<PAGE>   1


================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    --------

                                    FORM 10-Q


(Mark One)

[X]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934
        For the quarterly period ended March 31, 2001

                                       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 333-40067


                               PLIANT CORPORATION
             (Exact name of registrant as specified in its charter)


            Utah                                                87-0496065
-------------------------------                           ---------------------
(State or other jurisdiction of                             (I.R.S. Employer
 incorporation or organization)                             Identification No.)




                      2755 E. Cottonwood Parkway, Suite 400
                           Salt Lake City, Utah 84121
                                 (801) 993-8221

          (Address of principal executive offices and telephone number)


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.

Yes   X     No
     ---       ----

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. On May 14, 2001, there were
563,921 outstanding shares of the registrant's Common Stock.

================================================================================



<PAGE>   2




PART I. FINANCIAL INFORMATION
-------------------------------
ITEM 1. FINANCIAL STATEMENTS

PLIANT CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2001 AND DECEMBER 31, 2000 (DOLLARS IN THOUSANDS) (UNAUDITED)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                            March 31,       December 31,
                                                                                               2001              2000
                                                                                            ---------       ------------
<S>                                                                                         <C>              <C>

ASSETS

CURRENT ASSETS:
      Cash and cash equivalents                                                             $   2,329        $   3,060
      Receivables, net of allowances of $1,901 and $2,166, respectively                       112,402          115,058
      Inventories                                                                              82,590           79,151
      Prepaid expenses and other                                                                3,141            1,983
      Income taxes receivable                                                                   3,039            2,758
      Deferred income taxes                                                                    13,141           12,992
                                                                                            ---------        ---------

           Total current assets                                                               216,642          215,002

PLANT AND EQUIPMENT, net                                                                      328,923          333,083

INTANGIBLE ASSETS, net                                                                        203,412          205,870

OTHER ASSETS                                                                                   29,957           31,079
                                                                                            ---------        ---------

TOTAL ASSETS                                                                                $ 778,934        $ 785,034
                                                                                            =========        =========

LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES:
      Current portion of long-term debt                                                     $   6,985        $   9,362
      Trade accounts payable                                                                  106,173          109,018
      Accrued liabilities                                                                      47,624           39,012
                                                                                            ---------        ---------

           Total current liabilities                                                          160,782          157,392

LONG-TERM DEBT, net of current portion                                                        669,157          678,031

OTHER LIABILITIES                                                                              30,582           25,757

DEFERRED INCOME TAXES                                                                          31,160           33,060
                                                                                            ---------        ---------

           Total liabilities                                                                  891,681          894,240
                                                                                            ---------        ---------


REDEEMABLE PREFERRED STOCK - 200,000 shares authorized, 100,000 shares
      outstanding and designated as Series A, no par value, with a redemption
      and liquidation value of $1,000 per share                                                80,519           80,349
                                                                                            ---------        ---------

REDEEMABLE COMMON STOCK - no par value; 60,000 shares authorized;
      53,996 shares outstanding as of March 31, 2001 and 57,121 outstanding
      as of December 31, 2000, net of related stockholders' notes receivable of
      $12,857 at March 31, 2001 and $14,551 at December 31, 2000                               16,641           16,456
                                                                                            ---------        ---------


STOCKHOLDERS' DEFICIT:
      Common stock - no par value; 10,000,000 shares authorized, 509,925 shares
          outstanding at March 31, 2001 and 510,674 at December 31, 2000                       87,639           87,989
      Warrants                                                                                 26,500           26,500
      Accumulated deficit                                                                    (314,069)        (312,414)
      Stockholders' notes receivable                                                             (584)            (825)
      Accumulated other comprehensive income                                                   (9,393)          (7,261)
                                                                                            ---------        ---------

           Total stockholders' deficit                                                       (209,907)        (206,011)
                                                                                            ---------        ---------

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                                                 $ 778,934        $ 785,034
                                                                                            =========        =========
</TABLE>


See notes to condensed consolidated financial statements.



                                       2
<PAGE>   3


PLIANT CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND 2000 (IN THOUSANDS) (UNAUDITED)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                        Three Months Ended
                                                             March 31,
                                                     --------------------------
                                                       2001             2000
                                                     ---------        ---------
<S>                                                  <C>              <C>

SALES  Net                                           $ 202,659        $ 220,506

COST OF SALES                                          160,696          177,493
                                                     ---------        ---------

      Gross profit                                      41,963           43,013
                                                     ---------        ---------

OPERATING EXPENSES:
      Administration and other                          12,965           14,041
      Stock-based compensation related to
            administrative employees                     7,033            1,223
      Sales and marketing                                8,780            6,639
      Research and development                             753            1,082
      Compensation and transaction costs
           related to recapitalization                       -            5,200
                                                     ---------        ---------

           Total operating expenses                     29,531           28,185
                                                     ---------        ---------

OPERATING INCOME                                        12,432           14,828

INTEREST EXPENSE                                       (20,360)         (11,558)

OTHER INCOME  - Net                                        895              430
                                                     ---------        ---------

INCOME (LOSS) BEFORE INCOME TAXES                       (7,033)           3,700

INCOME TAX PROVISION (BENEFIT)                          (2,309)           2,299
                                                     ---------        ---------

NET INCOME (LOSS)                                    $  (4,724)       $   1,401
                                                     =========        =========
</TABLE>


See notes to condensed consolidated financial statements.



                                       3
<PAGE>   4

PLIANT CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND 2000 (IN THOUSANDS) (UNAUDITED)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                    2001            2000
                                                                                  --------        --------
<S>                                                                               <C>             <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
      Net  income (loss)                                                          $ (4,724)       $  1,401
      Adjustments to reconcile net income (loss) to net cash
        provided by operating activities:
           Depreciation and amortization                                            10,089           9,515
           Deferred income taxes                                                    (2,015)            662
           Reduction in provision for losses on accounts receivable                      -            (217)
           Stock-based compensation related to administrative employees              7,033           1,223
           Loss on disposal of assets                                                  116               -
           Changes in assets and liabilities:
                Receivables                                                          2,252           4,286
                Inventories                                                         (3,662)        (14,149)
                Prepaid expenses and other                                          (1,151)            102
                Income taxes receivable                                               (311)          2,272
                Other assets                                                         1,104             754
                Trade accounts payable                                              (2,943)          9,141
                Accrued liabilities                                                  7,777           1,823
                Due to affiliates                                                        -             (91)
                Other liabilities                                                    1,098           1,186
                                                                                  --------        --------

                     Net cash provided by operating activities                      14,663          17,908
                                                                                  --------        --------

CASH FLOWS FROM INVESTING ACTIVITIES:
      Proceeds from sale of assets                                                   7,914               -
      Capital expenditures for plant and equipment                                 (15,310)        (10,093)
                                                                                  --------        --------

                     Net cash used in investing activities                          (7,396)        (10,093)
                                                                                  --------        --------

CASH FLOWS FROM FINANCING ACTIVITIES:
      Net proceeds from issuance of stock and net change
        in related stockholders' notes receivables                                     (99)            (46)
      Principal payments on long-term debt                                         (11,251)         (3,469)
      Payment on revolving debt                                                          -            (343)
                                                                                  --------        --------

                     Net cash used in financing activities                         (11,350)         (3,858)
                                                                                  --------        --------

EFFECT OF EXCHANGE RATE CHANGES ON CASH
      AND CASH EQUIVALENTS                                                           3,352            (826)
                                                                                  --------        --------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                  (731)          3,131

CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD                                   3,060           9,097
                                                                                  --------        --------

CASH AND CASH EQUIVALENTS, END OF THE PERIOD                                      $  2,329        $ 12,228
                                                                                  ========        ========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

      Cash paid (received) during the period for:
           Interest                                                               $  6,820        $  8,411
           Income taxes                                                           $ (1,663)       $ (1,814)
      Other non-cash disclosure:
           Dividends accrued but not paid                                         $  3,793        $      -
</TABLE>


See notes to condensed consolidated financial statements.



                                       4
<PAGE>   5


PLIANT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
FOR THE THREE MONTHS ENDED MARCH 31, 2001   (IN THOUSANDS) (UNAUDITED)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                                           ACCUMULATED
                                             COMMON STOCK          WARRANTS                 STOCKHOLDERS'     OTHER
                                             ------------        TO PURCHASE   ACCUMULATED     NOTES       COMPREHENSIVE
                                           SHARES     AMOUNT     COMMON STOCK    DEFICIT     RECEIVABLE       INCOME       TOTAL
                                           -----------------     ------------  ------------  ------------  -------------   -----
<S>                                        <C>      <C>          <C>           <C>           <C>           <C>           <C>
BALANCE, DECEMBER 31, 2000                  511     $  87,989     $  26,500    $(312,414)    $    (825)    $  (7,261)    $(206,011)

Net loss                                      -             -             -       (4,724)            -             -        (4,724)

Stock-based compensation
    related to administrative
    employees                                 -             -             -        7,033             -             -         7,033

Fair value change in interest rate
   derivatives classified as cash
   flow hedges                                -             -             -            -             -          (780)         (780)

Preferred stock dividend and
    accretion                                 -             -             -       (3,964)            -             -        (3,964)

Repurchase of common stock and
    cancellation of notes from
    management                               (1)         (350)            -            -           251             -           (99)

Amortization of discount on
    stockholder's note receivable             -             -             -            -           (10)            -           (10)

Foreign currency transaction
    adjustment                                -             -             -            -             -        (1,352)       (1,352)
                                      ---------     ---------     ---------    ---------     ---------     ---------     ---------

BALANCE, MARCH 31, 2001                     510     $  87,639     $  26,500    $(314,069)    $    (584)    $  (9,393)    $(209,907)
                                      =========     =========     =========    =========     =========     =========     =========
</TABLE>


See notes to condensed consolidated financial statements.



                                       5
<PAGE>   6


PLIANT CORPORATION AND SUBSIDIARIES


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------


1.      BASIS OF PRESENTATION

        The accompanying condensed consolidated financial statements have been
        prepared, without audit, in accordance with U.S. generally accepted
        accounting principles and pursuant to the rules and regulations of the
        Securities and Exchange Commission. The information reflects all normal
        recurring adjustments that, in the opinion of management, are necessary
        for a fair presentation of the financial position, results of operations
        and cash flows of Pliant Corporation and its subsidiaries ("Pliant" or
        the "Company") as of the dates and for the periods presented. Results of
        operations for the period ended March 31, 2001 are not necessarily
        indicative of results of operations to be expected for the full fiscal
        year.

        Certain information in footnote disclosures normally included in
        financial statements presented in accordance with U.S. generally
        accepted accounting principles has been condensed or omitted in
        accordance with the rules and regulations of the Securities and Exchange
        Commission. These statements should be read in conjunction with the
        Company's Annual Report on Form 10-K for the year ended December 31,
        2000.

2.      INVENTORIES

        Inventories are valued at the lower of cost (using the first-in,
        first-out method) or market value. Inventories as of March 31, 2001 and
        December 31, 2000 consisted of the following (in thousands):


<TABLE>
<CAPTION>
                          March 31,    December 31,
                             2001          2000
                          ---------    ------------
<S>                        <C>           <C>

Finished goods             $46,667       $46,760
Raw materials               26,858        24,158
Work-in-process              9,065         8,233
                           -------       -------

Total                      $82,590       $79,151
                           =======       =======
</TABLE>


3.      PLANT CLOSING COSTS

        During the fourth quarter 2000, we approved and announced our plans to
        cease operations at our Dallas, Texas; Birmingham, Alabama; and
        Harrington, Delaware facilities. Our Dallas facility was closed in
        December 2000. We expect to close our Birmingham and our Harrington
        facilities by the end of the third quarter 2001. Included in other
        accrued liabilities as of March 31, 2001 and December 31, 2000 are the
        remaining amounts for plant closing totaling $3.9 million and $5.0
        million, respectively.

4.      REDEEMABLE COMMON STOCK

        Under the May 2000 stock purchase agreements, we have repurchase rights,
        which allow us to repurchase certain shares from the employees, if the
        individuals cease to be employees for any reason. The repurchase rights
        lapse as follows: (1) one-sixth on January 1, 2001, so long as the



                                       6
<PAGE>   7


        recipient is still our employee on such date and (2) the remainder in
        equal increments over a five-year period commencing on December 31, 2000
        as follows: (a) in full if 100% or more of the applicable target market
        value of equity is achieved as of the end of the applicable calendar
        year and (b) partial, if more than 90% of the applicable target market
        value of equity is achieved or (c) if the target market value of equity
        is not achieved, in full on December 31, 2009. The repurchase rights
        terminate in the event of certain acceleration events as defined in the
        agreement. The repurchase price per share is the original price paid by
        the employee plus interest compounded annually at 7% commencing on the
        181st day after the date of termination of the employee through the date
        on which the shares are actually repurchased.

        In addition, under employment agreements, additional repurchase rights
        and put options were established. The repurchase rights allow the
        Company to repurchase shares, not already subject to the May 2000 stock
        purchase agreement repurchase rights, from the employee in the event of
        termination for any reason. The put options allow for the employees to
        require the Company to purchase all of the shares in the event of
        resignation for good reason, death, disability or retirement, subject to
        the restrictive provisions of any credit or other agreements. However,
        the put option related to 32,750 shares, in no event can be exercised
        until January 1, 2006. The price under the repurchase rights and the put
        options is the fair market value of the common stock, as determined in
        good faith.

        On December 27, 2000, we entered into a severance agreement with an
        employee. Under the agreement, we cancelled approximately $133,000 of
        accrued interest on a note receivable. We repurchased 6,211 shares of
        restricted stock for $483.13 per share and offset the purchase price
        against $3.0 million of note principal. In addition, on January 2, 2001,
        we repurchased an additional 539 shares of restricted stock for $483.13
        per share and offset the purchase price against $260,000 of note
        principal. The Company's repurchase rights were changed on the remaining
        7,423 shares of common stock owned by this individual, whereby the
        Company agreed not to repurchase the shares until February 28, 2003 at a
        repurchase price of the greater of the fair market value and $111.53 per
        share. Interest ceased to accrue on the remaining $787,000 balance of
        the note related to the sale of stock in 1999. Further, the put option
        was cancelled. As a result of these modifications, a $323,000 discount
        on the note receivable balance was recorded as compensation expense in
        2000. The discount will be amortized to interest income over the
        remaining term of the note. In the event we determine to repurchase the
        stock from this individual at an amount that is: (1) greater than the
        fair value of the stock (i.e. the note balance is greater than the fair
        value) or (2) greater than the note balance as a result of future
        increases in fair value of the stock, we will record additional expense.

        On January 22, 2001, we entered into a severance agreement with another
        employee. Under this agreement, we cancelled approximately $85,000 of
        accrued interest on a note receivable. We repurchased 3,125 shares of
        restricted stock for $483.13 and offset the purchase price against $1.5
        million of note principal. We further agreed to cease interest on the
        remaining $302,000 principal balance of the note receivable related to
        625 shares and to cease interest on the $262,000 principal balance
        related to the sale of stock in 1999. As a result of these interest
        modifications, a $208,000 discount on the note receivable balance was
        recorded as compensation expense in the first quarter of 2001. The
        discount will be amortized to interest income over the remaining term of
        the note. In addition, the Company's repurchase rights and the
        individual's put option were changed on the remaining 2,832 shares of
        common stock owned by this individual. We agreed not to repurchase and
        the individual agreed not to exercise the put option on the shares until
        February 28, 2003. The repurchase price and the put option price were
        changed to be the greater of the fair value of the stock or the balance
        on the note receivable. Because the fair value of these shares was
        $483.13 per share on January 22, 2001, compensation expense of
        approximately $1.0 million was recorded in the first quarter of 2001,
        which represents the difference between the carrying amount and the fair
        value of the 2,622 shares common stock that are subject to the note
        receivable.



                                       7
<PAGE>   8


        On February 1, 2001, we amended the note agreements with another
        employee that were issued in connection with the sale of restricted
        stock in 1999 and 2000. Under the amended agreements, interest ceases to
        accrue, effective December 31, 2000, on one note with a principal
        balance of $1.6 million and another note with a principal balance of
        $7.0 million. Further, the notes were modified to remove the full
        recourse provisions and modify the pledge agreement. As a result of
        these modifications, the sale of stock for notes will now be accounted
        for as stock options and will be subject to variable accounting.
        Accordingly, changes in the fair value of the common stock in excess of
        the note balance will be recorded as compensation expense until the note
        is paid in full. In addition, interest income will not be recorded on
        these notes. In connection with this modification we recorded
        compensation expense of $6.0 million, in the first quarter of 2001.

        Because of the modifications of these employee notes, in the first
        quarter of 2001 another employee's 2000 stock purchase will be accounted
        for as stock options, subject to variable accounting. In addition,
        interest income will not be recorded on this note with a principal
        balance of $3.7 million.

5.      STOCK OPTION PLANS

        During the three months ended March 31, 2001, options to purchase 1,780
        shares at $483.13 per share were granted to employees. These options
        vest over five (5) years. During the same period options to purchase
        4,114 shares were forfeited due to employee terminations.

6.      OPERATING LEASES

        In March 2001 we completed a sale and leaseback of certain equipment and
        received proceeds of $7.9 million. There was no gain or loss in
        connection with the sale and the lease is accounted for as an operating
        lease. As part of the transaction we issued a $3.4 million letter of
        credit for which the lessor is the beneficiary should we default on any
        payments. The monthly lease payments are $139,967 for 72 months.


7.      DERIVATIVE INSTRUMENTS

        Effective January 1, 2001, we adopted SFAS No. 133, "Accounting for
        Derivative Instruments and Hedging Activities", as amended by SFAS No.
        137 and SFAS No. 138. We recognize the fair value of derivatives as
        either assets or liabilities in the balance sheet. To the extent that
        the derivatives qualify as hedges, gains or losses associated with the
        effective portion are recorded as a component of other comprehensive
        income while the ineffective portion is recognized in income.

        At the adoption of this pronouncement, we had one interest rate cap
        agreement, which had been entered into during the fourth quarter of
        2000. As a result, the initial adoption of this pronouncement did not
        result in a material effect to our financial statements.

        During the first quarter of 2001, we entered into three additional
        interest rate derivative agreements with separate financial
        institutions. We use our interest rate derivatives to manage interest
        rate risk associated with future interest payments on variable rate
        borrowings under our Credit Facilities. Our interest rate derivative
        agreements are considered cash flow hedges and consisted of the
        following as of March 31, 2001 (dollars in millions):



                                       8
<PAGE>   9


<TABLE>
<CAPTION>
                              Notional        Variable             Fixed             Maturity
        Type                   Amount           Rate*             Rate **              Dates
----------------------      -----------     ------------     -----------------    --------------
<S>                         <C>             <C>              <C>                  <C>
Interest rate cap             $128.0            LIBOR             10.00%            12/31/2003
Interest rate cap               30.0            LIBOR              7.25%            02/09/2004
Interest rate collar            40.0            LIBOR          4.15% - 7.25%        02/13/2004
Interest rate swap              60.0            LIBOR              5.40%            02/13/2004

--------------
*  Three-month LIBOR, as defined; 4.88% as of March 31, 2001

** Strike for caps; floor and strike for collar
</TABLE>

        The fair value of our interest rate derivative agreements is reported on
        our consolidated balance sheet at March 31, 2001 in other liabilities of
        approximately $802,000, and in other assets of approximately $70,000.
        For the three months ended March 31, 2001, the ineffective portion of
        our interest rate derivatives was a loss of approximately $111,000 which
        is included in interest expense.


8.      OPERATING SEGMENTS

        Operating segments are components of the Company for which separate
        financial information is available that is evaluated regularly by our
        chief operating decision maker in deciding how to allocate resources and
        in assessing performance. This information is reported on the same basis
        that is used internally for evaluating segment performance.

        We have three reportable operating segments: specialty films, design
        products and industrial films. The specialty films segment produces
        converter films that are sold to other flexible packaging manufacturers
        for additional fabrication, barrier films used to package and protect
        food and other products, and other films used in the personal care,
        medical and agriculture industries. The design products segment produces
        printed rollstock, bags and sheets used to package products in the food
        and other industries. The industrial films segment produces stretch
        films, used for industrial unitizing and containerization, and PVC
        films, used to wrap meat, cheese and produce.

        Sales and transfers between our segments are eliminated in
        consolidation. We evaluate performance of the operating segments based
        on profit or loss before income taxes, not including nonrecurring gains
        or losses. Our reportable segments are managed separately with separate
        management teams, because each segment has different products, customer
        requirements, technology and marketing strategies. During the first
        quarter of 2001, two plant operations were reclassified from our
        Specialty segment to our Industrial segment in accordance with a change
        in business focus. Accordingly, the 2000 amounts have been reclassified
        to reflect this change. In addition, certain operating expenses were
        reclassified from our segments to the corporate category as a result of
        expenses which are no longer attributable and allocated to the segment.



                                       9
<PAGE>   10


Segment profit or loss and segment assets as of and for the three months ended
March 31, 2001 and 2000 are presented in the following table (in thousands):


<TABLE>
<CAPTION>
                                          DESIGN      INDUSTRIAL      SPECIALTY    CORPORATE/
                                         PRODUCTS        FILMS          FILMS         OTHER         TOTAL
<S>                                      <C>           <C>            <C>           <C>            <C>
MARCH 31, 2001
Net sales to customers                   $  53,369     $  61,597      $  87,693     $       -      $ 202,659
Intersegment sales                           2,004         1,539          2,269        (5,812)             -
                                         ---------     ---------      ---------     ---------      ---------
Total net sales                             55,373        63,136         89,962        (5,812)       202,659
Depreciation and amortization                2,509         1,976          2,793         2,811         10,089
Interest expense                               887           (29)             6        19,496         20,360
Segment profit (loss)                        9,220        11,019         18,766       (46,038)        (7,033)
Segment total assets                       178,254       125,531        398,816        76,333        778,934
Capital expenditures                         4,225         2,638          7,402         1,045         15,310

MARCH 31, 2000
Net sales to customers                      53,402        60,760        106,344             -        220,506
Intersegment sales                           1,468         1,611          1,682        (4,761)             -
                                         ---------     ---------      ---------     ---------      ---------
Total net sales                             54,870        61,427        108,970        (4,761)       220,506
Depreciation and amortization                2,214         1,903          3,194         2,204          9,515
Interest expense                               888            87              6        10,577         11,558
Segment profit (loss)                        6,497         9,191         19,987       (26,775)         8,900
Compensation and transaction costs
    related to recapitalization                  -             -              -         5,200          5,200
Segment total assets                       178,353       130,166        416,540        55,039        780,098
Capital expenditures                         1,361         3,697          3,852         1,183         10,093
</TABLE>



                                       10
<PAGE>   11


A reconciliation of the totals reported for the operating segments to our totals
reported in the consolidated condensed financial statements is as follows (in
thousands):

<TABLE>
<CAPTION>
                                                         Three months ended
                                                             March 31,
                                                             ---------
                                                        2001             2000
                                                        ----             ----
<S>                                                   <C>              <C>
PROFIT OR LOSS

Total profit for reportable segments                  $ 39,005         $ 35,675
Compensation and transaction costs related
     to recapitalization                                     -           (5,200)
Unallocated amounts:
   Corporate expenses                                  (26,542)         (16,198)
   Interest expense                                    (19,496)         (10,577)
                                                      --------         --------
   Income (loss) before taxes                         $ (7,033)        $  3,700
                                                      ========         ========
</TABLE>


<TABLE>
<CAPTION>
                                                       March 31,       March 31,
ASSETS                                                   2001            2000
                                                         ----            ----
<S>                                                    <C>             <C>

Total assets for reportable segments                   $702,601        $725,059
Intangible assets not allocated to segments              14,528          15,839
Other unallocated assets                                 61,805          39,200
                                                       --------        --------
      Total consolidated assets                        $778,934        $780,098
                                                       ========        ========
</TABLE>



                                       11
<PAGE>   12


9.      CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

        The following condensed consolidating financial statements present, in
        separate columns, financial information for (i) Pliant (on a parent only
        basis), with its investment in its subsidiaries recorded under the
        equity method, (ii) guarantor subsidiaries (as specified in the
        Indenture, dated May 31, 2000 (the "Indenture") relating to Pliant's
        $220 million senior subordinated notes due 2010 (the "Notes")) on a
        combined basis, with any investments in non-guarantor subsidiaries
        specified in the Indenture recorded under the equity method, (iii)
        direct and indirect non-guarantor subsidiaries on a combined basis, (iv)
        the eleminations necessary to arrive at the information for Pliant and
        its subsidiaries on a consolidated basis, and (v) Pliant on a
        consolidated basis, in each case as of March 31, 2001 and December 31,
        2000 and for the three months ended March 31, 2001 and 2000. The Notes
        are fully and unconditionally guaranteed on a joint and several basis by
        each guarantor subsidiary and each guarantor subsidiary is wholly owned,
        directly or indirectly, by Pliant. There are no contractual restrictions
        limiting transfers of cash from guarantor and non-guarantor subsidiaries
        to Pliant. The condensed consolidating financial statements are
        presented herein, rather than separate financial statements for each of
        the guarantor subsidiaries because management believes that separate
        financial statements relating to the guarantor subsidiaries are not
        material to investors. During the second quarter of 2000, one of our
        non-guarantor subsidiary companies, Pliant Packaging of Canada, LLC,
        became a guarantor. In addition, during the first quarter of 2001, our
        Blessings subsidiary was merged with and into Pliant. Accordingly, the
        former Blessings subsidiary is reflected as part of "Pliant Corporation
        Only" column for all periods presented.



                                       12
<PAGE>   13


PLIANT CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEET
AS OF MARCH 31, 2001 (IN THOUSANDS) (UNAUDITED)
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>
                                                             Pliant        Combined      Combined                    Consolidated
                                                           Corporation     Guarantor    Non-Guarantor                   Pliant
                                                          (Parent Only)  Subsidiaries   Subsidiaries   Eliminations   Corporation
                                                          -------------  ------------   ------------   ------------   -----------
<S>                                                         <C>            <C>            <C>            <C>            <C>

ASSETS
CURRENT ASSETS:
   Cash and cash equivalents                                $       -      $      39      $   2,290      $       -      $   2,329
   Receivables - net                                           89,712          4,880         17,810              -        112,402
   Inventories                                                 67,212          7,858          7,520              -         82,590
   Prepaid expenses and other                                   2,158            135            848              -          3,141
   Income taxes receivable                                      2,059            (25)         1,005              -          3,039
   Deferred income taxes                                       14,430             38         (1,327)             -         13,141
                                                            ---------      ---------      ---------      ---------      ---------
       Total current assets                                   175,571         12,925         28,146              -        216,642
PLANT AND EQUIPMENT - Net                                     274,092         11,814         43,017              -        328,923
INTANGIBLE ASSETS - Net                                       183,675          2,392         17,345              -        203,412
INVESTMENT IN SUBSIDIARIES                                     51,884              -              -        (51,884)             -
OTHER ASSETS                                                   27,329              -          2,628              -         29,957
                                                            ---------      ---------      ---------      ---------      ---------
TOTAL ASSETS                                                $ 712,551      $  27,131      $  91,136      $ (51,884)     $ 778,934
                                                            =========      =========      =========      =========      =========

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
   Current portion of long-term debt                        $   6,985      $       -      $       -      $       -      $   6,985
   Trade accounts payable                                      86,486          5,387         14,300              -        106,173
   Accrued liabilities                                         42,535          1,096          3,993              -         47,624
   Due to (from) affiliates                                    (2,418)         8,253         (5,835)             -              -
                                                            ---------      ---------      ---------      ---------      ---------
       Total current liabilities                              133,588         14,736         12,458              -        160,782
LONG-TERM DEBT - Net of current portion                       634,157              -         35,000              -        669,157
OTHER LIABILITIES                                              29,148              -          1,434              -         30,582
DEFERRED INCOME TAXES                                          28,405            497          2,258              -         31,160
                                                            ---------      ---------      ---------      ---------      ---------
       Total liabilities                                      825,298         15,233         51,150              -        891,681
                                                            ---------      ---------      ---------      ---------      ---------

REDEEMABLE STOCK                                               97,160              -              -              -         97,160
                                                            ---------      ---------      ---------      ---------      ---------

STOCKHOLDERS' EQUITY (DEFICIT):
   Common stock                                                87,639         14,020         29,241        (43,261)        87,639
   Warrants                                                    26,500              -              -              -         26,500
   Retained earnings accumulated (deficit)                   (314,069)        (2,111)        18,093        (15,982)      (314,069)
   Stockholders' note receivable                                 (584)             -              -              -           (584)
   Accumulated other comprehensive loss                        (9,393)           (11)        (7,348)         7,359         (9,393)
                                                            ---------      ---------      ---------      ---------      ---------
       Total stockholders' equity (deficit)                  (209,907)        11,898         39,986        (51,884)      (209,907)
                                                            ---------      ---------      ---------      ---------      ---------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)        $ 712,551      $  27,131      $  91,136      $ (51,884)     $ 778,934
                                                            =========      =========      =========      =========      =========
</TABLE>



                                       13
<PAGE>   14


PLIANT CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEET
AS OF DECEMBER 31, 2000 (IN THOUSANDS) (UNAUDITED)
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>
                                                             PLIANT        COMBINED      COMBINED                    CONSOLIDATED
                                                           CORPORATION    GUARANTOR     NON-GUARANTOR                    PLIANT
                                                          (PARENT ONLY)  SUBSIDIARIES   SUBSIDIARIES   ELIMINATIONS    CORPORATION
                                                          -------------  ------------   ------------   ------------    -----------
<S>                                                       <C>            <C>            <C>            <C>             <C>
ASSETS
CURRENT ASSETS:
   Cash and cash equivalents                                $     459      $      10      $   2,591      $       -      $   3,060
   Receivables, net                                            90,670          4,966         19,422              -        115,058
   Inventories                                                 64,884          6,983          7,284              -         79,151
   Prepaid expenses and other                                   1,527             30            426              -          1,983
   Income taxes receivable                                      1,885            (24)           897              -          2,758
   Deferred income taxes                                       14,431             37         (1,476)             -         12,992
                                                            ---------      ---------      ---------                     ---------
       Total current assets                                   173,856         12,002         29,144              -        215,002
PLANT AND EQUIPMENT, net                                      268,739         16,538         47,806              -        333,083
INTANGIBLE ASSETS, net                                        185,727          2,482         17,661              -        205,870
INVESTMENT IN SUBSIDIARIES                                     49,611              -              -        (49,611)             -
OTHER ASSETS                                                   28,593              -          2,486              -         31,079
                                                            ---------      ---------      ---------      ---------      ---------
TOTAL ASSETS                                                $ 706,526      $  31,022      $  97,097      $ (49,611)     $ 785,034
                                                            =========      =========      =========      =========      =========

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
   Current portion of long-term debt                        $   8,312      $       -      $   1,050      $       -      $   9,362
   Trade accounts payable                                      87,970          5,730         15,318              -        109,018
   Accrued liabilities                                         32,068          1,201          5,743              -         39,012
   Due to (from) affiliates                                   (10,000)        13,442         (3,442)             -              -
                                                            ---------      ---------      ---------                     ---------
       Total current liabilities                              118,350         20,373         18,669              -        157,392
LONG-TERM DEBT, net of current portion                        642,976              -         35,055              -        678,031
OTHER LIABILITIES                                              24,200              -          1,557              -         25,757
DEFERRED INCOME TAXES                                          30,206            497          2,357              -         33,060
                                                            ---------      ---------      ---------                     ---------
       Total liabilities                                      815,732         20,870         57,638              -        894,240
                                                            ---------      ---------      ---------                     ---------


REDEEMABLE COMMON STOCK                                        96,805              -              -              -         96,805
                                                            ---------      ---------      ---------      ---------      ---------

STOCKHOLDERS' EQUITY (DEFICIT)
   Common stock                                                87,989         14,020         29,241        (43,261)        87,989
   Warrants to purchase common stock                           26,500              -              -              -         26,500
   Retained earnings (accumulated deficit)                   (312,414)        (3,857)        15,966        (12,109)      (312,414)
   Shareholder note receivable                                   (825)             -              -              -           (825)
   Accumulated other comprehensive income (loss)               (7,261)           (11)        (5,748)         5,759         (7,261)
                                                            ---------      ---------      ---------      ---------      ---------
       Total stockholders' equity (deficit)                  (206,011)        10,152         39,459        (49,611)      (206,011)
                                                            ---------      ---------      ---------      ---------      ---------
TOTAL LIABILITIES AND
      STOCKHOLDERS' EQUITY (DEFICIT)                        $ 706,526      $  31,022      $  97,097      $ (49,611)     $ 785,034
                                                            =========      =========      =========      =========      =========
</TABLE>



                                       14
<PAGE>   15


PLIANT CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING INCOME STATEMENT
FOR THE THREE MONTHS ENDED MARCH 31, 2001 (IN THOUSANDS) (UNAUDITED)
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>
                                             Pliant        Combined       Combined                       Consolidated
                                           Corporation     Guarantor    Non-Guarantor                        Pliant
                                          (Parent Only)   Subsidiaries   Subsidiaries    Eliminations     Corporation
                                          -------------   ------------   ------------    ------------     -----------
<S>                                       <C>             <C>            <C>             <C>             <C>
SALES , Net                                 $ 170,938       $   9,559      $  27,974       $  (5,812)      $ 202,659
COST OF SALES                                 137,226           7,888         21,394          (5,812)        160,696
                                            ---------       ---------      ---------       ---------       ---------

GROSS PROFIT                                   33,712           1,671          6,580               -          41,963
OPERATING EXPENSES                             26,859              90          2,582               -          29,531
                                            ---------       ---------      ---------       ---------       ---------

OPERATING INCOME                                6,853           1,581          3,998               -          12,432
INTEREST EXPENSE                              (19,470)              -           (890)              -         (20,360)
EQUITY IN EARNINGS OF SUBSIDIARIES              3,873               -              -          (3,873)              -
OTHER INCOME  (EXPENSE), Net                      418             165            312               -             895
                                            ---------       ---------      ---------       ---------       ---------

INCOME (LOSS) BEFORE INCOME TAXES              (8,326)          1,746          3,420          (3,873)         (7,033)
INCOME TAX PROVISION (BENEFIT)                 (3,602)              -          1,293               -          (2,309)
                                            ---------       ---------      ---------       ---------       ---------

NET INCOME (LOSS)                           $  (4,724)      $   1,746      $   2,127       $  (3,873)      $  (4,724)
                                            =========       =========      =========       =========       =========
</TABLE>



                                       15
<PAGE>   16


PLIANT CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING INCOME STATEMENT
FOR THE THREE MONTHS ENDED MARCH 31, 2000 (IN THOUSANDS) (UNAUDITED)
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>
                                             Pliant        Combined        Combined                        Consolidated
                                           Corporation     Guarantor     Non-Guarantor                        Pliant
                                          (Parent Only)   Subsidiaries    Subsidiaries    Eliminations     Corporation
                                          -------------   ------------    ------------    ------------     -----------
<S>                                        <C>            <C>             <C>             <C>             <C>

SALES, Net                                  $ 186,259       $  11,793       $  27,215       $  (4,761)      $ 220,506
COST OF SALES                                 150,213          10,999          21,042          (4,761)        177,493
                                            ---------       ---------       ---------       ---------       ---------

GROSS PROFIT                                   36,046             794           6,173               -          43,013
OPERATING EXPENSES                             25,208              91           2,886               -          28,185
                                            ---------       ---------       ---------       ---------       ---------

OPERATING INCOME                               10,838             703           3,287               -          14,828
INTEREST EXPENSE                              (10,582)              2            (978)              -         (11,558)
EQUITY IN EARNINGS OF SUBSIDIARIES              1,914               -               -          (1,914)              -
OTHER INCOME (EXPENSE), Net                        55             (12)            387               -             430
                                            ---------       ---------       ---------       ---------       ---------

INCOME BEFORE INCOME TAXES                      2,225             693           2,696          (1,914)          3,700
INCOME TAX EXPENSE                                824             380           1,095               -           2,299
                                            ---------       ---------       ---------       ---------       ---------

NET INCOME                                  $   1,401       $     313       $   1,601       $  (1,914)      $   1,401
                                            =========       =========       =========       =========       =========
</TABLE>



                                       16
<PAGE>   17


PLIANT CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2001 (IN THOUSANDS) (UNAUDITED)
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>
                                                               Pliant        Combined       Combined                   Consolidated
                                                             Corporation    Guarantor     Non-Guarantor                   Pliant
                                                            (Parent Only)  Subsidiaries   Subsidiaries   Eliminations  Corporation
                                                            -------------  ------------   ------------   ------------  -----------
<S>                                                         <C>            <C>            <C>            <S>           <C>

CASH FLOWS PROVIDED BY (USED IN)
     OPERATING ACTIVITIES                                     $ 21,192       $ (4,574)      $ (1,955)             -      $ 14,663
                                                              --------       --------       --------       --------      --------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Proceeds from sale of assets                                  2,966          4,948              -              -         7,914
   Capital expenditures for plant and equipment                (12,378)        (1,802)        (1,130)             -       (15,310)
                                                              --------       --------       --------       --------      --------
      Net cash provided by investing activities                 (9,412)         3,146         (1,130)             -        (7,396)
                                                              --------       --------       --------       --------      --------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Net proceeds from issuance of common stock and net
      change in related stockholders' notes receivables            (99)                                                       (99)
   Principal payments on long-term debt                        (10,146)             -         (1,105)             -       (11,251)
                                                              --------       --------       --------       --------      --------
      Net cash used in financing
      activities                                               (10,245)             -         (1,105)             -       (11,350)
                                                              --------       --------       --------       --------      --------


EFFECT OF EXCHANGE RATE CHANGES
     ON CASH AND CASH EQUIVALENTS                               (1,994)         1,457          3,889              -         3,352
                                                              --------       --------       --------       --------      --------

NET INCREASE (DECREASE) IN CASH
    AND CASH EQUIVALENTS                                          (459)            29           (301)             -          (731)


CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD               459             10          2,591              -         3,060
                                                              --------       --------       --------       --------      --------

CASH AND CASH EQUIVALENTS AT
    END OF THE PERIOD                                         $      -       $     39       $  2,290       $      -      $  2,329
                                                              ========       ========       ========       ========      ========


</TABLE>



                                       17
<PAGE>   18


PLIANT CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 (IN THOUSANDS) (UNAUDITED)
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>
                                                                  Pliant       Combined      Combined                  Consolidated
                                                               Corporation    Guarantor    Non-Guarantor                 Pliant
                                                               Parent Only   Subsidiaries  Subsidiaries   Eliminations  Corporation
                                                               -----------   ------------  ------------   ------------  -----------
<S>                                                            <C>           <C>           <C>            <C>           <C>

CASH FLOWS PROVIDED BY OPERATING ACTIVITIES                      $ 13,489      $    592      $  3,827      $    -        $ 17,908
                                                                 --------      --------      --------      ------        --------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Capital expenditures for plant and equipment                    (9,262)         (199)         (632)          -         (10,093)
                                                                 --------      --------      --------      ------        --------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Net change in stockholder notes receivable                         (46)            -             -           -             (46)
   Principal payments on long-term debt                            (2,969)            -          (843)          -          (3,812)
                                                                 --------      --------      --------      ------        --------
      Net cash used in financing activities                        (3,015)            -          (843)          -          (3,858)
                                                                 --------      --------      --------      ------        --------


EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS         (713)          661          (774)          -            (826)
                                                                 --------      --------      --------      ------        --------

NET INCREASE  IN CASH AND CASH EQUIVALENTS                            499         1,054         1,578           -           3,131


CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD                1,231           517         7,349           -           9,097
                                                                 --------      --------      --------      ------        --------

CASH AND CASH EQUIVALENTS AT END OF THE PERIOD                   $  1,730      $  1,571      $  8,927      $    -        $ 12,228
                                                                 ========      ========      ========      ======        ========
</TABLE>



                                       18
<PAGE>   19


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

The purpose of this section is to discuss and analyze our consolidated financial
condition, liquidity and capital resources and results of operations. This
analysis should be read in conjunction with Management's Discussion and Analysis
of Financial Condition and Results of Operations contained in our Annual Report
on Form 10-K for the year ended December 31, 2000 (the "2000 10-K"). This
section contains certain forward-looking statements within the meanings of
federal securities laws that involve risks and uncertainties, including
statements regarding our plans, objectives, goals, strategies and financial
performance. Our actual results could differ materially from the results
anticipated in these forward-looking statements as a result of factors set forth
under "Cautionary Statement for Forward-Looking Information" below and elsewhere
in this report.

GENERAL

We generate our revenues, earnings and cash flows from the sale of film and
flexible packaging products throughout the world. We manufacture these products
at 23 facilities located in North America, Central America, Europe and
Australia. Our sales have grown primarily as a result of strategic acquisitions
made over the past several years, increased levels of production at acquired
facilities, return on capital expenditures and the overall growth in the markets
for film and flexible packaging products.

On May 31, 2000, we consummated a recapitalization pursuant to an agreement
dated March 31, 2000 (the "Recapitalization Agreement") among us, our then
existing stockholders and an affiliate of J.P. Morgan Partners, LLC, whereby an
affiliate of J.P. Morgan Partners, LLC acquired majority control of our common
stock. Pursuant to the Recapitalization Agreement, we redeemed all of the shares
of our common stock held by Jon M. Huntsman, our founder, then majority
stockholder and then Chairman of the Board (the "Equity Redemption") for
approximately $314.0 million. An affiliate of J.P. Morgan Partners, LLC
purchased approximately one-half of the shares of our common stock held
collectively by The Christena Karen H. Durham Trust (the "Trust") and by members
of our current and former senior management (the "Management Investors") for
approximately $101.8 million. An affiliate of J.P. Morgan Partners, LLC and
certain other institutional investors also purchased (the "Investor Common
Equity Contribution") shares of common stock directly from us for approximately
$63.5 million ($62.6 million net of offering costs). The Trust and the
Management Investors retained or "rolled over" approximately one-half of the
shares of our common stock collectively owned by them prior to the
recapitalization. In addition, we issued to another affiliate of J.P. Morgan
Partners, LLC and to certain other institutional investors a new series of
senior cumulative exchangeable redeemable preferred stock (the "Preferred
Stock") and detachable warrants for our common stock (the "Preferred Stock
Warrants") for net consideration of approximately $98.5 million. The foregoing
transactions are collectively referred to as the "Recapitalization." The total
consideration paid in the Recapitalization was approximately $1.1 billion,
including transaction costs.

On May 14, 2001, approximately 55.4% of our total common stock was owned by an
affiliate of J.P. Morgan Partners, LLC, approximately 4.3% of our total common
stock was owned by certain other institutional investors and approximately 40.3%
of our total common stock was owned collectively by the Trust and the Management
Investors. J.P. Morgan Partners, LLC owns our common stock through its Flexible
Film, LLC subsidiary and owns our preferred stock through its Southwest
Industrial Films, LLC subsidiary.


                                       19
<PAGE>   20


The Recapitalization constituted a "change of control" under the provisions of
our long-term incentive plans ("LTIP"). Upon a change of control, all
participants in the LTIP fully vest and all amounts due to the participants are
payable within 90 days. As a result, we accrued $5.0 million of compensation
expense in the three months ended March 31, 2000 relating to the vesting under
the LTIP. In addition, we incurred $0.2 million of fees and expenses in
connection with the Recapitalization in the three months ended March 31, 2000.
Both the LTIP compensation expense and these fees and expenses are included in
"compensation and transaction costs related to recapitalization" in the
accompanying condensed consolidated statement of operations for the three months
ended March 31, 2000.


RESULTS OF OPERATIONS

The following table sets forth net sales, expenses, and operating income and
such amounts as a percentage of net sales, for the three months ended March 31,
2001 and 2000 (dollars in millions).

<TABLE>
<CAPTION>
                                           Three Months Ended March 31
                                           ---------------------------
                                           2001                     2000
                                    ------------------       ------------------
                                                 % of                     % of
                                      $         Sales          $          Sales
                                    ------      ------       ------      ------
<S>                                 <C>         <C>          <C>         <C>

Sales-net                           $202.7       100.0%      $220.5       100.0%
Cost of sales                        160.7        79.3        177.5        80.5
                                    ------      ------       ------      ------
Gross profit                          42.0        20.7         43.0        19.5
Total operating expenses              29.5        14.6         28.2        12.8
                                    ------      ------       ------      ------
Operating income                    $ 12.5         6.1%      $ 14.8         6.7%
                                    ======      ======       ======      ======
</TABLE>

THREE MONTHS ENDED MARCH 31, 2001 COMPARED TO THREE MONTHS ENDED MARCH 31, 2000

Net Sales

Net sales decreased by $17.8 million, or 8.1%, from $220.5 million for the first
quarter of 2000, to $202.7 million for the three months ended March 31, 2001.
The decrease was primarily due to a 3.5% decrease in sales volume and a 4.6%
decrease in our average selling price. In the markets we serve, the average
selling price of our products generally increases or decreases as the price of
resins, our primary raw material, increases or decreases. Average resin prices
were significantly lower during the first quarter of 2001 compared to the first
quarter of 2000 resulting in a significant decrease in our average selling
prices.

Gross Profit

Gross profit decreased by $1.0 million, or 2.3%, from $43.0 million for the
first quarter of 2000, to $42.0 million for the three months ended March 31,
2001. The decrease was primarily due to a decrease in sales volumes and prices
which were offset partially by decreasing resin costs and lower manufacturing
costs.

Total Operating Expenses

Total operating expenses increased by $1.3 million, or 4.6%, from $28.2 million
for the first quarter of 2000 to $29.5 million for the three months ended March
31, 2001. The significant items contributing to most of this increase relate to
two unusual items: $7.0 million of non-cash stock-based compensation expense
related to administrative employees for the three month period ended March 31,
2001, and $5.2 million of



                                       20
<PAGE>   21


compensation expense and transaction costs related to the Recapitalization for
the three month period ended March 31, 2000.

Operating Income

Operating income decreased by $2.3 million, or 15.5%, from $14.8 million for the
first quarter of 2000 to $12.5 million for the three months ended March 31,
2001, due to the factors discussed above. Excluding the unusual items described
above from both periods, operating income would have been $19.5 million for the
first quarter of 2001 and $20.0 million in the first quarter of 2000 which
represents a decrease of $0.5 million or 2.5%.

Interest Expense

Interest expense increased by $8.8 million, or 75%, from $11.6 million for the
first quarter of 2000, to $20.4 million for the three months ended March 31,
2001. As a result of the financing for the May 31, 2000 Recapitalization,
interest expense increased significantly compared to the prior year.

Other Income (Expense)

Other income (expense) changed from income of $0.4 million for the three months
ended March 31, 2000, to income of $0.9 million for the three months ended March
31, 2001, an increase in income of $0.5 million. The increase was primarily due
to an insurance claim and other less significant items.


LIQUIDITY AND CAPITAL RESOURCES

Upon closing of the Recapitalization, we issued 220,000 Units (the "Units")
consisting of $220.0 million principal amount of 13% Senior Subordinated Notes
due 2010 (the "Notes") and Warrants (the "Note Warrants") to purchase 18,532
shares of common stock. The Notes were issued at a discount of approximately
$5.9 million and mature on June 1, 2010. The Units were issued in a private
placement transaction exempt from the registration requirements under the
Securities Act of 1933. On August 29, 2000, our registration statement relating
to the exchange of the private Notes for Notes registered under the Securities
Act of 1933 was declared effective by the Securities and Exchange Commission,
and, as a result, the Notes and the Note Warrants became separated. We
consummated the exchange offer and issued $220.0 million of registered Notes for
all of the private Notes on October 12, 2000. Interest on the Notes is payable
semi-annually on each June 1 and December 1, commencing on December 1, 2000. The
Notes are unsecured. The Notes are subordinated to all of our existing and
future senior debt, rank equally with any future senior subordinated debt and
rank senior to any future subordinated debt. The Notes are guaranteed by some of
our subsidiaries. The Note Warrants became exercisable on August 29, 2000, and
mature on June 1, 2010.

Upon closing of the offering of the Units and the Recapitalization, we purchased
all of our outstanding $125.0 million principal amount of 9 1/8% Senior
Subordinated Notes due 2007, refinanced all amounts outstanding under our prior
credit facility (the "Prior Credit Facility") and replaced the Prior Credit
Facility with amended and restated senior secured credit facilities (the "New
Credit Facilities") with The Chase Manhattan Bank, Bankers Trust Company, The
Bank of Nova Scotia and a syndicate of banking institutions. The New Credit
Facilities consist of a $200.0 million senior secured tranche A facility, $40.0
million of which was made available to our principal Mexican subsidiary (the
"Tranche A Facility"), a $280.0 million senior secured tranche B facility (the
"Tranche B Facility") and a $100.0 million revolving credit facility (the
"Revolving Credit Facility").



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Effective September 30, 2000, we entered into an amendment of our New Credit
Facilities. The amendment modified certain financial covenants contained in the
New Credit Facilities, including the leverage and interest coverage ratios and
the permitted amount of capital expenditures. We were in compliance with the
amended covenants of our New Credit Facilities as of March 31, 2001.

Loans under the Revolving Credit Facility and the Tranche A Facility bear
interest, at our option, at either Adjusted LIBOR plus 3.25% or ABR (as defined
below) plus 2.25%, in each case subject to certain adjustments. Loans under the
Tranche B Facility bear interest, at our option, at either Adjusted LIBOR plus
3.75% or ABR plus 2.75%. We may elect interest periods of one, two, three or six
months for Adjusted LIBOR borrowings. Interest is calculated on the basis of
actual days elapsed in a year of 360 days (or 365 or 366 days, as the case may
be, in the case of ABR loans based on the Prime Rate) and interest is payable at
the end of each interest period and, in any event, at least every three months.
ABR is the Alternate Base Rate, which is the higher of Bankers Trust Company's
Prime Rate or the Federal Funds Effective Rate plus 1/2 of 1%. Adjusted LIBOR
will at all times include statutory reserves.

Our obligations under the New Credit Facilities are guaranteed by substantially
all of our domestic subsidiaries and secured by substantially all of our
domestic assets. The New Credit Facilities are also secured by a pledge of 65%
of the capital stock of each of our foreign subsidiaries.

The New Credit Facilities and the indenture relating to the Notes impose certain
restrictions on us, including restrictions on our ability to incur indebtedness,
pay dividends, make investments, grant liens, sell our assets and engage in
certain other activities. In addition, the New Credit Facilities require us to
maintain certain financial ratios. Indebtedness under the New Credit Facilities
is secured by substantially all of our assets, including our real and personal
property, inventory, accounts receivable, intellectual property, and other
intangibles.

Net Cash Provided by Operating Activities

Net cash provided by operating activities was $14.7 million for the three months
ended March 31, 2001, a decrease of $3.2 million, or 18%, from the same period
in 2000. The decrease resulted primarily from decreases in net income and a
decrease in the change in accounts payable. The decrease was offset partially by
a smaller increase in inventory and accounts receivable compared to the prior
year, and an increase in the change of non-cash income statement items.

Net Cash Used in Investing Activities

Net cash used in investing activities was $7.4 million for the three months
ended March 31, 2001, compared to $10.1 million for the same period in 2000.
Capital expenditures were $15.3 million and $10.1 million for the periods ended
March 31, 2001 and 2000 respectively. Capital expenditures in both periods were
primarily for major expansion projects in all of our product lines, for
upgrading our information systems, and for several new and carryover maintenance
projects throughout our company. We expect capital expenditures to decline over
the next few quarters. In 2001, we received $7.9 million as part of a
sale-leaseback transaction of newly-acquired machinery and equipment.

Net Cash Provided by Financing Activities

Net cash used in financing activities was $11.4 million for the three months
ended March 31, 2001, compared to $3.9 million for the same period in 2000. The
activity for both periods primarily represented principal payments on the New
and Prior Credit Facilities. In 2001, we prepaid $8.0 million of principal on
our term loans under the New Credit Facilities.



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Liquidity

As of March 31, 2001, we had approximately $55.9 million of working capital and
approximately $95.5 million available under our $100.0 million Revolving Credit
Facility. We had $4.5 million of letters of credit issued, which reduces the
amount available for borrowings under our Revolving Credit Facility. As of March
31, 2001, the debt under the New Credit Facilities bore interest at a weighted
average rate of 10.04%.

As of March 31, 2001, we had $2.3 million in cash and cash equivalents, of which
the majority was held by our foreign subsidiaries. The effective tax rate of
repatriating this money all future foreign earnings to the United States varies
from approximately 40% to 65%, depending on various U.S. and foreign tax
factors, including each foreign subsidiary's country of incorporation. High
effective repatriation tax rates may limit our ability to access cash and cash
equivalents generated by our foreign operations for use in our United States
operations, including to pay principal, premium, if any, and interest on the
Notes and the New Credit Facilities. For the three months ended March 31, 2001,
our foreign operations generated net income from continuing operations of
approximately $2.1 million.

Interest expense and scheduled principal payments on our borrowings under the
New Credit Facilities and the Notes have significantly increased our future
liquidity requirements. We expect that cash flows from operating activities and
available borrowings under the New Credit Facilities will provide sufficient
working capital to operate our business, to make expected capital expenditures
and to meet foreseeable liquidity requirements. If we were to engage in a
significant acquisition transaction, however, it may be necessary for us to
restructure our existing credit arrangements.

CAUTIONARY STATEMENT FOR FORWARD-LOOKING INFORMATION

Certain information set forth in this report contains "forward-looking
statements" within the meaning of federal securities laws. Forward-looking
statements include statements concerning our plans, objectives, goals,
strategies, future events, future revenues or performance, capital expenditures,
financing needs, plans or intentions relating to acquisitions, business trends,
and other information that is not historical information. When used in this
report, the words "estimates," "expects," "anticipates," "forecasts," "plans,"
"intends," "believes" and variations of such words or similar expressions are
intended to identify forward-looking statements. We may also make additional
forward-looking statements from time to time. All such subsequent
forward-looking statements, whether written or oral, by us or on our behalf, are
also expressly qualified by these cautionary statements.

All forward-looking statements, including, without limitation, management's
examination of historical operating trends, are based upon our current
expectations and various assumptions. Our expectations, beliefs and projections
are expressed in good faith and we believe there is a reasonable basis for them.
But, there can be no assurance that management's expectations, beliefs and
projections will result or be achieved. All forward-looking statements apply
only as of the date made. We undertake no obligation to publicly update or
revise forward-looking statements which may be made to reflect events or
circumstances after the date made or to reflect the occurrence of unanticipated
events.

There are a number of risks and uncertainties that could cause our actual
results to differ materially from the forward-looking statements contained in or
contemplated by this report. The following risks and uncertainties, together
with those discussed in our Post-Effective Amendment No. 1 to the Registration
Statement on Form S-4 (file no. 333-42008), as amended, which was filed with the
Securities and Exchange Commission on May 4, 2001, are among the factors that
could cause our actual results to differ materially from the forward-looking
statements. There may be other factors, including those discussed elsewhere in
this report, that may cause our actual results to differ materially from the
forward-looking statements. Any forward-looking statements should be considered
in light of these factors.



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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to various interest rate and resin price risks that arise in the
normal course of business. We finance our operations with borrowings comprised
primarily of variable rate indebtedness. We enter into interest rate collar and
swap agreements to manage interest rate market risks and commodity collar
agreements to manage resin market risks. Our raw material costs are comprised
primarily of resins. Significant increases in interest rates or the price of
resins could adversely affect our operating margins, results of operations and
ability to service our indebtedness. An increase of 1% in interest rates payable
on our variable rate indebtedness would increase our annual interest expense by
approximately $4.1 million.

During the three months ended March 31, 2001, we entered into certain interest
rate collars, caps and swaps. We adopted SFAS No. 133 to account for these
instruments as of January 1, 2001. Under the conditions of our credit
facilities, we are required to obtain interest rate protection on 50% of our
entire debt. See Note 7 to the condensed consolidated financial statement
contained elsewhere in this report.



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                           PART II. OTHER INFORMATION


ITEM 5. OTHER INFORMATION

On April 20, 2001, we were informed by a potential new customer that they would
not be going forward with their project with us. We are currently in
negotiations with this customer to resolve the amounts due to us as a result of
their cancellation of their contract with us. We can not currently predict the
outcome of these negotiations, or the effect on our financial position and
results.


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K


        (a)     No exhibits are filed with this report.

        (b)     No report on Form 8-K was filed during the quarter for which
                this report is filed.

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                                   SIGNATURES


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

                                    PLIANT CORPORATION


                                    /s/BRIAN E. JOHNSON
                                    --------------------------------------------
                                    BRIAN E. JOHNSON
                                    Executive Vice President and
                                    Chief Financial Officer
                                    (Authorized Signatory and
                                    Principal Financial and Accounting Officer)



Date:   May 14, 2001



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