----

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| x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|---|--------------------------------------------------------------------------------------|

|  ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
|--------|-------------------------------------------------------------------------------------------|

| PAPERWEIGHT DEVELOPMENT CORP.                                 | APPLETON PAPERS INC.                                          |
|---------------------------------------------------------------|---------------------------------------------------------------|
| (Exact Name of Registrant as Specified in Its Charter)        | (Exact Name of Registrant as Specified in Its Charter)        |
| Wisconsin                                                     | Delaware                                                      |
| (State or Other Jurisdiction ofIncorporation or Organization) | (State or Other Jurisdiction ofIncorporation or Organization) |
|                                                          |                                                          |
| 39-2014992                                                    | 36-2556469                                                    |
| (I.R.S. EmployerIdentification No.)                           | (I.R.S. EmployerIdentification No.)                           |
|                                                          |                                                          |
| 825 East Wisconsin Avenue, P.O. Box 359,Appleton, Wisconsin   | 54912-0359                                                    |
| (Address of Principal Executive Offices)                      | (Zip Code)                                                    |

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|          |                                                                                                               | PageNumber |
|---------------|--------------------------------------------------------------------------------------------------------------------|------------|
| PART I        |                                                                                                               |       |
|          |                                                                                                               |       |
| Item 1        | Business                                                                                                           | 3          |
|          |                                                                                                               |       |
| Item 1A  | Risk Factors                                                                                                       | 11         |
|          |                                                                                                               |       |
| Item 1B  | Unresolved Staff Comments                                                                                          | 18         |
|          |                                                                                                               |       |
| Item 2        | Properties                                                                                                         | 19         |
|          |                                                                                                               |       |
| Item 3        | Legal Proceedings                                                                                                  | 19         |
|          |                                                                                                               |       |
| Item 4        | Mine Safety Disclosures                                                                                            | 19         |
|          |                                                                                                               |       |
| PART II       |                                                                                                               |       |
|          |                                                                                                               |       |
| Item 5   | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 20         |
|          |                                                                                                               |       |
| Item 6        | Selected Financial Data                                                                                            | 21         |
|          |                                                                                                               |       |
| Item 7        | Management’s Discussion and Analysis of Financial Condition and Results of Operations                        | 23         |
|          |                                                                                                               |       |
| Item 7A  | Quantitative and Qualitative Disclosures About Market Risk                                                         | 42         |
|          |                                                                                                               |       |
| Item 8        | Financial Statements and Supplementary Data                                                                        | 43         |
|          |                                                                                                               |       |
| Item 9   | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                               | 102        |
|          |                                                                                                               |       |
| Item 9A  | Controls and Procedures                                                                                            | 102        |
|          |                                                                                                               |       |
| Item 9B  | Other Information                                                                                                  | 103        |
|          |                                                                                                               |       |
| PART III |                                                                                                               |       |
|          |                                                                                                               |       |
| Item 10  | Directors, Executive Officers and Corporate Governance                                                             | 104        |
|          |                                                                                                               |       |
| Item 11  | Executive Compensation                                                                                             | 109        |
|          |                                                                                                               |       |
| Item 12  | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters                     | 129        |
|          |                                                                                                               |       |
| Item 13  | Certain Relationships and Related Transactions and Director Independence                                           | 129        |
|          |                                                                                                               |       |
| Item 14  | Principal Accountant Fees and Services                                                                             | 130        |
|          |                                                                                                               |       |
| PART IV  |                                                                                                               |       |
|          |                                                                                                               |       |
| Item 15  | Exhibits and Financial Statement Schedules                                                                         | 131        |
|          |                                                                                                               |
| SIGNATURES    |                                                                                                               |
|          |                                                                                                               |
| EXHIBITS      |                                                                                                               |

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| •   | As of December 31, 2012, NCR has recorded an estimated liability of $115 million representing its portion of defense and liability costs with respect to the Lower Fox River; |
|---------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| •   | Technical analyses contending that discharges from NCR’s former assets represent 8% to 10% of the total PCBs discharged by the PRPs; |
|---------------------|--------------------------------------------------------------------------------------------------------------------------------------------|

| •   | Appleton’s and BAT’s joint and several responsibility for over half of the claims asserted against NCR and Appleton, based on the Arbitration and the Dispute Resolution; |
|---------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| •   | Based on legal analyses and ongoing reviews of publicly-available financial information, Appleton believes that other PRPs will be required, and have adequate financial resources, to pay their respective shares of the remediation and NRD claims for the Lower Fox River; and |
|---------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| •   | legal fees and other expenses. |
|---------------------|--------------------------------|

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| Location                                  | Description                                        | ApproximateSquare Footage                                                                                                                                                                | Status                          |
|-------------------------------------------|----------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------|
| Appleton, Wisconsin (Wisconsin Ave.)      | Headquarters Offices and Manufacturing Plant  |                            1,151,000    |     Owned        |
| Portage, Wisconsin                        | Capsule Manufacturing Plant                        |                             73,000                | Owned                           |
| Roaring Spring, Pennsylvania              | Pulp and Paper Mill                                |                           636,000                                | Owned                           |
| West Carrollton, Ohio                     | Manufacturing Plant                                |                           758,000                                | Owned                           |
| Appleton, Wisconsin (East Warehouse Road) | Warehouse                                          |                           290,000                                | Lease expires 12/31/14          |
| Appleton, Wisconsin (Kensington Drive)    | Distribution Center                                |                           357,000                                | Lease expires 12/31/15          |
| Monroe, Ohio                              | Distribution Center                                |                           220,000                                | Lease expires 4/30/16 |
| Camp Hill, Pennsylvania                   | Distribution Center                                |                           212,000                                | Lease expires 12/31/13          |
| Ontario, California                       | Distribution Center                                |                           102,000                                | Lease expires 7/31/13           |
| Kansas City, Kansas                       | Distribution Center                                |                           103,000                                | Lease expires 1/31/15           |
| McDonough, Georgia                        | Distribution Center                                |                           106,000                                | Lease expires 10/31/14          |
| Peterborough, Ontario, Canada             | Distribution Center                                |                             44,000                     | Lease expires 3/31/15           |
| Roaring Spring, Pennsylvania              | Warehouse                                          |                             89,000                     | Month to Month                  |

----

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|                                                            |   | PAPERWEIGHT DEVELOPMENT CORP. AND SUBSIDIARIESAND APPLETON PAPERS INC. AND SUBSIDIARIES |     |
|-----------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------|----------|
|                                                            |   | 2012                                                                                    |     | 2011 |   | 2010 |   |   | 2009 |   |   | 2008 |   |
|                                                            |   |                                                                                    |     |   |   |   |   |   |   |   |   |   |   |
|                                                            |   | (in thousands)                                                                          |     |
| Statement of Operations Data:                                   |   |                                                                                    |     |   |   |   |   |   |   |   |   |   |   |
| Net sales                                                       |   | $                                                                                       | 849,756  |   | $ | 857,329 |   | $ | 849,884 |   |   | $ | 761,807 |   |   | $ | 854,923 |   |
| Cost of sales                                                   |   |                                                                                    | 758,875  |   |   | 718,710 |   |   | 682,228 |   |   |   | 609,734 |   |   |   | 743,490 |   |
| Gross profit                                                    |   |                                                                                    | 90,881   |   |   | 138,619 |   |   | 167,656 |   |   |   | 152,073 |   |   |   | 111,433 |   |
| Selling, general and administrative expenses                    |   |                                                                                    | 152,961  |   |   | 144,928 |   |   | 139,154 |   |   |   | 129,147 |   |   |   | 184,703 |   |
| Restructuring and other charges (1)                             |   |                                                                                    | 28,589   |   |   | - |   |   | - |   |   |   | - |   |   |   | 2,578 |   |
| Environmental expense insurance recovery                        |   |                                                                                    | (2,188   | ) |   | - |   |   | (8,947 | ) |   |   | - |   |   |   | - |   |
| Litigation settlement, net                                      |   |                                                                                    | -        |   |   | 3,122 |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                            |   |                                                                                    |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating (loss) income                                         |   |                                                                                    | (88,481  | ) |   | (9,431 | ) |   | 37,449 |   |   |   | 22,925 |   |   |   | (75,848 | ) |
|                                                            |   |                                                                                    |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest expense                                                |   |                                                                                    | 59,654   |   |   | 61,330 |   |   | 65,772 |   |   |   | 51,291 |   |   |   | 54,267 |   |
| Debt extinguishment expense (income), net                       |   |                                                                                    | -        |   |   | - |   |   | 7,010 |   |   |   | (42,602 | ) |   |   | (11,598 | ) |
| Interest income                                                 |   |                                                                                    | (224     | ) |   | (355 | ) |   | (327 | ) |   |   | (402 | ) |   |   | (1,071 | ) |
| Litigation settlement, net                                      |   |                                                                                    | -        |   |   | (23,229 | ) |   | - |   |   |   | -  |   |   |   | (22,274 | ) |
| Other (income) expense                                          |   |                                                                                    | (47      | ) |   | (102 | ) |   | (429 | ) |   |   | (2,326 | ) |   |   | 6,061 |   |
| (Loss) income from continuing operations                        |   |                                                                                    |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   before income taxes                                 |   |                                                                                    | (147,864 | ) |   | (47,075 | ) |   | (34,577 | ) |   |   | 16,964 |   |   |   | (101,233 | ) |
|                                                            |   |                                                                                    |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Provision (benefit) for income taxes                            |   |                                                                                    | 587      |   |   | 577 |   |   | 176 |   |   |   | 333 |   |   |   | (317 | ) |
| (Loss) income from continuing operations                        |   |                                                                                    | (148,451 | ) |   | (47,652 | ) |   | (34,753 | ) |   |   | 16,631 |   |   |   | (100,916 | ) |
| Discontinued operations                                         |   |                                                                                    |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income (loss) from discontinued operations, net of income taxes |   |                                                                                    | -   |   |   | -  |   |   | 3,499 |   |   |   | (606 | ) |   |   | (80,965 | ) |
| Net (loss) income                                               |   | $                                                                                       | (148,451 | ) | $ | (47,652 | ) | $ | (31,254 | ) |   | $ | 16,025 |   |   | $ | (181,881 | ) |

----

|                                           |   |   |   2012 |   |   |   2011 |   |   |   2010 |   |   |   |   2009 |   |   |   |   2008 |   |
|------------------------------------------------|--------|--------|-------------|--------|--------|------------------|--------|--------|------------------|--------|--------|--------|------------------|--------|--------|--------|-------------|--------|
| Paperweight Development Corp. and Subsidiaries |   |   |        |   |   |             |   |   |             |   |   |   |             |   |   |   |        |   |
| Other Financial Data:                          |   |   |        |   |   |             |   |   |             |   |   |   |             |   |   |   |        |   |
| Depreciation and amortization (2)              |   | $      | 100,296     |   | $      | 48,616           |   | $      | 49,780           |   |   | $      | 56,460           |   |   | $      | 53,310      |   |
| Capital expenditures (2)                       |   |   | 17,143      |   |   | 15,847           |   |   | 17,250           |   |   |   | 22,851           |   |   |   | 95,193      |   |
| Balance Sheet Data (at end of period):         |   |   |        |   |   |             |   |   |             |   |   |   |             |   |   |   |        |   |
| Working capital (3)                            |   | $      | 64,823      |   | $      | 109,104          |   | $      | 115,738          |   |   | $      | 105,490          |   |   | $      | 115,436     |   |
| Total assets (3)                               |   |   | 561,090     |   |   | 643,268          |   |   | 676,994          |   |   |   | 790,799          |   |   |   | 928,619     |   |
| Total debt                                     |   |   | 515,765     |   |   | 511,874          |   |   | 558,950          |   |   |   | 550,716          |   |   |   | 605,364     |   |
| Redeemable common stock                        |   |   | 81,704      |   |   | 97,615           |   |   | 110,045          |   |   |   | 122,087          |   |   |   | 147,874     |   |
| Accumulated deficit (3)                        |   |   | (439,923    | )      |   | (299,226         | )      |   | (257,258         | )      |   |   | (232,996         | )      |   |   | (261,776    | )      |
|                                           |   |   |        |   |   |             |   |   |             |   |   |   |             |   |   |   |        |   |
|                                           |   |   |        |   |   |             |   |   |             |   |   |   |             |   |   |   |        |   |
| Appleton Papers Inc. and Subsidiaries          |   |   |        |   |   |             |   |   |             |   |   |   |             |   |   |   |        |   |
| Other Financial Data                           |   |   |        |   |   |             |   |   |             |   |   |   |             |   |   |   |        |   |
| Depreciation and amortization (2)              |   | $      | 100,296     |   | $      | 48,616           |   | $      | 49,780           |   |   | $      | 56,460           |   |   | $      | 53,310      |   |
| Capital expenditures (2)                       |   |   | 17,143      |   |   | 15,847           |   |   | 17,250           |   |   |   | 22,851           |   |   |   | 95,193      |   |
| Balance Sheet Data (at end of period):         |   |   |        |   |   |             |   |   |             |   |   |   |             |   |   |   |        |   |
| Working capital (3)                            |   | $      | 64,823      |   | $      | 109,104          |   | $      | 115,738          |   |   | $      | 105,490          |   |   | $      | 115,436     |   |
| Total assets (3)                               |   |   | 561,078     |   |   | 643,256          |   |   | 676,982          |   |   |   | 790,787          |   |   |   | 928,607     |   |
| Total debt                                     |   |   | 515,765     |   |   | 511,874          |   |   | 558,950          |   |   |   | 550,716          |   |   |   | 605,364     |   |
| Common stock                                   |   |   | 10,500      |   |   | 10,500           |   |   | 10,500           |   |   |   | 10,500           |   |   |   | 10,500      |   |
| Paid-in capital                                |   |   | 623,305     |   |   | 623,305          |   |   | 623,305          |   |   |   | 623,305          |   |   |   | 623,305     |   |
| Due from parent                                |   |   | (237,257    | )      |   | (229,100         | )      |   | (222,354         | )      |   |   | (217,305         | )      |   |   | (204,272    | )      |
| Accumulated deficit (3)                        |   |   | (754,779    | )      |   | (606,328         | )      |   | (558,676         | )      |   |   | (527,422         | )      |   |   | (543,448    | )      |
|                                           |   |   |        |   |   |             |   |   |             |   |   |   |             |   |   |   |        |   |

| (1) | The Company continually assesses its staffing requirements for its headquarters and manufacturing operations. Staffing reductions occurred in 2008 and due to the continued decline in the Company’s carbonless business, as well as the global economic downturn, additional nonrestructuring headcount reductions were taken during 2009 - 2011. During 2012, the Company ceased papermaking operations at its West Carrollton, Ohio facility and moved its carbonless coating to the Company’s converting plant in Appleton, Wisconsin, resulting in the reduction of 314 jobs at the West Carrollton facility and the addition of 68 jobs at the Appleton facility. Related employee termination benefits and equipment decommissioning and other expenses are included in the 2012 restructuring charge. See Note 3, Restructuring and Other Related Costs, of Notes to Consolidated Financial Statements for further discussion. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Amounts exclude information related to discontinued operations. See Note 4, Discontinued Operations, of Notes to Consolidated Financial Statements for further discussion. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | See Note 2, Summary of Significant Accounting Policies, of Notes to Consolidated Financial Statements, for the impacts of the 2012 accounting policy changes on the financial information presented for the three years ended December 29, 2012. For fiscal years 2010, 2009 and 2008, the accounting policy changes had the following impacts. For fiscal year 2010 ended January 1, 2011, accumulated deficit increased $103.5 million and accumulated other comprehensive loss was reduced by $103.5 million. For fiscal year 2009 ended January 2, 2010, the Statement of Operations Data above includes an increase to cost of sales of $6.5 million and an increase to selling, general and administrative expenses (“SG&A”) of $0.7 million. This resulted in reduced net income of $7.2 million. In addition, inventories increased $0.1 million while the accumulated deficit increased $103.9 million and accumulated other comprehensive loss was reduced by $104.0 million. For fiscal year 2008 ended January 3, 2009, there was an increase to cost of sales of $60.1 million and an increase to SG&A of $28.6 million. This resulted in an increased net loss of $88.7 million. In addition, inventories increased $4.1 million while the accumulated deficit increased $96.7 million and accumulated other comprehensive loss was reduced by $100.8 million. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|            ●       | Net sales totaled $849.8 million, a $7.5 million, or 0.9%, decrease from 2011 net sales. Net sales within the paper business decreased $5.3 million, or 0.6%. Shipment volumes were approximately 4% lower than 2011 largely due to the Company’s decision to discontinue selling carbonless papers into certain non-strategic international markets. Encapsys net sales decreased $3.8 million, or 6.9%. Volumes were approximately 12% lower than 2011 as a result of the non-strategic sales decline of carbonless paper as well as a weak global economy reducing the short-term demand for customer products using Encapsys microencapsulation. |
|----------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|            ● | As a result of the cessation of papermaking operations at West Carrollton, the Company recorded $77.4 million of other related costs in cost of sales. These costs include $64.7 million of noncash expense for accelerated depreciation related to the decommissioning of papermaking assets. It also includes an $11.1 million noncash writedown of papermaking stores and spare parts inventories to lower of cost or market, a $1.2 million noncash writedown of construction in progress and $0.4 million of retention incentives and other costs. In addition, as a result of working through the transition to the 15-year base stock supply agreement, costs of $11.4 million were incurred during the year. Restructuring expense of $28.6 million was also recorded and included employee termination benefits and exit costs related to the decommissioning of papermaking assets. |
|----------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|         ●       | Cost of sales includes pension and other postretirement benefit plan expense of $21.0 million which is $17.6 million lower than in 2011. |
|----------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------|

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|            ● | SG&A spending of $153.0 million was $8.1 million, or 5.6%, higher than 2011 spending largely due to $7.5 million of costs incurred as a result of the discontinued business combination transaction discussed above. In addition, 2012 incentive compensation, including bonuses and stock-based incentive compensation, was $6.2 million higher. Pension and other postretirement benefit plan expense of $10.6 million was $4.9 million lower than in 2011. |
|----------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|            ● | An environmental expense insurance recovery of $2.2 million was recorded as a separate line item within operating loss on the Consolidated Statement of Comprehensive Loss representing additional insurance recovery due Appleton. In March 2008, Appleton received favorable jury verdicts in a state court declaratory judgment relating to insurance coverage of its environmental claims involving the Fox River. A final judgment and order was entered in January 2009. The insurers appealed the final judgment. In June 2010, the Wisconsin Court of Appeals upheld the final judgment. Settlements have been negotiated between the insurers and Appleton. Under the terms of the indemnification agreement, recoveries from insurance are reimbursed to AWA to the extent of its indemnification obligation. During 2010, Appleton recorded an $8.9 million receivable, representing settlements to be received in excess of amounts reimbursable to AWA, in the Consolidated Balance Sheet as of January 1, 2011. During 2011, Appleton received $6.2 million of these funds. This additional $2.2 million was received during October 2012. |
|----------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|            ● | Net loss was $148.5 million compared to last year’s loss of $47.7 million. As discussed above, 2012 results include a restructuring charge of $28.6 million, other related costs associated with the ceasing of papermaking in West Carrollton, Ohio of $77.4 million and $7.5 million of costs related to the discontinued business combination transaction. In comparison, the 2011 results included a $3.1 million litigation settlement and a $23.2 million litigation recovery. |
|----------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|            ● | Net debt as of December 29, 2012 was $513.7 million compared to $504.5 million at the end of 2011, an increase of $9.2 million. |
|----------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------|

|            ● | During 2012, the Company generated $23.3 million of cash from operations which included a decrease in working capital of $26.4 million. |
|----------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------|

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|                                         |   | Paperweight Development Corp. and Subsidiaries and |
|----------------------------------------------|--------|----------------------------------------------------|
|                                         |   |  Appleton Papers Inc. and Subsidiaries        |
|                                         |   |                                               |
|                                         |   | For the Year Ended                                 |   |   | Increase |   |
|                                         |   | December 29, 2012                                  |   |   | December 31, 2011 |   |   | (Decrease) |   |
|                                         |   | (dollars in millions)                    |   |   |   |   |
|                                         |   |                                               |   |   |   |   |   |   |   |
| Net sales                                    |   | $                                                  | 849.8 |   |   | $ | 857.3 |   |   |   | -0.9 | % |
| Cost of sales                                |   |                                               | 758.9 |   |   |   | 718.7 |   |   |   | 5.6 | % |
| Gross profit                                 |   |                                               | 90.9 |   |   |   | 138.6 |   |   |   | -34.4 | % |
|                                         |   |                                               |   |   |   |   |   |   |   |   |   |   |
| Selling, general and administrative expenses |   |                                               | 153.0 |   |   |   | 144.9 |   |   |   | 5.6 | % |
| Environmental expense insurance recovery     |   |                                               |                        (2.2 | ) |   |   | - |   |   |   | nm |   |
| Restructuring                                |   |                                               | 28.6 |   |   |   | - |   |   |   | nm |   |
| Litigation settlement, net                   |   |                                               | - |   |   |   | 3.1 |   |   |   | -100.0 | % |
|                                         |   |                                               |   |   |   |   |   |   |   |   |   |   |
| Operating loss                               |   |                                               | (88.5 | ) |   |   | (9.4 | ) |   |   | nm |   |
|                                         |   |                                               |   |   |   |   |   |   |   |   |   |   |
| Interest expense, net                        |   |                                               | 59.4 |   |   |   | 61.0 |   |   |   | -2.6 | % |
| Recovery from litigation settlement, net     |   |                                               | - |   |   |   | (23.2 | ) |   |   | -100.0 | % |
| Other non-operating income, net    |   |                                               | - |   |   |   | (0.1 | ) |   |   | -100.0 | % |
|                                         |   |                                               |   |   |   |   |   |   |   |   |   |   |
| Loss before income taxes                     |   |                                               | (147.9 | ) |   |   | (47.1 | ) |   |   | -214.0 | % |
| Provision for income taxes                   |   |                                               | 0.6 |   |   |   | 0.6 |   |   |   | - |   |
|                                         |   |                                               |   |   |   |   |   |   |   |   |   |   |
| Net loss                                     |   | $                                                  | (148.5 | ) |   | $ | (47.7 | ) |   |   | -211.3 | % |
|                                         |   |                                               |   |   |   |   |   |   |   |   |   |   |
| Comparisons as a % of net sales              |   |                                               |   |   |   |   |   |   |   |   |   |   |
| Cost of sales                                |   |                                               | 89.3 | % |   |   | 83.8 | % |   |   | 5.5 | % |
| Gross margin                                 |   |                                               | 10.7 | % |   |   | 16.2 | % |   |   | -5.5 | % |
| Selling, general and administrative expenses |   |                                               | 18.0 | % |   |   | 16.9 | % |   |   | 1.1 | % |
| Operating margin                             |   |                                               | -10.4 | % |   |   | -1.1 | % |   |   | -9.3 | % |
| Loss before income taxes                     |   |                                               | -17.4 | % |   |   | -5.5 | % |   |   | -11.9 | % |
| Net loss                                     |   |                                               | -17.5 | % |   |   | -5.6 | % |   |   | -11.9 | % |

----

| Favorable price and mix                               |   | $      | 17.9  |   |
|-------------------------------------------------------|--------|--------|------------|--------|
| Favorable manufacturing operations                    |   |   | 19.0  |   |
| Selling, general and administrative expense and other |   |   | 11.3  |   |
| Favorable raw materials and utilities pricing         |   |   | 1.4   |   |
| Restructuring and other related costs                 |   |   | (106.0)    |   |
| Long-term supply agreement transition costs      |   |   | (11.4)     |   |
| Lower shipment volumes                                |   |   | (4.9)      |   |
|                                                  |   | $      | (72.7)     |   |

|            ●   | Carbonless papers segment 2012 net sales totaled $406.8 million, a decrease of $46.2 million, or 10.2%, from the prior year. Current year shipment volumes were nearly 13% lower than 2011 shipments. In addition to the expected carbonless market decline, during 2012 the Company discontinued selling carbonless papers into certain non-strategic international markets. This contributed to approximately 85% of the reduced volumes and 74% of the sales decline. The carbonless papers segment recorded a 2012 operating loss of $42.2 million compared to a 2011 operating loss of $4.2 million. The current year operating loss includes restructuring and other related costs of $58.3 million and $4.1 million of one-time transition costs related to the 15-year base stock supply agreement. This was partially offset by a $13.1 million reduction in retiree benefits expense. |
|----------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|            ● | Thermal papers segment 2012 net sales of $411.7 million were $40.9 million, or 11.0%, higher than 2011 net sales of $370.8 million. During 2012, shipments of thermal papers increased approximately 9% over the prior year. Continued strong demand for tag, label and entertainment (“TLE”) products, in all markets, accounted for an increase in shipment volumes of nearly 19%. Current year shipments of receipt paper were flat year on year. Current year net sales were also positively impacted by favorable price and mix of $4.8 million and $2.2 million, respectively. The thermal papers segment recorded a 2012 operating loss of $34.2 million compared to 2011 operating income of $0.6 million. The current year operating loss includes restructuring and other related costs of $47.7 million and $7.3 million of one-time transition costs related to the 15-year base stock supply agreement. Also during 2012, this business segment recorded a $6.8 million settlement charge relating to withdrawal from the multi-employer pension plan as negotiated by the West Carrollton bargaining workforce during current year labor contract negotiations. These were partially offset by a $5.2 million reduction in retiree benefits expense. |
|----------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|            ● | Encapsys segment net sales for 2012 totaled $51.0 million, which was a decrease of $3.8 million, or 6.9%, from 2011 net sales. Current year operating income was $10.5 million compared to 2011 operating income of $10.8 million. Compared to last year, shipment volumes declined nearly 12%. Lower Encapsys sales volume was the result of decreased carbonless papers production as well as a weak global economy reducing the short-term demand for customer products using Encapsys microencapsulation. |
|----------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|            ● | As of year-end 2012, unallocated corporate charges totaled $19.6 million and include $7.5 million of discontinued business combination transaction costs, $4.2 million higher incentive compensation expense and a $2.2 million environmental expense insurance recovery. As of year-end 2011, unallocated corporate charges totaled $13.3 million and included a $3.1 million litigation settlement. |
|----------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                     |   | Paperweight Development Corp. and Subsidiaries and |
|----------------------------------------------------------|--------|----------------------------------------------------|
|                                                     |   | Appleton Papers Inc. and Subsidiaries              |
|                                                     |   |                                               |   |   |   |   |
|                                                     |   | For the Year Ended                                 |   |   | Increase |   |
|                                                     |   | December 31, 2011                        |   |   | January 1, 2011 |   |   | (Decrease) |   |
|                                                     |   | (dollars in millions)                    |   |   |   |   |
|                                                     |   |                                               |   |   |   |   |   |   |   |
| Net sales                                                |   | $                                                  | 857.3 |   |   | $ | 849.9 |   |   |   | 0.9 | % |
| Cost of sales                                            |   |                                               | 718.7 |   |   |   | 682.2 |   |   |   | 5.4 | % |
| Gross profit                                             |   |                                               | 138.6 |   |   |   | 167.7 |   |   |   | -17.4 | % |
|                                                     |   |                                               |   |   |   |   |   |   |   |   |   |   |
| Selling, general and administrative expenses             |   |                                               | 144.9 |   |   |   | 139.2 |   |   |   | 4.1 | % |
| Environmental expense insurance recovery                 |   |                                               | - |   |   |   | (8.9 | ) |   |   | -100.0 | %  |
| Litigation settlement, net                               |   |                                               | 3.1 |   |   |   | - |   |   |   | nm |   |
|                                                     |   |                                               |   |   |   |   |   |   |   |   |   |   |
| Operating (loss) income                                  |   |                                               | (9.4 | ) |   |   | 37.4 |   |   |   | -125.1 | % |
|                                                     |   |                                               |   |   |   |   |   |   |   |   |   |   |
| Interest expense, net                                    |   |                                               | 61.0 |   |   |   | 65.4 |   |   |   | -6.7 | % |
| Debt extinguishment expense, net                    |   |                                               | - |   |   |   | 7.0 |   |   |   | -100.0 | % |
| Recovery from litigation settlement, net                 |   |                                               | (23.2 | ) |   |   | - |   |   |   | nm |   |
| Other non-operating income, net                |   |                                               | (0.1 | ) |   |   | (0.4 | ) |   |   | -75.0 | % |
|                                                     |   |                                               |   |   |   |   |   |   |   |   |   |   |
| Loss from continuing operations before income taxes      |   |                                               | (47.1 | ) |   |   | (34.6 | ) |   |   | -36.1 |  % |
| Provision for income taxes                               |   |                                               | 0.6 |   |   |   | 0.2 |   |   |   | 200.0 | % |
|                                                     |   |                                               |   |   |   |   |   |   |   |   |   |   |
| Loss from continuing operations                          |   |                                               | (47.7 | ) |   |   | (34.8 | ) |   |   | -37.1 | % |
|                                                     |   |                                               |   |   |   |   |   |   |   |   |   |   |
| Income from discontinued operations, net of income taxes |   |                                               | - |   |   |   | 3.5 |   |   | -100.0 | %  |
|                                                     |   |                                               |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                 |   | $                                                  | (47.7 | ) |   | $ | (31.3 | ) |   |   | -52.4 | %  |
|                                                     |   |                                               |   |   |   |   |   |   |   |   |   |   |
| Comparisons as a % of net sales                          |   |                                               |   |   |   |   |   |   |   |   |   |   |
| Cost of sales                                            |   |                                               | 83.8 | % |   |   | 80.3 | % |   |   | 3.5 | % |
| Gross margin                                             |   |                                               | 16.2 | % |   |   | 19.7 | % |   |   | -3.5 | % |
| Selling, general and administrative expenses             |   |                                               | 16.9 | % |   |   | 16.4 | % |   |   | 0.5 | % |
| Operating margin                                         |   |                                               | -1.1 | % |   |   | 4.4 | % |   |   | -5.5 | % |
| Loss from continuing operations before income taxes      |   |                                               | -5.5 | % |   |   | -4.1 | % |   |   | -1.4 | % |
| Loss from continuing operations                          |   |                                               | -5.6 | % |   |   | -4.1 | % |   |   | -1.5 | % |
| Income from discontinued operations, net of income taxes |   |                                               | - |   |   |   | 0.4 | % |   |   | -0.4 | % |
| Net loss                                                 |   |                                               | -5.6 | % |   |   | -3.7 | % |   |   | -1.9 | % |

----

| Favorable price and mix                                           |   | $      | 44.8  |   |
|-------------------------------------------------------------------|--------|--------|------------|--------|
| Net inflation of raw material and utilities pricing               |   |   | (29.9)     |   |
| Increased manufacturing costs, including retiree benefits expense |   |   | (33.5)     |   |
| Mill curtailments to match customer demand                        |   |   | (6.3)      |   |
| Lower shipment volumes                                            |   |   | (7.5)      |   |
|                                                              |   | $      | (32.4)     |   |

|           ● | Carbonless papers segment 2011 net sales totaled $453.0 million, a decrease of $26.1 million, or 5.4%, from the prior year. Current year shipment volumes were nearly 10% lower than 2010 shipments. The impact of lower shipment volumes was partially offset by favorable pricing resulting from various price increases initiated since 2010 in response to rapidly rising raw material costs. Carbonless papers operating income decreased $34.7 million during 2011 to a reported operating loss of $4.2 million. Margins continued to be negatively impacted by continued inflation in raw material and utilities pricing. While pulp prices came down during the second half of 2011, the cost of chemicals continued to climb. Overall, average pulp prices paid in 2011 were higher than those paid in 2010. As noted above, increased pension and other retirement benefits expense negatively impacted current year earnings, of which, $27.9 million was included in the carbonless papers segment. |
|----------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|           ● | Thermal papers segment 2011 net sales of $370.8 million were $29.0 million higher than 2010 net sales of $341.8 million. During 2011, shipments of thermal papers increased approximately 1% over the prior year. In order to improve profitability, the Company has been managing volumes and price of the point of sale receipt paper (“POS”) portion of the thermal business. Shipment volumes of POS were approximately 7% lower than 2010 shipment volumes. Demonstrating the strength of the Company’s thermal products portfolio, shipment volumes of TLE were approximately 12% higher than the prior year. The thermal papers segment also benefited from favorable pricing realized in response to escalating raw material costs. During 2011, the thermal papers segment recorded operating income of $0.6 million compared to a 2010 operating loss of $1.8 million. Improved pricing and mix, as well as volume growth, more than offset increases in raw material costs and pension and other retirement benefits expense. As noted above, increased pension and other retirement benefits expense negatively impacted current year earnings, of which, $14.9 million was included in the thermal papers segment. |
|----------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|           ● | Encapsys segment net sales for 2011 totaled $54.7 million, which was an increase of $2.5 million, or 4.8%, over 2010 net sales. Current year operating income was $10.8 million compared to 2010 operating income of $10.3 million. These increases were the result of increased shipment volumes of approximately 7%. |
|----------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|           ●   | As of year-end 2011, unallocated corporate charges totaled $13.3 million. These charges include increased pension and other retirement benefits costs as well as a $3.1 million litigation settlement. In 2010, income of $1.9 million was reported in unallocated corporate charges and included an environmental expense insurance recovery of $8.9 million. |
|----------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

----

|                                                                                                                                                                            |   | 2012                                                                                                                              |   |   |   | 2011          |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|---------------|
| Revolving credit facility at approximately 4.25%                                                                                                                                | $      |                     3.7  |   |   | $      |  -  |
| Secured variable rate industrial development bonds, 0.4% average interest rate at December 29, 2012, $2.7 million due in 2013 and $6.0 million due in 2027  |   | 8.7                                                                                                                          |   |   |   | 8.7      |
| State of Ohio assistance loan at 6%, approximately $0.1 million due monthly and final payment due May 2017                                                                 |   | 5.2                                                                                                                          |   |   |   | 6.2      |
| State of Ohio loan at 1% until July 2011, then 3% until May 2019, approximately $30,000 due monthly and final payment due May 2019                               |   | 2.0                                                                                                                          |   |   |   | 2.2      |
| Columbia County, Wisconsin municipal debt due December 2019                                                                                                                     |   | 0.3                                                                                                                          |   |   |   | -        |
| Senior subordinated notes payable at 9.75%, due June 2014                                                                                                                  |   | 32.2                                                                                                                         |   |   |   | 32.2     |
| Senior secured first lien notes payable at 10.5%, due June 2015                                                                                                                 |   | 305.0                                                                                                                        |   |   |   | 305.0    |
| Unamortized discount on 10.5% senior secured first lien notes payable, due June 2015                                                                                            |   | (3.3)                                                                                                                             |   |   |   | (4.3)         |
| Second lien notes payable at 11.25%, due December 2015                                                                                                                          |   | 161.8                                                                                                                        |   |   |   | 161.8    |
|                                                                                                                                                                            |   | 515.6                                                                                                                        |   |   |   | 511.8    |
| Less obligations due within one year                                                                                                                                            |   | (4.0)                                                                                                                             |   |   |   | (1.3)         |
|                                                                                                                                                                            | $      | 511.6                                                                                                                        |   |   | $      | 510.5    |

----

----

|                               |   | Payment Due by Period |   |
|------------------------------------|--------|-----------------------|--------|
| Contractual Obligations       |   | Total                 |   |   | Less Than 1 Year |   |   | 1-3 Years |   |   | 4-5 Years |   |   | After 5 Years |   |
|                               |   | (dollars in millions) |   |
| Long-term debt (1)                 |   | $                     | 518.8  |   |   | $ | 4.0 |   |   | $ | 505.5 |   |   | $ | 2.5 |   |   | $ | 6.8 |   |
| Operating leases                   |   |                  | 8.7    |   |   |   | 4.1 |   |   |   | 4.4 |   |   |   | 0.2 |   |   |   | - |   |
| Other long-term obligations (2)    |   |                  | 355.1  |   |   |   | 74.3 |   |   |   | 143.5 |   |   |   | 49.7 |   |   |   | 87.6 |   |
| Total contractual cash obligations |   | $                     | 882.6  |   |   | $ | 82.4 |   |   | $ | 653.4 |   |   | $ | 52.4 |   |   | $ | 94.4 |   |

| (1) | The senior secured first lien notes payable at 10.5%, due June 2015, are included at face of $305.0 million. |
|-----|--------------------------------------------------------------------------------------------------------------|

| (2) | Represents obligations for interest, pension funding, postretirement health benefits and deferred compensation payments. |
|-----|--------------------------------------------------------------------------------------------------------------------------|

|                                 |   | Estimate of Potential Commitment per Period |
|--------------------------------------|--------|---------------------------------------------|
| Other Commitments                    |   | Total                                       |   |   Less Than 1 Year |   | 1-3 Years |   |   | 4-5 Years |
|                                 |   | (dollars in millions)                       |
| Estimated share repurchase liability |   | $                                           | 108.0 |   |   $ | 19.3 |   | $                                   41.5 |   |  $ |                   47.2 |

----

----

----

----

----

----

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| PAPERWEIGHT DEVELOPMENT CORP. AND SUBSIDIARIES                                                                                                                                                        |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                                  |   |
| CONSOLIDATED BALANCE SHEETS                                                                                                                                                                           |   |
| (dollars in thousands, except share data)                                                                                                                                                             |   |
|                                                                                                                                                                                                  |   |   |   |   |   |   |
|                                                                                                                                                                                                  |   | December 29, 2012 |   |   | December 31, 2011 |   |
|                                                                                                                                                                                                  |   |   |   |   |   |   |
| Current assets                                                                                                                                                                                        |   | $ | 1,851 |   |   | $ | 7,241 |   |
|   Cash and cash equivalents                                                                                                                                                                 |   |   |   |   |   |   |   |   |
|   Accounts receivable, less allowance for doubtful accounts of  $1,077 and $1,186, respectively                                                                                        |   |   | 92,680 |   |   |   | 90,339 |   |
|   Inventories                                                                                                                                                                               |   |   | 94,349 |   |   |   | 103,877 |   |
|   Other current assets                                                                                                                                                                      |   |   | 70,620 |   |   |   | 54,724 |   |
|       Total current assets                                                                                                                                              |   |   | 259,500 |   |   |   | 256,181 |   |
| Property, plant and equipment, net of accumulated depreciation  of $607,006 and $513,985, respectively                                                                                      |   |   | 243,265 |   |   |   | 324,665 |   |
| Intangible assets, net                                                                                                                                                                                |   |   | 43,839 |   |   |   | 46,125 |   |
| Other assets                                                                                                                                                                                          |   |   | 14,486 |   |   |   | 16,297 |   |
|       Total assets                                                                                                                                                      |   | $  | 561,090 |   |   | $ | 643,268 |   |
| LIABILITIES, REDEEMABLE COMMON STOCK,ACCUMULATED DEFICIT ANDACCUMULATED OTHER COMPREHENSIVE INCOME                                                                                                    |   |   |   |   |   |   |   |   |
| Current liabilities                                                                                                                                                                                   |   |   |   |   |   |   |   |   |
|   Current portion of long-term debt                                                                                                                                                         |   | $ | 3,975 |   |   | $ | 1,256 |   |
|   Accounts payable                                                                                                                                                                          |   |   | 68,600 |   |   |   | 51,766 |   |
|   Accrued interest                                                                                                                                                                          |   |   | 2,467 |   |   |   | 2,628 |   |
|   Other accrued liabilities                                                                                                                                                                 |   |   | 119,635 |   |   |   | 91,427 |   |
|     Total current liabilities                                                                                                                                                     |   |   | 194,677 |   |   |   | 147,077 |   |
|                                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| Long-term debt                                                                                                                                                                                        |   |   | 511,624 |   |   |   | 510,533 |   |
| Postretirement benefits other than pension                                                                                                                                                            |   |   | 38,440 |   |   |   | 41,611 |   |
| Accrued pension                                                                                                                                                                                       |   |   | 137,081 |   |   |   | 125,245 |   |
| Other long-term liabilities                                                                                                                                                                           |   |   | 32,165 |   |   |   | 7,389 |   |
| Commitments and contingencies (Note 19)                                                                                                                                                               |   |   | - |   |   |   | - |   |
| Redeemable common stock, $0.01 par value,shares authorized: 30,000,000, shares issued andoutstanding: 8,730,118 and 9,212,808, respectively                                                           |   |   | 81,704 |   |   |   | 97,615 |   |
| Accumulated deficit                                                                                                                                                                                   |   |   | (439,923 | ) |   |   | (299,226 | ) |
| Accumulated other comprehensive income                                                                                                                                                                |   |   | 5,322 |   |   |   | 13,024 |   |
|                                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
|       Total liabilities, redeemable common stock,      accumulated deficit and accumulated other comprehensive      income |   | $ | 561,090 |   |   | $ | 643,268 |   |

----

| APPLETON PAPERS INC. AND SUBSIDIARIES                                                                            |   |
|------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                             |   |
| CONSOLIDATED BALANCE SHEETS                                                                                      |   |
| (dollars in thousands, except share data)                                                                        |   |
|                                                                                                             |   |   |   |   |   |   |
|                                                                                                             |   | December 29, 2012 |   |   | December 31, 2011 |   |
|                                                                                                             |   |   |   |   |   |   |
| Current assets                                                                                                   |   | $ | 1,851 |   |   | $ | 7,241 |   |
|   Cash and cash equivalents                                                                            |   |   |   |   |   |   |   |   |
|   Accounts receivable, less allowance for doubtful accounts of  $1,077 and $1,186, respectively   |   |   | 92,680 |   |   |   | 90,339 |   |
|   Inventories                                                                                          |   |   | 94,349 |   |   |   | 103,877 |   |
|   Other current assets                                                                                 |   |   | 70,620 |   |   |   | 54,724 |   |
|       Total current assets                                                         |   |   | 259,500 |   |   |   | 256,181 |   |
| Property, plant and equipment, net of accumulated depreciation  of $607,006 and $513,985, respectively |   |   | 243,265 |   |   |   | 324,665 |   |
| Intangible assets, net                                                                                           |   |   | 43,839 |   |   |   | 46,125 |   |
| Other assets                                                                                                     |   |   | 14,474 |   |   |   | 16,285 |   |
|       Total assets                                                                 |   | $ | 561,078 |   |   | $  | 643,256 |   |
| LIABILITIES AND TOTAL EQUITY                                                                                |   |   |   |   |   |   |   |   |
| Current liabilities                                                                                              |   |   |   |   |   |   |   |   |
|   Current portion of long-term debt                                                                    |   | $ | 3,975 |   |   | $ | 1,256 |   |
|   Accounts payable                                                                                     |   |   | 68,600 |   |   |   | 51,766 |   |
|   Accrued interest                                                                                     |   |   | 2,467 |   |   |   | 2,628 |   |
|   Other accrued liabilities                                                                            |   |   | 119,635 |   |   |   | 91,427 |   |
|     Total current liabilities                                                                |   |   | 194,677 |   |   |   | 147,077 |   |
|                                                                                                             |   |   |   |   |   |   |   |   |
| Long-term debt                                                                                                   |   |   | 511,624 |   |   |   | 510,533 |   |
| Postretirement benefits other than pension                                                                       |   |   | 38,440 |   |   |   | 41,611 |   |
| Accrued pension                                                                                                  |   |   | 137,081 |   |   |   | 125,245 |   |
| Other long-term liabilities                                                                                      |   |   | 32,165 |   |   |   | 7,389 |   |
|     Total liabilities                                                                        |   |   | 913,987 |   |   |   | 831,855 |   |
| Commitments and contingencies (Note 19)                                                                          |   |   | - |   |   |   | - |   |
| Common stock, $100.00 par value,130,000 shares authorized,100 shares issued and outstanding                      |   |   | 10,500 |   |   |   | 10,500 |   |
| Paid-in capital                                                                                                  |   |   | 623,305 |   |   |   | 623,305 |   |
| Due from parent                                                                                                  |   |   | (237,257 | ) |   |   | (229,100 | ) |
| Accumulated deficit                                                                                              |   |   | (754,779 | ) |   |   | (606,328 | ) |
| Accumulated other comprehensive income                                                                           |   |   | 5,322 |   |   |   | 13,024 |   |
|         Total equity                                                     |   |   | (352,909 | ) |   |   | (188,599 | ) |
|                                                                                                             |   |   |   |   |   |   |   |   |
| Total liabilities and equity                                                                                     |   | $ | 561,078 |   |   | $ | 643,256 |   |

----

| PAPERWEIGHT DEVELOPMENT CORP. AND SUBSIDIARIES                       |   |
|----------------------------------------------------------------------|--------|
|                                                                 |   |
| CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS                        |   |
| (dollars in thousands)                                               |   |
|                                                                 |   |   |   |   |   |   |   |   |   |
|                                                                 |   | For the |   |   | For the |   |   | For the |   |
|                                                                 |   | Year Ended |   |   | Year Ended |   |   | Year Ended |   |
|                                                                 |   | December 29, 2012 |   |   | December 31, 2011 |   |   | January 1, 2011 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |
| Net sales                                                            |   | $ | 849,756 |   |   | $ | 857,329 |   |   | $ | 849,884 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost of sales                                                        |   |   | 758,875 |   |   |   | 718,710 |   |   |   | 682,228 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
|    Gross profit                                            |   |   | 90,881 |   |   |   | 138,619 |   |   |   | 167,656 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Selling, general and administrative expenses                         |   |   | 152,961 |   |   |   | 144,928 |   |   |   | 139,154 |   |
| Environmental expense insurance recovery                             |   |   | (2,188 | ) |   |   | - |   |   |   | (8,947 | ) |
| Restructuring                                                        |   |   | 28,589 |   |   |   | - |   |   |   | - |   |
| Litigation settlement, net                                           |   |   | - |   |   |   | 3,122 |   |   |   | - |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating (loss) income                                              |   |   | (88,481 | ) |   |   | (9,431 | ) |   |   | 37,449 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Other expense (income)                                               |   |   |   |   |   |   |   |   |   |   |   |   |
|   Interest expense                                         |   |   | 59,654 |   |   |   | 61,330 |   |   |   | 65,772 |   |
|   Debt extinguishment expense, net                         |   |   | - |   |   |   | - |   |   |   | 7,010 |   |
|   Interest income                                          |   |   | (224 | ) |   |   | (355 | ) |   |   | (327 | ) |
|   Recovery from litigation settlement, net                 |   |   | - |   |   |   | (23,229 | ) |   |   | - |   |
|   Foreign exchange (gain) loss                             |   |   | (213 | ) |   |   | 1,136 |   |   |   | 600 |   |
|   Other expense (income)                                   |   |   | 166 |   |   |   | (1,238 | ) |   |   | (1,029 | ) |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss from continuing operations before income taxes                  |   |   | (147,864 | ) |   |   | (47,075 | ) |   |   | (34,577 | ) |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Provision for income taxes                                           |   |   | 587 |   |   |   | 577 |   |   |   | 176 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss from continuing operations                                      |   |   | (148,451 | ) |   |   | (47,652 | ) |   |   | (34,753 | ) |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Discontinued operations                                              |   |   |   |   |   |   |   |   |   |   |   |   |
|   Income from discontinued operations, net of income taxes |   |   | - |   |   |   | - |   |   |   | 3,499 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                             |   |   | (148,451 | ) |   |   | (47,652 | ) |   |   | (31,254 | ) |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Other comprehensive (loss) income                                    |   |   |   |   |   |   |   |   |   |   |   |   |
|   Changes in retiree plans                                 |   |   | (4,812 | ) |   |   | 433 |   |   |   | 6,743 |   |
|   Realized and unrealized (losses) gains on derivatives    |   |   | (2,890 | ) |   |   | 1,373 |   |   |   | 140 |   |
| Total other comprehensive (loss) income                              |   |   | (7,702 | ) |   |   | 1,806 |   |   |   | 6,883 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive loss                                                   |   | $ | (156,153 | ) |   | $ | (45,846 | ) |   | $ | (24,371 | ) |

----

| APPLETON PAPERS INC. AND SUBSIDIARIES                                |   |
|----------------------------------------------------------------------|--------|
|                                                                 |   |
| CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS                        |   |
| (dollars in thousands)                                               |   |
|                                                                 |   |   |   |   |   |   |   |   |   |
|                                                                 |   | For the |   |   | For the |   |   | For the |   |
|                                                                 |   | Year Ended |   |   | Year Ended |   |   | Year Ended |   |
|                                                                 |   | December 29, 2012 |   |   | December 31, 2011 |   |   | January 1, 2011 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |
| Net sales                                                            |   | $ | 849,756 |   |   | $ | 857,329 |   |   | $ | 849,884 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost of sales                                                        |   |   | 758,875 |   |   |   | 718,710 |   |   |   | 682,228 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
|    Gross profit                                            |   |   | 90,881 |   |   |   | 138,619 |   |   |   | 167,656 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Selling, general and administrative expenses                         |   |   | 152,961 |   |   |   | 144,928 |   |   |   | 139,154 |   |
| Environmental expense insurance recovery                             |   |   | (2,188 | ) |   |   | - |   |   |   | (8,947 | ) |
| Restructuring                                                        |   |   | 28,589 |   |   |   | - |   |   |   | - |   |
| Litigation settlement, net                                           |   |   | - |   |   |   | 3,122 |   |   |   | - |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating (loss) income                                              |   |   | (88,481 | ) |   |   | (9,431 | ) |   |   | 37,449 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Other expense (income)                                               |   |   |   |   |   |   |   |   |   |   |   |   |
|   Interest expense                                         |   |   | 59,654 |   |   |   | 61,330 |   |   |   | 65,772 |   |
|   Debt extinguishment expense, net                         |   |   | - |   |   |   | - |   |   |   | 7,010 |   |
|   Interest income                                          |   |   | (224 | ) |   |   | (355 | ) |   |   | (327 | ) |
|   Recovery from litigation settlement, net                 |   |   | - |   |   |   | (23,229 | ) |   |   | - |   |
|   Foreign exchange (gain) loss                             |   |   | (213 | ) |   |   | 1,136 |   |   |   | 600 |   |
|   Other expense (income)                                   |   |   | 166 |   |   |   | (1,238 | ) |   |   | (1,029 | ) |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss from continuing operations before income taxes                  |   |   | (147,864 | ) |   |   | (47,075 | ) |   |   | (34,577 | ) |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Provision for income taxes                                           |   |   | 587 |   |   |   | 577 |   |   |   | 176 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss from continuing operations                                      |   |   | (148,451 | ) |   |   | (47,652 | ) |   |   | (34,753 | ) |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Discontinued operations                                              |   |   |   |   |   |   |   |   |   |   |   |   |
|   Income from discontinued operations, net of income taxes |   |   | - |   |   |   | - |   |   |   | 3,499 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                             |   |   | (148,451 | ) |   |   | (47,652 | ) |   |   | (31,254 | ) |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Other comprehensive (loss) income                                    |   |   |   |   |   |   |   |   |   |   |   |   |
|   Changes in retiree plans                                 |   |   | (4,812 | ) |   |   | 433 |   |   |   | 6,743 |   |
|   Realized and unrealized (losses) gains on derivatives    |   |   | (2,890 | ) |   |   | 1,373 |   |   |   | 140 |   |
| Total other comprehensive (loss) income                              |   |   | (7,702 | ) |   |   | 1,806 |   |   |   | 6,883 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive loss                                                   |   | $ | (156,153 | ) |   | $ | (45,846 | ) |   | $ | (24,371 | ) |

----

| PAPERWEIGHT DEVELOPMENT CORP. AND SUBSIDIARIES                        |   |
|-----------------------------------------------------------------------|--------|
|                                                                  |   |
| CONSOLIDATED STATEMENTS OF CASH FLOWS                                 |   |
| FOR THE TWELVE MONTHS ENDED                                           |   |
| (dollars in thousands)                                                |   |
|                                                                  |   |   |   |   |   |   |   |   |   |
|                                                                  |   | December 29,  2012 |   |   | December 31,  2011 |   |   | January 1, 2011 |   |
| Cash flows from operating activities:                                 |   |   |   |   |   |   |   |   |   |
| Net loss                                                              |   | $ | (148,451 | ) |   | $ | (47,652 | ) |   | $ | (31,254 | ) |
| Adjustments to reconcile net loss to net cash provided                |   |   |   |   |   |   |   |   |   |   |   |   |
| (used) by operating activities:                                       |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation                                                          |   |   | 98,010 |   |   |   | 46,292 |   |   |   | 48,578 |   |
| Amortization of intangible assets                                     |   |   | 2,286 |   |   |   | 2,324 |   |   |   | 2,908 |   |
| Impaired inventory revaluation                                        |   |   |  11,061 |   |   |   |  - |   |   |   |  - |   |
| Amortization of financing fees                                        |   |   | 2,645 |   |   |   | 3,373 |   |   |   | 4,080 |   |
| Amortization of bond discount                                         |   |   | 1,066 |   |   |   | 958 |   |   |   | 745 |   |
| Employer 401(k) noncash matching contributions                        |   |   | 3,038 |   |   |   | 2,738 |   |   |   | 3,209 |   |
| Foreign exchange (gain) loss                                          |   |   | (227 | ) |   |   | 1,143 |   |   |   | 559 |   |
| Net gain from involuntary conversion of equipment                     |   |   | - |   |   |   | (1,374 | ) |   |   | (638 | ) |
| Noncash gain on foreign currency hedging                              |   |   | (2,382 | ) |   |   | - |   |   |   | - |   |
| Loss on disposals of equipment                                        |   |   | 1,448 |   |   |   | 209 |   |   |   | 419 |   |
| Gain on sale of business                                              |   |   | - |   |   |   | - |   |   |   | (2,560 | ) |
| Accretion of capital lease obligations                                |   |   | 10 |   |   |   | 7 |   |   |   | 33 |   |
| Loss on debt extinguishment                                           |   |   | - |   |   |   | - |   |   |   | 7,010 |   |
| Fox River insurance recovery                                          |   |   | - |   |   |   | (145 | ) |   |   | (9,053 | ) |
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| (Increase)/decrease in assets and increase/(decrease) in liabilities: |   |   |   |   |   |   |   |   |   |   |   |   |
| Accounts receivable                                                   |   |   | (2,857 | ) |   |   | 2,004 |   |   |   | (14,540 | ) |
| Inventories                                                           |   |   | (962 | ) |   |   | 6,107 |   |   |   | (5,872 | ) |
| Other current assets                                                  |   |   | 3,105 |   |   |   | 14,484 |   |   |   | (6,739 | ) |
| Accounts payable and other accrued liabilities                        |   |   | 27,159 |   |   |   | (569 | ) |   |   | (9,273 | ) |
| Accrued pension                                                       |   |   | 12,322 |   |   |   | 37,149 |   |   |   | (11,862 | ) |
| Other, net                                                            |   |   | 16,034 |   |   |   | 1,663 |   |   |   | (5,735 | ) |
| Net cash provided (used) by operating activities                 |   |   | 23,305 |   |   |   | 68,711 |   |   |   | (29,985 | ) |
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash flows from investing activities:                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds from sale of equipment                                       |   |   | 22 |   |   |   | 6 |   |   |   | 208 |   |
| Net change in cash due to sale of Films                               |   |   | - |   |   |   | 2,000 |   |   |   | 56,000 |   |
| Insurance proceeds from involuntary conversion of equipment           |   |   | - |   |   |   | 1,374 |   |   |   | 1,029 |   |
| Additions to property, plant and equipment                            |   |   | (17,143 | ) |   |   | (15,847 | ) |   |   | (17,839 | ) |
| Net cash (used) provided by investing activities                      |   |   | (17,121 | ) |   |   | (12,467 | ) |   |   | 39,398 |   |
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash flows from financing activities:                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Payments of senior secured notes payable                              |   |   | - |   |   |   | - |   |   |   | (211,225 | ) |
| Payments of senior notes payable                                      |   |   | - |   |   |   | (17,491 | ) |   |   | - |   |
| Proceeds from senior secured first lien notes payable                 |   |   | - |   |   |   | - |   |   |   | 299,007 |   |
| Debt acquisition costs                                                |   |   | - |   |   |   | - |   |   |   | (10,847 | ) |
| Payments relating to capital lease obligations                        |   |   | (68 | ) |   |   | (47 | ) |   |   | (721 | ) |
| Proceeds from old revolving line of credit                            |   |   | - |   |   |   | - |   |   |   | 21,350 |   |
| Payments of old revolving line of credit                              |   |   | - |   |   |   | - |   |   |   | (109,575 | ) |
| Proceeds from revolving line of credit                                |   |   | 253,400 |   |   |   | 202,800 |   |   |   | 316,993 |   |
| Payments of revolving line of credit                                  |   |   | (249,700 | ) |   |   | (232,100 | ) |   |   | (287,693 | )  |
| Payments of State of Ohio loans                                       |   |   | (1,256 | ) |   |   | (1,203 | ) |   |   | (1,151 | ) |
| Payments of secured financing                                         |   |   | - |   |   |   | - |   |   |   | (20,905 | ) |
| Proceeds from municipal debt                                          |   |   | 300 |   |   |   | - |   |   |   | - |   |
| Proceeds from issuance of redeemable common stock                     |   |   | 2,884 |   |   |   | 2,875 |   |   |   | 3,561 |   |
| Payments to redeem common stock                                       |   |   | (14,070 | ) |   |   | (12,351 | ) |   |   | (11,811 | ) |
| (Decrease) increase in cash overdraft                                 |   |   | (3,078 | ) |   |   | 4,749 |   |   |   | (2,628 | ) |
| Net cash used by financing activities                                 |   |   | (11,588 | ) |   |   | (52,768 | ) |   |   | (15,645 | ) |
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Effect of foreign exchange rate changes on cash and cash equivalents  |   |   | 14 |   |   |   | (7 | ) |   |   | 41 |   |
| Change in cash and cash equivalents                                   |   |   | (5,390 | ) |   |   | 3,469 |   |   |   | (6,191 | )  |
| Cash and cash equivalents at beginning of period                      |   |   | 7,241 |   |   |   | 3,772 |   |   |   | 9,963 |   |
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash and cash equivalents at end of period                            |   | $ | 1,851 |   |   | $ | 7,241 |   |   | $ | 3,772 |   |
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |

----

| APPLETON PAPERS INC. AND SUBSIDIARIES                                 |   |
|-----------------------------------------------------------------------|--------|
|                                                                  |   |
| CONSOLIDATED STATEMENTS OF CASH FLOWS                                 |   |
| FOR THE TWELVE MONTHS ENDED                                           |   |
| (dollars in thousands)                                                |   |
|                                                                  |   |   |   |   |   |   |   |   |   |
|                                                                  |   | December 29, 2012 |   |   | December 31, 2011 |   |   | January 1, 2011 |   |
| Cash flows from operating activities:                                 |   |   |   |   |   |   |   |   |   |
| Net loss                                                              |   | $ | (148,451 | ) |   | $ | (47,652 | ) |   | $ | (31,254 | ) |
| Adjustments to reconcile net loss to net cash provided                |   |   |   |   |   |   |   |   |   |   |   |   |
| (used) by operating activities:                                       |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation                                                          |   |   | 98,010 |   |   |   | 46,292 |   |   |   | 48,578 |   |
| Amortization of intangible assets                                     |   |   | 2,286 |   |   |   | 2,324 |   |   |   | 2,908 |   |
| Impaired inventory revaluation                                        |   |   |  11,061 |   |   |   |  - |   |   |   |  - |   |
| Amortization of financing fees                                        |   |   | 2,645 |   |   |   | 3,373 |   |   |   | 4,080 |   |
| Amortization of bond discount                                         |   |   | 1,066 |   |   |   | 958 |   |   |   | 745 |   |
| Employer 401(k) noncash matching contributions                        |   |   | 3,038 |   |   |   | 2,738 |   |   |   | 3,209 |   |
| Foreign exchange (gain) loss                                          |   |   | (227 | ) |   |   | 1,143 |   |   |   | 559 |   |
| Net gain from involuntary conversion of equipment                     |   |   | - |   |   |   | (1,374 | ) |   |   | (638 | ) |
| Noncash gain on foreign currency hedging                              |   |   | (2,382 | ) |   |   | - |   |   |   | - |   |
| Loss on disposals of equipment                                        |   |   | 1,448 |   |   |   | 209 |   |   |   | 419 |   |
| Gain on sale of business                                              |   |   | - |   |   |   | - |   |   |   | (2,560 | ) |
| Accretion of capital lease obligations                                |   |   | 10 |   |   |   | 7 |   |   |   | 33 |   |
| Loss on debt extinguishment                                           |   |   | - |   |   |   | - |   |   |   | 7,010 |   |
| Fox River insurance recovery                                          |   |   | - |   |   |   | (145 | ) |   |   | (9,053 | ) |
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| (Increase)/decrease in assets and increase/(decrease) in liabilities: |   |   |   |   |   |   |   |   |   |   |   |   |
| Accounts receivable                                                   |   |   | (2,857 | ) |   |   | 2,004 |   |   |   | (14,540 | ) |
| Inventories                                                           |   |   | (962 | ) |   |   | 6,107 |   |   |   | (5,872 | ) |
| Other current assets                                                  |   |   | 3,105 |   |   |   | 14,484 |   |   |   | (6,739 | ) |
| Accounts payable and other accrued liabilities                        |   |   | 46,159 |   |   |   | 24,851 |   |   |   | (35,793 | ) |
| Accrued pension                                                       |   |   | 12,322 |   |   |   | 37,149 |   |   |   | (11,862 | ) |
| Other, net                                                            |   |   | 13,005 |   |   |   | (1,067 | ) |   |   | (37,535 | ) |
| Net cash provided (used) by operating activities                 |   |   | 39,276 |   |   |   | 91,401 |   |   |   | (88,305 | ) |
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash flows from investing activities:                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds from sale of equipment                                       |   |   | 22 |   |   |   | 6 |   |   |   | 208 |   |
| Net change in cash due to sale of Films                               |   |   | - |   |   |   | 2,000 |   |   |   | 56,000 |   |
| Insurance proceeds from involuntary conversion of equipment           |   |   | - |   |   |   | 1,374 |   |   |   | 1,029 |   |
| Additions to property, plant and equipment                            |   |   | (17,143 | ) |   |   | (15,847 | ) |   |   | (17,839 | ) |
| Net cash (used) provided by investing activities                      |   |   | (17,121 | ) |   |   | (12,467 | ) |   |   | 39,398 |   |
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash flows from financing activities:                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Payments of senior secured notes payable                              |   |   | - |   |   |   | - |   |   |   | (211,225 | ) |
| Payments of senior notes payable                                      |   |   | - |   |   |   | (17,491 | ) |   |   | - |   |
| Proceeds from senior secured first lien notes payable                 |   |   | - |   |   |   | - |   |   |   | 299,007 |   |
| Debt acquisition costs                                                |   |   | - |   |   |   | - |   |   |   | (10,847 | ) |
| Payments relating to capital lease obligations                        |   |   | (68 | ) |   |   | (47 | ) |   |   | (721 | ) |
| Proceeds from old revolving line of credit                            |   |   | - |   |   |   | - |   |   |   | 21,350 |   |
| Payments of old revolving line of credit                              |   |   | - |   |   |   | - |   |   |   | (109,575 | ) |
| Proceeds from revolving line of credit                                |   |   | 253,400 |   |   |   | 202,800 |   |   |   | 316,993 |   |
| Payments of revolving line of credit                                  |   |   | (249,700 | ) |   |   | (232,100 | ) |   |   | (287,693 | ) |
| Payments of State of Ohio loans                                       |   |   | (1,256 | ) |   |   | (1,203 | ) |   |   | (1,151 | ) |
| Payments of secured financing                                         |   |   | - |   |   |   | - |   |   |   | (20,905 | ) |
| Proceeds from municipal debt                                          |   |   | 300 |   |   |   | - |   |   |   | - |   |
| Due from parent                                                       |   |   | (27,157 | ) |   |   | (32,166 | ) |   |   | 50,070 |   |
| (Decrease) increase in cash overdraft                                 |   |   | (3,078 | ) |   |   | 4,749 |   |   |   | (2,628 | ) |
| Net cash (used) provided by financing activities                 |   |   | (27,559 | ) |   |   | (75,458 | ) |   |   | 42,675 |   |
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Effect of foreign exchange rate changes on cash and cash equivalents  |   |   | 14 |   |   |   | (7 | ) |   |   | 41 |   |
| Change in cash and cash equivalents                                   |   |   | (5,390 | ) |   |   | 3,469 |   |   |   | (6,191 | ) |
| Cash and cash equivalents at beginning of period                      |   |   | 7,241 |   |   |   | 3,772 |   |   |   | 9,963 |   |
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash and cash equivalents at end of period                            |   | $ | 1,851 |   |   | $ | 7,241 |   |   | $ | 3,772 |   |
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |

----

| PAPERWEIGHT DEVELOPMENT CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF REDEEMABLE COMMON STOCK, ACCUMULATED DEFICIT AND ACCUMULATED OTHER COMPREHENSIVE INCOMEFOR THE YEARS ENDED (dollars in thousands, except share data) |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                          |
|                                                                                                                                                                                                                                          |   | Redeemable Common Stock |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                          |   | SharesOutstanding |   |   | Amount |   |   | AccumulatedDeficit |   |   | AccumulatedOtherComprehensiveIncome |   |
|                                                                                                                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, January 2, 2010                                                                                                                                                                                                                 |   |   | 10,097,099 |   |   | $ | 122,087 |   |   | $ | (232,996 | ) |   | $ | 4,335 |   |
|                                                                                                                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive loss:                                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                                                                                                                                                                                                      |   |   | - |   |   |   | - |   |   |   | (31,254 | ) |   |   | - |   |
| Other comprehensive income                                                                                                                                                                                                                    |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 6,883 |   |
|                                                                                                                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of redeemable common stock                                                                                                                                                                                                           |   |   | 562,003 |   |   |   | 6,761 |   |   |   | - |   |   |   | - |   |
| Redemption of redeemable common stock                                                                                                                                                                                                         |   |   | (945,890 | ) |   |   | (11,811 | ) |   |   | - |   |   |   | - |   |
| Accretion of redeemable common stock                                                                                                                                                                                                          |   |   | - |   |   |   | (6,992 | ) |   |   | 6,992 |   |   |   | - |   |
|                                                                                                                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, January 1, 2011                                                                                                                                                                                                            |   |   | 9,713,212 |   |   |   | 110,045 |   |   |   | (257,258 | ) |   |   | 11,218 |   |
|                                                                                                                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive loss:                                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                                                                                                                                                                                                      |   |   | - |   |   |   | - |   |   |   | (47,652 | ) |   |   | - |   |
| Other comprehensive income                                                                                                                                                                                                                    |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1,806 |   |
|                                                                                                                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of redeemable common stock                                                                                                                                                                                                           |   |   | 416,217 |   |   |   | 5,605 |   |   |   | - |   |   |   | - |   |
| Redemption of redeemable common stock                                                                                                                                                                                                         |   |   | (916,621 | ) |   |   | (12,351 | ) |   |   | - |   |   |   | - |   |
| Accretion of redeemable common stock                                                                                                                                                                                                          |   |   | - |   |   |   | (5,684 | ) |   |   | 5,684 |   |   |   | - |   |
|                                                                                                                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, December 31, 2011                                                                                                                                                                                                               |   |   | 9,212,808 |   |   |   | 97,615 |   |   |   | (299,226 | ) |   |   | 13,024 |   |
|                                                                                                                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive loss:                                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                                                                                                                                                                                                      |   |   | - |   |   |   | - |   |   |   | (148,451 | ) |   |   | - |   |
| Other comprehensive loss                                                                                                                                                                                                                      |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (7,702 | ) |
|                                                                                                                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of redeemable common stock                                                                                                                                                                                                           |   |   | 378,566 |   |   |   | 5,913 |   |   |   | - |   |   |   | - |   |
| Redemption of redeemable common stock                                                                                                                                                                                                         |   |   | (861,256 | ) |   |   | (14,070 | ) |   |   | - |   |   |   | - |   |
| Accretion of redeemable common stock                                                                                                                                                                                                          |   |   | - |   |   |   | (7,754 | ) |   |   | 7,754 |   |   |   | - |   |
|                                                                                                                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, December 29, 2012                                                                                                                                                                                                          |   |   | 8,730,118 |   |   | $ | 81,704 |   |   | $ | (439,923 | ) |   | $ | 5,322 |   |

----

| APPLETON PAPERS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EQUITYFOR THE YEARS ENDED(dollars in thousands, except share data)  |
|------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                           |   | Common Stock |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                           |   | SharesOutstanding |   |   | Amount |   |            Paid-in Capital |   |   |    Due fromParent |   | AccumulatedDeficit |   |   | AccumulatedOtherComprehensiveIncome |   |
|                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, January 2, 2010                                                                                                                  |   |   | 100 |   |   | $ | 10,500 |   | $ | 623,305 |   |   | $                                      (217,305) |   | $ | (527,422 | ) |   | $ | 4,335 |   |
|                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive loss:                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                                                                                                       |   |   | - |   |   |   | - |   |   | - |   |   | -  |   |   | (31,254 | ) |   |   | - |   |
| Other comprehensive income                                                                                                                     |   |   | - |   |   |   | - |   |   | - |   |   | -  |   |   | - |   |   |   | 6,883 |   |
| Change in due from parent                                                                                                                      |   |   | - |   |   |   | - |   |   | - |   |   | (5,049) |   |   | - |   |   |   | - |   |
|                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, January 1, 2011                                                                                                             |   |   | 100 |   |   |   | 10,500 |   |   | 623,305 |   |   |                                         (222,354) |   |   | (558,676 | ) |   |   | 11,218 |   |
|                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive loss:                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                                                                                                       |   |   | - |   |   |   | - |   |   | - |   |   | -  |   |   | (47,652 | ) |   |   | - |   |
| Other comprehensive income                                                                                                                     |   |   | - |   |   |   | - |   |   | - |   |   | -  |   |   | - |   |   |   | 1,806 |   |
| Change in due from parent                                                                                                                      |   |   | - |   |   |   | - |   |   | - |   |   | (6,746) |   |   | - |   |   |   | - |   |
|                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, December 31, 2011                                                                                                           |   |   | 100 |   |   |   | 10,500 |   |   |  623,305 |   |   |                                         (229,100) |   |   | (606,328 | ) |   |   | 13,024 |   |
|                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive loss:                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                                                                                                       |   |   | - |   |   |   | - |   |   | - |   |   | -  |   |   | (148,451 | ) |   |   | - |   |
|        Other comprehensive loss                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (7,702 | )  |
| Change in due from parent                                                                                                                      |   |   | - |   |   |   | - |   |   | - |   |   | (8,157) |   |   | - |   |   |   | - |   |
|                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, December 29, 2012                                                                                                           |   |   | 100 |   |   | $ | 10,500 |   | $ | 623,305 |   |   | $                                      (237,257) |   | $ | (754,779 | ) |   | $ | 5,322 |   |

----

----

----

----

|                                                      |   | For the Year Ended December 29, 2012 |     |
|-----------------------------------------------------------|--------|--------------------------------------|----------|
|                                                      |   | PreviousMethod                       |     |   | Effect of Change |   |   | AsReported |   |
| Net sales                                                 |   | $                                    | 849,756  |   |   | $ | - |   |   | $ | 849,756 |   |
| Cost of sales                                             |   |                                 | 741,408  |   |   |   | 17,467 |   |   |   | 758,875 |   |
|   Gross profit                                  |   |                                 | 108,348  |   |   |   | (17,467 | ) |   |   | 90,881 |   |
|                                                      |   |                                 |     |   |   |   |   |   |   |   |   |   |
| Selling general and administrative expenses               |   |                                 | 144,916  |   |   |   | 8,045 |   |   |   | 152,961 |   |
| Environmental expense insurance recovery                  |   |                                 | (2,188   | ) |   |   | - |   |   |   | (2,188 | ) |
| Restructuring                                             |   |                                 | 28,589   |   |   |   | - |   |   |   | 28,589 |   |
| Operating loss                                            |   |                                 | (62,969  | ) |   |   | (25,512 | ) |   |   | (88,481 | ) |
|                                                      |   |                                 |     |   |   |   |   |   |   |   |   |   |
| Other expense (income)                                    |   |                                 |     |   |   |   |   |   |   |   |   |   |
|   Interest expense                              |   |                                 | 59,654   |   |   |   | - |   |   |   | 59,654 |   |
|   Interest income                               |   |                                 | (224     | ) |   |   | - |   |   |   | (224 | ) |
|   Other income                                  |   |                                 | (47      | ) |   |   | - |   |   |   | (47 | ) |
| Loss before income taxes                                  |   |                                 | (122,352 | ) |   |   | (25,512 | ) |   |   | (147,864 | ) |
| Provision for income taxes                                |   |                                 | 587      |   |   |   | - |   |   |   | 587 |   |
| Net loss                                                  |   |                                 | (122,939 | ) |   |   | (25,512 | ) |   |   | (148,451 | ) |
|                                                      |   |                                 |     |   |   |   |   |   |   |   |   |   |
| Other comprehensive loss:                                 |   |                                 |     |   |   |   |   |   |   |   |   |   |
|   Changes in retiree plans                      |   |                                 | (29,350  | ) |   |   | 24,538 |   |   |   | (4,812 | ) |
|   Realized and unrealized losses on derivatives |   |                                 | (2,890   | ) |   |   | - |   |   |   | (2,890 | ) |
| Total other comprehensive loss                            |   |                                 | (32,240  | ) |   |   | 24,538 |   |   |   | (7,702 | ) |
| Comprehensive loss                                        |   | $                                    | (155,179 | ) |   | $ | (974 | ) |   | $ | (156,153 | ) |

|                                                     |   | For the Year Ended December 31, 2011 |    |
|----------------------------------------------------------|--------|--------------------------------------|---------|
|                                                     |   | PreviouslyReported                   |    |   | Effect of Change |   |   | Revised |   |
| Net sales                                                |   | $                                    | 857,329 |   |   | $ | - |   |   | $ | 857,329 |   |
| Cost of sales                                            |   |                                 | 687,524 |   |   |   | 31,186 |   |   |   | 718,710 |   |
|   Gross profit                                 |   |                                 | 169,805 |   |   |   | (31,186 | ) |   |   | 138,619 |   |
|                                                     |   |                                 |    |   |   |   |   |   |   |   |   |   |
| Selling general and administrative expenses              |   |                                 | 130,574 |   |   |   | 14,354 |   |   |   | 144,928 |   |
| Litigation settlement, net                               |   |                                 | 3,122   |   |   |   | - |   |   |   | 3,122 |   |
| Operating income (loss)                                  |   |                                 | 36,109  |   |   |   | (45,540 | ) |   |   | (9,431 | ) |
|                                                     |   |                                 |    |   |   |   |   |   |   |   |   |   |
| Other expense (income)                                   |   |                                 |    |   |   |   |   |   |   |   |   |   |
|   Interest expense                             |   |                                 | 61,330  |   |   |   | - |   |   |   | 61,330 |   |
|   Interest income                              |   |                                 | (355    | ) |   |   | - |   |   |   | (355 | ) |
|   Recovery from litigation settlement, net     |   |                                 | (23,229 | ) |   |   | - |   |   |   | (23,229 | ) |
|   Other income                                 |   |                                 | (102    | ) |   |   | - |   |   |   | (102 | ) |
| Loss before income taxes                                 |   |                                 | (1,535  | ) |   |   | (45,540 | ) |   |   | (47,075 | ) |
| Provision for income taxes                               |   |                                 | 577     |   |   |   | - |   |   |   | 577 |   |
| Net loss                                                 |   |                                 | (2,112  | ) |   |   | (45,540 | ) |   |   | (47,652 | ) |
|                                                     |   |                                 |    |   |   |   |   |   |   |   |   |   |
| Other comprehensive (loss) income:                       |   |                                 |    |   |   |   |   |   |   |   |   |   |
|   Changes in retiree plans                     |   |                                 | (46,461 | ) |   |   | 46,894 |   |   |   | 433 |   |
|   Realized and unrealized gains on derivatives |   |                                 | 1,373   |   |   |   | - |   |   |   | 1,373 |   |
| Total other comprehensive (loss) income                  |   |                                 | (45,088 | ) |   |   | 46,894 |   |   |   | 1,806 |   |
| Comprehensive loss                                       |   | $                                    | (47,200 | ) |   | $ | 1,354 |   |   | $ | (45,846 | ) |

----

|                                                                 |   | For the Year Ended January 1, 2011 |    |
|----------------------------------------------------------------------|--------|------------------------------------|---------|
|                                                                 |   | PreviouslyReported                 |    |   | Effect of Change |   |   | Revised |   |
| Net sales                                                            |   | $                                  | 849,884 |   |   | $ | - |   |   | $ | 849,884 |   |
| Cost of sales                                                        |   |                               | 684,488 |   |   |   | (2,260 | ) |   |   | 682,228 |   |
|   Gross profit                                             |   |                               | 165,396 |   |   |   | 2,260 |   |   |   | 167,656 |   |
|                                                                 |   |                               |    |   |   |   |   |   |   |   |   |   |
| Selling general and administrative expenses                          |   |                               | 137,304 |   |   |   | 1,850 |   |   |   | 139,154 |   |
| Environmental expense insurance recovery                             |   |                               | (8,947  | ) |   |   | - |   |   |   | (8,947 | ) |
| Operating income                                                     |   |                               | 37,039  |   |   |   | 410 |   |   |   | 37,449 |   |
|                                                                 |   |                               |    |   |   |   |   |   |   |   |   |   |
| Other expense (income)                                               |   |                               |    |   |   |   |   |   |   |   |   |   |
|   Interest expense                                         |   |                               | 65,772  |   |   |   | - |   |   |   | 65,772 |   |
|   Debt extinguishment expense, net                         |   |                               | 7,010   |   |   |   | - |   |   |   | 7,010 |   |
|   Interest income                                          |   |                               | (327    | ) |   |   | - |   |   |   | (327 | ) |
|   Other income                                             |   |                               | (429    | ) |   |   | - |   |   |   | (429 | ) |
| Loss from continuing operations before income taxes                  |   |                               | (34,987 | ) |   |   | 410 |   |   |   | (34,577 | ) |
| Provision for income taxes                                           |   |                               | 176     |   |   |   | - |   |   |   | 176 |   |
| Loss from continuing operations                                      |   |                               | (35,163 | ) |   |   | 410 |   |   |   | (34,753 | ) |
| Discontinued operations                                              |   |                               |    |   |   |   |   |   |   |   |   |   |
|   Income from discontinued operations, net of income taxes |   |                               | 3,499   |   |   |   | - |   |   |   | 3,499 |   |
| Net loss                                                             |   |                               | (31,664 | ) |   |   | 410 |   |   |   | (31,254 | ) |
|                                                                 |   |                               |    |   |   |   |   |   |   |   |   |   |
| Other comprehensive income:                                          |   |                               |    |   |   |   |   |   |   |   |   |   |
|   Changes in retiree plans                                 |   |                               | 7,306   |   |   |   | (563 | ) |   |   | 6,743 |   |
|   Realized and unrealized gains on derivatives             |   |                               | 140     |   |   |   | - |   |   |   | 140 |   |
| Total other comprehensive income                                     |   |                               | 7,446   |   |   |   | (563 | ) |   |   | 6,883 |   |
| Comprehensive loss                                                   |   | $                                  | (24,218 | ) |   | $ | (153 | ) |   | $ | (24,371 | ) |

|                                          |   | December 29, 2012 |     |
|-----------------------------------------------|--------|-------------------|----------|
|                                          |   | PreviousMethod    |     |   | Effect of Change |   |   | As Reported |   |
| Inventories                                   |   | $                 | 93,973   |   |   | $ | 376 |   |   | $ | 94,349 |   |
|                                          |   |              |     |   |   |   |   |   |   |   |   |   |
| Accumulated deficit (PDC)                     |   |              | (265,378 | ) |   |   | (174,545 | ) |   |   | (439,923 | ) |
| Accumulated deficit (Appleton)                |   |              | (580,234 | ) |   |   | (174,545 | ) |   |   | (754,779 | ) |
|                                          |   |              |     |   |   |   |   |   |   |   |   |   |
| Accumulated other comprehensive (loss) income |   |              | (169,599 | ) |   |   | 174,921 |   |   |   | 5,322 |   |

|                                          |   | December 31, 2011  |                                                    |
|-----------------------------------------------|--------|--------------------|---------------------------------------------------------|
|                                          |   | PreviouslyReported |                                                    |   | Effect of Change |   |   | Revised |   |
| Inventories                                   |   | $                  |         102,527 |   |   | $ | 1,350 |   |   | $ | 103,877 |   |
|                                          |   |               |                                                    |   |   |   |   |   |   |   |   |   |
| Accumulated deficit (PDC)                     |   |               | (150,193                                                | ) |   |   | (149,033 | ) |   |   | (299,226 | ) |
| Accumulated deficit (Appleton)                |   |               | (457,295                                                | ) |   |   | (149,033 | ) |   |   | (606,328 | ) |
|                                          |   |               |                                                    |   |   |   |   |   |   |   |   |   |
| Accumulated other comprehensive (loss) income |   |               | (137,359                                                | ) |   |   | 150,383 |   |   |   | 13,024 |   |

----

|                                                                  |   | For the Year Ended December 29, 2012 |     |
|-----------------------------------------------------------------------|--------|-------------------------------------------|----------|
|                                                                  |   | PreviousMethod                            |     |   | Effect of Change |   |   | As Reported |   |
| Cash flows from operating activities:                                 |   |                                      |     |   |   |   |   |   |   |   |   |   |
|   Net loss                                                  |   | $                                         | (122,939 | ) |   | $ | (25,512 | ) |   | $ | (148,451 | ) |
| (Increase)/decrease in assets and increase/(decrease) in liabilities: |   |                                      |     |   |   |   |   |   |   |   |   |   |
|   Inventories                                               |   |                                      | (1,936   | ) |   |   | 974 |   |   |   | (962 | ) |
|   Accrued pension                                           |   |                                      | (14,788  | ) |   |   | 27,110 |   |   |   | 12,322 |   |
|   Other, net (PDC)                                          |   |                                      | 18,606   |   |   |   | (2,572 | ) |   |   | 16,034 |   |
|   Other, net (Appleton)                                     |   |                                      | 15,577   |   |   |   | (2,572 | ) |   |   | 13,005 |   |

|                                                                  |   | For the Year Ended December 31, 2011 |    |
|-----------------------------------------------------------------------|--------|-------------------------------------------|---------|
|                                                                  |   | PreviouslyReported                        |    |   | Effect of Change |   |   | Revised |   |
| Cash flows from operating activities:                                 |   |                                      |    |   |   |   |   |   |   |   |   |   |
|   Net loss                                                  |   | $                                         | (2,112  | ) |   | $ | (45,540 | ) |   | $ | (47,652 | ) |
| (Increase)/decrease in assets and increase/(decrease) in liabilities: |   |                                      |    |   |   |   |   |   |   |   |   |   |
|   Inventories                                               |   |                                      | 7,463   |   |   |   | (1,356 | )  |   |   | 6,107 |   |
|   Accrued pension                                           |   |                                      | (12,004 | ) |   |   | 49,153 |   |   |   | 37,149 |   |
|   Other, net (PDC)                                          |   |                                      | 3,920   |   |   |   | (2,257 | ) |   |   | 1,663 |   |
|   Other, net (Appleton)                                     |   |                                      | 1,190   |   |   |   | (2,257 | ) |   |   | (1,067 | )  |

|                                                                  |   | For the Year Ended January 1, 2011 |    |
|-----------------------------------------------------------------------|--------|-----------------------------------------|---------|
|                                                                  |   | PreviouslyReported                      |    |   | Effect of Change |   |   | Revised |   |
| Cash flows from operating activities:                                 |   |                                    |    |   |   |   |   |   |   |   |   |   |
|   Net loss                                                  |   | $                                       | (31,664 | ) |   | $ | 410 |   |   | $ | (31,254 | ) |
| (Increase)/decrease in assets and increase/(decrease) in liabilities: |   |                                    |    |   |   |   |   |   |   |   |   |   |
|   Inventories                                               |   |                                    | (6,026  | ) |   |   | 154 |   |   |   | (5,872 | ) |
|   Accrued pension                                           |   |                                    | (7,279  | ) |   |   | (4,583 | )  |   |   | (11,862 | )  |
|   Other, net (PDC)                                          |   |                                    | (9,754  | )  |   |   | 4,019 |   |   |   | (5,735 | )  |
|   Other, net (Appleton)                                     |   |                                    | (41,554 | )  |   |   | 4,019 |   |   |   | (37,535 | )  |

----

|                                                                                             |   | For the Year Ended December 29, 2012 |     |
|--------------------------------------------------------------------------------------------------|--------|--------------------------------------|----------|
|                                                                                             |   | PreviousMethod                       |     |   | Effect of Change |   |   | As Reported |   |
| Accumulated deficit  Net loss                                                          |   | $                                    | (122,939 | ) |   | $ | (25,512 | ) |   | $ | (148,451 | )  |
| Total accumulated deficit (PDC)                                                                  |   |                                 | (265,378 | ) |   |   | (174,545 | ) |   |   | (439,923 | )  |
| Total accumulated deficit (Appleton)                                                             |   |                                 | (580,234 | ) |   |   | (174,545 | ) |   |   | (754,779 | )  |
|  Accumulated other comprehensive (loss) income  Other comprehensive loss          |   |                                 | (32,240  | ) |   |   | 24,538 |   |   |   | (7,702 | )  |
| Total accumulated other comprehensive (loss) income                                              |   |                                 | (169,599 | ) |   |   | 174,921 |   |   |   | 5,322 |   |
|                                                                                             |   |                                 |     |   |   |   |   |   |   |   |   |   |
|                                                                                             |   | For the Year Ended December 31, 2011 |     |
|                                                                                             |   | Previously Reported                  |     |   | Effect of Change |   |   | Revised |   |
| Accumulated deficit  Net loss                                                          |   | $                                    | (2,112   | ) |   | $ | (45,540 | ) |   | $ | (47,652 |  )  |
| Total accumulated deficit (PDC)                                                                  |   |                                 | (150,193 | ) |   |   | (149,033 | ) |   |   | (299,226 | )  |
| Total accumulated deficit (Appleton)                                                             |   |                                 | (457,295 | ) |   |   | (149,033 | ) |   |   | (606,328 | )  |
|  Accumulated other comprehensive (loss) income  Other comprehensive (loss) income |   |                                 | (45,088  | ) |   |   | 46,894 |   |   |   | 1,806 |   |
| Total accumulated other comprehensive (loss) income                                              |   |                                 | (137,359 | ) |   |   | 150,383 |   |   |   | 13,024 |   |

|                                                                          |   | For the Year Ended January 1, 2011 |
|-------------------------------------------------------------------------------|--------|------------------------------------|
|                                                                          |   | Previously Reported                |   |   | Effect of Change |   |   | Revised |
| Accumulated deficitBalance at January 2, 2010 (PDC)                           |   | $                                  | (129,093) |   |   | $ | (103,903 | ) |   | $ | (232,996) |
| Balance at January 2, 2010 (Appleton)                                         |   |                               | (423,519) |   |   |   | (103,903 | ) |   |   | (527,422) |
|   Net loss                                                          |   |                               | (31,664) |   |   |   | 410 |   |   |   | (31,254) |
| Total accumulated deficit (PDC)                                               |   |                               | (153,765) |   |   |   | (103,493 | ) |   |   | (257,258) |
| Total accumulated deficit (Appleton)                                          |   |                               | (455,183) |   |   |   | (103,493 | ) |   |   | (558,676) |
|  Accumulated other comprehensive (loss) incomeBalance at January 2, 2010 |   |                               | (99,717) |   |   |   | 104,052 |   |   |   | 4,335 |
|   Other comprehensive income                                        |   |                               | 7,446 |   |   |   | (563 | ) |   |   | 6,883 |
| Total accumulated other comprehensive (loss) income                           |   |                               | (92,271) |   |   |   | 103,489 |   |   |   | 11,218 |

----

----

----

|                                                  |   |    2012 |        |   | 2011   |   |
|-------------------------------------------------------|--------|------------------------|-------------|--------|--------|--------|
| Changes in retiree plans                              |   | $                      | 6,453  |   |   | $      | 11,265 |   |
|                                                  |   |                   |        |   |   |   |   |   |
| Realized and unrealized (losses) gains on derivatives |   |                   | (1,131)     |   |   |   | 1,759 |   |
|                                                  |   | $                      | 5,322  |   |   | $      | 13,024 |   |

----

|                                    |   | For the Year Ended December 29, 2012 |          |   | Location on Statement of Comprehensive Loss |
|-----------------------------------------|--------|-------------------------------------------|---------------|--------|---------------------------------------------|
|                                    |   |                                      |          |   |                                        |   |   |   |
| Employee termination benefits           |   | $                                         | 25,166        |   |                                        | Restructuring |
| Decommissioning and other expenses |   |                                      | 3,423         |   |                                        | Restructuring |
| Retention incentives and other costs    |   |                                      | 320           |   |                                        | Cost of sales |
| Accelerated depreciation                |   |                                      | 64,742        |   |                                        | Cost of sales |
| Revaluation of inventory                |   |                                      | 11,061        |   |                                        | Cost of sales |
| Loss on disposal of fixed assets        |   |                                      | 1,238         |   |                                        | Cost of sales |
|                                    |   | $                                         |  105,950 |   |                                        |   |   |   |

----

|                                       |   | December 31, 2011 |   |   | 2012 Additions |   |   | 2012        |   |   | December 29, 2012 |   |
|--------------------------------------------|--------|------------------------|--------|--------|----------------|--------|--------|-------------|--------|--------|------------------------|--------|
|                                       |   | Reserve                |   |   | to Reserve     |   |   | Utilization |   |   | Reserve                |   |
|                                       |   |                   |   |   |           |   |   |        |   |   |                   |   |
| Exit costs - equipment decommissioning     |   | $                      | -      |   |           | $      | 3,423  |        |   | $      | (2,658                 | )      |   | $ | 765 |   |
| Employee termination benefits - short-term |   |                   | -      |   |           |   | 7,166  |        |   |   | (6,712                 | )      |   |   | 454 |   |
| Employee termination benefits - long-term  |   |                   | -      |   |           |   | 18,000 |        |   |   | -                      |   |   |   | 18,000 |   |
|                                       |   | $                      | -      |   |           | $      | 28,589 |        |   | $      | (9,370                 | )      |   | $ | 19,219 |   |

----

|                                | For the Year         |
|-------------------------------------|----------------------|
|                                | Ended                |
|                                | January 1, 2011 |
| Net sales                           | $                    | 51,581 |
|                                |                 |   |
| Operating income                    | $                    | 3,513 |
|                                |                 |   |
| Income before income taxes          | $                    | 3,513 |
| Provision for income taxes          |                 | 14 |
| Income from discontinued operations | $                    | 3,499 |

----

|                                                                             |   | As of December  29, 2012 |   |   | As of December  31, 2011 |   |
|----------------------------------------------------------------------------------|--------|-------------------------------|--------|--------|-------------------------------|--------|
|                                                                             |   | Gross Carrying Amount         |   |   | Accumulated Amortization      |   |   | Gross Carrying Amount |   |   | Accumulated Amortization |   |
| Amortizable intangible assets:                                                   |   |                          |   |   |                          |   |   |   |   |   |   |   |
|      Trademarks                                         |   | $                             | 44,665 |   |                          | $      | 26,275 |   |   | $ | 44,665 |   |   | $ | 24,177 |   |
|      Patents                                            |   |                          | 7,808  |   |                          |   | 7,808 |   |   |   | 10,071 |   |   |   | 10,071 |   |
|      Customer relationships                             |   |                          | 5,365  |   |                          |   | 2,781 |   |   |   | 5,365 |   |   |   | 2,593 |   |
|             Subtotal |   |                          | 57,838 |   |                          | $      | 36,864 |   |   |   | 60,101 |   |   | $ | 36,841 |   |
| Unamortizable intangible assets:                                                 |   |                          |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |
|      Trademarks                                         |   |                          | 22,865 |   |                          |   |   |   |   |   | 22,865 |   |   |   |   |   |
|             Total    |   | $                             | 80,703 |   |                          |   |   |   |   | $ | 82,966 |   |   |   |   |   |

|                                        |   | 2012   |   |   | 2011   |   |
|---------------------------------------------|--------|--------|--------|--------|--------|--------|
| Finished goods                              |   | $      | 43,243 |   |   | $      | 43,888 |   |
| Raw materials, work in process and supplies |   |   | 51,106 |   |   |   | 59,989 |   |
|                                        |   | $      | 94,349 |   |   | $      | 103,877 |   |

|                       |   | 2012   |     |   | 2011   |   |
|----------------------------|--------|--------|----------|--------|--------|--------|
| Land and improvements      |   | $      | 9,634    |   |   | $      | 9,279 |   |
| Buildings and improvements |   |   | 134,144  |   |   |   | 133,042 |   |
| Machinery and equipment    |   |   | 663,915  |   |   |   | 657,310 |   |
| Software                   |   |   | 33,643   |   |   |   | 33,349 |   |
| Capital leases             |   |   | 304      |   |   |   | 165 |   |
| Construction in progress   |   |   | 8,631    |   |   |   | 5,505 |   |
|                       |   |   | 850,271  |   |   |   | 838,650 |   |
| Accumulated depreciation   |   |   | (607,006 | )      |   |   | (513,985 | ) |
|                       |   | $      | 243,265  |   |   | $      | 324,665 |   |

----

|                                     |   | 2012   |   |   | 2011   |   |
|------------------------------------------|--------|--------|--------|--------|--------|--------|
| Environmental indemnification receivable |   | $      | 65,000 |   |   | $      | 46,000 |   |
| Environmental expense insurance recovery |   |   | -      |   |   |   | 2,960 |   |
| Other                                    |   |   | 5,620  |   |   |   | 5,764 |   |
|                                     |   | $      | 70,620 |   |   | $      | 54,724 |   |

|                         |   | 2012   |   |   | 2011   |   |
|------------------------------|--------|--------|--------|--------|--------|--------|
| Deferred debt issuance costs |   | $      | 7,736  |   |   | $      | 10,381 |   |
| Other                        |   |   | 6,750  |   |   |   | 5,916 |   |
|                         |   | $      | 14,486 |   |   | $      | 16,297 |   |

|                         |   | 2012   |   |   | 2011   |   |
|------------------------------|--------|--------|--------|--------|--------|--------|
| Deferred debt issuance costs |   | $      | 7,736  |   |   | $      | 10,381 |   |
| Other                        |   |   | 6,738  |   |   |   | 5,904 |   |
|                         |   | $      | 14,474 |   |   | $      | 16,285 |   |

|                                       |   | 2012   |    |   | 2011   |   |
|--------------------------------------------|--------|--------|---------|--------|--------|--------|
| Compensation                               |   | $      | 14,800  |   |   | $      | 9,966 |   |
| Trade discounts                            |   |   | 16,796  |   |   |   | 15,277 |   |
| Workers’ compensation                |   |   | 4,875   |   |   |   | 5,090 |   |
| Accrued insurance                          |   |   | 1,896   |   |   |   | 2,153 |   |
| Other accrued taxes                        |   |   | 1,494   |   |   |   | 1,181 |   |
| Postretirement benefits other than pension |   |   | 3,248   |   |   |   | 3,218 |   |
| Fox River Liabilities                      |   |   | 65,000  |   |   |   | 46,000 |   |
| Litigation settlement                      |   |   | -       |   |   |   | 750 |   |
| Restructuring reserve                      |   |   | 1,219   |   |   |   | - |   |
| Other                                      |   |   | 10,307  |   |   |   | 7,792 |   |
|                                       |   | $      | 119,635 |   |   | $      | 91,427 |   |

----

|                                                                                                                                                |   | December 29, 2012 |    |   | December 31, 2011 |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|---------|--------|------------------------|--------|
| Revolving credit facility at approximately 4.25%                                                                                                    |   | $                      | 3,700   |   |                   | $      | - |   |
| Secured variable rate industrial development bonds, 0.4% average interest rate at December 29, 2012, $2,650 due in 2013 and $6,000 due in 2027 |   |                   | 8,650   |   |                   |   | 8,650 |   |
| State of Ohio assistance loan at 6%, approximately $100 due monthly and final payment due May 2017                                             |   |                   | 5,210   |   |                   |   | 6,185 |   |
| State of Ohio loan at 1% until July 2011, then 3% until May 2019, approximately $30 due monthly and final payment due May 2019                      |   |                   | 2,002   |   |                   |   | 2,283 |   |
| Columbia County, Wisconsin municipal debt due December 2019                                                                                         |   |                   | 300     |   |                   |   | - |   |
| Senior subordinated notes payable at 9.75%, due June 2014                                                                                      |   |                   | 32,195  |   |                   |   | 32,195 |   |
| Senior secured first lien notes payable at 10.5%, due June 2015                                                                                |   |                   | 305,000 |   |                   |   | 305,000 |   |
| Unamortized discount on 10.5% senior secured first lien notes payable, due June 2015                                                                |   |                   | (3,224  | )      |                   |   | (4,290 | ) |
| Second lien notes payable at 11.25%, due December 2015                                                                                         |   |                   | 161,766 |   |                   |   | 161,766 |   |
|                                                                                                                                                |   |                   | 515,599 |   |                   |   | 511,789 |   |
| Less obligations due within one year                                                                                                                |   |                   | (3,975  | )      |                   |   | (1,256 | ) |
|                                                                                                                                                |   | $                      | 511,624 |   |                   | $      | 510,533 |   |

----

----

|       | ObligationsOutstanding atDecember 29, 2012 |    |
|------------|-------------------------------------------------|---------|
| 2013       | $                                               | 3,975   |   |
| 2014       |                                            | 33,594  |   |
| 2015       |                                            | 471,944 |   |
| 2016       |                                            | 1,567   |   |
| 2017       |                                            | 982     |   |
| Thereafter |                                            | 6,761   |   |
|       | $                                               | 518,823 |   |

|                         |   | Operating |   |
|------------------------------|--------|-----------|--------|
|                         |   | Leases    |   |
| 2013                         |   | $         | 4,077  |   |
| 2014                         |   |      | 2,935  |   |
| 2015                         |   |      | 1,491  |   |
| 2016                         |   |      | 202    |   |
| 2017                         |   |      | -      |   |
| Thereafter                   |   |      | 3      |   |
|                         |   |      |   |   |
| Total minimum lease payments |   | $         | 8,708  |   |

----

| Designated as a Hedge                 |   | Balance Sheet Location    |   | December 29, 2012 |   |   | December 31, 2011 |    |
|---------------------------------------|--------|---------------------------|--------|------------------------|--------|--------|------------------------|---------|
| Foreign currency exchange derivatives |   | Other current liabilities |   | $                      | 1,014  |   |                   | $  | - |   |
| Pulp fixed swap                       |   | Other current liabilities |   |                   | -      |   |                   |    | 760 |   |
|                                  |   |                      |   |                   |   |   |                   |    |   |   |
| Not Designated as a Hedge             |   |                      |   |                   |   |   |                   |    |   |   |
| Natural gas fixed swap                |   | Other current liabilities |   |                   | 43     |   |                   |    | 599 |   |
| Pulp fixed swap                       |   | Other current liabilities |   |                   | -      |   |                   |    | 200 |   |

----

| Designated as a Hedge                                               |   | Statement ofComprehensive Loss Location |   |   | December 29, 2012 |   |   | December 31, 2011 |   |   |   January 1, 2011 |   |
|---------------------------------------------------------------------|--------|----------------------------------------------|--------|--------|------------------------|--------|--------|------------------------|--------|--------|-----------------------------|--------|
| Foreign currency exchange derivatives                               |   | Net sales                                    |   |   | $                      | 3,056  |   |                   | $      | (437   | )                           |   | $ | 918 |   |
|                                                                |   |                                         |   |   |                   |   |   |                   |   |   |                        |   |   |   |   |   |
| (Losses) gains recognized in accumulated other comprehensive income |   |                                         |   |   |                   |   | (934   | )                 |   |   | 2,382                       |   |   |   |   386 |   |
|                                                                |   |                                         |   |   |                   |   |   |                   |   |   |                        |   |   |   |   |   |
| Pulp fixed swap                                                     |   | Cost of sales                                |   |   |                   | (1,181 | )      |                   |   | -      |                        |   |   | - |   |
| Pulp fixed swap                                                     |   | Other expense                                |   |   |                   | (166   | )      |                   |   | (137   | )                           |   |   | - |   |
|                                                                |   |                                         |   |   |                   |   |   |                   |   |   |                        |   |   |   |   |   |
| Losses recognized in accumulated other comprehensive income         |   |                                         |   |   |                   |   | (197   | )                      |   |   | (623                        | )      |   |   |  - |   |
|                                                                |   |                                         |   |   |                   |   |   |                   |   |   |                        |   |   |   |   |   |
| Not Designated as a Hedge                                           |   |                                         |   |   |                   |   |   |                   |   |   |                        |   |   |   |   |   |
| Natural gas fixed swap                                              |   | Cost of sales                                |   |   |                   | (271   | )      |                   |   | (986   | )                           |   |   | (88 | ) |
| Pulp fixed swap                                                     |   | Cost of sales                                |   |   |                   | (10    | )      |                   |   | (145   | )                           |   |   | - |   |
| Interest rate swap contract                                         |   | Interest expense                             |   |   |                   | -      |   |                   |   | -      |                        |   |   | 961 |   |

|                                      |   |   | December 29, 2012 |    |   | December 31, 2011 |    |
|-------------------------------------------|--------|--------|------------------------|---------|--------|------------------------|---------|
|                                      |   |   | Carrying               |    |   | Fair                   |    |   | Carrying |   |   | Fair |   |
| Financial Instruments                     |   |   | Amount                 |    |   | Value                  |    |   | Amount |   |   | Value |   |
| Senior subordinated notes payable         |   |   | $                      | 32,195  |   |                   |  $ | 32,356 |   |   | $ | 32,195 |   |   |  $ | 23,341 |   |
| Senior secured first lien notes payable   |   |   |                   | 301,776 |   |                   |    | 319,883 |   |   |   | 300,710 |   |   |   | 303,717 |   |
| Second lien notes payable                 |   |   |                   | 161,766 |   |                   |    | 175,516 |   |   |   | 161,766 |   |   |   | 147,207 |   |
| Revolving credit facility                 |   |   |                   | 3,700   |   |                   |    | 3,700 |   |   |   | - |   |   |   | - |   |
| State of Ohio loans                       |   |   |                   | 7,212   |   |                   |    | 7,212 |   |   |   | 8,468 |   |   |   | 8,530 |   |
| Columbia County, Wisconsin municipal debt |   |   |                   | 300     |   |                   |    | 300 |   |   |   | - |   |   |   | - |   |
| Industrial development bonds              |   |   |                   | 8,650   |   |                   |    | 8,650 |   |   |   | 8,650 |   |   |   | 8,650 |   |
|                                      |   |   | $                      | 515,599 |   |                   | $       | 547,617 |   |   | $ | 511,789 |   |   | $ | 491,445 |   |

----

| Pension Benefits                                                      |   |   | 2012   |     |   | 2011   |   |
|-----------------------------------------------------------------------|--------|--------|--------|----------|--------|--------|--------|
| Change in benefit obligation                                          |   |   |   |     |   |   |   |
|   Benefit obligation at beginning of period                 |   |   | $      | 391,091  |   |   | $      | 349,692 |   |
|   Service cost                                              |   |   |   | 3,907    |   |   |   | 3,995 |   |
|   Interest cost                                             |   |   |   | 19,468   |   |   |   | 19,874 |   |
|   Actuarial loss                                            |   |   |   | 56,008   |   |   |   | 36,271 |   |
|   Benefits and expenses paid                                |   |   |   | (20,052  | )      |   |   | (18,741 | ) |
| Benefit obligation at end of period                                   |   |   | $      | 450,422  |   |   | $      | 391,091 |   |
|                                                                  |   |   |   |     |   |   |   |   |   |
| Change in plan assets                                                 |   |   |   |     |   |   |   |   |   |
|   Fair value at beginning of period                         |   |   | $      | 265,341  |   |   | $      | 260,606 |   |
|   Actual return on plan assets                              |   |   |   | 42,082   |   |   |   | 5,007 |   |
|   Employer contributions                                    |   |   |   | 25,452   |   |   |   | 18,469 |   |
|   Benefits and expenses paid                                     |   |   |   | (20,052  | )      |   |   | (18,741 | ) |
| Fair value at end of period                                           |   |   | $      | 312,823  |   |   | $      | 265,341 |   |
|                                                                  |   |   |   |     |   |   |   |   |   |
| Funded status of plans                                                |   |   |   |     |   |   |   |   |   |
|   Funded status at end of period                            |   |   | $      | (137,599 | )      |   | $      | (125,750 | ) |
|                                                                  |   |   |   |     |   |   |   |   |   |
| Amounts recognized in the consolidated balance sheet consist of: |   |   |   |     |   |   |   |   |   |
|     Accrued benefit liability-current             |   |   | $      | (518     | )      |   | $      | (505 | ) |
|     Accrued benefit liability-noncurrent          |   |   |   | (137,081 | )      |   |   | (125,245 | ) |
| Net amount recognized                                                 |   |   | $      | (137,599 | )      |   | $      | (125,750 | ) |
|                                                                  |   |   |   |     |   |   |   |   |   |
| Key assumptions at end of period (%)                                  |   |   |   |     |   |   |   |   |   |
|   Discount rate                                             |   |   |   | 4.15     |   |   |   | 5.00 |   |

|               | 2012 |                                                  |   | 2011   |   |
|--------------------|------|-------------------------------------------------------|--------|--------|--------|
| Prior service cost | $    |         2,142 |   |   | $      |         2,628 |   |

----

| Prior service cost |   |   | $   486 |   |
|--------------------|--------|--------|------------------------|--------|

|                                       |   | For the           |    |   | For the           |   |    | For the         |   |
|--------------------------------------------|--------|-------------------|---------|--------|-------------------|--------|---------|-----------------|--------|
|                                       |   | Year Ended        |    |   | Year Ended        |   |    | Year Ended      |   |
|                                       |   | December 29, |    |   | December 31, |   |    | January 1, |   |
| Pension Benefits                           |   | 2012              |    |   | 2011              |   |    | 2011            |   |
| Net periodic benefit cost                  |   |              |    |   |              |   |    |            |   |
|   Service cost                   |   | $                 | 3,907   |   |              | $      | 3,995   |            |   | $ | 5,769 |   |
|   Interest cost                  |   |              | 19,468  |   |              |   | 19,874  |            |   |   | 19,728 |   |
|   Expected return on plan assets |   |              | (21,770 | )      |              |   | (21,687 | )               |   |   | (18,413 | ) |
|   Amortization of                |   |              |    |   |              |   |    |            |   |   |   |   |
|     Prior service cost |   |              | 486     |   |              |   | 486     |            |   |   | 550 |   |
|   Mark-to-market adjustment      |   |              | 35,696  |   |              |   | 52,950  |            |   |   | 684 |   |
|   Curtailment gain               |   |              | -       |   |              |   | -       |            |   |   | (4,502 | ) |
| Net periodic benefit cost                  |   | $                 | 37,787  |   |              | $      | 55,618  |            |   | $ | 3,816 |   |
| Key assumptions (%)                        |   |              |    |   |              |   |    |            |   |   |   |   |
|   Discount rate                  |   |              | 5.00    |   |              |   | 5.75    |            |   |   | 6.00 |   |
|   Expected return on plan assets |   |              | 8.00    |   |              |   | 8.25    |            |   |   | 8.25 |   |
|   Rate of compensation increase  |   |              | NA      |   |              |   | NA      |            |   |   | 4.00 |   |

| 2013           |   | $      | 19,379  |   |
|----------------|--------|--------|---------|--------|
| 2014           |   |   | 20,521  |   |
| 2015           |   |   | 21,670  |   |
| 2016           |   |   | 22,756  |   |
| 2017           |   |   | 23,788  |   |
| 2018 thru 2022 |   |   | 133,083 |   |
|           |   | $      | 241,197 |   |

|                                            |   | December 29, 2012 |   |   | December 31, 2011 |   |
|-------------------------------------------------|--------|------------------------|--------|--------|------------------------|--------|
| U.S. Equity                                     |   |                   | 38     | %      |                   |   | 38 | % |
| International Equity                            |   |                   | 15     |   |                   |   | 16 |   |
| Private Equity                                  |   |                   | 2      |   |                   |   | 2 |   |
| Emerging Market Equity                          |   |                   | 10     |   |                   |   | 10 |   |
| Fixed Income                                    |   |                   | 30     |   |                   |   | 29 |   |
| Real Estate                                     |   |                   | 5      |   |                   |   | 5 |   |
|        Total |   |                   | 100    | %      |                   |   | 100 | % |

----

| Total U.S. Equity (including private equity) |   |   | 40 | % |
|----------------------------------------------|--------|--------|----|---|
| Total International Equity                   |   |   | 25 | % |
| Real Estate                                  |   |   | 6  | % |
| Bonds                                        |   |   | 29 | % |

----

|                         |   |   | Fair Value Measurements at December 29, 2012 |   |
|------------------------------|--------|--------|---------------------------------------------------|--------|
|                         |   |   | Quoted Prices                                     |   |   | Significant |   |   | Significant |   |   |   |   |
|                         |   |   | in Active                                         |   |   | Observable |   |   | Unobservable |   |   |   |   |
|                         |   |   | Markets                                           |   |   | Inputs |   |   | Inputs |   |   |   |   |
|                         |   |   | (Level 1)                                         |   |   | (Level 2) |   |   | (Level 3) |   |   | Total |   |
| Asset Category               |   |   |                                              |   |   |   |   |   |   |   |   |   |   |
| Cash and cash equivalents    |   |   | $                                                 | 1,597  |   |   |   |   |   |   |   |   | $ | 1,597 |   |
|                         |   |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Public equity                |   |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |
|   U.S.             | (a)    |   |                                              |   |   |   |   | 119,414 |   |   |   |   |   |   | 119,414 |   |
|   International    | (a)    |   |                                              |   |   |   |   | 48,090 |   |   |   |   |   |   | 48,090 |   |
|   Emerging markets | (b)    |   |                                              |   |   |   |   | 32,883 |   |   |   |   |   |   | 32,883 |   |
|                         |   |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Private equity               | (c)    |   |                                              |   |   |   |   |   |   |   |   | 6,072 |   |   |   | 6,072 |   |
|                         |   |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fixed income                 |   |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Corporate bonds  | (d)    |   |                                              |   |   |   |   | 91,529 |   |   |   |   |   |   |   | 91,529 |   |
|                         |   |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Real estate                  | (e)    |   |                                              |   |   |   |   |   |   |   |   | 13,238 |   |   |   | 13,238 |   |
|                         |   |   | $                                                 | 1,597  |   |   | $ | 291,916 |   |   | $ | 19,310 |   |   | $ | 312,823 |   |

|                         |   |   | Fair Value Measurements at December 31, 2011 |   |
|------------------------------|--------|--------|---------------------------------------------------|--------|
|                         |   |   | Quoted Prices                                     |   |   | Significant |   |   | Significant |   |   |   |   |
|                         |   |   | in Active                                         |   |   | Observable |   |   | Unobservable |   |   |   |   |
|                         |   |   | Markets                                           |   |   | Inputs |   |   | Inputs |   |   |   |   |
|                         |   |   | (Level 1)                                         |   |   | (Level 2) |   |   | (Level 3) |   |   | Total |   |
| Asset Category               |   |   |                                              |   |   |   |   |   |   |   |   |   |   |
| Cash and cash equivalents    |   |   | $                                                 | 683    |   |   |   |   |   |   |   |   | $ | 683 |   |
|                         |   |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Public equity                |   |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |
|   U.S.             | (a)    |   |                                              |   |   |   | 101,468 |   |   |   |   |   |   | 101,468 |   |
|   International    | (a)    |   |                                              |   |   |   | 41,231 |   |   |   |   |   |   | 41,231 |   |
|   Emerging markets | (b)    |   |                                              |   |   |   | 27,561 |   |   |   |   |   |   | 27,561 |   |
|                         |   |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Private equity               | (c)    |   |                                              |   |   |   |   |   |   |   | 6,475 |   |   |   | 6,475 |   |
|                         |   |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fixed income                 |   |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Government       | (d)    |   |                                              |   |   |   | 474 |   |   |   |   |   |   |   | 474 |   |
|   Corporate bonds  | (d)    |   |                                              |   |   |   | 75,138 |   |   |   |   |   |   |   | 75,138 |   |
|                         |   |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Real estate                  | (e)    |   |                                              |   |   |   |   |   |   |   |   | 12,311 |   |   |   | 12,311 |   |
|                         |   |   | $                                                 | 683    |   |   | $ | 245,872 |   |   | $ | 18,786 |   |   | $ | 265,341 |   |

----

----

|                            |   | Changes in Fair Value UsingSignificant Unobservable Inputs (Level 3) |   |
|---------------------------------|--------|----------------------------------------------------------------------|--------|
|                            |   | Private                                                              |   |   | Real |   |   |   |   |
|                            |   | Equities                                                             |   |   | Estate |   |   | Total |   |
| Balance, January 1, 2011        |   | $                                                                    | 7,062  |   |   | $ | 13,748 |   |   | $ | 20,810 |   |
|                            |   |                                                                 |   |   |   |   |   |   |   |   |   |   |
| Realized gains/(losses)         |   |                                                                 | 799    |   |   |   | (919 | ) |   |   | (120) |   |
| Unrealized gains                |   |                                                                 | 14     |   |   |   | 1,560 |   |   |   | 1,574 |   |
| Return of capital               |   |                                                                 | (1,464 | ) |   |   | (2,905 | ) |   |   | (4,369 | ) |
| Income                          |   |                                                                 | 64     |   |   |   | 827 |   |   |   | 891 |   |
| Balance, December 31, 2011 |   |                                                                 | 6,475  |   |   |   | 12,311 |   |   |   | 18,786 |   |
| Realized gains/(losses)         |   |                                                                 | 499    |   |   |   | (137 | ) |   |   | 362 |   |
| Unrealized (losses) gains       |   |                                                                 | (85    | ) |   |   | 716 |   |   |   | 631 |   |
| Return of capital               |   |                                                                 | (913   | ) |   |   | (404 | ) |   |   | (1,317 | ) |
| Income                          |   |                                                                 | 96     |   |   |   | 752 |   |   |   | 848 |   |
| Balance, December 29, 2012 |   | $                                                                    | 6,072  |   |   | $ | 13,238 |   |   | $ | 19,310 |   |

----

| Other Postretirement Benefits                                    |   |   | 2012   |    |    | 2011   |   |
|------------------------------------------------------------------|--------|--------|--------|---------|---------|--------|--------|
| Change in benefit obligation                                     |   |   |   |    |    |   |   |
|   Benefit obligation at beginning of period            |   |   | $      | 44,829  |    |   | $      | 48,891 |   |
|   Service cost                                         |   |   |   | 374     |    |   |   | 498 |   |
|   Interest cost                                        |   |   |   | 1,879   |    |   |   | 2,511 |   |
|   Plan amendments                                      |   |   |   | (1,026  | )       |   |   | (2,616 | ) |
|   Actuarial gain                                       |   |   |   | (2,130  | )  |   |   | (1,867 | ) |
|   Benefits and expenses paid                           |   |   |   | (2,238  | )       |   |   | (2,588 | ) |
| Benefit obligation at end of period                              |   |   | $      | 41,688  |    |   | $      | 44,829 |   |
|                                                             |   |   |   |    |    |   |   |   |   |
| Funded status of plans                                           |   |   |   |    |    |   |   |   |   |
|   Funded status at end of period                       |   |   | $      | (41,688 | )       |   | $      | (44,829 | ) |
|                                                             |   |   |   |    |    |   |   |   |   |
| Amounts recognized in the consolidated balance sheet consist of: |   |   |   |    |    |   |   |   |   |
|   Accrued benefit liability-current                    |   |   | $      | (3,248  | )       |   | $      | (3,218 | ) |
|   Accrued benefit liability-noncurrent                 |   |   |   | (38,440 | )       |   |   | (41,611 | ) |
| Net amount recognized                                            |   |   | $      | (41,688 | )       |   | $      | (44,829 | ) |
|                                                             |   |   |   |    |    |   |   |   |   |
| Key assumptions at end of period                                 |   |   |   |    |    |   |   |   |   |
|   Discount rate                                        |   |   |   | 3.71    | %       |   |   | 4.64 | % |
|   Valuation year medical trend                         |   |   |   | 7.00    | %       |   |   | 7.50 | % |
|   Ultimate medical trend                               |   |   |   | 5.00    | %       |   |   | 5.00 | % |
|   Year ultimate medical trend reached                  |   |   | 2016   |    |    | 2016   |   |

----

|                 |   | 2012 |                                            |   | 2011   |   |
|----------------------|--------|------|-------------------------------------------------|--------|--------|--------|
| Prior service credit |   | $    |        8,595 |   |   | $      |     13,894 |   |

| Amortization of prior service credit | $ |    2,075          |
|--------------------------------------|---|---------------------------------------------------------------------|

----

| Other Postretirement Benefits                    |   | For theYear EndedDecember 29, 2012 |   |   | For theYear EndedDecember 31, 2011 |   |   | For theYear EndedJanuary 1, 2011 |   |
|--------------------------------------------------|--------|----------------------------------------------|--------|--------|----------------------------------------------|--------|--------|--------------------------------------------|--------|
| Net periodic benefit (gain) cost                 |   |                                         |   |   |                                         |   |   |                                       |   |
|   Service cost                         |   | $                                            | 374    |   |                                         | $      | 498    |                                       |   | $ | 741 |   |
|   Interest cost                        |   |                                         | 1,879  |   |                                         |   | 2,511  |                                       |   |   | 2,970 |   |
|   Amortization of prior service credit |   |                                         | (2,599 | )      |                                         |   | (2,668 | )                                          |   |   | (2,151 | ) |
|   Mark-to-market adjustment            |   |                                         | (2,130 | )      |                                         |   | (1,867 | )                                          |   |   | 4,132 |   |
|   Curtailment gain                     |   |                                         | (3,726 | )      |                                         |   | -      |                                       |   |   | (1,450 | ) |
|                                             |   |                                         |   |   |                                         |   |   |                                       |   |   |   |   |
| Net periodic benefit (gain) cost                 |   | $                                            | (6,202 | )      |                                         | $      | (1,526 | )                                          |   | $ | 4,242 |   |

|                                            |   | For theYear EndedDecember 29, 2012 |   |   | For theYear EndedDecember 31, 2011 |   |   | For theYear EndedJanuary 1, 2011 |   |
|-------------------------------------------------|--------|----------------------------------------------|--------|--------|----------------------------------------------|--------|--------|--------------------------------------------|--------|
|                                            |   |                                         |   |   |                                         |   |   |                                       |   |
|   Discount rate                       |   |                                         | 4.64   | %      |                                         |   | 5.47   | %                                          |   |   | 5.70 | % |
|   Valuation year medical trend        |   |                                         | 7.50   | %      |                                         |   | 8.00   | %                                          |   |   | 8.50 | % |
|   Ultimate medical trend              |   |                                         | 5.00   | %      |                                         |   | 5.00   | %                                          |   |   | 5.00 | % |
|   Year ultimate medical trend reached |   | 2017                                         |   |   | 2017                                         |   |   | 2017                                       |   |

|                                          |   | 1% Increase |   |   | 1% Decrease |   |
|-----------------------------------------------|--------|-------------|--------|--------|-------------|--------|
| Aggregate impact on service and interest cost |   | $           | 37     |   |        | $      | (35 | ) |
| Effect on accumulated plan benefit obligation |   |        | 831    |   |        |   | (769 | ) |

| 2013           |   | $      | 3,248  |   |
|----------------|--------|--------|--------|--------|
| 2014           |   |   | 3,200  |   |
| 2015           |   |   | 3,226  |   |
| 2016           |   |   | 3,256  |   |
| 2017           |   |   | 3,264  |   |
| 2018 thru 2022 |   |   | 15,645 |   |
|           |   | $      | 31,839 |   |

----

----

|                              |   | WeightedAverage GrantUnit Price |   |   | GrantUnits |   |                                        | WeightedAverageRemainingContractualLife (Years) |   |   | AggregateIntrinsic Value(dollars inthousands) |   |
|-----------------------------------|--------|---------------------------------|--------|--------|------------|--------|---------------------------------------------|-------------------------------------------------|--------|--------|-----------------------------------------------|--------|
| Outstanding, January 2, 2010 |   | $                               | 27.72  |   |       |   |    1,545,340                 |                                            |   |   |                                          |   |   |   |   |   |
|   Exercised             |   |                            | 10.00  |   |       |   | (2,100                                      | )                                               |   |   |                                          |   |   |   |   |   |
|   Forfeited or expired  |   |                            | 27.91  |   |       |   | (144,467                                    | )                                               |   |   |                                          |   |   |   |   |   |
| Outstanding, January 1, 2011 |   | $                               | 27.73  |   |       |   |    1,398,773                 |                                            |   |   | 6.3                                           |   |   | $ | 16 |   |
| Exercisable, January 1, 2011 |   | $                               | 30.49  |   |       |   |       976,440 |                                            |   |   | 5.5                                           |   |   | $ | 16 |   |

| Outstanding, January 1, 2011   |   | $      | 27.73 |   |   |   |  1,398,773                                  |   |   |   |   |   |   |   |   |
|-------------------------------------|--------|--------|-------|--------|--------|--------|--------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|
|   Granted                 |   |   | 12.87 |   |   |   |     770,500                  |   |   |   |   |   |   |   |   |
|   Exercised               |   |   | 10.00 |   |   |   |        (5,540 | )      |   |   |   |   |   |   |   |
|   Forfeited or expired    |   |   | 24.14 |   |   |   | (172,666                                         | )      |   |   |   |   |   |   |   |
| Outstanding, December 31, 2011 |   | $      | 22.34 |   |   |   |  1,991,067                                  |   |   |   | 6.6    |   | $      | -      |   |
| Exercisable, December 31, 2011 |   | $      | 27.87 |   |   |   |  1,251,067                                  |   |   |   | 5.3    |   | $      | -      |   |

| Outstanding, December 31, 2011 |   | $      | 22.34 |   |   |   |   1,991,067                 |   |   |   |   |   |   |   |
|-------------------------------------|--------|--------|-------|--------|--------|--------|---------------------------------------|--------|--------|--------|--------|--------|--------|--------|
|   Granted                 |   |   | 15.02 |   |   |   |      283,000 |   |   |   |   |   |   |   |
|   Forfeited or expired    |   |   | 20.12 |   |   |   | (251,617                              | )      |   |   |   |   |   |   |
| Outstanding, December 29, 2012 |   | $      | 21.59 |   |   |   |   2,022,450                 |   |   |   | 6.1    |   | $      | -      |
| Exercisable, December 29,2012  |   | $      | 27.77 |   |   |   |   1,145,950                 |   |   |   | 4.4    |   | $      | -      |

----

|                                 |   | WeightedAverage GrantUnit Price |   |   | GrantUnits |   |    | Weighted AverageRemainingContractualLife (Years) |   |   | AggregateIntrinsic Value(dollars inthousands) |   |
|--------------------------------------|--------|---------------------------------|--------|--------|------------|--------|---------|--------------------------------------------------|--------|--------|-----------------------------------------------|--------|
| Outstanding, January 2, 2010    |   | $                          | -      |   |       |   | -       |                                             |   |   |                                          |   |   |   |   |   |
|   Granted                  |   |                            | 13.25  |   |       |   | 213,000 |                                             |   |   |                                          |   |   |   |   |   |
|   Forfeited or expired     |   |                            | 13.09  |   |       |   | (7,500  | )                                                |   |   |                                          |   |   |   |   |   |
| Outstanding, January 1, 2011    |   | $                          | 13.26  |   |       |   | 205,500 |                                             |   |   | 2.0                                           |   |   | $ | (86 | ) |
|                                 |   |                            |   |   |       |   |    |                                             |   |   |                                          |   |   |   |   |   |
| Outstanding, January 1, 2011    |   | $                          | 13.26  |   |       |   | 205,500 |                                             |   |   |                                          |   |   |   |   |   |
|   Forfeited or expired     |   |                            | 13.32  |   |       |   | (10,500 | )                                                |   |   |                                          |   |   |   |   |   |
| Outstanding, December 31, 2011  |   | $                          | 13.25  |   |       |   | 195,000 |                                             |   |   | 1.0                                           |   |   | $ |    343 |   |
|                                 |   |                            |   |   |       |   |    |                                             |   |   |                                          |   |   |   |   |   |
|                                 |   |                            |   |   |       |   |    |                                             |   |   |                                          |   |   |   |   |   |
| Outstanding, December 31, 2011  |   | $                          | 13.25  |   |       |   | 195,000 |                                             |   |   |                                          |   |   |   |   |   |
|   Granted             |   |                            | 15.02  |   |       |   | 116,500 |                                             |   |   |                                          |   |   |   |   |   |
|   Forfeited or expired     |   |                            | 13.63  |   |       |   | (42,500 | )                                                |   |   |                                          |   |   |   |   |   |
| Outstanding, December 29, 2012  |   | $                          | 13.96  |   |       |   | 269,000 |                                             |   |   | 0.8                                           |   |   | $ | 2,834 |   |
| Exercisable, January 2, 2013    |   | $                          | 13.26  |   |       |   | 160,000 |                                             |   |   | -                                             |   |   | $ | 2,834 |   |

----

----

| •   | As of December 31, 2012, NCR has recorded an estimated liability of $115 million representing its portion of defense and liability costs with respect to the Lower Fox River; |
|---------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| •   | Technical analyses contending that discharges from NCR’s former assets represent 8% to 10% of the total PCBs discharged by the PRPs; |
|---------------------|--------------------------------------------------------------------------------------------------------------------------------------------|

| •   | Appleton’s and BAT’s joint and several responsibility for over half of the claims asserted against NCR and Appleton, based on the Arbitration and the Dispute Resolution; |
|---------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| •   | Based on legal analyses and ongoing reviews of publicly-available financial information, Appleton believes that other PRPs will be required, and have adequate financial resources, to pay their respective shares of the remediation and NRD claims for the Lower Fox River; and |
|---------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| •   | legal fees and other expenses. |
|---------------------|--------------------------------|

----

----

|                                 |   | For theYear EndedDecember 29, 2012 |   |   | For theYear EndedDecember 31, 2011 |   |   | For theYear EndedJanuary 1, 2011 |   |
|--------------------------------------|--------|----------------------------------------------|--------|--------|----------------------------------------------|--------|--------|--------------------------------------------|--------|
| Cash paid during the period for:     |   |                                         |   |   |                                         |   |   |                                       |   |
| Interest                             |   | $                                            | 55,904 |   |                                         | $      | 57,377 |                                       |   | $ | 63,143 |   |
| Income taxes                         |   |                                         | 377    |   |                                         |   | 442    |                                       |   |   | 387 |   |
|                                 |   |                                         |   |   |                                         |   |   |                                       |   |   |   |   |
| Cash received during the period for: |   |                                         |   |   |                                         |   |   |                                       |   |   |   |   |
| Income tax refunds                   |   | $                                            | 644    |   |                                         | $      | 19     |                                       |   | $ | 1 |   |

----

----

|                    |   | For the ThreeMonths EndedApril 1, 2012 |    |    | For the ThreeMonths EndedJuly 1, 2012 |   |                                                                | For the ThreeMonths EndedSeptember 30, 2012 |   | For the ThreeMonths EndedDecember 29, 2012 |    | For the YearEndedDecember 29, 2012 |
|-------------------------|--------|---------------------------------------------|---------|---------|--------------------------------------------|--------|---------------------------------------------------------------------|---------------------------------------------|--------|-------------------------------------------------|---------|-----------------------------------------|
| Net sales               |   | $                                           | 219,630 |    |                                       | $      |       213,901                         |                                        |   | $                                               | 210,744 |                                    | $ | 205,481 |   | $ |                849,756  |
| Gross profit            |   |                                        | 9,455   |    |                                       |   |         12,644              |                                        |   |                                            | 44,788  |                                    |   | 23,994 |   |   |                  90,881  |
| Operating (loss) income |   |                                        | (49,981 | )  |                                       |   |           (30,568 | )                                      |   |                                            | 14,542  |                                    |   | (22,474 | ) |   |                 (88,481) |
| Net (loss) income       |   | $                                           | (64,886 | )  |                                       | $      | (46,950                                                             | )                                      |   | $                                          | 516     |                                    | $ | (37,131 | ) | $ |  (148,451) |

|                    |   | For the ThreeMonths EndedApril 3, 2011 |    |    | For the ThreeMonths EndedJuly 3, 2011 |   |                                                               | For the ThreeMonths EndedOctober 2, 2011 |   |    | For the ThreeMonths EndedDecember 31, 2011                                                         |   | For the YearEndedDecember 31, 2011 |
|-------------------------|--------|---------------------------------------------|---------|---------|--------------------------------------------|--------|--------------------------------------------------------------------|-----------------------------------------------|--------|---------|---------------------------------------------------------------------------------------------------------|--------|-----------------------------------------|
| Net sales               |   | $                                           | 218,015 |    |                                       | $      |       216,586                        |                                          |   | $       |               217,104                  |   |                                    | $ | 205,624 |   | $ |                857,329    |
| Gross profit            |   |                                        | 47,323  |    |                                       |   |         43,508             |                                          |   |    |                44,756             |   |                                    |   | 3,032 |   |   |                138,619    |
| Operating income (loss) |   |                                        | 10,680  |    |                                       |   |           11,728 |                                          |   |    |                12,045                       |   |                                    |   | (43,884 | ) |   |           (9,431)   |
| Net (loss) income       |   | $                                           | (4,815  | )  |                                       | $      | (2,289                                                             | )                                        |   | $  |                  18,872 |   |                                    | $ | (59,420 | ) | $ |  (47,652)   |

----

|   | Gross profit was impacted as follows, increase/(decrease) |
|--------|-----------------------------------------------------------|

|   | 2012: Q1 - $(0.6) million; Q2 - $1.5 million; Q3 - $2.0 million                     |
|--------|-------------------------------------------------------------------------------------|
|   |                                                                                |
|   | 2011: Q1 - $0.5 million; Q2 - $1.1 million; Q3 - $0.8 million; Q4 - $(33.6) million |
|   |                                                                                |   |
|   | Operating (loss) income was impacted as follows, increase/(decrease)                |   |

|   | 2012: Q1 - $(0.2) million; Q2 - $1.9 million; Q3 - $2.6 million                     |
|--------|-------------------------------------------------------------------------------------|
|   |                                                                                |
|   | 2011: Q1 - $0.4 million; Q2 - $1.0 million; Q3 - $0.8 million; Q4 - $(47.8) million |
|   |                                                                                |   |
|   | Net (loss) income was impacted as follows, increase/(decrease)                      |   |

|   | 2012: Q1 - $(0.2) million; Q2 - $1.9 million; Q3 - $2.6 million                          |
|--------|------------------------------------------------------------------------------------------|
|   |                                                                                     |
|   | 2011: Q1 - $0.4 million; Q2 - $1.0 million; Q3 - $0.8 million; Q4 - $(47.8) million |

----

|                          |   | For the Year EndedDecember 29, 2012 |          |   | For the Year EndedDecember 31, 2011 |   |          | For the Year EndedJanuary 1, 2011 |   |
|-------------------------------|--------|-----------------------------------------------|---------------|--------|-----------------------------------------------|--------|---------------|---------------------------------------------|--------|
| Net sales                     |   |                                          |          |   |                                          |   |          |                                        |   |
| Carbonless papers             |   | $                                             | 406,845       |   |                                          | $      | 453,007       |                                        |   | $ | 479,058 |   |
| Thermal papers                |   |                                          | 411,699       |   |                                          |   | 370,832       |                                        |   |   | 341,776 |   |
|                          |   |                                          | 818,544       |   |                                          |   | 823,839       |                                        |   |   | 820,834 |   |
|  Encapsys                |   |                                          |   50,969 |   |                                          |   |   54,733 |                                        |   |   |   52,250 |   |
| Intersegment (A)              |   |                                          | (19,757       | )      |                                          |   | (21,243       | )                                           |   |   | (23,200 | ) |
| Total                         |   | $                                             | 849,756       |   |                                          | $      | 857,329       |                                        |   | $ | 849,884 |   |
|  Operating (loss) income |   |                                          |          |   |                                          |   |          |                                        |   |   |   |   |
| Carbonless papers             |   | $                                             | (42,172       | )      |                                          | $      | (4,215        | )                                           |   | $ | 30,492 |   |
| Thermal papers                |   |                                          | (34,229       | )      |                                          |   | 555           |                                        |   |   | (1,787 | ) |
|                          |   |                                          | (76,401       | )      |                                          |   | (3,660        | )                                           |   |   | 28,705 |   |
|                          |   |                                          |          |   |                                          |   |          |                                        |   |   |   |   |
| Encapsys                      |   |                                          | 10,491        |   |                                          |   | 10,805        |                                        |   |   | 10,345 |   |
| Unallocated corporate charges |   |                                          | (19,632       | )      |                                          |   | (13,296       | )                                           |   |   | 1,944 |   |
| Intersegment (A)              |   |                                          | (2,939        | )      |                                          |   | (3,280        | )                                           |   |   | (3,545 | ) |
| Total                         |   | $                                             | (88,481       | )      |                                          | $      | (9,431        | )                                           |   | $ | 37,449 |   |
|                          |   |                                          |          |   |                                          |   |          |                                        |   |   |   |   |
| Depreciation and amortization |   |                                          |          |   |                                          |   |          |                                        |   |   |   |   |
| Carbonless papers             |   | $                                             | 54,473        |   |                                          | $      | 26,114        |                                        |   | $ | 27,377 |   |
| Thermal papers                |   |                                          | 42,946        |   |                                          |   | 18,454        |                                        |   |   | 19,702 |   |
|                          |   |                                          | 97,419        |   |                                          |   | 44,568        |                                        |   |   | 47,079 |   |
|                          |   |                                          |          |   |                                          |   |          |                                        |   |   |   |   |
| Encapsys                      |   |                                          | 2,816         |   |                                          |   | 3,898         |                                        |   |   | 2,455 |   |
| Unallocated corporate charges |   |                                          | 61            |   |                                          |   | 150           |                                        |   |   | 246 |   |
| Total                         |   | $                                             | 100,296       |   |                                          | $      | 48,616        |                                        |   | $ | 49,780 |   |

| (A)   | Intersegment represents the portion of the Encapsys segment financial results relating to encapsulated products provided internally for the production of carbonless papers. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|                                                                                                                                                                                           |   | ParentGuarantor |     |   | Issuer |   |     | SubsidiaryGuarantors |   |   | Non-Guarantor Subsidiary |   |   | Eliminations |    |   | Consolidated |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------|----------|--------|--------|--------|----------|----------------------|--------|--------|-------------------------------|--------|--------|--------------|---------|--------|--------------|--------|
|                                                                                                                                                                                           |   |            |     |   |   |   |     |                 |   |   |                          |   |   |         |    |   |         |   |
| ASSETS                                                                                                                                                                                         |   |            |     |   |   |   |     |                 |   |   |                          |   |   |         |    |   |         |   |
| Current assets                                                                                                                                                                                 |   |            |     |   |   |   |     |                 |   |   |                          |   |   |         |    |   |         |   |
|    Cash and cash equivalents                                                                                                                                                         |   | $               | -        |   |   | $      | 1,593    |                 |   | $      | -                             |   |   | $            | 258     |   |         | $      | - |   |   | $ | 1,851 |   |
|    Accounts receivable, net                                                                                                                                                          |   |            | -        |   |   |   | 88,111   |                 |   |   | -                             |   |   |         | 4,569   |   |         |   | - |   |   |   | 92,680 |   |
|    Inventories                                                                                                                                                                       |   |            | -        |   |   |   | 92,939   |                 |   |   | -                             |   |   |         | 1,410   |   |         |   | - |   |   |   | 94,349 |   |
|    Due from parent                                                                                                                                                                   |   |            | -        |   |   |   | 65,000   |                 |   |   | -                             |   |   |         | -       |   |         |   | (65,000 | ) |   |   | - |   |
|    Other current assets                                                                                                                                                         |   |            | 65,000   |   |   |   | 5,570    |                 |   |   | -                             |   |   |         | 50      |   |         |   | - |   |   |   | 70,620 |   |
|       Total current assets                                                                                                                                       |   |            | 65,000   |   |   |   | 253,213  |                 |   |   | -                             |   |   |         | 6,287   |   |         |   | (65,000 | ) |   |   | 259,500 |   |
|                                                                                                                                                                                           |   |            |     |   |   |   |     |                 |   |   |                          |   |   |         |    |   |         |   |   |   |   |   |   |   |
|    Property, plant and equipment, net                                                                                                                                                |   |            | -        |   |   |   | 243,254  |                 |   |   | -                             |   |   |         | 11      |   |         |   | - |   |   |   | 243,265 |   |
|    Investment in subsidiaries                                                                                                                                                        |   |            | (352,909 | )      |   |   | 14,216   |                 |   |   | -                             |   |   |         | -       |   |         |   | 338,693 |   |   |   | - |   |
|    Other assets                                                                                                                                                                 |   |            | 12       |   |   |   | 58,298   |                 |   |   | -                             |   |   |         | 15      |   |         |   | - |   |   |   | 58,325 |   |
|        Total assets                                                                                                                                              |   | $               | (287,897 | )      |   | $      | 568,981  |                 |   | $      | -                             |   |   | $            | 6,313   |   |         | $      | 273,693 |   |   | $ | 561,090 |   |
|                                                                                                                                                                                           |   |            |     |   |   |   |     |                 |   |   |                          |   |   |         |    |   |         |   |   |   |   |   |   |   |
| LIABILITIES, REDEEMABLE COMMON STOCK, COMMON STOCK, PAID-IN CAPITAL, DUE FROM PARENT, ACCUMULATED DEFICIT AND ACCUMULATED OTHER COMPREHENSIVE INCOME                                           |   |            |     |   |   |   |     |                 |   |   |                          |   |   |         |    |   |         |   |   |   |   |
| Current liabilities                                                                                                                                                                            |   |            |     |   |   |   |     |                 |   |   |                          |   |   |         |    |   |         |   |   |   |   |   |   |   |
|    Current portion of long-term debt                                                                                                                                                 |   | $               | -        |   |   | $      | 3,975    |                 |   | $      | -                             |   |   | $            | -       |   |         | $      | - |   |   | $ | 3,975 |   |
|    Accounts payable                                                                                                                                                                  |   |            | -        |   |   |   | 68,574   |                 |   |   | -                             |   |   |         | 26      |   |         |   | - |   |   |   | 68,600 |    |
|    Due to (from) parent and affiliated companies                                                                                                                                     |   |            | 65,000   |   |   |   | 10,799   |                 |   |   | -                             |   |   |         | (10,799 | )      |         |   | (65,000 |  ) |   |   | - |   |
|    Other accrued liabilities                                                                                                                                                         |   |            | -        |   |   |   | 119,690  |                 |   |   | -                             |   |   |         | 2,412   |   |         |   | - |   |   |   | 122,102 |   |
|        Total current liabilities                                                                                                                                 |   |            | 65,000   |   |   |   | 203,038  |                 |   |   | -                             |   |   |         | (8,361  | )      |         |   | (65,000 | ) |   |   | 194,677 |   |
|                                                                                                                                                                                           |   |            |     |   |   |   |     |                 |   |   |                          |   |   |         |    |   |         |   |   |   |   |   |   |   |
| Long-term debt                                                                                                                                                                                 |   |            | -        |   |   |   | 511,624  |                 |   |   | -                             |   |   |         | -       |   |         |   | - |   |   |   | 511,624 |   |
| Other long-term liabilities                                                                                                                                                                    |   |            | -        |   |   |   | 207,228  |                 |   |   | -                             |   |   |         | 458     |   |         |   | - |   |   |   | 207,686 |   |
| Redeemable common stock, common stock, paid-in capital, due from parent, accumulated deficit and accumulated other comprehensive income                                                        |   |            | (352,897 | )      |   |   | (352,909 | )                    |   |   | -                             |   |   |         | 14,216  |   |         |   | 338,693 |   |   |   | (352,897 | ) |
|                                                                                                                                                                                           |   |            |     |   |   |   |     |                 |   |   |                          |   |   |         |    |   |         |   |   |   |   |   |   |   |
|       Total liabilities, redeemable common stock, common stock, paid-in capital, due from parent, accumulated deficit and accumulated other comprehensive income |   | $               | (287,897 | )      |   | $      | 568,981  |                 |   | $      | -                             |   |   | $            | 6,313   |   |         | $      | 273,693 |   |   | $ | 561,090 |   |

----

| PAPERWEIGHT DEVELOPMENT CORP. AND SUBSIDIARIES                                                                                                                                                 |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| AND APPLETON PAPERS INC. AND SUBSIDIARIES                                                                                                                                                      |   |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)                                                                                                                                       |   |
|                                                                                                                                                                                           |   |
| CONDENSED CONSOLIDATING BALANCE SHEET                                                                                                                                                          |   |
|                                                                                                                                                                                           |   |
| DECEMBER 31, 2011                                                                                                                                                                         |   |
|                                                                                                                                                                                           |   |
| (dollars in thousands)                                                                                                                                                                         |   |
|                                                                                                                                                                                           |   |
|                                                                                                                                                                                           |   | ParentGuarantor |   |   | Issuer |   |   | SubsidiaryGuarantors |   |   | Non-Guarantor Subsidiary |   |   | Eliminations |   |   | Consolidated |   |
|                                                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| ASSETS                                                                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current assets                                                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Cash and cash equivalents                                                                                                                                                         |   | $ | - |   |   | $ | 6,688 |   |   | $ | - |   |   | $ | 553 |   |   | $ | - |   |   | $ | 7,241 |   |
|    Accounts receivable, net                                                                                                                                                          |   |   | - |   |   |   | 85,795 |   |   |   | - |   |   |   | 4,544 |   |   |   | - |   |   |   | 90,339 |   |
|    Inventories                                                                                                                                                                       |   |   | - |   |   |   | 102,504 |   |   |   | - |   |   |   | 1,373 |   |   |   | - |   |   |   | 103,877 |   |
|    Due from parent                                                                                                                                                                   |   |   | - |   |   |   | 46,000 |   |   |   | - |   |   |   | - |   |   |   | (46,000 | ) |   |   | - |   |
|    Other current assets                                                                                                                                                         |   |   | 46,000 |   |   |   | 8,675 |   |   |   | - |   |   |   | 49 |   |   |   | - |   |   |   | 54,724 |   |
|       Total current assets                                                                                                                                       |   |   | 46,000 |   |   |   | 249,662 |   |   |   | - |   |   |   | 6,519 |   |   |   | (46,000 | ) |   |   | 256,181 |   |
|                                                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Property, plant and equipment, net                                                                                                                                                |   |   | - |   |   |   | 324,651 |   |   |   | - |   |   |   | 14 |   |   |   | - |   |   |   | 324,665 |   |
|    Investment in subsidiaries                                                                                                                                                        |   |   | (188,599 | ) |   |   | 13,713 |   |   |   | - |   |   |   | - |   |   |   | 174,886 |   |   |   | - |   |
|    Other assets                                                                                                                                                                 |   |   | 12 |   |   |   | 62,315 |   |   |   | - |   |   |   | 95 |   |   |   | - |   |   |   | 62,422 |   |
|        Total assets                                                                                                                                              |   | $ | (142,587 | ) |   | $ | 650,341 |   |   | $ | - |   |   | $ | 6,628 |   |   | $ | 128,886 |   |   | $ | 643,268 |   |
|                                                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LIABILITIES, REDEEMABLE COMMON STOCK, COMMON STOCK, PAID-IN CAPITAL, DUE FROM PARENT, ACCUMULATED DEFICIT AND ACCUMULATED OTHER COMPREHENSIVE INCOME                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current liabilities                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Current portion of long-term debt                                                                                                                                                 |   | $ | - |   |   | $ | 1,256 |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | 1,256 |   |
|    Accounts payable                                                                                                                                                                  |   |   | - |   |   |   | 51,694 |   |   |   | - |   |   |   | 72 |   |   |   | - |   |   |   | 51,766 |    |
|    Due to (from) parent and affiliated companies                                                                                                                                     |   |   | 46,000 |   |   |   | 9,714 |   |   |   | - |   |   |   | (9,714 | ) |   |   | (46,000 |  ) |   |   | - |   |
|    Other accrued liabilities                                                                                                                                                         |   |   | - |   |   |   | 91,599 |   |   |   | - |   |   |   | 2,456 |   |   |   | - |   |   |   | 94,055 |   |
|        Total current liabilities                                                                                                                                 |   |   | 46,000 |   |   |   | 154,263 |   |   |   | - |   |   |   | (7,186 | ) |   |   | (46,000 | ) |   |   | 147,077 |   |
|                                                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Long-term debt                                                                                                                                                                                 |   |   | - |   |   |   | 510,533 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 510,533 |   |
| Other long-term liabilities                                                                                                                                                                    |   |   | - |   |   |   | 174,144 |   |   |   | - |   |   |   | 101 |   |   |   | - |   |   |   | 174,245 |   |
| Redeemable common stock, common stock, paid-in capital, due from parent, accumulated deficit and accumulated other comprehensive income                                                        |   |   | (188,587 | ) |   |   | (188,599 | ) |   |   | - |   |   |   | 13,713 |   |   |   | 174,886 |   |   |   | (188,587 | ) |
|                                                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       Total liabilities, redeemable common stock, common stock, paid-in capital, due from parent, accumulated deficit and accumulated other comprehensive income |   | $ | (142,587 | ) |   | $ | 650,341 |   |   | $ | - |   |   | $ | 6,628 |   |   | $ | 128,886 |   |   | $ | 643,268 |   |

----

| PAPERWEIGHT DEVELOPMENT CORP. AND SUBSIDIARIES            |   |
|-----------------------------------------------------------|--------|
| AND APPLETON PAPERS INC. AND SUBSIDIARIES                 |   |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)  |   |
|                                                      |   |
| CONSOLIDATED STATEMENT OF COMPREHENSIVE (LOSS) INCOME     |   |
|                                                      |   |
| FOR THE YEAR ENDED DECEMBER 29, 2012                      |   |
|                                                      |   |
| (dollars in thousands)                                    |   |
|                                                      |   |
|                                                      |   | ParentGuarantor |   |   | Issuer |   |   | SubsidiaryGuarantors |   |   | Non-Guarantor Subsidiary |   |   | Eliminations |   |   | Consolidated |   |
|                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net sales                                                 |   | $ | - |   |   | $ | 846,934 |   |   | $ | - |   |   | $ | 50,947 |   |   | $ | (48,125 | ) |   | $ | 849,756 |   |
| Cost of sales                                             |   |   | - |   |   |   | 758,252 |   |   |   | - |   |   |   | 48,079 |   |   |   | (47,456 | ) |   |   | 758,875 |   |
|                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross profit                                              |   |   | - |   |   |   | 88,682 |   |   |   | - |   |   |   | 2,868 |   |   |   | (669 | ) |   |   | 90,881 |   |
| Selling, general and administrative expenses              |   |   | - |   |   |   | 150,855 |   |   |   | - |   |   |   | 2,106 |   |   |   | - |   |   |   | 152,961 |   |
| Environmental expense insurance recovery                  |   |   | - |   |   |   | (2,188 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (2,188 | ) |
| Restructuring                                             |   |   | - |   |   |   | 28,589 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 28,589 |   |
|                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating (loss) income                                   |   |   | - |   |   |   | (88,574 | ) |   |   | - |   |   |   | 762 |   |   |   | (669 | ) |   |   | (88,481 | ) |
| Interest expense                                          |   |   | - |   |   |   | 59,654 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 59,654 |   |
| Interest income                                           |   |   | - |   |   |   | (224 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (224 | ) |
| Loss (income) in equity investments                       |   |   | 148,451 |   |   |   | (372 | ) |   |   | - |   |   |   | - |   |   |   | (148,079 | ) |   |   | - |   |
| Other expense (income)                                    |   |   | - |   |   |   | 787 |   |   |   | - |   |   |   | (297 | ) |   |   | (537 | ) |   |   | (47 | ) |
|                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (Loss) income before income taxes                         |   |   | (148,451 | ) |   |   | (148,419 | ) |   |   | - |   |   |   | 1,059 |   |   |   | 147,947 |   |   |   | (147,864 | ) |
| Provision for income taxes                                |   |   | - |   |   |   | 32 |   |   |   | - |   |   |   | 555 |   |   |   | - |   |   |   | 587 |   |
|                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net (loss) income                                         |   | $ | (148,451 | ) |   | $ | (148,451 | ) |   | $ | - |   |   | $ | 504 |   |   | $ | 147,947 |   |   | $ | (148,451 | ) |
|                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other comprehensive loss                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Changes in retirement plans                   |   |   | (4,812 | ) |   |   | (4,812 | ) |   |   | - |   |   |   | - |   |   |   | 4,812 |   |   |   | (4,812 | ) |
|   Realized and unrealized losses on derivatives |   |   | (2,890 | ) |   |   | (2,890 | ) |   |   | - |   |   |   | - |   |   |   | 2,890 |   |   |   | (2,890 | ) |
| Total other comprehensive loss                            |   |   | (7,702 | ) |   |   | (7,702 | ) |   |   | - |   |   |   | - |   |   |   | 7,702 |   |   |   | (7,702 | ) |
|                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive loss (income)                               |   | $ | (156,153 | ) |   | $ | (156,153 | ) |   | $ | - |   |   | $ | 504 |   |   |   | 155,649 |   |   |   | (156,153 | ) |

----

| PAPERWEIGHT DEVELOPMENT CORP. AND SUBSIDIARIES           |   |
|----------------------------------------------------------|--------|
| AND APPLETON PAPERS INC. AND SUBSIDIARIES                |   |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) |   |
|                                                     |   |
| CONSOLIDATED STATEMENT OF COMPREHENSIVE (LOSS) INCOME    |   |
|                                                     |   |
| FOR THE YEAR DECEMBER 31, 2011                      |   |
|                                                     |   |
| (dollars in thousands)                                   |   |
|                                                     |   |
|                                                     |   | Parent |   |   |   |   |   | Subsidiary |   |   | Non-Guarantor |   |   |   |   |   |   |   |
|                                                     |   | Guarantor |   |   | Issuer |   |   | Guarantors |   |   | Subsidiary |   |   | Eliminations |   |   | Consolidated |   |
| Net sales                                                |   | $ | - |   |   | $ | 854,000 |   |   | $ | - |   |   | $ | 51,119 |   |   | $ | (47,790 | ) |   | $ | 857,329 |   |
| Cost of sales                                            |   |   | - |   |   |   | 718,262 |   |   |   | - |   |   |   | 48,560 |   |   |   | (48,112 | ) |   |   | 718,710 |   |
|                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross profit                                             |   |   | - |   |   |   | 135,738 |   |   |   | - |   |   |   | 2,559 |   |   |   | 322 |   |   |   | 138,619 |   |
| Selling, general and administrative expenses             |   |   | - |   |   |   | 142,758 |   |   |   | - |   |   |   | 2,170 |   |   |   | - |   |   |   | 144,928 |   |
| Litigation settlement, net                               |   |   | - |   |   |   | 3,122 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 3,122 |   |
|                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating (loss) income                                  |   |   | - |   |   |   | (10,142 | ) |   |   | - |   |   |   | 389 |   |   |   | 322 |   |   |   | (9,431 | ) |
| Interest expense                                         |   |   | - |   |   |   | 61,677 |   |   |   | - |   |   |   | - |   |   |   | (347 | ) |   |   | 61,330 |   |
| Interest income                                          |   |   | - |   |   |   | (355 | ) |   |   | - |   |   |   | (347 | ) |   |   | 347 |   |   |   | (355 | ) |
| Loss (income) in equity investments                      |   |   | 47,652 |   |   |   | (571 | ) |   |   | - |   |   |   | - |   |   |   | (47,081 | ) |   |   | - |   |
| Other (income) expense                                   |   |   | - |   |   |   | (23,607 | ) |   |   | - |   |   |   | 275 |   |   |   | 1 |   |   |   | (23,331 | ) |
|                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (Loss) income before income taxes                        |   |   | (47,652 | ) |   |   | (47,286 | ) |   |   | - |   |   |   | 461 |   |   |   | 47,402 |   |   |   | (47,075 | ) |
| Provision for income taxes                               |   |   | - |   |   |   | 366 |   |   |   | - |   |   |   | 211 |   |   |   | - |   |   |   | 577 |   |
|                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net (loss) income                                        |   | $ | (47,652 | ) |   | $ | (47,652 | ) |   | $ | - |   |   | $ | 250 |   |   | $ | 47,402 |   |   | $ | (47,652 | ) |
|                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other comprehensive income                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Changes in retiree plans                     |   |   | 433 |   |   |   | 433 |   |   |   | - |   |   |   | - |   |   |   | (433 | ) |   |   | 433 |   |
|   Realized and unrealized gains on derivatives |   |   | 1,373 |   |   |   | 1,373 |   |   |   | - |   |   |   | - |   |   |   | (1,373 | ) |   |   | 1,373 |   |
| Total other comprehensive income                         |   |   | 1,806 |   |   |   | 1,806 |   |   |   | - |   |   |   | - |   |   |   | (1,806 | ) |   |   | 1,806 |   |
|                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive (loss) income                              |   | $ | (45,846 | ) |   | $ | (45,846 | ) |   | $ | - |   |   | $ | 250 |   |   | $ | 45,596 |   |   | $ | (45,846 | ) |

----

| PAPERWEIGHT DEVELOPMENT CORP. AND SUBSIDIARIES                  |   |
|-----------------------------------------------------------------|--------|
| AND APPLETON PAPERS INC. AND SUBSIDIARIES                       |   |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)        |   |
|                                                            |   |
| CONSOLIDATED STATEMENT OF COMPREHENSIVE (LOSS) INCOME           |   |
|                                                            |   |
| FOR THE YEAR JANUARY 1, 2011                               |   |
|                                                            |   |
| (dollars in thousands)                                          |   |
|                                                            |   |
|                                                            |   | Parent |   |   |   |   |   | Subsidiary |   |   | Non-Guarantor |   |   |   |   |   |   |   |
|                                                            |   | Guarantor |   |   | Issuer |   |   | Guarantors |   |   | Subsidiary |   |   | Eliminations |   |   | Consolidated |   |
| Net sales                                                       |   | $ | - |   |   | $ | 847,623 |   |   | $ | - |   |   | $ | 47,867 |   |   | $ | (45,606 | ) |   | $ | 849,884 |   |
| Cost of sales                                                   |   |   | - |   |   |   | 682,121 |   |   |   | - |   |   |   | 45,771 |   |   |   | (45,664 | ) |   |   | 682,228 |   |
|                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross profit                                                    |   |   | - |   |   |   | 165,502 |   |   |   | - |   |   |   | 2,096 |   |   |   | 58 |   |   |   | 167,656 |   |
| Selling, general and administrative expenses                    |   |   | - |   |   |   | 137,284 |   |   |   | - |   |   |   | 1,870 |   |   |   | - |   |   |   | 139,154 |   |
| Environmental expense insurance recovery                        |   |   | - |   |   |   | (8,947 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (8,947 | ) |
|                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating income                                                |   |   | - |   |   |   | 37,165 |   |   |   | - |   |   |   | 226 |   |   |   | 58 |   |   |   | 37,449 |   |
| Interest expense                                                |   |   | - |   |   |   | 66,190 |   |   |   | - |   |   |   | - |   |   |   | (418 | ) |   |   | 65,772 |   |
| Debt extinguishment expense, net                                |   |   | - |   |   |   | 7,010 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 7,010 |   |
| Interest income                                                 |   |   | - |   |   |   | (326 | ) |   |   | - |   |   |   | (419 | ) |   |   | 418 |   |   |   | (327 | ) |
| Loss in equity investments                                      |   |   | 31,254 |   |   |   | 24,591 |   |   |   | - |   |   |   | - |   |   |   | (55,845 | ) |   |   | - |   |
| Other expense (income)                                     |   |   | - |   |   |   | 230 |   |   |   | - |   |   |   | (664 | ) |   |   | 5 |   |   |   | (429 | ) |
|                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (Loss) income from continuing operations before income taxes    |   |   | (31,254 | ) |   |   | (60,530 | ) |   |   | - |   |   |   | 1,309 |   |   |   | 55,898 |   |   |   | (34,577 | ) |
| Provision for income taxes                                      |   |   | - |   |   |   | 20 |   |   |   | - |   |   |   | 156 |   |   |   | - |   |   |   | 176 |   |
|                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (Loss) income from continuing operations                        |   |   | (31,254 | ) |   |   | (60,550 | ) |   |   | - |   |   |   | 1,153 |   |   |   | 55,898 |   |   |   | (34,753 | ) |
| Income (loss) from discontinued operations, net of income taxes |   |   | - |   |   |   | 29,296 |   |   |   | (25,797 | ) |   |   | - |   |   |   | - |   |   |   | 3,499 |   |
|                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net (loss) income                                               |   | $ | (31,254 | ) |   | $ | (31,254 | ) |   | $ | (25,797 | ) |   | $ | 1,153 |   |   | $ | 55,898 |   |   | $ | (31,254 | ) |
|                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other comprehensive income                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Change in retiree plans                             |   |   | 6,743 |   |   |   | 6,743 |   |   |   | - |   |   |   | - |   |   |   | (6,743 | ) |   |   | 6,743 |   |
|   Realized and unrealized gains on derivatives        |   |   | 140 |   |   |   | 140 |   |   |   | - |   |   |   | - |   |   |   | (140 | ) |   |   | 140 |   |
| Total other comprehensive income                                |   |   | 6,883 |   |   |   | 6,883 |   |   |   | - |   |   |   | - |   |   |   | (6,883 | ) |   |   | 6,883 |   |
|                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive (loss) income                                |   | $ | (24,371 | ) |   | $ | (24,371 | ) |   | $ | (25,797 | ) |   | $ | 1,153 |   |   | $ | 49,015 |   |   | $ | (24,371 | ) |

----

| PAPERWEIGHT DEVELOPMENT CORP. AND SUBSIDIARIES                                                            |   |
|-----------------------------------------------------------------------------------------------------------|--------|
| AND APPLETON PAPERS INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)         |   |
|                                                                                                      |   |
| CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS                                                           |   |
|                                                                                                      |   |
| FOR THE YEAR ENDED DECEMBER 29, 2012                                                                      |   |
|                                                                                                      |   |
| (dollars in thousands)                                                                                    |   |
|                                                                                                      |   |
|                                                                                                      |   | Parent |   |   |   |   |   | Subsidiary |   |   | Non-Guarantor |   |   |   |   |   |   |   |
|                                                                                                      |   | Guarantor |   |   | Issuer |   |   | Guarantors |   |   | Subsidiary |   |   | Eliminations |   |   | Consolidated |   |
|                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash flows from operating activities:                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net (loss) income                                                                                         |   | $ | (148,451 | ) |   | $ | (148,451 | ) |   | $ | - |   |   | $ | 504 |   |   | $ | 147,947 |   |   | $ | (148,451 | ) |
| Adjustments to reconcile net (loss) income to net cash (used) provided by operating activities: |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation and amortization                                                                             |   |   | - |   |   |   | 100,292 |   |   |   | - |   |   |   | 4 |   |   |   | - |   |   |   | 100,296 |   |
| Other                                                                                                     |   |   | - |   |   |   | 16,956 |   |   |   | - |   |   |   | (297 | ) |   |   | - |   |   |   | 16,659 |   |
| Change in assets and liabilities, net                                                                     |   |   | 132,480 |   |   |   | 69,689 |   |   |   | - |   |   |   | 579 |   |   |   | (147,947 | ) |   |   | 54,801 |   |
|                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net cash (used) provided by operating activities                                                     |   |   | (15,971 | ) |   |   | 38,486 |   |   |   | - |   |   |   | 790 |   |   |   | - |   |   |   | 23,305 |   |
| Cash flows from investing activities:                                                                     |   |   |   |   |   |   |   |   |   |   |   - |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds from sale of equipment                                                                           |   |   | - |   |   |   | 22 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 22 |   |
| Additions to property, plant and equipment                                                                |   |   | - |   |   |   | (17,143 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (17,143 | ) |
|                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | - |   |   |   |   |   |
| Net cash used by investing activities                                                                     |   |   | - |   |   |   | (17,121 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (17,121 | ) |
| Cash flows from financing activities:                                                                     |   |   |   |   |   |   |   |   |   |   |  - |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Payments relating to capital lease obligations                                                            |   |   | - |   |   |   | (68 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (68 | ) |
| Proceeds from revolving line of credit                                                                    |   |   | - |   |   |   | 253,400 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 253,400 |   |
| Payments of revolving line of credit                                                                      |   |   | - |   |   |   | (249,700 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (249,700 | ) |
| Payments of State of Ohio loan                                                                            |   |   | - |   |   |   | (1,256 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (1,256 | ) |
| Proceeds from forgivable debt                                                                             |   |   | - |   |   |   | 300 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 300 |   |
| Due to (from) parent and affiliated companies, net                                                   |   |   | 27,157 |   |   |   | (26,072 | ) |   |   | - |   |   |   | (1,085 | ) |   |   | - |   |   |   | - |   |
| Proceeds from issuance of redeemable common stock                                                         |   |   | 2,884 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 2,884 |   |
| Payments to redeem common stock                                                                           |   |   | (14,070 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (14,070 | ) |
| Decrease in cash overdraft                                                                                |   |   | - |   |   |   | (3,078 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (3,078 | ) |
|                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net cash provided (used) by financing activities                                                     |   |   | 15,971 |   |   |   | (26,474 | ) |   |   | - |   |   |   | (1,085 | ) |   |   | - |   |   |   | (11,588 | ) |
| Effect of foreign exchange rate changes on cash and cash equivalents                                      |   |   | - |   |   |   | 14 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 14 |   |
| Change in cash and cash equivalents                                                                       |   |   | - |   |   |   | (5,095 | ) |   |   | - |   |   |   | (295 | ) |   |   | - |   |   |   | (5,390 | ) |
| Cash and cash equivalents at beginning of period                                                          |   |   | - |   |   |   | 6,688 |   |   |   | - |   |   |   | 553 |   |   |   | - |   |   |   | 7,241 |   |
| Cash and cash equivalents at end of period                                                                |   | $ | - |   |   | $ | 1,593 |   |   | $ | - |   |   | $ | 258 |   |   | $ | - |   |   | $ | 1,851 |   |

----

| PAPERWEIGHT DEVELOPMENT CORP. AND SUBSIDIARIES                                                            |   |
|-----------------------------------------------------------------------------------------------------------|--------|
| AND APPLETON PAPERS INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)         |   |
|                                                                                                      |   |
| CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS                                                           |   |
|                                                                                                      |   |
| FOR THE YEAR ENDED DECEMBER 31, 2011                                                                      |   |
|                                                                                                      |   |
| (dollars in thousands)                                                                                    |   |
|                                                                                                      |   |
|                                                                                                      |   | Parent |   |   |   |   |   | Subsidiary |   |   | Non-Guarantor |   |   |   |   |   |   |   |
|                                                                                                      |   | Guarantor |   |   | Issuer |   |   | Guarantors |   |   | Subsidiary |   |   | Eliminations |   |   | Consolidated |   |
|                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash flows from operating activities:                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net (loss) income                                                                                         |   | $ | (47,652 | ) |   | $ | (47,652 | ) |   | $ | - |   |   | $ | 250 |   |   | $ | 47,402 |   |   | $ | (47,652 | ) |
| Adjustments to reconcile net (loss) income to net cash (used) provided by operating activities: |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation and amortization                                                                             |   |   | - |   |   |   | 48,612 |   |   |   | - |   |   |   | 4 |   |   |   | - |   |   |   | 48,616 |   |
| Other                                                                                                     |   |   | - |   |   |   | 6,634 |   |   |   | - |   |   |   | 275 |   |   |   | - |   |   |   | 6,909 |   |
| Change in assets and liabilities, net                                                                     |   |   | 24,962 |   |   |   | 80,001 |   |   |   | 101 |   |   |   | 3,176 |   |   |   | (47,402 | ) |   |   | 60,838 |   |
|                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net cash (used) provided by operating activities                                                     |   |   | (22,690 | ) |   |   | 87,595 |   |   |   | 101 |   |   |   | 3,705 |   |   |   | - |   |   |   | 68,711 |   |
| Cash flows from investing activities:                                                                     |   |   |   |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds from sale of equipment                                                                           |   |   | - |   |   |   | 6 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 6 |   |
| Proceeds from sale of Films                                                                          |   |   |  - |   |   |   |  2,000 |   |   |   |  - |   |   |   |  - |   |   |   | - |   |   |   |  2,000 |   |
| Insurance proceeds from involuntary conversion of equipment                                          |   |   |  - |   |   |   |  1,374 |   |   |   |  - |   |   |   |  - |   |   |   |  - |   |   |   |  1,374 |   |
| Additions to property, plant and equipment                                                                |   |   | - |   |   |   | (15,833 | ) |   |   | - |   |   |   | (14 | ) |   |   | - |   |   |   | (15,847 | ) |
|                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net cash used by investing activities                                                                     |   |   | - |   |   |   | (12,453 | ) |   |   | - |   |   |   | (14 | ) |   |   | - |   |   |   | (12,467 | ) |
| Cash flows from financing activities:                                                                     |   |   |   |   |   |   |   |   |   |   |  - |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Payments of senior subordinated notes payable                                                   |   |   |  - |   |   |   |  (17,491 | )  |   |   |  - |   |   |   |  - |   |   |   |  - |   |   |   |  (17,491 | )  |
| Payments relating to capital lease obligation                                                             |   |   | - |   |   |   | (47 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (47 | ) |
| Proceeds from revolving line of credit                                                                    |   |   | - |   |   |   | 202,800 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 202,800 |   |
| Payments of revolving line of credit                                                                      |   |   | - |   |   |   | (232,100 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (232,100 | ) |
| Payments of State of Ohio loan                                                                            |   |   | - |   |   |   | (1,203 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (1,203 | ) |
| Due to (from) parent and affiliated companies, net                                                   |   |   | 32,166 |   |   |   | (28,554 | ) |   |   | (101 | ) |   |   | (3,511 | ) |   |   | - |   |   |   | - |   |
| Proceeds from issuance of redeemable common stock                                                         |   |   | 2,875 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 2,875 |   |
| Payments to redeem common stock                                                                           |   |   | (12,351 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (12,351 | ) |
| Increase in cash overdraft                                                                                |   |   | - |   |   |   | 4,749 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 4,749 |   |
|                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net cash provided (used) by financing activities                                                     |   |   | 22,690 |   |   |   | (71,846 | ) |   |   | (101 | )  |   |   | (3,511 | ) |   |   | - |   |   |   | (52,768 | ) |
| Effect of foreign exchange rate changes on cash and cash equivalents                                      |   |   | - |   |   |   | (7 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (7 | ) |
| Change in cash and cash equivalents                                                                       |   |   | - |   |   |   | 3,289 |   |   |   | - |   |   |   | 180 |   |   |   | - |   |   |   | 3,469 |   |
| Cash and cash equivalents at beginning of period                                                          |   |   | - |   |   |   | 3,399 |   |   |   | - |   |   |   | 373 |   |   |   | - |   |   |   | 3,772 |   |
| Cash and cash equivalents at end of period                                                                |   | $ | - |   |   | $ | 6,688 |   |   | $ | - |   |   | $ | 553 |   |   | $ | - |   |   | $ | 7,241 |   |

----

| PAPERWEIGHT DEVELOPMENT CORP. AND SUBSIDIARIES                                                            |   |
|-----------------------------------------------------------------------------------------------------------|--------|
| AND APPLETON PAPERS INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)         |   |
|                                                                                                      |   |
| CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS                                                           |   |
|                                                                                                      |   |
| FOR THE YEAR ENDED JANUARY 1, 2011                                                                        |   |
|                                                                                                      |   |
| (dollars in thousands)                                                                                    |   |
|                                                                                                      |   |
|                                                                                                      |   | Parent |   |   |   |   |   | Subsidiary |   |   | Non-Guarantor |   |   |   |   |   |   |   |
|                                                                                                      |   | Guarantor |   |   | Issuer |   |   | Guarantors |   |   | Subsidiary |   |   | Eliminations |   |   | Consolidated |   |
|                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash flows from operating activities:                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net (loss) income                                                                                         |   | $ | (31,254 | ) |   | $ | (31,254 | ) |   | $ | (25,797 | )  |   | $ | 1,153 |   |   | $ | 55,898 |   |   | $ | (31,254 | ) |
| Adjustments to reconcile net (loss) income to net cash provided (used) by operating activities: |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation and amortization                                                                             |   |   | - |   |   |   | 49,755 |   |   |   | 1,726 |   |   |   | 5 |   |   |   | - |   |   |   | 51,486 |   |
| Other                                                                                                     |   |   | - |   |   |   | 4,468 |   |   |   | - |   |   |   | (664 | ) |   |   | - |   |   |   | 3,804 |   |
| Change in assets and liabilities, net                                                                     |   |   | 89,574 |   |   |   | (79,618 | )  |   |   | (7,264 | )  |   |   | (815 | ) |   |   | (55,898 | ) |   |   | (54,021 | )  |
|                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net cash provided (used) by operating activities                                                |   |   | 58,320 |   |   |   | (56,649 | )  |   |   | (31,335 | )  |   |   | (321 | )  |   |   | - |   |   |   | (29,985 | )  |
| Cash flows from investing activities:                                                                     |   |   |   |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds from sale of equipment                                                                           |   |   | - |   |   |   | 208 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 208 |   |
| Proceeds from sale of Films                                                                          |   |   |  - |   |   |   |  56,000 |   |   |   |  - |   |   |   |  - |   |   |   | - |   |   |   |  56,000 |   |
| Insurance proceeds from involuntary conversion of equipment                                          |   |   |  - |   |   |   |  1,029 |   |   |   |  - |   |   |   |  - |   |   |   |  - |   |   |   |  1,029 |   |
| Additions to property, plant and equipment                                                                |   |   | - |   |   |   | (17,249 | ) |   |   | (590 | )  |   |   | - |   |   |   | - |   |   |   | (17,839 | ) |
|                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net cash provided (used) by investing activities                                                          |   |   | - |   |   |   | 39,988 |   |   |   | (590 | )  |   |   | - |   |   |   | - |   |   |   | 39,398 |   |
| Cash flows from financing activities:                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Payments of senior subordinated notes payable                                                   |   |   |  - |   |   |   |  (211,225 | )  |   |   |  - |   |   |   |  - |   |   |   |  - |   |   |   |  (211,225 | )  |
| Proceeds from senior secured first lien notes payable                                                |   |   |  - |   |   |   |  299,007 |   |   |   |  - |   |   |   |  - |   |   |   |  - |   |   |   |  299,007 |   |
| Debt acquisitions costs                                                                         |   |   |  - |   |   |   |  (10,847 | )  |   |   |  - |   |   |   |  - |   |   |   |  - |   |   |   |  (10,847 | )  |
| Payments relating to capital lease obligation                                                             |   |   | - |   |   |   | (721 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (721 | ) |
| Proceeds from old revolving line of credit                                                                |   |   | - |   |   |   | 21,350 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 21,350 |   |
| Payments of old revolving line of credit                                                                  |   |   | - |   |   |   | (109,575 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (109,575 | ) |
| Proceeds from new revolving line of credit                                                           |   |   |  - |   |   |   |  316,993 |   |   |   |  - |   |   |   |  - |   |   |   |  - |   |   |   |  316,993 |   |
| Payments of new revolving line of credit                                                             |   |   |  - |   |   |   |  (287,693 | )  |   |   |  - |   |   |   |  - |   |   |   |  - |   |   |   |  (287,693 | )  |
| Payments of State of Ohio loan                                                                            |   |   | - |   |   |   | (1,151 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (1,151 | ) |
| Payments of secured financing                                                                        |   |   |  - |   |   |   |  (20,905 | )  |   |   |  - |   |   |   |  - |   |   |   |  - |   |   |   |  (20,905 | )  |
| Due (from) to parent and affiliated companies, net                                                   |   |   | (50,070 | )  |   |   | 18,253 |   |   |   | 31,924 |   |   |   | (107 | ) |   |   | - |   |   |   | - |   |
| Proceeds from issuance of redeemable common stock                                                         |   |   | 3,561 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 3,561 |   |
| Payments to redeem common stock                                                                           |   |   | (11,811 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (11,811 | ) |
| Decrease in cash overdraft                                                                                |   |   | - |   |   |   | (2,628 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (2,628 | ) |
|                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net cash (used) provided by financing activities                                                     |   |   | (58,320 | )  |   |   | 10,858 |   |   |   | 31,924 |   |   |   | (107 | ) |   |   | - |   |   |   | (15,645 | ) |
| Effect of foreign exchange rate changes on cash and cash equivalents                                      |   |   | - |   |   |   | 41 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 41 |   |
| Change in cash and cash equivalents                                                                       |   |   | - |   |   |   | (5,762 | ) |   |   | (1 | )  |   |   | (428 | ) |   |   | - |   |   |   | (6,191 | ) |
| Cash and cash equivalents at beginning of period                                                          |   |   | - |   |   |   | 9,161 |   |   |   | 1 |   |   |   | 801 |   |   |   | - |   |   |   | 9,963 |   |
| Cash and cash equivalents at end of period                                                                |   | $ | - |   |   | $ | 3,399 |   |   | $ | - |   |   | $ | 373 |   |   | $ | - |   |   | $ | 3,772 |   |

----

| Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure |
|--------------|--------------------------------------------------------------------------------------|

| Item 9A. | Controls and Procedures |
|---------------|-------------------------|

----

| Item 9B. | Other Information |
|---------------|-------------------|

----

| Name                | Age    | Position                                                                                                                                                          |
|---------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                |   |                                                                                                                                                              |
| Mark R. Richards    | 53     | Chairman, President, Chief Executive Officer and a Director of Appleton, and Chairman, President, Chief Executive Officer and a Director of PDC                   |
|                |   |                                                                                                                                                              |
| Stephen P. Carter   | 61     | Director of Appleton and PDC                                                                                                                                      |
|                |   |                                                                                                                                                              |
| Terry M. Murphy     | 64     | Director of Appleton and PDC                                                                                                                                      |
|                |   |                                                                                                                                                              |
| Andrew F. Reardon   | 67     | Director of Appleton and PDC                                                                                                                                      |
|                |   |                                                                                                                                                              |
| Mark A. Suwyn       | 70     | Director of Appleton and PDC                                                                                                                                      |
|                |   |                                                                                                                                                              |
| Kathi P. Seifert    | 63     | Director of Appleton and PDC                                                                                                                                      |
|                |   |                                                                                                                                                              |
| George W. Wurtz     | 56     | Director of Appleton and PDC                                                                                                                                      |
|                |   |                                                                                                                                                              |
| Kerry S. Arent      | 52     | Senior Vice President Human Resources of Appleton                                                                                                                 |
|                |   |                                                                                                                                                              |
| Thomas J. Ferree    | 55     | Senior Vice President Finance, Chief Financial Officer and Treasurer of Appleton, and Senior Vice President Finance, Chief Financial Officer and Treasurer of PDC |
|                |   |                                                                                                                                                              |
| Jeffrey J. Fletcher | 60     | Vice President, Controller and Assistant Treasurer of Appleton, and Vice President, Controller and Assistant Treasurer of PDC                                |
|                |   |                                                                                                                                                              |
| James R. Hillend    | 54     | Vice President Carbonless and Thermal Value Streams of Appleton                                                                                                   |
|                |   |                                                                                                                                                              |
| Tami L. Van Straten | 41     | Vice President, General Counsel & Secretary of Appleton, and Vice President, General Counsel & Secretary of PDC                                           |

----

----

----

----

----

|   | • | provide compensation opportunities that are competitive for similar positions within similar companies when company performance meets pre-established goals; |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                                                                                                            |   | Fixed (Salary) |   |   | Pay at Risk (Annual and Long-Term Incentives)(1) |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------|--------|--------|--------------------------------------------------|--------|
| Mark R. RichardsChairman, President, Chief Executive Officer and a Director of Appleton, and Chairman, President, Chief Executive Officer and a Director of PDC |   |           | 30     | %      |                                             |   | 70 | % |
|                                                                                                                                                            |   |           |   |   |                                             |   |   |   |
| Thomas J. FerreeSenior Vice President Finance, Chief Financial Officer and Treasurer of Appleton, and Chief Financial Officer and Treasurer of PDC              |   |           | 37     | %      |                                             |   | 63 | % |
|                                                                                                                                                            |   |           |   |   |                                             |   |   |   |
| Kerry S. ArentSenior Vice President, Human Resources of Appleton                                                                                                |   |           | 48     | %      |                                             |   | 52 | % |
|                                                                                                                                                            |   |           |   |   |                                             |   |   |   |
| Tami Van StratenVice President, General Counsel & Secretary of Appleton                                                                                     |   |           | 59     | %      |                                             |   | 41 | % |
|                                                                                                                                                            |   |           |   |   |                                             |   |   |   |
| Jeffrey J. FletcherVice President and Controller of Appleton, and Assistant Treasurer and Controller of PDC                                                     |   |           | 62     | %      |                                             |   | 38 | % |
|                                                                                                                                                            |   |           |   |   |                                             |   |   |   |
| Kent E. WillettsFormer Senior Vice President of Appleton                                                                                                        |   |           | 46     | %      |                                             |   | 54 | % |

| (1) | Calculated using annual incentive paid at target plus restricted stock units and long-term incentive. Long- term  incentive expected value based on Black-Scholes valuation methodology. The assumptions used for a January 1, 2012 valuation are: Expected life: 6.5 years (mid-point of 3 and 10 years vesting period); Dividend yield: 0% (plan does not pay dividends); Risk Free Interest Rate (based on Treasury Constant Maturities yield curve): 1.29% ; Volatility (based on peer group volatility for previous 6.5 years): 44%. The LTIP grant as of January 1, 2012 is valued at $6.74 per share with a $15.01 per share grant price. The Restricted Stock Unit grant as of January 1, 2012  is valued at $15.01 per share grant price. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|        | All AppletonAdjusted EBITDAI |  CCD |
|-------------|------------------------------|-----------|
| Outstanding |  $103                   | 55 days   |
| Target      | $95                          | 58 days   |
| Threshold   | $87                          | 63 days   |

----

----

|   | • | the Company’s merger or consolidation with another company and the Company is not the surviving company and the Company is not controlled by the persons or entities who controlled the Company immediately prior to such merger or consolidation; or |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                          | Minimum | Target | Maximum |
|-------------------------------|---------|--------|---------|
| 3-Year Average Revenue Growth | 0.5%    | 2.5%   | 5.0%+   |
| 3-Year Average ROIC           | 6.0%    | 8.5%   | 11.0%+  |

----

----

----

| Name and Principal Position              |   | Year   |       | Salary ($) |   | Bonus ($) |   | LTIPAwards($)(1) |   | RSUAwards($)(2) |   | Non-Equity Incentive Plan Compensation ($)(3) |   | Change in Pension Value andNonqualified Deferred Compensation Earnings ($)(4) |   | All OtherCompensation ($)(5) |   | Total($)(6) |
|------------------------------------------|--------|--------|------------|-----------------|--------|----------------|--------|------------------|--------|-----------------|--------|-----------------------------------------------|--------|------------------------------------------------------------------------------------|--------|------------------------------|--------|-------------|
| Mark R. Richards                         |   | 2012   |       | 800,000         |   | 376,000        | (7)    | 808,800          |   | 600,400         |   | 1,224,000                                     |   | 255,610                                                                            |   | 148,516                      |   | 4,213,326   |
| Chairman, President, Chief Executive     |   | 2011   |       | 800,000         |   | 0              |   | 1,567,500        |   | 0               |   | 546,179                                       | (8)    | 133,043                                                                            |   | 99,937                       |   | 3,146,659   |
| Officer and a Director of Appleton, and  |   | 2010   |       | 792,308         |   | 0              |   | 0                |   | 861,900         |   | 185,202                                       |   | 150,475                                                                            |   | 39,785                       |   | 2,029,670   |
| Chairman, President, Chief Executive     |   |   |       |            |   |           |   |             |   |            |   |                                          |   |                                                                               |   |                         |   |        |
| Officer and a Director of PDC            |   |   |       |            |   |           |   |             |   |            |   |                                          |   |                                                                               |   |                         |   |        |
|                                     |   |   |       |            |   |           |   |             |   |            |   |                                          |   |                                                                               |   |                         |   |        |
| Thomas J. Ferree                         |   | 2012   |       | 402,462         |   | 200,000        | (7)    | 293,190          |   | 217,645         |   | 458,807                                       |   | 49,828                                                                             |   | 75,029                       |   | 1,696,961   |
| Senior Vice President Finance, Chief     |   | 2011   |       | 388,500         |   | 16,468         | (9)    | 513,000          |   | 0               |   | 170,988                                       | (8)    | 44,151                                                                             |   | 53,944                       |   | 1,187,051   |
| Financial Officer and Treasurer of       |   | 2010   |       | 385,654         |   | 0              |   | 0                |   | 278,460         |   | 58,330                                        |   | 66,117                                                                             |   | 35,785                       |   | 824,346     |
| Appleton, and Chief Financial Officer    |   |   |       |            |   |           |   |             |   |            |   |                                          |   |                                                                               |   |                         |   |        |
| and Treasurer of PDC                     |   |   |       |            |   |           |   |             |   |            |   |                                          |   |                                                                               |   |                         |   |        |
|                                     |   |   |       |            |   |           |   |             |   |            |   |                                          |   |                                                                               |   |                         |   |        |
| Kerry S. Arent                      |   | 2012   |       | 256,846         |   | 100,000        | (7)    | 101,100          |   | 75,050          |   | 256,846                                       |   | 140,987                                                                            |   | 44,878                       |   | 975,707     |
| Senior Vice President, Human Resources   |   | 2011   | (10)  | 238,423         |   | 9,184          | (9)    | 208,050          |   | 0               |   | 61,228                                   | (8)    | 107,593                                                                            |   | 35,448                       |   | 659,926     |
| of Appleton                              |   |   |       |            |   |           |   |             |   |            |   |                                          |   |                                                                               |   |                         |   |        |
|                                     |   |   |       |            |   |           |   |             |   |            |   |                                          |   |                                                                               |   |                         |   |        |
| Tami L. Van Straten                      |   | 2012   | (11)       | 199,231         |   | 150,000        | (7)    | 37,070           |   | 30,020          |   | 151,416                                       |   | 35,231                                                                             |   | 29,075                       |   | 632,043     |
| Vice President, General Counsel &    |   |   |       |            |   |           |   |             |   |            |   |                                          |   |                                                                               |   |                         |   |        |
| Secretary                                |   |   |       |            |   |           |   |             |   |            |   |                                          |   |                                                                               |   |                         |   |        |
|                                     |   |   |       |            |   |           |   |             |   |            |   |                                          |   |                                                                               |   |                         |   |        |
| Jeffrey J. Fletcher                      |   | 2012   |       | 209,179         |   | 150,000        | (7)    | 30,330           |   | 22,515          |   | 158,976                                       |   | 23,235                                                                             |   | 29,655                       |   | 623,890     |
| Vice President and Controller            |   | 2011   | (10)  | 204,000         |   | 8,058          | (9)    | 68,400           |   | 0               |   | 41,942                                        | (8)    | 23,486                                                                             |   | 16,554                       |   | 362,440     |
| of Appleton, and Assistant Treasurer     |   |   |       |            |   |           |   |             |   |            |   |                                          |   |                                                                               |   |                         |   |        |
| and Controller of PDC                    |   |   |       |            |   |           |   |             |   |            |   |                                          |   |                                                                               |   |                         |   |        |
|                                     |   |   |       |            |   |           |   |             |   |            |   |                                          |   |                                                                               |   |                         |   |        |
| Kent E. Willetts                         |   | 2012   | (12)       | 277,519         |   | 0              |   | 121,320          | (13)   | 90,060          | (13)   | 0                                             |   | 13,944                                                                             |   | 493,860                      |   | 996,703     |
| Former Senior Vice President of Appleton |   | 2011   |       | 272,000         |   | 10,290         | (9)    | 213,750          |   | 0               |   | 105,002                                       | (8)    | 37,906                                                                             |   | 34,291                       |   | 673,239     |
|                                     |   | 2010   |       | 270,769         |   | 7,446          | (14)   | 0                |   | 185,640         |   | 37,231                                        |   | 47,388                                                                             |   | 28,639                       |   | 577,113     |

----

| (1) | In 2011, the LTIP grant date fair value is calculated based on a Black-Scholes valuation methodology. The assumptions used for January 2, 2011 grant are: Expected life: 6.5 years (mid-point of 3 and 10 years vesting period); Dividend yield: 0% (plan does not pay dividends); Risk Free Interest Rate (based on Treasury Constant Maturities yield curve): 2.71%; Volatility (based on peer group volatility for previous 6.5 years): 40%. The LTIP grant as of January 2, 2011 is valued at $5.70 per share with a $12.84 per share grant price. In 2012, the assumptions used for January 1, 2012 grant are: Expected life: 6.5 years (mid-point of 3 and 10 years vesting period); Dividend yield: 0% (plan does not pay dividends); Risk Free Interest Rate (based on Treasury Constant Maturities yield curve): 1.29%; Volatility (based on peer group volatility for previous 6.5 years): 44%. The LTIP grant as of January 1, 2012 is valued at $6.74 per share with a $15.01 per share grant price. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Units awarded for January 3, 2010 under the RSU plan are valued at the grant price ($13.26 per share) multiplied by the number of units granted. Units awarded for January 1, 2012 under the RSU plan are valued at the grant price ($15.01 per share) multiplied by the number of units granted. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Non-equity performance-based incentive plan compensation consists of payments under Appleton’s Annual Incentive Plan and the Performance Cash Plan. Amounts paid under the Annual Incentive Plan are determined based on company and business segment performance and other extraordinary factors, positive or negative, determined by the CEO and the Compensation Committee. Amounts paid under the Annual Incentive Plan are earned in 2012 and paid in 2013. The Performance Cash Plan reflects the compensation costs recognized by the Company for financial reporting purposes and ASC 718 for long-term non-equity performance-based incentives. There were no awards paid in 2012 under the Performance Cash Plan. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | The valuation methods and material assumptions used in determining the change in pension value are discussed in detail in Note 16 of the Consolidated Financial Statements in Item 8, above. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5) | The aggregate incremental costs of all perquisites are stated as actual costs to the Company. |
|-----|-----------------------------------------------------------------------------------------------|

| (6) | In 2010, the following executives deferred the following indicated amounts into the Nonqualified Excess Plan: Mr. Richards ($65,280). In 2011, the following executives deferred the following indicated amounts into the Nonqualified Excess Plan: Mr. Richards ($40,000). In 2012, the following executives deferred the following indicated amounts into the Nonqualified Excess plan: Mr. Richards ($117,877) and Ms. Arent ($35,206). These deferrals are also described in the Nonqualified Deferred Compensation table. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (7) | In 2012, the following executives received a discretionary bonus amount: Mr. Richards 31%, Mr. Ferree 44%, Ms. Arent 39%, Ms. Van Straten 99% and Mr. Fletcher 94%. The discretionary bonus amount is represented as a percent of the earned incentive. The discretionary awards were made in accordance with the terms of the annual incentive plan. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (8) | In 2011, the value of Non-Equity Incentive Payments for each of the named executives is as follows: |
|-----|-----------------------------------------------------------------------------------------------------|

|   | Mr. Richards: Performance Cash Plan ($196,795); Annual ($349,384) |
|--------|-------------------------------------------------------------------|

|   | Mr. Ferree: Performance Cash Plan ($61,202); Annual ($109,786) |
|--------|----------------------------------------------------------------|

|   | Ms. Arent: Annual ($61,228) |
|--------|-----------------------------|

|   | Mr. Fletcher: Annual ($41,942) |
|--------|--------------------------------|

|  (9) | Mr. Willetts:  Performance Cash Plan ($36,404; Annual ($68,598)In 2011, the following executives received a discretionary bonus in the amount of 15% of the earned incentive: Mr. Ferree,Ms. Arent and Mr. Willetts. Mr. Fletcher received a discretionary bonus of 19% of the earned incentive. |
|-----------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (10) | Ms. Arent and Mr. Fletcher became named officers in 2011. |
|------|-----------------------------------------------------------|

| (11) | Ms. Van Straten became a named officer in 2012. |
|------|-------------------------------------------------|

| (12) | Mr. Willetts departed on December 14, 2012. |
|------|---------------------------------------------|

| (13) | Awards that were granted were forfeited at departure. |
|------|-------------------------------------------------------|

| (14) | Mr. Willetts received a discretionary bonus amount in 2010 of 20% of the earned incentive. |
|------|--------------------------------------------------------------------------------------------|

----

|                       |                                       |          |          |   | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(2) |   | All OtherStock Awards:Number of |      |   |
|----------------------------|--------------------------------------------|---------------|---------------|--------|----------------------------------------------------------------------------------------|--------|--------------------------------------|-----------|--------|
| Name                       | Plan                                       | Grant Date(1) | Approval Date |   | Threshold($)                                                                           |   |                                 | Target($) |   |   | Maximum($) |   | SecuritiesUnderlyingUnits (#)(3) |   | Grant Date Fair Value of StockAwards ($)(4) |
| Mark R. Richards | Annual Performance-Based Incentive Plan    |          |          |   |                                                                                   | 68,000 |                                 |      |   | 680,000 |   |   |   | 1,360,000 |   |   |   |   |
|                       | Long-Term Incentive Plan                   | 1/1/2012      | 2/22/2012     |   |                                                                                   |   |                                 |      |   |   |   |   |   |   |   | 120,000 |   | 808,800 |
|                       | Restricted Stock Unit Plan                 | 1/1/2012      | 2/22/2012     |   |                                                                                   |   |                                 |      |   |   |   |   |   |   |   | 40,000 |   | 600,400 |
|                       |                                       |          |          |   |                                                                                   |   |                                 |      |   |   |   |   |   |   |   |   |   |   |
| Thomas J. Ferree           | Annual Performance-Based Incentive Plan    |          |          |   |                                                                                   | 24,148 |                                 |      |   | 241,477 |   |   |   | 482,954 |   |   |   |   |
|                       | Long-Term Incentive Plan                   | 1/1/2012      | 1/12/2012     |   |                                                                                   |   |                                 |      |   |   |   |   |   |   |   | 43,500 |   | 293,190 |
|                       | Restricted Stock Unit Plan                 | 1/1/2012      | 1/12/2012     |   |                                                                                   |   |                                 |      |   |   |   |   |   |   |   | 14,500 |   | 217,645 |
|                       |                                       |          |          |   |                                                                                   |   |                                 |      |   |   |   |   |   |   |   |   |   |   |
| Kerry S. Arent             | Annual Performance-Based Incentive Plan    |          |          |   |                                                                                   | 12,842 |                                 |      |   | 128,423 |   |   |   | 256,846 |   |   |   |   |
|                       | Long-Term Incentive Plan                   | 1/1/2012      | 1/12/2012     |   |                                                                                   |   |                                 |      |   |   |   |   |   |   |   | 15.000 |   | 101,100 |
|                       | Restricted Stock Unit Plan                 | 1/1/2012      | 1/12/2012     |   |                                                                                   |   |                                 |      |   |   |   |   |   |   |   | 5,000 |   | 75,050 |
|                       |                                       |          |          |   |                                                                                   |   |                                 |      |   |   |   |   |   |   |   |   |   |   |
| Tami L. Van Straten        | Annual Performance-Based Incentive Plan    |          |          |   |                                                                                   | 7,969  |                                 |      |   | 79,692 |   |   |   | 159,385 |   |   |   |   |
|                       | Long-Term Incentive Plan                   | 1/1/2012      | 1/12/2012     |   |                                                                                   |   |                                 |      |   |   |   |   |   |   |   | 5,500 |   | 37,070 |
|                       | Restricted Stock Unit Plan                 | 1/1/2012      | 1/12/2012     |   |                                                                                   |   |                                 |      |   |   |   |   |   |   |   | 2,000 |   | 30,020 |
|                       |                                       |          |          |   |                                                                                   |   |                                 |      |   |   |   |   |   |   |   |   |   |   |
| Jeffrey J. Fletcher        | Annual Performance-Based Incentive Plan    |          |          |   |                                                                                   | 8,367  |                                 |      |   | 83,671 |   |   |   | 167,343 |   |   |   |   |
|                       | Long-Term Incentive Plan                   | 1/1/2012      | 1/12/2012     |   |                                                                                   |   |                                 |      |   |   |   |   |   |   |   | 4,500 |   | 30,330 |
|                       | Restricted Stock Unit Plan                 | 1/1/2012      | 1/12/2012     |   |                                                                                   |   |                                 |      |   |   |   |   |   |   |   | 1,500 |   | 22,515 |
|                       |                                       |          |          |   |                                                                                   |   |                                 |      |   |   |   |   |   |   |   |   |   |   |
| Kent E. Willetts           | Annual Performance-Based Incentive Plan(5) |          |          |   |                                                                                   | 15,675 |                                 |      |   | 156,750 |   |   |   | 313,500 |   |   |   |   |
|                       | Long-Term Incentive Plan                   | 1/1/2012      | 1/12/2012     |   |                                                                                   |   |                                 |      |   |   |   |   |   |   |   | 18,000(5) |   | 121,320 |
|                       | Restricted Stock Unit Plan                 | 1/1/2012      | 1/12/2012     |   |                                                                                   |   |                                 |      |   |   |   |   |   |   |   | 6,000(5) |   | 90,060 |

----

| (1) | The Grant Date for units under the Company’s Long-Term Incentive Plan reflects the date upon which the units were awarded to the named executive officer. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | All Non-Equity Incentive Plan awards are made under the Company’s Annual Incentive Plan. Projected payouts are based, or will be based, on Company financial performance. The Threshold, Target and Maximum payouts stated are based on 2012 salaries for the Annual Incentive Plan. Actual amounts earned in 2012 and paid in 2013 are stated in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Represents grants of units under the Company’s Long-Term Incentive Plan or Restricted Stock Unit Plan. |
|-----|--------------------------------------------------------------------------------------------------------------|

| (4) | The units granted under the Company’s LTIPs are valued, as of the date of the grant, at the most recent PDC stock price as determined by the semi-annual ESOP valuation. Value is calculated using a Black-Scholes valuation methodology. The assumptions used for valuation are: Expected life: 6.5 years (mid-point of 3 and 10 years vested period); Dividend yield: 0% (plan does not pay dividends); Risk Free Interest Rate (based on Treasury Constant maturities yield curve): 1.29%; Volatility (based on peer group volatility for previous 6.5 years): 44%. The LTIP grant as of January 1, 2012 is valued at $6.74 per share with a $15.01 per share grant price. The RSU units are valued, as of the Grant Date, at the most recent PDC stock price as determined by the semi-annual ESOP valuation. The RSU grant as of January 1, 2012 is valued at $15.01 per share. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5) | Units granted were forfeited at departure on December 14, 2012 and no annual incentive will be paid for 2012. |
|-----|---------------------------------------------------------------------------------------------------------------|

----

|                |             |   |                    |      |   | Less Non-Cash Compensation |   |      |                                                                             |   |
|---------------------|------------------|--------|-------------------------|-----------|--------|----------------------------|--------|-----------|----------------------------------------------------------------------------------|--------|
|   Name    |   Year |   | TotalCompensation($)(1) |      |   | Long-Term Awards($)(2)     |   |      | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) |   |   | Other($)(3) |   |   | Net Cash Compensation ($) |   |
| Mark R. Richards    | 2012             |   |                    | 4,213,326 |   |                       |   | 1,409,200 |                                                                             |   |   | 255,610 |   |   | 2,360 |   |   |   | 2,546,156 |   |
|                | 2011             |   |                    | 3,146,659 |   |                       |   | 1,567,500 |                                                                             |   |   | 133,043 |   |   | 3,136 |   |   |   | 1,442,980 |   |
|                | 2010             |   |                    | 2,029,670 |   |                       |   | 861,900   |                                                                             |   |   | 150,475 |   |   |   |   |   |   | 1,017,295 |   |
|                |             |   |                    |      |   |                       |   |      |                                                                             |   |   |   |   |   |   |   |   |   |   |   |
| Thomas J. Ferree    | 2012             |   |                    | 1,696,961 |   |                       |   | 510,835   |                                                                             |   |   | 49,828 |   |   | 3,756 |   |   |   | 1,132,542 |   |
|                | 2011             |   |                    | 1,187,051 |   |                       |   | 513,000   |                                                                             |   |   | 44,151 |   |   | 2,770 |   |   |   | 627,130 |   |
|                | 2010             |   |                    | 824,346   |   |                       |   | 278,460   |                                                                             |   |   | 66,117 |   |   |   |   |   |   | 479,769 |   |
|                |             |   |                    |      |   |                       |   |      |                                                                             |   |   |   |   |   |   |   |   |   |   |   |
| Kerry S. Arent      | 2012             |   |                    | 975,707   |   |                       |   | 176,150   |                                                                             |   |   | 140,987 |   |   | 1,380 |   |   |   | 657,190 |   |
|                | 2011             |   |                    | 659,926   |   |                       |   | 208,050   |                                                                             |   |   | 107,593 |   |   | 1,380 |   |   |   | 342,903 |   |
|                |             |   |                    |      |   |                       |   |      |                                                                             |   |   |   |   |   |   |   |   |   |   |   |
| Tami L. Van Straten | 2012             |   |                    | 632,043   |   |                       |   | 67,090    |                                                                             |   |   | 35,231 |   |   | 1,746 |   |   |   | 527,976 |   |
|                |             |   |                    |      |   |                       |   |      |                                                                             |   |   |   |   |   |   |   |   |   |   |   |
| Jeffrey J. Fletcher | 2012             |   |                    | 623,890   |   |                       |   | 52,845    |                                                                             |   |   | 23,235 |   |   | 0 |   |   |   | 547,810 |   |
|                | 2011             |   |                    | 362,440   |   |                       |   | 68,400    |                                                                             |   |   | 23,486 |   |   | 0 |   |   |   | 270,554 |   |
|                |             |   |                    |      |   |                       |   |      |                                                                             |   |   |   |   |   |   |   |   |   |   |   |
| Kent E. Willetts    | 2012             |   |                    | 996,703   |   |                       |   | 211,380   |                                                                             |   |   | 13,944 |   |   | 452,443 | (4) |   |   | 318,936 |   |
|                | 2011             |   |                    | 673,239   |   |                       |   | 213,750   |                                                                             |   |   | 37,906 |   |   | 1,907 |   |   |   | 419,676 |   |
|                | 2010             |   |                    | 577,113   |   |                       |   | 185,640   |                                                                             |   |   | 47,388 |   |   |   |   |   |   | 344,085 |   |

| (1) | Total Compensation includes the Annual Incentive Pay Plan. Amounts paid under the Annual Incentive Pay Plan are earned in year reported and paid in following year.  |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | LTIP Option Awards (2011 and 2012) and RSU Option Awards (2010 and 2012). Performance Cash Plan (2011) is cash compensation. |
|-----|------------------------------------------------------------------------------------------------------------------------------|

| (3) | Tax gross-ups and life insurance. |
|-----|-----------------------------------|

| (4) | Also includes accrued severance. |
|-----|----------------------------------|

----

| LTIP Awards    |
|---------------------|
| Name                | Grant | Number of SecuritiesUnderlyingUnexercised Units | Number of SecuritiesUnderlyingUnexercised Units |  GrantPrice ($) | DateFullyVested(1) |  ExpirationDate(1) |
| Date                | Exercisable(#) | Unexercisable(#) |
| Mark R. Richards    | 01/01/12 | 0 | 120,000 | 15.01 | 01/01/15 | 01/01/22 |
|                | 01/02/11 | 0 | 275,000 | 12.84 | 01/02/14 | 01/02/21 |
|                | 01/01/09 | 155,000 | 0 | 21.43 | 01/01/12 | 01/01/19 |
|                | 01/01/08 | 100,000 | 0 | 33.41 | 01/01/11 | 01/01/18 |
|                | 01/01/07 | 90,000 | 0 | 33.62 | 01/01/10 | 01/01/17 |
|                | 01/01/06 | 85,000 | 0 | 28.56 | 01/01/09 | 01/01/16 |
|                | 07/01/05 | 85,000 | 0 | 27.77 | 07/01/08 | 07/01/15 |
|                |   |   |   |   |   |   |
| Thomas J. Ferree    | 01/01/12 | 0 | 43,500 | 15.01 | 01/01/15 | 01/01/22 |
|                | 01/02/11 | 0 | 90,000 | 12.84 | 01/02/14 | 01/02/21 |
|                | 01/01/09 | 45,000 | 0 | 21.43 | 01/01/12 | 01/01/19 |
|                | 01/01/08 | 31,000 | 0 | 33.41 | 01/01/11 | 01/01/18 |
|                | 01/01/07 | 25,000 | 0 | 33.62 | 01/01/10 | 01/01/17 |
|                |   |   |   |   |   |   |
| Kerry S. Arent      | 01/01/12 | 0 | 15,000 | 15.01 | 01/01/15 | 01/01/22 |
|                | 01/02/11 | 0 | 36,500 | 12.84 | 01/02/14 | 01/02/21 |
|                | 07/01/09 | 14,000 |   | 18.87 | 07/01/12 | 07/01/19 |
|                | 01/01/09 | 10,000 | 0 | 21.43 | 01/01/12 | 01/01/19 |
|                | 01/01/08 | 5,000 | 0 | 33.41 | 01/01/11 | 01/01/18 |
|                | 01/01/06 | 3,000 | 0 | 28.56 | 01/01/09 | 01/01/16 |
|                | 07/01/05 | 2,000 | 0 | 27.77 | 07/01/08 | 07/01/15 |
|                | 01/01/04 | 1,600 | 0 | 23.36 | 01/01/07 | 01/01/14 |
|                | 01/01/03 | 1,600 | 0 | 21.92 | 01/01/06 | 01/01/13 |
|                |   |   |   |   |   |   |
| Tami L. Van Straten | 01/01/12 | 0 | 5,500 | 15.01 | 01/01/15 | 01/01/22 |
|                | 01/02/11 | 0 | 10,000 | 12.84 | 01/02/14 | 01/02/21 |
|                | 01/01/09 | 4,000 | 0 | 21.43 | 01/01/12 | 01/01/19 |
|                | 01/01/08 | 3,000 | 0 | 33.41 | 01/01/11 | 01/01/18 |
|                | 01/01/07 | 3,000 | 0 | 33.62 | 01/01/10 | 01/01/17 |
|                | 01/01/06 | 3,000 | 0 | 28.56 | 01/01/09 | 01/01/16 |
|                | 01/01/04 | 3,000 | 0 | 23.36 | 01/01/07 | 01/01/14 |
|                | 01/01/03 | 1,000 | 0 | 21.92 | 01/01/06 | 01/01/13 |
|                |   |   |   |   |   |   |
| Jeffrey J. Fletcher | 01/01/12 | 0 | 4,500 | 15.01 | 01/01/15 | 01/01/22 |
|                | 01/02/11 | 0 | 12,000 | 12.84 | 01/02/14 | 01/02/21 |
|                | 01/01/09 | 10,000 | 0 | 21.43 | 01/01/12 | 01/01/19 |
|                | 01/01/08 | 6,000 | 0 | 33.41 | 01/01/11 | 01/01/18 |
|                | 02/05/07 | 6,000 | 0 | 33.62 | 02/05/10 | 02/05/17 |
|                |   |   |   |   |   |   |
| Kent E. Willetts    |    01/01/12(2) | 0 | 18,000 | 15.01 | 01/01/15 | 01/01/22 |
|                |    01/02/11(2) | 0 | 37,500 | 12.84 | 01/02/14 | 01/02/21 |
|                | 01/01/09 | 27,000 | 0 | 21.43 | 01/01/12 | 01/01/19 |
|                | 01/01/08 | 18,500 | 0 | 33.41 | 01/01/11 | 01/01/18 |
|                | 01/01/07 | 18,500 | 0 | 33.62 | 01/01/10 | 01/01/17 |
|                | 01/01/06 | 18,500 | 0 | 28.56 | 01/01/09 | 01/01/16 |
|                | 11/14/05 | 18,500 | 0 | 27.77 | 11/14/08 | 11/14/15 |

----

| RSU Awards     |
|---------------------|
|  Name          | GrantDate | Number of UnderlyingSecurities That HaveNot Vested (#)(3) |   | Market Value ofUnderlying Securities That Have Not Vested ($)(4) | Date Fully Vested |
| Mark R. Richards    | 01/01/12 | 40,000 |   | 702,000 | 01/01/15 |
|                | 01/03/10 | 65,000 |   | 1,140,750 | 01/03/13 |
|                |   |   |   |   |   |
| Thomas J. Ferree    | 01/01/12 | 14,500 |   | 254,475 | 01/01/15 |
|                | 01/03/10 | 21,000 |   | 368,550 | 01/03/13 |
|                |   |   |   |   |   |
| Kerry S. Arent      | 01/01/12 | 5,000 |   | 87,750 | 01/01/15 |
|                | 01/03/10 | 9,000 |   | 157,950 | 01/03/13 |
|                |   |   |   |   |   |
| Tami L. Van Straten | 01/01/12 | 2,000 |   | 35,100 | 01/01/15 |
|                | 01/03/10 | 2,500 |   | 43,875 | 01/03/13 |
|                |   |   |   |   |   |
| Jeffrey J. Fletcher | 01/01/12 | 1,500 |   | 26,325 | 01/01/15 |
|                | 01/03/10 | 5,000 |   | 87,750 | 01/03/13 |
|                |   |   |   |   |   |
| Kent E. Willetts    | 01/01/12 |   6,000(2) |   | 0 |   |
|                | 01/03/10 |   14,000(2) |   | 0 |   |

| (1) | Employees are generally entitled to exercise any LTIP units only after holding the units for at least three years and for up to ten years from the date of grant. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Forfeited upon departure. |
|-----|---------------------------|

| (3) | RSU units are vested three years after the award date and paid at vesting. |
|-----|----------------------------------------------------------------------------|

| (4) | The market value of RSU units that have not vested was calculated by multiplying the number of units by the PDC stock price of $17.55 as of December 31, 2012 as determined by the semi-annual ESOP valuation. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Name                | Plan Name |   | Number of Years ofCredited Service (#) |   |   | Present Value of AccumulatedBenefit ($)(1) |   |    | Payments During LastFiscal Year ($) |
|---------------------|----------------|--------|-------------------------------------------------------|--------|--------|------------------------------------------------------|--------|---------|-----------------------------------------------|
| Mark R. Richards    | Pension        |   |                                                  | 6.0    |   |                                                 |   | 165,371 |                                          |   |   | 0 |
|                | SERP           |   |                                                  | 6.0    |   |                                                 |   | 682,446 |                                          |   |   | 0 |
|                |           |   |                                                  |   |   |                                                 |   |    |                                          |   |   |   |
| Thomas J. Ferree    | Pension        |   |                                                  | 4.4    |   |                                                 |   | 139,736 |                                          |   |   | 0 |
|                | SERP           |   |                                                  | 4.4    |   |                                                 |   | 138,992 |                                          |   |   | 0 |
|                |           |   |                                                  |   |   |                                                 |   |    |                                          |   |   |   |
| Kerry S. Arent      | Pension        |   |                                                  | 28.8   |   |                                                 |   | 655,381 |                                          |   |   | 0 |
|                | SERP           |   |                                                  | 28.8   |   |                                                 |   | 50,695  |                                          |   |   | 0 |
|                |           |   |                                                  |   |   |                                                 |   |    |                                          |   |   |   |
| Tami Van Straten    | Pension        |   |                                                  | 10.1   |   |                                                 |   | 135,503 |                                          |   |   | 0 |
|                | SERP           |   |                                                  | 10.1   |   |                                                 |   | 0       |                                          |   |   | 0 |
|                |           |   |                                                  |   |   |                                                 |   |    |                                          |   |   |   |
| Jeffrey J. Fletcher | Pension        |   |                                                  | 4.1    |   |                                                 |   | 146,547 |                                          |   |   | 0 |
|                | SERP           |   |                                                  | 4.1    |   |                                                 |   | 9,831   |                                          |   |   | 0 |
|                |           |   |                                                  |   |   |                                                 |   |    |                                          |   |   |   |
| Kent E. Willetts    | Pension        |   |                                                  | 5.3    |   |                                                 |   | 129,930 |                                          |   |   | 0 |
|                | SERP           |   |                                                  | 5.3    |   |                                                 |   | 87,067  |                                          |   |   | 0 |

| (1) | The valuation methods and material assumptions used in determining the present value of accumulated pension benefits are discussed in detail in Note 16 of the Consolidated Financial Statements in Item 8, above. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Name                |   | Executive Contributionsin Last Fiscal Year ($)(1) |    |   | Company Contributions inLast FiscalYear ($)(2) |   |   | Aggregate Earningsin Last FiscalYear ($) |   |   | AggregateWithdrawals/Distributions ($) |   |   | AggregateBalance atDecember 31, 2012 ($) |    |
|---------------------|--------|--------------------------------------------------------|---------|--------|----------------------------------------------------------|--------|--------|-----------------------------------------------|--------|--------|----------------------------------------|--------|--------|-----------------------------------------------|---------|
| Mark R. Richards    |   |                                                   | 117,877 |   |                                                     |   | 98,656 |                                          |   |   | 87,959                                 |   |   |                                          | 0       |   |   |   | 1,225,949 |   |
| Thomas J. Ferree    |   |                                                   | 0       |   |                                                     |   | 30,593 |                                          |   |   | 544                                    |   |   |                                          | 0       |   |   |   | 43,922 |   |
| Kerry S. Arent      |   |                                                   | 35,206  |   |                                                     |   | 8,498  |                                          |   |   | 1,557                                  |   |   |                                          | 0       |   |   |   | 45,261 |   |
| Jeffrey J. Fletcher |   |                                                   | 0       |   |                                                     |   | 918    |                                          |   |   | 0                                      |   |   |                                          | 0       |   |   |   | 918 |   |
| Tami Van Straten    |   |                                                   | 0       |   |                                                     |   | 0      |                                          |   |   | 0                                      |   |   |                                          | 0       |   |   |   | 0 |   |
| Kent E. Willetts    |   |                                                   | 0       |   |                                                     |   | 0      |                                          |   |   | 13,721                                 |   |   |                                          | (86,379 | ) |   |   | 0 |   |

| (1) | Employee Contributions to the Nonqualified Excess Plan may include base salary and/or annual performance-based incentive pay. Amounts reported as deferred under the Nonqualified Excess Plan are included as part of Total Compensation in the Summary Compensation Table. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Excess Plan contribution related to Retirement Contribution Benefit (see below). |
|-----|----------------------------------------------------------------------------------|

| Name             | Unused Vacation Paid at Termination ($) | COBRA Health Benefits ($) | Outplacement Services ($) | Termination Protection Payments ($) | Company FICA To Be Paid ($) | Total ($) |
|------------------|-----------------------------------------|---------------------------|---------------------------|-------------------------------------|-----------------------------|-----------|
| Kent E. Willetts | $0                                      | $19,906                   | $9,800                    | $427,500                            | $6,199                      | $463,405  |

----

| Name                | Termination Other Than forMisconduct or With Good Reason | COBRAHealthBenefits ($)(1) | OutplacementServices ($) | TerminationProtectionPayments ($)(2) | Long-TermIncentive Plans($)(3) | CompanyFICA ToBe Paid ($)(4) | Tax Gross-UpPayments ($) | Total ($) |
|---------------------|---------------------------------------------------------------------------------------------|---------------------------------|--------------------------|--------------------------------------|-------------------------------------|-----------------------------------|-------------------------------|-----------|
| Mark R. Richards    | Without Change of Control                                                                   | 19,906                          | 9,800                    | 2,424,000                            | 1,140,750                           | 51,689                            | 0                             | 3,646,145 |
|                | Within two years of Change of Control                                                       | 39,811                          | 9,800                    | 5,649,200                            | 3,503,870                           | 132,720                           | 0                             | 9,335,401 |
|                |                                                                                        |                            |                     |                                 |                                |                              |                          |      |
| Thomas J. Ferree    | Without Change of Control                                                                   | 19,906                          | 9,800                    | 1,066,307                            | 368,550                             | 20,805                            | 0                             | 1,485,368 |
|                | Within two years of Change of Control                                                       | 26,541                          | 9,800                    | 1,754,807                            | 1,157,415                           | 42,227                            | 0                             | 2,990,790 |
|                |                                                                                        |                            |                     |                                 |                                |                              |                          |      |
| Kerry S. Arent      | Without Change of Control                                                                   | 19,906                          | 9,800                    | 646,846                              | 157,950                             | 11,671                            | 0                             | 846,173   |
|                | Within two years of Change of Control                                                       | 26,541                          | 9,800                    | 1,036,846                            | 446,715                             | 21,513                            | 0                             | 1,541,415 |
|                |                                                                                        |                            |                     |                                 |                                |                              |                          |      |
| Tami L. Van Straten | Without Change of Control                                                                   | 13,270                          | 9,800                    | 311,416                              | 43,875                              | 5,152                             | 0                             | 383,513   |
|                | Within one year of Change of Control                                                        | 13,270                          | 9,800                    | 311,416                              | 140,045                             | 6,547                             | 0                             | 481,078   |
|                |                                                                                        |                            |                     |                                 |                                |                              |                          |      |
| Jeffrey J. Fletcher | Without Change of Control                                                                   | 13,270                          | 9,800                    | 327,072                              | 87,750                              | 6,015                             | 0                             | 443,907   |
|                | Within one year of Change of Control                                                        | 13,270                          | 9,800                    | 327,072                              | 182,025                             | 7,382                             | 0                             | 539,549   |
|                |                                                                                        |                            |                     |                                 |                                |                              |                          |      |
| Kent E. Willetts    | Without Change of Control                                                                   | 0                               | 0                        | 0                                    | 0                                   | 0                                 | 0                             | 0         |
|                | Within two years of Change of Control                                                       | 0                               | 0                        | 0                                    | 0                                   | 0                                 | 0                             | 0         |

| (1) | COBRA Health Benefits amounts stated in this table are based on cost of high deductible medical and comprehensive dental plan options. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Includes Termination Protection Payments (or Enhanced Severance Payment for Mr. Fletcher and Ms. Van Straten) and Prorated Annual Incentive. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | In the event of a change of control as defined in the Termination Protection Agreements, the LTIP and RSU become immediately exercisable. The amount reflects the value of all outstanding awards on December 31, 2012, including the value of January 3, 2010 grants that were paid out on February 22, 2013. The value of outstanding RSU units is determined by multiplying the number of units outstanding for each grant date by the PDC unit value on December 31, 2012. The value of outstanding LTIP units is determined by multiplying the number of units outstanding for each grant date by the change in unit value from the date of the grant to December 31, 2012. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Assumes company Medicare rate at 1.45%. |
|-----|-----------------------------------------|

----

|   | • | the date upon which a third party acquires ownership of Company stock constituting more than 50% of the total fair market value of total voting power of the stock of the Company; |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | the date upon which any third party acquires (during a 12-month period ending on the date of the most recent acquisition) ownership of the Company stock constituting more than 35% of the total voting power of the stock of the Company; |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | the date upon which a majority of the Company’s Board of Directors are replaced during a 12-month period, and the new appointments are not endorsed by a majority of the Board prior to the date of appointment; or |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | the date upon which any third party acquires (during a 12-month period ending on the date of the most recent acquisition) assets of the Company having a gross fair market value of at least 40% of the total gross fair market value of all assets of the Company immediately prior to such acquisition. |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | • | a decrease in the executive officer’s position or responsibilities without his or her consent; |
|--------|---------|------------------------------------------------------------------------------------------------------|

|   | • | failure to pay the executive officer’s salary or bonus in effect immediately prior to a change of control; |
|--------|---------|------------------------------------------------------------------------------------------------------------------|

|   | • | the relocation of the executive officer’s principal place of employment without his or her consent; or |
|--------|---------|--------------------------------------------------------------------------------------------------------------|

|   | • | failure by any successor entity to expressly assume and agree to the terms of the Termination Protection Agreement. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------|

|         |                              |               |      |
|-------------------|-----------------------------------|--------------------|-----------|
| Name              | Fees Earned orPaid in Cash ($)(1) | StockAwards ($)(2) | Total ($) |
| Stephen P. Carter | 57,500                            | 35,000             | 92,500    |
| Terry M. Murphy   | 62,500                            | 35,000             | 97,500    |
| Andrew F. Reardon | 60,000                            | 35,000             | 95,000    |
| Kathi P. Seifert  | 60,000                            | 35,000             | 95,000    |
| Mark A. Suwyn     | 55,000                            | 35,000             | 90,000    |
| George W. Wurtz   | 55,000                            | 35,000             | 90,000    |

| (1) | Non-employee directors are entitled to participate in the Company’s Nonqualified Excess Plan and may defer 100% of their fees. Mr. Murphy deferred $62,500 of his cash compensation into that plan. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | On January 2, 2012, each of the then non-employee directors were issued 1165.9 deferred compensation units valued at the December 31, 2011 share price of $15.01 per share ($17,500). On July 2, 2012, each of the then non-employee directors were issued 930.9 deferred compensation units valued at the June 30, 2012 share price of $18.80 per share ($17,500). The amounts reflect the aggregate grant date fair value computed in accordance with Financial Accounting Standards Codification Topic. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
|---------------|------------------------------------------------------------------------------------------------|

| Name of Beneficial Owner                                     | Amount andNatureof BeneficialOwnership (1) | Percent |
|--------------------------------------------------------------|------------------------------------------------------|---------|
| Mark R. Richards                                             | 18,767                                               | *       |
| Thomas J. Ferree                                             | 23,171                                               | *       |
| Kerry S. Arent                                               | 31,629                                               | *       |
| Tami L. Van Straten                                          | 9,417                                                | *       |
| Jeffrey J. Fletcher                                          | 2,407                                                | *       |
| James R. Hillend                                             | 20,072                                               | *       |
| Kent E. Willetts                                             | 15,216                                               | *       |
| Stephen P. Carter                                            | —  (2)                               | *       |
| Terry M. Murphy                                              | —  (2)                               | *       |
| Andrew F. Reardon                                            | —  (2)                               | *       |
| Kathi P. Seifert                                             | —  (2)                               | *       |
| Mark A. Suwyn                                                | —  (2)                               | *       |
| George W. Wurtz                                              | —  (2)                               | *       |
|                                                         |                                                 |    |
| All directors and executive officers as a group (13 persons) | 120,679                                              | 1.38%   |

| (1) | Participants in the KSOP have the right to direct the ESOP trustee to vote shares of common stock which have been allocated to that participant’s ESOP account either for or against specified corporate events relating to PDC. For all other shareholder votes, the ESOP trustee will vote all shares of common stock held by the ESOP as directed by the ESOP committee, subject to the security holders agreements described above under “Item 10. Directors, Executive Officers and Corporate Governance.” Participants have statutory diversification rights beginning at age 55, conditional diversification rights, and the right to receive distributions from the participant’s KSOP account upon retirement, death, disability, resignation, dismissal or permanent layoff. Participants may not sell, pledge or otherwise transfer the shares of common stock allocated to their KSOP accounts. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Non-employee directors are not eligible to participate in the KSOP. |
|-----|---------------------------------------------------------------------|

----

----

| (a)(1)  | Financial Statements.                                                                                                                                                                                                                                  |   |   |   |                   |   |
|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|------------------------|--------|
|         | Report of Independent Registered Public Accounting Firm    Paperweight Development Corp. and Subsidiaries    Appleton Papers Inc. and Subsidiaries                                                                  |   |   |   |   4344            |   |
|         |                                                                                                                                                                                                                                                        |   |   |   |                   |   |
|         | Consolidated Balance Sheets as of December 29, 2012 and December 31, 2011   Paperweight Development Corp. and Subsidiaries   Appleton Papers Inc. and Subsidiaries                                                                 |   |   |   |  4546             |   |
|         |                                                                                                                                                                                                                                                        |   |   |   |                   |   |
|         | Consolidated Statements of Comprehensive Loss for the years ended December 29, 2012, December 31, 2011 and January 1, 2011    Paperweight Development Corp. and Subsidiaries     Appleton Papers Inc. and Subsidiaries   |   |   |   |    4748 |   |
|         |                                                                                                                                                                                                                                                        |   |   |   |                   |   |
|         | Consolidated Statements of Cash Flows for the years ended December 29, 2012, December 31, 2011 and January 1, 2011   Paperweight Development Corp. and Subsidiaries   Appleton Papers Inc. and Subsidiaries                        |   |   |   |   4950       |   |
|         |                                                                                                                                                                                                                                                        |   |   |   |                   |   |
|         | Consolidated Statements of Redeemable Common Stock, Accumulated Deficit and Accumulated Other ComprehensiveIncome for the years ended December 29, 2012, December 31, 2011 and January 1, 2011 for Paperweight DevelopmentCorp. and Subsidiaries            |   |   |   | 51                     |   |
|         |                                                                                                                                                                                                                                                        |   |   |   |                   |   |
|         | Consolidated Statements of Equity for the years ended December 29, 2012, December 31, 2011 and January 1, 2011 for Appleton Papers Inc. and Subsidiaries                                                                                               |   |   |   |  52               |   |
|         |                                                                                                                                                                                                                                                        |   |   |   |                   |   |
|         | Notes to Consolidated Financial Statements                                                                                                                                                                                                        |   |   |   | 53                     |   |
|         |                                                                                                                                                                                                                                                        |   |   |   |                   |   |
|         | Report of Independent Registered Public Accounting Firm on Financial Statement Schedule     Paperweight Development Corp. and Subsidiaries   Appleton Papers Inc. and Subsidiaries                                       |   |   |   |  138139           |   |
|         |                                                                                                                                                                                                                                                        |   |   |   |                   |   |
| (a)(2)  | SCHEDULE II - Valuation and Qualifying Accounts                                                                                                                                                                                                        |   |   |   |  140              |   |
|         |                                                                                                                                                                                                                                                        |   |   |   |                   |   |
| (a)(3)  | Exhibits.                                                                                                                                                                                                                                                   |   |   |   |                   |   |
|         |                                                                                                                                                                                                                                                        |   |   |   |                   |
| 3.1          | Second Amended and Restated Certificate of Incorporation of Appleton Papers Inc. Incorporated by reference to Exhibit 3.1 to the Registrants’ Registration Statement on Form S-4 (Registration No. 333-82084) filed on February 4, 2002.    |
|         |                                                                                                                                                                                                                                                        |
| 3.2     | Amended and Restated By-laws of Appleton Papers Inc. Incorporated by reference to Exhibit 3.2 to the Registrants’ Registration Statement on Form S-4 (Registration No. 333-82084) filed on February 4, 2002.                                |
|         |                                                                                                                                                                                                                                                        |
| 3.2.1   | Amendment to Amended and Restated By-laws of Appleton Papers Inc. Incorporated by reference to Exhibit 3.2.1 to Amendment No. 2 to the Registrants’ Registration Statement on Form S-4 (Registration No. 333-82084) filed on May 15, 2002.  |
|         |                                                                                                                                                                                                                                                        |
| 3.2.2   | Amendment to Amended and Restated By-laws of Appleton Papers Inc. Incorporated by reference to Exhibit 3.2.2 to the Registrants’ Annual Report on Form 10-K for the year ended December 28, 2002.                                           |
|         |                                                                                                                                                                                                                                                        |
| 3.3     | Amended and Restated Articles of Incorporation of Paperweight Development Corp. Incorporated by reference to Exhibit 3.3 to the Registrants’ Registration Statement on Form S-4 (Registration No. 333-82084) filed on February 4, 2002.     |
|         |                                                                                                                                                                                                                                                        |
| 3.4     | Amended and Restated By-laws of Paperweight Development Corp. Incorporated by reference to Exhibit 3.4 to the Registrants’ Registration Statement on Form S-4 (Registration No. 333-82084) filed on February 4, 2002.                       |

----

| 4.1    | Indenture, dated as of June 11, 2004, between Appleton Papers Inc. and each of the guarantors named therein and U.S. Bank National Association, as trustee governing the 9 3/4 Senior Subordinated Notes due 2014 (the “Senior Subordinated Notes Indenture”). Incorporated by reference to Exhibit 4.2 to the Registrants’ Quarterly Report on Form 10-Q for the quarter ended July 4, 2004. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                      |

| 4.2  | Form of registered Senior Subordinated Note (included as Exhibit A1 to the Senior Subordinated Notes Indenture). Incorporated by reference to Exhibit 4.4 to the Registrants’ Annual Report on Form 10-K for the fiscal year ended January 2, 2010. |
|-----------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.3   | First Supplemental Indenture, dated as of January 11, 2005, among Appleton Papers Inc., each of the guarantors named therein and U.S. Bank National Association, as trustee, governing the 9 3/4% Senior Subordinated Notes due 2014. Incorporated by reference to Exhibit 4.6 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 29, 2007.                                   |
|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|       |                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 4.4   | Second Supplemental Indenture, dated as of June 13, 2006, among Appleton Papers Inc., each of the guarantors named therein and U.S. Bank National Association, as trustee, governing the 9 3/4% Senior Subordinated Notes due 2014. Incorporated by reference to Exhibit 4.2 to the Registrant's current report on Form 8-K filed June 16, 2006.                                                                   |
|       |                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 4.5   | Form of 9 3/4% Senior Subordinated Notes due 2014. Incorporated by reference to Exhibit 4.4 to the Registrant's current report on Form 8-K filed on June 16, 2006.                                                                                                                                                                                                                                                           |
|       |                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 4.6   | Third Supplemental Indenture, dated as of September 9, 2009, among Appleton Papers Inc., as issuer, each of the guarantors named therein and U.S. Bank National Association, a trustee, governing the 9 3/4% Senior Subordinated Notes due 2014. Incorporated by reference to Exhibit 4.3 to the Registrant's current report on Form 8-K filed October 6, 2009.                                                         |
|       |                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 4.7   | Indenture, dated as of September 30, 2009, among Appleton Papers Inc., as issuer, each of the guarantors named therein and U.S. Bank National Association, as trustee and collateral agent, governing the 11.25% Second Lien Notes due 2015 (the "Second Lien Notes Indenture"). Incorporated by reference to Exhibit 4.1 to the Registrant's current report on Form 8-K filed October 6, 2009.                    |
|       |                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 4.8   | Form of Second Lien Notes due 2015 (included as Exhibits A1 and A2 to the Second Lien Notes Indenture). Incorporated by reference to Exhibit 4.14 to the Registrants’ Annual Report on Form 10-K for the fiscal year ended January 2, 2010.                                                                                                                                                                            |
|       |                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 4.9   | Second Lien Collateral Agreement, dated as of September 30, 2009, among Appleton Papers Inc., Paperweight Development Corp. and each other Grantor identified therein in favor of U.S. Bank National Association, as Collateral Agent. Incorporated by reference to Exhibit 4.14 to Registrants' Quarterly Report on Form 10-Q filed for the quarter ended July 3, 2011.                                                |
|       |                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 4.10       | First Supplemental Indenture, dated as of January 29, 2010, among Appleton Papers Inc., as issuer, each of the guarantors identified therein and U.S. Bank National Association, as trustee and collateral agent, governing the 11.25% Second Lien Notes Due 2015. Incorporated by reference to Exhibit 4.1 to the Registrant’s current report on Form 8-K filed February 3, 2010.                           |
|       |                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 4.11       | Indenture, dated as of February 8, 2010, among Appleton Papers Inc., as issuer, each of the guarantors named therein and U.S. Bank National Association, as trustee and collateral agent, governing the 10.50% Senior Secured Notes due 2015 (the “Senior Secured Notes Indenture”). Incorporated by reference to Exhibit 4.1 to the Registrant’s current report on Form 8-K filed February 12, 2010. |
|       |                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 4.12  | Form of 10 1/2% Senior Secured Notes due 2015 (included as Exhibit A to the Senior Secured Notes Indenture). Incorporated by reference to Exhibit 4.18 to the Registrants’ Annual Report on Form 10-K for the fiscal year ended January 2, 2010.                                                                                                                                                                       |
|       |                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.1  | Purchase Agreement by and among Arjo Wiggins Appleton p.l.c., Arjo Wiggins US Holdings Ltd., Arjo Wiggins North America Investments Ltd., Paperweight Development Corp. and New Appleton LLC, dated as of July 5, 2001. Incorporated by reference to Exhibit 10.4 to the Registrants’ Registration Statement on Form S-4 (Registration No. 333-82084) filed on February 4, 2002.                                  |

| 10.1.1  | Amendment to Purchase Agreement by and among Arjo Wiggins US Holdings Ltd., Arjo Wiggins North America Investments Ltd., Arjo Wiggins Appleton Ltd., Paperweight Development Corp. and New Appleton LLC, dated as of June 11, 2004. Incorporated by reference to Exhibit 10.2 to the Registrants’ Quarterly Report on Form 10-Q for the quarter ended July 4, 2004. |
|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|         |                                                                                                                                                                                                                                                                                                                                                                                |
| 10.2         | Fox River AWA Environmental Indemnity Agreement by and among Arjo Wiggins Appleton p.l.c., Appleton Papers Inc., Paperweight Development Corp. and New Appleton LLC, dated as of November 9, 2001. Incorporated by reference to Exhibit 10.1 to the Registrants’ Quarterly Report on Form 10-Q for the quarter ended October 2, 2011.                               |
|         |                                                                                                                                                                                                                                                                                                                                                                                |
| 10.2.1  | Amendment to Fox River AWA Environmental Indemnity Agreement by and among Paperweight Development Corp., New Appleton LLC, Appleton Papers Inc. and Arjo Wiggins Appleton Ltd., dated as of June 11, 2004. Incorporated by reference to Exhibit 10.3 to the Registrants’ Quarterly Report on Form 10-Q for the quarter ended July 4, 2004.                          |
|         |                                                                                                                                                                                                                                                                                                                                                                                |
| 10.3    | Fox River PDC Environmental Indemnity Agreement by and among Appleton Papers Inc. and Paperweight Development Corp., dated as of November 9, 2001. Incorporated by reference to Exhibit 10.7 to Amendment No. 1 to the Registrants’ Registration Statement on Form S-4 (Registration No. 333-82084) filed on April 17, 2002.                                        |
|         |                                                                                                                                                                                                                                                                                                                                                                                |
| 10.3.1  | Amendment to Fox River PDC Environmental Indemnity Agreement by and among Appleton Papers Inc., Paperweight Development Corp. and New Appleton LLC, dated as of June 11, 2004. Incorporated by reference to Exhibit 10.4 to the Registrants’ Quarterly Report on Form 10-Q for the quarter ended July 4, 2004.                                                      |

----

| 10.4  | Security Agreement by and among Appleton Papers Inc., Paperweight Development Corp., New Appleton LLC and Arjo Wiggins Appleton p.l.c., dated as November 9, 2001. Incorporated by reference to Exhibit 10.8 to Amendment No. 1 to the Registrants’ Registration Statement on Form S-4 (Registration No. 333-82084) filed on April 17, 2002. |
|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|       |                                                                                                                                                                                                                                                                                                                                                         |

| 10.5     | Amended and Restated Relationship Agreement by and among Arjo Wiggins Appleton Ltd. (f/k/a Arjo Wiggins Appleton p.l.c.), Arjo Wiggins (Bermuda) Holdings Limited, Paperweight Development Corp., PDC Capital Corporation and Arjo Wiggins Appleton (Bermuda) Limited, dated as of June 11, 2004. Incorporated by reference to Exhibit 10.5 to the Registrants’ Quarterly Report on Form 10-Q for the quarter ended July 3, 2011.                          |
|---------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.6     | Assignment and Assumption Deed, dated as of November 9, 2001, between Arjo Wiggins Appleton p.l.c. and Arjo Wiggins Appleton (Bermuda) Limited. Incorporated by reference to Exhibit 10.10 to Amendment No. 1 to the Registrants’ Registration Statement on Form S-4 (Registration No. 333-82084) filed on April 17, 2002.                                                                                                                                 |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.7          | Collateral Assignment, dated as of November 9, 2001, between Arjo Wiggins Appleton (Bermuda) Limited Paperweight Development Corp., New Appleton LLC and Appleton Papers Inc. Incorporated by reference to Exhibit 10.11 to Amendment No. 1 to the Registrants’ Registration Statement on Form S-4 (Registration No. 333-82084) filed on April 17, 2002.                                                                                                   |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.8     | Appleton Papers Inc. Employee Stock Ownership Trust, created September 6, 2001, effective June 1, 2001. Incorporated by reference to Exhibit 10.13 to the Registrants’ Registration Statement on Form S-4 (Registration No. 333-82084) filed on February 4, 2002.                                                                                                                                                                                     |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.8.1        | Amendment to Appleton Papers Inc. Employee Stock Ownership Trust, dated effective May 3, 2012.                                                                                                                                                                                                                                                                                                                                                                             |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.9          | Collateral Agreement made by Paperweight Development Corp., Appleton Papers Inc., and certain of its subsidiaries in favor of U.S. Bank National Association, as collateral agent, dated as of February 8, 2010. Incorporated by reference to Exhibit 4.2 to the Registrants’ current report on Form 8-K filed February 12, 2010.                                                                                                                          |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.10         | Collateral Agreement made by Appleton Papers Canada Ltd. in favor of U.S. Bank National Association, as collateral agent, dated as of February 8, 2010. Incorporated by reference to Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended July 3, 2011.                                                                                                                                                               |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.11         | Credit Agreement, dated as of February 8, 2010, among Appleton Papers Inc., as borrower, Paperweight Development Corp., as holdings, Fifth Third Bank, as administrative agent, swing line lender and an L/C issuer, the other lenders party thereto and Fifth Third Bank, as sole lead arranger and sole book manager. Incorporated by reference to Exhibit 10.2 to the Registrants’ Quarterly report on Form 10-Q for the quarter ended October 2, 2011. |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.11.1  | First Amendment to Credit Agreement, dated as of August 27, 2010, among Appleton Papers Inc., as borrower, Paperweight Development Corp., as holdings, Fifth Third Bank, as administrative agent, swing line lender and an L/C issuer, and the other lenders party thereto. Incorporated by reference to Exhibit 10.12.1 to the Registrants’ Annual Report on Form 10-K for the fiscal year ended December 31, 2011.                                            |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.11.2  | Second Amendment to Credit Agreement, dated as of July 1, 2011, among Appleton Papers Inc., as borrower, Paperweight Development Corp., as holdings, Fifth Third Bank, as administrative agent, swing line lender and an L/C issuer, and the other lenders party thereto. Incorporated by reference to Exhibit 10.2.1 to the Registrants’ Quarterly Report on Form 10-Q for the quarter ended October 2, 2011.                                             |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.11.3       | Third Amendment to Credit Agreement, dated as of May 1, 2012, among Appleton Papers Inc., as borrower, Paperweight Development Corp., as holdings, Fifth Third Bank, as administrative agent, swing line lender and an L/C issuer, and the other lenders party thereto. Incorporated by reference to Exhibit 10.1 to the Registrants’ Quarterly Report on Form 10-Q for the quarter ended July 1, 2012.                                                              |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.12    | Guarantee and Collateral Agreement made by Paperweight Development Corp., Appleton Papers Inc. and certain of its subsidiaries, in favor of Fifth Third Bank, as administrative agent, dated as of February 8, 2010. Incorporated by reference to Exhibit 10.6 to the Registrants’ Quarterly Report on Form 10-Q for the quarter ended July 3, 2011.                                                                                                       |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.13    | Guarantee and Collateral Agreement made by Appleton Papers Canada Ltd. in favor of Fifth Third Bank, as administrative agent, dated as of February 8, 2010.  Incorporated by reference to Exhibit 10.7 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended July 3, 2011.                                                                                                                                                          |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.14    | Appleton Papers Inc. New Deferred Compensation Plan, as amended on October 31, 2002, and restated effective as of November 9, 2001. Incorporated by reference to Exhibit 10.12 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005.(1)                                                                                                                                                                    |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.15    | The Executive Nonqualified Excess Plan of Appleton Papers Inc., as amended and restated on January 1, 2013. (1)                                                                                                                                                                                                                                                                                                                                                       |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.15.1       | Adoption Agreement, effective March 1, 2011, by Appleton Papers Inc. and Principal Life Insurance Company, as the provider. Incorporated by reference to Exhibit 10.2 to the Registrants’ Quarterly Report on Form 10-Q for the quarter ended April 3, 2011. (1)                                                                                                                                                                                           |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.16         | Appleton Papers Inc. Supplemental Executive Retirement Plan, as amended through March 28, 2001. Incorporated by reference to Exhibit 10.16 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2005. (1)                                                                                                                                                                                                                  |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.16.1       | Amendment to the Appleton Papers Inc. Supplemental Executive Retirement Plan, effective January 1, 2009. Incorporated by reference to Exhibit 10.16.1 to the Registrants’ Annual Report on Form 10-K for the fiscal year ended January 2, 2010. (1)                                                                                                                                                                                                   |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.17         | Form of Termination Protection Agreement. Incorporated by reference to Exhibit 10.13 to the Registrant's Annual Report on Form 10-K for the fiscal year ended January 3, 2009. (1)                                                                                                                                                                                                                                                                                    |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |

----

| 10.17.1             | Clarifying Amendment to Form of Termination Protection Agreement, effective November 11, 2010. Incorporated by reference to Exhibit 10.17.1 to the Registrants’ Annual Report on Form 10-K for the fiscal year ended January 1, 2011. (1)                                                                                                                                                                          |
|---------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                |                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.18               | Form of Enhanced Severance Agreement. (1)                                                                                                                                                                                                                                                                                                                                                                                          |
|                |                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.19               | Termination Protection Agreement Amended and Restated for Mark R. Richards dated effective December 17, 2008. Incorporated by reference to Exhibit 10.14 to the Registrant's Annual Report on Form 10-K for the fiscal year ended January 3, 2009. (1)                                                                                                                                                                   |
|                |                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.19.1             | Clarifying Amendment to Termination Protection Agreement Amended and Restated for Mark R. Richards, effective November 11, 2010. Incorporated by reference to Exhibit 10.19.1 to the Registrants’ Annual Report on Form 10-K for the fiscal year ended January 1, 2011. (1)                                                                                                                                        |
|                |                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.20               | Amended and Restated Intellectual Property Agreement among Appleton Papers Inc., WTA Inc., Appleton Coated Papers Holdings Inc. and Appleton Coated LLC, dated as of November 9, 2001. Incorporated by reference to Exhibit 10.20 to the Registrants’ Registration Statement on Form S-4 (Registration No. 333-82084) filed on February 4, 2002.                                                                   |
|                |                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.21               | Trademark License Agreement between Appleton Papers Inc., f/k/a Lentheric, Inc., and NCR Corporation, dated as of June 30, 1978. Incorporated by reference to Exhibit 10.21 to the Registrants’ Registration Statement on Form S-4 (Registration No. 333-82084) filed on February 4, 2002.                                                                                                                         |
|                |                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.22               | Security Holders Agreement by and between Paperweight Development Corp. and the Appleton Papers Inc. Employee Stock Ownership Trust, dated as of November 9, 2001. Incorporated by reference to Exhibit 10.26 to the Registrants’ Registration Statement on Form S-4 (Registration No. 333-82084) filed on February 4, 2002.                                                                                       |
|                |                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.23               | Security Holders Agreement by and among Paperweight Development Corp., Appleton Investment Inc. and Appleton Papers Inc., dated as of November 9, 2001. Incorporated by reference to Exhibit 10.25 to the Registrants’ Registration Statement on Form S-4 (Registration No. 333-82084) filed on February 4, 2002.                                                                                                  |
|                |                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.24               | Appleton Papers Retirement Savings and Employee Stock Ownership Plan, amended and restated generally effective January 1, 2009. Incorporated by reference to Exhibit 10.23 to the Registrants’ Annual Report on Form 10-K for the fiscal year ended January 2, 2010. (1)                                                                                                                                           |
|                |                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.24.1             | Resolution by Appleton’s Board of Directors dated December 8, 2010, amending the Appleton Papers Inc. Retirement Savings and Employee Stock Ownership Plan, generally effective March 1, 2011. Incorporated by reference to Exhibit 10.24.2 to the Registrants’ Annual Report on Form 10-K for the fiscal year ended January 1, 2011. (1)                                                               |
|                |                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.24.2        | Resolution by Appleton’s ESOP Administrative Committee and the Benefit Finance Committee of Appleton Papers Inc. effective October 1, 2011, amending Appleton Papers Retirement Savings and Employee Stock Ownership Plan, generally effective January 1, 2009. Incorporated by reference to Exhibit 10.26.2 to the Registrants’ Annual Report on Form 10-K for the fiscal year ended December 31, 2011. (1) |
|                |                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.24.3             | Resolution by Appleton’s ESOP Administrative Committee effective January 1, 2012, amending Appleton Papers Retirement Savings and Employee Stock Ownership Plan, generally effective January 1, 2009. (1)                                                                                                                                                                                                                    |
|                |                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.24.4             | Resolution by Appleton’s ESOP Administrative Committee effective October 8, 2012, amending Appleton Papers Retirement Savings and Employee Stock Ownership Plan, generally effective January 1, 2009. (1)                                                                                                                                                                                                                    |
|                |                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.25          | Amended and restated Appleton Papers Inc. Retirement Plan as amended through March 9, 2011. Incorporated by reference to Exhibit 10.1 to the Registrants’ Quarterly Report on Form 10-Q for the quarter ended April 3, 2011. (1)                                                                                                                                                                                   |
|                |                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.25.1   | Resolutions by the Benefit Finance Committee of Appleton Papers Inc. dated April 4, 2011 further amending the Appleton Papers Inc. Retirement Plan as amended through March 9, 2011. Incorporated by reference to Exhibit 10.1.1 to the Registrants’ Quarterly Report on Form 10-Q for the quarter ended April 3, 2011. (1)                                                                                   |
|                |                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.25.2             | Resolutions by the Benefit Finance Committee of Appleton Papers Inc. effective July 1, 2012 further amending the Appleton Papers Inc. Retirement Plan as amended through March 9, 2011. (1)                                                                                                                                                                                                                                        |
|                |                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.25.3             | Resolutions by the Benefit Finance Committee of Appleton Papers Inc. effective September 24, 2012, further amending the Appleton Papers Inc. Retirement Plan as amended through March 9, 2011. (1)                                                                                                                                                                                                                                 |
|                |                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.26               | Form of Non-Employee Director Deferred Compensation Agreement. Incorporated by reference to Exhibit 10.4 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended October 1, 2006. (1)                                                                                                                                                                                                                   |
|                |                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.27          | Appleton Papers Inc. Long-Term Incentive Plan, as amended and restated, effective as of January 1, 2011. Incorporated by reference to Exhibit 10.29 to the Registrants’ Annual Report on Form 10-K for the fiscal year ended December 31, 2011. (1)                                                                                                                                                                |
|                |                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.28          | Appleton Papers Inc. Long-Term Performance Cash Plan, amended and restated, effective November 11, 2010. Incorporated by reference to Exhibit 10.30 to the Registrants’ Annual Report on Form 10-K for the fiscal year ended December 31, 2011. (1)                                                                                                                                                                     |
|                |                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.29          | Appleton Papers Inc. Long Term Restricted Stock Unit Plan, revised and restated effective November 11, 2010. Incorporated by reference to Exhibit 10.31 to the Registrants’ Annual Report on Form 10-K for the fiscal year ended December 31, 2011. (1)                                                                                                                                                                 |

----

| 10.30       | Stock Purchase Agreement between Appleton Papers Inc. and NEX Performance Films Inc. dated as of July 2, 2010. Incorporated by reference to Exhibit 2.1 to the Registrant’s current report on Form 8-K/A filed August 9, 2010 (exhibits and schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K, but a copy will be furnished supplementally to the Securities and Exchange Commission upon request). |
|-------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 10.31  | Supply Agreement dated as of February 22, 2012 between Domtar Paper Company, LLC, Domtar A.W. LLC and Appleton Papers Inc. (with certain confidential information deleted therefrom). Incorporated by reference to Exhibit 10.33 to the Registrants’ Annual Report on Form 10-K for the fiscal year ended December 31, 2011.                                                                                                         |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                            |

| 18.1     | Letter of Concurring Opinion from PricewaterhouseCoopers, dated March 11, 2011, to the Board or Directors of Paperweight Development Corp. and Subsidiaries regarding the preferability of change in accounting principle from the LIFO to the FIFO method. Incorporated by reference to the Registrants’ Annual Report on Form 10-K for the fiscal year ended January 1, 2011. |
|---------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|          |                                                                                                                                                                                                                                                                                                                                                                                            |
| 18.2     | Letter of Concurring Opinion from PricewaterhouseCoopers, dated March 13, 2013, to the Board of Directors of Appleton Papers Inc. and Subsidiaries regarding the preferability of changes in accounting principles to mark-to-market accounting for pension and other postretirement benefit plans, and to certain costs included in inventory.                                                 |
|          |                                                                                                                                                                                                                                                                                                                                                                                            |
| 18.3     | Letter of Concurring Opinion from PricewaterhouseCoopers, dated March 13, 2013, to the Board of Directors of Paperweight Development Corp. and Subsidiaries regarding the preferability of changes in accounting principles to mark-to-market accounting for pension and other postretirement benefit plans, and to certain costs included in inventory.                                        |
|          |                                                                                                                                                                                                                                                                                                                                                                                            |
| 21.1     | Subsidiaries of Paperweight Development Corp.                                                                                                                                                                                                                                                                                                                                                   |
|          |                                                                                                                                                                                                                                                                                                                                                                                            |
| 31.1     | Certification of Mark R. Richards, Chairman, President and Chief Executive Officer of Appleton Papers Inc., pursuant to Rule 15d-14(a) of the Securities Exchange Act of 1934 as amended.                                                                                                                                                                                                       |
|          |                                                                                                                                                                                                                                                                                                                                                                                            |
| 31.2     | Certification of Thomas J. Ferree, Senior Vice President Finance, Chief Financial Officer and Treasurer of Appleton Papers Inc., pursuant to Rule 15d-14(a) of the Securities Exchange Act of 1934 as amended.                                                                                                                                                                                  |
|          |                                                                                                                                                                                                                                                                                                                                                                                            |
| 31.3     | Certification of Mark R. Richards, Chairman, President and Chief Executive Officer of Paperweight Development Corp., pursuant to Rule 15d-14(a) of the Securities Exchange Act of 1934 as amended.                                                                                                                                                                                              |
|          |                                                                                                                                                                                                                                                                                                                                                                                            |
| 31.4     | Certification of Thomas J. Ferree, Senior Vice President Finance, Chief Financial Officer and Treasurer of Paperweight Development Corp., pursuant to Rule 15d-14(a) of the Securities Exchange Act of 1934 as amended.                                                                                                                                                                         |
|          |                                                                                                                                                                                                                                                                                                                                                                                            |
| 32.1     | Certification of Mark R. Richards, Chairman, President and Chief Executive Officer of Appleton Papers Inc., pursuant to 18 U.S.C. Section 1350.                                                                                                                                                                                                                                                 |
|          |                                                                                                                                                                                                                                                                                                                                                                                            |
| 32.2     | Certification of Thomas J. Ferree, Senior Vice President Finance, Chief Financial Officer and Treasurer of Appleton Papers Inc., pursuant to 18 U.S.C. Section 1350.                                                                                                                                                                                                                       |
|          |                                                                                                                                                                                                                                                                                                                                                                                            |
| 32.3     | Certification of Mark R. Richards, Chairman, President and Chief Executive Officer of Paperweight Development Corp., pursuant to 18 U.S.C. Section 1350.                                                                                                                                                                                                                                        |
|          |                                                                                                                                                                                                                                                                                                                                                                                            |
| 32.4     | Certification of Thomas J. Ferree, Senior Vice President Finance, Chief Financial Officer and Treasurer of Paperweight Development Corp., pursuant to 18 U.S.C. Section 1350.                                                                                                                                                                                                                   |
|          |                                                                                                                                                                                                                                                                                                                                                                                            |
| 101.ins       | XBRL Instance Document                                                                                                                                                                                                                                                                                                                                                                          |
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| 101.sch  | XBRL Taxonomy Extension Schema                                                                                                                                                                                                                                                                                                                                                                  |
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| 101.cal  | XBRL Taxonomy Extension Calculation Linkbase                                                                                                                                                                                                                                                                                                                                                    |
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| 101.def  | XBRL Taxonomy Extension Definition Linkbase                                                                                                                                                                                                                                                                                                                                                     |
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| 101.lab  | Taxonomy Extension Label Linkbase                                                                                                                                                                                                                                                                                                                                                               |
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| 101.pre  | Taxonomy Extension Presentation Linkbase                                                                                                                                                                                                                                                                                                                                                        |

| (1) | Management contract or compensatory plan or arrangement. |
|-----|----------------------------------------------------------|

----

|               | APPLETON PAPERS INC.                        |
|--------------------|-------------------------------------------------------|
| By:      | /s/ Mark R. Richards                                  |
|               | Mark R. RichardsPresident and Chief Executive Officer |
| Date:    | March 13, 2013                                   |

| Name                                  | Title                                                                                         | Date          |
|--------------------------------------------|----------------------------------------------------------------------------------------------------|--------------------|
| /s/ MARK R. RICHARDSMark R. Richards       | Chairman, President, Chief Executive Officer and a Director(Principal Executive Officer)           | March 7, 2013 |
|                                       |                                                                                               |               |
| /s/ THOMAS J. FERREEThomas J. Ferree       | Senior Vice President Finance, Chief Financial Officer and Treasurer (Principal Financial Officer) | March 7, 2013 |
|                                       |                                                                                               |               |
| /s/ JEFFREY J. FLETCHERJeffrey J. Fletcher | Vice President, Controller and Assistant Treasurer                                                 | March 7, 2013 |
|                                       |                                                                                               |               |
| /s/ STEPHEN P. CARTERStephen P. Carter     | Director                                                                                           | March 7, 2013 |
|                                       |                                                                                               |               |
| /s/ TERRY M. MURPHY                        | Director                                                                                           | March 7, 2013 |
| Terry M. Murphy                            |
|                                       |                                                                                               |               |
| /s/ ANDREW F. REARDON                      | Director                                                                                           | March 7, 2013 |
| Andrew F. Reardon                          |
|                                       |                                                                                               |               |
| /s/ KATHI P. SEIFERTKathi P. Seifert       | Director                                                                                           | March 7, 2013 |
|                                       |                                                                                               |               |
| /s/ MARK A. SUWYNMark A. Suwyn             | Director                                                                                           | March 7, 2013 |
|                                       |                                                                                               |               |
| /s/ GEORGE W. WURTZGeorge W. Wurtz         | Director                                                                                           | March 7, 2013 |

----

|               | PAPERWEIGHT DEVELOPMENT CORP.               |
|--------------------|-------------------------------------------------------|
| By:      | /s/ Mark R. Richards                                  |
|               | Mark R. RichardsPresident and Chief Executive Officer |
| Date:    | March 13, 2013                                   |

| Name                                  | Title                                                                                         | Date          |
|--------------------------------------------|----------------------------------------------------------------------------------------------------|--------------------|
| /s/ MARK R. RICHARDSMark R. Richards       | Chairman, President, Chief Executive Officer and a Director(Principal Executive Officer)           | March 7, 2013 |
|                                       |                                                                                               |               |
| /s/ THOMAS J. FERREEThomas J. Ferree       | Senior Vice President Finance, Chief Financial Officer and Treasurer (Principal Financial Officer) | March 7, 2013 |
|                                       |                                                                                               |               |
| /s/ JEFFREY J. FLETCHERJeffrey J. Fletcher | Vice President, Controller and Assistant Treasurer                                                 | March 7, 2013 |
|                                       |                                                                                               |               |
| /s/ STEPHEN P. CARTERStephen P. Carter     | Director                                                                                           | March 7, 2013 |
|                                       |                                                                                               |               |
| /s/ TERRY M. MURPHY                        | Director                                                                                           | March 7, 2013 |
| Terry M. Murphy                            |
|                                       |                                                                                               |               |
| /s/ ANDREW F. REARDON                      | Director                                                                                           | March 7, 2013 |
| Andrew F. Reardon                          |
|                                       |                                                                                               |               |
| /s/ KATHI P. SEIFERTKathi P. Seifert       | Director                                                                                           | March 7, 2013 |
|                                       |                                                                                               |               |
| /s/ MARK A. SUWYNMark A. Suwyn             | Director                                                                                           | March 7, 2013 |
|                                       |                                                                                               |               |
| /s/ GEORGE W. WURTZGeorge W. Wurtz         | Director                                                                                           | March 7, 2013 |

----

----

----

| Allowances for Losses on Accounts Receivable |   | Balance at Beginning of Period |   |   | ChargedTo CostsandExpenses |   |   | Amounts WrittenOff Less Recoveries |   |   | Balance atEnd of Period |   |
|----------------------------------------------|--------|--------------------------------|--------|--------|----------------------------|--------|--------|------------------------------------|--------|--------|-------------------------|--------|
|                                         |   |                           |   |   |                       |   |   |                               |   |   |                    |   |
| January 1, 2011                         |   |                           | 1,356  |   |                       |   | 734    |                               |   |   | (655                    | )      |   |   | 1,435 |   |
| December 31, 2011                       |   |                           | 1,435  |   |                       |   | 679    |                               |   |   | (928                    | )      |   |   | 1,186 |   |
| December 29, 2012                            |   |                           | 1,186  |   |                       |   | 193    |                               |   |   | (302                    | )      |   |   | 1,077 |   |
|                                         |   |                           |   |   |                       |   |   |                               |   |   |                    |   |   |   |   |   |

----