NSH » Topics » PART IV

These excerpts taken from the NSH 10-K filed Feb 27, 2009.

PART I

 

Items 1., 1A. and 2.    Business, Risk Factors And Properties    3
  

Overview

   3
  

Recent Developments

   4
  

Organizational History And Structure

   4
  

Employees

   6
  

Environmental And Safety Regulation

   6
  

Properties

   6
  

Risk Factors

   6
Item 1B.    Unresolved Staff Comments    21
Item 3.    Legal Proceedings    22
Item 4.    Submission of Matters to a Vote of Security Holders    24
Item X.    Executive Officers of the Registrant    24
PART II
Item 5.    Market For Registrant’s Common Units, Related Unitholder Matters and Issuer Purchases of Common Units    25
Item 6.    Selected Financial Data    27
Item 7.    Management’s Discussion and Analysis of Financial Condition and Results of Operations    28
Item 7A.    Quantitative and Qualitative Disclosures About Market Risk    40
Item 8.    Financial Statements and Supplementary Data    40
Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure    118
Item 9A.    Controls and Procedures    118
Item 9B.    Other Information    118
PART III
Item 10.    Directors and Executive Officers of the Registrant    119
Item 11.    Executive Compensation    119
Item 12.    Security Ownership of Certain Beneficial Owners and Management and Related Unitholder Matters    119
Item 13.    Certain Relationships and Related Transactions, and Director Independence    119
Item 14.    Principal Accountant Fees and Services    119
PART IV
Item 15.    Exhibits and Financial Statement Schedules    119
Signatures       130

 

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Table of Contents

PART I

Unless otherwise indicated, the terms “NuStar GP Holdings, LLC,” “NuStar GP Holdings,” “we,” “our” and “us” are used in this report to refer to NuStar GP Holdings, LLC, to one or more of our consolidated subsidiaries or to all of them taken as a whole. In the following Items 1., 1A. and 2., “Business, Risk Factors and Properties,” we make certain forward-looking statements, including statements regarding our plans, strategies, objectives, expectations, intentions and resources. The words “forecasts,” “intends,” “believes,” “expects,” “plans,” “scheduled,” “goal,” “may,” “anticipates,” “estimates” and similar expressions identify forward-looking statements. We do not undertake to update, revise or correct any of the forward-looking information. You are cautioned that such forward-looking statements should be read in conjunction with our disclosures beginning on page 29 of this report under the heading: “CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION.”

PART I

ALIGN="justify">Unless otherwise indicated, the terms “NuStar GP Holdings, LLC,” “NuStar GP Holdings,” “we,” “our” and “us” are used in this report to refer to
NuStar GP Holdings, LLC, to one or more of our consolidated subsidiaries or to all of them taken as a whole. In the following Items 1., 1A. and 2., “Business, Risk Factors and Properties,” we make certain forward-looking statements,
including statements regarding our plans, strategies, objectives, expectations, intentions and resources. The words “forecasts,” “intends,” “believes,” “expects,” “plans,” “scheduled,”
“goal,” “may,” “anticipates,” “estimates” and similar expressions identify forward-looking statements. We do not undertake to update, revise or correct any of the forward-looking information. You are cautioned
that such forward-looking statements should be read in conjunction with our disclosures beginning on page 29 of this report under the heading: “CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION.”

STYLE="margin-top:12px;margin-bottom:0px">ITEMS 1., 1A. and 2. BUSINESS, RISK FACTORS AND PROPERTIES

FACE="Times New Roman" SIZE="2">OVERVIEW

NuStar GP Holdings, LLC (NuStar GP Holdings), a Delaware limited
liability company, was formed in June 2000. Our units are traded on the New York Stock Exchange (NYSE) under the symbol “NSH.” Our principal executive offices are located at 2330 North Loop 1604 West, San Antonio, Texas 78248 and our
telephone number is (210) 918-2000.

Our only cash generating assets are our ownership interests in NuStar Energy L.P. (NuStar
Energy), a publicly traded Delaware limited partnership (NYSE: NS). NuStar Energy is engaged in the terminalling and storage of petroleum products, the transportation of petroleum products and anhydrous ammonia and asphalt and fuels marketing.
NuStar Energy has terminal facilities in the United States, the Netherlands Antilles, Canada, Mexico, the Netherlands and the United Kingdom. As of December 31, 2008, our aggregate ownership interests in NuStar Energy consisted of the
following:

 







  

the 2% general partner interest;







  

100% of the incentive distribution rights issued by NuStar Energy, which entitle us to receive increasing percentages of the cash distributed by NuStar Energy,
currently at the maximum percentage of 23%; and







  

10,250,054 common units of NuStar Energy representing an 18.5% limited partner interest.

STYLE="margin-top:12px;margin-bottom:0px" ALIGN="justify">Our primary objective is to increase per unit distributions to our unitholders by actively supporting NuStar Energy in executing its business strategy,
which includes continued growth through expansion projects and strategic acquisitions. We may facilitate NuStar Energy’s growth through the use of our capital resources, which could involve capital contributions, loans or other forms of
financial support.

NuStar Energy is required by its partnership agreement to distribute all of its available cash at the end of each
quarter, less reserves established by its general partner in its sole discretion to provide for the proper conduct of NuStar Energy’s business or to provide funds for future distributions. Similarly, we are required by our limited liability
company agreement to distribute all of our available cash at the end of each quarter, less reserves established by our board of directors. However, unlike NuStar Energy, we do not have a general partner or incentive distribution rights. Therefore,
all of our distributions are made on our units, which are our only class of securities outstanding.

Our internet website address is
http://www.nustargpholdings.com. Information contained on our website is not part of this report on Form 10-K. Our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K filed with (or furnished
to) the Securities and Exchange Commission (SEC) are available on our internet website (in the “Investor Relations” section), free of charge, as soon as reasonably practicable after we file or furnish such material. We also post our
corporate governance guidelines, code of business conduct and ethics, code of ethics for senior financial officers and the charters of our board’s committees in the same website location. Our governance documents are available in print to any
unitholder that makes a written request to Corporate Secretary, NuStar GP Holdings, LLC, 2330 North Loop 1604 West, San Antonio, Texas 78248.

 


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Table of Contents


PART I

ALIGN="justify">Unless otherwise indicated, the terms “NuStar GP Holdings, LLC,” “NuStar GP Holdings,” “we,” “our” and “us” are used in this report to refer to
NuStar GP Holdings, LLC, to one or more of our consolidated subsidiaries or to all of them taken as a whole. In the following Items 1., 1A. and 2., “Business, Risk Factors and Properties,” we make certain forward-looking statements,
including statements regarding our plans, strategies, objectives, expectations, intentions and resources. The words “forecasts,” “intends,” “believes,” “expects,” “plans,” “scheduled,”
“goal,” “may,” “anticipates,” “estimates” and similar expressions identify forward-looking statements. We do not undertake to update, revise or correct any of the forward-looking information. You are cautioned
that such forward-looking statements should be read in conjunction with our disclosures beginning on page 29 of this report under the heading: “CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION.”

STYLE="margin-top:12px;margin-bottom:0px">ITEMS 1., 1A. and 2. BUSINESS, RISK FACTORS AND PROPERTIES

FACE="Times New Roman" SIZE="2">OVERVIEW

NuStar GP Holdings, LLC (NuStar GP Holdings), a Delaware limited
liability company, was formed in June 2000. Our units are traded on the New York Stock Exchange (NYSE) under the symbol “NSH.” Our principal executive offices are located at 2330 North Loop 1604 West, San Antonio, Texas 78248 and our
telephone number is (210) 918-2000.

Our only cash generating assets are our ownership interests in NuStar Energy L.P. (NuStar
Energy), a publicly traded Delaware limited partnership (NYSE: NS). NuStar Energy is engaged in the terminalling and storage of petroleum products, the transportation of petroleum products and anhydrous ammonia and asphalt and fuels marketing.
NuStar Energy has terminal facilities in the United States, the Netherlands Antilles, Canada, Mexico, the Netherlands and the United Kingdom. As of December 31, 2008, our aggregate ownership interests in NuStar Energy consisted of the
following:

 







  

the 2% general partner interest;







  

100% of the incentive distribution rights issued by NuStar Energy, which entitle us to receive increasing percentages of the cash distributed by NuStar Energy,
currently at the maximum percentage of 23%; and







  

10,250,054 common units of NuStar Energy representing an 18.5% limited partner interest.

STYLE="margin-top:12px;margin-bottom:0px" ALIGN="justify">Our primary objective is to increase per unit distributions to our unitholders by actively supporting NuStar Energy in executing its business strategy,
which includes continued growth through expansion projects and strategic acquisitions. We may facilitate NuStar Energy’s growth through the use of our capital resources, which could involve capital contributions, loans or other forms of
financial support.

NuStar Energy is required by its partnership agreement to distribute all of its available cash at the end of each
quarter, less reserves established by its general partner in its sole discretion to provide for the proper conduct of NuStar Energy’s business or to provide funds for future distributions. Similarly, we are required by our limited liability
company agreement to distribute all of our available cash at the end of each quarter, less reserves established by our board of directors. However, unlike NuStar Energy, we do not have a general partner or incentive distribution rights. Therefore,
all of our distributions are made on our units, which are our only class of securities outstanding.

Our internet website address is
http://www.nustargpholdings.com. Information contained on our website is not part of this report on Form 10-K. Our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K filed with (or furnished
to) the Securities and Exchange Commission (SEC) are available on our internet website (in the “Investor Relations” section), free of charge, as soon as reasonably practicable after we file or furnish such material. We also post our
corporate governance guidelines, code of business conduct and ethics, code of ethics for senior financial officers and the charters of our board’s committees in the same website location. Our governance documents are available in print to any
unitholder that makes a written request to Corporate Secretary, NuStar GP Holdings, LLC, 2330 North Loop 1604 West, San Antonio, Texas 78248.

 


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Table of Contents


PART III

FACE="Times New Roman" SIZE="2">ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

SIZE="2">DIRECTORS AND EXECUTIVE OFFICERS OF NUSTAR GP HOLDINGS, LLC

Information required to be disclosed under this Item 10
appears under the following headings in the Company’s Proxy Statement for the 2009 annual meeting of unitholders and is hereby incorporated by reference: “Information Regarding the Board of Directors,” “Independent
Directors,” “Audit Committee,” “Code of Ethics of Senior Financial Officers,” “Proposal No. 1 Election of Directors,” “Information Concerning Nominees and Other Directors” and “Certain
Relationships and Related Transactions.”

Information regarding executive officers is included in Part I of this Form 10-K as
permitted by General Instruction G(3).

PART III

FACE="Times New Roman" SIZE="2">ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

SIZE="2">DIRECTORS AND EXECUTIVE OFFICERS OF NUSTAR GP HOLDINGS, LLC

Information required to be disclosed under this Item 10
appears under the following headings in the Company’s Proxy Statement for the 2009 annual meeting of unitholders and is hereby incorporated by reference: “Information Regarding the Board of Directors,” “Independent
Directors,” “Audit Committee,” “Code of Ethics of Senior Financial Officers,” “Proposal No. 1 Election of Directors,” “Information Concerning Nominees and Other Directors” and “Certain
Relationships and Related Transactions.”

Information regarding executive officers is included in Part I of this Form 10-K as
permitted by General Instruction G(3).

PART IV

STYLE="margin-top:12px;margin-bottom:0px">ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

 






(a)

(1) Financial Statements. The following consolidated financial statements of NuStar GP Holdings, LLC and its subsidiaries and NuStar Energy L.P. and
its subsidiaries are included in Part II, Item 8 of this Form 10-K:

NUSTAR GP HOLDINGS, LLC:

Management’s Report on Internal Control over Financial Reporting

STYLE="margin-top:6px;margin-bottom:0px; margin-left:6%" ALIGN="justify">Report of independent registered public accounting firm (KPMG LLP)

ALIGN="justify">Consolidated Balance Sheets as of December 31, 2008 and 2007

SIZE="2">Consolidated Statements of Income for the Years Ended December 31, 2008, 2007 and 2006

Consolidated
Statements of Cash Flows for the Years Ended December 31, 2008, 2007 and 2006

 


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Consolidated Statements of Members’ Equity – Years Ended December 31,
2008, 2007 and 2006

Notes to Consolidated Financial Statements

STYLE="margin-top:12px;margin-bottom:0px; margin-left:8%" ALIGN="justify">NUSTAR ENERGY L.P.

SIZE="2">Reports of independent registered public accounting firm (KPMG LLP)

Consolidated Balance Sheets as of
December 31, 2008 and 2007

Consolidated Statements of Income for the Years Ended December 31, 2008, 2007 and 2006

Consolidated Statements of Cash Flows for the Years Ended December 31, 2008, 2007 and 2006

STYLE="margin-top:6px;margin-bottom:0px; margin-left:8%" ALIGN="justify">Consolidated Statements of Partners’ Equity for the Years Ended December 31, 2008, 2007 and 2006

STYLE="margin-top:6px;margin-bottom:0px; margin-left:8%" ALIGN="justify">Notes to Consolidated Financial Statements

 






 (2)

Financial Statement Schedules and Other Financial Information. No financial statement schedules are submitted because either they are inapplicable or
because the required information is included in the consolidated financial statements or notes thereto.

 






 (3)

Exhibits

Filed as part of
this Form 10-K are the following:

PART IV

STYLE="margin-top:12px;margin-bottom:0px">ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

 






(a)

(1) Financial Statements. The following consolidated financial statements of NuStar GP Holdings, LLC and its subsidiaries and NuStar Energy L.P. and
its subsidiaries are included in Part II, Item 8 of this Form 10-K:

NUSTAR GP HOLDINGS, LLC:

Management’s Report on Internal Control over Financial Reporting

STYLE="margin-top:6px;margin-bottom:0px; margin-left:6%" ALIGN="justify">Report of independent registered public accounting firm (KPMG LLP)

ALIGN="justify">Consolidated Balance Sheets as of December 31, 2008 and 2007

SIZE="2">Consolidated Statements of Income for the Years Ended December 31, 2008, 2007 and 2006

Consolidated
Statements of Cash Flows for the Years Ended December 31, 2008, 2007 and 2006

 


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Consolidated Statements of Members’ Equity – Years Ended December 31,
2008, 2007 and 2006

Notes to Consolidated Financial Statements

STYLE="margin-top:12px;margin-bottom:0px; margin-left:8%" ALIGN="justify">NUSTAR ENERGY L.P.

SIZE="2">Reports of independent registered public accounting firm (KPMG LLP)

Consolidated Balance Sheets as of
December 31, 2008 and 2007

Consolidated Statements of Income for the Years Ended December 31, 2008, 2007 and 2006

Consolidated Statements of Cash Flows for the Years Ended December 31, 2008, 2007 and 2006

STYLE="margin-top:6px;margin-bottom:0px; margin-left:8%" ALIGN="justify">Consolidated Statements of Partners’ Equity for the Years Ended December 31, 2008, 2007 and 2006

STYLE="margin-top:6px;margin-bottom:0px; margin-left:8%" ALIGN="justify">Notes to Consolidated Financial Statements

 






 (2)

Financial Statement Schedules and Other Financial Information. No financial statement schedules are submitted because either they are inapplicable or
because the required information is included in the consolidated financial statements or notes thereto.

 






 (3)

Exhibits

Filed as part of
this Form 10-K are the following:

These excerpts taken from the NSH 10-K filed Feb 29, 2008.

PART IV

 

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

 

(a)

  (1)    Financial Statements. The following consolidated financial statements of NuStar GP Holdings, LLC and its subsidiaries and NuStar Energy L.P. and its subsidiaries are included in Part II, Item 8 of this Form 10-K:
     NUSTAR GP HOLDINGS, LLC:
     Management’s Report on Internal Control over Financial Reporting
     Report of independent registered public accounting firm (KPMG LLP)
     Consolidated Balance Sheets as of December 31, 2007 and 2006
     Consolidated Statements of Income for the Years Ended December 31, 2007, 2006 and 2005
     Consolidated Statements of Cash Flows for the Years Ended December 31, 2007, 2006 and 2005
     Consolidated Statements of Partners’ Equity—Years Ended December 31, 2007, 2006 and 2005
     Notes to Consolidated Financial Statements

 

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     NUSTAR ENERGY L.P.
     Management’s Report on Internal Control over Financial Reporting
     Reports of independent registered public accounting firm (KPMG LLP)
     Consolidated Balance Sheets as of December 31, 2007 and 2006
     Consolidated Statements of Income for the Years Ended December 31, 2007, 2006 and 2005
     Consolidated Statements of Cash Flows for the Years Ended December 31, 2007, 2006 and 2005
     Consolidated Statements of Partners’ Equity for the Years Ended December 31, 2007, 2006 and 2005
     Notes to Consolidated Financial Statements
   (2 )   Financial Statement Schedules and Other Financial Information. No financial statement schedules are submitted because either they are inapplicable or because the required information is included in the consolidated financial statements or notes thereto.
   (3 )   Exhibits
Filed as part of this Form 10-K are the following:


PART IV

 






ITEM 15.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

 
































































































(a)

 (1)  Financial Statements. The following consolidated financial statements of NuStar GP Holdings, LLC and its subsidiaries and NuStar Energy L.P. and its subsidiaries are included in Part
II, Item 8 of this Form 10-K:
   NUSTAR GP HOLDINGS, LLC:
   Management’s Report on Internal Control over Financial Reporting
   Report of independent registered public accounting firm (KPMG LLP)
   Consolidated Balance Sheets as of December 31, 2007 and 2006
   Consolidated Statements of Income for the Years Ended December 31, 2007, 2006 and 2005
   Consolidated Statements of Cash Flows for the Years Ended December 31, 2007, 2006 and 2005
   Consolidated Statements of Partners’ Equity—Years Ended December 31, 2007, 2006 and 2005
   Notes to Consolidated Financial Statements

 


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   NUSTAR ENERGY L.P.
   Management’s Report on Internal Control over Financial Reporting
   Reports of independent registered public accounting firm (KPMG LLP)
   Consolidated Balance Sheets as of December 31, 2007 and 2006
   Consolidated Statements of Income for the Years Ended December 31, 2007, 2006 and 2005
   Consolidated Statements of Cash Flows for the Years Ended December 31, 2007, 2006 and 2005
   Consolidated Statements of Partners’ Equity for the Years Ended December 31, 2007, 2006 and 2005
   Notes to Consolidated Financial Statements
  (2) Financial Statement Schedules and Other Financial Information. No financial statement schedules are submitted because either they are inapplicable or because the required information
is included in the consolidated financial statements or notes thereto.
  (3) Exhibits
Filed as part of this Form 10-K are the following:
This excerpt taken from the NSH 10-K filed Feb 28, 2007.

PART IV

 

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

 

(a)    (1)   Financial Statements. The following consolidated financial statements of Valero GP Holdings, LLC and its subsidiaries and of Valero L.P. and its subsidiaries are included in Part II, Item 8 of this Form 10-K:
     VALERO GP HOLDINGS, LLC:
    

 

Report of independent registered public accounting firm (KPMG LLP)

    

 

Consolidated Balance Sheets as of December 31, 2006 and 2005

    

 

Consolidated Statements of Income for the Years Ended December 31, 2006, 2005 and 2004

    

 

Consolidated Statements of Cash Flows for the Years Ended December 31, 2006, 2005 and 2004

    

 

Consolidated Statements of Partners’ Equity for the Years Ended December 31, 2006, 2005 and 2004

    

 

Notes to Consolidated Financial Statements

     VALERO L.P:
    

 

Reports of independent registered public accounting firm (KPMG LLP)

    

 

Consolidated Balance Sheets as of December 31, 2006 and 2005

    

 

Consolidated Statements of Income for the Years Ended December 31, 2006, 2005 and 2004

    

 

Consolidated Statements of Cash Flows for the Years Ended December 31, 2006, 2005 and 2004

    

 

Consolidated Statements of Partners’ Equity for the Years Ended December 31, 2006, 2005 and 2004

    

 

Notes to Consolidated Financial Statements

 

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The following consolidated financial statements of Valero L.P. and its subsidiaries are included in Part II, Item 8 of this Form 10-K:

    

 

Management’s Report on Internal Control over Financial Reporting

    

 

Reports of independent registered public accounting firm (KPMG LLP)

    

 

Consolidated Balance Sheets as of December 31, 2006 and 2005

    

 

Consolidated Statements of Income for the Years Ended December 31, 2006, 2005 and 2004

    

 

Consolidated Statements of Cash Flows – Years Ended December 31, 2006, 2005 and 2004

    

 

Consolidated Statements of Partners’ Equity – Years Ended December 31, 2006, 2005 and 2004

    

 

Notes to Consolidated Financial Statements

 

  (2) Financial Statement Schedules and Other Financial Information. No financial statement schedules are submitted because either they are inapplicable or because the required information is included in the consolidated financial statements or notes thereto.

 

  (3) Exhibits

Filed as part of this Form 10-K are the following:

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