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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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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 September 30, 2003



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



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PLIANT CORPORATION

(Exact name of registrant as specified in its charter)



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



1475 Woodfield Road,
Suite 700

Schaumburg, IL 60173

(847) 969-3300

(Address of principal executive offices and telephone number)



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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 ̈



Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule
12b-2).  Yes ̈No  x



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 November 12, 2003, there were 571,711 outstanding shares of the registrants Common Stock.



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##### Table of Contents

PLIANT CORPORATION AND SUBSIDIARIES



TABLE OF CONTENTS



|                                                                                                                |  | PAGE
|--------------------------------------------------------------------------------------------------------------- |  | ----
|PART I. FINANCIAL INFORMATION                                                                                   |  |     
|                                                                                                                | 
|ITEM 1. FINANCIAL STATEMENTS                                                                                    |  |     
|                                                                                                                | 
|CONDENSED CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 2003 ANDDECEMBER 31, 2002                             |  | 3   
|                                                                                                                | 
|CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002 |  | 4   
|                                                                                                                | 
|CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002           |  | 5   
|                                                                                                                | 
|CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS DEFICIT FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003          |  | 6   
|                                                                                                                | 
|NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS                                                            |  | 7   
|                                                                                                                | 
|ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS                   |  | 20  
|                                                                                                                | 
|ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                              |  | 33  
|                                                                                                                | 
|ITEM 4. CONTROLS AND PROCEDURES                                                                                 |  | 33  
|                                                                                                                | 
|PART II. OTHER INFORMATION                                                                                      |  |     
|                                                                                                                | 
|ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K                                                                        |  | 36  





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##### Table of Contents

PART I. FINANCIAL INFORMATION



ITEM 1. FINANCIAL STATEMENTS



PLIANT
CORPORATION AND SUBSIDIARIES



CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF SEPTEMBER 30, 2003 AND DECEMBER 31, 2002 (DOLLARS IN
THOUSANDS)

---



|                                                                                                                                                                                                                                                                                     |  | (Unaudited) September 30,2003 |          |   | (Audited) December 31,2002 |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----------------------------- | -------- | - | -------------------------- | -
|ASSETS                                                                                                                                                                                                                                                                               |  |                               |          |   |                            |  
|                                                                                                                                                                                                                                                                                     |  |                              
|CURRENT ASSETS:                                                                                                                                                                                                                                                                      |  |                               |          |   |                            |  
|Cash and cash equivalents                                                                                                                                                                                                                                                            |  | $                             | 10,003   |   |                            | $
|Receivables, net of allowances of $4,375 and $5,583, respectively                                                                                                                                                                                                                    |  |                               | 129,118  |   |                            |  
|Inventories                                                                                                                                                                                                                                                                          |  |                               | 101,939  |   |                            |  
|Prepaid expenses and other                                                                                                                                                                                                                                                           |  |                               | 4,946    |   |                            |  
|Income taxes receivable                                                                                                                                                                                                                                                              |  |                               | 77       |   |                            |  
|Deferred income taxes                                                                                                                                                                                                                                                                |  |                               | 11,726   |   |                            |  
|                                                                                                                                                                                                                                                                                     |  |                               |          |   |                            |  
|Total current assets                                                                                                                                                                                                                                                                 |  |                               | 257,809  |   |                            |  
|                                                                                                                                                                                                                                                                                     |  |                              
|PLANT AND EQUIPMENT, net                                                                                                                                                                                                                                                             |  |                               | 330,016  |   |                            |  
|GOODWILL                                                                                                                                                                                                                                                                             |  |                               | 203,997  |   |                            |  
|INTANGIBLE ASSETS, net                                                                                                                                                                                                                                                               |  |                               | 24,705   |   |                            |  
|OTHER ASSETS                                                                                                                                                                                                                                                                         |  |                               | 40,454   |   |                            |  
|                                                                                                                                                                                                                                                                                     |  |                               |          |   |                            |  
|TOTAL ASSETS                                                                                                                                                                                                                                                                         |  | $                             | 856,981  |   |                            | $
|                                                                                                                                                                                                                                                                                     |  |                               |          |   |                            |  
|                                                                                                                                                                                                                                                                                     |  |                              
|LIABILITIES AND STOCKHOLDERS DEFICIT                                                                                                                                                                                                                                                |  |                               |          |   |                            |  
|                                                                                                                                                                                                                                                                                     |  |                              
|CURRENT LIABILITIES:                                                                                                                                                                                                                                                                 |  |                               |          |   |                            |  
|Trade accounts payable                                                                                                                                                                                                                                                               |  | $                             | 96,404   |   |                            | $
|Accrued liabilities                                                                                                                                                                                                                                                                  |  |                               | 61,565   |   |                            |  
|Current portion of long-term debt                                                                                                                                                                                                                                                    |  |                               | 4,542    |   |                            |  
|                                                                                                                                                                                                                                                                                     |  |                               |          |   |                            |  
|Total current liabilities                                                                                                                                                                                                                                                            |  |                               | 162,511  |   |                            |  
|LONG-TERM DEBT, net of current portion                                                                                                                                                                                                                                               |  |                               | 779,589  |   |                            |  
|OTHER LIABILITIES                                                                                                                                                                                                                                                                    |  |                               | 26,378   |   |                            |  
|DEFERRED INCOME TAXES                                                                                                                                                                                                                                                                |  |                               | 26,313   |   |                            |  
|                                                                                                                                                                                                                                                                                     |  |                               |          |   |                            |  
|Total liabilities                                                                                                                                                                                                                                                                    |  |                               | 994,791  |   |                            |  
|                                                                                                                                                                                                                                                                                     |  |                               |          |   |                            |  
|MINORITY INTEREST                                                                                                                                                                                                                                                                    |  |                               | 375      |   |                            |  
|REDEEMABLE PREFERRED STOCK200,000 shares authorized, designated as Series A, no par value, with a redemption and liquidation
value of $1,000 per share; 140,973 shares outstanding atSeptember 30, 2003 and 130,973 shares outstanding at December 31, 2002                         |  |                               | 180,769  |   |                            |  
|REDEEMABLE COMMON STOCKno par value; 60,000 shares authorized; 29,073 shares outstanding as of September 30, 2003 and 34,240
shares outstanding at December 31, 2002, net of related stockholders notes receivable of $4,258 at September 30, 2003 and $6,754 at December 31, 2002 |  |                               | 13,008   |   |                            |  
|                                                                                                                                                                                                                                                                                     |  |                               | 193,777  |   |                            |  
|                                                                                                                                                                                                                                                                                     |  |                               |          |   |                            |  
|STOCKHOLDERS DEFICIT:                                                                                                                                                                                                                                                               |  |                               |          |   |                            |  
|Common stockno par value; 10,000,000 shares authorized, 542,638 shares outstanding at September 30, 2003 and December 31,
2002                                                                                                                                                      |  |                               | 103,376  |   |                            |  
|Warrants to purchase common stock                                                                                                                                                                                                                                                    |  |                               | 39,133   |   |                            |  
|Accumulated deficit                                                                                                                                                                                                                                                                  |  |                               | (461,642 | ) |                            |  
|Stockholders notes receivable                                                                                                                                                                                                                                                       |  |                               | (660     | ) |                            |  
|Accumulated other comprehensive loss                                                                                                                                                                                                                                                 |  |                               | (12,169  | ) |                            |  
|                                                                                                                                                                                                                                                                                     |  |                               |          |   |                            |  
|Total stockholders deficit                                                                                                                                                                                                                                                          |  |                               | (331,962 | ) |                            |  
|                                                                                                                                                                                                                                                                                     |  |                               |          |   |                            |  
|TOTAL LIABILITIES AND STOCKHOLDERS DEFICIT                                                                                                                                                                                                                                          |  | $                             | 856,981  |   |                            | $
|                                                                                                                                                                                                                                                                                     |  |                               |          |   |                            |  



See
notes to condensed consolidated financial statements.



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PLIANT CORPORATION AND SUBSIDIARIES



CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND NINE MONTHS ENDED
SEPTEMBER 30, 2003 AND 2002 (IN THOUSANDS) (UNAUDITED)

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|                                   |  | Three Months Ended September 30, |         |   | Nine Months Ended September 30, |  
|---------------------------------- |  | -------------------------------- | ------- | - | ------------------------------- | -
|                                   |  | 2003                             |         |   | 2002                            |  
|NET SALES                          |  | $                                | 238,718 |   |                                 | $
|COST OF SALES                      |  |                                  | 204,331 |   |                                 |  
|                                   |  |                                  |         |   |                                 |  
|Gross profit                       |  |                                  | 34,387  |   |                                 |  
|                                   |  |                                  |         |   |                                 |  
|OPERATING EXPENSES:                |  |                                  |         |   |                                 |  
|Sales, general, and administrative |  |                                  | 24,035  |   |                                 |  
|Research and development           |  |                                  | 1,681   |   |                                 |  
|Restructuring and other costs      |  |                                  | 3,323   |   |                                 |  
|                                   |  |                                  |         |   |                                 |  
|Total operating expenses           |  |                                  | 29,039  |   |                                 |  
|                                   |  |                                  |         |   |                                 |  
|OPERATING INCOME                   |  |                                  | 5,348   |   |                                 |  
|INTEREST EXPENSE                   |  |                                  | (23,512 | ) |                                 |  
|OTHER INCOMENet                   |  |                                  | (300    | ) |                                 |  
|                                   |  |                                  |         |   |                                 |  
|INCOME (LOSS) BEFORE INCOME TAXES  |  |                                  | (18,464 | ) |                                 |  
|INCOME TAX EXPENSE (BENEFIT)       |  |                                  | 1,637   |   |                                 |  
|                                   |  |                                  |         |   |                                 |  
|NET LOSS                           |  | $                                | (20,101 | ) |                                 | $
|                                   |  |                                  |         |   |                                 |  



See
notes to condensed consolidated financial statements.



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PLIANT CORPORATION AND SUBSIDIARIES



CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30,
2003 AND 2002 (IN THOUSANDS) (UNAUDITED)

---



|                                                                                                   |  | 2003 |          |   | 2002 |  
|-------------------------------------------------------------------------------------------------- |  | ---- | -------- | - | ---- | -
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                              |  |      |          |   |      |  
|Net income (loss)                                                                                  |  | $    | (46,345  | ) |      | $
|Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: |  |      |          |   |      |  
|Depreciation and amortization                                                                      |  |      | 36,404   |   |      |  
|Amortization/write-off of deferred financing costs                                                 |  |      | 8,658    |   |      |  
|Deferred income taxes                                                                              |  |      | (1,067   | ) |      |  
|Provision for losses on accounts receivable                                                        |  |      | 416      |   |      |  
|Non-cash plant closing costs                                                                       |  |      | 3,260    |   |      |  
|Gain or loss on disposal of assets                                                                 |  |      | 4,749    |   |      |  
|Changes in assets and liabilities:                                                                 |  |      |          |   |      |  
|Receivables                                                                                        |  |      | (10,511  | ) |      |  
|Inventories                                                                                        |  |      | (3,917   | ) |      |  
|Prepaid expenses and other Security deposit for operating lease                                    |  |      | (797    | ) |      |  
|Income taxes payable/receivable                                                                    |  |      | 2,291    |   |      |  
|Intangible and other assets                                                                        |  |      | (282     | ) |      |  
|Trade accounts payable                                                                             |  |      | (17,584  | ) |      |  
|Accrued interest                                                                                   |  |      | 14,857   |   |      |  
|Accrued liabilities                                                                                |  |      | (13,418  | ) |      |  
|Other                                                                                              |  |      | (415     | ) |      |  
|                                                                                                   |  |      |          |   |      |  
|Net cash (used in) provided by operating activities                                                |  |      | (23,701  | ) |      |  
|                                                                                                   |  |      |          |   |      |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                              |  |      |          |   |      |  
|Capital expenditures for plant and equipment                                                       |  |      | (14,409  | ) |      |  
|Purchase of Decora net of cash                                                                     |  |      |         |   |      |  
|Proceeds from sale and leaseback of assets                                                         |  |      |         |   |      |  
|Proceeds from sale of land and building                                                            |  |      |         |   |      |  
|Purchase of Roll-O-Sheets                                                                          |  |      |         |   |      |  
|                                                                                                   |  |      |          |   |      |  
|Net cash used in investing activities                                                              |  |      | (14,409  | ) |      |  
|                                                                                                   |  |      |          |   |      |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                              |  |      |          |   |      |  
|Net proceeds from issuance of preferred stock and warrants                                         |  |      | 9,532    |   |      |  
|Proceeds from issuance of senior subordinated debt                                                 |  |      | 250,000  |   |      |  
|Payment of financing fees                                                                          |  |      | (10,472  | ) |      |  
|Borrowing (Repayments) under revolver                                                              |  |      | 50,250   |   |      |  
|Repayment of term debt and revolver                                                                |  |      | (252,500 | ) |      |  
|                                                                                                   |  |      |          |   |      |  
|Net cash provided by (used in) financing activities                                                |  |      | 46,810   |   |      |  
|                                                                                                   |  |      |          |   |      |  
|EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS                                       |  |      | (332     | ) |      |  
|                                                                                                   |  |      |          |   |      |  
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                               |  |      | 8,368    |   |      |  
|                                                                                                   |  |      |          |   |      |  
|CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD                                                 |  |      | 1,635    |   |      |  
|                                                                                                   |  |      |          |   |      |  
|CASH AND CASH EQUIVALENTS, END OF THE PERIOD                                                       |  | $    | 10,003   |   |      | $
|                                                                                                   |  |      |          |   |      |  
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:                                                 |  |      |          |   |      |  
|Cash paid during the period for:                                                                   |  |      |          |   |      |  
|Interest                                                                                           |  | $    | 49,362   |   |      | $
|Income taxes                                                                                       |  | $    | 5,123    |   |      | $
|Other non-cash disclosure:                                                                         |  |      |          |   |      |  
|Preferred Stock dividends accrued but not paid                                                     |  | $    | 19,635   |   |      | $

See notes to condensed consolidated financial statements.





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PLIANT CORPORATION AND SUBSIDIARIES



CONSOLIDATED STATEMENTS OF STOCKHOLDERS DEFICIT

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003
(IN THOUSANDS) (UNAUDITED)

---



|                                                                                            |  | Common Stock |  | Warrants To Purchase CommonStock |         | Accumulated Deficit |   |        | StockholdersNotes Receivable |   |          | Accumulated Other Comprehensive Income (Loss) |  |   | Total |  
|------------------------------------------------------------------------------------------- |  | ------------ |  | -------------------------------- | ------- | ------------------- | - | ------ | ----------------------------- | - | -------- | --------------------------------------------- |  | - | ----- | -
|                                                                                            |  | Shares       |  | Amount                           |         |                     |   |        |                              
|BALANCE, DECEMBER 31, 2002                                                                  |  | 543          |  | $                                | 103,376 |                     | $ | 38,676 |                               | $ | (394,420 | )                                             |  | $ | (660  | )
|Net loss                                                                                    |  |             |  |                                  |        |                     |   |       |                               |   | (46,345  | )                                             |  |   |      |  
|Fair value change in interest rate Derivatives classified as cash Flow hedges, net of taxes |  |             |  |                                  |        |                     |   |       |                               |   |         |                                               |  |   |      |  
|Preferred stock dividend and Accretion                                                      |  |             |  |                                  |        |                     |   |       |                               |   | (20,877  | )                                             |  |   |      |  
|Issuance of warrants                                                                        |  |             |  |                                  |        |                     |   | 457    |                               |   |         |                                               |  |   |      |  
|Foreign currency translation Adjustment                                                     |  |             |  |                                  |        |                     |   |       |                               |   |         |                                               |  |   |      |  
|                                                                                            |  |              |  |                                  |         |                     |   |        |                               |   |          |                                               |  |   |       |  
|BALANCE, SEPTEMBER 30, 2003                                                                 |  | 543          |  | $                                | 103,376 |                     | $ | 39,133 |                               | $ | (461,642 | )                                             |  | $ | (660  | )
|                                                                                            |  |              |  |                                  |         |                     |   |        |                               |   |          |                                               |  |   |       |  



See
notes to condensed consolidated financial statements.



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PLIANT CORPORATION AND SUBSIDIARIES



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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|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, the Company or we) as of the dates and for the periods presented. Results of operations for the period ended
September 30, 2003 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, 2002 and the Companys Registration Statements on Form S-1 (File No. 333-106432) and on Form S-4 (File No 333-107843). Certain reclassifications have been made to the condensed consolidated financial statements for the quarter and
nine months ended September 30, 2002 for comparative purposes.



|2. | INVENTORIES
|-- | -----------



Inventories are valued at the lower of cost (using the first-in, first-out method) or market value. Inventories as of September 30, 2003 and December 31,
2002 consisted of the following (in thousands):



|                |  | September 30,2003 |         | December 31,2002
|--------------- |  | ----------------- | ------- | ----------------
|Finished goods  |  | $                 | 58,974  |                 
|Raw materials   |  |                   | 33,914  |                 
|Work-in-process |  |                   | 9,051   |                 
|                |  |                   |         |                 
|Total           |  | $                 | 101,939 |                 
|                |  |                   |         |                 



|3. | RESTRUCTURING AND OTHER COSTS
|-- | -----------------------------



Restructuring and other costs include plant closing costs (including costs related to relocation of manufacturing equipment), charges for impairment of
fixed assets related to plant closures, office closing costs and other costs related to workforce reductions.



The following table summarizes restructuring and other costs for the three and nine month periods ended September 30

(in thousands):



|                               |  | Three Months Ended September 30 |     | Nine Months Ended September 30
|------------------------------ |  | ------------------------------- | --- | ------------------------------
|                               |  | 2003                            |     | 2002                          
|Plant closing costs:           |  |                                 |     |                               
|Severance                      |  | $                               | 55  |                               
|Relocation of production lines |  |                                 | 431 |                               
|Leases                         |  |                                 |    |                               
|Other plant closure costs      |  |                                 | 464 |                               
|                               |  |                                 |     |                               
|                               |  |                                 | 950 |                               
|                               |  |                                 |     |                               



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|Office closing and workforce reduction costs:     |  |   |       |  |   |       |  |   |        |  |   |       
|------------------------------------------------- |  | - | ----- |  | - | ----- |  | - | ------ |  | - | ------
|Severance                                         |  |   | 29    |  |   | 1,194 |  |   | 586    |  |   | 4,005 
|Leases                                            |  |   |      |  |   |      |  |   | 1,357  |  |   |      
|Other office closure costs                        |  |   |      |  |   | 255   |  |   |       |  |   | 605   
|                                                  |  |   |       |  |   |       |  |   |        |  |   |       
|                                                  |  |   | 29    |  |   | 1,449 |  |   | 1,943  |  |   | 4,610 
|                                                  |  |   |       |  |   |       |  |   |        |  |   |       
|Total Plant/Office                                |  |   | 979   |  |   | 5,760 |  |   | 9,586  |  |   | 11,969
|                                                  |  |   |       |  |   |       |  |   |        |  |   |       
|Fixed Asset Impairments related to Plant Closures |  |   | 2,344 |  |   |      |  |   | 2,344  |  |   |      
|                                                  |  |   |       |  |   |       |  |   |        |  |   |       
|Total Restructuring and other costs               |  | $ | 3,323 |  | $ | 5,760 |  | $ | 11,930 |  | $ | 11,969
|                                                  |  |   |       |  |   |       |  |   |        |  |   |       



The following table
summarizes the roll-forward of the reserve from December 31, 2002 to September 30, 2003:



|                                                   |  |                       |  |                |       | Accruals for the Nine Months Ended September 30, 2003 |     |   |           |   |     |                          | 
|-------------------------------------------------- |  | --------------------- |  | -------------- | ----- | ----------------------------------------------------- | --- | - | --------- | - | --- | ------------------------ | 
|                                                   |  | 12/31/2002            |  |                |       |                                                       |     |   |           |   |     |                          | 
|                                                   |  | # EmployeesTerminated |  | AccrualBalance |       | AdditionalEmployees                                   |     |   | Severance |   |     | RelocatedProductionLines | 
|Plant Closing Costs:                               |  |                       |  |                |       |                                                       |     |   |           |   |     |                          | 
|Merced                                             |  | 54                    |  | $              | 1,527 |                                                       |    |   |           | $ |    |                          | 
|Shelbyville                                        |  | 12                    |  |                | 327   |                                                       | (4  | ) |           |   | (48 | )                        | 
|Toronto                                            |  | 18                    |  |                | 124   |                                                       | (14 | ) |           |   | 28  |                          | 
|Pliant Solutions                                   |  | 145                   |  |                | 1,727 |                                                       | 3   |   |           |   | 49  |                          | 
|Mexico                                             |  |                      |  |                |      |                                                       | 17  |   |           |   | 134 |                          | 
|Leases                                             |  |                      |  |                | 641   |                                                       |    |   |           |   |    |                          | 
|                                                   |  |                       |  |                |       |                                                       |     |   |           |   |     |                          | 
|                                                   |  | 229                   |  | $              | 4,346 |                                                       | 2   |   |           | $ | 163 |                          | 
|                                                   |  |                       |  |                |       |                                                       |     |   |           |   |     |                          | 
|                                                   |  |                       |  |                |       |                                                       |    
|Office Closing and Workforce Reduction Costs:      |  |                       |  |                |       |                                                       |     |   |           |   |     |                          | 
|Leases                                             |  |                      |  | $              | 430   |                                                       |    |   |           | $ |    |                          | 
|Severance                                          |  | 111                   |  |                | 3,580 |                                                       | 3   |   |           |   | 586 |                          | 
|                                                   |  |                       |  |                |       |                                                       |     |   |           |   |     |                          | 
|                                                   |  | 111                   |  | $              | 4,010 |                                                       | 3   |   |           | $ | 586 |                          | 
|                                                   |  |                       |  |                |       |                                                       |     |   |           |   |     |                          | 
|Subtotal Plant/Office                              |  | 340                   |  | $              | 8,365 |                                                       | 5   |   |           | $ | 749 |                          | 
|                                                   |  |                       |  |                |       |                                                       |     |   |           |   |     |                          | 
|                                                   |  |                       |  |                |       |                                                       |    
|Fixed Asset Impairments related to Plant Closures: |  |                       |  |                |       |                                                       |     |   |           |   |     |                          | 
|Shelbyville                                        |  |                      |  |                |      |                                                       |    |   |           |   |    |                          | 
|Brazil                                             |  |                      |  |                |      |                                                       |    |   |           |   |    |                          | 
|                                                   |  |                       |  |                |       |                                                       |     |   |           |   |     |                          | 
|                                                   |  |                      |  |                |      |                                                       |    |   |           |   |    |                          | 
|                                                   |  |                       |  |                |       |                                                       |     |   |           |   |     |                          | 
|TOTAL                                              |  | 340                   |  | $              | 8,356 |                                                       | 5   |   |           | $ | 749 |                          | 
|                                                   |  |                       |  |                |       |                                                       |     |   |           |   |     |                          | 



During the second quarter of 2003, we
reviewed our exit plans in Shelbyville and Toronto and were able to retain several employees in other capacities. We therefore reduced the amount of the severance accrual for these retained employees.



Plant Closing Costs



2003 accrualsDuring the first nine months of 2003, we
continued to incur costs related to the closure of our facilities in Merced, California and Shelbyville, Indiana; production rationalizations in Toronto, Canada; and the relocation of certain lines from our Merced plant and Fort Edward (Pliant
Solutions) plant to our other facilities. In addition, we incurred expenses for consolidating our two plants in Mexico to one plant. We also recorded charges for impairment of fixed assets in Shelbyville and Brazil related to the closure of these
plants.



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Office Closing and Workforce Reduction Costs



2003 accrualsDuring the first quarter of 2003, we
accrued the present value of future lease payments on two buildings that we do not currently occupy. In connection with the 2001 restructuring plan, we vacated and subleased these facilities in 2001. During the first quarter of 2003, the sublessees
defaulted on the subleases.



|4. | STOCK OPTION PLANS
|-- | ------------------



During the nine months ended September 30, 2003, 250 options to purchase shares of our common stock were granted and options to purchase 3,794 shares of
our common stock were cancelled in connection with employee terminations.



We apply Accounting Principles Board Opinion No. 25 and related interpretations in accounting for stock-based compensation plans as they relate to employees and directors. We did not have compensation expense related
to stock options for the three and nine month periods ended September 30, 2003 and 2002. Had the compensation cost for all the outstanding options been determined in accordance with SFAS No. 123, Accounting for Stock-Based Compensation,
our net income (loss) for the three and nine month periods ended September 30, 2003 and 2002 would have been the following pro forma amounts (in thousands):



|                                     |  | Three Months endedSeptember 30 |         |   | Nine Months ended September 30 |  
|------------------------------------ |  | ------------------------------ | ------- | - | ------------------------------ | -
|                                     |  | 2003                           |         |   | 2002                           |  
|As reported                          |  | $                              | (20,101 | ) |                                | $
|Pro forma stock compensation expense |  |                                | (178    | ) |                                |  
|                                     |  |                                |         |   |                                |  
|Pro forma                            |  | $                              | (20,279 | ) |                                | $
|                                     |  |                                |         |   |                                |  



|5. | INCOME TAXES
|-- | ------------



For the three months ended September 30, 2003, income tax expense was $1.6 million, or (8.6%) of our pretax loss of $18.5 million, as compared to an
income tax benefit of $2.0 million or 21.3% of pre-tax loss of $9.4 million for the three months ended September 30, 2002. For the nine months ended September 30, 2003, our income tax expense was $6.5 million, or (16.3%), on pretax losses of $39.8
million as compared to an income tax benefit of $0.1 million, or 0.1% on pretax loss of $7.7 million for the nine months ended September 30, 2002. The significant variance in the effective income tax rate is principally due to the increase in the
valuation allowance, which offset the United States tax benefit accrued for the 2003 net operating loss. In addition, income taxes are accrued for foreign operations since the pretax losses are principally related to the operations in the United
States. The effective rate for foreign income taxes is substantially higher than the effective rate for income taxes in the United States.



|6. | COMPREHENSIVE LOSS
|-- | ------------------



Comprehensive losses for the nine months ended September 30, 2003 and 2002 were $40.6 million and $18.2 million, respectively. Comprehensive losses for
the three months ended September 30, 2003 and 2002 were $19.0 million and $14.5 million, respectively. The components of comprehensive loss are net loss, the change in cumulative unrealized losses on derivatives recorded in accordance with Statement
of Financial Accounting Standards No. 133 and foreign currency translation.



|7. | AMENDMENT TO CREDIT FACILITIES, ISSUANCE OF PREFERRED SHARES AND ISSUANCE OF SENIOR SECURED NOTES
|-- | -------------------------------------------------------------------------------------------------



Our credit facilities require us to maintain certain key financial ratios on a quarterly basis. These key ratios include a
leverage ratio and an interest coverage ratio. Effective March 24, 2003, we entered into an amendment (the Amendment) of our credit facilities to, among other things, permit us to issue up to $50 million of our common stock, qualified
preferred stock, warrants to acquire our common stock or qualified preferred stock, or any combination of our common stock, qualified preferred stock or warrants, or other capital contributions with respect to our common stock or qualified preferred
stock. The Amendment also adjusted certain financial covenants, including the leverage and interest coverage ratios. As a condition to the effectiveness of the Amendment, we agreed to issue 10,000 shares of our Series A preferred stock and warrants
to purchase 43,962 shares of our common stock to J.P. Morgan Partners (BHCA), L.P.



9



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(J.P. Morgan Partners), and J.P. Morgan Partners agreed to purchase such shares and warrants for $10 million. We completed this sale on March 25,
2003. All of the proceeds of this sale were used to reduce our term debt. In addition, the Amendment allows us to issue an additional $40 million of equity securities between March 25, 2003 and March 31, 2005 in order to obtain cash to reduce the
revolving borrowings and/or term borrowings under our credit facilities. J.P. Morgan Partners is required to purchase up to $25 million of such additional equity securities to the extent necessary to enable us to meet our leverage ratio or the first
lien leverage ratio specified in the Amendment at the end of any calendar quarter or fiscal year ending on or before December 31, 2004. Any such additional issuance of Series A preferred stock to J.P. Morgan Partners will also include warrants to
purchase 4.3962 shares of our common stock for every $1,000 face amount of preferred stock issued. Our obligations to issue and J.P. Morgan Partners obligation to purchase such equity securities are set forth in a Securities Purchase Agreement
dated as of March 25, 2003. Generally, if we are required to issue any portion of such $25 million of equity securities under the Amendment with respect to any fiscal quarter in 2003, we must use 50% of the net proceeds from the issuance of any such
equity securities to reduce our revolving borrowings, and 50% to reduce our term borrowings. If we are required to issue any such equity securities under the Amendment with respect to any fiscal quarter in 2004, we must use 100% of the net proceeds
to reduce our term borrowings. The issuance of the remaining $15 million of equity securities is voluntary on our part, and neither J.P. Morgan Partners nor any other person is required to purchase such equity securities. We incurred an
amendment fee of $2.2 million in connection with the Amendment. We also incurred approximately $0.5 million of legal and administrative expenses in connection with negotiating the Amendment and the issuance of 10,000 shares of Series A
preferred stock and related warrants.



On May 22, 2003, we
entered into an additional amendment to our credit facilities, which permitted us to issue $250 million of senior secured notes, as described below, and, among other things:



| |  |  | required the prepayment of revolving loans with the net proceeds received from the issuance of the senior secured notes until $75.0 million (or, if less, all) of the revolving loans
were paid;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | required the prepayment of the tranche A term loans in an amount equal to 50% of the portion of such net proceeds not applied to the revolving loans and the prepayment of the
tranche B term loans in an amount equal to 50% of the portion of such net proceeds not applied to the revolving loans (subject to the right of the tranche B term lenders to reject such prepayment, to the extent tranche A term loans remain, in which
case such rejected prepayments were instead applied to the tranche A term loans); (A) with respect to the tranche A term loans, first, in direct order of maturities to reduce scheduled repayments of such loans through 2004, second, to reduce
scheduled repayments of such loans ratably for 2005, and third, with the balance of such portion, if any, to reduce the remaining scheduled repayments of such loans ratably; and (B) with respect to the tranche B term loans, to reduce the remaining
scheduled repayments of such loans ratably;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | added Uniplast Holdings Inc. and its United States subsidiaries as borrowers under our credit facilities for up to $9.4 million of loans;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------



| |  |  | adjusted the terms pursuant to which J.P. Morgan Partners is required to purchase up to $25 million of additional equity securities to the extent necessary to enable us to meet
certain leverage ratios;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | added a new financial covenant based on the ratio of indebtedness under the credit facilities and certain qualified receivables financings to consolidated EBITDA; and
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | adjusted certain financial and negative covenants, including the leverage and interest coverage ratios.
| | - |  | -------------------------------------------------------------------------------------------------------



On May 30, 2003, we completed the sale of $250 million aggregate principal amount of 111/8% Senior Secured Notes Due 2009 (the 2003 Notes). The net proceeds from the sale of the 2003 Notes were
used to repay borrowings under our credit facilities in accordance with the amendment to our credit facilities, described above. The 2003 Notes rank equally with our existing and future senior debt and rank senior to our existing and future
subordinated indebtedness. The 2003 Notes are secured, on a second-priority lien basis, by a substantial portion of our assets. Due to this second-priority status, the 2003 Notes effectively rank junior to (1) our obligations under our credit
facilities and any other existing and future obligations secured by a first-priority lien on the collateral securing the 2003 Notes to the extent of the value of such collateral, and (2) our obligations under our credit facilities and any other
existing and future obligations that are secured by a lien on assets that are not part of the collateral securing the 2003 Notes, to the extent of the value of such assets. The 2003 Notes are guaranteed by some of our subsidiaries.



On May 30, 2003, we prepaid a total of $75.0 million
of our revolving loans and $165 million of our term loans with the proceeds from the issuance of the 2003 Notes. Proposed tranche B payments of $22.8 million were rejected by tranche



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B lenders and applied to tranche A term loans. Accordingly, a total of $105.3 million was applied to tranche A term loans and $59.7 million was applied to
tranche B term loans.



We are required to make annual mandatory
prepayments of the term loans under our credit facilities within 90 days following the end of each year in an amount equal to the amount by which 100% of excess cash flow for such year (or 50% of excess cash flow if our leverage ratio at the end of
such year is less than or equal to 4.0 to 1.0) exceeds the aggregate amount of voluntary prepayments made since the last excess cash flow payment, subject to certain adjustments. In addition, the term loan facilities are subject to mandatory
prepayments in an amount equal to (a) 100% of the net cash proceeds of equity and debt issuances by us or any of our restricted subsidiaries, and (b) 100% of the net cash proceeds of asset sales or other dispositions of property by us or any of our
restricted subsidiaries, in each case subject to certain exceptions.



Prior to June 1, 2007, we may, on one or more occasions, redeem up to a maximum of 35% of the original aggregate principal amount of the 2003 Notes with the net cash proceeds of one or more equity offerings by us at a redemption price equal
to 111.125% of the principal amount thereof, plus accrued and unpaid interest. Otherwise, we may not redeem the Notes prior to June 1, 2007. On or after that date, we may redeem some or all of the 2003 Notes at the following redemption prices
(expressed as a percentage of principal amount), plus accrued and unpaid interest: 105.563% if redeemed prior to June 1, 2008; 102.781% if redeemed prior to June 1, 2009; and 100% if redeemed on or after June 1, 2009.



8.    OPERATING SEGMENTS



Operating segments are components of our business 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 basis that it is used internally for
evaluating segment performance.



We have four operating
segments: Pliant U.S., Pliant Flexible Packaging, Pliant International and Pliant Solutions. At December 31, 2002 we had three operating segments. During the first quarter of 2003, we reorganized our old Pliant U.S. segment into two new
separate segments, Pliant U.S. and Pliant Flexible Packaging. Segment information in this report with respect to 2002 has been restated for comparative purposes.



Sales and transfers between our segments are eliminated in consolidation. We evaluate the performance of our operating
segments based on net sales (excluding intercompany sales) and segment profit. The segment profit reflects income before discontinued operations, extraordinary items, interest expense, income taxes, depreciation, amortization, restructuring costs
and other non-cash charges and net adjustments for certain unusual items. Our reportable segments are managed separately with separate management teams, because each segment has differing products, customer requirements, technology and marketing
strategies.



Segment profit and segment assets as of and for
the periods ended September 30, 2003 and 2002 are presented in the following table (in thousands). Certain reclassifications have been made to the prior year amounts to be consistent with the 2003 presentation.



|Three Months Ended September 30 |  | Pliant U.S. |         | PliantFlexiblePackaging |   | PliantInternational |  | Pliant Solutions |        |  | Corporate/ Other |        |   | Total
|------------------------------- |  | ----------- | ------- | ----------------------- | - | ------------------- |  | ---------------- | ------ |  | ---------------- | ------ | - | -----
|2003                            |  |             |         |                         |   |                     |  |                  |        |  |                  |        |   |      
|Net sales to customers          |  | $           | 143,519 |                         | $ | 57,529              |  | $                | 26,538 |  | $                | 11,132 |   |      
|Inter-segment sales             |  |             | 2,866   |                         |   | 973                 |  |                  | 1,319  |  |                  |       |   |      
|                                |  |             |         |                         |   |                     |  |                  |        |  |                  |        |   |      
|Total net sales                 |  |             | 146,385 |                         |   | 58,502              |  |                  | 27,857 |  |                  | 11,132 |   |      
|Depreciation and amortization   |  |             | 4,837   |                         |   | 2,028               |  |                  | 1,796  |  |                  | 429    |   |      
|Interest expense                |  |             | 13      |                         |   | 16                  |  |                  | 634    |  |                  | 5      |   |      
|Segment profit/ (loss)          |  |             | 22,776  |                         |   | 9,029               |  |                  | 1,004  |  |                  | (5,367 | ) |      
|Capital expenditures            |  |             | 955     |                         |   | 883                 |  |                  | 1,355  |  |                  |       |   |      
|                                |  |             |         |                         |   |                    
|2002                            |  |             |         |                         |   |                     |  |                  |        |  |                  |        |   |      
|Net sales to customers          |  | $           | 136,613 |                         | $ | 54,957              |  | $                | 25,653 |  | $                | 12,941 |   |      
|Inter-segment sales             |  |             | 5,845   |                         |   | 1,105               |  |                  | 30     |  |                  |       |   |      
|                                |  |             |         |                         |   |                     |  |                  |        |  |                  |        |   |      
|Total net sales                 |  |             | 142,458 |                         |   | 56,062              |  |                  | 25,683 |  |                  | 12,941 |   |      
|Depreciation and amortization   |  |             | 4,460   |                         |   | 2,029               |  |                  | 1,538  |  |                  | 483    |   |      
|Interest expense                |  |             | 20      |                         |   | 18                  |  |                  | 513    |  |                  | 15     |   |      
|Segment profit/ (loss)          |  |             | 19,876  |                         |   | 8,155               |  |                  | 2,188  |  |                  | 1,833  |   |      
|Capital expenditures            |  |             | 8,307   |                         |   | 1,027               |  |                  | 1,872  |  |                  | 152    |   |      



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|Nine Months Ended September 30 |  |   |         |  |   |         |  |   |         |  |   |        |   | 
|------------------------------ |  | - | ------- |  | - | ------- |  | - | ------- |  | - | ------ | - | 
|2003                           |  |   |         |  |   |         |  |   |         |  |   |        |   | 
|Net sales to customers         |  | $ | 432,059 |  | $ | 162,852 |  | $ | 82,229  |  | $ | 28,662 |   | 
|Inter-segment sales            |  |   | 9,104   |  |   | 2,974   |  |   | 8,674   |  |   |       |   | 
|                               |  |   |         |  |   |         |  |   |         |  |   |        |   | 
|Total net sales                |  |   | 441,163 |  |   | 165,826 |  |   | 90,903  |  |   | 28,662 |   | 
|Depreciation and amortization  |  |   | 15,234  |  |   | 6,015   |  |   | 5,345   |  |   | 1,149  |   | 
|Interest expense               |  |   | 8       |  |   | 48      |  |   | 1,844   |  |   | 16     |   | 
|Segment profit/ (loss)         |  |   | 71,386  |  |   | 24,444  |  |   | 7,331   |  |   | (7,012 | ) | 
|Segment total assets           |  |   | 497,562 |  |   | 153,125 |  |   | 104,333 |  |   | 31,483 |   | 
|Capital expenditures           |  |   | 4,487   |  |   | 5,025   |  |   | 3,873   |  |   |       |   | 
|                               |  |   |         |  |   |        
|2002                           |  |   |         |  |   |         |  |   |         |  |   |        |   | 
|Net sales to customers         |  | $ | 403,715 |  | $ | 153,216 |  | $ | 81,468  |  | $ | 18,894 |   | 
|Inter-segment sales            |  |   | 14,909  |  |   | 3,165   |  |   | 167     |  |   |       |   | 
|                               |  |   |         |  |   |         |  |   |         |  |   |        |   | 
|Total net sales                |  |   | 418,624 |  |   | 156,381 |  |   | 81,635  |  |   | 18,894 |   | 
|Depreciation and amortization  |  |   | 13,609  |  |   | 6,077   |  |   | 4,680   |  |   | 768    |   | 
|Interest expense               |  |   | 12      |  |   | 71      |  |   | 1,609   |  |   | 15     |   | 
|Segment profit/ (loss)         |  |   | 68,238  |  |   | 23,495  |  |   | 12,015  |  |   | 2,395  |   | 
|Segment total assets           |  |   | 517,765 |  |   | 161,052 |  |   | 106,981 |  |   | 25,530 |   | 
|Capital expenditures           |  |   | 20,567  |  |   | 6,308   |  |   | 3,732   |  |   | 251    |   | 



The business operated by our Pliant
Solutions segment was acquired in May 2002.



A reconciliation
of the totals reported for the operating segments to the totals reported in the consolidated financial statements as of and for the periods ended September 30 is as follows (in thousands):



|                                                                                                            |  | Three Months EndedSeptember 30 |         |   | Nine Months EndedSeptember 30 |  
|----------------------------------------------------------------------------------------------------------- |  | ------------------------------ | ------- | - | ----------------------------- | -
|                                                                                                            |  | 2003                           |         |   | 2002                          |  
|Profit or Loss Total segment profit                                                                         |  | $                              | 20,221  |   |                               | $
|Depreciation and amortization                                                                               |  |                                | (11,865 | ) |                               |  
|Restructuring and other costs                                                                               |  |                                | (3,323  | ) |                               |  
|Interest expense                                                                                            |  |                                | (23,512 | ) |                               |  
|Other expenses and adjustments for non-cash charges and certain adjustments defined by our credit agreement |  |                                | 15      |   |                               |  
|                                                                                                            |  |                                |         |   |                               |  
|Income (loss) before taxes                                                                                  |  | $                              | (18,464 | ) |                               | $
|                                                                                                            |  |                                |         |   |                               |  
|                                                                                                            |  |                                |        
|                                                                                                            |  |                                |         |   |                               |  
|                                                                                                            |  |                                |         |   |                               |  
|Assets Total assets for reportable segments                                                                 |  |                                |         |   |                               |  
|Other unallocated assets                                                                                    |  |                                |         |   |                               |  
|                                                                                                            |  |                                |         |   |                               |  
|Total consolidated assets                                                                                   |  |                                |         |   |                               |  
|                                                                                                            |  |                                |         |   |                               |  



|9. | CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
|-- | --------------------------------------------



The following condensed consolidating financial statements present, in separate columns, financial information for (i) Pliant Corporation (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 2000 Indenture) relating to Pliant Corporations $220 million
senior subordinated notes due 2010 (the 2000 Notes), the Indenture dated April 10, 2002 (the 2002 Indenture) relating to Pliants $100 million senior subordinated notes due 2010 (the 2002 Notes), and the
Indenture dated May 30, 2003 (the 2003 Indenture and together with the 2000 Indenture and the 2002 Indenture, the Indentures) relating to Pliants $250 million senior secured notes due 2009 (the 2003 Notes
and together with the 2000 Notes and the 2002 Notes, the Notes)) on a combined basis, with any investments in non-guarantor subsidiaries specified in the Indentures recorded under the equity method, (iii) direct and indirect
non-guarantor subsidiaries on a combined basis, (iv) the eliminations necessary to arrive at the information for Pliant Corporation and its subsidiaries on a consolidated basis, and (v) Pliant Corporation on a consolidated basis, in each case as of
September 30, 2003 and December 31, 2002 and for the nine months ended September 30, 2003 and 2002. The Notes are fully and unconditionally guaranteed on a joint and several basis by each guarantor subsidiary and each guarantor subsidiary is 100%
owned, directly or indirectly, by Pliant Corporation, within the meaning of Rule 3-10 (h) (1) of Regulation S-X. There are no contractual restrictions limiting transfers of cash from guarantor and non-guarantor subsidiaries to Pliant Corporation
except from our Alliant joint venture. Alliant is a joint venture between us and Supreme Plastics Ltd., a



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company based in the United Kingdom. We own a fifty-percent interest in Alliant. The limited liability
company agreement governing the joint venture prohibits distributions to the members of the joint venture before July 27, 2004, other than annual distributions sufficient to pay taxes imposed upon the members as a result of the attribution to the
members of income of the joint venture. 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.



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PLIANT CORPORATION AND SUBSIDIARIES



CONDENSED CONSOLIDATING BALANCE SHEET

AS OF SEPTEMBER 30, 2003 (IN THOUSANDS) (UNAUDITED)

---



|                                                     |  | PliantCorporation(Parent Only) |              |   | Combined Guarantor Subsidiaries |   |              | Combined Non-Guarantor Subsidiaries |  |   | Eliminations |   |  | ConsolidatedPliantCorporation |        
|---------------------------------------------------- |  | ------------------------------ | ------------ | - | ------------------------------- | - | ------------ | ----------------------------------- |  | - | ------------ | - |  | ----------------------------- | -------
|ASSETS                                               |  |                                |              |   |                                 |   |              |                                     |  |   |              |   |  |                               |        
|CURRENT ASSETS:                                      |  |                                |              |   |                                 |   |              |                                     |  |   |              |   |  |                               |        
|Cash and cash equivalents                            |  | $                              | 8,015        |   |                                 | $ | 27           |                                     |  | $ | 1,961        |   |  | $                             |       
|Receivablesnet                                      |  |                                | 94,054       |   |                                 |   | 13,298       |                                     |  |   | 21,766       |   |  |                               |       
|Inventories Prepaid expenses and other               |  |                                | 68,767 3,015 |   |                                 |   | 18,871 1,063 |                                     |  |   | 14,301 868   |   |  |                               |      
|Income taxes receivable                              |  |                                | 296          |   |                                 |   | (351         | )                                   |  |   | 132          |   |  |                               |       
|Deferred income taxes                                |  |                                | 10,033       |   |                                 |   |             |                                     |  |   | 1,693        |   |  |                               |       
|                                                     |  |                                |              |   |                                 |   |              |                                     |  |   |              |   |  |                               |        
|Total current assets                                 |  |                                | 184,180      |   |                                 |   | 32,908       |                                     |  |   | 40,721       |   |  |                               |       
|PLANT AND EQUIPMENTNet                              |  |                                | 264,903      |   |                                 |   | 16,830       |                                     |  |   | 48,283       |   |  |                               |       
|INTANGIBLE ASSETSNet                                |  |                                | 213,712      |   |                                 |   |             |                                     |  |   | 14,990       |   |  |                               |       
|INVESTMENT IN SUBSIDIARIES                           |  |                                | 45,222       |   |                                 |   |             |                                     |  |   |             |   |  |                               | (45,222
|OTHER ASSETS                                         |  |                                | 37,339       |   |                                 |   |             |                                     |  |   | 3,115        |   |  |                               |       
|                                                     |  |                                |              |   |                                 |   |              |                                     |  |   |              |   |  |                               |        
|TOTAL ASSETS                                         |  | $                              | 745,356      |   |                                 | $ | 49,738       |                                     |  | $ | 107,109      |   |  | $                             | (45,222
|                                                     |  |                                |              |   |                                 |   |              |                                     |  |   |              |   |  |                               |        
|LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)       |  |                                |              |   |                                 |   |              |                                     |  |   |              |   |  |                               |        
|CURRENT LIABILITIES:                                 |  |                                |              |   |                                 |   |              |                                     |  |   |              |   |  |                               |        
|Trade accounts payable                               |  | $                              | 75,450       |   |                                 | $ | 6,241        |                                     |  | $ | 14,713       |   |  | $                             |       
|Accrued liabilities                                  |  |                                | 52,871       |   |                                 |   | 1,450        |                                     |  |   | 7,244        |   |  |                               |       
|Current portion of long-term debt                    |  |                                | 1,629        |   |                                 |   |             |                                     |  |   | 2,913        |   |  |                               |       
|Due to (from) affiliates                             |  |                                | (50,240      | ) |                                 |   | 30,184       |                                     |  |   | 20,056       |   |  |                               |       
|                                                     |  |                                |              |   |                                 |   |              |                                     |  |   |              |   |  |                               |        
|Total current liabilities                            |  |                                | 79,710       |   |                                 |   | 37,875       |                                     |  |   | 44,926       |   |  |                               |       
|LONG-TERM DEBTNet of current portion                |  |                                | 758,339      |   |                                 |   |             |                                     |  |   | 21,250       |   |  |                               |       
|OTHER LIABILITIES                                    |  |                                | 24,149       |   |                                 |   |             |                                     |  |   | 2,229        |   |  |                               |       
|DEFERRED INCOME TAXES                                |  |                                | 21,343       |   |                                 |   | 2,459        |                                     |  |   | 2,511        |   |  |                               |       
|                                                     |  |                                |              |   |                                 |   |              |                                     |  |   |              |   |  |                               |        
|Total liabilities                                    |  |                                | 883,541      |   |                                 |   | 40,334       |                                     |  |   | 70,916       |   |  |                               |       
|                                                     |  |                                |              |   |                                 |   |              |                                     |  |   |              |   |  |                               |        
|MINORITY INTEREST                                    |  |                                |             |   |                                 |   |             |                                     |  |   | 375          |   |  |                               |       
|REDEEMABLE STOCK:                                    |  |                                |              |   |                                 |   |              |                                     |  |   |              |   |  |                               |        
|Preferred Stock                                      |  |                                | 180,769      |   |                                 |   |             |                                     |  |   |             |   |  |                               |       
|Common Stock                                         |  |                                | 13,008       |   |                                 |   |             |                                     |  |   |             |   |  |                               |       
|                                                     |  |                                |              |   |                                 |   |              |                                     |  |   |              |   |  |                               |        
|REDEEMABLE STOCK                                     |  |                                | 193,777      |   |                                 |   |             |                                     |  |   |             |   |  |                               |       
|                                                     |  |                                |              |   |                                 |   |              |                                     |  |   |              |   |  |                               |        
|STOCKHOLDERS EQUITY (DEFICIT):                      |  |                                |              |   |                                 |   |              |                                     |  |   |              |   |  |                               |        
|Common stock                                         |  |                                | 103,376      |   |                                 |   |             |                                     |  |   | 9,650        |   |  |                               | (9,650 
|Additional paid-in capital                           |  |                                |             |   |                                 |   | 14,020       |                                     |  |   | 19,593       |   |  |                               | (33,613
|Warrants                                             |  |                                | 39,133       |   |                                 |   |             |                                     |  |   |             |   |  |                               |       
|Retained earnings accumulated (deficit)              |  |                                | (461,642     | ) |                                 |   | (4,605       | )                                   |  |   | 12,549       |   |  |                               | (7,944 
|Stockholders note receivable                        |  |                                | (660         | ) |                                 |   |             |                                     |  |   |             |   |  |                               |       
|Accumulated other comprehensive loss                 |  |                                | (12,169      | ) |                                 |   | (11          | )                                   |  |   | (5,974       | ) |  |                               | 5,985  
|                                                     |  |                                |              |   |                                 |   |              |                                     |  |   |              |   |  |                               |        
|Total stockholders equity (deficit)                 |  |                                | (331,962     | ) |                                 |   | 9,404        |                                     |  |   | 35,818       |   |  |                               | (45,222
|                                                     |  |                                |              |   |                                 |   |              |                                     |  |   |              |   |  |                               |        
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT) |  | $                              | 745,356      |   |                                 | $ | 49,738       |                                     |  | $ | 107,109      |   |  | $                             | (45,222
|                                                     |  |                                |              |   |                                 |   |              |                                     |  |   |              |   |  |                               |        





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PLIANT CORPORATION AND SUBSIDIARIES



CONDENSED CONSOLIDATING BALANCE SHEET

AS OF DECEMBER 31, 2002 (IN THOUSANDS) (UNAUDITED)

---



|                                                     |  | Pliant Corporation Parent Only |          |   | Combined Guarantors |   |        | Combined Non-Guarantors |  |   | Eliminations |   |  | ConsolidatedPliantCorporation |        
|---------------------------------------------------- |  | ------------------------------ | -------- | - | ------------------- | - | ------ | ----------------------- |  | - | ------------ | - |  | ----------------------------- | -------
|ASSETS                                               |  |                                |          |   |                     |   |        |                         |  |   |              |   |  |                               |        
|CURRENT ASSETS:                                      |  |                                |          |   |                     |   |        |                         |  |   |              |   |  |                               |        
|Cash and cash equivalents                            |  | $                              |         |   |                     | $ |       |                         |  | $ | 1,635        |   |  | $                             |       
|Receivables                                          |  |                                | 82,421   |   |                     |   | 13,444 |                         |  |   | 23,158       |   |  |                               |       
|Inventories                                          |  |                                | 71,586   |   |                     |   | 15,832 |                         |  |   | 10,604       |   |  |                               |       
|Prepaid expenses and other                           |  |                                | 2,842    |   |                     |   | 899    |                         |  |   | 408          |   |  |                               |       
|Income taxes receivable                              |  |                                | 1,145    |   |                     |   | 4      |                         |  |   | 1,219        |   |  |                               |       
|Deferred income taxes                                |  |                                | 6,909    |   |                     |   | 1,522  |                         |  |   | (249         | ) |  |                               |       
|                                                     |  |                                |          |   |                     |   |        |                         |  |   |              |   |  |                               |        
|Total current assets                                 |  |                                | 164,903  |   |                     |   | 31,701 |                         |  |   | 36,775       |   |  |                               |       
|PLANT AND EQUIPMENTNet                              |  |                                | 283,638  |   |                     |   | 17,919 |                         |  |   | 48,922       |   |  |                               |       
|GOODWILL                                             |  |                                | 189,106  |   |                     |   |       |                         |  |   | 14,891       |   |  |                               |       
|INTANGIBLE ASSETSNet                                |  |                                | 26,964   |   |                     |   |       |                         |  |   | 70           |   |  |                               |       
|INVESTMENT IN SUBSIDIARIES                           |  |                                | 52,813   |   |                     |   |       |                         |  |   |             |   |  |                               | (52,813
|OTHER ASSETS                                         |  |                                | 34,871   |   |                     |   | 17     |                         |  |   | 3,426        |   |  |                               |       
|                                                     |  |                                |          |   |                     |   |        |                         |  |   |              |   |  |                               |        
|TOTAL ASSETS                                         |  | $                              | 752,295  |   |                     | $ | 49,637 |                         |  | $ | 104,084      |   |  | $                             | (52,813
|                                                     |  |                                |          |   |                     |   |        |                         |  |   |              |   |  |                               |        
|                                                     |  |                                |          |   |                    
|LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)       |  |                                |          |   |                     |   |        |                         |  |   |              |   |  |                               |        
|CURRENT LIABILITIES:                                 |  |                                |          |   |                     |   |        |                         |  |   |              |   |  |                               |        
|Trade accounts payable                               |  | $                              | 83,918   |   |                     | $ | 8,675  |                         |  | $ | 21,395       |   |  | $                             |       
|Accrued liabilities                                  |  |                                | 48,091   |   |                     |   | 4,818  |                         |  |   | 5,968        |   |  |                               |       
|Current portion of long-term debt                    |  |                                | 14,117   |   |                     |   |       |                         |  |   | 628          |   |  |                               |       
|Due to (from) affiliates                             |  |                                | (28,373  | ) |                     |   | 15,316 |                         |  |   | 13,057       |   |  |                               |       
|                                                     |  |                                |          |   |                     |   |        |                         |  |   |              |   |  |                               |        
|Total current liabilities                            |  |                                | 117,753  |   |                     |   | 28,809 |                         |  |   | 41,048       |   |  |                               |       
|LONG-TERM DEBTNet of current portion                |  |                                | 697,472  |   |                     |   |       |                         |  |   | 24,164       |   |  |                               |       
|OTHER LIABILITIES                                    |  |                                | 25,101   |   |                     |   |       |                         |  |   | 1,876        |   |  |                               |       
|DEFERRED INCOME TAXES                                |  |                                | 19,017   |   |                     |   | 1,751  |                         |  |   | 3,068        |   |  |                               |       
|                                                     |  |                                |          |   |                     |   |        |                         |  |   |              |   |  |                               |        
|Total liabilities                                    |  |                                | 859,343  |   |                     |   | 30,560 |                         |  |   | 70,156       |   |  |                               |       
|                                                     |  |                                |          |   |                     |   |        |                         |  |   |              |   |  |                               |        
|MINORITY INTEREST                                    |  |                                |         |   |                     |   |       |                         |  |   | 192          |   |  |                               |       
|REDEEMABLE STOCK:                                    |  |                                |          |   |                     |   |        |                         |  |   |              |   |  |                               |        
|Preferred stock                                      |  |                                | 150,816  |   |                     |   |       |                         |  |   |             |   |  |                               |       
|Common stock                                         |  |                                | 13,008   |   |                     |   |       |                         |  |   |             |   |  |                               |       
|                                                     |  |                                |          |   |                     |   |        |                         |  |   |              |   |  |                               |        
|TOTAL REDEEMABLE STOCK                               |  |                                | 163,824  |   |                     |   |       |                         |  |   |             |   |  |                               |       
|                                                     |  |                                |          |   |                     |   |        |                         |  |   |              |   |  |                               |        
|STOCKHOLDERS EQUITY (DEFICIT):                      |  |                                |          |   |                     |   |        |                         |  |   |              |   |  |                               |        
|Common stock                                         |  |                                | 103,376  |   |                     |   | 14,020 |                         |  |   | 29,240       |   |  |                               | (43,260
|Warrants to purchase common stock                    |  |                                | 38,676   |   |                     |   |       |                         |  |   |             |   |  |                               |       
|Retained earnings (deficit)                          |  |                                | (394,420 | ) |                     |   | 5,067  |                         |  |   | 14,489       |   |  |                               | (19,556
|Stockholders notes receivable                       |  |                                | (660     | ) |                     |   |       |                         |  |   |             |   |  |                               |       
|Accumulated other comprehensive loss                 |  |                                | (17,844  | ) |                     |   | (10    | )                       |  |   | (9,993       | ) |  |                               | 10,003 
|                                                     |  |                                |          |   |                     |   |        |                         |  |   |              |   |  |                               |        
|Total stockholders equity (deficit)                 |  |                                | (270,872 | ) |                     |   | 19,077 |                         |  |   | 33,736       |   |  |                               | (52,813
|                                                     |  |                                |          |   |                     |   |        |                         |  |   |              |   |  |                               |        
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT) |  | $                              | 752,295  |   |                     | $ | 49,637 |                         |  | $ | 104,084      |   |  | $                             | (52,813
|                                                     |  |                                |          |   |                     |   |        |                         |  |   |              |   |  |                               |        



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PLIANT CORPORATION AND SUBSIDIARIES



CONDENSED CONSOLIDATING INCOME STATEMENT

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 (IN THOUSANDS) (UNAUDITED)

---



|                                   |  | PliantCorporation(ParentOnly) |         |   | Combined Guarantor Subsidiaries |   |        | Combined Non-Guarantor Subsidiaries |  |   | Eliminations |   |  | ConsolidatedPliant Corporation |        
|---------------------------------- |  | ----------------------------- | ------- | - | ------------------------------- | - | ------ | ----------------------------------- |  | - | ------------ | - |  | ------------------------------ | -------
|NET SALES                          |  | $                             | 553,077 |   |                                 | $ | 61,572 |                                     |  | $ | 111,906      |   |  | $                              | (20,753
|COST OF SALES                      |  |                               | 455,033 |   |                                 |   | 60,146 |                                     |  |   | 97,951       |   |  |                                | (20,753
|                                   |  |                               |         |   |                                 |   |        |                                     |  |   |              |   |  |                                |        
|GROSS PROFIT                       |  |                               | 98,044  |   |                                 |   | 1,426  |                                     |  |   | 13,955       |   |  |                                |       
|OPERATING EXPENSES                 |  |                               | 66,925  |   |                                 |   | 6,728  |                                     |  |   | 10,323       |   |  |                                |       
|                                   |  |                               |         |   |                                 |   |        |                                     |  |   |              |   |  |                                |        
|OPERATING INCOME                   |  |                               | 31,119  |   |                                 |   | (5,302 | )                                   |  |   | 3,632        |   |  |                                |       
|INTEREST EXPENSE                   |  |                               | (68,848 | ) |                                 |   | (16    | )                                   |  |   | (1,886       | ) |  |                                |       
|EQUITY IN EARNINGS OF SUBSIDIARIES |  |                               | (9,113  | ) |                                 |   |       |                                     |  |   |             |   |  |                                | 9,113  
|OTHER INCOME (EXPENSE), Net        |  |                               | (175    | ) |                                 |   | (184   | )                                   |  |   | 1,818        |   |  |                                |       
|                                   |  |                               |         |   |                                 |   |        |                                     |  |   |              |   |  |                                |        
|INCOME (LOSS) BEFORE INCOME TAXES  |  |                               | (47,017 | ) |                                 |   | (5,502 | )                                   |  |   | 3,564        |   |  |                                | 9,113  
|INCOME TAX PROVISION (BENEFIT)     |  |                               | (672    | ) |                                 |   | 4,170  |                                     |  |   | 3,005        |   |  |                                |       
|                                   |  |                               |         |   |                                 |   |        |                                     |  |   |              |   |  |                                |        
|NET INCOME (LOSS)                  |  | $                             | (46,345 | ) |                                 | $ | (9,672 | )                                   |  | $ | 559          |   |  | $                              | 9,113  
|                                   |  |                               |         |   |                                 |   |        |                                     |  |   |              |   |  |                                |        



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PLIANT CORPORATION AND SUBSIDIARIES



CONDENSED CONSOLIDATING INCOME STATEMENT

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 (IN THOUSANDS) (UNAUDITED)

---



|                                   |  | PliantCorporation(Parent Only) |         |   | Combined Guarantor Subsidiaries |   |        | Combined Non-Guarantor Subsidiaries |  |   | Eliminations |   |  | ConsolidatedPliant Corporation |        
|---------------------------------- |  | ------------------------------ | ------- | - | ------------------------------- | - | ------ | ----------------------------------- |  | - | ------------ | - |  | ------------------------------ | -------
|NET SALES                          |  | $                              | 520,928 |   |                                 | $ | 53,951 |                                     |  | $ | 100,656      |   |  | $                              | (18,242
|COST OF SALES                      |  |                                | 422,251 |   |                                 |   | 44,982 |                                     |  |   | 82,129       |   |  |                                | (18,242
|                                   |  |                                |         |   |                                 |   |        |                                     |  |   |              |   |  |                                |        
|GROSS PROFIT                       |  |                                | 98,677  |   |                                 |   | 8,969  |                                     |  |   | 18,527       |   |  |                                |       
|OPERATING EXPENSES                 |  |                                | 67,805  |   |                                 |   | 2,973  |                                     |  |   | 9,426        |   |  |                                |       
|                                   |  |                                |         |   |                                 |   |        |                                     |  |   |              |   |  |                                |        
|OPERATING INCOME                   |  |                                | 30,872  |   |                                 |   | 5,996  |                                     |  |   | 9,101        |   |  |                                |       
|INTEREST EXPENSE                   |  |                                | (53,361 | ) |                                 |   | (15    | )                                   |  |   | (1,677       | ) |  |                                |       
|EQUITY IN EARNINGS OF SUBSIDIARIES |  |                                | 11,744  |   |                                 |   |       |                                     |  |   |             |   |  |                                | (11,744
|OTHER INCOME (EXPENSE), Net        |  |                                | (657    | ) |                                 |   | (17    | )                                   |  |   | 2,031        |   |  |                                |       
|                                   |  |                                |         |   |                                 |   |        |                                     |  |   |              |   |  |                                |        
|INCOME (LOSS) BEFORE INCOME TAXES  |  |                                | (11,402 | ) |                                 |   | 5,964  |                                     |  |   | 9,455        |   |  |                                | (11,744
|INCOME TAX PROVISION (BENEFIT)     |  |                                | (3,787  | ) |                                 |   |       |                                     |  |   | 3,675        |   |  |                                |       
|                                   |  |                                |         |   |                                 |   |        |                                     |  |   |              |   |  |                                |        
|NET INCOME (LOSS)                  |  | $                              | (7,615  | ) |                                 | $ | 5,964  |                                     |  | $ | 5,780        |   |  | $                              | (11,744
|                                   |  |                                |         |   |                                 |   |        |                                     |  |   |              |   |  |                                |        





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PLIANT CORPORATION AND SUBSIDIARIES



CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 (IN THOUSANDS) (UNAUDITED)

---



|                                                             |  | PliantCorporation(ParentOnly) |          |   | Combined Guarantor Subsidiaries |   |        | Combined Non-Guarantor Subsidiaries |  |   | Eliminations |   | ConsolidatedPliantCorporation |  
|------------------------------------------------------------ |  | ----------------------------- | -------- | - | ------------------------------- | - | ------ | ----------------------------------- |  | - | ------------ | - | ----------------------------- | -
|CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES        |  | $                             | (34,768  | ) |                                 | $ | 2,998  |                                     |  | $ | 8,069        |   |                               |  
|                                                             |  |                               |          |   |                                 |   |        |                                     |  |   |              |   |                               |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                        |  |                               |          |   |                                 |   |        |                                     |  |   |              |   |                               |  
|Asset transfers                                              |  |                               |         |   |                                 |   |       |                                     |  |   |             |   |                               |  
|Capital expenditures for plant and equipment                 |  |                               | (7,559   | ) |                                 |   | (889   | )                                   |  |   | (5,961       | ) |                               |  
|                                                             |  |                               |          |   |                                 |   |        |                                     |  |   |              |   |                               |  
|Net cash used in investing activities                        |  |                               | (7,559   | ) |                                 |   | (889   | )                                   |  |   | (5,961       | ) |                               |  
|                                                             |  |                               |          |   |                                 |   |        |                                     |  |   |              |   |                               |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                        |  |                               |          |   |                                 |   |        |                                     |  |   |              |   |                               |  
|Net proceeds from issuance of preferred stock and warrants   |  |                               | 9,532    |   |                                 |   |       |                                     |  |   |             |   |                               |  
|Payment of financing fees                                    |  |                               | (10,472  | ) |                                 |   |       |                                     |  |   |             |   |                               |  
|Payment/Receipt of Dividends                                 |  |                               | 2,499    |   |                                 |   |       |                                     |  |   | (2,499       | ) |                               |  
|Proceeds from issuance of senior subordinated debt           |  |                               | 250,000  |   |                                 |   |       |                                     |  |   |             |   |                               |  
|Borrowing under revolver                                     |  |                               | 50,250   |   |                                 |   |       |                                     |  |   |             |   |                               |  
|Repayment of term debt and revolver                          |  |                               | (251,871 | ) |                                 |   |       |                                     |  |   | (629         | ) |                               |  
|                                                             |  |                               |          |   |                                 |   |        |                                     |  |   |              |   |                               |  
|Net cash provided by (used in) financing activities          |  |                               | 49,938   |   |                                 |   |       |                                     |  |   | (3,128       | ) |                               |  
|                                                             |  |                               |          |   |                                 |   |        |                                     |  |   |              |   |                               |  
|EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS |  |                               | 404      |   |                                 |   | (2,082 | )                                   |  |   | 1,346        |   |                               |  
|                                                             |  |                               |          |   |                                 |   |        |                                     |  |   |              |   |                               |  
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS         |  |                               | 8,015    |   |                                 |   | 27     |                                     |  |   | 326          |   |                               |  
|                                                             |  |                               |          |   |                                 |   |        |                                     |  |   |              |   |                               |  
|CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD         |  |                               |         |   |                                 |   |       |                                     |  |   | 1,635        |   |                               |  
|                                                             |  |                               |          |   |                                 |   |        |                                     |  |   |              |   |                               |  
|CASH AND CASH EQUIVALENTS AT END OF THE PERIOD               |  | $                             | 8,015    |   |                                 | $ | 27     |                                     |  | $ | 1,961        |   |                               | $
|                                                             |  |                               |          |   |                                 |   |        |                                     |  |   |              |   |                               |  



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PLIANT CORPORATION AND SUBSIDIARIES



CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 (IN THOUSANDS) (UNAUDITED)

---



|                                                                                                     |  | PliantCorporation(ParentOnly) |         |   | Combined Guarantor Subsidiaries |   |         | Combined Non-Guarantor Subsidiaries |  |   | Eliminations |   | ConsolidatedPliantCorporation |  
|---------------------------------------------------------------------------------------------------- |  | ----------------------------- | ------- | - | ------------------------------- | - | ------- | ----------------------------------- |  | - | ------------ | - | ----------------------------- | -
|CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES                                                |  | $                             | 27,750  |   |                                 | $ | 3,686   |                                     |  | $ | 11,018       |   |                               |  
|                                                                                                     |  |                               |         |   |                                 |   |         |                                     |  |   |              |   |                               |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                                |  |                               |         |   |                                 |   |         |                                     |  |   |              |   |                               |  
|Sale and leaseback of assets                                                                         |  |                               | 15,033  |   |                                 |   |        |                                     |  |   |             |   |                               |  
|Sale of land and buildings                                                                           |  |                               |        |   |                                 |   | 3,589   |                                     |  |   |             |   |                               |  
|Transfers between segments                                                                           |  |                               | (9,116  | ) |                                 |   | 9,762   |                                     |  |   | (646         | ) |                               |  
|Decora acquisition                                                                                   |  |                               | (6,209  | ) |                                 |   | (14,369 | )                                   |  |   |             |   |                               |  
|Acquisition of Roll-O-Sheets                                                                         |  |                               |        |   |                                 |   |        |                                     |  |   | (1,500       | ) |                               |  
|Capital expenditures for plant and equipment                                                         |  |                               | (27,597 | ) |                                 |   | (2,589  | )                                   |  |   | (3,879       | ) |                               |  
|                                                                                                     |  |                               |         |   |                                 |   |         |                                     |  |   |              |   |                               |  
|Net cash (used in) provided by investing activities                                                  |  |                               | (27,889 | ) |                                 |   | (3,607  | )                                   |  |   | (6,025       | ) |                               |  
|                                                                                                     |  |                               |         |   |                                 |   |         |                                     |  |   |              |   |                               |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                                |  |                               |         |   |                                 |   |         |                                     |  |   |              |   |                               |  
|Receipt/payment of dividends                                                                         |  |                               |        |   |                                 |   |        |                                     |  |   |             |   |                               |  
|Net proceeds from issuance of common stock and net change in related stockholders notes receivables |  |                               | 27      |   |                                 |   |        |                                     |  |   |             |   |                               |  
|Proceeds from issuance of senior subordinated debts                                                  |  |                               | 103,750 |   |                                 |   |        |                                     |  |   |             |   |                               |  
|Payment of financing fee                                                                             |  |                               | (5,328  | ) |                                 |   |        |                                     |  |   |             |   |                               |  
|Borrowings under revolver                                                                            |  |                               | (7,923  | ) |                                 |   |        |                                     |  |   |             |   |                               |  
|Repayment of term debt and revolver                                                                  |  |                               | (90,992 | ) |                                 |   |        |                                     |  |   | (8,208       | ) |                               |  
|                                                                                                     |  |                               |         |   |                                 |   |         |                                     |  |   |              |   |                               |  
|Net cash provided by (used in) financing activities                                                  |  |                               | (466    | ) |                                 |   |        |                                     |  |   | (8,208       | ) |                               |  
|                                                                                                     |  |                               |         |   |                                 |   |         |                                     |  |   |              |   |                               |  
|EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS                                         |  |                               | 605     |   |                                 |   | (1,046  | )                                   |  |   | (316         | ) |                               |  
|                                                                                                     |  |                               |         |   |                                 |   |         |                                     |  |   |              |   |                               |  
|                                                                                                     |  |                               |         |   |                                 |   |         |                                     |  |   |              |   |                               |  
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                                 |  |                               |        |   |                                 |   | (967    | )                                   |  |   | (3,531       | ) |                               |  
|CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD                                                 |  |                               |        |   |                                 |   | 967     |                                     |  |   | 3,851        |   |                               |  
|                                                                                                     |  |                               |         |   |                                 |   |         |                                     |  |   |              |   |                               |  
|                                                                                                     |  |                               |         |   |                                 |   |         |                                     |  |   |              |   |                               |  
|CASH AND CASH EQUIVALENTS AT END OF THE PERIOD                                                       |  | $                             |        |   |                                 | $ |        |                                     |  | $ | 320          |   |                               | $
|                                                                                                     |  |                               |         |   |                                 |   |         |                                     |  |   |              |   |                               |  



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|10. | COMMITMENTS AND CONTINGENCIES
|--- | -----------------------------



On February 26, 2003, former employees of our Fort Edward, New York manufacturing facility, which we acquired as part of the Decora acquisition, named us
as defendants in a complaint filed in the Supreme Court of the State of New York, County of Washington (Index No. 4417E). We received service of this complaint on April 2, 2003, and successfully removed the case to the United States District Court
for the Northern District of New York (Case No. 1:03cv00533). The complaint alleges claims against us for conspiracy to defraud and breach of contract arising out of our court-approved purchase of the assets of Decora Industries, Inc. and Decora,
Incorporated. Plaintiffs complaint seeks compensatory and punitive damages and a declaratory judgment nullifying severance agreements for lack of consideration and economic duress. We intend to resist the plaintiffs claims vigorously. We
do not believe this proceeding will have a material adverse affect on our financial condition or results of operations.



|11. | OTHER EVENTS
|--- | ------------



On September, 8, 2003, we entered into a separation agreement with Jack E. Knott. As of the date of the separation agreement, Mr. Knott owned 232 shares
of our common stock, 6,458 performance-vesting shares (of which 1,291 had vested), 1,292 time-vested shares, options to purchase 8,902 shares of our common stock and 229 shares of our preferred stock. We cancelled 5,167 unvested performance vesting
shares owned by Mr. Knott against a note receivable from Mr. Knott for $2.5 million. Pursuant to the terms of the severance agreement, and in addition to the benefits payable to Mr. Knott following a termination without cause under the terms of his
employment agreement with us, we agreed: to extend the termination date of his right to exercise his options to acquire 8,902 shares of common stock until August 22, 2005; not to exercise our rights to redeem the common stock, vested
performance-vesting shares, time-vested shares and preferred stock owned by him until the earlier of a transaction consisting of a sale of us or August 22, 2005; and to pay him a cash payment of $50,000.



|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, 2002 (the 2002
10-K) and our Registration Statements on Form S-1 (file No. 333-106432) and on Form S-4 (File No 333-107843). This section contains certain forward-looking statements within the meaning 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 25 facilities located in the United States,
Australia, Canada, Germany and Mexico. 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.



Recent
Developments



On October 22, 2003, our Board of Directors appointed Harold
Bevis as our President and Chief Executive Officer. Mr. Bevis also became a member of the Board of Directors. Mr. Bevis replaced Ed Lapekas, who was named interim CEO in August 2003. Mr. Lapekas will succeed Timothy Walsh as non-executive
Chairman of the Board of



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Directors. Mr. Walsh continues to serve as a director. Mr. Bevis joined Pliant directly from Emerson Electric, where he was President of a group of
manufacturing companies for the past five years.



Recent Accounting
Pronouncements



In June 2002, the FASB issued Statement of Financial
Accounting Standards No. 146, Accounting for Costs Associated with Exit or Disposal Activities. This Statement addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging
Issues Task Force (EITF) Issue No. 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring). The primary difference between this
Statement and Issue No. 94-3 relates to its requirements for recognition of a liability for a cost associated with an exit or disposal activity. This Statement requires that a liability for a cost associated with an exit or disposal activity be
recognized when the liability is incurred. The provisions of this Statement are effective for exit or disposal activities that are initiated after December 31, 2002. We adopted this Statement on January 1, 2003. This Statement did not have any
impact on our consolidated financial statements.



In May 2003, the FASB issued
SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity. This statement establishes standards for how an issuer classifies and measures certain financial instruments with
characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). This standard is effective for financial instruments entered into
or modified after May 31, 2003. Through the implementation of SFAS 150 the company will classify its Redeemable Preferred Stock as a liability and the corresponding dividends as interest expense beginning from the first quarter of 2004.



Results of Operations



The following table sets forth net sales, operating expenses, and operating income, and such
amounts as a percentage of net sales, for the three and nine months ended September 30, 2003 and 2002 (dollars in millions).



|                                                        |  | Three Months Ended September 30, |       |           | Nine Months Ended September 30, |  
|------------------------------------------------------- |  | -------------------------------- | ----- | --------- | ------------------------------- | -
|                                                        |  | 2003                             |       |           | 2002                            |  
|                                                        |  | $                                |       | % ofSales |                                 |  
|Net sales                                               |  | $                                | 238.7 |           | 100.0                           | %
|Cost of Sales                                           |  |                                  | 204.3 |           | 85.6                            |  
|                                                        |  |                                  |       |           |                                 |  
|Gross profit                                            |  |                                  | 34.4  |           | 14.4                            |  
|Operating expenses before restructuring and other costs |  |                                  | 25.7  |           | 10.8                            |  
|Restructuring and other costs                           |  |                                  | 3.3   |           | 1.4                             |  
|                                                        |  |                                  |       |           |                                 |  
|Total operating expenses                                |  |                                  | 29.0  |           | 12.2                            |  
|                                                        |  |                                  |       |           |                                 |  
|Operating income                                        |  | $                                | 5.4   |           | 2.2                             | %



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Three Months Ended September 30, 2003 Compared with the Three Months Ended September 30, 2002



Net Sales



Net sales increased by $8.5 million, or 3.7%, to $238.7 million for the third quarter of 2003 from $230.2 million for the three months ended
September 30, 2002. The increase was primarily due to a 6.1% increase in average selling prices partially offset by a 2.2% decrease in sales volume. Our average selling prices increased primarily due to increases in our raw material costs. See
Operating Segment Review below for a detailed discussion of sales volumes and selling prices by segment and division.



Gross Profit



Gross profit decreased by $5.0 million, or 12.7%, to $34.4 million for the third quarter of 2003, from $39.4 million for the three months ended September 30, 2002. This decrease was primarily due to lower profits from
our Pliant Solutions segment and lower sales volumes discussed above. See Operating Segment Review below for a detailed discussion of the segment profits and sales volumes by segment.



Total Operating Expenses before Restructuring and Other Costs



Total operating expenses before restructuring and other costs increased $1.4 million, or
5.8%, to $25.7 million for the third quarter of 2003 from $24.3 million for the third quarter of 2002. This increase was principally due to severance costs of $1.1 million related to recent organizational changes, increased lease expenses resulting
from a sale-leaseback of equipment we entered into at the end of the third quarter of 2002, as well as increases in legal and consulting expenses. These increases were partially offset by lower travel and related costs and lower sales commissions.



Restructuring and Other Costs



Restructuring and other costs decreased by $2.5 million to $3.3 million for the third
quarter of 2003 from $5.8 million for the three months ended September 30, 2002. The costs for the third quarter of 2003 included $1.6 million of charges for fixed asset impairments related to the closure of our plant in Shelbyville, $0.7 million
related to the closure of our facility in Brazil consisting primarily of fixed asset impairment charges, costs related to the consolidation of two plants in Mexico and costs related to the transfer the production from our facility in Fort Edward,
New York to our facilities in Mexico and Danville, Kentucky. Restructuring costs for the third quarter of 2002 included $2.1 million related to the closure of our plant in Merced, California, $1.3 million for severance costs related to a corporate
wide work reduction program, $0.6 million related to severance costs and costs for relocation of production lines related to the Uniplast acquisition and other costs related to the consolidation of two plants in Mexico and costs related to the
transfer of production from our facility in Fort Edward, New York to our facilities in Mexico and Danville, Kentucky.



Operating Income



Operating income decreased by $3.9 million, or 42.0%, to $5.4 million for the three months ended September 30, 2003 from $9.3 million for the three months ended September 30, 2002, due to the factors discussed above.



Interest Expense



Interest expense increased by $4.4 million, or 23.0%, to $23.5 million for the three months
ended September 30, 2003 from $19.1 million for the three months ended September 30, 2002. In May 2003, we issued $250 million of senior secured notes and prepaid a total of $75.0 million of revolving loans and $165 million of our term loans.
Interest expense increased due to the issuance of these senior secured notes, which have a higher interest rate than the borrowings under our credit facilities.



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Other Income



Other income reflects a loss of $0.3 million for the three months ended September 30, 2003, as compared to income of $0.4 million for the three months ended September 30,
2002. Other income for 2003 included several immaterial items. Other income for 2002 included several immaterial items.



Income Tax Expense (Benefit)



Income tax expense for the three months ended September 30, 2003 was $1.6 million on pretax losses of $18.5 million as compared to an income tax benefit of $2.0 million
on pretax losses of $9.4 million for the same period in 2002. See Note 5 to the condensed consolidated financial statements included elsewhere in this report for a discussion of the change in the effective income tax rate.



Nine Months Ended September 30, 2003 Compared with the Nine Months Ended September 30,
2002



Net Sales



Net sales increased by $48.5 million, or 7.4%, to $705.8 million for the nine months ended
September 30, 2003 from $657.3 million for the nine months ended September 30, 2002. The increase was primarily due to a 9.4% increase in average selling prices and an additional 4-1/2 months of sales from our Pliant Solutions business, which was
acquired in May 2002. The increase in net sales was partially offset by a 2.5% decrease in sales volume, excluding our Pliant Solutions business. Our average selling prices increased primarily due to increases in our raw material costs. See
Operating Segment Review below for a detailed discussion of sales volumes and selling prices by segment and division.



Gross Profit



Gross profit decreased by $12.8 million, or 10.1%, to $113.4 million for the nine months ended September 30, 2003, from $126.2 million for the nine months ended September 30, 2002. This decrease was primarily due to
lower profits from our Pliant Solutions segment, lower aggregate sales volumes and lower margins in certain segments. See Operating Segment Review below for a detailed discussion of the sales volumes and margins by segment.



Total Operating Expenses before Restructuring and Other Costs



Total operating expenses before restructuring and other costs increased $3.9 million, or
5.7%, to $72.1 million for the nine months ended September 30, 2003 from $68.2 million for the nine months ended September 30, 2002. This increase was principally due to severance costs of $1.1 million related to recent organizational changes,
increased lease expenses resulting from a sale-leaseback of equipment we entered into during the third quarter of 2002, as well as increases in legal, consulting, and commissions expense. The increase in total operating expenses was partially offset
by a reduction in travel expenses.



Restructuring and Other Costs



Restructuring and other costs were $11.9 million for the nine months
ended September 30, 2003 as compared to $12.0 million for the nine months ended September 30, 2002. The costs for the nine months ended September 30, 2003 included $1.6 million for fixed asset impairment charges related to the closure of our
facility in Shelbyville, $0.7 million related to the closure of our facility in Brazil consisting primarily of fixed asset impairment charges, $2.6 million related to the closure and transfer of the production from our facility in Fort Edward, New
York to our facilities in Mexico and Danville, Kentucky, $1.2 million related to the consolidation of two plants in Mexico, $1.3 million related to the closure and transfer of production from our Merced facility, and other costs related to the
closure of our Shelbyville facility. The costs for the nine months ended September 30, 2002 included $4.5 million related to the closure of our Salt Lake City Corporate office and a corporate wide workforce reduction program, $2.1 million related to
the closure of our facility in Merced, California, $0.5 million of severance in our Pliant International segment, $2.7 million related to the



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transfer of production from certain facilities acquired as part of the Uniplast acquisition to other facilities, and other costs related to the closure of
our Birmingham facility.



Operating Income



Operating income decreased by $16.6 million, or 36.1%, to $29.4 million for the nine months
ended September 30, 2003 from $46.0 million for the nine months ended September 30, 2002, due to the factors discussed above.



Interest Expense



Interest expense increased by $15.7 million, or 28.5%, to $70.8 million for the nine months ended September 30, 2003 from $55.1 million for the nine months ended September 30, 2002. Interest expense for 2003 included
a $5.3 million charge in the second quarter for expensing a portion of previously capitalized financing fees incurred in connection with our credit facilities. In May 2003, we prepaid a total of $75.0 million of revolving loans and $165 million of
our term loans with the net cash proceeds from the issuance of $250 million of senior secured notes. In addition, interest expense increased due to the issuance of $100 million of senior subordinated notes in April 2002 and the issuance of the $250
million of senior secured notes in May 2003. These notes have higher interest rates than the borrowings repaid under our credit facilities. The increase in interest expense was partially offset by the decrease in interest cost on our credit
facilities due to the decrease in LIBOR.



Other Income



Other income was $1.5 million for the nine months ended September 30, 2003, as compared to
$1.4 million for the nine months ended September 30, 2002. Other income for 2003 included a $0.6 million currency gain, $0.2 million of royalty income, $0.2 million of rental income, and other less significant items. Other income for 2002 included
$0.6 million related to a settlement with a customer in our Pliant International segment and other less significant items.



Income Tax Expense (Benefit)



Income tax expense for the nine months ended September 30, 2003 was $6.5 million on pretax losses of $39.8 million as compared to an income tax benefit of $0.1 million on
pretax loss of $7.7 million for the same period in 2002. See Note 5 to the condensed consolidated financial statements included elsewhere in this report for a discussion of the change in the effective income tax rate.



Operating Segment Review



General



Operating segments are components of our business 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. We evaluate the performance of our operating segments based on net sales (excluding inter-company sales) and segment profit. The segment profit
reflects income before discontinued operations, extraordinary items, interest expense, income taxes, depreciation, amortization, restructuring and other costs and other non-cash charges and net adjustments for certain unusual items. For more
information on our operating segments, including a reconciliation of segment profit to income before taxes, see Note 8 to the consolidated financial statements included elsewhere in this report.



In our Annual Report on Form 10-K for the year ended December 31, 2002 we had three reporting
segments: Pliant U.S., Pliant International and Pliant Solutions. During the first quarter of 2003, we reorganized our operations under four operating segments: Pliant U.S., Pliant Flexible Packaging, Pliant International and Pliant Solutions.
Segment information below with respect to 2002 has been restated for comparative purposes.



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Summary of segment information (in millions of dollars):



|                                     |  | PliantU.S. |       | PliantFlexible Packaging |   | Pliant International |  | PliantSolutions |      |  | UnallocatedCorporateExpenses |      |   | Total
|------------------------------------ |  | ---------- | ----- | ------------------------ | - | -------------------- |  | --------------- | ---- |  | ---------------------------- | ---- | - | -----
|Quarter ended September 30, 2003     |  |            |       |                          |   |                      |  |                 |      |  |                              |      |   |      
|Net sales                            |  | $          | 143.6 |                          | $ | 57.5                 |  | $               | 26.5 |  | $                            | 11.1 |   |      
|                                     |  |            |       |                          |   |                      |  |                 |      |  |                              |      |   |      
|Segment profit / (loss)              |  | $          | 22.8  |                          | $ | 9.0                  |  | $               | 1.0  |  | $                            | (5.4 | ) |      
|                                     |  |            |       |                          |   |                      |  |                 |      |  |                              |      |   |      
|                                     |  |            |       |                          |   |                     
|Quarter ended September 30, 2002     |  |            |       |                          |   |                      |  |                 |      |  |                              |      |   |      
|Net sales                            |  | $          | 136.6 |                          | $ | 55.0                 |  | $               | 25.7 |  | $                            | 12.9 |   |      
|                                     |  |            |       |                          |   |                      |  |                 |      |  |                              |      |   |      
|Segment profit / (loss)              |  | $          | 19.9  |                          | $ | 8.2                  |  | $               | 2.2  |  | $                            | 1.8  |   |      
|                                     |  |            |       |                          |   |                      |  |                 |      |  |                              |      |   |      
|                                     |  |            |       |                          |   |                     
|Nine Months ended September 30, 2003 |  |            |       |                          |   |                      |  |                 |      |  |                              |      |   |      
|Net sales                            |  | $          | 432.0 |                          | $ | 162.9                |  | $               | 82.2 |  | $                            | 28.7 |   |      
|                                     |  |            |       |                          |   |                      |  |                 |      |  |                              |      |   |      
|Segment profit / (loss)              |  | $          | 71.4  |                          | $ | 24.4                 |  | $               | 7.3  |  | $                            | (7.0 | ) |      
|                                     |  |            |       |                          |   |                      |  |                 |      |  |                              |      |   |      
|                                     |  |            |       |                          |   |                     
|Nine Months ended September 30, 2002 |  |            |       |                          |   |                      |  |                 |      |  |                              |      |   |      
|Net sales                            |  | $          | 403.7 |                          | $ | 153.2                |  | $               | 81.5 |  | $                            | 18.9 |   |      
|                                     |  |            |       |                          |   |                      |  |                 |      |  |                              |      |   |      
|Segment profit / (loss)              |  | $          | 68.3  |                          | $ | 23.5                 |  | $               | 12.0 |  | $                            | 2.4  |   |      
|                                     |  |            |       |                          |   |                      |  |                 |      |  |                              |      |   |      



Three Months Ended September 30,
2003 Compared with the Three Months Ended September 30, 2002



Pliant
U.S.



Net sales.The net sales of our Pliant U.S. segment increased
$7.0 million, or 5.1%, to $143.6 million for the third quarter of 2003 from $136.6 million for the second quarter of 2002. This increase was primarily due to a 6.2% increase in our average selling prices, principally due to the pass-through of raw
material price increases, partially offset by a decrease in sales volumes of 1.1%. The changes in sales volumes is discussed for each Pliant U.S. division below.



Net sales in our Industrial Films division increased $4.4 million, or 10.4%, to $46.6 million for the third quarter of 2003 from $42.2
million for the third quarter of 2002. This increase was principally due to an increase in our average selling prices of 10.6%, resulting from the pass-through of raw material price increases. Sales volumes for the quarter ended September 30, 2003
remained unchanged as compared to the same period in 2002. Net sales in our Specialty Films division increased $7.3 million, or 18.5%, to $46.7 million for the third quarter of 2003 from $39.5 million for the third quarter of 2002. This increase was
principally due to an increase in our sales volume of 17.2% and an increase in our average selling prices of 1.1%. The sales volume in the Specialty Films division for the third quarter of 2003 included the transfer of certain businesses from our
Converter Films division. Excluding the transfer of the business from our Converter Films division, the sales volume of our Specialty Films division increased 9.8% for the second quarter of 2003 as compared to the same period in 2002. The increase
in sales volume was primarily the result of incremental sales from a new film line at our Washington, Georgia plant and increased sales to existing customers. Average selling prices increased due to the pass-through of raw material price increases
and improvements in our sales mix. Net sales in our Converter Films division decreased $4.7 million, or 8.6%, to $50.2 million for the third quarter of 2003 from $54.9 million for the third quarter of 2002. This decrease was principally due to a
decrease in our sales volume of 13.6%, partially offset by an increase in our average selling prices of 5.8% resulting from the pass-through of raw material price increases and improvements in sales mix. The sales volumes



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decreased primarily as a result of the slowdown in the economy and the transfer of business to our Specialty Films division. Excluding the transfer of
business to the Specialty Films division, sales volume of the Converter Films division decreased 8.9% for the third quarter of 2003 as compared to the same period in 2002.



Segment profit. The Pliant U.S. segment profit was $22.8 million for the third quarter of 2003 as compared to $19.9 million for the
third quarter of 2002. This increase was principally due to increased gross margins and lower Selling, General and Administrative costs partially offset by the 1.1% decrease in sales volumes discussed above.



Pliant Flexible Packaging



Net sales.The net sales of our Pliant Flexible Packaging segment increased $2.5
million, or 4.5%, to $57.5 million for the third quarter of 2003 from $55.0 million for the third quarter of 2002. This increase was principally due to an increase in our average selling prices of 6.9% partially offset by a decrease in sales volumes
of 2.1%.



Segment profit. The Pliant Flexible Packaging segment profit
increased $0.8 million, or 9.8%, to $9.0 million for the third quarter of 2003 from $8.2 million for the third quarter of 2002. This increase in segment profit was primarily due to higher gross margins, partially offset by the effect of the 2.1%
decrease in sales volumes and higher selling general and administrative costs.



Pliant International



Net sales.The net sales of our
Pliant International segment increased $0.8 million, or 3.1%, to $26.5 million for the third quarter of 2003 from $25.7 million for the third quarter of 2002. This increase was principally due to an increase in our average selling prices of 12.6%
partially offset by a decrease in our sales volume of 8.2%. Average selling prices increased due to the pass-through of raw material price increases. Among other factors, our sales volumes were adversely affected by a reduction in sales of personal
care films.



Segment profit. The Pliant International segment profit
decreased $1.2 million to $1.0 million for the third quarter of 2003 from $2.2 million for the third quarter of 2002. The decrease was due principally to the decrease in sales volume. The gross margins in this segment remained relatively stable for
the third quarter of 2003, as compared to the same period of 2002, as increases in raw material prices were largely offset by higher average selling prices. However, during the last month of the third quarter of 2003 we have seen a substantial
deterioration in the margins of our Mexican operation due to the lack of sales to high margin customers. We expect this trend to continue until new business with higher margins is generated. In addition, we closed our facility in Brazil during the
third quarter of 2003. See Restructuring and Other Costs above. The impact of this closure is not material to ongoing sales and segment profits of the Pliant International segment.



Pliant Solutions



Net sales.Net sales for our Pliant Solutions segment decreased $1.8 million or 14.0% to $11.1 million for the three months ended
September 30, 2003 from $12.9 million for the three months ended September 30, 2002 principally due to a 6.0% decrease in sales volume and an 8.5 % decrease in average selling price. Sales volumes decreased due to lower sales to several major
customers as a result of weak customer demand. Selling prices decreased principally due to a change in sales mix, resulting in reduced sales of high margin products.



Segment profit. The Pliant Solutions segment incurred a loss of $5.4 million for the third quarter of 2003, as compared to segment
profit of $1.8 million for the same period in 2002. This decrease was due to the decrease in sales discussed above, higher raw material prices due to increases in resin prices and start-up problems for internally sourced material. In addition, a
$2.6 million charge for excess and obsolete inventory was recorded due to product changes at several large customers.



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Unallocated Corporate Expenses



Unallocated corporate expenses increased $3.2 million, or 80%, to $7.2 million for the third quarter of 2003 from $4.0 million for the third
quarter of 2002. This increase was principally due to severance costs related to the recent organizational changes of approximately $1.1 million, increased lease expenses resulting from a sale-leaseback of equipment we entered into at the end of the
third quarter of 2002, as well as increases in legal and consulting expenses partially offset by a reduction in travel expenses.



Nine Months Ended September 30, 2003 Compared with the Nine Months Ended September 30, 2002



Pliant U.S.



Net sales.The net sales of our Pliant U.S. segment increased $28.3 million, or 7.0%, to $432.0 million for the nine months ended September 30, 2003 from $403.7
million for the same period in 2002. This increase was primarily due to a 9.5% increase in our average selling prices, primarily due to the pass-through of raw material price increases, partially offset by a decrease in sales volumes of 2.3%. The
change in sales volumes is discussed for each Pliant U.S. division below.



Net
sales in our Industrial Films division increased $18.1 million, or 15.3%, to $136.6 million for the first nine months of 2003 from $118.5 million for the same period in 2002. This increase was principally due to an increase in our average selling
prices of 15.2%, principally due to the pass-through of raw material price increases, and a 0.2% increase in our sales volumes. Net sales in our Specialty Films division increased $18.7 million, or 15.7%, to $137.6 million for the first nine months
of 2003 from $118.9 million for the same period in 2002. This increase was principally due to an increase in our sales volume of 12.6%, an increase in our average selling prices of 2.8%. The increase in sales volume was primarily the result of
incremental sales from a new film line at our Washington, Georgia plant and the transfer of business from our Converter Films division. Excluding the transfer of business from our Converter Films division, sales volume of our Specialty Films
division increased 5.4% for the nine months ended September 30, 2003 as compared to the same period in 2002. Average selling prices increased due to the pass-through of raw material price increases and improvements in our sales mix. Net sales in our
Converter Films division decreased $8.5 million, or 5.1%, to $157.8 million for the first nine months of 2003 from $166.3 million for the same period in 2002. This decrease was principally due to a decrease in our sales volume of 13.9%, partially
offset by an increase in our average selling prices of 10.1% principally due to the pass-through of raw material price increases. The sales volumes decreased primarily as a result of the slowdown in the economy and the transfer of business to our
Specialty Films division. Excluding the transfer of business to the Specialty Films division, sales volume of the Converter Films division decreased 9.4 % for the first nine months of 2003 as compared to the same period in 2002.



Segment profit. The Pliant U.S. segment profit was $71.4 million for the first nine
months of 2003, as compared to $68.3 million for the same period in 2002. This increase was principally due to a decrease in Selling, General and Administrative costs partially offset by the effect of lower sales volumes discussed above. The affect
of the increase in selling prices was almost entirely offset by the increase in raw material prices, except in the Specialty Films business. In the Specialty Films division, incremental volumes at lower margins and the competitive environment in the
personal care business resulted in less than complete recovery of the increase in raw material prices.



Pliant Flexible Packaging



Net
sales.The net sales of our Pliant Flexible Packaging segment increased $9.7 million, or 6.3%, to $162.9 million for the first nine months of 2003 from $153.2 million for the same period in 2002. This increase was principally due to an increase
in our sales volumes of 1.6%, and an increase in our average selling prices of 4.7%.



Segment profit. The Pliant Flexible Packaging segment profit increased $0.9 million, to $24.4 million for the first nine months of 2003 from $23.5 million for the same period of 2002. This increase in segment profit was primarily due
to the effect of the increase in sales volume discussed above and slightly higher gross margins partially offset by higher Selling, General and Administrative expenses as a result of operating as a separate segment.



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Pliant International



Net sales.The net sales of our Pliant International segment increased $0.7 million, or 0.9%, to $82.2 million for the first nine months of 2003 from $81.5 million
for the same period in 2002. This increase was principally due to an increase in our average selling prices of 10.6% partially offset by a decrease in our sales volume of 8.7%. Among other factors, our sales volumes were adversely affected by a
reduction in sales of personal care films sold by our operation in Mexico. Average selling prices increased due to the pass-through of raw material price increases.



Segment profit. The Pliant International segment profit decreased $4.7 million to $7.3 million for the first nine months of 2003 from
$12.0 million for the same period in 2002. The decrease was due principally to the decrease in sales volume discussed above and a decrease in gross margins. The decrease in gross margins was principally due to higher conversion costs primarily at
our facility in Mexico.



Pliant Solutions



Our Pliant Solutions segment was created following the Decora acquisition in May 2002.
Therefore, a discussion of results of operations for this segment as compared to the nine months ended September 30, 2002 is not presented.



Pliant Solutions had net sales of $28.7 million and a segment loss of $7.0 million for the first nine months of 2003.



Unallocated Corporate Expenses



Unallocated corporate expenses increased $5.4 million or 47.4% to $16.8 million for the
first nine months of 2003 from $11.4 million for the same period in 2002. This increase was principally due to $1.1 million of severance costs related to recent organizational changes, increased lease expenses based on a sale-leaseback of equipment
we entered into at the end of the third quarter of 2002, as well as increases in legal and consulting expenses partially offset by a reduction in travel expenses.



Liquidity and Capital Resources



Our principal sources of funds are cash generated by our operations and borrowings under our credit facilities. In addition, we have raised funds through the issuance of
our senior subordinated notes and the sale of shares of our preferred stock.



Credit facilities



As amended, our credit facilities consist
of:



| |  | tranche A term loans in an aggregate principal amount of $9.6 million outstanding as of September 30, 2003;
| | - | -----------------------------------------------------------------------------------------------------------



| |  | Mexico term loans in an aggregate principal amount of $24.2 million outstanding as of September 30, 2003;
| | - | ---------------------------------------------------------------------------------------------------------



| |  | tranche B term loans in an aggregate principal amount of $185.8 million outstanding as of September 30, 2003; and
| | - | -----------------------------------------------------------------------------------------------------------------



| |  | revolving credit facility in an aggregate principal amount of up to $100 million. The available borrowing under this facility is limited by letters of credit outstanding and other
limitations to total debt incurrence. See discussion in Liquidity below.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Under the $100 million revolving credit facility discussed above, up to $30.0 million (plus an additional amount up to $40.0 million to support certain borrowings by our principal Mexican subsidiary) of the revolving
credit facility is available in the form of letters of credit.



Compliance
with financial covenants



Our credit facilities currently require us to
maintain certain key financial ratios on a quarterly basis. These key ratios include a leverage ratio and an interest coverage ratio. Effective March 24, 2003, we entered into an amendment (the



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Amendment) of our credit facilities to, among other things, permit us to issue up to $50 million of our common stock, qualified preferred stock,
warrants to acquire our common stock or qualified preferred stock, or any combination of our common stock, qualified preferred stock or warrants, or other capital contributions with respect to our common stock or qualified preferred stock. The
Amendment also adjusted certain financial covenants, including the leverage and interest coverage ratios. As a condition to the effectiveness of the Amendment, we agreed to issue 10,000 shares of our Series A preferred stock and warrants to purchase
43,962 shares of our common stock to J.P. Morgan Partners (BHCA), L.P. (J.P. Morgan Partners), and J.P. Morgan Partners agreed to purchase such shares and warrants for $10 million. We completed this sale on March 25, 2003. All of the
proceeds of this sale were used to reduce our term debt. In addition, the Amendment allows us to issue an additional $40 million of equity securities between March 25, 2003 and March 31, 2005 in order to obtain cash to reduce the revolving
borrowings and/or term borrowings under our credit facilities. J.P. Morgan Partners is required to purchase up to $25 million of such additional equity securities to the extent necessary to enable us to meet our leverage ratio or the first lien
leverage ratio specified in the Amendment at the end of any calendar quarter or fiscal year ending on or before December 31, 2004. Any such additional issuance of Series A preferred stock to J.P. Morgan Partners will also include warrants to
purchase 4.3962 shares of our common stock for every $1,000 face amount of preferred stock issued. Our obligations to issue, and J.P. Morgan Partners obligation to purchase such equity securities are set forth in a Securities Purchase
Agreement dated as of March 25, 2003. Generally, if we are required to issue any portion of such $25 million of equity securities under the Amendment with respect to any fiscal quarter in 2003, we must use 50% of the net proceeds from the issuance
of any such equity securities to reduce our revolving borrowings, and 50% to reduce our term borrowings. If we are required to issue any such equity securities under the Amendment with respect to any fiscal quarter in 2004, we must use 100% of the
net proceeds to reduce our term borrowings. The issuance of the remaining $15 million of equity securities is voluntary on our part, and neither J.P. Morgan Partners nor any other person is required to purchase such equity securities. We incurred an
amendment fee of $2.2 million in connection with the Amendment. We also incurred approximately $0.5 million of legal and administrative expenses in connection with negotiating the Amendment and the issuance of 10,000 shares of Series A preferred
stock and related warrants.



On May 22, 2003, we entered into an additional
amendment to our credit facilities, which permitted us to issue $250 million of senior secured notes, as described below, and, among other things:



| |  | required the prepayment of revolving loans with the net proceeds received from the issuance of the senior secured notes until $75.0 million (or, if less, all) of the revolving loans
were paid;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | required the prepayment of the tranche A term loans in an amount equal to 50% of the portion of such net proceeds not applied to the revolving loans and the prepayment of the
tranche B term loans in an amount equal to 50% of the portion of such net proceeds not applied to the revolving loans (subject to the right of the tranche B term lenders to reject such prepayment, to the extent tranche A term loans remain, in which
case such rejected prepayments were instead applied to the tranche A term loans); (A) with respect to the tranche A term loans, first, in direct order of maturities to reduce scheduled repayments of such loans through 2004, second, to reduce
scheduled repayments of such loans ratably for 2005, and third, with the balance of such portion, if any, to reduce the remaining scheduled repayments of such loans ratably; and (B) with respect to the tranche B term loans, to reduce the remaining
scheduled repayments of such loans ratably;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | added Uniplast Holdings Inc. and its United States subsidiaries as borrowers under our credit facilities for up to $9.4 million of loans;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------



| |  | adjusted the terms pursuant to which J.P. Morgan Partners is required to purchase up to $25 million of additional equity securities to the extent necessary to enable us to meet
certain leverage ratios;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | added a new financial covenant based on the ratio of indebtedness under the credit facilities and certain qualified receivables financings to consolidated EBITDA; and
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | adjusted certain financial and negative covenants, including the leverage and interest coverage ratios.
| | - | -------------------------------------------------------------------------------------------------------



We prepaid a total of $75.0 million of our revolving loans and $165 million of our term loans with the proceeds from the issuance of the
2003 Notes. Proposed tranche B payments of $22.8 million were rejected by tranche B lenders



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and applied to tranche A term loans. Accordingly, a total of $105.3 million was applied to tranche A term loans and $59.7 million was applied to tranche B
term loans.



At September 30, 2003, we were in compliance with the financial
covenants contained in our credit facilities, as amended. As always, our ability to continue to maintain compliance with these financial covenants will depend on our future earnings and cash flows. As described above, we can raise up to $25 million
pursuant to J.P. Morgan Partners commitment to purchase additional equity securities to the extent necessary to enable us to comply with the leverage ratios contained in the credit facilities. Our ability to comply with the interest coverage
ratio, however, will depend on our earnings and cash flows. Based on year-to-date earnings and forecasted earnings and cash flows for the fourth quarter, it is uncertain whether we will satisfy the interest coverage ratio for the twelve month period
ending December 31, 2003. If we are unable to obtain an appropriate waiver or amendment, if necessary, the failure to comply with the financial covenants would cause us to be in default under our credit facilities. Any such default would have a
material adverse effect on our liquidity and financial condition. As a result, if required, we intend to request a waiver of this covenant or an amendment to our credit facilities. On several occasions in the past, we have successfully obtained
amendments adjusting the financial covenants contained in our credit facilities to levels that would permit us to comply. However, we cannot assure you that we can obtain additional amendments.



We are required to make annual mandatory prepayments of the term loans under our credit
facilities within 90 days following the end of each year in an amount equal to the amount by which 100% of excess cash flow for such year (or 50% of excess cash flow if our leverage ratio at the end of such year is less than or equal to 4.0 to 1.0)
exceeds the aggregate amount of voluntary prepayments made since the last excess cash flow payment, subject to certain adjustments. In addition, the term loan facilities are subject to mandatory prepayments in an amount equal to (a) 100% of the net
cash proceeds of equity and debt issuances by us or any of our restricted subsidiaries, and (b) 100% of the net cash proceeds of asset sales or other dispositions of property by us or any of our restricted subsidiaries, in each case subject to
certain exceptions.



Senior secured notes



On May 30, 2003, we completed the sale of $250 million aggregate principal amount of 111/8% Senior Secured Notes Due 2009 (the 2003 Notes). The net proceeds from the sale of the 2003 Notes were
used to repay borrowings under our credit facilities in accordance with the amendment to our credit facilities, described above. The 2003 Notes rank equally with our existing and future senior debt and rank senior to our existing and future
subordinated indebtedness. The 2003 Notes are secured, on a second-priority lien basis, by a substantial portion of our assets. Due to this second-priority status, the 2003 Notes effectively rank junior to (1) our obligations under our credit
facilities and any other existing and future obligations secured by a first-priority lien on the collateral securing the 2003 Notes to the extent of the value of such collateral, and (2) our obligations under our credit facilities and any other
existing and future obligations that are secured by a lien on assets that are not part of the collateral securing the 2003 Notes, to the extent of the value of such assets. The 2003 Notes are guaranteed by some of our subsidiaries.



Prior to June 1, 2007, we may, on one or more occasions, redeem up to a
maximum of 35% of the original aggregate principal amount of the 2003 Notes with the net cash proceeds of one or more equity offerings by us at a redemption price equal to 111.125% of the principal amount thereof, plus accrued and unpaid interest.
Otherwise, we may not redeem the Notes prior to June 1, 2007. On or after that date, we may redeem some or all of the 2003 Notes at the following redemption prices (expressed as a percentage of principal amount), plus accrued and unpaid interest:
105.563% if redeemed prior to June 1, 2008; 102.781% if redeemed prior to June 1, 2009; and 100% if redeemed on or after June 1, 2009.



Senior subordinated notes



In 2000, we issued $220 million aggregate principal amount of 13% Senior Subordinated Notes due 2010. In 2002, we issued an additional $100 million of 13% Senior
Subordinated Notes due 2010. The Notes mature on June 1, 2010, and interest on the Notes is payable on June 1 and December 1 of each year. 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 Notes are unsecured. Prior to June 1, 2003, we may, on one or more occasions, redeem up to a maximum of 35% of the original
aggregate principal amount of the Notes with the net cash proceeds of one or more equity offerings by us at a redemption price equal to 113% of the principal amount thereof, plus accrued and unpaid interest. Otherwise, we may not redeem the



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Notes prior to June 1, 2005. On or after that date, we may redeem the Notes, in whole or in part, at the following redemption prices (expressed as
percentages of principal amount), plus accrued and unpaid interest: 106.5% if redeemed prior to June 1, 2006; 104.333% if redeemed prior to June 1, 2007; 102.167% if redeemed prior to June 1, 2008; and 100% if redeemed on or after June 1, 2008.



Preferred stock



We have approximately $141 million of Series A Cumulative Exchangeable Redeemable Preferred
Stock outstanding. The Series A preferred stock accrues dividends at the rate of 14% per annum; however, our board of directors has never declared or paid any dividends on the Series A preferred stock. Unpaid dividends accumulate and are added to
the liquidation amount of the Series A preferred stock. The total liquidation amount as of September 30, 2003, including unpaid dividends is approximately $181 million. After May 31, 2005 the annual dividend rate increases to 16% unless we pay
dividends in cash. The dividend rate also increases to 16% if we fail to comply with certain of our obligations or upon certain events of bankruptcy. The Series A Preferred Stock is mandatorily redeemable on May 31, 2011.



Net Cash Used in Operating Activities



Net cash used in operating activities was $23.7 million for the nine months ended September
30, 2003, a decrease of $66.2 million, as compared to net cash provided by operations of $42.5 million for the same period in 2002. This decrease was largely due to a decrease in operating results and changes in working capital items, including
increases in accounts receivable, inventories and significant decreases in accounts payable and accrued liabilities. Accounts receivable increased principally due to increases in selling prices for our products. Inventories increased principally due
to higher raw material prices. Accounts payable and accrued liabilities decreased principally due to revised payment terms with our raw material suppliers due to the increased liquidity as a result of the recent financing.



Net Cash Used in Investing Activities



Net cash used in investing activities was $14.4 million for the nine months ended September
30, 2003, as compared to $37.5 million for the same period in 2002. Capital expenditures for the first nine months of 2003 were principally for ongoing maintenance. Capital expenditures in the first nine months of 2002 were primarily for expansion
projects as well as ongoing maintenance costs. In addition, net cash used in investing activities for the nine month ended September 30, 2002 included $20.6 million for the purchase of the Decora business and $1.5 million for the purchase of
Roll-O-Sheets. In addition, during the nine months ended September 30, 2002 we received $15.0 million of sales proceeds through a sale and lease back transaction and $3.6 million from the sale of land and buildings.



Net Cash Provided by Financing Activities



Net cash provided by financing activities was $46.8 million for the nine months ended
September 30, 2003, as compared to net cash used in financing activities of $8.7 million for the nine months ended September 30, 2002. The activity for the first nine months of 2003 includes the net proceeds from the issuance of $10 million of
Series A preferred stock and warrants, the net proceeds from the issuance of $250 million principal amount of senior secured notes in May 2003, and the use of these proceeds to repay term debt. In addition, we paid $10.5 million in financing fees
for a related amendment to our credit facilities and the issuance of the Series A preferred stock and warrants. The activity for both periods also includes scheduled principal payments on our term loans and borrowings and repayments under our
revolving credit facility.



Liquidity



As of September 30, 2003, we had approximately $95.3 million of working capital. As of
September 30, 2003, we had approximately $88.0 million available for borrowings under our $100.0 million revolving credit facility, with no outstanding borrowings and approximately $6.7 million of letters of credit issued under our revolving credit
facility. Our outstanding borrowings under our revolving credit facility fluctuate significantly during each quarter as a result of the timing of payments for raw materials, capital and interest, as well as the timing of customer collections.



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As of September 30, 2003, we had approximately $10.0 million in cash and cash equivalents. A portion of this amount was
held by our foreign subsidiaries. Repatriation tax rates may limit our ability to access cash and cash equivalents generated by our foreign operations for use in our U.S. operations, including to pay principal and interest on outstanding borrowings.



We expect that our total capital expenditures will be approximately $20
million to $30 million in each of 2003 and 2004. These expenditures will consist of ongoing maintenance of business projects, productivity improvement projects and minor expansion of business and growth projects.



The following table sets forth our total contractual cash obligations as of September 30,
2003 (in thousands):



|                                                     |  |       |           | Payments Due by Period
|---------------------------------------------------- |  | ----- | --------- | ----------------------
|Contractual Cash Obligations                         |  | Total |           | Less than 1 year      
|Long-term debt (including capital lease obligations) |  | $     | 784,131   |                       
|Operating leases                                     |  |       | 59,056    |                       
|Redeemable preferred stock                           |  |       | 180,769   |                       
|                                                     |  |       |           |                       
|Total contractual cash obligations                   |  | $     | 1,023,956 |                       



After giving effect to payments made
through September 30, 2003, our estimated debt service for the remainder of 2003 is approximately $26.3 million, consisting solely of interest payments. Although our outstanding preferred stock accrues dividends, these dividends are only paid if
declared. We do not expect to pay any dividends on our preferred stock for the foreseeable future.



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. These risks include, but are not limited to: general economic and business conditions, particularly an economic downturn; industry trends; increases in our leverage; interest rate increases; changes in our ownership structure; raw
material costs and availability, particularly resin; competition; the loss of any of our significant customers; changes in the demand for our products; new technologies; changes in distribution channels or competitive conditions in the markets or
countries in which we operate; costs of integrating any future acquisitions; loss of our intellectual property rights; foreign currency fluctuations and devaluations and political instability in our foreign markets; changes in our business strategy
or



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development plans; availability, terms and deployment of capital; availability of qualified personnel; and increases in the cost of compliance with laws and
regulations, including environmental laws and regulations. Each of these risks and certain other uncertainties are discussed in more detail in the 2002 10-K and in our Registration Statements on Form S-1 (file no. 333-106432), as amended, and on
Form S-4 (File No 333-107843 filed with the Securities and Exchange Commission. 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.



|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 $0.2 million, after accounting for the effect of our interest rate hedge agreements.



|ITEM 4. |  | CONTROLS AND PROCEDURES
|------- |  | -----------------------



Disclosure Controls and Procedures



We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our filings under the Securities Exchange Act of
1934 is recorded, processed, summarized and reported within the periods specified in the rules and forms of the Securities and Exchange Commission. This information is accumulated and communicated to our management, including our principal executive
officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Our management, including our principal executive officer and principal financial officer, recognizes that any set of controls and
procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.



Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation
of our disclosure controls and procedures as of the end of the period covered by this report. Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures are
effective in alerting them on a timely basis to material information required to be disclosed in our periodic filings.



Changes in Internal Control Over Financial Reporting



There were no changes in our internal control over financial reporting that occurred during our last fiscal quarter that have materially affected or are reasonably likely
to materially affect our internal control over financial reporting.



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PART II. OTHER INFORMATION



|ITEM 6. |  | EXHIBITS AND REPORTS ON FORM 8-K
|------- |  | --------------------------------





|     |  
|---- | -
|(a   | )
|     |  
|10.1 |  
|     |  
|10.2 |  
|     |  
|10.3 |  
|     |  
|10.4 |  
|     |  
|10.5 |  
|     |  
|31.1 |  
|     |  
|31.2 |  
|     |  
|32   |  
|     |  
|(b   | )
|     |  
|     |  
|     |  
|     |  
|     |  
|     |  
|     |  
|     |  



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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 CORPORATIONBy:

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




Date: November 12, 2003





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INDEX TO EXHIBITS



|Exhibits |  |                                                                                                                                                                                                                                   
|-------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|         | 
|10.1     |  | Consulting Agreement, dated as of August 24, 2003, between Pliant Corporation and Edward A. Lapekas (incorporated by reference to Exhibit 10.63 to Pliant Corporations
Registration Statement on Form S-4 (File No. 333-107843)).
|         | 
|10.2     |  | Separation Agreement, dated as of August 27, 2003, between Pliant Corporation and Elise H. Scroggs (incorporated by reference to Exhibit 10.65 to Pliant Corporations
Registration Statement of Form S-4 (File No. 333-107843)). 
|         | 
|10.3     |  | Separation Agreement, dated as of September 8, 2003, between Pliant Corporation and Jack E. Knott (incorporated by reference to Exhibit 10.64 to Pliant Corporations
Registration Statement of Form S-4 (File No. 333-107843)).  
|         | 
|10.4     |  | Retention Bonus Agreement, dated as of September 26, 2003, between Pliant Corporation and Stanley B. Bikulege.                                                                                                                    
|         | 
|10.5     |  | Retention Bonus Agreement, dated as of September 26, 2003, between Pliant Corporation and Len Azzaro.                                                                                                                             
|         | 
|31.1     |  | Rule 15d-14(a) Certification, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                               
|         | 
|31.2     |  | Rule 15d-14(a) Certification, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                               
|         | 
|32       |  | Section 1350 Certification, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                 



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