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): March 2, 2004
VALERO L.P.
(Exact name of registrant as specified in its charter)
| Delaware | 1-16417 | 74-2956831 | ||||||
| (State or other jurisdiction | (Commission | (IRS Employer | ||||||
| of incorporation) | File Number) | Identification No.) | ||||||
| One Valero Place | 78212 | |||||||
| San Antonio, Texas | Zip Code | |||||||
| (Address of principal executive offices) |
Registrant's telephone number, including area code: (210) 370-2000
_________________
| Item 7. | Financial Statements and Exhibits. | |||
| (c) | Exhibit | |||
| 99.1 | Presentation by Valero L.P. (the "Partnership") March 2, 2004. |
Item 9. Regulation FD Disclosure.
The Partnership is furnishing herewith certain data being presented to analysts and investors on March 2, 2004, at the RBC Capital Markets 2004 Master Limited Partnership Investor Conference. The presentation is set forth
in Exhibit 99.1 hereto and incorporated by reference herein. The exhibit is not filed but is furnished pursuant to Regulation FD.
Signatures
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: March 2, 2004 | By: /s/Bradley C. Barron Name: Bradley C. Barron Title: Corporate Secretary |
EXHIBIT INDEX
| Number | Exhibit | |||||||
| 99.1 | Presentation by Valero L.P. (the "Partnership") on March 2, 2004. |
Exhibit 99.1
1
2004 Master Limited Partnership
Investor Conference
March 2, 2004
Forward Looking Statements
Cautionary Statement Regarding Forward-Looking Statements
This presentation 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 the
prospectus and prospectus supplement, Valero L.P.’s 2002
annual report on Form 10-K and subsequent filings with the
Securities and Exchange Commission.
2
System Overview
3
Stable, fee-based assets supplying growing markets
No direct exposure to commodity price volatility
Balanced Portfolio of Assets
Refined Product Pipelines
3,800 miles
Crude Oil Pipelines
800 miles
Crude Oil Storage Tanks
3 primary facilities with
over 14 million barrels of
crude oil storage
capacity
Refined Product Terminals
19 terminals with 4 million
barrels of refined product
storage capacity
Percentage of total throughputs based on 2003
throughput volume of 1.34 million BPD
4
Strong Relationship with Valero Energy
Valero L.P. assets critical to profitability of 8 Valero Energy
refineries
Long-term handling and throughput agreements in place
100% of crude oil and other feedstocks at 3 refineries
75% of feedstocks and production at 3 refineries
Insurance coverage through Valero Energy’s program
Pre-existing environmental risk retained by Valero Energy
Valero Energy retains all commodity risk
Valero Energy maintains a significant retained interest
46% ownership (44% subordinated common; 2% GP interest)
GP incentive distribution at around 6%
5
6
Peer Avg.
53.9%
(Dollars in millions)
Capital Structure (12/31/03)
$175 MM Credit Facility $0.0
Note Payable 9.7
6 7/8% notes due 2012 97.9
6.05% notes due 2013 246.6
Total Debt $354.2
Common Units $310.6
Subordinated Units 118.0
Generals Partner’s Equity 9.6
Total Partner’s Equity 438.2
Total Capitalization $792.4
Debt Rating Baa3/BBB
Strong Financial Position
Debt-to-Capitalization Ratio
44.7%
45.0%
48.6%
51.4%
27.2%
7.1%
0.0%
20.0%
40.0%
60.0%
2001
2002
3/31/03
6/30/03
9/30/03
12/31/03
148% total shareholder return since IPO
Includes 25% cumulative increase in distribution
Valero L.P. Has Outperformed Peers Since IPO
(1)
Buckeye Partners, Enbridge Energy Partners, Enterprise Products Partners, GulfTerra, Kaneb Pipeline Partners,
Kinder Morgan Energy Partners, Magellan Midstream Partners, Northern Border Partners, Pacific Energy Partners,
Plains All American Pipeline, Sunoco Logistics Partners, TC Pipeline Partners, TEPPCO Partners.
60%
80%
100%
120%
140%
160%
180%
200%
220%
4/10/01
8/19/01
12/28/01
5/9/02
9/17/02
1/26/03
6/7/03
10/16/03
2/25/04
Peer Group(1)
S&P 500
Valero L.P.
Relative Price (April 10, 2001 = 100)
7
Valero L.P. has delivered distribution growth over 1.5x the
peer average since its IPO in April 2001
Valero L.P. maintains one of the strongest distribution coverage ratios
in the peer group
Strong Distribution Growth
___________________________
(1)
Compound annual growth rates of quarterly distributions to L.P. unitholders since the third quarter distribution of 2001.
(2)
Based on Lehman Brothers’ equity research estimates as of January 27, 2004. Represents total expected 2003 distributable
cash flow divided by total 2003 distributions.
Distribution CAGR Since Valero LP IPO (1)
Total Distribution Coverage (2)
8
Continued growth through acquisitions
Focus on stable, fee-based assets which are supportive of
Valero’s refinery system
Increase utilization rates
Expand existing systems
South Texas Pipeline System
McKee Refinery System
Invest in new logistics projects
Control costs
Leverage economies of scale from incremental acquisitions
and expansions
Valero L.P. Strategy
9
Acquisition of Royal Trading
Two state-of-the-art asphalt
terminals acquired for $28 million
on February 20th
Terminal near Tulsa, Oklahoma
Storage capacity of 340,000
barrels
Four truck loading stations, rail
loading facility and barge
access
Terminal near Santa Fe, New Mexico
Storage capacity of 160,000
barrels
Two truck loading stations and
rail loading facility
Long-term supply contracts with Valero
Immediately accretive to partnership’s earnings and
distributable cash flow
10
Dos Laredos Project
Valero to supply 5 mbpd of LPG for delivery to Pemex
Gas at a new 35,000 bbl terminal in Nuevo Laredo, Mexico
Construction to be completed by June 1, 2004
Total investment estimated to be approximately $26 million
Opportunities to increase volumes and expand deeper into Mexico
11
Key Investment Highlights
Track record of growth and value creation through
accretive acquisitions
More than doubled in size since IPO in April 2001
Completed nearly $530 million of accretive acquisitions
Balanced portfolio of fee-based assets
No exposure to commodity price volatility
Strong sponsor support
46% owned by Valero Energy
Solid financial position
Modest leverage and conservative capital structure
Track record of strong and consistent cash flow
generation
Strong distribution coverage
12
Appendix
13
Financial Performance
(Dollars in millions, except EPU)
14
1Q03
2Q03
3Q03
4Q03
FY 03
Total Throughput (MBPD)
884
1,454
1,488
1,523
1,340
Revenue
$31.8
$47.5
$51.7
$50.4
$181.5
Operating Expenses
11.7
16.3
19.5
17.2
64.6
G&A
1.8
1.7
1.6
2.4
7.5
Depreciation
4.3
7.2
7.1
7.6
26.3
Operating Income
14.0
22.3
23.5
23.2
83.0
Interest Expense
2.4
4.7
4.5
4.2
15.9
Equity Income from Affiliates
0.7
0.6
0.6
0.4
2.4
Net Income
12.3
18.2
19.6
19.4
69.6
Income Tax Provision
-
-
-
-
-
GP Distribution
0.6
1.1
1.1
1.1
3.9
Net Income applicable to LPs
$11.7
$17.1
$18.5
$18.3
$65.6
EPU
$0.60
$0.79
$0.82
$0.79
$3.02
Common units (in thousands)
19,556
21,703
22,477
23,041
21,706
Ownership Structure
Public
Valero L.P.
(NYSE:VLI)
Refined Product
Terminals
Crude Oil
Pipelines
Refined Product
Pipelines
Valero Energy
(NYSE: VLO)
9.6 million Subordinated Units
.6 million Common Units
12.8 million Common Units
Crude Oil
Storage
46%
54%
Valero Logistics
Operations L.P.
Bondholders
Revolving Credit Line
Guarantee
15