TEPPCO Partners, L.P. Reports Second Quarter 2006 Results, with Another Record Performance from the Upstream Segment.HOUSTON Houston, city (1990 pop. 1,630,553), seat of Harris co., SE Tex., a deepwater port on the Houston Ship Channel; inc. 1837. Economy The fourth largest city in the nation and the largest in the entire South and Southwest, Houston is a port of entry; -- TEPPCO Partners TEPPCO Partners LP (NYSE: TPP) is a Fortune 300 company based in Houston, Texas. This company operates petroleum pipelines. History During the second quarter of 2007, it was acquired by another Fortune 500 company, Houston-based Enterprise GP Holdings , L.P. (NYSE NYSE See: New York Stock Exchange :TPP TPP thiamine pyrophosphate. Thiamine pyrophosphate (TPP) The coenzyme containing thiamine that is essential in converting glucose to energy. Mentioned in: Beriberi TPP 1. total plasma protein. 2. ) today reported net income for the second quarter of 2006 of $41.5 million, or $0.42 per unit, compared with net income of $40.9 million, or $0.43 per unit, for the second quarter of 2005. Net income for the six months ended June June: see month. 30, 2006, was $104.3 million, or $1.05 per unit, compared with $88.4 million, or $0.96 per unit, for the six months ended June 30, 2005. Net income for the six months ended June 30, 2006, includes a $17.9 million gain on the sale of the Pioneer gas processing plant which occurred on March 31, 2006. Excluding the impact of the sale of the Pioneer gas processing plant, which is being accounted for as discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. , income from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the for the second quarter of 2006 was $41.6 million, or $0.42 per unit, compared with $40.1 million, or $0.42 per unit, for the second quarter of 2005, and for the six months ended June 30, 2006 was $84.9 million, or $0.85 per unit, compared with $86.4 million, or $0.94 per unit, for the six months ended June 30, 2005. The Pioneer gas processing plant is accounted for as discontinued operations for all periods presented. Earnings before interest, taxes, depreciation and amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
v. rec·on·ciled, rec·on·cil·ing, rec·on·ciles v.tr. 1. To reestablish a close relationship between. 2. To settle or resolve. 3. to its most directly comparable GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). financial measure later in this news release. "Our upstream From the consumer to the provider. See downstream. (networking) upstream - Fewer network hops away from a backbone or hub. For example, a small ISP that connects to the Internet through a larger ISP that has their own connection to the backbone is downstream from the larger segment continued its strong performance during 2006, with EBITDA from continuing operations increasing 22 percent over the 2005 second quarter, as we benefited from increased marketing volumes and rates. Additionally, our midstream mid·stream n. 1. The middle part of a stream. 2. The part of a course that is neither at the beginning nor at the end: the midstream of life. Noun 1. segment continued to benefit from the increased capacity from the completion of the Jonah Jonah (jō`nə), prophetic book of the Bible. It tells the story of a prophet called by God to preach repentance to the city of Nineveh. According to the Second Book of Kings, Jonah lived during the reign (c.786 B.C.–c.746 B.C. Phase IV expansion in 2006, and increased refined products volumes largely offset lower summer-fill propane propane, CH3CH2CH3, colorless, gaseous alkane. It is readily liquefied by compression and cooling. It melts at −189.9°C; and boils at −42.2°C;. demand in our downstream From the provider to the customer. Downloading files and Web pages from the Internet is the downstream side. The upstream is from the customer to the provider (requesting a Web page, sending e-mail, etc.). segment. Our diverse revenue base continues to demonstrate the strategic benefit of our asset portfolio," said Jerry Jer·ry n. pl. Jer·ries Chiefly British Slang A German, especially a German soldier. [Alteration of German. E. Thompson Thompson, city, Canada Thompson, city (1991 pop. 14,977), central Man., Canada, on the Burntwood River. A mining town, it developed after large nickel deposits were discovered in the area in 1956. , president and chief executive officer of the general partner of TEPPCO. "We are pleased with our performance for the second quarter of 2006, with increased operating revenues operating revenue Revenue from any regular source. Revenue from sales is adjusted for discounts and returns when calculating operating revenue. Compare other revenue. in each of our business segments more than offsetting approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $10 million of expenses that are not expected to be ongoing beyond 2006. These expenses are primarily related to employee severances as we transition to a shared services shared services, n.pl the administrative, clinical, or other service functions that are common to two or more hospitals or their health care facilities and used jointly or cooperatively by them. environment, the completion of our previously announced joint venture of Jonah Gas Gathering Company with an affiliate Affiliate Relationship between two companies when one company owns substantial interest, but less than a majority of the voting stock of another company, or when two companies are both subsidiaries of a third company. See: Subsidiaries, parent company. of Enterprise Products Partners L.P. and the proposed changes to our partnership agreement in connection with the proposed reduced incentive distribution sharing rate by our general partner in exchange for units," continued Thompson. OPERATING RESULTS BY BUSINESS SEGMENT Upstream Segment The upstream segment includes transportation, storage, gathering and marketing of crude oil; and distribution of lubrication lubrication, introduction of a substance between the contact surfaces of moving parts to reduce friction and to dissipate heat. A lubricant may be oil, grease, graphite, or any substance—gas, liquid, semisolid, or solid—that permits free action of oils and specialty chemicals A Specialty chemical is a chemical produced for a specialized use. They are produced in lower volume than bulk chemicals, of which petrochemicals, made from oil feedstocks, are the most common. However, both are produced in a chemical plant. . EBITDA from continuing operations for the upstream segment increased 22 percent to $31 million for the second quarter of 2006, compared with $25.5 million for the second quarter of 2005. The increase in EBITDA resulted primarily from increased marketing and transportation revenues, partially offset by increased operating expense Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. , primarily due to 2005 acquisitions and their continued integration into our systems and increased product measurement losses, and higher general and administrative expenses. Total crude oil volumes marketed increased 15 percent to 619,000 barrels per day Barrels per day (abbreviated BPD, bbl/d, bpd, bd or b/d) is a measurement used to describe the amount of crude oil (measured in barrels) produced or consumed by an entity in one day. (bpd) for the second quarter of 2006, compared with 537,000 bpd for the second quarter of 2005. Transportation volumes decreased 4 percent to 251,000 bpd for the second quarter of 2006, compared with 262,000 bpd for the second quarter of 2005. Our pro-rata Pro-rata Used to describe a proportionate allocation. Notes: For example, a pro-rata dividend means that every shareholder gets an equal proportion for each share they own. See also: Dividend share of EBITDA in Seaway Crude Pipeline, which is included in upstream segment EBITDA, was $7 million for the second quarter of 2006, compared with $10.2 million for the second quarter of 2005. The decrease was primarily due to a stipulation An agreement between attorneys that concerns business before a court and is designed to simplify or shorten litigation and save costs. During the course of a civil lawsuit, criminal proceeding, or any other type of litigation, the opposing attorneys may come to an agreement in the Seaway partnership agreement whereby TEPPCO's portion of equity earnings decreases in 2006 from 60 percent to 40 percent (on a pro-rated basis to an average rate of 47 percent for 2006), higher expenses from legal and regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. settlements in 2006, increased power costs and increased pipeline integrity expenses primarily related to the pipeline release in May 2005. Long-haul long haul n. 1. A long distance: It is a long haul from New York to Los Angeles. 2. A long period of time: Over the long haul the candidates performed well. volumes on Seaway averaged 246,000 bpd in the 2006 quarter, compared with 213,000 bpd in the 2005 quarter. Midstream Segment The midstream segment includes natural gas gathering services, and storage, transportation and fractionation fractionation /frac·tion·a·tion/ (frak?shun-a´shun) 1. in radiology, division of the total dose of radiation into small doses administered at intervals. 2. of natural gas liquids (NGLs). EBITDA from continuing operations for the midstream segment was $36.1 million for the second quarter of 2006, compared with $39.9 million for the second quarter of 2005. The decrease was primarily due to higher operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. for pipeline imbalance imbalance /im·bal·ance/ (im-bal´ans) 1. lack of balance, such as between two opposing muscles or between electrolytes in the body. 2. dysequilibrium (2). valuations, employee severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when costs, costs related to entering into the Jonah Gas Gathering Company joint venture with an affiliate of Enterprise Products Partners L.P., the loss of EBITDA associated with the Pioneer Gas Processing Plant which was sold on March 31, 2006 and expenses related to the proposed amendments to our partnership agreement. These higher expenses were partially offset by increased natural gas gathering revenues resulting from the Phase IV expansion of the Jonah system completed in early 2006. Total natural gas gathering volumes increased 10 percent, to approximately 1.74 billion cubic feet per day (Bcf/d) in the second quarter of 2006, compared with approximately 1.58 Bcf/d in the second quarter of 2005. NGL NGL - A dialect of IGL. transportation volumes increased by 15 percent, to approximately 195,000 bpd in the second quarter of 2006, compared with approximately 170,000 bpd in the second quarter of 2005. Downstream Segment The downstream segment includes the transportation and storage of refined products, liquefied petroleum gases liquefied petroleum gas or LPG, mixture of gases, chiefly propane and butane, produced commercially from petroleum and stored under pressure to keep it in a liquid state. (LPGs) and petrochemicals. EBITDA from continuing operations for the downstream segment was $29.9 million for the second quarter of 2006, compared with $29.7 million for the second quarter of 2005. Increased demand for distillates and refinery blend “Blending” redirects here. For alpha blending, see Alpha compositing. In linguistics, a blend is a word formed from parts of two other words. These parts are sometimes, but not always, morphemes. stock deliveries in the upper Midwest The Upper Midwest is a region of the United States with no universally agreed-upon boundary, but it almost always lies within the US Census Bureau's definition of the Midwest and includes the states of Minnesota and Wisconsin, as well as at least the Upper Peninsula of Michigan. , increased revenues from assets acquired in the second half of 2005 and increased volumes of product inventory sales were substantially offset by lower LPG LPG: see liquefied petroleum gas. 1. LPG - Linguaggio Procedure Grafiche (Italian for "Graphical Procedures Language"). dott. Gabriele Selmi. Roughly a cross between Fortran and APL, with graphical-oriented extensions and several peculiarities. transportation revenues and increased operating, general and administrative expenses. Demand for long-haul propane transportation used for summer-fill programs was lower in the second quarter of 2006 as a result of excess supply from the warmer winter weather in early 2006. Expenses were higher in 2006 due primarily to assets acquired in the second half of 2005, increased insurance costs, a regulatory penalty for past incidents, employee severance costs and expenses related to the proposed amendments to our partnership agreement. Transportation volumes increased 9 percent to approximately 597,000 bpd in the second quarter of 2006, compared with approximately 549,000 bpd in the second quarter of 2005. Our pro-rata share of EBITDA from unconsolidated investments, which is included in downstream segment EBITDA, was $2.8 million for the second quarter of 2006, compared with $4.9 million for the second quarter of 2005. Our pro-rata share of EBITDA in Centennial Pipeline was $0.3 million for the second quarter of 2006, compared to $2.2 million for the second quarter of 2005. The decrease was primarily attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to lower transportation volumes and increased pipeline integrity expenses. Our pro-rata share of EBITDA in Mont Belvieu Storage Partners, L.P. was $2.5 million for the second quarter of 2006, compared with $2.7 million for the second quarter of 2005, primarily due to higher system maintenance expenses on the Mont Belvieu Storage Partners' system. CAPITALIZATION capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. AND LIQUIDITY Interest expense - net decreased $2.4 million during the second quarter of 2006, compared with the prior year second quarter. This decrease was due primarily to a $2.5 million reduction in interest expense during the second quarter of 2006 related to favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. changes in the fair value of interest rate swaps Interest Rate Swap A deal between banks or companies where borrowers switch floating-rate loans for fixed rate loans in another country. These can be either the same or different currencies. , a $2 million increase in interest expense in the 2005 second quarter related to the cancellation cancellation (See: cancel) CANCELLATION. Its general acceptation, is the act of crossing a writing; it is used sometimes to signify the manual operation of tearing or destroying the instrument itself. Hyde v. Hyde, 1 Eq. Cas. Abr. 409; Rob. of an interest rate lock agreement and increased capitalized interest Capitalized interest Interest that is not immediately expensed, but rather is considered as an asset and is then amortized through the income statement over time. In the context of project financing, interest that is paid by additional borrowing. on construction projects during 2006. These decreases of expense between the comparable periods were partially offset by higher outstanding principal balances and higher short term floating interest rates on the revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility during the second quarter of 2006. Total debt outstanding at June 30, 2006, was approximately $1.5 billion, with remaining liquidity of approximately $241 million under TEPPCO's $700 million credit facility. In July July: see month. 2006, $204.1 million of gross proceeds were received from the public issuance of 5.75 million units. The net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). of approximately $196 million were used to reduce borrowings outstanding under our revolving credit facility. 2006 OUTLOOK Based on our performance during the six months ended June 30, 2006, and projections for the remainder of the year, we expect EBITDA for the full year of 2006, excluding the results from discontinued operations, to remain in the range of $400 million to $420 million. We expect net income per unit to be in the range of $1.65 to $1.85 per unit, excluding the results of discontinued operations, which is a $0.05 decrease from the forecast provided earlier in the year. The decrease in net income per unit reflects the increase in the weighted average number of units outstanding resulting from the new units issued in July 2006, as noted above. We currently anticipate that total capital expenditures for 2006 will be approximately $265 million, which will include approximately $195 million for organic growth projects and $40 million for maintenance capital expenditures, which includes $19 million for pipeline integrity. We estimate $30 million in expenditures for system upgrades. Additionally, we expect to contribute for the remainder of 2006 approximately $119 million to the new Jonah joint venture for our share of the Phase V expansion. In April 2006, EPCO EPCO Explorer Pipeline Company, Inc , Inc. made a proposal to the Audit and Conflicts Committee of the general partner's board of directors to reduce the general partner's maximum percentage interest in our quarterly distributions from 50 percent to 25 percent with respect to that portion of our quarterly cash distribution to partners that exceeds $0.325 per unit. In exchange for the agreement to reduce its maximum percentage interest in our quarterly distributions, our general partner would receive a number of newly-issued units that, based on the distribution rate and the number of units outstanding at the time of issuance, would result in our general partner receiving cash distributions from the newly-issued units and from its reduced maximum percentage interest in our quarterly distributions that would approximately equal the cash distributions our general partner would have received from its maximum percentage interest in our quarterly distributions without reduction. Based on our current distribution rate and outstanding units, the number of newly-issued TEPPCO units issued to the general partner would be approximately 14.1 million. On June 26, 2006, TEPPCO filed a preliminary proxy statement Proxy Statement A document containing the information that a company is required by the SEC to provide to shareholders so they can make informed decisions about matters that will be brought up at an annual stockholder meeting. with the Securities and Exchange Commission that outlines the EPCO proposal and other proposals for which TEPPCO plans to solicit approval from its unitholders at a special meeting. NON-GAAP FINANCIAL MEASURES The Financial Highlights table accompanying ac·com·pa·ny v. ac·com·pa·nied, ac·com·pa·ny·ing, ac·com·pa·nies v.tr. 1. To be or go with as a companion. 2. this earnings release and other disclosures herein include references to EBITDA, which may be viewed as a non-GAAP (Generally Accepted Accounting Principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting ) measure under the rules of the Securities and Exchange Commission (SEC). We define EBITDA as net income plus interest expense - net, depreciation and amortization, and a pro-rata portion, based on our equity ownership, of the interest expense and depreciation and amortization of each of our joint ventures. We have included EBITDA as a supplemental disclosure because we believe EBITDA is used by our investors as a supplemental financial measure in the evaluation of our business. A reconciliation of EBITDA to net income is provided in the Financial Highlights table. We believe EBITDA provides useful information regarding the performance of our assets without regard to financing methods, capital structures or historical costs basis. As a result, EBITDA provides investors a helpful measure for comparing the operating performance of our assets with the performance of other companies that have different financing and capital structures. EBITDA multiples are also used by our investors in assisting in the valuation of our limited partners' equity. EBITDA should not be considered as an alternative to net income or income from continuing operations, operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. , cash flows from operating activities or any other measure of financial performance calculated and presented in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with GAAP. Our EBITDA may not be comparable to EBITDA of other entities because other entities may not calculate EBITDA in the same manner as we do. Information in the accompanying Operating Data table includes margin of the upstream segment, which may be viewed as a non-GAAP financial measure under the rules of the SEC. Margin is calculated as revenues generated from the sale of crude oil and lubrication oil, and transportation of crude oil, less the costs of purchases of crude oil and lubrication oil. We believe margin is a more meaningful measure of financial performance than sales and purchases of crude oil and lubrication oil due to the significant fluctuations sales and purchases caused by variations in the level of marketing activity and prices for products marketed. Additionally, we use margin internally to evaluate the financial performance of the upstream segment because it excludes expenses that are not directly related to the marketing and sales activities being evaluated. A reconciliation of margin to operating income is provided in the Operating Data table accompanying this earnings release. TEPPCO will host a conference call related to earnings performance at 8 a.m. CT on Wednesday Wednesday: see week. , August 2, 2006. Interested parties may listen live over the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the or via telephone by dialing 800-811-8845, confirmation code 9423738. Please call in five to 10 minutes prior to the scheduled start time. To participate live over the Internet, log on to the company's Web site at www.teppco.com. An audio replay of the conference call will also be available for seven days by dialing 888-203-1112, confirmation code 9423738. A replay and transcript A generic term for any kind of copy, particularly an official or certified representation of the record of what took place in a court during a trial or other legal proceeding. A transcript of record will also be available by accessing the company's Web site at www.teppco.com. TEPPCO Partners, L.P. is a publicly traded partnership Publicly Traded Partnership A limited partnership that also has interests traded in the equity securities market. Notes: This is also known as a master limited partnership. See also: Master Limited Partnership, Partnership, Public Company with an enterprise value of approximately $4 billion, which conducts business through various subsidiary operating companies operating company A business that engages in transactions with outsiders. . TEPPCO owns and operates one of the largest common carrier pipelines of refined petroleum products and liquefied petroleum gases in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. ; owns and operates petrochemical petrochemical, any one of a large group of chemicals derived from a component of petroleum or natural gas. The cracking processes for manufacturing gasoline produce vast quantities of gaseous hydrocarbons. and natural gas liquid pipelines; is engaged in transportation, storage, gathering and marketing of crude oil; owns and operates natural gas gathering systems; and owns 50-percent interests in Seaway Crude Pipeline Company, Centennial Pipeline LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control and Mont Belvieu Storage Partners, L.P., and an undivided UNDIVIDED. That which is held by the same title by two or more persons, whether their rights are equal, as to value or quantity, or unequal. 2. Tenants in common, joint-tenants, and partners, hold an undivided right in their respective properties, until ownership interest in the Basin BASIN Boulder Area Sustainability Information Network (Boulder, Colorado) BASIN Brothers And Sisters In Need Pipeline. Texas Eastern Products Pipeline Company, LLC, an indirect subsidiary of EPCO, Inc., is the general partner of TEPPCO Partners, L.P. For more information, visit TEPPCO's Web site at www.teppco.com. This news release includes forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Except for the historical information contained herein, the matters discussed in this news release, including without limitation those under the caption "2006 Outlook" are forward-looking statements that involve certain risks and uncertainties. These risks and uncertainties include, among other things, market conditions, governmental regulations and risk factors discussed in TEPPCO Partners, L.P. filings with the Securities and Exchange Commission.
TEPPCO Partners, L. P.
FINANCIAL HIGHLIGHTS
(Unaudited - In Millions, Except Per Unit Amounts)
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2006 2005 2006 2005
--------- --------- --------- ---------
Operating Revenues:
Sales of petroleum products $2,287.3 $1,961.3 $4,683.6 $3,346.4
Transportation - Refined
Products 39.4 37.8 71.2 72.8
Transportation - LPGs 13.4 14.5 42.8 46.7
Transportation - Crude oil 10.5 9.0 19.5 18.2
Transportation - NGLs 10.7 11.4 21.4 21.6
Gathering - Natural Gas 41.5 37.0 82.8 73.5
Other 22.3 16.4 40.1 32.0
--------- --------- --------- ---------
Total Operating Revenues 2,425.1 2,087.4 4,961.4 3,611.2
--------- --------- --------- ---------
Costs and Expenses:
Purchases of petroleum
products 2,254.8 1,941.9 4,625.8 3,313.0
Operating expenses 61.3 48.0 113.1 96.0
Operating fuel and power 13.0 11.6 27.3 22.6
General and administrative 9.2 6.1 18.4 13.3
Depreciation and
amortization 28.6 26.1 57.4 51.8
Gains on sales of assets - (0.1) (1.4) (0.6)
--------- --------- --------- ---------
Total Costs and Expenses 2,366.9 2,033.6 4,840.6 3,496.1
--------- --------- --------- ---------
Operating Income 58.2 53.8 120.8 115.1
--------- --------- --------- ---------
Interest expense - net (19.2) (21.6) (40.4) (40.9)
Equity earnings (1) 2.7 7.8 3.7 11.8
Other income - net 0.4 0.1 1.3 0.4
--------- --------- --------- ---------
Income before deferred
income tax expense 42.1 40.1 85.4 86.4
Deferred income tax expense 0.5 - 0.5 -
--------- --------- --------- ---------
Income from continuing
operations 41.6 40.1 84.9 86.4
Income from discontinued
operations (0.1) 0.8 1.5 2.0
Gain on sale of discontinued
operations - - 17.9 -
--------- --------- --------- ---------
Discontinued operations (0.1) 0.8 19.4 2.0
--------- --------- --------- ---------
Net Income $41.5 $40.9 $104.3 $88.4
========= ========= ========= =========
Net Income Allocation:
----------------------
Limited Partner
Unitholders:
Income from continuing
operations $29.4 $28.2 $59.9 $61.1
Discontinued operations (0.1) 0.6 13.7 1.4
--------- --------- --------- ---------
Total Net Income
Allocated to Limited
Partners Unitholders 29.3 28.8 73.6 62.5
--------- --------- --------- ---------
General Partner:
Income from continuing
operations 12.2 11.9 25.0 25.3
Discontinued operations - 0.2 5.7 0.6
--------- --------- --------- ---------
Total Net Income
Allocated to General
Partner 12.2 12.1 30.7 25.9
--------- --------- --------- ---------
Total:
Income from continuing
operations 41.6 40.1 84.9 86.4
Discontinued operations (0.1) 0.8 19.4 2.0
--------- --------- --------- ---------
Total Net Income
Allocated $41.5 $40.9 $104.3 $88.4
========= ========= ========= =========
Basic and Diluted Net
Income Per Limited Partner
Unit:
Income from continuing
operations $0.42 $0.42 $0.85 $0.94
Discontinued operations - 0.01 0.20 0.02
--------- --------- --------- ---------
Earnings Per Unit $0.42 $0.43 $1.05 $0.96
========= ========= ========= =========
Weighted Average Number of
Limited Partner Units 70.0 66.6 70.0 64.8
========= ========= ========= =========
(1)EBITDA
Net Income $41.5 $40.9 $104.3 $88.4
Discontinued operations 0.1 (0.8) (19.4) (2.0)
--------- --------- --------- ---------
Income from continuing
operations 41.6 40.1 84.9 86.4
Deferred income tax
expense 0.5 - 0.5 -
Interest expense - net 19.2 21.6 40.4 40.9
Depreciation and
amortization (D&A) 28.6 26.1 57.4 51.8
Amortization of excess
investment in joint
ventures 1.2 1.3 2.1 2.5
TEPPCO's pro-rata
percentage of joint
venture interest expense
and D&A 5.9 6.0 11.6 11.7
--------- --------- --------- ---------
EBITDA from continuing
operations $97.0 $95.1 $196.9 $193.3
--------- --------- --------- ---------
Discontinued operations (0.1) 0.8 19.4 2.0
D&A included in
discontinued operations - 0.2 0.1 0.3
--------- --------- --------- ---------
EBITDA $96.9 $96.1 $216.4 $195.6
========= ========= ========= =========
TEPPCO Partners, L.P.
BUSINESS SEGMENT DATA
(Unaudited - In Millions)
Three Months
Ended June Intersegment
30, 2006 Downstream Midstream Upstream Eliminations Consolidated
------------- ---------- --------- --------- ------------ ------------
Operating
revenues $69.3 $70.4 $2,287.0 $(1.6) $2,425.1
Purchases of
petroleum
products - 13.0 2,243.1 (1.3) 2,254.8
Operating
expenses 37.7 18.7 18.2 (0.3) 74.3
General and
adminis-
trative 4.7 2.6 1.9 - 9.2
Depreciation
and
amortization
(D&A) 10.1 15.0 3.5 - 28.6
---------- --------- --------- ------------ ------------
Operating
Income 16.8 21.1 20.3 - 58.2
Equity
(losses)
earnings (2.4) - 5.1 - 2.7
Other - net 0.2 - 0.2 - 0.4
---------- --------- --------- ------------ ------------
Income
before
interest 14.6 21.1 25.6 - 61.3
---------- --------- --------- ------------ ------------
Depreciation
and
amortization 10.1 15.0 3.5 - 28.6
Amortization
of excess
investment
in joint
ventures 1.0 - 0.2 - 1.2
TEPPCO's pro-
rata
percentage
of joint
venture
interest
expense and
D&A 4.2 - 1.7 - 5.9
---------- --------- --------- ------------ ------------
EBITDA from
continuing
operations $29.9 $36.1 $31.0 $- $97.0
========== ========= ========= ============ ============
Discontinued
operations (0.1)
Deferred
income tax
expense (0.5)
Depreciation
and
amortization (28.6)
Interest
expense -
net (19.2)
Amortization
of excess
investment
in joint
ventures (1.2)
TEPPCO's pro-
rata
percentage
of joint
venture
interest
expense and
D&A (5.9)
------------
Net Income $41.5
============
Three Months
Ended June Intersegment
30, 2005 Downstream Midstream Upstream Eliminations Consolidated
------------- ---------- --------- --------- ------------ ------------
Operating
revenues $63.4 $51.7 $1,973.0 $(0.7) $2,087.4
Purchases of
petroleum
products - - 1,942.6 (0.7) 1,941.9
Operating
expenses 35.2 10.4 14.0 - 59.6
General and
adminis-
trative 3.5 1.4 1.2 - 6.1
Depreciation
and
amortization
(D&A) 9.8 12.7 3.6 - 26.1
Gains on
sales of
assets - - (0.1) - (0.1)
---------- --------- --------- ------------ ------------
Operating
Income 14.9 27.2 11.7 - 53.8
Equity
(losses)
earnings (0.2) - 8.0 - 7.8
Other - net 0.1 - - - 0.1
---------- --------- --------- ------------ ------------
Income
before
interest 14.8 27.2 19.7 - 61.7
---------- --------- --------- ------------ ------------
Depreciation
and
amortization 9.8 12.7 3.6 - 26.1
Amortization
of excess
investment
in joint
ventures 1.1 - 0.2 - 1.3
TEPPCO's pro-
rata
percentage
of joint
venture
interest
expense and
D&A 4.0 - 2.0 - 6.0
---------- --------- --------- ------------ ------------
EBITDA from
continuing
operations $29.7 $39.9 $25.5 $- $95.1
========== ========= ========= ============ ============
Discontinued
operations 0.8
Depreciation
and
amortization (26.1)
Interest
expense -
net (21.6)
Amortization
of excess
investment
in joint
ventures (1.3)
TEPPCO's pro-
rata
percentage
of joint
venture
interest
expense and
D&A (6.0)
------------
Net Income $40.9
============
TEPPCO Partners, L.P.
BUSINESS SEGMENT DATA
(Unaudited - In Millions)
Six Months
Ended June Intersegment
30, 2006 Downstream Midstream Upstream Eliminations Consolidated
------------- ---------- --------- --------- ------------ ------------
Operating
revenues $143.4 $126.7 $4,698.6 $(7.3) $4,961.4
Purchases of
petroleum
products - 13.0 4,619.5 (6.7) 4,625.8
Operating
expenses 73.2 32.9 34.9 (0.6) 140.4
General and
adminis-
trative 9.8 4.9 3.7 - 18.4
Depreciation
and
amortization
(D&A) 20.4 30.2 6.8 - 57.4
Gains on
sales of
assets - (1.4) - - (1.4)
---------- --------- --------- ------------ ------------
Operating
Income 40.0 47.1 33.7 - 120.8
Equity
(losses)
earnings (3.6) - 7.3 - 3.7
Other - net 1.0 0.1 0.2 - 1.3
---------- --------- --------- ------------ ------------
Income
before
interest 37.4 47.2 41.2 - 125.8
---------- --------- --------- ------------ ------------
Depreciation
and
amortization 20.4 30.2 6.8 - 57.4
Amortization
of excess
investment
in joint
ventures 1.7 - 0.4 - 2.1
TEPPCO's pro-
rata
percentage
of joint
venture
interest
expense and
D&A 8.3 - 3.3 - 11.6
---------- --------- --------- ------------ ------------
EBITDA from
continuing
operations $67.8 $77.4 $51.7 $- $196.9
========== ========= ========= ============ ============
Discontinued
operations 19.4
Deferred
income tax
expense (0.5)
Depreciation
and
amortization (57.4)
Interest
expense -
net (40.4)
Amortization
of excess
investment
in joint
ventures (2.1)
TEPPCO's pro-
rata
percentage
of joint
venture
interest
expense and
D&A (11.6)
------------
Net Income $104.3
============
Six Months
Ended June Intersegment
30, 2005 Downstream Midstream Upstream Eliminations Consolidated
------------- ---------- --------- --------- ------------ ------------
Operating
revenues $141.6 $101.8 $3,369.8 $(2.0) $3,611.2
Purchases of
petroleum
products - - 3,315.0 (2.0) 3,313.0
Operating
expenses 68.1 22.5 28.0 - 118.6
General and
adminis-
trative 7.7 2.9 2.7 - 13.3
Depreciation
and
amortization
(D&A) 19.4 25.2 7.2 - 51.8
Gains on
sales of
assets (0.1) (0.4) (0.1) - (0.6)
---------- --------- --------- ------------ ------------
Operating
Income 46.5 51.6 17.0 - 115.1
Equity
(losses)
earnings (2.1) - 13.9 - 11.8
Other - net 0.3 0.1 - - 0.4
---------- --------- --------- ------------ ------------
Income
before
interest 44.7 51.7 30.9 - 127.3
---------- --------- --------- ------------ ------------
Depreciation
and
amortization 19.4 25.2 7.2 - 51.8
Amortization
of excess
investment
in joint
ventures 2.1 - 0.4 - 2.5
TEPPCO's pro-
rata
percentage
of joint
venture
interest
expense and
D&A 8.1 - 3.6 - 11.7
---------- --------- --------- ------------ ------------
EBITDA from
continuing
operations $74.3 $76.9 $42.1 $- $193.3
========== ========= ========= ============ ============
Discontinued
operations 2.0
Depreciation
and
amortization (51.8)
Interest
expense -
net (40.9)
Amortization
of excess
investment
in joint
ventures (2.5)
TEPPCO's pro-
rata
percentage
of joint
venture
interest
expense and
D&A (11.7)
------------
Net Income $88.4
============
TEPPCO Partners, L.P.
Condensed Statements of Cash Flows (Unaudited) (In Millions)
Six Months Ended
June 30,
----------------------
2006 2005
----------------------------------------------------------------------
Cash Flows from Operating Activities
Net income $104.3 $88.4
Income from discontinued operations (19.4) (2.0)
Deferred income tax expense 0.5 -
Gains on sales of assets (1.4) (0.6)
Depreciation, working capital and other 57.6 (58.1)
Cash flows from discontinued operations 1.5 2.3
----------------------------------------------------------------------
Net Cash Provided by Operating Activities 143.1 30.0
----------------------------------------------------------------------
Cash Flows from Investing Activities:
Proceeds from asset sales 39.8 0.5
Purchase of assets - (42.5)
Cash paid for linefill on assets owned (1.4) (5.4)
Investment in Mont Belvieu Storage Partners,
L.P. (1.7) (1.1)
Investment in Centennial Pipeline LLC (2.5) -
Capital expenditures (1) (82.5) (82.9)
----------------------------------------------------------------------
Net Cash Used in Investing Activities (48.3) (131.4)
----------------------------------------------------------------------
Cash Flows from Financing Activities:
Proceeds from revolving credit facilities 305.6 299.3
Repayments on revolving credit facilities (266.5) (374.3)
Proceeds from the issuance of LP Units - 278.8
Distributions paid (133.8) (117.3)
----------------------------------------------------------------------
Net Cash Provided by (Used in) Financing
Activities (94.7) 86.5
----------------------------------------------------------------------
Net Increase (Decrease) in Cash and Cash
Equivalents 0.1 (14.9)
Cash and Cash Equivalents -- beginning of period 0.1 16.4
----------------------------------------------------------------------
Cash and Cash Equivalents -- end of period $0.2 $1.5
======================================================================
Supplemental Information:
Non-cash investing activities:
Interest paid (net of capitalized interest) $42.1 $41.1
======================================================================
(1) Includes capital expenditures for maintaining existing operations
of $13.9 million in 2006, and $19.9 million in 2005.
TEPPCO Partners, L. P.
Condensed Balance Sheets (Unaudited)
(In Millions)
June 30, December 31,
2006 2005
----------------------------------------------------------------------
Assets
Current assets
Cash and cash equivalents $0.2 $0.1
Other 928.6 899.0
----------------------------------------------------------------------
Total current assets 928.8 899.1
Property, plant and equipment - net 1,957.5 1,960.1
Intangible assets (1) 360.6 376.9
Equity investments 353.5 359.6
Other assets 86.8 84.8
----------------------------------------------------------------------
Total assets $3,687.2 $3,680.5
======================================================================
Liabilities and Partners' Capital
Total current liabilities $936.1 $937.2
----------------------------------------------------------------------
Senior Notes (2) 1,106.7 1,119.1
Other long-term debt 445.0 405.9
Deferred tax liability 0.5 -
Other non-current liabilities 27.2 16.9
Partners' capital
Accumulated other comprehensive loss (0.3) -
General partner's interest (3) (70.1) (61.5)
Limited partners' interests 1,242.1 1,262.9
----------------------------------------------------------------------
Total partners' capital 1,171.7 1,201.4
----------------------------------------------------------------------
Total liabilities and partners' capital $3,687.2 $3,680.5
======================================================================
(1) Includes the value of long-term service agreements between TEPPCO
and its customers.
(2) Includes $18.9 million and $31.5 million at Jun. 30, 2006, and
Dec. 31, 2005, respectively related to fair value hedges.
(3) Amount does not represent a commitment by the General Partner to
make a contribution to TEPPCO.
TEPPCO Partners, L. P.
OPERATING DATA
(Unaudited - In Millions, Except as Noted)
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2006 2005 2006 2005
--------- --------- --------- ---------
Downstream Segment:
Barrels Delivered
Refined Products 46.0 42.1 81.9 80.7
LPGs 8.3 7.9 21.1 22.7
--------- --------- --------- ---------
Total 54.3 50.0 103.0 103.4
========= ========= ========= =========
Average Tariff Per Barrel
Refined Products $0.86 $0.90 $0.87 $0.90
LPGs 1.33 1.84 1.91 2.06
Average System Tariff Per
Barrel $0.93 $1.05 $1.08 $1.16
Upstream Segment:
Margins/Revenues:
Crude oil transportation
revenue $16.6 $15.0 $32.4 $29.1
Crude oil marketing
margin 19.1 9.0 31.9 12.5
Crude oil terminaling
revenue 3.6 2.0 5.8 4.5
LSI margin 2.0 1.7 4.2 3.5
--------- --------- --------- ---------
Total
Margins/Revenues $41.3 $27.7 $74.3 $49.6
========= ========= ========= =========
Reconciliation of
Margins/Revenues to
Operating Income:
Sales of petroleum
products $2,273.9 $1,961.3 $4,674.3 $3,346.4
Transportation - Crude
oil 10.5 9.0 19.5 18.2
Purchases of petroleum
products (2,243.1) (1,942.6) (4,619.5) (3,315.0)
--------- --------- --------- ---------
Total Margins/Revenues 41.3 27.7 74.3 49.6
Other operating revenues 2.6 2.7 4.8 5.2
Operating expenses (18.2) (14.0) (34.9) (28.0)
General and
administrative (1.9) (1.2) (3.7) (2.7)
Depreciation and
amortization (3.5) (3.6) (6.8) (7.2)
Gains on sales of assets - 0.1 - 0.1
--------- --------- --------- ---------
Operating income $20.3 $11.7 $33.7 $17.0
========= ========= ========= =========
Total barrels
Crude oil transportation 22.8 23.8 45.2 47.5
Crude oil marketing 56.3 48.9 109.2 93.2
Crude oil terminaling 38.3 21.3 62.7 48.4
Lubrication oil volume
(total gallons): 3.4 3.2 7.2 7.3
Margin per barrel:
Crude oil transportation $0.726 $0.630 $0.716 $0.613
Crude oil marketing 0.339 0.185 0.292 0.135
Crude oil terminaling 0.093 0.096 0.093 0.092
Lubrication oil margin (per
gallon): $0.605 $0.531 $0.577 $0.469
Midstream Segment:
Gathering - Natural Gas -
Jonah
Bcf 111.3 99.0 220.0 196.4
Btu (in trillions) 123.0 109.5 243.0 216.8
Average fee per MMBtu $0.210 $0.189 $0.208 $0.189
Gathering - Natural Gas -
Val Verde
Bcf 46.9 44.6 92.3 87.9
Btu (in trillions) 41.7 39.5 81.6 77.5
Average fee per MMBtu $0.389 $0.411 $0.404 $0.420
Transportation - NGLs
Total barrels 17.7 15.5 33.5 29.4
Margin per barrel $0.608 $0.733 $0.638 $0.735
Fractionation - NGLs
Total barrels 1.1 1.1 2.3 2.2
Margin per barrel $1.850 $1.820 $1.666 $1.732
Natural Gas Sales
Btu (in millions) 2.6 - 2.6 -
Average fee per MMBtu $5.24 $- $5.24 $-
Sales - Condensate
Total barrels
(thousands) 18.3 13.3 43.0 41.2
Margin per barrel $68.20 $53.24 $65.52 $49.77
TEPPCO Partners, L.P.
Earnings Estimate 2006
(Excluding Discontinued Operations)
Net Income $170 million - $190 million
Basic Net Income Per Limited Partner Unit $1.65 - $1.85
Interest Expense, net $93 million
Depreciation and Amortization Expense
(D&A) $109 million
TEPPCO's Pro-rata Percentage of Joint
Venture Interest Expense and D&A $23 million
Amortization of Excess Investment in $5 million
Joint Ventures
EBITDA $400 million - $420 million
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