þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware
(State or other jurisdiction of
incorporation or organization) |
74-1828067
(I.R.S. Employer
Identification No.) |
|
One Valero Way
San Antonio, Texas
(Address of principal executive
offices)
|
78249
(Zip Code)
|
Large accelerated filer þ | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o |
Form 10-K Item No. and Caption | Heading in 2010 Proxy Statement | |
|
||
10. Directors, Executive Officers and
Corporate
Governance
|
Information Regarding the Board of Directors, Independent Directors, Audit Committee, Governance Documents and Codes of Ethics, Proposal No. 1 Election of Directors , Information Concerning Nominees and Other Directors, and Section 16(a) Beneficial Ownership Reporting Compliance | |
|
||
11. Executive Compensation
|
Compensation Committee, Compensation Discussion and Analysis, Director Compensation, Executive Compensation, and Certain Relationships and Related Transactions | |
|
||
12. Security Ownership of Certain Beneficial
Owners and Management and Related
Stockholder Matters
|
Beneficial Ownership of Valero Securities and Equity Compensation Plan Information | |
|
||
13. Certain Relationships and Related
Transactions, and Director
Independence
|
Certain Relationships and Related Transactions and Independent Directors | |
|
||
14. Principal Accountant Fees and Services
|
KPMG Fees for Fiscal Year 2009, KPMG Fees for Fiscal Year 2008, and Audit Committee Pre-Approval Policy |
ii
PAGE | ||||||||
Business, Risk Factors and Properties | 1 | |||||||
|
2 | |||||||
|
3 | |||||||
|
13 | |||||||
|
17 | |||||||
|
17 | |||||||
|
18 | |||||||
Unresolved Staff Comments | 18 | |||||||
Legal Proceedings | 19 | |||||||
Submission of Matters to a Vote of Security Holders | 21 | |||||||
|
||||||||
22 | ||||||||
Selected Financial Data | 25 | |||||||
26 | ||||||||
54 | ||||||||
Financial Statements and Supplementary Data | 60 | |||||||
144 | ||||||||
Controls and Procedures | 144 | |||||||
Other Information | 144 | |||||||
|
||||||||
Directors, Executive Officers and Corporate Governance | 145 | |||||||
Item 11.
|
Executive Compensation | 145 | ||||||
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
145 | ||||||
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence | 145 | ||||||
Item 14.
|
Principal Accountant Fees and Services | 145 | ||||||
|
||||||||
Exhibits and Financial Statement Schedules | 145 | |||||||
|
||||||||
150 | ||||||||
EX-10.2 | ||||||||
EX-10.5 | ||||||||
EX-10.6 | ||||||||
EX-10.7 | ||||||||
EX-12.1 | ||||||||
EX-21.1 | ||||||||
EX-23.1 | ||||||||
EX-31.1 | ||||||||
EX-31.2 | ||||||||
EX-32.1 | ||||||||
EX-99.1 | ||||||||
EX-101 INSTANCE DOCUMENT | ||||||||
EX-101 SCHEMA DOCUMENT | ||||||||
EX-101 CALCULATION LINKBASE DOCUMENT | ||||||||
EX-101 LABELS LINKBASE DOCUMENT | ||||||||
EX-101 PRESENTATION LINKBASE DOCUMENT | ||||||||
EX-101 DEFINITION LINKBASE DOCUMENT |
iii
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
1
Table of Contents
Table of Contents
Refinery
Location
Throughput Capacity
(a)
(barrels per day)
Texas
315,000
Texas
310,000
Louisiana
250,000
Texas
245,000
Aruba
235,000
Texas
145,000
Texas
100,000
1,600,000
California
170,000
California
135,000
305,000
Tennessee
195,000
Texas
170,000
Oklahoma
90,000
455,000
Quebec, Canada
235,000
New Jersey
185,000
420,000
2,780,000
(a)
(b)
(c)
(d)
Table of Contents
Percentage
sour crude oil
43
%
acidic sweet crude oil
3
%
sweet crude oil
28
%
residual fuel oil
7
%
other feedstocks
7
%
blendstocks
12
%
gasolines and blendstocks
48
%
distillates
33
%
petrochemicals
3
%
other products (includes vacuum gas oil, No. 6 fuel oil, petroleum coke, asphalt, and other)
16
%
Percentage
sour crude oil
53
%
acidic sweet crude oil
1
%
sweet crude oil
11
%
residual fuel oil
13
%
other feedstocks
8
%
blendstocks
14
%
gasolines and blendstocks
44
%
distillates
33
%
petrochemicals
4
%
other products (includes vacuum gas oil, No. 6 fuel oil, petroleum coke, asphalt, and other)
19
%
Table of Contents
Table of Contents
Percentage
sour crude oil
63
%
acidic sweet crude oil
6
%
sweet crude oil
3
%
other feedstocks
11
%
blendstocks
17
%
gasolines and blendstocks
64
%
distillates
22
%
other products (includes vacuum gas oil, No. 6 fuel oil, petroleum coke, asphalt, and other)
14
%
Table of Contents
Percentage
sour crude oil
9
%
sweet crude oil
80
%
residual fuel oil
1
%
other feedstocks
1
%
blendstocks
9
%
gasolines and blendstocks
54
%
distillates
35
%
petrochemicals
3
%
other products (includes vacuum gas oil, No. 6 fuel oil, asphalt, and other)
8
%
Table of Contents
Percentage
sour crude oil
29
%
acidic sweet crude oil
8
%
sweet crude oil
51
%
residual fuel oil
1
%
other feedstocks
6
%
blendstocks
5
%
gasolines and blendstocks
44
%
distillates
41
%
petrochemicals
1
%
other products (includes vacuum gas oil, No. 6 fuel oil, petroleum coke, asphalt, and other)
14
%
Table of Contents
Table of Contents
Table of Contents
Ethanol Production
Production of DDG
Corn Processed
State
City
(in gallons per year)
(in tons per year)
(in bushels per year)
Linden
110 million
350,000
40 million
Albert City
110 million
350,000
40 million
Charles City
110 million
350,000
40 million
Fort Dodge
110 million
350,000
40 million
Hartley
110 million
350,000
40 million
Welcome
110 million
350,000
40 million
Albion
110 million
350,000
40 million
Bloomingburg
110 million
350,000
40 million
Aurora
120 million
390,000
43 million
Jefferson
110 million
350,000
40 million
Total
1,110 million
3,540,000
403 million
1
2
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Name
Age*
Positions Held with Valero
Officer Since
63
Chief Executive Officer, President, and Chairman of the Board
2001
45
Executive Vice President and General Counsel
2003
52
Executive Vice President and Chief Financial Officer
1998
53
Executive Vice PresidentCorporate Development and Strategic Planning
1998
52
Executive Vice PresidentMarketing and Supply
2003
57
Executive Vice President and Chief Operating Officer
2001
Table of Contents
Table of Contents
Table of Contents
Table of Contents
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
100
101
102
103
104
105
106
107
108
109
110
111
112
113
114
115
116
117
118
119
120
121
122
123
124
125
126
127
128
129
130
131
132
133
134
135
136
137
138
139
140
141
142
143
144
Sales Prices of the
Dividends
Common Stock
Per
Quarter Ended
High
Low
Common Share
$
20.67
$
15.89
$
0.15
20.50
15.57
0.15
23.30
16.03
0.15
25.85
16.24
0.15
$
30.36
$
13.94
$
0.15
40.74
28.20
0.15
55.00
39.20
0.15
71.12
44.94
0.12
Table of Contents
Period
Total
Average
Total Number of
Total Number of
Approximate Dollar
Number of
Price
Shares Not
Shares Purchased
Value of Shares that
Shares
Paid per
Purchased as Part
as Part of
May Yet Be Purchased
Purchased
Share
of Publicly
Publicly
Under the Plans or
Announced Plans
Announced Plans
Programs (2)
or Programs (1)
or Programs
147,075
$
20.12
147,075
$ 3.46 billion
8,147
$
19.45
8,147
$ 3.46 billion
3,723
$
16.67
3,723
$ 3.46 billion
158,945
$
20.00
158,945
$ 3.46 billion
(1)
(2)
Table of Contents
And A Peer Group
12/2004
12/2005
12/2006
12/2007
12/2008
12/2009
$
100
$
228.46
$
227.72
$
314.03
$
98.77
$
78.79
100
104.91
121.48
128.16
80.74
102.11
100
118.39
159.53
204.20
157.45
150.50
*
Table of Contents
Year Ended December 31,
2009 (a) (b)
2008 (a)
2007 (a) (c)
2006 (a) (c)
2005 (a) (c) (d)
$
68,144
$
113,136
$
89,987
$
82,556
$
78,856
(58
)
761
6,630
7,347
5,207
(352
)
(1,012
)
4,377
5,029
3,429
(0.65
)
(1.93
)
7.40
7.95
5.83
0.60
0.57
0.48
0.30
0.19
23,012
21,421
19,920
18,389
16,090
3,965
4,039
4,777
35,629
34,417
42,722
37,753
32,798
7,163
6,264
6,470
4,619
5,156
14,725
15,620
18,507
18,605
15,050
(a)
(b)
(c)
(d)
(e)
Table of Contents
(f)
Table of Contents
Table of Contents
Table of Contents
Table of Contents
(millions of dollars, except per share amounts)
Year Ended December 31,
2009 (a) (b)
2008 (b) (c)
Change
$
68,144
$
113,136
$
(44,992
)
61,959
101,830
(39,871
)
3,311
4,046
(735
)
702
768
(66
)
572
559
13
1,261
1,214
47
101
105
(4
)
18
18
48
44
4
230
86
144
(305
)
305
4,028
(4,028
)
68,202
112,375
(44,173
)
(58
)
761
(819
)
17
113
(96
)
(520
)
(451
)
(69
)
112
104
8
(449
)
527
(976
)
(97
)
1,539
(1,636
)
(352
)
(1,012
)
660
(1,630
)
(119
)
(1,511
)
$
(1,982
)
$
(1,131
)
$
(851
)
$
(0.65
)
$
(1.93
)
$
1.28
(3.02
)
(0.23
)
(2.79
)
$
(3.67
)
$
(2.16
)
$
(1.51
)
Table of Contents
(millions of dollars, except per barrel and per gallon amounts)
Year Ended December 31,
2009
2008
Change
$
105
$
995
$
(890
)
$
5.85
$
11.10
$
(5.25
)
$
3.79
$
4.46
$
(0.67
)
1.52
1.34
0.18
$
5.31
$
5.80
$
(0.49
)
458
588
(130
)
516
586
(70
)
65
79
(14
)
632
604
28
171
197
(26
)
153
140
13
1,995
2,194
(199
)
277
283
(6
)
2,272
2,477
(205
)
1,101
1,102
(1
)
748
871
(123
)
68
70
(2
)
364
436
(72
)
2,281
2,479
(198
)
$
170
$
260
$
(90
)
999
973
26
4,983
5,000
(17
)
$
0.154
$
0.229
$
(0.075
)
$
1,171
$
1,097
$
74
28.9
%
29.9
%
(1.0
%)
$
87
$
99
$
(12
)
$
464
$
505
$
(41
)
$
70
$
70
$
$
123
$
109
$
14
3,159
3,193
(34
)
$
0.260
$
0.268
$
(0.008
)
$
201
$
200
$
1
29.0
%
28.5
%
0.5
%
$
33
$
36
$
(3
)
$
238
$
263
$
(25
)
$
31
$
35
$
(4
)
Table of Contents
(millions of dollars, except per gallon amounts)
Year Ended December 31,
2009
2008
Change
$
165
N/A
$
165
1,479
N/A
1,479
$
0.65
N/A
$
0.65
$
0.31
N/A
$
0.31
0.03
N/A
0.03
$
0.34
N/A
$
0.34
Table of Contents
(millions of dollars, except per barrel amounts)
Year Ended December 31,
2009
2008
Change
$
(56
)
$
3,267
$
(3,323
)
1,274
1,404
(130
)
$
5.13
$
11.57
$
(6.44
)
$
3.71
$
4.50
$
(0.79
)
1.54
1.30
0.24
$
5.25
$
5.80
$
(0.55
)
$
189
$
580
$
(391
)
387
423
(36
)
$
6.52
$
9.27
$
(2.75
)
$
3.66
$
4.24
$
(0.58
)
1.53
1.29
0.24
$
5.19
$
5.53
$
(0.34
)
$
63
$
887
$
(824
)
344
374
(30
)
$
5.18
$
11.60
$
(6.42
)
$
3.40
$
3.91
$
(0.51
)
1.28
1.21
0.07
$
4.68
$
5.12
$
(0.44
)
$
252
$
375
$
(123
)
267
276
(9
)
$
9.16
$
10.84
$
(1.68
)
$
4.83
$
5.36
$
(0.53
)
1.74
1.77
(0.03
)
$
6.57
$
7.13
$
(0.56
)
$
448
$
5,109
$
(4,661
)
(229
)
(86
)
(143
)
(114
)
(114
)
(4,028
)
4,028
$
105
$
995
$
(890
)
Table of Contents
(dollars per barrel, except as noted)
Year Ended December 31,
2009
2008
Change
$
61.69
$
99.56
$
(37.87
)
1.69
5.20
(3.51
)
1.36
6.13
(4.77
)
5.19
15.71
(10.52
)
7.61
4.85
2.76
6.22
18.35
(12.13
)
8.02
22.96
(14.94
)
(1.31
)
(3.69
)
2.38
8.01
4.46
3.55
8.26
24.12
(15.86
)
7.99
3.22
4.77
7.37
20.23
(12.86
)
37.30
68.79
(31.49
)
15.75
9.93
5.82
9.86
22.59
(12.73
)
0.47
0.42
0.05
(a)
(b)
(c)
(d)
(e)
Table of Contents
(f)
(g)
(h)
(i)
(j)
(k)
Table of Contents
Table of Contents
Table of Contents
(millions of dollars, except per share amounts)
Year Ended December 31,
2008 (a) (b)
2007 (a) (b) (c)
Change
$
113,136
$
89,987
$
23,149
101,830
77,059
24,771
4,046
3,666
380
768
750
18
559
638
(79
)
1,214
1,106
108
105
90
15
44
48
(4
)
86
86
(305
)
(305
)
4,028
4,028
112,375
83,357
29,018
761
6,630
(5,869
)
113
167
(54
)
(451
)
(466
)
15
104
105
(1
)
527
6,436
(5,909
)
1,539
2,059
(520
)
(1,012
)
4,377
(5,389
)
(119
)
857
(976
)
$
(1,131
)
$
5,234
$
(6,365
)
$
(1.93
)
$
7.40
$
(9.33
)
(0.23
)
1.48
(1.71
)
$
(2.16
)
$
8.88
$
(11.04
)
Table of Contents
(millions of dollars, except per barrel and per gallon amounts)
Year Ended December 31,
2008
2007
Change
$
995
$
7,067
$
(6,072
)
$
11.10
$
12.44
$
(1.34
)
$
4.46
$
3.85
$
0.61
1.34
1.17
0.17
$
5.80
$
5.02
$
0.78
588
627
(39
)
586
525
61
79
79
604
719
(115
)
197
211
(14
)
140
170
(30
)
2,194
2,331
(137
)
283
276
7
2,477
2,607
(130
)
1,102
1,191
(89
)
871
859
12
70
80
(10
)
436
482
(46
)
2,479
2,612
(133
)
$
260
$
154
$
106
973
957
16
5,000
4,979
21
$
0.229
$
0.174
$
0.055
$
1,097
$
1,024
$
73
29.9
%
29.7
%
0.2
%
$
99
$
101
$
(2
)
$
505
$
494
$
11
$
70
$
59
$
11
$
109
$
95
$
14
3,193
3,234
(41
)
$
0.268
$
0.248
$
0.020
$
200
$
187
$
13
28.5
%
27.8
%
0.7
%
$
36
$
37
$
(1
)
$
263
$
256
$
7
$
35
$
31
$
4
Table of Contents
(millions of dollars, except per barrel amounts)
Year Ended December 31,
2008
2007
Change
$
3,267
$
4,505
$
(1,238
)
1,404
1,537
(133
)
$
11.57
$
12.81
$
(1.24
)
$
4.50
$
3.70
$
0.80
1.30
1.08
0.22
$
5.80
$
4.78
$
1.02
$
580
$
910
$
(330
)
423
402
21
$
9.27
$
11.66
$
(2.39
)
$
4.24
$
4.13
$
0.11
1.29
1.33
(0.04
)
$
5.53
$
5.46
$
0.07
$
887
$
796
$
91
374
379
(5
)
$
11.60
$
10.29
$
1.31
$
3.91
$
3.45
$
0.46
1.21
1.08
0.13
$
5.12
$
4.53
$
0.59
$
375
$
856
$
(481
)
276
289
(13
)
$
10.84
$
14.41
$
(3.57
)
$
5.36
$
4.82
$
0.54
1.77
1.49
0.28
$
7.13
$
6.31
$
0.82
$
5,109
$
7,067
$
(1,958
)
(86
)
(86
)
(4,028
)
(4,028
)
$
995
$
7,067
$
(6,072
)
Table of Contents
(dollars per barrel)
Year Ended December 31,
2008
2007
Change
$
99.56
$
72.27
$
27.29
5.20
4.95
0.25
6.13
5.61
0.52
15.71
12.41
3.30
4.85
13.78
(8.93
)
18.35
11.94
6.41
22.96
17.76
5.20
(3.69
)
11.05
(14.74
)
4.46
18.02
(13.56
)
24.12
21.30
2.82
3.22
13.98
(10.76
)
20.23
12.96
7.27
68.79
48.29
20.50
9.93
23.20
(13.27
)
22.59
22.07
0.52
(a)
(b)
(c)
(d)
(e)
(f)
Table of Contents
(g)
(h)
(i)
(j)
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Year Ended December 31,
2009
2008
2007
$
(126
)
$
81
$
348
260
(153
)
(268
)
(130
)
(14
)
Payments Due by Period
2010
2011
2012
2013
2014
Thereafter
Total
$
240
$
424
$
765
$
495
$
400
$
5,143
$
7,467
348
222
121
81
61
287
1,120
23,356
2,541
1,899
732
200
1,090
29,818
162
153
152
131
1,271
1,869
$
23,944
$
3,349
$
2,938
$
1,460
$
792
$
7,791
$
40,274
Table of Contents
BBB (negative outlook)
Baa2 (negative outlook)
BBB (negative outlook)
Table of Contents
Borrowing
Capacity
Expiration
$300 million
June 2010
$2.4 billion
November 2012
Cdn. $115 million
December 2012
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Other
Pension
Postretirement
Benefits
Benefits
$
61
$
14
27
10
8
1
4
6
1
Table of Contents
Table of Contents
Table of Contents
December 31, 2009
Wtd Avg
Wtd Avg
Pre-tax
Contract
Pay
Receive
Contract
Market
Fair
Volumes
Price
Price
Value
Value
Value
4,880
N/A
$
75.65
$
369
$
405
$
(36
)
42,600
$
72.58
88.12
N/A
662
662
42,600
88.12
76.81
N/A
(482
)
(482
)
139,901
34.81
33.76
N/A
(147
)
(147
)
27,250
20.77
15.00
N/A
(157
)
(157
)
88,244
56.41
58.47
N/A
182
182
23,875
17.10
24.05
N/A
166
166
204,810
78.06
N/A
15,987
17,491
1,504
7,155
4.07
N/A
29
30
1
150
4.21
N/A
1
1
199,566
N/A
77.37
15,440
16,905
(1,465
)
23,250
N/A
4.13
96
97
(1
)
160
N/A
4.28
1
1
522
40.12
N/A
2
1
(1
)
500
N/A
42.50
2
2
27,201
19.94
24.54
N/A
125
125
3,000
53.70
62.93
N/A
28
28
31,201
21.60
19.33
N/A
(71
)
(71
)
3,900
48.41
43.29
N/A
(20
)
(20
)
40,188
83.09
N/A
3,339
3,458
119
10
95.91
N/A
1
1
100
6.10
N/A
1
1
40,164
N/A
82.93
3,331
3,454
(123
)
10
N/A
95.91
1
1
100
N/A
5.46
1
1
250
45.00
N/A
1,250
N/A
41.67
5
2
3
$
289
Table of Contents
December 31, 2008
Wtd Avg
Wtd Avg
Pre-tax
Contract
Pay
Receive
Contract
Market
Fair
Volumes
Price
Price
Value
Value
Value
6,904
N/A
$
48.28
$
333
$
320
$
13
60,162
$
121.69
58.44
N/A
(3,805
)
(3,805
)
4,680
63.72
64.03
N/A
1
1
60,162
62.38
129.80
N/A
4,056
4,056
4,680
76.32
78.69
N/A
11
11
780
38.62
N/A
30
27
(3
)
25,987
96.88
55.25
N/A
(1,082
)
(1,082
)
19,734
105.96
63.94
N/A
(829
)
(829
)
3,900
124.78
67.99
N/A
(221
)
(221
)
25,931
59.65
106.81
N/A
1,223
1,223
19,734
72.18
121.96
N/A
982
982
3,900
74.08
136.66
N/A
244
244
135,882
59.17
N/A
8,040
7,319
(721
)
3,466
78.33
N/A
271
240
(31
)
4,310
8.46
N/A
36
24
(12
)
135,091
N/A
62.74
8,475
7,510
965
3,692
N/A
84.66
313
276
37
4,310
N/A
5.68
24
24
57
60.64
N/A
1
(1
)
19,887
77.56
45.09
N/A
(646
)
(646
)
10,050
40.66
35.35
N/A
(53
)
(53
)
1,950
78.36
65.80
N/A
(24
)
(24
)
16,084
56.44
97.17
N/A
655
655
5,850
64.19
73.12
N/A
52
52
1,950
68.06
80.59
N/A
24
24
Table of Contents
December 31, 2008
Wtd Avg
Wtd Avg
Pre-tax
Contract
Pay
Receive
Contract
Market
Fair
Volumes
Price
Price
Value
Value
Value
24,039
$
71.70
N/A
$
1,724
$
1,300
$
(424
)
956
84.12
N/A
80
70
(10
)
200
5.79
N/A
1
1
21,999
N/A
$
73.38
1,614
1,209
405
956
N/A
83.63
80
70
10
200
N/A
5.82
1
1
100
30.00
N/A
$
816
Table of Contents
December 31, 2009
Expected Maturity Dates
There-
Fair
2010
2011
2012
2013
2014
after
Total
Value
$
33
$
418
$
759
$
489
$
395
$
5,126
$
7,220
$
8,028
6.8
%
6.4
%
6.9
%
5.5
%
5.7
%
7.5
%
7.1
%
$
200
$
$
$
$
$
$
200
$
200
0.9
%
%
%
%
%
%
0.9
%
December 31, 2008
Expected Maturity Dates
There-
Fair
2009
2010
2011
2012
2013
after
Total
Value
$
209
$
33
$
418
$
759
$
489
$
4,597
$
6,505
$
6,362
3.6
%
6.8
%
6.4
%
6.9
%
5.5
%
6.8
%
6.6
%
$
100
$
$
$
$
$
$
100
$
100
3.9
%
%
%
%
%
%
3.9
%
Table of Contents
Table of Contents
of Valero Energy Corporation and subsidiaries:
February 26, 2010
Table of Contents
of Valero Energy Corporation and subsidiaries:
Table of Contents
February 26, 2010
Table of Contents
(Millions of Dollars, Except Par Value)
Table of Contents
(Millions of Dollars, Except per Share Amounts)
Year Ended December 31,
2009
2008
2007
$
68,144
$
113,136
$
89,987
61,959
101,830
77,059
3,311
4,046
3,666
702
768
750
572
559
638
1,428
1,363
1,244
230
86
(305
)
4,028
68,202
112,375
83,357
(58
)
761
6,630
17
113
167
(520
)
(451
)
(466
)
112
104
105
(449
)
527
6,436
(97
)
1,539
2,059
(352
)
(1,012
)
4,377
(1,630
)
(119
)
857
$
(1,982
)
$
(1,131
)
$
5,234
$
(0.65
)
$
(1.93
)
$
7.73
(3.02
)
(0.23
)
1.51
$
(3.67
)
$
(2.16
)
$
9.24
541
524
565
$
(0.65
)
$
(1.93
)
$
7.40
(3.02
)
(0.23
)
1.48
$
(3.67
)
$
(2.16
)
$
8.88
541
524
579
$
0.60
$
0.57
$
0.48
$
873
$
816
$
801
Table of Contents
(Millions of Dollars)
Accumulated
Additional
Other
Common
Paid-in
Treasury
Retained
Comprehensive
Stock
Capital
Stock
Earnings
Income (Loss)
$
6
$
7,779
$
(1,396
)
$
11,951
$
265
5,234
(271
)
89
(4,873
)
(757
)
172
308
6
7,111
(6,097
)
16,914
573
(1,131
)
(299
)
62
(667
)
17
(120
)
(749
)
6
7,190
(6,884
)
15,484
(176
)
(1,982
)
(324
)
1
798
68
(160
)
163
541
$
7
$
7,896
$
(6,721
)
$
13,178
$
365
Table of Contents
(Millions of Dollars)
Year Ended December 31,
2009
2008
2007
$
(1,982
)
$
(1,131
)
$
5,234
1,527
1,476
1,376
607
103
4,069
(305
)
(827
)
1,868
(2
)
(76
)
(10
)
66
59
100
(343
)
675
(131
)
255
(1,630
)
(469
)
(173
)
(145
)
(15
)
1,823
3,095
5,258
(2,306
)
(2,893
)
(2,260
)
(415
)
(408
)
(518
)
(556
)
(21
)
463
2,428
(25
)
(75
)
27
24
(209
)
16
25
63
(29
)
(144
)
(8
)
(7
)
(11
)
(3,292
)
(2,965
)
(582
)
799
998
2,245
(285
)
(374
)
(463
)
39
296
3,000
(39
)
(296
)
(3,000
)
950
(850
)
(4
)
(955
)
(5,788
)
11
16
159
5
9
311
(324
)
(299
)
(271
)
(11
)
(4
)
(24
)
1,289
(1,607
)
(3,831
)
65
(47
)
29
(115
)
(1,524
)
874
940
2,464
1,590
$
825
$
940
$
2,464
Table of Contents
(Millions of Dollars)
Year Ended December 31,
2009
2008
2007
$
(1,982
)
$
(1,131
)
$
5,234
375
(490
)
250
219
(410
)
80
(1
)
(1
)
6
218
(411
)
86
81
85
(11
)
(133
)
67
(17
)
(52
)
152
(28
)
541
(749
)
308
$
(1,441
)
$
(1,880
)
$
5,542
Table of Contents
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31,
2009
2008
$
6
$
2
4
17
1
$
11
$
19
$
15
$
1,792
94
57
$
72
$
1,886
$
90
$
123
124
4
$
214
$
127
$
$
334
11
3
$
11
$
337
Year Ended December 31,
2009
2008
2007
$
2,764
$
5,978
$
5,340
(2,637
)
(190
)
290
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
$
77
491
1
(10
)
(3
)
$
556
Year Ended December 31,
2009
2008
2007
$
1,198
N/A
N/A
92
N/A
N/A
68,367
$
114,625
$
90,766
(358
)
(1,110
)
4,388
(0.66
)
(2.12
)
7.42
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
$
138
153
42
4
$
337
$
10
$
10
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
July 1,
2007
$
570
929
107
46
$
1,652
$
15
38
$
53
Year Ended
December 31,
2007
$
2,231
391
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31,
2009
2008
$
$
22
7
7
115
102
$
122
$
131
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31,
2009
2008
$
3,800
$
2,937
18
16
3,818
2,953
(45
)
(58
)
$
3,773
$
2,895
Year Ended December 31,
2009
2008
2007
$
58
$
43
$
33
28
43
34
(42
)
(27
)
(25
)
1
(1
)
1
$
45
$
58
$
43
December 31,
2009
2008
$
2,124
$
2,140
2,317
2,224
141
96
90
185
166
$
4,863
$
4,620
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Estimated
December 31,
Useful Lives
2009
2008
$
646
$
602
10 - 33 years
20,819
19,333
30 years
246
246
24 - 44 years
668
549
22 years
399
5 - 22 years
851
787
13 - 47 years
1,013
872
2 - 44 years
1,208
1,098
2,756
2,632
28,606
26,119
(5,594
)
(4,698
)
$
23,012
$
21,421
December 31, 2009
December 31, 2008
Gross
Accumulated
Gross
Accumulated
Cost
Amortization
Cost
Amortization
$
114
$
(57
)
$
97
$
(43
)
147
(30
)
127
(22
)
78
(64
)
95
(76
)
62
(34
)
62
(29
)
25
(14
)
25
(12
)
27
(27
)
4
(4
)
$
426
$
(199
)
$
437
$
(213
)
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Amortization
Expense
$
22
16
16
16
16
$
4,019
stock option exercises, and other
50
(4,069
)
$
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31,
2009
2008
$
156
$
165
100
66
109
7
41
42
108
90
$
514
$
370
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31,
Maturity
2009
2008
Various
$
$
2027
24
24
2018
33
33
2018
33
33
2009
9
2031
25
25
2032
25
25
2032
25
25
2032
19
19
2009
200
2013
300
300
2014
200
200
2017
750
750
2037
1,500
1,500
2012
750
750
2032
750
750
2030
200
200
2010
25
25
2026
100
100
2015
75
75
2011
200
200
2013
180
180
2011
210
210
2014
185
185
2037
24
100
2017
200
200
2097
100
100
2015
287
287
2019
750
2039
250
2010
200
100
(56
)
(68
)
7,364
6,537
36
39
7,400
6,576
(237
)
(312
)
$
7,163
$
6,264
(a)
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
$
233
418
759
489
395
5,126
(56
)
$
7,364
December 31,
2009
2008
$
7,364
$
6,537
8,228
6,462
December 31,
2009
2008
$
703
$
1,036
481
226
238
255
103
189
84
90
76
72
70
92
32
38
82
160
$
1,869
$
2,158
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Year Ended December 31,
2009
2008
2007
$
72
$
70
$
51
4
4
1
3
3
2
(3
)
(4
)
(13
)
28
(1
)
1
$
76
$
72
$
70
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Common
Treasury
Stock
Stock
627
(24
)
(70
)
3
627
(91
)
(18
)
(2
)
627
(111
)
46
2
673
(109
)
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Foreign
Net Gain
Accumulated
Currency
Pension/OPEB
(Loss) On
Other
Translation
Liability
Cash Flow
Comprehensive
Adjustment
Adjustment
Hedges
Income (Loss)
$
330
$
(110
)
$
45
$
265
250
86
(28
)
308
580
(24
)
17
573
(490
)
(411
)
152
(749
)
90
(435
)
169
(176
)
375
218
(52
)
541
$
465
$
(217
)
$
117
$
365
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Year Ended December 31,
2009
2008
2007
Restricted
Common
Restricted
Common
Restricted
Common
Stock
Stock
Stock
Stock
Stock
Stock
$
(352
)
$
(1,012
)
$
4,377
323
298
270
1
1
1
$
(676
)
$
(1,311
)
$
4,106
2
541
1
524
1
565
$
0.61
$
0.60
$
0.56
$
0.57
$
0.47
$
0.48
(1.25
)
(2.50
)
7.25
7.25
share
from continuing operations (1)
$
0.61
$
(0.65
)
$
0.56
$
(1.93
)
$
7.72
$
7.73
$
(352
)
$
(1,012
)
$
4,377
94
$
(352
)
$
(1,012
)
$
4,283
541
524
565
13
1
541
524
579
$
(0.65
)
$
(1.93
)
$
7.40
(1)
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(2)
Year Ended December 31,
2009
2008
2007
4
7
12
7
2
Year Ended December 31,
2009
2008
2007
$
9
$
(100
)
$
(806
)
4,865
(3,227
)
(77
)
(705
)
(249
)
(668
)
(197
)
32
47
(7
)
(58
)
1,475
(4,985
)
2,557
73
(51
)
(20
)
107
(4
)
15
95
(446
)
481
$
255
$
(1,630
)
$
(469
)
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Year Ended December 31,
2009
2008
2007
$
(126
)
$
81
$
348
260
(153
)
(268
)
(130
)
(14
)
Year Ended December 31,
2009
2008
2007
$
390
$
351
$
331
(165
)
1,455
2,014
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Fair Value Measurements Using
Quoted
Significant
Prices
Other
Significant
in Active
Observable
Unobservable
Total as of
Markets
Inputs
Inputs
December 31,
(Level 1)
(Level 2)
(Level 3)
2009
$
10
$
349
$
$
359
99
10
109
100
9
109
34
34
Fair Value Measurements Using
Quoted
Significant
Prices
Other
Significant
in Active
Observable
Unobservable
Total as of
Markets
Inputs
Inputs
December 31,
(Level 1)
(Level 2)
(Level 3)
2008
$
40
$
610
$
$
650
98
98
13
13
7
7
26
26
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Year Ended December 31,
2009
2008
$
13
$
(33
)
171
20
(158
)
10
$
10
$
13
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Fair Value Measurements Using
Quoted
Significant
Prices
Other
Significant
in Active
Observable
Unobservable
Total as of
Total
Markets
Inputs
Inputs
December 31,
Gains
(Level 1)
(Level 2)
(Level 3)
2009
(Losses)
$
$
$
15
$
15
$
(1,901
)
(230
)
108
108
(95
)
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
We are exposed to market risks related to the volatility of crude oil, refined product, and grain
prices, as well as volatility in the price of natural gas used in our refining operations. To
reduce the impact of this price volatility on our results of operations and cash flows, we use
commodity derivative instruments, including swaps, futures, and options, to manage our exposure to
commodity price risks. For such risk management purposes, we use fair value hedges, cash flow
hedges, and economic hedges.
Fair value hedges are used to hedge certain refining inventories and firm commitments to purchase
inventories. The level of activity for our fair value hedges is based on the level of our
operating inventories, and normally represents the amount by which our inventories differ from our
previous year-end LIFO inventory levels.
Derivative Instrument / Maturity
Contract Volumes
4,880
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Cash flow hedges are used to hedge certain forecasted feedstock and product purchases, refined
product sales, and natural gas purchases. The purpose of our cash flow hedges is to lock in the
price of forecasted feedstock, product, or natural gas purchases or refined product sales at
existing market prices that are deemed favorable by management.
Derivative Instrument / Maturity
Contract Volumes
42,600
42,600
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Economic hedges are hedges not designated as fair value or cash flow hedges that are used to (i)
manage price volatility in certain refinery feedstock, refined product, and grain inventories, and
(ii) manage price volatility in certain forecasted refinery feedstock, product, and grain
purchases, refined product sales, and natural gas purchases. In addition, through August 2009, we
used economic hedges to manage price volatility in the referenced product margins associated with
the Alon earn-out agreement, which was a separate contractual derivative that we entered into with
the sale of our Krotz Springs Refinery but which was settled in August 2009, as further discussed
in Note 2. Our objective in entering into economic hedges is consistent with the objectives
discussed above for fair value hedges and cash flow hedges. However, the economic hedges are not
designated as a fair value hedge or a cash flow hedge for accounting purposes, usually due to the
difficulty of establishing the required documentation at the date that the derivative instrument is
entered into that would allow us to achieve hedge deferral accounting. As of December 31, 2009,
we had the following outstanding commodity derivative instruments that were entered into as
economic hedges. The information presents the volume of outstanding contracts by type of
instrument and year of maturity (volumes in thousands of barrels, except those identified as grain
contracts that are presented in thousands of bushels).
Derivative Instrument / Maturity
Contract Volumes
139,901
27,250
88,244
23,875
204,810
7,155
150
199,566
23,250
160
522
500
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
These represent commodity derivative instruments held or issued for trading purposes. Our
objective in entering into commodity derivative instruments for trading purposes is to take
advantage of existing market conditions related to crude oil and refined products that management
perceives as opportunities to benefit our results of operations and cash flows, but for which there
are no related physical transactions. As of December 31, 2009, we had the following outstanding
commodity derivative instruments that were entered into for trading purposes. The information
presents the volume of outstanding contracts by type of instrument and year of maturity (volumes
represent thousands of barrels, except those identified as natural gas contracts that are presented
in billions of British thermal units).
Derivative Instrument / Maturity
Contract Volumes
27,201
3,000
31,201
3,900
40,188
10
100
40,164
10
100
250
1,250
Our primary market risk exposure for changes in interest rates relates to our debt obligations. We
manage our exposure to changing interest rates through the use of a combination of fixed-rate and
floating-rate debt. In addition, we have at times used interest rate swap agreements to manage our
fixed to floating interest rate position by converting certain fixed-rate debt to floating-rate
debt. These interest rate swap agreements are generally accounted for as fair value hedges.
However, we had no outstanding interest rate swap agreements during the years ended December 31,
2009, 2008, and 2007.
We are exposed to exchange rate fluctuations on transactions related to our Canadian operations.
To manage our exposure to these exchange rate fluctuations, we use foreign currency exchange and
purchase contracts. These contracts are not designated as hedging instruments for accounting
purposes, and therefore they are classified as economic hedges. As of December 31, 2009, we had
commitments to purchase $456 million of U.S. dollars and commitments to sell $604 million of U.S.
dollars. These commitments matured on or before February 1, 2010, resulting in a $3 million
loss in the first quarter of 2010.
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following tables provide information about the fair values of our derivative instruments as of
December 31, 2009 (in millions) and the line items in the balance sheet in which the fair values
are reflected. See Note 17 for additional information related to the fair values of our derivative
instruments. As indicated in Note 17, we net fair value amounts recognized for multiple similar
derivative instruments executed with the same counterparty under master netting arrangements. The
table below, however, is presented on a gross asset and gross liability basis, which results in the
reflection of certain assets in liability accounts and certain liabilities in asset accounts. In
addition, in Note 17 we netted cash received from brokers attributable to excess margin against the
fair value of the commodity derivatives; this cash receipt is not reflected in the table below.
Asset Derivatives
Liability Derivatives
Balance Sheet
Balance Sheet
Location
Fair Value
Location
Fair Value
Receivables, net
$
1
Receivables, net
$
2
Accrued expenses
13
Accrued expenses
37
Receivables, net
308
Receivables, net
271
Prepaid expenses and other current assets
579
Prepaid expenses and other current assets
415
Accrued expenses
28
Accrued expenses
19
$
929
$
744
Receivables, net
$
34
Receivables, net
$
29
Accrued expenses
2,094
Accrued expenses
2,101
Receivables, net
506
Receivables, net
370
Prepaid expenses and other current assets
1,049
Prepaid expenses and other current assets
1,037
Accrued expenses
46
Accrued expenses
62
Prepaid expenses and other current assets
Prepaid expenses and other current assets
Accrued expenses
Accrued expenses
1
Receivables, net
Accounts payable
$
3,729
$
3,600
$
4,658
$
4,344
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Our price risk management activities involve the receipt or payment of fixed price commitments into
the future. These transactions give rise to market risk, the risk that future changes in market
conditions may make an instrument less valuable. We closely monitor and manage our exposure to
market risk on a daily basis in accordance with policies approved by our board of directors.
Market risks are monitored by a risk control group to ensure compliance with our stated risk
management policy. Concentrations of customers in the refining industry may impact our overall
exposure to counterparty risk, in that these customers may be similarly affected by changes in
economic or other conditions. In addition, financial services companies are the counterparties in
certain of our price risk management activities, and such financial services companies may be
adversely affected by periods of uncertainty and illiquidity in the credit and capital markets.
The following tables provide information about the gain or loss recognized in income and other
comprehensive income on our derivative instruments for the year ended December 31, 2009 (in
millions), and the line items in the financial statements in which such gains and losses are
reflected.
Derivatives
Location of
Amount of
Location of
Amount of
Amount of
in Fair
Gain or (Loss)
Gain or (Loss)
Gain or (Loss)
Gain or (Loss)
Gain or (Loss)
Value
Recognized in
Recognized in
Recognized in
Recognized in
Recognized in Income
Hedging
Income on
Income on
Income on
Income on
for Ineffective Portion
Relationships
Derivatives
Derivatives
Hedged Item
Hedged Item
of Derivative (1)
Cost of sales
$
(75
)
Cost of sales
$
69
$
(6
)
$
(75
)
$
69
(6
)
(1)
Amount of
Location of
Amount of
Location of
Amount of
Gain or (Loss)
Gain or (Loss)
Gain or (Loss)
Gain or (Loss)
Gain or (Loss)
Derivatives in
Recognized in
Reclassified from
Reclassified
Recognized in
Recognized in
Cash Flow
OCI on
Accumulated OCI
from Accumulated
Income on
Income on
Hedging
Derivatives
into Income
OCI into Income
Derivatives
Derivatives
Relationships
(Effective Portion)
(Effective Portion)
(Effective Portion)
(Ineffective Portion)
(Ineffective Portion) (1)
$
125
Cost of sales
$
337
Cost of sales
$
3
Income (loss) from
discontinued operations,
net of income taxes
(132
)
N.A.
$
125
$
205
$
3
(1)
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(2)
Derivatives Designated as Economic
Location of Gain or (Loss)
Amount of Gain or (Loss)
Hedges and Other Derivative
Recognized in Income on
Recognized in Income on
Instruments
Derivatives
Derivatives
Cost of sales
$
55
Cost of sales
(22
)
33
Other income, net
20
(commodity contracts)
Other income, net
(62
)
(42
)
$
(9
)
Location of Gain or (Loss)
Amount of Gain or (Loss)
Derivatives Designated as
Recognized in Income on
Recognized in Income on
Trading Activities
Derivatives
Derivatives
Cost of sales
$
126
$
126
Year Ended December 31,
2009
2008
2007
$
(504
)
$
(64
)
$
5,556
222
605
458
(167
)
(14
)
422
before income tax expense (benefit)
$
(449
)
$
527
$
6,436
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Year Ended December 31,
2009
2008
2007
$
(157
)
$
184
$
2,253
net of U.S. federal income tax effect
(12
)
30
78
9
(59
)
(84
)
(6
)
(27
)
(48
)
81
7
(144
)
1,353
(7
)
26
16
(5
)
25
(12
)
$
(97
)
$
1,539
$
2,059
Year Ended December 31,
2009
2008
2007
$
(379
)
$
828
$
1,710
(14
)
18
93
120
45
202
22
2
3
(251
)
893
2,008
212
478
114
(5
)
28
27
(53
)
140
(90
)
154
646
51
$
(97
)
$
1,539
$
2,059
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31,
2009
2008
$
88
$
91
241
78
304
394
84
93
152
72
234
298
1,103
1,026
(200
)
(62
)
903
964
(212
)
(216
)
(4,337
)
(4,230
)
(399
)
(628
)
(91
)
(106
)
(5,039
)
(5,180
)
$
(4,136
)
$
(4,216
)
Amount
Expiration
$
51
2010 through 2029
38
Unlimited
30
2011
4,451
2010 through 2029
40
2029
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
$
195
5
$
200
Year Ended December 31,
2009
2008
2007
$
238
$
164
$
160
158
17
32
106
67
13
(6
)
(5
)
(36
)
statute of limitations
(1
)
(5
)
(11
)
(5
)
$
484
$
238
$
164
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Refining
Retail
Ethanol
Corporate
Total
$
59,061
$
7,885
$
1,198
$
$
68,144
5,137
137
5,274
1,261
101
18
48
1,428
105
293
165
(621
)
(58
)
2,482
66
5
39
2,592
102,608
10,528
113,136
7,703
7,703
1,214
105
44
1,363
995
369
(603
)
761
2,689
104
141
2,934
81,103
8,884
89,987
6,298
6,298
1,106
90
48
1,244
7,067
249
(686
)
6,630
2,342
107
193
2,642
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Year Ended December 31,
2009
2008
2007
$
29,830
$
44,885
$
40,059
21,911
43,629
29,653
2,275
4,017
3,563
1,576
2,770
1,837
3,469
7,307
5,991
59,061
102,608
81,103
6,148
8,750
7,235
1,505
1,446
1,356
232
332
293
7,885
10,528
8,884
1,032
166
1,198
$
68,144
$
113,136
$
89,987
Year Ended December 31,
2009
2008
2007
$
58,792
$
95,163
$
76,828
6,048
9,961
8,142
3,304
8,012
5,017
$
68,144
$
113,136
$
89,987
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31,
2009
2008
$
20,810
$
21,327
2,239
1,999
1,002
1,045
$
24,051
$
24,371
December 31,
2009
2008
$
30,701
$
30,801
1,875
1,818
654
2,399
1,798
$
35,629
$
34,417
We have several qualified non-contributory defined benefit pension plans (collectively, the
Qualified Plans), some of which are subject to collective bargaining agreements. The Qualified
Plans cover substantially all employees in the United States and generally provide eligible
employees with retirement income based on years of service and compensation during specific
periods.
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Other Postretirement
Pension Plans
Benefit Plans
2009
2008
2009
2008
$
1,492
$
1,292
$
520
$
477
104
92
12
13
79
76
25
28
9
7
(51
)
6
1
1
2
(74
)
(75
)
(28
)
(27
)
(153
)
107
(27
)
26
4
(6
)
$
1,454
$
1,492
$
466
$
520
$
1,005
$
1,358
$
$
228
(400
)
92
122
18
18
9
7
1
2
(74
)
(75
)
(28
)
(27
)
$
1,251
$
1,005
$
$
$
1,251
$
1,005
$
$
1,454
1,492
466
520
$
(203
)
$
(487
)
$
(466
)
$
(520
)
Other Postretirement
Pension Plans
Benefit Plans
2009
2008
2009
2008
$
(19
)
$
(13
)
$
(25
)
$
(22
)
(184
)
(474
)
(441
)
(498
)
358
645
(21
)
43
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Other Postretirement
Pension Plans
Benefit Plans
2009
2008
2009
2008
$
16
$
19
$
(115
)
$
(84
)
342
626
94
127
$
358
$
645
$
(21
)
$
43
Other
Pension
Postretirement
Plans
Benefit Plans
$
3
$
(20
)
1
4
$
4
$
(16
)
December 31,
2009
2008
$
249
$
1,492
221
1,201
81
1,005
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Significant
Quoted Prices
Other
Significant
in Active
Observable
Unobservable
Markets
Inputs
Inputs
(Level 1)
(Level 2)
(Level 3)
Total
$
15
$
$
$
15
519
519
98
98
2
2
107
107
60
60
257
257
66
66
1
1
89
89
37
37
$
1,251
$
$
$
1,251
(a)
(b)
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Pension
Other
Health Care
Benefits
Benefits
Subsidy Receipts
$
73
$
24
$
(2
)
78
27
(2
)
82
28
(3
)
93
29
(3
)
113
31
(3
)
682
171
(25
)
Other Postretirement
Pension Plans
Benefit Plans
2009
2008
2007
2009
2008
2007
$
104
$
92
$
95
$
12
$
13
$
13
79
76
71
25
28
27
(108
)
(105
)
(84
)
3
3
3
(19
)
(9
)
(9
)
10
2
9
6
3
6
88
68
94
24
35
37
7
14
1
1
$
95
$
68
$
108
$
25
$
35
$
38
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Other Postretirement
Pension Plans
Benefit Plans
2009
2008
2009
2008
$
(273
)
$
612
$
(27
)
$
25
(51
)
(10
)
(2
)
(6
)
(3
)
(3
)
(3
)
19
9
(1
)
(income) loss
$
(287
)
$
607
$
(65
)
$
31
Other Postretirement
Pension Plans
Benefit Plans
2009
2008
2009
2008
5.80
%
5.40
%
5.68
%
5.39
%
3.47
%
4.18
%
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Other Postretirement
Pension Plans
Benefit Plans
2009
2008
2007
2009
2008
2007
5.40
%
6.00
%
5.75
%
5.39
%
6.00
%
5.75
%
7.72
%
8.23
%
8.25
%
4.18
%
4.40
%
4.43
%
2009
2008
7.50
%
8.30
%
5.00
%
5.00
%
2018
2015
1% Increase
1% Decrease
$
1
$
(1
)
20
(18
)
Valero Energy Corporation Thrift Plan
We are the sponsor of the Valero Energy Corporation Thrift Plan, which is a defined contribution
plan. Participation in the Thrift Plan is voluntary. Participants may participate in the plan as
soon as practicable following enrollment.
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The Valero Savings Plan is a defined contribution plan covering our retail store employees, certain
other employees supporting the retail organization, and employees at our ethanol plants. Under the
Valero Savings Plan, participants can contribute from 1% to 30% of their compensation. We
contribute $0.60 for every $1.00 of the participants contribution up to 6% of compensation.
The Premcor Retirement Savings Plan is a defined contribution plan covering former Premcor
employees who became employees of Valero effective September 1, 2005. Under this plan,
participants can contribute from 1% to 50% of their eligible compensation. We contribute 200% of
the first 3% of a participants pre-tax contribution. In addition, we contribute 100% of a
participants pre-tax contribution above 3% up to 6% for certain union participants who contribute
to the plan.
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Under the terms of our various stock option plans, the exercise price of options granted is not
less than the fair market value of our common stock on the date of grant. Stock options become
exercisable pursuant to the individual written agreements between the participants and us, usually
in three or five equal annual installments beginning one year after the date of grant, with
unexercised options generally expiring seven or ten years from the date of grant.
Year Ended December 31,
2009
2008
2007
6.0
4.5
5.0
47.8
%
43.2
%
33.7
%
3.1
%
3.5
%
0.7
%
2.8
%
2.8
%
4.0
%
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Weighted-
Weighted-
Average
Average
Number
Exercise
Remaining
Aggregate
of Stock
Price
Contractual
Intrinsic
Options
Per Share
Term
Value
(in years)
(in millions)
25,069,553
$
24.76
3,766,000
19.13
(1,280,036
)
8.75
(929,641
)
52.83
26,625,876
23.75
4.6
$
73
18,264,250
21.32
3.4
73
Restricted stock is granted to employees and non-employee directors. Restricted stock granted to
employees vests in accordance with individual written agreements between the participants and us,
usually in equal annual installments over a period of five years beginning one year after the date
of grant. Restricted stock granted to our non-employee directors vests from one to three years
following the date of grant. A summary of the status of our restricted stock awards is presented
in the table below.
Weighted-
Average
Grant-Date
Number of
Fair Value
Shares
Per Share
1,829,295
$
35.41
1,425,710
19.22
(626,424
)
37.09
(30,284
)
35.49
2,598,297
26.12
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In 2007, we issued to certain key employees performance awards, which represent rights to receive
shares of Valero common stock only upon Valeros achievement of an objective performance measure.
Performance awards are subject to vesting in three annual amounts beginning approximately one year
after the date of grant. The number of common shares earned each year is based on the vested award
adjusted by a factor determined by our total shareholder return over a rolling three-year period
compared to the total shareholder return of a defined peer group for the same time period.
As of December 31, 2009, 64,020 unvested restricted stock units were outstanding. Restricted stock
units vest in equal annual amounts over a three-year or five-year period beginning one year after
the date of grant. These restricted stock units are payable in cash based on the price of our
common stock on the date of vesting, and therefore they are accounted for as liability-based
awards. For the years ended December 31, 2009, 2008, and 2007, cash payments of $1 million,
$1 million, and $8 million, respectively, were made for vested restricted stock units. During the
year ended December 31, 2009, 5,340 restricted stock units were granted, 35,708 units vested, and
4,300 units were forfeited. Based on the price of our common stock on December 31, 2009, there was
$1 million of unrecognized compensation cost related to outstanding unvested restricted stock
units, which is expected to be recognized over a weighted-average period of approximately four
years.
We have long-term operating lease commitments for land, office facilities, retail facilities and
related equipment, transportation equipment, time charters for ocean-going tankers and coastal
vessels, dock facilities, and various facilities and equipment used in the storage, transportation,
production, and sale of refinery feedstocks and refined products.
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Operating
Capital
Leases
Leases
$
348
$
7
230
6
127
6
86
6
65
5
297
17
1,153
47
(20
)
$
1,133
47
(11
)
$
36
Year Ended December 31,
2009
2008
2007
$
534
$
514
$
509
21
23
24
555
537
533
(4
)
(4
)
(4
)
$
551
$
533
$
529
We have various purchase obligations under certain industrial gas and chemical supply arrangements
(such as hydrogen supply arrangements), crude oil and other feedstock supply arrangements, and
various throughput and terminalling agreements. We enter into these contracts to ensure an
adequate supply of utilities and feedstock and adequate storage capacity to operate our refineries.
Substantially all of our purchase obligations are based on market prices or adjustments based on
market indices. Certain of these purchase obligations include fixed or minimum volume
requirements, while others are based on our usage requirements. None of these obligations are
associated with suppliers financing arrangements. These purchase obligations are not reflected in
the consolidated balance sheets.
Currently, some of the proposed federal cap-and-trade legislation would require businesses that emit
greenhouse gases to buy emission credits from the government, other businesses, or through an
auction process. In addition, refiners would be obligated to purchase emission credits associated
with the
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
We are subject to extensive tax liabilities, including federal, state, and foreign income taxes and
transactional taxes such as excise, sales/use, payroll, franchise, withholding, and ad valorem
taxes. New tax laws and regulations and changes in existing tax laws and regulations are
continuously being enacted or proposed that could result in increased expenditures for tax
liabilities in the future. Many of these liabilities are subject to periodic audits by the
respective taxing authority. Subsequent changes to our tax liabilities as a result of these audits
may subject us to interest and penalties.
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In connection with our acquisition of the St. Charles Refinery in 2003, the seller was entitled to
receive payments in any of the seven years following the acquisition if certain average refining
margins during any of those years exceeded a specified level. In connection with the Premcor
Acquisition in 2005, we assumed Premcors obligation under a contingent earn-out agreement related
to Premcors acquisition of the Delaware City Refinery from Motiva Enterprises LLC (Motiva). Under
this agreement, Motiva was entitled to receive two separate annual earn-out payments depending on
(a) the amount of crude oil processed at the refinery and the level of refining margins through May
2007, and (b) the achievement of certain performance criteria at the gasification facility through
May 2006. As described below, final payments under all of these agreements have been made, and,
consequently, our obligations have been fulfilled under the agreements. No payments were made
during the year ended December 31, 2009.
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Delaware
St. Charles
City
Refinery
Refinery
$
50
$
25
25
175
50
50
25
175
50
In July 2008, we entered into an agreement to participate as a prospective shipper on the 500,000
barrel-per-day expansion of the Keystone crude oil pipeline system, which is expected to be
completed in 2012 or 2013. Once completed, the pipeline will enable crude oil to be transported
from Western Canada to the U.S. Gulf Coast at Port Arthur, Texas. We have also secured commitments from several Canadian oil producers to
sell to us heavy sour crude oil for shipment through the pipeline.
During the first quarter of 2007, our McKee Refinery was shut down due to a fire originating in its
propane deasphalting unit, resulting in business interruption losses for which we submitted claims
to our insurance carriers under our insurance policies. We reached a settlement with the insurance
carriers on
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Liabilities for future remediation costs are recorded when environmental assessments and/or
remedial efforts are probable and the costs can be reasonably estimated. Other than for
assessments, the timing and magnitude of these accruals generally are based on the completion of
investigations or other studies or a commitment to a formal plan of action. Environmental
liabilities are based on best estimates of probable undiscounted future costs using currently
available technology and applying current regulations, as well as our own internal environmental
policies.
Year Ended December 31,
2009
2008
2007
$
297
$
285
$
298
16
72
36
(40
)
(51
)
(55
)
6
(9
)
6
$
279
$
297
$
285
December 31,
2009
2008
$
41
$
42
238
255
$
279
$
297
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of February 26, 2010, we were named as a defendant in 34 active cases alleging liability
related to MTBE contamination in groundwater. The plaintiffs are generally water providers,
governmental authorities, and private water companies alleging that refiners and marketers of MTBE
and gasoline containing MTBE are liable for manufacturing or distributing a defective product. We
have been named in these lawsuits together with many other refining industry companies. We are
being sued primarily as a refiner and marketer of MTBE and gasoline containing MTBE. We do not own
or operate gasoline station facilities in most of the geographic locations in which damage is
alleged to have occurred. The lawsuits generally seek individual, unquantified compensatory and
punitive damages, injunctive relief, and attorneys fees. Many of the cases are pending in federal
court and are consolidated for pre-trial proceedings in the U.S. District Court for the Southern
District of New York (Multi-District Litigation Docket No. 1358,
In re: Methyl-Tertiary Butyl Ether
Products Liability Litigation
). Sixteen cases are pending in state court. Discovery is open in
all cases. We believe that we have strong defenses to all claims and are vigorously defending the
lawsuits.
As of February 26, 2010, we were named in 21 consumer class action lawsuits relating to fuel
temperature. We have been named in these lawsuits together with several other defendants in the
retail and wholesale petroleum marketing business. The complaints, filed in federal courts in
several states, allege that because fuel volume increases with fuel temperature, the defendants
have violated state consumer protection laws by failing to adjust the volume or price of fuel when
the fuel temperature exceeded 60 degrees Fahrenheit. The complaints seek to certify classes of
retail consumers who purchased fuel in various locations. The complaints seek an order compelling
the installation of temperature correction devices as well as monetary relief. The federal
lawsuits are consolidated into a multi-district litigation case in the U.S. District Court for the
District of Kansas (Multi-District Litigation Docket No. 1840,
In re: Motor Fuel Temperature Sales
Practices Litigation
). Discovery has commenced. The court has indicated that it will rule on the
Kansas-based class certification motion only (possibly in the spring of 2010), and then make a
decision on how to further proceed with the rest of the docket. We believe that we have several
strong defenses to these lawsuits and intend to contest them. We have not recorded a loss
contingency liability with respect to this matter, but due to the inherent uncertainty of
litigation, we believe that it is reasonably possible that we may suffer a loss with respect to one
or more of the lawsuits. An estimate of the possible loss or range of loss from an adverse result
in all or substantially all of these cases cannot reasonably be made.
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Rosolowski v. Clark Refining & Marketing, Inc., et al
., Judicial Circuit Court, Cook County,
Illinois (Case No. 95-L 014703). We assumed this lawsuit in our acquisition of Premcor Inc. The
lawsuit relates in part to a 1994 release to the atmosphere of spent catalyst from the now-closed
Blue Island, Illinois refinery. The case was certified as a class action in 2000 with three
classes, two of which received nominal or no damages, and one of which received a sizeable jury
verdict. That class consisted of local residents who claimed property damage or loss of use and
enjoyment of their property over a period of several years. In 2005, the jury returned a verdict
for the plaintiffs of $80 million in compensatory damages and $40 million in punitive damages.
However, following our motions for new trial and judgment notwithstanding the verdict (citing,
among other things, misconduct by plaintiffs counsel and improper class certification), the trial
judge in 2006 vacated the jurys award and decertified the class. Plaintiffs appealed, and in June
2008 the state appeals court reversed the trial judges decision to decertify the class and set
aside the judgment. Thereafter, the Illinois Supreme Court refused to hear the case and returned
it to the trial court. We have submitted renewed motions for judgment notwithstanding the verdict
or, alternatively, a new trial. We are pursuing several options for resolution of this matter,
including settlement. While we do not believe that the ultimate resolution of this matter will
have a material effect on our financial position or results of operations, we have recorded a loss
contingency liability with respect to this matter.
We are also a party to additional claims and legal proceedings arising in the ordinary course of
business. We believe that there is only a remote likelihood that future costs related to known
contingent liabilities related to these legal proceedings would have a material adverse impact on
our consolidated results of operations or financial position.
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(in millions)
Valero
Other Non-
Energy
Guarantor
Corporation
PRG
Subsidiaries
Eliminations
Consolidated
$
78
$
$
747
$
$
825
1
121
122
24
3,749
3,773
420
4,443
4,863
858
888
(858
)
888
180
180
5
256
261
11
11
936
461
10,384
(858
)
10,923
4,234
24,372
28,606
(402
)
(5,192
)
(5,594
)
3,832
19,180
23,012
227
227
6,456
3,807
68
(10,331
)
14,181
(14,181
)
809
(809
)
133
67
1,195
1,395
72
72
$
22,515
$
8,239
$
31,054
$
(26,179
)
$
35,629
$
33
$
$
204
$
$
237
52
133
5,575
5,760
117
88
309
514
19
706
725
953
(858
)
95
253
253
214
214
455
454
7,747
(858
)
7,798
6,236
895
32
7,163
5,924
8,257
(14,181
)
760
4,112
(809
)
4,063
1,099
127
643
1,869
11
11
7
1
(1
)
7
7,896
3,719
6,887
(10,606
)
7,896
(6,721
)
(6,721
)
13,178
(3,644
)
3,262
382
13,178
365
(7
)
113
(106
)
365
14,725
68
10,263
(10,331
)
14,725
$
22,515
$
8,239
$
31,054
$
(26,179
)
$
35,629
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(in millions)
Valero
Other Non-
Energy
Guarantor
Corporation
PRG
Subsidiaries
Eliminations
Consolidated
$
215
$
$
725
$
$
940
23
2
106
131
34
2,861
2,895
343
4,277
4,620
76
197
(76
)
197
98
98
8
542
550
19
19
314
406
8,806
(76
)
9,450
4,041
22,078
26,119
(291
)
(4,407
)
(4,698
)
3,750
17,671
21,421
224
224
6,429
2,718
65
(9,212
)
15,225
(15,225
)
883
(883
)
121
42
1,273
1,436
1,886
1,886
$
22,972
$
8,802
$
28,039
$
(25,396
)
$
34,417
$
209
$
$
103
$
$
312
43
291
3,989
4,323
82
30
258
370
23
569
592
6
70
(76
)
485
485
127
127
819
477
4,989
(76
)
6,209
5,329
899
36
6,264
5,966
9,259
(15,225
)
866
3,846
(883
)
3,829
1,204
192
762
2,158
337
337
6
1
(1
)
6
7,190
1,598
4,349
(5,947
)
7,190
(6,884
)
(6,884
)
15,484
(1,523
)
4,636
(3,113
)
15,484
(176
)
(10
)
161
(151
)
(176
)
15,620
65
9,147
(9,212
)
15,620
$
22,972
$
8,802
$
28,039
$
(25,396
)
$
34,417
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(in millions)
Valero
Other Non-
Energy
Guarantor
Corporation
PRG
Subsidiaries
Eliminations
Consolidated
$
$
10,864
$
67,405
$
(10,125
)
$
68,144
11,979
60,105
(10,125
)
61,959
287
3,024
3,311
702
702
3
43
526
572
129
1,299
1,428
131
99
230
3
12,569
65,755
(10,125
)
68,202
(3
)
(1,705
)
1,650
(58
)
(2,220
)
947
(2,121
)
3,394
1,154
(55
)
727
(1,809
)
17
(633
)
(542
)
(1,154
)
1,809
(520
)
13
99
112
(1,702
)
(1,342
)
(799
)
3,394
(449
)
280
(851
)
474
(97
)
(1,982
)
(491
)
(1,273
)
3,394
(352
)
(1,630
)
(1,630
)
$
(1,982
)
$
(2,121
)
$
(1,273
)
$
3,394
$
(1,982
)
(1)
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(in millions)
Valero
Other Non-
Energy
Guarantor
Corporation
PRG
Subsidiaries
Eliminations
Consolidated
$
$
20,105
$
109,997
$
(16,966
)
$
113,136
19,683
99,113
(16,966
)
101,830
443
3,603
4,046
768
768
(9
)
40
528
559
140
1,223
1,363
43
43
86
(305
)
(305
)
1,796
2,232
4,028
(9
)
22,145
107,205
(16,966
)
112,375
9
(2,040
)
2,792
761
(1,436
)
882
(1,523
)
2,077
1,083
(69
)
868
(1,769
)
113
(577
)
(552
)
(1,091
)
1,769
(451
)
17
87
104
(921
)
(1,762
)
1,133
2,077
527
210
(358
)
1,687
1,539
(1,131
)
(1,404
)
(554
)
2,077
(1,012
)
(119
)
(119
)
$
(1,131
)
$
(1,523
)
$
(554
)
$
2,077
$
(1,131
)
(1)
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(in millions)
Valero
Other Non-
Energy
Guarantor
Corporation
PRG
Subsidiaries
Eliminations
Consolidated
$
$
19,310
$
89,903
$
(19,226
)
$
89,987
17,694
78,591
(19,226
)
77,059
524
3,142
3,666
750
750
(6
)
30
614
638
189
1,055
1,244
(6
)
18,437
84,152
(19,226
)
83,357
6
873
5,751
6,630
4,556
668
1,320
(6,544
)
1,446
(245
)
869
(1,903
)
167
(520
)
(574
)
(1,275
)
1,903
(466
)
5
100
105
5,488
727
6,765
(6,544
)
6,436
254
85
1,720
2,059
5,234
642
5,045
(6,544
)
4,377
678
179
857
$
5,234
$
1,320
$
5,224
$
(6,544
)
$
5,234
(1)
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(in millions)
Valero
Other Non-
Energy
Guarantor
Corporation
PRG
Subsidiaries
Eliminations
Consolidated
$
(526
)
$
(1,198
)
$
3,547
$
$
1,823
(526
)
(1,780
)
(2,306
)
(72
)
(343
)
(415
)
(556
)
(556
)
(21
)
(21
)
27
27
(2,335
)
(142
)
(2,121
)
4,598
109
(109
)
16
16
1,422
(1,422
)
(29
)
(29
)
(8
)
(8
)
(804
)
(740
)
(4,815
)
3,067
(3,292
)
799
799
998
998
(285
)
(285
)
39
39
(39
)
(39
)
950
950
(850
)
(850
)
(324
)
(324
)
(109
)
109
2,121
2,477
(4,598
)
(183
)
(1,239
)
1,422
5
(4
)
1
1,193
1,938
1,225
(3,067
)
1,289
65
65
(137
)
22
(115
)
215
725
940
$
78
$
$
747
$
$
825
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(in millions)
Valero
Other Non-
Energy
Guarantor
Corporation
PRG (1)
Subsidiaries (1)
Eliminations
Consolidated
$
46
$
14
$
3,035
$
$
3,095
(653
)
(2,240
)
(2,893
)
(93
)
(315
)
(408
)
463
463
(25
)
(25
)
24
24
(1,235
)
(1,523
)
2,758
629
265
(894
)
25
25
596
(596
)
(144
)
(144
)
(7
)
(7
)
(10
)
(481
)
(3,742
)
1,268
(2,965
)
(6
)
(368
)
(374
)
296
296
(296
)
(296
)
(955
)
(955
)
16
16
9
9
(299
)
(299
)
(894
)
894
1,523
1,235
(2,758
)
(688
)
92
596
(4
)
(4
)
(1,235
)
467
429
(1,268
)
(1,607
)
(47
)
(47
)
(1,199
)
(325
)
(1,524
)
1,414
1,050
2,464
$
215
$
$
725
$
$
940
(1)
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(in millions)
Valero
Other Non-
Energy
Guarantor
Corporation
PRG (1)
Subsidiaries (1)
Eliminations
Consolidated
$
736
$
(51
)
$
4,573
$
$
5,258
(293
)
(1,967
)
(2,260
)
(64
)
(454
)
(518
)
1,873
555
2,428
(25
)
(50
)
(75
)
(209
)
(209
)
(2,742
)
(58
)
2,800
2,383
1,346
(3,729
)
3
60
63
3,969
(3,969
)
1
(12
)
(11
)
3,610
1,437
(731
)
(4,898
)
(582
)
2,245
2,245
(280
)
(183
)
(463
)
3,000
3,000
(3,000
)
(3,000
)
(5,788
)
(5,788
)
159
159
311
311
(271
)
(271
)
(1,346
)
(2,383
)
3,729
2,800
(2,800
)
143
(4,112
)
3,969
(20
)
(4
)
(24
)
(3,644
)
(1,386
)
(3,699
)
4,898
(3,831
)
29
29
702
172
874
712
878
1,590
$
1,414
$
$
1,050
$
$
2,464
(1)
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2009 Quarter Ended
March 31
June 30
September 30
December
31 (a)
$
13,329
$
17,375
$
18,573
$
18,867
593
(192
)
(238
)
(221
)
309
(254
)
(629
)
(1,408
)
0.60
(0.48
)
(1.12
)
(2.51
)
assuming dilution (c)
0.59
(0.48
)
(1.12
)
(2.51
)
2008 Quarter Ended
March 31
June 30
September 30 (d)
December 31 (e)
$
26,443
$
34,824
$
34,038
$
17,831
498
1,268
1,787
(2,792
)
261
734
1,152
(3,278
)
0.49
1.39
2.20
(6.36
)
assuming dilution (c)
0.48
1.37
2.18
(6.36
)
(a)
(b)
(c)
(d)
(e)
Table of Contents
Table of Contents
Page | ||||
60 | ||||
61 | ||||
64 | ||||
65 | ||||
66 | ||||
67 | ||||
68 | ||||
69 |
2.01
|
|
Agreement and Plan of Merger dated as of April 24, 2005 by and among Valero Energy Corporation and
Premcor Inc. incorporated by reference to Exhibit 2.1 to Valeros Current Report on Form 8-K dated
April 24, 2005, and filed April 25, 2005 (SEC File No. 1-13175).
|
||
|
||||
3.01
|
|
Amended and Restated Certificate of Incorporation of Valero Energy Corporation, formerly known as Valero
Refining and Marketing Company incorporated by reference to Exhibit 3.1 to Valeros Registration
Statement on Form S-1 (SEC File No. 333-27013) filed May 13, 1997.
|
||
|
||||
3.02
|
|
Certificate of Amendment (effective July 31, 1997) to Restated Certificate of Incorporation of Valero
Energy Corporation incorporated by reference to Exhibit 3.02 to Valeros Annual Report on Form 10-K for
the year ended December 31, 2003 (SEC File No. 1-13175).
|
||
|
||||
3.03
|
|
Certificate of Merger of Ultramar Diamond Shamrock Corporation with and into Valero Energy Corporation
dated December 31, 2001 incorporated by reference to Exhibit 3.03 to Valeros Annual Report on
Form 10-K for the year ended December 31, 2003 (SEC File No. 1-13175).
|
145
3.04
|
|
Amendment (effective December 31, 2001) to Restated Certificate of Incorporation of Valero Energy
Corporation incorporated by reference to Exhibit 3.1 to Valeros Current Report on Form 8-K dated
December 31, 2001, and filed January 11, 2002 (SEC File No. 1-13175).
|
||
|
||||
3.05
|
|
Second Certificate of Amendment (effective September 17, 2004) to Restated Certificate of Incorporation
of Valero Energy Corporation incorporated by reference to Exhibit 3.04 to Valeros Quarterly Report on
Form 10-Q for the quarter ended September 30, 2004 (SEC File No. 1-13175).
|
||
|
||||
3.06
|
|
Certificate of Merger of Premcor Inc. with and into Valero Energy Corporation effective September 1, 2005
- incorporated by reference to Exhibit 2.01 to Valeros Quarterly Report on Form 10-Q for the quarter
ended September 30, 2005 (SEC File No. 1-13175).
|
||
|
||||
3.07
|
|
Third Certificate of Amendment (effective December 2, 2005) to Restated Certificate of Incorporation of
Valero Energy Corporation incorporated by reference to Exhibit 3.07 to Valeros Annual Report on Form
10-K for the year ended December 31, 2005 (SEC File No. 1-13175).
|
||
|
||||
3.08
|
|
Amended and Restated Bylaws of Valero Energy Corporation (as of July 12, 2007) incorporated by
reference to Exhibit 3.01 to Valeros Current Report on Form 8-K dated July 11, 2007, and filed July 17,
2007 (SEC File No. 1-13175).
|
||
|
||||
4.01
|
|
Indenture dated as of December 12, 1997 between Valero Energy Corporation and The Bank of New York -
incorporated by reference to Exhibit 3.4 to Valeros Registration Statement on Form S-3 (SEC File
No. 333-56599) filed June 11, 1998.
|
||
|
||||
4.02
|
|
First Supplemental Indenture dated as of June 28, 2000 between Valero Energy Corporation and The Bank of
New York (including Form of 7 3/4% Senior Deferrable Note due 2005) incorporated by reference to
Exhibit 4.6 to Valeros Current Report on Form 8-K dated June 28, 2000, and filed June 30, 2000 (SEC File
No. 1-13175).
|
||
|
||||
4.03
|
|
Indenture (Senior Indenture) dated as of June 18, 2004 between Valero Energy Corporation and Bank of New
York incorporated by reference to Exhibit 4.7 to Valeros Registration Statement on Form S-3 (SEC File
No. 333-116668) filed June 21, 2004.
|
||
|
||||
4.04
|
|
Form of Indenture related to subordinated debt securities incorporated by reference to Exhibit 4.8 to
Valeros Registration Statement on Form S-3 (SEC File No. 333-116668) filed June 21, 2004.
|
||
|
||||
4.05
|
|
Third Supplemental Indenture dated as of August 31, 2005 between The Premcor Refining Group Inc. and
Deutsche Bank Trust Company Americas incorporated by reference to Exhibit 4.09 to Valeros Annual
Report on Form 10-K for the year ended December 31, 2005 (SEC File No. 1-13175).
|
||
|
||||
4.06
|
|
Fourth Supplemental Indenture dated as of September 1, 2005 among The Premcor Refining Group Inc., Valero
Energy Corporation, and Deutsche Bank Trust Company Americas incorporated by reference to Exhibit 4.10
to Valeros Annual Report on Form 10-K for the year ended December 31, 2005 (SEC File No. 1-13175).
|
||
|
||||
4.07
|
|
Guaranty dated September 2, 2005 of The Premcor Refining Group Inc. (guaranteeing certain Valero-heritage
debt) incorporated by reference to Exhibit 4.11 to Valeros Annual Report on Form 10-K for the year
ended December 31, 2005 (SEC File No. 1-13175).
|
||
|
||||
4.08
|
|
Guaranty dated September 2, 2005 of Valero Energy Corporation (guaranteeing certain Premcor-heritage
debt) incorporated by reference to Exhibit 4.12 to Valeros Annual Report on Form 10-K for the year
ended December 31, 2005 (SEC File No. 1-13175).
|
||
|
||||
4.09
|
|
Specimen Certificate of Common Stock incorporated by reference to Exhibit 4.1 to Valeros Registration
Statement on Form S-3 (SEC File No. 333-116668) filed June 21, 2004.
|
||
|
146
+10.01
|
|
Valero Energy Corporation Annual Bonus Plan, amended and restated as of July 29, 2009 incorporated by
reference to Exhibit 10.01 to Valeros Current Report on Form 8-K dated July 29, 2009, and filed
August 4, 2009 (SEC File No. 1-13175).
|
||
|
||||
*+10.02
|
|
Valero Energy Corporation 2005 Omnibus Stock Incentive Plan, amended and restated as of October 1, 2005.
|
||
|
||||
+10.03
|
|
Valero Energy Corporation 2001 Executive Stock Incentive Plan, amended and restated as of October 1, 2005
- incorporated by reference to Exhibit 10.04 to Valeros Annual Report on Form 10-K for the year ended
December 31, 2005 (SEC File No. 1-13175).
|
||
|
||||
+10.04
|
|
Valero Energy Corporation Deferred Compensation Plan, amended and restated as of January 1, 2008 -
incorporated by reference to Exhibit 10.04 to Valeros Annual Report on Form 10-K for the year ended
December 31, 2008 (SEC File No. 1-13175).
|
||
|
||||
*+10.05
|
|
Form of 2010 Elective Deferral Agreement pursuant to the Valero Energy Corporation Deferred Compensation
Plan.
|
||
|
||||
*+10.06
|
|
Form of Investment Election Form pursuant to the Valero Energy Corporation Deferred Compensation Plan.
|
||
|
||||
*+10.07
|
|
Form of 2010 Distribution Election Form pursuant to the Valero Energy Corporation Deferred Compensation
Plan.
|
||
|
||||
+10.08
|
|
Valero Energy Corporation Amended and Restated Supplemental Executive Retirement Plan, amended and
restated as of November 10, 2008 incorporated by reference to Exhibit 10.08 to Valeros Annual Report
on Form 10-K for the year ended December 31, 2008 (SEC File No. 1-13175).
|
||
|
||||
+10.09
|
|
Valero Energy Corporation 2003 Employee Stock Incentive Plan, as amended and restated effective
October 1, 2005 incorporated by reference to Exhibit 10.11 to Valeros Annual Report on Form 10-K for
the year ended December 31, 2005 (SEC File No. 1-13175).
|
||
|
||||
+10.10
|
|
Valero Energy Corporation Stock Option Plan, as amended and restated effective January 1, 2009 -
incorporated by reference to Exhibit 10.10 to Valeros Annual Report on Form 10-K for the year ended
December 31, 2008 (SEC File No. 1-13175).
|
||
|
||||
+10.11
|
|
Valero Energy Corporation Restricted Stock Plan for Non-Employee Directors, as amended and restated July
11, 2007 incorporated by reference to Exhibit 10.02 to Valeros Current Report on Form 8-K/A dated
July 11, 2007, and filed September 18, 2007 (SEC File No. 1-13175).
|
||
|
||||
+10.12
|
|
Valero Energy Corporation Non-Employee Director Stock Option Plan, as amended and restated effective
January 1, 2007 incorporated by reference to Exhibit 10.02 to Valeros Quarterly Report on Form 10-Q
for the quarter ended September 30, 2006 (SEC File No. 1-13175).
|
||
|
||||
+10.13
|
|
Form of Indemnity Agreement between Valero Energy Corporation (formerly known as Valero Refining and
Marketing Company) and certain officers and directors incorporated by reference to Exhibit 10.8 to
Valeros Registration Statement on Form S-1 (SEC File No. 333-27013) filed May 13, 1997.
|
||
|
||||
+10.14
|
|
Schedule of Indemnity Agreements incorporated by reference to Exhibit 10.9 to Valeros Registration
Statement on Form S-1 (SEC File No. 333-27013) filed May 13, 1997.
|
||
|
||||
+10.15
|
|
Change of Control Agreement (Tier I) dated January 18, 2007 between Valero Energy Corporation and William
R. Klesse incorporated by reference to Exhibit 10.01 to Valeros Current Report on Form 8-K dated
January 17, 2007 and filed January 19, 2007 (SEC File No. 1-13175).
|
||
|
||||
+10.16
|
|
Schedule of Change of Control Agreements (Tier I) incorporated by reference to Exhibit 10.16 to
Valeros Annual Report on Form 10-K for the year ended December 31, 2008 (SEC File No. 1-13175).
|
||
|
147
+10.17
|
|
Change of Control Agreement (Tier II) dated March 15, 2007 between Valero Energy Corporation and Kimberly
S. Bowers incorporated by reference to Exhibit 10.16 to Valeros Annual Report on Form 10-K for the
year ended December 31, 2008 (SEC File No. 1-13175).
|
||
|
||||
+10.18
|
|
Form of Performance Award Agreement pursuant to the Valero Energy Corporation 2005 Omnibus Stock
Incentive Plan incorporated by reference to Exhibit 10.02 to Valeros Current Report on Form 8-K dated
January 18, 2006, and filed January 20, 2006 (SEC File No. 1-13175).
|
||
|
||||
+10.19
|
|
Form of Stock Option Agreement pursuant to the Valero Energy Corporation 2005 Omnibus Stock Incentive
Plan incorporated by reference to Exhibit 10.03 to Valeros Current Report on Form 8-K dated October
20, 2005, and filed October 26, 2005 (SEC File No. 1-13175).
|
||
|
||||
+10.20
|
|
Form of Stock Option Agreement pursuant to the Valero Energy Corporation Non-Employee Director Stock
Option Plan incorporated by reference to Exhibit 10.04 to Valeros Quarterly Report on Form 10-Q for
the quarter ended September 30, 2006 (SEC File No. 1-13175).
|
||
|
||||
+10.21
|
|
Form of Restricted Stock Agreement pursuant to the Valero Energy Corporation 2005 Omnibus Stock Incentive
Plan incorporated by reference to Exhibit 10.02 to Valeros Quarterly Report on Form 10-Q for the
quarter ended September 30, 2005 (SEC File No. 1-13175).
|
||
|
||||
+10.22
|
|
Form of Restricted Stock Agreement pursuant to the Valero Energy Corporation Restricted Stock Plan for
Non-Employee Directors incorporated by reference to Exhibit 10.03 to Valeros Quarterly Report on Form
10-Q for the quarter ended September 30, 2006 (SEC File No. 1-13175).
|
||
|
||||
10.23
|
|
$2,500,000,000 5-Year Revolving Credit Agreement, dated as of August 17, 2005, among Valero Energy
Corporation, as Borrower; JPMorgan Chase Bank, N.A., as Administrative Agent and Global Administrative
Agent; and the lenders named therein incorporated by reference to Exhibit 10.23 to Valeros Annual
Report on Form 10-K for the year ended December 31, 2008 (SEC File No. 1-13175).
|
||
|
||||
10.24
|
|
First Amendment to $2,500,000,000 5-Year Revolving Credit Agreement, dated as of July 24, 2006 -
incorporated by reference to Exhibit 10.24 to Valeros Annual Report on Form 10-K for the year ended
December 31, 2008 (SEC File No. 1-13175).
|
||
|
||||
10.25
|
|
Second Amendment to $2,500,000,000 5-Year Revolving Credit Agreement, dated as of November 9, 2007 -
incorporated by reference to Exhibit 10.25 to Valeros Annual Report on Form 10-K for the year ended
December 31, 2008 (SEC File No. 1-13175).
|
||
|
||||
*12.01
|
|
Statements of Computations of Ratios of Earnings to Fixed Charges and Ratios of Earnings to Fixed Charges
and Preferred Stock Dividends.
|
||
|
||||
14.01
|
|
Code of Ethics for Senior Financial Officers incorporated by reference to Exhibit 14.01 to Valeros
Annual Report on Form 10-K for the year ended December 31, 2003 (SEC File No. 1-13175).
|
||
|
||||
*21.01
|
| Valero Energy Corporation subsidiaries. | ||
|
||||
*23.01
|
| Consent of KPMG LLP dated February 26, 2010. | ||
|
||||
*24.01
|
| Power of Attorney dated February 25, 2010 (on the signature page of this Form 10-K). | ||
|
||||
*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.
|
148
149
Section 1350 Certifications (under Section 906 of the Sarbanes-Oxley Act of 2002).
Audit Committee Pre-Approval Policy.
*
+
Table of Contents
150
151
VALERO ENERGY CORPORATION
(Registrant)
By
/s/ William R. Klesse
(William R. Klesse)
Chief Executive Officer, President, and
Chairman of the Board
Table of Contents
Signature
Title
Date
Chief Executive Officer, President, and
Chairman of the Board
(Principal Executive Officer)
February 25, 2010
Executive Vice President
and Chief Financial Officer
(Principal Financial and Accounting Officer)
February 25, 2010
Director
February 25, 2010
Director
February 25, 2010
Director
February 25, 2010
Director
February 25, 2010
Director
February 25, 2010
Director
February 25, 2010
Director
February 25, 2010
Director
February 25, 2010
Director
February 25, 2010
1
(a) |
the stockholders of the Company approve any agreement or transaction pursuant
to which: (i) the Company will merge or consolidate with any other Person (other than a
wholly owned subsidiary of the Company) and will not be the surviving entity (or in
which the Company survives only as the subsidiary of another entity); (ii) the Company
will sell all or substantially all of its assets to any other Person (other than a
wholly owned subsidiary of the Company); or (iii) the Company will be liquidated or
dissolved; or
|
(b) |
any person or group (as these terms are used in Section 13(d) and 14(d) of
the Securities Exchange Act of 1934) other than the Company, any subsidiary of the
Company, any employee benefit plan of the Company or its subsidiaries, or any entity
holding Shares for or pursuant to the terms of such employee benefit plans, is or
becomes an Acquiring Person as defined in the Rights Agreement (or any successor
rights agreement) (or, if no Rights Agreement is then in effect, such person or group
acquires or holds such number of shares as, under the terms and conditions of the most
recent such rights agreement to be in force and effect, would have caused such person
or group to be an Acquiring Person thereunder); or
|
(c) |
any person or group shall commence a tender offer or exchange offer for 15%
or more of the Shares then outstanding, or for any number or amount of Shares which, if
the tender or exchange offer were to be fully subscribed and all Shares for which the
tender or exchange offer is made were to be purchased or exchanged pursuant to the
offer, would result in the acquiring person or group directly or indirectly
beneficially owning 50% or more of the Shares then outstanding; or
|
(d) |
individuals who, as of any date, constitute the Board (the Incumbent Board)
thereafter cease for any reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director whose election, or
nomination for election by the Companys stockholders, was approved by a vote of at
least a majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of office
occurs as a result of an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened solicitation of proxies
or consents by or on behalf of a person or group other than the Board; or
|
(e) |
the Distribution Date (as defined in the Rights Agreement) occurs; or
|
(f) |
any other event occurs that is or has been determined by the Board or the
Committee to constitute a Change of Control hereunder.
|
2
3
4
5
(a) |
The grant of an Award shall be authorized by the Committee and may be evidenced
by an Award Agreement setting forth the Incentive or Incentives being granted, the
total number of
|
1 |
|
Reflects the 2-for-1 stock split of Valeros
common stock on December 15, 2005.
|
6
shares of Common Stock subject to the Incentive(s) or the value of the Performance
Award (if applicable), the Option Price (if applicable), the Award Period, the Date
of Grant, and such other terms, provisions, limitations, and performance objectives,
as are approved by the Committee, but not inconsistent with the Plan. The Company
may execute an Award Agreement with a Participant after the Committee approves the
issuance of an Award. Any Award granted pursuant to this Plan must be granted
within 10 years of the date of adoption of this Plan. The grant of an Award to a
Participant shall not be deemed either to entitle the Participant to, or to
disqualify the Participant from, receipt of any other Award under the Plan.
|
(b) |
If the Committee establishes a purchase price for an Award, the Participant
must accept such Award within a period of 30 days (or such shorter period as the
Committee may specify) after the Date of Grant by executing the applicable Award
Agreement and paying such purchase price.
|
(a) |
The Plan is subject to the following limitations:
|
(i) |
The Option Price of Stock Options cannot be less than 100% of
the Fair Market Value of a share of Common Stock on the Date of Grant of the
Stock Option.
|
||
(ii) |
The SAR Price of a SAR cannot be less than 100% of the Fair
Market Value of a share of Common Stock on the Date of Grant of the SAR.
|
||
(iii) |
Repricing of Stock Options and SARs or other downward
adjustments in the Option Price or SAR Price of previously granted Stock
Options or SARs, respectively, are prohibited, except in connection with
certain capital adjustments as described in Article 14 or 15.
|
||
(iv) |
No more than 40% (4,000,000), of the available shares pursuant
to Awards under the Plan may be in the form of time-lapse Restricted Stock.
|
||
(v) |
No Participant may receive during any calendar year Awards that
are to be settled in Shares of Common Stock covering an aggregate of more than
1,000,000 Shares.
|
||
(vi) |
No Participant may receive during any calendar year Awards that
are to be settled in cash covering an aggregate of more than $20,000,000.
|
||
(vii) |
The term of Awards may not exceed 10 years.
|
(b) |
Limited SARs granted in tandem with Stock Options or other Awards shall not be
counted towards the maximum individual grant limitation set forth in this Section, as
the Limited SAR will expire based on conditions described in Section 6.5(b), below.
|
7
(a) |
Legend on Shares
. Each Participant who is awarded Restricted Stock
shall be issued the number of shares of Common Stock specified in the Award Agreement
for such Restricted Stock, and such shares shall be recorded in the share transfer
records of the Company and ownership of such shares shall be evidenced by a certificate
or book entry notation in the share transfer records of the Company. Such shares shall
be registered in the name of the Participant, and shall bear or be subject to an
appropriate legend referring to the terms, conditions, and restrictions applicable to
such Restricted Stock, substantially as provided in Section 19.18 of the Plan. The
Committee may require that the stock certificates or other evidence of ownership of the shares of Restricted Stock be held in custody by the Company until the restrictions
thereon shall have lapsed, and that the Participant deliver to the Committee a stock
power or stock powers, endorsed in blank, relating to the shares of Restricted Stock.
|
(b) |
Restrictions and Conditions
. Shares of Restricted Stock and Restricted
Stock Units shall be subject to the following restrictions and conditions:
|
(i) |
Subject to the other provisions of this Plan and the terms of
the particular Award Agreements, during such period as may be determined by the
Committee commencing on the Date of Grant (the Restriction Period), the
Participant shall not be permitted to sell, transfer, pledge or assign shares
of Restricted Stock and/or Restricted Stock Units. Any Restricted Stock or
Restricted Stock Units not granted pursuant to a Performance Award, shall have
a minimum Restriction Period of three years from the Date of Grant, provided
that the Committee may provide for earlier vesting following a Change in
Control or upon an Employees termination of employment by reason of death,
disability or Retirement. Except for these limitations, the Committee may in
its sole discretion, remove any or all of the restrictions on such Restricted
Stock and/or Restricted Stock Units whenever it may determine that, by reason
of changes in applicable laws or other changes in circumstances arising after
the date of the Award, such action is appropriate.
|
||
(ii) |
Except as provided in subparagraph (i) above and subject to the
terms of a Participants Award Agreement, the Participant shall have, with
respect to his or her Restricted Stock, all of the rights of a stockholder of
the Company, including the right to vote the shares, and the right to receive
any dividends thereon. Certificates or evidence of ownership of shares of
Common Stock free of restriction under this Plan shall be delivered to the
Participant promptly after, and only after, the Restriction Period shall expire
without forfeiture in respect of such shares of Common Stock. Certificates for
the shares of Common Stock forfeited under the provisions of the Plan shall be
promptly returned to the Company by the forfeiting Participant. Each
Participant, by his or her acceptance of Restricted Stock, shall irrevocably
grant to the Company a power of attorney to transfer any shares so forfeited to
the Company and agrees to execute any documents requested by the Company in
connection with such forfeiture and transfer.
|
8
(iii) |
The Restriction Period of Restricted Stock and/or Restricted
Stock Units shall commence on the Date of Grant and, subject to Article 15 of
the Plan, unless otherwise established by the Committee in the Award Agreement
setting forth the terms of the Restricted Stock and/or Restricted Stock Units,
shall expire upon satisfaction of the conditions set forth in the Award
Agreement; such conditions may provide for vesting based on (i) length of
continuous service, (ii) achievement of specific business objectives, (iii)
increases in specified indices, (iv) attainment of specified growth rates, or
(v) other comparable Performance Measurements, as may be determined by the
Committee in its sole discretion.
|
(c) |
Forfeiture
. Except as otherwise determined by the Committee or the
Chief Executive Officer, the provisions of Article 9 shall apply with respect to
Restricted Stock granted hereunder.
|
(a) |
An SAR shall entitle the Participant at his election to surrender to the
Company the SAR, or portion thereof, as the Participant shall choose, and to receive
from the Company in exchange therefore cash in an amount equal to the excess (if any)
of the Fair Market Value (as of the date of the exercise of the SAR) per share over the
SAR Price per share specified in such SAR, multiplied by the total number of shares of
the SAR being surrendered. In the discretion of the Committee, the Company may satisfy
its obligation upon exercise of an SAR by the distribution of that number of shares of
Common Stock having an aggregate Fair Market Value (as of the date of the exercise of
the SAR) equal to the amount of cash otherwise payable to the Participant, with a cash
settlement to be made for any fractional share interests, or the Company may settle
such obligation in part with shares of Common Stock and in part with cash.
|
(b) |
A Limited SAR shall allow the Participant to receive from the Company cash in
an amount equal to the excess (if any) of the Fair Market Value (as of the date of the
exercise of the Limited SAR) per share over the Limited SAR Price per share specified
in such Limited SAR, multiplied by the total number of shares of the Limited SAR being
surrendered. The Company will satisfy its obligation with a cash settlement to be made
for any fractional Limited SAR. Limited SARs will expire without consideration upon
the vesting, exercise, or settlement, in shares and/or in cash, of Awards for which the
Limited SAR was granted in tandem.
|
(a) |
Grant of Performance Awards.
The Committee may issue Performance Awards in the
form of Performance Units, Performance Shares, Performance Cash, or Dividend
Equivalents to Participants subject to the Performance Goals and Performance Period as
it shall determine. The terms and conditions of each Performance Award will be set
forth in the related Award Agreement. The Committee shall have complete discretion in
determining the number and/or value of Performance Awards granted to each Participant.
Any Performance Units or Performance Shares granted under the Plan shall have a minimum
Restriction Period of one year from the Date of Grant, provided that the Committee may
provide for earlier vesting following a Change in Control or upon an Employees
termination of employment by reason of death, disability or Retirement. Participants
receiving Performance Awards are not required to pay the Company therefor (except for
applicable tax withholding) other than the rendering of services.
|
(b) |
Value of Performance Awards.
The Committee shall set Performance Goals in its
discretion for each Participant who is granted a Performance Award. Such Performance
Goals may be
|
9
particular to a Participant, may relate to the performance of the Subsidiary which
employs him or her, may be based on the division which employs him or her, may be
based on the performance of the Company generally, or a combination of the
foregoing. The Performance Goals may be based on achievement of balance sheet or
income statement objectives, or any other objectives established by the Committee.
The Performance Goals may be absolute in their terms or measured against or in
relationship to other companies comparably, similarly or otherwise situated. The
extent to which such Performance Goals are met will determine the number and/or
value of the Performance Award to the Participant.
|
(c) |
Form of Payment.
Payment of the amount to which a Participant shall be
entitled upon the settlement of a Performance Award shall be made in a lump sum or
installments in cash, shares of Common Stock, or a combination thereof as determined by
the Committee.
|
(a) |
Grant of Other Stock Based Awards
. The Committee may issue to Participants,
either alone or in addition to other Awards made under the Plan, Stock Unit Awards
which may be in the form of Common Stock or other securities. The value of each such
Award shall be based, in whole or in part, on the value of the underlying Common Stock
or other securities. The Committee, in its sole and complete discretion, may determine
that an Award, either in the form of a Stock Unit Award under this Section or as an
Award granted pursuant to the other provisions of this Article, may provide to the
Participant (i) dividends or Dividend Equivalents (payable on a current or deferred
basis) and (ii) cash payments in lieu of or in addition to an Award. The Committee
shall determine the terms, restrictions, conditions, vesting requirements, and payment
rules (all of which are sometimes hereinafter collectively referred to as rules) of
the Award and shall set forth those rules in the related Award Agreement.
|
(b) |
Rules
. The Committee, in its sole and complete discretion, may grant a Stock
Unit Award subject to the following rules:
|
(i) |
All rights with respect to such Stock Unit Awards granted to a
Participant under the Plan shall be exercisable during his or her lifetime only
by such Participant or his or her guardian or legal representative.
|
||
(ii) |
Stock Unit Awards may require the payment of cash consideration
by the Participant in receipt of the Award or provide that the Award, and any
Common Stock or other securities issued in conjunction with the Award be
delivered without the payment of cash consideration.
|
||
(iii) |
The Committee, in its sole and complete discretion, may
establish certain Performance Criteria that may relate in whole or in part to
receipt of the Stock Unit Awards.
|
||
(iv) |
Stock Unit Awards may be subject to a deferred payment schedule
and/or vesting over a specified employment period.
|
||
(v) |
The Committee as a result of certain circumstances may waive or
otherwise remove, in whole or in part, any restriction or condition imposed on
a Stock Unit Award at the time of Award.
|
10
(a) |
Vesting and
Exercise. Except as otherwise provided in the Plan, or otherwise
determined by the Committee and included in the applicable Award Agreement, a Stock
Option, SAR or other Award having an exercise provision (each, an Exercisable Award)
vests in and may be exercised by a Participant only while the Participant is and has
continually been since the date of the grant of the Exercisable Award an Employee or
Non-Employee Director.
|
||
(b) |
Voluntary Termination by Participant (Exercisable Awards)
. If a Participants
employment or service as a Non-Employee Director with the Company is voluntarily
terminated by the Participant (other than through retirement, death or disability; see
Section 9.3 below), then: (i) that portion of any Exercisable Award that has not vested
on or prior to such date of termination shall automatically lapse and be forfeited, and
(ii) all vested but unexercised Exercisable Awards previously granted to that
Participant under the Plan shall automatically lapse and be forfeited at the close of
business on the 30th day following that date of such Participants termination, unless
an Exercisable Award expires earlier according to its original terms.
|
||
(c) |
Involuntary Termination for Cause (Exercisable Awards)
. If a Participants
employment or service as a Non-Employee director is involuntarily terminated by the
Company for Cause: (i) that portion of any Exercisable Award that has not vested on or
prior to such date of termination shall automatically lapse and be forfeited, and (ii)
all vested but unexercised Exercisable Awards previously granted to that Participant
under the Plan shall automatically lapse and be forfeited at the close of business on
the 30th day following that date of such Participants termination, unless an
Exercisable Award expires earlier according to its original terms.
|
||
(d) |
Involuntary Termination Other Than For Cause (Exercisable Awards).
If a
Participants employment or service as a Non-Employee Director is involuntarily
terminated by the Company other than for Cause: (i) that portion of any Exercisable
Award that has not vested on or prior to such date of termination shall automatically
lapse and be forfeited, and (ii) all vested but unexercised Exercisable Awards
previously granted to that Participant under the Plan shall automatically lapse and be
forfeited at the close of business on the last business day of the twelfth month
following the date of the Participants termination, unless an Exercisable Award
expires earlier according to its original terms.
|
11
12
13
(a) |
Increased revenue;
|
||
(b) |
Net income measures (including but not limited to income after capital costs
and income before or after taxes);
|
||
(c) |
Stock price measures (including but not limited to growth measures and total
stockholder return);
|
||
(d) |
Market share;
|
||
(e) |
Earnings per share (actual or targeted growth);
|
||
(f) |
Earnings before interest, taxes, depreciation, and amortization (EBITDA);
|
||
(g) |
Economic value added (EVA
®
);
|
||
(h) |
Cash flow measures (including but not limited to net cash flow and net cash
flow before financing activities);
|
||
(i) |
Return measures (including but not limited to return on equity, return on
average assets, return on capital, risk-adjusted return on capital, return on
investors capital and return on average equity);
|
||
(j) |
Operating measures (including operating income, funds from operations, cash
from operations, after-tax operating income, sales volumes, production volumes, and
production efficiency);
|
||
(k) |
Expense measures (including but not limited to cost-per-barrel, overhead cost
and general and administrative expense);
|
||
(l) |
Margins;
|
||
(m) |
Stockholder value;
|
||
(n) |
Total stockholder return;
|
||
(o) |
Proceeds from dispositions;
|
||
(p) |
Production volumes;
|
||
(q) |
Refinery runs or refinery utilization;
|
||
(r) |
Total market value; and
|
||
(s) |
Corporate values measures (including ethics compliance, environmental, and
safety).
|
14
15
(a) |
An appropriate adjustment shall be made in the maximum number of shares of
Common Stock then subject to being awarded under the Plan and in the maximum number of shares of Common Stock that may be awarded to a Participant to the end that the same
proportion of the Companys issued and outstanding shares of Common Stock shall
continue to be subject to being so awarded.
|
(b) |
Appropriate adjustments shall be made in the number of shares of Common Stock
and the Option Price thereof then subject to purchase pursuant to each such Stock
Option previously granted and unexercised, to the end that the same proportion of the
Companys issued and outstanding shares of Common Stock in each such instance shall
remain subject to purchase at the same aggregate Option Price.
|
(c) |
Appropriate adjustments shall be made in the number of SARs and the SAR Price
thereof then subject to exercise pursuant to each such SAR previously granted and
unexercised, to the end that the same proportion of the Companys issued and
outstanding shares of Common Stock in each instance shall remain subject to exercise at
the same aggregate SAR Price.
|
(d) |
Appropriate adjustments shall be made in the number of outstanding shares of
Restricted Stock with respect to which restrictions have not yet lapsed prior to any
such change.
|
(e) |
Appropriate adjustments shall be made with respect to shares of Common Stock
applicable to any other Incentives previously awarded under the Plan as the Committee,
in its sole discretion, deems appropriate, consistent with the event.
|
16
(a) |
In the event of a Change of Control, notwithstanding any other provision in
this Plan to the contrary all unmatured installments of Incentives outstanding and not
otherwise canceled in accordance with Section 15.3 above, shall thereupon automatically
be accelerated and exercisable in full and all Restriction Periods applicable to Awards
of Restricted Stock and/or Restricted Stock Units shall automatically expire. The
determination of the Committee that any of the foregoing conditions has been met shall
be binding and conclusive on all parties.
|
(b) |
In the event of a Change of Control, notwithstanding any other provision in
this Plan and not otherwise canceled in accordance with Section 15.3 above, previously
granted and unpaid Performance Cash and/or Dividend Equivalents or Performance Cash
and/or Dividend Equivalents granted in the year during which the Change of Control
occurs will be paid no later than 60 days from the date of the occurrence of such
Change of Control. The amount of the Performance Cash and/or Dividend Equivalent
payable shall be:
|
(i) |
One-half of the maximum value of Performance Cash and/or
Dividend Equivalent payable pursuant to the terms and provisions of the Award
(reduced by the application of the Committees negative discretion, if
applicable) to such person if the Change of Control occurs before 50 percent of
the Performance Period has elapsed; or
|
(ii) |
The full maximum value of the Performance Cash and/or Dividend
Equivalent payable pursuant to the terms and provisions of the Award (reduced
by the application of the Committees negative discretion, if applicable) to
such person if the Change of Control occurs on or after 50 percent of the
Performance Period has elapsed.
|
17
(a) |
provide for the acceleration of any time periods relating to the vesting,
exercise or realization of the Incentive so that the Incentive may be exercised or
realized in full on or before a date fixed by the Committee;
|
(b) |
provide for the purchase of any Incentive, upon the Participants request, for
an amount of cash equal to the amount that could have been attained upon the exercise
of the Incentive or realization of the Participants rights in the Incentive had the
Incentive been currently exercisable or payable;
|
(c) |
adjust any outstanding Incentive as the Committee deems appropriate to reflect
the Change of Control or Dissolution Event; or
|
(d) |
cause any outstanding Incentive to be assumed, or new rights substituted
therefor, by the acquiring or surviving corporation after a Change of Control or
successor following a Dissolution Event.
|
(e) |
The Committee may in its discretion include other provisions and limitations in
any Award Agreement as it may deem equitable and in the best interests of the Company.
|
18
19
20
Transfer of this stock is restricted in accordance with conditions printed on the
reverse of this certificate.
|
The shares of stock evidenced hereby are subject to and transferable only in
accordance with the 2005 Valero Energy Corporation Omnibus Stock Incentive Plan, a
copy of which is on file at the principal office of the Company in San Antonio,
Texas. No transfer or pledge of the shares evidenced hereby may be made except in
accordance with and subject to the provisions of said Plan. By acceptance of shares
represented hereby, any holder, transferee or pledge beneficiary hereof agrees to
be bound by all of the provisions of said Plan.
|
Shares of stock represented hereby have been acquired by the holder for investment
and not for resale, transfer or distribution, have been issued pursuant to
exemptions from the registration requirements of applicable state and federal
securities laws, and may not be offered for sale, sold or transferred other than
pursuant to effective registration under such laws, or in transactions otherwise in
compliance with such laws, and upon evidence satisfactory to the Company of
compliance with such laws, as to which the Company may rely upon an opinion of
counsel satisfactory to the Company.
|
21
o | I elect not to participate in the Plan during 2010 . | |
o |
I hereby elect to defer a portion of my compensation for the
period
commencing January 1, 2010 and ending December 31,
2010
(the Plan Year) as follows:
|
|
Salary (elect either 1 or 2) |
1. |
% (in even 1% increments not to exceed 30%) of the
regular salary to which I may become entitled during the Plan Year;
|
||
2. |
$
per pay period of the regular salary to which I may
become entitled with respect to (check either (a) or (b) below):
|
(a) | all pay periods during the Plan Year | ||
(b) | the following pay periods (specify): | ||
Bonus (elect either 3 or 4 for bonus earned in 2010 and payable in 2011 ) |
3. |
% (in even 1% increments not to exceed 50%) of any cash
bonuses to which I may become entitled;
|
||
4. |
$
of any cash bonuses to which I may become entitled.
|
|
||
Participants Signature
|
Date | |
|
||
«First_Name» «Last_Name»
|
«Emplid» | |
|
||
Participants Name
|
Participants Employee ID Number |
_ _ _ _ _ | % |
Dreyfus
Appreciation (DGAGX)
|
||
|
||||
_ _ _ _ _ | % |
Fidelity
Intermediate Government (FSTGX)
|
||
|
||||
_ _ _ _ _ | % |
Janus
Worldwide (JAWWX)
|
||
|
||||
_ _ _ _ _ | % |
Milestone
Funds Treasury Obligations Portfolio (MTIXX)
|
||
|
||||
_ _ _ _ _ | % |
Oakmark I
(OAKMX)
|
||
|
||||
_ _ _ _ _ | % |
Price
Mid-Cap Growth (RPMGX)
|
||
|
||||
_ _ _ _ _ | % |
Columbia
Income Z (SRINX)
|
||
|
||||
_ _ _ _ _ | % |
Vanguard
Asset Allocation (VAAPX)
|
||
|
||||
_ _ _ _ _ | % |
Vanguard
Index Extended Market (VEXMX)
|
||
|
||||
_ _ _ _ _ | % |
Vanguard
Index 500 (VFINX)
|
||
|
||||
_ _ _ _ _ | % |
Vanguard
Growth and Income (VQNPX)
|
||
|
||||
|
||||
100% |
|
|
||
Participants Signature
|
Date | |
|
||
«First_Name» «Last_Name»
|
«Emplid» | |
|
||
Participants Name
|
Participants Employee ID Number |
Payment Election
|
DEFAULT PAYMENT IF NO ELECTION IS MADE: | ||||
Upon Retirement
|
Fifteen annual installments commencing at date of retirement | ||||
|
||||||
I elect that, upon retirement, the value of my Plan account related to deferrals made for the
2010 Plan Year
will be paid at the time and in the manner elected below:
|
||||||
|
||||||
Payment Commencement (choose one): | ||||||
|
||||||
|
o | As soon as administratively possible following retirement | ||||
|
(this is the default if no election is made) | |||||
|
||||||
|
o | January 1 after the year of retirement | ||||
|
||||||
AND | ||||||
|
||||||
Form of Distribution (choose one): | ||||||
|
||||||
|
o | Lump sum payment | ||||
|
||||||
|
o | Annual installments for years (choose 2 - 15 years) | ||||
|
||||||
Payment Election
|
DEFAULT PAYMENT IF NO ELECTION IS MADE: | ||||
Upon Other Separation
|
Immediate lump sum payable upon separation | ||||
|
||||||
I elect that, upon my separation from employment for a reason other than retirement, the
value of my Plan account related to deferrals made for the
2010 Plan Year
will be paid at the
time and in the manner elected below:
|
||||||
|
||||||
Payment Commencement (choose one): | ||||||
|
||||||
|
o | As soon as administratively possible following separation | ||||
|
(this is the default if no election is made) | |||||
|
||||||
|
o | January 1 after the year of separation | ||||
|
||||||
AND | ||||||
|
||||||
Form of Distribution (choose one): | ||||||
|
||||||
|
o | Lump sum (this is the default payment if no election is made) | ||||
|
||||||
|
o | Five annual installments | ||||
|
||||||
Amount of Elective Deferral or | ||
Specified Date | Total Amount of the Account (Whichever is Less) | |
|
||
|
||
|
ACKNOWLEDGED AND AGREED:
|
||
|
||
|
||
Participants Signature
|
Date | |
|
||
«First_Name» «Last_Name»
|
«Emplid» | |
|
||
Participants Name
|
Participants Employee ID Number |
Year Ended December 31, | |||||||||||||||||||||
2009 | 2008 | 2007 | 2006 | 2005 | |||||||||||||||||
Ratio of Earnings to Fixed Charges:
|
|||||||||||||||||||||
Earnings:
|
|||||||||||||||||||||
Income (loss) from continuing
operations before income tax expense
(benefit), minority interest in net
income of consolidated subsidiaries,
and income from equity investees
|
$ | (467 | ) | $ | 511 | $ | 6,453 | $ | 7,480 | $ | 4,948 | ||||||||||
Add:
|
|||||||||||||||||||||
Fixed charges
|
705 | 630 | 644 | 546 | 470 | ||||||||||||||||
Amortization of capitalized interest
|
19 | 18 | 14 | 9 | 8 | ||||||||||||||||
Distributions from equity investees
|
| | | 47 | 50 | ||||||||||||||||
Less:
|
|||||||||||||||||||||
Interest capitalized
|
(112 | ) | (104 | ) | (105 | ) | (148 | ) | (62 | ) | |||||||||||
|
|||||||||||||||||||||
Total earnings
|
$ | 145 | $ | 1,055 | $ | 7,006 | $ | 7,934 | $ | 5,414 | |||||||||||
|
|||||||||||||||||||||
|
|||||||||||||||||||||
Fixed charges:
|
|||||||||||||||||||||
Interest expense, net
|
$ | 408 | $ | 347 | $ | 361 | $ | 229 | $ | 272 | |||||||||||
Interest capitalized
|
112 | 104 | 105 | 148 | 62 | ||||||||||||||||
Rental expense interest factor (a)
|
185 | 179 | 178 | 169 | 136 | ||||||||||||||||
|
|||||||||||||||||||||
Total fixed charges
|
$ | 705 | $ | 630 | $ | 644 | $ | 546 | $ | 470 | |||||||||||
|
|||||||||||||||||||||
|
|||||||||||||||||||||
Ratio of earnings to fixed charges
|
(b | ) | 1.7x | 10.9x | 14.5x | 11.5x | |||||||||||||||
|
|||||||||||||||||||||
|
|||||||||||||||||||||
Ratio of Earnings to Fixed Charges and
Preferred Stock Dividends:
|
|||||||||||||||||||||
Total earnings
|
$ | 145 | $ | 1,055 | $ | 7,006 | $ | 7,934 | $ | 5,414 | |||||||||||
|
|||||||||||||||||||||
|
|||||||||||||||||||||
Total fixed charges
|
$ | 705 | $ | 630 | $ | 644 | $ | 546 | $ | 470 | |||||||||||
Preferred stock dividends
|
| | | 3 | 20 | ||||||||||||||||
|
|||||||||||||||||||||
Total fixed charges and preferred
stock dividends
|
$ | 705 | $ | 630 | $ | 644 | $ | 549 | $ | 490 | |||||||||||
|
|||||||||||||||||||||
|
|||||||||||||||||||||
Ratio of earnings to fixed charges and
preferred stock dividends
|
(b | ) | 1.7x | 10.9x | 14.5x | 11.0x | |||||||||||||||
|
(a) |
The interest portion of rental expense represents one-third of rents, which is deemed
representative of the
interest portion of rental expense.
|
|
(b) |
For the year ended December 31, 2009, earnings were
insufficient to cover fixed charges by
$560 million. The deficiency included the effect of a $230 million pre-tax impairment loss
resulting from the permanent cancellation of certain capital projects classified as
construction in progress as a result of the unfavorable impact of the continuing economic
slowdown on refining industry fundamentals during the year. The deficiency was also partially
attributable to a $120 million loss contingency accrual related to our dispute of a turnover
tax on export sales in Aruba.
|
Name of Entity | State of Incorporation/Organization | |
AUTOTRONIC SYSTEMS, INC.
|
Delaware | |
BIG DIAMOND, INC.
|
Texas | |
BIG DIAMOND NUMBER 1, INC.
|
Texas | |
CANADIAN ULTRAMAR COMPANY
|
Nova Scotia | |
CANALUX L.P.
|
Newfoundland and Labrador | |
COLONNADE VERMONT INSURANCE COMPANY
|
Vermont | |
DIAMOND ALTERNATIVE ENERGY, LLC
|
Delaware | |
DIAMOND OMEGA COMPANY, L.L.C.
|
Delaware | |
DIAMOND SHAMROCK ARIZONA, INC.
|
Delaware | |
DIAMOND SHAMROCK REFINING COMPANY, L.P.
|
Delaware | |
DIAMOND SHAMROCK STATIONS, INC.
|
Delaware | |
DIAMOND UNIT INVESTMENTS, L.L.C.
|
Delaware | |
DSRM NATIONAL BANK
|
U.S.A. | |
EMERALD MARKETING, INC.
|
Texas | |
HUNTWAY REFINING COMPANY
|
Delaware | |
MICHIGAN REDEVELOPMENT GP, LLC
|
Delaware | |
MICHIGAN REDEVELOPMENT, L.P.
|
Delaware | |
MRP PROPERTIES COMPANY, LLC
|
Michigan | |
NATIONAL CONVENIENCE STORES INCORPORATED
|
Delaware | |
NECHES RIVER HOLDING CORP.
|
Delaware | |
OCEANIC TANKERS AGENCY LIMITED
|
Quebec | |
PORT ARTHUR COKER COMPANY L.P.
|
Delaware | |
PREMCOR USA INC.
|
Delaware | |
PROPERTY RESTORATION, L.P.
|
Delaware | |
ROBINSON OIL COMPANY (1987) LIMITED
|
Nova Scotia | |
SABINE RIVER HOLDING CORP.
|
Delaware | |
SABINE RIVER LLC
|
Delaware | |
SIGMOR BEVERAGE, INC.
|
Texas | |
SIGMOR CORPORATION
|
Delaware | |
SIGMOR NUMBER 5, INC.
|
Texas | |
SIGMOR NUMBER 43, INC.
|
Texas | |
SIGMOR NUMBER 79, INC.
|
Texas | |
SIGMOR NUMBER 80, INC.
|
Texas | |
SIGMOR NUMBER 103, INC.
|
Texas | |
SIGMOR NUMBER 105, INC.
|
Texas | |
SIGMOR NUMBER 119, INC.
|
Texas | |
SIGMOR NUMBER 178, INC.
|
Texas | |
SIGMOR NUMBER 196, INC.
|
Texas | |
SIGMOR NUMBER 238, INC.
|
Texas | |
SIGMOR NUMBER 259, INC.
|
Texas | |
SIGMOR NUMBER 422, INC.
|
Texas | |
SKIPPER BEVERAGE COMPANY, INC.
|
Texas | |
SUNBELT REFINING COMPANY, L.P.
|
Delaware | |
SUNRAY WIND, LLC
|
Texas | |
SUNSHINE BEVERAGE CO.
|
Texas | |
THE PREMCOR PIPELINE CO.
|
Delaware | |
THE PREMCOR REFINING GROUP INC.
|
Delaware | |
THE SHAMROCK PIPE LINE CORPORATION
|
Delaware |
Page 1
Name of Entity | State of Incorporation/Organization | |
TOC-DS COMPANY
|
Delaware | |
ULTRAMAR ACCEPTANCE INC.
|
Canada | |
ULTRAMAR ENERGY INC.
|
Delaware | |
ULTRAMAR INC.
|
Nevada | |
ULTRAMAR LTD.
|
Canada | |
ULTRAMAR SERVICES INC.
|
Canada | |
VALERO ARUBA ACQUISITION COMPANY I, LTD.
|
Virgin Islands (U.K.) | |
VALERO ARUBA FINANCE INTERNATIONAL, LTD.
|
Virgin Islands (U.K.) | |
VALERO ARUBA HOLDING COMPANY N.V.
|
Aruba | |
VALERO ARUBA HOLDINGS INTERNATIONAL, LTD.
|
Virgin Islands (U.K.) | |
VALERO ARUBA MAINTENANCE/OPERATIONS
COMPANY N.V.
|
Aruba | |
VALERO BONAIRE FUELS COMPANY N.V.
|
Bonaire | |
VALERO CALIFORNIA RETAIL COMPANY
|
Delaware | |
VALERO CANADA FINANCE, INC.
|
Delaware | |
VALERO CANADA L.P.
|
Newfoundland | |
VALERO CAPITAL CORPORATION
|
Delaware | |
VALERO CARIBBEAN SERVICES COMPANY
|
Delaware | |
VALERO CHOPS GP, L.L.C.
|
Delaware | |
VALERO CHOPS I, L.P.
|
Delaware | |
VALERO CHOPS II, L.P.
|
Delaware | |
VALERO CLAIMS MANAGEMENT, INC.
|
Texas | |
VALERO COKER CORPORATION ARUBA N.V.
|
Aruba | |
VALERO CUSTOMS & TRADE SERVICES, INC.
|
Delaware | |
VALERO DIAMOND, L.P.
|
Texas | |
VALERO DIAMOND METRO, INC.
|
Michigan | |
VALERO ENERGY ARUBA II COMPANY
|
Cayman Islands | |
VALERO ENERGY CORPORATION (parent)
|
Delaware | |
VALERO FINANCE L.P. I
|
Newfoundland | |
VALERO FINANCE L.P. II
|
Newfoundland | |
VALERO FINANCE L.P. III
|
Newfoundland | |
VALERO GRAIN MARKETING, LLC
|
Texas | |
VALERO HOLDINGS, INC.
|
Delaware | |
VALERO LUX COMPANY I S.à r.l.
|
Luxembourg | |
VALERO LUX COMPANY II S.à r.l.
|
Luxembourg | |
VALERO MARKETING & SUPPLY-ARUBA N.V.
|
Aruba | |
VALERO MARKETING AND SUPPLY COMPANY
|
Delaware | |
VALERO MARKETING AND SUPPY INTERNATIONAL LTD.
|
Cayman Islands | |
VALERO MISSION COMPANY, LLC
|
Delaware | |
VALERO MKS LOGISTICS, L.L.C.
|
Delaware | |
VALERO NATURAL GAS PIPELINE COMPANY
|
Delaware | |
VALERO OMEGA COMPANY, L.L.C.
|
Delaware | |
VALERO PAYMENT SERVICES COMPANY
|
Delaware | |
VALERO POWER MARKETING COMPANY
|
Delaware | |
VALERO REFINING AND MARKETING COMPANY
|
Delaware | |
VALERO REFINING COMPANY-ARUBA N.V.
|
Aruba | |
VALERO REFINING COMPANY-CALIFORNIA
|
Delaware | |
VALERO REFINING COMPANY-NEW JERSEY
|
Delaware | |
VALERO REFINING COMPANY-OKLAHOMA
|
Michigan | |
VALERO REFINING COMPANY-TENNESSEE, L.L.C.
|
Delaware | |
VALERO REFINING-NEW ORLEANS, L.L.C.
|
Delaware | |
VALERO REFINING-TEXAS, L.P.
|
Texas | |
VALERO RENEWABLE FUELS COMPANY, LLC
|
Texas | |
VALERO RETAIL HOLDINGS, INC.
|
Delaware | |
VALERO SECURITY SYSTEMS, INC.
|
Delaware |
Page 2
Name of Entity | State of Incorporation/Organization | |
VALERO SERVICES, INC.
|
Delaware | |
VALERO TERMINALING AND DISTRIBUTION COMPANY
|
Delaware | |
VALERO TEXAS POWER MARKETING, INC.
|
Delaware | |
VALERO UK LTD
|
United Kingdom | |
VALERO ULTRAMAR HOLDINGS INC.
|
Delaware | |
VALERO UNIT INVESTMENTS, L.L.C.
|
Delaware | |
VALLEY SHAMROCK, INC.
|
Texas | |
VEC TRUST I
|
Delaware | |
VEC TRUST III
|
Delaware | |
VEC TRUST IV
|
Delaware | |
VRG PROPERTIES COMPANY
|
Delaware | |
VTD PROPERTIES COMPANY
|
Delaware |
Page 3
|
/s/ William R. Klesse | |||
|
|
|||
|
Chief Executive Officer and President |
|
/s/ Michael S. Ciskowski | |||
|
|
|||
|
Executive Vice President and Chief Financial Officer |
1. |
The Report fully complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934; and
|
||
2. |
The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.
|
/s/ William R. Klesse
|
||
|
||
Chief Executive Officer and President
|
||
February 26, 2010
|
1. |
The Report fully complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934; and
|
||
2. |
The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.
|
/s/ Michael S. Ciskowski
|
||
|
||
Executive Vice President and Chief Financial Officer
|
||
February 26, 2010
|
I. | Statement of Principles | |
Pursuant to Section 10A of the Securities Exchange Act of 1934, as amended by Section 202 of
the Sarbanes-Oxley Act of 2002 (SOX Act), the Audit Committee of the board of directors (the
Audit Committee) of Valero Energy Corporation (the Company) is required to pre-approve the
audit and non-audit services performed by the Companys independent auditor to assure that the
provision of such services does not impair the auditors independence. The SECs rules
establish two approaches for pre-approving services. The two approaches are not mutually
exclusive:
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| the Audit Committee may pre-approve each particular service on a case-by-case basis ( separate pre-approval ), and | ||
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the Audit Committee may adopt a pre-approval policy that is detailed as to the
particular types of services that may be provided by the independent auditor without
consideration by the Audit Committee on a case-by-case basis (
policy-based
pre-approval
).
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The Audit Committee believes that a combination of these approaches will provide an effective
and efficient procedure to pre-approve services performed by the independent auditor.
Therefore, unless a type of service has received policy-based pre-approval (as specifically
identified in the appendices to this policy), it will require separate pre-approval by the
Audit Committee.
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The appendices to this policy contain lists of services that have received policy-based
pre-approval of this Audit Committee in the following categories (categorized in accordance
with the SECs rules):
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| Audit Services | ||
| Audit-Related Services | ||
| Tax Services | ||
| All Other Services |
II. | Term of Pre-Approvals | |
The term of the policy-based pre-approvals stated in the appendices to this policy is the
period from January 1, 2010 to January 31, 2011, unless the Audit Committee specifically
provides for a different period. The Audit Committee will review and pre-approve, at least
annually, the services that may be provided by the independent auditor. The Audit Committee
will revise the list of policy-based pre-approved services from time to time as the Committee
deems necessary or appropriate.
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III. | Delegation | |
In accordance with the SOX Act and SEC rules, the Audit Committee hereby delegates to its
Chairman the authority to grant separate pre-approvals of services and fees in accordance with
this policy. The Audit Committee may further delegate pre-approval authority from time to time
to one or more of its other members in its discretion. Any committee member to whom
pre-approval authority is delegated shall report any pre-approval decisions to the full Audit
Committee at its next meeting. The Audit Committee does not delegate its responsibilities to
pre-approve services to any member of the Companys management.
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IV. | Services for which Separate Pre-Approval is Required | |
The terms and fees for the following services of the independent auditor require
separate
pre-approval by the Audit Committee:
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the annual financial statement audit, including all audits, reviews, procedures and
other services required to be performed by the independent auditor to form an opinion
on the Companys consolidated financial statements, and
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the annual audit of the Companys internal control over financial reporting,
including all services required to be performed by the independent auditor to issue its
report on the effectiveness of the Companys internal control over financial reporting.
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The Audit Committee will monitor these engagements as it deems appropriate, and will approve,
if necessary, any changes in terms, conditions and fees resulting from changes in engagement
scope, changes in the Companys structure or other matters.
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V. | Services for which Policy-Based Pre-Approval is Available |
A. | Audit Services | ||
The Audit Committee may grant
policy-based
pre-approval for Audit Services other than the
services described in Section IV above. These Audit Services are generally services that
only the Companys independent auditor reasonably can provide, and include:
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services associated with SEC registration statements (
e.g.
, comfort letters,
consents), periodic reports and other documents filed with the SEC or other
documents issued in connection with securities offerings,
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| statutory audits or financial audits for subsidiaries or affiliates of the Company. |
The Audit Committee has given policy-based pre-approval for the Audit Services listed in
Appendix A
. All other Audit Services must be separately pre-approved by the Audit
Committee.
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B. | Audit-Related Services | ||
Audit-Related Services are assurance and related services that are reasonably related to
the performance of the annual audit or quarterly review of the Companys financial
statements or that are traditionally performed by the independent auditor. The Audit
Committee may grant policy-based pre-approval for Audit-Related Services. These services
would include:
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| employee benefit plan audits, and | ||
| due diligence services related to proposed mergers and acquisitions. |
The Audit Committee believes that the provision of the Audit-Related Services listed in
Appendix B
does not impair the independence of the auditor, and has given
policy-based pre-approval for the Audit-Related Services listed in
Appendix B
.
All other Audit-Related Services must be separately pre-approved by the Audit Committee.
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C. | Tax Services | ||
The Audit Committee believes that the independent auditor can provide Tax Services to the
Company such as tax compliance, tax planning and tax advice without impairing the
auditors independence. However, the Audit Committee will not permit the retention of the
independent auditor in connection with a transaction initially recommended by the
independent auditor, the purpose of which may be tax avoidance and the tax treatment of
which may not be supported in the U.S. Internal Revenue Code and related regulations or in
the tax laws and regulations of any jurisdiction in which the Company is subject to
taxation. In addition, the independent auditor may not provide any tax services to the
Company that are deemed to be incompatible with auditor independence per standards
promulgated by the Public Company Accounting Oversight Board (PCAOB).
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The Audit Committee has given policy-based pre-approval for the Tax Services listed in
Appendix C
. All other Tax Services must be separately pre-approved by the Audit
Committee, including Tax Services related to large and complex transactions and Tax
Services proposed to be provided by the independent auditor to any executive officer or
director of the Company, in his or her individual capacity, when such services are paid
for by the Company.
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D. | All Other Services | ||
The Audit Committee may grant policy-based pre-approval for those permissible non-audit
services classified as All Other Services that it believes are routine, recurring services
that would not impair the independence of the auditor. The Audit Committee has given
policy-based pre-approval for the All Other Services listed in
Appendix D
. Any
permissible All Other Services that are not listed in
Appendix D
must be
separately pre-approved by the Audit Committee.
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VI. | Prohibited Services | ||
A list of the SECs prohibited non-audit services is attached to this policy as
Appendix
E
. The list sets forth the several services that the SOX Act and the SEC have specifically
identified as services that may not be performed by the Companys independent auditor. The
Audit Committee will consult the SECs rules and relevant guidance, with the assistance of
counsel when necessary or appropriate, to determine whether any proposed service by the
independent auditor falls within any category of prohibited non-audit services.
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In addition, the independent auditor may not provide any service or product to the Company for
a
contingent fee
(as defined and interpreted by the SEC pursuant to Rule 2-01(c)(5) of
Regulation S-X) or a commission, or pursuant to an agreement (written or otherwise) by the
Company to pay a value added fee based on the results of the independent auditors
performance of a service.
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VII. | Pre-Approval Fee Levels and Budgeted Amounts | ||
Pre-approval fee levels or budgeted amounts for all services to be provided by the independent
auditor will be established at least annually by the Audit Committee. All services that have
received policy-based pre-approval are subject to the pre-approval fee levels or budgeted
amounts set forth in the appendices to this policy. Any proposed services exceeding these
amounts will require separate pre-approval by the Audit Committee or by any person to whom
pre-approval authority is granted under Section III above.
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VIII. | Procedures | ||
Requests or applications to provide services that require separate approval by the Audit
Committee must be submitted to the Audit Committee by both the independent auditor and the
Companys Chief Financial Officer (or his designee), and must include a joint statement as to
whether, in their view, the request or application is consistent with the SECs rules on
auditor independence. In connection with the Audit Committees consideration of any proposed
service, the independent auditor, at the Committees request, will provide to the Audit
Committee detailed documentation regarding the specific services to be provided so that the
Committee can make a well-reasoned assessment of the impact of the service on the auditors
independence.
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The Audit Committee hereby designates the Companys Vice President of Internal Audit (the
Monitor) to monitor the performance of all services provided by the independent auditor and
to determine whether such services are in compliance with this policy. The Monitor will report
to the Audit Committee on a periodic basis the results of his monitoring.
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Service
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assistance with and review of documents filed with the SEC including
registration statements, reports on Forms 10-K and 10-Q, and other
documents
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services associated with other documents issued in connection with
securities offerings (
e.g.
, comfort letters, consents)
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assistance in responding to SEC comment letters
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statutory audits (
e.g.
, FERC and insurance audits) and financial audits
for subsidiaries of the Company, to include services normally provided by
the Companys independent auditor in connection with statutory and
regulatory filings
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certificates, letters and opinions issued to regulators, agencies and
other third-parties (
e.g.
, insurance, banking, environmental) regarding
the Companys assets and/or operations that only the Companys
independent auditors reasonably can provide
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consultations concerning principles of accounting and/or financial
reporting treatment under standards or interpretations by the SEC, PCAOB,
FASB or other regulatory or standard-setting bodies necessary to reach an
audit judgment and/or opinion on the Companys financial statements
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Pre-approval fee limit for Audit Services (other than services pertaining to
registration statements or prospectuses in connection with securities
offerings)
$250,000 |
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Pre-approval fee limit for Audit Services pertaining to registration statements
or prospectuses in connection with securities offerings
$250,000 per registration statement or prospectus |
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Service
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due diligence services pertaining to potential business acquisitions or dispositions
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financial statement audits of employee benefit plans
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accounting consultations and audits in connection with acquisitions
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consultations concerning principles of accounting and/or financial reporting
treatment under standards or interpretations by the SEC, PCAOB, FASB or other
regulatory or standard-setting bodies
outside
those consultations necessary to
perform an audit or review of Valeros financial statements in accordance with
generally accepted auditing standards
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Pre-approval fee limit for Audit-Related Services
$500,000 |
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Service
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Note
: The following are subject to the terms of subsection C. of Section V. of this policy.
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U.S. federal, state and local tax compliance, including the preparation of original and
amended tax returns and claims for refunds
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U.S. federal, state and local tax planning and advice, including assistance with tax
audits and appeals (but expressly excluding advocacy or litigation services), tax advice
related to mergers and acquisitions, tax advice relating to employee benefit plans, and
requests for rulings or technical advice from taxing authorities
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review of Canadian federal and provincial income tax returns
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Canadian federal and provincial tax planning and advice, including assistance with tax
audits and appeals (but expressly excluding advocacy or litigation services), and advice
relating to the tax effects of certain employee benefit arrangements
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review of federal, state, local and international income, franchise, and other tax returns
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Pre-approval fee limit for Tax Services
$750,000 |
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Services
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none
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Pre-approval fee limit for All Other Services
$0 |
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| Bookkeeping or other services related to the accounting records or financial statements of the audit client* | ||
| Financial information systems design and implementation* | ||
| Appraisal or valuation services, fairness opinions or contribution-in-kind reports* | ||
| Actuarial services* | ||
| Internal audit outsourcing services* | ||
| Management functions | ||
| Human resources | ||
| Broker-dealer, investment adviser or investment banking services | ||
| Legal services | ||
| Expert services unrelated to the audit |
* | Provision of these non-audit services may be permitted if it is reasonable to conclude that the results of these services will not be subject to audit procedures. Materiality is not an appropriate basis upon which to overcome the rebuttable presumption that prohibited services will be subject to audit procedures. |