During the fourth quarter of 1999, PLP announced and began implementing a rightsizing program (Rightsizing Program) which was designed to simplify and focus PLP's core businesses. The key components of the Rightsizing Program were: (i) the shutdown and permanent closure of the Nichols and Payne Creek facilities of IMC Phosphates Company (IMC Phosphates), formerly known as IMC-Agrico Company, resulting from an optimization program that will reduce rock and concentrate production costs through higher utilization rates at the lowest-cost facilities; and (ii) headcount reductions. In conjunction with the Rightsizing Program, PLP recorded a special charge of $52.3 million, or $0.51 per unit, in the fourth quarter of 1999.

Activity related to accruals for the Rightsizing Program during the period January 1, 2000 to June 30, 2000 was as follows:

The timing and costs of the Rightsizing Program are generally on schedule with the time and dollar estimates disclosed in the fourth quarter of 1999.

During the fourth quarter of 1998, PLP developed and began execution of a plan to improve profitability (Project Profit). Project Profit was comprised of four major initiatives: (i) the combination of certain activities within IMC's potash and phosphates business units in an effort to realize certain operating and staff function synergies; (ii) restructuring of the phosphate rock mining and concentrated phosphate production/distribution operations and processes in an effort to reduce costs; (iii) simplification of current business activities by eliminating businesses not deemed part of PLP's core competencies; and (iv) reduction of operational and administrative headcount. In conjunction with Project Profit, PLP recorded a special charge of $61.8 million, or $0.60 per unit, in the fourth quarter of 1998.

Activity related to accruals for Project Profit during the period January 1, 2000 to June 30, 2000 was as follows:

The timing and costs of Project Profit are generally on schedule with the time and dollar estimates disclosed in the fourth quarter of 1999.

As part of Project Profit, PLP had written off certain assets in 1998. However, in April 2000, some of these assets were sold to a third party. The activity was recorded in the second quarter Statement of Operations as a reduction of the restructuring charge previously recognized for Project Profit.

In the fourth quarter of 1999, PLP decided to discontinue its oil and gas business which primarily consisted of its interest in a multi-year oil and natural gas exploration program (Exploration Program) with McMoRan Exploration Company (MMR). PLP sold its interest in the Exploration Program for proceeds of $32.0 million. The Statement of Operations has been restated for the applicable 1999 periods presented to report the operating results of the oil and gas business as discontinued operations in accordance with Accounting Principles Board Opinion No. 30, "Reporting the Results of Operations."

In April 1998, the American Institute of Certified Public Accountants issued Statement of Position (SOP) 98-5, "Reporting on the Costs of Start-Up Activities," which mandated that costs related to start-up activities be expensed as incurred, effective January 1, 1999. Prior to the adoption of SOP 98-5, PLP capitalized its start-up costs (i.e., pre-operating costs). PLP adopted the provisions of SOP 98-5 in its financial statements beginning January 1, 1999 and, accordingly, recorded a charge for the cumulative effect of an accounting change of $2.6 million, or $0.02 per unit, in order to expense start-up costs that had been previously capitalized.

In December 1999, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin (SAB) No. 101, "Revenue Recognition in Financial Statements," which provides guidance regarding revenue recognition. PLP is in the process of determining the impact, if any, this new guidance will have on PLP's financial statements. The effect of any change will be reflected by the cumulative effect of an accounting change as of January 1, 2000. In May 2000, the SEC deferred the required effective date for implementation of SAB No. 101 until the fourth quarter of 2000.

During the second quarter of 2000, the Financial Accounting Standards Board issued Emerging Issues Task Force (EITF) 00-01, "Investor Balance Sheet and Income Statement Display under the Equity Method for Investments in Certain Partnerships and Other Ventures," which will require PLP to account for its investment in IMC Phosphates using the equity method rather than the current proportional consolidation method. Under the equity method, PLP's investment in IMC Phosphates will be displayed as a single amount in PLP's Balance Sheet and PLP's share of IMC Phosphates earnings or losses will be displayed as a single amount in PLP's Statement of Operations. Under the current proportional consolidation method, IMC Phosphates' assets and liabilities are displayed, on a proportionate gross basis, in the PLP Balance Sheet and the related results of operations are similarly displayed in PLP's Statement of Operations. PLP will adopt this change in accounting method in the fourth quarter of 2000, as required by EITF 00-01, and will restate prior periods' financial statements to reflect this new accounting method.

Three months ended June 30, 2000 vs. three months ended June 30, 1999

PLP, through its joint venture interest in IMC Phosphates, is one of the world's largest and lowest cost producers, marketers and distributors of phosphate crop nutrients and animal feed ingredients, with operations in central Florida and on the Mississippi River in Louisiana. IMC Phosphates is 41.5 percent owned by PLP and 58.5 percent owned by IMC. The dollar amounts included throughout this discussion are shown at PLP's 41.5 percent ownership percentage, unless otherwise noted .

PLP's second quarter net sales of $109.3 million decreased 36 percent from $170.6 million in the year-earlier period. PLP's gross margins of $15.1 million in the second quarter of 2000 represented a 62 percent decrease from gross margins of $39.7 million in the second quarter of 1999. The loss from continuing operations for the second quarter of 2000 was $1.5 million, or $0.01 per unit, while earnings from continuing operations for the second quarter of 1999 were $23.4 million, or $0.23 per unit.

IMC Phosphates' net sales for the second quarter of 2000 declined 36 percent to $109.3 million compared to $170.6 million for the same period last year largely as a result of lower volumes and lower average sales realizations. Decreased shipments of concentrated phosphates, primarily diammonium phosphate (DAP), unfavorably impacted net sales by $37.0 million. Lower average concentrate sales prices, driven by decreased average DAP realizations, reduced sales by $23.6 million. Average DAP prices fell 23 percent to $130 per short ton in the second quarter of 2000 from $168 per short ton in the second quarter of 1999. Also, sales of urea and uranium decreased $2.3 million, as a result of exiting these two businesses as part of Project Profit.

Gross margins decreased 67 percent to $12.2 million for the second quarter of 2000 compared to $36.8 million for the second quarter of last year. This decrease was mainly the result of  the lower volumes and prices discussed above, partially offset by increased Project Profit and Rightsizing Program savings of approximately $7.6 million.