<PAGE>

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


                       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 SEPTEMBER 30, 2001


                           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>


                          PART I. FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                              TEPPCO PARTNERS, L.P.
                           CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)

<Table>
<Caption>
                                                                    SEPTEMBER 30,    DECEMBER 31,
                                                                       2001             2000
                                                                    -----------      -----------
                                                                    (UNAUDITED)
                                     ASSETS
<S>                                                           <C>              <C>
Current assets:
  Cash and cash equivalents ...................................     $    33,031      $    27,096
  Accounts receivable, trade ..................................         293,439          303,394
  Inventories .................................................          26,756           24,784
  Other .......................................................           6,141            8,123
                                                                    -----------      -----------
     Total current assets .....................................         359,367          363,397
                                                                    -----------      -----------
Property, plant and equipment, at cost (Net of accumulated
  depreciation and amortization of $276,769 and $251,165) .....       1,143,196          949,705
Equity investments ............................................         269,893          241,648
Intangible assets .............................................         240,500           34,174
Goodwill ......................................................          24,756            4,214
Other assets ..................................................          35,838           29,672
                                                                    -----------      -----------
     Total assets .............................................     $ 2,073,550      $ 1,622,810
                                                                    ===========      ===========

                        LIABILITIES AND PARTNERS' CAPITAL

Current liabilities:
  Notes payable ...............................................     $   360,000      $        --
  Accounts payable and accrued liabilities ....................         294,364          293,720
  Accounts payable, general partner ...........................          13,253            6,637
  Accrued interest ............................................           8,831           18,633
  Other accrued taxes .........................................          10,780           10,501
  Other .......................................................          42,043           28,780
                                                                    -----------      -----------
     Total current liabilities ................................         729,271          358,271
                                                                    -----------      -----------
Senior Notes ..................................................         389,807          389,784
Other long-term debt ..........................................         472,000          446,000
Other liabilities and deferred credits ........................          15,956            3,991
Minority interest .............................................              --            4,296
Redeemable Class B Units held by related party ................         106,270          105,411
Partners' capital:
  Accumulated other comprehensive loss ........................         (26,992)              --
  General partner's interest ..................................          11,848            1,824
  Limited partners' interests .................................         375,390          313,233
                                                                    -----------      -----------
     Total partners' capital ..................................         360,246          315,057
                                                                    -----------      -----------
Commitments and contingencies (Note 9)
     Total liabilities and partners' capital ..................     $ 2,073,550      $ 1,622,810
                                                                    ===========      ===========
</Table>


          See accompanying Notes to Consolidated Financial Statements.


                                       2
<PAGE>


                              TEPPCO PARTNERS, L.P.

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


<Table>
<Caption>
                                                         THREE MONTHS      THREE MONTHS     NINE MONTHS    NINE MONTHS
                                                             ENDED            ENDED            ENDED          ENDED
                                                         SEPTEMBER 30,     SEPTEMBER 30,   SEPTEMBER 30,   SEPTEMBER 30,
                                                             2001              2000            2001            2000
                                                         -------------    --------------   -------------   -------------
<S>                                                      <C>              <C>              <C>              <C>
Operating revenues:
  Sales of crude oil and petroleum products ........     $    915,296    $      686,732   $   2,601,580      $2,059,160
  Transportation - Refined products ................           32,161            29,483         109,748          90,198
  Transportation - LPGs ............................           15,669            14,477          54,174          47,961
  Transportation - crude oil and NGLs ..............           12,167             7,932          34,484          15,834
  Mont Belvieu operations ..........................            3,977             3,015           9,871          10,369
  Other - net ......................................           11,546             8,259          39,876          24,772
                                                         -------------    --------------   -------------    ------------
    Total operating revenues .......................          990,816           749,898       2,849,733       2,248,294
                                                         -------------    --------------   -------------    ------------

Costs and expenses:
  Purchases of crude oil and petroleum products ....          902,126           679,459       2,566,621       2,039,763
  Operating, general and administrative ............           38,181            27,735          96,086          77,303
  Operating fuel and power .........................            9,125             8,838          27,946          24,677
  Depreciation and amortization ....................           10,411             9,154          31,175          25,740
  Taxes - other than income taxes ..................            3,852             2,805          11,409           7,986
                                                         -------------    --------------   -------------    ------------
    Total costs and expenses .......................          963,695           727,991       2,733,237       2,175,469
                                                         -------------    --------------   -------------    ------------

    Operating income ...............................           27,121            21,907         116,496          72,825

Interest expense ...................................          (15,679)          (15,967)        (47,365)        (32,949)
Interest capitalized ...............................            1,105             1,551           2,040           3,816
Equity earnings ....................................            5,645             9,325          15,270           9,325
Other income - net .................................              997               548           2,224           2,180
                                                         -------------    --------------   -------------    ------------
    Income before minority interest ................           19,189            17,364          88,665          55,197
Minority interest ..................................              (97)             (175)           (800)           (557)
                                                         -------------    --------------   -------------    ------------

    Net income .....................................     $     19,092     $      17,189    $     87,865      $   54,640
                                                         =============    ==============   =============    ============
Net Income Allocation:
Limited Partner Unitholders ........................     $     12,113     $      11,995    $     62,035      $   39,491
Class B Unitholder .................................            1,357             1,619           7,027           5,333
General Partner ....................................            5,622             3,575          18,803           9,816
                                                         -------------    --------------   -------------    ------------
    Total net income allocated .....................     $     19,092     $      17,189    $     87,865      $   54,640
                                                         =============    ==============   =============    ============
Basic and diluted net income per Limited
    Partner and Class B Unit ....................  .     $       0.35     $        0.41    $       1.79      $     1.36
                                                         =============    ==============   =============    ============
Weighted average Limited Partner and Class B
   Units outstanding ...............................           38,867            32,917          38,544          32,917

</Table>


          See accompanying Notes to Consolidated Financial Statements.


                                       3
<PAGE>

                              TEPPCO PARTNERS, L.P.

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

<Table>
<Caption>
                                                                        NINE MONTHS      NINE MONTHS
                                                                           ENDED            ENDED
                                                                       SEPTEMBER 30,    SEPTEMBER 30,
                                                                            2001            2000
                                                                       -------------    -------------
<S>                                                                    <C>              <C>
Cash flows from operating activities:
  Net income .......................................................     $   87,865     $     54,640
  Depreciation and amortization ....................................         31,175           25,740
  Earnings in equity investments, net of distributions .............          6,090           (8,370)
  Noncash portion of interest expense ..............................          2,175            1,475
  Decrease (increase) in accounts receivable, trade ................          9,292          (34,619)
  Increase in inventories ..........................................         (1,972)          (3,006)
  Decrease (increase) in other current assets ......................         (3,524)           2,205
  Increase (decrease) in accounts payable and accrued expenses .....        (16,231)          48,989
  Other ............................................................         (1,412)          (9,087)
                                                                         -----------    -------------
    Net cash provided by operating activities ......................        113,458           77,967
                                                                         -----------    -------------

Cash flows from investing activities:
  Proceeds from cash investments ...................................          3,236            1,475
  Purchases of cash investments ....................................             --           (2,000)
  Purchases of ARCO assets, net of cash received ...................             --         (322,640)
  Purchase of crude oil assets .....................................        (20,000)          (7,843)
  Proceeds from the sale of assets .................................          1,300               --
  Purchase of Jonah Gas Gathering Company ..........................       (359,834)              --
  Investments in Centennial Pipeline Company .......................        (34,335)          (2,984)
  Capital expenditures .............................................        (61,966)         (53,272)
                                                                         -----------    -------------
    Net cash used in investing activities ..........................       (471,599)        (387,264)
                                                                         -----------    -------------
Cash flows from financing activities:
  Proceeds from term loan and revolving credit facility ............        427,000          453,000
  Repayment of term loan and revolving credit facility .............        (41,000)         (86,000)
  Debt issuance cost ...............................................         (2,601)          (7,074)
  Proceeds from the issuance of Limited Partner Units, net .........         54,588               --
  General Partner contributions ....................................          1,114               --
  Distributions ....................................................        (75,025)         (58,207)
                                                                         -----------    -------------
    Net cash provided by financing activities ......................        364,076          301,719
                                                                         -----------    -------------

Net increase (decrease) in cash and cash equivalents ...............          5,935           (7,578)

Cash and cash equivalents at beginning of period ...................         27,096           32,593
                                                                         -----------    -------------
Cash and cash equivalents at end of period .........................     $   33,031     $     25,015
                                                                         ===========    =============

SUPPLEMENTAL DISCLOSURE OF CASH FLOWS:
  Interest paid during the period (net of capitalized interest) ....     $   52,022     $     27,709
                                                                         ===========    =============
</Table>

          See accompanying Notes to Consolidated Financial Statements.


                                       4
<PAGE>


                              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 "Downstream Segment"), TCTM,
L.P. (the "Upstream Segment") and TEPPCO Midstream Companies, L.P. (the
"Midstream Segment"). Collectively the Downstream Segment, the Upstream Segment
and the Midstream Segment are referred to as the "Operating Partnerships." Texas
Eastern Products Pipeline Company, LLC (the "Company" or "General Partner"), a
Delaware limited liability company, serves as the general partner of the
Partnership. The General Partner is a wholly owned subsidiary of Duke Energy
Field Services, LP ("DEFS"), a joint venture between Duke Energy Corporation
("Duke Energy") and Phillips Petroleum Company. Duke Energy holds a majority
interest in DEFS. 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., TE Products Pipeline Company,
Limited Partnership, TCTM, L.P. and TEPPCO Midstream Companies, 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.

         On July 26, 2001, the Company restructured its general partner
ownership of the Operating Partnerships to cause them to be wholly-owned by the
Partnership. TEPPCO GP, Inc. ("TEPPCO GP"), a subsidiary of the Partnership,
succeeded the Company as general partner of the Operating Partnerships. All
remaining partner interests in the Operating Partnerships not already owned by
the Partnership were transferred to the Partnership. In exchange for this
contribution, the Company's interest as general partner of the Partnership was
increased to 2%. The increased percentage is the economic equivalent of the
aggregate interest that the Company had prior to the restructuring through its
combined interests in the Partnership and the Operating Partnerships. As a
result, the Partnership holds a 99.999% limited partner interest in the
Operating Partnerships and TEPPCO GP holds a .001% general partner interest.

         The accompanying unaudited consolidated financial statements reflect
all adjustments that 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 September 30, 2001, and the results of operations and cash
flows for the periods presented. The results of operations for the nine months
ended September 30, 2001, are not necessarily indicative of results of
operations for the full year 2001. 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, 2000. Certain amounts from prior periods have
been reclassified to conform to current presentation.

         The Partnership operates in three segments: refined products, liquefied
petroleum gases ("LPGs") and petrochemicals transportation ("Downstream
Segment"); crude oil and natural gas liquids ("NGLs") transportation and
marketing ("Upstream Segment"); and natural gas gathering ("Midstream Segment").
The Partnership's reportable segments offer different products and services and
are managed separately because each requires different business strategies. The
Upstream Segment was acquired as a unit in November 1998, and the management at
the time of the acquisition was RETAINED. The Midstream Segment was acquired on
September 30, 2001 and will be commercially managed and operated by DEFS. The
Partnership's interstate transportation operations, including rates charged to
customers, are subject to regulations prescribed by the Federal Energy
Regulatory Commission ("FERC"). Refined products, LPGs, petrochemicals, 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 Units and Class B Units outstanding (a total of 38.9


                                       5
<PAGE>


                              TEPPCO PARTNERS, L.P.

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

million Units for the nine months ended September 30, 2001, and 32.9 million
Units for the nine months ended September 30, 2000). 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. Quarterly
Distributions of Available Cash). The General Partner was allocated $18.8
million (representing 21.4%) and $9.8 million (representing 17.96%) of net
income for the nine months ended September 30, 2001, and 2000, respectively.

         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 September 30, 2001 and 2000, the denominator was
increased by 45,110 Units and 23,877 Units, respectively. For the nine months
ended September 30, 2001 and 2000, the denominator was increased by 33,277 Units
and 21,193 Units, respectively.

NOTE 2. NEW ACCOUNTING PRONOUNCEMENTS

         Effective January 1, 2001, the Partnership adopted Statement of
Financial Accounting Standards ("SFAS") No. 133, Accounting for Derivative
Instruments and Hedging Activities and SFAS No. 138, Accounting for Certain
Derivative Instruments and Certain Hedging Activities, an amendment of FASB
Statement No. 133. These statements establish accounting and reporting standards
requiring that derivative instruments (including certain derivative instruments
embedded in other contracts) be recorded at fair value and included in the
balance sheet as assets or liabilities. The accounting for changes in the fair
value of a derivative instrument depends on the intended use of the derivative
and the resulting designation, which is established at the inception of a
derivative. Special accounting for derivatives qualifying as fair value hedges
allows a derivative's gains and losses to offset related results on the hedged
item in the statement of income. For derivative instruments designated as cash
flow hedges, changes in fair value, to the extent the hedge is effective, are
recognized in other comprehensive income until the hedged item is recognized in
earnings. Hedge effectiveness is measured at least quarterly based on the
relative cumulative changes in fair value between the derivative contract and
the hedged item over time. Any change in fair value resulting from
ineffectiveness, as defined by SFAS 133, is recognized immediately in earnings.

         Adoption of SFAS 133 at January 1, 2001 resulted in the recognition of
$10.1 million of derivative liabilities, $4.1 million of which are included in
current liabilities and $6.0 million of which are included in other noncurrent
liabilities on the Partnership's balance sheet, and $10.1 million of hedging
losses included in accumulated other comprehensive loss, a component of
Partners' capital, as the cumulative effect of the change in accounting
principle. The hedging losses included in accumulated other comprehensive loss
will be transferred to earnings as the forecasted transactions actually occur.
Approximately $4.1 million of the loss included in accumulated other
comprehensive loss as of January 1, 2001 was anticipated to be transferred into
earnings during 2001. The cumulative effect of the accounting change had no
effect on the Partnership's net income or its earnings per Unit amounts for the
nine months ended September 30, 2001. Amounts were determined as of January 1,
2001 based on quoted market values, the Partnership's portfolio of derivative
instruments, and the Partnership's measurement of hedge effectiveness.

         From time to time, the Partnership has utilized and expects to continue
to utilize derivative financial instruments with respect to a portion of its
interest rate risks and its crude oil marketing activities to achieve a more
predictable cash flow by reducing its exposure to interest rate and crude oil
price fluctuations. These transactions generally are swaps and forwards and are
entered into with major financial institutions or commodities trading
institutions. Derivative financial instruments used in the Partnership's
Upstream Segment are intended to reduce the Partnership's exposure to
fluctuations in the market price of crude oil, while derivative financial
instruments related to the Partnership's interest rate risks are intended to
reduce the Partnership's exposure to increases in the benchmark interest rates
underlying the Partnership's variable rate revolving credit facility. Through
December 31,


                                       6
<PAGE>


                              TEPPCO PARTNERS, L.P.

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


2000, gains and losses from financial instruments used in the Partnership's
Upstream Segment have been recognized in revenues for the periods to which the
derivative financial instruments relate, and gains and losses from its interest
rate financial instruments have been recognized in interest expense for the
periods to which the derivative financial instruments relate.

         As of September 30, 2001, the Upstream Segment had open positions on
option contracts it had written for 100,000 barrels of crude oil and futures
contracts for the sale of 50,000 barrels of crude oil. During the nine months
ended September 30, 2001, a loss of $22,500 was recognized on such contracts.

         Also as of September 30, 2001, the Partnership had in place an interest
rate swap agreement to hedge its exposure to increases in the benchmark interest
rate underlying its variable rate revolving credit facilities. The swap
agreement is based on a notional amount of $250 million. Under the swap
agreement, the Partnership pays a fixed rate of interest of 6.955% and receives
a floating rate based on a three month USD LIBOR rate. The interest rate swap is
designated as a cash flow hedge, therefore, the changes in fair value, to the
extent the swap is effective, are recognized in other comprehensive income until
the hedged interest costs are recognized in earnings. During the nine month
period ended September 30, 2001, the Partnership recognized $4.0 million in
losses, included in interest expense, on the interest rate swap attributable to
interest costs occurring in 2001. No gain or loss from ineffectiveness was
required to be recognized. The fair value of the interest rate swap agreement
was a loss of approximately $22.1 million at September 30, 2001. Approximately
$10.1 million (inclusive of the $4.1 million related to the cumulative effect of
the accounting change not yet recognized) of such amount is anticipated to be
transferred into earnings over the next twelve months.

         During 2001, the Partnership executed treasury rate lock agreements
with a combined notional amount of $400 million to hedge its exposure to
increases in the treasury rate that will be used to establish the fixed interest
rate for the debt offering that is probable to occur in the fourth quarter of
2001. Under the treasury rate lock agreements, the Partnership pays a fixed rate
of interest, and receives a floating rate based on the three month treasury
rate. The treasury rate locks are designated as cash flow hedges, therefore, the
changes in fair value, to the extent the treasury rate locks are effective, are
recognized in other comprehensive income until the actual debt offering occurs.
Upon completion of the debt offering, the realized gain or loss on the treasury
rate locks will be amortized out of accumulated other comprehensive income into
interest expense over the life of the debt obligation. During April 2001, a
treasury lock with a notional amount of $200 million was terminated with a
realized gain of $1.1 million. The realized gain was recorded as a component of
accumulated other comprehensive income. As of September 30, 2001, a notional
amount of $200 million remained outstanding. The fair value of the outstanding
treasury rate locks was a loss of approximately $6.0 million at September 30,
2001.

         In July 2001, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 141, Business Combinations, and SFAS No. 142, Goodwill and Other
Intangible Assets. SFAS 141 requires that the purchase method of accounting be
used for all business combinations and specifies that certain acquired
intangible assets be reported apart from goodwill. SFAS 142 requires that
goodwill and intangible assets with indefinite useful lives no longer be
amortized, but instead tested for impairment at least annually. SFAS 142
requires that intangible assets with definite useful lives be amortized over
their respective estimated useful lives. The Partnership has adopted SFAS 141,
and will adopt SFAS 142 effective January 1, 2002.

         At September 30, 2001, the Partnership had $24.8 million of unamortized
goodwill. Amortization expense related to goodwill was $0.1 million and $0.8
million for the year ended December 31, 2000 and the nine months ended September
30, 2001, respectively. The Partnership has not determined the impact of
adopting SFAS 142 at the date of this report, including whether any transitional
impairment losses will be required to be recognized as the cumulative effect of
a change in accounting principle.


                                       7
<PAGE>


NOTE 3.  ACQUISITIONS

         On July 20, 2000, the Partnership completed an acquisition of ARCO Pipe
Line Company ("ARCO"), a wholly owned subsidiary of Atlantic Richfield Company,
for $322.6 million, which included $4.1 million of acquisition related costs
other than the purchase price. The purchased assets included ARCO's 50-percent
ownership interest in Seaway Crude Pipeline Company ("Seaway"), which owns a
pipeline that carries mostly imported crude oil from a marine terminal at
Freeport, Texas, to Cushing, Oklahoma and from a marine terminal at Texas City,
Texas to refineries in the Texas City and Houston areas. The Partnership assumed
ARCO's role as operator of this pipeline. The Partnership also acquired: (i)
ARCO's crude oil terminal facilities in Cushing and Midland, Texas, including
the line transfer and pumpover business at each location; (ii) an undivided
ownership interest in both the Rancho Pipeline, a crude oil pipeline from West
Texas to Houston, and the Basin Pipeline, a crude oil pipeline running from Jal,
New Mexico, through Midland to Cushing, both of which are operated by another
joint owner; and (iii) the receipt and delivery pipelines known as the West
Texas Trunk System, which is located around the Midland terminal. The
acquisition was accounted for under the purchase method of accounting.
Accordingly, the results of the acquisition are included in the consolidated
financial statements from July 20, 2000.

         In October 2000, the Partnership received a settlement notice from
Atlantic Richfield Company for payment of a net aggregate amount of
approximately $12.9 million in post-closing adjustments related to the purchase
of ARCO. A large portion of the requested adjustment related to an indemnity for
payment of accrued income taxes. In August 2001, the Partnership and Atlantic
Richfield Company reached a settlement of $11.0 million for the post-closing
adjustments. The Partnership recorded the settlement as an increase to the
purchase price of ARCO. The Partnership paid the settlement amount to Atlantic
Richfield Company on October 15, 2001.


         On September 30, 2001, the Partnership completed the purchase of the
Jonah Gas Gathering Company ("Jonah") from Alberta Energy Company for $360
million. The acquisition serves as an entry into the natural gas gathering
industry for the Partnership. Goodwill recognized in the purchase amounted to
approximately $10.4 million. The Jonah system consists of approximately 300
miles of pipelines ranging in size from four to 20 inches in diameter, four
compressor stations with an aggregate of approximately 21,200 horsepower and
related metering facilities. Gas gathered on the Jonah system is collected from
approximately 300 producing wells in the Green River Basin in southwestern
Wyoming. Gas is delivered to gas processing facilities owned by others. The
Partnership owns a processing facility which extracts condensate prior to
delivery of natural gas to DEFS' Overland Trail Transmission system and Questar.
From these processing facilities, the natural gas is delivered to several
interstate pipeline systems located in the region for transportation to end-use
markets. Interstate pipelines in the region include the Overland Trail
Transmission system, owned by our affiliate DEFS, Kern River, Northwest,
Colorado Interstate Gas and Questar. These pipeline systems provide access for
natural gas collected by the Jonah system to end-user markets throughout the
Midwest, the West Coast and the Rocky Mountain regions. The Jonah assets will be
commercially managed and operated by DEFS. The acquisition was accounted for
under the purchase method of accounting. Accordingly, the results of the
acquisition will be included in the consolidated financial statements from
September 30, 2001.


         The following table presents unaudited pro forma results of the
Partnership as though the acquisitions of the ARCO and Jonah businesses occurred
at the beginning of the respective periods (in thousands, except per Unit
amounts).


<Table>
<Caption>
                                                        QUARTER ENDED              NINE MONTHS ENDED
                                                        SEPTEMBER 30,                SEPTEMBER 30,
                                                  -------------------------     -------------------------
                                                     2001           2000          2001           2000
                                                  ----------     ----------     ----------     ----------
<S>                                               <C>            <C>            <C>            <C>
Revenues ....................................     $  998,535     $  757,070     $2,873,004     $2,281,465
Net Income ..................................         15,432         13,824         77,076         41,739
Basic and diluted net income per Limited
    Partner and Class B Unit ................     $     0.28     $     0.33     $     1.57     $     1.04
</Table>


                                        8
<PAGE>


                              TEPPCO PARTNERS, L.P.

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


         The following table allocates the estimated fair value of Jonah assets
acquired on September 30, 2001. The Partnership is in the process of obtaining
third-party valuations of certain assets, thus, the allocation of the purchase
price is pending and subject to refinement.

<Table>
<Caption>

         (in thousands)
<S>                                                          <C>
         Property, plant and equipment .................     $ 141,570
         Intangible assets .............................       208,000
         Goodwill ......................................        10,395
                                                             ---------
                  Total assets .........................       359,965
                                                             ---------

         Total liabilities assumed......................          (490)
                                                             ---------
                  Net assets acquired...................     $ 359,475
                                                             =========
</Table>


         The value assigned to intangible assets relates to contracts with
customers that are for either a fixed term or which dedicate total future lease
production. The value assigned to intangible assets will be amortized over the
expected lives of the contracts (approximately 16 years) in proportion to the
timing of expected contractual volumes.

         The assigned value of goodwill is attributable to the natural gas
gathering assets that fully comprise the Midstream Segment.

NOTE 4.  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>


                                                 SEPTEMBER 30,     DECEMBER 31,
                                                     2001              2000
                                                 -------------     ------------
<S>                                              <C>               <C>
    Crude oil ............................          $13,833          $14,635
    Gasolines ............................              453            3,795
    Propane ..............................              463               --
    Butanes ..............................            2,597              267
    Fuel oil .............................               44               82
    Other products .......................            4,491            2,693
    Materials and supplies ...............            4,875            3,312
                                                    -------          -------
              Total ......................          $26,756          $24,784
                                                    =======          =======
</Table>

         The costs of inventories did not exceed market values at September 30,
2001, and December 31, 2000.

NOTE 5.  EQUITY INVESTMENTS

         Seaway is a partnership between the Upstream Segment and Phillips
Petroleum Company ("Phillips"). The Upstream Segment purchased its 50-percent
voting interest in Seaway on July 20, 2000 (see Note 3. Acquisitions). The
Seaway Crude Pipeline Company Partnership Agreement provides for varying
participation ratios throughout the life of the Seaway Partnership. From July
20, 2000, through May 2002, the Upstream Segment receives 80% of revenue and
expense of Seaway. From June 2002 through May 2006, the Upstream Segment
receives 60% of


                                       9
<PAGE>


                              TEPPCO PARTNERS, L.P.

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


revenue and expense of Seaway. Thereafter, the sharing ratio becomes 40% of
revenue and expense to the Upstream Segment.

         The Partnership uses the equity method of accounting for its investment
in Seaway. Summarized financial information for Seaway as of and for the nine
months ended September 30, 2001 is presented below (in thousands):

<Table>

<S>                                                                 <C>
    Current assets .......................................          $ 40,023
    Non current assets ...................................           277,295
    Current liabilities ..................................             9,184
    Partners' capital ....................................           308,134
    Revenues .............................................            55,719
    Net income ...........................................            27,283
</Table>

NOTE 6.  LONG TERM DEBT

SENIOR NOTES

         On January 27, 1998, the Downstream Segment 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 Downstream Segment, in whole or in
part, at a premium.

         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 Downstream Segment
and rank on a parity with all other unsecured and unsubordinated indebtedness of
the Downstream Segment. The indenture governing the Senior Notes contains
covenants, including, but not limited to, covenants limiting the creation of
liens securing indebtedness and sale and leaseback transactions. However, the
indenture does not limit the Partnership's ability to incur additional
indebtedness.

On October 4, 2001, the Partnership entered into an interest rate swap agreement
to hedge its exposure to changes in the fair value of its $210 million principal
amount of 7.51% fixed rate Senior Notes. The swap agreement has a notional
amount of $210 million and matures in January 2028 to match the principal and
maturity of the Senior Notes. Under the swap agreement, the Partnership pays a
floating rate based on a three month USD LIBOR rate, plus a spread, and receives
a fixed rate of interest of 7.51%.

OTHER LONG TERM DEBT AND CREDIT FACILITIES

         On July 14, 2000, the Partnership entered into a $75 million term loan
and a $475 million revolving credit facility. On July 21, 2000, the Partnership
borrowed $75 million under the term loan and $340 million under the revolving
credit facility. The funds were used to finance the acquisition of the ARCO
assets (see Note 3. Acquisitions) and to refinance existing credit facilities,
other than the Senior Notes. The term loan was repaid from proceeds received
from the issuance of additional Limited Partner Units on October 25, 2000. On
April 6, 2001, the Partnership's $475 million revolving credit agreement was
amended to permit borrowings up to $500 million and to allow for letters of
credit up to $20 million. The term of the revised credit agreement was extended
to April 6, 2004. Additionally, on April 6, 2001, the Partnership entered into a
364-day, $200 million revolving credit agreement. The interest rate is based on
the Partnership's option of either the lender's base rate plus a spread, or
LIBOR plus a spread in effect at the time of the borrowings. The credit
agreements contain restrictive financial covenants that


                                       10
<PAGE>

                              TEPPCO PARTNERS, L.P.

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

require the Partnership to maintain a minimum level of partners' capital as well
as maximum debt-to-EBITDA (earnings before interest expense, income tax expense
and depreciation and amortization expense) and minimum fixed charge coverage
ratios. At September 30, 2001, $472 million was outstanding under the revolving
credit facility at a weighted average interest rate of 4.9%.

         On July 21, 2000, the Partnership entered into a three year swap
agreement to hedge a portion of its exposure on the variable rate credit
facilities. On April 6, 2001 the swap agreement was extended until April 6, 2004
to match the maturity of the variable rate credit facility above. The swap
agreement is based on a notional amount of $250 million. Under the swap
agreement, the Partnership pays a fixed rate of interest of 6.955% and receives
a floating rate based on a three month USD LIBOR rate.

SHORT TERM CREDIT FACILITY

         On September 28, 2001, the Partnership entered into a $400 million
credit facility with SunTrust Bank. The Partnership borrowed $360 million under
the facility for the acquisition of the Jonah assets (see Note 3. Acquisitions).
The credit facility is payable in June 2002. The interest rate is based on the
Partnership's option of either the lender's base rate plus a spread, or LIBOR
plus a spread in effect at the time of the borrowings. The credit agreements
contain restrictive financial covenants that require the Partnership to maintain
a minimum level of partners' capital as well as maximum debt-to-EBITDA (earnings
before interest expense, income tax expense and depreciation and amortization
expense) and minimum fixed charge coverage ratios. At September 30, 2001, $360
million was outstanding under the credit facility at an interest rate of 3.63%.

NOTE 7.  QUARTERLY DISTRIBUTIONS OF AVAILABLE CASH

         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. Pursuant to the Partnership Agreement, the
Company receives incremental incentive cash distributions to the extent that
cash distributions on a per Unit basis exceed certain target thresholds. The
Following table shows the allocation between the Company and the unitholders of
each increment of cash distributed per Unit:

<Table>
<Caption>
                                                                                              GENERAL
                                                                              UNITHOLDERS     PARTNER
                                                                              -----------     -------
<S>                                                                              <C>             <C>
Quarterly Cash Distribution per Unit:
    Up to Minimum Quarterly Distribution ($0.275 per Unit) ................       98%            2%
    First Target - $0.276 per Unit up to $0.325 per Unit ..................       85%           15%
    Second Target - $0.326 per Unit up to $0.45 per Unit ..................       75%           25%
    Over Second Target - Cash distributions greater than $0.45 per Unit ...       50%           50%
</Table>

         The following table reflects the allocation of total distributions paid
for the nine month periods ended September 30, 2001 and 2000 (in thousands,
except per Unit amounts).

<Table>
<Caption>
                                                  NINE MONTHS ENDED SEPTEMBER 30,
                                                  -------------------------------
                                                         2001        2000
                                                        -------     -------
<S>                                                 <C>             <C>
Limited Partner Units .............................     $53,865     $42,775
General Partner Interest ..........................         817         491
General Partner Incentive .........................      13,674       8,576
                                                        -------     -------
    Total Partners' Capital Cash Distributions ....      68,356      51,842
Class B Units .....................................       6,169       5,777
Minority Interest .................................         500         588
                                                        -------     -------
    Total Cash Distributions Paid .................     $75,025     $58,207
                                                        =======     =======
Total Cash Distributions Paid Per Unit ............     $ 1.575     $ 1.475
                                                        =======     =======
</Table>



                                       11
<PAGE>


                             TEPPCO PARTNERS, L.P.

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


         On October 17, 2001, the Partnership declared a cash distribution of
$0.575 per Limited Partner Unit and Class B Unit for the quarter ended September
30, 2001. The distribution was paid on November 5, 2001, to Unitholders of
record on October 31, 2001.

NOTE 8. SEGMENT DATA

         The Partnership operates in three segments: refined products, LPGs, and
petrochemicals transportation, which operates through the Downstream Segment;
crude oil and NGLs transportation and marketing, which operates through the
Upstream Segment; and natural gas gathering, which operates through the
Midstream Segment. The amounts indicated below as "Partnership and Other" relate
primarily to intercompany eliminations and assets held by the Partnership that
have not been allocated to the Operating Partnerships.

         The Downstream Segment is engaged in the interstate transportation,
storage and terminaling of petroleum products and LPGs, intrastate
transportation of petrochemicals 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. The Downstream Segment
is one of the largest pipeline common carriers of refined petroleum products and
LPGs in the United States. The Partnership owns and operates a pipeline system
extending from southeast Texas through the central and midwestern United States
to the northeastern United States.

         The Upstream Segment gathers, stores, transports and markets crude oil
principally in Oklahoma, Texas and the Rocky Mountain region; operates two
trunkline NGL pipelines in South Texas and two NGL pipelines in East Texas; and
distributes lube oils and specialty chemicals to industrial and commercial
accounts. On July 20, 2000, the Partnership acquired certain assets from ARCO
(see Note 3. Acquisitions). The acquisition was accounted for under the purchase
method of accounting. The results of the acquisition have been included in the
Upstream Segment since the purchase on July 20, 2000.

         The Midstream Segment gathers natural gas in the Green River Basin in
southwest Wyoming. On September 30, 2001, the Partnership acquired Jonah Gas
Gathering Company from Alberta Energy Corporation (see Note 3. Acquisitions).
The acquisition was accounted for under the purchase method of accounting. The
results of operations of the acquisition will be included in periods subsequent
to September 30, 2001.

         The table below includes interim financial information by business
segment for the interim periods ended September 30, 2001 and 2000 (in
thousands):


                                       12
<PAGE>


                             TEPPCO PARTNERS, L.P.

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


<Table>
<Caption>
                                        THREE MONTHS ENDED SEPTEMBER 30, 2001       THREE MONTHS ENDED SEPTEMBER 30, 2000
                                     ------------------------------------------   -----------------------------------------
                                      DOWNSTREAM      UPSTREAM                     DOWNSTREAM     UPSTREAM
                                       SEGMENT        SEGMENT      CONSOLIDATED      SEGMENT       SEGMENT     CONSOLIDATED
                                     -----------    -----------    ------------    ----------    -----------   ------------
<S>                                  <C>            <C>            <C>             <C>            <C>          <C>
Unaffiliated revenues ............   $    60,362    $   930,454    $   990,816     $   53,110        696,788    $   749,898
Operating expenses, including
   power .........................        30,000        923,284        953,284         29,495        689,342        718,837
Depreciation and amortization
   expense .......................         7,179          3,232         10,411          6,908          2,246          9,154
                                     -----------    -----------    -----------     ----------    -----------    -----------
   Operating income ..............        23,183          3,938         27,121         16,707          5,200         21,907
Interest expense, net ............        (7,905)        (6,669)       (14,574)        (7,899)        (6,517)       (14,416)
Equity earnings ..................          (296)         5,941          5,645             --          9,325          9,325
Other income, net ................           398            502            900            318             55            373
                                     -----------    -----------    -----------     ----------    -----------    -----------
      Net income .................   $    15,380    $     3,712    $    19,092     $    9,126    $     8,063    $    17,189
                                     ===========    ===========    ===========     ==========    ===========    ===========
</Table>

<Table>
<Caption>
                                         NINE MONTHS ENDED SEPTEMBER 30, 2001       NINE MONTHS ENDED SEPTEMBER 30, 2000
                                     ------------------------------------------   -----------------------------------------
                                      DOWNSTREAM      UPSTREAM                     DOWNSTREAM     UPSTREAM
                                       SEGMENT        SEGMENT      CONSOLIDATED      SEGMENT       SEGMENT     CONSOLIDATED
                                     -----------    -----------    ------------    ----------    -----------   ------------
<S>                                  <C>            <C>            <C>             <C>                <C>        <C>
Unaffiliated revenues ............   $   204,925    $ 2,644,808    $ 2,849,733     $  171,176    $ 2,077,118    $ 2,248,294
Operating expenses, including
   power .........................        88,321      2,613,741      2,702,062         88,367      2,061,362      2,149,729
Depreciation and amortization
   expense .......................        21,563          9,612         31,175         20,565          5,175         25,740
                                     -----------    -----------    -----------     ----------    -----------    -----------
   Operating income ..............        95,041         21,455        116,496         62,244         10,581         72,825
Interest expense, net ............       (24,267)       (21,058)       (45,325)       (22,376)        (6,757)       (29,133)
Equity earnings ..................          (635)        15,905         15,270             --          9,325          9,325
Other income, net ................           567            857          1,424          1,284            339          1,623
                                     -----------    -----------    -----------     ----------    -----------    -----------
   Net income ....................   $    70,706    $    17,159    $    87,865     $   41,152    $    13,488    $    54,640
                                     ===========    ===========    ===========     ==========    ===========    ===========
</Table>

<Table>
<Caption>
                                                           AS OF SEPTEMBER 30, 2001
                                     ------------------------------------------------------------------------
                                      DOWNSTREAM      UPSTREAM      MIDSTREAM     PARTNERSHIP
                                       SEGMENT        SEGMENT        SEGMENT       AND OTHER     CONSOLIDATED
                                     -----------    -----------     ---------     -----------    ------------
<S>                                  <C>            <C>             <C>            <C>            <C>
Total assets .....................   $   809,106    $   905,406     $ 360,860     $    (1,822)   $ 2,073,550
Accounts receivable, trade .......        20,772        272,667            --              --        293,439
Accounts payable and accrued
   liabilities ...................   $     9,822    $   284,542     $      --     $        --    $   294,364
</Table>

<Table>
<Caption>
                                                           AS OF SEPTEMBER 30, 2000
                                     ------------------------------------------------------------------------
                                      DOWNSTREAM      UPSTREAM      MIDSTREAM     PARTNERSHIP
                                       SEGMENT        SEGMENT        SEGMENT       AND OTHER     CONSOLIDATED
                                     -----------    -----------     ---------    -----------    ------------
<S>                                  <C>            <C>             <C>           <C>            <C>
Total assets .....................   $   743,838    $   720,722     $      --    $    (1,592)   $ 1,462,968
Accounts receivable, trade .......        18,729        229,278            --             --        248,007
Accounts payable and accrued
   liabilities ...................   $    10,380    $   236,123     $      --    $        --    $   246,503
</Table>


                                       13
<PAGE>


                              TEPPCO PARTNERS, L.P.

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

NOTE 9.  COMMITMENTS AND CONTINGENCIES

         In the fall of 1999 and on December 1, 2000, the Company and the
Partnership were named as defendants in two separate lawsuits in Jackson County
Circuit Court, Jackson County, Indiana, in Ryan E. McCleery and Marcia S.
McCleery, et al. v. Texas Eastern Corporation, et al. (including the Company and
Partnership) and Gilbert Richards and Jean Richards v. Texas Eastern
Corporation, et. al. In both cases plaintiffs contend, among other things, that
the Company and other defendants stored and disposed of toxic and hazardous
substances and hazardous wastes in a manner that caused the materials to be
released into the air, soil and water. They further contend that the release
caused damages to the plaintiffs. In their complaints, the plaintiffs allege
strict liability for both personal injury and property damage together with
gross negligence, continuing nuisance, trespass, criminal mischief and loss of
consortium. The plaintiffs are seeking compensatory, punitive and treble
damages. The Company has filed an answer to both complaints, denying the
allegations, as well as various other motions. These cases are in the early
stages of discovery and are not covered by insurance. The Company is defending
itself vigorously against the lawsuits. The Partnership cannot estimate the
loss, if any, associated with these pending lawsuits.

         The Partnership is involved in various other 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, results of operations or cash
flows.

         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 its operations 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 condition, results of operations or
cash flows in the near term.

         As of September 30, 2001, the Partnership had accrued approximately
$8.3 million of costs to complete environmental remediation activity at certain
sites owned by the Upstream Segment. Such amount includes $4.3 million of
environmental remediation costs accrued during the third quarter of 2001. In
connection with the acquisition of the Upstream Segment in November 1998, the
Partnership received an indemnity from DEFS for environmental remediation costs
that exceed $3.0 million, up to a maximum of $25.0 million, for certain sites
that existed prior to the Partnership's operation of such properties.
Approximately $2.6 million of the balance accrued as of September 30, 2001 is
expected to be recovered under the indemnity. The majority of the indemnified
costs relate to a crude oil site in Stephens County, Oklahoma, attributable to
operations prior to the Partnership's acquisition of the Upstream Segment.

         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 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 is expected to 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 has accrued $0.2 million at
September 30, 2001 for future costs of the remediation program for the Seymour
terminal. In the opinion of the Company, the completion of the remediation
program will not have a material adverse impact on the Partnership's financial
position, results of operations or liquidity.


                                       14
<PAGE>

                              TEPPCO PARTNERS, L.P.

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


         The Partnership received a compliance order from the Louisiana
Department of Environmental Quality ("DEQ") during 1994 relative to potential
environmental contamination at the Partnership's Arcadia, Louisiana facility
that may be attributable to the operations of the Partnership and adjacent
petroleum terminals of other companies. The Partnership and all adjacent
terminals have been assigned to the Groundwater Division of DEQ, in which a
consolidated plan will be developed. The Partnership has finalized a negotiated
Compliance Order with DEQ that will allow the Partnership to continue with a
remediation plan similar to the one previously agreed to by DEQ and implemented
by the Company. In the opinion of the General Partner, the completion of the
remediation program being proposed by the Partnership will not have a future
material adverse impact on the Partnership.

         Substantially all of the petroleum products transported and stored by
the Partnership are owned by the Partnership's customers. At September 30, 2001,
the Partnership had approximately 23.6 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.

NOTE 10. COMPREHENSIVE INCOME

         The table below reconciles reported net income to total comprehensive
income for the nine months ended September 30, 2001 (in thousands).

<Table>
<S>                                                                <C>
Net income .....................................................   $ 87,865
Cumulative effect attributable to adoption of SFAS 133 (see
     Note 2. New Accounting Pronouncements) ....................    (10,103)
Hedge accounting for derivative instruments ....................    (16,889)
                                                                   --------
    Total comprehensive income .................................   $ 60,873
                                                                   ========
</Table>

         The accumulated balance of other comprehensive loss related to cash
flow hedges is as follows (in thousands):

<Table>
<S>                                                                <C>
        Balance at December 31, 2000 ...........................   $     --
        Cumulative effect of accounting change .................    (10,103)
        Net loss on cash flow hedges ...........................    (20,928)
        Reclassification adjustments ...........................      4,039
                                                                   --------
        Balance at September 30, 2001 ..........................   $(26,992)
                                                                   ========
</Table>

NOTE 11.  SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION

         Under the Partnership's shelf registration statement on Form S-3 filed
with the Securities and Exchange Commission on July 27, 2001, TE Products
Pipeline Company, Limited Partnership and TCTM, L.P., the Partnership's sole
first-tier operating subsidiaries (the "Guarantor Subsidiaries"), may issue
unconditional guarantees of senior or subordinated debt securities of the
Partnership in the event that the Partnership issues such securities from time
to time under the registration statement. If issued, the guarantees will be
full, unconditional and joint and several. In July 2001, the Partnership
restructured the ownership of the general partner interests in these first-tier
operating subsidiaries to cause them to be wholly-owned by the Partnership. For
purposes of the following consolidating information, the Partnership's and
Guarantor Subsidiaries' investments in their respective subsidiaries are
accounted for by the equity method of accounting.


                                       15
<PAGE>


                              TEPPCO PARTNERS, L.P.

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

<Table>
<Caption>
                                                                                                                         TEPPCO
                                                           TEPPCO        GUARANTOR    NON-GUARANTOR  CONSOLIDATING   PARTNERS, L.P.
SEPTEMBER 30, 2001                                      PARTNERS, L.P.  SUBSIDIARIES  SUBSIDIARIES    ADJUSTMENTS     CONSOLIDATED
------------------                                      --------------  ------------  -------------  -------------   --------------
                                                                                    (IN THOUSANDS)
<S>                                                     <C>             <C>           <C>            <C>              <C>
Assets
   Current assets .....................................   $    3,127    $   44,867     $  323,141     $   (11,768)     $  359,367
   Property, plant and equipment - net ................           --       673,111        470,085              --       1,143,196
   Equity investments .................................      493,468       285,553        230,632        (739,760)        269,893
   Intercompany notes receivable ......................      830,027            --             --        (830,027)             --
   Other assets .......................................        5,732        19,651        280,626          (4,915)        301,094
                                                          ----------    ----------     ----------     -----------      ----------
      Total assets ....................................   $1,332,354    $1,023,182     $1,304,484     $(1,586,470)     $2,073,550
                                                          ==========    ==========     ==========     ===========      ==========
 Liabilities and partners' capital
   Current liabilities ................................   $  365,767    $   46,933     $  673,305     $  (356,734)     $  729,271
   Long term debt .....................................      472,000       389,807             --              --         861,807
   Intercompany notes payable .........................           --        89,060        380,967        (470,027)             --
   Other long term liabilities and minority
     interest .........................................           --         3,918             --          12,038          15,956
   Redeemable Class B Units held by related
     party ............................................           --            --             --         106,270         106,270
   Total partners' capital ............................      494,587       493,464        250,212        (878,017)        360,246
                                                          ----------    ----------     ----------     -----------      ----------
      Total liabilities and partners' capital .........   $1,332,354    $1,023,182     $1,304,484     $(1,586,470)     $2,073,550
                                                          ==========    ==========     ==========     ===========      ==========
</Table>

<Table>
<Caption>
                                                                                                                         TEPPCO
                                                           TEPPCO        GUARANTOR    NON-GUARANTOR  CONSOLIDATING   PARTNERS, L.P.
DECEMBER 31, 2000                                       PARTNERS, L.P.  SUBSIDIARIES  SUBSIDIARIES    ADJUSTMENTS     CONSOLIDATED
-----------------                                       --------------  ------------  -------------  -------------   --------------
                                                                                    (IN THOUSANDS)
<S>                                                     <C>             <C>           <C>            <C>              <C>
  Assets
     Current assets ...................................   $    6,083    $   52,773     $  315,488     $   (10,947)     $  363,397
     Property, plant and equipment - net ..............           --       640,657        309,048              --         949,705
     Equity investments ...............................      420,433       202,811        236,232        (617,828)        241,648

     Intercompany notes receivable ....................      441,836            --             --        (441,836)             --
     Other assets .....................................        5,322        15,385         48,475          (1,122)         68,060
                                                          ----------    ----------     ----------     -----------      ----------
        Total assets ..................................   $  873,674    $  911,626     $  909,243     $(1,071,733)     $1,622,810
                                                          ==========    ==========     ==========     ===========      ==========
   Liabilities and partners' capital
     Current liabilities ..............................   $    7,206    $   45,085     $  318,049     $   (12,069)     $  358,271
     Long term debt ...................................      446,000       389,784             --              --         835,784
     Intercompany notes payable .......................           --        48,037        393,799        (441,836)             --
     Other long term liabilities and
       minority interest ..............................           --         3,991             --           4,296           8,287
     Redeemable Class B Units held by
       related party ..................................      105,411            --             --              --         105,411
     Total partners' capital ..........................      315,057       424,729        197,395        (622,124)        315,057
                                                          ----------    ----------     ----------     -----------      ----------
        Total liabilities and partners' capital .......   $  873,674    $  911,626     $  909,243     $(1,071,733)     $1,622,810
                                                          ==========    ==========     ==========     ===========      ==========
</Table>


                                       16

<PAGE>

                              TEPPCO PARTNERS, L.P.

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


<Table>
<Caption>
                                                                                                             TEPPCO
                                                TEPPCO        GUARANTOR   NON-GUARANTOR  CONSOLIDATING   PARTNERS, L.P.
THREE MONTHS ENDED SEPTEMBER 30, 2001       PARTNERS, L.P.  SUBSIDIARIES  SUBSIDIARIES    ADJUSTMENTS     CONSOLIDATED
-------------------------------------       --------------  ------------  -------------  -------------   --------------
                                                                          (IN THOUSANDS)
<S>                                         <C>             <C>           <C>            <C>              <C>
   Operating revenues ...................    $        --    $    58,527     $   932,289    $        --    $   990,816
   Costs and expenses ...................             --         36,458         927,237             --        963,695
                                             -----------    -----------     -----------    -----------    -----------
     Operating income ...................             --         22,069           5,052             --         27,121
                                             -----------    -----------     -----------    -----------    -----------
   Interest expense - net ...............         (8,774)        (7,181)         (7,393)         8,774        (14,574)
   Equity earnings ......................         19,092          3,868           5,941        (23,256)         5,645
   Other income - net ...................          8,774            433             564         (8,774)           997
                                             -----------    -----------     -----------    -----------    -----------
     Income before minority interest ....         19,092         19,189           4,164        (23,256)        19,189
   Minority interest ....................             --             --              --            (97)           (97)
                                             -----------    -----------     -----------    -----------    -----------
     Net income .........................    $    19,092    $    19,189     $     4,164    $   (23,353)   $    19,092
                                             ===========    ===========     ===========    ===========    ===========
</Table>

<Table>
<Caption>
                                                                                                             TEPPCO
                                                TEPPCO        GUARANTOR   NON-GUARANTOR  CONSOLIDATING   PARTNERS, L.P.
THREE MONTHS ENDED SEPTEMBER 30, 2000       PARTNERS, L.P.  SUBSIDIARIES  SUBSIDIARIES    ADJUSTMENTS     CONSOLIDATED
-------------------------------------       --------------  ------------  -------------  -------------   --------------
                                                                          (IN THOUSANDS)
<S>                                         <C>             <C>           <C>            <C>              <C>
   Operating revenues ...................    $        --    $    51,203     $   698,695    $        --    $   749,898
   Costs and expenses ...................             --         35,686         692,305             --        727,991
                                             -----------    -----------     -----------    -----------    -----------
     Operating income ...................             --         15,517           6,390             --         21,907
                                             -----------    -----------     -----------    -----------    -----------
   Interest expense - net ...............         (8,261)        (6,955)         (7,461)         8,261        (14,416)
   Equity earnings ......................         17,189          8,467           9,325        (25,656)         9,325
   Other income - net ...................          8,261            335             213         (8,261)           548
                                             -----------    -----------     -----------    -----------    -----------
     Income before minority interest ....         17,189         17,364           8,467        (25,656)        17,364
   Minority interest ....................             --             --              --           (175)          (175)
                                             -----------    -----------     -----------    -----------    -----------
     Net income .........................    $    17,189    $    17,364     $     8,467    $   (25,831)   $    17,189
                                             ===========    ===========     ===========    ===========    ===========
</Table>

<Table>
<Caption>
                                                                                                             TEPPCO
                                                 TEPPCO      GUARANTOR    NON-GUARANTOR  CONSOLIDATING   PARTNERS, L.P.
NINE MONTHS ENDED SEPTEMBER 30, 2001        PARTNERS, L.P.  SUBSIDIARIES   SUBSIDIARIES   ADJUSTMENTS     CONSOLIDATED
------------------------------------        --------------  ------------  -------------  -------------   --------------
                                                                          (IN THOUSANDS)
<S>                                         <C>             <C>           <C>            <C>              <C>
   Operating revenues ...................    $        --    $   199,374     $ 2,650,359    $        --    $ 2,849,733
   Costs and expenses ...................             --        107,712       2,625,525             --      2,733,237
                                             -----------    -----------     -----------    -----------    -----------
     Operating income ...................             --         91,662          24,834             --        116,496
                                             -----------    -----------     -----------    -----------    -----------
   Interest expense - net ...............        (26,577)       (22,160)        (23,165)        26,577        (45,325)
   Equity earnings ......................         87,865         18,048          15,905       (106,548)        15,270
   Other income - net ...................         26,577          1,115           1,109        (26,577)         2,224
                                             -----------    -----------     -----------    -----------    -----------
     Income before minority interest ....         87,865         88,665          18,683       (106,548)        88,665
   Minority interest ....................             --             --              --           (800)          (800)
                                             -----------    -----------     -----------    -----------    -----------
     Net income .........................    $    87,865    $    88,665     $    18,683    $  (107,348)   $    87,865
                                             ===========    ===========     ===========    ===========    ===========
</Table>

                                       17
<PAGE>

                              TEPPCO PARTNERS, L.P.

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

<Table>
<Caption>
                                                                                                             TEPPCO
                                                TEPPCO        GUARANTOR   NON-GUARANTOR  CONSOLIDATING   PARTNERS, L.P.
NINE MONTHS ENDED SEPTEMBER 30, 2000        PARTNERS, L.P.  SUBSIDIARIES  SUBSIDIARIES    ADJUSTMENTS     CONSOLIDATED
------------------------------------        --------------  ------------  -------------  -------------   --------------
                                                                          (IN THOUSANDS)
<S>                                         <C>             <C>           <C>            <C>              <C>
   Operating revenues ...................    $        --    $   165,526     $ 2,082,768    $        --    $ 2,248,294
   Costs and expenses ...................             --        106,770       2,068,699             --      2,175,469
                                             -----------    -----------     -----------    -----------    -----------
     Operating income ...................             --         58,756          14,069             --         72,825
                                             -----------    -----------     -----------    -----------    -----------
   Interest expense - net ...............         (8,261)       (20,170)         (8,963)         8,261        (29,133)
   Equity earnings ......................         54,640         15,047           9,325        (69,687)         9,325
   Other income - net ...................          8,261          1,564             616         (8,261)         2,180
                                             -----------    -----------     -----------    -----------    -----------
     Income before minority interest ....         54,640         55,197          15,047        (69,687)        55,197
   Minority interest ....................             --             --              --           (557)          (557)
                                             -----------    -----------     -----------    -----------    -----------
     Net income .........................    $    54,640    $    55,197     $    15,047    $   (70,244)   $    54,640
                                             ===========    ===========     ===========    ===========    ===========
</Table>

<Table>
<Caption>
                                                                                                                         TEPPCO
                                                           TEPPCO        GUARANTOR    NON-GUARANTOR  CONSOLIDATING   PARTNERS, L.P.
NINE MONTHS ENDED SEPTEMBER 30, 2001                    PARTNERS, L.P.  SUBSIDIARIES  SUBSIDIARIES    ADJUSTMENTS     CONSOLIDATED
------------------------------------                    --------------  ------------  -------------  -------------   --------------
                                                                                    (IN THOUSANDS)
<S>                                                     <C>             <C>           <C>            <C>              <C>
   Cash flows from operating activities
     Net Income ......................................    $  87,865      $  88,665     $  18,681       $(107,346)      $  87,865
       Adjustments to reconcile net income to net
        cash provided by operating activities:
         Depreciation and amortization ...............           --         20,051        11,124              --          31,175
         Equity earnings, net of distributions .......      (13,340)         3,375         5,600          10,455           6,090
         Changes in assets and liabilities and
            other ....................................        2,601          2,822       (17,894)            799         (11,672)
                                                          ---------      ---------     ---------       ---------       ---------
   Net cash provided by operating activities .........       77,126        114,913        17,511         (96,092)        113,458
                                                          ---------      ---------     ---------       ---------       ---------

   Cash flows from investing activities ..............     (446,301)       (83,599)     (388,000)        446,301        (471,599)

   Cash flows from financing activities ..............      369,175        (34,452)      379,562        (350,209)        364,076
                                                          ---------      ---------     ---------       ---------       ---------
   Net increase (decrease) in cash and cash
     equivalents .....................................           --         (3,138)        9,073              --           5,935
   Cash and cash equivalents at beginning of
     period ..........................................           --          9,167        17,929              --          27,096
                                                          ---------      ---------     ---------       ---------       ---------
   Cash and cash equivalents at end of period ........    $      --      $   6,029     $  27,002       $      --       $  33,031
                                                          =========      =========     =========       =========       =========
</Table>

                                       18
<PAGE>

                              TEPPCO PARTNERS, L.P.

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

<Table>
<Caption>
                                                                                                                         TEPPCO
                                                           TEPPCO        GUARANTOR    NON-GUARANTOR  CONSOLIDATING   PARTNERS, L.P.
NINE MONTHS ENDED SEPTEMBER 30, 2000                    PARTNERS, L.P.  SUBSIDIARIES  SUBSIDIARIES    ADJUSTMENTS     CONSOLIDATED
------------------------------------                    --------------  ------------  -------------  -------------   --------------
                                                                                    (IN THOUSANDS)
<S>                                                     <C>             <C>           <C>            <C>              <C>
   Cash flows from operating activities
     Net Income ......................................    $  54,640      $  55,197     $  15,047       $ (70,244)      $  54,640
       Adjustments to reconcile net income to
         net cash provided by operating activities:
         Depreciation and amortization ...............           --         19,053         6,687              --          25,740
         Equity earnings, net of distributions .......        2,978         (3,233)       (8,258)            143          (8,370)
         Changes in assets and liabilities
           and other .................................           --          2,829         2,571             557           5,957
                                                          ---------      ---------     ---------       ---------       ---------
   Net cash provided by operating activities .........       57,618         73,846        16,047         (69,544)         77,967
                                                          ---------      ---------     ---------       ---------       ---------

   Cash flows from investing activities ..............           --        (49,792)     (337,472)             --        (387,264)
   Cash flows from financing activities ..............      (57,618)       (31,628)      321,421          69,544         301,719
                                                          ---------      ---------     ---------       ---------       ---------
   Net decrease in cash and cash equivalents .........           --         (7,574)           (4)             --          (7,578)
   Cash and cash equivalents at beginning of
     period ..........................................           --         16,284        16,309              --          32,593
                                                          ---------      ---------     ---------       ---------       ---------
   Cash and cash equivalents at end of period ........    $      --      $   8,710     $  16,305       $      --       $  25,015
                                                          =========      =========     =========       =========       =========
</Table>


                                       19


<PAGE>


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


GENERAL

         The following information is provided to facilitate increased
understanding of the 2001 and 2000 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 known to it that are reasonably likely to materially affect
future liquidity or earnings.

         Through its ownership of the Downstream Segment, the Upstream Segment
and the Midstream Segment, the Partnership operates in three segments: refined
products, LPGs and petrochemical transportation; crude oil and NGLs
transportation and marketing; and natural gas gathering. The Partnership's
reportable segments offer different products and services and are managed
separately because each requires different business strategies. On September 30,
2001, the Partnership completed the acquisition of Jonah (see Note 3.
Acquisitions). The operations of Jonah include the gathering of natural gas.

         The Downstream Segment is involved in the interstate transportation,
storage and terminaling of petroleum products and LPGs, intrastate
transportation of petrochemicals 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 Downstream
Segment. Higher natural gas prices increase the cost of electricity used to
power pump stations on the Pipeline System. 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 Upstream Segment is involved in the transportation, aggregation and
marketing of crude oil and NGLs; and the distribution of lube oils and specialty
chemicals. Revenues are earned from the gathering, storage, transportation and
marketing of crude oil and NGLs; and the distribution of lube oils and specialty
chemicals, principally in Oklahoma, Texas and the Rocky Mountain region.
Marketing operations consist primarily of aggregating purchased crude oil along
its pipeline systems, or from third party pipeline systems, and arranging the
necessary logistics for the ultimate sale of the crude oil to local refineries,
marketers or other end users.

         The Midstream Segment gathers natural gas in the Green River Basin in
southwest Wyoming. On September 30, 2001, the Partnership acquired Jonah Gas
Gathering Company from Alberta Energy Corporation (see Note 3. Acquisitions).
The acquisition was accounted for under the purchase method of accounting. The
results of operations of the acquisition will be included in periods subsequent
to September 30, 2001.

         On July 20, 2000, the Partnership completed an acquisition of assets
from ARCO for $322.6 million, which included $4.1 million of acquisition related
costs other than the purchase price. The purchased assets included ARCO's
50-percent voting interest in Seaway. The Partnership assumed ARCO's role as
operator of this pipeline. The Company also acquired ARCO's crude oil terminal
facilities in Cushing and Midland, Texas, including the line transfer and
pumpover business at each location, an undivided ownership interest in both the
Rancho Pipeline and the Basin Pipeline, both of which are operated by another
joint owner, and the receipt and delivery pipelines known as the West Texas
Trunk System, located around the Midland terminal. The transaction was accounted
for under the purchase method for accounting purposes. The results of operations
of assets acquired have been included in the Upstream Segment since the purchase
on July 20, 2000.


                                       20
<PAGE>

RESULTS OF OPERATIONS

         In October 2000, the Partnership received a settlement notice from
Atlantic Richfield Company for payment of a net aggregate amount of
approximately $12.9 million in post-closing adjustments related to the purchase
of ARCO. A large portion of the requested adjustment related to an indemnity for
payment of accrued income taxes. In August 2001, the Partnership and Atlantic
Richfield Company reached a settlement of $11.0 million for the post-closing
adjustments. The Partnership recorded the settlement as an increase to the
purchase price of ARCO. The Partnership paid the settlement amount to Atlantic
Richfield Company on October 15, 2001.

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


<Table>
<Caption>
                                       QUARTER ENDED SEPTEMBER 30,   NINE MONTHS ENDED SEPTEMBER 30,
                                       ---------------------------   -------------------------------
                                          2001             2000          2001             2000
                                       ----------       ----------     ----------       ----------
<S>                                    <C>              <C>            <C>              <C>
Operating revenues:
    Downstream Segment .............   $   60,362       $   53,110     $  204,925       $  171,176
    Upstream Segment ...............      930,454          696,788      2,644,808        2,077,118
                                       ----------       ----------     ----------       ----------
       Total operating revenues ....      990,816          749,898      2,849,733        2,248,294
                                       ----------       ----------     ----------       ----------
Operating income:
    Downstream Segment .............       23,183           16,707         95,041           62,244
    Upstream Segment ...............        3,938            5,200         21,455           10,581
                                       ----------       ----------     ----------       ----------
       Total operating income ......       27,121           21,907        116,496           72,825
                                       ----------       ----------     ----------       ----------
Net income:
    Downstream Segment .............       15,380            9,126         70,706           41,152
    Upstream Segment ...............        3,712            8,063         17,159           13,488
                                       ----------       ----------     ----------       ----------
       Total net income ............   $   19,092       $   17,189     $   87,865       $   54,640
                                       ----------       ----------     ----------       ----------
</Table>

         For the quarter ended September 30, 2001, the Partnership reported net
income of $19.1 million, compared with net income of $17.2 million for the 2000
third quarter. The $1.9 million increase in net income resulted from a $6.3
million increase in net income provided by the Downstream Segment, partially
offset by a $4.4 million decrease in net income provided by the Upstream
Segment. The increase in net income by the Downstream Segment was comprised
primarily of a $7.3 million increase in operating revenues, partially offset by
a $0.8 million increase in costs and expenses. The decrease in net income by the
Upstream Segment was comprised of a $12.3 million increase in costs and expenses
(excluding purchases of crude oil and petroleum products) and a $3.4 million
decrease in equity earnings of Seaway, partially offset by a a $10.1 million
increase in margin, a $0.9 million increase in other operating revenues, and a
$0.4 million increase in other income - net.

         For the nine months ended September 30, 2001, the Partnership reported
net income of $87.9 million, compared with net income of $54.6 million for the
corresponding period in 2000. The $33.3 million increase in income resulted from
a $29.5 million increase in net income provided by the Downstream Segment and a
$3.7 million increase in net income provided by the Upstream Segment. The
increase in net income by the Downstream Segment was primarily due to a $33.7
million increase in operating revenues, partially offset by a $1.9 million
increase in interest expense (net of capitalized interest), a $1.0 million
increase in costs and expenses, $0.6 million in losses from equity investments,
and a $0.5 million decrease in other income - net. The increase in net income by
the Upstream Segment was primarily due to a $34.2 million increase in margin, a
$6.6 million increase in other operating revenues, a $6.6 million increase in
equity earnings of Seaway, and a $0.6 million increase in other income - net,
partially offset by a $30.0 million increase in costs and expenses (excluding
purchases of crude oil and petroleum products) and a $14.3 million increase in
interest expense (net of capitalized interest).


                                       21
<PAGE>


RESULTS OF OPERATIONS - (CONTINUED)

DOWNSTREAM SEGMENT

      Volume and average rate information for 2001 and 2000 is presented below:


<Table>
<Caption>
                                                   QUARTER ENDED                  NINE MONTHS ENDED
                                                   SEPTEMBER 30,    PERCENTAGE      SEPTEMBER 30,      PERCENTAGE
                                               -------------------   INCREASE    --------------------   INCREASE
                                                 2001       2000    (DECREASE)     2001        2000    (DECREASE)
                                               -------    -------   ----------   --------    --------  -----------
                                                           (IN THOUSANDS, EXCEPT AVERAGE RATE INFORMATION)
<S>                                            <C>        <C>         <C>        <C>          <C>         <C>
VOLUMES DELIVERED
    Refined products .......................    32,387     32,490         --       92,935       97,216       (4)%
    LPGs ...................................     8,864      9,058         (2)%     27,422       27,385       --
    Mont Belvieu operations ................     5,352      5,506         (3)%     16,188       19,154      (15)%
                                               -------    -------     ------     --------     --------    -----
        Total ..............................    46,603     47,054         (1)%    136,545      143,755       (5)%
                                               =======    =======     ======     ========     ========    =====
AVERAGE RATE PER BARREL
    Refined products ......................    $  0.99    $  0.91          9%    $   0.98(a)  $   0.93        5%
    LPGs ..................................       1.77       1.60         11%        1.98         1.75       13%
    Mont Belvieu operations ...............       0.18      .0.16         13%        0.18         0.15       20%
        Average system rate per barrel ....    $  1.05    $  0.95         11%    $   1.08     $   0.98       10%
                                               =======    =======     ======     ========     ========    =====
</Table>

   (a) Net of $18.9 million received from Pennzoil-Quaker State Company for
       canceled transportation agreement discussed below.


         Refined products transportation revenues increased $2.7 million for the
quarter ended September 30, 2001, compared with the prior-year quarter, due
primarily to a 9% increase in the refined products average rate per barrel. The
increase in the refined products average rate per barrel from the prior-year
quarter was due to the approval of market based rates in April 2001, and an
increased percentage of long haul volumes delivered in the Midwest. Refined
products volumes delivered during the third quarter of 2001 decreased slightly
compared to the prior-year quarter, due primarily to lower deliveries of methyl
tertiary butyl ether ("MTBE") at the Partnership's marine terminal near
Beaumont, Texas, which were largely offset by increased long haul deliveries of
motor fuel and distillate in the Midwest market area.

         LPGs transportation revenues increased $1.2 million for the quarter
ended September 30, 2001, compared with the third quarter of 2000, due primarily
to increased deliveries of propane in the upper Midwest and Northeast market
areas attributable to favorable price differentials and higher demand from
customers filling their storage facilities. These increases were partially
offset by decreased butane deliveries in the Midwest and short-haul deliveries
of propane along the upper Texas Gulf Coast. The LPGs average rate per barrel
increased 11% from the prior-year quarter as a result of an increased percentage
of long-haul deliveries during the third quarter of 2001.

         Revenues generated from Mont Belvieu operations increased $1.0 million
during the quarter ended September 30, 2001, compared with the third quarter of
2000, as a result of increased storage revenue and brine service revenue. Mont
Belvieu shuttle volumes delivered decreased 3% during the third quarter of 2001,
compared with the third quarter of 2000, due to reduced petrochemical demand.
The Mont Belvieu average rate per barrel increased during the third quarter of
2001 as a result of reduced contract shuttle deliveries, which generally carry
lower rates.

         Other operating revenues increased $2.4 million during the quarter
ended September 30, 2001, compared with the prior year quarter, due primarily to
contract petrochemical delivery revenue, which started during the fourth quarter
of 2000, and increased product sales. These increases were partially offset by
decreased product exchange revenue.

         Costs and expenses increased $0.8 million for the quarter ended
September 30, 2001, compared with the third quarter of 2000, primarily due to a
$1.4 million increase in operating, general and administrative expenses, a


                                       22
<PAGE>

RESULTS OF OPERATIONS - (CONTINUED)

$0.3 million increase in depreciation and amortization expense, and a $0.2
million increase in operating fuel and power expense. These increases were
partially offset by a $1.1 million decrease in taxes - other than income taxes.
Operating, general and administrative expenses increased primarily due to
increased general and administrative consulting and contract labor and increased
incentive compensation accruals. The increase in depreciation expense from the
prior year third quarter resulted from assets placed in service during the
fourth quarter of 2000. Operating fuel and power expense increased as a result
of increased long-haul product deliveries. The decrease in taxes - other than
income taxes resulted from actual property taxes being lower than previously
estimated.

         Interest expense decreased $0.6 million for the quarter ended September
30, 2001, compared with the second quarter of 2000, as a result of reduced
interest rates on borrowings under the variable-rate credit facilities. Interest
capitalized decreased $0.6 million as a result of the completion of the
petrochemical pipelines from Mont Belvieu, Texas, to Port Arthur, Texas, during
the fourth quarter of 2000.

         Net loss from equity investments totaled $0.3 million during the
quarter ended September 30, 2001 due to pre-operating expenses of Centennial
Pipeline, LLC ("Centennial").

         For the nine months ended September 30, 2001, refined products
transportation revenues increased $19.6 million, due primarily to revenue
recognized on the canceled transportation agreement with Pennzoil-Quaker State
Company ("Pennzoil") and the recognition of $1.7 million of previously deferred
revenue related to the approval of the market based rates during the second
quarter of 2001, partially offset by a 4% decrease in refined products volumes
delivered. The net revenue increase related to the settlement was approximately
$14.8 million during the nine months ended September 30, 2001. Jet fuel volumes
delivered to the Midwest market areas decreased 14% due to reduced air travel
demand and an airline pilot strike during the second quarter of 2001. Deliveries
of MTBE decreased as a result of the expiration of contract deliveries to the
Partnership's marine terminal near Beaumont, Texas, in April 2001. The total
refined products volume decrease was partially offset by increased distillate
deliveries primarily due to increased demand in the south Central market areas
and deliveries at a third-party terminal in Houston, Texas. The refined products
average rate per barrel increased 5% from the prior-year period primarily due to
an increased percentage of long-haul volumes delivered in 2001.

         LPGs transportation revenues increased $6.2 million for the nine months
ended September 30, 2001, compared with the corresponding period in 2000, due
primarily to increased deliveries of propane in the Midwest and Northeast market
areas attributable to colder weather in the Northeast during the first quarter
of 2001, favorable price differentials and higher demand from customers filling
their storage facilities. Additionally, butane deliveries to the Chicago market
area increased due to favorable price differentials. These increases were
partially offset by decreased short-haul deliveries of propane as a result of
operational problems at a petrochemical facility on the upper Texas Gulf Coast
that is served by the Partnership. The LPGs average rate per barrel increased
13% from the prior-year period as a result of an increased percentage of
long-haul deliveries to the upper Midwest and Northeast market areas.

         Revenues generated from Mont Belvieu operations decreased $0.5 million
during the nine months ended September 30, 2001, compared with the nine months
ended September 30, 2000, as a result of decreased contract storage revenue,
partially offset by increased brine service revenue. Mont Belvieu shuttle
deliveries decreased during the nine months ended September 30, 2001, compared
with the corresponding period in 2000, due to reduced petrochemical demand. The
Mont Belvieu average rate per barrel increased for the nine months as a result
of reduced contract deliveries which generally carry lower rates.

         Other operating revenues increased $8.5 million during the nine months
ended September 30, 2001, compared with the corresponding period in 2000,
primarily due to contract petrochemical delivery revenue, which started during
the fourth quarter of 2000, increased propane deliveries from the Partnership's
Providence, Rhode Island, import facility in the first quarter of 2001, and
increased product sales.


                                       23
<PAGE>

RESULTS OF OPERATIONS - (CONTINUED)

         Costs and expenses increased $1.0 million for the nine months ended
September 30, 2001, compared with the corresponding period in 2000, primarily
due to a $2.2 million increase in operating fuel and power expense and a $1.0
million increase in depreciation and amortization expense, partially offset by a
$1.2 million decrease in operating, general and administrative expenses and a
$1.0 decrease in taxes - other than income taxes. Operating fuel and power
expense increased as a result of higher rates charged by electric utilities. The
increase in depreciation expense from the prior year period resulted from assets
placed in service during the fourth quarter of 2000. Operating, general and
administrative expenses decreased primarily as a result of a March 2000
write-off of project evaluation costs related to the proposed pipeline
construction from Beaumont, Texas, to Little Rock, Arkansas, decreased labor
costs and decreased throughput-related rental expense on volumes received
through the connection with Colonial Pipeline at Beaumont, Texas. The decrease
in taxes - other than income taxes resulted from actual property taxes being
lower than previously estimated.

         Interest expense decreased $0.1 million during the nine months ended
September 30, 2001, compared with the nine months ended September 30, 2000, as a
result of reduced interest rates on borrowings under the variable-rate credit
facilities, largely offset by increased borrowings to fund investment in
Centennial Pipeline. Interest capitalized decreased $2.0 million during the nine
months ended September 30, 2001, compared with the corresponding prior year
period, as a result of the completion of the petrochemical pipelines from Mont
Belvieu, Texas, to Port Arthur, Texas, during the fourth quarter of 2000.

         Net loss from equity investments totaled $0.6 million during the nine
months ended September 30, 2001 due to pre-operating expenses of Centennial.
Other income - net decreased $0.5 million during the nine months ended September
30, 2001, compared with the first nine months of 2000, due primarily to lower
interest income earned on cash investments.



                                       24
<PAGE>


RESULTS OF OPERATIONS - (CONTINUED)

UPSTREAM SEGMENT

         Margin of the Upstream Segment is calculated as revenues generated from
the sale of crude oil and lubrication oil, and transportation of crude oil and
NGLs, less the costs of purchases of crude oil and lubrication oil. Margin is a
more meaningful measure of financial performance than operating revenues and
operating expenses due to the significant fluctuations in revenues and expenses
caused by variations in the level of marketing activity and prices for products
marketed.

         Margin and volume information for 2001 and 2000 is presented below (in
thousands, except per barrel and per gallon amounts):

<Table>
<Caption>
                                                   QUARTER ENDED                           NINE MONTHS ENDED
                                                   SEPTEMBER 30,        PERCENTAGE            SEPTEMBER 30,           PERCENTAGE
                                              -----------------------   INCREASE       ------------------------        INCREASE
                                                2001         2000       (DECREASE)         2001          2000         (DECREASE)
                                              ---------    ---------   -----------     ---------      ---------       ---------
                                                               (IN THOUSANDS, EXCEPT AVERAGE RATE INFORMATION)
<S>                                           <C>          <C>             <C>         <C>            <C>                 <C>
Margins:
      Crude oil transportation ...........    $   9,119    $   6,769           35%     $  26,165      $  16,496           59%
      Crude oil marketing ................        3,625        3,863           (6)%        9,282          9,451           (2)%
      Crude oil terminaling ..............        2,831        1,849           53%         7,505          1,849          306%
      NGL transportation .................        5,412        1,802          200%        15,853          5,142          208%
      Lubrication oil sales ..............        1,030          922           12%         3,148          2,293           37%
      Seaway Crude Intercompany ..........        3,320           --           --          7,490             --           --
                                              ---------    ---------       ------      ---------      ---------        -----
        Total margin .....................    $  25,337    $  15,205           67%     $  69,443      $  35,231           97%
                                              =========    =========       ======      =========      =========        =====

Total barrels:
      Crude oil transportation ...........       19,795       13,016           52%        57,391         30,952           85%
      Crude oil marketing ................       37,135       23,424           59%       109,586         75,842           44%
      Crude oil terminaling ..............       30,130       22,000           37%        87,252         22,000          297%
      NGL transportation .................        5,828        1,422          310%        16,026          3,859          315%
Lubrication oil volume (total gallons) ...        2,257        1,999           13%         6,646          5,566           19%

Margin per barrel:
      Crude oil transportation ...........    $   0.461    $   0.520          (11)%     $  0.456      $   0.533          (14)%
      Crude oil marketing ................        0.098        0.165          (41)%        0.085          0.125          (32)%
      Crude oil terminaling ..............        0.094        0.084           12%         0.086          0.084            2%
      NGL transportation .................        0.929        1.267          (27)%        0.989          1.332          (26)%
Lubrication oil margin (per gallon) ......        0.456        0.461           (1)%        0.474          0.412           15%
</Table>


         Margin increased $10.1 million during the third quarter of 2001,
compared with the third quarter of 2000. NGL transportation margin increased
$3.6 million primarily due to the Panola system acquired on December 31, 2000.
Seaway Crude intercompany margin of $3.3 million was attributable to volumes
transported on Seaway on behalf of the Upstream Segment. Crude oil
transportation margin increased $2.4 million primarily due to volumes
transported on the pipeline assets acquired from Ultramar Diamond Shamrock
Corporation ("UDS") on March 1, 2001, and the full quarter impact of the assets
acquired from ARCO. Crude oil terminaling margin increased $1.0 million as a
result of higher pumpover volumes at Midland, Texas, and Cushing, Oklahoma.
These increases were partially offset by a $0.2 million decrease in crude oil
marketing margin compared with the prior quarter.

         Costs and expenses, excluding expenses associated with purchases of
crude oil and petroleum products, increased $12.3 million during the quarter
ended September 30, 2001, compared with the prior year quarter. The increase was
comprised of a $9.0 million increase in operating, general and administrative
expenses, a $2.2 million increase in taxes - other than income taxes, a $1.0
million increase in depreciation and amortization expense, and a


                                       25
<PAGE>


RESULTS OF OPERATIONS - (CONTINUED)


$0.1 million increase in operating fuel and power expense. The increase in
operating, general and administrative expenses was primarily attributable to a
$4.3 million increase in environmental costs, increased labor related costs and
increased general and administrative supplies and services expense. The increase
in taxes - other than income taxes, depreciation expense, and operating fuel and
power were primarily due to assets acquired from UDS.

         Equity earnings in Seaway Crude Pipeline Company for the quarter ended
September 30, 2001, decreased $3.4 million from the quarter ended September 30,
2000, as a result of lower third-party transportation volumes.

         Margin increased $34.2 million during the nine months ended September
30, 2001, compared with the corresponding period in 2000. NGL transportation
margin increased $10.7 million primarily due to the Panola system acquired on
December 31, 2000, partially offset by decreased volumes on the Dean and Wilcox
pipeline systems in South Texas. Crude oil transportation margin increased $9.7
million primarily due to a $5.6 million increase on the ARCO assets acquired in
July 2000 and higher volume on the Red River and South Texas systems, which
benefited from increased regional crude oil production and pipeline assets
acquired from UDS. Seaway Crude intercompany margin of $7.5 million was
attributable to volumes transported on Seaway on behalf of the Upstream Segment.
Crude oil terminaling margin contributed $5.7 million as a result of pumpover
volumes at Midland, Texas, and Cushing, Oklahoma, related to the ARCO assets
acquired in July 2000. Margin contributed from lubrication oil sales increased
$0.9 million primarily due to increased volumes and increased rates on the
margin realized per gallon. These increases were partially offset by a $0.2
million decrease in crude oil marketing margin compared with the prior
corresponding period.

         Costs and expenses, excluding expenses associated with purchases of
crude oil and petroleum products, increased $30.0 million during the nine months
ended September 30, 2001, compared with the corresponding prior year period,
comprised of a $20.0 million increase in operating, general and administrative
expenses, a $4.5 million increase in depreciation and amortization expense, a
$4.5 million increase in taxes - other than income taxes, and a $1.0 million
increase in operating fuel and power expense. The increase in operating, general
and administrative expenses was primarily attributable to operating expenses of
the acquired assets, $4.3 million of expense recorded in September 2001 for
environmental remediation, increased labor related costs and increased general
and administrative supplies and services expense. The increases in depreciation
and amortization expense, taxes - other than income taxes, and operating fuel
and power expense were primarily attributable to assets acquired.

         Net income of the Upstream Segment for the nine-month period ended
September 30, 2001, included $15.9 million of equity earnings in Seaway Crude
Pipeline Company, which was added to the Partnership's business on July 20,
2001, with the acquired ARCO assets.

         Other operating revenue of the Upstream Segment increased $0.9 million
and $6.6 million for the three-month and nine-month periods ended September 30,
2001, respectively, compared with the prior year periods, attributable to
revenue from documentation and other services to support customer's trading
activity at Midland, Texas, and Cushing, Oklahoma. Such revenues were added to
the Partnership's business on July 20, 2000, with the acquired ARCO assets.

         Interest expense increased $0.3 million and $14.5 million for the
three-month and nine-month periods ended September 30, 2001, respectively,
compared with the prior year periods, primarily due to interest expense on the
term loan and revolving credit facilities used to finance the acquisition of
acquired assets.



                                       26
<PAGE>


FINANCIAL CONDITION AND LIQUIDITY

         Net cash from operations for the nine months ended September 30, 2001,
totaled $113.5 million, comprised of $119.0 million of income before charges for
depreciation and amortization, partially offset by $5.5 million of cash used
for working capital changes. This compares with cash flows from operations of
$78.0 million for the corresponding period in 2000, comprised of $80.4 million
of income before charges for depreciation and amortization, and $2.4 million of
cash used for working capital changes. The decrease in cash from working capital
changes during the nine-month period ended September 30, 2001, as compared to
the corresponding period in 2000, resulted primarily from decreased accounts
payable and accrued expenses at September 30, 2001. Net cash from operations for
the nine months ended September 30, 2001 and 2000, included interest payments of
$52.0 million and $27.7 million, respectively.

         Cash flows used in investing activities during the first nine months of
2001 was comprised of $359.8 million for the purchase of Jonah Gas Gathering
Company on September 30, 2001, $62.0 million of capital expenditures, $34.3
million of cash contributions for the Partnership's interest in the Centennial
joint venture, and $20.0 million for the purchase of crude oil assets from UDS
on March 1, 2001. These uses of cash were partially offset by $3.2 million
received on matured cash investments and $1.3 million of cash received from the
sale of vehicles. Cash flows used in investing activities during the first nine
months of 2000 was primarily comprised of $322.6 million for the purchase of
assets from ARCO, $53.3 million of capital expenditures, $7.8 million for crude
oil systems purchased in North Texas, and $3.0 million of cash contributions for
the Partnership's initial interest in the Centennial joint venture. These
decreases were partially offset by $1.5 million of proceeds from investment
maturities.

         In August 2000, the Partnership announced the execution of definitive
agreements with CMS Energy Corporation and Marathon Ashland Petroleum LLC to
form Centennial. Centennial will own and operate an interstate refined petroleum
products pipeline extending from the upper Texas Gulf Coast to Illinois. Each
participant will own a one-third interest in Centennial. Centennial will build a
74-mile, 24-inch diameter pipeline connecting the Downstream Segment's facility
in Beaumont, Texas, with the start of an existing 720-mile, 26-inch diameter
pipeline extending from Longville, Louisiana, to Bourbon, Illinois. The pipeline
will intersect the Downstream Segment's existing mainline near Creal Springs,
Illinois, where a new two million barrel refined petroleum products storage
terminal will be built. The Partnership expects to contribute approximately $70
million for its one-third interest in Centennial. The Partnership expects to
fund its contribution through borrowings under its credit facilities. Centennial
is anticipated to commence operations in the first quarter of 2002.

         The Partnership estimates that capital expenditures, excluding
acquisitions, for 2001 will be approximately $97 million, which includes $3
million of capitalized interest. Approximately $49 million is expected to be
used to expand the Partnership's capacity to support the receipt connection
point with Centennial at Beaumont, Texas, and delivery location at Creal
Springs, Illinois. Approximately one-half of the remaining amount is expected to
be used for revenue-generating projects, with the remaining amount to be used
for life-cycle replacements and upgrading current facilities.

         On July 14, 2000, the Partnership entered into a $75 million term loan
and a $475 million revolving credit facility. On July 21, 2000, the Partnership
borrowed $75 million under the term loan and $340 million under the revolving
credit facility. The funds were used to finance the acquisition of the ARCO
assets (see Note 3. Acquisitions) and to refinance existing credit facilities,
other than the Senior Notes. The term loan was repaid from proceeds received
from the issuance of additional Limited Partner Units on October 25, 2000. On
April 6, 2001, the Partnership's $475 million revolving credit agreement was
amended to permit borrowings up to $500 million and to allow for letters of
credit up to $20 million. The term of the revised credit agreement was extended
to April 6, 2004. Additionally, on April 6, 2001, the Partnership entered into a
364-day, $200 million revolving credit agreement. The interest rate is based on
the Partnership's option of either the lender's base rate plus a spread, or
LIBOR plus a spread in effect at the time of the borrowings. The credit
agreements contain restrictive financial covenants that require the Partnership
to maintain a minimum level of partners' capital as well as maximum
debt-to-EBITDA (earnings before interest expense, income tax expense and
depreciation and amortization expense) and minimum


                                       27
<PAGE>

FINANCIAL CONDITION AND LIQUIDITY - (CONTINUED)

fixed charge coverage ratios. At September 30, 2001, $472 million was
outstanding under the revolving credit facility at a weighted average interest
rate of 4.8%.

         On July 21, 2000, the Partnership entered into a three year swap
agreement to hedge its exposure on the variable rate credit facilities. On April
6, 2001 the swap agreement was extended until April 6, 2004 to match the
maturity of the variable rate credit facility above. The swap agreement is based
on a notional amount of $250 million. Under the swap agreement, the Partnership
pays a fixed rate of interest of 6.955% and receives a floating rate based on a
three month USD LIBOR rate.

         During 2001, the Partnership executed treasury rate lock agreements
with a combined notional amount of $400 million to hedge its exposure to
increases in the treasury rate that will be used to establish the fixed interest
rate for the debt offering that is probable to occur in the fourth quarter of
2001. Under the treasury rate lock agreements, the Partnership pays a fixed rate
of interest, and receives a floating rate based on the three month treasury
rate. The treasury rate locks are designated as cash flow hedges, therefore, the
changes in fair value, to the extent the treasury rate locks are effective, are
recognized in other comprehensive income until the actual debt offering occurs.
Upon completion of the debt offering, the realized gain or loss on the treasury
rate locks will be amortized out of accumulated other comprehensive income into
interest expense over the life of the debt obligation. During April 2001, a
treasury lock with a notional amount of $200 million was terminated with a
realized gain of $1.1 million. The realized gain was recorded as a component of
accumulated other comprehensive income. As of September 30, 2001, a notional
amount of $200 million remained outstanding. The fair value of the outstanding
treasury rate locks was a loss of approximately $6.0 million at September 30,
2001.

         On October 4, 2001, the Partnership entered into an interest rate swap
agreement to hedge its exposure to changes in the fair value of its $210 million
principal amount of 7.51% fixed rate Senior Notes. The swap agreement has a
notional amount of $210 million and matures in January 2028 to match the
principal and maturity of the Senior Notes. Under the swap agreement, the
Partnership pays a floating rate based on a three month USD LIBOR rate, plus a
spread, and receives a fixed rate of interest of 7.51%.

         The Partnership paid the second quarter 2001 cash distribution of $25.5
million ($0.525 per Limited Partner Unit and Class B Unit) on August 6, 2001. On
October 17, 2001, the Partnership declared a cash distribution of $0.575 per
Limited Partner Unit and Class B Unit for the quarter ended September 30, 2001.
The distribution was paid on November 5, 2001 to Unitholders of record on
October 31, 2001.

OTHER MATTERS

         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 its operations 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, results of 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 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 is expected to 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


                                       28
<PAGE>

OTHER MATTERS - (CONTINUED)

Partnership has accrued $0.2 million at September 30, 2001 for future costs of
the remediation program for the Seymour terminal. In the opinion of the Company,
the completion of the remediation program will not have a material adverse
impact on the Partnership's financial condition, results of operations or
liquidity.

         The Partnership received a compliance order from the Louisiana
Department of Environmental Quality ("DEQ") during 1994 relative to potential
environmental contamination at the Partnership's Arcadia, Louisiana facility,
which may be attributable to the operations of the Partnership and adjacent
petroleum terminals of other companies. The Partnership and all adjacent
terminals have been assigned to the Groundwater Division of DEQ, in which a
consolidated plan will be developed. The Partnership has finalized a negotiated
Compliance Order with DEQ that will allow the Partnership to continue with a
remediation plan similar to the one previously agreed to by DEQ and implemented
by the Company. In the opinion of the General Partner, the completion of the
remediation program being proposed by the Partnership will not have a future
material adverse impact on the Partnership.

         On May 11, 1999, the Downstream Segment filed an application with the
FERC requesting permission to charge market-based rates for substantially all
refined products transportation tariffs. Along with its application for
market-based rates, the Downstream Segment filed a petition for waiver pending
the FERC's determination on its application for market-based rates of the
requirements that would otherwise have been imposed by the FERC's regulations
requiring the Downstream Segment to reduce its rates in conformity with the PPI
Index. On June 30, 1999, the FERC granted the waiver stating that the Downstream
Segment would be required to make refunds, with interest, of all amounts
collected under rates in excess of the PPI Index ceiling level after July 1,
1999, if the Downstream Segment's application for market-based rates was
ultimately denied.

         On July 31, 2000, the FERC issued an order granting the Downstream
Segment market-based rates in certain markets and set for hearing the Downstream
Segment's application for market-based rates in the Little Rock, Arkansas;
Shreveport-Arcadia, Louisiana; Cincinnati-Dayton, Ohio; and Memphis, Tennessee,
destination markets and the Shreveport, Louisiana, origin market. After the
matter was set for hearing, the Downstream Segment and the protesting shippers
entered into a settlement agreement resolving their respective differences. On
April 25, 2001, the FERC issued an order approving the offer of settlement. As a
result of the settlement, the Downstream Segment recognized approximately $1.7
million of previously deferred transportation revenue in the second quarter of
2001. Also, the Downstream Segment withdrew the application for market-based
rates to the Little Rock, Arkansas, destination market and the Arcadia,
Louisiana, destination in the Shreveport-Arcadia, Louisiana, destination market.
The Partnership has made appropriate refunds of approximately $1.0 million in
the third quarter of 2001.

         In July 2001, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 141, Business Combinations, and SFAS No. 142, Goodwill and Other
Intangible Assets. SFAS 141 requires that the purchase method of accounting be
used for all business combinations and specifies that certain acquired
intangible assets be reported apart from goodwill. SFAS 142 requires that
goodwill and intangible assets with indefinite useful lives no longer be
amortized, but instead tested for impairment at least annually. SFAS 142
requires that intangible assets with definite useful lives be amortized over
their respective estimated useful lives. The Partnership will adopt SFAS 141
immediately, and SFAS 142 effective January 1, 2002.

         At September 30, 2001, the Partnership had $24.8 million of unamortized
goodwill. Amortization expense related to goodwill was $0.1 million and $0.8
million for the year ended December 31, 2000 and the nine months ended September
30, 2001, respectively. The Partnership has not determined the impact of
adopting SFAS 142 at the date of this report, including whether any transitional
impairment losses will be required to be recognized as the cumulative effect of
a change in accounting principle.

         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


                                       29
<PAGE>


OTHER MATTERS - (CONTINUED)

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 2000 Annual Report on Form 10-K and other filings made
by the Partnership with the Securities and Exchange Commission.

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. Risk management policies have been established by the
Risk Management Committee to monitor and control these market risks. The Risk
Management Committee is comprised of senior executives of the Company.

         At September 30, 2001, the Downstream Segment 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"). At September 30, 2001, the estimated fair value of the Senior Notes was
approximately $377 million.

         From time to time, the Partnership has utilized and expects to continue
to utilize derivative financial instruments with respect to a portion of its
interest rate risks and its crude oil marketing activities to achieve a more
predictable cash flow by reducing its exposure to interest rate and crude oil
price fluctuations. These transactions generally are swaps and forwards and are
entered into with major financial institutions or commodities trading
institutions. Derivative financial instruments used in the Partnership's
Upstream Segment are intended to reduce the Partnership's exposure to
fluctuations in the market price of crude oil, while derivative financial
instruments related to the Partnership's interest rate risks are intended to
reduce the Partnership's exposure to increases in the benchmark interest rates
underlying the Partnership's variable rate revolving credit facility. Through
December 31, 2000, gains and losses from financial instruments used in the
Partnership's Upstream Segment have been recognized in revenues for the periods
to which the derivative financial instruments relate, and gains and losses from
its interest rate financial instruments have been recognized in interest expense
for the periods to which the derivative financial instrument relate.

         Adoption of SFAS 133 at January 1, 2001 resulted in the recognition of
$10.1 million of derivative liabilities, $4.1 million of which are included in
current liabilities and $6.0 million of which are included in other noncurrent
liabilities on the Partnership's balance sheet, and $10.1 million of hedging
losses included in accumulated other comprehensive loss, a component of
Partners' capital, as the cumulative effect of the change in accounting
principle. The hedging losses included in accumulated other comprehensive loss
will be transferred to earnings as the forecasted transactions actually occur.
Approximately $4.1 million of the loss included in accumulated other
comprehensive loss as of January 1, 2001 is anticipated to be transferred into
earnings over the next twelve months. The cumulative effect of the accounting
change had no effect on the Partnership's net income or its earnings per Unit
amounts for the nine months ended September 30, 2001. Amounts were determined as
of


                                       30
<PAGE>


QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS - (CONTINUED)


January 1, 2001 based on quoted market values, the Partnership's portfolio of
derivative instruments, and the Partnership's measurement of hedge
effectiveness.

         As of September 30, 2001, the Upstream Segment had open positions on
option contracts it had written for 100,000 barrels of crude oil and futures
contracts for the sale of 50,000 barrels of crude oil. During the nine months
ended September 30, 2001, a loss of $22,500 was recognized on such contracts.

         Also as of September 30, 2001, the Partnership had in place an interest
rate swap agreement to hedge its exposure to increases in the benchmark interest
rate underlying its variable rate revolving credit facilities. The swap
agreement is based on a notional amount of $250 million. Under the swap
agreement, the Partnership pays a fixed rate of interest of 6.955% and receives
a floating rate based on a three month USD LIBOR rate. The interest rate swap is
designated as a cash flow hedge, therefore, the changes in fair value, to the
extent the swap is effective, are recognized in other comprehensive income until
the hedged interest costs are recognized in earnings. During the nine month
period ended September 30, 2001, the Partnership recognized $4.0 million in
losses, included in interest expense, on the interest rate swap attributable to
interest costs occurring in 2001. No gain or loss from ineffectiveness was
required to be recognized. The fair value of the interest rate swap agreement
was a loss of approximately $22.1 million at September 30, 2001. Approximately
$10.1 million (inclusive of the $4.1 million related to the cumulative effect of
the accounting change not yet recognized) of such amount is anticipated to be
transferred into earnings over the next twelve months.

         During 2001, the Partnership executed treasury rate lock agreements
with a combined notional amount of $400 million to hedge its exposure to
increases in the treasury rate that will be used to establish the fixed interest
rate for the debt offering that is probable to occur in the fourth quarter of
2001. Under the treasury rate lock agreements, the Partnership pays a fixed rate
of interest, and receives a floating rate based on the three month treasury
rate. The treasury rate locks are designated as cash flow hedges, therefore, the
changes in fair value, to the extent the treasury rate locks are effective, are
recognized in other comprehensive income until the actual debt offering occurs.
Upon completion of the debt offering, the realized gain or loss on the treasury
rate locks will be amortized out of accumulated other comprehensive income into
interest expense over the life of the debt obligation. During April 2001, a
treasury lock with a notional amount of $200 million was terminated with a
realized gain of $1.1 million. The realized gain was recorded as a component of
accumulated other comprehensive income. As of September 30, 2001, a notional
amount of $200 million remained outstanding. The fair value of the outstanding
treasury rate locks was a loss of approximately $6.0 million at September 30,
2001.


                                       31
<PAGE>


                          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 3.5 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).

  3.6             Contribution, Assignment and Amendment Agreement among TEPPCO
                  Partners, L.P., TE Products Pipeline Company, Limited
                  Partnership, TCTM, L.P., Texas Eastern Products Pipeline
                  Company, LLC, and TEPPCO GP, Inc., dated July 26, 2001 (Filed
                  as Exhibit 3.6 to Form 10-Q of TEPPCO Partners, L.P.
                  (Commission File No. 1-10403) for the quarter ended June 30,
                  2001 and incorporated herein by reference).

  3.7*            Third Amended and Restated Agreement of Limited Partnership of
                  TEPPCO Partners, L.P., dated September 21, 2001.

  3.8*            Second Amended and Restated Agreement of Limited Partnership
                  of TE Products Pipeline Company, Limited Partnership, dated
                  September 21, 2001.

  3.9*            Amended and Restated Agreement of Limited Partnership of TCTM,
                  L.P., dated September 21, 2001.

  3.10*           Agreement of Limited Partnership of TEPPCO Midstream
                  Companies, L.P., dated September 24, 2001.

  4.1             Form of Certificate representing Limited Partner Units (Filed
                  as Exhibit 4.1 to the Registration Statement of TEPPCO
                  Partners, L.P. (Commission File No. 33-32203) and incorporated
                  herein by reference).

  4.2             Form of Indenture between TE Products Pipeline Company,
                  Limited Partnership and The Bank of New York, as Trustee,
                  dated as of January 27, 1998 (Filed as Exhibit 4.3 to TE
                  Products Pipeline Company, Limited Partnership's Registration
                  Statement on Form S-3 (Commission File No. 333-38473) and
                  incorporated herein by reference).

  4.3             Form of Certificate representing Class B Units (Filed as
                  Exhibit 4.3 to Form 10-K of TEPPCO Partners, L.P. (Commission
                  File No. 1-10403) for the year ended December 31, 1998 and
                  incorporated herein by reference).


                                       32
<PAGE>


EXHIBITS AND REPORTS ON FORM 8-K - (CONTINUED)


  10.1+           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).

  10.2+           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).

  10.3+           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).

  10.4+           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).

  10.5+           Duke Energy Corporation Executive Savings Plan (Filed as
                  Exhibit 10.7 to the Partnership's Form 10-K (Commission File
                  No. 1-10403) for the year ended December 31, 1999 and
                  incorporated herein by reference).

  10.6+           Duke Energy Corporation Executive Cash Balance Plan (Filed as
                  Exhibit 10.8 to the Partnership's Form 10-K (Commission File
                  No. 1-10403) for the year ended December 31, 1999 and
                  incorporated herein by reference).

  10.7+           Duke Energy Corporation Retirement Benefit Equalization Plan
                  (Filed as Exhibit 10.9 to the Partnership's Form 10-K
                  (Commission File No. 1-10403) for the year ended December 31,
                  1999 and incorporated herein by reference).

  10.8+           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).

  10.9+           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).

  10.10+          Texas Eastern Products Pipeline Company 1994 Long Term
                  Incentive Plan, Amendment 1, effective January 16, 1995 (Filed
                  as Exhibit 10.12 to Form 10-Q of TEPPCO Partners, L.P.
                  (Commission File No. 1-10403) for the quarter ended June 30,
                  1999 and incorporated herein by reference).

  10.11           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).

  10.12           Contribution Agreement between Duke Energy Transport and
                  Trading Company and TEPPCO Partners, L.P., dated October 15,
                  1998 (Filed as Exhibit 10.16 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).

  10.13           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 Exhibit 10.17 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).

  10.14           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 10.19 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).


                                       33
<PAGE>


EXHIBITS AND REPORTS ON FORM 8-K - (CONTINUED)


  10.15+          Form of Employment Agreement between the Company and Ernest P.
                  Hagan, Thomas R. Harper, David L. Langley, Charles H. Leonard
                  and James C. Ruth, dated December 1, 1998 (Filed as Exhibit
                  10.20 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).

  10.16           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).

  10.17           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).

  10.18           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).

  10.19+          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).

  10.20+          Form of Employment and Non-Compete Agreement between the
                  Company and J. Michael Cockrell effective January 1, 1999
                  (Filed as Exhibit 10.29 to Form 10-Q of TEPPCO Partners, L.P.
                  (Commission File No. 1-10403) for the quarter ended September
                  30, 1999 and incorporated herein by reference).

  10.21+          Texas Eastern Products Pipeline Company Non-employee Directors
                  Unit Accumulation Plan, effective April 1, 1999 (Filed as
                  Exhibit 10.30 to Form 10-Q of TEPPCO Partners, L.P.
                  (Commission File No. 1-10403) for the quarter ended September
                  30, 1999 and incorporated herein by reference).

  10.22+          Texas Eastern Products Pipeline Company Non-employee Directors
                  Deferred Compensation Plan, effective November 1, 1999 (Filed
                  as Exhibit 10.31 to Form 10-Q of TEPPCO Partners, L.P.
                  (Commission File No. 1-10403) for the quarter ended September
                  30, 1999 and incorporated herein by reference).

  10.23+          Texas Eastern Products Pipeline Company Phantom Unit Retention
                  Plan, effective August 25, 1999 (Filed as Exhibit 10.32 to
                  Form 10-Q of TEPPCO Partners, L.P. (Commission File No.
                  1-10403) for the quarter ended September 30, 1999 and
                  incorporated herein by reference).

  10.24           Credit Agreement between TEPPCO Partners, L.P., SunTrust Bank,
                  and Certain Lenders, dated July 14, 2000 (Filed as Exhibit
                  10.31 to Form 10-Q of TEPPCO Partners, L.P. (Commission File
                  No. 1-10403) for the quarter ended June 30, 2000 and
                  incorporated herein by reference).

  10.25           Amended and Restated Purchase Agreement By and Between
                  Atlantic Richfield Company and Texas Eastern Products Pipeline
                  Company With Respect to the Sale of ARCO Pipe Line Company,
                  dated as of May 10, 2000. (Filed as Exhibit 2.1 to Form 10-Q
                  of TEPPCO Partners, L.P. (Commission File No. 1-10403) for the
                  quarter ended March 31, 2000 and incorporated herein by
                  reference).

  10.26+          Texas Eastern Products Pipeline Company, LLC 2000 Long Term
                  Incentive Plan, Amendment and Restatement, effective January
                  1, 2000 (Filed as Exhibit 10.28 to Form 10-K of TEPPCO
                  Partners, L.P. (Commission File No. 1-10403) for the year
                  ended December 31, 2000 and incorporated herein by reference).


                                       34
<PAGE>
EXHIBITS AND REPORTS ON FORM 8-K - (CONTINUED)

  10.27+          TEPPCO Supplemental Benefit Plan, effective April 1, 2000
                  (Filed as Exhibit 10.29 to Form 10-K of TEPPCO Partners, L.P.
                  (Commission File No. 1-10403) for the year ended December 31,
                  2000 and incorporated herein by reference).

  10.28+          Employment Agreement with Barry R. Pearl (Filed as Exhibit
                  10.30 to Form 10-Q of TEPPCO Partners, L.P. (Commission File
                  No. 1-10403) for the quarter ended March 31, 2001 and
                  incorporated herein by reference).

  10.29           Amended and Restated Credit Agreement among TEPPCO Partners,
                  L. P. as Borrower, SunTrust Bank as Administrative Agent and
                  LC Issuing Bank, and Certain Lenders, dated as of April 6,
                  2001 ($500,000,000 Revolving Facility) (Filed as Exhibit 10.31
                  to Form 10-Q of TEPPCO Partners, L.P. (Commission File No.
                  1-10403) for the quarter ended March 31, 2001 and incorporated
                  herein by reference).

  10.30           Credit Agreement among TEPPCO Partners, L. P. as Borrower,
                  SunTrust Bank as Administrative Agent, and Certain Lenders,
                  dated as of April 6, 2001 ($200,000,000 Revolving Facility)
                  (Filed as Exhibit 10.32 to Form 10-Q of TEPPCO Partners, L.P.
                  (Commission File No. 1-10403) for the quarter ended March 31,
                  2001 and incorporated herein by reference).

  10.31*          Purchase and Sale Agreement By and Among Green River Pipeline,
                  LLC and McMurry Oil Company, Sellers, and TEPPCO Partners,
                  L.P., Buyer, dated as of September 7, 2000.

  10.32*          Credit Agreement Among TEPPCO Partners, L.P. as Borrower,
                  SunTrust Bank, as Administrative Agent and Certain Lenders,
                  dated as of September 28, 2001 ($400,000,000 Term Facility).

  10.33*          Amendment 1, dated as of September 28, 2001, to the Amended
                  and Restated Credit Agreement among TEPPCO Partners, L. P. as
                  Borrower, SunTrust Bank as Administrative Agent and LC Issuing
                  Bank, and Certain Lenders, dated as of April 6, 2001
                  ($500,000,000 Revolving Facility).

  10.34*          Amendment 1, dated as of September 28, 2001, to the Credit
                  Agreement among TEPPCO Partners, L. P. as Borrower, SunTrust
                  Bank as Administrative Agent, and Certain Lenders, dated as of
                  April 6, 2001 ($200,000,000 Revolving Facility).

  12.1*           Statement of Computation of Ratio of Earnings to Fixed
                  Charges.

  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).
----------

    *  Filed herewith.

    +  A management contract or compensation plan or arrangement.

(b)   Reports on Form 8-K filed during the quarter ended September 30, 2001:

                  A report on Form 8-K was filed on July 27, 2001, pursuant to
                  Item 5 and Item 7 of such form.



                                       35
<PAGE>

                                   SIGNATURES

                  Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrants have 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, LLC, as General Partner

                                               /s/ WILLIAM L. THACKER
                                               ----------------------
                                                   William L. Thacker
                                               Chief Executive Officer

                                               /s/ CHARLES H. LEONARD
                                               ----------------------
                                                 Charles H. Leonard
                                        Senior Vice President, Chief Financial
                                                Officer and Treasurer
Date:  November 8, 2001


                                       36
<PAGE>

                               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 3.5 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).

  3.6             Contribution, Assignment and Amendment Agreement among TEPPCO
                  Partners, L.P., TE Products Pipeline Company, Limited
                  Partnership, TCTM, L.P., Texas Eastern Products Pipeline
                  Company, LLC, and TEPPCO GP, Inc., dated July 26, 2001 (Filed
                  as Exhibit 3.6 to Form 10-Q of TEPPCO Partners, L.P.
                  (Commission File No. 1-10403) for the quarter ended June 30,
                  2001 and incorporated herein by reference).

  3.7*            Third Amended and Restated Agreement of Limited Partnership of
                  TEPPCO Partners, L.P., dated September 21, 2001.

  3.8*            Second Amended and Restated Agreement of Limited Partnership
                  of TE Products Pipeline Company, Limited Partnership, dated
                  September 21, 2001.

  3.9*            Amended and Restated Agreement of Limited Partnership of TCTM,
                  L.P., dated September 21, 2001.

  3.10*           Agreement of Limited Partnership of TEPPCO Midstream
                  Companies, L.P., dated September 24, 2001.

  4.1             Form of Certificate representing Limited Partner Units (Filed
                  as Exhibit 4.1 to the Registration Statement of TEPPCO
                  Partners, L.P. (Commission File No. 33-32203) and incorporated
                  herein by reference).

  4.2             Form of Indenture between TE Products Pipeline Company,
                  Limited Partnership and The Bank of New York, as Trustee,
                  dated as of January 27, 1998 (Filed as Exhibit 4.3 to TE
                  Products Pipeline Company, Limited Partnership's Registration
                  Statement on Form S-3 (Commission File No. 333-38473) and
                  incorporated herein by reference).

  4.3             Form of Certificate representing Class B Units (Filed as
                  Exhibit 4.3 to Form 10-K of TEPPCO Partners, L.P. (Commission
                  File No. 1-10403) for the year ended December 31, 1998 and
                  incorporated herein by reference).
</Table>



<PAGE>




<Table>
<Caption>
  EXHIBIT
  NUMBER          DESCRIPTION
  -------         -----------
<S>               <C>
  10.1+           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).

  10.2+           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).

  10.3+           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).

  10.4+           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).

  10.5+           Duke Energy Corporation Executive Savings Plan (Filed as
                  Exhibit 10.7 to the Partnership's Form 10-K (Commission File
                  No. 1-10403) for the year ended December 31, 1999 and
                  incorporated herein by reference).

  10.6+           Duke Energy Corporation Executive Cash Balance Plan (Filed as
                  Exhibit 10.8 to the Partnership's Form 10-K (Commission File
                  No. 1-10403) for the year ended December 31, 1999 and
                  incorporated herein by reference).

  10.7+           Duke Energy Corporation Retirement Benefit Equalization Plan
                  (Filed as Exhibit 10.9 to the Partnership's Form 10-K
                  (Commission File No. 1-10403) for the year ended December 31,
                  1999 and incorporated herein by reference).

  10.8+           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).

  10.9+           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).

  10.10+          Texas Eastern Products Pipeline Company 1994 Long Term
                  Incentive Plan, Amendment 1, effective January 16, 1995 (Filed
                  as Exhibit 10.12 to Form 10-Q of TEPPCO Partners, L.P.
                  (Commission File No. 1-10403) for the quarter ended June 30,
                  1999 and incorporated herein by reference).

  10.11           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).

  10.12           Contribution Agreement between Duke Energy Transport and
                  Trading Company and TEPPCO Partners, L.P., dated October 15,
                  1998 (Filed as Exhibit 10.16 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).

  10.13           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 Exhibit 10.17 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).

  10.14           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 10.19 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).
</Table>



<PAGE>




<Table>
<Caption>
  EXHIBIT
  NUMBER          DESCRIPTION
  -------         -----------
<S>               <C>
  10.15+          Form of Employment Agreement between the Company and Ernest P.
                  Hagan, Thomas R. Harper, David L. Langley, Charles H. Leonard
                  and James C. Ruth, dated December 1, 1998 (Filed as Exhibit
                  10.20 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).

  10.16           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).

  10.17           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).

  10.18           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).

  10.19+          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).

  10.20+          Form of Employment and Non-Compete Agreement between the
                  Company and J. Michael Cockrell effective January 1, 1999
                  (Filed as Exhibit 10.29 to Form 10-Q of TEPPCO Partners, L.P.
                  (Commission File No. 1-10403) for the quarter ended September
                  30, 1999 and incorporated herein by reference).

  10.21+          Texas Eastern Products Pipeline Company Non-employee Directors
                  Unit Accumulation Plan, effective April 1, 1999 (Filed as
                  Exhibit 10.30 to Form 10-Q of TEPPCO Partners, L.P.
                  (Commission File No. 1-10403) for the quarter ended September
                  30, 1999 and incorporated herein by reference).

  10.22+          Texas Eastern Products Pipeline Company Non-employee Directors
                  Deferred Compensation Plan, effective November 1, 1999 (Filed
                  as Exhibit 10.31 to Form 10-Q of TEPPCO Partners, L.P.
                  (Commission File No. 1-10403) for the quarter ended September
                  30, 1999 and incorporated herein by reference).

  10.23+          Texas Eastern Products Pipeline Company Phantom Unit Retention
                  Plan, effective August 25, 1999 (Filed as Exhibit 10.32 to
                  Form 10-Q of TEPPCO Partners, L.P. (Commission File No.
                  1-10403) for the quarter ended September 30, 1999 and
                  incorporated herein by reference).

  10.24           Credit Agreement between TEPPCO Partners, L.P., SunTrust Bank,
                  and Certain Lenders, dated July 14, 2000 (Filed as Exhibit
                  10.31 to Form 10-Q of TEPPCO Partners, L.P. (Commission File
                  No. 1-10403) for the quarter ended June 30, 2000 and
                  incorporated herein by reference).

  10.25           Amended and Restated Purchase Agreement By and Between
                  Atlantic Richfield Company and Texas Eastern Products Pipeline
                  Company With Respect to the Sale of ARCO Pipe Line Company,
                  dated as of May 10, 2000. (Filed as Exhibit 2.1 to Form 10-Q
                  of TEPPCO Partners, L.P. (Commission File No. 1-10403) for the
                  quarter ended March 31, 2000 and incorporated herein by
                  reference).

  10.26+          Texas Eastern Products Pipeline Company, LLC 2000 Long Term
                  Incentive Plan, Amendment and Restatement, effective January
                  1, 2000 (Filed as Exhibit 10.28 to Form 10-K of TEPPCO
                  Partners, L.P. (Commission File No. 1-10403) for the year
                  ended December 31, 2000 and incorporated herein by reference).
</Table>



<PAGE>


<Table>
<Caption>
  EXHIBIT
  NUMBER          DESCRIPTION
  -------         -----------
<S>               <C>
  10.27+          TEPPCO Supplemental Benefit Plan, effective April 1, 2000
                  (Filed as Exhibit 10.29 to Form 10-K of TEPPCO Partners, L.P.
                  (Commission File No. 1-10403) for the year ended December 31,
                  2000 and incorporated herein by reference).

  10.28+          Employment Agreement with Barry R. Pearl (Filed as Exhibit
                  10.30 to Form 10-Q of TEPPCO Partners, L.P. (Commission File
                  No. 1-10403) for the quarter ended March 31, 2001 and
                  incorporated herein by reference).

  10.29           Amended and Restated Credit Agreement among TEPPCO Partners,
                  L. P. as Borrower, SunTrust Bank as Administrative Agent and
                  LC Issuing Bank, and Certain Lenders, dated as of April 6,
                  2001 ($500,000,000 Revolving Facility) (Filed as Exhibit 10.31
                  to Form 10-Q of TEPPCO Partners, L.P. (Commission File No.
                  1-10403) for the quarter ended March 31, 2001 and incorporated
                  herein by reference).

  10.30           Credit Agreement among TEPPCO Partners, L. P. as Borrower,
                  SunTrust Bank as Administrative Agent, and Certain Lenders,
                  dated as of April 6, 2001 ($200,000,000 Revolving Facility)
                  (Filed as Exhibit 10.32 to Form 10-Q of TEPPCO Partners, L.P.
                  (Commission File No. 1-10403) for the quarter ended March 31,
                  2001 and incorporated herein by reference).

  10.31*          Purchase and Sale Agreement By and Among Green River Pipeline,
                  LLC and McMurry Oil Company, Sellers, and TEPPCO Partners,
                  L.P., Buyer, dated as of September 7, 2000.

  10.32*          Credit Agreement Among TEPPCO Partners, L.P. as Borrower,
                  SunTrust Bank, as Administrative Agent and Certain Lenders,
                  dated as of September 28, 2001 ($400,000,000 Term Facility).

  10.33*          Amendment 1, dated as of September 28, 2001, to the Amended
                  and Restated Credit Agreement among TEPPCO Partners, L. P. as
                  Borrower, SunTrust Bank as Administrative Agent and LC Issuing
                  Bank, and Certain Lenders, dated as of April 6, 2001
                  ($500,000,000 Revolving Facility).

  10.34*          Amendment 1, dated as of September 28, 2001, to the Credit
                  Agreement among TEPPCO Partners, L. P. as Borrower, SunTrust
                  Bank as Administrative Agent, and Certain Lenders, dated as of
                  April 6, 2001 ($200,000,000 Revolving Facility).

  12.1*           Statement of Computation of Ratio of Earnings to Fixed
                  Charges.

  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).
</Table>


----------

    *  Filed herewith.

    +  A management contract or compensation plan or arrangement.