TEPPCO PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION AND BASIS OF PRESENTATION
TEPPCO Partners, L.P. is a Delaware limited partnership which operates
through TE Products Pipeline Company, Limited Partnership, a Delaware limited
partnership (collectively the "Partnership"), in which TEPPCO Partners, L.P.
holds a 99% interest as the sole limited partner. Texas Eastern Products
Pipeline Company, (the "Company") is the general partner of the Partnership and
has agreed not to voluntarily withdraw as the general partner of the
Partnership, subject to certain limited exceptions, prior to January 1, 2000. On
June 18, 1997, PanEnergy Corp and Duke Power Company completed a previously
announced merger. At closing, the combined companies became Duke Energy
Corporation ("Duke Energy"). The Company, previously a wholly-owned subsidiary
of PanEnergy Corp, became an indirect wholly-owned subsidiary of Duke Energy on
the date of the merger.
The accompanying unaudited consolidated financial statements reflect
all adjustments, which are, in the opinion of management, of a normal and
recurring nature and necessary for a fair statement of the financial position of
the Partnership as of September 30, 1997, and the results of operations and cash
flows for the periods presented. The results of operations for the nine months
ended September 30, 1997, are not necessarily indicative of results of
operations for the full year 1997. The interim financial statements should be
read in conjunction with the Partnership's consolidated financial statements and
notes thereto presented in the TEPPCO Partners, L.P. Annual Report on Form 10-K
for the year ended December 31, 1996.
Net income per Unit is computed by dividing net income, after deduction
of the general partner's interest, by the weighted average number of Units
outstanding (a total of 14,500,000 Units as of September 30, 1997). The general
partner's percentage interest in net income is based on its percentage of cash
distributions from Available Cash for each period (see Note 6). The general
partner was allocated 7.73% and 6.35% of net income for the nine months ended
September 30, 1997 and 1996, respectively.
NOTE 2. ACCOUNTING POLICY CHANGE
In February 1997, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") 128, "Earnings per
Share." This statement establishes standards for computing and presenting net
income per Unit and requires, among other things, dual presentation of basic and
diluted net income per Unit on the face of the consolidated statements of
income. This statement is effective for financial statements for periods ending
after December 15, 1997. The Partnership will adopt SFAS 128 by December 31,
1997, and does not expect the adoption to have a material impact on its
calculation of net income per Unit.
In June 1997, the FASB issued SFAS 130, "Reporting Comprehensive
Income." This statement establishes standards for reporting and display of
comprehensive income and its components in a full set of financial statements.
In June 1997, the FASB also issued SFAS 131, "Disclosures about Segments of an
Enterprise and Related Information." This statement establishes standards for
reporting information about operating segments in annual financial statements
and requires that enterprises report selected information about operating
segments in interim reports issued to shareholders. Both of these statements are
effective for financial statements for periods beginning after December 15,
1997. As both SFAS 130 and 131 establish standards for reporting and display,
the Partnership does not expect the adoption of these statements to have a
material impact on its financial condition or results of operations.