##### 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 June 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
    
    76-0291058
(I.R.S. Employer Identification Number)Incorporation or Organization)
 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
 PART I. FINANCIAL INFORMATIONPageItem 1. Financial StatementsConsolidated Balance Sheets as of June 30, 2007 and December 31, 2006 (unaudited)
    
    
    1Statements of Consolidated Income and Comprehensive Income For the Three Months and Six
Months Ended June 30, 2007 and 2006 (unaudited)
    
    
    2Statements of Consolidated Cash Flows For the Six Months Ended June 30, 2007 and 2006
(unaudited)
    
    
    4Statement of Consolidated Partners Capital For the Six Months Ended June 30, 2007 (unaudited)
    
    
    5Notes to the Consolidated Financial Statements (unaudited)
    
    
    6Note 1. Partnership Organization
    
    
    6Note 2. General Accounting Policies and Related Matters
    
    
    7Note 3. Accounting for Unit-Based Awards
    
    
    10Note 4. Employee Benefit Plans
    
    
    13Note 5. Financial Instruments  Interest Rate Swaps
    
    
    14Note 6. Inventories
    
    
    15Note 7. Property, Plant and Equipment
    
    
    16Note 8. Investments in Unconsolidated Affiliates
    
    
    16Note 9. Dispositions and Discontinued Operations
    
    
    20Note 10. Intangible Assets and Goodwill
    
    
    22Note 11. Debt Obligations
    
    
    24Note 12. Partners Capital and Distributions
    
    
    27Note 13. Business Segments
    
    
    30Note 14. Related Party Transactions
    
    
    34Note 15. Earnings per Unit
    
    
    38Note 16. Commitments and Contingencies
    
    
    39Note 17. Supplemental Cash Flow Information
    
    
    45Note 18. Supplemental Condensed Consolidating Financial Information
    
    
    45Note 19. Subsequent Events
    
    
    50Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    51Cautionary Note Regarding Forward-Looking Statements
    
    
    52Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    74Item 4. Controls and Procedures
    
    
    76PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    77Item 1A. Risk Factors
    
    
    77Item 5. Other Information
    
    
    79Item 6. Exhibits
    
    
    79Signatures
    
    
    83Fourth Amendment to Amended and Restated Credit AgreementForm of Phantom Unit Grant for DirectorsCompany AgreementAssignment, Assumption and Amendment No.2 to Guaranty AgreementStatement 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
  i




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 TEPPCO PARTNERS, L.P.
 
 CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands)
 June 30,
    
    
    December 31,2007
    
    
    2006ASSETSCurrent assets:Cash and cash equivalents
    
    $
    22
    
    
    $
    70Accounts receivable, trade (net of allowance for doubtful accounts of
$110 and $100)
    
    
    927,575
    
    
    
    852,816Accounts receivable, related parties
    
    
    1,974
    
    
    
    11,788Inventories
    
    
    93,379
    
    
    
    72,193Other
    
    
    37,533
    
    
    
    29,843Total current assets
    
    
    1,060,483
    
    
    
    966,710Property, plant and equipment, at cost(net of accumulated
depreciation and amortization of $542,676 and $509,889)
    
    
    1,703,597
    
    
    
    1,642,095Equity investments
    
    
    1,059,921
    
    
    
    1,039,710Intangible assets
    
    
    176,090
    
    
    
    185,410Goodwill
    
    
    15,506
    
    
    
    15,506Other assets
    
    
    92,399
    
    
    
    72,661Total assets
    
    $
    4,107,996
    
    
    $
    3,922,092LIABILITIES AND PARTNERS CAPITALCurrent liabilities:Accounts payable and accrued liabilities
    
    $
    958,121
    
    
    $
    855,306Accounts payable, related parties
    
    
    67,027
    
    
    
    34,461Accrued interest
    
    
    37,164
    
    
    
    35,523Other accrued taxes
    
    
    16,576
    
    
    
    14,482Other
    
    
    27,478
    
    
    
    36,776Total current liabilities
    
    
    1,106,366
    
    
    
    976,548Long-term debt:Senior notes
    
    
    1,104,459
    
    
    
    1,113,287Junior subordinated notes
    
    
    299,521
    
    
    
    Other long-term debt
    
    
    200,000
    
    
    
    490,000Total long-term debt
    
    
    1,603,980
    
    
    
    1,603,287Deferred tax liability
    
    
    
    
    
    
    652Other liabilities and deferred credits
    
    
    35,818
    
    
    
    19,461Other liabilities, related party
    
    
    
    
    
    
    1,814Commitments and contingenciesPartners capital:Limited partners interests:Limited partner units (89,804,829 and 89,804,829 units
outstanding)
    
    
    1,438,887
    
    
    
    1,405,559Restricted limited partner units (62,400 and 0 units outstanding)
    
    
    63
    
    
    
    General partners interest
    
    
    (78,869
    )
    
    
    (85,655
    )Accumulated other comprehensive income
    
    
    1,751
    
    
    
    426Total partners capital
    
    
    1,361,832
    
    
    
    1,320,330Total liabilities and partners capital
    
    $
    4,107,996
    
    
    $
    3,922,092
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TEPPCO PARTNERS, L.P.
 
 STATEMENTS OF CONSOLIDATED INCOME AND COMPREHENSIVE INCOME
(Unaudited)
(Dollars in thousands)
 For the Three Months Ended
    
    
    For the Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Operating revenues:Sales of petroleum products
    
    $
    1,933,104
    
    
    $
    2,287,266
    
    
    $
    3,783,232
    
    
    $
    4,683,612Transportation  Refined products
    
    
    41,718
    
    
    
    39,443
    
    
    
    78,853
    
    
    
    71,242Transportation  LPGs
    
    
    16,747
    
    
    
    13,354
    
    
    
    52,800
    
    
    
    42,775Transportation  Crude oil
    
    
    9,580
    
    
    
    10,544
    
    
    
    20,370
    
    
    
    19,467Transportation  NGLs
    
    
    11,098
    
    
    
    10,738
    
    
    
    22,039
    
    
    
    21,391Gathering  Natural gas
    
    
    15,452
    
    
    
    41,459
    
    
    
    30,860
    
    
    
    82,834Other
    
    
    21,737
    
    
    
    22,248
    
    
    
    39,711
    
    
    
    40,100Total operating revenues
    
    
    2,049,436
    
    
    
    2,425,052
    
    
    
    4,027,865
    
    
    
    4,961,421Costs and expenses:Purchases of petroleum products
    
    
    1,900,944
    
    
    
    2,254,756
    
    
    
    3,714,938
    
    
    
    4,625,796Operating expense
    
    
    43,917
    
    
    
    55,275
    
    
    
    89,083
    
    
    
    101,778Operating fuel and power
    
    
    14,829
    
    
    
    12,987
    
    
    
    30,103
    
    
    
    27,284General and administrative
    
    
    8,164
    
    
    
    9,158
    
    
    
    16,762
    
    
    
    18,359Depreciation and amortization
    
    
    25,880
    
    
    
    28,676
    
    
    
    51,249
    
    
    
    57,433Taxes  other than income taxes
    
    
    4,975
    
    
    
    6,048
    
    
    
    10,218
    
    
    
    11,359Gains on sales of assets
    
    
    (2
    )
    
    
    (18
    )
    
    
    (18,651
    )
    
    
    (1,396
    )Total costs and expenses
    
    
    1,998,707
    
    
    
    2,366,882
    
    
    
    3,893,702
    
    
    
    4,840,613Operating income
    
    
    50,729
    
    
    
    58,170
    
    
    
    134,163
    
    
    
    120,808Other income (expense):Interest expense  net
    
    
    (22,785
    )
    
    
    (19,198
    )
    
    
    (44,996
    )
    
    
    (40,341
    )Gain on sale of ownership interest in Mont
Belvieu Storage Partners, L.P.
    
    
    (189
    )
    
    
    
    
    
    
    59,648
    
    
    
    Equity earnings
    
    
    19,234
    
    
    
    2,674
    
    
    
    35,797
    
    
    
    3,663Interest income
    
    
    445
    
    
    
    184
    
    
    
    787
    
    
    
    656Other income  net
    
    
    535
    
    
    
    270
    
    
    
    779
    
    
    
    697Income before provision for income taxes
    
    
    47,969
    
    
    
    42,100
    
    
    
    186,178
    
    
    
    85,483Provision for income taxes
    
    
    209
    
    
    
    514
    
    
    
    227
    
    
    
    514Income from continuing operations
    
    
    47,760
    
    
    
    41,586
    
    
    
    185,951
    
    
    
    84,969Income (loss) from discontinued operations
    
    
    
    
    
    
    (110
    )
    
    
    
    
    
    
    1,497Gain on sale of discontinued operations
    
    
    
    
    
    
    (12
    )
    
    
    
    
    
    
    17,872Discontinued operations
    
    
    
    
    
    
    (122
    )
    
    
    
    
    
    
    19,369Net income
    
    $
    47,760
    
    
    $
    41,464
    
    
    $
    185,951
    
    
    $
    104,338Changes in fair values of interest rate cash flow
hedges
    
    
    1,295
    
    
    
    
    
    
    
    1,512
    
    
    
    Changes in fair values of crude oil cash flow hedges
    
    
    (513
    )
    
    
    (509
    )
    
    
    (153
    )
    
    
    (273
    )Comprehensive income
    
    $
    48,542
    
    
    $
    40,955
    
    
    $
    187,310
    
    
    $
    104,065
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TEPPCO PARTNERS, L.P.
 STATEMENTS OF CONSOLIDATED INCOME AND COMPREHENSIVE INCOME  (Continued)
(Unaudited)
(Dollars in thousands, except per Unit amounts)
 For the Three Months Ended
    
    
    For the Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Net Income Allocation:Limited Partner Unitholders:Income from continuing operations
    
    $
    39,926
    
    
    $
    29,360
    
    
    $
    155,450
    
    
    $
    59,988Income (loss) from discontinued operations
    
    
    
    
    
    
    (86
    )
    
    
    
    
    
    
    13,674Total Limited Partner Unitholders net
income allocation
    
    
    39,926
    
    
    
    29,274
    
    
    
    155,450
    
    
    
    73,662General Partner:Income from continuing operations
    
    
    7,834
    
    
    
    12,226
    
    
    
    30,501
    
    
    
    24,981Income (loss) from discontinued operations
    
    
    
    
    
    
    (36
    )
    
    
    
    
    
    
    5,695Total General Partner net income allocation
    
    
    7,834
    
    
    
    12,190
    
    
    
    30,501
    
    
    
    30,676Total net income allocated
    
    $
    47,760
    
    
    $
    41,464
    
    
    $
    185,951
    
    
    $
    104,338Basic and diluted net income per Limited Partner Unit:Continuing operations
    
    $
    0.44
    
    
    $
    0.42
    
    
    $
    1.73
    
    
    $
    0.85Discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.20Basic and diluted net
income per Limited
Partner Unit
    
    $
    0.44
    
    
    $
    0.42
    
    
    $
    1.73
    
    
    $
    1.05Weighted average Limited
Partner Units outstanding
    
    
    89,832
    
    
    
    69,964
    
    
    
    89,819
    
    
    
    69,964
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TEPPCO PARTNERS, L.P.
 
 STATEMENTS OF CONSOLIDATED CASH FLOWS
 (Unaudited)
 (Dollars in thousands)
 For the Six Months EndedJune 30,2007
    
    
    2006Operating activities:Net income
    
    $
    185,951
    
    
    $
    104,338Adjustments to reconcile net income to cash provided by
continuing operating activities:Income from discontinued operations
    
    
    
    
    
    
    (19,369
    )Deferred income taxes
    
    
    (654
    )
    
    
    514Depreciation and amortization
    
    
    51,249
    
    
    
    57,433Amortization of deferred compensation
    
    
    202
    
    
    
    Earnings in equity investments
    
    
    (35,797
    )
    
    
    (3,663
    )Distributions from equity investments
    
    
    68,159
    
    
    
    16,297Gains on sales of assets
    
    
    (18,651
    )
    
    
    (1,396
    )Gain on sale of ownership interest in Mont Belvieu Storage
Partners, L.P.
    
    
    (59,648
    )
    
    
    Non-cash portion of interest expense
    
    
    591
    
    
    
    840Net effect of changes in operating accounts
    
    
    7,731
    
    
    
    (13,460
    )Net cash provided by continuing operating activities
    
    
    199,133
    
    
    
    141,534Net cash provided by discontinued operations
    
    
    
    
    
    
    1,521Net cash provided by operating activities
    
    
    199,133
    
    
    
    143,055Investing activities:Proceeds from sales of assets
    
    
    26,538
    
    
    
    39,750Proceeds from sale of ownership interest
    
    
    137,606
    
    
    
    Investment in Mont Belvieu Storage Partners, L.P.
    
    
    
    
    
    
    (1,720
    )Investment in Centennial Pipeline LLC
    
    
    (11,081
    )
    
    
    (2,500
    )Investment in Jonah Gas Gathering Company
    
    
    (86,153
    )
    
    
    Capitalized costs incurred to develop identifiable intangible assets
    
    
    (2,500
    )
    
    
    Cash paid for linefill on assets owned
    
    
    (15,095
    )
    
    
    (1,371
    )Capital expenditures
    
    
    (109,876
    )
    
    
    (82,463
    )Net cash used in investing activities
    
    
    (60,561
    )
    
    
    (48,304
    )Financing activities:Proceeds from revolving credit facility
    
    
    405,850
    
    
    
    305,550Repayments on revolving credit facility
    
    
    (695,850
    )
    
    
    (266,450
    )Issuance of Junior Subordinated Notes
    
    
    299,517
    
    
    
    Debt issuance costs
    
    
    (3,750
    )
    
    
    Proceeds from termination of treasury locks
    
    
    1,589
    
    
    
    Distributions paid
    
    
    (145,976
    )
    
    
    (133,785
    )Net cash used in financing activities
    
    
    (138,620
    )
    
    
    (94,685
    )Net change in cash and cash equivalents
    
    
    (48
    )
    
    
    66Cash and cash equivalents, January 1
    
    
    70
    
    
    
    119Cash and cash equivalents, June 30
    
    $
    22
    
    
    $
    185
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TEPPCO PARTNERS, L.P.
 
 STATEMENT OF CONSOLIDATED PARTNERS CAPITAL
 (Unaudited)
 (Dollars in thousands, except Unit amounts)
 Outstanding
    
    
    
    
    
    
    
    
    
    
    AccumulatedLimited
    
    
    General
    
    
    Limited
    
    
    OtherPartner
    
    
    Partners
    
    
    Partners
    
    
    ComprehensiveUnits
    
    
    Interest
    
    
    Interests
    
    
    Income
    
    
    TotalBalance, December 31, 2006
    
    
    89,804,829
    
    
    $
    (85,655
    )
    
    $
    1,405,559
    
    
    $
    426
    
    
    $
    1,320,330Net income allocation
    
    
    
    
    
    
    30,501
    
    
    
    155,450
    
    
    
    
    
    
    
    185,951Issuance of restricted Units under 2006
LTIP
    
    
    62,400
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Cash distributions
    
    
    
    
    
    
    (23,841
    )
    
    
    (122,135
    )
    
    
    
    
    
    
    (145,976
    )Noncash contribution
    
    
    
    
    
    
    126
    
    
    
    
    
    
    
    
    
    
    
    126Amortization of equity awards
    
    
    
    
    
    
    
    
    
    
    76
    
    
    
    
    
    
    
    76Changes in fair values of crude oil
cash flow hedges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (153
    )
    
    
    (153
    )Changes in fair values of interest rate
cash flow hedges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,512
    
    
    
    1,512Pension benefit SFAS No. 158 adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (34
    )
    
    
    (34
    )Balance, June 30, 2007
    
    
    89,867,229
    
    
    $
    (78,869
    )
    
    $
    1,438,950
    
    
    $
    1,751
    
    
    $
    1,361,832
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##### Table of Contents



TEPPCO PARTNERS, L.P.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)
 
 NOTE 1. PARTNERSHIP ORGANIZATION
 Partnership Organization
    Basis of Presentation
   6




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
 
 NOTE 2. GENERAL ACCOUNTING POLICIES AND RELATED MATTERS
 Business Segments
   Estimates
  Income Taxes
  Net Income Per Unit
   7




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TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
  Recent Accounting Developments
 How
Taxes Collected from Customers and Remitted to Governmental Authorities Should Be Presented in the
Income Statement (That Is, Gross versus Net Presentation)
 Accounting for Uncertainty in Income Taxes Accounting for Income Taxes
 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 CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
  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 CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
  
 NOTE 3. ACCOUNTING FOR UNIT-BASED AWARDS
 Share-Based Payment
 1999 Phantom Unit Retention Plan
   2000 Long Term Incentive Plan
   10




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TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
  2005 Phantom Unit Plan
   EPCO, Inc. 2006 TPP Long-Term Incentive Plan
   11




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
  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
    
    
    
    45.35Outstanding at June 30, 2007
    
    
    155,000
    
    
    $
    45.35
    
    
    
    9.9Options exercisable at:June 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%.  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
    )
    
    
    45.35Restricted Units at June 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%. 12




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
  Unit Appreciation Rights and Phantom Units
    
 NOTE 4. EMPLOYEE BENEFIT PLANS
   13




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TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
  Employers Accounting for Settlements and Curtailments of Defined
Benefit Pension Plans and for Termination Benefits,
  
 NOTE 5. FINANCIAL INSTRUMENTS  INTEREST RATE SWAPS
    14




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TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
    
 NOTE 6. INVENTORIES
  June 30,
    
    
    December 31,2007
    
    
    2006Crude oil (1)
    
    $
    64,110
    
    
    $
    49,312Refined products and LPGs (2)
    
    
    14,403
    
    
    
    7,636Lubrication oils and specialty chemicals
    
    
    7,836
    
    
    
    7,500Materials and supplies
    
    
    6,760
    
    
    
    7,029Other
    
    
    270
    
    
    
    716Total
    
    $
    93,379
    
    
    $
    72,193
 
 (1)
    
    At June 30, 2007 and December 31, 2006, the substantial majority of our crude oil
inventory was subject to forward sales contracts.(2)
    
    Refined products and LPGs inventory is managed on a combined basis. 15




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
 
 NOTE 7. PROPERTY, PLANT AND EQUIPMENT
  EstimatedUseful Life
    
    
    June 30,
    
    
    December 31,In Years
    
    
    2007
    
    
    2006Land and right of way
    
    
    20-40
    
    
    $
    134,273
    
    
    $
    128,791Line pipe and fittings
    
    
    20-40
    
    
    
    1,213,715
    
    
    
    1,218,226Storage tanks
    
    
    20-40
    
    
    
    210,191
    
    
    
    196,306Buildings and improvements
    
    
    5-40
    (1)
    
    
    64,164
    
    
    
    58,973Machinery and equipment
    
    
    5-40
    (2)
    
    
    381,943
    
    
    
    346,868Construction work in progress
    
    
    
    
    
    
    241,987
    
    
    
    202,820Total property, plant and equipment
    
    
    
    
    
    $
    2,246,273
    
    
    $
    2,151,984Less accumulated depreciation and amortization
    
    
    
    
    
    
    542,676
    
    
    
    509,889Net property, plant and equipment
    
    
    
    
    
    $
    1,703,597
    
    
    $
    1,642,095
 
 (1)
    
    In general, the estimated useful lives of major components of this category are as
follows: buildings, 20-40 years and leasehold improvements and other, 5-10 years.(2)
    
    In general, the estimated useful lives of major components of this category are as
follows: pumping equipment, 20-30 years; other station equipment, 20-30 years; delivery
facilities, 20-40 years; communication systems, 5-10 years; office furniture and equipment,
5-10 years; and vehicles and other work equipment, 5-10 years.  
 NOTE 8. INVESTMENTS IN UNCONSOLIDATED AFFILIATES
  Ownership
    
    
    Investments in unconsolidatedPercentage at
    
    
    affiliates atJune 30,
    
    
    June 30,
    
    
    December 31,2007
    
    
    2007
    
    
    2006Downstream Segment:Centennial Pipeline LLC (Centennial)
    
    
    50.0
    %
    
    $
    80,687
    
    
    $
    62,321MB Storage (1)
    
    
    
    
    
    
    
    
    
    
    85,626Other
    
    
    25.0
    %
    
    
    383
    
    
    
    369Upstream Segment:Seaway Crude Pipeline Company (Seaway)
    
    
    50.0
    %
    
    
    192,233
    
    
    
    195,584Midstream Segment:Jonah Gas Gathering Company (Jonah)
    
    
    95.3
    %
    
    
    786,618
    
    
    
    695,810Total
    
    
    
    
    
    $
    1,059,921
    
    
    $
    1,039,710
 16




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
 
 (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 Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Equity earnings (losses):Downstream Segment
    
    $
    (3,879
    )
    
    $
    (2,366
    )
    
    $
    (5,366
    )
    
    $
    (3,632
    )Upstream Segment
    
    
    1,448
    
    
    
    5,040
    
    
    
    3,237
    
    
    
    7,295Midstream Segment
    
    
    21,665
    
    
    
    
    
    
    
    37,926
    
    
    
    Total equity earnings
    
    $
    19,234
    
    
    $
    2,674
    
    
    $
    35,797
    
    
    $
    3,663
 Seaway
  Centennial
  MB Storage
  17




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
   Jonah
   18




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
 Summarized Financial Information of Unconsolidated Affiliates
  For the Three Months EndedJune 30, 2007
    
    June 30, 2006Operating
    
    Net
    
    
    
    
    
    Operating
    
    NetRevenues
    
    Income
    
    Income (Loss)
    
    Revenues
    
    Income
    
    Income (Loss)Downstream Segment (1)
    
    $
    11,735
    
    
    $
    1,687
    
    
    $
    (1,080
    )
    
    $
    16,828
    
    
    $
    1,268
    
    
    $
    (1,550
    )Upstream Segment
    
    
    16,471
    
    
    
    6,308
    
    
    
    6,386
    
    
    
    27,319
    
    
    
    12,291
    
    
    
    12,351Midstream Segment (2)
    
    
    46,399
    
    
    
    23,531
    
    
    
    23,872
    
    
    
    
    
    
    
    
    
    
    
    For the Six Months EndedJune 30, 2007
    
    June 30, 2006Operating
    
    Net
    
    
    
    
    
    Operating
    
    NetRevenues
    
    Income
    
    Income
    
    Revenues
    
    Income
    
    Income (Loss)Downstream Segment (1)
    
    $
    28,150
    
    
    $
    5,791
    
    
    $
    273
    
    
    $
    33,900
    
    
    $
    4,237
    
    
    $
    (1,258
    )Upstream Segment
    
    
    34,641
    
    
    
    14,143
    
    
    
    14,320
    
    
    
    48,882
    
    
    
    18,975
    
    
    
    19,100Midstream Segment (2)
    
    
    102,923
    
    
    
    43,543
    
    
    
    44,041
    
    
    
    
    
    
    
    
    
    
    
    
 
 (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, Jonah was
deconsolidated and has been subsequently accounted for as an equity investment.  June 30, 2007Current
    
    Noncurrent
    
    Current
    
    
    
    
    
    Noncurrent
    
    PartnersAssets
    
    Assets
    
    Liabilities
    
    Long-term Debt
    
    Liabilities
    
    CapitalDownstream Segment (1)
    
    $
    16,787
    
    
    $
    253,250
    
    
    $
    16,637
    
    
    $
    135,000
    
    
    $
    7,179
    
    
    $
    111,221Upstream Segment
    
    
    21,770
    
    
    
    252,439
    
    
    
    7,383
    
    
    
    
    
    
    
    26
    
    
    
    266,800Midstream Segment
    
    
    40,750
    
    
    
    948,958
    
    
    
    17,697
    
    
    
    
    
    
    
    203
    
    
    
    971,808December 31, 2006Current
    
    Noncurrent
    
    Current
    
    
    
    
    
    Noncurrent
    
    PartnersAssets
    
    Assets
    
    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. 19




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TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
 
 NOTE 9. DISPOSITIONS AND DISCONTINUED OPERATIONS
 Dispositions
 MB Storage
   Other Refined Products Assets
  Discontinued operations
 Pioneer Plant
  20




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
  For the Three Months
    
    
    For the Six MonthsEnded June 30,
    
    
    Ended June 30,2006
    
    
    2006Operating revenues:Sales of petroleum products
    
    $
    18
    
    
    $
    3,828Other
    
    
    11
    
    
    
    932Total operating revenues
    
    
    29
    
    
    
    4,760Costs and expenses:Purchases of petroleum products
    
    
    139
    
    
    
    3,000Operating expense
    
    
    
    
    
    
    182Depreciation and amortization
    
    
    
    
    
    
    51Taxes  other than income taxes
    
    
    
    
    
    
    30Total costs and expenses
    
    
    139
    
    
    
    3,263Income (loss) from discontinued operations
    
    $
    (110
    )
    
    $
    1,497
  For the Six MonthsEnded June 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
 21




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
 
 NOTE 10. INTANGIBLE ASSETS AND GOODWILL
 Intangible Assets
  June 30, 2007
    
    
    December 31, 2006Gross Carrying
    
    
    Accumulated
    
    
    Gross Carrying
    
    
    AccumulatedAmount
    
    
    Amortization
    
    
    Amount
    
    
    AmortizationIntangible assets:Gathering and transportation agreements
    
    $
    241,537
    
    
    $
    (97,400
    )
    
    $
    241,537
    
    
    $
    (87,121
    )Fractionation agreement
    
    
    38,000
    
    
    
    (17,575
    )
    
    
    38,000
    
    
    
    (16,625
    )Other
    
    
    14,810
    
    
    
    (3,282
    )
    
    
    12,310
    
    
    
    (2,691
    )Subtotal
    
    
    294,347
    
    
    
    (118,257
    )
    
    
    291,847
    
    
    
    (106,437
    )Excess investments:Centennial Pipeline LLC
    
    
    33,390
    
    
    
    (18,172
    )
    
    
    33,390
    
    
    
    (16,579
    )Seaway Crude Pipeline Company
    
    
    26,908
    
    
    
    (4,793
    )
    
    
    26,908
    
    
    
    (4,450
    )Jonah Gas Gathering Company
    
    
    3,949
    
    
    
    (33
    )
    
    
    2,924
    
    
    
    Subtotal
    
    
    64,247
    
    
    
    (22,998
    )
    
    
    63,222
    
    
    
    (21,029
    )Total intangible assets
    
    $
    358,594
    
    
    $
    (141,255
    )
    
    $
    355,069
    
    
    $
    (127,466
    )
     22




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
   Intangible Assets
    
    Excess Investments2007
    
    $
    23,426
    
    
    $
    4,4282008
    
    
    21,164
    
    
    
    4,5462009
    
    
    18,553
    
    
    
    4,7522010
    
    
    18,534
    
    
    
    3,5462011
    
    
    18,526
    
    
    
    844
 Goodwill
 Goodwill and Other Intangible Assets,
   Downstream
    
    Midstream
    
    Upstream
    
    SegmentsSegment
    
    Segment
    
    Segment
    
    TotalGoodwill
    
    $
    1,339
    
    
    $
    
    
    
    $
    14,167
    
    
    $
    15,506
 23




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
 
 NOTE 11. DEBT OBLIGATIONS
  June 30,
    
    
    December 31,2007
    
    
    2006Senior debt obligations:Revolving Credit Facility, due December 2011
    
    $
    200,000
    
    
    $
    490,0006.45% TE Products Senior Notes, due January 2008 (1)
    
    
    179,983
    
    
    
    179,9687.625% Senior Notes, due February 2012
    
    
    498,976
    
    
    
    498,8666.125% Senior Notes, due February 2013
    
    
    199,202
    
    
    
    199,1307.51% TE Products Senior Notes, due January 2028
    
    
    210,000
    
    
    
    210,000Total senior debt obligations
    
    
    1,288,161
    
    
    
    1,577,9647.000% Junior Subordinated Notes, due June 2067
    
    
    299,521
    
    
    
    Total borrowings
    
    
    1,587,682
    
    
    
    1,577,964Adjustment to carrying value associated with hedges of fair
value swaps
    
    
    16,298
    
    
    
    25,323Total Debt Instruments (1)
    
    $
    1,603,980
    
    
    $
    1,603,287
 
 (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 June 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. Revolving Credit Facility
  24




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
 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
    %
     25




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
 Junior Subordinated Notes
     26




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
 Fair Values
  Fair ValueJune 30,
    
    December 31,Face Value
    
    2007
    
    20066.45% TE Products Senior Notes, due January 2008
    
    $
    180,000
    
    
    $
    180,630
    
    
    $
    181,6417.625% Senior Notes, due February 2012
    
    
    500,000
    
    
    
    532,902
    
    
    
    537,0676.125% Senior Notes, due February 2013
    
    
    200,000
    
    
    
    199,697
    
    
    
    201,6107.51% TE Products Senior Notes, due January 2028
    
    
    210,000
    
    
    
    218,762
    
    
    
    221,4717.000% Junior Subordinated Notes, due June 2067
    
    
    300,000
    
    
    
    286,045
    
    
    
    
  Letter of Credit
  
 NOTE 12. PARTNERS CAPITAL AND DISTRIBUTIONS
 Quarterly Distributions of Available Cash
  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
    %
 27




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
  For the Six Months EndedJune 30,2007
    
    
    2006Limited Partner Units (1)
    
    $
    122,135
    
    
    $
    94,451General Partner Ownership Interest
    
    
    2,493
    
    
    
    1,928General Partner Incentive
    
    
    21,348
    
    
    
    37,406Total Cash Distributions Paid
    
    $
    145,976
    
    
    $
    133,785Total Cash Distributions Paid Per Unit
    
    $
    1.360
    
    
    $
    1.350
 
 (1)
    
    The 2007 amount includes $19.2 million of distributions paid to affiliates of our
General Partner in respect of the 14.1 million Units we issued in December 2006.  EPCO, Inc. TPP Employee Unit Purchase Plan
    28




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
 General Partners Interest
      Accumulated Other Comprehensive Income
 Reporting Comprehensive Income
 29




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
   Balance at December 31, 2006
    
    $
    426Changes in fair values of interest rate cash flow hedges
    
    
    1,512Changes in fair values of crude oil cash flow hedges
    
    
    (153
    )Pension benefit SFAS No. 158 adjustment
    
    
    (34
    )Balance at June 30, 2007
    
    $
    1,751
 
 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.
    30




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
    For the Three Months Ended June 30, 2007Downstream
    
    
    Upstream
    
    
    Midstream
    
    
    Segments
    
    
    PartnershipSegment
    
    
    Segment
    
    
    Segment
    
    
    Total
    
    
    and Other
    
    
    ConsolidatedSales of petroleum products
    
    $
    9,403
    
    
    $
    1,923,865
    
    
    $
    
    
    
    $
    1,933,268
    
    
    $
    (164
    )
    
    $
    1,933,104Operating revenues
    
    
    73,777
    
    
    
    12,121
    
    
    
    30,434
    
    
    
    116,332
    
    
    
    
    
    
    
    116,332Purchases of petroleum products
    
    
    9,311
    
    
    
    1,892,878
    
    
    
    
    
    
    
    1,902,189
    
    
    
    (1,245
    )
    
    
    1,900,944Operating expenses, including
power and taxes  other than
income taxes
    
    
    36,955
    
    
    
    16,449
    
    
    
    10,316
    
    
    
    63,720
    
    
    
    1
    
    
    
    63,721General and administrative
expenses
    
    
    4,244
    
    
    
    1,770
    
    
    
    2,150
    
    
    
    8,164
    
    
    
    
    
    
    
    8,164Depreciation and amortization
expense
    
    
    11,724
    
    
    
    4,148
    
    
    
    10,008
    
    
    
    25,880
    
    
    
    
    
    
    
    25,880Gains on sales of assets
    
    
    
    
    
    
    (2
    )
    
    
    
    
    
    
    (2
    )
    
    
    
    
    
    
    (2
    )Operating income
    
    
    20,946
    
    
    
    20,743
    
    
    
    7,960
    
    
    
    49,649
    
    
    
    1,080
    
    
    
    50,729Gain on sale of ownership
interest in MB Storage
    
    
    (189
    )
    
    
    
    
    
    
    
    
    
    
    (189
    )
    
    
    
    
    
    
    (189
    )Equity (losses) earnings
    
    
    (3,879
    )
    
    
    1,448
    
    
    
    22,745
    
    
    
    20,314
    
    
    
    (1,080
    )
    
    
    19,234Interest income
    
    
    229
    
    
    
    50
    
    
    
    166
    
    
    
    445
    
    
    
    
    
    
    
    445Other income (expense), net
    
    
    529
    
    
    
    7
    
    
    
    (1
    )
    
    
    535
    
    
    
    
    
    
    
    535Earnings before interest
expense, provision for
income taxes and
discontinued operations
    
    $
    17,636
    
    
    $
    22,248
    
    
    $
    30,870
    
    
    $
    70,754
    
    
    $
    
    
    
    $
    70,754
 31




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
 For the Three Months Ended June 30, 2006Downstream
    
    
    Upstream
    
    
    Midstream
    
    
    Segments
    
    
    PartnershipSegment
    
    
    Segment
    
    
    Segment
    
    
    Total
    
    
    and Other
    
    
    ConsolidatedSales of petroleum products
    
    $
    
    
    
    $
    2,273,878
    
    
    $
    13,776
    
    
    $
    2,287,654
    
    
    $
    (388
    )
    
    $
    2,287,266Operating revenues
    
    
    69,333
    
    
    
    13,134
    
    
    
    56,569
    
    
    
    139,036
    
    
    
    (1,250
    )
    
    
    137,786Purchases of petroleum products
    
    
    
    
    
    
    2,243,143
    
    
    
    12,949
    
    
    
    2,256,092
    
    
    
    (1,336
    )
    
    
    2,254,756Operating expenses, including
power and taxes  other than
income taxes
    
    
    37,743
    
    
    
    18,160
    
    
    
    18,709
    
    
    
    74,612
    
    
    
    (302
    )
    
    
    74,310General and administrative
expenses
    
    
    4,701
    
    
    
    1,870
    
    
    
    2,587
    
    
    
    9,158
    
    
    
    
    
    
    
    9,158Depreciation and amortization
expense
    
    
    10,133
    
    
    
    3,494
    
    
    
    15,049
    
    
    
    28,676
    
    
    
    
    
    
    
    28,676Gains on sales of assets
    
    
    (18
    )
    
    
    
    
    
    
    
    
    
    
    (18
    )
    
    
    
    
    
    
    (18
    )Operating income
    
    
    16,774
    
    
    
    20,345
    
    
    
    21,051
    
    
    
    58,170
    
    
    
    
    
    
    
    58,170Equity (losses) earnings
    
    
    (2,366
    )
    
    
    5,040
    
    
    
    
    
    
    
    2,674
    
    
    
    
    
    
    
    2,674Interest income
    
    
    145
    
    
    
    
    
    
    
    39
    
    
    
    184
    
    
    
    
    
    
    
    184Other income, net
    
    
    40
    
    
    
    225
    
    
    
    5
    
    
    
    270
    
    
    
    
    
    
    
    270Earnings before interest
expense, provision for income
taxes and discontinued
operations
    
    $
    14,593
    
    
    $
    25,610
    
    
    $
    21,095
    
    
    $
    61,298
    
    
    $
    
    
    
    $
    61,298
 For the Six Months Ended June 30, 2007Downstream
    
    
    Upstream
    
    
    Midstream
    
    
    Segments
    
    
    PartnershipSegment
    
    
    Segment
    
    
    Segment
    
    
    Total
    
    
    and Other
    
    
    ConsolidatedSales of petroleum products
    
    $
    18,779
    
    
    $
    3,764,896
    
    
    $
    
    
    
    $
    3,783,675
    
    
    $
    (443
    )
    
    $
    3,783,232Operating revenues
    
    
    159,319
    
    
    
    25,507
    
    
    
    59,807
    
    
    
    244,633
    
    
    
    
    
    
    
    244,633Purchases of petroleum products
    
    
    18,705
    
    
    
    3,700,044
    
    
    
    
    
    
    
    3,718,749
    
    
    
    (3,811
    )
    
    
    3,714,938Operating expenses, including
power and taxes  other than
income taxes
    
    
    71,978
    
    
    
    35,487
    
    
    
    22,019
    
    
    
    129,484
    
    
    
    (80
    )
    
    
    129,404General and administrative
expenses
    
    
    8,319
    
    
    
    3,598
    
    
    
    4,845
    
    
    
    16,762
    
    
    
    
    
    
    
    16,762Depreciation and amortization
expense
    
    
    22,860
    
    
    
    8,216
    
    
    
    20,173
    
    
    
    51,249
    
    
    
    
    
    
    
    51,249Gains on sales of assets
    
    
    (18,651
    )
    
    
    
    
    
    
    
    
    
    
    (18,651
    )
    
    
    
    
    
    
    (18,651
    )Operating income
    
    
    74,887
    
    
    
    43,058
    
    
    
    12,770
    
    
    
    130,715
    
    
    
    3,448
    
    
    
    134,163Gain on sale of ownership interest
in MB Storage
    
    
    59,648
    
    
    
    
    
    
    
    
    
    
    
    59,648
    
    
    
    
    
    
    
    59,648Equity (losses) earnings
    
    
    (5,366
    )
    
    
    3,237
    
    
    
    41,374
    
    
    
    39,245
    
    
    
    (3,448
    )
    
    
    35,797Interest income
    
    
    431
    
    
    
    79
    
    
    
    277
    
    
    
    787
    
    
    
    
    
    
    
    787Other income, net
    
    
    758
    
    
    
    21
    
    
    
    
    
    
    
    779
    
    
    
    
    
    
    
    779Earnings before interest
expense, provision for income
taxes and discontinued
operations
    
    $
    130,358
    
    
    $
    46,395
    
    
    $
    54,421
    
    
    $
    231,174
    
    
    $
    
    
    
    $
    231,174
 32




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
 For the Six Months Ended June 30, 2006Downstream
    
    
    Upstream
    
    
    Midstream
    
    
    Segments
    
    
    PartnershipSegment
    
    
    Segment
    
    
    Segment
    
    
    Total
    
    
    and Other
    
    
    ConsolidatedSales of petroleum products (1)
    
    $
    
    
    
    $
    4,674,314
    
    
    $
    13,776
    
    
    $
    4,688,090
    
    
    $
    (4,478
    )
    
    $
    4,683,612Operating revenues
    
    
    143,400
    
    
    
    24,280
    
    
    
    112,946
    
    
    
    280,626
    
    
    
    (2,817
    )
    
    
    277,809Purchases of petroleum products (1)
    
    
    
    
    
    
    4,619,539
    
    
    
    12,949
    
    
    
    4,632,488
    
    
    
    (6,692
    )
    
    
    4,625,796Operating expenses, including
power and taxes  other than
income taxes
    
    
    73,145
    
    
    
    34,962
    
    
    
    32,917
    
    
    
    141,024
    
    
    
    (603
    )
    
    
    140,421General and administrative
expenses
    
    
    9,795
    
    
    
    3,677
    
    
    
    4,887
    
    
    
    18,359
    
    
    
    
    
    
    
    18,359Depreciation and amortization
expense
    
    
    20,430
    
    
    
    6,765
    
    
    
    30,238
    
    
    
    57,433
    
    
    
    
    
    
    
    57,433Gains on sales of assets
    
    
    (25
    )
    
    
    
    
    
    
    (1,371
    )
    
    
    (1,396
    )
    
    
    
    
    
    
    (1,396
    )Operating income
    
    
    40,055
    
    
    
    33,651
    
    
    
    47,102
    
    
    
    120,808
    
    
    
    
    
    
    
    120,808Equity (losses) earnings
    
    
    (3,632
    )
    
    
    7,295
    
    
    
    
    
    
    
    3,663
    
    
    
    
    
    
    
    3,663Interest income
    
    
    541
    
    
    
    
    
    
    
    115
    
    
    
    656
    
    
    
    
    
    
    
    656Other income, net
    
    
    423
    
    
    
    269
    
    
    
    5
    
    
    
    697
    
    
    
    
    
    
    
    697Earnings before interest expense,
provision for income taxes and
discontinued operations
    
    $
    37,387
    
    
    $
    41,215
    
    
    $
    47,222
    
    
    $
    125,824
    
    
    $
    
    
    
    $
    125,824
 
 (1)
    
    Effective April 1, 2006, we adopted EITF 04-13, which resulted in the netting of
certain sales and purchases of petroleum products transactions. The period from January 1,
2006 through March 31, 2006 was not adjusted for the adoption of EITF 04-13, as retroactive
restatement was not permitted, which impacts comparability.  Downstream
    
    Upstream
    
    Midstream
    
    Segments
    
    PartnershipSegment
    
    Segment
    
    Segment
    
    Total
    
    and Other
    
    ConsolidatedJune 30, 2007:Total assets
    
    $
    1,160,615
    
    
    $
    1,610,082
    
    
    $
    1,418,612
    
    
    $
    4,189,309
    
    
    $
    (81,313
    )
    
    $
    4,107,996Capital expenditures
    
    
    72,285
    
    
    
    32,616
    
    
    
    3,963
    
    
    
    108,864
    
    
    
    1,012
    
    
    
    109,876Non-cash investing activities
    
    
    
    
    
    
    
    
    
    
    10,864
    
    
    
    10,864
    
    
    
    
    
    
    
    10,864December 31, 2006:Total assets
    
    $
    1,160,929
    
    
    $
    1,504,699
    
    
    $
    1,335,502
    
    
    $
    4,001,130
    
    
    $
    (79,038
    )
    
    $
    3,922,092Capital expenditures
    
    
    75,344
    
    
    
    48,351
    
    
    
    42,929
    
    
    
    166,624
    
    
    
    3,422
    
    
    
    170,046Non-cash investing activities
    
    
    
    
    
    
    
    
    
    
    581,341
    
    
    
    581,341
    
    
    
    
    
    
    
    581,341
 33




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
  For the Three Months Ended
    
    
    For the Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Earnings before interest expense,
provision for income taxes and
discontinued operations
    
    $
    70,754
    
    
    $
    61,298
    
    
    $
    231,174
    
    
    $
    125,824Interest expense  net
    
    
    (22,785
    )
    
    
    (19,198
    )
    
    
    (44,996
    )
    
    
    (40,341
    )Income before provision for income taxes
    
    
    47,969
    
    
    
    42,100
    
    
    
    186,178
    
    
    
    85,483Provision for income taxes
    
    
    209
    
    
    
    514
    
    
    
    227
    
    
    
    514Income from continuing operations
    
    
    47,760
    
    
    
    41,586
    
    
    
    185,951
    
    
    
    84,969Discontinued operations
    
    
    
    
    
    
    (122
    )
    
    
    
    
    
    
    19,369Net income
    
    $
    47,760
    
    
    $
    41,464
    
    
    $
    185,951
    
    
    $
    104,338NOTE 14. RELATED PARTY TRANSACTIONS


The following table summarizes the related party transactions for the three months and six
months ended June 30, 2007 and 2006:For the Three Months Ended
    
    For the Six Months EndedJune 30,
    
    June 30,2007
    
    2006
    
    2007
    
    2006Revenues from EPCO and affiliates:Sales of petroleum products (1)
    
    $
    29
    
    
    $
    2,048
    
    
    $
    105
    
    
    $
    2,069Transportation  NGLs (2)
    
    
    3,206
    
    
    
    2,907
    
    
    
    6,015
    
    
    
    4,619Transportation  LPGs (3)
    
    
    667
    
    
    
    632
    
    
    
    2,273
    
    
    
    2,355Transportation  Refined products (4)
    
    
    44
    
    
    
    
    
    
    
    44
    
    
    
    Other operating revenues (5)
    
    
    901
    
    
    
    171
    
    
    
    1,207
    
    
    
    209Revenues from unconsolidated affiliates:Other operating revenues (6)
    
    
    75
    
    
    
    84
    
    
    
    109
    
    
    
    169Costs and Expenses from EPCO and affiliates (7):Purchases of petroleum products (8)
    
    
    11,097
    
    
    
    13,531
    
    
    
    23,244
    
    
    
    21,629Operating expense (9)
    
    
    24,466
    
    
    
    27,811
    
    
    
    48,764
    
    
    
    52,164General and administrative
    
    
    6,044
    
    
    
    7,109
    
    
    
    12,409
    
    
    
    12,105Costs and Expenses from unconsolidated affiliates:Purchases of petroleum products (10)
    
    
    
    
    
    
    573
    
    
    
    
    
    
    
    1,061Operating expense (11)
    
    
    2,992
    
    
    
    914
    
    
    
    3,662
    
    
    
    1,876
 
 (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.(5)
    
    Includes other operating revenues on the TE Products pipeline.(6)
    
    Includes management fees and rental revenues. 34




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
 (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 June 30, 2007 and 2006
of $7.4 million and $10.6 million, respectively, and for the six months ended June 30, 2007
and 2006 of $15.7 million and $16.3 million, respectively.(9)
    
    Includes insurance expense for the three months ended June 30, 2007 and 2006, related
to premiums paid by EPCO of $3.6 million and $4.4 million, respectively, and for the six
months ended June 30, 2007 and 2006 of $8.8 million and $7.1 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.
  June 30, 
2007
    
    
    December 31, 
2006Accounts receivable, related parties (1)
    
    $
    1,974
    
    
    $
    11,788Gas imbalance receivable
    
    
    
    
    
    
    1,278Insurance reimbursement receivable
    
    
    1,426
    
    
    
    1,426Accounts payable, related parties (2)
    
    
    67,027
    
    
    
    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 L.P., 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.
  35




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
      Sale of Pioneer plant
  Jonah Joint Venture
   36




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
  Sale of General Partner to Enterprise GP Holdings
  Other Transactions
   Relationship with Energy Transfer Equity
  Relationship with Unconsolidated Affiliates
  37




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
 
 NOTE 15. EARNINGS PER UNIT
     For the Three Months Ended
    
    
    For the Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Income from continuing operations
    
    $
    47,760
    
    
    $
    41,586
    
    
    $
    185,951
    
    
    $
    84,969Discontinued operations
    
    
    
    
    
    
    (122
    )
    
    
    
    
    
    
    19,369Net income
    
    
    47,760
    
    
    
    41,464
    
    
    
    185,951
    
    
    
    104,338General Partner interest in net income
    
    
    16.4
    %
    
    
    29.4
    %
    
    
    16.4
    %
    
    
    29.4
    %Earnings
allocated to General Partner:Income from continuing operations
    
    $
    7,834
    
    
    $
    12,226
    
    
    $
    30,501
    
    
    $
    24,981Discontinued operations
    
    
    
    
    
    
    (36
    )
    
    
    
    
    
    
    5,695Net income allocated
    
    
    7,834
    
    
    
    12,190
    
    
    
    30,501
    
    
    
    30,676BASIC EARNINGS PER UNIT:Numerator:Income from continuing operations
    
    $
    39,926
    
    
    $
    29,360
    
    
    $
    155,450
    
    
    $
    59,988Discontinued operations
    
    
    
    
    
    
    (86
    )
    
    
    
    
    
    
    13,674Limited partners interest in net income
    
    $
    39,926
    
    
    $
    29,274
    
    
    $
    155,450
    
    
    $
    73,662Denominator:Units
    
    
    89,805
    
    
    
    69,964
    
    
    
    89,805
    
    
    
    69,964Time-vested restricted Units
    
    
    27
    
    
    
    
    
    
    
    14
    
    
    
    Total Weighted average Units outstanding
    
    
    89,832
    
    
    
    69,964
    
    
    
    89,819
    
    
    
    69,964Basic earnings per Unit:Income from continuing operations
    
    $
    0.44
    
    
    $
    0.42
    
    
    $
    1.73
    
    
    $
    0.85Discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.20Limited partners interest in net income
    
    $
    0.44
    
    
    $
    0.42
    
    
    $
    1.73
    
    
    $
    1.05
 38




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
 For the Three Months Ended
    
    
    For the Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006DILUTED EARNINGS PER UNIT:Numerator:Income from continuing operations
    
    $
    39,926
    
    
    $
    29,360
    
    
    $
    155,450
    
    
    $
    59,988Discontinued operations
    
    
    
    
    
    
    (86
    )
    
    
    
    
    
    
    13,674Limited partners interest in net income
    
    $
    39,926
    
    
    $
    29,274
    
    
    $
    155,450
    
    
    $
    73,662Denominator:Units
    
    
    89,805
    
    
    
    69,964
    
    
    
    89,805
    
    
    
    69,964Time-vested restricted Units
    
    
    27
    
    
    
    
    
    
    
    14
    
    
    
    Incremental option units
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total Weighted average Units outstanding
    
    
    89,832
    
    
    
    69,964
    
    
    
    89,819
    
    
    
    69,964Diluted earnings per Unit:Income from continuing operations
    
    $
    0.44
    
    
    $
    0.42
    
    
    $
    1.73
    
    
    $
    0.85Discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.20Limited partners interest in net income
    
    $
    0.44
    
    
    $
    0.42
    
    
    $
    1.73
    
    
    $
    1.05
  
 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. Michael and
Linda
Robson, et al. v. Texas Eastern Corporation, et al
 Rebecca L. Grisham et al. v. TE Products Pipeline
Company, Limited
 39




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
 Partnership
 Jimmy R. Green, et al. v. Cities
Service Refinery, et al. th
    40




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
  Regulatory Matters
     41




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TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
        42




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
  Contractual Obligations
   Payment or Settlement due by PeriodTotal
    

2007
    

2008
    

2009
    

2010
    

2011
    
ThereafterMaturities of long-term debt(1)(2)
    
    $
    1,590.0
    
    
    $
    
    
    
    $
    

    
    
    $
    
    
    
    $
    
    
    
    $
    200.0
    
    
    $
    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








43



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##### Table of Contents



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




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
 
 NOTE 17. SUPPLEMENTAL CASH FLOW INFORMATION
  For the Six Months EndedJune 30,2007
    
    
    2006Decrease (increase) in:Accounts receivable, trade
    
    $
    (74,759
    )
    
    $
    (26,756
    )Accounts receivable, related parties
    
    
    (1,702
    )
    
    
    3,144Inventories
    
    
    (21,186
    )
    
    
    (10,981
    )Other current assets
    
    
    (8,837
    )
    
    
    5,003Other
    
    
    (10,172
    )
    
    
    (3,201
    )Increase (decrease) in:Accounts payable and accrued expenses
    
    
    97,103
    
    
    
    14,376Accounts payable, related parties
    
    
    30,435
    
    
    
    7,825Other
    
    
    (3,151
    )
    
    
    (2,870
    )Net effect of changes in operating accounts
    
    $
    7,731
    
    
    $
    (13,460
    )Non-cash investing activities:Payable to Enterprise Gas Processing, LLC for spending
for Phase V expansion of Jonah Gas Gathering Company
    
    $
    10,864
    
    
    $
    Non-cash financing activities:Non-cash contribution from General Partner
    
    $
    126
    
    
    $
    Deferred compensation
    
    $
    76
    
    
    $
    Supplemental disclosure of cash flows:Cash paid for interest (net of amounts capitalized)
    
    $
    43,850
    
    
    $
    42,074
 
 NOTE 18. SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION
   45




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
  June 30, 2007TEPPCOTEPPCO
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    Partners, L.P.Partners, L.P.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    ConsolidatedAssetsCurrent assets
    
    $
    25,950
    
    
    $
    67,330
    
    
    $
    1,080,491
    
    
    $
    (113,288
    )
    
    $
    1,060,483Property, plant and equipment  net
    
    
    
    
    
    
    1,083,196
    
    
    
    620,401
    
    
    
    
    
    
    
    1,703,597Equity investments
    
    
    1,359,908
    
    
    
    1,297,111
    
    
    
    192,253
    
    
    
    (1,789,351
    )
    
    
    1,059,921Intercompany notes receivable
    
    
    1,222,932
    
    
    
    
    
    
    
    
    
    
    
    (1,222,932
    )
    
    
    Intangible assets
    
    
    
    
    
    
    146,014
    
    
    
    30,076
    
    
    
    
    
    
    
    176,090Other assets
    
    
    8,618
    
    
    
    38,458
    
    
    
    60,829
    
    
    
    
    
    
    
    107,905Total assets
    
    $
    2,617,408
    
    
    $
    2,632,109
    
    
    $
    1,984,050
    
    
    $
    (3,125,571
    )
    
    $
    4,107,996Liabilities and partners capitalCurrent liabilities
    
    $
    32,435
    
    
    $
    169,893
    
    
    $
    1,017,326
    
    
    $
    (113,288
    )
    
    $
    1,106,366Long-term debt
    
    
    1,223,303
    
    
    
    380,677
    
    
    
    
    
    
    
    
    
    
    
    1,603,980Intercompany notes payable
    
    
    
    
    
    
    735,897
    
    
    
    487,035
    
    
    
    (1,222,932
    )
    
    
    Other long-term liabilities
    
    
    426
    
    
    
    33,537
    
    
    
    1,855
    
    
    
    
    
    
    
    35,818Total partners capital
    
    
    1,361,244
    
    
    
    1,312,105
    
    
    
    477,834
    
    
    
    (1,789,351
    )
    
    
    1,361,832Total liabilities and partners capital
    
    $
    2,617,408
    
    
    $
    2,632,109
    
    
    $
    1,984,050
    
    
    $
    (3,125,571
    )
    
    $
    4,107,996
 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
    
    
    1,319,931
    
    
    
    1,317,671
    
    
    
    195,606
    
    
    
    (1,793,498
    )
    
    
    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
    
    $
    2,578,366
    
    
    $
    2,600,453
    
    
    $
    1,866,699
    
    
    $
    (3,123,426
    )
    
    $
    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
    
    
    1,319,589
    
    
    
    1,322,775
    
    
    
    471,464
    
    
    
    (1,793,498
    )
    
    
    1,320,330Total liabilities and partners capital
    
    $
    2,578,366
    
    
    $
    2,600,453
    
    
    $
    1,866,699
    
    
    $
    (3,123,426
    )
    
    $
    3,922,092
 46




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
 For the Three Months Ended June 30, 2007TEPPCOTEPPCO
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    Partners, L.P.Partners, L.P.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    ConsolidatedOperating revenues
    
    $
    
    
    
    $
    87,687
    
    
    $
    1,961,913
    
    
    $
    (164
    )
    
    $
    2,049,436Costs and expenses
    
    
    
    
    
    
    67,455
    
    
    
    1,932,498
    
    
    
    (1,244
    )
    
    
    1,998,709Gains on sales of assets
    
    
    
    
    
    
    
    
    
    
    (2
    )
    
    
    
    
    
    
    (2
    )Operating income
    
    
    
    
    
    
    20,232
    
    
    
    29,417
    
    
    
    1,080
    
    
    
    50,729Interest expense  net
    
    
    
    
    
    
    (15,342
    )
    
    
    (7,443
    )
    
    
    
    
    
    
    (22,785
    )Gain on sale of ownership interest in MB
Storage
    
    
    
    
    
    
    (189
    )
    
    
    
    
    
    
    
    
    
    
    (189
    )Equity earnings
    
    
    47,760
    
    
    
    42,224
    
    
    
    1,448
    
    
    
    (72,198
    )
    
    
    19,234Other income  net
    
    
    
    
    
    
    830
    
    
    
    150
    
    
    
    
    
    
    
    980Income before provision for income taxes
    
    
    47,760
    
    
    
    47,755
    
    
    
    23,572
    
    
    
    (71,118
    )
    
    
    47,969Provision for income taxes
    
    
    
    
    
    
    (5
    )
    
    
    214
    
    
    
    
    
    
    
    209Net income
    
    $
    47,760
    
    
    $
    47,760
    
    
    $
    23,358
    
    
    $
    (71,118
    )
    
    $
    47,760
 For the Three Months Ended June 30, 2006TEPPCOTEPPCO
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    Partners, L.P.Partners, L.P.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    ConsolidatedOperating revenues
    
    $
    
    
    
    $
    109,775
    
    
    $
    2,317,678
    
    
    $
    (2,401
    )
    
    $
    2,425,052Costs and expenses
    
    
    
    
    
    
    81,190
    
    
    
    2,288,111
    
    
    
    (2,401
    )
    
    
    2,366,900Gains on sales of assets
    
    
    
    
    
    
    (18
    )
    
    
    
    
    
    
    
    
    
    
    (18
    )Operating income
    
    
    
    
    
    
    28,603
    
    
    
    29,567
    
    
    
    
    
    
    
    58,170Interest expense  net
    
    
    
    
    
    
    (13,504
    )
    
    
    (5,694
    )
    
    
    
    
    
    
    (19,198
    )Equity earnings
    
    
    41,464
    
    
    
    26,783
    
    
    
    5,040
    
    
    
    (70,613
    )
    
    
    2,674Other income  net
    
    
    
    
    
    
    202
    
    
    
    252
    
    
    
    
    
    
    
    454Income before provision for income taxes
    
    
    41,464
    
    
    
    42,084
    
    
    
    29,165
    
    
    
    (70,613
    )
    
    
    42,100Provision for income taxes
    
    
    
    
    
    
    498
    
    
    
    16
    
    
    
    
    
    
    
    514Income from continuing operations
    
    
    41,464
    
    
    
    41,586
    
    
    
    29,149
    
    
    
    (70,613
    )
    
    
    41,586Discontinued operations
    
    
    
    
    
    
    (122
    )
    
    
    
    
    
    
    
    
    
    
    (122
    )Net income
    
    $
    41,464
    
    
    $
    41,464
    
    
    $
    29,149
    
    
    $
    (70,613
    )
    
    $
    41,464
 47




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
 For the Six Months Ended June 30, 2007TEPPCOTEPPCO
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    Partners, L.P.Partners, L.P.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    ConsolidatedOperating revenues
    
    $
    
    
    
    $
    186,605
    
    
    $
    3,841,703
    
    
    $
    (443
    )
    
    $
    4,027,865Costs and expenses
    
    
    
    
    
    
    133,622
    
    
    
    3,782,622
    
    
    
    (3,891
    )
    
    
    3,912,353Gains on sales of assets
    
    
    
    
    
    
    (18,651
    )
    
    
    
    
    
    
    
    
    
    
    (18,651
    )Operating income
    
    
    
    
    
    
    71,634
    
    
    
    59,081
    
    
    
    3,448
    
    
    
    134,163Interest expense  net
    
    
    
    
    
    
    (31,304
    )
    
    
    (13,692
    )
    
    
    
    
    
    
    (44,996
    )Gain on sale of ownership interest in MB
Storage
    
    
    
    
    
    
    59,648
    
    
    
    
    
    
    
    
    
    
    
    59,648Equity earnings
    
    
    185,951
    
    
    
    84,159
    
    
    
    3,237
    
    
    
    (237,550
    )
    
    
    35,797Other income  net
    
    
    
    
    
    
    1,319
    
    
    
    247
    
    
    
    
    
    
    
    1,566Income before provision for income taxes
    
    
    185,951
    
    
    
    185,456
    
    
    
    48,873
    
    
    
    (234,102
    )
    
    
    186,178Provision for income taxes
    
    
    
    
    
    
    (495
    )
    
    
    722
    
    
    
    
    
    
    
    227Net income
    
    $
    185,951
    
    
    $
    185,951
    
    
    $
    48,151
    
    
    $
    (234,102
    )
    
    $
    185,951
 For the Six Months Ended June 30, 2006TEPPCOTEPPCO
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    Partners, L.P.Partners, L.P.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    ConsolidatedOperating revenues
    
    $
    
    
    
    $
    224,835
    
    
    $
    4,744,644
    
    
    $
    (8,058
    )
    
    $
    4,961,421Costs and expenses
    
    
    
    
    
    
    156,953
    
    
    
    4,693,114
    
    
    
    (8,058
    )
    
    
    4,842,009Gains on sales of assets
    
    
    
    
    
    
    (1,396
    )
    
    
    
    
    
    
    
    
    
    
    (1,396
    )Operating income
    
    
    
    
    
    
    69,278
    
    
    
    51,530
    
    
    
    
    
    
    
    120,808Interest expense  net
    
    
    
    
    
    
    (27,881
    )
    
    
    (12,460
    )
    
    
    
    
    
    
    (40,341
    )Equity earnings
    
    
    104,338
    
    
    
    43,045
    
    
    
    7,295
    
    
    
    (151,015
    )
    
    
    3,663Other income  net
    
    
    
    
    
    
    1,025
    
    
    
    328
    
    
    
    
    
    
    
    1,353Income before provision for income taxes
    
    
    104,338
    
    
    
    85,467
    
    
    
    46,693
    
    
    
    (151,015
    )
    
    
    85,483Provision for income taxes
    
    
    
    
    
    
    498
    
    
    
    16
    
    
    
    
    
    
    
    514Income from continuing operations
    
    
    104,338
    
    
    
    84,969
    
    
    
    46,677
    
    
    
    (151,015
    )
    
    
    84,969Discontinued operations
    
    
    
    
    
    
    19,369
    
    
    
    
    
    
    
    
    
    
    
    19,369Net income
    
    $
    104,338
    
    
    $
    104,338
    
    
    $
    46,677
    
    
    $
    (151,015
    )
    
    $
    104,338
 48




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##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
 For the Six Months Ended June 30, 2007TEPPCOTEPPCO
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    Partners, L.P.Partners, L.P.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    ConsolidatedOperating activities:Net income
    
    $
    185,951
    
    
    $
    185,951
    
    
    $
    48,151
    
    
    $
    (234,102
    )
    
    $
    185,951Adjustments to reconcile net income to net
cash
from operating activities:
    
    
    Deferred income taxes
    
    
    
    
    
    
    (633
    )
    
    
    (21
    )
    
    
    
    
    
    
    (654
    )Depreciation and amortization
    
    
    
    
    
    
    37,272
    
    
    
    13,977
    
    
    
    
    
    
    
    51,249Earnings in equity investments, net of
distributions
    
    
    (39,975
    )
    
    
    21,905
    
    
    
    4,163
    
    
    
    46,269
    
    
    
    32,362Gains on sales of assets and ownership
interest
    
    
    
    
    
    
    (78,299
    )
    
    
    
    
    
    
    
    
    
    
    (78,299
    )Changes in assets and liabilities and other
    
    
    9,321
    
    
    
    (25,539
    )
    
    
    34,535
    
    
    
    (9,793
    )
    
    
    8,524Net cash from operating activities
    
    
    155,297
    
    
    
    140,657
    
    
    
    100,805
    
    
    
    (197,626
    )
    
    
    199,133Cash flows from investing activities
    
    
    
    
    
    
    (21,054
    )
    
    
    (39,507
    )
    
    
    
    
    
    
    (60,561
    )Cash flows from financing activities
    
    
    (138,708
    )
    
    
    (119,603
    )
    
    
    (61,346
    )
    
    
    181,037
    
    
    
    (138,620
    )Net change in cash and cash equivalents
    
    
    16,589
    
    
    
    
    
    
    
    (48
    )
    
    
    (16,589
    )
    
    
    (48
    )Cash and cash equivalents, January 1
    
    
    10,975
    
    
    
    
    
    
    
    70
    
    
    
    (10,975
    )
    
    
    70Cash and cash equivalents, June 30
    
    $
    27,564
    
    
    $
    
    
    
    $
    22
    
    
    $
    (27,564
    )
    
    $
    22
 For the Six Months Ended June 30, 2006TEPPCOTEPPCO
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    Partners, L.P.Partners, L.P.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    ConsolidatedOperating activities:Net income
    
    $
    104,338
    
    
    $
    104,338
    
    
    $
    46,677
    
    
    $
    (151,015
    )
    
    $
    104,338Adjustments to reconcile net income to net
cash
from continuing operating activities:Income from discontinued operations
    
    
    
    
    
    
    (19,369
    )
    
    
    
    
    
    
    
    
    
    
    (19,369
    )Deferred income taxes
    
    
    
    
    
    
    498
    
    
    
    16
    
    
    
    
    
    
    
    514Depreciation and amortization
    
    
    
    
    
    
    45,114
    
    
    
    12,319
    
    
    
    
    
    
    
    57,433Earnings in equity investments, net of
distributions
    
    
    29,447
    
    
    
    3,591
    
    
    
    1,162
    
    
    
    (21,566
    )
    
    
    12,634Gains on sales of assets
    
    
    
    
    
    
    (1,396
    )
    
    
    
    
    
    
    
    
    
    
    (1,396
    )Changes in assets and liabilities and other
    
    
    (31,902
    )
    
    
    11,640
    
    
    
    (18,034
    )
    
    
    25,676
    
    
    
    (12,620
    )Net cash from continuing operating activities
    
    
    101,883
    
    
    
    144,416
    
    
    
    42,140
    
    
    
    (146,905
    )
    
    
    141,534Cash flows from discontinued operations
    
    
    
    
    
    
    1,521
    
    
    
    
    
    
    
    
    
    
    
    1,521Net cash from operating activities
    
    
    101,883
    
    
    
    145,937
    
    
    
    42,140
    
    
    
    (146,905
    )
    
    
    143,055Cash flows from investing activities
    
    
    
    
    
    
    85,290
    
    
    
    (29,960
    )
    
    
    (103,634
    )
    
    
    (48,304
    )Cash flows from financing activities
    
    
    (94,685
    )
    
    
    (231,289
    )
    
    
    (12,051
    )
    
    
    243,340
    
    
    
    (94,685
    )Net change in cash and cash equivalents
    
    
    7,198
    
    
    
    (62
    )
    
    
    129
    
    
    
    (7,199
    )
    
    
    66Cash and cash equivalents, January 1
    
    
    1,978
    
    
    
    62
    
    
    
    45
    
    
    
    (1,966
    )
    
    
    119Cash and cash equivalents, June 30
    
    $
    9,176
    
    
    $
    
    
    
    $
    174
    
    
    $
    (9,165
    )
    
    $
    185
 49




---



##### Table of Contents



TEPPCO PARTNERS, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
 
 NOTE 19. SUBSEQUENT EVENTS
 Treasury Locks
  Acquisition of Assets
  50




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 General
  
    
    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 June 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
 we us our TEPPCO
 TE Products, TCTM TEPPCO Midstream Operating Companies.
 General Partner
 Enterprise GP Holdings
 Enterprise
 EPCO
 51




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##### Table of Contents



Cautionary Note Regarding Forward-Looking Statements
   Overview of Critical Accounting Policies and Estimates
 52
    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
   53




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##### Table of Contents



Results of Operations
  For the Three Months Ended
    
    
    For the Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Operating revenues:Downstream Segment
    
    $
    83,180
    
    
    $
    69,333
    
    
    $
    178,098
    
    
    $
    143,400Upstream Segment
    
    
    1,935,986
    
    
    
    2,287,012
    
    
    
    3,790,403
    
    
    
    4,698,594Midstream Segment (1)
    
    
    30,434
    
    
    
    70,345
    
    
    
    59,807
    
    
    
    126,722Intersegment eliminations
    
    
    (164
    )
    
    
    (1,638
    )
    
    
    (443
    )
    
    
    (7,295
    )Total operating revenues
    
    
    2,049,436
    
    
    
    2,425,052
    
    
    
    4,027,865
    
    
    
    4,961,421Operating income:Downstream Segment
    
    
    20,946
    
    
    
    16,774
    
    
    
    74,887
    
    
    
    40,055Upstream Segment
    
    
    20,743
    
    
    
    20,345
    
    
    
    43,058
    
    
    
    33,651Midstream Segment (1)
    
    
    7,960
    
    
    
    21,051
    
    
    
    12,770
    
    
    
    47,102Intersegment eliminations
    
    
    1,080
    
    
    
    
    
    
    
    3,448
    
    
    
    Total operating income
    
    
    50,729
    
    
    
    58,170
    
    
    
    134,163
    
    
    
    120,808Equity earnings (losses):Downstream Segment
    
    
    (3,879
    )
    
    
    (2,366
    )
    
    
    (5,366
    )
    
    
    (3,632
    )Upstream Segment
    
    
    1,448
    
    
    
    5,040
    
    
    
    3,237
    
    
    
    7,295Midstream Segment (1)
    
    
    22,745
    
    
    
    
    
    
    
    41,374
    
    
    
    Intersegment eliminations
    
    
    (1,080
    )
    
    
    
    
    
    
    (3,448
    )
    
    
    Total equity earnings
    
    
    19,234
    
    
    
    2,674
    
    
    
    35,797
    
    
    
    3,663Earnings before interest:Downstream Segment
    
    
    17,636
    
    
    
    14,593
    
    
    
    130,358
    
    
    
    37,387Upstream Segment
    
    
    22,248
    
    
    
    25,610
    
    
    
    46,395
    
    
    
    41,215Midstream Segment (1)
    
    
    30,870
    
    
    
    21,095
    
    
    
    54,421
    
    
    
    47,222Interest expense
    
    
    (25,860
    )
    
    
    (22,356
    )
    
    
    (51,799
    )
    
    
    (46,758
    )Interest capitalized
    
    
    3,075
    
    
    
    3,158
    
    
    
    6,803
    
    
    
    6,417Income before provision for income taxes
    
    
    47,969
    
    
    
    42,100
    
    
    
    186,178
    
    
    
    85,483Provision for income taxes
    
    
    209
    
    
    
    514
    
    
    
    227
    
    
    
    514Income from continuing operations
    
    
    47,760
    
    
    
    41,586
    
    
    
    185,951
    
    
    
    84,969Discontinued operations
    
    
    
    
    
    
    (122
    )
    
    
    
    
    
    
    19,369Net income
    
    $
    47,760
    
    
    $
    41,464
    
    
    $
    185,951
    
    
    $
    104,338
 
 (1)
    
    Effective August 1, 2006, with the formation of a joint venture with Enterprise, Jonah
Gas Gathering Company (Jonah) was deconsolidated and has been subsequently accounted for
as an equity investment (see Note 8 in the Notes to the Consolidated Financial Statements).  54




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##### Table of Contents



Downstream Segment
  For the Three Months Ended
    
    
    
    
    
    
    For the Six Months EndedJune 30,
    
    
    Increase
    
    
    June 30,
    
    
    Increase2007
    
    
    2006
    
    
    (Decrease)
    
    
    2007
    
    
    2006
    
    
    (Decrease)Operating revenues:Sales of petroleum products
    
    $
    9,403
    
    
    $
    
    
    
    $
    9,403
    
    
    $
    18,779
    
    
    $
    
    
    
    $
    18,779Transportation  Refined products
    
    
    41,718
    
    
    
    39,443
    
    
    
    2,275
    
    
    
    78,853
    
    
    
    71,242
    
    
    
    7,611Transportation  LPGs
    
    
    16,747
    
    
    
    13,354
    
    
    
    3,393
    
    
    
    52,800
    
    
    
    42,775
    
    
    
    10,025Other
    
    
    15,312
    
    
    
    16,536
    
    
    
    (1,224
    )
    
    
    27,666
    
    
    
    29,383
    
    
    
    (1,717
    )Total operating revenues
    
    
    83,180
    
    
    
    69,333
    
    
    
    13,847
    
    
    
    178,098
    
    
    
    143,400
    
    
    
    34,698Costs and expenses:Purchases of petroleum products
    
    
    9,311
    
    
    
    
    
    
    
    9,311
    
    
    
    18,705
    
    
    
    
    
    
    
    18,705Operating expense
    
    
    24,774
    
    
    
    26,305
    
    
    
    (1,531
    )
    
    
    46,294
    
    
    
    49,807
    
    
    
    (3,513
    )Operating fuel and power
    
    
    9,404
    
    
    
    8,318
    
    
    
    1,086
    
    
    
    19,817
    
    
    
    17,623
    
    
    
    2,194General and administrative
    
    
    4,244
    
    
    
    4,701
    
    
    
    (457
    )
    
    
    8,319
    
    
    
    9,795
    
    
    
    (1,476
    )Depreciation and amortization
    
    
    11,724
    
    
    
    10,133
    
    
    
    1,591
    
    
    
    22,860
    
    
    
    20,430
    
    
    
    2,430Taxes  other than income taxes
    
    
    2,777
    
    
    
    3,120
    
    
    
    (343
    )
    
    
    5,867
    
    
    
    5,715
    
    
    
    152Gains on sales of assets
    
    
    
    
    
    
    (18
    )
    
    
    18
    
    
    
    (18,651
    )
    
    
    (25
    )
    
    
    (18,626
    )Total costs and expenses
    
    
    62,234
    
    
    
    52,559
    
    
    
    9,675
    
    
    
    103,211
    
    
    
    103,345
    
    
    
    (134
    )Operating income
    
    
    20,946
    
    
    
    16,774
    
    
    
    4,172
    
    
    
    74,887
    
    
    
    40,055
    
    
    
    34,832Gain on sale of ownership interest
in Mont Belvieu Storage
Partners, L.P. (MB Storage)
    
    
    (189
    )
    
    
    
    
    
    
    (189
    )
    
    
    59,648
    
    
    
    
    
    
    
    59,648Equity losses
    
    
    (3,879
    )
    
    
    (2,366
    )
    
    
    (1,513
    )
    
    
    (5,366
    )
    
    
    (3,632
    )
    
    
    (1,734
    )Interest income
    
    
    229
    
    
    
    145
    
    
    
    84
    
    
    
    431
    
    
    
    541
    
    
    
    (110
    )Other income  net
    
    
    529
    
    
    
    40
    
    
    
    489
    
    
    
    758
    
    
    
    423
    
    
    
    335Earnings before interest
    
    $
    17,636
    
    
    $
    14,593
    
    
    $
    3,043
    
    
    $
    130,358
    
    
    $
    37,387
    
    
    $
    92,971The following table presents volumes delivered in barrels and average tariff per barrel for
the three months and six months ended June 30, 2007 and 2006 (in thousands, except tariff
information):For the Three Months Ended
    
    
    Percentage
    
    
    For the six Months Ended
    
    
    PercentageJune 30,
    
    
    Increase
    
    
    June 30,
    
    
    Increase2007
    
    
    2006
    
    
    (Decrease)
    
    
    2007
    
    
    2006
    
    
    (Decrease)Volumes Delivered:Refined products
    
    
    44,922
    
    
    
    46,049
    
    
    
    (2
    %)
    
    
    80,675
    
    
    
    81,857
    
    
    
    (1
    %)LPGs
    
    
    6,964
    
    
    
    8,277
    
    
    
    (16
    %)
    
    
    23,562
    
    
    
    21,117
    
    
    
    12
    %Total
    
    
    51,886
    
    
    
    54,326
    
    
    
    (5
    %)
    
    
    104,237
    
    
    
    102,974
    
    
    
    1
    %Average Tariff per Barrel:Refined products
    
    $
    0.93
    
    
    $
    0.86
    
    
    
    8
    %
    
    $
    0.98
    
    
    $
    0.87
    
    
    
    13
    %LPGs
    
    
    2.40
    
    
    
    1.61
    
    
    
    49
    %
    
    
    2.24
    
    
    
    2.03
    
    
    
    10
    %Average
system tariff per barrel
    
    
    1.13
    
    
    
    0.97
    
    
    
    16
    %
    
    
    1.26
    
    
    
    1.11
    
    
    
    14
    %
  55




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##### Table of Contents



Three Months Ended June 30, 2007 Compared with Three Months Ended June 30, 2006
      56




---



##### Table of Contents



For the Three MonthsEnded June 30,
    
    
    Increase2007
    
    
    2006
    
    
    (Decrease)Centennial
    
    $
    (2,762
    )
    
    $
    (3,401
    )
    
    $
    639MB Storage
    
    
    (1,123
    )
    
    
    1,043
    
    
    
    (2,166
    )Other
    
    
    6
    
    
    
    (8
    )
    
    
    14Total equity losses
    
    $
    (3,879
    )
    
    $
    (2,366
    )
    
    $
    (1,513
    )
   Six Months Ended June 30, 2007 Compared with Six Months Ended June 30, 2006
     57




---



##### Table of Contents



For the Six Months EndedJune 30,
    
    
    Increase2007
    
    
    2006
    
    
    (Decrease)Centennial
    
    $
    (6,749
    )
    
    $
    (7,313
    )
    
    $
    564MB Storage
    
    
    1,368
    
    
    
    3,692
    
    
    
    (2,324
    )Other
    
    
    15
    
    
    
    (11
    )
    
    
    26Total equity losses
    
    $
    (5,366
    )
    
    $
    (3,632
    )
    
    $
    (1,734
    )
    58




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##### Table of Contents



Upstream Segment
  For the Three Months Ended
    
    
    
    
    
    
    For the Six Months EndedJune 30,
    
    
    Increase
    
    
    June 30,
    
    
    Increase2007
    
    
    2006
    
    
    (Decrease)
    
    
    2007
    
    
    2006
    
    
    (Decrease)Operating revenues: (1)Sales of petroleum products 
(2)(3)
    
    $
    1,923,865
    
    
    $
    2,273,878
    
    
    $
    (350,013
    )
    
    $
    3,764,896
    
    
    $
    4,674,314
    
    
    $
    (909,418
    )Transportation  Crude oil
    
    
    9,580
    
    
    
    10,544
    
    
    
    (964
    )
    
    
    20,370
    
    
    
    19,467
    
    
    
    903Other
    
    
    2,541
    
    
    
    2,590
    
    
    
    (49
    )
    
    
    5,137
    
    
    
    4,813
    
    
    
    324Total operating revenues
    
    
    1,935,986
    
    
    
    2,287,012
    
    
    
    (351,026
    )
    
    
    3,790,403
    
    
    
    4,698,594
    
    
    
    (908,191
    )Costs and expenses: (1)Purchases of petroleum products (2) (3)
    
    
    1,892,878
    
    
    
    2,243,143
    
    
    
    (350,265
    )
    
    
    3,700,044
    
    
    
    4,619,539
    
    
    
    (919,495
    )Operating expense
    
    
    13,365
    
    
    
    14,837
    
    
    
    (1,472
    )
    
    
    28,838
    
    
    
    27,981
    
    
    
    857Operating fuel and power
    
    
    1,642
    
    
    
    1,766
    
    
    
    (124
    )
    
    
    3,700
    
    
    
    3,959
    
    
    
    (259
    )General and administrative
    
    
    1,770
    
    
    
    1,870
    
    
    
    (100
    )
    
    
    3,598
    
    
    
    3,677
    
    
    
    (79
    )Depreciation and amortization
    
    
    4,148
    
    
    
    3,494
    
    
    
    654
    
    
    
    8,216
    
    
    
    6,765
    
    
    
    1,451Taxes  other than income taxes
    
    
    1,442
    
    
    
    1,557
    
    
    
    (115
    )
    
    
    2,949
    
    
    
    3,022
    
    
    
    (73
    )Gains on sales of assets
    
    
    (2
    )
    
    
    
    
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    Total costs and expenses
    
    
    1,915,243
    
    
    
    2,266,667
    
    
    
    (351,424
    )
    
    
    3,747,345
    
    
    
    4,664,943
    
    
    
    (917,598
    )Operating income
    
    
    20,743
    
    
    
    20,345
    
    
    
    398
    
    
    
    43,058
    
    
    
    33,651
    
    
    
    9,407Equity earnings
    
    
    1,448
    
    
    
    5,040
    
    
    
    (3,592
    )
    
    
    3,237
    
    
    
    7,295
    
    
    
    (4,058
    )Interest income
    
    
    50
    
    
    
    
    
    
    
    50
    
    
    
    79
    
    
    
    
    
    
    
    79Other income  net
    
    
    7
    
    
    
    225
    
    
    
    (218
    )
    
    
    21
    
    
    
    269
    
    
    
    (248
    )Earnings before interest
    
    $
    22,248
    
    
    $
    25,610
    
    
    $
    (3,362
    )
    
    $
    46,395
    
    
    $
    41,215
    
    
    $
    5,180
 
 (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 six months ended June 30,
2006) was not adjusted for the adoption of EITF 04-13, as retroactive restatement was not
permitted, which impacts comparability.  59




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##### Table of Contents



For the Three Months Ended
    
    
    Percentage
    
    
    For the Six Months Ended
    
    
    PercentageJune 30,
    
    
    Increase
    
    
    June 30,
    
    
    Increase2007
    
    
    2006
    
    
    (Decrease)
    
    
    2007
    
    
    2006
    
    
    (Decrease)Margins: (1)Crude oil marketing
    
    $
    18,854
    
    
    $
    19,096
    
    
    
    (1
    %)
    
    $
    40,385
    
    
    $
    31,882
    
    
    
    27
    %Lubrication oil sales
    
    
    2,075
    
    
    
    2,044
    
    
    
    2
    %
    
    
    4,229
    
    
    
    4,175
    
    
    
    1
    %Revenues: (1)Crude oil transportation
    
    
    16,594
    
    
    
    16,586
    
    
    
    
    
    
    
    33,814
    
    
    
    32,354
    
    
    
    5
    %Crude oil terminaling
    
    
    3,044
    
    
    
    3,553
    
    
    
    (14
    %)
    
    
    6,794
    
    
    
    5,831
    
    
    
    17
    %Total margins/revenues
    
    $
    40,567
    
    
    $
    41,279
    
    
    
    (2
    %)
    
    $
    85,222
    
    
    $
    74,242
    
    
    
    15
    %Total barrels/gallons:Crude oil marketing (barrels) (1)
    
    
    58,058
    
    
    
    56,257
    
    
    
    3
    %
    
    
    114,004
    
    
    
    109,198
    
    
    
    4
    %Lubrication oil volume (gallons)
    
    
    3,519
    
    
    
    3,377
    
    
    
    4
    %
    
    
    7,350
    
    
    
    7,232
    
    
    
    2
    %Crude oil transportation (barrels)
    
    
    22,182
    
    
    
    22,847
    
    
    
    (3
    %)
    
    
    46,315
    
    
    
    45,175
    
    
    
    3
    %Crude oil terminaling (barrels)
    
    
    31,056
    
    
    
    38,305
    
    
    
    (19
    %)
    
    
    71,199
    
    
    
    62,748
    
    
    
    13
    %Margin per barrel or gallon:Crude oil marketing (per barrel) (1)
    
    $
    0.325
    
    
    $
    0.339
    
    
    
    (4
    %)
    
    $
    0.354
    
    
    $
    0.292
    
    
    
    21
    %Lubrication oil margin (per gallon)
    
    
    0.590
    
    
    
    0.605
    
    
    
    (2
    %)
    
    
    0.575
    
    
    
    0.577
    
    
    
    Average tariff per barrel:Crude oil transportation
    
    $
    0.748
    
    
    $
    0.726
    
    
    
    3
    %
    
    $
    0.730
    
    
    $
    0.716
    
    
    
    2
    %Crude oil terminaling
    
    
    0.098
    
    
    
    0.093
    
    
    
    5
    %
    
    
    0.095
    
    
    
    0.093
    
    
    
    2
    %
 
 (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 Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Sales of petroleum products
    
    $
    1,923,865
    
    
    $
    2,273,878
    
    
    $
    3,764,896
    
    
    $
    4,674,314Transportation  Crude oil
    
    
    9,580
    
    
    
    10,544
    
    
    
    20,370
    
    
    
    19,467Less: Purchases of petroleum products
    
    
    (1,892,878
    )
    
    
    (2,243,143
    )
    
    
    (3,700,044
    )
    
    
    (4,619,539
    )Total margins/revenues
    
    
    40,567
    
    
    
    41,279
    
    
    
    85,222
    
    
    
    74,242Other operating revenues
    
    
    2,541
    
    
    
    2,590
    
    
    
    5,137
    
    
    
    4,813Net operating revenues
    
    
    43,108
    
    
    
    43,869
    
    
    
    90,359
    
    
    
    79,055Operating expense
    
    
    13,365
    
    
    
    14,837
    
    
    
    28,838
    
    
    
    27,981Operating fuel and power
    
    
    1,642
    
    
    
    1,766
    
    
    
    3,700
    
    
    
    3,959General and administrative expense
    
    
    1,770
    
    
    
    1,870
    
    
    
    3,598
    
    
    
    3,677Depreciation and amortization
    
    
    4,148
    
    
    
    3,494
    
    
    
    8,216
    
    
    
    6,765Taxes  other than income taxes
    
    
    1,442
    
    
    
    1,557
    
    
    
    2,949
    
    
    
    3,022Gains on sales of assets
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    Operating income
    
    $
    20,743
    
    
    $
    20,345
    
    
    $
    43,058
    
    
    $
    33,651
 60




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##### Table of Contents



Accounting for Purchases and Sales of Inventory with
the Same Counterparty
 Three Months Ended June 30, 2007 Compared with Three Months Ended June 30, 2006
    61




---



##### Table of Contents



Six Months Ended June 30, 2007 Compared with Six Months Ended June 30, 2006
     62




---



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Midstream Segment
  For the Three Months Ended
    
    
    
    
    
    
    For the Six Months EndedJune 30,
    
    
    Increase
    
    
    June 30,
    
    
    Increase2007
    
    
    2006
    
    
    (Decrease)
    
    
    2007
    
    
    2006
    
    
    (Decrease)Operating revenues: (1)Sales of petroleum products
    
    $
    
    
    
    $
    13,776
    
    
    $
    (13,776
    )
    
    $
    
    
    
    $
    13,776
    
    
    $
    (13,776
    )Gathering  Natural gas
    
    
    15,452
    
    
    
    41,459
    
    
    
    (26,007
    )
    
    
    30,860
    
    
    
    82,834
    
    
    
    (51,974
    )Transportation  NGLs
    
    
    11,098
    
    
    
    10,738
    
    
    
    360
    
    
    
    22,039
    
    
    
    21,391
    
    
    
    648Other
    
    
    3,884
    
    
    
    4,372
    
    
    
    (488
    )
    
    
    6,908
    
    
    
    8,721
    
    
    
    (1,813
    )Total operating revenues
    
    
    30,434
    
    
    
    70,345
    
    
    
    (39,911
    )
    
    
    59,807
    
    
    
    126,722
    
    
    
    (66,915
    )Costs and expenses (1):Purchases of petroleum products
    
    
    
    
    
    
    12,949
    
    
    
    (12,949
    )
    
    
    
    
    
    
    12,949
    
    
    
    (12,949
    )Operating expense
    
    
    5,777
    
    
    
    14,435
    
    
    
    (8,658
    )
    
    
    14,031
    
    
    
    24,593
    
    
    
    (10,562
    )Operating fuel and power
    
    
    3,783
    
    
    
    2,903
    
    
    
    880
    
    
    
    6,586
    
    
    
    5,702
    
    
    
    884General and administrative expense
    
    
    2,150
    
    
    
    2,587
    
    
    
    (437
    )
    
    
    4,845
    
    
    
    4,887
    
    
    
    (42
    )Depreciation and amortization
    
    
    10,008
    
    
    
    15,049
    
    
    
    (5,041
    )
    
    
    20,173
    
    
    
    30,238
    
    
    
    (10,065
    )Taxes  other than income taxes
    
    
    756
    
    
    
    1,371
    
    
    
    (615
    )
    
    
    1,402
    
    
    
    2,622
    
    
    
    (1,220
    )Gains on sales of assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,371
    )
    
    
    1,371Total costs and expenses
    
    
    22,474
    
    
    
    49,294
    
    
    
    (26,820
    )
    
    
    47,037
    
    
    
    79,620
    
    
    
    (32,583
    )Operating income
    
    
    7,960
    
    
    
    21,051
    
    
    
    (13,091
    )
    
    
    12,770
    
    
    
    47,102
    
    
    
    (34,332
    )Equity earnings (1)
    
    
    22,745
    
    
    
    
    
    
    
    22,745
    
    
    
    41,374
    
    
    
    
    
    
    
    41,374Interest income
    
    
    166
    
    
    
    39
    
    
    
    127
    
    
    
    277
    
    
    
    115
    
    
    
    162Other income  net
    
    
    (1
    )
    
    
    5
    
    
    
    (6
    )
    
    
    
    
    
    
    5
    
    
    
    (5
    )Earnings before interest
    
    $
    30,870
    
    
    $
    21,095
    
    
    $
    9,775
    
    
    $
    54,421
    
    
    $
    47,222
    
    
    $
    7,199
 
 (1)
    
    Effective August 1, 2006, with the formation of a joint venture with Enterprise, 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 the Consolidated
Financial Statements). 63




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##### Table of Contents



For the Three Months Ended
    
    Percentage
    
    For the Six Months Ended
    
    PercentageJune 30,
    
    Increase
    
    June 30,
    
    Increase2007
    
    2006
    
    (Decrease)
    
    2007
    
    2006
    
    (Decrease)Gathering  Natural Gas  Jonah (1):MMcf
    
    
    139,877
    
    
    
    111,346
    
    
    
    26
    %
    
    
    272,459
    
    
    
    220,016
    
    
    
    24
    %BBtus
    
    
    154,207
    
    
    
    122,969
    
    
    
    25
    %
    
    
    300,310
    
    
    
    242,976
    
    
    
    24
    %Average fee per MMBtu
    
    $
    0.205
    
    
    $
    0.210
    
    
    
    (2
    %)
    
    $
    0.204
    
    
    $
    0.208
    
    
    
    (2
    %)Gathering  Natural Gas  Val Verde:MMcf
    
    
    43,487
    
    
    
    46,938
    
    
    
    (7
    %)
    
    
    87,054
    
    
    
    92,288
    
    
    
    (6
    %)BBtu
    
    
    38,515
    
    
    
    41,675
    
    
    
    (8
    %)
    
    
    77,097
    
    
    
    81,606
    
    
    
    (6
    %)Average fee per MMBtu
    
    $
    0.401
    
    
    $
    0.389
    
    
    
    3
    %
    
    $
    0.400
    
    
    $
    0.404
    
    
    
    (1
    %)Transportation  NGLs (2):Barrels
    
    
    15,340
    
    
    
    16,183
    
    
    
    (5
    %)
    
    
    30,843
    
    
    
    30,996
    
    
    
    Average rate per barrel
    
    $
    0.723
    
    
    $
    0.664
    
    
    
    9
    %
    
    $
    0.715
    
    
    $
    0.690
    
    
    
    4
    %Natural Gas Sales (1):BBtus
    
    
    4,501
    
    
    
    2,627
    
    
    
    71
    %
    
    
    8,048
    
    
    
    2,627
    
    
    
    206
    %Average fee per MMBtu
    
    $
    3.204
    
    
    $
    5.242
    
    
    
    (39
    %)
    
    $
    4.903
    
    
    $
    5.242
    
    
    
    (6
    %)Fractionation  NGLs:Barrels
    
    
    1,074
    
    
    
    1,125
    
    
    
    (5
    %)
    
    
    2,052
    
    
    
    2,277
    
    
    
    (11
    %)Average rate per barrel
    
    $
    1.822
    
    
    $
    1.850
    
    
    
    (1
    %)
    
    $
    1.774
    
    
    $
    1.666
    
    
    
    6
    %Sales  Condensate (1):Barrels
    
    
    21.2
    
    
    
    18.3
    
    
    
    16
    %
    
    
    56.4
    
    
    
    43.0
    
    
    
    31
    %Average rate per barrel
    
    $
    58.64
    
    
    $
    68.20
    
    
    
    (14
    %)
    
    $
    67.54
    
    
    $
    65.52
    
    
    
    3
    %
 
 (1)
    
    Effective August 1, 2006, with the formation of a joint venture with Enterprise, Jonah
was deconsolidated and operating results after August 1, 2006 are included in equity
earnings (see Note 8 in the Notes to the Consolidated Financial Statements). However, the
table includes Jonahs volume and average rate information for the full three and six
months ended June 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.  Three Months Ended June 30, 2007 Compared with Three Months Ended June 30, 2006
  64




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65




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##### Table of Contents



Six Months Ended June 30, 2007 Compared with Six Months Ended June 30, 2006
       66




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Discontinued Operations
   For the Three Months
    
    
    For the Six MonthsEnded June 30,
    
    
    Ended June 30,2006
    
    
    2006Operating revenues:Sales of petroleum products
    
    $
    18
    
    
    $
    3,828Other
    
    
    11
    
    
    
    932Total operating revenues
    
    
    29
    
    
    
    4,760Costs and expenses:Purchases of petroleum products
    
    
    139
    
    
    
    3,000Operating expense
    
    
    
    
    
    
    182Depreciation and amortization
    
    
    
    
    
    
    51Taxes  other than income taxes
    
    
    
    
    
    
    30Total costs and expenses
    
    
    139
    
    
    
    3,263Income (loss) from discontinued operations
    
    $
    (110
    )
    
    $
    1,497
  67




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##### Table of Contents



Interest Expense and Capitalized Interest
 Three Months Ended June 30, 2007 Compared with Three Months Ended June 30, 2006
   Six Months Ended June 30, 2007 Compared with Six Months Ended June 30, 2006




Income Taxes  Texas Margin Tax




68



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##### Table of Contents



Financial Condition and Liquidity
  For the Six Months EndedJune 30,2007
    
    
    2006Cash provided by (used in):Operating activities
    
    $
    199.1
    
    
    $
    143.1Investing activities
    
    
    (60.6
    )
    
    
    (48.3
    )Financing activities
    
    
    (138.6
    )
    
    
    (94.7
    )Operating ActivitiesNet cash from operating activities for the six months ended June 30, 2007 and 2006, was
comprised of the following (in millions):For the Six Months EndedJune 30,2007
    
    
    2006Net income
    
    $
    186.0
    
    
    $
    104.3Income from discontinued operations
    
    
    
    
    
    
    (19.4
    )Provision for income taxes
    
    
    (0.7
    )
    
    
    0.5Depreciation and amortization
    
    
    51.2
    
    
    
    57.4Earnings in equity investments
    
    
    (35.8
    )
    
    
    (3.7
    )Distributions from equity investments
    
    
    68.2
    
    
    
    16.3Gains on sales of assets
    
    
    (18.7
    )
    
    
    (1.4
    )Gain on sale of ownership interest in MB Storage
    
    
    (59.6
    )
    
    
    Non-cash portion of interest expense
    
    
    0.6
    
    
    
    0.8Net effect of changes in operating accounts and other
    
    
    7.9
    
    
    
    (13.2
    )Net cash provided by continuing operating activities
    
    
    199.1
    
    
    
    141.6Net cash provided by discontinued operations
    
    
    
    
    
    
    1.5Net cash from operating activities
    
    $
    199.1
    
    
    $
    143.1
   69




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##### Table of Contents



Investing Activities
  Financing Activities
   70




---



##### Table of Contents



Other Considerations
 Universal Shelf
  Credit Facility
  Junior Subordinated Notes
   71




---



##### Table of Contents



Future Capital Needs and Commitments
   Liquidity Outlook
  72




---



##### Table of Contents



Classification of Short-Term Obligations Expected to be
Refinanced.
 Off-Balance Sheet Arrangements
     73




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##### Table of Contents



Contractual Obligations
   Amount of Commitment Expiration Per PeriodLess than
    
    
    
    
    
    
    
    
    
    
    AfterTotal
    
    
    1 Year
    
    
    1-3 Years
    
    
    4-5 Years
    
    
    5 YearsRevolving Credit Facility, due 2011
    
    $
    200.0
    
    
    $
    
    
    
    $
    
    
    
    $
    200.0
    
    
    $
    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)
    
    
    1,920.1
    
    
    
    111.4
    
    
    
    197.7
    
    
    
    191.4
    
    
    
    1,419.6Debt and interest total
    
    $
    3,510.1
    
    
    $
    111.4
    
    
    $
    197.7
    
    
    $
    891.4
    
    
    $
    2,309.6
 
 (1)
    
    Obligations of TE Products.
 (2)
    
    Our TE Products subsidiary entered into an interest rate swap agreement to hedge its
exposure to changes in the fair value of its 7.51% Senior Notes due 2028. At June 30,
2007, the 7.51% Senior Notes include an adjustment to decrease the fair value of the debt
by $9.3 million related to this interest rate swap agreement. We also entered into
interest rate swap agreements to hedge our exposure to changes in the fair value of our
7.625% Senior Notes due 2012. At June 30, 2007, the 7.625% Senior Notes include a
deferred gain, net of amortization, from previous interest rate swap terminations of $25.6
million. At June 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 $2.3 million of unamortized
debt discounts. The fair value adjustments, the deferred gain 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 the 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.
 Credit Ratings
   Recent Accounting Pronouncements
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
  Commodity Risk
 Accounting for Derivative Instruments and Hedging Activities Accounting for Certain Derivative Instruments and Certain Hedging Activities, an
amendment of FASB Statement No. 133
  74




---



##### Table of Contents



Interest Rate Risk
    75




---



##### Table of Contents



Fair Values of Debt
  Fair ValueJune 30,
    
    December 31,Face Value
    
    2007
    
    20066.45% TE Products Senior Notes, due January 2008
    
    $
    180,000
    
    
    $
    180,630
    
    
    $
    181,6417.625% Senior Notes, due February 2012
    
    
    500,000
    
    
    
    532,902
    
    
    
    537,0676.125% Senior Notes, due February 2013
    
    
    200,000
    
    
    
    199,697
    
    
    
    201,6107.51% TE Products Senior Notes, due January 2028
    
    
    210,000
    
    
    
    218,762
    
    
    
    221,4717.000% Junior Subordinated Notes, due June 2067
    
    
    300,000
    
    
    
    286,045
    
    
    
    
 
 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
   76




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##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  Risks Relating to Our Business
 The success of our Jonah gas gathering operations is substantially dependent upon Enterprise.
  Our partnership status may be a disadvantage to us in calculating our cost of service for
rate-making purposes.
  77




---



##### Table of Contents



Risks Relating to Our Units as a Result of Our Partnership Structure
 The credit and risk profile of our General Partner and its owners could adversely affect our credit
ratings and profile, which could increase our borrowing costs or hinder our ability to raise
capital.
   Control of our General Partner may be transferred to a third party without unitholder consent.
  78




---



##### Table of Contents



Tax Risks to Unitholders
 We have adopted certain methodologies that may result in a shift of income, gain, loss and
deduction between the General Partner and our unitholders. The Internal Revenue Service (IRS)
may challenge this treatment, which could adversely affect the value of our Units.
   
 Item 5. Other Information.
  
 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
 79




---



##### Table of Contents



ExhibitNumber
    
    DescriptionTEPPCO
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 on Form 8-K of TEPPCO Partners, L.P. (Commission File No. 1-10403) filed on
February 20, 2002 and incorporated herein by reference).4.5
    
    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).
 80




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##### Table of Contents

10.

ExhibitNumber
    
    Description4.8
    
    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).4.13
    
    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.10.1+
    
    Form of TPP Employee Unit Appreciation Right Grant (Texas Eastern Products
Pipeline Company, LLC) under the EPCO, Inc. 2006 TPP Long-Term Incentive Plan (Filed as
Exhibit 10.1 to the Current Report on Form 8-K of TEPPCO Partners, L.P. (Commission
File No. 1-10403) filed on May 24, 2007 and incorporated herein by reference).10.2
    
    Replacement of Capital Covenant, dated May 18, 2007, executed by TEPPCO
Partners, L.P., TE Products Pipeline Company, Limited Partnership, TCTM, L.P., TEPPCO
Midstream Companies, L.P. and Val Verde Gas Gathering Company, L.P. in favor of the
covered debt holders described therein (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 18, 2007
and incorporated herein by reference).10.3+*
    
    Form of Phantom Unit Grant for Directors of Texas Eastern Products Pipeline Company,
LLC under the EPCO, Inc. TPP Long-Term Incentive Plan, as amended.10.4
    
    Company Agreement of TE Products Pipeline Company, LLC by and between TEPPCO
GP, Inc. and TEPPCO Partners, L.P. dated as of June 30, 2007 (Filed as Exhibit 3.2 to
 81




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##### Table of Contents



ExhibitNumber
    
    Descriptionthe 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).10.5*
    
    Company Agreement of TEPPCO Midstream Companies, LLC by and between TEPPCO GP,
Inc. and TEPPCO Partners, L.P. dated as of June 30, 2007.10.6
    
    Second Amendment to Fourth Amended and Restated Administrative Services Agreement dated August 7, 2007, but effective as of May 7, 2007 (Filed as Exhibit 10.1 to Form 10-Q of Duncan Energy Partners L.P. (Commission File No. 1-33266) for the quarter ended June 30, 2007 and incorporated herein by reference).10.7*
    
    Assignment, Assumption and Amendment No. 2 to Guaranty Agreement,
dated as of May 21, 2007, by and among TE Products Pipeline Company,
Limited Partnership, Marathon Petroleum Company, LLC and Marathon Oil
Corporation.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. 82




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##### Table of Contents



SIGNATURES
  TEPPCO Partners, L.P.By:  /s/   JERRY E. THOMPSONJerry E. Thompson,Date: August 8, 2007
    
    President and Chief Executive Officer of
Texas Eastern Products Pipeline Company, LLC, General PartnerBy:  /s/   WILLIAM G. MANIASWilliam G. Manias,Date: August 8, 2007
    
    Vice President and Chief Financial Officer of
Texas Eastern Products Pipeline Company, LLC, General Partner 83




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##### Table of Contents



INDEX TO 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 on Form 8-K of TEPPCO Partners, L.P. (Commission File No. 1-10403) filed on
February 20, 2002 and incorporated herein by reference).4.5
    
    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).




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##### Table of Contents



ExhibitNumber
    
    Description4.8
    
    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).4.13
    
    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.10.1+
    
    Form of TPP Employee Unit Appreciation Right Grant (Texas Eastern Products
Pipeline Company, LLC) under the EPCO, Inc. 2006 TPP Long-Term Incentive Plan (Filed as
Exhibit 10.1 to the Current Report on Form 8-K of TEPPCO Partners, L.P. (Commission
File No. 1-10403) filed on May 24, 2007 and incorporated herein by reference).10.2
    
    Replacement of Capital Covenant, dated May 18, 2007, executed by TEPPCO
Partners, L.P., TE Products Pipeline Company, Limited Partnership, TCTM, L.P., TEPPCO
Midstream Companies, L.P. and Val Verde Gas Gathering Company, L.P. in favor of the
covered debt holders described therein (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 18, 2007
and incorporated herein by reference).10.3+*
    
    Form of Phantom Unit Grant for Directors of Texas Eastern Products Pipeline Company,
LLC under the EPCO, Inc. TPP Long-Term Incentive Plan, as amended.10.4
    
    Company Agreement of TE Products Pipeline Company, LLC by and between TEPPCO
GP, Inc. and TEPPCO Partners, L.P. dated as of June 30, 2007 (Filed as Exhibit 3.2 to




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##### Table of Contents



ExhibitNumber
    
    Descriptionthe 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).10.5*
    
    Company Agreement of TEPPCO Midstream Companies, LLC by and between TEPPCO GP,
Inc. and TEPPCO Partners, L.P. dated as of June 30, 2007.10.6
    
    Second Amendment to Fourth Amended and Restated Administrative Services Agreement dated August 7, 2007, but effective as of May 7, 2007 (Filed as Exhibit 10.1 to Form 10-Q of Duncan Energy Partners L.P. (Commission File No. 1-33266) for the quarter ended June 30, 2007 and incorporated herein by reference).10.7*
    
    Assignment, Assumption and Amendment No. 2 to Guaranty Agreement, dated as of May 21, 2007, by and among TE Products Pipeline Company, Limited Partnership, Marathon Petroleum Company, LLC and Marathon Oil Corporation.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.