NewPage Holding 10-Q 2010 Q3 Quarterly report

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 September 30, 2010

8540 Gander Creek Drive

Miamisburg, Ohio 45342

877.855.7243

		IRS Employer
Commission		Identification	State of
File Number	Registrant	Number	Incorporation
001-32956	NEWPAGE HOLDING CORPORATION	05-0616158	Delaware
333-125952	NEWPAGE CORPORATION	05-0616156	Delaware

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

NewPage Holding Corporation	Yes x	No ¨
NewPage Corporation	Yesx	No¨

Indicate by check mark whether the 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).

NewPage Holding Corporation	Yes ¨	No ¨
NewPage Corporation	Yes¨	No¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:

NewPage Holding Corporation	Large accelerated filer¨	Accelerated filer¨
	Non-accelerated filerx	Smaller reporting company¨

NewPage Corporation	Large accelerated filer¨	Accelerated filer¨
	Non-accelerated filerx	Smaller reporting company¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

NewPage Holding Corporation	Yes ¨	No x
NewPage Corporation	Yes¨	Nox

There were 10 Common Shares, $0.01 per share par value, of NewPage Holding Corporation and 100 Common Shares, $0.01 per share par value, of NewPage Corporation outstanding as of November 1, 2010.

This Form 10-Q is a combined quarterly report being filed separately by two registrants: NewPage Holding Corporation and NewPage Corporation. NewPage Corporation meets the conditions set forth in general instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this form with the reduced disclosure format.

References to “NewPage Holding” refer to NewPage Holding Corporation, a Delaware corporation; references to “NewPage” refer to NewPage Corporation, a Delaware corporation and a wholly-owned subsidiary of NewPage Holding. References to “NewPage Group” refer to NewPage Group Inc., a Delaware corporation and the direct parent of NewPage Holding. Unless the context provides otherwise, references to “we,” “us” and “our” refer to NewPage Holding and its subsidiaries. All assets, liabilities, income, expenses and cash flows presented for all periods represent those of NewPage Holding’s wholly-owned subsidiary, NewPage, except for activity related to NewPage Holding’s debt and equity and income tax effects. Unless otherwise noted, the information provided pertains to both NewPage Holding and NewPage.

FORWARD-LOOKING STATEMENTS

This quarterly report contains “forward-looking statements” within the meaning of the Securities Exchange Act of 1934, the Private Securities Litigation Reform Act of 1995 and other related laws. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws. Forward-looking statements may include the words “may,” “plans,” “estimates,” “anticipates,” “believes,” “expects,” “intends” and similar expressions. Although we believe that these forward-looking statements are based on reasonable assumptions, they are subject to numerous factors, risks and uncertainties that could cause actual outcomes and results to be materially different from those projected or assumed in our forward-looking statements. These factors, risks and uncertainties include, among others, the following:

• our substantial level of indebtedness

• changes in the supply of, demand for, or prices of our products

• general economic and business conditions in the United States and Canada and elsewhere

• the ability of our customers to continue as a going concern, including our ability to collect accounts receivable according to customary business terms

• the activities of competitors, including those that may be engaged in unfair trade practices

• changes in significant operating expenses, including raw material and energy costs

• changes in currency exchange rates

• changes in the availability of capital

• changes in the regulatory environment, including requirements for enhanced environmental compliance

• the other factors described under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2009

Given these risks and uncertainties, we caution you not to place undue reliance on forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, either to reflect new developments or for any other reason, except as required by law.

1

INDEX

		Page
PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements:
	Condensed Consolidated Balance Sheets as of September 30, 2010 and December 31, 2009	3
	Consolidated Statements of Operations for the third quarter and three quarters ended September 30, 2010 and 2009	4
	Consolidated Statements of Equity (Deficit) for the three quarters ended September 30, 2010 and 2009	6
	Condensed Consolidated Statements of Cash Flows for the three quarters ended September 30, 2010 and 2009	8
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	31
Item 4.	Controls and Procedures	32
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	32
Item 5.	Other Information	32
Item 6.	Exhibits	33
Signatures		34

2

PART I FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

SEPTEMBER 30, 2010 AND DECEMBER 31, 2009

Dollars in millions, except per share amounts

	NewPage Holding						NewPage
	Sept. 30,			Dec. 31,			Sept. 30,			Dec. 31,
ASSETS	2010			2009			2010			2009
Cash and cash equivalents	$	8		$	5		$	8		$	5
Accounts receivable, net		313			296			313			296
Inventories (Note 3)		532			602			532			602
Other current assets		30			23			30			23
Total current assets		883			926			883			926
Property, plant and equipment, net of accumulated depreciation of $1,098 as of September 30, 2010 and $905 as of December 31, 2009		2,798			2,965			2,798			2,965
Other assets		114			115			113			114
TOTAL ASSETS	$	3,795		$	4,006		$	3,794		$	4,005
LIABILITIES AND EQUITY (DEFICIT)
Accounts payable	$	201		$	230		$	201		$	230
Other current liabilities		307			238			307			238
Total current liabilities		508			468			508			468
Long-term debt (Note 5)		3,393			3,231			3,179			3,030
Other long-term obligations		492			493			492			493
Commitments and contingencies (Note 12)
EQUITY (DEFICIT)
Common stock, NewPage Holding—10 shares authorized, issued and outstanding, $0.01 per share par value; NewPage—100 shares authorized, issued and outstanding, $0.01 per share par value		—			—			—			—
Additional paid-in capital		706			685			812			791
Accumulated deficit		(1,035	)		(606	)		(938	)		(522	)
Accumulated other comprehensive loss		(269	)		(265	)		(259	)		(255	)
Total equity (deficit)		(598	)		(186	)		(385	)		14
TOTAL LIABILITIES AND EQUITY (DEFICIT)	$	3,795		$	4,006		$	3,794		$	4,005

See notes to condensed consolidated financial statements.

3

NEWPAGE HOLDING CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

THIRD QUARTER AND THREE QUARTERS ENDED

SEPTEMBER 30, 2010 AND 2009

Dollars in millions

	NewPage Holding
	Third Quarter Ended Sept. 30,				Three Quarters Ended Sept. 30,
	2010		2009		2010		2009
Net sales	$	943	$	791	$	2,650	$	2,249
Cost of sales		886		785		2,648		2,261
Selling, general and administrative expenses		41		47		148		142
Interest expense (including non-cash interest expense of $15, $59, $47 and $82 and loss on extinguishment of debt of $85 in 2009) (Note 5)		97		199		295		343
Other (income) expense, net (Note 8)		(10)		(93)		(13)		(218)
Income (loss) before income taxes		(71)		(147)		(428)		(279)
Income tax (benefit)		—		(10)		1		(20)
Net income (loss)		(71)		(137)		(429)		(259)
Net income (loss)—noncontrolling interests		—		1		—		4
Net income (loss) attributable to the company	$	(71)	$	(138)	$	(429)	$	(263)

See notes to condensed consolidated financial statements.

4

NEWPAGE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

THIRD QUARTER AND THREE QUARTERS ENDED

SEPTEMBER 30, 2010 AND 2009

Dollars in millions

	NewPage
	Third Quarter Ended Sept. 30,				Three Quarters Ended Sept. 30,
	2010		2009		2010		2009
Net sales	$	943	$	791	$	2,650	$	2,249
Cost of sales		886		785		2,648		2,261
Selling, general and administrative expenses		41		47		148		142
Interest expense (including non-cash interest expense of $11, $55, $34 and $68 and loss on extinguishment of debt of $85 in 2009) (Note 5)		93		194		282		328
Other (income) expense, net (Note 8)		(10)		(93)		(13)		(218)
Income (loss) before income taxes		(67)		(142)		(415)		(264)
Income tax (benefit)		—		(5)		1		(15)
Net income (loss)		(67)		(137)		(416)		(249)
Net income (loss)—noncontrolling interests		—		1		—		4
Net income (loss) attributable to the company	$	(67)	$	(138)	$	(416)	$	(253)

See notes to condensed consolidated financial statements.

5

NEWPAGE HOLDING CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY (DEFICIT) (unaudited)

THREE QUARTERS ENDED SEPTEMBER 30, 2010

Dollars in millions

	Common Stock				Add- itional   Paid-in		Accum- ulated		Accum- ulated Other Compre- hensive   Income
	Shares		Amount		Capital		Deficit		(Loss)		Total
Balance at December 31, 2009		10	$	—	$	685	$	(606)	$	(265)	$	(186)
Comprehensive income (loss):
Net income (loss)								(429)				(429)
Defined-benefit postretirement plans:
Change in net actuarial gains (losses)										(6)		(6)
Amortization of net actuarial loss on defined benefit plans										1		1
Cash-flow hedges:
Change in unrealized gains (losses), net of tax benefit of $1										(2)		(2)
Reclassification adjustment to net income (loss), net of tax of $1										1		1
Foreign currency translation adjustment										2		2
Comprehensive income (loss)											$	(433)
Equity awards (Note 6)						22						22
Loan to NewPage Group						(1)						(1)
Balance at September 30, 2010		10	$	—	$	706	$	(1,035)	$	(269)	$	(598)

THREE QUARTERS ENDED SEPTEMBER 30, 2009

Dollars in millions

	Equity Attributable to the Company
	Common Stock				Add- itional Paid-in		Accum- ulated		Accum- ulated Other Compre- hensive   Income		Total Attribut- able to the		Noncon- trolling
	Shares		Amount		Capital		Deficit		(Loss)		Company		Interests		Total
Balance at December 31, 2008		10	$	—	$	661	$	(283)	$	(402)	$	(24)	$	26	$	2
Comprehensive income (loss):
Net income (loss)								(263)				(263)		4		(259)
Amortization of net actuarial loss on defined benefit plans, net of tax of $6										7		7				7
Cash-flow hedges:
Change in unrealized gains (losses), net of tax benefit of $9										(13)		(13)				(13)
Reclassification adjustment to net income (loss), net of tax of $10 (Note 2)										67		67				67
Foreign currency translation adjustment										12		12				12
Comprehensive income (loss)											$	(190)	$	4	$	(186)
Equity awards (Note 6)						7						7				7
Loan to NewPage Group						(3)						(3)				(3)
Balance at September 30, 2009		10	$	—	$	665	$	(546)	$	(329)	$	(210)	$	30	$	(180)

See notes to condensed consolidated financial statements.

6

NEWPAGE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY (DEFICIT) (unaudited)

THREE QUARTERS ENDED SEPTEMBER 30, 2010

Dollars in millions

	Common Stock				Add- itional   Paid-in		Accum- ulated		Accum- ulated Other Compre- hensive   Income
	Shares		Amount		Capital		Deficit		(Loss)		Total
Balance at December 31, 2009		100	$	—	$	791	$	(522)	$	(255)	$	14
Comprehensive income (loss):
Net income (loss)								(416)				(416)
Defined-benefit postretirement plans:
Change in net actuarial gains (losses)										(6)		(6)
Amortization of net actuarial loss on defined benefit plans										1		1
Cash-flow hedges:
Change in unrealized gains (losses), net of tax benefit of $1										(2)		(2)
Reclassification adjustment to net income (loss), net of tax of $1										1		1
Foreign currency translation adjustment										2		2
Comprehensive income (loss)											$	(420)
Equity awards (Note 6)						22						22
Loans to parent companies						(1)						(1)
Balance at September 30, 2010		100	$	—	$	812	$	(938)	$	(259)	$	(385)

THREE QUARTERS ENDED SEPTEMBER 30, 2009

Dollars in millions

	Equity Attributable to the Company
	Common Stock				Add- itional Paid-in		Accum- ulated		Accum- ulated Other Compre- hensive   Income		Total Attribut- able to the		Noncon- trolling
	Shares		Amount		Capital		Deficit		(Loss)		Company		Interests		Total
Balance at December 31, 2008		100	$	—	$	767	$	(214)	$	(396)	$	157	$	26	$	183
Comprehensive income (loss):
Net income (loss)								(253)				(253)		4		(249)
Amortization of net actuarial loss on defined benefit plans, net of tax of $6										7		7				7
Cash-flow hedges:
Change in unrealized gains (losses), net of tax benefit of $9										(13)		(13)				(13)
Reclassification adjustment to net income (loss), net of tax of $6 (Note 2)										71		71				71
Foreign currency translation adjustment										12		12				12
Comprehensive income (loss)											$	(176)	$	4	$	(172)
Equity awards (Note 6)						7						7				7
Loans to parent companies						(3)						(3)				(3)
Balance at September 30, 2009		100	$	—	$	771	$	(467)	$	(319)	$	(15)	$	30	$	15

See notes to condensed consolidated financial statements.

7

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

THREE QUARTERS ENDED SEPTEMBER 30, 2010 AND 2009

Dollars in millions

	NewPage Holding				NewPage
	Three Quarters				Three Quarters
	Ended Sept. 30,				Ended Sept. 30,
	2010		2009		2010		2009
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	(429)	$	(259)	$	(416)	$	(249)
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities:
Depreciation and amortization		203		208		203		208
Non-cash interest expense		47		82		34		68
Loss on extinguishment of debt (Note 5)		—		72		—		72
(Gain) loss on disposal and impairment of assets		9		5		9		5
Deferred income taxes		—		(21)		—		(17)
Non-cash U.S. pension expense		26		37		26		37
Equity award expense (Note 6)		21		7		21		7
Change in operating assets and liabilities		32		(144)		32		(144)
Net cash provided by (used for) operating activities		(91)		(13)		(91)		(13)
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures		(49)		(45)		(49)		(45)
Proceeds from sales of assets		12		22		12		22
Other investing activities		(2)		—		(2)		—
Net cash provided by (used for) investing activities		(39)		(23)		(39)		(23)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term debt		67		1,598		67		1,598
Payment of financing costs		(4)		(54)		(4)		(54)
Loans to parent companies		(1)		(3)		(1)		(3)
Repayments of long-term debt		—		(1,584)		—		(1,584)
Borrowings on revolving credit facility		735		907		735		907
Payments on revolving credit facility		(667)		(823)		(667)		(823)
Net cash provided by (used for) financing activities		130		41		130		41
Effect of exchange rate changes on cash and cash equivalents		3		3		3		3
Net increase (decrease) in cash and cash equivalents		3		8		3		8
Cash and cash equivalents at beginning of period		5		3		5		3
Cash and cash equivalents at end of period	$	8	$	11	$	8	$	11
SUPPLEMENTAL INFORMATION
Cash paid for interest	$	210	$	153	$	210	$	153

See notes to condensed consolidated financial statements.

8

NEWPAGE HOLDING CORPORATION AND SUBSIDIARIES

NEWPAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Dollars in millions, except per share amounts

1. BASIS OF PRESENTATION

NewPage Holding Corporation (“NewPage Holding”) is a holding company that owns all of the outstanding capital stock of NewPage Corporation. NewPage Corporation and its subsidiaries are engaged in manufacturing, marketing and distributing printing papers used primarily for commercial printing, magazines, catalogs, textbooks and labels. Our products include coated, uncoated, supercalendered, newsprint and specialty papers and market pulp. Our products are manufactured at multiple mills in the United States and one mill in Canada and are supported by multiple distribution and converting locations. We operate within one operating segment. The condensed consolidated financial statements include the accounts of NewPage Holding and all entities it controls. All intercompany transactions and balances have been eliminated.

Unless the context provides otherwise, the terms “we,” “our” and “us” refer to NewPage Holding and its consolidated subsidiaries, including NewPage Corporation, a separate public-reporting company. Unless otherwise noted, “NewPage” refers to NewPage Corporation and its consolidated subsidiaries. Other than NewPage Holding’s debt obligation and related financing costs, interest expense and income tax effects, all other assets, liabilities, income, expenses, and cash flows presented for all periods represent those of its wholly-owned subsidiary, NewPage. Unless otherwise noted, the information provided pertains to both NewPage Holding and NewPage.

These interim condensed consolidated financial statements have not been audited. However, in the opinion of management, these financial statements include all normal recurring adjustments necessary for a fair statement in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Certain information and footnote disclosures normally included in annual financial statements presented in accordance with U.S. GAAP have been condensed or omitted. The results of operations and cash flows for the interim periods presented are not necessarily indicative of the results to be expected for the full year. The accompanying financial statements should be read in conjunction with the annual financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2009.

2. FINANCIAL INSTRUMENTS

Derivative Financial Instruments

We periodically use derivative financial instruments as part of our overall strategy to manage exposure to market risks associated with foreign currency exchange rate and natural gas price fluctuations. We do not hold or issue derivative financial instruments for trading purposes. We regularly monitor the credit-worthiness of the counterparties to our derivative instruments in order to manage our credit risk exposures under these agreements. Our risk of loss in the event of nonperformance by any counterparty under derivative financial instrument agreements is not considered material by management. These derivative instruments are measured at fair value and are classified as other assets or other long-term obligations on our balance sheets depending on the fair value of the instrument.

If the derivative is designated as a fair-value hedge, the changes in the fair value of the derivative and of the hedged item attributable to the hedged risk are recognized in earnings. If the derivative is designated as a cash-flow hedge, the effective portion of the change in the fair value of the derivative is recorded in

9

accumulated other comprehensive income (loss) and is recognized in the consolidated statements of operations when the hedged item affects earnings. Ineffective portions of changes in the fair value of cash-flow hedges and financial instruments not designated as hedges are recognized in earnings.

Prior to our debt refinancing in September 2009, we utilized interest rate swaps to manage our exposure to market risks from interest rate fluctuations. During the third quarter ended September 30, 2009, we reclassified $48 of unrealized losses from accumulated other comprehensive income (loss) to interest expense as the hedged forecasted cash flows were no longer probable of occurring as a result of the refinancing. After our debt refinancing, we no longer had sufficient variable-rate debt exposure for our outstanding interest rate swaps to qualify for hedge accounting treatment and recorded the fair value of the interest rate swaps as other current liabilities with changes in fair value recognized as an adjustment to interest expense. We recognized in interest expense a (gain) loss of zero and $3 for the third quarter and three quarters ended September 30, 2010, for interest rate swaps that did not qualify for hedge accounting.

Interest Rates

As of December 31, 2009, we had outstanding interest rate swaps totaling $900 for which we received amounts based on LIBOR and paid amounts based on a fixed rate. As of December 31, 2009, we also had outstanding a $200 interest rate swap with an offsetting exposure for which we received amounts based on a fixed rate and paid amounts based on LIBOR. During the third quarter of 2010, we settled the remaining liability for all interest rate agreements. We measured the fair values of our interest rate swaps using observable interest-rate yield curves for comparable assets and liabilities at commonly quoted intervals. We paid cash of $21 and $15 on our interest rate agreements for the third quarter ended September 30, 2010 and 2009 and we paid cash of $34 and $31 on our interest rate agreements for the three quarters ended September 30, 2010 and 2009.

Natural Gas

In order to hedge the future cost of natural gas consumed at our mills, we engage in financial hedging of future gas purchase prices, designated as cash flow hedges. We hedge with financial instruments that are priced based on New York Mercantile Exchange (“NYMEX”) natural gas futures contracts. We do not hedge basis (the effect of varying delivery points or locations) or transportation costs (the cost to transport the gas from the delivery point to a company location) under these transactions. As of September 30, 2010 and December 31, 2009, we were party to natural gas futures contracts for notional amounts aggregating 1,190,000 and 2,130,000 MMBTUs, which expire through October 2011. We measure the fair values of our natural gas contracts based on natural gas futures contracts priced on the NYMEX.

10

Assets and Liabilities Measured at Fair Value on a Recurring Basis

As of September 30, 2010 and December 31, 2009, the fair values and carrying amounts of our financial assets and liabilities measured on a recurring basis are as follows:

	Sept. 30,		Dec. 31,
Significant other observable inputs (Level 2)	2010		2009
Qualifying as hedges—
Other long-term liabilities—natural gas contracts	$	(3)	$	(2)
Not qualifying as hedges—
Other current liabilities:
Interest rate swap agreements	$	—	$	(35)
Interest rate swap agreements		—		4

The amount of gain (loss) on cash flow hedges recognized in accumulated other comprehensive income (loss) (“AOCI”) and the amount reclassified to income (loss) during the third quarter and three quarters ended September 30, 2010 and 2009 are as follows:

	Amount of gain (loss) recognized			Location of gain (loss) reclassified from AOCI to		Amount of gain (loss) reclassified from AOCI to income
Derivative Type	in OCI			income (loss)		(loss)
Third Quarter Ended September 30, 2010
Natural gas contracts	$	(1	)		Cost of sales	$	—
Three Quarters Ended September 30, 2010
Natural gas contracts	$	(3	)		Cost of sales	$	(2	)
Third Quarter Ended September 30, 2009
Interest rate swap agreements	$	(17	)		Interest expense	$	(57	)
Natural gas contracts		(1	)		Cost of sales		(2	)
Three Quarters Ended September 30, 2009
Interest rate swap agreements	$	(18	)		Interest expense	$	(73	)
Natural gas contracts		(4	)		Cost of sales		(4	)

Assets and Liabilities Not Carried at Fair Value

The fair value of long-term debt is based upon quoted market prices for the same or similar issues or on the current interest rates available to us for debt of similar terms and maturities. At September 30, 2010 and December 31, 2009, the carrying amounts of all other assets and liabilities that qualify as financial instruments approximated their fair value. Details of our long-term debt are as follows:

	September 30, 2010						December 31, 2009
	Fair Value			Carrying Amount			Fair Value			Carrying Amount
Long-term debt:
NewPage Holding	$	(2,264	)	$	(3,243	)	$	(2,686	)	$	(3,083	)
NewPage		(2,252	)		(3,029	)		(2,624	)		(2,882	)

11

3. INVENTORIES

Inventories as of September 30, 2010 and December 31, 2009 consist of:

	Sept. 30, 2010		Dec. 31, 2009
Finished and in-process goods	$	306	$	376
Raw materials		88		86
Stores and supplies		138		140
	$	532	$	602

If inventories had been valued at current costs, they would have been valued at $509 and $607 at September 30, 2010 and December 31, 2009.

4. ACCOUNTS PAYABLE

Accounts payable as of September 30, 2010 and December 31, 2009 includes $16 and $13 of outstanding checks in excess of cash.

5. LONG-TERM DEBT

The balances of long-term debt as of September 30, 2010 and December 31, 2009 are as follows:

	Sept. 30, 2010		Dec. 31, 2009
NewPage:
Revolving credit facility	$	120	$	52
11.375% first-lien senior secured notes (face amount $1,770 and $1,700)		1,680		1,601
Floating rate second-lien senior secured notes (LIBOR plus 6.25%)		225		225
10% second-lien senior secured notes (face amount $806)		805		805
12% senior subordinated notes (face amount $200)		199		199
Capital lease		150		148
Subtotal		3,179		3,030
NewPage Holding—
Senior unsecured NewPage Holding PIK Notes (face amount $219 and
$207; LIBOR plus 7.00%)		214		201
Long-term debt	$	3,393	$	3,231

In February 2010, we issued an additional $70 in aggregate principal amount of 11.375% senior secured notes due 2014 (the “Additional First-Lien Notes”) in a private placement. The Additional First-Lien Notes have the same terms as the existing first-lien senior secured notes.

12

Included in interest expense for the third quarter of 2009 is a loss of $85 from the extinguishment of debt, including the write-off of $13 of consent fees, and a reclassification adjustment of $48 of unrealized losses from accumulated other comprehensive income (loss) as the hedged forecasted cash flows were no longer probable of occurring as a result of the refinancing.

6. EQUITY

During the third quarter ended September 30, 2010, NewPage loaned $1 to NewPage Group, which was recorded as a reduction in shareholder’s equity as repayment is not assured, to enable NewPage Group to satisfy its obligation to repurchase a former executive officer’s NewPage Group stock.

Included in selling, general and administrative expenses is equity award expense of $2 and $1 for the third quarter ended September 30, 2010 and 2009 and $21 and $7 for the three quarters ended September 30, 2010 and 2009. In February 2010, the compensation committee amended the outstanding stock option awards of employees and directors to change the exercise price to $2.00 per share and vest the unearned performance-based options for 2008 and 2009. Included in the amount of equity award expense for the three quarters ended September 30, 2010 is $8 to reflect the effects of the modification and the vesting of the prior-year unearned performance-based options. Also included in the amount of equity award expense for the three quarters ended September 30, 2010 is $5 of remaining unamortized grant-date fair value relating to the accelerated vesting of stock options previously awarded to certain former executive officers. In accordance with their stock option agreements, upon their separation all of their outstanding stock options became vested. None of these options were exercised by the executive officers.

The following table summarizes activity in the plan:

Shares of NewPage Group issuable under stock options, in thousands	Options		Weighted- average exercise price
Outstanding at December 31, 2009		5,070	$	20.47
Granted		2,678		4.08
Forfeited or expired		(4,426)		9.55
Outstanding at September 30, 2010		3,322		1.95
Exercisable at September 30, 2010		1,589		2.00

The outstanding options and the exercisable options at September 30, 2010 have a weighted-average remaining contractual life of 1.8 years.

We utilize a Black-Scholes pricing model to determine the fair value of options granted. The determination of the fair value of stock-based payment awards on the date of grant using an option-pricing model is affected by the stock price as well as assumptions regarding a number of other variables. These variables include expected stock price volatility over the term of the awards and projected employee stock option exercise behaviors (term of option). We estimate the expected term of options granted by incorporating the contractual term of the options and employees’ expected exercise behaviors. We estimate the volatility of NewPage Group’s common stock by considering volatility of appropriate peer companies and adjusting for factors unique to our stock, including the effect of debt leverage.

13

Assumptions used to determine the fair value of option grants are as follows:

	Three Quarters
	Ended September 30,
	2010			2009
Weighted-average fair value of options granted	$	2.75		$	3.06
Weighted-average assumptions used for grants:
Expected volatility		90	%		90	%
Risk-free interest rate		1.8	%		2.0	%
Expected life of option (in years)		4			5

7. RETIREMENT AND OTHER POSTRETIREMENT BENEFITS

A summary of the components of net periodic costs for the third quarter and three quarters ended September 30, 2010 and 2009 is as follows:

Pension Plans

	U.S. Plans				Canadian Plans
	Third Quarter				Third Quarter
	Ended Sept. 30,				Ended Sept. 30,
	2010		2009		2010		2009
Service cost	$	6	$	6	$	1	$	1
Interest cost		16		15		5		4
Expected return on plan assets		(16)		(14)		(4)		(4)
Amortization of net loss		4		5		—		—
Net periodic cost	$	10	$	12	$	2	$	1
	U.S. Plans				Canadian Plans
	Three Quarters				Three Quarters
	Ended Sept. 30,				Ended Sept. 30,
		2010		2009		2010		2009
Service cost	$	18	$	17	$	3	$	2
Interest cost		48		47		15		13
Expected return on plan assets		(49)		(42)		(14)		(11)
Amortization of net loss		10		15		1		—
Net periodic cost	$	27	$	37	$	5	$	4

14

Other Postretirement Plans

	U.S. Plans				Canadian Plans
	Third Quarter Ended Sept. 30,				Third Quarter Ended Sept. 30,
	2010		2009		2010		2009
Service cost	$	—	$	—	$	—	$	1
Interest cost		2		3		1		—
Amortization of net prior service cost (credit)		(3)		—		(1)		—
Net periodic cost (income)	$	(1)	$	3	$	—	$	1
	U.S. Plans				Canadian Plans
	Three Quarters Ended Sept. 30,				Three Quarters Ended Sept. 30,
	2010		2009		2010		2009
Service cost	$	1	$	1	$	1	$	1
Interest cost		5		9		1		1
Amortization of net prior service cost (credit)		(9)		(1)		(1)		—
Net periodic cost (income)	$	(3)	$	9	$	1	$	2

8. OTHER (INCOME) EXPENSE

During the three quarters ended September 30, 2010, we recognized $12 of net loss on disposal and impairment of assets in other (income) expense. In addition, during the third quarter and three quarters ended September 30, 2010, we recognized $(9) and $(22) of income for alternative fuel mixture tax credits, as income recognition criteria was met. We recognized $(94) and $(214) of income during the third quarter and three quarters ended September 30, 2009 for alternative fuel mixture tax credits.

9. INCOME TAXES

For the third quarter and three quarters ended September 30, 2010 and 2009, we recorded a valuation allowance against our net deferred income tax benefit for federal income taxes and for certain states as it was more likely than not that we would not realize those benefits. For the third quarter and three quarters ended September 30, 2009, we allocated $(4) and $7 of tax expense (benefit) to other comprehensive income (loss) and the corresponding offset as an allocation to tax benefit from operations. For the third quarter and three quarters ended September 30, 2009, for NewPage, we have allocated $(8) and $3 of tax expense (benefit) to other comprehensive income (loss) and the corresponding offset as an allocation to tax expense (benefit) from operations. The amounts for the third quarter and three quarters ended September 30, 2009, reflect the reclassification to income tax (benefit) of all amounts previously allocated to other comprehensive income (loss) related to the interest rate swap cash flow hedges. Also included in the third quarter and three quarters ended September 30, 2009 was a tax benefit of $12, reflecting the decreases to our state deferred tax liabilities resulting from changes in our distribution channels that have occurred as part of our integration with Stora Enso North America, Inc. (“SENA”).

10. RESTRUCTURING

During 2008, we announced actions being taken to integrate NewPage operations and the former SENA facilities and services. The restructuring actions included the permanent closure of six paper machines and two mills affecting approximately 980 employees, the permanent closure of a converting facility affecting approximately 160 employees and the reduction of personnel in other areas, including sales, finance and other support functions, affecting approximately 200 employees. Most of the affected employees had separated from the company by December 31, 2008 with the remainder separating in 2009 and 2010. We expect remaining closure-related activities to be completed in 2010.

15

The activity in the accrued restructuring liability relating to these actions for the three quarters ended September 30, 2010 and 2009 was as follows:

	Closure Costs		Employee Costs
Three Quarters ended September 30, 2010
Balance accrued at December 31, 2009	$	4	$	3
Payments		(4)		(2)
Balance accrued at September 30, 2010	$	—	$	1
Three Quarters ended September 30, 2009
Balance accrued at December 31, 2008	$	14	$	19
Adjustments		—		(1)
Payments		(7)		(14)
Balance accrued at September 30, 2009	$	7	$	4

11. DISPOSITION OF ASSETS

On November 3, 2010, NewPage Port Hawkesbury Corp. (“NPPH”), an indirect wholly-owned subsidiary of NewPage, completed the sale of certain assets, including a boiler at the Port Hawkesbury, Nova Scotia mill, to Nova Scotia Power Inc. (“NSPI”) for a cash sales price of Canadian $80. In addition, NSPI and NPPH have entered into an engineering, procurement and construction agreement for NPPH to construct for NSPI a 60 MW biomass cogeneration utility plant for the generation of electricity by December 31, 2012 for approximately Canadian $93. NSPI and NPPH also entered into a management, operations and maintenance agreement related to NPPH operating the utility assets for NSPI.

In February 2010, Consolidated Water Power Company (“CWPCo”), an indirect wholly-owned subsidiary of NewPage, announced that it signed an agreement with Wisconsin Rapids Water Works Lighting Commission to sell the CWPCo utility transmission and distribution assets (“CWPCo Utility”). The purchase price will be equal to the net book value of the assets at the time of closing, which is subject to regulatory approvals. On November 1, 2010, CWPCo entered into an asset sale agreement to sell five hydroelectric projects to Great Lakes Utilities for a net cash sales price of approximately $70. The closing of the transaction is subject to completion of the CWPCO Utility sale and regulatory approval. These transactions are not expected to close in 2010. We continue to hold and operate the assets in the normal course of our operations.

In March 2009, NewPage Wisconsin System Inc. (“NPWSI”), an indirect wholly-owned subsidiary of NewPage, completed the sale of a hydroelectric generating facility located in Niagara, Wisconsin to Northbrook Wisconsin, LLC for a net cash sales price of $22. Included in cost of sales for the three quarters ended September 30, 2009 is a loss on the sale of $3.

12. COMMITMENTS AND CONTINGENCIES

Claims have been made against us for the costs of environmental remediation measures taken or to be taken. Reserves for these liabilities have been established and no insurance recoveries have been anticipated in the determination of the reserves. We are involved in various other litigation and administrative proceedings arising in the normal course of business. Although the ultimate outcome of these matters cannot be predicted with certainty, we do not believe that the currently expected outcome of any matter, lawsuit or claim that is pending or threatened, or all of them combined, will have a material adverse effect on our financial condition, results of operations or liquidity.

16

13. SUPPLEMENTAL CONSOLIDATING INFORMATION

NewPage has issued $1,770 face amount of 11.375% senior secured notes due May 2014, $225 face amount of floating rate senior secured notes due May 2012, $806 face amount of 10% senior secured notes due May 2012 and $200 face amount of 12% senior subordinated notes due May 2013 (collectively, the “Notes”). The Notes are jointly and severally guaranteed on a full and unconditional basis by NewPage’s 100%-owned subsidiaries, except Consolidated Water Power Company, our non-guarantor subsidiary.

The following condensed consolidating financial statements have been prepared from financial information on the same basis of accounting as the consolidated financial statements. Investments in our subsidiaries are accounted for under the equity method. Certain adjustments totaling $18 have been made that decrease the net losses of the parent and guarantor subsidiaries columns in the supplemental consolidating statement of operations for the three quarters ended September 30, 2009, to correct the classification of certain expenses in the period ended March 31, 2009. This adjustment is not considered material to the periods to which it relates.

17

NEWPAGE CORPORATION

SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET

SEPTEMBER 30, 2010

	NewPage   Corporation		Guarantor   Subsidiaries		Non- Guarantor   Subsidiaries		Consolidation/  Eliminations		Consolidated
ASSETS
Cash and cash equivalents	$	2	$	(1)	$	7	$	—	$	8
Accounts receivable		243		69		1		—		313
Inventories		235		297		—		—		532
Other current assets		20		9		1		—		30
Total current assets		500		374		9		—		883
Intercompany receivables		1,308		460		144		(1,912)		—
Property, plant and equipment, net		27		2,716		55		—		2,798
Investment in subsidiaries		1,773		66		—		(1,839)		—
Other assets		105		7		1		—		113
TOTAL ASSETS	$	3,713	$	3,623	$	209	$	(3,751)	$	3,794
LIABILITIES AND EQUITY (DEFICIT)
Accounts payable	$	44	$	156	$	1	$	—	$	201
Other current liabilities		170		131		6		—		307
Total current liabilities		214		287		7		—		508
Intercompany payables		460		1,326		126		(1,912)		—
Long-term debt		3,029		150		—		—		3,179
Other long-term liabilities		395		87		10		—		492
Equity (deficit)		(385)		1,773		66		(1,839)		(385)
TOTAL LIABILITIES AND EQUITY (DEFICIT)	$	3,713	$	3,623	$	209	$	(3,751)	$	3,794

18

NEWPAGE CORPORATION

SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET

DECEMBER 31, 2009

					Non-
	NewPage		Guarantor		Guarantor		Consolidation/
	Corporation		Subsidiaries		Subsidiaries		Eliminations		Consolidated
ASSETS
Cash and cash equivalents	$	1	$	—	$	4	$	—	$	5
Accounts receivable		230		65		1		—		296
Inventories		293		309		—		—		602
Other current assets		15		7		1		—		23
Total current assets		539		381		6		—		926
Intercompany receivables		1,262		274		85		(1,621)		—
Property, plant and equipment, net		41		2,867		57		—		2,965
Investment in subsidiaries		1,783		66		—		(1,849)		—
Other assets		110		3		1		—		114
TOTAL ASSETS	$	3,735	$	3,591	$	149	$	(3,470)	$	4,005
LIABILITIES AND EQUITY
Accounts payable	$	54	$	176	$	—	$	—	$	230
Other current liabilities		117		116		5		—		238
Total current liabilities		171		292		5		—		468
Intercompany payables		274		1,279		68		(1,621)		—
Long-term debt		2,882		148		—		—		3,030
Other long-term liabilities		394		89		10		—		493
Equity		14		1,783		66		(1,849)		14
TOTAL LIABILITIES AND EQUITY	$	3,735	$	3,591	$	149	$	(3,470)	$	4,005

19

NEWPAGE CORPORATION

SUPPLEMENTAL CONSOLIDATING STATEMENT OF OPERATIONS

THIRD QUARTER ENDED SEPTEMBER 30, 2010

	NewPage   Corporation		Guarantor   Subsidiaries		Non- Guarantor   Subsidiaries		Consolidation/ Eliminations		Consolidated
Net sales	$	842	$	808	$	23	$	(730)	$	943
Cost of sales		791		802		23		(730)		886
Selling, general and administrative expenses		41		—		—		—		41
Equity in (earnings) loss of subsidiaries		(4)		—		—		4		—
Interest expense		91		2		—		—		93
Other (income) expense, net		(10)		—		—		—		(10)
Income (loss) before income taxes		(67)		4		—		(4)		(67)
Income tax (benefit)		—		—		—		—		—
Net income (loss)	$	(67)	$	4	$	—	$	(4)	$	(67)

NEWPAGE CORPORATION

SUPPLEMENTAL CONSOLIDATING STATEMENT OF OPERATIONS

THREE QUARTERS ENDED SEPTEMBER 30, 2010

	NewPage   Corporation			Guarantor   Subsidiaries		Non- Guarantor   Subsidiaries		Consolidation/ Eliminations		Consolidated
Net sales	$	2,375		$	2,384	$	66	$	(2,175)	$	2,650
Cost of sales		2,359			2,399		65		(2,175)		2,648
Selling, general and administrative expenses		147			1		—		—		148
Equity in (earnings) loss of subsidiaries		35			(1)		—		(34)		—
Interest expense		273			9		—		—		282
Other (income) expense, net		(23)			10		—		—		(13)
Income (loss) before income taxes		(416)			(34)		1		34		(415)
Income tax (benefit)		—			1		—		—		1
Net income (loss)	$	(416)		$	(35)	$	1	$	34	$	(416)
			��

20

NEWPAGE CORPORATION

SUPPLEMENTAL CONSOLIDATING STATEMENT OF OPERATIONS

THIRD QUARTER ENDED SEPTEMBER 30, 2009

	NewPage   Corporation		Guarantor   Subsidiaries		Non-   Guarantor   Subsidiary		Consolidation/  Eliminations		Consolidated
Net sales	$	700	$	623	$	22	$	(554)	$	791
Cost of sales		627		692		21		(555)		785
Selling, general and administrative expenses		41		6		—		—		47
Equity in (earnings) loss of subsidiaries		68		(1)		—		(67)		—
Interest expense		193		1		—		—		194
Other (income) expense, net		(90)		(3)		—		—		(93)
Income (loss) before income taxes		(139)		(72)		1		68		(142)
Income tax (benefit)		(1)		(4)		—		—		(5)
Net income (loss)		(138)		(68)		1		68		(137)
Net income (loss)—noncontrolling interests		—		—		—		1		1
Net income (loss) attributable to the company	$	(138)	$	(68)	$	1	$	67	$	(138)

NEWPAGE CORPORATION

SUPPLEMENTAL CONSOLIDATING STATEMENT OF OPERATIONS

THREE QUARTERS ENDED SEPTEMBER 30, 2009

	NewPage   Corporation		Guarantor   Subsidiaries		Non-   Guarantor   Subsidiary		Consolidation/   Eliminations		Consolidated
Net sales	$	1,772	$	2,077	$	63	$	(1,663)	$	2,249
Cost of sales		1,738		2,128		62		(1,667)		2,261
Selling, general and administrative expenses		128		14		—		—		142
Equity in (earnings) loss of subsidiaries		64		(1)		—		(63)		—
Interest expense		322		6		—		—		328
Other (income) expense, net		(216)		(2)		—		—		(218)
Income (loss) before income taxes		(264)		(68)		1		67		(264)
Income tax (benefit)		(11)		(4)		—		—		(15)
Net income (loss)		(253)		(64)		1		67		(249)
Net income (loss)—noncontrolling interests		—		—		—		4		4
Net income (loss) attributable to the company	$	(253)	$	(64)	$	1	$	63	$	(253)

21

NEWPAGE CORPORATION

SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

THREE QUARTERS ENDED SEPTEMBER 30, 2010

	NewPage   Corporation		Guarantor   Subsidiaries		Non-   Guarantor   Subsidiaries		Consolidation/   Eliminations		Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES
Net cash provided by (used for) operating activities	$	(124)	$	30	$	3	$	—	$	(91)
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures		(5)		(44)		—		—		(49)
Proceeds from sales of assets		—		12		—		—		12
Other investing activities		—		(2)		—		—		(2)
Net cash provided by (used for) investing activities		(5)		(34)		—		—		(39)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term debt		67		—		—		—		67
Payment of financing costs		(4)		—		—		—		(4)
Loan to parent companies		(1)		—		—		—		(1)
Borrowings on revolving credit facility		735		—		—		—		735
Payments on revolving credit facility		(667)		—		—		—		(667)
Net cash provided by (used for) financing activities		130		—		—		—		130
Effect of exchange rate changes on cash and cash equivalent		—		3		—		—		3
Net increase (decrease) in cash and cash equivalents		1		(1)		3		—		3
Cash and cash equivalents at beginning of period		1		—		4		—		5
Cash and cash equivalents at end of period	$	2	$	(1)	$	7	$	—	$	8

22

NEWPAGE CORPORATION

SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

THREE QUARTERS ENDED SEPTEMBER 30, 2009

	NewPage   Corporation		Guarantor   Subsidiaries		Non-   Guarantor   Subsidiary		Consolidation/   Eliminations		Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES
Net cash provided by (used for) operating activities	$	(37)	$	16	$	—	$	8	$	(13)
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures		(4)		(41)		—		—		(45)
Proceeds from sales of assets		—		22		—		—		22
Net cash provided by (used for) investing activities		(4)		(19)		—		—		(23)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term debt		1,598		—		—		—		1,598
Payment of financing costs		(54)		—		—		—		(54)
Loans to parent companies		(3)		—		—		—		(3)
Repayments on long-term debt		(1,584)		—		—		—		(1,584)
Borrowings on revolving credit facility		907		—		—		—		907
Payments on revolving credit facility		(823)		—		—		—		(823)
Net cash provided by (used for) financing activities		41		—		—		—		41
Effect of exchange rate changes on cash and cash equivalent		—		3		—		—		3
Net increase (decrease) in cash and cash equivalents		—		—		—		8		8
Cash and cash equivalents at beginning of period		1		—		2		—		3
Cash and cash equivalents at end of period	$	1	$	—	$	2	$	8	$	11

23

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

Overview

Company Background

We believe that we are the largest coated paper manufacturer in North America based on production capacity. Coated paper is used primarily in media and marketing applications, such as high-end advertising brochures, direct mail advertising, coated labels, magazines, magazine covers and inserts, catalogs and textbooks. We operate 20 paper machines at ten paper mills located in Kentucky, Maine, Maryland, Michigan, Minnesota, Wisconsin and Nova Scotia, Canada.

Trends in Our Business

North American printing paper demand is primarily driven by advertising and print media usage. In particular, the demand for certain grades of coated paper is affected by spending on catalog and promotional materials by retailers and spending on magazine advertising, which affects the number of printed pages in magazines. During the first three quarters of 2010, North American printing paper demand increased compared to the first three quarters of 2009. This was a result of decreased advertising spending and magazine and catalog circulation during the first three quarters of 2009 largely attributable to general economic factors and inventory reductions by customers. As a result of the higher demand, our market-related downtime in the first three quarters of 2010 declined to 39,000 tons, with no market-related downtime in the third quarter of 2010, from 411,000 tons of market-related downtime in the first three quarters of 2009. We will consider the need for market-related downtime from time to time based on market conditions.

Coated paper production capacity in North America was lower during the first three quarters of 2010 compared to the first three quarters of 2009, primarily as a result of North American capacity closures.

North American prices for coated paper products historically have been determined by North American supply and demand, rather than directly by raw material costs or other costs of sales. As a result of announced price increases, which began to take effect in the third quarter of 2010 and are expected to continue into the fourth quarter, we believe average prices for coated paper will increase during the fourth quarter of 2010 compared to the first three quarters of 2010.

In September 2009, NewPage, along with two other U.S. paper producers and the United Steelworkers Union, filed antidumping and countervailing duty petitions with the U.S. Department of Commerce and the U.S. International Trade Commission alleging that manufacturers of certain coated paper in China and Indonesia are dumping their products in the United States and that these manufacturers have been subsidized by their governments in violation of U.S. trade laws. In September 2010, the Department of Commerce announced final antidumping and countervailing duty margins, replacing the preliminary margins announced earlier this year. On October 22, 2010, the International Trade Commission determined by unanimous vote that imports of coated paper from China and Indonesia threaten material injury to U.S. producers and workers. The decision will allow the Department of Commerce to impose duties to offset the threat of dumping and government subsidies. These duties will remain in effect for five years, subject to annual administrative reviews. Approximately 17% of our net sales are directly related to the products covered by the duties.

24

Additional First-Lien Notes Issuance

In February 2010, we issued an additional $70 million in aggregate principal amount of 11.375% senior secured notes due 2014 (the “Additional First-Lien Notes”) in a private placement. The Additional First-Lien Notes have the same terms as the existing $1.7 billion 11.375% first-lien senior secured notes.

Results of Operations

The following tables set forth our historical results of operations for the third quarter and three quarters ended September 30, 2010. The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and notes thereto included in this Quarterly Report. All assets, liabilities, income, expenses and cash flows presented for all periods represent those of NewPage Holding’s wholly-owned subsidiary, NewPage, except for NewPage Holding’s debt and equity activity and income tax effects. Unless otherwise noted, the information provided pertains to both NewPage Holding and NewPage.

Third Quarter 2010 Compared to Third Quarter 2009

	NewPage Holding
	Third Quarter Ended Sept. 30,
	2010				2009
(in millions)	$		%		$		%
Net sales		943		100.0		791		100.0
Cost of sales		886		93.8		785		99.2
Selling, general and administrative expenses		41		4.4		47		5.9
Interest expense		97		10.3		199		25.2
Other (income) expense, net		(10)		(1.0)		(93)		(11.7)
Income (loss) before income taxes		(71)		(7.5)		(147)		(18.6)
Income tax (benefit)		—		—		(10)		(1.3)
Net income (loss)		(71)		(7.5)		(137)		(17.3)
Net income (loss)—noncontrolling interests		—		—		1		0.2
Net income (loss) attributable to the company		(71)		(7.5)		(138)		(17.5)
Supplemental Information
Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization)	$	106			$	140

Net sales for the third quarter of 2010 were $943 million compared to $791 million for the third quarter of 2009, an increase of $152 million or 19%. Net sales were affected primarily by higher sales volume of core paper ($146 million) compared to the third quarter of 2009. Core volume is principally coated freesheet, coated groundwood and supercalendered paper products sold in North America. Average core paper prices decreased to $875 per ton in the third quarter of 2010 compared to $886 per ton in the third quarter of 2009. Core paper sales volume increased to 939,000 tons in the third quarter of 2010 compared to 769,000 tons in the third quarter of 2009 as a result of decreased advertising spending and magazine and catalog circulation during the third quarter of 2009 largely attributable to general economic factors and inventory reductions by customers. We took 101,000 tons of market-related downtime in the third quarter of 2009. We did not take any market-related downtime during the third quarter of 2010. We will consider the need for additional downtime from time to time based on market conditions.

Cost of sales for the third quarter of 2010 was $886 million compared to $785 million for the third quarter of 2009, an increase of $101 million, or 13%. The increase was primarily a result of higher core paper

25

sales volume ($121 million), partially offset by lower sales volumes of other non-core paper and the elimination of market-related downtime in the third quarter of 2010. Gross margin for the third quarter of 2010 was 6.2% compared to 0.8% for the third quarter of 2009, primarily as a result of higher core paper sales volumes and the effects of not taking market-related downtime. Maintenance expense at our mills increased to $73 million in the third quarter of 2010 from $66 million in the third quarter of 2009, as a result of higher costs for scheduled annual maintenance shutdowns.

Selling, general and administrative expenses decreased to $41 million for the third quarter of 2010 from $47 million for the third quarter of 2009, primarily from lower costs resulting from cost reduction initiatives and lower pension expense. As a percentage of net sales, selling, general and administrative expenses improved in the third quarter of 2010 to 4.4% from 5.9% in the third quarter of 2009.

Interest expense for the third quarter of 2010 was $97 million compared to $199 million for the third quarter of 2009. Interest expense for NewPage for the third quarter of 2010 was $93 million compared to $194 million for the third quarter of 2009, primarily as a result of a charge of $133 million on the refinancing of debt and related transactions in the third quarter of 2009, partially offset by higher interest rates and higher debt levels in the third quarter of 2010.

Other (income) expense was $(10) million for the third quarter of 2010 and $(93) million for the third quarter of 2009. Included in other (income) expense in the third quarter of 2010 and 2009 was $(9) million and $(94) million of income recognized for alternative fuel mixture tax credits.

Income tax expense (benefit) for the third quarter of 2010 and 2009 was zero and $(10) million. Income tax expense (benefit) for NewPage for the third quarter of 2010 and 2009 was zero and $(5) million. For the third quarter of 2010 and 2009, we recorded a valuation allowance against our net deferred income tax benefit for federal income taxes and for certain states as it was more likely than not that we would not realize those benefits. For the third quarter ended September 30, 2010 and 2009, we allocated zero and $(4) million of tax expense to other comprehensive income (loss) and the corresponding offset as an allocation to tax benefit from operations. For the third quarter ended September 30, 2010 and 2009, for NewPage, we allocated zero and $(8) million of tax expense to other comprehensive income (loss) and the corresponding offset as an allocation to tax benefit from operations. The amounts for the third quarter of 2009 reflect the reclassification to income tax (benefit) of all amounts previously allocated to other comprehensive income (loss) related to the interest rate swap cash flow hedges. Also included in the third quarter ended September 30, 2009 was a tax benefit of $12 million, reflecting the decreases to our state deferred tax liabilities as a result of changes in our distribution channels that have occurred as part of our integration with SENA.

Net income (loss) attributable to NewPage Holding was $(71) million in the third quarter of 2010 compared to $(138) million in the third quarter of 2009. Net income (loss) attributable to NewPage was $(67) million in the third quarter of 2010 compared to $(138) million in the third quarter of 2009. The improvements were primarily a result of higher core paper sales volume and lower interest expense, partially offset by lower other income recognized from the alternative fuel mixture tax credits.

Adjusted EBITDA was $106 million for the third quarter of 2010 compared to $140 million for the third quarter of 2009. See “Reconciliation of Net Income (Loss) Attributable to the Company to Adjusted EBITDA” for further information on the use of EBITDA and Adjusted EBITDA as a measurement tool.

26

Three Quarters 2010 Compared to Three Quarters 2009

	NewPage Holding
	Three Quarters Ended Sept. 30,
	2010				2009
(in millions)	$		%		$		%
Net sales		2,650		100.0		2,249		100.0
Cost of sales		2,648		99.9		2,261		100.5
Selling, general and administrative expenses		148		5.6		142		6.3
Interest expense		295		11.1		343		15.3
Other (income) expense, net		(13)		(0.5)		(218)		(9.7)
Income (loss) before income taxes		(428)		(16.1)		(279)		(12.4)
Income tax (benefit)		1		0.1		(20)		(0.9)
Net income (loss)		(429)		(16.2)		(259)		(11.5)
Net income (loss)—noncontrolling interests		—		—		4		0.2
Net income (loss) attributable to the company		(429)		(16.2)		(263)		(11.7)
Supplemental Information
Adjusted EBITDA	$	131			$	344

Net sales for the first three quarters of 2010 were $2,650 million compared to $2,249 million for the first three quarters of 2009, an increase of $401 million, or 18%. Net sales were affected primarily by higher sales volume of core paper ($465 million) and higher sales volume and higher average prices of other non-core paper, partially offset by lower average core paper prices ($189 million) in the first three quarters of 2010 compared to the first three quarters of 2009. Average core paper prices decreased to $862 per ton in the first three quarters of 2010 compared to $924 per ton in the first three quarters of 2009. Core paper sales volume increased to 2,599,000 tons in the first three quarters of 2010 compared to 2,126,000 tons in the first three quarters of 2009. This can be attributed to the decreased advertising spending and magazine and catalog circulation during the first three quarters of 2009 largely attributable to general economic factors and inventory reductions by customers. We took 39,000 tons of market-related downtime in the first three quarters of 2010 compared to 411,000 tons of market-related downtime in the first three quarters of 2009.

Cost of sales for the first three quarters of 2010 was $2,648 million compared to $2,261 million for the first three quarters of 2009, an increase of $387 million, or 17%. The increase was primarily a result of higher core paper sales volume ($357 million) and higher volumes of other non-core paper, partially offset by lower levels of market-related downtime. During the second quarter of 2010, we took actions to reduce personnel as part of our cost reduction initiatives and recognized a charge of $4 million for employee-related costs in cost of sales. Gross margin (loss) for the first three quarters of 2010 was 0.1% compared to (0.5)% for the first three quarters of 2009. Maintenance expense at our mills increased to $230 million in the first three quarters of 2010 from $208 million in the first three quarters of 2009, as a result of higher costs for scheduled annual maintenance shutdowns.

Selling, general and administrative expenses increased to $148 million for the first three quarters of 2010 from $142 million for the first three quarters of 2009, primarily as a result of $14 million higher non-cash stock compensation expense and $6 million in employee-related costs, primarily associated with certain former executive officers, during the first three quarters of 2010, partially offset by the benefits from cost reduction initiatives, lower pension expense and lower integration costs. As a percentage of net sales, selling, general and administrative expenses improved in the first three quarters of 2010 to 5.6% from 6.3% in the first three quarters of 2009.

27

Interest expense for the first three quarters of 2010 was $295 million compared to $343 million for the first three quarters of 2009. Interest expense for NewPage for the first three quarters of 2010 was $282 million compared to $328 million for the first three quarters of 2009, primarily as a result of a charge of $133 million on the refinancing of debt and related transactions in the third quarter of 2009 partially offset by higher interest rates on outstanding debt and higher levels of outstanding debt during 2010.

Other (income) expense was $(13) million for the first three quarters of 2010 and $(218) million for the first three quarters of 2009. Included in other (income) expense in the first three quarters of 2010 and 2009 was $(22) million and $(214) million of income recognized for alternative fuel mixture tax credits.

Income tax expense (benefit) for the first three quarters of 2010 and 2009 was $1 million and $(20) million. Income tax expense (benefit) for NewPage for the first three quarters of 2010 and 2009 was $1 million and $(15) million. For the first three quarters of 2010 and 2009, we recorded a valuation allowance against our net deferred income tax benefit for federal income taxes and for certain states as it was more likely than not that we would not realize those benefits. For the first three quarters ended September 30, 2010 and 2009, we allocated zero and $7 million of tax expense to other comprehensive income (loss) and the corresponding offset as an allocation to tax benefit from operations. For the first three quarters ended September 30, 2010 and 2009, for NewPage, we allocated zero and $3 million of tax expense to other comprehensive income (loss) and the corresponding offset as an allocation to tax benefit from operations. The amounts for the first three quarters of 2009 reflect the reclassification to income tax (benefit) of all amounts previously allocated to other comprehensive income (loss) related to the interest rate swap cash flow hedges. Also included in the first three quarters ended September 30, 2009 was a tax benefit of $12 million, reflecting the decreases to our state deferred tax liabilities as a result of changes in our distribution channels that have occurred as part of our integration with SENA.

Net income (loss) attributable to NewPage Holding was $(429) million in the first three quarters of 2010 compared to $(263) million in the first three quarters of 2009. Net income (loss) attributable to NewPage was $(416) million in the first three quarters of 2010 compared to $(253) million in the first three quarters of 2009. The decreases were primarily a result of lower average sales prices and lower other income recognized for the alternative fuel mixture tax credits, partially offset by higher core paper sales volume and lower interest expense.

Adjusted EBITDA was $131 million for the first three quarters of 2010 compared to $344 million for the first three quarters of 2009. See “Reconciliation of Net Income (Loss) Attributable to the Company to Adjusted EBITDA” for further information on the use of EBITDA and Adjusted EBITDA as a measurement tool.

Reconciliation of Net Income (Loss) Attributable to the Company to Adjusted EBITDA

EBITDA is defined as net income (loss) attributable to the company before interest expense, income taxes, depreciation and amortization. EBITDA and Adjusted EBITDA are not measures of our performance under U.S. GAAP, are not intended to represent net income (loss) attributable to the company, and should not be used as an alternative to net income (loss) attributable to the company as an indicator of performance. EBITDA and Adjusted EBITDA are shown because they are a basis upon which our management assesses performance and are primary components of certain covenants under our revolving credit facility. In addition, our management believes EBITDA and Adjusted EBITDA are useful to investors because they and similar measures are frequently used by securities analysts, investors and other interested parties in the evaluation of companies with substantial financial leverage. The use of EBITDA and Adjusted EBITDA instead of net income (loss) attributable to the company has limitations as an analytical tool, and you should not consider them in isolation, or as a substitute for analysis of our results as reported under U.S. GAAP. Some of these limitations are:

• EBITDA and Adjusted EBITDA do not reflect our current cash expenditure requirements, or future requirements, for capital expenditures or contractual commitments

28

• EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs

• EBITDA and Adjusted EBITDA do not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our debt

• although depreciation and amortization are non-cash charges, the assets being depreciated and amortized often will have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements

• our measures of EBITDA and Adjusted EBITDA are not necessarily comparable to other similarly titled captions of other companies due to potential inconsistencies in the methods of calculation

Because of these limitations, EBITDA and Adjusted EBITDA should not be considered as discretionary cash available to us to reinvest in the growth of our business.

The following table presents a reconciliation of net income (loss) attributable to the company to EBITDA and Adjusted EBITDA:

	NewPage Holding
	Third Quarter Ended Sept. 30,				Three Quarters Ended Sept. 30,
(in millions)	2010		2009		2010		2009
Net income (loss) attributable to the company	$	(71)	$	(138)	$	(429)	$	(263)
Interest expense		97		199		295		343
Income tax (benefit)		—		(10)		1		(20)
Depreciation and amortization		68		69		203		208
EBITDA		94		120		70		268
Equity awards		2		1		21		7
(Gain) loss on disposal and impairment of assets		1		1		9		5
Non-cash U.S. pension expense		9		12		26		37
Integration and related severance costs		1		3		5		24
Other		(1)		3		—		3
Adjusted EBITDA	$	106	$	140	$	131	$	344

Liquidity and Capital Resources

Available Liquidity

As of September 30, 2010, our principal sources of liquidity include cash generated from operating activities and availability under our revolving credit facility. The amount of borrowings and letters of credit available to NewPage pursuant to the revolving credit facility is limited to the lesser of $500 million or an amount determined pursuant to a borrowing base ($387 million as of September 30, 2010).

29

As of September 30, 2010, we had $117 million available for borrowing in excess of the $50 million required minimum, after reduction for $100 million in outstanding letters of credit and $120 million in outstanding borrowings under the revolving credit facility. We have not experienced, and do not currently anticipate that we will experience, any limitations in our ability to access funds available under our revolving credit facility. In an effort to manage credit risk exposures under our debt and derivative instruments, we regularly monitor the credit-worthiness of the counterparties to these agreements. Our revolving credit facility matures on October 2, 2011 unless we repay or refinance our second-lien notes by July 4, 2011, in which case the revolving credit facility matures on December 21, 2012. We anticipate seeking to extend or refinance the revolving credit facility prior to its maturity and/or refinancing our second-lien notes. We believe our cash flow from operations, proceeds from the sale of nonstrategic assets, available borrowings under our existing or a replacement revolving credit facility and cash and cash equivalents will be adequate to meet our liquidity needs for the next twelve months. However, given the uncertainty of the current economic environment, we cannot assure you that our business will generate sufficient cash flows from operations, that we will be able to complete the sale of nonstrategic assets or that future borrowings will be available to us under our existing or a replacement revolving credit facility in an amount sufficient to enable us to fund our liquidity needs.

Aggregate indebtedness as of September 30, 2010 totaled $3,490 million, which includes $3,271 million at NewPage. Beginning in 2012, our debt service requirements will substantially increase as a result of scheduled payments of our indebtedness. We anticipate that we will seek to refinance our indebtedness prior to that time or retire portions of our indebtedness with issuances of equity securities, proceeds from the sale of assets or cash generated from operations. Our ability to operate our business, service our debt requirements and reduce our total debt will depend upon our future operating performance, which will be affected by prevailing economic conditions and financial, business and other factors, many of which are beyond our control, as well as continued access to the capital markets as may be necessary to refinance our existing indebtedness.

Cash Flows

Cash provided by (used for) operating activities was $(91) million during the first three quarters of 2010 compared to $(13) million during the first three quarters of 2009. The reduction in cash provided by (used for) operating activities was primarily the result of the expiration of the alternative fuel mixture tax credit at the end of 2009, for which we received cash payments of $198 million during the first three quarters of 2009, as well as higher cash requirements for interest and the settlement of interest rate swaps in 2010, partially offset by improvements in working capital. Investing activities in the first three quarters of 2010 include $49 million for capital expenditures and the receipt of $12 million of proceeds from the sales of assets. Financing activities in the first three quarters of 2010 included the issuance of $70 million of additional First-Lien Notes (proceeds of $67 million) used to repay existing borrowings under the revolving credit facility and for general corporate purposes and $68 million of net borrowings under the revolving credit facility.

Capital Expenditures

Capital expenditures were $49 million and $45 million for the first three quarters ended September 30, 2010 and 2009.

Financial Discussion

During the second quarter of 2010, we took actions to reduce personnel as part of our cost reduction initiatives and recognized charges for employee-related costs of $4 million in cost of sales and $6 million in selling, general and administrative expenses. During the first three quarters of 2010, we continued to achieve cost savings from production and operating efficiencies and other restructuring activities. We also continued evaluating ways to raise capital through the issuance and refinancing of debt and through the sale of nonstrategic assets.

30

On November 3, 2010, NewPage Port Hawkesbury Corp. (“NPPH”), an indirect wholly-owned subsidiary of NewPage, completed the sale of certain assets, including a boiler at the Port Hawkesbury, Nova Scotia mill, to Nova Scotia Power Inc. (“NSPI”) for a cash sales price of Canadian $80 million. In addition, NSPI and NPPH have entered into an engineering, procurement and construction contract for NPPH to construct for NSPI a 60 MW biomass cogeneration utility plant for the generation of electricity by December 31, 2012 for approximately Canadian $93 million. NSPI and NPPH also entered into a management, operations and maintenance agreement related to NPPH operating the utility assets for NSPI. NPPH is required to post $10 million of letters of credit under these arrangements in 2010 and an additional $5 million in 2011.

In February 2010, Consolidated Water Power Company (“CWPCo”), an indirect wholly-owned subsidiary of NewPage, announced that it signed an agreement with Wisconsin Rapids Water Works Lighting Commission to sell the CWPCo utility transmission and distribution assets (“CWPCo Utility”). The purchase price will be equal to the net book value of the assets at the time of closing, which is subject to regulatory approvals. On November 1, 2010, CWPCo entered into an asset sale agreement to sell five hydroelectric projects to Great Lakes Utilities for a net cash sales price of approximately $70 million. The closing of the transaction is subject to completion of the CWPCO Utility sale and regulatory approval. These transactions are not expected to close in 2010. We continue to hold and operate the assets in the normal course of our operations.

We have various investments held by our defined-benefit pension plan trusts. The returns on these assets have generally matched the broader market. We are monitoring the effects of our underfunded pension plans on our minimum pension funding requirements and pension expense for future periods. We currently do not anticipate material increases in our minimum funding requirements during the remainder of 2010 or 2011.

The Environmental Protection Agency released a proposed rule in June 2010, which provides for new Industrial Boiler Maximum Achievable Control Technology (MACT) standards to regulate emissions of hazardous air pollutants. The rule as proposed would impose new emission limits for solid fuel-fired boilers and is expected to be finalized in 2011 with compliance expected by early 2014. As proposed, we could be required to make significant capital expenditures on emission control equipment at our mills to comply with the rule. In addition, our mills would likely incur increased operating expenses associated with compliance and operation of the new control equipment. We will complete our evaluation following finalization of the rule and a review of our mills relative to the proposed new standards. We, along with others, have commented on the proposed rule and expect revisions to the final form.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

As of September 30, 2010 and December 31, 2009, $564 million and $484 million of our debt consisted of borrowings with variable interest rates. If market interest rates increase, variable-rate debt will create higher debt service requirements, which could adversely affect our cash flow or compliance with our debt covenants. The potential annual increase in interest expense resulting from a 100 basis point increase in quoted interest rates on our debt balances outstanding at September 30, 2010 and December 31, 2009, would be $6 million and $5 million.

31

ITEM 4. CONTROLS AND PROCEDURES

We maintain a system of internal accounting controls designed to provide reasonable assurance that transactions are properly recorded and summarized so that reliable financial records and reports can be prepared and assets safeguarded. In addition, a system of disclosure controls is maintained to ensure that information required to be disclosed is recorded, processed, summarized and reported in a timely manner to management responsible for the preparation and reporting of our financial information.

Management, with the participation of our chief executive officer and chief financial officer, assessed the disclosure control systems as being effective as they encompass material matters for the quarter ended September 30, 2010. To the best of our knowledge, there were no changes in the internal controls over financial reporting that occurred during the quarter ended September 30, 2010 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II                OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

In September 2009, NewPage, along with two other U.S. paper producers and the United Steelworkers Union, filed antidumping and countervailing duty petitions with the U.S. Department of Commerce and the U.S. International Trade Commission alleging that manufacturers of certain coated paper in China and Indonesia are dumping their products in the United States and that these manufacturers have been subsidized by their governments in violation of U.S. trade laws.

In September 2010, the Department of Commerce announced final antidumping and countervailing duty margins, replacing the preliminary margins announced earlier this year. On October 22, 2010, the International Trade Commission determined by unanimous vote that imports of coated paper from China and Indonesia threaten material injury to U.S. producers and workers. The decision will allow the Department of Commerce to impose duties to offset the threat of dumping and government subsidies. These duties will remain in effect for five years, subject to annual administrative reviews.

ITEM 5. OTHER INFORMATION

On November 1, 2010, Consolidated Water Power Company, an indirect wholly-owned subsidiary of NewPage, entered into an asset sale agreement to sell five hydroelectric projects to Great Lakes Utilities for a net cash sales price of approximately $70 million. The closing of the transaction is subject to completion of a separate sale of utility assets and regulatory approval. These transactions are not expected to close in 2010.

On November 3, 2010, NewPage Port Hawkesbury Corp., an indirect wholly-owned subsidiary of NewPage, completed the sale of certain assets, including a boiler at the Port Hawkesbury, Nova Scotia mill, to Nova Scotia Power Inc. for a cash sales price of Canadian $80 million. An amending agreement was entered into in conjunction with the closing to address certain closing issues.

32

ITEM 6.      EXHIBITS

Exhibit Number	Description
10.1	Employment Agreement dated as of September 1, 2010 between NewPage Corporation and Laszlo M. Lukacs
10.2	Third Amendment to Revolving Credit and Guaranty Agreement and First Amendment to Pledge and Security Agreement, dated as of October 15, 2010 (incorporated by reference from Exhibit 10.1 to the Form 8-K filed on October 21, 2010)
10.3	Asset Sale Agreement dated as of November 1, 2010 between Consolidated Water Power Company and Great Lakes Utilities
10.4	Amending Agreement dated November 3, 2010 between NewPage Port Hawkesbury Corp. and Nova Scotia Power Inc.
31.1	Certification of Principal Executive Officer pursuant to Rules 13a-14 and 15d-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to Rules 13a-14 and 15d-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

33

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, NewPage Holding Corporation and NewPage Corporation have duly caused this Report to be signed on their behalf by the undersigned, thereunto duly authorized.

NEWPAGE HOLDING CORPORATION	NEWPAGE CORPORATION
By: /s/  David J. Prystash	By: /s/  David J. Prystash
David J. Prystash	David J. Prystash
Senior Vice President and	Senior Vice President and
Chief Financial Officer	Chief Financial Officer
(Principal Financial Officer)	(Principal Financial Officer)
Date:   November 4, 2010	Date:   November 4, 2010

34