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

|   | For the fiscal year ended December 31, 2010 |
|--------|---------------------------------------------|

| 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) |

----

| Securities registered pursuant to section 12(b) of the Act:  |
|-------------------------------------------------------------------|
|                                                              |   |   |
|                                                              | Verso Paper Corp. |   |

| Title of each class                    | Name of each exchange on which registered |
|----------------------------------------|-------------------------------------------|
| Common Stock, $.01 par value per share | New York Stock Exchange                   |

|                                                                                                                                   | Verso Paper Holdings LLC | None                                    |
|----------------------------------------------------------------------------------------------------------------------------------------|--------------------------|-----------------------------------------|
|                                                                                                                                   |                     |                                    |
| Securities registered pursuant to Section 12(g) of the Act:                                                                            |
|                                                                                                                                   |                     |                                    |
|                                                                                                                                   | Verso Paper Corp.        | None                |
|                                                                                                                                   | Verso Paper Holdings LLC | None                                    |
|                                                                                                                                   |                     |                                    |
| Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.           |
|                                                                                                                                   |                     |                                    |
|                                                                                                                                   | Verso Paper Corp.        | o Yes þ No     |
|                                                                                                                                   | Verso Paper Holdings LLC | o Yes þ No          |
|                                                                                                                                   |                     |                                    |
| Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. |
|                                                                                                                                   |                     |                                    |
|                                                                                                                                   | Verso Paper Corp.        | o Yes þ No     |
|                                                                                                                                   | Verso Paper Holdings LLC | o Yes þ No          |

----

| 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     |
|                                                                                                                                                                                                                                                                                                                                                                                        |   |   |
| Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.                           |
|                                                                                                                                                                                                                                                                                                                                                                                        |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                        | Verso Paper Corp. | þ |
|                                                                                                                                                                                                                                                                                                                                                                                        | Verso Paper Holdings LLC | þ |

| Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                     |   |   |   |
| Verso Paper Corp.                                                                                                                                                                                                                                                                                                                        |   |   |   |
| Large accelerated filer o                                                                                                                                                                                                                                                                                                                | Accelerated filer o | Non-accelerated filer   þ | Smaller reporting company o |
|                                                                                                                                                                                                                                                                                                                                     |   | (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 company o |
|                                                                                                                                                                                                                                                                                                                                     |   | (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 Act).   |
|---------------------------------------------------------------------------------------------------------------------|
|                                                                                                                |   |   |
|                                                                                                                | Verso Paper Corp. | o Yes þ No     |
|                                                                                                                | Verso Paper Holdings LLC | o Yes þ No        |

----

| PART I     |
|------------|
|       |   | Page |
|       |   |   |
| Item 1.    | Business | 3 |
| Item 1A.   | Risk Factors | 12 |
| Item 1B.   | Unresolved Staff Comments | 21 |
| Item 2.    | Properties | 21 |
| Item 3.    | Legal Proceedings | 21 |
| Item 4.    | Submission of Matters to a Vote of Security Holders | 21 |
|       |   |   |
| PART II    |
|       |   |   |
| Item 5.    | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 22 |
| Item 6.    | Selected Financial Data | 23 |
| Item 7.    | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 27 |
| Item 7A.   | Quantitative and Qualitative Disclosures About Market Risk | 39 |
| Item 8.    | Financial Statements and Supplementary Data | 42 |
| Item 9.    | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 86 |
| Item 9A.   | Controls and Procedures | 86 |
| Item 9B.   | Other Information | 87 |
|       |   |   |
| PART III   |
|       |   |   |
| Item 10.   | Directors, Executive Officers and Corporate Governance | 88 |
| Item 11.   | Executive Compensation | 88 |
| Item 12.   | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 88 |
| Item 13.   | Certain Relationships and Related Transactions and Director Independence | 88 |
| Item 14.   | Principal Accountant Fees and Services | 89 |
|       |   |   |
| PART IV    |
|       |   |   |
| Item 15.   | Exhibits and Financial Statement Schedules | 90 |
|       |   |   |
| Signatures | 95 |

----

----

Item 1.  Business

----

| (Tons in thousands, Dollars in millions) |   | Tons Sold |   |   | Net Sales |   |
|------------------------------------------|--------|-----------|--------|--------|-----------|--------|
| Product:                                 |   | Kts       |   |   | %         |   |   | $ |   |   |   | % |   |
| Coated groundwood paper                  |   |      | 896    |   |      |   | 44 |   |   | $ | 717 |   |   |   | 45 |   |
| Coated freesheet paper                   |   |      | 572    |   |      |   | 28 |   |   |   | 474 |   |   |   | 29 |   |
| Supercalendered paper                    |   |      | 175    |   |      |   | 8 |   |   |   | 124 |   |   |   | 8 |   |
| Pulp                                     |   |      | 270    |   |      |   | 13 |   |   |   | 165 |   |   |   | 10 |   |
| Other                                    |   |      | 151    |   |      |   | 7 |   |   |   | 125 |   |   |   | 8 |   |
| Total                                    |   |      | 2,064  |   |      |   | 100 |   |   | $ | 1,605 |   |   |   | 100 |   |

----

----

|                      |                                                    |     | Production                                                                          |
|---------------------------|---------------------------------------------------------|----------|-------------------------------------------------------------------------------------|
|                      |                                                    | Paper    | Capacity                                                                            |
| Mill/Location             | Product/Paper Grades                                    | Machines | (in tons)                                                                           |
| Jay (Androscoggin), Maine | Lightweight Coated Groundwood                           | 2        |          355,000                       |
|                      | Lightweight Coated Freesheet                            | 1        |          175,000                       |
|                      | Specialty/Uncoated                                      | 1        |          105,000                       |
|                      | Pulp                                                    |     |          420,000                       |
| Bucksport, Maine          | Lightweight and Ultra-Lightweight Coated Groundwood and |     |                                                                                |
|                      | High Bulk Specialty Coated Groundwood                   | 3        |          440,000                       |
|                      | Specialty/Uncoated                                      | 1        |            55,000            |
| Quinnesec, Michigan       | Coated Freesheet                                        | 1        |          410,000                       |
|                      | Specialty/Uncoated                                      |     |              5,000 |
|                      | Pulp                                                    |     |          475,000                       |
| Sartell, Minnesota        | Lightweight and Ultra-Lightweight Coated Groundwood     | 1        |          180,000                       |
|                      | Supercalendered                                         | 2        |          140,000                       |

----

----

----

| ●     | high-bulk offset and rotogravure coated groundwood;                                                                 |
|---------------------------------|---------------------------------------------------------------------------------------------------------------------|
|                            |                                                                                                                |
| ●          | lightweight grade No. 4 coated groundwood;                                                                     |
|                            |                                                                                                                |
| ●          | ultra-lightweight grade No. 5 coated groundwood;                                                               |
|                            |                                                                                                                |
| ●          | rotogravure coated freesheet; and                                                                              |
|                            |                                                                                                                |
| ●          | innovative and performance driven products for the flexible packaging, label, and specialty printing markets.  |

----

| ●    | price;                              |
|---------------------------|-------------------------------------|
|                      |                                |
| ●    | product availability;               |
|                      |                                |
| ●    | product quality;                    |
|                      |                                |
| ●    | breadth of product offerings;  |
|                      |                                |
| ●    | timeliness of product delivery; and |
|                      |                                |
| ●    | customer service.                   |

----

----

Item 1A.   Risk Factors

| ●     | Market prices for paper products are a function of supply and demand, factors over which we have limited control.  We therefore have limited ability to control the pricing of our products.  Market prices of grade No. 3, 60 lb. basis weight paper, which is an industry benchmark for coated freesheet paper pricing, have fluctuated since 2000 from a high of $1,100 per ton to a low of $705 per ton.  In addition, market prices of grade No. 5, 34 lb. basis weight paper, which is an industry benchmark for coated groundwood paper pricing, have fluctuated between a high of $1,120 per ton to a low of $795 per ton over the same period.  Our average coated paper prices declined from 2008 through the first quarter of 2010, but average prices began to climb modestly in the second quarter of 2010.  We expect prices to continue to improve in 2011, but we cannot assure you that the prices will continue to improve. Because market conditions determine the price for our paper products, the price for our products could fall below our cash production costs. |
|---------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●     | Market prices for paper products typically are not directly affected by raw material costs or other costs of sales, and consequently we have limited ability to pass through increases in our costs to our customers absent increases in the market price.  In addition, a significant portion of our sales are pursuant to sales agreements that limit price increases.  Thus, even though our costs may increase, we may not have the ability to increase the prices for our products, or the prices for our products may decline. |
|----------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●     | The manufacturing of coated paper is highly capital-intensive and a large portion of our operating costs are fixed.  Additionally, paper machines are large, complex machines that operate more efficiently when operated continuously.  Consequently, both we and our competitors typically continue to run our machines whenever marginal sales exceed the marginal costs, adversely impacting prices at times of lower demand. |
|----------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ●     | increasing our vulnerability to general adverse economic and industry conditions; |
|---------------------------------|-----------------------------------------------------------------------------------|

| ●     | requiring us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, research and development efforts, and other general corporate purposes; |
|----------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●     | increasing our vulnerability to, and limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; |
|---------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●     | exposing us to the risk of increased interest rates as borrowings under our senior secured credit facility and our second priority senior secured floating rate notes are subject to variable rates of interest; |
|---------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●     | placing us at a competitive disadvantage compared to our competitors that have less debt; and |
|----------------------------|-----------------------------------------------------------------------------------------------|

| ●     | limiting our ability to borrow additional funds. |
|----------------------------|--------------------------------------------------|

----

----

| ●     | incur additional indebtedness; |
|---------------------------------|--------------------------------|

| ●     | pay dividends or make other distributions or repurchase or redeem our stock; |
|----------------------------|------------------------------------------------------------------------------|

| ●     | prepay, redeem or repurchase certain of our indebtedness; |
|---------------------------------|-----------------------------------------------------------|

| ●     | make investments; |
|---------------------------------|-------------------|

| ●     | sell assets, including capital stock of restricted subsidiaries; |
|----------------------------|------------------------------------------------------------------|

| ●     | enter into agreements restricting our subsidiaries’ ability to pay dividends; |
|----------------------------|-------------------------------------------------------------------------------------|

| ●     | consolidate, merge, sell or otherwise dispose of all or substantially all of our assets; |
|---------------------------------|------------------------------------------------------------------------------------------|

| ●     | enter into transactions with our affiliates; and |
|----------------------------|--------------------------------------------------|

| ●     | incur liens. |
|----------------------------|--------------|

----

| ●     | product availability; |
|---------------------------------|-----------------------|

| ●     | the quality of our products; |
|----------------------------|------------------------------|

| ●     | our breadth of product offerings; |
|---------------------------------|-----------------------------------|

| ●     | our ability to maintain plant efficiencies and to achieve high operating rates; |
|---------------------------------|---------------------------------------------------------------------------------|

| ●     | manufacturing costs per ton; |
|----------------------------|------------------------------|

----

| ●     | customer service and our ability to distribute our products on time; and |
|---------------------------------|--------------------------------------------------------------------------|

| ●     | the availability and/or cost of wood fiber, market pulp, chemicals, energy and other raw materials and labor. |
|----------------------------|---------------------------------------------------------------------------------------------------------------|

----

----

----

----

Item 1B.   Unresolved Staff Comments

Item 2.      Properties

| Location                  | Use                                       | Owned/Leased |
|---------------------------|-------------------------------------------|--------------|
| Memphis, Tennessee        | corporate headquarters                    |  leased |
| Jay (Androscoggin), Maine | paper mill/kraft pulp mill                |  owned  |
| Bucksport, Maine          | paper mill                                |  owned  |
| Quinnesec, Michigan       | paper mill/kraft pulp mill                |  owned  |
| Sartell, Minnesota        | paper mill                                |  owned  |
| West Chester, Ohio        | sales, distribution, and customer service |  leased |

Item 3.      Legal Proceedings

Item 4.      Submission of Matters to a Vote of Security Holders

----

Item 5.      Market for Registrants’ Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

|                         |   | High   |   |   | Low    |   |
|------------------------------|--------|--------|--------|--------|--------|--------|
| 2010                         |   |   |   |   |   |   |
| First quarter                |   | $      | 3.96   |   |   | $      | 2.64 |   |
| Second quarter               |   |   | 5.76   |   |   |   | 2.29 |   |
| Third quarter                |   |   | 3.23   |   |   |   | 2.05 |   |
| Fourth quarter               |   |   | 4.03   |   |   |   | 2.80 |   |
| 2009                         |   |   |   |   |   |   |   |   |
| First quarter                |   | $      | 1.40   |   |   | $      | 0.32 |   |
| Second quarter               |   |   | 2.00   |   |   |   | 0.50 |   |
| Third quarter                |   |   | 3.79   |   |   |   | 1.01 |   |
| Fourth quarter               |   |   | 3.50   |   |   |   | 2.10 |   |
| 2008                         |   |   |   |   |   |   |   |   |
| Second quarter (from May 15) |   | $      | 12.01  |   |   | $      | 7.72 |   |
| Third quarter                |   |   | 8.42   |   |   |   | 2.16 |   |
| Fourth quarter               |   |   | 2.59   |   |   |   | 0.82 |   |

----

|                                                       |                                                                             |                                   | Number of securities                                                             |
|------------------------------------------------------------|----------------------------------------------------------------------------------|----------------------------------------|----------------------------------------------------------------------------------|
|                                                       | Number of                                                                        | Weighted-                              | remaining available                                                              |
|                                                       | securities to be                                                                 | average                                | for future issuance                                                              |
|                                                       | issued upon                                                                      | exercise                               | under equity                                                                     |
|                                                       | exercise of                                                                      | price of                               | compensation plans                                                               |
|                                                       | outstanding                                                                      | outstanding                            | (excluding securities                                                            |
|                                                       | options                                                                          | options                                | reflected in column (a))                                                         |
| Plan Category                                              | (a)                                                                              | (b)                                    | (c)                                                                              |
| Equity compensation plans approved by security holders     | 1,407,840                                                                        | $3.33                                  | 2,421,706                                                                        |
| Equity compensation plans not approved by security holders |               - |        - |               - |
| Total                                                      | 1,407,840                                                                        | $3.33                                  | 2,421,706                                                                        |

Item 6.      Selected Financial Data

----

|                                              |   |                     |    |   |                 |   |    |         |   |   |     |   |   |   |    |   | Predecessor |   |
|---------------------------------------------------|--------|--------------------------|---------|--------|----------------------|--------|---------|--------------|--------|--------|----------|--------|--------|--------|---------|--------|-------------|--------|
|                                              |   | VERSO PAPER Consolidated |    |   | VERSO PAPER Combined |   |    | Combined     |   |
|                                              |   |                     |    |   |                 |   |    |         |   |   |     |   |   | Five   |    |   | Seven       |   |
|                                              |   |                     |    |   |                 |   |    |         |   |   | Year     |   |   | Months |    |   | Months      |   |
|                                              |   |                     |    |   |                 |   |    |         |   |   | Ended    |   |   | Ended  |    |   | Ended       |   |
| (Dollars and tons in millions except              |   | Year Ended December 31,  |    |   | December 31,         |   |    | December 31, |   |   | July 31, |   |
|   per share amounts)                    |   | 2010                     |    |   | 2009                 |   |    | 2008         |   |   | 2007     |   |   | 2006   |    |   | 2006        |   |
| Statement of Operations Data:                     |   |                     |    |   |                 |   |    |         |   |   |     |   |   |   |    |   |        |   |
| Net sales                                         |   | $                        | 1,605.3 |   |                 | $      | 1,360.9 |         |   | $      | 1,766.8  |   |   | $      | 1,628.8 |   |        | $      | 706.8 |   |   | $ | 904.4 |   |
| Costs and expenses:                               |   |                     |    |   |                 |   |    |         |   |   |     |   |   |   |    |   |        |   |   |   |   |   |   |   |
| Cost of products sold - (exclusive of             |   |                     |    |   |                 |   |    |         |   |   |     |   |   |   |    |   |        |   |   |   |   |   |   |   |
|   depreciation, amortization, and depletion) |   |                     | 1,410.8 |   |                 |   | 1,242.7 |         |   |   | 1,463.2  |   |   |   | 1,403.0 |   |        |   | 589.3 |   |   |   | 771.6 |   |
| Depreciation, amortization, and depletion         |   |                     | 127.4   |   |                 |   | 132.7   |         |   |   | 134.5    |   |   |   | 123.2   |   |        |   | 48.3 |   |   |   | 72.7 |   |
| Selling, general, and administrative expenses     |   |                     | 71.0    |   |                 |   | 61.9    |         |   |   | 79.7     |   |   |   | 53.2    |   |        |   | 14.4 |   |   |   | 34.3 |   |
| Restructuring and other charges                   |   |                     | -       |   |                 |   | 1.0     |         |   |   | 27.4     |   |   |   | 19.4    |   |        |   | 10.1 |   |   |   | (0.3 | ) |
| Total operating expenses                          |   |                     | 1,609.2 |   |                 |   | 1,438.3 |         |   |   | 1,704.8  |   |   |   | 1,598.8 |   |        |   | 662.1 |   |   |   | 878.3 |   |
| Operating income (loss)                           |   |                     | (3.9    | )      |                 |   | (77.4   | )            |   |   | 62.0     |   |   |   | 30.0    |   |        |   | 44.7 |   |   |   | 26.1 |   |
| Interest income                                   |   |                     | (0.1    | )      |                 |   | (0.3    | )            |   |   | (0.8     | )      |   |   | (1.5    | )      |        |   | (1.8 | ) |   |   | - |   |
| Interest expense                                  |   |                     | 128.1   |   |                 |   | 123.4   |         |   |   | 125.6    |   |   |   | 143.0   |   |        |   | 49.1 |   |   |   | 8.4 |   |
| Other income, net(1)                              |   |                     | (0.9    | )      |                 |   | (307.3  | )            |   |   | -        |   |   |   | -       |   |        |   | - |   |   |   | - |   |
| Income (loss) before income taxes                 |   |                     | (131.0  | )      |                 |   | 106.8   |         |   |   | (62.8    | )      |   |   | (111.5  | )      |        |   | (2.6 | ) |   |   | 17.7 |   |
| Income tax expense                                |   |                     | 0.1     |   |                 |   | 0.8     |         |   |   | -        |   |   |   | -       |   |        |   | - |   |   |   | 7.0 |   |
| Net income (loss)                                 |   | $                        | (131.1  | )      |                 | $      | 106.0   |         |   | $      | (62.8    | )      |   | $      | (111.5  | )      |        | $      | (2.6 | ) |   | $ | 10.7 |   |
| Per Share Data:                                   |   |                     |    |   |                 |   |    |         |   |   |     |   |   |   |    |   |        |   |   |   |   |   |   |   |
| Earnings (loss) per share:                        |   |                     |    |   |                 |   |    |         |   |   |     |   |   |   |    |   |        |   |   |   |   |   |   |   |
| Basic                                             |   | $                        | (2.50   | )      |                 | $      | 2.03    |         |   | $      | (1.35    | )      |   | $      | (2.93   | )      |        | $      | (0.07 | ) |   |   |   |   |
| Diluted                                           |   |                     | (2.50   | )      |                 |   | 2.03    |         |   |   | (1.35    | )      |   |   | (2.93   | )      |        |   | (0.07 | ) |   |   |   |   |
| Weighted average common shares                    |   |                     |    |   |                 |   |    |         |   |   |     |   |   |   |    |   |        |   |   |   |   |   |   |   |
|   outstanding (in thousands):           |   |                     |    |   |                 |   |    |         |   |   |     |   |   |   |    |   |        |   |   |   |   |   |   |   |
| Basic                                             |   |                     | 52,445  |   |                 |   | 52,138  |         |   |   | 46,691   |   |   |   | 38,047  |   |        |   | 38,047 |   |   |   |   |   |
| Diluted                                           |   |                     | 52,445  |   |                 |   | 52,153  |         |   |   | 46,691   |   |   |   | 38,047  |   |        |   | 38,047 |   |   |   |   |   |
| Statement of Cash Flows Data:                     |   |                     |    |   |                 |   |    |         |   |   |     |   |   |   |    |   |        |   |   |   |   |   |   |   |
| Cash provided by operating activities             |   | $                        | 73.5    |   |                 | $      | 177.2   |         |   | $      | 54.1     |   |   | $      | 15.0    |   |        | $      | 128.2 |   |   | $ | 39.3 |   |
| Cash used in investing activities                 |   |                     | (98.3   | )      |                 |   | (34.1   | )            |   |   | (81.3    | )      |   |   | (69.1   | )      |        |   | (1,402.0 | ) |   |   | (27.6 | ) |
| Cash provided by (used in) financing              |   |                     |    |   |                 |   |    |         |   |   |     |   |   |   |    |   |        |   |   |   |   |   |   |   |
|   activities                                 |   |                     | 25.5    |   |                 |   | (110.5  | )            |   |   | 88.2     |   |   |   | 0.2     |   |        |   | 1,386.3 |   |   |   | (11.6 | ) |
| Other Financial and Operating Data:               |   |                     |    |   |                 |   |    |         |   |   |     |   |   |   |    |   |        |   |   |   |   |   |   |   |
| EBITDA(2)                                         |   | $                        | 124.4   |   |                 | $      | 362.6   |         |   | $      | 196.5    |   |   | $      | 153.2   |   |        | $      | 93.0 |   |   | $ | 98.8 |   |
| Capital expenditures                              |   |                     | (73.6   | )      |                 |   | (34.2   | )            |   |   | (81.4    | )      |   |   | (70.9   | )      |        |   | (27.8 | ) |   |   | (27.7 | ) |
| Total tons sold                                   |   |                     | 2,063.6 |   |                 |   | 1,724.5 |         |   |   | 1,952.7  |   |   |   | 2,096.3 |   |        |   | 866.4 |   |   |   | 1,145.0 |   |
| Balance Sheet Data:                               |   |                     |    |   |                 |   |    |         |   |   |     |   |   |   |    |   |        |   |   |   |   |   |   |   |
| Working capital(3)                                |   | $                        | 162.4   |   |                 | $      | 210.6   |         |   | $      | 151.9    |   |   | $      | 87.2    |   |        | $      | 153.8 |   |   |   |   |   |
| Property, plant and equipment, net                |   |                     | 972.7   |   |                 |   | 1,022.6 |         |   |   | 1,116.0  |   |   |   | 1,160.2 |   |        |   | 1,212.3 |   |   |   |   |   |
| Total assets                                      |   |                     | 1,516.1 |   |                 |   | 1,572.7 |         |   |   | 1,636.4  |   |   |   | 1,603.5 |   |        |   | 1,711.0 |   |   |   |   |   |
| Total debt                                        |   |                     | 1,228.6 |   |                 |   | 1,192.4 |         |   |   | 1,357.7  |   |   |   | 1,419.6 |   |        |   | 1,169.3 |   |   |   |   |   |
| Total equity (deficit)                            |   |                     | (6.8    | )      |                 |   | 125.3   |         |   |   | (10.0    | )      |   |   | (75.1   | )      |        |   | 280.0 |   |   |   |   |   |

| (1)       | Other income was $307.3 million for the year ended December 31, 2009, which includes $238.9 million in net benefits from alternative fuel mixture tax credits provided by the U.S. government for our use of black liquor in alternative fuel mixtures and $64.8 million in net gains related to the early retirement of debt.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|-----------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2)  | EBITDA consists of earnings before interest, taxes, depreciation, and amortization. EBITDA is a measure commonly used in our industry and we present EBITDA to enhance your understanding of our operating performance. We use EBITDA as one criterion for evaluating our performance relative to that of our peers. We believe that EBITDA is an operating performance measure, and not a liquidity measure, that provides investors and analysts with a measure of operating results unaffected by differences in capital structures, capital investment cycles and ages of related assets among otherwise comparable companies. However, EBITDA is not a measurement of financial performance under U.S. GAAP, and our EBITDA may not be comparable to similarly titled measures of other companies. You should not consider our EBITDA as an alternative to operating or net income, determined in accordance with U.S. GAAP, as an indicator of our operating performance, or as an alternative to cash flows from operating activities, determined in accordance with U.S. GAAP, as an indicator of our cash flows or as a measure of liquidity. The following table reconciles net income (loss) to EBITDA for the periods presented: |

----

|                                      |   |                     |   |   |                 |   |   |         |   |   |     |   |   |   |   |   | Predecessor |   |
|-------------------------------------------|--------|--------------------------|--------|--------|----------------------|--------|--------|--------------|--------|--------|----------|--------|--------|--------|--------|--------|-------------|--------|
|                                      |   | VERSO PAPER Consolidated |   |   | VERSO PAPER Combined |   |   | Combined     |   |
|                                      |   |                     |   |   |                 |   |   |         |   |   |     |   |   | Five   |   |   | Seven       |   |
|                                      |   |                     |   |   |                 |   |   |         |   |   | Year     |   |   | Months |   |   | Months      |   |
|                                      |   |                     |   |   |                 |   |   |         |   |   | Ended    |   |   | Ended  |   |   | Ended       |   |
|                                      |   | Year Ended December 31,  |   |   | December 31,         |   |   | December 31, |   |   | July 31, |   |
| (Dollars in millions)                     |   | 2010                     |   |   | 2009                 |   |   | 2008         |   |   | 2007     |   |   | 2006   |   |   | 2006        |   |
| Reconciliation of net income (loss) to    |   |                     |   |   |                 |   |   |         |   |   |     |   |   |   |   |   |        |   |
|   EBITDA:                            |   |                     |   |   |                 |   |   |         |   |   |     |   |   |   |   |   |        |   |
| Net income (loss)                         |   | $                        | (131.1 | )      |                 | $      | 106.0  |         |   | $      | (62.8    | )      |   | $      | (111.5 | )      |        | $      | (2.6 | ) |   | $ | 10.7 |   |
| Income tax expense                        |   |                     | 0.1    |   |                 |   | 0.8    |         |   |   | -        |   |   |   | -      |   |        |   | - |   |   |   | 7.0 |   |
| Interest expense, net                     |   |                     | 128.0  |   |                 |   | 123.1  |         |   |   | 124.8    |   |   |   | 141.5  |   |        |   | 47.3 |   |   |   | 8.4 |   |
| Depreciation, amortization, and depletion |   |                     | 127.4  |   |                 |   | 132.7  |         |   |   | 134.5    |   |   |   | 123.2  |   |        |   | 48.3 |   |   |   | 72.7 |   |
| EBITDA                                    |   | $                        | 124.4  |   |                 | $      | 362.6  |         |   | $      | 196.5    |   |   | $      | 153.2  |   |        | $      | 93.0 |   |   | $ | 98.8 |   |

| (3) | Working capital is defined as current assets net of current liabilities, excluding the current portion of long-term debt. |
|-----|---------------------------------------------------------------------------------------------------------------------------|

----

|                                              |   |                        |    |   |         |   |    |     |   |   |    |   |   |   |    |   | Predecessor |   |
|---------------------------------------------------|--------|-----------------------------|---------|--------|--------------|--------|---------|----------|--------|--------|---------|--------|--------|--------|---------|--------|-------------|--------|
|                                              |   | VERSO HOLDINGS Consolidated |    |   |         |   |    | Combined |   |
|                                              |   |                        |    |   |         |   |    |     |   |   |    |   |   | Five   |    |   | Seven       |   |
|                                              |   |                        |    |   |         |   |    |     |   |   |    |   |   | Months |    |   | Months      |   |
|                                              |   |                        |    |   |         |   |    |     |   |   |    |   |   | Ended  |    |   | Ended       |   |
|                                              |   | Year Ended December 31,     |    |   | December 31, |   |    | July 31, |   |
| (Dollars and tons in millions)                    |   | 2010                        |    |   | 2009         |   |    | 2008     |   |   | 2007    |   |   | 2006   |    |   | 2006        |   |
| Statement of Operations Data:                     |   |                        |    |   |         |   |    |     |   |   |    |   |   |   |    |   |        |   |
| Net sales                                         |   | $                           | 1,605.3 |   |         | $      | 1,360.9 |     |   | $      | 1,766.8 |   |   | $      | 1,628.8 |   |        | $      | 706.8 |   |   | $ | 904.4 |   |
| Costs and expenses:                               |   |                        |    |   |         |   |    |     |   |   |    |   |   |   |    |   |        |   |   |   |   |   |   |   |
| Cost of products sold - (exclusive of             |   |                        |    |   |         |   |    |     |   |   |    |   |   |   |    |   |        |   |   |   |   |   |   |   |
|   depreciation, amortization, and depletion) |   |                        | 1,410.8 |   |         |   | 1,242.7 |     |   |   | 1,462.3 |   |   |   | 1,403.2 |   |        |   | 589.3 |   |   |   | 771.6 |   |
| Depreciation, amortization, and depletion         |   |                        | 127.4   |   |         |   | 132.7   |     |   |   | 134.4   |   |   |   | 123.1   |   |        |   | 48.3 |   |   |   | 72.7 |   |
| Selling, general, and administrative expenses     |   |                        | 70.9    |   |         |   | 61.7    |     |   |   | 79.4    |   |   |   | 52.0    |   |        |   | 14.0 |   |   |   | 34.3 |   |
| Restructuring and other charges                   |   |                        | -       |   |         |   | 1.0     |     |   |   | 27.4    |   |   |   | 19.4    |   |        |   | 10.1 |   |   |   | (0.3 | ) |
| Total operating expenses                          |   |                        | 1,609.1 |   |         |   | 1,438.1 |     |   |   | 1,703.5 |   |   |   | 1,597.7 |   |        |   | 661.7 |   |   |   | 878.3 |   |
| Operating income (loss)                           |   |                        | (3.8    | )      |         |   | (77.2   | )        |   |   | 63.3    |   |   |   | 31.1    |   |        |   | 45.1 |   |   |   | 26.1 |   |
| Interest income                                   |   |                        | (0.1    | )      |         |   | (0.2    | )        |   |   | (0.8    | )      |   |   | (1.5    | )      |        |   | (1.8 | ) |   |   | - |   |
| Interest expense                                  |   |                        | 122.5   |   |         |   | 116.1   |     |   |   | 103.2   |   |   |   | 113.9   |   |        |   | 48.7 |   |   |   | 8.4 |   |
| Other income, net(1)                              |   |                        | (0.7    | )      |         |   | (273.8  | )        |   |   | -       |   |   |   | -       |   |        |   | - |   |   |   | - |   |
| Income (loss) before income taxes                 |   |                        | (125.5  | )      |         |   | 80.7    |     |   |   | (39.1   | )      |   |   | (81.3   | )      |        |   | (1.8 | ) |   |   | 17.7 |   |
| Income tax expense                                |   |                        | -       |   |         |   | -       |     |   |   | -       |   |   |   | -       |   |        |   | - |   |   |   | 7.0 |   |
| Net income (loss)                                 |   | $                           | (125.5  | )      |         | $      | 80.7    |     |   | $      | (39.1   | )      |   | $      | (81.3   | )      |        | $      | (1.8 | ) |   | $ | 10.7 |   |
| Statement of Cash Flows Data:                     |   |                        |    |   |         |   |    |     |   |   |    |   |   |   |    |   |        |   |   |   |   |   |   |   |
| Cash provided by operating activities             |   | $                           | 75.8    |   |         | $      | 180.1   |     |   | $      | 74.9    |   |   | $      | 38.8    |   |        | $      | 128.8 |   |   | $ | 39.3 |   |
| Cash used in investing activities                 |   |                        | (98.3   | )      |         |   | (34.1   | )        |   |   | (80.3   | )      |   |   | (67.8   | )      |        |   | (1,391.8 | ) |   |   | (27.6 | ) |
| Cash provided by (used in) financing         |   |                        |    |   |         |   |    |     |   |   |    |   |   |   |    |   |        |   |   |   |   |   |   |   |
|   activities                                 |   |                        | 25.4    |   |         |   | (115.8  | )        |   |   | 66.4    |   |   |   | (24.9   | )      |        |   | 1,375.4 |   |   |   | (11.6 | ) |
| Other Financial and Operating Data:               |   |                        |    |   |         |   |    |     |   |   |    |   |   |   |    |   |        |   |   |   |   |   |   |   |
| EBITDA(2)                                         |   | $                           | 124.3   |   |         | $      | 329.3   |     |   | $      | 197.7   |   |   | $      | 154.2   |   |        | $      | 93.4 |   |   | $ | 98.8 |   |
| Capital expenditures                              |   |                        | (73.6   | )      |         |   | (34.2   | )        |   |   | (80.4   | )      |   |   | (69.6   | )      |        |   | (27.5 | ) |   |   | (27.7 | ) |
| Total tons sold                                   |   |                        | 2,063.6 |   |         |   | 1,724.5 |     |   |   | 1,952.7 |   |   |   | 2,096.3 |   |        |   | 866.4 |   |   |   | 1,145.0 |   |
| Balance Sheet Data:                               |   |                        |    |   |         |   |    |     |   |   |    |   |   |   |    |   |        |   |   |   |   |   |   |   |
| Working capital(3)                                |   | $                           | 162.3   |   |         | $      | 210.4   |     |   | $      | 156.3   |   |   | $      | 95.6    |   |        | $      | 154.0 |   |   |   |   |   |
| Property, plant, and equipment, net               |   |                        | 972.7   |   |         |   | 1,022.6 |     |   |   | 1,115.7 |   |   |   | 1,159.9 |   |        |   | 1,212.0 |   |   |   |   |   |
| Total assets                                      |   |                        | 1,530.5 |   |         |   | 1,560.3 |     |   |   | 1,614.1 |   |   |   | 1,577.0 |   |        |   | 1,692.4 |   |   |   |   |   |
| Total debt                                        |   |                        | 1,172.7 |   |         |   | 1,118.3 |     |   |   | 1,245.7 |   |   |   | 1,156.4 |   |        |   | 1,159.3 |   |   |   |   |   |
| Total equity                                      |   |                        | 71.4    |   |         |   | 198.0   |     |   |   | 91.7    |   |   |   | 174.9   |   |        |   | 279.7 |   |   |   |   |   |

| (1)       | Other income was $273.8 million for the year ended December 31, 2009, which includes $238.9 million in net benefits from alternative fuel mixture tax credits provided by the U.S. government for our use of black liquor in alternative fuel mixtures and $31.3 million in net gains related to the early retirement of debt.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|-----------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2)  | EBITDA consists of earnings before interest, taxes, depreciation, and amortization. EBITDA is a measure commonly used in our industry and we present EBITDA to enhance your understanding of our operating performance. We use EBITDA as one criterion for evaluating our performance relative to that of our peers. We believe that EBITDA is an operating performance measure, and not a liquidity measure, that provides investors and analysts with a measure of operating results unaffected by differences in capital structures, capital investment cycles and ages of related assets among otherwise comparable companies. However, EBITDA is not a measurement of financial performance under U.S. GAAP, and our EBITDA may not be comparable to similarly titled measures of other companies. You should not consider our EBITDA as an alternative to operating or net income, determined in accordance with U.S. GAAP, as an indicator of our operating performance, or as an alternative to cash flows from operating activities, determined in accordance with U.S. GAAP, as an indicator of our cash flows or as a measure of liquidity. The following table reconciles net income (loss) to EBITDA for the periods presented: |

----

|                                      |   |                        |   |   |         |   |   |     |   |   |   |   |   |   |   |   | Predecessor |   |
|-------------------------------------------|--------|-----------------------------|--------|--------|--------------|--------|--------|----------|--------|--------|--------|--------|--------|--------|--------|--------|-------------|--------|
|                                      |   | VERSO HOLDINGS Consolidated |   |   |         |   |   | Combined |   |
|                                      |   |                        |   |   |         |   |   |     |   |   |   |   |   | Five   |   |   | Seven       |   |
|                                      |   |                        |   |   |         |   |   |     |   |   |   |   |   | Months |   |   | Months      |   |
|                                      |   |                        |   |   |         |   |   |     |   |   |   |   |   | Ended  |   |   | Ended       |   |
|                                      |   | Year Ended December 31,     |   |   | December 31, |   |   | July 31, |   |
| (Dollars in millions)                     |   | 2010                        |   |   | 2009         |   |   | 2008     |   |   | 2007   |   |   | 2006   |   |   | 2006        |   |
| Reconciliation of net income (loss) to    |   |                        |   |   |         |   |   |     |   |   |   |   |   |   |   |   |        |   |
|   EBITDA:                            |   |                        |   |   |         |   |   |     |   |   |   |   |   |   |   |   |        |   |
| Net income (loss)                         |   | $                           | (125.5 | )      |         | $      | 80.7   |     |   | $      | (39.1  | )      |   | $      | (81.3  | )      |        | $      | (1.8 | ) |   | $ | 10.7 |   |
| Income tax expense                        |   |                        | -      |   |         |   | -      |     |   |   | -      |   |   |   | -      |   |        |   | - |   |   |   | 7.0 |   |
| Interest expense, net                     |   |                        | 122.4  |   |         |   | 115.9  |     |   |   | 102.4  |   |   |   | 112.4  |   |        |   | 46.9 |   |   |   | 8.4 |   |
| Depreciation, amortization, and depletion |   |                        | 127.4  |   |         |   | 132.7  |     |   |   | 134.4  |   |   |   | 123.1  |   |        |   | 48.3 |   |   |   | 72.7 |   |
| EBITDA                                    |   | $                           | 124.3  |   |         | $      | 329.3  |     |   | $      | 197.7  |   |   | $      | 154.2  |   |        | $      | 93.4 |   |   | $ | 98.8 |   |

| (3) | Working capital is defined as current assets net of current liabilities, excluding the current portion of long-term debt. |
|-----|---------------------------------------------------------------------------------------------------------------------------|

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

----

----

----

----

----

|                                              |   | VERSO PAPER             |      |   | VERSO HOLDINGS          |   |
|---------------------------------------------------|--------|-------------------------|-----------|--------|-------------------------|--------|
|                                              |   | Year Ended December 31, |      |   | Year Ended December 31, |   |
| (Dollars in thousands)                            |   | 2010                    |      |   | 2009                    |   |   | 2008 |   |   | 2010 |   |   | 2009 |   |   | 2008 |   |
| Net sales                                         |   | $                       | 1,605,316 |   |                    | $      | 1,360,854 |   |   | $ | 1,766,813 |   |   | $ | 1,605,316 |   |   | $ | 1,360,854 |   |   | $ | 1,766,813 |   |
| Costs and expenses:                               |   |                    |      |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost of products sold - (exclusive of             |   |                    |      |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   depreciation, amortization, and depletion) |   |                    | 1,410,770 |   |                    |   | 1,242,743 |   |   |   | 1,463,169 |   |   |   | 1,410,770 |   |   |   | 1,242,743 |   |   |   | 1,462,333 |   |
| Depreciation, amortization, and depletion         |   |                    | 127,367   |   |                    |   | 132,682 |   |   |   | 134,458 |   |   |   | 127,367 |   |   |   | 132,682 |   |   |   | 134,344 |   |
| Selling, general, and administrative expenses     |   |                    | 71,043    |   |                    |   | 61,889 |   |   |   | 79,744 |   |   |   | 70,989 |   |   |   | 61,655 |   |   |   | 79,441 |   |
| Restructuring and other charges                   |   |                    | -         |   |                    |   | 979 |   |   |   | 27,416 |   |   |   | - |   |   |   | 979 |   |   |   | 27,416 |   |
| Total operating expenses                          |   |                    | 1,609,180 |   |                    |   | 1,438,293 |   |   |   | 1,704,787 |   |   |   | 1,609,126 |   |   |   | 1,438,059 |   |   |   | 1,703,534 |   |
| Operating income (loss)                           |   |                    | (3,864    | )      |                    |   | (77,439 | ) |   |   | 62,026 |   |   |   | (3,810 | ) |   |   | (77,205 | ) |   |   | 63,279 |   |
| Interest income                                   |   |                    | (120      | )      |                    |   | (246 | ) |   |   | (770 | ) |   |   | (124 | ) |   |   | (241 | ) |   |   | (770 | ) |
| Interest expense                                  |   |                    | 128,077   |   |                    |   | 123,365 |   |   |   | 125,622 |   |   |   | 122,528 |   |   |   | 116,130 |   |   |   | 103,200 |   |
| Other income, net                                 |   |                    | (884      | )      |                    |   | (307,307 | ) |   |   | - |   |   |   | (734 | ) |   |   | (273,796 | ) |   |   | - |   |
| Income (loss) before income taxes                 |   |                    | (130,937  | )      |                    |   | 106,749 |   |   |   | (62,826 | ) |   |   | (125,480 | ) |   |   | 80,702 |   |   |   | (39,151 | ) |
| Income tax expense                                |   |                    | 145       |   |                    |   | 746 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Net income (loss)                                 |   | $                       | (131,082  | )      |                    | $      | 106,003 |   |   | $ | (62,826 | ) |   | $ | (125,480 | ) |   | $ | 80,702 |   |   | $ | (39,151 | ) |

----

----

----

|                                    |   | VERSO PAPER             |    |   | VERSO HOLDINGS          |   |
|-----------------------------------------|--------|-------------------------|---------|--------|-------------------------|--------|
|                                    |   | Year Ended December 31, |    |   | Year Ended December 31, |   |
| (Dollars in thousands)                  |   | 2010                    |    |   | 2009                    |   |   | 2008 |   |   | 2010 |   |   | 2009 |   |   | 2008 |   |
| Net cash provided by (used in):         |   |                    |    |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating activities                    |   | $                       | 73,480  |   |                    | $      | 177,156 |   |   | $ | 54,085 |   |   | $ | 75,821 |   |   | $ | 180,135 |   |   | $ | 74,923 |   |
| Investing activities                    |   |                    | (98,266 | )      |                    |   | (34,133 | ) |   |   | (81,278 | ) |   |   | (98,266 | ) |   |   | (34,133 | ) |   |   | (80,339 | ) |
| Financing activities                    |   |                    | 25,469  |   |                    |   | (110,468 | ) |   |   | 88,202 |   |   |   | 25,389 |   |   |   | (115,760 | ) |   |   | 66,437 |   |
| Net change in cash and cash equivalents |   | $                       | 683     |   |                    | $      | 32,555 |   |   | $ | 61,009 |   |   | $ | 2,944 |   |   | $ | 30,242 |   |   | $ | 61,021 |   |

----

| ●     | $200 million revolving credit facility maturing in 2012, under which no amounts were outstanding, $28.3 million in letters of credit were issued, and $155.9 million was available for future borrowing as of December 31, 2010.  The borrowing capacity under our revolving credit facility was reduced as a result of Lehman’s  bankruptcy.  Lehman had a commitment for $15.8 million of the $200 million available under our revolving credit facility and it failed to fund the portion of its commitment with respect to a borrowing request we made in October 2008.  Barclays purchased Lehman’s commitment on February 3, 2011, resulting in the $15.8 million commitment becoming available to us again; |
|---------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●     | $350 million aggregate principal amount of 111⁄2% senior secured fixed rate notes due 2014; |
|---------------------------------|------------------------------------------------------------------------------------------------|

| ●     | $337 million aggregate principal amount of 91⁄8% second priority senior secured fixed rate notes due 2014; |
|---------------------------------|----------------------------------------------------------------------------------------------------------------|

| ●     | $180 million aggregate principal amount of second priority senior secured floating rate notes due 2014; and |
|---------------------------------|-------------------------------------------------------------------------------------------------------------|

| ●     | $300 million aggregate principal amount of 113⁄8% senior subordinated fixed rate notes due 2016. |
|---------------------------------|------------------------------------------------------------------------------------------------------|

----

----

----

|                                                       |   | Payments due by period |    |
|------------------------------------------------------------|--------|------------------------|---------|
|                                                       |   |                   |    |   | Less than |   |   |   |   |   |   |   |   | More than |   |
| (Dollars in millions)                                      |   | Total                  |    |   | 1 year |   |   | 1-3 years |   |   | 3-5 years |   |   | 5 years |   |
| Verso Paper Holdings LLC                                   |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Long-term debt(1)                                          |   | $                      | 1,638.3 |   |   | $ | 114.4 |   |   | $ | 226.1 |   |   | $ | 977.9 |   |   | $ | 319.9 |   |
| Operating leases                                           |   |                   | 21.7    |   |   |   | 6.6 |   |   |   | 9.1 |   |   |   | 3.7 |   |   |   | 2.3 |   |
| Purchase obligations(2)                                    |   |                   | 685.1   |   |   |   | 154.6 |   |   |   | 174.4 |   |   |   | 174.0 |   |   |   | 182.1 |   |
| Other long-term liabilities(3)                             |   |                   | 33.4    |   |   |   | 0.4 |   |   |   | 3.0 |   |   |   | 2.2 |   |   |   | 27.8 |   |
| Chase NMTC Verso Investment Fund LLC                       |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loan from Verso Paper Finance Holdings LLC                 |   |                   | 68.7    |   |   |   | 1.5 |   |   |   | 3.0 |   |   |   | 3.0 |   |   |   | 61.2 |   |
| Total contractual obligations for Verso Paper Holdings LLC |   |                   | 2,447.2 |   |   |   | 277.5 |   |   |   | 415.6 |   |   |   | 1,160.8 |   |   |   | 593.3 |   |
| Long-term debt for Verso Paper Finance Holdings LLC        |   |                   | 159.0   |   |   |   | 6.8 |   |   |   | 88.0 |   |   |   | 3.0 |   |   |   | 61.2 |   |
| Eliminate loans from affiliates                            |   |                   | (137.4  | ) |   |   | (3.0 | ) |   |   | (6.0 | ) |   |   | (6.0 | ) |   |   | (122.4 | ) |
| Total contractual obligations for Verso Paper Corp.        |   | $                      | 2,468.8 |   |   | $ | 281.3 |   |   | $ | 497.6 |   |   | $ | 1,157.8 |   |   | $ | 532.1 |   |

| (1) | Long-term debt includes principal payments, commitment fees, and interest payable.  A portion of interest expense is at a variable rate and has been calculated using current LIBOR.  Actual payments could vary. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | Purchase obligations include unconditional purchase obligations for power purchase agreements (gas and electricity), machine clothing, and other commitments for advertising, raw materials, or storeroom inventory.                  |
| (3) | Other long-term liabilities reflected above represent the gross amount of asset retirement obligations.                                                                                                                               |

Item 7A.   Quantitative and Qualitative Disclosures About Market Risk

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Item 8.      
Financial Statements and Supplementary Data

| Management’s Report on Internal Control Over Financial Reporting              | 43                                                                                          |
|-------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------|
|                                                                                |                                                                                        |
| Reports of Deloitte & Touche LLP, Independent Registered Public Accounting Firm | 44                                                                                          |
|                                                                                |                                                                                        |
| Consolidated Financial Statements                                                   |                                                                                        |
|                                                                                |                                                                                        |   |
|                                                                                | Consolidated Balance Sheets                                                                 | 48 |
|                                                                                |                                                                                        |   |
|                                                                                | Consolidated Statements of Operations                                                       | 49 |
|                                                                                |                                                                                        |   |
|                                                                                | Consolidated Statements of Changes in Stockholders’ Equity  of Verso Paper Corp. | 50 |
|                                                                                |                                                                                        |   |
|                                                                                | Consolidated Statements of Changes in Member’s Equity of Verso Paper Holdings LLC     | 51 |
|                                                                                |                                                                                        |   |
|                                                                                | Consolidated Statements of Cash Flows                                                       | 52 |
|                                                                                |                                                                                        |
| Notes to Consolidated Financial Statements                                          | 53                                                                                          |

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----

|  CONSOLIDATED BALANCE SHEETS                                 |   |
|-------------------------------------------------------------------|--------|
|                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                              |   | VERSO PAPER |   |   | VERSO HOLDINGS |   |
|                                                              |   | December 31, |   |   | December 31, |   |
| (Dollars in thousands, except per share amounts)                  |   | 2010 |   |   | 2009 |   |   | 2010 |   |   | 2009 |   |
| ASSETS                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Current assets:                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash and cash equivalents                                         |   | $ | 152,780 |   |   | $ | 152,097 |   |   | $ | 152,706 |   |   | $ | 149,762 |   |
| Accounts receivable, net                                          |   |   | 107,008 |   |   |   | 104,263 |   |   |   | 107,012 |   |   |   | 104,289 |   |
| Inventories                                                       |   |   | 142,516 |   |   |   | 162,401 |   |   |   | 142,516 |   |   |   | 162,401 |   |
| Prepaid expenses and other assets                                 |   |   | 3,806 |   |   |   | 11,292 |   |   |   | 3,792 |   |   |   | 10,385 |   |
| Total current assets                                              |   |   | 406,110 |   |   |   | 430,053 |   |   |   | 406,026 |   |   |   | 426,837 |   |
| Property, plant, and equipment, net                               |   |   | 972,711 |   |   |   | 1,022,622 |   |   |   | 972,711 |   |   |   | 1,022,622 |   |
| Reforestation                                                     |   |   | 13,826 |   |   |   | 13,357 |   |   |   | 13,826 |   |   |   | 13,357 |   |
| Intangibles and other assets, net                                 |   |   | 104,795 |   |   |   | 88,006 |   |   |   | 127,350 |   |   |   | 86,896 |   |
| Goodwill                                                          |   |   | 18,695 |   |   |   | 18,695 |   |   |   | 10,551 |   |   |   | 10,551 |   |
| Total assets                                                      |   | $ | 1,516,137 |   |   | $ | 1,572,733 |   |   | $ | 1,530,464 |   |   | $ | 1,560,263 |   |
|                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LIABILITIES AND EQUITY                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current liabilities:                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Accounts payable                                                  |   | $ | 123,874 |   |   | $ | 103,253 |   |   | $ | 124,774 |   |   | $ | 100,995 |   |
| Accrued liabilities                                               |   |   | 119,810 |   |   |   | 116,225 |   |   |   | 118,923 |   |   |   | 115,425 |   |
| Total current liabilities                                         |   |   | 243,684 |   |   |   | 219,478 |   |   |   | 243,697 |   |   |   | 216,420 |   |
| Long-term debt                                                    |   |   | 1,228,611 |   |   |   | 1,192,352 |   |   |   | 1,172,736 |   |   |   | 1,118,273 |   |
| Other liabilities                                                 |   |   | 50,648 |   |   |   | 35,612 |   |   |   | 42,614 |   |   |   | 27,577 |   |
| Total liabilities                                                 |   |   | 1,522,943 |   |   |   | 1,447,442 |   |   |   | 1,459,047 |   |   |   | 1,362,270 |   |
| Commitments and contingencies (Note 18)                           |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| 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 52,467,101 shares issued and outstanding on December 31,     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2010, and 52,374,647 shares issued and outstanding on             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| December 31, 2009)                                                |   |   | 525 |   |   |   | 524 |   |   |   | n/a |   |   |   | n/a |   |
| Paid-in-capital                                                   |   |   | 214,050 |   |   |   | 212,381 |   |   |   | 318,690 |   |   |   | 317,023 |   |
| Retained deficit                                                  |   |   | (205,127 | ) |   |   | (74,045 | ) |   |   | (231,019 | ) |   |   | (105,461 | ) |
| Accumulated other comprehensive loss                              |   |   | (16,254 | ) |   |   | (13,569 | ) |   |   | (16,254 | ) |   |   | (13,569 | ) |
| Total equity                                                      |   |   | (6,806 | ) |   |   | 125,291 |   |   |   | 71,417 |   |   |   | 197,993 |   |
| Total liabilities and equity                                      |   | $ | 1,516,137 |   |   | $ | 1,572,733 |   |   | $ | 1,530,464 |   |   | $ | 1,560,263 |   |
|                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Included in the balance sheet line items above are related-party  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| balances as follows:                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Accounts receivable                                               |   | $ | 12,248 |   |   | $ | 7,785 |   |   | $ | 12,248 |   |   | $ | 7,785 |   |
| Intangibles and other assets, net                                 |   |   | - |   |   |   | - |   |   |   | 23,305 |   |   |   | - |   |
| Accounts payable                                                  |   |   | 808 |   |   |   | 498 |   |   |   | 808 |   |   |   | 498 |   |
| Long-term debt                                                    |   |   | - |   |   |   | - |   |   |   | 23,305 |   |   |   | - |   |

----

| CONSOLIDATED STATEMENTS OF OPERATIONS             |   |
|---------------------------------------------------|--------|
|                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                              |   | VERSO PAPER |   |   | VERSO HOLDINGS |   |
|                                              |   | Year Ended December 31, |   |   | Year Ended December 31, |   |
| (Dollars in thousands, except per share amounts)  |   | 2010 |   |   | 2009 |   |   | 2008 |   |   | 2010 |   |   | 2009 |   |   | 2008 |   |
| Net sales                                         |   | $ | 1,605,316 |   |   | $ | 1,360,854 |   |   | $ | 1,766,813 |   |   | $ | 1,605,316 |   |   | $ | 1,360,854 |   |   | $ | 1,766,813 |   |
| Costs and expenses:                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost of products sold - (exclusive of             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   depreciation, amortization, and depletion) |   |   | 1,410,770 |   |   |   | 1,242,743 |   |   |   | 1,463,169 |   |   |   | 1,410,770 |   |   |   | 1,242,743 |   |   |   | 1,462,333 |   |
| Depreciation, amortization, and depletion         |   |   | 127,367 |   |   |   | 132,682 |   |   |   | 134,458 |   |   |   | 127,367 |   |   |   | 132,682 |   |   |   | 134,344 |   |
| Selling, general, and administrative expenses     |   |   | 71,043 |   |   |   | 61,889 |   |   |   | 79,744 |   |   |   | 70,989 |   |   |   | 61,655 |   |   |   | 79,441 |   |
| Restructuring and other charges                   |   |   | - |   |   |   | 979 |   |   |   | 27,416 |   |   |   | - |   |   |   | 979 |   |   |   | 27,416 |   |
| Total operating expenses                          |   |   | 1,609,180 |   |   |   | 1,438,293 |   |   |   | 1,704,787 |   |   |   | 1,609,126 |   |   |   | 1,438,059 |   |   |   | 1,703,534 |   |
| Operating income (loss)                           |   |   | (3,864 | ) |   |   | (77,439 | ) |   |   | 62,026 |   |   |   | (3,810 | ) |   |   | (77,205 | ) |   |   | 63,279 |   |
| Interest income                                   |   |   | (120 | ) |   |   | (246 | ) |   |   | (770 | ) |   |   | (124 | ) |   |   | (241 | ) |   |   | (770 | ) |
| Interest expense                                  |   |   | 128,077 |   |   |   | 123,365 |   |   |   | 125,622 |   |   |   | 122,528 |   |   |   | 116,130 |   |   |   | 103,200 |   |
| Other income, net                                 |   |   | (884 | ) |   |   | (307,307 | ) |   |   | - |   |   |   | (734 | ) |   |   | (273,796 | ) |   |   | - |   |
| Income (loss) before income taxes                 |   |   | (130,937 | ) |   |   | 106,749 |   |   |   | (62,826 | ) |   |   | (125,480 | ) |   |   | 80,702 |   |   |   | (39,151 | ) |
| Income tax expense                                |   |   | 145 |   |   |   | 746 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Net income (loss)                                 |   | $ | (131,082 | ) |   | $ | 106,003 |   |   | $ | (62,826 | ) |   | $ | (125,480 | ) |   | $ | 80,702 |   |   | $ | (39,151 | ) |
| Earnings (loss) per common share                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                             |   | $ | (2.50 | ) |   | $ | 2.03 |   |   | $ | (1.35 | ) |   |   |   |   |   |   |   |   |   |   |   |   |
| Diluted                                           |   | $ | (2.50 | ) |   | $ | 2.03 |   |   | $ | (1.35 | ) |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average common shares                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   outstanding (in thousands)                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                             |   |   | 52,445 |   |   |   | 52,138 |   |   |   | 46,691 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Diluted                                           |   |   | 52,445 |   |   |   | 52,153 |   |   |   | 46,691 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Included in the financial statement line          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   items above are related-party              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   transactions as follows (Notes 15 and 16): |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net sales                                         |   | $ | 175,912 |   |   | $ | 138,760 |   |   | $ | 165,799 |   |   | $ | 175,912 |   |   | $ | 138,760 |   |   | $ | 165,799 |   |
| Purchases included in cost of products sold       |   |   | 6,213 |   |   |   | 4,625 |   |   |   | 7,159 |   |   |   | 6,213 |   |   |   | 4,625 |   |   |   | 7,159 |   |
| Restructuring and other charges                   |   |   | - |   |   |   | - |   |   |   | 23,281 |   |   |   | - |   |   |   | - |   |   |   | 23,281 |   |

----

| VERSO PAPER CORP.                                          |   |
|------------------------------------------------------------|--------|
| CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY |   |
| FOR THE YEARS ENDED DECEMBER 31, 2010, 2009, and 2008      |   |
|                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   | Accumulated |   |   |   |   |
|                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   | Other |   |   |   |   |
|                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   | Comprehensive |   |   |   |   |
|                                                       |   | Common |   |   | Common |   |   | Paid-in- |   |   | Retained |   |   | Income |   |   | Total |   |
| (Dollars in thousands)                                     |   | Shares |   |   | Stock |   |   | Capital |   |   | Deficit |   |   | (Loss) |   |   | Equity |   |
| Balance - December 31, 2007                                |   |   | 38,046 |   |   | $ | 380 |   |   | $ | 48,489 |   |   | $ | (114,100 | ) |   | $ | (9,870 | ) |   | $ | (75,101 | ) |
| Net loss                                                   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (62,826 | ) |   |   | - |   |   |   | (62,826 | ) |
| Other comprehensive income (loss):                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net unrealized losses on derivative                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   financial instruments, net of                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   reclassification of $1.9 million of            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   net gains included in net loss                      |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (27,571 | ) |   |   | (27,571 | ) |
| Defined benefit pension plan:                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Pension liability adjustment                               |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (5,701 | ) |   |   | (5,701 | ) |
| Prior service cost amortization                            |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 871 |   |   |   | 871 |   |
| Total other comprehensive loss                             |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (32,401 | ) |   |   | (32,401 | ) |
| Comprehensive loss                                         |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (62,826 | ) |   |   | (32,401 | ) |   |   | (95,227 | ) |
| Issuance of common stock, net of issuance                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   cost of $15.8 million                               |   |   | 14,000 |   |   |   | 140 |   |   |   | 152,064 |   |   |   | - |   |   |   | - |   |   |   | 152,204 |   |
| Dividends paid ($.06/share)                                |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (3,122 | ) |   |   | - |   |   |   | (3,122 | ) |
| Equity award expense                                       |   |   | - |   |   |   | - |   |   |   | 11,199 |   |   |   | - |   |   |   | - |   |   |   | 11,199 |   |
| Balance - December 31, 2008                                |   |   | 52,046 |   |   |   | 520 |   |   |   | 211,752 |   |   |   | (180,048 | ) |   |   | (42,271 | ) |   |   | (10,047 | ) |
| Net income                                                 |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 106,003 |   |   |   | - |   |   |   | 106,003 |   |
| Other comprehensive income (loss):                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net unrealized losses on derivative                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   financial instruments, net of                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   reclassification of $40.2 million of                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   net losses included in net income                   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 27,773 |   |   |   | 27,773 |   |
| Defined benefit pension plan:                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Pension liability adjustment                               |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (413 | ) |   |   | (413 | ) |
| Amortization of net loss and prior                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   service cost                                        |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1,342 |   |   |   | 1,342 |   |
| Total other comprehensive income                           |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 28,702 |   |   |   | 28,702 |   |
| Comprehensive income                                       |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 106,003 |   |   |   | 28,702 |   |   |   | 134,705 |   |
| Common stock issued for restricted stock                   |   |   | 328 |   |   |   | 4 |   |   |   | (4 | ) |   |   | - |   |   |   | - |   |   |   | - |   |
| Equity award expense                                       |   |   | - |   |   |   | - |   |   |   | 633 |   |   |   | - |   |   |   | - |   |   |   | 633 |   |
| Balance - December 31, 2009                                |   |   | 52,374 |   |   |   | 524 |   |   |   | 212,381 |   |   |   | (74,045 | ) |   |   | (13,569 | ) |   |   | 125,291 |   |
| Net loss                                                   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (131,082 | ) |   |   | - |   |   |   | (131,082 | ) |
| Other comprehensive income (loss):                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net unrealized losses on derivative                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   financial instruments, net of                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   reclassification of $8.8 million                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   of net losses included in net loss                  |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (725 | ) |   |   | (725 | ) |
| Defined benefit pension plan:                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Pension liability adjustment                               |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (3,834 | ) |   |   | (3,834 | ) |
| Amortization of net loss and prior                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   service cost                                        |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1,874 |   |   |   | 1,874 |   |
| Total other comprehensive loss                             |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (2,685 | ) |   |   | (2,685 | ) |
| Comprehensive loss                                         |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (131,082 | ) |   |   | (2,685 | ) |   |   | (133,767 | ) |
| Common stock issued for restricted stock                   |   |   | 91 |   |   |   | 1 |   |   |   | (1 | ) |   |   | - |   |   |   | - |   |   |   | - |   |
| Stock option exercise                                      |   |   | 2 |   |   |   | - |   |   |   | 3 |   |   |   | - |   |   |   | - |   |   |   | 3 |   |
| Equity award expense                                       |   |   | - |   |   |   | - |   |   |   | 1,667 |   |   |   | - |   |   |   | - |   |   |   | 1,667 |   |
| Balance - December 31, 2010                                |   |   | 52,467 |   |   | $ | 525 |   |   | $ | 214,050 |   |   | $ | (205,127 | ) |   | $ | (16,254 | ) |   | $ | (6,806 | ) |

----

| VERSO PAPER HOLDINGS LLC                                                      |   |
|-------------------------------------------------------------------------------|--------|
| CONSOLIDATED STATEMENTS OF CHANGES IN MEMBER'S EQUITY                         |   |
| FOR THE YEARS ENDED DECEMBER 31, 2010, 2009, and 2008                         |   |
|                                                                          |   |   |   |   |   |   |   | Accumulated |   |   |   |   |
|                                                                          |   |   |   |   |   |   |   | Other |   |   |   |   |
|                                                                          |   |   |   |   |   |   |   | Comprehensive |   |   | Total |   |
|                                                                          |   | Paid-in- |   |   | Retained |   |   | Income |   |   | Member's |   |
| (Dollars in thousands)                                                        |   | Capital |   |   | Deficit |   |   | (Loss) |   |   | Equity |   |
| Balance - December 31, 2007                                                   |   | $ | 289,911 |   |   | $ | (105,188 | ) |   | $ | (9,870 | ) |   | $ | 174,853 |   |
| Cash distributions                                                            |   |   | - |   |   |   | (22,796 | ) |   |   | - |   |   |   | (22,796 | ) |
| Net loss                                                                      |   |   | - |   |   |   | (39,151 | ) |   |   | - |   |   |   | (39,151 | ) |
| Other comprehensive income (loss):                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net unrealized losses on derivative financial instruments, net of             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   reclassification of $1.9 million of net gains included in net loss     |   |   | - |   |   |   | - |   |   |   | (27,571 | ) |   |   | (27,571 | ) |
| Defined benefit pension plan:                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Pension liability adjustment                                                  |   |   | - |   |   |   | - |   |   |   | (5,701 | ) |   |   | (5,701 | ) |
| Prior service cost amortization                                               |   |   | - |   |   |   | - |   |   |   | 871 |   |   |   | 871 |   |
| Total other comprehensive loss                                                |   |   | - |   |   |   | - |   |   |   | (32,401 | ) |   |   | (32,401 | ) |
| Comprehensive loss                                                            |   |   | - |   |   |   | (39,151 | ) |   |   | (32,401 | ) |   |   | (71,552 | ) |
| Equity award expense                                                          |   |   | 11,199 |   |   |   | - |   |   |   | - |   |   |   | 11,199 |   |
| Balance - December 31, 2008                                                   |   |   | 301,110 |   |   |   | (167,135 | ) |   |   | (42,271 | ) |   |   | 91,704 |   |
| Parent company contributions                                                  |   |   | 15,281 |   |   |   | (3,569 | ) |   |   | - |   |   |   | 11,712 |   |
| Cash distributions                                                            |   |   | - |   |   |   | (15,459 | ) |   |   | - |   |   |   | (15,459 | ) |
| Net income                                                                    |   |   | - |   |   |   | 80,702 |   |   |   | - |   |   |   | 80,702 |   |
| Other comprehensive income (loss):                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net unrealized losses on derivative financial instruments, net of             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   reclassification of $40.2 million of net losses included in net income |   |   | - |   |   |   | - |   |   |   | 27,773 |   |   |   | 27,773 |   |
| Defined benefit pension plan:                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net actuarial loss                                                            |   |   | - |   |   |   | - |   |   |   | (413 | ) |   |   | (413 | ) |
| Prior service cost amortization                                               |   |   | - |   |   |   | - |   |   |   | 1,342 |   |   |   | 1,342 |   |
| Total other comprehensive income                                              |   |   | - |   |   |   | - |   |   |   | 28,702 |   |   |   | 28,702 |   |
| Comprehensive income                                                          |   |   | - |   |   |   | 80,702 |   |   |   | 28,702 |   |   |   | 109,404 |   |
| Equity award expense                                                          |   |   | 632 |   |   |   | - |   |   |   | - |   |   |   | 632 |   |
| Balance - December 31, 2009                                                   |   |   | 317,023 |   |   |   | (105,461 | ) |   |   | (13,569 | ) |   |   | 197,993 |   |
| Cash distributions                                                            |   |   | - |   |   |   | (78 | ) |   |   | - |   |   |   | (78 | ) |
| Net loss                                                                      |   |   | - |   |   |   | (125,480 | ) |   |   | - |   |   |   | (125,480 | ) |
| Other comprehensive income (loss):                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net unrealized losses on derivative financial instruments, net of             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   reclassification of $8.8 million of net losses included in net loss    |   |   | - |   |   |   | - |   |   |   | (725 | ) |   |   | (725 | ) |
| Defined benefit pension plan:                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net actuarial loss                                                            |   |   | - |   |   |   | - |   |   |   | (3,834 | ) |   |   | (3,834 | ) |
| Prior service cost amortization                                               |   |   | - |   |   |   | - |   |   |   | 1,874 |   |   |   | 1,874 |   |
| Total other comprehensive loss                                                |   |   | - |   |   |   | - |   |   |   | (2,685 | ) |   |   | (2,685 | ) |
| Comprehensive loss                                                            |   |   | - |   |   |   | (125,480 | ) |   |   | (2,685 | ) |   |   | (128,165 | ) |
| Equity award expense                                                          |   |   | 1,667 |   |   |   | - |   |   |   | - |   |   |   | 1,667 |   |
| Balance - December 31, 2010                                                   |   | $ | 318,690 |   |   | $ | (231,019 | ) |   | $ | (16,254 | ) |   | $ | 71,417 |   |

----

| CONSOLIDATED STATEMENTS OF CASH FLOWS                 |   |
|-------------------------------------------------------|--------|
|                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                  |   | VERSO PAPER |   |   | VERSO HOLDINGS |   |
|                                                  |   | Year Ended December 31, |   |   | Year Ended December 31, |   |
| (Dollars in thousands)                                |   | 2010 |   |   | 2009 |   |   | 2008 |   |   | 2010 |   |   | 2009 |   |   | 2008 |   |
| Cash Flows From Operating Activities:                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss)                                     |   | $ | (131,082 | ) |   | $ | 106,003 |   |   | $ | (62,826 | ) |   | $ | (125,480 | ) |   | $ | 80,702 |   |   | $ | (39,151 | ) |
| Adjustments to reconcile net income (loss)            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   to net cash provided by operating         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   activities:                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation, amortization, and             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   depletion                                      |   |   | 127,367 |   |   |   | 132,682 |   |   |   | 134,458 |   |   |   | 127,367 |   |   |   | 132,682 |   |   |   | 134,344 |   |
| Amortization of debt issuance costs                   |   |   | 5,650 |   |   |   | 5,748 |   |   |   | 9,924 |   |   |   | 5,290 |   |   |   | 5,264 |   |   |   | 5,427 |   |
| Accretion of discount on long-term               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   debt                                           |   |   | 3,721 |   |   |   | 2,081 |   |   |   | - |   |   |   | 3,721 |   |   |   | 2,081 |   |   |   | - |   |
| Gain on early extinguishment of debt                  |   |   | (253 | ) |   |   | (64,777 | ) |   |   | - |   |   |   | (255 | ) |   |   | (31,266 | ) |   |   | - |   |
| Loss on disposal of fixed assets                      |   |   | 3 |   |   |   | 533 |   |   |   | 722 |   |   |   | 3 |   |   |   | 533 |   |   |   | 722 |   |
| Equity award expense                                  |   |   | 1,667 |   |   |   | 633 |   |   |   | 11,199 |   |   |   | 1,667 |   |   |   | 632 |   |   |   | 11,199 |   |
| Change in unrealized losses on                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   derivatives, net                               |   |   | - |   |   |   | 27,378 |   |   |   | (27,571 | ) |   |   | - |   |   |   | 27,378 |   |   |   | (27,571 | ) |
| Other - net                                           |   |   | (4,691 | ) |   |   | 533 |   |   |   | (6,238 | ) |   |   | (4,691 | ) |   |   | 532 |   |   |   | (6,238 | ) |
| Changes in assets and liabilities:                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Accounts receivable                                   |   |   | (2,746 | ) |   |   | (21,725 | ) |   |   | 51,024 |   |   |   | (2,723 | ) |   |   | (21,752 | ) |   |   | 50,625 |   |
| Inventories                                           |   |   | 19,885 |   |   |   | 27,855 |   |   |   | (76,314 | ) |   |   | 19,885 |   |   |   | 27,855 |   |   |   | (76,314 | ) |
| Prepaid expenses and other assets                     |   |   | 8,969 |   |   |   | (18,270 | ) |   |   | (7,964 | ) |   |   | 8,076 |   |   |   | (17,363 | ) |   |   | (7,982 | ) |
| Accounts payable                                      |   |   | 20,621 |   |   |   | (17,357 | ) |   |   | (10,202 | ) |   |   | 23,778 |   |   |   | (16,344 | ) |   |   | (9,980 | ) |
| Accrued liabilities                                   |   |   | 24,369 |   |   |   | (4,161 | ) |   |   | 37,873 |   |   |   | 19,183 |   |   |   | (10,799 | ) |   |   | 39,842 |   |
| Net cash provided by operating activities             |   |   | 73,480 |   |   |   | 177,156 |   |   |   | 54,085 |   |   |   | 75,821 |   |   |   | 180,135 |   |   |   | 74,923 |   |
| Cash Flows From Investing Activities:                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds from sale of fixed assets                    |   |   | 453 |   |   |   | 83 |   |   |   | 108 |   |   |   | 453 |   |   |   | 83 |   |   |   | 108 |   |
| Transfers to restricted cash                          |   |   | (25,073 | ) |   |   | - |   |   |   | - |   |   |   | (25,073 | ) |   |   | - |   |   |   | - |   |
| Capital expenditures                                  |   |   | (73,646 | ) |   |   | (34,216 | ) |   |   | (81,386 | ) |   |   | (73,646 | ) |   |   | (34,216 | ) |   |   | (80,447 | ) |
| Net cash used in investing activities                 |   |   | (98,266 | ) |   |   | (34,133 | ) |   |   | (81,278 | ) |   |   | (98,266 | ) |   |   | (34,133 | ) |   |   | (80,339 | ) |
| Cash Flows From Financing Activities:                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds from long-term debt                          |   |   | 27,438 |   |   |   | 352,838 |   |   |   | 92,083 |   |   |   | 27,438 |   |   |   | 352,837 |   |   |   | 92,083 |   |
| Debt issuance costs                                   |   |   | (1,971 | ) |   |   | (10,270 | ) |   |   | - |   |   |   | (1,971 | ) |   |   | (10,270 | ) |   |   | - |   |
| Repayments of long-term debt                          |   |   | - |   |   |   | (453,036 | ) |   |   | (150,850 | ) |   |   | - |   |   |   | (442,868 | ) |   |   | (2,850 | ) |
| Cash distributions                                    |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (78 | ) |   |   | (15,459 | ) |   |   | (22,796 | ) |
| Proceeds from issuance of common stock                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   (2008 - net of issuance cost of $14.8 million) |   |   | 2 |   |   |   | - |   |   |   | 153,216 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Dividends paid                                        |   |   | - |   |   |   | - |   |   |   | (3,122 | ) |   |   | - |   |   |   | - |   |   |   | - |   |
| Repayments of short-term borrowings                   |   |   | - |   |   |   | - |   |   |   | (3,125 | ) |   |   | - |   |   |   | - |   |   |   | - |   |
| Net cash provided by (used in) financing activities   |   |   | 25,469 |   |   |   | (110,468 | ) |   |   | 88,202 |   |   |   | 25,389 |   |   |   | (115,760 | ) |   |   | 66,437 |   |
| Change in cash and cash equivalents                   |   |   | 683 |   |   |   | 32,555 |   |   |   | 61,009 |   |   |   | 2,944 |   |   |   | 30,242 |   |   |   | 61,021 |   |
| Cash and cash equivalents at beginning of period      |   |   | 152,097 |   |   |   | 119,542 |   |   |   | 58,533 |   |   |   | 149,762 |   |   |   | 119,520 |   |   |   | 58,499 |   |
| Cash and cash equivalents at end of period            |   | $ | 152,780 |   |   | $ | 152,097 |   |   | $ | 119,542 |   |   | $ | 152,706 |   |   | $ | 149,762 |   |   | $ | 119,520 |   |
| Total interest paid                                   |   | $ | 115,405 |   |   | $ | 90,713 |   |   | $ | 120,656 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total income taxes paid (received)                    |   |   | (182 | ) |   |   | 1,759 |   |   |   | - |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

----

----

----

|                           | Years                                                            |
|--------------------------------|------------------------------------------------------------------|
| Building                       | 20 - 40                                                          |
| Machinery and equipment        | 10 - 20                                                          |
| Furniture and office equipment | 3 - 10                                                           |
| Computer hardware              | 3 - 6                                                            |
| Leasehold improvements         | Over the terms of the lease orthe useful life of theimprovements |

----

|                                      |   | Year Ended December 31, |   |
|-------------------------------------------|--------|-------------------------|--------|
| (Dollars in thousands)                    |   | 2010                    |   |   | 2009 |   |
| Asset retirement obligations, January 1   |   | $                       | 13,300 |   |   | $ | 14,028 |   |
| Accretion expense                         |   |                    | 831    |   |   |   | 779 |   |
| Settlement of existing liabilities        |   |                    | (1,278 | ) |   |   | (1,348 | ) |
| Adjustment to existing liabilities        |   |                    | 807    |   |   |   | (159 | ) |
| Asset retirement obligations, December 31 |   | $                       | 13,660 |   |   | $ | 13,300 |   |

----

----

----

----

|                                 |   | December 31, |    |
|--------------------------------------|--------|--------------|---------|
| (Dollars in thousands)               |   | 2010         |    |   | 2009 |   |
| Raw materials                        |   | $            | 27,709  |   |   | $ | 28,923 |   |
| Woodyard logs                        |   |         | 3,863   |   |   |   | 4,463 |   |
| Work-in-process                      |   |         | 16,416  |   |   |   | 27,472 |   |
| Finished goods                       |   |         | 67,817  |   |   |   | 75,379 |   |
| Replacement parts and other supplies |   |         | 26,711  |   |   |   | 26,164 |   |
| Inventories                          |   | $            | 142,516 |   |   | $ | 162,401 |   |

|                                  |   | December 31, |      |
|---------------------------------------|--------|--------------|-----------|
| (Dollars in thousands)                |   | 2010         |      |   | 2009 |   |
| Land and land improvements            |   | $            | 37,346    |   |   | $ | 30,599 |   |
| Building and leasehold improvements   |   |         | 181,985   |   |   |   | 175,677 |   |
| Machinery, equipment, and other       |   |         | 1,244,153 |   |   |   | 1,214,863 |   |
| Construction-in-progress              |   |         | 38,640    |   |   |   | 10,260 |   |
| Property, plant, and equipment, gross |   |         | 1,502,124 |   |   |   | 1,431,399 |   |
| Accumulated depreciation              |   |         | (529,413  | ) |   |   | (408,777 | ) |
| Property, plant, and equipment, net   |   | $            | 972,711   |   |   | $ | 1,022,622 |   |

----

|                                                                              |   | VERSO PAPER  |    |   | VERSO HOLDINGS |   |
|-----------------------------------------------------------------------------------|--------|--------------|---------|--------|----------------|--------|
|                                                                              |   | December 31, |    |   | December 31,   |   |
| (Dollars in thousands)                                                            |   | 2010         |    |   | 2009           |   |   | 2010 |   |   | 2009 |   |
| Amortizable intangible assets:                                                    |   |         |    |   |           |   |   |   |   |   |   |   |
| Customer relationships, net of accumulated amortization of $5.7 million on        |   |         |    |   |           |   |   |   |   |   |   |   |
|   December 31, 2010, and $4.6 million on December 31, 2009                   |   | $            | 7,570   |   |           | $      | 8,720 |   |   | $ | 7,570 |   |   | $ | 8,720 |   |
| Patents, net of accumulated amortization of $0.5 million on December 31, 2010,    |   |         |    |   |           |   |   |   |   |   |   |   |   |   |   |   |
|   and $0.4 million on December 31, 2009                                      |   |         | 641     |   |           |   | 755 |   |   |   | 641 |   |   |   | 755 |   |
| Total amortizable intangible assets                                               |   |         | 8,211   |   |           |   | 9,475 |   |   |   | 8,211 |   |   |   | 9,475 |   |
| Unamortizable intangible assets:                                                  |   |         |    |   |           |   |   |   |   |   |   |   |   |   |   |   |
| Trademarks                                                                        |   |         | 21,473  |   |           |   | 21,473 |   |   |   | 21,473 |   |   |   | 21,473 |   |
| Other assets:                                                                     |   |         |    |   |           |   |   |   |   |   |   |   |   |   |   |   |
| Financing costs, net of accumulated amortization of $19.9 million on December     |   |         |    |   |           |   |   |   |   |   |   |   |   |   |   |   |
|   31, 2010, and $14.3 million on December 31, 2009, for Verso Paper,         |   |         |    |   |           |   |   |   |   |   |   |   |   |   |   |   |
|   and net of accumulated amortization of $18.5 million on December 31, 2010, |   |         |    |   |           |   |   |   |   |   |   |   |   |   |   |   |
|   and $13.2 million on December 31, 2009, for Verso Holdings                 |   |         | 25,550  |   |           |   | 29,229 |   |   |   | 24,800 |   |   |   | 28,119 |   |
| Deferred major repair                                                             |   |         | 12,009  |   |           |   | 8,787 |   |   |   | 12,009 |   |   |   | 8,787 |   |
| Deferred software cost, net of accumulated amortization of $0.8 million on        |   |         |    |   |           |   |   |   |   |   |   |   |   |   |   |   |
|   December 31, 2010, and $2.9 million on December 31, 2009                   |   |         | 414     |   |           |   | 1,354 |   |   |   | 414 |   |   |   | 1,354 |   |
| Replacement parts, net                                                            |   |         | 4,535   |   |           |   | 3,806 |   |   |   | 4,535 |   |   |   | 3,806 |   |
| Loan to affiliate                                                                 |   |         | -       |   |           |   | - |   |   |   | 23,305 |   |   |   | - |   |
| Restricted cash                                                                   |   |         | 27,399  |   |           |   | 2,241 |   |   |   | 27,399 |   |   |   | 2,241 |   |
| Other                                                                             |   |         | 5,204   |   |           |   | 11,641 |   |   |   | 5,204 |   |   |   | 11,641 |   |
| Total other assets                                                                |   |         | 75,111  |   |           |   | 57,058 |   |   |   | 97,666 |   |   |   | 55,948 |   |
| Intangibles and other assets                                                      |   | $            | 104,795 |   |           | $      | 88,006 |   |   | $ | 127,350 |   |   | $ | 86,896 |   |

|                    |   | Year Ended December 31, |   |
|-------------------------|--------|-------------------------|--------|
| (Dollars in thousands)  |   | 2010                    |   |   | 2009 |   |   | 2008 |   |
| Intangible amortization |   | $                       | 1,265  |   |   | $ | 1,415 |   |   | $ | 1,565 |   |
| Software amortization   |   |                    | 940    |   |   |   | 1,880 |   |   |   | 1,723 |   |

| (Dollars in thousands) |   |   |   |
|------------------------|--------|--------|--------|
| 2011                   |   | $      | 1,065  |   |
| 2012                   |   |   | 915    |   |
| 2013                   |   |   | 815    |   |
| 2014                   |   |   | 715    |   |
| 2015                   |   |   | 615    |   |

----

|                               |   | VERSO PAPER  |    |   | VERSO HOLDINGS |   |
|------------------------------------|--------|--------------|---------|--------|----------------|--------|
|                               |   | December 31, |    |   | December 31,   |   |
| (Dollars in thousands)             |   | 2010         |    |   | 2009           |   |   | 2010 |   |   | 2009 |   |
| Accrued interest                   |   | $            | 49,493  |   |           | $      | 50,069 |   |   | $ | 48,606 |   |   | $ | 49,269 |   |
| Payroll and employee benefit costs |   |         | 47,981  |   |           |   | 41,200 |   |   |   | 47,981 |   |   |   | 41,200 |   |
| Accrued sales rebates              |   |         | 13,677  |   |           |   | 10,433 |   |   |   | 13,677 |   |   |   | 10,433 |   |
| Derivatives                        |   |         | 2,327   |   |           |   | 3,705 |   |   |   | 2,327 |   |   |   | 3,705 |   |
| Accrued taxes - other than income  |   |         | 1,461   |   |           |   | 1,675 |   |   |   | 1,461 |   |   |   | 1,675 |   |
| Freight and other                  |   |         | 4,871   |   |           |   | 9,143 |   |   |   | 4,871 |   |   |   | 9,143 |   |
| Accrued liabilities                |   | $            | 119,810 |   |           | $      | 116,225 |   |   | $ | 118,923 |   |   | $ | 115,425 |   |

|                                            |       |   | December 31, 2010 |   |   | December 31, 2009 |   |
|-------------------------------------------------|------------|--------|-------------------|--------|--------|-------------------|--------|
|                                            | Original   |   | Interest          |   |   |              |   |   | Fair |   |   |   |   |   | Fair |   |
| (Dollars in thousands)                          | Maturity   |   | Rate              |   |   | Balance           |   |   | Value |   |   | Balance |   |   | Value |   |
| Verso Paper Holdings LLC                        |       |   |              |   |   |              |   |   |   |   |   |   |   |   |   |   |
| First Priority Revolving Credit Facility        | 8/1/2012   |   |              | -      |   |              | $      | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |
| First Priority Senior Secured Notes - fixed (1) | 7/1/2014   |   |              | 11.50  | %      |              |   | 332,135 |   |   |   | 384,125 |   |   |   | 300,977 |   |   |   | 357,500 |   |
| Second Priority Senior Secured Notes - fixed    | 8/1/2014   |   |              | 9.13   | %      |              |   | 337,080 |   |   |   | 347,192 |   |   |   | 337,080 |   |   |   | 321,911 |   |
| Second Priority Senior Secured Notes - floating | 8/1/2014   |   |              | 4.04   | %      |              |   | 180,216 |   |   |   | 162,194 |   |   |   | 180,216 |   |   |   | 142,371 |   |
| Senior Subordinated Notes                       | 8/1/2016   |   |              | 11.38  | %      |              |   | 300,000 |   |   |   | 300,750 |   |   |   | 300,000 |   |   |   | 241,500 |   |
| Chase NMTC Verso Investment Fund LLC            |       |   |              |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loan from Verso Paper Finance Holdings LLC      | 12/29/2040 |   |              | 6.50   | %      |              |   | 23,305 |   |   |   | 23,305 |   |   |   | - |   |   |   | - |   |
| Total debt for Verso Paper Holdings LLC         |       |   |              |   |   |              |   | 1,172,736 |   |   |   | 1,217,566 |   |   |   | 1,118,273 |   |   |   | 1,063,282 |   |
| Verso Paper Finance Holdings LLC                |       |   |              |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Senior Unsecured Term Loan                      | 2/1/2013   |   |              | 6.64   | %      |              |   | 79,180 |   |   |   | 76,409 |   |   |   | 74,079 |   |   |   | 31,113 |   |
| Loan from Verso Paper Holdings LLC              | 12/29/2040 |   |              | 6.50   | %      |              |   | 23,305 |   |   |   | 23,305 |   |   |   | - |   |   |   | - |   |
| Eliminate loans from affiliates                 | 12/29/2040 |   |              | 6.50   | %      |              |   | (46,610 | ) |   |   | (46,610 | ) |   |   | - |   |   |   | - |   |
| Total debt for Verso Paper Corp.                |       |   |              |   |   |              | $      | 1,228,611 |   |   | $ | 1,270,670 |   |   | $ | 1,192,352 |   |   | $ | 1,094,395 |   |

| (1) | Par value of $350,000 on December 31, 2010, and $325,000 on December 31, 2009. |
|-----|--------------------------------------------------------------------------------|

----

|                               |   | VERSO PAPER             |    |   | VERSO HOLDINGS          |   |
|------------------------------------|--------|-------------------------|---------|--------|-------------------------|--------|
|                               |   | Year Ended December 31, |    |   | Year Ended December 31, |   |
| (Dollars in thousands)             |   | 2010                    |    |   | 2009                    |   |   | 2008 |   |   | 2010 |   |   | 2009 |   |   | 2008 |   |
| Interest expense                   |   | $                       | 123,695 |   |                    | $      | 118,013 |   |   | $ | 117,106 |   |   | $ | 118,506 |   |   | $ | 111,263 |   |   | $ | 99,181 |   |
| Cash interest paid                 |   |                    | 115,405 |   |                    |   | 90,713 |   |   |   | 120,656 |   |   |   | 115,405 |   |   |   | 90,713 |   |   |   | 100,761 |   |
| Debt issuance cost amortization(1) |   |                    | 5,650   |   |                    |   | 5,748 |   |   |   | 9,924 |   |   |   | 5,290 |   |   |   | 5,264 |   |   |   | 5,427 |   |

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

----

|                 |   | VERSO  |      |   | VERSO    |   |
|----------------------|--------|--------|-----------|--------|----------|--------|
|                 |   | PAPER  |      |   | HOLDINGS |   |
| 2011                 |   | $      | -         |   |     | $      | - |   |
| 2012                 |   |   | -         |   |     |   | - |   |
| 2013                 |   |   | 79,180    |   |     |   | - |   |
| 2014                 |   |   | 867,296   |   |     |   | 867,296 |   |
| 2015                 |   |   | -         |   |     |   | - |   |
| 2016 and thereafter  |   |   | 300,000   |   |     |   | 323,305 |   |
| Total long-term debt |   | $      | 1,246,476 |   |     | $      | 1,190,601 |   |

----

|                         |   | VERSO PAPER  |   |   | VERSO HOLDINGS |   |
|------------------------------|--------|--------------|--------|--------|----------------|--------|
|                         |   | December 31, |   |   | December 31,   |   |
| (Dollars in thousands)       |   | 2010         |   |   | 2009           |   |   | 2010 |   |   | 2009 |   |
| Pension benefit obligation   |   | $            | 17,873 |   |           | $      | 12,622 |   |   | $ | 17,873 |   |   | $ | 12,622 |   |
| Asset retirement obligations |   |         | 13,660 |   |           |   | 13,300 |   |   |   | 13,660 |   |   |   | 13,300 |   |
| Deferred income taxes        |   |         | 8,185  |   |           |   | 8,035 |   |   |   | - |   |   |   | - |   |
| Derivatives                  |   |         | 178    |   |           |   | - |   |   |   | 178 |   |   |   | - |   |
| Other                        |   |         | 10,752 |   |           |   | 1,655 |   |   |   | 10,903 |   |   |   | 1,655 |   |
| Other liabilities            |   | $            | 50,648 |   |           | $      | 35,612 |   |   | $ | 42,614 |   |   | $ | 27,577 |   |

|                                               |   | VERSO PAPER            |     |
|----------------------------------------------------|--------|------------------------|----------|
|                                               |   | Year Ended December 31 |     |
| (In thousands, except per share amounts)           |   | 2010                   |     |   | 2009 |   |   | 2008 |   |
| Numerator                                          |   |                   |     |   |   |   |   |   |   |
| Net income (loss) available to common shareholders |   | $                      | (131,082 | ) |   | $ | 106,003 |   |   | $ | (62,826 | ) |
|                                               |   |                   |     |   |   |   |   |   |   |   |   |   |
| Denominator                                        |   |                   |     |   |   |   |   |   |   |   |   |   |
| Weighted average basic common shares               |   |                   | 52,445   |   |   |   | 52,138 |   |   |   | 46,691 |   |
| Effect of dilutive securities                      |   |                   | -        |   |   |   | 15 |   |   |   | - |   |
| Weighted average diluted common shares             |   |                   | 52,445   |   |   |   | 52,153 |   |   |   | 46,691 |   |
|                                               |   |                   |     |   |   |   |   |   |   |   |   |   |
| Basic earnings (loss) per share of common stock    |   | $                      | (2.50    | ) |   | $ | 2.03 |   |   | $ | (1.35 | ) |
|                                               |   |                   |     |   |   |   |   |   |   |   |   |   |
| Diluted earnings (loss) per share of common stock  |   | $                      | (2.50    | ) |   | $ | 2.03 |   |   | $ | (1.35 | ) |
|                                               |   |                   |     |   |   |   |   |   |   |   |   |   |

----

|                                     |   | Year Ended December 31, |   |
|------------------------------------------|--------|-------------------------|--------|
| (Dollars in thousands)                   |   | 2010                    |   |   | 2009 |   |   | 2008 |   |
| Components of net periodic pension cost: |   |                    |   |   |   |   |   |   |   |
| Service cost                             |   | $                       | 6,107  |   |   | $ | 6,328 |   |   | $ | 5,976 |   |
| Interest cost                            |   |                    | 2,088  |   |   |   | 1,537 |   |   |   | 998 |   |
| Expected return on plan assets           |   |                    | (1,849 | ) |   |   | (1,234 | ) |   |   | (762 | ) |
| Amortization of prior service cost       |   |                    | 1,784  |   |   |   | 1,023 |   |   |   | 871 |   |
| Amortization of actuarial loss           |   |                    | 90     |   |   |   | 319 |   |   |   | - |   |
| Net periodic pension cost                |   | $                       | 8,220  |   |   | $ | 7,973 |   |   | $ | 7,083 |   |

| (Dollars in thousands)                                        |   | 2010   |   |   | 2009   |   |
|---------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Amounts recognized in accumulated other comprehensive income: |   |   |   |   |   |   |
| Prior service cost                                            |   | $      | 5,493  |   |   | $      | 7,277 |   |
| Net actuarial loss                                            |   |   | 8,143  |   |   |   | 4,399 |   |

----

|                                                                                                     |   | Year Ended December 31, |    |
|----------------------------------------------------------------------------------------------------------|--------|-------------------------|---------|
| (Dollars in thousands)                                                                                   |   | 2010                    |    |   | 2009 |   |
| Change in Projected Benefit Obligation:                                                                  |   |                    |    |   |   |   |
| Benefit obligation at beginning of period                                                                |   | $                       | 35,137  |   |   | $ | 25,453 |   |
| Service cost                                                                                             |   |                    | 6,107   |   |   |   | 6,328 |   |
| Interest cost                                                                                            |   |                    | 2,088   |   |   |   | 1,537 |   |
| Plan amendments                                                                                          |   |                    | -       |   |   |   | 1,369 |   |
| Actuarial loss                                                                                           |   |                    | 4,405   |   |   |   | 703 |   |
| Benefits paid                                                                                            |   |                    | (606    | ) |   |   | (253 | ) |
| Benefit obligation on December 31                                                                        |   | $                       | 47,131  |   |   | $ | 35,137 |   |
| Change in Plan Assets:                                                                                   |   |                    |    |   |   |   |   |   |
| Plan assets at fair value, beginning of fiscal year                                                      |   | $                       | 22,515  |   |   | $ | 12,956 |   |
| Actual net return (loss) on plan assets                                                                  |   |                    | 2,420   |   |   |   | 2,894 |   |
| Employer contributions                                                                                   |   |                    | 4,929   |   |   |   | 6,918 |   |
| Benefits paid                                                                                            |   |                    | (606    | ) |   |   | (253 | ) |
| Plan assets at fair value, end of fiscal year                                                            |   |                    | 29,258  |   |   |   | 22,515 |   |
| Unfunded projected benefit obligation recognized in other liabilities on the consolidated balance sheets |   | $                       | (17,873 | ) |   | $ | (12,622 | ) |

| (Dollars in thousands) |   |   |   |
|------------------------|--------|--------|--------|
| 2011                   |   | $      | 873    |   |
| 2012                   |   |   | 1,168  |   |
| 2013                   |   |   | 1,474  |   |
| 2014                   |   |   | 1,757  |   |
| 2015                   |   |   | 2,082  |   |
| 2016-2020              |   |   | 18,346 |   |

|                                                                |   | 2010   |   |   | 2009   |   |   | 2008   |   |
|---------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Weighted average assumptions used to determine benefit obligations  |   |   |   |   |   |   |   |
|   as of December 31:                                           |   |   |   |   |   |   |   |   |   |
| Discount rate                                                       |   |   | 5.40   | %      |   |   | 6.00   | %      |   |   | 6.00 | % |
| Rate of compensation increase                                       |   |   | N/A    |   |   |   | N/A    |   |   |   | N/A |   |
| Weighted average assumptions used to determine net periodic pension |   |   |   |   |   |   |   |   |   |   |   |   |
|   cost for the fiscal year:                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Discount rate                                                       |   |   | 6.00   |   |   |   | 6.00   |   |   |   | 6.00 |   |
| Rate of compensation increase                                       |   |   | N/A    |   |   |   | N/A    |   |   |   | N/A |   |
| Expected long-term return on plan assets                            |   |   | 7.50   |   |   |   | 7.50   |   |   |   | 7.50 |   |

----

|                 |   |       |   |   | Allocation of Plan     |   |
|----------------------|--------|------------|--------|--------|------------------------|--------|
|                 |   | Targeted   |   |   | Assets on December 31, |   |
|                 |   | Allocation |   |   | 2010                   |   |   | 2009 |   |
| Equity securities:   |   |       |   |   |                   |   |   |   |   |
| Large capital equity |   |       | 26.4   | %      |                   |   | 29.3 | % |   |   | 27.3 | % |
| Small capital equity |   |       | 4.6    |   |                   |   | 5.5 |   |   |   | 4.7 |   |
| International equity |   |       | 17.0   |   |                   |   | 18.2 |   |   |   | 16.9 |   |
| Other securities:    |   |       |   |   |                   |   |   |   |   |   |   |   |
| Bond fund            |   |       | 47.0   |   |                   |   | 43.1 |   |   |   | 46.5 |   |
| Fixed income fund    |   |       | 5.0    |   |                   |   | 3.9 |   |   |   | 4.6 |   |

| (Dollars in thousands)                          |   | Total  |   |   | Level 1 |   |   | Level 2 (1) |   |   | Level 3 |   |
|-------------------------------------------------|--------|--------|--------|--------|---------|--------|--------|-------------|--------|--------|---------|--------|
| December 31, 2010                               |   |   |   |   |    |   |   |        |   |   |    |   |
| Large capital equity                            |   | $      | 8,583  |   |    | $      | -      |        |   |   | 8,583   |   |   | $ | - |   |
| Corporate bond fund                             |   |   | 6,935  |   |    |   | -      |        |   |   | 6,935   |   |   |   | - |   |
| Governmental bond fund                          |   |   | 5,675  |   |    |   | -      |        |   |   | 5,675   |   |   |   | - |   |
| 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 on December 31, 2010 |   | $      | 29,258 |   |    | $      | -      |        |   | $      | 29,258  |   |   | $ | - |   |
| December 31, 2009                               |   |   |   |   |    |   |   |        |   |   |    |   |   |   |   |   |
| Large capital equity                            |   | $      | 6,149  |   |    | $      | -      |        |   | $      | 6,149   |   |   | $ | - |   |
| Corporate bond fund                             |   |   | 6,301  |   |    |   | -      |        |   |   | 6,301   |   |   |   | - |   |
| Governmental bond fund                          |   |   | 4,158  |   |    |   | -      |        |   |   | 4,158   |   |   |   | - |   |
| International equity                            |   |   | 3,817  |   |    |   | -      |        |   |   | 3,817   |   |   |   | - |   |
| Small capital equity                            |   |   | 1,061  |   |    |   | -      |        |   |   | 1,061   |   |   |   | - |   |
| Fixed income fund                               |   |   | 1,029  |   |    |   | -      |        |   |   | 1,029   |   |   |   | - |   |
| Total assets at fair value on December 31, 2009 |   | $      | 22,515 |   |    | $      | -      |        |   | $      | 22,515  |   |   | $ | - |   |

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

----

----

|                                             |   |        |      |   |     |   |   |       |   |   | Weighted        |   |   |   |           |
|--------------------------------------------------|--------|-------------|-----------|--------|----------|--------|--------|------------|--------|--------|-----------------|--------|--------|--------|----------------|
|                                             |   |        |      |   | Weighted |   |   | Weighted   |   |   | Average         |   |   |   | Aggregate      |
|                                             |   |        |      |   | Average  |   |   | Average    |   |   | Remaining       |   |   |   | Intrinsic      |
|                                             |   | Options     |      |   | Exercise |   |   | Grant Date |   |   | Contractual     |   |   |   | Value          |
|                                             |   | Outstanding |      |   | Price    |   |   | Fair Value |   |   | Life (in years) |   |   |   | (in thousands) |
| Options granted                                  |   |        | 15,200    |   |     | $      | 1.43   |       |   | $      | 0.46            |   |   |   |           |   |   |
| December 31, 2008                                |   |        | 15,200    |   |     |   | 1.43   |       |   |   | 0.46            |   |   |   |           |   |   |
| Options granted                                  |   |        | 1,083,202 |   |     |   | 3.55   |       |   |   | 2.07            |   |   |   |           |   |   |
| Performance options granted (1)                  |   |        | 42,000    |   |     |   | 1.13   |       |   |   | 0.35            |   |   |   |           |   |   |
| December 31, 2009                                |   |        | 1,140,402 |   |     |   | 3.43   |       |   |   | 1.99            |   |   |   |           |   |   |
| Options granted                                  |   |        | 287,003   |   |     |   | 2.87   |       |   |   | 2.16            |   |   |   |           |   |   |
| Forfeited                                        |   |        | (36,650   | )      |     |   | 1.73   |       |   |   | 0.91            |   |   |   |           |   |   |
| Exercised                                        |   |        | (2,009    | )      |     |   | 1.09   |       |   |   | 0.34            |   |   |   |           |   |   |
| December 31, 2010(2)                             |   |        | 1,388,746 |   |     |   | 3.36   |       |   |   | 2.05            |   |   |   | 5.8            |   |   |   |
|                                             |   |        |      |   |     |   |   |       |   |   |            |   |   |   |           |   |   |   |
| Options exercisable on December 31, 2010(2)      |   |        | 382,040   |   |     |   | 3.40   |       |   |   |            |   |   |   | 5.9            |   |   | $  | 99 |
| Options expected to vest as of December 31, 2010 |   |        | 987,610   |   |     |   | 3.39   |       |   |   |            |   |   |   |           |   |   |   |                   210 |

| (1) | On December 31, 2010 and 2009, there were an additional 19,094 and 41,998, respectively, of performance-based options for which the performance period has not begun.  These options are treated as variable awards and had a weighted average fair value of $2.40 and $2.09 at December 31, 2010 and 2009, respectively. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | Options outstanding and options exercisable on December 31, 2010, had exercise prices ranging from $0.71 to $3.69.                                                                                                                                                                                                                  |

|                                                              | 2010                | 2009                | 2008      |
|-------------------------------------------------------------------|---------------------|---------------------|-----------|
| Expected weighted-average life of options granted                 | 4.5 - 5.0 years     | 5.0 years           | 5.0 years |
| Range of volatility rates based on historical industry volatility | 90.22%              | 31.82% - 87.28%     | 31.82%    |
| Range of risk-free interest rates                                 |  2.19% - 2.59% |  1.49% - 2.73% | 2.50%     |
| Expected dividend yield                                           |  -             |  -             |  -   |

----

|                           |   | Units  |    |   | WeightedAverage FairValue at GrantDate |   |
|--------------------------------|--------|--------|---------|--------|----------------------------------------|--------|
| Nonvested at December 31, 2007 |   |   | 339,955 |   |                                   | $      | 3.40 |   |
| Vested                         |   |   | (84,343 | )      |                                   |   | 3.40 |   |
| Nonvested at December 31, 2008 |   |   | 255,612 |   |                                   |   | 3.40 |   |
| Vested                         |   |   | (92,443 | )      |                                   |   | 3.40 |   |
| Nonvested at December 31, 2009 |   |   | 163,169 |   |                                   |   | 3.40 |   |
| Vested                         |   |   | (81,092 | )      |                                   |   | 3.40 |   |
| Nonvested at December 31, 2010 |   |   | 82,077  |   |                                   |   | 3.40 |   |

----

|                               |   | December 31, |   |
|------------------------------------|--------|--------------|--------|
| (Dollars in thousands)             |   | 2010         |   |   | 2009 |   |
| Other receivables                  |   | $            | 65     |   |   | $ | 63 |   |
| Other current assets(1)            |   |         | 158    |   |   |   | 158 |   |
| Total current assets               |   | $            | 223    |   |   | $ | 221 |   |
| Property, plant, and equipment     |   | $            | 10,671 |   |   | $ | 10,671 |   |
| Accumulated depreciation           |   |         | (2,639 | ) |   |   | (2,012 | ) |
| Net property, plant, and equipment |   | $            | 8,032  |   |   | $ | 8,659 |   |
| Current liabilities                |   | $            | (159   | ) |   | $ | (48 | ) |

| (1) | Represents restricted cash which may be used only to fund the ongoing energy operations of this investment. |
|-----|-------------------------------------------------------------------------------------------------------------|

----

|                                                   |   | December 31, 2010 |      |   | December 31, 2009       |   |   |
|--------------------------------------------------------|--------|-------------------|-----------|--------|-------------------------|--------|--------|
|                                                   |   |              |      |   | 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  |   |              | 5,748,733 |   |                    | $      | 142    |   |   | $ | 2,505 |   |   |   | 5,430,707 |   |   | $ | 560 |   |   | $ | 2,132 |   |  Other assets/Accrued liabilties |
| Derivatives not designated as hedging                  |   |              |      |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   instruments under FASB ASC 815                  |   |              |      |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest rate swaps, receive-variable,  pay-fixed |   | $                 | -         |   |                    |   | -      |   |   |   | - |   |   | $ | 250,000 |   |   |   | - |   |   |   | 1,573 |   |  Other liabilities |

----

|                                                |   | Loss Recognized    |   |   | Loss Reclassified    |   |              |
|-----------------------------------------------------|--------|--------------------|--------|--------|----------------------|--------|-------------------|
|                                                |   | in Accumulated OCI |   |   | from Accumulated OCI |   |  Location of |
|                                                |   |               |   |   |                 |   |              | Year Ended |   |  Loss on |
|                                                |   | December 31,       |   |   | December 31,         |   |  Statements  |
| (Dollars in thousands)                              |   | 2010               |   |   | 2009                 |   |              | 2010 |   |   | 2009 |   |  of Operations |
| Derivatives designated as hedging                   |   |               |   |   |                 |   |              |   |   |   |   |   |   |
|   instruments under FASB ASC 815               |   |               |   |   |                 |   |              |   |   |   |   |   |   |
| Short-term, fixed price energy swaps(1)             |   | $                  | (2,476 | )      |                 | $      | (1,514            | ) |   | $ | (8,505 | ) |   | $ | (36,723 | ) |  Cost of products sold |
| Interest rate swaps, receive-variable, pay-fixed(1) |   |               | -      |   |                 |   | (281              | ) |   |   | (281 | ) |   |   | (3,511 | ) |  Interest expense |

| (1) | Net losses at December 31, 2010 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     |
|                                             |   | Year Ended December 31, |   |  Statements |
| (Dollars in thousands)                           |   | 2010                    |   |             | 2009                  |   |              | 2010            |   |   | 2009 |   |  of Operations |
| Derivatives designated as hedging                |   |                    |   |             |                  |   |              |            |   |   |   |   |   |
|   instruments under FASB ASC 815            |   |                    |   |             |                  |   |              |            |   |   |   |   |   |
| Short-term, fixed price energy swaps             |   | $                       | (921   | )                |                  | $      | (4,652            | )               |   | $      | (132 | ) |   | $ | (92 | ) |  Cost of products sold |
| Derivatives not designated as hedging            |   |                    |   |             |                  |   |              |            |   |   |   |   |   |   |   |   |   |
|   instruments under FASB ASC 815            |   |                    |   |             |                  |   |              |            |   |   |   |   |   |   |   |   |   |
| Interest rate swaps, receive-variable, pay-fixed |   |                    | -      |             |                  |   | (1,257            | )               |   |   | - |   |   |   | - |   |  Interest expense/Other income, net |

----

| (Dollars in thousands)                               |   | Total  |   |   | Level 1 |   |   | Level 2 |   |   | Level 3 |   |
|------------------------------------------------------|--------|--------|--------|--------|---------|--------|--------|---------|--------|--------|---------|--------|
| December 31, 2010                                    |   |   |   |   |    |   |   |    |   |   |    |   |
| Assets:                                              |   |   |   |   |    |   |   |    |   |   |    |   |
| Commodity swaps(1)                                   |   | $      | 142    |   |    | $      | -      |    |   | $      | 142     |   |   | $ | - |   |
| Deferred compensation assets(1)                      |   |   | 1,547  |   |    |   | 1,547  |    |   |   | -       |   |   |   | - |   |
| Regional Greenhouse Gas Initiative carbon credits(1) |   |   | 334    |   |    |   | -      |    |   |   | 334     |   |   |   | - |   |
| Liabilities:                                         |   |   |   |   |    |   |   |    |   |   |    |   |   |   |   |   |
| Commodity swaps(1)                                   |   | $      | 2,505  |   |    | $      | -      |    |   | $      | 2,505   |   |   | $ | - |   |
| Deferred compensation liabilities(1)                 |   |   | 1,547  |   |    |   | 1,547  |    |   |   | -       |   |   |   | - |   |
| December 31, 2009                                    |   |   |   |   |    |   |   |    |   |   |    |   |   |   |   |   |
| Assets:                                              |   |   |   |   |    |   |   |    |   |   |    |   |   |   |   |   |
| Commodity swaps(1)                                   |   | $      | 560    |   |    | $      | -      |    |   | $      | 560     |   |   | $ | - |   |
| Deferred compensation assets(1)                      |   |   | 643    |   |    |   | 643    |    |   |   | -       |   |   |   | - |   |
| Regional Greenhouse Gas Initiative carbon credits(1) |   |   | 248    |   |    |   | -      |    |   |   | 248     |   |   |   | - |   |
| Liabilities:                                         |   |   |   |   |    |   |   |    |   |   |    |   |   |   |   |   |
| Commodity swaps(1)                                   |   | $      | 2,132  |   |    | $      | -      |    |   | $      | 2,132   |   |   | $ | - |   |
| Deferred compensation liabilities(1)                 |   |   | 643    |   |    |   | 643    |    |   |   | -       |   |   |   | - |   |
| Interest rate swaps(2)                               |   |   | 1,573  |   |    |   | -      |    |   |   | 1,573   |   |   |   | - |   |

| (1)       | Based on observable market data.                                                                                 |
|-----------|------------------------------------------------------------------------------------------------------------------|
| (2)  | Based on observable inputs for the liability (interest rates and yield curves observable at specific intervals). |

----

----

|                              |   | Year Ended December 31 |    |
|-----------------------------------|--------|------------------------|---------|
| (Dollars in thousands)            |   | 2010                   |    |   | 2009 |   |
| Current tax provision:            |   |                   |    |   |   |   |
| U.S. federal                      |   | $                      | (76     | ) |   | $ | 76 |   |
| U.S. state and local              |   |                   | 70      |   |   |   | 779 |   |
|                              |   |                   | (6      | ) |   |   | 855 |   |
| Deferred tax provision (benefit): |   |                   |    |   |   |   |   |   |
| U.S. federal                      |   |                   | (44,345 | ) |   |   | 36,507 |   |
| U.S. state and local              |   |                   | (3,269  | ) |   |   | 6,277 |   |
|                              |   |                   | (47,614 | ) |   |   | 42,784 |   |
| Valuation allowance               |   |                   | 47,765  |   |   |   | (42,894 | ) |
| Income tax provision              |   | $                      | 145     |   |   | $ | 745 |   |

|                              |   | Year Ended December 31 |    |
|-----------------------------------|--------|------------------------|---------|
| (Dollars in thousands)            |   | 2010                   |    |   | 2009 |   |
| Tax at Statutory U.S. Rate of 34% |   | $                      | (44,564 | ) |   | $ | 36,294 |   |
| Increase resulting from:          |   |                   |    |   |   |   |   |   |
| Meals and entertainment           |   |                   | 132     |   |   |   | 171 |   |
| Nondeductible lobbying expenses   |   |                   | 102     |   |   |   | 2 |   |
| Equity award expense              |   |                   | 94      |   |   |   | 101 |   |
| Other                             |   |                   | 2       |   |   |   | 2 |   |
| Net permanent differences         |   |                   | 330     |   |   |   | 276 |   |
| Valuation allowance               |   |                   | 47,765  |   |   |   | (42,894 | )  |
| State income taxes (benefit)      |   |                   | (3,199  | ) |   |   | 7,056 |   |
| Adjustment to provision      |   |                   | (87     | )  |   |   | 13 |   |
| Other                             |   |                   | (100    | ) |   |   | - |   |
| Total income tax provision        |   | $                      | 145     |   |   | $ | 745 |   |

----

|                                        |   | Year Ended December 31 |     |
|---------------------------------------------|--------|------------------------|----------|
| (Dollars in thousands)                      |   | 2010                   |     |   | 2009 |   |
| Deferred tax assets:                        |   |                   |     |   |   |   |
| Net operating loss and credit carryforwards |   | $                      | 200,293  |   |   | $ | 150,762 |   |
| Pension                                     |   |                   | 5,694    |   |   |   | 4,866 |   |
| Payment-in-kind interest                    |   |                   | 5,666    |   |   |   | 4,083 |   |
| Compensation reserves                       |   |                   | 4,062    |   |   |   | 2,949 |   |
| Inventory reserves                          |   |                   | 3,987    |   |   |   | 3,339 |   |
| Unrealized hedge losses                     |   |                   | 852      |   |   |   | 1,571 |   |
| Bad debt reserves                           |   |                   | 763      |   |   |   | 1,234 |   |
| Inventory capitalization                    |   |                   | -        |   |   |   |  2,632 |   |
| Other                                       |   |                   | 1,492    |   |   |   | 1,190 |   |
| Gross deferred tax assets                   |   |                   | 222,809  |   |   |   | 172,626 |   |
| Less: valuation allowance                   |   |                   | (80,541  | ) |   |   | (31,743 | ) |
| Deferred tax assets, net of allowance       |   |                   | 142,268  |   |   |   | 140,883 |   |
| Deferred tax liabilities:                   |   |                   |     |   |   |   |   |   |
| Property, plant, and equipment              |   | $                      | (106,978 | ) |   | $ | (105,829 | ) |
| Cancellation of debt income deferral        |   |                   | (25,960  | ) |   |   | (25,920 | ) |
| Intangible assets                           |   |                   | (11,315  | ) |   |   | (11,581 | ) |
| Deferred repair charges                     |   |                   | (4,578   | ) |   |   | (3,288 | ) |
| Inventory capitalization                    |   |                   | (918     | ) |   |   | - |   |
| Prepaid expenses                            |   |                   | (704     | ) |   |   | (2,300 | ) |
| Total deferred tax liabilities              |   |                   | (150,453 | ) |   |   | (148,918 | ) |
| Net deferred tax liabilities                |   | $                      | (8,185   | ) |   | $ | (8,035 | ) |

----

| (Dollars in thousands) |   |   |   |
|------------------------|--------|--------|--------|
| 2011                   |   | $      | 6,564  |   |
| 2012                   |   |   | 5,262  |   |
| 2013                   |   |   | 3,843  |   |
| 2014                   |   |   | 2,539  |   |
| 2015                   |   |   | 1,177  |   |
| Thereafter             |   |   | 2,345  |   |
| Total                  |   | $      | 21,730 |   |

----

----

|                            |   | VERSO HOLDINGS |
|---------------------------------|--------|----------------|
|                            |   | Assets         |   | Liabilities |
| (Dollars in thousands)          |   | CarryingValue  |   | Classification |   | CarryingValue |   | Classification |
| New Market Tax Credit Financing |   | $              | 23,305 |   | Intangibles and other assets, net |   | $ | 23,305 |   | Long-term debt |

|                                       |   | VERSO PAPER             |      |   | VERSO HOLDINGS          |   |
|--------------------------------------------|--------|-------------------------|-----------|--------|-------------------------|--------|
|                                       |   | Year Ended December 31, |      |   | Year Ended December 31, |   |
| (Dollars in thousands)                     |   | 2010                    |      |   | 2009                    |   |   | 2008 |   |   | 2010 |   |   | 2009 |   |   | 2008 |   |
| Net Sales:                                 |   |                    |      |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Coated and supercalendered                 |   | $                       | 1,314,961 |   |                    | $      | 1,198,758 |   |   | $ | 1,575,005 |   |   | $ | 1,314,961 |   |   | $ | 1,198,758 |   |   | $ | 1,575,005 |   |
| Hardwood market pulp                       |   |                    | 164,948   |   |                    |   | 104,541 |   |   |   | 146,443 |   |   |   | 164,948 |   |   |   | 104,541 |   |   |   | 146,443 |   |
| Other                                      |   |                    | 125,407   |   |                    |   | 57,555 |   |   |   | 45,365 |   |   |   | 125,407 |   |   |   | 57,555 |   |   |   | 45,365 |   |
| Total                                      |   | $                       | 1,605,316 |   |                    | $      | 1,360,854 |   |   | $ | 1,766,813 |   |   | $ | 1,605,316 |   |   | $ | 1,360,854 |   |   | $ | 1,766,813 |   |
| Operating Income (Loss):                   |   |                    |      |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Coated and supercalendered                 |   | $                       | (38,938   | )      |                    |   | (57,474 | ) |   |   | 36,885 |   |   | $ | (38,884 | ) |   |   | (57,240 | ) |   |   | 37,053 |   |
| Hardwood market pulp                       |   |                    | 49,267    |   |                    |   | (12,548 | ) |   |   | 29,931 |   |   |   | 49,267 |   |   |   | (12,548 | ) |   |   | 29,931 |   |
| Other                                      |   |                    | (14,193   | )      |                    |   | (7,417 | ) |   |   | (4,790 | ) |   |   | (14,193 | ) |   |   | (7,417 | ) |   |   | (3,705 | ) |
| Total                                      |   | $                       | (3,864    | )      |                    | $      | (77,439 | ) |   | $ | 62,026 |   |   | $ | (3,810 | ) |   | $ | (77,205 | ) |   | $ | 63,279 |   |
| Depreciation, Amortization, and Depletion: |   |                    |      |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Coated and supercalendered                 |   | $                       | 100,902   |   |                    | $      | 110,415 |   |   | $ | 112,928 |   |   | $ | 100,902 |   |   | $ | 110,415 |   |   | $ | 112,928 |   |
| Hardwood market pulp                       |   |                    | 18,313    |   |                    |   | 17,916 |   |   |   | 18,385 |   |   |   | 18,313 |   |   |   | 17,916 |   |   |   | 18,385 |   |
| Other                                      |   |                    | 8,152     |   |                    |   | 4,351 |   |   |   | 3,145 |   |   |   | 8,152 |   |   |   | 4,351 |   |   |   | 3,031 |   |
| Total                                      |   | $                       | 127,367   |   |                    | $      | 132,682 |   |   | $ | 134,458 |   |   | $ | 127,367 |   |   | $ | 132,682 |   |   | $ | 134,344 |   |
| Capital Spending:                          |   |                    |      |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Coated and supercalendered                 |   | $                       | 59,067    |   |                    | $      | 28,604 |   |   | $ | 69,029 |   |   | $ | 59,067 |   |   | $ | 28,604 |   |   | $ | 69,028 |   |
| Hardwood market pulp                       |   |                    | 11,017    |   |                    |   | 3,869 |   |   |   | 8,604 |   |   |   | 11,017 |   |   |   | 3,869 |   |   |   | 8,604 |   |
| Other                                      |   |                    | 3,562     |   |                    |   | 1,743 |   |   |   | 3,753 |   |   |   | 3,562 |   |   |   | 1,743 |   |   |   | 2,815 |   |
| Total                                      |   | $                       | 73,646    |   |                    | $      | 34,216 |   |   | $ | 81,386 |   |   | $ | 73,646 |   |   | $ | 34,216 |   |   | $ | 80,447 |   |

----

| Verso Paper Holdings LLC              |   |
|---------------------------------------|--------|
| Condensed Consolidating Balance Sheet |   |
| December 31, 2010                     |   |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  |   |   |   |   |   |   |   |   |   |   | Non- |   |   | Non- |   |   |   |   |   |   |   |
|                                  |   | Parent |   |   | Subsidiary |   |   | Guarantor |   |   | Guarantor |   |   | Guarantor |   |   | Intercompany |   |   |   |   |
| (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                    |   |   | - |   |   |   | - |   |   |   | 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                        |   |   | 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 |   |

| Verso Paper Holdings LLC              |   |
|---------------------------------------|--------|
| Condensed Consolidating Balance Sheet |   |
| December 31, 2009                     |   |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  |   |   |   |   |   |   |   |   |   |   | Non- |   |   | Non- |   |   |   |   |   |   |   |
|                                  |   | Parent |   |   | Subsidiary |   |   | Guarantor |   |   | Guarantor |   |   | Guarantor |   |   | Intercompany |   |   |   |   |
| (Dollars in thousands)                |   | Issuer |   |   | Issuer |   |   | Subsidiaries |   |   | Subsidiary |   |   | Affiliate |   |   | Eliminations |   |   | Consolidated |   |
| ASSETS                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current assets                        |   | $ | - |   |   | $ | - |   |   | $ | 426,837 |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | 426,837 |   |
| Property, plant, and equipment, net   |   |   | - |   |   |   | - |   |   |   | 1,022,622 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1,022,622 |   |
| Intercompany receivable               |   |   | 1,195,660 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (1,195,660 | ) |   |   | - |   |
| Investment in subsidiaries            |   |   | 169,874 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (169,874 | ) |   |   | - |   |
| Non-current assets                    |   |   | - |   |   |   | - |   |   |   | 110,804 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 110,804 |   |
| Total assets                          |   | $ | 1,365,534 |   |   | $ | - |   |   | $ | 1,560,263 |   |   | $ | - |   |   | $ | - |   |   | $ | (1,365,534 | ) |   | $ | 1,560,263 |   |
| LIABILITIES AND MEMBER'S EQUITY       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current liabilities                   |   | $ | 49,268 |   |   | $ | - |   |   | $ | 167,152 |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | 216,420 |   |
| Intercompany payable                  |   |   | - |   |   |   | - |   |   |   | 1,195,660 |   |   |   | - |   |   |   | - |   |   |   | (1,195,660 | ) |   |   | - |   |
| Long-term debt                        |   |   | 1,118,273 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1,118,273 |   |
| Other long-term liabilities           |   |   | - |   |   |   | - |   |   |   | 27,577 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 27,577 |   |
| Member's equity                       |   |   | 197,993 |   |   |   | - |   |   |   | 169,874 |   |   |   | - |   |   |   | - |   |   |   | (169,874 | ) |   |   | 197,993 |   |
| Total liabilities and member's equity |   | $ | 1,365,534 |   |   | $ | - |   |   | $ | 1,560,263 |   |   | $ | - |   |   | $ | - |   |   | $ | (1,365,534 | ) |   | $ | 1,560,263 |   |

----

| Verso Paper Holdings LLC                          |   |
|---------------------------------------------------|--------|
| Condensed Consolidating Statements of Operations  |   |
| Year Ended December 31, 2010                      |   |
|                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                              |   |   |   |   |   |   |   |   |   |   | Non- |   |   | Non- |   |   |   |   |   |   |   |
|                                              |   | Parent |   |   | Subsidiary |   |   | Guarantor |   |   | Guarantor |   |   | Guarantor |   |   | Intercompany |   |   |   |   |
| (Dollars in thousands)                            |   | Issuer |   |   | Issuer |   |   | Subsidiaries |   |   | Subsidiary |   |   | Affiliate |   |   | Eliminations |   |   | Consolidated |   |
| Net sales                                         |   | $ | - |   |   | $ | - |   |   | $ | 1,605,316 |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | 1,605,316 |   |
| Cost of products sold (exclusive of               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   depreciation, amortization, and depletion) |   |   | - |   |   |   | - |   |   |   | 1,410,770 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1,410,770 |   |
| Depreciation, amortization, and depletion         |   |   | - |   |   |   | - |   |   |   | 127,367 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 127,367 |   |
| Selling, general, and administrative              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   expenses                                   |   |   | - |   |   |   | - |   |   |   | 70,948 |   |   |   | 21 |   |   |   | 20 |   |   |   | - |   |   |   | 70,989 |   |
| Interest income                                   |   |   | (123,710 | ) |   |   | - |   |   |   | (123 | ) |   |   | (1 | ) |   |   | (4 | ) |   |   | 123,714 |   |   |   | (124 | ) |
| Interest expense                                  |   |   | 123,710 |   |   |   | - |   |   |   | 122,524 |   |   |   | 4 |   |   |   | 4 |   |   |   | (123,714 | ) |   |   | 122,528 |   |
| Other income, net                                 |   |   | (255 | ) |   |   | - |   |   |   | (734 | ) |   |   | - |   |   |   | - |   |   |   | 255 |   |   |   | (734 | ) |
| Equity in net loss of subsidiaries                |   |   | (125,480 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 125,480 |   |   |   | - |   |
| Net loss                                          |   | $ | (125,225 | ) |   | $ | - |   |   | $ | (125,436 | ) |   | $ | (24 | ) |   | $ | (20 | ) |   | $ | 125,225 |   |   | $ | (125,480 | ) |

| Verso Paper Holdings LLC                          |   |
|---------------------------------------------------|--------|
| Condensed Consolidating Statements of Operations  |   |
| Year Ended December 31, 2009                      |   |
|                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                              |   |   |   |   |   |   |   |   |   |   | Non- |   |   | Non- |   |   |   |   |   |   |   |
|                                              |   | Parent |   |   | Subsidiary |   |   | Guarantor |   |   | Guarantor |   |   | Guarantor |   |   | Intercompany |   |   |   |   |
| (Dollars in thousands)                            |   | Issuer |   |   | Issuer |   |   | Subsidiaries |   |   | Subsidiary |   |   | Affiliate |   |   | Eliminations |   |   | Consolidated |   |
| Net sales                                         |   | $ | - |   |   | $ | - |   |   | $ | 1,360,854 |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | 1,360,854 |   |
| Cost of products sold (exclusive of               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   depreciation, amortization, and depletion) |   |   | - |   |   |   | - |   |   |   | 1,242,743 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1,242,743 |   |
| Depreciation, amortization, and depletion         |   |   | - |   |   |   | - |   |   |   | 132,682 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 132,682 |   |
| Selling, general, and administrative              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   expenses                                   |   |   | - |   |   |   | - |   |   |   | 61,655 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 61,655 |   |
| Restructuring and other charges                   |   |   | - |   |   |   | - |   |   |   | 979 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 979 |   |
| Interest income                                   |   |   | (112,797 | ) |   |   | - |   |   |   | (241 | ) |   |   | - |   |   |   | - |   |   |   | 112,797 |   |   |   | (241 | ) |
| Interest expense                                  |   |   | 112,797 |   |   |   | - |   |   |   | 116,130 |   |   |   | - |   |   |   | - |   |   |   | (112,797 | ) |   |   | 116,130 |   |
| Other income, net                                 |   |   | (31,266 | ) |   |   | - |   |   |   | (273,796 | ) |   |   | - |   |   |   | - |   |   |   | 31,266 |   |   |   | (273,796 | ) |
| Equity in net income of subsidiaries              |   |   | 80,702 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (80,702 | ) |   |   | - |   |
| Net income                                        |   | $ | 111,968 |   |   | $ | - |   |   | $ | 80,702 |   |   | $ | - |   |   | $ | - |   |   | $ | (111,968 | ) |   | $ | 80,702 |   |

| Verso Paper Holdings LLC                          |   |
|---------------------------------------------------|--------|
| Condensed Consolidating Statements of Operations  |   |
| Year Ended December 31, 2008                      |   |
|                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                              |   |   |   |   |   |   |   |   |   |   | Non- |   |   | Non- |   |   |   |   |   |   |   |
|                                              |   | Parent |   |   | Subsidiary |   |   | Guarantor |   |   | Guarantor |   |   | Guarantor |   |   | Intercompany |   |   |   |   |
| (Dollars in thousands)                            |   | Issuer |   |   | Issuer |   |   | Subsidiaries |   |   | Subsidiary |   |   | Affiliate |   |   | Eliminations |   |   | Consolidated |   |
| Net sales                                         |   | $ | - |   |   | $ | - |   |   | $ | 1,766,813 |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | 1,766,813 |   |
| Cost of products sold (exclusive of               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   depreciation, amortization, and depletion) |   |   | - |   |   |   | - |   |   |   | 1,462,333 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1,462,333 |   |
| Depreciation, amortization, and depletion         |   |   | - |   |   |   | - |   |   |   | 134,344 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 134,344 |   |
| Selling, general, and administrative              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   expenses                                   |   |   | - |   |   |   | - |   |   |   | 79,441 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 79,441 |   |
| Restructuring and other charges                   |   |   | - |   |   |   | - |   |   |   | 27,416 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 27,416 |   |
| Interest and dividend income                      |   |   | (122,315 | ) |   |   | - |   |   |   | (770 | ) |   |   | - |   |   |   | - |   |   |   | 122,315 |   |   |   | (770 | ) |
| Interest expense                                  |   |   | 105,007 |   |   |   | - |   |   |   | 103,200 |   |   |   | - |   |   |   | - |   |   |   | (105,007 | ) |   |   | 103,200 |   |
| Equity in net loss of subsidiaries                |   |   | (39,151 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 39,151 |   |   |   | - |   |
| Net loss                                          |   | $ | (21,843 | ) |   | $ | - |   |   | $ | (39,151 | ) |   | $ | - |   |   | $ | - |   |   | $ | 21,843 |   |   | $ | (39,151 | ) |

----

| Verso Paper Holdings LLC                         |   |
|--------------------------------------------------|--------|
| Condensed Consolidating Statements of Cash Flows |   |
| Year Ended December 31, 2010                     |   |
|                                             |   |   |   |   |   |   |   |   |   |   | Non- |   |   | Non- |   |   |   |   |   |   |   |
|                                             |   | Parent |   |   | Subsidiary |   |   | Guarantor |   |   | Guarantor |   |   | Guarantor |   |   | Intercompany |   |   |   |   |
| (Dollars in thousands)                           |   | Issuer |   |   | Issuer |   |   | Subsidiaries |   |   | Subsidiary |   |   | Affiliate |   |   | Eliminations |   |   | Consolidated |   |
| Net cash provided by operating activities        |   | $ | - |   |   | $ | - |   |   | $ | 64,287 |   |   | $ | 3,818 |   |   | $ | 7,716 |   |   | $ | - |   |   | $ | 75,821 |   |
| Cash flows from investing activities:            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds from sale of fixed assets               |   |   | - |   |   |   | - |   |   |   | 453 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 453 |   |
| Loan to affiliate                                |   |   | - |   |   |   | - |   |   |   | (23,305 | ) |   |   | - |   |   |   | (31,017 | ) |   |   | 54,322 |   |   |   | - |   |
| Transfers to restricted cash                     |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (25,073 | ) |   |   | - |   |   |   | - |   |   |   | (25,073 | ) |
| Capital expenditures                             |   |   | - |   |   |   | - |   |   |   | (64,490 | ) |   |   | (9,156 | ) |   |   | - |   |   |   | - |   |   |   | (73,646 | ) |
| Return of investment in subsidiaries             |   |   | 78 |   |   |   | - |   |   |   | (78 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Net cash used in investing activities            |   |   | 78 |   |   |   | - |   |   |   | (87,420 | ) |   |   | (34,229 | ) |   |   | (31,017 | ) |   |   | 54,322 |   |   |   | (98,266 | ) |
| Cash flows from financing activities:            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds from long-term debt                     |   |   | 27,438 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 27,438 |   |
| Loan from affiliate                              |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 31,017 |   |   |   | 23,305 |   |   |   | (54,322 | ) |   |   | - |   |
| Debt issuance costs                              |   |   | (1,205 | ) |   |   | - |   |   |   | (160 | ) |   |   | (606 | ) |   |   | - |   |   |   | - |   |   |   | (1,971 | ) |
| Cash distributions                               |   |   | (78 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (78 | ) |
| Advances to subsidiaries                         |   |   | (26,233 | ) |   |   | - |   |   |   | 26,233 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Net cash provided by financing activities        |   |   | (78 | ) |   |   | - |   |   |   | 26,073 |   |   |   | 30,411 |   |   |   | 23,305 |   |   |   | (54,322 | ) |   |   | 25,389 |   |
| Change in cash and cash equivalents              |   |   | - |   |   |   | - |   |   |   | 2,940 |   |   |   | - |   |   |   | 4 |   |   |   | - |   |   |   | 2,944 |   |
| Cash and cash equivalents at beginning of   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   period                                    |   |   | - |   |   |   | - |   |   |   | 149,762 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 149,762 |   |
| Cash and cash equivalents at end of period       |   | $ | - |   |   | $ | - |   |   | $ | 152,702 |   |   | $ | - |   |   | $ | 4 |   |   | $ | - |   |   | $ | 152,706 |   |

| Verso Paper Holdings LLC                         |   |
|--------------------------------------------------|--------|
| Condensed Consolidating Statements of Cash Flows |   |
| Year Ended December 31, 2009                     |   |
|                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                             |   |   |   |   |   |   |   |   |   |   | Non- |   |   | Non- |   |   |   |   |   |   |   |
|                                             |   | Parent |   |   | Subsidiary |   |   | Guarantor |   |   | Guarantor |   |   | Guarantor |   |   | Intercompany |   |   |   |   |
| (Dollars in thousands)                           |   | Issuer |   |   | Issuer |   |   | Subsidiaries |   |   | Subsidiary |   |   | Affiliate |   |   | Eliminations |   |   | Consolidated |   |
| Net cash provided by operating activities        |   | $ | - |   |   | $ | - |   |   | $ | 180,135 |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | 180,135 |   |
| Cash flows from investing activities:            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds from sale of fixed assets               |   |   | - |   |   |   | - |   |   |   | 83 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 83 |   |
| Capital expenditures                             |   |   | - |   |   |   | - |   |   |   | (34,216 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (34,216 | ) |
| Investment in subsidiaries                       |   |   | (39,449 | ) |   |   | - |   |   |   | 39,449 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Return of investment in subsidiaries             |   |   | 15,459 |   |   |   | - |   |   |   | (15,459 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Net cash used in investing activities            |   |   | (23,990 | ) |   |   | - |   |   |   | (10,143 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (34,133 | ) |
| Cash flows from financing activities:            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Debt issuance costs                              |   |   | (10,270 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (10,270 | ) |
| Cash distributions                               |   |   | (15,459 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (15,459 | ) |
| Advances to subsidiaries                         |   |   | (342,567 | ) |   |   | - |   |   |   | 342,567 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Repayment of advances to subsidiaries            |   |   | 482,317 |   |   |   | - |   |   |   | (482,317 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Proceeds from long-term debt                     |   |   | 352,837 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 352,837 |   |
| Payments on long-term debt                       |   |   | (442,868 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (442,868 | ) |
| Net cash used in financing activities            |   |   | 23,990 |   |   |   | - |   |   |   | (139,750 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (115,760 | ) |
| Change in cash and cash equivalents              |   |   | - |   |   |   | - |   |   |   | 30,242 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 30,242 |   |
| Cash and cash equivalents at beginning of        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   period                                    |   |   | - |   |   |   | - |   |   |   | 119,520 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 119,520 |   |
| Cash and cash equivalents at end of period       |   | $ | - |   |   | $ | - |   |   | $ | 149,762 |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | 149,762 |   |

----

| Verso Paper Holdings LLC                         |   |
|--------------------------------------------------|--------|
| Condensed Consolidating Statements of Cash Flows |   |
| Year Ended December 31, 2008                     |   |
|                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                             |   |   |   |   |   |   |   |   |   |   | Non- |   |   | Non- |   |   |   |   |   |   |   |
|                                             |   | Parent |   |   | Subsidiary |   |   | Guarantor |   |   | Guarantor |   |   | Guarantor |   |   | Intercompany |   |   |   |   |
| (Dollars in thousands)                           |   | Issuer |   |   | Issuer |   |   | Subsidiaries |   |   | Subsidiary |   |   | Affiliate |   |   | Eliminations |   |   | Consolidated |   |
| Net cash provided by operating activities        |   | $ | 17,308 |   |   | $ | - |   |   | $ | 57,615 |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | 74,923 |   |
| Cash flows from investing activities:            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds from sale of fixed assets               |   |   | - |   |   |   | - |   |   |   | 108 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 108 |   |
| Capital expenditures                             |   |   | - |   |   |   | - |   |   |   | (80,447 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (80,447 | ) |
| Return of investment in subsidiaries             |   |   | 5,488 |   |   |   | - |   |   |   | (5,488 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Net cash used in investing activities            |   |   | 5,488 |   |   |   | - |   |   |   | (85,827 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (80,339 | ) |
| Cash flows from financing activities:            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash distributions                               |   |   | (22,796 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (22,796 | ) |
| Advances to subsidiaries                         |   |   | (92,083 | ) |   |   | - |   |   |   | 92,083 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Repayment of advances to subsidiaries            |   |   | 2,850 |   |   |   | - |   |   |   | (2,850 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Proceeds from long-term debt                     |   |   | 92,083 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 92,083 |   |
| Payments on long-term debt                       |   |   | (2,850 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (2,850 | ) |
| Net cash provided by financing activities        |   |   | (22,796 | ) |   |   | - |   |   |   | 89,233 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 66,437 |   |
| Change in cash and cash equivalents              |   |   | - |   |   |   | - |   |   |   | 61,021 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 61,021 |   |
| Cash and cash equivalents at beginning of   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   period                                    |   |   | - |   |   |   | - |   |   |   | 58,499 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 58,499 |   |
| Cash and cash equivalents at end of period       |   | $ | - |   |   | $ | - |   |   | $ | 119,520 |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | 119,520 |   |

|                                          |   | VERSO PAPER CORP. |   |
|-----------------------------------------------|--------|-------------------|--------|
|                                          |   | 2010              |   |   | 2009 |   |
| (Dollars in millions, except per share        |   | Fourth            |   |   | Third |   |   | Second |   |   | First |   |   | Fourth |   |   | Third |   |   | Second |   |   | First |   |
|   amounts)                               |   | Quarter           |   |   | Quarter |   |   | Quarter |   |   | Quarter |   |   | Quarter |   |   | Quarter |   |   | Quarter |   |   | Quarter |   |
| Summary Statement of Operations Data:         |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net sales                                     |   | $                 | 407.7  |   |   | $ | 432.9 |   |   | $ | 401.1 |   |   | $ | 363.6 |   |   | $ | 381.0 |   |   | $ | 394.7 |   |   | $ | 298.1 |   |   | $ | 287.1 |   |
| Gross margin(1)                               |   |              | 70.0   |   |   |   | 61.0 |   |   |   | 36.7 |   |   |   | 26.8 |   |   |   | 44.3 |   |   |   | 56.2 |   |   |   | (0.4 | ) |   |   | 18.1 |   |
| Cost of products sold                         |   |              | 368.5  |   |   |   | 403.6 |   |   |   | 397.2 |   |   |   | 368.9 |   |   |   | 368.8 |   |   |   | 371.8 |   |   |   | 331.5 |   |   |   | 303.3 |   |
| Selling, general, and administrative expenses |   |              | 21.8   |   |   |   | 16.4 |   |   |   | 16.6 |   |   |   | 16.2 |   |   |   | 16.5 |   |   |   | 15.1 |   |   |   | 14.9 |   |   |   | 15.4 |   |
| Restructuring and other charges               |   |              | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 0.3 |   |   |   | 0.4 |   |   |   | 0.1 |   |   |   | 0.2 |   |
| Interest income                               |   |              | -      |   |   |   | (0.1 | ) |   |   | - |   |   |   | - |   |   |   | (0.1 | ) |   |   | (0.1 | ) |   |   | - |   |   |   | (0.1 | ) |
| Interest expense                              |   |              | 31.7   |   |   |   | 32.2 |   |   |   | 31.9 |   |   |   | 32.3 |   |   |   | 33.5 |   |   |   | 34.3 |   |   |   | 28.5 |   |   |   | 27.1 |   |
| Other income, net                             |   |              | (0.4   | ) |   |   | - |   |   |   | (0.3 | ) |   |   | (0.2 | ) |   |   | (57.0 | ) |   |   | (70.3 | ) |   |   | (66.7 | ) |   |   | (113.3 | ) |
| Income tax expense                            |   |              | 0.1    |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 0.8 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Net income (loss)                             |   |              | (14.0  | ) |   |   | (19.2 | ) |   |   | (44.3 | ) |   |   | (53.6 | ) |   |   | 18.2 |   |   |   | 43.5 |   |   |   | (10.2 | ) |   |   | 54.5 |   |
| Share Data2:                                  |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings (loss) per share:                    |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                         |   | $                 | (0.27  | ) |   | $ | (0.36 | ) |   | $ | (0.85 | ) |   | $ | (1.02 | ) |   | $ | 0.35 |   |   | $ | 0.84 |   |   | $ | (0.20 | ) |   | $ | 1.05 |   |
| Diluted                                       |   |              | (0.27  | ) |   |   | (0.36 | ) |   |   | (0.85 | ) |   |   | (1.02 | ) |   |   | 0.35 |   |   |   | 0.83 |   |   |   | (0.20 | ) |   |   | 1.05 |   |
| Weighted average shares of common stock       |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   outstanding (thousands):               |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                         |   |              | 52,467 |   |   |   | 52,466 |   |   |   | 52,466 |   |   |   | 52,381 |   |   |   | 52,375 |   |   |   | 52,082 |   |   |   | 52,047 |   |   |   | 52,047 |   |
| Diluted                                       |   |              | 52,467 |   |   |   | 52,466 |   |   |   | 52,466 |   |   |   | 52,381 |   |   |   | 52,409 |   |   |   | 52,116 |   |   |   | 52,047 |   |   |   | 52,047 |   |
| Closing price per share:                      |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| High                                          |   | $                 | 4.01   |   |   | $ | 3.18 |   |   | $ | 5.66 |   |   | $ | 3.94 |   |   | $ | 3.49 |   |   | $ | 3.69 |   |   | $ | 1.89 |   |   | $ | 1.30 |   |
| Low                                           |   |              | 2.85   |   |   |   | 2.08 |   |   |   | 2.31 |   |   |   | 2.83 |   |   |   | 2.22 |   |   |   | 1.11 |   |   |   | 0.54 |   |   |   | 0.34 |   |
| Period-end                                    |   |              | 3.42   |   |   |   | 2.88 |   |   |   | 2.31 |   |   |   | 3.04 |   |   |   | 2.61 |   |   |   | 2.99 |   |   |   | 1.23 |   |   |   | 0.64 |   |

| (1)       | Gross margin represents net sales less cost of products sold, excluding depreciation, amortization, and depletion. |
|-----------|--------------------------------------------------------------------------------------------------------------------|
| (2)  | No dividends were declared or paid in any of the periods presented.                                                |

----

Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Item 9A.  Controls and Procedures

----

Item 9B.  Other Information

|                |                                              |   | 2010        |   |
|---------------------|---------------------------------------------------|--------|-------------|--------|
| Name                | Positions                                         |   | Bonus Award |   |
| Michael A. Jackson  | President, Chief Executive Officer and Director   |   | $           | 23,265 |   |
| Lyle J. Fellows     | Senior Vice President of Manufacturing and Energy |   |        | 4,120  |   |
| Michael A. Weinhold | Senior Vice President of Sales and Marketing      |   |        | 28,098 |   |
| Robert P. Mundy     | Senior Vice President and Chief Financial Officer |   |        | 29,678 |   |
| Peter H. Kesser     | Vice President, General Counsel and Secretary     |   |        | 22,904 |   |

----

Item 10.  Directors, Executive Officers and Corporate Governance

Item 11.  Executive Compensation

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

Item 13.  Certain Relationships and Related Transactions, and Director Independence

----

Item 14.  Principal Accountant Fees and Services

| (In thousands of U.S. dollars) |   | 2010   |     |   | 2009   |   |    | 2008   |   |
|--------------------------------|--------|--------|----------|--------|--------|--------|---------|--------|--------|
| Audit fees                     |   | $      | 1,108    |   |   | $      | 1,194   |   |   | $ | 939 |   |
| Audit-related fees             |   |   |  97 |   |   |   | 38      |   |   |   | - |   |
| All other                      |   |   |  -  |   |   |   |  - |   |   |   |  395 |   |
| Total                          |   | $      | 1,205    |   |   | $      | 1,232   |   |   | $ | 1,334 |   |

----

Item 15.  Exhibits and Financial Statement Schedule

| ExhibitNumber |   Description of Exhibit                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|---------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 2.1           | Agreement of Purchase and Sale dated as of June 4, 2006, among International Paper Company, Verso Paper Investments LP and Verso Paper LLC,(1) as amended by Amendment No. 1 to Agreement of Purchase and Sale, dated as of August 1, 2006, among International Paper Company, Verso Paper Investments LP and Verso Paper LLC,(2) and Amendment No. 2 to Agreement of Purchase and Sale, dated as of May 31, 2007, among International Paper Company, Verso Paper Investments LP and Verso Paper LLC.(2) |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 3.1           | Amended and Restated Certificate of Incorporation of Verso Paper Corp.(2)                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 3.2           | Amended and Restated Bylaws of Verso Paper Corp.(2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 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.(3)                                                                                                                                                                                                                                                                                                                                               |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 3.4           | Amended and Restated Limited Liability Company Agreement of Verso Paper Holdings LLC dated as of January 25, 2007.(3)                                                                                                                                                                                                                                                                                                                                                                                                   |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 4.1           | Specimen common stock certificate of Verso Paper Corp.(2)                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 4.2           | Indenture relating to the 91⁄8% Second Priority Senior Secured Fixed Rate Notes due 2014 and the Second Priority Senior Secured Floating Rate Notes due 2014, dated as of August 1, 2006, among Verso Paper Holdings LLC, Verso Paper Inc., the Guarantors named therein, and Wilmington Trust Company, as Trustee. (1)                                                                                                                                                                                             |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 4.3           | Indenture relating to the 113⁄8% Senior Subordinated Notes due 2016, dated as of August 1, 2006, among Verso Paper Holdings LLC, Verso Paper Inc., the Guarantors named therein, and Wilmington Trust Company, as Trustee.(1)                                                                                                                                                                                                                                                                                       |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 4.4           | Collateral Agreement dated as of August 1, 2006, among Verso Paper Holdings LLC, Verso Paper Inc., the Subsidiaries named therein, and Wilmington Trust Company, as Collateral Agent.(4)                                                                                                                                                                                                                                                                                                                                |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 4.5           | Indenture dated as of June 11, 2009, among Verso Paper Holdings LLC, Verso Paper Inc., the guarantors named therein, and Wilmington Trust FSB, as trustee,(5)  as supplemented by the First Supplemental Indenture, dated as of January 15, 2010, among Verso Paper Holdings LLC, Verso Paper Inc., the guarantors named therein, and Wilmington Trust FSB, as trustee.(6)                                                                                                                                    |

----

| 4.6    | 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,(7)  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.(8)                                                                                                                   |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 4.7    | 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.(7)                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 4.8    | 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.(8)                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.1   | Amended and Restated Credit Agreement dated as of June 3, 2009, among Verso Paper Finance Holdings LLC, Verso Paper Holdings LLC, the lenders party thereto, Credit Suisse, Cayman Islands Branch, as administrative agent, Lehman Brothers Inc., as syndication agent, Citigroup Global Markets Inc. and Bank of America Securities LLC, as co-documentation agents, and Credit Suisse Securities (USA) LLC and Lehman Brothers Inc., as joint bookrunners and co-lead arrangers.(4)                              |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.2   | Amended and Restated Guarantee and Collateral Agreement dated as of June 11, 2009, among Verso Paper Finance Holdings LLC, Verso Paper Holdings LLC, each other Pledgor identified therein, Credit Suisse, Cayman Islands Branch, as administrative agent for the secured parties, Credit Suisse, Cayman Islands Branch, as credit agreement authorized representative, Wilmington Trust FSB, as note authorized representative, and each additional authorized representative from time to time party thereto.(4) |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.3   | 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,(7)  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.(8)                                                                           |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.4   | 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,(1) as amended by Joinder and Supplement No. 3 to Intercreditor Agreement dated as of January 26, 2011.(7)                                                                                                                                          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.5   | Intellectual Property Security Agreement dated as of August 1, 2006, made by Verso Paper Finance Holdings LLC, Verso Paper Holdings LLC, Verso Paper Inc., Verso Paper LLC, Verso Androscoggin LLC, Verso Bucksport LLC, Verso Quinnesec LLC, Verso Sartell LLC and NexTier Solutions Corporation in favor of Credit Suisse, Cayman Islands Branch, as Administrative Agent.(1)                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.6   | Intellectual Property Security Agreement dated as of August 1, 2006, made by Verso Paper Holdings LLC, Verso Paper Inc., Verso Paper LLC, Verso Androscoggin LLC, Verso Bucksport LLC, Verso Quinnesec LLC, Verso Sartell LLC, and Nextier Solutions Corporation in favor of Wilmington Trust Company, as Collateral Agent.(1)                                                                                                                                                                                     |

----

| 10.7   | Credit Agreement dated January 31, 2007, among Verso Paper Finance Holdings LLC, Verso Paper Finance Holdings Inc., the Lenders party thereto, Credit Suisse, as Administrative Agent, and Citigroup Global Markets Inc., as Syndication Agent.(2)                                                                                                                                                                                                                                                                             |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 10.8   | Management and Transaction Fee Agreement dated as of August 1, 2006, among Verso Paper LLC, Verso Paper Investments LP, Apollo Management V, L.P. and Apollo Management VI, L.P.(1)                                                                                                                                                                                                                                                                                                                                            |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 10.9   | Third Amended and Restated Limited Partnership Agreement of Verso Paper Management LP dated as of May 20, 2008 (form).(2)                                                                                                                                                                                                                                                                                                                                                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 10.10  | Registration Rights Agreement among Verso Paper Investments LP and the individual limited partners of Verso Paper Management LP (form).(2)                                                                                                                                                                                                                                                                                                                                                                                     |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 10.11* | Verso Paper Corp. 2008 Incentive Award Plan (form),(2) as amended by the First Amendment to Verso Paper Corp. 2008 Incentive Award Plan.(9)                                                                                                                                                                                                                                                                                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 10.12* | Form of Verso Paper Corp. 2008 Incentive Award Plan Stock Option Grant Notice and Stock Option Agreement for Non-Employee Directors.(9)                                                                                                                                                                                                                                                                                                                                                                                        |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 10.13* | Form of Verso Paper Corp. 2008 Incentive Award Plan Stock Option Grant Notice and Stock Option Agreement.(10)                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 10.14* | Form of Verso Paper Corp. 2008 Incentive Award Plan Restricted Stock Award Grant Notice and Restricted Stock Award Agreement.(10)                                                                                                                                                                                                                                                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 10.15* | Verso Paper Corp. Senior Executive Bonus Plan (form).(2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 10.16* | 2009 Long-Term Cash Award Program for Executives effective as of January 1, 2009, pursuant to the Verso Paper Corp. Senior Executive Bonus Plan.(4)                                                                                                                                                                                                                                                                                                                                                                            |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 10.17* | Employment Agreement dated as of November 16, 2006, between Mike Jackson and Verso Paper Holdings LLC,(1) as supplemented by the Letter Agreement dated as of November 16, 2006, between Verso Paper Holdings LLC and Mike Jackson,(1) and as amended by the First Amendment to Employment Agreement dated as of January 1, 2008, between Mike Jackson and Verso Paper Holdings LLC,(2) and the Second Amendment to Employment Agreement dated as of December 31, 2008, between Mike Jackson and Verso Paper Holdings LLC.(11) |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 10.18* | Letter Agreement dated as of February 16, 2007, between Verso Paper Management LP and Mike Jackson.(1)                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 10.19* | Confidentiality and Non-Competition Agreement dated as of January 1, 2008, between Verso Paper Holdings LLC and Lyle J. Fellows,(2) as amended by the First Amendment to Confidentiality and Non-Competition Agreement dated as of December 31, 2008, between Verso Paper Holdings LLC and Lyle J. Fellows.(11)                                                                                                                                                                                                           |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 10.20* | Confidentiality and Non-Competition Agreement dated as of January 1, 2008, between Verso Paper Holdings LLC and Michael A. Weinhold,(2) as amended by the First Amendment to Confidentiality and Non-Competition Agreement dated as of December 31, 2008, between Verso Paper Holdings LLC and Michael A. Weinhold.(11)                                                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 10.21* | Confidentiality and Non-Competition Agreement dated as of January 1, 2008, between Verso Paper Holdings LLC and Robert P. Mundy,(2) as amended by the First Amendment to Confidentiality and Non-Competition Agreement dated as of December 31, 2008, between Verso Paper Holdings LLC and Robert P. Mundy.(11)                                                                                                                                                                                                           |

----

| 10.22* | Confidentiality and Non-Competition Agreement dated as of January 1, 2008, between Verso Paper Holdings LLC and Peter H. Kesser,(2) as amended by the First Amendment to Confidentiality and Non-Competition Agreement dated as of December 31, 2008, between Verso Paper Holdings LLC and Peter H. Kesser.(11)                                                                                                                                                                            |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 10.23* | Confidentiality and Non-Competition Agreement dated as of January 1, 2008, between Verso Paper Holdings LLC and Ricardo Moncada, as amended by the First Amendment to Confidentiality and Non-Competition Agreement dated as of December 31, 2008, between Verso Paper Holdings LLC and Ricardo Moncada.(12)                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 10.24* | Letter Agreement dated as of November 1, 2006, between Verso Paper Management LP and L.H. Puckett.(1)                                                                                                                                                                                                                                                                                                                                                                                           |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 10.25* | Indemnification Agreement between Verso Paper Corp. and its directors and executive officers (form).(2)                                                                                                                                                                                                                                                                                                                                                                                         |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 10.26* | Verso Paper Deferred Compensation Plan, consisting of The CORPORATEplan for RetirementSM Executive Plan, Basic Plan Document, effective as of February 15, 2007, as amended and restated by the Adoption Agreement effective as of December 1, 2008, as further amended by the Verso Paper Deferred Compensation Plan Amendment effective as of April 10, 2009, and as further amended by the Second Amendment to Verso Paper Deferred Compensation Plan effective as of December 23, 2009.(13) |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 10.27* | Executive Retirement Program effective as of January 1, 2010.(13)                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 12     | Computation of Ratio of Earnings to Fixed Charges.                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 21     | Subsidiaries of Verso Paper Corp.                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 23.1   | Consent of Deloitte & Touche LLP, Independent Registered Public Accounting Firm.                                                                                                                                                                                                                                                                                                                                                                                                            |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 23.2   | Consent of Resource Information Systems, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 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 the United States Code.                                                                                                                                                                                                                                                                                                             |

----

| (1) | Incorporated by reference to the Registration Statement of Verso Paper Holdings LLC on Form S-4 (Registration No. 333-142283), as amended. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Incorporated by reference to Verso Paper Corp.’s  Registration Statement on Form S-1 (Registration No. 333-148201), as amended. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Incorporated by reference to Verso Paper Holding LLC’s Annual Report on Form 10-K for the year ended December 31, 2007. |
|-----|-------------------------------------------------------------------------------------------------------------------------------|

----

| (4) | Incorporated by reference to Verso Paper Corp.’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2009. |
|-----|----------------------------------------------------------------------------------------------------------------------------------|

| (5) | Incorporated by reference to Verso Paper Corp.’s Current Report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on June 11, 2009. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (6) | Incorporated by reference to Verso Paper Corp.’s Current Report on Form 8-K filed with the SEC on January 15, 2010. |
|-----|---------------------------------------------------------------------------------------------------------------------------|

| (7) | Incorporated by reference to Verso Paper Corp.’s Current Report on Form 8-K filed with the SEC on January 26, 2011. |
|-----|---------------------------------------------------------------------------------------------------------------------------|

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

| (9) | Incorporated by reference to Verso Paper Corp.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008. |
|-----|--------------------------------------------------------------------------------------------------------------------------------|

| (10) | Incorporated by reference to Verso Paper Corp.’s Current Report on Form 8-K filed with the SEC on September 25, 2009. |
|------|-----------------------------------------------------------------------------------------------------------------------------|

| (11) | Incorporated by reference to Verso Paper Corp.’s Current Report on Form 8-K filed with the SEC on January 2, 2009. |
|------|--------------------------------------------------------------------------------------------------------------------------|

| (12) | Incorporated by reference to Verso Paper Corp.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2009. |
|------|--------------------------------------------------------------------------------------------------------------------------------|

| (13) | Incorporated by reference to Verso Paper Corp.’s Current Report on Form 8-K filed with the SEC on December 30, 2009. |
|------|----------------------------------------------------------------------------------------------------------------------------|

----

SIGNATURES

|   | VERSO PAPER CORP. |
|--------|-------------------|
|   |              |   |
|   |              |   |
|   | By:               | /s/ Michael A. Jackson |
|   |              | Michael A. Jackson |
|   |              | President and Chief Executive Officer |
|   |              |   |
|   |              |   |
|   | By:               | /s/ Robert P. Mundy |
|   |              | Robert P. Mundy |
|   |              | Senior Vice President and Chief Financial Officer |

| Signature              |   | Position                                                                                      |   | Date                |
|------------------------|--------|-----------------------------------------------------------------------------------------------|--------|---------------------|
|                   |   |                                                                                          |   |                |
| /s/ Michael A. Jackson |   |                                                                                          |   |                |
| Michael A. Jackson     |   | President, Chief Executive Officer and Director(Principal Executive Officer)                  |   | March 3, 2011       |
| /s/ Robert P. Mundy    |   |                                                                                          |   |                |
| Robert P. Mundy        |   | Senior Vice President and Chief FinancialOfficer (Principal Financial and Accounting Officer) |   | March 3, 2011       |
| /s/ Michael E. Ducey   |   |                                                                                          |   |                |
| Michael E. Ducey       |   | Director                                                                                      |   | March 3, 2011       |
|                   |   |                                                                                          |   |                |
| /s/ Thomas Gutierrez   |   |                                                                                          |   |                |
| Thomas Gutierrez       |   | Director                                                                                      |   | March 3, 2011  |
|                   |   |                                                                                          |   |                |
| /s/ Scott M. Kleinman  |   |                                                                                          |   |                |
| Scott M. Kleinman      |   | Director                                                                                      |   | March 3, 2011       |
|                   |   |                                                                                          |   |                |
|                   |   |                                                                                          |   |                |
| David W. Oskin         |   | Director                                                                                      |   | March 3, 2011  |
|                   |   |                                                                                          |   |                |
| /s/ Eric L. Press      |   |                                                                                          |   |                |
| Eric L. Press          |   | Director                                                                                      |   | March 3, 2011  |
|                   |   |                                                                                          |   |                |
| /s/ L.H. Puckett, Jr.  |   |                                                                                          |   |                |
| L.H. Puckett, Jr.      |   | Director                                                                                      |   | March 3, 2011  |
|                   |   |                                                                                          |   |                |
| /s/ David B. Sambur    |   |                                                                                          |   |                |
| David B. Sambur        |   | Director                                                                                      |   | March 3, 2011  |
|                   |   |                                                                                          |   |                |
| /s/ Jordan C. Zaken    |   |                                                                                          |   |                |
| Jordan C. Zaken        |   | Director                                                                                      |   | March 3, 2011  |

----

|   | VERSO PAPER HOLDINGS LLC |
|--------|--------------------------|
|   |                     |   |
|   |                     |   |
|   | By:                      | /s/ Michael A. Jackson |
|   |                     | Michael A. Jackson |
|   |                     | President and Chief Executive Officer |
|   |                     |   |
|   |                     |   |
|   | By:                      | /s/ Robert P. Mundy |
|   |                     | Robert P. Mundy |
|   |                     | Senior Vice President and Chief Financial Officer |

| Signature              |   | Position                                                                                      |   | Date                |
|------------------------|--------|-----------------------------------------------------------------------------------------------|--------|---------------------|
|                   |   |                                                                                          |   |                |
| /s/ Michael A. Jackson |   |                                                                                          |   |                |
| Michael A. Jackson     |   | President, Chief Executive Officer and Director(Principal Executive Officer)                  |   | March 3, 2011       |
| /s/ Robert P. Mundy    |   |                                                                                          |   |                |
| Robert P. Mundy        |   | Senior Vice President and Chief FinancialOfficer (Principal Financial and Accounting Officer) |   | March 3, 2011  |
| /s/ Michael E. Ducey   |   |                                                                                          |   |                |
| Michael E. Ducey       |   | Director                                                                                      |   | March 3, 2011       |
|                   |   |                                                                                          |   |                |
| /s/ Scott M. Kleinman  |   |                                                                                          |   |                |
| Scott M. Kleinman      |   | Director                                                                                      |   | March 3, 2011  |
|                   |   |                                                                                          |   |                |
|                   |   |                                                                                          |   |                |
| David W. Oskin         |   | Director                                                                                      |   | March 3, 2011  |
|                   |   |                                                                                          |   |                |
| /s/ L.H. Puckett, Jr.  |   |                                                                                          |   |                |
| L.H. Puckett, Jr.      |   | Director                                                                                      |   | March 3, 2011  |
|                   |   |                                                                                          |   |                |
| /s/ David B. Sambur    |   |                                                                                          |   |                |
| David B. Sambur        |   | Director                                                                                      |   | March 3, 2011  |
|                   |   |                                                                                          |   |                |
| /s/ Jordan C. Zaken    |   |                                                                                          |   |                |
| Jordan C. Zaken        |   | Director                                                                                      |   | March 3, 2011  |

----

----

----

|                                                                 |   | Balance at |   |   | Charged to |   |   | Charge-off |   |   | Balance   |   |
|----------------------------------------------------------------------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|-----------|--------|
|                                                                 |   | Beginning  |   |   | Cost and   |   |   | Against    |   |   | at End of |   |
| (Dollars in thousands)                                               |   | of Period  |   |   | Expenses   |   |   | Allowances |   |   | Period    |   |
| Allowance for uncollectible accounts included in Accounts receivable |   |       |   |   |       |   |   |       |   |   |
|   on the consolidated statements of condition                   |   |       |   |   |       |   |   |       |   |   |      |   |
| Year Ended December 31, 2008                                         |   | $          | 1,677  |   |       | $      | 999    |       |   | $      | (783      | )      |   | $ | 1,893 |   |
| Year Ended December 31, 2009                                         |   | $          | 1,893  |   |       | $      | 432    |       |   | $      | (1,356    | )      |   | $ | 969 |   |
| Year Ended December 31, 2010                                         |   | $          | 969    |   |       | $      | 214    |       |   | $      | (398      | )      |   | $ | 785 |   |

| S-3  |
|-----------|