Sheet-like clouds are common in turbulent gas and perhaps form via collisions between turbulent gas flows. Having examined the evolution of an isothermal shocked slab in an earlier contribution, in this work we follow the evolution of a sheet-like cloud confined by (thermal) pressure and gas in it is allowed to cool. The extant purpose of this endeavour is to study the early phases of core-formation. The observed evolution of this cloud supports the conjecture that molecular clouds themselves are three-phase media (comprising viz. a stable cold and warm medium, and a third thermally unstable medium), though it appears, clouds may evolve in this manner irrespective of whether they are gravitationally bound. We report, this sheet fragments initially due to the growth of the thermal instability (TI) and some fragments are elongated, filament-like. Subsequently, relatively large fragments become gravitationally unstable and sub-fragment into smaller cores. The formation of cores appears to be a three stage process: first, growth of the TI leads to rapid fragmentation of the slab; second, relatively small fragments acquire mass via gas-accretion and/or merger and third, sufficiently massive fragments become susceptible to the gravitational instability and sub-fragment to form smaller cores. We investigate typical properties of clumps (and smaller cores) resulting from this fragmentation process. Findings of this work support the suggestion that the weak velocity field usually observed in dense clumps and smaller cores is likely seeded by the growth of dynamic instabilities. Simulations were performed using the smooth particle hydrodynamics algorithm.