SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 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 [_] No [X].

----------

Number of Common Units outstanding as of the close of business on
March 25, 2002: 36,750,000.

Part I. Financial Information
Item 1. Financial Statements

BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per Unit data)

Three Months Ended
------------------------------------------
September 30, September 30,
2001 2000
------------- --------------

Revenues

Net trade sales ........................................ $ - $107,576
Net sales to related parties ........................... - 5,757
--------- --------
Total revenues ................................... - 113,333
--------- --------

Expenses
Cost of goods sold

Trade ............................................ - 104,250
Related parties .................................. - 4,837
Marketing, general & administrative expense ............ - 5,807
Interest expense ....................................... 56 6,446
Bad debt expense ....................................... - -
Tax on gross margin .................................... (2,515) 850
Equity on loss of unconsolidated subsidiaries .......... - -
Equity in loss of affiliate ............................ - 311
Other (income) and expense, including minority interest - (1,090)
--------- ---------
Total expenses .............................. (2,459) 121,411
--------- ---------

Net income ............................................. 2,459 (8,078)
Less 1% General Partner interest ................... (25) 81
--------- ---------
Net income applicable to Limited Partners' interest .... $ 2,434 $(7,997)
========= =========

Per Unit data-basic and diluted, net of 1% General
Partner interest

Net income per Unit .................................... $ 0.07 $ (0.22)
========= ==========

Average number of Units outstanding during the period .. $ 36,750 36,750
========= =========

Cash distributions declared per Unit ................... $ 0.00 $ 0.00
========= =========

See Notes to Condensed Consolidated Financial Statements

BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per Unit data)

Nine Months Ended
-----------------------------
September 30, September 30,
2001 2000
------------- -------------

Revenues

Net trade sales ................................................................. $ - $ 375,507
Net sales to related parties .................................................... - 18,011
--------- ---------
Total revenues ............................................................ - 393,518
--------- ---------

Expenses
Cost of goods sold

Trade ..................................................................... - 330,831
Related parties ........................................................... - 14,760
Marketing, general & administrative expense ..................................... - 19,366
Interest expense ................................................................ 107 21,144
Bad debt expense ................................................................ 6,933 -
Tax on gross margin ............................................................. (2,515) 2,310
Equity on loss of unconsolidated subsidiaries ................................... 19,091 -
Equity in loss of affiliate ..................................................... - 804
Other expense (income), including minority interest ............................. - (1,231)
--------- ---------

Total expenses ....................................................... 23,616 387,984
--------- ---------

Net income (loss) from continuing operations ...................................... (23,616) 5,534

Discontinued operations:
Loss from discontinued operations, net ...................................... - (10,192)
Gain on disposal of discontinued operations, net ............................ - 5,012
--------- ---------

Net income (loss) ............................................................... (23,616) 354
Less 1% General Partner interest ........................................... (236) (4)
--------- ---------

Net income (loss) applicable to Limited Partners'
interest .................................................................. $ (23,380) $ 350
========= =========

Per Unit data, basic and diluted, net of 1% General Partner interest
Income (loss) from continuing operations per Unit ............................... $ (0.64) $ 0.15
Income (loss) from discontinued operations per Unit ............................. 0.00 (0.14)
--------- ---------
Net income (loss) per Unit ...................................................... $ (0.64) $ 0.01
========= =========

Average number of Units outstanding during the period ........................... 36,750 36,750
========= =========

Cash distributions declared per Unit ............................................ $ 0.00 $ 0.00
========= =========

See Notes to Condensed Consolidated Financial Statements

BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)

Nine Months Ended
-----------------------------
September 30, September 30,
2001 2000
------------- -------------

Cash Flows From Operations

Net income (loss) ................................................ $ (23,616) $ 354
Adjustments to reconcile net income (loss) to net
cash used by operating activities:
Gain on disposal of discontinued operations, net ........... - (5,012)
Equity on loss of unconsolidated subsidiaries .............. 19,091 -
Bad debt expense ........................................... 6,933 -
Depreciation ............................................... - 27,655
Increase (decrease) in certain assets and liabilities:
Change in receivables ...................................... - (39)
Change in inventory ........................................ - (9,128)
Change in accounts payable ................................. - (12,225)
Other ...................................................... (2,408) (7,054)
--------- ---------

Net cash flows provided (used) by operating activities ............. - (5,449)
--------- ---------

Cash Flows From Investing Activities

Capital expenditures .......................................... - (6,885)
Plant acquisition ............................................. - (15,880)
--------- ---------
Net cash flows provided (used) by investing activities ............. - (22,765)
--------- ---------

Cash Flows From Financing Activities

Gross borrowings under line-of-credit agreement ............ - 241,664
Gross repayments under line-of-credit agreement ............ - (254,681)
Proceeds from sale of business segment ..................... - 38,800
Payment of debt issuance costs ............................ - (1,132)
--------- ---------
Net cash flows provided (used) by financing activities ........... - 24,651
--------- ---------

Change in cash and equivalents ..................................... - (3,563)

Cash and equivalents at beginning of period ........................ - 5,759
--------- ---------

Cash and equivalents at end of period .............................. $ - $ 2,196
========= =========

Supplemental Disclosures of Cash Flow Information

Issuance of note payable in exchange for payment of gross margin tax $ 2,800 $ -
========= =========

See Notes to Condensed Consolidated Financial Statements

BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

ASSETS (Unaudited)
- ------ -----------
Current assets September 30, 2001 December 31, 2000
------------------ -----------------

Cash and equivalents .......................................... $ - $ 3,223
Accounts receivable (less allowance for doubtful accounts of $0
and $1,843 respectively)
Trade ....................................................... - 58,444
Related parties ............................................. - 22,328
Inventories

Finished and in process goods ............................... - 44,024
Raw materials and supplies .................................. - 12,964
Receivable from unconsolidated subsidiary (see Note 7) ........ - -
Prepaid expenses and other current assets ..................... - 15,907
--------- ---------
Total current assets ........................................ - 156,890
--------- ---------
Other assets

Investments in and advances to affiliated companies ......... - 4,124
Other assets ................................................ - 37,408
--------- ---------
Total other assets .......................................... - 41,532
--------- ---------

Plant, property and equipment .................................... - 486,410
Less accumulated depreciation ............................... - (295,995)
--------- ---------
Net plant, property and equipment ........................ - 190,415
--------- ---------
Total assets ......................................... $ - $ 388,837
========= =========

LIABILITIES AND PARTNERS' CAPITAL

Current liabilities

Accounts and drafts payable ................................. $ - 66,495
Accrued interest ............................................ 107 3,673
Note payable to general partner ............................. 2,800 -
Other accrued liabilities ................................... - 18,480
--------- ---------
Total current liabilities ........................... 2,907 88,648
--------- ---------

Long-term debt .............................................. - 272,410
Other liabilities ........................................... - 4,555
Deferred tax on gross margin ................................ 1,618 4,133
--------- ---------
Total liabilities ................................. 4,525 369,746
--------- ---------

Partners' capital (deficit)
Limited Partners ............................................ (3,009) 20,371
General Partner ............................................. (1,516) (1,280)
--------- ---------
Total partners' capital (deficit) ...................... (4,525) 19,091
--------- ---------
Total liabilities and partner's capital ........................ $ - $ 388,837
========= =========

See Notes to Condensed Consolidated Financial Statements

BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
(In thousands)

Limited General
Partners Partner Total
-------- ------- -----

Balance at December 31, 1999 ........ $118,766 $ ( 286) $ 118,480
Net loss ......................... 350 4 354
-------- ------- ---------
Balance at September 30, 2000 ....... $119,116 $ (282) $ 118,834
======== ======= =========

Balance at December 31, 2000 ........ $ 20,371 (1,280) $ 19,091
Net loss ......................... (23,380) (236) (23,616)
--------- ------- --------
Balance at September 30, 2001 ....... $ (3,009) $(1,516) $ (4,525)
========= ======= =========

See Notes to Condensed Consolidated Financial Statements

BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In thousands except Unit and per Unit data)

1. Basis of Presentation

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 Chemical, Inc., formerly
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 the activities of the Partnership and
the Operating Partnership, and its activities are limited to such management.
The General Partner's interest in the Operating Partnership is reflected as
minority interest in the accompanying consolidated condensed financial
statements.

On April 3, 2001, the Operating Partnership and its wholly owned subsidiary BCP
Finance Corporation, filed a voluntary petition in the U.S. Bankruptcy Court to
reorganize under Chapter 11 of the U.S. Bankruptcy Code. Accordingly, as of
April 3, 2001, the Operating Partnership's operations are subject to the
jurisdiction of the Bankruptcy Court and are no longer controlled by the
Company. Accordingly, the Company no longer consolidates the Operating
Partnership's financial results in its condensed consolidated financial
statements, resulting in a change in reporting entity.

As a result of this change in reporting entity, the Company has restated its
fiscal 2001 results, effective January 1, 2001, to account for its investment in
the Operating Partnership under the equity method. Under the equity method, the
Partnership's share of the Operating Partnerships' income or loss is recorded in
earnings and as an adjustment to the Partnership's investment in the Operating
Partnership, to the extent that the Partnership's investment is not reduced
below zero. During the first quarter fiscal 2001, the Partnership's investment
in the Operating Partnership was reduced to zero, therefore, further losses
incurred by the Operating Partnership are no longer recognized by the
Partnership. The Partnership did not recognize its 99% share of the Operating
Partnership's losses amounting to $138.4 million and $179.8 million for the
three and nine-month periods ended September 30, 2001, respectively.

These financial statements and the financial statements of the Operating Limited
Partnership appearing in Footnote 9 have been prepared on a going concern basis,
which contemplates continuity of operations, realization of assets, and payment
of liabilities in the ordinary course of business. As a results of the Chapter
11 filing, there is no assurance that the carrying amounts of assets will be
realized or that liabilities will be settled for amounts recorded. Financial
statements of the Operating Limited Partnership appearing in Footnote 9 have
been prepared in accordance with the AICPA's Statement of Position 90-7
"Financial Reporting by Entities in Reorganization Under the Bankruptcy Code"
(SOP 90-7).

Accordingly, the accompanying condensed financial statements as of and for the
three and nine-month periods ended September 30, 2001 include the consolidated
financial results of the Operating Partnership and its subsidiary on an equity
basis. See Notes 2 and 3 for recent events regarding the bankruptcy proceedings.
See Note 9 for the condensed consolidated financial information of the Operating
Limited Partnership.

The accompanying unaudited interim consolidated condensed financial statements
of the Partnership contain all adjustments, including normal recurring
adjustments, which in the opinion of the General Partner, are necessary for a
fair statement of the results for the interim periods in accordance with
accounting principles generally accepted in the United States of America.
Results for the interim periods are not necessarily indicative of the results
for the full year. The interim financial statements and notes should be read in
conjunction with the financial statements and accompanying notes in the
Partnership's fiscal 2000 Annual Report on Form 10-K.

Basic income (loss) per unit is computed by dividing net income (loss), 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 (loss) per unit and diluted income (loss) per unit are
equivalent.

2. Organization and Business

The Partnership is a holding company and does not have its own independent
operations and does not engage in any revenue producing activities. As of June
30, 2001, the Operating Partnership had 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 pipefittings, vinyl siding and window frames, vinyl flooring
and other applications. The acetylene plant located in Geismar, Louisiana has
been idled since December 2000.

On April 3, 2001, the Operating Partnership and its wholly owned 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 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 Company's vendors,
customers, lenders, unit holders and employees will continue to be key to the
Company'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 credit facilities as described in Note
3. However, given current business and market conditions, there can be no
assurance that the Partnership or Operating Partnership will be able to meet its
financial obligations in the future.

3. Proceedings Under Chapter 11

Subsequent to the commencement of the Operating Partnership Chapter 11 case, 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 "Primary DIP Facility") to the
prepetition Year 2000 Revolving Credit Facility (the "Prepetition Credit
Facility") providing up to $100 million of debtor-in-possession financing, (ii)
permitted continued operation of the consolidated cash management system during
the Operating Partnership Chapter 11 case in substantially the same manner as it
was operated prior to the commencement of the Operating Partnership Chapter 11
case, (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 Operating
Partnership's ability to continue its operations.

The Primary DIP Facility, which received final Approval of the Bankruptcy Court
on July 11, 2001, provides the Operating Partnership with a revolving line of
credit in an aggregate amount not to exceed $100 million, subject to borrowing
base limitations and bears interest at the Alternate Base Rate plus 1.25%. The
Operating Partnership has used amounts borrowed under the Primary DIP Facility
for its ongoing working capital needs and for certain other purposes of the
Operating Partnership as permitted by that facility. 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 Primary
DIP Facility. All obligations under the Primary DIP Facility are afforded
"super-priority" administrative expense status in the Operating Partnership
Chapter 11 case. The Primary DIP Facility matured on March 31, 2002, but the
lenders have agreed, and the Bankruptcy Court has approved, the extension of the
maturity date to April 30, 2002.

In light of the possibility that the Primary DIP Facility would be insufficient
to finance the Operating Partnership's working capital needs during the period
required to obtain confirmation of a plan of reorganization for the Debtors, the
Operating Partnership approached a number of institutional lenders to assess
their interest in extending additional credit to the Debtors. None of these
lenders were willing to provide credit or terms acceptable to the Operating
Partnership. The Operating Partnership requested its general partner, BCPM, to
provide a loan to it. On October 31, 2001, the Debtors filed an initial motion
with the Bankruptcy Court seeking an interim order to obtain additional,
secondary postpetition financing (the "Secondary DIP Facility") from BCPM. The
terms of the proposed Secondary DIP Facility were negotiated, on the one hand,
by management of the Operating Partnership and the Debtors' legal counsel and,
on the other hand, by officers of BCPM and BCPM's legal counsel, with the
approval of the Independent Committee of the Board of Directors of BCPM which is
comprised of three outside directors who are not employees of the Operating
Partnership, BCPM or Borden. The negotiations included efforts to obtain the
support of the lenders under the Primary DIP Facility and the Official Committee
of Unsecured Creditors appointed

in the Operating Partnership Chapter 11 case. The Creditors Committee filed an
objection to the initial motion on November 6, 2001.

Further negotiations between the Operating Partnership and BCPM occurred, and
the parties agreed to revisions to the terms of the proposed Secondary DIP
Facility. The Debtors sought interim approval of the revised Secondary DIP
Facility. Subject to the terms and conditions of the Secondary DIP Facility,
BCPM has agreed to makes loans to the Operating Partnership through March 31,
2002, in an aggregate amount not to exceed $10 million for working capital,
other general corporate purposes and to make payments on the Primary DIP
Facility. The loans are unsecured, bear interest at the Alternate Base Rate
specified in the Primary DIP Facility plus 2.75% and mature on March 31, 2002.
The Creditors Committee also objected to the revised Secondary DIP Facility.
After a hearing, the Bankruptcy Court entered an order on December 20, 2001,
granting interim approval to $5 million in loans under the Secondary DIP
Facility.

On March 22, 2002, BCPM, the General Partner of the Company and the Operating
Partnership, filed a voluntary petition under Chapter 11 of the Bankruptcy Code.
As of the date of the filing, BCPM had cash of approximately $25 million, a
claim of approximately $4 million against the Operating Partnership for
repayment of borrowings under the Secondary DIP Facility, and claims of
approximately $6.6 million against the Operating Partnership for unreimbursed
expenses of the Company and the Operating Partnership paid by BCPM, the payment
of which is subject to the approval of the Bankruptcy Court.

On March 22, 2002, BCPM filed a motion in the General Partner Bankruptcy
requesting authority to extend the maturity date of the Secondary DIP Facility
and approval of the second $5 million of lending authority under the Secondary
DIP Facility. This motion was approved by the Bankruptcy Court on March 27,
2002. It is anticipated that the Operating Partnership will require borrowings
from BCPM in excess of the amounts previously committed, or approved by the
Bankruptcy Court, under the Secondary DIP Facility in order to continue
operations until the Operating Partnership completes the sale of certain of its
assets. BCPM may file a motion requesting authority to make further loans to the
Operating Partnership. There can, however, be no assurance that BCPM will be
authorized by the Bankruptcy Court to make further loans to the Operating
Partnership or that the Operating Partnership will be authorized by the
Bankruptcy Court to make further borrowings from BCPM.

The Operating Partnership has been exploring various strategic alternatives,
including possible mergers or joint ventures or a sale or sales of substantially
all of its assets. This strategy had been announced by the Company and the
Debtors to the public, creditors and the Bankruptcy Court in various public
filings, press releases and pleadings. Prior to the filing of the Operating
Partnership Chapter 11 case, the Operating Partnership had retained Taylor
Strategic Divestitures Corporation ("Taylor") to provide investment-banking
services in connection with its attempts to complete an asset sale or other
transaction. On September 28, 2001, the Bankruptcy Court entered an order
approving the Debtors' retention of Taylor and a fee structure for its services.

Throughout the Operating Partnership Chapter 11 case, Taylor has worked with the
Debtors to identify and contact potential candidates for asset purchases or
other transactions. Beginning in June 2001, certain potential purchasers
submitted non-binding expressions of interest for certain of the Debtors'
assets. On August 24, 2001, the Debtors filed a motion with the Bankruptcy Court
for an order approving bidding procedures for the sale of substantially all of
the Debtors' assets. An order approving bidding procedures was entered by the
Bankruptcy Court on October 12, 2001. The procedures include a five-stage
process for marketing assets, negotiating with potential purchasers, conducting
an auction if needed, and obtaining court approval of sales of principal assets.

Following due diligence by several candidates, the number and amount of the bids
declined. Several candidates cited the events of September 11, 2001 and related
events for withdrawing from the bidding process, while others offered business
reasons for declining to bid. The Operating Partnership has, however, continued
to solicit bids and has conducted discussions with a number of candidates.

On December 3, 2001, the Debtors filed a motion with the Bankruptcy Court
seeking approval of an asset purchase agreement with Shintech Louisiana, LLC
("Shintech") regarding the sale of the assets and operations of the Addis plant.
Shintech agreed to pay: (i) $38 million for the Addis plant, (ii) the value of
the Addis inventory and accounts receivable, and (iii) the cost of severance
benefits for certain Addis employees. The sale excludes certain items such as
cash, intercompany accounts, claims against third parties and equity interests
in certain entities. The sale was approved by the Bankruptcy Court on December
20, 2001, and closed on February 28, 2002. The proceeds from the

sale of the Addis plant were applied to pay expenses of the transaction and
outstanding borrowings under the Primary DIP Facility.

The Operating Partnership announced on March 8, 2002, that it had executed an
asset purchase agreement for the plant at Illiopolis, Illinois, with Formosa
Plastics Corporation, Delaware, which proposes to pay approximately $35 million
for the plant and working capital, subject to adjustments. The Bankruptcy Court
approved the Illiopolis transaction at a hearing on March 27, 2002. If the
transaction closes, a portion of the proceeds from the sale of the Illiopolis
plant will be applied to pay outstanding borrowings under the Primary DIP
Facility.

The Operating Partnership continues to explore possible dispositions of the
Geismar plant, but there is no assurance that a sale of the plant will be
completed. The Operating Partnership is continuing to operate the Illiopolis
plant at the present time, and began idling the Geismar plant in March 2002. On
December 12, 2001 the Creditors Committee filed a motion seeking an order
requiring the Debtors to abandon the assets comprising the Geismar plant. The
Debtors objected to the motion. The Bankruptcy Court held an initial hearing on
this motion on December 20, 2001, and the motion remains pending at this time.

It is not anticipated that holders of the Company's Common Units will receive
any distribution as a result of any sales of the Operating Partnership's assets
or the Debtors' plan of reorganization.

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
Operating 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
for liabilities incurred after November 30, 2002.

The Operating 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 Operating Partnership has expended substantial resources, both financial and
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 Operating Partnership is subject to legal proceedings and claims which may
arise in the ordinary course of business. Management of the Operating
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 Operating Partnership. Any potential liability
may be impacted by the Operating Partnership Chapter 11 case described in Note
2.

5. Debt

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 As a result of the filing of the Operating Partnership Chapter 11
case described in Note 2, no payments will be made by the Debtors on the Notes
except as approved by the Bankruptcy Court.

6. Segment Information

Prior to fiscal 2000, the Company 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. Related Party Transactions

The Company and the Operating Partnership are managed by BCPM, subject to orders
of the Bankruptcy Court, pursuant to the Amended and Restated Partnership
Agreement of the Company and the Amended and Restated Partnership Agreement of
the Operating Partnership, respectively. Neither the Company nor the Operating
Partnership directly employs any of the persons responsible for managing or
operating the business of the Operating Partnership, but instead relies on the
officers and employees of the General Partner and of Borden who provide support
to or perform services for the General Partner and reimburses the General
Partner or Borden (on its own or on the General Partner's behalf) for their
services.

The Operating Partnership sold its formaldehyde and certain other assets for
$48.5 million to Borden on July 28, 2000. As part of the transaction, the
Operating Partnership and Borden entered into a series of agreements with
respect to the operations of the parties at the Geismar complex, including the
provision of utilities and other services by the Operating Partnership to
Borden's facilities, the provision of dock capacity by Borden to the Operating
Partnership at Borden's dock facility, the provision of a control room by Borden
to the Operating Partnership, and indemnification of Borden by the Operating
Partnership for any environmental liability relating to the assets purchased by
Borden during the period in which they were owned by the Operating Partnership.

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. The Partnership
recorded a deferred tax liability of $1.6 million and a receivable of $4.4
million from the Operating Partnership for future reimbursement of these
expenses. Management believes the Partnership is entitled to reimbursement for
these obligations by the Operating Partnership, pursuant to the Partnership
Agreement and consistent with past practice; however, such reimbursement is
subject to approval of the Bankruptcy Court. This receivable was written down to
zero upon the Operating Partnership filing for bankruptcy due to the uncertainty
surrounding the ultimate collection of these amounts.

On January 14, 2002, the General Partner and the Operating Partnership entered
into the Secondary DIP Facility which, as amended on March 29, 2002, commits the
General Partner to make loans to the Operating Partnership through April 30,
2002, in an aggregate amount not to exceed $10 million for working capital,
other general corporate purposes and to make payments on the Primary DIP
Facility.

8. New Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board (FASB) issued Statement
of Accounting Standard No. 141, "Business Conditions". This statement requires
that all business combinations in the scope of this statement are to be
accounted for using one method, the purchase accounting method.

Also in June 2001, the FASB issued Statement of Accounting Standard No. 142,
"Goodwill and Other Intangible Assets". This statement addresses how intangible
assets that are acquired individually or within a group of other assets (but not
those acquired in a business combination) should be accounted for in financial
statements upon their acquisition. This statement also addresses how goodwill
and other intangible assets should be accounted for after they have been
initially recognized in the financial statements. This statement currently would
not have an impact on the Company's financial statements.

In August 2001, the FASB issued Statement of Accounting Standard No. 143,
"Accounting for Obligations Associated with the Retirement of Long-Lived
Assets". This standard is effective for fiscal years beginning after June 15,
2002. The Statement would require that (1) an existing legal obligation
associated with the retirement of a tangible long-lived asset be recognized as a
liability when incurred and the amount of the liability be initially measured at
fair value (2) an entity recognize subsequent changes in the liability that
result from (a) the passage of time and (b) revisions in either the timing or
amount of estimated cash flows; and (3) upon initially recognizing a liability
for an Asset Retirement Obligation, an entity capitalized the cost by
recognizing an increase in the carrying amount of the related long-lived asset.
The Partnership has not yet evaluated the impact of this statement.

In October 2001, the FASB issued Statement of Accounting Standards No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets". This standard
is effective for fiscal years beginning after December 15, 2001. The Statement
addresses issues relating to the implementation of FASB Statement No. 121 (FAS
121), Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of, and to develop a single accounting model, based on the
framework established in FAS 121, for long-lived assets to be disposed of by
sale, whether previously held and used or newly acquired. The Partnership has
not yet evaluated the impact of this Statement.

9. Consolidated Condensed Interim Debtor-In-Possession Financial Statements of
Borden Chemicals and Plastics Operating Limited Partnership

The consolidated condensed interim Debtor-In-Possession financial statements of
the Operating Partnership as of and for the three and nine months ended
September 30, 2001 are as follows:

DEBTOR-IN-POSSESSION FINANCIAL STATEMENTS
BORDEN CHEMICALS AND PLASTICS OPERATING LIMITED PARTNERSHIP

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands)

Three Months Ended Three Months Ended
September 30, 2001 September 30, 2000
------------------ ------------------

Revenues

Total revenues ....................................... $85,456 $113,333
-------- -------
Expenses

Cost of goods sold ................................... 93,635 109,087
Marketing, general & administrative expense .......... 5,952 5,807
Impairment of long-lived assets ...................... 123,003 -
Interest expense (excluding contractual
interest for 2001 of $4,800) ....................... 1,842 6,446
Tax on gross margin .................................. (1,955) 850
Equity in loss of affiliate .......................... 585 311
Other (income) expense ............................... 239 (1,008)
Reorganization items:
Professional fees ............................. 1,917 -
Loss on debt issuance costs ................... - -
Gain on settlement of pre-petition claims ..... - -
--------- --------

Total expenses ............................ 225,218 121,493
--------- --------
Net income (loss) .................................... $(139,762) $ (8,160)
========= ========

DEBTOR-IN-POSSESSION FINANCIAL STATEMENTS
BORDEN CHEMICALS AND PLASTICS OPERATING LIMITED PARTNERSHIP

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands)

Nine Months Ended Nine Months Ended
September 30, 2001 September 30, 2000
------------------ ------------------

Revenues

Total revenues .......................................... $ 280,259 $ 393,518
--------- ---------
Expenses
Cost of goods sold ...................................... 315,981 345,591
Marketing, general & administrative expense ............. 17,729 19,366
Impairment of long-lived assets ......................... 122,058 --
Interest expense (excluding contractual interest for 2001
of $9,400) .......................................... 10,757 21,144
Tax on gross margin ..................................... (1,955) 2,310
Equity in loss of affiliate ............................. 1,519 804
Other (income) expense .................................. 6,219 (1,235)
Reorganization items:
Professional fees ................................ 5,507 --
Loss on debt issuance costs ...................... 3,755 --
Gain on settlement of pre-petition claims ........ (377) --
--------- ---------

Total expenses ............................... 481,193 387,980
--------- ---------

Net income (loss) from continuing operations ............ $(200,934) $ 5,538
========= =========

Discontinued operations
(Loss) from discontinued operations, net ......... -- (10,192)
Gain on disposal of discontinued operations, net . -- 5,012
--------- ---------

Net income (loss) ......................................... $(200,934) $ 358
========= =========

DEBTOR-IN-POSSESSION FINANCIAL STATEMENTS
BORDEN CHEMICALS AND PLASTICS OPERATING LIMITED PARTNERSHIP

CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(Unaudited)
(In thousands)

September 30, September 30,
2001 2000
------------- -------------

Cash Flows From Operations

Net income (loss) .......................................... $(200,934) $ 358
Adjustments to reconcile net loss income to net cash
used by operating activities:
Gain on disposal of discontinued operations, net ........ -- (5,012)
Depreciation ............................................ 19,932 27,655
Impairment of long lived assets ......................... 122,058 --
Changes in certain assets and liabilities:
Change in receivables ................................... 29,747 (39)
Change in inventory ..................................... 31,334 (9,128)
Change in accounts payable .............................. (4,400) (12,225)
Other ................................................... 5,390 (7,058)
Reorganization Items:
Payment of professional fees ............................ (3,570) --
Loss on debt issuance costs ............................. 3,755 --
Gain on settlement of pre-petition claims ............... (377) --
--------- ---------
Net cash flows provided (used) by operating activities 2,935 (5,449)
--------- ---------

Cash Flows From Investing Activities

Capital expenditures .................................... (5,947) (6,885)
Plant acquisition ....................................... -- (15,880)
Proceeds from note receivable ........................... 9,700 --
--------- ---------
Net cash flows provided (used) by investing activities 3,753 (22,765)
--------- ---------

Cash Flows From Financing Activities

Gross borrowings under line-of-credit agreement ......... 132,343 241,664
Gross repayments under line-of-credit agreement ......... (137,915) (254,681)
Proceeds from sale of business segment .................. -- 38,800
Payment of debt issuance costs .......................... (1,360) (1,132)
--------- ---------
Net cash flows provided (used) by financing activities (6,932) 24,651
--------- ---------

Change in cash and equivalents ............................. (244) (3,563)

Cash and equivalents at beginning of period ................ 3,223 5,759
--------- ---------

Cash and equivalents at end of period ...................... $ 2,979 $ 2,196
========= =========

DEBTOR-IN-POSSESSION FINANCIAL STATEMENTS
BORDEN CHEMICALS AND PLASTICS OPERATING LIMITED PARTNERSHIP

CONSOLIDATED CONDENSED BALANCE SHEET
(Unaudited)
(In thousands)

ASSETS
- ------

Current assets September 30, 2001 December 31, 2000
------------------ -----------------

Cash and equivalents ...................................................... $ 2,979 $ 3,223
Accounts receivable (less allowance for doubtful accounts of $434 and
$1,843 respectively)
Trade .................................................................. 50,531 58,444
Related parties ........................................................ 494 22,328
Inventories:
Finished and in process goods .......................................... 20,292 44,024
Raw materials and supplies ............................................. 5,362 12,964
Assets held for sale ...................................................... 42,647 -
Other current assets ...................................................... 9,435 15,907
---------- ---------
Total current assets ................................................... 131,740 156,890
---------- ---------
Other assets

Investments in and advances to affiliated companies .................... 1,000 4,124
Other assets ........................................................... 6,015 37,408
---------- ---------
Total other assets .............................................. 7,015 41,532
---------- ---------

Plant, property and equipment ............................................... 303,694 486,410
Less accumulated depreciation ........................................ (262,067) (295,995)
----------- ----------
Net plant, property and equipment ................................. 41,627 190,415
---------- ---------
Total assets .................................................... $ 180,382 $ 388,837
========== =========

LIABILITIES AND PARTNERS' CAPITAL
Liabilities not subject to compromise:
Current liabilities
Priority debt .......................................................... $ 66,838 $ -
Accounts and drafts payable ............................................ 18,106 66,495
Accrued interest ....................................................... 397 3,673
Other accrued liabilities .............................................. 9,222 18,480
---------- ---------
Total current liabilities ........................................ 94,563 88,648

Long term debt ......................................................... - 272,410
Other liabilities ...................................................... 2,225 4,914
Deferred tax on gross margin ........................................... 1,618 4,133
---------- ---------
Total liabilities not subject to compromise ............................... 98,406 370,105
---------- ---------

Liabilities subject to compromise:
Accrued interest 8,073 -
Long-term debt 200,000 -
Pre-petition accounts payable 43,612 -
Other accrued liabilities 12,493 -
---------- ---------
Total liabilities subject to compromise 264,178 -
----------- --------------

Partners' capital (deficit)
General Partner (2,389) (359)
Limited Partners (179,813) 19,091
---------- ---------
Total partners' capital (deficit) (182,202) 18,732
---------- ---------
Total liabilities and partner's capital $ 180,382 $ 388,837
========== ===========

BORDEN CHEMICALS AND PLASTICS OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED CONDENSED DEBTOR-IN-POSSESSION FINANCIAL STATEMENTS
- -------------------------------------------------------------------------

1. Asset impairment

An impairment charge of $123.0 million was recorded during the quarter ended
September 30, 2001 to write-down to fair value long-lived assets associated with
the Geismar and Addis facilities in accordance with FAS 121 "Accounting for the
Impairment of Long-Lived Assets and Assets to be Disposed of" as the Company's
estimates of future undiscounted cash flows associated with these facilities no
longer recovered the asset's carrying value. Estimates of future undiscounted
cash flows were lowered during the 3rd quarter as a result of several factors
including the expected loss of a significant customer contract, continued
deterioration in the overall economy, and an extended forecast in the expected
upturn of the PVC industry from previous projections. The fair value of the
assets was estimated by management based on various sources including binding or
non-binding bids or offers from third parties, other discussions with third
parties, and an independent asset valuation.

2. Liabilities subject to compromise

Liabilities subject to compromise refer to liabilities incurred prior to the
commencement of the Operating Partnership Chapter 11 case. These liabilities
consist primarily of amounts outstanding under the Company's long-term debt and
also include accounts payable, accrued interest, and other accrued expenses.
These amounts represent management's best estimate of known or potential claims
to be resolved in connection with the Operating Partnership Chapter 11 case. The
bar date was established as October 19, 2001. The bar date is the date by which
claims against the Company must be filed if the claimants wish to receive any
distribution in the Chapter 11 Cases. Certain creditors have submitted claims in
excess of the amounts recorded as liabilities by the Operating Partnership. Such
claims remain subject to future adjustments based on negotiations and
reconciliation with applicable creditors, actions of the Bankruptcy Court,
further developments with respect to disputed claims, or other events. Payment
terms for these amounts, which are considered long-term liabilities at this
time, will be established in connection with the Operating Partnership Chapter
11 case and as such, the ultimate amount of such liabilities is presently not
determinable. The Operating Partnership has received approval from the
Bankruptcy Court to pay or otherwise honor certain of its pre-petition
obligations, including pre-petition wages, vacation pay, employee benefits and
reimbursement of employee business expenses. The Bankruptcy Court also has
authorized the Company to pay pre-petition obligations to critical vendors to
aid the Company in maintaining its normal operations. In the second quarter, in
accordance with SOP 90-7, the Company wrote off debt issuance costs of $3.8
million associated with the $200 million of Subordinated Notes as a result of
the bankruptcy proceedings.

Liabilities subject to compromise consist of the following as of September 30,
2001 (in thousands):

Accrued interest ................................. $ 8,073
Long-term debt ................................... 200,000
Pre-petition accounts payable .................... 43,612
Other accrued liabilities ........................ 12,493
----------
Total liabilities subject to compromise ...... $ 264,178
==========

Pre-petition accounts payable was reduced by approximately $4.3 million during
the third quarter of 2001, primarily due to critical vendor payments.

3. Related party transactions

The Operating Partnership sold its formaldehyde and certain other assets for
$48.5 million to Borden on July 28, 2000. As part of the transaction, the
Operating Partnership and Borden entered into a series of agreements with
respect to the operations of the parties at the Geismar complex, including the
provision of utilities and other services by the Operating Partnership to
Borden's facilities at an annual charge of approximately $1.2 million for 2001,
the provision of dock capacity by Borden to the Operating Partnership at
Borden's dock facility, the provision of a

control room by Borden to the Operating Partnership, and indemnification of
Borden by the Operating Partnership for any environmental liability relating to
the assets purchased by Borden during the period in which they were owned by the
Operating Partnership.

The Company subleased 99 railcars from Borden at an annual cost of $0.5 million.
As part of the Bankruptcy Court proceedings, the Company elected to reject the
sublease agreement with Borden. As a result of this lease rejection, Borden has
offset approximately $1.8 million from the proceeds of the $37.5 million note
used to capitalized BCPM. BCPM has a claim against the Company for the amount of
this offset. As part of the Borden offset, invoices amounting to $0.3 million
for exchanges, environmental and utility services were also offset.

The employees of BCPM (together with employees providing support to or services
for BCPM) operate the Partnership and participate in various General Partner
benefit plans including pension, retirement savings, post-retirement other than
pension, post employment, and health and life insurance. The Partnership has no
direct liability for such benefits since the Partnership does not directly
employ any of the persons responsible for managing and operating the
Partnership, but instead reimburses the General Partner (on its own or BCPM's
behalf) for their services. Charges to the Partnership for such services are
actuarially determined where appropriate. The Partnership expenses the full
amount of such charges but only reimburses the General Partner (on its own or
BCPM's behalf) for actual benefits paid. The difference between cash payments to
the General Partner (on its own or BCPM's behalf) and expense is accrued on the
Partnership's books. The General Partner maintains a post-retirement and
disability plan for employees of the General Partner. This liability was
approximately $4.0 million as of September 30, 2001.

During the nine months ended September 30, 2001, BCPM made unreimbursed
severance payments totaling $0.7 million to former employees of the General
Partner. In addition, BCPM also made unreimbursed payments for certain
professional services and other expenses of $0.6 million. The Operating
Partnership has reflected these payments as expense in the condensed statement
of operations and have recorded a corresponding payable to BCPM, which liability
is included in liabilities subject to compromise in the accompanying
consolidated condensed balance sheet at September 30, 2001.

4. Subsequent events

In December 2001, the Operating Partnership entered into a Loan Agreement "Loan
Agreement" with BCPM whereby BCPM will provide loans up to $10 million for the
Operating Partnership to use for working capital requirements or other general
corporate purposes in the event that there is no borrowing availability under
the Operating Partnership's revolving credit facility with Fleet. The Operating
Partnership may only borrow pursuant to this Loan Agreement if there is no
positive borrowing availability under the Operating Partnership's revolving
credit facility with Fleet. Borrowings under the Loan Agreement are payable on
the earlier of a) March 31, 2002, b) the date of confirmation of a plan of
reorganization, c) the date upon which the sale of substantially all of the
Operating Partnership's assets has been completed, or d) an event of default.
Borrowings under the Loan Agreement bear interest at the Alternate Base Rate
plus 2.75%. The Bankruptcy Court approved the Loan Agreement for borrowings up
to $5 million. Borrowings under the Loan Agreement have been granted
administrative claim status. The Primary DIP Facility matured on March 31, 2002,
but the lenders have agreed, and the Bankruptcy Court has approved, the
extension of the maturity date to April 30, 2002.

transaction at a hearing on March 27, 2002. If the transaction closes, a portion
of the proceeds from the sale of the Illiopolis plant will be applied to pay
outstanding borrowings under the Primary DIP Facility.

It is not anticipated that holders of the Company's Common Units will receive
any distribution as a result of any sales of the Operating Partnership's assets
or the Debtors' plan of reorganization.

Management has undertaken several other initiatives to improve liquidity,
including idling unprofitable or high cost assets and production facilities,
wage freezes and reductions-in-force. However, given current business and market
conditions and the financial condition of the Debtors, there can be no assurance
that the Operating Partnership will be able to meet its financial obligations in
the future. At this time, sales of Operating Partnership assets are not expected
to generate enough cash to make a distribution to unit holders of the Company or
to satisfy all of the Operating Partnership's debts.

In the fourth quarter, an impairment charge of $22.6 million will be recorded to
write-down to fair value long-lived assets associated with the Illiopolis
facility and the Corporate office in accordance with FAS 121 "Accounting for the
Impairment of Long-Lived Assets and Assets to be Disposed of" as all assets
became held for sale during the fourth quarter. The fair value of the assets was
estimated by management based on various sources including binding or
non-binding bids or offers from third parties, other discussions with third
parties, and an independent asset valuation.

5. Restructuring and related charges

During the nine months ended September 30, 2001, the Company recorded
restructuring charges of $135.7 million primarily associated with the asset
impairment charges, bankruptcy court proceedings and severance costs.

Restructuring charges for bankruptcy reorganization include professional fees of
$5.5 million, a write off of pre-petition debt issuance costs of $3.8 million
and a gain from the settlement of a pre-petition liability of $0.4 million.

In the nine months ended September 30, 2001, the Company severed 81 employees,
at an expense of $3.5 million. The Company continues to pay 75% of the cost of
medical and dental insurance for severed employees for up to six months after
termination. This will continue as long as the Company has the ability to
provide and maintain a group medical plan. The cost of these health benefits for
severed employees for the nine months ending September 30, 2001, was $0.3
million.

An impairment charge of $123.0 was recorded during the quarter ended September
30, 2001 to write-down to fair value long-lived assets associated with the
Geismar and Addis facilities in accordance with FAS 121 "Accounting for the
Impairment of Long-Lived Assets and Assets to be Disposed of" as the Company's
estimates of future undiscounted cash flows associated with these facilities no
longer recovered the asset's carrying value. Estimates of future undiscounted
cash flows were lowered during the 3rd quarter as a result of several factors
including the expected loss of a significant customer contract, continued
deterioration in the overall economy, and an extended forecast in the expected
upturn of the PVC industry from previous projections. The fair value of the
assets was estimated by management based on various sources including binding or
non-binding bids or offers from third parties, other discussions with third
parties, and an independent asset valuation.

Additional restructuring and related charges will occur in the fourth quarter.
Fourth quarter restructuring and related charges will include an impairment
charge for Illiopolis and the Corporate assets of $22.6 million, severance costs
of $11.5 million and estimates for closure of the Geismar facility of
approximately $7.9 million. These impairment charges represent the write-down of
all the Company's assets to fair market value, as all of the assets became held
for sale in the fourth quarter of 2001.

The following is a schedule of the restructuring and related charges recorded in
the nine months ended September 30, 2001:

(in millions)
Description Type Charge Payment Balance*
- ----------------------------------------------------------------------------------------------------------------

Severance Cash $3.5 ($2.0) $1.5
Benefits Cash 0.3 (0.3) 0.0
Bankruptcy - professional fees Cash 5.5 (3.0) 2.5
Bankruptcy - claim settlement Cash (0.4) 0.4 0.0
----------- ---------- ---------
Total cash 8.9 ($4.9) $4.0

Asset impairment Non-cash 123.0
Bankruptcy - debt issuance costs Non-cash 3.8
---------
Total non-cash 126.8
--------
Total $135.7
-------

* Outstanding balance at September 30, 2001 is recorded in current liabilities
not subject to compromise.

6. Commitments & Contingencies

The Company 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 product varies with the supplier's raw
material and variable costs, which are market-driven, as well as its fixed
processing costs.

Contingencies for the Company include lawsuits and claims, which arise in the
normal course of business and contingencies in the fourth quarter for idlement
and closure of the Geismar facility. Management continues to explore possible
dispositions of the Geismar facility, but there is no assurance that a sale of
the plant will be completed and the plant was idled in March 2002. In the fourth
quarter, a contingency for the idlement and closure costs of the Geismar plant
will be established in the amount of $5.8 million. An additional contingency of
$1.7 million for obligations to rejected leases will also be established. It is
the opinion of management that the assessment of contingencies is reasonable and
the reserves are adequate. However, there can be no assurance that future
operating results will not be materially different from these estimates.

Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
- ------------------------------------------------------------------------

On April 3, 2001, the Operating Partnership and its wholly owned 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 Operating Partnership Chapter 11 case"). The
Operating Partnership Chapter 11 case have been procedurally consolidated for
administrative purposes only. The Debtors are currently acting as
debtors-in-possession pursuant to the Bankruptcy Code.

Due to the bankruptcy filing, the Company no longer consolidates the Operating
Partnership's financial results in its condensed consolidated financial
statements, resulting in a change in reporting entity. As a result of this
change in reporting entity, the Company has restated its fiscal 2001 results,
effective January 1, 2001, to account for its investment in the Operating
Partnership under the equity method. Under the equity method, the Company's
share of the Operating Partnerships' income or loss is recorded in earnings and
as an adjustment to the Company's investment in the Operating Partnership, to
the extent that the Company's investment is not reduced below zero. During the
first quarter fiscal 2001, the Company's investment in the Operating Partnership
was reduced to zero, therefore, further losses incurred by the Operating
Partnership are no longer recognized by the Company. The Company did not
recognize its 99% share of the Operating Partnership's losses amounting to
$138.4 million and $179.8 million for the three and nine-month periods ended
September 30, 2001, respectively.

The Company is a holding company and does not have its own independent
operations, engage in any revenue producing activities, maintain its own bank
accounts nor does it have any cash flows. Prior to the Operating Partnership
filing for bankruptcy, certain obligations of the Company, including gross
margin taxes, were paid by BCPM and reimbursed by the Operating Partnership, as
management believes these expenses are reimbursable expenses pursuant to the
Partnership Agreement and past practice.

The Company's $2.8 million gross margin tax obligation due in April 2001 was
paid by BCPM and in return, the Company issued a demand note payable to BCPM.
Certain other expenses, primarily for accounting and legal services, of
approximately $1.3 million through September 30, 2001 and $3.6 million through
February 2002 have also been funded by BCPM. It is the position of BCPM that
these expenses are reimbursable by the Operating Partnership pursuant to the
Partnership Agreement and consistent with past practice; however, such
reimbursement is subject to approval of the Bankruptcy Court. It is the position
of BCPM that it is not required to make capital contributions or further loans
to, or advances on behalf of, the Company. However, BCPM will consider making
additional loans and advances upon request of the Company, taking into account
the interests of its creditors, but there can be no assurance that BCPM will
make further loans or advances in the future. The Partnership recorded interest
of $0.1 million associated with this note.

To the extent that payments for Company obligations are not made by BCPM, are
not deemed to be reimbursable expenses from the Operating Partnership by the
bankruptcy court, or the Operating Partnership does not have the ability to pay
expenses deemed to be reimbursable, the Partnership would not have the
wherewithal or ability to pay these obligations.

Due to the change in reporting entity discussed above, a comparative analysis
and discussion of the Company's operations is not deemed to be meaningful. The
following management discussion pertaining to the results of operations and
liquidity of the Operating Partnership are included as management believes this
is the most meaningful manner in which to explain the changes in the losses from
its equity investment in the Operating Partnership.

Overview and Outlook

The Operating Partnership 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 Operating Partnership's

products are affected by general economic conditions and a downturn in the
economy could have a material adverse effect on the Operating Partnership,
including, but not limited to, its ability to service its debt obligations. The
demand for the Operating 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 increase 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 and into the first half of 2001 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 and continued to decline over the first half of
2001. 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 Operating Partnership incurred negative profit margins
from PVC Products over the second half 2000, and the first half of 2001.

Results of Operations
Quarter Ended September 30, 2001 Compared to Quarter Ended September 30, 2000

Revenue

Total revenue during the third quarter of 2001 decreased $27.8 million or 24.6%
to $85.5 million from $113.3 million in the third quarter of 2000. The decrease
in revenues is attributed to a decrease in average selling prices and volumes in
PVC resins. Selling prices and volume decreases are the result of a decreased
demand in the marketplace.

Cost of Goods Sold

Total cost of goods sold decreased $15.5 million to $93.6 million in the current
period from $109.1 million in the same period last year. The decrease in total
cost of goods was due to a decrease in sales volumes and increased raw
materials. Expressed as percent of revenue, cost of goods sold was 109.6% in the
current period versus 96.3% in the prior period.

As a result of the changes in revenues and cost of goods sold, the contributing
margin from continuing operations declined to a negative margin of $8.2 million
in the third quarter of 2001 from a positive margin of $4.2 million for the same
quarter of 2000.

Marketing, General and Administrative Expense

Marketing, general and administrative expenses increased $0.2 million to $6.0
million in the third quarter of 2001 compared to $5.8 million in 2000. This
increase was primarily due to an increase in post-retirement benefits offset by
a reduction in salaries and contract labor.

Impairment of Long-lived Assets

undiscounted cash flows associated with these facilities no longer recovered the
asset's carrying value. Estimates of future undiscounted cash flows were lowered
during the 3rd quarter as a result of several factors including the expected
loss of a significant customer contract, continued deterioration in the overall
economy, and an extended forecast in the expected upturn of the PVC industry
from previous projections. The fair value of the assets was estimated by
management based on various sources including binding or non-binding bids or
offers from third parties, other discussions with third parties, and an
independent asset valuation.

Interest Expense

Interest expense for the quarter decreased $4.6 million over the 2000 quarter,
which is the result of lower interest rates under the Revolving Credit Facility
in 2001 and the bankruptcy proceedings which precludes interest charges on the
unsecured Subordinated Notes. Interest expense has been recorded for the first
quarter of 2001. However, third quarter contractual interest charges of $4.8
million on the Subordinated Notes for the period after the bankruptcy filing,
which are not expected to be paid, have not been recorded.

Tax on Gross Margin

Gross margin tax expense during the quarter represents a deferred tax benefit as
a result of the impairment of long-lived assets. No current gross margin tax
expense has been incurred or recognized during 2001 as the Partnership does not
have taxable income for 2001 due to the losses incurred.

Other Income and Expense

Other expense during the third quarter of 2001 was $0.2 million as compared to
income of $1.0 million for the same period last year. The increase was largely
due to severance payments made as part of management's initiative to reduce the
labor force.

Reorganization Items

Professional fees during the three months ended September 30, 2001 related to
the reorganization proceedings were $1.9 million compared to no expense for the
same period last year.

Net Loss from Continuing Operations

The net loss for the third quarter of 2001 was $139.8 million compared to a $8.2
million loss for the third quarter of 2000. As discussed above, the primary
reasons for the decline were decreased sales volumes and selling prices for PVC
resins and an impairment of fixed assets.

Results of Operations
Nine Months Ended September 30, 2001 Compared to Nine Months Ended
September 30, 2000

Revenues

Total revenues from continuing operations during the first nine months of 2001
decreased $113.2 million or 28.8% to $280.3 million from $393.5 million in 2000.
The decrease in revenues is attributable to a 20% decrease in average selling
prices of PVC resins, and an 11% decrease in sales volumes for the business
line.

Cost of Goods Sold

Total cost of goods sold decreased $29.6 million to $316.0 million from $345.6
million when comparing year-to-date 2001 to 2000. Expressed as a percent of
revenue, cost of goods sold was 112.7% in the current period versus 87.8% in the
prior year. The decrease in gross margin was primarily due to the decrease in
sales volume and increase in raw material prices.

As a result of the changes in revenues and cost of goods sold, the contributing
margin from continuing operations decreased by $83.6 million to a negative
margin of $35.7 million in the first nine months of 2001 from a positive margin
of $47.9 million for 2000.

Marketing, General and Administrative Expense

Marketing, general and administrative expenses decreased $1.7 million to $17.7
million in the first nine months of 2001 compared to $19.4 million in 2000. This
decrease was primarily due to a reduction in salaries and contract labor.

Impairment of Long-lived Assets

Interest Expense

Interest expense decreased $10.4 million over 2000, a direct result of lower
borrowing rates and the bankruptcy proceedings which precludes interest charges
on the unsecured Subordinated Notes. Interest expense has been recorded for the
first quarter of 2001. However, contractual interest charges of $9.4 million on
the Subordinated Notes for the period after the bankruptcy filing, which are not
expected to be paid, have not been recorded.

Tax on Gross Margin

Gross margin tax expense during the nine months represents a deferred tax
benefit as a result of the impairment of long-lived assets. No current gross
margin tax expense has been incurred or recognized during 2001 as the
Partnership does not have taxable income for 2001 due to the losses incurred.

Other Income and Expense

Other expense for 2001 was $6.2 million as compared to income of $1.2 million
for the same period last year. The increase was largely due to severance
payments of $3.5 million made as part of management's initiative to reduce the
labor force, and sales tax assessment of $2.6 million, offset by a decrease in
other income.

Reorganization Items

Professional fees during the nine months ended September 30, 2001 related to the
reorganization proceedings were $5.5 million compared to no expense for the same
period last year. In the second quarter, in accordance with SOP 90-7, the
Company wrote off debt issuance costs of $3.8 million associated with the $200
million of Subordinated Notes as a result of the bankruptcy proceedings. The
gain on settlement of pre-petition claims in 2001 of $0.4 million represents a
court approved settlement of certain pre-petition liabilities.

Net Income from Continuing Operations

Net loss for the first nine months of 2001 was $200.9 million compared to income
of $5.5 million for the first nine months of 2000. As discussed above, the
primary reasons for the decline were the impairment of fixed assets, decreased
sales volumes, and selling prices for PVC resins.

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 $10.2 million was
incurred for the first nine months of 2000. Depressed selling prices for
Methanol, Ammonia and Urea caused the continued losses from the discontinued
businesses. A net gain of $5.0 million was recognized during the first nine
months of 2000 on the sale of the Partnership's formaldehyde and related assets.

Liquidity and Capital Resources

Cash Flows from Operations

Cash provided by operations for the first nine months of 2001 totaled $2.9
million compared to uses of $5.4 million in 2000, primarily due to favorable
changes in inventories and receivables, offset by payments for reorganization
items and severance.

Cash Flows from Investing Activities

Capital expenditures totaled $5.9 million and $6.9 million for the first nine
months of 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 from
the sale of the formaldehyde business of $9.7 million were collected in the
first quarter of 2001.

Cash Flows from Financing Activities

Net repayments of long-term borrowings were $5.6 million in the first nine
months of 2001 compared to repayments of $13.0 million in the first nine months
of 2000. In 2001, a $1.4 million debt issuance cost payment was made.

Liquidity

On April 3, 2001, the Debtors commenced the Operating Partnership Chapter 11
case. The Debtors are currently acting as debtors-in-possession pursuant to the
Bankruptcy Code.

the Operating Partnership approached a number of institutional lenders to assess
their interest in extending additional credit to the Debtors. None of these
lenders were willing to provide credit or terms acceptable to the Operating
Partnership. The Operating Partnership requested its general partner, BCPM, to
provide a loan to it. On October 31, 2001, the Debtors filed an initial motion
with the Bankruptcy Court seeking an interim order to obtain additional,
secondary postpetition financing (the "Secondary DIP Facility") from BCPM. The
terms of the proposed Secondary DIP Facility were negotiated, on the one hand,
by management of the Operating Partnership and the Debtors' legal counsel and,
on the other hand, by officers of BCPM and BCPM's legal counsel, with the
approval of the Independent Committee of the Board of Directors of BCPM which is
comprised of three outside directors who are not employees of the Operating
Partnership, BCPM or its affiliates. The negotiations included efforts to obtain
the support of the lenders under the Primary DIP Facility and the Official
Committee of Unsecured Creditors appointed in the Operating Partnership Chapter
11 case. The Creditors Committee filed an objection to the initial motion on
November 6, 2001.

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 Notes are senior unsecured obligations of the
Operating Partnership and are non-recourse to the Company, BCPM and its
affiliates. As a result of the filing of the Operating Partnership Chapter 11
case, no principal or interest payments will be made on any pre-petition debt,
including the Notes, except as approved by the Bankruptcy Court.

Management has undertaken several other initiatives to improve liquidity,
including idling unprofitable or high cost assets and production facilities,
wage freezes and reductions-in-force. However, given current business and market
conditions and the financial condition of the Debtors, there can be no assurance
that the Operating Partnership will be able to meet its financial obligations in
the future. At this time, sales of Operating Partnership assets are note
expected to generate enough cash to make a distribution to unit holders of the
Company or to satisfy all of the Operating Partnership's debts.

Capital Expenditures

The Partnership currently believes that the level of annual base capital
expenditures for 2001 are expected to be approximately $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 DIP Loan Agreement provides up to $100 million under a
revolving credit agreement with Fleet Capital Corporation. The DIP Loan
Agreement will terminate upon the earlier of consummation of a plan of
reorganization in Chapter 11 Cases, or April 30, 2002, 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, either at LIBOR
plus 3% or Base Rate plus 1.25%. At September 30, 2001, borrowings under the
facility were $66.8 million.

The Partnership is exposed to swings in the LIBOR or Base rates. A change of
1.00% in the applicable rate would change the Partnership's annual interest cost
by approximately $0.7 million based on the borrowings at September 30, 2001.

Commodity Risk - The Partnership generally does not use derivatives or other
financial instruments such as futures contracts to manage commodity market risk.
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.

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

April 15, 2002