<PAGE>   1
================================================================================


                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

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

                                       OR

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

                       FOR THE QUARTER ENDED JUNE 30, 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
                                             ---   ---



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<PAGE>   2
                          PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                              TEPPCO PARTNERS, L.P.

                           CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)

<Table>
<Caption>
                                                                JUNE 30,       DECEMBER 31,
                                                                  2001             2000
                                                              ------------     ------------
                                                               (UNAUDITED)
<S>                                                           <C>              <C>
                                     ASSETS
Current assets:
  Cash and cash equivalents ................................  $     12,801     $     27,096
  Accounts receivable, trade ...............................       306,574          303,394
  Inventories ..............................................        37,942           24,784
  Other ....................................................         9,651            8,123
                                                              ------------     ------------
     Total current assets ..................................       366,968          363,397
                                                              ------------     ------------
Property, plant and equipment, at cost (Net of accumulated
  depreciation and amortization of $269,154 and $251,165)...       982,707          949,705
Equity investments .........................................       262,333          241,648
Intangible assets ..........................................        46,632           38,388
Other assets ...............................................        36,514           29,672
                                                              ------------     ------------
     Total assets ..........................................  $  1,695,154     $  1,622,810
                                                              ============     ============

                        LIABILITIES AND PARTNERS' CAPITAL

Current liabilities:
  Accounts payable and accrued liabilities .................  $    292,371     $    293,720
  Accounts payable, general partner ........................         8,619            6,637
  Accrued interest .........................................        15,289           18,633
  Other accrued taxes ......................................        10,882           10,501
  Other ....................................................        33,530           28,780
                                                              ------------     ------------
     Total current liabilities .............................       360,691          358,271
                                                              ------------     ------------
Senior Notes ...............................................       389,799          389,784
Other long-term debt .......................................       438,000          446,000
Other liabilities and deferred credits .....................        11,282            3,991
Minority interest ..........................................         5,065            4,296
Redeemable Class B Units held by related party .............       106,969          105,411
Partners' capital:
  General partner's interest ...............................         6,160            1,824
  Limited partners' interests ..............................       381,906          313,233
  Accumulated other comprehensive loss .....................        (4,718)              --
                                                              ------------     ------------
     Total partners' capital ...............................       383,348          315,057
                                                              ------------     ------------
     Total liabilities and partners' capital ...............  $  1,695,154     $  1,622,810
                                                              ============     ============
</Table>

          See accompanying Notes to Consolidated Financial Statements.



                                       2
<PAGE>   3

                              TEPPCO PARTNERS, L.P.

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

<Table>
<Caption>
                                                     THREE MONTHS    THREE MONTHS     SIX MONTHS      SIX MONTHS
                                                        ENDED           ENDED           ENDED           ENDED
                                                       JUNE 30,        JUNE 30,        JUNE 30,        JUNE 30,
                                                         2001            2000            2001            2000
                                                     ------------    ------------    ------------    ------------
<S>                                                  <C>             <C>             <C>             <C>
Operating revenues:
  Sales of crude oil and petroleum products ......   $    978,803    $    689,643    $  1,686,284    $  1,372,428
  Transportation - Refined products ..............         51,406          32,685          77,587          60,715
  Transportation -  LPGs .........................         13,506          10,367          38,505          33,484
  Transportation - crude oil and NGLs ............         11,408           3,773          22,317           7,902
  Mont Belvieu operations ........................          2,997           2,883           5,894           7,354
  Other - net ....................................         15,562           8,353          28,330          16,513
                                                     ------------    ------------    ------------    ------------
    Total operating revenues .....................      1,073,682         747,704       1,858,917       1,498,396
                                                     ------------    ------------    ------------    ------------

Costs and expenses:
  Purchases of crude oil and petroleum products ..        965,919         682,891       1,664,495       1,360,304
  Operating, general and administrative ..........         29,955          25,334          57,905          49,568
  Operating fuel and power .......................         10,207           8,326          18,821          15,839
  Depreciation and amortization ..................         10,857           8,339          20,764          16,586
  Taxes - other than income taxes ................          3,675           2,663           7,557           5,181
                                                     ------------    ------------    ------------    ------------
    Total costs and expenses .....................      1,020,613         727,553       1,769,542       1,447,478
                                                     ------------    ------------    ------------    ------------

    Operating income .............................         53,069          20,151          89,375          50,918

Interest expense .................................        (15,392)         (8,548)        (31,686)        (16,982)
Interest capitalized .............................            590           1,255             935           2,265
Equity earnings ..................................          4,419              --           9,625              --
Other income - net ...............................            793             850           1,227           1,632
                                                     ------------    ------------    ------------    ------------
    Income before minority interest ..............         43,479          13,708          69,476          37,833
Minority interest ................................           (441)           (138)           (703)           (382)
                                                     ------------    ------------    ------------    ------------

    Net income ...................................   $     43,038    $     13,570    $     68,773    $     37,451
                                                     ============    ============    ============    ============

Net Income Allocation:
Limited Partner Unitholders ......................   $     31,311    $      9,963    $     49,922    $     27,496
Class B Unitholder ...............................          3,478           1,346           5,670           3,714
General Partner ..................................          8,249           2,261          13,181           6,241
                                                     ------------    ------------    ------------    ------------
    Total net income allocated ...................   $     43,038    $     13,570    $     68,773    $     37,451
                                                     ============    ============    ============    ============

Basic net income per Limited Partner and
      Class B Unit ...............................   $       0.90    $       0.35    $       1.45    $       0.95
                                                     ============    ============    ============    ============

Diluted net income per Limited Partner
      and Class B Unit ...........................   $       0.89    $       0.35    $       1.45    $       0.95
                                                     ============    ============    ============    ============

Weighted average Limited Partner and Class B
   Units outstanding .............................         38,867          32,917          38,380          32,917
</Table>

          See accompanying Notes to Consolidated Financial Statements.



                                       3
<PAGE>   4

                              TEPPCO PARTNERS, L.P.

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

<Table>
<Caption>
                                                                       SIX MONTHS    SIX MONTHS
                                                                          ENDED         ENDED
                                                                        JUNE 30,      JUNE 30,
                                                                          2001          2000
                                                                       ----------    ----------
<S>                                                                    <C>           <C>
Cash flows from operating activities:
  Net income .......................................................   $   68,773    $   37,451
  Depreciation and amortization ....................................       20,764        16,586
  Earnings in equity investments, net of distributions .............        4,457           (95)
  Noncash portion of interest expense ..............................        1,356           177
  Increase in accounts receivable, trade ...........................       (3,843)      (28,580)
  Decrease (increase) in inventories ...............................      (13,158)        6,027
  Decrease (increase) in other current assets ......................         (843)        1,044
  Increase (decrease) in accounts payable and accrued expenses .....      (13,515)       32,574
  Other ............................................................       (2,459)         (703)
                                                                       ----------    ----------
    Net cash provided by operating activities ......................       61,532        64,481
                                                                       ----------    ----------

Cash flows from investing activities:
  Proceeds from cash investments ...................................        3,236         1,475
  Purchases of cash investments ....................................           --        (2,000)
  Purchase of crude oil assets .....................................      (20,000)           --
  Proceeds from the sale of assets .................................        1,300            --
  Investment in Centennial Pipeline Company ........................      (25,142)           --
  Capital expenditures .............................................      (33,398)      (39,147)
                                                                       ----------    ----------
    Net cash used in investing activities ..........................      (74,004)      (39,672)
                                                                       ----------    ----------

Cash flows from financing activities:
  Proceeds from term loan and revolving credit facility ............       33,000        20,000
  Repayment on revolving credit facility ...........................      (41,000)           --
  Proceeds form the issuance of Limited Partner Units, net .........       54,588            --
  General Partner contributions ....................................        1,114            --
  Distributions ....................................................      (49,524)      (38,256)
                                                                       ----------    ----------
    Net cash used in financing activities ..........................       (1,822)      (18,256)
                                                                       ----------    ----------

Net increase (decrease) in cash and cash equivalents ...............      (14,294)        6,553

Cash and cash equivalents at beginning of period ...................       27,095        32,593
                                                                       ----------    ----------
Cash and cash equivalents at end of period .........................   $   12,801    $   39,146
                                                                       ==========    ==========

SUPPLEMENTAL DISCLOSURE OF CASH FLOWS:
  Interest paid during the period (net of capitalized interest) ....   $   32,230    $   14,090
                                                                       ==========    ==========
</Table>

          See accompanying Notes to Consolidated Financial Statements.



                                       4
<PAGE>   5

                              TEPPCO PARTNERS, L.P.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 1.  ORGANIZATION AND BASIS OF PRESENTATION

         TEPPCO Partners, L.P. (the "Partnership"), a Delaware limited
partnership, was formed in March 1990. The Partnership operates through TE
Products Pipeline Company, Limited Partnership (the "Downstream Segment") and
TCTM, L.P. (the "Upstream Segment"). Collectively the Downstream Segment and the
Upstream Segment are referred to as "the Operating Partnerships." As of June 30,
2001, the Partnership owned a 99% interest as the sole limited partner in both
the Downstream Segment and Upstream Segment.

         Texas Eastern Products Pipeline Company, LLC (the "Company" or "General
Partner"), a Delaware limited liability company, serves as the general partner
of the Partnership with a 2% general partner interest. 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.

         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 to 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.
References herein to the "General Partner" refer to the Company prior to the
restructuring and to TEPPCO GP thereafter.

         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 and TCTM, L.P. (the "Partnership Agreements"). The General Partner
is reimbursed by the Partnership for all reasonable direct and indirect expenses
incurred in managing the Partnership.

         The accompanying unaudited consolidated financial statements reflect
all adjustments, which are, in the opinion of management, of a normal and
recurring nature and necessary for a fair statement of the financial position of
the Partnership as of June 30, 2001, and the results of operations and cash
flows for the periods presented. The results of operations for the six months
ended June 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 two segments: refined products and
liquefied petroleum gases ("LPGs") transportation (Downstream Segment); and
crude oil and natural gas liquids ("NGLs") transportation and marketing
(Upstream 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
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, 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 38.4



                                       5
<PAGE>   6

                              TEPPCO PARTNERS, L.P.

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


million Units for the six months ended June 30, 2001, and 32.9 million Units for
the six months ended June 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 $13.2 million (representing 19.17%) and $6.2
million (representing 16.66%) of net income for the six months ended June 30,
2001, and 2000, respectively. The General Partner's percentage interest in net
income increased for the six months ended June 30, 2001, compared to the
corresponding period of 2000, as a result of the increased quarterly
distribution to $0.525 per Unit from $0.500 per Unit in the third quarter of
2000.

         Diluted net income per Unit is similar to the computation of basic net
income per Unit above, except that the denominator was increased to include the
dilutive effect of outstanding Unit options by application of the treasury stock
method. For the quarters ended June 30, 2001 and 2000, the denominator was
increased by 44,559 Units and 19,746 Units, respectively. For the six months
ended June 30, 2001 and 2000, the denominator was increased by 36,021 Units and
14,333 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. This statement establishes 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 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 six months ended June 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



                                       6
<PAGE>   7

                              TEPPCO PARTNERS, L.P.

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


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.

         As of June 30, 2001, the Upstream Segment had open positions on
speculative option and futures contracts. During the six months ended June 30,
2001, a gain of $3,500 was recognized on such contracts.

         Also as of June 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 six month period ended
June 30, 2001, the Partnership recognized $2.2 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 $13.2 million at June 30, 2001. Approximately $4.8 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 third 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 June 30, 2001, a notional amount
of $200 million remained outstanding. The fair value of the outstanding treasury
rate locks was a gain of approximately $7.4 million at June 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 will adopt SFAS 141
immediately, and SFAS 142 effective January 1, 2002.

         At June 30, 2001, the Partnership had $14.6 million of unamortized
goodwill. Amortization expense related to goodwill was $0.1 million and $0.6
million for the year ended December 31, 2000 and the six months ended June 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>   8
                              TEPPCO PARTNERS, L.P.

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


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.
The purchase 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 statements of income from July 20, 2000.

         The following table presents the unaudited pro forma results of the
Partnership as though the acquisition of ARCO occurred at the beginning of 2000
(in thousands, except per Unit amounts).

<Table>
<Caption>
                                                 QUARTER ENDED        SIX MONTHS
                                                    JUNE 30,        ENDED JUNE 30,
                                                      2000               2000
                                                ----------------   ----------------
<S>                                             <C>                <C>
Revenues ....................................   $        754,922   $      1,513,119
Net Income ..................................             12,779             35,081
Basic and diluted net income per Limited
    Partner and Class B Unit ................   $           0.33   $           0.89
</Table>

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>
                                   JUNE 30,     DECEMBER 31,
                                     2001           2000
                                 ------------   ------------
<S>                              <C>            <C>
Crude oil ....................   $     26,285   $     14,635
Gasolines ....................            929          3,795
Propane ......................            726             --
Butanes ......................          1,870            267
Fuel oil .....................            203             82
Other products ...............          4,003          2,693
Materials and supplies .......          3,926          3,312
                                 ------------   ------------
          Total ..............   $     37,942   $     24,784
                                 ============   ============
</Table>

         The costs of inventories did not exceed market values at June 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
ownership interest in Seaway on July 20, 2000 (see Note 3. Acquisitions). The
Seaway Crude Pipeline Company Partnership Agreement provides for varying
participation


                                       8
<PAGE>   9

                              TEPPCO PARTNERS, L.P.

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


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 until May 2006, the Upstream Segment receives 60% of
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 six
months ended June 30, 2001 is presented below (in thousands):

<Table>
<S>                                                                                  <C>
             Current assets................................................          $  36,610
             Non current assets............................................            279,439
             Current liabilities...........................................              6,005
             Partners' capital.............................................            310,044
             Revenues......................................................             35,315
             Net income....................................................             16,193
</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 will 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.

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 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 June 30, 2001, $438 million was outstanding under the revolving credit
facility at a weighted average interest rate of 4.9%.



                                       9
<PAGE>   10

                              TEPPCO PARTNERS, L.P.

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


         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.

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 on the portion that
cash distributions on a per Unit basis exceed certain target thresholds as
follows:


<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 six month periods ended June 30, 2001 and 2000 (in thousands, except per
Unit amounts).

<Table>
<Caption>
                                                         SIX MONTHS ENDED JUNE 30,
                                                        ---------------------------
                                                          2001               2000
                                                        --------           --------
<S>                                                     <C>                <C>
Limited Partner Units ...............................   $ 35,516           $ 28,275
1% General Partner Interest .........................        400                324
General Partner Incentive ...........................      8,996              5,452
                                                        --------           --------
      Total Partners' Capital Cash Distributions ....     44,912             34,051
Class B Units .......................................      4,112              3,819
Minority Interest ...................................        500                386
                                                        --------           --------
      Total Cash Distributions Paid .................   $ 49,524           $ 38,256
                                                        ========           ========


Total Cash Distributions Paid Per Unit ..............   $  1.050           $  0.975
                                                        ========           ========
</Table>

         On July 20, 2001, the Partnership declared a cash distribution of
$0.525 per Limited Partner Unit and Class B Unit for the quarter ended June 30,
2001. The distribution was paid on August 6, 2001, to Unitholders of record on
July 31, 2001.

NOTE 8. SEGMENT DATA

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



                                       10
<PAGE>   11

                              TEPPCO PARTNERS, L.P.

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


         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. 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 completed its acquisition of 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 table below includes interim financial information by business
segment for the interim periods ended June 30, 2001 and 2000 (in thousands):



                                       11
<PAGE>   12

                              TEPPCO PARTNERS, L.P.

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


<Table>
<Caption>
                                           THREE MONTHS ENDED JUNE 30, 2001               THREE MONTHS ENDED JUNE 30, 2000
                                    --------------------------------------------    --------------------------------------------
                                     DOWNSTREAM       UPSTREAM                       DOWNSTREAM       UPSTREAM
                                       SEGMENT        SEGMENT       CONSOLIDATED      SEGMENT         SEGMENT       CONSOLIDATED
                                    ------------    ------------    ------------    ------------    ------------    ------------
<S>                                 <C>             <C>             <C>             <C>             <C>             <C>
Unaffiliated revenues ...........   $     80,458    $    993,224    $  1,073,682    $     54,288    $    693,416    $    747,704
Operating expenses, including
      power .....................         30,755         979,001       1,009,756          30,215         688,999         719,214
Depreciation and amortization
      expense ...................          7,207           3,650          10,857           6,874           1,465           8,339
                                    ------------    ------------    ------------    ------------    ------------    ------------
      Operating income ..........         42,496          10,573          53,069          17,199           2,952          20,151
Interest expense, net ...........         (8,027)         (6,775)        (14,802)         (7,167)           (126)         (7,293)
Equity earnings .................           (339)          4,758           4,419              --              --              --
Other income, net ...............             57             295             352             573             139             712
                                    ------------    ------------    ------------    ------------    ------------    ------------
      Net income ................   $     34,187    $      8,851    $     43,038    $     10,605    $      2,965    $     13,570
                                    ============    ============    ============    ============    ============    ============
</Table>

<Table>
<Caption>
                                           SIX MONTHS ENDED JUNE 30, 2001                 SIX MONTHS ENDED JUNE 30, 2000
                                    --------------------------------------------    --------------------------------------------
                                     DOWNSTREAM       UPSTREAM                       DOWNSTREAM       UPSTREAM
                                      SEGMENT         SEGMENT       CONSOLIDATED      SEGMENT         SEGMENT       CONSOLIDATED
                                    ------------    ------------    ------------    ------------    ------------    ------------
<S>                                 <C>             <C>             <C>             <C>             <C>             <C>
Unaffiliated revenues ...........   $    144,563    $  1,714,354    $  1,858,917    $    118,066    $  1,380,330    $  1,498,396
Operating expenses, including
      power .....................         58,321       1,690,457       1,748,778          58,872       1,372,020       1,430,892
Depreciation and amortization
      expense ...................         14,384           6,380          20,764          13,657           2,929          16,586
                                    ------------    ------------    ------------    ------------    ------------    ------------
      Operating income ..........         71,858          17,517          89,375          45,537           5,381          50,918
Interest expense, net ...........        (16,362)        (14,389)        (30,751)        (14,477)           (240)        (14,717)
Equity earnings .................           (339)          9,964           9,625              --              --              --
Other income, net ...............            169             355             524             966             284           1,250
                                    ------------    ------------    ------------    ------------    ------------    ------------
      Net income ................   $     55,326    $     13,447    $     68,773    $     32,026    $      5,425    $     37,451
                                    ============    ============    ============    ============    ============    ============
</Table>

<Table>
<Caption>
                                                       AS OF JUNE 30, 2001
                                    ---------------------------------------------------------
                                     DOWNSTREAM      UPSTREAM      PARTNERSHIP
                                      SEGMENT        SEGMENT        AND OTHER    CONSOLIDATED
                                    ------------   ------------   ------------   ------------
<S>                                 <C>            <C>            <C>            <C>
Total assets ....................   $    778,313   $    910,190   $      6,651   $  1,695,154
Accounts receivable, trade ......         25,805        280,769             --        306,574
Accounts payable and accrued
      liabilities ...............   $     10,855   $    281,516   $         --   $    292,371
</Table>

<Table>
<Caption>
                                                       AS OF JUNE 30, 2000
                                    ----------------------------------------------------------
                                     DOWNSTREAM      UPSTREAM     PARTNERSHIP
                                       SEGMENT       SEGMENT       AND OTHER      CONSOLIDATED
                                    ------------   ------------   ------------    ------------
<S>                                 <C>            <C>            <C>             <C>
Total assets ....................   $    748,412   $    347,841   $     (2,354)   $  1,093,899
Accounts receivable, trade ......         20,369        213,977             --         234,346
Accounts payable and accrued
      liabilities ...............   $      9,984   $    221,873   $         --    $    231,857
</Table>



                                       12
<PAGE>   13

                              TEPPCO PARTNERS, L.P.

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


NOTE 9. 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 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 on-site and off-site groundwater contamination
attributable to the Partnership's operations at the Seymour, Indiana, terminal.
A Feasibility Study, which includes the Partnership's proposed remediation
program, has been approved by IDEM. IDEM 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 $0.4 million at June 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.



                                       13
<PAGE>   14

                              TEPPCO PARTNERS, L.P.

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


         On October 16, 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 relates to Atlantic
Richfield Company's 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 has accrued the
amount of the settlement as an adjustment to the purchase price of ARCO.

         Substantially all of the petroleum products transported and stored by
the Partnership are owned by the Partnership's customers. At June 30, 2001, the
Partnership had approximately 20.9 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 six months ended June 30, 2001 (in thousands).

<Table>
<S>                                                  <C>
Net income .......................................   $  68,773
Cumulative effect attributable to adoption of
     SFAS 133 (see Note 2. New Accounting
     Pronouncements) .............................     (10,103)
Hedge accounting for derivative instruments ......       5,385
                                                     ---------
    Total comprehensive income ...................   $  64,055
                                                     =========
</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 gain on cash flow hedges .....................      3,142
Reclassification adjustments .....................      2,243
                                                     --------
Balance at June 30, 2001 .........................   $ (4,718)
                                                     ========
</Table>

NOTE 11. SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION

         In connection with the Partnership's filing of a shelf registration
statement on Form S-3 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.



                                       14
<PAGE>   15

                              TEPPCO PARTNERS, L.P.

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


<Table>
<Caption>
                                                                                                                         TEPPCO
                                                    TEPPCO         GUARANTOR      NON-GUARANTOR    CONSOLIDATING     PARTNERS, L.P.
JUNE  30, 2001                                  PARTNERS, L.P.    SUBSIDIARIES     SUBSIDIARIES     ADJUSTMENTS       CONSOLIDATED
--------------                                  --------------   --------------   --------------   --------------    --------------
                                                                                  (IN THOUSANDS)
<S>                                             <C>              <C>              <C>              <C>               <C>
Assets
   Current assets ...........................   $        2,740   $       40,769   $      324,296   $         (837)   $      366,968
   Property, plant and equipment - net ......               --          653,929          328,778               --           982,707
   Equity investments .......................          494,996          284,373          232,020         (749,056)          262,333
   Intercompany notes receivable ............          435,191               --               --         (435,191)               --
   Other assets .............................            5,543           13,966           62,884              753            83,146
                                                --------------   --------------   --------------   --------------    --------------
      Total assets ..........................   $      938,470   $      993,037   $      947,978   $   (1,184,331)   $    1,695,154
                                                ==============   ==============   ==============   ==============    ==============
 Liabilities and partners' capital
   Current liabilities ......................   $        4,355   $       45,370   $      315,685   $       (4,719)   $      360,691
   Long term debt ...........................          438,000          389,799               --               --           827,799
   Intercompany notes payable ...............               --           54,960          380,231         (435,191)               --
   Other long term liabilities and
     minority interest ......................               --            2,853               --           13,494            16,347
   Redeemable Class B Units held by
     related party ..........................               --               --               --          106,969           106,969
   Total partners' capital ..................          496,115          500,055          252,062         (864,884)          383,348
                                                --------------   --------------   --------------   --------------    --------------
         Total liabilities and partners'
           capital ..........................   $      938,470   $      993,037   $      947,978   $   (1,184,331)   $    1,695,154
                                                ==============   ==============   ==============   ==============    ==============
</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>



                                       15
<PAGE>   16

                              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 JUNE 30, 2001               PARTNERS, L.P.    SUBSIDIARIES     SUBSIDIARIES     ADJUSTMENTS      CONSOLIDATED
--------------------------------               --------------   --------------   --------------   --------------   --------------
                                                                                 (IN THOUSANDS)
<S>                                            <C>              <C>              <C>              <C>              <C>
Operating revenues ..........................  $           --   $       78,546   $      995,136   $           --   $    1,073,682
Costs and expenses ..........................              --           37,233          983,380               --        1,020,613
                                               --------------   --------------   --------------   --------------   --------------
  Operating income ..........................              --           41,313           11,756               --           53,069
                                               --------------   --------------   --------------   --------------   --------------
Interest expense - net ......................          (8,431)          (7,355)          (7,447)           8,431          (14,802)
Equity earnings .............................          43,038            9,132            4,758          (52,509)           4,419
Other income - net ..........................           8,431              389              404           (8,431)             793
                                               --------------   --------------   --------------   --------------   --------------
  Income before minority interest ...........          43,038           43,479            9,471          (52,509)          43,479
Minority interest ...........................              --               --               --             (441)            (441)
                                               --------------   --------------   --------------   --------------   --------------
  Net income ................................  $       43,038   $       43,479   $        9,471   $      (52,950)  $       43,038
                                               ==============   ==============   ==============   ==============   ==============
</Table>


<Table>
<Caption>
                                                                                                                      TEPPCO
                                                   TEPPCO        GUARANTOR      NON-GUARANTOR    CONSOLIDATING    PARTNERS, L.P.
THREE MONTHS ENDED JUNE 30, 2000               PARTNERS, L.P.   SUBSIDIARIES     SUBSIDIARIES     ADJUSTMENTS      CONSOLIDATED
--------------------------------               --------------  --------------   --------------   --------------   --------------
                                                                                (IN THOUSANDS)
<S>                                            <C>              <C>              <C>              <C>              <C>
Operating revenues ..........................  $           --  $       52,368   $      695,336   $           --   $      747,704
Costs and expenses ..........................              --          36,364          691,189               --          727,553
                                               --------------  --------------   --------------   --------------   --------------
  Operating income ..........................              --          16,004            4,147               --           20,151
                                               --------------  --------------   --------------   --------------   --------------
Interest expense - net ......................              --          (6,537)            (756)              --           (7,293)
Equity earnings .............................          13,570           3,592               --          (17,162)              --
Other income - net ..........................              --             649              201               --              850
                                               --------------  --------------   --------------   --------------   --------------
  Income before minority interest ...........          13,570          13,708            3,592          (17,162)          13,708
Minority interest ...........................              --              --               --             (138)            (138)
                                               --------------  --------------   --------------   --------------   --------------
  Net income ................................  $       13,570  $       13,708   $        3,592   $      (17,300)  $       13,570
                                               ==============  ==============   ==============   ==============   ==============
</Table>


<Table>
<Caption>
                                                                                                                       TEPPCO
                                                   TEPPCO         GUARANTOR      NON-GUARANTOR    CONSOLIDATING    PARTNERS, L.P.
SIX MONTHS ENDED JUNE 30, 2001                 PARTNERS, L.P.    SUBSIDIARIES     SUBSIDIARIES     ADJUSTMENTS      CONSOLIDATED
------------------------------                 --------------   --------------   --------------   --------------   --------------
                                                                                 (IN THOUSANDS)
<S>                                            <C>              <C>              <C>              <C>              <C>
Operating revenues ..........................  $           --   $      140,847   $    1,718,070   $           --   $    1,858,917
Costs and expenses ..........................              --           71,253        1,698,289               --        1,769,542
                                               --------------   --------------   --------------   --------------   --------------
  Operating income ..........................              --           69,594           19,781               --           89,375
                                               --------------   --------------   --------------   --------------   --------------
Interest expense - net ......................         (17,803)         (14,979)         (15,772)          17,803          (30,751)
Equity earnings .............................          68,773           14,180            9,964          (83,292)           9,625
Other income - net ..........................          17,803              681              546          (17,803)           1,227
                                               --------------   --------------   --------------   --------------   --------------
  Income before minority interest ...........          68,773           69,476           14,519          (83,292)          69,476
Minority interest ...........................              --               --               --             (703)            (703)
                                               --------------   --------------   --------------   --------------   --------------
  Net income ................................  $       68,773   $       69,476   $       14,519   $      (83,995)  $       68,773
                                               ==============   ==============   ==============   ==============   ==============
</Table>



                                       16
<PAGE>   17

                              TEPPCO PARTNERS, L.P.

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


<Table>
<Caption>
                                                                                                                      TEPPCO
                                                   TEPPCO        GUARANTOR      NON-GUARANTOR    CONSOLIDATING    PARTNERS, L.P.
SIX MONTHS ENDED JUNE 30, 2000                 PARTNERS, L.P.   SUBSIDIARIES     SUBSIDIARIES     ADJUSTMENTS      CONSOLIDATED
------------------------------                 --------------  --------------   --------------   --------------   --------------
                                                                                (IN THOUSANDS)
<S>                                            <C>              <C>              <C>              <C>              <C>
Operating revenues ..........................  $           --  $      114,323   $    1,384,073   $           --   $    1,498,396
Costs and expenses ..........................              --          71,084        1,376,394               --        1,447,478
                                               --------------  --------------   --------------   --------------   --------------
  Operating income ..........................              --          43,239            7,679               --           50,918
                                               --------------  --------------   --------------   --------------   --------------
Interest expense - net ......................              --         (13,216)          (1,501)              --          (14,717)
Equity earnings .............................          37,451           6,581               --          (44,032)              --
Other income - net ..........................              --           1,229              403               --            1,632
                                               --------------  --------------   --------------   --------------   --------------
  Income before minority interest ...........          37,451          37,833            6,581          (44,032)          37,833
Minority interest ...........................              --              --               --             (382)            (382)
                                               --------------  --------------   --------------   --------------   --------------
  Net income ................................  $       37,451  $       37,833   $        6,581   $      (44,414)  $       37,451
                                               ==============  ==============   ==============   ==============   ==============
</Table>


<Table>
<Caption>
                                                                                                                       TEPPCO
                                                   TEPPCO         GUARANTOR      NON-GUARANTOR    CONSOLIDATING    PARTNERS, L.P.
SIX MONTHS ENDED JUNE 30, 2001                 PARTNERS, L.P.    SUBSIDIARIES     SUBSIDIARIES     ADJUSTMENTS      CONSOLIDATED
------------------------------                 --------------   --------------   --------------   --------------   --------------
                                                                                 (IN THOUSANDS)
<S>                                            <C>              <C>              <C>              <C>              <C>
Cash flows from operating activities
  Net Income ................................  $       68,773   $       69,476   $       14,518   $      (83,994)  $       68,773
    Adjustments to reconcile net income to
     net cash provided by operating
     activities:
      Depreciation and amortization .........              --           13,376            7,388               --           20,764
      Equity earnings, net of
        distributions .......................         (19,750)           1,279            4,212           18,716            4,457
      Changes in assets and liabilities
         and other ..........................               1           (1,792)         (31,373)             702          (32,462)
                                               --------------   --------------   --------------   --------------   --------------
Net cash provided by operating activities ...          49,024           82,339           (5,255)         (64,576)          61,532
                                               --------------   --------------   --------------   --------------   --------------


Cash flows from investing activities ........         (47,139)         (48,554)         (25,450)          47,139          (74,004)

Cash flows from financing activities ........          (1,885)         (42,951)          25,577           17,437           (1,822)
                                               --------------   --------------   --------------   --------------   --------------

Net decrease in cash and cash equivalents ...              --           (9,166)          (5,128)              --          (14,294)
Cash and cash equivalents at beginning of
  period ....................................              --            9,166           17,929               --           27,095
                                               --------------   --------------   --------------   --------------   --------------
Cash and cash equivalents at end of period ..  $           --   $           --   $       12,801   $           --   $       12,801
                                               ==============   ==============   ==============   ==============   ==============
</Table>



                                       17
<PAGE>   18

                              TEPPCO PARTNERS, L.P.

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


<Table>
<Caption>
                                                                                                                       TEPPCO
                                                   TEPPCO         GUARANTOR      NON-GUARANTOR    CONSOLIDATING    PARTNERS, L.P.
SIX MONTHS ENDED JUNE 30, 2000                 PARTNERS, L.P.    SUBSIDIARIES     SUBSIDIARIES     ADJUSTMENTS      CONSOLIDATED
------------------------------                 --------------   --------------   --------------   --------------   --------------
                                                                                 (IN THOUSANDS)
<S>                                            <C>              <C>              <C>              <C>              <C>
Cash flows from operating activities

  Net Income ................................  $       37,451   $       37,833   $        6,581   $      (44,414)  $       37,451
    Adjustments to reconcile net income to
     net cash provided by operating
     activities:
      Depreciation and amortization .........              --           12,649            3,937               --           16,586
      Equity earnings, net of
        distributions .......................             419            2,876               --           (3,390)             (95)
      Changes in assets and liabilities
         and other ..........................              --            8,557            1,600              382           10,539
                                               --------------   --------------   --------------   --------------   --------------
Net cash provided by operating activities ...          37,870           61,915           12,118          (47,422)          64,481
                                               --------------   --------------   --------------   --------------   --------------


Cash flows from investing activities ........              --          (33,215)          (6,457)              --          (39,672)


Cash flows from financing activities ........         (37,870)         (18,256)          (9,552)          47,422          (18,256)
                                               --------------   --------------   --------------   --------------   --------------
Net increase (decrease) in cash and cash
  equivalents ...............................              --           10,444           (3,891)              --            6,553
Cash and cash equivalents at beginning of
  period ....................................              --           16,284           16,309               --           32,593
                                               --------------   --------------   --------------   --------------   --------------
Cash and cash equivalents at end of period ..  $           --   $       26,728   $       12,418   $           --   $       39,146
                                               ==============   ==============   ==============   ==============   ==============
</Table>



                                       18
<PAGE>   19

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 and the Upstream
Segment, the Partnership operates in two segments: refined products and LPGs
transportation, and crude oil and NGLs transportation and marketing. The
Partnership's reportable segments offer different products and services and are
managed separately because each requires different business strategies.

         The 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 purchasing and aggregating crude oil
along its own and third party gathering and pipeline systems and arranging the
necessary logistics for the ultimate sale of crude oil to local refineries,
marketers or other end users.

         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. The purchase included ARCO's 50-percent ownership 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.



                                       19
<PAGE>   20

RESULTS OF OPERATIONS


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

<Table>
<Caption>
                                      QUARTER ENDED JUNE 30,   SIX MONTHS ENDED JUNE 30,
                                         2001         2000         2001         2000
                                      ----------   ----------  -----------   -----------
<S>                                   <C>          <C>          <C>          <C>
Operating revenues:
    Downstream Segment ............   $   80,458   $   54,288   $  144,563   $  118,066
    Upstream Segment ..............      993,224      693,416    1,714,354    1,380,330
                                      ----------   ----------   ----------   ----------
       Total operating revenues ...    1,073,682      747,704    1,858,917    1,498,396
                                      ----------   ----------   ----------   ----------

Operating income:
    Downstream Segment ............       42,496       17,199       71,858       45,537
    Upstream Segment ..............       10,573        2,952       17,517        5,381
                                      ----------   ----------   ----------   ----------
       Total operating income .....       53,069       20,151       89,375       50,918
                                      ----------   ----------   ----------   ----------

Net income:
    Downstream Segment ............       34,187       10,605       55,326       32,026
    Upstream Segment ..............        8,851        2,965       13,447        5,425
                                      ----------   ----------   ----------   ----------
      Total net income ............   $   43,038   $   13,570   $   68,773   $   37,451
                                      ----------   ----------   ----------   ----------
</Table>

         For the quarter ended June 30, 2001, the Partnership reported net
income of $43.0 million, compared with net income of $13.6 million for the 2000
second quarter. The $29.4 million increase in net income resulted from a $23.6
million increase in net income provided by the Downstream Segment and a $5.8
million increase in net income provided by the Upstream Segment. The increase in
net income by the Downstream Segment was comprised of a $26.2 million increase
in operating revenues, partially offset by a $0.9 million increase in costs and
expenses, a $0.9 million increase in interest expense (net of capitalized
interest), a $0.3 million decrease in other income - net, and $0.3 million in
equity losses. The increase in net income by the Upstream Segment was comprised
of a $13.8 million increase in margin, $3.0 million in other operating revenues,
and $4.8 million of equity earnings of Seaway, partially offset by a $9.2
million increase in costs and expenses (excluding purchases of crude oil and
petroleum products) and a $6.6 million increase in interest expense.

         For the six months ended June 30, 2001, the Partnership reported net
income of $68.8 million, compared with net income of $37.5 million for the
corresponding period in 2000. The $31.3 million increase in income resulted from
a $23.3 million increase in net income provided by the Downstream Segment and a
$8.0 million increase in net income provided by the Upstream Segment. The
increase in net income by the Downstream Segment was primarily due to a $26.5
million increase in operating revenues, partially offset by a $1.9 million
increase in interest expense (net of capitalized interest), a $0.6 million
decrease in other income - net, $0.3 million in equity losses, and a $0.2
million increase in costs and expenses. The increase in net income by the
Upstream Segment was primarily due to a $24.1 million increase in margin, $5.8
million in other operating revenues, and $10.0 million of equity earnings of
Seaway, partially offset by a $17.7 million increase in costs and expenses
(excluding purchases of crude oil and petroleum products) and a $14.2 million
increase in interest expense.



                                       20
<PAGE>   21


RESULTS OF OPERATIONS - (CONTINUED)

DOWNSTREAM SEGMENT

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

<Table>
<Caption>
                                                    QUARTER ENDED                             SIX MONTHS ENDED
                                                       JUNE 30,            PERCENTAGE              JUNE 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 ......................       33,360          35,113           (5)%       60,548          64,726           (6)%
    LPGs ..................................        6,907           6,634            4%        18,558          18,327            1%
    Mont Belvieu operations ...............        4,571           6,576          (30)%       10,836          13,648          (21)%
                                              ----------      ----------   ----------     ----------      ----------   ----------
        Total .............................       44,838          48,323           (7)%       89,942          96,701           (7)%
                                              ==========      ==========   ==========     ==========      ==========   ==========

AVERAGE RATE PER BARREL
    Refined products ......................   $     0.97(a)   $     0.93            4%    $     0.97(a)   $     0.94            3%
    LPGs ..................................         1.96            1.56           26%          2.07            1.83           13%
    Mont Belvieu operations ...............         0.18            0.14           29%          0.17            0.15           13%
        Average system rate per barrel ....   $     1.04      $     0.91           14%    $     1.10      $     1.00           10%
                                              ==========      ==========   ==========     ==========      ==========   ==========
</Table>

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

         Refined products transportation revenues increased $18.7 million for
the quarter ended June 30, 2001, compared with the prior-year quarter, due
primarily to revenue recognized from a cash settlement received from a 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. The net
revenue increase related to the settlement was approximately $17.2 million
during the second quarter of 2001. Refined products volumes delivered during the
second quarter of 2001 decreased 5% from the prior year quarter, due primarily
to decreased jet fuel volumes delivered attributable to reduced air travel
demand and the expiration of contract deliveries of methyl tertiary butyl ether
("MTBE") at the Partnership's marine terminal near Beaumont, Texas, in April
2001. These decreases were partially offset by increased motor fuel deliveries
due to favorable differentials. The increase in the refined products average
rate per barrel from the prior-year quarter resulted primarily from the
recognition of previously deferred transportation revenue related to the
approval of market based rates.

         LPGs transportation revenues increased $3.1 million for the quarter
ended June 30, 2001, compared with the second quarter of 2000, due primarily to
increased deliveries of propane in the upper Midwest and Northeast market areas
attributable to strong demand, favorable price differentials, and early summer
fill programs by customers. 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 due to
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
26% from the prior-year quarter as a result of an increased percentage of
long-haul deliveries during the second quarter of 2001.

         Revenues generated from Mont Belvieu operations increased $0.1 million
during the quarter ended June 30, 2001, compared with the second quarter of
2000, as a result of increased brine receipts and service revenue, which was
partially offset by decreased contract storage revenue. Mont Belvieu shuttle
volumes delivered decreased 30% during the second quarter of 2001, compared with
the second quarter of 2000, due to reduced petrochemical demand. The Mont
Belvieu average rate per barrel increased during the second quarter of 2001 as a
result of reduced contract shuttle deliveries, which generally carry lower
rates.

         Other operating revenues increased $4.2 million during the quarter
ended June 30, 2001, compared with the prior year quarter, due primarily to
contract petrochemical delivery revenue, which started during the fourth quarter



                                       21
<PAGE>   22

RESULTS OF OPERATIONS - (CONTINUED)


of 2000, and increased product sales. These increases were partially offset by
decreased propane deliveries from the Partnership's Providence, Rhode Island,
import facility.

         Costs and expenses increased $0.9 million for the quarter ended June
30, 2001, compared with the second quarter of 2000, primarily due to a $1.2
million increase in operating fuel and power expense and a $0.3 million increase
in depreciation and amortization expense, partially offset by a $0.4 million
decrease in taxes - other than income taxes, and a $0.2 million decrease in
operating, general and administrative expenses. Operating fuel and power expense
increased as a result of higher power rates from electric utilities. The
increase in depreciation expense from the prior year second quarter resulted
from assets placed in service during the later part of 2000. The decrease in
taxes - other than income taxes resulted from actual property taxes being lower
than previously estimated. Operating, general and administrative expenses
decreased due to lower labor costs, lower insurance expense and decreased
throughput-related rental expense on volumes received through the connection
with Colonial Pipeline at Beaumont, Texas, partially offset by increased
environmental remediation expenses and increased pipeline measurement losses.

         Interest expense increased $0.2 million during the quarter ended June
30, 2001, compared with the second quarter of 2000, as a result of borrowings
under the Sun Trust credit facilities. Interest capitalized decreased $0.7
million during the quarter ended June 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 $0.3 million during the
quarter ended June 30, 2001 due to pre-operating expenses of Centennial Pipeline
and net losses on Transport 4. Other income - net decreased $0.3 million during
the quarter ended June 30, 2001, compared with the second quarter of 2000, due
primarily to lower interest income earned on cash investments.

         For the six months ended June 30, 2001, refined products transportation
revenues increased $16.9 million, due primarily to revenue recognized on the
canceled transportation agreement with 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 6% decrease
in refined products volumes delivered. The net revenue increase related to the
settlement was approximately $17.2 million during the six months ended June 30,
2001. Jet fuel volumes delivered to the Midwest market areas decreased 13% due
to reduced air travel demand and a 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. Motor fuel volumes delivered decreased 5% as a result of lower demand in
the Midwest market areas and a local refinery expansion in the West Memphis,
Arkansas, market area. The refined products average rate per barrel increased 3%
from the prior-year period due primarily to the recognition of revenue related
to the market based rates discussed previously.

         LPGs transportation revenues increased $5.0 million for the six months
ended June 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 early summer fill programs by
customers. 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 $1.5 million
during the six months ended June 30, 2001, compared with the six months ended
June 30, 2000, as a result of decreased contract storage revenue, partially
offset by increased brine receipts and service revenue. Mont Belvieu shuttle
deliveries decreased during the six months ended June 30, 2001, compared with
the corresponding period in 2000, due to reduced petrochemical demand. The Mont
Belvieu average rate per barrel increased for the six months as a result of
reduced contract deliveries which generally carry lower rates.



                                       22
<PAGE>   23

RESULTS OF OPERATIONS - (CONTINUED)


         Other operating revenues increased $6.1 million during the six months
ended June 30, 2001, compared with the corresponding period in 2000, due
primarily to contract petrochemical delivery revenue, which started during the
fourth quarter of 2000, increased deliveries from the Partnership's Providence,
Rhode Island, import facility in the first quarter of 2001, and increased
product sales.

         Costs and expenses increased $0.2 million for the six months ended June
30, 2001, compared with the corresponding period in 2000, primarily due to a
$2.0 million increase in operating fuel and power expense and a $0.7 million
increase in depreciation and amortization expense, partially offset by a $2.6
million decrease in operating, general and administrative expenses. 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 was a
result of assets placed in service during the later part 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.

         Interest expense increased $0.6 million during the six months ended
June 30, 2001, compared with the six months ended June 30, 2000, as a result of
borrowings under the Sun Trust credit facilities. Interest capitalized decreased
$1.3 million during the six months ended June 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 $0.3 million during the six
months ended June 30, 2001 due to pre-operating expenses of Centennial Pipeline
and net losses on Transport 4. Other income - net decreased $0.6 million during
the six months ended June 30, 2001, compared with the first six months of 2000,
due primarily to lower interest income earned on cash investments.



                                       23
<PAGE>   24


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                          SIX MONTHS ENDED
                                                      JUNE 30,          PERCENTAGE             JUNE 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 ............   $    8,921   $    4,861           84%    $   17,046   $    9,727           75%
      Crude oil marketing .................        2,804        3,338          (16)%        5,657        5,588            1%
      Crude oil terminaling ...............        2,546           --           --          4,674           --           --
      NGL transportation ..................        5,565        1,580          252%        10,441        3,340          213%
      Lubrication oil sales ...............          984          746           32%         2,118        1,371           54%
      Seaway Crude Intercompany ...........        3,472           --           --          4,170           --           --
                                              ----------   ----------   ----------     ----------   ----------   ----------
        Total margin ......................   $   24,292   $   10,525          131%    $   44,106   $   20,026          120%
                                              ==========   ==========   ==========     ==========   ==========   ==========

Total barrels:
       Crude oil transportation ...........       21,851        8,961          144%        37,596       17,728          112%
       Crude oil marketing ................       44,026       26,167           68%        72,451       52,148           39%
       Crude oil terminaling ..............       32,460           --           --         57,122           --           --
       NGL transportation .................        5,436        1,206          351%        10,198        2,438          318%
Lubrication oil volume (total gallons) ....        2,134        1,296           65%         4,389        3,568           23%

Margin per barrel:
       Crude oil transportation ...........   $    0.408   $    0.543          (25)%   $    0.453   $    0.549          (17)%
       Crude oil marketing ................        0.064        0.128          (50)%        0.078        0.107          (27)%
       Crude oil terminaling ..............        0.078           --           --          0.082           --           --
       NGL transportation .................        1.024        1.311          (22)%        1.024        1.370          (25)%
Lubrication oil margin (per gallon) .......        0.461        0.576          (20)%        0.483        0.385           25%
</Table>



         Margin increased $13.8 million during the second quarter of 2001,
compared with the second quarter of 2000. The increase was comprised of a $4.1
million increase in crude oil transportation; a $4.0 million increase in NGL
transportation; $3.5 million in Seaway Crude intercompany transportation; $2.5
million in crude oil terminaling attributable to pumpover fees charged at
Midland, Texas, and Cushing, Oklahoma, related to the ARCO assets acquired in
July 2000; and a $0.2 million increase in lubrication oil sales; partially
offset by a $0.5 million decrease in crude oil marketing margin. The increase in
crude oil transportation margin was primarily due to $2.0 million contributed by
the ARCO assets acquired, a $1.7 million increase from higher volume on the Red
River system, which benefited from pipeline assets acquired from Ultramar
Diamond Shamrock Corporation ("UDS") on March 1, 2001, and increased regional
production, and a $0.4 million increase on the South Texas system attributable
to increased regional production. The increase in NGL transportation margin was
primarily due to $3.7 million contributed from the Panola system acquired on
December 31, 2000, and a $0.3 million increase in margin related to increased
volumes on the Dean and Wilcox pipeline systems in South Texas. Margin
contributed from lubrication



                                       24
<PAGE>   25

RESULTS OF OPERATIONS - (CONTINUED)


oil sales increased $0.2 million due to increased volumes. The decrease in crude
oil marketing margin resulted from less favorable pricing spreads in the second
quarter of 2001, compared with the prior quarter.

         Other operating revenue of the Upstream Segment increased $3.0 million
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.

         Costs and expenses, excluding expenses associated with purchases of
crude oil and petroleum products, increased $9.2 million during the quarter
ended June 30, 2001, compared with the prior year quarter, comprised of a $4.8
million increase in operating, general and administrative expenses, a $2.2
million increase in depreciation and amortization expense, a $1.5 million
increase in taxes - other than income taxes, and a $0.7 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, 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.

         Interest expense increased $6.6 million for the quarter ended June 30,
2001, compared with the prior year quarter, primarily due to interest expense on
the term loan and revolving credit facilities used to finance the acquisition of
acquired assets.

         Margin increased $24.1 million during the six months ended June 30,
2001, compared with the corresponding period in 2000. The increase was primarily
comprised of a $7.3 million increase in crude oil transportation; a $7.1 million
increase in NGL transportation; $4.7 million in crude oil terminaling
attributable to pumpover fees charged at Midland, Texas, and Cushing, Oklahoma,
related to the ARCO assets acquired in July 2000; $4.2 million attributable to
Seaway Crude intercompany transportation; and a $0.7 million increase in
lubrication oil sales. The increase in crude oil transportation margin was
primarily due to $4.0 million contributed by the ARCO assets acquired, and a
$2.8 million increase from higher volume on the Red River and South Texas
systems, which benefited from increased regional production, and pipeline assets
acquired from UDS on March 1, 2001. The increase in NGL transportation margin
was primarily due to $7.3 million contributed from the Panola system acquired on
December 31, 2000, partially offset by a $0.2 million decrease in margin related
to the Dean and Wilcox pipeline systems in South Texas. Margin contributed from
lubrication oil sales increased $0.7 million due primarily to increased volumes
and increased rates on the margin realized per gallon.

         Other operating revenue of the Upstream Segment increased $5.8 million
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.

         Costs and expenses, excluding expenses associated with purchases of
crude oil and petroleum products, increased $17.7 million during the six months
ended June 30, 2001, compared with the corresponding prior year period,
comprised of a $11.0 million increase in operating, general and administrative
expenses, a $3.5 million increase in depreciation and amortization expense, a
$2.3 million increase in taxes - other than income taxes, and a $0.9 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, 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 three-month and six-month
periods ended June 30, 2001 included $4.8 million and $10.0 million,
respectively, of equity earnings in Seaway Crude Pipeline Company, which was
added to the Partnership's business on July 20, 2000, with the acquired ARCO
assets.



                                       25
<PAGE>   26

RESULTS OF OPERATIONS - (CONTINUED)


         Interest expense increased $14.1 million for the six months ended June
30, 2001, compared with the prior year period, primarily due to interest expense
on the term loan and revolving credit facilities used to finance the acquisition
of acquired assets.

FINANCIAL CONDITION AND LIQUIDITY

         Net cash from operations for the six months ended June 30, 2001,
totaled $61.5 million, comprised of $89.5 million of income before charges for
depreciation and amortization, partially offset by $28.0 million of cash used
for working capital changes. This compares with cash flows from operations of
$64.5 million for the corresponding period in 2000, comprised of $54.0 million
of income before charges for depreciation and amortization, and $10.5 million of
cash provided by working capital changes. The decrease in cash from working
capital changes during the six-month period ended June 30, 2001, as compared to
the corresponding period in 2000, resulted primarily from crude oil marketing
activity and higher inventory balances at June 30, 2001. Net cash from
operations for the six months ended June 30, 2001 and 2000, included interest
payments of $33.2 million and $16.4 million, respectively.

         Cash flows used in investing activities during the first six months of
2001 was comprised of $33.4 million of capital expenditures, $25.1 million of
cash contributions for the Partnership's interest in the Centennial Pipeline,
LLC ("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 six months of 2000 was comprised of $39.1 million of capital
expenditures and $2.0 million of additional cash investments. These decreases of
cash 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.

         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



                                       26
<PAGE>   27

FINANCIAL CONDITION AND LIQUIDITY - (CONTINUED)


fixed charge coverage ratios. At June 30, 2001, $438 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 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 third 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 being included in accumulated other comprehensive
income. As of June 30, 2001, a notional amount of $200 million remained
outstanding. The fair value of the outstanding treasury rate locks was a gain of
approximately $7.4 million at June 30, 2001.

         The Partnership paid the first quarter 2001 cash distribution of $25.5
million ($0.525 per Limited Partner Unit and Class B Unit) on May 4, 2001. On
July 20, 2001, the Partnership declared a cash distribution of $0.525 per
Limited Partner Unit and Class B Unit for the quarter ended June 30, 2001. The
distribution was paid on August 6, 2001 to Unitholders of record on July 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 on-site and off-site groundwater contamination
attributable to the Partnership's operations at the Seymour, Indiana, terminal.
A Feasibility Study, which includes the Partnership's proposed remediation
program, has been approved by IDEM. IDEM 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 $0.4 million at June 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



                                       27
<PAGE>   28

OTHER MATTERS - (CONTINUED)


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 will make appropriate refunds of approximately $1.0 million in
the third quarter of 2001.

         On October 16, 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 relates to Atlantic
Richfield Company's 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 has accrued the
amount of the settlement as an adjustment to the purchase price of ARCO.

         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 useful lives. The Partnership will adopt SFAS 141 immediately,
and SFAS 142 effective January 1, 2002.

         At June 30, 2001, the Partnership had $14.6 million of unamortized
goodwill. Amortization expense related to goodwill was $0.1 million and $0.6
million for the year ended December 31, 2000 and the six months ended June 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 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.



                                       28
<PAGE>   29

OTHER MATTERS - (CONTINUED)


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 June 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 June
30, 2001, the estimated fair value of the Senior Notes was approximately $374
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 six months ended June 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.

         As of June 30, 2001, the Upstream Segment had open positions on
speculative option and futures contracts. During the six months ended June 30,
2001, a gain of $3,500 was recognized on such contracts.

         Also as of June 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 six month period ended
June 30, 2001, the Partnership recognized $2.2 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 $13.2 million at June 30, 2001. Approximately $4.8 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.



                                       29
<PAGE>   30

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS - (CONTINUED)


         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 third 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 June 30, 2001, a notional amount
of $200 million remained outstanding. The fair value of the outstanding treasury
rate locks was a gain of approximately $7.4 million at June 30, 2001.



                                       30
<PAGE>   31

                           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.

         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).

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

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

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

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



                                       31
<PAGE>   32


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

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

         10.7+             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).

         10.8+             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).

         10.9+             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).

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

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

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

         10.13             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).

         10.14             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).

         10.15             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).

         10.16             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).

         10.17+            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).



                                       32
<PAGE>   33

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


         10.18             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).

         10.19             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).

         10.20             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).

         10.21+            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).

         10.22+            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).

         10.23+            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).

         10.24+            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).

         10.25+            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).

         10.26             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).

         10.27             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).

         10.28+            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).

         10.29+            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).

         10.30+            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).

         10.31             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).



                                       33
<PAGE>   34

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


         10.32             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).

         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 June 30,
                  2001:

                           A report on Form 8-K was filed on April 23, 2001,
                           pursuant to Item 5 of such form.

                           A report on Form 8-K was filed on May 9, 2001,
                           pursuant to Item 5 of such form.

                                   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: August 10, 2001



                                       34
<PAGE>   35

                                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.

         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).

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

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

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



<PAGE>   36

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

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

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

         10.7+             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).

         10.8+             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).

         10.9+             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).

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

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

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

         10.13             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).

         10.14             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).

         10.15             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).

         10.16             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).

         10.17+            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).
</Table>



<PAGE>   37

<Table>
<S>                        <C>
         10.18             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).

         10.19             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).

         10.20             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).

         10.21+            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).

         10.22+            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).

         10.23+            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).

         10.24+            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).

         10.25+            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).

         10.26             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).

         10.27             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).

         10.28+            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).

         10.29+            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).
</Table>



<PAGE>   38

<Table>
<S>                        <C>
         10.30+            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).

         10.31             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).

         10.32             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).

         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.