----

----

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

| o | 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 ItsCharter) |

|                                                                    |                                                                    |
|-------------------------------------------------------------------------|-------------------------------------------------------------------------|
| 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)                                                         |

----

INDEX

|                                 |                                                                                                                                                                |       |
|--------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|
|                                 |                                                                                                                                                                | PageNumber |
| PART I                          | FINANCIAL      INFORMATION                                                                                                                                          |       |
|                                 |                                                                                                                                                                |       |
| Item 1                          | Financial Statements      (unaudited)                                                                                                                               | 1          |
|                                 |                                                                                                                                                                |       |
|                                 | a) Condensed Consolidated Balance      Sheets                                                                                                                       | 1          |
|                                 |                                                                                                                                                                |       |
|                                 | b) Condensed Consolidated Statements of      Operations                                                                                                             | 2          |
|                                 |                                                                                                                                                                |       |
|                                 | c) Condensed Consolidated Statements of Cash      Flows                                                                                                             | 3          |
|                                 |                                                                                                                                                                |       |
|                                 | d) Consolidated Statements of Redeemable Common Stock,      Accumulated Deficit, Accumulated Other Comprehensive Income (Loss) and      Comprehensive Income (Loss) | 4          |
|                                 |                                                                                                                                                                |       |
|                                 | e) Notes to Condensed Consolidated Financial      Statements                                                                                                        | 5          |
|                                 |                                                                                                                                                                |       |
| Item 2                          | Management’s Discussion and Analysis of Financial Condition      and Results of Operations                                                                    | 26         |
|                                 |                                                                                                                                                                |       |
| Item 3                          | Quantitative and Qualitative Disclosures About Market      Risk                                                                                                     | 29         |
|                                 |                                                                                                                                                                |       |
| Item 4                          | Controls and Procedures                                                                                                                                             | 29         |
|                                 |                                                                                                                                                                |       |
| PART II     | OTHER      INFORMATION                                                                                                                                              |       |
|                                 |                                                                                                                                                                |       |
| Item 1A                         | Risk Factors                                                                                                                                                        | 30         |
|                                 |                                                                                                                                                                |       |
| Item 6                          | Exhibits                                                                                                                                                            | 31         |
|                                 |                                                                                                                                                                |
| Signatures                           | 32                                                                                                                                                                  |

----

Index

Item 1—Financial Statements(unaudited)

| PAPERWEIGHT DEVELOPMENT CORP. AND      SUBSIDIARIES                                                                                                                                                              |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| CONDENSED      CONSOLIDATED BALANCE SHEETS                                                                                                                                                                       |   |
| (unaudited)                                                                                                                                                                                                      |   |
| (dollars      in thousands, except share data)                                                                                                                                                                   |   |
|                                                                                                                                                                                                             |   |   |   |   |   |   |
|                                                                                                                                                                                                             |   | March      30, |   |   | December      29, |   |
|                                                                                                                                                                                                             |   | 2008 |   |   | 2007 |   |
| ASSETS                                                                                                                                                                                                           |   |   |   |   |   |   |
| Current      assets                                                                                                                                                                                              |   |   |   |   |   |   |
|   Cash      and cash equivalents                                                                                                                                                                       |   | $ | 22,041 |   |   | $ | 44,838 |   |
|   Accounts      receivable, less allowance for doubtful      accounts of $1,394 and $1,480, respectively                                                                                          |   |   | 117,334 |   |   |   | 116,762 |   |
|   Inventories                                                                                                                                                                                          |   |   | 144,078 |   |   |   | 124,078 |   |
|   Other      current assets                                                                                                                                                                            |   |   | 31,230 |   |   |   | 12,210 |   |
|   Assets      of discontinued operations                                                                                                                                                               |   |   | 26,091 |   |   |   | 36,731 |   |
|        Total      current assets                                                                                                                                              |   |   | 340,774 |   |   |   | 334,619 |   |
|                                                                                                                                                                                                             |   |   |   |   |   |   |   |   |
| Property,      plant and equipment, net of accumulated depreciation of  $366,711 and      $353,975, respectively                                                                                       |   |   | 405,486 |   |   |   | 393,742 |   |
| Goodwill                                                                                                                                                                                                         |   |   | 50,246 |   |   |   | 50,246 |   |
| Intangible      assets, net                                                                                                                                                                                      |   |   | 75,973 |   |   |   | 77,340 |   |
| Environmental      indemnification receivable                                                                                                                                                                    |   |   | 164,631 |   |   |   | 165,198 |   |
| Other      assets                                                                                                                                                                                                |   |   | 22,810 |   |   |   | 24,617 |   |
| Assets      of discontinued operations                                                                                                                                                                           |   |   | 59,311 |   |   |   | 57,646 |   |
|                                                                                                                                                                                                             |   |   |   |   |   |   |   |   |
|        Total      assets                                                                                                                                                      |   | $ | 1,119,231 |   |   | $ | 1,103,408 |   |
|                                                                                                                                                                                                             |   |   |   |   |   |   |   |   |
| LIABILITIES,      REDEEMABLE COMMON STOCK,                                                                                                                                                                       |   |   |   |   |   |   |   |   |
|  ACCUMULATED      DEFICIT AND                                                                                                                                                                               |   |   |   |   |   |   |   |   |
|  ACCUMULATED      OTHER COMPREHENSIVE INCOME                                                                                                                                                                |   |   |   |   |   |   |   |   |
| Current      liabilities                                                                                                                                                                                         |   |   |   |   |   |   |   |   |
|   Current      portion of long-term debt                                                                                                                                                               |   | $ | 3,138 |   |   | $ | 3,138 |   |
|   Accounts      payable                                                                                                                                                                                |   |   | 87,430 |   |   |   | 82,621 |   |
|   Accrued      interest                                                                                                                                                                                |   |   | 11,222 |   |   |   | 4,688 |   |
|   Restructuring      reserve                                                                                                                                                                           |   |   | 229 |   |   |   | 398 |   |
|   Other      accrued liabilities                                                                                                                                                                       |   |   | 65,019 |   |   |   | 80,950 |   |
|   Liabilities      of discontinued operations                                                                                                                                                          |   |   | 19,131 |   |   |   | 21,685 |   |
|        Total      current liabilities                                                                                                                                         |   |   | 186,169 |   |   |   | 193,480 |   |
|                                                                                                                                                                                                             |   |   |   |   |   |   |   |   |
| Senior      secured notes payable                                                                                                                                                                                |   |   | 221,063 |   |   |   | 221,625 |   |
| Revolving      line of credit                                                                                                                                                                                    |   |   | 10,000 |   |   |   | - |   |
| Variable      rate industrial development bonds                                                                                                                                                                  |   |   | 8,650 |   |   |   | 8,650 |   |
| State      of Ohio assistance loan                                                                                                                                                                               |   |   | 8,780 |   |   |   | 8,780 |   |
| Capital      lease obligation                                                                                                                                                                                    |   |   | 1,160 |   |   |   | 1,311 |   |
| Postretirement      benefits other than pension                                                                                                                                                                  |   |   | 47,079 |   |   |   | 47,436 |   |
| Accrued      pension                                                                                                                                                                                             |   |   | 15,961 |   |   |   | 16,857 |   |
| Environmental      liability                                                                                                                                                                                     |   |   | 165,887 |   |   |   | 173,353 |   |
| Other      long-term liabilities                                                                                                                                                                                 |   |   | 8,789 |   |   |   | 5,483 |   |
| Liabilities      of discontinued operations                                                                                                                                                                      |   |   | 21,290 |   |   |   | 20,750 |   |
| Senior      notes payable                                                                                                                                                                                        |   |   | 150,050 |   |   |   | 150,050 |   |
| Senior      subordinated notes payable                                                                                                                                                                           |   |   | 150,000 |   |   |   | 150,000 |   |
| Commitments      and contingencies  (Note 13)                                                                                                                                                               |   |   | - |   |   |   | - |   |
| Redeemable      common stock, $0.01 par value, shares      authorized:  30,000,000,    shares      issued and outstanding:  11,125,172 and 11,116,751,      respectively |   |   | 185,127 |   |   |   | 182,040 |   |
| Accumulated      deficit                                                                                                                                                                                         |   |   | (61,492 | ) |   |   | (80,086 | ) |
| Accumulated      other comprehensive income                                                                                                                                                                      |   |   | 718 |   |   |   | 3,679 |   |
|                                                                                                                                                                                                             |   |   |   |   |   |   |   |   |
|        Total      liabilities, redeemable common stock, accumulated deficit      and accumulated other comprehensive      income                                         |   | $ | 1,119,231 |   |   | $ | 1,103,408 |   |
|                                                                                                                                                                                                             |   |   |   |   |   |   |   |   |
| The      accompanying notes are an integral part of these condensed consolidated      financial statements.                                                                                                      |   |

----

Index

| PAPERWEIGHT DEVELOPMENT CORP. AND      SUBSIDIARIES                              |   |
|----------------------------------------------------------------------------------|--------|
|                                                                             |   |   |   |   |   |   |
| CONDENSED      CONSOLIDATED STATEMENTS OF OPERATIONS                             |   |
| FOR      THE THREE MONTHS ENDED                                                  |   |
| (unaudited)                                                                      |   |
| (dollars      in thousands)                                                      |   |
|                                                                             |   |   |   |   |   |   |
|                                                                             |   |   |   |   |   |   |
|                                                                             |   | March      30, 2008 |   |   | April      1, 2007 |   |
|                                                                             |   |   |   |   |   |   |
| Net      sales                                                                   |   | $ | 236,230 |   |   | $ | 232,350 |   |
|                                                                             |   |   |   |   |   |   |   |   |
| Cost      of sales                                                               |   |   | 181,690 |   |   |   | 173,547 |   |
|                                                                             |   |   |   |   |   |   |   |   |
|   Gross      profit                                                    |   |   | 54,540 |   |   |   | 58,803 |   |
|                                                                             |   |   |   |   |   |   |   |   |
| Selling,      general and administrative expenses                                |   |   | 44,236 |   |   |   | 44,896 |   |
| Restructuring      and other charges                                             |   |   | - |   |   |   | 960 |   |
|                                                                             |   |   |   |   |   |   |   |   |
| Operating      income                                                            |   |   | 10,304 |   |   |   | 12,947 |   |
|                                                                             |   |   |   |   |   |   |   |   |
| Other      expense (income)                                                      |   |   |   |   |   |   |   |   |
|   Interest      expense                                                |   |   | 11,074 |   |   |   | 12,262 |   |
|   Interest      income                                                 |   |   | (181 | ) |   |   | (1,123 | ) |
|   Litigation      settlement, net (Note 13)                            |   |   | (22,233 | ) |   |   | - |   |
|   Foreign      exchange loss (gain)                                    |   |   | 232 |   |   |   | (25 | ) |
|                                                                             |   |   |   |   |   |   |   |   |
| Income      from continuing operations before income taxes                       |   |   | 21,412 |   |   |   | 1,833 |   |
|                                                                             |   |   |   |   |   |   |   |   |
| Provision      for income taxes                                                  |   |   | 37 |   |   |   | 347 |   |
|                                                                             |   |   |   |   |   |   |   |   |
| Income      from continuing operations                                           |   |   | 21,375 |   |   |   | 1,486 |   |
|                                                                             |   |   |   |   |   |   |   |   |
| Discontinued      operations                                                     |   |   |   |   |   |   |   |   |
|   Income      (loss) from discontinued operations, net of income taxes |   |   | 25 |   |   |   | (1,562 | ) |
|                                                                             |   |   |   |   |   |   |   |   |
| Net      income (loss)                                                           |   | $ | 21,400 |   |   | $ | (76 | ) |
|                                                                             |   |   |   |   |   |   |   |   |

----

Index

| PAPERWEIGHT DEVELOPMENT CORP. AND      SUBSIDIARIES                                                         |   |
|-------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                        |   |   |   |   |   |   |
| CONDENSED      CONSOLIDATED STATEMENTS OF CASH FLOWS                                                        |   |
| FOR      THE THREE MONTHS ENDED                                                                             |   |
| (unaudited)                                                                                                 |   |
| (dollars      in thousands)                                                                                 |   |
|                                                                                                        |   |   |   |   |   |   |
|                                                                                                        |   |   |   |   |   |   |
|                                                                                                        |   | March      30, 2008 |   |   | April      1, 2007 |   |
| Cash      flows from operating activities:                                                                  |   |   |   |   |   |   |
| Net      income (loss)                                                                                      |   | $ | 21,400 |   |   | $ | (76 | ) |
| Adjustments      to reconcile net income (loss) to net cash usedby      operating activities:               |   |   |   |   |   |   |   |   |
|                                                                                                        |
| Depreciation                                                                                                |   |   | 13,428 |   |   |   | 15,843 |   |
| Amortization      of intangible assets                                                                      |   |   | 336 |   |   |   | 2,217 |   |
| Amortization      of financing fees                                                                         |   |   | 580 |   |   |   | 680 |   |
| Employer      401(k) noncash matching contributions                                                         |   |   | 1,869 |   |   |   | 2,171 |   |
| Foreign      exchange loss                                                                                  |   |   | 14 |   |   |   | 22 |   |
| Loss      on disposals of equipment                                                                         |   |   | 513 |   |   |   | 336 |   |
| Accretion      of capital lease obligation                                                                  |   |   | 32 |   |   |   | 42 |   |
| Litigation      settlement, net                                                                             |   |   | (22,233 | ) |   |   | - |   |
| (Increase)/decrease      in assets and increase/(decrease) in liabilities:                                  |   |   |   |   |   |   |   |   |
| Accounts      receivable                                                                                    |   |   | 12,901 |   |   |   | 9,394 |   |
| Inventories                                                                                                 |   |   | (22,571 | ) |   |   | (11,036 | ) |
| Other      current assets                                                                                   |   |   | 751 |   |   |   | (16 | ) |
| Accounts      payable and other accrued liabilities                                                         |   |   | (7,290 | ) |   |   | (21,667 | ) |
| Restructuring      reserve                                                                                  |   |   | (169 | ) |   |   | (192 | ) |
| Accrued      pension                                                                                        |   |   | (1,736 | ) |   |   | 111 |   |
| Other,      net                                                                                             |   |   | (1,984 | ) |   |   | 1,424 |   |
|                                                                                                        |   |   |   |   |   |   |   |   |
| Net      cash used by operating activities                                                             |   |   | (4,159 | ) |   |   | (747 | ) |
|                                                                                                        |   |   |   |   |   |   |   |   |
| Cash      flows from investing activities:                                                                  |   |   |   |   |   |   |   |   |
| Proceeds      from sale of equipment                                                                        |   |   | 3 |   |   |   | 3 |   |
| Additions      to property, plant and equipment                                                             |   |   | (26,007 | ) |   |   | (7,319 | ) |
|                                                                                                        |   |   |   |   |   |   |   |   |
| Net      cash used by investing activities                                                                  |   |   | (26,004 | ) |   |   | (7,316 | ) |
|                                                                                                        |   |   |   |   |   |   |   |   |
| Cash      flows from financing activities:                                                                  |   |   |   |   |   |   |   |   |
| Payments      of senior secured notes payable                                                               |   |   | (562 | ) |   |   | (4,881 | ) |
| Payments      relating to capital lease obligation                                                          |   |   | (183 | ) |   |   | (183 | ) |
| Proceeds      from revolving lines of credit                                                                |   |   | 29,300 |   |   |   | 23,000 |   |
| Payments      of revolving lines of credit                                                                  |   |   | (19,300 | ) |   |   | (23,186 | ) |
| Proceeds      from issuance of redeemable common stock                                                      |   |   | 330 |   |   |   | - |   |
| Payments      to redeem common stock                                                                        |   |   | (49 | ) |   |   | (74 | ) |
| (Decrease)      increase in cash overdraft                                                                  |   |   | (1,916 | ) |   |   | 1,885 |   |
|                                                                                                        |   |   |   |   |   |   |   |   |
| Net      cash provided (used) by financing activities                                                  |   |   | 7,620 |   |   |   | (3,439 | ) |
|                                                                                                        |   |   |   |   |   |   |   |   |
| Effect      of foreign exchange rate changes on cash and cash    equivalents                                |   |   | (254 | ) |   |   | (4 | ) |
| Change      in cash and cash equivalents                                                                    |   |   | (22,797 | ) |   |   | (11,506 | ) |
| Cash      and cash equivalents at beginning of period                                                       |   |   | 44,838 |   |   |   | 19,975 |   |
|                                                                                                        |   |   |   |   |   |   |   |   |
| Cash      and cash equivalents at end of period                                                             |   | $ | 22,041 |   |   | $ | 8,469 |   |
|                                                                                                        |   |   |   |   |   |   |   |   |
|                                                                                                        |   |   |   |   |   |   |   |   |
| The      accompanying notes are an integral part of these condensed consolidated      financial statements. |   |

----

Index

| PAPERWEIGHT DEVELOPMENT CORP. AND      SUBSIDIARIES                                                          |
|--------------------------------------------------------------------------------------------------------------|
|                                                                                                         |   |
| CONSOLIDATED      STATEMENTS OF REDEEMABLE COMMON STOCK,                                                     |
| ACCUMULATED      DEFICIT, ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) AND COMPREHENSIVE      INCOME (LOSS) |
| FOR      THE THREE MONTHS ENDED                                                                              |
| (unaudited)                                                                                                  |
| (dollars      in thousands, except sharedata)                                                                |

|                                                         |   |                         |       |   |   |   |    |        |   |   |               |   |   |               |   |
|--------------------------------------------------------------|--------|------------------------------|------------|--------|--------|--------|---------|-------------|--------|--------|--------------------|--------|--------|--------------------|--------|
|                                                         |   | Redeemable      Common Stock |       |   |   |   |    | Accumulated |   |   |               |   |
|                                                         |   |                         |       |   |   |   |    |        |   |   | Other              |   |   |               |   |
|                                                         |   | Shares                       |       |   |   |   |    | Accumulated |   |   | Comprehensive      |   |   | Comprehensive      |   |
|                                                         |   | Outstanding                  |       |   | Amount |   |    | Deficit     |   |   | Income      (Loss) |   |   | Income      (Loss) |   |
| Balance,      December 29, 2007                              |   |                         | 11,116,751 |   |   | $      | 182,040 |        |   | $      | (80,086            | )      |   | $                  | 3,679  |   |   |   |   |
|                                                         |   |                         |       |   |   |   |    |        |   |   |               |   |   |               |   |   |   |   |   |
| Comprehensive      income:                                   |   |                         |       |   |   |   |    |        |   |   |               |   |   |               |   |   |   |   |   |
|   Net      income                                  |   |                         | -          |   |   |   | -       |        |   |   | 21,400             |   |   |               | -      |   |   | $ | 21,400 |   |
|   SFAS      158 pension liability adjustment       |   |                         | -          |   |   |   | -       |        |   |   | -                  |   |   |               | (36    | ) |   |   | (36 | ) |
|   Foreign      currency translation adjustment     |   |                         | -          |   |   |   | -       |        |   |   | -                  |   |   |               | 35     |   |   |   | 35 |   |
|   Realized      and unrealized loss on derivatives |   |                         | -          |   |   |   | -       |        |   |   | -                  |   |   |               | (2,960 | ) |   |   | (2,960 | ) |
|     Total      comprehensive income      |   |                         |       |   |   |   |    |        |   |   |               |   |   |               |   |   |   | $ | 18,439 |   |
| Issuance      of redeemable common stock                     |   |                         | 9,881      |   |   |   | 330     |        |   |   | -                  |   |   |               | -      |   |   |   |   |   |
| Redemption      of redeemable common stock                   |   |                         | (1,460     | )      |   |   | (49     | )           |   |   | -                  |   |   |               | -      |   |   |   |   |   |
| Accretion      of redeemable common stock                    |   |                         | -          |   |   |   | 2,806   |        |   |   | (2,806             | )      |   |               | -      |   |   |   |   |   |
|                                                         |   |                         |       |   |   |   |    |        |   |   |               |   |   |               |   |   |   |   |   |   |
| Balance,      March 30, 2008                                 |   |                         | 11,125,172 |   |   | $      | 185,127 |        |   | $      | (61,492            | )      |   | $                  | 718    |   |   |   |   |   |
|                                                         |   |                         |       |   |   |   |    |        |   |   |               |   |   |               |   |   |   |   |   |   |
| Balance,      December 30, 2006                              |   |                         | 11,550,231 |   |   | $      | 190,466 |        |   | $      | (67,885            | )      |   | $                  | (5,010 | ) |   |   |   |   |
|                                                         |   |                         |       |   |   |   |    |        |   |   |               |   |   |               |   |   |   |   |   |   |
| Comprehensive      loss:                                     |   |                         |       |   |   |   |    |        |   |   |               |   |   |               |   |   |   |   |   |   |
|   Net      loss                                    |   |                         | -          |   |   |   | -       |        |   |   | (76                | )      |   |               | -      |   |   | $ | (76 | ) |
|   Foreign      currency translation adjustment     |   |                         | -          |   |   |   | -       |        |   |   | -                  |   |   |               | (4     | ) |   |   | (4 | ) |
|   Realized      and unrealized loss on derivatives |   |                         | -          |   |   |   | -       |        |   |   | -                  |   |   |               | (541   | ) |   |   | (541 | ) |
|     Total      comprehensive loss        |   |                         |       |   |   |   |    |        |   |   |               |   |   |               |   |   |   | $ | (621 | ) |
| Redemption      of redeemable common stock                   |   |                         | (2,190     | )      |   |   | (74     | )           |   |   | -                  |   |   |               | -      |   |   |   |   |   |
| Accretion      of redeemable common stock                    |   |                         | -          |   |   |   | 3,734   |        |   |   | (3,734             | )      |   |               | -      |   |   |   |   |   |
|                                                         |   |                         |       |   |   |   |    |        |   |   |               |   |   |               |   |   |   |   |   |   |
| Balance,      April 1, 2007                                  |   |                         | 11,548,041 |   |   | $      | 194,126 |        |   | $      | (71,695            | )      |   | $                  | (5,555 | ) |   |   |   |   |

----

Index

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

| 1. | BASIS      OF PRESENTATION |
|----|----------------------------|

|                                   |   | For      the Three  |   |   | For      the Three |   |
|----------------------------------------|--------|---------------------|--------|--------|--------------------|--------|
|                                   |   | Months      Ended   |   |   | Months      Ended  |   |
|                                   |   | March      30, 2008 |   |   | April      1, 2007 |   |
| Net      sales                         |   | $                   | 22,811 |   |               | $      | 22,907 |   |
| Income      (loss) before income taxes |   |                | 25     |   |               |   | (2,658 | ) |

----

Index

|                                                                     |   | March      30, 2008 |    |   | December      29, 2007 |   |
|--------------------------------------------------------------------------|--------|---------------------|---------|--------|------------------------|--------|
|  Current      assets                                                |   | $                   | 26,091  |   |                   | $      | 36,731 |   |
|  Property,      plant and equipment, net                            |   |                | 29,373  |   |                   |   | 28,921 |   |
|  Other      long-term assets                                        |   |                | 29,938  |   |                   |   | 28,725 |   |
|  Current      liabilities                                           |   |                | (19,131 | )      |                   |   | (21,685 | ) |
|  Other      long-term liabilities                                   |   |                | (21,290 | )      |                   |   | (20,750 | ) |
|      Net      assets of discontinued operations |   | $                   | 44,981  |   |                   | $      | 51,942 |   |

|                                                                             |   | As      of March 30, 2008  |    |   | As      of December 29, 2007  |   |
|----------------------------------------------------------------------------------|--------|----------------------------|---------|--------|-------------------------------|--------|
|                                                                             |   | Gross      Carrying Amount |    |   | Accumulated      Amortization |   |   | Gross      Carrying Amount |   |   | Accumulated      Amortization |   |
| Amortizable      intangible assets:                                              |   |                       |    |   |                          |   |   |   |   |   |   |   |
|      Trademarks                                         |   | $                          | 49,255  |   |                          | $      | 17,234 |   |   | $ | 49,255 |   |   | $ | 16,652 |   |
|      Patents                                            |   |                       | 30,979  |   |                          |   | 30,363 |   |   |   | 30,979 |   |   |   | 29,920 |   |
|      Customer      relationships                        |   |                       | 26,024  |   |                          |   | 5,586 |   |   |   | 26,024 |   |   |   | 5,261 |   |
|      Non-compete      agreements                        |   |                       | 932     |   |                          |   | 899 |   |   |   | 932 |   |   |   | 882 |   |
|             Subtotal |   |                       | 107,190 |   |                          | $      | 54,082 |   |   |   | 107,190 |   |   | $ | 52,715 |   |
| Unamortizable      intangible assets:                                            |   |                       |    |   |                          |   |   |   |   |   |   |   |   |   |   |   |
|      Trademarks                                         |   |                       | 22,865  |   |                          |   |   |   |   |   | 22,865 |   |   |   |   |   |
|             Total    |   | $                          | 130,055 |   |                          |   |   |   |   | $ | 130,055 |   |   |   |   |   |

----

Index

|                                    |   | December      29, |   |   | 2008      Additions |   |   | 2008        |   |   | March      30,    |   |
|-----------------------------------------|--------|-------------------|--------|--------|---------------------|--------|--------|-------------|--------|--------|-------------------|--------|
|                                    |   | 2007      Reserve |   |   | to      Reserve     |   |   | Utilization |   |   | 2008      Reserve |   |
| Distribution      center exit costs     |   | $                 | 200    |   |                | $      | -      |        |   | $      | -                 |   |   | $ | 200 |   |
| U.S.      employee termination benefits |   |              | 198    |   |                |   | -      |        |   |   | (169              | )      |   |   | 29 |   |
|                                    |   | $                 | 398    |   |                | $      | -      |        |   | $      | (169              | )      |   | $ | 229 |   |

----

Index

|                                             |   | March      30, 2008 |    |   | December      29, 2007 |   |
|--------------------------------------------------|--------|---------------------|---------|--------|------------------------|--------|
| Finished      goods                              |   | $                   | 80,601  |   |                   | $      | 67,596 |   |
| Raw      materials, work in process and supplies |   |                | 73,274  |   |                   |   | 66,575 |   |
|                                             |   |                | 153,875 |   |                   |   | 134,171 |   |
| Inventory      reserve                           |   |                | (3,440  | )      |                   |   | (3,736 | ) |
|                                             |   |                | 150,435 |   |                   |   | 130,435 |   |
| LIFO      reserve                                |   |                | (6,357  | )      |                   |   | (6,357 | ) |
|                                             |   | $                   | 144,078 |   |                   | $      | 124,078 |   |

|                                       |   | March      30, 2008 |     |   | December      29, 2007 |   |
|--------------------------------------------|--------|---------------------|----------|--------|------------------------|--------|
| Land      and improvements                 |   | $                   | 9,714    |   |                   | $      | 9,603 |   |
| Buildings      and improvements            |   |                | 96,079   |   |                   |   | 95,421 |   |
| Machinery      and equipment               |   |                | 562,502  |   |                   |   | 560,323 |   |
| Software                                   |   |                | 33,962   |   |                   |   | 33,779 |   |
| Capital      lease                         |   |                | 4,764    |   |                   |   | 4,764 |   |
| Construction      in progress              |   |                | 65,176   |   |                   |   | 43,827 |   |
|                                       |   |                | 772,197  |   |                   |   | 747,717 |   |
| Accumulated      depreciation/amortization |   |                | (366,711 | )      |                   |   | (353,975 | ) |
|                                       |   | $                   | 405,486  |   |                   | $      | 393,742 |   |

|                                              |   | For      the Three  |   |   | For      the Three |   |
|---------------------------------------------------|--------|---------------------|--------|--------|--------------------|--------|
|                                              |   | Months      Ended   |   |   | Months      Ended  |   |
|                                              |   | March      30, 2008 |   |   | April      1, 2007 |   |
| Cost      of sales                                |   | $                   | 11,552 |   |               | $      | 12,400 |   |
| Selling,      general and administrative expenses |   |                | 1,876  |   |               |   | 1,985 |   |
|                                              |   | $                   | 13,428 |   |               | $      | 14,385 |   |

----

Index

|                                    |   | March      30, 2008 |   |   | December      29, 2007 |   |
|-----------------------------------------|--------|---------------------|--------|--------|------------------------|--------|
| Deferred      debt issuance costs       |   | $                   | 13,320 |   |                   | $      | 13,900 |   |
| Restricted      cash for mill expansion |   |                | 5,755  |   |                   |   | 7,369 |   |
| Other                                   |   |                | 3,735  |   |                   |   | 3,348 |   |
|                                    |   | $                   | 22,810 |   |                   | $      | 24,617 |   |

|                                            |   | March      30, 2008 |   |   | December      29, 2007 |   |
|-------------------------------------------------|--------|---------------------|--------|--------|------------------------|--------|
| Payroll      and bonus                          |   | $                   | 8,705  |   |                   | $      | 19,596 |   |
| Trade      discounts                            |   |                | 15,025 |   |                   |   | 22,044 |   |
| Workers’      compensation                |   |                | 3,558  |   |                   |   | 4,306 |   |
| Accrued      insurance                          |   |                | 2,935  |   |                   |   | 2,087 |   |
| Other      accrued taxes                        |   |                | 1,747  |   |                   |   | 2,299 |   |
| Postretirement      benefits other than pension |   |                | 3,283  |   |                   |   | 3,283 |   |
| Fox      River liabilities                      |   |                | 20,645 |   |                   |   | 20,645 |   |
| Other                                           |   |                | 9,121  |   |                   |   | 6,690 |   |
|                                            |   | $                   | 65,019 |   |                   | $      | 80,950 |   |

----

Index

|                                            |   | For      the ThreeMonths      EndedMarch      30, 2008 |   |   | For      the ThreeMonths      EndedApril      1, 2007 |   |
|-------------------------------------------------|--------|--------------------------------------------------------|--------|--------|-------------------------------------------------------|--------|
| Net      periodic benefit cost                  |   |                                                   |   |   |                                                  |   |
|   Service      cost                   |   | $                                                      | 1,538  |   |                                                  | $      | 1,910 |   |
|   Interest      cost                  |   |                                                   | 4,488  |   |                                                  |   | 4,232 |   |
|   Expected      return on plan assets |   |                                                   | (5,186 | )      |                                                  |   | (4,716 | ) |
|   Amortization      of                |   |                                                   |   |   |                                                  |   |   |   |
|     Prior      service cost |   |                                                   | 48     |   |                                                  |   | 56 |   |
|     Actuarial      loss     |   |                                                   | -      |   |                                                  |   | 472 |   |
| Net      periodic benefit cost                  |   | $                                                      | 888    |   |                                                  | $      | 1,954 |   |

----

Index

|                                            |   | For      the Three  |   |   | For      the Three |   |
|-------------------------------------------------|--------|---------------------|--------|--------|--------------------|--------|
|                                            |   | Months      Ended   |   |   | Months      Ended  |   |
|                                            |   | March      30, 2008 |   |   | April      1, 2007 |   |
| Net      periodic benefit cost                  |   |                |   |   |               |   |
|   Service      cost                   |   | $                   | 232    |   |               | $      | 208 |   |
|   Interest      cost                  |   |                | 770    |   |               |   | 648 |   |
|   Amortization      of                |   |                |   |   |               |   |   |   |
|     Prior      service cost |   |                | (539   | )      |               |   | (539 | ) |
|     Actuarial      loss     |   |                | 1      |   |               |   | - |   |
| Net      periodic benefit cost                  |   | $                   | 464    |   |               | $      | 317 |   |

----

Index

----

Index

|   | • | total      remediation costs of $600 million, based on the most recent bids received      with a range from $594 million to $900million; |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------|

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

----

Index

|   | • | 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 our interim settlement agreement with NCR and the      arbitration determination; and |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | $38      million in fees and expenses through2010. |
|--------|---------|----------------------------------------------------|

----

Index

----

Index

----

Index

|                                                                                                                                                                               |   | March      30, 2008 |    |   | December      29, 2007 |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------|---------|--------|------------------------|--------|
| Senior      secured variable rate notes payable at LIBOR plus 1.75%,  $563      due quarterly with $209,812 due June 5, 2014                                             |   | $                   | 223,876 |   |                   | $      | 224,438 |   |
| Revolving      line of credit at LIBOR plus 1.75%                                                                                                                                  |   |                | 10,000  |   |                   |   | - |   |
|                                                                                                                                                                               |   |                | 233,876 |   |                   |   | 224,438 |   |
| Less      obligations due within one year                                                                                                                                          |   |                | (2,813  | )      |                   |   | (2,813 | ) |
|                                                                                                                                                                               |   |                | 231,063 |   |                   |   | 221,625 |   |
| Unsecured      variable rate industrial development bonds, 2.7% average  interest      rate at March 30, 2008, $2,650 due in 2013 and $6,000 due  in      2027 |   |                | 8,650   |   |                   |   | 8,650 |   |
| State      of Ohio assistance loan at 6%, approximately $100 due  monthly      and final payment due May 15, 2017                                                        |   |                | 9,105   |   |                   |   | 9,105 |   |
| Less      obligations due within one year                                                                                                                                          |   |                | (325    | )      |                   |   | (325 | ) |
|                                                                                                                                                                               |   |                | 8,780   |   |                   |   | 8,780 |   |
|                                                                                                                                                                               |   |                |    |   |                   |   |   |   |
| Senior      notes payable at 8.125%, due June 15, 2011                                                                                                                             |   |                | 150,050 |   |                   |   | 150,050 |   |
| Senior      subordinated notes payable at 9.75%, due June 15, 2014                                                                                                                 |   |                | 150,000 |   |                   |   | 150,000 |   |

----

Index

|                                                              |   | For      the Three  |    |   | For      the Three |   |
|-------------------------------------------------------------------|--------|---------------------|---------|--------|--------------------|--------|
|                                                              |   | Months      Ended   |    |   | Months      Ended  |   |
|                                                              |   | March      30, 2008 |    |   | April      1, 2007 |   |
| Net      sales                                                    |   |                |    |   |               |   |
| Technical      Papers                                             |   |                |    |   |               |   |
| Coated      solutions                                             |   | $                   | 137,538 |   |               | $      | 139,752 |   |
| Thermal      papers                                               |   |                | 63,028  |   |               |   | 61,088 |   |
| Security      papers                                              |   |                | 8,664   |   |               |   | 7,787 |   |
|                                                              |   |                | 209,230 |   |               |   | 208,627 |   |
|                                                              |   |                |    |   |               |   |   |   |
| Performance      packaging                                        |   |                | 27,000  |   |               |   | 23,723 |   |
| Total                                                             |   | $                   | 236,230 |   |               | $      | 232,350 |   |
|                                                              |   |                |    |   |               |   |   |   |
| Operating      income (loss)                                      |   |                |    |   |               |   |   |   |
| Technical      Papers                                             |   |                |    |   |               |   |   |   |
| Coated      solutions                                             |   | $                   | 9,332   |   |               | $      | 15,604 |   |
| Thermal      papers                                               |   |                | 2,329   |   |               |   | 2,207 |   |
| Security      papers                                              |   |                | 768     |   |               |   | 866 |   |
|                                                              |   |                | 12,429  |   |               |   | 18,677 |   |
|                                                              |   |                |    |   |               |   |   |   |
| Performance      packaging                                        |   |                | 1,463   |   |               |   | 280 |   |
| Unallocated      corporate charges and business development costs |   |                | (3,588  | )      |               |   | (6,010 | ) |
| Total                                                             |   | $                   | 10,304  |   |               | $      | 12,947 |   |

----

Index

|                               |   | For      the Three  |   |   | For      the Three |   |
|------------------------------------|--------|---------------------|--------|--------|--------------------|--------|
|                               |   | Months      Ended   |   |   | Months      Ended  |   |
|                               |   | March      30, 2008 |   |   | April      1, 2007 |   |
| Depreciation      and amortization |   |                |   |   |               |   |
| Technical      Papers              |   |                |   |   |               |   |
| Coated      solutions              |   | $                   | 9,115  |   |               | $      | 10,238 |   |
| Thermal      papers                |   |                | 3,216  |   |               |   | 3,769 |   |
| Security      papers               |   |                | 761    |   |               |   | 701 |   |
|                               |   |                | 13,092 |   |               |   | 14,708 |   |
|                               |   |                |   |   |               |   |   |   |
| Performance      packaging         |   |                | 1,687  |   |               |   | 1,681 |   |
| Unallocated      corporate charges |   |                | 16     |   |               |   | 13 |   |
| Total                              |   | $                   | 14,795 |   |               | $      | 16,402 |   |

----

Index

| PAPERWEIGHT      DEVELOPMENT CORP. AND SUBSIDIARIES                                                                  |   |
|----------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -    (Continued)                                           |   |
|                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| CONDENSED      CONSOLIDATING BALANCE SHEET                                                                           |   |
| MARCH      30, 2008                                                                                                  |   |
| (unaudited)                                                                                                          |   |
| (dollars      in thousands)                                                                                          |   |
|                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                 |   | Parent |   |   |   |   |   | Subsidiary |   |   | Non-Guarantor |   |   |   |   |   |   |   |
|                                                                                                                 |   | Guarantor |   |   | Issuer |   |   | Guarantors |   |   | Subsidiary |   |   | Eliminations |   |   | Consolidated |   |
|                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| ASSETS                                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current      assets                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash      and cash equivalents                                                                                       |   | $ | - |   |   | $ | 10,230 |   |   | $ | 9,497 |   |   | $ | 2,314 |   |   | $ | - |   |   | $ | 22,041 |   |
| Accounts      receivable, net                                                                                        |   |   | - |   |   |   | 100,072 |   |   |   | 11,280 |   |   |   | 5,982 |   |   |   | - |   |   |   | 117,334 |   |
| Inventories                                                                                                          |   |   | - |   |   |   | 128,003 |   |   |   | 14,395 |   |   |   | 1,680 |   |   |   | - |   |   |   | 144,078 |   |
| Other      current assets                                                                                            |   |   | 1,408 |   |   |   | 29,054 |   |   |   | 420 |   |   |   | 348 |   |   |   | - |   |   |   | 31,230 |   |
| Assets      of discontinued operations                                                                               |   |   | - |   |   |   | - |   |   |   | 26,091 |   |   |   | - |   |   |   | - |   |   |   | 26,091 |   |
| Total      current assets                                                                                            |   |   | 1,408 |   |   |   | 267,359 |   |   |   | 61,683 |   |   |   | 10,324 |   |   |   | - |   |   |   | 340,774 |   |
|                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Property,      plant and equipment, net                                                                              |   |   | - |   |   |   | 376,245 |   |   |   | 29,213 |   |   |   | 28 |   |   |   | - |   |   |   | 405,486 |   |
|                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Investment      in subsidiaries                                                                                      |   |   | 352,418 |   |   |   | 155,300 |   |   |   | - |   |   |   | - |   |   |   | (507,718 | ) |   |   | - |   |
| Other      assets                                                                                                    |   |   | 164,643 |   |   |   | 77,726 |   |   |   | 71,242 |   |   |   | 49 |   |   |   | - |   |   |   | 313,660 |   |
| Assets      of discontinued operations                                                                               |   |   | - |   |   |   | - |   |   |   | 59,311 |   |   |   | - |   |   |   | - |   |   |   | 59,311 |   |
| Total      assets                                                                                                    |   | $ | 518,469 |   |   | $ | 876,630 |   |   | $ | 221,449 |   |   | $ | 10,401 |   |   | $ | (507,718 | ) |   | $ | 1,119,231 |   |
|                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LIABILITIES,      REDEEMABLE COMMON STOCK,                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| ACCUMULATED      DEFICIT AND ACCUMULATED OTHER                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| COMPREHENSIVE      INCOME                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current      liabilities                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current      portion of long-term debt                                                                               |   | $ | - |   |   | $ | 3,138 |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | 3,138 |   |
| Accounts      payable                                                                                                |   |   | - |   |   |   | 85,382 |   |   |   | 1,870 |   |   |   | 178 |   |   |   | - |   |   |   | 87,430 |   |
| Due      to (from) parent and affiliated companies                                                                   |   |   | 394,116 |   |   |   | (425,714 | ) |   |   | 35,273 |   |   |   | (3,675 | ) |   |   | - |   |   |   | - |   |
| Other      accrued liabilities                                                                                       |   |   | - |   |   |   | 73,950 |   |   |   | 1,139 |   |   |   | 1,381 |   |   |   | - |   |   |   | 76,470 |   |
| Liabilities      of discontinued operations                                                                          |   |   | - |   |   |   | - |   |   |   | 19,131 |   |   |   | - |   |   |   | - |   |   |   | 19,131 |   |
| Total      current liabilities                                                                                       |   |   | 394,116 |   |   |   | (263,244 | ) |   |   | 57,413 |   |   |   | (2,116 | ) |   |   | - |   |   |   | 186,169 |   |
|                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Long-term      debt                                                                                                  |   |   | - |   |   |   | 548,543 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 548,543 |   |
| Capital      lease obligation                                                                                        |   |   | - |   |   |   | 1,160 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1,160 |   |
| Other      long-term liabilities                                                                                     |   |   | - |   |   |   | 237,753 |   |   |   | - |   |   |   | (37 | ) |   |   | - |   |   |   | 237,716 |   |
| Liabilities      of discontinued operations                                                                          |   |   | - |   |   |   | - |   |   |   | 21,290 |   |   |   | - |   |   |   | - |   |   |   | 21,290 |   |
| Redeemable      common stock, accumulated deficit      and accumulated other      comprehensive income     |   |   | 124,353 |   |   |   | 352,418 |   |   |   | 142,746 |   |   |   | 12,554 |   |   |   | (507,718 | ) |   |   | 124,353 |   |
|                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      liabilities, redeemable common stock, accumulated deficit and accumulated      other comprehensive income |   | $ | 518,469 |   |   | $ | 876,630 |   |   | $ | 221,449 |   |   | $ | 10,401 |   |   | $ | (507,718 | ) |   | $ | 1,119,231 |   |

----

Index

| PAPERWEIGHT      DEVELOPMENT CORP. AND SUBSIDIARIES                                                                       |   |
|---------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -    (Continued)                                                |   |
|                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| CONDENSED      CONSOLIDATING BALANCE SHEET                                                                                |   |
| DECEMBER      29, 2007                                                                                                    |   |
| (dollars      in thousands)                                                                                               |   |
|                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                      |   | Parent |   |   |   |   |   | Subsidiary |   |   | Non-Guarantor |   |   |   |   |   |   |   |
|                                                                                                                      |   | Guarantor |   |   | Issuer |   |   | Guarantors |   |   | Subsidiary |   |   | Eliminations |   |   | Consolidated |   |
|                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| ASSETS                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current      assets                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash      and cash equivalents                                                                                            |   | $ | - |   |   | $ | 33,567 |   |   | $ | 9,247 |   |   | $ | 2,024 |   |   | $ | - |   |   | $ | 44,838 |   |
| Accounts      receivable, net                                                                                             |   |   | - |   |   |   | 97,424 |   |   |   | 11,191 |   |   |   | 8,147 |   |   |   | - |   |   |   | 116,762 |   |
| Inventories                                                                                                               |   |   | - |   |   |   | 108,721 |   |   |   | 13,092 |   |   |   | 2,265 |   |   |   | - |   |   |   | 124,078 |   |
| Other      current assets                                                                                                 |   |   | 3,800 |   |   |   | 7,565 |   |   |   | 447 |   |   |   | 398 |   |   |   | - |   |   |   | 12,210 |   |
| Assets      of discontinued operations                                                                                    |   |   | - |   |   |   | - |   |   |   | 36,731 |   |   |   | - |   |   |   | - |   |   |   | 36,731 |   |
| Total      current assets                                                                                                 |   |   | 3,800 |   |   |   | 247,277 |   |   |   | 70,708 |   |   |   | 12,834 |   |   |   | - |   |   |   | 334,619 |   |
|                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Property,      plant and equipment, net                                                                                   |   |   | - |   |   |   | 363,541 |   |   |   | 30,170 |   |   |   | 31 |   |   |   | - |   |   |   | 393,742 |   |
|                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Investment      in subsidiaries                                                                                           |   |   | 331,128 |   |   |   | 155,533 |   |   |   | - |   |   |   | - |   |   |   | (486,661 | ) |   |   | - |   |
| Other      assets                                                                                                         |   |   | 165,274 |   |   |   | 80,439 |   |   |   | 71,637 |   |   |   | 51 |   |   |   | - |   |   |   | 317,401 |   |
| Assets      of discontinued operations                                                                                    |   |   | - |   |   |   | - |   |   |   | 57,646 |   |   |   | - |   |   |   | - |   |   |   | 57,646 |   |
| Total      assets                                                                                                         |   | $ | 500,202 |   |   | $ | 846,790 |   |   | $ | 230,161 |   |   | $ | 12,916 |   |   | $ | (486,661 | ) |   | $ | 1,103,408 |   |
|                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LIABILITIES,      REDEEMABLE COMMON STOCK,                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| ACCUMULATED      DEFICIT AND ACCUMULATED OTHER                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| COMPREHENSIVE      INCOME                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current      liabilities                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current      portion of long-term debt                                                                                    |   | $ | - |   |   | $ | 3,138 |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | 3,138 |   |
| Accounts      payable                                                                                                     |   |   | - |   |   |   | 78,001 |   |   |   | 4,387 |   |   |   | 233 |   |   |   | - |   |   |   | 82,621 |   |
| Due      to (from) parent and affiliated companies                                                                        |   |   | 394,569 |   |   |   | (431,078 | ) |   |   | 39,718 |   |   |   | (3,209 | ) |   |   | - |   |   |   | - |   |
| Other      accrued liabilities                                                                                            |   |   | - |   |   |   | 82,117 |   |   |   | 1,942 |   |   |   | 1,977 |   |   |   | - |   |   |   | 86,036 |   |
| Liabilities      of discontinued operations                                                                               |   |   | - |   |   |   | - |   |   |   | 21,685 |   |   |   | - |   |   |   | - |   |   |   | 21,685 |   |
| Total      current liabilities                                                                                            |   |   | 394,569 |   |   |   | (267,822 | ) |   |   | 67,732 |   |   |   | (999 | ) |   |   | - |   |   |   | 193,480 |   |
|                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Long-term      debt                                                                                                       |   |   | - |   |   |   | 539,105 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 539,105 |   |
| Capital      lease obligation                                                                                             |   |   | - |   |   |   | 1,311 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1,311 |   |
| Other      long-term liabilities                                                                                          |   |   | - |   |   |   | 243,068 |   |   |   | - |   |   |   | 61 |   |   |   | - |   |   |   | 243,129 |   |
| Liabilities      of discontinued operations                                                                               |   |   | - |   |   |   | - |   |   |   | 20,750 |   |   |   | - |   |   |   | - |   |   |   | 20,750 |   |
| Redeemable      common stock, accumulated      deficit and accumulated      other comprehensive income          |   |   | 105,633 |   |   |   | 331,128 |   |   |   | 141,679 |   |   |   | 13,854 |   |   |   | (486,661 | ) |   |   | 105,633 |   |
|                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      liabilities, redeemable common stock, accumulated deficit and accumulated      other      comprehensive income |   | $ | 500,202 |   |   | $ | 846,790 |   |   | $ | 230,161 |   |   | $ | 12,916 |   |   | $ | (486,661 | ) |   | $ | 1,103,408 |   |
|                                                                                                                      |   |

----

Index

| PAPERWEIGHT      DEVELOPMENT CORP. AND SUBSIDIARIES                          |   |
|------------------------------------------------------------------------------|--------|
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -    (Continued)   |   |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| CONDENSED      CONSOLIDATING STATEMENT OF OPERATIONS                         |   |
| FOR      THE THREE MONTHS ENDED MARCH 30, 2008                               |   |
| (unaudited)                                                                  |   |
| (dollars      in thousands)                                                  |   |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                         |   | Parent |   |   |   |   |   | Subsidiary |   |   | Non-Guarantor |   |   |   |   |   |   |   |
|                                                                         |   | Guarantor |   |   | Issuer |   |   | Guarantors |   |   | Subsidiary |   |   | Eliminations |   |   | Consolidated |   |
| Net      sales                                                               |   | $ | - |   |   | $ | 210,256 |   |   | $ | 27,005 |   |   | $ | 15,031 |   |   | $ | (16,062 | ) |   | $ | 236,230 |   |
| Cost      of sales                                                           |   |   | - |   |   |   | 160,803 |   |   |   | 21,880 |   |   |   | 15,525 |   |   |   | (16,518 | ) |   |   | 181,690 |   |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross      profit (loss)                                                     |   |   | - |   |   |   | 49,453 |   |   |   | 5,125 |   |   |   | (494 | ) |   |   | 456 |   |   |   | 54,540 |   |
| Selling,      general and administrative expenses                            |   |   | - |   |   |   | 40,015 |   |   |   | 3,648 |   |   |   | 573 |   |   |   | - |   |   |   | 44,236 |   |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating      income (loss)                                                 |   |   | - |   |   |   | 9,438 |   |   |   | 1,477 |   |   |   | (1,067 | ) |   |   | 456 |   |   |   | 10,304 |   |
| Interest      expense                                                        |   |   | 2,853 |   |   |   | 11,074 |   |   |   | - |   |   |   | - |   |   |   | (2,853 | ) |   |   | 11,074 |   |
| Interest      income                                                         |   |   | - |   |   |   | (4,145 | ) |   |   | - |   |   |   | (20 | ) |   |   | 3,984 |   |   |   | (181 | ) |
| (Income)      loss in equity investments                                     |   |   | (24,253 | ) |   |   | 6 |   |   |   | - |   |   |   | - |   |   |   | 24,247 |   |   |   | - |   |
| Litigation      settlement, net                                              |   |   | - |   |   |   | (22,233 | ) |   |   | - |   |   |   | - |   |   |   | -  |   |   |   | (22,233 | ) |
| Other      (income) expense                                                  |   |   | - |   |   |   | (253 | ) |   |   | - |   |   |   | 312 |   |   |   | 173 |   |   |   | 232 |   |
| Income      (loss) from continuing operations before income taxes            |   |   | 21,400 |   |   |   | 24,989 |   |   |   | 1,477 |   |   |   | (1,359 | ) |   |   | (25,095 | ) |   |   | 21,412 |   |
| Provision      for income taxes                                              |   |   | - |   |   |   | 20 |   |   |   | 17 |   |   |   | - |   |   |   | - |   |   |   | 37 |   |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income      (loss) from continuing operations                                |   |   | 21,400 |   |   |   | 24,969 |   |   |   | 1,460 |   |   |   | (1,359 | ) |   |   | (25,095 | ) |   |   | 21,375 |   |
| (Loss)      income from discontinued operations, net of income    taxes |   |   | - |   |   |   | (716 | ) |   |   | (390 | ) |   |   | - |   |   |   | 1,131 |   |   |   | 25 |   |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      income (loss)                                                       |   | $ | 21,400 |   |   | $ | 24,253 |   |   | $ | 1,070 |   |   | $ | (1,359 | ) |   | $ | (23,964 | ) |   | $ | 21,400 |   |

----

Index

| PAPERWEIGHT      DEVELOPMENT CORP. AND SUBSIDIARIES                        |   |
|----------------------------------------------------------------------------|--------|
|                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -    (Continued) |   |
|                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| CONDENSED      CONSOLIDATING STATEMENT OF OPERATIONS                       |   |
| FOR      THE THREE MONTHS ENDED APRIL 1, 2007                              |   |
| (unaudited)                                                                |   |
| (dollars      in thousands)                                                |   |
|                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                       |   | Parent |   |   |   |   |   | Subsidiary |   |   | Non-Guarantor |   |   |   |   |   |   |   |
|                                                                       |   | Guarantor |   |   | Issuer |   |   | Guarantors |   |   | Subsidiary |   |   | Eliminations |   |   | Consolidated |   |
| Net      sales                                                             |   | $ | - |   |   | $ | 207,428 |   |   | $ | 23,707 |   |   | $ | 15,560 |   |   | $ | (14,345 | ) |   | $ | 232,350 |   |
| Cost      of sales                                                         |   |   | - |   |   |   | 153,839 |   |   |   | 19,799 |   |   |   | 14,231 |   |   |   | (14,322 | ) |   |   | 173,547 |   |
|                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross      profit                                                          |   |   | - |   |   |   | 53,589 |   |   |   | 3,908 |   |   |   | 1,329 |   |   |   | (23 | ) |   |   | 58,803 |   |
| Selling,      general and administrative expenses                          |   |   | - |   |   |   | 40,516 |   |   |   | 3,746 |   |   |   | 563 |   |   |   | 71 |   |   |   | 44,896 |   |
| Restructuring      and other charges                                       |   |   | - |   |   |   | 960 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 960 |   |
|                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating      income                                                      |   |   | - |   |   |   | 12,113 |   |   |   | 162 |   |   |   | 766 |   |   |   | (94 | ) |   |   | 12,947 |   |
| Interest      expense                                                      |   |   | 2,636 |   |   |   | 12,262 |   |   |   | - |   |   |   | - |   |   |   | (2,636 | ) |   |   | 12,262 |   |
| Interest      income                                                       |   |   | - |   |   |   | (4,673 | ) |   |   | - |   |   |   | (14 | ) |   |   | 3,564 |   |   |   | (1,123 | ) |
| (Income)      loss in equity investments                                   |   |   | (2,560 | ) |   |   | 1,946 |   |   |   | - |   |   |   | - |   |   |   | 614 |   |   |   | - |   |
| Other      income                                                          |   |   | - |   |   |   | (8 | ) |   |   | - |   |   |   | (19 | ) |   |   | 2 |   |   |   | (25 | ) |
| (Loss)      income from continuing operations before      income taxes     |   |   | (76 | ) |   |   | 2,586 |   |   |   | 162 |   |   |   | 799 |   |   |   | (1,638 | ) |   |   | 1,833 |   |
| Provision      for income taxes                                            |   |   | - |   |   |   | 26 |   |   |   | 34 |   |   |   | 287 |   |   |   | - |   |   |   | 347 |   |
|                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (Loss)      income from continuing operations                              |   |   | (76 | ) |   |   | 2,560 |   |   |   | 128 |   |   |   | 512 |   |   |   | (1,638 | ) |   |   | 1,486 |   |
| Loss      from discontinued operations, net of income taxes                |   |   | - |   |   |   | - |   |   |   | (2,560 | ) |   |   | - |   |   |   | 998 |   |   |   | (1,562 | ) |
|                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      (loss) income                                                     |   | $ | (76 | ) |   | $ | 2,560 |   |   | $ | (2,432 | ) |   | $ | 512 |   |   | $ | (640 | ) |   | $ | (76 | ) |

----

Index

| PAPERWEIGHT      DEVELOPMENT CORP. AND SUBSIDIARIES                                                      |   |
|----------------------------------------------------------------------------------------------------------|--------|
|                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -    (Continued)                               |   |
|                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| CONDENSED      CONSOLIDATING STATEMENT OF CASH FLOWS                                                     |   |
| FOR      THE THREE MONTHS ENDED MARCH 30, 2008                                                           |   |
| (unaudited)                                                                                              |   |
| (dollars      in thousands)                                                                              |   |
|                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                     |   | Parent |   |   |   |   |   | Subsidiary |   |   | Non-Guarantor |   |   |   |   |   |   |   |
|                                                                                                     |   | Guarantor |   |   | Issuer |   |   | Guarantors |   |   | Subsidiary |   |   | Eliminations |   |   | Consolidated |   |
|                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash      flows from operating activities:                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      income (loss)                                                                                   |   | $ | 21,400 |   |   | $ | 24,253 |   |   | $ | 1,070 |   |   | $ | (1,359 | ) |   | $ | (23,964 | ) |   | $ | 21,400 |   |
| Adjustments to      reconcile net income (loss) to net cash provided (used) by operating      activities |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation      and amortization                                                                       |   |   | - |   |   |   | 12,306 |   |   |   | 1,455 |   |   |   | 3 |   |   |   | - |   |   |   | 13,764 |   |
| Other                                                                                                    |   |   | - |   |   |   | (19,801 | ) |   |   | 264 |   |   |   | 312 |   |   |   | - |   |   |   | (19,225 | ) |
| Change      in assets and liabilities, net                                                               |   |   | (21,228 | ) |   |   | (27,285 | ) |   |   | 2,651 |   |   |   | 1,800 |   |   |   | 23,964 |   |   |   | (20,098 | ) |
|                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      cash provided (used) by operating activities                                                    |   |   | 172 |   |   |   | (10,527 | ) |   |   | 5,440 |   |   |   | 756 |   |   |   | - |   |   |   | (4,159 | ) |
| Cash      flows from investing activities:                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds      from sale of equipment                                                                     |   |   | - |   |   |   | 3 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 3 |   |
| Additions      to property, plant and equipment                                                          |   |   | - |   |   |   | (25,262 | ) |   |   | (745 | ) |   |   | - |   |   |   | - |   |   |   | (26,007 | ) |
|                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      cash used by investing activities                                                               |   |   | - |   |   |   | (25,259 | ) |   |   | (745 | ) |   |   | - |   |   |   | - |   |   |   | (26,004 | ) |
| Cash      flows from financing activities:                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Payments      of senior secured notes payable                                                            |   |   | - |   |   |   | (562 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (562 | ) |
| Payments      relating to capital lease obligation                                                       |   |   | - |   |   |   | (183 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (183 | ) |
| Proceeds      from revolving line of credit                                                              |   |   | - |   |   |   | 29,300 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 29,300 |   |
| Payments      of revolving line of credit                                                                |   |   | - |   |   |   | (19,300 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (19,300 | ) |
| Due      to parent and affiliated companies, net                                                         |   |   | (453 | ) |   |   | 5,364 |   |   |   | (4,445 | ) |   |   | (466 | ) |   |   | - |   |   |   | - |   |
| Proceeds      from issuance of redeemable common stock                                                   |   |   | 330 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 330 |   |
| Payments      to redeem common stock                                                                     |   |   | (49 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (49 | ) |
| Decrease      in cash overdraft                                                                          |   |   | - |   |   |   | (1,916 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (1,916 | ) |
|                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      cash (used) provided by financing activities                                                    |   |   | (172 | ) |   |   | 12,703 |   |   |   | (4,445 | ) |   |   | (466 | ) |   |   | - |   |   |   | 7,620 |   |
| Effect      of foreign exchange rate changes on cash and cash    equivalents                             |   |   | - |   |   |   | (254 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (254 | ) |
| Change      in cash and cash equivalents                                                                 |   |   | - |   |   |   | (23,337 | ) |   |   | 250 |   |   |   | 290 |   |   |   | - |   |   |   | (22,797 | ) |
| Cash      and cash equivalents at beginning of period                                                    |   |   | - |   |   |   | 33,567 |   |   |   | 9,247 |   |   |   | 2,024 |   |   |   | - |   |   |   | 44,838 |   |
| Cash      and cash equivalents at end of period                                                          |   | $ | - |   |   | $ | 10,230 |   |   | $ | 9,497 |   |   | $ | 2,314 |   |   | $ | - |   |   | $ | 22,041 |   |

----

Index

| PAPERWEIGHT      DEVELOPMENT CORP. AND SUBSIDIARIES                                                       |   |
|-----------------------------------------------------------------------------------------------------------|--------|
|                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -    (Continued)                                |   |
|                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| CONDENSED      CONSOLIDATING STATEMENT OF CASH FLOWS                                                      |   |
| FOR      THE THREE MONTHS ENDED APRIL 1, 2007                                                             |   |
| (unaudited)                                                                                               |   |
| (dollars      in thousands)                                                                               |   |
|                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                      |   | Parent |   |   |   |   |   | Subsidiary |   |   | Non-Guarantor |   |   |   |   |   |   |   |
|                                                                                                      |   | Guarantor |   |   | Issuer |   |   | Guarantors |   |   | Subsidiary |   |   | Eliminations |   |   | Consolidated |   |
|                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash      flows from operating activities:                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      (loss) income                                                                                    |   | $ | (76 | ) |   | $ | 2,560 |   |   | $ | (2,432 | ) |   | $ | 512 |   |   | $ | (640 | ) |   | $ | (76 | ) |
| Adjustments      to reconcile net (loss) income to net cash provided (used) by operating      activities: |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation      and amortization                                                                        |   |   | - |   |   |   | 14,849 |   |   |   | 3,209 |   |   |   | 2 |   |   |   | - |   |   |   | 18,060 |   |
| Other                                                                                                     |   |   | - |   |   |   | 3,084 |   |   |   | 186 |   |   |   | (19 | ) |   |   | - |   |   |   | 3,251 |   |
| Change      in assets and liabilities, net                                                                |   |   | 204 |   |   |   | (29,946 | ) |   |   | 4,697 |   |   |   | 2,423 |   |   |   | 640 |   |   |   | (21,982 | ) |
|                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      cash provided (used) by operating activities                                                     |   |   | 128 |   |   |   | (9,453 | ) |   |   | 5,660 |   |   |   | 2,918 |   |   |   | - |   |   |   | (747 | ) |
| Cash      flows from investing activities:                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds      from sale of equipment                                                                      |   |   | - |   |   |   | 3 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 3 |   |
| Additions      to property, plant and equipment                                                           |   |   | - |   |   |   | (5,093 | ) |   |   | (2,213 | ) |   |   | (13 | ) |   |   | - |   |   |   | (7,319 | ) |
|                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      cash used by investing activities                                                                |   |   | - |   |   |   | (5,090 | ) |   |   | (2,213 | ) |   |   | (13 | ) |   |   | - |   |   |   | (7,316 | ) |
| Cash      flows from financing activities:                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Payments      of long-term debt                                                                           |   |   | - |   |   |   | (4,881 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (4,881 | ) |
| Payments      relating to capital lease obligation                                                        |   |   | - |   |   |   | (183 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (183 | ) |
| Proceeds      from revolving lines of credit                                                              |   |   | - |   |   |   | 23,000 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 23,000 |   |
| Payments      of revolving lines of credit                                                                |   |   | - |   |   |   | (23,000 | ) |   |   | (186 | ) |   |   | - |   |   |   | - |   |   |   | (23,186 | ) |
| Due      to parent and affiliated companies, net                                                          |   |   | (54 | ) |   |   | 7,067 |   |   |   | (3,166 | ) |   |   | (3,847 | ) |   |   | - |   |   |   | - |   |
| Payments      to redeem common stock                                                                      |   |   | (74 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (74 | ) |
| Increase      in cash overdraft                                                                           |   |   | - |   |   |   | 1,885 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1,885 |   |
|                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      cash (used) provided by financing activities                                                     |   |   | (128 | ) |   |   | 3,888 |   |   |   | (3,352 | ) |   |   | (3,847 | ) |   |   | - |   |   |   | (3,439 | ) |
|                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Effect      of foreign exchange rate changes on cash and cash    equivalents                              |   |   | - |   |   |   | (4 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (4 | ) |
| Change      in cash and cash equivalents                                                                  |   |   | - |   |   |   | (10,659 | ) |   |   | 95 |   |   |   | (942 | ) |   |   | - |   |   |   | (11,506 | ) |
| Cash      and cash equivalents at beginning of period                                                     |   |   | - |   |   |   | 17,249 |   |   |   | 817 |   |   |   | 1,909 |   |   |   | - |   |   |   | 19,975 |   |
| Cash      and cash equivalents at end of period                                                           |   | $ | - |   |   | $ | 6,590 |   |   | $ | 912 |   |   | $ | 967 |   |   | $ | - |   |   | $ | 8,469 |   |

----

Index

Item 2—Management’s Discussion and Analysis of Financial Conditionand Results of Operations

|                                                                 |   | For      the Quarter Ended |   |   |          |   |
|----------------------------------------------------------------------|--------|----------------------------|--------|--------|---------------|--------|
|                                                                 |   | March      30,             |   |   | April      1, |   |   | % |   |
|                                                                 |   | 2008                       |   |   | 2007          |   |   | Chg |   |
|                                                                 |   | (dollars      in millions) |   |   |          |   |
|                                                                 |   |                       |   |   |          |   |   |   |   |
| Net      sales                                                       |   | $                          | 236.2  |   |          | $      | 232.4 |   |   |   | 1.6 | % |
| Cost      of sales                                                   |   |                       | 181.7  |   |          |   | 173.6 |   |   |   | 4.7 | % |
|                                                                 |   |                       |   |   |          |   |   |   |   |   |   |   |
| Gross      profit                                                    |   |                       | 54.5   |   |          |   | 58.8 |   |   |   | -7.3 | % |
|                                                                 |   |                       |   |   |          |   |   |   |   |   |   |   |
| Selling,      general and administrative expenses                    |   |                       | 44.2   |   |          |   | 44.9 |   |   |   | -1.6 | % |
| Restructuring      and other charges                                 |   |                       | -      |   |          |   | 1.0 |   |   |   | -100.0 | % |
|                                                                 |   |                       |   |   |          |   |   |   |   |   |   |   |
| Operating      income                                                |   |                       | 10.3   |   |          |   | 12.9 |   |   |   | -20.2 | % |
|                                                                 |   |                       |   |   |          |   |   |   |   |   |   |   |
| Interest      expense, net                                           |   |                       | 10.9   |   |          |   | 11.1 |   |   |   | -1.8 | % |
| Other      non-operating income, net                                 |   |                       | (22.0  | )      |          |   | - |   |   | nm |   |
|                                                                 |   |                       |   |   |          |   |   |   |   |   |   |   |
| Income      from continuing operations before income taxes           |   |                       | 21.4   |   |          |   | 1.8 |   |   | nm |   |
| Provision      for income taxes                                      |   |                       | -      |   |          |   | 0.3 |   |   |   | -100.0 | % |
|                                                                 |   |                       |   |   |          |   |   |   |   |   |   |   |
| Income      from continuing operations                               |   |                       | 21.4   |   |          |   | 1.5 |   |   | nm |   |
|                                                                 |   |                       |   |   |          |   |   |   |   |   |   |   |
| Income      (loss) from discontinued operations, net of income taxes |   |                       | -      |   |          |   | (1.6 | ) |   |   | 100.0 | % |
|                                                                 |   |                       |   |   |          |   |   |   |   |   |   |   |
| Net      income (loss)                                               |   | $                          | 21.4   |   |          | $      | (0.1 | ) |   | nm |   |
|                                                                 |   |                       |   |   |          |   |   |   |   |   |   |   |
| Comparison      as a % of net sales                                  |   |                       |   |   |          |   |   |   |   |   |   |   |
| Cost      of sales                                                   |   |                       | 76.9   | %      |          |   | 74.7 | % |   |   | 2.2 | % |
| Gross      margin                                                    |   |                       | 23.1   | %      |          |   | 25.3 | % |   |   | -2.2 | % |
| Selling,      general and administrative expenses                    |   |                       | 18.7   | %      |          |   | 19.3 | % |   |   | -0.6 | % |
| Operating      margin                                                |   |                       | 4.4    | %      |          |   | 5.6 | % |   |   | -1.2 | % |
| Income      from continuing operations before income taxes           |   |                       | 9.1    | %      |          |   | 0.8 | % |   |   | 8.3 | % |
| Income      from continuing operations                               |   |                       | 9.1    | %      |          |   | 0.6 | % |   |   | 8.5 | % |
| Income      (loss) from discontinued operations, net of income taxes |   |                       | -      |   |          |   | -0.7 | % |   |   | 0.7 | % |
| Net      income (loss)                                               |   |                       | 9.1    | %      |          |   | - |   |   |   | 9.1 | % |

----

Index

|   | • | Coated      solutions segment net sales totaled $137.5 million for first quarter of      2008, a decrease of $2.2 million, or 1.6%, from prior year levels.      Overall, carbonless shipment volumes in first quarter 2008 were lower than      first quarter 2007. The volume shortfall and unfavorable mix offset gains      from improved pricing over first quarter 2007. Coated solutions segment      first quarter 2008 operating income decreased $6.3 million compared      to first quarter 2007. Operating margins in 2008 were adversely affected      by lower shipment volumes, unfavorable mix and higher raw material and      distribution costs which offset improved pricing and manufacturing gains      compared to the prior year period. |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Thermal      papers segment net sales during first quarter 2008 were $63.0 million, an      increase of $1.9 million, or 3.2%, from the prior year period. The segment      benefited from increased shipment volumes, improved prices and favorable      mix compared to the year earlier period. Thermal papers segment first      quarter 2008 operating income increased by $0.1 million compared to first      quarter 2007 as a result of improved volume, pricing and mix, as well      as manufacturing gains, offsetting higher raw material and      distribution costs as compared to first quarter  2007. |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Security      papers segment net sales were $8.7 million in first quarter 2008, an      increase of $0.9 million, or 11.3%, from first quarter 2007. The increase      was due to increased shipment volumes and improved pricing. Security      papers segment first quarter 2008 operating income decreased by $0.1      million for first quarter 2008, compared to first quarter 2007, due to      higher raw material and distribution costs which offset manufacturing      gains, increased shipment volumes and improved  pricing. |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Performance      packaging segment net sales totaled $27.0 million in first quarter 2008,      an increase of $3.3 million, or 13.8%, from first quarter 2007. The      segment benefited from improved pricing and favorable mix during the      current quarter as compared to the prior year period. Performance      packaging segment first quarter 2008 operating income increased $1.2      million from first quarter 2007. The improved operating results reflect      improved pricing, favorable mix and manufacturing gains in first quarter      2008 as compared to the year earlierperiod. |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Unallocated      corporate charges and business development costs decreased $2.4 million in      first quarter 2008 compared to first quarter 2007. The 2007 quarter      included $1.8 million of consulting feeexpense. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Index

----

Index

Item 3—Quantitative and Qualitative Disclosures AboutMarket Risk

Item 4—Controls and Procedures

----

Index

Item 1A – Risk Factors

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

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

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

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

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

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

----

Index

Item 6—Exhibits

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

----

Index

SIGNATURES

|                                     |                                                                                                                                                     |
|------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                     | APPLETON      PAPERS INC.            (Registrant)                                            |
|                                     |                                                                                                                                                     |
|   Date:      May 12, 2008 |  /s/      Thomas J. Ferree                                                                                                                          |
|                                     | Thomas      J. Ferree                                                                                                                                    |
|                                     | Vice      President Finance, Chief Financial Officer and Treasurer(Signing      on behalf of the Registrant and as the Principal Financial      Officer) |

----

Index

|                                     |                                                                                                                                                                                           |
|------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                     | PAPERWEIGHT      DEVELOPMENT CORP.                        (Registrant) |
|                                     |                                                                                                                                                                                           |
|   Date:      May 12, 2008 |  /s/      Thomas J. Ferree                                                                                                                                                                |
|                                     | Thomas      J. Ferree                                                                                                                                                                          |
|                                     | Chief      Financial Officer and Treasurer (Signing      on behalf of the Registrant and as the Principal Financial      Officer)                                                              |

----

----