10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended: October2, 2016

OR

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

For The Transition Period From            To             .

Commission file number: 333-82084-01

PAPERWEIGHT DEVELOPMENT CORP.

(Exact Name of Registrant as Specified in Its Charter)

Wisconsin

(State or Other Jurisdiction of

Incorporation or Organization)

39-2014992

(I.R.S. Employer

Identification No.)

825 East Wisconsin Avenue, P.O. Box 359,

Appleton, Wisconsin

(Address of Principal Executive Offices)

Registrant’s telephone number, including area code: (920) 734-9841

Indicate by check mark whether each 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.    Yes ☐     No  ☒

Indicate by check mark whether each registrant has submitted electronically and posted on its corporate Web site, 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). Yes  ☒   No  ☐

Indicate by check mark whether either of the registrants is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check one).

Large Accelerated filer  ☐    Accelerated filer  ☐    Non-accelerated filer  ☒    (Do not check if a smaller reporting company)

Smaller reporting company ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):    Yes  ☐    No  ☒

As of November 1, 2016,  6,416,315 shares of Paperweight Development Corp. common stock, $.01 par value, were outstanding. There is no trading market for the common stock of Paperweight Development Corp. No shares of Paperweight Development Corp. were held by non-affiliates.

Documents incorporated by reference: None.

INDEX

			Page Number
PART I	FINANCIAL INFORMATION
Item 1	Financial Statements (unaudited)
	a)	Condensed Consolidated Balance Sheets	3
	b)	Condensed Consolidated Statements of Comprehensive(Loss) Income	4
	c)	Condensed Consolidated Statements of Cash Flows	5
	d)	Condensed Consolidated Statements of Redeemable Common Stock, Accumulated Deficit and Accumulated Other Comprehensive Income	6
	e)	Notes to Condensed Consolidated Financial Statements	7
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations		25
Item 3	Quantitative and Qualitative Disclosures About Market Risk		30
Item 4	Controls and Procedures		30
PART II	OTHER INFORMATION
Item 6	Exhibits		32
Signatures			33

2

PART 1 – FINANCIAL INFORMATION

Item 1 – Financial Statements (unaudited)

PAPERWEIGHT DEVELOPMENT CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(dollars in thousands, except share data)
	October 2,		January 2,
	2016		2016
ASSETS
Current assets
Cash and cash equivalents	$	3,685	$	1,817
Accounts receivable, less allowance for doubtful accounts of $913 and $1,073, respectively		46,861		41,573
Inventories		85,761		87,197
Other current assets		2,793		4,738
Total current assets		139,100		135,325
Property, plant and equipment, net		210,041		214,869
Intangible assets, net		35,269		36,983
Other assets		9,725		11,253
Total assets	$	394,135	$	398,430
LIABILITIES, REDEEMABLE COMMON STOCK,
ACCUMULATED DEFICIT AND
ACCUMULATED OTHER COMPREHENSIVE INCOME
Current liabilities
Current portion of long-term debt, net	$	5,792	$	1,567
Accounts payable		44,763		51,064
Accrued interest		9,148		2,814
Other accrued liabilities		46,603		49,041
Total current liabilities		106,306		104,486
Long-term debt, net		428,291		413,763
Postretirement benefits other than pension		20,706		22,581
Accrued pension		111,006		105,750
Other long-term liabilities		33,461		35,354
Commitments and contingencies  (Note 12)		—		—
Redeemable common stock, $0.01 par value,
shares authorized:  30,000,000,
shares issued and outstanding: 6,416,315 and
6,757,898, respectively		112,760		114,749
Accumulated deficit		(436,851)		(419,925)
Accumulated other comprehensive income		18,456		21,672
Total liabilities, redeemable common stock, accumulated
deficit and accumulated other comprehensive income	$	394,135	$	398,430

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

PAPERWEIGHT DEVELOPMENT CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(unaudited)
(dollars in thousands)
	For the		For the		For the		For the
	Three Months Ended		Three Months Ended		Nine Months Ended		Nine Months Ended
	October 2, 2016		October 4, 2015		October 2, 2016		October 4, 2015
Net sales	$	169,189	$	180,591	$	523,280	$	530,658
Cost of sales		139,852		147,721		427,486		438,137
Gross profit		29,337		32,870		95,794		92,521
Selling, general and administrative expenses		25,917		28,701		78,922		85,462
Operating income		3,420		4,169		16,872		7,059
Other expense
Interest expense, net		10,179		11,094		30,550		36,446
Debt modification/extinguishment expense		—		3,605		—		3,605
Foreign exchange loss (gain)		95		210		(223)		1,418
Other expense		280		266		802		786
Loss from continuing operations before income taxes		(7,134)		(11,006)		(14,257)		(35,196)
Provision for income taxes		76		17		234		167
Loss from continuing operations		(7,210)		(11,023)		(14,491)		(35,363)
Discontinued operations
Income from discontinued operations, net of income taxes		—		2,983		—		11,750
Gain on sale, net of income taxes		—		188,921		—		188,921
Income from discontinued operations, net of income taxes		—		191,904		—		200,671
Net (loss) income		(7,210)		180,881		(14,491)		165,308
Other comprehensive loss:
Changes in retiree plans		(913)		(946)		(2,743)		(2,838)
Unrealized gains (losses) on derivatives		372		(803)		(473)		(1,463)
Total other comprehensive loss		(541)		(1,749)		(3,216)		(4,301)
Comprehensive (loss) income	$	(7,751)	$	179,132	$	(17,707)	$	161,007

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

PAPERWEIGHT DEVELOPMENT CORP.  AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED
(unaudited)
(dollars in thousands)
	October 2,		October 4,
	2016		2015
Cash flows from operating activities:
Net (loss) income	$	(14,491)	$	165,308
Adjustments to reconcile net (loss) income to net cash used by operating activities:
Depreciation		17,935		19,824
Amortization of intangible assets and other		1,968		1,714
Amortization of financing fees		1,429		1,526
Amortization of debt discount		591		720
Employer 401(k) noncash matching contributions		1,245		1,509
Foreign exchange (gain) loss		(260)		1,468
Gain on sale of Encapsys		—		(188,921)
Debt modification expense		—		3,605
Loss on disposals of equipment		46		1,198
(Increase)/decrease in assets and increase/(decrease) in liabilities:
Accounts receivable		(5,521)		3,546
Inventories		1,647		13,048
Other current assets		1,950		3,264
Accounts payable and other accrued liabilities		(7,838)		(30,214)
Accrued pension		3,463		(1,948)
Other, net		(3,309)		(6,189)
Net cash provided (used) byoperating activities		(1,145)		(10,542)
Cash flows from investing activities:
Proceeds from sale of equipment		46		8
Net change in cash due to sale of Encapsys		—		200,514
Increase in restricted cash		—		(4,276)
Additions to property, plant and equipment		(11,521)		(12,623)
Net cash provided (used) by investing activities		(11,475)		183,623
Cash flows from financing activities:
Debt acquisition costs		—		(850)
Payments of first lien term loan		—		(172,512)
Payments relating to capital lease obligations		(208)		(159)
Proceeds from revolving line of credit		271,400		262,400
Payments of revolving line of credit		(258,000)		(265,350)
Payments of State of Ohio loans		(1,167)		(1,100)
Proceeds from issuance of redeemable common stock		850		1,062
Payments to redeem common stock		(6,093)		(5,077)
Increase in cash overdraft		7,669		8,108
Net cash provided (used) byfinancing activities		14,451		(173,478)
Effect of foreign exchange rate changes on cash and cash equivalents		37		(50)
Change in cash and cash equivalents		1,868		(447)
Cash and cash equivalents at beginning of period		1,817		2,720
Cash and cash equivalents at end of period	$	3,685	$	2,273

Noncash activities: In September 2016, Appvion entered into a $4.5 million promissory note related to the Fox River Funding Agreement, and reclassified the amount due to short-term debt. The impact of this is included in the operating activities section of the Consolidated Statement of Cash Flows.

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

PAPERWEIGHT DEVELOPMENT CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE COMMON STOCK,
ACCUMULATED DEFICIT AND ACCUMULATED OTHER COMPREHENSIVE INCOME
FOR THE NINE MONTHS ENDED
(unaudited)
(dollars in thousands, except share data)
	Redeemable Common Stock						Accumulated
							Other
	Shares				Accumulated		Comprehensive
	Outstanding		Amount		Deficit		Income
Balance, January 2, 2016	6,757,898	$	114,749	$	(419,925)	$	21,672
Net loss	—		—		(14,491)		—
Other comprehensive loss	—		—		—		(3,216)
Issuance of redeemable common stock	135,592		1,669		—		—
Redemption of redeemable common stock	(477,175)		(8,734)		2,641		—
Change in fair value and accretion of redeemable common stock	—		5,076		(5,076)		—
Balance, October 2, 2016	6,416,315	$	112,760	$	(436,851)	$	18,456
Balance, January 3, 2015	7,205,699	$	121,017	$	(579,136)	$	27,186
Net income	—		—		165,308		—
Other comprehensive loss	—		—		—		(4,301)
Issuance of redeemable common stock	189,150		2,080		—		—
Redemption of redeemable common stock	(438,484)		(7,962)		2,885		—
Change in fair value and accretion of redeemable common stock	—		5,885		(5,885)		—
Balance, October 4, 2015	6,956,365	$	121,020	$	(416,828)	$	22,885

Theaccompanying notes are an integral part of these condensedconsolidated financial statements.

6

PAPERWEIGHT DEVELOPMENT CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.       BASIS OF PRESENTATION

In the opinion of management, all adjustments made for the fair statement of comprehensive (loss) income for the three and ninemonths ended October2, 2016 and October4, 2015, the cash flows for the nine months ended October2, 2016 and October4, 2015 and financial position at October2, 2016 and January 2, 2016 were normal recurring adjustments. As disclosed in Note 15 to the Condensed Consolidated Financial Statements, the Company adopted Accounting Standards Update (“ASU”) 2015-03, “Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs,” during the first quarter of 2016. In accordance with the guidance, $8.1 million of unamortized debt issuance costs, associated with the Company’s long-term debt, were reclassified from other assets, as previously reported on the Consolidated Balance Sheet as of January 2, 2016, to long-term debt.

These condensed financial statements should be read in conjunction with the audited consolidated financial statements and notes of Paperweight Development Corp. (“PDC”) and its 100%-owned subsidiaries (collectively the “Company”), which includes Appvion, Inc. and its 100%-owned subsidiaries (collectively “Appvion”) for each of the three years in the period ended January 2, 2016, which are included in the annual report on Form 10-K for the year ended January 2, 2016. The condensed consolidated balance sheet data as of January 2, 2016, contained within these condensed financial statements, was derived from the audited financial statements of PDC but does not include all disclosures required by accounting principles generally accepted in the United States of America.

The results of operations for any interim period are not necessarily indicative of the results to be expected for the full year.

2.DISCONTINUED OPERATIONS

On August 3, 2015, Appvion completed the sale of the assets primarily used in the development, manufacture and sale of microencapsulation materials by the Encapsys segment of the Company (the “Encapsys Business”) to Rise Acquisition LLC (“Rise”), a Delaware limited liability company and an affiliate of Sherman Capital Holdings LLC, a Delaware limited liability company, for an aggregate purchase price of $208 million in cash, subject to working capital adjustments, and the assumption of certain liabilities (the “Sale”). Total working capital adjustments and cash expenses of the Sale were approximately $7.5 million. Of the approximate $200.5 million of net proceeds, $165 million was used immediately to repay a portion of long-term debt. In addition, proceeds of $35 million were set aside as restricted cash to be used within one year of this transaction for the specific purpose of capital investment and/or further debt reduction. As of January 2, 2016, Appvion had used this entire amount of restricted cash to repay an additional $25 million in long-term debt and $10 million for capital investment. The estimated carrying value of the net assets sold was $11.8 million. The operating results for this business for the three and nine months ended October4, 2015 have been reclassified and are now reported separately as discontinued operations.

In connection with the Sale, Appvion and Rise entered into certain other agreements, including a Supply Agreement, by which Rise will supply Appvion with all of its microencapsulation product requirements for use in its carbonless paper products for a ten-year term subject to renewal, and a Transition Services Agreement, by which Appvion will provide certain transition services to Rise for up to three years following the closing date. Additionally, Appvion and Rise entered into a lease agreement, by which Appvion will lease a portion of its facilities in Appleton, Wisconsin to Rise for a three-year term, as well as a Patent License Agreement with respect to certain shared patents related to the Encapsys Business and Appvion’s retained paper businesses.

7

PAPERWEIGHT DEVELOPMENT CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

The following table presents the key line items constituting income from discontinued operations for the Encapsys Business for the three and nine months ended October 4, 2015 (dollars in thousands):

	For the Three		For the Nine
	Months Ended		Months Ended
	October 4, 2015		October 4, 2015
Net sales	$	4,795	$	28,263
Cost of sales		1,440		11,697
Selling, general and administrative expenses		372		4,816
Income from discontinued operations		2,983		11,750
Gain on sale		188,921		188,921
Income from discontinued operations	$	191,904	$	200,671

The following are the significant line items of the Encapsys Business impacting cash flow for the periods presented (dollars in thousands):

	For the Three		For the Nine
	Months Ended		Months Ended
	October 4, 2015		October 4, 2015
Depreciation (recovery) expense	$	(377)	$	967
Additions to property, plant and equipment		815		2,282

8

PAPERWEIGHT DEVELOPMENT CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

3.       ACCOUNTS RECEIVABLE SECURITIZATION

During June 2014, the Company entered into an accounts receivable securitization program with a commitment size of $30.0 million, whereby transactions under the program are accounted for as sales of trade receivables in accordance with ASC Topic 860, “Transfers and Servicing.” Sales of trade receivables under the program are recorded as a reduction of accounts receivable in the Condensed Consolidated Balance Sheets as of October2, 2016 and January 2, 2016. Proceeds received, including collections on the deferred purchase price notes receivable, are included in cash flows from operating activities in the Condensed Consolidated Statements of Cash Flows for the nine months ended October2, 2016 and October4, 2015.

Trade receivables sold to the third-party financial institution, and being serviced by Appvion, Inc., totaled $33.6 million as of October2, 2016, for which $10.7 million in proceeds was received. Trade receivables sold to the third-party financial institution as of January 2, 2016 totaled $36.9 million, for which $18.1 million in proceeds was received. The fair value of the receivables sold equaled the carrying cost at the time of sale and no gain or loss was recorded as a result of the sale. The fair value of the deferred purchase price notes receivable recorded as of October2, 2016 was $21.1 million and $16.5 million as of year-end 2015 and is included in accounts receivable in the Condensed Consolidated Balance Sheets as of October2, 2016 and January 2, 2016, respectively. The Company estimates the fair value of the deferred purchase price notes receivable using Level 3 inputs based on historical performance of similar receivables including an allowance for doubtful accounts, as well as estimated cash discounts to be taken by customers and potential credits issued to customers. The Company deems the interest rate risk related to the deferred purchase price notes to be de minimis primarily due to the short average collection cycle (30 days) of the related receivables.

Servicing fees paid for the program were $0.1 million and $0.4 million for the three- and nine-month periods ended October 2, 2016, respectively, as well as for the three- and nine-month periods endedOctober4, 2015, respectively. Transaction costs of $0.7 million, related to the June 2014 entry into this program, were deferred and recorded on the balance sheet as other long-term assets. They are being amortized over the three-year term of the securitization agreement, ending June 2017. The remaining balance at October2, 2016 was $0.2 million.

4.       OTHER INTANGIBLE ASSETS

The Company’s intangible assets consist of the following (dollars in thousands):

	As of October 2, 2016				As of January 2, 2016
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Amortizable intangible assets:
Trademarks	$	44,665	$	34,143	$	44,665	$	32,570
Patents		5,443		5,443		6,158		6,158
Customer relationships		5,365		3,483		5,365		3,342
Subtotal		55,473	$	43,069		56,188	$	42,070
Unamortizable intangible assets:
Trademarks		22,865				22,865
Total	$	78,338			$	79,053

Amortization expense of intangibles from continuing operations for the three and ninemonths ended October2, 2016 was $0.6 million and $1.7 million, respectively. Amortization expense of intangibles from continuing operations for the three and nine months ended October4, 2015 was $0.6 million and $1.7 million, respectively.

9

PAPERWEIGHT DEVELOPMENT CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

5.       INVENTORIES

Inventories consist of the following (dollars in thousands):

	October 2, 2016		January 2, 2016
Finished goods	$	47,112	$	47,378
Raw materials		12,652		14,925
Work in process		10,148		9,300
Stores and spare parts		15,849		15,594
	$	85,761	$	87,197

Stores and spare parts inventory represents manufacturing supplies and equipment parts of varying age that must be available, on demand, to ensure minimal interruption of manufacturing processes. The balance is valued at average cost. All other inventories are valued using the first-in, first-out (“FIFO”) method.

6.       PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment balances consist of the following (dollars in thousands):

	October 2, 2016		January 2, 2016
Land and improvements	$	9,762	$	9,684
Buildings and improvements		129,731		129,453
Machinery and equipment		506,950		504,338
Software		33,888		33,476
Capital leases		1,180		996
Construction in progress		12,309		6,149
		693,820		684,096
Accumulated depreciation		(483,779)		(469,227)
	$	210,041	$	214,869

Depreciation expense from continuing operations for the three and ninemonths ended October2, 2016 and October4, 2015consists of the following (dollars in thousands):

	For the Three		For the Three		For the Nine		For the Nine
	Months Ended		Months Ended		Months Ended		Months Ended
	October 2, 2016		October 4, 2015		October 2, 2016		October 4, 2015
Cost of sales	$	5,295	$	5,580	$	15,832	$	16,478
Selling, general and administrative expenses		699		918		2,103		2,379
	$	5,994	$	6,498	$	17,935	$	18,857

10

PAPERWEIGHT DEVELOPMENT CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

7.      OTHER ACCRUED LIABILITIES

Other accrued liabilities, as presented in the current liabilities section of the Condensed Consolidated Balance Sheet, consist of the following (dollars in thousands):

	October 2, 2016		January 2, 2016
Compensation	$	5,876	$	6,457
Trade discounts		10,723		12,977
Workers’ compensation		2,927		3,133
Accrued insurance		1,306		1,435
Other accrued taxes		1,077		1,694
Postretirement benefits other than pension		1,869		1,869
Fox River Funding Agreement		—		7,271
Due on accounts receivable securitization		11,300		5,500
Other		11,525		8,705
	$	46,603	$	49,041

As disclosed in Note 15, on September 1, 2016, Appvion paid $3.0 million of the Fox River Funding Agreement and reclassified the remaining $4.5 million to short-term debt.

8.       NEW ACCOUNTING PRONOUNCEMENTS

In August 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-15, “Classification of Certain Cash Receipts and Cash Payments.”  This guidance addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice.  This ASU is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years.  Early adoption is permitted.  This guidance should be applied using a retrospective transition method to each period presented.  The Company is assessing the impact the guidance will have, if any, on its consolidated financial statements.

In March 2016, FASB issued ASU No. 2016-09, “Improvements to Employee Share-Based Payment Accounting.” This guidance simplifies the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. This ASU is effective for fiscal years beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted. This guidance can be applied either prospectively, retrospectively or using a modified retrospective transition method. The Company is assessing the impact the guidance will have, if any, on its consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-05, “Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships.” This guidance clarifies that a change in the counterparty to a derivative instrument that has been designated as a hedging instrument does not, in and of itself, require dedesignation of that hedging relationship provided all other hedge accounting criteria continue to be met. The guidance must be applied using a prospective or modified retrospective application method and will be effective for fiscal years beginning after December 15, 2016 and interim periods within those fiscal years. Early adoption is permitted. The Company is assessing the impact the guidance will have, if any, on its consolidated financial statements.

11

PAPERWEIGHT DEVELOPMENT CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers.” This guidance provides a single comprehensive revenue recognition model to apply in determining how and when to recognize revenue. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. When applying the new revenue model to contracts with customers, the guidance requires five steps to be applied which include: 1) identify the contract(s) with a customer, 2) identify the performance obligations in the contract, 3) determine the transaction price, 4) allocate the transaction price to the performance obligations in the contract and 5) recognize revenue when (or as) the entity satisfies a performance obligation. The guidance also requires both quantitative and qualitative disclosures which are more comprehensive than existing revenue standards. The disclosures are intended to enable financial statement users to understand the nature, timing and uncertainty of revenue and the related cash flow. Additionally, in March 2016, the FASB issued ASU No. 2016-08, “Principal versus Agent Considerations” to clarify the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued ASU No. 2016-10, “Identifying Performance Obligations and Licensing” to clarify the guidance associated with identifying performance obligations and licensing. In May 2016, the FASB issued ASU No. 2016-11, “Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at March 3, 2016 EITF Meeting” to rescind specific guidance included in Topic 605, Revenue Recognition, and Topic 932, Extractive Activities-Oil and Gas, effective upon adoption of Topic 606. Also in May 2016, the FASB issued ASU No. 2016-12, “Narrow-Scope Improvements and Practical Expedients” to address certain issues in the guidance regarding assessing collectability, presentation of state taxes, noncash consideration, and completed contracts and contract modifications at transition. These ASU’s will be effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted but no earlier than the original effective date of fiscal years, and interim periods within those years, beginning after December 15, 2016. The Company is assessing the impact the guidance will have, if any, on its consolidated financial statements.

12

PAPERWEIGHT DEVELOPMENT CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

9.      EMPLOYEE BENEFITS

The components of net periodic benefit cost (gain) associated with the defined benefit pension plans include the following (dollars in thousands):

	For the Three		For the Three		For the Nine		For the Nine
	Months Ended		Months Ended		Months Ended		Months Ended
	October 2, 2016		October 4, 2015		October 2, 2016		October 4, 2015
Service cost	$	1,441	$	1,476	$	4,183	$	4,482
Interest cost		4,733		4,480		14,149		13,572
Expected return on plan assets		(5,183)		(5,780)		(15,681)		(17,532)
Amortization of prior service credit		(597)		(655)		(1,793)		(1,965)
Net loss (gain) amortization		3,026		(121)		3,026		(121)
Net periodic benefit cost (gain)	$	3,420	$	(600)	$	3,884	$	(1,564)

The Company does not expect to contribute any cash to its funded pension plan in 2016.

Certain of the Company’s hourly employees participated in a multi-employer defined benefit plan, the Pace Industry Union-Management Pension Plan (EIN #11-6166763). Participants in this plan included the West Carrollton, Ohio represented manufacturing employees, where the collective bargaining agreement expired on April 1, 2012. Participants also included the represented employees at the Kansas City, Kansas distribution center, where the collective bargaining agreement expired December 31, 2011. As a result of labor contracts ratified in June 2012 and September 2012, by the bargaining employees at the Kansas City, Kansas distribution center and West Carrollton, Ohio plant, respectively, both groups elected to end their participation in this multi-employer plan and instead participate in the defined benefit pension plan sponsored by the Company.In addition, during first quarter 2012 there was a workforce reduction at the West Carrollton, Ohio plant resulting from the cessation of papermaking activities. As a result, the Company recorded $25.0 million of expense in 2012 representing its estimated cost to satisfy a complete withdrawal liability under the terms of the plan’s trust agreement, with a payment period that began January 2014 and could extend for up to 20 years, discounted in accordance with ASC Section 450-20-S99-1. Payments of $0.5 million and $1.6 million were made during third quarter 2016 and the first nine months 2016, respectively, resulting in recorded interest expense of $0.3 million and $0.9 million for each of the two periods, respectively, and a $0.7 million reduction of the reserve since year-end 2015. Of the $22.7 million reserve, $0.9 million is classified as short-term and $21.8 million is classified as long-term within the Condensed Consolidated Balance Sheet at October2, 2016.

10.      POSTRETIREMENT BENEFIT PLANS OTHER THAN PENSIONS

The components of other postretirement benefit gain include the following (dollars in thousands):

	For the Three		For the Three		For the Nine		For the Nine
	Months Ended		Months Ended		Months Ended		Months Ended
	October 2, 2016		October 4, 2015		October 2, 2016		October 4, 2015
Service cost	$	16	$	1	$	48	$	139
Interest cost		215		248		715		888
Amortization of prior service credit		(316)		(291)		(950)		(873)
Net gain amortization		(1,277)		(2,487)		(1,277)		(2,487)
Net periodic benefit gain	$	(1,362)	$	(2,529)	$	(1,464)	$	(2,333)

13

PAPERWEIGHT DEVELOPMENT CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

11.      LONG-TERM INCENTIVE COMPENSATION     

In December 2001, the Company adopted the Long-Term Stock Appreciation Rights Plan (“SAR” Plan). As of January 3, 2010, the Company adopted the Long-Term Restricted Stock Unit Plan ("RSU" Plan). Both plans utilize phantom units. The value of a unit in the SAR Plan is based on the change in the fair market value of PDC’s common stock under the terms of the employee stock ownership plan (the “ESOP”) between the grant date and the exercise date. The value of a unit in the RSU Plan is based on the value of PDC common stock, as determined by the ESOP trustee. As of the end of third quarter 2016, the fair market value of one share of PDC common stock was $13.70.  

As of year-end 2015, 143,818 RSU units became vested and exercisable. In accordance with the RSU Plan, payment for these RSU’s was made in February 2016. During the first nine months of 2016, 130,850 additional units were granted under the RSU Plan. Due to terminations of employment, 84,140 unvested units were forfeited during the current year.  Additionally, 13,267 RSU units became vested and exercisable during third quarter 2016. Payment for 767 of these RSU units was made in third quarter 2016.A balance of 262,100 RSU units remains as of October2, 2016. Payment for the remaining 12,500 RSU units vesting during third quarter 2016 was made in October 2016.Approximately $0.1 million and$0.8 million of expense, related to this RSU Plan, was recorded during each of the three- and nine-month periods ended October2, 2016, respectively. Approximately $0.2 million and $1.2 million of expense, related to this plan, was recorded during the three- and nine-month periods ended October 4, 2015, respectively.As of October2, 2016, total unrecognized stock-based compensation expense relating to unvested long-term restricted employee stock units was $1.5 million. This amount is expected to be recognized over the weighted-average period of 2.0 years.

During the first nine months of 2016, 310,150 additional units were granted under the SAR Plan. Approximately $0.1 million of expense recovery and $0.5million of expense, related to this plan, was recorded in both the three- and nine-month periods ended October 2, 2016, respectively.Approximately $0.1 million and $0.2 million of expense, related to this plan, was recorded in both the three- and nine-month periods ended October 4, 2015, respectively.

Beginning in 2006, the Company established a nonqualified deferred compensation agreement with each of its non-employee directors. In March 2013, the board adopted the Appvion, Inc. Non-Employee Director Deferred Compensation Plan to formalize the terms of the agreement. No expense was recorded during third quarter 2016 related to this plan.Approximately$0.3 million of expense, related to this plan, was recorded during thenine-month period ended October2, 2016.Approximately $0.1 million and $0.5 million of expense, related to this plan, was recorded during the three- and nine-month periods ended October 4, 2015, respectively.

14

PAPERWEIGHT DEVELOPMENT CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

12.      COMMITMENTS AND CONTINGENCIES

Lower Fox River

Appvion Caps Potential Liability.  On September 30, 2014, Appvion entered into a Funding Agreement with NCR Corporation (“NCR”), B.A.T. Industries, p.l.c. (“BAT”) and Windward Prospects Ltd (“Windward”) relating to clean-up costs for the Lower Fox River and certain potential future sites. Under the Funding Agreement, the parties paid the following amounts on September 30, 2014 toward historical Fox River Costs (as defined in the Funding Agreement) incurred by NCR through September 1, 2014:  BAT ‑ $77.08 million; Windward ‑ $10 million; and Appvion ‑ $6 million.  In addition, BTI 2014 LLC, a wholly owned subsidiary of BAT (“BTI”), is responsible for funding 50% of the Fox River Costs incurred by NCR after September 1, 2014.  The parties also agreed:  (a) to vigorously pursue reasonable and viable claims against certain third parties and to deposit any recoveries therefrom into BTI; and (b) that any funds remaining in BTI after paying BAT and NCR for any unreimbursed funding of Fox River Costs would be used to fund 60% of any Future Sites Costs, as defined in the Funding Agreement.

Subject to the limitations described below, Appvion agreed to assume the following additional funding obligations under the Funding Agreement:

(a) $4 million was paid on February 2, 2015 toward Fox River Costs;

(b) On September 1 of each year during the term of the Funding Agreement, the lesser of (1) an amount equal to 50% of the aggregate unreimbursed amount paid by BAT to the BTI for Fox River Costs (to the extent that Appvion has not previously paid such amount in any prior years) and (2) $7.5 million ($7.5 million was paid on September 1, 2015); and

(c) On September 1 of each year during the term of the Funding Agreement, the lesser of (1) an amount equal to 50% of the aggregate amount paid by BAT to the BTI for Future Sites Costs (to the extent that Appvion has not previously paid such amount in prior years) and (2) $7.5 million.

Effective August 31, 2016, the parties agreed that the amount due from Appvion on September 1, 2016, as set forth in (c) above would be separated into two payments: (i) $3.0 million, which was paid on September 1, 2016; and (ii) $4.5 million, which was subsequently paid on October 3, 2016.

Notwithstanding the foregoing, Appvion’s funding obligations are subject to the following limitations:

(a) In no event will Appvion’s funding obligations for Fox River Costs exceed $25 million (the “Appvion Fox River Cap”);

(b) In no event will Appvion’s funding obligations for Future Sites Costs exceed $25 million (the “Appvion Future Sites Cap”); and

(c) In no event will Appvion’s funding obligations under the Funding Agreement exceed $7.5 million during any calendar year (except for the payment of $4 million on February 2, 2015 and the payment of $7.5 million on September 1, 2015). The $4 million payment due February 1, 2015, the $7.5 million payment due September 1, 2015, the $3 million payment due September 1, 2016, and the $4.5 million payment due October 3, 2016 have been timely paid.

The parties to the Funding Agreement agree that they have no recourse against Appvion for any further liability relating to the Fox River or Future Sites beyond the Appvion Fox River Cap and the Appvion Future Sites Cap, respectively.

Appvion bears sole responsibility for its funding obligations under the Funding Agreement. The Funding Agreement does not, however, modify, alter or amend the two indemnification agreements entered into in 2001 wherein Windward agreed to indemnify PDC and PDC agreed to indemnify Appvion for certain costs, expenses and liabilities relating to Fox River and Future Sites, including Appvion’s costs and expenses in negotiating and entering into the Funding Agreement and any future costs and expenses incurred by Appvion in pursuing recoveries.

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PAPERWEIGHT DEVELOPMENT CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

As a result of the Funding Agreement, $24.0 million of expense was recorded as selling, general and administrative expense in the Consolidated Statements of Comprehensive (Loss) Income for the year ended January 3, 2015. This expense represents the total payments expected to be made with respect to Fox River costs, as discussed above, with the first payment made on September 30, 2014, the second payment made on February 2, 2015, the third payment made on September 1, 2015 and the last paymentsmade on September 1, 2016 and October 3, 2016, discounted to reflect the long-term nature of the liability. A short-term liability of $4.5 million is recorded in the current portion of long-term debton the Condensed Consolidated Balance Sheet as of October 2, 2016. The total of these liabilities were accreted to the full liability of $25.0 million during the course of the payment schedule.

Other

From time to time, the Company may be subject to various demands, claims, suits or other legal or regulatory proceedings arising in the ordinary course of business. A comprehensive insurance program is maintained to provide a measure of financial protection against such matters, though not all such exposures are, or can be, addressed by insurance. Estimated costs are recorded for such demands, claims, suits or proceedings of this nature when reasonably determinable. The Company has successfully defended such claims, settling some for amounts which are not material to the business and obtaining dismissals in others. While the Company will vigorously defend itself and expects to prevail in any similar cases that may be brought against it in the future, there can be no assurance that it will be successful.

The Company does not believe that any pending or threatened demands, claims, suits or other legal or regulatory proceedings will have, individually or in the aggregate, a materially adverse effect on its business, financial condition and results of operations or cash flows. 

13.      EMPLOYEE STOCK OWNERSHIP PLAN

The Company’s matching contributions charged to expense were$0.3 million and $0.4 million for the three-month periods ended October 2, 2016 and October 4, 2015, respectively. The Company’s matching contributions charged to expense were $1.2 million and $1.5 million for the nine-month periods ended October 2, 2016 and October 4, 2015, respectively. As a result of hardship withdrawals, required diversifications and employee terminations, 477,175 shares of PDC redeemable common stock were repurchased during the first nine months of 2016 at an aggregate price of approximately $6.1 million.  During the same period, the ESOP trustee purchased 69,090 shares of PDC redeemable common stock for an aggregate price of $0.9 million using pre-tax deferrals, rollovers and loan payments made by employees, while the Company’s matching contributions for the same period resulted in an additional 66,502 shares of redeemable common stock being issued.

As a result of hardship withdrawals, required diversifications and employee terminations, 438,484 shares of PDC redeemable common stock were repurchased during the first nine months of 2015 at an aggregate price of approximately $5.1 million. During the same period, the ESOP trustee purchased 96,574 shares of PDC redeemable common stock for an aggregate price of $1.1 million using pre-tax deferrals, rollovers and loan payments made by employees, while the Company’s matching contributions for the same period resulted in an additional 92,576 shares of redeemable common stock being issued.

In accordance with ASC 480, “Distinguishing Liabilities from Equity,” the appropriate accounting for redeemable equity first depends upon a determination of whether the equity is currently redeemable or not currently redeemable. Shares that are currently redeemable should be recorded at redemption value. For shares that are not currently redeemable, the accounting guidance allows for changes in redemption value to be accreted from the initial issuance date to the earliest redemption date. This guidance also specifies that if the redemption value is less than the original issuance cost, the carrying amount of the redeemable common stock should not be less than the original issuance cost.

As of October 2, 2016, the fair market value of one share of PDC common stock was $13.70.  Based on the estimated fair value of the redeemable common stock at October 2, 2016, an ultimate redemption liability of approximately $88 million wasdetermined. The redeemable common stock recorded book value as of October 2, 2016,  was $113 million. The change in fair value and accretion of redeemable common stock was $5.1 million for the nine months ended October2, 2016.

Based on the estimated fair value of the redeemable common stock at October 4, 2015, an ultimate redemption liability of approximately $90 million was determined. The redeemable common stock recorded book value as of October 4, 2015 was $121 million. The change in fair value and accretion of redeemable common stock was $5.9 million for the nine months ended October 4, 2015.

16

PAPERWEIGHT DEVELOPMENT CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

14.      DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

The Company selectively uses financial instruments to manage some market risks from changes in foreign currency exchange rates, commodity prices and interest rates. The fair values of all derivatives are recorded in the Condensed Consolidated Balance Sheet. The change in a derivative’s fair value is recorded each period in current earnings or accumulated other comprehensive income, depending on whether the derivative is designated and qualifies as part of a hedge transaction and, if so, the type of hedge transaction.

The Company selectively hedges forecasted transactions that are subject to foreign currency exchange exposure by using forward exchange contracts. These instruments are designated as cash flow hedges and are recorded in the Condensed Consolidated Balance Sheet at fair value using Level 2 observable market inputs. The fair value of foreign currency forward contracts is based on a valuation model that discounts cash flows resulting from the differential between the contract price and the market-based forward note, also deemed to be categorized as Level 2. The effective portion of the contracts’ gains or losses due to changes in fair value is initially recorded as a component of accumulated other comprehensive income and is subsequently reclassified into earnings when the underlying transactions occur and affect earnings or if it becomes probable the forecasted transactions will not occur. These contracts are designed to hedge the variability in future cash flows attributable to changes in currency exchange rates. The notional amount of foreign exchange contracts used to hedge foreign currency transactions was$9.5 million as of October 2, 2016. These contracts have settlement dates extending through December 2016.

The Company selectively hedges forecasted commodity transactions that are subject to pricing fluctuations by using collar contracts to manage risks associated with market fluctuations in energy prices. These contracts are recorded in the Condensed Consolidated Balance Sheet at fair value using Level 2 observable market inputs based on the New York Mercantile Exchange as measured on the last trading day of the accounting period and compared to the collar price. The contracts’ gains or losses due to changes in fair value are recorded in current period earnings. As of January 2, 2016, all contracts have been settled. At October 4,  2015, the hedged volumes of these contracts totaled 280,909 MMBTU (Million British Thermal Units) of natural gas.

On July 30, 2013, Appvion entered into an interest rate swap contract on $100 million of its variable rate first lien term loan with a forward start date of September 15, 2014 and a maturity date of June 28, 2019. This interest rate swap pays the Company variable interest at the three-month Eurodollar rate or a fixed floor rate of 1.25%, whichever is greater, and the Company pays the counterparty a fixed interest rate. The fixed Eurodollar interest rate for the contract is 7.24%. Based on the terms of the interest rate swap contract and the underlying debt, the interest rate contract was determined to be effective, and thus qualifies as a cash flow hedge. Any changes in the fair value of the interest rate swap are recorded in accumulated other comprehensive income in the accompanying Condensed Consolidated Balance Sheet until earnings are affected by the variability of cash flows.

The following table presents the location and fair values of derivative instruments included in the Company’s Condensed Consolidated Balance Sheets (dollars in thousands):

Designated as a Hedge	Balance Sheet Location	October 2, 2016		January 2, 2016
Foreign currency exchange derivatives	Accounts receivable	$	108	$	430
Foreign currency exchange derivatives	Other accrued liabilities		(72)		—
Interest rate swap	Other long-term liabilities		(3,623)		(3,501)

17

PAPERWEIGHT DEVELOPMENT CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

The following table presents the location and amount of (gains) losses on derivative instruments and related hedge items included in the Company’s Condensed Consolidated Statement of Comprehensive (Loss) Incomefor the three- and nine-months ended October 2, 2016 and October 4, 2015 and (gains) losses initially recognized in accumulated other comprehensive income in the Condensed Consolidated Balance Sheet at the period-ends presented (dollars in thousands):

	Statement of
	Comprehensive		For the Three		For the Three		For the Nine		For the Nine
	(Loss) Income		Months Ended		Months Ended		Months Ended		Months Ended
Designated as a Hedge	Location	October 2, 2016		October 4, 2015		October 2, 2016		October 4, 2015
Foreign currency exchange derivatives	Net sales	$	(127)	$	(50)	$	(161)	$	(1,206)
Gains recognized in accumulated
other comprehensive income							(24)		(25)
Interest rate swap	Interest expense		362		480		1,141		1,120
Losses recognized in accumulated
other comprehensive income							3,567		4,139
Not Designated as a Hedge
Natural gas collar	Cost of sales		—		176		—		384

For a discussion of the fair value of financial instruments, see Note 16, Fair Value Measurements.

15.      LONG-TERM OBLIGATIONS

Long-term obligations, excluding capital lease obligations, consist of the following (dollars in thousands):

	October 2,		January 2,
	2016		2016
Revolving credit facility at approximately 7.5% base rate and 5.5% Euro rate,
due June 2018	$	23,000	$	9,600
Unamortized debt issuance costs		(609)		(875)
Secured variable rate industrial development bonds, 0.7% average interest rate at
October 2, 2016, due in 2027		6,000		6,000
Unamortized debt issuance costs		(55)		(59)
State of Ohio assistance loan at 6%, approximately $100 due monthly and final
payment due May 2017		975		1,905
Unamortized debt issuance costs		(17)		(34)
State of Ohio loan at 3%, approximately $30 due monthly and final
payment due May 2019		868		1,105
Columbia County, Wisconsin municipal debt due December 2019		300		300
First lien term loan at 6.25%, due June 2019		158,300		158,300
Unamortized discount		(795)		(992)
Unamortized debt issuance costs		(1,838)		(2,291)
Second lien senior secured notes at 9.0%, due June 2020		250,000		250,000
Unamortized discount		(2,375)		(2,769)
Unamortized debt issuance costs		(4,171)		(4,860)
Fox River note at 6.0%, due October 2016		4,500		—
		434,083		415,330
Less obligations due within one year		(5,792)		(1,567)
	$	428,291	$	413,763

18

PAPERWEIGHT DEVELOPMENT CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

During the first nine months of 2016, the Company made mandatory debt repayments of $1.2 million on its State of Ohio loans. The Company also borrowed $271.4 million and repaid $258.0 million on its revolving credit facility, leaving an outstanding balance at quarter-end of $23.0 million. Approximately $15.0 million of the revolving credit facility commitment was used in the form of outstanding letters of credit issued thereunder, which, in accordance with its debt covenants, left approximately $6.6 million of unused borrowing capacity under its revolving credit facility. No amounts were drawn by beneficiaries under the outstanding letters of credit.

During the third quarter of 2016, the Company entered into a $4.5 million promissory note with NCR Corporation in relation to the Fox River Funding Agreement disclosed in Note 12. The unpaid principal balance of this Note bears interest at 6% per annum. Principal and interest were due and paid in full on October 3, 2016.

During the first quarter of 2016, the Company adopted ASU 2015-03, “Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.” In accordance with the guidance, $8.1 million of unamortized debt issuance costs, specifically attributable to each of the Company’s long-term debt issues, were reclassified from other assets, as previously reported on the Consolidated Balance Sheet as of January 2, 2016, to long-term debt. The unamortized debt issuance costs are now presented as a direct deduction from each debt liability, consistent with the presentation of the corresponding debt discount, where applicable.

On June 28, 2013, Appvion entered into a credit agreement (the “Credit Agreement”) providing for a $100 million revolving line of credit due June 28, 2018 and a $335 million first lien term loan due June 28, 2019.  The Credit Agreement ranks senior in right of payment to all existing and future subordinated indebtedness of Appvion and is secured by security interests in substantially all of the property and assets of Appvion and the debt guarantors. As noted above, the maturity date of the revolving credit facility is June 28, 2018 and the maturity date of the first lien term loan is June 28, 2019. The Credit Agreement is unconditionally, and jointly and severally, guaranteed by PDC,  Appvion Canada, Ltd. and APVN Holdings LLC. It contains covenants customary for similar credit facilities. Affirmative and negative covenants under the Credit Agreement restrict Appvion’s ability and the ability of Appvion’s subsidiaries, subject to certain exceptions, to incur additional indebtedness and liens, engage in sale and leaseback transactions, make investments, make loans and advances, transact certain asset sales, engage in mergers, acquisitions, consolidations, liquidations and dissolutions, pay dividends or make other payments in respect of equity interests and other restricted payments, engage in certain transactions with affiliates, limit capital expenditures and make prepayments, redemptions and repurchases of other indebtedness.

After giving effect to the Third Amendment, (as defined below), the total amount committed under the revolving line of credit was reduced to $75 million and $170 million of the first lien term loan was repaid using proceeds from the Sale of the Encapsys Business. The first lien term loan bears interest, (i) through Appvion’s 2015 fiscal year, at Appvion’s option at either base rate plus 3.5% per annum or Eurodollar plus 4.5% per annum and (ii) thereafter, at either base rate or Eurodollar with the applicable margin determined pursuant to a pricing grid which provides that (x) if the reported consolidated first lien leverage ratio is greater than 3.00 to 1.00, the applicable margin on Eurodollar loans increases from 4.5% per annum to 5.0% per annum and the applicable margin on base rate loans increases from 3.5% per annum to 4.0% per annum and (y) if the reported consolidated first lien leverage ratio is less than or equal to 3.00 to 1.00, the applicable margin on Eurodollar loans returns to 4.5% per annum and the applicable margin on base rate loans returns to 3.5% per annum. The Credit Agreement provides for a fixed floor rate of 1.25% for Eurodollar loans and 2.25% for base rate loans. On July 30, 2013, Appvion fixed the interest rate at 7.24% on $100.0 million of the first lien term loan using an interest rate swap contract with a forward start date of September 15, 2014 and a maturity date of June 28, 2019. Within five business days after the year-end financial statements have been filed, Appvion is required to prepay an aggregate principal amount of the term loan equal to the excess, if any, of (a) 50% of defined excess cash flow, provided that such percentage shall be reduced to (1) 25% based upon Appvion achieving a consolidated leverage ratio of less than 3.5 to 1.0 but greater than or equal to 2.5 to 1.0 and (2) 0% based upon Appvion achieving a consolidated leverage ratio of less than 2.5 to 1.0 minus (b) the aggregate amount of all prepayments of the revolving credit line which constitute permanent reductions of the revolving credit facility and all optional prepayments of the first lien term loan made during the year. 

19

PAPERWEIGHT DEVELOPMENT CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

On August 3, 2015, Appvion, PDC, Jefferies Finance LLC, as administrative agent, Fifth Third Bank, as revolver agent, swing line lender and L/C issuer, and the lenders party to the Credit Agreement entered into a Third Amendment (the “Third Amendment”) to the Credit Agreement. The Third Amendment became effective simultaneously with the closing of the Sale of the Encapsys Business. Upon its effectiveness, the Third Amendment, among other things, (i) permitted the Company to consummate the Sale of the Encapsys Business and provided for the corresponding release of liens on the Encapsys Business, (ii) required that not less than $165 million of the net proceeds be applied to prepay the revolving credit loans and the term loans under the Credit Agreement and provided that the remainder of the net proceeds be reinvested or otherwise applied to further prepay indebtedness in accordance with the Credit Agreement, (iii) provided for a permanent reduction of the revolving credit facility commitments from $100 million to $75 million, (iv) required the payment of a consent fee equal to 0.175% of the aggregate principal amount of loans and commitments, (v) added the pricing grid discussed above and (vi) further conformed certain terms and covenants under the Credit Agreement to account for the Sale of the Encapsys Business and the transactions contemplated thereby. The Third Amendment also removed the maximum consolidated leverage covenant and added (i) a maximum consolidated first lien leverage covenant that requires maintenance of a consolidated first lien leverage ratio, initially, of not more than 3.50 to 1.00, and on and after the third fiscal quarter of 2016, of not more than 3.25 to 1.00 and on and after the third fiscal quarter of 2017, of not more than 3.00 to 1.00 and (ii) a minimum consolidated fixed charge coverage covenant that requires maintenance of a consolidated fixed charge coverage ratio, initially, of not less than 0.95 to 1.00 and on and after the first fiscal quarter of 2016, of not less than 1.00 to 1.00. The Company incurred $0.9 million of debt acquisition costs related to the execution of this amendment. These costs have been deferred and will be amortized over the remaining term of the Credit Agreement.

On June 24, 2016, Appvion, PDC, Jefferies Finance LLC, as administrative agent, Fifth Third Bank, as revolver agent, swing line lender and L/C issuer, and the lenders party to the Credit Agreement entered into a Fourth Amendment (the “Fourth Amendment”) to its Credit Agreement dated June 28, 2013. The Fourth Amendment amends the definition of Consolidated EBITDA to provide for an additional add-back to Consolidated Net Income for cash, fees and/or expenses paid or incurred in connection with certain financial and advisory services provided to the Company and Appvion in an aggregate amount not to exceed $6.5 million.

On November 19, 2013, Appvion completed a voluntary refinancing of a portion of its debt to extend maturities and reduce interest expense. The refinancing included the issuance of $250 million in aggregate principal amount of second lien senior secured notes carrying an annual interest rate of 9.0%, payable semi-annually in arrears on June 1 and December 1 of each year. The notes will mature on June 1, 2020 and are unconditionally, and jointly and severally, guaranteed by PDC and Appvion Canada, Ltd. The notes are secured by a second-priority security interest in substantially all of the property and assets of Appvion and the debt guarantors. These liens are junior in priority to the liens on this same collateral securing the outstanding debt incurred under the Credit Agreement. The notes contain covenants customary for similar debt which restrict Appvion’s ability, as well as the ability of the guarantors, to sell or lease certain assets or merge or consolidate with or into other companies, incur additional debt or issue preferred shares, incur liens, pay dividends or make other distributions, make other restricted payments and investments, place restrictions on the ability of certain of Appvion’s subsidiaries to pay dividends or other payments to Appvion, enter into sale and leaseback transactions, amend particular agreements relating to Appvion’s transaction with its former parent Windward Prospects Ltd. and the ESOP and enter into transactions with certain affiliates.

20

PAPERWEIGHT DEVELOPMENT CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

16.      FAIR VALUE MEASUREMENTS

The carrying amount (including current portions) and estimated fair value of certain of the Company’s recorded financial instruments are as follows (dollars in thousands):

	October 2, 2016				January 2, 2016
	Carrying		Fair		Carrying		Fair
Financial Instruments	Amount		Value		Amount		Value
First lien term loan	$	155,667	$	147,884	$	155,017	$	144,166
Second lien notes		243,454		157,028		242,371		96,948
Revolving credit facility		22,391		22,391		8,725		8,725
State of Ohio loans		1,826		1,826		2,976		2,976
Columbia County, Wisconsin municipal debt		300		300		300		300
Industrial development bonds		5,945		5,945		5,941		5,941
Fox River note		4,500		4,500		—		—
	$	434,083	$	339,874	$	415,330	$	259,056

The first lien term loan and the second lien notes are traded in public markets. Their fair value was determined using Level 2 inputs based on quoted market prices. The fair value of the State of Ohio loans was determined using Level 2 observable market inputs including current rates for financial instruments of the same remaining maturity and similar terms. The revolving credit facility and industrial development bonds have variable interest rates that reflect current market terms and conditions.

Due to their short-term nature, the carrying values of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities were reasonable estimates of fair value as of October2, 2016 and January 2, 2016.

21

PAPERWEIGHT DEVELOPMENT CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

17.      SEGMENT INFORMATION

The Company’s reportable segments are as follows: carbonless papers and thermal papers. Management evaluates the performance of the segments based primarily on operating income (loss). Items excluded from the determination of segment operating income (loss) are unallocated corporate charges, net interest expense,debt modification/extinguishment expense, foreign exchange loss (gain) and other expense. The Company does not allocate total assets internally in assessing operating performance and does not track capital expenditures by segment. Net sales, operating income (loss) and depreciation and amortization, as determined by the Company for its reportable segments, are as follows (dollars in thousands):

	For the Three		For the Three		For the Nine		For the Nine
	Months Ended		Months Ended		Months Ended		Months Ended
	October 2, 2016		October 4, 2015		October 2, 2016		October 4, 2015
Net sales
Carbonless papers	$	67,587	$	81,224	$	218,980	$	253,680
Thermal papers		101,602		99,367		304,300		276,978
Total	$	169,189	$	180,591	$	523,280	$	530,658
Operating income (loss)
Carbonless papers	$	3,940	$	6,641	$	13,242	$	21,719
Thermal papers		2,519		(99)		11,269		(6,679)
		6,459		6,542		24,511		15,040
Unallocated corporate charges		(3,039)		(2,373)		(7,639)		(7,981)
Total	$	3,420	$	4,169	$	16,872	$	7,059
Depreciation and amortization (A)
Carbonless papers	$	3,386	$	3,795	$	10,125	$	10,844
Thermal papers		3,228		3,224		9,533		9,582
		6,614		7,019		19,658		20,426
Unallocated corporate charges		43		51		245		145
Total	$	6,657	$	7,070	$	19,903	$	20,571

(A) Depreciation and amortization from continuing operations are allocated to the reportable segments based on the amount of activity provided by departments to the respective product lines in each reportable segment.

22

PAPERWEIGHT DEVELOPMENT CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

18.      ACCUMULATED OTHER COMPREHENSIVE INCOME

The changes in accumulated other comprehensive income by component for the nine months ended October 2, 2016 are as follows (dollars in thousands):

	Change in		Hedging
	Retiree Plans		Activities		Total
Balance, January 2, 2016	$	24,742	$	(3,070)	$	21,672
Other comprehensive loss before reclassifications		—		(1,453)		(1,453)
Amounts recorded in accumulated other
comprehensive income		(2,743)		980		(1,763)
Net other comprehensive loss		(2,743)		(473)		(3,216)
Balance, October 2, 2016	$	21,999	$	(3,543)	$	18,456

The changes in accumulated other comprehensive income by component for the nine months ended October 4, 2015 are as follows (dollars in thousands):

	Change in		Hedging
	Retiree Plans		Activities		Total
Balance, January 3, 2015	$	29,837	$	(2,651)	$	27,186
Other comprehensive loss before reclassifications		—		(1,377)		(1,377)
Amounts recorded in accumulated other
comprehensive income		(2,838)		(86)		(2,924)
Net other comprehensive loss		(2,838)		(1,463)		(4,301)
Balance, October 4, 2015	$	26,999	$	(4,114)	$	22,885

23

PAPERWEIGHT DEVELOPMENT CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

Details about these reclassifications are as follows (dollars in thousands):

		Amount Reclassified from
		Accumulated Other
		Comprehensive Income
										Affected Line Item
	For the Three		For the Three		For the Nine		For the Nine			in Condensed Consolidated
Details about Accumulated	Months Ended		Months Ended		Months Ended		Months Ended			Statements of
Other Comprehensive	October 2,		October 4,		October 2,		October 4,			Comprehensive (Loss)
Income Components	2016		2015		2016		2015			Income
Change in retiree plans
Amortization of prior service credit	$	913	$	946	$	2,743	$	2,838	(a)
Hedging activities
Foreign exchange contracts	$	127	$	50	$	161	$	1,206		Net sales
Interest rate swap		(362)		(480)		(1,141)		(1,120)		Interest expense
	$	(235)	$	(430)	$	(980)	$	86
Total reclassifications for the period	$	678	$	516	$	1,763	$	2,924

(a) These accumulated other comprehensive income components are included in the computation of net periodic pension cost. See Note 9, Employee Benefits, and Note 10, Postretirement Benefit Plans other than Pension.

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

Unless stated to the contrary or the context requires otherwise, all references in this report to the Company refer to Paperweight Development Corp. (“PDC” or “Paperweight”) and its 100%-owned subsidiaries. It includes Appvion, Inc. and its 100%-owned subsidiaries (collectively “Appvion”).

Overview

This discussion summarizes significant factors affecting the consolidated operating results, financial position and liquidity of PDC for the quarter ended October 2, 2016. This discussion should be read in conjunction with the accompanying Condensed Consolidated Financial Statements and related Notes. Reference should also be made to the Annual Report on Form 10-K for the year ended January 2, 2016, the Consolidated Financial Statements and related Notes included therein.

Financial Highlights

Third quarter 2016 net sales of $169.2 million were $11.4 million, or 6.3%, lower than third quarter 2015 net sales of $180.6 million largely due to lower shipment volumes and slightly lower product pricing. Shipment volumes were approximately 6% lower than those for third quarter 2015. Current quarter thermal papers net sales of $101.6 million were $2.2 million higher with shipment volumes down 2% versus the same period of 2015. Third quarter carbonless papers sales of $67.6 million were $13.6 million lower with shipment volumes approximately 11% lower than third quarter 2015.

Third quarter 2016 gross profit of $29.3 million was $3.6 million lower than third quarter 2015 and current quarter gross margin decreased to 17.3% from an 18.2% margin for the same period last year. The decrease was largely due to lower pricing in the carbonless papers segment that was somewhat offset by improved pricing for thermal receipt paper, lower raw material costs and continued execution of cost-savings initiatives. Current quarter selling, general and administrative (“SG&A”) expenses were $2.8 million, or 9.8%, lower than the same quarter of 2015 primarily due to lower distribution costs, lower compensation costs and lower bad debt expense.

During the third quarter of 2016, the Company recorded a net loss from continuing operations of $7.2 million compared to a net loss from continuing operations of $11.0 million in third quarter 2015. Current quarter results include a $0.9 million decrease in interest expense.

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Comparison of Unaudited Results of Operations for the Quarters Ended October 2, 2016 and October 4, 2015

	For the Quarter Ended
	October 2,			October 4,			Increase
	2016			2015			(Decrease)
	(dollars in millions)
Net sales	$	169.2		$	180.6			(6.3)	%
Cost of sales		139.9			147.7			(5.3)	%
Gross profit		29.3			32.9			(10.9)	%
Selling, general and administrative expenses		25.9			28.7			(9.8)	%
Operating income		3.4			4.2			(19.0)	%
Interest expense, net		10.2			11.1			(8.1)	%
Debt modification expense		—			3.6			(100.0)	%
Other non-operating expense, net		0.3			0.5			(40.0)	%
Loss from continuing operations before income taxes		(7.1)			(11.0)			35.5	%
Provision for income taxes		0.1			—			NM
Loss from continuing operations		(7.2)			(11.0)			34.5	%
Discontinued operations
Income from discontinued operations		—			3.0			(100.0)	%
Gain on sale		—			188.9			(100.0)	%
Income from discontinued operations		—			191.9			(100.0)	%
Net (loss) income	$	(7.2)		$	180.9			(104.0)	%
Comparison as a percentage of net sales
Cost of sales		82.7	%		81.8	%		0.9	%
Gross margin		17.3	%		18.2	%		(0.9)	%
Selling, general and administrative expenses		15.3	%		15.9	%		(0.6)	%
Operating margin		2.0	%		2.3	%		(0.3)	%
Loss from continuing operations before income taxes		(4.2)	%		(6.1)	%		1.9	%
Loss from continuing operations		(4.3)	%		(6.1)	%		1.8	%

Net sales for third quarter 2016 were $169.2 million, a decrease of $11.4 million, or 6.3%, compared to the same period of the prior year. Shipment volumes were approximately 6% lower than third quarter 2015. Current quarter thermal papers net sales of $101.6 million were $2.2 million higher with shipment volumes 2% lower than the same period of the prior year. Third quarter carbonless papers sales of $67.6 million were $13.6 million lower with shipment volumes approximately 11% lower than third quarter 2015.

Third quarter 2016 operating income of $3.4 million compared to operating income of $4.2 million in third quarter 2015. This decrease in earnings was largely due to lower volumes and pricing in the carbonless papers segmentas well as $2.1 million of consulting fees in the quarter.  This was somewhat offset by improved pricing for thermal receipt papers, lower raw material costs and continued execution of cost-savings initiatives. Current quarter SG&A expenses were $2.8 million, or 9.8%, lower than the same period of the previous year primarily due to lower distribution costs, lower compensation costs and lower bad debt expense.

26

Comparison of Unaudited Results of Operations for the Nine Months Ended October 2, 2016 and October 4, 2015

	For the Nine Months Ended
	October 2,			October 4,			Increase
	2016			2015			(Decrease)
	(dollars in millions)
Net sales	$	523.3		$	530.6			(1.4)	%
Cost of sales		427.5			438.1			(2.4)	%
Gross profit		95.8			92.5			3.6	%
Selling, general and administrative expenses		78.9			85.5			(7.7)	%
Operating income		16.9			7.0			141.4	%
Interest expense, net		30.6			36.4			(15.9)	%
Debt modification expense		—			3.6			(100.0)	%
Other non-operating expense, net		0.6			2.2			(72.7)	%
Loss from continuing operations before income taxes		(14.3)			(35.2)			59.4	%
Provision for income taxes		0.2			0.2			0.0	%
Loss from continuing operations		(14.5)			(35.4)			59.0	%
Discontinued operations
Income from discontinued operations		—			11.8			(100.0)	%
Gain on sale		—			188.9			(100.0)	%
Income from discontinued operations		—			200.7			(100.0)	%
Net (loss) income	$	(14.5)		$	165.3			(108.8)	%
Comparison as a percentage of net sales
Cost of sales		81.7	%		82.6	%		(0.9)	%
Gross margin		18.3	%		17.4	%		0.9	%
Selling, general and administrative expenses		15.1	%		16.1	%		(1.0)	%
Operating margin		3.2	%		1.3	%		1.9	%
Loss from continuing operations before income taxes		(2.7)	%		(6.6)	%		3.9	%
Loss from continuing operations		(2.8)	%		(6.7)	%		3.9	%

Year-to-date 2016 net sales of $523.3 million were $7.3 million, or 1.4%, lower than net sales of $530.6 million recorded during the first nine months of 2015. Current year-to-date shipment volumes were nearly 3% lower than in 2015. Net sales of $304.3 million recorded for the Company’s thermal papers segment year-to-date were up $27.3 million, or 9.9%, while shipment volumes were approximately 6% higher than the same period of the prior year. Current year-to-date carbonless paper business net sales of $219.0 million were down $34.6 million, or 13.6%, with shipment volumes approximately 12% lower than the same period in 2015.

The Company recorded operating income of $16.9 million for the first nine months of 2016 compared to operating income of $7.0 million for the same period last year. Favorable pricing and product mix in the thermal papers segment and lower spending associated with annual maintenance downtime taken at the Roaring Spring, Pennsylvania mill, as well as continued improvements in operating performance and execution of cost-savings initiatives, contributed to the year-over-year improvement. Year-to-date SG&A expenses were $6.6 million, or 7.7%, lower when compared to the same period in 2015 largely due to lower distribution costs and compensation expense. This was offset by $3.4 million of consulting fees paid year-to-date as well as $3.0 million mark-to-market variance, year-over-year, associated with the retiree benefit plan versus the prior period.

27

The Company reported a net loss from continuing operations of $14.5 million for the first nine months of 2016 compared to a net loss from continuing operations of $35.4 million reported for the same period last year. In addition to the items noted above, year-to-date interest expense decreased $5.8 million to $30.6 million as the Company used proceeds from the third quarter 2015 sale of the Encapsys Business to repay $170.0 million of first lien term debt. Also during the first nine months of the current year, the Company recorded a foreign exchange gain of $0.2 million, compared to a $1.4 million loss in the prior year period, due to fluctuations in the Euro and Canadian dollar as they relate to the conversion of non-U.S. Dollar denominated receipts and net assets to U.S. Dollars.

Business Segment Discussion

Third quarter 2016 net sales were $169.2 million, $11.4 million lower than third quarter 2015 net sales of $180.6 million. Year-to-date 2016 net sales were $523.3 million, $7.3 million lower than 2015 net sales for the comparable period. Third quarter 2016 operating income of $3.4 million compared to a third quarter 2015 operating income of $4.2 million. Year-to-date 2016 operating income of $16.9 million compared to operating income of $7.0 million for the same period in 2015. The year-on-year operating income variance was the result of the following (dollars in millions):

		For the Three		For the Nine
		Months Ended		Months Ended
		October 2, 2016 v.		October 2, 2016 v.
		the Three Months		the Nine Months
		Ended October 4, 2015		Ended October 4, 2015
Favorable manufacturing costs	$	5.8	$	12.0
Lower SG&A and other		4.2		7.6
Price and mix		(1.1)		6.0
Reduced downtime at the Roaring Spring Mill		—		2.2
Unfavorable foreign exchange		—		(2.7)
Retiree benefit plans mark-to-market loss		(4.5)		(3.0)
Lower shipment volumes		(5.2)		(12.2)
	$	(0.8)	$	9.9

Thermal Papers

· Third quarter 2016 thermal papers net sales totaled $101.6 million, an increase of $2.2 million, or 2.2%, compared to the same period of the prior year while shipment volumes were 2% lower than in third quarter 2015.  Current quarter shipments of tag, label and entertainment papers (“TLE”) were approximately 14% higher than in third quarter 2015 and shipments of receipt paper declined approximately 20% compared to the same period last year. In addition, net sales benefited from favorable receipt paper pricing. The Company believes that third quarter 2015 marked the beginning of stabilization in the thermal papers markets with market share and pricing shifting to more historical levels as some competitors exited the market.

· During the first nine months of 2016, thermal papers net sales totaled $304.3 million, an increase of $27.3 million, or 9.9%, from the same period of the prior year. Year-to-date shipment volumes were approximately 6% higher than the same period last year with TLE volumes increasing approximately 12% while receipt paper volume was down approximately 1%. In addition, net sales also benefited from favorable receipt paper pricing as a result of the stabilization in market share and pricing shifting to more historical levels as some competitors exited the U.S. market in the third quarter 2015.

· The thermal papers segment recorded third quarter 2016 operating income of $2.5 million compared to a third quarter 2015 operating loss of $0.1 million. Slightly lower shipment volumes negatively impacted current quarter earnings by $0.6 million; however, that was more than offset by favorable pricing and product mix of $3.8 million. Continued improvements in operating performance and execution of cost savings initiatives, as well as lower SG&A expenses and other spending, added $1.0 million to third quarter 2016 earnings when compared to the same quarter last year. In addition, thermal papers had a $1.6 million mark-to-market unfavorable variance associated with the retiree benefit plan versus the prior period.

28

· During the first nine months of 2016, the thermal papers segment recorded operating income of $11.3 million compared to an operating loss of $6.7 million for the same period last year. Current year-to-date earnings were $4.1 million higher due to increased shipment volumes. In addition, pricing and product mix were $9.0 million favorable, partially offset by unfavorable foreign currency of $2.0 million. Continued improvements in operating performance and execution of cost-savings initiatives, as well as lower SG&A expenses and other spending, added $7.9 million to year-to-date 2016 earnings when compared to the same period last year. In addition, thermal papers had a $1.0 million mark-to-market unfavorable variance associated with the retiree benefit plan versus the prior period.

Carbonless Papers

· Third quarter 2016 carbonless net sales totaled $67.6 million, a decrease of $13.6 million, or 16.7%, from same period of the prior year. Current quarter shipment volumes were approximately 11% lower than third quarter 2015. During the first nine months of 2016, carbonless net sales totaled $219.0 million, a decrease of $34.6 million, or 13.6% from the same period in 2015. Year-to-date 2016 carbonless shipment volumes were down approximately 12% compared to the same period last year. Despite volume declines in this segment, specialty papers growth is gaining traction. Third quarter 2016 shipment volumes of specialty papers was nearly 28% higher than the same quarter last year while current year-to-date volumes are almost 15% higher than the first nine months of 2015.

· Third quarter 2016 carbonless papers recorded operating income of $3.9 million compared to operating income of $6.7 million reported in third quarter 2015. Current quarter earnings were $4.6 million lower due to reduced shipment volumes and $4.9 million unfavorable due to pricing and product mix. Continued improvements in operating performance and execution of cost-savings initiatives, as well as lower SG&A expenses and other spending, added $9.4 million to third quarter 2016 earnings compared to the same quarter last year. In addition, carbonless papers had a $2.7 million unfavorable mark-to-market variance associated with the retiree benefit plans versus the prior period.

· During the first nine months of 2016, operating income of $13.2 million was reported compared to $21.7 million of operating income for the same period in 2015. Year-to-date earnings were $16.3 million lower compared to the same period in 2015 due to reduced shipment volumes and $3.0 million unfavorable due to pricing and product mix and the unfavorable impact of foreign currency exchanges that totals $0.7 million. Those factors were somewhat offset by favorable year-to-date manufacturing operations of $9.0 million from continued improvements in operating performance, execution of cost-savings initiatives and lower spending associated with the annual maintenance downtime taken at the Roaring Spring, Pennsylvania mill. SG&A expenses and other spending were lower by $4.3 million. In addition, carbonless papers had a $1.8 million unfavorable mark-to-market variance associated with the retiree benefit plan versus the prior period.

Unallocated Corporate Charges

· Unallocated corporate charges totaled $3.0 million in third quarter 2016 and $2.4 million in third quarter 2015. Year-to-date 2016 expense was $7.6 million compared to $8.0 million for the first nine months of 2015.

Liquidity and Capital Resources

Overview. The Company’s primary sources of liquidity and capital resources are cash provided by operations and credit available under its revolving credit facility. The Company expects cash on hand, internally-generated cash flow and available credit from its revolving credit facility will provide the necessary funds for the reasonably foreseeable operating and recurring cash needs (e.g., working capital, debt service, other contractual obligations and capital expenditures). At October 2, 2016, the Company had $3.7 million of cash and, in accordance with its debt covenants, approximately $6.6 million of unused borrowing capacity under its revolving credit facility. At that date, the revolving credit facility had an outstanding balance of $23.0 million compared to $9.6 million at year-end 2015. Approximately $15.0 million of the revolving credit facility commitment was used in the form of outstanding letters of credit issued thereunder. Due to the required adoption of new accounting guidance, $8.1 million of unamortized debt issuance costs were reclassified from other assets to long-term debt on the year-end 2015 Condensed Consolidated Balance Sheet as of January 2, 2016, resulting in restated net debt (total debt less cash) of $413.5 million. At the end of third quarter 2016, net debt was approximately $430.4 million.

Management reported that the Company was in compliance with all debt covenants at October 2, 2016, and is forecasted to remain in compliance for the next 12 months. The Company’s ability to comply with the financial covenants in the future depends on achieving forecasted operating results and operating cash flows. The Company’s failure to comply with its covenants, or an assessment that it is likely to fail to comply with its covenants, could lead the Company to seek amendments to, or waivers of, the financial covenants. The Company cannot provide assurance that it would be able to obtain any such amendments to or waivers of the covenants. In the event of noncompliance with debt covenants, if the lenders will not amend or waive the Company’s non-compliance with the covenants, the outstanding debt would become due and the Company would need to seek alternative financing. The Company cannot provide assurance that it would be able to obtain alternative financing in such circumstances. Failure to secure alternative financing would have a material adverse impact on the Company.

29

Cash Flows from Operating Activities. Net cash used by operating activities during the first nine months of 2016 was $1.1 million compared to $10.5 million of net cash used during the same period in 2015. In addition to a net loss of $14.5 million, noncash charges totaling $22.9 million were recorded. Noncash charges included $19.9 million of depreciation and amortization of intangible assets, $0.3 million of foreign exchange gain, $1.2 million of noncash employer matching contributions to the KSOP and $2.1 million of other noncash charges. During the first nine months of 2016, working capital increased by $9.6 million. This was largely the result of a $7.8 million decrease in accounts payable and other accrued liabilities anda $5.5 million increase in accounts receivable slightly offset by a $1.6 million decrease in inventory and a $2.1 million decrease in other current assets and liabilities.

Cash Flows from Investing Activities.During the first nine months of 2016, $11.5 million of cash was used for the acquisition of property, plant and equipment. During this same period last year, $183.6 million was provided by investing activities.  Of this, $12.6 million of cash was used for the acquisition of property, plant and equipment and there was a $200.5 million increase to cash resulting from the sale of the Encapsys Business, of which, $4.3 million was restricted for the specific purpose of capital investment and/or further debt reduction within one year from the sale of Encapsys.

Cash Flows from Financing Activities. Net cash provided by financing activities during the first nine months of 2016 was $14.5 million compared to $173.5 million of cash used during the same period of the prior year. During the current period, the Company borrowed a net $13.4 million on its revolving credit facility. Also during the first nine months of 2016, the Company made mandatory debt repayments of $1.2 million on its State of Ohio loans. Current year proceeds from the issuance of PDC redeemable common stock totaled $0.9 million. The ESOP trustee purchased this stock using pre-tax deferrals, rollovers and loan payments made by employees during the first six months of 2016. Payments to redeem PDC stock were $6.1 million during this same period. In addition, cash overdrafts increased $7.7 million during the first nine months of 2016. Cash overdrafts represent short-term obligations, in excess of deposits on hand, which have not yet cleared through the banking system. Fluctuations in the balance are a function of quarter-end payment patterns and the speed with which the payees deposit the checks. During the first nine months of 2015, the Company repaid $172.5 million on its first lien term loan, largely using proceeds from the sale of its Encapsys Business.

Item 3—Quantitative and Qualitative Disclosures about Market Risk

For information regarding quantitative and qualitative disclosures about market risk, see the Annual Report on Form 10‑K for the year ended January 2, 2016. There have been no material changes in the quantitative or qualitative exposure to market risk from that described in the Form 10‑K.

Item 4—Controls and Procedures

Evaluation of Disclosure Controls and Procedures

         The Company maintains a set of disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports filed or submitted under the Securities Exchange Act of 1934, as amended (“Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely discussion regarding required disclosure. Management, with the participation of the CEO and CFO, evaluated the effectiveness of disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) as of the end of the period covered by this report. Based on this evaluation, the CEO and CFO concluded that the disclosure controls and procedures were effective as of October 2, 2016.

Changes in Internal Control over Financial Reporting

         There have been no changes in the Company’s internal control over financial reporting during the third quarter of 2016 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

30

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements. The words “will,” “may,” “should,” “believes,” “anticipates,” “intends,” “estimates,” “expects,” “projects,” “plans,” “seeks” or similar expressions are intended to identify forward-looking statements. All statements in this report other than statements of historical fact, including statements which address the Company’s strategy, future operations, future financial position, estimated revenues, projected costs, prospects, plans and objectives of management and events or developments that it 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 2, 2016, as well as in the Quarterly Report on Form 10-Q for the current quarter ended October 2, 2016, which factors are incorporated herein by reference and as updated above. Many of these factors are beyond the Company’s ability to control or predict. Given these uncertainties, undue reliance should not be placed on the forward-looking statements. The Company disclaims any obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

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Item 6 – Exhibits

31.1	Certification of Kevin M. Gilligan, President, Chief Executive Officer and a Director of Paperweight Development Corp., pursuant to Rule 15d-14(a) of the Securities Exchange Act of 1934 as amended.
31.2	Certification of Thomas J. Ferree, Senior Vice President Finance, Chief Financial Officer and Treasurer of Paperweight Development Corp., pursuant to Rule 15d-14(a) of the Securities Exchange Act of 1934 as amended.
32.1	Certification of Kevin M. Gilligan, President, Chief Executive Officer and a Director of Paperweight Development Corp., pursuant to 18 U.S.C. Section 1350.
32.2	Certification of Thomas J. Ferree, Senior Vice President Finance, Chief Financial Officer and Treasurer of Paperweight Development Corp., pursuant to 18 U.S.C. Section 1350.
101.ins	XBRL Instance Document
101.sch	XBRL Taxonomy Extension Schema
101.cal	XBRL Taxonomy Extension Calculation Linkbase
101.def	XBRL Taxonomy Extension Definition Linkbase
101.lab	Taxonomy Extension Label Linkbase
101.pre	Taxonomy Extension Presentation Linkbase

32

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized

	PAPERWEIGHT DEVELOPMENT CORP.     (Registrant)
Date: November 10, 2016	/s/ Thomas J. Ferree
	Thomas J. Ferree
	Senior Vice President Finance, Chief Financial Officer and Treasurer (Signing on behalf of the Registrant and as the Principal Financial Officer)

33

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Kevin M. Gilligan, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Paperweight Development Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: November 10, 2016		/s/ Kevin M. Gilligan
	Name:	Kevin M. Gilligan
	Title:	President,  Chief Executive Officer and a Director

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Thomas J. Ferree, certify that:

1. I have reviewed thisquarterly report on Form 10-Q of Paperweight Development Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: November 10, 2016		/s/ Thomas J. Ferree
	Name:	Thomas J. Ferree
	Title:	Senior Vice President Finance, Chief Financial Officer and Treasurer

EX-32.1

Exhibit 32.1

Statement

Pursuant to §906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. §1350, the undersigned officer of Paperweight Development Corp. (the “Company”), hereby certifies that to his knowledge:

(1)the Company’s Quarterly Report on Form 10-Q for the period ended October 2, 2016 fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended, and

(2)the information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	PAPERWEIGHT DEVELOPMENT CORP.
Dated: November 10, 2016		/s/ Kevin M. Gilligan
	Name:	Kevin M. Gilligan
	Title:	President,  Chief Executive Officer and a Director

This certification accompanies this QuarterlyReport on Form 10-Q pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for purposes of the Securities Exchange Act of 1934, as amended.  

EX-32.2

Exhibit 32.2

Statement

Pursuant to §906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. §1350, the undersigned officer of Paperweight Development Corp. (the “Company”), hereby certifies that to his knowledge:

(1)the Company’s Quarterly Report on Form 10-Q for the period endedOctober 2, 2016 fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended, and

(2)the information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	PAPERWEIGHT DEVELOPMENT CORP.
Dated:November 10, 2016		/s/ Thomas J. Ferree
	Name:	Thomas J. Ferree
	Title:	Senior Vice President Finance, Chief Financial Officer and Treasurer

This certification accompanies this Quarterly Report on Form 10-Q pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for purposes of the Securities Exchange Act of 1934, as amended.  

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Document And Entity Information - shares	9 Months Ended
	Oct. 02, 2016	Nov. 01, 2016
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Oct. 02, 2016
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2016
Entity Registrant Name	PAPERWEIGHT DEVELOPMENT CORP
Entity Central Index Key	0001166365
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		6,416,315

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Oct. 02, 2016	Jan. 02, 2016
Current assets
Cash and cash equivalents	$ 3,685	$ 1,817
Accounts receivable, less allowance for doubtful accounts of $913 and $1,073, respectively	46,861	41,573
Inventories	85,761	87,197
Other current assets	2,793	4,738
Total current assets	139,100	135,325
Property, plant and equipment, net	210,041	214,869
Intangible assets, net	35,269	36,983
Other assets	9,725	11,253
Total assets	394,135	398,430
Current liabilities
Current portion of long-term debt	5,792	1,567
Accounts payable	44,763	51,064
Accrued interest	9,148	2,814
Other accrued liabilities	46,603	49,041
Total current liabilities	106,306	104,486
Long-term debt	428,291	413,763
Postretirement benefits other than pension	20,706	22,581
Accrued pension	111,006	105,750
Other long-term liabilities	33,461	35,354
Commitments and contingencies (Note 12)
Redeemable common stock, $0.01 par value, shares authorized: 30,000,000, shares issued and outstanding: 6,416,315 and 6,757,898, respectively	112,760	114,749
Accumulated deficit	(436,851)	(419,925)
Accumulated other comprehensive income	18,456	21,672
Total liabilities, redeemable common stock, accumulated deficit and accumulated other comprehensive income	$ 394,135	$ 398,430

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Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Oct. 02, 2016	Jan. 02, 2016
Condensed Consolidated Balance Sheets [Abstract]
Accounts receivable, allowance for doubtful accounts	$ 913	$ 1,073
Redeemable common stock, par value	$ 0.01	$ 0.01
Redeemable common stock, shares authorized	30,000,000	30,000,000
Redeemable common stock, shares issued	6,416,315	6,757,898
Redeemable common stock, shares outstanding	6,416,315	6,757,898

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Condensed Consolidated Statements Of Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 02, 2016	Oct. 04, 2015	Oct. 02, 2016	Oct. 04, 2015
Net sales	$ 169,189	$ 180,591	$ 523,280	$ 530,658
Cost of sales	139,852	147,721	427,486	438,137
Gross profit	29,337	32,870	95,794	92,521
Selling, general and administrative expenses	25,917	28,701	78,922	85,462
Operating income	3,420	4,169	16,872	7,059
Other expense
Interest expense	10,179	11,094	30,550	36,446
Write off of Deferred Debt Issuance Cost		3,605		3,605
Foreign exchange (gain) loss	95	210	(223)	1,418
Other expense	280	266	802	786
Loss from continuing operations before income taxes	(7,134)	(11,006)	(14,257)	(35,196)
Provision for income taxes	76	17	234	167
Loss from continuing operations	(7,210)	(11,023)	(14,491)	(35,363)
Income from discontinued operations		2,983		11,750
Gain on sale		188,921		188,921
Income from discontinued operations		191,904		200,671
Net loss	(7,210)	180,881	(14,491)	165,308
Other comprehensive loss
Changes in retiree plans	(913)	(946)	(2,743)	(2,838)
Unrealized losses on derivatives	372	(803)	(473)	(1,463)
Total other comprehensive loss	(541)	(1,749)	(3,216)	(4,301)
Comprehensive loss	$ (7,751)	$ 179,132	$ (17,707)	$ 161,007

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Condensed Consolidated Statements Of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Oct. 02, 2016	Oct. 04, 2015
Cash flows from operating activities:
Net loss	$ (14,491)	$ 165,308
Adjustments to reconcile net loss to net cash (used) provided by operating activities:
Depreciation	17,935	19,824
Amortization of intangible assets	1,968	1,714
Amortization of financing fees	1,429	1,526
Amortization of debt discount	591	720
Employer 401(k) non-cash matching contributions	1,245	1,509
Foreign exchange (gain) loss	(260)	1,468
Gain on sale of Encapsys		(188,921)
Write off of Deferred Debt Issuance Cost		3,605
(Gain) loss on disposals of equipment	46	1,198
(Increase)/decrease in assets and increase/(decrease) in liabilities:
Accounts receivable	(5,521)	3,546
Inventories	1,647	13,048
Other current assets	1,950	3,264
Accounts payable and other accrued liabilities	(7,838)	(30,214)
Accrued pension	3,463	(1,948)
Other, net	(3,309)	(6,189)
Net cash (used) provided by operating activities	(1,145)	(10,542)
Cash flows from investing activities:
Proceeds from sale of equipment	46	8
Net change in cash due to sale of Encapsys		200,514
Increase in restricted cash		(4,276)
Additions to property, plant and equipment	(11,521)	(12,623)
Net cash used by investing activities	(11,475)	183,623
Cash flows from financing activities:
Debt acquisition costs		(850)
Payment of first lien term loan		(172,512)
Payments relating to capital lease obligations	(208)	(159)
Proceeds from new revolving line of credit	271,400	262,400
Payments of new revolving line of credit	(258,000)	(265,350)
Payments of State of Ohio loans	(1,167)	(1,100)
Proceeds from Issuance of Common Stock	850	1,062
Payments to redeem common stock	(6,093)	(5,077)
Decrease in cash overdraft	7,669	8,108
Net cash used by financing activities	14,451	(173,478)
Effect of foreign exchange rate changes on cash and cash equivalents	37	(50)
Change in cash and cash equivalents	1,868	(447)
Cash and cash equivalents at beginning of period	1,817	2,720
Cash and cash equivalents at end of period	$ 3,685	$ 2,273

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Condensed Consolidated Statements Of Equity, Redeemable Common Stock, Accumulated Deficit And Accumulated Other Comprehensive Income - USD ($) $ in Thousands	Redeemable Common Stock [Member]	Accumulated Deficit [Member]	Accumulated Other Comprehensive Income [Member]	Total
Balance at Jan. 03, 2015	$ 121,017	$ (579,136)	$ 27,186
Balance, shares at Jan. 03, 2015	7,205,699
Net loss		165,308		$ 165,308
Other comprehensive loss			(4,301)	161,007
Redemption of redeemable common stock	$ (7,962)	2,885		$ (5,100)
Redemption of redeemable common stock, shares	(438,484)			(438,484)
Accretion of redeemable common stock	$ 5,885	(5,885)		$ 5,900
Balance at Oct. 04, 2015	$ 121,020	(416,828)	22,885
Balance, shares at Oct. 04, 2015	6,956,365
Stock Issued During Period, Value, Employee Stock Ownership Plan	$ 2,080
Stock Issued During Period, Shares, Employee Stock Ownership Plan	189,150
Balance at Jan. 02, 2016	$ 114,749	(419,925)	21,672
Balance, shares at Jan. 02, 2016	6,757,898			6,757,898
Net loss		(14,491)		$ (14,491)
Other comprehensive loss			(3,216)	(17,707)
Redemption of redeemable common stock	$ (8,734)	2,641		$ (6,100)
Redemption of redeemable common stock, shares	(477,175)			(477,175)
Accretion of redeemable common stock	$ 5,076	(5,076)		$ 5,100
Balance at Oct. 02, 2016	$ 112,760	$ (436,851)	$ 18,456
Balance, shares at Oct. 02, 2016	6,416,315			6,416,315
Stock Issued During Period, Value, Employee Stock Ownership Plan	$ 1,669
Stock Issued During Period, Shares, Employee Stock Ownership Plan	135,592

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Basis Of Presentation

9 Months Ended

Oct. 02, 2016

Basis Of Presentation [Abstract]

Basis Of Presentation

1.       BASIS OF PRESENTATION

In the opinion of management, all adjustments made for the fair statement of comprehensive (loss) income for the three and nine months ended October 2, 2016 and October 4, 2015, the cash flows for the nine months ended October 2, 2016 and October 4, 2015 and financial position at October 2, 2016 and January 2, 2016 were normal recurring adjustments. As disclosed in Note 15 to the Condensed Consolidated Financial Statements, the Company adopted Accounting Standards Update (“ASU”) 2015-03, “Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs,” during the first quarter of 2016. In accordance with the guidance, $8.1 million of unamortized debt issuance costs, associated with the Company’s long-term debt, were reclassified from other assets, as previously reported on the Consolidated Balance Sheet as of January 2, 2016, to long-term debt.

These condensed financial statements should be read in conjunction with the audited consolidated financial statements and notes of Paperweight Development Corp. (“PDC”) and its 100%-owned subsidiaries (collectively the “Company”), which includes Appvion, Inc. and its 100%-owned subsidiaries (collectively “Appvion”) for each of the three years in the period ended January 2, 2016, which are included in the annual report on Form 10-K for the year ended January 2, 2016. The condensed consolidated balance sheet data as of January 2, 2016, contained within these condensed financial statements, was derived from the audited financial statements of PDC but does not include all disclosures required by accounting principles generally accepted in the United States of America.

The results of operations for any interim period are not necessarily indicative of the results to be expected for the full year.

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Discontinued Operations

9 Months Ended

Oct. 02, 2016

Discontinued Operations [Abstract]

Discontinued Operations

2.DISCONTINUED OPERATIONS

On August 3, 2015, Appvion completed the sale of the assets primarily used in the development, manufacture and sale of microencapsulation materials by the Encapsys segment of the Company (the “Encapsys Business”) to Rise Acquisition LLC (“Rise”), a Delaware limited liability company and an affiliate of Sherman Capital Holdings LLC, a Delaware limited liability company, for an aggregate purchase price of $208 million in cash, subject to working capital adjustments, and the assumption of certain liabilities (the “Sale”). Total working capital adjustments and cash expenses of the Sale were approximately $7.5 million. Of the approximate $200.5 million of net proceeds, $165 million was used immediately to repay a portion of long-term debt. In addition, proceeds of $35 million were set aside as restricted cash to be used within one year of this transaction for the specific purpose of capital investment and/or further debt reduction. As of January 2, 2016, Appvion had used this entire amount of restricted cash to repay an additional $25 million in long-term debt and $10 million for capital investment. The estimated carrying value of the net assets sold was $11.8 million. The operating results for this business for the three and nine months ended October4, 2015 have been reclassified and are now reported separately as discontinued operations.

In connection with the Sale, Appvion and Rise entered into certain other agreements, including a Supply Agreement, by which Rise will supply Appvion with all of its microencapsulation product requirements for use in its carbonless paper products for a ten-year term subject to renewal, and a Transition Services Agreement, by which Appvion will provide certain transition services to Rise for up to three years following the closing date. Additionally, Appvion and Rise entered into a lease agreement, by which Appvion will lease a portion of its facilities in Appleton, Wisconsin to Rise for a three-year term, as well as a Patent License Agreement with respect to certain shared patents related to the Encapsys Business and Appvion’s retained paper businesses.

The following table presents the key line items constituting income from discontinued operations for the Encapsys Business for the three and nine months ended October 4, 2015 (dollars in thousands):

	For the Three		For the Nine
	Months Ended		Months Ended
	October 4, 2015		October 4, 2015
Net sales	$	4,795	$	28,263
Cost of sales		1,440		11,697
Selling, general and administrative expenses		372		4,816
Income from discontinued operations		2,983		11,750
Gain on sale		188,921		188,921
Income from discontinued operations	$	191,904	$	200,671

The following are the significant line items of the Encapsys Business impacting cash flow for the periods presented (dollars in thousands):

	For the Three		For the Nine
	Months Ended		Months Ended
	October 4, 2015		October 4, 2015
Depreciation (recovery) expense	$	(377)	$	967
Additions to property, plant and equipment		815		2,282

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Accounts Receivable Securitization

9 Months Ended

Oct. 02, 2016

Transfers and Servicing [Abstract]

Accounts Receivable Securitization

3.       ACCOUNTS RECEIVABLE SECURITIZATION

During June 2014, the Company entered into an accounts receivable securitization program with a commitment size of $30.0 million, whereby transactions under the program are accounted for as sales of trade receivables in accordance with ASC Topic 860, “Transfers and Servicing.” Sales of trade receivables under the program are recorded as a reduction of accounts receivable in the Condensed Consolidated Balance Sheets as of October2, 2016 and January 2, 2016. Proceeds received, including collections on the deferred purchase price notes receivable, are included in cash flows from operating activities in the Condensed Consolidated Statements of Cash Flows for the nine months ended October2, 2016 and October4, 2015.

Trade receivables sold to the third-party financial institution, and being serviced by Appvion, Inc., totaled $33.6 million as of October2, 2016, for which $10.7 million in proceeds was received. Trade receivables sold to the third-party financial institution as of January 2, 2016 totaled $36.9 million, for which $18.1 million in proceeds was received. The fair value of the receivables sold equaled the carrying cost at the time of sale and no gain or loss was recorded as a result of the sale. The fair value of the deferred purchase price notes receivable recorded as of October2, 2016 was $21.1 million and $16.5 million as of year-end 2015 and is included in accounts receivable in the Condensed Consolidated Balance Sheets as of October2, 2016 and January 2, 2016, respectively. The Company estimates the fair value of the deferred purchase price notes receivable using Level 3 inputs based on historical performance of similar receivables including an allowance for doubtful accounts, as well as estimated cash discounts to be taken by customers and potential credits issued to customers. The Company deems the interest rate risk related to the deferred purchase price notes to be de minimis primarily due to the short average collection cycle (30 days) of the related receivables.

Servicing fees paid for the program were $0.1 million and $0.4 million for the three- and nine-month periods ended October 2, 2016, respectively, as well as for the three- and nine-month periods endedOctober4, 2015, respectively. Transaction costs of $0.7 million, related to the June 2014 entry into this program, were deferred and recorded on the balance sheet as other long-term assets. They are being amortized over the three-year term of the securitization agreement, ending June 2017. The remaining balance at October2, 2016 was $0.2 million.

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Other Intangible Assets

9 Months Ended

Oct. 02, 2016

Other Intangible Assets [Abstract]

Other Intangible Assets

4.       OTHER INTANGIBLE ASSETS

The Company’s intangible assets consist of the following (dollars in thousands):

	As of October 2, 2016				As of January 2, 2016
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Amortizable intangible assets:
Trademarks	$	44,665	$	34,143	$	44,665	$	32,570
Patents		5,443		5,443		6,158		6,158
Customer relationships		5,365		3,483		5,365		3,342
Subtotal		55,473	$	43,069		56,188	$	42,070
Unamortizable intangible assets:
Trademarks		22,865				22,865
Total	$	78,338			$	79,053

Amortization expense of intangibles from continuing operations for the three and nine months ended October2, 2016 was $0.6 million and $1.7 million, respectively. Amortization expense of intangibles from continuing operations for the three and nine months ended October4, 2015 was $0.6 million and $1.7 million, respectively.

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Inventories

9 Months Ended

Oct. 02, 2016

Inventories [Abstract]

Inventories

5.       INVENTORIES

Inventories consist of the following (dollars in thousands):

	October 2, 2016		January 2, 2016
Finished goods	$	47,112	$	47,378
Raw materials		12,652		14,925
Work in process		10,148		9,300
Stores and spare parts		15,849		15,594
	$	85,761	$	87,197

Stores and spare parts inventory represents manufacturing supplies and equipment parts of varying age that must be available, on demand, to ensure minimal interruption of manufacturing processes. The balance is valued at average cost. All other inventories are valued using the first-in, first-out (“FIFO”) method.

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Property, Plant And Equipment

9 Months Ended

Oct. 02, 2016

Property, Plant And Equipment [Abstract]

Property, Plant And Equipment

6.       PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment balances consist of the following (dollars in thousands):

	October 2, 2016		January 2, 2016
Land and improvements	$	9,762	$	9,684
Buildings and improvements		129,731		129,453
Machinery and equipment		506,950		504,338
Software		33,888		33,476
Capital leases		1,180		996
Construction in progress		12,309		6,149
		693,820		684,096
Accumulated depreciation		(483,779)		(469,227)
	$	210,041	$	214,869

Depreciation expense from continuing operations for the three and nine months ended October 2, 2016 and October 4, 2015consists of the following (dollars in thousands):

	For the Three		For the Three		For the Nine		For the Nine
	Months Ended		Months Ended		Months Ended		Months Ended
	October 2, 2016		October 4, 2015		October 2, 2016		October 4, 2015
Cost of sales	$	5,295	$	5,580	$	15,832	$	16,478
Selling, general and administrative expenses		699		918		2,103		2,379
	$	5,994	$	6,498	$	17,935	$	18,857

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Other Accrued Liabilities

9 Months Ended

Oct. 02, 2016

Other Accrued Liabilities [Abstract]

Other Accrued Liabilities

7.       OTHER ACCRUED LIABILITIES

Other accrued liabilities, as presented in the current liabilities section of the Condensed Consolidated Balance Sheet, consist of the following (dollars in thousands):

	October 2, 2016		January 2, 2016
Compensation	$	5,876	$	6,457
Trade discounts		10,723		12,977
Workers’ compensation		2,927		3,133
Accrued insurance		1,306		1,435
Other accrued taxes		1,077		1,694
Postretirement benefits other than pension		1,869		1,869
Fox River Funding Agreement		—		7,271
Due on accounts receivable securitization		11,300		5,500
Other		11,525		8,705
	$	46,603	$	49,041

As disclosed in Note 15, on September 1, 2016, Appvion paid $3.0 million of the Fox River Funding Agreement and reclassified the remaining $4.5 million to short-term debt.

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New Accounting Pronouncements

9 Months Ended

Oct. 02, 2016

New Accounting Pronouncements [Abstract]

New Accounting Pronouncements

8.       NEW ACCOUNTING PRONOUNCEMENTS

In August 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-15, “Classification of Certain Cash Receipts and Cash Payments.”  This guidance addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice.  This ASU is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years.  Early adoption is permitted.  This guidance should be applied using a retrospective transition method to each period presented.  The Company is assessing the impact the guidance will have, if any, on its consolidated financial statements.

In March 2016, FASB issued ASU No. 2016-09, “Improvements to Employee Share-Based Payment Accounting.” This guidance simplifies the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. This ASU is effective for fiscal years beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted. This guidance can be applied either prospectively, retrospectively or using a modified retrospective transition method. The Company is assessing the impact the guidance will have, if any, on its consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-05, “Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships.” This guidance clarifies that a change in the counterparty to a derivative instrument that has been designated as a hedging instrument does not, in and of itself, require dedesignation of that hedging relationship provided all other hedge accounting criteria continue to be met. The guidance must be applied using a prospective or modified retrospective application method and will be effective for fiscal years beginning after December 15, 2016 and interim periods within those fiscal years. Early adoption is permitted. The Company is assessing the impact the guidance will have, if any, on its consolidated financial statements.

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers.” This guidance provides a single comprehensive revenue recognition model to apply in determining how and when to recognize revenue. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. When applying the new revenue model to contracts with customers, the guidance requires five steps to be applied which include: 1) identify the contract(s) with a customer, 2) identify the performance obligations in the contract, 3) determine the transaction price, 4) allocate the transaction price to the performance obligations in the contract and 5) recognize revenue when (or as) the entity satisfies a performance obligation. The guidance also requires both quantitative and qualitative disclosures which are more comprehensive than existing revenue standards. The disclosures are intended to enable financial statement users to understand the nature, timing and uncertainty of revenue and the related cash flow. Additionally, in March 2016, the FASB issued ASU No. 2016-08, “Principal versus Agent Considerations” to clarify the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued ASU No. 2016-10, “Identifying Performance Obligations and Licensing” to clarify the guidance associated with identifying performance obligations and licensing. In May 2016, the FASB issued ASU No. 2016-11, “Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at March 3, 2016 EITF Meeting” to rescind specific guidance included in Topic 605, Revenue Recognition, and Topic 932, Extractive Activities-Oil and Gas, effective upon adoption of Topic 606. Also in May 2016, the FASB issued ASU No. 2016-12, “Narrow-Scope Improvements and Practical Expedients” to address certain issues in the guidance regarding assessing collectability, presentation of state taxes, noncash consideration, and completed contracts and contract modifications at transition. These ASU’s will be effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted but no earlier than the original effective date of fiscal years, and interim periods within those years, beginning after December 15, 2016. The Company is assessing the impact the guidance will have, if any, on its consolidated financial statements.

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Employee Benefits

9 Months Ended

Oct. 02, 2016

Employee Benefits [Abstract]

Employee Benefits

9.       EMPLOYEE BENEFITS

The components of net periodic benefit cost (gain) associated with the defined benefit pension plans include the following (dollars in thousands):

	For the Three		For the Three		For the Nine		For the Nine
	Months Ended		Months Ended		Months Ended		Months Ended
	October 2, 2016		October 4, 2015		October 2, 2016		October 4, 2015
Service cost	$	1,441	$	1,476	$	4,183	$	4,482
Interest cost		4,733		4,480		14,149		13,572
Expected return on plan assets		(5,183)		(5,780)		(15,681)		(17,532)
Amortization of prior service credit		(597)		(655)		(1,793)		(1,965)
Net loss (gain) amortization		3,026		(121)		3,026		(121)
Net periodic benefit cost (gain)	$	3,420	$	(600)	$	3,884	$	(1,564)

The Company does not expect to contribute any cash to its funded pension plan in 2016.

Certain of the Company’s hourly employees participated in a multi-employer defined benefit plan, the Pace Industry Union-Management Pension Plan (EIN #11-6166763). Participants in this plan included the West Carrollton, Ohio represented manufacturing employees, where the collective bargaining agreement expired on April 1, 2012. Participants also included the represented employees at the Kansas City, Kansas distribution center, where the collective bargaining agreement expired December 31, 2011. As a result of labor contracts ratified in June 2012 and September 2012, by the bargaining employees at the Kansas City, Kansas distribution center and West Carrollton, Ohio plant, respectively, both groups elected to end their participation in this multi-employer plan and instead participate in the defined benefit pension plan sponsored by the Company. In addition, during first quarter 2012 there was a workforce reduction at the West Carrollton, Ohio plant resulting from the cessation of papermaking activities. As a result, the Company recorded $25.0 million of expense in 2012 representing its estimated cost to satisfy a complete withdrawal liability under the terms of the plan’s trust agreement, with a payment period that began January 2014 and could extend for up to 20 years, discounted in accordance with ASC Section 450-20-S99-1. Payments of $0.5 million and $1.6 million were made during third quarter 2016 and the first nine months 2016, respectively, resulting in recorded interest expense of $0.3 million and $0.9 million for each of the two periods, respectively, and a $0.7 million reduction of the reserve since year-end 2015. Of the $22.7 million reserve, $0.9 million is classified as short-term and $21.8 million is classified as long-term within the Condensed Consolidated Balance Sheet at October2, 2016.

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Postretirement Benefit Plans Other Than Pensions

9 Months Ended

Oct. 02, 2016

Postretirement Benefit Plans Other Than Pensions [Abstract]

Postretirement Benefit Plans Other Than Pensions

10.      POSTRETIREMENT BENEFIT PLANS OTHER THAN PENSIONS

The components of other postretirement benefit gain include the following (dollars in thousands):

	For the Three		For the Three		For the Nine		For the Nine
	Months Ended		Months Ended		Months Ended		Months Ended
	October 2, 2016		October 4, 2015		October 2, 2016		October 4, 2015
Service cost	$	16	$	1	$	48	$	139
Interest cost		215		248		715		888
Amortization of prior service credit		(316)		(291)		(950)		(873)
Net gain amortization		(1,277)		(2,487)		(1,277)		(2,487)
Net periodic benefit gain	$	(1,362)	$	(2,529)	$	(1,464)	$	(2,333)

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Long-Term Incentive Compensation

9 Months Ended

Oct. 02, 2016

Long-Term Incentive Compensation [Abstract]

Long-Term Incentive Compensation

11.      LONG-TERM INCENTIVE COMPENSATION     

In December 2001, the Company adopted the Long-Term Stock Appreciation Rights Plan (“SAR” Plan). As of January 3, 2010, the Company adopted the Long-Term Restricted Stock Unit Plan ("RSU" Plan). Both plans utilize phantom units. The value of a unit in the SAR Plan is based on the change in the fair market value of PDC’s common stock under the terms of the employee stock ownership plan (the “ESOP”) between the grant date and the exercise date. The value of a unit in the RSU Plan is based on the value of PDC common stock, as determined by the ESOP trustee. As of the end of third quarter 2016, the fair market value of one share of PDC common stock was $13.70.  

As of year-end 2015, 143,818 RSU units became vested and exercisable. In accordance with the RSU Plan, payment for these RSU’s was made in February 2016. During the first nine months of 2016, 130,850 additional units were granted under the RSU Plan. Due to terminations of employment, 84,140 unvested units were forfeited during the current year.  Additionally, 13,267 RSU units became vested and exercisable during third quarter 2016. Payment for 767 of these RSU units was made in third quarter 2016.A balance of 262,100 RSU units remains as of October2, 2016. Payment for the remaining 12,500 RSU units vesting during third quarter 2016 was made in October 2016.Approximately $0.1million and$0.8million of expense, related to this RSU Plan, was recorded during each of the three- and nine-month periods ended October2, 2016, respectively. Approximately $0.2million and $1.2 million of expense, related to this plan, was recorded during the three- and nine-month periods ended October 4, 2015, respectively.As of October2, 2016, total unrecognized stock-based compensation expense relating to unvested long-term restricted employee stock units was $1.5 million. This amount is expected to be recognized over the weighted-average period of 2.0 years.

During the first nine months of 2016, 310,150 additional units were granted under the SAR Plan. Approximately $0.1 million of expense recovery and $0.5million of expense, related to this plan, was recorded in both the three- and nine-month periods ended October 2, 2016, respectively.Approximately $0.1 million and $0.2million of expense, related to this plan, was recorded in both the three- and nine-month periods ended October 4, 2015, respectively.

Beginning in 2006, the Company established a nonqualified deferred compensation agreement with each of its non-employee directors. In March 2013, the board adopted the Appvion, Inc. Non-Employee Director Deferred Compensation Plan to formalize the terms of the agreement. No expense was recorded during third quarter 2016 related to this plan.Approximately$0.3million of expense, related to this plan, was recorded during thenine-month period ended October2, 2016.Approximately $0.1 million and $0.5 million of expense, related to this plan, was recorded during the three- and nine-month periods ended October 4, 2015, respectively.

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Commitments And Contingencies

9 Months Ended

Oct. 02, 2016

Commitments And Contingencies [Abstract]

Commitments And Contingencies

12.      COMMITMENTS AND CONTINGENCIES

Lower Fox River

Appvion Caps Potential Liability.  On September 30, 2014, Appvion entered into a Funding Agreement with NCR Corporation (“NCR”), B.A.T. Industries, p.l.c. (“BAT”) and Windward Prospects Ltd (“Windward”) relating to clean-up costs for the Lower Fox River and certain potential future sites. Under the Funding Agreement, the parties paid the following amounts on September 30, 2014 toward historical Fox River Costs (as defined in the Funding Agreement) incurred by NCR through September 1, 2014:  BAT ‑ $77.08 million; Windward ‑ $10 million; and Appvion ‑ $6 million.  In addition, BTI 2014 LLC, a wholly owned subsidiary of BAT (“BTI”), is responsible for funding 50% of the Fox River Costs incurred by NCR after September 1, 2014.  The parties also agreed:  (a) to vigorously pursue reasonable and viable claims against certain third parties and to deposit any recoveries therefrom into BTI; and (b) that any funds remaining in BTI after paying BAT and NCR for any unreimbursed funding of Fox River Costs would be used to fund 60% of any Future Sites Costs, as defined in the Funding Agreement.

Subject to the limitations described below, Appvion agreed to assume the following additional funding obligations under the Funding Agreement:

(a) $4 million was paid on February 2, 2015 toward Fox River Costs;

(b) On September 1 of each year during the term of the Funding Agreement, the lesser of (1) an amount equal to 50% of the aggregate unreimbursed amount paid by BAT to the BTI for Fox River Costs (to the extent that Appvion has not previously paid such amount in any prior years) and (2) $7.5 million ($7.5 million was paid on September 1, 2015); and

(c) On September 1 of each year during the term of the Funding Agreement, the lesser of (1) an amount equal to 50% of the aggregate amount paid by BAT to the BTI for Future Sites Costs (to the extent that Appvion has not previously paid such amount in prior years) and (2) $7.5 million.

Effective August 31, 2016, the parties agreed that the amount due from Appvion on September 1, 2016, as set forth in (c) above would be separated into two payments: (i) $3.0 million, which was paid on September 1, 2016; and (ii) $4.5 million, which was subsequently paid on October 3, 2016.

Notwithstanding the foregoing, Appvion’s funding obligations are subject to the following limitations:

(a) In no event will Appvion’s funding obligations for Fox River Costs exceed $25 million (the “Appvion Fox River Cap”);

(b) In no event will Appvion’s funding obligations for Future Sites Costs exceed $25 million (the “Appvion Future Sites Cap”); and

(c) In no event will Appvion’s funding obligations under the Funding Agreement exceed $7.5 million during any calendar year (except for the payment of $4 million on February 2, 2015 and the payment of $7.5 million on September 1, 2015). The $4 million payment due February 1, 2015, the $7.5 million payment due September 1, 2015, the $3 million payment due September 1, 2016, and the $4.5 million payment due October 3, 2016 have been timely paid.

The parties to the Funding Agreement agree that they have no recourse against Appvion for any further liability relating to the Fox River or Future Sites beyond the Appvion Fox River Cap and the Appvion Future Sites Cap, respectively.

Appvion bears sole responsibility for its funding obligations under the Funding Agreement. The Funding Agreement does not, however, modify, alter or amend the two indemnification agreements entered into in 2001 wherein Windward agreed to indemnify PDC and PDC agreed to indemnify Appvion for certain costs, expenses and liabilities relating to Fox River and Future Sites, including Appvion’s costs and expenses in negotiating and entering into the Funding Agreement and any future costs and expenses incurred by Appvion in pursuing recoveries.

As a result of the Funding Agreement, $24.0 million of expense was recorded as selling, general and administrative expense in the Consolidated Statements of Comprehensive (Loss) Income for the year ended January 3, 2015. This expense represents the total payments expected to be made with respect to Fox River costs, as discussed above, with the first payment made on September 30, 2014, the second payment made on February 2, 2015, the third payment made on September 1, 2015 and the last paymentsmade on September 1, 2016 and October 3, 2016, discounted to reflect the long-term nature of the liability. A short-term liability of $4.5 million is recorded in the current portion of long-term debton the Condensed Consolidated Balance Sheet as of October 2, 2016. The total of these liabilities were accreted to the full liability of $25.0 million during the course of the payment schedule.

Other

From time to time, the Company may be subject to various demands, claims, suits or other legal or regulatory proceedings arising in the ordinary course of business. A comprehensive insurance program is maintained to provide a measure of financial protection against such matters, though not all such exposures are, or can be, addressed by insurance. Estimated costs are recorded for such demands, claims, suits or proceedings of this nature when reasonably determinable. The Company has successfully defended such claims, settling some for amounts which are not material to the business and obtaining dismissals in others. While the Company will vigorously defend itself and expects to prevail in any similar cases that may be brought against it in the future, there can be no assurance that it will be successful.

The Company does not believe that any pending or threatened demands, claims, suits or other legal or regulatory proceedings will have, individually or in the aggregate, a materially adverse effect on its business, financial condition and results of operations or cash flows. 

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Employee Stock Ownership Plan

9 Months Ended

Oct. 02, 2016

Employee Stock Ownership Plan [Abstract]

Employee Stock Ownership Plan

13.      EMPLOYEE STOCK OWNERSHIP PLAN

The Company’s matching contributions charged to expense were$0.3 million and $0.4 million for the three-month periods ended October 2, 2016 and October 4, 2015, respectively. The Company’s matching contributions charged to expense were $1.2 million and $1.5 million for the nine-month periods ended October 2, 2016 and October 4, 2015, respectively. As a result of hardship withdrawals, required diversifications and employee terminations, 477,175 shares of PDC redeemable common stock were repurchased during the first nine months of 2016 at an aggregate price of approximately $6.1 million.  During the same period, the ESOP trustee purchased 69,090 shares of PDC redeemable common stock for an aggregate price of $0.9 million using pre-tax deferrals, rollovers and loan payments made by employees, while the Company’s matching contributions for the same period resulted in an additional 66,502 shares of redeemable common stock being issued.

As a result of hardship withdrawals, required diversifications and employee terminations, 438,484 shares of PDC redeemable common stock were repurchased during the first nine months of 2015 at an aggregate price of approximately $5.1 million. During the same period, the ESOP trustee purchased 96,574 shares of PDC redeemable common stock for an aggregate price of $1.1 million using pre-tax deferrals, rollovers and loan payments made by employees, while the Company’s matching contributions for the same period resulted in an additional 92,576 shares of redeemable common stock being issued.

In accordance with ASC 480, “Distinguishing Liabilities from Equity,” the appropriate accounting for redeemable equity first depends upon a determination of whether the equity is currently redeemable or not currently redeemable. Shares that are currently redeemable should be recorded at redemption value. For shares that are not currently redeemable, the accounting guidance allows for changes in redemption value to be accreted from the initial issuance date to the earliest redemption date. This guidance also specifies that if the redemption value is less than the original issuance cost, the carrying amount of the redeemable common stock should not be less than the original issuance cost.

As of October 2, 2016, the fair market value of one share of PDC common stock was $13.70.  Based on the estimated fair value of the redeemable common stock at October 2, 2016, an ultimate redemption liability of approximately $88 million wasdetermined. The redeemable common stock recorded book value as of October 2, 2016,  was $113 million. The change in fair value and accretion of redeemable common stock was $5.1 million for the nine months ended October2, 2016.

Based on the estimated fair value of the redeemable common stock at October 4, 2015, an ultimate redemption liability of approximately $90 million was determined. The redeemable common stock recorded book value as of October 4, 2015 was $121 million. The change in fair value and accretion of redeemable common stock was $5.9 million for the nine months ended October 4, 2015.

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Derivative Instruments And Hedging Activities

9 Months Ended

Oct. 02, 2016

Derivative Instruments And Hedging Activities [Abstract]

Derivative Instruments And Hedging Activities

14.      DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

The Company selectively uses financial instruments to manage some market risks from changes in foreign currency exchange rates, commodity prices and interest rates. The fair values of all derivatives are recorded in the Condensed Consolidated Balance Sheet. The change in a derivative’s fair value is recorded each period in current earnings or accumulated other comprehensive income, depending on whether the derivative is designated and qualifies as part of a hedge transaction and, if so, the type of hedge transaction.

The Company selectively hedges forecasted transactions that are subject to foreign currency exchange exposure by using forward exchange contracts. These instruments are designated as cash flow hedges and are recorded in the Condensed Consolidated Balance Sheet at fair value using Level 2 observable market inputs. The fair value of foreign currency forward contracts is based on a valuation model that discounts cash flows resulting from the differential between the contract price and the market-based forward note, also deemed to be categorized as Level 2. The effective portion of the contracts’ gains or losses due to changes in fair value is initially recorded as a component of accumulated other comprehensive income and is subsequently reclassified into earnings when the underlying transactions occur and affect earnings or if it becomes probable the forecasted transactions will not occur. These contracts are designed to hedge the variability in future cash flows attributable to changes in currency exchange rates. The notional amount of foreign exchange contracts used to hedge foreign currency transactions was $9.5 million as of October 2, 2016. These contracts have settlement dates extending through December 2016.

The Company selectively hedges forecasted commodity transactions that are subject to pricing fluctuations by using collar contracts to manage risks associated with market fluctuations in energy prices. These contracts are recorded in the Condensed Consolidated Balance Sheet at fair value using Level 2 observable market inputs based on the New York Mercantile Exchange as measured on the last trading day of the accounting period and compared to the collar price. The contracts’ gains or losses due to changes in fair value are recorded in current period earnings. As of January 2, 2016, all contracts have been settled. At October 4,  2015, the hedged volumes of these contracts totaled 280,909 MMBTU (Million British Thermal Units) of natural gas.

On July 30, 2013, Appvion entered into an interest rate swap contract on $100 million of its variable rate first lien term loan with a forward start date of September 15, 2014 and a maturity date of June 28, 2019. This interest rate swap pays the Company variable interest at the three-month Eurodollar rate or a fixed floor rate of 1.25%, whichever is greater, and the Company pays the counterparty a fixed interest rate. The fixed Eurodollar interest rate for the contract is 7.24%. Based on the terms of the interest rate swap contract and the underlying debt, the interest rate contract was determined to be effective, and thus qualifies as a cash flow hedge. Any changes in the fair value of the interest rate swap are recorded in accumulated other comprehensive income in the accompanying Condensed Consolidated Balance Sheet until earnings are affected by the variability of cash flows.

The following table presents the location and fair values of derivative instruments included in the Company’s Condensed Consolidated Balance Sheets (dollars in thousands):

Designated as a Hedge	Balance Sheet Location	October 2, 2016		January 2, 2016
Foreign currency exchange derivatives	Accounts receivable	$	108	$	430
Foreign currency exchange derivatives	Other accrued liabilities		(72)		—
Interest rate swap	Other long-term liabilities		(3,623)		(3,501)

The following table presents the location and amount of (gains) losses on derivative instruments and related hedge items included in the Company’s Condensed Consolidated Statement of Comprehensive (Loss) Income for the three- and nine-months ended October 2, 2016 and October 4, 2015 and (gains) losses initially recognized in accumulated other comprehensive income in the Condensed Consolidated Balance Sheet at the period-ends presented (dollars in thousands):

	Statement of
	Comprehensive		For the Three		For the Three		For the Nine		For the Nine
	(Loss) Income		Months Ended		Months Ended		Months Ended		Months Ended
Designated as a Hedge	Location	October 2, 2016		October 4, 2015		October 2, 2016		October 4, 2015
Foreign currency exchange derivatives	Net sales	$	(127)	$	(50)	$	(161)	$	(1,206)
Gains recognized in accumulated
other comprehensive income							(24)		(25)
Interest rate swap	Interest expense		362		480		1,141		1,120
Losses recognized in accumulated
other comprehensive income							3,567		4,139
Not Designated as a Hedge
Natural gas collar	Cost of sales		—		176		—		384

For a discussion of the fair value of financial instruments, see Note 16, Fair Value Measurements.

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Long-Term Obligations

9 Months Ended

Oct. 02, 2016

Long-Term Obligations [Abstract]

Long-Term Obligations

15.      LONG-TERM OBLIGATIONS

Long-term obligations, excluding capital lease obligations, consist of the following (dollars in thousands):

	October 2,		January 2,
	2016		2016
Revolving credit facility at approximately 7.5% base rate and 5.5% Euro rate,
due June 2018	$	23,000	$	9,600
Unamortized debt issuance costs		(609)		(875)
Secured variable rate industrial development bonds, 0.7% average interest rate at
October 2, 2016, due in 2027		6,000		6,000
Unamortized debt issuance costs		(55)		(59)
State of Ohio assistance loan at 6%, approximately $100 due monthly and final
payment due May 2017		975		1,905
Unamortized debt issuance costs		(17)		(34)
State of Ohio loan at 3%, approximately $30 due monthly and final
payment due May 2019		868		1,105
Columbia County, Wisconsin municipal debt due December 2019		300		300
First lien term loan at 6.25%, due June 2019		158,300		158,300
Unamortized discount		(795)		(992)
Unamortized debt issuance costs		(1,838)		(2,291)
Second lien senior secured notes at 9.0%, due June 2020		250,000		250,000
Unamortized discount		(2,375)		(2,769)
Unamortized debt issuance costs		(4,171)		(4,860)
Fox River note at 6.0%, due October 2016		4,500		—
		434,083		415,330
Less obligations due within one year		(5,792)		(1,567)
	$	428,291	$	413,763

During the first nine months of 2016, the Company made mandatory debt repayments of $1.2 million on its State of Ohio loans. The Company also borrowed $271.4 million and repaid $258.0 million on its revolving credit facility, leaving an outstanding balance at quarter-end of $23.0 million. Approximately $15.0 million of the revolving credit facility commitment was used in the form of outstanding letters of credit issued thereunder, which, in accordance with its debt covenants, left approximately $6.6 million of unused borrowing capacity under its revolving credit facility. No amounts were drawn by beneficiaries under the outstanding letters of credit.

During the third quarter of 2016, the Company entered into a $4.5 million promissory note with NCR Corporation in relation to the Fox River Funding Agreement disclosed in Note 12. The unpaid principal balance of this Note bears interest at 6% per annum. Principal and interest were due and paid in full on October 3, 2016.

During the first quarter of 2016, the Company adopted ASU 2015-03, “Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.” In accordance with the guidance, $8.1 million of unamortized debt issuance costs, specifically attributable to each of the Company’s long-term debt issues, were reclassified from other assets, as previously reported on the Consolidated Balance Sheet as of January 2, 2016, to long-term debt. The unamortized debt issuance costs are now presented as a direct deduction from each debt liability, consistent with the presentation of the corresponding debt discount, where applicable.

On June 28, 2013, Appvion entered into a credit agreement (the “Credit Agreement”) providing for a $100 million revolving line of credit due June 28, 2018 and a $335 million first lien term loan due June 28, 2019. The Credit Agreement ranks senior in right of payment to all existing and future subordinated indebtedness of Appvion and is secured by security interests in substantially all of the property and assets of Appvion and the debt guarantors. As noted above, the maturity date of the revolving credit facility is June 28, 2018 and the maturity date of the first lien term loan is June 28, 2019. The Credit Agreement is unconditionally, and jointly and severally, guaranteed by PDC,  Appvion Canada, Ltd. and APVN Holdings LLC. It contains covenants customary for similar credit facilities. Affirmative and negative covenants under the Credit Agreement restrict Appvion’s ability and the ability of Appvion’s subsidiaries, subject to certain exceptions, to incur additional indebtedness and liens, engage in sale and leaseback transactions, make investments, make loans and advances, transact certain asset sales, engage in mergers, acquisitions, consolidations, liquidations and dissolutions, pay dividends or make other payments in respect of equity interests and other restricted payments, engage in certain transactions with affiliates, limit capital expenditures and make prepayments, redemptions and repurchases of other indebtedness.

After giving effect to the Third Amendment, (as defined below), the total amount committed under the revolving line of credit was reduced to $75 million and $170 million of the first lien term loan was repaid using proceeds from the Sale of the Encapsys Business. The first lien term loan bears interest, (i) through Appvion’s 2015 fiscal year, at Appvion’s option at either base rate plus 3.5% per annum or Eurodollar plus 4.5% per annum and (ii) thereafter, at either base rate or Eurodollar with the applicable margin determined pursuant to a pricing grid which provides that (x) if the reported consolidated first lien leverage ratio is greater than 3.00 to 1.00, the applicable margin on Eurodollar loans increases from 4.5% per annum to 5.0% per annum and the applicable margin on base rate loans increases from 3.5% per annum to 4.0% per annum and (y) if the reported consolidated first lien leverage ratio is less than or equal to 3.00 to 1.00, the applicable margin on Eurodollar loans returns to 4.5% per annum and the applicable margin on base rate loans returns to 3.5% per annum. The Credit Agreement provides for a fixed floor rate of 1.25% for Eurodollar loans and 2.25% for base rate loans. On July 30, 2013, Appvion fixed the interest rate at 7.24% on $100.0 million of the first lien term loan using an interest rate swap contract with a forward start date of September 15, 2014 and a maturity date of June 28, 2019. Within five business days after the year-end financial statements have been filed, Appvion is required to prepay an aggregate principal amount of the term loan equal to the excess, if any, of (a) 50% of defined excess cash flow, provided that such percentage shall be reduced to (1) 25% based upon Appvion achieving a consolidated leverage ratio of less than 3.5 to 1.0 but greater than or equal to 2.5 to 1.0 and (2) 0% based upon Appvion achieving a consolidated leverage ratio of less than 2.5 to 1.0 minus (b) the aggregate amount of all prepayments of the revolving credit line which constitute permanent reductions of the revolving credit facility and all optional prepayments of the first lien term loan made during the year. 

On August 3, 2015, Appvion, PDC, Jefferies Finance LLC, as administrative agent, Fifth Third Bank, as revolver agent, swing line lender and L/C issuer, and the lenders party to the Credit Agreement entered into a Third Amendment (the “Third Amendment”) to the Credit Agreement. The Third Amendment became effective simultaneously with the closing of the Sale of the Encapsys Business. Upon its effectiveness, the Third Amendment, among other things, (i) permitted the Company to consummate the Sale of the Encapsys Business and provided for the corresponding release of liens on the Encapsys Business, (ii) required that not less than $165 million of the net proceeds be applied to prepay the revolving credit loans and the term loans under the Credit Agreement and provided that the remainder of the net proceeds be reinvested or otherwise applied to further prepay indebtedness in accordance with the Credit Agreement, (iii) provided for a permanent reduction of the revolving credit facility commitments from $100 million to $75 million, (iv) required the payment of a consent fee equal to 0.175% of the aggregate principal amount of loans and commitments, (v) added the pricing grid discussed above and (vi) further conformed certain terms and covenants under the Credit Agreement to account for the Sale of the Encapsys Business and the transactions contemplated thereby. The Third Amendment also removed the maximum consolidated leverage covenant and added (i) a maximum consolidated first lien leverage covenant that requires maintenance of a consolidated first lien leverage ratio, initially, of not more than 3.50 to 1.00, and on and after the third fiscal quarter of 2016, of not more than 3.25 to 1.00 and on and after the third fiscal quarter of 2017, of not more than 3.00 to 1.00 and (ii) a minimum consolidated fixed charge coverage covenant that requires maintenance of a consolidated fixed charge coverage ratio, initially, of not less than 0.95 to 1.00 and on and after the first fiscal quarter of 2016, of not less than 1.00 to 1.00. The Company incurred $0.9 million of debt acquisition costs related to the execution of this amendment. These costs have been deferred and will be amortized over the remaining term of the Credit Agreement.

On June 24, 2016, Appvion, PDC, Jefferies Finance LLC, as administrative agent, Fifth Third Bank, as revolver agent, swing line lender and L/C issuer, and the lenders party to the Credit Agreement entered into a Fourth Amendment (the “Fourth Amendment”) to its Credit Agreement dated June 28, 2013. The Fourth Amendment amends the definition of Consolidated EBITDA to provide for an additional add-back to Consolidated Net Income for cash, fees and/or expenses paid or incurred in connection with certain financial and advisory services provided to the Company and Appvion in an aggregate amount not to exceed $6.5 million.

On November 19, 2013, Appvion completed a voluntary refinancing of a portion of its debt to extend maturities and reduce interest expense. The refinancing included the issuance of $250 million in aggregate principal amount of second lien senior secured notes carrying an annual interest rate of 9.0%, payable semi-annually in arrears on June 1 and December 1 of each year. The notes will mature on June 1, 2020 and are unconditionally, and jointly and severally, guaranteed by PDC and Appvion Canada, Ltd. The notes are secured by a second-priority security interest in substantially all of the property and assets of Appvion and the debt guarantors. These liens are junior in priority to the liens on this same collateral securing the outstanding debt incurred under the Credit Agreement. The notes contain covenants customary for similar debt which restrict Appvion’s ability, as well as the ability of the guarantors, to sell or lease certain assets or merge or consolidate with or into other companies, incur additional debt or issue preferred shares, incur liens, pay dividends or make other distributions, make other restricted payments and investments, place restrictions on the ability of certain of Appvion’s subsidiaries to pay dividends or other payments to Appvion, enter into sale and leaseback transactions, amend particular agreements relating to Appvion’s transaction with its former parent Windward Prospects Ltd. and the ESOP and enter into transactions with certain affiliates.

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Fair Value Measurements

9 Months Ended

Oct. 02, 2016

Fair Value Measurements [Abstract]

Fair Value Measurements

16.      FAIR VALUE MEASUREMENTS

The carrying amount (including current portions) and estimated fair value of certain of the Company’s recorded financial instruments are as follows (dollars in thousands):

	October 2, 2016				January 2, 2016
	Carrying		Fair		Carrying		Fair
Financial Instruments	Amount		Value		Amount		Value
First lien term loan	$	155,667	$	147,884	$	155,017	$	144,166
Second lien notes		243,454		157,028		242,371		96,948
Revolving credit facility		22,391		22,391		8,725		8,725
State of Ohio loans		1,826		1,826		2,976		2,976
Columbia County, Wisconsin municipal debt		300		300		300		300
Industrial development bonds		5,945		5,945		5,941		5,941
Fox River note		4,500		4,500		—		—
	$	434,083	$	339,874	$	415,330	$	259,056

The first lien term loan and the second lien notes are traded in public markets. Their fair value was determined using Level 2 inputs based on quoted market prices. The fair value of the State of Ohio loans was determined using Level 2 observable market inputs including current rates for financial instruments of the same remaining maturity and similar terms. The revolving credit facility and industrial development bonds have variable interest rates that reflect current market terms and conditions.

Due to their short-term nature, the carrying values of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities were reasonable estimates of fair value as of October2, 2016 and January 2, 2016.

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Segment Information

9 Months Ended

Oct. 02, 2016

Segment Information [Abstract]

Segment Information

17.      SEGMENT INFORMATION

The Company’s reportable segments are as follows: carbonless papers and thermal papers. Management evaluates the performance of the segments based primarily on operating income (loss). Items excluded from the determination of segment operating income (loss) are unallocated corporate charges, net interest expense, debt modification/extinguishment expense, foreign exchange loss (gain) and other expense. The Company does not allocate total assets internally in assessing operating performance and does not track capital expenditures by segment. Net sales, operating income (loss) and depreciation and amortization, as determined by the Company for its reportable segments, are as follows (dollars in thousands):

	For the Three		For the Three		For the Nine		For the Nine
	Months Ended		Months Ended		Months Ended		Months Ended
	October 2, 2016		October 4, 2015		October 2, 2016		October 4, 2015
Net sales
Carbonless papers	$	67,587	$	81,224	$	218,980	$	253,680
Thermal papers		101,602		99,367		304,300		276,978
Total	$	169,189	$	180,591	$	523,280	$	530,658
Operating income (loss)
Carbonless papers	$	3,940	$	6,641	$	13,242	$	21,719
Thermal papers		2,519		(99)		11,269		(6,679)
		6,459		6,542		24,511		15,040
Unallocated corporate charges		(3,039)		(2,373)		(7,639)		(7,981)
Total	$	3,420	$	4,169	$	16,872	$	7,059
Depreciation and amortization (A)
Carbonless papers	$	3,386	$	3,795	$	10,125	$	10,844
Thermal papers		3,228		3,224		9,533		9,582
		6,614		7,019		19,658		20,426
Unallocated corporate charges		43		51		245		145
Total	$	6,657	$	7,070	$	19,903	$	20,571

(A) Depreciation and amortization from continuing operations are allocated to the reportable segments based on the amount of activity provided by departments to the respective product lines in each reportable segment.

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Accumulated Other Comprehensive Income

9 Months Ended

Oct. 02, 2016

Accumulated Other Comprehensive Income [Abstract]

Accumulated Other Comprehensive Income

18.      ACCUMULATED OTHER COMPREHENSIVE INCOME

The changes in accumulated other comprehensive income by component for the nine months ended October 2, 2016 are as follows (dollars in thousands):

	Change in		Hedging
	Retiree Plans		Activities		Total
Balance, January 2, 2016	$	24,742	$	(3,070)	$	21,672
Other comprehensive loss before reclassifications		—		(1,453)		(1,453)
Amounts recorded in accumulated other
comprehensive income		(2,743)		980		(1,763)
Net other comprehensive loss		(2,743)		(473)		(3,216)
Balance, October 2, 2016	$	21,999	$	(3,543)	$	18,456

The changes in accumulated other comprehensive income by component for the nine months ended October 4, 2015 are as follows (dollars in thousands):

	Change in		Hedging
	Retiree Plans		Activities		Total
Balance, January 3, 2015	$	29,837	$	(2,651)	$	27,186
Other comprehensive loss before reclassifications		—		(1,377)		(1,377)
Amounts recorded in accumulated other
comprehensive income		(2,838)		(86)		(2,924)
Net other comprehensive loss		(2,838)		(1,463)		(4,301)
Balance, October 4, 2015	$	26,999	$	(4,114)	$	22,885

Details about these reclassifications are as follows (dollars in thousands):

		Amount Reclassified from
		Accumulated Other
		Comprehensive Income
										Affected Line Item
	For the Three		For the Three		For the Nine		For the Nine			in Condensed Consolidated
Details about Accumulated	Months Ended		Months Ended		Months Ended		Months Ended			Statements of
Other Comprehensive	October 2,		October 4,		October 2,		October 4,			Comprehensive (Loss)
Income Components	2016		2015		2016		2015			Income
Change in retiree plans
Amortization of prior service credit	$	913	$	946	$	2,743	$	2,838	(a)
Hedging activities
Foreign exchange contracts	$	127	$	50	$	161	$	1,206		Net sales
Interest rate swap		(362)		(480)		(1,141)		(1,120)		Interest expense
	$	(235)	$	(430)	$	(980)	$	86
Total reclassifications for the period	$	678	$	516	$	1,763	$	2,924

(a) These accumulated other comprehensive income components are included in the computation of net periodic pension cost. See Note 9, Employee Benefits, and Note 10, Postretirement Benefit Plans other than Pension.

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Discontinued Operations (Tables)

9 Months Ended

Oct. 02, 2016

Discontinued Operations [Abstract]

Discontinued Operations Impact On Financial Statements

The following table presents the key line items constituting income from discontinued operations for the Encapsys Business for the three and nine months ended October 4, 2015 (dollars in thousands):

	For the Three		For the Nine
	Months Ended		Months Ended
	October 4, 2015		October 4, 2015
Net sales	$	4,795	$	28,263
Cost of sales		1,440		11,697
Selling, general and administrative expenses		372		4,816
Income from discontinued operations		2,983		11,750
Gain on sale		188,921		188,921
Income from discontinued operations	$	191,904	$	200,671

The following are the significant line items of the Encapsys Business impacting cash flow for the periods presented (dollars in thousands):

	For the Three		For the Nine
	Months Ended		Months Ended
	October 4, 2015		October 4, 2015
Depreciation (recovery) expense	$	(377)	$	967
Additions to property, plant and equipment		815		2,282

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Other Intangible Assets (Tables)

9 Months Ended

Oct. 02, 2016

Other Intangible Assets [Abstract]

Schedule Of Intangible Assets

	As of October 2, 2016				As of January 2, 2016
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Amortizable intangible assets:
Trademarks	$	44,665	$	34,143	$	44,665	$	32,570
Patents		5,443		5,443		6,158		6,158
Customer relationships		5,365		3,483		5,365		3,342
Subtotal		55,473	$	43,069		56,188	$	42,070
Unamortizable intangible assets:
Trademarks		22,865				22,865
Total	$	78,338			$	79,053

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Inventories (Tables)

9 Months Ended

Oct. 02, 2016

Inventories [Abstract]

Components Of Inventories

	October 2, 2016		January 2, 2016
Finished goods	$	47,112	$	47,378
Raw materials		12,652		14,925
Work in process		10,148		9,300
Stores and spare parts		15,849		15,594
	$	85,761	$	87,197

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Property, Plant And Equipment (Tables)

9 Months Ended

Oct. 02, 2016

Property, Plant And Equipment [Abstract]

Components Of Property, Plant And Equipment

	October 2, 2016		January 2, 2016
Land and improvements	$	9,762	$	9,684
Buildings and improvements		129,731		129,453
Machinery and equipment		506,950		504,338
Software		33,888		33,476
Capital leases		1,180		996
Construction in progress		12,309		6,149
		693,820		684,096
Accumulated depreciation		(483,779)		(469,227)
	$	210,041	$	214,869

Schedule Of Depreciation Expense

	For the Three		For the Three		For the Nine		For the Nine
	Months Ended		Months Ended		Months Ended		Months Ended
	October 2, 2016		October 4, 2015		October 2, 2016		October 4, 2015
Cost of sales	$	5,295	$	5,580	$	15,832	$	16,478
Selling, general and administrative expenses		699		918		2,103		2,379
	$	5,994	$	6,498	$	17,935	$	18,857

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Other Accrued Liabilities (Tables)

9 Months Ended

Oct. 02, 2016

Other Accrued Liabilities [Abstract]

Schedule Of Accrued Liabilities

	October 2, 2016		January 2, 2016
Compensation	$	5,876	$	6,457
Trade discounts		10,723		12,977
Workers’ compensation		2,927		3,133
Accrued insurance		1,306		1,435
Other accrued taxes		1,077		1,694
Postretirement benefits other than pension		1,869		1,869
Fox River Funding Agreement		—		7,271
Due on accounts receivable securitization		11,300		5,500
Other		11,525		8,705
	$	46,603	$	49,041

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Employee Benefits (Tables)

9 Months Ended

Oct. 02, 2016

Pension Benefits [Member]

Defined Benefit Plan Disclosure [Line Items]

Components Of Net Periodic Pension Cost

	For the Three		For the Three		For the Nine		For the Nine
	Months Ended		Months Ended		Months Ended		Months Ended
	October 2, 2016		October 4, 2015		October 2, 2016		October 4, 2015
Service cost	$	1,441	$	1,476	$	4,183	$	4,482
Interest cost		4,733		4,480		14,149		13,572
Expected return on plan assets		(5,183)		(5,780)		(15,681)		(17,532)
Amortization of prior service credit		(597)		(655)		(1,793)		(1,965)
Net loss (gain) amortization		3,026		(121)		3,026		(121)
Net periodic benefit cost (gain)	$	3,420	$	(600)	$	3,884	$	(1,564)

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Postretirement Benefit Plans Other Than Pensions (Tables)

9 Months Ended

Oct. 02, 2016

Other Postretirement Benefits [Member]

Defined Benefit Plan Disclosure [Line Items]

Components Of Other Postretirement Benefit Cost

	For the Three		For the Three		For the Nine		For the Nine
	Months Ended		Months Ended		Months Ended		Months Ended
	October 2, 2016		October 4, 2015		October 2, 2016		October 4, 2015
Service cost	$	16	$	1	$	48	$	139
Interest cost		215		248		715		888
Amortization of prior service credit		(316)		(291)		(950)		(873)
Net gain amortization		(1,277)		(2,487)		(1,277)		(2,487)
Net periodic benefit gain	$	(1,362)	$	(2,529)	$	(1,464)	$	(2,333)

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Derivative Instruments And Hedging Activities (Tables)

9 Months Ended

Oct. 02, 2016

Derivative Instruments And Hedging Activities [Abstract]

Schedule Of Fair Values Of Derivative Instruments Included In Company's Condensed Consolidated Balance Sheets

Designated as a Hedge	Balance Sheet Location	October 2, 2016		January 2, 2016
Foreign currency exchange derivatives	Accounts receivable	$	108	$	430
Foreign currency exchange derivatives	Other accrued liabilities		(72)		—
Interest rate swap	Other long-term liabilities		(3,623)		(3,501)

Schedule Of Amount Of Losses (Gains) On Derivative Instruments

	Statement of
	Comprehensive		For the Three		For the Three		For the Nine		For the Nine
	(Loss) Income		Months Ended		Months Ended		Months Ended		Months Ended
Designated as a Hedge	Location	October 2, 2016		October 4, 2015		October 2, 2016		October 4, 2015
Foreign currency exchange derivatives	Net sales	$	(127)	$	(50)	$	(161)	$	(1,206)
Gains recognized in accumulated
other comprehensive income							(24)		(25)
Interest rate swap	Interest expense		362		480		1,141		1,120
Losses recognized in accumulated
other comprehensive income							3,567		4,139
Not Designated as a Hedge
Natural gas collar	Cost of sales		—		176		—		384

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Long-Term Obligations (Tables)

9 Months Ended

Oct. 02, 2016

Long-Term Obligations [Abstract]

Schedule Of Long-Term Obligations

	October 2,		January 2,
	2016		2016
Revolving credit facility at approximately 7.5% base rate and 5.5% Euro rate,
due June 2018	$	23,000	$	9,600
Unamortized debt issuance costs		(609)		(875)
Secured variable rate industrial development bonds, 0.7% average interest rate at
October 2, 2016, due in 2027		6,000		6,000
Unamortized debt issuance costs		(55)		(59)
State of Ohio assistance loan at 6%, approximately $100 due monthly and final
payment due May 2017		975		1,905
Unamortized debt issuance costs		(17)		(34)
State of Ohio loan at 3%, approximately $30 due monthly and final
payment due May 2019		868		1,105
Columbia County, Wisconsin municipal debt due December 2019		300		300
First lien term loan at 6.25%, due June 2019		158,300		158,300
Unamortized discount		(795)		(992)
Unamortized debt issuance costs		(1,838)		(2,291)
Second lien senior secured notes at 9.0%, due June 2020		250,000		250,000
Unamortized discount		(2,375)		(2,769)
Unamortized debt issuance costs		(4,171)		(4,860)
Fox River note at 6.0%, due October 2016		4,500		—
		434,083		415,330
Less obligations due within one year		(5,792)		(1,567)
	$	428,291	$	413,763

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Fair Value Measurements (Tables)

9 Months Ended

Oct. 02, 2016

Fair Value Measurements [Abstract]

Schedule Of Carrying Amount And Fair Value Of Financial Instruments

	October 2, 2016				January 2, 2016
	Carrying		Fair		Carrying		Fair
Financial Instruments	Amount		Value		Amount		Value
First lien term loan	$	155,667	$	147,884	$	155,017	$	144,166
Second lien notes		243,454		157,028		242,371		96,948
Revolving credit facility		22,391		22,391		8,725		8,725
State of Ohio loans		1,826		1,826		2,976		2,976
Columbia County, Wisconsin municipal debt		300		300		300		300
Industrial development bonds		5,945		5,945		5,941		5,941
Fox River note		4,500		4,500		—		—
	$	434,083	$	339,874	$	415,330	$	259,056

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Segment Information (Tables)

9 Months Ended

Oct. 02, 2016

Segment Information [Abstract]

Schedule Of Segment Reporting Information

	For the Three		For the Three		For the Nine		For the Nine
	Months Ended		Months Ended		Months Ended		Months Ended
	October 2, 2016		October 4, 2015		October 2, 2016		October 4, 2015
Net sales
Carbonless papers	$	67,587	$	81,224	$	218,980	$	253,680
Thermal papers		101,602		99,367		304,300		276,978
Total	$	169,189	$	180,591	$	523,280	$	530,658
Operating income (loss)
Carbonless papers	$	3,940	$	6,641	$	13,242	$	21,719
Thermal papers		2,519		(99)		11,269		(6,679)
		6,459		6,542		24,511		15,040
Unallocated corporate charges		(3,039)		(2,373)		(7,639)		(7,981)
Total	$	3,420	$	4,169	$	16,872	$	7,059
Depreciation and amortization (A)
Carbonless papers	$	3,386	$	3,795	$	10,125	$	10,844
Thermal papers		3,228		3,224		9,533		9,582
		6,614		7,019		19,658		20,426
Unallocated corporate charges		43		51		245		145
Total	$	6,657	$	7,070	$	19,903	$	20,571

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Accumulated Other Comprehensive Income (Tables)

9 Months Ended

Oct. 02, 2016

Accumulated Other Comprehensive Income [Abstract]

Schedule Of Changes In Accumulated Other Comprehensive Income By Component

The changes in accumulated other comprehensive income by component for the nine months ended October 2, 2016 are as follows (dollars in thousands):

	Change in		Hedging
	Retiree Plans		Activities		Total
Balance, January 2, 2016	$	24,742	$	(3,070)	$	21,672
Other comprehensive loss before reclassifications		—		(1,453)		(1,453)
Amounts recorded in accumulated other
comprehensive income		(2,743)		980		(1,763)
Net other comprehensive loss		(2,743)		(473)		(3,216)
Balance, October 2, 2016	$	21,999	$	(3,543)	$	18,456

The changes in accumulated other comprehensive income by component for the nine months ended October 4, 2015 are as follows (dollars in thousands):

	Change in		Hedging
	Retiree Plans		Activities		Total
Balance, January 3, 2015	$	29,837	$	(2,651)	$	27,186
Other comprehensive loss before reclassifications		—		(1,377)		(1,377)
Amounts recorded in accumulated other
comprehensive income		(2,838)		(86)		(2,924)
Net other comprehensive loss		(2,838)		(1,463)		(4,301)
Balance, October 4, 2015	$	26,999	$	(4,114)	$	22,885

Schedule Of Reclassifications Out Of Accumulated Other Comprehensive Income

		Amount Reclassified from
		Accumulated Other
		Comprehensive Income
										Affected Line Item
	For the Three		For the Three		For the Nine		For the Nine			in Condensed Consolidated
Details about Accumulated	Months Ended		Months Ended		Months Ended		Months Ended			Statements of
Other Comprehensive	October 2,		October 4,		October 2,		October 4,			Comprehensive (Loss)
Income Components	2016		2015		2016		2015			Income
Change in retiree plans
Amortization of prior service credit	$	913	$	946	$	2,743	$	2,838	(a)
Hedging activities
Foreign exchange contracts	$	127	$	50	$	161	$	1,206		Net sales
Interest rate swap		(362)		(480)		(1,141)		(1,120)		Interest expense
	$	(235)	$	(430)	$	(980)	$	86
Total reclassifications for the period	$	678	$	516	$	1,763	$	2,924

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Basis Of Presentation (Details)	9 Months Ended
	Oct. 02, 2016
Appvion, Inc. [Member]
Ownership percentage by parent	100.00%
Paperweight Development Corp. [Member]
Ownership percentage by parent	100.00%

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Discontinued Operations (Narrative) (Details) - USD ($) $ in Thousands		3 Months Ended	9 Months Ended		12 Months Ended
	Aug. 03, 2015	Oct. 04, 2015	Oct. 02, 2016	Oct. 04, 2015	Jan. 02, 2016
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Supply Agreement Term					10 years
Aggregate purchase price				$ 200,514
Repayments of long term debt	$ 165,000		$ 1,167	1,100
Additional Repayment of Long Term Debt	25,000
Proceeds set aside as restricted cash	35,000
Proceeds used for capital investment					$ 10,000
Net assets sold, carrying value					$ 11,800
Gain on sale of business		$ 188,921		$ 188,921
Encapsys Business [Member] | Discontinued Operations, Disposed of by Sale [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Aggregate purchase price	208,000
Working capital adjustments and expenses	7,500
Proceeds from sale of business, net	$ 200,500

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Discontinued Operations (Discontinued Operations Impact On Income Statement) (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Oct. 04, 2015	Oct. 04, 2015
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Income from discontinued operations	$ 2,983	$ 11,750
Gain on sale	188,921	188,921
Income from discontinued operations	191,904	200,671
Discontinued Operations, Disposed of by Sale [Member] | Encapsys Business [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Net sales	4,795	28,263
Costs of sales	1,440	11,697
Selling, general and administrative	$ 372	$ 4,816

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Discontinued Operations (Discontinued Operations Impact On Cash Flows) (Details) - Discontinued Operations, Disposed of by Sale [Member] - Encapsys Business [Member] - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Oct. 04, 2015	Oct. 04, 2015
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Depreciation (recovery) expense	$ (377)	$ 967
Additions to property, plant and equipment	$ 815	$ 2,282

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Accounts Receivable Securitization (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended		12 Months Ended
	Oct. 02, 2016	Oct. 04, 2015	Oct. 02, 2016	Oct. 04, 2015	Jan. 02, 2016	Jun. 29, 2014
Securitization Service Fees	$ 0.1	$ 0.1	$ 0.4	$ 0.4
Accounts Receivable Securitization Proceeds	10.7				$ 18.1
Accounts Receivalbe Securitization Committment Size						$ 30.0
Fair Value Of Deferred Purchase Price Notes	$ 21.1		21.1		16.5
Accounts Receivable Average Collection Period	30 days
Deferred Transactions Costs For Receivable Securitization	$ 0.2		0.2
Accounts Receivable Securitization Repayment Amount	33.6				$ 36.9
Other Noncurrent Assets [Member]
Deferred Transactions Costs For Receivable Securitization	$ 0.7		$ 0.7

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Other Intangible Assets (Narrative) (Details) - USD ($) $ in Thousands	9 Months Ended
	Oct. 02, 2016	Oct. 04, 2015
Other Intangible Assets [Abstract]
Amortization expense	$ 1,968	$ 1,714

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Other Intangible Assets (Schedule Of Intangible Assets) (Details) - USD ($) $ in Thousands	Oct. 02, 2016	Oct. 04, 2015
Intangible Assets [Line Items]
Amortizable intangible assets, Gross Carrying Amount	$ 55,473	$ 56,188
Amortizable intangible assets, Accumulated Amortization	43,069	42,070
Total intangible assets gross	78,338	79,053
Trademarks [Member]
Intangible Assets [Line Items]
Amortizable intangible assets, Gross Carrying Amount	44,665	44,665
Amortizable intangible assets, Accumulated Amortization	34,143	32,570
Unamortizable intangible assets, Gross Carrying Amount	22,865	22,865
Patents [Member]
Intangible Assets [Line Items]
Amortizable intangible assets, Gross Carrying Amount	5,443	6,158
Amortizable intangible assets, Accumulated Amortization	5,443	6,158
Customer Relationships [Member]
Intangible Assets [Line Items]
Amortizable intangible assets, Gross Carrying Amount	5,365	5,365
Amortizable intangible assets, Accumulated Amortization	$ 3,483	$ 3,342

XML

Inventories (Components Of Inventories) (Details) - USD ($) $ in Thousands	Oct. 02, 2016	Jan. 02, 2016
Inventories [Abstract]
Finished goods	$ 47,112	$ 47,378
Raw Materials	12,652	14,925
Work in Process	10,148	9,300
Stores and Spare Parts	15,849	15,594
Inventories, Net	$ 85,761	$ 87,197

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Property, Plant And Equipment (Components Of Property, Plant And Equipment) (Details) - USD ($) $ in Thousands	Oct. 02, 2016	Jan. 02, 2016
Property, Plant And Equipment [Abstract]
Land and improvements	$ 9,762	$ 9,684
Buildings and improvements	129,731	129,453
Machinery and equipment	506,950	504,338
Software	33,888	33,476
Capital lease	1,180	996
Construction in progress	12,309	6,149
Property, plant and equipment, gross, total	693,820	684,096
Accumulated depreciation	(483,779)	(469,227)
Property, plant and equipment, net, total	$ 210,041	$ 214,869

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Property, Plant And Equipment (Schedule Of Depreciation Expense) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 02, 2016	Oct. 04, 2015	Oct. 02, 2016	Oct. 04, 2015
Depreciation Expense [Line Items]
Depreciation Expense			$ 17,935	$ 19,824
Depreciation, Continued Operations	$ 5,994	$ 6,498	17,935	18,857
Cost Of Sales [Member]
Depreciation Expense [Line Items]
Depreciation, Continued Operations	5,295	5,580	15,832	16,478
Selling, General And Administrative Expenses [Member]
Depreciation Expense [Line Items]
Depreciation, Continued Operations	$ 699	$ 918	$ 2,103	$ 2,379

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Other Accrued Liabilities (Narrative) (Details) $ in Thousands	Jan. 02, 2016 USD ($)
Other Accrued Liabilities [Abstract]
Funding Agreement short-term liability	$ 7,271

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Other Accrued Liabilities (Schedule Of Accrued Liabilities) (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Oct. 02, 2016	Jan. 02, 2016
Other Accrued Liabilities [Abstract]
Compensation	$ 5,876	$ 6,457
Trade discounts	10,723	12,977
Workers' compensation	2,927	3,133
Accrued insurance	1,306	1,435
Other accrued taxes	1,077	1,694
Postretirement benefits other than pension	1,869	1,869
Fox River Funding Agreement		7,271
Due on Accounts Receivable Securitization	11,300	5,500
Other	11,525	8,705
Other accrued liabilities	$ 46,603	$ 49,041

XML

Employee Benefits (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 02, 2016	Oct. 04, 2015	Oct. 02, 2016	Oct. 04, 2015	Jan. 02, 2016	Dec. 29, 2012
Defined Benefit Plan Disclosure [Line Items]
Other long-term liabilities	$ 33,461		$ 33,461		$ 35,354
Interest expense	10,179	$ 11,094	30,550	$ 36,446
Multiemployer Pension Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Multiemployer Plan Withdrawal Liability	$ 22,700		22,700			$ 25,000
Multiemployer Plan Full Withdrawal Expense Payment Period	20 years
Payment Related To Multiemployer Plan	$ 500		1,600
Multiemployer Principle Payment			700
Other long-term liabilities	21,800		21,800
Interest expense	300		900
Other Liabilities, Current	$ 900		$ 900

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Employee Benefits (Components Of Net Periodic Pension Cost) (Details) - Pension Benefits [Member] - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 02, 2016	Oct. 04, 2015	Oct. 02, 2016	Oct. 04, 2015
Defined Benefit Plan Disclosure [Line Items]
Service cost	$ 1,441	$ 1,476	$ 4,183	$ 4,482
Interest cost	4,733	4,480	14,149	13,572
Expected return on plan assets	(5,183)	(5,780)	(15,681)	(17,532)
Amortization of prior service cost	(597)	(655)	(1,793)	(1,965)
Net loss (gain) amortization	3,026	(121)	3,026	(121)
Net periodic benefit cost (gain)	$ 3,420	$ (600)	$ 3,884	$ (1,564)

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Postretirement Benefit Plans Other Than Pensions (Components Of Other Postretirement Benefit Cost) (Details) - Other Postretirement Benefits [Member] - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 02, 2016	Oct. 04, 2015	Oct. 02, 2016	Oct. 04, 2015
Defined Benefit Plan Disclosure [Line Items]
Service cost	$ 16	$ 1	$ 48	$ 139
Interest cost	215	248	715	888
Amortization of prior service credit	(316)	(291)	(950)	(873)
Net loss (gain) amortization	(1,277)	(2,487)	(1,277)	(2,487)
Net periodic benefit cost (gain)	$ (1,362)	$ (2,529)	$ (1,464)	$ (2,333)

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Long-Term Incentive Compensation (Narrative) (Details) - USD ($) $ / shares in Units, $ in Millions		3 Months Ended		9 Months Ended
	Oct. 14, 2016	Oct. 02, 2016	Oct. 04, 2015	Oct. 02, 2016	Oct. 04, 2015	Jan. 02, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Fair market value of common stock		$ 13.70		$ 13.70
Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Units outstanding		262,100		262,100
Deferred compensation expense		$ 0.1	$ 0.2	$ 0.8	$ 1.2
Units granted				130,850
Units forfeited				84,140
Units exercised		767
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Exercisable, Number		13,267		13,267		143,818
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Stock Options		$ 1.5		$ 1.5
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition				2 years
LTIP [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Deferred compensation expense		$ 0.1	0.1	$ 0.5	0.2
Units granted				310,150
Deferred Compensation Agreement [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Deferred compensation expense			$ 0.1	$ 0.3	$ 0.5
Subsequent Event [Member] | Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Units exercised	12,500

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Commitments And Contingencies (Details) - USD ($) $ in Thousands					3 Months Ended		9 Months Ended		12 Months Ended
	Oct. 03, 2016	Sep. 01, 2015	Feb. 02, 2015	Sep. 30, 2014	Oct. 02, 2016	Oct. 04, 2015	Oct. 02, 2016	Oct. 04, 2015	Jan. 03, 2015	Jan. 02, 2016
Loss Contingencies [Line Items]
Funding Agreement Payment			$ 4,000
Funding Agreement short-term liability										$ 7,271
Selling, General and Administrative Expense					$ 25,917	$ 28,701	$ 78,922	$ 85,462	$ 24,000
Subsequent Event [Member]
Loss Contingencies [Line Items]
Repayments of Short-term Debt	$ 4,500
Appvion, Inc. [Member]
Loss Contingencies [Line Items]
Funding Agreement Payment		$ 7,500		$ 6,000
Maximum [Member]
Loss Contingencies [Line Items]
Funding Agreement				25,000
Maximum [Member] | Appvion, Inc. [Member]
Loss Contingencies [Line Items]
Funding Agreement				25,000
Windward Prospects Ltd (AWA) [Member]
Loss Contingencies [Line Items]
Funding Agreement Payment				10,000
Supplier Contract Terms Litigation [Member]
Loss Contingencies [Line Items]
Funding Agreement Payment				$ 77,080

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Employee Stock Ownership Plan (Narrative) (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		9 Months Ended
	Oct. 02, 2016	Oct. 04, 2015	Oct. 02, 2016	Oct. 04, 2015
Employee Stock Ownership Plan [Abstract]
Contributions charged to expense	$ 0.3	$ 0.4	$ 1.2	$ 1.5
Redeemable common stock repurchased, shares			477,175	438,484
Redeemable common stock repurchased, value			$ 6.1	$ 5.1
ESOP shares matched by Company			66,502	92,576
ESOP shares purchased with pre-tax dollars			69,090	96,574
ESOP Purchased With Pre Tax Dollars, Price			$ 0.9	$ 1.1
Ultimate redemption liability	88.0	90.0	88.0	90.0
Recorded book value of redeemable common stock	$ 113.0	$ 121.0	113.0	121.0
Accretion of redeemable common stock			$ 5.1	$ 5.9
Share Price	$ 13.70		$ 13.70

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Derivative Instruments And Hedging Activities (Narrative) (Details) $ in Millions	Oct. 02, 2016 USD ($) MMBTU	Jul. 30, 2013 USD ($)
Derivative [Line Items]
Derivative, Fixed Interest Rate		7.24%
Notional Amount of Interest Rate Cash Flow Hedge Derivatives		$ 100.0
Derivative, Floor Interest Rate		1.25%
Designated As A Hedge [Member]
Derivative [Line Items]
Notional Amount of Interest Rate Cash Flow Hedge Derivatives	$ 9.5
Designated As A Hedge [Member] | Natural Gas [Member]
Derivative [Line Items]
Notional nonmonetary amount of price risk derivatives | MMBTU	280,909

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Derivative Instruments And Hedging Activities (Schedule Of Fair Values Of Derivative Instruments Included In Company's Condensed Consolidated Balance Sheets) (Details) - USD ($) $ in Thousands	Oct. 02, 2016	Jan. 02, 2016
Derivatives, Fair Value [Line Items]
Foreign currency exchange derivatives, liabilities	$ (72)
Other Current Assets [Member] | Foreign Currency Exchange Derivatives [Member] | Designated As A Hedge [Member]
Derivatives, Fair Value [Line Items]
Foreign currency exchange derivatives, assets	108	$ 430
Other Noncurrent Liabilities [Member] | Interest Rate Swap [Member] | Designated As A Hedge [Member]
Derivatives, Fair Value [Line Items]
Interest rate swap	$ (3,623)	$ (3,501)

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Derivative Instruments And Hedging Activities (Schedule Of Amount Of Losses (Gains) On Derivative Instruments) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 02, 2016	Oct. 04, 2015	Oct. 02, 2016	Oct. 04, 2015
Net Sales [Member] | Designated As A Hedge [Member]
Derivative [Line Items]
Losses (gains) recognized in accumulated other comprehensive loss			$ (24)	$ (25)
Net Sales [Member] | Foreign Currency Exchange Derivatives [Member] | Designated As A Hedge [Member]
Derivative [Line Items]
Losses (gains) recognized in accumulated other comprehensive loss	$ (127)	$ (50)	(161)	(1,206)
Cost Of Sales [Member] | Natural Gas Fixed Swap [Member] | Not Designated As A Hedge [Member]
Derivative [Line Items]
Losses (gains) recognized in accumulated other comprehensive loss		176		384
Interest Expense [Member] | Designated As A Hedge [Member]
Derivative [Line Items]
Losses (gains) recognized in accumulated other comprehensive loss			3,567	4,139
Interest Expense [Member] | Interest Rate Swap [Member] | Designated As A Hedge [Member]
Derivative [Line Items]
Losses (gains) recognized in accumulated other comprehensive loss	$ 362	$ 480	$ 1,141	$ 1,120

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Long-Term Obligations (Narrative) (Details)					3 Months Ended	9 Months Ended
	Jun. 28, 2019	Jun. 28, 2018	Aug. 03, 2015 USD ($) item	Jul. 30, 2013 USD ($) item	Oct. 04, 2015 USD ($)	Oct. 02, 2016 USD ($) item	Oct. 04, 2015 USD ($)	Sep. 29, 2013	Jan. 02, 2016 USD ($)	Jul. 05, 2015 USD ($)	Nov. 19, 2013 USD ($)	Jun. 28, 2013 USD ($)
Debt Instrument [Line Items]
Long-term debt						$ 434,083,000			$ 415,330,000
Payments of Long-term Debt			$ 165,000,000			1,167,000	$ 1,100,000
Proceeds from new revolving line of credit						271,400,000	262,400,000
Line of Credit Facility, Remaining Borrowing Capacity						6,600,000
Payments of revolving line of credit						$ 258,000,000	265,350,000
Revolving credit facility, maximum borrowing capacity			$ 75,000,000									$ 100,000,000
Debt instrument, maturity year	June 28, 2019	June 28, 2018
Write off of Deferred Debt Issuance Cost					$ 3,605,000		$ 3,605,000
Derivative, Fixed Interest Rate				7.24%
Percentage of excess cash flow				50.00%
Percentage of excess cash flow upon achieving specified consolidated leverage ratio				25.00%
Percentage of excess cash flow upon achieving second specified consolidated leverage ratio				0.00%
Second specified leverage ratio | item				2.5
Consent fee as percentage of aggregate principal amount of loans and commitments			0.175%
Debt acquisition costs			$ 900,000
Interest Rate Floor [Member]
Debt Instrument [Line Items]
Derivative, Fixed Interest Rate				7.24%
Derivative, Amount of Hedged Item				$ 100,000,000
Base Rate [Member]
Debt Instrument [Line Items]
Interest rate, fixed floor rate						2.25%
London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument [Line Items]
Interest rate, fixed floor rate						1.25%
Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Long-term debt						$ 23,000,000			9,600,000
Payments of Long-term Debt						258,000,000
Proceeds from new revolving line of credit						271,400,000
Revolving line of credit, amount outstanding						23,000,000
Revolving credit facility, maximum borrowing capacity			$ 75,000,000							$ 100,000,000
Letter Of Credit Sub-Facility [Member]
Debt Instrument [Line Items]
Revolving line of credit, amount outstanding						15,000,000
State Of Ohio Loans [Member]
Debt Instrument [Line Items]
Payments of Long-term Debt						$ 1,200,000
Senior Secured First Lien Notes Payable Due 2019 [Member]
Debt Instrument [Line Items]
Long-term debt												$ 335,000,000
Leverage ratio | item						3.00
Senior Secured First Lien Notes Payable Due 2019 [Member] | Base Rate [Member]
Debt Instrument [Line Items]
Basis spread on variable rate								3.50%
Senior Secured First Lien Notes Payable At 10.5% [Member]
Debt Instrument [Line Items]
Long-term debt						$ 158,300,000			158,300,000
Senior Secured First Lien Notes Payable At 10.5% [Member] | Base Rate [Member]
Debt Instrument [Line Items]
Basis spread on variable rate, after current fiscal year						4.00%
Senior Secured First Lien Notes Payable At 10.5% [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument [Line Items]
Basis spread on variable rate								4.50%
Basis spread on variable rate, after current fiscal year						5.00%
Senior Secured Second Lien Notes Payable Due 2020 [Member]
Debt Instrument [Line Items]
Long-term debt						$ 250,000,000			$ 250,000,000		$ 250,000,000
Debt instrument interest rate											9.00%
Minimum [Member]
Debt Instrument [Line Items]
Leverage ratio | item				2.5
Initial consolidated first lien leverage ratio | item			0.95
Consolidated first lien leverage ratio on and after the third fiscal quarter of 2016 | item			1.00
Maximum [Member]
Debt Instrument [Line Items]
Leverage ratio | item				3.5
Initial consolidated first lien leverage ratio | item			3.50
Consolidated first lien leverage ratio on and after the third fiscal quarter of 2016 | item			3.25
Consolidated first lien leverage ratio on and after the third fiscal quarter of 2017 | item			3.00

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Long-Term Obligations (Schedule Of Long-Term Obligations) (Details) - USD ($)	Jun. 28, 2019	Jun. 28, 2018	Oct. 02, 2016	Jan. 02, 2016	Nov. 19, 2013	Jun. 28, 2013
Debt Instrument [Line Items]
Long-term debt			$ 434,083,000	$ 415,330,000
Fox River note at 6%, due October 2016			4,500,000
Less obligations due within one year			(5,792,000)	(1,567,000)
Long-term obligations, excluding the capital lease obligation			428,291,000	413,763,000
Debt instrument, maturity year	June 28, 2019	June 28, 2018
Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Long-term debt			23,000,000	9,600,000
Deferred Finance Costs, Net			(609,000)	(875,000)
Senior Secured First Lien Notes Payable Due 2019 [Member]
Debt Instrument [Line Items]
Long-term debt						$ 335,000,000
Industrial Development Bonds, Due 2027 [Member]
Debt Instrument [Line Items]
Long-term debt			6,000,000	6,000,000
Deferred Finance Costs, Net			(55,000)	(59,000)
State Of Ohio Assistance Loan At 6% [Member]
Debt Instrument [Line Items]
Long-term debt			975,000	1,905,000
Deferred Finance Costs, Net			(17,000)	(34,000)
State Of Ohio Loan At 3% Until May 2019 [Member]
Debt Instrument [Line Items]
Long-term debt			868,000	1,105,000
Columbia County, Wisconsin Municipal Debt Due December 2019 [Member]
Debt Instrument [Line Items]
Long-term debt			300,000	300,000
Senior Secured First Lien Notes Payable At 10.5% [Member]
Debt Instrument [Line Items]
Long-term debt			158,300,000	158,300,000
Unamortized Discount On 10.5% Senior Secured First Lien Notes Payable [Member]
Debt Instrument [Line Items]
Unamortized discount			(795,000)	(992,000)
Deferred Finance Costs, Net			(1,838,000)	(2,291,000)
Senior Secured Second Lien Notes Payable Due 2020 [Member]
Debt Instrument [Line Items]
Long-term debt			250,000,000	250,000,000	$ 250,000,000
Deferred Finance Costs, Net			(4,171,000)	(4,860,000)
Debt instrument interest rate					9.00%
Unamortized Discount On Senior Secured Second Lien Notes Payable Due 2020 [Member]
Debt Instrument [Line Items]
Unamortized discount			$ (2,375,000)	$ (2,769,000)

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Fair Value Measurements (Schedule Of Carrying Amount And Fair Value Of Financial Instruments) (Details) - USD ($) $ in Thousands	Oct. 02, 2016	Jan. 02, 2016
Carrying Amount [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial Instruments, Fair Value	$ 434,083	$ 415,330
Carrying Amount [Member] | Senior Secured First Lien Notes Payable Due 2019 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial Instruments, Fair Value	155,667	155,017
Carrying Amount [Member] | Senior Secured Second Lien Notes Payable Due 2020 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial Instruments, Fair Value	243,454	242,371
Carrying Amount [Member] | Revolving Credit Facility [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial Instruments, Fair Value	22,391	8,725
Carrying Amount [Member] | State Of Ohio Loans [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial Instruments, Fair Value	1,826	2,976
Carrying Amount [Member] | Columbia County, Wisconsin Municipal Debt [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial Instruments, Fair Value	300	300
Carrying Amount [Member] | Industrial Development Bonds [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial Instruments, Fair Value	5,945	5,941
Carrying Amount [Member] | Fox River Note [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial Instruments, Fair Value	4,500
Fair Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial Instruments, Fair Value	339,874	259,056
Fair Value [Member] | Senior Secured First Lien Notes Payable Due 2019 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial Instruments, Fair Value	147,884	144,166
Fair Value [Member] | Senior Secured Second Lien Notes Payable Due 2020 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial Instruments, Fair Value	157,028	96,948
Fair Value [Member] | Revolving Credit Facility [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial Instruments, Fair Value	22,391	8,725
Fair Value [Member] | State Of Ohio Loans [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial Instruments, Fair Value	1,826	2,976
Fair Value [Member] | Columbia County, Wisconsin Municipal Debt [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial Instruments, Fair Value	300	300
Fair Value [Member] | Industrial Development Bonds [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial Instruments, Fair Value	5,945	$ 5,941
Fair Value [Member] | Fox River Note [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial Instruments, Fair Value	$ 4,500

XML

Segment Information (Schedule Of Segment Reporting Information) (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Oct. 02, 2016	Oct. 04, 2015	Oct. 02, 2016	Oct. 04, 2015
Segment Reporting Information [Line Items]
Net sales		$ 169,189	$ 180,591	$ 523,280	$ 530,658
Operating income (loss)		3,420	4,169	16,872	7,059
Depreciation and amortization		6,657	7,070	19,903	20,571
Significant Reconciling Items [Member]
Segment Reporting Information [Line Items]
Operating income (loss)		(3,039)	(2,373)	(7,639)	(7,981)
Depreciation and amortization		43	51	245	145
Carbonless Papers [Member]
Segment Reporting Information [Line Items]
Net sales		67,587	81,224	218,980	253,680
Operating income (loss)		3,940	6,641	13,242	21,719
Depreciation and amortization	[1]	3,386	3,795	10,125	10,844
Thermal Papers [Member]
Segment Reporting Information [Line Items]
Net sales		101,602	99,367	304,300	276,978
Operating income (loss)		2,519	(99)	11,269	(6,679)
Depreciation and amortization		3,228	3,224	9,533	9,582
Net Paper Segments [Member]
Segment Reporting Information [Line Items]
Operating income (loss)		6,459	6,542	24,511	15,040
Depreciation and amortization		$ 6,614	$ 7,019	$ 19,658	$ 20,426

[1] Depreciation and amortization from continuing operations are allocated to the reportable segments based on the amount of activity provided by departments to the respective product lines in each reportable segment

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Accumulated Other Comprehensive Income (Schedule Of Changes In Accumulated Other Comprehensive Income By Component) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 02, 2016	Oct. 04, 2015	Oct. 02, 2016	Oct. 04, 2015
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated other comprehensive income, Beginning balance			$ 21,672	$ 27,186
Other comprehensive income before reclassifications			(1,453)	(1,377)
Amounts reclassified from accumulated other comprehensive income (loss)			(1,763)	(2,924)
Net other comprehensive (loss) income	$ (541)	$ (1,749)	(3,216)	(4,301)
Accumulated other comprehensive income, Ending balance	18,456	22,885	18,456	22,885
Change In Retiree Plans [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated other comprehensive income, Beginning balance			24,742	29,837
Amounts reclassified from accumulated other comprehensive income (loss)			(2,743)	(2,838)
Net other comprehensive (loss) income			(2,743)	(2,838)
Accumulated other comprehensive income, Ending balance	21,999	26,999	21,999	26,999
Hedging Activities [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated other comprehensive income, Beginning balance			(3,070)	(2,651)
Other comprehensive income before reclassifications			(1,453)	(1,377)
Amounts reclassified from accumulated other comprehensive income (loss)			980	(86)
Net other comprehensive (loss) income			(473)	(1,463)
Accumulated other comprehensive income, Ending balance	$ (3,543)	$ (4,114)	$ (3,543)	$ (4,114)

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Accumulated Other Comprehensive Income (Schedule Of Reclassifications Out Of Accumulated Other Comprehensive Income) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 02, 2016	Oct. 04, 2015	Oct. 02, 2016	Oct. 04, 2015
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items]
Net sales	$ 169,189	$ 180,591	$ 523,280	$ 530,658
Cost of sales	(139,852)	(147,721)	(427,486)	(438,137)
Interest Expense	10,179	11,094	30,550	36,446
Net loss	(7,210)	180,881	(14,491)	165,308
Reclassification Out Of Accumulated Other Comprehensive Income [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items]
Net loss	678	516	1,763	2,924
Change In Retiree Plans [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items]
Amortization of prior service cost	913	946	2,743	2,838
Hedging Activities [Member] | Reclassification Out Of Accumulated Other Comprehensive Income [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items]
Net loss	(235)	(430)	(980)	86
Hedging Activities [Member] | Foreign Currency Exchange Derivatives [Member] | Reclassification Out Of Accumulated Other Comprehensive Income [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items]
Net sales	127	50	161	1,206
Hedging Activities [Member] | Commodity Contracts [Member] | Reclassification Out Of Accumulated Other Comprehensive Income [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items]
Cost of sales	$ (362)	$ (480)	$ (1,141)	$ (1,120)