Valero GP Holdings, LLC Reports Fourth Quarter 2006 Earnings and Announces Quarterly Distribution

  
    
  
  
    
      Valero GP Holdings, LLC (NYSE:VEH) today announced earnings of $10.3 
      million, or $0.24 per unit, for the fourth quarter of 2006. For the six 
      months ended December 31, 2006, earnings were $20 million, or $0.47 per 
      unit. Distributable cash flow available to unitholders for the fourth 
      quarter of 2006 was $13.5 million, or $0.32 per unit, and $27.0 million, 
      or $0.64 per unit, for the six months ended December 31, 2006.
    
    
      With respect to the quarterly distribution to unitholders payable for 
      the fourth quarter of 2006, Valero GP Holdings, LLC also announced that 
      it has declared a distribution of $0.32 per unit, or $1.28 per unit on 
      an annual basis, which will be paid on February 16, 2007, to holders of 
      record as of February 7, 2007.
    
    
      A conference call with management is scheduled for 2:30 p.m. ET (1:30 
      p.m. CT) today to discuss the financial results for the fourth quarter 
      of 2006. Investors interested in listening to the presentation may call 
      800-622-7620, passcode 5994994. International callers may access the 
      presentation by dialing 706-645-0327, passcode 5994994. The company 
      intends to have a playback available following the presentation, which 
      may be accessed by calling 800-642-1687, passcode 5994994. A live 
      broadcast of the conference call will also be available on the company’s 
      website at www.valerogpholdings.com.
    
    
      Valero GP Holdings, LLC is a publicly traded limited liability company 
      that owns the two percent general partner interest, a 21.4 percent 
      limited partner interest and the incentive distribution rights in Valero 
      L.P., one of the largest independent terminal and petroleum liquids 
      pipeline operators in the nation with operations in the United States, 
      the Netherlands Antilles, Canada, Mexico, the Netherlands and the United 
      Kingdom. For more information, visit Valero GP Holdings, LLC’s 
      website at www.valerogpholdings.com.
    
    
      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 GP Holdings, LLC. 
      All forward-looking statements are based on the company’s 
      beliefs as well as assumptions made by and information currently 
      available to the company. These statements reflect the company'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 GP Holdings, LLC’s 
      filings with the Securities and Exchange Commission.
    
    
      
        
          Valero GP Holdings, LLCConsolidated Financial 
          InformationDecember 31, 2006(unaudited, 
          thousands of dollars, except unit data and per unit data)
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
          Three Months EndedDecember 31, 2006
        
        
        
        
          Six Months EndedDecember 31, 2006
        
      
      
        
          
            Statement of Income Data:
          
        
        
        
        
        
        
        
        
        
      
      
        
          Equity in earnings of Valero L.P.
        
        
        
        
          $ 10,842 
        
        
        
        
          $ 22,479 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          General and administrative expenses
        
        
        
        
          (659)
        
        
        
        
          (1,536)
        
      
      
        
          Other income (expense), net
        
        
        
        
          167 
        
        
        
        
          (119)
        
      
      
        
          Interest expense, net
        
        
        
        
          (10)
        
        
        
        
          (16)
        
      
      
        
          Interest expense - affiliated
        
        
        
        
          - 
        
        
        
        
          (901)
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Income before income tax (expense) benefit
        
        
        
        
          10,340 
        
        
        
        
          19,907 
        
      
      
        
          Income tax (expense) benefit
        
        
        
        
          (17)
        
        
        
        
          113 
        
      
      
        
          Net income
        
        
        
        
          $ 10,323 
        
        
        
        
          $ 20,020 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Basic and diluted net income per unit
        
        
        
        
          $ 0.24 
        
        
        
        
          $ 0.47 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Equity in Earnings of Valero L.P.:
        
        
        
        
        
        
        
        
        
      
      
        
          General partner interest (2%)
        
        
        
        
          $ 674 
        
        
        
        
          $ 1,427 
        
      
      
        
          General partner incentive distribution
        
        
        
        
          3,909 
        
        
        
        
          7,818 
        
      
      
        
          Direct charges to Valero GP Holdings, LLC (Note 1)
        
        
        
        
          (223)
        
        
        
        
          (575)
        
      
      
        
          General partner's interest in earnings of Valero L.P.
        
        
        
        
          4,360 
        
        
        
        
          8,670 
        
      
      
        
          Limited partner interest in earnings of Valero L.P.
        
        
        
        
          7,203 
        
        
        
        
          15,251 
        
      
      
        
          Amortization of step-up in basis related to Valero L.P.'s assets and 
          liabilities
        
        
        
        
          (721)
        
        
        
        
          (1,442)
        
      
      
        
          Equity in earnings of Valero L.P.
        
        
        
        
          $ 10,842 
        
        
        
        
          $ 22,479 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Distributable Cash (Note 2):
        
        
        
        
        
        
        
        
        
      
      
        
          Cash distributions from Valero L.P. associated with:
        
        
        
        
        
        
        
        
        
      
      
        
          General partner interest (2%)
        
        
        
        
          $ 955 
        
        
        
        
          $ 1,910 
        
      
      
        
          Incentive distribution rights
        
        
        
        
          3,909 
        
        
        
        
          7,818 
        
      
      
        
          Limited partner interest-common units
        
        
        
        
          9,347 
        
        
        
        
          18,697 
        
      
      
        
          Total cash distributions from Valero L.P.
        
        
        
        
          14,211 
        
        
        
        
          28,425 
        
      
      
        
          Deduct expenses of Valero GP Holdings, LLC:
        
        
        
        
        
        
        
        
        
      
      
        
          General and administrative expenses
        
        
        
        
          (659)
        
        
        
        
          (1,536)
        
      
      
        
          Income tax (expense) benefit
        
        
        
        
          (17)
        
        
        
        
          113 
        
      
      
        
          Interest expense, net - non-affiliated
        
        
        
        
          (10)
        
        
        
        
          (16)
        
      
      
        
          Distributable cash
        
        
        
        
          $ 13,525 
        
        
        
        
          $ 26,986 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Units outstanding
        
        
        
        
          42,500,000 
        
        
        
        
          42,500,000 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Distributable cash flow per unit
        
        
        
        
          $ 0.32 
        
        
        
        
          $ 0.64 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Cash distributions to be paid to the unitholders of Valero GP 
          Holdings, LLC:
        
        
        
        
        
        
        
        
        
      
      
        
          Distribution per unit (Note 3)
        
        
        
        
          $ 0.32 
        
        
        
        
          $ 0.58 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Distributions applicable to public unitholders
        
        
        
        
          $ 13,600 
        
        
        
        
          $ 18,040 
        
      
      
        
          Distributions applicable to Valero Energy
        
        
        
        
          - 
        
        
        
        
          9,160 
        
      
      
        
          Total distributions
        
        
        
        
          $ 13,600 
        
        
        
        
          $ 27,200 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Valero GP Holdings, LLCConsolidated Financial 
          InformationDecember 31, 2006(unaudited, 
          thousands of dollars, except per unit data)
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Notes:
        
        
        
        
        
        
        
        
        
      
      
        
          
            1. We reimbursed Valero L.P. for these costs, and we were in turn 
            reimbursed by Valero Energy. Generally accepted accounting 
            principles require us to record this as an increase in our 
            investment in Valero L.P. and for Valero L.P. to record the full 
            expense and record the reimbursement as a capital contribution. 
            Valero L.P. allocated 100% of these costs to us because we paid 
            the amounts in full.
          
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          
            2. Valero GP Holdings, LLC utilizes distributable cash as a 
            financial measure which is not defined in United States generally 
            accepted accounting principles. Management uses this financial 
            measure because it is a widely accepted financial indicator used 
            by investors to compare general partner performance. In addition, 
            management believes that this measure provides investors an 
            enhanced perspective of the ability to make a minimum quarterly 
            distribution. Distributable cash is not intended to represent cash 
            flows for the period, nor is it presented as an alternative to net 
            income. It should not be considered in isolation or as substitutes 
            for a measure of performance prepared in accordance with United 
            States generally accepted accounting principles.
          
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          The following is a reconciliation of net income to distributable 
          cash to net cash provided by operating activities (in thousands):
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
          Three Months EndedDecember 31, 2006
        
        
        
        
          Six Months EndedDecember 31, 2006
        
      
      
        
          Net Income
        
        
        
        
          $ 10,323 
        
        
        
        
          $ 20,020 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Adjustments to derive Distributable Cash:
        
        
        
        
        
        
        
        
        
      
      
        
          Equity in earnings of Valero L.P.
        
        
        
        
          (10,842)
        
        
        
        
          (22,479)
        
      
      
        
          Quarterly distribution from Valero L.P.
        
        
        
        
          14,211 
        
        
        
        
          28,425 
        
      
      
        
          Other (income) expense, net
        
        
        
        
          (167)
        
        
        
        
          119 
        
      
      
        
          Interest expense - affiliated (a)
        
        
        
        
          - 
        
        
        
        
          901 
        
      
      
        
          Distributable cash
        
        
        
        
          13,525 
        
        
        
        
          26,986 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Adjustments to Distributable Cash to derive Net Cash Provided by 
          Operating Activities:
        
        
        
        
        
        
        
        
        
      
      
        
          Quarterly distribution from Valero L.P.
        
        
        
        
          (14,211)
        
        
        
        
          (28,425)
        
      
      
        
          Cash distribution of equity earnings received from Valero L.P.
        
        
        
        
          10,842 
        
        
        
        
          22,479 
        
      
      
        
          Interest expense - affiliated (a)
        
        
        
        
          - 
        
        
        
        
          (901)
        
      
      
        
          Net effect of changes in operating accounts
        
        
        
        
          790 
        
        
        
        
          1,011 
        
      
      
        
          Net cash provided by operating activities
        
        
        
        
          $ 10,946 
        
        
        
        
          $ 21,150 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          (a) In connection with our initial public offering, Valero Energy 
          made a capital contribution to us in the form of a note receivable, 
          including affiliated interest expense. Therefore, affiliated 
          interest expense is excluded from the calculation of distributable 
          cash.
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          
            3. The reported distribution per unit for the period between the 
            closing of our initial public offering on July 19, 2006 and 
            December 31, 2006 is prorated based upon the actual number of days 
            we were public and distributions of $0.64 per unit. Additionally, 
            for the period from July 1 - July 18, 2006 Valero Energy received 
            100% of our distributions, which totaled $2.7 million.