----

----

| x | QUARTERLY 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  | FINANCIAL INFORMATION                                                                                                                            |       |
|         |                                                                                                                                             |       |
| Item 1  | Financial Statements (unaudited)                                                                                                                 |       |
|         |                                                                                                                                             |       |
|         | a) Condensed Consolidated Balance Sheets                                                                                                         | 3          |
|         |                                                                                                                                             |       |
|         | b) Condensed Consolidated Statements of Operations                                                                                               | 4          |
|         |                                                                                                                                             |       |
|         | c) Condensed Consolidated Statements of Cash Flows                                                                                               | 5          |
|         |                                                                                                                                             |       |
|         | d) Consolidated Statements of Redeemable Common Stock, Accumulated Deficit, Accumulated Other Comprehensive Loss and Comprehensive (Loss) Income | 6          |
|         |                                                                                                                                             |       |
|         | e) Notes to Condensed Consolidated Financial Statements                                                                                          | 7          |
|         |                                                                                                                                             |       |
| Item 2  | Management’s Discussion and Analysis of Financial Condition and Results of Operations                                                      | 26         |
|         |                                                                                                                                             |       |
| Item 3  | Quantitative and Qualitative Disclosures About Market Risk                                                                                       | 31         |
|         |                                                                                                                                             |       |
| Item 4T | Controls and Procedures                                                                                                                          | 31         |
|         |                                                                                                                                             |       |
| PART II | OTHER INFORMATION                                                                                                                                |       |
|         |                                                                                                                                             |       |
| Item 1       | Legal Proceedings                                                                                                                                | 31         |
|         |                                                                                                                                             |       |
| Item 1A | Risk Factors                                                                                                                                     | 31         |
|         |                                                                                                                                             |       |
| Item 6  | Exhibits                                                                                                                                         | 32         |
|         |                                                                                                                                             |       |
| Signatures   |                                                                                                                                             | 33         |

----

| PAPERWEIGHT DEVELOPMENT CORP. AND SUBSIDIARIES                                                                                                                                              |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                        |   |
| CONDENSED CONSOLIDATED BALANCE SHEETS                                                                                                                                                       |   |
| (unaudited)                                                                                                                                                                                 |   |
| (dollars in thousands, except share data)                                                                                                                                                   |   |
|                                                                                                                                                                                        |   | April 4, 2010 |   |   | January 2, 2010 |   |
| ASSETS                                                                                                                                                                                      |   |   |   |   |   |   |
| Current assets                                                                                                                                                                              |   |   |   |   |   |   |
|   Cash and cash equivalents                                                                                                                                                       |   | $ | 3,238 |   |   | $ | 9,963 |   |
|   Accounts receivable, less allowance for doubtful accounts of $1,846 and $1,761, respectively                                                                                    |   |   | 111,977 |   |   |   | 90,584 |   |
|   Inventories                                                                                                                                                                     |   |   | 129,635 |   |   |   | 120,942 |   |
|   Other current assets                                                                                                                                                            |   |   | 54,529 |   |   |   | 54,835 |   |
|        Total current assets                                                                                                                              |   |   | 299,379 |   |   |   | 276,324 |   |
|                                                                                                                                                                                        |   |   |   |   |   |   |   |   |
| Property, plant and equipment, net of accumulated depreciation of  $460,126 and $448,531, respectively                                                                            |   |   | 395,602 |   |   |   | 405,598 |   |
| Goodwill                                                                                                                                                                                    |   |   | 2,910 |   |   |   | 2,910 |   |
| Intangible assets, net                                                                                                                                                                      |   |   | 66,857 |   |   |   | 67,730 |   |
| Environmental indemnification receivable                                                                                                                                                    |   |   | 14,515 |   |   |   | 28,600 |   |
| Other assets                                                                                                                                                                                |   |   | 27,140 |   |   |   | 16,818 |   |
|                                                                                                                                                                                        |   |   |   |   |   |   |   |   |
|        Total assets                                                                                                                                      |   | $ | 806,403 |   |   | $ | 797,980 |   |
|                                                                                                                                                                                        |   |   |   |   |   |   |   |   |
| LIABILITIES, REDEEMABLE COMMON STOCK, ACCUMULATED DEFICIT AND ACCUMULATED OTHER COMPREHENSIVE LOSS                                                                                |   |   |   |   |   |   |   |   |
| Current liabilities                                                                                                                                                                         |   |   |   |   |   |   |   |   |
|   Current portion of long-term debt                                                                                                                                               |   | $ | 3,789 |   |   | $ | 5,955 |   |
|   Accounts payable                                                                                                                                                                |   |   | 51,933 |   |   |   | 60,020 |   |
|   Accrued interest                                                                                                                                                                |   |   | 12,218 |   |   |   | 5,218 |   |
|   Other accrued liabilities                                                                                                                                                       |   |   | 88,384 |   |   |   | 92,460 |   |
|        Total current liabilities                                                                                                                         |   |   | 156,324 |   |   |   | 163,653 |   |
|                                                                                                                                                                                        |   |   |   |   |   |   |   |   |
| Long-term debt                                                                                                                                                                              |   |   | 583,325 |   |   |   | 544,113 |   |
| Postretirement benefits other than pension                                                                                                                                                  |   |   | 50,598 |   |   |   | 50,609 |   |
| Accrued pension                                                                                                                                                                             |   |   | 102,343 |   |   |   | 101,312 |   |
| Environmental liability                                                                                                                                                                     |   |   | 14,515 |   |   |   | 28,600 |   |
| Other long-term liabilities                                                                                                                                                                 |   |   | 5,623 |   |   |   | 9,087 |   |
| Commitments and contingencies (Note 11)                                                                                                                                                     |   |   | - |   |   |   | - |   |
| Redeemable common stock, $0.01 par value,  shares authorized: 30,000,000,  shares issued and outstanding:  10,095,253 and  10,097,099, respectively |   |   | 120,320 |   |   |   | 122,087 |   |
| Accumulated deficit                                                                                                                                                                         |   |   | (127,383 | ) |   |   | (121,764 | ) |
| Accumulated other comprehensive loss                                                                                                                                                        |   |   | (99,262 | ) |   |   | (99,717 | ) |
|        Total liabilities, redeemable common stock, accumulated       deficit and accumulated other comprehensive loss |   | $ | 806,403 |   |   | $ | 797,980 |   |

----

| PAPERWEIGHT DEVELOPMENT CORP. AND SUBSIDIARIES      |   |
|-----------------------------------------------------|--------|
|                                                |   |
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS     |   |
| FOR THE THREE MONTHS ENDED                          |   |
| (unaudited)                                         |   |
| (dollars in thousands)                              |   |
|                                                |   |   |   |   |   |   |
|                                                |   | April 4, 2010 |   |   | April 5, 2009 |   |
|                                                |   |   |   |   |   |   |
| Net sales                                           |   | $ | 232,168 |   |   | $ | 212,550 |   |
|                                                |   |   |   |   |   |   |   |   |
| Cost of sales                                       |   |   | 188,418 |   |   |   | 170,809 |   |
|                                                |   |   |   |   |   |   |   |   |
|    Gross profit                           |   |   | 43,750 |   |   |   | 41,741 |   |
|                                                |   |   |   |   |   |   |   |   |
| Selling, general and administrative expenses        |   |   | 37,191 |   |   |   | 34,318 |   |
| Environmental expense insurance recovery            |   |   | (8,181 | ) |   |   | - |   |
|                                                |   |   |   |   |   |   |   |   |
| Operating income                                    |   |   | 14,740 |   |   |   | 7,423 |   |
|                                                |   |   |   |   |   |   |   |   |
| Other expense (income)                              |   |   |   |   |   |   |   |   |
|   Interest expense                        |   |   | 16,922 |   |   |   | 11,392 |   |
|   Debt extinguishment expense (gain), net |   |   | 5,532 |   |   |   | (5,380 | ) |
|   Interest income                         |   |   | (10 | ) |   |   | (16 | ) |
|   Foreign exchange (gain) loss            |   |   | (263 | ) |   |   | 279 |   |
|                                                |   |   |   |   |   |   |   |   |
| (Loss) income before income taxes                   |   |   | (7,441 | ) |   |   | 1,148 |   |
|                                                |   |   |   |   |   |   |   |   |
| Benefit for income taxes                            |   |   | (79 | ) |   |   | (15 | ) |
|                                                |   |   |   |   |   |   |   |   |
| Net (loss) income                                   |   | $ | (7,362 | ) |   | $ | 1,163 |   |

----

| PAPERWEIGHT DEVELOPMENT CORP. AND SUBSIDIARIES                                                  |   |
|-------------------------------------------------------------------------------------------------|--------|
|                                                                                            |   |
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                                                 |   |
| FOR THE THREE MONTHS ENDED                                                                      |   |
| (unaudited)                                                                                     |   |
| (dollars in thousands)                                                                          |   |
|                                                                                            |   | April 4, 2010 |   |   | April 5, 2009 |   |
| Cash flows from operating activities:                                                           |   |   |   |   |   |   |
| Net (loss) income                                                                               |   | $ | (7,362 | ) |   | $ | 1,163 |   |
| Adjustments to reconcile net (loss) income to net cash (used) provided by operating activities: |   |   |   |   |   |   |   |   |
| Depreciation                                                                                    |   |   | 12,295 |   |   |   | 14,429 |   |
| Amortization of intangible assets                                                               |   |   | 873 |   |   |   | 960 |   |
| Amortization of financing fees                                                                  |   |   | 988 |   |   |   | 569 |   |
| Amortization of bond discount                                                                   |   |   | 116 |   |   |   | - |   |
| Employer 401(k) noncash matching contributions                                                  |   |   | 906 |   |   |   | 1,147 |   |
| Foreign exchange (gain) loss                                                                    |   |   | (297 | ) |   |   | 319 |   |
| Loss on disposals of equipment                                                                  |   |   | 78 |   |   |   | 32 |   |
| Accretion of capital lease obligations                                                          |   |   | 13 |   |   |   | 21 |   |
| Loss (gain) on debt extinguishment                                                              |   |   | 5,437 |   |   |   | (5,380 | ) |
| Fox River insurance recoveries                                                                  |   |   | (8,181 | ) |   |   | - |   |
| (Increase)/decrease in assets and increase/(decrease) in liabilities:                           |   |   |   |   |   |   |   |   |
| Accounts receivable                                                                             |   |   | (21,286 | ) |   |   | (9,468 | ) |
| Inventories                                                                                     |   |   | (8,711 | ) |   |   | 862 |   |
| Other current assets                                                                            |   |   | 2,544 |   |   |   | (2,537 | ) |
| Accounts payable and other accrued liabilities                                                  |   |   | (151 | ) |   |   | 3,549 |   |
| Restructuring reserve                                                                           |   |   | - |   |   |   | (1,468 | ) |
| Accrued pension                                                                                 |   |   | 1,819 |   |   |   | 1,364 |   |
| Other, net                                                                                      |   |   | (4,230 | ) |   |   | (5,214 | ) |
|                                                                                            |   |   |   |   |   |   |   |   |
| Net cash (used) provided by operating activities                                           |   |   | (25,149 | ) |   |   | 348 |   |
|                                                                                            |   |   |   |   |   |   |   |   |
| Cash flows from investing activities:                                                           |   |   |   |   |   |   |   |   |
|         Proceeds from sale of equipment                 |   |   | 57 |   |   |   | 9 |   |
| Additions to property, plant and equipment                                                      |   |   | (2,366 | ) |   |   | (4,745 | ) |
|                                                                                            |   |   |   |   |   |   |   |   |
| Net cash used by investing activities                                                           |   |   | (2,309 | ) |   |   | (4,736 | ) |
|                                                                                            |   |   |   |   |   |   |   |   |
| Cash flows from financing activities:                                                           |   |   |   |   |   |   |   |   |
| Payments of senior secured notes payable                                                        |   |   | (211,225 | ) |   |   | (562 | ) |
| Proceeds from senior secured first lien notes payable                                           |   |   | 299,007 |   |   |   | - |   |
| Payments of senior subordinated secured notes payable                                           |   |   | - |   |   |   | (1,687 | ) |
| Debt acquisition costs                                                                          |   |   | (10,576 | ) |   |   | (2,685 | ) |
| Payments relating to capital lease obligations                                                  |   |   | (195 | ) |   |   | (182 | ) |
| Proceeds from old revolving line of credit                                                      |   |   | 21,350 |   |   |   | 43,850 |   |
| Payments of old revolving line of credit                                                        |   |   | (109,575 | ) |   |   | (16,050 | ) |
| Proceeds from new revolving line of credit                                                      |   |   | 74,693 |   |   |   | - |   |
| Payments of new revolving line of credit                                                        |   |   | (36,200 | ) |   |   | - |   |
| Payments of State of Ohio loans                                                                 |   |   | (282 | ) |   |   | (200 | ) |
| Payments of secured financing                                                                   |   |   | (838 | ) |   |   | (557 | ) |
| Payments to redeem common stock                                                                 |   |   | (24 | ) |   |   | (12 | ) |
| Decrease in cash overdraft                                                                      |   |   | (5,436 | ) |   |   | (16,810 | ) |
|                                                                                            |   |   |   |   |   |   |   |   |
| Net cash provided by financing activities                                                  |   |   | 20,699 |   |   |   | 5,105 |   |
|                                                                                            |   |   |   |   |   |   |   |   |
| Effect of foreign exchange rate changes on cash and cash equivalents                            |   |   | 34 |   |   |   | (40 | ) |
| Change in cash and cash equivalents                                                             |   |   | (6,725 | ) |   |   | 677 |   |
| Cash and cash equivalents at beginning of period                                                |   |   | 9,963 |   |   |   | 4,180 |   |
|                                                                                            |   |   |   |   |   |   |   |   |
| Cash and cash equivalents at end of period                                                      |   | $ | 3,238 |   |   | $ | 4,857 |   |

----

|  PAPERWEIGHT DEVELOPMENT CORP. AND SUBSIDIARIES      |   |
|-----------------------------------------------------------|--------|
|                                                      |   |
| CONSOLIDATED STATEMENTS OF REDEEMABLE COMMON STOCK,       |   |
| ACCUMULATED DEFICIT, ACCUMULATED OTHER COMPREHENSIVE LOSS |   |
| AND COMPREHENSIVE (LOSS) INCOME                           |   |
| FOR THE THREE MONTHS ENDED                                |   |
| (unaudited)                                               |   |
| (dollars in thousands, except share data)                 |   |
|                                                      |   |
|                                                      |   | Redeemable Common Stock |   |   |   |   |   |   |   |   |   |   |
|                                                      |   | SharesOutstanding |   |   | Amount |   |   | AccumulatedDeficit |   |   | AccumulatedOtherComprehensiveLoss |   |   | Comprehensive(Loss) Income |   |
|                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, January 2, 2010                                  |   |   | 10,097,099 |   |   | $ | 122,087 |   |   | $ | (121,764 | ) |   | $ | (99,717 | ) |   |   |   |
|                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive loss:                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Net loss                                      |   |   | - |   |   |   | - |   |   |   | (7,362 | )  |   |   | - |   |   | $ | (7,362 | ) |
|   Changes in retiree plans, net                 | -      | - | - | 298 |   |   | 298 |   |
|   Realized and unrealized gain on derivatives   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 157 |   |   |   | 157 |   |
|     Total comprehensive loss          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | $ | (6,907 | ) |
| Redemption of redeemable common stock                     |   |   | (1,846 | ) |   |   | (24 | ) |   |   | - |   |   |   | - |   |   |   |   |   |
| Accretion of redeemable common stock                      |   |   | - |   |   |   | (1,743 | ) |   |   | 1,743 |   |   |   | - |   |   |   |   |   |
|                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, April 4, 2010                                    |   |   | 10,095,253 |   |   | $ | 120,320 |   |   | $ | (127,383 | ) |   | $ | (99,262 | ) |   |   |   |   |
|                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, January 3, 2009                                  |   |   | 10,643,894 |   |   | $ | 147,874 |   |   | $ | (159,650 | ) |   | $ | (95,169 | ) |   |   |   |   |
|                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive income:                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Net income                                    |   |   | - |   |   |   | - |   |   |   | 1,163 |   |   |   | - |   |   | $ | 1,163 |   |
|   Changes in retiree plans, net                 |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (288 | ) |   |   | (288 | ) |
|   Realized and unrealized gain on derivatives   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 272 |   |   |   | 272 |   |
|     Total comprehensive income        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | $ | 1,147 |   |
| Redemption of redeemable common stock                     |   |   | (533 | ) |   |   | (12 | ) |   |   | - |   |   |   | - |   |   |   |   |   |
| Accretion of redeemable common stock                      |   |   | - |   |   |   | (470 | ) |   |   | 470 |   |   |   | - |   |   |   |   |   |
|                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, April 5, 2009                                    |   |   | 10,643,361 |   |   | $ | 147,392 |   |   | $ | (158,017 | ) |   | $ | (95,185 | ) |   |   |   |   |

----

|                                     |   | April 4, 2010 |    |   | January 2, 2010 |   |
|------------------------------------------|--------|---------------|---------|--------|-----------------|--------|
|                                     |   |          |    |   |            |   |
| Beginning of period balance              |   |          |    |   |            |   |
| Goodwill                                 |   | $             | 48,896  |   |            | $      | 50,246 |   |
| Accumulated impairment losses            |   |          | (45,986 | )      |            |   | (39,645 | ) |
|                                     |   |          | 2,910   |   |            |   | 10,601 |   |
| Impairment losses                        |   |          | -       |   |            |   | (6,341 | ) |
| Goodwill related to assets held for sale |   |          | -       |   |            |   | (1,350 | ) |
| End of period balance                    |   |          |    |   |            |   |   |   |
| Goodwill                                 |   |          | 48,896  |   |            |   | 48,896 |   |
| Accumulated impairment losses            |   |          | (45,986 | )      |            |   | (45,986 | ) |
|                                     |   | $             | 2,910   |   |            | $      | 2,910 |   |

|                                                                             |   | As of April 4, 2010   |    |   | As of January 2, 2010    |   |
|----------------------------------------------------------------------------------|--------|-----------------------|---------|--------|--------------------------|--------|
|                                                                             |   | Gross Carrying Amount |    |   | Accumulated Amortization |   |   | Gross Carrying Amount |   |   | Accumulated Amortization |   |
| Amortizable intangible assets:                                                   |   |                  |    |   |                     |   |   |   |   |   |   |   |
|     Trademarks                                               |   | $                     | 47,835  |   |                     | $      | 21,408 |   |   | $ | 47,835 |   |   | $ | 20,847 |   |
|      Patents                                            |   |                  | 15,013  |   |                     |   | 15,010 |   |   |   | 15,013 |   |   |   | 15,005 |   |
|      Customer relationships                             |   |                  | 25,064  |   |                     |   | 7,502 |   |   |   | 25,064 |   |   |   | 7,200 |   |
|      Non-compete agreements                             |   |                  | -       |   |                     |   | - |   |   |   | 691 |   |   |   | 686 |   |
|             Subtotal |   |                  | 87,912  |   |                     | $      | 43,920 |   |   |   | 88,603 |   |   | $ | 43,738 |   |
| Unamortizable intangible assets:                                                 |   |                  |    |   |                     |   |   |   |   |   |   |   |   |   |   |   |
|    Trademarks                                                     |   |                  | 22,865  |   |                     |   |   |   |   |   | 22,865 |   |   |   |   |   |
|             Total    |   | $                     | 110,777 |   |                     |   |   |   |   | $ | 111,468 |   |   |   |   |   |

----

|                                        |   | April 4, 2010 |    |   | January 2, 2010 |   |
|---------------------------------------------|--------|---------------|---------|--------|---------------------------|--------|
|                                        |   |          |    |   |                      |   |
| Finished goods                              |   | $             | 73,971  |   |                      | $      | 68,534 |   |
| Raw materials, work in process and supplies |   |          | 68,025  |   |                      |   | 65,259 |   |
|                                        |   |          | 141,996 |   |                      |   | 133,793 |   |
| Inventory reserve                           |   |          | (3,880  | )      |                      |   | (4,370 | ) |
|                                        |   |          | 138,116 |   |                      |   | 129,423 |   |
| Last-in, first-out ("LIFO") reserve         |   |          | (8,481  | )      |                      |   | (8,481 | ) |
|                                        |   | $             | 129,635 |   |                      | $      | 120,942 |   |

|                                  |   | April 4, 2010 |     |   | January 2, 2010 |   |
|---------------------------------------|--------|--------------------|----------|--------|---------------------------|--------|
| Land and improvements                 |   | $                  | 9,753    |   |                      | $      | 9,753 |   |
| Buildings and improvements            |   |               | 137,764  |   |                      |   | 137,602 |   |
| Machinery and equipment               |   |               | 661,052  |   |                      |   | 660,691 |   |
| Software                              |   |               | 33,435   |   |                      |   | 33,414 |   |
| Capital leases                        |   |               | 4,929    |   |                      |   | 4,764 |   |
| Construction in progress              |   |               | 8,795    |   |                      |   | 7,905 |   |
|                                  |   |               | 855,728  |   |                      |   | 854,129 |   |
| Accumulated depreciation/amortization |   |               | (460,126 | )      |                      |   | (448,531 | ) |
|                                  |   | $                  | 395,602  |   |                      | $      | 405,598 |   |

|                                         |   | For the ThreeMonths EndedApril 4, 2010 |   |   | For the ThreeMonths EndedApril 5, 2009 |   |
|----------------------------------------------|--------|----------------------------------------|--------|--------|----------------------------------------|--------|
| Cost of sales                                |   | $                                      | 10,673 |   |                                   | $      | 12,761 |   |
| Selling, general and administrative expenses |   |                                   | 1,622  |   |                                   |   | 1,668 |   |
|                                         |   | $                                      | 12,295 |   |                                   | $      | 14,429 |   |

|                                     |   | April 4, 2010 |   |   | January 2, 2010 |    |
|------------------------------------------|--------|--------------------|--------|--------|----------------------|---------|
| Environmental indemnification receivable |   | $                  | 47,100 |   |                 | $       | 47,100 |   |
| Alternative fuels tax credit receivable  |   |               | -      |   |                 |    | 925 |   |
| Environmental expense insurance recovery |   |               | 2,228  |   |                 |    | - |   |
| Other                                    |   |               | 5,201  |   |                 |    | 6,810 |   |
|                                     |   |  $            | 54,529 |   |                 |  $ | 54,835 |   |

|                                     |   | April 4, 2010 |   |   | January 2, 2010 |    |
|------------------------------------------|--------|--------------------|--------|--------|----------------------|---------|
| Deferred debt issuance costs             |   | $                  | 16,937 |   |                 | $       | 12,786 |   |
| Environmental expense insurance recovery |   |               | 5,953  |   |                 |    | - |   |
| Other                                    |   |               | 4,250  |   |                 |    | 4,032 |   |
|                                     |   |  $            | 27,140 |   |                 |  $ | 16,818 |   |

----

|                                       |   | April 4, 2010 |   |   | January 2, 2010 |   |
|--------------------------------------------|--------|--------------------|--------|--------|----------------------|--------|
| Compensation                               |   | $                  | 9,057  |   |                 | $      | 10,288 |   |
| Trade discounts                            |   |               | 12,241 |   |                 |   | 16,472 |   |
| Workers’ compensation                |   |               | 4,302  |   |                 |   | 4,460 |   |
| Accrued insurance                          |   |               | 1,745  |   |                 |   | 1,864 |   |
| Other accrued taxes                        |   |               | 1,189  |   |                 |   | 1,535 |   |
| Postretirement benefits other than pension |   |               | 3,609  |   |                 |   | 3,609 |   |
| Fox River Liabilities                      |   |               | 47,100 |   |                 |   | 47,100 |   |
| Other                                      |   |               | 9,141  |   |                 |   | 7,132 |   |
|                                       |   | $                  | 88,384 |   |                 | $      | 92,460 |   |

----

| Pension Benefits                           |   | For the ThreeMonths EndedApril 4, 2010 |   |   | For the ThreeMonths EndedApril 5, 2009 |   |
|--------------------------------------------|--------|--------------------------------------------------|--------|--------|--------------------------------------------------|--------|
| Net periodic benefit cost                  |   |                                             |   |   |                                             |   |
|   Service cost                   |   | $                                                | 1,517  |   |                                             | $      | 1,458 |   |
|   Interest cost                  |   |                                             | 4,900  |   |                                             |   | 4,909 |   |
|   Expected return on plan assets |   |                                             | (5,318 | )      |                                             |   | (5,200 | ) |
|   Amortization of prior service cost  |   |                                             | 135    |   |                                             |   | 135 |   |
|   Amortization of actuarial loss |   |                                             | 653    |   |                                             |   | 122 |   |
| Net periodic benefit cost                  |   | $                                                | 1,887  |   |                                             | $      | 1,424 |   |

| Other Postretirement Benefits                    |   | For the ThreeMonths EndedApril 4, 2010 |   |   | For the ThreeMonths EndedApril 5, 2009 |   |
|--------------------------------------------------|--------|--------------------------------------------------|--------|--------|--------------------------------------------------|--------|
| Net periodic benefit cost                        |   |                                             |   |   |                                             |   |
|   Service cost                         |   | $                                                | 196    |   |                                             | $      | 185 |   |
|   Interest cost                        |   |                                             | 760    |   |                                             |   | 767 |   |
|   Amortization of prior service credit |   |                                             | (538   | )      |                                             |   | (545 | ) |
|   Amortization of actuarial loss       |   |                                             | 48     |   |                                             |   | - |   |
| Net periodic benefit cost                        |   | $                                                | 466    |   |                                             | $      | 407 |   |

----

----

|   | • | total remediation costs of $690 million, based on the most recent bids received with a range from $594 million to $900 million; |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------|

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

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

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

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

----

----

----

| Designated as a Hedge                 |   | Balance Sheet Location      |   | April 4, 2010 |   |   | January 2, 2010 |   |
|---------------------------------------|--------|-----------------------------|--------|---------------|--------|--------|-----------------|--------|
| Foreign currency exchange derivatives |   | Accounts receivable         |   | $             | 575    |   |            | $      | 308 |   |
| Foreign currency exchange derivatives |   | Other current liabilities   |   |          | (92    | )      |            |   | (35 | ) |
|                                  |   |                        |   |          |   |   |            |   |   |   |
| Not Designated as a Hedge             |   |                        |   |          |   |   |            |   |   |   |
| Interest rate swap contract           |   | Other long-term liabilities |   |          | -      |   |            |   | (3,813 | ) |

| Designated as a Hedge                                             |   | Statement of Operations Location |   | April 4, 2010 |       |    | April 5, 2009 |   |
|-------------------------------------------------------------------|--------|----------------------------------|--------|---------------|------------|---------|---------------|--------|
| Foreign currency exchange derivatives                             |   | Net sales                        |   | $             | (53        | )  |          | $      | (32 | )  |
|                                                              |   |                             |   |          |       |    |          |   |   |   |
| (Gains) losses recognized in accumulated other comprehensive loss |   |                             |   |          |  (404 | )  |          |   |  33 |   |
|                                                              |   |                             |   |          |       |    |          |   |   |   |
| Not Designated as a Hedge                                         |   |                             |   |          |       |    |          |   |   |   |
| Interest rate swap contract                                       |   | Interest expense                 |   |          | 961        |    |          |   | (204 | ) |

|                                                                                                                                                                                                              | April 4, 2010                                                                                                               |   | January 2, 2010                                                                                                             |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------|--------|
| The senior secured variable rate notes payable were paid off, in full, and terminated on February 8, 2010. At January 2, 2010 the notes were at 6.625%, $542 due quarterly with $204,184 due June 2013. | $                                                                                                                                | -      |                                                                                                                             |   | $ | 211,225 |   |
| Secured term note payable at 14.25%, approximately $200 due monthly with $6,831 due December 2013.                                                                                                                | 18,856                                                                                                                           |   | 19,695                                                                                                                           |   |
| At January 2, 2010 the old revolving credit facility was at approximately 6.7%. On February 8, 2010, it was repaid in full and terminated.                                                                        |                                                                                                                             | -      |                                                                                                                             |   |   | 88,225 |   |
| New revolving credit facility at approximately 6.0%                                                                                                                                                               |  38,493                                                                                                                     |   |  -                                                                                                                          |   |
| Unsecured variable rate industrial development bonds, 0.4% average interest rate at April 4, 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                                                                                                           | 7,755                                                                                                                            |   | 7,965                                                                                                                            |   |
| State of Ohio loan at 1% until July 2011, then 3% until May 2019, approximately $30 due monthly and final payment due May 2019                                                                     | 2,784                                                                                                                            |   | 2,856                                                                                                                            |   |
| Senior notes payable at 8.125%, due June 2011                                                                                                                                                                | 17,491                                                                                                                           |   | 17,491                                                                                                                           |   |
| Senior subordinated notes payable at 9.75%, due June 2014                                                                                                                                                    | 32,195                                                                                                                           |   | 32,195                                                                                                                           |   |
| Senior secured first lien notes payable at 10.5%, due June 2015                                                                                                                                                   | 305,000                                                                                                                          |   | -                                                                                                                                |   |
| Unamortized discount on 10.5% senior secured first lien notes payable, due June 2015                                                                                                                              | (5,876                                                                                                                           | )      | -                                                                                                                                |   |
| Second lien notes payable at 11.25%, due December 2015                                                                                                                                                            | 161,766                                                                                                                          |   | 161,766                                                                                                                          |   |
|                                                                                                                                                                                                              | 587,114                                                                                                                          |   | 550,068                                                                                                                          |   |
| Less obligations due within one year                                                                                                                                                                              | (3,789                                                                                                                           | )      | (5,955                                                                                                                           | )      |
|                                                                                                                                                                                                              | $                    583,325 |   | $                    544,113 |   |
|                                                                                                                                                                                                              |                                                                                                                             |   |                                                                                                                             |   |

----

----

----

|                                    |   | April 4, 2010 |    |   | January 2, 2010 |    |
|-----------------------------------------|--------|-------------------------|---------|--------|---------------------------|---------|
|                                    |   | Carrying                |    |   | Fair                      |    |   | Carrying |   |   | Fair |   |
| Financial Instruments                   |   | Amount                  |    |   | Value                     |    |   | Amount |   |   | Value |   |
| Senior subordinated notes payable       |   | $                       | 32,195  |   |                      | $       | 10,785 |   |   | $ | 32,195 |   |   | $ | 19,317 |   |
| Senior notes payable                    |   |                    | 17,491  |   |                      |    | 16,879 |   |   |   | 17,491 |   |   |   | 17,491 |   |
| Senior secured first lien notes payable |   | 299,124                 |    |   |                      | 303,611 |   |   |   | - |   |   |   | - |   |
| Second lien notes payable               |   | 161,766                 |    |   |                      | 144,781 |   |   |   | 161,766 |   |   |   | 161,766 |   |
| Senior credit facility                  |   | -                       |    |   |                      | -       |   |   |   | 211,225 |   |   |   | 211,225 |   |
| Secured term note payable               |   | 18,856                  |    |   |                      | 18,856  |   |   |   | 19,695 |   |   |   | 19,695 |   |
| Revolving credit facility               | 38,493 | 38,493                  | 88,225  | 88,225 |
| State of Ohio loans                     | 10,539 | 10,928                  | 10,821  | 10,941 |
| Industrial development bonds            |   |                    | 8,650   |   |                      |    | 8,650 |   |   |   | 8,650 |   |   |   | 8,650 |   |
|                                    |   | $                       | 587,114 |   |                      | $       | 552,983 |   |   | $ | 550,068 |   |   | $ | 537,310 |   |
|                                    |   |                    |    |   |                      |    |   |   |   |   |   |   |   |   |   |   |
| Interest rate swap derivative           |   | $                       | -       |   |                      | $       | - |   |   | $ | 3,813 |   |   | $ | 3,813 |   |

----

|                                                         |   | For the Three Months EndedApril 4, 2010 |          |   | For the Three Months EndedApril 5, 2009 |   |
|--------------------------------------------------------------|--------|---------------------------------------------------|---------------|--------|---------------------------------------------------|--------|
| Net sales                                                    |   |                                              |          |   |                                              |   |
| Technical Papers                                             |   |                                              |          |   |                                              |   |
| Carbonless papers                                            |   | $                                                 | 124,625       |   |                                              | $      | 120,518 |   |
| Thermal papers                                               |   |                                              | 80,225        |   |                                              |   | 65,030 |   |
|                                                         |   |                                              | 204,850       |   |                                              |   | 185,548 |   |
|                                                         |   |                                              |          |   |                                              |   |   |   |
| Encapsys                                                |   |                                              |   11,468 |   |                                              |   |   9,209 |   |
| Performance packaging                                        |   |                                              | 22,159        |   |                                              |   | 23,944 |   |
| Intersegment (A)                                             |   |                                              | (6,309        | )      |                                              |   | (6,151 | ) |
| Total                                                        |   | $                                                 | 232,168       |   |                                              | $      | 212,550 |   |
|                                                         |   |                                              |          |   |                                              |   |   |   |
| Operating income (loss)                                      |   |                                              |          |   |                                              |   |   |   |
| Technical Papers                                             |   |                                              |          |   |                                              |   |   |   |
| Carbonless papers                                            |   | $                                                 | 8,285         |   |                                              | $      | 11,561 |   |
| Thermal papers                                               |   |                                              | (2,055        | )      |                                              |   | (3,516 | ) |
|                                                         |   |                                              | 6,230         |   |                                              |   | 8,045 |   |
|                                                         |   |                                              |          |   |                                              |   |   |   |
| Encapsys                                                     |   |                                              |   1,533  |   |                                              |   |   342 |   |
| Performance packaging                                        |   |                                              | 1,335         |   |                                              |   | 344 |   |
| Unallocated corporate charges and business development costs |   |                                              | 6,790         |   |                                              |   | (534 | ) |
| Intersegment (A)                                             |   |                                              | (1,148        | )      |                                              |   | (774 | ) |
| Total                                                        |   | $                                                 | 14,740        |   |                                              | $      | 7,423 |   |
|                                                         |   |                                              |          |   |                                              |   |   |   |
| Depreciation and amortization                                |   |                                              |          |   |                                              |   |   |   |
| Technical Papers                                             |   |                                              |          |   |                                              |   |   |   |
| Carbonless papers                                            |   | $                                                 | 6,856         |   |                                              | $      | 8,349 |   |
| Thermal papers                                               |   |                                              | 4,938         |   |                                              |   | 4,887 |   |
|                                                         |   |                                              | 11,794        |   |                                              |   | 13,236 |   |
|                                                         |   |                                              |          |   |                                              |   |   |   |
| Encapsys                                                |   |                                              |   461    |   |                                              |   |   511 |   |
| Performance packaging                                        |   |                                              | 913           |   |                                              |   | 1,602 |   |
| Unallocated corporate charges                                |   |                                              | -             |   |                                              |   | 40 |   |
| Total                                                        |   | $                                                 | 13,168        |   |                                              | $      | 15,389 |   |

----

| PAPERWEIGHT DEVELOPMENT CORP. AND SUBSIDIARIES                                                                                               |
|----------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                         |
| NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)                                                                           |
|                                                                                                                                         |
| CONDENSED CONSOLIDATING BALANCE SHEET                                                                                                        |
| APRIL 4, 2010                                                                                                                                |
| (unaudited)                                                                                                                                  |
| (dollars in thousands)                                                                                                                       |
|                                                                                                                                         |
|                                                                                                                                         |   | ParentGuarantor |   |   | Issuer |   |   | SubsidiaryGuarantors |   |   | Non-Guarantor Subsidiary |   |   | Eliminations |   |   | Consolidated |
|                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| ASSETS                                                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current assets                                                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Cash and cash equivalents                                                                                                       |   | $ | - |   |   | $ | 1,915 |   |   | $ | - |   |   | $ | 1,323 |   |   | $ | - |   |   | $ | 3,238 |
|    Accounts receivable, net                                                                                                        |   |   | - |   |   |   | 95,048 |   |   |   | 11,501 |   |   |   | 5,428 |   |   |   | - |   |   |   | 111,977 |
|    Inventories                                                                                                                     |   |   | - |   |   |   | 116,356 |   |   |   | 10,881 |   |   |   | 2,398 |   |   |   | - |   |   |   | 129,635 |
|    Other current assets                                                                                                       |   |   | 47,100 |   |   |   | 7,282 |   |   |   | - |   |   |   | 147 |   |   |   | - |   |   |   | 54,529 |
|       Total current assets                                                                                     |   |   | 47,100 |   |   |   | 220,601 |   |   |   | 22,382 |   |   |   | 9,296 |   |   |   | - |   |   |   | 299,379 |
|                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Property, plant and equipment, net                                                                                              |   |   | - |   |   |   | 375,468 |   |   |   | 20,126 |   |   |   | 8 |   |   |   | - |   |   |   | 395,602 |
|    Investment in subsidiaries                                                                                                      |   |   | 176,179 |   |   |   | 98,426 |   |   |   | - |   |   |   | - |   |   |   | (274,605) |   |   |   | - |
|    Other assets                                                                                                               |   |   | 14,527 |   |   |   | 77,202 |   |   |   | 19,573 |   |   |   | 120 |   |   |   | - |   |   |   | 111,422 |
|        Total assets                                                                                            |   | $ | 237,806 |   |   | $ | 771,697 |   |   | $ | 62,081 |   |   | $ | 9,424 |   |   | $ | (274,605) |   |   | $ | 806,403 |
|                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LIABILITIES, REDEEMABLE COMMON STOCK, ACCUMULATED DEFICIT AND ACCUMULATED OTHER COMPREHENSIVE LOSS                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current liabilities                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Current portion of long-term debt                                                                                               |   | $ | - |   |   | $ | 3,789 |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | 3,789 |
|    Accounts payable                                                                                                                |   |   | - |   |   |   | 45,875 |   |   |   | 6,014 |   |   |   | 44 |   |   |   | - |   |   |   | 51,933 |
|    Due to (from) parent and affiliated companies                                                                                   |   |   | 344,131 |   |   |   | (308,916 | ) |   |   | (30,535 | ) |   |   | (4,680 | ) |   |   | - |   |   |   | - |
|    Other accrued liabilities                                                                                                       |   |   | - |   |   |   | 98,469 |   |   |   | 945 |   |   |   | 1,188 |   |   |   | - |   |   |   | 100,602 |
|        Total current liabilities                                                                               |   |   | 344,131 |   |   |   | (160,783 | ) |   |   | (23,576 | ) |   |   | (3,448 | ) |   |   | - |   |   |   | 156,324 |
|                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Long-term debt                                                                                                                               |   |   | - |   |   |   | 583,325 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 583,325 |
| Other long-term liabilities                                                                                                                  |   |   | - |   |   |   | 172,976 |   |   |   | - |   |   |   | 103 |   |   |   | - |   |   |   | 173,079 |
| Redeemable common stock, accumulated deficit and accumulated other comprehensive loss                                                        |   |   | (106,325) |   |   |   | 176,179 |   |   |   | 85,657 |   |   |   |  12,769 |   |   |   | (274,605) |   |   |   | (106,325) |
|                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       Total liabilities, redeemable common stock, accumulated deficit and accumulated other comprehensive loss |   | $ | 237,806 |   |   | $ | 771,697 |   |   | $ | 62,081 |   |   | $ | 9,424 |   |   | $ | (274,605) |   |   | $ | 806,403 |

----

| PAPERWEIGHT DEVELOPMENT CORP. AND SUBSIDIARIES                                                                                               |
|----------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                         |
| NOTES TO CONDENSED 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 |   |   |   | 7,518 |   |   |   | 77 |   |   |   | 140 |   |   |   | - |   |   |   | 54,835 |
|       Total current assets                                                                                     |   |   | 47,100 |   |   |   | 203,101 |   |   |   | 17,773 |   |   |   | 8,350 |   |   |   | - |   |   |   | 276,324 |
|                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    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 |   |   |   | 67,430 |   |   |   | 19,863 |   |   |   | 153 |   |   |   | - |   |   |   | 116,058 |
|        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                                                                                                       |   |   | - |   |   |   | 94,485 |   |   |   | 1,097 |   |   |   | 2,096 |   |   |   | - |   |   |   | 97,678 |
|        Total current liabilities                                                                               |   |   | 354,893 |   |   |   | (161,254 | ) |   |   | (26,090 | ) |   |   | (3,896 | ) |   |   | - |   |   |   | 163,653 |
|                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Long-term debt                                                                                                                               |   |   | - |   |   |   | 544,113 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 544,113 |
| Other long-term liabilities                                                                                                                  |   |   | - |   |   |   | 189,510 |   |   |   | - |   |   |   | 98 |   |   |   | - |   |   |   | 189,608 |
| 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 CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) |   |
|                                                               |   |
| CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS                    |   |
| FOR THE THREE MONTHS ENDED APRIL 4, 2010                           |   |
| (unaudited)                                                        |   |
| (dollars in thousands)                                             |   |
|                                                               |   |
|                                                               |   |
|                                                               |   |
|                                                               |   | Parent |   |   |   |   |   | Subsidiary |   |   | Non-Guarantor |   |   |   |   |   |   |   |
|                                                               |   | Guarantor |   |   | Issuer |   |   | Guarantors |   |   | Subsidiary |   |   | Eliminations |   |   | Consolidated |   |
| Net sales                                                          |   | $ | - |   |   | $ | 210,016 |   |   | $ | 22,160 |   |   | $ | 11,340 |   |   | $ | (11,348 | ) |   | $ | 232,168  |   |
| Cost of sales                                                      |   |   | - |   |   |   | 170,328 |   |   |   | 18,218 |   |   |   | 11,333 |   |   |   | (11,461 | ) |   |   | 188,418  |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross profit                                                       |   |   | - |   |   |   | 39,688 |   |   |   | 3,942 |   |   |   | 7 |   |   |   | 113 |   |   |   | 43,750  |   |
| Selling, general and administrative expenses                       |   |   | - |   |   |   | 34,284  |   |   |   | 2,467 |   |   |   | 440 |   |   |   | - |   |   |   | 37,191  |   |
| Environmental expense insurance recovery                           |   |   | - |   |   |   | (8,181 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (8,181) |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating income (loss)                                            |   |   | - |   |   |   | 13,585  |   |   |   | 1,475 |   |   |   | (433 | ) |   |   | 113 |   |   |   | 14,740  |   |
| Interest expense                                                   |   |   | 3,299 |   |   |   | 17,172  |   |   |   | - |   |   |   | - |   |   |   | (3,549 | ) |   |   | 16,922  |   |
| Debt extinguishment expense, net                                   |   |   | - |   |   |   | 5,532  |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 5,532  |   |
| Interest income                                                    |   |   | - |   |   |   | (3,309 | ) |   |   | - |   |   |   | (250) |   |   |   | 3,549 |   |   |   | (10) |   |
| Loss (income) in equity investments                                |   |   | 4,063 |   |   |   | (1,925 | ) |   |   | - |   |   |   | - |   |   |   | (2,138 | ) |   |   | - |   |
| Other loss (income)                                                |   |   | - |   |   |   | 148  |   |   |   | - |   |   |   | (521 | ) |   |   | 110 |   |   |   | (263) |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (Loss) income before income taxes                                  |   |   | (7,362) |   |   |   | (4,033 | ) |   |   | 1,475 |   |   |   | 338 |   |   |   | 2,141 |   |   |   | (7,441) |   |
| Provision (benefit) for income taxes                               |   |   | - |   |   |   | 30  |   |   |   | 12 |   |   |   | (121 | ) |   |   | - |   |   |   | (79) |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net (loss) income                                                  |   | $ | (7,362) |   |   | $ | (4,063 | ) |   | $ | 1,463 |   |   | $ | 459 |   |   | $ | 2,141 |   |   | $ | (7,362) |   |

----

| PAPERWEIGHT DEVELOPMENT CORP. AND SUBSIDIARIES                     |   |
|--------------------------------------------------------------------|--------|
|                                                               |   |
| NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) |   |
|                                                               |   |
| CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS                    |   |
| FOR THE THREE MONTHS ENDED APRIL 5, 2009                           |   |
| (unaudited)                                                        |   |
| (dollars in thousands)                                             |   |
|                                                               |   |
|                                                               |   |
|                                                               |   |
|                                                               |   | Parent |   |   |   |   |   | Subsidiary |   |   | Non-Guarantor |   |   |   |   |   |   |   |
|                                                               |   | Guarantor |   |   | Issuer |   |   | Guarantors |   |   | Subsidiary |   |   | Eliminations |   |   | Consolidated |   |
| Net sales                                                          |   | $ | - |   |   | $ | 188,981 |   |   | $ | 23,944 |   |   | $ | 11,632  |   |   | $ | (12,007) |   |   | $ | 212,550  |   |
| Cost of sales                                                      |   |   | - |   |   |   | 150,649 |   |   |   | 20,269 |   |   |   | 11,526  |   |   |   | (11,635) |   |   |   | 170,809  |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross profit                                                       |   |   | - |   |   |   | 38,332 |   |   |   | 3,675 |   |   |   | 106  |   |   |   | (372) |   |   |   | 41,741  |   |
| Selling, general and administrative expenses                       |   |   | - |   |   |   | 30,627 |   |   |   | 3,327 |   |   |   | 364  |   |   |   | - |   |   |   | 34,318  |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating income (loss)                                            |   |   | - |   |   |   | 7,705 |   |   |   | 348 |   |   |   | (258) |   |   |   | (372) |   |   |   | 7,423  |   |
| Interest expense                                                   |   |   | 3,099 |   |   |   | 11,392 |   |   |   | - |   |   |   | - |   |   |   | (3,099) |   |   |   | 11,392  |   |
| Debt extinguishment gain, net                                      |   |   | - |   |   |   | (5,380 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (5,380) |   |
| Interest income                                                    |   |   | - |   |   |   | (3,114 | ) |   |   | - |   |   |   | (1) |   |   |   | 3,099  |   |   |   | (16) |   |
| (Income) loss in equity investments                                |   |   | (4,262 | ) |   |   | 250 |   |   |   | - |   |   |   | - |   |   |   | 4,012  |   |   |   | -  |   |
| Other loss                                                         |   |   | - |   |   |   | 228 |   |   |   | - |   |   |   | 211 |   |   |   | (160) |   |   |   | 279  |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income (loss) before income taxes                                  |   |   | 1,163 |   |   |   | 4,329 |   |   |   | 348 |   |   |   | (468) |   |   |   | (4,224) |   |   |   | 1,148  |   |
| Provision (benefit) for income taxes                               |   |   | - |   |   |   | 67 |   |   |   | 11 |   |   |   | (93) |   |   |   | - |   |   |   | (15) |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss)                                                  |   | $ | 1,163 |   |   | $ | 4,262 |   |   | $ | 337 |   |   | $ | (375) |   |   | $ | (4,224) |   |   | $ | 1,163  |   |

----

| PAPERWEIGHT DEVELOPMENT CORP. AND SUBSIDIARIES                                                  |   |      |
|-------------------------------------------------------------------------------------------------|--------|-----------|
|                                                                                            |   |      |
| NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)                              |   |      |
|                                                                                            |   |      |
| CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS                                                 |   |      |
| FOR THE THREE MONTHS ENDED APRIL 4, 2010                                                        |   |      |
| (unaudited)                                                                                     |   |      |
| (dollars in thousands)                                                                          |   |      |
|                                                                                            |   |      |
|                                                                                            |   | Parent    |   |   |   |   |   | Subsidiary |   |   | Non-Guarantor |   |   |   |   |   |   |   |   |
|                                                                                            |   | Guarantor |   |   | Issuer |   |   | Guarantors |   |   | Subsidiary |   |   | Eliminations |   |   | Consolidated |   |   |
|                                                                                            |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash flows from operating activities:                                                           |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net (loss) income                                                                               |   | $         | (7,362 | ) |   | $ | (4,063 | ) |   | $ | 1,463 |   |   | $ | 459 |   |   | $ | 2,141 |   |   | $ | (7,362 | ) |   |
| Adjustments to reconcile net (loss) income to net cash provided (used) by operating activities: |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation and amortization                                                                   |   |      | - |   |   |   | 12,303 |   |   |   | 864 |   |   |   | 1 |   |   |   | - |   |   |   | 13,168 |   |   |
| Other                                                                                           |   |      | - |   |   |   | (419 | )  |   |   | - |   |   |   | (521 | ) |   |   | - |   |   |   | (940 | ) |   |
| Change in assets and liabilities, net                                                      |   |      |   18,148 |   |   |   |   (44,599 | ) |   |   |   (590 | )  |   |   |   (833 | )  |   |   |  (2,141 | )  |   |   |   (30,015 | ) |   |
| Net cash provided (used) by operating activities                                                |   |      | 10,786 |   |   |   | (36,778 | ) |   |   | 1,737 |   |   |   | (894 | ) |   |   | - |   |   |   | (25,149 | ) |   |
| Cash flows from investing activities:                                                           |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds from sale of equipment                                                                 |   |      | - |   |   |   | 57 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 57 |   |   |
| Additions to property, plant and equipment                                                      |   |      | - |   |   |   | (2,135 | ) |   |   | (231 | ) |   |   | - |   |   |   | - |   |   |   | (2,366 | ) |   |
|                                                                                            |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net cash used by investing activities                                                           |   |      | - |   |   |   | (2,078 | ) |   |   | (231 | ) |   |   | - |   |   |   | - |   |   |   | (2,309 | ) |   |
| Cash flows from financing activities:                                                           |   |      |   |   |   |   |   |   |   |   | - |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Payments of senior secured notes payable                                                        |   |      | - |   |   |   | (211,225 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (211,225 | ) |   |
| Proceeds from senior secured first lien notes payable                                           |   |      | - |   |   |   |   299,007 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 299,007 |   |   |
| Debt acquisition costs                                                                          |   |      | - |   |   |   | (10,576 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (10,576 | ) |   |
| Payments relating to capital lease obligations                                                  |   |      | - |   |   |   | (195 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (195 | ) |   |
| Proceeds from old revolving line of credit                                                      |   |      | - |   |   |   | 21,350 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 21,350 |   |   |
| Payments of old revolving line of credit                                                        |   |      | - |   |   |   | (109,575 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (109,575 | ) |   |
| Proceeds from new revolving line of credit                                                      |   |      | - |   |   |   | 74,693 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 74,693 |   |   |
| Payments of new revolving line of credit                                                        |   |      | - |   |   |   | (36,200 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (36,200 | ) |   |
| Payments of State of Ohio loans                                                                 |   |      | - |   |   |   | (282 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (282 | ) |   |
| Payments of secured financing                                                                   |   |      | - |   |   |   | (838 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (838 | ) |   |
| Due to parent and affiliated companies, net                                                     |   |      | (10,762 | ) |   |   | 10,853 |   |   |   | (1,507 | ) |   |   | 1,416 |   |   |   | - |   |   |   | - |   |   |
| Payments to redeem common stock                                                            |   |      |  (24 | ) |   |   |  - |   |   |   | - |   |   |   |  - |   |   |   |  - |   |   |   |  (24 | )  |   |
| Decrease in cash overdraft                                                                 |   |      | - |   |   |   | (5,436 | )  |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (5,436 | )  |   |
|                                                                                            |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net cash (used) provided by financing activities                                                |   |      | (10,786 | ) |   |   | 31,576 |   |   |   | (1,507 | ) |   |   | 1,416 |   |   |   | - |   |   |   | 20,699 |   |   |
|                                                                                            |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Effect of foreign exchange rate changes on cash and cash equivalents                            |   |      | - |   |   |   | 34 |   |   |   | - |   |   |   | - |   |   |   |   - |   |   |   | 34 |   |   |
| Change in cash and cash equivalents                                                             |   |      | - |   |   |   | (7,246 | ) |   |   | (1 | ) |   |   | 522 |   |   |   | - |   |   |   | (6,725 | ) |   |
| Cash and cash equivalents at beginning of period                                                |   |      | - |   |   |   | 9,161 |   |   |   | 1 |   |   |   | 801 |   |   |   | - |   |   |   | 9,963 |   |   |
| Cash and cash equivalents at end of period                                                      |   | $         | - |   |   | $ | 1,915 |   |   | $ | - |   |   | $ | 1,323 |   |   | $ | - |   |   | $ | 3,238 |   |   |

----

| PAPERWEIGHT DEVELOPMENT CORP. AND SUBSIDIARIES                                                  |   |      |
|-------------------------------------------------------------------------------------------------|--------|-----------|
|                                                                                            |   |      |
| NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)                              |   |      |
|                                                                                            |   |      |
| CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS                                                 |   |      |
| FOR THE THREE MONTHS ENDED APRIL 5, 2009                                                        |   |      |
| (unaudited)                                                                                     |   |      |
| (dollars in thousands)                                                                          |   |      |
|                                                                                            |   |      |
|                                                                                            |   | Parent    |   |   |   |   |   | Subsidiary |   |   | Non-Guarantor |   |   |   |   |   |   |   |   |
|                                                                                            |   | Guarantor |   |   | Issuer |   |   | Guarantors |   |   | Subsidiary |   |   | Eliminations |   |   | Consolidated |   |   |
|                                                                                            |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash flows from operating activities:                                                           |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss)                                                                               |   | $         | 1,163 |   |   | $ | 4,262 |   |   | $ | 337 |   |   | $ | (375 | ) |   | $ | (4,224 | )  |   | $ | 1,163 |   |   |
| Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities: |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation and amortization                                                                   |   |      | - |   |   |   | 13,825 |   |   |   | 1,563 |   |   |   | 1 |   |   |   | - |   |   |   | 15,389 |   |   |
| Other                                                                                           |   |      | - |   |   |   | (3,503 | )  |   |   | - |   |   |   | 211 |   |   |   | - |   |   |   | (3,292 | )  |   |
| Change in assets and liabilities, net                                                      |   |      |  10,096 |   |   |   |  (27,230 | )  |   |   |  1,333 |   |   |   |  (1,335 | )  |   |   |  4,224 |   |   |   |  (12,912 | )  |   |
|                                                                                            |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net cash provided (used) by operating activities                                                |   |      | 11,259 |   |   |   | (12,646 | ) |   |   | 3,233 |   |   |   | (1,498 | ) |   |   | - |   |   |   | 348 |   |   |
| Cash flows from investing activities:                                                           |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds from sale of equipment                                                                 |   |      | - |   |   |   | 9 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 9 |   |   |
| Additions to property, plant and equipment                                                 |   |      |  - |   |   |   | (4,568 | )  |   |   | (177 | )  |   |   |  - |   |   |   |  - |   |   |   |  (4,745 | )  |   |
|                                                                                            |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net cash used by investing activities                                                           |   |      | - |   |   |   | (4,559 | ) |   |   | (177 | ) |   |   | - |   |   |   | - |   |   |   | (4,736 | ) |   |
| Cash flows from financing activities:                                                           |   |      |   |   |   |   |   |   |   |   | - |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Payments of senior secured notes payable                                                        |   |      | - |   |   |   | (562 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (562 | ) |   |
| Payments of senior subordinated notes payable                                                   |   |      | - |   |   |   | (1,687 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (1,687 | ) |   |
| Debt acquisition costs                                                                          |   |      | - |   |   |   | (2,685 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (2,685 | ) |   |
| Payments relating to capital lease obligation                                                   |   |      | - |   |   |   | (182 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (182 | ) |   |
| Proceeds from old revolving line of credit                                                      |   |      | - |   |   |   | 43,850 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 43,850 |   |   |
| Payments of old revolving line of credit                                                        |   |      | - |   |   |   | (16,050 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (16,050 | ) |   |
| Payments of State of Ohio loans                                                                 |   |      | - |   |   |   | (200 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (200 | ) |   |
| Payments of secured financing                                                                   |   |      | - |   |   |   | (557 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (557 | ) |   |
| Due to parent and affiliated companies, net                                                     |   |      | (11,247 | ) |   |   | 14,541 |   |   |   | (3,120 | ) |   |   | (174 | ) |   |   | - |   |   |   | - |   |   |
| Payments to redeem common stock                                                                 |   |      | (12 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (12 | ) |   |
| Decreases in cash overdraft                                                                |   |      |  - |   |   |   |  (16,810 | )  |   |   |  - |   |   |   |  - |   |   |   |  - |   |   |   |  (16,810 | )  |   |
|                                                                                            |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net cash (used) provided by financing activities                                                |   |      | (11,259 | ) |   |   | 19,658 |   |   |   | (3,120 | ) |   |   | (174 | ) |   |   | - |   |   |   | 5,105 |   |   |
|                                                                                            |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Effect of foreign exchange rate changes on cash and cash equivalents                            |   |      | - |   |   |   | (40 | ) |   |   | - |   |   |   | - |   |   |   |   - |   |   |   | (40 | ) |   |
| Change in cash and cash equivalents                                                             |   |      | - |   |   |   | 2,413 |   |   |   | (64 | ) |   |   | (1,672 | ) |   |   | - |   |   |   | 677 |   |   |
| Cash and cash equivalents at beginning of period                                                |   |      | - |   |   |   | 2,111 |   |   |   | 65 |   |   |   | 2,004 |   |   |   | - |   |   |   | 4,180 |   |   |
| Cash and cash equivalents at end of period                                                      |   | $         | - |   |   | $ | 4,524 |   |   | $ | 1 |   |   | $ | 332 |   |   | $ | - |   |   | $ | 4,857 |   |   |

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|                                         |   | For the Quarter Ended |   |   |     |   |
|----------------------------------------------|--------|-----------------------|--------|--------|----------|--------|
|                                         |   | April 4,              |   |   | April 5, |   |   | Increase |   |
|                                         |   | 2010                  |   |   | 2009     |   |   | (Decrease) |   |
|                                         |   | (dollars in millions) |   |   |     |   |
|                                         |   |                  |   |   |     |   |   |   |   |
| Net sales                                    |   | $                     | 232.2  |   |     | $      | 212.5 |   |   |   | 9.3 | % |
| Cost of sales                                |   |                  | 188.4  |   |     |   | 170.8 |   |   |   | 10.3 | % |
|                                         |   |                  |   |   |     |   |   |   |   |   |   |   |
| Gross profit                                 |   |                  | 43.8   |   |     |   | 41.7 |   |   |   | 5.0 | % |
|                                         |   |                  |   |   |     |   |   |   |   |   |   |   |
| Selling, general and administrative expenses |   |                  | 37.2   |   |     |   | 34.3 |   |   |   | 8.5 | % |
| Environmental expense insurance recovery     |   |                  | (8.2   | )      |     |   | - |   |   |   | nm |   |
|                                         |   |                  |   |   |     |   |   |   |   |   |   |   |
| Operating income                             |   |                  | 14.8   |   |     |   | 7.4 |   |   |   | 100.0 | % |
|                                         |   |                  |   |   |     |   |   |   |   |   |   |   |
| Interest expense, net                        |   |                  | 16.9   |   |     |   | 11.3 |   |   |   | 49.6 | % |
| Debt extinguishment expense (gain), net      |   |                  | 5.5    |   |     |   | (5.4 | ) |   | 201.9 | % |
| Other non-operating (income) expense, net    | (0.1   | )                     | 0.3    |   | nm       |   |
|                                         |   |                  |   |   |     |   |   |   |   |   |   |   |
| (Loss) income before income taxes            |   |                  | (7.5   | )      |     |   | 1.2 |   |   | nm |   |
| Benefit for income taxes                     |   |                  | (0.1   | )      |     |   | - |   |   |   | nm |   |
|                                         |   |                  |   |   |     |   |   |   |   |   |   |   |
| Net (loss) income                            |   | $                     | (7.4   | )      |     | $      | 1.2 |   |   | nm |   |
|                                         |   |                  |   |   |     |   |   |   |   |   |   |   |
| Comparison as a % of net sales               |   |                  |   |   |     |   |   |   |   |   |   |   |
| Cost of sales                                |   |                  | 81.1   | %      |     |   | 80.4 | % |   |   | 0.7 | % |
| Gross margin                                 |   |                  | 18.9   | %      |     |   | 19.6 | % |   |   | -0.7 | % |
| Selling, general and administrative expenses |   |                  | 16.0   | %      |     |   | 16.1 | % |   |   | -0.1 | % |
| Operating margin                             |   |                  | 6.4    | %      |     |   | 3.5 | % |   |   | 2.9 | % |
| (Loss) income before income taxes            |   |                  | -3.2   | %      |     |   | 0.6 | % |   |   | -3.8 | % |
| Net (loss) income                            |   |                  | -3.2   | %      |     |   | 0.6 | % |   |   | -3.8 | % |

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| Unfavorable price and mix                                                                    |   | $      | (18.1 | )      |
|----------------------------------------------------------------------------------------------|--------|--------|-------|--------|
| Net inflation of raw material and utilities pricing                                          |   |   | (2.4  | )      |
| Higher distribution costs                                                                    |   |   | (0.6  | )      |
| Reduced manufacturing costs                                                                  |   |   | 8.9   |   |
| Reduction in mill curtailments to match customer demand                                      |   |   | 3.8   |   |
| Higher shipment volumes                                                                      |   |   | 3.5   |   |
| Reduced start-up costs related to the thermal coater at the West Carrollton, Ohio paper mill |   |   | 2.9   |   |
| Other                                                                                        |   |   | 0.2   |   |
|                                                                                         |   | $      | (1.8  | )      |

| ·   | Carbonless segment net sales totaled $124.6 million for first quarter 2010, an increase of $4.1 million, or 3.4%, from prior year levels. First quarter 2010 carbonless shipment volumes were approximately 13% higher than first quarter 2009. The launch of the Company’s new Superior carbonless sheet product, as well as increased international demand, contributed to the increase in overall shipment volumes. First quarter 2010 operating income decreased $3.2 million compared to first quarter 2009. Despite higher shipment volumes, mix was unfavorably impacted by the increased international demand because profit margins are lower on international sales. Higher raw material costs have also driven down operating results and distribution costs were higher due to increased fuel costs and international shipments. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Thermal papers segment net sales during first quarter 2010 were $80.2 million, an increase of $15.2 million, or 23.4%, from the same prior year period. The segment benefited from increased shipment volumes of approximately 36%, of which, the largest volume increase was recorded within the light weight non-top coat (“LWNTC”) product offerings. The operating loss recorded during first quarter 2010 was $1.4 million less than the operating loss recorded during first quarter 2009. Increased net sales and the elimination of the new thermal coater start-up costs, incurred during first quarter 2009, contributed favorably to first quarter 2010 operating results. Competitive pricing continues to narrow LWNTC gross margins. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Encapsys first quarter 2010 net sales of $11.5 million were $2.2 million, or 24.5%, higher than first quarter 2009. First quarter 2010 volumes were nearly 43% higher than the prior year quarter. This increase in sales contributed an increase in operating income of $1.2 million. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Performance packaging segment net sales totaled $22.2 million in first quarter 2010, a decrease of $1.8 million, or 7.5%, from first quarter 2009. Compared to first quarter 2009, this segment incurred a decline in net sales due the December 2009 sale of C&H. The remaining packaging business actually reported a $3.6 million increase in quarter-on-quarter net sales. In comparison to first quarter last year, current year shipment volumes during the first three months, for the remaining business, increased nearly 14%. First quarter 2010 operating income, for the remaining business, increased $1.3 million from first quarter 2009. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Unallocated corporate charges and business development costs decreased $7.3 million in first quarter 2010 compared to first quarter 2009 due to the recording of the $8.2 million Fox River insurance recovery. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| 31.1   | Certification of Mark R. Richards, Chairman, President and Chief Executive Officer of Appleton Papers Inc., pursuant to Rule 15d-14(a) of the Securities Exchange Act of 1934 as amended.                               |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                    |
| 31.2   | Certification of Thomas J. Ferree, Senior Vice President Finance, Chief Financial Officer and Treasurer of Appleton Papers Inc., pursuant to Rule 15d-14(a) of the Securities Exchange Act of 1934 as amended.          |
|   |                                                                                                                                                                                                                    |
| 31.3   | Certification of Mark R. Richards, Chairman, President and Chief Executive Officer of Paperweight Development Corp., pursuant to Rule 15d-14(a) of the Securities Exchange Act of 1934 as amended.                      |
|   |                                                                                                                                                                                                                    |
| 31.4   | Certification of Thomas J. Ferree, Senior Vice President Finance, Chief Financial Officer and Treasurer of Paperweight Development Corp., pursuant to Rule 15d-14(a) of the Securities Exchange Act of 1934 as amended. |
|   |                                                                                                                                                                                                                    |
| 32.1   | Certification of Mark R. Richards, Chairman, President and Chief Executive Officer of Appleton Papers Inc., pursuant to 18 U.S.C. Section 1350.                                                                         |
|   |                                                                                                                                                                                                                    |
| 32.2   | Certification of Thomas J. Ferree, Senior Vice President Finance, Chief Financial Officer and Treasurer of Appleton Papers Inc., pursuant to 18 U.S.C. Section 1350.                                                    |
|   |                                                                                                                                                                                                                    |
| 32.3   | Certification of Mark R. Richards, Chairman, President and Chief Executive Officer of Paperweight Development Corp., pursuant to 18 U.S.C. Section 1350.                                                                |
|   |                                                                                                                                                                                                                    |
| 32.4   | Certification of Thomas J. Ferree, Senior Vice President Finance, Chief Financial Officer and Treasurer of Paperweight Development Corp., pursuant to 18 U.S.C. Section 1350.                                           |

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|                                                       |                                                                                                                                              |
|------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                       | APPLETON PAPERS INC.            (Registrant)                                          |
|                                                       |                                                                                                                                              |
|   Date: May 7, 2010     |  /s/ Thomas J. Ferree                                                                                                                        |
|                                                       | Thomas J. Ferree                                                                                                                                  |
|                                                       | Senior Vice President Finance, Chief Financial Officer and Treasurer (Signing on behalf of the Registrant and as the Principal Financial Officer) |

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|                                                       |                                                                                                                                                                                      |
|------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                       | PAPERWEIGHT DEVELOPMENT CORP.                        (Registrant) |
|                                                       |                                                                                                                                                                                      |
|   Date: May 7, 2010     |  /s/ Thomas J. Ferree                                                                                                                                                                |
|                                                       | Thomas J. Ferree                                                                                                                                                                          |
|                                                       | Senior Vice President, Chief Financial Officer and Treasurer (Signing on behalf of the Registrant and as the Principal Financial Officer)                                                 |

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