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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

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

                     FOR THE FISCAL YEAR ENDED JUNE 30, 2001

                                       OR

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

          FOR THE TRANSITION PERIOD FROM ........... TO ...............

                        COMMISSION FILE NUMBER 333-11569

                             TEXAS PETROCHEMICALS LP
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                        TEXAS                                74-1778313
           (STATE OR OTHER JURISDICTION OF                (I.R.S. EMPLOYER
           INCORPORATION OR ORGANIZATION)                IDENTIFICATION NO.)

             THREE RIVERWAY, SUITE 1500
                   HOUSTON, TEXAS                               77056
      (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)               (ZIP CODE)

                                 (713) 627-7474
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

      SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OR 12(g) OF THE ACT:
                                      NONE

         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 requirement for the past 90 days. Yes  X  No
                                             ---    ---

         Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.  X
                             ---

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                             TEXAS PETROCHEMICALS LP

                                TABLE OF CONTENTS

<Table>
<Caption>
                                                                                     Page
                                                                                     ----
<S>                                                                                  <C>
                                     PART I

Item 1. Business                                                                      1

Item 2. Properties                                                                    7

Item 3. Legal Proceedings                                                             7

Item 4. Submission of Matters to a Vote of Security Holders                           7

                                     PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters         8

Item 6. Selected Financial Data                                                       8

Item 7. Management's Discussion and Analysis of Financial Condition
             and Results of Operations                                                9

Item 7A. Quantitative and Qualitative Disclosures About Market Risks                 14

Item 8. Financial Statements and Supplementary Data                                  16

Item 9. Changes in and Disagreements With Accountants on Accounting                  34
             and Financial Disclosure

                                    PART III

Item 10. Directors and Executive Officers of the Registrant                          35

Item 11. Executive Compensation                                                      37

Item 12. Security Ownership of Certain Beneficial Owners and Management              38

Item 13. Certain Relationships and Related Transactions                              38

                                     PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K            39

         Signatures                                                                  41
</Table>


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                                     PART I

ITEM 1.  BUSINESS

         Texas Petrochemicals LP, formerly Texas Petrochemicals Corporation,
referred to as the "Company" herein, is one of the largest producers of
butadiene, the largest producer of butene-1, and the third largest producer of
methyl tertiary-butyl ether (MTBE) in North America. In addition, the Company is
the sole producer of diisobutylene and isobutylene concentrate in the United
States and the largest domestic merchant supplier of high purity isobutylene to
the chemical market. The Company's products include: (i) butadiene, primarily
used to produce synthetic rubber; (ii) MTBE, used as an oxygenate and octane
enhancer in gasoline; (iii) alkylate, used as a gasoline blend component; (iv)
n-butylenes (butene-1 and butene-2), used in the manufacture of plastic resins,
fuel additives and synthetic alcohols; (v) specialty isobutylenes, primarily
used in the production of specialty rubbers, lubricant additives, detergents and
coatings; and (vi) polyisobutylenes, used in the production of fuel and lube
additives, adhesives, sealants and packaging.

         The Company's manufacturing facility, located approximately one mile
from the Houston Ship Channel provides convenient access to other Gulf Coast
petrochemical producers and is connected to several of its customers and raw
material suppliers through an extensive pipeline network. In addition, the
Company's facility is serviced by rail, tank truck and barge.

         The Company was founded in 1968, at which time the Company was
principally engaged in the installation of crude butadiene processing
facilities. In 1984, Mr. Dave C. Swalm acquired from Tenneco, Inc. the assets
(principally comprised of the Houston facility) of Petro-Tex Chemical
Corporation ("Petro-Tex") the prior owner of the Company's manufacturing
facility.

         On July 1, 1996 Texas Olefins Company ("TOC"), Texas Petrochemicals LP
and a raw material supply contract of Clarkston Corporation (collectively
referred to as the "Predecessor") were acquired for approximately $371 million
in a series of transactions (the "Acquisition"). After the transactions, TOC was
merged with and into Texas Petrochemicals LP with Texas Petrochemicals LP
becoming a 100% owned subsidiary of TPC Holding Corporation, which is 100% owned
subsidiary of Texas Petrochemical Holdings, Inc. (the "Parent"). Texas
Petrochemicals Holdings, Inc. is a privately held company formed by a group of
investors.

         On July 1, 2000 the Company converted its legal form from a corporation
to a limited partnership pursuant to the conversion provisions of the Texas
Business Corporation Act and the Texas Revised Limited Partnership Act. TPC
Holding Corp., the Company's immediate parent prior to the conversion, retained
a direct 1% ownership interest in the partnership and became its sole general
partner. Petrochemical Partnership Holdings, Inc., a new wholly owned subsidiary
of TPC Holding Corp., acquired the remaining 99% ownership interest and
simultaneously became a limited partner of the partnership. This change has no
effect on the current management of the Company or its existing operations. The
Texas Business Corporation Act provides that the effect of the conversion is
that the Company as a legal entity continues to exist, without interruption, but
in the organizational form of a Texas limited partnership rather than in the
prior organizational form of a Texas corporation.

         The Company's principal executive offices are located at Three
Riverway, Suite 1500, Houston, Texas 77056. The Company's telephone number is
(713) 627-7474.

PRODUCTS

         Butadiene is the most widely used feedstock for synthetic rubber
products and is also used in the manufacture of engineered plastics, nylon
fibers and other products. The Company sells butadiene to a stable customer
base. As one of the largest producers of butadiene in North America, the Company


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believes that many of its customers place significant value on its ability to
provide a reliable domestic supply of butadiene and as a result have entered
into long-term sales contracts with the Company.

         The Company extracts butadiene from crude butadiene, which is generated
from the production of ethylene and is comprised of a number of valuable
components, including butadiene, isobutylene, n-butylenes, isobutane and
n-butane. Many U.S. ethylene producers rely on third parties such as the Company
to process their crude butadiene streams, as the crude butadiene volumes they
produce are not sufficient to justify the construction of on-site butadiene
recovery facilities. During 2001, the Company completed modifications that
increased its butadiene extraction capacity by 300 million pounds per year to a
total annual capacity of 1.2 billion pounds. Included in the project were
changes that expanded the Company's logistical capabilities to support the
increased throughput. The Company is the largest non-integrated crude butadiene
processor in North America and as a result of its strategic importance to
ethylene producers, the Company has been able to secure long-term supply
contracts covering the majority of its crude butadiene requirements. Such
contracts provide for a fixed profit margin based on the Company's selling
prices for butadiene, and add a measure of stability to the Company's butadiene
operations.

         MTBE is a motor gasoline blending stock, which reduces carbon monoxide
and volatile organic compound emissions and enhances the octane content of
gasoline. MTBE is produced by reacting methanol and isobutylene. MTBE use and
demand is seasonal based on the demand for motor fuels and driving patterns. The
Company's ability to produce isobutylene by three alternative methods enables it
to produce MTBE by the most economical process available to the Company. The
U.S. Clean Air Act ("CAA") of 1990 requires the use of an "oxygenate" in
gasoline sold in certain regions that are not in compliance with air quality
standards. MTBE is the predominate oxygenate used in gasoline. However, as a
result of incidents in which MTBE from gasoline has been found in drinking
water, the federal government and certain state governments are considering
actions that could reduce or even eventually eliminate the use of MTBE in
gasoline. There can be no assurance that these activities will not impact the
Company's market for MTBE. A significant reduction in the demand for MTBE could
have a material adverse effect on the Company's financial condition and results
of operations. See "MTBE Environmental and Market Issues" for a further
discussion of MTBE.

         The Company is the leading producer of chemical grade butene-1 and
specialty isobutylenes in North America. In recent years, the Company has
increased its sales of these products by increasing its market share in
polyolefin applications and the development of new end-use applications.
Butene-1 is used as a comonomer in the production of high-density polyethylene
("HDPE") and linear low-density polyethylene ("LLDPE"). Both HDPE and LLDPE are
raw materials for the production of trash bags, film wrap, pipe and plastic
containers. Butene-1 is also used to produce butylene oxide, a key component of
detergent additive packages used in many gasoline formulations.

         High purity isobutylene is used in the production of butyl rubber,
which is used to produce tires, and in specialty chemical applications such as
the production of resins, antioxidants, paints and coatings, synthetic lubricant
oils and rubber chemicals. The Company is currently the largest domestic
merchant supplier of high purity isobutylene to the chemical market. Isobutylene
concentrate is similar to high purity isobutylene in composition, although its
purity is 88% isobutylene compared to 99.9% in high purity isobutylene. The
Company markets isobutylene concentrate for use in the lubricant additives
business as well as for use in the production of butyl rubber. The Company is
the sole U.S. producer of isobutylene concentrate. Diisobutylene is used
primarily as an intermediate in the manufacturing of alkylphenols for the
surfactant and phenolic resins markets. Other uses include the production of
tackifier and ink resins, dispersants and lubricant oil additives, and rubber
and processing chemicals. The Company is the sole U.S. producer of
diisobutylene.

         During fiscal year 2000 the Company completed the development and
construction of a $12 million polyisobutylene plant. The plant produces various
grades of polyisobutylenes, which are used to produce a broad range of chemicals
including industrial specialties, lubricants and fuel dispersant additives.


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<PAGE>   5


         The Company's principal feedstocks are crude butadiene, isobutane and
methanol. The Company's sources of isobutane and methanol are readily available
from several suppliers. The inability of any one of these suppliers to continue
as a source of raw materials would not have a material impact on the Company's
ability to continue normal operations. The Company's crude butadiene supply is
purchased generally under contract terms from several major ethylene producers.
The loss of any one of the Company's largest crude butadiene suppliers would
have a material impact on the Company's ability to continue normal operations.
One of the Company's intermediate products, isobutylene, is used in the
manufacture of MTBE and specialty isobutylenes.

OTHER OPERATIONS

         The Company operates a cogeneration power plant that supplies
electricity and process steam to the facility's chemical processing operations.
Excess capacity of this power plant, as well as steam and boiler feed water are
currently sold to neighboring facilities under contracts at a price equal to the
cost of fuel plus a fixed profit. In addition, the Company generates revenues
from its terminals in Baytown, Texas and Lake Charles, Louisiana and from
chemical by-product sales to third parties.

CONTRACTS

         The Company enters into three general types of contracts in connection
with its production processes: feedstock supply contracts, product sales
contracts and, to a lesser extent, toll manufacturing agreements. These
contracts typically have terms of two to three years and provide for successive
one-year renewals unless either party objects to such renewal in a timely
manner. The Company also purchases and sells products on a spot basis.

         Certain of the Company's largest customers account for a significant
percentage of the Company's sales of particular products. The Goodyear Tire and
Rubber Company represented 11% of sales during the years ended June 30, 2001 and
1999. Although the Company believes its relationship with Goodyear Tire and
Rubber Company is good, the loss of this customer would have a material adverse
effect on the Company's financial condition, results of operations or cash
flows.

COMPETITION

         The petrochemicals businesses in which the Company operates are highly
competitive. Many of the Company's competitors, particularly in the
petrochemicals industry, are larger and have greater financial resources than
the Company. Among the Company's competitors are some of the world's largest
chemical companies and major integrated petroleum companies that have their own
raw material resources. In addition, a significant portion of the Company's
business is based upon widely available technology. Accordingly, barriers to
entry, apart from capital availability, may be low in the commodity product
section of the Company's business, and the entrance of new competitors into the
industry may reduce the Company's ability to capture improving profit margins in
circumstances where overcapacity in the industry is diminishing. Further,
petroleum-rich countries have recently become more significant participants in
the petrochemical industry and may continue to expand their role in this
industry in the future. Any of these developments would have a negative impact
on the Company's financial condition, results of operations or cash flows.

         Given the nature of the markets in which it competes, the Company
believes it has two primary competitive advantages over its competitors. First,
the Company's position as the most significant merchant crude butadiene
processor in the world has allowed it to secure supply arrangements for crude
butadiene that provide for a fixed profit based on the Company's selling prices
for the finished product. The Company believes that this partially limits its
exposure to fluctuations in raw materials prices. Second, the Company's flexible
production processes enable it to optimize production output to meet


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<PAGE>   6


variations in customer demand. Also, the Company's flexible production processes
enable the Company to conduct maintenance work on its plant equipment with
minimal loss of production.


PATENTS AND LICENSES

         The Company presently owns, controls or holds right to 11 patents and
seeks patent protection for its proprietary processes where feasible to do so.

MTBE ENVIRONMENTAL AND MARKET ISSUES

         There is concern in a number of states that MTBE may enter drinking
water supplies as a result of leaks in underground gasoline storage tanks. As a
result of this concern, California's Governor, Gray Davis, issued an Executive
Order banning MTBE from gasoline as of December 31, 2002. Currently, the
effective date of the ban is being reconsidered by California because of
concerns about the availability and cost of alternatives to MTBE. Several other
states have enacted laws providing for reduction or elimination of MTBE from
gasoline. In addition certain States have established maximum contaminant levels
("MCLs") for MTBE in drinking water supplies ranging from 10 to 17 ppb. The U.S.
Environmental Protection Agency ("EPA"), has not yet established an MCL, but has
an advisory of 20-40 ppb, based on aesthetics. If MTBE is found at levels
exceeding the MCLs, the water will have to be treated to reduce MTBE
concentration to a level at or below the applicable MCL.

         There continues to be action in Congress to impact the use of MTBE in
gasoline. The most prevalent legislative proposals would ban MTBE, eliminate the
oxygen requirement of the CAA or require the use of ethanol as a
gasoline-blending component. The Company is not able to predict whether such
legislation will be adopted. If adopted, however, such legislation would be
expected to materially reduce MTBE demand and have an adverse material effect on
the Company's results of operations.

         Various scientific bodies have evaluated MTBE as a possible human
carcinogen. To date, the International Agency on Research on Cancer ("IARC"),
the National Toxicology Program ("NTP") and the California Cancer Identification
Committee ("CIC") have found MTBE not to be classifiable as a possible, probable
or known human carcinogen. California EPA has designated MTBE as a possible
human carcinogen.

ENVIRONMENTAL REGULATION

         The Company's policy is to be in compliance with all applicable
environmental laws. The Company is also committed to Responsible Care(R), a
chemical industry initiative to enhance the industry's responsible management of
chemicals. The Company's operations are subject to federal, state, and local
laws and regulations administered by the EPA, the U.S. Coast Guard, the Army
Corps of Engineers, the Texas Natural Resource Conservation Commission
("TNRCC"), the Texas General Land Office, the Texas Department of Health and
various local regulatory agencies. The Company holds all required permits and
registrations necessary to comply substantially with all applicable
environmental laws and regulations, including permits and registrations for
wastewater and stormwater discharges, solid and hazardous waste disposal and air
emissions, and management believes that the Company is in substantial compliance
with the laws and regulations that materially affect its operations. While
management does not expect that compliance with existing environmental laws will
have a material adverse effect on the Company's financial condition or results
of operations, there can be no assurance that future legislation, regulation or
judicial or administrative decisions will not have such an effect.

         Under federal and state environmental laws, companies may be liable for
remediation of contamination at on-site and off-site waste management and
disposal areas. Management believes that the Company is not likely to be
required to incur material remediation costs related to its management,
transportation and disposal of solid and hazardous materials and wastes, or to
its pipeline operations. If


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the Company were to be required to incur such costs, however, management
believes that such costs would not have a material adverse effect on the
Company's results of operations.

         The day-to-day operations of the Company are subject to extensive
regulation under the Resource Conservation and Recovery Act ("RCRA"), the
Federal Clean Water Act, the CAA and similar requirements of state law. In
particular, under the CAA, the EPA and the TNRCC have promulgated, or are
required to promulgate, numerous regulations that affect or will affect the
operations of the Company. The most significant of these are the so-called
Hazardous Organics National Emission Standard for Hazardous Air Pollutants or
HON Rule, the requirements of Title V of the CAA and rules relating to the
control of emissions of nitrogen oxides to reduce ozone levels in greater
Houston's ozone non-attainment area.

         The HON Rule requires controls on emissions of certain listed hazardous
air pollutants ("HAPs"). Butadiene, methanol, dimethylformamide, benzene,
styrene, and MTBE, which are manufactured, used and/or processed by the Company,
have been identified as HAPs for purposes of regulation under the CAA. Areas of
concern in the Company's operations for HAP emissions include equipment leaks,
process vents, product storage, transfer operations and emissions from
wastewater streams.

         Nitrogen Oxide ("NOx") emission control rules adopted in 1994 required
compliance by November 15, 1999. The Company has installed predictive emission
monitoring systems ("PEMS") for NOx emissions on stationary sources at its
boiler house.

         The Company's Houston facility is located in Harris County, Texas,
which has been designated as a severe non-attainment area for ozone under the
CAA. Accordingly, the State of Texas is in the process of developing a revised
State Implementation Plan ("SIP") which will require significant reductions in
emissions of ozone precursors, including volatile organic compounds and oxides
of nitrogen from the plants in Harris County. The revised SIP will require
certain additional emission reductions from the Company's facilities. Such
reductions will require the Company to modify existing controls, install
additional controls for air emissions, or install new equipment. The current
rules would require most area plants, including the Company's Houston plant, to
reduce emissions of NOx by approximately 90%. However, a negotiated plan agreed
to by TNRCC and the affected plants would reduce the amount of the required
reductions to 75%, if certain scientific data supports such reduction. Approval
by EPA of the SIP is anticipated to occur by late 2002. The Company is unable at
this time to predict the cost of modifying its facilities to comply with the
requirements of the SIP.

         The Company has elected to participate in the Voluntary Emissions
Reduction Program ("VERP") sponsored by the TNRCC under which the Company will
voluntarily obtain permits for certain air emission sources that had
historically been "grandfathered" from certain permit requirements. A VERP
application was submitted to the TNRCC in 2000. The VERP permit that will be
issued will likely require the Company to commit to certain emission reductions.
Subsequent to the Company's voluntary commitment to this permitting effort in
1998, the Texas Legislature enacted Senate Bill 766 which provides incentives
for grandfathered emissions sources to apply for a voluntary emissions reduction
permit instead of remaining grandfathered. In particular, grandfathered sources
are invited to apply for a permit prior to September 1, 2001. As a result of
legislation adopted by the Texas Legislature in 2001, facilities that do not
file for a VERP by September 1, 2001 will be subject to a mandatory permit
program. The permits provided for under Senate Bill 766 are expected to
establish less stringent emissions controls than would be required under permits
for new emissions sources. The TNRCC has promulgated rules to implement the
requirements of Senate Bill 766. The Company is pursuing available options with
respect to its grandfathered emissions sources that allow the Company to meet
applicable air emissions requirements in a cost-effective manner. Measures
likely to be required as part of Senate Bill 766 implementation are not
anticipated to have a materially adverse impact on the Company or its
operations.


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         Regulations under Title V of the CAA require a facility-wide inventory
of emissions, sources and the air pollution control requirements applicable to
those sources. The Company filed its Title V application with the TNRCC in July
2000. In connection with the Title V program, the Company may be required to
upgrade its on-going monitoring program once it has received its operating
permit. It is also possible that the Company may be required to make
modifications to some of its equipment in order to comply with requirements
identified through the facility-wide Title V permit process. These anticipated
commitments are not expected to have a material adverse impact on the Company's
operations.

         The Company has an active program to manage asbestos-containing
material at its Houston facility in accordance with federal, state and local
environmental, health and safety regulations. The Company does not believe that,
when properly managed, these materials pose a hazard to the health of Company
employees or to the environment. There is no requirement to remove these
materials, provided they are properly managed. As the plant is reconfigured or
additions are made, asbestos-containing materials are appropriately handled by a
certified contractor.

         The wastewater treatment system for the Houston facility is 75 percent
owned by the Company and 25 percent owned by the owner of an adjacent facility.
The treatment system is operated by the Company. The state discharge permit is
held jointly by the Company and a third party. The Company believes that the
system has sufficient capacity for the Company's projected needs.

         The Company received a Notice of Violation ("NOV") on March 10, 2000
from the EPA relating to certain discrepancies alleged to have been found during
routine inspections conducted by EPA in 1995 and 1997. The NOV led to the filing
of a judicial complaint against the Company. The Company vigorously disputed the
factual and legal basis of the NOV and settlement negotiations were initiated.
The EPA, the Department of Justice, and the Company are currently finalizing a
settlement that will entail a civil penalty and the installation of vapor
controls on three organic liquid storage vessels on or before October 1, 2002.
The anticipated settlement of such issues is not expected to have a material
adverse impact on the Company's financial condition, results of operations or
cash flows.

         The terminals in Baytown and Lake Charles are subject to many of the
same or similar environmental laws and regulations as are applicable at the
Houston facility. Management believes that the terminals are in substantial
compliance with these requirements and that no significant expenditures will be
required at these facilities to allow them to continue to comply with such laws
and regulations.

         The Company is participating with a number of other companies in a
voluntary program (the "HPV Program") with EPA for assessing the safety of the
Company's products. Testing is currently scheduled for butadiene and testing on
other products is expected in the future. The final reports are anticipated by
the end of 2002.

EMPLOYEES

         As of June 30, 2001 the Company had approximately 316 full-time
employees, all of whom were salaried employees. In addition, the Company
contracts with a third party to provide approximately 126 contract employees to
perform routine maintenance on and around its Houston facility. The Company
believes its relationship with its employees is satisfactory.

SAFETY RECORD

         The Company maintains one of the best worker's compensation records in
Texas, equivalent to most clerical operations. Over the last five years, the
Company only experienced two lost time injuries at the Houston Plant Site. The
Company believes this record is accomplished through extensive classroom and


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on-the-job training as well as the efforts of its highly trained, 75-member
volunteer emergency response team.

ITEM 2.  PROPERTIES

         The Company's plant is located on a 257-acre tract approximately one
mile from the Houston Ship Channel and near one of the chemical industry's
largest domestic processing facilities. Approximately 230 acres is owned by the
Company, and 25% of the remaining 27 acres is owned by a third party. The
Company leases from the Port of Houston two ship docks, which accommodate barge
and ocean-going vessels, and has facilities to accommodate rail and truck
service. In addition, the facility is connected by pipeline to customers and
suppliers of raw materials, directly and through other major pipelines in the
immediate area as well as in Texas City, and with salt dome storage facilities
of other companies located at both Mont Belvieu and Pierce Junction, Texas. The
Company's facility also has a laboratory for sampling and testing. The Company
owns and operates a storage and terminal facility at Baytown, Texas, leases
storage and terminal facilities in Lake Charles, Louisiana and Linden, New
Jersey, and leases tank storage capacity in Bayonne, New Jersey. The Company
also leases office space in Three Riverway Plaza, Houston, Texas as its
principal executive offices. The Company believes that it has adequate
facilities for the conduct of its current and planned operations.

ITEM 3.  LEGAL PROCEEDINGS

         In addition to the matters disclosed under "Environmental Regulation,"
the Company is a party to various claims and litigation arising in the ordinary
course of its business. Management recognizes the uncertainties of litigation
and the possibility that one or more adverse rulings could materially impact
operating results. However, based on management's understanding of the current
facts and circumstances of such claims and litigation, the ultimate resolution
of such matters is not expected to have a material adverse effect on the
Company's financial position or results of operations.

         Legal actions have been filed in several states for recovery for
alleged property damage and/or costs of remediation and replacement of water
supplies due to the presence of MTBE. As of this point in time, the Company has
not been named in any of these actions; however, no assurance can be given that
the Company will not be named in these or other future actions.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         There were no matters submitted to a vote of the Company's security
holders during the fourth quarter of the fiscal year ended June 30, 2001.


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                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         Not applicable

ITEM 6.  SELECTED FINANCIAL DATA

         The selected financial data for the Company set forth below for the
five years ended June 30, 2001 should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Consolidated Financial Statements, including the related notes.


<Table>
<Caption>
                                                                   YEAR ENDED JUNE 30,
                                               -------------------------------------------------------
                                                1997(1)      1998      1999(2)      2000      2001(3)
                                               ---------   --------   ---------   --------   ---------
                                                        (IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S>                                            <C>         <C>        <C>         <C>        <C>
STATEMENT OF OPERATIONS DATA:


Revenues                                       $   490.2   $  514.8   $   448.2   $  744.7   $   858.7

Income from operations                              18.3       37.4        38.7       68.0        41.1

Interest expense                                    35.2       35.7        34.0       33.5        31.7

Net income (loss)                                  (12.7)      (1.4)        1.4       16.5         6.1

Income (Loss) per common share
     Before extraordinary loss                 $   (2.71)  $  (0.34)  $    0.34   $   3.97
     Extraordinary loss                            (0.35)        --          --         --
                                               ---------   --------   ---------   --------
                                               $   (3.06)  $  (0.34)  $    0.34   $   3.97
                                               =========   ========   =========   ========

BALANCE SHEET DATA (AT PERIOD END):

Total assets                                   $   521.1   $  496.8   $   482.4   $  523.9   $   509.0

Long-term debt                                     317.7      310.8       293.5      285.4       272.1
</Table>

--------
(1) Net loss for the year ended June 30, 1997 includes an extraordinary loss of
$1.5 million for early extinguishment of debt.

(2) In January 1999, the estimated useful lives of certain plant assets were
increased from 10 to 15 years. This change was accounted for as a change in
accounting estimate and resulted in $4.2 million decrease in depreciation
expense.

(3) Net income for the year ended June 30, 2001 includes a cumulative effect of
accounting change of $(0.4) million related to the implementation of SFAS No.
133 and 138, Accounting for Derivative Instruments and Certain Hedging
Activities. Income (loss) per common shares is not disclosed for the year ended
June 30, 2001 due to the conversion of the Company to a limited partnership
structure.


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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS.

        This discussion should be read in conjunction with the information
contained in the Consolidated Financial Statements and related notes.

OVERVIEW

         The Company's revenues are derived primarily from merchant market sales
of butadiene, MTBE, alkylate, n-butylenes (butene-1 and butene-2) and specialty
isobutylenes (isobutylene concentrate, high purity isobutylene, diisobutylene
and polyisobutylene). The Company's results of operations are affected by a
number of factors, including variations in market demand, production volumes,
and the pricing of its products and primary raw materials. The Company believes
that the pricing for its principal products is primarily dependent on the
balance between the global supply and North American demand for each product,
the cost structure of the various global producers (including their cost of raw
materials), and from time to time, other external factors, such as the
implementation of the Clean Air Act Amendments of 1990, which has significantly
increased the demand for MTBE over the past 10 years. Historically, the Company
has successfully mitigated the cyclicality of the markets for certain of its end
products by entering into contracts with pricing which allows for a fixed profit
by linking prices directly or indirectly to raw material costs. In addition, the
Company has attempted to optimize the use of isobutylene, an intermediate
product produced by the Company, to produce MTBE or higher margin specialty
products depending on prevailing market conditions. See "MTBE Environmental and
Market Issues" for further discussion of MTBE.

REVENUES

         The following tables set forth the Company's historical revenues and
the percentages of historical revenues by product and volume of products sold.

Revenues

<Table>
<Caption>
                                                    YEAR ENDED JUNE 30,
                                  ------------------------------------------------------
                                      1999               2000                  2001
                                  -------------     ---------------      ---------------
                                                 (DOLLARS IN MILLIONS)
<S>                               <C>      <C>      <C>        <C>       <C>        <C>
Butadiene                         $   98.2   22%    $  134.2     18%     $  167.9     20%
Fuel Products (1)                    234.4   52        451.9     61         507.6     59
Specialty Products (2)               102.8   23        144.1     19         163.3     19
Other(3)                              12.8    3         14.5      2          19.9      2
                                  -------- ----     --------   ----      --------   ----
Total                             $  448.2  100%    $  744.7    100%     $  858.7    100%
                                  ======== ====     ========   ====      ========   ====
</Table>

----------

(1) Includes revenues from sales of MTBE, butene-2 and alkylate.

(2) Includes revenues from sales of butene-1, isobutylene concentrate,
    high-purity isobutylene, diisobutylene and polyisobutylene

(3) Includes utility revenues and revenues realized from the Company's
    terminalling facilities.


                                       9
<PAGE>   12
Sales Volumes

<Table>
<Caption>
                                            YEAR ENDED JUNE 30,
                                -------------------------------------------
                                 1999               2000              2001
                                ------             ------            ------
                                 (MILLIONS OF POUNDS, EXCEPT WHERE NOTED)
<S>                             <C>                <C>               <C>
Butadiene                        821.1              844.6             785.6
Fuel Products(1)                 388.7              487.7             438.1
Specialty Products               587.4              642.0             601.6
</Table>

----------
(1)  Volumes in millions of gallons. Includes 376.9 million, 449.9 million and
     358.2 million gallons of MTBE sales and 98.5 million, and 125.1 million and
     110.0 million gallons of finished MTBE purchased for resale for the three
     years ended June 30, 2001.

RESULTS OF OPERATIONS

         The following table sets forth an overview of the Company's results of
operations.

<Table>
<Caption>
                                                               YEAR ENDED JUNE 30,
                                            ------------------------------------------------------
                                                1999                2000                 2001
                                            -------------     ----------------     ---------------
                                                                 (DOLLARS IN MILLIONS)
<S>                                         <C>      <C>      <C>        <C>       <C>        <C>
Revenues                                    $  448.2  100%    $  744.7    100%     $  858.7    100%
Cost of goods sold                             374.4   84        643.2     87         782.0     91
Non-cash ESOP compensation                       0.4   --          0.6     --           1.0     --
Depreciation and amortization                   26.8    6         23.8      3          24.6      3
                                            -------- ----     --------   ----      --------   ----
      Gross profit                              46.6   10         77.1     10          51.1      6
Selling, general and administrative              7.9    2          9.1      1          10.0      1
                                            -------- ----     --------   ----      --------   ----
      Income from operations                $   38.7    8%    $   68.0      9%     $   41.1      5%
                                            ======== ====     ========   ====      ========   ====
</Table>


YEAR ENDED JUNE 30, 2001 COMPARED TO THE YEAR ENDED JUNE 30, 2000

Revenues

         The Company's revenues increased by approximately 15%, or $114.0
million, to $858.7 million for the year ended June 30, 2001 from $744.7 million
for the year ended June 30, 2000. The increase was due to higher product sales
prices.

         Butadiene revenues increased by approximately 25%, or $33.7 million,
to $167.9 million for the year ended June 30, 2001 from $134.2 million for the
year ended June 30, 2000. The increase was attributable to higher sales prices,
which were partly offset by lower sales volumes. Higher sales prices were
experienced during the current year as a result of increased hydrocarbon values.
Sales volumes were down in the second half of the year due to limited
availability of crude butadiene and reduced demand from customers.

         Fuel products revenues increased by approximately 12%, or $55.7
million, to $507.6 million for the year ended June 30, 2001 from $451.9 million
for the year ended June 30, 2000. The increase was caused by higher MTBE sales
prices, higher butene-2 sales volumes and the introduction of alkylate sales.
MTBE prices were higher during the current year as a result of increases in
gasoline and crude oil prices. Butene-2 sales volumes increased due to higher
production rates.

         Specialty products revenues increased by approximately 13%, or $19.2
million to $163.3 million for the year ended June 30, 2001 from $144.1 million
for the year ended June 30, 2000. The increase


                                       10
<PAGE>   13


was principally due to higher isobutylene concentrate sales prices caused by
increased raw material and energy costs. Sales volumes of specialty products
remained relatively unchanged.

Gross Profit

         Gross profit decreased by approximately 34%, or $26.0 million to
$51.1 million for the year ended June 30, 2001 from $77.1 million for the year
ended June 30, 2000. Gross margin during the current period declined by 4.5%.
Gross profit decreased during the current year because of lower butadiene sales
volumes and lower margin contributed from certain specialty isobutylene
products. High raw material and energy costs attributed to the lower margin
contributed from certain specialty products. MTBE and specialty products
production volumes and margin contribution were negatively impacted by
operational outages that were experienced during the fourth quarter of the
current year. These outages resulted from two separate events involving a plant
fire and flooding from Tropical Storm Allison. The Company estimates the impact
of these operational outages at $13.0 million for fiscal year 2001. As a result
of continued operational outages sustained from these events and negative
inventory adjustments, the Company anticipates an additional $10.0 million
financial impact during the first quarter of fiscal 2002.

Income from Operations

         Income from operations decreased by approximately 40%, or $26.9
million, to $41.1 million for the year ended June 30, 2001 from $68.0 million
for the year ended June 30, 2000. Operating margin during this period decreased
to 4.8% from 9.1%. The decrease in income from operations was primarily caused
by the same factors contributing to the decrease in gross profit described
above. The increase in selling, general and administrative costs was principally
due to higher MTBE advocacy and consulting costs, and an increase in employee
headcount.


YEAR ENDED JUNE 30, 2000 COMPARED TO THE YEAR ENDED JUNE 30, 1999

Revenues

         The Company's revenues increased by approximately 66%, or $296.5
million, to $744.7 million for the year ended June 30, 2000 from $448.2 million
for the year ended June 30, 1999. The increase was due to higher product sales
prices and sales volumes.

         Butadiene revenues increased by approximately 37%, or $36.0 million,
to $134.2 million for the year ended June 30, 2000 from $98.2 million for the
year ended June 30, 1999. The increase was attributable to higher sales prices
and slightly higher sales volumes. A shortage of butadiene supply in the U.S.
market contributed to higher sales prices.

         Fuel products revenues increased by approximately 93%, or $217.5
million, to $451.9 million for the year ended June 30, 2000 from $234.4
million for the year ended June 30, 1999. The increase was due principally to
higher MTBE sales prices and higher MTBE sales volumes. MTBE prices were
significantly higher particularly during the last half of fiscal year 2000 as a
result of increases in gasoline and crude oil prices. In addition, during the
last quarter of fiscal year 2000 MTBE prices rose dramatically as a result of
new Reformulated Gas (RFG II) requirements. MTBE sales volumes were higher due
to increased production rates resulting from operational efficiencies and no
scheduled turnarounds for catalyst change. In addition, revenues increased
because butene-2 sales volumes were sold into the fuels market.

         Specialty products revenues increased by approximately 40%, or $41.3
million to $144.1 million for the year ended June 30, 2000 from $102.8 million
for the year ended June 30, 1999. The increase was due to higher sales volumes
and sales prices. Sales volumes were higher due to increased customer demand and
a new export business. Sales prices increased due to higher isobutylene values
during the year.


                                       11
<PAGE>   14


Gross Profit

         Gross profit increased by approximately 65%, or $30.5 million to
$77.1 million for the year ended June 30, 2000 from $46.6 million for the year
ended June 30, 1999. Gross margin during the period remained steady at 10.4%.
Gross profit increased during the current fiscal year due to higher sales
volumes of all product groups and higher margins on butadiene and MTBE sales.
Butadiene margins improved over prior year period due to improved spot business,
processing efficiencies from new control room instrumentation and positive
inventory impacts from higher butadiene sale prices. MTBE margins improved over
the prior year period due to higher production rates and a larger spread of
sales prices over raw material costs. Gross profit from specialty isobutylenes
was unchanged as higher sales volumes offset the impact of higher raw material
costs. Gross profit also increased due to lower depreciation and amortization
charges during the current period.

Income from Operations

         Income from operations increased by approximately 76%, or $29.3
million, to $68.0 million for the year ended June 30, 2000 from $38.7 million
for the year ended June 30, 1999. Operating margin during this period increased
to 9.1% from 8.6%. The increase in income from operations was primarily due to
the same factors contributing to the increase in gross profit described above.
The increase in selling, general and administrative costs was primarily due to
higher MTBE advocacy and consulting costs.


LIQUIDITY AND CAPITAL RESOURCES

   CASH FLOWS

YEAR ENDED JUNE 30, 2001 COMPARED TO THE YEAR ENDED JUNE 30, 2000

         Net cash provided by operating activities was $30.4 million for the
year ended June 30, 2001 compared to $42.9 million for the year ended June 30,
2000. The decrease of $12.5 million was primarily attributable to lower net
income during the current year. Net cash used in investing activities was $13.2
million for the year ended June 30, 2001 compared to $18.8 million for the year
ended June 30, 2000. The decrease of $5.6 million was caused by lower capital
expenditures during the current year. Net cash used in financing activities was
$12.7 million for the year ended June 30, 2001 compared to $9.3 million for the
year ended June 30, 2000. The increase of $3.4 million is due primarily to a
$5.7 million prepayment made during the current year towards the term loans
under the Bank Credit Agreement.

YEAR ENDED JUNE 30, 2000 COMPARED TO THE YEAR ENDED JUNE 30, 1999

         Net cash provided by operating activities was $42.9 million for the
year ended June 30, 2000 compared to $35.2 million for the year ended June 30,
1999. The increase of $7.7 million was primarily attributable to changes in
working capital. Net cash used in investing activities was $18.8 million for
the year ended June 30, 2000 compared to $13.9 million for the year ended June
30, 1999. The increase of $4.9 million was caused by higher capital
expenditures during the current year. Net cash used in financing activities was
$9.3 million for the year ended June 30, 2000 compared to $22.1 million for
the year ended June 30, 1999. The decrease of $12.8 million is primarily due to
lower repayments on the revolving line of credit during the current year.


   LIQUIDITY

         In July 1996 the Company issued $175 million of 11 1/8% Senior
Subordinated Notes due 2006 and borrowed $140 million under a Bank Credit
Agreement. The Company used the combined proceeds to


                                       12
<PAGE>   15


finance the Acquisition of the Company. The Company's liquidity needs arise
primarily from principal and interest payments under the Bank Credit Agreement
and the Subordinated Notes. Additionally, beginning in January 2002 a semiannual
cash interest of $3.9 million payment is required under the Discount Notes held
by the Parent. The Parent does not maintain continuing operations that generate
cash flow to meet these interest payments. The Company's ability to fund
interest on the debt held by the Parent is limited by the terms of the Company's
Subordinated Notes. On August 10, 2001 the Company funded a cash payment of
$9.3 million to the Parent to be held for future scheduled interest payments on
the Discount Notes. There can be no assurance that the Company will be able to
continue to fund cash payments to its Parent to meet additional future interest
requirements.

         The Company's primary source of funds to meet debt service requirements
is net cash flow provided by operating activities. Operating cash flow is
significantly impacted by raw materials cost as well as the selling price and
volume variances of finished goods. The Company enters into supply contracts for
certain of its products in order to mitigate the impact of changing prices.
Additionally, the Company has a $40 million Revolving Credit Facility, of which
$2.0 million was in use at June 30, 2001, to provide funds for ongoing
operations, working capital and planned capital expenditures. The Company
believes that the availability of funds under the Revolving Credit Facility is
sufficient to cover any current liquidity needs which could arise as a result of
negative working capital. The Company's ability to borrow under the Revolving
Credit Facility is limited by the terms of the Bank Credit Agreement and the
Subordinated Notes. The Bank Credit Agreement and the Subordinated Notes include
certain restrictive covenants, which include but are not limited to, limitations
on capital expenditures, indebtedness, investments and sales of assets and
subsidiary stock. In September 2000 in compliance with the excess cash flow
provisions, the Company made a prepayment of $5.7 million towards the term
loans under the Bank Credit Agreement. During March 2001 the Company obtained an
amendment to the Bank Credit Agreement relating to certain financial ratios and
capital expenditure limitations.

   CASH BONUS PLAN

         In connection with the Acquisition, the Predecessor established a $35
million Cash Bonus Plan covering substantially all employees of the Predecessor
(or certain affiliates of the Predecessor) and covering certain third-party
contractors who had contributed to the past success of the Predecessor. For the
three years ended June 30, 2001, $0.2 million, $9.6 million and $7.8 million
of this amount was paid to eligible participants. In July 2000 the debt was paid
in full.

   CAPITAL EXPENDITURES

         The Company's capital expenditures for fiscal 2001 related principally
to the completion of an incremental capacity expansion for butadiene and
improving plant operating efficiencies. Capital expenditures for year ended June
30, 2001 were $14.0 million, compared to $18.8 million for the year ended June
30, 2000. The Company expenses approximately $20.0 million annually for plant
maintenance. These maintenance costs are not treated as capital expenditures.





   RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

         In June 1998 the Financial Accounting Standard Board (FASB) issued
Statement of Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Certain Hedging Activities." In June 2000 the FASB issued SFAS
No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging
Activity, an Amendment of SFAS 133." SFAS No. 133 as amended by SFAS No. 138
requires that all derivative instruments be recorded on the balance sheet at
their respective fair values. Changes in the fair value of derivatives are
recorded each period in current earnings or other comprehensive income,


                                       13
<PAGE>   16


depending on whether the derivative is designated as part of a hedge transaction
and, if it is, the type of hedge transaction. The Company adopted SFAS No. 133
and SFAS No. 138 on July 1, 2000. Upon adoption of SFAS No. 133 and 138 the
Company's management decided not to designate any of its derivative instruments
as part of hedge transactions. Accordingly, during the first quarter of fiscal
2001 the Company recorded a net-of-tax cumulative-effect loss of $0.4 million
into earnings to recognize at fair value all derivative instruments.

         In December 1999 the U.S. Securities and Exchange Commission (SEC)
issued Staff Accounting Bulletin (SAB) 101, "Revenue Recognition in Financial
Statements," which summarizes the SEC's views in applying generally accepted
accounting principles to revenue recognition. The bulletin was effective for the
Company's fourth quarter of 2001. The company has determined that SAB 101's
revenue recognition guidelines are consistent with the Company's existing
revenue recognition policies; therefore, SAB 101 did not have an impact on the
Company's consolidated financial statements.

         In May 2000 the Emerging Issues Task Force (EITF) of the Financial
Accounting Standards Board (FASB) reached a consensus with respect to EITF Issue
00-10, "Accounting for Shipping and Handling Fees and Costs." EITF 00-10
recognizes the inconsistencies in practice of the recording of shipping and
handling costs incurred by most companies that sell goods. The issue was
effective for the Company's fourth quarter of 2001. The adoption of this issue
did not have an impact on the Company's consolidated financial statements.

         In July 2001 the FASB issued SFAS No. 142, "Goodwill and Other
Intangible Assets." Under this standard goodwill will no longer be amortized but
will be tested for impairment as set forth in the statement. The Company plans
to early adopt this statement for fiscal year beginning July 2001. The Company's
management does not anticipate an impairment of goodwill upon adoption of this
statement. Amortization of goodwill for the prior two fiscal years totaled $4.6
million and $4.6 million, respectively.

DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS

         This filing includes forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. These forward-looking statements are identified as any
statement that does not relate strictly to historical or current facts. They use
words such as "anticipate," "believe," "intend," "plan," "projection,"
"forecast," "strategy," "position," "continue," "estimate," "expect," "may,"
"will," or the negative of those terms or other variations of them or by
comparable terminology. In particular, statements expressed or implied,
concerning future operating results or the ability to generate sales, income or
cash flow are forward-looking statements. Forward-looking statements are not
guarantees of performance. They involve risks, uncertainties and assumptions.
The future results of our operations may differ materially from those expressed
in these forward-looking statements. Many of the factors that will determine
these results are beyond our ability to control or predict. Specific factors
that could cause actual results to differ from those in the forward-looking
statements include but are not limited to those factors disclosed in conjunction
with the forward looking statements included herein ("Cautionary Disclosures").
Subsequent written or oral forward looking statements attributable to the
Company or persons acting on its behalf are expressly qualified in their
entirety by the Cautionary Disclosures.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

COMMODITY PRICES

         The Company manages its exposure to commodity price fluctuations by
entering into contracts on raw material purchases and product sales with third
parties. In addition, the Company periodically enters into commodity price swap
agreements and future contracts to reduce price risk by either purchasing or
selling raw materials or other products in the market. At June 30, 2001, the
Company had outstanding


                                       14
<PAGE>   17


natural gas swap contracts with notional volumes totaling 1.3 mmbtus and other
raw material swap agreements with notional volumes totaling 0.1 million barrels.
The fair value of these outstanding derivative instruments at June 30, 2001 was
recorded in current year earnings, resulting in a $1.2 million loss. A
hypothetical 10% unfavorable change in the price of natural gas from that in
effect at year end would result in an additional $0.5 million loss.


INTEREST RATE RISK

         The Company maintains an overall interest rate risk-management strategy
that incorporates the use of derivative instruments to minimize its exposure to
changes in the fair value of its fixed rate debt and to volatility in LIBOR
rates associated with its floating rate debt. The derivative instruments are
used as part of the Company interest rate risk-management strategy that include
interest rate swaps and cap contracts. As of June 30, 2001 the Company settled
all of its outstanding interest rate swaps and caps, which resulted in $0.2
million of reduced interest expense for the current year.




                                       15
<PAGE>   18


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


                  INDEX TO CONSOLIDATED FINANCIAL STATEMENTS OF
                             TEXAS PETROCHEMICALS LP
                   (FORMERLY TEXAS PETROCHEMICALS CORPORATION)


<Table>
<Caption>
                                                                PAGE
                                                                ----
<S>                                                             <C>
Reports of Independent Accountants                                17

Financial Statements

      Consolidated Balance Sheet                                  19

      Consolidated Statement of Operations                        20

      Consolidated Statement of Partners' Equity                  21

      Consolidated Statement of Cash Flows                        22

      Notes to Consolidated Financial Statements                  23
</Table>


                                       16
<PAGE>   19


                        REPORT OF INDEPENDENT ACCOUNTANTS


To the Board of Directors
and Partners of Texas Petrochemicals LP:

In our opinion, the accompanying consolidated balance sheet as of June 30, 2001
and the related consolidated statement of operations, partners' equity and cash
flows present fairly, in all material respects, the financial position of Texas
Petrochemicals LP and its subsidiaries (collectively, "the Company") at June 30,
2001, and the results of their operations and their cash flows for the year then
ended in conformity with accounting principles generally accepted in the United
States of America. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audit. We conducted our audit of these
statements in accordance with auditing standards generally accepted in the
United States of America, which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.

As discussed in Note 2 to the consolidated financial statements, in the year
ended June 30, 2001, the Company changed its method of accounting for derivative
instruments and certain hedging activities.


PricewaterhouseCoopers LLP
Houston, Texas
August 23, 2001


                                       17
<PAGE>   20


                         REPORT OF INDEPENDENT AUDITORS

To the Board of Directors
Texas Petrochemicals Corporation:

         We have audited the accompanying consolidated balance sheet of Texas
Petrochemicals Corporation and subsidiary (the "Company") as of June 30, 2000
and the related consolidated statements of operations, stockholder's equity, and
cash flows for each of the two years in the period ended June 30, 2000. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

         We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

         In our opinion, such financial statements present fairly, in all
material respects, the financial position of the Company at June 30, 2000 and
1999 and the results of its operations and its cash flows for each of the three
years in the period ended June 30, 2000, in conformity with accounting
principles generally accepted in the United States of America.

                                                     DELOITTE & TOUCHE LLP

Houston, Texas
August 4, 2000


                                       18
<PAGE>   21


                             TEXAS PETROCHEMICALS LP

                           CONSOLIDATED BALANCE SHEET
                 (IN THOUSANDS OF DOLLARS, EXCEPT SHARE AMOUNTS)


<Table>
<Caption>
                                                                                JUNE 30,
                                                                        -----------------------
                                                                           2001         2000
                                                                        ----------   ----------
<S>                                                                     <C>          <C>
                                    ASSETS

Current assets:
      Cash and cash equivalents                                         $   19,407   $   14,919
      Accounts receivable - trade                                           54,479       64,235
      Inventories                                                           35,574       35,957
      Investments in land held for sale                                         --        1,068
      Other current assets                                                  12,487       11,179
                                                                        ----------   ----------
          Total current assets                                             121,947      127,358
Property, plant and equipment, net                                         213,475      219,517
Investment in land held for sale                                               990          990
Investment in  limited partnership                                           2,652        2,769
Goodwill, net of accumulated amortization of $24,091 and $19,508           160,395      164,978
Other assets, net                                                            9,564        8,287
                                                                        ----------   ----------
          Total assets                                                  $  509,023   $  523,899
                                                                        ==========   ==========

                       LIABILITIES AND PARTNERS' EQUITY

Current liabilities:
      Bank overdraft                                                    $    5,829   $    7,146
      Accounts payable - trade                                              67,171       71,775
      Payable to Parent                                                        213          639
      Accrued expenses                                                      16,606       18,190
      Current portion of cash bonus plan liability                              --          213
      Current portion of long-term debt                                      6,196        8,086
                                                                        ----------   ----------
          Total current liabilities                                         96,015      106,049

Revolving line of credit                                                     2,000        1,650
Long-term debt                                                             263,943      275,665
Deferred income taxes                                                       59,417       61,944

Commitments and contingencies (Note 7)

Partners' equity:
      Limited partner                                                       86,772           --
      General partner                                                          876           --
      Common stock, $1 par value, 4,500,000 shares authorized
         and 4,126,000 shares issued outstanding                                --        4,162
      Additional paid in capital                                                --       72,620
      Accumulated earnings                                                      --        3,809
      Note receivable from ESOP                                                 --       (2,000)
                                                                        ----------   ----------
          Total partners' equity                                            87,648       78,591
                                                                        ----------   ----------
              Total liabilities and partners' equity                    $  509,023   $  523,899
                                                                        ==========   ==========
</Table>



          See accompanying notes to consolidated financial statements.


                                       19
<PAGE>   22


                             TEXAS PETROCHEMICALS LP

                      CONSOLIDATED STATEMENT OF OPERATIONS
                 (IN THOUSANDS OF DOLLARS, EXCEPT SHARE AMOUNTS)


<Table>
<Caption>
                                                                  YEAR ENDED JUNE 30,
                                                        --------------------------------------
                                                           2001          2000          1999
                                                        ----------    ----------    ----------
<S>                                                     <C>           <C>           <C>
Revenues                                                $  858,718    $  744,725    $  448,155
Cost of goods sold                                         782,004       643,195       374,401
Non-cash ESOP compensation                                     950           570           407
Depreciation and amortization                               24,598        23,800        26,784
                                                        ----------    ----------    ----------
   Gross profit                                             51,166        77,160        46,563

Selling, general and administrative expenses                10,001         9,139         7,916
                                                        ----------    ----------    ----------
        Income from operations                              41,165        68,021        38,647

Interest expense                                            31,664        33,524        33,953

Other income (expense)
   Non-cash change in fair value of derivatives               (561)           --            --
   Loss on disposal of assets                                 (327)           --           (44)
   Other, net                                                  564           (38)        1,320
                                                        ----------    ----------    ----------
                                                              (324)          (38)        1,276
                                                        ----------    ----------    ----------

          Income before income taxes and
          cumulative effect of accounting change             9,177        34,459         5,970

Provision for income taxes                                   2,660        17,956         4,538

Cumulative effect of accounting change
   (net of $221 income tax benefit)                           (410)           --            --
                                                        ----------    ----------    ----------

        Net income                                      $    6,107    $   16,503    $    1,432
                                                        ==========    ==========    ==========


Basic and diluted income per common share:                            $     3.97    $     0.34
                                                                      ==========    ==========


Weighted average shares outstanding                                    4,162,000     4,162,000
                                                                      ==========    ==========
</Table>


          See accompanying notes to consolidated financial statements.


                                       20
<PAGE>   23


                             TEXAS PETROCHEMICALS LP

                   CONSOLIDATED STATEMENT OF PARTNERS' EQUITY
                 (IN THOUSANDS OF DOLLARS, EXCEPT SHARE AMOUNTS)



<Table>
<Caption>
                                                                       ADDITIONAL        NOTE        ACCUMULATED
                              PARTNERS'         COMMON STOCK            PAID IN       RECEIVABLE      EARNINGS
                               EQUITY       SHARES         VALUE        CAPITAL        FROM ESOP      (DEFICIT)        TOTAL
<S>                           <C>         <C>           <C>            <C>            <C>            <C>            <C>
Balance, June 30, 1998                      4,162,000   $     4,162    $    71,643    $    (6,000)   $   (14,126)   $    55,679
Net income                                                                                                 1,432          1,432
Non-cash ESOP compensation                                                     407                                          407
Reduction in ESOP Note                                                                      2,000                         2,000
                                          -----------   -----------    -----------    -----------    -----------    -----------
Balance, June 30, 1999                      4,162,000         4,162         72,050         (4,000)       (12,694)        59,518
                                          -----------   -----------    -----------    -----------    -----------    -----------

Net income                                                                                                16,503         16,503
Non-cash ESOP compensation                                                     570                                          570
Reduction in ESOP Note                                                                      2,000                         2,000
                                          -----------   -----------    -----------    -----------    -----------    -----------
Balance, June 30, 2000                      4,162,000         4,162         72,620         (2,000)         3,809         78,591
                                          -----------   -----------    -----------    -----------    -----------    -----------

Transfer to partners' equity  $  80,591    (4,162,000)       (4,162)       (72,620)                       (3,809)
Net income                        6,107                                                                                   6,107
Non-cash ESOP compensation          950                                                                                     950
Reduction in ESOP Note                                                                      2,000                         2,000
                              ---------   -----------   -----------    -----------    -----------    -----------    -----------
Balance, June 30, 2001        $  87,648            --   $        --    $        --    $        --    $        --    $    87,648
                              =========   ===========   ===========    ===========    ===========    ===========    ===========
</Table>



          See accompanying notes to consolidated financial statements.


                                       21
<PAGE>   24


                             TEXAS PETROCHEMICALS LP

                      CONSOLIDATED STATEMENT OF CASH FLOWS
                            (IN THOUSANDS OF DOLLARS)

<Table>
<Caption>
                                                                       YEAR ENDED JUNE 30,
                                                              --------------------------------
                                                                2001        2000        1999
                                                              --------    --------    --------
<S>                                                           <C>         <C>         <C>
Cash flows from operating activities:
    Net income                                                $  6,107    $ 16,503    $  1,432
    Adjustments to reconcile net income
      to cash flows from operating activities:
    Depreciation of fixed assets                                20,015      18,985      21,924
    Amortization of intangibles                                  4,583       4,815       4,860
    Amortization of debt issue costs and deferred premium        1,207       1,173       1,159
    Deferred income taxes                                       (1,656)      3,628      (1,460)
    Earnings from limited partnership                             (558)       (324)       (775)
    Loss on sale of asset                                          327          --          --
    Non-cash ESOP compensation                                     950         570         407
    Non-cash fair value of derivatives                           1,192          --          --
    Change in:
       Accounts receivable                                       9,756     (24,015)      5,078
       Inventories                                                 383     (15,984)     (2,763)
       Other assets                                             (5,054)      4,741      (4,183)
       Accounts payable, accrued and other                      (7,485)     32,397       8,489
    Distribution received from partnership                         675         375         990
                                                              --------    --------    --------
         Net cash provided by operating activities              30,442      42,864      35,158

Cash flows from investing activities:
    Capital expenditures                                       (13,973)    (18,796)    (14,413)
    Proceeds from asset sales                                      741          --         477
                                                              --------    --------    --------
         Net cash used in investing activities                 (13,232)    (18,796)    (13,936)

Cash flows from financing activities:
    Bank overdraft                                              (1,317)      6,272         874
    Net borrowings (repayments) on revolving line of credit        350        (350)    (10,000)
    Payments on long-term debt                                 (13,295)     (7,465)     (6,979)
    Cash bonus plan payments                                      (213)     (9,557)     (7,807)
    Debt issuance and organizational costs                        (247)       (152)       (163)
    Reduction in note receivable from ESOP                       2,000       2,000       2,000
                                                              --------    --------    --------
         Net cash used in financing activities                 (12,722)     (9,252)    (22,075)
                                                              --------    --------    --------

Net increase (decrease) in cash and cash equivalents             4,488      14,816        (853)

Cash and cash equivalents, beginning                            14,919         103         956
                                                              --------    --------    --------

Cash and cash equivalents, ending                             $ 19,407    $ 14,919    $    103
                                                              ========    ========    ========
</Table>


          See accompanying notes to consolidated financial statements.


                                       22
<PAGE>   25


                             TEXAS PETROCHEMICALS LP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  THE COMPANY

      On July 1, 2000 the Texas Petrochemicals LP converted its legal form from
a corporation to a limited partnership pursuant to the conversion provisions of
the Texas Business Corporation Act and the Texas Revised Limited Partnership
Act. TPC Holding Corp., the Company's immediate parent prior to the conversion,
retained a direct 1% ownership interest in the partnership and became its sole
general partner. Petrochemical Partnership Holdings, Inc., a new wholly owned
subsidiary of TPC Holding Corp., acquired the remaining 99% ownership interest
and simultaneously became a limited partner of the partnership. This change has
no effect on the current management of the Company or its existing operations.
The Texas Business Corporation Act provides that the effect of the conversion is
that the Company as a legal entity continues to exist, without interruption, but
in the organizational form of a Texas limited partnership rather than in the
prior organizational form of a Texas corporation. As a result of the above
equity restructuring there was no change in the carrying values of the Company's
assets and liabilities.

      The Company through its facility in Houston, Texas is one of the largest
producers of butadiene, the largest producer of butene-1, and the third largest
producer of methyl tertiary-butyl ether ("MTBE") in North America. In addition,
the Company is the sole producer of diisobutylene and isobutylene concentrate in
the United States and is the largest domestic merchant supplier of high purity
isobutylene to the chemical market. The Company's products include: (i)
butadiene, primarily used to produce synthetic rubber; (ii) MTBE, used as an
oxygenate and octane enhancer in gasoline; (iii) alkylate, used as a gasoline
blend component; (iv) n-butylenes (butene-1 and butene-2), used in the
manufacture of plastic resins, fuel additives and synthetic alcohols; (v)
specialty isobutylenes, primarily used in the production of specialty rubbers,
lubricant additives, detergents and coatings; and (vi) polyisobutylenes, used in
the production of fuel and lube additives, adhesives, sealants and packaging.

      The Company's principal feedstocks are crude butadiene, isobutane and
methanol. The Company purchases a significant portion of its crude butadiene
requirements at prices, which are adjusted based on the Company's selling price
of butadiene as well as the cost of natural gas used to produce butadiene,
thereby providing the Company with a fixed profit on such sales. Methanol and
isobutane are purchased at prices linked to prevailing market prices.


2.  SIGNIFICANT ACCOUNTING POLICIES

   Principles of Consolidation

      The consolidated financial statements include the accounts of Texas
Petrochemicals LP and its wholly owned subsidiary, Texas Butylene Chemical
Company, (collectively referred to as the "Company"). Intercompany accounts and
transactions have been eliminated in consolidation.

Cash and Cash Equivalents

      The Company considers all highly liquid investments with a maturity of
three months or less at the date of purchase to be cash equivalents.


                                       23
<PAGE>   26


                             TEXAS PETROCHEMICALS LP

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

Inventories

         Inventories consist of raw materials, finished goods and chemicals used
in processing and are valued at the lower of average cost or market.

         The Company may enter into product exchange agreements with suppliers
whereby certain inventories are exchanged for raw materials. These exchanges are
recorded at the lower of cost or market. Any resulting gains or losses from the
utilization of these exchanges are reflected in cost of chemical products sold.
Balances related to quantities due to or payable by the Company are included in
inventory.

Investment in Limited Partnership

         The Company and Hollywood Marine, Inc. formed a limited partnership,
Hollywood/Texas Petrochemicals, Ltd., to operate four barges capable of
transporting chemicals. The Company is a 50% limited partner in the limited
partnership. The Company accounts for this investment under the equity method
and records its portion of the limited partnership's net income as other income
in the accompanying statement of operations. Summarized financial information of
the partnership has not been presented because the Company's investment in and
its proportionate share of the partnership's operations are not material.

Long-Lived Assets

         Property, plant and equipment are recorded at cost. Turnaround costs
for major units of the manufacturing facilities are capitalized and amortized
over the life of the turnaround. Maintenance and repairs are charged to expense
as incurred while significant improvements are capitalized. Upon retirement or
sale of an asset, the asset and the related accumulated depreciation are removed
from the accounts and any resulting gain or loss is reflected in operations.

         Depreciation of property, plant and equipment is computed using the
straight-line method over their estimated useful lives ranging from 3 to 31
years. In January 1999, the estimated useful lives of certain plant assets were
increased from 10 years to 15 years based on engineering analysis. This change
was accounted for as a change in accounting estimate and resulted in a $4.2
million decrease in depreciation expense for fiscal year 1999.

         Goodwill represents the excess of purchase price paid over the value
assigned to the net tangible and identifiable intangible assets of a business
acquired. Goodwill has been amortized over 40 years using the straight-line
method. However, effective July 2001, the Company plans to early adopt SFAS No.
142, "Goodwill and Other Intangible Assets" and goodwill will no longer be
amortized. Instead goodwill will be tested for impairment.

         Debt issue costs relating to the Company's long-term debt are amortized
to interest expense over the scheduled maturity of debt utilizing the effective
interest method. Other assets include patents which are amortized using the
straight-line method over their useful lives ranging from 2 to 7 years.

         The Company reviews long-lived assets for impairment whenever events or
changes in circumstances indicate that the carrying amount of such assets may
not be recoverable, in accordance with SFAS No. 121 "Accounting for Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed Of." If the
undiscounted future cash flows of such assets are less than the carrying amount,
the


                                       24
<PAGE>   27


                             TEXAS PETROCHEMICALS LP

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


carrying amount is reduced to fair value and an impairment loss is recognized.
Assets held for sale are carried at the lower of cost or fair value less cost to
sell.

Revenue Recognition

         The Company recognizes revenue from sales of refined products in the
period of delivery.

Income Taxes

         The Company accounts for income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes," which requires that deferred taxes be provided at
enacted tax rates on temporary differences between the carrying amounts of
assets and liabilities for financial and tax reporting purposes. The Company's
Parent files a consolidated federal tax return for all of its subsidiaries. The
Parent's tax allocation policy provides for the Company to calculate its own
provision on a "separate return basis" and amounts payable and/or receivable are
reflected in intercompany accounts.

Employee Stock Ownership Plan

         The balance of the note receivable from the Employee Stock Ownership
Plan (See Note 8), has been reported as a contra account in the partners' equity
section of the balance sheet. The Company has recognized as non-cash ESOP
compensation, the increase in the fair value of the common stock as those shares
were allocated to participants' accounts with the corresponding offset credited
to the partners' equity section.

Financial Derivative Instruments

         Outstanding financial derivative instruments are recorded on the
balance sheet at their fair value. Changes in the fair value of financial
derivative instruments are recognized immediately in earnings as these
instruments are not designated as part of hedged transactions.

Management Estimates

         The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Reclassifications

         Certain reclassifications have been made to previously issued financial
statements to conform to the current presentation.



                                       25
<PAGE>   28



                             TEXAS PETROCHEMICALS LP

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


Recently Issued Accounting Pronouncements

         In June 1998 the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Certain Hedging Activities." In June 2000 the FASB issued SFAS
No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging
Activity, an Amendment of SFAS 133." SFAS No. 133 as amended by SFAS No. 138
requires that all derivative instruments be recorded on the balance sheet at
their respective fair values. Changes in the fair value of derivatives are
recorded each period in current earnings or other comprehensive income,
depending on whether the derivative is designated as part of a hedge transaction
and, if it is, the type of hedge transaction. The Company adopted SFAS No. 133
and SFAS No. 138 on July 1, 2000. Upon adoption of SFAS No. 133 and 138 the
Company's management decided not to designate any of its derivative instruments
as part of hedge transactions. Accordingly, during the first quarter of fiscal
2001 the Company recorded a net-of-tax cumulative-effect loss of $0.4 million
into earnings to recognize at fair value all derivative instruments.

         In December 1999 the U.S. SEC issued SAB 101, "Revenue Recognition in
Financial Statements," which summarizes the SEC's views in applying generally
accepted accounting principles to revenue recognition. The bulletin was
effective for the Company's fourth quarter of 2001. The company has determined
that SAB 101's revenue recognition guidelines are consistent with the Company's
existing revenue recognition policies; therefore, SAB 101 did not have an impact
on the Company's consolidated financial statements.

         In May 2000 the EITF of the FASB reached a consensus with respect to
EITF Issue 00-10, "Accounting for Shipping and Handling Fees and Costs." EITF
00-10 recognizes the inconsistencies in practice of the recording of shipping
and handling costs incurred by most companies that sell goods. The issue was
effective for the Company's fourth quarter of 2001. The adoption of this issue
did not have an impact on the Company's consolidated financial statements.

         In July 2001 the FASB issued SFAS No. 142, "Goodwill and Other
Intangible Assets." Under this standard goodwill will no longer be amortized but
will be tested for impairment as set forth in the statement. The Company plans
to early adopt this statement for fiscal year beginning July 2001. The Company's
management does not anticipate an impairment of goodwill upon adoption of this
statement. Amortization of goodwill for the prior two fiscal years totaled $4.6
million and $4.6 million, respectively.


3.  DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS (IN THOUSANDS OF DOLLARS)

INVENTORIES:

<Table>
<Caption>
                                                             JUNE 30,
                                                 -------------------------------
                                                     2001                2000
                                                 ------------       ------------
<S>                                              <C>                <C>
         Finished goods                          $     13,583       $     18,505
         Raw materials                                 20,497             15,915
         Chemicals and supplies                         1,494              1,537
                                                 ------------       ------------
                                                 $     35,574       $     35,957
                                                 ============       ============
</Table>


                                       26
<PAGE>   29
                             TEXAS PETROCHEMICALS LP

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


OTHER CURRENT ASSETS:
<Table>
<Caption>
                                                             JUNE 30,
                                                 -------------------------------
                                                      2001               2000
                                                 ------------       ------------
<S>                                              <C>                <C>
         Catalyst inventory                      $      5,389       $      7,402
         Other receivables                              4,929                 --
         Prepaid and other                              2,169              3,777
                                                 ------------       ------------
                                                 $     12,487       $     11,179
                                                 ============       ============
</Table>

PROPERTY, PLANT AND EQUIPMENT:

<Table>
<Caption>
                                                             JUNE 30,
                                                 -------------------------------
                                                      2001               2000
                                                 ------------       ------------
<S>                                              <C>                <C>
         Chemical plant                          $    300,379       $    295,124
         Construction in progress                      17,704              9,233
         Other                                          5,839              5,592
                                                 ------------       ------------
                                                      323,922            309,949
         Less accumulated depreciation                110,447             90,432
                                                 ------------       ------------
                                                 $    213,475       $    219,517
                                                 ============       ============
</Table>

ACCRUED EXPENSES:
<Table>
<Caption>
                                                             JUNE 30,
                                                 -------------------------------
                                                      2001               2000
                                                 ------------       ------------
<S>                                              <C>                <C>
         Accrued interest                        $     12,439       $     13,780
         Property and sales taxes                       2,320              2,218
         Other                                          1,847              2,192
                                                 ------------       ------------
                                                 $     16,606       $     18,190
                                                 ============       ============
</Table>

4.  LONG-TERM DEBT
<Table>
<Caption>
                                                             JUNE 30,
                                                 -------------------------------
                                                      2001               2000
                                                 ------------       ------------
<S>                                              <C>                <C>
       Bank Credit Agreement:
         Term A Loan                             $      8,237       $     14,402
         Term B Loan                                   35,295             40,421
         ESOP Loan                                         --              2,000
         Revolving Credit Loans                         2,000              1,650
       Senior Subordinated Notes                      225,000            225,000
       Deferred premium on Senior
          Subordinated Notes                            1,607              1,928
                                                 ------------       ------------
                                                      272,139            285,401
         Less current maturities                        6,196              8,086
                                                 ------------       ------------
         Long-term debt                          $    265,943       $    277,315
                                                 ============       ============
</Table>

                                       27
<PAGE>   30
                             TEXAS PETROCHEMICALS LP

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


         The Bank Credit Agreement originally provided for term loans in the
amount of $130 million, an ESOP loan of $10 million, and a revolving credit
facility of up to $40 million. Quarterly principal and interest payments are
made under the Bank Credit Agreement. The final payments under the Term A Loan
and Term B Loan are due on December 31, 2002 and June 30, 2004, respectively.
The final payment under the ESOP Loan was made on June 30, 2001. The Revolving
Credit Loan facility is currently scheduled to expire on December 31, 2002. The
debt under the Bank Credit Agreement bears interest, at the option of the
borrower, based on the LIBOR rate plus a margin (2% and 3% at June 30, 2001 and
1.75% and 3% at June 30, 2000) or the greater of the prime rate and the federal
funds rate plus 1/2% plus a margin (.75% at June 30, 2001 and June 30, 2000).
Substantially all assets of the Company are pledged as collateral under the Bank
Credit Agreement. The Senior Subordinated Notes are due 2006 and bear interest
at 11 1/8% payable semiannually on January 1 and July 1. The Bank Credit
Agreement and the Senior Subordinated Notes include certain restrictive
covenants, which include but are not limited to, limitations on capital
expenditures, indebtedness, investments and sales of assets and subsidiary
stock. Additionally, the Bank Credit Agreement requires the Company to maintain
certain financial ratios. In September 2000, in compliance with the excess cash
flow provisions, the Company made a prepayment of $5.7 million towards the term
loans under the Bank Credit Agreement. In March 2001, the Company obtained an
amendment to the Bank Credit Agreement related to certain financial ratios and
capital expenditure limitations.

         The fair value of the Senior Subordinated Notes, based on quoted market
prices, was approximately $200 million and $191 million as of June 30, 2001
and 2000, respectively. The long-term debt under the Bank Credit Agreement
carries a floating interest rate, therefore, the Company estimates that the
carrying amount of such debt was not materially different from its fair value as
of June 30, 2001 and 2000.

         In February 1998 the Company entered into a three-year swap agreement
for $125 million of its Senior Subordinated Notes. The swap agreement
effectively converted a portion of the 11 1/8% fixed rate Senior Subordinated
Notes to a floating debt with a structured collar. In addition, in June 1998 the
Company entered into a three-year interest rate cap for $64 million of its
senior debt under the Bank Credit Agreement. The cap effectively converted a
portion of the Company's floating rate bank debt to a fixed rate of 6.75% plus
the margin if LIBOR rates are set above 6.75%. During the current fiscal year
both of the preceding interest rate swap agreements were settled, which resulted
in $0.2 million of reduced interest expense for the current year.

         The aggregate scheduled maturities outstanding debt for the succeeding
five years are as follows:

<Table>
<Caption>
                      FISCAL YEAR
                      -----------
<S>                                                     <C>
                           2002                         $  6,196
                           2003                           17,277
                           2004                           22,059
                           2005                               --
                           2006                          225,000
</Table>



                                       28
<PAGE>   31
                             TEXAS PETROCHEMICALS LP

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


5.  FEDERAL AND STATE INCOME TAXES

      Significant components of the Company's deferred tax assets and
liabilities at June 30, 2001 and June 30, 2000 are as follows (in thousands of
dollars):

<Table>
<Caption>
                                                            JUNE 30,
                                                    ------------------------
                                                       2001          2000
                                                    ----------    ----------
<S>                                                 <C>           <C>
Deferred tax asset (liability) - current:
    Cash bonus plan                                 $       --            74
    Turnaround costs                                    (1,029)         (159)
    Other                                                 (742)         (816)
                                                    ----------    ----------
         Total current                              $   (1,771)   $     (901)
                                                    ==========    ==========

Deferred tax asset (liability) - noncurrent:
    Capital loss carryforward                       $    3,986    $    3,872
    Investment in land                                     701           701
    Property, plant and equipment                      (61,829)      (64,275)
    Other                                                 (203)         (170)
                                                    ----------    ----------
                                                       (57,345)      (59,872)
    Valuation allowance                                 (2,072)       (2,072)
                                                    ----------    ----------
         Total noncurrent                           $  (59,417)   $  (61,944)
                                                    ==========    ==========
</Table>

      The Company recognized a $2.1 million valuation allowance in fiscal year
2000 for uncertainties in realizing the benefits of a portion of the capital
loss carryforward, which expires by fiscal year 2003. The Company expects to
utilize the remaining portion of the capital loss carryforward, which expires in
fiscal year 2004.

      The current deferred tax asset (liability) is included in other current
assets in the accompanying balance sheet. The provision for federal and state
income taxes is comprised of the following (in thousand of dollars):

<Table>
<Caption>
                                                                YEAR ENDED JUNE 30,
                                               -----------------------------------------------------
                                                   2001                 2000                 1999
                                               ------------        -------------        ------------
<S>                                            <C>                 <C>                  <C>
Current:
      Federal                                  $      6,112        $      12,308        $      5,296
      State                                          (1,796)               2,020                 702
                                               ------------        -------------        ------------
                                                      4,316               14,328               5,998
                                               ------------        -------------        ------------
Deferred:
      Federal                                        (1,656)               3,628              (1,460)
      State                                              --                   --                  --
                                               ------------        -------------       -------------
                                                     (1,656)               3,628              (1,460)
                                               ------------        -------------        ------------
          Total provision
              for income taxes                 $      2,660        $      17,956        $      4,538
                                               ============        =============        ============
</Table>

      The provision for income taxes differs from the amount computed by
applying the statutory federal income tax rate to income before income taxes.
The reasons for this difference are as follows:


                                       29
<PAGE>   32
                             TEXAS PETROCHEMICALS LP

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

<Table>
<Caption>
                                                              YEAR ENDED JUNE 30,
                                                     ---------------------------------
                                                       2001         2000        1999
                                                     --------     --------    --------
<S>                                                  <C>          <C>         <C>
Statutory federal income tax rate                          35%          35%         35%
Computed "expected" federal income tax               $  3,212     $ 12,061    $  2,090
Increase in tax resulting from:
      State income taxes, net of
         federal benefit                                             1,313         456
      Valuation allowance                                            2,072
      Income tax refund receivable                     (2,324)
      Other, net                                         (164)         707         388
      Amortization of goodwill and other                1,936        1,803       1,604
                                                     --------     --------    --------
Provision for income taxes                           $  2,660     $ 17,956    $  4,538
                                                     ========     ========    ========
</Table>

6.  SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

     Cash paid for interest and income taxes are as follows (in thousands of
dollars):

<Table>
<Caption>
                                                                YEAR ENDED JUNE 30,
                                               ----------------------------------------------------
                                                  2001                 2000                 1999
                                               -----------        ------------          -----------
<S>                                            <C>                <C>                   <C>
      Interest                                 $    33,005        $     32,479          $    34,641
      Income taxes                                   2,865              16,407                6,897
</Table>

7.  COMMITMENTS AND CONTINGENCIES

LEASE COMMITMENTS

      The Company leases tank cars under noncancelable operating leases. Under
the terms of the lease agreements, the Company was reimbursed by customers at a
fixed rate per mile, based on the distance the tank cars travel. Reimbursements
were approximately $0.3 million, $0.7 million and $0.5 million for the three
years ended June 30, 2001.

       Total rent expense was approximately $5.5 million, $4.4 million and
$4.6 million, net of reimbursements described above, for the three years ended
June 30, 2001, respectively. Future minimum lease payments under noncancelable
operating leases consist of the following at June 30, 2001 (in thousands of
dollars):

<Table>
<Caption>
                      FISCAL YEAR
                      -----------
<S>                                                                    <C>
                          2002                                         $  6,002
                          2003                                            4,723
                          2004                                            3,160
                          2005                                            2,644
                          2006                                            1,500
                                                                       --------

                      Total minimum lease payments                     $ 18,029
                                                                       ========
</Table>


                                       30
<PAGE>   33


                             TEXAS PETROCHEMICALS LP

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


PURCHASE COMMITMENTS

         The Company has purchase commitments incident to the ordinary conduct
of business. The prices of such purchase commitments are based on formulas,
which are determined from the prevailing market rate for such products. These
commitments generally have cancellation provisions given proper notification.

LITIGATION

         The Company is involved in various routine legal proceedings which are
incidental to the business. Management of the Company is vigorously defending
such matters and is of the opinion that their ultimate resolution will not have
a material adverse impact on the Company's financial position, results of
operations or cash flows.

         The Company received a Notice of Violation ("NOV") on March 10, 2000
from the EPA relating to certain discrepancies alleged to have been found during
routine inspections conducted by EPA in 1995 and 1997. The NOV led to the filing
of a judicial complaint against the Company. The Company vigorously disputed the
factual and legal basis of the NOV and settlement negotiations were initiated.
The EPA, the Department of Justice, and the Company are currently finalizing a
settlement that will entail a civil penalty and the installation of vapor
controls on three organic liquid storage vessels on or before October 1, 2002.
The anticipated settlement of such issues is not expected to have a material
adverse impact on the Company's financial condition, results of operations or
cash flows.

         Legal actions have been filed in several states for recovery for
alleged property damage and/or costs of remediation and replacement of water
supplies due to the presence of MTBE. As of this point in time, the Company has
not been named in any of these actions; however, no assurance can be given that
the Company will not be named in these or other future actions.

ENVIRONMENTAL REGULATION

         The Company's operations are subject to federal, state and local laws
and regulations administered by the EPA, the U.S. Coast Guard, the Army Corps of
Engineers, the TNRCC, the Texas General Land Office, the Texas Department of
Health and various local regulatory agencies. The Company holds all required
permits and registrations necessary to comply substantially with all applicable
environmental laws and regulations, including permits and registrations for
wastewater discharges, solid and hazardous waste disposal and air emissions, and
management believes that the Company is in substantial compliance with all such
laws and regulations. While management does not expect the cost of compliance
with existing environmental laws will have a material adverse effect on the
Company's financial condition, results of operations or cash flows, there can be
no assurance that future legislation, regulation or judicial or administrative
decisions will not have such an effect.

         Under federal and state environmental laws, companies may be liable for
remediation of contamination at on-site and off-site waste management and
disposal areas. Management believes that


                                       31
<PAGE>   34


                             TEXAS PETROCHEMICALS LP

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


the Company is not likely to be required to incur material remediation costs
related to its management, transportation and disposal of solid and hazardous
materials and wastes, or to its pipeline operations.

         There continues to be action in Congress to impact the use of MTBE in
gasoline. The most prevalent legislative proposals would ban MTBE, eliminate the
oxygen requirement of the CAA and require the use of ethanol as a
gasoline-blending component. The Company is not able to predict whether such
legislation will be adopted. If adopted, however, such legislation would be
expected to materially reduce MTBE demand and the Company's financial results.


8.  EMPLOYEE BENEFITS

PROFIT SHARING PLAN

         The Company has a profit sharing plan that covers all full-time
employees that have completed 90 days or more of service. Employees can
contribute up to 10% of their base compensation to a tax deferred fund. The
Company matches at the rate of $.25 per one dollar contributed by the employee
up to 6% of the employee's base compensation. The Company's expense to match
employee contributions was approximately $0.2 million for each of the
proceeding three years, respectively. Additionally, the Company made additional
discretionary contributions to the plan, which amounted to approximately $2.3
million, $2.3 million and $2.0 million, for the three years ended June 30, 2001,
respectively. The Company's contributions vest with the employee at a rate of
20% per year.

EMPLOYEE STOCK OWNERSHIP PLAN

         In connection with the Acquisition, the Parent established an Employee
Stock Ownership Plan (the "ESOP"), covering substantially all full-time
employees of the Company. The ESOP borrowed $10 million under the Bank Credit
Agreement to purchase 100,000 shares of the Parent's Common Stock at the closing
of the Acquisition. The shares of Common Stock purchased by the ESOP were
pledged as security for the ESOP Loan, and such shares were released and
allocated to ESOP participants' accounts as the ESOP Loan was discharged. For
employees whose employment commenced prior to October 1, 1996 and who have
attained 21 years, participation begins as of the Acquisition date or the date
of commencement of the participant's employment. A participant's ESOP account
vests at the rate of 20% per year. The Company's contributions to the ESOP,
which are used to retire principal and pay interest on the loan was reported as
compensation expense. Principal and interest payments made for the three years
ended June 30, 2001 amounted to $2.1 million, $2.2 million and $2.4 million,
respectively. As of June 30, 2001 the ESOP Loan was paid in full and all 100,000
shares have been allocated to employees.

CASH BONUS PLAN LIABILITY

         In connection with the Acquisition, the Predecessor established the
$35 million Cash Bonus Plan covering substantially all employees of the
Predecessor (or certain affiliates of the Predecessor) and covering the
employees of certain third-party contractors who had contributed to the past
success of the Predecessor. All participants of the plan as of July 2, 1996 were
distributed 10% of the cash bonus in August 1996, and the remaining amount was
paid in sixteen quarterly installments which began in October 1996. In July 2000
the remaining $0.2 million was paid, which fully retired the debt.


                                       32
<PAGE>   35
                             TEXAS PETROCHEMICALS LP

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


9.       RELATED PARTY TRANSACTIONS

         In March 2001 the Company renegotiated a loan to its Director of
Research in the amount of $0.2 million of which $0.2 million remained
outstanding as of June 30, 2001. The loan carries an interest rate of 8%.

         In June 1998 the Company issued a loan of $0.2 million to its
Executive Vice President and Chief Financial Officer which was paid in full
during fiscal year 2000. The proceeds from the loan were utilized to purchase
outstanding shares of the Parent's common stock at fair market value. The loan
carried an interest rate of 7%.

         During fiscal 1999 the Company made payments totaling $0.3 million to
a consulting firm whose majority shareholder is also an outside director and
security holder of the Company. No such expenditures were made in fiscal year
2001 and 2000. The Chairman of the Company receives annual compensation of $0.2
million for consulting services provided to the Company and reimbursements of
approximately $25,000 per year for office expenses.

10.      CONCENTRATION OF CREDIT RISK

         The Company sells its products primarily to chemical and petroleum
based companies in North America. For the three years ended June 30, 2001
approximately 38%, 34% and 34%, respectively, of the Company's sales were to
four customers. The Company had one customer who represented 11% of sales during
the years ended June 30, 2001 and 1999 and another customer who represented 14%
of sales during the years ended June 30, 2000 and 1999. The Company performs
ongoing credit evaluations of its customers and generally does not require
collateral for accounts receivable. The Company's credit losses have been
minimal.

         The Company maintains its cash deposits and short-term investments with
a major bank and a financial services company which at certain times exceed the
federally insured limits. Management assesses the financial condition of these
institutions and believes that any possible credit loss is remote.


11.      FINANCIAL INSTRUMENTS

         At June 30, 2001 the Company estimated that the carrying value and fair
value of its financial instruments, other than long-term debt (See Note 4), were
approximately equal due to the short-term nature of the instruments. Such
instruments include cash and cash equivalents, accounts receivable and accounts
payable.

         The Company enters into certain derivative financial instruments as
part of its interest rate risk management and commodity price risk management.
See Note 4 for a discussion of interest rate derivative financial instruments.
At June 30, 2001 the Company had natural gas swap contracts outstanding with
notional volumes totaling 1.3 mmbtus and other outstanding commodity swap
contracts with notional volumes totaling 0.1 million barrels. All of these
commodity contracts mature


                                       33
<PAGE>   36


                             TEXAS PETROCHEMICALS LP

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


within twelve months. The differential has been paid or received as interest
rates change is accrued and recognized as an adjustment to interest expense. The
fair value of financial derivative instruments are the amounts at which they
could be settled based on estimates from dealers. As of June 30, 2001 reporting
the estimated fair values of the outstanding commodity derivative instruments
resulted in a loss of approximately $1.2 million. All interest rate derivative
instruments were settled during the current fiscal year.


ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

         On September 13, 2000 the Audit Committee of the Board of Directors of
the Company recommended and approved and the Company's Board of Directors
approved, the engagement of PricewaterhouseCoopers LLP ("PwC") to audit the
consolidated financial statements of the Company for the fiscal year ending June
30, 2001. Accordingly, the engagement of Deloitte & Touche LLP ("D&T") as the
Company's auditors was discontinued. D&T's reports on the Company's consolidated
financial statements for the two years ended June 30, 2000 did not contain an
adverse opinion or disclaimer of opinion, and were not qualified or modified as
to uncertainty, audit scope or accounting principles. In connection with the
audits of the Company's consolidated financial statements for the two years
ended June 30, 2000, and during the subsequent interim period preceding such
dismissal, (i) the Company had no disagreements with D&T on any matter of
accounting principles or practices, financial statement disclosure or auditing
scope or procedure, (ii) D&T did not advise the company of any "reportable
events" as defined in Item 304(a)(1)(v) of Regulation S-K under the Securities
Exchange Act of 1934, and (iii) the Company did not consult with D&T on any
accounting, auditing or financial reporting matters.

         In connection with the audits of the Company's consolidated financial
statements for the year ended June 30, 2001, (i) the Company had no
disagreements with PwC on any matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedure which, if not
resolved to the satisfaction of PwC, would have caused PwC to make reference to
the matter in their reports; and (ii) there were no "reportable events" as
defined in Item 304(a)(1)(v) of Regulation S-K under the Securities Exchange Act
of 1934.


                                       34
<PAGE>   37

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The following table sets forth certain information concerning the
directors and executive officers of the Company. Each director is elected for a
one-year term or until such person's successor is duly elected and qualified.

<Table>
<Caption>
                                                                                            Years of
                                                                                        service with the
                                                                                             Company
Name                        Age    Position                                            or its predecessors
----                        ---    --------                                            -------------------
<S>                         <C>    <C>                                                 <C>
Hunter W. Henry Jr.          73    Director                                                     3
William A. McMinn            71    Director and Chairman                                       17
Steve A. Nordaker            54    Director                                                     4
Susan O. Rheney              42    Director                                                     5
Gary L. Rosenthal            52    Director                                                     3
John T. Shelton              70    Director                                                    17
Guy E. Sutherland            65    Director                                                     2
B. W. Waycaster              62    Director, President and Chief Executive Officer              9
Carl S. Stutts               54    Executive Vice President, Chief Financial Officer            3
Stephen R. Wright            53    Sr. Vice President, Secretary and General Counsel            5
William F. Howard            58    Sr. Vice President Operations                               25
</Table>


         Mr. Henry has held various manufacturing and management positions in
the Dow Chemical Company, including Vice President - Business Operations for
Latin America, Vice President - Manufacturing Dow Badische, General Manager -
Michigan Division, President - Dow Brazil, President - Dow USA and Executive
Vice President of Dow Chemical Company (1982 - 1988). Mr. Henry was on Dow's
board from 1979 to 1993 and has served on the Executive, Compensation, Health
and Safety Committees and as Chairman of the Finance and Investment Policy
Committee. Mr. Henry also served as Chairman of the Board of Dowell
Schlumberger, 1985 - 1988.

         Mr. McMinn has been Chairman of the Board of the Company since 1996. He
was Corporate Vice President and Manager of the Industrial Chemical Group of FMC
Corporation, a manufacturer of machinery and chemical products, from 1973
through 1985. He became President and Chief Executive Officer of Cain Chemical
Inc., a producer of petrochemicals, in 1987 and served in that capacity until
its acquisition by Occidental Petroleum in May 1988. He became Chairman of the
Board of Directors of Arcadian Corporation in August 1990 and served in that
capacity until it was sold in April 1997. Mr. McMinn currently serves on the
board of Lexicon Genetics, Inc.

         Mr. Nordaker has been a Managing Director of J.P. Morgan Securities
Inc. or predecessor merged entities since August 1995. From 1982 to 1995, he was
a Group Manager at Texas Commerce Bank National Association and, in addition,
served in several capacities at Texas Commerce Bank in the Energy Group,
including Section Manager and Division Manager. From May 1977 to March 1982, Mr.
Nordaker was a Manager of Projects for The Frantz Company, an engineering
consulting firm servicing the oil refinery and petrochemical industry. Prior
thereto, he was a chemical engineer with Universal Oil Products. Mr. Nordaker
serves on the Board of Directors as the Designee of J.P. Morgan Partners, an
affiliate of J.P. Morgan Securities.


                                       35
<PAGE>   38


         Ms. Rheney is an independent investor. Ms. Rheney was a principal of
The Sterling Group, Inc., an investment banking firm specializing in leveraged
buyouts from 1992 to 2000. Ms. Rheney is also a director of American Plumbing &
Mechanical, Inc.

         Mr. Rosenthal has served as President of Heaney Rosenthal, Inc. which
focuses on investment, acquisition and advice to various businesses since 1994.
Mr. Rosenthal currently serves as a director for Oil States International, Inc.,
Dresser Inc., and Jackson Products Company, Inc. and previously served as
Chairman of the Board (1990-1994) and CEO (1994) of Wheatley TXT Corp.

         Mr. Shelton previously served as Vice Chairman of the Board, Executive
Vice President and Chief Operations Officer of the Company from 1983 to 1996.
Prior thereto, Mr. Shelton held various positions in the chemicals industry
including Vice President - Manufacturing of Oxirane Corporation and Manager -
Manufacturing/Engineering of Atlantic Richfield Company.

         Mr. Sutherland has held various management positions in Phillips
Petroleum Company including President, Phillips Driscopipe, President, Applied
Automation, Vice President, Chemicals and Senior Vice President Phillips
Chemical Company. Mr. Sutherland was employed by Phillips for 41 years and spent
time on Wall Street for the Company as well as in Washington, DC where he was on
loan to the government as part of the Presidents Executive Exchange Program. He
was Chairman of the NPRA Petrochemical Committee and on the Executive Committee
of the NPRA and was active in CMA. He currently serves on the Board of
WeststarBank, member Arvest Group, the Advisory Board of ChemConnect, Inc. and
as Managing Member of Sutherland-Wheeler Farm LLC.

         Mr. Waycaster has been President and Chief Executive Officer of the
Company since 1992. Prior thereto, Mr. Waycaster spent 27 years with The Dow
Chemical Company and was serving as Vice President of the Hydrocarbons and
Resources when he left to join the Company. Mr. Waycaster is a Board member of
the American Chemistry Council, National Petrochemical and Refiners Association,
and serves on the Advisory Board of ChemConnect, Inc.

         Mr. Stutts joined the Company in April 1998 as CFO, Vice President of
Finance and Corporate Development, and in March 2000 was promoted to Executive
Vice President. Previously, he was a general partner of Columbine Venture Funds,
an institutional venture capital fund focusing on investments in early stage
companies. From 1971 to 1988 he held various management positions in Tenneco,
Inc. and its subsidiary companies. He is on the Board and the Compensation
Committee of Bolder Technologies Corp.

         Mr. Wright joined the Company in August 1996 as Vice President and
General Counsel. From January 1996 until he joined the Company, Mr. Wright was
engaged in the private practice of law, either as a sole practitioner or of
counsel to Andrews & Kurth, L.L.P. For over five years prior thereto, Mr. Wright
was the Vice President and General Counsel or the Senior Vice President and
General Counsel of Destec Energy, Inc. In July 1999, he was named Senior Vice
President for Law and Administration.

         Mr. Howard has been Vice President Operations of the Company since July
1999, and he was promoted to Senior Vice President Operations in March 2000. He
joined the Company in 1976 and has held various positions in Manufacturing and
Maintenance. Prior to 1976, Mr. Howard was with Exxon Chemical Company. Mr.
Howard has 30 years of experience in the chemicals industry.


                                       36
<PAGE>   39
COMPENSATION OF DIRECTORS

         Directors of the Company who are not employees of the Company receive
an annual retainer of $15,000 and a fee of $500 for each meeting of the Board or
any committee thereof that they attend. Directors who are also employees of the
Company do not receive Director compensation.

ITEM 11.  EXECUTIVE COMPENSATION

         The following table sets forth the total value of compensation received
by the Chief Executive Officer and the three most highly compensated executive
officers, other than the Chief Executive Officer, who served as executive
officers of the Company for the three years ended June 30, 2001.


                           SUMMARY COMPENSATION TABLE

<Table>
<Caption>
Name and Principal Position                         Year(1)          Salary            Bonus
---------------------------                         -------          ------            -----
<S>                                                 <C>            <C>                <C>
B. W. Waycaster, President and
  Chief Executive Officer                           2001           $  420,000         $  588,325
                                                    2000              300,000            575,436
                                                    1999              300,000            459,156

Carl S. Stutts, Executive Vice President,
  Chief Financial Officer                           2001           $  228,000         $  319,683
                                                    2000              175,000            335,671
                                                    1999              175,000            267,841

Stephen R. Wright, Senior Vice
  President, Secretary and
  General Counsel                                   2001           $  192,000         $  283,683
                                                    2000              180,000            345,272
                                                    1999              180,000            275,494


William F. Howard, Senior Vice President
  Operations                                        2001           $  174,000         $  253,976
                                                    2000              150,000            223,763
</Table>


----------

(1)  None of the executive officers have received perquisites, the value of
     which exceeded the lesser of $50,000 or 10% of the salary and bonus of such
     executive officer.


                                       37
<PAGE>   40


ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         Texas Petrochemicals LP is a limited partnership wholly owned by
Petrochemical Partnership Holdings, Inc., as the limited partner and TPC Holding
Corp., as the general partner. Petrochemical Partnership Holdings, Inc. is a
wholly owned subsidiary of TPC Holding Corp. which is owned by Texas
Petrochemical Holdings, Inc.

         The following information is given respect to partner's interest in
Texas Petrochemicals LP as of June 30, 2001.


<Table>
<Caption>
           Name and Address of                              Nature of
           Beneficial Owner                              Beneficial Owner                 Beneficial Interest
      ---------------------------                   --------------------------        -------------------------
<S>                                                 <C>                               <C>
      Petrochemical Partnership Holdings, Inc.            Limited Partner                         99%
      300 Delaware Ave. Suite 900
      Wilmington, Delaware 19801

      TPC Holding Corp.                                   General Partner                          1%
      Three Riverway, Suite 1500
      Houston, TX  77056
</Table>


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

RELATED PARTY TRANSACTIONS

         In March 2001 the Company renegotiated a loan to its Director of
Research in the amount of $0.2 million of which $0.2 million remained
outstanding as of June 30, 2001. The loan carries an interest rate of 8%.

         In June 1998 the Company issued a loan of $0.2 million to its
Executive Vice President and Chief Financial Officer which was paid in full
during fiscal year 2000. The proceeds from the loan were utilized to purchase
outstanding shares of the Parent's common stock at fair market value. The loan
carried an interest rate of 7%.

         During fiscal 1999 the Company made payments totaling $0.3 million to
a consulting firm whose majority shareholder is also an outside director and
security of the Company. No such expenditures were made in fiscal 2000. The
Chairman of the Company receives annual compensation of $0.2 million for
consulting services provided to the Company and reimbursements of approximately
$25,000 per year for office expenses.

         In August 2001, the TPC Holding Corp. Employee Stock Ownership Trust
(the "Trust") purchased 69,000 shares of common stock of Texas Petrochemical
Holdings, Inc. from existing shareholders in exchange for cash and seller
financing. The cash portion of the offer to selling shareholders was funded by a
loan made by Texas Petrochemicals LP to the Trust. The loan of $2.5 million is
to be financed over a 10 year period at a 6% interest rate.


                                       38
<PAGE>   41
                                     PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

     (a) Exhibits

        3.1    Certificate of Incorporation of the Company, as amended
               (incorporated by reference to Exhibit 3.1 of Form S-4, File No.
               333-11569).

        3.2    Bylaws of the Company (incorporated by reference to Exhibit 3.2
               of Form S-4, File No. 333-11569).

        3.3    Certificate of Limited partnership of Texas Petrochemicals LP
               (incorporated by reference to Exhibit 3.3 of Form 10Q, File No.
               333-11569).

        3.4    Agreement of Limited partnership of Texas Petrochemicals LP
               (incorporated by reference to Exhibit 3.4 of Form 10Q, File No.
               333-11569).

        4.1    Indenture dated as of July 1, 1996 by and between the Company and
               Fleet National Bank, as Trustee, with respect to the 11 1/8%
               Senior Subordinated Notes due 2006, including the form of the
               Note (incorporated by reference to Exhibit 4.1 of Form S-4, File
               No. 333-11569).

        4.2    Indenture dated as of March 1, 1997 by and between the Company
               and Fleet National Bank, as Trustee, with respect to the 11 1/8%
               Series B Senior Subordinated Notes due 2006, including the form
               of Note (incorporated by reference to Exhibit 4.2 of Form S-4,
               File No. 333-24589).

        4.3    First Supplemental Indenture dated June 28, 2000 amending and
               supplementing Senior Discount Notes due 2007 (incorporated by
               reference to Exhibit 4.3 of Form 10K, File No. 333-11569.

        5.1    Opinion of Bracewell & Patterson as to the validity of the
               11 1/8% Senior Subordinated Notes die 2006 and the validity of
               the 11 1/8% Series B Senior Subordinated Notes due 2006
               (incorporated by reference to Exhibit 5.1 of Form S-4, File No.
               333-11569).

        10.1   Holdings' 1996 Stock Option Plan (incorporated by reference to
               Exhibit 10.1 of Form S-4, File No. 333-11569).

        10.2   TPC Employee Stock Ownership Plan (incorporated by reference to
               Exhibit 10.2 of Form S-4, file No. 333-11569).

        10.3   TPC Employee Stock Ownership Plan Trust Agreement (incorporated
               by reference to Exhibit 10.3 of Form S-4, File No. 333-11569).

        10.4   TPC Cash Bonus Plan (incorporated by reference to Exhibit 10.4 of
               Form S-4, File No. 333-11569).

        10.5   Security Agreement by and between Boatmen's Trust Company of
               Texas and the Company (incorporated by reference to Exhibit 10.5
               of Form S-4, File No. 333-11569).

        10.6   TPC Profit Sharing Plan (incorporated by reference to Exhibit
               10.6 of Form S-4, File No. 333-11569).

        10.7   Lease for Calcasieu Parish, Louisiana (incorporated by reference
               to Exhibit 10.7 of Form S-4, File No. 333-11569).

        10.8   Credit Agreement dated as of July 1, 1996 among the Company,
               Texas Commerce Bank, National Association, ABN AMRO North
               America, Inc., and The Bank of Nova Scotia (incorporated by
               reference to Exhibit 10.8 of Form S-4, File No. 333-11569).

        10.9   Security Agreement date as of July 1, 1996 by and between the
               Company and Texas Commerce Bank, National Association
               (incorporated by reference to Exhibit 10.9 of Form S-4, File No.
               333-11569).

        10.10  Pledge Agreement date as of July 1, 1996 by and between the
               Company and Texas Commerce Bank, National Association
               (incorporated by reference to Exhibit 10.10 of Form S-4, File No.
               333-11569).


                                       39
<PAGE>   42


        10.11  Letter Agreement dated May 6, 1996 by and among The Sterling
               Group, Inc., Texas Petrochemical Holdings, Inc., TPC Holding, and
               the Company (incorporated by reference 10.11 of Form S-4, File
               No. 333-11569).

        10.12  Form of Indemnity Agreement between the Company and each of its
               officers and directors (incorporated by reference to Exhibit
               10.12 of Form S-4, File No. 333-11569).

        10.13  Form of Tax Sharing Agreement among Texas Petrochemical Holdings,
               Inc., TPC Holding, the Company and Texas Butylene Chemical
               Corporation (incorporated by reference to Exhibit 10.13 of Form
               S-4, File No. 333-11569).

        10.14  Employment Agreement with Bill W. Waycaster (incorporated by
               reference to Exhibit 10.14 of Form S-4, File No. 333-11569).

        10.15  Amendment to Credit Agreement dated as of June 30, 1999 by and
               among the Company, Chase Bank of Texas, National Association, ABN
               AMRO North America, Inc., the Bank of Nova Scotia and other
               financial institutions listed on the signature pages attached.
               (incorporated by reference to Exhibit 10.15 of Form 10K, File No.
               333-11569).

        10.16  Amended and Restated Credit Agreement among TPC Holding Corp.,
               Texas Petrochemicals LP, Chase Bank of Texas-National
               Association, ABN AMRO North America, Inc. and The Bank of Nova
               Scotia (incorporated by reference to Exhibit 10.16 of Form 10K,
               File No. 333-11569).

        10.17  Note Modification Agreement dated June 30, 2000 between Texas
               Petrochemicals LP (incorporated by reference to Exhibit 10.17 of
               Form 10Q, File No. 333-11569).

        10.18  First Amendment to Amended and Restated Credit Agreement
               (incorporated by reference to Exhibit 10.18 of Form 10Q, File No.
               333-11569).

        21     Subsidiaries of the Company (incorporated to Exhibit 21 of Form
               S-4, File No. 333-11569).

        25.1   Statement of Eligibility and Qualification on Form T-1 of Fleet
               National Bank as Trustee under the Indenture dated as of July 1,
               1996 (incorporated by reference to Exhibit 25.1 of Form S-4, File
               No. 333-11569).

        25.2   Statement of Eligibility and Qualification on Form T-1 of Fleet
               National Bank as Trustee under the Indenture dated as of March 1,
               1997 (incorporated by reference to Exhibit 25.2 of Form S-4, File
               No. 333-24589).

     (b) Financial Statement Schedules

           Not applicable

     (c) Reports on Form 8-K

           There were no reports on Form 8-K filed during the three months ended
June 30, 2001.


                                       40
<PAGE>   43



                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, this report has been signed on behalf of the registrant by the
undersigned, thereunto duly authorized, September 26, 2001.

                                   TEXAS PETROCHEMICALS LP
                                                  (Registrant)

                                   By:   TPC Holding Corp.
                                         as General Partner

                                   By:         /s/ B.W. WAYCASTER
                                      ------------------------------------------
                                                   B.W. Waycaster
                                        President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
to be signed below by the following persons on behalf of TPC Holding Corp. in
the indicated capacities on September 26, 2001.

<Table>
<S>                                                  <C>
            /s/ WILLIAM A. McMINN                    Chairman
------------------------------------------
              William A. McMinn


           /s/ B.W. WAYCASTER                        Director, President and Chief Executive Officer
------------------------------------------
               B.W. Waycaster


         /s/ HUNTER W. HENRY JR.                     Director
------------------------------------------
             Hunter W. Henry Jr.


       /s/ STEVE A. NORDAKER                         Director
------------------------------------------
              Steve A. Nordaker


            /s/ SUSAN O. RHENEY                      Director
------------------------------------------
               Susan O. Rheney


         /s/ GARY L. ROSENTHAL                       Director
------------------------------------------
              Gary L. Rosenthal


           /s/ JOHN T. SHELTON                       Director
------------------------------------------
               John T. Shelton


         /s/ GUY E. SUTHERLAND                       Director
------------------------------------------
              Guy E. Sutherland


             /s/ CARL S. STUTTS                      Executive Vice President,
------------------------------------------           Chief Financial Officer
               Carl S. Stutts
</Table>


                                       41