Best Earnings in Valero’s History
Table of Contents
1
Our Financial Highlights
3 A Letter to our Shareholders
6 A Look at our Company from Coast to Coast
9 Making Valero a Global Force in Refining
11 Developing One of the World’s Most
Complex Refining Systems
13 Turning Retail and Wholesale into
World-Class Competitors
15 Strong Safety, Reliability & Environmental
Initiatives Make a World of Difference
17 Making our World a Better Place
18 Financial Information
24 Our Board of Directors
25 Shareholder Information
Best Earnings in Valero’s History
O u r F i n a n c i a l H i g h l i g h t s
(Millions of Dollars, Except per Share Amounts)
operating revenues
operating income
net income
earnings per common share –
assuming dilution
total assets
stockholders’ equity
2006
$ 91,833
$ 8,010
$ 5,463
8.64
$
$ 37,753
$ 18,605
2005
$ 82,162
$ 5,459
$ 3,590
$
6.10
$ 32,798
$ 15,050
capital expenditures and deferred
turnaround and catalyst costs
$ 3,756
$ 2,574
S u M M A R y A n n u A L R E P O R T
In an effort to provide shareholders with more effective communications,
Valero Energy Corporation has adopted a summary annual report format, which
provides condensed financial disclosure. The company’s full financial statements
are contained in its Annual Report on Form 10-K for the year ended
December 31, 2006, which is provided to all shareholders.
VLO AR pages 1-13 3
3/19/07 5:08:11 PM
Letter to Shareholders
and CEO Portrait
Valero’s Executive Management Team
Pictured left to right: Joe Gorder, Executive Vice President – Marketing & Supply; Rich
Marcogliese, Executive Vice President – Operations; Greg King, President; Bill Klesse, CEO &
Chairman of the Board; Gene Edwards, Executive Vice President – Corporate Development &
Strategic Planning; and Mike Ciskowski, Executive Vice President & Chief Financial Officer.
VLO AR pages 1-13 4
3/19/07 5:08:25 PM
A Le tte r to our Shareholders
In today’s rapidly changing world,
companies need every advantage to
compete and succeed. At Valero,
we have worked hard to recruit
employees, develop strategies
and acquire assets that give us a
competitive edge and make us a
world-class competitor.
Valero has grown from a regional
energy company with a single refinery
to become North America’s largest
refiner, with a system of 18 refineries
stretching from California to the
Caribbean and a combined throughput
capacity of 3.3 million barrels per
day. Our geographic diversity and
operating flexibility allow us to react
quickly to shifts in the marketplace.
We are also the leader in refinery
conversion capacity, which allows us
to upgrade low quality feedstocks into
higher value clean products, giving us
a competitive advantage.
A growing economy and strong
demand for clean-burning fuels,
combined with the size and
complexity of our refining system
and the best employees in the
business, allowed us to capitalize on
healthy margins and strong feedstock
differentials to make 2006 the best
year in Valero’s history. In 2006,
we achieved a record $8.5 billion
of operating income and after-tax
earnings of $5.5 billion, or $8.64 per
share.
We have shared this success with you,
our shareholders. We increased our
dividend twice in 2006, and in January
2007 we increased it an additional
50 percent, raising our quarterly cash
dividend to $0.12 per share. We also
invested $2 billion to buy back
35 million shares in 2006, and we
will continue buying back our shares
in 2007.
In addition, we finished 2006 with a
very healthy balance sheet, having a
cash balance of nearly $1.6 billion
and a debt-to-capitalization ratio of
just 16 percent. We boosted our cash
flow by contributing our financial
interest in Valero L.P. to Valero GP
Holdings, LLC and completed two
public offerings to sell our ownership
stake in that new company. After-
tax proceeds from these transactions
totaled $555 million, and the
separation better positioned both
companies for future growth.
As we have demonstrated, we are
taking a very balanced approach
with our cash flow. Besides returning
cash to you, our shareholders, our
capital expenditures in 2006 were
$3.75 billion. For 2007, our capital
expenditures are expected to continue
in the $3.5 billion range. We will
pay down high interest rate debt
and continue looking into potential
acquisitions. But, any acquisitions
must come at the right price and fit our
acquisition criteria. The credit market
has recognized Valero’s financial
strength, with two upgrades this year
in our credit rating to BBB/stable
outlook, which reduces our costs.
Our goal is to improve our returns
on investment and equity to provide
industry-leading value to you over the
long run.
One of the ways we will improve
returns is through the significant
opportunities we have to generate
earnings internally from improved
performance. We have acquired
many refineries that did not receive
5-Year Total Cumulative
Shareholder Return
$600
$500
$400
$300
$200
$100
$0
Valero Energy
Corporation
Peer Group
S&P 500
12/01
12/02
12/03
12/04
12/05
12/06
Source: Valero’s Form 10-K for 2006.
Va l e r o e n e r g y C o r p o r a t i o n
3
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returning More Cash than
ever to Shareholders
50%
Valero earnings
payout ratio
40%
(Dividends +
Buybacks)/
earnings
30%
20%
10%
0%
2003 2004 2005 2006
Krotz Springs and Three Rivers
refineries. VPP Star Site status is the
highest level of safety certification that
OSHA offers, and today Valero has
11 of the 23 U.S. refineries that have
achieved Star Site status. As we are
continuing these VPP efforts, we are
One of the ways
we will improve
returns is through
the significant
opportunities we
have to generate
earnings internally
from improved
performance.
increasing awareness and commitment
to our process safety management
program.
We have also made great strides in
reducing emissions at our refineries.
Flue gas scrubbers are state-of-the-
art pollution prevention systems that
reduce emissions of sulfur dioxide and
particulate matter, thereby enhancing
air quality. In 2006, we added three
new flue gas scrubbers, raising our
total to 10 – more than any other
refining company in North America.
What’s more, we are investing in
the latest technology to improve
energy efficiency at our refineries.
In doing so, we can reduce fuel
consumption and reduce carbon
dioxide emissions by approximately
2 million tons per year over the
next several years. Though we are
uncertain about the science, we are
concerned about climate change
issues and will continue to work to
reduce our carbon dioxide emissions
from existing equipment. It should
be noted that when new regulations
are implemented that change the
specifications of fuels, like removing
sulfur, it requires a refinery to increase
heat and power consumption for the
new process units, which increases
carbon dioxide emissions. Clearly,
these are complex issues facing us all
and a collaborative approach must be
taken to find appropriate solutions.
Transportation fuels produced from
crude oil are the most economic
for the consumer. Our industry is
extremely efficient in refining crude
oil into products that improve our
customers’ lives. Many programs
being considered to substitute
alternative fuels for crude oil derived
adequate capital investment prior to
our ownership. As we increase their
complexity, improve energy efficiency,
enhance reliability and apply best
practices throughout our system,
we believe we can improve annual
operating income by over $1 billion
within the next five years. We will
also increase our capacity utilization
by reducing both planned and
unplanned downtime. Realizing this
improved performance goal will be a
key to our future success.
Of course, personal safety continues
to be our top priority for all of our
operations. As I always tell our
employees, “I want you to go home
from work every day the same way you
came, just tired.” In 2006, our refining
network reached a record-best total
recordable injury rate of 0.92, which
is 25 percent better than the three-year
industry average of 1.22 reported by
the National Petrochemical & Refiners
Association. We achieved this record
while integrating the former Premcor
refineries, acquired in September
2005, into our system.
In 2006, we also had four refineries
become certified or re-certified as
Star Sites in the Occupational Safety
and Health Administration’s Voluntary
Protection Program (VPP). These
included our Benicia, St. Charles,
4
Va l e r o e n e r g y C o r p o r a t i o n
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refined products require subsidies to
be competitive with crude oil based
transportation fuels. We believe that
free markets should be allowed to
determine the fuels we use and the
prices we pay for them.
Another ongoing initiative is the
growth of the Valero brand. Valero
now has approximately 5,800 retail
and branded wholesale sites following
our expansion into the Great Lakes
and Pacific Northwest regions last
year. We continue to brand outlets
within our marketing area, and we
announced an agreement with Susser
Petroleum of Corpus Christi, Texas in
August 2006 to put the Valero brand
on over 300 of their locations in
Texas and Oklahoma. The deal made
Valero the No. 1 wholesale rack fuel
marketer in Texas, with 1,900 branded
wholesale and company-owned
locations and significant unbranded
sales volumes around the state.
Our retail operations, which represent
the company-operated stores, had
their best year ever in earnings per
store in 2006, and Valero was named
Chain of the Year by Convenience
Store Decisions magazine. Even with
these successes, we are continuing
to implement aggressive profit
improvement initiatives for our retail
organization.
Of course, none of these successes
would have been possible without
the dedication and hard work of our
employees, who were responsible for
Valero once again being named to
Fortune magazine’s list of the 100 Best
Companies to Work For. With this
year’s ranking at No. 22, Valero has
been in the top 25 for the last three
consecutive years, and we have been
named to the list in each of the past six
years that we have been eligible.
We have a very strong caring
and sharing commitment to the
communities in which we live and
work. With the company match, our
employees raised a record $13 million
for Valero’s United Way campaign
and set a volunteer record with nearly
275,000 hours donated to worthy
causes. Our employees also made
it possible for the 2006 Valero Texas
Open and Benefit for Children Golf
Classic to raise a record $7 million
for charity, the largest contribution
in PGA TOUR history. We thank our
customers, contractors and suppliers
for their generosity and support of this
event.
2006 was a record year in every way
for Valero because everyone from
our board members and executives
to our employees made countless
contributions to our success. I thank
everyone for their support, hard work,
dedication and commitment to safety
and excellence. We also thank our
customers for their business and thank
our suppliers and contractors who
make tremendous efforts toward our
goal of improved operations.
We also thank Bill Greehey who
stepped down as Chairman of the
Board of Directors in January 2007
following his retirement as Chief
Executive Officer at the end of 2005.
All of us at Valero thank Bill for his
leadership and commitment to our
success over the years.
Thanks to the outstanding members
of our team, we are ready for the
future and are in a great position to
execute our strategies. I thank you,
our shareholders, for your investment
in our company and your confidence
in us. We are looking forward to
making our operations even better and
strengthening our position as a world-
class competitor in the years to come.
CEO & Chairman of the Board
Higher
Highs
Higher
Lows
$8
$7
$6
$5
$4
$3
$2
$1
$0
1998-2002 1999-2003 2000-2004 2001-2005 2002-2006
USGC 5-3-2 Product Margin
(US Gulf Coast margin calculated with
the ratio of 5 barrels of crude oil vs.
three barrels of gasoline and two
barrels of heating oil)
50/50 Arab Light/Medium
Sour Crude Oil Differentials
Va l e r o e n e r g y C o r p o r a t i o n
5
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A Lo o k at our Company
f r o m C o a s t t o C o a s t
In 1980, Valero was a regional energy
company with total assets just shy
of $650 million, operations solely in
Texas, and less than 1,600 employees
on its payroll.
Today, Valero has assets of $38
billion, including 18 refineries and
approximately 5,800 retail and
branded wholesale locations across
North America.
As the map on
the opposite page
clearly illustrates,
it’s a sea of Valero
teal and gold from
coast to coast.
In fact, Valero is the 15th largest
company on the Fortune 500, with
nearly $92 billion in annual revenues
and almost 22,000 employees. It has
been ranked No. 1 among the world’s
refining and marketing companies for
the past two years at the Platts Top 250
Global Energy Company Awards.
With a combined throughput capacity
of approximately 3.3 million barrels
per day (BPD), Valero is the largest
refiner in North America and the most
geographically diverse among all U.S.
refiners. With a sizeable presence
in the four key U.S. refining regions,
Valero is able to capitalize on the
upswings in regional margins since
they don’t always move together.
Beyond its size, Valero also benefits
from its ability to process more low-
quality, low-cost feedstocks than
its peers. Because it has one of the
world’s most complex refining systems,
the company has been able to turn
great feedstock differentials into great
earnings.
Valero has achieved these results by
acquiring refineries for a fraction of
their replacement value and then
investing in them to make them
significantly more profitable. Now the
company is building on this success by
focusing on reliability initiatives, better
cost control and energy efficiency.
On the marketing side, Valero
is putting the same emphasis on
improving profitability in its retail
and wholesale operations. Valero’s
brand is going up at a breakneck
pace at distributor sites across the
country, taking product out of the spot
market and selling it into the branded
wholesale channel for a higher margin.
At the same time, the retail division
is implementing profit improvement
initiatives that will reduce its costs and
grow in-store sales.
Exploring opportunities to improve
returns on capital and overall
performance throughout its operations
is making Valero a better investment
for the long term.
Just as importantly, the company
continues to make safety a top priority
and remains focused on environmental
excellence. Valero’s employees
also remain committed to their
communities – volunteering in record
numbers and giving record donations
to charity.
For all of these reasons, Valero
has been recognized as a world-
class competitor in operational
excellence, refining complexity,
retail and wholesale marketing,
safety performance, environmental
stewardship and community service.
So it’s easy to see why Valero truly is a
world-class company.
Valero’s throughput Capacity
From 170,000 BpD
to 3.3 Million BpD
3MM
2MM
1MM
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Houston
Krotz
Springs
texas City
paulsboro
aruba
Benicia
St. Charles
Corpus
Christi
east &
Huntway
ardmore
Denver*
McKee
Quebec City
three rivers
Wilmington
Delaware City
lima
Memphis
port arthur
*Denver refinery was divested in 2005.
6
Va l e r o e n e r g y C o r p o r a t i o n
Krotz Springs
Ardmore
St. Charles
Memphis
Lima
Delaware City
Paulsboro
Quebec City
Aruba
CAnADA
SAn AnTOniO
ARUBA
Caribbean Sea
Benicia
Wilmington
McKee
San Antonio
Three Rivers
Corpus Christi
(East & West)
Texas City
Houston
Port Arthur
d
n
e
g
e
L
Retail & Branded
Wholesale Presence
Wholesale
Marketing Presence
Valero Refineries
Cameron Highway
Oil Pipeline Project
Third-Party
Off Shore Platforms
Valero Headquarters
VLO AR pages 1-13 9
3/19/07 5:09:57 PM
Va l e r o e n e r g y C o r p o r a t i o n
7
Valero got its start in refining with the Corpus Christi refinery (pictured), which remains one
of the most technologically advanced plants in the world. Over the years, the company has
assembled the best workforce, acquired great assets, upgraded and expanded those plants
and developed best practices, providing lots of opportunities for the company
to improve returns and remain competitive in the coming years.
Making Valero
A G l o b a l F o r c e i n R e f i n i n g
Realizing that the time was right to
enter the refining business, Valero
in 1997 began buying undervalued
refineries and investing to expand and
improve them. A decade later, Valero
has assembled an 18-refinery system
that’s the largest in north America in
terms of throughput capacity.
Valero bought its plants at a fraction
of their replacement cost as other
companies were abandoning the
refining business at a cyclical low. As
the years went by, Valero’s strategy of
acquiring plants at value prices was
proven correct as margins surged and
analysts declared a “Golden Age of
Refining.” And now, with its size and
geographic diversity, Valero is a vibrant
competitor on an international scale.
By investing in and upgrading its
refineries since 1980, Valero has
added 573,000 barrels per day (BPD)
in refining capacity – an amount
nearly twice the capacity of Valero’s
Port Arthur refinery, one of the largest
in its system.
When other refiners scrambled to
add capacity to take advantage of this
“Golden Age,” Valero was uniquely
positioned to carefully choose which
projects best fit its strategy and
provided the highest returns. In 2006,
as construction costs skyrocketed
The company
has acquired the
best employees
and developed
the best practices
in the industry,
providing significant
opportunities to
improve annual
operating income.
across the global refining industry,
Valero was able to implement its most
ambitious capital budget ever, while
still keeping costs at approximately
$3.75 billion.
Another advantage of Valero’s strategy
is the expertise it has gained along with
the refineries. By applying this
expertise in conjunction with upgrades,
expansions, energy efficiency and
reliability enhancements, Valero is
targeting $1 billion of operating income
improvements in the next five years.
Valero’s strategy continues to pay off.
Current capital improvement projects
are expected to add another
$250 million in operating income
in 2007. This includes the recently
completed expansion at the Port
Arthur refinery and mild hydrocracker
units in the works at the Houston and
St. Charles refineries. In addition,
grassroots ultra-low-sulfur diesel units
are planned for the Benicia and Corpus
Christi refineries.
A successful strategy plus world-
class size, complexity, strength and
geographic diversity – combined with
Valero’s dedicated and hard-working
employees – give Valero the best
refining system in the business. It’s a
system that is positioned for long-term
success.
A Leader in Upgrading Capacity
Cat Cracking
Hydrocracking
Coking
MBpD
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
VLO XOM COP RDS BP CVX MRO SUN TSO
Valero’s upgrading capacity, which is the highest in its peer group, provides
superior operational flexibility. note: includes U.S., Canada & Caribbean
Source: Oil & Gas Journal, Company Web Sites
Va l e r o e n e r g y C o r p o r a t i o n
9
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Flexibility and Diversity Key to Valero’s
Feedstock Strategy
number of Heavy, Sour Crudes
& resids Used by Valero
Source of Valero’s 2006
Feedstock Consumption
Europe 7%
Rest of World 3%
45
40
35
30
25
20
2002 2003 2004 2005 2006
the num ber of dif ferent heavy, sour and resid
feedstocks t hat Valero processes has grown
fr om 27 to 40 i n j ust f ive years.
South
America
11%
Africa
12%
Middle
East
17%
North America
50%
Oil tankers, like this one shown at the Port Arthur refinery’s dock, deliver crude
oil from around the world to the company’s plants. Because of the complexity and
flexibility of its system, Valero is able to choose from a wide selection of feedstocks,
giving it an earnings advantage over many of its peers.
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$25 Continued Wide Differentials
$20
$15
$10
$5
$0
2002 2003 2004 2005 2006
Resid
Maya
Arab
Light/Medium
D eve l opin g One of the World’s
M o s t C o m p l e x R e f i n i n g S y s t e m s
Valero’s refining system isn’t just
the biggest in north America, it’s
also one of the most complex. This is
a result of Valero’s strategy – which
stretches back to the beginning of the
company – to plan for a future that
would belong to companies with the
ability to process lower-cost heavy,
sour feedstocks into premium, clean-
burning fuels. That strategy has paid
off for Valero ever since 1984, when
it entered the refining business by
commissioning its Corpus Christi
refinery.
To keep its competitive advantage over
other refiners, Valero has acquired
facilities and upgraded them to meet
this strategy. For example, the Port
Arthur refinery – part of the Premcor
acquisition in 2005 – became Valero’s
most profitable plant in 2006, and
including expansions through the first
quarter of 2007, it has added 325,000
barrels per day (BPD) of medium
and heavy sour feedstocks to Valero’s
capacity.
Today, Valero has more catalytic
cracking capacity than some refining
companies’ total conversion capacity.
The same is true of Valero’s coking
capacity. Sour crude oil and residual
fuels make up approximately
60 percent of Valero’s raw materials
input, which provides tremendous
cost advantages. As the world moves
toward cleaner fuel standards, the
demand for easy-to-process light,
sweet crude is growing. Meanwhile,
the long-term trend for most new
oil being produced to meet rising
worldwide demand typically has
been heavier and more sour, and not
Valero’s ability to
process a wide
variety of feedstocks
allows it to quickly
take advantage of
price differentials
in the marketplace
and mitigate supply
disruptions.
all refiners are as well-positioned as
Valero to process those grades of
crude oil. As those trends continue,
the difference in price between heavy
or sour crude oil and more costly
light, sweet crude oil should remain
favorable.
As a result of the company’s focus on
increasing feedstock flexibility, the
number of different heavy, sour and
resid feedstocks that Valero processes
has grown from 27 in 2002 to 40 in
2006. Because Valero is able to choose
from a wide selection of feedstocks,
the company can ensure that it’s
getting the best prices the marketplace
is offering.
And with Valero’s large throughput
capacity, changes in price differentials
rapidly add up. Every $1 difference
between sweet and sour crude oils
impacts Valero by about $500 million
per year in operating income.
Internal projects to add conversion
capacity have given Valero even more
of a competitive advantage. A new
hydrocracker reactor at the Ardmore
refinery in 2006 should contribute
an additional $10 million to $12
million to the refinery’s 2007 operating
income, and in 2007 new mild
hydrocracking units at the Houston
and St. Charles refineries should boost
the company’s conversion capacity
even higher.
Valero’s strategy was forward-
thinking when it was adopted in the
early 1980s. Today, because of its
tremendous complexity and flexibility,
the company’s refining system is
considered to be one of the very best
in the world.
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Va l e r o e n e r g y C o r p o r a t i o n
11
Valero: Fastest Growing Brand in U.S.
U.S. Gasoline Sales Change by Brand, 2006 vs 2005
Valero
Industry Average
-7% -5% -3% -1% 0% 1% 3% 5% 7% 9% 11% 13% 15%
Source: Lundberg Letter
For being a superior retailer and innovator, Valero’s retail network was named the
2006 Chain of the Year by Convenience Store Decisions magazine. And, as a result
of the branded wholesale network’s dramatic growth, Valero was named America’s
“fastest-growing” gasoline marketer by Lundberg.
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Turn i ng R etail and Wholesale
i n t o Wo r l d - C l a s s C o m p e t i t o r s
For many years, the “Three F’s”
– Fast, Friendly, and Fanatically Clean
– have been the mantra of Valero’s
retail operations. In 2006, the Retail
Division put added emphasis on
another “F” – Fiercely Competitive.
Optimization, Upgrades and
Profitability for Retail Sites
Valero’s retail organization continued
to focus on converting its Corner Store
network to the Valero fuel brand,
upgrading its stores, offering quality
products and strong in-store programs,
and realizing cost efficiencies – all
with the goal of making the network
more competitive.
This plan continues to reap rewards.
Because the fuel brand and Corner
Store offerings have been well-
received by customers, the Retail
Division achieved its highest per-store
earnings in history, growing per-store
inside sales by 7 percent and gross
profit by approximately 10 percent.
Even though there were 41 fewer
stores in its network in 2006 due to
the divestiture of underperforming
sites, the U.S. Retail Division still
had a nearly 40 percent increase in
operating income over 2005 and had
its third-best earnings ever.
In recognition of Valero’s dramatic
growth and success in the retail
industry in a very short period (the
company had no branded retail
operations in early 2000), Valero’s
Corner Store network was named the
2006 Convenience Store Chain of the
Year by Convenience Store Decisions
magazine. This award annually
honors a petroleum convenience store
chain that has established itself as a
superior retailer and innovator in its
markets of operation.
“Valero is a model of consistency with
an outstanding retail offering and the
refining capacity to deliver consumers
a good value on fuel with no dropoff
in quality,” said the magazine’s Editor-
in-Chief John Lofstock. “Valero has
managed to create some excitement
in the market with new stores, strong
in-store programs and a popular credit
card network. With its commitment to
retail excellence, Valero was an easy
choice for Chain of the Year.”
Record Growth for Branded
Wholesale Business
With the continued, aggressive growth
of its branded wholesale locations
as well as its unbranded wholesale
volumes, Valero also was labeled
America’s “fastest growing” gasoline
marketer by the Lundberg Group, a
well-respected source for information
on the U.S. automotive fuel market.
Valero earned this distinction for
its track record of growth in 2006,
according to a study released in
January 2007 by Lundberg. According
to the study, Valero achieved nearly 15
percent growth in gasoline sales over
2005, while the rest of the industry
had an average decline of about 1
percent.
Thanks to Valero’s ability to provide
reliable supply, competitive pricing,
and a wide range of brand support
programs, distributors have been
signing on with the company in
record numbers. In fact, Valero
contracted over 1,100 additional
sites in 2006 alone, representing an
additional 1.4 billion gallons in fuel
sales per year. Today, the branded
wholesale network consists of nearly
3,900 branded wholesale sites in the
U.S., and the company’s goal is to
have 7,000 U.S. sites by 2011.
Retail and Wholesale Strive to be
Fiercely Competitive
Despite the success that the retail and
wholesale organizations achieved in
2006, they are continually working
to make their operations even more
successful. In fact, they are currently
implementing aggressive plans to
further improve their profitability
and achieve their ultimate goal of
becoming Fiercely Competitive.
Va l e r o e n e r g y C o r p o r a t i o n
13
5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
Refining Employee
Injury Rates
Valero
UDS
Premcor
Basis
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
UDS, Premcor & Basis are companies acquired by Valero.
Valero has invested nearly $700 million to construct state-of-the-art scrubber
units like this one shown at the Delaware City refinery, one of two scrubber units
that went on line at the refinery in 2006. Valero has scrubber units, which reduce
sulfur dioxide emissions by over 93 percent, at 10 of its refineries.
VLO AR pages 14-28.indd 16
3/19/07 5:15:14 PM
St ron g Safety, Reliability
& E n v i r o n m e n t a l I n i t i a t i v e s M a k e a Wo r l d o f D i f f e r e n c e
In its annual listing of the “100 Best
Companies to Work For,” Fortune
magazine singled out Valero’s safety
efforts as one of the main reasons
the company once again ranked in
the top 25 among the nation’s best
employers. This was not surprising
because company officials have
always believed that safety is the most
fundamental way of caring for its
employees, contract workers, and the
communities where it operates.
In 2006, Valero’s international refining
network achieved a record-best
total recordable injury rate (TRIR)
of 0.92, which is 25 percent better
than the three-year industry average
of 1.22 reported by the National
Petrochemical & Refiners Association.
This record is the result of significant
safety improvements at all of the
refineries that Valero has acquired
in recent years. In fact, five Valero
refineries finished the year without an
employee lost-time injury.
Valero also works closely with its
contract workforce to ensure that they
maintain high safety standards, and
as a result, the company reached a
record contractor TRIR of 1.03 in 2006
– a 26 percent improvement over the
previous year.
Since 2001, Valero employees and
contractors have assumed even higher
safety standards through participation
in the OSHA Voluntary Protection
Program (VPP), and today Valero has
11 VPP Star Site refineries – more
than any other refiner. Out of 149
U.S. refineries, only 23 have met the
rigorous qualifications to earn this
distinction, and Valero owns nearly
half of those sites. And, the company’s
remaining refineries are on track to
earn this prestigious certification in the
coming years.
Another important benefit of VPP is the
program’s strict adherence to OSHA’s
rigorous Process Safety Management
(PSM) regulations. Valero’s focus on
PSM and its PSM-related programs
are critical to the company’s efforts
to maintain operational integrity and
reliability at all of its sites.
Safe and reliable operations are also
essential to strong environmental
performance, another area where
Valero has seen steady improvement
in recent years. Between 2001
and 2005, Valero reduced criteria
emissions by 19,130 tons per year, or
nearly 26 percent, while increasing
charge capacity by almost 240,000
barrels per year, or almost 14 percent.
Much of Valero’s emission reductions
are a result of major investments in
state-of-the-art emission reduction
technology. And, these investments
are in addition to the billions of dollars
that Valero has invested to produce the
clean fuels that adhere to new clean
fuels standards and meet the growing
demand of U.S. consumers.
Valero will continue to be on the
forefront of safety initiatives and
environmental technology, and remain
committed to sharing best practices
from within its operations and
throughout the industry. After all, safe
operations are a safe investment.
Valero’s Commitment to
GHG Emission Reductions
As Valero continues working to meet
our nation’s growing demand for clean
fuels, the company is also committed
to reducing greenhouse gas (GHG)
emissions. Valero is investing in the
latest technology to improve combustion
and energy efficiency at its refineries,
which will reduce fuel consumption and
carbon dioxide emissions over the next
several years.
in professional and public policy
forums that address climate change
and its potential impacts.
Valero also supports market-based
mechanisms and incentives to ensure the
most economic sources of GHG emission
reductions are realized.
Valero will continue to closely follow
regulatory developments, and participate
Through careful scientific, economic,
and technical analysis, the company
will work with all stakeholders to
develop long-term measures that
protect the environment.
VLO AR pages 14-28.indd 17
3/19/07 5:15:28 PM
Va l e r o e n e r g y C o r p o r a t i o n
15
Valero Texas Open
Charitable
Contributions
$7,000,000
$6,000,000
$5,000,000
$4,000,000
$3,000,000
$2,000,000
$1,000,000
$ 0
2001 2002* 2003 2004 2005 2006
* First year as the Valero Texas Open sponsor.
Valero employee Kayla Moore and her son, Isaac, benefited greatly from the services of Seton Home,
a San Antonio charity that receives United Way contributions and Valero Texas Open proceeds.
Today, Kayla is giving back to her community by contributing her time and money to worthy causes.
VLO AR pages 14-28.indd 18
3/19/07 5:15:49 PM
Ma k in g o u r World a Better Place
Va l e r o E m p l o y e e s G i v e B a c k t o t h e i r C o m m u n i t i e s
Charity has come full circle for Valero
employee Kayla Moore.
company’s philosophy of helping those
in need.
Once a vulnerable 17-year-old in
foster care, Kayla learned about the
importance of giving back when she
benefited from the contributions that
Valero made to a local charity that
helped her out when she needed it
most.
With the support of Seton Home – a
beneficiary of Valero’s United Way
contributions and Valero Texas Open
proceeds – Kayla was able to provide
a nice life for herself and her little boy,
Isaac. Seton Home provided them with
shelter and meals, taught Kayla how
to care for her son, and enabled her
to resume her education. Best of all,
this agency helped her get a job at a
company she loves – Valero!
Kayla says that without Seton Home
and Valero, she has no idea where
she and Isaac would have ended up.
Today, she is one of the people that
makes Valero such a success. And,
this story of giving back has come full
circle because Kayla has embraced the
For 27 years, Valero employees like
Kayla have been making a difference in
the company’s communities. In 2006
alone, Valero employees volunteered
nearly 275,000 hours – doing
everything from mentoring children
and building Habitat for Humanity
homes to delivering hot meals to
homebound seniors. The company and
its employees also contributed nearly
$47 million to charities stretching from
Canada to the Caribbean in 2006.
There are countless examples of Valero
employees’ generosity. They gave a
record $13 million to United Way with
company match, and helped raise an
unprecedented $1.5 million for the
MS Society through the Valero MS150.
And, the company’s retail employees
generated $1.1 million for Children’s
Miracle Network and $1.3 million for
the Muscular Dystrophy Association.
Before the company signed on as title
sponsor, the most that the tournament
had ever raised for charity was
$500,000. In 2006, the tournament
netted a record $7 million for charity,
which was the largest contribution in
the PGA TOUR’s history. So in the span
of just five years, Valero helped take
the tournament from the bottom of the
TOUR’s charity rankings to the very top.
What’s more, the Texas Open has
brought in $25.6 million for charity
over its entire 84-year history, and $21
million of that amount has been raised
since Valero became title sponsor just
five years ago.
Through their good works in the
community, Valero employees have
provided shelter for the homeless,
meals for the hungry, healthcare for
the disabled, companionship for the
elderly, and much more. They have
offered hope, healed hearts, and saved
lives.
But there’s no better example of
Valero’s commitment to community
service than the Valero Texas Open.
Through their many contributions, they
have made the world a much better
place.
VLO AR pages 14-28.indd 19
3/19/07 5:16:21 PM
Va l e r o e n e r g y C o r p o r a t i o n
17
Fin an cial Information
C o n d e n s e d & C o n s o l i d a t e d
The financial information presented
on pages 19-23 of this summary
annual report should be read in
conjunction with Valero Energy
Corporation’s complete Consolidated
Financial Statements (including the
notes) and Management’s Discussion
and Analysis of Financial Condition
and Results of Operations. This and
other information about the company
is contained in Valero’s Proxy
Statement for the 2007 Annual
Meeting of Stockholders and Valero’s
Form 10-K for the year ended
December 31, 2006. These
documents are provided to all
shareholders of record as of March 1,
2007. In addition, anyone may
request, without charge, a Form 10-K
by writing or calling Valero’s Investor
Relations Department. Address and
contact information can be found on
the inside back cover of this report.
Valero’s 2006 Annual Report on Form
10-K and the Proxy Statement also
may be accessed via the company’s
Web site at: www.valero.com.
R e p o r t o f I n d e p e n d e n t R e g i s t e r e d P u b l i c A c c o u n t i n g F i r m
To t h e B o a r d o f D i r e c t o r s a n d S t o c k h o l d e r s
o f Va l e r o E n e r g y C o r p o r a t i o n a n d S u b s i d i a r i e s :
We have audited, in accordance with
the standards of the Public Company
Accounting Oversight Board (United
States), the consolidated balance
sheets of Valero Energy Corporation
and subsidiaries (the Company) as of
December 31, 2006 and 2005, and
the related consolidated statements of
income, stockholders’ equity, cash
flows and comprehensive income for
each of the years in the three-year
period ended December 31, 2006
appearing in the Company’s 2006
Annual Report on Form 10-K (not
presented herein). In our report dated
February 23, 2007, also appearing in
that Annual Report, we expressed an
unqualified opinion on those
consolidated financial statements. Our
report on the consolidated financial
statements refers to changes in the
method of accounting for purchases
and sales of inventory with the same
counterparty and stock compensation
in 2006.
In our opinion, the information set
forth in the accompanying condensed
consolidated balance sheets as of
December 31, 2006 and 2005, and
the related condensed consolidated
statements of income and cash flows
for each of the years in the three-year
period ended December 31, 2006, is
fairly stated, in all material respects, in
relation to the consolidated financial
statements from which it has been
derived.
KPMG LLP
San Antonio, Texas
February 23, 2007
18
Va l e r o e n e r g y C o r p o r a t i o n
RGB
condensed consolidated balance sheets
December 31,
ASSeTS
Current Assets
(millions of dollars)
2006
2005
$ 10,760
$
8,346
Property, Plant and Equipment, Net
21,098
17,856
Goodwill
Intangible Assets, Deferred Charges
and Other Assets, Net
4,211
1,684
4,926
1,670
ToTAl ASSeTS
$ 37,753
$ 32,798
liAbiliTieS AND STockholDerS’ equiTy
Current Liabilities
$
8,822
$
7,375
Long-Term Debt and Capital Lease Obligations,
Less Current Portions
Deferred Income Taxes
Other Long-Term Liabilities
4,657
4,047
1,622
5,156
3,615
1,602
Stockholders’ Equity
18,605
15,050
ToTAl liAbiliTieS AND
STockholDerS’ equiTy
$ 37,753
$ 32,798
VLO AR pages 14-28.indd 21
3/19/07 5:16:51 PM
Va l e r o e n e r g y C o r p o r a t i o n
19
condensed consolidated statements of income
yeAr eNDeD December 31,
2006
2005
2004
(millions of dollars, except per share amounts)
operATiNg reveNueS
coSTS AND expeNSeS:
Cost of Sales
Refining Operating Expenses
Retail Selling Expenses
General and Administrative Expenses
Depreciation and Amortization Expense
ToTAl coSTS AND expeNSeS
operATiNg iNcome
equiTy iN eArNiNgS oF vAlero l.p.
oTher iNcome (expeNSe), NeT
iNTereST AND DebT expeNSe, NeT
miNoriTy iNTereST iN NeT iNcome oF
vAlero gp holDiNgS, llc
iNcome beFore iNcome TAx expeNSe
iNcome TAx expeNSe
NeT iNcome
preFerreD STock DiviDeNDS
NeT iNcome ApplicAble To
commoN STock
eArNiNgS per commoN ShAre
Weighted Average Common Shares Outstanding
(in millions)
eArNiNgS per commoN ShAre —
ASSumiNg DiluTioN
Weighted Average Common Equivalent Shares
Outstanding (in millions)
$ 91,833
$ 82,162
$ 54,619
77,482
3,785
803
598
1,155
83,823
8,010
45
351
( 210 )
( 7 )
8,189
2,726
5,463
2
71,673
2,874
758
558
840
76,703
5,459
41
53
( 266 )
—
5,287
1,697
3,590
13
47,797
2,100
696
442
605
51,640
2,979
39
( 48 )
( 260 )
—
2,710
906
1,804
13
$
$
5,461
8.94
$
$
3,577
6.51
$
$
1,791
3.51
611
549
510
$
8.64
$
6.10
$
3.27
632
588
552
DiviDeNDS per commoN ShAre
$
0.30
$
0.19
$
0.145
20
Va l e r o e n e r g y C o r p o r a t i o n
VLO AR pages 14-28.indd 22
3/19/07 5:17:03 PM
condensed consolidated statements of cash flows
year ended december 31,
2006
2005
2004
(millions of dollars)
cash Flows From operating activities:
Net Income
Adjustments to Reconcile Net Income
to Net Cash Provided by Operating Activities:
Depreciation and Amortization Expense
Deferred Income Tax Expense
Changes in Current Assets,
Current Liabilities and Other, Net
Net Cash Provided by Operating Activities
cash Flows From investing activities:
Capital Expenditures and Deferred Turnaround
and Catalyst Costs
Proceeds from Sale of Valero GP Holdings, LLC
Proceeds from Sales of Assets
Major Acquisitions
Contingent Payments in Connection with Acquisitions
Buyout of Assets Under Structured Lease Arrangements
Other, Net
Net Cash Used in Investing Activities
cash Flows From Financing activities:
Debt Borrowings (Repayments), Net
Termination of Interest Rate Swaps
Proceeds from Common Stock Offerings, Net
Benefit from Tax Deduction in Excess
of Recognized Stock-based Compensation Cost
Common and Preferred Stock Dividends
Issuance (Repurchase) of Common Stock, Net
Other
Net Cash Provided by (Used in) Financing Activities
eFFect oF Foreign eXchange rate changes
on cash
net increase (decrease) in cash and
temporary cash investments
cash and temporary cash investments
at beginning oF year
cash and temporary cash investments
at end oF year
$
5,463
$
3,590
$ 1,804
1,155
290
(596 )
6,312
(3,756 )
880
64
––
(101 )
––
(58 )
(2,971 )
(249 )
(54 )
––
206
(184 )
(1,898 )
(9 )
(2,188 )
1
1,154
436
840
255
1,165
5,850
(2,574 )
––
153
(2,343 )
( 85 )
––
(51 )
605
345
226
2,980
(1,596 )
––
108
( 541 )
( 53 )
( 567 )
(36 )
(4,900 )
(2,685 )
(874 )
—
––
—
(106 )
(389 )
(13 )
(1,382 )
4
(428 )
864
71
—
406
—
( 79 )
( 205 )
(8 )
185
15
495
369
$
1,590
$
436
$
864
Va l e r o e n e r g y C o r p o r a t i o n
21
condensed consolidated 5-yr financial & statistical review
operATiNg reSulTS For yeAr
eNDeD December 31:
Operating Revenues
Operating Income
Net Income
(millions of dollars, except per share and per barrel amounts)
2006
2005(a)
2004(b)
2003(c)
2002
$ 91,833
$ 82,162
$ 54,619
$ 37,969
$ 29,048
$ 8,010
$ 5,459
$ 2,979
$ 1,222
$ 5,463
$ 3,590
$ 1,804
622
$
$
471
92
$
$
Earnings per Common Share
$
8.94
$
6.51
$
3.51
1.34
$ 0.22
Earnings per Common Share—
Assuming Dilution
FiNANciAl poSiTioN AS oF December 31:
$
8.64
$
6.10
$
3.27
$
1.27
$ 0.21
Current Assets
$ 10,760
$ 8,346
$ 5,264
$ 3,817
$ 3,536
Property, Plant and Equipment, Net
21,098
17,856
10,317
8,195
7,412
Goodwill
4,211
4,926
2,401
2,402
2,580
Intangible Assets, Deferred Charges
and Other Assets, Net
Total Assets
Current Liabilities
Long-Term Debt and Capital Lease Obligations,
Less Current Portions
Deferred Income Taxes
Other Long-Term Liabilities
Company-Obligated Preferred
Securities of Subsidiary Trusts
Minority Interest in Valero L.P.
1,684
1,670
1,410
1,250
937
$ 37,753
$ 32,798
$ 19,392
$ 15,664
$ 14,465
$ 8,822
$ 7,375
$ 4,534
$ 3,064
$ 3,006
4,657
4,047
1,622
––
––
5,156
3,615
1,602
—
—
3,901
2,011
1,148
—
—
4,245
4,494
1,605
1,241
1,015
927
—
—
373
116
Stockholders’ Equity
18,605
15,050
7,798
5,735
4,308
Total Liabilities and Stockholders’ Equity
$ 37,753
$ 32,798
$ 19,392
$ 15,664
$ 14,465
22
Va l e r o e n e r g y C o r p o r a t i o n
VLO AR pages 14-28.indd 24
3/19/07 5:17:17 PM
c o m m u n i t y
P h o t o
yeAr eNDeD December 31,
2006
2005(a)
2004(b)
2003(c)
2002
commoN STock DATA:
Dividends per Common Share
$
0.30
$
0.19
$ 0.145
$ 0.105
$ 0.10
Number of Shares Outstanding,
End of Year (in millions)
Number of Registered Shareholders,
End of Year
Market Price:
High
Low
oTher DATA:
604
617
511
481
429
8,507
7,233
6,554
6,564
7,174
$ 70.75
$ 46.84
$ 58.63
$ 21.01
$ 23.91
$ 11.43
$ 11.77
8.05
$
$ 12.49
$ 5.79
Capital Expenditures and Deferred Turnaround
and Catalyst Costs
$ 3,756
$ 2,574
$ 1,596
$ 1,112
$
780
Number of Employees, End of Year
21,855
21,923
19,879
19,741
19,878
operATiNg STATiSTicS:
Throughput Volumes (mbbls per day)
2,960
2,488
2,162
1,835
1,595
Throughput Margin per Barrel
$ 12.29
$ 11.14
$
7.44
$
5.13
$ 4.02
Operating Costs per Barrel:
Refining Operating Expenses
Depreciation and Amortization
$
3.50
0.95
$
3.16
0.80
$
2.65
0.66
$
2.43
0.62
$ 2.26
0.66
Total Operating Costs per Barrel
$
4.45
$
3.96
$
3.31
$
3.05
$ 2.92
(a)
Includes the operations related to the Premcor Acquisition beginning September 1, 2005.
(b)
Includes the operations related to the Aruba Acquisition beginning March 5, 2004.
(c)
Includes the operations of the St. Charles Refinery beginning July 1, 2003.
VLO AR pages 14-28.indd 25
3/19/07 5:17:25 PM
Va l e r o e n e r g y C o r p o r a t i o n
23
Our Board of Directo rs
Left to Right
Senator Don Nickles retired in 2005
as U.S. Senator from Oklahoma
after 24 years. As a U.S. Senator,
he served as Assistant Republican
Leader, Chairman of the Republican
Senatorial Committee, Chairman of
the Republican Policy Committee and
Chairman of the Budget Committee.
He also served on the Finance
and Energy and Natural Resources
committees. Upon his retirement, he
formed and became Chairman and
Chief Executive Officer of The Nickles
Group. He also serves on the Board
of Chesapeake Energy Corporation
and Fortress America Acquisition
Corporation.
bob profusek is a partner in the Jones
Day law firm and heads their Mergers
and Acquisitions department. Mr.
Profusek also serves as a director
of CTS Corporation. Previously, he
served as Executive Vice President of
Omnicom Group Inc. and as a director
of the managing general partner of
Valero L.P.
Dr. Susan kaufman purcell is the
Director of the Center for Hemispheric
Policy at the University of Miami.
This center examines the relationship
between the U.S. and Latin
America with respect to economic
development, trade, healthcare and
politics. Previously, Dr. Purcell served
as Vice President of the Americas
Society and Vice President of the
Council of the Americas.
Jerry choate is retired from Allstate
Corporation, where he served as
Chairman of the Board and Chief
Executive Officer from 1995 through
the end of 1998. Currently, Mr. Choate
serves as a director of Amgen, Inc.,
H&R Block and Van Kampen Mutual
Funds.
bill klesse is CEO and Chairman of the
Board of Valero Energy Corporation.
He was elected Chairman of the Board
in January 2007, and was named CEO
and Vice Chairman of the Board at the
end of 2005. Previously, Mr. Klesse
served as Valero’s Executive Vice
President and Chief Operating Officer,
and held other leadership positions
with Valero, Ultramar Diamond
Shamrock and Diamond Shamrock
Corporation since 1969.
Dr. ron calgaard serves as Chairman
of the Ray Ellison Grandchildren
Trust, and as a director of The Trust
Company, N.A. Previously, he served
as Chairman and Chief Executive
Officer of Austin, Calvert & Flavin,
Inc. in San Antonio. Prior to that, he
was President of Trinity University
in San Antonio from 1979 until his
retirement in 1999, at which time he
was appointed President Emeritus of
the University.
bill bradford is the retired Chairman
of the Board of Halliburton Company.
Prior to the Halliburton-Dresser
merger, he was Chairman of the
Board and Chief Executive Officer of
Dresser Industries, Inc., and he held
various positions in production and
management during his tenure there.
bob marbut is Chairman of the Board
and Chief Executive Officer of Argyle
Communications, Inc. and Chairman
of SecTecGLOBAL, Inc. He also serves
as Executive Chairman of Electronics
Line 3000 Ltd., and as Chairman and
Co-Chief Executive Officer of Argyle
Security Acquisition Corporation.
He is a director of Tupperware
Brands Corporation and Hearst-
Argyle Television, Inc. Previously, Mr.
Marbut led Hearst-Argyle Television,
Inc.; Argyle Television, Inc.; Argyle
Television Holding, Inc.; and Harte-
Hanks Communications, Inc.
irl engelhardt is Chairman of the
Board of Peabody Energy Corporation.
He served as Peabody’s Chairman and
Chief Executive Officer from 1993
through 2005 when he retired as Chief
Executive Officer. Prior to that, he
served as Chief Executive Officer of
a predecessor of the company. Mr.
Engelhardt is also a director of The
Williams Companies, Inc., and is
Chairman of The Federal Reserve Bank
of St. Louis.
ruben escobedo, a Certified Public
Accountant, has had his own certified
public accounting firm, Ruben
Escobedo & Company, CPAs, in San
Antonio since its formation in 1977.
He also serves as a director of Cullen/
Frost Bankers, Inc.
24
Va l e r o e n e r g y C o r p o r a t i o n
VLO AR pages 14-28.indd 26
3/19/07 5:17:35 PM
Sh a reho lde r Information
Media Inquiries
Media inquiries, please contact:
Corporate Communications
P.O. Box 696000
San Antonio, TX 78269-6000
(800) 531-7911 or (210) 345-2000
(210) 345-2327 (fax)
corporatecommunications@valero.com
Annual Meeting
Valero’s annual meeting of
stockholders will be held at 10 a.m.,
Thursday, April 26, 2007, at Valero’s
corporate headquarters located at One
Valero Way (near the southwest corner
of the intersection of I.H. 10 and Loop
1604 West) in San Antonio, Texas.
Transfer Agent and Registrar
Computershare Investor Services has
been appointed transfer agent, registrar
and dividend disbursing agent for
Valero’s common stock. Inquiries
with respect to stock accounts and
dividends and all requests to transfer
certificates should be addressed to:
Computershare Investor Services LLC
250 Royall Street, Mail Stop 1A
Canton, MA 02021
(888) 470-2938
(312) 360-5261
www.computershare.com/contactus
Dividend Withholding
under federal income tax law, you
are subject to certain penalties, as
well as withholding with respect
to your dividend payments, if you
have not provided Valero with your
correct social security number or
other taxpayer identification number.
For this reason, any security holder
who has not provided a taxpayer
identification number should obtain a
Form W-9 (Payer’s Request for Taxpayer
Identification number). To request
a Form W-9, please contact Valero’s
transfer agent and registrar at the
address shown above.
Principal Officers
Bill Klesse, CEO & Chairman of the
Board
Greg King, President
Mike Ciskowski, Executive Vice
President & Chief Financial Officer
Gene Edwards, Executive Vice
President – Corporate Development
& Strategic Planning
Joe Gorder, Executive Vice President
– Marketing & Supply
Rich Marcogliese, Executive Vice
President – Operations
Gary Arthur Jr., Senior Vice President
– Retail Marketing
Kim Bowers, Senior Vice President &
General Counsel
Mary Rose Brown, Senior Vice
President – Corporate
Communications
Jay Browning, Senior Vice President –
Corporate Law & Secretary
Mike Crownover, Vice President –
Human Resources
Clay Killinger, Vice President &
Controller
Norm Renfro, Vice President –
Health, Safety & Environmental
Hal Zesch, Vice President & Chief
Information Officer
Donna Titzman, Treasurer
Steve Gilbert, Assistant Secretary &
Disclosure & Compliance Officer
Valero Corporate Headquarters
One Valero Way
San Antonio, TX 78249-1616
(210) 345-2000
Web Site
www.valero.com
Valero Energy Corporation
Common Stock
Valero’s common stock is listed
for trading on the new york Stock
Exchange under the ticker symbol
“VLO.”
Investor Inquiries
Investor inquiries, please contact:
Investor Relations
P.O. Box 696000
San Antonio, TX 78269-6000
(800) 531-7911 or (210) 345-2000
(210) 345-2103 (fax)
investorrelations@valero.com
Forward-Looking Statements
Much of the information provided
in this report includes or is based
upon estimates, predictions,
projections and other “forward-
looking statements” (as defined
in Section 27A of the Securities
Act of 1933 and Section 21E of
the Securities Exchange Act of
1934) that involve various risks
and uncertainties. While these
forward-looking statements, and
any assumptions upon which
they are based, are made in good
faith and reflect Valero’s current
judgment regarding the direction
of its business, actual results will
almost always vary, sometimes
materially, from any estimates,
predictions, projections,
assumptions, or other future
performance suggested herein.
Certain risks and uncertainties
that may affect Valero are detailed
from time to time in its SEC
reports, including Valero’s most
recent Annual Report on Form
10-K. The financial and other
information provided in this
summary annual report should be
read in conjunction with Valero
Energy Corporation’s complete
Consolidated Financial Statements
(including the notes) and
Management’s Discussion and
Analysis of Financial Condition
and Results of Operations. This
and other information about
Valero is contained in Valero’s
notice of the 2007 Annual
Meeting of Stockholders Proxy
Statement and Form 10-K for
the year ended December 31,
2006. This document is provided
to all stockholders of record as
of March 1, 2007. In addition,
persons may request, without
charge, a Form 10-K by writing or
calling Valero’s Investor Relations
Department. Valero’s 2006
Annual Report on Form 10-K and
the Proxy Statement also may
be accessed via our Web site at:
www.valero.com.
Printed in the u.S.A.
Va l e r o e n e r g y C o r p o r a t i o n
25
Valero Energy Corporation
P.0. Box 696000 • San Antonio, Texas 78269-6000 • www.valero.com