UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 21, 2003
VALERO L.P.
(Exact name of registrant as specified in its charter)
Delaware 1-16417 74-2956831
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
One Valero Place
San Antonio, Texas 78212
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (210) 370-2000
------------------------------
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
99.1 Press Release dated April 21, 2003.
Item 9. Regulation FD Disclosure (including Item 12 information).
The following information, which is intended to be furnished under Item 12
"Results of Operations and Financial Condition," is being furnished under this
Item 9 in accordance with SEC Release No. 33-8216.
On April 21, 2003, Valero L.P. (the "Partnership") issued a press release
announcing financial results for the Partnership's first quarter 2003 earnings.
A copy of the press release is furnished with this report as Exhibit 99.1, and
is incorporated herein by reference. The press release discloses certain
financial measures (EBITDA and distributable cash flow) that are non-GAAP
financial measures as defined under SEC rules. The press release furnishes a
reconciliation of these non-GAAP financial measures to their nearest GAAP
financial measures. Reasons for the Partnership's use of these non-GAAP
financial measures are disclosed in the Partnership's annual report on Form 10-K
for the year ended December 31, 2002, under the caption "Item 6. Selected
Financial Data."
The information in this report is being furnished, not filed, pursuant to Item
12 of Form 8-K. Accordingly, the information in Item 12 of this report will not
be incorporated by reference into any registration statement filed by the
Partnership under the Securities Act of 1933, as amended, unless specifically
identified therein as being incorporated therein by reference.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
VALERO L.P.
By: Riverwalk Logistics, L.P.
its general partner
By: Valero GP, LLC
its general partner
Date: April 21, 2003 By: /s/Bradley C. Barron
------------------------------
Name: Bradley C. Barron
Title: Corporate Secretary
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EXHIBIT INDEX
Number Exhibit
99.1 Press Release dated April 21, 2003.
4
Exhibit 99.1
Valero L.P. Reports
First Quarter Earnings
SAN ANTONIO, April 21, 2003 -- Valero L.P. (NYSE: VLI) today announced net
income applicable to limited partners of $11.8 million, or $0.60 per unit, for
the first quarter of 2003, compared to $9.6 million, or $0.50 per unit, for the
first quarter of 2002. Distributable cash flow for the first quarter was $15.5
million, or $0.69 per unit. With respect to the quarterly distribution to
unitholders payable for the first quarter of 2003, the Board of Directors of the
partnership has approved a distribution of $0.70 per unit payable May 15, 2003.
Although throughput volumes in January and early February were down primarily
due to seasonal refinery run cuts at Valero Energy Corporation's McKee and
Ardmore refineries, throughput volumes increased substantially in March as a
result of improved refining and marketing fundamentals. In addition, the
partnership benefited from the contribution of the pipeline and crude oil tank
assets acquired March 18, 2003.
"This has been another exciting quarter for Valero L.P., especially with the
recent $350 million acquisition of the crude oil tank assets and the South Texas
Pipeline System from Valero Energy," said Curt Anastasio, Chief Executive
Officer of Valero L.P. "This acquisition was a major step in our strategy of
growth through accretive acquisitions and has allowed us to significantly
diversify our earnings base. We now serve six of Valero Energy's 12 refineries
and believe that we will be able to increase our annual operating income by more
than $30 million from the contribution of these assets."
"With the increase in earnings and cash flow from these recent transactions, we
expect to be in a position to recommend to our Board of Directors an increase in
the quarterly distribution of five cents per unit starting with the distribution
with respect to the second quarter of 2003. This would increase the quarterly
distribution to 75 cents per unit, or $3.00 per unit annually, and would mark
the third increase in the quarterly distribution rate since the second quarter
of 2002."
"Our primary goal remains increasing our cash distributions to unitholders
through accretive acquisitions and internal growth opportunities while
maintaining a strong balance sheet and coverage ratio," said Anastasio.
A conference call with management is scheduled for 4:00 p.m. ET (3:00 p.m. CT)
today, (April 21), to discuss the financial and operational results for the
first quarter of 2003. Anyone interested in listening to the presentation can
call 888/815-2262, ID 9586060, or listen via the internet on the company's web
site at www.valerolp.com.
Valero L.P. owns and operates crude oil and refined product pipelines, refined
product terminals and refinery crude oil tank assets primarily in Texas, New
Mexico, Colorado, Oklahoma and California. The partnership transports refined
products from Valero Energy's refineries to established and growing markets in
the Mid-Continent, Southwest and the Texas-Mexico border region of the United
States. In addition, its pipelines and storage facilities primarily supply six
of Valero Energy's key refineries with crude oil and other feedstocks as well as
provide access to domestic and foreign crude oil sources.
Cautionary Statement Regarding Forward-Looking Statements
This press release includes forward-looking statements within the meaning of the
Securities Litigation Reform Act of 1995 regarding future events and the future
financial performance of Valero L.P. All forward-looking statements are based on
the partnership's beliefs as well as assumptions made by and information
currently available to the partnership. These statements reflect the
partnership's current views with respect to future events and are subject to
various risks, uncertainties and assumptions. These risks, uncertainties and
assumptions are discussed in Valero L.P.'s 2002 annual report on Form 10-K and
subsequent filings with the Securities and Exchange Commission.
For more information, visit Valero L.P.'s web site at www.valerolp.com.
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Valero L.P.
Consolidated Financial Information
March 31, 2003 and 2002
(unaudited, in thousands, except unit data,
per unit data and barrel information)
Three Months Ended
March 31,
---------------------------
2003 2002
---- ----
Statement of Income Data (Note 1):
Revenues $ 31,816 $ 26,024
--------- ---------
Costs and expenses:
Operating expenses 11,661 9,184
General and administrative expenses 1,844 1,788
Depreciation and amortization 4,283 4,356
--------- ----------
Total costs and expenses 17,788 15,328
--------- ----------
Operating income 14,028 10,696
Equity income from Skelly-Belvieu
Pipeline Company 731 678
Interest expense, net (Note 2) (2,377) (556)
--------- ----------
Income before income tax expense 12,382 10,818
Income tax expense (Note 3) - 395
--------- ----------
Net income 12,382 10,423
Net income applicable to general
partner (Note 3) (624) (845)
--------- ----------
Net income applicable to limited partners $ 11,758 $ 9,578
========= ==========
Net income per unit applicable to limited
partners (Note 4) $ 0.60 $ 0.50
Weighted average number of limited
partnership units outstanding (Note 5) 19,556,486 19,241,617
Earnings before interest, taxes and
depreciation and amortization (EBITDA, Note 6) $ 19,042 $ 15,730
Distributable cash flow (Note 6) 15,490 14,478
Operating Data (barrels/day):
Crude oil pipeline throughput 332,760 312,387
Refined product pipeline throughput 296,816 262,872
Refined product terminal throughput 176,797 175,816
Crude oil tank throughput 77,458 -
March 31, December 31,
2003 2002
---- ----
Balance Sheet Data:
Long-term debt, including current
portion (Note 2) $ 383,891 $ 109,658
Partners' equity (Note 5) 362,590 293,895
Debt-to-capitalization ratio 51.4% 27.2%
See accompanying notes on the following page.
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Valero L.P.
Consolidated Financial Information - Continued
March 31, 2003 and 2002
Notes:
1. Effective March 18, 2003, Valero L.P. and Valero Energy Corporation
(Valero Energy) entered into (i) a contribution agreement whereby
Valero Energy contributed to Valero Logistics Operations, L.P. (Valero
Logistics) certain crude oil and other feedstock tank assets in
exchange for an aggregate amount of $200,000,000 in cash, and (ii) a
contribution agreement whereby Valero Energy contributed to Valero
Logistics certain refined product pipelines and refined product
terminals (referred to as the South Texas Pipelines and Terminals) in
exchange for an aggregate amount of $150,000,000 in cash. The
statement of income for the three months ended March 31, 2003,
includes $1,791,000 of operating income related to the tank assets and
the South Texas Pipelines and Terminals for the period from March 19,
2003 through March 31, 2003, excluding depreciation expense of
approximately $460,000. The statement of income for the three months
ended March 31, 2003, also includes $543,000 of operating income
related to the Telfer asphalt terminal acquired effective January 7,
2003 for $15,000,000 in cash.
2. Interest expense increased for the three months ended March 31, 2003
as compared to the three months ended March 31, 2002 primarily due to
interest expense related to the 6.875% senior notes issued in July of
2002, the proceeds of which were used to repay borrowings under the
variable-rate revolving credit facility, and interest expense related
to a private placement of $250,000,000 of 6.05% senior notes and
$25,000,000 of borrowings under the revolving credit facility
effective March18, 2003. These 2003 borrowings were used to fund a
portion of the acquistions discussed in Note 1 and the redemption of
common units discussed in Note 5. Also during the three months ended
March 31, 2003, Valero Logistics entered into $105,000,000 (notional
amount) of interest rate swaps, which effectively convert $105,000,000
of fixed rate debt to variable rate debt.
3. Net income for the three months ended March 31, 2002 includes $650,000
(net of income tax expense of $395,000) related to the Wichita Falls
Business for the month ended January 31, 2002. Such net income was
allocated entirely to the general partner. Net income applicable to
the general partner includes the effect of incentive distributions.
4. Net income is allocated between limited partners and the general
partner's interests. Then such apportioned net income applicable to
the limited partners is divided by the weighted average number of
limited partnership units outstanding for such class.
5. On March 18, 2003, Valero L.P. redeemed from Valero Energy 3,809,750
common units for $134,065,000 in cash, using a portion of the proceeds
from the $250,000,000 private placement of 6.05% senior notes
discussed in Note 2. Also on March 18, 2003, Valero L.P. closed on a
public offering of 5,750,000 common units for total proceeds of
$202,342,000, net of underwriters' discount. As a result of these
common unit transactions, Valero Energy's aggregate ownership interest
in Valero L.P. was reduced to 49.5%, including Riverwalk Logistics,
L.P.'s 2% general partner interest.
6. The following is a reconciliation of income before income tax expense
to EBITDA and distributable cash flow:
Three Months Ended
March 31,
-------------------------
2003 2002
---- ----
(in thousands)
Income before income tax expense $ 12,382 $ 10,818
Plus interest expense, net 2,377 556
Plus depreciation and amortization 4,283 4,356
--------- ---------
EBITDA 19,042 15,730
Less equity income from Skelly-Belvieu
Pipeline Company (731) (678)
Less interest expense, net (2,377) (556)
Less maintenance capital expenditures (1,192) (789)
Plus distributions from Skelly-Belvieu
Pipeline Company 748 771
--------- ---------
--------- ---------
Distributable cash flow $ 15,490 $ 14,478
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