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UNITED STATES
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) : JULY 15, 2003
COMMISSION FILE NO. 1-10403
TEPPCO PARTNERS, L.P. DELAWARE 76-0291058
TE PRODUCTS PIPELINE COMPANY,
LIMITED PARTNERSHIP DELAWARE 76-0329620
TCTM, L.P. DELAWARE 76-0595522
TEPPCO MIDSTREAM COMPANIES, L.P. DELAWARE 76-0692243
JONAH GAS GATHERING COMPANY WYOMING 83-0317360
VAL VERDE GAS GATHERING COMPANY, L.P. DELAWARE 48-1260551
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) (STATE OF INCORPORATION (I.R.S. EMPLOYER
OR ORGANIZATION) IDENTIFICATION NO.)
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, 2002, 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, 2002.
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
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Charles H. Leonard
Senior Vice President and Chief Financial Officer
Date: July 15, 2003
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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.
33-81976) and (No. 333-100494) on Form S-3 and the registration statement (No.
333-82892) on Form S-8 of TEPPCO Partners, L.P. of our report dated May 15,
2003, with respect to the consolidated balance sheet of Texas Eastern Products
Pipeline Company, LLC and subsidiary as of December 31, 2002, included in the
Current Report on Form 8-K of TEPPCO Partners, L.P. filed July 15, 2003.
KPMG LLP
Houston, Texas
July 15, 2003
EXHIBIT 99.1
TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC
AND SUBSIDIARY
Consolidated Balance Sheet
December 31, 2002
(With Independent Auditors' Report Thereon)
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, 2002. 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, 2002 in
conformity with accounting principles generally accepted in the United States of
America.
KPMG LLP
Houston, Texas
May 15, 2003
TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC
AND SUBSIDIARY
Consolidated Balance Sheet
December 31, 2002
(In thousands)
ASSETS
Accounts receivable, related parties $ 53,484
Advances to Duke Energy Field Services, L.P. 1,252
Investment in TEPPCO Partners, L.P. 12,770
------------
Total assets $ 67,506
============
LIABILITIES AND MEMBER'S EQUITY
Current liabilities:
Accrued income taxes $ 134
Deferred income taxes 1,166
Member's equity:
Member's equity 76,206
Note receivable, Duke Energy Field Services, L.P. (10,000)
------------
Total member's equity 66,206
Commitments and contingencies
------------
Total liabilities and member's equity $ 67,506
============
See accompanying notes to consolidated balance sheet
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TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC
AND SUBSIDIARY
Notes to Consolidated Balance Sheet
December 31, 2002
(1) BASIS OF PRESENTATION
The accompanying consolidated balance sheet as of December 31, 2002
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 ConocoPhillips. 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 Company 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
wholly owned 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 balance sheet includes the Company's accounts on a
consolidated basis. Significant intercompany items have been
eliminated in consolidation. The Company's investment in the
Partnership is 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, Related Party
Transactions).
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TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC
AND SUBSIDIARY
Notes to Consolidated Balance Sheet
December 31, 2002
(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, Note Receivable.
(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 the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities. Actual results could differ from these estimates.
(e) INCOME TAXES
The Company became a nontaxable entity for federal income tax
purposes as of March 31, 2000 but remains a taxable entity for
state income tax purposes.
The Company follows the asset and liability method of
accounting for state income taxes. 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.
(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, 2002 represents unpaid amounts charged to the
Partnership related to business activities of the Partnership and cash
advances to DEFS.
(4) NOTE RECEIVABLE
As of December 31, 2002, 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, 2002, 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, 2002. (See note 1, Basis of
Presentation).
(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
4 (Continued)
TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC
AND SUBSIDIARY
Notes to Consolidated Balance Sheet
December 31, 2002
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, Basis of Presentation). The assets
and liabilities of the Partnership are summarized below (in thousands):
DECEMBER 31,
2002
------------
Current assets $ 360,567
Property, plant, and equipment, net 1,587,824
Equity investments 284,705
Intangible assets 465,374
Other assets 72,172
------------
$ 2,770,642
============
Current liabilities $ 366,783
Long-term debt 1,377,692
Other liabilities and deferred credits 30,962
Redeemable Class B Units held by
related party 103,363
Partners' capital 891,842
------------
$ 2,770,642
============
(6) INCOME TAXES
At December 31, 2002, accrued income taxes payable was comprised of
$134,000 of state income taxes.
As of December 31, 2002, 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 $1,166,000.
(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, styled 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
5 (Continued)
TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC
AND SUBSIDIARY
Notes to Consolidated Balance Sheet
December 31, 2002
other motions. These cases are not covered by insurance. Discovery is
ongoing, and the Company is defending itself vigorously against the
lawsuits. The plaintiffs have not stipulated the amount of damages that
they are seeking in the suit. 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.
(8) SUBSEQUENT EVENT
In May 2003, the Company was named as a defendant in a lawsuit styled
John R. James, et al. V. J Graves Insulation Company, et al. as filed
in the first Judicial District Court, Caddo Parish, Louisiana. There
are numerous plaintiffs identified in the action that are alleged to
have suffered damages as the result of alleged exposure to
asbestos-containing products and materials. According to the petition
and as a result of a preliminary investigation, the Company believes
that the only claim asserted against it results from one individual for
the period of July 1971 through June 1972, who is alleged to have
worked at a facility owned by the Company's predecessor. This period is
a relatively minor period with respect to the total alleged exposure
period for this individual from January 1964 through December 2001. The
individual's claims involve numerous employers and alleged job sites.
Currently, the Company has been unable to confirm involvement by the
Company or its predecessors with the alleged location, and it is
currently uncertain whether this case is covered by insurance.
Discovery is planned and, if the Company is unable to obtain early
voluntary dismissal, the Company intends to defend itself vigorously
against this lawsuit. The plaintiffs have not stipulated the amount of
damages that they are seeking in this suit. The Company cannot estimate
the loss, if any, associated with this pending lawsuit.
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