----

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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)                                                         |

----

|            |                                                                                                                         | PageNumber |
|-----------------|------------------------------------------------------------------------------------------------------------------------------|------------|
| PART      I     |                                                                                                                         |       |
|            |                                                                                                                         |       |
| Item      1     | Business                                                                                                                     | 3          |
|            |                                                                                                                         |       |
| Item 1A    | Risk      Factors                                                                                                            | 12         |
|            |                                                                                                                         |       |
| Item 1B    | Unresolved Staff      Comments                                                                                               | 18         |
|            |                                                                                                                         |       |
| Item      2     | Properties                                                                                                                   | 19         |
|            |                                                                                                                         |       |
| Item    3       | Legal      Proceedings                                                                                                       | 20         |
|            |                                                                                                                         |       |
| Item      4     | Submission of Matters to      a Vote of Security Holders                                                                     | 20         |
|            |                                                                                                                         |       |
| PART      II    |                                                                                                                         |       |
|            |                                                                                                                         |       |
| Item    5       | Market for Registrant’s      Common Equity, Related Stockholder Matters and Issuer Purchases of Equity      Securities | 21         |
|            |                                                                                                                         |       |
| Item      6     | Selected Financial      Data                                                                                                 | 22         |
|            |                                                                                                                         |       |
| Item7           | Management’s Discussion and      Analysis of Financial Condition and Results of      Operations                        | 24         |
|            |                                                                                                                         |       |
| Item 7A    | Quantitative and      Qualitative Disclosures About Market Risk                                                              | 43         |
|            |                                                                                                                         |       |
| Item      8     | Financial      Statements and Supplementary Data                                                                             | 45         |
|            |                                                                                                                         |       |
| Item      9     | Changes in and Disagreements      with Accountants on Accounting and Financial      Disclosure                               | 94         |
|            |                                                                                                                         |       |
| Item 9A(T) | Controls and      Procedures                                                                                                 | 94         |
|            |                                                                                                                         |       |
| Item 9B    | Other      Information                                                                                                       | 94         |
|            |                                                                                                                         |       |
| PART III   |                                                                                                                         |       |
|            |                                                                                                                         |       |
| Item 10    | Directors and Executive      Officers of the Registrant                                                                      | 95         |
|            |                                                                                                                         |       |
| Item 11    | Executive      Compensation                                                                                                  | 99         |
|            |                                                                                                                         |       |
| Item 12    | Security Ownership of      Certain Beneficial Owners and Management and Related Stockholder      Matters                     | 116        |
|            |                                                                                                                         |       |
| Item 13    | Certain Relationships and      Related Transactions and Director Independence                                                | 116        |
|            |                                                                                                                         |       |
| Item 14    | Principal Accountant Fees      and Services                                                                                  | 116        |
|            |                                                                                                                         |       |
| PART IV    |                                                                                                                         |       |
|            |                                                                                                                         |       |
| Item 15    | Exhibits and Financial      Statement Schedules                                                                              | 117        |
|            |                                                                                                                         |
| SIGNATURES      | 121                                                                                                                          |
|            |                                                                                                                         |
| EXHIBITS        |                                                                                                                         |

----

| Item 1. | Business |
|--------------|----------|

----

----

----

----

----

----

----

----

|   | • | total      remediation costs of $654 million, based on the most recent bids received      with a range from $594 million to $900million; |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | the      FWS preliminary estimate that discharges from the Appleton plant and the      Combined Locks mill represent 36% to 52% of the total PCBs discharged by      the PRPs, which is substantially greater than Appleton’s      estimate; |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | costs      to settle NRD claims against Appleton and NCR, estimated at $20 million or      less, based on the IGP’s settlement of other NRD  claims; |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Appleton’s      responsibility for over half of the claims asserted against Appleton and      NCR, based on the Company’s interim settlement agreement with NCR and the      arbitration determination; and |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | $25      million in fees and expenses. |
|--------|---------|----------------------------------------|

----

| Item 1A. | Risk      Factors |
|---------------|-------------------|

----

|   | • | make      it more difficult for Appleton to satisfy its obligations with respect to      the senior credit facilities, the senior secured note payable, the senior      notes and senior subordinatednotes; |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | require      Appleton to dedicate a substantial portion of cash flow from operations to      payments on indebtedness, thereby reducing the availability of cash flow      to fund working capital, capital expenditures, acquisitions, research and      technology efforts and other general corporate activities; |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | limit      Appleton’s ability to obtain additional financing for working capital,      capital expenditures, acquisitions and other general corporate activities;      and |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | limit      Appleton’s flexibility in planning for, or reacting to, changes in its      businesses and the industries in which it  operates. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | demand      for and selling prices of Appleton’sproducts; |
|--------|---------|-----------------------------------------------------------------|

|   | • | competition; |
|--------|---------|--------------|

|   | • | costs      of raw materials and operatingcosts; |
|--------|---------|-------------------------------------------------|

|   | • | the      decline rate in sales of carbonless paper  products; |
|--------|---------|---------------------------------------------------------------|

|   | • | environmental      regulations; and |
|--------|---------|-------------------------------------|

|   | • | general      economic conditions. |
|--------|---------|-----------------------------------|

----

----

----

|   | • | declining      overall carbonless market size; |
|--------|---------|------------------------------------------------|

|   | • | accelerating      decline in carbonless sheet sales; |
|--------|---------|------------------------------------------------------|

|   | • | variations      in demand for, or pricing of, carbonless  products; |
|--------|---------|---------------------------------------------------------------------|

|   | • | increasing      manufacturing costs; |
|--------|---------|--------------------------------------|

|   | • | increasing      competition in international markets or from domestic or foreign      producers; or |
|--------|---------|-----------------------------------------------------------------------------------------------------|

|   | • | declining      general economic conditions. |
|--------|---------|---------------------------------------------|

----

----

| Item 1B. | Unresolved      Staff Comments |
|---------------|--------------------------------|

----

| Item 2. | Properties |
|--------------|------------|

| Location                                       | Description                                          | ApproximateSquare Footage | Status                           |
|------------------------------------------------|------------------------------------------------------|--------------------------------|----------------------------------|
| Appleton,      Wisconsin (Wisconsin Ave.)      | Headquarters      Offices and Manufacturing Plant    | 1,157,000                      | Owned                            |
| Portage,      Wisconsin                        | Capsule      Manufacturing Plant                     | 54,000                         | Owned                            |
| Roaring      Spring, Pennsylvania              | Pulp      and Paper Mill                             | 634,000                        | Owned                            |
| West      Carrollton, Ohio                     | Pulp      and Paper Mill                             | 770,000                        | Owned                            |
| Merrill,      Wisconsin                        | Flexible      Plastics Printing and Converting Plant | 128,000                        | Owned                            |
| Rhinelander,      Wisconsin                    | Film      and Commercial Packaging Plant             | 78,000                         | Owned                            |
| Turners      Falls, Massachusetts              | Film      and Commercial Packaging Plant             | 105,000                        | Owned                            |
| Milton,      Wisconsin                         | Film      and Commercial Packaging Plant             | 47,000                         | Owned                            |
| Appleton,      Wisconsin (East Warehouse Road) | Warehouse                                            | 352,000                        | Lease      expires 11/30/12      |
| Appleton,      Wisconsin (Kensington Drive)    | Distribution Center                             | 357,000                        | Lease      expires 12/31/09      |
| Hebron,      Kentucky                          | Distribution Center                             | 194,000                        | Lease expires 12/31/10 |
| Camp      Hill, Pennsylvania                   | Distribution Center                             | 242,000                        | Lease      expires 8/31/10       |
| Ontario,      California                       | Distribution Center                             | 115,000                        | Lease      expires 7/31/10       |
| Edwardsville,      Kansas                      | Distribution Center                             | 244,000                        | Lease      expires 12/28/10      |
| McDonough,      Georgia                        | Distribution Center                             | 136,000                        | Lease      expires 9/30/10       |
| Portland,      Oregon                          | Distribution Center                             | 53,000                         | Lease      expires 12/31/10      |
| Peterborough,      Ontario, Canada             | Distribution Center                             | 50,000                         | Lease      expires 12/31/10      |
| Roaring      Spring, Pennsylvania              | Warehouse                                            | 67,000                         | Lease      expires 12/31/09      |

----

| Item 3. | Legal      Proceedings |
|--------------|------------------------|

| Item 4. | Submission      of Matters to a Vote of SecurityHolders |
|--------------|---------------------------------------------------------|

----

| Item 5. | Market      for Registrant’s Common Equity, Related Stockholder Matters and Issuer      Purchases of Equity Securities |
|--------------|------------------------------------------------------------------------------------------------------------------------------|

----

| Item 6. | Selected      Financial Data |
|--------------|------------------------------|

|                                                                    |   | 2008                |     |   | 2007   |   |      | 2006   |   |   | 2005      |   |   | 2004   |      |
|-------------------------------------------------------------------------|--------|---------------------|----------|--------|--------|--------|-----------|--------|--------|--------|-----------|--------|--------|--------|-----------|
|                                                                    |   |                |     |   |   |   |      |   |   |   |      |   |   |   |      |
|                                                                    |   | (in      thousands) |     |
| Statement      of Operations Data:                                      |   |                |     |   |   |   |      |   |   |   |      |   |   |   |      |
| Net      sales                                                          |   | $                   | 964,577  |   |   | $      | 963,240   |   |   | $      | 973,655   |   |   | $      | 934,266   |   |   | $ | 879,447 |   |
| Cost      of sales                                                      |   |                | 780,440  |   |   |   | 733,738   |   |   |   | 732,603   |   |   |   | 703,796   |   |   |   | 655,178 |   |
| Gross      profit                                                       |   |                | 184,137  |   |   |   | 229,502   |   |   |   | 241,052   |   |   |   | 230,470   |   |   |   | 224,269 |   |
| Selling,      general and administrative expenses                       |   |                | 167,030  |   |   |   | 177,275   |   |   |   | 179,671   |   |   |   | 177,220   |   |   |   | 170,332 |   |
| Goodwill      impairment                                                |   |                | 39,645   |   |   |   | -         |   |   |   | -         |   |   |   | -         |   |   |   | - |   |
| Restructuring      and other charges (1)                                |   |                | 2,578    |   |   |   | 1,445     |   |   |   | 2,161     |   |   |   | 7,405     |   |   |   | 2,989 |   |
|                                                                    |   |                |     |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| Operating      (loss) income                                            |   |                | (25,116  | )      |   |   | 50,782    |   |   |   | 59,220    |   |   |   | 45,845    |   |   |   | 50,948 |   |
|                                                                    |   |                |     |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| Interest      expense                                                   |   |                | 54,267   |   |   |   | 48,351    |   |   |   | 48,978    |   |   |   | 49,298    |   |   |   | 49,160 |   |
| Debt      extinguishment (income) expense, net                          |   |                | (11,598  | )      |   |   | 1,572     |   |   |   | 208       |   |   |   | 38        |   |   |   | 30,779 |   |
| Interest      income                                                    |   |                | (1,071   | )      |   |   | (2,476    | )      |   |   | (903      | )      |   |   | (638      | ) |   |   | (2,093 | ) |
| Litigation      settlement, net                                         |   |                | (22,274  | )      |   |   | -         |   |   |   | -         |   |   |   | -         |   |   |   | - |   |
| Other      expense (income)                                             |   |                | 4,523    |   |   |   | (1,112    | )      |   |   | (513      | )      |   |   | 902       |   |   |   | 304 |   |
|                                                                    |   |                |     |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| (Loss)      income from continuing operations                           |   |                |     |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
|   before      income taxes                                    |   |                | (48,963  | )      |   |   | 4,447     |   |   |   | 11,450    |   |   |   | (3,755    | ) |   |   | (27,202 | )  |
|                                                                    |   |                |     |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| (Benefit)      provision for income taxes                               |   |                | (268     | )      |   |   | 253       |   |   |   | 633       |   |   |   | 548       |   |   |   | 422 |   |
|                                                                    |   |                |     |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| (Loss)      income from continuing operations                           |   |                | (48,695  | )      |   |   | 4,194     |   |   |   | 10,817    |   |   |   | (4,303    | ) |   |   | (27,624 | )  |
|                                                                    |   |                |     |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| Discontinued      operations                                            |   |                |     |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| (Loss)      income from discontinued operations, net of income    taxes |   |                | (48,687  | )      |   |   | (10,501   | )      |   |   | 528       |   |   |   | 1,289     |   |   |   | 2,593 |   |
| Net      (loss) income                                                  |   | $                   | (97,382  | )      |   | $      | (6,307    | )      |   | $      | 11,345    |   |   | $      | (3,014    | ) |   | $ | (25,031 | )  |
|                                                                    |   |                |     |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
|                                                                    |   |                |     |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| Other      Financial Data:                                              |   |                |     |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| Depreciation      and amortization(2)                                   |   | $                   | 99,041   |   |   | $      | 63,809    |   |   | $      | 69,195    |   |   | $      | 73,067    |   |   | $ | 70,688 |   |
| Capital      expenditures(2)                                            |   |                | 98,843   |   |   |   | 53,627    |   |   |   | 32,391    |   |   |   | 27,199    |   |   |   | 31,514 |   |
| Balance      Sheet Data (at end of period):                             |   |                |     |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| Working      capital                                                    |   | $                   | 116,738  |   |   | $      | 141,139   |   |   | $      | 142,065   |   |   | $      | 145,809   |   |   | $ | 191,268 |   |
| Total      assets                                                       |   |                | 929,921  |   |   |   | 1,103,408 |   |   |   | 1,016,123 |   |   |   | 1,024,934 |   |   |   | 1,074,439 |   |
| Total      debt                                                         |   |                | 605,364  |   |   |   | 544,174   |   |   |   | 531,293   |   |   |   | 574,011   |   |   |   | 602,904 |   |
| Redeemable      common stock                                            |   |                | 147,874  |   |   |   | 182,040   |   |   |   | 190,466   |   |   |   | 185,292   |   |   |   | 159,329 |   |
| Accumulated      deficit                                                |   |                | (159,650 | )      |   |   | (80,086   | )      |   |   | (67,885   | )      |   |   | (61,982   | ) |   |   | (41,034 | ) |

----

| (1) | Appleton      has continued to assess its staffing requirements for its headquarters      operations and for its plants and mills. Further reductions occurred      throughout fiscal years 2004 - 2008. Due to the continued decline in      Appleton’s carbonless business, as well as the global economic downturn,      additional headcount reductions were taken during 2008. See Note 5 of      Notes to Consolidated FinancialStatements. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Amounts      exclude information related to the discontinued  operation. |
|-----|--------------------------------------------------------------------------|

----

| Item 7. | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations |
|--------------|-------------------------------------------------------------------------------------------------------|

----

|   | • | Loss      from continuing operations was $48.7 million compared to $4.2 million of      income from continuing operations in the prior year. This loss includes a      $39.6 million goodwill impairment charge within performance packaging due      to the decreased future outlook and revised cash flows for this segment.      The loss also includes a $9.4 million charge arising from the      reclassification of other comprehensive loss, associated with the interest      rate swaps, to interest expense. The remaining decrease was primarily      driven by reduced volumes and higher raw material and utility costs within      technical papers compared to 2007 and $14.1 million of start-up costs      associated with the West Carrollton expansion which was greater than the      amount anticipated. The positive effects of price improvement,      productivity improvements and lower selling, general and administrative      expenses did not offset the increased  costs.  |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Appleton      completed the $125 million expansion project at its West Carrollton, Ohio      paper mill. The Company recorded $14.1 million of start-up costs, in      2008, associated with this project. |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | The      Company recorded $2.6 million of restructuring and other charges for      employee termination benefits during 2008. Due to the impact of the      economic downturn on the business, salaried employment was reduced by 72      during December 2008. In addition, due to a shift of production from the      Appleton, Wisconsin plant to the West Carrollton, Ohio paper mill and the      impact of the economic downturn on the business, production headcount was      reduced by 127. Since production employees are covered by union contracts,      should business conditions improve in the future, some may be      recalled. |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Appleton      recorded a $22.3 million net litigation settlement gain as the result of a      lawsuit to recover previously incurred costs from an insurance carrier.      See Item 3. Legal Proceedings. |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Appleton      made market purchases of its senior notes totaling $40.6 million during      the year. As these senior notes were purchased at prices less than face      value, the Company recorded an $11.6 million net gain on these      purchases. |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Appleton      paid $25.0 million associated with the Fox River Liabilities, fulfilling      its obligation. |
|--------|---------|-------------------------------------------------------------------------------------------------------------|

|   | • | Appleton      recorded a $48.7 million loss from discontinued operations. This was      entirely related to the 2008 operations and sale of Bemrose and included      impairment charges of $43.7million. |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|   | • | Appleton’s      net loss of $97.4 million represents an increase of $91.1 million over the      $6.3 million net loss in 2007. This increased loss is due to the      aforementioned loss from continuing operations and the loss from      discontinued operations. Due to the loss in the current year and decrease      in ESOP stock price, management determined that it constituted a      "triggering event" under Statement of Financial Accounting Standards      (“SFAS”) 144, "Accounting for the Impairment of Long Lived Assets," for      the Company. As required, the Company reviewed long-lived asset groups for      impairment on a undiscounted cash flow basis and determined that an      impairment charge was not required as the undiscounted cash flow exceeded      the carrying value of the assets. |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|                                                             |   |                            |   |    |                        |   |
|------------------------------------------------------------------|--------|---------------------------------|--------|---------|-----------------------------|--------|
|                                                             |   | For      the Year Ended         |   |    |                        |   |
|                                                             |   | January 3, 2009       |   |    | December 29, 2007 |   |   |        %  | Chg  |
|                                                             |   | (dollars in millions) |   |    |                        |   |
|                                                             |   |                            |   |    |                        |   |   |   |   |
| Net      sales                                                   |   | $                               | 964.6  |    |                        | $      | 963.2 |   |   |   | 0.1 | % |
| Cost      of sales                                               |   |                            | 780.5  |    |                        |   | 733.7 |   |   |   | 6.4 | % |
| Gross      profit                                                |   |                            | 184.1  |    |                        |   | 229.5 |   |   |   | -19.8 | % |
|                                                             |   |                            |   |    |                        |   |   |   |   |   |   |   |
| Selling,      general and administrative expenses                |   |                            | 167.0  |    |                        |   | 177.3 |   |   |   | -5.8 | % |
| Goodwill      impairment                                         |   |                            | 39.6   |    |                        |   | - |   |   |   | nm |   |
| Restructuring      and other charges                             | 2.6    | 1.4                             | 85.7   | %       |
|                                                             |   |                            |   |    |                        |   |   |   |   |   |   |   |
| Operating      (loss) income                                     |   |                            | (25.1  | )  |                        |   | 50.8 |   |   |           - | 149.4 | % |
|                                                             |   |                            |   |    |                        |   |   |   |   |   |   |   |
| Interest      expense, net                                       |   |                            | 53.2   |    |                        |   | 45.8 |   |   |   | 16.2 | % |
| Debt      extinguishment (income) expense, net                   |   |                            | (11.6  | )       |                        |   | 1.6 | ) |   |   | nm |   |
| Other      non-operating income, net                             | (17.7  | )                               | (1.1   | nm      |
|                                                             |   |                            |   |    |                        |   |   |   |   |   |   |   |
| (Loss)      income from continuing operations before incometaxes |   |                            | (49.0  | )  |                        |   | 4.5 |   |   |   | nm |   |
| (Benefit)      provision for income taxes                        |   |                            | (0.3   | )  |                        |   | 0.3 |   |   |           - | 200.0 | % |
|                                                             |   |                            |   |    |                        |   |   |   |   |   |   |   |
| (Loss)      income from continuing operations                    |   |                            | (48.7  | )  |                        |   | 4.2 |   |   |   | nm |   |
|                                                             |   |                            |   |    |                        |   |   |   |   |   |   |   |
| Loss      from discontinued operations, net of income taxes      |   |                            | (48.7  | )       |                        |   | (10.5 | ) |   | -363.8 | %  |
|                                                             |   |                            |   |    |                        |   |   |   |   |   |   |   |
| Net      loss                                                    |   | $                               | (97.4  | )       |                        | $      | (6.3 | ) |   |   | nm |   |
|                                                             |   |                            |   |    |                        |   |   |   |   |   |   |   |
| Comparisons      as a % of net sales                             |   |                            |   |    |                        |   |   |   |   |   |   |   |
| Cost      of sales                                               |   |                            | 80.9   | %       |                        |   | 76.2 | % |   |   | 4.7 | % |
| Gross      margin                                                |   |                            | 19.1   | %       |                        |   | 23.8 | % |   |   | -4.7 | % |
| Selling,      general and administrative expenses                |   |                            | 17.3   | %       |                        |   | 18.4 | % |   |   | -1.1 | % |
| Operating      margin                                            |   |                            | -2.6   | %       |                        |   | 5.3 | % |   |   | -7.9 | % |
| (Loss)      income from continuing operations before incometaxes |   |                            | -5.1   | %       |                        |   | 0.5 | % |   |   | -5.6 | % |
| (Loss)      income from continuing operations                    |   |                            | -5.0   | %       |                        |   | 0.4 | % |   |   | -5.4 | % |
| Loss      from discontinued operations, net of income taxes      |   |                            | -5.0   | %       |                        |   | -1.1 | % |   |   | -3.9 | % |
| Net      loss                                                    |   |                            | -10.0  | %       |                        |   | -0.7 | % |   |   | -9.3 | % |

----

----

| • | Coated      solutions segment net sales totaled $538.0 million for 2008, a decrease of      $33.9 million, or 5.9%, from prior year. Carbonless shipment volumes in      2008 were 9.7% lower than 2007 shipments. The adverse impact of lower      shipment volumes and unfavorable mix was partially offset by favorable      pricing when compared to 2007. Coated solutions operating income decreased      $22.3 million or 42.8% to $29.8 million for 2008 as the favorable impacts      of improved pricing, manufacturing gains and lower selling, general and      administrative expenses were offset by the negative impacts of lower      volumes, unfavorable mix, higher raw material and utility costs and higher      distribution costs. |
|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| • | Thermal      papers segment net sales totaled $280.3 million for 2008, an increase of      $23.2 million, or 9.0%, over 2007 largely due to a 9.3% increase in      shipment volumes and improved pricing. In 2008, thermal papers segment      operating income declined $19.1 million or 266.2% to a loss of $11.9      million. Despite increased shipment volumes, operating margins continued      to be adversely affected by unfavorable mix, higher raw material and      utility costs and higher distribution costs. In addition, 2008 margins      were impacted by $14.1 million of start-up costs associated with the      expansion project at the West Carrollton, Ohio paper  mill. |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| • | Security      papers segment net sales totaled $34.0 million for 2008, an increase of      $1.7 million, or 5.2%, over 2007 primarily due to a 2.3% increase in      shipment volumes and improved pricing. Security papers segment 2008      operating income decreased $0.1 million to $3.4 million. The favorable      impact of increased shipment volumes, manufacturing gains and improved      pricing were partially offset by higher raw material and utility costs and      higher distribution costs.  |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Performance      Packaging |
|----------------------------|

| • | Performance      packaging segment net sales totaled $112.3 million for 2008, an increase      of $10.4 million, or 10.2%, over prior year levels. Net sales in 2008 were      positively impacted by improved pricing and favorable mix. Performance      packaging segment 2008 operating income decreased $40.5 million to a loss      of $34.3 million. Operating results include a $39.6 million goodwill      impairment charge. The Company reviews the carrying value of goodwill and      intangible assets with indefinite lives for impairment annually or more      frequently if events or changes in circumstances indicate that an asset      might be impaired. During third quarter 2008, an impairment analysis was      performed on the performance packaging business due to the depressed      economic future outlook and revised future cash flow projections. As a      result of this impairment analysis, a $17.7 million goodwill impairment      charge was recorded. Appleton performed its annual goodwill impairment      analysis during fourth quarter 2008. In accordance with SFAS 142, a Step      One analysis was done to compare the fair value of the reporting unit to      the carrying value. In Step One, the fair value of the reporting unit was      estimated using a weighting of the “market” and “income” valuation      approach. The “income” valuation approach estimates the enterprise value      using a net present value model, which discounts projected free cash flows      of the business at a computed weighted average cost of capital as the      discount rate. The “market” approach is based on the market multiple of      guideline companies. As a result of performing Step One, the carrying      value of the reporting unit exceeded the fair value. Having failed Step      One, Step Two was performed to allocate the fair value of the business to      all assets and liabilities of the reporting unit as if the reporting unit      had been acquired in a business combination and the fair value of the      reporting unit, as determined in the first step of the goodwill impairment      test, was the price paid to acquire the reporting unit. The excess of the      fair value of the reporting unit, over the amount assigned to its assets      and liabilities is the implied fair value of goodwill. The carrying value      of the performance packaging goodwill exceeded the implied fair value of      the goodwill and therefore, an impairment loss was recognized to the      extent of the excess of $21.9 million in the fourth quarter of 2008.      Different assumptions or reduced future cash flow estimates could change      the estimated fair value, and therefore, impairment charges could be      required in the future. |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| • | Unallocated      corporate charges and business development costs decreased $6.1 million in      2008 compared to 2007. Charges in 2007 included $1.9 million of consulting      fee expense incurred in connection with income tax refunds obtained during      2007 for the 2000 and 2001 tax periods. Reduced employee incentive      payments and reduced bad debt expense during 2008 also contributed to the      year-on-year decrease in costs. |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                    |   |                            |   |   |                        |   |   |
|-------------------------------------------------------------------------|--------|---------------------------------|--------|--------|-----------------------------|--------|--------|
|                                                                    |   | For      the Year Ended         |   |   |                        |   |   |
|                                                                    |   | December 29, 2007     |   |   | December 30, 2006 |   | %      |  Chg     |   |
|                                                                    |   | (dollars in millions) |   |   |                        |   |   |
|                                                                    |   |                            |   |   |                        |   |   |   |   |   |
| Net      sales                                                          |   | $                               | 963.2  |   |                        | $      | 973.7  |   |   |   | -1.1 | % |
| Cost      of sales                                                      |   |                            | 733.7  |   |                        |   | 732.6  |   |   |   | 0.2 | % |
| Gross      profit                                                       |   |                            | 229.5  |   |                        |   | 241.1  |   |   |   | -4.8 | % |
|                                                                    |   |                            |   |   |                        |   |   |   |   |   |   |   |
| Selling,      general and administrative expenses                       |   |                            | 177.3  |   |                        |   | 179.7  |   |   |   | -1.3 | % |
| Restructuring      and other charges                                    |   |                            | 1.4    |   |                        |   | 2.2    |   |   |   | -36.4 | % |
|                                                                    |   |                            |   |   |                        |   |   |   |   |   |   |   |
| Operating      income                                                   |   |                            | 50.8   |   |                        |   | 59.2   |   |   |   | -14.2 | % |
|                                                                    |   |                            |   |   |                        |   |   |   |   |   |   |   |
| Interest      expense, net                                              |   |                            | 45.8   |   |                        |   | 48.1   |   |   |   | -4.8 | % |
| Debt      extinguishment expense, net                                   |   |                            | 1.6    |   |                        |   | 0.2    |   |   |   | nm |   |
| Other      non-operating income, net                                    |   |                            | (1.1)  |   |                        |   | (0.5   | ) |   |   | 120.0 | % |
|                                                                    |   |                            |   |   |                        |   |   |   |   |   |   |   |
| Income      from continuing operations before income taxes              |   |                            | 4.5    |   |                        |   | 11.4   |   |   |   | -60.5 | % |
| Provision      for income taxes                                         |   |                            | 0.3    |   |                        |   | 0.6    |   |   |   | -50.0 | % |
|                                                                    |   |                            |   |   |                        |   |   |   |   |   |   |   |
| Income      from continuing operations                                  |   |                            | 4.2    |   |                        |   | 10.8   |   |   |   | -61.1 | % |
|                                                                    |   |                            |   |   |                        |   |   |   |   |   |   |   |
| (Loss)      income from discontinued operations, net of income    taxes |   |                            | (10.5) |   |                        |   | 0.5    |   |   |   |  nm |   |
|                                                                    |   |                            |   |   |                        |   |   |   |   |   |   |   |
| Net      (loss) income                                                  |   | $                               | (6.3)  |   |                        | $      | 11.3   |   |   |   | -155.8 | % |
|                                                                    |   |                            |   |   |                        |   |   |   |   |   |   |   |
| Comparisons      as a % of net sales                                    |   |                            |   |   |                        |   |   |   |   |   |   |   |
| Cost      of sales                                                      |   |                            | 76.2   | %      |                        |   | 75.2%  |   |   |   | 1.0 | % |
| Gross      margin                                                       |   |                            | 23.8   | %      |                        |   | 24.8%  |   |   |   | -1.0 | % |
| Selling,      general and administrative expenses                       |   |                            | 18.4   | %      |                        |   | 18.5%  |   |   |   | -0.1 | % |
| Operating      margin                                                   |   |                            | 5.3    | %      |                        |   | 6.1%   |   |   |   | -0.8 | % |
| Income      from continuing operations before income taxes              |   |                            | 0.5    | %      |                        |   | 1.2%   |   |   |   | -0.7 | % |
| Income      from continuing operations                                  |   |                            | 0.4    | %      |                        |   | 1.1%   |   |   |   | -0.7 | % |
| (Loss)      income from discontinued operations, net of income    taxes |   |                            | -1.1   | %      |                        |   | 0.1%   |   |   |   | -1.2 | % |
| Net      (loss) income                                                  |   |                            | -0.7   | %      |                        |   | 1.2%   |   |   |   | -1.9 | % |

----

| • | Coated      solutions segment net sales totaled $572.0 million for 2007, a decrease of      $0.4 million, or 0.1%, from prior year levels. Lower shipment volumes and      unfavorable mix offset improved pricing during 2007. Appleton experienced      lower shipments in domestic markets in 2007, but was able to increase      shipments internationally in part due to a weakened dollar but also due to      increased international sales effort. Coated solutions operating income      increased $1.3 million, or 2.5%, to $52.1 million for 2007 as the impacts      of lower volumes, higher raw material costs and higher costs from a      planned bi-annual mill maintenance outage were offset by improved pricing,      manufacturing gains and lower selling, general and administrative      expenses. |
|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| • | Thermal      papers segment net sales totaled $257.1 million for 2007, a decrease of      $3.0 million, or 1.1%, from 2006. Improved mix generally was offset by      lower shipment volumes in 2007. International shipment volumes increased      nearly 30%. Thermal papers segment operating income declined $6.2 million,      or 46.4%, to $7.2 million in 2007. The operating income decline is      attributable to lower volumes, competitive pricing, higher raw materials      and mill maintenance outage costs which offset gains from improved mix and      reduced manufacturing and selling, general and administrative      costs. |
|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| • | Security      papers segment net sales totaled $32.3 million for 2007, an increase of      $2.9 million or 9.8% over 2006, primarily due to improved pricing during      2007. Security papers segment 2007 operating income increased $1.9 million      to $3.5 million on the strength of improved pricing and manufacturing cost      reductions. |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| • | Performance      packaging segment net sales totaled $101.8 million for 2007, a decrease of      $10.0 million, or 8.9%, from prior year levels. Net sales were adversely      impacted by lower shipment volumes, lower pricing and unfavorable mix      during 2007, all a reflection of generally soft market conditions for      packaging. Performance packaging segment 2007 operating income decreased      $3.6 million to $6.2 million. Results for 2007 reflect the impact of lower      volumes as well as margin declines derived from resin price increases,      which were partially offset by manufacturing gains and lower selling,      general and administrativecosts. |
|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| • | Unallocated      corporate charges and business development costs increased $1.8 million in      2007 compared to 2006, including $1.9 million of consulting fee expense      incurred in connection with income tax refunds obtained during 2007 for      the 2000 and 2001 tax periods. |
|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|   | • | The      maturity date for the revolving credit facility will be June 5, 2012, and      the maturity date for the senior secured variable rate notes payable will      be June 5, 2013; |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Appleton      will be permitted up to $35 million of capital expenditures in 2009 and up      to $40 million of capital expenditures in2010; |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------|

|  | • | Appleton      may not make acquisitions until December 31,  2010; |
|--|---------|-------------------------------------------------------------------|

|  | • | Other      restrictions are imposed on liens, indebtedness, investments, restricted      payments and note repurchases; |
|--|---------|-------------------------------------------------------------------------------------------------------------------------|
|  | • | Mandatory      prepayments are increased from 50% to 75% of excess cash flow as defined      in the senior secured credit facilities; |
|--|---------|---------------------------------------------------------------------------------------------------------------------------------------|
|  | • | Financial      covenants are modified to increase the total leverage ratio, to eliminate      the interest coverage ratio, to add a senior secured leverage ratio, and      to add a fixed charge coverage ratio, all as defined in the senior secured      credit facilities and the First Amendment to the senior secured credit      facilities. |
|--|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Fiscal QuarterFiscal      quarter ending March 31, 2009Fiscal      quarter ending June 30, 2009Fiscal      quarter ending September 30, 2009Fiscal      quarter ending December 31, 2009 | MaximumLeverage Ratio6.00      to 1.007.25      to 1.006.75      to 1.005.50      to 1.00 |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------|
| Fiscal      quarter ending March 31, 2010                                                                                                                                                | 5.25      to 1.00                                                                         |
| Fiscal      quarter ending June 30, 2010                                                                                                                                                 | 5.25      to 1.00                                                                         |
| Fiscal      quarter ending September 30, 2010                                                                                                                                            | 4.75      to 1.00                                                                         |
| Fiscal      quarter ending December 31, 2010                                                                                                                                             | 4.50      to 1.00                                                                         |
| Fiscal      quarter ending March 31, 2011                                                                                                                                                | 4.50      to 1.00                                                                         |
| Fiscal      quarter ending June 30, 2011 and any fiscal quarter ending      thereafter                                                                                                   | 4.00      to 1.00                                                                         |

| Fiscal QuarterFiscal      quarter ending March 31, 2009Fiscal      quarter ending June 30, 2009Fiscal      quarter ending September 30, 2009Fiscal      quarter ending December 31, 2009 | MaximumSenior Leverage Ratio3.50      to 1.004.15      to 1.004.00      to 1.003.25      to 1.00 |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------|
| Fiscal      quarter ending March 31, 2010                                                                                                                                                |          3.00 to 1.00                                                             |   |
| Fiscal      quarter ending June 30, 2010                                                                                                                                                 |          3.00 to 1.00                                                             |   |
| Fiscal      quarter ending September 30, 2010                                                                                                                                            | 2.75      to 1.00                                                                                |
| Fiscal      quarter ending December 31, 2010 and any fiscal quarter ending      thereafter                                                                                               | 2.50      to 1.00                                                                                |

| Fiscal QuarterFiscal      quarter ending March 31, 2009Fiscal      quarter ending June 30, 2009Fiscal      quarter ending September 30, 2009Fiscal      quarter ending December 31, 2009 | MaximumFixed Charge Coverage Ratio1.25      to 1.001.10      to 1.001.25      to 1.001.10      to 1.00 |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------|
| Fiscal      quarter ending March 31, 2010                                                                                                                                                | 1.15      to 1.00                                                                                      |
| Fiscal      quarter ending June 30, 2010                                                                                                                                                 | 1.10      to 1.00                                                                                      |
| Fiscal      quarter ending September 30, 2010 and any fiscal quarter ending      thereafter                                                                                              | 1.25      to 1.00                                                                                      |

----

----

|                                                                                                                                                                                                                                                                                               |   |                            |   |   |   |    |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------|--------|--------|--------|---------|
|                                                                                                                                                                                                                                                                                               |   | 2008                            |   |   | 2007   |    |
|                                                                                                                                                                                                                                                                                               |   | (dollars in millions) |   |
|                                                                                                                                                                                                                                                                                               |   |                            |   |   |   |    |
| Senior      secured variable rate notes payable at LIBOR plus 1.75%, $0.6 million due      quarterly with $209.8 million due June 5, 2014 (After March 2009,      amended to LIBOR, but not less than 2.0%, plus 4.5%, $0.6 million due      quarterly with $212.1 million due June 5, 2013.) |   |  $                         | 221.6  |   |   |  $ | 224.4 |   |
| Secured      term note payable at 12.5%, approximately $0.2 million due monthly with      $6.9 million due                                                                                                                                                                                         |   |                            |   |   |   |    |   |   |
| December      1, 2013 (After March 2009, amended to 14.25%.)                                                                                                                                                                                                                                       | 21.8   | -                               |
| Revolving credit      facility at LIBOR, plus 2.0% (After March 2009, amended to LIBOR, but not      less than 2.0%, plus 4.5%.)                                                                                                                                                              |   |                            | 83.7   |   |   |    | - |   |
|                                                                                                                                                                                                                                                                                               |   |                            | 327.1  |   |   |    | 224.4 |   |
| Less      obligations due within one year                                                                                                                                                                                                                                                          |   |                            | (4.7   | )      |   |    | (2.8 | ) |
|                                                                                                                                                                                                                                                                                               |   |                            | 322.4  |   |   |    | 221.6 |   |
| Unsecured      variable rate industrial development bonds, 2.5% average interest rate at      January 3, 2009, $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 15, 2017                                                                                                                                                                           |   |                            | 8.8    |   |   |    | 9.1 |   |
| Less      obligations due within one year                                                                                                                                                                                                                                                          |   |                            | (0.8   | )      |   |    | (0.3 | )  |
|                                                                                                                                                                                                                                                                                               |   |                            | 8.0    |   |   |    | 8.8 |   |
|                                                                                                                                                                                                                                                                                               |   |                            |   |   |   |    |   |   |
| Senior      notes payable at 8.125%, due June 15, 2011                                                                                                                                                                                                                                        |   |                            | 109.5  |   |   |    | 150.1 |   |
| Senior      subordinated notes payable at 9.75%, due June 15,      2014                                                                                                                                                                                                                       |   |                            | 150.0  |   |   |    | 150.0 |   |
| Total      long-term obligations                                                                                                                                                                                                                                                                   |   | $                               | 598.6  |   |   | $       | 539.2 |   |

----

----

|                                    |   | 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                     |   | $                          | 604.1   |   |   | $ | 5.5 |   |   | $ | 121.5 |   |   | $ | 316.9 |   |   | $ | 160.2 |   |
| Capital      lease obligation           |   |                       | 1.4     |   |   |   | 0.7 |   |   |   | 0.7 |   |   |   | — |   |   |   | — |   |
| Operating      leases                   |   |                       | 15.5    |   |   |   | 6.8 |   |   |   | 6.2 |   |   |   | 2.5 |   |   |   | — |   |
| Other      long-term obligations (1)    |   |                       | 380.2   |   |   |   | 60.3 |   |   |   | 121.9 |   |   |   | 119.7 |   |   |   | 78.3 |   |
| Total      contractual cash obligations |   | $                          | 1,001.2 |   |   | $ | 73.3 |   |   | $ | 250.3 |   |   | $ | 439.1 |   |   | $ | 238.5 |   |

| (1) | Represents      obligations for interest, pension, postretirement health benefits,      deferred compensation payments and severance  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 |   | $                                                | 111.0 |   |   | $ | 22.0 |   |   | $ | 48.0 |   |   | $ | 41.0 |

----

----

----

----

| Item 7A. | Quantitative      and Qualitative Disclosures About MarketRisk |
|---------------|----------------------------------------------------------------|

----

----

| 1.   | Report      of Independent Registered Public AccountingFirm |
|----------------|-------------------------------------------------------------|

----

| PAPERWEIGHT      DEVELOPMENT CORP. AND SUBSIDIARIES                                                                                                                                                            |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                                           |   |
| CONSOLIDATED      BALANCE SHEETS                                                                                                                                                                               |   |
| (dollars      in thousands, except share data)                                                                                                                                                                 |   |
|                                                                                                                                                                                                           |   | January 3, 2009 |   |   | December 29, 2007 |   |
| ASSETS                                                                                                                                                                                                         |   |   |   |   |   |   |
| Current      assets                                                                                                                                                                                            |   |   |   |   |   |   |
|   Cash      and cash equivalents                                                                                                                                                                     |   | $ | 4,180 |   |   | $ | 44,838 |   |
|   Accounts      receivable, less allowance for doubtful accounts of $1,825 and $1,480,      respectively                                                                                             |   |   | 92,029 |   |   |   | 116,762 |   |
|   Inventories                                                                                                                                                                                        |   |   | 130,053 |   |   |   | 124,078 |   |
|   Other      current assets                                                                                                                                                                          |   |   | 46,239 |   |   |   | 12,210 |   |
|   Assets      of discontinued operations                                                                                                                                                             |   |   | - |   |   |   | 36,731 |   |
|        Total      current assets                                                                                                                                            |   |   | 272,501 |   |   |   | 334,619 |   |
|                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |
| Property,      plant and equipment, net of accumulated depreciation of $398,683 and      $353,975, respectively                                                                                           |   |   | 445,671 |   |   |   | 393,742 |   |
| Goodwill                                                                                                                                                                                                       |   |   | 10,601 |   |   |   | 50,246 |   |
| Intangible      assets, net                                                                                                                                                                                    |   |   | 72,939 |   |   |   | 77,340 |   |
| Environmental      indemnification receivable                                                                                                                                                                  |   |   | 114,300 |   |   |   | 165,198 |   |
| Other      assets                                                                                                                                                                                              |   |   | 13,909 |   |   |   | 24,617 |   |
| Assets      of discontinued operations                                                                                                                                                                         |   |   | - |   |   |   | 57,646 |   |
|                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |
|        Total      assets                                                                                                                                                    |   | $ | 929,921 |   |   | $ | 1,103,408 |   |
|                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |
| LIABILITIES,      REDEEMABLE COMMON STOCK, ACCUMULATED      DEFICIT AND ACCUMULATED      OTHER COMPREHENSIVE (LOSS) INCOME                                                                           |   |   |   |   |   |   |   |   |
| Current      liabilities                                                                                                                                                                                       |   |   |   |   |   |   |   |   |
|   Current      portion of long-term debt                                                                                                                                                             |   | $ | 5,455 |   |   | $ | 3,138 |   |
|   Accounts      payable                                                                                                                                                                              |   |   | 62,538 |   |   |   | 82,621 |   |
|   Accrued      interest                                                                                                                                                                              |   |   | 3,628 |   |   |   | 4,688 |   |
|   Other      accrued liabilities                                                                                                                                                                     |   |   | 84,142 |   |   |   | 81,348 |   |
|   Liabilities      of discontinued operations                                                                                                                                                        |   |   | - |   |   |   | 21,685 |   |
|        Total      current liabilities                                                                                                                                       |   |   | 155,763 |   |   |   | 193,480 |   |
|                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |
| Long-term      debt                                                                                                                                                                                            |   |   | 598,598 |   |   |   | 539,105 |   |
| Postretirement      benefits other than pension                                                                                                                                                                |   |   | 45,364 |   |   |   | 47,436 |   |
| Accrued      pension                                                                                                                                                                                           |   |   | 109,532 |   |   |   | 16,857 |   |
| Environmental      liability                                                                                                                                                                                   |   |   | 114,300 |   |   |   | 173,353 |   |
| Other      long-term liabilities                                                                                                                                                                               |   |   | 13,309 |   |   |   | 6,794 |   |
| Liabilities      of discontinued operations                                                                                                                                                                    |   |   | - |   |   |   | 20,750 |   |
| Commitments      and contingencies (Note 17)                                                                                                                                                              |   |   | - |   |   |   | - |   |
| Redeemable      common stock, $0.01 par value,  shares      authorized: 30,000,000, shares issued and  outstanding: 10,643,894      and 11,116,751, respectively                      |   |   | 147,874 |   |   |   | 182,040 |   |
| Accumulated      deficit                                                                                                                                                                                       |   |   | (159,650 | ) |   |   | (80,086 | ) |
| Accumulated      other comprehensive (loss) income                                                                                                                                                             |   |   | (95,169 | )  |   |   | 3,679 |   |
|                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |
|        Total      liabilities, redeemable common stock, accumulated       deficit      and accumulated other comprehensive (loss) income |   | $ | 929,921 |   |   | $ | 1,103,408 |   |

----

| PAPERWEIGHT      DEVELOPMENT CORP. AND SUBSIDIARIES                                    |   |
|----------------------------------------------------------------------------------------|--------|
|                                                                                   |   |
| CONSOLIDATED      STATEMENTS OF OPERATIONS                                             |   |
| (dollars      in thousands)                                                            |   |
|                                                                                   |   |   |   |   |   |   |   |   |   |
|                                                                                   |   | For      the |   |   | For      the |   |   | For      the |   |
|                                                                                   |   | Year      Ended |   |   | Year      Ended |   |   | Year      Ended |   |
|                                                                                   |   | January 3,      2009 |   |   | December 29,      2007 |   |   | December 30,      2006 |   |
|                                                                                   |   |   |   |   |   |   |   |   |   |
| Net      sales                                                                         |   | $ | 964,577 |   |   | $ | 963,240 |   |   | $ | 973,655 |   |
|                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost      of sales                                                                     |   |   | 780,440 |   |   |   | 733,738 |   |   |   | 732,603 |   |
|                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
|         Gross profit                                                         |   |   | 184,137 |   |   |   | 229,502 |   |   |   | 241,052 |   |
|                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Selling,      general and administrative expenses                                      |   |   | 167,030 |   |   |   | 177,275 |   |   |   | 179,671 |   |
| Goodwill      impairment                                                               |   |   | 39,645 |   |   |   | - |   |   |   | - |   |
| Restructuring      and other charges                                                   |   |   | 2,578 |   |   |   | 1,445 |   |   |   | 2,161 |   |
|                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating      (loss) income                                                           |   |   | (25,116 | ) |   |   | 50,782 |   |   |   | 59,220 |   |
|                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other      expense (income)                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
|   Interest      expense                                                      |   |   | 54,267 |   |   |   | 48,351 |   |   |   | 48,978 |   |
|   Debt      extinguishment (income) expense, net                             |   |   | (11,598 | ) |   |   | 1,572 |   |   |   | 208 |   |
|   Interest      income                                                       |   |   | (1,071 | ) |   |   | (2,476 | ) |   |   | (903 | ) |
|   Litigation      settlement, net (Note 17)                                  |   |   | (22,274 | ) |   |   | - |   |   |   | - |   |
|   Foreign      exchange loss (gain)                                          |   |   | 4,523 |   |   |   | (1,112 | ) |   |   | (513 | ) |
|                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| (Loss)      income from continuing operations before incometaxes                       |   |   | (48,963 | ) |   |   | 4,447 |   |   |   | 11,450 |   |
|                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| (Benefit)      provision for income taxes                                              |   |   | (268 | ) |   |   | 253 |   |   |   | 633 |   |
|                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| (Loss)      income from continuing operations                                          |   |   | (48,695 | ) |   |   | 4,194 |   |   |   | 10,817 |   |
|                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Discontinued      operations                                                           |   |   |   |   |   |   |   |   |   |   |   |   |
|         (Loss) income from discontinued operations, net of income      taxes |   |   | (48,687 | ) |   |   | (10,501 | ) |   |   | 528 |   |
|                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      (loss) income                                                                 |   | $ | (97,382 | ) |   | $ | (6,307 | ) |   | $ | 11,345 |   |
|                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|  PAPERWEIGHT DEVELOPMENT CORP.      AND SUBSIDIARIES                       |   |
|---------------------------------------------------------------------------------|--------|
|                                                                            |   |
| CONSOLIDATED      STATEMENTS OF CASH FLOWS                                      |   |
| FOR      THE TWELVE MONTHS ENDED                                                |   |
| (dollars      in thousands)                                                     |   |
|                                                                            |   |   |   |   |   |   |   |   |   |
|                                                                            |   | For      the YearEndedJanuary 3,      2009 |   |   | For      the YearEndedDecember 29,      2007 |   |   | For      the YearEndedDecember 30,      2006 |   |
| Cash      flows from operating activities:                                      |   |   |   |   |   |   |   |   |   |
| Net      (loss) income                                                          |   | $ | (97,382 | ) |   | $ | (6,307 | )  |   | $ | 11,345 |   |
| Adjustments      to reconcile net (loss) income to net cash                     |   |   |   |   |   |   |   |   |   |   |   |   |
| provided      by operating activities:                                          |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation                                                                    |   |   | 54,995 |   |   |   | 62,679 |   |   |   | 66,319 |   |
| Amortization      of intangible assets                                          |   |   | 4,401 |   |   |   | 7,610 |   |   |   | 9,436 |   |
| Impairment      of continuing operations goodwill                               |   |   | 39,645 |   |   |   | - |   |   |   | - |   |
| Impairment      of discontinued operations goodwill and long-lived      assets  |   |   | 43,745 |   |   |   | 8,039 |   |   |   | - |   |
| Amortization      of financing fees                                             |   |   | 2,199 |   |   |   | 2,456 |   |   |   | 2,609 |   |
| Employer      401(k) noncash matching contributions                             |   |   | 5,807 |   |   |   | 6,658 |   |   |   | 6,798 |   |
| Foreign      exchange loss (gain)                                               |   |   | 4,922 |   |   |   | (1,204 | ) |   |   | (267 | )  |
| Loss      on disposals of equipment                                             |   |   | 1,450 |   |   |   | 2,400 |   |   |   | 1,232 |   |
| Accretion      of capital lease obligation                                      |   |   | 111 |   |   |   | 152 |   |   |   | 189 |   |
| Recognition      of noncash expense associated with interest rate    swaps      |   |   | 9,446 |   |   |   | - |   |   |   | - |   |
| Debt      extinguishment expenses                                               |   |   | 1,012 |   |   |   | 858 |   |   |   | 191 |   |
| Deferred      income taxes                                                      |   |   | - |   |   |   | 959 |   |   |   | - |   |
| (Increase)/decrease      in assets and increase/(decrease) in liabilities       |   |   |   |   |   |   |   |   |   |   |   |   |
| Accounts      receivable                                                        |   |   | 30,493 |   |   |   | 7,107 |   |   |   | (12,679 | ) |
| Inventories                                                                     |   |   | (10,792 | )  |   |   | 4,317 |   |   |   | 5,329 |   |
| Other      current assets                                                       |   |   | 1,046 |   |   |   | (1,504 | ) |   |   | (5,250 | ) |
| Accounts      payable and other accrued liabilities                             |   |   | (44,965 | ) |   |   | 6,389 |   |   |   | 23,610 |   |
| Restructuring      reserve                                                      |   |   | 1,740 |   |   |   | (1,907 | ) |   |   | (4,292 | ) |
| Accrued      pension                                                            |   |   | (5,524 | ) |   |   | (5,999 | ) |   |   | (830 | ) |
| Fox      River liabilities                                                      |   |   | (25,000 | ) |   |   | - |   |   |   | - |   |
| Other,      net                                                                 |   |   | (2,975 | ) |   |   | (1,047 | ) |   |   | 935 |   |
|                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      cash provided by operating activities                             |   |   | 14,374 |   |   |   | 91,656 |   |   |   | 104,675 |   |
|                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash      flows from investing activities:                                      |   |   |   |   |   |   |   |   |   |   |   |   |
|              Proceeds from sale of equipment |   |   | 159 |   |   |   | 44 |   |   |   | 795 |   |
| Net      change in cash due to sale of Bemrose Group Limited                    |   |   | (999 | ) |   |   | - |   |   |   | - |   |
| Restricted      cash for mill expansion                                         |   |   | - |   |   |   | (7,369 | ) |   |   | - |   |
| Additions      to property, plant and equipment                                 |   |   | (99,534 | ) |   |   | (54,457 | ) |   |   | (36,462 | ) |
|                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      cash used by investing activities                                      |   |   | (100,374 | ) |   |   | (61,782 | ) |   |   | (35,667 | ) |
|                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash      flows from financing activities:                                      |   |   |   |   |   |   |   |   |   |   |   |   |
| Payments      of senior secured notes payable                                   |   |   | (2,813 | ) |   |   | (196,095 | ) |   |   | (35,776 | ) |
| Proceeds      from senior secured notes payable                                 |   |   | - |   |   |   | 225,000 |   |   |   | - |   |
| Payments      of senior notes payable                                           |   |   | (40,600 | ) |   |   | (17,550 | ) |   |   | (4,400 | ) |
| Payments      of senior subordinated notes payable                              |   |   | - |   |   |   | (7,000 | )  |   |   | - |   |
| Debt      acquisition costs                                                     |   |   | (279 | ) |   |   | (2,321 | ) |   |   | - |   |
| Bond      consent costs                                                         |   |   | - |   |   |   | - |   |   |   | (7,994 | ) |
| Payments      relating to capital lease obligation                              |   |   | (731 | ) |   |   | (731 | ) |   |   | (731 | ) |
| Proceeds      from revolving lines of credit                                    |   |   | 396,707 |   |   |   | 73,996 |   |   |   | 27,475 |   |
| Payments      of revolving lines of credit                                      |   |   | (312,973 | ) |   |   | (74,182 | ) |   |   | (29,289 | ) |
| Proceeds      from State of Ohio Financing                                      |   |   | - |   |   |   | 9,105 |   |   |   | - |   |
| Payments      of State of Ohio loan                                             |   |   | (325 | ) |   |   | - |   |   |   | - |   |
| Proceeds      from secured financing                                            |   |   | 22,000 |   |   |   | - |   |   |   | - |   |
| Payments      of secured financing                                              |   |   | (186 | ) |   |   | - |   |   |   | - |   |
| Proceeds      from issuance of redeemable common stock                          |   |   | 6,426 |   |   |   | 7,659 |   |   |   | 8,238 |   |
| Payments      to redeem common stock                                            |   |   | (27,930 | ) |   |   | (28,641 | ) |   |   | (27,118 | ) |
| Increase      in cash overdraft                                                 |   |   | 5,729 |   |   |   | 6,100 |   |   |   | 1,870 |   |
|                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      cash provided (used) by financing activities                      |   |   | 45,025 |   |   |   | (4,660 | ) |   |   | (67,725 | ) |
|                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Effect      of foreign exchange rate changes on cash and cash      equivalents  |   |   | 317 |   |   |   | (351 | ) |   |   | 270 |   |
| Change      in cash and cash equivalents                                        |   |   | (40,658 | ) |   |   | 24,863 |   |   |   | 1,553 |   |
| Cash      and cash equivalents at beginning of period                           |   |   | 44,838 |   |   |   | 19,975 |   |   |   | 18,422 |   |
|                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash      and cash equivalents at end of period                                 |   | $ | 4,180 |   |   | $ | 44,838 |   |   | $ | 19,975 |   |
|                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |

----

| CONSOLIDATED      STATEMENTS OF REDEEMABLE COMMON STOCK,                                                    |   |
|-------------------------------------------------------------------------------------------------------------|--------|
| ACCUMULATED      DEFICIT, ACCUMULATED OTHER COMPREHENSIVE (LOSS)INCOME      AND COMPREHENSIVE INCOME (LOSS) |   |
| (dollars      in thousands, except share data)                                                              |   |
|                                                                                                        |   |
|                                                                                                        |   | Redeemable      Common Stock |   |   |   |   |   |   |   |   |   |   |
|                                                                                                        |   | SharesOutstanding |   |   | Amount |   |   | AccumulatedDeficit |   |   | AccumulatedOtherComprehensive(Loss)      Income |   |   | ComprehensiveIncome      (Loss) |   |
|                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,      December 31, 2005                                                                        |   |   | 11,938,060 |   |   | $ | 185,292 |   |   | $ | (61,982 | ) |   | $ | (25,854 | ) |   |   |   |
|                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive      income:                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Net      income                                                                                 |   |   | - |   |   |   | - |   |   |   | 11,345 |   |   |   | - |   |   | $ | 11,345 |   |
|   Minimum      pension liability adjustment                                                       |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 12,082 |   |   |   | 12,082 |   |
|   Foreign      currency translation adjustment                                                    |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 8,161 |   |   |   | 8,161 |   |
|   Realized      and unrealized gains on derivatives                                               |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 601 |   |   |   | 601 |   |
|     Total      comprehensive income                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | $ | 32,189 |   |
| Issuance      of redeemable common stock                                                                    |   |   | 499,160 |   |   |   | 15,044 |   |   |   | - |   |   |   | - |   |   |   |   |   |
| Redemption      of redeemable common stock                                                                  |   |   | (886,989 | ) |   |   | (27,118 | ) |   |   | - |   |   |   | - |   |   |   |   |   |
| Accretion      of redeemable common stock                                                                   |   |   | - |   |   |   | 17,248 |   |   |   | (17,248 | ) |   |   | - |   |   |   |   |   |
| Balance,      December 30, 2006                                                                             |   |   | 11,550,231 |   |   |   | 190,466 |   |   |   | (67,885 | ) |   |   | (5,010 | ) |   |   |   |   |
|                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive      income:                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Net      loss                                                                                   |   |   | - |   |   |   | - |   |   |   | (6,307 | )  |   |   | - |   |   | $ | (6,307 | )  |
|   Minimum      pension liability adjustment                                                       |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 12,773 |   |   |   | 12,773 |   |
|   Foreign      currency translation adjustment                                                    |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 884 |   |   |   | 884 |   |
|   Realized      and unrealized losses on derivatives                                              |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (523 | )  |   |   | (523 | )  |
|     Total      comprehensive income                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | $ | 6,827 |   |
| Adjustment      to initially adopt SFAS 158, net                                                            |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (4,445 | ) |   |   |   |   |
| Issuance      of redeemable common stock                                                                    |   |   | 435,408 |   |   |   | 14,321 |   |   |   | - |   |   |   | - |   |   |   |   |   |
| Redemption      of redeemable common stock                                                                  |   |   | (868,888 | ) |   |   | (28,641 | ) |   |   | - |   |   |   | - |   |   |   |   |   |
| Accretion      of redeemable common stock                                                                   |   |   | - |   |   |   | 5,894 |   |   |   | (5,894 | ) |   |   | - |   |   |   |   |   |
| Balance,      December 29, 2007                                                                             |   |   | 11,116,751 |   |   |   | 182,040 |   |   |   | (80,086 | ) |   |   | 3,679 |   |   |   |   |   |
|                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive      loss:                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Net      loss                                                                                   |   |   | - |   |   |   | - |   |   |   | (97,382 | ) |   |   | - |   |   | $ | (97,382 | ) |
|   Adjustment      for the change in measurement date due to the adoption of SFAS      158         |   |   | - |   |   |   | - |   |   |   | (473 | ) |   |   | - |   |   |   | (473 | ) |
|   Changes      in retiree plans                                                                   |   |   | - |   |   |   | - |   |   |   |   |   |   |   | (98,395 | )  |   |   | (98,395 | )  |
|   Disposal      of Bemrose pension plan                                                           |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 7,976 |   |   |   | 7,976 |   |
|   Foreign      currency translation adjustment                                                    |   |   | - |   |   |   |  - |   |   |   |  - |   |   |   | (8,110 | )  |   |   | (8,110 | )  |
|   Realized      and unrealized losses on derivatives                                              |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (319 | ) |   |   | (319 | ) |
|     Total      comprehensive loss                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | $ | (196,703 | )  |
| Issuance      of redeemable common stock                                                                    |   |   | 497,130 |   |   |   | 12,055 |   |   |   | - |   |   |   | - |   |   |   |   |   |
| Redemption      of redeemable common stock                                                                  |   |   | (969,987 | ) |   |   | (27,930 | ) |   |   | - |   |   |   | - |   |   |   |   |   |
| Accretion      of redeemable common stock                                                                   |   |   | - |   |   |   | (18,291 | )  |   |   | 18,291 |   |   |   | - |   |   |   |   |   |
| Balance,      January 3, 2009                                                                     |   |   | 10,643,894 |   |   | $ | 147,874 |   |   | $ | (159,650 | ) |   | $ | (95,169 | )  |   |   |   |   |

----

----

----

----

----

----

|                                                              |   | 2008   |    |    | 2007   |   |
|-------------------------------------------------------------------|--------|--------|---------|---------|--------|--------|
| Changes      in retiree plans and disposal of Bemrose pensionplan |   | $      | (94,864 | )       |   | $      | (4,445 | ) |
| Foreign      currency translation adjustment                      |   |   | -       |    |   |   | 8,110 |   |
| Realized      and unrealized (losses) gains on derivatives        |   |   | (305    | )  |   |   | 14 |   |
|                                                              |   | $      | (95,169 | )       |   | $      | 3,679 |   |

----

|                                            |   | For      the Year EndedJanuary 3,      2009 |    |   | For      the Year EndedDecember 29,      2007 |   |    | For      the Year Ended December 30, 2006 |   |
|-------------------------------------------------|--------|--------------------------------------------------|---------|--------|----------------------------------------------------|--------|---------|------------------------------------------------|--------|
| Net      sales                                  |   | $                                                | 55,675  |   |                                               | $      | 113,343 |                                           |   | $ | 113,726 |   |
|                                            |   |                                             |    |   |                                               |   |    |                                           |   |   |   |   |
| Operating      Loss                             |   | $                                                | (4,942  | )      |                                               | $      | (1,503  | )                                              |   | $ | (309 | ) |
| Impairment      charge                          |   |                                             | (43,745 | )      |                                               |   | (8,039  | )                                              |   |   | - |   |
| Loss      before income taxes                   |   |                                             | (48,687 | )      |                                               |   | (9,542  | )                                              |   |   | (309 | ) |
| Provision      (benefit) for income taxes       |   |                                             | -       |   |                                               |   | 959     |                                           |   |   | (837 | ) |
| (Loss)      income from discontinued operations |   | $                                                | (48,687 | )      |                                               | $      | (10,501 | )                                              |   | $ | 528 |   |

----

|                                                                             |   | As      of January 3, 2009 |    |   | As      of December 29, 2007 |   |
|----------------------------------------------------------------------------------|--------|---------------------------------|---------|--------|-----------------------------------|--------|
|                                                                             |   | Gross      Carrying Amount      |    |   | Accumulated      Amortization     |   |   | Gross      Carrying Amount |   |   | Accumulated      Amortization |   |
| Amortizable      intangible assets:                                              |   |                            |    |   |                              |   |   |   |   |   |   |   |
|      Trademarks                                         |   | $                               | 49,255  |   |                              | $      | 18,980 |   |   | $ | 49,255 |   |   | $ | 16,652 |   |
|      Patents                                            |   |                            | 30,979  |   |                              |   | 30,643 |   |   |   | 30,979 |   |   |   | 29,920 |   |
|      Customer      relationships                        |   |                            | 26,024  |   |                              |   | 6,565 |   |   |   | 26,024 |   |   |   | 5,261 |   |
|      Non-compete      agreements                        |   |                            | 932     |   |                              |   | 928 |   |   |   | 932 |   |   |   | 882 |   |
|             Subtotal |   |                            | 107,190 |   |                              | $      | 57,116 |   |   |   | 107,190 |   |   | $ | 52,715 |   |
| Unamortizable      intangible assets:                                            |   |                            |    |   |                              |   |   |   |   |   |   |   |   |   |   |   |
|      Trademarks                                         |   |                            | 22,865  |   |                              |   |   |   |   |   | 22,865 |   |   |   |   |   |
|             Total    |   | $                               | 130,055 |   |                              |   |   |   |   | $ | 130,055 |   |   |   |   |   |

----

----

|                                    |   | December 29, 2007 |   |   | 2008      Additions |   |   | 2008        |   |   | January 3, 2009 |
|-----------------------------------------|--------|-----------------------------|--------|--------|---------------------|--------|--------|-------------|--------|--------|---------------------------|
|                                    |   | Reserve                     |   |   | to      Reserve     |   |   | Utilization |   |   | Reserve                   |
| Distribution      center exit costs     |   | $                           | 200    |   |                | $      | -      |        |   | $      | (200                      | ) |   | $ | - |
| U.S.      employee termination benefits |   |                        | 198    |   |                |   | 2,578  |        |   |   | (638                      | ) |   |   | 2,138 |
|                                    |   | $                           | 398    |   |                | $      | 2,578  |        |   | $      | (838                      | ) |   | $ | 2,138 |

|                                    |   | December 30, 2006 |   |   | 2007      Additions |   |   | 2007        |   |   | December 29, 2007 |
|-----------------------------------------|--------|-----------------------------|--------|--------|---------------------|--------|--------|-------------|--------|--------|-----------------------------|
|                                    |   | Reserve                     |   |   | to      Reserve     |   |   | Utilization |   |   | Reserve                     |
| Distribution      center exit costs     |   | $                           | 1,194  |   |                | $      | 351    |        |   | $      | (1,345                      | ) |   | $ | 200 |
| U.S.      employee termination benefits |   |                        | 720    |   |                |   | 1,094  |        |   |   | (1,616                      | ) |   |   | 198 |
|                                    |   | $                           | 1,914  |   |                | $      | 1,445  |        |   | $      | (2,961                      | ) |   | $ | 398 |

|                                             |   | 2008   |    |   | 2007   |   |
|--------------------------------------------------|--------|--------|---------|--------|--------|--------|
| Finished      goods                              |   | $      | 72,855  |   |   | $      | 67,596 |   |
| Raw      materials, work in process and supplies |   |   | 72,196  |   |   |   | 66,575 |   |
|                                             |   |   | 145,051 |   |   |   | 134,171 |   |
| Inventory      reserve                           |   |   | (4,481  | )      |   |   | (3,736 | ) |
|                                             |   |   | 140,570 |   |   |   | 130,435 |   |
| LIFO      reserve                                |   |   | (10,517 | )      |   |   | (6,357 | ) |
|                                             |   | $      | 130,053 |   |   | $      | 124,078 |   |

|                                       |   | 2008   |     |   | 2007   |   |
|--------------------------------------------|--------|--------|----------|--------|--------|--------|
| Land      and improvements                 |   | $      | 10,071   |   |   | $      | 9,603 |   |
| Buildings      and improvements            |   |   | 134,761  |   |   |   | 95,421 |   |
| Machinery      and equipment               |   |   | 653,543  |   |   |   | 560,323 |   |
| Software                                   |   |   | 32,788   |   |   |   | 33,779 |   |
| Capital      lease                         |   |   | 4,764    |   |   |   | 4,764 |   |
| Construction      in progress              |   |   | 8,427    |   |   |   | 43,827 |   |
|                                       |   |   | 844,354  |   |   |   | 747,717 |   |
| Accumulated      depreciation/amortization |   |   | (398,683 | )      |   |   | (353,975 | ) |
|                                       |   | $      | 445,671  |   |   | $      | 393,742 |   |

----

|                                    |   |    | 2008                                                                                                                                                                           |   |   |    | 2007                                                                                                                                                                                                               |
|-----------------------------------------|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Deferred      debt issuance costs       |   | $       | 10,968                                                                                                                                                                         |   |   | $       | 13,900                                                                                                                                                                                                             |
| Restricted      cash for mill expansion |   |    | -                                                                                                                                                                              |   |   |    | 7,369                                                                                                                                                                                                              |
| Other                                   |   |    | 2,941                                                                                                                                                                          |   |   |    | 3,348                                                                                                                                                                                                              |
|                                    |   |  $ |                             13,909 |   |   |  $ |                                   24,617 |

|                                            |   |   | 2008   |   |   |   | 2007   |
|-------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
| Payroll      and bonus                          |   | $      | 5,030  |   |   | $      | 19,596 |
| Trade      discounts                            |   |   | 18,537 |   |   |   | 22,044 |
| Workers’      compensation                |   |   | 4,489  |   |   |   | 4,306  |
| Accrued      insurance                          |   |   | 1,744  |   |   |   | 2,087  |
| Other      accrued taxes                        |   |   | 1,901  |   |   |   | 2,299  |
| Postretirement      benefits other than pension |   |   | 3,329  |   |   |   | 3,283  |
| Fox      River Liabilities                      |   |   | 37,700 |   |   |   | 20,645 |
| Restructuring      reserve                      |   |   | 2,140  |   |   |   | 398    |
| Other                                           |   |   | 9,272  |   |   |   | 6,690  |
|                                            |   | $      | 84,142 |   |   | $      | 81,348 |

----

|                                                                                                                                                                                                                                                                   | 2008    |    | 2007    |    |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------|---------|---------|---------|
| Senior      secured variable rate notes payable at LIBOR plus 1.75%, $563 due      quarterly with $209,812 due June 5, 2014 (After March 2009, amended      to LIBOR, but not less than 2.0%, plus 4.5%, $563 due quarterly with      $212,062 due June 5, 2013.) | $       | 221,625 |    |  $ |   | 224,438 |   |
| Secured      term note payable at 12.5%, approximately $200 due monthly with $6,943 due      December 1, 2013 (After March 2009, amended to      14.25%.)                                                                                                         | 21,814  |    | -       |    |
| Revolving credit      facility at LIBOR plus 2.0% (After March 2009, amended to LIBOR, but not      less than 2.0%, plus 4.5%)                                                                                                                                    |    | 83,734  |    |    |   | - |   |
|                                                                                                                                                                                                                                                                   | 327,173 |    | 224,438 |    |
| Less      obligations due within one year                                                                                                                                                                                                                              | (4,640  | )       | (2,813  | )       |
|                                                                                                                                                                                                                                                                   | 322,533 |    | 221,625 |    |
| Unsecured      variable rate industrial development bonds, 2.5% average      interest rate at January 3, 2009, $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 15, 2017                                                                                                                                                  | 8,780   |    | 9,105   |    |
| Less      obligations due within one year                                                                                                                                                                                                                         | (815    | )  | (325    | )  |
|                                                                                                                                                                                                                                                                   | 7,965   |    | 8,780   |    |
| Senior      notes payable at 8.125%, due June 15, 2011                                                                                                                                                                                                            | 109,450 |    | 150,050 |    |
| Senior      subordinated notes payable at 9.75%, due June 15,      2014                                                                                                                                                                                           | 150,000 |    | 150,000 |    |

----

|   | • | First      Amendment to the senior secured credit facilities;  and |
|--------|---------|--------------------------------------------------------------------|

|   | • | First      Amendment to the senior secured term note  payable. |
|--------|---------|----------------------------------------------------------------|

----

|   | • | The      maturity date for the revolving credit facility will be June 5, 2012,      and the maturity date for the senior secured variable rate notes payable      will be June 5, 2013; |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Appleton      will be permitted up to $35 million of capital expenditures in 2009 and up      to $40 million of capital expenditures in2010; |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Appleton      may not make acquisitions until December 31,  2010; |
|--------|---------|-------------------------------------------------------------------|

|   | • | Other      restrictions are imposed on liens, indebtedness, investments, restricted      payments and note repurchases; |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------|

|   | • | Mandatory      prepayments are increased from 50% to 75% of excess cash flow as defined      in the senior secured creditfacilities; |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Financial      covenants are modified to increase the total leverage ratio, to eliminate      the interest coverage ratio, to add a senior secured leverage ratio and to      add a fixed charge coverage ratio, all as defined in the senior secured      credit facilities and the First Amendment to the senior secured credit      facilities. |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Fiscal QuarterFiscal      quarter ending March 31, 2009Fiscal      quarter ending June 30, 2009Fiscal      quarter ending September 30, 2009Fiscal      quarter ending December 31, 2009 | MaximumLeverage Ratio6.00      to 1.007.25      to 1.006.75      to 1.005.50      to 1.00 |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------|
| Fiscal      quarter ending March 31, 2010                                                                                                                                                | 5.25      to 1.00                                                                         |
| Fiscal      quarter ending June 30, 2010                                                                                                                                                 | 5.25      to 1.00                                                                         |
| Fiscal      quarter ending September 30, 2010                                                                                                                                            | 4.75      to 1.00                                                                         |
| Fiscal      quarter ending December 31, 2010                                                                                                                                             | 4.50      to 1.00                                                                         |
| Fiscal      quarter ending March 31, 2011                                                                                                                                                | 4.50      to 1.00                                                                         |
| Fiscal      quarter ending June 30, 2011 and any fiscal quarter ending      thereafter                                                                                                   | 4.00      to 1.00                                                                         |

| Fiscal QuarterFiscal      quarter ending March 31, 2009Fiscal      quarter ending June 30, 2009Fiscal      quarter ending September 30, 2009Fiscal      quarter ending December 31, 2009Fiscal quarter ending March 31, 2010Fiscal quarter ending June 30, 2010Fiscal quarter ending September 30,      2010Fiscal quarter ending December 31, 2010 and any      fiscal quarter ending thereafter | MaximumSenior Leverage Ratio3.50      to 1.004.15      to 1.004.00      to 1.003.25      to 1.003.00 to 1.003.00 to 1.002.75 to 1.002.50 to1.00 |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Fiscal QuarterFiscal      quarter ending March 31, 2009Fiscal      quarter ending June 30, 2009Fiscal      quarter ending September 30, 2009Fiscal      quarter ending December 31, 2009 | MaximumFixed Charge Coverage Ratio1.25      to 1.001.10      to 1.001.25      to 1.001.10      to 1.00 |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------|
| Fiscal      quarter ending March 31, 2010                                                                                                                                                | 1.15      to 1.00                                                                                      |
| Fiscal      quarter ending June 30, 2010                                                                                                                                                 | 1.10      to 1.00                                                                                      |
| Fiscal      quarter ending September 30, 2010 and any fiscal quarter ending      thereafter                                                                                              | 1.25      to 1.00                                                                                      |

----

----

| 2009       |   | $      | 5,455   |   |
|------------|--------|--------|---------|--------|
| 2010       |   |   | 5,816   |   |
| 2011       |   |   | 115,684 |   |
| 2012       |   |   | 90,429  |   |
| 2013       |   |   | 226,494 |   |
| Thereafter |   |   | 160,175 |   |
|       |   | $      | 604,053 |   |

----

|                               |   | 2008   |   | 2007   |   |
|------------------------------------|--------|--------|--------|--------|--------|
| Building                           |   | $      | 4,764  |   | $      | 4,764 |   |
| Less      accumulated depreciation |   |   | (3,715 | )      |   | (3,191 | ) |
|                               |   | $      | 1,049  |   | $      | 1,573 |   |

----

|                                                                  |   | Capital |   |   | Operating |   |
|-----------------------------------------------------------------------|--------|---------|--------|--------|-----------|--------|
|                                                                  |   | Lease   |   |   | Leases    |   |
| 2009                                                                  |   | $       | 731    |   |      | $      | 6,789 |   |
| 2010                                                                  |   |    | 670    |   |      |   | 4,379 |   |
| 2011                                                                  |   |    | -      |   |      |   | 1,860 |   |
| 2012                                                                  |   |    | -      |   |      |   | 1,742 |   |
| 2013                                                                  |   |    | -      |   |      |   | 757 |   |
| Thereafter                                                            |   |    | -      |   |      |   | - |   |
|                                                                  |   |    |   |   |      |   |   |   |
| Total      minimum lease payments                                     |   |    | 1,401  |   |      | $      | 15,527 |   |
|                                                                  |   |    |   |   |      |   |   |   |
| Less      amounts representing interest                               |   |    | (90    | )      |      |   |   |   |
| Present      value of minimum lease payments      under capital lease |   |    | 1,311  |   |      |   |   |   |
| Less      current principal portion                                   |   |    | (663   | )      |      |   |   |   |
|                                                                  |   | $       | 648    |   |      |   |   |   |

|                                   |   | January 3, 2009 |    |   | December 29, 2007 |   |
|----------------------------------------|--------|---------------------------|---------|--------|-----------------------------|--------|
|                                   |   | Carrying                  |    |   | Fair                        |   |   | Carrying |   |   | Fair |   |
| Financial      Instruments             |   | Amount                    |    |   | Value                       |   |   | Amount |   |   | Value |   |
| Senior      subordinated notes payable |   | $                         | 150,000 |   |                        | $      | 80,250 |   |   | $ | 150,000 |   |   | $ | 148,500 |   |
| Senior      notes payable              |   |                      | 109,450 |   |                        |   | 75,521 |   |   |   | 150,050 |   |   |   | 147,237 |   |
| Senior      credit facility            |   |                      | 221,625 |   |                        |   | 162,894 |   |   |   | 224,438 |   |   |   | 212,655 |   |
| Senior      secured debt               |   |                      | 21,814  |   |                        |   | 21,814 |   |   |   | - |   |   |   | - |   |
| Revolving credit      facility    | 83,734 | 83,734                    | -       | -      |
| State      of Ohio assistance loan     | 8,780  | 7,978                     | 9,105   | 9,378  |
| Industrial      development bonds      |   |                      | 8,650   |   |                        |   | 8,650 |   |   |   | 8,650 |   |   |   | 8,650 |   |
|                                   |   | $                         | 604,053 |   |                        | $      | 440,841 |   |   | $ | 542,243 |   |   | $ | 526,420 |   |
| Lease      obligation                  |   | $                         | 1,311   |   |                        | $      | 1,311 |   |   | $ | 1,931 |   |   | $ | 1,931 |   |
| Interest      rate swap derivatives    |   | $                         | 9,446   |   |                        | $      | 9,446 |   |   | $ | - |   |   | $ | - |   |

----

| Pension      Benefits                                                           |    | 2008   |     |   | 2007   |   |
|---------------------------------------------------------------------------------|---------|--------|----------|--------|--------|--------|
| Change      in benefit obligation                                               |    |   |     |   |   |   |
|   Benefit      obligation at beginning of period                      |    | $      | 286,737  |   |   | $      | 300,263 |   |
|   Effect      of eliminating early measurement date                   |    |   | 769      |   |   |   | - |   |
|   Service      cost                                                   | 6,155   | 7,640  |
|   Interest      cost                                                  |    |   | 17,952   |   |   |   | 16,926 |   |
|   Plan      amendments                                                |    |   | 2,819    |   |   |   | - |   |
|   Actuarial      loss (gain)                                          |    |   | 5,115    |   |   |   | (13,747 | ) |
|   Curtailment      gain                                               |    |   | (823     | )      |   |   | (9,797 | ) |
|   Benefits      and expenses paid                                     |    |   | (15,423  | )      |   |   | (14,548 | ) |
| Benefit      obligation at end of period                                        |    | $      | 303,301  |   |   | $      | 286,737 |   |
|                                                                            |    |   |     |   |   |   |   |   |
| Change      in plan assets                                                      |    |   |     |   |   |   |   |   |
|   Fair      value at beginning of period                              |    | $      | 269,670  |   |   | $      | 246,979 |   |
|   Effect      of eliminating early measurement date                   |    |   | 489      | )      |   |   | - |   |
|   Actual      return on plan assets                                   | (71,487 | 27,938 |
|   Employer      contributions                                         |    |   | 10,296   |   |   |   | 9,301 |   |
|        Benefits and expenses paid                                          |    |   | (15,423  | )      |   |   | (14,548 | ) |
| Fair      value at end of period                                                |    | $      | 193,545  |   |   | $      | 269,670 |   |
|                                                                            |    |   |     |   |   |   |   |   |
| Funded      status of plans                                                     |    |   |     |   |   |   |   |   |
|   Funded      status at end of period                                 |    | $      | (109,756 | )      |   | $      | (17,067 | ) |
|                                                                            |    |   |     |   |   |   |   |   |
| Amounts      recognized in the consolidated balance sheet consist      of: |    |   |     |   |   |   |   |   |
|     Accrued      benefit liability-current                  |    | $      | (224     | )      |   | $      | (210 | ) |
|     Accrued      benefit liability-noncurrent               |    |   | (109,532 | )      |   |   | (16,857 | ) |
| Net      amount recognized                                                      |    | $      | (109,756 | )      |   | $      | (17,067 | ) |
|                                                                            |    |   |     |   |   |   |   |   |
| Key      assumptions at end of period (%)                                       |    |   |     |   |   |   |   |   |
|   Discount      rate                                                  |    |   | 6.50     |   |   |   | 6.25 |   |
|   Rate      of compensation increase                                  |    |   | 4.00     |   |   |   | 4.00 |   |

----

| Accumulated      other comprehensive loss |   |   |     |
|-------------------------------------------|--------|--------|----------|
| Net      actuarial loss                   |   | $      | (98,508  | ) |
| Prior      service cost                   |   |   | (4,522   | ) |
| Total                                     |   | $      | (103,030 | ) |

|                      |   | Before      Adoption |   |   |        |   |   | After      Adoption |   |
|---------------------------|--------|----------------------|--------|--------|-------------|--------|--------|---------------------|--------|
|                      |   | of      SFAS 158     |   |   | Adjustments |   |   | of      SFAS 158    |   |
| Accrued      benefit cost |   | $                    | 13,122 |   |        | $      | 3,945  |                |   | $ | 17,067 |   |

| Actuarial      loss     |   | $      | 490   |   |
|-------------------------|--------|--------|-------|--------|
| Prior      service cost |   |   | 539   |   |
|                    |   | $      | 1,029 |   |

|                                            |   | For      the    |    |   | For      the      |   |    | For      the      |   |
|-------------------------------------------------|--------|-----------------|---------|--------|-------------------|--------|---------|-------------------|--------|
|                                            |   | Year      Ended |    |   | Year      Ended   |   |    | Year      Ended   |   |
|                                            |   | January 3, |    |   | December 29, |   |    | December 30, |   |
| Pension      Benefits                           |   | 2009            |    |   | 2007              |   |    | 2006              |   |
| Net      periodic benefit cost                  |   |            |    |   |              |   |    |              |   |
|   Service      cost                   |   | $               | 6,155   |   |              | $      | 7,640   |              |   | $ | 7,531 |   |
|   Interest      cost                  |   |            | 17,952  |   |              |   | 16,926  |              |   |   | 16,271 |   |
|   Expected      return on plan assets |   |            | (20,745 | )      |              |   | (18,863 | )                 |   |   | (17,458 | ) |
|   Amortization      of                |   |            |    |   |              |   |    |              |   |   |   |   |
|     Prior      service cost |   |            | 192     |   |              |   | 226     |              |   |   | 216 |   |
|     Actuarial      loss     |   |            | -       |   |              |   | 1,886   |              |   |   | 2,236 |   |
|   Curtailment      charge             |   |            | 41      |   |              |   | 363     |              |   |   | - |   |
| Net      periodic benefit cost                  |   | $               | 3,595   |   |              | $      | 8,178   |              |   | $ | 8,796 |   |
| Key      assumptions (%)                        |   |            |    |   |              |   |    |              |   |   |   |   |
|   Discount      rate                  |   |            | 6.25    |   |              |   | 5.75    |              |   |   | 5.75 |   |
|   Expected      return on plan assets |   |            | 8.25    |   |              |   | 8.25    |              |   |   | 8.25 |   |
|   Rate      of compensation increase  |   |            | 4.00    |   |              |   | 3.50    |              |   |   | 3.50 |   |

| 2009                |   | $      | 14,710  |   |
|---------------------|--------|--------|---------|--------|
| 2010                |   |   | 15,796  |   |
| 2011                |   |   | 16,861  |   |
| 2012                |   |   | 17,946  |   |
| 2013                |   |   | 19,079  |   |
| 2014      thru 2018 |   |   | 112,727 |   |
|                |   | $      | 197,119 |   |

----

|                                            |   | December 31,      2008 |   |   | November 30,      2007 |   |
|-------------------------------------------------|--------|-----------------------------|--------|--------|-----------------------------|--------|
| U.S.      Equity                                |   |                        | 45     | %      |                        |   | 50 | % |
| International      Equity                       |   |                        | 3      |   |                        |   | 4 |   |
| Private      Equity                             |   |                        | 4      |   |                        |   | 3 |   |
| Emerging      Market Equity                     |   |                        | 4      |   |                        |   | 6 |   |
| High      Yield                                 |   |                        | 7      |   |                        |   | 6 |   |
| Fixed      Income                               |   |                        | 28     |   |                        |   | 24 |   |
| Real      Estate                                |   |                        | 9      |   |                        |   | 7 |   |
|        Total |   |                        | 100    | %      |                        |   | 100 | % |

| Total      U.S. Equity (including private equity) |   |   | 53 | % |
|---------------------------------------------------|--------|--------|----|---|
| Total      International Equity                   |   |   | 8  | % |
| Real      Estate                                  |   |   | 7  | % |
| Bonds                                             |   |   | 32 | % |

----

| Other      Postretirement Benefits                                       |   | 2008   |    |    | 2007   |   |
|--------------------------------------------------------------------------|--------|--------|---------|---------|--------|--------|
| Change      in benefit obligation                                        |   |   |    |    |   |   |
|   Benefit      obligation at beginning of period               |   | $      | 50,719  |    |   | $      | 46,205 |   |
|   Effect      of eliminating early measurement date            |   |   | 72      |    |   |   | - |   |
|   Service      cost                                            | 931    | 834    |
|   Interest      cost                                           |   |   | 3,079   |    |   |   | 2,590 |   |
|   Plan      amendments                                         |   |   | (206    | )  |   |   | - |   |
|   Actuarial      (gain) loss                                   | (2,820 | )      | 4,208   |
|   Benefits      and expenses paid                              |   |   | (3,082  | )       |   |   | (3,118 | ) |
| Benefit      obligation at end of period                                 |   | $      | 48,693  |    |   | $      | 50,719 |   |
|                                                                     |   |   |    |    |   |   |   |   |
| Funded      status of plans                                              |   |   |    |    |   |   |   |   |
|   Funded      status at end of period                          |   | $      | (48,693 | )       |   | $      | (50,719 | ) |
|                                                                     |   |   |    |    |   |   |   |   |
| Amounts      recognized in the consolidated balance sheet consist    of: |   |   |    |    |   |   |   |   |
|   Accrued      benefit liability-current                       |   | $      | (3,329  | )       |   | $      | (3,283 | ) |
|   Accrued      benefit liability-noncurrent                    |   |   | (45,364 | )       |   |   | (47,436 | ) |
| Net      amount recognized                                               |   | $      | (48,693 | )       |   | $      | (50,719 | ) |
|                                                                     |   |   |    |    |   |   |   |   |
| Key      assumptions at end of period                                    |   |   |    |    |   |   |   |   |
|   Discount      rate                                           |   |   | 6.40    | %       |   |   | 6.10 | % |
|   Valuation      year medical trend                            |   |   | 9.00    | %       |   |   | 10.00 | % |
|   Ultimate      medical trend                                  |   |   | 5.00    | %       |   |   | 5.00 | % |
|   Year      ultimate medical trend reached                     |   | 2016   |    |    | 2012   |   |

----

| Accumulated      other comprehensive income |   |   |   |
|---------------------------------------------|--------|--------|--------|
| Net      actuarial loss                     |   | $      | (2,316 | ) |
| Prior      service credit                   |   |   | 10,482 |   |
| Total                                       |   | $      | 8,166  |   |

|                      |   | Before      Adoption |   |   |        |   |   | After      Adoption |   |
|---------------------------|--------|----------------------|--------|--------|-------------|--------|--------|---------------------|--------|
|                      |   | of      SFAS 158     |   |   | Adjustments |   |   | of      SFAS 158    |   |
|                      |   |                 |   |   |        |   |   |                |   |
| Accrued      benefit cost |   | $                    | 58,194 |   |        | $      | (7,475 | )                   |   | $ | 50,719 |   |

| Amortization      of:     |   |   |   |
|---------------------------|--------|--------|--------|
| Prior      service credit |   | $      | 2,180  |   |

| Other      Postretirement Benefits                  |   | For      theYear      EndedJanuary 3, 2009 |   |   | For      theYear      EndedDecember 29, 2007 |   |   | For      theYear      EndedDecember 30, 2006 |   |
|-----------------------------------------------------|--------|------------------------------------------------------|--------|--------|--------------------------------------------------------|--------|--------|--------------------------------------------------------|--------|
| Net      periodic benefit cost                      |   |                                                 |   |   |                                                   |   |   |                                                   |   |
|   Service      cost                       |   | $                                                    | 931    |   |                                                   | $      | 834    |                                                   |   | $ | 844 |   |
|   Interest      cost                      |   |                                                 | 3,079  |   |                                                   |   | 2,590  |                                                   |   |   | 2,596 |   |
|   Amortization      of prior service cost |   |                                                 | (2,156 | )      |                                                   |   | (2,156 | )                                                      |   |   | (2,156 | ) |
|   Amortization      of net actuarial loss |   |                                                 | 3      |   |                                                   |   | -      |                                                   |   |   | - |   |
|                                                |   |                                                 |   |   |                                                   |   |   |                                                   |   |   |   |   |
| Net      periodic benefit cost                      |   | $                                                    | 1,857  |   |                                                   | $      | 1,268  |                                                   |   | $ | 1,284 |   |

----

|                                                 |   | For      theYear      EndedJanuary 3, 2009 |   |   | For      theYear      EndedDecember 29, 2007 |   |   | For      theYear      EndedDecember 30, 2006 |   |
|------------------------------------------------------|--------|------------------------------------------------------|--------|--------|--------------------------------------------------------|--------|--------|--------------------------------------------------------|--------|
|   Discount      rate                       |   |                                                 | 6.10   | %      |                                                   |   | 5.75   | %                                                      |   |   | 5.75 | % |
|   Valuation      year medical trend        |   |                                                 | 10.00  | %      |                                                   |   | 11.00  | %                                                      |   |   | 11.00 | % |
|   Ultimate      medical trend              |   |                                                 | 5.00   | %      |                                                   |   | 5.00   | %                                                      |   |   | 5.00 | % |
|   Year      ultimate medical trend reached |   | 2013                                                 |   |   | 2013                                                   |   |   | 2012                                                   |   |

|                                               |   | 1%      Increase |   |   | 1%      Decrease |   |
|----------------------------------------------------|--------|------------------|--------|--------|------------------|--------|
| Aggregate      impact on service and interest cost |   | $                | 84     |   |             | $      | (82 | ) |
| Effect      on accumulated plan benefit obligation |   |             | 1,146  |   |             |   | (1,089 | ) |

| 2009                |   | $      | 3,329  |   |
|---------------------|--------|--------|--------|--------|
| 2010                |   |   | 3,579  |   |
| 2011                |   |   | 3,854  |   |
| 2012                |   |   | 4,005  |   |
| 2013                |   |   | 4,173  |   |
| 2014      thru 2018 |   |   | 22,121 |   |
|                |   | $      | 41,061 |   |

----

|                                  |   | WeightedAverage      GrantUnit      Price |   |   | GrantUnits |   |      | WeightedAverageRemainingContractualLife      (Years) |   |   | AggregateIntrinsic      Value(dollars      inthousands) |   |
|---------------------------------------|--------|-------------------------------------------|--------|--------|------------|--------|-----------|------------------------------------------------------|--------|--------|---------------------------------------------------------|--------|
| Outstanding,      December 29, 2007   |   | $                                         | 29.13  |   |       |   | 942,567   |                                                 |   |   |                                                    |   |   |   |
|   Granted                   |   |                                      | 33.41  |   |       |   | 365,000   |                                                 |   |   |                                                    |   |   |   |
|   Exercised                 |   |                                      | 20.91  |   |       |   | (31,640   | )                                                    |   |   |                                                    |   |   |   |
|   Forfeited      or expired |   |                                      | 32.41  |   |       |   | (143,767  | )                                                    |   |   |                                                    |   |   |   |
| Outstanding,      January 3, 2009     |   | $                                         | 30.32  |   |       |   | 1,132,160 |                                                 |   |   | 7.5                                                     |   |   | $ | 182 |   |
| Exercisable,      January 3, 2009     |   | $                                         | 26.78  |   |       |   | 536,160   |                                                 |   |   | 6.3                                                     |   |   | $ | 182 |   |
|                                  |   |                                      |   |   |       |   |      |                                                 |   |   |                                                    |   |
| Outstanding,      December 30, 2006   |   | $                                         | 26.29  |   |       |   | 840,117   |                                                 |   |   |                                                    |   |   |   |
|   Granted                   |   |                                      | 33.62  |   |       |   | 337,000   |                                                 |   |   |                                                    |   |   |   |
|   Exercised                 |   |                                      | 22.39  |   |       |   | (119,017  | )                                                    |   |   |                                                    |   |   |   |
|   Forfeited      or expired |   |                                      | 28.47  |   |       |   | (115,533  | )                                                    |   |   |                                                    |   |   |   |
| Outstanding,      December 29, 2007   |   | $                                         | 29.13  |   |       |   | 942,567   |                                                 |   |   | 7.9                                                     |   |   | $ | 4,034 |   |
| Exercisable,      December 29, 2007   |   | $                                         | 20.62  |   |       |   | 129,050   |                                                 |   |   | 5.3                                                     |   |   | $ | 1,650 |   |
|                                  |   |                                      |   |   |       |   |      |                                                 |   |   |                                                    |   |   |   |   |   |
| Outstanding,      December 31, 2005   |   | $                                         | 23.52  |   |       |   | 767,514   |                                                 |   |   |                                                    |   |   |   |   |   |
|   Granted                   |   |                                      | 28.74  |   |       |   | 331,750   |                                                 |   |   |                                                    |   |   |   |   |   |
|   Exercised                 |   |                                      | 17.67  |   |       |   | (146,181  | )                                                    |   |   |                                                    |   |   |   |   |   |
|   Forfeited      or expired |   |                                      | 25.85  |   |       |   | (112,966  | )                                                    |   |   |                                                    |   |   |   |   |   |
| Outstanding,      December 30, 2006   |   | $                                         | 26.29  |   |       |   | 840,117   |                                                 |   |   | 8.1                                                     |   |   | $ | 6,164 |   |
| Exercisable,      December 30, 2006   |   | $                                         | 21.41  |   |       |   | 245,317   |                                                 |   |   | 6.4                                                     |   |   | $ | 2,997 |   |

----

----

|   | • | total      remediation costs of $654 million, based on the most recent bids received      with a range from $594 million to $900million; |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | the      FWS preliminary estimate that discharges from the Appleton plant and the      Combined Locks mill represent 36% to 52% of the total PCBs discharged by      the PRPs, which is substantially greater than Appleton’s      estimate; |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | costs      to settle NRD claims against Appleton and NCR, estimated at $20 million or      less, based on the IGP’s settlement of other NRD  claims; |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Appleton’s      responsibility for over half of the claims asserted against Appleton and      NCR, based on the Company’s interim settlement agreement with NCR and the      arbitration determination; and |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | $25      million in fees and expenses. |
|--------|---------|----------------------------------------|

----

----

----

|                                      |   | For      theYear      EndedJanuary 3, 2009 |   |   | For      theYear      EndedDecember 29, 2007 |   |   | For      theYear      EndedDecember 30, 2006 |   |
|-------------------------------------------|--------|------------------------------------------------------|--------|--------|--------------------------------------------------------|--------|--------|--------------------------------------------------------|--------|
| Cash      paid during the period for:     |   |                                                 |   |   |                                                   |   |   |                                                   |   |
| Interest                                  |   | $                                                    | 45,278 |   |                                                   | $      | 45,020 |                                                   |   | $ | 46,569 |   |
| Income      taxes                         |   |                                                 | 287    |   |                                                   |   | 811    |                                                   |   |   | 659 |   |
|                                      |   |                                                 |   |   |                                                   |   |   |                                                   |   |   |   |   |
| Cash      received during the period for: |   |                                                 |   |   |                                                   |   |   |                                                   |   |   |   |   |
| Income      tax refunds                   |   | $                                                    | 702    |   |                                                   | $      | 6,454  |                                                   |   | $ | 111 |   |

----

----

|                                                                    |   | For      the ThreeMonths      EndedMarch 30,      2008 |    |   | For      the ThreeMonths      EndedJune 29,      2008 |   |    | For      the ThreeMonths      EndedSeptember 28,      2008 |   |   | For      the ThreeMonths      EndedJanuary 3,      2009 |   | For      the YearEndedJanuary 3,      2009 |
|-------------------------------------------------------------------------|--------|-------------------------------------------------------------|---------|--------|------------------------------------------------------------|--------|---------|-----------------------------------------------------------------|--------|--------|--------------------------------------------------------------|--------|-------------------------------------------------|
| Net      sales                                                          |   | $                                                           | 236,230 |   |                                                       | $      | 249,779 |                                                            |   | $      | 255,216                                                      |   |                                            | $ | 223,352 |   | $ | 964,577 |
| Gross      profit                                                       |   |                                                        | 54,540  |   |                                                       |   | 50,620  |                                                            |   |   | 44,043                                                       |   |                                            |   | 34,934 |   |   | 184,137 |
| Operating      income (loss)                                            |   |                                                        | 10,304  |   |                                                       |   | 10,438  |                                                            |   |   | (13,328                                                      | )      |                                            |   | (32,530 | ) |   | (25,116) |
| Income      (loss) from continuing operations                           |   |                                                        | 21,375  |   |                                                       |   | 274     |                                                            |   |   | (25,807                                                      | )      |                                            |   | (44,537 | ) |   | (48,695) |
| Income      (loss) from discontinued operations, net of income    taxes |   |                                                        | 25      |   |                                                       |   | (42,950 | )                                                               |   |   | (4,224                                                       | )      |                                            |   | (1,538 | ) |   | (48,687) |
| Net      income (loss)                                                  |   |                                                        | 21,400  |   |                                                       |   | (42,676 | )                                                               |   |   | (30,031                                                      | )      |                                            |   | (46,075 | ) |   | (97,382) |

----

|                                                                    |   | For      the ThreeMonths      EndedApril 1,2007 |    |   | For      the ThreeMonths      EndedJuly 1,2007 |   |    | For      the ThreeMonths      EndedSeptember 30,2007 |   |   | For      the ThreeMonths      EndedDecember 29,      2007 |   |   | For      the YearEndedDecember 29,      2007 |    |   |
|-------------------------------------------------------------------------|--------|------------------------------------------------------|---------|--------|-----------------------------------------------------|--------|---------|-----------------------------------------------------------|--------|--------|----------------------------------------------------------------|--------|--------|---------------------------------------------------|---------|--------|
| Net      sales                                                          |   | $                                                    | 232,350 |   |                                                | $      | 242,765 |                                                      |   | $      | 247,242                                                        |   |   | $                                                 | 240,883 |   |   | $ | 963,240          |   |
| Gross      profit                                                       |   |                                                 | 58,803  |   |                                                |   | 54,135  |                                                      |   |   | 60,418                                                         |   |   |                                              | 56,146  |   |   |   | 229,502     |   |
| Operating      income                                                   |   |                                                 | 12,947  |   |                                                |   | 11,551  |                                                      |   |   | 17,947                                                         |   |   |                                              | 8,337   |   |   |   | 50,782     |   |
| Income      (loss) from continuing operations                           |   |                                                 | 1,486   |   |                                                |   | (899    | )                                                         |   |   | 6,755                                                          |   |   |                                              | (3,148  | )      |   |   | 4,194     |   |
| (Loss)      income from discontinued operations, net of income    taxes |   |                                                 | (1,562  | )      |                                                |   | (848    | )                                                         |   |   | 524                                                            |   |   |                                              | (8,615  | )      |   |   | (10,501)   |   |
| Net      (loss) income                                                  |   |                                                 | (76     | )      |                                                |   | (1,747  | )                                                         |   |   | 7,279                                                          |   |   |                                              | (11,763 | )      |   |   | (6,307)   |   |

----

|                                                              |   | For      the Year EndedJanuary 3, 2009 |    |    | For      the Year EndedDecember 29, 2007 |   |    | For      the Year EndedDecember 30, 2006 |   |
|-------------------------------------------------------------------|--------|--------------------------------------------------|---------|---------|----------------------------------------------------|--------|---------|----------------------------------------------------|--------|
| Net      sales                                                    |   |                                             |    |    |                                               |   |    |                                               |   |
| Technical      Papers                                             |   |                                             |    |    |                                               |   |    |                                               |   |
| Coated      solutions                                             |   | $                                                | 538,002 |    |                                               | $      | 571,989 |                                               |   | $ | 572,368 |   |
| Thermal      papers                                               |   |                                             | 280,296 |    |                                               |   | 257,075 |                                               |   |   | 260,035 |   |
| Security      papers                                              |   |                                             | 34,025  |    |                                               |   | 32,335  |                                               |   |   | 29,446 |   |
|                                                              |   |                                             | 852,323 |    |                                               |   | 861,399 |                                               |   |   | 861,849 |   |
|                                                              |   |                                             |    |    |                                               |   |    |                                               |   |   |   |   |
| Performance      packaging                                        |   |                                             | 112,254 |    |                                               |   | 101,841 |                                               |   |   | 111,806 |   |
| Total                                                             |   | $                                                | 964,577 |    |                                               | $      | 963,240 |                                               |   | $ | 973,655 |   |
| Operating      income (loss)                                      |   |                                             |    |    |                                               |   |    |                                               |   |   |   |   |
| Technical      Papers                                             |   |                                             |    |    |                                               |   |    |                                               |   |   |   |   |
| Coated      solutions                                             |   | $                                                | 29,851  |    |                                               | $      | 52,126  |                                               |   | $ | 50,853 |   |
| Thermal      papers                                               |   |                                             | (11,924 | )       |                                               |   | 7,176   |                                               |   |   | 13,392 |   |
| Security      papers                                              |   |                                             | 3,388   |    |                                               |   | 3,482   |                                               |   |   | 1,624 |   |
|                                                              |   |                                             | 21,315  |    |                                               |   | 62,784  |                                               |   |   | 65,869 |   |
|                                                              |   |                                             |    |    |                                               |   |    |                                               |   |   |   |   |
| Performance      packaging                                        |   |                                             | (34,292 | )       |                                               |   | 6,225   |                                               |   |   | 9,798 |   |
| Unallocated      corporate charges and business development costs |   |                                             | (12,139 | )  |                                               |   | (18,227 | )                                                  |   |   | (16,447 | ) |
| Total                                                             |   | $                                                | (25,116 | )  |                                               | $      | 50,782  |                                               |   | $ | 59,220 |   |
|                                                              |   |                                             |    |    |                                               |   |    |                                               |   |   |   |   |
| Depreciation      and amortization                                |   |                                             |    |    |                                               |   |    |                                               |   |   |   |   |
| Technical      Papers                                             |   |                                             |    |    |                                               |   |    |                                               |   |   |   |   |
| Coated      solutions                                             |   | $                                                | 35,181  |    |                                               | $      | 40,330  |                                               |   | $ | 45,935 |   |
| Thermal      papers                                               |   |                                             | 14,314  |    |                                               |   | 14,309  |                                               |   |   | 14,605 |   |
| Security      papers                                              |   |                                             | 3,045   |    |                                               |   | 2,804   |                                               |   |   | 2,805 |   |
|                                                              |   |                                             | 52,540  |    |                                               |   | 57,443  |                                               |   |   | 63,345 |   |
|                                                              |   |                                             |    |    |                                               |   |    |                                               |   |   |   |   |
| Performance      packaging                                        |   |                                             | 45,731  |    |                                               |   | 5,794   |                                               |   |   | 5,478 |   |
| Unallocated      corporate charges                                |   |                                             | 770     |    |                                               |   | 572     |                                               |   |   | 372 |   |
| Total                                                             |   | $                                                | 99,041  |    |                                               | $      | 63,809  |                                               |   | $ | 69,195 |   |

----

----

| PAPERWEIGHT      DEVELOPMENT CORP. AND SUBSIDIARIES                                                                                                                                                                                                                        |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                       |   |
|                                         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) |   |
|                                                                                                                                                                                                                                                                       |   |
|                                         CONDENSED CONSOLIDATING BALANCE SHEET                    |   |
|                                                                                                                                                                                                                                                                       |   |
|                                JANUARY 3, 2009                                                                                                |   |
|                                                                                                                                                                                                                                                                       |   |
| (dollars      in thousands)                                                                                                                                                                                                                                                |   |
|                                                                                                                                                                                                                                                                       |   |
|                                                                                                                                                                                                                                                                       |   | ParentGuarantor |   |   | Issuer |   |   | SubsidiaryGuarantors |   |   | Non-Guarantor Subsidiary |   |   | Eliminations |   |   | Consolidated |   |
|                                                                                                                                                                                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| ASSETS                                                                                                                                                                                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current      assets                                                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|         Cash and cash equivalents                                                                                                                                                                                                                                |   | $ | - |   |   | $ | 2,111 |   |   | $ | 65 |   |   | $ | 2,004 |   |   | $ | - |   |   | $ | 4,180 |   |
|         Accounts receivable, net                                                                                                                                                                                                                                 |   |   | - |   |   |   | 73,738 |   |   |   | 12,868 |   |   |   | 5,423 |   |   |   | - |   |   |   | 92,029 |   |
|         Inventories                                                                                                                                                                                                                                              |   |   | - |   |   |   | 113,406 |   |   |   | 14,658 |   |   |   | 1,989 |   |   |   | - |   |   |   | 130,053 |   |
|         Other current assets                                                                                                                                                                                                                                     |   |   | 37,700 |   |   |   | 6,343 |   |   |   | 1,993 |   |   |   | 203 |   |   |   | - |   |   |   | 46,239 |   |
|       Total      current assets                                                                                                                                                                                                              |   |   | 37,700 |   |   |   | 195,598 |   |   |   | 29,584 |   |   |   | 9,619 |   |   |   | - |   |   |   | 272,501 |   |
|                                                                                                                                                                                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|         Property, plant and equipment, net                                                                                                                                                                                                                       |   |   | - |   |   |   | 416,630 |   |   |   | 29,028 |   |   |   | 13 |   |   |   | - |   |   |   | 445,671 |   |
|         Investment in subsidiaries                                                                                                                                                                                                                               |   |   | 146,562 |   |   |   | 124,971 |   |   |   | - |   |   |   | - |   |   |   | (271,533 | ) |   |   | - |   |
|         Other assets                                                                                                                                                                                                                                             |   |   | 114,312 |   |   |   | 66,964 |   |   |   | 30,432 |   |   |   | 41 |   |   |   | - |   |   |   | 211,749 |   |
|             Total assets                                                                                                                                                                                                                     |   | $ | 298,574 |   |   | $ | 804,163 |   |   | $ | 89,044 |   |   | $ | 9,673 |   |   | $ | (271,533 | ) |   | $ | 929,921 |   |
|                                                                                                                                                                                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LIABILITIES,      REDEEMABLE COMMON STOCK, ACCUMULATED DEFICIT AND ACCUMULATED OTHER      COMPREHENSIVE (LOSS) INCOME                                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current      liabilities                                                                                                                                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|         Current portion of long-term debt                                                                                                                                                                                                                        |   | $ | - |   |   | $ | 5,455 |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | 5,455 |   |
|         Accounts payable                                                                                                                                                                                                                                         |   |   | - |   |   |   | 61,674 |   |   |   | 739 |   |   |   | 125 |   |   |   | - |   |   |   | 62,538 |    |
|         Due to (from) parent and affiliated companies                                                                                                                                                                                                            |   |   | 405,519 |   |   |   | (374,547 | ) |   |   | (27,760 | )  |   |   | (3,212 | ) |   |   | - |   |   |   | - |   |
|         Other accrued liabilities                                                                                                                                                                                                                                |   |   | - |   |   |   | 83,916 |   |   |   | 1,861 |   |   |   | 1,993 |   |   |   | - |   |   |   | 87,770 |   |
|             Total current liabilities                                                                                                                                                                                                        |   |   | 405,519 |   |   |   | (223,502 | ) |   |   | (25,160 | ) |   |   | (1,094 | ) |   |   | - |   |   |   | 155,763 |   |
|                                                                                                                                                                                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Long-term      debt                                                                                                                                                                                                                                                        |   |   | - |   |   |   | 598,598 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 598,598 |   |
| Other      long-term liabilities                                                                                                                                                                                                                                           |   |   | - |   |   |   | 282,505 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 282,505 |   |
| Redeemable      common stock, accumulated deficit and accumulated other comprehensive      (loss) income                                                                                                                                                                   |   |   | (106,945 | ) |   |   | 146,562 |   |   |   | 114,204 |   |   |   | 10,767 |   |   |   | (271,533 | ) |   |   | (106,945 | ) |
|                                                                                                                                                                                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       Total      liabilities, redeemable common stock, accumulated deficit and accumulated      other comprehensive (loss) income                                                                                                            |   | $ | 298,574 |   |   | $ | 804,163 |   |   | $ | 89,044 |   |   | $ | 9,673 |   |   | $ | (271,533 | ) |   | $ | 929,921 |   |

----

| PAPERWEIGHT      DEVELOPMENT CORP. AND SUBSIDIARIES                                                                                                                                                                                                                                         |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                        |   |
|                                       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)                              |   |
|                                                                                                                                                                                                                                                                                        |   |
|                                               CONDENSED CONSOLIDATING BALANCE SHEET |   |
|                                                                                                                                                                                                                                                                                        |   |
|                                  DECEMBER 29, 2007                                                                                              |   |
|                                                                                                                                                                                                                                                                                        |   |
| (dollars      in thousands)                                                                                                                                                                                                                                                                 |   |
|                                                                                                                                                                                                                                                                                        |   |
|                                                                                                                                                                                                                                                                                        |   | ParentGuarantor |   |   | Issuer |   |   | SubsidiaryGuarantors |   |   | Non-Guarantor Subsidiary |   |   | Eliminations |   |   |  Consolidated |   |
|                                                                                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| ASSETS                                                                                                                                                                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current      assets                                                                                                                                                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|         Cash and cash equivalents                                                                                                                                                                                                                                                 |   | $ | - |   |   | $ | 33,567 |   |   | $ | 9,247 |   |   | $ | 2,024 |   |   | $ | - |   |   | $ | 44,838 |   |
|         Accounts receivable, net                                                                                                                                                                                                                                                  |   |   | - |   |   |   | 97,424 |   |   |   | 11,191 |   |   |   | 8,147 |   |   |   | - |   |   |   | 116,762 |   |
|         Inventories                                                                                                                                                                                                                                                               |   |   | - |   |   |   | 108,721 |   |   |   | 13,092 |   |   |   | 2,265 |   |   |   | - |   |   |   | 124,078 |   |
|         Other current assets                                                                                                                                                                                                                                                      |   |   | 3,800 |   |   |   | 7,565 |   |   |   | 447 |   |   |   | 398 |   |   |   | - |   |   |   | 12,210 |   |
|         Assets of discontinued operations                                                                                                                                                                                                                                         |   |   | - |   |   |   | - |   |   |   | 36,731 |   |   |   | - |   |   |   | - |   |   |   | 36,731 |   |
|             Total current assets                                                                                                                                                                                                                              |   |   | 3,800 |   |   |   | 247,277 |   |   |   | 70,708 |   |   |   | 12,834 |   |   |   | - |   |   |   | 334,619 |   |
|                                                                                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|         Property, plant and equipment, net                                                                                                                                                                                                                                        |   |   | - |   |   |   | 363,541 |   |   |   | 30,170 |   |   |   | 31 |   |   |   | - |   |   |   | 393,742 |   |
|         Investment in subsidiaries                                                                                                                                                                                                                                                |   |   | 331,128 |   |   |   | 155,533 |   |   |   | - |   |   |   | - |   |   |   | (486,661) |   |   |   | - |   |
|         Other assets                                                                                                                                                                                                                                                              |   |   | 165,274 |   |   |   | 80,439 |   |   |   | 71,637 |   |   |   | 51 |   |   |   | - |   |   |   | 317,401 |   |
|         Assets of discontinued operations                                                                                                                                                                                                                                         |   |   |                   - |   |   |   | - |   |   |   | 57,646 |   |   |   | - |   |   |   | - |   |   |   | 57,646 |   |
|             Total assets                                                                                                                                                                                                                                      |   | $ | 500,202 |   |   | $ | 846,790 |   |   | $ | 230,161 |   |   | $ | 12,916 |   |   | $ | (486,661) |   |   | $ | 1,103,408 |   |
|                                                                                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LIABILITIES,      REDEEMABLE COMMON STOCK, ACCUMULATED DEFICIT AND ACCUMULATED OTHER      COMPREHENSIVE INCOME                                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current      liabilities                                                                                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|         Current portion of long-term debt                                                                                                                                                                                                                                         |   | $ | - |   |   | $ | 3,138 |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | 3,138 |   |
|         Accounts payable                                                                                                                                                                                                                                                          |   |   | - |   |   |   | 78,001 |   |   |   | 4,387 |   |   |   | 233 |   |   |   | - |   |   |   | 82,621 |    |
|         Due to (from) parent and affiliated companies                                                                                                                                                                                                                             |   |   | 394,569 |   |   |   | (431,078 | ) |   |   | 39,718 |   |   |   | (3,209 | ) |   |   | - |   |   |   | - |   |
|         Other accrued liabilities                                                                                                                                                                                                                                                 |   |   | - |   |   |   | 82,117 |   |   |   | 1,942 |   |   |   | 1,977 |   |   |   | - |   |   |   | 86,036 |   |
|         Liabilities of discontinued operations                                                                                                                                                                                                                                    |   |   | - |   |   |   | - |   |   |   | 21,685 |   |   |   | - |   |   |   | - |   |   |   | 21,685 |   |
|             Total current liabilities                                                                                                                                                                                                                         |   |   | 394,569 |   |   |   | (267,822 | ) |   |   | 67,732 |   |   |   | (999 | ) |   |   | - |   |   |   | 193,480 |   |
|                                                                                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Long-term      debt                                                                                                                                                                                                                                                                         |   |   | - |   |   |   | 539,105 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 539,105 |   |
| Other      long-term liabilities                                                                                                                                                                                                                                                            |   |   | - |   |   |   | 244,379 |   |   |   | - |   |   |   | 61 |   |   |   | - |   |   |   | 244,440 |   |
| Liabilities      of discontinued operations                                                                                                                                                                                                                                                 |   |   | - |   |   |   | - |   |   |   | 20,750 |   |   |   | - |   |   |   | - |   |   |   | 20,750 |   |
| Redeemable      common stock, accumulated deficit and accumulated other comprehensive      income                                                                                                                                                                                           |   |   | 105,633 |   |   |   | 331,128 |   |   |   | 141,679 |   |   |   | 13,854 |   |   |   | (486,661) |   |   |   | 105,633 |   |
|                                                                                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       Total      liabilities, redeemable common stock, accumulated deficit and accumulated      other comprehensive income                                                                                                                                    |   | $ | 500,202 |   |   | $ | 846,790 |   |   | $ | 230,161 |   |   | $ | 12,916 |   |   | $ | (486,661) |   |   | $ | 1,103,408 |   |

----

| PAPERWEIGHT      DEVELOPMENT CORP. AND SUBSIDIARIES                     |   |
|-------------------------------------------------------------------------|--------|
|                                                                    |   |
| NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)           |   |
|                                                                    |   |
| CONDENSED      CONSOLIDATING STATEMENT OF OPERATIONS                    |   |
| FOR      THE YEAR JANUARY 3, 2009                                       |   |
| (dollars      in thousands)                                             |   |
|                                                                    |   |
|                                                                    |   |
|                                                                    |   |
|                                                                    |   | Parent |   |   |   |   |   | Subsidiary |   |   | Non-Guarantor |   |   |   |   |   |   |   |
|                                                                    |   | Guarantor |   |   | Issuer |   |   | Guarantors |   |   | Subsidiary |   |   | Eliminations |   |   | Consolidated |   |
| Net      sales                                                          |   | $ | - |   |   | $ | 853,796 |   |   | $ | 112,246 |   |   | $ | 58,132 |   |   | $ | (59,597 | ) |   | $ | 964,577 |   |
| Cost      of sales                                                      |   |   | - |   |   |   | 690,282 |   |   |   | 92,852 |   |   |   | 56,900 |   |   |   | (59,594 | ) |   |   | 780,440 |   |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross      profit                                                       |   |   | - |   |   |   | 163,514 |   |   |   | 19,394 |   |   |   | 1,232 |   |   |   | (3 | ) |   |   | 184,137 |   |
| Selling,      general and administrative expenses                       |   |   | - |   |   |   | 150,457 |   |   |   | 14,513 |   |   |   | 2,060 |   |   |   | - |   |   |   | 167,030 |   |
| Goodwill      impairment                                                |   |   | - |   |   |   |   | - |   |   | 39,645 |   |   |   | - |   |   |   | - |   |   |   | 39,645 |   |
| Restructuring      and other charges                                    |   |   | - |   |   |   | 2,578 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 2,578 |   |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating      income (loss)                                            |   |   | - |   |   |   | 10,479 |   |   |   | (34,764 | ) |   |   | (828 | ) |   |   | (3 | ) |   |   | (25,116 | ) |
| Interest      expense                                                   |   |   | 12,151 |   |   |   | 54,267 |   |   |   | 153 |   |   |   | - |   |   |   | (12,304 | ) |   |   | 54,267 |   |
| Debt      extinguishment income, net                                    |   |   | - |   |   |   | (11,598 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (11,598 | )  |
| Interest      income                                                    |   |   | - |   |   |   | (15,797 | ) |   |   | (153 | ) |   |   | (67 | ) |   |   | 14,946 |   |   |   | (1,071 | ) |
| Loss      in equity investments                                         |   |   | 85,231 |   |   |   | 34,149 |   |   |   | - |   |   |   | - |   |   |   | (119,380 | ) |   |   | - |   |
| Other      (income) loss                                                |   |   | - |   |   |   | (20,132 | ) |   |   | - |   |   |   | 2,654 |   |   |   | (273 | ) |   |   | (17,751 | ) |
| Loss      from continuing operations                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       before      income taxes            |   |   | (97,382 | ) |   |   | (30,410 | ) |   |   | (34,764 | ) |   |   | (3,415 | ) |   |   | 117,008 |   |   |   | (48,963 | ) |
| (Benefit)      provision for income taxes                               |   |   | - |   |   |   | (48 | ) |   |   | 49 |   |   |   | (269 | ) |   |   | - |   |   |   | (268 | ) |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss      from continuing operations                                    |   |   | (97,382 | ) |   |   | (30,362 | ) |   |   | (34,813 | ) |   |   | (3,146 | ) |   |   | 117,008 |   |   |   | (48,695 | ) |
| (Loss)      income from discontinued operations, net of income    taxes |   |   | - |   |   |   | (54,869 | ) |   |   | 3,540 |   |   |   | - |   |   |   | 2,642 |   |   |   | (48,687 | ) |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      loss                                                           |   | $ | (97,382 | ) |   | $ | (85,231 | ) |   | $ | (31,273 | ) |   | $ | (3,146 | ) |   | $ | 119,650 |   |   | $ | (97,382 | ) |

----

| PAPERWEIGHT      DEVELOPMENT CORP. AND SUBSIDIARIES           |   |
|---------------------------------------------------------------|--------|
|                                                          |   |
| NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) |   |
|                                                          |   |
| CONDENSED      CONSOLIDATING STATEMENT OF OPERATIONS          |   |
| FOR      THE YEAR DECEMBER 29, 2007                      |   |
| (dollars      in thousands)                                   |   |
|                                                          |   |
|                                                          |   |
|                                                          |   |
|                                                          |   | Parent |   |   |   |   |   | Subsidiary |   |   | Non-Guarantor |   |   |   |   |   |   |   |
|                                                          |   | Guarantor |   |   | Issuer |   |   | Guarantors |   |   | Subsidiary |   |   | Eliminations |   |   | Consolidated |   |
| Net      sales                                                |   | $ | - |   |   | $ | 860,674 |   |   | $ | 101,697 |   |   | $ | 62,867 |   |   | $ | (61,998 | ) |   | $ | 963,240 |   |
| Cost      of sales                                            |   |   | - |   |   |   | 655,074 |   |   |   | 81,174 |   |   |   | 59,452 |   |   |   | (61,962 | ) |   |   | 733,738 |   |
|                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross      profit                                             |   |   | - |   |   |   | 205,600 |   |   |   | 20,523 |   |   |   | 3,415 |   |   |   | (36 | ) |   |   | 229,502 |   |
| Selling,      general and administrative expenses             |   |   | - |   |   |   | 160,039 |   |   |   | 14,430 |   |   |   | 2,393 |   |   |   | 413 |   |   |   | 177,275 |   |
| Restructuring      and other charges                          |   |   | - |   |   |   | 1,305 |   |   |   | 140 |   |   |   | - |   |   |   | - |   |   |   | 1,445 |   |
|                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating      income                                         |   |   | - |   |   |   | 44,256 |   |   |   | 5,953 |   |   |   | 1,022 |   |   |   | (449 | ) |   |   | 50,782 |   |
| Interest      expense                                         |   |   | 11,059 |   |   |   | 48,347 |   |   |   | - |   |   |   | 4 |   |   |   | (11,059 | ) |   |   | 48,351 |   |
| Debt      extinguishment expense, net                         |   |   | - |   |   |   | 1,572 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1,572 |   |
| Interest      income                                          |   |   | - |   |   |   | (17,464 | ) |   |   | - |   |   |   | (73 | ) |   |   | 15,061 |   |   |   | (2,476 | ) |
| (Income)      loss in equity investments                      |   |   | (4,752 | ) |   |   | 7,161 |   |   |   | - |   |   |   | - |   |   |   | (2,409 | ) |   |   | - |   |
| Other      income                                             |   |   | - |   |   |   | (254 | ) |   |   | - |   |   |   | (1,173 | ) |   |   | 315 |   |   |   | (1,112 | ) |
| (Loss)      income from continuing operations                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       before      income taxes  |   |   | (6,307 | ) |   |   | 4,894 |   |   |   | 5,953 |   |   |   | 2,264 |   |   |   | (2,357 | ) |   |   | 4,447 |   |
| Provision      for income taxes                               |   |   | - |   |   |   | 142 |   |   |   | 22 |   |   |   | 89 |   |   |   | - |   |   |   | 253 |   |
|                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (Loss)      income from continuing operations                 |   |   | (6,307 | ) |   |   | 4,752 |   |   |   | 5,931 |   |   |   | 2,175 |   |   |   | (2,357 | ) |   |   | 4,194 |   |
| Loss      from discontinued operations, net of income taxes   |   |   | - |   |   |   | - |   |   |   | (14,916 | ) |   |   | - |   |   |   | 4,415 |   |   |   | (10,501 | ) |
|                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      (loss) income                                        |   | $ | (6,307 | ) |   | $ | 4,752 |   |   | $ | (8,985 | ) |   | $ | 2,175 |   |   | $ | 2,058 |   |   | $ | (6,307 | ) |

----

| PAPERWEIGHT      DEVELOPMENT CORP. AND SUBSIDIARIES                     |   |
|-------------------------------------------------------------------------|--------|
|                                                                    |   |
| NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)           |   |
|                                                                    |   |
| CONDENSED      CONSOLIDATING STATEMENT OF OPERATIONS                    |   |
| FOR      THE YEAR DECEMBER 30, 2006                                |   |
| (dollars      in thousands)                                             |   |
|                                                                    |   |
|                                                                    |   |
|                                                                    |   |
|                                                                    |   | Parent |   |   |   |   |   | Subsidiary |   |   | Non-Guarantor |   |   |   |   |   |   |   |
|                                                                    |   | Guarantor |   |   | Issuer |   |   | Guarantors |   |   | Subsidiary |   |   | Eliminations |   |   | Consolidated |   |
| Net      sales                                                          |   | $ | - |   |   | $ | 860,628 |   |   | $ | 111,139 |   |   | $ | 66,312 |   |   | $ | (64,424 | ) |   | $ | 973,655 |   |
| Cost      of sales                                                      |   |   | - |   |   |   | 647,768 |   |   |   | 87,537 |   |   |   | 62,035 |   |   |   | (64,737 | ) |   |   | 732,603 |   |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross      profit                                                       |   |   | - |   |   |   | 212,860 |   |   |   | 23,602 |   |   |   | 4,277 |   |   |   | 313 |   |   |   | 241,052 |   |
| Selling,      general and administrative expenses                       |   |   | - |   |   |   | 163,709 |   |   |   | 13,128 |   |   |   | 2,582 |   |   |   | 252 |   |   |   | 179,671 |   |
| Restructuring      and other charges                                    |   |   | - |   |   |   | 2,079 |   |   |   | 82 |   |   |   | - |   |   |   | - |   |   |   | 2,161 |   |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating      income                                                   |   |   | - |   |   |   | 47,072 |   |   |   | 10,392 |   |   |   | 1,695 |   |   |   | 61 |   |   |   | 59,220 |   |
| Interest      expense                                                   |   |   | 10,132 |   |   |   | 48,978 |   |   |   | - |   |   |   | - |   |   |   | (10,132 | ) |   |   | 48,978 |   |
| Debt      extinguishment expense, net                                   |   |   | - |   |   |   | 208 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 208 |   |
| Interest      income                                                    |   |   | - |   |   |   | (14,130 | ) |   |   | (6 | ) |   |   | (64 | ) |   |   | 13,297 |   |   |   | (903 | ) |
| Income      in equity investments                                       |   |   | (21,477 | ) |   |   | (8,880 | ) |   |   | - |   |   |   | - |   |   |   | 30,357 |   |   |   | - |   |
| Other      (income) expense                                             |   |   | - |   |   |   | (576 | ) |   |   | - |   |   |   | 92 |   |   |   | (29 | ) |   |   | (513 | ) |
| Income      from continuing operations                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|             before income taxes           |   |   | 11,345 |   |   |   | 21,472 |   |   |   | 10,398 |   |   |   | 1,667 |   |   |   | (33,432 | ) |   |   | 11,450 |   |
| (Benefit)      provision for income taxes                               |   |   | - |   |   |   | (5 | ) |   |   | 31 |   |   |   | 607 |   |   |   | - |   |   |   | 633 |   |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income      from continuing operations                                  |   |   | 11,345 |   |   |   | 21,477 |   |   |   | 10,367 |   |   |   | 1,060 |   |   |   | (33,432 | ) |   |   | 10,817 |   |
| (Loss)      income from discontinued operations, net of income    taxes |   |   | - |   |   |   | - |   |   |   | (2,889 | ) |   |   | - |   |   |   | 3,417 |   |   |   | 528 |   |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      income                                                         |   | $ | 11,345 |   |   | $ | 21,477 |   |   | $ | 7,478 |   |   | $ | 1,060 |   |   | $ | (30,015 | ) |   | $ | 11,345 |   |

----

| PAPERWEIGHT      DEVELOPMENT CORP. AND SUBSIDIARIES                                              |   |
|--------------------------------------------------------------------------------------------------|--------|
|                                                                                             |   |
| NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)                                    |   |
|                                                                                             |   |
| CONDENSED      CONSOLIDATING STATEMENT OF CASH FLOWS                                             |   |
| FOR      THE YEAR ENDED JANUARY 3, 2009                                                     |   |
| (dollars      in thousands)                                                                      |   |
|                                                                                             |   |
|                                                                                             |   | Parent |   |   |   |   |   | Subsidiary |   |   | Non-Guarantor |   |   |   |   |   |   |   |
|                                                                                             |   | Guarantor |   |   | Issuer |   |   | Guarantors |   |   | Subsidiary |   |   | Eliminations |   |   | Consolidated |   |
|                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash      flows from operating activities:                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      loss                                                                                    |   | $ | (97,382 | ) |   | $ | (85,231 | ) |   | $ | (31,273 | ) |   | $ | (3,146 | ) |   | $ | 119,650 |   |   | $ | (97,382 | ) |
| Adjustments      to reconcile net loss to net cash provided (used) by operating      activities: |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation      and amortization                                                               |   |   | - |   |   |   | 53,298 |   |   |   | 6,085 |   |   |   | 13 |   |   |   | - |   |   |   | 59,396 |   |
| Impairment      of continuing operations                                                         |   |   | - |   |   |   | - |   |   |   | 39,645 |   |   |   | - |   |   |   | - |   |   |   | 39,645 |   |
| Impairment      of discontinued operations                                                       |   |   | - |   |   |   | - |   |   |   | 43,745 |   |   |   | - |   |   |   | - |   |   |   | 43,745 |   |
| Other                                                                                            |   |   | - |   |   |   | 22,027 |   |   |   | 266 |   |   |   | 2,654 |   |   |   | - |   |   |   | 24,947 |   |
| Change      in assets and liabilities, net                                                       |   |   | 107,936 |   |   |   | (55,008 | ) |   |   | 10,283 |   |   |   | 462 |   |   |   | (119,650 | ) |   |   | (55,977 | ) |
|                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      cash provided (used) by operating activities                                            |   |   | 10,554 |   |   |   | (64,914 | ) |   |   | 68,751 |   |   |   | (17 | ) |   |   | - |   |   |   | 14,374 |   |
| Cash      flows from investing activities:                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds      from sale of equipment                                                             |   |   | - |   |   |   | 159 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 159 |   |
| Net      change in cash balance upon sale of Bemrose Group      Limited                          |   |   | - |   |   |   | 5,806 |   |   |   | (6,805 | ) |   |   | - |   |   |   | - |   |   |   | (999 | ) |
| Additions      to property, plant and equipment                                                  |   |   | - |   |   |   | (95,884 | ) |   |   | (3,650 | ) |   |   | - |   |   |   | - |   |   |   | (99,534 | ) |
|                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      cash used by investing activities                                                       |   |   | - |   |   |   | (89,919 | ) |   |   | (10,455 | ) |   |   | - |   |   |   | - |   |   |   | (100,374 | ) |
| Cash      flows from financing activities:                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Payments      of senior secured notes payable                                                    |   |   | - |   |   |   | (2,813 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (2,813 | ) |
| Payments      of senior notes payable                                                            |   |   | - |   |   |   | (40,600 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (40,600 | ) |
| Debt      acquisition costs                                                                      |   |   | - |   |   |   | (279 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (279 | ) |
| Payments      relating to capital lease obligation                                               |   |   | - |   |   |   | (731 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (731 | ) |
| Proceeds      from revolving credit facility                                                |   |   | - |   |   |   | 396,707 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 396,707 |   |
| Payments      of revolving credit facility                                                  |   |   | - |   |   |   | (312,973 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (312,973 | ) |
| Payments      of State of Ohio loan                                                              |   |   | - |   |   |   | (325 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (325 | ) |
| Proceeds      from secured financing                                                             |   |   | - |   |   |   | 22,000 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 22,000 |   |
| Payments      of secured financing                                                               |   |   | - |   |   |   | (186 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (186 | ) |
| Due      to parent and affiliated companies, net                                                 |   |   | 10,950 |   |   |   | 56,531 |   |   |   | (67,478 | ) |   |   | (3 | ) |   |   | - |   |   |   | - |   |
| Proceeds      from issuance of redeemable common stock                                           |   |   | 6,426 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 6,426 |   |
| Payments      to redeem common stock                                                             |   |   | (27,930 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (27,930 | ) |
| Increase      in cash overdraft                                                                  |   |   | - |   |   |   | 5,729 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 5,729 |   |
|                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      cash (used) provided by financing activities                                            |   |   | (10,554 | ) |   |   | 123,060 |   |   |   | (67,478 | ) |   |   | (3 | ) |   |   | - |   |   |   | 45,025 |   |
| Effect      of foreign exchange rate changes on cash and cash      equivalents                   |   |   | - |   |   |   | 317 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 317 |   |
| Change      in cash and cash equivalents                                                         |   |   | - |   |   |   | (31,456 | ) |   |   | (9,182 | ) |   |   | (20 | ) |   |   | - |   |   |   | (40,658 | ) |
| Cash      and cash equivalents at beginning of period                                            |   |   | - |   |   |   | 33,567 |   |   |   | 9,247 |   |   |   | 2,024 |   |   |   | - |   |   |   | 44,838 |   |
| Cash      and cash equivalents at end of period                                                  |   | $ | - |   |   | $ | 2,111 |   |   | $ | 65 |   |   | $ | 2,004 |   |   | $ | - |   |   | $ | 4,180 |   |

----

| PAPERWEIGHT      DEVELOPMENT CORP. AND SUBSIDIARIES                                                       |   |
|-----------------------------------------------------------------------------------------------------------|--------|
|                                                                                                      |   |
| NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)                                             |   |
|                                                                                                      |   |
| CONDENSED      CONSOLIDATING STATEMENT OF CASH FLOWS                                                      |   |
| FOR      THE YEAR ENDED DECEMBER 29, 2007                                                            |   |
| (dollars      in thousands)                                                                               |   |
|                                                                                                      |   |
|                                                                                                      |   | Parent |   |   |   |   |   | Subsidiary |   |   | Non-Guarantor |   |   |   |   |   |   |   |
|                                                                                                      |   | Guarantor |   |   | Issuer |   |   | Guarantors |   |   | Subsidiary |   |   | Eliminations |   |   | Consolidated |   |
|                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash      flows from operating activities:                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      (loss) income                                                                                    |   | $ | (6,307 | ) |   | $ | 4,752 |   |   | $ | (8,985 | ) |   | $ | 2,175 |   |   | $ | 2,058 |   |   | $ | (6,307 | ) |
| Adjustments      to reconcile net (loss) income to net cash (used) provided by operating      activities: |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation      and amortization                                                                        |   |   | - |   |   |   | 57,997 |   |   |   | 12,274 |   |   |   | 18 |   |   |   | - |   |   |   | 70,289 |   |
| Impairment      of discontinued operations                                                                |   |   | - |   |   |   | - |   |   |   | 8,039 |   |   |   | - |   |   |   | - |   |   |   | 8,039 |   |
| Other                                                                                                     |   |   | - |   |   |   | 11,145 |   |   |   | 2,307 |   |   |   | (1,173 | ) |   |   | - |   |   |   | 12,279 |   |
| Change      in assets and liabilities, net                                                                |   |   | (90,921 | ) |   |   | 102,532 |   |   |   | (2,440 | ) |   |   | 243 |   |   |   | (2,058 | ) |   |   | 7,356 |   |
|                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      cash (used) provided by operating activities                                                     |   |   | (97,228 | ) |   |   | 176,426 |   |   |   | 11,195 |   |   |   | 1,263 |   |   |   | - |   |   |   | 91,656 |   |
| Cash      flows from investing activities:                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds      from sale of equipment                                                                      |   |   | - |   |   |   | 4 |   |   |   | 40 |   |   |   | - |   |   |   | - |   |   |   | 44 |   |
| Additions      to property, plant and equipment                                                           |   |   | - |   |   |   | (57,411 | ) |   |   | (4,389 | ) |   |   | (26 | ) |   |   | - |   |   |   | (61,826 | ) |
|                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      cash used by investing activities                                                                |   |   | - |   |   |   | (57,407 | ) |   |   | (4,349 | ) |   |   | (26 | ) |   |   | - |   |   |   | (61,782 | ) |
| Cash      flows from financing activities:                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Payments      of senior secured notes payable                                                             |   |   | - |   |   |   | (196,095 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (196,095 | ) |
| Proceeds      from senior secured notes payable                                                           |   |   | - |   |   |   | 225,000 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 225,000 |   |
| Payments      of senior notes payable                                                                     |   |   | - |   |   |   | (17,550 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (17,550 | ) |
| Payments      of senior subordinated notes payable                                                        |   |   | - |   |   |   | (7,000 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (7,000 | ) |
| Proceeds      from State of Ohio financing                                                                |   |   | - |   |   |   | 9,105 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 9,105 |   |
| Debt      acquisition costs                                                                               |   |   | - |   |   |   | (2,321 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (2,321 | ) |
| Payments      relating to capital lease obligation                                                        |   |   | - |   |   |   | (731 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (731 | ) |
| Proceeds      from revolving credit facility                                                              |   |   | - |   |   |   | 67,550 |   |   |   | 6,446 |   |   |   | - |   |   |   | - |   |   |   | 73,996 |   |
| Payments      of revolving credit facility                                                                |   |   | - |   |   |   | (67,550 | ) |   |   | (6,632 | ) |   |   | - |   |   |   | - |   |   |   | (74,182 | ) |
| Due      to parent and affiliated companies, net                                                          |   |   | 118,210 |   |   |   | (118,858 | ) |   |   | 1,770 |   |   |   | (1,122 | ) |   |   | - |   |   |   | - |   |
| Proceeds      from issuance of redeemable common stock                                                    |   |   | 7,659 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 7,659 |   |
| Payments      to redeem common stock                                                                      |   |   | (28,641 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (28,641 | ) |
| Increase      in cash overdraft                                                                           |   |   | - |   |   |   | 6,100 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 6,100 |   |
|                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      cash provided (used) by financing activities                                                     |   |   | 97,228 |   |   |   | (102,350 | ) |   |   | 1,584 |   |   |   | (1,122 | ) |   |   | - |   |   |   | (4,660 | ) |
| Effect      of foreign exchange rate changes on cash and cash      equivalents                            |   |   | - |   |   |   | (351 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (351 | ) |
| Change      in cash and cash equivalents                                                                  |   |   | - |   |   |   | 16,318 |   |   |   | 8,430 |   |   |   | 115 |   |   |   | - |   |   |   | 24,863 |   |
| Cash      and cash equivalents at beginning of period                                                     |   |   | - |   |   |   | 17,249 |   |   |   | 817 |   |   |   | 1,909 |   |   |   | - |   |   |   | 19,975 |   |
| Cash      and cash equivalents at end of period                                                           |   | $ | - |   |   | $ | 33,567 |   |   | $ | 9,247 |   |   | $ | 2,024 |   |   | $ | - |   |   | $ | 44,838 |   |

----

| PAPERWEIGHT      DEVELOPMENT CORP. AND SUBSIDIARIES                                                |   |
|----------------------------------------------------------------------------------------------------|--------|
|                                                                                               |   |
| NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)                                      |   |
|                                                                                               |   |
| CONDENSED      CONSOLIDATING STATEMENT OF CASH FLOWS                                               |   |
| FOR      THE YEAR ENDED DECEMBER 30, 2006                                                     |   |
| (dollars      in thousands)                                                                        |   |
|                                                                                               |   |
|                                                                                               |   |
|                                                                                               |   | Parent |   |   |   |   |   | Subsidiary |   |   | Non-Guarantor |   |   |   |   |   |   |   |
|                                                                                               |   | Guarantor |   |   | Issuer |   |   | Guarantors |   |   | Subsidiary |   |   | Eliminations |   |   | Consolidated |   |
|                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash      flows from operating activities:                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      income                                                                                    |   | $ | 11,345 |   |   | $ | 21,477 |   |   | $ | 7,478 |   |   | $ | 1,060 |   |   | $ | (30,015 | ) |   | $ | 11,345 |   |
| Adjustments      to reconcile net income to net cash (used) provided by operating      activities: |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation      and amortization                                                                 |   |   | - |   |   |   | 63,703 |   |   |   | 12,038 |   |   |   | 14 |   |   |   | - |   |   |   | 75,755 |   |
| Other                                                                                              |   |   | - |   |   |   | 10,117 |   |   |   | 543 |   |   |   | 92 |   |   |   | - |   |   |   | 10,752 |   |
| Change      in assets and liabilities, net                                                         |   |   | (19,890 | ) |   |   | 11,347 |   |   |   | (14,446 | ) |   |   | (203 | ) |   |   | 30,015 |   |   |   | 6,823 |   |
|                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      cash (used) provided by operating activities                                              |   |   | (8,545 | ) |   |   | 106,644 |   |   |   | 5,613 |   |   |   | 963 |   |   |   | - |   |   |   | 104,675 |   |
| Cash      flows from investing activities:                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds      from sale of equipment                                                               |   |   | - |   |   |   | 7 |   |   |   | 788 |   |   |   | - |   |   |   | - |   |   |   | 795 |   |
| Additions      to property, plant and equipment                                                    |   |   | - |   |   |   | (26,987 | ) |   |   | (9,475 | ) |   |   | - |   |   |   | - |   |   |   | (36,462 | ) |
|                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      cash used by investing activities                                                         |   |   | - |   |   |   | (26,980 | ) |   |   | (8,687 | ) |   |   | - |   |   |   | - |   |   |   | (35,667 | ) |
| Cash      flows from financing activities:                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Payments      of senior secured notes payable                                                      |   |   | - |   |   |   | (35,776 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (35,776 | ) |
| Payments      of senior notes payable                                                              |   |   | - |   |   |   | (4,400 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (4,400 | ) |
| Bond      consent costs                                                                            |   |   | - |   |   |   | (7,994 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (7,994 | ) |
| Payments      relating to capital lease obligation                                                 |   |   | - |   |   |   | (731 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (731 | ) |
| Proceeds      from revolving credit facility                                                       |   |   | - |   |   |   | 20,000 |   |   |   | 7,475 |   |   |   | - |   |   |   | - |   |   |   | 27,475 |   |
| Payments      of revolving credit facility                                                         |   |   | - |   |   |   | (22,000 | ) |   |   | (7,289 | ) |   |   | - |   |   |   | - |   |   |   | (29,289 | ) |
| Due      to parent and affiliated companies, net                                                   |   |   | 27,425 |   |   |   | (24,798 | ) |   |   | (1,129 | ) |   |   | (1,498 | ) |   |   | - |   |   |   | - |   |
| Proceeds      from issuance of redeemable common stock                                             |   |   | 8,238 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 8,238 |   |
| Payments      to redeem common stock                                                               |   |   | (27,118 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (27,118 | ) |
| Increase      in cash overdraft                                                                    |   |   | - |   |   |   | 1,870 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1,870 |   |
|                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      cash provided (used) by financing activities                                              |   |   | 8,545 |   |   |   | (73,829 | ) |   |   | (943 | ) |   |   | (1,498 | ) |   |   | - |   |   |   | (67,725 | ) |
| Effect      of foreign exchange rate changes on cash and cash      equivalents                     |   |   | - |   |   |   | 270 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 270 |   |
| Change      in cash and cash equivalents                                                           |   |   | - |   |   |   | 6,105 |   |   |   | (4,017 | ) |   |   | (535 | ) |   |   | - |   |   |   | 1,553 |   |
| Cash      and cash equivalents at beginning of period                                              |   |   | - |   |   |   | 11,144 |   |   |   | 4,834 |   |   |   | 2,444 |   |   |   | - |   |   |   | 18,422 |   |
| Cash      and cash equivalents at end of period                                                    |   | $ | - |   |   | $ | 17,249 |   |   | $ | 817 |   |   | $ | 1,909 |   |   | $ | - |   |   | $ | 19,975 |   |

----

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

| Item 9A(T). | Controls      and Procedures |
|------------------|------------------------------|

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

----

| Item 10. | Directors      and Executive Officers of theRegistrant |
|---------------|--------------------------------------------------------|

| Name                     | Age    | Position                                                                                                                                                       |
|--------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Mark      R. Richards    | 49     | Chairman,      President, Chief Executive Officer and a Director of Appleton, and      Chairman, President, Chief Executive Officer and a Director of      PDC |
|                     |   |                                                                                                                                                           |
| Stephen      P. Carter   | 57     | Director      of Appleton and PDC                                                                                                                              |
|                     |   |                                                                                                                                                           |
| Terry      M. Murphy     | 60     | Director      of Appleton and PDC                                                                                                                              |
|                     |   |                                                                                                                                                           |
| Ronald      A. Pace      | 61     | Director      of Appleton and PDC                                                                                                                              |
|                     |   |                                                                                                                                                           |
| Andrew      F. Reardon   | 63     | Director      of Appleton and PDC                                                                                                                              |
|                     |   |                                                                                                                                                           |
| Susan      Scherbel      | 50     | Director      of Appleton and PDC                                                                                                                              |
|                     |   |                                                                                                                                                           |
| Kathi      P. Seifert    | 59     | Director      of Appleton and PDC                                                                                                                              |
|                     |   |                                                                                                                                                           |
| M.      Kathleen Bolhous | 49     | Vice      President and General Manager, Performance Packaging of      Appleton                                                                                |
|                     |   |                                                                                                                                                           |
| Thomas      J. Ferree    | 51     | Vice      President Finance, Chief Financial Officer and Treasurer of Appleton, and      Chief Financial Officer and Treasurer of PDC                          |
|                     |   |                                                                                                                                                           |
| Jeffrey      J. Fletcher | 56     | Controller      of Appleton, and Assistant Treasurer and Controller of  PDC                                                                                    |
|                     |   |                                                                                                                                                           |
| Sarah      T. Macdonald  | 44     | Vice      President, Global Sales and General Manager, International of      Appleton                                                                          |
|                     |   |                                                                                                                                                           |
| Kent      E. Willetts    | 51     | Vice      President, Marketing and Strategy ofAppleton                                                                                                         |

----

----

----

|   | • | The      boards of Appleton and PDC regularly approve Appleton’s CEO succession      plan. |
|--------|---------|--------------------------------------------------------------------------------------------------|

|   | • | The      independent directors meet regularly without the CEO    present. |
|--------|---------|---------------------------------------------------------------------------|

|   | • | Appleton      has adopted guidelines for executive investment in PDC    stock. |
|--------|---------|--------------------------------------------------------------------------------|

----

| Item 11. | Executive      Compensation |
|---------------|-----------------------------|

|   | • | provide      compensation opportunities that pay generally within the middle of the      range of management compensation for similar companies with an opportunity      to exceed the median when higher performance levels are      achieved; |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                                                                                                                                                        |   | Fixed      (Salary) |   |   | Pay      at Risk (Annual and Long-Term Incentives)(1) |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------|--------|--------|-------------------------------------------------------|--------|
| Mark      R. Richards         Chairman, President, Chief Executive Officer and a Director of Appleton,      and Chairman, President, Chief Executive Officer and a Director      of      PDC |   |                | 29%    |   |                                                  |   | 71% |   |
| Thomas      J. Ferree         Vice President Finance, Chief Financial Officer and Treasurer of Appleton,      and Chief Financial Officer and Treasurer of PDC                               |   |                | 39%    |   |                                                  |   | 61% |   |
| Sarah      T. Macdonald         Vice President, Global Sales and General Manager, International of      Appleton                                                                             |   |                | 44%    |   |                                                  |   | 56% |   |
| M.      Kathleen Bolhous         Vice President and General Manager, Performance Packaging of      Appleton                                                                                  |   |                | 47%    |   |                                                  |   | 53% |   |
| Jeffrey      J. Fletcher         Controller of Appleton, and Assistant Treasurer and Controller of      PDC                                                                                  |   |                | 59%    |   |                                                  |   | 41% |   |

| (1) | Calculated using annual incentive      paid at target and long-term incentive expected value based on a      Black-Scholes valuation methodology. The assumptions used for valuation      are: Expected life: 6.5 years; Dividend yield: 0%; Risk Free rate: 4.5%;      Volatility      20%. Target cash is discounted for      risk-of-forfeiture by 15.43% and time value of money by 12.37%. The LTIP      grant as of January 1, 2008 is valued at $9.23 per share with a $33.41 per share grant    price. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                       |   | 20%      of Target |   |   | 100      % of Target |   |   | 200      % of Target |   |   | 300%      of Target |   |
|----------------------------|--------|--------------------|--------|--------|----------------------|--------|--------|----------------------|--------|--------|---------------------|--------|
| All      Appleton          |   |               | (20.0  | )      |                 |   | (16.1  | )                    |   |   | (8.0                | )      |   |   | 0.5 |   |
| Technical      Papers      |   |               | (6.0   | )      |                 |   | 0.7    |                 |   |   | 11.4                |   |   |   | 18.7 |   |
| Performance      Packaging |   |               | (4.9   | )      |                 |   | (3.9   | )                    |   |   | (2.0                | )      |   |   | 0.0 |   |

----

|   | • | the      termination of the ESOP or amendment of the ESOP so that it ceases to be      an employee stock ownership plan; |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------|

|   | • | an      event whereby the ESOP ceases to own a majority interest in      Appleton; |
|--------|---------|------------------------------------------------------------------------------------|

|   | • | the      sale, lease, exchange or other transfer of all or substantially all of      Appleton assets to another entity; |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------|

|   | • | Appleton’s      liquidation; |
|--------|---------|------------------------------------|

|   | • | Appleton’s      merger or consolidation into another company;or |
|--------|---------|-----------------------------------------------------------------------|

|   | • | any      other event whereby ownership and control is effectively      transferred. |
|--------|---------|-------------------------------------------------------------------------------------|

----

|   | The      first performance cycle is from January 1, 2008, through      December 31, 2010. Appleton expects to start new performance cycles      every year effective as ofJanuary 1.  |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| Name      and Principal Position                                                                                     |   | Year   |   | Salary ($)(1) |   | Bonus ($)                                                |         | OptionAwards      ($)(2)                                      |   | Non-Equity      Incentive Plan Compensation ($) (3)            |   | Change      in Pension Value andNonqualified      Deferred Compensation Earnings ($)(4) |   | All      OtherCompensation($)(5) |   | Total      ($)(6) |
|----------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------------------|--------|---------------------------------------------------------------|--------------|---------------------------------------------------------------|--------|---------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------|--------|----------------------------------|--------|-------------------|
| Mark      R. Richards                                                                                                |   | 2008   |   | 764,423            |   | 0                                                             |    |  (731,638)                                               |   |         96,905                                            |   |        81,467                                                                           |   |        50,345               |   | 261,502           |
|          Chairman, President, Chief Executive                                                         |   | 2007   |   | 663,462            |   | 0                                                             |         | 216,767                                                       |   | 472,717                                                             |   | 134,632                                                                                      |   |        47,564               |   | 1,535,142         |
|          Officer and Director of Appleton, and PDC                                                    |   | 2006   |   | 584,615            |   | 0                                                             |         | 346,519                                                       |   | 833,076                                                             |   |        56,164                                                                           |   |        49,546               |   | 1,869,920         |
|          and Chairman, President, Chief                                                               |   |   |   |               |   |                                                          |         |                                                          |   |                                                                |   |                                                                                         |   |                             |   |              |
|          Executive Officer and a Director of PDC                                                      |   |   |   |               |   |                                                          |         |                                                          |   |                                                                |   |                                                                                         |   |                             |   |              |
|                                                                                                                 |   |   |   |               |   |                                                          |         |                                                          |   |                                                                |   |                                                                                         |   |                             |   |              |
| Thomas      J. Ferree                                                                                                |   | 2008   |   | 376,538            |   | 0                                                             |         |                0 |   |         29,997                                            |   |        41,120                                                                           |   |        35,331               |   | 482,987           |
|          Vice President Finance, Chief Financial                                                      |   | 2007   |   | 329,231            |   | 0                                                             |         |                0 |   | 156,385                                                             |   |        24,284                                                                           |   |        49,663               |   | 559,563           |
|          Officer and Treasurer of Appleton, and                                                       |   | 2006   |   | 62,500        |   | 56,250(9)                                                     |         |                0 |   |                 0 |   |           7,365                                                     |   |        41,337               |   | 167,452           |
|          Chief Financial Officer and Treasurer of                                                     |   |   |   |               |   |                                                          |         |                                                          |   |                                                                |   |                                                                                         |   |                             |   |              |
| PDC(7)                                                                                                               |   |   |   |               |   |                                                          |         |                                                          |   |                                                                |   |                                                                                         |   |                             |   |              |
|                                                                                                                 |   |   |   |               |   |                                                          |         |                                                          |   |                                                                |   |                                                                                         |   |                             |   |              |
| Sarah      T. Macdonald                                                                                              |   | 2008   |   | 303,885            |   | 0                                                             |         |  (77,468)                                                |   |   17,892                                                  |   |           4,512                                                          |   |        41,722               |   | 290,543           |
|          Vice President, Global Sales and General                                                     |   | 2007   |   | 279,231            |   | 36,858(10)                                                    |         | 22,952                                                        |   | 102,758                                                             |   |        30,000                                                                           |   |        29,833               |   | 501,632           |
|          Manager, International of Appleton                                                           |   | 2006   |   | 275,000            |   |           0      |         | 52,347                                                        |   | 140,663                                                             |   |   18,729                                                                           |   |        30,636               |   | 517,375           |
|                                                                                                                 |   |   |   |               |   |                                                          |         |                                                          |   |                                                                |   |                                                                                         |   |                             |   |              |
| M.      Kathleen Bolhous                                                                                             |   | 2008   | (13)   | 238,477            |   | 0                                                             |         |  (29,246)                                                |   |   11,644                                                  |   |        12,304                                                                           |   |        30,907               |   | 264,086           |
|          Vice President and General Manager, Performance         Packaging of Appleton |   |   |   |               |   |                                                          |         |                                                          |   |                                                                |   |                                                                                         |   |                             |   |              |
|                                                                                                                 |   |   |   |               |   |                                                          |         |                                                          |   |                                                                |   |                                                                                         |   |                             |   |              |
| Jeffrey      J. Fletcher                                                                                             |   | 2008   | (13)   | 202,385            |   | 0                                                             |         |                0 |   |                 0      |   |        46,734                                                                           |   |        13,086               |   | 262,205           |
|          Controller of Appleton, and Assistant Treasurer         and Controller of PDC |   |   |   |               |   |                                                          |         |                                                          |   |                                                                |   |                                                                                         |   |                             |   |              |
|                                                                                                                 |   |   |   |               |   |                                                          |         |                                                          |   |                                                                |   |                                                                                         |   |                             |   |              |
| Walter      M. Schonfeld                                                                                             |   | 2008   |   | 407,846            |   | 0                                                             |         |  (19,795)                                                |   |                 0      |   |                0                                |   |        38,444               |   | 426,495           |
|          Former President, Technical Papers of                                                        |   | 2007   |   | 383,462            |   | 0                                                             |         | 12,621                                                        |   | 315,589                                                             |   |        30,942                                                                           |   |        42,096               |   | 784,710           |
|          Appleton(8)                                                                                  |   | 2006   |   | 223,558            |   | 50,000(11)                                                    |         | 7,174                                                         |   | 220,313                                                             |   |        16,618                                                                           |   |        53,392               |   | 571,055           |
|                                                                                                                 |   |   |   |               |   |                                                          |         |                                                          |   |                                                                |   |                                                                                         |   |                             |   |              |
| Angela      M. Tyczkowski                                                                                            |   | 2008   |   | 191,827            |   | 0                                                             |         | (77,474)                                                      |   |                 0      |   |                0                                |   | 182,650                          |   | 297,003           |
|          Former Vice President, Secretary, General                                                    |   | 2007   |   | 283,462            |   | 0                                                             |         | 19,704                                                        |   | 134,644                                                             |   |        81,114                                                                           |   |        30,926               |   | 549,850           |
|          Counsel and Chief Compliance Officer of                                                      |   | 2006   |   | 243,077            |   | 0                                                             |         | 37,566                                                        |   | 230,923                                                             |   |        19,722                                                                           |   |        28,592               |   | 559,880           |
|          Appleton and Vice President, Secretary of         PDC(12)                     |   |   |   |               |   |                                                          |         |                                                          |   |                                                                |   |                                                                                         |   |                             |   |              |

----

| (2) | Option      awards consist of grants of units under Appleton’s Long-Term Incentive      Plan. The amounts reflect the compensation costs recognized by Appleton      for financial reporting purposes under SFAS 123R for long-term      performance-based incentive plan units. The valuation methods and material      assumptions used in determining the long-term performance-based incentive      plan units value are discussed in detail in Note 16 of the Consolidated      Financial Statements in Item 8,above. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Non-equity      incentive plan compensation consists of payments under Appleton’s Annual      Performance-Based Incentive Plan and Long-Term Performance Cash Plan.      Amounts paid under the plan are determined based on company and division      business value added performance and other extraordinary factors, positive      or negative, determined by the CEO and the Compensation Committee. Amounts      paid under the Annual Performance-Based Incentive Plan are earned in 2008      and paid in 2009. No amounts were paid in 2009. Amounts earned under the      Long-Term Performance Cash Plan reflect the compensation costs recognized      by Appleton for financial reporting purposes under SFAS 123R for long-term      performance-based incentives. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | The      valuation methods and material assumptions used in determining the change      in pension value are discussed in detail in Note 14 of the Consolidated      Financial Statements in Item 8,above. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

| (6) | The      following executives deferred the following indicated amounts into the      Nonqualified Excess Plan: Mr. Richards ($265,295); Mr. Schonfeld      ($23,560); Ms. Tyczkowski ($163,235); Ms. Macdonald ($148,590); Ms.      Bolhous ($6,693). These deferrals are also described in the Nonqualified      Deferred Compensation table. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (7) | Mr. Ferree      joined Appleton in October 2006. |
|-----|-------------------------------------------------------|

| (8) | Mr. Schonfeld      joined Appleton in May 2006 and left Appleton on January 3,      2009. |
|-----|---------------------------------------------------------------------------------------------------------------|

| (9) | Mr. Ferree      was paid a $25,000 sign-on bonus as part of Appleton’s offer of      employment. Mr. Ferree’s guaranteed annual incentive payment of      $31,250 for 2006 was fixed at the commencement of his      employment. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (10) | Ms.      Macdonald’s annual performance-based incentive compensation was adjusted      by the Compensation Committee by $36,858 to more appropriately reflect her      performance during 2007. |
|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  (11) |  Mr.      Schonfeld was paid a $50,000 sign-on bonus as part of Appleton's offer of      employment. |
|------------|-----------------------------------------------------------------------------------------------------------|
|  (12) |  Ms.      Tyczkowski left Appleton on August 15, 2008.                                               |
|  (13) |  Ms.      Bolhous and Mr. Fletcher became named officers in  2008.                                   |

----

| Name                           | Plan                                         |         |         | Estimated Future Payouts Under Non-Equity      Incentive Plan Awards(2) | All      OtherOption Awards:Number      ofSecurities           | Exercise or Base                                                      |  Grant Date Fair                          |
|--------------------------------|----------------------------------------------|--------------|--------------|---------------------------------------------------------------------------------------------|---------------------------------------------------------------------|---------------------------------------------------------------------------------|----------------------------------------------------------|
|   Grant      Date(1) |   Approval      Date               | Threshold($) | Target($)    | Maximum($)                                                                                  | UnderlyingOptions      (#)(3)                                       | Price      of OptionAwards($/Unit)(4)                                           | Value      of Stock and OptionAwards($)(5)               |
| Mark R. Richards     | Annual      Performance-Based Incentive Plan |         | 1/1/08       | 125,048                                                                                     | 625,240                                                             | 1,875,721                                                                       |                                                     |   |   |
|                           | Long-Term      Performance Cash Plan         |         | 1/1/08       | 186,500                                                                                     | 373,000                                                             |        559,500                                                             |                                                     |   |   |
|                           | Long-Term      Performance Cash Plan(6)      |         | 1/1/09       | 186,500                                                                                     | 373,000                                                             |        559,500                                                             |                                                     |   |   |
|                           | Long-Term Incentive      Plan           | 1/1/08       |         |                                                                                        |                                                                |                                                                            | 100,000                                                  | 33.41 | 0 |
|                           | Long-Term      Incentive Plan(7)             | 1/1/09       | 2/10/09      |                                                                                        |                                                                |                                                                            | 155,000                                                  | 21.43 | 0 |
|                           |                                         |         |         |                                                                                        |                                                                |                                                                            |                                                     |   |   |
| Thomas      J. Ferree          | Annual      Performance-Based Incentive Plan |         | 1/1/08       |        39,854                                                                          | 199,269                                                             |        597,808                                                             |                                                     |   |   |
|                           | Long-Term      Performance Cash Plan         |         | 1/1/08       |        58,000                                                                          | 116,000                                                             |        174,000                                                             |                                                     |   |   |
|                           | Long-Term      Performance Cash Plan(6)      |         | 1/1/09       |        58,000                                                                          | 116,000                                                             |        174,000                                                             |                                                     |   |   |
|                           | Long-Term Incentive      Plan           | 1/1/08       |         |                                                                                        |                                                                |                                                                            |   31,000                                       | 33.41 | 0 |
|                           | Long-Term      Incentive Plan(7)             | 1/1/09       | 2/10/09      |                                                                                        |                                                                |                                                                            |   45,000                                       | 21.43 | 0 |
|                           |                                         |         |         |                                                                                        |                                                                |                                                                            |                                                     |   |   |
| Sarah      T. Macdonald        | Annual      Performance-Based Incentive Plan |         |  1/1/08 |        29,252                                                                          | 146,260                                                             |        438,779                                                             |                                                     |   |   |
|                           | Long-Term      Performance Cash Plan         |         | 1/1/08       |        34,500                                                                          |        69,000                                                  |        103,500                                                             |                                                     |   |   |
|                           | Long-Term      Performance Cash Plan(6)      |         | 1/1/09       |        34,500                                                                          |        69,000                                                  |        103,500                                                             |                                                     |   |   |
|                           | Long-Term Incentive      Plan           | 1/1/08       |         |                                                                                        |                                                                |                                                                            |        18,500                                       | 33.41 | 0 |
|                           | Long-Term      Incentive Plan(7)             | 1/1/09       | 2/10/09      |                                                                                        |                                                                |                                                                            |   24,000                                       | 21.43 | 0 |
|                           |                                         |         |         |                                                                                        |                                                                |                                                                            |                                                     |   |   |
| M.      Kathleen Bolhous       | Annual      Performance-Based Incentive Plan |         |  1/1/08 |        22,960                                                                          | 114,802                                                             |        344,406                                                             |                                                     |   |   |
|                           | Long-Term      Performance Cash Plan         |         | 1/1/08       |        22,500                                                                          |        45,000                                                  |          67,500                                                  |                                                     |   |   |
|                           | Long-Term      Performance Cash Plan(6)      |         | 1/1/09       |        22,500                                                                          |        45,000                                                  |          67,500                                                       |                                                     |   |   |
|                           | Long-Term Incentive      Plan           | 1/1/08       |         |                                                                                        |                                                                |                                                                            |        12,000                                       | 33.41 | 0 |
|                           | Long-Term      Incentive Plan(7)             | 1/1/09       | 2/10/09      |                                                                                        |                                                                |                                                                            |   16,000                                       | 21.43 | 0 |
|                           |                                         |         |         |                                                                                        |                                                                |                                                                            |                                                     |   |   |
| Jeffrey      J. Fletcher       | Annual      Performance-Based Incentive Plan |         | 1/1/08       |        15,588                                                                          |        77,938                                                  |        155,877                                                             |                                                     |   |   |
|                           | Long-Term      Performance Cash Plan         |         | 1/1/08       |                 0                              |                 0      |                     0         |                                                     |   |   |
|                           | Long-Term      Performance Cash Plan(6)      |         | 1/1/09       |                 0                              |                 0      |                     0         |                                                     |   |   |
|                           | Long-Term Incentive      Plan           | 1/1/08       |         |                                                                                        |                                                                |                                                                            |          6,000                                 | 33.41 | 0 |
|                           | Long-Term      Incentive Plan(7)             | 1/1/09       |         |                                                                                        |                                                                |                                                                            |   10,000                                       | 21.43 | 0 |
|                           |                                         |         |         |                                                                                        |                                                                |                                                                            |                                                     |   |   |
| Walter      M. Schonfeld       | Annual      Performance-Based Incentive Plan |         |  1/1/08 |        39,267                                                                          | 196,337                                                             |        589,010                                                             |                                                     |   |   |
|                           | Long-Term      Performance Cash Plan         |         | 1/1/08       |        65,600                                                                          | 131,000                                                             |        196,500                                                             |                                                     |   |   |
|                           | Long-Term Incentive      Plan           | 1/1/08       |         |                                                                                        |                                                                |                                                                            |   35,000                                       | 33.41 | 0 |
|                           |                                         |         |         |                                                                                        |                                                                |                                                                            |                                                     |   |   |
| Angela      M. Tyczkowski      | Annual      Performance-Based Incentive Plan |         |  1/1/08 |        19,183                                                                          |        95,913                                                  |        287,740                                                             |                                                     |   |   |
|                           | Long-Term      Performance Cash Plan         |         | 1/1/08       |                 0                         |                 0 |                   0 |                                                     |   |   |
|                           | Long-Term Incentive      Plan           | 1/1/08       |         |                                                                                        |                                                                |                                                                       |                0 | 33.41 | 0 |

----

|   | (1) | The      Grant Date for units under Appleton’s LTIP reflects the date upon which      the units were awarded to the named executive officer. The units are      valued, as of the Grant Date, at the most recent PDC stock price as      determined by the semi-annual ESOPvaluation. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | All      Non-Equity Incentive Plan awards are made under Appleton’s Annual      Performance-Based Incentive Plan or Long-Term Performance Cash Plan.      Projected payouts are based, or will be based, on Company financial      performance. The Threshold, Target and Maximum payouts stated are based on      2008 salaries for the Annual Performance-Based Incentive Plan and the      specified target payout for the Long-Term Performance Cash Plan. Actual      amounts earned in 2008 and paid in 2009 are stated in the Non-Equity      Incentive Plan Compensation column of the Summary Compensation      Table. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3) | Option      awards consist of grants of units under Appleton’s Long-Term Incentive      Plan. |
|--------|-----|-----------------------------------------------------------------------------------------------------|

|   | (4) | The      units granted under Appleton’s LTIP are valued, as of the date of the      grant, at the most recent PDC stock price as determined by the semi-annual      ESOP valuation. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (5) | Appleton      has determined, using the guidance provided in SFAS 123R, that the units      awarded under the LTIP are liabilities subject to remeasurement at each      reporting date. It is Appleton’s policy to measure all liabilities      incurred under the LTIP at intrinsicvalue. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (6) | Long-Term      Performance Cash Plan awards for 2009 were granted on January 1, 2009      consistent with January 1 grant dates in prior years. Because 2008 was a      fifty-three (53) week fiscal year, the 2009 awards were actaully granted      in the 2008 fiscal year. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (7) | LTIP      awards for 2009 were granted on January 1, 2009 consistent with January 1      grant dates in prior years. Because 2008 was a fifty-three (53) week      fiscal year, the 2009 awards were actually granted in the 2008 fiscal      year. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Name                       | Number of SecuritiesUnderlyingUnexercised      Options | Number of SecuritiesUnderlyingUnexercised      Options | OptionExercisePrice($) | Date OptionsFullyVested(1) | Option ExpirationDate(1) |
|----------------------------|------------------------------------------------------------------|------------------------------------------------------------------|------------------------|---------------------------------|-------------------------------|
| Exercisable(#)             | Unexercisable(#)                                                 |
| Mark      R. Richards      |                                                             |                                                             |                   |                            |                          |
| Units      Awarded 2009    |               0          | 155,000                                                          | 21.43                  | 01/01/12                        | 01/01/19                      |
| Units      Awarded 2008    |               0          | 100,000                                                          | 33.41                  | 01/01/11                        | 01/01/18                      |
| Units      Awarded 2007    |               0          |   90,000                                               | 33.62                  | 01/01/10                        | 01/01/17                      |
| Units      Awarded 2006    | 85,000                                                           |                0    | 28.56                  | 01/01/09                        | 01/01/16                      |
| Units      Awarded 2005    | 85,000                                                           |                0    | 27.77                  | 07/01/08                        | 07/01/15                      |
| Thomas      J. Ferree      |                                                             |                                                             |                   |                            |                          |
| Units      Awarded 2009    |               0          |  45,000                                                     | 21.43                  | 01/01/12                        | 01/01/19                      |
| Units      Awarded 2008    |               0          |  31,000                                                     | 33.41                  | 01/01/11                        | 01/01/18                      |
| Units      Awarded 2007    |               0          |  25,000                                                     | 33.62                  | 01/01/10                        | 01/01/17                      |
| Sarah      T. Macdonald    |                                                             |                                                             |                   |                            |                          |
| Units      Awarded 2009    |               0          |  24,000                                                     | 21.43                  | 01/01/12                        | 01/01/19                      |
| Units      Awarded 2008    |               0          |  18,500                                                     | 33.41                  | 01/01/11                        | 01/01/18                      |
| Units      Awarded 2007    |               0          |  18,500                                                     | 33.62                  | 01/01/10                        | 01/01/17                      |
| Units      Awarded 2006    |   9,000                                                |                0    | 28.56                  | 01/01/09                        | 01/01/16                      |
| Units      Awarded 2005    |        9,000                                                |                0    | 27.77                  | 07/01/08                        | 07/01/15                      |
| M.      Kathleen Bolhous   |                                                             |                                                             |                   |                            |                          |
| Units      Awarded 2009    |               0          |  16,000                                                     | 21.43                  | 01/01/12                        | 01/01/19                      |
| Units      Awarded 2008    |               0          |  12,000                                                     | 33.41                  | 01/01/11                        | 01/01/18                      |
| Units      Awarded 2007    |               0          |  12,000                                                     | 33.62                  | 01/01/10                        | 01/01/17                      |
| Units      Awarded 2006    |               0          |    9,000                                          | 28.56                  | 01/18/09                        | 01/19/16                      |
| Jeffrey      J. Fletcher   |                                                             |                                                             |                   |                            |                          |
| Units      Awarded 2009    |               0          |  10,000                                                     | 21.43                  | 01/01/12                        | 01/01/19                      |
| Units      Awarded 2008    |               0          |         6,000                                          | 33.41                  | 01/01/11                        | 01/01/18                      |
| Units      Awarded 2007    |               0          |         6,000                                          | 33.62                  | 02/05/10                        | 02/05/17                      |
| Walter      M. Schonfeld   |                                                             |                                                             |                   |                            |                          |
| Units      Awarded 2008(2) |               0          |  35,000                                                     | 33.41                  | 01/01/11                        | 01/01/18                      |
| Units      Awarded 2007(2) |               0          |  35,000                                                     | 33.62                  | 01/01/10                        | 01/01/17                      |
| Units      Awarded 2006(2) |               0          |  18,500                                                     | 31.27                  | 07/01/09                        | 07/01/16                      |
| Angela      M. Tyczkowski  |                                                             |                                                             |                   |                            |                          |
| Units      Awarded 2008    |               0          |                0    |                   |                            |                          |
| Units      Awarded 2007(2) |               0          |  20,000                                                     | 33.62                  | 01/01/10                        | 01/01/17                      |
| Units      Awarded 2006(3) |        9,000                                                |                0    | 28.56                  | 01/01/09                        | 01/01/16                      |
| Units      Awarded 2005(3) |        6,000                                                |                0    | 27.77                  | 07/01/08                        | 07/01/15                      |
| Units      Awarded 2004(3) |        1,600                                                |                0    | 23.36                  | 01/01/07                        | 01/01/14                      |
|                       |                                                             |                                                             |                   |                            |                          |

| (1) | Employees      are generally entitled to exercise any long-term performance-based      incentive plan units only after holding the units for at least three years      and for up to ten years from the date ofgrant. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Units      have zero ($0) value and will not be eligible for exercise beyond the      12/31/08 exercise period. Units were automatically forfeited at the close      of the exercise period. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Name                      | Plan Name |   | Number of Years ofCredited      Service(#) |   |   | Present Value ofAccumulatedBenefit($)(1) |   |    | Payments During LastFiscal      Year($) |   |
|---------------------------|----------------|--------|-----------------------------------------------------------|--------|--------|----------------------------------------------------|--------|---------|---------------------------------------------------|--------|
| Mark      R. Richards     | Pension        |   |                                                      | 3.8    |   |                                               |   | 50,001  |                                              |   |   | 0 |   |
|                      | SERP           |   |                                                      | 3.8    |   |                                               |   | 232,552 |                                              |   |   | 0 |   |
| Thomas      J. Ferree     | Pension        |   |                                                      | 2.2    |   |                                               |   | 35,556  |                                              |   |   | 0 |   |
|                      | SERP           |   |                                                      | 2.2    |   |                                               |   | 37,213  |                                              |   |   | 0 |   |
| Sarah      T. Macdonald   | Pension        |   |                                                      | 2.5    |   |                                               |   | 24,938  |                                              |   |   | 0 |   |
|                      | SERP           |   |                                                      | 2.5    |   |                                               |   | 14,277  |                                              |   |   | 0 |   |
| M.      Kathleen Bolhous  | Pension        |   |                                                      | 3.0    |   |                                               |   | 42,409  |                                              |   |   | 0 |   |
|                      | SERP           |   |                                                      | 3.0    |   |                                               |   | 16,049  |                                              |   |   | 0 |   |
| Jeffrey      J. Fletcher  | Pension        |   |                                                      | 1.9    |   |                                               |   | 40,493  |                                              |   |   | 0 |   |
|                      | SERP           |   |                                                      | 1.9    |   |                                               |   | 6,241   |                                              |   |   | 0 |   |
| Walter      M. Schonfeld  | Pension        |   |                                                      | 2.7    |   |                                               |   | 0       |                                              |   |   | 0 |   |
|                      | SERP           |   |                                                      | 2.7    |   |                                               |   | 0       |                                              |   |   | 0 |   |
| Angela      M. Tyczkowski | Pension        |   |                                                      | 12.4   |   |                                               |   | 77,979  |                                              |   |   | 0 |   |
|                      | SERP           |   |                                                      | 12.4   |   |                                               |   | 31,695  |                                              |   |   | 0 |   |

| (1) | The      valuation methods and material assumptions used in determining the present      value of accumulated pension benefits are discussed in detail in Note 14      of the Consolidated Financial Statements in Item 8,      above. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Name                      |   | Executive Contributionsin      Last Fiscal Year($)(1) |    |   | Company Contributions inLast      Fiscal Year($) |   |     | Aggregate Earningsin      Last FiscalYear($) |   |   | AggregateWithdrawals/Distributions($) |   |   | AggregateBalance      at1/03/09($) |     |
|---------------------------|--------|------------------------------------------------------------|---------|--------|------------------------------------------------------------|--------|----------|---------------------------------------------------|--------|--------|---------------------------------------|--------|--------|------------------------------------|----------|
| Mark      R. Richards     |   |                                                       | 265,295 |   |                                                       |   | 0        |                                              |   |   | (260,510)                        |   |   |                               | 0        |   |   |   | 476,493 |   |
| Thomas      J. Ferree     |   |                                                       | 0       |   |                                                       |   | 0        |                                              |   |   |  0                          |   |   |                               | 0        |   |   |   | 0 |   |
| Sarah      T. Macdonald   |   |                                                       | 148,590 |   |                                                       |   | 3,364(2) |                                              |   |   | (139,034)                             |   |   |                               | 0        |   |   |   | 237,480 |   |
| M.      Kathleen Bolhous  |   |                                                       | 6,693   |   |                                                       |   | 0        |                                              |   |   | (13,345)                              |   |   |                               | 0        |   |   |   | 17,948 |   |
| Jeffrey      J. Fletcher  |   |                                                       | 0       |   |                                                       |   | 0        |                                              |   |   | 0                                |   |   |                               | 0        |   |   |   | 0 |   |
| Walter      M. Schonfeld  |   |                                                       | 23,560  |   |                                                       |   | 0        |                                              |   |   | (10,271)                              |   |   |                               | 0        |   |   |   | 25,002 |   |
| Angela      M. Tyczkowski |   |                                                       | 163,235 |   |                                                       |   | 0        |                                              |   |   | (44,330)                              |   |   |                               | (479,671 | ) |   |   | 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 ($) |    Total      ($) |
|---------------------------|----------------------------------------------------------|--------------------------------------------|--------------------------------------------|------------------------------------------------------|----------------------------------------------------|----------------------------------|
| Angela      M. Tyczkowski | 8,769                                                    | 1,504                                      | 7,500                                      | 109,615                                              | 32,717                                             | 160,105                          |

----

| Name                        | Termination Other Than forMisconduct or With Good Reason | COBRAHealthBenefits ($)(1) | OutplacementServices($) | TerminationProtectionPayments($) | Long-TermIncentive PlanUnitsExercisable($)(2) | CompanyFICA      ToBe Paid($)(3) | Tax Gross-UpPayments($)                                                                | Total($)            |
|-----------------------------|---------------------------------------------------------------------------------------------|---------------------------------|-------------------------|----------------------------------|----------------------------------------------------|---------------------------------------|---------------------------------------------------------------------------------------------|---------------------|
| Mark      R. Richards       | Without      Change of Control                                                              | 14,425                          | 9,950                   | 1,125,000                        | 0                                                  | 16,313                                |               0       | 1,165,688           |
|                        | Within two years of Change of Control                         | 28,850                          | 9,950                   | 4,162,500                        | 0                                                  | 60,356                                | 1,849,785                                                                                   | 6,111,441           |
|                        |                                                                                        |                            |                    |                             |                                               |                                  |                                                                                        |                |
| Thomas      J. Ferree       | Without      Change of Control                                                              | 14,425                          | 9,950                   |    555,000        | 0                                                  |   8,048                     |              0             |   587,423 |
|                        | Within      two years of Change of Control                                                  | 19,233                          | 9,950                   | 1,147,000                        | 0                                                  | 16,632                                |   453,748                                                                         | 1,646,563           |
|                        |                                                                                        |                            |                    |                             |                                               |                                  |                                                                                        |                |
| Sarah      T. Macdonald     | Without      Change of Control                                                              | 14,425                          | 9,950                   |    443,250        | 0                                                  |   6,427                     |              0             |   474,052 |
|                        | Within      two years of Change of Control                                                  | 19,233                          | 9,950                   |    886,500        | 0                                                  | 12,854                                |   353,563                                                                         | 1,282,100           |
|                        |                                                                                        |                            |                    |                             |                                               |                                  |                                                                                        |                |
| M.      Kathleen Bolhous    | Without      Change of Control                                                              | 14,425                          | 9,950                   |    345,000        | 0                                                  |   5,003                     |                   0             |   374,378 |
|                        | Within      two years of Change of Control                                                  | 19,233                          | 9,950                   |    692,100        | 0                                                  | 10,035                                |                    0  |   731,318 |
|                        |                                                                                        |                            |                    |                             |                                               |                                  |                                                                                        |                |
| Jeffrey      J. Fletcher(4) |                                                                                        |                            |                    |                             |                                               |                                  |                                                                                        |                |

|   | (1) | COBRA      Health Benefits amounts stated in this table are based on average cost of      medical and dental plans options. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------|

|   | (2) | In      the event of a change of control as defined in the Termination Protection      Agreements, the LTIP units become immediately exercisable. The amount      reflects the value of all outstanding LTIP units on      January 3, 2009. 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      January 3, 2009. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3) | Assumes      Medicare rate at 1.45%                                     |
|--------|-----|-------------------------------------------------------------------------|
|   | (4) | Covered      under standard Severance Plan for all salaried  employees. |

----

|   | • | a      change in ownership or effective control of Appleton;  or |
|--------|---------|------------------------------------------------------------------|

|   | • | a      change in the ownership of a substantial potion of the assets of Appleton,      as defined by the occurrence of any one of the following      events; |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | 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. |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------|

|                   |                                       |                                                  |           | Outstanding      Deferred Compensation(3) (4) |
|------------------------|--------------------------------------------|-------------------------------------------------------|----------------|----------------------------------------------------|
| Name                   | Fees      Earned orPaid      in Cash($)(1) | Deferred      CompensationAwards      ($)(2)      (4) | Total      ($) | Total      Units                                   |  Total      Value($) |
| Stephen      P. Carter | 65,000                                     | 35,000                                                | 100,000        | 3,406                                              | 72,991 |
| Terry      M. Murphy   | 55,000                                     | 35,000                                                | 90,000         | 1,713                                              | 36,710 |
| Ronald      A. Pace    | 55,000                                     | 35,000                                                | 90,000         | 3,406                                              | 72,991 |
| Andrew      F. Reardon | 55,000                                     | 35,000                                                | 90,000         | 1,713                                              | 36,710 |
| Susan      Scherbel    | 60,000                                     | 35,000                                                | 95,000         | 3,406                                              | 72,991 |
| Kathi      P. Seifert  | 60,000                                     | 35,000                                                | 95,000         | 3,406                                              | 72,991 |

| (1) | Non-employee      directors are entitled to participate in the Company’s Nonqualified Excess      Plan. Mr. Carter deferred $65,000 of his cash compensation into that plan,      Mr. Murphy deferred $55,000, Ms. Scherbel deferred $60,000 and Mr. Pace      deferred $55,000. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | On      January 2, 2008, each of the then non-employee directors were issued      523.8 deferred compensation units. On June 30, 2008, each of the then      non-employee directors were issued 656.9 deferred compensation units. The      amounts reflect the compensation costs recognized by Appleton for      financial reporting purposes under SFAS 123R for long-term      performance-based incentive plan units. The valuation methods and material      assumptions used in determining the long-term performance-based incentive      plan units value are discussed in detail in Note 16 of the Consolidated      Financial Statements in Item 8, above. The Company has determined, using      the guidance provided in SFAS 123R, that the deferred compensation units      awarded are liabilities subject to remeasurement at each reporting date.      It is policy to measure all liabilities incurred at intrinsic      value. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Total      Deferred Compensation earned and outstanding as of January 3, 2009.      Excludes compensation deferred into the Nonqualified Excess      Plan. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | On      January 2, 2009, each of the then non-employee directors were issued 816.6      deferred compensation units to be earned during the first six months of      2009. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| 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                                                |        14,563                                                                                         | *       |
| Thomas      J. Ferree                                                |        12,470                                                                                         | *       |
| Stephen      P. Carter                                               |                    —  (2)      | *       |
| Terry      M. Murphy                                                 |                    —  (2) | *       |
| Ronald      A. Pace                                                  |                    —  (2)      | *       |
| Andrew      F. Reardon                                               |               —       (2) | *       |
| Susan      Scherbel                                                  |                    —  (2)      | *       |
| Kathi      P. Seifert                                                |                    —  (2)      | *       |
| Sarah      T. Macdonald                                              |          3,201                                                                              | *       |
| Kent      E. Willetts                                                |   13,303                                                                                         | *       |
| M.      Kathleen Bolhous                                             |          7,765                                                                              | *       |
| Jeffrey      J. Fletcher                                             |          1,452                                                                              | *       |
| Walter      M. Schonfeld                                             |        10,104                                                                                         | *       |
| Angela      M. Tyczkowski                                            |   19,630                                                                                         | *       |
| All      directors and executive officers as a group (14    persons) | 124,703                                                                                                    | 1.17%   |

| (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 and      Executive Officers of the Registrant.” 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. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Item 13. | Certain      Relationships and Related Transactions and Director      Independence |
|---------------|------------------------------------------------------------------------------------|

| Item 14. | Principal      Accountant Fees and Services |
|---------------|---------------------------------------------|

----

| (a)(1) | Financial      Statements.                                                                                                                                                                                                                                                                                                                                                                  |   |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|   |                                                                                                                                                                                                                                                                                                                                                                                        |   |   |   |   |
|   | Report of      Independent Registered Public Accounting      Firm                                                                                                                                                                                                                                                                                                                      |   |   | 45 |
|   |                                                                                                                                                                                                                                                                                                                                                                                        |   |   |   |   |
|   | Consolidated Balance      Sheets as of January 3, 2009 and December 29,      2007                                                                                                                                                                                                                                                                                                      |   |   | 46 |
|   |                                                                                                                                                                                                                                                                                                                                                                                        |   |   |   |   |
|   | Consolidated Statements of      Operations for the years ended January 3, 2009, December 29, 2007 and      December 30, 2006                                                                                                                                                                                                                                                      |   |   | 47 |
|   |                                                                                                                                                                                                                                                                                                                                                                                        |   |   |   |   |
|   | Consolidated Statements of      Cash Flows for the years ended January 3, 2009, December 29, 2007 and      December 30, 2006                                                                                                                                                                                                                                                      |   |   | 48 |
|   |                                                                                                                                                                                                                                                                                                                                                                                        |   |   |   |   |
|   | Consolidated Statements of      Redeemable Common Stock, Accumulated Deficit, Accumulated Other      Comprehensive (Loss) Income and Comprehensive Income (Loss) for the years      ended January 3, 2009, December 29, 2007 and December 30,      2006                                                                                                                           |   |   | 49 |
|   |                                                                                                                                                                                                                                                                                                                                                                                        |   |   |   |   |
|   | Notes to Consolidated      Financial Statements                                                                                                                                                                                                                                                                                                                                             |   |   | 50 |
|   |                                                                                                                                                                                                                                                                                                                                                                                        |   |   |   |   |
|   | SCHEDULE II – Valuation      and Qualifying Accounts                                                                                                                                                                                                                                                                                                                                  |   |   | 124 |
|   |                                                                                                                                                                                                                                                                                                                                                                                        |   |   |   |   |
| (a)(2) | 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 (the “Senior Notes Indenture”). Incorporated by reference to      Exhibit 4.1 to the Registrants’ Quarterly Report on Form 10-Q for the      quarter ended July 4, 2004.              |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                        |   |
| 4.2    | 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 (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. |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                        |   |
| 4.3    | Form      of registered Senior Note (included as Exhibit A1 to the Senior Notes      Indenture).                                                                                                                                                                                                                                                                                            |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                        |   |
| 4.4    | Form      of registered Senior Subordinated Note (included as Exhibit A1 to the      Senior Subordinated Notes Indenture).                                                                                                                                                                                                                                                                  |   |

----

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 4.5    | 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 8 1/8% Senior Notes due 2011.      Incorporated by reference to Exhibit 4.5 to the Registrant’s Annual Report      on Form 10-K for the fiscal year ended December 29,  2007.                                                                                                                                                                                                                                                                                                                                |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 4.6    | 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.                                                                                                                                                                                                                                                                                                                         |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 4.7    | 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 8 1/8% Senior Notes due 2011.      Incorporated by reference to Exhibit 4.1 to Appleton’s current report on      Form 8-K filed on June 16, 2006.                                                                                                                                                                                                                                                                                                                                                         |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 4.8    | 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 Appleton’s current      report on Form 8-K filed June 16, 2006.                                                                                                                                                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 4.9    | Form      of 8 1/8% Senior Notes due 2011. Incorporated by reference to Exhibit 4.3      to Appleton’s current report on Form 8-K filed June 16,      2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 4.10   | Form      of 9 3/4% Senior Subordinated Notes due 2014. Incorporated by reference to      Exhibit 4.4 to Appleton’s current report on Form 8-K filed on      June 16, 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 4.11   | Credit      Agreement, dated as of June 5, 2007, among Appleton Papers Inc., as      the U.S. Borrower, BemroseBooth Limited, as the UK Borrower, Paperweight      Development Corp. as Holdings, Bank of America, N.A. as Administrative      Agent, swing line lender and L/C issuer, Banc of America Securities LLC as      joint lead arranger and joint book manager, UBS Securities LLC as joint      lead arranger, joint book manager and syndication agent, BNP Paribas,      LaSalle Bank National Association and SunTrust Bank as co-co-documentation      agents. Incorporated by reference to Exhibit 4.1 to Registrants’ Quarterly      Report on Form 10-Q for the quarter ended July 1,    2007. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 4.11.1 | First      Amendment to Credit Agreement and Waiver, dated as of March 23, 2009,      among Appleton Papers Inc., as the U.S. Borrower, Paperweight Development      Corp. as Holdings certain subsidiaries of Holdings, as Guarantors, Bank of      America, N.A. as Administrative Agent, swing line lender and L/C issuer,      and Lenders as identified on the signature pages  thereof.                                                                                                                                                                                                                                                                                                                                     |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 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 10.6 to the Registrants’ Quarterly Report on Form      10-Q for the quarter ended September 28, 2003.                                                                                                                                                                                                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 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 4,    2004. |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 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.                                                                                                                                                                         |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.9    | 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)                                                                                                                                                             |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.10   | The      Executive Nonqualified Excess Plan of Appleton Papers Inc. Incorporated by      reference to Exhibit 10.13 to the Registrant’s Annual Report on Form 10-K      for the fiscal year ended December 31, 2005. (1)                                                                                                                                                                                                                                                |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.10.1 | Adoption      Agreement, dated as of January 3, 2006, by Appleton Papers Inc. and      Principal Life Insurance Company, as the provider. Incorporated by      reference to Exhibit 10.13.1 to the Registrant’s Annual Report on Form      10-K for the fiscal year ended December 31, 2005.                                                                                                                                                                       |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.12   | 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)                                                                                                                                                                                                      |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.13   | Form      of Termination Protection Agreement. (1)                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.14   | Termination      Protection Agreement Amended and Restated for Mark R. Richards dated      effective December 17, 2008. (1)                                                                                                                                                                                                                                                                                                                                                   |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.15   | Termination      Protection Agreement Amendment for Kathleen T. Bolhous and Letter      Agreement, dated effective December 31, 2008. (1)                                                                                                                                                                                                                                                                                                                                          |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.16   | 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.                                                                                          |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.17   | 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.                                                                                                                                                  |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.18   | 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.                                                                                                              |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.19   | 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.                                                                                                                         |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.20   | Appleton      Papers Retirement Savings and Employee Stock Ownership Plan effective      September 19, 2006. Incorporated by reference to Exhibit 10.19 to the      Registrant’s Annual Report on Form 10-K for the fiscal year ended December      29, 2007. (1)                                                                                                                                                                                                       |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |

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| 10.20.1 | Resolution      by Appleton’s ESOP Administrative Committee effective January 1,      2008, amending Appleton Papers Retirement Savings and Employee Stock      Ownership Plan effective January 1, 2008. Incorporated by reference      to Exhibit 10.19.1 to the Registrant’s Annual Report on Form 10-K for the      fiscal year ended December 29, 2007. (1) |
|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                                                                                                                                                                                                                                                                                   |
| 10.21   | Amended      and restated Appleton Papers Inc. Retirement Plan approved      December 5, 2007. Incorporated by reference to Exhibit 10.20.1 to the      Registrant’s Annual Report on Form 10-K for the fiscal year ended December      29, 2007. (1)                                                                                                                       |
|    |                                                                                                                                                                                                                                                                                                                                                                                   |
| 10.21.1 | Resolution      by Appleton’s Board of Directors dated December 5, 2007 amending      Appleton Papers Inc. Retirement Plan effective January 1, 2008.      Incorporated by reference to Exhibit 10.20.1 to the Registrant’s Annual      Report on Form 10-K for the fiscal year ended December 29, 2007.      (1)                                                |
|    |                                                                                                                                                                                                                                                                                                                                                                                   |
| 10.21.2 | Amendment      to the Appleton Papers Inc. Retirement Plan, effective December 19, 2008.      (1)                                                                                                                                                                                                                                                                                      |
|    |                                                                                                                                                                                                                                                                                                                                                                                   |
| 10.22   | 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)                                                                                                                                                        |
|    |                                                                                                                                                                                                                                                                                                                                                                                   |
| 10.23   | Appleton      Papers Inc. Long-Term Incentive Plan, as amended and restated, effective      as of January 1, 2009. (1)                                                                                                                                                                                                                                                            |
|    |                                                                                                                                                                                                                                                                                                                                                                                   |
| 10.24   | Appleton      Papers Inc. Long-Term Performance Cash Plan, amended and restated,      effective January 1, 2009. (1)                                                                                                                                                                                                                                                              |
|    |                                                                                                                                                                                                                                                                                                                                                                                   |
| 12.1    | Computation      of Ratio of Earnings to Fixed Charges.                                                                                                                                                                                                                                                                                                                                |
|    |                                                                                                                                                                                                                                                                                                                                                                                   |
| 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, 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, 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, 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, Chief Financial Officer and Treasurer of Paperweight      Development Corp., pursuant to 18 U.S.C. Section  1350.                                                                                                                                                                                                                              |

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

----

| APPLETON      PAPERS INC. |
|---------------------------|
|                      |   |
| By:                       | /s/      Mark R. Richards |
|                      | Mark      R. RichardsPresident      and Chief Executive Officer |
| Date:                     | March      27, 2009 |

| Name                                            | Title                                                                                            | Date                                                                                                                  |
|------------------------------------------------------|-------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------|
| /s/      MARK R. RICHARDSMark      R. Richards       | Chairman,      President, Chief Executive Officer and a Director (Principal Executive      Officer)   |                        March 27, 2009 |
|                                                 |                                                                                                  |                                                                                                                       |
| /s/      THOMAS J. FERREEThomas      J. Ferree       | Vice      President Finance, Chief Financial Officer and Treasurer (Principal      Financial Officer) |                        March 27, 2009 |
|                                                 |                                                                                                  |                                                                                                                       |
| /s/      JEFFREY J. FLETCHERJeffrey      J. Fletcher | Controller(Principal      Accounting Officer)                                                         |                        March 27, 2009 |
|                                                 |                                                                                                  |                                                                                                                       |
| /s/      STEPHEN P. CARTERStephen      P. Carter     | Director                                                                                              |                        March 27, 2009 |
|                                                 |                                                                                                  |                                                                                                                       |
| /s/      TERRY M. MURPHY                             | Director                                                                                              |                        March 27, 2009 |
| Terry      M. Murphy                                 |
|                                                 |                                                                                                  |                                                                                                                       |
| /s/      RONALD A. PACERonald      A. Pace           | Director                                                                                              |                        March 27, 2009 |
|                                                 |                                                                                                  |                                                                                                                       |
| /s/      ANDREW F. REARDON                           | Director                                                                                              |                        March 27, 2009 |
| Andrew      F. Reardon                               |
|                                                 |                                                                                                  |                                                                                                                       |
| /s/      KATHI P. SEIFERTKathi      P. Seifert       | Director                                                                                              |                        March 27, 2009 |
|                                                 |                                                                                                  |                                                                                                                       |
| /s/      SUSAN SCHERBELSusan      Scherbel           | Director                                                                                              |                        March 27, 2009 |

----

| PAPERWEIGHT      DEVELOPMENT CORP. |
|------------------------------------|
|                               |   |
| By:                                | /s/      Mark R. Richards |
|                               | Mark      R. RichardsPresident      and Chief Executive Officer |
| Date:                              | March      27, 2009 |

| Name                                            | Title                                                                                          | Date                              |
|------------------------------------------------------|-----------------------------------------------------------------------------------------------------|----------------------------------------|
| /s/      MARK R. RICHARDSMark      R. Richards       | Chairman,      President, Chief Executive Officer and a Director (Principal Executive      Officer) |          March 27, 2009 |
|                                                 |                                                                                                |                                   |
| /s/      THOMAS J. FERREEThomas      J. Ferree       | Chief      Financial Officer and Treasurer(Principal      Financial Officer)                        |          March 27, 2009 |
|                                                 |                                                                                                |                                   |
| /s/      JEFFREY J. FLETCHERJeffrey      J. Fletcher | Assistant      Treasurer and Controller(Principal      Accounting Officer)                          |          March 27, 2009 |
|                                                 |                                                                                                |                                   |
| /s/      STEPHEN P. CARTERStephen      P. Carter     | Director                                                                                            |          March 27, 2009 |
|                                                 |                                                                                                |                                   |
| /s/      TERRY M. MURPHY                             | Director                                                                                            |          March 27, 2009 |
|  Terry      M. Murphy                           |
|                                                 |                                                                                                |                                   |
| /s/      RONALD A. PACE Ronald      A. Pace     | Director                                                                                            |          March 27, 2009 |
|                                                 |                                                                                                |                                   |
| /s/      ANDREW F. REARDON                           | Director                                                                                            | March      27, 2009               |
| Andrew      F. Reardon                               |
|                                                 |                                                                                                |                                   |
| /s/      KATHI P. SEIFERTKathi      P. Seifert       | Director                                                                                            |          March 27, 2009 |
|                                                 |                                                                                                |                                   |
| /s/      SUSAN SCHERBELSusan      Scherbel           | Director                                                                                            |          March 27, 2009 |

----

----

| Allowance      for Losses on Accounts Receivable                                                                                                                                                                                                                                                                                         |          | BalanceatBeginningof      Period |   |          | AcquisitionofBusiness |   |   | Chargedto      CostsandExpenses |   |                  | AmountsWrittenOff      LessRecoveries |          |   | Balanceat      End ofPeriod |   |   |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------|----------------------------------|--------|---------------|-----------------------|--------|--------|---------------------------------|--------|-----------------------|---------------------------------------|---------------|--------|-----------------------------|--------|--------|--------|
| December      30, 2006                                                                                                                                                                                                                                                                                                                                                 |        $ | 1,279                            |   | $             |                  | --     |   |        $                   |   |         895 |                                  |        $ |   |    (127)     |   | $      |   | 2,047 |   |   |
| December      29, 2007                                                                                                                                                                                                                                                                                                                                                 |        $ | 2,047                            |   | $             |                  | --     |   |        $                   |   |         894 |                                  |        $ |   | (1,461)                     |   | $      |   | 1,480 |   |   |
| January      3, 2009                                                                                                                                                                                                                                                                                                                                                   |        $ | 1,480                            |   |   $ |                  | --     |   |        $                   |   |         600 |                                  |        $ |   |         (255)     |   | $      |   | 1,825 |   |   |
|                                                                                                                                                                                                                                                                                                                                                              |          |                             |   |          |                  |   |   |                            |   |                  |                                  |          |   |                        |   |   |   |   |   |   |
| Inventory      Reserve                                                         |          |                             |   |          |                  |   |   |                            |   |                  |                                  |          |   |                        |   |   |   |   |   |   |
| December      30, 2006                                                                                                                                                                                                                                                                                                                                                 |        $ | 3,887                            |   |        $ |                  | --     |   |        $                   |   | 3,683                 |                                  |        $ |   | (1,978)                     |   | $      |   | 5,592 |   |   |
| December      29, 2007                                                                                                                                                                                                                                                                                                                                                 |        $ | 5,592                            |   |        $ |                  | --     |   |        $                   |   |    659 |                                  |        $ |   | (2,515)                     |   | $      |   | 3,736 |   |   |
| January      3, 2009                                                                                                                                                                                                                                                                                                                                                   |        $ | 3,736                            |   |        $ |                  | --     |   |        $                   |   | 1,867                 |                                  |        $ |   | (1,122)                     |   | $      |   | 4,481 |   |   |

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