10-Q/A 1 d10qa.txt FORM 10-Q/A SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q/A |X|QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2001 - Commission File No. 1-9699 BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP Delaware 31-1269627 ----------------------- ------------------------------------ (State of organization) (I.R.S. Employer Identification No.) Highway 73, Geismar, Louisiana 70734 614-225-4482 ---------------------------------------- ------------------------------- (Address of principal executive offices) (Registrant's 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. --------- Number of Common Units outstanding as of the close of business on November 8, 2001: 36,750,000. ================================================================================ 1 BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except per Unit data)

See Notes to Consolidated Condensed Financial Statements. 2 BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands)

See Notes to Consolidated Condensed Financial Statements 3 BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP CONSOLIDATED CONDENSED BALANCE SHEETS (In thousands)

See Notes to Consolidated Condensed Financial Statements. 4 BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (Unaudited) (In thousands) Limited General Partners Partner Total --------- --------- --------- Balance at December 31, 1999 ............. $ 118,766 $ ( 286) $ 118,480 Net income ............................ 367 4 371 --------- --------- --------- Balance at March 31, 2000 ................ $ 119,133 $ ( 282) $ 118,851 ========= ========= ========= Balance at December 31, 2000 ............. $ 20,371 $ (1,280) $ 19,091 Net income (Restated) ................. (36,637) (370) (37,007) --------- --------- --------- Balance at March 31, 2001 (Restated) ..... $ (16,266) $ (1,650) $ (17,916) ========= ========= ========= See Notes to Consolidated Condensed Financial Statements. 5 BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited) (In thousands except Unit and per Unit data) 1. Interim Financial Statements The accompanying unaudited interim consolidated condensed financial statements of Borden Chemicals and Plastics Limited Partnership (the "Partnership"), and its subsidiary operating partnership Borden Chemicals and Plastics Operating Limited Partnership (the "Operating Partnership") contain all adjustments, consisting only of normal recurring adjustments, which in the opinion of BCP Management, Inc. (the "General Partner") are necessary for a fair statement of the results for the interim periods. Results for the interim periods are not necessarily indicative of the results for the full year. The Company has revised its financial statements as of and for the quarter ended March 31, 2001 for the understatement of accounts payable and for inventory valuation adjustments at March 31, 2001. The impact of this revision on the Company's financial results for the quarter ended March 31, 2001 is summarized below: As Reported As Restated ----------- ----------- Net (loss) $ (29,569) $ (36,637) (Loss) per Unit $ (0.80) $ (1.00) Inventories $ 46,399 $ 39,187 Current liabilities $ 58,623 $ 74,258 Total liabilities $ 345,020 $ 360,425 Partners' capital (deficit) $ 4,700 $ (17,916) Basic income per unit is computed by dividing net income, after subtracting the General Partner's 1% interest, by the weighted average number of units outstanding. Currently, there are no potentially dilutive securities; accordingly, basic income per unit and diluted income per unit are equivalent. 2. Organization and Business Borden Chemicals and Plastics Limited Partnership (the "Company" or "Partnership") is a Delaware limited partnership which owns a 98.9899% limited partner interest as sole limited partner in Borden Chemicals and Plastics Operating Limited Partnership (the "Operating Partnership"). BCP Management, Inc. ("BCPM"), a wholly-owned subsidiary of Borden, Inc. ("Borden"), owns a 1% interest as the sole general partner in the Partnership and a 1.0101% interest as the sole general partner ("General Partner") in the Operating Partnership, resulting in an aggregate 2% ownership interest in the partnerships. BCPM manages and controls the activities of the Partnership and the Operating Partnership, and its activities are limited to such management and control. The General Partner's interest in the Operating Partnership is reflected as minority interest in the accompanying consolidated financial statements. The Operating Partnership has three operating locations: its main operating site in Geismar, Louisiana, which produces PVC resins, vinyl chloride monomer and acetylene; a PVC resins plant located in Illiopolis, Illinois; and a PVC resins plant in Addis, Louisiana. Its finished goods PVC resins are sold for further processing into various end-use applications, such as plastic pipe and pipe fittings, vinyl siding and window frames, vinyl flooring and other applications. The Partnership has incurred net losses of $99,389, $23,991 and $40,607 in 2000, 1999, and 1998, respectively. During 2000, the Partnership exited its Methanol and Derivatives and Nitrogen Products operations that were dependent on natural gas as a raw material feedstock. Increased production capacities outside of the United States that take advantage of low cost supplies of natural gas had resulted in the Partnership incurring significant losses from these businesses competing against low cost global producers. During the second half of 2000, the Partnership incurred significant losses from continuing operations, as market conditions in the PVC resin industry deteriorated. Industry resin capacity increases combined with a significant downturn in consumption from PVC converters, which was a result of inventory control efforts by the converters and reduced demand from end users due to sluggish economic conditions, caused the Partnership's sales volume and selling prices to fall well below profitable levels. Further, the cost of natural gas increased to unprecedented levels during the second half of the year. This caused the Partnership's production costs to rise dramatically, as natural gas affected both raw material costs and energy costs. On April 3, 2001, the Operating Partnership and its subsidiary, BCP Finance Corporation, (collectively, "the Debtors") elected to seek bankruptcy court protection to develop and implement a financial reorganization because, despite management's continuing efforts to reduce the exposure to natural gas, depressed resin prices and demand converged with sharply increased energy costs in the first quarter of 2001 to create a critical debt and liquidity situation. Management is in the process of developing strategies to restructure the Operating Partnership's financial affairs and allow it to emerge from bankruptcy. These strategies could include seeking strategic investors, lenders, and/or joint 6 venture partners, selling substantial assets or pursuing a merger or other strategic transactions. There can be no assurance that management's efforts in this regard will be successful. The support of the Partnership's vendors, customers, lenders, unitholders and employees will continue to be key to the Partnership's future success. Management has undertaken several initiatives to improve liquidity, including idling unprofitable or high cost assets and production facilities, wage freezes, reductions-in-force and entering into a DIP Credit Facility as described below. However, given current business and market conditions, there can be no assurance that the Partnership will be able to meet its financial obligations in the future. 3. Proceedings Under Chapter 11 On April 3, 2001, the Operating Partnership and its subsidiary, BCP Finance Corporation, (collectively, the "Debtors") filed voluntary petitions for protection under Chapter 11 of the U.S. Bankruptcy Code (the "Chapter 11 Cases") in the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court"). The Chapter 11 Cases have been procedurally consolidated for administrative purposes only. The Debtors are currently acting as debtors-in-possession pursuant to the Bankruptcy Code. Subsequent to the commencement of the Chapter 11 Cases, the Debtors sought and obtained several orders from the Bankruptcy Court which were intended to stabilize and continue business operations. The most significant of these orders (i) approved, an amendment (the "DIP Loan Agreement") to the Operating Partnership's Credit Agreement dated as of March 31, 2000, (the "Year 2000 Revolving Credit Facility") with Fleet Capital Corporation ("Fleet") as agent for itself and other lenders party thereto (the "DIP Lenders") providing up to $100 million debtor-in-possession financing, (ii) permitted continued operation of the consolidated cash management system during the Chapter 11 Cases in substantially the same manner as it was operated prior to the commencement of the Chapter 11 Cases, and (iii) authorized payment of pre-petition wages, vacation pay and employee benefits and reimbursement of employee business expenses, and (iv) authorized payment of pre-petition obligations to certain vendors critical to the Partnership's ability to continue its operations. The DIP Loan Agreement provides the Operating Partnership with a revolving line of credit in an aggregate amount not to exceed $100 million subject to borrowing base limitations. The Operating Partnership will use amounts borrowed under the DIP Loan Agreement for its ongoing working capital needs and for certain other purposes of the Operating Partnership as permitted by the DIP Loan Agreement. The Operating Partnership granted a security interest to the DIP Lenders in substantially all of the Operating Partnership's assets as security for its obligations under the DIP Loan Agreement. All obligations under the DIP Loan Agreement will be afforded "super-priority" administrative expense status in the Chapter 11 Cases. Under the DIP Loan Agreement, the Operating Partnership, at its option, may make either LIBOR based or Base Rate Borrowings. The applicable interest rate for LIBOR based borrowings is LIBOR plus 3.00%, and for Base Rate Borrowings, is Base Rate plus 1.25%. The Partnership is required to meet certain financial covenants under the DIP Loan Agreement, including capital expenditure and professional fee limitations and certain budget requirements relating to cash receipts and payments. 4. Environmental and Legal Proceedings Under an Environmental Indemnity Agreement (the "EIA") with Borden, Inc. ("Borden"), Borden has agreed, subject to certain specified limitations, to indemnify the Partnership in respect of environmental liabilities arising from facts or circumstances that existed and requirements in effect prior to November 30, 1987, the date of the initial sale of the Geismar and Illiopolis plants to the Partnership. The Partnership is responsible for environmental liabilities arising from facts or circumstances that existed and requirements that become effective on or after such date. With respect to certain environmental liabilities that may arise from facts or circumstances that existed and requirements in effect both prior to and after such date, Borden and the Partnership will share liabilities on an equitable basis considering all of the facts and circumstances including, but not limited to, the relative contribution of each to the matter and the amount of time each has operated the assets in question (to the extent relevant). No claims can be made under the EIA after November 30, 2002. The Partnership is subject to extensive federal, state and local environmental laws and regulations which impose limitations on the discharge of pollutants into the air and water, establish standards for the treatment, storage, transportation and disposal of solid and hazardous wastes, and impose obligations to investigate and remediate contamination in certain circumstances. The Partnership has expended substantial resources, both financial and 7 managerial, and it anticipates that it will continue to do so in the future. Failure to comply with the extensive federal, state and local environmental laws and regulations could result in significant civil or criminal penalties and remediation costs. The Partnership is subject to legal proceedings and claims which may arise in the ordinary course of business. Management of the Partnership believes, based on the information it currently possesses, that the amount of the ultimate liability, taking into account its insurance coverage, including its risk retention program and Environmental Indemnity Agreement with Borden, is unlikely to have a material adverse effect on the financial position or results of operations of the Partnership. Any potential liability may be impacted by the Chapter 11 cases described in Note 2. 5. Debt This note contains information regarding the Operating Partnership's short-term borrowings and long-term debt as of March 31, 2001. As a result of the filing of the Chapter 11 Cases described in Note 2, no payments will be made by the Debtors on pre-petition debt except as approved by the Bankruptcy Court. The Year 2000 Revolving Credit Facility provides for a revolving credit facility of up to $100 million subject to borrowing base limitations. The Operating Partnership's obligations under the facility are collateralized by its accounts receivable, inventory and a lien against certain fixed assets. The Year 2000 Revolving Credit Facility replaced the existing facility and all amounts outstanding under that facility were repaid with borrowings under the Year 2000 Revolving Credit Facility. In addition, a change in control of the General Partner, the Partnership or the Operating Partnership are events of default under the Year 2000 Revolving Credit Facility. On May 1, 1995, the Operating Partnership issued $200 million aggregate principal amount of 9.5% Notes due 2005 (the "Notes") pursuant to an Indenture dated as of May 1, 1995 (the "Indenture"). The Notes are senior unsecured obligations of the Operating Partnership. The Notes include restrictions on the Operating Partnership's ability to make cash distributions, incur additional indebtedness, sell assets, engage in sale/leasebacks and to take certain other actions. Upon a Change in Control, the holders of the Notes may require the Operating Partnership to repurchase their Notes at a price equal to 101% of the aggregate principal amount plus accrued and unpaid interest to the date of repurchase. 6. Segment Information Prior to fiscal 2000, the Partnership operated in three reportable segments as defined by SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information". The segments were PVC Polymers Products, Methanol and Derivatives and Nitrogen Products. The Partnership identifies its reportable segments based on the internal organization that is used by management for making operating decisions and assessing performance. During fiscal 2000, the Partnership exited its Methanol and Derivatives and Nitrogen Products business segments. Consequently, the Partnership now operates in only the PVC Polymers Products business segment, which consists of PVC resins, ethylene-based vinyl chloride monomer (for internal consumption), and its currently idled acetylene and acetylene-based vinyl chloride monomer operations. 7. New Accounting Pronouncements In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities", which is effective in the current period for the Partnership. The statement requires that all derivatives be recorded in the balance sheet as either assets or liabilities and be measured at fair value. The accounting for changes in fair value of a derivative depends on the intended use of the derivative and the resulting designation. The Partnership adopted SFAS No. 133 as of January 1, 2001, but it currently does not hold any derivative instruments or engage in any hedging activities and as such no transition expense has been incurred upon adoption. 8. Subsequent Event In April 2001, the Partnership borrowed $2.8 million from BCPM in order to pay federal gross margin taxes, and has issued a demand note, bearing interest at prime rate plus 1.50%, payable to BCPM for the same amount. 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results ------------------------------------------------------------------------------- of Operations ------------- Overview and Outlook On April 3, 2001, the Operating Partnership and its subsidiary BCP Finance Corporation, (the "Debtors") filed voluntary petitions for protection under Chapter 11 of the Bankruptcy Code, 11 U.S. C. 101-1330 in the United States Bankruptcy Court for the District of Delaware under case number 01-1268 (RRM) and 01-1269 (RRM) ("The Chapter 11 Cases"). The Chapter 11 Cases have been procedurally consolidated for administrative purposes only. The Debtors are currently acting as debtors-in-possession pursuant to the Bankruptcy Code. The Partnership has exited the Methanol and Derivatives and the Nitrogen Products businesses in 2000, and its revenues are now derived principally from the sale of PVC resins. The markets for and profitability of PVC resins have been, and are likely to continue to be, cyclical. Periods of high demand, high capacity utilization and increasing operating margins tend to result in new plant investment and increased production until supply exceeds demand, followed by periods of declining prices and declining capacity utilization and decreased margins until the cycle is repeated. In addition, markets for the Partnership's products are affected by general economic conditions and a downturn in the economy could have a material adverse effect on the Partnership, including, but not limited to, its ability to service its debt obligations. The demand for the Partnership's PVC products is primarily dependent on the construction and automotive industries. Historically, natural gas has been a principal raw material feedstock, the price of which has been volatile in recent years. The other principal feedstocks are ethylene and chlorine. Prices for these raw materials may change significantly from year to year. Prices for PVC improved somewhat during the first half of 1997, but then declined due to competitive market conditions experienced in the second half of 1997. Published prices for PVC during the fourth quarter of 1997 declined to an average of approximately $0.30 per pound. PVC continued to decline in 1998. General competitive conditions and reduced demand for PVC in the Far East kept downward pressure on selling prices through 1998 with the fourth quarter price in the $0.24 per pound range. Prices for PVC steadily increased each quarter in 1999, with the fourth quarter price averaging approximately $0.36 per pound. During the first half of 2000, selling prices continued to increased steadily, with prices reaching a high of approximately $0.42 per pound with strong volumes and profit margins. During the summer months, however, the demand for PVC resins declined significantly as customers took steps to control their inventory levels and due to seasonal customer plant shutdowns. Demand for PVC resins continued to be soft in the fourth quarter of 2000 as general economic conditions weakened the demand for construction and automotive applications. As a result, selling prices for PVC resins decreased every month over the second half of 2000. When combined with lower sales volumes due to decreased demand and increased raw material and energy costs due to the significant increases in the cost of natural gas, the Partnership incurred negative profit margins from PVC Products over the second half of the year. During the first quarter of 2001, PVC pricing was an average of $0.33 per pound. Results of Operations Quarter Ended March 31, 2001 Compared to Quarter Ended March 31, 2000 Revenues Total revenues from continuing operations during the first quarter of 2001 decreased $39.0 million or 27.8% to $101.5 million from $140.5 million in the first quarter of 2000. Total revenues for PVC Polymers Products decreased as a result of a 14% decrease in selling prices, and a decrease in sales volumes. Selling prices and volume decreases are the result of a decreased demand in the marketplace. Cost of Goods Sold Total cost of goods sold from continuing operations increased $1.6 million to $121.5 million in the current period from $119.9 in the same period last year. Expressed as a percent of revenue, cost of goods sold was 119.8% in the current period versus 85.4% in the prior year. The increase was due to price increases in all major raw materials. 9 Interest Expense Interest expense for the first quarter of 2001 decreased $0.8 million which is the result of lower interest rates under the Revolving Credit Facility in the first quarter of 2001 as compared to the same period last year, and the write-off of debt issuance costs in the first quarter of 2000. Tax on Gross Margin Taxes on gross margin were zero in the current period compared to $0.75 million in the first quarter of 2000. The decrease is directly attributable to the decline in profitability versus the prior year. Loss from Discontinued Operations The Partnership exited the Methanol and Derivatives and the Nitrogen Products business in 2000, and its revenues are now derived principally from the sale of PVC resins. A net loss from discontinued operations of $4.6 million was incurred for the first quarter of 2000. Depressed selling prices for Methanol, Ammonia and Urea caused the continued losses from the discontinued businesses. Other Expense Other expense during the first quarter of 2001 was $2.6 million as compared to $0.01 million for the same period last year. This increase was largely due to severance payments made as part of management's initiative to reduce the labor force. As of March 31, 2001, $0.875 million remained unpaid and is payable over the next three quarters. Net Loss Net loss for the first quarter of 2001 was $37.0 million compared to income of $0.4 million for the first quarter of 2000. As discussed above, the primary reasons for the $36.6 million decrease from prior year was the result of decreased volume and selling prices from PVC Products. Net loss from discontinued operations was $4.6 in the prior period. Liquidity and Capital Resources Cash Flows from Operations. Cash used in operations for the first quarter 2001 totaled $13.6 million, a reduction of $11.0 million from first quarter 2000 primarily due to favorable changes in receivables and inventories offset by an unfavorable change in payables and a net loss of $37.0 million. Cash Flows from Investing Activities. First quarter capital expenditures totaled $3.7 million and $1.0 million for 2001 and 2000, respectively. The Partnership had a 50% interest in a 200 million pound stated annual capacity acetylene plant at the Geismar complex, with the remaining 50% interest held by BASF Corporation. The Partnership purchased BASF's interest in the acetylene plant in January 2000 for $15.9 million, $8.2 million of which was paid in the first quarter 2000 and the remaining balance was paid in July 2000. Proceeds from a note receivable of $9.7 million were collected in the first quarter of 2001. Cash Flows from Financing Activities. Net long-term borrowings were $5.5 million in the first quarter of 2001 compared to $14.5 million in the first quarter of 2000. A decrease of $37.4 million in net income from prior year was offset by favorable increases in capital expenditures and plant acquisitions of $5.5 million, a $1.1 million debt issuance cost payment in first quarter 2000, and a $26.7 million reduction in working capital requirements. Liquidity On April 3, 2001, the Debtors commenced the Chapter 11 Cases. The Debtors are currently acting as debtors-in-possession pursuant to the Bankruptcy Code. 10 Subsequent to the commencement of the Chapter 11 Cases, the Debtors sought and obtained several orders from the Bankruptcy Court which were intended to stabilize and continue business operations. The most significant of these orders (i) approved, an amendment (the "DIP Loan Agreement") to the Operating Partnership's Credit Agreement dated as of March 31, 2000, (the "Year 2000 Revolving Credit Facility") with Fleet Capital Corporation ("Fleet") as agent for itself and other lenders and other lenders party thereto (the "DIP Lenders"), providing up to $100 million debtor-in-possession financing, (ii) permitted continued operation of the consolidated cash management system during the Chapter 11 Cases in substantially the same manner as it was operated prior to the commencement of the Chapter 11 Cases, and (iii) authorized payment of pre-petition wages, vacation pay and employee benefits and reimbursement of employee business expenses and (iv) authorized payment of pre-petition obligations to certain vendors critical to the Partnership's ability to continue its operations. The DIP Loan Agreement provides the Operating Partnership with a revolving line of credit in an aggregate amount not to exceed $100 million, subject to borrowing base limitations. The Operating Partnership will use amounts borrowed under the DIP Loan Agreement for its ongoing working capital needs and for certain other purposes of the Operating Partnership as permitted by the DIP Loan Agreement. The Operating Partnership granted a security interest to the DIP Lenders in substantially all of the Operating Partnership's assets as security for its obligations under the DIP Loan Agreement. All obligations under the DIP Loan Agreement will be afforded "super-priority" administrative expense status in the Chapter 11 Cases. Despite management's continuing efforts to reduce the exposure to natural gas, depressed resin prices and demand converged with sharply increased energy costs in the first quarter of 2001 to create a critical debt and liquidity situation. Management is in the process of developing strategies to restructure the Operating Partnership's financial affairs to allow it to emerge from bankruptcy. These strategies could include seeking strategic investors, lenders, and/or joint venture partners, selling substantial assets or pursuing other strategic transactions including a merger, joint venture or asset sale. There can be no assurance that management's efforts in this regard will be successful. The support of vendors, customers, lenders, unitholders and employees will continue to be key to the Operating Partnership's future success. Management has undertaken several initiatives to improve liquidity, including idling unprofitable or high cost assets and production facilities, wage freezes, reductions-in-force and entering into the DIP Loan Agreement. However, given current business and market conditions, there can be no assurance that the Operating Partnership will be able to meet its financial obligations in the future. Capital Expenditures The Partnership currently believes that the level of annual base capital expenditures for 2001 will be in the range of $6 to $12 million with the expenditures to be mainly for required environmental, safety and other non-discretionary projects. This estimate reflects limitations placed on capital expenditures by the DIP Loan Agreement. Item 2-A Market Risk -------------------- Interest Rate Risk - The Year 2000 Credit Facility provides up to $100 million under a revolving credit agreement with Fleet Capital Corporation. The credit facility expires on March 30, 2004, at which time all amounts outstanding must be repaid. Interest on borrowings under the revolving credit facility is determined, at the Operating Partnership's option, based on the applicable LIBOR rate (one, two, three or six month periods) plus a margin or the Adjusted Base Rate ("ABR"). The ABR is the greater of (a) the prime rate as announced or quoted by Fleet Bank or (b) Federal Funds Effective rate plus .50%. At March 31, 2001, borrowings under the facility were $77.9 million and bore interest at 8.0%. The Partnership is exposed to swings in the LIBOR or ABR rates. A change of 1.00% in the applicable rate would change the Partnership's interest cost by $0.8 million based on the borrowings at March 31, 2001. Commodity Risk - The Partnership generally does not use derivatives or other financial instruments such as futures contracts to manage commodity market risk. However, at certain times of the year the Operating Partnership will enter into contracts whereby it agrees to purchase a specified quantity of natural gas (the Operating Partnership's principal raw 11 material) at a fixed price. Such contracts are generally not in excess of three months forward, and the Operating Partnership generally limits such forward purchases to 60% of a month's requirements. In addition, the Partnership has entered into a fifteen year supply agreement (commencing in 1997) to provide a long-term supply of ethylene, a raw material, and minimize price volatility. The purchase price for the product varies with the supplier's raw material and variable costs, which are market-driven, as well as its fixed costs. The Partnership evaluates all such contracts on the basis of whether committed costs are expected to be realized in light of current and expected selling prices when the commodities are consumed in manufactured products. Foreign Exchange and Equity Risk - The Partnership is not exposed to significant foreign exchange or equity market risk. Forward-Looking Statements Certain statements in this Form 10-Q are forward-looking. These can be identified by the use of forward-looking words or phrases such as "believe", "expect", "may" and "potential", among others and include statements regarding the business outlook for the Operating Partnership and its ability to fund its cash needs. The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for such forward-looking statements. While these forward-looking statements are based on the Partnership's reasonable current expectations, a variety of risks uncertainties and other factors, including many which are outside the control of the Partnership, could cause the Partnership's actual results to differ materially from the anticipated results or expectations expressed in such forward-looking statements. The risks, uncertainties and other factors that may affect the operations, performance, development and results of the Partnership include changes in the demand for and pricing of its commodity products, changes in industry production capacity, changes in the supply of and costs of natural gas and other significant raw materials, loss of business from major customers, continuing availability of post-petition financing, negative market and credit impact from the Chapter 11 filings, unanticipated expenses, substantial changes in financial markets, labor unrest, foreign competition, major equipment failure, unanticipated results in pending legal proceedings, changes in applicable environmental, health and safety laws and regulations. PART II. OTHER INFORMATION Item 1. Legal Proceedings ------------------------- There have been no material developments in the ongoing legal proceedings that are discussed in the Partnership's 2000 Annual Report on Form 10-K. The Partnership is subject to legal proceedings and claims that may arise in the ordinary course of business. The management of the Partnership believes, based on the information it currently possesses, that the amount of ultimate liability, taking into account its insurance coverage, including its risk retention program and Environmental Indemnity Agreement with Borden, is unlikely to have a material adverse effect on the financial position or results of operations of the Partnership. 12 SIGNATURE Pursuant to the requirements of Section 13 or 15(d) 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. BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP By BCP Management, Inc., its General Partner By: /s/ Robert R. Whitlow, Jr. --------------------------------------- Robert R. Whitlow, Jr. Chief Financial Officer and Treasurer November 21, 2001 13

BORDEN CHEMICALS & PLASTICS LIMITED PARTNERSHIP /DE/ 10-Q/A