##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2007
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to.
 Commission File No. 1-10403
 
 TEPPCO Partners, L.P.
 (Exact name of Registrant as specified in its charter)
 Delaware
(State of Other Jurisdiction of 
Incorporation or Organization)
    
    76-0291058
(I.R.S. Employer Identification Number)
 1100 Louisiana Street, Suite 1600
Houston, Texas 77002
(Address of principal executive offices, including zip code)
 (713) 381-3636
(Registrants telephone number, including area code)
 þ o
  þ o o
 o þ




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##### 



TEPPCO PARTNERS, L.P.
 TABLE OF CONTENTS
 Page No.PART I. FINANCIAL INFORMATIONItem 1.Financial StatementsUnaudited Condensed Consolidated Balance Sheets
    
    
    1Unaudited Condensed Statements of Consolidated Income and Comprehensive Income
    
    
    2Unaudited Condensed Statements of Consolidated Cash Flows
    
    
    4Unaudited Condensed Statements of Consolidated Partners Capital
    
    
    5Notes to Unaudited Condensed Consolidated Financial Statements
    
    
    6Note 1. Partnership Organization and Basis of Presentation
    
    
    6Note 2. General Accounting Policies and Related Matters
    
    
    7Note 3. Accounting for Unit-Based Awards
    
    
    10Note 4. Employee Benefit Plans
    
    
    14Note 5. Financial Instruments
    
    
    14Note 6. Inventories
    
    
    16Note 7. Property, Plant and Equipment
    
    
    17Note 8. Investments in Unconsolidated Affiliates
    
    
    18Note 9. Acquisitions, Dispositions and Discontinued Operations
    
    
    21Note 10. Intangible Assets and Goodwill
    
    
    23Note 11. Debt Obligations
    
    
    25Note 12. Partners Capital and Distributions
    
    
    28Note 13. Business Segments
    
    
    32Note 14. Related Party Transactions
    
    
    36Note 15. Earnings per Unit
    
    
    39Note 16. Commitments and Contingencies
    
    
    41Note 17. Supplemental Cash Flow Information
    
    
    47Note 18. Supplemental Condensed Consolidating Financial Information
    
    
    47Note 19. Subsequent Events
    
    
    52Item 2.Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    53Cautionary Note Regarding Forward-Looking Statements
    
    
    54Item 3.Quantitative and Qualitative Disclosures About Market Risk
    
    
    78Item 4.Controls and Procedures
    
    
    81PART II. OTHER INFORMATIONItem 1.Legal Proceedings
    
    
    81Item 1A.Risk Factors
    
    
    81Item 6.Exhibits
    
    
    82Signatures
    
    
    84Form of TPP Employee Restricted Unit GrantForm of TPP Employee Option GrantStatement of Computation of Ratio of Earnings to Fixed ChargesCertification of CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certification of CEO Pursuant to Section 906Certification of CFO Pursuant to Section 906




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 TEPPCO PARTNERS, L.P.
 
 UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
 September 30,
    
    
    December 31,2007
    
    
    2006ASSETSCurrent assets:Cash and cash equivalents
    
    $
    28
    
    
    $
    70Restricted cash
    
    
    2,877
    
    
    
    Accounts receivable, trade (net of allowance for doubtful accounts of
$118 and $100)
    
    
    1,148,874
    
    
    
    852,816Accounts receivable, related parties
    
    
    5,883
    
    
    
    11,788Inventories
    
    
    133,773
    
    
    
    72,193Other
    
    
    39,141
    
    
    
    29,843Total current assets
    
    
    1,330,576
    
    
    
    966,710Property,
plant and equipment, at cost(net of accumulated depreciation of $562,076 and $509,889)
    
    
    1,750,284
    
    
    
    1,642,095Equity investments
    
    
    1,097,431
    
    
    
    1,039,710Intangible assets
    
    
    170,176
    
    
    
    185,410Goodwill
    
    
    15,506
    
    
    
    15,506Other assets
    
    
    103,364
    
    
    
    72,661Total assets
    
    $
    4,467,337
    
    
    $
    3,922,092LIABILITIES AND PARTNERS CAPITALCurrent liabilities:Accounts payable and accrued liabilities
    
    $
    1,204,066
    
    
    $
    855,306Accounts payable, related parties
    
    
    38,023
    
    
    
    34,461Accrued interest
    
    
    23,292
    
    
    
    35,523Other accrued taxes
    
    
    19,784
    
    
    
    14,482Other
    
    
    37,960
    
    
    
    36,776Total current liabilities
    
    
    1,323,125
    
    
    
    976,548Long-term debt:Senior notes
    
    
    1,111,431
    
    
    
    1,113,287Junior subordinated notes
    
    
    299,530
    
    
    
    Other long-term debt
    
    
    377,000
    
    
    
    490,000Total long-term debt
    
    
    1,787,961
    
    
    
    1,603,287Deferred tax liability
    
    
    
    
    
    
    652Other liabilities and deferred credits
    
    
    25,790
    
    
    
    19,461Other liabilities, related party
    
    
    
    
    
    
    1,814Commitments and contingenciesPartners capital:Limited partners interests:Limited partner units (89,806,186 and 89,804,829 units outstanding)
    
    
    1,417,346
    
    
    
    1,405,559Restricted limited partner units (62,400 and 0 units outstanding)
    
    
    207
    
    
    
    General partners interest
    
    
    (83,099
    )
    
    
    (85,655
    )Accumulated other comprehensive (loss) income
    
    
    (3,993
    )
    
    
    426Total partners capital
    
    
    1,330,461
    
    
    
    1,320,330Total liabilities and partners capital
    
    $
    4,467,337
    
    
    $
    3,922,092
  1




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 
 UNAUDITED CONDENSED STATEMENTS OF CONSOLIDATED INCOME
AND COMPREHENSIVE INCOME
(Dollars in thousands)
 For the Three Months Ended
    
    
    For the Nine Months EndedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Operating revenues:Sales of petroleum products
    
    $
    2,455,695
    
    
    $
    2,446,671
    
    
    $
    6,238,927
    
    
    $
    7,130,283Transportation  Refined products
    
    
    48,123
    
    
    
    42,067
    
    
    
    126,976
    
    
    
    113,309Transportation  LPGs
    
    
    16,735
    
    
    
    16,877
    
    
    
    69,535
    
    
    
    59,652Transportation  Crude oil
    
    
    12,332
    
    
    
    9,567
    
    
    
    32,702
    
    
    
    29,034Transportation  NGLs
    
    
    12,023
    
    
    
    10,971
    
    
    
    34,062
    
    
    
    32,362Gathering  Natural gas
    
    
    15,429
    
    
    
    25,022
    
    
    
    46,289
    
    
    
    107,856Other
    
    
    20,320
    
    
    
    18,870
    
    
    
    60,031
    
    
    
    58,970Total operating revenues
    
    
    2,580,657
    
    
    
    2,570,045
    
    
    
    6,608,522
    
    
    
    7,531,466Costs and expenses:Purchases of petroleum products
    
    
    2,426,692
    
    
    
    2,417,636
    
    
    
    6,141,630
    
    
    
    7,043,432Operating expense
    
    
    45,375
    
    
    
    49,237
    
    
    
    134,458
    
    
    
    151,015Operating fuel and power
    
    
    15,060
    
    
    
    15,478
    
    
    
    45,163
    
    
    
    42,762General and administrative
    
    
    7,396
    
    
    
    6,994
    
    
    
    24,158
    
    
    
    25,353Depreciation and amortization
    
    
    26,486
    
    
    
    26,250
    
    
    
    77,735
    
    
    
    83,683Taxes  other than income taxes
    
    
    4,931
    
    
    
    2,625
    
    
    
    15,149
    
    
    
    13,984Gains on sales of assets
    
    
    (2
    )
    
    
    (14
    )
    
    
    (18,653
    )
    
    
    (1,410
    )Total costs and expenses
    
    
    2,525,938
    
    
    
    2,518,206
    
    
    
    6,419,640
    
    
    
    7,358,819Operating income
    
    
    54,719
    
    
    
    51,839
    
    
    
    188,882
    
    
    
    172,647Other income (expense):Interest expense  net
    
    
    (26,901
    )
    
    
    (23,181
    )
    
    
    (71,897
    )
    
    
    (63,522
    )Gain on sale of ownership interest in Mont
Belvieu Storage Partners, L.P.
    
    
    (20
    )
    
    
    
    
    
    
    59,628
    
    
    
    Equity earnings
    
    
    19,059
    
    
    
    11,567
    
    
    
    54,856
    
    
    
    15,230Interest income
    
    
    454
    
    
    
    1,012
    
    
    
    1,241
    
    
    
    1,668Other income  net
    
    
    306
    
    
    
    51
    
    
    
    1,085
    
    
    
    748Income before provision for income taxes
    
    
    47,617
    
    
    
    41,288
    
    
    
    233,795
    
    
    
    126,771Provision for income taxes
    
    
    (14
    )
    
    
    143
    
    
    
    213
    
    
    
    657Income from continuing operations
    
    
    47,631
    
    
    
    41,145
    
    
    
    233,582
    
    
    
    126,114Income from discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,497Gain on sale of discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,872Discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,369Net income
    
    $
    47,631
    
    
    $
    41,145
    
    
    $
    233,582
    
    
    $
    145,483Changes in fair values of interest rate cash flow
hedges and treasury locks
    
    
    (2,528
    )
    
    
    (584
    )
    
    
    (1,016
    )
    
    
    (584
    )Changes in fair values of crude oil cash flow hedges
    
    
    (3,216
    )
    
    
    507
    
    
    
    (3,369
    )
    
    
    234Comprehensive income
    
    $
    41,887
    
    
    $
    41,068
    
    
    $
    229,197
    
    
    $
    145,133
 2




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 
 UNAUDITED CONDENSED STATEMENTS OF CONSOLIDATED INCOME
AND COMPREHENSIVE INCOME  (Continued)
(Dollars in thousands, except per Unit amounts)
 For the Three Months Ended
    
    
    For the Nine Months EndedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Net Income Allocation:Limited Partner Unitholders:Income from continuing operations
    
    $
    39,656
    
    
    $
    29,047
    
    
    $
    195,106
    
    
    $
    89,035Income from discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,674Total Limited Partner Unitholders net income
allocation
    
    
    39,656
    
    
    
    29,047
    
    
    
    195,106
    
    
    
    102,709General Partner:Income from continuing operations
    
    
    7,975
    
    
    
    12,098
    
    
    
    38,476
    
    
    
    37,079Income from discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,695Total General Partner net income allocation
    
    
    7,975
    
    
    
    12,098
    
    
    
    38,476
    
    
    
    42,774Total net income allocated
    
    $
    47,631
    
    
    $
    41,145
    
    
    $
    233,582
    
    
    $
    145,483Basic and diluted net income per Limited
Partner Unit:Continuing operations
    
    $
    0.44
    
    
    $
    0.39
    
    
    $
    2.17
    
    
    $
    1.24Discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.19Basic and diluted net income per
Limited Partner
Unit
    
    $
    0.44
    
    
    $
    0.39
    
    
    $
    2.17
    
    
    $
    1.43Weighted average limited partner units
outstanding
    
    
    89,868
    
    
    
    75,360
    
    
    
    89,835
    
    
    
    71,782
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##### Table of Contents



TEPPCO PARTNERS, L.P.
 
 UNAUDITED CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
(Dollars in thousands)
 For the Nine Months EndedSeptember 30,2007
    
    
    2006Operating activities:Net income
    
    $
    233,582
    
    
    $
    145,483Adjustments to reconcile net income to cash provided by continuing
operating activities:Income from discontinued operations
    
    
    
    
    
    
    (19,369
    )Deferred income taxes
    
    
    (656
    )
    
    
    657Depreciation and amortization
    
    
    77,735
    
    
    
    83,683Amortization of deferred compensation
    
    
    514
    
    
    
    Earnings in equity investments
    
    
    (54,856
    )
    
    
    (15,230
    )Distributions from equity investments
    
    
    96,967
    
    
    
    26,546Gains on sales of assets
    
    
    (18,653
    )
    
    
    (1,410
    )Gain on sale of ownership interest in Mont Belvieu Storage Partners, L.P.
    
    
    (59,628
    )
    
    
    Non-cash portion of interest expense
    
    
    906
    
    
    
    1,241Net effect of changes in operating accounts
    
    
    (56,725
    )
    
    
    9,412Net cash provided by continuing operating activities
    
    
    219,186
    
    
    
    231,013Net cash provided by discontinued operations
    
    
    
    
    
    
    1,521Net cash provided by operating activities
    
    
    219,186
    
    
    
    232,534Investing activities:Proceeds from sales of assets
    
    
    27,771
    
    
    
    39,750Proceeds from sale of ownership interest
    
    
    137,326
    
    
    
    Purchase of assets
    
    
    (12,733
    )
    
    
    (10,975
    )Increase in restricted cash
    
    
    (2,877
    )
    
    
    Investment in Mont Belvieu Storage Partners, L.P.
    
    
    
    
    
    
    (4,168
    )Investment in Centennial Pipeline LLC
    
    
    (11,081
    )
    
    
    (2,500
    )Investment in Jonah Gas Gathering Company
    
    
    (127,775
    )
    
    
    (65,342
    )Capitalized costs incurred to develop identifiable intangible assets
    
    
    (2,500
    )
    
    
    Cash paid for linefill on assets owned
    
    
    (26,613
    )
    
    
    (5,640
    )Capital expenditures
    
    
    (164,161
    )
    
    
    (125,684
    )Net cash used in investing activities
    
    
    (182,643
    )
    
    
    (174,559
    )Financing activities:Proceeds from revolving credit facility
    
    
    805,250
    
    
    
    509,750Repayments on revolving credit facility
    
    
    (918,250
    )
    
    
    (556,650
    )Issuance of Limited Partner Units, net
    
    
    53
    
    
    
    195,072Issuance of Junior Subordinated Notes
    
    
    299,517
    
    
    
    Debt issuance costs
    
    
    (3,750
    )
    
    
    Proceeds from termination of treasury locks
    
    
    1,443
    
    
    
    Payment for termination of interest rate swap
    
    
    (1,235
    )
    
    
    Distributions paid
    
    
    (219,613
    )
    
    
    (206,176
    )Net cash used in financing activities
    
    
    (36,585
    )
    
    
    (58,004
    )Net change in cash and cash equivalents
    
    
    (42
    )
    
    
    (29
    )Cash and cash equivalents, January 1
    
    
    70
    
    
    
    119Cash and cash equivalents, September 30
    
    $
    28
    
    
    $
    90
  4




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 UNAUDITED CONDENSED STATEMENTS OF CONSOLIDATED PARTNERS CAPITAL
(Dollars in thousands, except Unit amounts)
 Outstanding
    
    
    
    
    
    
    
    
    
    
    AccumulatedLimited
    
    
    General
    
    
    Limited
    
    
    OtherPartner
    
    
    Partners
    
    
    Partners
    
    
    ComprehensiveUnits
    
    
    Interest
    
    
    Interests
    
    
    Income (Loss)
    
    
    TotalBalance, December 31, 2006
    
    
    89,804,829
    
    
    $
    (85,655
    )
    
    $
    1,405,559
    
    
    $
    426
    
    
    $
    1,320,330Net income allocation
    
    
    
    
    
    
    38,476
    
    
    
    195,106
    
    
    
    
    
    
    
    233,582Issuance of restricted units under 2006
LTIP
    
    
    62,400
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Units issued in connection with Employee
Unit Purchase Plan
    
    
    1,357
    
    
    
    
    
    
    
    53
    
    
    
    
    
    
    
    53Cash distributions
    
    
    
    
    
    
    (35,920
    )
    
    
    (183,693
    )
    
    
    
    
    
    
    (219,613
    )Non-cash contribution
    
    
    
    
    
    
    
    
    
    
    276
    
    
    
    
    
    
    
    276Amortization of equity awards
    
    
    
    
    
    
    
    
    
    
    252
    
    
    
    
    
    
    
    252Changes in fair values of crude oil cash
flow hedges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,369
    )
    
    
    (3,369
    )Changes in fair values of interest rate
cash flow hedges and treasury locks
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,016
    )
    
    
    (1,016
    )Pension benefit SFAS No. 158
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (34
    )
    
    
    (34
    )Balance, September 30, 2007
    
    
    89,868,586
    
    
    $
    (83,099
    )
    
    $
    1,417,553
    
    
    $
    (3,993
    )
    
    $
    1,330,461
  5




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
 NOTE 1. PARTNERSHIP ORGANIZATION AND BASIS OF PRESENTATION
 Partnership Organization
    Basis of Presentation
  6




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   
 NOTE 2. GENERAL ACCOUNTING POLICIES AND RELATED MATTERS
 Business Segments
   Estimates
  Income Taxes
  Accounting for Uncertainty in Income Taxes
 7




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Net Income Per Unit
    Recent Accounting Developments
 Fair Value Measurements
 The Fair Value Option for Financial Assets and
Financial Liabilities  Including an amendment of FASB Statement No. 115
 8




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Restricted Cash
  Revenue Recognition
    Accounting for
Purchases and Sales of Inventory with the Same Counterparty
  9




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  
 NOTE 3. ACCOUNTING FOR UNIT-BASED AWARDS
 Share-Based Payment
  For the Three Months Ended
    
    
    For the Nine Months EndedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Phantom Unit Plans (1) (2):1999 Phantom Unit Retention Plan
    
    $
    (51
    )
    
    $
    374
    
    
    $
    731
    
    
    $
    5552000 Long Term Incentive Plan
    
    
    (25
    )
    
    
    115
    
    
    
    277
    
    
    
    4342005 Phantom Unit Plan
    
    
    (112
    )
    
    
    343
    
    
    
    429
    
    
    
    846EPCO, Inc. 2006 TPP Long-Term Incentive Plan:Unit options
    
    
    27
    
    
    
    
    
    
    
    39
    
    
    
    Restricted units
    
    
    135
    
    
    
    
    
    
    
    199
    
    
    
    Unit appreciation rights (UARs) (2)
    
    
    20
    
    
    
    
    
    
    
    44
    
    
    
    Phantom units (2)
    
    
    3
    
    
    
    
    
    
    
    7
    
    
    
    Compensation expense allocated under ASA (3)
    
    
    357
    
    
    
    53
    
    
    
    710
    
    
    
    119Total compensation expense
    
    $
    354
    
    
    $
    885
    
    
    $
    2,436
    
    
    $
    1,954
 
 (1)
    
    The decrease in compensation expense for the Phantom Unit Plans for the three months
ended September 30, 2007 is primarily due to a decrease in the Unit price at September 30,
2007 as compared to the Unit price at June 30, 2007. Accruals for plan award payouts,
accounted for as liability awards, are based on the Unit price (see discussion of plans
below).(2)
    
    Accounted for as liability awards under the provisions of SFAS 123(R).(3)
    
    Represents amounts allocated to us from EPCO in connection with the use of shared
services under the ASA. 1999 Plan
  10




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   2000 LTIP
   2005 Phantom Unit Plan
   2006 LTIP
  11




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
    Unit Options
  Weighted-Weighted-
    
    
    AverageAverage
    
    
    RemainingNumber
    
    
    Strike Price
    
    
    Contractualof Units
    
    
    (dollars/Unit)
    
    
    Term (in years)Unit Options:Outstanding at December 31, 2006
    
    
    
    
    
    $
    
    
    
    
    Granted (1)
    
    
    155,000
    
    
    
    45.35
    
    
    
    Outstanding at September 30, 2007
    
    
    155,000
    
    
    $
    45.35
    
    
    
    9.65Options exercisable at:September 30, 2007
    
    
    
    
    
    $
    
    
    
    
    
 
 (1)
    
    The total grant date fair value of these awards was $0.4 million based on the following
assumptions: (i) expected life of option of 7 years, (ii) risk-free interest rate of
4.78%; (iii) expected distribution yield on Units of 7.92%; and (iv) expected Unit price
volatility on Units of 18.03%.  12




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Restricted Units
  Weighted-Average GrantNumber
    
    
    Date Fair Valueof Units
    
    

Per Unit (1)Restricted Units at December 31, 2006
    
    
    Granted (2)
    
    
    62,900
    
    
    $
    37.64Forfeited
    
    
    (500
    )
    
    
    37.64Restricted Units at September 30, 2007
    
    
    62,400
    
    
    
    37.64
 
 (1)
    
    Determined by dividing the aggregate grant date fair value of awards (including an
allowance for forfeitures) by the number of awards issued.(2)
    
    Aggregate grant date fair value of restricted unit awards issued during 2007 was $2.4
million based on a grant date market price of our Units of $45.35 per Unit and an estimated
forfeiture rate of 17%.  Phantom Units and UARs
    13




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 
 NOTE 4. EMPLOYEE BENEFIT PLANS
   Employers Accounting for Settlements and Curtailments of Defined
Benefit Pension Plans and for Termination Benefits,
  
 NOTE 5. FINANCIAL INSTRUMENTS
  Interest Rate Risk Hedging Program
  14




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Interest Rate Swaps
  Period Covered by
    
    Termination Date ofHedged Debt
    
    Number of Swaps
    
    Swaps
    
    Swaps
    
    Rate Swaps
    
    Notional ValueRevolving Credit Facility, 
due Dec. 2011
    
    
    4
    
    
    Jan. 2006 to Jan.
2008
    
    Jan. 2008
    
    Swapped 5.36%
floating rate for
fixed rate ranging
from 4.67% to
4.695% (1)
    
    $200.0 million
 
 (1)
    
    On June 30, 2007, these interest rate swap agreements were de-designated as cash flow
hedges and are now accounted for using mark-to-market accounting; thus, changes in the fair
value of these swaps are recognized in earnings. At September 30, 2007 and December 31,
2006, the fair values of these interest rate swaps were assets of $0.6 million and $1.4
million, respectively. Interest Rate Swap Terminations.
  Treasury Locks
  15




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   Commodity Risk Hedging Program
   
 NOTE 6. INVENTORIES
  September 30,
    
    
    December 31,2007
    
    
    2006Crude oil (1)
    
    $
    87,539
    
    
    $
    49,312Refined products and LPGs (2)
    
    
    27,414
    
    
    
    7,636Lubrication oils and specialty chemicals
    
    
    7,914
    
    
    
    7,500Materials and supplies
    
    
    7,337
    
    
    
    7,029NGLs
    
    
    3,569
    
    
    
    716Total
    
    $
    133,773
    
    
    $
    72,193
 
 (1)
    
    At September 30, 2007 and December 31, 2006, $78.0 million and $44.0 million,
respectively, of our crude oil inventory was subject to forward sales contracts.(2)
    
    Refined products and LPGs inventory is managed on a combined basis.  16




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  
 NOTE 7. PROPERTY, PLANT AND EQUIPMENT
  EstimatedUseful Life
    
    
    September 30,
    
    
    December 31,In Years
    
    
    2007
    
    
    2006Plants and pipelines (1)
    
    
    5-40
    (4)
    
    $
    1,763,665
    
    
    $
    1,615,867Underground and other storage facilities (2)
    
    
    5-40
    (5)
    
    
    243,911
    
    
    
    196,306Transportation equipment (3)
    
    
    5-10
    
    
    
    5,746
    
    
    
    8,200Land and right of way
    
    
    
    
    
    
    138,018
    
    
    
    128,791Construction work in progress
    
    
    
    
    
    
    161,020
    
    
    
    202,820Total property, plant and equipment
    
    
    
    
    
    $
    2,312,360
    
    
    $
    2,151,984Less accumulated depreciation
    
    
    
    
    
    
    562,076
    
    
    
    509,889Property, plant and equipment, net
    
    
    
    
    
    $
    1,750,284
    
    
    $
    1,642,095
 
 (1)
    
    Plants and pipelines include refined products, LPGs, NGL, petrochemical, crude oil and
natural gas pipelines; terminal loading and unloading facilities; office furniture and
equipment; buildings, laboratory and shop equipment; and related assets.(2)
    
    Underground and other storage facilities include underground product storage caverns;
storage tanks; and other related assets.(3)
    
    Transportation equipment includes vehicles and similar assets used in our operations.(4)
    
    The estimated useful lives of major components of this category are as follows:
pipelines, 20-40 years (with some equipment at 5 years); terminal facilities, 10-40 years;
office furniture and equipment, 5-10 years; buildings 20-40 years; and laboratory and shop
equipment, 5-40 years.(5)
    
    The estimated useful lives of major components of this category are as follows:
underground storage facilities, 20-40 years (with some components at 5 years) and storage
tanks, 20-30 years.  For the Three Months Ended
    
    For the Nine Months EndedSeptember 30,
    
    September 30,2007
    
    2006
    
    2007
    
    2006Depreciation expense (1)
    
    $
    20,572
    
    
    $
    19,564
    
    
    $
    60,001
    
    
    $
    61,015Capitalized interest (2)
    
    
    2,010
    
    
    
    1,703
    
    
    
    8,813
    
    
    
    8,120
 
 (1)
    
    Depreciation expense is a component of depreciation and amortization expense as
presented in our Unaudited Condensed Statements of Consolidated Income.(2)
    
    Capitalized interest increases the carrying value of the associated asset and reduces
interest expense during the period it is recorded. 17




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 
 NOTE 8. INVESTMENTS IN UNCONSOLIDATED AFFILIATES
  Ownership
    
    
    Investments in unconsolidatedPercentage at
    
    
    affiliates atSeptember 30,
    
    
    September 30,2007
    
    
    2007
    
    
    December 31, 2006Downstream Segment:Centennial Pipeline LLC (Centennial)
    
    
    50.0
    %
    
    $
    80,428
    
    
    $
    62,321MB Storage (1)
    
    
    
    
    
    
    
    
    
    
    85,626Other
    
    
    25.0
    %
    
    
    348
    
    
    
    369Upstream Segment:Seaway Crude Pipeline Company (Seaway)
    
    
    50.0
    %
    
    
    192,214
    
    
    
    195,584Midstream Segment:Jonah Gas Gathering Company (Jonah)
    
    
    80.64
    %
    
    
    824,441
    
    
    
    695,810Total
    
    
    
    
    
    $
    1,097,431
    
    
    $
    1,039,710
 
 (1)
    
    Refers to our ownership interests in Mont Belvieu Storage Partners, L.P. and Mont
Belvieu Venture, LLC (collectively, MB Storage). On March 1, 2007, we sold our
ownership interests in these entities.  For the Three Months Ended
    
    
    For the Nine Months EndedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Equity earnings (losses):Downstream Segment
    
    $
    (3,064
    )
    
    $
    (2,949
    )
    
    $
    (8,430
    )
    
    $
    (6,581
    )Upstream Segment
    
    
    1,073
    
    
    
    2,962
    
    
    
    4,310
    
    
    
    10,257Midstream Segment
    
    
    21,056
    
    
    
    11,563
    
    
    
    62,430
    
    
    
    11,563Intersegment eliminations
    
    
    (6
    )
    
    
    (9
    )
    
    
    (3,454
    )
    
    
    (9
    )Total equity earnings
    
    $
    19,059
    
    
    $
    11,567
    
    
    $
    54,856
    
    
    $
    15,230
 Seaway
  18




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Centennial
  MB Storage
  Jonah
   19




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   Summarized Financial Information of Unconsolidated Affiliates
  For the Three Months EndedSeptember 30, 2007
    
    September 30, 2006Net
    
    
    
    
    
    
    
    
    
    NetRevenues
    
    Operating Income
    
    Income
    
    Revenues
    
    Operating Income
    
    Income (Loss)Downstream Segment (1)
    
    $
    15,728
    
    
    $
    6,346
    
    
    $
    3,682
    
    
    $
    19,065
    
    
    $
    1,585
    
    
    $
    (1,125
    )Upstream Segment
    
    
    16,802
    
    
    
    6,231
    
    
    
    6,303
    
    
    
    20,895
    
    
    
    9,164
    
    
    
    9,313Midstream Segment (2)
    
    
    47,359
    
    
    
    23,223
    
    
    
    23,455
    
    
    
    44,956
    
    
    
    18,573
    
    
    
    16,529
 For the Nine Months EndedSeptember 30, 2007
    
    September 30, 2006Operating
    
    Net
    
    
    
    
    
    Operating
    
    NetRevenues
    
    Income
    
    Income
    
    Revenues
    
    Income
    
    Income (Loss)Downstream Segment (1)
    
    $
    43,326
    
    
    $
    9,768
    
    
    $
    1,587
    
    
    $
    52,965
    
    
    $
    5,820
    
    
    $
    (2,383
    )Upstream Segment
    
    
    51,443
    
    
    
    20,374
    
    
    
    20,623
    
    
    
    69,777
    
    
    
    28,138
    
    
    
    28,413Midstream Segment (2)
    
    
    150,282
    
    
    
    66,766
    
    
    
    67,496
    
    
    
    111,657
    
    
    
    71,030
    
    
    
    65,853
 
 (1)
    
    On March 1, 2007, we sold our ownership interest in MB Storage to Louis Dreyfus.(2)
    
    Effective August 1, 2006, with the formation of a joint venture with Enterprise Products
Partners, Jonah was deconsolidated and has been subsequently accounted for as an equity
investment.  September 30, 2007Current
    
    Noncurrent
    
    
    
    
    
    
    
    
    
    Noncurrent
    
    PartnersAssets
    
    Assets
    
    Current Liabilities
    
    Long-term Debt
    
    Liabilities
    
    CapitalDownstream Segment (1)
    
    $
    24,497
    
    
    $
    250,978
    
    
    $
    20,686
    
    
    $
    132,450
    
    
    $
    7,436
    
    
    $
    114,903Upstream Segment
    
    
    25,417
    
    
    
    251,814
    
    
    
    8,591
    
    
    
    
    
    
    
    38
    
    
    
    268,602Midstream Segment
    
    
    45,301
    
    
    
    1,008,811
    
    
    
    21,815
    
    
    
    
    
    
    
    258
    
    
    
    1,032,039
 20




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 December 31, 2006Current
    
    Noncurrent
    
    
    
    
    
    
    
    
    
    Noncurrent
    
    PartnersAssets
    
    Assets
    
    Current Liabilities
    
    Long-term Debt
    
    Liabilities
    
    CapitalDownstream Segment
    
    $
    36,735
    
    
    $
    359,156
    
    
    $
    40,959
    
    
    $
    140,000
    
    
    $
    5,971
    
    
    $
    208,961Upstream Segment
    
    
    21,506
    
    
    
    256,634
    
    
    
    6,704
    
    
    
    
    
    
    
    84
    
    
    
    271,352Midstream Segment
    
    
    33,963
    
    
    
    800,591
    
    
    
    25,113
    
    
    
    
    
    
    
    191
    
    
    
    809,250
 
 (1)
    
    On March 1, 2007, we sold our ownership interest in MB Storage to Louis Dreyfus. 
 NOTE 9. ACQUISITIONS, DISPOSITIONS AND DISCONTINUED OPERATIONS
 Acquisitions
   Dispositions
 MB Storage and Other Related Assets
   21




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Other Refined Products Assets
  Discontinued Operations
 Pioneer Plant
   For the Three Months
    
    
    For the Nine MonthsEnded September 30,
    
    
    Ended September 30,2006
    
    
    2006Operating revenues:Sales of petroleum products
    
    $
    
    
    
    $
    3,828Other
    
    
    
    
    
    
    932Total operating revenues
    
    
    
    
    
    
    4,760Costs and expenses:Purchases of petroleum products
    
    
    
    
    
    
    3,000Operating expense
    
    
    
    
    
    
    182Depreciation and amortization
    
    
    
    
    
    
    51Taxes  other than income taxes
    
    
    
    
    
    
    30Total costs and expenses
    
    
    
    
    
    
    3,263Income from discontinued operations
    
    $
    
    
    
    $
    1,497
 22




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  For the Nine MonthsEnded September 30,2006Cash flows from discontinued operations:Net income
    
    $
    19,369Depreciation and amortization
    
    
    51Gain on sale of Pioneer plant
    
    
    (17,872
    )Increase in inventories
    
    
    (27
    )Net cash provided by discontinued operations
    
    $
    1,521
 
 NOTE 10. INTANGIBLE ASSETS AND GOODWILL
 Intangible Assets
  September 30, 2007
    
    
    December 31, 2006Gross Carrying
    
    
    Accumulated
    
    
    Gross Carrying
    
    
    AccumulatedAmount
    
    
    Amortization
    
    
    Amount
    
    
    AmortizationIntangible assets:Downstream Segment:Transportation agreements
    
    $
    1,000
    
    
    $
    (346
    )
    
    $
    1,000
    
    
    $
    (308
    )Other
    
    
    4,474
    
    
    
    (530
    )
    
    
    1,974
    
    
    
    (78
    )Subtotal
    
    
    5,474
    
    
    
    (876
    )
    
    
    2,974
    
    
    
    (386
    )Upstream Segment:Transportation agreements
    
    
    888
    
    
    
    (321
    )
    
    
    888
    
    
    
    (276
    )Other
    
    
    10,030
    
    
    
    (2,931
    )
    
    
    10,030
    
    
    
    (2,479
    )Subtotal
    
    
    10,918
    
    
    
    (3,252
    )
    
    
    10,918
    
    
    
    (2,755
    )Midstream Segment:Gathering agreements
    
    
    239,649
    
    
    
    (101,848
    )
    
    
    239,649
    
    
    
    (86,537
    )Fractionation agreement
    
    
    38,000
    
    
    
    (18,050
    )
    
    
    38,000
    
    
    
    (16,625
    )Other
    
    
    306
    
    
    
    (145
    )
    
    
    306
    
    
    
    (134
    )Subtotal
    
    
    277,955
    
    
    
    (120,043
    )
    
    
    277,955
    
    
    
    (103,296
    )Total intangible assets
    
    
    294,347
    
    
    
    (124,171
    )
    
    
    291,847
    
    
    
    (106,437
    )Excess investments: (1)Downstream Segment (2)
    
    
    33,390
    
    
    
    (20,069
    )
    
    
    33,390
    
    
    
    (16,579
    )Upstream Segment (3)
    
    
    26,908
    
    
    
    (4,964
    )
    
    
    26,908
    
    
    
    (4,450
    )Midstream Segment (4)
    
    
    5,660
    
    
    
    (62
    )
    
    
    2,924
    
    
    
    Subtotal
    
    
    65,958
    
    
    
    (25,095
    )
    
    
    63,222
    
    
    
    (21,029
    )Total intangible assets, including
excess investments
    
    $
    360,305
    
    
    $
    (149,266
    )
    
    $
    355,069
    
    
    $
    (127,466
    )
 
 (1)
    
    Excess investments are included in Equity Investments in our Consolidated Balance
Sheet.(2)
    
    Relates to our investment in Centennial Pipeline LLC.(3)
    
    Relates to our investment in Seaway Crude Pipeline Company.(4)
    
    Relates to our investment in Jonah Gas Gathering Company. 23




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  For the Three Months Ended
    
    
    For the Nine Months EndedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Intangible assets:Downstream Segment
    
    $
    191
    
    
    $
    12
    
    
    $
    490
    
    
    $
    (31
    )Upstream Segment
    
    
    157
    
    
    
    184
    
    
    
    497
    
    
    
    545Midstream Segment
    
    
    5,566
    
    
    
    6,490
    
    
    
    16,747
    
    
    
    22,154Subtotal
    
    
    5,914
    
    
    
    6,686
    
    
    
    17,734
    
    
    
    22,668Excess investments: (1)Downstream Segment
    
    
    1,897
    
    
    
    1,027
    
    
    
    3,490
    
    
    
    2,731Upstream Segment
    
    
    171
    
    
    
    173
    
    
    
    514
    
    
    
    518Midstream Segment
    
    
    29
    
    
    
    
    
    
    
    62
    
    
    
    Subtotal
    
    
    2,097
    
    
    
    1,200
    
    
    
    4,066
    
    
    
    3,249Total amortization expense
    
    $
    8,011
    
    
    $
    7,886
    
    
    $
    21,800
    
    
    $
    25,917
 
 (1)
    
    Amortization of excess investments is included in equity earnings.  Intangible Assets
    
    Excess Investments2007
    
    $
    23,599
    
    
    $
    5,0062008
    
    
    21,806
    
    
    
    5,0662009
    
    
    19,512
    
    
    
    4,4702010
    
    
    17,578
    
    
    
    3,1252011
    
    
    15,889
    
    
    
    973
 Goodwill
  Downstream
    
    Midstream
    
    Upstream
    
    SegmentsSegment
    
    Segment
    
    Segment
    
    TotalGoodwill
    
    $
    1,339
    
    
    $
    
    
    
    $
    14,167
    
    
    $
    15,506
 24




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TEPPCO PARTNERS, L.P.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 
 NOTE 11. DEBT OBLIGATIONS
  September 30,
    
    
    December 31,2007
    
    
    2006Senior debt obligations:Revolving Credit Facility, due December 2011
    
    $
    377,000
    
    
    $
    490,0006.45% TE Products Senior Notes, due January 2008 (1)
    
    
    179,991
    
    
    
    179,9687.625% Senior Notes, due February 2012
    
    
    499,032
    
    
    
    498,8666.125% Senior Notes, due February 2013
    
    
    199,237
    
    
    
    199,1307.51% TE Products Senior Notes, due January 2028
    
    
    210,000
    
    
    
    210,000Total senior debt obligations
    
    
    1,465,260
    
    
    
    1,577,9647.000% Junior Subordinated Notes, due June 2067
    
    
    299,530
    
    
    
    Total borrowings
    
    
    1,764,790
    
    
    
    1,577,964Adjustment to carrying value associated with hedges of
fair value swaps
    
    
    23,171
    
    
    
    25,323Total Debt Instruments (1) (2)
    
    $
    1,787,961
    
    
    $
    1,603,287Standby letter of credit outstanding (3)
    
    $
    18,155
    
    
    $
    8,700
 
 (1)
    
    In accordance with SFAS No. 6, Classification of Short-Term Obligations Expected to be
Refinanced, long-term debt reflects the classification of short-term obligations at September
30, 2007 as long-term. With respect to the 6.45% TE Products Senior Notes due in January
2008, we have the ability to use available credit capacity under our Revolving Credit
Facility to fund the repayment of these Senior Notes.(2)
    
    We have entered into interest rate swap agreements to hedge our exposure to changes in the
fair value on a portion of the debt obligations presented above (see Note 5).(3)
    
    Letters of credit were issued in connection with crude oil purchased during the respective
quarter. Payables related to these purchases of crude oil are generally paid during the
following quarter. Revolving Credit Facility
  25




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Senior Notes
  Redemption
    
    
    
    
    
    RedemptionYear
    
    Price
    
    Year
    
    Price2008
    
    
    103.755
    %
    
    
    2013
    
    
    
    101.878
    %2009
    
    
    103.380
    %
    
    
    2014
    
    
    
    101.502
    %2010
    
    
    103.004
    %
    
    
    2015
    
    
    
    101.127
    %2011
    
    
    102.629
    %
    
    
    2016
    
    
    
    100.751
    %2012
    
    
    102.253
    %
    
    
    2017
    
    
    
    100.376
    %
    Junior Subordinated Notes
  26




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
     27




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Fair Values
  Fair ValueSeptember 30,
    
    December 31,Face Value
    
    2007
    
    20066.45% TE Products Senior Notes, due January 2008
    
    $
    180,000
    
    
    $
    180,270
    
    
    $
    181,6417.625% Senior Notes, due February 2012
    
    
    500,000
    
    
    
    533,456
    
    
    
    537,0676.125% Senior Notes, due February 2013
    
    
    200,000
    
    
    
    200,133
    
    
    
    201,6107.51% TE Products Senior Notes, due January 2028
    
    
    210,000
    
    
    
    218,400
    
    
    
    221,4717.000% Junior Subordinated Notes, due June 2067
    
    
    300,000
    
    
    
    269,069
    
    
    
    
 Debt Obligations of Unconsolidated Affiliates
  Scheduled Maturities of Debt2008
    
    $
    10,1002009
    
    
    9,9002010
    
    
    9,1002011
    
    
    9,000After 2011
    
    
    101,900Total scheduled maturities of debt
    
    $
    140,000
   
 NOTE 12. PARTNERS CAPITAL AND DISTRIBUTIONS
   28




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   Offerings and Registration Statements
     Quarterly Distributions of Available Cash
  29




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 GeneralUnitholders
    
    PartnerQuarterly Cash Distribution per Unit:Up to Minimum Quarterly Distribution ($0.275 per Unit)
    
    
    98
    %
    
    
    2
    %First Target  $0.276 per Unit up to $0.325 per Unit
    
    
    85
    %
    
    
    15
    %Over First Target  Cash distributions greater than $0.325 per Unit
    
    
    75
    %
    
    
    25
    %
  For the Nine Months EndedSeptember 30,2007
    
    
    2006Limited Partner Units (1)
    
    $
    183,693
    
    
    $
    145,558General Partner Ownership Interest
    
    
    3,749
    
    
    
    2,971General Partner Incentive
    
    
    32,171
    
    
    
    57,647Total Cash Distributions Paid
    
    $
    219,613
    
    
    $
    206,176Total Cash Distributions Paid Per Unit
    
    $
    2.045
    
    
    $
    2.025
 
 (1)
    
    The 2007 amount includes $28.8 million of distributions paid to affiliates of our
General Partner with respect to the 14.1 million Units we issued in December 2006.  Cash Distribution HistoryDistribution
    
    Record
    
    Paymentper Unit
    
    Date
    
    Date1st Quarter 2007
    
    $
    0.6850
    
    
    Apr. 30, 2007
    
    May 7, 20072nd Quarter 2007
    
    
    0.6850
    
    
    Jul. 31, 2007
    
    Aug. 7, 20073rd Quarter 2007 (1)
    
    
    0.6950
    
    
    Oct. 31, 2007
    
    Nov. 7, 2007
 
 (1)
    
    The third quarter 2007 cash distribution will total approximately $74.8 million. EPCO, Inc. TPP Employee Unit Purchase Plan
   30




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   General Partners Interest
    Accumulated Other Comprehensive Income (Loss)
 Reporting Comprehensive Income
 31




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   Balance at December 31, 2006
    
    $
    426Changes in fair values of interest rate cash flow hedges and
transfer of interest rate swaps to earnings
    
    
    173Changes in fair values of crude oil cash flow hedges
    
    
    (3,369
    )Proceeds from termination of treasury locks
    
    
    1,443Amortization of treasury lock proceeds into earnings
    
    
    (38
    )Changes in fair values of treasury locks
    
    
    (2,594
    )Pension benefit SFAS No. 158 adjustment
    
    
    (34
    )Balance at September 30, 2007
    
    $
    (3,993
    )
 
 NOTE 13. BUSINESS SEGMENTS
  
    
    Our Downstream Segment, which is engaged in the transportation, marketing and
storage of refined products, LPGs and petrochemicals;
    
    Our Upstream Segment, which is engaged in the gathering, transportation, marketing
and storage of crude oil and distribution of lubrication oils and specialty chemicals;
and
    
    Our Midstream Segment, which is engaged in the gathering of natural gas,
fractionation of NGLs and transportation of NGLs.
    32




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
    For the Three Months Ended
    
    
    For the Nine Months EndedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Total operating revenues
    
    $
    2,580,657
    
    
    $
    2,570,045
    
    
    $
    6,608,522
    
    
    $
    7,531,466Less: Total costs and expenses
    
    
    2,525,938
    
    
    
    2,518,206
    
    
    
    6,419,640
    
    
    
    7,358,819Operating income
    
    
    54,719
    
    
    
    51,839
    
    
    
    188,882
    
    
    
    172,647Add: Gain on sale of ownership interest
in MB Storage
    
    
    (20
    )
    
    
    
    
    
    
    59,628
    
    
    
    Equity earnings
    
    
    19,059
    
    
    
    11,567
    
    
    
    54,856
    
    
    
    15,230Interest income
    
    
    454
    
    
    
    1,012
    
    
    
    1,241
    
    
    
    1,668Other income  net
    
    
    306
    
    
    
    51
    
    
    
    1,085
    
    
    
    748Earnings before interest expense,
provision for
Income taxes and discontinued operations
    
    $
    74,518
    
    
    $
    64,469
    
    
    $
    305,692
    
    
    $
    190,293
 33




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  For the Three Months Ended
    
    
    For the Nine Months EndedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Earnings before interest expense,
provision for income taxes and
discontinued operations
discontinued operations
    
    $
    74,518
    
    
    $
    64,469
    
    
    $
    305,692
    
    
    $
    190,293Interest expense  net
    
    
    (26,901
    )
    
    
    (23,181
    )
    
    
    (71,897
    )
    
    
    (63,522
    )Income before provision for income taxes
    
    
    47,617
    
    
    
    41,288
    
    
    
    233,795
    
    
    
    126,771Provision for income taxes
    
    
    (14
    )
    
    
    143
    
    
    
    213
    
    
    
    657Income from continuing operations
    
    
    47,631
    
    
    
    41,145
    
    
    
    233,582
    
    
    
    126,114Discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,369Net income
    
    $
    47,631
    
    
    $
    41,145
    
    
    $
    233,582
    
    
    $
    145,483
  Downstream
    
    Upstream
    
    Midstream
    
    PartnershipSegment
    
    Segment
    
    Segment
    
    and Other
    
    ConsolidatedRevenues from third parties:Three months ended September 30, 2007
    
    $
    83,393
    
    
    $
    2,464,750
    
    
    $
    27,672
    
    
    $
    
    
    
    $
    2,575,815Three months ended September 30, 2006
    
    
    71,415
    
    
    
    2,453,601
    
    
    
    40,295
    
    
    
    
    
    
    
    2,565,311Nine months ended September 30, 2007
    
    
    257,858
    
    
    
    6,254,605
    
    
    
    81,464
    
    
    
    
    
    
    
    6,593,927Nine months ended September 30, 2006
    
    
    212,115
    
    
    
    7,151,580
    
    
    
    153,615
    
    
    
    
    
    
    
    7,517,310Revenues from related parties:Three months ended September 30, 2007
    
    $
    1,135
    
    
    $
    281
    
    
    $
    3,478
    
    
    $
    (52
    )
    
    $
    4,842Three months ended September 30, 2006
    
    
    943
    
    
    
    262
    
    
    
    3,645
    
    
    
    (116
    )
    
    
    4,734Nine months ended September 30, 2007
    
    
    4,768
    
    
    
    749
    
    
    
    9,493
    
    
    
    (415
    )
    
    
    14,595Nine months ended September 30, 2006
    
    
    3,643
    
    
    
    338
    
    
    
    10,291
    
    
    
    (116
    )
    
    
    14,156Intersegment and intrasegment revenues:Three months ended September 30, 2007
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Three months ended September 30, 2006
    
    
    
    
    
    
    63
    
    
    
    (45
    )
    
    
    (18
    )
    
    
    Nine months ended September 30, 2007
    
    
    
    
    
    
    80
    
    
    
    
    
    
    
    (80
    )
    
    
    Nine months ended September 30, 2006
    
    
    
    
    
    
    602
    
    
    
    6,711
    
    
    
    (7,313
    )
    
    
    Total revenues:Three months ended September 30, 2007
    
    $
    84,528
    
    
    $
    2,465,031
    
    
    $
    31,150
    
    
    $
    (52
    )
    
    $
    2,580,657Three months ended September 30, 2006
    
    
    72,358
    
    
    
    2,453,926
    
    
    
    43,895
    
    
    
    (134
    )
    
    
    2,570,045Nine months ended September 30, 2007
    
    
    262,626
    
    
    
    6,255,434
    
    
    
    90,957
    
    
    
    (495
    )
    
    
    6,608,522Nine months ended September 30, 2006
    
    
    215,758
    
    
    
    7,152,520
    
    
    
    170,617
    
    
    
    (7,429
    )
    
    
    7,531,466Operating income:Three months ended September 30, 2007
    
    $
    26,646
    
    
    $
    20,602
    
    
    $
    7,465
    
    
    $
    6
    
    
    $
    54,719Three months ended September 30, 2006
    
    
    19,586
    
    
    
    19,446
    
    
    
    12,798
    
    
    
    9
    
    
    
    51,839Nine months ended September 30, 2007
    
    
    101,533
    
    
    
    63,660
    
    
    
    20,235
    
    
    
    3,454
    
    
    
    188,882Nine months ended September 30, 2006
    
    
    59,641
    
    
    
    53,097
    
    
    
    59,900
    
    
    
    9
    
    
    
    172,647
 34




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Downstream
    
    Upstream
    
    Midstream
    
    PartnershipSegment
    
    Segment
    
    Segment
    
    and Other
    
    ConsolidatedEquity earnings (losses):Three months ended September 30, 2007
    
    $
    (3,064
    )
    
    $
    1,073
    
    
    $
    21,056
    
    
    $
    (6
    )
    
    $
    19,059Three months ended September 30, 2006
    
    
    (2,949
    )
    
    
    2,962
    
    
    
    11,563
    
    
    
    (9
    )
    
    
    11,567Nine months ended September 30, 2007
    
    
    (8,430
    )
    
    
    4,310
    
    
    
    62,430
    
    
    
    (3,454
    )
    
    
    54,856Nine months ended September 30, 2006
    
    
    (6,581
    )
    
    
    10,257
    
    
    
    11,563
    
    
    
    (9
    )
    
    
    15,230Earnings before interest expense,
provision for income taxes and
discontinued operations:Three months ended September 30, 2007
    
    $
    24,096
    
    
    $
    21,719
    
    
    $
    28,703
    
    
    $
    
    
    
    $
    74,518Three months ended September 30, 2006
    
    
    16,926
    
    
    
    22,752
    
    
    
    24,791
    
    
    
    
    
    
    
    64,469Nine months ended September 30, 2007
    
    
    154,454
    
    
    
    68,114
    
    
    
    83,124
    
    
    
    
    
    
    
    305,692Nine months ended September 30, 2006
    
    
    54,313
    
    
    
    63,967
    
    
    
    72,013
    
    
    
    
    
    
    
    190,293Segment assets:At September 30, 2007
    
    $
    1,191,059
    
    
    $
    1,883,534
    
    
    $
    1,465,232
    
    
    $
    (72,488
    )
    
    $
    4,467,337At December 31, 2006
    
    
    1,160,929
    
    
    
    1,504,699
    
    
    
    1,335,502
    
    
    
    (79,038
    )
    
    
    3,922,092Investments in unconsolidated affiliates:At September 30, 2007
    
    $
    80,776
    
    
    $
    192,214
    
    
    $
    824,441
    
    
    $
    
    
    
    $
    1,097,431At December 31, 2006
    
    
    148,316
    
    
    
    195,584
    
    
    
    695,810
    
    
    
    
    
    
    
    1,039,710Intangible assets:At September 30, 2007
    
    $
    4,598
    
    
    $
    7,666
    
    
    $
    157,912
    
    
    $
    
    
    
    $
    170,176At December 31, 2006
    
    
    2,588
    
    
    
    8,163
    
    
    
    174,659
    
    
    
    
    
    
    
    185,410Goodwill:At September 30, 2007
    
    $
    1,339
    
    
    $
    14,167
    
    
    $
    
    
    
    $
    
    
    
    $
    15,506At December 31, 2006
    
    
    1,339
    
    
    
    14,167
    
    
    
    
    
    
    
    
    
    
    
    15,506
 35




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 
 NOTE 14. RELATED PARTY TRANSACTIONS
  For the Three Months Ended
    
    For the Nine Months EndedSeptember 30,
    
    September 30,2007
    
    2006
    
    2007
    
    2006Revenues from EPCO and affiliates:Sales of petroleum products (1)
    
    $
    91
    
    
    $
    1,009
    
    
    $
    196
    
    
    $
    3,078Transportation  NGLs (2)
    
    
    3,478
    
    
    
    2,760
    
    
    
    9,493
    
    
    
    7,379Transportation  LPGs (3)
    
    
    695
    
    
    
    476
    
    
    
    2,968
    
    
    
    2,831Transportation  Refined products (4)
    
    
    61
    
    
    
    
    
    
    
    105
    
    
    
    Other operating revenues (5)
    
    
    301
    
    
    
    400
    
    
    
    1,508
    
    
    
    609Revenues from unconsolidated affiliates:Other operating revenues (6)
    
    
    216
    
    
    
    89
    
    
    
    325
    
    
    
    259Costs and Expenses from EPCO and affiliates (7):Purchases of petroleum products (8)
    
    
    17,133
    
    
    
    17,415
    
    
    
    40,373
    
    
    
    38,424Operating expense (9)
    
    
    24,126
    
    
    
    23,530
    
    
    
    72,890
    
    
    
    76,314General and administrative
    
    
    6,568
    
    
    
    4,567
    
    
    
    19,150
    
    
    
    16,672Costs and Expenses from unconsolidated affiliates:Purchases of petroleum products (10)
    
    
    2,341
    
    
    
    1,014
    
    
    
    2,341
    
    
    
    2,075Operating expense (11)
    
    
    2,701
    
    
    
    1,690
    
    
    
    6,363
    
    
    
    3,566
 
 (1)
    
    Includes sales of Lubrication Services, LLC (LSI) to various EPCO affiliates.(2)
    
    Includes revenues from NGL transportation on the Chaparral and Panola NGL pipelines.(3)
    
    Includes revenues from LPG transportation on the TE Products pipeline.(4)
    
    Includes revenues from refined products transportation from affiliates of Energy
Transfer Equity L.P. for the three months and five months ended September 30, 2007. See
Relationship with Energy Transfer Equity below.(5)
    
    Includes other operating revenues on the TE Products pipeline.(6)
    
    Includes management fees and rental revenues.(7)
    
    Includes payroll, payroll related expenses, administrative expenses, including
reimbursements related to employee benefits and employee benefit plans, incurred in
managing us and our subsidiaries in accordance with the ASA, rent expense, trucking
services expense and other operating expenses.(8)
    
    Includes TCO purchases of condensate for the three months ended September 30, 2007 and
2006 of $12.6 million and $14.0 million, respectively, and for the nine months ended
September 30, 2007 and 2006 of $28.2 million and $30.3 million, respectively.(9)
    
    Includes insurance expense for the three months ended September 30, 2007 and 2006,
related to premiums paid by EPCO of $2.8 million and $3.6 million, respectively, and for
the nine months ended September 30, 2007 and 2006 of $11.6 million and $10.7 million,
respectively. The majority of our insurance coverage, including property, liability,
business interruption, auto and directors and officers liability insurance, was obtained
through EPCO.(10)
    
    Includes pipeline transportation expense.(11)
    
    Includes rental expense and other operating expense. 36




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  September 30, 2007
    
    December 31, 2006Accounts receivable, related parties (1)
    
    $
    5,883
    
    
    $
    11,788Gas imbalance receivable
    
    
    
    
    
    
    1,278Insurance reimbursement receivable
    
    
    1,426
    
    
    
    1,426Accounts payable, related parties (2)
    
    
    38,023
    
    
    
    34,461Deferred revenue, related parties
    
    
    
    
    
    
    252Other liabilities, related party (3)
    
    
    
    
    
    
    1,814
 
 (1)
    
    Relates to sales and transportation services provided to EPCO and affiliates and direct
payroll, payroll related costs and other operational charges to unconsolidated affiliates.(2)
    
    Relates to direct payroll, payroll related costs and other operational related charges
from EPCO and affiliates, transportation and other services provided by unconsolidated
affiliates and advances from Seaway for operating expenses.(3)
    
    Relates to our share of EPCOs Oil Insurance Limited insurance program retrospective
premiums obligation. Relationship with EPCO and Affiliates
  
    
    EPCO and its consolidated private company subsidiaries;
    
    Texas Eastern Products Pipeline Company, LLC, our General Partner;
    
    Enterprise GP Holdings, which owns and controls our General Partner;
    
    Enterprise Products Partners, which is controlled by affiliates of EPCO, including
Enterprise GP Holdings;
    
    Duncan Energy Partners L.P., which is controlled by affiliates of EPCO; and
    
    Enterprise Gas Processing LLC, which is controlled by affiliates of EPCO and is our
joint venture partner in Jonah.
    37




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   Sale of Pioneer plant
  Jonah Joint Venture
   Sale of General Partner to Enterprise GP Holdings
  38




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Other Transactions
   Relationship with Energy Transfer Equity
  Relationship with Unconsolidated Affiliates
  
 NOTE 15. EARNINGS PER UNIT
  39




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
    For the Three Months Ended
    
    
    For the Nine Months EndedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Income from continuing operations
    
    $
    47,631
    
    
    $
    41,145
    
    
    $
    233,582
    
    
    $
    126,114Discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,369Net income
    
    
    47,631
    
    
    
    41,145
    
    
    
    233,582
    
    
    
    145,483General Partner interest in net income
    
    
    16.74
    %
    
    
    29.40
    %
    
    
    16.47
    %
    
    
    29.40
    %Earnings allocated to General Partner:Income from continuing operations
    
    $
    7,975
    
    
    $
    12,098
    
    
    $
    38,476
    
    
    $
    37,079Discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,695Net income allocated
    
    
    7,975
    
    
    
    12,098
    
    
    
    38,476
    
    
    
    42,774BASIC EARNINGS PER UNIT:Numerator:Income from continuing operations
    
    $
    39,656
    
    
    $
    29,047
    
    
    $
    195,106
    
    
    $
    89,035Discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,674Limited partners interest in net income
    
    $
    39,656
    
    
    $
    29,047
    
    
    $
    195,106
    
    
    $
    102,709Denominator:Units
    
    
    89,806
    
    
    
    75,360
    
    
    
    89,805
    
    
    
    71,782Time-vested restricted Units
    
    
    62
    
    
    
    
    
    
    
    30
    
    
    
    Total Weighted average Units outstanding
    
    
    89,868
    
    
    
    75,360
    
    
    
    89,835
    
    
    
    71,782Basic earnings per Unit:Income from continuing operations
    
    $
    0.44
    
    
    $
    0.39
    
    
    $
    2.17
    
    
    $
    1.24Discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.19Limited partners interest in net income
    
    $
    0.44
    
    
    $
    0.39
    
    
    $
    2.17
    
    
    $
    1.43DILUTED EARNINGS PER UNIT:Numerator:Income from continuing operations
    
    $
    39,656
    
    
    $
    29,047
    
    
    $
    195,106
    
    
    $
    89,035Discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,674Limited partners interest in net income
    
    $
    39,656
    
    
    $
    29,047
    
    
    $
    195,106
    
    
    $
    102,709Denominator:Units
    
    
    89,806
    
    
    
    75,360
    
    
    
    89,805
    
    
    
    71,782Time-vested restricted Units
    
    
    62
    
    
    
    
    
    
    
    30
    
    
    
    Total Weighted average Units outstanding
    
    
    89,868
    
    
    $
    75,360
    
    
    
    89,835
    
    
    
    71,782
 40




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TEPPCO PARTNERS, L.P.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 For the Three Months Ended
    
    
    For the Nine Months EndedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Diluted earnings per Unit:Income from continuing operations
    
    $
    0.44
    
    
    $
    0.39
    
    
    $
    2.17
    
    
    $
    1.24Discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.19Limited partners interest in net income
    
    $
    0.44
    
    
    $
    0.39
    
    
    $
    2.17
    
    
    $
    1.43
  
 NOTE 16. COMMITMENTS AND CONTINGENCIES
 Litigation
 Ryan E. McCleery and Marcia S.
McCleery, et al. and Michael and Linda Robson, et al. v. Texas Eastern Corporation, et al.
 Rebecca L. Grisham et al. v. TE Products Pipeline
Company, Limited Partnership
 Jimmy R. Green, et al. v. Cities
Service Refinery, et al. th
 41




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
      Regulatory Matters
  42




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TEPPCO PARTNERS, L.P.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
      43




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
        44




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Contractual Obligations
   Payment or Settlement due by PeriodTotal
    
    2007
    
    2008
    
    2009
    
    2010
    
    2011
    
    ThereafterMaturities of long-term debt (1)(2)
    
    $
    1,767.0
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    377.0
    
    
    $
    1,390.0
 
 (1)
    
    We have long-term payment obligations under our Revolving Credit Facility, our Senior
Notes and our Junior Subordinated Notes. Amounts shown in the table represent our
scheduled future maturities of long-term debt principal for the periods indicated (see Note
11 for additional information regarding our consolidated debt obligations).(2)
    
    In accordance with SFAS No. 6, Classification of Short-Term Obligations Expected to be
Refinanced, we have classified our 6.45% TE Products Senior Notes due in January 2008 as
long-term (see Note 11 for additional information). Other
    45




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TEPPCO PARTNERS, L.P.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
     46




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TEPPCO PARTNERS, L.P.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 
 NOTE 17. SUPPLEMENTAL CASH FLOW INFORMATION
  For the Nine Months EndedSeptember 30,2007
    
    
    2006Decrease (increase) in:Accounts receivable, trade
    
    $
    (296,058
    )
    
    $
    (3,995
    )Accounts receivable, related parties
    
    
    (5,556
    )
    
    
    1,309Inventories
    
    
    (61,729
    )
    
    
    103Other current assets
    
    
    (5,240
    )
    
    
    5,877Other
    
    
    (16,529
    )
    
    
    (7,259
    )Increase (decrease) in:Accounts payable and accrued expenses
    
    
    331,312
    
    
    
    2,159Accounts payable, related parties
    
    
    (672
    )
    
    
    14,919Other
    
    
    (2,253
    )
    
    
    (3,701
    )Net effect of changes in operating accounts
    
    $
    (56,725
    )
    
    $
    9,412Non-cash investing activities:Payable to Enterprise Gas Processing, LLC for spending for Phase V
expansion of Jonah Gas Gathering Company
    
    $
    12,968
    
    
    $
    18,943Net assets transferred to Jonah Gas Gathering Company
    
    $
    
    
    
    $
    572,609Supplemental disclosure of cash flows:Cash paid for interest (net of amounts capitalized)
    
    $
    73,086
    
    
    $
    84,402
 
 NOTE 18. SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION
   47




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TEPPCO PARTNERS, L.P.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 September 30, 2007TEPPCOTEPPCO
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    Partners, L.P.Partners, L.P.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    ConsolidatedAssetsCurrent assets
    
    $
    22,877
    
    
    $
    78,974
    
    
    $
    1,316,233
    
    
    $
    (87,508
    )
    
    $
    1,330,576Property, plant and equipment  net
    
    
    
    
    
    
    1,111,031
    
    
    
    639,253
    
    
    
    
    
    
    
    1,750,284Equity investments
    
    
    1,331,273
    
    
    
    1,316,641
    
    
    
    192,234
    
    
    
    (1,742,717
    )
    
    
    1,097,431Intercompany notes receivable
    
    
    1,399,059
    
    
    
    
    
    
    
    
    
    
    
    (1,399,059
    )
    
    
    Intangible assets
    
    
    
    
    
    
    140,851
    
    
    
    29,325
    
    
    
    
    
    
    
    170,176Other assets
    
    
    8,421
    
    
    
    37,677
    
    
    
    72,774
    
    
    
    (2
    )
    
    
    118,870Total assets
    
    $
    2,761,630
    
    
    $
    2,685,174
    
    
    $
    2,249,819
    
    
    $
    (3,229,286
    )
    
    $
    4,467,337Liabilities and partners capitalCurrent liabilities
    
    $
    31,539
    
    
    $
    121,048
    
    
    $
    1,258,046
    
    
    $
    (87,508
    )
    
    $
    1,323,125Long-term debt
    
    
    1,399,204
    
    
    
    388,757
    
    
    
    
    
    
    
    
    
    
    
    1,787,961Intercompany notes payable
    
    
    
    
    
    
    890,760
    
    
    
    508,299
    
    
    
    (1,399,059
    )
    
    
    Other long-term liabilities
    
    
    426
    
    
    
    23,548
    
    
    
    1,818
    
    
    
    (2
    )
    
    
    25,790Total partners capital
    
    
    1,330,461
    
    
    
    1,261,061
    
    
    
    481,656
    
    
    
    (1,742,717
    )
    
    
    1,330,461Total liabilities and partners capital
    
    $
    2,761,630
    
    
    $
    2,685,174
    
    
    $
    2,249,819
    
    
    $
    (3,229,286
    )
    
    $
    4,467,337
 December 31, 2006TEPPCOTEPPCO
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    Partners, L.P.Partners, L.P.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    ConsolidatedAssetsCurrent assets
    
    $
    37,534
    
    
    $
    149,056
    
    
    $
    894,916
    
    
    $
    (114,796
    )
    
    $
    966,710Property, plant and equipment  net
    
    
    
    
    
    
    958,266
    
    
    
    683,829
    
    
    
    
    
    
    
    1,642,095Equity investments
    
    
    1,320,672
    
    
    
    1,317,671
    
    
    
    195,606
    
    
    
    (1,794,239
    )
    
    
    1,039,710Intercompany notes receivable
    
    
    1,215,132
    
    
    
    
    
    
    
    
    
    
    
    (1,215,132
    )
    
    
    Intangible assets
    
    
    
    
    
    
    153,803
    
    
    
    31,607
    
    
    
    
    
    
    
    185,410Other assets
    
    
    5,769
    
    
    
    21,657
    
    
    
    60,741
    
    
    
    
    
    
    
    88,167Total assets
    
    $
    2,579,107
    
    
    $
    2,600,453
    
    
    $
    1,866,699
    
    
    $
    (3,124,167
    )
    
    $
    3,922,092Liabilities and partners capitalCurrent liabilities
    
    $
    40,578
    
    
    $
    161,101
    
    
    $
    889,665
    
    
    $
    (114,796
    )
    
    $
    976,548Long-term debt
    
    
    1,215,948
    
    
    
    387,339
    
    
    
    
    
    
    
    
    
    
    
    1,603,287Intercompany notes payable
    
    
    
    
    
    
    711,381
    
    
    
    503,751
    
    
    
    (1,215,132
    )
    
    
    Other long-term liabilities
    
    
    2,251
    
    
    
    17,857
    
    
    
    1,819
    
    
    
    
    
    
    
    21,927Total partners capital
    
    
    1,320,330
    
    
    
    1,322,775
    
    
    
    471,464
    
    
    
    (1,794,239
    )
    
    
    1,320,330Total liabilities and partners capital
    
    $
    2,579,107
    
    
    $
    2,600,453
    
    
    $
    1,866,699
    
    
    $
    (3,124,167
    )
    
    $
    3,922,092
 48




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 For the Three Months Ended September 30, 2007TEPPCOTEPPCO
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    Partners, L.P.Partners, L.P.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    ConsolidatedOperating revenues
    
    $
    
    
    
    $
    92,339
    
    
    $
    2,488,370
    
    
    $
    (52
    )
    
    $
    2,580,657Costs and expenses
    
    
    
    
    
    
    69,254
    
    
    
    2,456,744
    
    
    
    (58
    )
    
    
    2,525,940Gains on sales of assets
    
    
    
    
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    (2
    )Operating income
    
    
    
    
    
    
    23,087
    
    
    
    31,626
    
    
    
    6
    
    
    
    54,719Interest expense  net
    
    
    
    
    
    
    (20,131
    )
    
    
    (6,770
    )
    
    
    
    
    
    
    (26,901
    )Gain on sale of ownership interest in MB
Storage
    
    
    
    
    
    
    (20
    )
    
    
    
    
    
    
    
    
    
    
    (20
    )Equity earnings
    
    
    47,631
    
    
    
    44,180
    
    
    
    1,073
    
    
    
    (73,825
    )
    
    
    19,059Other income  net
    
    
    
    
    
    
    615
    
    
    
    145
    
    
    
    
    
    
    
    760Income before provision for income taxes
    
    
    47,631
    
    
    
    47,731
    
    
    
    26,074
    
    
    
    (73,819
    )
    
    
    47,617Provision for income taxes
    
    
    
    
    
    
    100
    
    
    
    (114
    )
    
    
    
    
    
    
    (14
    )Net income
    
    $
    47,631
    
    
    $
    47,631
    
    
    $
    26,188
    
    
    $
    (73,819
    )
    
    $
    47,631
 For the Three Months Ended September 30, 2006TEPPCOTEPPCO
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    Partners, L.P.Partners, L.P.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    ConsolidatedOperating revenues
    
    $
    
    
    
    $
    85,938
    
    
    $
    2,484,528
    
    
    $
    (421
    )
    
    $
    2,570,045Costs and expenses
    
    
    
    
    
    
    69,040
    
    
    
    2,449,601
    
    
    
    (421
    )
    
    
    2,518,220Gains on sales of assets
    
    
    
    
    
    
    (14
    )
    
    
    
    
    
    
    
    
    
    
    (14
    )Operating income
    
    
    
    
    
    
    16,912
    
    
    
    34,927
    
    
    
    
    
    
    
    51,839Interest expense  net
    
    
    
    
    
    
    (14,586
    )
    
    
    (8,595
    )
    
    
    
    
    
    
    (23,181
    )Equity earnings
    
    
    41,145
    
    
    
    38,603
    
    
    
    2,962
    
    
    
    (71,143
    )
    
    
    11,567Other income  net
    
    
    
    
    
    
    356
    
    
    
    707
    
    
    
    
    
    
    
    1,063Income before provision for income taxes
    
    
    41,145
    
    
    
    41,285
    
    
    
    30,001
    
    
    
    (71,143
    )
    
    
    41,288Provision for income taxes
    
    
    
    
    
    
    140
    
    
    
    3
    
    
    
    
    
    
    
    143Income from continuing operations
    
    
    41,145
    
    
    
    41,145
    
    
    
    29,998
    
    
    
    (71,143
    )
    
    
    41,145Discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net income
    
    $
    41,145
    
    
    $
    41,145
    
    
    $
    29,998
    
    
    $
    (71,143
    )
    
    $
    41,145
 49




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 For the Nine Months Ended September 30, 2007TEPPCOTEPPCO
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    Partners, L.P.Partners, L.P.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    ConsolidatedOperating revenues
    
    $
    
    
    
    $
    278,944
    
    
    $
    6,330,073
    
    
    $
    (495
    )
    
    $
    6,608,522Costs and expenses
    
    
    
    
    
    
    202,876
    
    
    
    6,239,366
    
    
    
    (3,949
    )
    
    
    6,438,293Gains on sales of assets
    
    
    
    
    
    
    (18,653
    )
    
    
    
    
    
    
    
    
    
    
    (18,653
    )Operating income
    
    
    
    
    
    
    94,721
    
    
    
    90,707
    
    
    
    3,454
    
    
    
    188,882Interest expense  net
    
    
    
    
    
    
    (51,435
    )
    
    
    (20,462
    )
    
    
    
    
    
    
    (71,897
    )Gain on sale of ownership interest in MB
Storage
    
    
    
    
    
    
    59,628
    
    
    
    
    
    
    
    
    
    
    
    59,628Equity earnings
    
    
    233,582
    
    
    
    128,339
    
    
    
    4,310
    
    
    
    (311,375
    )
    
    
    54,856Other income  net
    
    
    
    
    
    
    1,934
    
    
    
    392
    
    
    
    
    
    
    
    2,326Income before provision for income taxes
    
    
    233,582
    
    
    
    233,187
    
    
    
    74,947
    
    
    
    (307,921
    )
    
    
    233,795Provision for income taxes
    
    
    
    
    
    
    (395
    )
    
    
    608
    
    
    
    
    
    
    
    213Net income
    
    $
    233,582
    
    
    $
    233,582
    
    
    $
    74,339
    
    
    $
    (307,921
    )
    
    $
    233,582
 For the Nine Months Ended September 30, 2006TEPPCOTEPPCO
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    Partners, L.P.Partners, L.P.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    ConsolidatedOperating revenues
    
    $
    
    
    
    $
    257,078
    
    
    $
    7,282,867
    
    
    $
    (8,479
    )
    
    $
    7,531,466Costs and expenses
    
    
    
    
    
    
    207,291
    
    
    
    7,161,417
    
    
    
    (8,479
    )
    
    
    7,360,229Gains on sales of assets
    
    
    
    
    
    
    (1,410
    )
    
    
    
    
    
    
    
    
    
    
    (1,410
    )Operating income
    
    
    
    
    
    
    51,197
    
    
    
    121,450
    
    
    
    
    
    
    
    172,647Interest expense  net
    
    
    
    
    
    
    (37,756
    )
    
    
    (25,766
    )
    
    
    
    
    
    
    (63,522
    )Equity earnings
    
    
    145,483
    
    
    
    130,883
    
    
    
    10,257
    
    
    
    (271,393
    )
    
    
    15,230Other income  net
    
    
    
    
    
    
    1,299
    
    
    
    1,117
    
    
    
    
    
    
    
    2,416Income before provision for income taxes
    
    
    145,483
    
    
    
    145,623
    
    
    
    107,058
    
    
    
    (271,393
    )
    
    
    126,771Provision for income taxes
    
    
    
    
    
    
    140
    
    
    
    517
    
    
    
    
    
    
    
    657Income from continuing operations
    
    
    145,483
    
    
    
    145,483
    
    
    
    106,541
    
    
    
    (271,393
    )
    
    
    126,114Discontinued operations
    
    
    
    
    
    
    
    
    
    
    19,369
    
    
    
    
    
    
    
    19,369Net income
    
    $
    145,483
    
    
    $
    145,483
    
    
    $
    125,910
    
    
    $
    (271,393
    )
    
    $
    145,483
 50




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 For the Nine Months Ended September 30, 2007TEPPCOTEPPCO
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    Partners, L.P.Partners, L.P.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    ConsolidatedOperating activities:Net income
    
    $
    233,582
    
    
    $
    233,582
    
    
    $
    74,339
    
    
    $
    (307,921
    )
    
    $
    233,582Adjustments to reconcile net income to net
cash from operating activities:Deferred income taxes
    
    
    
    
    
    
    (632
    )
    
    
    (24
    )
    
    
    
    
    
    
    (656
    )Depreciation and amortization
    
    
    
    
    
    
    55,649
    
    
    
    22,086
    
    
    
    
    
    
    
    77,735Earnings in equity investments, net of
distributions
    
    
    (13,969
    )
    
    
    23,051
    
    
    
    4,890
    
    
    
    28,139
    
    
    
    42,111Gains on sales of assets and ownership
interest
    
    
    
    
    
    
    (78,281
    )
    
    
    
    
    
    
    
    
    
    
    (78,281
    )Changes in assets and liabilities and other
    
    
    (179,783
    )
    
    
    (87,124
    )
    
    
    30,392
    
    
    
    181,210
    
    
    
    (55,305
    )Net cash from operating activities
    
    
    39,830
    
    
    
    146,245
    
    
    
    131,683
    
    
    
    (98,572
    )
    
    
    219,186Cash flows from investing activities
    
    
    
    
    
    
    (106,070
    )
    
    
    (73,697
    )
    
    
    (2,876
    )
    
    
    (182,643
    )Cash flows from financing activities
    
    
    (35,403
    )
    
    
    (39,939
    )
    
    
    (58,028
    )
    
    
    96,785
    
    
    
    (36,585
    )Net change in cash and cash equivalents
    
    
    4,427
    
    
    
    236
    
    
    
    (42
    )
    
    
    (4,663
    )
    
    
    (42
    )Cash and cash equivalents, January 1
    
    
    10,975
    
    
    
    
    
    
    
    70
    
    
    
    (10,975
    )
    
    
    70Cash and cash equivalents, September 30
    
    $
    15,402
    
    
    $
    236
    
    
    $
    28
    
    
    $
    (15,638
    )
    
    $
    28
 For the Nine Months Ended September 30, 2006TEPPCOTEPPCO
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    Partners, L.P.Partners, L.P.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    ConsolidatedOperating activities:Net income
    
    $
    145,483
    
    
    $
    145,483
    
    
    $
    125,910
    
    
    $
    (271,393
    )
    
    $
    145,483Adjustments to reconcile net income to net
cash from continuing operating activities:Income from discontinued operations
    
    
    
    
    
    
    
    
    
    
    (19,369
    )
    
    
    
    
    
    
    (19,369
    )Deferred income taxes
    
    
    
    
    
    
    140
    
    
    
    517
    
    
    
    
    
    
    
    657Depreciation and amortization
    
    
    
    
    
    
    53,236
    
    
    
    30,447
    
    
    
    
    
    
    
    83,683Earnings in equity investments, net of
distributions
    
    
    60,693
    
    
    
    10,125
    
    
    
    5,061
    
    
    
    (64,563
    )
    
    
    11,316Gains on sales of assets
    
    
    
    
    
    
    (1,410
    )
    
    
    
    
    
    
    
    
    
    
    (1,410
    )Changes in assets and liabilities and other
    
    
    51,523
    
    
    
    (26,087
    )
    
    
    18,315
    
    
    
    (33,098
    )
    
    
    10,653Net cash from continuing operating activities.
    
    
    257,699
    
    
    
    181,487
    
    
    
    160,881
    
    
    
    (369,054
    )
    
    
    231,013Cash flows from discontinued operations
    
    
    
    
    
    
    
    
    
    
    1,521
    
    
    
    
    
    
    
    1,521Net cash from operating activities
    
    
    257,699
    
    
    
    181,487
    
    
    
    162,402
    
    
    
    (369,054
    )
    
    
    232,534Cash flows from investing activities
    
    
    (195,072
    )
    
    
    34,715
    
    
    
    (54,333
    )
    
    
    40,131
    
    
    
    (174,559
    )Cash flows from financing activities
    
    
    (58,004
    )
    
    
    (216,190
    )
    
    
    (108,098
    )
    
    
    324,288
    
    
    
    (58,004
    )Net change in cash and cash equivalents
    
    
    4,623
    
    
    
    12
    
    
    
    (29
    )
    
    
    (4,635
    )
    
    
    (29
    )Cash and cash equivalents, January 1
    
    
    1,978
    
    
    
    
    
    
    
    107
    
    
    
    (1,966
    )
    
    
    119Cash and cash equivalents, September 30
    
    $
    6,601
    
    
    $
    12
    
    
    $
    78
    
    
    $
    (6,601
    )
    
    $
    90
 51




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 
 NOTE 19. SUBSEQUENT EVENTS
 Senior Notes Redemption
  Treasury Locks
  52




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 For the three months and nine months ended September 30, 2007 and 2006
  
    
    Key References Used in this Quarterly Report.
    
    Cautionary Note Regarding Forward-Looking Statements.
    
    Overview of Critical Accounting Policies and Estimates.
    
    Overview of Business.
    
    Recent Developments  Discusses recent developments during the quarter ended
September 30, 2007.
    
    Results of Operations  Discusses material period-to-period variances in the
statements of consolidated income.
    
    Financial Condition and Liquidity  Analyzes cash flows and financial position.
    
    Other Considerations  Addresses available sources of liquidity, trends, future
plans and contingencies that are reasonably likely to materially affect future
liquidity or earnings.
    
    Recent Accounting Pronouncements.
  /d
    
    = per dayBBtus
    
    = billion British Thermal unitsBcf
    
    = billion cubic feetMMBtus
    
    = million British Thermal unitsMMcf
    
    = million cubic feetMcf
    
    = thousand cubic feetMMBbls
    
    = million barrels
  Key References Used in this Quarterly Report
 we us our TEPPCO
 TE Products, TCTM TEPPCO Midstream Operating Companies.
 General Partner
 Enterprise GP Holdings
 53




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##### Table of Contents



Enterprise Products Partners
 EPCO
 Cautionary Note Regarding Forward-Looking Statements
   Overview of Critical Accounting Policies and Estimates
  54




---



##### Table of Contents



Overview of Business
  
    
    Our Downstream Segment, which is engaged in the transportation, marketing and
storage of refined products, liquefied petroleum gases (LPGs) and petrochemicals;
    
    Our Upstream Segment, which is engaged in the gathering, transportation, marketing
and storage of crude oil and distribution of lubrication oils and specialty chemicals;
and
    
    Our Midstream Segment, which is engaged in the gathering of natural gas,
transportation of natural gas liquids (NGLs) and fractionation of NGLs.
   Recent Developments
 Jonah Phase V Expansion
  Asset Acquisitions and Organic Growth Projects
  55




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##### Table of Contents



DRIP
  56




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##### Table of Contents



Results of Operations
  For the Three Months Ended
    
    
    For the Nine Months EndedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Operating revenues:Downstream Segment
    
    $
    84,528
    
    
    $
    72,358
    
    
    $
    262,626
    
    
    $
    215,758Upstream Segment
    
    
    2,465,031
    
    
    
    2,453,926
    
    
    
    6,255,434
    
    
    
    7,152,520Midstream Segment (1)
    
    
    31,150
    
    
    
    43,895
    
    
    
    90,957
    
    
    
    170,617Intersegment eliminations
    
    
    (52
    )
    
    
    (134
    )
    
    
    (495
    )
    
    
    (7,429
    )Total operating revenues
    
    
    2,580,657
    
    
    
    2,570,045
    
    
    
    6,608,522
    
    
    
    7,531,466Operating income:Downstream Segment
    
    
    26,646
    
    
    
    19,586
    
    
    
    101,533
    
    
    
    59,641Upstream Segment
    
    
    20,602
    
    
    
    19,446
    
    
    
    63,660
    
    
    
    53,097Midstream Segment (1)
    
    
    7,465
    
    
    
    12,798
    
    
    
    20,235
    
    
    
    59,900Intersegment eliminations
    
    
    6
    
    
    
    9
    
    
    
    3,454
    
    
    
    9Total operating income
    
    
    54,719
    
    
    
    51,839
    
    
    
    188,882
    
    
    
    172,647Equity earnings (losses):Downstream Segment
    
    
    (3,064
    )
    
    
    (2,949
    )
    
    
    (8,430
    )
    
    
    (6,581
    )Upstream Segment
    
    
    1,073
    
    
    
    2,962
    
    
    
    4,310
    
    
    
    10,257Midstream Segment (1)
    
    
    21,056
    
    
    
    11,563
    
    
    
    62,430
    
    
    
    11,563Intersegment eliminations
    
    
    (6
    )
    
    
    (9
    )
    
    
    (3,454
    )
    
    
    (9
    )Total equity earnings
    
    
    19,059
    
    
    
    11,567
    
    
    
    54,856
    
    
    
    15,230Earnings before interest:Downstream Segment
    
    
    24,096
    
    
    
    16,926
    
    
    
    154,454
    
    
    
    54,313Upstream Segment
    
    
    21,719
    
    
    
    22,752
    
    
    
    68,114
    
    
    
    63,967Midstream Segment (1)
    
    
    28,703
    
    
    
    24,791
    
    
    
    83,124
    
    
    
    72,013Interest expense
    
    
    (28,911
    )
    
    
    (24,884
    )
    
    
    (80,710
    )
    
    
    (71,642
    )Interest capitalized
    
    
    2,010
    
    
    
    1,703
    
    
    
    8,813
    
    
    
    8,120Income before provision for income taxes
    
    
    47,617
    
    
    
    41,288
    
    
    
    233,795
    
    
    
    126,771Provision for income taxes
    
    
    (14
    )
    
    
    143
    
    
    
    213
    
    
    
    657Income from continuing operations
    
    
    47,631
    
    
    
    41,145
    
    
    
    233,582
    
    
    
    126,114Discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,369Net income
    
    $
    47,631
    
    
    $
    41,145
    
    
    $
    233,582
    
    
    $
    145,483
 
 (1)
    
    Effective August 1, 2006, with the formation of a joint venture with Enterprise
Products Partners, Jonah was deconsolidated and has been subsequently accounted for as an
equity investment (see Note 8 in the Notes to Unaudited Condensed Consolidated Financial
Statements).  57




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##### Table of Contents



Downstream Segment
  For the Three Months Ended
    
    
    
    
    
    
    For the Nine Months EndedSeptember 30,
    
    
    Increase
    
    
    September 30,
    
    
    Increase2007
    
    
    2006
    
    
    (Decrease)
    
    
    2007
    
    
    2006
    
    
    (Decrease)Operating revenues:Sales of petroleum products
    
    $
    5,600
    
    
    $
    
    
    
    $
    5,600
    
    
    $
    24,379
    
    
    $
    
    
    
    $
    24,379Transportation  Refined products
    
    
    48,123
    
    
    
    42,067
    
    
    
    6,056
    
    
    
    126,976
    
    
    
    113,309
    
    
    
    13,667Transportation  LPGs
    
    
    16,735
    
    
    
    16,877
    
    
    
    (142
    )
    
    
    69,535
    
    
    
    59,652
    
    
    
    9,883Other
    
    
    14,070
    
    
    
    13,414
    
    
    
    656
    
    
    
    41,736
    
    
    
    42,797
    
    
    
    (1,061
    )Total operating revenues
    
    
    84,528
    
    
    
    72,358
    
    
    
    12,170
    
    
    
    262,626
    
    
    
    215,758
    
    
    
    46,868Costs and expenses:Purchases of petroleum products
    
    
    5,465
    
    
    
    
    
    
    
    5,465
    
    
    
    24,170
    
    
    
    
    
    
    
    24,170Operating expense
    
    
    25,165
    
    
    
    27,799
    
    
    
    (2,634
    )
    
    
    71,459
    
    
    
    77,606
    
    
    
    (6,147
    )Operating fuel and power
    
    
    9,438
    
    
    
    10,560
    
    
    
    (1,122
    )
    
    
    29,255
    
    
    
    28,183
    
    
    
    1,072General and administrative
    
    
    3,953
    
    
    
    3,455
    
    
    
    498
    
    
    
    12,272
    
    
    
    13,250
    
    
    
    (978
    )Depreciation and amortization
    
    
    11,282
    
    
    
    10,713
    
    
    
    569
    
    
    
    34,142
    
    
    
    31,143
    
    
    
    2,999Taxes  other than income taxes
    
    
    2,581
    
    
    
    259
    
    
    
    2,322
    
    
    
    8,448
    
    
    
    5,974
    
    
    
    2,474Gains on sales of assets
    
    
    (2
    )
    
    
    (14
    )
    
    
    12
    
    
    
    (18,653
    )
    
    
    (39
    )
    
    
    (18,614
    )Total costs and expenses
    
    
    57,882
    
    
    
    52,772
    
    
    
    5,110
    
    
    
    161,093
    
    
    
    156,117
    
    
    
    4,976Operating income
    
    
    26,646
    
    
    
    19,586
    
    
    
    7,060
    
    
    
    101,533
    
    
    
    59,641
    
    
    
    41,892Gain on sale of ownership interest
in Mont Belvieu Storage
Partners, L.P. (MB Storage)
    
    
    (20
    )
    
    
    
    
    
    
    (20
    )
    
    
    59,628
    
    
    
    
    
    
    
    59,628Equity losses
    
    
    (3,064
    )
    
    
    (2,949
    )
    
    
    (115
    )
    
    
    (8,430
    )
    
    
    (6,581
    )
    
    
    (1,849
    )Interest income
    
    
    231
    
    
    
    258
    
    
    
    (27
    )
    
    
    662
    
    
    
    799
    
    
    
    (137
    )Other income  net
    
    
    303
    
    
    
    31
    
    
    
    272
    
    
    
    1,061
    
    
    
    454
    
    
    
    607Earnings before interest
    
    $
    24,096
    
    
    $
    16,926
    
    
    $
    7,170
    
    
    $
    154,454
    
    
    $
    54,313
    
    
    $
    100,141
  For the Three Months Ended
    
    
    Percentage
    
    
    For the Nine Months Ended
    
    
    PercentageSeptember 30,
    
    
    Increase
    
    
    September 30,
    
    
    Increase2007
    
    
    2006
    
    
    (Decrease)
    
    
    2007
    
    
    2006
    
    
    (Decrease)Volumes Delivered:Refined products
    
    
    48,947
    
    
    
    43,018
    
    
    
    14
    %
    
    
    129,623
    
    
    
    125,061
    
    
    
    4
    %LPGs
    
    
    7,080
    
    
    
    9,763
    
    
    
    (27
    %)
    
    
    30,642
    
    
    
    30,880
    
    
    
    (1
    %)Total
    
    
    56,027
    
    
    
    52,781
    
    
    
    6
    %
    
    
    160,265
    
    
    
    155,941
    
    
    
    3
    %Average Tariff per Barrel:Refined products
    
    $
    0.98
    
    
    $
    0.98
    
    
    
    
    
    
    $
    0.98
    
    
    $
    0.91
    
    
    
    8
    %LPGs
    
    
    2.36
    
    
    
    1.73
    
    
    
    36
    %
    
    
    2.27
    
    
    
    1.93
    
    
    
    18
    %Average system
tariff per barrel
    
    
    1.16
    
    
    
    1.12
    
    
    
    4
    %
    
    
    1.23
    
    
    
    1.11
    
    
    
    11
    %
  58




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##### Table of Contents



Three Months Ended September 30, 2007 Compared with Three Months Ended September 30, 2006
      59




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For the Three MonthsEnded September 30,
    
    
    Increase2007
    
    
    2006
    
    
    (Decrease)Centennial
    
    $
    (2,800
    )
    
    $
    (4,065
    )
    
    $
    1,265MB Storage
    
    
    (279
    )
    
    
    1,122
    
    
    
    (1,401
    )Other
    
    
    15
    
    
    
    (6
    )
    
    
    21Total equity losses
    
    $
    (3,064
    )
    
    $
    (2,949
    )
    
    $
    (115
    )
   Nine Months Ended September 30, 2007 Compared with Nine Months Ended September 30, 2006
    60




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##### Table of Contents



For the Nine Months EndedSeptember 30,
    
    
    Increase2007
    
    
    2006
    
    
    (Decrease)Centennial
    
    $
    (9,549
    )
    
    $
    (11,378
    )
    
    $
    1,829MB Storage
    
    
    1,089
    
    
    
    4,814
    
    
    
    (3,725
    )Other
    
    
    30
    
    
    
    (17
    )
    
    
    47Total equity losses
    
    $
    (8,430
    )
    
    $
    (6,581
    )
    
    $
    (1,849
    )
   61




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##### Table of Contents



Upstream Segment
  For the Three Months Ended
    
    
    
    
    
    
    For the Nine Months EndedSeptember 30,
    
    
    Increase
    
    
    September 30,
    
    
    Increase2007
    
    
    2006
    
    
    (Decrease)
    
    
    2007
    
    
    2006
    
    
    (Decrease)Operating revenues: (1)Sales of petroleum products (2)(3)
    
    $
    2,450,147
    
    
    $
    2,441,750
    
    
    $
    8,397
    
    
    $
    6,215,043
    
    
    $
    7,116,064
    
    
    $
    (901,021
    )Transportation  Crude oil
    
    
    12,332
    
    
    
    9,567
    
    
    
    2,765
    
    
    
    32,702
    
    
    
    29,034
    
    
    
    3,668Other
    
    
    2,552
    
    
    
    2,609
    
    
    
    (57
    )
    
    
    7,689
    
    
    
    7,422
    
    
    
    267Total operating revenues
    
    
    2,465,031
    
    
    
    2,453,926
    
    
    
    11,105
    
    
    
    6,255,434
    
    
    
    7,152,520
    
    
    
    (897,086
    )Costs and expenses: (1)Purchases of
petroleum products (2)(3)
    
    
    2,421,285
    
    
    
    2,413,391
    
    
    
    7,894
    
    
    
    6,121,329
    
    
    
    7,032,930
    
    
    
    (911,601
    )Operating expense
    
    
    13,146
    
    
    
    12,974
    
    
    
    172
    
    
    
    41,984
    
    
    
    40,955
    
    
    
    1,029Operating fuel and power
    
    
    1,671
    
    
    
    1,511
    
    
    
    160
    
    
    
    5,371
    
    
    
    5,470
    
    
    
    (99
    )General and administrative
    
    
    1,593
    
    
    
    1,460
    
    
    
    133
    
    
    
    5,191
    
    
    
    5,137
    
    
    
    54Depreciation and amortization
    
    
    5,133
    
    
    
    3,699
    
    
    
    1,434
    
    
    
    13,349
    
    
    
    10,464
    
    
    
    2,885Taxes  other than income taxes
    
    
    1,601
    
    
    
    1,445
    
    
    
    156
    
    
    
    4,550
    
    
    
    4,467
    
    
    
    83Total costs and expenses
    
    
    2,444,429
    
    
    
    2,434,480
    
    
    
    9,949
    
    
    
    6,191,774
    
    
    
    7,099,423
    
    
    
    (907,649
    )Operating income
    
    
    20,602
    
    
    
    19,446
    
    
    
    1,156
    
    
    
    63,660
    
    
    
    53,097
    
    
    
    10,563Equity earnings
    
    
    1,073
    
    
    
    2,962
    
    
    
    (1,889
    )
    
    
    4,310
    
    
    
    10,257
    
    
    
    (5,947
    )Interest income
    
    
    41
    
    
    
    324
    
    
    
    (283
    )
    
    
    120
    
    
    
    324
    
    
    
    (204
    )Other income  net
    
    
    3
    
    
    
    20
    
    
    
    (17
    )
    
    
    24
    
    
    
    289
    
    
    
    (265
    )Earnings before interest
    
    $
    21,719
    
    
    $
    22,752
    
    
    $
    (1,033
    )
    
    $
    68,114
    
    
    $
    63,967
    
    
    $
    4,147
 
 (1)
    
    Amounts in this table are presented after elimination of intercompany transactions,
including sales and purchases of petroleum products.(2)
    
    Petroleum products include crude oil, lubrication oils and specialty chemicals.(3)
    
    On April 1, 2006, we adopted Emerging Issues Task Force (EITF) 04-13. The period
from January 1, 2006 through March 31, 2006 (included in the nine months ended September
30, 2006) was not adjusted for the adoption of EITF 04-13, as retroactive restatement was
not permitted, which impacts comparability.  62




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##### Table of Contents



For the Three Months Ended
    
    
    Percentage
    
    
    For the Nine Months Ended
    
    
    PercentageSeptember 30,
    
    
    Increase
    
    
    September 30,
    
    
    Increase2007
    
    
    2006
    
    
    (Decrease)
    
    
    2007
    
    
    2006
    
    
    (Decrease)Margins: (1)Crude oil marketing
    
    $
    15,305
    
    
    $
    14,675
    
    
    
    4
    %
    
    $
    55,690
    
    
    $
    46,557
    
    
    
    20
    %Lubrication oil sales
    
    
    2,267
    
    
    
    2,221
    
    
    
    2
    %
    
    
    6,496
    
    
    
    6,396
    
    
    
    2
    %Revenues: (1)Crude oil transportation
    
    
    20,072
    
    
    
    18,162
    
    
    
    11
    %
    
    
    53,886
    
    
    
    50,516
    
    
    
    7
    %Crude oil terminaling
    
    
    3,550
    
    
    
    2,868
    
    
    
    24
    %
    
    
    10,344
    
    
    
    8,699
    
    
    
    19
    %Total margins/revenues
    
    $
    41,194
    
    
    $
    37,926
    
    
    
    9
    %
    
    $
    126,416
    
    
    $
    112,168
    
    
    
    13
    %Total barrels/gallons:Crude oil marketing (barrels) (1)
    
    
    59,788
    
    
    
    57,982
    
    
    
    3
    %
    
    
    173,792
    
    
    
    167,180
    
    
    
    4
    %Lubrication oil volume (gallons)
    
    
    3,971
    
    
    
    3,457
    
    
    
    15
    %
    
    
    11,321
    
    
    
    10,689
    
    
    
    6
    %Crude oil transportation (barrels)
    
    
    24,899
    
    
    
    23,237
    
    
    
    7
    %
    
    
    71,214
    
    
    
    68,412
    
    
    
    4
    %Crude oil terminaling (barrels)
    
    
    31,804
    
    
    
    30,181
    
    
    
    5
    %
    
    
    103,003
    
    
    
    92,929
    
    
    
    11
    %Margin per barrel or gallon:Crude oil marketing (per barrel) (1)
    
    $
    0.256
    
    
    $
    0.253
    
    
    
    1
    %
    
    $
    0.320
    
    
    $
    0.278
    
    
    
    15
    %Lubrication oil margin (per gallon)
    
    
    0.571
    
    
    
    0.642
    
    
    
    (11
    %)
    
    
    0.574
    
    
    
    0.598
    
    
    
    (4
    %)Average tariff per barrel:Crude oil transportation
    
    $
    0.806
    
    
    $
    0.782
    
    
    
    3
    %
    
    $
    0.757
    
    
    $
    0.738
    
    
    
    3
    %Crude oil terminaling
    
    
    0.112
    
    
    
    0.095
    
    
    
    18
    %
    
    
    0.100
    
    
    
    0.094
    
    
    
    6
    %
 
 (1)
    
    Amounts in this table are presented prior to the eliminations of intercompany sales, revenues
and purchases between TEPPCO Crude Oil, LLC (TCO) and TEPPCO Crude Pipeline, LLC (TCPL),
both of which are our wholly-owned subsidiaries. TCO is a significant shipper on TCPL. Crude
oil marketing volumes also include inter-region transfers, which are transfers among TCOs
various geographically managed regions.  For the Three Months Ended
    
    
    For the Nine Months EndedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Sales of petroleum products
    
    $
    2,450,147
    
    
    $
    2,441,750
    
    
    $
    6,215,043
    
    
    $
    7,116,064Transportation  Crude oil
    
    
    12,332
    
    
    
    9,567
    
    
    
    32,702
    
    
    
    29,034Less: Purchases of petroleum products
    
    
    (2,421,285
    )
    
    
    (2,413,391
    )
    
    
    (6,121,329
    )
    
    
    (7,032,930
    )Total margins/revenues
    
    
    41,194
    
    
    
    37,926
    
    
    
    126,416
    
    
    
    112,168Other operating revenues
    
    
    2,552
    
    
    
    2,609
    
    
    
    7,689
    
    
    
    7,422Net operating revenues
    
    
    43,746
    
    
    
    40,535
    
    
    
    134,105
    
    
    
    119,590Operating expense
    
    
    13,146
    
    
    
    12,974
    
    
    
    41,984
    
    
    
    40,955Operating fuel and power
    
    
    1,671
    
    
    
    1,511
    
    
    
    5,371
    
    
    
    5,470General and administrative expense
    
    
    1,593
    
    
    
    1,460
    
    
    
    5,191
    
    
    
    5,137Depreciation and amortization
    
    
    5,133
    
    
    
    3,699
    
    
    
    13,349
    
    
    
    10,464Taxes  other than income taxes
    
    
    1,601
    
    
    
    1,445
    
    
    
    4,550
    
    
    
    4,467Operating income
    
    $
    20,602
    
    
    $
    19,446
    
    
    $
    63,660
    
    
    $
    53,097
 Accounting for Purchases and Sales of Inventory with
the Same Counterparty
 63




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##### Table of Contents



Three Months Ended September 30, 2007 Compared with Three Months Ended September 30, 2006
     64




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##### Table of Contents



Nine Months Ended September 30, 2007 Compared with Nine Months Ended September 30, 2006
     65




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##### Table of Contents



Midstream Segment
  For the Three Months Ended
    
    
    
    
    
    
    For the Nine Months EndedSeptember 30,
    
    
    Increase
    
    
    September 30,
    
    
    Increase2007
    
    
    2006
    
    
    (Decrease)
    
    
    2007
    
    
    2006
    
    
    (Decrease)Operating revenues: (1)Sales of petroleum products
    
    $
    
    
    
    $
    4,990
    
    
    $
    (4,990
    )
    
    $
    
    
    
    $
    18,766
    
    
    $
    (18,766
    )Gathering  Natural gas
    
    
    15,429
    
    
    
    25,022
    
    
    
    (9,593
    )
    
    
    46,289
    
    
    
    107,856
    
    
    
    (61,567
    )Transportation  NGLs
    
    
    12,023
    
    
    
    10,971
    
    
    
    1,052
    
    
    
    34,062
    
    
    
    32,362
    
    
    
    1,700Other
    
    
    3,698
    
    
    
    2,912
    
    
    
    786
    
    
    
    10,606
    
    
    
    11,633
    
    
    
    (1,027
    )Total operating revenues
    
    
    31,150
    
    
    
    43,895
    
    
    
    (12,745
    )
    
    
    90,957
    
    
    
    170,617
    
    
    
    (79,660
    )Costs and expenses (1):Purchases of petroleum products
    
    
    
    
    
    
    4,323
    
    
    
    (4,323
    )
    
    
    
    
    
    
    17,272
    
    
    
    (17,272
    )Operating expense
    
    
    7,064
    
    
    
    8,529
    
    
    
    (1,465
    )
    
    
    21,095
    
    
    
    33,122
    
    
    
    (12,027
    )Operating fuel and power
    
    
    3,951
    
    
    
    3,407
    
    
    
    544
    
    
    
    10,537
    
    
    
    9,109
    
    
    
    1,428General and administrative expense
    
    
    1,850
    
    
    
    2,079
    
    
    
    (229
    )
    
    
    6,695
    
    
    
    6,966
    
    
    
    (271
    )Depreciation and amortization
    
    
    10,071
    
    
    
    11,838
    
    
    
    (1,767
    )
    
    
    30,244
    
    
    
    42,076
    
    
    
    (11,832
    )Taxes  other than income taxes
    
    
    749
    
    
    
    921
    
    
    
    (172
    )
    
    
    2,151
    
    
    
    3,543
    
    
    
    (1,392
    )Gains on sales of assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,371
    )
    
    
    1,371Total costs and expenses
    
    
    23,685
    
    
    
    31,097
    
    
    
    (7,412
    )
    
    
    70,722
    
    
    
    110,717
    
    
    
    (39,995
    )Operating income
    
    
    7,465
    
    
    
    12,798
    
    
    
    (5,333
    )
    
    
    20,235
    
    
    
    59,900
    
    
    
    (39,665
    )Equity earnings (1)
    
    
    21,056
    
    
    
    11,563
    
    
    
    9,493
    
    
    
    62,430
    
    
    
    11,563
    
    
    
    50,867Interest income
    
    
    182
    
    
    
    430
    
    
    
    (248
    )
    
    
    459
    
    
    
    545
    
    
    
    (86
    )Other income  net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    (5
    )Earnings before interest
    
    $
    28,703
    
    
    $
    24,791
    
    
    $
    3,912
    
    
    $
    83,124
    
    
    $
    72,013
    
    
    $
    11,111
 
 (1)
    
    Effective August 1, 2006, with the formation of a joint venture with Enterprise
Products Partners, Jonah was deconsolidated and operating results, including revenues and
costs and expenses, after August 1, 2006 are included in equity earnings (see Note 8 in the
Notes to Unaudited Condensed Consolidated Financial Statements). 66




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##### Table of Contents



For the Three Months Ended
    
    Percentage
    
    For the Nine Months Ended
    
    PercentageSeptember 30,
    
    Increase
    
    September 30,
    
    Increase2007
    
    2006
    
    (Decrease)
    
    2007
    
    2006
    
    (Decrease)Gathering  Natural Gas  Jonah (1):MMcf
    
    
    151,845
    
    
    
    118,739
    
    
    
    28
    %
    
    
    424,304
    
    
    
    338,755
    
    
    
    25
    %BBtu
    
    
    167,498
    
    
    
    131,188
    
    
    
    28
    %
    
    
    467,808
    
    
    
    374,164
    
    
    
    25
    %Average fee per MMBtu
    
    $
    0.216
    
    
    $
    0.204
    
    
    
    6
    %
    
    $
    0.209
    
    
    $
    0.206
    
    
    
    1
    %Gathering  Natural Gas  Val Verde:MMcf
    
    
    44,225
    
    
    
    45,003
    
    
    
    (2
    %)
    
    
    131,279
    
    
    
    137,291
    
    
    
    (4
    %)BBtu
    
    
    39,311
    
    
    
    39,851
    
    
    
    (1
    %)
    
    
    116,408
    
    
    
    121,458
    
    
    
    (4
    %)Average fee per MMBtu
    
    $
    0.392
    
    
    $
    0.408
    
    
    
    (4
    %)
    
    $
    0.398
    
    
    $
    0.405
    
    
    
    (2
    %)Transportation  NGLs (2):Barrels
    
    
    16,612
    
    
    
    16,165
    
    
    
    3
    %
    
    
    47,455
    
    
    
    47,161
    
    
    
    1
    %Average rate per barrel
    
    $
    0.724
    
    
    $
    0.679
    
    
    
    7
    %
    
    $
    0.718
    
    
    $
    0.686
    
    
    
    5
    %Natural Gas Sales (1):BBtu
    
    
    3,931
    
    
    
    3,537
    
    
    
    11
    %
    
    
    11,978
    
    
    
    6,164
    
    
    
    94
    %Average fee per MMBtu
    
    $
    3.01
    
    
    $
    5.29
    
    
    
    (43
    %)
    
    $
    4.28
    
    
    $
    5.27
    
    
    
    (19
    %)Fractionation  NGLs:Barrels
    
    
    1,044
    
    
    
    1,034
    
    
    
    1
    %
    
    
    3,097
    
    
    
    3,311
    
    
    
    (7
    %)Average rate per barrel
    
    $
    1.781
    
    
    $
    1.633
    
    
    
    9
    %
    
    $
    1.776
    
    
    $
    1.655
    
    
    
    7
    %Sales  Condensate (1):Barrels
    
    
    0.9
    
    
    
    2.7
    
    
    
    (67
    %)
    
    
    57.3
    
    
    
    45.7
    
    
    
    25
    %Average rate per barrel
    
    $
    67.34
    
    
    $
    70.37
    
    
    
    (4
    %)
    
    $
    67.54
    
    
    $
    65.81
    
    
    
    3
    %
 
 (1)
    
    Effective August 1, 2006, with the formation of a joint venture with Enterprise
Products Partners, Jonah was deconsolidated and operating results after August 1, 2006 are
included in equity earnings (see Note 8 in the Notes to Unaudited Condensed Consolidated
Financial Statements). However, the table includes Jonahs volume and average rate
information for the full three and nine months ended September 30, 2007 and 2006.(2)
    
    Volumes for the 2006 period have been revised to exclude barrels associated with
capacity leases from which revenues are classified as other operating revenues.  67




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##### Table of Contents



Three Months Ended September 30, 2007 Compared with Three Months Ended September 30, 2006
       68




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##### Table of Contents



Nine Months Ended September 30, 2007 Compared with Nine Months Ended September 30, 2006
      69




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##### Table of Contents



Discontinued Operations
  70




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##### Table of Contents



For the Three Months
    
    
    For the Nine MonthsEnded September 30,
    
    
    Ended September 30,2006
    
    
    2006Operating revenues:Sales of petroleum products
    
    $
    
    
    
    $
    3,828Other
    
    
    
    
    
    
    932Total operating revenues
    
    
    
    
    
    
    4,760Costs and expenses:Purchases of petroleum products
    
    
    
    
    
    
    3,000Operating expense
    
    
    
    
    
    
    182Depreciation and amortization
    
    
    
    
    
    
    51Taxes  other than income taxes
    
    
    
    
    
    
    30Total costs and expenses
    
    
    
    
    
    
    3,263Income from discontinued operations
    
    $
    
    
    
    
    1,497
  Interest Expense and Capitalized Interest
 Three Months Ended September 30, 2007 Compared with Three Months Ended September 30, 2006
   Nine Months Ended September 30, 2007 Compared with Nine Months Ended September 30, 2006
   71




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##### Table of Contents



Income Taxes  Revised Texas Franchise Tax
  Financial Condition and Liquidity
  For the Nine Months EndedSeptember 30,2007
    
    2006Cash provided by (used in):Continuing operating activities
    
    $
    219,186
    
    
    $
    231,013Operating activities
    
    
    219,186
    
    
    
    232,534Investing activities
    
    
    (182,643
    )
    
    
    (174,559
    )Financing activities
    
    
    (36,585
    )
    
    
    (58,004
    )
 Operating Activities
  
    
    Cash payments for crude oil inventory increased $37.5 million. As part of our crude
oil marketing activity, we purchase crude oil and simultaneously enter into offsetting
sales contracts for physical delivery in future periods.  These transactions result in
an increase in the amount of inventory carried on our books until the crude oil is
sold. The substantial majority of inventory related to these contracts as of September
30, 2007 has been contracted for sale in the fourth quarter of 2007; however, new
contracts may be executed, resulting in higher inventory balances being held in future
balance sheet periods. At September 30, 2007, these transactions and other crude oil
operating inventory changes represented a $38.2 million increase in the amount of
inventory recorded on our consolidated balance sheet as compared to December 31, 2006.
    
    Cash distributions received from unconsolidated affiliates increased $70.4 million
primarily due to an increase of $77.3 million in distributions received from our equity
investment in Jonah as a result of the formation of the joint venture on August 1,
2006. Distributions received from our equity investment in Seaway decreased $6.1
million primarily due to the reduction of our sharing ratio to 40% in 2007 from 47% in
2006, and lower Seaway revenues, which were negatively impacted by the unexpected
temporary shutdown of several regional refineries for maintenance and repairs.
Distributions received from our equity investment in MB Storage decreased $0.8 million
due to the sale of our investment in MB Storage on March 1, 2007.
 72




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##### Table of Contents




    
    Cash paid for interest, net of amounts capitalized, decreased $11.3 million
period-to-period primarily due to lower outstanding balances on our variable rate
revolving credit facility. Excluding the effects of hedging activities and interest
capitalized during the year ended December 31, 2007, we expect interest payments on our
fixed rate Senior Notes and junior subordinated notes for 2007 to be approximately
$89.1 million. We expect to make our interest payments with cash flows from operating
activities.
 Investing Activities
  
    
    Investments in unconsolidated affiliates increased $66.8 million, which includes a
$62.4 million increase in contributions for our ownership interest in the Jonah joint
venture with Enterprise Products Partners primarily for capital expenditures on its
Phase V expansion and an $8.6 million increase in our investment in Centennial,
partially offset by a $4.2 million decrease in our investment in MB Storage, which was
sold on March 1, 2007. Contributions to Centennial in 2007 included $6.1 million for
contractual obligations that were created upon formation of Centennial and $5.0 million
for debt service requirements.
    
    Capital expenditures increased $38.5 million primarily due to an increase in organic
growth projects period-to-period and higher spending to sustain existing operations,
including pipeline integrity (see Other Considerations  Future Capital Needs and
Commitments below). Cash paid for linefill on assets owned increased $21.0 million
period-to-period primarily due to the sale of our ownership interest in MB Storage on
March 1, 2007 and the completion of organic growth projects in our Upstream Segment.
Because we sold our interest in MB Storage and we have location exchange requirements
to provide barrels to shippers at Mont Belvieu, we increased our long-term propane
inventory.
    
    Proceeds from the sales of assets and ownership interests for the nine months ended
September 30, 2007 was $165.1 million, which includes $137.3 million from the sale of
TE Products ownership interests in MB Storage and its general partner and $18.5
million for the sale of other Downstream Segment assets, all to Louis Dreyfus on March
1, 2007; $8.0 million for the sale of Downstream Segment assets to Enterprise Products
Partners in January 2007 (see Note 9 in the Notes to Unaudited Condensed Consolidated
Financial Statements); and $1.3 million for the sale of various Upstream Segment assets
in the third quarter of 2007. Proceeds from the sales of assets for the nine months
ended September 30, 2006 was $39.8 million, of which $38.0 million related to cash
proceeds received from the sale of the Pioneer plant in the Midstream Segment on March
31, 2006.
    
    Restricted cash was $2.9 million at September 30, 2007, and was related to a U.S.
Department of Justice penalty (see Note 16 in the Notes to Unaudited Condensed
Consolidated Financial Statements).
    
    Cash paid for the acquisition of assets for the nine months ended September 30, 2007
was $12.7 million, of which $6.0 million was for Downstream Segment assets and $6.7
million was for Upstream Segment assets (see Note 9 in the Notes to Unaudited Condensed
Consolidated Financial Statements). For the nine months ended September 30, 2006, cash
paid for the acquisition of assets was $11.0 million for Downstream Segment assets.
    
    During the nine months ended September 30, 2007, we paid $2.5 million in cash to a
customer as part of a reimbursable commitment.
 73




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##### Table of Contents



Financing Activities
  
    
    Net repayments under our revolving credit facility increased $66.1 million.
    
    Cash distributions to our partners increased $13.4 million period-to-period due to
an increase in the number of Units outstanding and our quarterly cash distribution
rates. We paid cash distributions of $219.6 million ($2.045 per Unit) and $206.2
million ($2.025 per Unit) during each of the nine months ended September 30, 2007 and
2006, respectively. Additionally, we declared a cash distribution of $0.695 per Unit
for the quarter ended September 30, 2007. We will pay the distribution of $74.8
million on November 7, 2007 to unitholders of record on October 31, 2007.
    
    Net proceeds from the issuance of Units decreased $195.0 million period-to-period.
We generated $195.1 million in net proceeds from an underwritten equity offering in
July 2006 from the public issuance of 5.8 million Units. In the 2007 period, we
received $0.1 million in net proceeds related to the issuance of Units to employees
under the employee unit purchase plan (see Note 12 in the Notes to the Unaudited
Condensed Consolidated Financial Statements).
    
    We received $295.8 million from the issuance in May 2007 of our 7.000% junior
subordinated notes due June 2067 (net of debt issuance costs of $3.7 million) (see Note
11 in the Notes to Unaudited Condensed Consolidated Financial Statements).
    
    We received $1.4 million in proceeds from the termination of treasury locks in May
2007, and we paid $1.2 million for the termination of an interest rate swap in
September 2007 (see Note 5 in the Notes to Unaudited Condensed Consolidated Financial
Statements).
 Other Considerations
 Registration Statements
   Credit Facility
  74




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##### Table of Contents



Future Capital Needs and Commitments
   Liquidity Outlook
  75




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##### Table of Contents



Classification of Short-Term Obligations Expected to be
Refinanced.
 Off-Balance Sheet Arrangements
     Contractual Obligations
  76




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##### Table of Contents



Amount of Commitment Expiration Per PeriodLess than 1Total
    
    
    Year
    
    
    1-3 Years
    
    
    4-5 Years
    
    
    After 5 YearsRevolving Credit Facility, due 2011
    
    $
    377.0
    
    
    $
    
    
    
    $
    
    
    
    $
    377.0
    
    
    $
    6.45% Senior Notes due 2008 (1) (2) (3)
    
    
    180.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    180.07.625% Senior Notes due 2012 (2)
    
    
    500.0
    
    
    
    
    
    
    
    
    
    
    
    500.0
    
    
    
    6.125% Senior Notes due 2013 (2)
    
    
    200.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    200.07.51% Senior Notes due 2028 (1) (2)
    
    
    210.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    210.07.00% Junior Subordinated Notes due
2067 (2)
    
    
    300.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    300.0Interest payments (4)
    
    
    1,928.8
    
    
    
    116.2
    
    
    
    219.0
    
    
    
    187.9
    
    
    
    1,405.7Debt and interest total
    
    $
    3,695.8
    
    
    $
    116.2
    
    
    $
    219.0
    
    
    $
    1,064.9
    
    
    $
    2,295.7
 
 (1)
    
    Obligations of TE Products.(2)
    
    At September 30, 2007, the 7.51% Senior Notes and the 7.625% Senior Notes include a
deferred loss of $1.2 million and a deferred gain of $24.4 million, respectively, both
net of amortization, from interest rate swap terminations (see Note 5 in the Notes to
Unaudited Condensed Consolidated Financial Statements). At September 30, 2007, our 6.45%
Senior Notes, our 7.625% Senior Notes, our 6.125% Senior Notes and our 7.00% junior
subordinated notes include $2.2 million of unamortized debt discounts. The fair value
adjustments, the deferred gain/loss adjustment and the unamortized debt discounts are
excluded from this table.(3)
    
    In accordance with SFAS No. 6, Classification of Short-Term Obligations Expected to
be Refinanced, we have classified our 6.45% TE Products Senior Notes due in January 2008
as long-term (see Note 11 in the Notes to Unaudited Condensed Consolidated Financial
Statements for additional information).(4)
    
    Includes interest payments due on our Senior Notes and junior subordinated notes and
interest payments and commitment fees due on our Revolving Credit Facility. The interest
amounts calculated on the Revolving Credit Facility and the junior subordinated notes are
based on the assumption that the amounts outstanding and the interest rates charged both
remain at their current levels. Summary of Related Party Transactions
  For the Three Months Ended
    
    For the Nine Months EndedSeptember 30,
    
    September 30,2007
    
    2006
    
    2007
    
    2006Revenues from EPCO and affiliates
    
    $
    4,626
    
    
    $
    4,645
    
    
    $
    14,270
    
    
    $
    13,897Revenues from unconsolidated affiliates
    
    
    216
    
    
    
    89
    
    
    
    325
    
    
    
    259Costs and Expenses from EPCO and affiliates:Purchases of petroleum products
    
    
    17,133
    
    
    
    17,415
    
    
    
    40,373
    
    
    
    38,424Operating expense
    
    
    24,126
    
    
    
    23,530
    
    
    
    72,890
    
    
    
    76,314General and administrative
    
    
    6,568
    
    
    
    4,567
    
    
    
    19,150
    
    
    
    16,672Costs and Expenses from unconsolidated affiliates:Purchases of petroleum products
    
    
    2,341
    
    
    
    1,014
    
    
    
    2,341
    
    
    
    2,075Operating expense
    
    
    2,701
    
    
    
    1,690
    
    
    
    6,363
    
    
    
    3,566
 77




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##### Table of Contents




    
    EPCO and its consolidated private company subsidiaries;
    
    Texas Eastern Products Pipeline Company, LLC, our General Partner;
    
    Enterprise GP Holdings, which owns and controls our General Partner;
    
    Enterprise Products Partners, which is controlled by affiliates of EPCO, including
Enterprise GP Holdings;
    
    Duncan Energy Partners L.P., which is controlled by affiliates of EPCO; and
    
    Enterprise Gas Processing LLC, which is controlled by affiliates of EPCO and is our
joint venture partner in Jonah.
 Credit Ratings
    Recent Accounting Pronouncements
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
  78




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##### Table of Contents



Commodity Risk Hedging Program
 Accounting for Derivative Instruments and Hedging Activities Accounting for Certain Derivative Instruments and Certain Hedging Activities, an
amendment of FASB Statement No. 133
   Interest Rate Risk Hedging Program
   Number of
    
    Period Covered
    
    TerminationHedged Debt
    
    Swaps
    
    by Swaps
    
    Date of Swaps
    
    Rate Swaps
    
    Notional ValueRevolving Credit Facility, due Dec. 2011
    
    4
    
    Jan. 2006 to Jan. 2008
    
    Jan. 2008
    
    Swapped 5.36% floating rate for fixed rate ranging from 4.67% to 4.695% (1)
    
    $200.0 million
 
 (1)
    
    On June 30, 2007, these interest rate swap agreement were de-designated as cash flow
hedges and are now accounted for using mark-to-market accounting; thus, changes in the fair
value of these swaps are recognized in earnings. At September 30, 2007 and December 31,
2006, the fair values of these interest rate swaps were assets of $0.6 million and $1.4
million, respectively. 79




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##### Table of Contents



Resulting
    
    September 30,
    
    October 29,Scenario
    
    Classification
    
    2007
    
    2007FV assuming no change in underlying interest rates
    
    Asset
    
    $
    609,878
    
    
    $
    251,732FV assuming 10% increase in underlying interest rates
    
    Asset
    
    
    871,198
    
    
    
    251,732FV assuming 10% decrease in underlying interest rates
    
    Asset
    
    
    348,559
    
    
    
    251,732
 Interest Rate Swap Termination.
 Treasury Locks
  80




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##### Table of Contents



Fair Values of Debt
  Fair ValueSeptember 30,
    
    December 31,Face Value
    
    2007
    
    20066.45% TE Products Senior Notes, due January 2008
    
    $
    180,000
    
    
    $
    180,270
    
    
    $
    181,6417.625% Senior Notes, due February 2012
    
    
    500,000
    
    
    
    533,456
    
    
    
    537,0676.125% Senior Notes, due February 2013
    
    
    200,000
    
    
    
    200,133
    
    
    
    201,6107.51% TE Products Senior Notes, due January 2028
    
    
    210,000
    
    
    
    218,400
    
    
    
    221,4717.000% Junior Subordinated Notes, due June 2067
    
    
    300,000
    
    
    
    269,069
    
    
    
    
 
 Item 4. Controls and Procedures
  (i)
    
    that our disclosure controls and procedures are designed to ensure that information
required to be disclosed by us in the reports that we file or submit under the Securities
Exchange Act of 1934 is recorded, processed, summarized and reported within the time
periods specified in the SECs rules and forms, and that such information is accumulated
and communicated to our management, including the CEO and CFO, as appropriate to allow
timely decisions regarding required disclosure; and(ii)
    
    that our disclosure controls and procedures are effective.
 Changes in Internal Control over Financial Reporting
   
 PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  81




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##### Table of Contents



Item 6. Exhibits.
 ExhibitNumber
    
    Description3.1
    
    Certificate of Limited Partnership of TEPPCO Partners, L.P. (Filed as Exhibit
3.2 to the Registration Statement of TEPPCO Partners, L.P. (Commission File No.
33-32203) and incorporated herein by reference).3.2
    
    Third Amended and Restated Agreement of Limited Partnership of TEPPCO
Partners, L.P., dated September 21, 2001 (Filed as Exhibit 3.7 to Form 10-Q of TEPPCO
Partners, L.P. (Commission File No. 1-10403) for the quarter ended September 30, 2001
and incorporated herein by reference).3.3
    
    Limited Liability Company Agreement of Texas Eastern Products Pipeline
Company, LLC, dated March 31, 2000 (Filed as Exhibit 3.3 to Form 10-Q/A of TEPPCO
Partners, L.P. (Commission File No. 1-10403) for the quarter ended June 30, 2005 and
incorporated herein by reference).3.4
    
    Amendment to Limited Liability Company Agreement of Texas Eastern Products
Pipeline Company, LLC, dated March 22, 2005 (Filed as Exhibit 3.4 to Form 10-Q/A of
TEPPCO Partners, L.P. (Commission File No. 1-10403) for the quarter ended June 30,
2005 and incorporated herein by reference).3.5
    
    Amendment to Limited Liability Company Agreement of Texas Eastern Products
Pipeline Company, LLC, dated June 15, 2006, but effective as of February 24, 2005
(Filed as Exhibit 3.1 to the Current Report on Form 8-K of TEPPCO Partners, L.P.
(Commission File No. 1-10403) filed on June 16, 2006 and incorporated herein by
reference).3.6
    
    Fourth Amended and Restated Agreement of Limited Partnership of TEPPCO
Partners, L.P., dated December 8, 2006 (Filed as Exhibit 3 to the Current Report on
Form 8-K of TEPPCO Partners, L.P. (Commission File No. 1-10403) filed on December 13,
2006 and incorporated herein by reference).3.7
    
    Amended and Restated Limited Liability Company Agreement of Texas Eastern
Products Pipeline Company, LLC (Filed as Exhibit 3 to the Current Report on Form 8-K
of TEPPCO Partners, L.P. (Commission File No. 1-10403) filed on May 10, 2007 and
incorporated herein by reference).4.1
    
    Form of Certificate representing Limited Partner Units (Filed as Exhibit 4.1
to the Registration Statement of TEPPCO Partners, L.P. (Commission File No. 33-32203)
and incorporated herein by reference).4.2
    
    Form of Indenture between TE Products Pipeline Company, Limited Partnership
and The Bank of New York, as Trustee, dated as of January 27, 1998 (Filed as Exhibit
4.3 to TE Products Pipeline Company, Limited Partnerships Registration Statement on
Form S-3 (Commission File No. 333-38473) and incorporated herein by reference).4.3
    
    Form of Certificate representing Class B Units (Filed as Exhibit 4.3 to Form
10-K of TEPPCO Partners, L.P. (Commission File No. 1-10403) for the year ended
December 31, 1998 and incorporated herein by reference).4.4
    
    Form of Indenture between TEPPCO Partners, L.P., as issuer, TE Products
Pipeline Company, Limited Partnership, TCTM, L.P., TEPPCO Midstream Companies, L.P.
and Jonah Gas Gathering Company, as subsidiary guarantors, and First Union National
Bank, NA, as trustee, dated as of February 20, 2002 (Filed as Exhibit 99.2 to the Current Report
 82




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##### Table of Contents



ExhibitNumber
    
    Descriptionon Form 8-K of TEPPCO
Partners, L.P. (Commission File No. 1-10403) filed on February 20, 2002
and incorporated herein by reference).4.5
    
    First Supplemental Indenture between TEPPCO Partners, L.P., as issuer, TE
Products Pipeline Company, Limited Partnership, TCTM, L.P., TEPPCO Midstream
Companies, L.P. and Jonah Gas Gathering Company, as subsidiary guarantors, and First
Union National Bank, NA, as trustee, dated as of February 20, 2002 (Filed as Exhibit
99.3 to the Current Report on Form 8-K of TEPPCO Partners, L.P. (Commission File No.
1-10403) filed on February 20, 2002 and incorporated herein by reference).4.6
    
    Second Supplemental Indenture, dated as of June 27, 2002, among TEPPCO
Partners, L.P., as issuer, TE Products Pipeline Company, Limited Partnership, TCTM,
L.P., TEPPCO Midstream Companies, L.P., and Jonah Gas Gathering Company, as Initial
Subsidiary Guarantors, and Val Verde Gas Gathering Company, L.P., as New Subsidiary
Guarantor, and Wachovia Bank, National Association, formerly known as First Union
National Bank, as trustee (Filed as Exhibit 4.6 to Form 10-Q of TEPPCO Partners, L.P.
(Commission File No. 1-10403) for the quarter ended June 30, 2002 and incorporated
herein by reference).4.7
    
    Third Supplemental Indenture among TEPPCO Partners, L.P. as issuer, TE
Products Pipeline Company, Limited Partnership, TCTM, L.P., TEPPCO Midstream
Companies, L.P., Jonah Gas Gathering Company and Val Verde Gas Gathering Company, L.P.
as Subsidiary Guarantors, and Wachovia Bank, National Association, as trustee, dated
as of January 30, 2003 (Filed as Exhibit 4.7 to Form 10-K of TEPPCO Partners, L.P.
(Commission File No. 1-10403) for the year ended December 31, 2002 and incorporated
herein by reference).4.8
    
    Full Release of Guarantee dated as of July 31, 2006 by Wachovia Bank,
National Association, as trustee, in favor of Jonah Gas Gathering Company (Filed as
Exhibit 4.8 to Form 10-Q of TEPPCO Partners, L.P. (Commission File No. 1-10403) for
the quarter ended September 30, 2006 and incorporated herein by reference).4.9
    
    Indenture, dated as of May 14, 2007, by and among TEPPCO Partners, L.P., as
issuer, TE Products Pipeline Company, Limited Partnership, TCTM, L.P., TEPPCO
Midstream Companies, L.P. and Val Verde Gas Gathering Company, L.P., as subsidiary
guarantors, and The Bank of New York Trust Company, N.A., as trustee (Filed as Exhibit
99.1 to the Current Report on Form 8-K of TEPPCO Partners, L.P. (Commission File No.
1-10403) filed on May 15, 2007 and incorporated herein by reference).4.10
    
    First Supplemental Indenture, dated as of May 18, 2007, by and among TEPPCO
Partners, L.P., as issuer, TE Products Pipeline Company, Limited Partnership, TCTM,
L.P., TEPPCO Midstream Companies, L.P. and Val Verde Gas Gathering Company, L.P., as
subsidiary guarantors, and The Bank of New York Trust Company, N.A., as trustee (Filed
as Exhibit 4.2 to the Current Report on Form 8-K of TEPPCO Partners, L.P. (Commission
File No. 1-10403) filed on May 18, 2007 and incorporated herein by reference).4.11
    
    First Supplemental Indenture, dated as of June 30, 2007, by and among TE
Products Pipeline Company, LLC and The Bank of New York Trust Company, N.A., as
trustee (Filed as Exhibit 4.1 to the Current Report on Form 8-K of TE Products
Pipeline Company, LLC (Commission File No. 1-13603) filed on July 6, 2007 and
incorporated herein by reference).4.12
    
    Second Supplemental Indenture, dated as of June 30, 2007, by and among TEPPCO
Partners, L.P., as issuer, TE Products Pipeline Company, Limited Partnership, TCTM,
L.P., TEPPCO Midstream Companies, L.P. , Val Verde Gas Gathering Company, L.P., TE
Products Pipeline Company, LLC and TEPPCO Midstream Companies, LLC, as subsidiary
guarantors, and The Bank of New York Trust Company, N.A., as trustee (Filed as Exhibit 4.2 to the
Current Report on Form 8-K of TE Products Pipeline Company, LLC
(Commission File No. 1-13603) filed on July 6, 2007 and incorporated
herein by reference).
 83




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##### Table of Contents



ExhibitNumber
    
    Description4.13
    
    Fourth Supplemental Indenture, dated June 30, 2007, by and among TEPPCO
Partners, L.P., as issuer, TE Products Pipeline Company, Limited Partnership, TCTM,
L.P., TEPPCO Midstream Companies, L.P., Val Verde Gas Gathering Company, L.P., TE
Products Pipeline Company, LLC and TEPPCO Midstream Companies, LLC, as subsidiary
guarantors, and U.S. Bank National Association, as trustee (Filed as Exhibit 4.2 to
the Current Report on Form 8-K of TE Products Pipeline Company, LLC (Commission File
No. 1-13603) filed on July 6, 2007 and incorporated herein by reference).4.14
    
    Fourth Amendment to Amended and Restated Credit Agreement, dated as of June
30, 2007, by and among TEPPCO Partners, L.P., the Borrower, several banks and other
financial institutions, the Lenders, SunTrust Bank, as the Administrative Agent for
the Lenders and as the LC Issuing Bank, Wachovia Bank, National Association, as
Syndication Agent, and BNP Paribas, JPMorgan Chase Bank, N.A., and The Royal Bank of
Scotland Plc, as Co-Documentation. (Filed as Exhibit 4.14 to Form 10-Q of TEPPCO
Partners, L.P. (Commision File No. 1-10403) for the quarter ended June 30, 2007 and
incorporated herein by reference).10.1+*
    
    Form of TPP Employee Restricted Unit Grant, as amended, of Texas Eastern Products
Pipeline Company, LLC under the EPCO, Inc. 2006 TPP Long-Term Incentive Plan.10.2+*
    
    Form of TPP Employee Option Grant, as amended, of Texas Eastern Products Pipeline
Company, LLC under the EPCO, Inc. 2006 TPP Long-Term Incentive Plan.12.1*
    
    Statement of Computation of Ratio of Earnings to Fixed Charges.31.1*
    
    Certification of Chief Executive Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.31.2*
    
    Certification of Chief Financial Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.32.1**
    
    Certification of Chief Executive Officer Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.32.2**
    
    Certification of Chief Financial Officer Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
 
 *
    
    Filed herewith.**
    
    Furnished herewith pursuant to Item 601(b)-(32) of Regulation S-K.+
    
    A management contract or compensation plan or arrangement. 
 SIGNATURES
  TEPPCO Partners, L.P.Date: November 7, 2007
    
    
    
    By:
    
    /s/ JERRY E. THOMPSONJerry E. Thompson,President and Chief Executive Officer ofTexas Eastern Products Pipeline Company, LLC, General PartnerDate: November 7, 2007
    
    
    
    By:
    
    /s/ WILLIAM G. MANIASWilliam G. Manias,Vice President and Chief Financial Officer ofTexas Eastern Products Pipeline Company, LLC, General Partner
 84




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##### Table of Contents



Exhibit Index
 ExhibitNumber
    
    Description3.1
    
    Certificate of Limited Partnership of TEPPCO Partners, L.P. (Filed as Exhibit
3.2 to the Registration Statement of TEPPCO Partners, L.P. (Commission File No.
33-32203) and incorporated herein by reference).3.2
    
    Third Amended and Restated Agreement of Limited Partnership of TEPPCO
Partners, L.P., dated September 21, 2001 (Filed as Exhibit 3.7 to Form 10-Q of TEPPCO
Partners, L.P. (Commission File No. 1-10403) for the quarter ended September 30, 2001
and incorporated herein by reference).3.3
    
    Limited Liability Company Agreement of Texas Eastern Products Pipeline
Company, LLC, dated March 31, 2000 (Filed as Exhibit 3.3 to Form 10-Q/A of TEPPCO
Partners, L.P. (Commission File No. 1-10403) for the quarter ended June 30, 2005 and
incorporated herein by reference).3.4
    
    Amendment to Limited Liability Company Agreement of Texas Eastern Products
Pipeline Company, LLC, dated March 22, 2005 (Filed as Exhibit 3.4 to Form 10-Q/A of
TEPPCO Partners, L.P. (Commission File No. 1-10403) for the quarter ended June 30,
2005 and incorporated herein by reference).3.5
    
    Amendment to Limited Liability Company Agreement of Texas Eastern Products
Pipeline Company, LLC, dated June 15, 2006, but effective as of February 24, 2005
(Filed as Exhibit 3.1 to the Current Report on Form 8-K of TEPPCO Partners, L.P.
(Commission File No. 1-10403) filed on June 16, 2006 and incorporated herein by
reference).3.6
    
    Fourth Amended and Restated Agreement of Limited Partnership of TEPPCO
Partners, L.P., dated December 8, 2006 (Filed as Exhibit 3 to the Current Report on
Form 8-K of TEPPCO Partners, L.P. (Commission File No. 1-10403) filed on December 13,
2006 and incorporated herein by reference).3.7
    
    Amended and Restated Limited Liability Company Agreement of Texas Eastern
Products Pipeline Company, LLC (Filed as Exhibit 3 to the Current Report on Form 8-K
of TEPPCO Partners, L.P. (Commission File No. 1-10403) filed on May 10, 2007 and
incorporated herein by reference).4.1
    
    Form of Certificate representing Limited Partner Units (Filed as Exhibit 4.1
to the Registration Statement of TEPPCO Partners, L.P. (Commission File No. 33-32203)
and incorporated herein by reference).4.2
    
    Form of Indenture between TE Products Pipeline Company, Limited Partnership
and The Bank of New York, as Trustee, dated as of January 27, 1998 (Filed as Exhibit
4.3 to TE Products Pipeline Company, Limited Partnerships Registration Statement on
Form S-3 (Commission File No. 333-38473) and incorporated herein by reference).4.3
    
    Form of Certificate representing Class B Units (Filed as Exhibit 4.3 to Form
10-K of TEPPCO Partners, L.P. (Commission File No. 1-10403) for the year ended
December 31, 1998 and incorporated herein by reference).4.4
    
    Form of Indenture between TEPPCO Partners, L.P., as issuer, TE Products
Pipeline Company, Limited Partnership, TCTM, L.P., TEPPCO Midstream Companies, L.P.
and Jonah Gas Gathering Company, as subsidiary guarantors, and First Union National
Bank, NA, as trustee, dated as of February 20, 2002 (Filed as Exhibit 99.2 to the Current Report
 85




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##### Table of Contents



ExhibitNumber
    
    Descriptionon Form 8-K of TEPPCO
Partners, L.P. (Commission File No. 1-10403) filed on February 20, 2002
and incorporated herein by reference).4.5
    
    First Supplemental Indenture between TEPPCO Partners, L.P., as issuer, TE
Products Pipeline Company, Limited Partnership, TCTM, L.P., TEPPCO Midstream
Companies, L.P. and Jonah Gas Gathering Company, as subsidiary guarantors, and First
Union National Bank, NA, as trustee, dated as of February 20, 2002 (Filed as Exhibit
99.3 to the Current Report on Form 8-K of TEPPCO Partners, L.P. (Commission File No.
1-10403) filed on February 20, 2002 and incorporated herein by reference).4.6
    
    Second Supplemental Indenture, dated as of June 27, 2002, among TEPPCO
Partners, L.P., as issuer, TE Products Pipeline Company, Limited Partnership, TCTM,
L.P., TEPPCO Midstream Companies, L.P., and Jonah Gas Gathering Company, as Initial
Subsidiary Guarantors, and Val Verde Gas Gathering Company, L.P., as New Subsidiary
Guarantor, and Wachovia Bank, National Association, formerly known as First Union
National Bank, as trustee (Filed as Exhibit 4.6 to Form 10-Q of TEPPCO Partners, L.P.
(Commission File No. 1-10403) for the quarter ended June 30, 2002 and incorporated
herein by reference).4.7
    
    Third Supplemental Indenture among TEPPCO Partners, L.P. as issuer, TE
Products Pipeline Company, Limited Partnership, TCTM, L.P., TEPPCO Midstream
Companies, L.P., Jonah Gas Gathering Company and Val Verde Gas Gathering Company, L.P.
as Subsidiary Guarantors, and Wachovia Bank, National Association, as trustee, dated
as of January 30, 2003 (Filed as Exhibit 4.7 to Form 10-K of TEPPCO Partners, L.P.
(Commission File No. 1-10403) for the year ended December 31, 2002 and incorporated
herein by reference).4.8
    
    Full Release of Guarantee dated as of July 31, 2006 by Wachovia Bank,
National Association, as trustee, in favor of Jonah Gas Gathering Company (Filed as
Exhibit 4.8 to Form 10-Q of TEPPCO Partners, L.P. (Commission File No. 1-10403) for
the quarter ended September 30, 2006 and incorporated herein by reference).4.9
    
    Indenture, dated as of May 14, 2007, by and among TEPPCO Partners, L.P., as
issuer, TE Products Pipeline Company, Limited Partnership, TCTM, L.P., TEPPCO
Midstream Companies, L.P. and Val Verde Gas Gathering Company, L.P., as subsidiary
guarantors, and The Bank of New York Trust Company, N.A., as trustee (Filed as Exhibit
99.1 to the Current Report on Form 8-K of TEPPCO Partners, L.P. (Commission File No.
1-10403) filed on May 15, 2007 and incorporated herein by reference).4.10
    
    First Supplemental Indenture, dated as of May 18, 2007, by and among TEPPCO
Partners, L.P., as issuer, TE Products Pipeline Company, Limited Partnership, TCTM,
L.P., TEPPCO Midstream Companies, L.P. and Val Verde Gas Gathering Company, L.P., as
subsidiary guarantors, and The Bank of New York Trust Company, N.A., as trustee (Filed
as Exhibit 4.2 to the Current Report on Form 8-K of TEPPCO Partners, L.P. (Commission
File No. 1-10403) filed on May 18, 2007 and incorporated herein by reference).4.11
    
    First Supplemental Indenture, dated as of June 30, 2007, by and among TE
Products Pipeline Company, LLC and The Bank of New York Trust Company, N.A., as
trustee (Filed as Exhibit 4.1 to the Current Report on Form 8-K of TE Products
Pipeline Company, LLC (Commission File No. 1-13603) filed on July 6, 2007 and
incorporated herein by reference).4.12
    
    Second Supplemental Indenture, dated as of June 30, 2007, by and among TEPPCO
Partners, L.P., as issuer, TE Products Pipeline Company, Limited Partnership, TCTM,
L.P., TEPPCO Midstream Companies, L.P. , Val Verde Gas Gathering Company, L.P., TE
Products Pipeline Company, LLC and TEPPCO Midstream Companies, LLC, as subsidiary
guarantors, and The Bank of New York Trust Company, N.A., as trustee (Filed as Exhibit 4.2 to the
Current Report on Form 8-K of TE Products Pipeline Company, LLC
(Commission File No. 1-13603) filed on July 6, 2007 and incorporated
herein by reference).
 86




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##### Table of Contents



ExhibitNumber
    
    Description4.13
    
    Fourth Supplemental Indenture, dated June 30, 2007, by and among TEPPCO
Partners, L.P., as issuer, TE Products Pipeline Company, Limited Partnership, TCTM,
L.P., TEPPCO Midstream Companies, L.P., Val Verde Gas Gathering Company, L.P., TE
Products Pipeline Company, LLC and TEPPCO Midstream Companies, LLC, as subsidiary
guarantors, and U.S. Bank National Association, as trustee (Filed as Exhibit 4.2 to
the Current Report on Form 8-K of TE Products Pipeline Company, LLC (Commission File
No. 1-13603) filed on July 6, 2007 and incorporated herein by reference).4.14
    
    Fourth Amendment to Amended and Restated Credit Agreement, dated as of June
30, 2007, by and among TEPPCO Partners, L.P., the Borrower, several banks and other
financial institutions, the Lenders, SunTrust Bank, as the Administrative Agent for
the Lenders and as the LC Issuing Bank, Wachovia Bank, National Association, as
Syndication Agent, and BNP Paribas, JPMorgan Chase Bank, N.A., and The Royal Bank of
Scotland Plc, as Co-Documentation. (Filed as Exhibit 4.14 to Form 10-Q of TEPPCO
Partners, L.P. (Commision File No. 1-10403) for the quarter ended June 30, 2007 and
incorporated herein by reference).10.1+*
    
    Form of TPP Employee Restricted Unit Grant, as amended, of Texas Eastern Products
Pipeline Company, LLC under the EPCO, Inc. 2006 TPP Long-Term Incentive Plan.10.2+*
    
    Form of TPP Employee Option Grant, as amended, of Texas Eastern Products Pipeline
Company, LLC under the EPCO, Inc. 2006 TPP Long-Term Incentive Plan.12.1*
    
    Statement of Computation of Ratio of Earnings to Fixed Charges.31.1*
    
    Certification of Chief Executive Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.31.2*
    
    Certification of Chief Financial Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.32.1**
    
    Certification of Chief Executive Officer Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.32.2**
    
    Certification of Chief Financial Officer Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
 
 *
    
    Filed herewith.**
    
    Furnished herewith pursuant to Item 601(b)-(32) of Regulation S-K.+
    
    A management contract or compensation plan or arrangement. 87