<PAGE>
 
                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-Q
                                        

(x) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarterly period ended April 4, 1998

                                       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  333-24519


                            PEN-TAB INDUSTRIES, INC.
             (Exact name of registrant as specified in its charter)

          DELAWARE                              54-1833398
(State or other jurisdiction                (I.R.S.  Employer
Incorporation or organization)            Identification Number)

                                167 KELLEY DRIVE
                             FRONT ROYAL, VA 22630
                           TELEPHONE: (540) 622-2000
    (Address, including zip code, and telephone number, including area code,
                  of registrant's principal executive offices)

                                NOT APPLICABLE
                                --------------
                (Former Name, Former Address and Former Fiscal 
                      Year, if Changed Since Last Report)

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 periods that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.   Yes   X        No 
                                         -----         -----


Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.  As of April 3, 1998, there
were outstanding 100 shares of common stock, $0.01 par value, all of which are
privately owned and are not traded on a public market.
<PAGE>
 
                           PEN-TAB INDUSTRIES, INC.
                                AND SUBSIDIARY
                                   FORM 10-Q
                      FOR THE QUARTER ENDED APRIL 4, 1998
                                     INDEX
                                        



PART I.  FINANCIAL INFORMATION

     Item 1.  Financial Statements (Unaudited)                         Page
                                                                       ----
 
              a)   Condensed Consolidated Balance Sheets
                   as of April 4, 1998 and January 3, 1998 (Audited)      1
 
              b)   Condensed Consolidated Statements of Income
                   for the Quarters Ended
                   April 4, 1998 and April 5, 1997                       2
 
              c)   Condensed Consolidated Statements of Cash Flows
                   for the Quarters Ended April 4, 1998 and
                   April 5, 1997                                         3
 
              d)   Notes to Unaudited Condensed Consolidated Financial   
                   Statements                                            4

     Item 2.  Management's Discussion and Analysis of Financial
              Condition and Results of Operations                        6
 
 
PART II. OTHER INFORMATION
 
     Item 1.  Legal Proceedings                                          7
 
     Item 2.  Changes in Securities                                      7
 
     Item 3.  Defaults upon Senior Securities                            7
 
     Item 4.  Submission of Matters to a Vote of Security Holders        7
 
     Item 5.  Other Information                                          7
 
     Item 6.  Exhibits and Reports on Form 8-K                           7
 

SIGNATURE                                                                8



 
<PAGE>
 
PEN-TAB INDUSTRIES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)

<TABLE> 
<CAPTION> 
                                                                             January 3,              April 4,
                                                                                1998                   1998
                                                                              Audited               Unaudited
                                                                          ------------------     ------------------
<S>                                                                     <C>                     <C> 
ASSETS
Current assets:
    Cash and cash equivalents                                             $          13,676      $          -----
     Accounts receivable, net of allowances                                           8,321                 10,091
     Inventories                                                                     21,787                 29,827
     Prepaid expenses and other current assets                                          988                  1,690
                                                                          ------------------     ------------------
          Total current assets                                                       44,772                 41,608

Property, plant and equipment, net                                                   15,775                 15,546
Other assets                                                                          3,245                  3,165
                                                                          ------------------     ------------------
          Total assets                                                    $          63,792      $          60,319
                                                                          ==================     ==================

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
     Accounts payable and bank overdraft                                            $ 2,671                $ 2,419
     Accrued expenses and other current liabilities                                   1,023                  1,335
     Accrued interest on subordinated notes                                           3,330                  1,199
     Deferred income taxes                                                              140                    140
     Current portion of long-term debt                                                  540                    114
                                                                          ------------------     ------------------
          Total current liabilities                                                   7,704                  5,207

Long-term debt                                                                        7,214                  7,203
Senior subordinated notes                                                            75,000                 75,000
Deferred income taxes                                                                 1,879                  1,879
Stockholders' equity (deficit)                                                      (28,005)               (28,970)
Minority Interest                                                                    ------                 ------
                                                                          ------------------     ------------------
Total liabilities and stockholders' equity                                $          63,792      $          60,319
                                                                          ==================     ==================
</TABLE> 

See accompanying notes to unaudited condensed consolidated interim financial
statements.

                                       1
<PAGE>
 
PEN-TAB INDUSTRIES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS)

<TABLE> 
<CAPTION> 
                                                                                                  Quarter Ended
                                                                                      ----------------------------------------
                                                                                          April 5,              April 4,
                                                                                            1997                  1998
                                                                                          Unaudited             Unaudited
                                                                                      ------------------    ------------------


<S>                                                                                  <C>                    <C> 
Net sales                                                                             $          17,244     $          18,218
Cost of goods sold                                                                               13,596                14,011
                                                                                      ------------------    ------------------
Gross profit                                                                                      3,648                 4,207

Expenses:
     Selling, general and administrative                                                          3,353                 3,732
     Interest expense - net                                                                       1,570                 1,942
                                                                                      ------------------    ------------------
Total expenses                                                                                    4,923                 5,674
                                                                                      ------------------    ------------------
Loss before income taxes and minority interest                                                   (1,275)               (1,467)
Income tax (provision) benefit                                                                   (1,938)                  502
                                                                                      ------------------    ------------------
                                                                                                 (3,213)                 (965)
Minority Interest                                                                                -----                    (11)
                                                                                      ------------------    ------------------
Net loss                                                                              $          (3,213)    $            (954)
                                                                                      ==================    ==================


Pro forma financial data:
     Historical loss before income taxes                                              $          (1,275)    $          (1,467)
     Pro forma income tax benefit                                                                   485                   502
                                                                                      ------------------    ------------------
     Pro forma net loss                                                               $            (790)    $            (965)
                                                                                      ==================    ==================
</TABLE> 

See accompanying notes to unaudited condensed consolidated interim financial
statements.

                                       2
<PAGE>
 
PEN-TAB INDUSTRIES, INC. AND SUBSIDIARY 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 
(DOLLARS IN THOUSANDS)

<TABLE> 
<CAPTION> 
                                                                                                      Quarter Ended
                                                                                          --------------------------------------
                                                                                              April 5,             April 4,
                                                                                                1997                 1998
                                                                                             Unaudited            Unaudited
                                                                                          -----------------    -----------------


<S>                                                                                     <C>                     <C> 
OPERATING ACTIVITIES
Net loss                                                                                  $         (3,213)    $           (954)
Adjustments to reconcile net loss to net cash
used in operating activities:
     Depreciation and amortization                                                                     623                  635
     Deferred income taxes                                                                           2,343               ------
     Amortization of debt issue costs                                                                   45                  114
     Minority Interest                                                                                                      (11)
     Provision for losses on accounts receivable                                                        33                   45
     Changes in operating assets and liabilities:
          Accounts receivable                                                                        1,461               (1,815)
          Inventories                                                                              (11,398)              (8,040)
          Prepaid expenses, other current assets and other assets                                     (139)                (736)
          Accounts payable and bank overdraft                                                          891                 (252)
          Accrued expenses and other current liabilities                                              (373)                 312
          Accrued interest on subordinated notes                                                     1,382               (2,131)
                                                                                          -----------------    -----------------
Net cash used in operating activities                                                               (8,345)             (12,833)
                                                                                          -----------------    -----------------
                                                                                                            
INVESTING ACTIVITIES                                                                                        
Purchase of equipment                                                                                 (454)                (406)
                                                                                          -----------------    -----------------
Net cash used in investing activities                                                                 (454)                (406)
                                                                                          -----------------    -----------------
                                                                                                            
FINANCING ACTIVITIES                                                                                        
Net change in long-term debt                                                                       (15,847)                (437)
Issuance of senior subordinated notes, net of expense                                               72,000                -----
Dividends                                                                                          (39,687)               -----
                                                                                          -----------------    -----------------
Net cash provided by (used in)  financing activities                                                16,466                 (437)
                                                                                          -----------------    -----------------
                                                                                                            
Increase (decrease) in cash and cash equivalents                                                     7,667              (13,676)
Cash and cash equivalents at beginning of period                                                       111               13,676
                                                                                          -----------------    -----------------
Cash and cash equivalents at end of period                                                $          7,778     $              -
                                                                                          =================    =================

</TABLE> 

See accompanying notes to unaudited condensed consolidated interim financial
statements.

                                       3
<PAGE>
 
                           PEN-TAB INDUSTRIES, INC.
                                 AND SUBSIDIARY
         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 APRIL 4, 1998
                             (DOLLARS IN THOUSANDS)


                                        
1.  BASIS OF PRESENTATION

  On February 4, 1997, Pen-Tab Industries, Inc., a Virginia corporation, changed
  its name to Pen-Tab Holdings ("Holdings").  On February 4, 1997 Holdings
  formed a wholly owned subsidiary called Pen-Tab Industries, Inc. (the
  "Company"), a Delaware corporation.  On February 3, 1998 the Company formed a
  subsidiary called Vinylweld L.L.C. (see note 6).  The accompanying unaudited
  condensed consolidated financial statements of Pen-Tab Industries, Inc. have
  been prepared in accordance with generally accepted accounting principles
  applicable for interim financial information and with the instructions to Form
  10-Q and Article 10 of Regulation S-X.  Accordingly, they do not include all
  of the information and footnotes required by generally accepted accounting
  principles for complete financial statements.  In the opinion of management,
  all adjustments (consisting of normal recurring accruals) considered necessary
  for a fair presentation have been included.  Operating results for the quarter
  ended April 4, 1998 are not necessarily indicative of the results that may be
  expected for the year ended January 2, 1999.


  All references to fiscal quarter refer to the 13-week period ended April 4,
  1998, and the 14-week period ended April 5, 1997.  These financial statements
  should be read in conjunction with the audited financial statements of Pen-Tab
  Industries, Inc. as of January 3, 1998 and December 28, 1996 and for each of
  the three years in the period ended January 3, 1998, included in the Company's
  form 10-K (#333-24519) as filed with the Securities and Exchange Commission.

 

2.  NEW ACCOUNTING AND AUDITING PRONOUNCEMENTS

  The Financial Accounting Standards Board (FAS) has issued various new
  statements including Statements Nos. 130, 131, and 132.  The Company complied
  with the requirements (disclosure) of Statement Nos. 130 (comprehensive
  income), 131 (segment disclosures) , and 132 (pension and other post-
  retirement benefit).



3.  Inventories

  The Company uses the LIFO method of accounting to value inventories.  The
  components of inventories consist of the following:

 
                       January 3,  April 4,
                         1998       1998
                         ----       ----  

  Raw materials         $ 8,993   $12,835
  Work-in process           372       128
  Finished goods         12,422    16,864
                        -------   -------
                        $21,787   $29,827
                        =======   =======
 

                                       4
<PAGE>
 
3. INVENTORIES (CONTINUED)

     For the quarter ended April 4, 1998, the LIFO adjustment was calculated
  based upon management's expected year-end inventory levels and cost, resulting
  in no adjustment for the period.

     An actual valuation of inventory under the LIFO method can be made only at
  the end of each year based on the inventory levels and costs at that time.
  Accordingly, interim LIFO calculations are necessarily based on management's
  estimates of expected year-end inventory levels and costs.



4.  INCOME TAXES


     The Company was taxed as an "S" corporation for the five week period ended
  February 4, 1997, and a "C" corporation for the period thereafter.  The
  Company recorded a one-time tax charge of $2,343 during the quarter ended
  April 5, 1997 to record the cumulative deferred tax liability upon termination
  of the Company's "S" corporation election.

     Adjusted for income taxes, the Company's net loss for the quarter ended
  April 5, 1997 would have been $790, had the Company been subject to federal
  and state income taxes during such periods.



5.  SENIOR SUBORDINATED NOTES AND LONG-TERM DEBT

     On February 4, 1997, the Company issued $75,000 10 7/8% Senior Subordinated
  Notes due 2007 and paid a dividend to Holdings in the amount of $34,517.
  Concurrently, the Company repaid the outstanding obligation under the Loan and
  Security Agreement and entered into a new Credit Agreement with the Bank of
  America Illinois (The Credit Agreement).  The Credit Agreement, which expires
  on February 23, 1999, provides for advances based upon a borrowing base
  comprised of specified percentages of eligible accounts receivable, inventory
  and property, plant, and equipment, up to an aggregate maximum of $35,000.
  The interest rate per annum applicable to the Credit Agreement is the prime
  rate, as announced by the Bank plus a margin from 0.0% to 0.7% or at the
  Company's option, the Eurodollar rate plus a margin from 1.0% to 2.2% (based
  on the Company's ratio of EBITDA minus capital expenditure to interest
  expense).  Under the terms of the Credit Agreement, the Company is required to
  maintain certain financial ratios relating to cash flow and working capital,
  reduce the principle balance of any loans outstanding to zero for a period of
  sixty days beginning September 30 of each fiscal year and restrict the amount
  of dividends that can be paid during the year.

     During November 1997, the Company entered into a swap agreement, which
  expires February, 2002, to swap its fixed rate of payment on the $75,000 10
  7/8% Senior Subordinated Notes for a floating rate payment.  The floating rate
  is based upon a basket of the LIBORS of three countries plus a spread, and is
  capped at 12.5%.  The interest rate resets every six months and the Company
  can terminate the transaction at any time, at the then current fair market
  value of the swap instrument.

     On April 1, 1998, the Company made an annual installment of $400 on the
  $7,500 industrial revenue development bonds.
 
6.  MINORITY INTEREST

     Effective February 3, 1998, the net assets of the Company's Vinylweld
  division were contributed to a newly formed Delaware limited liability company
  called Vinylweld L.L.C. The Company also sold 20% of the Vinylweld L.L.C. to
  its new president. As of April 4, 1998, the minority interest is $(0.0)
  million as a result of a negative equity position of Vinylweld L.L.C.

                                       5
<PAGE>
 
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

RESULTS OF OPERATIONs


     Net sales for the quarter ended April 4, 1998 increased by $1.0 million, or
5.8%, to $18.2 million from $17.2 million for the quarter ended April 5, 1997.
For the Pen-Tab segment differentiated product sales increased $0.4 million for
the quarter ended April 4, 1998 as compared to the quarter ended April 5, 1997,
and core product sales increased $1.0 million for the quarter ended April 4,
1998 as compared to the quarter ended April 5, 1997.  For the Pen-Tab segment,
pounds / units shipped increased approximately 7.8% for the quarter ended April
4, 1998 compared to the quarter ended April 5, 1997, increasing revenues by $1.4
million or 9.4%.  This positive trend is the result of the Company's commitment
to it's growth strategy of (i) focusing on rapidly growing customers, (ii)
continuing the introduction of differentiated products, (iii) focusing on
partnering relationships, and (iv) broadening product distribution.  The
Vinylweld segment sales decreased approximately $0.4 million for the quarter
ended April 4, 1998.

     Gross profit for the quarter ended April 4, 1998 increased  $0.6 million or
16.7% to $4.2 million from $3.6 million for the quarter ended April 5, 1997.
The gross profit percentage for the quarter ended April 4, 1998 was 23.1%
compared to 21.2% for the quarter ended April 5, 1997.  The increase in gross
profit margin is principally related to, (i) a LIFO adjustment decreasing gross
profit for the quarter ended April 5, 1997 by $0.1 million or 0.5%, (ii) a lower
manufacturing variance during quarter ended April 4, 1998 of $0.2 million or
1.0% as a result of increased production levels and increased efficiency, and
(iii) changes in product mix.

     SG&A expenses for the quarter ended April 4, 1998 increased $0.4 million,
or 12.1% to $3.7 million from $3.3 million for the quarter ended April 5, 1997.
As a percentage of net sales, SG&A expenses increased to 20.3% for the quarter
ended April 4, 1998 from 19.8% for the quarter ended April 5, 1997.  This
increase is principally the result of (i) an increase in sales commissions and
advertising allowances and (ii) increases in sales and marketing salaries and
related expenses.

     Interest expense for the quarter ended April 4, 1998 increased $0.4 million
to $1.9 million from $1.5 million for the quarter ended April 5, 1997.   The
increase is principally due to the interest expense incurred for the full
quarter ended April 4, 1998 on the $75 million of senior subordinated notes
issued during February 1997.

     Income tax provision for the quarter ended April 5, 1997 includes a one-
time tax charge of $2.3 million to record the cumulative deferred tax liability
upon termination of the Company's "S" corporation election.  The tax benefit for
the quarter ended April 4, 1998 is based upon the estimated "C" corporation
effective tax rate for the full year.



LIQUIDITY AND CAPITAL RESOURCES

     Net cash used in operating activities for the quarter ended April 4, 1998
was $12.8 million as compared to net cash used in operating activities of $8.3
million for the quarter ended April 5, 1997.  The increase was primarily
attributable to a $4.1 million payment on February 4, 1998 for the accrued
interest on subordinated notes.

     Net cash used in financing activities for the quarter ended April 4, 1998
was $0.4 million as compared to net cash provided by financing activities of
$16.5 million for the quarter ended April 5, 1997. During quarter ended April 5,
1997, the net cash provided by financing activities consisted of $75 million
relating to the issuance of senior subordinated notes, offset by an increase in
dividend distributions of $39.6 million and a $15.8 million repayment of long-
term debt.

                                       6
<PAGE>
 
PART 11.  OTHER INFORMATION

Item 1.  Legal Proceedings.
---------------------------
Not applicable.

Item 2.   Changes in Securities.
--------------------------------
Not applicable.

Item 3.  Defaults upon Senior Securities.
-----------------------------------------
Not applicable.

Item 4.  Submission of Matters to a Vote of Security Holders.
-------------------------------------------------------------
Not applicable.

Item 5.  Other Information.
-------------------------- 
Not applicable.

Item 6.   Exhibits and Reports on Form 8-K.
-------------------------------------------
     (a)  Exhibits
     -------------
               Financial Data Schedule (filed only electronically with the SEC)

     (b)  Reports on From 8-K
     ------------------------

               No reports on Form 8-K were filed during the first quarter of
               1998.

                                       7
<PAGE>
 
                                   SIGNATURE


Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report on Form 10-Q for the quarter ended April 
4, 1998 to be signed on its behalf by the undersigned thereunto duly authorized.


                                             Pen-Tab Industries, Inc.
                                             (Registrant)



Date:                                        By: /s/ William Leary
-----------------------------------          ---------------------
                                             William Leary
                                             Vice President, Chief Financial and
                                             Administrative Officer
                                             (principal financial officer
                                             and accounting officer)

                                       8