##### 



Exhibit 99.1
 Texas Eastern Products Pipeline Company, LLC and Subsidiaries
 Consolidated
Financial Statements as of
December 31, 2006 and 2005, and for each of
the three years in the period ended December 31, 2006
Report of Independent Registered Public Accounting Firm




---



##### 



CONSOLIDATED FINANCIAL STATEMENTS
OF TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 TABLE OF CONTENTS
 PageReport of Independent Registered Public Accounting Firm
    
    
    1Consolidated Balance Sheets as of December 31, 2006 and 2005
    
    
    2Statements of Consolidated Income and Comprehensive Income for the Years Ended December 31, 2006, 2005 and 2004
    
    
    3Statements of Consolidated Cash Flows for the Years Ended December 31, 2006, 2005 and 2004
    
    
    4Statements of Consolidated Members Equity (Deficit) for the Years Ended December 31, 2006, 2005 and 2004
    
    
    5Notes to Consolidated Financial Statements
    
    
    6Note 1. Organization
    
    
    6Note 2. Summary of Significant Accounting Policies
    
    
    8Note 3. Recent Accounting Developments
    
    
    17Note 4. Accounting for Equity Awards
    
    
    19Note 5. Employee Benefit Plans
    
    
    23Note 6. Financial Instruments  Interest Rate Swaps
    
    
    27Note 7. Inventories
    
    
    29Note 8. Property, Plant and Equipment
    
    
    29Note 9. Investments in Unconsolidated Affiliates
    
    
    31Note 10. Acquisitions
    
    
    33Note 11. Dispositions and Discontinued Operations
    
    
    35Note 12. Goodwill and Other Intangible Assets
    
    
    36Note 13. Debt Obligations
    
    
    38Note 14. Minority Interest
    
    
    41Note 15. Members Equity (Deficit)
    
    
    43Note 16. Business Segments
    
    
    44Note 17. Related Party Transactions
    
    
    47Note 18. Commitments and Contingencies
    
    
    53Note 19. Concentrations of Credit Risk
    
    
    59Note 20. Supplemental Cash Flow Information
    
    
    60Note 21. Subsequent Events
    
    
    60
 i




---



##### 



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
     
 1




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
 December 31,2006
    
    
    2005ASSETSCurrent assets:Cash and cash equivalents
    
    $
    119
    
    
    $
    119Accounts receivable, trade (net of allowance for doubtful accounts of
$100 and $250)
    
    
    852,816
    
    
    
    803,373Accounts receivable, related parties
    
    
    11,788
    
    
    
    5,207Inventories
    
    
    72,193
    
    
    
    29,069Other
    
    
    29,843
    
    
    
    61,621Total current assets
    
    
    966,759
    
    
    
    899,389Property, plant and equipment, at cost(net of accumulated
depreciation and amortization of $509,889 and $474,332)
    
    
    1,642,095
    
    
    
    1,960,068Equity investments
    
    
    1,039,710
    
    
    
    359,656Intangible assets
    
    
    185,410
    
    
    
    376,908Goodwill
    
    
    15,506
    
    
    
    16,944Other assets
    
    
    72,661
    
    
    
    67,834Total assets
    
    $
    3,922,141
    
    
    $
    3,680,799LIABILITIES AND MEMBERS EQUITY (DEFICIT)Current liabilities:Accounts payable and accrued liabilities
    
    $
    855,306
    
    
    $
    800,033Accounts payable, related parties
    
    
    34,885
    
    
    
    12,145Accrued interest
    
    
    35,523
    
    
    
    32,840Other accrued taxes
    
    
    14,482
    
    
    
    16,532Other
    
    
    36,776
    
    
    
    75,970Total current liabilities
    
    
    976,972
    
    
    
    937,520Senior notes
    
    
    1,113,287
    
    
    
    1,119,121Other long-term debt
    
    
    490,000
    
    
    
    405,900Deferred tax liability
    
    
    652
    
    
    
    Other liabilities and deferred credits
    
    
    19,461
    
    
    
    16,936Other liabilities, related party
    
    
    1,814
    
    
    
    Minority interest
    
    
    1,405,559
    
    
    
    1,262,846Commitments and contingenciesMembers equity (deficit):Accumulated other comprehensive income
    
    
    426
    
    
    
    11Members equity (deficit)
    
    
    (86,030
    )
    
    
    (61,535
    )Total members equity (deficit)
    
    
    (85,604
    )
    
    
    (61,524
    )Total liabilities and members equity (deficit)
    
    $
    3,922,141
    
    
    $
    3,680,799
  2




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 STATEMENTS OF CONSOLIDATED INCOME AND COMPREHENSIVE INCOME
(Dollars in thousands
 For Year Ended December 31,2006
    
    
    2005
    
    
    2004Operating revenues:Sales of petroleum products
    
    $
    9,080,516
    
    
    $
    8,061,808
    
    
    $
    5,426,832Transportation  Refined products
    
    
    152,552
    
    
    
    144,552
    
    
    
    148,166Transportation  LPGs
    
    
    89,315
    
    
    
    96,297
    
    
    
    87,050Transportation  Crude oil
    
    
    38,822
    
    
    
    37,614
    
    
    
    37,177Transportation  NGLs
    
    
    43,838
    
    
    
    43,915
    
    
    
    41,204Gathering  Natural gas
    
    
    123,933
    
    
    
    152,797
    
    
    
    140,122Other
    
    
    78,509
    
    
    
    68,051
    
    
    
    67,539Total operating revenues
    
    
    9,607,485
    
    
    
    8,605,034
    
    
    
    5,948,090Costs and expenses:Purchases of petroleum products
    
    
    8,967,062
    
    
    
    7,986,438
    
    
    
    5,367,027Operating expense
    
    
    203,015
    
    
    
    185,712
    
    
    
    191,893Operating fuel and power
    
    
    57,450
    
    
    
    48,972
    
    
    
    48,139General and administrative
    
    
    31,683
    
    
    
    33,518
    
    
    
    28,017Depreciation and amortization
    
    
    108,252
    
    
    
    110,729
    
    
    
    112,284Taxes  other than income taxes
    
    
    17,983
    
    
    
    20,610
    
    
    
    17,425Gains on sales of assets
    
    
    (7,404
    )
    
    
    (668
    )
    
    
    (1,053
    )Total costs and expenses
    
    
    9,378,041
    
    
    
    8,385,311
    
    
    
    5,763,732Operating income
    
    
    229,444
    
    
    
    219,723
    
    
    
    184,358Other income (expense):Interest expense  net
    
    
    (86,171
    )
    
    
    (81,861
    )
    
    
    (72,053
    )Equity earnings
    
    
    36,761
    
    
    
    20,094
    
    
    
    22,148Interest income, related party
    
    
    
    
    
    
    
    
    
    
    187Interest income
    
    
    2,086
    
    
    
    687
    
    
    
    467Other income (expense)  net
    
    
    888
    
    
    
    (9,552
    )
    
    
    853Income before provision for income taxes
    
    
    183,008
    
    
    
    149,091
    
    
    
    135,960Provision for income taxes
    
    
    652
    
    
    
    3
    
    
    
    (1
    )Minority interest
    
    
    130,484
    
    
    
    112,744
    
    
    
    96,667Income from continuing operations
    
    
    51,872
    
    
    
    36,344
    
    
    
    39,294Income from discontinued operations
    
    
    1,497
    
    
    
    3,150
    
    
    
    2,689Gain on sale of discontinued operations
    
    
    17,872
    
    
    
    
    
    
    
    Minority interest for discontinued operations
    
    
    (13,835
    )
    
    
    (2,228
    )
    
    
    (1,913
    )Discontinued operations
    
    
    5,534
    
    
    
    922
    
    
    
    776Net income
    
    $
    57,406
    
    
    $
    37,266
    
    
    $
    40,070Changes in fair values of interest rate cash flow hedges
    
    
    (248
    )
    
    
    
    
    
    
    Changes in fair values of crude oil cash flow hedges
    
    
    730
    
    
    
    11
    
    
    
    Comprehensive income
    
    $
    57,888
    
    
    $
    37,277
    
    
    $
    40,070
  3




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 STATEMENTS OF CONSOLIDATED CASH FLOWS
(Dollars in thousands)
 For Year Ended December 31,2006
    
    
    2005
    
    
    2004Operating activities:Net income
    
    $
    57,406
    
    
    $
    37,266
    
    
    $
    40,070Adjustments to reconcile net income to cash provided by
continuing operating activities:Minority interest
    
    
    144,319
    
    
    
    114,972
    
    
    
    98,580Income from discontinued operations
    
    
    (19,369
    )
    
    
    (3,150
    )
    
    
    (2,689
    )Forgiveness of note receivable, Duke Energy Field
Services, L.P.
    
    
    
    
    
    
    10,000
    
    
    
    Deferred income tax expense (benefit)
    
    
    652
    
    
    
    
    
    
    
    (1
    )Depreciation and amortization
    
    
    108,252
    
    
    
    110,729
    
    
    
    112,284Earnings in equity investments
    
    
    (36,761
    )
    
    
    (20,094
    )
    
    
    (22,148
    )Distributions from equity investments
    
    
    63,483
    
    
    
    37,085
    
    
    
    47,213Gains on sales of assets
    
    
    (7,404
    )
    
    
    (668
    )
    
    
    (1,053
    )Non-cash portion of interest expense
    
    
    1,676
    
    
    
    1,624
    
    
    
    (391
    )Net effect of changes in operating accounts
    
    
    (40,652
    )
    
    
    (37,046
    )
    
    
    (74,868
    )Net cash provided by continuing operating activities
    
    
    271,602
    
    
    
    250,718
    
    
    
    196,997Net cash provided by discontinued operations
    
    
    1,521
    
    
    
    3,782
    
    
    
    3,271Net cash provided by operating activities
    
    
    273,123
    
    
    
    254,500
    
    
    
    200,268Investing activities:Proceeds from sales of assets
    
    
    51,558
    
    
    
    510
    
    
    
    1,226Acquisition of assets
    
    
    (20,473
    )
    
    
    (112,231
    )
    
    
    (3,421
    )Investment in Centennial Pipeline LLC
    
    
    (2,500
    )
    
    
    
    
    
    
    (1,500
    )Investment in Mont Belvieu Storage Partners, L.P.
    
    
    (4,767
    )
    
    
    (4,233
    )
    
    
    (21,358
    )Investment in Jonah Gas Gathering Company
    
    
    (121,035
    )
    
    
    
    
    
    
    Cash paid for linefill on assets owned
    
    
    (6,453
    )
    
    
    (14,408
    )
    
    
    (957
    )Capital expenditures
    
    
    (170,046
    )
    
    
    (220,553
    )
    
    
    (156,749
    )Net cash used in continuing investing activities
    
    
    (273,716
    )
    
    
    (350,915
    )
    
    
    (182,759
    )Net cash used in discontinued investing activities
    
    
    
    
    
    
    
    
    
    
    (7,398
    )Net cash used in investing activities
    
    
    (273,716
    )
    
    
    (350,915
    )
    
    
    (190,157
    )Financing activities:Proceeds from revolving credit facility
    
    
    924,125
    
    
    
    657,757
    
    
    
    324,200Contributions from minority interest
    
    
    195,059
    
    
    
    278,806
    
    
    
    Repayments on revolving credit facility
    
    
    (840,025
    )
    
    
    (604,857
    )
    
    
    (181,200
    )Debt issuance costs
    
    
    
    
    
    
    (498
    )
    
    
    Contribution from member
    
    
    
    
    
    
    5
    
    
    
    Distributions paid to minority interest
    
    
    (196,665
    )
    
    
    (177,916
    )
    
    
    (166,158
    )Distributions paid to member
    
    
    (81,901
    )
    
    
    (73,185
    )
    
    
    Net cash provided by (used in) financing activities
    
    
    593
    
    
    
    80,112
    
    
    
    (23,158
    )Net change in cash and cash equivalents
    
    
    
    
    
    
    (16,303
    )
    
    
    (13,047
    )Cash and cash equivalents, January 1
    
    
    119
    
    
    
    16,422
    
    
    
    29,469Cash and cash equivalents, December 31
    
    $
    119
    
    
    $
    119
    
    
    $
    16,422
  4




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 STATEMENTS OF CONSOLIDATED MEMBERS EQUITY (DEFICIT)
(Dollars in thousands)
 NoteReceivable
    
    
    Accumulated(Duke Energy
    
    
    OtherMembers
    
    
    Field Services,
    
    
    ComprehensiveEquity (Deficit)
    
    
    L.P.)
    
    
    (Loss) Income
    
    
    TotalBalance, December 31, 2003
    
    $
    108,695
    
    
    $
    (10,000
    )
    
    $
    (2,902
    )
    
    $
    95,793Net income on cash flow hedge
    
    
    
    
    
    
    
    
    
    
    2,902
    
    
    
    2,902Net income  year ended December 31, 2004
    
    
    40,070
    
    
    
    
    
    
    
    
    
    
    
    40,070Balance, December 31, 2004
    
    
    148,765
    
    
    
    (10,000
    )
    
    
    
    
    
    
    138,765Forgiveness of note receivable, Duke Energy
Field Services, L.P.
    
    
    
    
    
    
    10,000
    
    
    
    
    
    
    
    10,000Contribution from member
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    5Changes in fair values of crude oil cash
flow hedges
    
    
    
    
    
    
    
    
    
    
    11
    
    
    
    11Distribution to Duke Energy Field
Services, L.P.
    
    
    (176,046
    )
    
    
    
    
    
    
    
    
    
    
    (176,046
    )Write-off of income tax receivable resulting
from acquisition by DFI GP Holdings L.P.
    
    
    (408
    )
    
    
    
    
    
    
    
    
    
    
    (408
    )Income tax receivable adjustment
    
    
    260
    
    
    
    
    
    
    
    
    
    
    
    260Write-off of deferred income tax liability
resulting from acquisition by DFI GP
Holdings L.P.
    
    
    1,808
    
    
    
    
    
    
    
    
    
    
    
    1,808Distributions paid to member
    
    
    (73,185
    )
    
    
    
    
    
    
    
    
    
    
    (73,185
    )Net income  year ended December 31, 2005
    
    
    37,266
    
    
    
    
    
    
    
    
    
    
    
    37,266Balance, December 31, 2005
    
    
    (61,535
    )
    
    
    
    
    
    
    11
    
    
    
    (61,524
    )Distributions paid to member
    
    
    (81,901
    )
    
    
    
    
    
    
    
    
    
    
    (81,901
    )Changes in fair values of crude oil cash flow
hedges
    
    
    
    
    
    
    
    
    
    
    730
    
    
    
    730Changes in fair values of interest rate cash
flow hedges
    
    
    
    
    
    
    
    
    
    
    (248
    )
    
    
    (248
    )Adjustment to initially apply SFAS No. 158
    
    
    
    
    
    
    
    
    
    
    (67
    )
    
    
    (67
    )Net income  year ended December 31, 2006
    
    
    57,406
    
    
    
    
    
    
    
    
    
    
    
    57,406Balance, December 31, 2006
    
    $
    (86,030
    )
    
    $
    
    
    
    $
    426
    
    
    $
    (85,604
    )
  5




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 1. ORGANIZATION
     Parent Company Financial Information
   6




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   December 31,2006
    
    
    2005ASSETSCurrent assets
    
    $
    49
    
    
    $
    260Other assets
    
    
    
    
    
    
    1Total assets
    
    $
    49
    
    
    $
    261LIABILITIES AND MEMBERS EQUITY (DEFICIT)Current liabilities
    
    $
    424
    
    
    $
    309Excess of distributions received over equity in earnings of TEPPCO
Partners, L.P. (1)
    
    
    85,655
    
    
    
    61,487Members equity (deficit)
    
    
    (86,030
    )
    
    
    (61,535
    )Total liabilities and members equity (deficit)
    
    $
    49
    
    
    $
    261
 
 (1)
    
    Represents the Parent Companys equity method investment in TEPPCO. This Parent Company
investment is eliminated in the process of consolidating the financial statements of the
Parent Company with those of TEPPCO. This balance does not represent an asset to TEPPCO nor
does it represent an obligation on the Parent Companys part to contribute cash or other
property to TEPPCO. Our general partner equity account at TEPPCO generally consists of our
cumulative share of TEPPCOs earnings less any cash distributions that it has paid to us plus
any amounts we have contributed to TEPPCO. During 2006, we were allocated $57.7 million
(representing 28.6%) of TEPPCOs net income and received $81.9 million in cash distributions
from TEPPCO. During 2005, we were allocated $47.6 million (representing 29.3%) of TEPPCOs
net income and received $73.2 million in cash distributions from TEPPCO.  For Year EndedDecember 31,2006
    
    
    2005
    
    
    2004General and administrative expenses
    
    $
    335
    
    
    $
    310
    
    
    $
    1Taxes  other than income taxes
    
    
    
    
    
    
    
    
    
    
    85Operating loss
    
    
    (335
    )
    
    
    (310
    )
    
    
    (86
    )Equity earnings in TEPPCO Partners, L.P. (1)
    
    
    57,732
    
    
    
    47,579
    
    
    
    39,968Interest income, related party
    
    
    
    
    
    
    
    
    
    
    187Other income (expense), net
    
    
    9
    
    
    
    (10,000
    )
    
    
    Income before provision for income taxes
    
    
    57,406
    
    
    
    37,269
    
    
    
    40,069Provision for income taxes
    
    
    
    
    
    
    3
    
    
    
    (1
    )Net income
    
    $
    57,406
    
    
    $
    37,266
    
    
    $
    40,070
 
 (1)
    
    Represents the Parent Companys earnings from its equity method investment in TEPPCO. 7




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  For Year EndedDecember 31,2006
    
    
    2005
    
    
    2004Cash flows from operating activities:Net income
    
    $
    57,406
    
    
    $
    37,266
    
    
    $
    40,070Adjustments to reconcile net income to cash provided by
operating activities:Forgiveness of note receivable, Duke Energy Field
Services, L.P.
    
    
    
    
    
    
    10,000
    
    
    
    Equity earnings in TEPPCO Partners, L.P.
    
    
    (57,732
    )
    
    
    (47,579
    )
    
    
    (39,968
    )Distributions from TEPPCO Partners, L.P.
    
    
    81,901
    
    
    
    73,185
    
    
    
    66,899Deferred income tax expense (benefit)
    
    
    
    
    
    
    
    
    
    
    (1
    )Decrease in current assets
    
    
    261
    
    
    
    
    
    
    
    6Increase in current liabilities
    
    
    114
    
    
    
    309
    
    
    
    Other
    
    
    
    
    
    
    (1
    )
    
    
    (67,006
    )Net cash provided by operating activities
    
    
    81,950
    
    
    
    73,180
    
    
    
    Cash flows from financing activities:Contribution from member
    
    
    
    
    
    
    5
    
    
    
    Distributions paid to member
    
    
    (81,901
    )
    
    
    (73,185
    )
    
    
    Net cash used in financing activities
    
    
    (81,901
    )
    
    
    (73,180
    )
    
    
    Net change in cash and cash equivalents
    
    
    49
    
    
    
    
    
    
    
    Cash and cash equivalents, January 1
    
    
    
    
    
    
    
    
    
    
    Cash and cash equivalents, December 31
    
    $
    49
    
    
    $
    
    
    
    $
    
 NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  Business Segments
   8




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Allowance for Doubtful Accounts
  For Year Ended December 31,2006
    
    
    2005
    
    
    2004Balance at beginning of period
    
    $
    250
    
    
    $
    112
    
    
    $
    4,700Charges to expense
    
    
    64
    
    
    
    829
    
    
    
    536Deductions and other
    
    
    (214
    )
    
    
    (691
    )
    
    
    (5,124
    )Balance at end of period
    
    $
    100
    
    
    $
    250
    
    
    $
    112
 Asset Retirement Obligations
     9




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Accounting for Asset Retirement Obligations Accounting for Conditional
Asset Retirement Obligations, an interpretation of FASB Statement No. 143,
 Basis of Presentation and Principles of Consolidation
   Cash and Cash Equivalents
  Capitalization of Interest
  Contingencies
  10




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
    Dollar Amounts
  Environmental Expenditures
   For Year Ended December 31,2006
    
    
    2005
    
    
    2004Balance at beginning of period
    
    $
    2,447
    
    
    $
    5,037
    
    
    $
    7,639Charges to expense
    
    
    1,887
    
    
    
    2,530
    
    
    
    5,178Deductions and other
    
    
    (2,532
    )
    
    
    (5,120
    )
    
    
    (7,780
    )Balance at end of period
    
    $
    1,802
    
    
    $
    2,447
    
    
    $
    5,037
 Estimates
  11




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Fair Value of Current Assets and Current Liabilities
  Goodwill
   Income Taxes
  Texas Margin Tax
   12




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Accounting for Income Taxes
 Intangible Assets and Excess Investments
      Inventories
  Minority Interest
  13




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   Natural Gas Imbalances
  Property, Plant and Equipment
  Accounting for
the Impairment or Disposal of Long-Lived Assets
 Revenue Recognition
  14




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
    Unit Option Plan and Unit Purchase Plan
  Use of Derivatives
 Accounting
for Derivative Instruments and Hedging Activities, Accounting for Certain
Derivative Instruments and Certain Hedging Activities, an amendment of FASB Statement No. 133.
  15




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
      16




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 NOTE 3. RECENT ACCOUNTING DEVELOPMENTS
 Share-Based Payment Accounting for Stock-Based Compensation Accounting for Stock-Based Compensation  Transition and Disclosure Accounting for Stock Issued to Employees
 Determining Whether a General Partner, or the General Partners as a Group, Controls a Limited
Partnership or Similar Entity When the Limited Partners Have Certain Rights
 Accounting Changes and Error Corrections Accounting
Changes Reporting Accounting Changes in Interim Periods
 Accounting for Purchases and
Sales of Inventory with the Same Counterparty Accounting for Nonmonetary Transactions
 17




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  How Taxes Collected from Customers and
Remitted to Governmental Authorities Should Be Presented in the Income Statement (That Is, Gross
versus Net Presentation)
 Accounting for Uncertainty in Income
Taxes Accounting for Income Taxes
 Fair Value Measurements
 Considering the Effects
of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements
 18




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Employers Accounting for Defined Benefit
Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106, and
132(R)
 The Fair Value Option for Financial Assets and
Financial Liabilities  Including an amendment of FASB Statement No. 115
 NOTE 4. ACCOUNTING FOR EQUITY AWARDS
 1994 Long Term Incentive Plan
   19




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   1999 and 2002 Phantom Unit Retention Plans
    2000 Long Term Incentive Plan
   20




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
    2005 Phantom Unit Plan
   EPCO, Inc. 2006 TPP Long-Term Incentive Plan
  21




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   EPCO, Inc. TPP Employee Unit Purchase Plan
    22




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 NOTE 5. EMPLOYEE BENEFIT PLANS
 Retirement Plans
   Employers Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for
Termination Benefits
 23




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  For Year Ended December 31,2006
    
    
    2005
    
    
    2004Service cost benefit earned during the year
    
    $
    
    
    
    $
    4,393
    
    
    $
    3,653Interest cost on projected benefit obligation
    
    
    891
    
    
    
    934
    
    
    
    719Expected return on plan assets
    
    
    (412
    )
    
    
    (671
    )
    
    
    (878
    )Amortization of prior service cost
    
    
    
    
    
    
    5
    
    
    
    7Recognized net actuarial loss
    
    
    135
    
    
    
    129
    
    
    
    57SFAS 88 curtailment charge
    
    
    
    
    
    
    50
    
    
    
    SFAS 88 settlement charge
    
    
    3,545
    
    
    
    194
    
    
    
    Net pension benefits costs
    
    $
    4,159
    
    
    $
    5,034
    
    
    $
    3,558
 Other Postretirement Benefits
  Employers Accounting for Postretirement Benefits Other Than Pensions
  For Year Ended December 31,2006
    
    
    2005
    
    
    2004Service cost benefit earned during the year
    
    $
    
    
    
    $
    81
    
    
    $
    165Interest cost on accumulated postretirement benefit obligation
    
    
    
    
    
    
    69
    
    
    
    153Amortization of prior service cost
    
    
    
    
    
    
    53
    
    
    
    126Recognized net actuarial loss
    
    
    
    
    
    
    4
    
    
    
    1Curtailment credit
    
    
    
    
    
    
    (1,676
    )
    
    
    Settlement credit
    
    
    
    
    
    
    (4
    )
    
    
    Net postretirement benefits costs
    
    $
    
    
    
    $
    (1,473
    )
    
    $
    445
  24




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   Other PostretirementPension Benefits
    
    Benefits2006
    
    2005
    
    2006
    
    2005Discount rate
    
    
    4.73
    %
    
    
    4.59
    %
    
    
    
    
    
    
    5.75
    %Increase in compensation levels
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
  Other PostretirementPension Benefits
    
    Benefits2006
    
    2005
    
    2006
    
    2005Discount rate (1)
    
    
    4.59
    %
    
    
    5.75%/5.00
    %
    
    
    
    
    
    
    5.75%/5.00
    %Increase in compensation levels
    
    
    
    
    
    
    5.00
    %
    
    
    
    
    
    
    Expected long-term rate of
return on plan assets (2)
    
    
    2.00
    %
    
    
    8.00%/2.00
    %
    
    
    
    
    
    
    
 
 (1)
    
    Expense was remeasured on May 31, 2005, as a result of TEPPCO RCBP and TEPPCO SBP
amendments. The discount rate was decreased from 5.75% to 5% effective June 1, 2005, to
reflect rates of returns on bonds currently available to settle the liability.(2)
    
    As a result of TEPPCO RCBP and TEPPCO SBP amendments, the expected return on assets was
changed from 8% to 2% due to the movement of plan funds from equity investments into
short-term money market funds, effective June 1, 2005. 25




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Other PostretirementPension Benefits
    
    
    Benefits2006
    
    
    2005
    
    
    2006
    
    
    2005Change in benefit obligationBenefit obligation at beginning of year
    
    $
    22,111
    
    
    $
    15,940
    
    
    $
    
    
    
    $
    2,964Service cost
    
    
    
    
    
    
    4,393
    
    
    
    
    
    
    
    81Interest cost
    
    
    891
    
    
    
    934
    
    
    
    
    
    
    
    70Actuarial loss
    
    
    152
    
    
    
    2,740
    
    
    
    
    
    
    
    76Retiree contributions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    64Benefits paid
    
    
    (22,677
    )
    
    
    (910
    )
    
    
    
    
    
    
    (80
    )Impact of curtailment
    
    
    
    
    
    
    (986
    )
    
    
    
    
    
    
    (3,575
    )Settlement
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    400Benefit obligation at end of year
    
    $
    477
    
    
    $
    22,111
    
    
    $
    
    
    
    $
    Change in plan assetsFair value of plan assets at beginning of year
    
    $
    23,104
    
    
    $
    14,969
    
    
    $
    
    
    
    $
    Actual return on plan assets
    
    
    884
    
    
    
    20
    
    
    
    
    
    
    
    Retiree contributions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    64Employer contributions
    
    
    
    
    
    
    9,025
    
    
    
    
    
    
    
    16Benefits paid
    
    
    (22,677
    )
    
    
    (910
    )
    
    
    
    
    
    
    (80
    )Fair value of plan assets at end of year
    
    $
    1,311
    
    
    $
    23,104
    
    
    $
    
    
    
    $
    Funded status
    
    $
    834
    
    
    $
    993
    
    
    $
    
    
    
    $
    Amount Recognized in the Balance Sheet:Noncurrent assets
    
    $
    834
    
    
    $
    
    
    
    $
    
    
    
    $
    Net pension asset at end of year
    
    $
    834
    
    
    $
    
    
    
    $
    
    
    
    $
    Amount Recognized in Accumulated
Other Comprehensive Income:Unrecognized actuarial loss (1)
    
    $
    67
    
    
    $
    
    
    
    $
    
    
    
    $
    
 
 (1)
    
    This amount will be amortized out of accumulated other comprehensive income into net
periodic benefit cost in 2007.  December 31, 2006Before
    
    
    
    
    
    AfterApplication of
    
    
    
    
    
    Application ofSFAS No. 158
    
    Adjustments
    
    SFAS No. 158Prepaid pension cost (included in other current assets)
    
    $
    901
    
    
    $
    (901
    )
    
    $
    Other assets
    
    
    71,827
    
    
    
    834
    
    
    
    72,661Total assets
    
    
    3,922,208
    
    
    
    (67
    )
    
    
    3,922,141Accumulated other comprehensive income
    
    
    493
    
    
    
    (67
    )
    
    
    426Total members equity (deficit)
    
    
    (85,537
    )
    
    
    (67
    )
    
    
    (85,604
    )Total liabilities and members equity (deficit)
    
    
    3,922,208
    
    
    
    (67
    )
    
    
    3,922,141
 26




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  OtherPension
    
    PostretirementBenefits
    
    Benefits2007
    
    $
    477
    
    
    $
    
 Plan Assets
  Other Plans
   NOTE 6. FINANCIAL INSTRUMENTS  INTEREST RATE SWAPS
    27




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
     28




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 NOTE 7. INVENTORIES
  December 31,2006
    
    
    2005Crude oil (1)
    
    $
    49,312
    
    
    $
    3,021Refined products and LPGs (2) (3)
    
    
    7,636
    
    
    
    11,864Lubrication oils and specialty chemicals
    
    
    7,500
    
    
    
    5,740Materials and supplies
    
    
    7,029
    
    
    
    8,203Other
    
    
    716
    
    
    
    241Total
    
    $
    72,193
    
    
    $
    29,069
 
 (1)
    
    At December 31, 2006, the substantial majority of our crude oil inventory was subject to
forward sales contracts.(2)
    
    Refined products and LPGs inventory is managed on a combined basis.(3)
    
    At December 31, 2006, we recorded a $1.5 million lower of cost or market adjustment
related to our Downstream Segments inventory. NOTE 8. PROPERTY, PLANT AND EQUIPMENT
  December 31,2006
    
    
    2005Land and right of way
    
    $
    128,791
    
    
    $
    147,064Line pipe and fittings
    
    
    1,218,226
    
    
    
    1,434,392Storage tanks
    
    
    196,306
    
    
    
    189,054Buildings and improvements
    
    
    58,973
    
    
    
    51,596Machinery and equipment
    
    
    346,868
    
    
    
    370,439Construction work in progress
    
    
    202,820
    
    
    
    241,855Total property, plant and equipment
    
    $
    2,151,984
    
    
    $
    2,434,400Less accumulated depreciation and amortization
    
    
    509,889
    
    
    
    474,332Net property, plant and equipment
    
    $
    1,642,095
    
    
    $
    1,960,068
    29




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
    Asset Retirement Obligations
   Asset retirement obligation liability balance, December 31, 2005
    
    $
    Liabilities recorded
    
    
    1,189Liabilities settled
    
    
    Accretion
    
    
    39Revision in estimates
    
    
    Asset retirement obligation liability balance, December 31, 2006
    
    $
    1,228
  30




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 NOTE 9. INVESTMENTS IN UNCONSOLIDATED AFFILIATES
 Seaway
  Centennial
  MB Storage
   31




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Summarized Financial Information for Seaway, Centennial and MB Storage
  For Year EndedDecember 31,2006
    
    2005Revenues
    
    $
    160,408
    
    
    $
    164,494Net income
    
    
    34,070
    
    
    
    52,623
  December 31,2006
    
    2005Current assets
    
    $
    58,241
    
    
    $
    60,082Noncurrent assets
    
    
    615,790
    
    
    
    630,212Current liabilities
    
    
    37,663
    
    
    
    32,242Long-term debt
    
    
    150,000
    
    
    
    150,000Noncurrent liabilities
    
    
    6,055
    
    
    
    13,626Partners capital
    
    
    480,313
    
    
    
    494,426
 Jonah
   32




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
    Revenues
    
    $
    79,618Net income
    
    
    34,743
  Current assets
    
    $
    33,963Noncurrent assets
    
    
    800,591Current liabilities
    
    
    25,113Noncurrent liabilities
    
    
    191Partners capital
    
    
    809,250
 NOTE 10. ACQUISITIONS
 Mexia Pipeline
  33




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Storage and Terminaling Assets
  Refined Products Terminal and Truck Rack
  Genco Assets
  Terminal Assets
  Refined Products Terminal
  34




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Cavern Assets
  NOTE 11. DISPOSITIONS AND DISCONTINUED OPERATIONS
 Pioneer Plant
   For Year EndedDecember 31,2006
    
    
    2005
    
    
    2004Operating revenues:Sales of petroleum products
    
    $
    3,828
    
    
    $
    10,479
    
    
    $
    7,295Other
    
    
    932
    
    
    
    2,975
    
    
    
    2,807Total operating revenues
    
    
    4,760
    
    
    
    13,454
    
    
    
    10,102Costs and expenses:Purchases of petroleum products
    
    
    3,000
    
    
    
    8,870
    
    
    
    5,944Operating expense
    
    
    182
    
    
    
    692
    
    
    
    738Depreciation and amortization
    
    
    51
    
    
    
    612
    
    
    
    610Taxes  other than income taxes
    
    
    30
    
    
    
    130
    
    
    
    121Total costs and expenses
    
    
    3,263
    
    
    
    10,304
    
    
    
    7,413Income from discontinued operations
    
    $
    1,497
    
    
    $
    3,150
    
    
    $
    2,689
  December 31,2005Inventories
    
    $
    7Property, plant and equipment, net
    
    
    19,812Assets of discontinued operations
    
    $
    19,819
 35




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  For Year EndedDecember 31,2006
    
    
    2005
    
    
    2004Cash flows from discontinued operating activities:Net income
    
    $
    19,369
    
    
    $
    3,150
    
    
    $
    2,689Depreciation and amortization
    
    
    51
    
    
    
    612
    
    
    
    610Gain on sale of Pioneer plant
    
    
    (17,872
    )
    
    
    
    
    
    
    (Increase) decrease in inventories
    
    
    (27
    )
    
    
    20
    
    
    
    (28
    )Net cash flows provided by discontinued operating
activities
    
    
    1,521
    
    
    
    3,782
    
    
    
    3,271Cash flows from discontinued investing activities:Capital expenditures
    
    
    
    
    
    
    
    
    
    
    (7,398
    )Net cash flows used in discontinued investing activities
    
    
    
    
    
    
    
    
    
    
    (7,398
    )Net cash flows from discontinued operations
    
    $
    1,521
    
    
    $
    3,782
    
    
    $
    (4,127
    )
 Crude oil and Refined Products Assets
  NOTE 12. GOODWILL AND OTHER INTANGIBLE ASSETS
 Goodwill
 Goodwill and Other Intangible Assets,
  36




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Downstream
    
    Midstream
    
    Upstream
    
    SegmentsSegment
    
    Segment
    
    Segment
    
    TotalGoodwill:December 31, 2006 (1)
    
    $
    1,339
    
    
    $
    
    
    
    $
    14,167
    
    
    $
    15,506December 31, 2005
    
    
    
    
    
    
    2,777
    
    
    
    14,167
    
    
    
    16,944
 
 (1)
    
    Effective August 1, 2006, with the formation of a joint venture with Enterprise, Jonah
was deconsolidated and has been subsequently accounted for as an equity investment (see
Note 9). On November 1, 2006, we acquired a refined products terminal, and recorded $1.3
million of goodwill (see Note 10). Other Intangible Assets
  December 31, 2006
    
    
    December 31, 2005Gross Carrying
    
    
    Accumulated
    
    
    Gross Carrying
    
    
    AccumulatedAmount
    
    
    Amortization
    
    
    Amount
    
    
    AmortizationIntangible assets:Gathering and transportation agreements (1)
    
    $
    241,537
    
    
    $
    (87,121
    )
    
    $
    464,337
    
    
    $
    (118,921
    )Fractionation agreement
    
    
    38,000
    
    
    
    (16,625
    )
    
    
    38,000
    
    
    
    (14,725
    )Other
    
    
    12,310
    
    
    
    (2,691
    )
    
    
    10,226
    
    
    
    (2,009
    )Subtotal
    
    $
    291,847
    
    
    $
    (106,437
    )
    
    $
    512,563
    
    
    $
    (135,655
    )Excess investments:Centennial Pipeline LLC
    
    $
    33,390
    
    
    $
    (16,579
    )
    
    $
    33,390
    
    
    $
    (12,947
    )Seaway Crude Pipeline Company
    
    
    26,908
    
    
    
    (4,450
    )
    
    
    27,100
    
    
    
    (3,764
    )Jonah Gas Gathering Company
    
    
    2,924
    
    
    
    
    
    
    
    
    
    
    
    Subtotal
    
    $
    63,222
    
    
    $
    (21,029
    )
    
    $
    60,490
    
    
    $
    (16,711
    )Total intangible assets
    
    $
    355,069
    
    
    $
    (127,466
    )
    
    $
    573,053
    
    
    $
    (152,366
    )
 
 (1)
    
    Effective August 1, 2006, with the formation of a joint venture with Enterprise, Jonah
was deconsolidated and has been subsequently accounted for as an equity investment (see
Note 9).   37




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
     Intangible Assets (1)
    
    Excess Investments2007
    
    $
    23,194
    
    
    $
    4,4402008
    
    
    20,664
    
    
    
    4,5882009
    
    
    18,053
    
    
    
    4,7932010
    
    
    18,034
    
    
    
    3,5872011
    
    
    18,026
    
    
    
    885
 
 (1)
    
    Excludes estimated amortization expense of Jonahs intangible assets as a result
of its deconsolidation effective August 1, 2006. NOTE 13. DEBT OBLIGATIONS
  December 31,2006
    
    
    2005Revolving Credit Facility, due December 2011
    
    $
    490,000
    
    
    $
    405,9006.45% TE Products Senior Notes, due January 2008
    
    
    179,968
    
    
    
    179,9377.625% TEPPCO Senior Notes, due February 2012
    
    
    498,866
    
    
    
    498,6596.125% TEPPCO Senior Notes, due February 2013
    
    
    199,130
    
    
    
    198,9887.51% TE Products Senior Notes, due January 2028
    
    
    210,000
    
    
    
    210,000Total borrowings
    
    
    1,577,964
    
    
    
    1,493,484Adjustment to carrying value associated with
hedges of
fair value
    
    
    25,323
    
    
    
    31,537Total debt instruments
    
    $
    1,603,287
    
    
    $
    1,525,021
 38




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Revolving Credit Facility
   
    
    The maturity date of the credit facility was extended from December 13, 2010 to
December 13, 2011. Also under the terms of the amendment, TEPPCO may request up to
two one-year extensions of the maturity date. These extensions, if requested, will
become effective subject to lender approval and satisfaction of certain other
conditions.
    
    The amendment releases Jonah as a guarantor of the Revolving Credit Facility and
restricts the amount of outstanding debt of the Jonah joint venture to debt owing
to the owners of its partnership interests and other third-party debt in the
principal aggregate amount of $50.0 million.
    
    The amendment modifies the financial covenants to, among other things, allows
TEPPCO to include in the calculation of its Consolidated EBITDA (as defined in the
Revolving Credit Facility) pro forma adjustments for material capital projects.
    
    The amendment allows for the issuance of Hybrid Securities (as defined in the
Revolving Credit Facility) of up to 15% of TEPPCOs Consolidated Total
Capitalization (as defined in the Revolving Credit Facility).
  Senior Notes
  39




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Redemption
    
    
    
    RedemptionYear
    
    Price
    
    Year
    
    Price2008
    
    
    103.755
    %
    
    2013
    
    
    101.878
    %2009
    
    
    103.380
    %
    
    2014
    
    
    101.502
    %2010
    
    
    103.004
    %
    
    2015
    
    
    101.127
    %2011
    
    
    102.629
    %
    
    2016
    
    
    100.751
    %2012
    
    
    102.253
    %
    
    2017
    
    
    100.376
    %
      Fair ValueFace
    
    December 31,Value
    
    2006
    
    20056.45% TE Products Senior Notes, due January 2008
    
    $
    180.0
    
    
    $
    181.6
    
    
    $
    183.77.625% TEPPCO Senior Notes, due February 2012
    
    
    500.0
    
    
    
    537.1
    
    
    
    552.06.125% TEPPCO Senior Notes, due February 2013
    
    
    200.0
    
    
    
    201.6
    
    
    
    205.67.51% TE Products Senior Notes, due January 2028
    
    
    210.0
    
    
    
    221.5
    
    
    
    224.1
 40




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Letter of Credit
  NOTE 14. MINORITY INTEREST
   Minority interest at December 31, 2003
    
    $
    1,114,661Adjustments to issuance of Limited Partner Units, net
    
    
    (99
    )Net income allocation  year ended December 31, 2004
    
    
    98,580Cash distributions
    
    
    (166,158
    )Minority interest at December 31, 2004
    
    
    1,046,984Issuance of Limited Partner Units, net
    
    
    278,806Net income
allocation  year ended December 31, 2005
    
    
    114,972Cash distributions
    
    
    (177,916
    )Minority interest at December 31, 2005
    
    
    1,262,846Issuance of Limited Partner Units, net
    
    
    195,059Net income allocation  year ended December 31, 2006
    
    
    144,319Cash distributions
    
    
    (196,665
    )Minority interest at December 31, 2006
    
    $
    1,405,559
 TEPPCOs Equity Offerings  Issuance of Units
  41




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Incentive Distribution Rights
  
    
    changes to certain provisions that relate to distributions and capital
contributions, including the reduction in the Parent Companys incentive
distribution rights from 50% to 25% (IDR Reduction Amendment), elimination of the
Parent Companys requirement to make capital contributions to TEPPCO to maintain a
2% capital account, and adjustment of TEPPCOs minimum quarterly distribution and
target distribution levels for entity-level taxes;
    
    changes to various voting percentage requirements, in most cases from 66 2/3% of
outstanding Units to a majority of outstanding Units;
    
    the percentage of holders of outstanding Units necessary to constitute a quorum
was reduced from 66 2/3% to a majority of the outstanding Units;
    
    removal of provisions requiring unitholder approval for specified actions with
respect to the Operating Partnerships;
    
    changes to supplement and revise certain provisions that relate to conflicts of
interest and fiduciary duties; and
    
    changes to provide for certain registration rights of the Parent Company and its
affiliates (including with respect to the Units issued in respect of the IDR
Reduction Amendment, as described below), for the maintenance of the separateness
of TEPPCO from any other person or entity and other miscellaneous matters.
   42




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   NOTE 15. MEMBERS EQUITY (DEFICIT)
  Members Equity (Deficit)
  Accumulated Other Comprehensive Income
 Reporting Comprehensive Income
 43




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Balance at December 31, 2003
    
    $
    (2,902
    )Transferred to earnings
    
    
    2,939Change in fair value of cash flow hedge
    
    
    (37
    )Balance at December 31, 2004
    
    
    Change in fair value of cash flow hedge
    
    
    11Balance at December 31, 2005
    
    
    11Transferred to earnings
    
    
    2,255Changes in fair values of interest rate cash flow hedges
    
    
    (2,503
    )Changes in fair values of crude oil cash flow hedges
    
    
    730Adjustment to initially apply SFAS No. 158
    
    
    (67
    )Balance at December 31, 2006
    
    $
    426
 NOTE 16. BUSINESS SEGMENTS
  
    
    Our Downstream Segment, which is engaged in the transportation, marketing and
storage of refined products, LPGs and petrochemicals;
    
    Our Upstream Segment, which is engaged in the gathering, transportation,
marketing and storage of crude oil and distribution of lubrication oils and
specialty chemicals; and
    
    Our Midstream Segment, which is engaged in the gathering of natural gas,
fractionation of NGLs and transportation of NGLs.
    44




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
    For Year Ended December 31, 2006Downstream
    
    
    Upstream
    
    
    Midstream
    
    
    SegmentsSegment
    
    
    Segment
    
    
    Segment
    
    
    Total
    
    
    Other
    
    
    ConsolidatedSales of petroleum products (1)
    
    $
    5,800
    
    
    $
    9,060,782
    
    
    $
    18,766
    
    
    $
    9,085,348
    
    
    $
    (4,832
    )
    
    $
    9,080,516Operating revenues
    
    
    298,501
    
    
    
    48,847
    
    
    
    182,503
    
    
    
    529,851
    
    
    
    (2,882
    )
    
    
    526,969Purchases of petroleum products(1)
    
    
    5,526
    
    
    
    8,953,407
    
    
    
    17,272
    
    
    
    8,976,205
    
    
    
    (9,143
    )
    
    
    8,967,062Operating expenses, including
power and taxes  other than
income taxes
    
    
    153,246
    
    
    
    66,801
    
    
    
    59,150
    
    
    
    279,197
    
    
    
    (749
    )
    
    
    278,448General and administrative
expenses
    
    
    17,085
    
    
    
    5,986
    
    
    
    8,277
    
    
    
    31,348
    
    
    
    335
    
    
    
    31,683Depreciation and amortization
expense
    
    
    41,405
    
    
    
    14,400
    
    
    
    52,447
    
    
    
    108,252
    
    
    
    
    
    
    
    108,252Gains on sales of assets
    
    
    (4,223
    )
    
    
    (1,805
    )
    
    
    (1,376
    )
    
    
    (7,404
    )
    
    
    
    
    
    
    (7,404
    )Operating income
    
    
    91,262
    
    
    
    70,840
    
    
    
    65,499
    
    
    
    227,601
    
    
    
    1,843
    
    
    
    229,444Equity earnings (losses)
    
    
    (8,018
    )
    
    
    11,905
    
    
    
    35,052
    
    
    
    38,939
    
    
    
    (2,178
    )
    
    
    36,761Interest income
    
    
    1,008
    
    
    
    407
    
    
    
    662
    
    
    
    2,077
    
    
    
    9
    
    
    
    2,086Other income, net
    
    
    494
    
    
    
    388
    
    
    
    6
    
    
    
    888
    
    
    
    
    
    
    
    888Earnings before interest
expense, income taxes,
discontinued operations and
minority interest
    
    $
    84,746
    
    
    $
    83,540
    
    
    $
    101,219
    
    
    $
    269,505
    
    
    $
    (326
    )
    
    $
    269,179
 
 (1)
    
    Amounts for the period from April 1, 2006 through December 31, 2006 have been fully
adjusted for the impact of adopting EITF 04-13. The period from January 1, 2006 through
March 31, 2006 and for the years ended December 31, 2005 and 2004 have not been adjusted
for the adoption of EITF 04-13, as retroactive restatement was not permitted, which impacts
comparability (see Note 3 for further information). 45




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 For Year Ended December 31, 2005Downstream
    
    
    Upstream
    
    
    Midstream
    
    
    SegmentsSegment
    
    
    Segment
    
    
    Segment
    
    
    Total
    
    
    Other
    
    
    ConsolidatedSales of petroleum products
    
    $
    
    
    
    $
    8,062,131
    
    
    $
    
    
    
    $
    8,062,131
    
    
    $
    (323
    )
    
    $
    8,061,808Operating revenues
    
    
    287,191
    
    
    
    48,108
    
    
    
    211,171
    
    
    
    546,470
    
    
    
    (3,244
    )
    
    
    543,226Purchases of petroleum products
    
    
    
    
    
    
    7,989,682
    
    
    
    
    
    
    
    7,989,682
    
    
    
    (3,244
    )
    
    
    7,986,438Operating expenses, including
power
    
    
    142,131
    
    
    
    63,263
    
    
    
    50,288
    
    
    
    255,682
    
    
    
    (323
    )
    
    
    255,359General and administrative
expenses
    
    
    17,653
    
    
    
    7,077
    
    
    
    8,413
    
    
    
    33,143
    
    
    
    310
    
    
    
    33,453Depreciation and amortization
expense
    
    
    39,403
    
    
    
    17,161
    
    
    
    54,165
    
    
    
    110,729
    
    
    
    
    
    
    
    110,729Gains on sales of assets
    
    
    (139
    )
    
    
    (118
    )
    
    
    (411
    )
    
    
    (668
    )
    
    
    
    
    
    
    (668
    )Operating income
    
    
    88,143
    
    
    
    33,174
    
    
    
    98,716
    
    
    
    220,033
    
    
    
    (310
    )
    
    
    219,723Equity earnings (losses)
    
    
    (2,984
    )
    
    
    23,078
    
    
    
    
    
    
    
    20,094
    
    
    
    
    
    
    
    20,094Interest income
    
    
    477
    
    
    
    
    
    
    
    210
    
    
    
    687
    
    
    
    
    
    
    
    687Other income, net
    
    
    278
    
    
    
    156
    
    
    
    14
    
    
    
    448
    
    
    
    (10,000
    )
    
    
    (9,552
    )Earnings before interest
expense, income taxes,
discontinued operations and
minority interest
    
    $
    85,914
    
    
    $
    56,408
    
    
    $
    98,940
    
    
    $
    241,262
    
    
    $
    (10,310
    )
    
    $
    230,952
 For Year Ended December 31, 2004Downstream
    
    
    Upstream
    
    
    Midstream
    
    
    SegmentsSegment
    
    
    Segment
    
    
    Segment
    
    
    Total
    
    
    Other
    
    
    ConsolidatedSales of petroleum products
    
    $
    
    
    
    $
    5,426,832
    
    
    $
    
    
    
    $
    5,426,832
    
    
    $
    
    
    
    $
    5,426,832Operating revenues
    
    
    279,400
    
    
    
    49,163
    
    
    
    195,902
    
    
    
    524,465
    
    
    
    (3,207
    )
    
    
    521,258Purchases of petroleum products
    
    
    
    
    
    
    5,370,234
    
    
    
    
    
    
    
    5,370,234
    
    
    
    (3,207
    )
    
    
    5,367,027Operating expenses, including
power
    
    
    148,644
    
    
    
    55,459
    
    
    
    53,269
    
    
    
    257,372
    
    
    
    85
    
    
    
    257,457General and administrative
expenses
    
    
    16,884
    
    
    
    5,434
    
    
    
    5,698
    
    
    
    28,016
    
    
    
    1
    
    
    
    28,017Depreciation and amortization
expense
    
    
    43,135
    
    
    
    13,130
    
    
    
    56,019
    
    
    
    112,284
    
    
    
    
    
    
    
    112,284Gains on sales of assets
    
    
    (526
    )
    
    
    (527
    )
    
    
    
    
    
    
    (1,053
    )
    
    
    
    
    
    
    (1,053
    )Operating income
    
    
    71,263
    
    
    
    32,265
    
    
    
    80,916
    
    
    
    184,444
    
    
    
    (86
    )
    
    
    184,358Equity earnings (losses)
    
    
    (6,544
    )
    
    
    28,692
    
    
    
    
    
    
    
    22,148
    
    
    
    
    
    
    
    22,148Interest income
    
    
    309
    
    
    
    43
    
    
    
    115
    
    
    
    467
    
    
    
    
    
    
    
    467Interest income, related party
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    187
    
    
    
    187Other income, net
    
    
    478
    
    
    
    363
    
    
    
    12
    
    
    
    853
    
    
    
    
    
    
    
    853Earnings before interest
expense, income taxes,
discontinued operations and
minority interest
    
    $
    65,506
    
    
    $
    61,363
    
    
    $
    81,043
    
    
    $
    207,912
    
    
    $
    101
    
    
    $
    208,013
 46




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Downstream
    
    Upstream
    
    Midstream
    
    SegmentsSegment
    
    Segment
    
    Segment
    
    Total
    
    Other
    
    ConsolidatedDecember 31, 2006:Total assets
    
    $
    1,160,929
    
    
    $
    1,504,699
    
    
    $
    1,335,502
    
    
    $
    4,001,130
    
    
    $
    (78,989
    )
    
    $
    3,922,141Capital expenditures
    
    
    75,344
    
    
    
    48,351
    
    
    
    42,929
    
    
    
    166,624
    
    
    
    3,422
    
    
    
    170,046Non-cash investing activities
    
    
    
    
    
    
    
    
    
    
    581,341
    
    
    
    581,341
    
    
    
    
    
    
    
    581,341December 31, 2005:Total assets
    
    $
    1,056,217
    
    
    $
    1,353,492
    
    
    $
    1,280,548
    
    
    $
    3,690,257
    
    
    $
    (9,458
    )
    
    $
    3,680,799Capital expenditures
    
    
    58,609
    
    
    
    40,954
    
    
    
    119,837
    
    
    
    219,400
    
    
    
    1,153
    
    
    
    220,553Non-cash investing activities
    
    
    1,429
    
    
    
    
    
    
    
    
    
    
    
    1,429
    
    
    
    
    
    
    
    1,429December 31, 2004:Total assets
    
    $
    959,042
    
    
    $
    1,069,007
    
    
    $
    1,184,184
    
    
    $
    3,212,233
    
    
    $
    150,505
    
    
    $
    3,362,738Capital expenditures
    
    
    80,930
    
    
    
    37,448
    
    
    
    37,677
    
    
    
    156,055
    
    
    
    694
    
    
    
    156,749Capital expenditures for
discontinued operations
    
    
    
    
    
    
    
    
    
    
    7,398
    
    
    
    7,398
    
    
    
    
    
    
    
    7,398
  For Year Ended December 31,2006
    
    
    2005
    
    
    2004Earnings before interest expense, provision for income
taxes, discontinued operations and minority interest
    
    $
    269,179
    
    
    $
    230,952
    
    
    $
    208,013Interest expense  net
    
    
    (86,171
    )
    
    
    (81,861
    )
    
    
    (72,053
    )Income before provision for income taxes, discontinued
operations and minority interest
    
    
    183,008
    
    
    
    149,091
    
    
    
    135,960Provision for income taxes
    
    
    652
    
    
    
    3
    
    
    
    (1
    )Minority interest
    
    
    130,484
    
    
    
    112,744
    
    
    
    96,667Income from continuing operations
    
    
    51,872
    
    
    
    36,344
    
    
    
    39,294Discontinued operations
    
    
    5,534
    
    
    
    922
    
    
    
    776Net income
    
    $
    57,406
    
    
    $
    37,266
    
    
    $
    40,070
 NOTE 17. RELATED PARTY TRANSACTIONS
 EPCO and Affiliates and Duke Energy, DEFS and Affiliates
  47




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   
    
    EPCO and its consolidated private company subsidiaries;
    
    DFI, which owns and controls us;
    
    Enterprise Products Partners L.P., which is controlled by affiliates of EPCO;
    
    Duncan Energy Partners L.P. (DEP), which is controlled by affiliates of EPCO; and
    
    Enterprise Gas Processing LLC, which is controlled by affiliates of EPCO and is
our joint venture partner in Jonah.
     Administrative Services Agreement
  
    
    EPCO provides administrative, management, engineering and operating services as
may be necessary to manage and operate our business, properties and assets (in
accordance with prudent industry practices). EPCO will employ or otherwise retain
the services of such personnel as may be necessary to provide such services.
    
    We are required to reimburse EPCO for its services in an amount equal to the sum
of all costs and expenses incurred by EPCO which are directly or indirectly related
to our business or activities (including EPCO expenses reasonably allocated to us).
In addition, we have agreed to pay all sales, use, excise, value added or similar
taxes, if any, that may be applicable from time to time in respect of the services
provided to us by EPCO.
 48




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 
    
    EPCO allows us to participate as named insureds in its overall insurance program
with the associated costs being allocated to us.
     For Year Ended December 31,2006
    
    2005
    
    2004Revenues from EPCO and affiliates: (1)Sales of petroleum products (2)
    
    $
    3.2
    
    
    $
    
    
    
    $
    Transportation  NGLs (3)
    
    
    10.2
    
    
    
    7.4
    
    
    
    Transportation  LPGs(4)
    
    
    3.6
    
    
    
    4.3
    
    
    
    Other operating revenues (5)
    
    
    1.5
    
    
    
    0.3
    
    
    
    Costs and Expenses from EPCO and affiliates: (1)Payroll, administrative and other (6)(7)
    
    
    136.9
    
    
    
    78.0
    
    
    
    Purchases of petroleum products (8)
    
    
    41.8
    
    
    
    3.4
    
    
    
    Revenues from DEFS and affiliates: (9)Sales of petroleum products
    
    
    
    
    
    
    4.3
    
    
    
    23.2Transportation  NGLs
    
    
    
    
    
    
    2.8
    
    
    
    16.7Gathering  Natural gas  Jonah
    
    
    
    
    
    
    0.5
    
    
    
    3.3Transportation  LPGs
    
    
    
    
    
    
    0.7
    
    
    
    2.6Other operating revenues
    
    
    
    
    
    
    2.4
    
    
    
    14.0Costs and Expenses from DEFS and affiliates: (9)Payroll, administrative and other (10)(11)(12)
    
    
    
    
    
    
    17.4
    
    
    
    102.4Purchases of petroleum products (13)
    
    
    
    
    
    
    38.5
    
    
    
    146.4
 
 (1)
    
    Operating revenues earned and expenses incurred from activities with EPCO and its
affiliates are considered related party transactions beginning February 24, 2005, as a
result of the change in our ownership.(2)
    
    Includes Jonah NGL sales through July 31, 2006 of $2.9 million to Enterprise Gas
Processing, LLC and $0.3 million in sales from Lubrication Services, L.P. (LSI) to
various EPCO affiliates.(3)
    
    Includes revenues from NGL transportation on the Chaparral and Panola NGL pipelines.(4)
    
    Includes revenues from LPG transportation on the TE Products pipeline.(5)
    
    Includes other operating revenues on the TE Products pipeline. 49




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 
 (6)
    
    Includes payroll, payroll related expenses, administrative expenses, including
reimbursements related to employee benefits and employee benefit plans, incurred in
managing us and our subsidiaries in accordance with the ASA, and other operating expenses.(7)
    
    Includes insurance expense for the years ended December 31, 2006 and 2005, related to
premiums paid by EPCO of $15.8 million and $9.8 million, respectively. Beginning February
24, 2005, the majority of our insurance coverage, including property, liability, business
interruption, auto and directors and officers liability insurance, was obtained through
EPCO.(8)
    
    Includes TCO purchases of condensate of $41.6 million, Jonah processing fees through
July 31, 2006 of $0.1 million and $0.1 million of expenses related to LSIs use of an
affiliate of EPCO as a transporter.(9)
    
    Operating revenues earned and expenses incurred from activities with DEFS and its
affiliates are considered related party transactions prior to February 23, 2005, at which
time a change in our ownership occurred.(10)
    
    Includes operating costs and expenses related to DEFS managing and operating the Jonah
and Val Verde systems and the Chaparral NGL pipeline on our behalf under contractual
agreements established at the time of acquisition of each asset. In connection with the
change in our ownership, we or EPCO have assumed these activities.(11)
    
    Includes costs related to payroll, payroll related expenses and administrative expenses
incurred in managing us and our subsidiaries.(12)
    
    Includes insurance expense for the years ended December 31, 2005 and 2004, related to
premiums paid to Bison Insurance Company Limited (Bison), a wholly owned subsidiary of
Duke Energy, of $1.2 million and $6.5 million, respectively. Through February 23, 2005, we
contracted with Bison for a majority of our insurance coverage, including property,
liability, auto and directors and officers liability insurance.(13)
    
    Includes TCO purchases of condensate and $0.8 million of purchases by Jonahs Pioneer
processing plant which is classified as income from discontinued operations in the
consolidated financial statements.  December 31,2006
    
    2005Accounts receivable, related party (1)
    
    $
    0.3
    
    
    $
    4.3Gas imbalance receivable
    
    
    1.3
    
    
    
    Insurance reimbursement receivable
    
    
    1.4
    
    
    
    1.3Accounts payable, related party (2)
    
    
    26.4
    
    
    
    9.8Deferred revenue, related party
    
    
    0.3
    
    
    
    Long-term payable (3)
    
    
    1.8
    
    
    
    
 
 (1)
    
    Relates to sales and transportation services provided to EPCO and affiliates.(2)
    
    Relates to direct payroll, payroll related costs and other operational related charges
from EPCO and affiliates.(3)
    
    Relates to our share of EPCOs Oil Insurance Limited insurance program retrospective
premiums obligation. Sale of Pioneer plant
  50




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Jonah Joint Venture
   Other Transactions
    51




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Relationships with Unconsolidated Subsidiaries
 Centennial
    Jonah
  Seaway
  MB Storage
  52




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  NOTE 18. COMMITMENTS AND CONTINGENCIES
 Litigation
 Ryan E. McCleery and Marcia S.
McCleery, et al. and Michael and Linda Robson, et al. v. Texas Eastern Corporation, et al. Michael and
Linda Robson, et al. v. Texas Eastern Corporation, et al
 Rebecca L. Grisham et al. v. TE Products Pipeline
Company, Limited Partnership
 Jimmy R. Green, et al. v. Cities
Service Refinery, et al. th
  53




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
      Regulatory Matters
  54




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
      55




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
        56




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Contractual Obligations
  Payment or Settlement due by PeriodTotal
    
    2007
    
    2008
    
    2009
    
    2010
    
    2011
    
    ThereafterMaturities of long-term debt (1)
    
    $
    1,580.0
    
    
    $
    
    
    
    $
    180.0
    
    
    $
    
    
    
    $
    
    
    
    $
    490.0
    
    
    $
    910.0Interest payments (2)
    
    
    790.6
    
    
    
    106.9
    
    
    
    101.2
    
    
    
    95.4
    
    
    
    95.4
    
    
    
    94.1
    
    
    
    297.6Operating leases (3)
    
    
    69.7
    
    
    
    18.7
    
    
    
    11.7
    
    
    
    8.8
    
    
    
    7.3
    
    
    
    6.3
    
    
    
    16.9Purchase obligations (4)
    
    
    15.0
    
    
    
    12.9
    
    
    
    1.4
    
    
    
    0.5
    
    
    
    0.1
    
    
    
    
    
    
    
    0.1Capital expenditure
obligations (5)
    
    
    9.5
    
    
    
    9.5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Standby letter of credit (6)
    
    
    8.7
    
    
    
    8.7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other liabilities and deferred
Credits (7)
    
    
    5.2
    
    
    
    
    
    
    
    1.8
    
    
    
    1.7
    
    
    
    0.2
    
    
    
    0.1
    
    
    
    1.4
 
 (1)
    
    TEPPCO has long-term payment obligations under its Revolving Credit Facility and its
Senior Notes. Amounts shown in the table represent the scheduled future maturities of
long-term debt principal for the periods indicated (see Note 13 for additional information
regarding TEPPCOs consolidated debt obligations).(2)
    
    Includes interest payments due on our Senior Notes and interest payments and commitment
fees due on our Revolving Credit Facility. The interest amount calculated on the Revolving
Credit Facility is based on the assumption that the amount outstanding and the interest
rate charged both remain at their current levels.(3)
    
    We lease property, plant and equipment under noncancelable and cancelable operating
leases. Amounts shown in the table represent minimum cash lease payment obligations under
our operating leases with terms in excess of one year for the periods indicated. Lease
expense is charged to operating costs and expenses on a straight line basis over the period
of expected economic benefit. Contingent rental payments are expensed as incurred. Total
rental expense for the years ended December 31, 2006, 2005 and 2004, was $25.3 million,
$24.0 million and $22.1 million, respectively.(4)
    
    We have long and short-term purchase obligations for products and services with
third-party suppliers. The prices that we are obligated to pay under these contracts
approximate current market prices. The preceding table shows our commitments and estimated
payment obligations under these contracts for the periods indicated. Our estimated future
payment obligations are based on the contractual price under each contract for products and
services at December 31, 2006.(5)
    
    We have short-term payment obligations relating to capital projects we have initiated.
These commitments represent unconditional payment obligations that we have agreed to pay
vendors for services rendered or products purchased.(6)
    
    At December 31, 2006, we had outstanding an $8.7 million standby letter of credit in
connection with crude oil purchased during the fourth quarter of 2006. The payable related
to these purchases of crude oil is expected to be paid during the first quarter of 2007.(7)
    
    Excludes approximately $10.1 million of long-term deferred revenue payments, which are
being transferred to income over the term of the respective revenue contracts and $4.2
million related to our estimated long-term portion of our obligation under a catastrophic
event guarantee for Centennial. The amount of commitment by year is our best estimate of
projected payments of these long-term liabilities. Other
  57




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
       58




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
     NOTE 19. CONCENTRATIONS OF CREDIT RISK
   59




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 NOTE 20. SUPPLEMENTAL CASH FLOW INFORMATION
  For Year Ended December 31,2006
    
    
    2005
    
    
    2004Decrease (increase) in:Accounts receivable, trade
    
    $
    (67,317
    )
    
    $
    (249,745
    )
    
    $
    (181,690
    )Accounts receivable, related parties
    
    
    1,736
    
    
    
    6,638
    
    
    
    (14,693
    )Advance to related parties
    
    
    
    
    
    
    
    
    
    
    (67,006
    )Inventories
    
    
    (45,002
    )
    
    
    (970
    )
    
    
    (3,433
    )Other current assets
    
    
    25,812
    
    
    
    (19,088
    )
    
    
    (9,920
    )Other
    
    
    (9,906
    )
    
    
    (4,371
    )
    
    
    (9,163
    )Increase (decrease) in:Accounts payable and accrued expenses
    
    
    44,348
    
    
    
    254,251
    
    
    
    186,942Accounts payable, related parties
    
    
    15,810
    
    
    
    (12,508
    )
    
    
    4,360Other
    
    
    (6,133
    )
    
    
    (11,253
    )
    
    
    19,735Net effect of changes in operating accounts
    
    $
    (40,652
    )
    
    $
    (37,046
    )
    
    $
    (74,868
    )Non-cash investing activities:Net assets transferred to Mont Belvieu Storage Partners, L.P.
    
    $
    
    
    
    $
    1,429
    
    
    $
    Net assets transferred to Jonah Gas Gathering Company
    
    $
    572,609
    
    
    $
    
    
    
    $
    Payable to Enterprise Gas Processing, LLC for spending
for Phase V expansion of Jonah Gas Gathering Company
    
    $
    8,732
    
    
    $
    
    
    
    $
    Supplemental disclosure of cash flows:Cash paid for interest (net of amounts capitalized)
    
    $
    88,107
    
    
    $
    82,315
    
    
    $
    77,510
 NOTE 21. SUBSEQUENT EVENTS
   MB Storage
  60




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   Junior Subordinated Notes
    61




---



##### 



TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Treasury Locks
  Centennial Debt Guarantee
  62