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

|   | For the quarterly period ended March 31, 2011 |
|--------|-----------------------------------------------|

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

|   | For the transition period from __________ to __________ |
|--------|---------------------------------------------------------|

----

| Delaware                                |   | 001-34056                |   | 75-3217389                          |
|-----------------------------------------|--------|--------------------------|--------|-------------------------------------|
| (State of Incorporationor Organization) |   | (Commission File Number) |   | (IRS EmployerIdentification Number) |

----

----

| Delaware                                |   | 333-142283               |   | 56-2597634                          |
|-----------------------------------------|--------|--------------------------|--------|-------------------------------------|
| (State of Incorporationor Organization) |   | (Commission File Number) |   | (IRS EmployerIdentification Number) |

----

| Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.              |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                       |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                       | Verso Paper Corp. | þ Yes o No |
|                                                                                                                                                                                                                                                                                                                                                                                       | Verso Paper Holdings LLC | þ Yes o No |
|                                                                                                                                                                                                                                                                                                                                                                                       |   |   |
| Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). |
|                                                                                                                                                                                                                                                                                                                                                                                       |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                       | Verso Paper Corp. | o Yes o No  |
|                                                                                                                                                                                                                                                                                                                                                                                       | Verso Paper Holdings LLC | o Yes o No |

----

| Verso Paper Corp.              |                     |                                          |                       |
|--------------------------------|--------------------------|-----------------------------------------------|----------------------------|
| Large accelerated filer o | Accelerated filer o | Non-accelerated filer þ             | Smaller reporting companyo |
|                           |                     | (Do not check if a smaller reporting company) |                       |
| Verso Paper Holdings LLC       |                     |                                          |                       |
| Large accelerated filer o | Accelerated filer o | Non-accelerated filer þ             | Smaller reporting companyo |
|                           |                     | (Do not check if a smaller reporting company) |                       |

| Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). |
|------------------------------------------------------------------------------------------------------------------|
|                                                                                                             |   |   |
|                                                                                                             | Verso Paper Corp. | o Yes þ No |
|                                                                                                             | Verso Paper Holdings LLC | o Yes þ No |

----

----

| PART I.       | FINANCIAL INFORMATION | Page                                                                                                           |
|---------------|-----------------------|----------------------------------------------------------------------------------------------------------------|
|          |                  |                                                                                                           |   |
|          | Item 1.               | Financial Statements                                                                                           |   |
|          |                  |                                                                                                           |   |
|          |                  | Unaudited Condensed Consolidated Balance Sheets                                                                | 4 |
|          |                  |                                                                                                           |   |
|          |                  | Unaudited Condensed Consolidated Statements of Operations                                                      | 5 |
|          |                  |                                                                                                           |   |
|          |                  | Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity of Verso Paper Corp. | 6 |
|          |                  |                                                                                                           |   |
|          |                  | Unaudited Condensed Consolidated Statements of Changes in Member’s Equity of Verso Paper Holdings LLC    | 7 |
|          |                  |                                                                                                           |   |
|          |                  | Unaudited Condensed Consolidated Statements of Cash Flows                                                      | 8 |
|          |                  |                                                                                                           |   |
|          |                  | Notes to Unaudited Condensed Consolidated Financial Statements                                                 | 9 |
|          |                  |                                                                                                           |   |
|          | Item 2.               | Management’s Discussion and Analysis of Financial Condition and Results of Operations                    | 28 |
|          |                  |                                                                                                           |   |
|          | Item 3.               | Quantitative and Qualitative Disclosures About Market Risk                                                     | 35 |
|          |                  |                                                                                                           |   |
|          | Item 4.               | Controls and Procedures                                                                                        | 37 |
|          |                  |                                                                                                           |   |
| PART II.      | OTHER INFORMATION     |                                                                                                           |
|          |                  |                                                                                                           |   |
|          | Item 1.               | Legal Proceedings                                                                                              | 38 |
|          |                  |                                                                                                           |   |
|          | Item 1A.              | Risk Factors                                                                                                   | 38 |
|          |                  |                                                                                                           |   |
|          | Item 2.               | Unregistered Sales of Equity Securities and Use of Proceeds                                                    | 38 |
|          |                  |                                                                                                           |   |
|          | Item 3.               | Defaults Upon Senior Securities                                                                                | 38 |
|          |                  |                                                                                                           |   |
|          | Item 4.               | (Removed and Reserved)                                                                                         | 38 |
|          |                  |                                                                                                           |   |
|          | Item 5.               | Other Information                                                                                              | 38 |
|          |                  |                                                                                                           |   |
|          | Item 6.               | Exhibits                                                                                                       | 39 |
|          |                  |
| SIGNATURES    | 41                    |
|          |                  |
| EXHIBIT INDEX | 42                    |

----

| UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS                   |   |
|-------------------------------------------------------------------|--------|
|                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                              |   | VERSO PAPER |   |   | VERSO HOLDINGS |   |
|                                                              |   | March 31, |   |   | December 31, |   |   | March 31, |   |   | December 31, |   |
| (Dollars in thousands, except per share amounts)                  |   | 2011 |   |   | 2010 |   |   | 2011 |   |   | 2010 |   |
| ASSETS                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Current assets:                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash and cash equivalents                                         |   | $ | 54,811 |   |   | $ | 152,780 |   |   | $ | 54,736 |   |   | $ | 152,706 |   |
| Accounts receivable, net                                          |   |   | 137,007 |   |   |   | 107,008 |   |   |   | 137,134 |   |   |   | 107,012 |   |
| Inventories                                                       |   |   | 168,650 |   |   |   | 142,516 |   |   |   | 168,650 |   |   |   | 142,516 |   |
| Prepaid expenses and other assets                                 |   |   | 9,286 |   |   |   | 3,806 |   |   |   | 9,297 |   |   |   | 3,792 |   |
| Total current assets                                              |   |   | 369,754 |   |   |   | 406,110 |   |   |   | 369,817 |   |   |   | 406,026 |   |
| Property, plant, and equipment, net                               |   |   | 955,681 |   |   |   | 972,711 |   |   |   | 955,681 |   |   |   | 972,711 |   |
| Reforestation                                                     |   |   | 13,744 |   |   |   | 13,826 |   |   |   | 13,744 |   |   |   | 13,826 |   |
| Intangibles and other assets, net                                 |   |   | 100,298 |   |   |   | 104,795 |   |   |   | 122,943 |   |   |   | 127,350 |   |
| Goodwill                                                          |   |   | 18,695 |   |   |   | 18,695 |   |   |   | 10,551 |   |   |   | 10,551 |   |
| Total assets                                                      |   | $ | 1,458,172 |   |   | $ | 1,516,137 |   |   | $ | 1,472,736 |   |   | $ | 1,530,464 |   |
|                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LIABILITIES AND EQUITY                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current liabilities:                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Accounts payable                                                  |   | $ | 122,165 |   |   | $ | 123,874 |   |   | $ | 123,056 |   |   | $ | 124,774 |   |
| Accrued liabilities                                               |   |   | 78,050 |   |   |   | 119,810 |   |   |   | 77,296 |   |   |   | 118,923 |   |
| Total current liabilities                                         |   |   | 200,215 |   |   |   | 243,684 |   |   |   | 200,352 |   |   |   | 243,697 |   |
| Long-term debt                                                    |   |   | 1,255,248 |   |   |   | 1,228,611 |   |   |   | 1,198,029 |   |   |   | 1,172,736 |   |
| Other liabilities                                                 |   |   | 51,947 |   |   |   | 50,648 |   |   |   | 43,762 |   |   |   | 42,614 |   |
| Total liabilities                                                 |   |   | 1,507,410 |   |   |   | 1,522,943 |   |   |   | 1,442,143 |   |   |   | 1,459,047 |   |
| Commitments and contingencies (Note 11)                           |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Equity:                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Preferred stock -- par value $0.01 (20,000,000 shares authorized, |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| no shares issued)                                                 |   |   | - |   |   |   | - |   |   |   | n/a |   |   |   | n/a |   |
| Common stock -- par value $0.01 (250,000,000 shares authorized    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| with 52,625,108 shares issued and outstanding on March 31,        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2011, and 52,467,101 shares issued and outstanding on             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| December 31, 2010)                                                |   |   | 527 |   |   |   | 525 |   |   |   | n/a |   |   |   | n/a |   |
| Paid-in-capital                                                   |   |   | 214,708 |   |   |   | 214,050 |   |   |   | 319,335 |   |   |   | 318,690 |   |
| Retained deficit                                                  |   |   | (249,724 | ) |   |   | (205,127 | ) |   |   | (273,993 | ) |   |   | (231,019 | ) |
| Accumulated other comprehensive loss                              |   |   | (14,749 | ) |   |   | (16,254 | ) |   |   | (14,749 | ) |   |   | (16,254 | ) |
| Total equity                                                      |   |   | (49,238 | ) |   |   | (6,806 | ) |   |   | 30,593 |   |   |   | 71,417 |   |
| Total liabilities and equity                                      |   | $ | 1,458,172 |   |   | $ | 1,516,137 |   |   | $ | 1,472,736 |   |   | $ | 1,530,464 |   |
|                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Included in the balance sheet line items above are related-party  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| balances as follows (Note 9):                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Accounts receivable                                               |   | $ | 14,371 |   |   | $ | 12,248 |   |   | $ | 14,497 |   |   | $ | 12,248 |   |
| Intangibles and other assets, net                                 |   |   | - |   |   |   | - |   |   |   | 23,305 |   |   |   | 23,305 |   |
| Accounts payable                                                  |   |   | 877 |   |   |   | 808 |   |   |   | 877 |   |   |   | 808 |   |
| Accrued liabilities                                               |   |   | - |   |   |   | - |   |   |   | 126 |   |   |   | - |   |
| Long-term debt                                                    |   |   | - |   |   |   | - |   |   |   | 23,305 |   |   |   | 23,305 |   |

----

| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS              |   |
|------------------------------------------------------------------------|--------|
|                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                   |   | VERSO PAPER |   |   | VERSO HOLDINGS |   |
|                                                                   |   | Three Months Ended |   |   | Three Months Ended |   |
|                                                                   |   | March 31, |   |   | March 31, |   |
| (Dollars in thousands, except per share amounts)                       |   | 2011 |   |   | 2010 |   |   | 2011 |   |   | 2010 |   |
| Net sales                                                              |   | $ | 416,592 |   |   | $ | 363,646 |   |   | $ | 416,592 |   |   | $ | 363,646 |   |
| Costs and expenses:                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost of products sold - (exclusive of depreciation, amortization,      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| and depletion)                                                         |   |   | 352,528 |   |   |   | 336,746 |   |   |   | 352,528 |   |   |   | 336,746 |   |
| Depreciation, amortization, and depletion                              |   |   | 31,347 |   |   |   | 32,142 |   |   |   | 31,347 |   |   |   | 32,142 |   |
| Selling, general, and administrative expenses                          |   |   | 18,634 |   |   |   | 16,269 |   |   |   | 18,583 |   |   |   | 16,217 |   |
| Total operating expenses                                               |   |   | 402,509 |   |   |   | 385,157 |   |   |   | 402,458 |   |   |   | 385,105 |   |
| Operating income (loss)                                                |   |   | 14,083 |   |   |   | (21,511 | ) |   |   | 14,134 |   |   |   | (21,459 | ) |
| Interest income                                                        |   |   | (34 | ) |   |   | (39 | ) |   |   | (412 | ) |   |   | (39 | ) |
| Interest expense                                                       |   |   | 32,389 |   |   |   | 32,322 |   |   |   | 31,344 |   |   |   | 31,001 |   |
| Other, net                                                             |   |   | 26,327 |   |   |   | (244 | ) |   |   | 26,176 |   |   |   | (245 | ) |
| Loss before income taxes                                               |   |   | (44,599 | ) |   |   | (53,550 | ) |   |   | (42,974 | ) |   |   | (52,176 | ) |
| Income tax benefit                                                     |   |   | (2 | ) |   |   | - |   |   |   | - |   |   |   | - |   |
| Net loss                                                               |   | $ | (44,597 | ) |   | $ | (53,550 | ) |   | $ | (42,974 | ) |   | $ | (52,176 | ) |
|                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss per common share                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                  |   | $ | (0.84 | ) |   | $ | (1.02 | ) |   |   |   |   |   |   |   |   |
| Diluted                                                                |   | $ | (0.84 | ) |   | $ | (1.02 | ) |   |   |   |   |   |   |   |   |
| Weighted average common shares outstanding (in thousands)              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                  |   |   | 53,114 |   |   |   | 52,381 |   |   |   |   |   |   |   |   |   |
| Diluted                                                                |   |   | 53,114 |   |   |   | 52,381 |   |   |   |   |   |   |   |   |   |
| Included in the financial statement line items above are related-party |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| transactions as follows (Note 9):                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net sales                                                              |   | $ | 42,994 |   |   | $ | 32,154 |   |   | $ | 42,994 |   |   | $ | 32,154 |   |
| Purchases included in cost of products sold                            |   |   | 1,813 |   |   |   | 1,388 |   |   |   | 1,813 |   |   |   | 1,388 |   |
| Interest income                                                        |   |   | - |   |   |   | - |   |   |   | (379 | ) |   |   | - |   |
| Interest expense                                                       |   |   | - |   |   |   | - |   |   |   | 379 |   |   |   | - |   |

----

| VERSO PAPER CORP.                                                                   |   |
|-------------------------------------------------------------------------------------|--------|
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY      |   |
| FOR THE PERIODS ENDED MARCH 31, 2011 AND 2010                                       |   |
|                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   | Accumulated |   |   |   |   |
|                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   | Other |   |   |   |   |
|                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   | Comprehensive |   |   |   |   |
|                                                                                |   | Common |   |   | Common |   |   | Paid-in- |   |   | Retained |   |   | Income |   |   | Total |   |
| (Dollars and shares in thousands)                                                   |   | Shares |   |   | Stock |   |   | Capital |   |   | Deficit |   |   | (Loss) |   |   | Equity |   |
| Balance - December 31, 2009                                                         |   |   | 52,374 |   |   | $ | 524 |   |   | $ | 212,381 |   |   | $ | (74,045 | ) |   | $ | (13,569 | ) |   | $ | 125,291 |   |
| Net loss                                                                            |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (53,550 | ) |   |   | - |   |   |   | (53,550 | ) |
| Other comprehensive income (loss):                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Net unrealized losses on derivative financial                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       instruments, net of reclassification of $0.8         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       million of net losses included in net loss           |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (6,451 | ) |   |   | (6,451 | ) |
|    Defined benefit pension plan                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | - |   |
|       amortization of net loss and prior service cost |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 468 |   |   |   | 468 |   |
|    Total other comprehensive loss                                    |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (5,983 | ) |   |   | (5,983 | ) |
| Comprehensive loss                                                                  |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (53,550 | ) |   |   | (5,983 | ) |   |   | (59,533 | ) |
| Common stock issued for restricted stock                                            |   |   | 90 |   |   |   | 1 |   |   |   | (1 | ) |   |   | - |   |   |   | - |   |   |   | - |   |
| Stock option exercise                                                               |   |   | 1 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Equity award expense                                                                |   |   | - |   |   |   | - |   |   |   | 359 |   |   |   | - |   |   |   | - |   |   |   | 359 |   |
| Balance - March 31, 2010                                                            |   |   | 52,465 |   |   | $ | 525 |   |   | $ | 212,739 |   |   | $ | (127,595 | ) |   | $ | (19,552 | ) |   | $ | 66,117 |   |
|                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance - December 31, 2010                                                         |   |   | 52,467 |   |   | $ | 525 |   |   | $ | 214,050 |   |   | $ | (205,127 | ) |   | $ | (16,254 | ) |   | $ | (6,806 | ) |
| Net loss                                                                            |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (44,597 | ) |   |   | - |   |   |   | (44,597 | ) |
| Other comprehensive income (loss):                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Net unrealized gains on derivative financial                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       instruments, net of reclassification of $1.3         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       million of net losses included in net loss           |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1,113 |   |   |   | 1,113 |   |
|    Defined benefit pension plan                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       amortization of net loss and prior service cost |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 392 |   |   |   | 392 |   |
|    Total other comprehensive income                                  |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1,505 |   |   |   | 1,505 |   |
| Comprehensive income (loss)                                                         |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (44,597 | ) |   |   | 1,505 |   |   |   | (43,092 | ) |
| Common stock issued for restricted stock                                            |   |   | 153 |   |   |   | 2 |   |   |   | (2 | ) |   |   | - |   |   |   | - |   |   |   | - |   |
| Stock option exercise                                                               |   |   | 5 |   |   |   | - |   |   |   | 15 |   |   |   | - |   |   |   | - |   |   |   | 15 |   |
| Equity award expense                                                                |   |   | - |   |   |   | - |   |   |   | 645 |   |   |   | - |   |   |   | - |   |   |   | 645 |   |
| Balance - March 31, 2011                                                            |   |   | 52,625 |   |   | $ | 527 |   |   | $ | 214,708 |   |   | $ | (249,724 | ) |   | $ | (14,749 | ) |   | $ | (49,238 | ) |

----

| VERSO PAPER HOLDINGS LLC                                                                                |   |
|---------------------------------------------------------------------------------------------------------|--------|
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN MEMBER'S EQUITY                               |   |
| FOR THE PERIODS ENDED MARCH 31, 2011 AND 2010                                                           |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    |   |   |   |   |   |   |   | Accumulated |   |   |   |   |
|                                                                                                    |   |   |   |   |   |   |   | Other |   |   |   |   |
|                                                                                                    |   |   |   |   |   |   |   | Comprehensive |   |   | Total |   |
|                                                                                                    |   | Paid-in- |   |   | Retained |   |   | Income |   |   | Member's |   |
| (Dollars in thousands)                                                                                  |   | Capital |   |   | Deficit |   |   | (Loss) |   |   | Equity |   |
| Balance - December 31, 2009                                                                             |   | $ | 317,023 |   |   | $ | (105,461 | ) |   | $ | (13,569 | ) |   | $ | 197,993 |   |
| Net loss                                                                                                |   |   | - |   |   |   | (52,176 | ) |   |   | - |   |   |   | (52,176 | ) |
| Other comprehensive income (loss):                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Net unrealized losses on derivative financial instruments, net of                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       reclassification of $0.8 million of net losses included in net loss |   |   | - |   |   |   | - |   |   |   | (6,451 | ) |   |   | (6,451 | ) |
|    Defined benefit pension plan                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       amortization of net loss and prior service cost                     |   |   | - |   |   |   | - |   |   |   | 468 |   |   |   | 468 |   |
|    Total other comprehensive loss                                                        |   |   | - |   |   |   | - |   |   |   | (5,983 | ) |   |   | (5,983 | ) |
| Comprehensive loss                                                                                      |   |   | - |   |   |   | (52,176 | ) |   |   | (5,983 | ) |   |   | (58,159 | ) |
| Equity award expense                                                                                    |   |   | 359 |   |   |   | - |   |   |   | - |   |   |   | 359 |   |
| Balance - March 31, 2010                                                                                |   | $ | 317,382 |   |   | $ | (157,637 | ) |   | $ | (19,552 | ) |   | $ | 140,193 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance - December 31, 2010                                                                             |   | $ | 318,690 |   |   | $ | (231,019 | ) |   | $ | (16,254 | ) |   | $ | 71,417 |   |
| Net loss                                                                                                |   |   | - |   |   |   | (42,974 | ) |   |   | - |   |   |   | (42,974 | ) |
| Other comprehensive income (loss):                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Net unrealized gains on derivative financial instruments, net of                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       reclassification of $1.3 million of net losses included in net loss      |   |   | - |   |   |   | - |   |   |   | 1,113 |   |   |   | 1,113 |   |
|    Defined benefit pension plan                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       amortization of net loss and prior service cost                     |   |   | - |   |   |   | - |   |   |   | 392 |   |   |   | 392 |   |
|    Total other comprehensive income                                                      |   |   | - |   |   |   | - |   |   |   | 1,505 |   |   |   | 1,505 |   |
| Comprehensive income (loss)                                                                             |   |   | - |   |   |   | (42,974 | ) |   |   | 1,505 |   |   |   | (41,469 | ) |
| Equity award expense                                                                                    |   |   | 645 |   |   |   | - |   |   |   | - |   |   |   | 645 |   |
| Balance - March 31, 2011                                                                                |   | $ | 319,335 |   |   | $ | (273,993 | ) |   | $ | (14,749 | ) |   | $ | 30,593 |   |

----

| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                   |   |
|-----------------------------------------------------------------------------|--------|
|                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                        |   | VERSO PAPER |   |   | VERSO HOLDINGS |   |
|                                                                        |   | Three Months Ended |   |   | Three Months Ended |   |
|                                                                        |   | March 31, |   |   | March 31, |   |
| (Dollars in thousands)                                                      |   | 2011 |   |   | 2010 |   |   | 2011 |   |   | 2010 |   |
| Cash Flows From Operating Activities:                                       |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                                    |   | $ | (44,597 | ) |   | $ | (53,550 | ) |   | $ | (42,974 | ) |   | $ | (52,176 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities: |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation, amortization, and depletion                                   |   |   | 31,347 |   |   |   | 32,142 |   |   |   | 31,347 |   |   |   | 32,142 |   |
| Amortization of debt issuance costs                                         |   |   | 1,468 |   |   |   | 1,354 |   |   |   | 1,378 |   |   |   | 1,264 |   |
| Accretion of discount on long-term debt                                     |   |   | 1,053 |   |   |   | 902 |   |   |   | 1,053 |   |   |   | 902 |   |
| Loss (gain) on early extinguishment of debt                                 |   |   | 26,092 |   |   |   | (253 | ) |   |   | 26,092 |   |   |   | (255 | ) |
| Loss (gain) on disposal of fixed assets                                     |   |   | 309 |   |   |   | (59 | ) |   |   | 309 |   |   |   | (59 | ) |
| Equity award expense                                                        |   |   | 645 |   |   |   | 359 |   |   |   | 645 |   |   |   | 359 |   |
| Change in unrealized losses on derivatives, net                             |   |   | - |   |   |   | (6,451 | ) |   |   | - |   |   |   | (6,451 | ) |
| Other - net                                                                 |   |   | (203 | ) |   |   | 431 |   |   |   | (203 | ) |   |   | 431 |   |
| Changes in assets and liabilities:                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Accounts receivable                                                         |   |   | (30,000 | ) |   |   | (990 | ) |   |   | (30,122 | ) |   |   | (1,041 | ) |
| Inventories                                                                 |   |   | (26,134 | ) |   |   | (1,184 | ) |   |   | (26,134 | ) |   |   | (1,184 | ) |
| Prepaid expenses and other assets                                           |   |   | (3,031 | ) |   |   | 4,594 |   |   |   | (3,056 | ) |   |   | 4,594 |   |
| Accounts payable                                                            |   |   | (1,709 | ) |   |   | (2,338 | ) |   |   | (1,718 | ) |   |   | (2,338 | ) |
| Accrued liabilities                                                         |   |   | (37,987 | ) |   |   | (24,080 | ) |   |   | (39,349 | ) |   |   | (25,310 | ) |
| Net cash used in operating activities                                       |   |   | (82,747 | ) |   |   | (49,123 | ) |   |   | (82,732 | ) |   |   | (49,122 | ) |
| Cash Flows From Investing Activities:                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds from sale of fixed assets                                          |   |   | 24 |   |   |   | 52 |   |   |   | 24 |   |   |   | 52 |   |
| Transfers from restricted cash, net                                         |   |   | 3,818 |   |   |   | - |   |   |   | 3,818 |   |   |   | - |   |
| Capital expenditures                                                        |   |   | (13,242 | ) |   |   | (8,435 | ) |   |   | (13,242 | ) |   |   | (8,435 | ) |
| Net cash used in investing activities                                       |   |   | (9,400 | ) |   |   | (8,383 | ) |   |   | (9,400 | ) |   |   | (8,383 | ) |
| Cash Flows From Financing Activities:                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds from long-term debt                                                |   |   | 394,618 |   |   |   | 27,437 |   |   |   | 394,618 |   |   |   | 27,437 |   |
| Debt issuance costs                                                         |   |   | (10,457 | ) |   |   | (961 | ) |   |   | (10,458 | ) |   |   | (961 | ) |
| Repayments of long-term debt                                                |   |   | (389,998 | ) |   |   | - |   |   |   | (389,998 | ) |   |   | - |   |
| Proceeds from issuance of common stock                                      |   |   | 15 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Net cash provided by (used in) financing activities                         |   |   | (5,822 | ) |   |   | 26,476 |   |   |   | (5,838 | ) |   |   | 26,476 |   |
| Change in cash and cash equivalents                                         |   |   | (97,969 | ) |   |   | (31,030 | ) |   |   | (97,970 | ) |   |   | (31,029 | ) |
| Cash and cash equivalents at beginning of period                            |   |   | 152,780 |   |   |   | 152,097 |   |   |   | 152,706 |   |   |   | 149,762 |   |
| Cash and cash equivalents at end of period                                  |   | $ | 54,811 |   |   | $ | 121,067 |   |   | $ | 54,736 |   |   | $ | 118,733 |   |

----

VERSO PAPER CORP. AND VERSO PAPER HOLDINGS LLC

----

| 1. | BACKGROUND AND BASIS OF PRESENTATION |
|----|--------------------------------------|

----

| 2. | RECENT ACCOUNTING DEVELOPMENTS |
|----|--------------------------------|

----

| 3. | SUPPLEMENTAL FINANCIAL STATEMENT INFORMATION |
|----|----------------------------------------------|

|                                                 |   | VERSO PAPER                  |    |
|------------------------------------------------------|--------|------------------------------|---------|
|                                                 |   | Three Months Ended March 31, |    |
| (In thousands, except per share data)                |   | 2011                         |    |   | 2010 |   |
| Net income (loss) available to common shareholders   |   | $                            | (44,597 | ) |   | $ | (53,550 | ) |
|                                                 |   |                         |    |   |   |   |   |   |
| Weighted average common stock outstanding            |   |                         | 52,740  |   |   |   | 52,047 |   |
| Weighted average restricted stock                    |   |                         | 374     |   |   |   | 334 |   |
| Weighted average common shares outstanding - basic   |   |                         | 53,114  |   |   |   | 52,381 |   |
| Dilutive shares from stock options                   |   |                         | -       |   |   |   | - |   |
| Weighted average common shares outstanding - diluted |   |                         | 53,114  |   |   |   | 52,381 |   |
|                                                 |   |                         |    |   |   |   |   |   |
| Basic earnings (loss) per share                      |   | $                            | (0.84   | ) |   | $ | (1.02 | ) |
| Diluted earnings (loss) per share                    |   | $                            | (0.84   | ) |   | $ | (1.02 | ) |

----

|                                 |   | March 31, |    |   | December 31, |   |
|--------------------------------------|--------|-----------|---------|--------|--------------|--------|
| (Dollars in thousands)               |   | 2011      |    |   | 2010         |   |
| Raw materials                        |   | $         | 29,199  |   |         | $      | 27,709 |   |
| Woodyard logs                        |   |      | 11,453  |   |         |   | 3,863 |   |
| Work-in-process                      |   |      | 17,683  |   |         |   | 16,416 |   |
| Finished goods                       |   |      | 83,843  |   |         |   | 67,817 |   |
| Replacement parts and other supplies |   |      | 26,472  |   |         |   | 26,711 |   |
| Inventories                          |   | $         | 168,650 |   |         | $      | 142,516 |   |

|                                    |   | Three Months Ended March 31, |   |
|-----------------------------------------|--------|------------------------------|--------|
| (Dollars in thousands)                  |   | 2011                         |   |   | 2010 |   |
| Asset retirement obligations, January 1 |   | $                            | 13,660 |   |   | $ | 13,300 |   |
| Accretion expense                       |   |                         | 195    |   |   |   | 204 |   |
| Settlement of existing liabilities      |   |                         | (55    | ) |   |   | (155 | ) |
| Adjustment to existing liabilities      |   |                         | -      |   |   |   | 807 |   |
| Asset retirement obligations, March 31  |   | $                            | 13,800 |   |   | $ | 14,156 |   |

----

| 4. | INTANGIBLES AND OTHER ASSETS |
|----|------------------------------|

|                                                                                       |   | VERSO PAPER |    |   | VERSO HOLDINGS |   |
|--------------------------------------------------------------------------------------------|--------|-------------|---------|--------|----------------|--------|
|                                                                                       |   | March 31,   |    |   | December 31,   |   |   | March 31, |   |   | December 31, |   |
| (Dollars in thousands)                                                                     |   | 2011        |    |   | 2010           |   |   | 2011 |   |   | 2010 |   |
| Amortizable intangible assets:                                                             |   |        |    |   |           |   |   |   |   |   |   |   |
| Customer relationships, net of accumulated amortization of $6.0 million on                 |   |        |    |   |           |   |   |   |   |   |   |   |
|    March 31, 2011, and $5.7 million on December 31, 2010                    |   | $           | 7,332   |   |           | $      | 7,570 |   |   | $ | 7,332 |   |   | $ | 7,570 |   |
| Patents, net of accumulated amortization of $0.5 million on March 31, 2011,                |   |        |    |   |           |   |   |   |   |   |   |   |   |   |   |   |
|    and December 31, 2010                                                    |   |        | 612     |   |           |   | 641 |   |   |   | 612 |   |   |   | 641 |   |
| Total amortizable intangible assets                                                        |   |        | 7,944   |   |           |   | 8,211 |   |   |   | 7,944 |   |   |   | 8,211 |   |
| Unamortizable intangible assets:                                                           |   |        |    |   |           |   |   |   |   |   |   |   |   |   |   |   |
| Trademarks                                                                                 |   |        | 21,473  |   |           |   | 21,473 |   |   |   | 21,473 |   |   |   | 21,473 |   |
| Other assets:                                                                              |   |        |    |   |           |   |   |   |   |   |   |   |   |   |   |   |
| Financing costs, net of accumulated amortization of $13.9 million on                       |   |        |    |   |           |   |   |   |   |   |   |   |   |   |   |   |
|    March 31, 2011, and $19.9 million on December 31, 2010, for Verso Paper, |   |        |    |   |           |   |   |   |   |   |   |   |   |   |   |   |
|    and net of accumulated amortization of $12.4 million on March 31, 2011,  |   |        |    |   |           |   |   |   |   |   |   |   |   |   |   |   |
|    and $18.5 million on December 31, 2010, for Verso Holdings               |   |        | 28,068  |   |           |   | 25,550 |   |   |   | 27,408 |   |   |   | 24,800 |   |
| Deferred major repair                                                                      |   |        | 9,359   |   |           |   | 12,009 |   |   |   | 9,359 |   |   |   | 12,009 |   |
| Deferred software cost, net of accumulated amortization of $0.4 million on                 |   |        |    |   |           |   |   |   |   |   |   |   |   |   |   |   |
|    March 31, 2011, and $0.8 million on December 31, 2010                    |   |        | 315     |   |           |   | 414 |   |   |   | 315 |   |   |   | 414 |   |
| Replacement parts, net                                                                     |   |        | 4,139   |   |           |   | 4,535 |   |   |   | 4,139 |   |   |   | 4,535 |   |
| Loan to affiliate                                                                          |   |        | -       |   |           |   | - |   |   |   | 23,305 |   |   |   | 23,305 |   |
| Restricted cash                                                                            |   |        | 23,581  |   |           |   | 27,399 |   |   |   | 23,581 |   |   |   | 27,399 |   |
| Other                                                                                      |   |        | 5,419   |   |           |   | 5,204 |   |   |   | 5,419 |   |   |   | 5,204 |   |
| Total other assets                                                                         |   |        | 70,881  |   |           |   | 75,111 |   |   |   | 93,526 |   |   |   | 97,666 |   |
| Intangibles and other assets                                                               |   | $           | 100,298 |   |           | $      | 104,795 |   |   | $ | 122,943 |   |   | $ | 127,350 |   |

|                    |   | Three Months Ended |   |
|-------------------------|--------|--------------------|--------|
|                    |   | March 31,          |   |
| (Dollars in thousands)  |   | 2011               |   |   | 2010 |   |
| Intangible amortization |   | $                  | 266    |   |   | $ | 345 |   |
| Software amortization   |   |               | 99     |   |   |   | 355 |   |

----

| (Dollars in thousands) |   |   |   |
|------------------------|--------|--------|--------|
| 2011                   |   | $      | 799    |   |
| 2012                   |   |   | 915    |   |
| 2013                   |   |   | 815    |   |
| 2014                   |   |   | 715    |   |
| 2015                   |   |   | 615    |   |

| 5. | LONG-TERM DEBT |
|----|----------------|

|                                               |                               |   | March 31, 2011 |   |   | December 31, 2010 |      |
|----------------------------------------------------|------------------------------------|--------|----------------|--------|--------|-------------------|-----------|
|                                               | Original                           |   | Interest       |   |   |              |      |   | Fair |   |   |   |   |   | Fair |   |
| (Dollars in thousands)                             | Maturity                           |   | Rate           |   |   | Balance           |      |   | Value |   |   | Balance |   |   | Value |   |
| Verso Paper Holdings LLC                           |                               |   |           |   |   |              |      |   |   |   |   |   |   |   |   |   |
| Revolving Credit Facility                          |    8/1/2012              |   |           | -      |   |              | $         | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |
| 11.5% Senior Secured Notes (1)                     |    7/1/2014              |   |           | 11.50  | %      |              |      | 299,865 |   |   |   | 344,925 |   |   |   | 332,135 |   |   |   | 384,125 |   |
| 9.13% Second Priority Senior Secured Notes         |       8/1/2014 |   |           | 9.13   | %      |              |      | - |   |   |   | - |   |   |   | 337,080 |   |   |   | 347,192 |   |
| 8.75% Second Priority Senior Secured Notes (2)     |       2/1/2019 |   |           | 8.75   | %      |              |      | 394,643 |   |   |   | 415,800 |   |   |   | - |   |   |   | - |   |
| Second Priority Senior Secured Floating Rate Notes |       8/1/2014 |   |           | 4.05   | %      |              |      | 180,216 |   |   |   | 177,152 |   |   |   | 180,216 |   |   |   | 162,194 |   |
| 11.38% Senior Subordinated Notes                   |    8/1/2016              |   |           | 11.38  | %      |              |      | 300,000 |   |   |   | 318,600 |   |   |   | 300,000 |   |   |   | 300,750 |   |
| Chase NMTC Verso Investment Fund LLC               |                               |   |           |   |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loan from Verso Paper Finance Holdings LLC         |    12/29/2040            |   |           | 6.50   | %      |              |      | 23,305 |   |   |   | 23,305 |   |   |   | 23,305 |   |   |   | 23,305 |   |
| Total debt for Verso Paper Holdings LLC            |                               |   |           |   |   |              | 1,198,029 |   |   |   | 1,279,782 |   |   |   | 1,172,736 |   |   |   | 1,217,566 |   |
| Verso Paper Finance Holdings LLC                   |                               |   |           |   |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Senior Unsecured Term Loan                         |     2/1/2013        |   |           | 6.67   | %      |              |      | 80,524 |   |   |   | 77,706 |   |   |   | 79,180 |   |   |   | 76,409 |   |
| Loan from Verso Paper Holdings LLC                 |    12/29/2040            |   |           | 6.50   | %      |              |      | 23,305 |   |   |   | 23,305 |   |   |   | 23,305 |   |   |   | 23,305 |   |
| Eliminate loans from affiliates                    | 12/29/2040                         |   |           | 6.50   | %      |              |      | (46,610 | ) |   |   | (46,610 | ) |   |   | (46,610 | ) |   |   | (46,610 | ) |
| Total debt for Verso Paper Corp.                   |                               |   |           |   |   |              | $         | 1,255,248 |   |   | $ | 1,334,183 |   |   | $ | 1,228,611 |   |   | $ | 1,270,670 |   |

| (1) Par value of $315,000 on March 31, 2011, and $350,000 on December 31, 2010. |
|---------------------------------------------------------------------------------|
| (2) Par value of $396,000 on March 31, 2011.                                    |

|                                |   | VERSO PAPER        |   |   | VERSO HOLDINGS     |   |
|-------------------------------------|--------|--------------------|--------|--------|--------------------|--------|
|                                |   | Three Months Ended |   |   | Three Months Ended |   |
|                                |   | March 31,          |   |   | March 31,          |   |
| (Dollars in thousands)              |   | 2011               |   |   | 2010               |   |   | 2011 |   |   | 2010 |   |
| Interest expense                    |   | $                  | 31,647 |   |               | $      | 31,005 |   |   | $ | 30,693 |   |   | $ | 29,774 |   |
| Cash interest paid                  |   |               | 55,556 |   |               |   | 55,874 |   |   |   | 55,812 |   |   |   | 55,874 |   |
| Debt issuance cost amortization (1) |   |               | 1,468  |   |               |   | 1,354 |   |   |   | 1,378 |   |   |   | 1,264 |   |

| (1) Amortization of debt issuance cost is included in interest expense. |
|-------------------------------------------------------------------------|

----

----

| 6. | RETIREMENT PLANS |
|----|------------------|

----

|                                     |   | Three Months Ended |   |
|------------------------------------------|--------|--------------------|--------|
|                                     |   | March 31,          |   |
| (Dollars in thousands)                   |   | 2011               |   |   | 2010 |   |
| Components of net periodic benefit cost: |   |               |   |   |   |   |
| Service cost                             |   | $                  | 1,674  |   |   | $ | 1,527 |   |
| Interest cost                            |   |               | 631    |   |   |   | 522 |   |
| Expected return on plan assets           |   |               | (645   | ) |   |   | (462 | ) |
| Amortization of prior service cost       |   |               | 294    |   |   |   | 446 |   |
| Amortization of actuarial loss           |   |               | 98     |   |   |   | 22 |   |
| Net periodic benefit cost                |   | $                  | 2,052  |   |   | $ | 2,055 |   |

----

| (Dollars in thousands)          |   | Total  |   |   | Level 1 |   |   | Level 2 (1) |   |   | Level 3 |   |
|---------------------------------|--------|--------|--------|--------|---------|--------|--------|-------------|--------|--------|---------|--------|
| March 31, 2011                  |   |   |   |   |    |   |   |        |   |   |    |   |
| Corporate/ Government bond fund |   | $      | 14,511 |   |    | $      | -      |        |   | $      | 14,511  |   |   | $ | - |   |
| Large capital equity            |   |   | 8,582  |   |    |   | -      |        |   |   | 8,582   |   |   |   | - |   |
| International equity            |   |   | 5,296  |   |    |   | -      |        |   |   | 5,296   |   |   |   | - |   |
| Small capital equity            |   |   | 1,527  |   |    |   | -      |        |   |   | 1,527   |   |   |   | - |   |
| Fixed income fund               |   |   | 1,378  |   |    |   | -      |        |   |   | 1,378   |   |   |   | - |   |
| Total assets at fair value      |   | $      | 31,294 |   |    | $      | -      |        |   | $      | 31,294  |   |   | $ | - |   |
| December 31, 2010               |   |   |   |   |    |   |   |        |   |   |    |   |   |   |   |   |
| Corporate/ Government bond fund |   | $      | 12,610 |   |    | $      | -      |        |   | $      | 12,610  |   |   | $ | - |   |
| Large capital equity            |   |   | 8,583  |   |    |   | -      |        |   |   | 8,583   |   |   |   | - |   |
| International equity            |   |   | 5,318  |   |    |   | -      |        |   |   | 5,318   |   |   |   | - |   |
| Small capital equity            |   |   | 1,595  |   |    |   | -      |        |   |   | 1,595   |   |   |   | - |   |
| Fixed income fund               |   |   | 1,152  |   |    |   | -      |        |   |   | 1,152   |   |   |   | - |   |
| Total assets at fair value      |   | $      | 29,258 |   |    | $      | -      |        |   | $      | 29,258  |   |   | $ | - |   |

| (1) Based on the net asset value of units held by the plan at period end. |
|---------------------------------------------------------------------------|

| 7. | DERIVATIVE INSTRUMENTS AND HEDGES |
|----|-----------------------------------|

----

|                                             |   | March 31, 2011 |      |   | December 31, 2010       |   |   |
|--------------------------------------------------|--------|----------------|-----------|--------|-------------------------|--------|--------|
|                                             |   |           |      |   | Fair Value Measurements |   |   |   |   |   | Fair Value Measurements |   | Balance |
|                                             |   | Notional       |      |   | Derivative              |   |   | Derivative |   |   | Notional |   |   | Derivative |   |   | Derivative |   | Sheet |
| (Dollars in thousands)                           |   | Amount         |      |   | Asset                   |   |   | Liability |   |   | Amount |   |   | Asset |   |   | Liability |   | Location |
| Derivatives designated as hedging                |   |           |      |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    instruments under FASB ASC 815 |   |           |      |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Short-term, fixed price energy swaps - MMBtu's   |   |           | 5,463,719 |   |                    | $      | 117    |   |   | $ | 1,506 |   |   |   | 5,748,733 |   |   | $ | 142 |   |   | $ | 2,505 |   |  Other assets/Accrued liabilties |

|                                             |   | Loss Recognized    |   |   | Loss Reclassified    |   |              |
|--------------------------------------------------|--------|--------------------|--------|--------|----------------------|--------|-------------------|
|                                             |   | in Accumulated OCI |   |   | from Accumulated OCI |   |  Location of |
|                                             |   |               |   |   |                 |   |              | Three Months Ended |   |  Loss on |
|                                             |   | March 31,          |   |   | December 31,         |   |              | March 31, |   |  Statements |
| (Dollars in thousands)                           |   | 2011               |   |   | 2010                 |   |              | 2011 |   |   | 2010 |   |  of Operations |
| Derivatives designated as hedging                |   |               |   |   |                 |   |              |   |   |   |   |   |   |
|    instruments under FASB ASC 815      |   |               |   |   |                 |   |              |   |   |   |   |   |   |
| Short-term, fixed price energy swaps(1)          |   | $                  | (1,371 | )      |                 | $      | (2,476            | ) |   | $ | (1,271 | ) |   | $ | (493 | ) |  Cost of products sold |
| Interest rate swaps, receive-variable, pay-fixed |   |               | -      |   |                 |   | -                 |   |   |   | - |   |   |   | (281 | ) |  Interest expense |

| (1)Net losses at March 31, 2011, are expected to be reclassified from Accumulated other comprehensive income into earnings within the next 23 months. |
|-------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                        |               |   |             | Loss Recognized       |   |              |
|---------------------------------------------|--------------------|--------|------------------|-----------------------|--------|-------------------|
|                                        | Loss Recognized    |   |             | on Derivative         |   |  Location of |
|                                        | on Derivative      |   |             | (Ineffective Portion) |   |  Loss on     |
|                                        | Three Months Ended |   |  Statements |
| (Dollars in thousands)                      | 2011               |   |             | 2010                  |   |              | 2011 |   |   | 2010 |   |  of Operations |
| Derivatives designated as hedging           |               |   |             |                  |   |              |   |   |   |   |   |   |
|    instruments under FASB ASC 815 |               |   |             |                  |   |              |   |   |   |   |   |   |
| Short-term, fixed price energy swaps        |               | $      | (346             | )                     |   | $                 | (429 | ) |   | $ | (4 | ) |   | $ | (24 | ) |  Cost of products sold |

----

| 8. | FAIR VALUE OF FINANCIAL INSTRUMENTS |
|----|-------------------------------------|

| (Dollars in thousands)                            |   | Total  |   |   | Level 1 |   |   | Level 2 |   |   | Level 3 |   |
|---------------------------------------------------|--------|--------|--------|--------|---------|--------|--------|---------|--------|--------|---------|--------|
| March 31, 2011                                    |   |   |   |   |    |   |   |    |   |   |    |   |
| Assets:                                           |   |   |   |   |    |   |   |    |   |   |    |   |
| Commodity swaps                                   |   | $      | 117    |   |    | $      | -      |    |   | $      | 117     |   |   | $ | - |   |
| Deferred compensation assets                      |   |   | 2,205  |   |    |   | 2,205  |    |   |   | -       |   |   |   | - |   |
| Regional Greenhouse Gas Initiative carbon credits |   |   | 341    |   |    |   | -      |    |   |   | 341     |   |   |   | - |   |
| Liabilities:                                      |   |   |   |   |    |   |   |    |   |   |    |   |   |   |   |   |
| Commodity swaps                                   |   | $      | 1,506  |   |    | $      | -      |    |   | $      | 1,506   |   |   | $ | - |   |
| Deferred compensation liabilities                 |   |   | 2,205  |   |    |   | 2,205  |    |   |   | -       |   |   |   | - |   |
| December 31, 2010                                 |   |   |   |   |    |   |   |    |   |   |    |   |   |   |   |   |
| Assets:                                           |   |   |   |   |    |   |   |    |   |   |    |   |   |   |   |   |
| Commodity swaps                                   |   | $      | 142    |   |    | $      | -      |    |   | $      | 142     |   |   | $ | - |   |
| Deferred compensation assets                      |   |   | 1,547  |   |    |   | 1,547  |    |   |   | -       |   |   |   | - |   |
| Regional Greenhouse Gas Initiative carbon credits |   |   | 334    |   |    |   | -      |    |   |   | 334     |   |   |   | - |   |
| Liabilities:                                      |   |   |   |   |    |   |   |    |   |   |    |   |   |   |   |   |
| Commodity swaps                                   |   | $      | 2,505  |   |    | $      | -      |    |   | $      | 2,505   |   |   | $ | - |   |
| Deferred compensation liabilities                 |   |   | 1,547  |   |    |   | 1,547  |    |   |   | -       |   |   |   | - |   |

| Fair values are based on observable market data. |
|--------------------------------------------------|

----

| 9. | RELATED PARTY TRANSACTIONS |
|----|----------------------------|

----

| 10. | NEW MARKET TAX CREDIT ENTITIES |
|-----|--------------------------------|

----

|                                      |   | VERSO PAPER |   |   | VERSO HOLDINGS |   |
|-------------------------------------------|--------|-------------|--------|--------|----------------|--------|
|                                      |   | March 31,   |   |   | December 31,   |   |   | March 31, |   |   | December 31, |   |
| (Dollars in thousands)                    |   | 2011        |   |   | 2010           |   |   | 2011 |   |   | 2010 |   |
| Maximum loss exposure                     |   | $           | 119    |   |           | $      | 110 |   |   | $ | 119 |   |   | $ | 110 |   |
| Current assets                            |   | $           | 34     |   |           | $      | 25 |   |   | $ | 34 |   |   | $ | 25 |   |
| Other noncurrent assets (restricted cash) |   |        | 85     |   |           |   | 85 |   |   |   | 85 |   |   |   | 85 |   |
| Total assets                              |   | $           | 119    |   |           | $      | 110 |   |   | $ | 119 |   |   | $ | 110 |   |
| Current liabilities                       |   |        | 23     |   |           |   | 12 |   |   |   | 149 |   |   |   | 17 |   |
| Other noncurrent liabilities              |   |        | 7,923  |   |           |   | 7,712 |   |   |   | 7,923 |   |   |   | 7,712 |   |
| Total liabilities                         |   | $           | 7,946  |   |           | $      | 7,724 |   |   | $ | 8,072 |   |   | $ | 7,729 |   |

| Amounts presented in the condensed consolidated balance sheets and the table above are adjusted for intercompany eliminations. |
|--------------------------------------------------------------------------------------------------------------------------------|

| 11. | COMMITMENTS AND CONTINGENCIES |
|-----|-------------------------------|

| 12. | INFORMATION BY INDUSTRY SEGMENT |
|-----|---------------------------------|

----

|                                       |   | VERSO PAPER        |    |   | VERSO HOLDINGS     |   |
|--------------------------------------------|--------|--------------------|---------|--------|--------------------|--------|
|                                       |   | Three Months Ended |    |   | Three Months Ended |   |
|                                       |   | March 31,          |    |   | March 31,          |   |
| (Dollars in thousands)                     |   | 2011               |    |   | 2010               |   |   | 2011 |   |   | 2010 |   |
| Net Sales:                                 |   |               |    |   |               |   |   |   |   |   |   |   |
| Coated and supercalendered                 |   | $                  | 351,690 |   |               | $      | 302,778 |   |   | $ | 351,690 |   |   | $ | 302,778 |   |
| Hardwood market pulp                       |   |               | 35,737  |   |               |   | 37,414 |   |   |   | 35,737 |   |   |   | 37,414 |   |
| Other                                      |   |               | 29,165  |   |               |   | 23,454 |   |   |   | 29,165 |   |   |   | 23,454 |   |
| Total                                      |   | $                  | 416,592 |   |               | $      | 363,646 |   |   | $ | 416,592 |   |   | $ | 363,646 |   |
| Operating Income (Loss):                   |   |               |    |   |               |   |   |   |   |   |   |   |   |   |   |   |
| Coated and supercalendered                 |   | $                  | 8,173   |   |               |   | (25,670 | ) |   | $ | 8,224 |   |   |   | (25,618 | ) |
| Hardwood market pulp                       |   |               | 9,264   |   |               |   | 7,632 |   |   |   | 9,264 |   |   |   | 7,632 |   |
| Other                                      |   |               | (3,354  | )      |               |   | (3,473 | ) |   |   | (3,354 | ) |   |   | (3,473 | ) |
| Total                                      |   | $                  | 14,083  |   |               | $      | (21,511 | ) |   | $ | 14,134 |   |   | $ | (21,459 | ) |
| Depreciation, Amortization, and Depletion: |   |               |    |   |               |   |   |   |   |   |   |   |   |   |   |   |
| Coated and supercalendered                 |   | $                  | 25,116  |   |               | $      | 25,808 |   |   | $ | 25,116 |   |   | $ | 25,808 |   |
| Hardwood market pulp                       |   |               | 4,283   |   |               |   | 4,653 |   |   |   | 4,283 |   |   |   | 4,653 |   |
| Other                                      |   |               | 1,948   |   |               |   | 1,681 |   |   |   | 1,948 |   |   |   | 1,681 |   |
| Total                                      |   | $                  | 31,347  |   |               | $      | 32,142 |   |   | $ | 31,347 |   |   | $ | 32,142 |   |
| Capital Spending:                          |   |               |    |   |               |   |   |   |   |   |   |   |   |   |   |   |
| Coated and supercalendered                 |   | $                  | 9,165   |   |               | $      | 6,311 |   |   | $ | 9,165 |   |   | $ | 6,311 |   |
| Hardwood market pulp                       |   |               | 3,861   |   |               |   | 1,673 |   |   |   | 3,861 |   |   |   | 1,673 |   |
| Other                                      |   |               | 216     |   |               |   | 451 |   |   |   | 216 |   |   |   | 451 |   |
| Total                                      |   | $                  | 13,242  |   |               | $      | 8,435 |   |   | $ | 13,242 |   |   | $ | 8,435 |   |

| 13. | CONDENSED CONSOLIDATING FINANCIAL INFORMATION |
|-----|-----------------------------------------------|

----

| Verso Paper Holdings LLC              |   |
|---------------------------------------|--------|
| Condensed Consolidating Balance Sheet |   |
| March 31, 2011                        |   |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  |   |   |   |   |   |   |   |   |   |   | Non- |   |   | Non- |   |   |   |   |   |   |   |
|                                  |   | Parent |   |   | Subsidiary |   |   | Guarantor |   |   | Guarantor |   |   | Guarantor |   |   |   |   |   |   |   |
| (Dollars in thousands)                |   | Issuer |   |   | Issuer |   |   | Subsidiaries |   |   | Subsidiary |   |   | Affiliate |   |   | Eliminations |   |   | Consolidated |   |
| ASSETS                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current assets                        |   | $ | - |   |   | $ | - |   |   | $ | 369,783 |   |   | $ | - |   |   | $ | 34 |   |   | $ | - |   |   | $ | 369,817 |   |
| Property, plant, and equipment, net   |   |   | - |   |   |   | - |   |   |   | 943,452 |   |   |   | 12,517 |   |   |   | - |   |   |   | (288 | ) |   |   | 955,681 |   |
| Intercompany/affiliate receivable     |   |   | 1,223,704 |   |   |   | - |   |   |   | 2,836 |   |   |   | - |   |   |   | 31,154 |   |   |   | (1,257,694 | ) |   |   | - |   |
| Investment in subsidiaries            |   |   | 4,024 |   |   |   | - |   |   |   | 321 |   |   |   | - |   |   |   | - |   |   |   | (4,345 | ) |   |   | - |   |
| Non-current assets(1)                 |   |   | - |   |   |   | - |   |   |   | 125,367 |   |   |   | 21,786 |   |   |   | 71 |   |   |   | 14 |   |   |   | 147,238 |   |
| Total assets                          |   | $ | 1,227,728 |   |   | $ | - |   |   | $ | 1,441,759 |   |   | $ | 34,303 |   |   | $ | 31,259 |   |   | $ | (1,262,313 | ) |   | $ | 1,472,736 |   |
| LIABILITIES AND MEMBER'S EQUITY       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current liabilities                   |   | $ | 22,411 |   |   | $ | - |   |   | $ | 177,800 |   |   | $ | - |   |   | $ | 158 |   |   | $ | (17 | ) |   | $ | 200,352 |   |
| Intercompany/affiliate payable        |   |   | - |   |   |   | - |   |   |   | 1,223,704 |   |   |   | 33,982 |   |   |   | - |   |   |   | (1,257,686 | ) |   |   | - |   |
| Long-term debt(2)                     |   |   | 1,174,724 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 23,305 |   |   |   | - |   |   |   | 1,198,029 |   |
| Other long-term liabilities           |   |   | - |   |   |   | - |   |   |   | 35,839 |   |   |   | - |   |   |   | 7,923 |   |   |   | - |   |   |   | 43,762 |   |
| Member's equity                       |   |   | 30,593 |   |   |   | - |   |   |   | 4,416 |   |   |   | 321 |   |   |   | (127 | ) |   |   | (4,610 | ) |   |   | 30,593 |   |
| Total liabilities and equity          |   | $ | 1,227,728 |   |   | $ | - |   |   | $ | 1,441,759 |   |   | $ | 34,303 |   |   | $ | 31,259 |   |   | $ | (1,262,313 | ) |   | $ | 1,472,736 |   |

| (1) Non-current assets of guarantor subsidiaries includes $23.3 million of a long-term note receivable from Verso Finance. |
|----------------------------------------------------------------------------------------------------------------------------|
| (2) Long-term debt of non-guarantor affiliate is payable to Verso Finance.                                                 |

| Verso Paper Holdings LLC              |   |
|---------------------------------------|--------|
| Condensed Consolidating Balance Sheet |   |
| December 31, 2010                     |   |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  |   |   |   |   |   |   |   |   |   |   | Non- |   |   | Non- |   |   |   |   |   |   |   |
|                                  |   | Parent |   |   | Subsidiary |   |   | Guarantor |   |   | Guarantor |   |   | Guarantor |   |   |   |   |   |   |   |
| (Dollars in thousands)                |   | Issuer |   |   | Issuer |   |   | Subsidiaries |   |   | Subsidiary |   |   | Affiliate |   |   | Eliminations |   |   | Consolidated |   |
| ASSETS                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current assets                        |   | $ | - |   |   | $ | - |   |   | $ | 406,017 |   |   | $ | 5 |   |   | $ | 4 |   |   | $ | - |   |   | $ | 406,026 |   |
| Property, plant, and equipment, net   |   |   | - |   |   |   | - |   |   |   | 962,857 |   |   |   | 9,854 |   |   |   | - |   |   |   | - |   |   |   | 972,711 |   |
| Intercompany/affiliate receivable     |   |   | 1,222,061 |   |   |   | - |   |   |   | 3,843 |   |   |   | - |   |   |   | 31,021 |   |   |   | (1,256,925 | ) |   |   | - |   |
| Investment in subsidiaries            |   |   | 47,383 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (47,383 | ) |   |   | - |   |
| Non-current assets(1)                 |   |   | - |   |   |   | - |   |   |   | 125,964 |   |   |   | 25,678 |   |   |   | 85 |   |   |   | - |   |   |   | 151,727 |   |
| Total assets                          |   | $ | 1,269,444 |   |   | $ | - |   |   | $ | 1,498,681 |   |   | $ | 35,537 |   |   | $ | 31,110 |   |   | $ | (1,304,308 | ) |   | $ | 1,530,464 |   |
| LIABILITIES AND MEMBER'S EQUITY       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current liabilities                   |   | $ | 48,596 |   |   | $ | - |   |   | $ | 195,097 |   |   | $ | - |   |   | $ | 4 |   |   | $ | - |   |   | $ | 243,697 |   |
| Intercompany/affiliate payable        |   |   | - |   |   |   | - |   |   |   | 1,222,061 |   |   |   | 34,864 |   |   |   | - |   |   |   | (1,256,925 | ) |   |   | - |   |
| Long-term debt(2)                     |   |   | 1,149,431 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 23,305 |   |   |   | - |   |   |   | 1,172,736 |   |
| Other long-term liabilities           |   |   | - |   |   |   | - |   |   |   | 34,793 |   |   |   | - |   |   |   | 7,821 |   |   |   | - |   |   |   | 42,614 |   |
| Member's equity                       |   |   | 71,417 |   |   |   | - |   |   |   | 46,730 |   |   |   | 673 |   |   |   | (20 | ) |   |   | (47,383 | ) |   |   | 71,417 |   |
| Total liabilities and equity          |   | $ | 1,269,444 |   |   | $ | - |   |   | $ | 1,498,681 |   |   | $ | 35,537 |   |   | $ | 31,110 |   |   | $ | (1,304,308 | ) |   | $ | 1,530,464 |   |

| (1) Non-current assets of guarantor subsidiaries includes $23.3 million of a long-term note receivable from Verso Finance. |
|----------------------------------------------------------------------------------------------------------------------------|
| (2) Long-term debt of non-guarantor affiliate is payable to Verso Finance.                                                 |

----

| Verso Paper Holdings LLC                         |   |
|--------------------------------------------------|--------|
| Condensed Consolidating Statements of Operations |   |
| Three Months Ended March 31, 2011                |   |
|                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                             |   |   |   |   |   |   |   |   |   |   | Non- |   |   | Non- |   |   |   |   |   |   |   |
|                                             |   | Parent |   |   | Subsidiary |   |   | Guarantor |   |   | Guarantor |   |   | Guarantor |   |   | Intercompany |   |   |   |   |
| (Dollars in thousands)                           |   | Issuer |   |   | Issuer |   |   | Subsidiaries |   |   | Subsidiary |   |   | Affiliate |   |   | Eliminations |   |   | Consolidated |   |
| Net sales                                        |   | $ | - |   |   | $ | - |   |   | $ | 416,592 |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | 416,592 |   |
| Cost of products sold (exclusive of              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   depreciation, amortization, and      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   depletion)                                |   |   | - |   |   |   | - |   |   |   | 352,528 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 352,528 |   |
| Depreciation, amortization, and depletion        |   |   | - |   |   |   | - |   |   |   | 31,341 |   |   |   | 6 |   |   |   | 14 |   |   |   | (14 | ) |   |   | 31,347 |   |
| Selling, general, and administrative        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   expenses                                  |   |   | - |   |   |   | - |   |   |   | 18,506 |   |   |   | (24 | ) |   |   | 101 |   |   |   | - |   |   |   | 18,583 |   |
| Interest income                                  |   |   | (31,781 | ) |   |   | - |   |   |   | (396 | ) |   |   | (16 | ) |   |   | (387 | ) |   |   | 32,168 |   |   |   | (412 | ) |
| Interest expense                                 |   |   | 31,781 |   |   |   | - |   |   |   | 30,958 |   |   |   | 394 |   |   |   | 379 |   |   |   | (32,168 | ) |   |   | 31,344 |   |
| Other, net                                       |   |   | 26,092 |   |   |   | - |   |   |   | 84 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 26,176 |   |
| Equity in net loss of subsidiaries               |   |   | (16,882 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 16,882 |   |   |   | - |   |
| Net loss                                         |   | $ | (42,974 | ) |   | $ | - |   |   | $ | (16,429 | ) |   | $ | (360 | ) |   | $ | (107 | ) |   | $ | 16,896 |   |   | $ | (42,974 | ) |

| Verso Paper Holdings LLC                         |   |
|--------------------------------------------------|--------|
| Condensed Consolidating Statements of Operations |   |
| Three Months Ended March 31, 2010                |   |
|                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                             |   |   |   |   |   |   |   |   |   |   | Non- |   |   | Non- |   |   |   |   |   |   |   |
|                                             |   | Parent |   |   | Subsidiary |   |   | Guarantor |   |   | Guarantor |   |   | Guarantor |   |   | Intercompany |   |   |   |   |
| (Dollars in thousands)                           |   | Issuer |   |   | Issuer |   |   | Subsidiaries |   |   | Subsidiary |   |   | Affiliate |   |   | Eliminations |   |   | Consolidated |   |
| Net sales                                        |   | $ | - |   |   | $ | - |   |   | $ | 363,646 |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | 363,646 |   |
| Cost of products sold (exclusive of              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   depreciation, amortization, and           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   depletion)                                |   |   | - |   |   |   | - |   |   |   | 336,746 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 336,746 |   |
| Depreciation, amortization, and depletion        |   |   | - |   |   |   | - |   |   |   | 32,142 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 32,142 |   |
| Selling, general, and administrative             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   expenses                                  |   |   | - |   |   |   | - |   |   |   | 16,217 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 16,217 |   |
| Interest income                                  |   |   | (30,493 | ) |   |   | - |   |   |   | (39 | ) |   |   | - |   |   |   | - |   |   |   | 30,493 |   |   |   | (39 | ) |
| Interest expense                                 |   |   | 30,493 |   |   |   | - |   |   |   | 31,001 |   |   |   | - |   |   |   | - |   |   |   | (30,493 | ) |   |   | 31,001 |   |
| Other, net                                       |   |   | (255 | ) |   |   | - |   |   |   | (245 | ) |   |   | - |   |   |   | - |   |   |   | 255 |   |   |   | (245 | ) |
| Equity in net loss of subsidiaries               |   |   | (52,176 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 52,176 |   |   |   | - |   |
| Net loss                                         |   | $ | (51,921 | ) |   | $ | - |   |   | $ | (52,176 | ) |   | $ | - |   |   | $ | - |   |   | $ | 51,921 |   |   | $ | (52,176 | ) |

----

| Verso Paper Holdings LLC                               |   |
|--------------------------------------------------------|--------|
| Condensed Consolidating Statements of Cash Flows       |   |
| Three Months Ended March 31, 2011                      |   |
|                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                   |   |   |   |   |   |   |   |   |   |   | Non- |   |   | Non- |   |   |   |   |   |   |   |
|                                                   |   | Parent |   |   | Subsidiary |   |   | Guarantor |   |   | Guarantor |   |   | Guarantor |   |   | Intercompany |   |   |   |   |
| (Dollars in thousands)                                 |   | Issuer |   |   | Issuer |   |   | Subsidiaries |   |   | Subsidiary |   |   | Affiliate |   |   | Eliminations |   |   | Consolidated |   |
| Net cash used in operating activities                  |   | $ | - |   |   | $ | - |   |   | $ | (81,520 | ) |   | $ | (1,224 | ) |   | $ | 12 |   |   | $ | - |   |   | $ | (82,732 | ) |
| Cash flows from investing activities:                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds from sale of fixed assets                     |   |   | - |   |   |   | - |   |   |   | 24 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 24 |   |
| Transfers to (from) restricted cash                    |   |   | - |   |   |   | - |   |   |   | (307 | ) |   |   | 4,125 |   |   |   | - |   |   |   | - |   |   |   | 3,818 |   |
| Capital expenditures                                   |   |   | - |   |   |   | - |   |   |   | (10,573 | ) |   |   | (2,669 | ) |   |   | - |   |   |   | - |   |   |   | (13,242 | ) |
| Net cash used in investing activities                  |   |   | - |   |   |   | - |   |   |   | (10,856 | ) |   |   | 1,456 |   |   |   | - |   |   |   | - |   |   |   | (9,400 | ) |
| Cash flows from financing activities:                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds from long-term debt                           |   |   | 394,618 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 394,618 |   |
| Repayments of long-term debt                           |   |   | (389,998 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (389,998 | ) |
| Debt issuance costs                                    |   |   | (10,378 | ) |   |   | - |   |   |   | 152 |   |   |   | (232 | ) |   |   | - |   |   |   | - |   |   |   | (10,458 | ) |
| Repayment of advances to subsidiaries                  |   |   | 389,998 |   |   |   | - |   |   |   | (389,998 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Advances to subsidiaries                               |   |   | (384,240 | ) |   |   | - |   |   |   | 384,240 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Net cash used in financing activities                  |   |   | - |   |   |   | - |   |   |   | (5,606 | ) |   |   | (232 | ) |   |   | - |   |   |   | - |   |   |   | (5,838 | ) |
| Change in cash and cash equivalents                    |   |   | - |   |   |   | - |   |   |   | (97,982 | ) |   |   | - |   |   |   | 12 |   |   |   | - |   |   |   | (97,970 | ) |
| Cash and cash equivalents at beginning  of period |   |   | - |   |   |   | - |   |   |   | 152,702 |   |   |   | - |   |   |   | 4 |   |   |   | - |   |   |   | 152,706 |   |
| Cash and cash equivalents at end of  period       |   | $ | - |   |   | $ | - |   |   | $ | 54,720 |   |   | $ | - |   |   | $ | 16 |   |   | $ | - |   |   | $ | 54,736 |   |

| Verso Paper Holdings LLC                               |   |
|--------------------------------------------------------|--------|
| Condensed Consolidating Statements of Cash Flows       |   |
| Three Months Ended March 31, 2010                      |   |
|                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                   |   |   |   |   |   |   |   |   |   |   | Non- |   |   | Non- |   |   |   |   |   |   |   |
|                                                   |   | Parent |   |   | Subsidiary |   |   | Guarantor |   |   | Guarantor |   |   | Guarantor |   |   | Intercompany |   |   |   |   |
| (Dollars in thousands)                                 |   | Issuer |   |   | Issuer |   |   | Subsidiaries |   |   | Subsidiary |   |   | Affiliate |   |   | Eliminations |   |   | Consolidated |   |
| Net cash used in operating activities                  |   | $ | - |   |   | $ | - |   |   | $ | (49,122 | ) |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | (49,122 | ) |
| Cash flows from investing activities:                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds from sale of fixed assets                     |   |   | - |   |   |   | - |   |   |   | 52 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 52 |   |
| Capital expenditures                                   |   |   | - |   |   |   | - |   |   |   | (8,435 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (8,435 | ) |
| Net cash used in investing activities                  |   |   | - |   |   |   | - |   |   |   | (8,383 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (8,383 | ) |
| Cash flows from financing activities:                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Debt issuance costs                                    |   |   | (961 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (961 | ) |
| Advances to subsidiaries                               |   |   | (26,476 | ) |   |   | - |   |   |   | 26,476 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Proceeds from long-term debt                           |   |   | 27,437 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 27,437 |   |
| Net cash provided by financing activities              |   |   | - |   |   |   | - |   |   |   | 26,476 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 26,476 |   |
| Change in cash and cash equivalents                    |   |   | - |   |   |   | - |   |   |   | (31,029 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (31,029 | ) |
| Cash and cash equivalents at beginning  of period |   |   | - |   |   |   | - |   |   |   | 149,762 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 149,762 |   |
| Cash and cash equivalents at end of  period       |   | $ | - |   |   | $ | - |   |   | $ | 118,733 |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | 118,733 |   |

----

ITEM 2.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

----

|                                                   |   | VERSO PAPER        |    |   | VERSO HOLDINGS     |   |
|--------------------------------------------------------|--------|--------------------|---------|--------|--------------------|--------|
|                                                   |   | Three Months Ended |    |   | Three Months Ended |   |
|                                                   |   | March 31,          |    |   | March 31,          |   |
| (Dollars in thousands)                                 |   | 2011               |    |   | 2010               |   |   | 2011 |   |   | 2010 |   |
| Net sales                                              |   | $                  | 416,592 |   |               | $      | 363,646 |   |   | $ | 416,592 |   |   | $ | 363,646 |   |
| Costs and expenses:                                    |   |               |    |   |               |   |   |   |   |   |   |   |   |   |   |   |
| Cost of products sold - exclusive of                   |   |               |    |   |               |   |   |   |   |   |   |   |   |   |   |   |
|    depreciation, amortization, and depletion |   |               | 352,528 |   |               |   | 336,746 |   |   |   | 352,528 |   |   |   | 336,746 |   |
| Depreciation, amortization, and depletion              |   |               | 31,347  |   |               |   | 32,142 |   |   |   | 31,347 |   |   |   | 32,142 |   |
| Selling, general, and administrative expenses          |   |               | 18,634  |   |               |   | 16,269 |   |   |   | 18,583 |   |   |   | 16,217 |   |
| Total operating expenses                               |   |               | 402,509 |   |               |   | 385,157 |   |   |   | 402,458 |   |   |   | 385,105 |   |
| Operating income (loss)                                |   |               | 14,083  |   |               |   | (21,511 | ) |   |   | 14,134 |   |   |   | (21,459 | ) |
| Interest income                                        |   |               | (34     | )      |               |   | (39 | ) |   |   | (412 | ) |   |   | (39 | ) |
| Interest expense                                       |   |               | 32,389  |   |               |   | 32,322 |   |   |   | 31,344 |   |   |   | 31,001 |   |
| Other, net                                             |   |               | 26,327  |   |               |   | (244 | ) |   |   | 26,176 |   |   |   | (245 | ) |
| Loss before income taxes                               |   |               | (44,599 | )      |               |   | (53,550 | ) |   |   | (42,974 | ) |   |   | (52,176 | ) |
| Income tax benefit                                     |   |               | (2      | )      |               |   | - |   |   |   | - |   |   |   | - |   |
| Net loss                                               |   | $                  | (44,597 | )      |               | $      | (53,550 | ) |   | $ | (42,974 | ) |   | $ | (52,176 | ) |

----

----

|                                    |   | VERSO PAPER        |    |   | VERSO HOLDINGS     |   |
|-----------------------------------------|--------|--------------------|---------|--------|--------------------|--------|
|                                    |   | Three Months Ended |    |   | Three Months Ended |   |
|                                    |   | March 31,          |    |   | March 31,          |   |
| (Dollars in thousands)                  |   | 2011               |    |   | 2010               |   |   | 2011 |   |   | 2010 |   |
| Net cash provided by (used in):         |   |               |    |   |               |   |   |   |   |   |   |   |
| Operating activities                    |   | $                  | (82,747 | )      |               | $      | (49,123 | ) |   | $ | (82,732 | ) |   | $ | (49,122 | ) |
| Investing activities                    |   |               | (9,400  | )      |               |   | (8,383 | ) |   |   | (9,400 | ) |   |   | (8,383 | ) |
| Financing activities                    |   |               | (5,822  | )      |               |   | 26,476 |   |   |   | (5,838 | ) |   |   | 26,476 |   |
| Net change in cash and cash equivalents |   | $                  | (97,969 | )      |               | $      | (31,030 | ) |   | $ | (97,970 | ) |   | $ | (31,029 | ) |

----

----

----

----

ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

----

----

ITEM 4.  CONTROLS AND PROCEDURES

----

ITEM 1.   LEGAL PROCEEDINGS

ITEM 1A.   RISK FACTORS

ITEM 2.   UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES

ITEM 4.   (Removed and Reserved)

ITEM 5.   OTHER INFORMATION

----

ITEM 6.   EXHIBITS

| Exhibit |                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Number  | Description                                                                                                                                                                                                                                                                                                                                                                                                                               |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 3.1     | Amended and Restated Certificate of Incorporation of Verso Paper Corp. (1)                                                                                                                                                                                                                                                                                                                                                                |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 3.2     | Amended and Restated Bylaws of Verso Paper Corp. (1)                                                                                                                                                                                                                                                                                                                                                                                      |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 3.3     | Certificate of Formation of Verso Paper Holdings LLC, filed June 6, 2006, as amended by Certificates of Amendment filed June 13, 2006, June 23, 2006 and June 26 2006. (2)                                                                                                                                                                                                                                                                |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 3.4     | Amended and Restated Limited Liability Company Agreement of Verso Paper Holdings LLC dated as of January 25, 2007. (2)                                                                                                                                                                                                                                                                                                                    |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 4.1     | Indenture dated as of January 26, 2011, among Verso Paper Holdings LLC, Verso Paper Inc., the guarantors named therein, and Wilmington Trust Company, as trustee,(3)  as supplemented by the First Supplemental Indenture, dated as of February 10, 2011, among Verso Paper Holdings LLC, Verso Paper Inc., the guarantors named therein, and Wilmington Trust Company, as trustee.(4)                                          |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 4.2     | Registration Rights Agreement, dated as of January 26, 2011, among Verso Paper Holdings LLC, Verso Paper Inc., the guarantors named therein, and Credit Suisse Securities (USA) LLC, Citigroup Global Markets Inc., Barclays Capital Inc., and Merrill Lynch Pierce, Fenner & Smith Incorporated as representatives of the initial purchasers.(3)                                                                                     |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 4.3     | Registration Rights Agreement, dated as of February 10, 2011, among Verso Paper Holdings LLC, Verso Paper Inc., the guarantors named therein, and Credit Suisse Securities (USA) LLC, Citigroup Global Markets Inc., Barclays Capital Inc., and Merrill Lynch Pierce, Fenner & Smith Incorporated as representatives of the initial purchasers.(4)                                                                                    |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.1    | Collateral Agreement dated as of January 26, 2011, among Verso Paper Holdings LLC, Verso Paper Inc., the subsidiaries party thereto, and Wilmington Trust Company, as collateral agent, (3)  as amended by Amendment No. 1 to Collateral Agreement, dated as of February 10, 2011, among Verso Paper Holdings LLC, Verso Paper Inc., the subsidiaries party thereto, and Wilmington Trust Company, as collateral agent.(4) |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.2    | Intercreditor Agreement dated as August 1, 2006, among Credit Suisse, Cayman Islands Branch, as Intercreditor Agent, Wilmington Trust Company, as Trustee, Verso Paper Finance Holdings LLC, Verso Paper Holdings LLC, and the Subsidiaries named therein,(5) as amended by Joinder and Supplement No. 3 to Intercreditor Agreement dated as of January 26, 2011. (3)                                                                |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 12      | Computation of Ratio of Earnings to Fixed Charges for Verso Paper Holdings LLC.                                                                                                                                                                                                                                                                                                                                                           |

----

| 31.1   | Certification of Principal Executive Officer pursuant to Rule 13a-14(a) under Securities Exchange Act of 1934.                                                                  |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                            |
| 31.2   | Certification of Principal Financial Officer pursuant to Rule 13a-14(a) under Securities Exchange Act of 1934.                                                                  |
|   |                                                                                                                                                                            |
| 32.1   | Certification of Principal Executive Officer pursuant to Rule 13a-14(b) under Securities Exchange Act of 1934 and Section 1350 of Chapter 63 of Title 18 of United States Code. |
|   |                                                                                                                                                                            |
| 32.2   | Certification of Principal Financial Officer pursuant to Rule 13a-14(b) under Securities Exchange Act of 1934 and Section 1350 of Chapter 63 of Title 18 of United States Code. |

----

| (1) | Incorporated by reference to Verso Paper Corp.’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on December 20, 2007, as amended (Registration Statement No. 333-148201). |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Incorporated by reference to Verso Paper Holding LLC’s Annual Report on Form 10-K for the year ended December 31, 2007, filed with the Securities and Exchange Commission on March 12, 2008. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Incorporated by reference to Verso Paper Corp.’s Current Report on Form 8-K filed with the SEC on January 26, 2011. |
|-----|---------------------------------------------------------------------------------------------------------------------------|

| (4) | Incorporated by reference to Verso Paper Corp.’s Current Report on Form 8-K filed with the SEC on February 10, 2011. |
|-----|----------------------------------------------------------------------------------------------------------------------------|

| (5) | Incorporated by reference to the Registration Statement of Verso Paper Holdings LLC on Form S-4 (Registration No. 333-142283), as amended. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------|

----

SIGNATURES

| Date:  May 9, 2011 |              |                                                             |
|------------------------------|-------------------|------------------------------------------------------------------|
|                         | VERSO PAPER CORP. |
|                         |              |                                                             |
|                         |              |                                                             |
|                         | By:               | /s/ Michael A. Jackson                                           |
|                         |              | Michael A. JacksonPresident and Chief Executive Officer          |
|                         |              |                                                             |
|                         |              |                                                             |
|                         | By:               | /s/ Robert P. Mundy                                              |
|                         |              | Robert P. MundySenior Vice President and Chief Financial Officer |

| Date:  May 9, 2011 |                     |                                                             |
|------------------------------|--------------------------|------------------------------------------------------------------|
|                         | VERSO PAPER HOLDINGS LLC |
|                         |                     |                                                             |
|                         |                     |                                                             |
|                         | By:                      | /s/ Michael A. Jackson                                           |
|                         |                     | Michael A. JacksonPresident and Chief Executive Officer          |
|                         |                     |                                                             |
|                         |                     |                                                             |
|                         | By:                      | /s/ Robert P. Mundy                                              |
|                         |                     | Robert P. MundySenior Vice President and Chief Financial Officer |

----

EXHIBIT INDEX

| 3.1    | Amended and Restated Certificate of Incorporation of Verso Paper Corp. (1)                                                                                                                                                                                                                                                                                                                                                                |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 3.2    | Amended and Restated Bylaws of Verso Paper Corp. (1)                                                                                                                                                                                                                                                                                                                                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 3.3    | Certificate of Formation of Verso Paper Holdings LLC, filed June 6, 2006, as amended by Certificates of Amendment filed June 13, 2006, June 23, 2006 and June 26 2006. (2)                                                                                                                                                                                                                                                                |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 3.4    | Amended and Restated Limited Liability Company Agreement of Verso Paper Holdings LLC dated as of January 25, 2007. (2)                                                                                                                                                                                                                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 4.1    | Indenture dated as of January 26, 2011, among Verso Paper Holdings LLC, Verso Paper Inc., the guarantors named therein, and Wilmington Trust Company, as trustee,(3)  as supplemented by the First Supplemental Indenture, dated as of February 10, 2011, among Verso Paper Holdings LLC, Verso Paper Inc., the guarantors named therein, and Wilmington Trust Company, as trustee.(4)                                          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 4.2    | Registration Rights Agreement, dated as of January 26, 2011, among Verso Paper Holdings LLC, Verso Paper Inc., the guarantors named therein, and Credit Suisse Securities (USA) LLC, Citigroup Global Markets Inc., Barclays Capital Inc., and Merrill Lynch Pierce, Fenner & Smith Incorporated as representatives of the initial purchasers.(3)                                                                                     |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 4.3    | Registration Rights Agreement, dated as of February 10, 2011, among Verso Paper Holdings LLC, Verso Paper Inc., the guarantors named therein, and Credit Suisse Securities (USA) LLC, Citigroup Global Markets Inc., Barclays Capital Inc., and Merrill Lynch Pierce, Fenner & Smith Incorporated as representatives of the initial purchasers.(4)                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.1   | Collateral Agreement dated as of January 26, 2011, among Verso Paper Holdings LLC, Verso Paper Inc., the subsidiaries party thereto, and Wilmington Trust Company, as collateral agent, (3)  as amended by Amendment No. 1 to Collateral Agreement, dated as of February 10, 2011, among Verso Paper Holdings LLC, Verso Paper Inc., the subsidiaries party thereto, and Wilmington Trust Company, as collateral agent.(4) |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.2   | Intercreditor Agreement dated as August 1, 2006, among Credit Suisse, Cayman Islands Branch, as Intercreditor Agent, Wilmington Trust Company, as Trustee, Verso Paper Finance Holdings LLC, Verso Paper Holdings LLC, and the Subsidiaries named therein,(5) as amended by Joinder and Supplement No. 3 to Intercreditor Agreement dated as of January 26, 2011. (3)                                                                |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 12     | Computation of Ratio of Earnings to Fixed Charges for Verso Paper Holdings LLC.                                                                                                                                                                                                                                                                                                                                                           |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 31.1   | Certification of Principal Executive Officer pursuant to Rule 13a-14(a) under Securities Exchange Act of 1934.                                                                                                                                                                                                                                                                                                                            |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 31.2   | Certification of Principal Financial Officer pursuant to Rule 13a-14(a) under Securities Exchange Act of 1934.                                                                                                                                                                                                                                                                                                                            |

----

| 32.1   | Certification of Principal Executive Officer pursuant to Rule 13a-14(b) under Securities Exchange Act of 1934 and Section 1350 of Chapter 63 of Title 18 of United States Code. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                            |
| 32.2   | Certification of Principal Financial Officer pursuant to Rule 13a-14(b) under Securities Exchange Act of 1934 and Section 1350 of Chapter 63 of Title 18 of United States Code. |

----

| (1) | Incorporated by reference to Verso Paper Corp.’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on December 20, 2007, as amended (Registration Statement No. 333-148201). |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Incorporated by reference to Verso Paper Holding LLC’s Annual Report on Form 10-K for the year ended December 31, 2007, filed with the Securities and Exchange Commission on March 12, 2008. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Incorporated by reference to Verso Paper Corp.’s Current Report on Form 8-K filed with the SEC on January 26, 2011. |
|-----|---------------------------------------------------------------------------------------------------------------------------|

| (4) | Incorporated by reference to Verso Paper Corp.’s Current Report on Form 8-K filed with the SEC on February 10, 2011. |
|-----|----------------------------------------------------------------------------------------------------------------------------|

| (5) | Incorporated by reference to the Registration Statement of Verso Paper Holdings LLC on Form S-4 (Registration No. 333-142283), as amended. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------|

| 43 |
|----|