<PAGE>   1

================================================================================
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-Q

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

                                      OR

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

             FOR THE QUARTER ENDED JUNE 30, 1999


                          COMMISSION FILE NO. 1-10403

                             TEPPCO PARTNERS, L.P.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                 DELAWARE                                  76-0291058
         (STATE OF INCORPORATION                        (I.R.S. EMPLOYER
             OR ORGANIZATION)                        IDENTIFICATION NUMBER)



                              2929 ALLEN PARKWAY
                                 P.O. BOX 2521
                           HOUSTON, TEXAS 77252-2521
         (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)

                                (713) 759-3636
             (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)


         Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X     No
                                             ---      ---
===============================================================================
<PAGE>   2





                         PART I. FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                             TEPPCO PARTNERS, L.P.

                          CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                JUNE 30,     DECEMBER 31,
                                                                  1999          1998
                                                               ----------    ------------
                                                               (UNAUDITED)
                                     ASSETS
<S>                                                            <C>           <C>
Current assets:
  Cash and cash equivalents .................................  $   49,200    $   47,423
  Short-term investments ....................................       3,909         3,269
  Accounts receivable, trade ................................     153,349       113,541
  Inventories ...............................................      21,517        20,434
  Other .....................................................       3,958         3,909
                                                               ----------    ----------
     Total current assets ...................................     231,933       188,576
                                                               ----------    ----------
Property, plant and equipment, at cost (Net of accumulated
  depreciation and amortization of $207,761 and $193,858) ...     699,446       671,611
Investments .................................................       4,246         6,490
Intangible assets ...........................................      35,884        36,842
Other assets ................................................      12,008        11,450
                                                               ----------    ----------
     Total assets ...........................................  $  983,517    $  914,969
                                                               ==========    ==========

                       LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
  Accounts payable and accrued liabilities ..................  $  146,687    $  117,933
  Accounts payable, general partner .........................       5,549         2,815
  Accrued interest ..........................................      13,226        13,039
  Other accrued taxes .......................................       7,309         6,739
  Other .....................................................       9,016         7,699
                                                               ----------    ----------
     Total current liabilities ..............................     181,787       148,225
                                                               ----------    ----------
Senior Notes ................................................     389,737       389,722
Other long-term debt ........................................      68,000        38,000
Other liabilities and deferred credits ......................       3,352         3,407
Minority interest ...........................................       3,445         3,393
Redeemable Class B Units held by related party ..............     106,102       105,036
Partners' capital:
General partner's interest ..................................         137          (380)
Limited partners' interests .................................     230,957       227,566
                                                               ----------    ----------
     Total partners' capital ................................     231,094       227,186
                                                               ----------    ----------
     Total liabilities and partners' capital ................  $  983,517    $  914,969
                                                               ==========    ==========
</TABLE>


          See accompanying Notes to Consolidated Financial Statements.



                                       2
<PAGE>   3


                             TEPPCO PARTNERS, L.P.

                       CONSOLIDATED STATEMENTS OF INCOME
                                  (UNAUDITED)
                    (IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)

<TABLE>
<CAPTION>
                                                                         THREE MONTHS   THREE MONTHS    SIX MONTHS    SIX MONTHS
                                                                            ENDED          ENDED          ENDED          ENDED
                                                                           JUNE 30,       JUNE 30,       JUNE 30,      JUNE 30,
                                                                             1999           1998           1999          1998
                                                                          ----------     ----------     ----------     ----------
<S>                                                                       <C>            <C>            <C>            <C>
Operating revenues:
  Sales of crude oil and petroleum products ............................  $  398,156     $       --     $  620,530     $       --
  Transportation - Refined products ....................................      33,353         32,755         58,949         55,217
  Transportation - LPGs ................................................      10,094          9,762         36,689         31,577
  Transportation - Crude oil and NGLs ..................................       2,970             --          5,536             --
  Mont Belvieu operations ..............................................       3,358          2,418          6,255          5,088
  Other - Net ..........................................................       7,420          6,625         13,482          9,883
                                                                          ----------     ----------     ----------     ----------
    Total operating revenues ...........................................     455,351         51,560        741,441        101,765
                                                                          ----------     ----------     ----------     ----------

Costs and expenses:
  Purchases of crude oil and petroleum products ........................     391,333             --        608,030             --
  Operating, general and administrative ................................      24,090         16,972         45,303         32,816
  Operating fuel and power .............................................       8,094          6,575         14,987         12,765
  Depreciation and amortization ........................................       8,154          6,625         16,293         12,705
  Taxes - other than income taxes ......................................       2,664          2,459          5,343          5,036
                                                                          ----------     ----------     ----------     ----------
    Total costs and expenses ...........................................     434,335         32,631        689,956         63,322
                                                                          ----------     ----------     ----------     ----------

    Operating income ...................................................      21,016         18,929         51,485         38,443

  Interest expense .....................................................      (7,780)        (7,521)       (15,322)       (14,677)
  Interest capitalized .................................................         347            233            489            517
  Other income - net ...................................................         590          1,033          1,131          1,680
                                                                          ----------     ----------     ----------     ----------
    Income before minority interest and extraordinary loss on debt
     extinguishment ....................................................      14,173         12,674         37,783         25,963
Minority interest ......................................................        (144)          (128)          (382)          (262)
                                                                          ----------     ----------     ----------     ----------
    Income before extraordinary loss on debt extinguishment ............      14,029         12,546         37,401         25,701
                                                                          ----------     ----------     ----------     ----------
Extraordinary loss on debt extinguishment, net of minority interest ....          --             --             --        (72,767)
                                                                          ----------     ----------     ----------     ----------

    Net income (loss) ..................................................  $   14,029     $   12,546     $   37,401     $  (47,066)
                                                                          ==========     ==========     ==========     ==========

Basic and diluted income (loss) per Limited Partner and Class B Unit:
    Income before extraordinary loss ...................................  $     0.38     $     0.39     $     1.02     $     0.80
    Extraordinary loss on debt extinguishment ..........................          --             --             --          (2.28)
                                                                          ----------     ----------     ----------     ----------
    Net income (loss) ..................................................  $     0.38     $     0.39     $     1.02     $    (1.48)
                                                                          ==========     ==========     ==========     ==========

Weighted average Limited Partner and Class B Units outstanding .........      32,917         29,000         32,917         29,000
</TABLE>



          See accompanying Notes to Consolidated Financial Statements.






                                       3
<PAGE>   4

                             TEPPCO PARTNERS, L.P.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                SIX MONTHS       SIX MONTHS
                                                                                  ENDED            ENDED
                                                                                 JUNE 30,         JUNE 30,
                                                                                   1999             1998
                                                                                ----------       ----------
<S>                                                                             <C>              <C>
Cash flows from operating activities:
 Net income (loss) ..........................................................   $   37,401       $  (47,066)
 Adjustments to reconcile net income (loss) to cash provided by operating
  activities:
  Extraordinary loss on early extinguishment of debt, net of
    minority interest .......................................................           --           72,767
  Depreciation and amortization .............................................       16,293           12,705
  Gain on sale of property, plant and equipment .............................           --             (356)
  Equity in loss of affiliate ...............................................          149               94
  Decrease (increase) in accounts receivable, trade .........................      (39,808)           5,993
  Increase in inventories ...................................................       (1,083)          (1,052)
  Decrease (increase) in other current assets ...............................          (49)             984
  Increase (decrease) in accounts payable and accrued expenses ..............       33,562             (874)
  Other .....................................................................       (1,081)            (519)
                                                                                ----------       ----------
    Net cash provided by operating activities ...............................       45,384           42,676
                                                                                ----------       ----------

Cash flows from investing activities:
  Proceeds from cash investments ............................................        3,840            2,105
  Purchases of cash investments .............................................       (2,235)              --
  Purchase of fractionator assets and related intangible assets .............           --          (40,000)
  Proceeds from the sale of property, plant and equipment ...................           --              525
  Purchase of crude oil system ..............................................       (2,250)              --
  Capital expenditures ......................................................      (40,313)          (9,530)
                                                                                ----------       ----------
    Net cash used in investing activities ...................................      (40,958)         (46,900)
                                                                                ----------       ----------

Cash flows from financing activities:
  Principal payment, First Mortgage Notes ...................................           --         (326,512)
  Prepayment premium, First Mortgage Notes ..................................           --          (70,093)
  Issuance of Senior Notes ..................................................           --          389,694
  Debt issuance costs, Senior Notes .........................................           --           (3,651)
  Proceeds from term loan ...................................................       25,000           38,000
  Proceeds from revolving credit agreement ..................................        5,000               --
  Distributions .............................................................      (32,649)         (27,420)
                                                                                ----------       ----------
    Net cash provided by (used in) financing activities .....................       (2,649)              18
                                                                                ----------       ----------

Net increase (decrease) in cash and cash equivalents ........................        1,777           (4,206)

Cash and cash equivalents at beginning of period ............................       47,423           43,961
                                                                                ----------       ----------
Cash and cash equivalents at end of period ..................................   $   49,200       $   39,755
                                                                                ==========       ==========

SUPPLEMENTAL DISCLOSURE OF CASH FLOWS:
Interest paid during the period (net of capitalized interest) ...............   $   14,455       $   12,292
                                                                                ==========       ==========
</TABLE>

          See accompanying Notes to Consolidated Financial Statements.



                                       4
<PAGE>   5


                             TEPPCO PARTNERS, L.P.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)





NOTE 1.  ORGANIZATION AND BASIS OF PRESENTATION

         TEPPCO Partners, L.P. (the "Partnership"), a Delaware limited
partnership, was formed in March 1990. The Partnership operates through TE
Products Pipeline Company, Limited Partnership (the "Products OLP") and TCTM,
L.P. (the "Crude Oil OLP"). Collectively the Products OLP and the Crude Oil OLP
are referred to as "the Operating Partnerships." The Partnership owns a 99%
interest as the sole limited partner interest in both the Products OLP and the
Crude Oil OLP. Texas Eastern Products Pipeline Company (the "Company" or
"General Partner"), an indirect wholly-owned subsidiary of Duke Energy
Corporation ("Duke Energy"), owns a 1% general partner interest in the
Partnership and 1% general partner interest in each Operating Partnership. The
Company, as general partner, performs all management and operating functions
required for the Partnership pursuant to the Agreements of Limited Partnership
of TEPPCO Partners, L.P. and TE Products Pipeline Company, Limited Partnership
and TCTM, L.P. (the "Partnership Agreements"). The general partner is
reimbursed by the Partnership for all reasonable direct and indirect expenses
incurred in managing the Partnership.

         The accompanying unaudited consolidated financial statements reflect
all adjustments, which are, in the opinion of management, of a normal and
recurring nature and necessary for a fair statement of the financial position
of the Partnership as of June 30, 1999, and the results of operations and cash
flows for the periods presented. The results of operations for the six months
ended June 30, 1999, are not necessarily indicative of results of operations
for the full year 1999. The interim financial statements should be read in
conjunction with the Partnership's consolidated financial statements and notes
thereto presented in the TEPPCO Partners, L.P. Annual Report on Form 10-K for
the year ended December 31, 1998. Certain amounts from the prior year have been
reclassified to conform to current presentation.

         The Partnership operates in two industry segments: refined products and
liquefied petroleum gases ("LPGs") transportation, and crude oil and natural gas
liquids ("NGLs") transportation and marketing. The Partnership's reportable
segments offer different products and services and are managed separately
because each requires different business strategies. The crude oil and NGLs
transportation segment was acquired as a unit, and the management at the time of
the acquisition was retained. The interstate transportation operations of both
segments, including rates charged to customers, are subject to regulations
prescribed by the Federal Energy Regulatory Commission ("FERC"). Refined
products, LPGs, crude oil and NGLs are referred to herein, collectively, as
"petroleum products" or "products."

         Basic net income per Unit is computed by dividing net income, after
deduction of the general partner's interest, by the weighted average number of
Limited Partner and Class B Units outstanding (a total of 32,916,547 Units and
29,000,000 Units as of June 30, 1999 and 1998, respectively). The general
partner's percentage interest in net income is based on its percentage of cash
distributions from Available Cash for each period (see Note 7. Cash
Distributions). The general partner was allocated $3.8 million (10.18%) of the
net income for the six months ended June 30, 1999, and $4.1 million (8.78%) of
the net loss for the six months ended June 30, 1998.

         Diluted net income per Unit is similar to the computation of basic net
income per Unit above, except that the denominator was increased to include the
dilutive effect of outstanding Unit options by application of the treasury
stock method. For the quarters ended June 30, 1999 and 1998, the denominator
was increased by 27,963 Units and 50,896 Units, respectively. For the six
months ended June 30, 1999 and 1998, the denominator was increased by 25,242
Units and 48,732 Units, respectively.




                                       5
<PAGE>   6


                             TEPPCO PARTNERS, L.P.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                  (UNAUDITED)





NOTE 2. NEW ACCOUNTING PRONOUNCEMENTS

         In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities." This statement establishes
standards for and disclosures of derivative instruments and hedging activities.
In July 1999, the FASB issued SFAS No. 137 to delay the effective date of SFAS
No. 133 until fiscal years beginning after June 15, 2000. The Partnership
expects to adopt this standard effective January 1, 2001, and does not expect
the adoption of this statement to have a material impact on its financial
condition or results of operations.

NOTE 3. RELATED PARTY TRANSACTIONS

         As of March 31, 1998, TEPPCO Colorado, LLC ("TEPPCO Colorado"), a
wholly-owned subsidiary of the Products OLP, purchased two fractionation
facilities located in Weld County, Colorado, from Duke Energy Field Services,
Inc. ("DEFS"), a wholly-owned subsidiary of Duke Energy. TEPPCO Colorado and
DEFS entered into a twenty year Fractionation Agreement, whereby TEPPCO
Colorado will receive a variable fee for all fractionated volumes delivered to
DEFS. The purchase price of these transactions was $40 million. Intangible
assets include $38 million of value assigned to the Fractionation Agreement,
which will be amortized on a straight-line method over the term of the
Fractionation Agreement. The remaining purchase price of $2.0 million was
allocated to the fractionator facilities purchased. TEPPCO Colorado and DEFS
also entered into a Operations and Management Agreement, whereby DEFS will
operate and maintain the fractionation facilities. TEPPCO Colorado will pay
DEFS a set volumetric rate for all fractionated volumes delivered to DEFS.

         Effective November 1, 1998, the Crude Oil OLP, through its
wholly-owned subsidiary TEPPCO Crude Oil, LLC ("TCO"), acquired substantially
all of the assets of Duke Energy Transport and Trading Company ("DETTCO") from
Duke Energy for approximately $106 million. In consideration for such assets,
Duke Energy received 3,916,547 Class B Limited Partnership Units ("Class B
Units"). The Class B Units are substantially identical to the 29,000,000
Limited Partner Units, except they are not listed on the New York Stock
Exchange. The Class B Units will be convertible into Limited Partner Units upon
approval by the Limited Partner Unitholders. The Company intends to seek
approval for conversion, however, if conversion is not approved before March
2000, the holder of the Class B Units will have the right to sell them to the
Partnership at 95.5% of the market price of the Limited Partner Units at the
time of sale. As a result of such option, the Class B Units were not included
in partners' capital at June 30, 1999. Collectively, the Limited Partner Units
and Class B Units are referred to as "Units." The transaction was accounted for
under the purchase method of accounting. Accordingly, the results of the
acquisition are included in the consolidated statements of income for periods
from November 1, 1998.

NOTE 4.  INVESTMENTS

SHORT-TERM INVESTMENTS

         The Partnership routinely invests cash in liquid short-term
investments as part of its cash management program. Investments with maturities
at date of purchase of 90 days or less are considered cash equivalents. At June
30, 1999, short-term investments included $3.9 million of investment-grade
corporate notes, which mature within one year. Such investments at June 30,
1999 included a $0.9 million investment in Duke Power Company corporate notes.
All short-term investments are classified as held-to-maturity securities and
are stated at amortized cost. The aggregate fair value of such securities
approximates amortized cost at June 30, 1999.





                                       6
<PAGE>   7


                             TEPPCO PARTNERS, L.P.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                  (UNAUDITED)


LONG-TERM INVESTMENTS

         At June 30, 1999, the Partnership had $4.2 million invested in
investment-grade corporate notes, which have varying maturities through 2004.
These securities are classified as held-to-maturity securities and are stated
at amortized cost. The aggregate fair value of such securities approximates
amortized cost at June 30, 1999.

NOTE 5.  INVENTORIES

         Inventories are carried at the lower of cost (based on weighted
average cost method) or market. The major components of inventories were as
follows (in thousands):

<TABLE>
<CAPTION>
                                    JUNE 30,   DECEMBER 31,
                                     1999          1998
                                  ----------    ----------
<S>                               <C>           <C>
     Gasolines .................  $    1,677    $    4,224
     Propane ...................         655         1,503
     Butanes ...................       2,333         1,654
     Fuel oil ..................         579           564
     Crude oil .................       8,762         5,517
     Other products ............       3,633         3,306
     Materials and supplies ....       3,878         3,666
                                  ----------    ----------
               Total ...........  $   21,517    $   20,434
                                  ==========    ==========
</TABLE>


         The costs of inventories were lower than market at June 30, 1999, and
December 31, 1998.

NOTE 6.  LONG TERM DEBT

SENIOR NOTES

         On January 27, 1998, the Products OLP completed the issuance of $180
million principal amount of 6.45% Senior Notes due 2008, and $210 million
principal amount of 7.51% Senior Notes due 2028 (collectively the "Senior
Notes"). The 6.45% Senior Notes due 2008 are not subject to redemption prior to
January 15, 2008. The 7.51% Senior Notes due 2028 may be redeemed at any time
after January 15, 2008, at the option of the Products OLP, in whole or in part,
at a premium. Net proceeds from the issuance of the Senior Notes totaled
approximately $386 million and was used to repay in full the $61.0 million
principal amount of the 9.60% Series A First Mortgage Notes, due 2000, and the
$265.5 million principal amount 10.20% Series B First Mortgage Notes, due 2010.
The premium for the early redemption of the First Mortgage Notes totaled $70.1
million. The Partnership recorded an extraordinary charge of $73.5 million
during the first quarter of 1998 (including $0.7 million allocated to minority
interest), which represents the redemption premium of $70.1 million and
unamortized debt issue costs related to the First Mortgage Notes of $3.4
million.

         The Senior Notes do not have sinking fund requirements. Interest on
the Senior Notes is payable semiannually in arrears on January 15 and July 15
of each year. The Senior Notes are unsecured obligations of the Products OLP
and will rank on a parity with all other unsecured and unsubordinated
indebtedness of the Products OLP. The indenture governing the Senior Notes
contains covenants, including, but not limited to, covenants limiting (i) the
creation of liens securing indebtedness and (ii) sale and leaseback
transactions. However, the indenture does not limit the Partnership's ability
to incur additional indebtedness.





                                       7
<PAGE>   8


                             TEPPCO PARTNERS, L.P.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                  (UNAUDITED)



OTHER LONG TERM DEBT

         In connection with the purchase of the fractionation assets from DEFS
as of March 31, 1998, TEPPCO Colorado received a $38 million bank loan from
SunTrust Bank. Proceeds from the loan were received on April 21, 1998. TEPPCO
Colorado paid interest to DEFS at a per annum rate of 5.75% on the amount of
the total purchase price outstanding for the period from March 31, 1998 until
April 21, 1998. The SunTrust loan bears interest at a rate of 6.53%, which is
payable quarterly beginning in July 1998. The principal balance of the loan is
payable in full on April 21, 2001. The Products OLP is guarantor on the loan.

         On May 17, 1999, the Products OLP entered into a $75 million term loan
agreement to finance construction of three new pipelines between the
Partnership's terminal in Mont Belvieu, Texas and Port Arthur, Texas. The term
loan agreement has a term of five years. SunTrust Bank is the administrator of
the loan. Approximately $28.0 million of construction cost was included in
capital expenditures during the first six months of 1999, with a total of
approximately $44.5 million expected to be incurred in 1999, and the remainder
in 2000. At June 30, 1999, $25 million has been borrowed under the term loan
agreement. Principal will be paid quarterly as follows, with the remaining
principal balance payable on May 17, 2004.

<TABLE>
<CAPTION>
                    QUARTERLY PERIODS ENDING                  PAYMENT AMOUNT
                    ------------------------                  --------------
<S>                                                           <C>
                  June 2001 through March 2002                $2.50 million
                  June 2002 through March 2003                $3.75 million
                  June 2003 through March 2004                $5.00 million
</TABLE>

         The interest rate for the $75 million term loan is based on the
borrower's option of either SunTrust Bank's prime rate, the federal funds rate
or LIBOR rate in effect at the time of the borrowings and is adjusted monthly,
bimonthly, quarterly or semi-annually. Interest is payable quarterly from the
time of borrowing. The current interest rate for amounts outstanding under the
term loan is 6.33%. Commitment fees for the term loan totaled approximately
$15,000 for the quarter ended June 30, 1999.

WORKING CAPITAL FACILITIES

         On May 17, 1999, the Products OLP entered into a $25 million revolving
credit agreement and TCO entered into a $30 million revolving credit agreement.
SunTrust Bank is the administrative agent on both revolving credit agreements.
The $25 million revolving credit agreement has a five year term and the $30
million revolving credit agreement has a three year term. The interest rate on
both agreements is based on the borrower's option of either SunTrust Bank's
prime rate, the federal funds rate or LIBOR rate in effect at the time of the
borrowings and is payable quarterly. Interest rates are adjusted monthly,
bimonthly, quarterly or semi-annually. The Products OLP has not made any
borrowings under this revolving credit facility. TCO borrowed $5 million under
its revolving credit agreement on June 30, 1999. Such amount was repaid in July
1999. Commitment fees for the revolving credit agreement totaled approximately
$17,000 for the quarter ended June 30, 1999.

         In connection with the purchase of the DETTCO assets by TCO, Duke
Capital also agreed to guarantee the payment by TCO and its subsidiaries under
certain commercial contracts between TCO and its subsidiaries and third
parties. Duke Capital will provide up to $100 million of guarantee credit to
TCO and its subsidiaries for a period of three years from November 30, 1998.
Pursuant to this agreement, the Partnership has agreed to pay Duke Capital a
commitment fee of $100,000 per year.





                                       8
<PAGE>   9


                             TEPPCO PARTNERS, L.P.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                  (UNAUDITED)



NOTE 7. CASH DISTRIBUTIONS

         The Partnership makes quarterly cash distributions of all of its
Available Cash, generally defined as consolidated cash receipts less
consolidated cash disbursements and cash reserves established by the general
partner in its sole discretion.

         On May 7, 1999, the Partnership paid the first quarter cash
distribution of $0.45 per Limited Partner Unit and Class B Unit to Unitholders
of record on April 30, 1998. Additionally, on July 19, 1999, the Partnership
declared a cash distribution of $0.475 per Limited Partner Unit and Class B
Unit for the quarter ended June 30, 1999, which represents an annualized
increase of $0.10 per Unit. The distribution was paid on August 6, 1999, to
Unitholders of record on July 30, 1999.

         The Company receives incremental incentive distributions of 15%, 25%
and 50% of the amount by which quarterly distributions of Available Cash exceed
$0.275, $0.325 and $0.45 per Limited Partner Unit and Class B Unit,
respectively. During the six months ended June 30, 1999 and 1998, incentive
distributions paid to the Company totaled $3.0 million and $2.3 million,
respectively.

NOTE 8. SEGMENT DATA

         The Partnership operates in two industry segments: refined products
and LPGs transportation, which operates through the Products OLP; and crude oil
and NGLs transportation and marketing, which operates through the Crude Oil
OLP.

         Operations of the Products OLP consist of interstate transportation,
storage and terminaling of petroleum products; short-haul shuttle
transportation of LPGs at the Mont Belvieu, Texas complex; sale of product
inventory; fractionation of natural gas liquids and other ancillary services.
The Products OLP is one of the largest pipeline common carriers of refined
petroleum products and LPGs in the United States. The Partnership owns and
operates an approximate 4,300-mile pipeline system extending from southeast
Texas through the central and midwestern United States to the northeastern
United States.

         The Crude Oil OLP gathers, stores, transports and markets crude oil,
principally in Oklahoma and Texas; operates two trunkline NGL pipelines in
South Texas; and distributes lube oil to industrial and commercial accounts.
The Crude Oil OLP's gathering, transportation and storage assets include
approximately 2,200 miles of pipeline and 1.3 million barrels of storage. The
crude oil and NGLs transportation and marketing segment was added with the
acquisition from DETTCO effective November 1, 1998.




                                       9
<PAGE>   10

                             TEPPCO PARTNERS, L.P.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                  (UNAUDITED)


         The below table includes interim financial information by business
segment for the quarter and six months ended June 30, 1999. Comparative data
has not been included as the Partnership operated as one business segment prior
to November 1, 1998.

<TABLE>
<CAPTION>
                                                PRODUCTS        CRUDE OIL
(in thousands):                                   OLP              OLP          CONSOLIDATED
                                               ----------       ----------      ------------
<S>                                            <C>              <C>              <C>
Three Months Ended June 30, 1999:
Unaffiliated revenues .......................  $   54,225       $  401,126       $  455,351
Operating expenses, including power .........      28,854          397,327          426,181
Depreciation and amortization expense .......       6,770            1,384            8,154
                                               ----------       ----------       ----------
      Operating income ......................      18,601            2,415           21,016
Interest expense, net .......................      (7,417)             (16)          (7,433)
Other income, net ...........................         386               60              446
                                               ----------       ----------       ----------
      Net income ............................  $   11,570       $    2,459       $   14,029
                                               ==========       ==========       ==========

Six Months Ended June 30, 1999:
Unaffiliated revenues .......................  $  115,375       $  626,066       $  741,441
Operating expenses, including power .........      55,043          618,620          673,663
Depreciation and amortization expense .......      13,533            2,760           16,293
                                               ----------       ----------       ----------
      Operating income ......................      46,799            4,686           51,485
Interest expense, net .......................     (14,811)             (22)         (14,833)
Other income, net ...........................         574              175              749
                                               ----------       ----------       ----------
      Net income ............................  $   32,562       $    4,839       $   37,401
                                               ==========       ==========       ==========

As of June 30, 1999:
Identifiable assets .........................  $  721,373       $  262,144       $  983,517

Accounts receivable, trade ..................      16,783          136,566          153,349

Accounts payable and accrued liabilities ....  $    6,740       $  139,947       $  146,687
</TABLE>

NOTE 9.  COMMITMENTS AND CONTINGENCIES

         The Partnership is involved in various claims and legal proceedings
incidental to its business. In the opinion of management, these claims and
legal proceedings will not have a material adverse effect on the Partnership's
consolidated financial position or results of operations.

         The operations of the Partnership are subject to federal, state and
local laws and regulations relating to protection of the environment. Although
the Partnership believes the operations of the pipeline system are in material
compliance with applicable environmental regulations, risks of significant
costs and liabilities are inherent in pipeline operations, and there can be no
assurance that significant costs and liabilities will not be incurred.
Moreover, it is possible that other developments, such as increasingly strict
environmental laws and regulations and enforcement policies thereunder, and
claims for damages to property or persons resulting from the operations of the
pipeline system, could result in substantial costs and liabilities to the
Partnership. The Partnership does not anticipate that changes in environmental
laws and regulations will have a material adverse effect on its financial
position, operations or cash flows in the near term.

         The Partnership and the Indiana Department of Environmental Management
("IDEM") have entered into an Agreed Order that will ultimately result in a
remediation program for any on-site and off-site groundwater contamination
attributable to the Partnership's operations at the Seymour, Indiana, terminal.
A Feasibility Study,





                                      10
<PAGE>   11

                             TEPPCO PARTNERS, L.P.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                  (UNAUDITED)



which includes the Partnership's proposed remediation program, has been
approved by IDEM. IDEM will issue a Record of Decision formally approving the
remediation program. After the Record of Decision has been issued, the
Partnership will enter into an Agreed Order for the continued operation and
maintenance of the program. The Partnership will evaluate the conditions of the
Record of Decision and make adjustments to the program as required. The amount
accrued for the program was approximately $0.5 million at June 30, 1999. In the
opinion of the Company, the completion of the remediation program being
proposed by the Partnership, if such program is approved by IDEM, will not have
a material adverse impact on the Partnership's financial condition, results of
operations or liquidity.

         In 1997, the Company initiated a program to prepare the Partnership's
process controls and business computer systems for the "Year 2000" issue.
Process controls are the automated equipment including hardware and software
systems which run operational activities. Business computer systems are the
computer hardware and software used by the Partnership. The Partnership is
utilizing both internal and external resources to identify, test, remediate or
replace all critical known or discovered non-compliant computerized systems and
applications. The Company continues to evaluate appropriate courses of
corrective action, including replacement of certain systems whose associated
costs would be recorded as assets and amortized. The Partnership has incurred
approximately $2.8 million of costs related to the Year 2000 issue. The Company
estimates the remaining amounts required to address the Year 2000 issue will be
as much as approximately $3.4 million. A portion of such costs would have been
incurred as part of normal system and application upgrades. In certain cases,
the timing of expenditures has been accelerated due to the Year 2000 issue.
Although the Company believes this estimate to be reasonable, due to the
complexities of the Year 2000 issue, there can be no assurance that the actual
costs related to the Year 2000 issue will not be significantly greater.

         The Partnership has adopted a three-phase Year 2000 program consisting
of: Phase I - Preliminary Assessment; Phase II - Detailed Assessment and
Remediation Planning; and Phase III - Remediation Activities and Testing. The
Products OLP has completed Phase I; Phase II is 99% complete; and Phase III is
84% complete. The Crude Oil OLP has completed 95% of Phase I; Phase II is 83%
complete; and Phase III is 60% complete. Remediation Activities and Testing of
all process controls and business computer systems are scheduled to be
completed by mid-fourth quarter of 1999.

         With respect to its third-party relationships, the Partnership has
contacted its primary vendors, suppliers and service providers to assess their
software and hardware products previously sold to the Partnership and other
aspects of their state of Year 2000 readiness. Information continues to be
updated regularly, thus the Partnership anticipates receiving additional
information in the near future that will assist in determining the extent to
which the Partnership may be vulnerable to those third parties' failure to
identify and remediate their Year 2000 issues. However, there can be no
assurance that the systems or products of other companies, on which the
Partnership's systems rely, will be timely converted, or converted in a manner
that is compatible with the Partnership's systems, or that any such failures by
other companies would not have a material adverse effect on the Partnership.

         Despite the Partnership's determined efforts to address and remediate
its Year 2000 issue, there can be no assurance that all process controls and
business computer systems will continue without interruption through January 1,
2000, and beyond. The complexity of identifying and testing all embedded
microprocessors that are installed in hardware throughout the products pipeline
system and crude oil system used for process or flow control, transportation,
security, communication and other systems may result in unforeseen operational
system shutdowns. Although the amount of potential liability and lost revenue
cannot be estimated, failures that result in substantial disruptions of
business activities could have a material adverse effect on the Partnership. In
order to mitigate potential disruptions, the Partnership will prepare
contingency plans for its critical systems, processes and external
relationships by mid-fourth quarter of 1999.





                                      11
<PAGE>   12
                             TEPPCO PARTNERS, L.P.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                  (UNAUDITED)


         Substantially all of the petroleum products transported and stored by
the Partnership are owned by the Partnership's customers. At June 30, 1999, the
Partnership had approximately 15.6 million barrels of products in its custody
owned by customers. The Partnership is obligated for the transportation,
storage and delivery of such products on behalf of its customers. The
Partnership maintains insurance adequate to cover product losses through
circumstances beyond its control.






                                      12
<PAGE>   13


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS


GENERAL

         Through its ownership of the Products OLP and the Crude Oil OLP, the
Partnership operates in two industry segments - refined products and LPGs
transportation; and crude oil and NGLs transportation and marketing. The
Partnership's reportable segments offer different products and services and are
managed separately because each requires different business strategies.

         The Products OLP segment is involved in the transportation, storage
and terminaling of petroleum products and the fractionation of NGLs. Revenues
are derived from the transportation of refined products and LPGs, the storage
and short-haul shuttle transportation of LPGs at the Mont Belvieu, Texas,
complex, sale of product inventory and other ancillary services. Labor and
electric power costs comprise the two largest operating expense items of the
Products OLP. Operations are somewhat seasonal with higher revenues generally
realized during the first and fourth quarters of each year. Refined products
volumes are generally higher during the second and third quarters because of
greater demand for gasolines during the spring and summer driving seasons. LPGs
volumes are generally higher from November through March due to higher demand
in the Northeast for propane, a major fuel for residential heating.

         The Crude Oil OLP segment is involved in the transportation and
marketing of crude oil and NGLs. Revenues are earned from the gathering,
storage, transportation and marketing of crude oil, NGLs and lube oils
principally in Oklahoma and Texas. Operations of this segment are included from
November 1, 1998, upon the acquisition from Duke Energy.

         The following information is provided to facilitate increased
understanding of the 1999 and 1998 interim consolidated financial statements
and accompanying notes presented in Item 1. Material period-to-period variances
in the consolidated statements of income are discussed under "Results of
Operations." The "Financial Condition and Liquidity" section analyzes cash
flows and financial position. Discussion included in "Other Matters" addresses
key trends, future plans and contingencies. Throughout these discussions,
management addresses items that are reasonably likely to materially affect
future liquidity or earnings.

RESULTS OF OPERATIONS

         Summarized below is financial data by business segment (in thousands):

<TABLE>
<CAPTION>
                                                           QUARTER ENDED JUNE 30,       SIX MONTHS ENDED JUNE 30,
                                                          -------------------------     -------------------------
                                                             1999           1998           1999           1998
                                                          ----------     ----------     ----------     ----------
<S>                                                       <C>            <C>            <C>            <C>
Operating revenues:
    Refined Products and LPGs Transportation ..........   $   54,225     $   51,560     $  115,375     $  101,765
    Crude Oil and NGLs Transportation and Marketing ...      401,126             --        626,066             --
                                                          ----------     ----------     ----------     ----------
       Total operating revenues .......................      455,351         51,560        741,441        101,765
                                                          ----------     ----------     ----------     ----------

Operating income:
   Refined Products and LPGs Transportation ...........       18,601         18,929         46,799         38,443
   Crude Oil and NGLs Transportation and Marketing ....        2,415             --          4,686             --
                                                          ----------     ----------     ----------     ----------
       Total operating income .........................       21,016         18,929         51,485         38,443
                                                          ----------     ----------     ----------     ----------

Income before extraordinary item:
    Refined Products and LPGs Transportation ..........       11,570         12,546         32,562         25,701
    Crude Oil and NGLs Transportation and Marketing ...        2,459             --          4,839             --
                                                          ----------     ----------     ----------     ----------
      Total income before extraordinary item ..........   $   14,029     $   12,546     $   37,401     $   25,701
                                                          ----------     ----------     ----------     ----------
</TABLE>






                                      13
<PAGE>   14


RESULTS OF OPERATIONS - (CONTINUED)


         Net income for the quarter ended June 30, 1999 was $14.0 million,
compared with net income of $12.5 million for the 1998 second quarter. The
increase in net income resulted primarily from $2.5 million of net income
contributed by the crude oil and NGLs transportation and marketing segment,
which was acquired effective November 1, 1998, partially offset by $1.0 million
decrease of net income by the refined products and LPGs transportation segment.
The decrease in net income of the refined products and LPGs transportation
segment was primarily due to a $3.0 million increase in costs and expenses and
a $0.5 million decrease in other income - net, partially offset by a $2.7
million increase in operating revenues.

         For the six months ended June 30, 1999, the Partnership reported net
income of $37.4 million, compared with a net loss of $47.1 million for the
first six months of 1998. The net loss in 1998 included an extraordinary charge
of $72.8 million for early extinguishment of debt, net of $0.7 million
allocated to minority interest. Excluding the extraordinary loss, net income
would have been $25.7 million for the first six months of 1998. The $11.7
million increase in income before the loss on debt extinguishment resulted from
a $6.9 million increase of net income by the refined products and LPGs
transportation segment and $4.8 million of net income contributed by the crude
oil and NGLs transportation and marketing segment, which was acquired effective
November 1, 1998. The increase in net income of the refined products and LPGs
transportation segment resulted primarily from a $13.6 million increase in
operating revenues, partially offset by a $5.3 million increase in costs and
expenses, a $0.6 million increase in interest expense and a $0.8 million
decrease in other income - net. See discussion below of factors affecting net
income for the comparative periods by business segment.

REFINED PRODUCTS AND LPGS TRANSPORTATION SEGMENT

         See volume and average tariff information below:

<TABLE>
<CAPTION>
                                                QUARTER ENDED                             SIX MONTHS ENDED
                                                  JUNE 30,             PERCENTAGE             JUNE 30,           PERCENTAGE
                                         -------------------------      INCREASE      ------------------------    INCREASE
                                            1999           1998        (DECREASE)        1999          1998      (DECREASE)
                                         ----------     ----------     ----------     ----------    ----------   ----------
<S>                                      <C>            <C>            <C>            <C>           <C>                  <C>
VOLUMES DELIVERED
(in thousands of barrels)
      Refined products                       35,818         35,183              2%        63,973        59,694            7%
      LPGs                                    6,367          5,660             12%        19,539        15,811           24%
      Mont Belvieu operations                 5,882          5,518              7%        12,767        11,462           11%
                                         ----------     ----------     ----------     ----------    ----------   ----------
          Total                              48,067         46,361              4%        96,279        86,967           11%
                                         ==========     ==========     ==========     ==========    ==========   ==========

AVERAGE TARIFF PER BARREL
      Refined products                   $     0.93     $     0.93             --     $     0.92    $     0.93           (1%)
      LPGs                                     1.59           1.72             (8%)         1.88          2.00           (6%)
      Mont Belvieu operations                  0.15           0.15             --           0.16          0.16           --
          Average system tariff          $     0.92     $     0.94             (2%)   $     1.01    $     1.02           (1%)
                                         ==========     ==========     ==========     ==========    ==========   ==========
</TABLE>


         Refined products transportation revenues increased $0.6 million for
the quarter ended June 30, 1999, compared with the prior-year quarter, due to a
2% increase in total refined products volumes delivered. Deliveries of jet fuel
and distillates in the Indianapolis, Chicago and Ohio markets served by the
Partnership increased as a result of strong demand and favorable price
differentials. Partially offsetting these increases were lower deliveries of
motor fuel as a result of reduced refinery production received into the
Ark-La-Tex system and decreased gasoline blending demand for methyl tertiary
butyl ether ("MTBE").

         LPGs transportation revenues increased $0.3 million for the quarter
ended June 30, 1999, compared with the second quarter of 1998, due primarily to
increased feed stock deliveries of isobutane to a Midwest refinery that was on
a turnaround during the second quarter of 1998 and increased propane demand
from petrochemical facilities along the upper Texas Gulf Coast and in the
Midwest market areas. These increases were partially offset by lower propane
demand in the Northeast due to unfavorable price differentials. The decrease in
the average tariff per barrel resulted from the increased percentage of
short-haul deliveries in the Midwest and Gulf Coast market areas in 1999.





                                      14
<PAGE>   15

RESULTS OF OPERATIONS - (CONTINUED)


         For the six months ended June 30, 1999, refined products
transportation revenues increased $3.7 million, or 7%, compared with the
corresponding period in 1998. Lower refinery production and strong economic
demand for motor fuel, distillates and jet fuel resulted in increased volumes
delivered in the Midwest market areas. Offsetting these increases was decreased
demand for gasoline blend stocks, primarily MTBE, and gasoline feed stocks,
primarily natural gasoline. Additionally, jet fuel deliveries increased as a
result of new military supply agreements that became effective in the fourth
quarter of 1998.

         LPGs transportation revenues increased $5.1 million, or 16%, during
the six months ended June 30, 1999, compared with the same period in 1998, due
to a 24% increase in volumes delivered, partially offset by a 6% decrease in
the average tariff per barrel. Propane deliveries in the Northeast and upper
Midwest increased from higher weather-related demand in the first quarter of
1999. Additionally, increased petrochemical demand throughout the first and
second quarters resulted in increased propane deliveries along the upper Texas
Gulf Coast and the Midwest market areas. The 6% decrease in the average tariff
per barrel resulted from the increased percentage of short-haul deliveries in
the Midwest and Gulf Coast market areas in 1999.

         Revenues generated from Mont Belvieu operations increased during both
the quarter and six months ended June 30, 1999, compared with the corresponding
periods in 1998, due primarily to increased storage revenue and increased
petrochemical demand for shuttle deliveries.

         Other operating revenues increased $0.8 million during the second
quarter of 1999, as compared with the second quarter of 1998, due primarily to
a $1.2 million increase in gains on the sale of product inventory attributable
to favorable market prices, partially offset by lower refined products rental
revenue and lower amounts of butane received for summer storage.

         During the six months ended June 30, 1999, other operating revenues
increased $3.6 million, as compared to the same period in 1998, due primarily
to a $1.8 million increase in operating revenues from the fractionator
facilities acquired on March 31, 1998, a $1.1 million increase due to higher
product inventory volumes sold and a $0.3 million increase due to higher
propane imports received at the marine terminal at Providence, Rhode Island.

         Costs and expenses increased $3.0 million for the quarter ended June
30, 1999, compared with the second quarter of 1998, primarily due to a $1.6
million increase in operating, general and administrative expenses and a $1.2
million increase in operating fuel and power expense. The increase in
operating, general and administrative expenses was primarily attributable to a
$0.6 million increase in expenses associated with Year 2000 activities, a $0.5
million increase in rental fees from higher volume through the connection from
Colonial Pipeline at Beaumont, increased operating supplies and expenses and
insurance reimbursement of past litigation costs related to the Partnership's
Seymour, Indiana, terminal received in June 1998. These increases were
partially offset by the $0.5 million of expense to write down the book-value of
product inventory to market-value at June 30, 1998. The increase in operating
fuel and power expense reflects the increased refined products and LPGs volumes
delivered in the second quarter of 1999, compared to the prior year second
quarter.

         Costs and expenses increased $5.3 million for the six-months ended
June 30, 1999, compared with the same period in 1998, due to a $2.9 million
increase in operating, general and administrative expenses, a $1.6 million
volume-related increase in operating fuel and power expense and a $0.8 million
increase in depreciation and amortization expense. The increase in operating,
general and administrative expenses was primarily attributable to a $1.1
million increase in expenses associated with Year 2000 activities, a $0.9
million increase in rental fees from higher volume through the connection from
Colonial Pipeline at Beaumont, increased product measurement losses, higher
labor costs in 1999, six months of fractionation fees in 1999 related to the
facilities acquired on March 31, 1998 and the factors occurring in the second
quarter noted previously. Depreciation and amortization expense increased as a
result of the completion of capital projects, coupled with six-months of
expense in 1999 for amortization of the value assigned to the Fractionation
Agreement.





                                      15
<PAGE>   16

RESULTS OF OPERATIONS - (CONTINUED)

         Other income decreased during both the quarter and six-months ended
June 30, 1999, compared with the corresponding periods in 1998, due primarily
to a $0.4 million gain on the disposition of non-carrier assets in June 1998,
and lower interest income earned on cash investments in 1999.

         Interest expense increased during the six-months ended June 30, 1999,
compared with the prior year period, due primarily to six months of interest
expense in 1999 on the $38 million term-loan used to finance the purchase of
the fractionation assets on March 31, 1998.

CRUDE OIL AND NGLS TRANSPORTATION AND MARKETING SEGMENT

         Margin and volume information is presented below:

<TABLE>
<CAPTION>
                                                                            SIX MONTHS
                                                       QUARTER ENDED           ENDED
                                                       JUNE 30, 1999       JUNE 30, 1999
                                                       -------------       -------------
<S>                                                     <C>                 <C>
               Margins (dollars in thousands):
                  Crude oil transportation .......      $    4,653          $    8,950
                  Crude oil marketing ............           2,993               4,989
                  NGL transportation .............           1,556               2,962
                  LSI ............................             591               1,135
                                                        ----------          ----------
                       Total margin ..............      $    9,793          $   18,036
                                                        ==========          ==========

               Barrels per day:
                  Crude oil transportation .......          94,397              92,508
                  Crude oil marketing ............         253,213             246,229
                  NGL transportation .............          13,205              12,054

               LSI volume (total gallons): .......       2,150,415           4,109,331

               Margin per barrel:
                  Crude oil transportation .......      $    0.542          $    0.535
                  Crude oil marketing ............      $    0.130          $    0.112
                  NGL transportation .............      $    1.295          $    1.358

               LSI margin (per gallon): ..........      $    0.275          $    0.276
</TABLE>

         The crude oil and NGLs transportation and marketing segment was added
to the Partnership's operations with the acquisition of the DETTCO assets
effective November 1, 1998. The acquisition was accounted for as a purchase for
accounting purposes. Net income contributed by the crude oil transportation and
marketing segment for the quarter and six-month periods ended June 30, 1999
totaled $2.5 million and $4.8 million, respectively.

         Margin is a more meaningful measure of financial performance than
operating revenues and operating expenses due to the significant fluctuations
in revenues and expense that may occur with changes in the level of marketing
activity. Margin is calculated as revenues generated from crude oil and lube
oil sales and crude oil and NGLs transportation less the cost of crude oil and
lube oil purchases. During the three months ended June 30, 1999, crude oil
transportation and NGL transportation contributed 47% and 16% of the margin,
respectively, while crude oil marketing operations accounted for 31% of the
margin. Operations of LSI contributed $0.6 million, or 6%, of the margin for
the three month period ended June 30, 1999. During the six months ended June
30, 1999, crude oil transportation and NGL transportation contributed 50% and
16% of the margin, respectively, while crude oil marketing operations accounted
for 28% of the margin. Operations of LSI contributed $1.1 million, or 6%, of
the margin for the six month period ended June 30, 1999.


                                      16
<PAGE>   17

RESULTS OF OPERATIONS - (CONTINUED)

       For the quarter ended June 30, 1999, operating, general and
administrative expenses, including operating fuel and power, of the crude oil
and NGLs transportation and marketing segment totaled $5.8 million, or 59% of
the margin. Depreciation and amortization expenses and taxes - other than
income totaled $1.6 million, or 16% of the margin for the second quarter. For
the six months ended June 30, 1999, operating, general and administrative
expenses, including operating fuel and power, of the crude oil and NGLs
transportation and marketing segment totaled $10.2 million, or 57% of the
margin. Depreciation and amortization expenses and taxes - other than income
totaled $3.1 million, or 17% of the margin during the six months ended June 30,
1999.

FINANCIAL CONDITION AND LIQUIDITY

         Net cash from operations for the six-month period ended June 30, 1999,
totaled $45.4 million, comprised of $53.7 million of income before charges for
depreciation and amortization, partially offset by $8.3 million of cash used
for working capital changes. This compares with cash flows from operations of
$42.7 million for the corresponding period in 1998, comprised of $38.4 million
of income before extraordinary loss on early extinguishment of debt and charges
for depreciation and amortization and $4.3 million provided by working capital
changes. The increase in cash used for working capital changes during the six
month period ended June 30, 1999, as compared with the same period in 1998,
resulted primarily from timing of payments related to crude oil marketing
activity. Net cash from operations for the six months ended June 30, 1999
included interest payments related to the Senior Notes and the term loan of
$14.9 million. Net cash from operations for the six months ended June 30, 1998
included interest payments related to the First Mortgage Notes of $12.8 million
paid on January 27, 1998 in connection with repayment of the outstanding
balance of the First Mortgage Notes.

         Cash flows used in investing activities during the first six months of
1999 included $40.3 million of capital expenditures, $2.3 million for the
purchase of a 125-mile crude oil system in Southeast Texas, and $2.2 million of
additional cash investments. These decreases of cash were offset by $3.8
million from investment maturities. Cash flows used in investing activities
during the first six months of 1998 included $40.0 million for the purchase
price of the fractionation assets and related intangible assets and $9.5
million of capital expenditures, partially offset by $2.1 million from
investment maturities and $0.5 million received from the sale of non-carrier
assets.

         In February 1999, the Partnership announced plans to construct three
new pipelines between the Partnership's terminal in Mont Belvieu, Texas and
Port Arthur, Texas. The project includes three 12-inch diameter common-carrier
pipelines and associated facilities. Each pipeline will be approximately 70
miles in length. Upon completion, the new pipelines will transport ethylene,
propylene and natural gasoline. The anticipated completion date is the fourth
quarter of 2000. The Partnership has entered into an agreement for turnkey
construction of the pipelines and related facilities and has separately entered
into agreements for guaranteed throughput commitments. The cost of this project
is expected to total approximately $74.5 million. Approximately $28.0 million
of construction cost was included in capital expenditures during the six month
period ended June 30, 1999, with a total of approximately $44.5 million
expected to be incurred in 1999, and the remainder in 2000.

         Exclusive of the pipeline construction between Mont Belvieu and Port
Arthur, the Partnership estimates that capital expenditures for 1999 will total
approximately $42 million. Approximately $22 million is expected to be used for
the Products OLP and $20 million is expected to be used for the Crude Oil OLP.
Approximately $20 million of planned expenditures of the Products OLP are
expected to be used for life-cycle replacements and to upgrade current
facilities, with the remaining $2 million expected to be used for
revenue-generating projects. Approximately $14 million of planned expenditures
of the Crude Oil OLP are expected to be used in revenue-generating and
cost-reduction projects, with the remainder to be used to maintain existing
operations. The Partnership revises capital spending estimates periodically in
response to changes in cash flows and operations.



                                      17
<PAGE>   18


FINANCIAL CONDITION AND LIQUIDITY - (CONTINUED)


         On January 27, 1998, the Products OLP completed the issuance of $180
million principal amount of 6.45% Senior Notes due 2008, and $210 million
principal amount of 7.51% Senior Notes due 2028 (collectively the "Senior
Notes"). The 6.45% Senior Notes due 2008 are not subject to redemption prior to
January 15, 2008. The 7.51% Senior Notes due 2028 may be redeemed at any time
after January 15, 2008, at the option of the Products OLP, in whole or in part,
at a premium. Net proceeds from the issuance of the Senior Notes totaled
approximately $386 million and was used to repay in full the $61.0 million
principal amount of the 9.60% Series A First Mortgage Notes, due 2000, and the
$265.5 million principal amount of the 10.20% Series B First Mortgage Notes,
due 2010. The premium for the early redemption of the First Mortgage Notes
totaled $70.1 million. The repayment of the First Mortgage Notes and the
issuance of the Senior Notes reduced the level of cash required for debt
service until 2008. The Partnership recorded an extraordinary charge of $73.5
million during the first quarter of 1998 (including $0.7 million allocated to
minority interest), which represents the redemption premium of $70.1 million
and unamortized debt issue costs related to the First Mortgage Notes of $3.4
million.

         The Senior Notes do not have sinking fund requirements. Interest on
the Senior Notes is payable semiannually in arrears on January 15 and July 15
of each year, commencing July 15, 1998. The Senior Notes are unsecured
obligations of the Products OLP and rank on a parity with all other unsecured
and unsubordinated indebtedness of the Products OLP. The indenture governing
the Senior Notes contains covenants, including, but not limited to, covenants
limiting (i) the creation of liens securing indebtedness and (ii) sale and
leaseback transactions. However, the indenture does not limit the Partnership's
ability to incur additional indebtedness.

         In connection with the purchase of the fractionation assets from DEFS
as of March 31, 1998, TEPPCO Colorado received a $38 million bank loan from
SunTrust Bank. Proceeds from the loan were received on April 21, 1998. The loan
bears interest at a rate of 6.53%, which is payable quarterly. The principal
balance of the loan is payable in full on April 21, 2001. The Products OLP is
guarantor on the loan.

         On May 17, 1999, the Products OLP entered into a $75 million term loan
agreement to finance construction of three new pipelines between the
Partnership's terminal in Mont Belvieu, Texas and Port Arthur, Texas. The term
loan agreement has a term of five years. SunTrust Bank is the administrator of
the loan. At June 30, 1999, $25 million has been borrowed under the term loan
agreement. Principal will be paid quarterly beginning in 2001. The interest
rate for the $75 million term loan is based on the borrower's option of either
SunTrust Bank's prime rate, the federal funds rate or LIBOR rate in effect at
the time of the borrowings and is adjusted monthly, bimonthly, quarterly or
semi-annually. Interest is payable quarterly from the time of borrowing. The
current interest rate for amounts outstanding under the term loan is 6.33%.
Commitment fees for the term loan agreement totaled approximately $15,000 for
the quarter ended June 30, 1999.

         On May 17, 1999, the Products OLP entered into a $25 million revolving
credit agreement and TCO entered into a $30 million revolving credit agreement.
SunTrust Bank is the administrative agent on both revolving credit agreements.
The $25 million revolving credit agreement has a five year term and the $30
million revolving credit agreement has a three year term. The interest rate on
both agreements is based on the borrower's option of either SunTrust Bank's
prime rate, the federal funds rate or LIBOR rate in effect at the time of the
borrowings and is payable quarterly. Interest rates are adjusted monthly,
bimonthly, quarterly or semi-annually. The Products OLP has not borrowed any
amounts under the revolving credit facility. TCO borrowed $5 million under its
revolving credit agreement on June 30, 1999. Such amount was repaid in July
1999. Commitment fees for the revolving credit agreement totaled approximately
$17,000 for the quarter ended June 30, 1999.

         In connection with the purchase of the DETTCO assets by TCO, Duke
Capital also agreed to guarantee the payment by TCO and its subsidiaries under
certain commercial contracts between TCO and its subsidiaries and third
parties. Duke Capital will provide up to $100 million of guarantee credit to
TCO and its subsidiaries for a period of three years from November 30, 1998.
Pursuant to this agreement, the Partnership has agreed to pay Duke Capital a
commitment fee of $100,000 per year.





                                      18
<PAGE>   19

FINANCIAL CONDITION AND LIQUIDITY - (CONTINUED)

         The Partnership paid cash distributions of $32.6 million during the
six months ended June 30, 1999. Additionally, on July 19, 1999, the Partnership
declared a cash distribution of $0.475 per Limited partner and Class B Unit.
This distribution increases the annualized distribution to $1.90 per Unit from
$1.80 per Unit. The second quarter cash distribution was paid on August 6, 1999
to Unitholders of record on July 30, 1999.

OTHER MATTERS

      Environmental

         The operations of the Partnership are subject to federal, state and
local laws and regulations relating to protection of the environment. Although
the Partnership believes the operations of the Pipeline System are in material
compliance with applicable environmental regulations, risks of significant
costs and liabilities are inherent in pipeline operations, and there can be no
assurance that significant costs and liabilities will not be incurred.
Moreover, it is possible that other developments, such as increasingly strict
environmental laws and regulations and enforcement policies thereunder, and
claims for damages to property or persons resulting from the operations of the
Pipeline System, could result in substantial costs and liabilities to the
Partnership. The Partnership does not anticipate that changes in environmental
laws and regulations will have a material adverse effect on it financial
position, operations or cash flows in the near term.

         The Partnership and the Indiana Department of Environmental Management
("IDEM") have entered into an Agreed Order that will ultimately result in a
remediation program for any on-site and off-site groundwater contamination
attributable to the Partnership's operations at the Seymour, Indiana, terminal.
A Feasibility Study, which includes the Partnership's proposed remediation
program, has been approved by IDEM. IDEM will issue a Record of Decision
formally approving the remediation program. After the Record of Decision has
been issued, the Partnership will enter into an Agreed Order for the continued
operation and maintenance of the program. The Partnership will evaluate the
conditions of the Record of Decision and make adjustments to the program as
required. The amount accrued for the program was approximately $0.5 million at
June 30, 1999. In the opinion of the Company, the completion of the remediation
program being proposed by the Partnership, if such program is approved by IDEM,
will not have a material adverse impact on the Partnership's financial
condition, results of operations or liquidity.

     Year 2000 Issues

         In 1997, the Company initiated a program to prepare the Partnership's
process controls and business computer systems for the "Year 2000" issue.
Process controls are the automated equipment including hardware and software
systems which run operational activities. Business computer systems are the
computer hardware and software used by the Partnership. The Partnership is
utilizing both internal and external resources to identify, test, remediate or
replace all critical known or discovered non-compliant computerized systems and
applications. The Company continues to evaluate appropriate courses of
corrective action, including replacement of certain systems whose associated
costs would be recorded as assets and amortized. The Partnership has incurred
approximately $2.8 million of costs related to the Year 2000 issue. The Company
estimates the remaining amounts required to address the Year 2000 issue will be
as much as approximately $3.4 million. A portion of such costs would have been
incurred as part of normal system and application upgrades. In certain cases,
the timing of expenditures has been accelerated due to the Year 2000 issue.
Although the Company believes this estimate to be reasonable, due to the
complexities of the Year 2000 issue, there can be no assurance that the actual
costs related to the Year 2000 issue will not be significantly greater.

         The Partnership has adopted a three-phase Year 2000 program consisting
of: Phase I - Preliminary Assessment; Phase II - Detailed Assessment and
Remediation Planning; and Phase III - Remediation Activities and Testing. The
Products OLP has completed Phase I; Phase II is 99% complete; and Phase III is
84% complete. The Crude Oil OLP has completed 95% of Phase I; Phase II is 83%
complete; and Phase III is 60% complete.





                                      19
<PAGE>   20


OTHER MATTERS - (CONTINUED)


Remediation Activities and Testing of all process controls and business
computer systems are scheduled to be completed by mid-fourth quarter of 1999.

         With respect to its third-party relationships, the Partnership has
contacted its primary vendors, suppliers and service providers to assess their
software and hardware products previously sold to the Partnership and other
aspects of their state of Year 2000 readiness. Information continues to be
updated regularly, thus the Partnership anticipates receiving additional
information in the near future that will assist in determining the extent to
which the Partnership may be vulnerable to those third parties' failure to
identify and remediate their Year 2000 issues. However, there can be no
assurance that the systems or products of other companies, on which the
Partnership's systems rely, will be timely converted, or converted in a manner
that is compatible with the Partnership's systems, or that any such failures by
other companies would not have a material adverse effect on the Partnership.

         Despite the Partnership's determined efforts to address and remediate
its Year 2000 issue, there can be no assurance that all process controls and
business computer systems will continue without interruption through January 1,
2000, and beyond. The complexity of identifying and testing all embedded
microprocessors that are installed in hardware throughout the products pipeline
system and crude oil system used for process or flow control, transportation,
security, communication and other systems may result in unforeseen operational
system shutdowns. Although the amount of potential liability and lost revenue
cannot be estimated, failures that result in substantial disruptions of
business activities could have a material adverse effect on the Partnership. In
order to mitigate potential disruptions, the Partnership will prepare
contingency plans for its critical systems, processes and external
relationships by mid-fourth quarter of 1999.

      Market and Regulatory Environment

         In July 1999, the Partnership announced plans to build a new 360-mile
pipeline from Beaumont, Texas, to Little Rock, Arkansas. The new pipeline will
parallel the Partnership's two existing pipelines and will increase delivery
capability of refined petroleum products by 100,000 barrels per day. The
expansion will also include construction of additional storage tanks,
connections to other pipelines to increase volumes entering the pipeline system
and increased delivery capability in the Partnership's Midwest market areas.
The expansion is scheduled to be completed in 18 to 24 months. The Partnership
currently anticipates finalizing the cost and size of the pipeline by the end
of the third quarter of 1999.

         Rates of interstate oil pipeline companies, like the Products OLP, are
currently regulated by the FERC, primarily through an index methodology,
whereby a pipeline company is allowed to change its rates based on the change
from year-to-year in the Producer Price Index for finished goods less 1% ("PPI
Index"). In the alternative, interstate oil pipeline companies may elect to
support rate filings by using a cost-of-service methodology, competitive market
showings ("Market Based Rates") or agreements between shippers and the oil
pipeline company that the rate is acceptable ("Settlement Rates").

         In May 1999, the Products OLP filed an application with the FERC to
charge Market Based Rates for substantially all refined products transportation
tariffs. On June 30, 1999, the FERC approved a previously filed request of the
Products OLP waiving the requirement to adjust refined products transportation
tariffs pursuant to the PPI Index while its Market Based Rates application is
under review. Under the PPI Index, refined products transportation rates in
effect on June 30, 1999 would have been reduced by approximately 1.83%
effective July 1, 1999. In July 1999, certain shippers filed protests with the
FERC on the Products OLP's application for Market Based Rates in certain origin
and destination markets. If all or any portion of the Market Based Rates
application is denied by the FERC, the Products OLP has agreed to refund, with
interest, all amounts collected under the tariff rates in excess of the PPI
Index with respect to those markets the FERC does not find competitive.

         Effective July 1, 1999, the Products OLP established Settlement Rates
with all shippers that utilize certain LPGs transportation tariff rates,
whereby such rates in effect on June 30, 1999, would not be adjusted for a
period of either two or three years. Other LPGs transportation tariff rates
under which such agreements could not be reached





                                      20
<PAGE>   21

OTHER MATTERS - (CONTINUED)

with all shippers were reduced pursuant to the PPI Index effective July 1,
1999. Effective July 1, 1999, the Products OLP canceled its tariff for
deliveries of MTBE into the Chicago market area reflecting reduced demand for
transportation of MTBE into such area.

     Other

         In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities." This statement establishes
standards for and disclosures of derivative instruments and hedging activities.
In July 1999, the FASB issued SFAS No. 137 to delay the effective date of SFAS
No. 133 until fiscal years beginning after June 15, 2000. The Partnership
expects to adopt this standard effective January 1, 2001, and does not expect
the adoption of this statement to have a material impact on its financial
condition or results of operations.

         The matters discussed herein include "forward-looking statements"
within the meaning of various provisions of the Securities Act of 1933 and the
Securities Exchange Act of 1934. All statements, other than statements of
historical facts, included in this document that address activities, events or
developments that the Partnership expects or anticipates will or may occur in
the future, including such things as estimated future capital expenditures
(including the amount and nature thereof), business strategy and measures to
implement strategy, competitive strengths, goals, expansion and growth of the
Partnership's business and operations, plans, references to future success,
references to intentions as to future matters and other such matters are
forward-looking statements. These statements are based on certain assumptions
and analyses made by the Partnership in light of its experience and its
perception of historical trends, current conditions and expected future
developments as well as other factors it believes are appropriate under the
circumstances. However, whether actual results and developments will conform
with the Partnership's expectations and predictions is subject to a number of
risks and uncertainties, including general economic, market or business
conditions, the opportunities (or lack thereof) that may be presented to and
pursued by the Partnership, competitive actions by other pipeline companies,
changes in laws or regulations, and other factors, many of which are beyond the
control of the Partnership. Consequently, all of the forward-looking statements
made in this document are qualified by these cautionary statements and there
can be no assurance that actual results or developments anticipated by the
Partnership will be realized or, even if substantially realized, that they will
have the expected consequences to or effect on the Partnership or its business
or operations. For additional discussion of such risks and uncertainties, see
TEPPCO Partners, L.P.'s 1998 Annual Report on Form 10-K.





                                      21
<PAGE>   22


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


         The Partnership may be exposed to market risk through changes in
commodity prices and interest rates as discussed below. The Partnership has no
foreign exchange risks.

         The Partnership mitigates exposure to commodity price fluctuations by
maintaining a balanced position between crude oil purchases and sales. As a
hedging strategy to manage crude oil price fluctuations, the Partnership
occasionally enters into futures contracts on the New York Mercantile Exchange,
and makes limited use of other derivative instruments. It is the Partnership's
policy not to acquire crude oil, futures contracts or other derivative products
for the purpose of speculating on price changes. Market risks associated with
commodity derivatives were not material at June 30, 1999.

         At June 30, 1999, the Products OLP had outstanding $180 million
principal amount of 6.45% Senior Notes due 2008, and $210 million principal
amount of 7.51% Senior Notes due 2028 (collectively the "Senior Notes").
Additionally, the Products OLP had a $38 million bank loan outstanding from
SunTrust Bank. The SunTrust loan bears interest at a fixed rate of 6.53% and is
payable in full in April 2001. At June 30, 1999, the estimated fair value of
the Senior Notes and the SunTrust loan was approximately $372.1 million and
$37.8 million, respectively.

         At June 30, 1999, the Products OLP had $25 million outstanding under a
variable interest rate term loan and the Crude Oil OLP had $5 million
outstanding under its revolving credit agreement. The interest rates for these
credit facilities are based on the borrower's option of either SunTrust
Bank's prime rate, the federal funds rate or LIBOR rate in effect at the time
of the borrowings and is adjusted monthly, bimonthly, quarterly or
semi-annually. Utilizing the balances of variable interest rate debt
outstanding at June 30, 1999, and assuming market interest rates increase 1%,
the potential annual increase in interest expense is approximately $0.3
million.






                                      22
<PAGE>   23


                           PART II. OTHER INFORMATION

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

         (a)      Exhibits:

                  Exhibit
                  Number                    Description
                  -------                   -----------

                  3.1      Certificate of Limited Partnership of the
                           Partnership (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      Certificate of Formation of TEPPCO Colorado, LLC
                           (Filed as Exhibit 3.2 to Form 10-Q of TEPPCO
                           Partners, L.P. (Commission File No. 1-10403) for the
                           quarter ended March 31, 1998 and incorporated herein
                           by reference).

                  3.3      Second Amended and Restated Agreement of Limited
                           Partnership of TEPPCO Partners, L.P., dated November
                           30, 1998 (Filed as Exhibit 3.3 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).

                  3.4      Amended and Restated Agreement of Limited
                           Partnership of TE Products Pipeline Company, Limited
                           Partnership, effective July 21, 1998 (Filed as
                           Exhibit 3.2 to Form 8-K of TEPPCO Partners, L.P.
                           (Commission File No. 1-10403) dated July 21, 1998
                           and incorporated herein by reference).

                  3.5      Agreement of Limited Partnership of TCTM, L.P.,
                           dated November 30, 1998 (Filed as Exhibit 3.3 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).

                  4.1      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 3.3 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).

                  10.1     Assignment and Assumption Agreement, dated March 24,
                           1988, between Texas Eastern Transmission Corporation
                           and the Company (Filed as Exhibit 10.8 to the
                           Registration Statement of TEPPCO Partners, L.P.
                           (Commission File No. 33-32203) and incorporated
                           herein by reference).

                  10.2     Texas Eastern Products Pipeline Company 1997
                           Employee Incentive Compensation Plan executed on
                           July 14, 1997 (Filed as Exhibit 10 to Form 10-Q of
                           TEPPCO Partners, L.P. (Commission File No. 1-10403)
                           for the quarter ended September 30, 1997 and
                           incorporated herein by reference).

                  10.3     Agreement Regarding Environmental Indemnities and
                           Certain Assets (Filed as Exhibit 10.5 to Form 10-K
                           of TEPPCO Partners, L.P. (Commission File No.
                           1-10403) for the year ended December 31, 1990 and
                           incorporated herein by reference).

                  10.4     Texas Eastern Products Pipeline Company Management
                           Incentive Compensation Plan executed on January 30,
                           1992 (Filed as Exhibit 10 to Form 10-Q of TEPPCO
                           Partners, L.P. (Commission File No. 1-10403) for the
                           quarter ended March 31, 1992 and incorporated herein
                           by reference).




                                      23
<PAGE>   24
ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K - (CONTINUED)


                  10.5     Texas Eastern Products Pipeline Company Long-Term
                           Incentive Compensation Plan executed on October 31,
                           1990 (Filed as Exhibit 10.9 to Form 10-K of TEPPCO
                           Partners, L.P. (Commission File No. 1-10403) for the
                           year ended December 31, 1990 and incorporated herein
                           by reference).

                  10.6     Form of Amendment to Texas Eastern Products Pipeline
                           Company Long-Term Incentive Compensation Plan (Filed
                           as Exhibit 10.7 to the Partnership's Form 10-K
                           (Commission File No. 1-10403) for the year ended
                           December 31, 1995 and incorporated herein by
                           reference).

                  10.7     Employees' Savings Plan of Panhandle Eastern
                           Corporation and Participating Affiliates (Effective
                           January 1, 1991) (Filed as Exhibit 10.10 to the
                           Partnership's Form 10-K (Commission File No.
                           1-10403) for the year ended December 31, 1990 and
                           incorporated herein by reference).

                  10.8     Retirement Income Plan of Panhandle Eastern
                           Corporation and Participating Affiliates (Effective
                           January 1, 1991) (Filed as Exhibit 10.11 to Form
                           10-K of TEPPCO Partners, L.P. (Commission File No.
                           1-10403) for the year ended December 31, 1990 and
                           incorporated herein by reference).

                  10.9     Panhandle Eastern Corporation Key Executive
                           Retirement Benefit Equalization Plan, adopted
                           December 20, 1993; effective January 1, 1994 (Filed
                           as Exhibit 10.12 to Form 10-K of Panhandle Eastern
                           Corporation (Commission File No. 1-8157) for the
                           year ended December 31, 1993 and incorporated herein
                           by reference).

                  10.10    Employment Agreement with William L. Thacker, Jr.
                           (Filed as Exhibit 10 to Form 10-Q of TEPPCO
                           Partners, L.P. (Commission File No. 1-10403) for the
                           quarter ended September 30, 1992 and incorporated
                           herein by reference).

                  10.11    Texas Eastern Products Pipeline Company 1994 Long
                           Term Incentive Plan executed on March 8, 1994 (Filed
                           as Exhibit 10.1 to Form 10-Q of TEPPCO Partners,
                           L.P. (Commission File No. 1-10403) for the quarter
                           ended March 31, 1994 and incorporated herein by
                           reference).

                  *10.12   Texas Eastern Products Pipeline Company 1994 Long
                           Term Incentive Plan, Amendment 1, effective January
                           16, 1995.

                  10.13    Panhandle Eastern Corporation Key Executive Deferred
                           Compensation Plan established effective January 1,
                           1994 (Filed as Exhibit 10.2 to Form 10-Q of TEPPCO
                           Partners, L.P. (Commission File No. 1-10403) for the
                           quarter ended March 31, 1994 and incorporated herein
                           by reference).

                  10.14    Asset Purchase Agreement between Duke Energy Field
                           Services, Inc. and TEPPCO Colorado, LLC, dated March
                           31, 1998 (Filed as Exhibit 10.14 to Form 10-Q of
                           TEPPCO Partners, L.P. (Commission File No. 1-10403)
                           for the quarter ended March 31, 1998 and
                           incorporated herein by reference).

                  10.15    Credit Agreement between TEPPCO Colorado, LLC,
                           SunTrust Bank, Atlanta, and Certain Lenders, dated
                           April 21, 1998 (Filed as Exhibit 10.15 to Form 10-Q
                           of TEPPCO Partners, L.P. (Commission File No.
                           1-10403) for the quarter ended March 31, 1998 and
                           incorporated herein by reference).

                  10.16    First Amendment to Credit Agreement between TEPPCO
                           Colorado, LLC, SunTrust Bank, Atlanta, and Certain
                           Lenders, effective June 29, 1998 (Filed as Exhibit
                           10.15 to Form 10-Q of TEPPCO Partners, L.P.
                           (Commission File No. 1-10403) for the quarter ended
                           June 30, 1998 and incorporated herein by reference).

                  10.17    Contribution Agreement between Duke Energy Transport
                           and Trading Company and TEPPCO Partners, L.P., dated
                           October 15, 1998 (Filed as Exhibit 3.3 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).

                  10.18    Guaranty Agreement by Duke Energy Natural Gas
                           Corporation for the benefit of TEPPCO Partners,
                           L.P., dated November 30, 1998, effective November 1,
                           1998 (Filed as

                                      24
<PAGE>   25
ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K - (CONTINUED)

                           Exhibit 3.3 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).

                  10.19    Revolving Credit Agreement between TCTM, L.P. as
                           Borrower and Duke Capital Corporation as Lender,
                           dated November 30, 1998 (Filed as Exhibit 3.3 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).

                  10.20    Letter Agreement regarding Payment Guarantees of
                           Certain Obligations of TCTM, L.P. between Duke
                           Capital Corporation and TCTM, L.P., dated November
                           30, 1998 (Filed as Exhibit 3.3 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).

                  10.21    Form of Employment Agreement between the Company and
                           O. Horton Cunningham, Ernest P. Hagan, Thomas R.
                           Harper, David L. Langley, Charles H. Leonard and
                           James C. Ruth, dated December 1, 1998 (Filed as
                           Exhibit 3.3 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).

                  10.22    Agreement Between Owner and Contractor between TE
                           Products Pipeline Company, Limited Partnership and
                           Eagleton Engineering Company, dated February 4,
                           1999. (Filed as Exhibit 10.21 to Form 10-Q of TEPPCO
                           Partners, L.P. (Commission File No. 1-10403) for the
                           quarter ended March 31, 1999 and incorporated herein
                           by reference).

                  10.23    Services and Transportation Agreement between TE
                           Products Pipeline Company, Limited Partnership and
                           Fina Oil and Chemical Company, BASF Corporation and
                           BASF Fina Petrochemical Limited Partnership, dated
                           February 9, 1999. (Filed as Exhibit 10.22 to
                           Form 10-Q of TEPPCO Partners, L.P. (Commission
                           File No. 1-10403) for the quarter ended March 31,
                           1999 and incorporated herein by reference).


                  10.24    Call Option Agreement, dated February 9, 1999.
                           (Filed as Exhibit 10.23 to Form 10-Q of TEPPCO
                           Partners, L.P. (Commission File No. 1-10403) for
                           the quarter ended March 31, 1999 and incorporated
                           herein by reference).


                  10.25    Texas Eastern Products Pipeline Company Retention
                           Incentive Compensation Plan, effective January 1,
                           1999. (Filed as Exhibit 10.24 to Form 10-Q of TEPPCO
                           Partners, L.P. (Commission File No. 1-10403) for the
                           quarter ended March 31, 1999 and incorporated herein
                           by reference).


                  *10.26   Credit Agreement between TE Products Pipeline
                           Company, Limited Partnership, SunTrust Bank,
                           Atlanta, and Certain Lenders, dated May 17, 1999.

                  *10.27   Credit Agreement between TEPPCO Crude Oil, LLC,
                           SunTrust Bank, Atlanta, and Certain Lenders, dated
                           May 17, 1999.

                  *10.28   Second Amendment to Credit Agreement between TEPPCO
                           Colorado, LLC, SunTrust Bank, Atlanta, and Certain
                           Lenders, effective May 17, 1999.

                  22.1     Subsidiaries of the Partnership (Filed as Exhibit
                           22.1 to the Registration Statement of TEPPCO
                           Partners, L.P. (Commission File No. 33-32203) and
                           incorporated herein by reference).

                  *27      Financial Data Schedule as of and for the six months
                           ended June 30, 1999.

                  -------------------
                    *  Filed herewith.

         (b)      Reports on Form 8-K: None

Items 1, 2, 3, 4 and 5 of Part II were not applicable and have been omitted.

                                      25
<PAGE>   26


                                   SIGNATURE



         Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned duly authorized officer and principal financial officer.


                               TEPPCO Partners, L.P.
                               (Registrant)

                               By:  Texas Eastern Products Pipeline Company,
                                    General Partner



                                            \S\  CHARLES H. LEONARD
                                 ----------------------------------------------
                                                 Charles H. Leonard
                                 Senior Vice President, Chief Financial Officer
                                                    and Treasurer










Date:  August 9, 1999

                                      26
<PAGE>   27
                               INDEX TO EXHIBITS
<TABLE>
<CAPTION>
                  Exhibit
                  Number                    Description
                  -------                   -----------

<S>                        <C>
                  3.1      Certificate of Limited Partnership of the
                           Partnership (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      Certificate of Formation of TEPPCO Colorado, LLC
                           (Filed as Exhibit 3.2 to Form 10-Q of TEPPCO
                           Partners, L.P. (Commission File No. 1-10403) for the
                           quarter ended March 31, 1998 and incorporated herein
                           by reference).

                  3.3      Second Amended and Restated Agreement of Limited
                           Partnership of TEPPCO Partners, L.P., dated November
                           30, 1998 (Filed as Exhibit 3.3 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).

                  3.4      Amended and Restated Agreement of Limited
                           Partnership of TE Products Pipeline Company, Limited
                           Partnership, effective July 21, 1998 (Filed as
                           Exhibit 3.2 to Form 8-K of TEPPCO Partners, L.P.
                           (Commission File No. 1-10403) dated July 21, 1998
                           and incorporated herein by reference).

                  3.5      Agreement of Limited Partnership of TCTM, L.P.,
                           dated November 30, 1998 (Filed as Exhibit 3.3 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).

                  4.1      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 3.3 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).

                  10.1     Assignment and Assumption Agreement, dated March 24,
                           1988, between Texas Eastern Transmission Corporation
                           and the Company (Filed as Exhibit 10.8 to the
                           Registration Statement of TEPPCO Partners, L.P.
                           (Commission File No. 33-32203) and incorporated
                           herein by reference).

                  10.2     Texas Eastern Products Pipeline Company 1997
                           Employee Incentive Compensation Plan executed on
                           July 14, 1997 (Filed as Exhibit 10 to Form 10-Q of
                           TEPPCO Partners, L.P. (Commission File No. 1-10403)
                           for the quarter ended September 30, 1997 and
                           incorporated herein by reference).

                  10.3     Agreement Regarding Environmental Indemnities and
                           Certain Assets (Filed as Exhibit 10.5 to Form 10-K
                           of TEPPCO Partners, L.P. (Commission File No.
                           1-10403) for the year ended December 31, 1990 and
                           incorporated herein by reference).

                  10.4     Texas Eastern Products Pipeline Company Management
                           Incentive Compensation Plan executed on January 30,
                           1992 (Filed as Exhibit 10 to Form 10-Q of TEPPCO
                           Partners, L.P. (Commission File No. 1-10403) for the
                           quarter ended March 31, 1992 and incorporated herein
                           by reference).
</TABLE>




<PAGE>   28

<TABLE>
<S>                        <C>
                  10.5     Texas Eastern Products Pipeline Company Long-Term
                           Incentive Compensation Plan executed on October 31,
                           1990 (Filed as Exhibit 10.9 to Form 10-K of TEPPCO
                           Partners, L.P. (Commission File No. 1-10403) for the
                           year ended December 31, 1990 and incorporated herein
                           by reference).

                  10.6     Form of Amendment to Texas Eastern Products Pipeline
                           Company Long-Term Incentive Compensation Plan (Filed
                           as Exhibit 10.7 to the Partnership's Form 10-K
                           (Commission File No. 1-10403) for the year ended
                           December 31, 1995 and incorporated herein by
                           reference).

                  10.7     Employees' Savings Plan of Panhandle Eastern
                           Corporation and Participating Affiliates (Effective
                           January 1, 1991) (Filed as Exhibit 10.10 to the
                           Partnership's Form 10-K (Commission File No.
                           1-10403) for the year ended December 31, 1990 and
                           incorporated herein by reference).

                  10.8     Retirement Income Plan of Panhandle Eastern
                           Corporation and Participating Affiliates (Effective
                           January 1, 1991) (Filed as Exhibit 10.11 to Form
                           10-K of TEPPCO Partners, L.P. (Commission File No.
                           1-10403) for the year ended December 31, 1990 and
                           incorporated herein by reference).

                  10.9     Panhandle Eastern Corporation Key Executive
                           Retirement Benefit Equalization Plan, adopted
                           December 20, 1993; effective January 1, 1994 (Filed
                           as Exhibit 10.12 to Form 10-K of Panhandle Eastern
                           Corporation (Commission File No. 1-8157) for the
                           year ended December 31, 1993 and incorporated herein
                           by reference).

                  10.10    Employment Agreement with William L. Thacker, Jr.
                           (Filed as Exhibit 10 to Form 10-Q of TEPPCO
                           Partners, L.P. (Commission File No. 1-10403) for the
                           quarter ended September 30, 1992 and incorporated
                           herein by reference).

                  10.11    Texas Eastern Products Pipeline Company 1994 Long
                           Term Incentive Plan executed on March 8, 1994 (Filed
                           as Exhibit 10.1 to Form 10-Q of TEPPCO Partners,
                           L.P. (Commission File No. 1-10403) for the quarter
                           ended March 31, 1994 and incorporated herein by
                           reference).

                  *10.12   Texas Eastern Products Pipeline Company 1994 Long
                           Term Incentive Plan, Amendment 1, effective January
                           16, 1995.

                  10.13    Panhandle Eastern Corporation Key Executive Deferred
                           Compensation Plan established effective January 1,
                           1994 (Filed as Exhibit 10.2 to Form 10-Q of TEPPCO
                           Partners, L.P. (Commission File No. 1-10403) for the
                           quarter ended March 31, 1994 and incorporated herein
                           by reference).

                  10.14    Asset Purchase Agreement between Duke Energy Field
                           Services, Inc. and TEPPCO Colorado, LLC, dated March
                           31, 1998 (Filed as Exhibit 10.14 to Form 10-Q of
                           TEPPCO Partners, L.P. (Commission File No. 1-10403)
                           for the quarter ended March 31, 1998 and
                           incorporated herein by reference).

                  10.15    Credit Agreement between TEPPCO Colorado, LLC,
                           SunTrust Bank, Atlanta, and Certain Lenders, dated
                           April 21, 1998 (Filed as Exhibit 10.15 to Form 10-Q
                           of TEPPCO Partners, L.P. (Commission File No.
                           1-10403) for the quarter ended March 31, 1998 and
                           incorporated herein by reference).

                  10.16    First Amendment to Credit Agreement between TEPPCO
                           Colorado, LLC, SunTrust Bank, Atlanta, and Certain
                           Lenders, effective June 29, 1998 (Filed as Exhibit
                           10.15 to Form 10-Q of TEPPCO Partners, L.P.
                           (Commission File No. 1-10403) for the quarter ended
                           June 30, 1998 and incorporated herein by reference).

                  10.17    Contribution Agreement between Duke Energy Transport
                           and Trading Company and TEPPCO Partners, L.P., dated
                           October 15, 1998 (Filed as Exhibit 3.3 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).

                  10.18    Guaranty Agreement by Duke Energy Natural Gas
                           Corporation for the benefit of TEPPCO Partners,
                           L.P., dated November 30, 1998, effective November 1,
                           1998 (Filed as
</TABLE>
<PAGE>   29

<TABLE>
<S>                        <C>
                           Exhibit 3.3 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).

                  10.19    Revolving Credit Agreement between TCTM, L.P. as
                           Borrower and Duke Capital Corporation as Lender,
                           dated November 30, 1998 (Filed as Exhibit 3.3 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).

                  10.20    Letter Agreement regarding Payment Guarantees of
                           Certain Obligations of TCTM, L.P. between Duke
                           Capital Corporation and TCTM, L.P., dated November
                           30, 1998 (Filed as Exhibit 3.3 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).

                  10.21    Form of Employment Agreement between the Company and
                           O. Horton Cunningham, Ernest P. Hagan, Thomas R.
                           Harper, David L. Langley, Charles H. Leonard and
                           James C. Ruth, dated December 1, 1998 (Filed as
                           Exhibit 3.3 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).

                  10.22    Agreement Between Owner and Contractor between TE
                           Products Pipeline Company, Limited Partnership and
                           Eagleton Engineering Company, dated February 4,
                           1999 (Filed as Exhibit 10.21 to Form 10-Q of TEPPCO
                           Partners, L.P. (Commission File No. 1-10403) for the
                           quarter ended March 31, 1999 and incorporated herein
                           by reference).

                  10.23    Services and Transportation Agreement between TE
                           Products Pipeline Company, Limited Partnership and
                           Fina Oil and Chemical Company, BASF Corporation and
                           BASF Fina Petrochemical Limited Partnership, dated
                           February 9, 1999 (Filed as Exhibit 10.22 to
                           Form 10-Q of TEPPCO Partners, L.P. (Commission File
                           No. 1-10403) for the quarter ended March 31, 1999
                           and incorporated herein by reference).

                  10.24    Call Option Agreement, dated February 9, 1999 (Filed
                           as Exhibit 10.23 to Form 10-Q of TEPPCO Partners,
                           L.P. (Commission File No. 1-10403) for the quarter
                           ended March 31, 1999 and incorporated herein by
                           reference).

                  10.25    Texas Eastern Products Pipeline Company Retention
                           Incentive Compensation Plan, effective January 1,
                           1999 (Filed as Exhibit 10.24 to Form 10-Q of TEPPCO
                           Partners, L.P. (Commission File No. 1-10403) for the
                           quarter ended March 31, 1999 and incorporated herein
                           by reference).

                  *10.26   Credit Agreement between TE Products Pipeline
                           Company, Limited Partnership, SunTrust Bank,
                           Atlanta, and Certain Lenders, dated May 17, 1999.

                  *10.27   Credit Agreement between TEPPCO Crude Oil, LLC,
                           SunTrust Bank, Atlanta, and Certain Lenders, dated
                           May 17, 1999.

                  *10.28   Second Amendment to Credit Agreement between TEPPCO
                           Colorado, LLC, SunTrust Bank, Atlanta, and Certain
                           Lenders, effective May 17, 1999.

                  22.1     Subsidiaries of the Partnership (Filed as Exhibit
                           22.1 to the Registration Statement of TEPPCO
                           Partners, L.P. (Commission File No. 33-32203) and
                           incorporated herein by reference).

                  *27      Financial Data Schedule as of and for the six months
                           ended June 30, 1999.
</TABLE>

                  -------------------
                    *  Filed herewith.