Appleton Papers Inc.

Earnings Review

Fourth Quarter & Full Year 2010

March 8, 2011

Forward-Looking Statements

This presentation contains forward-looking statements. The words “will,” “may,” “should,” “believes,” “anticipates,” “intends,” “estimates,” “expects,”

“projects,” “plans,” “seek” or similar expressions are intended to identify forward-looking statements. All statements in this news release, other than

statements of historical fact, including statements which address Appleton’s strategy, future operations, future financial position, estimated revenues,

projected costs, prospects, plans and objectives of management and events or developments that Appleton expects or anticipates will occur, are

forward-looking statements. All forward-looking statements speak only as of the date on which they are made. They rely on a number of assumptions

concerning future events and are subject to a number of risks and uncertainties, many of which are outside the Company’s control that could cause

actual results to differ materially from such statements. These risks and uncertainties include, but are not limited to, the factors listed under “Item 1A

- Risk Factors” in the Annual Report on Form 10-K for the year ended January 1, 2011. Many of these factors are beyond Appleton’s ability to control

or predict. Given these uncertainties, you should not place undue reliance on the forward-looking statements. Appleton disclaims any obligation to

update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Non-GAAP Financial Measures

This presentation refers to certain non-U.S. GAAP financial measures. EBITDA in this presentation is defined as net income plus net interest, taxes,

depreciation and amortization, and is derived from the Annual Report on Form 10-K for the current year ended January 1, 2011. For the three

months ended October 3, 2010, EBITDA excludes loss due to involuntary conversion. A reconciliation of those numbers to U.S. GAAP financial

measures is attached in the appendix of this presentation. Reference should also be made to the Annual Report on Form 10-K for the year ended

January 2, 2010, the consolidated financial statements and related notes included therein.

Other Information

The Company’s three reportable segments are as follows: carbonless papers, thermal papers, and Encapsys®.

On December 18, 2009, Appleton completed the sale of C&H Packaging, Inc. (“C&H”). Prior to the sale, C&H was included within the performance

packaging business segment. Unless noted otherwise, C&H operating results have been reclassified and are now reported separately as

discontinued operations.

On July 2, 2010, Appleton entered into a stock purchase agreement with NEX Performance Films Inc. (“Films”), an entity affiliated with Mason Wells

Buyout Fund II, Limited Partnership, whereby Appleton agreed to sell all of the outstanding capital stock of American Plastics, Inc. and New England

Extrusion Inc. The transaction closed on July 22, 2010. The operating results for this business have been reclassified and are now reported

separately as discontinued operations.

During the fourth quarter 2010, Appleton changed its method of inventory accounting, for raw materials, work in process and finished goods

inventories, from the LIFO method to the FIFO method. All periods presented have been restated to include the impact of this change. Reference

should also be made to the Annual Report on Form 10-K for the year ended January 1, 2011, the consolidated financial statements and related notes

included therein.

2

Q4 & Full Year 2010 Overview

• Delivered expected improvements to revenue, shipments and EBITDA

• Grew market leadership positions in the paper segments

• Achieved significant growth in revenue, shipments and income for Encapsys®

• Benefited from higher selling prices and improved product mix

• Improved operating efficiencies and reduced manufacturing costs

• Improved operating income

• Repaid $17.5 million secured term note due December 2013

3

4

Net Sales

$204.2M

• Up 8.4% compared to fourth quarter 2009

• Thermal papers up 14.5%

• Encapsys® up 32.1%

• Carbonless papers up 0.5%

Volumes • Thermal shipments up 7.8%

• Encapsys® shipments up 43.9%

• Carbonless shipments down 6.3%

Operating

Income(1)

$8.0M

• Up $14.0 million from fourth quarter 2009, excluding alternative fuels tax credit

recorded in fourth quarter 2009 and environmental expense recovery recorded in fourth

quarter 2010

EBITDA(1)

$21.4M

• Up $13.0 million, or 155.1%, excluding alternative fuels tax credit and environmental

expense recovery

• Down from third quarter reflecting normal seasonality

Q4 2010 Financial Highlights

Net Sales, Operating Earnings & EBITDA Up

(1) Adjusted results; also refer to reconciliation of non-GAAP EBITDA & adjusted EBITDA in the attached

appendix. All periods presented have been restated to include the impact of the change from LIFO to the FIFO

inventory accounting method.

5

Net Sales

$849.9M

• Up 11.6% compared to prior year

• Thermal papers up 21.6%

• Encapsys® up 29.1%

• Carbonless papers up 3.2%

Volumes • Thermal shipments up 24.1%

• Encapsys® shipments up 50.0%

• Carbonless shipments up 3.9%

Operating

Income(1)

$28.1M

• Up $11.5 million, or 68.9%, excluding environmental insurance recovery, and

alternative fuels tax credit and debt exchange costs

EBITDA(1)

$79.3M

• Up $6.2 million, or 8.5%, excluding environmental insurance recovery, alternative

fuels tax credit and debt exchange costs

• Raw material inflation of $28 million within paper business

2010 Full Year Financial Highlights

Sales and Profitability Improve; Input Costs Up

(1) Adjusted results; also refer to reconciliation of non-GAAP EBITDA & adjusted EBITDA in the attached

appendix. All periods presented have been restated to include the impact of the change from LIFO to the FIFO

inventory accounting method.

Net Sales Increased 8.4% From Q4 2009

Up 11.6% For Full Year

6

$189 $189$196

$188

$210$221

$215 $204

$0

$50

$100

$150

$200

$250

$300

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2009 2010

$ Millions

$24$25 $25

$13

$25

$15

$26

$22

$0

$5

$10

$15

$20

$25

$30

$35

$40

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2009 2010

18

5

8

1

EBITDA up 155% vs. Q4 2009(1)

Alternative Fuels Tax Credit (2009),

Voluntary Debt Exchange Expenses (Q3 2009),

Environmental Expense Recovery (Q1 & Q4 2010)

7

$ Millions

(1) Adjusted results; also refer to reconciliation of non-GAAP EBITDA & adjusted EBITDA in the

attached appendix. All periods presented have been restated to include the impact of the change

from LIFO to the FIFO inventory accounting method.

EBITDA Q4 2009 vs. Q4 2010

8

$0

$5

$10

$15

$20

$25

$30

Q4 2009 Volume /

Price /

Mix

Inflation Mfg. Ops,

net

SG&A /

Other

Alternative Fuels

Tax Credit

Env. Expense

Recovery

Q4 2010

(1.1)

(4.7)

$13.1

14.5

(5.9)

5.5

$22.2 0.8

$ Millions

EBITDA FY 2009 vs. FY 2010

9

$86.6

(25.7)

8.9

$0

$20

$40

$60

$80

$100

$120

FY 2009 Volume /

Price /

Mix

Inflation Mfg. Ops,

net

SG&A /

Other

Alternative

Fuels Tax Credit /

Bond Fees

Env. Expense

Recovery

FY 2010

2.9

(5.3)

34.3

(13.5)

$88.2

$ Millions

109 109

7485

11

15

(6) (5)

Sales

$204 $188

Strong Business Unit Performances

Carbonless Papers

Encapsys ®

Corporate/Intersegment

Thermal Papers

Alternative Fuels Tax Credit (2009)

Environmental Expense Recovery (2010)

Q4 2009 Q4 2010Q4 2009 Q4 2010

10

6

142

6

2

4

(2) (3)

5

1

Total EBITDA(1)

$22

$13

$ Millions

(1) All periods presented have been restated to include the impact of the change from LIFO to the FIFO inventory

accounting method.

$ Millions

2009 2010 2009 2010

EBITDA Margin (%)

11

Q4 Net sales grew 14.5% Q4 EBITDA up 236.6%

$65 $70 $71

$75 $80

$87 $89 $85

$0

$20

$40

$60

$80

$100

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Sales

$2 $2

$4

$2 $3 $3

$7 $6

0%

2%

4%

6%

8%

10%

12%

$0

$2

$4

$6

$8

$10

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

EBITDA

Thermal Business Segment

$ Millions $ Millions

(1) All periods presented have been restated to include the impact of the change from LIFO to the FIFO inventory

accounting method.

Encapsys® Business Segment

12

Q4 Net sales grew 32.1% Q4 EBITDA up 176.8%

$9 $10 $11

$11 $11 $12

$14 $15

$0

$2

$4

$6

$8

$10

$12

$14

$16

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Sales

$1

$1 $2 $2

$2 $2

$4

$5

0%

5%

10%

15%

20%

25%

30%

35%

$0

$1

$2

$3

$4

$5

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

EBITDA

2009 2010 2009 2010

EBITDA Margin (%)

$ Millions $ Millions

(1) All periods presented have been restated to include the impact of the change from LIFO to the FIFO inventory

accounting method.

$22 $24 $25

$11 $15

$12

$18 $14

8

5

5

0%

5%

10%

15%

20%

25%

$0

$5

$10

$15

$20

$25

$30

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

EBITDA

$121 $115

$120

$109

$125 $128

$117 $109

$0

$20

$40

$60

$80

$100

$120

$140

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Sales

Carbonless Business Segment

13

Q4 Net sales increased 0.5% Q4 EBITDA up 112.4%(1)

2009 2010 2009 2010

Alternative Fuels Tax Credit EBITDA Margin (%)

$ Millions $ Millions

(1) Excludes alternative fuels tax credit (2009).All periods presented have been restated to include the impact of

the change from LIFO to the FIFO inventory accounting method.

14

Net Debt • Net debt of $555.0 million as of fourth quarter 2010 compared to $540.1 million at

year-end 2009

•$3.8 million cash available at year-end, compared $10.0 million at

year-end 2009

• Receivable related to coal silo collapse of $8.2 million

Liquidity • Over $42 million of available liquidity at year-end

• On November 1, 2010, Appleton repaid the $17.5 million balance of the secured term

note payable at 14.25% due December 2013

Capital

Expenditures &

ESOP

• Used $17.8 million on capital projects

• $11.8 million in payments to redeem ESOP shares

Working

Capital

• Used $30.0 million of cash for operations in 2010 due to $36.6 million increase in

working capital

• Receivables up $14.5 million due to increased net sales and international sales

Balance Sheet

Net Debt

15

$530

$566

$591$600

$618 $622

$561

$540

$584

$599

$537

$555

$400

$450

$500

$550

$600

$650

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2008 2009 2010

$ Millions

Cash Conversion Days (# of days)

16

47.7 45.7 45.2

52.949.0 45.5

32.6

28.425.4

YE 2008 YE 2009 YE 2010

Accounts Receivable Inventory Accounts Payable

66.365.3

68.0

All periods presented have been restated to include the impact of the change from LIFO to the FIFO inventory

accounting method.

Outlook: Cautiously Optimistic

• Paper shipments in first quarter are expected to improve from fourth quarter

• Steady demand for our market-leading thermal products

• Continued growth of the Encapsys® segment

• Recovering profit margins

• Improving operating efficiencies

• Continuing inflation in chemical and oil based inputs, no relief from record

pulp prices

• Continued focus on reducing waste, controlling spending and increasing

cash flow

17

Appendix

4th Quarter & FY 2010 Earnings Summary

19

% %

($ in thousands) January 1, 2011 January 2, 2010 Change January 1, 2011 January 2, 2010 Change

Net sales $ 204,222 $ 188,362 8.4% $ 849,884 $ 761,807 11.6%

Gross profit 40,495 31,960 26.7% 165,396 158,560 4.3%

Environmental expense insurance recovery 766 - nm 8,947 - nm

Operating income 8,732 (1,313) 765.0% 37,039 30,108 23.0%

(Loss) income from continuing operations (7,621) (14,269) 46.6% (35,163) 23,814 -247.7%

Net income from discontinued operations (169) (3,093) 94.5% 3,499 (606) 677.4%

Net (loss) income (7,790) (17,362) 55.1% (31,664) 23,208 -236.4%

Other financial data:

Depreciation, amortization and other 13,433 14,400 -6.7% 51,200 56,460 -9.3%

EBITDA 22,165 13,087 69.4% 88,239 86,568 1.9%

Comparison as a % of net sales

Gross margin 19.8% 17.0% 2.9% 19.5% 20.8% -1.4%

Operating income 4.3% -0.7% 5.0% 4.4% 4.0% 0.4%

(Loss) income from continuing operations -3.7% -7.6% 3.8% -4.1% 3.1% -7.3%

EBITDA 10.9% 6.9% 3.9% 10.4% 11.4% -1.0%

For the

Three Months Ended

For the

Year Ended

Segment EBITDA

20

($ in thousands) Year Ended Year Ended

QTR 1 QTR 2 QTR 3 QTR 4 January 2, 2010 QTR 1 QTR 2 QTR 3 QTR 4 January 1, 2011

Carbonless Papers (4), (7), (8)

Operating income 14,015$ 15,343$ 16,824$ 2,961$ 49,143$ 8,233$ 4,910$ 10,553$ 6,778$ 30,474$

Depreciation, amortization & other 8,349 8,141 8,233 8,416 33,139 6,856 6,883 7,125 7,407 28,271

EBITDA 22,364$ 23,484$ 25,057$ 11,377$ 82,282$ 15,089$ 11,793$ 17,678$ 14,185$ 58,745$

Thermal papers (7), (8)

Operating income (loss) (2,903)$ (3,457)$ (1,201)$ (3,350)$ (10,911)$ (2,088)$ (2,015)$ 1,447$ 395$ (2,261)$

Depreciation, amortization & other 4,887 5,117 5,013 5,027 20,044 4,938 4,931 5,109 5,250 20,228

EBITDA 1,984$ 1,660$ 3,812$ 1,677$ 9,133$ 2,850$ 2,916$ 6,556$ 5,645$ 17,967$

Encapsys

Operating income 342$ 828$ 740$ 794$ 2,704$ 1,533$ 1,614$ 2,986$ 3,942$ 10,075$

Depreciation, amortization & other 511 645 922 881 2,959 461 548 751 695 2,455

EBITDA 853$ 1,473$ 1,662$ 1,675$ 5,663$ 1,994$ 2,162$ 3,737$ 4,637$ 12,530$

Unallocated corporate charges (5), (6)

Operating income (loss) (684)$ (713)$ (4,975)$ (807)$ (7,179)$ 6,561$ (1,329)$ (1,353)$ (1,583)$ 2,296$

Depreciation, amortization & other 79 81 82 76 318 48 49 68 81 246

EBITDA (605)$ (632)$ (4,893)$ (731)$ (6,861)$ 6,609$ (1,280)$ (1,285)$ (1,502)$ 2,542$

Intersegment (3) (774) (896) (1,068) (911) (3,649) (1,148) (1,079) (518) (800) (3,545)

Total EBITDA 23,822$ 25,089$ 24,570$ 13,087$ 86,568$ 25,394$ 14,512$ 26,168$ 22,165$ 88,239$

(1) Unaudited quarterly financial data.

(2) The operating results for performance packaging have been reclassified and are now reported separately as discontinued operations.

(3) Intersegment represents the portion of the Encapsys® segment financial results relating to encapsulated products provided internally for the production of carbonless papers.

(4) In 2009, carbonless results include alternative fuels tax credits of $7,962, $4,993 and $4,700 in Q2, Q3 and Q4, respectively.

(5) In the third quarter of 2009, $4,182 of costs associated with the write-off of debt costs was recorded within unallocated corporate charges.

(6) Environmental expense recoveries of $8,181 and $766 were recorded during the first quarter and fourth quarters of 2010, respectively.

(7) Third quarter 2010 results for carbonless and thermal papers include a $246 and $145, respectively, loss on disposal due to involuntary conversion related to the silo collapse at West Carrollton.

(8) Fourth quarter 2010 results for carbonless and thermal papers include a $648 and $381, respectively, gain on fixed assets due to involuntary conversion related to the silo collapse at West Carrollton.

(9) All prior period financial information has been restated to conform to FIFO accounting for inventories.

2009 (1), (2), (9) 2010 (1), (2), (9)

Condensed Balance Sheets

21

($ in thousands) January 1, 2011 January 2, 2010

Cash and cash equivalents 3,772$ 9,963$

Accounts receivable 93,374 81,485

Inventories 110,032 105,017

Other current assets 41,992 54,758

Assets of discontinued operations - 17,772

Total current assets 249,170 268,995

Property, plant and equipment, net 354,601 385,129

Other long-term assets 73,228 96,195

Assets of discontinued operations 40,332

Total assets 676,999$ 790,651$

Current portion of long-term debt 18,694$ 5,955$

Accounts payable 48,651 55,384

Other current liabilities 66,082 96,581

Liabilities of discontinued operations - 5,733

Total current liabilities 133,427 163,653

Long-term debt 540,131 544,113

Other long-term liabilities 139,432 189,608

Total equity (135,991) (106,723)

Total liabilities & equity 676,999$ 790,651$

22

Reconciliation of Non-GAAP EBITDA

& Adjusted EBITDA

22

($ in thousands) January 1, 2011 January 2, 2010 January 1, 2011 January 2, 2010

(Loss) income from continuing operations before income taxes $ (7,535) $ (14,069) $ (34,987) $ 24,147

Depreciation and amortization 12,404 14,400 50,171 56,460

Net interest expense 15,550 12,727 65,445 50,889

Net debt extinguishment expense (income) 1,478 144 7,010 (42,602)

Foreign exchange loss (gain) and other loss (income) 268 (115) 600 (2,326)

EBITDA $ 22,165 $ 13,087 $ 88,239 $ 86,568

Alternative fuels tax credit - (4,700) - (17,655)

Debt extinguishment expenses - - - 4,182

Environmental insurance recovery (766) - (8,947) -

Adjusted EBITDA $ 21,399 $ 8,387 $ 79,292 $ 73,095

For the For the

Three Months Ended Year Ended