VALERO L.P. AND VALERO LOGISTICS OPERATIONS, L.P.
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS - (Continued)
NOTE 6: Long-term Debt
As of March 31, 2002, the Partnership had $80,000,000 outstanding under its
$120,000,000 revolving credit facility. During the first quarter of 2002, the
Partnership borrowed $64,000,000 under the revolving credit facility to purchase
the Wichita Falls Business from Valero Energy.
The revolving credit facility expires on January 15, 2006 and borrowings under
the revolving credit facility bear interest at either an alternative base rate
or the LIBOR rate at the option of the Partnership.
The revolving credit facility requires that the Partnership maintain certain
financial ratios and includes other restrictive covenants, including a
prohibition on distributions if any default, as defined in the revolving credit
facility, exists or would result from the distribution. Management believes that
the Partnership is in compliance with all of these ratios and covenants.
NOTE 7: Net Income per Limited Partnership Unit
The following table provides details of the basic and diluted net income per
limited partnership unit computations:
Three Months Ended March 31, 2002
Net Income Units Per Unit
(Numerator) (Denominator) Amount
----------- ------------- ------
<S> <C> <C> <C>
Limited partners' interest in net income.................. $ 9,578
Basic net income per common and subordinated unit......... $ 9,578 19,242 $ 0.50
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Dilutive net income per common and subordinated unit...... $ 9,578 19,242 $ 0.50
===== ====== ====
The Partnership generated sufficient net income such that the amount of net
income allocated to common units was equal to the amount allocated to the
subordinated units, after consideration of the general partner interest.
Net income prior to the Partnership's initial public offering on April 16, 2001
was allocated entirely to UDS and its affiliates and the net income related to
the Wichita Falls Business for the month ended January 31, 2002 of $650,000 was
allocated entirely to Valero Energy, the Business's parent.
NOTE 8: Restricted Units
Valero GP, LLC, the general partner of Riverwalk Logistics, L.P., adopted a
long-term incentive plan under which restricted units may be awarded to certain
key employees and non-employees. In January 2002, Valero GP, LLC granted a total
of 55,250 restricted units to its officers and outside directors. One-third of
the restricted units will vest at the end of each year of the three-year vesting
period. For the three months ended March 31, 2002, the Partnership recognized
$132,000 of compensation expense associated with these restricted units, which
were valued at $40.95 per unit as of January 21, 2002, the date of grant.