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

The following  unaudited pro forma  financial  information  for the three months
ended March 31, 2001  assumes  that the Wichita  Falls  Business was acquired on
January 1, 2001 with borrowings under the revolving credit facility.

                                                            Three Months
                                                                Ended
                                                              March 31,
                                                                 2001
                                                                 ----
                                                            (in thousands)
       Pro Forma Income Statement Information
        Revenues........................................      $ 27,298
        Costs and expenses..............................        14,642
        Operating income................................        12,656
        Net income......................................        10,331

Since  Valero L.P.  had not  completed  its IPO by March 31,  2001,  all the net
income for the three months ended March 31, 2001,  would have been  allocated to
Valero  Energy  (the  Business's  parent)  and thus  there was no net income per
limited partnership unit for that period.

The financial  statements  included in this Form 10-Q represent the consolidated
and combined  financial  statements of Valero L.P., Valero Logistics  Operations
and the Wichita Falls Business as follows:
o    consolidated financial statements of the Partnership, including the Wichita
     Falls Business, as of March 31, 2002 and for the two months ended March 31,
     2002;
o    combined  financial  statements  of the  Partnership  and the Wichita Falls
     Business  as of December  31, 2001 and for the one month ended  January 31,
     2002; and
o    combined   financial   statements  of  Valero  L.P.  and  Valero  Logistics
     Operations for the three months ended March 31, 2001.

NOTE 3: Accounting Pronouncements

FASB Statement No. 144
In August 2001, the Financial Accounting Standards Board (FASB) issued Statement
of Financial  Accounting  Standard No. 144,  "Accounting  for the  Impairment or
Disposal of Long-Lived Assets." Statement No. 144 addresses financial accounting
and reporting for the impairment of long-lived  assets and for long-lived assets
to be disposed of. This Statement supersedes FASB Statement No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of" but retains Statement No. 121's  fundamental  provisions for recognition and
measurement  of  impairment  of  long-lived  assets  to be  held  and  used  and
measurement of long-lived  assets to be disposed of by sale. This statement also
supersedes APB Opinion No. 30,  "Reporting the Results of Operations - Reporting
the Effects of Disposal of a Segment of a Business,  and Extraordinary,  Unusual
and  Infrequently  Occurring  Events and  Transactions"  for the  disposal  of a
segment of a  business.  Statement  No. 144 does not apply to  goodwill or other
intangible  assets,  the accounting and reporting of which is addressed in newly
issued Statement No. 142, "Goodwill and Other Intangible Assets." The provisions
of Statement No. 144 are effective  for  financial  statements  for fiscal years
beginning  after  December 15,  2001,  and interim  periods  within those fiscal
years,  with  early  application   encouraged.   There  was  no  impact  to  the
Partnership's  financial  position  or  results  of  operations  as a result  of
adopting this statement effective January 1, 2002.

FASB Statement No. 145
In April 2002, the FASB issued  Statement of Financial  Accounting  Standard No.
145,  "Rescission  of FASB  Statements  No.  4, 44,  and 64,  Amendment  of FASB
Statement No. 13, and Technical Corrections." This statement:
o    rescinds  Statement No. 4, "Reporting Gains and Losses from  Extinguishment
     of Debt,"
o    rescinds  Statement  No.  64,  "Extinguishments  of Debt  Made  to  Satisfy
     Sinking-Fund Requirements,"
o    rescinds  Statement  No. 44,  "Accounting  for  Intangible  Assets of Motor
     Carriers," and

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