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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) : APRIL 16, 2002
COMMISSION FILE NO. 1-10403
TEPPCO PARTNERS, L.P. DELAWARE
TE PRODUCTS PIPELINE COMPANY,
LIMITED PARTNERSHIP DELAWARE
TCTM, L.P. DELAWARE
TEPPCO MIDSTREAM COMPANIES, L.P. DELAWARE
JONAH GAS GATHERING COMPANY WYOMING
(EXACT NAME OF REGISTRANT AS (STATE OF INCORPORATION
SPECIFIED IN ITS CHARTER) OR ORGANIZATION)
76-0291058
(I.R.S. EMPLOYER
IDENTIFICATION NUMBER)
2929 ALLEN PARKWAY
P.O. BOX 2521
HOUSTON, TEXAS 77252-2521
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
(713) 759-3636
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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ITEM 5. OTHER EVENTS
FINANCIAL INFORMATION FOR THE GENERAL PARTNER OF TEPPCO PARTNERS, L.P.
We are filing the consolidated balance sheet of Texas Eastern Products
Pipeline Company, LLC and subsidiary as of December 31, 2001, which is
incorporated herein by reference to Exhibit 99.1. Texas Eastern Products
Pipeline Company, LLC is the General Partner of TEPPCO Partners, L.P.
Additionally, we have included as an exhibit an auditors' consent to
the incorporation by reference of this report in previously filed registration
statements.
ITEM 7. STATEMENTS AND EXHIBITS
(c) EXHIBITS:
Exhibit
Number Description
------ -----------
23.1 Consent of KPMG LLP.
99.1 Consolidated Balance Sheet of
Texas Eastern Products Pipeline
Company, LLC and subsidiary as of
December 31, 2001.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TEPPCO Partners, L.P.
(Registrant)
By: Texas Eastern Products Pipeline Company, LLC
General Partner
/s/ CHARLES H. LEONARD
--------------------------------------------
Charles H. Leonard
Sr. Vice President, Chief Financial Officer
and Treasurer
Date: April 16, 2002
2
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
To the Partners of
TEPPCO Partners, L.P.:
We consent to the incorporation by reference in the registration statements
(No. 3-81976) and (No. 333-74286) on Form S-3 and the registration statement
(No. 33-82892) on Form S-8 of TEPPCO Partners, L.P. of our report dated April 9,
2002, with respect to the consolidated balance sheet of Texas Eastern Products
Pipeline Company, LLC and subsidiary as of December 31, 2001, which report
appears in the Current Report on Form 8-K of TEPPCO Partners, L.P. filed
April 16, 2002.
KPMG LLP
Houston, Texas
April 16, 2002
EXHIBIT 99.1
INDEX TO FINANCIAL STATEMENTS
Texas Eastern Products Pipeline Company, LLC
PAGE
----
Independent Auditors' Report......................................................................... F-2
Consolidated Balance Sheet as of December 31, 2001................................................... F-3
Notes to Consolidated Balance Sheet.................................................................. F-4
F-1
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Texas Eastern Products Pipeline Company, LLC:
We have audited the accompanying consolidated balance sheet of Texas Eastern
Products Pipeline Company, LLC and subsidiary as of December 31, 2001. This
consolidated financial statement is the responsibility of the Company's
management. Our responsibility is to express an opinion on this consolidated
financial statement based on our audit.
We conducted our audit 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 balance sheet
is free of material misstatement. An audit of a balance sheet includes
examining, on a test basis, evidence supporting the amounts and disclosures in
that balance sheet. An audit of a balance sheet also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall balance sheet presentation. We believe that our audit
of the balance sheet provides a reasonable basis for our opinion.
In our opinion, the consolidated balance sheet referred to above presents
fairly, in all material respects, the financial position of Texas Eastern
Products Pipeline Company, LLC and subsidiary as of December 31, 2001, in
conformity with accounting principles generally accepted in the United States of
America.
KMPG LLP
Houston, Texas
April 9, 2002
F-2
TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC
AND SUBSIDIARY
Consolidated Balance Sheet
December 31, 2001
(In thousands)
ASSETS
Current assets:
Accounts receivable, related parties $ 23,312
Advances to Duke Energy Field Services, L.P. 1,017
Investment in TEPPCO Partners, L.P. 13,190
------------------
Total assets $ 37,519
==================
LIABILITIES AND MEMBER'S EQUITY
Current liabilities:
Accrued income taxes $ 120
Deferred income taxes 1,095
Member's equity:
Member's equity 46,304
Note receivable, Duke Energy Field Services, L.P. (10,000)
------------------
Total member's equity 36,304
Commitments and contingencies
------------------
Total liabilities and member's equity $ 37,519
==================
See accompanying notes to consolidated balance sheet.
F-3
TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC
AND SUBSIDIARY
Notes to Consolidated Balance Sheet
December 31, 2001
(1) BASIS OF PRESENTATION
The accompanying consolidated balance sheet as of December 31, 2001
includes the accounts of Texas Eastern Products Pipeline Company, LLC and
its wholly owned subsidiary TEPPCO Investments, LLC (collectively, the
Company). On March 31, 2000, Texas Eastern Products Pipeline Company and
TEPPCO Investments, Inc. were converted to limited liability companies,
with a resulting name change for both companies to Texas Eastern Products
Pipeline Company, LLC and TEPPCO Investments, LLC, respectively.
Additionally on March 31, 2000, Texas Eastern Products Pipeline Company,
LLC (the LLC) distributed its ownership of a wholly owned subsidiary,
TEPPCO Holdings, Inc. to Duke Energy Corporation (Duke Energy), the
Company's ultimate parent. The LLC also distributed to, and Duke Energy
assumed, all assets and liabilities of the LLC, except those relating to
the performance of its duties as general partner of TEPPCO Partners,
L.P., TE Products Pipeline Company, Limited Partnership, and TCTM, L.P.,
and $10 million of the demand note receivable due from Duke Energy Field
Services, L.P. (DEFS), a joint venture formed between Duke Energy and
Phillips Petroleum Corporation. Also on March 31, 2000, Duke Energy
indirectly contributed its remaining investment in the LLC to DEFS.
The Company is the general partner of TEPPCO Partners, L.P. (the
Partnership). The Company, as general partner, performs all management
and operating functions required for the Partnership pursuant to the
Agreement of Limited Partnership of TEPPCO Partners, L.P. (the
Partnership Agreement). The general partner is reimbursed by the
Partnership for all reasonable direct and indirect expenses incurred in
managing the Partnership.
On July 26, 2001, the Company restructured its general partner ownership
of TE Products Pipeline Company, Limited Partnership and TCTM, L.P.
(collectively the Operating Partnerships) to cause them to be indirectly
wholly owned by the Partnership. TEPPCO GP, Inc., a subsidiary of the
Partnership, succeeded the Company as general partner of the Operating
Partnerships. All remaining partner interests in the Operating
Partnerships not already owned by the Partnership were transferred to the
Partnership. In exchange for this contribution, the Company's interest as
general partner of the Partnership was increased to 2%. The increased
percentage is the economic equivalent of the aggregate interest the
Company had prior to the restructuring through its combined interests in
the Partnership and the Operating Partnerships. This reorganization was
undertaken to simplify required financial reporting by the Operating
Partnerships when guarantees of Partnership debt are issued by the
Operating Partnerships.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) PRINCIPLES OF CONSOLIDATION
The consolidated balance sheet includes the accounts of the
Company. Significant intercompany items have been eliminated in
consolidation. The Company's investments in the Partnership and
the Operating Partnerships are accounted for using the equity
method.
(b) CASH AND CASH EQUIVALENTS
Cash equivalents are defined as all highly marketable securities
with a maturity of three months or less when purchased. The
Company generally does not maintain cash balances. Cash
transactions are generally settled through intercompany accounts
(see note 3).
(Continued)
F-4
TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC
AND SUBSIDIARY
Notes to Consolidated Balance Sheet
December 31, 2001
(c) FAIR VALUE OF FINANCIAL INSTRUMENTS
Accounts receivable and accounts payable approximate fair value
due to the short-term maturity of these financial instruments. The
fair value of the Company's note receivable is more fully
described in note 4.
(d) USE OF ESTIMATES
The preparation of the consolidated balance sheet in conformity
with accounting principles generally accepted in the United States
of America requires management to make estimates and assumptions
that affect certain reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities. Actual results
could differ from these estimates.
(e) INCOME TAXES
As discussed in note 1, on March 31, 2000, Texas Eastern Products
Pipeline Company and TEPPCO Investments, Inc. were converted to
limited liability companies, and the Company's ownership of TEPPCO
Holdings, Inc. was distributed to Duke Energy. As such, the
Company became a nontaxable entity for federal income tax purposes
as of March 31, 2000, but remains a taxable entity for state
income taxes.
Prior to March 31, 2000, the Company followed the asset and
liability method of accounting for federal income tax. Under this
method, deferred income taxes reflect the impact of temporary
differences between the amount of assets and liabilities for
financial reporting purposes, and such amounts as measured by tax
laws and regulations. These deferred income taxes are measured by
applying enacted tax laws and statutory tax rates applicable to
the period in which the differences are expected to affect taxable
income. Also prior to March 31, 2000, under an agreement with Duke
Energy, the Company computed federal taxes as if it was filing a
separate consolidated tax return and paid such tax, if any, to
Duke Energy in lieu of federal taxes otherwise payable to the
government. The Company continues to follow the asset and
liability method of accounting for state income taxes.
(3) RELATED PARTY TRANSACTIONS
The Company generally does not maintain cash balances. Cash transactions
are generally settled through intercompany accounts. Accounts receivable,
related parties, on the consolidated balance sheet at December 31, 2001
and 2000 represents unpaid amounts charged to the Partnership related to
business activities of the Partnership and cash advances to DEFS.
(Continued)
F-5
TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC
AND SUBSIDIARY
Notes to Consolidated Balance Sheet
December 31, 2001
(4) NOTE RECEIVABLE
As of December 31, 2001, the Company held a $10 million demand note
receivable due from DEFS. Interest is payable quarterly. The rate on the
note fluctuates quarterly based on the one-month LIBOR rate, plus 50
basis points, as of the last day of the preceding calendar quarter. Under
the terms of the note, DEFS may prepay the note, in whole or in part,
without premium or penalty. The Company believes that the amount included
in the consolidated balance sheet for the note receivable materially
represents fair value at December 31, 2001, as the underlying interest
rate is based on market rates. The note receivable due from DEFS is
classified as contra-equity on the consolidated balance sheet as of
December 31, 2001. On March 31, 2000, the LLC distributed $115 million of
the note receivable to Duke Energy (see note 1), reducing the note
receivable balance from $125 million to $10 million.
(5) INVESTMENTS
On March 7, 1990, in conjunction with the formation of the Partnership,
the Company contributed cash and conveyed all assets and liabilities
(other than certain intercompany and tax-related items) to the
Partnership in return for a 1.0101% general partner interest in TE
Products Pipeline Company, Limited Partnership and a 1% general partner
interest in TEPPCO Partners, L.P. On July 26, 2001, the Company
restructured its general partner ownership of the Operating Partnerships
(see note 1). The assets and liabilities of the Partnership are
summarized below (in thousands):
DECEMBER 31, 2001
--------------------
Current assets $ 283,480
Property, plant, and equipment, net 1,180,461
Equity investments 292,224
Intangible assets 253,413
Other assets 55,770
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$ 2,065,348
====================
Current liabilities $ 668,842
Long-term debt 730,472
Other liabilities and deferred credits 17,223
Redeemable Class B Units held by related party 105,630
Partners' capital 543,181
--------------------
$ 2,065,348
====================
(Continued)
F-6
TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC
AND SUBSIDIARY
Notes to Consolidated Balance Sheet
December 31, 2001
(6) INCOME TAXES
As discussed in note 1, Basis of Presentation, as of March 31, 2000,
Texas Eastern Products Pipeline Company and TEPPCO Investments, Inc. were
converted to limited liability companies, and the Company's ownership of
TEPPCO Holdings, Inc. was distributed to Duke Energy. As such, the
Company became a nontaxable entity for federal income tax purposes as of
March 31, 2000. In connection with the conversion to limited liability
companies, the federal deferred tax liability balance of $39.2 million at
March 31, 2000 was recorded as a tax benefit in earnings. Also discussed
in note 1, in connection with the contribution of the LLC to DEFS on
March 31, 2000, accrued income taxes of $15.7 million and deferred taxes
of $2.2 million of the Company were assumed by Duke Energy.
At December 31, 2001, accrued income taxes payable was comprised of
$120,000 of state income taxes.
As of December 31, 2001, the difference between the financial statement
carrying value and related tax basis of existing assets and liabilities,
primarily the Company's equity investment in the Partnership, resulted in
a deferred tax liability for state income taxes of $1,095,000.
(7) COMMITMENTS AND CONTINGENCIES
In the fall of 1999 and on December 1, 2000, the Company and the
Partnership were named as defendants in two separate lawsuits in Jackson
County Circuit Court, Jackson County, Indiana, in Ryan E. McCleery and
Marcia S. McCleery, et. al. v. Texas Eastern Corporation, et. al.
(including the Company and Partnership) and Gilbert Richards and Jean
Richards v. Texas Eastern Corporation, et. al. (including the Company and
Partnership). In both cases, the plaintiffs contend, among other things,
that the Company and other defendants stored and disposed of toxic and
hazardous substances and hazardous wastes in a manner that caused the
materials to be released into the air, soil, and water. They further
contend that the release caused damages to the plaintiffs. In their
complaints, the plaintiffs allege strict liability for both personal
injury and property damage together with gross negligence, continuing
nuisance, trespass, criminal mischief, and loss of consortium. The
plaintiffs are seeking compensatory, punitive, and treble damages. The
Company has filed an answer to both complaints, denying the allegations,
as well as various other motions. These cases are in the early stages of
discovery and are not covered by insurance. The Company is defending
itself vigorously against the lawsuits. The plaintiffs have not
stipulated the amount of damages that they are seeking in the suit. The
Company cannot estimate the loss, if any, associated with these pending
lawsuits. The Partnership would be responsible for the liability for any
settlements and judgments associated with these lawsuits.
F-7
