Enterprise Products Partners L.P.

SEC Filings

10-Q
TEPPCO PARTNERS LP filed this Form 10-Q on 08/07/1997
Entire Document
 
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS

RESULTS OF OPERATIONS - (CONTINUED)

        Other operating revenues decreased during both the quarter and six
months ended June 30, 1997, as compared to the corresponding periods in 1996,
due to write downs of product inventory recorded during the second quarter of
1997 and lower propane imports received at the marine terminal at Providence,
Rhode Island, due primarily to warmer winter weather during the first quarter
of 1997. These decreases were partially offset by higher refined products
terminaling fees attributable to the increase in refined products
transportation volumes delivered in 1997.

        Costs and expenses increased $0.7 million during the second quarter of
1997, compared with the prior year, due to a $0.5 million increase in
operating, general and administrative expenses and a $0.2 million increase in
taxes - other than income taxes. The increase in operating, general and
administrative expenses resulted primarily from increased rental expense
associated with the capacity lease with Colonial, which began in May 1997, and
increased throughput-related costs and labor costs. These increases were
partially offset by lower environmental remediation expenses and lower product
measurement losses. The increase in taxes - other than income taxes resulted
from higher property tax assessments.

        Costs and expenses decreased slightly during the first six months of
1997, compared with the same period in 1996, due primarily to lower operating,
general and administrative expenses attributable to lower outside services for
system maintenance and remediation and lower product measurement losses. These
decreases were partially offset by increased thoughput-related costs, increased
labor and benefits expenses and the Colonial capacity lease. Lower operating,
general and administrative expenses were partially offset by higher property
tax assessments for 1997.

        Interest expense decreased during both the quarter and six-month
periods in 1997, compared with the same periods in 1996, due to principal
payments on the First Mortgage Notes of $10.0 million and $13.0 million in
March 1996 and 1997, respectively. Capitalized interest increased $0.6 million
during the six month period ended June 30, 1997, compared with the same period
in 1996 as a result of higher construction balances related to capital
projects, which commenced during 1996, and were completed during 1997. Other
income, primarily interest, decreased during both the quarter and six months
ended June 30, 1997, compared with the corresponding periods in 1996, as a
result of lower cash balances in 1997.

FINANCIAL CONDITION AND LIQUIDITY

        Net cash from operations totaled $40.5 million for the six-month period
ended June 30, 1997, compared with $47.5 million for the corresponding period
in 1996. The decrease resulted primarily from a decrease in working capital
sources of cash. The decrease in working capital sources of cash was primarily
due to higher accounts receivable balances related to increased operating
revenues during the second quarter of 1997 and lower inventory sales during
1997, partially offset by lower cash payments for accrued expenses during 1997.
Net cash from operations for the six months ended June 30, 1997 and 1996
reflect semi-annual interest payments related to the Notes of $17.1 million and
$17.6 million, respectively.

        Cash flows used in investing activities during the first six months of
1997 included $15.4 million of capital expenditures and $3.9 million of
additional cash investments, partially offset by $16.0 million from investment
maturities and $1.0 million of insurance proceeds related to the replacement
value of a 20-inch diameter auxiliary pipeline at the Red River in central
Louisiana, which was damaged in 1994 and subsequently removed from service.
Cash flows used in investing activities during the first six months of 1996
included $15.6 million of capital expenditures and additional investments of
$14.4 million, partially offset by matured investments of $9.9 million. Capital
expenditures are expected to total approximately $35 million for the full year
of 1997. The Partnership revises capital spending periodically in response to
changes in cash flows and operations. Interest income earned on all investments
is included in cash from operations.



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