----

----

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

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

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

----

|         |                                                                                                                                                             | PageNumber |
|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|
| PART I  | FINANCIAL INFORMATION                                                                                                                                            |       |
|         |                                                                                                                                                             |       |
| Item 1  | Financial Statements (unaudited)                                                                                                                                 |       |
|         |                                                                                                                                                             |       |
|         | a) Condensed Consolidated Balance Sheets                                                                                                                         | 3          |
|         |                                                                                                                                                             |       |
|         | b) Condensed Consolidated Statements of Operations                                                                                                               | 4          |
|         |                                                                                                                                                             |       |
|         | c) Condensed Consolidated Statements of Cash Flows                                                                                                               | 5          |
|         |                                                                                                                                                             |       |
|         | d) Consolidated Statements of Redeemable Common Stock, Accumulated Deficit,      Accumulated Other Comprehensive Loss and Comprehensive Loss | 6          |
|         |                                                                                                                                                             |       |
|         | e) Notes to Condensed Consolidated Financial Statements                                                                                                          | 7          |
|         |                                                                                                                                                             |       |
| Item 2  | Management’s Discussion and Analysis of Financial Condition and Results of Operations                                                                      | 29         |
|         |                                                                                                                                                             |       |
| Item 3  | Quantitative and Qualitative Disclosures About Market Risk                                                                                                       | 33         |
|         |                                                                                                                                                             |       |
| Item 4  | Controls and Procedures                                                                                                                                          | 33         |
|         |                                                                                                                                                             |       |
| PART II | OTHER INFORMATION                                                                                                                                                |       |
|         |                                                                                                                                                             |       |
| Item 1       | Legal Proceedings                                                                                                                                                | 33         |
|         |                                                                                                                                                             |       |
| Item 1A | Risk Factors                                                                                                                                                     | 34         |
|         |                                                                                                                                                             |       |
| Item 6  | Exhibits                                                                                                                                                         | 36         |
|         |                                                                                                                                                             |       |
| Signatures   |                                                                                                                                                             | 37         |

----

| PAPERWEIGHT DEVELOPMENT CORP. AND SUBSIDIARIES                                                                                                                                            |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                      |   |
| CONDENSED CONSOLIDATED BALANCE SHEETS                                                                                                                                                     |   |
| (unaudited)                                                                                                                                                                               |   |
| (dollars in thousands, except share data)                                                                                                                                                 |   |
|                                                                                                                                                                                      |   | April 3, 2011 |   |   | January 1, 2011 |   |
| ASSETS                                                                                                                                                                                    |   |   |   |   |   |   |
| Current assets                                                                                                                                                                            |   |   |   |   |   |   |
|   Cash and cash equivalents                                                                                                                                                     |   | $ | 11,882 |   |   | $ | 3,772 |   |
|   Accounts receivable, less allowance for doubtful accounts of $1,113 and $1,435, respectively                                                                                  |   |   | 97,039 |   |   |   | 93,374 |   |
|   Inventories                                                                                                                                                                   |   |   | 110,365 |   |   |   | 110,032 |   |
|   Other current assets                                                                                                                                                          |   |   | 39,633 |   |   |   | 41,992 |   |
|        Total current assets                                                                                                                            |   |   | 258,919 |   |   |   | 249,170 |   |
|                                                                                                                                                                                      |   |   |   |   |   |   |   |   |
| Property, plant and equipment, net of accumulated depreciation of  $481,757 and $470,676, respectively                                                                          |   |   | 348,485 |   |   |   | 354,601 |   |
| Intangible assets, net                                                                                                                                                                    |   |   | 47,866 |   |   |   | 48,449 |   |
| Other assets                                                                                                                                                                              |   |   | 19,265 |   |   |   | 24,779 |   |
|                                                                                                                                                                                      |   |   |   |   |   |   |   |   |
|        Total assets                                                                                                                                    |   | $ | 674,535 |   |   | $ | 676,999 |   |
|                                                                                                                                                                                      |   |   |   |   |   |   |   |   |
| LIABILITIES, REDEEMABLE COMMON STOCK,ACCUMULATED DEFICIT ANDACCUMULATED OTHER COMPREHENSIVE LOSS                                                                                          |   |   |   |   |   |   |   |   |
| Current liabilities                                                                                                                                                                       |   |   |   |   |   |   |   |   |
|   Current portion of long-term debt                                                                                                                                             |   | $ | 18,694 |   |   | $ | 18,694 |   |
|   Accounts payable                                                                                                                                                              |   |   | 52,919 |   |   |   | 48,651 |   |
|   Accrued interest                                                                                                                                                              |   |   | 16,712 |   |   |   | 3,094 |   |
|   Other accrued liabilities                                                                                                                                                     |   |   | 67,215 |   |   |   | 62,988 |   |
|        Total current liabilities                                                                                                                       |   |   | 155,540 |   |   |   | 133,427 |   |
|                                                                                                                                                                                      |   |   |   |   |   |   |   |   |
| Long-term debt                                                                                                                                                                            |   |   | 525,766 |   |   |   | 540,131 |   |
| Postretirement benefits other than pension                                                                                                                                                |   |   | 45,378 |   |   |   | 45,133 |   |
| Accrued pension                                                                                                                                                                           |   |   | 83,594 |   |   |   | 88,583 |   |
| Other long-term liabilities                                                                                                                                                               |   |   | 5,753 |   |   |   | 5,716 |   |
| Commitments and contingencies (Note 13)                                                                                                                                                   |   |   | - |   |   |   | - |   |
| Redeemable common stock, $0.01 par value,  shares authorized: 30,000,000,  shares issued and outstanding:  9,713,197 and  9,713,212, respectively |   |   | 108,622 |   |   |   | 110,045 |   |
| Accumulated deficit                                                                                                                                                                       |   |   | (157,539 | ) |   |   | (153,765 | ) |
| Accumulated other comprehensive loss                                                                                                                                                      |   |   | (92,579 | ) |   |   | (92,271 | ) |
|        Total liabilities, redeemable common stock, accumulated      deficit and accumulated other comprehensive loss     |   | $ | 674,535 |   |   | $ | 676,999 |   |

----

| PAPERWEIGHT DEVELOPMENT CORP. AND SUBSIDIARIES  |
|-------------------------------------------------|
|                                            |
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
| (unaudited)                                     |
| (dollars in thousands)                          |

|                                                                                        |   | Three Months EndedApril 3, 2011 |    |   | Three MonthsEndedApril 4, 2010 |   |
|---------------------------------------------------------------------------------------------|--------|--------------------------------------|---------|--------|-------------------------------------|--------|
|                                                                                        |   |                                 |    |   |                                |   |
| Net sales                                                                                   |   | $                                    | 218,015 |   |                                | $      | 210,008 |   |
|                                                                                        |   |                                 |    |   |                                |   |   |   |
| Cost of sales                                                                               |   |                                 | 171,164 |   |                                |   | 170,285 |   |
|                                                                                        |   |                                 |    |   |                                |   |   |   |
|   Gross profit                                                                    |   |                                 | 46,851  |   |                                |   | 39,723 |   |
|                                                                                        |   |                                 |    |   |                                |   |   |   |
| Selling, general and administrative expenses                                                |   |                                 | 33,349  |   |                                |   | 34,813 |   |
| Environmental expense insurance recovery                                                    |   |                                 | -       |   |                                |   | (8,181 | ) |
| Litigation settlement                                                                       |   |                                 | 3,204   |   |                                |   | - |   |
|                                                                                        |   |                                 |    |   |                                |   |   |   |
| Operating income                                                                            |   |                                 | 10,298  |   |                                |   | 13,091 |   |
|                                                                                        |   |                                 |    |   |                                |   |   |   |
| Other expense (income)                                                                      |   |                                 |    |   |                                |   |   |   |
|   Interest expense                                                                |   |                                 | 16,150  |   |                                |   | 16,922 |   |
|   Debt extinguishment expense, net                                                |   |                                 | -       |   |                                |   | 5,532 |   |
|   Interest income                                                                 |   |                                 | (37     | )      |                                |   | (10 | ) |
|   Foreign exchange gain                                                           |   |                                 | (973    | )      |                                |   | (263 | ) |
|                                                                                        |   |                                 |    |   |                                |   |   |   |
| Loss before income taxes                                                                    |   |                                 | (4,842  | )      |                                |   | (9,090 | ) |
|                                                                                        |   |                                 |    |   |                                |   |   |   |
| Provision (benefit) for income taxes                                                        |   |                                 | 355     |   |                                |   | (91 | ) |
|                                                                                        |   |                                 |    |   |                                |   |   |   |
| Loss from continuing operations                                                             |   |                                 | (5,197  | )      |                                |   | (8,999 | ) |
|                                                                                        |   |                                 |    |   |                                |   |   |   |
| Discontinued operations                                                                     |   |                                 |    |   |                                |   |   |   |
|    Income from discontinued operations, net   of income taxes |   |                                 | -       |   |                                |   | 1,552 |   |
|                                                                                        |   |                                 |    |   |                                |   |   |   |
| Net loss                                                                                    |   | $                                    | (5,197  | )      |                                | $      | (7,447 | ) |
|                                                                                        |   |                                 |    |   |                                |   |   |   |
|                                                                                        |   |                                 |    |   |                                |   |   |   |

----

| PAPERWEIGHT DEVELOPMENT CORP. AND SUBSIDIARIES                                         |   |
|----------------------------------------------------------------------------------------|--------|
|                                                                                   |   |
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                                        |   |
| FOR THE THREE MONTHS ENDED                                                             |   |
| (unaudited)                                                                            |   |
| (dollars in thousands)                                                                 |   |
|                                                                                   |   | April 3, 2011 |   |   | April 4, 2010 |   |
| Cash flows from operating activities:                                                  |   |   |   |   |   |   |
| Net loss                                                                               |   | $ | (5,197 | ) |   | $ | (7,447 | ) |
| Adjustments to reconcile net loss to net cash provided (used) by operating activities: |   |   |   |   |   |   |   |   |
| Depreciation                                                                           |   |   | 11,551 |   |   |   | 12,295 |   |
| Amortization of intangible assets                                                      |   |   | 583 |   |   |   | 873 |   |
| Amortization of financing fees                                                         |   |   | 1,069 |   |   |   | 988 |   |
| Amortization of bond discount                                                          |   |   | 233 |   |   |   | 116 |   |
| Employer 401(k) non-cash matching contributions                                        |   |   | 698 |   |   |   | 906 |   |
| Foreign exchange gain                                                                  |   |   | (985 | ) |   |   | (297 | ) |
| Loss on disposals of equipment                                                         |   |   | 166 |   |   |   | 78 |   |
| Accretion of capital lease obligation                                                  |   |   | 2 |   |   |   | 13 |   |
| Loss on debt extinguishment                                                            |   |   | - |   |   |   | 5,532 |   |
| Environmental expense insurance recovery                                               |   |   | - |   |   |   | (8,181 | ) |
| (Increase)/decrease in assets and increase/(decrease) in liabilities:                  |   |   |   |   |   |   |   |   |
| Accounts receivable                                                                    |   |   | (2,963 | ) |   |   | (21,286 | ) |
| Inventories                                                                            |   |   | (165 | ) |   |   | (8,626 | ) |
| Other current assets                                                                   |   |   | 7,998 |   |   |   | 2,544 |   |
| Accounts payable and other accrued liabilities                                         |   |   | 20,317 |   |   |   | (151 | ) |
| Accrued pension                                                                        |   |   | (3,754 | ) |   |   | 1,819 |   |
| Other, net                                                                             |   |   | 187 |   |   |   | (4,230 | ) |
| Net cash provided (used) by operating activities                                  |   |   | 29,740 |   |   |   | (25,054 | ) |
|                                                                                   |   |   |   |   |   |   |   |   |
| Cash flows from investing activities:                                                  |   |   |   |   |   |   |   |   |
|         Proceeds from sale of equipment             |   |   | - |   |   |   | 57 |   |
|         Additions to property, plant and equipment  |   |   | (3,995 | ) |   |   | (2,366 | ) |
| Net cash used by investing activities                                                  |   |   | (3,995 | ) |   |   | (2,309 | ) |
|                                                                                   |   |   |   |   |   |   |   |   |
| Cash flows from financing activities:                                                  |   |   |   |   |   |   |   |   |
| Payments of senior secured notes payable                                               |   |   | - |   |   |   | (211,225 | ) |
| Proceeds from senior secured first lien notes payable                                  |   |   | - |   |   |   | 299,007 |   |
| Debt acquisition costs                                                                 |   |   | - |   |   |   | (10,671 | ) |
| Payments relating to capital lease obligations                                         |   |   | (12 | ) |   |   | (195 | ) |
| Proceeds from old revolving line of credit                                             |   |   | - |   |   |   | 21,350 |   |
| Payments of old revolving line of credit                                               |   |   | - |   |   |   | (109,575 | ) |
| Proceeds from new revolving line of credit                                             |   |   | 41,750 |   |   |   | 74,693 |   |
| Payments of new revolving line of credit                                               |   |   | (56,050 | ) |   |   | (36,200 | ) |
| Payments of State of Ohio loans                                                        |   |   | (298 | ) |   |   | (282 | ) |
| Payments of secured financing                                                          |   |   | - |   |   |   | (838 | ) |
| Payments to redeem common stock                                                        |   |   | - |   |   |   | (24 | ) |
| Decrease in cash overdraft                                                             |   |   | (3,037 | ) |   |   | (5,436 | ) |
| Net cash (used) provided by financing activities                                  |   |   | (17,647 | ) |   |   | 20,604 |   |
|                                                                                   |   |   |   |   |   |   |   |   |
| Effect of foreign exchange rate changes on cash and cash equivalents                   |   |   | 12 |   |   |   | 34 |   |
| Change in cash and cash equivalents                                                    |   |   | 8,110 |   |   |   | (6,725 | ) |
| Cash and cash equivalents at beginning of period                                       |   |   | 3,772 |   |   |   | 9,963 |   |
| Cash and cash equivalents at end of period                                             |   | $ | 11,882 |   |   | $ | 3,238 |   |

----

| PAPERWEIGHT DEVELOPMENT CORP. AND SUBSIDIARIES            |   |
|-----------------------------------------------------------|--------|
|                                                      |   |
| CONSOLIDATED STATEMENTS OF REDEEMABLE COMMON STOCK,       |   |
| ACCUMULATED DEFICIT, ACCUMULATED OTHER COMPREHENSIVE LOSS |   |
| AND COMPREHENSIVE LOSS                                    |   |
| FOR THE THREE MONTHS ENDED                                |   |
| (unaudited)                                               |   |
| (dollars in thousands, except share data)                 |   |
|                                                      |   |
|                                                      |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                      |   | Redeemable Common Stock |   |   |   |   |   |   |   |   |   |   |
|                                                      |   | SharesOutstanding |   |   | Amount |   |   | AccumulatedDeficit |   |   | AccumulatedOtherComprehensiveLoss |   |   | ComprehensiveLoss |   |
|                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, January 1, 2011                                  |   |   | 9,713,212 |   |   | $ | 110,045 |   |   | $ | (153,765 | ) |   | $ | (92,271 | ) |   |   |   |
|                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive loss:                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Net loss                                      |   |   |  - |   |   |   |  - |   |   |   | (5,197 | ) |   |   |  - |   |   | $ |  (5,197 | ) |
|   Changes in retiree plans                      |   |   |  - |   |   |   |  - |   |   |   |  - |   |   |   | 701 |   |   |   | 701 |   |
|   Realized and unrealized loss on derivatives   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (1,009 | ) |   |   | (1,009 | ) |
|     Total comprehensive loss          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | $ | (5,505 | ) |
| Redemption of redeemable common stock                     |   |   | (15 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   |   |   |
| Accretion of redeemable common stock                      |   |   | - |   |   |   | (1,423 | ) |   |   | 1,423 |   |   |   | - |   |   |   |   |   |
|                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, April 3, 2011                               |   |   | 9,713,197 |   |   | $ | 108,622 |   |   | $ | (157,539 | ) |   | $ | (92,579 | ) |   |   |   |   |
|                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, January 2, 2010                                  |   |   | 10,097,099 |   |   | $ | 122,087 |   |   | $ | (129,093 | ) |   | $ | (99,717 | ) |   |   |   |   |
|                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive loss:                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Net loss                                      |   |   | - |   |   |   | - |   |   |   | (7,447 | ) |   |   | - |   |   | $ | (7,447 | ) |
|   Changes in retiree plans                      |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 298 |   |   |   | 298 |   |
|   Realized and unrealized gain on derivatives   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 157 |   |   |   | 157 |   |
|     Total comprehensive loss          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | $ | (6,992 | ) |
| Redemption of redeemable common stock                     |   |   | (1,846 | ) |   |   | (24 | ) |   |   | - |   |   |   | - |   |   |   |   |   |
| Accretion of redeemable common stock                      |   |   | - |   |   |   | (1,743 | ) |   |   | 1,743 |   |   |   | - |   |   |   |   |   |
|                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, April 4, 2010                               |   |   | 10,095,253 |   |   | $ | 120,320 |   |   | $ | (134,797 | ) |   | $ | (99,262 | ) |   |   |   |   |

----

----

|                                                                             |   | As of April 3, 2011 |   |   | As of January 1, 2011 |   |
|----------------------------------------------------------------------------------|--------|--------------------------|--------|--------|----------------------------|--------|
|                                                                             |   | Gross Carrying Amount    |   |   | Accumulated Amortization   |   |   | Gross Carrying Amount |   |   | Accumulated Amortization |   |
| Amortizable intangible assets:                                                   |   |                     |   |   |                       |   |   |   |   |   |   |   |
|      Trademarks                                              |   | $                        | 44,665 |   |                       | $      | 22,604 |   |   | $ | 44,665 |   |   | $ | 22,079 |   |
|      Patents                                            |   |                     | 11,685 |   |                       |   | 11,685 |   |   |   | 12,376 |   |   |   | 12,376 |   |
|      Customer relationships                             |   |                     | 5,365  |   |                       |   | 2,425 |   |   |   | 5,365 |   |   |   | 2,367 |   |
|             Subtotal |   |                     | 61,715 |   |                       | $      | 36,714 |   |   |   | 62,406 |   |   | $ | 36,822 |   |
| Unamortizable intangible assets:                                                 |   |                     |   |   |                       |   |   |   |   |   |   |   |   |   |   |   |
|      Trademarks                                         |   |                     | 22,865 |   |                       |   |   |   |   |   | 22,865 |   |   |   |   |   |
|             Total    |   | $                        | 84,580 |   |                       |   |   |   |   | $ | 85,271 |   |   |   |   |   |

|                                        |   | April 3, 2011 |    |   | January 1, 2011 |   |
|---------------------------------------------|--------|--------------------|---------|--------|----------------------|--------|
|                                        |   |               |    |   |                 |   |
| Finished goods                              |   | $                  | 49,769  |   |                 | $      | 44,239 |   |
| Raw materials, work in process and supplies |   |               | 60,596  |   |                 |   | 65,793 |   |
|                                        |   | $                  | 110,365 |   |                 | $      | 110,032 |   |

----

|                                  |   | April 3, 2011 |     |   | January 1, 2011 |   |
|---------------------------------------|--------|--------------------|----------|--------|---------------------------|--------|
| Land and improvements                 |   | $                  | 8,611    |   |                      | $      | 8,611 |   |
| Buildings and improvements            |   |               | 131,496  |   |                      |   | 131,512 |   |
| Machinery and equipment               |   |               | 645,031  |   |                      |   | 643,300 |   |
| Software                              |   |               | 32,548   |   |                      |   | 32,575 |   |
| Capital lease                         |   |               | 165      |   |                      |   | 165 |   |
| Construction in progress              |   |               | 12,391   |   |                      |   | 9,114 |   |
|                                  |   |               | 830,242  |   |                      |   | 825,277 |   |
| Accumulated depreciation/amortization |   |               | (481,757 | )      |                      |   | (470,676 | ) |
|                                  |   | $                  | 348,485  |   |                      | $      | 354,601 |   |

|                                         |   | For the Three      |   |   | For the Three      |   |
|----------------------------------------------|--------|--------------------|--------|--------|--------------------|--------|
|                                         |   | Months Ended       |   |   | Months Ended       |   |
| Depreciation Expense                         |   | April 3, 2011 |   |   | April 4, 2010 |   |
| Cost of sales                                |   | $                  | 10,425 |   |               | $      | 10,141 |   |
| Selling, general and administrative expenses |   |               | 1,126  |   |               |   | 1,580 |   |
|                                         |   | $                  | 11,551 |   |               | $      | 11,721 |   |

|                                       |   | April 3, 2011 |   |   | January 1, 2011 |   |
|--------------------------------------------|--------|--------------------|--------|--------|----------------------|--------|
| Environmental indemnification receivable   |   | $                  | 22,172 |   |                 | $      | 20,580 |   |
| Environmental expense insurance recovery   |   |               | 4,198  |   |                 |   | 5,008 |   |
| Escrow from sale of Films                  |   |               | 2,000  |   |                 |   | 2,000 |   |
| Insurance recovery from coal silo accident |   |               | 5,224  |   |                 |   | 8,183 |   |
| Other                                      |   |               | 6,039  |   |                 |   | 6,221 |   |
|                                       |   | $                  | 39,633 |   |                 | $      | 41,992 |   |

|                                     |   | April 3, 2011 |   |   | January 1, 2011 |   |
|------------------------------------------|--------|--------------------|--------|--------|----------------------|--------|
| Deferred debt issuance costs             |   | $                  | 12,685 |   |                 | $      | 13,754 |   |
| Environmental expense insurance recovery |   |               | -      |   |                 |   | 4,045 |   |
| Other                                    |   |               | 6,580  |   |                 |   | 6,980 |   |
|                                     |   | $                  | 19,265 |   |                 | $      | 24,779 |   |

----

|                                       |   | April 3, 2011 |   |   | January 1, 2011 |   |
|--------------------------------------------|--------|--------------------|--------|--------|----------------------|--------|
| Compensation                               |   | $                  | 8,925  |   |                 | $      | 8,997 |   |
| Trade discounts                            |   |               | 12,207 |   |                 |   | 16,035 |   |
| Workers’ compensation                |   |               | 3,575  |   |                 |   | 3,680 |   |
| Accrued insurance                          |   |               | 2,103  |   |                 |   | 2,375 |   |
| Other accrued taxes                        |   |               | 1,406  |   |                 |   | 1,428 |   |
| Postretirement benefits other than pension |   |               | 3,758  |   |                 |   | 3,758 |   |
| Fox River Liabilities                      |   |               | 22,172 |   |                 |   | 20,580 |   |
| Litigation settlement                      |   |               | 3,200  |   |                 |   |                        - |   |
| Other                                      |   |               | 9,869  |   |                 |   | 6,135 |   |
|                                       |   | $                  | 67,215 |   |                 | $      | 62,988 |   |

----

| Pension Benefits                               |   |   | For the ThreeMonths Ended April 3, 2011 |   | For the ThreeMonths Ended April 4, 2010 |
|------------------------------------------------|--------|--------|---------------------------------------------------|--------|---------------------------------------------------|
| Net periodic benefit cost                      |   |   |                                              |   |                                              |
|   Service cost                       |   |   | $                                                 | 1,027  |                                              | $ | 1,517  |
|   Interest cost                      |   |   |                                              | 4,954  |                                              |   | 4,900  |
|   Expected return on plan assets     |   |   |                                              | (5,603 | )                                                 |   | (5,318) |
|   Amortization of prior service cost |   |   |                                              | 122    |                                              |   | 135  |
|   Amortization of actuarial loss     |   |   |                                              | 1,113  |                                              |   | 653  |
| Net periodic benefit cost                      |   |   | $                                                 | 1,613  |                                              | $ | 1,887  |

| Other Postretirement Benefits                    |   |   | For the ThreeMonths EndedApril 3, 2011 |    | For the ThreeMonths EndedApril 4, 2010 |   |
|--------------------------------------------------|--------|--------|--------------------------------------------------|---------|--------------------------------------------------|--------|
| Net periodic benefit cost                        |   |   |                                             |    |                                             |   |
|   Service cost                         |   | $      | 140                                              |    | $                                                | 196    |   |
|   Interest cost                        |   |   | 651                                              |    |                                             | 760    |   |
|   Amortization of prior service credit |   |   | (690                                             | )  |                                             | (538   | )  |
|   Amortization of actuarial loss       |   |   | 157                                              |    |                                             | 48     |   |
| Net periodic benefit cost                        |   | $      | 258                                              |    | $                                                | 466    |   |

----

----

----

|             •  | total remediation costs of $735 million, based on the most recent bids received with a range from $594 million to $900 million; |
|----------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------|

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

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

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

----

----

----

----

| Designated as a Hedge                 |   | Balance Sheet Location    |   | April 3, 2011 |                                                                                                                   |    | January 1, 2011 |   |
|---------------------------------------|--------|---------------------------|--------|--------------------|------------------------------------------------------------------------------------------------------------------------|---------|----------------------|--------|
| Foreign currency exchange derivatives |   | Other current assets      |   | $                  |                 -                      |    |                 | $      | 393 |   |
| Foreign currency exchange derivatives |   | Other current liabilities |   |               | (711                                                                                                                   | )  |                 |   | (67 | ) |
|                                  |   |                      |   |               |                                                                                                                   |    |                 |   |   |   |
| Not Designated as a Hedge             |   |                      |   |               |                                                                                                                   |    |                 |   |   |   |
| Natural gas fixed swap                |   | Other current liabilities |   |               | (66                                                                                                                    | )       |                 |   | (69 | ) |
| Pulp fixed swap                       |   | Other current assets      |   |               |                     325 |    |                 |   |  - |   |

| Designated as a Hedge                                                                               |   | Statement of Operations Location |   | For the ThreeMonths EndedApril 3, 2011 |                                                                                                                    |   | For the ThreeMonths EndedApril 4, 2010 |   |
|-----------------------------------------------------------------------------------------------------|--------|----------------------------------|--------|---------------------------------------------|-------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------|--------|
| Foreign currency exchange derivatives                                                               |   | Net sales                        |   | $                                           |               449                                 |   |                                   | $      | 135 |   |
| Losses (gains) recognized in accumulated other comprehensive loss as presented on the balance sheet |   |                             |   |                                        | 623                                                                                                                     |   |                                   |   | (404 | ) |
|                                                                                                |   |                             |   |                                        |                                                                                                                    |   |                                   |   |   |   |
| Not Designated as a Hedge                                                                           |   |                             |   |                                        |                                                                                                                    |   |                                   |   |   |   |
| Natural gas fixed swap                                                                              |   | Cost of sales                    |   |                                        | 59                                                                                                                      |   |                                   |   | - |   |
| Pulp fixed swap                                                                                     |   | Cost of sales                    |   |                                        |                     (325 | )      |                                   |   | - |   |
| Interest rate swap                                                                             |   | Interest expense                 |   |                                        |  -                                                                                                                 |   |                                   |   |  961 |   |

|                                          |   | (As Reported)Impact of                                                                       |   |                                                                                                                              |   | (As Corrected)Impact of                                                                        |
|-----------------------------------------------|--------|----------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------|
|                                          |   | Hedging on Net Sales                                                                         |   | Error Correction                                                                                                                  |   | Hedging on Net Sales                                                                                |
| For the three months ended April 4, 2010 |   |  $             53 gain |   | $                    188 loss |   |  $              135 loss |

----

|                                                                                                                                                       |   | April 3, 2011 |    |   | January 1, 2011 |    |
|------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|---------|--------|----------------------|---------|
| Revolving credit facility at approximately 4.0% at April 3, 2011                                                                                      |   |  $            | 15,000  |   |                 |  $ | 29,300 |   |
| Secured variable rate industrial development bonds, 0.6% average interest rate at April 3, 2011, $2,650 due in 2013 and $6,000 due in 2027  |   |               | 8,650   |   |                 |    | 8,650 |   |
| State of Ohio assistance loan at 6%, approximately $100 due monthly and final payment due May 2017                                                    |   |               | 6,880   |   |                 |    | 7,105 |   |
| State of Ohio loan at 1% until July 2011, then 3% until May 2019, approximately $30 due monthly and final payment due May 2019              |   |               | 2,494   |   |                 |    | 2,567 |   |
| Senior notes payable at 8.125%, due June 2011                                                                                                         |   |               | 17,491  |   |                 |    | 17,491 |   |
| Senior subordinated notes payable at 9.75%, due June 2014                                                                                             |   |               | 32,195  |   |                 |    | 32,195 |   |
| Senior secured first lien notes payable at 10.5%, due June 2015                                                                                            |   |               | 305,000 |   |                 |    | 305,000 |   |
| Unamortized discount on 10.5% senior secured first lien notes payable, due June 2015                                                                       |   |               | (5,016  | )      |                 |    | (5,249 | ) |
| Second lien notes payable at 11.25%, due December 2015                                                                                                     |   |               | 161,766 |   |                 |    | 161,766 |   |
|                                                                                                                                                       |   |               | 544,460 |   |                 |    | 558,825 |   |
| Less obligations due within one year                                                                                                                       |   |               | (18,694 | )      |                 |    | (18,694 | ) |
|                                                                                                                                                       |   | $                  | 525,766 |   |                 | $       | 540,131 |   |

----

|                                    |   | April 3, 2011 |    |   | January 1, 2011 |    |
|-----------------------------------------|--------|-------------------------|---------|--------|---------------------------|---------|
|                                    |   | Carrying                |    |   | Fair                      |    |   | Carrying |   |   | Fair |   |
| Financial Instruments                   |   | Amount                  |    |   | Value                     |    |   | Amount |   |   | Value |   |
| Senior subordinated notes payable       |   | $                       | 32,195  |   |                      | $       | 15,293 |   |   | $ | 32,195 |   |   | $ | 15,293 |   |
| Senior notes payable                    |   |                    | 17,491  |   |                      |    | 17,404 |   |   |   | 17,491 |   |   |   | 16,966 |   |
| Senior secured first lien notes payable |   | 299,984                 |    |   |                      | 315,733 |   |   |   | 299,751 |   |   |   | 299,751 |   |
| Second lien notes payable               |   | 161,766                 |    |   |                      | 157,722 |   |   |   | 161,766 |   |   |   | 130,222 |   |
| Revolving credit facility               |   | 15,000                  |    |   |                      | 15,000  |   |   |   | 29,300 |   |   |   | 29,300 |   |
| State of Ohio loans                     | 9,374  | 9,943                   | 9,672   | 10,185 |
| Industrial development bonds            |   |                    | 8,650   |   |                      |    | 8,650 |   |   |   | 8,650 |   |   |   | 8,650 |   |
|                                    |   | $                       | 544,460 |   |                      | $       | 539,745 |   |   | $ | 558,825 |   |   | $ | 510,367 |   |

----

|                          |   | For the ThreeMonths EndedApril 3, 2011 |          |    | For the ThreeMonths EndedApril 4, 2010 |   |
|-------------------------------|--------|--------------------------------------------------|---------------|---------|--------------------------------------------------|--------|
| Net sales                     |   |                                             |          |    |                                             |   |
| Carbonless papers             |   | $                                                | 119,296       |    |                                             | $      | 124,625 |   |
| Thermal papers                |   |                                             | 88,927        |    |                                             |   | 80,225 |   |
|                          |   |                                             | 208,223       |    |                                             |   | 204,850 |   |
|                          |   |                                             |          |    |                                             |   |   |   |
| Encapsys                 |   |                                             |   15,476 |    |                                             |   |   11,468 |   |
| Intersegment (A)              |   |                                             | (5,684        | )       |                                             |   | (6,310 | ) |
| Total                         |   | $                                                | 218,015       |    |                                             | $      | 210,008 |   |
|                          |   |                                             |          |    |                                             |   |   |   |
| Operating income (loss)       |   |                                             |          |    |                                             |   |   |   |
| Carbonless papers             |   | $                                                | 9,539         |    |                                             | $      | 8,233 |   |
| Thermal papers                |   |                                             | 2,528         |    |                                             |   | (2,088 | ) |
|                          |   |                                             | 12,067        |    |                                             |   | 6,145 |   |
|  Encapsys                |   |                                             |   3,932  |    |                                             |   |   1,533 |   |
| Unallocated corporate charges |   |                                             | (4,809        | )  |                                             |   | 6,561 |   |
| Intersegment (A)              |   |                                             | (892          | )       |                                             |   | (1,148 | ) |
| Total                         |   | $                                                | 10,298        |    |                                             | $      | 13,091 |   |
|                          |   |                                             |          |    |                                             |   |   |   |
| Depreciation and amortization |   |                                             |          |    |                                             |   |   |   |
| Carbonless papers             |   | $                                                | 6,500         |    |                                             | $      | 6,856 |   |
| Thermal papers                |   |                                             | 4,596         |    |                                             |   | 4,938 |   |
|                          |   |                                             | 11,096        |    |                                             |   | 11,794 |   |
|                          |   |                                             |          |    |                                             |   |   |   |
| Encapsys                 |   |                                             |   998    |    |                                             |   |   461 |   |
| Unallocated corporate charges |   |                                             | 40            |    |                                             |   | 48 |   |
| Total                         |   | $                                                | 12,134        |    |                                             | $      | 12,303 |   |

----

----

| PAPERWEIGHT DEVELOPMENT CORP. AND SUBSIDIARIES                                                                                               |
|----------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                         |
| NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)                                                                           |
|                                                                                                                                         |
| CONDENSED CONSOLIDATING BALANCE SHEET                                                                                                        |
| APRIL 3, 2011                                                                                                                                |
| (unaudited)                                                                                                                                  |
| (dollars in thousands)                                                                                                                       |
|                                                                                                                                         |
|                                                                                                                                         |   | ParentGuarantor |   |   | Issuer |   |   | SubsidiaryGuarantors |   |   | Non-Guarantor Subsidiary |   |   | Eliminations |   |   | Consolidated |
|                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| ASSETS                                                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current assets                                                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Cash and cash equivalents                                                                                                       |   | $ | 4,891  |   |   | $ | 6,372 |   |   | $ | - |   |   | $ | 619 |   |   | $ | - |   |   | $ | 11,882  |
|    Accounts receivable, net                                                                                                        |   |   | -  |   |   |   | 91,662 |   |   |   | - |   |   |   | 5,377 |   |   |   | - |   |   |   | 97,039  |
|    Inventories                                                                                                                     |   |   | -  |   |   |   | 108,972 |   |   |   | - |   |   |   | 1,393 |   |   |   | - |   |   |   | 110,365  |
|    Other current assets                                                                                                       |   |   | 22,172  |   |   |   | 17,419 |   |   |   | - |   |   |   | 42 |   |   |   | - |   |   |   | 39,633  |
|       Total current assets                                                                                     |   |   | 27,063  |   |   |   | 224,425 |   |   |   | - |   |   |   | 7,431 |   |   |   | - |   |   |   | 258,919  |
|                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Property, plant and equipment, net                                                                                              |   |   | -  |   |   |   | 348,467 |   |   |   | - |   |   |   | 18 |   |   |   | - |   |   |   | 348,485  |
|    Investment in subsidiaries                                                                                                      |   |   | 159,430  |   |   |   | 14,511 |   |   |   | - |   |   |   | - |   |   |   | (173,941) |   |   |   | -  |
|    Other assets                                                                                                               |   |   | 12  |   |   |   | 66,987 |   |   |   | - |   |   |   | 132 |   |   |   | - |   |   |   | 67,131  |
|        Total assets                                                                                            |   | $ | 186,505  |   |   | $ | 654,390 |   |   | $ | - |   |   | $ | 7,581 |   |   | $ | (173,941) |   |   | $ | 674,535  |
|                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LIABILITIES, REDEEMABLE COMMON STOCK, ACCUMULATED DEFICIT AND ACCUMULATED OTHER COMPREHENSIVE LOSS                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current liabilities                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Current portion of long-term debt                                                                                               |   | $ | -  |   |   | $ | 18,694 |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | 18,694  |
|    Accounts payable                                                                                                                |   |   | -  |   |   |   | 52,858 |   |   |   | - |   |   |   | 61 |   |   |   | - |   |   |   | 52,919  |
|    Due to (from) parent and affiliated companies                                                                                   |   |   | 328,001  |   |   |   | (318,970 | ) |   |   | - |   |   |   | (9,031 | ) |   |   | - |   |   |   | -  |
|    Other accrued liabilities                                                                                                       |   |   | -  |   |   |   | 81,994 |   |   |   | - |   |   |   | 1,933 |   |   |   | - |   |   |   | 83,927  |
|        Total current liabilities                                                                               |   |   | 328,001  |   |   |   | (165,424 | ) |   |   | - |   |   |   | (7,037 | ) |   |   | - |   |   |   | 155,540  |
|                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Long-term debt                                                                                                                               |   |   | -  |   |   |   | 525,766 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 525,766  |
| Other long-term liabilities                                                                                                                  |   |   | -  |   |   |   | 134,618 |   |   |   | - |   |   |   | 107 |   |   |   | - |   |   |   | 134,725  |
| Redeemable common stock, accumulated deficit and accumulated other comprehensive loss                                                        |   |   | (141,496) |   |   |   | 159,430 |   |   |   | - |   |   |   | 14,511 |   |   |   | (173,941) |   |   |   | (141,496) |
|                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       Total liabilities, redeemable common stock, accumulated deficit and accumulated other comprehensive loss |   | $ | 186,505  |   |   | $ | 654,390 |   |   | $ | - |   |   | $ | 7,581 |   |   | $ | (173,941) |   |   | $ | 674,535  |

----

| PAPERWEIGHT DEVELOPMENT CORP. AND SUBSIDIARIES                                                                                               |
|----------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                         |
| NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)                                                                           |
|                                                                                                                                         |
| CONDENSED CONSOLIDATING BALANCE SHEET                                                                                                        |
|                                                                                                                                         |
| JANUARY 1, 2011                                                                                                                              |
|                                                                                                                                         |
| (dollars in thousands)                                                                                                                       |
|                                                                                                                                         |
|                                                                                                                                         |   | ParentGuarantor |   |   | Issuer |   |   | SubsidiaryGuarantors |   |   | Non-GuarantorSubsidiary |   |   | Eliminations |   |   | Consolidated |
|                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| ASSETS                                                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current assets                                                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Cash and cash equivalents                                                                                                       |   | $ | -  |   |   | $ | 3,399 |   |   | $ | - |   |   | $ | 373 |   |   | $ | -  |   |   | $ | 3,772  |
|    Accounts receivable, net                                                                                                        |   |   | -  |   |   |   | 85,988 |   |   |   | 101 |   |   |   | 7,285 |   |   |   | -  |   |   |   | 93,374  |
|    Inventories                                                                                                                     |   |   | -  |   |   |   | 107,908 |   |   |   | - |   |   |   | 2,124 |   |   |   | -  |   |   |   | 110,032  |
|    Other current assets                                                                                                       |   |   | 20,580  |   |   |   | 21,364 |   |   |   | - |   |   |   | 48 |   |   |   | -  |   |   |   | 41,992  |
|       Total current assets                                                                                     |   |   | 20,580  |   |   |   | 218,659 |   |   |   | 101 |   |   |   | 9,830 |   |   |   | -  |   |   |   | 249,170  |
|                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Property, plant and equipment, net                                                                                              |   |   | -  |   |   |   | 354,597 |   |   |   | - |   |   |   | 4 |   |   |   | -  |   |   |   | 354,601  |
|    Investment in subsidiaries                                                                                                      |   |   | 161,559  |   |   |   | 13,462 |   |   |   | - |   |   |   | - |   |   |   | (175,021) |   |   |   | -  |
|    Other assets                                                                                                               |   |   | 12  |   |   |   | 73,087 |   |   |   | - |   |   |   | 129 |   |   |   | -  |   |   |   | 73,228  |
|        Total assets                                                                                            |   | $ | 182,151  |   |   | $ | 659,805 |   |   | $ | 101 |   |   | $ | 9,963 |   |   | $ | (175,021) |   |   | $ | 676,999  |
|                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LIABILITIES, REDEEMABLE COMMON STOCK, ACCUMULATED DEFICIT AND ACCUMULATED OTHER COMPREHENSIVE LOSS                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current liabilities                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Current portion of long-term debt                                                                                               |   | $ | -  |   |   | $ | 18,694 |   |   | $ | - |   |   | $ | - |   |   | $ | -  |   |   | $ | 18,694  |
|    Accounts payable                                                                                                                |   |   | -  |   |   |   | 48,608 |   |   |   | - |   |   |   | 43 |   |   |   | -  |   |   |   | 48,651  |
|    Due to (from) parent and affiliated companies                                                                                   |   |   | 318,142  |   |   |   | (312,040 | ) |   |   | 101 |   |   |   | (6,203 | ) |   |   | -  |   |   |   | -  |
|    Other accrued liabilities                                                                                                  |   |   | -  |   |   |   | 63,524 |   |   |   | - |   |   |   | 2,558 |   |   |   | -  |   |   |   | 66,082  |
|        Total current liabilities                                                                               |   |   | 318,142  |   |   |   | (181,214 | ) |   |   | 101 |   |   |   | (3,602 | ) |   |   | -  |   |   |   | 133,427  |
|                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Long-term debt                                                                                                                               |   |   | -  |   |   |   | 540,131 |   |   |   | - |   |   |   | - |   |   |   | -  |   |   |   | 540,131  |
| Other long-term liabilities                                                                                                                  |   |   | -  |   |   |   | 139,329 |   |   |   | - |   |   |   | 103 |   |   |   | -  |   |   |   | 139,432  |
| Redeemable common stock, accumulated deficit and accumulated other comprehensive loss                                                        |   |   | (135,991) |   |   |   | 161,559 |   |   |   | - |   |   |   | 13,462 |   |   |   | (175,021) |   |   |   | (135,991) |
|                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       Total liabilities, redeemable common stock, accumulated deficit and accumulated other comprehensive loss |   | $ | 182,151  |   |   | $ | 659,805 |   |   | $ | 101 |   |   | $ | 9,963 |   |   | $ | (175,021) |   |   | $ | 676,999  |

----

|                                                               |   |
|--------------------------------------------------------------------|--------|
| PAPERWEIGHT DEVELOPMENT CORP. AND SUBSIDIARIES                     |   |
|                                                               |   |
| NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) |   |
|                                                               |   |
| CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS                    |   |
| FOR THE THREE MONTHS ENDED APRIL 3, 2011                           |   |
| (unaudited)                                                        |   |
| (dollars in thousands)                                             |   |
|                                                               |   |
|                                                               |   | Parent |   |   |   |   |   | Subsidiary |   |   | Non-Guarantor |   |   |   |   |   |   |   |
|                                                               |   | Guarantor |   |   | Issuer |   |   | Guarantors |   |   | Subsidiary |   |   | Eliminations |   |   | Consolidated |   |
| Net sales                                                          |   | $ | - |   |   | $ | 215,890 |   |   | $ | - |   |   | $ | 13,704 |   |   | $ | (11,579 | ) |   | $ | 218,015 |   |
| Cost of sales                                                      |   |   | - |   |   |   | 170,630 |   |   |   | - |   |   |   | 12,384 |   |   |   | (11,850 | ) |   |   | 171,164 |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross profit                                                       |   |   | - |   |   |   | 45,260 |   |   |   | - |   |   |   | 1,320 |   |   |   | 271 |   |   |   | 46,851 |   |
| Selling, general and administrative expenses                       |   |   | - |   |   |   | 32,864 |   |   |   | - |   |   |   | 485 |   |   |   | - |   |   |   | 33,349 |   |
| Litigation settlement                                              |   |   | - |   |   |   | 3,204 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 3,204 |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating income                                                   |   |   | - |   |   |   | 9,192 |   |   |   | - |   |   |   | 835 |   |   |   | 271 |   |   |   | 10,298 |   |
| Interest expense                                                   |   |   | 3,376 |   |   |   | 16,226 |   |   |   | - |   |   |   | - |   |   |   | (3,452 | ) |   |   | 16,150 |   |
| Interest income                                                    |   |   | - |   |   |   | (3,413 | ) |   |   | - |   |   |   | (76 | ) |   |   | 3,452 |   |   |   | (37 | )  |
| Loss (income) in equity investments                                |   |   | 1,821 |   |   |   | (1,421 | ) |   |   | - |   |   |   | - |   |   |   | (400 | ) |   |   | - |   |
| Other income                                                       |   |   | - |   |   |   | (431 | ) |   |   | - |   |   |   | (441 | ) |   |   | (101 | ) |   |   | (973 | )  |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (Loss) income before income taxes                                  |   |   | (5,197 | ) |   |   | (1,769 | ) |   |   | - |   |   |   | 1,352 |   |   |   | 772 |   |   |   | (4,842 | )  |
| Provision for income taxes                                         |   |   | - |   |   |   | 52 |   |   |   | - |   |   |   | 303 |   |   |   | - |   |   |   | 355 |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net (loss) income                                                  |   | $ | (5,197 | ) |   | $ | (1,821 | ) |   | $ | - |   |   | $ | 1,049 |   |   | $ | 772 |   |   | $ | (5,197 | )  |

----

| PAPERWEIGHT DEVELOPMENT CORP. AND SUBSIDIARIES                     |   |
|--------------------------------------------------------------------|--------|
|                                                               |   |
| NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) |   |
|                                                               |   |
| CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS                    |   |
| FOR THE THREE MONTHS ENDED APRIL 4, 2010                           |   |
| (unaudited)                                                        |   |
| (dollars in thousands)                                             |   |
|                                                               |   |
|                                                               |   | Parent |   |   |   |   |   | Subsidiary |   |   | Non-Guarantor |   |   |   |   |   |   |   |
|                                                               |   | Guarantor |   |   | Issuer |   |   | Guarantors |   |   | Subsidiary |   |   | Eliminations |   |   | Consolidated |   |
| Net sales                                                          |   | $ | - |   |   | $ | 210,016 |   |   | $ | - |   |   | $ | 11,340 |   |   | $ | (11,348 | ) |   | $ | 210,008 |   |
| Cost of sales                                                      |   |   | - |   |   |   | 170,413 |   |   |   | - |   |   |   | 11,333 |   |   |   | (11,461 | ) |   |   | 170,285 |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross profit                                                       |   |   | - |   |   |   | 39,603 |   |   |   | - |   |   |   | 7 |   |   |   | 113 |   |   |   | 39,723 |   |
| Selling, general and administrative expense                        |   |   | - |   |   |   | 34,373 |   |   |   | - |   |   |   | 440 |   |   |   | - |   |   |   | 34,813 |   |
| Environmental expense insurance recovery                           |   |   | - |   |   |   | (8,181 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (8,181 | ) |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating income (loss)                                            |   |   | - |   |   |   | 13,411 |   |   |   | - |   |   |   | (433 | ) |   |   | 113 |   |   |   | 13,091 |   |
| Interest expense                                                   |   |   | 3,299 |   |   |   | 17,172 |   |   |   | - |   |   |   | - |   |   |   | (3,549 | ) |   |   | 16,922 |   |
| Debt extinguishment expense, net                                   |   |   | - |   |   |   | 5,532 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 5,532 |   |
| Interest income                                                    |   |   | - |   |   |   | (3,309 | ) |   |   | - |   |   |   | (250 | ) |   |   | 3,549 |   |   |   | (10 | ) |
| Loss (income) in equity investments                                |   |   | 4,148 |   |   |   | (1,925 | ) |   |   | - |   |   |   | - |   |   |   | (2,223 | ) |   |   | -  |   |
| Other loss (income)                                                |   |   | - |   |   |   | 148 |   |   |   | - |   |   |   | (521 | ) |   |   | 110 |   |   |   | (263 | ) |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (Loss) income from continuing operations before income taxes       |   |   | (7,447 | ) |   |   | (4,207 | ) |   |   | - |   |   |   | 338 |    |   |   | 2,226 |   |   |   | (9,090 | ) |
| Provision (benefit) for income taxes                               |   |   | - |   |   |   | 30 |   |   |   | - |   |   |   | (121 | ) |   |   | - |   |   |   | (91 | ) |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (Loss) income from continuing operations                           |   |   | (7,447 | ) |   |   | (4,237 | ) |   |   | - |   |   |   | 459 |   |   |   | 2,226 |   |   |   | (8,999 | ) |
| Income from discontinued operations, net of income taxes           |   |   | - |   |   |   | 89 |   |   |   | 1,463 |   |   |   | - |   |   |   | - |   |   |   | 1,552 |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net (loss) income                                                  |   | $ | (7,447 | ) |   | $ | (4,148 | ) |   | $ | 1,463 |   |   | $ | 459 |   |   | $ | 2,226 |   |   | $ | (7,447 | ) |

----

| PAPERWEIGHT DEVELOPMENT CORP. AND SUBSIDIARIES                                                  |   |
|-------------------------------------------------------------------------------------------------|--------|
|                                                                                            |   |
| NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)                              |   |
|                                                                                            |   |
| CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS                                                 |   |
| FOR THE THREE MONTHS ENDED APRIL 3, 2011                                                        |   |
| (unaudited)                                                                                     |   |
| (dollars in thousands)                                                                          |   |
|                                                                                            |   |
|                                                                                            |   | Parent |   |   |   |   |   | Subsidiary |   |   | Non-Guarantor |   |   |   |   |   |   |   |
|                                                                                            |   | Guarantor |   |   | Issuer |   |   | Guarantors |   |   | Subsidiary |   |   | Eliminations |   |   | Consolidated |   |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash flows from operating activities:                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net (loss) income                                                                               |   | $ | (5,197 | ) |   | $ | (1,821 | ) |   | $ | - |   |   | $ | 1,049 |   |   | $ | 772 |   |   | $ | (5,197 | ) |
| Adjustments to reconcile net (loss) income to net cash (used) provided by operating activities: |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation and amortization                                                                   |   |   | - |   |   |   | 12,133 |   |   |   | - |   |   |   | 1 |   |   |   | - |   |   |   | 12,134 |   |
| Other                                                                                           |   |   | - |   |   |   | 1,624 |   |   |   | - |   |   |   | (441 | ) |   |   | - |   |   |   | 1,183 |   |
| Change in assets and liabilities, net                                                      |   |   | 229 |   |   |   |   19,583 |   |   |   | 101 |   |   |   | 2,479 |   |   |   | (772 | ) |   |   |   21,620 |   |
| Net cash (used) provided by operating activities                                                |   |   | (4,968 | ) |   |   | 31,519 |   |   |   | 101 |   |   |   | 3,088 |   |   |   | - |   |   |   | 29,740 |   |
| Cash flows from investing activities:                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Additions to property, plant and equipment                                                      |   |   | - |   |   |   | (3,981 | ) |   |   | - |   |   |   | (14 | ) |   |   | - |   |   |   | (3,995 | ) |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net cash used by investing activities                                                           |   |   | - |   |   |   | (3,981 | ) |   |   | - |   |   |   | (14 | ) |   |   | - |   |   |   | (3,995 | ) |
| Cash flows from financing activities:                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Payments relating to capital lease obligation                                                   |   |   | - |   |   |   | (12 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (12 | ) |
| Proceeds from revolving line of credit                                                          |   |   | - |   |   |   | 41,750 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 41,750 |   |
| Payments of revolving line of credit                                                            |   |   | - |   |   |   | (56,050 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (56,050 | ) |
| Payments of State of Ohio loans                                                                 |   |   | - |   |   |   | (298 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (298 | ) |
| Due to parent and affiliated companies, net                                                     |   |   | 9,859 |   |   |   | (6,930 | ) |   |   | (101 | ) |   |   | (2,828 | ) |   |   | - |   |   |   | - |   |
| Decrease in cash overdraft                                                                 |   |   | - |   |   |   | (3,037 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (3,037 | ) |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net cash provided (used) by financing activities                                                |   |   | 9,859 |   |   |   | (24,577 | ) |   |   | (101 | ) |   |   | (2,828 | ) |   |   | - |   |   |   | (17,647 | ) |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Effect of foreign exchange rate changes on cash and cash equivalents                            |   |   | - |   |   |   | 12 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 12 |   |
| Change in cash and cash equivalents                                                             |   |   | 4,891 |   |   |   | 2,973 |   |   |   | - |   |   |   | 246 |   |   |   | - |   |   |   | 8,110 |   |
| Cash and cash equivalents at beginning of period                                                |   |   | - |   |   |   | 3,399 |   |   |   | - |   |   |   | 373 |   |   |   | - |   |   |   | 3,772 |   |
| Cash and cash equivalents at end of period                                                      |   | $ | 4,891 |   |   | $ | 6,372 |   |   | $ | - |   |   | $ | 619 |   |   | $ | - |   |   | $ | 11,882 |   |

----

| PAPERWEIGHT DEVELOPMENT CORP. AND SUBSIDIARIES                                                  |   |
|-------------------------------------------------------------------------------------------------|--------|
|                                                                                            |   |
| NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)                              |   |
|                                                                                            |   |
| CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS                                                 |   |
| FOR THE THREE MONTHS ENDED APRIL 4, 2010                                                        |   |
| (unaudited)                                                                                     |   |
| (dollars in thousands)                                                                          |   |
|                                                                                            |   |
|                                                                                            |   | Parent |   |   |   |   |   | Subsidiary |   |   | Non-Guarantor |   |   |   |   |   |   |   |
|                                                                                            |   | Guarantor |   |   | Issuer |   |   | Guarantors |   |   | Subsidiary |   |   | Eliminations |   |   | Consolidated |   |
| Cash flows from operating activities:                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net (loss) income                                                                               |   | $ | (7,447 | ) |   | $ | (4,148 | ) |   | $ | 1,463 |   |   | $ | 459 |   |   | $ | 2,226 |   |   | $ | (7,447 | ) |
| Adjustments to reconcile net (loss) income to net cash provided (used) by operating activities: |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation and amortization                                                                   |   |   | - |   |   |   | 12,303 |   |   |   | 864 |   |   |   | 1 |   |   |   | - |   |   |   | 13,168 |   |
| Other                                                                                           |   |   | - |   |   |   | (324 | ) |   |   | - |   |   |   | (521 | ) |   |   | - |   |   |   | (845 | ) |
| Change in assets and liabilities, net                                                      |   |   | 18,233 |   |   |   |   (44,514 | ) |   |   | (590 | ) |   |   | (833 | ) |   |   | (2,226 | ) |   |   |   (29,930 | ) |
| Net cash provided (used) by operating activities                                                |   |   | 10,786 |   |   |   | (36,683 | ) |   |   | 1,737 |   |   |   | (894 | ) |   |   | - |   |   |   | (25,054 | ) |
| Cash flows from investing activities:                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds from sale of equipment                                                                 |   |   | - |   |   |   | 57 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 57 |   |
| Additions to property, plant and equipment                                                      |   |   | - |   |   |   | (2,135 | ) |   |   | (231 | ) |   |   | - |   |   |   | - |   |   |   | (2,366 | ) |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net cash used by investing activities                                                           |   |   | - |   |   |   | (2,078 | ) |   |   | (231 | ) |   |   | - |   |   |   | - |   |   |   | (2,309 | ) |
| Cash flows from financing activities:                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Payments of senior secured notes payable                                                        |   |   | - |   |   |   | (211,225 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (211,225 | ) |
| Proceeds from senior secured first lien notes payable                                           |   |   | - |   |   |   | 299,007 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 299,007 |   |
| Debt acquisition costs                                                                          |   |   | - |   |   |   | (10,671 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (10,671 | ) |
| Payments relating to capital lease obligations                                                  |   |   | - |   |   |   | (195 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (195 | ) |
| Proceeds from old revolving line of credit                                                      |   |   | - |   |   |   | 21,350 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 21,350 |   |
| Payments of old revolving line of credit                                                        |   |   | - |   |   |   | (109,575 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (109,575 | ) |
| Proceeds of new revolving line of credit                                                        |   |   |   - |   |   |   | 74,693 |   |   |   |   - |   |   |   |   - |   |   |   |   - |   |   |   | 74,693 |   |
| Payments from new revolving line of credit                                                      |   |   | - |   |   |   | (36,200 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (36,200 | ) |
| Payments of State of Ohio loans                                                                 |   |   | - |   |   |   | (282 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (282 | ) |
| Payments of secured financing                                                                   |   |   | - |   |   |   | (838 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (838 | ) |
| Due to parent and affiliated companies, net                                                     |   |   | (10,762 | ) |   |   | 10,853 |   |   |   | (1,507 | ) |   |   | 1,416 |   |   |   | - |   |   |   |   | - |
| Payments to redeem common stock                                                            |   |   | (24 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (24 | ) |
| Decrease in cash overdraft                                                                 |   |   | - |   |   |   | (5,436 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (5,436 | ) |
| Net cash (used) provided by financing activities                                                |   |   | (10,786 | ) |   |   | 31,481 |   |   |   | (1,507 | ) |   |   | 1,416 |   |   |   | - |   |   |   | 20,604 |   |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Effect of foreign exchange rate changes on cash and cash equivalents                            |   |   | - |   |   |   | 34 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 34 |   |
| Change in cash and cash equivalents                                                             |   |   | - |   |   |   | (7,246 | ) |   |   | (1 | ) |   |   | 522 |   |   |   | - |   |   |   | (6,725 | ) |
| Cash and cash equivalents at beginning of period                                                |   |   | - |   |   |   | 9,161 |   |   |   | 1 |   |   |   | 801 |   |   |   | - |   |   |   | 9,963 |   |
| Cash and cash equivalents at end of period                                                      |   | $ | - |   |   | $ | 1,915 |   |   | $ | - |   |   | $ | 1,323 |   |   | $ | - |   |   | $ | 3,238 |   |

----

----

|                                                     |   | For the Quarter Ended |    |   |          |   |
|----------------------------------------------------------|--------|-----------------------|---------|--------|---------------|--------|
|                                                     |   | April 3,         |    |   | April 4, |   |   | Increase |   |
|                                                     |   | 2011                  |    |   | 2010          |   |   | (Decrease) |   |
|                                                     |   | (dollars in millions) |    |   |          |   |
|                                                     |   |                  |    |   |          |   |   |   |   |
| Net sales                                                |   | $                     | 218.0   |   |          | $      | 210.0 |   |   |   | 3.8 | % |
| Cost of sales                                            |   |                  | 171.2   |   |          |   | 170.3 |   |   |   | 0.5 | % |
|                                                     |   |                  |    |   |          |   |   |   |   |   |   |   |
| Gross profit                                             |   |                  | 46.8    |   |          |   | 39.7 |   |   |   | 17.9 | % |
|                                                     |   |                  |    |   |          |   |   |   |   |   |   |   |
| Selling, general and administrative expenses             |   |                  | 33.3    |   |          |   | 34.8 |   |   |   | -4.3 | % |
| Environmental expense insurance recovery            |   |                  |  - |   |          |   |  (8.2 | )  |   |   |  -100.0 | %  |
| Litigation settlement                                    |   |                  | 3.2     |   |          |   | - |   |   |   |                    nm |
|                                                     |   |                  |    |   |          |   |   |   |   |   |   |   |
| Operating income                                         |   |                  | 10.3    |   |          |   | 13.1 |   |   |   | -21.4 | % |
|                                                     |   |                  |    |   |          |   |   |   |   |   |   |   |
| Interest expense, net                                    |   |                  | 16.1    |   |          |   | 16.9 |   |   |   | -4.7 | % |
| Debt extinguishment expense, net                         |   |                  | -       |   |          |   | 5.5 |   |   | -100.0 | % |
| Other non-operating income, net                          |   |                  | (1.0    | )      |          |   | (0.2 | )  |   | 400.0 | % |
|                                                     |   |                  |    |   |          |   |   |   |   |   |   |   |
| Loss from continuing operations before income taxes      |   |                  | (4.8    | )      |          |   | (9.1 | )  |   | 47.3 | % |
| Provision (benefit) for income taxes                     |   |                  | 0.4     |   |          |   | (0.1 | ) |   |   | 500.0 | % |
|                                                     |   |                  |    |   |          |   |   |   |   |   |   |   |
| Loss from continuing operations                          |   |                  | (5.2    | )      |          |   | (9.0 | )  |   | 42.2 | % |
| Income from discontinued operations, net of income taxes |   |                  | -       |   |          |   | 1.6 |   |   | -100.0 | % |
|  Net loss                                           |   | $                     | (5.2    | )      |          | $      | (7.4 | )  |   | 29.7 | % |
|  Comparison as a percentage of net sales            |   |                  |    |   |          |   |   |   |   |   |   |   |
| Cost of sales                                            |   |                  | 78.5    | %      |          |   | 81.1 | % |   |   | -2.6 | % |
| Gross margin                                             |   |                  | 21.5    | %      |          |   | 18.9 | % |   |   | 2.6 | % |
| Selling, general and administrative expenses             |   |                  | 15.3    | %      |          |   | 16.6 | % |   |   | -1.3 | % |
| Operating margin                                         |   |                  | 4.7     | %      |          |   | 6.2 | % |   |   | -1.5 | % |
| Loss from continuing operations before income taxes      |   |                  | -2.2    | %      |          |   | -4.3 | % |   |   | 2.1 | % |
| Loss from continuing operations                          |   |                  | -2.4    | %      |          |   | -4.3 | % |   |   | 1.9 | % |
| Income from discontinued operations, net of income taxes |   |                  | -       |   |          |   | 0.8 | % |   |   | -0.8 | % |
| Net loss                                                 |   |                  | -2.4    | %      |          |   | -3.5 | % |   |   | 1.1 | % |

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|                                                |   | For the ThreeMonths EndedApril 3, 2011 v.the Three MonthsEnded April 4, 2010 |   |
|-----------------------------------------------------|--------|------------------------------------------------------------------------------|--------|
| Favorable price and product mix                     |   |  $                                                                      | 13.6   |   |
| Reduced manufacturing costs                         |   |                                                                         | 1.5    |   |
| Net inflation of raw material and utilities pricing |   |                                                                         | (7.2   | ) |
| Lower shipment volumes                              |   |                                                                         | (2.0   | )  |
|                                                |   | $                                                                            | 5.9    |   |

| • | For the first three months of 2011, carbonless papers net sales totaled $119.3 million, a decrease of $5.3 million, or 4.3%, from prior year levels. Shipment volumes during first quarter 2011 were approximately 10% lower than the same period last year. The majority of this decline in shipment volumes occurred within the international roll market. The negative impact of lower shipment volumes was partially offset by the benefits realized from price increases initiated since the beginning of 2010 in response to rapidly rising raw material costs. |
|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| • | First quarter 2011 carbonless papers operating income of $9.5 million increased $1.3 million compared to first quarter 2010. As mentioned above, operating income for the first three months of 2011 was favorably impacted by the benefit of price increases initiated in response to the ongoing negative impact of rapidly rising raw material costs. In addition, product mix was also favorable due to increased carbonless sheet sales as well as decreased sales into the international market where gross margins are lower. |
|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| • | First quarter 2011 thermal papers net sales totaled $88.9 million, an increase of $8.7 million, or 10.8%, over the same prior year period. The segment primarily benefited from favorable pricing realized from multiple price increases initiated since the beginning of 2010 in response to escalating raw material costs. |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| • | The thermal papers segment recorded operating income of $2.5 million for first quarter 2011. This compared to a first quarter 2010 operating loss of $2.1 million. Though this 2011 operating income included higher raw materials and utility costs, increased net sales and improved product mix offset the negative impact of these items. |
|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| • | Encapsys first quarter 2011 net sales of $15.5 million were $4.0 million, or 34.9%, higher than first quarter 2010. First quarter 2011 volumes were approximately 38% higher than the prior year quarter. |
|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| • | As a result of higher shipment volumes, improved manufacturing performance, increased funding of development work from potential commercial customers and lower  SG&A expenses, Encapsys first quarter 2011 operating income was $3.9 million compared to $1.5 million of operating income for the same quarter of 2010. |
|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| • | Unallocated corporate charges were $4.8 million for the first three months of 2011 due to recording a $3.2 million litigation settlement, while first quarter 2010 posted income of $6.6 million including the $8.2 million Fox River insurance recovery. |
|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| 10.1   | Amended and Restated Appleton Papers Inc. Retirement Plan as amended through March 9, 2011. (1)                                                                                                                                                                                                                                                                   |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.1.1 | Resolutions by the Benefit Finance Committee of Appleton Papers Inc. dated April 4, 2011 further amending Appleton Papers Inc. Retirement Plan as amended through March 9, 2011. (1)                                                                                                                                                                              |
| 10.2   | Adoption Agreement, effective March 1, 2011, by Appleton Papers Inc. and Principal Life Insurance Company, as the provider, amending and restating the Executive Nonqualified Excess Plan of Appleton Papers Inc. incorporated by reference to Exhibit 10.15 to the Registrants’ Annual Report on Form 10-K for the fiscal year ended January 2, 2010. (1)  |
| 31.1   | Certification of Mark R. Richards, Chairman, President and Chief Executive Officer of Appleton Papers Inc., pursuant to Rule 15d-14(a) of the Securities Exchange Act of 1934 as amended.                                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                                                                                                                                   |
| 31.2   | Certification of Thomas J. Ferree, Senior Vice President Finance, Chief Financial Officer and Treasurer of Appleton Papers Inc., pursuant to Rule 15d-14(a) of the Securities Exchange Act of 1934 as amended.                                                                                                                                                         |
|   |                                                                                                                                                                                                                                                                                                                                                                   |
| 31.3   | Certification of Mark R. Richards, Chairman, President and Chief Executive Officer of Paperweight Development Corp., pursuant to Rule 15d-14(a) of the Securities Exchange Act of 1934 as amended.                                                                                                                                                                     |
|   |                                                                                                                                                                                                                                                                                                                                                                   |
| 31.4   | Certification of Thomas J. Ferree, Senior Vice President Finance, Chief Financial Officer and Treasurer of Paperweight Development Corp., pursuant to Rule 15d-14(a) of the Securities Exchange Act of 1934 as amended.                                                                                                                                                |
|   |                                                                                                                                                                                                                                                                                                                                                                   |
| 32.1   | Certification of Mark R. Richards, Chairman, President and Chief Executive Officer of Appleton Papers Inc., pursuant to 18 U.S.C. Section 1350.                                                                                                                                                                                                                        |
|   |                                                                                                                                                                                                                                                                                                                                                                   |
| 32.2   | Certification of Thomas J. Ferree, Senior Vice President Finance, Chief Financial Officer and Treasurer of Appleton Papers Inc., pursuant to 18 U.S.C. Section 1350.                                                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                   |
| 32.3   | Certification of Mark R. Richards, Chairman, President and Chief Executive Officer of Paperweight Development Corp., pursuant to 18 U.S.C. Section 1350.                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                   |
| 32.4   | Certification of Thomas J. Ferree, Senior Vice President Finance, Chief Financial Officer and Treasurer of Paperweight Development Corp., pursuant to 18 U.S.C. Section 1350.                                                                                                                                                                                          |

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|                                                   |                                                                                                                                              |
|--------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                   | APPLETON PAPERS INC.            (Registrant)                                          |
|                                                   |                                                                                                                                              |
|   Date: May 12, 2011     |  /s/ Thomas J. Ferree                                                                                                                        |
|                                                   | Thomas J. Ferree                                                                                                                                  |
|                                                   | Senior Vice President Finance, Chief Financial Officer and Treasurer (Signing on behalf of the Registrant and as the Principal Financial Officer) |

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|                                                   |                                                                                                                                                                                      |
|--------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                   | PAPERWEIGHT DEVELOPMENT CORP.                        (Registrant) |
|                                                   |                                                                                                                                                                                      |
|   Date: May 12, 2011     |  /s/ Thomas J. Ferree                                                                                                                                                                |
|                                                   | Thomas J. Ferree                                                                                                                                                                          |
|                                                   | Senior Vice President Finance, Chief Financial Officer and Treasurer (Signing on behalf of the Registrant and as the Principal Financial Officer)                                         |

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