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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 _________________________________________
 FORM 10-Q
 _________________________________________
(Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended June 30, 2014
OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from _______ to _______            
Commission File Number 1-32940
  _________________________________________
NUSTAR GP HOLDINGS, LLC
(Exact name of registrant as specified in its charter)
  _________________________________________
 
Delaware
 
85-0470977
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
 
 
 
19003 IH-10 West
San Antonio, Texas
 
78257
(Address of principal executive offices)
 
(Zip Code)
Registrant’s telephone number, including area code (210) 918-2000
 _________________________________________
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule12b-2 of the Exchange Act:
Large accelerated filer
 
x
Accelerated filer
 
o
 
 
 
 
 
 
Non-accelerated filer
 
o  (Do not check if a smaller reporting company)
Smaller reporting company
 
o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  o   No  x
The number of common units outstanding as of July 31, 2014 was 42,707,607.
 
 
 
 
 



NUSTAR GP HOLDINGS, LLC AND SUBSIDIARIES
FORM 10-Q
TABLE OF CONTENTS
 


2


PART I – FINANCIAL INFORMATION

Item 1.
Financial Statements

NUSTAR GP HOLDINGS, LLC
CONSOLIDATED BALANCE SHEETS
(Thousands of Dollars)
 
 
June 30,
2014
 
December 31,
2013
 
(Unaudited)
 
 
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
1,527

 
$
1,603

Receivable from related parties
14,588

 
9,617

Income tax receivable
1,198

 
1,198

Other receivables
615

 
77

Deferred income tax assets, net

 
1,047

Other current assets
217

 
245

Total current assets
18,145

 
13,787

Investment in NuStar Energy L.P.
343,243

 
357,456

Long-term receivable from related party
40,432

 
41,139

Total assets
$
401,820

 
$
412,382

Liabilities and Members’ Equity
 
 
 
Current liabilities:
 
 
 
Short-term debt
$
26,000

 
$
26,000

Accounts payable
351

 
324

Accrued compensation expense
18,013

 
12,318

Accrued liabilities
362

 
536

Deferred income tax liabilities, net
1,222

 

Taxes other than income tax
570

 
1,240

Total current liabilities
46,518

 
40,418

Deferred income tax liabilities, net
1,125

 
3,671

Long-term liabilities
22,076

 
18,307

Commitments and contingencies (Note 8)

 

Members’ equity
324,090

 
341,045

Accumulated other comprehensive income
8,011

 
8,941

Total members’ equity
332,101

 
349,986

Total liabilities and members’ equity
$
401,820

 
$
412,382

See Condensed Notes to Consolidated Financial Statements.

3


NUSTAR GP HOLDINGS, LLC
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited, Thousands of Dollars, Except Unit and Per Unit Data)
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2014
 
2013
 
2014
 
2013
Equity in earnings of NuStar Energy L.P.
$
16,739

 
$
13,417

 
$
31,129

 
$
25,561

General and administrative expenses
(880
)
 
(618
)
 
(1,752
)
 
(1,418
)
Other income, net
196

 
18

 
213

 
99

Interest expense, net
(231
)
 
(170
)
 
(453
)
 
(343
)
Income before income tax (expense) benefit
15,824

 
12,647

 
29,137

 
23,899

Income tax (expense) benefit
(56
)
 
(88
)
 
277

 
(265
)
Net income
$
15,768

 
$
12,559

 
$
29,414

 
$
23,634

Comprehensive income
$
15,786

 
$
12,648

 
$
28,484

 
$
23,920

Basic and diluted net income per unit
$
0.37

 
$
0.29

 
$
0.69

 
$
0.55

Weighted-average number of basic units outstanding
42,658,178

 
42,618,376

 
42,657,235

 
42,612,057

Weighted-average number of diluted units outstanding
42,687,795

 
42,618,376

 
42,672,125

 
42,612,057

See Condensed Notes to Consolidated Financial Statements.

4


NUSTAR GP HOLDINGS, LLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, Thousands of Dollars)
 
 
Six Months Ended June 30,
 
2014
 
2013
Cash Flows from Operating Activities:
 
 
 
Net income
$
29,414

 
$
23,634

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Equity in earnings of NuStar Energy L.P.
(31,129
)
 
(25,561
)
Distributions of equity in earnings from NuStar Energy L.P.
31,129

 
25,561

Gain on sale of NuStar Energy L.P. limited partner units in connection
with unit-based compensation
(213
)
 
(99
)
(Benefit) provision for deferred income tax
(277
)
 
294

Changes in current assets and liabilities (Note 6)
(1,244
)
 
49

Increase in long-term receivable from related party
(653
)
 
(8,623
)
Increase in long-term liabilities
3,769

 
8,249

Other, net
152

 
91

Net cash provided by operating activities
30,948

 
23,595

Cash Flows from Investing Activities:
 
 
 
Distributions in excess of equity in earnings from NuStar Energy L.P.
16,805

 
22,544

Investment in NuStar Energy L.P.
(3,484
)
 

Proceeds from sale of NuStar Energy L.P. units in connection
with unit-based compensation
2,152

 
1,262

Net cash provided by investing activities
15,473

 
23,806

Cash Flows from Financing Activities:
 
 
 
Proceeds from short-term debt borrowings
26,000

 
18,500

Repayment of short-term debt
(26,000
)
 
(20,000
)
Distributions to unitholders
(46,497
)
 
(46,445
)
Net cash used in financing activities
(46,497
)
 
(47,945
)
Net decrease in cash and cash equivalents
(76
)
 
(544
)
Cash and cash equivalents as of the beginning of the period
1,603

 
2,597

Cash and cash equivalents as of the end of the period
$
1,527

 
$
2,053

See Condensed Notes to Consolidated Financial Statements.

5


NUSTAR GP HOLDINGS, LLC
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND BASIS OF PRESENTATION
Organization
NuStar GP Holdings, LLC (NuStar GP Holdings) (NYSE: NSH) is a publicly held Delaware limited liability company. Unless otherwise indicated, the terms “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.

We have no operations or sources of income or cash flows other than our investment in NuStar Energy L.P. (NuStar Energy) (NYSE: NS). As of June 30, 2014, we owned approximately 14.9% of NuStar Energy, consisting of the following:
the 2% general partner interest;
100% of the incentive distribution rights (IDR) 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
10,253,584 common units of NuStar Energy representing a 12.9% limited partner interest.

NuStar Energy is a publicly held Delaware limited partnership engaged in the transportation of petroleum products and anhydrous ammonia, the terminalling and storage of petroleum products and the marketing of petroleum products. NuStar Energy has terminal and storage facilities in the United States, Canada, Mexico, the Netherlands, including St. Eustatius in the Caribbean, the United Kingdom and Turkey.
Basis of Presentation
These unaudited condensed consolidated financial statements include the accounts of NuStar GP Holdings and subsidiaries in which it has a controlling interest. Intercompany balances and transactions have been eliminated in consolidation.

We account for our ownership interest in NuStar Energy using the equity method. Therefore, our financial results reflect a portion of NuStar Energy’s net income based on our ownership interest in NuStar Energy. We have no separate operating activities apart from those conducted by NuStar Energy and therefore generate no revenues from operations.

These unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities Exchange Act of 1934. Accordingly, they do not include all of the information and notes required by GAAP for complete consolidated financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All such adjustments are of a normal recurring nature unless otherwise indicated. Financial information for the three and six months ended June 30, 2014 and 2013 included in these Condensed Notes to Consolidated Financial Statements is derived from our unaudited condensed consolidated financial statements. Operating results for the three and six months ended June 30, 2014 are not necessarily indicative of the results that may be expected for the year ending December 31, 2014. The consolidated balance sheet as of December 31, 2013 has been derived from the audited consolidated financial statements as of that date. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2013.

New Accounting Pronouncement
In May 2014, the Financial Accounting Standards Board and the International Accounting Standards Board jointly issued a comprehensive new revenue recognition standard. The standard is effective for public entities for annual and interim periods beginning after December 15, 2016, using one of two retrospective application methods. Early adoption is not permitted for public entities. We are currently assessing the impact of this new guidance on our financial statements and disclosures.





6

NUSTAR GP HOLDINGS, LLC
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

2. INVESTMENT IN NUSTAR ENERGY
Summary Financial Information
Condensed consolidated financial information reported by NuStar Energy is presented below (in thousands of dollars): 
 
June 30,
2014
 
December 31,
2013
 
(Unaudited)
 
 
Balance Sheet Information:
 
 
 
Current assets
$
468,118

 
$
633,549

Property, plant and equipment, net
3,345,136

 
3,310,653

Goodwill
617,429

 
617,429

Other non-current assets
465,096

 
470,555

Total assets
$
4,895,779

 
$
5,032,186

Current liabilities
$
271,748

 
$
392,572

Long-term debt
2,726,629

 
2,655,553

Other non-current liabilities
88,043

 
80,267

Total liabilities
3,086,420

 
3,128,392

NuStar Energy partners’ equity
1,808,370

 
1,902,136

Noncontrolling interest
989

 
1,658

Total liabilities and partners’ equity
$
4,895,779

 
$
5,032,186

 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2014
 
2013
 
2014
 
2013
 
(Thousands of Dollars)
Statement of Comprehensive Income Information:
 
 
 
 
 
 
 
Revenues
$
749,745

 
$
902,014

 
$
1,598,958

 
$
1,900,200

Operating income
$
89,354

 
$
76,972

 
$
170,457

 
$
140,330

 
 
 
 
 
 
 
 
Income from continuing operations
$
57,187

 
$
34,712

 
$
100,183

 
$
54,311

(Loss) income from discontinued operations, net of tax
(1,788
)
 
(1,743
)
 
(5,147
)
 
3,062

Net income
$
55,399

 
$
32,969

 
$
95,036

 
$
57,373

Other
Our investment in NuStar Energy reconciles to NuStar Energy’s partners’ equity as follows: 
 
June 30,
2014
 
December 31,
2013
 
(Thousands of Dollars)
NuStar Energy’s partners’ equity
$
1,808,370

 
$
1,902,136

NuStar GP Holdings’ ownership interest in NuStar Energy
14.9
%
 
14.9
%
NuStar GP Holdings’ share of NuStar Energy’s partners’ equity
269,447

 
283,418

Step-up in basis related to NuStar Energy’s assets and liabilities,
including equity method goodwill, and other
73,796

 
74,038

Investment in NuStar Energy
$
343,243

 
$
357,456



7

NUSTAR GP HOLDINGS, LLC
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

3. RELATED PARTY TRANSACTIONS

We had a receivable from related parties of $14.6 million and $9.6 million as of June 30, 2014 and December 31, 2013, respectively, mainly relating to payroll, employee benefit plans and unit-based compensation for our employees providing services to NuStar Energy and NuStar Energy’s joint ventures. We also had a long-term receivable from related party of $40.4 million and $41.1 million as of June 30, 2014 and December 31, 2013, respectively, related to amounts payable for retiree medical benefits and other post-employment benefits. The following table summarizes information pertaining to related party transactions: 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2014
 
2013
 
2014
 
2013
 
(Thousands of Dollars)
Expenses for payroll, employee benefit plans and unit-
     based compensation
$
50,016

 
$
46,292

 
$
94,353

 
$
99,197

Other expenses
$
86

 
$
84

 
$
180

 
$
177

NuStar Energy
GP Services Agreement. NuStar Energy and NuStar GP, LLC, our wholly owned subsidiary, entered into a services agreement, effective January 1, 2008 (the GP Services Agreement). The GP Services Agreement provides that NuStar GP, LLC will furnish administrative and certain operating services necessary to conduct the business of NuStar Energy. All employees providing services to both NuStar GP Holdings and NuStar Energy are employed by NuStar GP, LLC; therefore, NuStar Energy reimburses NuStar GP, LLC for all employee costs, other than the expenses allocated to NuStar GP Holdings (the Holdco Administrative Services Expense). The GP Services Agreement will terminate on December 31, 2014, renewing automatically every two years unless terminated by either party upon six months’ prior written notice. The aggregate amounts of Holdco Administrative Services Expense that we incurred were $0.4 million and $0.2 million for the three months ended June 30, 2014 and 2013, respectively, and $0.9 million and $0.6 million for the six months ended June 30, 2014 and 2013, respectively.
Asphalt JV
On February 26, 2014, NuStar Energy sold its remaining 50% ownership interest in NuStar Asphalt LLC (Asphalt JV) to Lindsay Goldberg LLC (Lindsay Goldberg), a private investment firm (the Asphalt JV Sale). Lindsay Goldberg now owns 100% of Asphalt JV. Effective February 27, 2014, NuStar Asphalt LLC changed its name to Axeon Specialty Products LLC. As a result of the Asphalt JV Sale, we ceased reporting transactions between us and Asphalt JV as related party transactions in consolidated financial statements on February 26, 2014.

Asphalt JV Services Agreement. NuStar GP, LLC and Asphalt JV were a party to a services agreement, which provided that NuStar GP, LLC furnish certain administrative and other operating services necessary to conduct the business of Asphalt JV for an annual fee totaling $10.0 million, subject to adjustment (the Asphalt JV Services Agreement). The Asphalt JV Services Agreement terminated on June 30, 2014. The aggregate amounts charged under the Asphalt JV Services Agreement were $1.5 million and $2.2 million for the three months ended June 30, 2014 and 2013, respectively, and $3.1 million and $4.7 million for the six months ended June 30, 2014 and 2013, respectively.

8

NUSTAR GP HOLDINGS, LLC
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

4. DISTRIBUTIONS FROM NUSTAR ENERGY

The following table reflects the allocation of NuStar Energy’s cash distributions earned for the periods indicated among its general and limited partners:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2014
 
2013
 
2014
 
2013
 
(Thousands of Dollars, Except Per Unit Data)
General partner interest
$
1,961

 
$
1,961

 
$
3,922

 
$
3,922

General partner incentive distribution
10,805

 
10,805

 
21,610

 
21,610

Total general partner distribution
12,766

 
12,766

 
25,532

 
25,532

Limited partner distribution
11,223

 
11,272

 
22,434

 
22,552

Total distributions to NuStar GP Holdings
23,989

 
24,038

 
47,966

 
48,084

Public unitholders’ distributions
74,062

 
74,013

 
148,136

 
148,018

Total cash distributions
$
98,051

 
$
98,051

 
$
196,102

 
$
196,102

Cash distributions per unit applicable to limited partners
$
1.095

 
$
1.095

 
$
2.190

 
$
2.190


The following table summarizes information related to NuStar Energy’s quarterly cash distributions:
Quarter Ended
 
Cash Distributions Per Unit
 
Total Cash Distributions (Thousands of Dollars)
 
Record Date
 
Payment Date
June 30, 2014 (a)
 
$
1.095

 
$
98,051

 
August 6, 2014
 
August 11, 2014
March 31, 2014
 
$
1.095

 
$
98,051

 
May 7, 2014
 
May 12, 2014
December 31, 2013
 
$
1.095

 
$
98,051

 
February 10, 2014
 
February 14, 2014
(a)
The distribution was announced on July 25, 2014.

5. FAIR VALUE MEASUREMENTS

We segregate the inputs used in measuring fair value into three levels: Level 1, defined as observable inputs such as quoted prices for identical assets or liabilities in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable, such as quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in markets that are not active; and Level 3, defined as unobservable inputs in which little or no market data exists.

The following liabilities are measured at fair value on a recurring basis: 
 
June 30, 2014
 
Level 1
 
Level 2
 
Level 3
 
Total
 
(Thousands of Dollars)
Accrued compensation expense:
 
 
 
 
 
 
 
NuStar Energy restricted units and performance awards
$
11,899

 
$

 
$

 
$
11,899

NuStar Energy unit options

 
1,198

 

 
1,198

Total
$
11,899

 
$
1,198

 
$

 
$
13,097

 
 
December 31, 2013
 
Level 1
 
Level 2
 
Level 3
 
Total
 
(Thousands of Dollars)
Accrued compensation expense:
 
 
 
 
 
 
 
NuStar Energy restricted units and performance awards
$
6,224

 
$

 
$

 
$
6,224

NuStar Energy unit options

 
29

 

 
29

Total
$
6,224

 
$
29

 
$

 
$
6,253



9

NUSTAR GP HOLDINGS, LLC
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The fair value of our accrued compensation expense for NuStar Energy restricted units and performance awards is determined using the NuStar Energy unit price at the reporting date. The fair value of our accrued compensation expense for NuStar Energy unit options is determined using the Black-Scholes option-pricing model on the reporting date based on the following weighted average assumptions:
 
June 30,
2014
 
December 31,
2013
Expected life in years
5.9

 
5.8

Expected volatility
26.7
%
 
26.4
%
Expected distribution yield
7.1
%
 
8.6
%
Risk-free interest rate
0.1
%
 
0.1
%
Fair Value of Financial Instruments
We recognize cash equivalents, receivables, payables and short-term debt in our consolidated balance sheets at their carrying amounts. The fair values of these financial instruments approximate their carrying amounts. The fair value of our short-term debt would fall in Level 2 of the fair value hierarchy.

6. STATEMENTS OF CASH FLOWS

Changes in current assets and current liabilities were as follows: 
 
Six Months Ended June 30,
 
2014
 
2013
 
(Thousands of Dollars)
Decrease (increase) in current assets:
 
 
 
Receivable from related parties
$
(5,522
)
 
$
(2,011
)
Income tax receivable

 
6

Other receivables
(538
)
 
147

Other current assets
(62
)
 
(110
)
Increase (decrease) in current liabilities:
 
 
 
Accounts payable
27

 
(626
)
Accrued compensation expense
5,695

 
3,593

Accrued liabilities
(174
)
 
(77
)
Taxes other than income tax
(670
)
 
(873
)
Changes in current assets and current liabilities
$
(1,244
)
 
$
49


Cash flows related to interest and income tax were as follows:
 
Six Months Ended June 30,
 
2014
 
2013
 
(Thousands of Dollars)
Cash paid for interest
$
326

 
$
246

Cash paid (refunded) for income tax
$
1

 
$
(35
)

7. CREDIT FACILITY
Our revolving credit agreement dated June 28, 2013, as amended on June 17, 2014, will mature on June 27, 2015 and has a borrowing capacity of up to $40.0 million, of which, up to $10.0 million may be available for letters of credit (the 2013 Credit Facility). Our obligations under the 2013 Credit Facility are guaranteed by Riverwalk Holdings, LLC (Riverwalk), a wholly owned subsidiary. Riverwalk pledged 1,792,918 NuStar Energy units that it owns to secure its guarantee.

As of June 30, 2014, we had outstanding borrowings of $26.0 million and availability of $14.0 million for borrowings under the 2013 Credit Facility. Interest on the 2013 Credit Facility is based upon, at our option, either an alternative base rate or a LIBOR-based rate. As of June 30, 2014, the weighted-average interest rate was 2.2%.

10

NUSTAR GP HOLDINGS, LLC
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)


The terms of the 2013 Credit Facility require NuStar Energy to maintain, as of the end of each rolling period, which consists of any period of four consecutive fiscal quarters, a consolidated debt coverage ratio not to exceed 5.0-to-1.0. As of June 30, 2014, NuStar Energy’s consolidated debt coverage ratio was 4.0x. We are also required to receive cash distributions of at least $12.5 million in respect of our ownership interests in NuStar Energy each fiscal quarter. Our management believes that we are in compliance with the covenants of the 2013 Credit Facility as of June 30, 2014.

8. COMMITMENTS AND CONTINGENCIES
Contingencies
We are not currently a party to any material legal proceedings and have not recorded any accruals for loss contingencies. NuStar Energy is a party to claims and legal proceedings arising in the ordinary course of its business, which it believes are not material to its financial position or results of operations. However, due to the inherent uncertainty of litigation, there can be no assurance that the resolution of any particular claim or proceeding would not have a material adverse effect on NuStar Energy’s results of operations and ability to pay distributions, which would impact our results of operations and ability to pay distributions.

9. MEMBERS’ EQUITY

The following table presents changes to our members’ equity (in thousands of dollars):
 
Balance as of December 31, 2013
$
349,986

Net income
29,414

Distributions to unitholders
(46,497
)
Other comprehensive loss
(930
)
Unit-based compensation
128

Balance as of June 30, 2014
$
332,101

Accumulated Other Comprehensive Income
The following table presents balances of and changes in accumulated other comprehensive income by component:
 
Share of NuStar Energy’s Other Comprehensive Loss
 
Pension and Other Postretirement Benefit Plan Adjustments
 
Total
 
(Thousands of Dollars)
Balance as of January 1, 2014
$
(9,417
)
 
$
18,358

 
$
8,941

Other comprehensive income (loss) before reclassification adjustments
1,047

 

 
1,047

Amounts reclassified from accumulated other comprehensive loss (a)

 
(1,977
)
 
(1,977
)
Other comprehensive income (loss)
1,047

 
(1,977
)
 
(930
)
Balance as of June 30, 2014
$
(8,370
)
 
$
16,381

 
$
8,011

(a)
We recognized the net loss reclassified into income as general and administrative expenses. These amounts are components of net periodic pension cost and NuStar Energy reimburses us for these employee costs. See Note 11 for details of our net periodic pension cost.

11

NUSTAR GP HOLDINGS, LLC
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Cash Distributions
The following table summarizes our cash distributions applicable to the period in which the distributions were earned:
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2014
 
2013
 
2014
 
2013
 
(Thousands of Dollars, Except Per Unit Data)
Cash distributions per unit
$
0.545

 
$
0.545

 
$
1.090

 
$
1.090

Total cash distributions
$
23,250

 
$
23,236

 
$
46,498

 
$
46,458

 
The following table summarizes information related to our quarterly cash distributions:

Quarter Ended
 
Cash Distributions Per Unit
 
Total Cash Distributions (Thousands of Dollars)
 
Record Date
 
Payment Date
June 30, 2014 (a)
 
$
0.545

 
$
23,250

 
August 6, 2014
 
August 14, 2014
March 31, 2014
 
$
0.545

 
$
23,248

 
May 7, 2014
 
May 15, 2014
December 31, 2013
 
$
0.545

 
$
23,249

 
February 10, 2014
 
February 18, 2014
(a)
The distribution was announced on July 25, 2014.

10. NET INCOME PER UNIT

We treat restricted units granted under our long-term incentive plan as participating securities in computing net income per unit pursuant to the two-class method. The computation of diluted net income per unit for the three and six months ended June 30, 2013 excludes 289,100 outstanding options to purchase NuStar GP Holdings units, as the exercise price exceeded the average market price and their effect would have been anti-dilutive. Unit amounts used in the computation of basic and diluted net income per unit were as follows:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2014
 
2013
 
2014
 
2013
Basic units outstanding:
 
 
 
 
 
 
 
Weighted-average number of basic units outstanding
42,658,178

 
42,618,376

 
42,657,235

 
42,612,057

Diluted units outstanding:
 
 
 
 
 
 
 
Weighted-average number of basic units outstanding
42,658,178

 
42,618,376

 
42,657,235

 
42,612,057

Effect of dilutive securities
29,617

 

 
14,890

 

Weighted-average number of diluted units outstanding
42,687,795

 
42,618,376

 
42,672,125

 
42,612,057




12

NUSTAR GP HOLDINGS, LLC
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

11. EMPLOYEE BENEFIT PLANS

The components of net periodic benefit cost related to our defined benefit plans were as follows:
 
Pension Plans (a)
 
Other Postretirement
Benefit Plans
 
2014
 
2013
 
2014
 
2013
 
(Thousands of Dollars)
For the three months ended June 30:
 
 
 
 
 
 
 
Service cost
$
2,012

 
$
4,080

 
$
94

 
$
293

Interest cost
1,056

 
1,259

 
93

 
235

Expected return on assets
(1,144
)
 
(1,134
)
 

 

Amortization of prior service credit
(516
)
 
(10
)
 
(286
)
 
(50
)
Amortization of net (gain) loss
(260
)
 
518

 
28

 
52

Other (b)
(214
)
 

 

 

Net periodic benefit cost
$
934

 
$
4,713

 
$
(71
)
 
$
530

 
 
 
 
 
 
 
 
For the six months ended June 30:
 
 
 
 
 
 
 
Service cost
$
4,024

 
$
8,160

 
$
188

 
$
586

Interest cost
2,113

 
2,518

 
186

 
470

Expected return on assets
(2,288
)
 
(2,268
)
 

 

Amortization of prior service credit
(1,032
)
 
(20
)
 
(572
)
 
(100
)
Amortization of net (gain) loss
(215
)
 
1,036

 
56

 
104

Other (b)
(214
)
 
180

 

 

Net periodic benefit cost
$
2,388

 
$
9,606

 
$
(142
)
 
$
1,060

(a)
Includes amounts related to the pension plan, the excess pension plan and the supplemental executive retirement plan (the SERP).
(b)
In 2014, other relates to a settlement credit associated with the SERP and in 2013 includes charges related to NuStar Energy’s sale of its fuels refinery in San Antonio, Texas and related assets on January 1, 2013.

13


Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
FORWARD-LOOKING STATEMENTS
This Form 10-Q contains certain estimates, predictions, projections, assumptions and other forward-looking statements that involve various risks and uncertainties. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested in this report. These forward-looking statements can generally be identified by the words “anticipates,” “believes,” “expects,” “plans,” “intends,” “estimates,” “forecasts,” “budgets,” “projects,” “will,” “could,” “should,” “may” and similar expressions. These statements reflect our current views with regard to future events and are subject to various risks, uncertainties and assumptions. Please read our Annual Report on Form 10-K for the year ended December 31, 2013, Part I, Item 1A “Risk Factors,” as well as our subsequent current and quarterly reports, for a discussion of certain of those risks, uncertainties and assumptions.
If one or more of these risks or uncertainties materialize, or if the underlying assumptions prove incorrect, our actual results may vary materially from those described in any forward-looking statement. Other unknown or unpredictable factors could also have material adverse effects on our future results. Readers are cautioned not to place undue reliance on this forward-looking information, which is as of the date of this Form 10-Q. We do not intend to update these statements unless it is required by the securities laws to do so, and we undertake no obligation to publicly release the result of any revisions to any such forward-looking statements that may be made to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events.

OVERVIEW
NuStar GP Holdings, LLC (NuStar GP Holdings) (NYSE: NSH) is a publicly traded Delaware limited liability company. Unless otherwise indicated, the terms “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. Our Management’s Discussion and Analysis of Financial Condition and Results of Operations is presented in five sections:

Overview
Results of Operations
Trends and Outlook
Liquidity and Capital Resources
Critical Accounting Policies
New Accounting Pronouncement
Our only cash generating assets are our ownership interests in NuStar Energy L.P. (NuStar Energy), a publicly traded Delaware limited partnership (NYSE: NS). As of June 30, 2014, our aggregate ownership interests in NuStar Energy consisted of the following:

the 2% general partner interest;
100% of the incentive distribution rights (IDR) 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
10,253,584 common units of NuStar Energy representing a 12.9% limited partner interest.
We account for our ownership interest in NuStar Energy using the equity method. Therefore, our financial results reflect a portion of NuStar Energy’s net income based on our ownership interest. We have no separate operating activities apart from those conducted by NuStar Energy and therefore generate no revenues from operations.

NuStar Energy is engaged in the transportation of petroleum products and anhydrous ammonia, the terminalling and storage of petroleum products and the marketing of petroleum products. NuStar Energy has terminal and storage facilities in the United States, Canada, Mexico, the Netherlands, including St. Eustatius in the Caribbean, the United Kingdom and Turkey.

NuStar Energy’s partnership agreement requires that it distributes all “Available Cash” to its partners each quarter, and this term is defined in its partnership agreement as cash on hand at the end of the quarter, plus certain permitted borrowings made subsequent to the end of the quarter, less cash reserves determined by NuStar Energy’s board of directors. 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.

14



On February 26, 2014, NuStar Energy sold its then remaining 50% ownership interest in NuStar Asphalt LLC (Asphalt JV), which constituted all of NuStar Energy’s equity interest it retained after the first sale in 2012. The purchaser, Lindsay Goldberg LLC (Lindsay Goldberg), a private investment firm, now owns 100% of Asphalt JV. Effective February 27, 2014, NuStar Asphalt LLC changed its name to Axeon Specialty Products LLC.

On January 1, 2013, NuStar Energy sold its fuels refinery in San Antonio, Texas (the San Antonio Refinery) and related assets, which included inventory, a terminal in Elmendorf, Texas and a pipeline connecting the terminal and refinery for approximately $117.0 million (the San Antonio Refinery Sale). NuStar Energy presented the results of operations for the San Antonio Refinery and related assets as discontinued operations for all periods presented.

RESULTS OF OPERATIONS
Three Months Ended June 30, 2014 Compared to Three Months Ended June 30, 2013
Financial Highlights
(Unaudited, Thousands of Dollars, Except Per Unit Data)
 
 
Three Months Ended June 30,
 
 
 
2014
 
2013
 
Change
Equity in earnings of NuStar Energy
$
16,739

 
$
13,417

 
$
3,322

General and administrative expenses
(880
)
 
(618
)
 
(262
)
Other income, net
196

 
18

 
178

Interest expense, net
(231
)
 
(170
)
 
(61
)
Income before income tax expense
15,824

 
12,647

 
3,177

Income tax expense
(56
)
 
(88
)
 
32

Net income
$
15,768

 
$
12,559

 
$
3,209

Basic and diluted net income per unit
$
0.37

 
$
0.29

 
$
0.08


The following table summarizes NuStar Energy’s statement of comprehensive income data:
 
Three Months Ended June 30,
 
 
 
2014
 
2013
 
Change
 
(Unaudited, Thousands of Dollars, Except Per Unit Data)
Revenues
$
749,745

 
$
902,014

 
$
(152,269
)
Cost of product sales
473,755

 
648,766

 
(175,011
)
Operating expenses
115,537

 
111,315

 
4,222

Depreciation and amortization expense
45,382

 
42,709

 
2,673

Segment operating income
115,071

 
99,224

 
15,847

General and administrative expenses
23,163

 
19,653

 
3,510

Other depreciation and amortization expense
2,554

 
2,599

 
(45
)
Operating income
$
89,354

 
$
76,972

 
$
12,382

 
 
 
 
 
 
Income from continuing operations
$
57,187

 
$
34,712

 
$
22,475

Loss from discontinued operations, net of tax
(1,788
)
 
(1,743
)
 
(45
)
Net income
$
55,399

 
$
32,969

 
$
22,430

 
 
 
 
 
 
Net income per unit applicable to limited partners
$
0.56

 
$
0.28

 
$
0.28

 
 
 
 
 
 
Cash distributions per unit applicable to limited partners
$
1.095

 
$
1.095

 
$


15



NuStar Energy’s net income increased $22.4 million for the three months ended June 30, 2014, compared to the three months ended June 30, 2013, mainly due to an increase of $15.8 million in its segment operating income resulting from improvements in all three reportable segments. Additionally, NuStar Energy recorded equity in earnings of joint ventures of $3.3 million for the three months ended June 30, 2014, compared to a loss in equity of joint ventures of $10.1 million for the three months ended June 30, 2013, primarily due to losses from its investment in Asphalt JV for the three months ended June 30, 2013.
Equity in earnings of NuStar Energy
The following table summarizes our equity in earnings of NuStar Energy:
 
Three Months Ended June 30,
 
 
 
2014
 
2013
 
Change
 
(Thousands of Dollars)
NuStar GP Holdings’ Equity in Earnings of NuStar Energy:
 
 
 
 
 
General partner interest
$
894

 
$
446

 
$
448

General partner incentive distribution rights (IDR)
10,805

 
10,805

 

General partner’s interest in earnings and incentive distributions
        of NuStar Energy
11,699

 
11,251

 
448

Limited partner interest in earnings of NuStar Energy
5,761

 
2,887

 
2,874

Amortization of step-up in basis related to NuStar Energy’s assets
       and liabilities
(721
)
 
(721
)
 

Equity in earnings of NuStar Energy
$
16,739

 
$
13,417

 
$
3,322


Our equity in earnings related to our general and limited partner interests in NuStar Energy increased for the three months ended June 30, 2014, compared to the three months ended June 30, 2013, due to an increase in NuStar Energy’s net income.
Six Months Ended June 30, 2014 Compared to Six Months Ended June 30, 2013
Financial Highlights
(Unaudited, Thousands of Dollars, Except Per Unit Data)

 
Six Months Ended June 30,
 
 
 
2014
 
2013
 
Change
Equity in earnings of NuStar Energy
$
31,129

 
$
25,561

 
$
5,568

General and administrative expenses
(1,752
)
 
(1,418
)
 
(334
)
Other income, net
213

 
99

 
114

Interest expense, net
(453
)
 
(343
)
 
(110
)
Income before income tax benefit (expense)
29,137

 
23,899

 
5,238

Income tax benefit (expense)
277

 
(265
)
 
542

Net income
$
29,414

 
$
23,634

 
$
5,780

Basic and diluted net income per unit
$
0.69

 
$
0.55

 
$
0.14



16


The following table summarizes NuStar Energy’s statement of comprehensive income data:
 
Six Months Ended June 30,
 
 
 
2014
 
2013
 
Change
 
(Unaudited, Thousands of Dollars, Except Per Unit Data)
Revenues
$
1,598,958

 
$
1,900,200

 
$
(301,242
)
Cost of product sales
1,068,714

 
1,401,020

 
(332,306
)
Operating expenses
221,602

 
224,832

 
(3,230
)
Depreciation and amortization expense
89,033

 
81,774

 
7,259

Segment operating income
219,609

 
192,574

 
27,035

General and administrative expenses
44,019

 
47,147

 
(3,128
)
Other depreciation and amortization expense
5,133

 
5,097

 
36

Operating income
$
170,457

 
$
140,330

 
$
30,127

 
 
 
 
 
 
Income from continuing operations
$
100,183

 
$
54,311

 
$
45,872

(Loss) income from discontinued operations, net of tax
(5,147
)
 
3,062

 
(8,209
)
Net income
$
95,036

 
$
57,373

 
$
37,663

 
 
 
 
 
 
Net income per unit applicable to limited partners
$
0.92

 
$
0.45

 
$
0.47

 
 
 
 
 
 
Cash distributions per unit applicable to limited partners
$
2.190

 
$
2.190

 
$


NuStar Energy’s net income increased $37.7 million for the six months ended June 30, 2014, compared to the six months ended June 30, 2013, mainly due to an increase in its income from continuing operations, which benefitted from higher segment operating income and a decrease in the equity in loss of joint ventures. NuStar Energy’s segment operating income increased $27.0 million for the six months ended June 30, 2014, compared to the six months ended June 30, 2013, primarily due to increased segment operating income from its pipeline and fuels marketing segments, partially offset by decreased segment operating income from its storage segment.

Partially offsetting the improvements in NuStar Energy’s income from continuing operations, NuStar Energy recorded a loss from discontinued operations for the six months ended June 30, 2014, compared to income from discontinued operations for the six months ended June 30, 2013. NuStar Energy’s discontinued operations include the results of operations of certain storage assets that were classified as “Assets held for sale” on its consolidated balance sheet beginning December 31, 2013, as well as the results of operations of the San Antonio Refinery and related assets, which NuStar Energy sold on January 1, 2013.
Equity in earnings of NuStar Energy
The following table summarizes our equity in earnings of NuStar Energy:
 
Six Months Ended June 30,
 
 
 
2014
 
2013
 
Change
 
(Thousands of Dollars)
NuStar GP Holdings’ Equity in Earnings of NuStar Energy:
 
 
 
 
 
General partner interest
$
1,473


$
722

 
$
751

General partner incentive distribution rights (IDR)
21,610


21,610

 

General partner’s interest in earnings and incentive distributions
        of NuStar Energy
23,083

 
22,332

 
751

Limited partner interest in earnings of NuStar Energy
9,488


4,671

 
4,817

Amortization of step-up in basis related to NuStar Energy’s assets
        and liabilities
(1,442
)

(1,442
)
 

Equity in earnings of NuStar Energy
$
31,129

 
$
25,561

 
$
5,568


Our equity in earnings related to our general and limited partner interests in NuStar Energy increased for the six months ended June 30, 2014, compared to the six months ended June 30, 2013, due to an increase in NuStar Energy’s net income.

17



TRENDS AND OUTLOOK
We expect our equity in earnings of NuStar Energy to increase or decrease consistent with NuStar Energy’s earnings.

Overall, NuStar Energy expects its earnings for the third quarter of 2014 to be higher than the third quarter of 2013.

NuStar Energy’s Pipeline Segment
NuStar Energy expects that its pipeline segment earnings for the third quarter of 2014 will exceed the comparable period in 2013 and the second quarter of 2014, mainly due to higher throughputs on NuStar Energy’s pipelines serving the Eagle Ford Shale region. This increase in throughputs is due to continued growth in the region and expansion projects NuStar Energy completed in the first half of 2014 and in the third quarter of 2013, which increased its system’s overall capacity. NuStar Energy expects its full-year earnings for 2014 to exceed 2013 mainly due to the benefit of the increased throughputs described above, reduced turnaround activity at its customers’ refineries and the July 1, 2014 tariff increase on pipelines regulated by the Federal Energy Regulatory Commission.

NuStar Energy’s Storage Segment
NuStar Energy expects storage segment earnings for the third quarter of 2014 to be higher than the third quarter of 2013, mainly due to additional storage throughputs at its Corpus Christi North Beach terminal associated with the completion of Eagle Ford Shale projects and the benefit from the fourth quarter of 2013 completion of a second rail-car offloading facility at NuStar Energy’s St. James, Louisiana terminal. However, NuStar Energy expects its third quarter earnings to be lower than the second quarter due to seasonal maintenance expense at certain terminals.

NuStar Energy’s full-year earnings for 2014 are expected to be comparable to 2013, excluding the non-cash charges in 2013. Higher earnings in 2014 at NuStar Energy’s North Beach terminal and from the second rail-car unloading facility at its St. James terminal discussed above are expected to be offset by weak West Coast storage demand and the narrowing price differential of two widely traded crude oil grades (LLS and WTI), which has a negative impact on NuStar Energy’s profit sharing results, as well as unit train demand at its St. James terminal.

NuStar Energy’s Fuels Marketing Segment
NuStar Energy expects third quarter of 2014 results for its fuels marketing segment to be comparable to the second quarter of 2014 and higher than the third quarter of 2013. NuStar Energy expects the third quarter of 2014 to continue to benefit from improvements in its bunker fuel operations. Although NuStar Energy expects the full-year 2014 results in this segment to exceed 2013 results, earnings in this segment, as in any margin-based business, are subject to many factors that can raise or lower margins, which may cause the segment’s actual results to vary significantly from NuStar Energy’s forecast.

NuStar Energy’s outlook for the partnership, and for any of its segments, may change as it is based on NuStar Energy’s continuing evaluation of a number of factors, including factors outside its control, such as the price of crude oil, the state of the economy, changes to refinery maintenance schedules, demand for crude oil, refined products and ammonia, demand for its transportation and storage services, and changes in laws or regulations affecting NuStar Energy’s assets.






18


LIQUIDITY AND CAPITAL RESOURCES

General
Our cash flows consist of distributions from NuStar Energy on our partnership interests, including the IDR that we own. Due to our ownership of NuStar Energy’s IDR, our portion of NuStar Energy’s total distributions may exceed our ownership interest in NuStar Energy. Our primary cash requirements are for distributions to members, capital contributions to maintain our 2% general partner interest in NuStar Energy in the event that NuStar Energy issues additional units, debt service requirements, if any, benefit plan funding and general and administrative expenses. In addition, because NuStar GP, LLC, a wholly owned subsidiary of NuStar GP Holdings, elected to be treated as a taxable entity in August 2006, we may be required to pay income taxes, which may exceed the amount of tax expense recorded in the consolidated financial statements. We expect to fund our cash requirements primarily with the quarterly cash distributions we receive from NuStar Energy and borrowings under our revolving credit facility, if necessary. Additionally, NuStar Energy reimburses us for all costs incurred on its behalf, which are primarily employee-related costs.
Cash Distributions from NuStar Energy
NuStar Energy distributes all of its available cash within 45 days following the end of each quarter based on the partnership interests outstanding as of a record date that is set after the end of each quarter. The following table reflects the cash distributions earned for the periods shown with respect to our ownership interests in NuStar Energy and the IDR:
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2014
 
2013
 
2014
 
2013
 
(Thousands of Dollars, Except Per Unit Data)
Cash distributions per unit
$
1.095

 
$
1.095

 
$
2.190

 
$
2.190

Total cash distributions by NuStar Energy to all partners
$
98,051

 
$
98,051

 
$
196,102

 
$
196,102

Cash distributions we received from NuStar Energy:
 
 
 
 
 
 
 
General partner interest
$
1,961

 
$
1,961

 
$
3,922

 
$
3,922

General partner incentive distribution
10,805

 
10,805

 
21,610

 
21,610

Limited partner interest – common units
11,223

 
11,272

 
22,434

 
22,552

Total cash distributions to us
$
23,989

 
$
24,038

 
$
47,966

 
$
48,084

Distributions to us as a percentage of total cash
     distributions
24.5
%
 
24.5
%
 
24.5
%
 
24.5
%
Cash Flows for the Six Months Ended June 30, 2014 and June 30, 2013
Cash distributions received from NuStar Energy for the six months ended June 30, 2014 were $47.9 million compared to $48.1 million for the six months ended June 30, 2013. The cash distributions we received were used principally to fund distributions to our unitholders, totaling $46.5 million for the six months ended June 30, 2014, compared to $46.4 million for the six months ended June 30, 2013.

Credit Facility
Our revolving credit agreement dated June 28, 2013, as amended on June 17, 2014, will mature on June 27, 2015 and has a borrowing capacity of up to $40.0 million, of which, up to $10.0 million may be available for letters of credit (the 2013 Credit Facility). Our obligations under the 2013 Credit Facility are guaranteed by Riverwalk Holdings, LLC (Riverwalk), a wholly owned subsidiary. Riverwalk pledged 1,792,918 NuStar Energy units that it owns to secure its guarantee.

As of June 30, 2014, we had outstanding borrowings of $26.0 million and availability of $14.0 million for borrowings under the 2013 Credit Facility. Interest on the 2013 Credit Facility is based upon, at our option, either an alternative base rate or a LIBOR-based rate. As of June 30, 2014, the weighted-average interest rate was 2.2%.

The terms of the 2013 Credit Facility require NuStar Energy to maintain, as of the end of each rolling period, which consists of any period of four consecutive fiscal quarters, a consolidated debt coverage ratio not to exceed 5.0-to-1.0. As of June 30, 2014, NuStar Energy’s consolidated debt coverage ratio was 4.0x. We are also required to receive cash distributions of at least $12.5 million in respect of our ownership interests in NuStar Energy each fiscal quarter. Our management believes that we are in compliance with the covenants of the 2013 Credit Facility as of June 30, 2014.


19


Cash Distributions to Unitholders
Our limited liability company agreement requires that, within 50 days after the end of each quarter, we distribute all of our available cash to the holders of record of our units on the applicable record date. Available cash is defined as all cash on hand at the end of any calendar quarter less the amount of cash reserves necessary or appropriate, as determined in good faith by our board of directors, to service debt we may incur, if any, and to fund general and administrative expenses, future distributions and other miscellaneous uses of cash. The following table reflects our cash distributions applicable to the period in which the distributions were earned:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2014
 
2013
 
2014
 
2013
 
(Thousands of Dollars, Except Per Unit Data)
Cash distributions per unit
$
0.545

 
$
0.545

 
$
1.090

 
$
1.090

Total cash distributions
$
23,250

 
$
23,236

 
$
46,498

 
$
46,458

Related Party Transactions
Please refer to Note 3 of the Condensed Notes to Consolidated Financial Statements in Item 1. “Financial Statements” for total transactions charged to and amounts due from related parties, and a description of the agreements.
Contingencies
We are not currently a party to any material legal proceedings and have not recorded any accruals for loss contingencies. NuStar Energy is a party to claims and legal proceedings arising in the ordinary course of its business, which it believes are not material to its financial position or results of operations. However, due to the inherent uncertainty of litigation, there can be no assurance that the resolution of any particular claim or proceeding would not have a material adverse effect on NuStar Energy’s results of operations and ability to pay distributions, which would impact our results of operations and ability to pay distributions.

CRITICAL ACCOUNTING POLICIES
The preparation of financial statements in accordance with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Our critical accounting policies are disclosed in our Annual Report on Form 10-K for the year ended December 31, 2013.

NEW ACCOUNTING PRONOUNCEMENT
Please refer to Note 1 of the Condensed Notes to Consolidated Financial Statements in Item 1. “Financial Statements” for a detailed discussion of the new accounting pronouncement.


20


Item 4.
Controls and Procedures

(a)
Evaluation of disclosure controls and procedures.
Our management has evaluated, with the participation of our principal executive officer and principal financial officer, the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report, and has concluded that our disclosure controls and procedures were effective as of June 30, 2014.
(b)
Changes in internal control over financial reporting.
There has been no change in our internal control over financial reporting that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.


21


PART II – OTHER INFORMATION

Item 1.    Legal Proceedings

None.

Item 6.
Exhibits

Exhibit
Number

 
Description
 
 
 
10.01

 
First Amendment to 364-Day Revolving Credit Agreement dated as of June 17, 2014 among NuStar GP Holdings, LLC, Riverwalk Holdings, LLC, JPMorgan Chase Bank, N.A., as Administrative Agent and the lenders party thereto (incorporated by reference to Exhibit 10.01 of NuStar GP Holdings, LLC’s Current Report on Form 8-K filed June 23, 2014)
 
 
 
*31.01

 
Rule 13a-14(a) Certification (under Section 302 of the Sarbanes-Oxley Act of 2002) of principal executive officer
 
 
 
*31.02

 
Rule 13a-14(a) Certification (under Section 302 of the Sarbanes-Oxley Act of 2002) of principal financial officer
 
 
 
*32.01

 
Section 1350 Certification (under Section 906 of the Sarbanes-Oxley Act of 2002) of principal executive officer
 
 
 
*32.02

 
Section 1350 Certification (under Section 906 of the Sarbanes-Oxley Act of 2002) of principal financial officer
 
 
 
*101.INS

 
XBRL Instance Document
 
 
 
*101.SCH

 
XBRL Taxonomy Extension Schema Document
 
 
 
*101.CAL

 
XBRL Taxonomy Extension Calculation Linkbase Document
 
 
 
*101.DEF

 
XBRL Taxonomy Extension Definition Linkbase Document
 
 
 
*101.LAB

 
XBRL Taxonomy Extension Label Linkbase Document
 
 
 
*101.PRE

 
XBRL Taxonomy Extension Presentation Linkbase Document
 
 
 
*

Filed herewith.


22


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, thereunto duly authorized.
 
NUSTAR GP HOLDINGS, LLC
(Registrant)

By:
 
/s/ Bradley C. Barron
 
 
Bradley C. Barron
 
 
President and Chief Executive Officer
 
 
August 5, 2014
 
 
 
By:
 
/s/ Thomas R. Shoaf
 
 
Thomas R. Shoaf
 
 
Executive Vice President and Chief Financial Officer
 
 
August 5, 2014
 
 
 
By:
 
/s/ Jorge A. del Alamo
 
 
Jorge A. del Alamo
 
 
Senior Vice President and Controller
 
 
August 5, 2014


23