================================================================================
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                -----------------

                                    FORM 10-Q

(MARK ONE)

 |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
     ACT OF 1934

     FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2004

                                       OR

 |_| TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR  15(D)  OF THE  SECURITIES
     EXCHANGE ACT OF 1934

     FOR THE TRANSITION PERIOD FROM                   TO

                        COMMISSION FILE NUMBER 333-40067

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

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

                         1475 WOODFIELD ROAD, SUITE 700
                              SCHAUMBURG, IL 60173
                                 (847) 969-3300
          (Address of principal executive offices and telephone number)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes |X| No |_|

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 August 4, 2004, there were
571,711 outstanding shares of the registrant's Common Stock.

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

<PAGE>

                       PLIANT CORPORATION AND SUBSIDIARIES

                                TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

    ITEM 1. FINANCIAL STATEMENTS

        CONDENSED CONSOLIDATED BALANCE SHEETS AS OF JUNE 30,               3
           2004 AND DECEMBER 31, 2003

        CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR                4
           THE THREE AND SIX MONTHS ENDED JUNE 30, 2004 AND 2003

        CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR                5
           THE SIX MONTHS  ENDED JUNE 30, 2004 AND 2003

        CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS'                  6
           DEFICIT FOR THE SIX MONTHS ENDED JUNE 30, 2004

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS               7

    ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF                        22
       FINANCIAL CONDITION AND RESULTS OF OPERATIONS

    ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK     32

    ITEM 4. CONTROLS AND PROCEDURES                                        32

PART II. OTHER INFORMATION                                                 33

    ITEM 1. LEGAL PROCEEDINGS                                              33

    ITEM 2. CHANGES IN SECURITIES, USE OF PROCEEDS AND                     33
       ISSUER PURCHASES OF EQUITY SECURITIES

    ITEM 3.  DEFAULTS UPON SENIOR SECURITIES                               33

    ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS            33

    ITEM 5. OTHER INFORMATION                                              33

    ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K                               33

--------------------------------------------------------------------------------

<PAGE>


                          PART I. FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

PLIANT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2004 AND DECEMBER 31, 2003 (DOLLARS IN THOUSANDS) (UNAUDITED)

<TABLE>
<CAPTION>
<S>                                                                                      <C>                  <C>

                                                                                        JUNE 30, 2004        DECEMBER 31, 2003
                                                                                      -------------------  ----------------------
ASSETS
CURRENT ASSETS:
     Cash and cash equivalents                                                        $            3,684   $               3,308
     Receivables, net of allowances of $5,317 and $5,776 respectively                            127,292                 111,942
     Inventories                                                                                  89,149                  95,219
     Prepaid expenses and other                                                                    3,919                   3,809
     Income taxes receivable, net                                                                     --                   1,436
     Deferred income taxes                                                                         7,901                   9,417
                                                                                      -------------------  ----------------------
          Total current assets                                                                   231,945                 225,131

PLANT AND EQUIPMENT, net                                                                         305,748                 319,569
GOODWILL                                                                                         182,150                 182,162
INTANGIBLE ASSETS, net                                                                            18,386                  19,752
OTHER ASSETS                                                                                      39,094                  40,172
                                                                                      -------------------  ----------------------
TOTAL ASSETS                                                                          $          777,323   $             786,786
                                                                                      ===================  ======================

LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
     Trade accounts payable                                                           $           94,047   $              89,800
     Accrued liabilities:
        Interest payable                                                                          14,095                  19,775
        Customer rebates                                                                           6,793                   7,924
        Other                                                                                     34,965                  35,947
     Current portion of long-term debt                                                               201                   1,033
                                                                                      -------------------  ----------------------
          Total current liabilities                                                              150,101                 154,479
LONG-TERM DEBT, net of current portion                                                           813,969                 782,624
OTHER LIABILITIES                                                                                 26,696                  27,493
DEFERRED INCOME TAXES                                                                             26,644                  27,792
SHARES SUBJECT TO MANDATORY REDEMPTION (Note 10)                                                 211,618                      --
                                                                                      -------------------  ----------------------
          Total Liabilities                                                                    1,229,028                 992,388
                                                                                      -------------------  ----------------------
MINORITY INTEREST                                                                                    198                     291
                                                                                      -------------------  ----------------------
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 at December 31, 2003                                                            --                 188,223
                                                                                      -------------------  ----------------------
REDEEMABLE COMMON STOCK - no par value; 60,000 shares authorized; 10,873 shares
   outstanding as of June 30, 2004 and 29,073 shares outstanding as of December 31,
   2003, net of related stockholders' notes receivable of  $1,827 at June 30, 2004
   and $4,258 at December 31, 2003                                                                 6,645                  13,008
                                                                                      -------------------  ----------------------
STOCKHOLDERS' DEFICIT:
     Common stock - no par value; 10,000,000 shares authorized, 542,638  shares
        outstanding at June 30, 2004 and December 31, 2003                                       103,376                 103,376
     Warrants to purchase common stock                                                            39,133                  39,133
     Accumulated deficit                                                                        (589,180)               (537,052)
     Stockholders' notes receivable                                                                 (660)                   (660)
     Accumulated other comprehensive income (loss)                                               (11,217)                (11,921)
                                                                                      -------------------  ----------------------
          Total stockholders' deficit                                                           (458,548)               (407,124)
                                                                                      -------------------  ----------------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                                           $          777,323   $             786,786
                                                                                      ===================  ======================

</TABLE>

See notes to condensed consolidated financial statements.


<PAGE>


PLIANT CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE  THREE  AND SIX  MONTHS  ENDED  JUNE 30,  2004  AND 2003 (IN  THOUSANDS)
(UNAUDITED)

<TABLE>
<CAPTION>
<S>                                                                           <C>         <C>           <C>          <C>

                                                                              THREE MONTHS ENDED          SIX MONTHS ENDED
                                                                                   JUNE 30,                   JUNE 30,
                                                                          ------------------------------------------------------
                                                                                  2004        2003          2004          2003

NET SALES                                                                     $  242,696  $  226,573    $  486,863   $  467,084

COST OF SALES                                                                    207,145     190,332       414,520      388,046
                                                                          ------------------------------------------------------

     Gross profit                                                                 35,551      36,241        72,343       79,038

OPERATING EXPENSES:
     Sales, General and Administrative                                            21,632      22,257        42,615       43,573
     Research and Development                                                      1,432       1,380         3,264        2,757
     Restructuring and Other Costs                                                    --       2,543            --        8,607
                                                                          ------------------------------------------------------

          Total operating expenses                                                23,064      26,180        45,879       54,937
                                                                          ------------------------------------------------------

OPERATING INCOME                                                                  12,487      10,061        26,464       24,101

INTEREST EXPENSE-Current and Long-term debt (note 4, 8)                          (24,569)    (27,382)      (59,168)     (47,238)

INTEREST EXPENSE-Dividends and accretion on Redeemable Preferred Stock
   (note 10)                                                                      (8,666)          --      (17,033)           --
OTHER INCOME(EXPENSE) - Net                                                           87       1,263           (31)       1,759
                                                                          ------------------------------------------------------

INCOME(LOSS) BEFORE INCOME TAXES                                                 (20,661)    (16,058)      (49,768)     (21,378)

INCOME TAX EXPENSE (BENEFIT)                                                         708       2,843         2,360        4,866
                                                                          ------------------------------------------------------
NET INCOME(LOSS)                                                               $ (21,369)  $ (18,901)    $ (52,128)   $ (26,244)
                                                                          ======================================================

</TABLE>

See notes to condensed consolidated financial statements.


<PAGE>


PLIANT CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003 (IN THOUSANDS) (UNAUDITED)

<TABLE>
<CAPTION>
<S>                                                                                              <C>               <C>

                                                                                                     2004               2003
                                                                                              ----------------  -----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net  income (loss)                                                                            $    (52,128)      $    (26,244)
   Adjustments to reconcile net income (loss) to net cash (used in)/ provided by operating
     activities:
        Depreciation and amortization                                                                  21,892             24,538
        Amortization of deferred financing costs and accretion of debt discount                        19,599              7,648
        Deferred dividends and accretion on preferred shares                                           17,033                 --
        Deferred income taxes                                                                             820              1,041
        Provision for losses on accounts receivable                                                       487                331
        Non-cash plant closing costs                                                                       --              3,260
        Gain or loss on disposal of assets                                                                (11)               148
        Changes in assets and liabilities:
          Receivables                                                                                 (16,518)           (11,060)
          Inventories                                                                                   5,732            (12,032)
          Prepaid expenses and other                                                                     (123)               133
          Income taxes payable/receivable                                                               1,773              1,112
          Other assets                                                                                    649             (1,697)
          Trade accounts payable                                                                        4,752            (13,072)
          Accrued liabilities                                                                          (5,132)            (8,894)
          Other liabilities                                                                              (601)             1,811
          Other                                                                                           (93)              (192)
                                                                                              ----------------  -----------------
             Net cash (used in) / provided by operating activities                                     (1,869)           (33,169)
                                                                                              ----------------  -----------------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Capital expenditures for plant and equipment                                                       (11,132)           (10,722)
                                                                                              ----------------  -----------------

             Net cash used in investing activities                                                    (11,132)           (10,722)
                                                                                              ----------------  -----------------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Net proceeds from issuance of preferred stock                                                           --              9,532
   Net proceeds from issuance of senior secured discount notes                                        225,299                 --
   Proceeds from issuance of senior subordinated debt                                                      --            250,000
   Payment of financing fees                                                                           (9,327)            (9,734)
   Repayments/Payments of term debt and revolver                                                     (219,575)          (252,028)
   Repayment of capital leases and other, net                                                          (1,077)                --
   Proceeds from revolving debt - net                                                                  16,000             48,206
                                                                                              ----------------  -----------------

             Net cash provided by (used in) / financing activities                                     11,320             45,976
                                                                                              ----------------  -----------------

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS                                            2,057              1,397
                                                                                              ----------------  -----------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                                      376              3,482

CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD                                                      3,308              1,635
                                                                                              ----------------  -----------------
CASH AND CASH EQUIVALENTS, END OF THE PERIOD                                                     $      3,684       $      5,117
                                                                                              ================  =================

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
   Cash paid (received) during the period for:
        Interest                                                                                 $     43,170       $     36,902
        Income taxes                                                                                    2,090              2,841
   Other non-cash disclosure:
        Preferred Stock dividends accrued but not paid                                           $     16,112       $     12,864

See notes to condensed consolidated financial statements.

</TABLE>



PLIANT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
FOR THE SIX MONTHS ENDED JUNE 30, 2004   (IN THOUSANDS) (UNAUDITED)

<TABLE>
<CAPTION>
<S>                      <C>       <C>          <C>                 <C>                <C>              <C>              <C>

                                                                                                     ACCUMULATED
                        COMMON STOCK          WARRANTS                             STOCKHOLDERS'        OTHER
                     --------------------    TO PURCHASE        ACCUMULATED            NOTES        COMPREHENSIVE
                      SHARES    AMOUNT      COMMON STOCK          DEFICIT           RECEIVABLE      INCOME (LOSS)      TOTAL
                     --------- ---------- ------------------ ------------------  ------------------ --------------- ------------

BALANCE,
   DECEMBER 31,
   2003                 543    $ 103,376      $   39,133         $ (537,052)         $    (660)       $  (11,921)    $ (407,124)

Net loss                                                            (52,128)                                            (52,128)
Accumulated fair
   value change in
   interest rate
   derivatives
   charged to
   interest expense,
   net of taxes                                                                                            2,220          2,220
Foreign currency
   translation
   adjustment                                                                                             (1,516)        (1,516)
                     --------- ---------- ------------------ ------------------  ------------------ --------------- ------------

BALANCE, JUNE 30,
   2004                 543    $ 103,376      $   39,133         $ (589,180)         $    (660)       $  (11,217)    $ (458,548)
                     ========= ========== ================== ==================  ================== =============== ============

</TABLE>

See notes to condensed consolidated financial statements.

<PAGE>


PLIANT CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1.   BASIS OF PRESENTATION

     The  accompanying  condensed  consolidated  financial  statements have been
     prepared,  without  audit,  in  accordance  with  U.S.  generally  accepted
     accounting  principles  and  pursuant to the rules and  regulations  of the
     Securities and Exchange  Commission.  The  information  reflects all normal
     recurring adjustments that, in the opinion of management, are necessary for
     a fair  presentation of the financial  position,  results of operations and
     cash  flows of  Pliant  Corporation  and its  subsidiaries  ("Pliant,"  the
     "Company" or "we") as of the dates and for the periods  presented.  Results
     of  operations  for the  periods  ended June 30,  2004 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,  2003  and the  Company's  Registration
     Statement on Form S-4, as amended (File No  333-114608)  filed on April 20,
     2004.   Certain   reclassifications   have  been  made  to  the   condensed
     consolidated  financial  statements for the periods ended June 30, 2003 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 June 30, 2004 and December 31,
     2003 consisted of the following (in thousands):

                                     JUNE 30, 2004       DECEMBER 31, 2003
                                  --------------------  ---------------------

           Finished goods           $        51,760       $       55,858
           Raw materials                     26,968               28,551
           Work-in-process                   10,421               10,810
                                  --------------------  ---------------------

           Total                    $        89,149       $       95,219
                                  ====================  =====================

3.   RESTRUCTURING AND OTHER COSTS

     Restructuring  and other costs include plant closing costs (including costs
     related to relocation of manufacturing equipment), office closing costs and
     other costs related to workforce reductions.

     The following table summarizes  restructuring and other costs for the three
     and six months ended June 30 (in thousands):

<TABLE>
<CAPTION>
<S>                                                                      <C>             <C>           <C>           <C>

                                                                            THREE MONTHS ENDED            SIX MONTHS ENDED
                                                                                 JUNE 30,                     JUNE 30,
                                                                      -----------------------------------------------------------
                                                                           2004            2003         2004           2003
                                                                      --------------- --------------------------- ---------------
                  PLANT CLOSING COSTS:
                     Severance                                           $      --       $  (192)      $    --       $     108
                     Relocation of production lines                             --           962            --           2,256
                     Other plant closure costs                                  --         1,226            --           4,329
                                                                      ------------- --------------------------- ---------------
                                                                                --         1,996            --           6,693
                                                                      ------------- --------------------------- ---------------
                  OFFICE CLOSING AND WORKFORCE REDUCTION COSTS:
                     Severance                                                  --           547            --             557
                     Leases                                                     --            --            --           1,357
                                                                      ------------- --------------------------- ---------------
                                                                                --           547            --           1,914
                                                                      ------------- --------------------------- ---------------
                                                                         $      --       $ 2,543      $     --       $   8,607
                                                                      =============== =========================== ===============

</TABLE>


     2003 ACCRUALS:

     PLANT  CLOSING COSTS - During the first half 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 plant to our
other facilities.

     OFFICE  CLOSING AND  WORKFORCE  REDUCTION  COSTS - During the first half 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 sub-lessees defaulted on the subleases.

     The  following  table  summarizes  the  roll-forward  of the  reserve  from
December 31, 2003 to June 30, 2004:


                 ACCRUALS FOR THE SIX MONTHS ENDED JUNE 30, 2004
            --------------------------------------------------------

<TABLE>
<CAPTION>
<S>                       <C>         <C>     <C>        <C>       <C>        <C>     <C>       <C>    <C>       <C>         <C>

                              12/31/2003                                                                             6/30/ 04
                       --------------------                                         OTHER                     -------------------
                                                                RELOCATED           PLANT
                       # EMPLOYEES ACCRUAL ADDITIONAL           PRODUCTION         CLOSURE          PAYMENTS/ # EMPLOYEES ACCRUAL
                        TERMINATED BALANCE EMPLOYEES  SEVERANCE   LINES    LEASES   COSTS    TOTAL   CHARGES   TERMINATED BALANCE
                       ----------- ------- ---------- --------- ---------- ------ --------- ------- --------- ----------- -------
PLANT CLOSING COSTS:

Merced                      54     $ 1,235      --         --        --       --       --    $ --    $ (170)        54    $ 1,065
Shelbyville                  8         --       --         --        --       --       --      --       --           8        --
Toronto                      4         --       --         --        --       --       --      --       --           4        --
Pliant Solutions           148         541      --         --        --       --       --      --      (112)       165        429
Mexico                      17         --       --         --        --       --       --      --       --         --         --
Leases                     --        2,004      --         --        --       --       --      --      (175)       --       1,829
                       ------------------------------ ---------------------------------------------------------------------------
                           231     $ 3,780      --         --        --       --       --    $ --    $ (457)       231    $ 3,323
                       ------------------------------ ---------------------------------------------------------------------------

OFFICE CLOSING AND
   WORKFORCE REDUCTION
   COSTS:
Leases                     --      $ 1,129      --         --        --       --       --    $ --    $ (298)       --     $   831
Severance                  114         237      --         --        --       --       --      --      (153)       114         84
Singapore                  --          152      --         --        --       --       --      --       (23)       --         129
                       ----------------------------------------------------------------------------------------------------------
                           114     $ 1,518      --         --        --       --       --    $ --    $ (474)       114      1,044
                       ----------------------------------------------------------------------------------------------------------

        TOTAL              345     $ 5,298      --         --        --       --       --    $ --    $ (931)       345    $ 4,367
                       ============================== ===========================================================================

</TABLE>

     PLANT CLOSING COSTS AND OFFICE CLOSING AND WORKFORCE REDUCTION COSTS

     2004  ACCRUALS  -There were no  accruals  made in 2004.  The only  activity
during the six months related to payments charged to the accrual.

<PAGE>


4.   INTEREST EXPENSE - CURRENT AND LONG-TERM DEBT

Interest expense - current and long-term debt in the statement of operations for
the three and six months ended June 30, 2004 and 2003 are as follows:

<TABLE>
<CAPTION>
<S>                                                                       <C>            <C>             <C>             <C>

                                                                          THREE MONTHS ENDED              SIX MONTHS ENDED
                                                                               JUNE 30,                       JUNE 30,
                                                                     ----------------------------- ------------------------------
                                                                           2004           2003            2004            2003
                                                                     -------------- -------------- --------------- --------------
Interest expense accrued, net                                          $   23,488     $   20,796      $   46,821      $  39,244
Recurring amortization of financing fees                                    1,081          1,292           2,229          2,700
Write-off of previously capitalized financing fees and interest rate
   derivatives costs(a)                                                       --           5,294          10,118          5,294
                                                                     -------------- -------------- --------------- --------------

TOTAL                                                                  $   24,569     $   27,382      $   59,168      $  47,238
                                                                     ============== ============== =============== ==============
Cash interest payments                                                 $   22,316     $   30,501      $   43,170      $  36,902
                                                                     ============== ============== =============== ==============

</TABLE>

-------------
(a) This write-off  resulted from the repayment of the old credit  facilities in
February  2004,  from the net proceeds  from the issuance of the senior  secured
discount notes and borrowings under our revolving credit facility.  In May 2003,
a portion of the financing fees capitalized in connection with our then existing
credit  facilities  was written off in  connection  with the  amendment to these
agreements.


5.   STOCK OPTION PLANS

     During the three and six months  ended  March 31,  2004 and June 30,  2004,
     options to purchase 4,365 and 8,815 shares respectively 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 six month periods ended June 30,
     2004 and June 30, 2003. 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 six
     month  periods  ended June 30, 2004 and 2003 would have been the  following
     pro forma amounts (in thousands):

<TABLE>
<CAPTION>
<S>                                                                    <C>            <C>            <C>           <C>

                                                                         THREE MONTHS ENDED             SIX MONTHS ENDED
                                                                              JUNE 30,                      JUNE 30,
                                                                     ---------------------------- -----------------------------
                                                                         2004           2003           2004          2003
                                                                     -------------- ------------- -----------------------------

                  As reported                                          $ (21,369)     $ (18,901)     $ (52,128)    $ (26,244)
                  Pro forma stock compensation expense                      (200)          (188)          (400)         (376)
                                                                     -------------- ------------- -----------------------------
                  Pro forma                                            $ (21,569)     $ (19,089)     $ (52,528)    $ (26,620)
                                                                     ============== ============= =============================

</TABLE>

6.   INCOME TAXES

     For the three  months  ended June 30,  2004,  income tax  expense  was $0.7
million on pretax  losses of $20.7  million as compared to income tax expense of
$2.8 million on pretax loss of $16.0 million for the three months ended June 30,
2003.  For the six months  ended June 30,  2004,  income  tax  expense  was $2.4
million on pretax loss of $49.8  million  compared to income tax expense of $4.9
million on pretax loss of $21.4  million for the six months ended June 30, 2003.
Income tax benefits  related to net  operating  losses in the United  States are
offset by a valuation allowance as the realization of these tax benefits are not
certain.  Therefore,  the income tax  expense in the  statements  of  operations
primarily reflects foreign income taxes.

7.   COMPREHENSIVE INCOME/(LOSS)

     Other comprehensive  income (loss) for the three months ended June 30, 2004
and  2003  was  ($22.1)  million  and  ($14.1)  million,   respectively.   Other
comprehensive  income (loss) for the six months ended June 30, 2004 and 2003 was
($51.4)  million and ($21.6)  million,  respectively.  The  components  of other
comprehensive  income  (loss) are net income  (loss),  the change in  cumulative
unrealized  losses on  derivatives  recorded in  accordance  with  Statement  of
Financial Accounting Standards No. 133 and foreign currency translation.


<PAGE>


8.   REVOLVING CREDIT FACILITY AND ISSUANCE OF SENIOR SECURED DISCOUNT NOTES DUE
     2009

     Long-term  debt as of June 30, 2004 and December  31, 2003  consists of the
     following (in thousands):

<TABLE>
<CAPTION>
<S>                                                                                           <C>               <C>
                                                                                                JUNE 30,         DECEMBER 31,
                                                                                                  2004               2003
                                                                                            ----------------  -----------------
Credit Facilities:
Revolving credit facility                                                                     $    16,000       $       --
Tranche A and B term loans under old credit facilities                                                --            219,575
Senior secured discount notes at 11 1/8%, net of unamortized issue discount                       234,617               --
Senior secured notes, interest at 11 1/8%                                                         250,000           250,000
Senior subordinated notes, interest at 13.0% (net of unamortized issue discount,
   premium and discount related to warrants)                                                      312,795           312,402
Obligations under capital leases                                                                      758               856
Insurance financing                                                                                   --                824
                                                                                            ----------------  -----------------
Total                                                                                             814,170           783,657
Less current portion                                                                                 (201)           (1,033)
                                                                                            ----------------  -----------------
Long-term portion                                                                             $   813,969       $   782,624
                                                                                            ================  =================

</TABLE>


On February 17, 2004 we repaid the balance  outstanding on the credit facilities
that existed on that date from the proceeds from the issuance of Senior  Secured
Discount Notes (discussed  below) and the revolving  credit facility  (discussed
below).

REVOLVING CREDIT FACILITY

     On February 17, 2004, we entered into a revolving credit facility providing
up to $100 million  (subject to a borrowing base). The revolving credit facility
includes a $15 million  letter of credit  sub-facility,  with  letters of credit
reducing availability under the revolving credit facility.

     The  revolving  credit  facility  is secured by a first  priority  security
interest in substantially all inventory,  receivables, deposit accounts, 100% of
capital  stock of, or other equity  interests  in existing  and future  domestic
subsidiaries and foreign  subsidiaries that are note guarantors,  and 65% of the
capital  stock of, or other equity  interests in existing and future  first-tier
foreign  subsidiaries,  investment  property  and  certain  other  assets of the
Company  and the  note  guarantors  (the  "Second  Priority  Collateral")  and a
second-priority  security  interest in our real property,  fixtures,  equipment,
intellectual property and other assets ("First Priority Collateral").

     The revolving  credit facility matures on February 17, 2009. The Company is
subject to  periodic  reporting  of a  borrowing  base  consisting  of  eligible
accounts receivable and eligible inventory. The interest rates are at LIBOR plus
2.5% to 2.75%  or ABR  plus  1.5% - 1.75%.  The  commitment  fee for the  unused
portion of the revolving credit facility is 0.50% per annum.

     The borrowings under the revolving credit facility may be limited to 75% of
the lesser of the total commitment at such time and the borrowing base in effect
at such  time if the  fixed  coverage  ratio  defined  in the  revolving  credit
facility is less than or equal to 1.10 to 1.00.

ISSUANCE OF 11 1/8% SENIOR SECURED DISCOUNT NOTES DUE 2009

     On February 17, 2004 we completed the sale of $306 million  ($225.3 million
of proceeds)  principal  amount at maturity of 11 1/8% Senior  Secured  Discount
Notes due 2009.  The proceeds of this offering and the  borrowing  under the new
revolving credit facility (discussed above) were used to repay and terminate the
credit facilities that existed at December 31, 2003.

<PAGE>


     The Senior Secured Discount Notes are secured by a first priority  security
interest  in  the  First-Priority  Collateral  and  a  second-priority  security
interest in the Second-Priority Collateral.

     Unless we elect to pay cash interest as described  below,  and except under
certain limited circumstances,  the notes will accrete from the date of issuance
at the rate of 11 1/8% until December 15, 2006, compounded  semiannually on each
June 15 and December 15,  commencing  June 15, 2004,  to an aggregate  principal
amount  of  $1,000  per  note  ($306.0  million  in the  aggregate  assuming  no
redemption or other  repayments).  Commencing on December 15, 2006,  interest on
the notes  will  accrue at the rate of 11 1/8% per annum and will be  payable in
cash semiannually on June 15 and December 15, commencing on June 15, 2007.

     On any interest  payment  date prior to December 15, 2006,  we may elect to
commence  paying cash interest  (from and after such  interest  payment date) in
which case (i) we will be  obligated  to pay cash  interest  on each  subsequent
interest  payment date, (ii) the notes will cease to accrete after such interest
payment date and (iii) the outstanding  principal  amount at the stated maturity
of each note  will  equal the  accreted  value of such note as of such  interest
payment date.

     On or after June 15,  2007,  we may redeem  some or all of the 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 15, 2008;
102.781% if redeemed  prior to June 15,  2009;  and 100% if redeemed on or after
June 15,  2009.  Prior to such  date,  we may not  redeem  the  notes  except as
described in the following paragraph.

     At any time prior to June 15, 2007, we may redeem up to 35% of the accreted
value of the notes with the net cash proceeds of certain equity  offerings by us
at a  redemption  price equal to 111.125% of the  accreted  value  thereof  plus
accrued interest, so long as (i) at least 65% of the accreted value of the notes
remains  outstanding after such redemption and (ii) any such redemption by us is
made within 120 days after such equity offering.


9.   OPERATING SEGMENTS

     Operating  segments  are  components  of our  business  for which  separate
financial  information  is  available  and  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 is used internally
for evaluating segment performance.

     We have four operating  segments:  Pliant U.S., Pliant Flexible  Packaging,
Pliant  International  and Pliant  Solutions.  Sales and  transfers  between our
segments are  eliminated in  consolidation.  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  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 June 30,
     2004 and 2003 are presented in the following table (in thousands).  Certain
     reclassifications have been made to the prior year amounts to be consistent
     with the 2004 presentation.

<TABLE>
<CAPTION>
<S>                                     <C>             <C>             <C>             <C>             <C>             <C>

                                                          PLIANT
                                           PLIANT        FLEXIBLE        PLIANT         PLIANT        CORPORATE/
                                            U.S.         PACKAGING    INTERNATIONAL    SOLUTIONS        OTHER           TOTAL
                                       -------------- --------------- -------------- -------------- -------------- --------------
THREE MONTHS ENDED JUNE 30, 2004
   Net sales to customers               $    149,930    $     58,330    $    26,925    $     7,511    $       --     $   242,696
   Intersegment sales                          3,496             708          3,096             --         (7,300)           --
                                       -------------- --------------- -------------- -------------- -------------- --------------
      Total net sales                        153,426          59,038         30,021          7,511         (7,300)       242,696
   Depreciation and amortization               5,984           1,899          1,946            335            366         10,530
   Interest expense                               (1)             (6)         1,303              1         31,938         33,235
   Segment profit                             21,524           7,367          2,147         (2,591)        (5,343)        23,104
   Capital expenditures                        3,474             329          3,617            187            426          8,033
THREE MONTHS ENDED JUNE 30, 2003
   Net sales to customers               $    136,609    $     53,566    $    27,655    $     8,743    $       --     $   226,573
   Intersegment sales                          3,083           1,121          4,584             --         (8,788)           --
                                       -------------- --------------- -------------- -------------- -------------- --------------
     Total net sales                         139,692          54,687         32,239          8,743         (8,788)       226,573
   Depreciation and amortization               7,960           2,010          1,810            416          1,186         13,382
   Interest expense                               (3)             19            638              6         26,722         27,382
   Segment profit                             21,851           7,740          3,446           (744)        (5,242)        27,051
   Capital expenditures                        2,371           3,439            883             --            407          7,100

</TABLE>


<TABLE>
<CAPTION>
<S>                                     <C>             <C>             <C>             <C>             <C>             <C>

                                                          PLIANT
                                           PLIANT        FLEXIBLE        PLIANT         PLIANT        CORPORATE/
                                            U.S.         PACKAGING    INTERNATIONAL    SOLUTIONS        OTHER           TOTAL
                                       -------------- --------------- -------------- -------------- -------------- --------------
SIX MONTHS ENDED JUNE 30, 2004
   Net sales to customers               $    304,020    $    114,714    $    53,357    $    14,772    $        (0)   $   486,863
   Intersegment sales                          6,745           1,280          4,637            107        (12,769)            --
                                       --------------  -------------- -------------- -------------- -------------- --------------
     Total net sales                         310,765         115,994         57,994         14,879        (12,769)       486,863
   Depreciation and amortization              13,139           3,798          3,848            663            444         21,892
   Interest expense                               (4)             12          2,227              6         73,960         76,201
   Segment profit                             44,522          15,971          3,201         (4,865)       (10,504)        48,325
   Segment total assets                      463,718         136,153         80,952         16,862         79,638        777,323
   Capital expenditures                        4,971             473          4,877            222            589         11,132
SIX MONTHS ENDED JUNE 30, 2003
   Net sales to customers               $    288,541    $    105,323    $    55,691    $    17,529    $       --     $   467,084
   Intersegment sales                          6,239           2,002          7,355            --         (15,596)           --
                                       --------------  -------------- -------------- -------------- -------------- --------------
     Total net sales                         294,780         107,325         63,046         17,529        (15,596)       467,084
   Depreciation and amortization              14,517           3,987          3,549            721          1,764         24,538
   Interest expense                               (5)             32          1,215             11         45,985         47,238
   Segment profit                             48,612          15,415          6,326         (1,645)        (9,598)        59,110
   Segment total assets                      503,805         156,104        104,237         36,852         69,337        870,335
   Capital expenditures                        3,499           4,143          2,288            --             792         10,722

</TABLE>


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

<TABLE>
<CAPTION>
<S>                                                         <C>                  <C>              <C>               <C>

                                                                  THREE MONTHS ENDED                   SIX MONTHS ENDED
                                                                       JUNE 30,                            JUNE 30,
                                                          ----------------- -- --------------   -------------- -- --------------
                                                                2004               2003             2004              2003
                                                          -----------------    --------------   --------------    --------------
PROFIT OR LOSS
Total segment profit                                        $  23,104            $   27,051       $   48,325        $   59,110
Depreciation and amortization                                 (10,530)              (13,382)         (21,892)          (24,538)
Restructuring and other costs                                     --                 (2,543)             --             (8,607)
Interest expense                                              (33,235)              (27,382)         (76,201)          (47,238)

Other expenses and adjustments for non-cash charges and
 certain adjustments defined by our credit agreement              --                                     --               (105)
                                                                                        198
                                                          -----------------    --------------   --------------    --------------
Income (loss) before taxes                                  $ (20,661)           $  (16,058)      $  (49,768)       $  (21,378)
                                                          =================    ==============   ==============    ==============

ASSETS
Total assets for reportable segments                                                                 697,685           800,998
Other unallocated assets                                                                              79,638            69,337
                                                                                                ---------------   ---------------
Total consolidated assets                                                                          $ 777,323      $    870,335
                                                                                                ===============   ===============

</TABLE>


<PAGE>


10.  SHARES SUBJECT TO MANDATORY REDEMPTION

     The Company adopted  Statement of Financial  Accounting  Standard No. 150 (
"SFAS 150"),  ACCOUNTING FOR CERTAIN FINANCIAL  INSTRUMENTS WITH CHARACTERISTICS
OF BOTH  LIABILITIES  AND EQUITY,  effective  January 1, 2004. As a result,  the
redeemable  preferred  stock  of the  Company  that  contains  an  unconditional
mandatory redemption feature was recorded as a liability on the date of adoption
at fair market value.  Fair market value was  determined  using the value of the
securities on the date of issuance  plus  accretion of discount from the date of
issuance  through  December 31, 2003 and the unpaid dividends at the end of each
quarter  from the date of issuance  through  December  31,  2003.  In  addition,
effective  January 1, 2004, the dividends and accretion on the preferred  shares
are included as a part of interest expense in the statement of operations.

In addition,  as a result of adopting SFAS 150, the Company's  redeemable common
shares that have been put for redemption by the  shareholder  were recorded as a
liability at fair value. The fair value was computed using the agreed upon price
of the redemption times the number of shares put by the shareholder. As required
by SFAS 150 prior periods were not restated.

The shares subject to mandatory redemption are as follow (in thousands):

<TABLE>
<CAPTION>
<S>                                                                                     <C>                 <C>

                                                                                     AS OF JANUARY 1,    AS OF JUNE 30,
                                                                                           2004               2004
                                                                                     -----------------  -----------------
  Redeemable Preferred Shares 200,000 shares authorized, 140,973 shares
     outstanding as of June 30, 2004, designated as Series A, no par value with a
     redemption value of $1,000 per share plus accumulated dividends.
                                                                                        $188,223            $205,256


  18,200 Redeemable Common Shares that have been put for redemption by a
     shareholder, net of a shareholder note of $2,431                                      6,362               6,362
                                                                                     -----------------  -----------------
  Total shares subject to mandatory redemption                                          $194,585            $211,618
                                                                                     =================  =================


</TABLE>

The cash  settlement at the redemption date (assuming no cash dividends are paid
through the  redemption  date) is $ 680.6 million for the  redeemable  preferred
shares and $ 6.4 million (net of the note  receivable  of $ 2.4 million) for the
redeemable common shares that have been put for redemption by the shareholder.

11.  DEFINED BENEFIT PLANS

     The Company  sponsors three  noncontributory  defined benefit pension plans
(the "United States Plans") covering domestic employees with 1,000 or more hours
of service.  The Company funds these in accordance with the funding requirements
of the  Employee  Retirement  Income  Security  Act of 1974.  Contributions  are
intended to not only provide for benefits attributed to service to date but also
for those expected to be earned in the future. We also sponsor a defined benefit
plan in Germany (the "Germany Plan"). For information on the Germany Plan please
refer to the Company's Form 10-K for the year ended December 31, 2003.

     In the second  quarter  of 2004,  the  Company  redesigned  its  retirement
programs which led to the  curtailment and "freeze" of the pension plan for U.S.
salaried employees  effective June 30, 2004. As a result, a curtailment  benefit
of $1.6 million was recognized as income during the quarter ended June 30, 2004.

     The  consolidated  accrued net pension expense for the three and six months
ended June 30, 2004 and 2003 includes the following components (in thousands):

<TABLE>
<CAPTION>
<S>                                                            <C>                <C>              <C>             <C>

                                                                     THREE MONTHS ENDED                 SIX MONTHS ENDED
                                                                          JUNE 30,                          JUNE 30,
                                                                   2004              2003             2004            2003
                                                             ----------------- --------------------------------------------------
UNITED STATES PLANS
Service cost-benefits earned during the period                 $      1,189       $    1,119       $    2,378      $    2,238
Interest cost on projected benefit obligation                         1,374            1,289            2,748           2,578
Expected return on assets                                            (1,105)            (869)          (2,210)         (1,738)
Curtailment (gain) loss                                              (1,563)             --            (1,563)             --
Other                                                                   184              130              368             260
                                                             ----------------- --------------------------------------------------
Total accrued pension expense                                  $         79       $    1,669       $    1,721      $    3,338

</TABLE>

EMPLOYER CONTRIBUTIONS (A)
2004 Expected to plan trusts                                   $      7,261

-------------
(a)  Disclosed due to the change from Form 10-K for the year ended  December 31,
     2003 as a result of the  minimum  funding  changes  made under the  Pension
     Funding Equity Act.

<PAGE>

12.  CONTINGENCIES

     ENVIRONMENTAL   CONTINGENCIES  Our  operations  are  subject  to  extensive
environmental laws and regulations  concerning  emissions to the air, discharges
to  surface  and  subsurface  waters,  and the  generation,  handling,  storage,
transportation,  treatment,  and  disposal  of waste  materials,  as  adopted by
various  governmental  authorities in the jurisdictions in which we operate.  We
believe  we make  every  reasonable  effort to remain  in full  compliance  with
existing governmental laws and regulations concerning the environment.

     LITIGATION  On June 14,  2004,  the  Company  settled the  complaint  filed
against us by S.C.  Johnson & Sons,  Inc and S.C.  Johnson Home Storage filed in
U.S.  District Court for the District of Michigan,  Northern  Division (Case No.
01-CV-10343-BC)  for $6.0 million plus legal fees which was within  management's
estimated costs of $7.2 million accrued in the fourth quarter of 2003.

     On February 26, 2003, former employees of our Fort Edward, NY 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.

     We are  involved  in  other  litigation  matters  from  time to time in the
ordinary  course of our  business.  In our opinion,  none of such  litigation is
material to our financial condition or results of operations.

13.  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"), the Indenture dated May 30, 2003 ( the " 2003 Indenture") relating
     to Pliant's $ 250 million  senior secured notes due 2009 (the "2003 Notes")
     and Indenture dated February 17, 2004 ( the "2004 Indenture" and,  together
     with the 2000  Indenture,  the 2002 Indenture and the 2003  Indenture,  the
     "Indentures")  relating to Pliant's $ 306 million senior  secured  discount
     notes due 2009 ( " 2004 Notes" and,  together with the 2000 Notes, the 2002
     Notes and the 2003  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 June 30, 2004 and  December 31, 2003 and for the six months
     ended  June 30,  2004 and 2003.  The  Notes  are fully and  unconditionally
     guaranteed on a joint and several basis by each  guarantor  subsidiary  and
     each  guarantor  subsidiary is wholly  owned,  directly or  indirectly,  by
     Pliant  Corporation.   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 company based in the United
     Kingdom. We own a fifty-percent interest in Alliant. The limited


<PAGE>


     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.

     In 2004, one of our subsidiaries in Canada,  Uniplast Industries Co. became
     a guarantor subsidiary. As a result, all periods presented include Uniplast
     Industries Co. as a guarantor subsidiary.



<PAGE>


PLIANT CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEET
AS OF JUNE 30, 2004 (IN THOUSANDS) (UNAUDITED)

<TABLE>
<CAPTION>
<S>                                         <C>              <C>              <C>              <C>              <C>

                                                PLIANT          COMBINED         COMBINED                        CONSOLIDATED
                                             CORPORATION       GUARANTOR       NON-GUARANTOR                        PLIANT
                                            (PARENT ONLY)     SUBSIDIARIES     SUBSIDIARIES     ELIMINATIONS      CORPORATION
                                            ---------------  ---------------  ---------------- ---------------- ----------------

ASSETS
CURRENT ASSETS:
   Cash and cash equivalents                $           --   $          584   $         3,100  $            --  $         3,684
   Receivables - net                                91,907           16,956            18,429               --          127,292
   Inventories                                      61,975           15,109            12,065               --           89,149
   Prepaid expenses and other                        1,441              533             1,945               --            3,919
   Income taxes receivable                              --             (132)              132               --               --
   Deferred income taxes                             9,849           (1,524)             (424)              --            7,901
                                            ---------------  ---------------  ---------------- ---------------- ----------------
     Total current  assets                         165,172           31,526            35,247               --          231,945
PLANT AND EQUIPMENT - Net                          243,707           22,727            39,314               --          305,748
INTANGIBLE ASSETS - Net                            173,603           25,632             1,301               --          200,536
INVESTMENT IN SUBSIDIARIES                          (5,468)          (1,062)            1,062            5,468               --
OTHER ASSETS                                        35,542               --             3,552               --           39,094
                                            ---------------  ---------------  ---------------- ---------------- ----------------
TOTAL ASSETS                                $      612,556   $       78,823   $        80,476  $         5,468  $       777,323
                                            ===============  ===============  ================ ================ ================

LIABILITIES AND STOCKHOLDERS' EQUITY
   (DEFICIT)
CURRENT LIABILITIES:
   Current portion of long-term debt        $          201   $           --   $            --  $            --  $           201
   Trade accounts payable                           75,219            7,921            10,907                            94,047
   Accrued liabilities                              46,003            5,279             4,571               --           55,853
   Due to (from) affiliates                       (129,701)          79,662            50,039               --               --
                                            ---------------  ---------------  ---------------- ---------------- ----------------
     Total current liabilities                      (8,278)          92,862            65,517                           150,101
LONG-TERM DEBT - Net of current portion            813,969                                 --               --          813,969
OTHER LIABILITIES                                   24,135               --             2,561               --           26,696
DEFERRED INCOME TAXES                               23,015            1,209             2,420               --           26,644
SHARES SUBJECT TO MANDATORY REDEMPTION             211,618               --                --               --          211,618
                                            ---------------  ---------------  ---------------- ---------------- ----------------
        Total Liabilities                        1,064,459           94,071            70,498                         1,229,028
                                            ---------------  ---------------  ---------------- ---------------- ----------------
MINORITY INTEREST                                       --               --               198               --              198
REDEEMABLE COMMON STOCK                              6,645               --                --               --            6,645
STOCKHOLDERS' EQUITY (DEFICIT):
   Common stock                                    103,376               --                --               --          103,376
   Additional paid-in capital                                        14,020            29,302          (43,322)              --
   Warrants                                         39,133               --                --               --           39,133
   Retained earnings accumulated (deficit)        (589,180)         (29,369)          (12,611)          41,980         (589,180)
   Stockholders' note receivable                     (660)               --                --               --             (660)
   Accumulated other comprehensive loss            (11,217)             101            (6,911)           6,810          (11,217)
                                            ---------------  ---------------  ---------------- ---------------- ----------------
     Total stockholders' equity (deficit)         (458,548)         (15,248)            9,780            5,468         (458,548)
                                            ---------------  ---------------  ---------------- ---------------- ----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
   (DEFICIT)                                $      612,556   $       78,823   $        80,476  $         5,468  $       777,323
                                            ===============  ===============  ================ ================ ================
</TABLE>


<PAGE>


PLIANT CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEET
AS OF DECEMBER 31, 2003 (IN THOUSANDS) (UNAUDITED)

<TABLE>
<CAPTION>
<S>                                        <C>              <C>              <C>              <C>              <C>

                                               PLIANT          COMBINED         COMBINED                        CONSOLIDATED
                                            CORPORATION       GUARANTOR       NON-GUARANTOR                        PLIANT
                                           (PARENT ONLY)     SUBSIDIARIES     SUBSIDIARIES     ELIMINATIONS      CORPORATION
                                           ---------------  ---------------  ---------------- ---------------- ----------------
                   ASSETS
CURRENT ASSETS:
   Cash and cash equivalents               $           --   $         1,192  $         2,116  $            --  $         3,308
   Receivables - net                               79,685            14,071           18,186               --          111,942
   Inventories                                     63,954            19,567           11,698               --           95,219
   Prepaid expenses and other                       2,626               460              723               --            3,809
   Income taxes receivable                            167               806              463               --            1,436
   Deferred income taxes                           10,934            (1,521)               4               --            9,417
                                           ---------------  ---------------- ---------------- ---------------- ----------------
     Total current assets                         157,366            34,575           33,190               --          225,131
PLANT AND EQUIPMENT, Net                          253,601            24,576           41,392               --          319,569
GOODWILL                                          182,162                --               --               --          182,162
INTANGIBLE ASSETS, Net                             19,752                --               --               --           19,752
INVESTMENT IN SUBSIDIARIES                           (916)           (1,062)           1,062              916               --
OTHER ASSETS                                       36,125                --            4,047               --           40,172
                                           ---------------  ---------------- ---------------- ---------------- ----------------
   TOTAL ASSETS                            $      648,090   $        58,089  $        79,691  $           916  $       786,786
                                           ===============  ================ ================ ================ ================

LIABILITIES AND STOCKHOLDERS'  EQUITY
   (DEFICIT)
CURRENT LIABILITIES:

   Trade accounts payable                  $       66,839   $         8,520  $        14,441  $            --  $        89,800
   Accrued liabilities                             53,714             4,790            5,142               --           63,646
   Current portion of long-term debt                1,033                --               --               --            1,033
   Due to (from) affiliates                       (72,692)           56,423           16,269               --               --
                                           ---------------  ---------------- ---------------- ---------------- ----------------
     Total current liabilities                     48,894            69,733           35,852               --          154,479
LONG-TERM DEBT, Net of current portion            758,461                --           24,163               --          782,624
OTHER LIABILITIES                                  24,952                --            2,541               --           27,493
DEFERRED INCOME TAXES                              21,676             2,502            3,614               --           27,792
                                           ---------------  ---------------- ---------------- ---------------- ----------------
     Total liabilities                            853,983            72,235           66,170               --          992,388
                                           ---------------  ---------------- ---------------- ---------------- ----------------
MINORITY INTEREST                                      --                --              291               --              291
REDEEMABLE STOCK:
   Preferred stock                                188,223                --               --               --          188,223
   Common stock                                    13,008                --               --               --           13,008
                                           ---------------  ---------------- ---------------- ---------------- ----------------
     Total redeemable stock                       201,231                --               --               --          201,231
                                           ---------------  ---------------- ---------------- ---------------- ----------------
STOCKHOLDERS' (DEFICIT):
   Common stock                                   103,376            14,020           29,302          (43,322)         103,376
   Warrants to purchase common stock               39,133                --               --               --           39,133
   Retained earnings (deficit)                   (537,052)          (28,155)          (9,845)          38,000         (537,052)
   Stockholders' notes receivable                    (660)               --               --               --             (660)
   Accumulated other comprehensive loss           (11,921)              (11)          (6,227)           6,238          (11,921)
                                           ---------------  ---------------- ---------------- ---------------- ----------------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT)             (407,124)          (14,146)          13,230              916         (407,124)
                                           ---------------  ---------------- ---------------- ---------------- ----------------
   Total liabilities and stockholders'
     (deficit)                             $      648,090   $        58,089  $        79,691  $           916  $       786,786
                                           ===============  ================ ================ ================ ================

</TABLE>



<PAGE>


PLIANT CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING INCOME STATEMENT
FOR THE SIX MONTHS ENDED JUNE 30, 2004 (IN THOUSANDS) (UNAUDITED)

<TABLE>
<CAPTION>
<S>                                         <C>              <C>              <C>              <C>              <C>

                                                PLIANT          COMBINED         COMBINED                        CONSOLIDATED
                                             CORPORATION       GUARANTOR       NON-GUARANTOR                        PLIANT
                                            (PARENT ONLY)     SUBSIDIARIES     SUBSIDIARIES     ELIMINATIONS      CORPORATION
                                            ---------------  ---------------  ---------------- ---------------- ----------------

SALES , Net                               $       385,362   $       55,223   $          59,047  $      (12,769)  $      486,863
COST OF SALES                                     319,538           52,765              54,986         (12,769)         414,520
                                          ----------------  ---------------  ------------------ ---------------  ---------------

GROSS PROFIT                                       65,824            2,458               4,061                           72,343
OPERATING EXPENSES                                 38,130            3,153               4,596              --           45,879
                                          ----------------  ---------------  ------------------ ---------------  ---------------

OPERATING INCOME                                   27,694             (695)               (535)             --           26,464
INTEREST EXPENSE                                  (73,967)            (319)             (1,915)             --          (76,201)
EQUITY IN EARNINGS OF SUBSIDIARIES                 (3,980)              --                  --           3,980               --
OTHER INCOME  (EXPENSE), Net                         (279)             (50)                298              --              (31)
                                          ----------------  ---------------  ------------------ ---------------  ---------------

NET INCOME (LOSS) BEFORE INCOME TAXES             (50,532)          (1,064)             (2,152)          3,980          (49,768)
INCOME TAX PROVISION                                1,596              150                 614              --            2,360
                                          ----------------  ---------------  ------------------ ---------------  ---------------
NET INCOME (LOSS)                         $       (52,128)  $       (1,214)  $          (2,766) $        3,980   $      (52,128)
                                          ================  ===============  ================== ===============  ===============

</TABLE>

<PAGE>


PLIANT CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING INCOME STATEMENT
FOR THE SIX MONTHS ENDED JUNE 30, 2003 (IN THOUSANDS) (UNAUDITED)

<TABLE>
<CAPTION>
<S>                                        <C>              <C>              <C>              <C>              <C>

                                               PLIANT          COMBINED         COMBINED                        CONSOLIDATED
                                            CORPORATION       GUARANTOR       NON-GUARANTOR                        PLIANT
                                           (PARENT ONLY)     SUBSIDIARIES     SUBSIDIARIES     ELIMINATIONS      CORPORATION
                                           ---------------  ---------------  ---------------- ---------------- ----------------

SALES , Net                             $       365,677   $        58,187  $        58,815   $       (15,595)  $       467,084
COST OF SALES                                   300,835            50,553           52,253           (15,595)          388,046
                                        ----------------  ---------------- ----------------  ----------------  ----------------
GROSS PROFIT                                     64,842             7,634            6,562                --            79,038
OPERATING EXPENSES                               45,533             3,937            5,467                --            54,937
                                        ----------------  ---------------- ----------------  ----------------  ----------------

OPERATING INCOME                                 19,309             3,697            1,095                --            24,101
INTEREST EXPENSE                                (45,996)             (298)            (944)               --           (47,238)
EQUITY IN EARNINGS OF SUBSIDIARIES                  109                --               --              (109)               --
OTHER INCOME  (EXPENSE), Net                         38                95            1,626                --             1,759
                                        ----------------  ---------------- ----------------  ----------------  ----------------

INCOME (LOSS) BEFORE INCOME TAXES               (26,540)            3,494            1,777              (109)          (21,378)
INCOME TAX PROVISION (BENEFIT)                     (296)            4,029            1,133                --             4,866
                                        ----------------  ---------------- ----------------  ----------------  ----------------
NET INCOME (LOSS)                       $       (26,244)  $          (535) $           644   $          (109)  $       (26,244)
                                        ================  ================ ================  ================  ================


</TABLE>


<PAGE>


PLIANT CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2004 (IN THOUSANDS) (UNAUDITED)

<TABLE>
<CAPTION>
<S>                                             <C>              <C>              <C>              <C>              <C>

                                                    PLIANT          COMBINED         COMBINED                        CONSOLIDATED
                                                 CORPORATION       GUARANTOR       NON-GUARANTOR                        PLIANT
                                                (PARENT ONLY)     SUBSIDIARIES     SUBSIDIARIES     ELIMINATIONS      CORPORATION
                                                ---------------  ---------------  ---------------- ---------------- ----------------

CASH FLOWS PROVIDED BY (USED IN) OPERATING
   ACTIVITIES                                   $      (29,045) $          506   $       26,670  $           --   $       (1,869)
                                                --------------- ---------------  --------------- ---------------  ---------------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Capital expenditures for plant and equipment         (5,623)           (394)          (5,115)             --          (11,132)
                                                --------------- ---------------  --------------- ---------------  ---------------
     Net cash used in investing activities              (5,623)           (394)          (5,115)             --          (11,132)
                                                --------------- ---------------  --------------- ---------------  ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Net proceeds from issuance of senior secured
     discount notes                                    225,299              --               --              --          225,299
   Payment of financing fees                            (9,327)             --               --              --           (9,327)
   Repayment of term debt and revolver                (195,412)             --          (24,163)             --         (219,575)
   Repayment of capital leases and other, net           (1,077)             --               --              --           (1,077)
   Proceeds from revolving debt, net                    16,000              --               --              --           16,000
                                                --------------- ---------------  --------------- ---------------  ---------------
     Net cash used in financing activities              35,483              --          (24,163)                          11,320
                                                --------------- ---------------  --------------- ---------------  ---------------

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
   CASH EQUIVALENTS                                       (815)           (720)           3,592              --            2,057
                                                --------------- ---------------  --------------- ---------------  ---------------

NET INCREASE (DECREASE) IN CASH AND CASH
   EQUIVALENTS                                              --            (608)             984              --              376

CASH AND CASH EQUIVALENTS AT BEGINNING OF THE
   PERIOD                                                   --           1,192            2,116              --            3,308
                                                --------------- ---------------  --------------- ---------------  ---------------

CASH AND CASH EQUIVALENTS AT END OF THE PERIOD  $           --  $          584   $        3,100  $           --   $        3,684
                                                =============== ===============  =============== ===============  ===============

</TABLE>

<PAGE>


PLIANT CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2003 (IN THOUSANDS) (UNAUDITED)

<TABLE>
<CAPTION>
<S>                                              <C>             <C>              <C>              <C>              <C>

                                                    PLIANT          COMBINED         COMBINED                        CONSOLIDATED
                                                 CORPORATION       GUARANTOR       NON-GUARANTOR                        PLIANT
                                                 PARENT ONLY)     SUBSIDIARIES     SUBSIDIARIES     ELIMINATIONS      CORPORATION
                                                 --------------  ---------------  ---------------- ---------------- -------------

CASH FLOWS PROVIDED BY (USED IN) OPERATING
   ACTIVITIES                                    $     (40,494)  $        3,662  $        3,663   $           --  $      (33,169)
                                                 --------------  --------------- ---------------  --------------- ---------------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Capital expenditures for plant and equipment         (5,745)          (2,662)         (2,315)              --         (10,722)
                                                 --------------  --------------- ---------------  --------------- ---------------
   Net cash used in investing activities                (5,745)          (2,662)         (2,315)              --         (10,722)
                                                 --------------  --------------- ---------------  --------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Net proceeds from issuance of preferred stock         9,532               --              --               --           9,532
   Payment of financing fees                            (9,734)              --              --               --          (9,734)
   (Payment) receipt of dividends                        2,499               --          (2,499)              --              --
   Proceeds from issuance of senior subordinated
     debt                                              250,000               --              --               --         250,000
    Borrowings under revolver                           48,206               --              --               --          48,206
    Repayment of term debt and revolver               (251,399)              --            (629)              --        (252,028)
                                                 --------------  --------------- ---------------  --------------- ---------------
     Net cash used in financing activities              49,104               --          (3,128)              --          45,976
                                                 --------------  --------------- ---------------  --------------- ---------------

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH
   EQUIVALENTS                                             741             (918)          1,574               --           1,397
                                                 --------------  --------------- ---------------  --------------- ---------------

NET INCREASE (DECREASE) IN CASH AND CASH
   EQUIVALENTS                                           3,606               82            (206)              --           3,482

CASH AND CASH EQUIVALENTS AT BEGINNING OF THE
   PERIOD                                                   --              (21)          1,656               --           1,635
                                                 --------------  --------------- ---------------  --------------- ---------------

CASH AND CASH EQUIVALENTS AT END OF THE PERIOD   $       3,606   $           61  $        1,450   $           --  $        5,117
                                                 ==============  =============== ===============  =============== ===============

</TABLE>

<PAGE>


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,  2003 (the  "2003  10-K") and our
Registration  Statement on Form S-4, as amended (file No.  333-114608)  filed on
April 20, 2004. 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.

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 six
months ended June 30, 2004 and 2003 (dollars in millions).

<TABLE>
<CAPTION>
<S>                               <C>             <C>       <C>         <C>        <C>           <C>     <C>             <C>

                                            THREE MONTHS ENDED JUNE 30,                           SIX MONTHS ENDED JUNE 30,
                                  --------------------------------------------    ----------------------------------------------
                                           2004                   2003                      2004                    2003
                                  --------------------------------------------    --------------------- ------------------------
                                                 % OF                    % OF                     % OF                   % OF
                                     $          SALES         $         SALES           $        SALES        $         SALES
                                  ---------- ------------ --------- ----------    ----------- --------- ----------- ------------

Net sales                         $   242.7       100.0%    $226.6      100.0%     $   486.9     100.0%  $  467.1        100.0%
Cost of sales                         207.1        85.3      190.4       84.0          414.5      85.1      388.1         83.1
                                  ---------- ------------ --------- ----------    ----------- --------- ----------- ------------
Gross profit                           35.6        14.7       36.2       16.0           72.4      14.9       79.0         16.9

Operating expenses before
   restructuring and other costs       23.1         9.5       23.7       10.5           45.9       9.4       46.3          9.9
Restructuring and other costs            --          --        2.5        1.1             --        --        8.6          1.8
                                  ---------- ------------ --------- ----------    ----------- --------- ----------- ------------
Total operating expenses               23.1         9.5       26.2       11.6           45.9       9.4       54.9         11.7
                                  ---------- ------------ --------- ----------    ----------- --------- ----------- ------------
Operating income                  $    12.5         5.2%    $ 10.0        4.4%     $    26.5       5.5%  $   24.1          5.2%
                                  ---------- ------------ --------- ----------    ----------- --------- ----------- ------------

</TABLE>

THREE MONTHS ENDED JUNE 30, 2004  COMPARED  WITH THE THREE MONTHS ENDED JUNE 30,
2003

NET SALES

Net sales increased by $16.1 million,  or 7.1%, to $242.7 million for the second
quarter of 2004 from $226.6  million for the three  months  ended June 30, 2003.
The  increase  was  primarily  due to an 8.1%  increase  in our in sales  volume
partially  offset  by a  1.0%  decrease  in  our  average  selling  prices.  See
"Operating Segment Review" below for a detailed  discussion of sales volumes and
selling prices by segment and division.


<PAGE>


GROSS PROFIT

Gross profit  decreased by $0.6 million,  or 2%, to $35.6 million for the second
quarter of 2004,  from $36.2  million for the three  months ended June 30, 2003.
This decrease was primarily due to the effect of lower  margins.  See "Operating
Segment  Review"  below for a detailed  discussion  of the margin  variances  by
segment.

TOTAL OPERATING EXPENSES BEFORE RESTRUCTURING AND OTHER COSTS

Total  operating  expenses before  restructuring  and other costs decreased $0.6
million,  or 2.5%,  to $23.1  million for the second  quarter of 2004 from $23.7
million for the second quarter of 2003.

RESTRUCTURING AND OTHER COSTS

Restructuring  and other costs decreased by $2.5 million from the second quarter
of 2003 as there were no restructuring  expenses  incurred in the second quarter
of 2004.

OPERATING INCOME

Operating income  increased by $ 2.5 million,  or 25 %, to $12.5 million for the
second quarter of 2004,  from $ 10.0 million for the second quarter of 2003, due
to the factors  discussed  above.  In addition  operating  income for the second
quarter of 2004 was  favorably  affected by a  curtailment  gain of $1.6 million
related to the  curtailment of the U.S.  salaried  pension plan. (See note 11 to
the condensed consolidated financial statements).

INTEREST EXPENSE

Interest  expense on current and long-term  debt  decreased by $2.8 million,  or
10.2%,  to $24.6  million  for the three  months  ended June 30, 2004 from $27.4
million for the three months ended June 30, 2003.  This decrease was principally
due to a charge of $ 5.4 million in the second quarter of 2003 for the write-off
of previously  capitalized financing fees. This decrease was partially offset by
the higher  interest  costs  resulting  from the issuance of an additional  $250
million of senior  secured notes in May 2003 and accretion of the issue discount
associated  with the $ 225.3 million in net proceeds of senior secured  discount
notes issued in February  2004.  The  proceeds  from the issuance of these notes
were used to repay bank debt that carried a lower interest rate.

Interest  expense on preferred stock reflects the dividends and accretion on the
redeemable preferred stock of the Company that is classified as interest expense
after adoption of SFAS 150, effective January 1, 2004.

OTHER INCOME(EXPENSE)

Other  income was $0.1  million for the three  months  ended June 30,  2004,  as
compared to other  income of $ 1.3 million for the three  months  ended June 30,
2003.  The other income for the three months ended June 30, 2003  included  $0.5
million of currency  gains,  $0.2  million of royalty  income,  $0.1  million of
rental income and other less significant items.

INCOME TAX EXPENSE

     Income  tax  expense  for the three  months  ended  June 30,  2004 was $0.7
million on pretax  losses of $20.7  million as compared to income tax expense of
$2.8  million on pretax  losses of $16.1  million  for the same  period in 2003.
Income tax benefits  related to net  operating  losses in the United States were
offset by a valuation  allowance as the realization of these tax benefits is not
certain.  Therefore,  the income tax  expense in the  statements  of  operations
primarily reflect foreign income taxes.


SIX  MONTHS ENDED JUNE 30, 2004 COMPARED WITH THE SIX MONTHS ENDED JUNE 30, 2003

NET SALES

Net sales  increased by $19.8  million,  or 4.2%, to $486.9  million for the six
months ended June 30, 2004 from $467.1 million for the six months ended June 30,
2003.  The increase was  primarily  due to a 2.6% increase in sales volume and a
1.6% increase in our average  selling price  resulting  primarily  from the pass
through of increases in our raw material  prices to  customers.  See  "Operating
Segment  Review"  below for a detailed  discussion  of sales volumes and selling
prices by segment and division.

<PAGE>

GROSS PROFIT

Gross profit  decreased by $6.6 million,  or 8%, to $72.4 million for six months
ended June 30, 2004,  from $79.0 million for the six months ended June 30, 2003.
This decrease was primarily due to the effect of lower  margins.  See "Operating
Segment  Review"  below for a detailed  discussion  of the margin  variances  by
segment.

TOTAL OPERATING EXPENSES BEFORE RESTRUCTURING AND OTHER COSTS

Total  operating  expenses before  restructuring  and other costs decreased $0.4
million,  or 1.0%,  to $45.9 million for the six months ended June 30, 2004 from
$46.3 million for the six months ended June 30, 2003.

RESTRUCTURING AND OTHER COSTS

Restructuring  and other costs  decreased  by $8.6  million  from the six months
ended June 30, 2003 as there were no restructuring  expenses incurred in the six
months ended June 30, 2004.

OPERATING INCOME

Operating income increased by $ 2.4 million, or 10.0 %, to $26.5 million for the
six months  ended June 30,  2004,  from $ 24.1  million for the six months ended
June 30, 2003, due to the factors discussed above. In addition  operating income
for the six months ended June 30, 2004 was  favorably  affected by a curtailment
gain of $1.6 million  related to the  curtailment of the U.S.  salaried  pension
plan. (See Note 11 to the condensed consolidated financial statements).

INTEREST EXPENSE

Interest  expense on current and long-term debt  increased by $12.0 million,  or
25.4%,  to $59.2  million  for the six  months  ended  June 30,  2004 from $47.2
million for the six months ended June 30, 2003.  This  increase was  principally
due to the higher  interest  costs  resulting from the issuance of an additional
$250  million of senior  secured  notes in May 2003 and the  additional  $ 225.3
million in net proceeds of senior  secured  discount notes in February 2004. The
proceeds  from the  issuance  of these  notes  were used to repay bank debt that
carried a lower  interest  rate.  In addition,  the first  quarter 2004 interest
expense included a charge for the write-off of previously  capitalized financing
fees and losses  related to interest rate  derivatives  totaling $ 10.1 million.
Partially  offsetting these increases between years was a charge of $5.4 million
taken in the second quarter of 2003 for the write-off of previously  capitalized
financing fees.

Interest  expense on preferred stock reflects the dividends and accretion on the
redeemable preferred stock of the Company that is classified as interest expense
after adoption of SFAS 150, effective January 1, 2004.

OTHER INCOME(EXPENSE)

Other  expense  was $0.1  million  for the six months  ended June 30,  2004,  as
compared to other  income of $ 1.8  million  for the six months  ended March 31,
2003. The other income for the six months ended June 30, 2003 included primarily
net proceeds from the realization of certain insurance policies, $0.5 million of
currency gains,  $0.2 million of royalty  income,  $0.2 million of rental income
and other less significant items.

INCOME TAX EXPENSE

Income tax  expense for the six months  ended June 30, 2004 was $2.4  million on
pretax  losses of $49.8  million as compared to $4.9 million on pretax losses of
$21.4  million for the same period in 2003.  Income tax benefits  related to net
operating  losses in the United  States were offset by a valuation  allowance as
the realization of these tax benefits is not certain.  Therefore, the income tax
expense in the statements of operations primarily reflects foreign income taxes.

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

<PAGE>


sales) and segment  profit.  The segment profit  reflects income before 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 9 to the consolidated  financial
statements included elsewhere in this report.

We have four reporting segments: Pliant U.S., Pliant Flexible Packaging,  Pliant
International and Pliant Solutions.

     Summary of segment information (in millions of dollars):

<TABLE>
<CAPTION>
<S>                                    <C>             <C>                <C>            <C>             <C>             <C>


                                                                                                        UNALLOCATED
                                          PLIANT     PLIANT FLEXIBLE       PLIANT         PLIANT         CORPORATE
                                           U.S.         PACKAGING       INTERNATIONAL    SOLUTIONS       EXPENSES         TOTAL
                                       ------------- -----------------  -------------- --------------  -------------- --------------
THREE MONTHS ENDED JUNE 30, 2004
Net sales                              $      150.0    $       58.3       $   26.9       $    7.5        $     --        $ 242.7
Segment profit (loss)                  $       21.5             7.4            2.1           (2.6)           (5.3)          23.1

THREE MONTHS ENDED JUNE 30, 2003
Net sales                              $      136.6            53.6           27.7            8.7              --          226.6
Segment profit (loss)                  $       21.9             7.7            3.4           (0.7)           (5.2)          27.1
SIX MONTHS ENDED JUNE 30, 2004
Net sales                              $      304.1           114.7           53.4           14.7              --          486.9
Segment profit (loss)                  $       44.5            16.0            3.2           (4.9)          (10.5)          48.3

SIX MONTHS ENDED JUNE 30, 2003
Net sales                              $      288.6           105.3           55.7           17.5              --          467.1
Segment profit (loss)                  $       48.6            15.4            6.3           (1.6)           (9.6)          59.1

</TABLE>



THREE MONTHS ENDED JUNE 30, 2004  COMPARED  WITH THE THREE MONTHS ENDED JUNE 30,
2003

PLIANT U.S.

NET SALES. The net sales of our Pliant U.S. segment increased $13.4 million,  or
9.8%, to $150.0  million for the second  quarter of 2004 from $136.6 million for
the second  quarter of 2003.  This  increase was primarily due to an increase in
sales  volumes of 10.6%  partially  offset by a decrease  of 0.7% in our average
selling prices.  The increase in sales volumes is discussed for each Pliant U.S.
division below.

Net sales in our Industrial Films division increased $7.1 million,  or 16.7%, to
$49.7  million for the second  quarter of 2004 from $42.6 million for the second
quarter of 2003.  This  increase  was  principally  due to an  increase in sales
volumes of 7.8 million  pounds or 15.1% and an  increase in our average  selling
prices  of 1.2  cents  per  pound or 1.4 %. The  increase  in sales  volume  was
primarily  due to higher sales from our new  "Revolution"  stretch film products
and additional PVC sales from certain relocated lines that are now in operation.
Net sales in our Specialty  Films division  increased $0.9 million,  or 2.1%, to
$43.7  million for the second  quarter of 2004 from $42.8 million for the second
quarter of 2003.  This increase was  principally due to an increase in our sales
volume of 0.9 million pounds.  Our average  selling prices  remained  relatively
stable. The increase in sales volume was primarily the result of higher sales of
our agricultural films. Net sales in our Converter Films division increased $5.4
million,  or 10.5%,  to $56.6 million for the second  quarter of 2004 from $51.2
million for the second quarter of 2003.  This increase was principally due to an
increase in our sales volumes of 6.0 million pounds or 12.3% partially offset by
a decrease in our  average  selling  prices of 1.7 cents per pound or 1.6%.  The
increase in sales volumes were principally due to increased market share through
new customers in the engineered films market and additional volume from existing
customers in the industrial products market.

SEGMENT PROFIT.  The Pliant U.S. segment profit decreased $ 0.4 million to $21.5
million  for the second  quarter of 2004 as  compared  to $21.9  million for the
second quarter of 2003  principally due to lower gross margins  partially offset
by the  effect of higher  sales  volumes.  The  decrease  in gross  margins  was
principally  due to the fact that the change in selling prices  discussed  above
were not sufficient to offset the increase in raw material  prices,  principally
in the industrial and converter divisions.

<PAGE>


PLIANT FLEXIBLE PACKAGING

NET SALES. The net sales of our Pliant Flexible Packaging segment increased $4.7
million,  or 8.8%,  to $58.3  million for the second  quarter of 2004 from $53.6
million for the first quarter of 2003.  This increase was  principally due to an
increase in our sales volumes of 1.4 million pounds, or 3.9%, and an increase in
our average  selling  prices of 7.1 cents per pound,  or 4.8%.  The sales volume
increased  principally due to additional sales to existing customers principally
in our Bakery and Barrier film markets.

SEGMENT PROFIT.  The Pliant  Flexible  Packaging  segment profit  decreased $0.3
million to $7.4 million for the second quarter of 2004 from $7.7 million for the
second  quarter of 2003.  This decrease in segment profit was primarily due to a
decrease in gross margins partially offset by the effect of higher sales volumes
discussed  above.  The decrease in gross margins was principally due to the fact
that selling prices  increased at a rate lower than the increased  prices of raw
materials  in the  second  quarter  of 2004.  In  addition,  there is a delay in
implementing price increases and decreases in this segment due to contracts with
certain  customers.  Therefore,  the margins  for this  quarter  were  adversely
affected from increases in raw material prices not yet passed on to customers.

PLIANT INTERNATIONAL

NET SALES.  The net sales of our Pliant  International  segment  decreased  $0.8
million,  or 2.9%,  to $26.9  million for the second  quarter of 2004 from $27.7
million for the second quarter of 2003.  This decrease was  principally due to a
decrease in our average selling prices of 5.8 cents per pound, or 5.5% partially
offset by an increase in sales volume of 3.0%.  The decrease in average  selling
prices was caused primarily from our Mexico  operations.  Average selling prices
in Mexico decreased principally due to the deterioration of the Mexican peso and
a shift in our sales mix.

SEGMENT PROFIT. The Pliant  International  segment profit decreased $1.3 million
to $2.1 million for the second  quarter of 2004 from $3.4 million for the second
quarter of 2003. The decrease was due principally to the operating losses in our
plant in Mexico.  Our plant in Mexico was affected by  operating  issues and the
resulting loss of customers and products.  Management  changes have been made at
this location and increases in sales volume and improved  operating  results are
expected.

PLIANT SOLUTIONS

NET SALES. The net sales of our Pliant Solutions segment decreased $1.2 million,
or 13.8%,  to $7.5 million for the second  quarter of 2004 from $8.7 million for
the second quarter of 2003. This decrease was principally due to a 7.5% decrease
in our sales volume and a decrease in our average  selling  prices of 18.6 cents
per pound,  or 7.2%.  The decrease in sales volume was  primarily due to several
promotional programs in the second quarter of 2003 that were not repeated by our
customers  in the  second  quarter of 2004 and a  reduction  in sales to a major
customer due to the closing of several stores.  Average selling prices decreased
due to a change in the sales mix.

SEGMENT  PROFIT  (LOSS).  The Pliant  Solutions  segment  profit  decreased $1.9
million,  to a loss of $(2.6) million for the second quarter of 2004 from a loss
of  $(0.7)  million  for the  second  quarter  of  2003.  The  decrease  was due
principally to the decrease in sales volumes and a decrease in gross margins due
to a change in the sales mix.

UNALLOCATED CORPORATE EXPENSES

Unallocated  corporate  expenses  increased $0.1 million to $5.3 million for the
second  quarter of 2004 as compared  to $ 5.2 million for the second  quarter of
2003. 26 [GRAPHIC OMITTED]


<PAGE>

SIX MONTHS ENDED JUNE 30, 2004 COMPARED WITH THE SIX MONTHS ENDED JUNE 30, 2003

PLIANT U.S.

NET SALES. The net sales of our Pliant U.S. segment increased $15.5 million,  or
5.4%,  to $304.1  million  for the six months  ended June 30,  2004 from  $288.6
million for the six months ended June 30, 2003.  This increase was primarily due
to an  increase in sales  volume of 3.8% and an increase in our average  selling
prices  of 1.5  cents  per  pound or 1.5%.  The  increase  in sales  volumes  is
discussed for each Pliant U.S. division below.

Net sales in our Industrial Films division  increased $7.9 million,  or 8.7%, to
$97.9  million for the six months ended June 30, 2004 from $90.0 million for the
same period in 2003.  This increase was  principally due to an increase in sales
volume of 3.5% and an increase in our  average  selling  prices of 4.1 cents per
pound or 5.1%.  The increase in sales volume was  primarily  due to higher sales
from our new  "Revolution"  stretch film products and  additional PVC sales from
certain  relocated  lines that are now in operation.  Net sales in our Specialty
Films  division  increased  $1.7 million,  or 1.9%, to $92.6 million for the six
months ended June 30, 2004 from $90.9 million for the same period in 2003.  This
increase was  principally  due to an increase in our sales volume of 2.0 million
pounds,  partially  offset by a slight decrease in our average selling prices of
0.1 cents per pound.  The increase in sales volume was  primarily  the result of
higher sales from our personal care business and  agricultural  films  business.
Net sales in our Converter  Films division  increased $5.9 million,  or 5.5%, to
$113.5  million for the six months  ended June 30, 2004 from $107.6  million for
the same period in 2003.  This  increase  was  principally  due to higher  sales
volume which  increased 5.2% and a slight increase in our average selling prices
of 0.1 cents per pound. The sales volume increased due to increased market share
through new customers in the engineered films market and additional  volume from
existing customers in the industrial products market.

SEGMENT PROFIT.  The Pliant U.S. segment profit decreased $ 4.1 million to $44.5
million for the six months ended June 30, 2004 as compared to $48.6  million for
the same period in 2003 principally due to lower gross margins  partially offset
by the affects of the increases in sales volumes  discussed  above. The decrease
in gross  margins  was  principally  due to the fact  that  the  selling  prices
discussed  above did not increase at a leval  sufficient to  compensate  for the
increase in raw material prices.


<PAGE>


PLIANT FLEXIBLE PACKAGING

NET SALES. The net sales of our Pliant Flexible Packaging segment increased $9.4
million,  or 8.9%, to $114.7 million for the six months ended June 30, 2004 from
$105.3 million for the same period in 2003. This increase was principally due to
an increase in our sales volumes of 3.4 million pounds, or 4.7%, and an increase
in our average  selling prices of 5.9 cents per pound, or 4.0%. The sales volume
increased  principally due to additional sales to existing customers principally
from our Bakery and Barrier Films markets.

SEGMENT PROFIT.  The Pliant  Flexible  Packaging  segment profit  increased $0.6
million to $16.0  million for six months ended June 30, 2004 from $15.4  million
for the same period in 2003.  This increase in segment  profit was primarily due
to the affect of the increase in sales volume  partially offset by the effect of
higher conversion costs.

PLIANT INTERNATIONAL

NET SALES.  The net sales of our Pliant  International  segment  decreased  $2.3
million,  or 4.1%,  to $53.4 million for the six months ended June 30, 2004 from
$55.7 million for the same period in 2003.  This decrease was principally due to
a 4.6% decrease in our sales volume,  partially  offset by a slight  increase in
our average  selling  prices of 0.1 cents per pound.  Among other  factors,  our
sales  volumes were  adversely  affected by a reduction in sales at our plant in
Mexico  due to the  loss of  certain  customers  and  products  as a  result  of
operating issues discussed below.

SEGMENT PROFIT. The Pliant  International  segment profit decreased $3.1 million
to $3.2 million for the six months ended June 30, 2004 from $6.3 million for the
same period in 2003. The decrease was due principally to the operating losses in
our plant in Mexico.  Our plant in Mexico was affected by  operating  issues and
the resulting loss of customers and products.  Management changes have been made
at this  location and increases in sales volume and improved  operating  results
are expected.

PLIANT SOLUTIONS

NET SALES. The net sales of our Pliant Solutions segment decreased $2.8 million,
or 16.0%,  to $14.7  million  for the six months  ended June 30, 2004 from $17.5
million for the same period in 2003. This decrease was principally due to a 9.7%
decrease in our sales  volume and a decrease in our  average  selling  prices of
16.8 cents per pound, or 6.6%. The decrease in sales volume was primarily due to
several promotional programs in the first half of 2003 that were not repeated by
our  customers in 2004 and a reduction  in sales to a major  customer due to the
closing of several stores.  Average selling prices  decreased due to a change in
the sales mix.

SEGMENT  PROFIT  (LOSS).  The Pliant  Solutions  segment  profit  decreased $3.3
million, to a loss of $(4.9) million for the six months ended June 30, 2004 from
a loss of $(1.6)  million  for the same  period in 2003.  The  decrease  was due
principally to the decrease in sales volumes and a decrease in gross margins due
to a change in the sales mix.

UNALLOCATED CORPORATE EXPENSES

Unallocated  corporate  expenses increased $0.9 million to $10.5 million for the
six months  ended June 30, 2004 as compared to $ 9.6 million for the same period
in 2003.  The increase was  principally  due to an adjustment of $0.4 million in
the first quarter of 2004 related to employee  benefits for an acquisition  made
in prior years, increase in legal fees and increases in labor costs.




LIQUIDITY AND CAPITAL RESOURCES

SOURCES OF CAPITAL

     Our principal  sources of funds are cash  generated by our  operations  and
borrowings  under our revolving  credit  facility.  In addition,  we have raised
funds  through the issuance of our 13% Senior  Subordinated  Notes due 2010,  11
1/8% Senior  Secured Notes due 2009, 11 1/8% Senior  Secured  Discount Notes due
2009 and the sale of shares of our preferred stock.

     All of the term debt and revolver under the credit  facilities that existed
at December 31, 2003 had been at variable  rates of interest,  so payment of the
term loans with the proceeds of our 11 1/8% Senior  Secured  Discount  Notes and
borrowings  under  our  revolving  credit  facility  substantially  reduced  our
exposure to interest  rate risk.  Although  our $100  million  revolving  credit
facility  is at a  variable  rate of  interest,  there are  substantially  fewer
financial  covenants  than our credit  facilities  that  existed at December 31,
2003,  which will  substantially  reduce our exposure to covenant  default risk.
While the effective interest rate on the Senior Secured Discount Notes is higher
than the term loans retired from the proceeds of the February 2004 offering,  we
will realize greater short-term  liquidity and flexibility in our debt structure
resulting from the  elimination of a number of the financial and other covenants
in our then existing credit  facilities and the deferral of cash interest on the
Senior Secured Discount Notes during the period in which they accrete.

<PAGE>

PRIOR CREDIT FACILITIES

As of December 31, 2003,  our credit  facilities  consisted  of:  tranche A term
loans in an aggregate principal amount of $9.6 million outstanding;  Mexico term
loans in an aggregate principal amount of $24.2 million  outstanding;  tranche B
term loans in an aggregate principal amount of $185.8 million outstanding; and a
revolving credit facility in an aggregate principal amount of up to $100 million
(excluding $6.7 million of outstanding letters of credit).

REVOLVING CREDIT FACILITY

     On February 17, 2004, we paid off and terminated  our then existing  credit
facilities and entered into a revolving  credit facility  providing up to $100.0
million (subject to a borrowing base). The revolving credit facility  includes a
$15.0 million  letter of credit  sub-facility,  with letters of credit  reducing
availability under our revolving credit facility.

     The  revolving  credit  facility  is secured by a  first-priority  security
interest in substantially all inventory,  receivables, deposit accounts, 100% of
capital  stock of, or other equity  interests  in existing  and future  domestic
subsidiaries and foreign  subsidiaries that are guarantors of the Senior Secured
Discount  Notes,  and 65% of the capital stock of, or other equity  interests in
existing and future first-tier  foreign  subsidiaries,  investment  property and
certain   other   assets  of  the   Company   and  the  note   guarantors   (the
"Second-Priority  Collateral"),  and a second-priority  security interest in our
real property, fixtures, equipment,  intellectual property and other assets (the
"First-Priority Collateral").

     The revolving  credit facility matures on February 17, 2009. The Company is
subject to  periodic  reporting  of a  borrowing  base  consisting  of  eligible
accounts receivable and eligible  inventory.  The interest rate will be at LIBOR
plus 2.5% to 2.75 % or ABR plus 1.5% - 1.75%.

     The borrowings  under the revolving  credit  facility may be limited at any
given  time to 75% of the  lesser of the total  commitment  at such time and the
borrowing base in effect at such time if the fixed coverage ratio defined in the
new revolving credit facility is less than or equal to 1.10 to 1.00.

ISSUANCE OF 11 1/8% SENIOR SECURED DISCOUNT NOTES DUE 2009

     On February  17, 2004 we  completed  the sale of $306.0  million  principal
amount at maturity  (gross proceeds of $225.3 million) of 11 1/8% Senior Secured
Discount Notes due 2009. The proceeds of the offering and

<PAGE>


borrowings  under the revolving credit facility  (discussed  above) were used to
repay and terminate the credit facilities that existed at December 31, 2003.

     The Senior Secured Discount Notes are secured by a first-priority  security
interest  in  the  First-Priority  Collateral  and  a  second-priority  security
interest in the  Second-Priority  Collateral.  The Senior Secured Discount Notes
are guaranteed by our existing and future domestic  restricted  subsidiaries and
certain foreign subsidiaries.

     Unless we elect to pay cash interest as described  below,  and except under
certain  limited  circumstances  the Senior Secured  Discount Notes will accrete
from the  date of  issuance  at the rate of 11 1/8%  until  December  15,  2006,
compounded  semiannually  on each June 15 and  December 15  commencing  June 15,
2004, to an aggregate principal amount of $1,000 per note ($306.0 million in the
aggregate  assuming no redemption or other  repayments).  Commencing on December
15, 2006,  interest on the Senior Secured Discount Notes will accrue at the rate
of 11 1/8% per annum and will be  payable  in cash  semiannually  on June 15 and
December 15, commencing on June 15, 2007.

     On any interest  payment  date prior to December 15, 2006,  we may elect to
commence  paying cash interest  (from and after such  interest  payment date) in
which case (i) we will be  obligated  to pay cash  interest  on each  subsequent
interest  payment date, (ii) the notes will cease to accrete after such interest
payment date and (iii) the outstanding  principal  amount at the stated maturity
of each note  will  equal the  accreted  value of such note as of such  interest
payment date.

     On or after June 15, 2007, we may redeem some of all of the Senior  Secured
Discount 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 15,  2008;  102.781% if  redeemed  prior to June 15,  2009;  and 100% if
redeemed on or after June 15,  2009.  Prior to such date,  we may not redeem the
notes except as described in the following paragraph.

     At any time prior to June 15, 2007, we may redeem up to 35% of the accreted
value of the Senior Secured Discount Notes with the net cash proceeds of certain
equity  offerings by us at a redemption  price equal to 111.125% of the accreted
value thereof plus accrued interest, so long as (i) at least 65% of the accreted
value of the notes remains  outstanding  after such redemption and (ii) any such
redemption by us is made within 120 days after such equity offering.

11 1/8% SENIOR SECURED NOTES DUE 2009

     On May 30, 2003, we completed the sale of $250 million aggregate  principal
amount of our 11 1/8% Senior  Secured Notes due 2009. The 11 1/8% Senior Secured
Notes due 2009 mature on September  1, 2009,  and interest is payable on March 1
and  September  1 of each year.  The net  proceeds  from the sale of the 11 1/8%
Senior  Secured  Notes  due 2009 were  used to repay  borrowings  under our then
existing credit  facilities in accordance with an amendment to our then existing
credit  facilities.  The 11 1/8% Senior Secured Notes due 2009 rank equally with
our existing  and future  senior debt and rank senior to our existing and future
subordinated indebtedness, including the 13% Senior Subordinated Notes due 2010.
The 11 1/8% Senior Secured Notes due 2009 are secured, on a second-priority lien
basis,  by a  substantial  portion of our  assets.  Due to this  second-priority
status, the 11 1/8% Senior Secured Notes due 2009 effectively rank junior to our
obligations  secured by a first-priority  lien on the collateral securing the 11
1/8%  Senior  Secured  Notes  due  2009  to the  extent  of the  value  of  such
collateral.  These obligations  secured by first-priority  liens include our new
revolving  credit  facility with respect to  Second-Priority  Collateral and the
Senior  Secured   Discount  Notes  due  2009  with  respect  to   First-Priority
Collateral.  In addition,  the 11 1/8% Senior Secured Notes due 2009 effectively
rank junior to any of our obligations  that are secured by a lien on assets that
are not part of the  collateral  securing the 11 1/8% Senior  Secured  Notes due
2009,  to the extent of the value of such  assets.  The 11 1/8%  Senior  Secured
Notes due 2009 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 11 1/8% Senior
Secured  Notes  due  2009  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

<PAGE>


and unpaid  interest.  Otherwise,  we may not redeem the 11 1/8% Senior  Secured
Notes due 2009 prior to June 1, 2007.  On or after that date, we may redeem some
or all of the 11 1/8% Senior Secured Notes due 2009 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.

13% SENIOR SUBORDINATED NOTES DUE 2010

     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 13% Senior  Subordinated Notes due
2010 mature on June 1, 2010, and interest on the 13% Senior  Subordinated  Notes
due 2010 is  payable  on June 1 and  December  1 of each  year.  The 13%  Senior
Subordinated  Notes due 2010 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 13% Senior  Subordinated Notes due
2010 are  guaranteed by some of our  subsidiaries.  The 13% Senior  Subordinated
Notes due 2010 are  unsecured.  We may not redeem  the 13%  Senior  Subordinated
Notes due 2010 prior to June 1, 2005.  On or after that date,  we may redeem the
13% Senior  Subordinated  Notes due 2010,  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  $205.3 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.  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 $1.9 million for the six months ended
June 30,  2004,  a decrease  of $31.3  million,  as compared to net cash used in
operating activities of $33.2 million for the same period in 2003. This decrease
was due to  reductions  in working  capital  items of $35.4  million,  offset by
reductions in non-cash plant closing costs of $3.3 million and  depreciation and
amortization of $2.6 million.

NET CASH USED IN INVESTING ACTIVITIES

Net cash used in investing  activities  increased  $0.4 million to $11.1 million
for the six months  ended June 30, 2004,  from $10.7  million for the six months
ended June 30,  2003.  These cash  outflows  were for capital  expenditures  for
maintenance projects.

NET CASH PROVIDED BY FINANCING ACTIVITIES

Net cash provided by financing  activities  was $11.3 million for the six months
ended June 30, 2004, as compared to net cash provided by financing activities of
$46.0 million for the six months ended June 30, 2003. The activity for the first
six months of 2004 includes the net proceeds from the issuance of senior secured
discount notes of $225.3 million net of financing fees paid of $ 9.3 million and
the repayment of the old credit  facilities of $ 219.6  million.  In addition we
borrowed  $ 16.0  million  net of  repayments  under  the  credit  facility  for
operations and paid $1.1 million for capital leases. The transactions in the six
months of 2003 included the issuance of $ 10 million of

<PAGE>


redeemable  preferred shares,  net proceeds of $250 million from the issuance of
Senior Secured Notes to repay term debt and $9.7 million in financing fees for a
related amendment to our credit facility and the preferred share issuance.

LIQUIDITY

     As of June 30, 2004, we had approximately  $82.0 million of working capital
excluding  current  maturities  of long term debt.  As of June 30,  2004 we have
approximately  $48.5  million  available  for  borrowings  under our new  $100.0
million revolving credit facility,  with outstanding borrowings of approximately
$16.0 million and  approximately  $7.2 million of letters of credit issued under
our revolving  credit  facility.  The borrowings  under the new revolving credit
facility are limited to 75% of the lesser of the total  commitment  at such time
and the  borrowing  base in  effect at such  time if the  fixed  coverage  ratio
defined in the new  revolving  credit  facility is less than or equal to 1.10 to
1.00. 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.

As of June  30,  2004,  we had  approximately  $3.7  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-$30
million in each of 2004 and 2005. These  expenditures  will consist primarily of
ongoing maintenance capital expenditures and limited capacity additions.

Our revolving  credit  facility and the indentures  relating to our  outstanding
notes impose certain  restrictions on us, including  restrictions on our ability
to incur indebtedness,  pay dividends,  make investments,  grant liens, sell our
assets and engage in certain other activities.

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

<PAGE>


operate; costs of integrating any future acquisitions;  loss of our intellectual
property rights; operational difficulties at any of our plants; foreign currency
fluctuations and devaluations and political  instability in our foreign markets;
changes in our business strategy or 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 2003 Form 10-K and in our  Registration  Statement on Form
S-4 (file no.  333-114608),  as amended,  filed with the Securities and Exchange
Commission  on April 20,  2004.  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 resin  price  risks  that arise in the normal  course of
business.  Significant  increases in the price of resins could adversely  affect
our  operating  margins,  results of  operations  and  ability  to  service  our
indebtedness. We may be limited in our ability to pass increases in resin prices
on to certain of our customers  due to  provisions  in our contracts  with those
customers.

     Since the  repayment of $219.6  million of variable rate term debt with the
proceeds  of our Senior  Secured  Discount  Notes and  borrowings  under our new
revolving  credit  facility on  February  17,  2004 our  interest  rate risk has
decreased substantially.

     Our new revolving  credit  facility is at a variable  rate of interest.  An
increase  of 1% in  interest  rates would  result in an  additional  $100,000 of
annual  interest  expense  for each $10.0  million in  borrowings  under our new
revolving credit facility.  We will thus continue to be exposed to interest rate
risk to the extent of our borrowings under the new revolving credit facility.

ITEM 4. CONTROLS AND PROCEDURES

EVALUATION OF 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 our principal  financial officer,
as appropriate,  to allow timely decisions  regarding required  disclosure.  Our
management,   including  our  principal  executive  officer  and  our  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 CONTROLS

There were no significant  changes in our internal  controls or in other factors
that could  significantly  affect these  controls  subsequent to the date of the
evaluation referenced in the foregoing paragraph.

<PAGE>


                           PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

     On June 14, 2004, we settled the complaint filed against us by S.C. Johnson
& Sons, Inc and S.C.  Johnson Home Storage filed in U.S.  District Court for the
District of  Michigan,  Northern  Division  (Case No.  01-CV-10343-BC)  for $6.0
million plus legal fees which was within  management's  estimated  costs of $7.2
million accrued in the fourth quarter of 2003.


ITEM 2. CHANGES IN  SECURITIES,  USE OF PROCEEDS AND ISSUER  PURCHASES OF EQUITY
SECURITIES

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5. OTHER INFORMATION

None

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)  The following exhibits are filed with this report.

31.1 Certification  of Chief  Executive  Officer  pursuant to Section 302 of the
     Sarbanes-Oxley Act of 2002.

31.2 Certification  of Chief  Financial  Officer  pursuant to Section 302 of the
     Sarbanes-Oxley Act of 2002.

32.1 Certification of Chief Executive  Officer  furnished  pursuant to 18 U.S.C.
     Section 1350, as Adopted Pursuant to Section 906 of the  Sarbanes-Oxley Act
     of 2002.

32.2 Certification of Chief Financial  Officer  furnished  pursuant to 18 U.S.C.
     Section 1350, as Adopted Pursuant to Section 906 of the  Sarbanes-Oxley Act
     of 2002.


<PAGE>


(B)  REPORTS ON FORM 8-K

     We furnished a Current Report on Form 8-K, dated April 27, 2004, under Item
     9 of  such  form,  announcing  the  Company's  plan  to  host  an  Investor
     Conference on May 18, 2004 in Lexington,  Kentucky at the Marriott  Griffin
     Gate Resort followed by a tour of our plant in Danville, Kentucky.

     We furnished a Current Report on Form 8-K, dated May 6, 2004, under Items 7
     and 9 of such form,  announcing  the  Company's 1st quarter 2004 results as
     stated in a letter from Harold Bevis, President and Chief Executive Officer
     of Pliant,  to our  customers,  investors and  employees.  The  information
     included in Item 9 of this Current  Report was  furnished  and shall not be
     deemed to be filed.

     We filed a Current Report on Form 8-K, dated May 5, 2004, under Items 9 and
     12 of such form,  "Regulation  FD Disclosure  and Results of Operations and
     Financial Condition".

<PAGE>


                                   SIGNATURES


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


                                PLIANT CORPORATION


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


Date: August 5, 2004

<PAGE>


                                INDEX TO EXHIBITS

EXHIBITS
--------

  31.1    Certification  of Chief Executive  Officer  pursuant to Section 302 of
          the Sarbanes-Oxley Act of 2002.

  31.2    Certification  of Chief Financial  Officer  pursuant to Section 302 of
          the Sarbanes-Oxley Act of 2002.

  32.1    Certification  of Chief  Executive  Officer  furnished  pursuant to 18
          U.S.C.  Section  1350,  as  adopted  pursuant  to  Section  906 of the
          Sarbanes-Oxley Act of 2002.

  32.2    Certification  of Chief  Financial  Officer  furnished  pursuant to 18
          U.S.C.  Section  1350,  as  adopted  pursuant  to  Section  906 of the
          Sarbanes-Oxley Act of 2002.