<PAGE>
 
                       SECURITIES AND EXCHANGE COMMISSION

                            Washington, D.C.  20549

                                   FORM 10-Q
                                        
                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                 For the quarterly period ended March 31, 1999
                                       -
                          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 May 10,
1999: 36,750,000.

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

                                       1
<PAGE>
 
               BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP

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

<TABLE>
<CAPTION>
                                                             Three Months Ended
                                                            ---------------------
                                                            March 31,   March 31,
                                                              1999        1998
                                                            --------    ---------
<S>                                                       <C>         <C>
Revenues
  Net trade sales.........................................  $ 99,824    $128,136
  Net sales to related parties............................    15,610      25,375
                                                            --------    --------

        Total revenues....................................   115,434     153,511
                                                            --------    --------

Expenses
  Cost of goods sold
        Trade.............................................    91,558     125,447
        Related parties...................................    16,331      24,349
  Marketing, general & administrative expense.............     6,161       5,732
  Interest expense........................................     6,029       4,827
  Other expense, including minority
        interest and equity in loss of affiliate..........     1,046       1,480
                                                            --------    --------

             Total expenses...............................   121,125     161,835
                                                            --------    --------

  Net loss................................................    (5,691)     (8,324)
       Less 1% General Partner interest...................        57          83
                                                            --------    --------
  Net loss applicable to Limited Partners'
        interest..........................................  $ (5,634)   $ (8,241)
                                                            ========    ========

Per Unit data-basic, net of 1% General Partner interest
  Net loss per Unit.......................................  $  (0.15)   $  (0.22)
                                                            ========    ========

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

  Cash distributions declared per Unit....................  $   0.00    $   0.00
                                                            ========    ========
 
</TABLE>


See Notes to Consolidated Financial Statements.

                                       2
<PAGE>
 
               BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (Unaudited)
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                     Three Months Ended
                                                                 ---------------------------
                                                                 March 31,          March 31,
                                                                   1999               1998
                                                                   ----               ----
<S>                                                            <C>                 <C>
Cash Flows From Operations
 
Net loss......................................................     $(5,691)          $(8,324)
                                                                               
Adjustments to reconcile net loss income to net cash                           
provided by operating activities:                                              
  Depreciation................................................       8,707             8,099
  Increase (decrease) in cash from                                             
    changes in certain assets and liabilities:                                 
     Receivables, net.........................................       2,482            10,894
     Inventories..............................................      (1,459)            4,046
     Payables.................................................      (5,942)           (1,184)
     Accrued Interest.........................................       4,928             4,708
     Other, net...............................................         672            (8,302)
                                                                   -------           -------
                                                                     3,697             9,937
                                                                   -------           -------
                                                                               
Cash Flows Used In Investing Activities                                        
  Capital expenditures........................................      (3,913)           (7,016)
                                                                   -------           -------
                                                                    (3,913)           (7,016)
                                                                   -------           -------
                                                                               
Cash Flows Used In Financing Activities                                        
  Proceeds from borrowings....................................        (400)                0
  Cash distributions paid.....................................           0            (3,712)
                                                                   -------           -------
                                                                      (400)           (3,712)
                                                                   -------           -------
                                                                               
Decrease in cash and equivalents..............................        (616)             (791)
                                                                               
Cash and equivalents at beginning of period...................       8,703             7,528
                                                                   -------           -------
                                                                               
Cash and equivalents at end of period.........................     $ 8,087           $ 6,737
                                                                   =======           =======
                                                                               
Supplemental Disclosures of Cash Flow Information                              
                                                                               
Interest paid during the period...............................     $ 1,101           $   496
                                                                   =======           =======


</TABLE> 

See Notes to Consolidated Financial Statements

                                       3
<PAGE>
 
               BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP

                          CONSOLIDATED BALANCE SHEETS
                                  (Unaudited)
                                 (In thousands)
<TABLE>
<CAPTION>
 
                 ASSETS                                          March 31, 1999   December 31, 1998
                 ------                                          --------------   -----------------
<S>                                                          <C>                <C>  
Cash and equivalents............................................  $   8,087           $   8,703
Accounts receivable (less allowance for doubtful accounts
  of $673 and $672, respectively)
  Trade.........................................................     56,247              57,909
  Related parties...............................................     11,807              12,627
Inventories
  Finished and in process goods.................................     23,517              21,978
  Raw materials and supplies....................................      6,494               6,574
Other current assets............................................      3,154               2,694
                                                                  ---------           ---------
  Total current assets..........................................    109,306             110,485
                                                                  ---------           ---------

Investments in and advances to affiliated companies.............      8,130               8,442
Other assets....................................................     52,911              54,469
                                                                  ---------           ---------
                                                                     61,041              62,911
                                                                  ---------           ---------
Plant, property and equipment
  Land..........................................................     16,308              16,308
  Buildings.....................................................     45,604              45,604
  Machinery and equipment.......................................    694,009             690,096
                                                                  ---------           ---------
                                                                    755,921             752,008
  Less accumulated depreciation.................................   (472,415)           (463,708)
                                                                  ---------           ---------
  Net plant, property and equipment.............................    283,506             288,300
                                                                  ---------           ---------

    Total assets................................................  $ 453,853           $ 461,696
                                                                  =========           =========

LIABILITIES AND PARTNERS' CAPITAL
---------------------------------

Accounts and drafts payable.....................................  $  35,942           $  41,884
Accrued interest................................................      8,118               3,190
Other accrued liabilities.......................................     13,038              13,702
                                                                  ---------           ---------
  Total current liabilities.....................................     57,098              58,776

Long-term debt..................................................    251,400             251,800
Deferred tax on gross margin....................................      5,800               5,800
Other liabilities...............................................      1,933               1,949
Minority interest in consolidated subsidiary....................        842                 900
                                                                  ---------           ---------
  Total liabilities.............................................    317,073             319,225
                                                                  ---------           ---------

Partners' capital
  Limited Partners..............................................    136,883             142,517
  General Partner...............................................       (103)                (46)
                                                                  ---------           ---------
     Total partners' capital....................................    136,780             142,471
                                                                  ---------           ---------

    Total liabilities and partners' capital.....................  $ 453,853           $ 461,696
                                                                  =========           =========

</TABLE>

See Notes to Consolidated Financial Statements.

                                       4
<PAGE>
 
               BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP

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


<TABLE> 
<CAPTION> 
                                                                Limited     General
                                                                Partners    Partner       Total
                                                                --------    --------      -----
<S>                                                            <C>         <C>        <C>
Balance at December 31, 1997 ..............................     $182,718      $ 360    $183,078
   Net loss  ..............................................       (8,241)      ( 83)     (8,324)
   Cash distributions declared  ...........................            0          0           0
                                                                --------      -----    --------
Balance at March 31, 1998  ................................     $174,477      $ 277    $174,754
                                                                ========      =====    ========
 
Balance at December 31, 1998  .............................     $142,517        (46)   $142,471
   Net loss  ..............................................       (5,634)       (57)     (5,691)
   Cash distributions declared  ...........................            0          0           0
                                                                --------      -----    --------
Balance at March 31, 1999  ................................     $136,883      $(103)   $136,780
                                                                ========      =====    ========
</TABLE>



See Notes to Consolidated Financial Statements.

                                       5
<PAGE>
 
               BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP

                   NOTES TO CONSOLIDATED 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") 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.

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.

In April 1998, the American Institute of Certified Public Accountants (AICPA)
issued Statement of Position (SOP) 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use".  This statement requires the
capitalization of certain costs incurred to develop internal use software.  The
Partnership adopted the provisions of  SOP 98-1 beginning January 1, 1999.  The
adoption did not have a significant impact on the Partnership's financial
position or results of operations.

Effective for the year ended December 31, 1998, the Partnership adopted SFAS No.
131, "Disclosures about Segments of an Enterprise and Related Information."  In
accordance with SFAS No. 131, the Partnership has presented segment information
(Note 3) for the first quarter 1999.  Prior year's disclosures (Note 3) have
been conformed to the new presentation.

In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities", which is
effective in 2000 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 derivative and the resulting
designation.  The Partnership is in the process of assessing the impact that
SFAS No. 133 will have on the consolidated financial statements.

2. Environmental and Legal Proceedings

On March 11, 1998, the Partnership through its subsidiary operating partnership
Borden Chemicals and Plastics Operating Limited Partnership (the "Operating
Partnership") and the U.S. Department of Justice ("DOJ") reached an agreement to
resolve the enforcement action brought by the DOJ against the Operating
Partnership, the Partnership and the General Partner in October 1994, and the
Declaratory Judgement Action brought by the Partnership against the United
States.  The settlement provides for payment of a civil penalty of $3,600 and
funding of $400 for community based environment programs, but it does not
include any admission of wrongdoing.  The terms of the settlement also provide
for a program of groundwater and other remediation at the Geismar facility.  The
agreement also provides that the Partnership will undertake a Supplemental
Environmental Project to decommission  its underground injection wells and
instead subject the waste to innovative source reduction.  The estimated cost of
the project is $3,000.  In light of the $4,000 provision previously established
for this matter and Borden Inc.'s ("Borden") obligation under the Environmental
Indemnity Agreement ("EIA") to pay for the remediation program, the settlement
did not have a material effect on the Partnership's financial position or
results of operations.

Under the EIA, 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

                                       6
<PAGE>
 
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, and no claim can, with certain exceptions, be made with
respect to the first $500 of liabilities which Borden would otherwise be
responsible for thereunder in any year, but such excluded amounts shall not
exceed $3,500 in the aggregate. Excluded amounts under the EIA have aggregated
$3,500 through December 31, 1996.

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
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.  In the opinion of the management of the
Partnership, the amount of the ultimate liability, taking into account its
insurance coverage, including its risk retention program and Environmental
Indemnity Agreement with Borden would not materially affect the financial
position or results of operations of the Partnership.

                                       7
<PAGE>
 
3.  Segment Information

The Partnership's internal reporting is organized on the basis of products.
Each of the following products is considered to be an operating segment of the
business:  polyvinyl chloride ("PVC"), vinyl chloride monomer ("VCM"),
acetylene, methanol, formaldehyde, ammonia and urea.  These operating segments
have been aggregated into three reportable segments according to the nature and
economic characteristics of the products, production processes and other
similarities.  The segments are (i) PVC Polymers Products, which consist of PVC
resins and feedstocks (VCM and acetylene), (ii) Methanol and Derivatives, which
consist of methanol and formaldehyde, and (iii) Nitrogen Products, which consist
of ammonia and urea.

The Partnership evaluates performance of the segments and allocates resources to
them based upon contributing margin, which is gross margin net of distribution
expense.

Financial information for each of the reportable segments for the first quarters
of 1999 and 1998 is provided in the following table.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
                          PVC     Methanol
                        Polymers     and       Nitrogen  Consolidated
                        Products  Derivatives  Products     Totals
--------------------------------------------------------------------------------
<S>                    <C>          <C>       <C>           <C>       
1999
Revenues                  $ 83,125   $19,817       $12,492   $115,434
Contributing Margin          9,097        57        <1,609>     7,545
 
1998
Revenues                  $106,092   $35,894       $11,525   $153,511
Contributing Margin           <412>    7,808        <3,681>     3,715
</TABLE>
--------------------------------------------------------------------------------

A reconciliation of the total segment consolidated contributing margin to total
consolidated income for the first quarters ended March 31, 1999 and 1998 is as
follows:
 
                                       1999    1998
                                       ----    ----
 
Total segment contributing margin     7,545    3,715
Marketing, general and
     Administrative expense          <6,161>  <5,732>
Interest expense                     <6,029>  <4,827>
Other income/expense (net)           <1,046>  <1,480>
 
Consolidated income/(loss)           <5,691>  <8,324>

                                       8
<PAGE>
 
Item 2.  Management's Discussion and Analysis of Financial Condition and Results
--------------------------------------------------------------------------------
of Operations
-------------

Results of Operations
Quarter Ended March 31, 1999 Compared to Quarter Ended March 31, 1998

Revenues

Total revenues during the first quarter of 1999 decreased $38.1 million or 25%
to $115.4 million from $153.5 million in the first quarter of 1998.  This
decrease was the result of a $23.0 million decrease in PVC Polymers Products
revenues, a $16.1 million decrease in Methanol and Derivatives revenues and  a
$1.0 million increase in Nitrogen Products revenues.

Total revenues for PVC Polymers Products decreased $23.0 million as a result of
a 15% decline in selling prices, and a 7% decrease in sales volumes.  Excess
supply of PVC in the market, exacerbated by on-going lower demand levels in many
countries in the Far East region, has continued to put downward pressure on
selling prices and intensified competitive market conditions.

Total revenues for Methanol and Derivatives decreased $16.1 million as a result
of a 30% decrease in selling prices, and a 15% decline in sales volumes.  Excess
capacity and soft demand has put severe downward pressure on selling prices.
Also during the quarter, the state of California announced a phase-out of the
use of MTBE in reformulated gasoline by December 31, 2002.  Methanol is used as
a raw material in the manufacture of MTBE.  The announcement is not expected to
have an immediate impact on methanol demand.

Total revenues for Nitrogen Products increased $1.0 million as a result of a 20%
decrease in sales prices and 28% increase in volume.  A decrease in imports of
urea into China have put downward pressure on selling prices while volumes
returned to a more normal quarter from idled production in first quarter of
1998.

Cost of Goods Sold

PVC Polymers Products contributing margin improved from last year's $.4 million
loss to a profit of $9.1 million.  This is a result of decreases in major raw
material costs, led by chlorine, being able to more than offset the decline in
selling prices.  Included in the cost of goods sold for the first quarter of
1999 was a $.5 million charge to cover the cost of realigning certain production
facilities at Illiopolis.

Contributing margin of Methanol and Derivatives had the opposite condition with
a breakeven in the first quarter of 1999 compared to a profit of $7.8 million
from the same period a year ago.  Lower natural gas costs could not offset the
30% decline in selling prices.

Nitrogen Products continue to generate negative margins, $1.6 million loss in
first quarter of 1999 and $3.7 million loss for 1998 first quarter.  Natural gas
and selling prices were both 20% lower than the same period last year.

Interest Expense

Interest Expense for the first quarter of 1999 increased $1.2 million which
relates to the $251.4 million long term debt in the first quarter of 1999
compared to $225 million in long term debt for the same period a year ago.

Net Loss

Net loss for the first quarter of 1999 was $5.7 million compared to an $8.3
million loss for the first quarter of 1998.  As discussed above, the primary
reasons for the $2.6 million improvement were raw material decreases and
improved production efficiencies being able to offset an 18% decrease in selling
prices.

                                       9
<PAGE>
 
Liquidity and Capital Resources

Cash Flows from Operations.  Cash provided by operations for the first quarter
1999 totaled $3.7 million, a reduction of $6.2 million primarily due to an
unfavorable change in working capital offset somewhat by a reduction in net
loss.

Cash Flows from Investing Activities.  First quarter capital expenditures
totaled $3.9 million and $7.0 million for 1999 and 1998, respectively.  The
first quarter 1998 capital spending was higher than normal due primarily to
environmental projects and other discretionary capital expenditures.

Cash Flow from Financing Activities. Pursuant to its Partnership Agreement, the
Partnership is required to make quarterly distributions to Unitholders and the
General Partner of 100% of its Available Cash, if any.  Available Cash means
generally, with respect to any quarter, the sum of all cash receipts of the
Partnership plus net reductions to reserves established in prior quarters, less
all of its cash disbursements and net additions to reserves in such quarter.
The General Partner may establish such reserves, as it deems necessary or
appropriate in its reasonable discretion, to provide for the proper conduct of
the business of the Partnership or the Operating Partnership and to stabilize
distributions of cash to Unitholders and the General Partner and such other
reserves as are necessary to comply with the terms of any agreement or
obligation of the Partnership.

A cash distribution of $3.7 million was made during the first quarter of 1998.
This amount relates to the cash distribution declared for the immediately
preceding quarter.  Cash distributions with respect to interim periods are not
necessarily indicative of cash distributions with respect to a full year.
Moreover, due to the cyclical nature of the Partnership's business, past cash
distributions are not necessarily indicative of future cash distributions.

The cyclical nature of the Partnership's business as well as various seasonality
factors have a significant impact on its results of operations and, therefore,
on its ability to make cash distributions on a quarterly basis.  In addition,
the amount of Available Cash constituting Cash from Operations for any period
does not necessarily correlate directly with net income for such period because
various items and transactions affect net income but do not affect Available
Cash constituting Cash from Operations, while changes in working capital items
(including receivables, inventories, accounts payable and other items) generally
do not affect net income but do affect such Available Cash.  Moreover, as
provided for in the Partnership Agreements with respect to the Partnership and
the Operating Partnership, certain reserves may be established which affect
Available Cash constituting Cash from Operations but do not affect cash balances
in financial statements.  Such reserves have generally been used to set cash
aside for debt service, capital expenditures and other accrued items.

Liquidity

Adverse business conditions across the Partnership's three product groups have
considerably reduced its sales revenues and operating margins and caused the
Partnership to incur net losses over the past several quarters.  Unless business
conditions broadly improve, industry overcapacity affecting all of the
Partnership's product groups is likely to cause narrow operating margins to
persist throughout the remainder of the year, even if selling prices continue to
improve.  These narrow operating margins, combined with the Partnership's
capital expenditure needs (which are anticipated to be in the range of $3 to $5
million per quarter) and debt service requirements, along with restrictions in
the Credit Agreement and Indenture as discussed below, make it unlikely that the
Partnership will resume making quarterly cash distributions in 1999.

The Partnership through its subsidiary operating partnership Borden Chemicals
and Plastics Operating Limited Partnership (the "Operating Partnership") and
several lending institutions are parties to an amended and restated Credit
Agreement (the "Credit Agreement"), dated as of December 23, 1998 which provides
for a revolving credit facility of up to $90 million (the "Revolving Credit
Facility").  The new two-year agreement waived the Operating Partnership's non-
compliance with its financial covenants at the end of the third quarter and
reset coverage ratio covenants through December 31, 2000.  The Operating
Partnership's obligations under the facility are secured by its accounts
receivable, inventory and a lien against certain fixed assets.  As of March 31,
1999, the Operating 

                                       10
<PAGE>
 
Partnership had $51.4 million outstanding under the Revolving Credit Facility. A
change of control of the General Partner, the Partnership or the Operating
Partnership is an event of default under the Credit Agreement.

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.

In December 1998, the Company retained the investment banking firms of Evercore
Partners and Salomon Smith Barney to assist it in exploring strategic 
alternative, including joint ventures, mergers or alliances, or the sale of some
or all of the business. While these efforts are still on-going, to date they 
have not resulted in any transaction and there can be no assurances that they
will result in a transaction.

Capital Expenditures

The Partnership has agreed to purchase its partner's 50% share of the Acetylene
Plant at the Geismar complex on December 31, 1999.  The purchase price is
approximately $18 million, one-half payable at closing with the remainder
payable in equal monthly installments over three years.

Other than this acquisition, the Partnership currently believes that the level
of annual base capital expenditures over the next two years will be in the range
of $15 to $20 million per year.  Total capital expenditures for 1999 are
anticipated to be approximately $15 million with a large portion relating to a
new software system which will improve the computer systems infrastructure and
assist the Company in preparing for the year 2000.

Year 2000


Similar to other business entities, the Partnership will be impacted by the
inability of its computer application software programs, as well as certain
date-sensitive devices, to properly identify the year 2000 due to a commonly
used programming convention of using only two digits to identify a year.  Unless
modified or replaced these programs and devices could fail or create erroneous
results when referencing the year 2000.

The Partnership's company-wide Year 2000 Project (Project) to mitigate the
effects year 2000 issues is proceeding on schedule. All facets of the business
have been divided into two primary categories and a Y2K Manager has been
assigned to each.  Category 1 is the Enterprise Resource Planning ("ERP") or
Business Systems functions which encompasses Business Applications (software),
End-User (PC's), Technical Infrastructure (hardware), and Communications.
Category 2 consists of those applications which support our Manufacturing, lab,
and R&D functions.


The Project has three phases:     (I)  Risk Assessment
                                  (II) Detailed Assessment Remediation Planning
                                  (III)Remediation and Resolution



As of October 31, 1998 the Partnership completed Phase I having developed
detailed inventories of related equipment and resources and assigned a relative
risk to each application based on the potential impact to the business and the
specific effects of a material Y2K failure. Material failures are those which
would negatively impact the safety of individuals, property, or environment or
the Partnership's ability to conduct business in a normal fashion.

Phase II consists of the development of a detailed plan for remediation of all
those applications identified in the initial inventory and the assignment of
specific responsibilities for implementing the required changes.  The Category 1
Phase II plan was completed in November 1998. Management believes that the most
significant Year 2000 business risk to the Partnership relates to the current
financial system applications.  Accordingly, an enterprise-wide implementation
of Year 2000 compliant software and hardware has been initiated.  The
anticipated cost associated with the enterprise-wide implementation is
approximately $18 million.  In early 1998 the Partnership began 

                                       11
<PAGE>
 
converting its business applications over to a Windows NT based system utilizing
Microsoft SQL Servers and the latest version of Year 2000 compliant J.D. Edwards
software. This conversion will continue into 1999 and is expected to be fully
operational by September 1, 1999 (completion of Phase III.)

The Category 2 Phase plan II including detailed test plans was completed during
December 1998. Estimated costs associated with the remediation of our
manufacturing, lab, and R&D equipment/systems is approximately $1 million.  The
plan consists of repair, replacement, upgrades, and workarounds based on the
ability of the hardware and software to respond to a specified battery of Year
2000 date testing and the relative impact to the business as specified above.
As of Mach 31, 1999 Phase III for Category 2 was approximately 60% complete and
on target for June 30, 1999 completion.

The Company has also initiated a program to determine the effects of third-party
suppliers and customers on the business with respect to Y2K issues.  Over 2000
suppliers were mailed a self-assessment questionnaire with the intent of
identification and, to the extent possible, timely resolution of potential Year
2000 issues.  Additionally approximately 150 of the 2000+ suppliers have been
identified as critical vendors.  Each is being contacted directly to determine
the status of their Y2K compliance effort and the need, if any to develop a
contingency plan.  Inventories, alternate suppliers and forms of transportation,
production and maintenance schedules, etc. are all contingency considerations as
noted below.

While it is expected that the Company will be able to resolve any significant
issues identified in this process, the Partnership has limited or no control
over the actions of third-party suppliers.  As such we can provide no assurance
that these suppliers will resolve their Year 2000 issues before the occurrence
of a disruption to the business of the Partnership or any of its customers.
Material failure on the part of one of these third parties could have an adverse
affect on the Partnership's business and results of operations.

During all three phases of the Project, management has been considering the need
to develop contingency plans for any of the applications which could have a
critical impact on the business.  The major focus on contingency planning will
be in the second quarter of 1999 with the expectation of having any required
plans detailed by the end of the third quarter.  The Partnership expects to
fully explore any contingency requirements with its major suppliers and
customers and include possible resolution in its detailed plan.  Based on the
Partnership's current plans and efforts to date, the Partnership does not
anticipate that Year 2000 issues will have any material effects on its results
of operations.

The estimates and conclusions herein contain forward-looking statements and are
based on BCPM's best estimates of future events based on the information
available at this time.  However, there can be no guarantee that these results
will be achieved and actual results could differ from the plan.  Specific
factors that might cause differences from our estimates include, but are not
limited to, availability of resources, the ability to identify and correct all
potential Year 2000 inconsistencies, the ability of suppliers to correct Year
2000 issues in a timely manner, and unanticipated problems identified in our
ongoing internal and third party Year 2000 project quality assurance reviews.

Item 2-A Market Risk
--------------------

Interest Rate Risk  The Company's amended facility provides up to $90,000 under
a revolving credit agreement with a group of banks.  The amended credit facility
expires on December 31, 2000, at which time all amounts outstanding must be
repaid.  Interest on borrowings under the revolving credit facility are
determined, at the Operating Partnership's option, based on the applicable
Eurodollar rate (one, two, three, six, nine or twelve month periods) plus a
margin.  The ABR rate is the greater of (a) the prime rate (b) the Base CD rate
plus 1.00% or (c) the Federal Funds Effective rate plus .5%.  At March 31, 1999
borrowings under the amended facility were $51,400 and bore interest at 9.48%.

The Company is exposed to swings in the Eurodollar or ABR rates.  A change of
1.00% in the applicable rate would change the Company's interest cost by $514
based on the borrowings at March 31, 1999.

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 Partnership will enter into contracts
whereby it agrees to purchase a specified quantity of natural gas (the
Partnership's principal raw material) at a fixed price.  Such contracts are
generally not in excess of three months forward, and the Partnership generally
limits 

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<PAGE>
 
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 section 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 its significant raw materials, and changes in applicable
environmental, health and safety laws and regulations.


                           PART II. OTHER INFORMATION
                                        
Item 1.  Legal Proceedings
--------------------------

There is incorporated by reference herein the information regarding legal
proceeding in Item 3 of Part 1 of the Partnership's 1998 Annual Report on Form
10-K and Note 2 to the consolidated financial statements in Part 1 hereof.

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<PAGE>
 
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:
                                         ---------------------------------------
                                                              Ronald B. Wiles
                                         Chief Financial Officer and Treasurer
                                         Principal Accounting Officer



May 10, 1999

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