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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549



FORM 10-Q



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



For the Quarter Ended September 30, 2002



Commission File No. 1-13603

TE Products Pipeline Company,
Limited Partnership(Exact name of Registrant as specified in its
charter)

|                                                  |  |                                                   
|------------------------------------------------- |  | --------------------------------------------------
|Delaware
(State of Incorporation
or Organization) |  | 76-0329620
(I.R.S. Employer
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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TABLE OF CONTENTS



|                                                                                              |                                                                                                                      |  |  |  |  |  |  | 
|--------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION                                                                
|Item 1. Financial Statements                                                                 
|                                                                                              | Consolidated Balance Sheets as of September 30, 2002 (unaudited) and December 31, 2001                              
|                                                                                              | Consolidated Statements of Income for the three months and nine months ended September 30, 2002 and 2001 (unaudited)
|                                                                                              | Consolidated Statements of Cash Flows for the nine months ended September 30, 2002 and 2001 (unaudited)             
|                                                                                              | Notes to Consolidated Financial Statements (unaudited)                                                              
|Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                                                                                              | Forward-Looking Statements                                                                                          
|Item 3. Quantitative and Qualitative Disclosures About Market Risk                           
|Item 4. Controls and Procedures                                                              
|PART II. OTHER INFORMATION                                                                   
|Item 6. Exhibits and Reports on Form 8-K.                                                    
|SIGNATURES                                                                                   
|EXHIBIT INDEX                                                                                



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TE PRODUCTS PIPELINE COMPANY, LIMITED PARTNERSHIP

TABLE OF CONTENTS

|                                                                                              |                                                                                                                      |    |     
|--------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------- | -- | ----
|                                                                                              |                                                                                                                      |    | Page
|                                                                                              |                                                                                                                      |    |     
|PART I. FINANCIAL INFORMATION                                                                
|                                                                                              |                                                                                                                      |   
|Item 1. Financial Statements                                                                 
|                                                                                              |                                                                                                                      |    |     
|                                                                                              | Consolidated Balance Sheets as of September 30, 2002 (unaudited) and December 31, 2001                               |    | 1   
|                                                                                              |                                                                                                                      |    |     
|                                                                                              | Consolidated Statements of Income for the three months and nine months ended September 30,
2002 and 2001 (unaudited) |    | 2   
|                                                                                              |                                                                                                                      |    |     
|                                                                                              | Consolidated Statements of Cash Flows for the nine months ended September 30, 2002
and 2001 (unaudited)              |    | 3   
|                                                                                              |                                                                                                                      |    |     
|                                                                                              | Notes to the Consolidated Financial Statements (unaudited)                                                           |    | 4   
|                                                                                              |                                                                                                                      |    |     
|Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations |                                                                                                                      | 13
|                                                                                              |                                                                                                                      |    |     
|                                                                                              | Forward-Looking Statements                                                                                           |    | 22  
|                                                                                              |                                                                                                                      |    |     
|Item 3. Quantitative and Qualitative Disclosures About Market Risk                            |                                                                                                                      | 22
|                                                                                              |                                                                                                                      |    |     
|Item 4. Controls and Procedures                                                               |                                                                                                                      | 23
|                                                                                              |                                                                                                                      |    |     
|PART II. OTHER
INFORMATION                                                                    |                                                                                                                      |   
|                                                                                              |                                                                                                                      |    |     
|Item 6. Exhibits and Reports on Form 8-K                                                      |                                                                                                                      | 24

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PART I. FINANCIAL INFORMATION




Item 1. Financial Statements




TE PRODUCTS PIPELINE COMPANY, LIMITED PARTNERSHIP
 
CONSOLIDATED BALANCE SHEETS
(in thousands)

|                                                                                                                   |                                                                |                                         |         |               |         |              |         |         |         | 
|------------------------------------------------------------------------------------------------------------------ | -------------------------------------------------------------- | --------------------------------------- | ------- | ------------- | ------- | ------------ | ------- | ------- | ------- | 
|                                                                                                                   |                                                                |                                         |         | September 30, |         | December 31,
|                                                                                                                   |                                                                |                                         |         | 2002          |         | 2001        
|                                                                                                                   |                                                                |                                         |         |               |         |             
|                                                                                                                   |                                                                |                                         |         | (Unaudited)   |         |              |         |        
|ASSETS                                                                                                             |                                                                |                                         |         |               |         |              |         |        
|Current assets:                                                                                                    |                                                                |                                         |         |               |         |              |         |        
|                                                                                                                   | Cash and cash equivalents                                      |                                         | $       | 8,671         |         |              | $       | 3,654   |        
|                                                                                                                   | Accounts receivable, trade                                     |                                         |         | 19,638        |         |              |         | 22,815  |        
|                                                                                                                   | Accounts receivable, related parties                           |                                         |         | 13,394        |         |              |         | 7,386   |        
|                                                                                                                   | Inventories                                                    |                                         |         | 11,220        |         |              |         | 10,617  |        
|                                                                                                                   | Other                                                          |                                         |         | 9,270         |         |              |         | 11,069  |        
|                                                                                                                   | Total assets of discontinued operations                        |                                         |         |              |         |              |         | 35,798  |        
|                                                                                                                   |                                                                |                                         |         |               |         |              |         |        
|                                                                                                                   |                                                                | Total current assets                    |         |               | 62,193  |              |         |         | 91,339  | 
|                                                                                                                   |                                                                |                                         |         |               |         |              |         |        
|Property, plant and equipment, at cost (Net of accumulated
depreciation and amortization of $280,912 and $263,662) |                                                                |                                         | 717,765 |               |         |              | 697,178 |        
|Equity investments                                                                                                 |                                                                |                                         | 72,125  |               |         |              | 69,409  |        
|Advances to Parent Partnership                                                                                     |                                                                |                                         |        |               |         |              | 3,993   |        
|Other assets                                                                                                       |                                                                |                                         | 22,491  |               |         |              | 17,915  |        
|                                                                                                                   |                                                                |                                         |         |               |         |              |         |        
|                                                                                                                   |                                                                | Total assets                            |         | $             | 874,574 |              |         | $       | 879,834 | 
|                                                                                                                   |                                                                |                                         |         |               |         |              |         |        
|LIABILITIES AND PARTNERS CAPITAL                                                                                  |                                                                |                                         |         |               |         |              |         |        
|Current liabilities:                                                                                               |                                                                |                                         |         |               |         |              |         |        
|                                                                                                                   | Note payable, Parent Partnership                               |                                         | $       |              |         |              | $       | 72,490  |        
|                                                                                                                   | Accounts payable and accrued liabilities                       |                                         |         | 16,721        |         |              |         | 18,994  |        
|                                                                                                                   | Accounts payable, Texas Eastern Products Pipeline Company, LLC |                                         |         | 25,794        |         |              |         | 12,455  |        
|                                                                                                                   | Accrued interest                                               |                                         |         | 3,381         |         |              |         | 12,977  |        
|                                                                                                                   | Other accrued taxes                                            |                                         |         | 7,291         |         |              |         | 5,647   |        
|                                                                                                                   | Other                                                          |                                         |         | 15,071        |         |              |         | 10,204  |        
|                                                                                                                   | Total liabilities of discontinued operations                   |                                         |         |              |         |              |         | 33,366  |        
|                                                                                                                   |                                                                |                                         |         |               |         |              |         |        
|                                                                                                                   |                                                                | Total current liabilities               |         |               | 68,258  |              |         |         | 166,133 | 
|                                                                                                                   |                                                                |                                         |         |               |         |              |         |        
|Senior Notes                                                                                                       |                                                                |                                         | 395,082 |               |         |              | 375,184 |        
|Note Payable, Parent Partnership                                                                                   |                                                                |                                         | 146,332 |               |         |              | 45,410  |        
|Other liabilities and deferred credits                                                                             |                                                                |                                         | 22,355  |               |         |              | 22,995  |        
|Commitments and contingencies                                                                                      |                                                                |                                         |         |               |         |              |         |        
|Partners capital:                                                                                                 |                                                                |                                         |         |               |         |              |         |        
|                                                                                                                   | General partners interest                                     |                                         |         | 2             |         |              |         | 3       |        
|                                                                                                                   | Limited partners interest                                     |                                         |         | 242,545       |         |              |         | 270,109 |        
|                                                                                                                   |                                                                |                                         |         |               |         |              |         |        
|                                                                                                                   |                                                                | Total partners capital                 |         |               | 242,547 |              |         |         | 270,112 | 
|                                                                                                                   |                                                                |                                         |         |               |         |              |         |        
|                                                                                                                   |                                                                | Total liabilities and partners capital |         | $             | 874,574 |              |         | $       | 879,834 | 
|                                                                                                                   |                                                                |                                         |         |               |         |              |         |        

See accompanying Notes to Consolidated Financial Statements.

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TE PRODUCTS PIPELINE COMPANY, LIMITED PARTNERSHIP
 
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(in thousands)

|                                    |                                       |                                       |        |                    |        |                   |        |        |        |      |         |        |         |  |         |         |         | 
|----------------------------------- | ------------------------------------- | ------------------------------------- | ------ | ------------------ | ------ | ----------------- | ------ | ------ | ------ | ---- | ------- | ------ | ------- |  | ------- | ------- | ------- | 
|                                    |                                       |                                       |        | Three Months Ended |        | Nine Months Ended
|                                    |                                       |                                       |        | September 30,      |        | September 30,    
|                                    |                                       |                                       |        |                    |        |                  
|                                    |                                       |                                       |        | 2002               |        | 2001              |        | 2002   |        | 2001
|                                    |                                       |                                       |        |                    |        |                   |        |        |        |     
|Operating revenues:                 |                                       |                                       |        |                    |        |                   |        |        |        |      |         |        |         |  |         |        
|                                    | Transportation  Refined products     |                                       | $      | 35,271             |        |                   | $      | 32,161 |        |      | $       | 92,218 |         |  | $       | 109,748 |        
|                                    | Transportation  LPGs                 |                                       |        | 12,515             |        |                   |        | 15,669 |        |      |         | 46,688 |         |  |         | 54,174  |        
|                                    | Mont Belvieu operations               |                                       |        | 3,726              |        |                   |        | 3,977  |        |      |         | 11,121 |         |  |         | 9,871   |        
|                                    | Other                                 |                                       |        | 7,242              |        |                   |        | 6,720  |        |      |         | 22,969 |         |  |         | 25,581  |        
|                                    |                                       |                                       |        |                    |        |                   |        |        |        |      |         |        |         |  |         |        
|                                    |                                       | Total operating revenues              |        |                    | 58,754 |                   |        |        | 58,527 |      |         |        | 172,996 |  |         |         | 199,374 | 
|                                    |                                       |                                       |        |                    |        |                   |        |        |        |      |         |        |         |  |         |        
|Costs and expenses:                 |                                       |                                       |        |                    |        |                   |        |        |        |      |         |        |         |  |         |        
|                                    | Operating, general and administrative |                                       |        | 21,256             |        |                   |        | 20,176 |        |      |         | 60,618 |         |  |         | 55,965  |        
|                                    | Operating fuel and power              |                                       |        | 7,563              |        |                   |        | 8,303  |        |      |         | 20,202 |         |  |         | 25,545  |        
|                                    | Depreciation and amortization         |                                       |        | 7,496              |        |                   |        | 6,675  |        |      |         | 21,692 |         |  |         | 20,051  |        
|                                    | Taxes  other than income taxes       |                                       |        | 2,711              |        |                   |        | 1,304  |        |      |         | 8,532  |         |  |         | 6,151   |        
|                                    |                                       |                                       |        |                    |        |                   |        |        |        |      |         |        |         |  |         |        
|                                    |                                       | Total costs and expenses              |        |                    | 39,026 |                   |        |        | 36,458 |      |         |        | 111,044 |  |         |         | 107,712 | 
|                                    |                                       |                                       |        |                    |        |                   |        |        |        |      |         |        |         |  |         |        
|                                    |                                       | Operating income                      |        |                    | 19,728 |                   |        |        | 22,069 |      |         |        | 61,952  |  |         |         | 91,662  | 
|Interest expense                    |                                       |                                       | (6,698 | )                  |        |                   | (8,090 | )      |        |      | (20,639 | )      |         |  | (24,004 | )      
|Interest capitalized                |                                       |                                       | 709    |                    |        |                   | 909    |        |        |      | 2,900   |        |         |  | 1,844   |        
|Equity earnings                     |                                       |                                       | (2,019 | )                  |        |                   | (296   | )      |        |      | (5,005  | )      |         |  | (635    | )      
|Other income  net                  |                                       |                                       | 77     |                    |        |                   | 433    |        |        |      | 271     |        |         |  | 1,115   |        
|                                    |                                       |                                       |        |                    |        |                   |        |        |        |      |         |        |         |  |         |        
|                                    |                                       | Income before discontinued operations |        |                    | 11,797 |                   |        |        | 15,025 |      |         |        | 39,479  |  |         |         | 69,982  | 
|Income from discontinued operations |                                       |                                       |       |                    |        |                   | 405    |        |        |      | 912     |        |         |  | 1,340   |        
|                                    |                                       |                                       |        |                    |        |                   |        |        |        |      |         |        |         |  |         |        
|                                    |                                       | Net income                            |        | $                  | 11,797 |                   |        | $      | 15,430 |      |         | $      | 40,391  |  |         | $       | 71,322  | 
|                                    |                                       |                                       |        |                    |        |                   |        |        |        |      |         |        |         |  |         |        

See accompanying Notes to Consolidated Financial Statements.

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TE PRODUCTS PIPELINE COMPANY, LIMITED PARTNERSHIP
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)

|                                                              |                                                                                                          |                                                              |                                              |          |                   |         |        |         |        |         |  
|------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------ | -------------------------------------------- | -------- | ----------------- | ------- | ------ | ------- | ------ | ------- | -
|                                                              |                                                                                                          |                                                              |                                              |          | Nine Months Ended
|                                                              |                                                                                                          |                                                              |                                              |          | September 30,    
|                                                              |                                                                                                          |                                                              |                                              |          |                  
|                                                              |                                                                                                          |                                                              |                                              |          | 2002              |         | 2001  
|                                                              |                                                                                                          |                                                              |                                              |          |                   |         |       
|Cash flows from operating activities:                         |                                                                                                          |                                                              |                                              |          |                   |         |        |        
|                                                              | Net income from continuing operations                                                                    |                                                              | $                                            | 39,479   |                   |         | $      | 69,982  |       
|                                                              | Adjustments to reconcile net income from continuing operations
to cash provided by operating activities: |                                                              |                                              |          |                   |         |        |         |       
|                                                              |                                                                                                          | Depreciation and amortization                                |                                              |          | 21,692            |         |        |         | 20,051 |        
|                                                              |                                                                                                          | Equity in loss of affiliate                                  |                                              |          | 5,005             |         |        |         | 635    |        
|                                                              |                                                                                                          | Non-cash portion of interest expense                         |                                              |          | 23                |         |        |         | 447    |        
|                                                              |                                                                                                          | Decrease in accounts receivable                              |                                              |          | 3,177             |         |        |         | 7,198  |        
|                                                              |                                                                                                          | Increase in inventories                                      |                                              |          | (603              | )       |        |         | (1,942 | )      
|                                                              |                                                                                                          | Decrease (increase) in other current assets                  |                                              |          | 1,799             |         |        |         | (8,145 | )      
|                                                              |                                                                                                          | (Decrease) increase in accounts payable and accrued expenses |                                              |          | (3,546            | )       |        |         | 350    |        
|                                                              |                                                                                                          | Other                                                        |                                              |          | 24,002            |         |        |         | 3,895  |        
|                                                              |                                                                                                          |                                                              |                                              |          |                   |         |        |        
|                                                              |                                                                                                          |                                                              | Net cash provided by continuing operations   |          |                   | 91,028  |        |         |        | 92,471  |  
|                                                              |                                                                                                          |                                                              | Net cash provided by discontinued operations |          |                   | 1,178   |        |         |        | 5,876   |  
|                                                              |                                                                                                          |                                                              |                                              |          |                   |         |        |        
|                                                              |                                                                                                          |                                                              | Net cash provided by operating activities    |          |                   | 92,206  |        |         |        | 98,347  |  
|                                                              |                                                                                                          |                                                              |                                              |          |                   |         |        |        
|Cash flows from investing activities:                         |                                                                                                          |                                                              |                                              |          |                   |         |        |        
|                                                              | Proceeds from cash investments                                                                           |                                                              |                                              |         |                   |         |        | 3,236   |       
|                                                              | Proceeds from sale of assets                                                                             |                                                              |                                              | 3,380    |                   |         |        |        |       
|                                                              | Proceeds from sale of TEPPCO Colorado, LLC                                                               |                                                              |                                              | 4,095    |                   |         |        |        |       
|                                                              | Investment in Centennial Pipeline LLC                                                                    |                                                              |                                              | (7,721   | )                 |         |        | (34,335 | )     
|                                                              | Capital expenditures                                                                                     |                                                              |                                              | (47,423  | )                 |         |        | (52,500 | )     
|                                                              |                                                                                                          |                                                              |                                              |          |                   |         |        |        
|                                                              |                                                                                                          |                                                              | Net cash used in investing activities        |          |                   | (47,669 | )      |         |        | (83,599 | )
|                                                              |                                                                                                          |                                                              |                                              |          |                   |         |        |        
|Cash flows from financing activities:                         |                                                                                                          |                                                              |                                              |          |                   |         |        |        
|                                                              | Proceeds from term loan                                                                                  |                                                              |                                              | 176,099  |                   |         |        | 40,573  |       
|                                                              | Repayments of term loan                                                                                  |                                                              |                                              | (147,667 | )                 |         |        |        |       
|                                                              | Equity
contributions - Parent Partnership                                                                |                                                              |                                              | 2,447    |                   |         |        |        |       
|                                                              | Distributions                                                                                            |                                                              |                                              | (70,399  | )                 |         |        | (58,458 | )     
|                                                              |                                                                                                          |                                                              |                                              |          |                   |         |        |        
|                                                              |                                                                                                          |                                                              | Net cash used in financing activities        |          |                   | (39,520 | )      |         |        | (17,885 | )
|                                                              |                                                                                                          |                                                              |                                              |          |                   |         |        |        
|Net increase (decrease) in cash and cash equivalents          |                                                                                                          |                                                              | 5,017                                        |          |                   |         | (3,137 | )      
|Cash and cash equivalents at beginning of period              |                                                                                                          |                                                              | 3,654                                        |          |                   |         | 9,166  |        
|                                                              |                                                                                                          |                                                              |                                              |          |                   |         |        |        
|Cash and cash equivalents at end of period                    |                                                                                                          | $                                                            | 8,671                                        |          |                   | $       | 6,029  |        
|                                                              |                                                                                                          |                                                              |                                              |          |                   |         |        |        
|Supplemental disclosure of cash flows:                        |                                                                                                          |                                                              |                                              |          |                   |         |        |        
|Interest paid during the period (net of capitalized interest) |                                                                                                          | $                                                            | 24,996                                       |          |                   | $       | 30,853 |        

See accompanying Notes to Consolidated Financial Statements.

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TE PRODUCTS PIPELINE COMPANY, LIMITED PARTNERSHIP
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NOTE 1. ORGANIZATION AND BASIS OF PRESENTATION

TE Products Pipeline Company, Limited Partnership (the Partnership), a
Delaware limited partnership, was formed in March 1990. TEPPCO Partners, L.P.
(the Parent Partnership) owns a 99.999% interest as the sole limited partner.
TEPPCO GP, Inc. (TEPPCO GP or General Partner), a subsidiary of the Parent
Partnership, holds a 0.001% general partner interest in us. Texas Eastern
Products Pipeline Company, LLC (the Company), a Delaware limited liability
company, serves as the general partner of our Parent Partnership. The Company
is a wholly-owned subsidiary of Duke Energy Field Services (DEFS), a joint
venture between Duke Energy Corporation (Duke Energy) and ConocoPhillips.
Duke Energy holds an approximate 70% interest in DEFS, and ConocoPhillips holds
the remaining 30%. TEPPCO GP, as general partner, performs all of our
management and operating functions required according to the Agreement of
Limited Partnership of TE Products Pipeline Company, Limited Partnership (the
Partnership Agreement). We reimburse our General Partner and the Company for
all reasonable direct and indirect expenses that they incur in managing us.

On July 26, 2001, the Company restructured its general partner ownership
in us to cause us to be wholly-owned by the Parent Partnership. TEPPCO GP
succeeded the Company as our general partner. All of our remaining partner
interests not already owned by the Parent Partnership were transferred to the
Parent Partnership. In exchange for this contribution, the Companys interest
as general partner of the Parent Partnership was increased to 2%. The
increased percentage is the economic equivalent of the aggregate interest that
the Company had prior to the restructuring through its combined interests in
the Parent Partnership and us. As a result, the Parent Partnership holds a
99.999% limited partner interest in us and TEPPCO GP holds a 0.001% general
partner interest. In this Report, the General Partner refers to the Company
prior to the restructuring and to TEPPCO GP thereafter. This reorganization
was undertaken to simplify our required financial reporting when we issue
guarantees of our Parent Partnerships debt.

As used in this Report, we, us, and our means TE Products Pipeline
Company, Limited Partnership.

The accompanying unaudited consolidated financial statements reflect all
adjustments that are, in the opinion of the management of the Company, of a
normal and recurring nature and necessary for a fair statement of our financial
position as of September 30, 2002, and the results of our operations and cash
flows for the periods presented. The results of operations for the three
months and nine months ended September 30, 2002, are not necessarily indicative
of results of operations for the full year 2002. You should read the interim
financial statements in conjunction with our consolidated financial statements
and notes thereto presented in the TE Products Pipeline Company, Limited
Partnership Annual Report on Form 10-K for the year ended December 31, 2001.
We have reclassified certain amounts from prior periods to conform with the
current presentation.

We operate and report in one business segment: transportation and storage
of refined products, liquefied petroleum gases (LPGs) and petrochemicals.
Our interstate transportation operations, including rates charged to customers,
are subject to regulations prescribed by the Federal Energy Regulatory
Commission (FERC). We refer to refined products and LPGs in this Report
collectively, as petroleum products or products.

Effective January 1, 2002, our Parent Partnership realigned its business
segments to reflect its entry into the natural gas gathering business and the
expanded scope of its natural gas liquids (NGLs) operations. As part of this
realignment, on May 31, 2002, we transferred our investment in TEPPCO Colorado,
LLC (TEPPCO Colorado), which fractionates NGLs, to TEPPCO Midstream
Companies, L.P. (TEPPCO Midstream) for the book value of TEPPCO Colorados
net assets, which was $4.1 million. In connection with the transfer, we
received $4.1 million in cash from TEPPCO Midstream. As a result of the
transfer, the results of operations of TEPPCO Colorado for the periods
presented are reflected as discontinued operations (see Note 9. Discontinued
Operations). Prior periods presented have been restated to reflect the current
presentation.

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TE PRODUCTS PIPELINE COMPANY, LIMITED PARTNERSHIP
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)

NOTE 2. NEW ACCOUNTING PRONOUNCEMENTS

In July 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 142, Goodwill and
Other Intangible Assets. 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. At September 30, 2002, our investment in Centennial Pipeline LLC
included an excess investment (equity method goodwill) of $32.9 million, which
will not be amortized according to SFAS 142 (see Note 5. Equity Investments).
We adopted SFAS 142 effective January 1, 2002. The adoption of SFAS 142 did
not have a material effect on our financial position, results of operations or
cash flows.

In June 2001, the FASB issued SFAS No. 143, Accounting for Asset
Retirement Obligations. SFAS 143 requires us to record the fair value of an
asset retirement obligation as a liability in the period in which we incur a
legal obligation for the retirement of tangible long-lived assets. A
corresponding asset is also recorded and depreciated over the life of the
asset. After the initial measurement of the asset retirement obligation, the
obligation will be adjusted at the end of each period to reflect the passage of
time and changes in the estimated future cash flows underlying the obligation.
We are required to adopt SFAS 143 effective January 1, 2003. We are currently
evaluating the impact of adopting SFAS 143.

In August 2001, the FASB issued SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets. SFAS 144 supercedes SFAS No. 121,
Accounting for Long-Lived Assets and For Long-Lived Assets to be Disposed Of,
but retains its fundamental provisions for reorganizing and measuring
impairment losses on long-lived assets held for use and long-lived assets to be
disposed of by sale. We adopted SFAS 144 effective January 1, 2002. The
adoption of SFAS 144 resulted in the classification of the transfer of TEPPCO
Colorado as discontinued operations. Under previously existing literature, the
classification of the transfer of TEPPCO Colorado as discontinued operations
would not have been required.

In April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements
No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections.SFAS 145 eliminates the requirement to classify gains and losses
from the extinguishment of indebtedness as extraordinary, requires certain
lease modifications to be treated the same as a sale-leaseback transaction, and
makes other non-substantive technical corrections to existing pronouncements.
SFAS 145 is effective for fiscal years beginning after May 15, 2002, with
earlier adoption encouraged. We are required to adopt SFAS 145 effective
January 1, 2003. We do not believe that the adoption of SFAS 145 will have a
material effect on our financial position, results of operations or cash flows.

In July 2002, the FASB issued SFAS No. 146, Accounting for Costs
Associated with Exit or Disposal Activities. SFAS 146 addresses financial
accounting and reporting for costs associated with exit or disposal activities
and nullifies Emerging Issues Task Force (EITF) Issue No. 94-3, Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit
an Activity (including Certain Costs Incurred in a Restructuring). SFAS 146
requires recognition of a liability for a cost associated with an exit or
disposal activity when the liability is incurred, as opposed to when the entity
commits to an exit plan under EITF No. 94-3. SFAS 146 is to be applied
prospectively to exit or disposal activities initiated after December 31, 2002.
We do not believe that the adoption of SFAS 146 will have a material effect on
our financial position, results of operations or cash flows.

In June 2002, EITF reached a consensus on certain issues contained in
Topic 02-03, Recognition and Reporting of Gains and Losses on Energy Trading
Contracts under EITF Issue No. 98-10, Accounting for Contracts Involved in
Energy Trading and Risk Management Activities. We do not believe that this
consensus, as currently interpreted by the EITF, applies to us, as we do not
engage in energy trading and risk management activities as contemplated by EITF
No. 98-10. The adoption of this consensus did not have an effect on our
results of operations or cash flows.

5



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TE PRODUCTS PIPELINE COMPANY, LIMITED PARTNERSHIP
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)

NOTE 3. DERIVATIVE FINANCIAL INSTRUMENTS

We account for derivative financial instruments in accordance with SFAS
No. 133, Accounting for Derivative Instruments and Hedging
Activities, and SFAS
No. 138, Accounting for Certain Derivative Instruments and Certain Hedging
Activities, an amendment of FASB Statement No. 133. These statements establish
accounting and reporting standards requiring that derivative instruments
(including certain derivative instruments embedded in other contracts) be
recorded on the balance sheet at fair value as either 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.
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.

We have utilized and expect to continue to utilize interest rate swap
agreements to hedge a portion of our fair value risks. Interest rate swap
agreements are used to manage the fixed interest rate mix of our debt portfolio
and overall cost of borrowing. The interest rate swaps related to our fair
value risks are intended to reduce our exposure to changes in the fair value of
our fixed rate Senior Notes. The interest rate swap agreements involve the
periodic exchange of payments without the exchange of the notional amount upon
which the payments are based. The related amount payable to or receivable from
counterparties is included as an adjustment to accrued interest.

By using interest rate swap agreements to hedge exposures to changes in
the fair value of our fixed rate Senior Notes, we are exposed to credit risk
and market risk. Credit risk is the failure of the counterparty to perform
under the terms of the derivative contract. When the fair value of a
derivative contract is positive, the counterparty owes us, which creates credit
risk for us. When the fair value of a derivative contract is negative, we owe
the counterparty and, therefore, we do not possess credit risk. We minimize
the credit risk in derivative instruments by entering into transactions with
major financial institutions. Market risk is the adverse effect on the value
of a financial instrument that results from a change in interest rates. We
manage market risk associated with interest-rate contracts by establishing and
monitoring parameters that limit the type and degree of market risk that may be
undertaken.

Gains and losses on terminations of interest rate agreements are deferred
as an adjustment to the carrying amount of the outstanding obligation and
amortized as an adjustment to interest expense related to the obligation over
the remaining term of the original contract life of the terminated swap
agreement. In the event of early extinguishment of the obligation, any realized
or unrealized gain or loss from the swap would be recognized in the
consolidated statement of income at the time of extinguishment.

On October 4, 2001, we entered into an interest rate swap agreement to
hedge our exposure to changes in the fair value of our fixed rate 7.51% Senior
Notes due 2028. We designated this swap agreement as a fair value hedge. The
swap agreement has a notional amount of $210.0 million and matures in January
2028 to match the principal and maturity of the Senior Notes. Under the swap
agreement, we pay a floating rate based on a three month U.S. Dollar LIBOR
rate, plus a spread, and receive a fixed rate of interest of 7.51%. During the
nine months ended September 30, 2002, we recognized a gain of $5.4 million,
recorded as a reduction of interest expense, on the interest rate swap. During
the quarter ended September 30, 2002, we measured the hedge effectiveness of
this interest rate swap and noted that no gain or loss from ineffectiveness was
required to be recognized. The fair value of this interest rate swap agreement
was a gain of approximately $5.2 million at September 30, 2002, and a loss of
approximately $14.6 million at December 31, 2001.

6



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TE PRODUCTS PIPELINE COMPANY, LIMITED PARTNERSHIP
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)

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):

|                       |       |   |               |        |              |   |       |        | 
|---------------------- | ----- | - | ------------- | ------ | ------------ | - | ----- | ------ | 
|                       |       |   | September 30, |        | December 31,
|                       |       |   | 2002          |        | 2001        
|                       |       |   |               |        |             
|Gasolines              |       | $ | 855           |        |              | $ | 3,670 |       
|Propane                |       |   |              |        |              |   | 1,096 |       
|Butanes                |       |   | 4,253         |        |              |   | 1,431 |       
|Other products         |       |   | 1,944         |        |              |   | 901   |       
|Materials and supplies |       |   | 4,168         |        |              |   | 3,519 |       
|                       |       |   |               |        |              |   |       |       
|                       | Total |   | $             | 11,220 |              |   | $     | 10,617 | 
|                       |       |   |               |        |              |   |       |       

The costs of inventories did not exceed market values at September 30,
2002, and December 31, 2001.

NOTE 5. EQUITY INVESTMENTS

In August 2000, we entered into agreements with Panhandle Eastern Pipeline
Company (PEPL), a subsidiary of CMS Energy Corporation, and Marathon Ashland
Petroleum LLC (Marathon) to form Centennial Pipeline LLC (Centennial).
Centennial owns and operates an interstate refined petroleum products pipeline
extending from the upper Texas Gulf Coast to Illinois. Each participant owns a
one-third interest in Centennial. CMS Energy Corporation has announced that it
is exploring the sale of certain of its assets, including its investment in
Centennial. Through December 31, 2001, we contributed approximately $70.0
million for our investment in Centennial. During the nine months ended
September 30, 2002, we contributed approximately $7.7 million for our
investment in Centennial. These amounts are included in the equity investment
balance at September 30, 2002.

We use the equity method of accounting to report our investment in
Centennial. Summarized income statement data for Centennial for the nine
months ended September 30, 2002, and 2001, is presented below (in thousands):

|         |  |                   |         |      |  |   |        |  
|-------- |  | ----------------- | ------- | ---- |  | - | ------ | -
|         |  | Nine Months Ended
|         |  | September 30,    
|         |  |                  
|         |  | 2002              |         | 2001
|         |  |                   |         |     
|Revenues |  | $                 | 10,652  |      |  | $ |       |  
|Net loss |  |                   | (14,384 | )    |  |   | (1,065 | )

7



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TE PRODUCTS PIPELINE COMPANY, LIMITED PARTNERSHIP
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)

Summarized balance sheet data for Centennial as of September 30, 2002, and
December 31, 2001, is presented below (in thousands):

|                       |  |               |         |              |  |   |         | 
|---------------------- |  | ------------- | ------- | ------------ |  | - | ------- | 
|                       |  | September 30, |         | December 31,
|                       |  | 2002          |         | 2001        
|                       |  |               |         |             
|Current assets         |  | $             | 10,965  |              |  | $ | 26,849  | 
|Noncurrent assets      |  |               | 278,879 |              |  |   | 253,792 | 
|Current liabilities    |  |               | 17,750  |              |  |   | 23,405  | 
|Long-term debt         |  |               | 140,000 |              |  |   | 128,000 | 
|Noncurrent liabilities |  |               | 14,730  |              |  |   |        | 
|Partners capital      |  |               | 117,364 |              |  |   | 129,236 | 

At September 30, 2002, our investment in Centennial includes an excess net
investment amount (equity method goodwill) of $32.9 million. Excess investment
is the amount by which our investment balance exceeds our proportionate share
of the net assets of the investment. Due to the adoption of SFAS 142, we are
not amortizing the excess investment in Centennial. We will test the excess
investment for impairment on an annual basis.

NOTE 6. LONG TERM DEBT

Senior Notes

On January 27, 1998, we completed the issuance of $180.0 million principal
amount of 6.45% Senior Notes due 2008, and $210.0 million principal amount of
7.51% Senior Notes due 2028 (collectively the Senior Notes). The 6.45%
Senior Notes were issued at a discount and are being accreted to their face
value over the term of the 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, issued at par, may be redeemed at any time after January 15, 2008, at our
option, 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 and rank on a parity
with all of our other unsecured and unsubordinated indebtedness. 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 our ability to
incur additional indebtedness. As of September 30, 2002, we were in compliance
with the covenants of the Senior Notes.

We have entered into an interest rate swap agreement to hedge our exposure
to changes in the fair value on a portion of the Senior Notes discussed above.
See Note 3. Derivative Financial Instruments.

Other Long Term Debt and Credit Facilities

We currently utilize debt financing available from our Parent Partnership
through intercompany notes. The terms of the intercompany notes generally match
the principal and interest payment dates under the Parent Partnerships credit
agreements. The interest rates charged by the Parent Partnership includes the
stated interest rate of the Parent Partnership, plus a premium to cover debt
issuance costs. The interest rate is also decreased or increased to cover
gains and losses, respectively, on any interest rate swaps that the Parent
Partnership may have in place on its respective credit agreements. These
credit facilities of the Parent Partnership are described below.

On April 6, 2001, our Parent Partnership entered into an Amended and
Restated Credit Agreement (Three Year Facility) which provides for revolving
borrowings of up to $500.0 million for a period of three years including the
issuance of letters of credit of up to $20.0 million. The interest rate is
based, at the Parent Partnerships option, on either the lenders base rate
plus a spread, or LIBOR plus a spread in effect at the time of

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TE PRODUCTS PIPELINE COMPANY, LIMITED PARTNERSHIP
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)

the borrowings. The credit agreement for the Three Year Facility contains
restrictive financial covenants that require the Parent 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. On June 27,
2002, the Three Year Facility was amended to increase the maximum
debt-to-EBITDA ratio covenant to allow the Parent Partnership to incur
additional indebtedness to finance a portion of the purchase price of the
acquisition of Val Verde Gathering System (Val Verde) from Burlington
Resources Gathering Inc., a subsidiary of Burlington Resources Inc. On June
27, 2002, the Parent Partnership drew down the existing capacity of the Three
Year Facility. At September 30, 2002, $500.0 million was outstanding under the
Three Year Facility.

On April 6, 2001, our Parent Partnership entered into a 364-day, $200.0
million revolving credit agreement (Short-term Revolver). The interest rate
is based, at the Parent Partnerships option, on either the lenders base rate
plus a spread, or LIBOR plus a spread in effect at the time of the borrowings.
The credit agreement contains restrictive financial covenants that require the
Parent Partnership to maintain a minimum level of partners capital as well as
maximum debt-to-EBITDA and minimum fixed charge coverage ratios. On March 28,
2002, the Short-term Revolver was extended for an additional period of 364
days, ending in March 2003. On June 27, 2002, the Short-term Revolver was
amended to increase the maximum debt-to-EBITDA ratio covenant to allow the
Parent Partnership to incur additional indebtedness to finance a portion of the
Val Verde acquisition. On June 27, 2002, the Parent Partnership drew down
$72.0 million under the Short-term Revolver to finance a portion of the Val
Verde acquisition. At September 30, 2002, $72.0 million was outstanding under
this facility.

As of September 30, 2002, and December 31, 2001, we had intercompany notes
payable to our Parent Partnership of $146.3 million and $117.9 million,
respectively. At December 31, 2001, $72.5 million, included in current
liabilities, related to our borrowings under the Parent Partnerships
Short-term Revolver described above. Our long-term portion at December 31,
2001, totaled $45.4 million and represented borrowings under the Parent
Partnerships Three Year Facility. During the nine months ended September 30,
2002, the Parent Partnership issued $500.0 million principal amount of 7.625%
Senior Notes due 2012. The Parent Partnership used a portion of the proceeds
to repay the Short-term Revolver. Thus, at September 30, 2002, no amounts were
included in current liabilities as our portion of the Short-term Revolver had
been repaid. Our long-term portion at September 30, 2002, totaled $146.3
million and represents borrowings by us under the Parent Partnerships Three
Year Facility and Senior Notes described above. The interest rate on the note
payable, Parent Partnership at September 30, 2002, was 5.0%. At September 30,
2002, accrued interest includes $2.9 million due to the Parent Partnership.
For the nine months ended September 30, 2002, interest costs incurred on the
note payable, Parent Partnership totaled $5.4 million.

NOTE 7. QUARTERLY DISTRIBUTIONS OF AVAILABLE CASH

We make quarterly cash distributions of all of our Available Cash,
generally defined as consolidated cash receipts less consolidated cash
disbursements and cash reserves established by the General Partner in its sole
discretion. Prior to the restructuring of the General Partner interest on July
26, 2001, we paid distributions of 98.9899% to the Parent Partnership and
1.0101% to the Company. After July 26, 2001, we pay distributions of 99.999%
to the Parent Partnership and 0.001% to the General Partner (see Note 1.
Organization and Basis of Presentation).

For the nine months ended September 30, 2002, and 2001, we paid cash
distributions totaling $70.4 million and $58.5 million, respectively. The
distribution increases reflects our success in improving cash flow levels. We
will pay a cash distribution of approximately $24.5 million on November 8,
2002, for the three months ended September 30, 2002.

9



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TE PRODUCTS PIPELINE COMPANY, LIMITED PARTNERSHIP
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)

NOTE 8. COMMITMENTS AND CONTINGENCIES

In the fall of 1999 and on December 1, 2000, the Company and the
Partnership were named as defendants in two separate lawsuits in Jackson County
Circuit Court, Jackson County, Indiana, in Ryan E. McCleery and Marcia S.
McCleery, et. al. v. Texas Eastern Corporation, et. al. (including the Company
and Partnership)and Gilbert Richards and Jean Richards v. Texas Eastern
Corporation, et. al. (including the Company and Partnership).In both cases,
the 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 not covered by insurance. Discovery is
ongoing, and the Company is defending itself vigorously against the lawsuits.
The plaintiffs have not stipulated the amount of damages that they are seeking
in the suit. We cannot estimate the loss, if any, associated with these
pending lawsuits.

On December 21, 2001, we were named as a defendant in a lawsuit in the
10th Judicial District, Natchitoches Parish, Louisiana, in Rebecca L. Grisham
et. al. v. TE Products Pipeline Company, Limited Partnership. In this case,
the plaintiffs contend that our pipeline, which crosses the plaintiffs
property, leaked toxic products onto the plaintiffs property. The plaintiffs
further contend that this leak caused damages to the plaintiffs. We have filed
an answer to the plaintiffs petition denying the allegations. The plaintiffs
have not stipulated the amount of damages they are seeking in the suit. We are
defending ourself vigorously against the lawsuit. We cannot estimate the
damages, if any, associated with this pending lawsuit, however; this case is
covered by insurance.

In addition to the litigation discussed above, we have been, in the
ordinary course of business, a defendant in various lawsuits and a party to
various other legal proceedings, some of which are covered in whole or in part
by insurance. We believe that the outcome of these lawsuits and other
proceedings will not individually or in the aggregate have a material adverse
effect on our consolidated financial position, results of operations or cash
flows.

Our operations are subject to federal, state and local laws and
regulations governing the discharge of materials into the environment. Failure
to comply with these laws and regulations may result in the assessment of
administrative, civil, and criminal penalties, imposition of injunctions
delaying or prohibiting certain activities, and the need to perform
investigatory and remedial activities. Although we believe our operations are
in material compliance with applicable environmental laws and regulations,
risks of significant costs and liabilities are inherent in pipeline operations,
and we cannot assure you 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 our
operations, could result in substantial costs and liabilities to us. We
believe that changes in environmental laws and regulations will not have a
material adverse effect on our financial position, results of operations or
cash flows in the near term.

In 1994, we entered into an Agreed Order with the Indiana Department of
Environmental Management (IDEM) that resulted in the implementation of a
remediation program for groundwater contamination attributable to our
operations at the Seymour, Indiana, terminal. In 1999, the IDEM approved a
Feasibility Study, which includes our proposed remediation program. We expect
the IDEM to issue a Record of Decision formally approving the remediation
program. After the Record of Decision is issued, we will enter into a
subsequent Agreed Order for the continued operation and maintenance of the
remediation program. We have an accrued liability of $0.2 million at September
30, 2002, for future remediation costs at the Seymour terminal. We do not
expect that the completion of the remediation program will have a future
material adverse effect on our financial position, results of operations or
cash flows.

10



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TE PRODUCTS PIPELINE COMPANY, LIMITED PARTNERSHIP
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)

In 1994, the Louisiana Department of Environmental Quality (LDEQ) issued
a compliance order for environmental contamination at our Arcadia, Louisiana,
facility. This contamination may be attributable to our operations, as well as
adjacent petroleum terminals operated by other companies. In 1999, our Arcadia
facility and adjacent terminals were directed by the Remediation Services
Division of the LDEQ to pursue remediation of this containment phase. At
September 30, 2002, we have an accrued liability of $0.2 million for
remediation costs at our Arcadia facility. We do not expect that the
completion of the remediation program that we have proposed will have a future
material adverse effect on our financial position, results of operations or
cash flows.

Centennial entered into credit facilities totaling $150.0 million, and as
of September 30, 2002, $150.0 million was outstanding under those credit
facilities. The proceeds were used to fund construction and conversion costs
of its pipeline system. Each of the participants in Centennial, including us,
originally guaranteed one-third of Centennials debt up to a maximum amount of
$50.0 million. During the third quarter of 2002, PEPL, one of the participants
in Centennial, was downgraded by Moodys and Standard & Poors to below
investment grade, which resulted in PEPL being in default under its portion of
the Centennial guaranty. Effective September 27, 2002, the two remaining
participants, us and Marathon, increased our guaranteed amounts to one-half of
the debt of Centennial, up to a maximum amount of $75.0 million each, to avoid
a default on the Centennial debt. As compensation to us and Marathon for
providing our additional guarantees, PEPL is required to pay interest at a rate
of 4% per annum to each of us and Marathon on the portion of the additional
guaranty that each has provided for PEPL.

On February 20, 2002, our Parent Partnership issued $500.0 million
principal amount of 7.625% Senior Notes due 2012. We and the Parent
Partnerships other significant operating subsidiaries, which include TCTM,
L.P., TEPPCO Midstream and Jonah Gas Gathering Company, issued guarantees of
this debt. On June 30, 2002, the Parent Partnership acquired Val Verde through
its subsidiary, Val Verde Gas Gathering Company, L.P., which also issued an
unconditional guarantee of the Parent Partnerships debt securities. The
guarantees are full, unconditional and joint and several. The proceeds from
the offering of the $500.0 million principal amount of 7.625% Senior Notes were
used to reduce the outstanding balances of the Parent Partnerships credit
facilities.

In February 2000, we entered into a joint marketing and development
alliance with Louis Dreyfus Plastics Corporation, now known as Louis Dreyfus
Energy Services, L.P., (Louis Dreyfus), in which our Mont Belvieu LPGs
storage and transportation shuttle system services are jointly marketed by
Louis Dreyfus and us. The purpose of the alliance is to expand services to the
upper Texas Gulf Coast energy marketplace by increasing pipeline throughput and
the mix of products handled through the existing system and establishing new
receipt and delivery connections. We operate the facilities for the alliance.
Under the alliance, Louis Dreyfus has invested $6.1 million for expansion
projects at Mont Belvieu. The alliance is a service-oriented, fee-based
venture with no commodity trading activity. The alliance is scheduled to
terminate on December 31, 2002, at which time a partnership may be established
between us and Louis Dreyfus, if the terms of the joint development agreement
are met. We anticipate that the terms in the joint development agreement will
be met during the fourth quarter of 2002, and the partnership will be created
effective January 1, 2003. Under the terms of the joint development agreement,
we would contribute our Mont Belvieu assets to a newly formed partnership. The
economic terms of the partnership will be the same as those under the joint
development and marketing alliance.

NOTE 9. DISCONTINUED OPERATIONS

Effective January 1, 2002, our Parent Partnership realigned its business
segments to reflect its entry into the natural gas gathering business and the
expanded scope of its NGLs operations. As part of this realignment, on May 31,
2002, we entered into an Assignment and Assumption Agreement with TEPPCO
Midstream to transfer our investment in TEPPCO Colorado to TEPPCO Midstream at
the book value of TEPPCO Colorados net assets. SFAS No. 144, Accounting for
the Impairment or Disposal of Long-Lived Assetsrequires that long-lived assets
to be disposed of should be recorded at the lower of their carrying amount or
fair value less costs to sell. As a result, in
11Table of Contents

TE PRODUCTS PIPELINE COMPANY, LIMITED PARTNERSHIP
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)

the quarter ended June 30, 2002, we compared the fair value of TEPPCO Colorado
to its carrying value, and noted no indication of impairment.

The transfer of TEPPCO Colorado to TEPPCO Midstream was recorded at the
book value of the net assets, which was $4.1 million. In connection with the
transfer, we received $4.1 million in cash from TEPPCO Midstream. TEPPCO
Midstream assumed the outstanding debt of TEPPCO Colorado of $32.0 million as
part of the transaction. As a result of the transfer, our financial position
and results of operations have been restated to classify revenue, expenses,
assets and liabilities of TEPPCO Colorado as discontinued operations for the
periods presented. Condensed statements of income are shown below for TEPPCO
Colorado for the three months and nine months ended September 30, 2002, and
2001 (in thousands):

|                                      |                  |   |                    |   |                   |   |       |       |      |   |        |       |  |   |        |       | 
|------------------------------------- | ---------------- | - | ------------------ | - | ----------------- | - | ----- | ----- | ---- | - | ------ | ----- |  | - | ------ | ----- | 
|                                      |                  |   | Three Months Ended |   | Nine Months Ended
|                                      |                  |   | September 30,      |   | September 30,    
|                                      |                  |   |                    |   |                  
|                                      |                  |   | 2002               |   | 2001              |   | 2002  |       | 2001
|                                      |                  |   |                    |   |                   |   |       |       |     
|Revenues                              |                  | $ |                   |   |                   | $ | 1,835 |       |      | $ | 3,115  |       |  | $ | 5,551  |      
|Operating, general and administrative |                  |   |                   |   |                   |   | 217   |       |      |   | 369    |       |  |   | 660    |      
|Depreciation and amortization         |                  |   |                   |   |                   |   | 504   |       |      |   | 840    |       |  |   | 1,512  |      
|                                      |                  |   |                    |   |                   |   |       |       |      |   |        |       |  |   |        |      
|                                      | Operating income |   |                    |  |                   |   |       | 1,114 |      |   |        | 1,906 |  |   |        | 3,379 | 
|Interest expense                      |                  |   |                   |   |                   |   | (724  | )     |      |   | (1,015 | )     |  |   | (2,107 | )    
|Other income  net                    |                  |   |                   |   |                   |   | 15    |       |      |   | 21     |       |  |   | 68     |      
|                                      |                  |   |                    |   |                   |   |       |       |      |   |        |       |  |   |        |      
|                                      | Net income       |   | $                  |  |                   |   | $     | 405   |      |   | $      | 912   |  |   | $      | 1,340 | 
|                                      |                  |   |                    |   |                   |   |       |       |      |   |        |       |  |   |       

Assets and liabilities from discontinued operations at December 31, 2001,
are presented in the table below (in thousands):

|                                                               |                   |   |              |        | 
|-------------------------------------------------------------- | ----------------- | - | ------------ | ------ | 
|                                                               |                   |   | December 31,
|                                                               |                   |   | 2001        
|                                                               |                   |   |             
|Cash                                                           |                   | $ | 3,073        |       
|Accounts receivable, trade                                     |                   |   | 1            |       
|Property, plant and equipment, net                             |                   |   | 1,625        |       
|Intangible assets                                              |                   |   | 31,099       |       
|                                                               |                   |   |              |       
|                                                               | Total assets      |   | $            | 35,798 | 
|                                                               |                   |   |              |       
|Accounts payable, Texas Eastern Products Pipeline Company, LLC |                   | $ | 11           |       
|Other current liabilities                                      |                   |   | 1,473        |       
|Note payable, Parent Partnership                               |                   |   | 31,882       |       
|                                                               |                   |   |              |       
|                                                               | Total liabilities |   | $            | 33,366 | 
|                                                               |                   |   |              |       
|                                                               | Net assets        |   | $            | 2,432  | 
|                                                               |                   |   |              |       

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Item 2.    Managements Discussion and Analysis of Financial Condition and Results of Operations

General

You should read the following review of our financial position and results
of operations in conjunction with the Consolidated Financial Statements.
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. Other
Considerations addresses certain trends, future plans or contingencies that
could affect future liquidity or earnings. These Consolidated Financial
Statements should be read in conjunction with the financial statements and
related notes, together with our discussion and analysis of financial position
and results of operations included in our Annual Report on Form 10-K for the
year ended December 31, 2001.

We operate and report in one business segment: transportation and storage
of refined products, LPGs, and petrochemicals. Revenues are derived from the
transportation of refined products and LPGs, storage and short-haul shuttle
transportation of LPGs at the Mont Belvieu complex, intrastate transportation
of petrochemicals, sale of product inventory and other ancillary services. The
two largest operating expense items are labor and electric power. We generally
realize higher revenues during the first and fourth quarters of each year since
our operations are somewhat seasonal. 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. Our results also
include our equity investment in Centennial Pipeline LLC (Centennial).

Results of Operations

The following table presents volume and average rate information for the
three months and nine months ended September 30, 2002, and 2001:

|                          |                  |                         |                                  |      |                                           |        |            |      |                   |        |            |     |      |     |            |      |         |         |   |      |        |         |  |    |     |     |   
|------------------------- | ---------------- | ----------------------- | -------------------------------- | ---- | ----------------------------------------- | ------ | ---------- | ---- | ----------------- | ------ | ---------- | --- | ---- | --- | ---------- | ---- | ------- | ------- | - | ---- | ------ | ------- |  | -- | --- | --- | --
|                          |                  |                         |                                  |      | Three Months Ended                        |        |            |      | Nine Months Ended |        |           
|                          |                  |                         |                                  |      | September 30,                             |        | Percentage |      | September 30,     |        | Percentage
|                          |                  |                         |                                  |      |                                           |        | Increase   |      |                   |        | Increase  
|                          |                  |                         |                                  |      | 2002                                      |        | 2001       |      | (Decrease)        |        | 2002       |     | 2001 |     | (Decrease)
|                          |                  |                         |                                  |      |                                           |        |            |      |                   |        |            |     |      |     |           
|                          |                  |                         |                                  |      | (in thousands, except tariff information)
|Volumes Delivered         |                  |                         |                                  |      |                                           |        |            |      |                   |        |            |     |      |     |            |      |         |         |   |      |        |         |  |   
|                          |                  | Refined products        |                                  |      | 40,065                                    |        |            |      | 32,387            |        |            |     | 24   | %   |            |      | 101,174 |         |   |      | 92,935 |         |  |    | 9   | %  
|                          |                  | LPGs                    |                                  |      | 8,689                                     |        |            |      | 8,864             |        |            |     | (2   | %)  |            |      | 27,780  |         |   |      | 27,422 |         |  |    | 1   | %  
|                          |                  | Mont Belvieu operations |                                  |      | 6,128                                     |        |            |      | 5,352             |        |            |     | 15   | %   |            |      | 21,385  |         |   |      | 16,188 |         |  |    | 32  | %  
|                          |                  |                         |                                  |      |                                           |        |            |      |                   |        |            |     |      |     |            |      |         |         |   |      |        |         |  |   
|                          |                  |                         | Total                            |      |                                           | 54,882 |            |      |                   | 46,603 |            |     |      | 18  | %          |      |         | 150,339 |   |      |        | 136,545 |  |    |     | 10  | % 
|                          |                  |                         |                                  |      |                                           |        |            |      |                   |        |            |     |      |     |            |      |         |         |   |      |        |         |  |   
|Average Tariff per Barrel |                  |                         |                                  |      |                                           |        |            |      |                   |        |            |     |      |     |            |      |         |         |   |      |        |         |  |   
|                          | Refined products |                         | $                                | 0.88 |                                           |        | $          | 0.99 |                   |        |            | (11 | %)   |     | $          | 0.91 |         |         | $ | 0.98 |        |         |  | (7 | %) 
|                          |                  | LPGs                    |                                  |      | 1.44                                      |        |            |      | 1.77              |        |            |     | (19  | %)  |            |      | 1.68    |         |   |      | 1.98   |         |  |    | (15 | %) 
|                          |                  | Mont Belvieu operations |                                  |      | 0.14                                      |        |            |      | 0.18              |        |            |     | (22  | %)  |            |      | 0.14    |         |   |      | 0.18   |         |  |    | (22 | %) 
|                          |                  |                         | Average system tariff per barrel |      | $                                         | 0.89   |            |      | $                 | 1.05   |            |     |      | (15 | %)         |      | $       | 0.94    |   |      | $      | 1.08    |  |    |     | (13 | %)
|                          |                  |                         |                                  |      |                                           |        |            |      |                   |        |            |     |      |     |            |      |         |         |   |      |        |         |  |   

Three Months ended September 30, 2002 Compared to Three Months ended September 30, 2001

We reported net income of $11.8 million for the three months ended
September 30, 2002, compared with net income of $15.4 million for the three
months ended September 30, 2001. Net income decreased $3.6 million primarily
due to an increase of $2.6 million in costs and expenses, additional losses of
$1.7 million from equity investments, a decrease of $0.2 million in interest
capitalized, a decrease of $0.3 million in other income  net and a decrease of
$0.4 million of income from discontinued operations. The decreases to net
income were partially offset by an increase of $0.2 million in operating
revenues and a decrease of $1.4 million in interest expense. We discuss the
factors influencing these variances below.

Revenues from refined products transportation increased $3.1 million for
the three months ended September 30, 2002, compared with the three months ended
September 30, 2001, due primarily to a 24% increase in refined products volumes
delivered during the third quarter of 2002. This increase in refined products
volumes

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delivered is primarily due to barrels received into our pipeline from
Centennial at Creal Springs, Illinois. Centennial commenced refined products
deliveries to us beginning in April 2002. The refined products average rate
per barrel decreased 11% from the prior-year period due to the impact of the
Midwest origin point for volumes received from Centennial.

Revenues from LPGs transportation decreased $3.2 million for the three
months ended September 30, 2002, compared with the three months ended September
30, 2001, primarily due to decreased deliveries of propane in the upper Midwest
and Northeast market areas caused by lower prices from competing Canadian and
mid-continent propane supply as compared to propane originating from the Gulf
Coast. Total LPGs volumes delivered decreased 2% as a result of increased
short-haul deliveries to a petrochemical facility on the upper Texas Gulf
Coast. The LPGs average rate per barrel decreased 19% from the prior-year
period as a result of a decreased percentage of long-haul deliveries during the
three months ended September 30, 2002.

Revenues generated from Mont Belvieu operations decreased $0.2 million
during the three months ended September 30, 2002, compared with the three
months ended September 30, 2001, as a result of increased contract shuttle
deliveries. Mont Belvieu shuttle volumes delivered increased 15% during the
three months ended September 30, 2002, compared with the three months ended
September 30, 2001, due to increased petrochemical demand. The Mont Belvieu
average rate per barrel decreased 22% during the three months ended September
30, 2002, as a result of increased contract shuttle deliveries, which generally
carry lower rates.

Other operating revenues increased $0.5 million during the three months
ended September 30, 2002, compared with the three months ended September 30,
2001, primarily due to increased refined products and LPGs loading fees. These
increases were partially offset by lower propane deliveries at our Providence,
Rhode Island, import facility and lower refined products storage revenues.

Costs and expenses increased $2.6 million for the three months ended
September 30, 2002, compared with the three months ended September 30, 2001.
The increase was comprised of a $1.1 million increase in operating, general and
administrative expenses, a $0.8 million increase in depreciation and
amortization expense, and a $1.4 million increase in taxes  other than income
taxes, partially offset by a $0.7 million decrease in operating fuel and power
expense. Operating, general and administrative expenses increased primarily due
to increased consulting and contract services, increased rental charges and
increased insurance costs. Depreciation expense increased from the prior-year
period because of assets placed in service during 2001. Taxes  other than
income taxes increased as a result of a higher property base in 2002. Operating
fuel and power expense decreased as a result of decreased long-haul volumes
delivered related to Midwest volumes received from Centennial and lower
electric power costs.

Net losses from equity investments totaled $2.0 million during the three
months ended September 30, 2002, due to start-up expenses of Centennial, which
commenced operations in early April 2002.

Interest expense decreased $1.4 million during the three months ended
September 30, 2002, compared with the three months ended September 30, 2001,
due to lower interest rates on the Note Payable, Parent Partnership. Interest
capitalized decreased $0.2 million during the three months ended September 30,
2002, compared with the three months ended September 30, 2001, due to less
interest capitalized on our Centennial investment and lower construction
work-in-progress during the 2002 quarter.

Nine Months Ended September 30, 2002 Compared to Nine Months Ended September 30, 2001

We reported net income of $40.4 million for the nine months ended
September 30, 2002, compared with net income of $71.3 million for the nine
months ended September 30, 2001. Net income decreased $30.9 million primarily
due to a decrease of $26.4 million in operating revenues, an increase of $3.3
million in costs and expenses, additional losses of $4.4 million from equity
investments, a decrease of $0.8 million in other income  net and a decrease of
$0.4 million in income from discontinued operations. The decreases to net
income were partially offset by a decrease of $3.4 million in interest expense
and a $1.0 million increase in interest capitalized. We discuss the factors
influencing these variances below.

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Revenues from refined products transportation decreased $17.5 million for
the nine months ended September 30, 2002, compared with the nine months ended
September 30, 2001, due primarily to $18.9 million of revenue recognized in the
2001 period 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
market-based-rates during the second quarter of 2001. These decreases were
partially offset by a 9% increase in refined products volumes delivered during
the nine months ended September 30, 2002, primarily due to barrels received
into our pipeline from Centennial at Creal Springs, Illinois. Centennial
commenced refined products deliveries to us beginning in April 2002. The
overall increase in refined products deliveries was partially offset by a 1.3
million barrel decrease in methyl tertiary butyl ether (MTBE) deliveries as a
result of the expiration of contract deliveries to our marine terminal near
Beaumont, Texas, effective April 2001. As a result of the contract expiration,
we no longer transport MTBE through our pipeline system. The refined products
average rate per barrel decreased 7% from the prior-year period due to the
impact of the Midwest origin point for volumes received from Centennial, which
was partially offset by decreased short-haul MTBE volumes delivered and higher
market-based tariff rates, which went into effect in July 2001.

Revenues from LPGs transportation decreased $7.5 million for the nine
months ended September 30, 2002, compared with the nine months ended September
30, 2001, primarily due to decreased deliveries of propane in the upper Midwest
and Northeast market areas attributable to warmer than normal weather. The
decrease is also due to lower prices from competing Canadian and mid-continent
propane supply as compared to propane originating from the Gulf Coast. Total
LPGs volumes delivered increased 1% as a result of increased short-haul
deliveries to a petrochemical facility on the upper Texas Gulf Coast. The LPGs
average rate per barrel decreased 15% from the prior-year period as a result of
a decreased percentage of long-haul deliveries during the nine months ended
September 30, 2002.

Revenues generated from Mont Belvieu operations increased $1.2 million
during the nine months ended September 30, 2002, compared with the nine months
ended September 30, 2001, as a result of increased storage revenue and receipt
revenue. Mont Belvieu shuttle volumes delivered increased 32% during the nine
months ended September 30, 2002, compared with the nine months ended September
30, 2001, due to increased petrochemical demand. The Mont Belvieu average rate
per barrel decreased 22% during the nine months ended September 30, 2002, as a
result of increased contract shuttle deliveries, which generally carry lower
rates.

Other operating revenues decreased $2.6 million during the nine months
ended September 30, 2002, compared with the nine months ended September 30,
2001, primarily due to lower propane deliveries at our Providence, Rhode
Island, import facility, lower refined products storage revenues, lower margins
on product inventory sales, and increased losses as a result of exchanging
products at different geographic points of delivery to position product in the
Midwest market area. These decreases were partially offset by increased
refined products and LPGs loading fees.

Costs and expenses increased $3.3 million for the nine months ended
September 30, 2002, compared with the nine months ended September 30, 2001.
The increase was made up of a $4.7 million increase in operating, general and
administrative expenses, a $1.6 million increase in depreciation and
amortization expense, and a $2.4 million increase in taxes  other than income
taxes. These increases were partially offset by a $5.4 million decrease in
operating fuel and power expense. Operating, general and administrative
expenses increased, primarily due to higher pipeline maintenance and
rehabilitation expenses, increased consulting and contract services and
increased labor costs. Depreciation expense increased from the prior-year
period because of assets placed in service during 2001. Taxes  other than
income taxes increased as a result of a higher property base in 2002.
Operating fuel and power expense decreased as a result of decreased long-haul
volumes delivered related to Midwest volumes received from Centennial and lower
power costs.

Net losses from equity investments totaled $5.0 million during the nine
months ended September 30, 2002, due to pre-operating expenses and start-up
costs of Centennial, which commenced operations in early April 2002.

Interest expense decreased $3.4 million during the nine months ended
September 30, 2002, compared with the nine months ended September 30, 2001, due
to lower interest rates on the Note Payable, Parent Partnership.

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Interest capitalized increased $1.0 million during the nine months ended
September 30, 2002, compared with the nine months ended September 30, 2001, due
to interest capitalized on our investment in Centennial during its construction
and increased balances during 2002 on construction work-in-progress.

Discontinued Operations

Effective January 1, 2002, our Parent Partnership realigned its business
segments to reflect its entry into the natural gas gathering business and the
expanded scope of its natural gas liquids (NGLs) operations. As part of this
realignment, on May 31, 2002, we entered into an Assignment and Assumption
Agreement with TEPPCO Midstream to transfer our investment in TEPPCO Colorado,
which fractionates NGLs, to TEPPCO Midstream at the book value of TEPPCO
Colorados net assets (see Note 9. Discontinued Operations). Statement of
Financial Accounting Standards (SFAS) No. 144, Accounting for the Impairment
or Disposal of Long-Lived Assets,requires that long-lived assets to be
disposed of should be recorded at the lower of their carrying amount or fair
value less costs to sell. As a result, in the quarter ended June 30, 2002, we
compared the fair value of TEPPCO Colorado to its carrying value, and noted no
indication of impairment.

As a result of the transfer, our financial position and results of
operations have been restated to classify revenue, expenses, assets and
liabilities of TEPPCO Colorado as discontinued operations. Condensed
statements of income are shown below for TEPPCO Colorado for the three months
and nine months ended September 30, 2002, and 2001 (in thousands):

|                                      |                  |   |                    |   |                   |   |       |       |      |   |        |       |  |   |        |       | 
|------------------------------------- | ---------------- | - | ------------------ | - | ----------------- | - | ----- | ----- | ---- | - | ------ | ----- |  | - | ------ | ----- | 
|                                      |                  |   | Three Months Ended |   | Nine Months Ended
|                                      |                  |   | September 30,      |   | September 30,    
|                                      |                  |   |                    |   |                  
|                                      |                  |   | 2002               |   | 2001              |   | 2002  |       | 2001
|                                      |                  |   |                    |   |                   |   |       |       |     
|Revenues                              |                  | $ |                   |   |                   | $ | 1,835 |       |      | $ | 3,115  |       |  | $ | 5,551  |      
|Operating, general and administrative |                  |   |                   |   |                   |   | 217   |       |      |   | 369    |       |  |   | 660    |      
|Depreciation and amortization         |                  |   |                   |   |                   |   | 504   |       |      |   | 840    |       |  |   | 1,512  |      
|                                      |                  |   |                    |   |                   |   |       |       |      |   |        |       |  |   |        |      
|                                      | Operating income |   |                    |  |                   |   |       | 1,114 |      |   |        | 1,906 |  |   |        | 3,379 | 
|Interest expense                      |                  |   |                   |   |                   |   | (724  | )     |      |   | (1,015 | )     |  |   | (2,107 | )    
|Other income  net                    |                  |   |                   |   |                   |   | 15    |       |      |   | 21     |       |  |   | 68     |      
|                                      |                  |   |                    |   |                   |   |       |       |      |   |        |       |  |   |        |      
|                                      | Net income       |   | $                  |  |                   |   | $     | 405   |      |   | $      | 912   |  |   | $      | 1,340 | 
|                                      |                  |   |                    |   |                   |   |       |       |      |   |        |       |  |   |        |      

The following table presents volume and average rate information for
TEPPCO Colorado for the three months and nine months ended September 30, 2002,
and 2001:

|                      |                         |  |                    |   |            |  |                   |       |            |  |      |      |            |  |   |       |  |  |   |       |  |  |  |     |   
|--------------------- | ----------------------- |  | ------------------ | - | ---------- |  | ----------------- | ----- | ---------- |  | ---- | ---- | ---------- |  | - | ----- |  |  | - | ----- |  |  |  | --- | --
|                      |                         |  | Three Months Ended |   |            |  | Nine Months Ended |       |           
|                      |                         |  | September 30,      |   | Percentage |  | September 30,     |       | Percentage
|                      |                         |  |                    |   | Increase   |  |                   |       | Increase  
|                      |                         |  | 2002               |   | 2001       |  | (Decrease)        |       | 2002       |  | 2001 |      | (Decrease)
|                      |                         |  |                    |   |            |  |                   |       |            |  |      |      |           
|Fractionation  NGLs: |                         |  |                    |   |            |  |                   |       |            |  |      |      |            |  |   |       |  |  |   |       |  |  |  |    
|                      | Thousand barrels        |  |                    |  |            |  |                   | 1,004 |            |  |      | (100 | %)         |  |   | 2,043 |  |  |   | 3,062 |  |  |  | (33 | %)
|                      | Average rate per barrel |  | $                  |  |            |  | $                 | 1.828 |            |  |      | (100 | %)         |  | $ | 1.827 |  |  | $ | 1.813 |  |  |  | 1   | % 

Financial Condition and Liquidity

Net cash from operations totaled $92.2 million for the nine months ended
September 30, 2002. This cash was made up of $61.2 million of income before
charges for depreciation and amortization, $29.8 million of cash

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provided by working capital changes, and $1.2 million of cash from
discontinued operations. This compares with net cash from operations of $98.3
million for the corresponding period in 2001, comprised of $90.0 million of
income before charges for depreciation and amortization, $2.4 million of cash
provided by working capital changes and $5.9 million of cash from discontinued
operations. Net cash from operations for the nine months ended September 30,
2002, and 2001, included interest payments of $25.0 million and $30.9 million,
respectively.

Cash flows used in investing activities totaled $47.7 million during the
nine months ended September 30, 2002, and was comprised of $47.5 million of
capital expenditures and $7.7 million of cash contributions for our interest in
Centennial, partially offset by $3.4 million of cash proceeds from the sale of
assets and $4.1 million of cash proceeds from the sale of TEPPCO Colorado.
Cash flows used in investing activities totaled $83.6 million for the nine
months ended September 30, 2001, and was comprised of $52.5 million of capital
expenditures, and $34.3 million of cash contributions for our interest in
Centennial, partially offset by $3.2 million of net proceeds received from cash
investments.

Cash flows used in financing activities totaled $39.5 million during the
nine months ended September 30, 2002, and was comprised of $70.4 million of
distributions paid to our Parent Partnership and $147.7 million of repayments
of our term loan, partially offset by $176.1 million of proceeds from our term
loan and $2.5 million of equity contributions received from the
Parent Partnership. Cash flows
used in financing activities totaled $17.9 million during the nine months ended
September 30, 2001, and was comprised of $58.5 million of distributions paid to
our Parent Partnership, partially offset by $40.6 million of proceeds from our
term loan.

Centennial entered into credit facilities totaling $150.0 million, and as
of September 30, 2002, $150.0 million was outstanding under those credit
facilities. The proceeds were used to fund construction and conversion costs
of its pipeline system. Each of the participants in Centennial, including us,
originally guaranteed one-third of Centennials debt, up to a maximum amount of
$50.0 million. During the third quarter of 2002, PEPL, one of the participants
in Centennial, was downgraded by Moodys and Standard & Poors to below
investment grade, which resulted in PEPL being in default under its portion of
the Centennial guaranty. Effective September 27, 2002, the two remaining
participants, us and Marathon, increased our guaranteed amounts to one-half of
the debt of Centennial, up to a maximum amount of $75.0 million each, to avoid
a default on the Centennial debt. As compensation to us and Marathon for
providing our additional guarantees, PEPL is required to pay interest at a rate
of 4% per annum to each of us and Marathon on the portion of the additional
guaranty that each has provided for PEPL.

On February 20, 2002, the Parent Partnership issued $500.0 million
principal amount of 7.625% Senior Notes due 2012. We and the Parent
Partnerships other significant operating subsidiaries, which include TCTM,
L.P., TEPPCO Midstream and Jonah Gas Gathering Company, issued guarantees of
this debt. On June 30, 2002, the Parent Partnership acquired the Val Verde
Gathering System (Val Verde) through its subsidiary, Val Verde Gas Gathering
Company, L.P., which also issued an unconditional guarantee of the Parent
Partnerships debt securities. The guarantees are full, unconditional and
joint and several. The proceeds from the offering of the $500.0 million
principal amount of 7.625% Senior Notes were used to reduce the outstanding
balances of the Parent Partnerships credit facilities.

In February 2000, we entered into a joint marketing and development
alliance with Louis Dreyfus Plastics Corporation, now known as Louis Dreyfus
Energy Services, L.P., (Louis Dreyfus), in which our Mont Belvieu LPGs
storage and transportation shuttle system services are jointly marketed by
Louis Dreyfus and us. The purpose of the alliance is to expand services to the
upper Texas Gulf Coast energy marketplace by increasing pipeline throughput and
the mix of products handled through the existing system and establishing new
receipt and delivery connections. We operate the facilities for the alliance.
Under the alliance, Louis Dreyfus has invested $6.1 million for expansion
projects at Mont Belvieu. The alliance is a service-oriented, fee-based
venture with no commodity trading activity. The alliance is scheduled to
terminate on December 31, 2002, at which time a partnership may be established
between us and Louis Dreyfus, if the terms of the joint development agreement
are met. We anticipate that the terms in the joint development agreement will
be met during the fourth quarter of 2002, and the partnership will be created
effective January 1, 2003. Under the terms of the joint development agreement,
we would contribute

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our Mont Belvieu assets to a newly formed partnership. The economic terms
of the partnership will be the same as those under the joint development and
marketing alliance.

Parent Partnership Credit Facilities

We currently utilize debt financing available from our Parent Partnership
through intercompany notes. The terms of the intercompany notes generally match
the principal and interest payment dates under the Parent Partnerships credit
agreements. The interest rates charged by the Parent Partnership includes the
stated interest rate of the Parent Partnership, plus a premium to cover debt
issuance costs. The interest rate is also decreased or increased to cover
gains and losses, respectively, on any interest rate swaps that the Parent
Partnership may have in place on its respective credit agreements. These
credit facilities of the Parent Partnership are described below.

On April 6, 2001, our Parent Partnership entered into an Amended and
Restated Credit Agreement (Three Year Facility) which provides for revolving
borrowings of up to $500.0 million for a period of three years including the
issuance of letters of credit of up to $20.0 million. The interest rate is
based, at the Parent Partnerships option, on either the lenders base rate
plus a spread, or LIBOR plus a spread in effect at the time of the borrowings.
The credit agreement for the Three Year Facility contains restrictive financial
covenants that require the Parent 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. On June 27, 2002, the Three Year Facility
was amended to increase the maximum debt-to-EBITDA ratio covenant to allow the
Parent Partnership to incur additional indebtedness to finance a portion of the
purchase price of the acquisition of Val Verde from Burlington Resources
Gathering Inc., a subsidiary of Burlington Resources Inc. On June 27, 2002,
the Parent Partnership drew down the existing capacity of the Three Year
Facility. At September 30, 2002, $500.0 million was outstanding under the
Three Year Facility.

On April 6, 2001, the Parent Partnership entered into a 364-day, $200.0
million revolving credit agreement (Short-term Revolver). The interest rate
is based, at the Parent Partnerships option, on either the lenders base rate
plus a spread, or LIBOR plus a spread in effect at the time of the borrowings.
The credit agreement contains restrictive financial covenants that require the
Parent Partnership to maintain a minimum level of partners capital as well as
maximum debt-to-EBITDA and minimum fixed charge coverage ratios. On March 28,
2002, the Short-term Revolver was extended for an additional period of 364
days, ending in March 2003. On June 27, 2002, the Short-term Revolver was
amended to increase the maximum debt-to-EBITDA ratio covenant to allow the
Parent Partnership to incur additional indebtedness to finance a portion of the
Val Verde acquisition. On June 27, 2002, the Parent Partnership drew down
$72.0 million under the Short-term Revolver to finance a portion of the Val
Verde acquisition. At September 30, 2002, $72.0 million was outstanding under
this facility.

As of September 30, 2002, and December 31, 2001, we had intercompany notes
payable to our Parent Partnership of $146.3 million and $117.9 million,
respectively. At December 31, 2001, $72.5 million, included in current
liabilities, related to our borrowings under the Parent Partnerships
Short-term Revolver described above. Our long-term portion at December 31,
2001, totaled $45.4 million and represented borrowings under the Parent
Partnerships Three Year Facility. During the nine months ended September 30,
2002, the Parent Partnership issued $500.0 million principal amount of 7.625%
Senior Notes due 2012. The Parent Partnership used a portion of the proceeds
to repay the Short-term Revolver. Thus, at September 30, 2002, no amounts were
included in current liabilities as our portion of the Short-term Revolver had
been repaid. Our long-term portion at September 30, 2002, totaled $146.3
million and represents borrowings by us under the Parent Partnerships Three
Year Facility and Senior Notes described above. The interest rate on the note
payable, Parent Partnership at September 30, 2002, was 5.0%. At September 30,
2002, accrued interest includes $2.9 million due to the Parent Partnership.
For the nine months ended September 30, 2002, interest costs incurred on the
note payable, Parent Partnership totaled $5.4 million.

Senior Notes

On January 27, 1998, we completed the issuance of $180.0 million principal
amount of 6.45% Senior Notes due 2008, and $210.0 million principal amount of
7.51% Senior Notes due 2028 (collectively the Senior Notes).

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The 6.45% Senior Notes were issued at a discount and are being accreted to
their face value over the term of the 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, issued at par, may be redeemed at any time after January 15,
2008, at our option, 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 and rank on a parity
with all of our other unsecured and unsubordinated indebtedness. 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 our ability to
incur additional indebtedness. As of June 30, 2002, we were in compliance with
the covenants of the Senior Notes.

We have entered into an interest rate swap agreement to hedge our exposure
to changes in the fair value on a portion of the Senior Notes, as more fully
described in Item 3. Quantitative and Qualitative Disclosures About Market
Risk.

Cash Distributions

For the nine months ended September 30, 2002, and 2001, we paid cash
distributions totaling $70.4 million and $58.5 million, respectively. The
distribution increases reflects our success in improving cash flow levels. We
will pay a cash distribution of approximately $24.5 million on November 8,
2002, for the three months ended September 30, 2002.

Future Capital Needs and Commitments

We estimate that capital expenditures, excluding acquisitions, for 2002
will be approximately $62.5 million (which includes $3.5 million of capitalized
interest). We expect to use approximately $40.0 million for revenue generating
projects, approximately $13.0 million for maintenance capital spending and
approximately $6.0 million for system upgrade projects. Revenue generating
projects will include the installation of a brine pond at our Mont Belvieu LPGs
storage facility, the installation of improvements at the Princeton, Indiana,
LPGs truck loading facility, and the completion of facilities to support
receipt and delivery locations with Centennial. We expect to use approximately
$4.1 million of maintenance capital spending for pipeline rehabilitation
projects to comply with regulations enacted by the United States Department of
Transportation Office of Pipeline Safety. We continually review and evaluate
potential capital improvements and expansions that would be complementary to
our present system. These expenditures can vary greatly depending on the
magnitude of our transactions. Capital expenditures may be financed through
internally generated funds, debt or capital contributions from the Parent
Partnership.

Our debt repayment obligations consist of payments for principal and
interest on (i) Senior Notes, $180.0 million principal amount due January 15,
2008, and $210.0 million principal amount due January 15, 2028, and (ii) $146.3
million principal amount due to the Parent Partnership related to our share of
the Parent Partnerships Three Year Facility and Senior Notes, due in April
2004 and February 2012, respectively. We expect to repay the long-term, senior
unsecured obligations through the issuance of additional long-term senior
unsecured debt at the time the 2008 and 2028 debt matures, proceeds from
dispositions of assets, or any combination of the above items.

We are also contingently liable as guarantor for the lesser of one-half or
$75.0 million principal amount (plus interest) of the borrowings of Centennial.
We expect to contribute an additional $2.0 million to Centennial in the
remaining three months of 2002 to provide for operating problems associated
with the pipeline start-up, which have restricted the flexibility of
Centennials Creal Springs tank farm. We may make additional contributions to
Centennial in 2003. We expect that if any contributions are made they would
not have a material adverse effect on our financial position, results of
operations or cash flows. We are also contingently liable as guarantor for
$500.0 million principal amount of 7.625% Senior Notes due 2012 issued in
February 2002 by our Parent Partnership. We do not rely on off-balance sheet
borrowings to fund our acquisitions. We have no off-balance sheet commitments
for indebtedness other than the limited guaranty of the Centennial debt, the
Parent Partnership debt and leases covering assets utilized in several areas of
our operations.

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The following table summarizes our debt repayment obligations and material
contractual commitments as of September 30, 2002 (in millions).

|                                 |       |   |                                            |       |                  |   |           |     |           |   |               |      |  |   |     |     |  |   |       |       | 
|-------------------------------- | ----- | - | ------------------------------------------ | ----- | ---------------- | - | --------- | --- | --------- | - | ------------- | ---- |  | - | --- | --- |  | - | ----- | ----- | 
|                                 |       |   | Amount of Commitment Expiration Per Period
|                                 |       |   |                                           
|                                 |       |   | Total                                      |       | Less than 1 Year |   | 2-3 Years |     | 4-5 Years |   | After 5 Years
|                                 |       |   |                                            |       |                  |   |           |     |           |   |              
|Note payable, Parent Partnership |       | $ | 146.3                                      |       |                  | $ |          |     |           | $ | 25.1          |      |  | $ |    |     |  | $ | 121.2 |      
|6.45% Senior Notes due 2008      |       |   | 180.0                                      |       |                  |   |          |     |           |   |              |      |  |   |    |     |  |   | 180.0 |      
|7.51% Senior Notes due 2028      |       |   | 210.0                                      |       |                  |   |          |     |           |   |              |      |  |   |    |     |  |   | 210.0 |      
|Centennial cash contributions    |       |   | 2.0                                        |       |                  |   | 2.0       |     |           |   |              |      |  |   |    |     |  |   |      |      
|Operating leases                 |       |   | 20.2                                       |       |                  |   | 5.3       |     |           |   | 9.6           |      |  |   | 5.3 |     |  |   |      |      
|                                 |       |   |                                            |       |                  |   |           |     |           |   |               |      |  |   |     |     |  |   |       |      
|                                 | Total |   | $                                          | 558.5 |                  |   | $         | 7.3 |           |   | $             | 34.7 |  |   | $   | 5.3 |  |   | $     | 511.2 | 
|                                 |       |   |                                            |       |                  |   |           |     |           |   |               |      |  |   |     |     |  |   |       |      

Sources of Future Capital

We expect that our cash flow from operating activities will be adequate to
fund cash distributions and capital additions necessary to maintain existing
operations. However, expansionary capital projects and acquisitions may
require additional capital contributions from our Parent Partnership. The
Parent Partnership has funded its capital commitments from operating cash flow,
borrowings under bank credit facilities, the issuance of long term debt in
capital markets and public offering of Limited Partner Units. We expect future
capital needs would be similarly funded.

On May 29, 2002, Moodys Investors Service downgraded our Parent
Partnerships senior unsecured debt rating to Baa3 from Baa2. We were also
included in this downgrade. These ratings were given with stable outlooks and
followed our Parent Partnerships announcement of the acquisition of Val Verde.
The downgrades reflect Moodys concern that the Parent Partnership has a high
level of debt relative to many of its peers and that its debt may be
continually higher than its long-term targets if the Parent Partnership
continues to make a series of acquisitions of increasingly larger size.
Because of its high distribution rate, the Parent Partnership is particularly
reliant on external financing to finance its acquisitions. Moodys indicated
that the Parent Partnerships cash flows are becoming less predictable as a
result of its acquisitions and expansion into the crude oil and natural gas
gathering businesses. The Parent Partnership is evaluating alternatives to
lowering its debt-to-EBITDA ratio. Further reductions in the Parent
Partnerships and our credit ratings could increase the debt financing costs or
possibly reduce the availability of financing. Generally, a subsidiarys
credit rating will not be higher than its parent. A rating reflects only the
view of a rating agency and is not a recommendation to buy, sell or hold any
indebtedness. Any rating can be revised upward or downward or withdrawn at any
time by a rating agency if it decides that the circumstances warrant such a
change. On September 17, 2002, Moodys reaffirmed the Baa3 ratings on us and
our Parent Partnership.

Other Considerations

Our operations are subject to federal, state and local laws and
regulations governing the discharge of materials into the environment. Failure
to comply with these laws and regulations may result in the assessment of
administrative, civil, and criminal penalties, imposition of injunctions
delaying or prohibiting certain activities, and the need to perform
investigatory and remedial activities. Although we believe our operations are
in material compliance with applicable environmental laws and regulations,
risks of significant costs and liabilities are inherent in pipeline operations,
and we cannot assure you 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 our
operations, could result in substantial costs and liabilities to us. We
believe that changes in environmental laws and regulations will not have a
material adverse effect on our financial position, results of operations or
cash flows in the near term.

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In 1994, we entered into an Agreed Order with the Indiana Department of
Environmental Management (IDEM) that resulted in the implementation of a
remediation program for groundwater contamination attributable to our
operations at the Seymour, Indiana, terminal. In 1999, the IDEM approved a
Feasibility Study, which includes our proposed remediation program. We expect
the IDEM to issue a Record of Decision formally approving the remediation
program. After the Record of Decision is issued, we will enter into a
subsequent Agreed Order for the continued operation and maintenance of the
remediation program. We have an accrued liability of $0.2 million at September
30, 2002, for future remediation costs at the Seymour terminal. We do not
expect that the completion of the remediation program will have a future
material adverse effect on our financial position, results of operations or
cash flows.

In 1994, the Louisiana Department of Environmental Quality (LDEQ) issued
a compliance order for environmental contamination at our Arcadia, Louisiana,
facility. This contamination may be attributable to our operations, as well as
adjacent petroleum terminals operated by other companies. In 1999, our Arcadia
facility and adjacent terminals were directed by the Remediation Services
Division of the LDEQ to pursue remediation of this containment phase. At
September 30, 2002, we have an accrued liability of $0.2 million for
remediation costs at our Arcadia facility. We do not expect that the
completion of the remediation program that we have proposed will have a future
material adverse effect on our financial position, results of operations or
cash flows.

New Accounting Pronouncements

In July 2001, the Financial Accounting Standards Board (FASB) issued
SFAS No. 142, Goodwill and Other Intangible Assets. 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. At September 30, 2002, our investment
in Centennial included an excess investment (equity method goodwill) of $32.9
million, which will not be amortized according to SFAS 142 (see Note 5. Equity
Investments). We adopted SFAS 142 effective January 1, 2002. The adoption of
SFAS 142 did not have a material effect on our financial position, results of
operations or cash flows.

In June 2001, the FASB issued SFAS No. 143, Accounting for Asset
Retirement Obligations. SFAS 143 requires us to record the fair value of an
asset retirement obligation as a liability in the period in which we incur a
legal obligation for the retirement of tangible long-lived assets. A
corresponding asset is also recorded and depreciated over the life of the
asset. After the initial measurement of the asset retirement obligation, the
obligation will be adjusted at the end of each period to reflect the passage of
time and changes in the estimated future cash flows underlying the obligation.
We are required to adopt SFAS 143 effective January 1, 2003. We are currently
evaluating the impact of adopting SFAS 143.

In August 2001, the FASB issued SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets. SFAS 144 supercedes SFAS No. 121,
Accounting for Long-Lived Assets and For Long-Lived Assets to be Disposed Of,
but retains its fundamental provisions for reorganizing and measuring
impairment losses on long-lived assets held for use and long-lived assets to be
disposed of by sale. We adopted SFAS 144 effective January 1, 2002. The
adoption of SFAS 144 resulted in the classification of the transfer of TEPPCO
Colorado as discontinued operations. Under previously existing literature, the
classification of the transfer of TEPPCO Colorado as discontinued operations
would not have been required.

In April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements
No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections.SFAS 145 eliminates the requirement to classify gains and losses
from the extinguishment of indebtedness as extraordinary, requires certain
lease modifications to be treated the same as a sale-leaseback transaction, and
makes other non-substantive technical corrections to existing pronouncements.
SFAS 145 is effective for fiscal years beginning after May 15, 2002, with
earlier adoption encouraged. We are required to adopt SFAS 145 effective
January 1, 2003. We do not believe that the adoption of SFAS 145 will have a
material effect on our financial position, results of operations or cash flows.

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In July 2002, the FASB issued SFAS No. 146, Accounting for Costs
Associated with Exit or Disposal Activities. SFAS 146 addresses financial
accounting and reporting for costs associated with exit or disposal activities
and nullifies Emerging Issues Task Force (EITF) Issue No. 94-3, Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit
an Activity (including Certain Costs Incurred in a Restructuring). SFAS 146
requires recognition of a liability for a cost associated with an exit or
disposal activity when the liability is incurred, as opposed to when the entity
commits to an exit plan under EITF No. 94-3. SFAS 146 is to be applied
prospectively to exit or disposal activities initiated after December 31, 2002.
We do not believe that the adoption of SFAS 146 will have a material effect on
our financial position, results of operations or cash flows.

In June 2002, the EITF reached a consensus on certain issues contained in
Topic 02-03, Recognition and Reporting of Gains and Losses on Energy Trading
Contracts under EITF Issue No. 98-10, Accounting for Contracts Involved in
Energy Trading and Risk Management Activities. We do not believe that this
consensus, as currently interpreted by the EITF, applies to us, as we do not
engage in energy trading and risk management activities as contemplated by EITF
No. 98-10. The adoption of this consensus did not have an effect on our
results of operations or cash flows.




Forward-Looking Statements

The matters discussed in this Report 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 we expect or anticipate 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 our 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 based on our
experience and our perception of historical trends, current conditions and
expected future developments as well as other factors we believe are
appropriate under the circumstances. However, whether actual results and
developments will conform with our 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 us, competitive actions by other pipeline companies, changes
in laws or regulations, and other factors, many of which are beyond our
control. Consequently, all of the forward-looking statements made in this
document are qualified by these cautionary statements and we cannot assure you
that actual results or developments that we anticipate will be realized or,
even if substantially realized, will have the expected consequences to or
effect on us or our business or operations. For additional discussion of such
risks and uncertainties, see our 2001 Annual Report on Form 10-K and other
filings we have made with the Securities and Exchange Commission.




Item 3. Quantitative and Qualitative Disclosures About Market Risk

We may be exposed to market risk through changes in commodity prices and
interest rates. We do not have foreign exchange risks. Our Risk Management
Committee has established policies to monitor and control these market risks.
The Risk Management Committee is comprised, in part, of senior executives of
the Company.

We have utilized and expect to continue to utilize interest rate swap
agreements to hedge a portion of our fair value risks. Interest rate swap
agreements are used to manage the fixed interest rate mix of our debt portfolio
and overall cost of borrowing. The interest rate swaps related to our fair
value risks are intended to reduce our exposure to changes in the fair value of
our fixed rate Senior Notes. The interest rate swap agreements involve the
periodic exchange of payments without the exchange of the notional amount upon
which the payments are based. The related amount payable to or receivable from
counterparties is included as an adjustment to accrued interest.

As of September 30, 2002, and December 31, 2001, we had intercompany notes
payable to our Parent Partnership of $146.3 million and $117.9 million,
respectively. At December 31, 2001, $72.5 million, included in

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current liabilities, related to our borrowings under the Parent
Partnerships Short-term Revolver described above. Our long-term portion at
December 31, 2001, totaled $45.4 million and represented borrowings under the
Parent Partnerships Three Year Facility. During the nine months ended
September 30, 2002, the Parent Partnership issued $500.0 million principal
amount of 7.625% Senior Notes due 2012. The Parent Partnership used a portion
of the proceeds to repay the Short-term Revolver. Thus, at September 30, 2002,
no amounts were included in current liabilities as our portion of the
Short-term Revolver had been repaid. Our long-term portion at September 30,
2002, totaled $146.3 million and represents borrowings by us under the Parent
Partnerships Three Year Facility and Senior Notes described above. The
interest rate on the note payable, Parent Partnership at September 30, 2002,
was 5.0%. At September 30, 2002, accrued interest includes $2.9 million due to
the Parent Partnership. For the nine months ended September 30, 2002, interest
costs incurred on the note payable, Parent Partnership totaled $5.4 million.

On October 4, 2001, we entered into an interest rate swap agreement to
hedge our exposure to changes in the fair value of our fixed rate 7.51% Senior
Notes due 2028. We designated this swap agreement as a fair value hedge. The
swap agreement has a notional amount of $210.0 million and matures in January
2028 to match the principal and maturity of the Senior Notes. Under the swap
agreement, we pay a floating rate based on a three month U.S. Dollar LIBOR
rate, plus a spread, and receive a fixed rate of interest of 7.51%. During the
nine months ended September 30, 2002, we recognized a gain of $5.4 million,
recorded as a reduction of interest expense, on the interest rate swap. During
the quarter ended September 30, 2002, we measured the hedge effectiveness of
this interest rate swap and noted that no gain or loss from ineffectiveness was
required to be recognized. The fair value of this interest rate swap agreement
was a gain of approximately $5.2 million at September 30, 2002, and a loss of
approximately $14.6 million at December 31, 2001.

At September 30, 2002, we had outstanding $180.0 million principal amount
of 6.45% Senior Notes due 2008 and $210.0 million principal amount of 7.51%
Senior Notes due 2028. At September 30, 2002, the estimated fair value of the
Senior Notes was approximately $392.0 million.




Item 4. Controls and Procedures

Included in its recent Release No. 34-46427, effective August 29, 2002,
the Securities and Exchange Commission adopted rules requiring reporting
companies to maintain disclosure controls and procedures to provide reasonable
assurance that a registrant is able to record, process, summarize and report
the information required in the registrants quarterly and annual reports under
the Securities Exchange Act of 1934 (the Exchange Act). While we believe
that our existing disclosure controls and procedures have been effective to
accomplish these objectives, we intend to continue to examine, refine and
formalize our disclosure controls and procedures and to monitor ongoing
developments in this area.

The principal executive officer and principal financial officer of our
general partner have informed us that, based upon their evaluation as of
October 29, 2002, of our disclosure controls and procedures (as defined in Rule
13a-14(c) and Rule 15d-14(c) under the Exchange Act), they have concluded that
those disclosure controls and procedures are effective.

There have been no changes in our internal controls or in other factors
known to us that could significantly affect those controls subsequent to their
evaluation, nor any corrective actions with regard to significant deficiencies
and material weaknesses.

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PART II. OTHER INFORMATION




Item 6. Exhibits and Reports on Form 8-K.

|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) Exhibits: |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|3.1           |  | Second Amended and Restated Agreement of Limited Partnership
of TE Products Pipeline Company, Limited Partnership, effective
September 21, 2001 (Filed as Exhibit 3.8 to Form 10-Q of TEPPCO
Partners, L.P. (Commission File No. 1-10403) for the quarter ended
September 30, 2001, and incorporated herein by reference).                                                                                                                                                                                                                                                                                  
|4.1           |  | 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).                                                                                                                                                                                                                                                                       
|4.2           |  | Form of Indenture between TEPPCO Partners, L.P., as issuer,
TE Products Pipeline Company, Limited Partnership, TCTM, L.P.,
TEPPCO Midstream Companies, L.P. and Jonah Gas Gathering Company, as
subsidiary guarantors, and First Union National Bank, NA, as
trustee, dated as of February 20, 2002 (Filed as Exhibit 99.2 to
Form 8-K of TEPPCO Partners, L.P. (Commission File No. 1-10403)
dated as of February 20, 2002 and incorporated herein by
reference).                                                                                                                                          
|4.3           |  | First Supplemental Indenture between TEPPCO Partners, L.P.,
as issuer, TE Products Pipeline Company, Limited Partnership, TCTM,
L.P., TEPPCO Midstream Companies, L.P. and Jonah Gas Gathering
Company, as subsidiary guarantors, and First Union National Bank,
NA, as trustee, dated as of February 20, 2002 (Filed as Exhibit 99.3
to Form 8-K of TEPPCO Partners, L.P (Commission File No. 1-10403)
dated as of February 20, 2002 and incorporated herein by
reference).                                                                                                                                
|4.4           |  | Supplemental Indenture, dated as of June 27, 2002, among
TEPPCO Partners, L.P., as issuer, TE Products Pipeline Company,
Limited Partnership, TCTM, L.P., TEPPCO Midstream Companies, L.P.,
and Jonah Gas Gathering Company, as Initial Subsidiary Guarantors,
and Val Verde Gas Gathering Company, L.P., as New Subsidiary
Guarantor, and Wachovia Bank, National Association, formerly known
as First Union National Bank, as trustee (Filed as Exhibit 4.6 to
Form 10-Q of TEPPCO Partners, L.P. (Commission File No. 1-10403) for
the quarter ended June 30, 2002 and incorporated herein by
reference).
|10.1+         |  | Duke Energy Corporation Executive Savings Plan (Filed as
Exhibit 10.7 to Form 10-K of TEPPCO Partners, L.P. (Commission File
No. 1-10403) for the year ended December 31, 1999 and incorporated
herein by reference).                                                                                                                                                                                                                                                                                                                                                                                       
|10.2+         |  | Duke Energy Corporation Executive Cash Balance Plan (Filed
as Exhibit 10.8 to Form 10-K of TEPPCO Partners, L.P. (Commission
File No. 1-10403) for the year ended December 31, 1999 and
incorporated herein by reference).                                                                                                                                                                                                                                                                                                                                                                                  
|10.3+         |  | Duke Energy Corporation Retirement Benefit Equalization Plan
(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, 1999
and incorporated herein by reference).                                                                                                                                                                                                                                                                                                                                                                         
|10.4+         |  | 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).                                                                                                                                                                                                                                                                                                                                      
|10.5+         |  | 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).                                                                                                                                                                                                                                                                                                                       

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|       |  |                                                                                                                                                                                                                                                                                                                                                                                                         
|------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.6+  |  | 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).                                                                                                              
|10.7+  |  | 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).                                                                                                       
|10.8+  |  | 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).                                                                                                                              
|10.9   |  | 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).                                                                                                                
|10.10+ |  | Form of Employment Agreement between the Company and Thomas R.
Harper, Charles H. Leonard, James C. Ruth, John N. Goodpasture,
Leonard W. Mallett, Stephen W. Russell, David E. Owen, and Barbara
A. Carroll (Filed as Exhibit 10.20 to Form 10-K of TEPPCO Partners,
L.P. (Commission File No. 1-10403) for the year ended December 31,
1998 and incorporated herein by reference).                    
|10.11+ |  | 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).                                                                                                                                                                                        
|10.12  |  | 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).     
|10.13  |  | 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).                                                                                                                                                                                   
|10.14+ |  | 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).                                                                                                
|10.15+ |  | 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).                                                                                                                                                                       
|10.16  |  | Contribution, Assignment and Amendment Agreement among
TEPPCO Partners, L.P., TE Products Pipeline Company, Limited
Partnership, TCTM, L.P., Texas Eastern Products Pipeline Company,
LLC, and TEPPCO GP, Inc., dated July 26, 2001 (Filed as Exhibit 3.6
to Form 10-Q of TEPPCO Partners, L.P. (Commission File No. 1-10403)
for the quarter ended June 30, 2001 and incorporated herein by
reference).
|10.17  |  | 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).                                                                                                                                                                                  
|10.18  |  | 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).      

25



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##### Table of Contents



|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.19  |  | Credit Agreement among TEPPCO Partners, L.P. as Borrower,
SunTrust Bank as Administrative Agent, and Certain Lenders, dated as
of April 6, 2001 ($200,000,000 Revolving Facility) (Filed as Exhibit
10.32 to Form 10-Q of TEPPCO Partners, L.P. (Commission File No.
1-10403) for the quarter ended March 31, 2001 and incorporated
herein by reference).                                                                                                                 
|10.20  |  | Amendment 1, dated as of September 28, 2001, to the Amended
and Restated Credit Agreement among TEPPCO Partners, L.P. as
Borrower, SunTrust Bank as Administrative Agent and LC Issuing Bank,
and Certain Lenders, dated as of April 6, 2001 ($500,000,000
Revolving Facility) (Filed as Exhibit 10.33 to Form 10-Q of TEPPCO
Partners, L.P. (Commission File No. 1-10403) for the quarter ended
September 30, 2001 and incorporated herein by reference).                
|10.21  |  | Amendment 1, dated as of September 28, 2001, to the Credit
Agreement among TEPPCO Partners, L.P. as Borrower, SunTrust Bank as
Administrative Agent, and Certain Lenders, dated as of April 6, 2001
($200,000,000 Revolving Facility) (Filed as Exhibit 10.34 to Form
10-Q of TEPPCO Partners, L.P. (Commission File No. 1-10403) for the
quarter ended September 30, 2001 and incorporated herein by
reference).                                                         
|10.22  |  | Amendment and Restatement, dated as of November 13, 2001, to
the Credit Agreement among TEPPCO Partners, L.P. as Borrower,
SunTrust Bank as Administrative Agent, and Certain Lenders, dated as
of April 6, 2001 ($200,000,000 Revolving Facility) (Filed as Exhibit
10.35 to Form 10-K of TEPPCO Partners, L.P (Commission File No.
1-10403) for the year ended December 31, 2001 and incorporated
herein by reference).                                                 
|10.23  |  | Second Amendment and Restatement, dated as of November 13,
2001, to the Amended and Restated Credit Agreement amount 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 10.36 to Form
10-K of TEPPCO Partners, L.P (Commission File No. 1-10403) for the
year ended December 31, 2001 and incorporated herein by reference).
|10.24  |  | Credit Agreement among TEPPCO Partners, L.P. as Borrower,
SunTrust Bank as Administrative Agent and Certain Lenders, as
Lenders dated as of March 28, 2002 ($200,000,000 Revolving Credit
Facility) (Filed as Exhibit 10.44 to Form 10-Q of TEPPCO Partners,
L.P. (Commission File No. 1-10403) for the three months ended March
31, 2002 and incorporated herein by reference).                                                                                          
|10.25  |  | Amended and Restated Credit Agreement among TEPPCO Partners,
L.P. as Borrower, SunTrust Bank, as Administrative Agent and LC
Issuing Bank and Certain Lenders, as Lenders dated as of March 28,
2002 ($500,000,000 Revolving Facility) (Filed as Exhibit 10.45 to
Form 10-Q of TEPPCO Partners, L.P. (Commission File No. 1-10403) for
the three months ended March 31, 2002 and incorporated herein by
reference).                                                       
|10.26  |  | Amendment, dated as of June 27, 2002 to the Amended and
Restated Credit Agreement among TEPPCO Partners, L.P., as Borrower,
SunTrust Bank, as Administrative Agent, and Certain Lenders, dated
as of March 28, 2002 ($500,000,000 Revolving Credit Facility) (Filed
as Exhibit 99.3 to Form 8-K of TEPPCO Partners, L.P. (Commission
File No. 1-10403) dated as of July 2, 2002 and incorporated herein
by reference).                                                    
|10.27  |  | Amendment 1, dated as of June 27, 2002 to the Credit
Agreement among TEPPCO Partners, L.P., as Borrower, SunTrust Bank,
as Administrative Agent and Certain Lenders, dated as of March 28,
2002 ($200,000,000 Revolving Credit Facility) (Filed as Exhibit 99.4
to Form 8-K of TEPPCO Partners, L.P. (Commission File No. 1-10403)
dated as of July 2, 2002 and incorporated herein by reference).                                                                        
|10.28+ |  | Texas Eastern Products Pipeline Company, LLC 2002 Phantom Unit
Retention Plan, effective June 1, 2002 (Filed as Exhibit 10.49 to
Form 10-Q of TEPPCO Partners, L.P. (Commission File No. 1-10403) for
the quarter ended June 30, 2002, and incorporated herein by
reference).                                                                                                                                                                                             



---

|+ |  | A management contract or compensation plan or arrangement.
|- |  | ----------------------------------------------------------

26



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##### Table of Contents





|(b) |  | Reports on Form 8-K filed during the quarter ended September 30, 2002:
                     None.
|--- |  | -------------------------------------------------------------------------------------------------




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.



| |                                                   |  |                                                                                
| | ------------------------------------------------- |  | -------------------------------------------------------------------------------
| | TE Products Pipeline Company, Limited Partnership
| |                                                  
| | (Registrant)
(A Delaware Limited Partnership)    
|
| | By:                                               |  | TEPPCO GP, Inc.,
as General Partner                                            
|
|
| | By:                                               |  | /s/  BARRY R. PEARL                                                            
| |                                                   |  |                                                                                
| |                                                   |  | Barry R. Pearl,
President, Chief Executive
Officer and Director                
|
|
| | By:                                               |  | /s/  CHARLES H. LEONARD                                                        
| |                                                   |  |                                                                                
| |                                                   |  | Charles H. Leonard,
Senior Vice President, Chief Financial
Officer and Director

Date: November 4, 2002

27



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##### Table of Contents



CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002

I, BARRY R. PEARL, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of TE Products
Pipeline Company, Limited Partnership;                                                                                                                                                                                                                      
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;                   
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                                     



| | a) |  | designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b) |  | evaluated the effectiveness of the registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the Evaluation Date); and
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | c) |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



|5. |  | The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to
record, process, summarize and report financial data and have
identified for the registrants auditors any material weaknesses in
internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b) |  | any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrants
internal controls; and
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



|6. |  | The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                                     | 
|---------------------------------------------------- | 
|November 4, 2002                                     | 
|                                                    
|                                                    
|/s/  BARRY R. PEARL                                  | 
|                                                     | 
|Barry R. Pearl
President and Chief Executive Officer | 

28



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##### Table of Contents



CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002

I, CHARLES H. LEONARD, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of TE Products Pipeline
Company, Limited Partnership;                                                                                                                                                                                                                      
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;                   
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                                     



| | a) |  | designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b) |  | evaluated the effectiveness of the registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the Evaluation Date); and
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | c) |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



|5. |  | The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of internal controls which could
adversely affect the registrants ability to record, process, summarize and report financial data and have
identified for the registrants auditors any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b) |  | any fraud, whether or not material, that involves management or other employees who have
a significant role in the registrants internal controls; and
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



|6. |  | The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                                                     | 
|-------------------------------------------------------------------- | 
|November 4, 2002                                                     | 
|                                                                    
|                                                                    
|/s/  CHARLES H. LEONARD                                              | 
|                                                                     | 
|Charles H. Leonard
Senior Vice President and Chief Financial Officer | 

29



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##### Table of Contents



CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned, being the Chief Executive Officer of TEPPCO GP, Inc., the sole
general partner of TE Products Pipeline Company, Limited Partnership (the
Company), hereby certifies that, to his knowledge, the Companys Quarterly
Report on Form 10-Q for the quarterly period ended September 30, 2002, filed
with the United States Securities and Exchange Commission pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or
78o(d)), fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 and that information contained in such
Quarterly Report fairly presents, in all material respects, the financial
condition and results of operations of the Company.



|                                                     | 
|---------------------------------------------------- | 
|November 4, 2002                                     | 
|                                                    
|                                                    
|/s/  BARRY R. PEARL                                  | 
|                                                     | 
|Barry R. Pearl
President and Chief Executive Officer | 

30



---



##### Table of Contents



CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned, being the Chief Financial Officer of TEPPCO GP, Inc., the sole
general partner of TE Products Pipeline Company, Limited Partnership (the
Company), hereby certifies that, to his knowledge, the Companys Quarterly
Report on Form 10-Q for the quarterly period ended September 30, 2002, filed
with the United States Securities and Exchange Commission pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or
78o(d)), fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 and that information contained in such
Quarterly Report fairly presents, in all material respects, the financial
condition and results of operations of the Company.



|                                                                     | 
|-------------------------------------------------------------------- | 
|November 4, 2002                                                     | 
|                                                                    
|                                                                    
|/s/  CHARLES H. LEONARD                                              | 
|                                                                     | 
|Charles H. Leonard
Senior Vice President and Chief Financial Officer | 

31



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##### Table of Contents






EXHIBIT INDEX

|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) Exhibits: |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|3.1           |  | Second Amended and Restated Agreement of Limited Partnership
of TE Products Pipeline Company, Limited Partnership, effective
September 21, 2001 (Filed as Exhibit 3.8 to Form 10-Q of TEPPCO
Partners, L.P. (Commission File No. 1-10403) for the quarter ended
September 30, 2001, and incorporated herein by reference).                                                                                                                                                                                                                                                                                  
|4.1           |  | 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).                                                                                                                                                                                                                                                                       
|4.2           |  | Form of Indenture between TEPPCO Partners, L.P., as issuer,
TE Products Pipeline Company, Limited Partnership, TCTM, L.P.,
TEPPCO Midstream Companies, L.P. and Jonah Gas Gathering Company, as
subsidiary guarantors, and First Union National Bank, NA, as
trustee, dated as of February 20, 2002 (Filed as Exhibit 99.2 to
Form 8-K of TEPPCO Partners, L.P. (Commission File No. 1-10403)
dated as of February 20, 2002 and incorporated herein by
reference).                                                                                                                                          
|4.3           |  | First Supplemental Indenture between TEPPCO Partners, L.P.,
as issuer, TE Products Pipeline Company, Limited Partnership, TCTM,
L.P., TEPPCO Midstream Companies, L.P. and Jonah Gas Gathering
Company, as subsidiary guarantors, and First Union National Bank,
NA, as trustee, dated as of February 20, 2002 (Filed as Exhibit 99.3
to Form 8-K of TEPPCO Partners, L.P (Commission File No. 1-10403)
dated as of February 20, 2002 and incorporated herein by
reference).                                                                                                                                
|4.4           |  | Supplemental Indenture, dated as of June 27, 2002, among
TEPPCO Partners, L.P., as issuer, TE Products Pipeline Company,
Limited Partnership, TCTM, L.P., TEPPCO Midstream Companies, L.P.,
and Jonah Gas Gathering Company, as Initial Subsidiary Guarantors,
and Val Verde Gas Gathering Company, L.P., as New Subsidiary
Guarantor, and Wachovia Bank, National Association, formerly known
as First Union National Bank, as trustee (Filed as Exhibit 4.6 to
Form 10-Q of TEPPCO Partners, L.P. (Commission File No. 1-10403) for
the quarter ended June 30, 2002 and incorporated herein by
reference).
|10.1+         |  | Duke Energy Corporation Executive Savings Plan (Filed as
Exhibit 10.7 to Form 10-K of TEPPCO Partners, L.P. (Commission File
No. 1-10403) for the year ended December 31, 1999 and incorporated
herein by reference).                                                                                                                                                                                                                                                                                                                                                                                       
|10.2+         |  | Duke Energy Corporation Executive Cash Balance Plan (Filed
as Exhibit 10.8 to Form 10-K of TEPPCO Partners, L.P. (Commission
File No. 1-10403) for the year ended December 31, 1999 and
incorporated herein by reference).                                                                                                                                                                                                                                                                                                                                                                                  
|10.3+         |  | Duke Energy Corporation Retirement Benefit Equalization Plan
(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, 1999
and incorporated herein by reference).                                                                                                                                                                                                                                                                                                                                                                         
|10.4+         |  | 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).                                                                                                                                                                                                                                                                                                                                      
|10.5+         |  | 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).                                                                                                                                                                                                                                                                                                                       





---



##### Table of Contents



|       |  |                                                                                                                                                                                                                                                                                                                                                                                                         
|------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.6+  |  | 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).                                                                                                              
|10.7+  |  | 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).                                                                                                       
|10.8+  |  | 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).                                                                                                                              
|10.9   |  | 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).                                                                                                                
|10.10+ |  | Form of Employment Agreement between the Company and Thomas R.
Harper, Charles H. Leonard, James C. Ruth, John N. Goodpasture,
Leonard W. Mallett, Stephen W. Russell, David E. Owen, and Barbara
A. Carroll (Filed as Exhibit 10.20 to Form 10-K of TEPPCO Partners,
L.P. (Commission File No. 1-10403) for the year ended December 31,
1998 and incorporated herein by reference).                    
|10.11+ |  | 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).                                                                                                                                                                                        
|10.12  |  | 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).     
|10.13  |  | 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).                                                                                                                                                                                   
|10.14+ |  | 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).                                                                                                
|10.15+ |  | 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).                                                                                                                                                                       
|10.16  |  | Contribution, Assignment and Amendment Agreement among
TEPPCO Partners, L.P., TE Products Pipeline Company, Limited
Partnership, TCTM, L.P., Texas Eastern Products Pipeline Company,
LLC, and TEPPCO GP, Inc., dated July 26, 2001 (Filed as Exhibit 3.6
to Form 10-Q of TEPPCO Partners, L.P. (Commission File No. 1-10403)
for the quarter ended June 30, 2001 and incorporated herein by
reference).
|10.17  |  | 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).                                                                                                                                                                                  
|10.18  |  | 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).      





---



##### Table of Contents



|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.19  |  | Credit Agreement among TEPPCO Partners, L.P. as Borrower,
SunTrust Bank as Administrative Agent, and Certain Lenders, dated as
of April 6, 2001 ($200,000,000 Revolving Facility) (Filed as Exhibit
10.32 to Form 10-Q of TEPPCO Partners, L.P. (Commission File No.
1-10403) for the quarter ended March 31, 2001 and incorporated
herein by reference).                                                                                                                 
|10.20  |  | Amendment 1, dated as of September 28, 2001, to the Amended
and Restated Credit Agreement among TEPPCO Partners, L.P. as
Borrower, SunTrust Bank as Administrative Agent and LC Issuing Bank,
and Certain Lenders, dated as of April 6, 2001 ($500,000,000
Revolving Facility) (Filed as Exhibit 10.33 to Form 10-Q of TEPPCO
Partners, L.P. (Commission File No. 1-10403) for the quarter ended
September 30, 2001 and incorporated herein by reference).                
|10.21  |  | Amendment 1, dated as of September 28, 2001, to the Credit
Agreement among TEPPCO Partners, L.P. as Borrower, SunTrust Bank as
Administrative Agent, and Certain Lenders, dated as of April 6, 2001
($200,000,000 Revolving Facility) (Filed as Exhibit 10.34 to Form
10-Q of TEPPCO Partners, L.P. (Commission File No. 1-10403) for the
quarter ended September 30, 2001 and incorporated herein by
reference).                                                         
|10.22  |  | Amendment and Restatement, dated as of November 13, 2001, to
the Credit Agreement among TEPPCO Partners, L.P. as Borrower,
SunTrust Bank as Administrative Agent, and Certain Lenders, dated as
of April 6, 2001 ($200,000,000 Revolving Facility) (Filed as Exhibit
10.35 to Form 10-K of TEPPCO Partners, L.P (Commission File No.
1-10403) for the year ended December 31, 2001 and incorporated
herein by reference).                                                 
|10.23  |  | Second Amendment and Restatement, dated as of November 13,
2001, to the Amended and Restated Credit Agreement amount 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 10.36 to Form
10-K of TEPPCO Partners, L.P (Commission File No. 1-10403) for the
year ended December 31, 2001 and incorporated herein by
reference).
|10.24  |  | Credit Agreement among TEPPCO Partners, L.P. as Borrower,
SunTrust Bank as Administrative Agent and Certain Lenders, as
Lenders dated as of March 28, 2002 ($200,000,000 Revolving Credit
Facility) (Filed as Exhibit 10.44 to Form 10-Q of TEPPCO Partners,
L.P. (Commission File No. 1-10403) for the three months ended March
31, 2002 and incorporated herein by reference).                                                                                          
|10.25  |  | Amended and Restated Credit Agreement among TEPPCO Partners,
L.P. as Borrower, SunTrust Bank, as Administrative Agent and LC
Issuing Bank and Certain Lenders, as Lenders dated as of March 28,
2002 ($500,000,000 Revolving Facility) (Filed as Exhibit 10.45 to
Form 10-Q of TEPPCO Partners, L.P. (Commission File No. 1-10403) for
the three months ended March 31, 2002 and incorporated herein by
reference).                                                       
|10.26  |  | Amendment, dated as of June 27, 2002 to the Amended and
Restated Credit Agreement among TEPPCO Partners, L.P., as Borrower,
SunTrust Bank, as Administrative Agent, and Certain Lenders, dated
as of March 28, 2002 ($500,000,000 Revolving Credit Facility) (Filed
as Exhibit 99.3 to Form 8-K of TEPPCO Partners, L.P. (Commission
File No. 1-10403) dated as of July 2, 2002 and incorporated herein
by reference).                                                    
|10.27  |  | Amendment 1, dated as of June 27, 2002 to the Credit
Agreement among TEPPCO Partners, L.P., as Borrower, SunTrust Bank,
as Administrative Agent and Certain Lenders, dated as of March 28,
2002 ($200,000,000 Revolving Credit Facility) (Filed as Exhibit 99.4
to Form 8-K of TEPPCO Partners, L.P. (Commission File No. 1-10403)
dated as of July 2, 2002 and incorporated herein by reference).                                                                        
|10.28+ |  | Texas Eastern Products Pipeline Company, LLC 2002 Phantom Unit
Retention Plan, effective June 1, 2002 (Filed as Exhibit 10.49 to
Form 10-Q of TEPPCO Partners, L.P. (Commission File No. 1-10403) for
the quarter ended June 30, 2002, and incorporated herein by
reference).                                                                                                                                                                                             



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|+ |  | A management contract or compensation plan or arrangement.
|- |  | ----------------------------------------------------------