Valero (NYSE:VLI)
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Valero L.P. (NYSE:VLI) today announced income applicable to limited
partners from continuing operations of $36.9 million, or $0.79 per unit,
for the third quarter of 2006 compared to $37.1 million, or $0.79 per
unit, for the third quarter of 2005.
Distributable cash flow available to limited partners from continuing
operations for the third quarter was $52.4 million, or $1.12 per unit,
compared to $49.0 million, or $1.05 per unit for the third quarter of
2005. As of September 30, 2006, the partnership’s
debt-to-capitalization ratio was 38.5 percent compared to 38.0 percent
as of September 30, 2005.
With respect to the quarterly distribution to unitholders payable for
the third quarter of 2006, Valero L.P. also announced that it has
declared a distribution of $0.915 per unit, or $3.66 per unit on an
annual basis, which will be paid on November 14, 2006, to holders of
record as of November 7, 2006. This distribution represents an increase
of $0.06 per unit, or 7 percent, over the distribution for the third
quarter of 2005. Distributable cash flow available to limited partners
from continuing operations covers the distribution to the limited
partners by 1.22 times for the third quarter of 2006.
“We are pleased to report better than expected
results for the third quarter and consequently another increase in the
quarterly distribution,” said Curt Anastasio,
Valero L.P.’s Chief Executive Officer and
President. “This increase represents a total
increase in our quarterly distribution of 52.5 percent since Valero L.P.
went public in 2001.
“The third quarter has been a very active and
productive quarter for us with the Burgos pipeline project coming
on-line in early August and our recent announcement of our agreement to
acquire Koch Supply and Trading, L.P.’s St.
James, Louisiana facility for $140 million, which we expect to be
immediately accretive to distributable cash flow per unit. We expect to
close on the acquisition in December 2006 and have already identified
major projects for further growth there.
“As part of our $250 million terminal
expansion program, we have started construction on projects at our
terminals in Texas City, Savannah, Linden (New York Harbor), Baltimore
and St. Eustatius in the Caribbean and completed tank repairs at our
Piney Point, Maryland terminal. In the next two months, we expect to
start construction on expansion projects at our terminals in Portland
and Stockton. Additionally, in the first quarter of 2007, we expect to
start construction on expanding our Amsterdam terminal in the
Netherlands and our Vancouver terminal in Washington. Over the next year
or so, we expect to spend around $175 million on these expansion
opportunities. The majority of these projects will start contributing to
the partnership’s results in mid to late 2007.
“With respect to our ammonia pipeline, we
recently completed a new pumping station on the southern end of the
pipeline in Louisiana, which will allow us to capture incremental tariff
revenue by increasing throughput volumes to both existing and new
customers. We are also close to starting one of our pipeline lateral
projects on our ammonia pipeline in Southern Louisiana, which will serve
an industrial end-user. Additionally, we have now identified around $75
million of projects on our ammonia pipeline, primarily related to
pipeline laterals to industrial end-users, which is higher than $30
million of projects we previously anticipated.
“Looking ahead to the fourth quarter of 2006,
we expect results to be lower than the third quarter and in the range of
$0.65 to $0.70 per unit primarily due to higher maintenance expenses and
seasonality. Nonetheless, second half results for 2006 are expected to
be better than the first half,” said
Anastasio.
A conference call with management is scheduled for 2:30 p.m. ET (1:30
p.m. CT) today to discuss the financial and operational results for the
third quarter of 2006. Investors interested in listening to the
presentation may call 800-622-7620, passcode 8566945. International
callers may access the presentation by dialing 706-645-0327, passcode
8566945. The company intends to have a playback available following the
presentation, which may be accessed by calling 800-642-1687, passcode
8566945. A live broadcast of the conference call will also be available
on the company’s website at www.valerolp.com.
Valero L.P. is a publicly traded, limited partnership based in San
Antonio, with 9,303 miles of pipeline, 86 terminal facilities and four
crude oil storage facilities. One of the largest independent terminal
and petroleum liquids pipeline operators in the nation, the partnership
has operations in the United States, the Netherlands Antilles, Canada,
Mexico, the Netherlands and the United Kingdom. The partnership’s
combined system has approximately 77 million barrels of storage
capacity, and includes crude oil and refined product pipelines, refined
product terminals, a petroleum and specialty liquids storage and
terminaling business, as well as crude oil storage tank facilities. For
more information, visit Valero L.P.'s web site at www.valerolp.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 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 2005 annual report on Form
10-K and subsequent filings with the Securities and Exchange Commission.
Valero L.P.
Consolidated Financial Information
September 30, 2006 and 2005
(unaudited, thousands of dollars, except unit data and per unit
data)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2006
2005
2006
2005
Statement of Income Data (Note 1):
(Note 2)
(Note 2)
Revenues:
Services revenues
$ 161,888
$ 148,210
$ 461,911
$ 263,151
Product sales
129,135
110,175
383,084
110,175
Total revenues
291,023
258,385
844,995
373,326
Costs and expenses:
Cost of product sales
117,759
101,217
350,260
101,217
Operating expenses
82,502
68,429
232,727
109,759
General and administrative expenses
11,388
10,000
30,323
17,064
Depreciation and amortization
24,994
22,732
74,022
40,255
Total costs and expenses
236,643
202,378
687,332
268,295
Operating income
54,380
56,007
157,663
105,031
Equity income from joint ventures
1,464
1,541
4,514
2,340
Interest and other expenses, net
(15,289)
(14,637)
(47,630)
(26,344)
Income from continuing operations before income tax (benefit)
expense
40,555
42,911
114,547
81,027
Income tax (benefit) expense
(614)
2,050
1,997
2,050
Income from continuing operations
41,169
40,861
112,550
78,977
Income (loss) from discontinued operations
-
4,306
(377)
4,306
Net income applicable to general partner and limited partners'
interest
41,169
45,167
112,173
83,283
Net income applicable to general partner
(Note 3)
(4,310)
(3,892)
(12,550)
(7,215)
Net income applicable to limited partners
$ 36,859
$ 41,275
$ 99,623
$ 76,068
Income per unit applicable to limited partners
(Note 3):
Continuing operations
$ 0.79
$ 0.79
$ 2.14
$ 2.31
Discontinued operations
-
0.09
(0.01)
0.14
Net income
$ 0.79
$ 0.88
$ 2.13
$ 2.45
Weighted average number of basic and diluted units outstanding
46,809,749
46,809,749
46,809,749
31,051,243
EBITDA from continuing operations (Note 4)
$ 82,155
$ 80,027
$ 237,475
$ 147,373
Distributable cash flow from continuing operations (Note 4)
$ 60,413
$ 55,951
$ 163,990
$ 107,011
September 30,2006
September 30,2005
December 31,2005
Balance Sheet Data:
Long-term debt, including current
portion (a)
$ 1,179,042
$ 1,175,473
$ 1,170,705
Partners'
equity (b)
1,886,671
1,918,933
1,900,779
Debt-to-capitalization ratio (a) / ((a)+(b))
38.5%
38.0%
38.1%
Valero L.P.
Consolidated Financial Information - Continued
September 30, 2006 and 2005
(unaudited, thousands of dollars, except barrel information)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2006
2005
2006
2005
Operating Data:
Refined product terminals (Note 2):
Throughput (barrels/day) (a)
267,144
253,415
261,619
252,933
Throughput revenues
$ 13,273
$ 12,387
$ 36,689
$ 33,808
Storage lease revenues
62,925
56,411
182,951
56,411
Bunkering revenues
128,369
110,175
382,318
110,175
Total revenues
204,567
178,973
601,958
200,394
Cost of product sales
117,161
101,217
349,662
101,217
Operating expenses
49,555
39,450
143,626
49,672
Depreciation and amortization
11,249
11,936
33,196
15,655
Segment operating income
$ 26,602
$ 26,370
$ 75,474
$ 33,850
Refined product pipelines:
Throughput (barrels/day)
722,952
688,126
711,215
524,290
Throughput revenues
$ 58,567
$ 53,749
$ 162,814
$ 98,609
Product revenues
766
-
766
-
Total revenues
59,333
53,749
163,580
98,609
Cost of product sales
598
-
598
-
Operating expenses
25,972
22,507
69,510
41,362
Depreciation and amortization
10,554
7,772
31,296
15,533
Segment operating income
$ 22,209
$ 23,470
$ 62,176
$ 41,714
Crude oil pipelines:
Throughput (barrels/day)
410,211
382,615
426,129
362,574
Revenues
$ 15,072
$ 14,041
$ 43,989
$ 39,601
Operating expenses
4,559
4,455
12,546
12,464
Depreciation and amortization
1,277
1,155
3,809
3,457
Segment operating income
$ 9,236
$ 8,431
$ 27,634
$ 23,680
Crude oil storage tanks:
Throughput (barrels/day)
513,904
504,060
503,769
512,349
Revenues
$ 12,051
$ 11,622
$ 35,468
$ 34,722
Operating expenses
2,416
2,017
7,045
6,261
Depreciation and amortization
1,914
1,869
5,721
5,610
Segment operating income
$ 7,721
$ 7,736
$ 22,702
$ 22,851
Consolidated Information:
Revenues
$ 291,023
$ 258,385
$ 844,995
$ 373,326
Cost of product sales
117,759
101,217
350,260
101,217
Operating expenses
82,502
68,429
232,727
109,759
Depreciation and amortization
24,994
22,732
74,022
40,255
Segment operating income
65,768
66,007
187,986
122,095
General and administrative expenses
11,388
10,000
30,323
17,064
Consolidated operating income
$ 54,380
$ 56,007
$ 157,663
$ 105,031
(a) Excludes throughputs related to the storage lease and bunkering
operations acquired.
Notes:
1.
The statement of income data for the nine months ended September 30,
2006 and 2005 includes $69.3 million and $28.7 million,
respectively, of operating income related to the Kaneb Acquisition
on July 1, 2005. Of the $69.3 million and $28.7 million for the nine
months ended September 30, 2006 and 2005, respectively, $53.0
million and $17.9 million is attributed to the refined product
terminals segment, respectively, and $16.3 million and $10.8 million
is attributed to the refined product pipelines segment, respectively.
2.
The statement of income data and the operating data for the refined
product terminals for the three and nine months ended September 30,
2005 has been restated to reflect the March 30, 2006 sale of our
Australia and New Zealand subsidiaries as income (loss) from
discontinued operations.
3.
Income is allocated between limited partners and the general
partner's interests based on provisions in the partnership
agreement. The income applicable to limited partners is divided by
the weighted average number of limited partnership units outstanding
in computing the income per unit applicable to limited partners. On
July 1, 2005, Valero L.P. issued 23,768,355 of common units in
exchange for all of the outstanding common units of Kaneb Pipe Line
Partners, L.P. As of September 30, 2006, Valero L.P. has 46,809,749
common units outstanding.
During the quarter ended September 30, 2006 our general partner
reimbursed us for certain charges we incurred related to services
historically provided under our Services Agreement with Valero
Energy Corporation. Generally accepted accounting principles require
us to record the charges as expenses and record the reimbursement as
partner's capital contribution.
Valero L.P.
Consolidated Financial Information - Continued
September 30, 2006 and 2005
(unaudited, thousands of dollars, except unit data and per unit
data)
Notes: (continued)
The following table details the calculation of net income applicable
to the general partner (in thousands):
Three Months Ended
Nine Months Ended
September 30,
September 30,
2006
2005
2006
2005
Net income applicable to general partner and limited partners'
interest
$ 41,169
$ 45,167
$ 112,173
$ 83,283
Charges reimbursed by general partner
352
-
352
-
Net income before charges reimbursed by general partner
41,521
45,167
112,525
83,283
General partner incentive distribution
3,909
3,050
10,869
5,662
Net income before charges reimbursed by general partner and after
general partner incentive distribution
37,612
42,117
101,656
77,621
General partner interest
2%
2%
2%
2%
General partner allocation of net income before charges reimbursed
by general partner and after general partner incentive distribution
753
842
2,033
1,553
Charges reimbursed by general partner
(352)
-
(352)
-
General partner incentive distribution
3,909
3,050
10,869
5,662
Net income applicable to general partner
$ 4,310
$ 3,892
$ 12,550
$ 7,215
4.
Valero L.P. utilizes two financial measures, EBITDA from continuing
operations and distributable cash flow from continuing operations,
which are not defined in United States generally accepted accounting
principles. Management uses these financial measures because they
are widely accepted financial indicators used by investors to
compare partnership performance. In addition, management believes
that these measures provide investors an enhanced perspective of the
operating performance of the partnership's assets and the cash that
the business is generating. Neither EBITDA from continuing
operations nor distributable cash flow from continuing operations
are intended to represent cash flows for the period, nor are they
presented as an alternative to income from continuing operations.
They 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 income from continuing
operations to EBITDA from continuing operations and distributable
cash flow from continuing operations (in thousands):
Three Months EndedSeptember 30,
Nine Months EndedSeptember 30,
2006
2005
2006
2005
Income from continuing operations
$ 41,169
$ 40,861
$ 112,550
$ 78,977
Plus interest expense, net
16,606
14,384
48,906
26,091
Plus income tax expense (benefit)
(614)
2,050
1,997
2,050
Plus depreciation and amortization
24,994
22,732
74,022
40,255
EBITDA from continuing operations
82,155
80,027
237,475
147,373
Less equity income from joint ventures
(1,464)
(1,541)
(4,514)
(2,340)
Less interest expense, net
(16,606)
(14,384)
(48,906)
(26,091)
Less reliability capital expenditures
(6,601)
(8,476)
(22,817)
(12,369)
Less income tax (expense) / benefit
614
(2,050)
(1,997)
(2,050)
Plus general partner reimbursable charges
352
-
352
-
Plus distributions from joint ventures
1,963
2,375
4,397
2,488
Distributable cash flow from continuing operations
60,413
55,951
163,990
107,011
General partner's interest in distributable cash flow from
continuing operations
(8,044)
(6,928)
(19,819)
(12,742)
Limited partners' interest in distributable cash flow from
continuing operations
$ 52,369
$ 49,023
$ 144,171
$ 94,269
Weighted average number of basic and diluted units outstanding
46,809,749
46,809,749
46,809,749
31,051,243
Distributable cash flow from continuing operations per limited
partner unit
$ 1.119
$ 1.050
$ 3.080
$ 3.010
Valero L.P. (NYSE:VLI) today announced income applicable to
limited partners from continuing operations of $36.9 million, or $0.79
per unit, for the third quarter of 2006 compared to $37.1 million, or
$0.79 per unit, for the third quarter of 2005.
Distributable cash flow available to limited partners from
continuing operations for the third quarter was $52.4 million, or
$1.12 per unit, compared to $49.0 million, or $1.05 per unit for the
third quarter of 2005. As of September 30, 2006, the partnership's
debt-to-capitalization ratio was 38.5 percent compared to 38.0 percent
as of September 30, 2005.
With respect to the quarterly distribution to unitholders payable
for the third quarter of 2006, Valero L.P. also announced that it has
declared a distribution of $0.915 per unit, or $3.66 per unit on an
annual basis, which will be paid on November 14, 2006, to holders of
record as of November 7, 2006. This distribution represents an
increase of $0.06 per unit, or 7 percent, over the distribution for
the third quarter of 2005. Distributable cash flow available to
limited partners from continuing operations covers the distribution to
the limited partners by 1.22 times for the third quarter of 2006.
"We are pleased to report better than expected results for the
third quarter and consequently another increase in the quarterly
distribution," said Curt Anastasio, Valero L.P.'s Chief Executive
Officer and President. "This increase represents a total increase in
our quarterly distribution of 52.5 percent since Valero L.P. went
public in 2001.
"The third quarter has been a very active and productive quarter
for us with the Burgos pipeline project coming on-line in early August
and our recent announcement of our agreement to acquire Koch Supply
and Trading, L.P.'s St. James, Louisiana facility for $140 million,
which we expect to be immediately accretive to distributable cash flow
per unit. We expect to close on the acquisition in December 2006 and
have already identified major projects for further growth there.
"As part of our $250 million terminal expansion program, we have
started construction on projects at our terminals in Texas City,
Savannah, Linden (New York Harbor), Baltimore and St. Eustatius in the
Caribbean and completed tank repairs at our Piney Point, Maryland
terminal. In the next two months, we expect to start construction on
expansion projects at our terminals in Portland and Stockton.
Additionally, in the first quarter of 2007, we expect to start
construction on expanding our Amsterdam terminal in the Netherlands
and our Vancouver terminal in Washington. Over the next year or so, we
expect to spend around $175 million on these expansion opportunities.
The majority of these projects will start contributing to the
partnership's results in mid to late 2007.
"With respect to our ammonia pipeline, we recently completed a new
pumping station on the southern end of the pipeline in Louisiana,
which will allow us to capture incremental tariff revenue by
increasing throughput volumes to both existing and new customers. We
are also close to starting one of our pipeline lateral projects on our
ammonia pipeline in Southern Louisiana, which will serve an industrial
end-user. Additionally, we have now identified around $75 million of
projects on our ammonia pipeline, primarily related to pipeline
laterals to industrial end-users, which is higher than $30 million of
projects we previously anticipated.
"Looking ahead to the fourth quarter of 2006, we expect results to
be lower than the third quarter and in the range of $0.65 to $0.70 per
unit primarily due to higher maintenance expenses and seasonality.
Nonetheless, second half results for 2006 are expected to be better
than the first half," said Anastasio.
A conference call with management is scheduled for 2:30 p.m. ET
(1:30 p.m. CT) today to discuss the financial and operational results
for the third quarter of 2006. Investors interested in listening to
the presentation may call 800-622-7620, passcode 8566945.
International callers may access the presentation by dialing
706-645-0327, passcode 8566945. The company intends to have a playback
available following the presentation, which may be accessed by calling
800-642-1687, passcode 8566945. A live broadcast of the conference
call will also be available on the company's website at
www.valerolp.com.
Valero L.P. is a publicly traded, limited partnership based in San
Antonio, with 9,303 miles of pipeline, 86 terminal facilities and four
crude oil storage facilities. One of the largest independent terminal
and petroleum liquids pipeline operators in the nation, the
partnership has operations in the United States, the Netherlands
Antilles, Canada, Mexico, the Netherlands and the United Kingdom. The
partnership's combined system has approximately 77 million barrels of
storage capacity, and includes crude oil and refined product
pipelines, refined product terminals, a petroleum and specialty
liquids storage and terminaling business, as well as crude oil storage
tank facilities. For more information, visit Valero L.P.'s web site at
www.valerolp.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 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 2005 annual report on Form
10-K and subsequent filings with the Securities and Exchange
Commission.
-0-
*T
Valero L.P.
Consolidated Financial Information
September 30, 2006 and 2005
(unaudited, thousands of dollars, except unit data and per unit data)
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------------- ------------------------
2006 2005 2006 2005
------------- ------------- ----------- ------------
Statement of (Note 2) (Note 2)
Income Data
(Note 1):
Revenues:
Services
revenues $161,888 $148,210 $461,911 $263,151
Product sales 129,135 110,175 383,084 110,175
------------- ------------- ----------- ------------
Total
revenues 291,023 258,385 844,995 373,326
Costs and
expenses:
Cost of product
sales 117,759 101,217 350,260 101,217
Operating
expenses 82,502 68,429 232,727 109,759
General and
administrative
expenses 11,388 10,000 30,323 17,064
Depreciation
and
amortization 24,994 22,732 74,022 40,255
------------- ------------- ----------- ------------
Total costs
and
expenses 236,643 202,378 687,332 268,295
------------- ------------- ----------- ------------
Operating income 54,380 56,007 157,663 105,031
Equity income
from joint
ventures 1,464 1,541 4,514 2,340
Interest and
other
expenses, net (15,289) (14,637) (47,630) (26,344)
------------- ------------- ----------- ------------
Income from
continuing
operations
before income
tax (benefit)
expense 40,555 42,911 114,547 81,027
Income tax
(benefit)
expense (614) 2,050 1,997 2,050
------------- ------------- ----------- ------------
Income from
continuing
operations 41,169 40,861 112,550 78,977
Income (loss)
from
discontinued
operations - 4,306 (377) 4,306
------------- ------------- ----------- ------------
Net income
applicable to
general partner
and limited
partners'
interest 41,169 45,167 112,173 83,283
Net income
applicable to
general partner
(Note 3) (4,310) (3,892) (12,550) (7,215)
------------- ------------- ----------- ------------
Net income
applicable to
limited
partners $36,859 $41,275 $99,623 $76,068
============= ============= =========== ============
Income per unit
applicable to
limited
partners
(Note 3):
Continuing
operations $0.79 $0.79 $2.14 $2.31
Discontinued
operations - 0.09 (0.01) 0.14
------------- ------------- ----------- ------------
Net income $0.79 $0.88 $2.13 $2.45
Weighted average
number of basic
and diluted
units
outstanding 46,809,749 46,809,749 46,809,749 31,051,243
EBITDA from
continuing
operations
(Note 4) $82,155 $80,027 $237,475 $147,373
Distributable
cash flow from
continuing
operations
(Note 4) $60,413 $55,951 $163,990 $107,011
September 30, September 30, December 31,
2006 2005 2005
------------- ------------- ------------
Balance Sheet
Data:
Long-term debt,
including
current
portion (a) $1,179,042 $1,175,473 $1,170,705
Partners'
equity (b) 1,886,671 1,918,933 1,900,779
Debt-to-
capitalization
ratio (a) /
((a)+(b)) 38.5% 38.0% 38.1%
*T
-0-
*T
Valero L.P.
Consolidated Financial Information - Continued
September 30, 2006 and 2005
(unaudited, thousands of dollars, except barrel information)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -------------------
2006 2005 2006 2005
--------- --------- --------- ---------
Operating Data:
Refined product terminals
(Note 2):
Throughput (barrels/day) (a) 267,144 253,415 261,619 252,933
Throughput revenues $13,273 $12,387 $36,689 $33,808
Storage lease revenues 62,925 56,411 182,951 56,411
Bunkering revenues 128,369 110,175 382,318 110,175
--------- --------- --------- ---------
Total revenues 204,567 178,973 601,958 200,394
Cost of product sales 117,161 101,217 349,662 101,217
Operating expenses 49,555 39,450 143,626 49,672
Depreciation and
amortization 11,249 11,936 33,196 15,655
--------- --------- --------- ---------
Segment operating income $26,602 $26,370 $75,474 $33,850
========= ========= ========= =========
Refined product pipelines:
Throughput (barrels/day) 722,952 688,126 711,215 524,290
Throughput revenues $58,567 $53,749 $162,814 $98,609
Product revenues 766 - 766 -
--------- --------- --------- ---------
Total revenues 59,333 53,749 163,580 98,609
Cost of product sales 598 - 598 -
Operating expenses 25,972 22,507 69,510 41,362
Depreciation and
amortization 10,554 7,772 31,296 15,533
--------- --------- --------- ---------
Segment operating income $22,209 $23,470 $62,176 $41,714
========= ========= ========= =========
Crude oil pipelines:
Throughput (barrels/day) 410,211 382,615 426,129 362,574
Revenues $15,072 $14,041 $43,989 $39,601
Operating expenses 4,559 4,455 12,546 12,464
Depreciation and
amortization 1,277 1,155 3,809 3,457
--------- --------- --------- ---------
Segment operating income $9,236 $8,431 $27,634 $23,680
========= ========= ========= =========
Crude oil storage tanks:
Throughput (barrels/day) 513,904 504,060 503,769 512,349
Revenues $12,051 $11,622 $35,468 $34,722
Operating expenses 2,416 2,017 7,045 6,261
Depreciation and
amortization 1,914 1,869 5,721 5,610
--------- --------- --------- ---------
Segment operating income $7,721 $7,736 $22,702 $22,851
========= ========= ========= =========
Consolidated Information:
Revenues $291,023 $258,385 $844,995 $373,326
Cost of product sales 117,759 101,217 350,260 101,217
Operating expenses 82,502 68,429 232,727 109,759
Depreciation and
amortization 24,994 22,732 74,022 40,255
--------- --------- --------- ---------
Segment operating income 65,768 66,007 187,986 122,095
General and administrative
expenses 11,388 10,000 30,323 17,064
--------- --------- --------- ---------
Consolidated operating
income $54,380 $56,007 $157,663 $105,031
========= ========= ========= =========
(a) Excludes throughputs related to the storage lease and bunkering
operations acquired.
Notes:
1. The statement of income data for the nine months ended September
30, 2006 and 2005 includes $69.3 million and $28.7 million,
respectively, of operating income related to the Kaneb Acquisition
on July 1, 2005. Of the $69.3 million and $28.7 million for the
nine months ended September 30, 2006 and 2005, respectively, $53.0
million and $17.9 million is attributed to the refined product
terminals segment, respectively, and $16.3 million and $10.8
million is attributed to the refined product pipelines segment,
respectively.
2. The statement of income data and the operating data for the refined
product terminals for the three and nine months ended September
30, 2005 has been restated to reflect the March 30, 2006 sale of
our Australia and New Zealand subsidiaries as income (loss) from
discontinued operations.
3. Income is allocated between limited partners and the general
partner's interests based on provisions in the partnership
agreement. The income applicable to limited partners is divided by
the weighted average number of limited partnership units
outstanding in computing the income per unit applicable to limited
partners. On July 1, 2005, Valero L.P. issued 23,768,355 of common
units in exchange for all of the outstanding common units of Kaneb
Pipe Line Partners, L.P. As of September 30, 2006, Valero L.P. has
46,809,749 common units outstanding.
During the quarter ended September 30, 2006 our general partner
reimbursed us for certain charges we incurred related to services
historically provided under our Services Agreement with Valero
Energy Corporation. Generally accepted accounting principles
require us to record the charges as expenses and record the
reimbursement as partner's capital contribution.
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Valero L.P.
Consolidated Financial Information - Continued
September 30, 2006 and 2005
(unaudited, thousands of dollars, except unit data and per unit data)
Notes: (continued)
The following table details the calculation of net income applicable
to the general partner (in thousands):
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- ------------------
2006 2005 2006 2005
---------- -------- --------- --------
Net income applicable to
general partner and limited
partners' interest $41,169 $45,167 $112,173 $83,283
Charges reimbursed by general
partner 352 - 352 -
---------- -------- --------- --------
Net income before charges
reimbursed by general partner 41,521 45,167 112,525 83,283
General partner incentive
distribution 3,909 3,050 10,869 5,662
---------- -------- --------- --------
Net income before charges
reimbursed by general partner
and after general partner
incentive distribution 37,612 42,117 101,656 77,621
General partner interest 2% 2% 2% 2%
---------- -------- --------- --------
General partner allocation of
net income before charges
reimbursed by general partner
and after general partner
incentive distribution 753 842 2,033 1,553
Charges reimbursed by general
partner (352) - (352) -
General partner incentive
distribution 3,909 3,050 10,869 5,662
---------- -------- --------- --------
Net income applicable to
general partner $4,310 $3,892 $12,550 $7,215
========== ======== ========= ========
4. Valero L.P. utilizes two financial measures, EBITDA from continuing
operations and distributable cash flow from continuing operations,
which are not defined in United States generally accepted
accounting principles. Management uses these financial measures
because they are widely accepted financial indicators used by
investors to compare partnership performance. In addition,
management believes that these measures provide investors an
enhanced perspective of the operating performance of the
partnership's assets and the cash that the business is generating.
Neither EBITDA from continuing operations nor distributable cash
flow from continuing operations are intended to represent cash
flows for the period, nor are they presented as an alternative to
income from continuing operations. They 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 income from continuing
operations to EBITDA from continuing operations and distributable
cash flow from continuing operations (in thousands):
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Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- -----------------------
2006 2005 2006 2005
----------- ----------- ----------- -----------
Income from continuing
operations $41,169 $40,861 $112,550 $78,977
Plus interest
expense, net 16,606 14,384 48,906 26,091
Plus income tax
expense (benefit) (614) 2,050 1,997 2,050
Plus depreciation
and amortization 24,994 22,732 74,022 40,255
----------- ----------- ----------- -----------
EBITDA from continuing
operations 82,155 80,027 237,475 147,373
Less equity income
from joint ventures (1,464) (1,541) (4,514) (2,340)
Less interest
expense, net (16,606) (14,384) (48,906) (26,091)
Less reliability
capital
expenditures (6,601) (8,476) (22,817) (12,369)
Less income tax
(expense) / benefit 614 (2,050) (1,997) (2,050)
Plus general partner
reimbursable
charges 352 - 352 -
Plus distributions
from joint ventures 1,963 2,375 4,397 2,488
----------- ----------- ----------- -----------
Distributable cash
flow from continuing
operations 60,413 55,951 163,990 107,011
General partner's
interest in
distributable cash
flow from continuing
operations (8,044) (6,928) (19,819) (12,742)
----------- ----------- ----------- -----------
Limited partners'
interest in
distributable cash
flow from continuing
operations $52,369 $49,023 $144,171 $94,269
=========== =========== =========== ===========
Weighted average
number of basic and
diluted units
outstanding 46,809,749 46,809,749 46,809,749 31,051,243
Distributable cash
flow from continuing
operations per
limited partner unit $1.119 $1.050 $3.080 $3.010
*T