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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)

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:

<TABLE>
<CAPTION>

                                                                       Three Months Ended March 31, 2002
                                                                       ---------------------------------
                                                                 Net Income           Units           Per Unit
                                                                (Numerator)       (Denominator)        Amount
                                                                -----------       -------------        ------
                                                                        (in thousands)
<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
                                                                  ======              ======             ====

    Dilutive net income per common and subordinated unit......   $ 9,578              19,242           $ 0.50
                                                                   =====              ======             ====
</TABLE>


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.


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