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 OPERATONS

FINANCIAL CONDITION AND LIQUIDITY - (CONTINUED)

related to insurance claims settled in September 1997, lower trade accounts
receivable balances during 1997 and lower inventory sales during 1997, which
were partially offset by lower cash payments for accrued expenses during 1997.
Additionally, net cash from operations for the nine months ended September 30,
1997 and 1996 reflect semi-annual interest payments related to the First
Mortgage Notes of $33.6 million and $34.7 million, respectively.

         Cash flows used in investing activities during the first nine months of
1997 included $24.5 million of capital expenditures and $3.9 million of
additional cash investments, partially offset by $18.0 million from investment
maturities, $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 and $1.4 million
from the proceeds of the sale of the Arkansas City terminal. Cash flows used in
investing activities during the first nine months of 1996 included $29.4 million
of capital expenditures and additional investments of $14.4 million, partially
offset by matured investments of $10.9 million. Capital expenditures are
expected to total approximately $34 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.

         The Partnership paid cash distributions of $36.3 million during the
nine months ended September 30, 1997. Additionally, on October 17, 1997, the
Partnership declared a cash distribution of $0.80 per Unit for the three months
ended September 30, 1997. The third quarter cash distribution was paid on
November 7, 1997 to Unitholders of record on October 31, 1997.

         The First Mortgage Notes, which are secured by a mortgage on
substantially all property, plant and equipment of the Partnership, require
annual principal payments through March 2010. Interest is payable semi-annually
on March 7 and September 7. Cash and cash equivalents were reduced by the $13.0
million principal payment related to the First Mortgage Notes on March 7, 1997.
At September 30, 1997, the current maturities of the First Mortgage Notes were
$17.0 million. The note agreement relating to the First Mortgage Notes limits
the amount of cash distributions that can be made by TE Products Pipeline
Company, Limited Partnership to TEPPCO Partners, L.P. Such restriction is not
anticipated to preclude the Partnership from making quarterly distributions to
Unitholders of at least $0.80 per Unit during the remainder of 1997.

OTHER MATTERS

         The operations of the Partnership are subject to federal, state and
local laws and regulations relating to protection of the environment. Although
the Partnership believes the operations of the pipeline system are in material
compliance with applicable environmental regulations, risks of significant costs
and liabilities are inherent in pipeline operations, and there can be no
assurance that significant costs and liabilities will not be incurred. Moreover,
it is possible that other developments, such as increasingly strict
environmental laws and regulations and enforcement policies thereunder, and
claims for damages to property or persons resulting from the operations of the
pipeline system could result in substantial costs and liabilities to the
Partnership. The Partnership does not anticipate that changes in environmental
laws and regulations will have a material adverse effect on its financial
position, operations or cash flows in the near term.

         The Partnership and the Indiana Department of Environmental Management
("IDEM") have entered into an Agreed Order that will ultimately result in a
remediation program for any on-site and off-site environmental groundwater
contamination attributable to the Partnership's operations at the Seymour,
Indiana, terminal. As part of the Agreed Order, the Partnership has completed
the remedial investigation sampling for groundwater contamination. In November
1997, IDEM approved the final remedial investigation report for the Seymour

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