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SEC Filings
10-Q
NUSTAR ENERGY L.P. filed this Form 10-Q on 05/15/2002
Entire Document
 
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               VALERO L.P. AND VALERO LOGISTICS OPERATIONS, L.P.
      NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS - (Continued)

These consolidated and combined  financial  statements should be read along with
the audited  consolidated  and combined  financial  statements and notes thereto
included in Valero  L.P.'s Form 10-K/A filed on April 3, 2002 and Valero  L.P.'s
Form 8-K/A dated February 1, 2002 and filed on April 16, 2002.

Acquisition of the Wichita Falls Business
On February  1, 2002,  the  Partnership  acquired  the  Wichita  Falls Crude Oil
Pipeline and Storage  Business (the Wichita Falls  Business)  from Valero Energy
for a total cost of  $64,000,000.  The purchase price was funded with borrowings
under the Partnership's revolving credit facility.

The Wichita Falls Business consists of the following assets:
o    A 271.7 mile pipeline  originating  in Wichita  Falls,  Texas and ending at
     Valero  Energy's  McKee  refinery in Dumas,  Texas.  The  pipeline  has the
     capacity to  transport  110,000  barrels  per day of crude oil  gathered or
     acquired by Valero  Energy at Wichita  Falls.  The Wichita  Falls crude oil
     pipeline  connects to third party  pipelines that originate along the Texas
     Gulf Coast.
o    Four storage tanks located in Wichita Falls, Texas with a total capacity of
     660,000 barrels.

In the fourth  quarter of 2001,  UDS completed an expansion  project to increase
the  capacity of the crude oil pipeline  from 85,000  barrels per day to 110,000
barrels  per day and to increase  the  capacity  of the  storage  facility  from
360,000 barrels to 660,000 barrels.

Since the acquisition of the Wichita Falls Business represents the transfer of a
business  under the common  control of Valero  Energy,  the balance  sheet as of
December  31,  2001 and the  statements  of income  and cash flows for the month
ended January 31, 2002  (preceding the  acquisition  date) have been restated to
include the Wichita Falls Business.  The assumed  transfer to the Partnership as
of December 31, 2001 (the earliest date on which common control existed) and the
restatement  of the January 2002  statements  of income and cash flows have been
recorded based on Valero  Energy's  historical  cost,  which was based on Valero
Energy's allocation of the purchase price paid for UDS. The balance sheet of the
Wichita  Falls  Business  as of  December  31,  2001,  which is  included in the
combined balance sheet as of December 31, 2001,  includes the following  amounts
in the respective captions.

                                                           Wichita Falls
                                                             Business
                                                         December 31, 2001
                                                         -----------------
                                                           (in thousands)
       Balance Sheet Caption
        Property, plant and equipment...................     $ 64,160
        Accrued liabilities.............................          131
        Taxes other than income taxes...................          251
        Deferred income tax liabilities.................       13,147
        Net parent investment...........................       50,631


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