----

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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                                                                                               | 20         |
|            |                                                                                                                         |       |
| Item      2     | Properties                                                                                                                   | 21         |
|            |                                                                                                                         |       |
| Item    3       | Legal      Proceedings                                                                                                       | 22         |
|            |                                                                                                                         |       |
| PART      II    |                                                                                                                         |       |
|            |                                                                                                                         |       |
| Item 5     | Market for Registrant’s      Common Equity, Related Stockholder Matters and Issuer Purchases of Equity      Securities | 23         |
|            |                                                                                                                         |       |
| Item      6     | Selected Financial      Data                                                                                                 | 24         |
|            |                                                                                                                         |       |
| Item7           | Management’s Discussion and      Analysis of Financial Condition and Results of      Operations                        | 26         |
|            |                                                                                                                         |       |
| Item 7A    | Quantitative and      Qualitative Disclosures About Market Risk                                                              | 48         |
|            |                                                                                                                         |       |
| Item      8     | Financial      Statements and Supplementary Data                                                                             | 49         |
|            |                                                                                                                         |       |
| Item 9     | Changes in and Disagreements      with Accountants on Accounting and Financial      Disclosure                               | 104        |
|            |                                                                                                                         |       |
| Item 9A(T) | Controls and      Procedures                                                                                                 | 104        |
|            |                                                                                                                         |       |
| Item 9B    | Other      Information                                                                                                       | 104        |
|            |                                                                                                                         |       |
| PART III   |                                                                                                                         |       |
|            |                                                                                                                         |       |
| Item 10    | Directors, Executive      Officers and Corporate Governance                                                                  | 105        |
|            |                                                                                                                         |       |
| Item 11    | Executive      Compensation                                                                                                  | 109        |
|            |                                                                                                                         |       |
| Item 12    | Security Ownership of      Certain Beneficial Owners and Management and Related Stockholder      Matters                     | 127        |
|            |                                                                                                                         |       |
| Item 13    | Certain Relationships and      Related Transactions and Director Independence                                                | 127        |
|            |                                                                                                                         |       |
| Item 14    | Principal Accountant Fees      and Services                                                                                  | 127        |
|            |                                                                                                                         |       |
| PART IV    |                                                                                                                         |       |
|            |                                                                                                                         |       |
| Item 15    | Exhibits and Financial      Statement Schedules                                                                              | 128        |
|            |                                                                                                                         |
| SIGNATURES      |                                                                                                                         |
|            |                                                                                                                         |
| EXHIBITS        |                                                                                                                         |

----

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

----

----

----

----

----

----

----

----

|   | • | total      remediation costs of $690 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 |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

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

----

----

|   | • | make      it more difficult for Appleton to satisfy its financial obligations with      respect to the senior credit facility, the senior secured note payable,      the second lien notes, the senior notes and senior subordinated      notes; |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | 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      development or general corporateactivities; |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | limit      Appleton’s ability to obtain additional financing for working capital,      capital expenditures, acquisitions, research and development or general      corporate purposes; |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | 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      rate of decline 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                  | 68,000                         | Owned                            |
| Roaring      Spring, Pennsylvania               | Pulp      and Paper Mill                          | 636,000                        | Owned                            |
| West      Carrollton, Ohio                      | Pulp      and Paper Mill                          | 758,000                        | 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                                         | 272,000                        | Lease      expires 11/30/12      |
| Appleton,      Wisconsin (Kensington Drive)     | Distribution      Center                          | 357,000                        | Lease      expires 12/31/12      |
| Hebron,      Kentucky                           | Distribution      Center                          | 194,000                        | Lease expires 12/31/10 |
| Camp      Hill, Pennsylvania                    | Distribution      Center                          | 212,000                        | Lease      expires 12/31/13      |
| Ontario,      California                        | Distribution      Center                          | 102,000                        | Lease      expires 7/31/13       |
| 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                                         | 89,000                         | Lease      expires 12/31/10      |

----

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

----

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

----

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

|                                                                    |   | 2009                |     |   | 2008   |   |      | 2007   |   |   | 2006      |   |   | 2005   |      |
|-------------------------------------------------------------------------|--------|---------------------|----------|--------|--------|--------|-----------|--------|--------|--------|-----------|--------|--------|--------|-----------|
|                                                                    |   |                |     |   |   |   |      |   |   |   |      |   |   |   |      |
|                                                                    |   | (in      thousands) |     |
| Statement      of Operations Data:                                      |   |                |     |   |   |   |      |   |   |   |      |   |   |   |      |
| Net      sales                                                          |   | $                   | 862,140  |   |   | $      | 967,169   |   |   | $      | 965,094   |   |   | $      | 973,655   |   |   | $ | 934,266 |   |
| Cost      of sales                                                      |   |                | 684,261  |   |   |   | 780,440   |   |   |   | 733,738   |   |   |   | 732,603   |   |   |   | 703,796 |   |
| Gross      profit                                                       |   |                | 177,879  |   |   |   | 186,729   |   |   |   | 231,356   |   |   |   | 241,052   |   |   |   | 230,470 |   |
| Selling,      general and administrative expenses                       |   |                | 139,563  |   |   |   | 169,622   |   |   |   | 179,129   |   |   |   | 179,671   |   |   |   | 177,220 |   |
| Goodwill      impairment                                                |   |                | 6,341    |   |   |   | 39,645    |   |   |   | -         |   |   |   | -         |   |   |   | - |   |
| Restructuring      and other charges (1)                                |   |                | -        |   |   |   | 2,578     |   |   |   | 1,445     |   |   |   | 2,161     |   |   |   | 7,405 |   |
|                                                                    |   |                |     |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| Operating      income (loss)                                            |   |                | 31,975   |   |   |   | (25,116   | )      |   |   | 50,782    |   |   |   | 59,220    |   |   |   | 45,845 |   |
|                                                                    |   |                |     |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| Interest      expense                                                   |   |                | 51,291   |   |   |   | 54,267    |   |   |   | 48,351    |   |   |   | 48,978    |   |   |   | 49,298 |   |
| Debt      extinguishment (income) expense, net                          |   |                | (42,602  | )      |   |   | (11,598   | )      |   |   | 1,572     |   |   |   | 208       |   |   |   | 38 |   |
| Interest      income                                                    |   |                | (402     | )      |   |   | (1,071    | )      |   |   | (2,476    | )      |   |   | (903      | ) |   |   | (638) |   |
| Litigation      settlement, net                                         |   |                | -        |   |   |   | (22,274   | )      |   |   | -         |   |   |   | -         |   |   |   | - |   |
| Other      (income) expense                                             |   |                | (1,778   | )      |   |   | 6,061     |   |   |   | (1,112)   |   |   |   | (513      | ) |   |   | 902 |   |
|                                                                    |   |                |     |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| Income      (loss) from continuing operations                           |   |                |     |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
|   before      income taxes                                    |   |                | 25,466   |   |   |   | (50,501   | )      |   |   | 4,447     |   |   |   | 11,450    |   |   |   | (3,755) |   |
|                                                                    |   |                |     |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| Provision      (benefit) for income taxes                               |   |                | 334      |   |   |   | (268      | )      |   |   | 253       |   |   |   | 633       |   |   |   | 548 |   |
|                                                                    |   |                |     |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| Income      (loss) from continuing operations                           |   |                | 25,132   |   |   |   | (50,233   | )      |   |   | 4,194     |   |   |   | 10,817    |   |   |   | (4,303) |   |
|                                                                    |   |                |     |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| Discontinued      operations                                            |   |                |     |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| (Loss)      income from discontinued operations, net of income    taxes |   |                | -        |   |   |   | (47,149   | )      |   |   | (10,501   | )      |   |   | 528       |   |   |   | 1,289 |   |
| Net      income (loss)                                                  |   | $                   | 25,132   |   |   | $      | (97,382)  |   |   | $      | (6,307    | )      |   | $      | 11,345    |   |   | $ | (3,014) |   |
|                                                                    |   |                |     |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
|                                                                    |   |                |     |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| Other      Financial Data:                                              |   |                |     |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| Depreciation      and amortization(2)                                   |   | $                   | 62,034   |   |   | $      | 99,041    |   |   | $      | 63,809    |   |   | $      | 69,195    |   |   | $ | 73,067 |   |
| Capital      expenditures(2)                                            |   |                | 24,556   |   |   |   | 98,843    |   |   |   | 53,627    |   |   |   | 32,391    |   |   |   | 27,199 |   |
| Balance      Sheet Data (at end of period):                             |   |                |     |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| Working      capital                                                    |   | $                   | 113,802  |   |   | $      | 116,738   |   |   | $      | 141,139   |   |   | $      | 142,065   |   |   | $ | 145,809 |   |
| Total      assets                                                       |   |                | 797,980  |   |   |   | 929,921   |   |   |   | 1,103,408 |   |   |   | 1,016,123 |   |   |   | 1,024,934 |   |
| Total      debt                                                         |   |                | 550,716  |   |   |   | 605,364   |   |   |   | 544,174   |   |   |   | 531,293   |   |   |   | 574,011 |   |
| Redeemable      common stock                                            |   |                | 122,087  |   |   |   | 147,874   |   |   |   | 182,040   |   |   |   | 190,466   |   |   |   | 185,292 |   |
| Accumulated      deficit                                                |   |                | (121,764 | )      |   |   | (159,650) |   |   |   | (80,086)  |   |   |   | (67,885)  |   |   |   | (61,982) |   |

----

| (1) | Appleton      has continued to assess its staffing requirements for its headquarters      operations and for its plants and mills. Reductions occurred throughout      years 2005 through 2008. Due to the continued decline in Appleton’s      carbonless business, as well as the global economic downturn, additional      nonrestructuring headcount reductions were taken during 2009. See Note 5      of Notes to Consolidated FinancialStatements. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

----

| ·   | Net      sales totaled $862.1 million, a $105.1 million, or 10.9%, decrease from      2008 net sales. Net sales within the technical papers business decreased      by $92.6 million as a result of reduced shipment volumes and aggressive      price competition. Net sales within the performance packaging business      decreased by $12.5 million as a result of weaker demand and lower selling      prices to customers in response to lower resin  prices. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | During      2009, the Company registered with the Internal Revenue Service as an      alternative fuel mixer for which it earned an alternative fuels tax credit      of $17.7 million for alternative fuel usage throughout the year. These      credits were recorded as a reduction to cost of sales. This tax credit      expired on December 31, 2009. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | During      the challenging economic conditions of 2009, the Company pursued options      to reduce spending and waste. The Company evaluated production output and      took steps to reduce crewing levels and temporarily slow down or shut down      production equipment. Beginning in second quarter 2009, all non-union      employees in the Company were required to take two weeks of unpaid leave,      or furlough, before the end of third quarter 2009. In addition, beginning      in second quarter 2009, Appleton suspended the Company's matching      contributions for deferrals by non-union employees into the 401(k)      plan. The matching contributions were reinstated in October 2009. The      matching contributions for deferrals by non-union employees into the      Company stock fund remained intact. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In      September 2009, the Company completed a voluntary debt-for-debt exchange      transaction. This transaction exchanged $92.0 million of Appleton’s 8.125%      senior notes payable due June 2011 and $110.3 million of 9.75% senior      subordinated notes payable due June 2014 for a total of $158.2 million of      newly issued 11.25% second lien notes payable due December 2015. In      addition, $3.6 million of additional 11.25% notes were issued as in-kind      consent fees to the noteholders agreeing to the exchange. In total, $161.8      million of 11.25% notes were issued as a result of this debt exchange. The      transaction resulted in a debt reduction of $44.1 million as well as      extended maturities for a majority of the notes  payable. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In      January 2009, the Company made market purchases of its senior subordinated      notes totaling $7.5 million. As these notes were purchased at a price      significantly less than face value, the Company recorded a $5.4 million      net gain on these purchases. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Income      from continuing operations was $25.1 million compared to a loss from      continuing operations of $50.2 million in the prior year. The 2009 net      income includes $17.7 million of alternative fuel tax credits received for      alternative fuel usage. The 2009 income from continuing operations also      includes a $42.6 million gain on debt extinguishment, of which, $37.4      million is a result of the voluntary debt-for-debt exchange transaction      discussed above. Income from continuing operations for the year ended      January 2, 2010, was reduced by a $6.3 million goodwill impairment      charge within the performance packaging business due to the decreased      future outlook and revised cash flows for this segment. The 2008 loss from      continuing operations included a $39.6 million goodwill impairment charge      within this same business. The 2008 loss also included a $9.4 million      charge arising from the reclassification of other comprehensive loss,      associated with the interest rate swaps, to interest expense, as well as      $2.6 million of restructuringcharges. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Appleton’s      net income for the year ended January 2, 2010, of $25.1 million,      represents an increase of $122.5 million over the $97.4 million net loss      in 2008. The 2009 net income includes $17.7 million of alternative fuel      tax credits received for alternative fuel usage. Net income also includes      $42.6 million of net debt extinguishment income. A goodwill impairment      charge within the performance packaging business reduced 2009 net income      by $6.3 million. The 2008 net loss includes a $47.2 million loss from the      discontinued operations of Appleton’s former subsidiary, Bemrose, prior to      its sale in August 2008. The prior year net loss also includes impairment      charges of $39.6 million within the performance packaging business. The      2008 loss included a $9.4 million charge arising from the reclassification      of other comprehensive loss, associated with the interest rate swaps, to      interest expense, as well as $2.6 million of restructuring      charges. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|                                                             |   |                            |        |   |                      |   |
|------------------------------------------------------------------|--------|---------------------------------|-------------|--------|---------------------------|--------|
|                                                             |   | For      the Year Ended         |        |   |                      |   |
|                                                             |   | January 2, 2010       |        |   | January 3, 2009 |   |   | %      Chg |   |
|                                                             |   | (dollars in millions) |        |   |                      |   |
|                                                             |   |                            |        |   |                      |   |   |   |   |
| Net      sales                                                   |   | $                               | 862.1       |   |                      | $      | 967.2 |   |   |   | -10.9 | % |
| Cost      of sales                                               |   |                            | 684.2       |   |                      |   | 780.5 |   |   |   | -12.3 | % |
| Gross      profit                                                |   |                            | 177.9       |   |                      |   | 186.7 |   |   |   | -4.7 | % |
|                                                             |   |                            |        |   |                      |   |   |   |   |   |   |   |
| Selling,      general and administrative expenses                |   |                            | 139.6       |   |                      |   | 169.6 |   |   |   | -17.7 | % |
| Goodwill      impairment                                         |   |                            | 6.3         |   |                      |   | 39.6 |   |   |   | -84.1 | % |
| Restructuring      and other charges                             | -      |   2.6                 | -100.0      | %      |
|                                                             |   |                            |        |   |                      |   |   |   |   |   |   |   |
| Operating      income (loss)                                     |   |                            | 32.0        |   |                      |   | (25.1 | )  |   |   | 227.5 | % |
|                                                             |   |                            |        |   |                      |   |   |   |   |   |   |   |
| Interest      expense, net                                       |   |                            | 50.9        |   |                      |   | 53.2 |   |   |   | -4.3 | % |
| Debt      extinguishment income, net                        |   |                            |  (42.6 | )      |                      |   |  (11.6 | ) |   |   |  267.2 | % |
| Other      non-operating income, net                        |   |                            | (1.8        | )      |                      |   | (16.2 | )  |   |   | -88.9 | % |
|                                                             |   |                            |        |   |                      |   |   |   |   |   |   |   |
| Income      (loss) from continuing operations before incometaxes |   |                            | 25.5        |   |                      |   | (50.5 | )  |   |   | 150.5 |  % |
| Provision      (benefit) for income taxes                        |   |                            | 0.4         |   |                      |   | (0.3 | ) |   |   | 233.3 | % |
|                                                             |   |                            |        |   |                      |   |   |   |   |   |   |   |
| Income      (loss) from continuing operations                    |   |                            | 25.1        |   |                      |   | (50.2 | )  |   |   | 150.0 | % |
|                                                             |   |                            |        |   |                      |   |   |   |   |   |   |   |
| Loss      from discontinued operations, net of income taxes      |   |                            | -           |   |                      |   | (47.2 | ) |   | -100.0 | %  |
|                                                             |   |                            |        |   |                      |   |   |   |   |   |   |   |
| Net      income (loss)                                           |   | $                               | 25.1        |   |                      | $      | (97.4 | ) |   |   | 125.8 | %  |
|                                                             |   |                            |        |   |                      |   |   |   |   |   |   |   |
| Comparisons      as a % of net sales                             |   |                            |        |   |                      |   |   |   |   |   |   |   |
| Cost      of sales                                               |   |                            | 79.4        | %      |                      |   | 80.7 | % |   |   | -1.3 | % |
| Gross      margin                                                |   |                            | 20.6        | %      |                      |   | 19.3 | % |   |   | 1.3 | % |
| Selling,      general and administrative expenses                |   |                            | 16.2        | %      |                      |   | 17.5 | % |   |   | -1.3 | % |
| Operating      margin                                            |   |                            | 3.7         | %      |                      |   | -2.6 | % |   |   | 6.3 | % |
| Income      (loss) from continuing operations before incometaxes |   |                            | 3.0         | %      |                      |   | -5.2 | % |   |   | 8.2 | % |
| Income      (loss) from continuing operations                    |   |                            | 2.9         | %      |                      |   | -5.2 | % |   |   | 8.1 | % |
| Loss      from discontinued operations, net of income taxes      |   |                            | -           |   |                      |   | -4.9 | % |   |   | 4.9 | % |
| Net      income (loss)                                           |   |                            | 2.9         | %      |                      |   | -10.1 | % |   |   | 13.0 | % |

----

----

| Unfavorable      price and mix                                                                         |   | $      | (42.7 | )      |
|--------------------------------------------------------------------------------------------------------|--------|--------|-------|--------|
| Lower      shipment volumes                                                                            |   |   | (12.2 | )      |
| Mill      curtailments to match customer demand                                                        |   |   | (9.0  | )      |
| Deflation      of raw material and utilities pricing                                                   |   |   | 27.0  |   |
| Alternative      fuels tax credit                                                                      |   |   | 17.7  |   |
| Favorable      selling, general and administrative spending                                            |   |   | 16.9  |   |
| Reduced      manufacturing spending                                                                    |   |   | 11.3  |   |
| Lower      distribution costs                                                                          |   |   | 8.9   |   |
| Reduced      start-up costs related to the thermal coater at the West Carrollton, Ohio      paper mill |   |   | 5.4   |   |
|                                                                                                   |   | $      | 23.3  |   |

----

| • | Coated      solutions segment net sales totaled $444.2 million for 2009, a decrease of      $96.4 million, or 17.8%, from prior year. Carbonless shipment volumes in      2009 were 16.5% lower than 2008 shipments. Volume shortfalls were recorded      in all market channels. Pricing, product mix and market channel mix were      also unfavorable and contributed to the net sales decline. Coated      solutions operating income increased $16.1 million or 52.0% during 2009 to      $47.0 million. The adverse impact of lower shipment volumes and      unfavorable pricing and mix on 2009 operating margins was more than offset      by manufacturing cost reductions, raw material deflation, lower      distribution costs and favorable selling, general and administrative      spending as well as $14.3 million of alternative fuels tax credit recorded      as a reduction to cost of sales. |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| • | Thermal      papers segment 2009 net sales of $281.2 million were slightly higher than      2008 net sales of $280.3 million. Despite a year-on-year increase in      shipment volumes of 7.6%, aggressive price competition negatively impacted      sales revenues. During 2009, the thermal papers segment recorded an      operating loss of $10.5 million compared to a 2008 operating loss of $11.9      million. Operating margins were adversely affected by unfavorable pricing      and unfavorable mix which offset manufacturing cost reductions, raw      material deflation, lower distribution costs and favorable selling,      general and administrative spending. By comparison, 2008 margins were      impacted by $14.1 million of start-up costs associated with the expansion      project at the West Carrollton, Ohio paper mill whereas 2009 start-up and      optimization costs approximated $8.7million. |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| • | Security      papers segment net sales for 2009 totaled $36.9 million which was an      increase of $2.9 million or 8.6% over 2008 security net sales.      Year-on-year, 2009 shipment volumes increased 9.5%. Security papers      segment 2009 operating income of $9.2 million increased $5.8 million or      approximately 172% when compared to the prior year. This was largely the      result of increased shipment volumes, manufacturing cost reductions, raw      material deflation, lower distribution costs and favorable selling,      general and administrative spending as well as $3.4 million of alternative      fuels tax credits recorded as a reduction to cost of      sales.  |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| • | Performance      packaging segment net sales totaled $99.8 million for 2009, a decrease of      $12.5 million, or 11.1%, over prior year levels. The decrease in revenue      was largely due to weaker demand and lower selling prices to the customer      in response to lower resin prices. |
|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| • | Unallocated      corporate charges and business development costs of $11.7 million      decreased by $1.5 million during 2009 when compared to 2008. This includes      the $0.8 million gain on the sale ofC&H. |
|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                             |            |                            |   |    |                        |   |
|------------------------------------------------------------------|-----------------|---------------------------------|--------|---------|-----------------------------|--------|
|                                                             |            | For      the Year Ended         |   |    |                        |   |
|                                                             |            | January 3, 2009       |   |    | December 29, 2007 |   |   | %      Chg |   |
|                                                             |            | (dollars in millions) |   |    |                        |   |
|                                                             |            |                            |   |    |                        |   |   |   |   |
| Net      sales                                                   |            | $                               | 967.2  |    |                        | $      | 965.1 |   |   |   | 0.2 | % |
| Cost      of sales                                               |            |                            | 780.5  |    |                        |   | 733.7 |   |   |   | 6.4 | % |
| Gross      profit                                                |            |                            | 186.7  |    |                        |   | 231.4 |   |   |   | -19.3 | % |
|                                                             |            |                            |   |    |                        |   |   |   |   |   |   |   |
| Selling,      general and administrative expenses                |            |                            | 169.6  |    |                        |   | 179.2 |   |   |   | -5.4 | % |
| 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                             | (16.2           | )                          | (1.1   | nm      |
|                                                             |            |                            |   |    |                        |   |   |   |   |   |   |   |
| (Loss)      income from continuing operations before incometaxes |            |                            | (50.5  | )  |                        |   | 4.5 |   |   |   | nm |   |
| (Benefit)      provision for income taxes                        |            |                            | (0.3   | )  |                        |   | 0.3 |   |   |   | -200.0 | % |
|                                                             |            |                            |   |    |                        |   |   |   |   |   |   |   |
| (Loss)      income from continuing operations                    |            |                            | (50.2  | )  |                        |   | 4.2 |   |   |   | nm |   |
|                                                             |            |                            |   |    |                        |   |   |   |   |   |   |   |
| Loss      from discontinued operations, net of income taxes      |            |                            | (47.2  | )  |                        |   | (10.5 | ) |   | -349.5 | %  |
|                                                             |            |                            |   |    |                        |   |   |   |   |   |   |   |
| Net      loss                                                    |            | $                               | (97.4  | )  |                        | $      | (6.3 | ) |   |   | nm |   |
|                                                             |            |                            |   |    |                        |   |   |   |   |   |   |   |
| Comparisons      as a % of net sales                             |            |                            |   |    |                        |   |   |   |   |   |   |   |
| Cost      of sales                                               |            |                            | 80.7   | %       |                        |   | 76.0 | % |   |   | 4.7 | % |
| Gross      margin                                                |            |                            | 19.3   | %       |                        |   | 24.0 | % |   |   | -4.7 | % |
| Selling,      general and administrative expenses                |            |                            | 17.5   | %       |                        |   | 18.6 | % |   |   | -1.1 | % |
| Operating      margin                                            |            |                            | -2.6   | %       |                        |   | 5.3 | % |   |   | -7.9 | % |
| (Loss)      income from continuing operations before incometaxes |            |                            | -5.2   | %       |                        |   | 0.5 | % |   |   | -5.7 | % |
| (Loss)      income from continuing operations                    |            |                            | -5.2   | %       |                        |   | 0.4 | % |   |   | -5.6 | % |
| Loss      from discontinued operations, net of income taxes      |            |                            | -4.9   | %       |                        |   | -1.1 | % |   |   | -3.8 | % |
| Net      loss                                                    |            |                            | -10.1  | %       |                        |   | -0.7 | % |   |   | -9.4 | % |

----

----

| • | Coated      solutions segment net sales totaled $540.6 million for 2008, a decrease of      $33.2 million, or 5.8%, 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      $21.5 million or 41.0% to $30.9 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 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 ASC 350, 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 $5.3 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. |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|                                                                                                                                                                                                                                                                                      |   | 2009   |   |   | 2008   |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
| At      January 2, 2010 the senior secured variable rate notes payable were      at 6.625%, $0.5 million due quarterly with $204.2 due June 2013. At      January 3, 2009 the notes were at approximately 4.5%, $0.6 million      due quarterly with $209.8 due June 2014. |   | $      | 211.2  |   |   | $      | 221.6 |   |
|                                                                                                                                                                                                                                                                                      |   |   |   |   |   |   |   |   |
| Secured      term note payable at 14.25%, approximately $0.2 million due monthly with      $6.8 million due December 2013. At January 3, 2009 the note was at      12.5%, approximately $0.2 million due monthly with $6.9 million due      December 2013.                           |   |   | 19.7   |   |   |   | 21.8 |   |
|                                                                                                                                                                                                                                                                                      |   |   |   |   |   |   |   |   |
| At      January 2, 2010 the revolving credit facility was at approximately      6.7%. At January 3, 2009 the revolving credit facility was at      approximately 4.0%.                                                                                                          |   |   | 88.2   |   |   |   | 83.7 |   |
|                                                                                                                                                                                                                                                                                      |   |   |   |   |   |   |   |   |
| Unsecured      variable rate industrial development bonds, 0.6% average      interest rate at January 2, 2010, $2.7 million due in 2013 and      $6.0 million due in 2027                                                                                                       |   |   | 8.7    |   |   |   | 8.7 |   |
|                                                                                                                                                                                                                                                                                      |   |   |   |   |   |   |   |   |
| State      of Ohio assistance loan at 6%, approximately $0.1 million due monthly      and final payment due May 2017                                                                                                                                                                 |   |   | 8.0    |   |   |   | 8.8 |   |
|                                                                                                                                                                                                                                                                                      |   |   |   |   |   |   |   |   |
| State      of Ohio loan at 1% until July 2011, then 3% until May 2019,      approximately $30,000 due monthly and final payment due May      2019                                                                                                                          |   |   | 2.8    |   |   |   | - |   |
|                                                                                                                                                                                                                                                                                      |   |   |   |   |   |   |   |   |
| Senior      notes payable at 8.125%, due June 2011                                                                                                                                                                                                                                        |   |   | 17.5   |   |   |   | 109.5 |   |
| Senior      subordinated notes payable at 9.75%, due June 2014                                                                                                                                                                                                                            |   |   | 32.2   |   |   |   | 150.0 |   |
| Second      lien notes payable at 11.25%, due December 2015                                                                                                                                                                                                                               |   |   | 161.8  |   |   |   | - |   |
|                                                                                                                                                                                                                                                                                      |   |   | 550.1  |   |   |   | 604.1 |   |
| Less      obligations due within one year                                                                                                                                                                                                                                                 |   |   | (6.0)  |   |   |   | (5.5) |   |
|                                                                                                                                                                                                                                                                                      |   | $      | 544.1  |   |   | $      | 598.6 |   |

----

----

----

|   | • | 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 was June 5, 2012, and      the maturity date for the senior secured variable rate notes payable was      June 5, 2013; |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Appleton      was permitted up to $35 million of capital expenditures in 2009 and up to      $40 million of capital expenditures in 2010, with no limit in 2011 or      thereafter; |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

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

|   | • | Financial      covenants were 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. |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|                                    |   | 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                     |   | $                          | 550.1  |   |   | $ | 6.0 |   |   | $ | 119.0 |   |   | $ | 252.8 |   |   | $ | 172.3 |   |
| Capital      lease obligation           |   |                       | 0.8    |   |   |   | 0.7 |   |   |   | 0.1 |   |   |   | — |   |   |   | — |   |
| Operating      leases                   |   |                       | 16.2   |   |   |   | 5.7 |   |   |   | 6.7 |   |   |   | 2.4 |   |   |   | 1.4 |   |
| Other      long-term obligations (1)    |   |                       | 358.1  |   |   |   | 65.4 |   |   |   | 124.4 |   |   |   | 89.5 |   |   |   | 78.8 |   |
| Total      contractual cash obligations |   | $                          | 925.2  |   |   | $ | 77.8 |   |   | $ | 250.2 |   |   | $ | 344.7 |   |   | $ | 252.5 |   |

| (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 |   | $                                                                                                                                                                           | 73.4 |   |   | $ | 14.5 |   |   | $ | 31.6 |   | $ | 27.3 |

----

----

----

----

----

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

----

----

| PAPERWEIGHT      DEVELOPMENT CORP. AND SUBSIDIARIES                                                                                                                                                   |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                                  |   |
| CONSOLIDATED      BALANCE SHEETS                                                                                                                                                                      |   |
| (dollars      in thousands, except share data)                                                                                                                                                        |   |
|                                                                                                                                                                                                  |   | January 2, 2010 |   |   | January 3, 2009 |   |
| ASSETS                                                                                                                                                                                                |   |   |   |   |   |   |
| Current      assets                                                                                                                                                                                   |   |   |   |   |   |   |
|   Cash      and cash equivalents                                                                                                                                                            |   | $ | 9,963 |   |   | $ | 4,180 |   |
|   Accounts      receivable, less allowance for doubtful accounts of $1,761 and $1,715,      respectively                                                                                    |   |   | 90,584 |   |   |   | 88,218 |   |
|   Inventories                                                                                                                                                                               |   |   | 120,942 |   |   |   | 124,856 |   |
|   Other      current assets                                                                                                                                                                 |   |   | 55,759 |   |   |   | 45,920 |   |
|   Assets      held for sale                                                                                                                                                                 |   |   | - |   |   |   | 9,327 |   |
|        Total      current assets                                                                                                                                   |   |   | 277,248 |   |   |   | 272,501 |   |
|                                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| Property,      plant and equipment, net of accumulated depreciation of $448,531 and      $394,075 respectively                                                                                   |   |   | 405,598 |   |   |   | 439,301 |   |
| Goodwill                                                                                                                                                                                              |   |   | 2,910 |   |   |   | 9,251 |   |
| Intangible      assets, net                                                                                                                                                                           |   |   | 67,730 |   |   |   | 71,404 |   |
| Environmental      indemnification receivable                                                                                                                                                         |   |   | 28,600 |   |   |   | 114,300 |   |
| Other      assets                                                                                                                                                                                     |   |   | 15,894 |   |   |   | 13,909 |   |
| Assets      held for sale                                                                                                                                                                             |   |   | - |   |   |   | 9,255 |   |
|                                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
|        Total      assets                                                                                                                                           |   | $ | 797,980 |   |   | $ | 929,921 |   |
|                                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| LIABILITIES,      REDEEMABLE COMMON STOCK, ACCUMULATED      DEFICIT AND ACCUMULATED      OTHER COMPREHENSIVE LOSS                                                                           |   |   |   |   |   |   |   |   |
| Current      liabilities                                                                                                                                                                              |   |   |   |   |   |   |   |   |
|   Current      portion of long-term debt                                                                                                                                                    |   | $ | 5,955 |   |   | $ | 5,455 |   |
|   Accounts      payable                                                                                                                                                                     |   |   | 60,020 |   |   |   | 61,093 |   |
|   Accrued      interest                                                                                                                                                                     |   |   | 5,218 |   |   |   | 3,628 |   |
|   Other      accrued liabilities                                                                                                                                                            |   |   | 92,253 |   |   |   | 83,502 |   |
|   Liabilities      held for sale                                                                                                                                                            |   |   | - |   |   |   | 2,085 |   |
|        Total      current liabilities                                                                                                                              |   |   | 163,446 |   |   |   | 155,763 |   |
|                                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| Long-term      debt                                                                                                                                                                                   |   |   | 544,113 |   |   |   | 598,598 |   |
| Postretirement      benefits other than pension                                                                                                                                                       |   |   | 50,609 |   |   |   | 45,364 |   |
| Accrued      pension                                                                                                                                                                                  |   |   | 101,312 |   |   |   | 109,532 |   |
| Environmental      liability                                                                                                                                                                          |   |   | 28,600 |   |   |   | 114,300 |   |
| Other      long-term liabilities                                                                                                                                                                      |   |   | 9,294 |   |   |   | 13,309 |   |
| Commitments      and contingencies (Note 18)                                                                                                                                                     |   |   | - |   |   |   | - |   |
| Redeemable      common stock, $0.01 par value,  shares      authorized: 30,000,000, shares issued and  outstanding: 10,097,099      and 10,643,894, respectively             |   |   | 122,087 |   |   |   | 147,874 |   |
| Accumulated      deficit                                                                                                                                                                              |   |   | (121,764 | ) |   |   | (159,650 | ) |
| Accumulated      other comprehensive loss                                                                                                                                                             |   |   | (99,717 | )  |   |   | (95,169 | ) |
|                                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
|        Total      liabilities, redeemable common stock, accumulated       deficit      and accumulated other comprehensive loss |   | $ | 797,980 |   |   | $ | 929,921 |   |

----

| 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 2,      2010 |   |   | January 3,      2009 |   |   | December 29,      2007 |   |
|                                                                    |   |   |   |   |   |   |   |   |   |
| Net      sales                                                          |   | $ | 862,140 |   |   | $ | 967,169 |   |   | $ | 965,094 |   |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost      of sales                                                      |   |   | 684,261 |   |   |   | 780,440 |   |   |   | 733,738 |   |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
|         Gross profit                                          |   |   | 177,879 |   |   |   | 186,729 |   |   |   | 231,356 |   |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Selling,      general and administrative expenses                       |   |   | 139,563 |   |   |   | 169,622 |   |   |   | 179,129 |   |
| Goodwill      impairment                                                |   |   | 6,341 |   |   |   | 39,645 |   |   |   | - |   |
| Restructuring      and other charges                                    |   |   | - |   |   |   | 2,578 |   |   |   | 1,445 |   |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating      income (loss)                                            |   |   | 31,975 |   |   |   | (25,116 | ) |   |   | 50,782 |   |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Other      expense (income)                                             |   |   |   |   |   |   |   |   |   |   |   |   |
|   Interest      expense                                       |   |   | 51,291 |   |   |   | 54,267 |   |   |   | 48,351 |   |
|   Debt      extinguishment (income) expense, net              |   |   | (42,602 | ) |   |   | (11,598 | ) |   |   | 1,572 |   |
|   Interest      income                                        |   |   | (402 | ) |   |   | (1,071 | ) |   |   | (2,476 | ) |
|   Litigation      settlement, net (Note 18)                   |   |   | - |   |   |   | (22,274 | ) |   |   | - |   |
|   Foreign      exchange (gain) loss                           |   |   | (958 | ) |   |   | 4,523 |   |   |   | (1,112 | ) |
|   Other      (income) loss                                    |   |   | (820 | ) |   |   | 1,538 |   |   |   | - |   |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Income      (loss) from continuing operations before incometaxes        |   |   | 25,466 |   |   |   | (50,501 | ) |   |   | 4,447 |   |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Provision      (benefit) for income taxes                               |   |   | 334 |   |   |   | (268 | ) |   |   | 253 |   |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Income      (loss) from continuing operations                           |   |   | 25,132 |   |   |   | (50,233 | ) |   |   | 4,194 |   |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Discontinued      operations                                            |   |   |   |   |   |   |   |   |   |   |   |   |
|   Loss      from discontinued operations, net of income taxes |   |   | - |   |   |   | (47,149 | ) |   |   | (10,501 | ) |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      income (loss)                                                  |   | $ | 25,132 |   |   | $ | (97,382 | ) |   | $ | (6,307 | ) |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |

----

|  PAPERWEIGHT DEVELOPMENT CORP.      AND SUBSIDIARIES                      |   |
|--------------------------------------------------------------------------------|--------|
|                                                                           |   |
| CONSOLIDATED      STATEMENTS OF CASH FLOWS                                     |   |
| (dollars      in thousands)                                                    |   |
|                                                                           |   |   |   |   |   |   |   |   |   |
|                                                                           |   | For      the YearEndedJanuary 2,      2010 |   |   | For      the YearEndedJanuary 3,      2009 |   |   | For      the YearEndedDecember 29,      2007 |   |
| Cash      flows from operating activities:                                     |   |   |   |   |   |   |   |   |   |
| Net      income (loss)                                                         |   | $ | 25,132 |   |   | $ | (97,382 | )  |   | $ | (6,307 | ) |
| Adjustments      to reconcile net income (loss) to net cash                    |   |   |   |   |   |   |   |   |   |   |   |   |
| provided      by operating activities:                                         |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation                                                                   |   |   | 58,279 |   |   |   | 54,995 |   |   |   | 62,679 |   |
| Amortization      of intangible assets                                         |   |   | 3,755 |   |   |   | 4,401 |   |   |   | 7,610 |   |
| Impairment      of continuing operations goodwill                              |   |   | 6,341 |   |   |   | 39,645 |   |   |   | - |   |
| Impairment      of discontinued operations goodwill and long-lived      assets |   |   | - |   |   |   | 43,745 |   |   |   | 8,039 |   |
| Amortization      of financing fees                                            |   |   | 3,115 |   |   |   | 2,199 |   |   |   | 2,456 |   |
| Employer      401(k) noncash matching contributions                            |   |   | 4,006 |   |   |   | 5,807 |   |   |   | 6,658 |   |
| Foreign      exchange (gain) loss                                              |   |   | (958 | ) |   |   | 4,922 |   |   |   | (1,204 | )  |
| Loss      on disposals of equipment                                            |   |   | 574 |   |   |   | 1,450 |   |   |   | 2,400 |   |
| Gain      on sale of business                                                  |   |   | (755 | ) |   |   | - |   |   |   | - |   |
| Accretion      of capital lease obligation                                     |   |   | 68 |   |   |   | 111 |   |   |   | 152 |   |
| Recognition      of noncash expense associated with interest rate    swaps     |   |   | - |   |   |   | 9,446 |   |   |   | - |   |
| (Gain)      loss on debt extinguishment                                        |   |   | (42,602 | ) |   |   | (11,598 | ) |   |   | 653 |   |
| Deferred      income taxes                                                     |   |   | - |   |   |   | - |   |   |   | 959 |   |
| (Increase)/decrease      in assets and increase/(decrease) in liabilities:     |   |   |   |   |   |   |   |   |   |   |   |   |
| Accounts      receivable                                                       |   |   | (735) |   |   |   | 30,493 |   |   |   | 7,107 |   |
| Inventories                                                                    |   |   | 3,767 |   |   |   | (10,792 | ) |   |   | 4,317 |   |
| Other      current assets                                                      |   |   | 376 |   |   |   | 1,046 |   |   |   | (1,504 | ) |
| Accounts      payable and other accrued liabilities                            |   |   | 14,488 |   |   |   | (44,965 | ) |   |   | 6,389 |   |
| Restructuring      reserve                                                     |   |   | (2,138 | ) |   |   | 1,740 |   |   |   | (1,907 | ) |
| Accrued      pension                                                           |   |   | (5,484 | ) |   |   | (5,524 | ) |   |   | (5,999 | ) |
| Fox      River liabilities                                                     |   |   | - |   |   |   | (25,000 | ) |   |   | - |   |
| Other,      net                                                                |   |   | (6,001 | ) |   |   | (2,975 | ) |   |   | (1,047 | ) |
|                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      cash provided by operating activities                            |   |   | 61,228 |   |   |   | 1,764 |   |   |   | 91,451 |   |
|                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash      flows from investing activities:                                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds      from sale of equipment                                           |   |   | 27 |   |   |   | 159 |   |   |   | 44 |   |
| Net      change in cash due to sale of Bemrose Group Limited                   |   |   | - |   |   |   | (999 | ) |   |   | - |   |
| Net      change in cash due to sale of C&H Packaging,Inc.                  |   |   | 16,875 |   |   |   | - |   |   |   | - |   |
| Restricted      cash for mill expansion                                        |   |   | - |   |   |   | - |   |   |   | (7,369 | )  |
| Additions      to property, plant and equipment                                |   |   | (24,556 | ) |   |   | (99,534 | ) |   |   | (54,457 | ) |
|                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      cash used by investing activities                                     |   |   | (7,654 | ) |   |   | (100,374 | ) |   |   | (61,782 | ) |
|                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash      flows from financing activities:                                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Payments      of senior secured notes payable                                  |   |   | (10,400 | ) |   |   | (2,813 | ) |   |   | (196,095 | ) |
| Proceeds      from senior secured notes payable                                |   |   | - |   |   |   | - |   |   |   | 225,000 |   |
| Payments      of senior notes payable                                          |   |   | - |   |   |   | (27,990 | ) |   |   | (17,345 | ) |
| Payments      of senior subordinated notes payable                             |   |   | (1,687 | ) |   |   | - |   |   |   | (7,000 | )  |
| Debt      acquisition costs                                                    |   |   | (8,642 | ) |   |   | (279 | ) |   |   | (2,321 | ) |
| Payments      relating to capital lease obligation                             |   |   | (731 | ) |   |   | (731 | ) |   |   | (731 | ) |
| Proceeds      from revolving lines of credit                                   |   |   | 254,201 |   |   |   | 396,707 |   |   |   | 73,996 |   |
| Payments      of revolving lines of credit                                     |   |   | (249,710 | ) |   |   | (312,973 | ) |   |   | (74,182 | ) |
| Proceeds      from State of Ohio loan                                          |   |   | 3,000 |   |   |   | - |   |   |   | 9,105 |   |
| Payments      of State of Ohio loan                                            |   |   | (958 | ) |   |   | (325 | ) |   |   | - |   |
| Proceeds      from secured financing                                           |   |   | - |   |   |   | 22,000 |   |   |   | - |   |
| Payments      of secured financing                                             |   |   | (2,120 | ) |   |   | (186 | ) |   |   | - |   |
| Proceeds      from issuance of redeemable common stock                         |   |   | 4,135 |   |   |   | 6,426 |   |   |   | 7,659 |   |
| Payments      to redeem common stock                                           |   |   | (21,162 | ) |   |   | (27,930 | ) |   |   | (28,641 | ) |
| (Decrease)      increase in cash overdraft                                     |   |   | (13,717 | )  |   |   | 5,729 |   |   |   | 6,100 |   |
|                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      cash (used) provided by financing activities                     |   |   | (47,791 | ) |   |   | 57,635 |   |   |   | (4,455 | ) |
|                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |
| Effect      of foreign exchange rate changes on cash and cash      equivalents |   |   | - |   |   |   | 317 |   |   |   | (351 | ) |
| Change      in cash and cash equivalents                                       |   |   | 5,783 |   |   |   | (40,658 | ) |   |   | 24,863 |   |
| Cash      and cash equivalents at beginning of period                          |   |   | 4,180 |   |   |   | 44,838 |   |   |   | 19,975 |   |
|                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash      and cash equivalents at end of period                                |   | $ | 9,963 |   |   | $ | 4,180 |   |   | $ | 44,838 |   |
|                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |

----

| 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 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 ASC 715, 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 ASC      715          |   |   | - |   |   |   |   |   |   |   | (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 | ) |   |   |   |   |
|                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive      income:                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Net      income                                                                                 |   |   | - |   |   |   | - |   |   |   | 25,132 |   |   |   | - |   |   | $ | 25,132 |   |
|   Changes      in retiree plans                                                                   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (5,099 | )  |   |   | (5,099 | )  |
|   Realized      and unrealized gains on derivatives                                               |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 551 |   |   |   | 551 |   |
|     Total      comprehensive income                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | $ | 20,584 |   |
|                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance      of redeemable common stock                                                                    |   |   | 522,602 |   |   |   | 8,129 |   |   |   | - |   |   |   | - |   |   |   |   |   |
| Redemption      of redeemable common stock                                                                  |   |   | (1,069,397 | ) |   |   | (21,162 | ) |   |   | - |   |   |   | - |   |   |   |   |   |
| Accretion      of redeemable common stock                                                                   |   |   | - |   |   |   | (12,754 | )  |   |   | 12,754 |   |   |   | - |   |   |   |   |   |
| Balance,      January 2, 2010                                                                     |   |   | 10,097,099 |   |   | $ | 122,087 |   |   | $ | (121,764 | ) |   | $ | (99,717 | )  |   |   |   |   |

----

----

----

----

----

----

|                                                              |   | 2009   |    |   | 2008   |   |
|-------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
| Changes      in retiree plans and disposal of Bemrose pensionplan |   | $      | (99,963 | )      |   | $      | (94,864 | ) |
|                                                              |   |   |    |   |   |   |   |   |
| Realized      and unrealized gains (losses) on derivatives        |   |   | 246     |   |   |   | (305 | )  |
|                                                              |   | $      | (99,717 | )      |   | $      | (95,169 | ) |

----

----

| Consolidated      Statement of Operations                         |   |  As      Corrected in |    |   |  As      Reported in |   |    |             |   |
|-------------------------------------------------------------------|--------|----------------------------|---------|--------|---------------------------|--------|---------|------------------|--------|
| For      the Year Ended January 3, 2009                           |   |  2009      Form 10-K  |    |   |  2008      Form 10-K |   |    |  Difference |   |
| Other      (income) loss                                          |   | $                          | 1,538   |   |                      | $      | -       |             |   | $ | 1,538 |   |
| Income      (loss) from continuing operatings before income taxes |   |                       | (50,501 | )      |                      |   | (48,963 | )                |   |   | (1,538 | ) |
| Income      (loss) from continuing operations                     |   |                       | (50,233 | )      |                      |   | (48,695 | )                |   |   | (1,538 | ) |
| Loss      from discontinued operations, net of income taxes       |   |                       | (47,149 | )      |                      |   | (48,687 | )                |   |   | 1,538 |   |

|                                   |   | For      the Year EndedJanuary 3,      2009 |    |   | For      the Year EndedDecember 29,      2007 |   |
|----------------------------------------|--------|--------------------------------------------------|---------|--------|----------------------------------------------------|--------|
| Net      sales                         |   | $                                                | 55,675  |   |                                               | $      | 113,343 |   |
|                                   |   |                                             |    |   |                                               |   |   |   |
| Operating      Loss                    |   | $                                                | (3,404  | )      |                                               | $      | (1,503 | ) |
| Impairment      charge                 |   |                                             | (43,745 | )      |                                               |   | (8,039 | ) |
| Loss      before income taxes          |   |                                             | (47,149 | )      |                                               |   | (9,542 | ) |
| Provision      for income taxes        |   |                                             | -       |   |                                               |   | 959 |   |
| Loss      from discontinued operations |   | $                                                | (47,149 | )      |                                               | $      | (10,501 | ) |

----

----

|                                          |   | 2009   |    |   | 2008   |   |
|-----------------------------------------------|--------|--------|---------|--------|--------|--------|
|                                          |   |   |    |   |   |   |
| Beginning      of year balance                |   |   |    |   |   |   |
| Goodwill                                      |   | $      | 50,246  |   |   | $      | 50,246 |   |
| Accumulated      impairment losses            |   |   | (39,645 | )      |   |   | - |   |
|                                          |   |   | 10,601  |   |   |   | 50,246 |   |
| Impairment      losses                        |   |   | (6,341  | )      |   |   | (39,645 | ) |
| Goodwill      related to assets held for sale |   |   | (1,350  | )      |   |   | (1,350 | ) |
| End      of year balance                      |   |   |    |   |   |   |   |   |
| Goodwill                                      |   |   | 48,896  |   |   |   | 48,896 |   |
| Accumulated      impairment losses            |   |   | (45,986 | )      |   |   | (39,645 | ) |
|                                          |   | $      | 2,910   |   |   | $      | 9,251 |   |

|                                                                             |   | As      of January 2, 2010 |    |   | As      of January 3, 2009 |   |
|----------------------------------------------------------------------------------|--------|---------------------------------|---------|--------|---------------------------------|--------|
|                                                                             |   | Gross      Carrying Amount      |    |   | Accumulated      Amortization   |   |   | Gross      Carrying Amount |   |   | Accumulated      Amortization |   |
| Amortizable      intangible assets:                                              |   |                            |    |   |                            |   |   |   |   |   |   |   |
|      Trademarks                                         |   | $                               | 47,835  |   |                            | $      | 20,847 |   |   | $ | 47,835 |   |   | $ | 18,590 |   |
|      Patents                                            |   |                            | 15,013  |   |                            |   | 15,005 |   |   |   | 30,778 |   |   |   | 30,570 |   |
|      Customer      relationships                        |   |                            | 25,064  |   |                            |   | 7,200 |   |   |   | 25,064 |   |   |   | 5,983 |   |
|      Non-compete      agreements                        |   |                            | 691     |   |                            |   | 686 |   |   |   | 691 |   |   |   | 686 |   |
|             Subtotal |   |                            | 88,603  |   |                            | $      | 43,738 |   |   |   | 104,368 |   |   | $ | 55,829 |   |
| Unamortizable      intangible assets:                                            |   |                            |    |   |                            |   |   |   |   |   |   |   |   |   |   |   |
|      Trademarks                                         |   |                            | 22,865  |   |                            |   |   |   |   |   | 22,865 |   |   |   |   |   |
|             Total    |   | $                               | 111,468 |   |                            |   |   |   |   | $ | 127,233 |   |   |   |   |   |

----

|                                    |   | January 3,      2009 |   |   | 2009      Additions |   |   | 2009        |   |   | January 2,      2010 |
|-----------------------------------------|--------|---------------------------|--------|--------|---------------------|--------|--------|-------------|--------|--------|---------------------------|
|                                    |   | Reserve                   |   |   | to      Reserve     |   |   | Utilization |   |   | Reserve                   |
| U.S.      employee termination benefits |   | $                         | 2,138  |   |                | $      | -      |        |   | $      | (2,138)                   |   |   | $ | - |

|                                    |   | 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 |

----

|                                             |   | 2009   |    |   | 2008   |   |
|--------------------------------------------------|--------|--------|---------|--------|--------|--------|
|                                             |   |   |    |   |   |   |
| Finished      goods                              |   | $      | 68,534  |   |   | $      | 70,448 |   |
| Raw      materials, work in process and supplies |   |   | 65,259  |   |   |   | 69,255 |   |
|                                             |   |   | 133,793 |   |   |   | 139,703 |   |
| Inventory      reserve                           |   |   | (4,370  | )      |   |   | (4,330 | ) |
|                                             |   |   | 129,423 |   |   |   | 135,373 |   |
| LIFO      reserve                                |   |   | (8,481  | )      |   |   | (10,517 | ) |
|                                             |   | $      | 120,942 |   |   | $      | 124,856 |   |

|                                       |   | 2009   |     |   | 2008   |   |
|--------------------------------------------|--------|--------|----------|--------|--------|--------|
| Land      and improvements                 |   | $      | 9,753    |   |   | $      | 9,880 |   |
| Buildings      and improvements            |   |   | 137,602  |   |   |   | 132,110 |   |
| Machinery      and equipment               |   |   | 660,691  |   |   |   | 646,294 |   |
| Software                                   |   |   | 33,414   |   |   |   | 32,112 |   |
| Capital      lease                         |   |   | 4,764    |   |   |   | 4,764 |   |
| Construction      in progress              |   |   | 7,905    |   |   |   | 8,216 |   |
|                                       |   |   | 854,129  |   |   |   | 833,376 |   |
| Accumulated      depreciation/amortization |   |   | (448,531 | )      |   |   | (394,075 | ) |
|                                       |   | $      | 405,598  |   |   | $      | 439,301 |   |

----

|                                          |   | 2009   |   |   | 2008   |   |
|-----------------------------------------------|--------|--------|--------|--------|--------|--------|
| Environmental      indemnification receivable |   | $      | 47,100 |   |   | $      | 37,700 |   |
| Alternative      fuels tax credit receivable  |   |   | 925    |   |   |   | - |   |
| Note      receivable from Bemrose             |   |   | -      |   |   |   | 1,449 |   |
| Other                                         |   |   | 7,734  |   |   |   | 6,771 |   |
|                                          |   | $      | 55,759 |   |   | $      | 45,920 |   |

|                              |   | 2009   |   |   | 2008   |   |
|-----------------------------------|--------|--------|--------|--------|--------|--------|
| Deferred      debt issuance costs |   | $      | 12,786 |   |   | $      | 10,968 |   |
| Other                             |   |   | 3,108  |   |   |   | 2,941 |   |
|                              |   | $      | 15,894 |   |   | $      | 13,909 |   |

|                                            |   |   | 2009   |   |   | 2008   |
|-------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Compensation                                    |   | $      | 10,288 |   | $      | 4,776  |
| Trade      discounts                            |   |   | 16,472 |   |   | 18,537 |
| Workers’      compensation                |   |   | 4,460  |   |   | 4,489  |
| Accrued      insurance                          |   |   | 1,864  |   |   | 1,744  |
| Other      accrued taxes                        |   |   | 1,535  |   |   | 1,787  |
| Postretirement      benefits other than pension |   |   | 3,609  |   |   | 3,329  |
| Fox      River Liabilities                      |   |   | 47,100 |   |   | 37,700 |
| Restructuring      reserve                      |   |   | -      |   |   | 2,138  |
| Other                                           |   |   | 6,925  |   |   | 9,002  |
|                                            |   | $      | 92,253 |   | $      | 83,502 |

----

|                                                                                                                                                                                                                                                                          |   |    | January      2, 2010 |    |    | January      3, 2009 |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------|----------------------|---------|---------|----------------------|
| At      January 2, 2010 the senior secured variable rate notes payable were      at 6.625%, $542 due quarterly with $204,184 due June 2013. At      January 3, 2009 the notes were at approximately 4.5%, $563 due      quarterly with $209,812 due June 2014. |   | $       | 211,225              |    | $       | 221,625         |
| Secured      term note payable at 14.25%, approximately $200 due monthly with $6,831      due December 2013. At January 3, 2009 the note was at 12.5%,      approximately $200 due monthly with $6,943 due December      2013.                                           |   |    | 19,695               |    |    | 21,814          |
| At      January 2, 2010 the revolving credit facility was at approximately      6.7%. At January 3, 2009 the revolving credit facility was at      approximately 4.0%.                                                                                              |   |    | 88,225               |    |    | 83,734          |
| Unsecured      variable rate industrial development bonds, 0.6% average      interest rate at January 2, 2010, $2,650 due in 2013 and $6,000      due in 2027                                                                                                       |   |    | 8,650                |    |    | 8,650           |
| State      of Ohio assistance loan at 6%, approximately $100 due monthly      and final payment due May 2017                                                                                                                                                             |   |    | 7,965                |    |    | 8,780           |
| State      of Ohio loan at 1% until July 2011, then 3% until May 2019,      approximately $30 due monthly and final payment due May      2019                                                                                                                  |   |    | 2,856                |    |    | -               |
| Senior      notes payable at 8.125%, due June 2011                                                                                                                                                                                                                       |   |    | 17,491               |    |    | 109,450         |
| Senior      subordinated notes payable at 9.75%, due      June 2014                                                                                                                                                                                                      |   |    | 32,195               |    |    | 150,000         |
| Second      lien notes payable at 11.25%, due      December 2015                                                                                                                                                                                                         |   |    | 161,766              |    |    | -               |
|                                                                                                                                                                                                                                                                          |   |    | 550,068              |    |    | 604,053         |
| Less      obligations due within one year                                                                                                                                                                                                                                     |   |    |  (5,955         | )  |    |  (5,455)        |
|                                                                                                                                                                                                                                                                          |   |  $ |  544,113        |    |  $ |  598,598        |

----

----

----

|   | • | 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 was June 5, 2012, and      the maturity date for the senior secured variable rate notes payable was      June 5, 2013; |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Appleton      was permitted up to $35 million of capital expenditures in 2009 and up to      $40 million of capital expenditures in 2010, with no limit in 2011or      thereafter; |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

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

|   | • | Financial      covenants were 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. |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Consolidated      Statement of Cash Flows                            |   | As      Corrected in |    |   | As      Reported in |   |    |       |   |
|----------------------------------------------------------------------|--------|----------------------|---------|--------|---------------------|--------|---------|------------|--------|
| For      the Year Ended January 3, 2009                              |   | 2009      Form 10-K  |    |   | 2008      Form 10-K |   |    | Difference |   |
| Cash      flows from operating activities:                           |   |                 |    |   |                |   |    |       |   |
| (Gain)      loss on debt extinguishment/Debt extinguishment expenses |   | $                    | (11,598 | )      |                | $      | 1,012   |       |   | $ | (12,610 | ) |
| Net      cash provided by operating activities                       |   |                 | 1,764   |   |                |   | 14,374  |       |   |   | (12,610 | ) |
|                                                                 |   |                 |    |   |                |   |    |       |   |   |   |   |
| Cash      flows from financing activities:                           |   |                 |    |   |                |   |    |       |   |   |   |   |
| Payments      of senior notes payable                                |   |                 | (27,990 | )      |                |   | (40,600 | )          |   |   | 12,610 |   |
| Net      cash provided by financing activities                       |   |                 | 57,635  |   |                |   | 45,025  |       |   |   | 12,610 |   |

----

|       |   |                                     |    |   | Unaudited      Proforma     |   |
|------------|--------|------------------------------------------|---------|--------|----------------------------------|--------|
|       |   | Obligations                              |    |   | As      if 2010 Refinancing was  |   |
|       |   | Outstanding      at January      2, 2010 |    |   | in      Place at January 2, 2010 |   |
|       |   |                                     |    |   |                             |   |
| 2010       |   | $                                        | 5,955   |   |                             | $      | 3,789 |   |
| 2011       |   |                                     | 23,902  |   |                             |   | 21,735 |   |
| 2012       |   |                                     | 95,152  |   |                             |   | 4,760 |   |
| 2013       |   |                                     | 219,211 |   |                             |   | 14,485 |   |
| 2014       |   |                                     | 33,594  |   |                             |   | 33,594 |   |
| Thereafter |   |                                     | 172,254 |   |                             |   | 486,681 |   |
|       |   | $                                        | 550,068 |   |                             | $      | 565,044 |   |

|                               |   | 2009   |   | 2008   |   |
|------------------------------------|--------|--------|--------|--------|--------|
| Building                           |   | $      | 4,764  |   | $      | 4,764 |   |
| Less      accumulated depreciation |   |   | (4,240 | )      |   | (3,715 | ) |
|                               |   | $      | 524    |   | $      | 1,049 |   |

----

|                                                                  |   | Capital |   |   | Operating |   |
|-----------------------------------------------------------------------|--------|---------|--------|--------|-----------|--------|
|                                                                  |   | Lease   |   |   | Leases    |   |
| 2010                                                                  |   | $       | 718    |   |      | $      | 5,688 |   |
| 2011                                                                  |   |    | 47     |   |      |   | 3,387 |   |
| 2012                                                                  |   |    | 47     |   |      |   | 3,332 |   |
| 2013                                                                  |   |    | 47     |   |      |   | 1,633 |   |
| 2014                                                                  |   |    | -      |   |      |   | 727 |   |
| Thereafter                                                            |   |    | -      |   |      |   | 1,396 |   |
|                                                                  |   |    |   |   |      |   |   |   |
| Total      minimum lease payments                                     |   |    | 859    |   |      | $      | 16,163 |   |
|                                                                  |   |    |   |   |      |   |   |   |
| Less      amounts representing interest                               |   |    | (47    | )      |      |   |   |   |
| Present      value of minimum lease payments      under capital lease |   |    | 812    |   |      |   |   |   |
| Less      current principal portion                                   |   |    | (685   | )      |      |   |   |   |
|                                                                  |   | $       | 127    |   |      |   |   |   |

----

| Designated      as a Hedge                 |   | Balance      Sheet Location      |   | January      2, 2010 |   |   | January      3, 2009 |   |
|--------------------------------------------|--------|----------------------------------|--------|----------------------|--------|--------|----------------------|--------|
| Foreign      currency exchange derivatives |   | Accounts      receivable         |   | $                    | 308    |   |                 | $      | - |   |
| Foreign      currency exchange derivatives |   | Other      current liabilities   |   |                 | (35    | )      |                 |   | (361 | ) |
|                                       |   |                             |   |                 |   |   |                 |   |   |   |
| Not      Designated as a Hedge             |   |                             |   |                 |   |   |                 |   |   |   |
| Interest      rate swap contract           |   | Other      long-term liabilities |   |                 | (3,813 | )      |                 |   | (4,751 | ) |

| Designated      as a Hedge                 |   | Statement      of Operations Location |   | January      2, 2010 |   |   |
|--------------------------------------------|--------|---------------------------------------|--------|----------------------|--------|--------|
| Foreign      currency exchange derivatives |   | Net      sales                        |   | $                    | 82     |   | Gain |
|                                       |   |                                  |   |                 |   |   |   |
|                                       |   |                                  |   |                 | 246    |   | Gain      recognized in AOCI |
|                                       |   |                                  |   |                 |   |   |   |
| Not      Designated as a Hedge             |   |                                  |   |                 |   |   |   |
| Interest      rate swap contract           |   | Interest      expense                 |   |                 | 938    |   | Gain |

----

|                                   |   | January      2, 2010 |    |   | January      3, 2009 |    |
|----------------------------------------|--------|----------------------|---------|--------|----------------------|---------|
|                                   |   | Carrying             |    |   | Fair                 |    |   | Carrying |   |   | Fair |   |
| Financial      Instruments             |   | Amount               |    |   | Value                |    |   | Amount |   |   | Value |   |
| Senior      subordinated notes payable |   | $                    | 32,195  |   |                 |  $ | 19,317 |   |   | $ | 150,000 |   |   | $ | 80,250 |   |
| Senior      notes payable              |   |                 | 17,491  |   |                 |    | 17,491 |   |   |   | 109,450 |   |   |   | 75,521 |   |
| Second      lien notes payable         |   |                 | 161,766 |   |                 |    | 161,766 |   |   |   | - |   |   |   | - |   |
| Senior      credit facility            |   |                 | 211,225 |   |                 |    | 211,225 |   |   |   | 221,625 |   |   |   | 162,894 |   |
| Senior      secured debt               |   |                 | 19,695  |   |                 |    | 19,695 |   |   |   | 21,814 |   |   |   | 21,814 |   |
| Revolving      credit facility         |   |                 | 88,225  |   |                 |    | 88,225 |   |   |   | 83,734 |   |   |   | 83,734 |   |
| State      of Ohio loans               |   |                 | 10,821  |   |                 |    | 10,941 |   |   |   | 8,780 |   |   |   | 7,978 |   |
| Industrial      development bonds      |   |                 | 8,650   |   |                 |    | 8,650 |   |   |   | 8,650 |   |   |   | 8,650 |   |
|                                   |   | $                    | 550,068 |   |                 | $       | 537,310 |   |   | $ | 604,053 |   |   | $ | 440,841 |   |
|                                   |   |                 |    |   |                 |    |   |   |   |   |   |   |   |   |   |   |
| Interest      rate swap derivative     |   | $                    | 3,813   |   |                 | $       | 3,813 |   |   | $ | 4,751 |   |   | $ | 4,751 |   |

----

| Pension      Benefits                                                           |   | 2009                                   |     |   | 2008   |   |
|---------------------------------------------------------------------------------|--------|----------------------------------------|----------|--------|--------|--------|
| Change      in benefit obligation                                               |   |                                   |     |   |   |   |
|   Benefit      obligation at beginning of period                      |   | $                                      | 303,301  |   |   | $      | 286,737 |   |
|   Effect      of eliminating early measurement date                   |   |                                   | -        |   |   |   | 769 |   |
|   Service      cost                                                   | 5,301  | 6,155                                  |
|   Interest      cost                                                  |   |                                   | 19,501   |   |   |   | 17,952 |   |
|   Plan      amendments                                                |   |                                   | -        |   |   |   | 2,819 |   |
|   Actuarial      loss                                                 |   |                                   | 17,107   |   |   |   | 5,115 |   |
|   Curtailment      gain                                               |   |                                   | -        |   |   |   | (823 | ) |
|   Benefits      and expenses paid                                     |   |                                   | (16,629  | )      |   |   | (15,423 | ) |
| Benefit      obligation at end of period                                        |   | $                                      | 328,581  |   |   | $      | 303,301 |   |
|                                                                            |   |                                   |     |   |   |   |   |   |
| Change      in plan assets                                                      |   |                                   |     |   |   |   |   |   |
|   Fair      value at beginning of period                              |   | $                                      | 193,545  |   |   | $      | 269,670 |   |
|   Effect      of eliminating early measurement date                   |   |                                   | -        |   |   |   | 489 |   |
|   Actual      return on plan assets                                   | 39,708 |      (71,487) |
|   Employer      contributions                                         |   |                                   | 10,348   |   |   |   | 10,296 |   |
|        Benefits and expenses paid                                          |   |                                   | (16,629  | )      |   |   | (15,423 | ) |
| Fair      value at end of period                                                |   | $                                      | 226,972  |   |   | $      | 193,545 |   |
|                                                                            |   |                                   |     |   |   |   |   |   |
| Funded      status of plans                                                     |   |                                   |     |   |   |   |   |   |
|   Funded      status at end of period                                 |   | $                                      | (101,609 | )      |   | $      | (109,756 | ) |
|                                                                            |   |                                   |     |   |   |   |   |   |
| Amounts      recognized in the consolidated balance sheet consist      of: |   |                                   |     |   |   |   |   |   |
|     Accrued      benefit liability-current                  |   | $                                      | (297     | )      |   | $      | (224 | ) |
|     Accrued      benefit liability-noncurrent               |   |                                   | (101,312 | )      |   |   | (109,532 | ) |
| Net      amount recognized                                                      |   | $                                      | (101,609 | )      |   | $      | (109,756 | ) |
|                                                                            |   |                                   |     |   |   |   |   |   |
| Key      assumptions at end of period (%)                                       |   |                                   |     |   |   |   |   |   |
|   Discount      rate                                                  |   |                                   | 6.00     |   |   |   | 6.50 |   |
|   Rate      of compensation increase                                  |   |                                   | 4.00     |   |   |   | 4.00 |   |

----

| Accumulated      other comprehensive loss |   | 2009   |           |    | 2008   |   |
|-------------------------------------------|--------|--------|----------------|---------|--------|--------|
| Net      actuarial loss                   |   | $      | (96,311        | )  |   | $      | (98,508 | )  |
| Prior      service cost                   |   |   | (3,983         | )  |   |   | (4,522 | )  |
| Total                                     |   | $      |  (100,294 | )       |   | $      |  (103,030 | )  |

| Actuarial      loss     |   | $      | 2,614 |   |
|-------------------------|--------|--------|-------|--------|
| Prior      service cost |   |   | 539   |   |
|                    |   | $      | 3,153 |   |

|                                            |   | For      the    |    |   | For      the    |   |    | For      the      |   |
|-------------------------------------------------|--------|-----------------|---------|--------|-----------------|--------|---------|-------------------|--------|
|                                            |   | Year      Ended |    |   | Year      Ended |   |    | Year      Ended   |   |
|                                            |   | January 2, |    |   | January 3, |   |    | December 29, |   |
| Pension      Benefits                           |   | 2010            |    |   | 2009            |   |    | 2007              |   |
| Net      periodic benefit cost                  |   |            |    |   |            |   |    |              |   |
|   Service      cost                   |   | $               | 5,301   |   |            | $      | 6,155   |              |   | $ | 7,640 |   |
|   Interest      cost                  |   |            | 19,501  |   |            |   | 17,952  |              |   |   | 16,926 |   |
|   Expected      return on plan assets |   |            | (20,798 | )      |            |   | (20,745 | )                 |   |   | (18,863 | ) |
|   Amortization      of                |   |            |    |   |            |   |    |              |   |   |   |   |
|     Prior      service cost |   |            | 539     |   |            |   | 192     |              |   |   | 226 |   |
|     Actuarial      loss     |   |            | 379     |   |            |   | -       |              |   |   | 1,886 |   |
|   Curtailment      charge             |   |            | -       |   |            |   | 41      |              |   |   | 363 |   |
| Net      periodic benefit cost                  |   | $               | 4,922   |   |            | $      | 3,595   |              |   | $ | 8,178 |   |
| Key      assumptions (%)                        |   |            |    |   |            |   |    |              |   |   |   |   |
|   Discount      rate                  |   |            | 6.50    |   |            |   | 6.25    |              |   |   | 5.75 |   |
|   Expected      return on plan assets |   |            | 8.25    |   |            |   | 8.25    |              |   |   | 8.25 |   |
|   Rate      of compensation increase  |   |            | 4.00    |   |            |   | 4.00    |              |   |   | 3.50 |   |

| 2010                |   | $      | 16,049  |   |
|---------------------|--------|--------|---------|--------|
| 2011                |   |   | 17,041  |   |
| 2012                |   |   | 18,022  |   |
| 2013                |   |   | 19,036  |   |
| 2014                |   |   | 20,115  |   |
| 2015      thru 2019 |   |   | 116,081 |   |
|                |   | $      | 206,344 |   |

----

|                                            |   | December 31,      2009 |   |   | December 31,      2008 |   |
|-------------------------------------------------|--------|-----------------------------|--------|--------|-----------------------------|--------|
| U.S.      Equity                                |   |                        | 43     | %      |                        |   | 45 | % |
| International      Equity                       |   |                        | 12     |   |                        |   | 3 |   |
| Private      Equity                             |   |                        | 3      |   |                        |   | 4 |   |
| Emerging      Market Equity                     |   |                        | 9      |   |                        |   | 4 |   |
| High      Yield                                 |   |                        | 2      |   |                        |   | 7 |   |
| Fixed      Income                               |   |                        | 25     |   |                        |   | 28 |   |
| Real      Estate                                |   |                        | 6      |   |                        |   | 9 |   |
|        Total |   |                        | 100    | %      |                        |   | 100 | % |

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

----

|                           |   |   | Fair      Value Measurements at January 2, 2010 |    |
|--------------------------------|--------|--------|-------------------------------------------------|---------|
|                           |   |   | Quoted      Prices                              |    |   | Significant |   |   | Significant |   |   |   |   |
|                           |   |   | in      Active                                  |    |   | Observable |   |   | Unobservable |   |   |   |   |
|                           |   |   | Markets                                         |    |   | Inputs |   |   | Inputs |   |   |   |   |
|                           |   |   | (Level      1)                                  |    |   | (Level      2) |   |   | (Level      3) |   |   | Total |   |
| Asset      Category            |   |   |                                            |    |   |   |   |   |   |   |   |   |   |
| Cash      and cash equivalents |   |   | $                                               | 219     |   |   |   |   |   |   |   |   | $ | 219 |   |
|                           |   |   |                                            |    |   |   |   |   |   |   |   |   |   |   |   |
| Public      equity             |   |   |                                            |    |   |   |   |   |   |   |   |   |   |   |   |
| U.S.                           | (a)    |   |                                            | 97,815  |   |   |   |   |   |   |   |   |   | 97,815 |   |
| International                  | (a)    |   |                                            | 27,950  |   |   |   |   |   |   |   |   |   | 27,950 |   |
| Emerging      markets          | (b)    |   |                                            | 20,289  |   |   |   |   |   |   |   |   |   | 20,289 |   |
|                           |   |   |                                            |    |   |   |   |   |   |   |   |   |   |   |   |
| Private      equity            | (c)    |   |                                            |    |   |   |   |   |   |   | 6,254 |   |   |   | 6,254 |   |
|                           |   |   |                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Fixed      income              |   |   |                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Government                     | (d)    |   |                                            | 12,911  |   |   |   |   |   |   |   |   |   |   | 12,911 |   |
| Corporate      bonds           | (d)    |   |                                            | 32,653  |   |   |   |   |   |   |   |   |   |   | 32,653 |   |
| High      yield                | (e)    |   |                                            |    |   |   |   | 4,669 |   |   |   |   |   |   |   | 4,669 |   |
| Other                          | (d)    |   |                                            | 11,289  |   |   |   |   |   |   |   |   |   |   |   | 11,289 |   |
|                           |   |   |                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Real      estate               | (f)    |   |                                            |    |   |   |   |   |   |   |   | 12,923 |   |   |   | 12,923 |   |
|                           |   |   | $                                               | 203,126 |   |   | $ | 4,669 |   |   | $ | 19,177 |   |   | $ | 226,972 |   |

----

|                                          |   | 2009      Changes in Fair Value Using          |   |
|-----------------------------------------------|--------|------------------------------------------------|--------|
|                                          |   | Significant      Unobservable Inputs (Level 3) |   |
|                                          |   | Private                                        |   |   | Real |   |   |   |   |
|                                          |   | Equities                                       |   |   | Estate |   |   | Total |   |
| Balance      at beginning of period           |   | $                                              | 7,923  |   |   | $ | 16,862 |   |   | $ | 24,785 |   |
| Realized      losses                          |   |                                           | (52    | ) |   |   | (127 | ) |   |   | (179 | ) |
| Unrealized      losses                        |   |                                           | (1,456 | ) |   |   | (5,159 | ) |   |   | (6,615 | ) |
| (Return      of capital)/capital contribution |   |                                           | (136   | ) |   |   | 618 |   |   |   | 482 |   |
| (Losses)/income                               |   |                                           | (25    | ) |   |   | 729 |   |   |   | 704 |   |
| Balance      at end of period                 |   | $                                              | 6,254  |   |   | $ | 12,923 |   |   | $ | 19,177 |   |

----

| Other      Postretirement Benefits                                       |   | 2009   |    |   | 2008   |   |
|--------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
| Change      in benefit obligation                                        |   |   |    |   |   |   |
|   Benefit      obligation at beginning of period               |   | $      | 48,693  |   |   | $      | 50,719 |   |
|   Effect      of eliminating early measurement date            |   |   | -       |   |   |   | 72 |   |
|   Service      cost                                            | 664    | 931    |
|   Interest      cost                                           |   |   | 2,990   |   |   |   | 3,079 |   |
|   Plan      amendments                                         |   |   | 231     |   |   |   |     (206) | )  |
|   Actuarial      loss (gain)                                   | 5,425  |   | (2,820  |
|   Benefits      and expenses paid                              |   |   | (3,785  | )      |   |   | (3,082 | ) |
| Benefit      obligation at end of period                                 |   | $      | 54,218  |   |   | $      | 48,693 |   |
|                                                                     |   |   |    |   |   |   |   |   |
| Funded      status of plans                                              |   |   |    |   |   |   |   |   |
|   Funded      status at end of period                          |   | $      | (54,218 | )      |   | $      | (48,693 | ) |
| Accrued      benefit cost                                                |   | $      | (54,218 | )      |   | $      | (48,693 | ) |
|                                                                     |   |   |    |   |   |   |   |   |
| Amounts      recognized in the consolidated balance sheet consist    of: |   |   |    |   |   |   |   |   |
|   Accrued      benefit liability-current                       |   | $      | (3,609  | )      |   | $      | (3,329 | ) |
|   Accrued      benefit liability-noncurrent                    |   |   | (50,609 | )      |   |   | (45,364 | ) |
| Net      amount recognized                                               |   | $      | (54,218 | )      |   | $      | (48,693 | ) |
|                                                                     |   |   |    |   |   |   |   |   |
| Key      assumptions at end of period                                    |   |   |    |   |   |   |   |   |
|   Discount      rate                                           |   |   | 5.70    | %      |   |   | 6.40 | % |
|   Valuation      year medical trend                            |   |   | 8.50    | %      |   |   | 9.00 | % |
|   Ultimate      medical trend                                  |   |   | 5.00    | %      |   |   | 5.00 | % |
|   Year      ultimate medical trend reached                     |   | 2016   |    |   | 2016   |   |

----

| Accumulated      other comprehensive loss |   | 2009   |      |    | 2008   |   |
|-------------------------------------------|--------|--------|-----------|---------|--------|--------|
| Net      actuarial loss                   |   | $      | (7,740    | )  |   | $      | (2,316 | )  |
| Prior      service cost                   |   |   | 8,071     |    |   |   | 10,482 |   |
| Total                                     |   | $      |  331 |    |   | $      |  8,166 |   |

| Amortization      of:     |   |   |   |
|---------------------------|--------|--------|--------|
| Prior      service credit |   | $      | 1,960  |   |

| Other      Postretirement Benefits                  |   | For      theYear      EndedJanuary 2, 2010 |   |   | For      theYear      EndedJanuary 3, 2009 |   |   | For      theYear      EndedDecember 29, 2007 |   |
|-----------------------------------------------------|--------|------------------------------------------------------|--------|--------|------------------------------------------------------|--------|--------|--------------------------------------------------------|--------|
| Net      periodic benefit cost                      |   |                                                 |   |   |                                                 |   |   |                                                   |   |
|   Service      cost                       |   | $                                                    | 664    |   |                                                 | $      | 931    |                                                   |   | $ | 834 |   |
|   Interest      cost                      |   |                                                 | 2,990  |   |                                                 |   | 3,079  |                                                   |   |   | 2,590 |   |
|   Amortization      of prior service cost |   |                                                 | (2,180 | )      |                                                 |   | (2,156 | )                                                      |   |   | (2,156 | ) |
|   Amortization      of net actuarial loss |   |                                                 | -      |   |                                                 |   | 3      |                                                   |   |   | - |   |
|                                                |   |                                                 |   |   |                                                 |   |   |                                                   |   |   |   |   |
| Net      periodic benefit cost                      |   | $                                                    | 1,474  |   |                                                 | $      | 1,857  |                                                   |   | $ | 1,268 |   |

----

|                                                 |   | For      theYear      EndedJanuary 2, 2010 |   |   | For      theYear      EndedJanuary 3, 2009 |   |   | For      theYear      EndedDecember 29, 2007 |   |
|------------------------------------------------------|--------|------------------------------------------------------|--------|--------|------------------------------------------------------|--------|--------|--------------------------------------------------------|--------|
|                                                 |   |                                                 |   |   |                                                 |   |   |                                                   |   |
|   Discount      rate                       |   |                                                 | 6.40   | %      |                                                 |   | 6.10   | %                                                      |   |   | 5.75 | % |
|   Valuation      year medical trend        |   |                                                 | 9.00   | %      |                                                 |   | 10.00  | %                                                      |   |   | 11.00 | % |
|   Ultimate      medical trend              |   |                                                 | 5.00   | %      |                                                 |   | 5.00   | %                                                      |   |   | 5.00 | % |
|   Year      ultimate medical trend reached |   | 2017                                                 |   |   | 2013                                                 |   |   | 2013                                                   |   |

|                                               |   | 1%      Increase |   |   | 1%      Decrease |   |
|----------------------------------------------------|--------|------------------|--------|--------|------------------|--------|
| Aggregate      impact on service and interest cost |   | $                | 80     |   |             | $      | (78 | ) |
| Effect      on accumulated plan benefit obligation |   |             | 1,446  |   |             |   | (1,328 | ) |

| 2010                |   | $      | 3,609  |   |
|---------------------|--------|--------|--------|--------|
| 2011                |   |   | 3,861  |   |
| 2012                |   |   | 4,022  |   |
| 2013                |   |   | 4,193  |   |
| 2014                |   |   | 4,328  |   |
| 2015      thru 2019 |   |   | 23,090 |   |
|                |   | $      | 43,103 |   |

----

|                                     |   | WeightedAverage      GrantUnit      Price |   |   | GrantUnits |   |      | WeightedAverageRemainingContractualLife      (Years) |   |   | AggregateIntrinsic      Value(dollars      inthousands) |   |
|------------------------------------------|--------|-------------------------------------------|--------|--------|------------|--------|-----------|------------------------------------------------------|--------|--------|---------------------------------------------------------|--------|
| 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 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,      January 3, 2009        |   | $                                         | 30.32  |   |       |   | 1,132,160 |                                                 |   |   |                                                    |   |   |   |   |   |
|   Granted                      |   |                                      | 21.35  |   |       |   | 477,000   |                                                 |   |   |                                                    |   |   |   |   |   |
|   Exercised                    |   |                                      | 10.00  |   |       |   | (7,220    | )                                                    |   |   |                                                    |   |   |   |   |   |
|   Forfeited      or expired    |   |                                      | 28.40  |   |       |   | (56,600   | )                                                    |   |   |                                                    |   |   |   |   |   |
| Outstanding,      January 2, 2010        |   | $                                         | 27.72  |   |       |   | 1,545,340 |                                                 |   |   | 7.3                                                     |   |   | $ | 25 |   |
| Exercisable,      January 2, 2010        |   | $                                         | 29.38  |   |       |   | 754,340   |                                                 |   |   | 6.0                                                     |   |   | $ | 25 |   |

----

----

|   | • | total      remediation costs of $690 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 |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|                                      |   | For      theYear      EndedJanuary 2, 2010 |   |   | For      theYear      EndedJanuary 3, 2009 |   |   | For      theYear      EndedDecember 29, 2007 |   |
|-------------------------------------------|--------|------------------------------------------------------|--------|--------|------------------------------------------------------|--------|--------|--------------------------------------------------------|--------|
| Cash      paid during the period for:     |   |                                                 |   |   |                                                 |   |   |                                                   |   |
| Interest                                  |   | $                                                    | 47,631 |   |                                                 | $      | 45,278 |                                                   |   | $ | 45,020 |   |
| Income      taxes                         |   |                                                 | 137    |   |                                                 |   | 287    |                                                   |   |   | 811 |   |
|                                      |   |                                                 |   |   |                                                 |   |   |                                                   |   |   |   |   |
| Cash      received during the period for: |   |                                                 |   |   |                                                 |   |   |                                                   |   |   |   |   |
| Income      tax refunds                   |   | $                                                    | 480    |   |                                                 | $      | 702    |                                                   |   | $ | 6,454 |   |

----

----

|                                          |   | For      the ThreeMonths      EndedApril      5, 2009 |    |   | For      the ThreeMonths      EndedJuly 5,      2009 |   |    | For      the ThreeMonths      EndedOctober 4,      2009 |   |   | For      the ThreeMonths      EndedJanuary 2,      2010 |   | For      the YearEndedJanuary 2,      2010 |
|-----------------------------------------------|--------|-------------------------------------------------------|---------|--------|-----------------------------------------------------------|--------|---------|--------------------------------------------------------------|--------|--------|--------------------------------------------------------------|--------|-------------------------------------------------|
| Net      sales                                |   | $                                                     | 212,550 |   |                                                      | $      | 213,411 |                                                         |   | $      | 222,347                                                      |   |                                            | $ | 213,832 |   | $ | 862,140 |
| Gross      profit                             |   |                                                  | 41,741  |   |                                                      |   | 50,220  |                                                         |   |   | 46,765                                                       |   |                                            |   | 39,153 |   |   | 177,879 |
| Operating      income (loss)                  |   |                                                  | 7,423   |   |                                                      |   | 18,290  |                                                         |   |   | 7,891                                                        |   |                                            |   | (1,629 | ) |   |  31,975 |
| Income      (loss) from continuing operations |   |                                                  | 1,163   |   |                                                      |   | 7,244   |                                                         |   |   | 31,443                                                       |   |                                            |   | (14,718 | ) |   |  25,132 |
| Net      income (loss)                        |   |                                                  | 1,163   |   |                                                      |   | 7,244   |                                                         |   |   | 31,443                                                       |   |                                            |   | (14,718 | ) |   |  25,132 |

----

|                                                                    |   | 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                                                          |   | $                                                           | 236,612 |   |                                                       | $      | 250,113 |                                                            |   | $      | 255,675                                                      |   |   | $                                               | 224,769 |   |   | $ | 967,169 |   |
| Gross      profit                                                       |   |                                                        | 54,922  |   |                                                       |   | 50,954  |                                                            |   |   | 44,502                                                       |   |   |                                            | 36,351  |   |   |   | 186,729 |   |
| Operating      income (loss)                                            |   |                                                        | 10,304  |   |                                                       |   | 10,438  |                                                            |   |   | (13,328)                                                     |   |   |                                            | (32,530 | )      |   |   | (25,116) |   |
| Income      (loss) from continuing operations                           |   |                                                        | 21,375  |   |                                                       |   | 274     |                                                            |   |   | (25,807)                                                     |   |   |                                            | (46,075 | )      |   |   | (50,233) |   |
| Income      (loss) from discontinued operations, net of income    taxes |   |                                                        | 25      |   |                                                       |   | (42,950 | )                                                               |   |   | (4,224)                                                      |   |   |                                            | --      |   |   |   | (47,149) |   |
| Net      income (loss)                                                  |   |                                                        | 21,400  |   |                                                       |   | (42,676 | )                                                               |   |   | (30,031)                                                     |   |   |                                            | (46,075 | )      |   |   | (97,382) |   |

----

----

|                                                              |   | For      the Year EndedJanuary 2, 2010 |     |   | For      the Year EndedJanuary 3, 2009 |   |     | For      the Year EndedDecember 29, 2007 |   |
|-------------------------------------------------------------------|--------|--------------------------------------------------|----------|--------|--------------------------------------------------|--------|----------|----------------------------------------------------|--------|
| Net      sales                                                    |   |                                             |     |   |                                             |   |     |                                               |   |
| Technical      Papers                                             |   |                                             |     |   |                                             |   |     |                                               |   |
| Coated      solutions                                             |   | $                                                | 444,185  |   |                                             | $      | 540,594  |                                               |   | $ | 573,843 |   |
| Thermal      papers                                               |   |                                             | 281,229  |   |                                             |   | 280,296  |                                               |   |   | 257,075 |   |
| Security      papers                                              |   |                                             | 36,941   |   |                                             |   | 34,025   |                                               |   |   | 32,335 |   |
|                                                              |   |                                             | 762,355  |   |                                             |   | 854,915  |                                               |   |   | 863,253 |   |
|                                                              |   |                                             |     |   |                                             |   |     |                                               |   |   |   |   |
| Performance      packaging                                        |   |                                             | 99,785   |   |                                             |   | 112,254  |                                               |   |   | 101,841 |   |
| Total                                                             |   | $                                                | 862,140  |   |                                             | $      | 967,169  |                                               |   | $ | 965,094 |   |
| Operating      income (loss)                                      |   |                                             |     |   |                                             |   |     |                                               |   |   |   |   |
| Technical      Papers                                             |   |                                             |     |   |                                             |   |     |                                               |   |   |   |   |
| Coated      solutions                                             |   | $                                                | 46,975   |   |                                             | $      | 30,905   |                                               |   | $ | 52,383 |   |
| Thermal      papers                                               |   |                                             | (10,541) |   |                                             |   | (11,924) |                                               |   |   | 7,176 |   |
| Security      papers                                              |   |                                             | 9,204    |   |                                             |   | 3,388    |                                               |   |   | 3,482 |   |
|                                                              |   |                                             | 45,638   |   |                                             |   | 22,369   |                                               |   |   | 63,041 |   |
|                                                              |   |                                             |     |   |                                             |   |     |                                               |   |   |   |   |
| Performance      packaging                                        |   |                                             | (1,965)  |   |                                             |   | (34,292) |                                               |   |   | 6,225 |   |
| Unallocated      corporate charges and business development costs |   |                                             | (11,698) |   |                                             |   | (13,193) |                                               |   |   | (18,484 | ) |
| Total                                                             |   | $                                                | 31,975   |   |                                             | $      | (25,116) |                                               |   | $ | 50,782 |   |
|                                                              |   |                                             |     |   |                                             |   |     |                                               |   |   |   |   |
| Depreciation      and amortization                                |   |                                             |     |   |                                             |   |     |                                               |   |   |   |   |
| Technical      Papers                                             |   |                                             |     |   |                                             |   |     |                                               |   |   |   |   |
| Coated      solutions                                             |   | $                                                | 33,142   |   |                                             | $      | 35,181   |                                               |   | $ | 40,330 |   |
| Thermal      papers                                               |   |                                             | 20,044   |   |                                             |   | 14,314   |                                               |   |   | 14,309 |   |
| Security      papers                                              |   |                                             | 2,761    |   |                                             |   | 3,045    |                                               |   |   | 2,804 |   |
|                                                              |   |                                             | 55,947   |   |                                             |   | 52,540   |                                               |   |   | 57,443 |   |
|                                                              |   |                                             |     |   |                                             |   |     |                                               |   |   |   |   |
| Performance      packaging                                        |   |                                             | 12,071   |   |                                             |   | 45,731   |                                               |   |   | 5,794 |   |
| Unallocated      corporate charges                                |   |                                             | 357      |   |                                             |   | 770      |                                               |   |   | 572 |   |
| Total                                                             |   | $                                                | 68,375   |   |                                             | $      | 99,041   |                                               |   | $ | 63,809 |   |

----

----

| PAPERWEIGHT      DEVELOPMENT CORP. AND SUBSIDIARIES                                                                                                    |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                   |   |
| NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)                                                                                          |   |
|                                                                                                                                                   |   |
| CONDENSED      CONSOLIDATING BALANCE SHEET                                                                                                             |   |
|                                                                                                                                                   |   |
| JANUARY      2, 2010                                                                                                                                   |   |
|                                                                                                                                                   |   |
| (dollars      in thousands)                                                                                                                            |   |
|                                                                                                                                                   |   |
|                                                                                                                                                   |   | ParentGuarantor |   |   | Issuer |   |   | SubsidiaryGuarantors |   |   | Non-Guarantor Subsidiary |   |   | Eliminations |   |   | Consolidated |   |
|                                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| ASSETS                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current      assets                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|         Cash and cash equivalents                                                                                                            |   | $ | - |   |   | $ | 9,161 |   |   | $ | 1 |   |   | $ | 801 |   |   | $ | - |   |   | $ | 9,963 |   |
|         Accounts receivable, net                                                                                                             |   |   | - |   |   |   | 76,248 |   |   |   | 9,099 |   |   |   | 5,237 |   |   |   | - |   |   |   | 90,584 |   |
|         Inventories                                                                                                                          |   |   | - |   |   |   | 110,174 |   |   |   | 8,596 |   |   |   | 2,172 |   |   |   | - |   |   |   | 120,942 |   |
|    Other      current assets                                                                                                            |   |   | 47,100 |   |   |   | 8,337 |   |   |   | 77 |   |   |   | 245 |   |   |   | - |   |   |   | 55,759 |   |
|       Total      current assets                                                                                          |   |   | 47,100 |   |   |   | 203,920 |   |   |   | 17,773 |   |   |   | 8,455 |   |   |   | - |   |   |   | 277,248 |   |
|                                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|         Property, plant and equipment, net                                                                                                   |   |   | - |   |   |   | 385,120 |   |   |   | 20,469 |   |   |   | 9 |   |   |   | - |   |   |   | 405,598 |   |
|         Investment in subsidiaries                                                                                                           |   |   | 179,787 |   |   |   | 96,505 |   |   |   | - |   |   |   | - |   |   |   | (276,292 | ) |   |   | - |   |
|    Other      assets                                                                                                                    |   |   | 28,612 |   |   |   | 66,611 |   |   |   | 19,863 |   |   |   | 48 |   |   |   | - |   |   |   | 115,134 |   |
|             Total assets                                                                                                 |   | $ | 255,499 |   |   | $ | 752,156 |   |   | $ | 58,105 |   |   | $ | 8,512 |   |   | $ | (276,292 | ) |   | $ | 797,980 |   |
|                                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LIABILITIES,      REDEEMABLE COMMON STOCK, ACCUMULATED DEFICIT AND ACCUMULATED OTHER      COMPREHENSIVE LOSS                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current      liabilities                                                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|         Current portion of long-term debt                                                                                                    |   | $ | - |   |   | $ | 5,955 |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | 5,955 |   |
|         Accounts payable                                                                                                                     |   |   | - |   |   |   | 58,075 |   |   |   | 1,841 |   |   |   | 104 |   |   |   | - |   |   |   | 60,020 |    |
|         Due to (from) parent and affiliated companies                                                                                        |   |   | 354,893 |   |   |   | (319,769 | ) |   |   | (29,028 | )  |   |   | (6,096 | ) |   |   | - |   |   |   | - |   |
|         Other accrued liabilities                                                                                                            |   |   | - |   |   |   | 94,306 |   |   |   | 1,097 |   |   |   | 2,068 |   |   |   | - |   |   |   | 97,471 |   |
|             Total current liabilities                                                                                    |   |   | 354,893 |   |   |   | (161,433 | ) |   |   | (26,090 | ) |   |   | (3,924 | ) |   |   | - |   |   |   | 163,446 |   |
|                                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Long-term      debt                                                                                                                                    |   |   | - |   |   |   | 544,113 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 544,113 |   |
| Other      long-term liabilities                                                                                                                       |   |   | - |   |   |   | 189,689 |   |   |   | - |   |   |   | 126 |   |   |   | - |   |   |   | 189,815 |   |
| Redeemable      common stock, accumulated deficit and accumulated other comprehensive      loss                                                        |   |   | (99,394 | ) |   |   | 179,787 |   |   |   | 84,195 |   |   |   | 12,310 |   |   |   | (276,292 | ) |   |   | (99,394 | ) |
|                                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       Total      liabilities, redeemable common stock, accumulated deficit and accumulated      other comprehensive loss |   | $ | 255,499 |   |   | $ | 752,156 |   |   | $ | 58,105 |   |   | $ | 8,512 |   |   | $ | (276,292 | ) |   | $ | 797,980 |   |

----

| 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 |   |   |   | 9,057 |   |   |   | 5,423 |   |   |   | - |   |   |   | 88,218 |   |
|         Inventories                                                                                                                                                                                                                                                                |   |   | - |   |   |   | 113,406 |   |   |   | 9,461 |   |   |   | 1,989 |   |   |   | - |   |   |   | 124,856 |   |
|    Other      current assets                                                                                                                                                                                                                                                  |   |   | 37,700 |   |   |   | 6,343 |   |   |   | 1,674 |   |   |   | 203 |   |   |   | - |   |   |   | 45,920 |   |
|    Assets      held for sale                                                                                                                                                                                                                                                  |   |   | - |   |   |   | - |   |   |   | 9,327 |   |   |   | - |   |   |   | - |   |   |   | 9,327 |   |
|       Total      current assets                                                                                                                                                                                                                                |   |   | 37,700 |   |   |   | 195,598 |   |   |   | 29,584 |   |   |   | 9,619 |   |   |   | - |   |   |   | 272,501 |   |
|                                                                                                                                                                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|         Property, plant and equipment, net                                                                                                                                                                                                                                         |   |   | - |   |   |   | 416,630 |   |   |   | 22,658 |   |   |   | 13 |   |   |   | - |   |   |   | 439,301 |   |
|         Investment in subsidiaries                                                                                                                                                                                                                                                 |   |   | 146,562 |   |   |   | 124,971 |   |   |   | - |   |   |   | - |   |   |   | (271,533 | ) |   |   | - |   |
|         Other assets                                                                                                                                                                                                                                                               |   |   | 114,312 |   |   |   | 66,964 |   |   |   | 27,547 |   |   |   | 41 |   |   |   | - |   |   |   | 208,864 |   |
|    Assets      held for sale                                                                                                                                                                                                                                                  |   |   | - |   |   |   | - |   |   |   | 9,255 |   |   |   | - |   |   |   | - |   |   |   | 9,255 |   |
|             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                                                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current      liabilities                                                                                                                                                                                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|         Current portion of long-term debt                                                                                                                                                                                                                                          |   | $ | - |   |   | $ | 5,455 |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | 5,455 |   |
|         Accounts payable                                                                                                                                                                                                                                                           |   |   | - |   |   |   | 60,573 |   |   |   | 395 |   |   |   | 125 |   |   |   | - |   |   |   | 61,093 |    |
|         Due to (from) parent and affiliated companies                                                                                                                                                                                                                              |   |   | 405,519 |   |   |   | (373,446 | ) |   |   | (28,861 | )  |   |   | (3,212 | ) |   |   | - |   |   |   | - |   |
|    Other      accrued liabilities                                                                                                                                                                                                                                             |   |   | - |   |   |   | 83,916 |   |   |   | 1,221 |   |   |   | 1,993 |   |   |   | - |   |   |   | 87,130 |   |
|    Liabilities      held for sale                                                                                                                                                                                                                                             |   |   | - |   |   |   | - |   |   |   | 2,085 |   |   |   | - |   |   |   | - |   |   |   | 2,085 |   |
|             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                                                                                                                                                                                              |   |   | (106,945 | ) |   |   | 146,562 |   |   |   | 114,204 |   |   |   | 10,767 |   |   |   | (271,533 | ) |   |   | (106,945 | ) |
|                                                                                                                                                                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       Total      liabilities, redeemable common stock, accumulated deficit and accumulated      other comprehensive loss                                                                                                                                       |   | $ | 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 STATEMENT OF OPERATIONS          |   |
| FOR      THE YEAR JANUARY 2, 2010                             |   |
| (dollars      in thousands)                                   |   |
|                                                          |   |
|                                                          |   |
|                                                          |   |
|                                                          |   | Parent |   |   |   |   |   | Subsidiary |   |   | Non-Guarantor |   |   |   |   |   |   |   |
|                                                          |   | Guarantor |   |   | Issuer |   |   | Guarantors |   |   | Subsidiary |   |   | Eliminations |   |   | Consolidated |   |
| Net      sales                                                |   | $ | - |   |   | $ | 760,327 |   |   | $ | 99,785 |   |   | $ | 45,240 |   |   | $ | (43,212 | ) |   | $ | 862,140 |   |
| Cost      of sales                                            |   |   | - |   |   |   | 601,070 |   |   |   | 82,938 |   |   |   | 43,701 |   |   |   | (43,448 | ) |   |   | 684,261 |   |
|                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross      profit                                             |   |   | - |   |   |   | 159,257 |   |   |   | 16,847 |   |   |   | 1,539 |   |   |   | 236 |   |   |   | 177,879 |   |
| Selling,      general and administrative expenses             |   |   | - |   |   |   | 114,538 |   |   |   | 23,445 |   |   |   | 1,580 |   |   |   | - |   |   |   | 139,563 |   |
| Goodwill      impairment                                      |   |   | - |   |   |   | - |   |   |   | 6,341 |   |   |   | - |   |   |   | - |   |   |   | 6,341 |   |
|                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating      income (loss)                                  |   |   | - |   |   |   | 44,719 |   |   |   | (12,939 | ) |   |   | (41 | ) |   |   | 236 |   |   |   | 31,975 |   |
| Interest      expense                                         |   |   | 12,628 |   |   |   | 51,291 |   |   |   | 65 |   |   |   | - |   |   |   | (12,693 | ) |   |   | 51,291 |   |
| Debt      extinguishment income, net                          |   |   | - |   |   |   | (42,602 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (42,602 | )  |
| Interest      income                                          |   |   | - |   |   |   | (13,028 | ) |   |   | (65 | ) |   |   | (2 | ) |   |   | 12,693 |   |   |   | (402 | ) |
| (Gain)      loss in equity investments                        |   |   | (37,760 | ) |   |   | 11,486 |   |   |   | - |   |   |   | - |   |   |   | 26,274 |   |   |   | - |   |
| Other      income                                             |   |   | - |   |   |   | (470 | ) |   |   | - |   |   |   | (1,633 | ) |   |   | 325 |   |   |   | (1,778 | ) |
|                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income      (loss) before income taxes                        |   |   | 25,132 |   |   |   | 38,042 |   |   |   | (12,939 | ) |   |   | 1,594 |   |   |   | (26,363 | ) |   |   | 25,466 |   |
| Provision      for income taxes                               |   |   | - |   |   |   | 282 |   |   |   | 1 |   |   |   | 51 |   |   |   | - |   |   |   | 334 |   |
|                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      income (loss)                                        |   | $ | 25,132 |   |   | $ | 37,760 |   |   | $ | (12,940 | ) |   | $ | 1,543 |   |   | $ | (26,363 | )  |   | $ | 25,132 |   |

----

| 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                                                          |   | $ | - |   |   | $ | 856,388 |   |   | $ | 112,246 |   |   | $ | 58,132 |   |   | $ | (59,597 | ) |   | $ | 967,169 |   |
| Cost      of sales                                                      |   |   | - |   |   |   | 690,282 |   |   |   | 92,852 |   |   |   | 56,900 |   |   |   | (59,594 | ) |   |   | 780,440 |   |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross      profit                                                       |   |   | - |   |   |   | 166,106 |   |   |   | 19,394 |   |   |   | 1,232 |   |   |   | (3 | ) |   |   | 186,729 |   |
| Selling,      general and administrative expenses                       |   |   | - |   |   |   | 153,049 |   |   |   | 14,513 |   |   |   | 2,060 |   |   |   | - |   |   |   | 169,622 |   |
| 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                                                |   |   | - |   |   |   | (18,594 | ) |   |   | - |   |   |   | 2,654 |   |   |   | (273 | ) |   |   | (16,213 | ) |
| Loss      from continuing operations                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       before      income taxes            |   |   | (97,382 | ) |   |   | (31,948 | ) |   |   | (34,764 | ) |   |   | (3,415 | ) |   |   | 117,008 |   |   |   | (50,501 | ) |
| (Benefit)      provision for income taxes                               |   |   | - |   |   |   | (48 | ) |   |   | 49 |   |   |   | (269 | ) |   |   | - |   |   |   | (268 | ) |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss      from continuing operations                                    |   |   | (97,382 | ) |   |   | (31,900 | ) |   |   | (34,813 | ) |   |   | (3,146 | ) |   |   | 117,008 |   |   |   | (50,233 | ) |
| (Loss)      income from discontinued operations, net of income    taxes |   |   | - |   |   |   | (53,331 | ) |   |   | 3,540 |   |   |   | - |   |   |   | 2,642 |   |   |   | (47,149 | ) |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 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                                                   |   | $ | - |   |   | $ | 862,528 |   |   | $ | 101,697 |   |   | $ | 62,867 |   |   | $ | (61,998 | ) |   | $ | 965,094 |   |
| Cost      of sales                                               |   |   | - |   |   |   | 655,074 |   |   |   | 81,174 |   |   |   | 59,452 |   |   |   | (61,962 | ) |   |   | 733,738 |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross      profit                                                |   |   | - |   |   |   | 207,454 |   |   |   | 20,523 |   |   |   | 3,415 |   |   |   | (36 | ) |   |   | 231,356 |   |
| Selling,      general and administrative expenses                |   |   | - |   |   |   | 161,893 |   |   |   | 14,430 |   |   |   | 2,393 |   |   |   | 413 |   |   |   | 179,129 |   |
| 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 operationsbefore 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 discosntinued operations, net of incometaxes      |   |   | - |   |   |   | - |   |   |   | (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 CASH FLOWS                                                           |   |
| FOR      THE YEAR ENDED JANUARY 2, 2010                                                                        |   |
| (dollars      in thousands)                                                                                    |   |
|                                                                                                           |   |
|                                                                                                           |   | Parent |   |   |   |   |   | Subsidiary |   |   | Non-Guarantor |   |   |   |   |   |   |   |
|                                                                                                           |   | Guarantor |   |   | Issuer |   |   | Guarantors |   |   | Subsidiary |   |   | Eliminations |   |   | Consolidated |   |
|                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash      flows from operating activities:                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      income (loss)                                                                                         |   | $ | 25,132 |   |   | $ | 37,760 |   |   | $ | (12,940 | ) |   | $ | 1,543 |   |   | $ | (26,363 | ) |   | $ | 25,132 |   |
| Adjustments      to reconcile net income (loss) to net cash provided (used) by      operating activities: |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation      and amortization                                                                             |   |   | - |   |   |   | 56,456 |   |   |   | 5,572 |   |   |   | 6 |   |   |   | - |   |   |   | 62,034 |   |
| Impairment      of continuing operations                                                                       |   |   | - |   |   |   | - |   |   |   | 6,341 |   |   |   | - |   |   |   | - |   |   |   | 6,341 |   |
| Other                                                                                                          |   |   | - |   |   |   | (34,919 | ) |   |   | - |   |   |   | (1,633 | ) |   |   | - |   |   |   | (36,552 | ) |
| Change      in assets and liabilities, net                                                                     |   |   | 42,521 |   |   |   | (69,211 | ) |   |   | 2,835 |   |   |   | 1,765 |   |   |   | 26,363 |   |   |   | 4,273 |   |
|                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      cash provided (used) by operating activities                                                          |   |   | 67,653 |   |   |   | (9,914 | ) |   |   | 1,808 |   |   |   | 1,681 |   |   |   | - |   |   |   | 61,228 |   |
| Cash      flows from investing activities:                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds      from sale of equipment                                                                           |   |   | - |   |   |   | 27 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 27 |   |
| Net      change in cash due to sale of C&H Packaging,Inc.                                                  |   |   | - |   |   |   | 16,875 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 16,875 |   |
| Additions      to property, plant and equipment                                                                |   |   | - |   |   |   | (22,851 | ) |   |   | (1,705 | ) |   |   | - |   |   |   | - |   |   |   | (24,556 | ) |
|                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      cash used by investing activities                                                                     |   |   | - |   |   |   | (5,949 | ) |   |   | (1,705 | ) |   |   | - |   |   |   | - |   |   |   | (7,654 | ) |
| Cash      flows from financing activities:                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Payments      of senior secured notes payable                                                                  |   |   | - |   |   |   | (10,400 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (10,400 | ) |
| Payments      of senior subordinated notes payable                                                             |   |   | - |   |   |   | (1,687 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (1,687 | ) |
| Debt      acquisition costs                                                                                    |   |   | - |   |   |   | (8,642 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (8,642 | ) |
| Payments      relating to capital lease obligation                                                             |   |   | - |   |   |   | (731 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (731 | ) |
| Proceeds      from revolving line of credit                                                                    |   |   | - |   |   |   | 254,201 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 254,201 |   |
| Payments      of revolving line of credit                                                                      |   |   | - |   |   |   | (249,710 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (249,710 | ) |
| Proceeds      from State of Ohio loan                                                                          |   |   | - |   |   |   | 3,000 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 3,000 |   |
| Payments      of State of Ohio loan                                                                            |   |   | - |   |   |   | (958 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (958 | ) |
| Payments      of secured financing                                                                             |   |   | - |   |   |   | (2,120 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (2,120 | ) |
| Due      to parent and affiliated companies, net                                                               |   |   | (50,626 | )  |   |   | 53,677 |   |   |   | (167 | ) |   |   | (2,884 | ) |   |   | - |   |   |   | - |   |
| Proceeds      from issuance of redeemable common stock                                                         |   |   | 4,135 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 4,135 |   |
| Payments      to redeem common stock                                                                           |   |   | (21,162 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (21,162 | ) |
| Decrease      in cash overdraft                                                                                |   |   | - |   |   |   | (13,717 | )  |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (13,717 | )  |
|                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      cash (used) provided by financing activities                                                          |   |   | (67,653 | ) |   |   | 22,913 |   |   |   | (167 | ) |   |   | (2,884 | ) |   |   | - |   |   |   | (47,791 | ) |
| Effect      of foreign exchange rate changes on cash and cash      equivalents                                 |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Change      in cash and cash equivalents                                                                       |   |   | - |   |   |   | 7,050 |   |   |   | (64 | ) |   |   | (1,203 | ) |   |   | - |   |   |   | 5,783 |   |
| Cash      and cash equivalents at beginning of period                                                          |   |   | - |   |   |   | 2,111 |   |   |   | 65 |   |   |   | 2,004 |   |   |   | - |   |   |   | 4,180 |   |
| Cash      and cash equivalents at end of period                                                                |   | $ | - |   |   | $ | 9,161 |   |   | $ | 1 |   |   | $ | 801 |   |   | $ | - |   |   | $ | 9,963 |   |

----

| 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                                                                                            |   |   | - |   |   |   | 9,417 |   |   |   | 266 |   |   |   | 2,654 |   |   |   | - |   |   |   | 12,337 |   |
| 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 |   |   |   | (77,524 | ) |   |   | 68,751 |   |   |   | (17 | ) |   |   | - |   |   |   | 1,764 |   |
| 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                                                            |   |   | - |   |   |   | (27,990 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (27,990 | ) |
| Debt      acquisition costs                                                                      |   |   | - |   |   |   | (279 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (279 | ) |
| Payments      relating to capital lease obligation                                               |   |   | - |   |   |   | (731 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (731 | ) |
| Proceeds      from revolving line of credit                                                      |   |   | - |   |   |   | 396,707 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 396,707 |   |
| Payments      of revolving line of credit                                                        |   |   | - |   |   |   | (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 | ) |   |   | 135,670 |   |   |   | (67,478 | ) |   |   | (3 | ) |   |   | - |   |   |   | 57,635 |   |
| 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                                                                                                     |   |   | - |   |   |   | 10,940 |   |   |   | 2,307 |   |   |   | (1,173 | ) |   |   | - |   |   |   | 12,074 |   |
| 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 | ) |   |   | 176,221 |   |   |   | 11,195 |   |   |   | 1,263 |   |   |   | - |   |   |   | 91,451 |   |
| 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                                                                     |   |   | - |   |   |   | (17,345 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (17,345 | ) |
| 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 lines of credit                                                              |   |   | - |   |   |   | 67,550 |   |   |   | 6,446 |   |   |   | - |   |   |   | - |   |   |   | 73,996 |   |
| Payments      of revolving lines of credit                                                                |   |   | - |   |   |   | (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 |   |   |   | (102,145 | ) |   |   | 1,584 |   |   |   | (1,122 | ) |   |   | - |   |   |   | (4,455 | ) |
| 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 |   |

----

| 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,      Executive Officers and CorporateGovernance |
|---------------|------------------------------------------------------------|

| Name                     | Age    | Position                                                                                                                                                       |
|--------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Mark      R. Richards    | 50     | Chairman,      President, Chief Executive Officer and a Director of Appleton, and      Chairman, President, Chief Executive Officer and a Director of      PDC |
|                     |   |                                                                                                                                                           |
| Stephen      P. Carter   | 58     | Director      of Appleton and PDC                                                                                                                              |
|                     |   |                                                                                                                                                           |
| Terry      M. Murphy     | 61     | Director      of Appleton and PDC                                                                                                                              |
|                     |   |                                                                                                                                                           |
| Ronald      A. Pace      | 62     | Director      of Appleton and PDC                                                                                                                              |
|                     |   |                                                                                                                                                           |
| Andrew      F. Reardon   | 64     | Director      of Appleton and PDC                                                                                                                              |
|                     |   |                                                                                                                                                           |
| Susan      Scherbel      | 51     | Director      of Appleton and PDC                                                                                                                              |
|                     |   |                                                                                                                                                           |
| Kathi      P. Seifert    | 60     | Director      of Appleton and PDC                                                                                                                              |
|                     |   |                                                                                                                                                           |
| Kerry      S. Arent      | 49     | Vice      President, Human Resources of Appleton                                                                                                               |
|                     |   |                                                                                                                                                           |
| M.      Kathleen Bolhous | 50     | Vice      President and General Manager, Performance Packaging of      Appleton                                                                                |
|                     |   |                                                                                                                                                           |
| Thomas      J. Ferree    | 52     | Senior      Vice President Finance, Chief Financial Officer and Treasurer of Appleton,      and Chief Financial Officer and Treasurer of PDC                   |
|                     |   |                                                                                                                                                           |
| Jeffrey      J. Fletcher | 57     | Controller      of Appleton, and Assistant Treasurer and Controller of  PDC                                                                                    |
|                     |   |                                                                                                                                                           |
| Sarah      T. Macdonald  | 45     | Vice      President, Carbonless Business Unit of Appleton                                                                                                      |
|                     |   |                                                                                                                                                           |
| James      C. Tyrone     | 55     | Senior      Vice President of Appleton                                                                                                                         |
|                     |   |                                                                                                                                                           |
| Kent      E. Willetts    | 52     | Vice      President, Strategic Development 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. |
|--------|---------|--------------------------------------------------------------------------------|

----

|  | • | enable      Appleton to attract, motivate and retain highly qualified      people; |
|--|---------|------------------------------------------------------------------------------------|

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

|  | • | support      Appleton’s strategic business goals;and |
|--|---------|------------------------------------------------------------|

|  | • | act      in the best interests of Appleton’s beneficial owners, the participants in      the ESOP. |
|--|---------|----------------------------------------------------------------------------------------------------------|

----

|                                                                                                                                                                                |   | Fixed      (Salary) |   |   | Pay      at Risk (Annual and Long-Term Incentives)(1) |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------|--------|--------|-------------------------------------------------------|--------|
| Mark      R. RichardsChairman,      President, Chief Executive Officer and a Director of Appleton, and      Chairman, President, Chief Executive Officer and a Director of      PDC |   |                | 28     | %      |                                                  |   | 72 | % |
| Thomas      J. FerreeSenior      Vice President Finance, Chief Financial Officer and Treasurer of Appleton,      and Chief Financial Officer and Treasurer of PDC                   |   |                | 39     | %      |                                                  |   | 61 | % |
| Sarah      T. MacdonaldVice      President, Carbonless Business Unit of Appleton                                                                                                    |   |                | 45     | %      |                                                  |   | 55 | % |
| Kent      E. WillettsVice      President, Strategic Development of Appleton                                                                                                         |   |                | 42     | %      |                                                  |   | 58 | % |
| Kerry      S. Arent(2)Vice      President, Human Resources of Appleton                                                                                                              |   |                | 57     | %      |                                                  |   | 43 | % |

| (1) | Calculated      using annual incentive paid at target and 1 year of long-term incentive      expected value based on a Black-Scholes valuation methodology. The      assumptions used for a January 1, 2009 valuation are: Expected life: 6.5      years (mid-point of 3 and 10 years vesting period); Dividend yield: 0%      (plan does not pay dividends); Risk Free rate: 1.9% (based on Treasury      Constant Maturities yield curve); Volatility 35% (based on peer group      volatility for previous 6.5 years). The LTIP grant as of January 1, 2009      is valued at $8.26 per share with a $21.43 per share grant      price. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Reflects      6 months as Executive Director and 6 months as Vice    President. |
|-----|---------------------------------------------------------------------------------|

----

|                  |  All      AppletonAdjusted      EBITDA |  TP      DivisionAdjusted      EBITDA |  All      Appleton & TP      Division CCD |
|-----------------------|---------------------------------------------|--------------------------------------------|----------------------------------------------------|
| Outstanding      Plus | $124.0                                      | $111.2                                     | 54      days                                       |
| Outstanding           |  $117.9                                |  $105.7                               |  57      days                                 |
| Target                | $114.0                                      | $102.6                                     | 62      days                                       |
| Threshold             | $106.3                                      | $97.3                                      | 66      days                                       |

----

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

----

----

----

| 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                                    |   | 2009   |   | 721,154            |   | 0              |   | 0                  |   | 326,400                                                  |   | 114,285                                                                                      |   | 111,287                          |   | 1,273,126   |
| Chairman,      President, Chief Executive                |   | 2008   |   | 764,423            |   | 0              |   | 2,625,300          |   | 96,905                                                   |   | 81,467                                                                                       |   | 50,345                           |   | 3,618,440   |
| Officer      and Director of Appleton, and PDC           |   | 2007   |   | 663,462            |   | 0              |   | 1,303,200          |   | 472,717                                                  |   | 134,632                                                                                      |   | 47,564                           |   | 2,621,575   |
| and      Chairman, President, Chief                      |   |   |   |               |   |           |   |               |   |                                                     |   |                                                                                         |   |                             |   |        |
| Executive      Officer and a Director of PDC             |   |   |   |               |   |           |   |               |   |                                                     |   |                                                                                         |   |                             |   |        |
|                                                     |   |   |   |               |   |           |   |               |   |                                                     |   |                                                                                         |   |                             |   |        |
| Thomas      J. Ferree                                    |   | 2009   |   | 355,769            |   | 21,880         | (7)    | 0                  |   | 109,402                                                  |   | 46,407                                                                                       |   | 34,201                           |   | 567,659     |
| Senior      Vice President Finance, Chief                |   | 2008   |   | 376,538            |   | 0              |   | 788,650            |   | 29,997                                                   |   | 41,120                                                                                       |   | 35,331                           |   | 1,271,636   |
| Financial      Officer and Treasurer of                  |   | 2007   |   | 329,231            |   | 0              |   | 362,000            |   | 156,385                                                  |   | 24,284                                                                                       |   | 49,663                           |   | 921,563     |
| Appleton,      and Chief Financial Officer and Treasurer |   |   |   |               |   |           |   |               |   |                                                     |   |                                                                                         |   |                             |   |        |
|                                                     |   |   |   |               |   |           |   |               |   |                                                     |   |                                                                                         |   |                             |   |        |
| Sarah      T. Macdonald                                  |   | 2009   |   | 284,135            |   | 0              |   | 0                  |   | 75,648                                                   |   | 8,971                                                                                        |   | 35,173                           |   | 403,927     |
| Vice      President, Carbonless Business                 |   | 2008   |   | 303,885            |   | 0              |   | 447,065            |   | 17,892                                                   |   | 4,512                                                                                        |   | 41,722                           |   | 815,076     |
| Unit      of Appleton                                    |   | 2007   |   | 279,231            |   | 36,858         | (8)    | 267,880            |   | 102,758                                                  |   | 30,000                                                                                       |   | 29,833                           |   | 746,560     |
|                                                     |   |   |   |               |   |           |   |               |   |                                                     |   |                                                                                         |   |                             |   |        |
| Kent      E. Willetts                                    |   | 2009   | (9)    | 253,846            |   | 13,926         | (7)    | 0                  |   | 69,632                                                   |   | 38,676                                                                                       |   | 34,317                           |   | 410,397     |
| Vice      President, Strategic Development of Appleton   |   |   |   |               |   |           |   |               |   |                                                     |   |                                                                                         |   |                             |   |        |
|                                                     |   |   |   |               |   |           |   |               |   |                                                     |   |                                                                                         |   |                             |   |        |
| Kerry      S. Arent                                      |   | 2009   | (9)    | 183,846            |   | 29,728         | (7)(8) | 117,180            | (10)   | 48,640                                                   | (11)   | 77,818                                                                                       |   | 21,625                           |   | 478,837     |
| Vice      President, Human Resources of Appleton         |   |   |   |               |   |           |   |               |   |                                                     |   |                                                                                         |   |                             |   |        |

| (1) | The      2008 fiscal year contains 27 pay periods instead of the usual 26 pay      periods. The 2009 fiscal year contains 2 weeks of unpaid      furlough. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Options      awarded for January 1, 2009 are included under 2008. Because 2008 was a      fifty-three (53) week fiscal year, the 2009 awards were actually granted      in the 2008 fiscal year. As a result of SEC reporting changes, the amounts      reported for 2008 and 2007 have been restated to reflect the aggregate      grant date fair value computed in accordance with Financial Accounting      Standards Codification Topic 718. The amounts were previously reported at      intrinsic value which is used to recognize compensation expense for      financial reporting purposes. See Note 17 of Notes to Consolidated      Financial Statements. The grant date fair value is calculated based on a      Black-Scholes valuation methodology. The assumptions used are: Expected      life: 6.5 years (mid-point of 3 and 10 years vesting period); Dividend      yield: 0% (plan does not pay dividends); Risk Free Interest Rate (based on      Treasury Constant Maturities yield curve): 3.10% (July 1, 2009 grant),      1.90% (January 1, 2009 grant), 3.76% (January 1, 2008 grant) and 4.65%      (January 1, 2007 grant) ; Volatility (based on peer group volatility for      previous 6.5 years): 39% (July 1, 2009 grant), 35% (January 1, 2009      grant), 32% (January 1, 2008 grant) and 33% (January 1, 2007 grant). The      LTIP grant as of July 1, 2009 is valued at $8.37 per share with a $18.87      per share grant price; January 1, 2009 is valued at $8.26 per share with a      $21.43 per share grant price; January 1, 2008 is valued at $13.45 per      share with a $33.41 per share grant price; January 1, 2007 is valued at      $14.48 per share with a $33.62 per share grant  price. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | Comparison      of Fair Value SEC Required Reporting and Intrinsic Value Financial      Accounting |
|--------|----------------------------------------------------------------------------------------------------|

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

| Name                    | Fiscal      Year | Grant      Date        |   | Fair      Value |      |   | Intrinsic      Value |   |
|-------------------------|------------------|------------------------|--------|-----------------|-----------|--------|----------------------|--------|
| Mark      R. Richards   | 2008             | 1/1/08      and 1/1/09 |   |            | 2,625,300 |   |                 |   | (731,638 | ) |
|                    | 2007             | 1/1/07                 |   |            | 1,303,200 |   |                 |   | 216,767 |   |
| Thomas      J. Ferree   | 2008             | 1/1/08      and 1/1/09 |   |            | 788,650   |   |                 |   | 0 |   |
|                    | 2007             | 1/1/07                 |   |            | 362,000   |   |                 |   | 0 |   |
| Sarah      T. Macdonald | 2008             | 1/1/08      and 1/1/09 |   |            | 447,065   |   |                 |   | (77,468 | ) |
|                    | 2007             | 1/1/07                 |   |            | 267,880   |   |                 |   | 22,952 |   |

| (3) | Non-equity      incentive plan compensation consists of payments under Appleton’s Annual      Performance-Based Incentive Plan (2007 and 2009). Amounts paid under the      plan are determined based on company and division Adjusted EBITDA and cash      conversion day 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 2009      and paid in 2010. There were no annual performance-based incentives earned      in 2008. 2008 reflects Long Term Performance Cash target awards from      1/1/08 and 1/1/09 performance cycles. Because 2008 was a fifty-three (53)      week fiscal year, the 2009 awards were actually granted in the 2008 fiscal      year. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | The      valuation methods and material assumptions used in determining the change      in pension value are discussed in detail in Note 15 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 ($75,000). These deferrals are      also described in the Nonqualified Deferred Compensation      table. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (7) | Mr.      Ferree, Mr. Willetts, and Ms. Arent received discretionary bonus amounts      in accordance with the terms of the annual incentive plan of 20% of the      earned incentive as a result of their individual performance during      2009. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (8) | 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. Ms. Arent’s annual performance-based incentive      compensation was adjusted by the Compensation Committee by $20,000 to more      appropriately reflect her performance during  2009. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (9) | Mr.      Willetts and Ms. Arent became named officers in  2009. |
|-----|-----------------------------------------------------------------|

| (10) | Ms. Arent’s option award reflects      a Long Term Incentive grant eff. 7/1/09 at time of promotion to Vice      President. |
|------|-----------------------------------------------------------------------------------------------------------------------------------|

| (11) | Ms.      Arent’s 2009 annual performance-based incentive is prorated between      Executive Director plan payout and Vice President plan    payout. |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                       |                                         |               |               |   | Estimated Future Payouts Under Non-Equity      Incentive Plan Awards(3) |    | All      OtherOption Awards:Number      of | Exercise or Base | Grant Date Fair |
|----------------------------|----------------------------------------------|--------------------|--------------------|--------|---------------------------------------------------------------------------------------------|---------|-------------------------------------------------|----------------------------|---------------------------|
| Name                       | Plan(1)                                      | Grant      Date(2) | Approval      Date |   | Threshold($)                                                                                |    |                                            | Target($)                  |                      |   | Maximum($) |   | SecuritiesUnderlyingOptions      (#)(4) | Price      of OptionAwards($/Unit)(5) | Value      of Stockand      OptionAwards($)(6) |
| Mark R. Richards | Annual      Performance-Based Incentive Plan |               |               |   |                                                                                        | 127,500 |                                            |                       |                      | 637,500 |   |   |   | 1,912,500 |   |   |   |   |
|                       |                                         |               |               |   |                                                                                        |    |                                            |                       |                      |   |   |   |   |   |   |   |   |   |
| Thomas      J. Ferree      | Annual      Performance-Based Incentive Plan |               |               |   |                                                                                        | 40,700  |                                            |                       |                      | 203,500 |   |   |   | 610,500 |   |   |   |   |
|                       |                                         |               |               |   |                                                                                        |    |                                            |                       |                      |   |   |   |   |   |   |   |   |   |
| Sarah      T. Macdonald    | Annual      Performance-Based Incentive Plan |               |               |   |                                                                                        | 29,550  |                                            |                       |                      | 147,750 |   |   |   | 443,250 |   |   |   |   |
|                       |                                         |               |               |   |                                                                                        |    |                                            |                       |                      |   |   |   |   |   |   |   |   |   |
| Kent      E. Willetts      | Annual      Performance-Based Incentive Plan |               |               |   |                                                                                        | 26,400  |                                            |                       |                      | 132,000 |   |   |   | 396,000 |   |   |   |   |
|                       |                                         |               |               |   |                                                                                        |    |                                            |                       |                      |   |   |   |   |   |   |   |   |   |
| Kerry      S. Arent        | Annual      Performance-Based Incentive Plan |               |               |   |                                                                                        | 22,000  |                                            |                       |                      | 110,000 |   |   |   | 330,000 |   |   |   |   |
|                       | Long-Term      Incentive Plan                | 7/1/09             | 7/1/09             |   |                                                                                        |    |                                            |                       |                      |   |   |   |   |   |   | 14,000 | 18.87 | 117,180 |

|   | (2) | 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. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3) | All      Non-Equity Incentive Plan awards are made under Appleton’s Annual      Performance-Based Incentive Plan. Projected payouts are based, or will be      based, on Company financial performance. The Threshold, Target and Maximum      payouts stated are based on 2009 salaries for the Annual Performance-Based      Incentive Plan. Ms. Arent’s awards reflect full year Vice President      position. Actual amounts earned in 2009 and paid in 2010 are stated in the      Non-Equity Incentive Plan Compensation column of the Summary Compensation      Table. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (4) | Option      awards consist of grants of units under Appleton’s Long-Term Incentive      Plan or Long-Term Restricted Stock UnitPlan. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------|

|   | (5) | The      units granted under Appleton’s LTIP or RSU are valued, as of the date of      the grant, at the most recent PDC stock price as determined by the      semi-annual ESOP valuation. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (6) | Calculated using a Black-Scholes      valuation methodology. The assumptions used for valuation are: Expected      life: 6.5 years (mid-point of 3 and 10 years vested period); Dividend      yield: 0% (plan does not pay dividends); Risk Free rate: 3.1% (based on      Treasury Constant Maturities yield curve); Volatility 39% (based on peer      group volatility for previous 6.5 years). The LTIP grant as of July 1,      2009 is valued at $8.37 per share with an $18.87 per share grant      price. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                    |             |   |                          |      |   | Less      Non-Cash Compensation |   |      |                             |   |
|-------------------------|------------------|--------|-------------------------------|-----------|--------|---------------------------------|--------|-----------|----------------------------------|--------|
|   Name        |   Year |   | TotalCompensation      ($)(1) |      |   | Long      Term Awards($)(2)     |   |      | Change      in Pension Value ($) |   |   | Net      Cash Compensation ($) |   |
| Mark      R. Richards   | 2009             |   |                          | 1,273,246 |   |                            |   | 0         |                             |   |   | 114,285 |   |   |   | 1,158,961 |   |
|                    | 2008             |   |                          | 3,618,440 |   |                            |   | 2,722,205 |                             |   |   | 81,467 |   |   |   | 814,768 |   |
|                    | 2007             |   |                          | 2,621,575 |   |                            |   | 1,303,200 |                             |   |   | 134,632 |   |   |   | 1,183,743 |   |
|                    |             |   |                          |      |   |                            |   |      |                             |   |   |   |   |   |   |   |   |
| Thomas      J. Ferree   | 2009             |   |                          | 567,659   |   |                            |   | 0         |                             |   |   | 46,407 |   |   |   | 521,252 |   |
|                    | 2008             |   |                          | 1,271,636 |   |                            |   | 818,647   |                             |   |   | 41,120 |   |   |   | 411,869 |   |
|                    | 2007             |   |                          | 921,563   |   |                            |   | 362,000   |                             |   |   | 24,284 |   |   |   | 535,279 |   |
|                    |             |   |                          |      |   |                            |   |      |                             |   |   |   |   |   |   |   |   |
| Sarah      T. Macdonald | 2009             |   |                          | 403,927   |   |                            |   | 0         |                             |   |   | 8,971 |   |   |   | 394,956 |   |
|                    | 2008             |   |                          | 815,076   |   |                            |   | 464,957   |                             |   |   | 4,512 |   |   |   | 345,607 |   |
|                    | 2007             |   |                          | 746,560   |   |                            |   | 267,880   |                             |   |   | 30,000 |   |   |   | 448,680 |   |
|                    |             |   |                          |      |   |                            |   |      |                             |   |   |   |   |   |   |   |   |
| Kent      E. Willetts   | 2009             |   |                          | 410,397   |   |                            |   | 0         |                             |   |   | 38,676 |   |   |   | 371,721 |   |
|                    |             |   |                          |      |   |                            |   |      |                             |   |   |   |   |   |   |   |   |
| Kerry      S. Arent     | 2009             |   |                          | 478,837   |   |                            |   | 117,180   |                             |   |   | 77,818 |   |   |   | 283,839 |   |

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

|   | (2) | Option      Awards (2007 and 2008) and Performance Cash Plan  (2008). |
|--------|-----|-----------------------------------------------------------------------|

----

| 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 | 90,000                                                           |  0                                                          | 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 |                                                             | 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 | 25,000                                                           | 0                                                                | 33.62                  | 01/01/10                        | 01/01/17                      |
|                    |                                                             |                                                             |                   |                            |                          |
| Sarah      T. Macdonald |                                                             |                                                             |                   |                            |                          |
| Units      Awarded 2009 |                                                             | 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 | 18,500                                                           | 0                                                                | 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                |
|                    |                                                             |                                                             |                   |                            |                          |
| Kent      E. Willetts   |                                                             |                                                             |                   |                            |                          |
| Units      Awarded 2009 |                                                             | 27,000                                                           | 21.43                  | 01/01/12                        | 01/01/19                      |
| Units      Awarded 2008 |                                                             | 18,500                                                           | 33.41                  | 01/01/11                        | 01/01/18                      |
| Units      Awarded 2007 | 18,500                                                           | 0                                                                | 33.62                  | 01/01/10                        | 01/01/17                      |
| Units      Awarded 2006 | 18,500                                                           | 0                                                                | 28.56                  | 01/01/09                        | 01/01/16                      |
| Units      Awarded 2005 | 18,500                                                           | 0                                                                | 27.77                  | 11/14/08                        | 11/14/15                      |
|                    |                                                             |                                                             |                   |                            |                          |
| Kerry      S. Arent     |                                                             |                                                             |                   |                            |                          |
| Units      Awarded 2009 |                                                             | 14,000                                                           | 18.87                  | 07/01/12                        | 07/01/19                      |
| Units      Awarded 2009 |                                                             | 10,000                                                           | 21.43                  | 01/01/12                        | 01/01/19                      |
| Units      Awarded 2008 |                                                             | 5,000                                                            | 33.41                  | 01/01/11                        | 01/01/18                      |
| Units      Awarded 2006 | 3,000                                                            | 0                                                                | 28.56                  | 01/01/09                        | 01/01/16                      |
| Units      Awarded 2005 | 2,000                                                            | 0                                                                | 27.77                  | 07/01/08                        | 07/01/15                      |
| Units      Awarded 2004 | 1,600                                                            | 0                                                                | 23.36                  | 01/01/07                        | 01/01/14                      |
| Units      Awarded 2003 | 1,600                                                            | 0                                                                | 21.92                  | 01/01/06                        | 01/01/13                      |

| (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. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Name                    | Plan Name |   | Number of Years ofCredited      Service(#) |   |   | Present Value ofAccumulatedBenefit($)(1) |   |    | Payments During LastFiscal      Year($) |   |
|-------------------------|----------------|--------|-----------------------------------------------------------|--------|--------|----------------------------------------------------|--------|---------|---------------------------------------------------|--------|
| Mark      R. Richards   | Pension        |   |                                                      | 4.8    |   |                                               |   | 77,547  |                                              |   |   | 0 |   |
|                    | SERP           |   |                                                      | 4.8    |   |                                               |   | 319,291 |                                              |   |   | 0 |   |
| Thomas      J. Ferree   | Pension        |   |                                                      | 3.2    |   |                                               |   | 62,837  |                                              |   |   | 0 |   |
|                    | SERP           |   |                                                      | 3.2    |   |                                               |   | 56,339  |                                              |   |   | 0 |   |
| Sarah      T. Macdonald | Pension        |   |                                                      | 2.5    |   |                                               |   | 30,364  |                                              |   |   | 0 |   |
|                    | SERP           |   |                                                      | 2.5    |   |                                               |   | 17,822  |                                              |   |   | 0 |   |
| Kent      E. Willetts   | Pension        |   |                                                      | 4.1    |   |                                               |   | 74,735  |                                              |   |   | 0 |   |
|                    | SERP           |   |                                                      | 4.1    |   |                                               |   | 52,950  |                                              |   |   | 0 |   |
| Kerry      S. Arent     | Pension        |   |                                                      | 27.6   |   |                                               |   | 326,645 |                                              |   |   | 0 |   |
|                    | SERP           |   |                                                      | 27.6   |   |                                               |   | 0       |                                              |   |   | 0 |   |

| (1) | The      valuation methods and material assumptions used in determining the present      value of accumulated pension benefits are discussed in detail in Note 15      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      at12/31/10($) |     |
|-------------------------|--------|------------------------------------------------------------|---------|--------|------------------------------------------------------------|--------|---------|---------------------------------------------------|--------|--------|---------------------------------------|--------|--------|-------------------------------------|----------|
| Mark      R. Richards   |   |                                                       | 75,000  |   |                                                       |   | 0       |                                              |   |   | 107,769                               |   |   |                                | 0        |   |   |   | 659,262 |   |
| Thomas      J. Ferree   |   |                                                       | 0       |   |                                                       |   | 0       |                                              |   |   | 0                                     |   |   |                                | 0        |   |   |   | 0 |   |
| Sarah      T. Macdonald |   |                                                       | 0       |   |                                                       |   | 4,040   |  (2)                                         |   |   | (8,181                                | )      |   |                                | (148,671 | )  |   |   | 7,075 |   |
| Kent      E. Willetts   |   |                                                       | 0       |   |                                                       |   | 0       |                                              |   |   | 16,764                                |   |   |                                | 0        |   |   |   |  65,892 |   |
| Kerry      S. Arent     |   |                                                       |  0 |   |                                                       |   |  0 |                                              |   |   |  0                               |   |   |                                |  0  |   |   |   |  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                    | Termination Other Than forMisconduct or With Good Reason | COBRAHealthBenefits ($)(1) | OutplacementServices($) | TerminationProtectionPayments($)(2) | Long-TermIncentive Plans ($)(3) | CompanyFICA      ToBe Paid($)(4) | Tax Gross-UpPayments($) | Total($)  |
|-------------------------|---------------------------------------------------------------------------------------------|---------------------------------|-------------------------|-------------------------------------|-------------------------------------------|---------------------------------------|------------------------------|-----------|
| Mark      R. Richards   | Without      Change of Control                                                              | 15,106                          | 11,500                  | 1,451,400                           | 0                                         | 21,045                                | 0                            | 1,499,051 |
|                    | Within two years of Change of Control                         | 30,212                          | 11,500                  | 4,793,625                           | 373,000                                   | 75,009                                | 878,405                      | 6,161,658 |
|                    |                                                                                        |                            |                    |                                |                                      |                                  |                         |      |
| Thomas      J. Ferree   | Without      Change of Control                                                              | 15,106                          | 11,500                  |    686,282           | 0                                         |   9,951                     | 0                            | 722,839   |
|                    | Within      two years of Change of Control                                                  | 20,141                          | 11,500                  | 1,350,500                           | 116,000                                   | 21,264                                | 0                            | 1,519,405 |
|                    |                                                                                        |                            |                    |                                |                                      |                                  |                         |      |
| Sarah      T. Macdonald | Without      Change of Control                                                              | 15,106                          | 11,500                  |    518,898           | 0                                         |   7,524                     | 0                            | 553,028   |
|                    | Within      two years of Change of Control                                                  | 20,141                          | 11,500                  |    1,034,250         | 69,000                                    | 15,997                                | 168,268                      | 1,319,156 |
|                    |                                                                                        |                            |                    |                                |                                      |                                  |                         |      |
| Kent      E. Willetts   | Without      Change of Control                                                              | 15,106                          | 11,500                  |    479,558           | 0                                         |   6,954                     | 0                            | 513,118   |
|                    | Within      two years of Change of Control                                                  | 20,141                          | 11,500                  |    924,000           | 69,000                                    | 14,399                                | 172,852                      | 1,211,892 |
|                    |                                                                                        |                            |                    |                                |                                      |                                  |                         |      |
| Kerry      S. Arent     | Without      Change of Control                                                              | 15,106                          | 11,500                  | 408,368                             | 0                                         | 5,921                                 | 0                            | 440,895   |
|                    | Within      two years of Change of Control                                                  | 20,141                          | 11,500                  | 770,000                             | 0                                         | 11,165                                | 137,505                      | 950,311   |

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

|   | (2) | Includes      Termination Protection Payments and Prorated Annual  Bonus |
|--------|-----|--------------------------------------------------------------------------|

|   | (3) | 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 December 31, 2009      ($0). The value of outstanding LTIP units is determined by multiplying the      number of units outstanding for each grant date by the change in unit      value from the date of the grant to December 31, 2009. The Performance      Cash Plan is also prorated and a payout is made at  Target. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

----

|  | • | the      date upon which a third party acquires ownership of Company stock      constituting more than 50% of the total fair market value of total voting      power of the stock of theCompany; |
|--|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | • | the      date upon which any third party acquires (during a 12-month period ending      on the date of the most recent acquisition) ownership of the Company stock      constituting more than 35% of the total voting power of the stock of the      Company; |
|--|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

----

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

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

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

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

----

|                   |                                       |                    |           |
|------------------------|--------------------------------------------|-------------------------|----------------|
| Name                   | Fees      Earned orPaid      in Cash($)(1) | StockAwards      ($)(2) | Total      ($) |
| Stephen      P. Carter | 65,000                                     | 35,000                  | 100,000        |
| Terry      M. Murphy   | 55,000                                     | 35,000                  | 90,000         |
| Ronald      A. Pace    | 60,000                                     | 35,000                  | 95,000         |
| Andrew      F. Reardon | 55,000                                     | 35,000                  | 90,000         |
| Susan      Scherbel    | 60,000                                     | 35,000                  | 95,000         |
| Kathi      P. Seifert  | 55,000                                     | 35,000                  | 90,000         |

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

| (2) | On      January 2, 2009, each of the then non-employee directors were issued      816.6 deferred compensation units valued at the December 31, 2008 share      price of $21.43 per share ($17,500). On July 1, 2009, each of the then      non-employee directors were issued 927.4 deferred compensation units      valued at the June 30, 2009 share price of $18.87 per share ($17,500). The      amounts reflect the aggregate grant date fair value computed in accordance      with Financial Accounting Standards Codification  Topic. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

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

| Name      of Beneficial Owner                                        | Amount andNatureof BeneficialOwnership(1) | Percent |
|----------------------------------------------------------------------|-----------------------------------------------------|---------|
| Mark      R. Richards                                                | 16,187                                              | *       |
| Thomas      J. Ferree                                                | 14,695                                              | *       |
| Stephen      P. Carter                                               | —  (2)                              | *       |
| Terry      M. Murphy                                                 | —  (2)                              | *       |
| Ronald      A. Pace                                                  | —  (2)                              | *       |
| Andrew      F. Reardon                                               | —  (2)                              | *       |
| Susan      Scherbel                                                  | —  (2)                              | *       |
| Kathi      P. Seifert                                                | —  (2)                              | *       |
| Kerry      S. Arent                                                  | 31,471                                              | *       |
| M.      Kathleen Bolhous                                             | 9,498                                               | *       |
| Jeffrey      J. Fletcher                                             | 1,569                                               | *       |
| Sarah      T. Macdonald                                              | 4,987                                               | *       |
| Kent      E. Willetts                                                | 15,140                                              | *       |
|                                                                 |                                                |    |
| All      directors and executive officers as a group (13    persons) | 93,547                                              | .93%    |

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

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

----

| (a)(1)       | Financial      Statements.                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   |   |   |
|         | Report of      Independent Registered Public Accounting      Firm                                                                                                                                                                                                                                                                                                                                                                                  |   |   | 49 |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   |   |   |
|         | Consolidated Balance Sheets      as of January 2, 2010 and January 3, 2009                                                                                                                                                                                                                                                                                                                                                                              |   |   |   |  50 |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   |   |   |
|         | Consolidated Statements of      Operations for the years ended January 2, 2010, January 3, 2009 and      December 29, 2007                                                                                                                                                                                                                                                                                                                    |   |   | 51 |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   |   |   |
|         | Consolidated Statements of      Cash Flows for the years ended January 2, 2010, January 3, 2009 and      December 29, 2007                                                                                                                                                                                                                                                                                                                    |   |   | 52 |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   |   |   |
|         | Consolidated Statements of      Redeemable Common Stock, Accumulated Deficit, Accumulated Other      Comprehensive (Loss) Income and Comprehensive Income (Loss) for the years      ended January 2, 2010, January 3, 2009 and December 29,      2007                                                                                                                                                                                         |   |   | 53 |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   |   |   |
|         | Notes to Consolidated      Financial Statements                                                                                                                                                                                                                                                                                                                                                                                                         |   |   | 54 |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   |   |   |
|         | Report of Independent      Registered Public Accounting Firm on Financial Statement      Schedule                                                                                                                                                                                                                                                                                                                                                       |   |   |   | 134 |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   |   |   |
| (a)(2)  | SCHEDULE II – Valuation      and Qualifying Accounts                                                                                                                                                                                                                                                                                                                                                                                              |   |   | 135 |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   |   |   |
| (a)(3)       | Exhibits.                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   |   |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   |   |
| 3.1          | Second      Amended and Restated Certificate of Incorporation of Appleton Papers Inc.      Incorporated by reference to Exhibit 3.1 to the Registrants’ Registration      Statement on Form S-4 (Registration No. 333-82084) filed on      February 4, 2002.                                                                                                                                                                                 |   |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |
| 3.2          | Amended      and Restated By-laws of Appleton Papers Inc. Incorporated by reference to      Exhibit 3.2 to the Registrants’ Registration Statement on Form S-4      (Registration No. 333-82084) filed on February 4,    2002.                                                                                                                                                                                                               |   |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |
| 3.2.1        | Amendment      to Amended and Restated By-laws of Appleton Papers Inc. Incorporated by      reference to Exhibit 3.2.1 to Amendment No. 2 to the Registrants’      Registration Statement on Form S-4 (Registration No. 333-82084) filed on      May 15, 2002.                                                                                                                                                                               |   |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |
| 3.2.2        | Amendment      to Amended and Restated By-laws of Appleton Papers Inc. Incorporated by      reference to Exhibit 3.2.2 to the Registrants’ Annual Report on Form 10-K      for the year ended December 28, 2002.                                                                                                                                                                                                                             |   |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |
| 3.3          | Amended      and Restated Articles of Incorporation of Paperweight Development Corp.      Incorporated by reference to Exhibit 3.3 to the Registrants’ Registration      Statement on Form S-4 (Registration No. 333-82084) filed on      February 4, 2002.                                                                                                                                                                                  |   |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |
| 3.4          | Amended      and Restated By-laws of Paperweight Development Corp. Incorporated by      reference to Exhibit 3.4 to the Registrants’ Registration Statement on      Form S-4 (Registration No. 333-82084) filed on February 4,      2002.                                                                                                                                                                                                    |   |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |
| 4.1          | Indenture,      dated as of June 11, 2004, between Appleton Papers Inc. and each of      the guarantors named therein and U.S. Bank National Association, as      trustee governing the 8 1/8% Senior Notes due 2011 (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 governing the 9 3/4 Senior Subordinated Notes due 2014 (the      “Senior Subordinated Notes Indenture”). Incorporated by reference to      Exhibit 4.2 to the Registrants’ Quarterly Report on Form 10-Q for the      quarter ended July 4, 2004. |   |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |
| 4.3          | 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        | First      Supplemental Indenture, dated as of January 11, 2005, among Appleton      Papers Inc., each of the guarantors named therein and U.S. Bank National      Association, as trustee, governing the 9 3/4% Senior Subordinated Notes      due 2014. Incorporated by reference to Exhibit 4.6 to the Registrant’s      Annual Report on Form 10-K for the fiscal year ended December 29,      2007.                              |
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 4.7        | 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 the Registrant'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 the      Registrant'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 the Registrant'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 the Registrant's current report on Form 8-K filed on      June 16, 2006.                                                                                                                                                                                                                                                                |
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 4.11  | Third      Supplemental Indenture, dated as of September 9, 2009, among Appleton      Papers Inc., as issuer, each of the guarantors named therein and U.S. Bank      National Association, as trustee, governing the 8 1/8% Senior Notes due      2011. Incorporated by reference to Exhibit 4.2 to the Registrant's current      report on Form 8-K filed October 6, 2009.                                                                          |
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 4.12  | Third      Supplemental Indenture, dated as of September 9, 2009, among Appleton      Papers Inc., as issuer, each of the guarantors named therein and U.S. Bank      National Association, a trustee, governing the 9 3/4% Senior Subordinated      Notes due 2011. Incorporated by reference to Exhibit 4.3 to the      Registrant's current report on Form 8-K filed October 6,    2009.                                                      |
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 4.13       | Indenture,      dated as of September 30, 2009, among Appleton Papers Inc., as      issuer, each of the guarantors named therein and U.S. Bank National      Association, as trustee and collateral agent, governing the 11.25% Second      Lien Notes due 2015 (the "Second Lien Notes Indenture"). Incorporated by      reference to Exhibit 4.1 to the Registrant's current report on Form 8-K      filed October 6, 2009.               |
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 4.14  | Form      of Second Lien Notes due 2015 (included as Exhibits A1 and A2 to the      Second Lien Notes Indenture).                                                                                                                                                                                                                                                                                                                                     |
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 4.15  | Second      Lien Collateral Agreement, dated as of September 30, 2009, among Appleton      Papers Inc., Paperweight Development Corp. and each other Grantor      identified therein in favor of U.S. Bank National Association, as      Collateral Agent. Incorporated by reference to Exhibit 4.4 to Registrants'      current report on Form 8-K filed October 6, 2009.                                                                            |
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 4.16       | First      Supplemental Indenture, dated as of January 29, 2010, among Appleton      Papers Inc., as issuer, each of the guarantors identified therein and U.S.      Bank National Association, as trustee and collateral agent, governing      the 11.25% Second Lien Notes Due 2015. Incorporated by reference to      Exhibit 4.1 to the Registrant’s current report on Form 8-K filed February      3, 2010.                           |
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 4.17  | Indenture,      dated as of February 8, 2010, among Appleton Papers Inc., as issuer, each      of the guarantors named therein and U.S. Bank National Association, as      trustee and collateral agent, governing the 10.50% Senior Secured Notes      due 2015 (the “Senior Secured Notes Indenture”). Incorporated by reference      to Exhibit 4.1 to the Registrant’s current report on Form 8-K filed      February 12, 2010. |
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 4.18  | Form      of 10 1/2% Senior Secured Notes due 2015 (included as Exhibit A to the      Senior Secured Notes Indenture).                                                                                                                                                                                                                                                                                                                                |
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 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        | 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 the Registrants’      Quarterly Report on Form 10-Q for the quarter ended July 1,      2007. |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 10.9.1      | 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. Incorporated by      reference to Exhibit 4.11.1 to the Registrants' Annual Report on Form 10-K      for the fiscal year ended January 3, 2009.                                                                                                                                                                                            |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 10.9.2      | Second      Amendment to Credit Agreement, dated as of September 30, 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. Incorporated by      reference to Exhibit 4.5 to the Registrants' current report on Form      8-K filed October 6, 2009.                                                                                                                                                                                                              |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 10.10       | Collateral      Agreement made by Appleton Papers Canada Ltd. in favor of U.S. Bank      National Association, as collateral agent, dated as of February 8,      2010.  Incorporated by reference to Exhibit 4.3 to the      Registrant’s current report on Form 8-K filed February 12,  2010.                                                                                                                                                                                                                                                                                                                                                                                                                               |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 10.11       | Credit      Agreement, dated as of February 8, 2010, among Appleton Papers Inc., as      borrower, Paperweight Development Corp., as holdings, Fifth Third Bank, as      administrative agent, swing line lender and an L/C issuer, the other      lenders party thereto and Fifth Third Bank, as sole lead arranger and sole      book manager. Incorporated by reference to Exhibit 10.1 to the      Registrants’ current report on Form 8-K filed February 12,      2010.                                                                                                                                                                                                                                                           |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 10.12  | Guarantee      and Collateral Agreement made by Paperweight Development Corp., Appleton      Papers Inc. and certain of its subsidiaries, in favor of Fifth Third Bank,      as administrative agent, dated as of February 8, 2010. Incorporated by      reference to Exhibit 10.2 to the Registrants’ current report on Form 8-K      filed February 12, 2010.                                                                                                                                                                                                                                                                                                                                                                        |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 10.13  | Guarantee      and Collateral Agreement made by Appleton Papers Canada Ltd. in favor of      Fifth Third Bank, as administrative agent, dated as of February 8, 2010.      Incorporated by reference to Exhibit 10.3 to the Registrant’s current      report on Form 8-K filed February 12, 2010.                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 10.14       | Appleton      Papers Inc. New Deferred Compensation Plan, as amended on October 31,      2002, and restated effective as of November 9, 2001. Incorporated by      reference to Exhibit 10.12 to the Registrant’s Annual Report on Form 10-K      for the fiscal year ended December 31, 2005.(1)                                                                                                                                                                                                                                                                                                                                                                                                                       |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 10.15       | The      Executive Nonqualified Excess Plan of Appleton Papers Inc., as amended and      restated on January 1, 2008. (1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 10.15.1     | Adoption      Agreement, dated as of February 24, 2009, by Appleton Papers Inc. and      Principal Life Insurance Company, as the provider.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 10.16       | Appleton      Papers Inc. Supplemental Executive Retirement Plan, as amended through      March 28, 2001. Incorporated by reference to Exhibit 10.16 to the      Registrant's Annual Report on Form 10-K for the fiscal year ended December      31, 2005. (1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 10.16.1     | Amendment      to the Appleton Papers Inc. Supplemental Executive Retirement Plan,      effective January 1, 2009. (1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 10.17       | Form      of Termination Protection Agreement. Incorporated by reference to Exhibit      10.13 to the Registrant's Annual Report on Form 10-K for the fiscal year      ended January 3, 2009. (1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 10.18       | Termination      Protection Agreement Amended and Restated for Mark R. Richards dated      effective December 17, 2008. Incorporated by reference to      Exhibit 10.14 to the Registrant's Annual Report on Form 10-K for the      fiscal year ended January 3, 2009. (1)                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 10.19       | 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.                                                                                                                                                                                                                                                                                                                                                    |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 10.20       | 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.                                                                                                                                                                                                                                                                                                                                                                                                            |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 10.21       | 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.                                                                                                                                                                                                                                                                                                                                                                        |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 10.22       | 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.                                                                                                                                                                                                                                                                                                                                                                                   |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 10.23       | Appleton      Papers Retirement Savings and Employee Stock Ownership Plan, amended and      restated generally effective January 1, 2009 (1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |

----

| 10.23.1 | Resolution      by Appleton’s ESOP Administrative Committee effective January 1,      2009, amending and restating Appleton Papers Retirement Savings and      Employee Stock Ownership Plan, generally effective January 1,      2009.      (1)                                                                        |
|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                                                                                                                                                                                                                                    |
| 10.24   | 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)                                                                   |
|    |                                                                                                                                                                                                                                                                                                                                    |
| 10.24.1 | 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) |
|    |                                                                                                                                                                                                                                                                                                                                    |
| 10.24.2 | Amendment      to the Appleton Papers Inc. Retirement Plan, effective December 19,      2008. Incorporated by reference to Exhibit 10.21.2 to the Registrant’s      Annual Report on Form 10-K for the fiscal year ended January 3, 2009.      (1)                                                                           |
|    |                                                                                                                                                                                                                                                                                                                                    |
| 10.24.3 | Amendment      to the Appleton Papers Inc. Retirement Plan, executed September 4, 2009.      (1)                                                                                                                                                                                                                                        |
|    |                                                                                                                                                                                                                                                                                                                                    |
| 10.24.4 | Resolutions      by the Benefit Finance Committee of Appleton Papers Inc. dated December      30, 2009 further amending Appleton Papers Inc. Retirement Plan as amended      through September 4, 2009. (1)                                                                                                                        |
|    |                                                                                                                                                                                                                                                                                                                                    |
| 10.25   | 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)                                                                                                         |
|    |                                                                                                                                                                                                                                                                                                                                    |
| 10.26   | Appleton      Papers Inc. Long-Term Incentive Plan, as amended and restated, effective      as of January 1, 2009. Incorporated by reference to Exhibit 10.23 to      the Registrant's Annual Report on Form 10-K for the fiscal year ended      January 3, 2009.  (1)                                                        |
|    |                                                                                                                                                                                                                                                                                                                                    |
| 10.27   | Appleton      Papers Inc. Long-Term Performance Cash Plan, amended and restated,      effective January 1, 2009.  Incorporated by reference      to Exhibit 10.24 to the Registrant's Annual Report on Form 10-K for the      fiscal year ended January 3, 2009. (1)                                                          |
|    |                                                                                                                                                                                                                                                                                                                                    |
| 10.28   | Appleton      Papers Inc. Long Term Restricted Stock Unit Plan, effective      January 3, 2010.      (1)                                                                                                                                                                                                                           |
|    |                                                                                                                                                                                                                                                                                                                                    |
| 21.1    | Subsidiaries      of Paperweight Development Corp.                                                                                                                                                                                                                                                                                      |
|    |                                                                                                                                                                                                                                                                                                                                    |
| 31.1    | Certification      of Mark R. Richards, Chairman, President and Chief Executive Officer of      Appleton Papers Inc., pursuant to Rule 15d-14(a) of the Securities      Exchange Act of 1934 as amended.                                                                                                                                |
|    |                                                                                                                                                                                                                                                                                                                                    |
| 31.2    | Certification      of Thomas J. Ferree, Senior Vice President Finance, Chief Financial      Officer and Treasurer of Appleton Papers Inc., pursuant to Rule 15d-14(a)      of the Securities Exchange Act of 1934 as amended.                                                                                                           |
|    |                                                                                                                                                                                                                                                                                                                                    |
| 31.3    | Certification      of Mark R. Richards, Chairman, President and Chief Executive Officer of      Paperweight Development Corp., pursuant to Rule 15d-14(a) of the      Securities Exchange Act of 1934 as amended.                                                                                                                       |
|    |                                                                                                                                                                                                                                                                                                                                    |
| 31.4    | Certification      of Thomas J. Ferree, Chief Financial Officer and Treasurer of Paperweight      Development Corp., pursuant to Rule 15d-14(a) of the Securities Exchange      Act of 1934 as amended.                                                                                                                                 |
|    |                                                                                                                                                                                                                                                                                                                                    |
| 32.1    | Certification      of Mark R. Richards, Chairman, President and Chief Executive Officer of      Appleton Papers Inc., pursuant to 18 U.S.C. Section  1350.                                                                                                                                                                              |
|    |                                                                                                                                                                                                                                                                                                                                    |
| 32.2    | Certification      of Thomas J. Ferree, Senior Vice President Finance, Chief Financial      Officer and Treasurer of Appleton Papers Inc., pursuant to 18 U.S.C.      Section 1350.                                                                                                                                                     |
|    |                                                                                                                                                                                                                                                                                                                                    |
| 32.3    | Certification      of Mark R. Richards, Chairman, President and Chief Executive Officer of      Paperweight Development Corp., pursuant to 18 U.S.C. Section      1350.                                                                                                                                                                 |
|    |                                                                                                                                                                                                                                                                                                                                    |
| 32.4    | Certification      of Thomas J. Ferree, 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      1, 2010                                              |

| Name                                            | Title                                                                                                   | Date          |
|------------------------------------------------------|--------------------------------------------------------------------------------------------------------------|--------------------|
| /s/      MARK R. RICHARDSMark      R. Richards       | Chairman,      President, Chief Executive Officer and a Director (Principal Executive      Officer)          | March      1, 2010 |
|                                                 |                                                                                                         |               |
| /s/      THOMAS J. FERREEThomas      J. Ferree       | Senior      Vice President Finance, Chief Financial Officer and Treasurer (Principal      Financial Officer) | March      1, 2010 |
|                                                 |                                                                                                         |               |
| /s/      JEFFREY J. FLETCHERJeffrey      J. Fletcher | Controller      (Principal      Accounting Officer)                                                          | March      1, 2010 |
|                                                 |                                                                                                         |               |
| /s/      STEPHEN P. CARTERStephen      P. Carter     | Director                                                                                                     | March      1, 2010 |
|                                                 |                                                                                                         |               |
| /s/      TERRY M. MURPHY                             | Director                                                                                                     | March      1, 2010 |
| Terry      M. Murphy                                 |
|                                                 |                                                                                                         |               |
| /s/      RONALD A. PACERonald      A. Pace           | Director                                                                                                     | March      1, 2010 |
|                                                 |                                                                                                         |               |
| /s/      ANDREW F. REARDON                           | Director                                                                                                     | March      1, 2010 |
| Andrew      F. Reardon                               |
|                                                 |                                                                                                         |               |
| /s/      KATHI P. SEIFERTKathi      P. Seifert       | Director                                                                                                     | March      1, 2010 |
|                                                 |                                                                                                         |               |
| /s/      SUSAN SCHERBELSusan      Scherbel           | Director                                                                                                     | March      1, 2010 |

----

|                    |  PAPERWEIGHT      DEVELOPMENT CORP.              |
|-------------------------|-----------------------------------------------------------------|
| By:           | /s/      Mark R. Richards                                       |
|                    | Mark      R. RichardsPresident      and Chief Executive Officer |
| Date:         | March      1, 2010                                              |

| Name                                            | Title                                                                                          | Date                             |
|------------------------------------------------------|-----------------------------------------------------------------------------------------------------|---------------------------------------|
| /s/      MARK R. RICHARDSMark      R. Richards       | Chairman,      President, Chief Executive Officer and a Director (Principal Executive      Officer) | March      1, 2010                    |
|                                                 |                                                                                                |                                  |
| /s/      THOMAS J. FERREEThomas      J. Ferree       | Chief      Financial Officer and Treasurer (Principal      Financial Officer)                       | March      1, 2010                    |
|                                                 |                                                                                                |                                  |
| /s/      JEFFREY J. FLETCHERJeffrey      J. Fletcher | Assistant      Treasurer and Controller (Principal      Accounting Officer)                         | March      1, 2010                    |
|                                                 |                                                                                                |                                  |
| /s/      STEPHEN P. CARTERStephen      P. Carter     | Director                                                                                            | March      1, 2010                    |
|                                                 |                                                                                                |                                  |
| /s/      TERRY M. MURPHY                             | Director                                                                                            | March      1, 2010                    |
|  Terry      M. Murphy                           |
|                                                 |                                                                                                |                                  |
| /s/      RONALD A. PACE Ronald      A. Pace     | Director                                                                                            | March      1, 2010                    |
|                                                 |                                                                                                |                                  |
|  /s/      ANDREW F. REARDON                     | Director                                                                                            |          March 1, 2010 |
|  Andrew      F. Reardon                         |                                                                                                |                                  |
|                                                 |                                                                                                |                                  |
| /s/      KATHI P. SEIFERTKathi      P. Seifert       | Director                                                                                            | March      1, 2010                    |
|                                                 |                                                                                                |                                  |
| /s/      SUSAN SCHERBELSusan      Scherbel           | Director                                                                                            | March      1, 2010                    |

----

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| Allowances      for Losses on Accounts Receivable |   | Balance      at Beginning of Period |   |   | Assets      Heldfor      Sale |   |   | ChargedTo      CostsandExpenses |   |   | Amounts      WrittenOff      Less Recoveries |   |   | Balance      atEnd      of Period |   |
|---------------------------------------------------|--------|-------------------------------------|--------|--------|-------------------------------|--------|--------|---------------------------------|--------|--------|----------------------------------------------|--------|--------|-----------------------------------|--------|
|                                              |   |                                |   |   |                          |   |   |                            |   |   |                                         |   |   |                              |   |
| December      29, 2007                            |   | $                                   | 2,047  |   |                          | $      | -      |                            |   | $      | 894                                          |   |   | $                                 | (1,461 | )  |   | $ | 1,480 |   |
| January      3, 2009                              |   |                                | 1,480  |   |                          |   | (57    | )                          |   |   | 501                                          |   |   |                              | (209   | ) |   |   | 1,715 |   |
| January      2, 2010                              |   |                                | 1,715  |   |                          |   | -      |                            |   |   | 2,736                                        |   |   |                              | (2,690 | ) |   |   | 1,761 |   |
|                                              |   |                                |   |   |                          |   |   |                            |   |   |                                         |   |   |                              |   |   |   |   |   |   |
| Inventory      Reserve                            |   |                                |   |   |                          |   |   |                            |   |   |                                         |   |   |                              |   |   |   |   |   |   |
| December      29, 2007                            |   | $                                   | 5,592  |   |                          | $      | -      |                            |   | $      | 659                                          |   |   | $                                 | (2,515 | ) |   | $ | 3,736 |   |
| January      3, 2009                              |   |                                | 3,736  |   |                          |   | (174   | )                               |   |   | 1,860                                        |   |   |                              | (1,092 | ) |   |   | 4,330 |   |
| January      2, 2010                              |   |                                | 4,330  |   |                          |   | -      |                            |   |   | 1,381                                        |   |   |                              | (1,341 | ) |   |   | 4,370 |   |

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