Enterprise Products Partners L.P.

SEC Filings

10-Q
TEPPCO PARTNERS LP filed this Form 10-Q on 11/14/1997
Entire Document
 
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ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
         RESULTS OF OPERATIONS

         RESULTS OF OPERATIONS - (CONTINUED)


         Gains on the sale of inventory decreased $1.4 million during the nine
months ended September 30, 1997, compared with the corresponding period in 1996,
as a result of lower volumes of gasoline being sold during 1997.

         Other operating revenues increased $0.9 million during the 1997 third
quarter, as compared to the same period in 1996, due primarily to revenue
recognition of deficiency volumes on butane storage contracts and increased
terminaling revenues, partially offset by lower refined products storage
revenue.

         During the nine months ended September 30, 1997, other operating
revenues increased slightly due to the factors noted above, being offset by
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, during the first quarter of 1997.

         Costs and expenses increased $1.8 million during the third quarter of
1997, compared with the prior year, due primarily to a $1.2 million increase in
operating, general and administrative expenses and a $0.5 million increase in
taxes - other than income taxes. The increase in operating, general and
administrative expenses resulted primarily from increased throughput-related
power costs, expenses recorded for environmental remediation at the
Partnership's Seymour, Indiana, terminal, rental expense associated with the
capacity lease with Colonial, which began in May 1997, and increased labor and
benefits costs. These increases were partially offset by a reduction of expense
related to the settlement of insurance claims for previously incurred
environmental litigation costs. The increase in taxes - other than income taxes
resulted from a credit recorded during the third quarter of 1996 due to 1995 ad
valorem taxes being lower than estimated.

         Costs and expenses increased $1.6 million during the first nine months
of 1997, compared with the same period in 1996, due primarily to a $0.9 million
increase in operating, general and administrative expenses and a $0.8 million
increase in taxes - other than income taxes. The increase in operating, general
and administrative expenses was primarily attributable to throughput-related
expenses and rental expense of the Colonial capacity lease, partially offset by
the insurance settlement during the third quarter of 1997, lower outside service
costs for system maintenance and lower product measurement losses. The increase
in taxes - other than income taxes was due to higher ad valorem tax assessments
in 1997 and the credit for ad valorem taxes recorded during the third quarter of
1996.

         Interest expense decreased during both the quarter and nine-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 $0.5 million during
the nine month period ended September 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 - net decreased during both the quarter and nine months
ended September 30, 1997, compared with the corresponding periods in 1996, due
primarily to lower interest income attributable to lower cash balances during
1997. Additionally, during the third quarter of 1997, a loss of $0.5 million was
recorded on the sale of the Partnership's Arkansas City, Arkansas, terminal.

FINANCIAL CONDITION AND LIQUIDITY

         Net cash from operations totaled $51.0 million for the nine-month
period ended September 30, 1997, compared with $54.2 million for the
corresponding period in 1996. The decrease resulted from a $4.6 million increase
in working capital uses of cash, partially offset by a $1.5 million increase in
income before charges for depreciation and amortization. The increase in working
capital uses of cash resulted primarily from a receivable

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