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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, 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 June 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               
|                                             |                                                                                               | CONSOLIDATED STATEMENTS OF INCOME         
|                                             |                                                                                               | CONSOLIDATED STATEMENTS OF CASH FLOWS     
|                                             |                                                                                               | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|                                             | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                                             | Item 3. Quantitative and Qualitative Disclosures About Market Risk                           
|PART II. OTHER INFORMATION                  
|                                             | Item 6. Exhibits and Reports on Form 8-K.                                                    
|SIGNATURES                                  
|Certification of CEO Pursuant to Section 906
|Certification of CFO Pursuant to Section 906



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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 June 30, 2002 (unaudited) and December 31, 2001                              |  |      | 1  | 
|                                                                                              | Consolidated Statements of Income for the three months and six months ended June 30, 2002
and 2001 (unaudited) |  |      | 2  | 
|                                                                                              | Consolidated Statements of Cash Flows for the six months ended June 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 |                                                                                                                |  | 12   |   
|                                                                                              | Forward-Looking Statements                                                                                     |  |      | 20 | 
|Item 3. Quantitative and Qualitative Disclosures About Market Risk                            |                                                                                                                |  | 20   |   
|PART II. OTHER INFORMATION                                                                    |                                                                                                                |  |      |   
|Item 6. Exhibits and Reports on Form 8-K                                                      |                                                                                                                |  | 21   |   

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PART I. FINANCIAL INFORMATION




Item 1. Financial Statements




TE PRODUCTS PIPELINE COMPANY, LIMITED PARTNERSHIP

CONSOLIDATED BALANCE SHEETS
(in thousands)

|                                                                                                                   |                                                                |                                         |                                   |         |         |             |         |              |         |  |  | 
|------------------------------------------------------------------------------------------------------------------ | -------------------------------------------------------------- | --------------------------------------- | --------------------------------- | ------- | ------- | ----------- | ------- | ------------ | ------- |  |  | 
|                                                                                                                   |                                                                |                                         |                                   |         |         | June 30,    |         | December 31,
|                                                                                                                   |                                                                |                                         |                                   |         |         | 2002        |         | 2001        
|                                                                                                                   |                                                                |                                         |                                   |         |         |             |         |             
|                                                                                                                   |                                                                |                                         |                                   |         |         | (Unaudited) |         |              |         | 
|                                                                                                                   |                                                                |                                         |                                   | ASSETS  |         |             |         |              |         |  |  | 
|Current assets:                                                                                                    |                                                                |                                         |                                   |         |         |             |         |             
|                                                                                                                   | Cash and cash equivalents                                      |                                         | $                                 | 6,090   |         |             | $       | 3,654        |        
|                                                                                                                   | Accounts receivable, trade                                     |                                         |                                   | 17,423  |         |             |         | 22,815       |        
|                                                                                                                   | Accounts receivable, related parties                           |                                         |                                   | 13,277  |         |             |         | 7,386        |        
|                                                                                                                   | Inventories                                                    |                                         |                                   | 8,524   |         |             |         | 10,617       |        
|                                                                                                                   | Other                                                          |                                         |                                   | 12,056  |         |             |         | 11,069       |        
|                                                                                                                   | Total assets of discontinued operations                        |                                         |                                   |        |         |             |         | 35,798       |        
|                                                                                                                   |                                                                |                                         |                                   |         |         |             |         |              |        
|                                                                                                                   |                                                                | Total current assets                    |                                   |         | 57,370  |             |         |              | 91,339  | 
|                                                                                                                   |                                                                |                                         |                                   |         |         |             |         |              |        
|Property, plant and equipment, at cost (Net of accumulated
depreciation and amortization of $276,068 and $263,662) |                                                                |                                         | 711,986                           |         |         |             | 697,178 |             
|Equity investments                                                                                                 |                                                                |                                         | 74,149                            |         |         |             | 69,409  |             
|Advances to Parent Partnership                                                                                     |                                                                |                                         | 5,803                             |         |         |             | 3,993   |             
|Other assets                                                                                                       |                                                                |                                         | 16,421                            |         |         |             | 17,915  |             
|                                                                                                                   |                                                                |                                         |                                   |         |         |             |         |              |        
|                                                                                                                   |                                                                | Total assets                            |                                   | $       | 865,729 |             |         | $            | 879,834 | 
|                                                                                                                   |                                                                |                                         |                                   |         |         |             |         |              |        
|                                                                                                                   |                                                                |                                         | LIABILITIES AND PARTNERS CAPITAL |         |         |             |         |              |         |  | 
|Current liabilities:                                                                                               |                                                                |                                         |                                   |         |         |             |         |             
|                                                                                                                   | Note payable, Parent Partnership                               |                                         | $                                 |        |         |             | $       | 72,490       |        
|                                                                                                                   | Accounts payable and accrued liabilities                       |                                         |                                   | 16,372  |         |             |         | 18,994       |        
|                                                                                                                   | Accounts payable, Texas Eastern Products Pipeline Company, LLC |                                         |                                   | 6,796   |         |             |         | 12,455       |        
|                                                                                                                   | Accrued interest                                               |                                         |                                   | 14,936  |         |             |         | 12,977       |        
|                                                                                                                   | Other accrued taxes                                            |                                         |                                   | 5,922   |         |             |         | 5,647        |        
|                                                                                                                   | Other                                                          |                                         |                                   | 10,775  |         |             |         | 10,204       |        
|                                                                                                                   | Total liabilities of discontinued operations                   |                                         |                                   |        |         |             |         | 33,366       |        
|                                                                                                                   |                                                                |                                         |                                   |         |         |             |         |              |        
|                                                                                                                   |                                                                | Total current liabilities               |                                   |         | 54,801  |             |         |              | 166,133 | 
|                                                                                                                   |                                                                |                                         |                                   |         |         |             |         |              |        
|Senior Notes                                                                                                       |                                                                |                                         | 389,830                           |         |         |             | 389,814 |             
|Note Payable, Parent Partnership                                                                                   |                                                                |                                         | 146,244                           |         |         |             | 45,410  |             
|Other liabilities and deferred credits                                                                             |                                                                |                                         | 19,756                            |         |         |             | 8,365   |             
|Commitments and contingencies                                                                                      |                                                                |                                         |                                   |         |         |             |         |             
|Partners capital:                                                                                                 |                                                                |                                         |                                   |         |         |             |         |             
|                                                                                                                   | General partners interest                                     |                                         |                                   | 48      |         |             |         | 3            |        
|                                                                                                                   | Limited partners interest                                     |                                         |                                   | 255,050 |         |             |         | 270,109      |        
|                                                                                                                   |                                                                |                                         |                                   |         |         |             |         |              |        
|                                                                                                                   |                                                                | Total partners capital                 |                                   |         | 255,098 |             |         |              | 270,112 | 
|                                                                                                                   |                                                                |                                         |                                   |         |         |             |         |              |        
|                                                                                                                   |                                                                | Total liabilities and partners capital |                                   | $       | 865,729 |             |         | $            | 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 |        | Six Months Ended
|                                    |                                       |                                       |        | June 30,           |        | June 30,        
|                                    |                                       |                                       |        |                    |        |                 
|                                    |                                       |                                       |        | 2002               |        | 2001             |        | 2002   |        | 2001
|                                    |                                       |                                       |        |                    |        |                  |        |        |        |     
|Operating revenues:                 |                                       |                                       |        |                    |        |                  |        |        |        |      |         |        |         |  |         |       
|                                    | Transportation  Refined products     |                                       | $      | 31,803             |        |                  | $      | 51,406 |        |      | $       | 56,947 |         |  | $       | 77,587 |        
|                                    | Transportation  LPGs                 |                                       |        | 10,813             |        |                  |        | 13,506 |        |      |         | 34,173 |         |  |         | 38,505 |        
|                                    | Mont Belvieu operations               |                                       |        | 2,889              |        |                  |        | 2,997  |        |      |         | 7,395  |         |  |         | 5,894  |        
|                                    | Other                                 |                                       |        | 9,151              |        |                  |        | 10,637 |        |      |         | 15,727 |         |  |         | 18,861 |        
|                                    |                                       |                                       |        |                    |        |                  |        |        |        |      |         |        |         |  |         |        |        
|                                    |                                       | Total operating revenues              |        |                    | 54,656 |                  |        |        | 78,546 |      |         |        | 114,242 |  |         |        | 140,847 | 
|                                    |                                       |                                       |        |                    |        |                  |        |        |        |      |         |        |         |  |         |        |        
|Costs and expenses:                 |                                       |                                       |        |                    |        |                  |        |        |        |      |         |        |         |  |         |       
|                                    | Operating, general and administrative |                                       |        | 20,376             |        |                  |        | 19,359 |        |      |         | 39,362 |         |  |         | 35,788 |        
|                                    | Operating fuel and power              |                                       |        | 5,528              |        |                  |        | 9,204  |        |      |         | 12,639 |         |  |         | 17,242 |        
|                                    | Depreciation and amortization         |                                       |        | 7,364              |        |                  |        | 6,703  |        |      |         | 14,196 |         |  |         | 13,376 |        
|                                    | Taxes  other than income taxes       |                                       |        | 2,811              |        |                  |        | 1,966  |        |      |         | 5,821  |         |  |         | 4,847  |        
|                                    |                                       |                                       |        |                    |        |                  |        |        |        |      |         |        |         |  |         |        |        
|                                    |                                       | Total costs and expenses              |        |                    | 36,079 |                  |        |        | 37,232 |      |         |        | 72,018  |  |         |        | 71,253  | 
|                                    |                                       |                                       |        |                    |        |                  |        |        |        |      |         |        |         |  |         |        |        
|                                    |                                       | Operating income                      |        |                    | 18,577 |                  |        |        | 41,314 |      |         |        | 42,224  |  |         |        | 69,594  | 
|Interest expense                    |                                       |                                       | (7,202 | )                  |        |                  | (7,944 | )      |        |      | (13,941 | )      |         |  | (15,914 | )     
|Interest capitalized                |                                       |                                       | 498    |                    |        |                  | 590    |        |        |      | 2,191   |        |         |  | 935     |       
|Equity earnings                     |                                       |                                       | (2,190 | )                  |        |                  | (339   | )      |        |      | (2,986  | )      |         |  | (339    | )     
|Other income  net                  |                                       |                                       | 70     |                    |        |                  | 388    |        |        |      | 194     |        |         |  | 681     |       
|                                    |                                       |                                       |        |                    |        |                  |        |        |        |      |         |        |         |  |         |        |        
|                                    |                                       | Income before discontinued operations |        |                    | 9,753  |                  |        |        | 34,009 |      |         |        | 27,682  |  |         |        | 54,957  | 
|Income from discontinued operations |                                       |                                       | 510    |                    |        |                  | 528    |        |        |      | 912     |        |         |  | 935     |       
|                                    |                                       |                                       |        |                    |        |                  |        |        |        |      |         |        |         |  |         |        |        
|                                    |                                       | Net income                            |        | $                  | 10,263 |                  |        | $      | 34,537 |      |         | $      | 28,594  |  |         | $      | 55,892  | 
|                                    |                                       |                                       |        |                    |        |                  |        |        |        |      |         |        |         |  |         |        |        

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)

|                                                              |                                                                                                          |                                                   |                                              |          |                  |         |        |         |        |         |  
|------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------- | ------------------------------------------------- | -------------------------------------------- | -------- | ---------------- | ------- | ------ | ------- | ------ | ------- | -
|                                                              |                                                                                                          |                                                   |                                              |          | Six Months Ended
|                                                              |                                                                                                          |                                                   |                                              |          | June 30,        
|                                                              |                                                                                                          |                                                   |                                              |          |                 
|                                                              |                                                                                                          |                                                   |                                              |          | 2002             |         | 2001  
|                                                              |                                                                                                          |                                                   |                                              |          |                  |         |       
|Cash flows from operating activities:                         |                                                                                                          |                                                   |                                              |          |                  |         |        |        
|                                                              | Net income from continuing operations                                                                    |                                                   | $                                            | 27,682   |                  |         | $      | 54,957  |       
|                                                              | Adjustments to reconcile net income from continuing operations
to cash provided by operating activities: |                                                   |                                              |          |                  |         |        |         |       
|                                                              |                                                                                                          | Depreciation and amortization                     |                                              |          | 14,196           |         |        |         | 13,376 |        
|                                                              |                                                                                                          | Equity in loss of affiliate                       |                                              |          | 2,986            |         |        |         | 339    |        
|                                                              |                                                                                                          | Non-cash portion of interest expense              |                                              |          | 16               |         |        |         |       |        
|                                                              |                                                                                                          | Decrease in accounts receivable                   |                                              |          | 5,392            |         |        |         | 1,424  |        
|                                                              |                                                                                                          | Decrease (increase) in inventories                |                                              |          | 2,093            |         |        |         | (735   | )      
|                                                              |                                                                                                          | Increase in other current assets                  |                                              |          | (987             | )       |        |         | (4,808 | )      
|                                                              |                                                                                                          | Increase in accounts payable and accrued expenses |                                              |          | 4,417            |         |        |         | 389    |        
|                                                              |                                                                                                          | Other                                             |                                              |          | (1,933           | )       |        |         | 3,661  |        
|                                                              |                                                                                                          |                                                   |                                              |          |                  |         |        |         |       
|                                                              |                                                                                                          |                                                   | Net cash provided by continuing operations   |          |                  | 53,862  |        |         |        | 68,603  |  
|                                                              |                                                                                                          |                                                   | Net cash provided by discontinued operations |          |                  | 2,344   |        |         |        | 3,123   |  
|                                                              |                                                                                                          |                                                   |                                              |          |                  |         |        |         |       
|                                                              |                                                                                                          |                                                   | Net cash provided by operating activities    |          |                  | 56,206  |        |         |        | 71,726  |  
|                                                              |                                                                                                          |                                                   |                                              |          |                  |         |        |         |       
|Cash flows from investing activities:                         |                                                                                                          |                                                   |                                              |          |                  |         |        |        
|                                                              | Proceeds from cash investments                                                                           |                                                   |                                              |         |                  |         |        | 3,236   |       
|                                                              | Proceeds from sale of assets                                                                             |                                                   |                                              | 3,380    |                  |         |        |        |       
|                                                              | Investment in Centennial Pipeline, LLC                                                                   |                                                   |                                              | (7,726   | )                |         |        | (25,142 | )     
|                                                              | Capital expenditures                                                                                     |                                                   |                                              | (34,161  | )                |         |        | (26,648 | )     
|                                                              |                                                                                                          |                                                   |                                              |          |                  |         |        |         |       
|                                                              |                                                                                                          |                                                   | Net cash used in investing activities        |          |                  | (38,507 | )      |         |        | (48,554 | )
|                                                              |                                                                                                          |                                                   |                                              |          |                  |         |        |         |       
|Cash flows from financing activities:                         |                                                                                                          |                                                   |                                              |          |                  |         |        |        
|                                                              | Proceeds from term loan                                                                                  |                                                   |                                              | 176,099  |                  |         |        |        |       
|                                                              | Repayments of term loan                                                                                  |                                                   |                                              | (147,755 | )                |         |        | 6,634   |       
|                                                              | Issuance of Limited Partner Units, net                                                                   |                                                   |                                              | 2,230    |                  |         |        |        |       
|                                                              | General Partners contributions                                                                          |                                                   |                                              | 46       |                  |         |        |        |       
|                                                              | Distributions                                                                                            |                                                   |                                              | (45,883  | )                |         |        | (38,972 | )     
|                                                              |                                                                                                          |                                                   |                                              |          |                  |         |        |         |       
|                                                              |                                                                                                          |                                                   | Net cash used in financing activities        |          |                  | (15,263 | )      |         |        | (32,338 | )
|                                                              |                                                                                                          |                                                   |                                              |          |                  |         |        |         |       
|Net increase (decrease) in cash and cash equivalents          |                                                                                                          |                                                   | 2,436                                        |          |                  |         | (9,166 | )      
|Cash and cash equivalents at beginning of period              |                                                                                                          |                                                   | 3,654                                        |          |                  |         | 9,166  |        
|                                                              |                                                                                                          |                                                   |                                              |          |                  |         |        |         |       
|Cash and cash equivalents at end of period                    |                                                                                                          | $                                                 | 6,090                                        |          |                  | $       |       |        
|                                                              |                                                                                                          |                                                   |                                              |          |                  |         |        |        
|Supplemental disclosure of cash flows:                        |                                                                                                          |                                                   |                                              |          |                  |         |        |        
|Interest paid during the period (net of capitalized interest) |                                                                                                          | $                                                 | 10,675                                       |          |                  | $       | 16,661 |        

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 Phillips Petroleum
Company (Phillips). Duke Energy holds an approximate 70% interest in DEFS,
and Phillips 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 Parent Partnership 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 June 30, 2002, and the results of our operations and cash flows
for the periods presented. The results of operations for the three months and
six months ended June 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. During the
second quarter of 2002, as part of this realignment, we transferred our
investment in TEPPCO Colorado, LLC (TEPPCO Colorado), which fractionates
NGLs, to TEPPCO Midstream Companies, L.P. (TEPPCO Midstream). The transfer
was recorded at the book value of TEPPCO Colorados net assets, which was $4.1
million. In connection with the transfer, we received $4 million in
cash and recorded a receivable from TEPPCO Midstream for $0.1
million. 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 June 30, 2002, our investment in Centennial Pipeline, LLC
(Centennial) included an excess investment (equity method goodwill) of $32.7
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 associated with 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 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.

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

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TE PRODUCTS PIPELINE COMPANY, LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
(Unaudited)

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.

By using derivative financial instruments 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.

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 have designated this swap agreement, which hedges exposure
to changes in the fair value of the Senior Notes, as a fair value hedge. The
swap agreement has a notional amount of $210 million and matures in January
2028 to match the principal and maturity of the Senior Notes. Under the swap
agreement, 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
six months ended June 30, 2002, we recognized a gain of $3.6 million, recorded
as a reduction of interest expense, on the interest rate swap. During the
quarter ended June 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.

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):

|                       |       |   |          |       |              |   |       |        | 
|---------------------- | ----- | - | -------- | ----- | ------------ | - | ----- | ------ | 
|                       |       |   | June 30, |       | December 31,
|                       |       |   | 2002     |       | 2001        
|                       |       |   |          |       |             
|Gasolines              |       | $ | 1,145    |       |              | $ | 3,670 |       
|Propane                |       |   |         |       |              |   | 1,096 |       
|Butanes                |       |   | 2,280    |       |              |   | 1,431 |       
|Other products         |       |   | 1,262    |       |              |   | 901   |       
|Materials and supplies |       |   | 3,837    |       |              |   | 3,519 |       
|                       |       |   |          |       |              |   |       |       
|                       | Total |   | $        | 8,524 |              |   | $     | 10,617 | 
|                       |       |   |          |       |              |   |       |       

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

NOTE 5. EQUITY INVESTMENTS

In August 2000, we entered into agreements with CMS Energy Corporation and
Marathon Ashland Petroleum LLC to form 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.

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TE PRODUCTS PIPELINE COMPANY, LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
(Unaudited)

Through December 31, 2001, we contributed approximately $70 million for
our investment in Centennial. During the six months ended June 30, 2002, we
contributed approximately $7.7 million for our investment in Centennial. These
amounts are included in the equity investment balance at June 30, 2002.

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

|         |  |                           |        |      |  |   |      |  
|-------- |  | ------------------------- | ------ | ---- |  | - | ---- | -
|         |  | Six Months Ended June 30,
|         |  |                          
|         |  | 2002                      |        | 2001
|         |  |                           |        |     
|Revenues |  | $                         | 4,692  |      |  | $ |     |  
|Net loss |  |                           | (8,486 | )    |  |   | (124 | )

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

|                       |  |          |         |              |  |   |         | 
|---------------------- |  | -------- | ------- | ------------ |  | - | ------- | 
|                       |  | June 30, |         | December 31,
|                       |  | 2002     |         | 2001        
|                       |  |          |         |             
|Current assets         |  | $        | 15,842  |              |  | $ | 26,849  | 
|Noncurrent assets      |  |          | 277,162 |              |  |   | 253,792 | 
|Current liabilities    |  |          | 15,189  |              |  |   | 23,405  | 
|Long-term debt         |  |          | 140,000 |              |  |   | 128,000 | 
|Noncurrent liabilities |  |          | 14,553  |              |  |   |        | 
|Partners capital      |  |          | 123,262 |              |  |   | 129,236 | 

At June 30, 2002, our investment in Centennial included an excess
investment (equity method goodwill) of $32.7 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 million principal
amount of 6.45% Senior Notes due 2008, and $210 million principal amount of
7.51% Senior Notes due 2028 (collectively the Senior Notes). The 6.45%
Senior Notes 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.

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TE PRODUCTS PIPELINE COMPANY, LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
(Unaudited)

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 include 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 the respective credit agreements. These
credit facilities of the Parent Partnership are described below.

On July 14, 2000, our Parent Partnership entered into a $475 million
revolving credit facility (Three Year Facility) and used the funds to
refinance existing bank credit facilities and to finance the acquisition of
assets from ARCO Pipe Line Company, a wholly-owned subsidiary of Atlantic
Richfield Company for $322.6 million. The acquired assets are held through
TCTM, L.P., a 99.999% owned entity of the Parent Partnership. On April 6,
2001, the Three Year Facility was amended to provide for revolving borrowings
of up to $500 million including the issuance of letters of credit of up to $20
million. The term of the revised Three Year Facility was extended to April 6,
2004. 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 November
13, 2001, certain lenders under the agreement elected to withdraw from the
facility, and the available borrowing capacity was reduced to $411 million. On
March 27, 2002, the Three Year Facility was amended to increase the borrowing
capacity to $500 million. 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 June 30, 2002, $500 million was outstanding
under the Three Year Facility.

On April 6, 2001, the Parent Partnership entered into a 364-day, $200
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 27,
2002, the Short-term Revolver was extended for an additional period of 364
days, ending in April 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
million under the Short-term Revolver, and at June 30, 2002, $72 million was
outstanding under this facility.

As of June 30, 2002, and December 31, 2001, we had intercompany notes
payable to our Parent Partnership of $146.2 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 six months ended June 30, 2002,
the Parent Partnership issued $500 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 June 30, 2002, no amounts were included in
current liabilities as our share of the Short-term Revolver had been repaid.
Our long-term portion at June 30, 2002, totaled $146.2 million and represents

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TE PRODUCTS PIPELINE COMPANY, LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
(Unaudited)

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 June 30, 2002, was 5.7%. At June 30, 2002, accrued interest
includes $2.4 million due to the Parent Partnership. For the six months ended
June 30, 2002, interest costs incurred on the note payable, Parent Partnership
totaled $3.7 million.

NOTE 7. QUARTERLY DISTRIBUTONS 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.

For the six months ended June 30, 2002, and 2001, we paid cash
distributions totaling $45.9 million and $39 million, respectively. The
distribution increases reflects our success in improving cash flow levels. We
paid a cash distribution of $24.5 million on August 8, 2002, for the three
months ended June 30, 2002.

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 in the early stages of discovery and
are not covered by insurance. 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.

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TE PRODUCTS PIPELINE COMPANY, LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
(Unaudited)

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 $0.5 million at June 30,
2002, for future remediation costs at the Seymour terminal. We do not expect
that the completion of the remediation program will have a 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 June
30, 2002, we have an accrued liability of $0.3 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 has entered into credit facilities totaling $150 million. The
proceeds were used to fund construction and conversion costs of its pipeline
system. As of June 30, 2002, Centennial had borrowed $140 million under its
credit facility. We have guaranteed one-third of the debt of Centennial up to
a maximum amount of $50 million.

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 natural gas liquids (NGLs) operations. As part of this
realignment, on May 31, 2002, we entered into an Assignment and Assumption
Agreement 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 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 million in cash and recorded a
receivable from TEPPCO Midstream for $0.1 million. TEPPCO Midstream assumed the
outstanding debt of TEPPCO Colorado of $32 million as part of the transaction.
As a result of the transfer, the results of operations have been restated to
classify revenue, expenses, assets and liabilities of TEPPCO Colorado as
discontinued operations. The net income from discontinued operations totaled
$0.5 million during each of the three months ended June 30, 2002, and 2001, and
$0.9 million during each of the six months

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TE PRODUCTS PIPELINE COMPANY, LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
(Unaudited)

ended June 30, 2002, and 2001. Condensed statements of income are shown below
for TEPPCO Colorado for the three months and six months ended June 30, 2002,
and 2001 (in thousands):

|                                      |                  |   |                    |     |                  |   |       |       |      |   |        |       |  |   |        |       | 
|------------------------------------- | ---------------- | - | ------------------ | --- | ---------------- | - | ----- | ----- | ---- | - | ------ | ----- |  | - | ------ | ----- | 
|                                      |                  |   | Three Months Ended |     | Six Months Ended
|                                      |                  |   | June 30,           |     | June 30,        
|                                      |                  |   |                    |     |                 
|                                      |                  |   | 2002               |     | 2001             |   | 2002  |       | 2001
|                                      |                  |   |                    |     |                  |   |       |       |     
|Revenues                              |                  | $ | 1,281              |     |                  | $ | 1,912 |       |      | $ | 3,115  |       |  | $ | 3,716  |      
|Operating, general and administrative |                  |   | 150                |     |                  |   | 225   |       |      |   | 369    |       |  |   | 444    |      
|Depreciation and amortization         |                  |   | 336                |     |                  |   | 504   |       |      |   | 840    |       |  |   | 1,008  |      
|                                      |                  |   |                    |     |                  |   |       |       |      |   |        |       |  |   |        |      
|                                      | Operating income |   |                    | 795 |                  |   |       | 1,183 |      |   |        | 1,906 |  |   |        | 2,264 | 
|Interest expense                      |                  |   | (294               | )   |                  |   | (672  | )     |      |   | (1,015 | )     |  |   | (1,383 | )    
|Other income  net                    |                  |   | 9                  |     |                  |   | 17    |       |      |   | 21     |       |  |   | 54     |      
|                                      |                  |   |                    |     |                  |   |       |       |      |   |        |       |  |   |        |      
|                                      | Net income       |   | $                  | 510 |                  |   | $     | 528   |      |   | $      | 912   |  |   | $      | 935   | 
|                                      |                  |   |                    |     |                  |   |       |       |      |   |        |       |  |   |        |      

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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##### Table of Contents






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 and 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 the equity losses from our investment in Centennial Pipeline, LLC
(Centennial).

Results of Operations

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

|                          |                         |                                  |   |                                           |        |            |   |            |        |                  |  |      |     |            |   |        |        |  |   |        |        |  |  |     |     |   
|------------------------- | ----------------------- | -------------------------------- | - | ----------------------------------------- | ------ | ---------- | - | ---------- | ------ | ---------------- |  | ---- | --- | ---------- | - | ------ | ------ |  | - | ------ | ------ |  |  | --- | --- | --
|                          |                         |                                  |   | Three Months Ended                        |        |            |   |            |        | Six Months Ended |  |      |     |           
|                          |                         |                                  |   | June 30,                                  |        | Percentage |   | June 30,   |        | Percentage      
|                          |                         |                                  |   |                                           |        | Increase   |   |            |        | Increase        
|                          |                         |                                  |   | 2002                                      |        | 2001       |   | (Decrease) |        | 2002             |  | 2001 |     | (Decrease)
|                          |                         |                                  |   |                                           |        |            |   |            |        |                  |  |      |     |           
|                          |                         |                                  |   | (in thousands, except tariff information)
|Volumes Delivered         |                         |                                  |   |                                           |        |            |   |            |        |                  |  |      |     |            |   |        |        |  |   |        |        |  |  |    
|                          | Refined products        |                                  |   | 35,344                                    |        |            |   | 33,360     |        |                  |  | 6    | %   |            |   | 61,109 |        |  |   | 60,548 |        |  |  | 1   | %  
|                          | LPGs                    |                                  |   | 7,056                                     |        |            |   | 6,907      |        |                  |  | 2    | %   |            |   | 19,091 |        |  |   | 18,558 |        |  |  | 3   | %  
|                          | Mont Belvieu operations |                                  |   | 5,586                                     |        |            |   | 4,571      |        |                  |  | 22   | %   |            |   | 15,257 |        |  |   | 10,836 |        |  |  | 41  | %  
|                          |                         |                                  |   |                                           |        |            |   |            |        |                  |  |      |     |            |   |        |        |  |   |        |        |  |  |     |    
|                          |                         | Total                            |   |                                           | 47,986 |            |   |            | 44,838 |                  |  |      | 7   | %          |   |        | 95,457 |  |   |        | 89,942 |  |  |     | 6   | % 
|                          |                         |                                  |   |                                           |        |            |   |            |        |                  |  |      |     |            |   |        |        |  |   |        |        |  |  |     |    
|Average Tariff per Barrel |                         |                                  |   |                                           |        |            |   |            |        |                  |  |      |     |            |   |        |        |  |   |        |        |  |  |    
|                          | Refined products        |                                  | $ | 0.90                                      |        |            | $ | 0.97       |        |                  |  | (7   | %)  |            | $ | 0.93   |        |  | $ | 0.97   |        |  |  | (4  | %) 
|                          | LPGs                    |                                  |   | 1.53                                      |        |            |   | 1.96       |        |                  |  | (22  | %)  |            |   | 1.79   |        |  |   | 2.07   |        |  |  | (14 | %) 
|                          | Mont Belvieu operations |                                  |   | 0.13                                      |        |            |   | 0.18       |        |                  |  | (28  | %)  |            |   | 0.14   |        |  |   | 0.17   |        |  |  | (18 | %) 
|                          |                         | Average system tariff per barrel |   | $                                         | 0.90   |            |   | $          | 1.04   |                  |  |      | (14 | %)         |   | $      | 0.98   |  |   | $      | 1.10   |  |  |     | (11 | %)
|                          |                         |                                  |   |                                           |        |            |   |            |        |                  |  |      |     |            |   |        |        |  |   |        |        |  |  |     |    

Three Months ended June 30, 2002 compared to Three Months ended June 30, 2001

We reported net income of $10.3 million for the three months ended June
30, 2002, compared with net income of $34.5 million for the three months ended
June 30, 2001. Net income decreased $24.2 million primarily due to a decrease
of $23.9 million in operating revenues and losses of $2.2 million from equity
investments, partially offset by a decrease of $1.2 million in costs and
expenses and a $0.7 million decrease in interest expense. We discuss the
factors influencing these variances below.

Revenues from refined products transportation decreased $19.6 million for
the three months ended June 30, 2002, compared with the three months ended June
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 6%

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increase in refined products volumes delivered during the second quarter
of 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 0.7 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 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 $2.7 million for the three
months ended June 30, 2002, compared with the three months ended June 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 increased 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 22% from the prior-year
period as a result of a decreased percentage of long-haul deliveries during the
three months ended June 30, 2002.

Revenues generated from Mont Belvieu operations decreased $0.1 million
during the three months ended June 30, 2002, compared with the three months
ended June 30, 2001, as a result of increased contract shuttle deliveries,
which generally carry lower rates. Total Mont Belvieu shuttle volumes
delivered increased 22% during the three months ended June 30, 2002, compared
with the three months ended June 30, 2001, due to increased petrochemical
demand.

Other operating revenues decreased $1.5 million during the three months
ended June 30, 2002, compared with the three months ended June 30, 2001,
primarily due to lower propane deliveries at our Providence, Rhode Island,
import facility, lower refined product rental charges and lower margins on
product inventory sales. These decreases were partially offset by increased
refined products and LPGs loading fees.

Costs and expenses decreased $1.2 million for the three months ended June
30, 2002, compared with the three months ended June 30, 2001. The decrease was
comprised of a $3.7 million decrease in operating fuel and power expense,
partially offset by a $1 million increase in operating, general and
administrative expenses, a $0.7 million increase in depreciation and
amortization expense, and a $0.8 million increase in taxes  other than income
taxes. Operating fuel and power expense decreased as a result of decreased
mainline throughput and lower electric power costs. Operating, general and
administrative expenses increased primarily due to increased consulting and
contract services, increased rental charges 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.

Net losses from equity investments totaled $2.2 million during the three
months ended June 30, 2002, due to start-up expenses of Centennial. Centennial
commenced operations in early April 2002.

Interest expense decreased $0.7 million during the three months ended June
30, 2002, compared with the three months ended June 30, 2001, due to lower
interest rates on the Note Payable, Parent Partnership.

Six Months Ended June 30, 2002 compared to Six Months Ended June 30, 2001

We reported net income of $28.6 million for the six months ended June 30,
2002, compared with net income of $55.9 million for the six months ended June
30, 2001. Net income decreased $27.3 million primarily due to a decrease of
$26.6 million in operating revenues, an increase of $0.8 million in costs and
expenses and increased losses from equity investments of $2.6 million. The
decreases to net income were partially offset by a $2 million decrease in
interest expense and a $1.3 million increase in interest capitalized. We
discuss the factors influencing these variances below.

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Revenues from refined products transportation decreased $20.6 million for
the six months ended June 30, 2002, compared with the six months ended June 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 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 1% increase in refined
products volumes delivered during the six months ended June 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 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 system. The refined products average rate per barrel
decreased 4% 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 $4.3 million for the six
months ended June 30, 2002, compared with the six months ended June 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 3% 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 14% from the prior-year period as a result of
a decreased percentage of long-haul deliveries during the six months ended June
30, 2002.

Revenues generated from Mont Belvieu operations increased $1.5 million
during the six months ended June 30, 2002, compared with the six months ended
June 30, 2001, as a result of increased storage revenue and brine service
revenue. Mont Belvieu shuttle volumes delivered increased 41% during the six
months ended June 30, 2002, compared with the six months ended June 30, 2001,
due to increased petrochemical demand. The Mont Belvieu average rate per
barrel decreased during the six months ended June 30, 2002, as a result of
increased contract shuttle deliveries, which generally carry lower rates.

Other operating revenues decreased $3.1 million during the six months
ended June 30, 2002, compared with the six months ended June 30, 2001,
primarily due to lower propane deliveries at our Providence, Rhode Island,
import facility, lower refined product rental charges, 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 $0.8 million for the six months ended June
30, 2002, compared with the six months ended June 30, 2001. The increase was
made up of a $3.6 million increase in operating, general and administrative
expenses, a $0.8 million increase in depreciation and amortization expense, and
a $1 million increase in taxes  other than income taxes. These increases
were partially offset by a $4.6 million decrease in operating fuel and power
expense. Operating, general and administrative expenses increased, primarily
due to higher environmental remediation 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.
Operating fuel and power expense decreased as a result of decreased mainline
throughput and lower power costs. Taxes  other than income taxes increased as
a result of a higher property base in 2002.

Net losses from equity investments totaled $3 million during the six
months ended June 30, 2002, due to pre-operating expenses and start-up costs of
Centennial. Centennial commenced operations in early April 2002.

Interest expense decreased $2 million during the six months ended June 30,
2002, compared with the six months ended June 30, 2001, due to lower interest
rates on the Note Payable, Parent Partnership. Interest capitalized increased
$1.3 million during the six months ended June 30, 2002, compared with the six
months ended June 30, 2001, due to increased balances during 2002 on
construction work-in-progress and our investments in Centennial during its
construction.

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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, the results of operations have been restated
to classify revenue, expenses, assets and liabilities of TEPPCO Colorado as
discontinued operations. The net income from discontinued operations totaled
$0.5 million during each of the three months ended June 30, 2002, and 2001, and
$0.9 million during each of the six months ended June 30, 2002, and 2001.
Condensed statements of income are shown below for TEPPCO Colorado for the
three months and six months ended June 30, 2002, and 2001 (in thousands):

|                                      |                  |   |                    |     |                  |   |       |       |      |   |        |       |  |   |        |       | 
|------------------------------------- | ---------------- | - | ------------------ | --- | ---------------- | - | ----- | ----- | ---- | - | ------ | ----- |  | - | ------ | ----- | 
|                                      |                  |   | Three Months Ended |     | Six Months Ended
|                                      |                  |   | June 30,           |     | June 30,        
|                                      |                  |   |                    |     |                 
|                                      |                  |   | 2002               |     | 2001             |   | 2002  |       | 2001
|                                      |                  |   |                    |     |                  |   |       |       |     
|Revenues                              |                  | $ | 1,281              |     |                  | $ | 1,912 |       |      | $ | 3,115  |       |  | $ | 3,716  |      
|Operating, general and administrative |                  |   | 150                |     |                  |   | 225   |       |      |   | 369    |       |  |   | 444    |      
|Depreciation and amortization         |                  |   | 336                |     |                  |   | 504   |       |      |   | 840    |       |  |   | 1,008  |      
|                                      |                  |   |                    |     |                  |   |       |       |      |   |        |       |  |   |        |      
|                                      | Operating income |   |                    | 795 |                  |   |       | 1,183 |      |   |        | 1,906 |  |   |        | 2,264 | 
|Interest expense                      |                  |   | (294               | )   |                  |   | (672  | )     |      |   | (1,015 | )     |  |   | (1,383 | )    
|Other income  net                    |                  |   | 9                  |     |                  |   | 17    |       |      |   | 21     |       |  |   | 54     |      
|                                      |                  |   |                    |     |                  |   |       |       |      |   |        |       |  |   |        |      
|                                      | Net income       |   | $                  | 510 |                  |   | $     | 528   |      |   | $      | 912   |  |   | $      | 935   | 
|                                      |                  |   |                    |     |                  |   |       |       |      |   |        |       |  |   |        |      

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

|                      |                         |  |                    |       |            |  |            |       |                  |  |      |    |            |  |   |       |  |  |   |       |  |  |  |    |   
|--------------------- | ----------------------- |  | ------------------ | ----- | ---------- |  | ---------- | ----- | ---------------- |  | ---- | -- | ---------- |  | - | ----- |  |  | - | ----- |  |  |  | -- | --
|                      |                         |  | Three Months Ended |       |            |  |            |       | Six Months Ended |  |      |    |           
|                      |                         |  | June 30,           |       | Percentage |  | June 30,   |       | Percentage      
|                      |                         |  |                    |       | Increase   |  |            |       | Increase        
|                      |                         |  | 2002               |       | 2001       |  | (Decrease) |       | 2002             |  | 2001 |    | (Decrease)
|                      |                         |  |                    |       |            |  |            |       |                  |  |      |    |           
|Fractionation  NGLs: |                         |  |                    |       |            |  |            |       |                  |  |      |    |            |  |   |       |  |  |   |       |  |  |  |   
|                      | Thousand barrels        |  |                    | 1,032 |            |  |            | 1,044 |                  |  |      | (1 | %)         |  |   | 2,043 |  |  |   | 2,059 |  |  |  | (1 | %)
|                      | Average rate per barrel |  | $                  | 1.840 |            |  | $          | 1.831 |                  |  |      | 1  | %          |  | $ | 1.827 |  |  | $ | 1.805 |  |  |  | 1  | % 

Financial Condition and Liquidity

Net cash from operations totaled $56.2 million for the six months ended
June 30, 2002. This cash was made up of $41.9 million of income before charges
for depreciation and amortization, $12 million of cash from working capital
changes, and $2.3 million of cash from discontinued operations. This compares
with net cash from operations of $71.7 million for the corresponding period in
2001, comprised of $68.3 million of income before charges for depreciation and
amortization, $0.3 million of cash from working capital changes, and $3.1
million of cash from discontinued operations. Net cash from operations for the
six months ended June 30, 2002, and 2001, included interest payments of $10.7
million and $16.7 million, respectively.

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Cash flows used in investing activities totaled $38.5 million during the
six months ended June 30, 2002, and was comprised of $34.2 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. Cash flows used in investing activities totaled $48.6 million for the
six months ended June 30, 2001, and was comprised of $26.6 million of capital
expenditures, and $25.2 million of cash contributions for our interest in
Centennial, partially offset by $3.2 million of net proceeds received from cash
investments.

Centennial has entered into credit facilities totaling $150 million. The
proceeds were used to fund construction and conversion costs of its pipeline
system. As of June 30, 2002, Centennial had borrowed $140 million under its
credit facility. We have guaranteed one-third of the debt of Centennial up to
a maximum amount of $50 million.

On February 20, 2002, the Parent Partnership issued $500 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
Companies, L.P. 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 unconditional guarantees of the Parent
Partnerships debt securities. The guarantees are full, unconditional and
joint and several. The proceeds from the offering of the $500 million
principal amount of 7.625% Senior Notes were used to reduce the outstanding
balances of the Parent Partnerships credit facilities.

Parent Partnership Credit Facilities

We currently utilize debt financing available from the 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 include 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 the respective credit agreements. These
credit facilities of the Parent Partnership are described below.

On July 14, 2000, our Parent Partnership entered into a $475 million
revolving credit facility (Three Year Facility) and used the funds to
refinance existing bank credit facilities and to finance the acquisition of
assets from ARCO Pipe Line Company, a wholly-owned subsidiary of Atlantic
Richfield Company for $322.6 million. The acquired assets are held through
TCTM, L.P., a 99.999% owned entity of the Parent Partnership. On April 6,
2001, the Three Year Facility was amended to provide for revolving borrowings
of up to $500 million including the issuance of letters of credit of up to $20
million. The term of the revised Three Year Facility was extended to April 6,
2004. 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 November
13, 2001, certain lenders under the agreement elected to withdraw from the
facility, and the available borrowing capacity was reduced to $411 million. On
March 27, 2002, the Three Year Facility was amended to increase the borrowing
capacity to $500 million. 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 June 30, 2002, $500 million was outstanding under the Three Year
Facility.

On April 6, 2001, the Parent Partnership entered into a 364-day, $200
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 27,
2002, the Short-term

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Revolver was extended for an additional period of 364 days, ending in
April 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 million
under the Short-term Revolver, and at June 30, 2002, $72 million was
outstanding under this facility.

As of June 30, 2002, and December 31, 2001, we had intercompany notes
payable to our Parent Partnership of $146.2 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 six months ended June 30, 2002,
the Parent Partnership issued $500 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 June 30, 2002, no amounts were included in
current liabilities as our share of the Short-term Revolver had been repaid.
Our long-term portion at June 30, 2002, totaled $146.2 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 June 30, 2002, was 5.7%. At June 30, 2002, accrued interest
includes $2.4 million due to the Parent Partnership. For the six months ended
June 30, 2002, interest costs incurred on the note payable, Parent Partnership
totaled $3.7 million.

Senior Notes

On January 27, 1998, we completed the issuance of $180 million principal
amount of 6.45% Senior Notes due 2008, and $210 million principal amount of
7.51% Senior Notes due 2028 (collectively the Senior Notes). The 6.45%
Senior Notes 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.

In October 2001, we entered into an interest rate hedge agreement with a
notional amount and expiration related to a portion of our Senior Notes, as
more fully described in Item 3. Quantitative and Qualitative Disclosures About
Market Risk.

Cash Distributions

For the six months ended June 30, 2002 and 2001, we paid cash
distributions of $45.9 million and $39 million, respectively. The distribution
increases reflect our success in improving cash flow levels. We paid a cash
distribution of $24.5 million on August 8, 2002, for the three months ended
June 30, 2002.

Future Capital Needs and Commitments

We estimate that capital expenditures, excluding acquisitions, for 2002
will be approximately $65 million (which includes $3 million of capitalized
interest). We expect to use approximately $35 million for revenue generating
projects, approximately $18 million for maintenance capital spending and
approximately $9 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

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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 million principal amount due January 15,
2008, and $210 million principal amount due January 15, 2028, and (ii) $146.2
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-third
or $50 million principal amount (plus interest) of the borrowings of
Centennial. We expect to contribute an additional $3 million to Centennial in
the remaining six months of 2002. We are also contingently liable as guarantor
for $500 million principal amount of 7.625% Senior Notes due 2012 issued in
February 2002 by the 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 guarantee of the Centennial debt, the Parent
Partnership debt and leases covering assets utilized in several areas of our
operations.

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

|                                 |       |   |                                            |       |      |   |             |     |           |   |         |      |  |   |     |     |       |   |       |       | 
|-------------------------------- | ----- | - | ------------------------------------------ | ----- | ---- | - | ----------- | --- | --------- | - | ------- | ---- |  | - | --- | --- | ----- | - | ----- | ----- | 
|                                 |       |   | Amount of Commitment Expiration Per Period
|                                 |       |   |                                           
|                                 |       |   |                                            |       |      |   | Less than 1 |     |           |   |         |      |  |   |     |     | After
|                                 |       |   | Total                                      |       | Year |   | 2-3 Years   |     | 4-5 Years |   | 5 Years
|                                 |       |   |                                            |       |      |   |             |     |           |   |        
|Note payable, Parent Partnership |       | $ | 146.2                                      |       |      | $ |            |     |           | $ | 25.1    |      |  | $ |    |     |       | $ | 121.1 |      
|6.45% Senior Notes due 2008      |       |   | 180.0                                      |       |      |   |            |     |           |   |        |      |  |   |    |     |       |   | 180.0 |      
|7.51% Senior Notes due 2028      |       |   | 210.0                                      |       |      |   |            |     |           |   |        |      |  |   |    |     |       |   | 210.0 |      
|Centennial cash contributions    |       |   | 3.0                                        |       |      |   | 3.0         |     |           |   |        |      |  |   |    |     |       |   |      |      
|Operating leases                 |       |   | 21.0                                       |       |      |   | 5.3         |     |           |   | 9.4     |      |  |   | 6.3 |     |       |   |      |      
|                                 |       |   |                                            |       |      |   |             |     |           |   |         |      |  |   |     |     |       |   |       |      
|                                 | Total |   | $                                          | 560.2 |      |   | $           | 8.3 |           |   | $       | 34.5 |  |   | $   | 6.3 |       |   | $     | 511.1 | 
|                                 |       |   |                                            |       |      |   |             |     |           |   |         |      |  |   |     |     |       |   |       |      

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 the 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 $444 million 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

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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.

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.

In 1994, we entered into an Agreed Order with the 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 $0.5 million at June
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 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 June 30, 2002, we have an
accrued liability of $0.3 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 June 30, 2002, our investment in Centennial included an excess
investment of $32.7 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

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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 did not have a material effect on our financial position,
results of operations or cash flows.

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 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.

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 as discussed below. We do not have foreign exchange risks. Our
Risk Management Committee has established policies to

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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 derivative financial
instruments with respect to a portion of our interest rate and fair value
risks. These transactions generally are swaps, and we enter into them with
major financial institutions. The derivative financial instrument related to
our fair value risks are intended to reduce our exposure to changes in the fair
value of our fixed rate Senior Notes resulting from changes in interest rates.
Gains and losses from our interest rate financial instruments have been
recognized in interest expense for the periods to which the derivative
financial instrument relate.

As of June 30, 2002, and December 31, 2001, we had intercompany notes
payable to our Parent Partnership of $146.2 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 six months ended June 30, 2002,
the Parent Partnership issued $500 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 June 30, 2002, no amounts were included in
current liabilities as our share of the Short-term Revolver had been repaid.
Our long-term portion at June 30, 2002, totaled $146.2 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 June 30, 2002, was 5.7%. At June 30, 2002, accrued interest
includes $2.4 million due to the Parent Partnership. For the six months ended
June 30, 2002, interest costs incurred on the note payable, Parent Partnership
totaled $3.7 million.

As of June 30, 2002, we had an interest rate swap agreement in place to
hedge our exposure to changes in the fair value of our fixed rate 7.51% Senior
Notes due 2028. We have designated this swap agreement, which hedges exposure
to changes in the fair value of the Senior Notes, as a fair value hedge. The
swap agreement has a notional amount of $210 million and matures in January
2028 to match the principal and maturity of the Senior Notes. Under the swap
agreement, 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
six months ended June 30, 2002, we recognized a gain of $3.6 million, recorded
as a reduction of interest expense, on the interest rate swap. During the
quarter ended June 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.

At June 30, 2002, we had outstanding $180 million principal amount of
6.45% Senior Notes due 2008 and $210 million principal amount of 7.51% Senior
Notes due 2028. At June 30, 2002, the estimated fair value of the Senior Notes
was approximately $371 million.




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).

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|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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+ |  | Texas Eastern Products Pipeline Company 1997 Employee
Incentive Compensation Plan executed on July 14, 1997 (Filed as
Exhibit 10 to Form 10-Q of TEPPCO Partners, L.P. (Commission File
No. 1-10403) for the quarter ended September 30, 1997 and
incorporated herein by reference).                                                                                                                                                                                                                                                                                                                        
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.2+ |  | Texas Eastern Products Pipeline Company Management Incentive
Compensation Plan executed on January 30, 1992 (Filed as Exhibit 10
to Form 10-Q of TEPPCO Partners, L.P. (Commission File No. 1-10403)
for the quarter ended March 31, 1992 and incorporated herein by
reference).                                                                                                                                                                                                                                                                                                                            
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.3+ |  | Texas Eastern Products Pipeline Company Long-Term Incentive
Compensation Plan executed on October 31, 1990 (Filed as Exhibit
10.9 to Form 10-K of TEPPCO Partners, L.P. (Commission File No.
1-10403) for the year ended December 31, 1990 and incorporated
herein by reference).                                                                                                                                                                                                                                                                                                                           
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.4+ |  | Form of Amendment to Texas Eastern Products Pipeline Company
Long-Term Incentive Compensation Plan (Filed as Exhibit 10.7 to 10-K
of TEPPCO Partners, L.P. (Commission File No. 1-10403) for the year
ended December 31, 1995 and incorporated herein by reference).                                                                                                                                                                                                                                                                                                                                        
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.5+ |  | Duke Energy Corporation Executive Savings Plan (Filed as
Exhibit 10.7 to 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).                                                                                                                                                                                                                                                                                                                                                                                       
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.6+ |  | 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).                                                                                                                                                                                                                                                                                                                                                                                  
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.7+ |  | 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).                                                                                                                                                                                                                                                                                                                                                                         
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.8+ |  | 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).                                                                                                                                                                                                                                                                                                                                      
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.9+ |  | 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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|       |  |                                                                                                                                                                                                                                                                                                                                                                                                         
|------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.10+ |  | 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).                                                                                                              
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                         
|10.11+ |  | 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 FileNo. 1-10403) for the quarter ended September 30, 1999 and
incorporated herein by reference).                                                                                                        
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                         
|10.12+ |  | 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).                                                                                                                              
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                         
|10.13  |  | Asset Purchase Agreement between Duke Energy Field Services,
Inc. and TEPPCO Colorado, LLC, dated March 31, 1998 (Filed as
Exhibit 10.14 to Form 10-Q of TEPPCO Partners, L.P. (Commission FileNo. 1-10403) for the quarter ended March 31, 1998 and incorporated
herein by reference).                                                                                                                 
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                         
|10.14+ |  | 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).                    
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                         
|10.15+ |  | 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).                                                                                                                                                                                        
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                         
|10.16  |  | Agreement Between Owner and Contractor between TE Products
Pipeline Company, Limited Partnership and Eagleton Engineering
Company, dated February 4, 1999 (Filed as Exhibit 10.21 to Form 10-Q
of TEPPCO Partners, L.P. (Commission File No. 1-10403) for the
quarter ended March 31, 1999 and incorporated herein by reference).                                                                       
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                         
|10.17  |  | Services and Transportation Agreement between TE Products
Pipeline Company, Limited Partnership and Fina Oil and Chemical
Company, BASF Corporation and BASF Fina Petrochemical Limited
Partnership, dated February 9, 1999 (Filed as Exhibit 10.22 to Form
10-Q of TEPPCO Partners, L.P. (Commission FileNo. 1-10403) for the
quarter ended March 31, 1999 and incorporated herein by reference).      
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                         
|10.18  |  | Call Option Agreement, dated February 9, 1999 (Filed as
Exhibit 10.23 to Form 10-Q of TEPPCO Partners, L.P. (Commission File
No. 1-10403) for the quarter ended March 31, 1999 and incorporated
herein by reference).                                                                                                                                                                                   
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                         
|10.19+ |  | Texas Eastern Products Pipeline Company, 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).                                                                                                
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                         
|10.20+ |  | 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).                                                                                                                                                                       
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                         
|10.21  |  | 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).
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                         
|10.22  |  | 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).                                                                                                                                                                                  
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                         
|10.23  |  | 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 FileNo. 1-10403) for the
quarter ended March 31, 2001 and incorporated herein by reference).       

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|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.24  |  | 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).                                                                                                                 
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.25  |  | 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).                
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.26  |  | 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).                                                         
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.27  |  | 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).                                                 
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.28  |  | 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).
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.29  |  | 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).                                                                                          
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.30  |  | 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).                                                       
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.31  |  | 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).                                                    
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.32  |  | 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).                                                                        
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.33+ |  | 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).                                                                                                                                                                                             
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|99.1*  |  | Certification of Chief Executive Officer Pursuant to 18
U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                        
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|99.2*  |  | Certification of Chief Financial Officer Pursuant to 18
U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                        



---

|* |  | Filed herewith.                                           
|- |  | ----------------------------------------------------------
| 
|+ |  | A management contract or compensation plan or arrangement.



|(b) |  | Reports on Form 8-K filed during the quarter ended June 30, 2002:
|--- |  | -----------------------------------------------------------------

None.

24



---



##### Table of Contents






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: August 14, 2002

25



---



##### Table of Contents



INDEX TO EXHIBITS

|        |  |                                                                                                                                                   
|------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------
|EXHIBIT |  |                                                                                                                                                   
|NUMBER  |  | DESCRIPTION                                                                                                                                       
|        |  |                                                                                                                                                   
|99.1*   |  | Certification of Chief Executive Officer Pursuant to 18
U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
|        |  |                                                                                                                                                   
|99.2*   |  | Certification of Chief Financial Officer Pursuant to 18
U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.



---

|* |  | Filed herewith.                                           
|- |  | ----------------------------------------------------------
| 
|+ |  | A management contract or compensation plan or arrangement.



|(b) |  | Reports on Form 8-K filed during the quarter ended June 30, 2002:
|--- |  | -----------------------------------------------------------------

None.