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OUR FINANCIAL HIGHLIGHTS
TO OUR STOCkHOLDERS
INVESTING IN SHAREHOLDER VALUE
INVESTING IN OUR ASSETS
INVESTING IN SAFETY
INVESTING IN OUR ENVIRONMENT
INVESTING IN MARkETING
INVESTING IN OUR EMPLOYEES
INVESTING IN OUR COMMUNITIES
CONDENSED FINANCIAL INFORMATION
BOARD OF DIRECTORS
STOCkHOLDER INFORMATION
OUR commitment
to excellence
AS A LEADING REFINER AND MARKETER,
wE ARE COMMITTED TO FOLLOwING
THESE GUIDING PRINCIPLES IN PURSUING
AND ACHIEVING EXCELLENCE IN OUR
BUSINESS, INDUSTRY AND RELATIONSHIPS
wITH OUR EMPLOYEES AND COMMUNITIES:
SAFETY
The safety of our employees, our operations,
and our communities is our highest priority.
STAKEHOLDERS
We are committed to delivering long-term
value to all stakeholders – our employees,
communities, investors, and customers –
by pursuing profitable, value-enhancing
strategies with a focus on world-class
operations.
EMPLOYEES
Our employees are our No. 1 asset.
We are committed to providing a
challenging, enjoyable and rewarding
work environment, which fosters creative
thinking, teamwork, open communication,
respect, and opportunity for individual
professional growth and development.
ENVIRONMENT
We are committed to producing
environmentally clean products, while
striving to improve and enhance the
environmental quality of our operations
within our local communities.
COMMUNITIES
We are committed to taking a leadership
role in the communities in which we live
and work by providing company support
and encouraging employee involvement.
OUR FINANCIAL
HIGHLIGHTS
[MILLIONS OF DOLLARS, EXCEPT PER
SHARE AMOUNTS]
OPERATING REVENUES
OPERATING INCOME
INCOME FROM CONTINUING OPERATIONS
NET INCOME
EARNINGS PER COMMON SHARE FROM
CONTINUING OPERATIONS – ASSUMING DILUTION
TOTAL ASSETS
STOCKHOLDERS’ EQUITY
CAPITAL EXPENDITURES AND DEFERRED
TURNAROUND AND CATALYST COSTS
SUMMARY ANNUAL REPORT
This summary annual report format provides condensed
2007*
2006*
$ 95,327
$ 6,918
$ 4,565
$ 5,234
$
7.72
$ 42,722
$ 18,507
$ 2,778
$ 87,640
$ 7,722
$ 5,287
$ 5,463
$
8.36
$ 37,753
$ 18,605
$ 3,756
financial statement disclosure. The company’s full
* Effective July 1, 2007, Valero Energy Corporation sold its Lima, Ohio refinery.
financial statements are contained in its Annual Report
on Form 10-K for the year ended December 31, 2007,
Therefore, the assets and liabilities related to the sale are presented as “as-
sets held for sale” and “liabilities related to assets held for sale,” respectively,
in the consolidated balance sheet as of December 31, 2006. In addition, the
which has been filed with the SEC and made available to
results of operations of the Lima refinery are reported as discontinued opera-
all stockholders. This information is also available at
www.valero.com.
tions for the years ended December 31, 2007 and 2006, and therefore are not
included in any statement of income information presented in this table other
than the net income amounts.
VALERO 2007 ANNUAL REPORT > 1
PAGE LEFT BLANK INTENTIONALLY
to our
stockholders
2007 WAS A GREAT YEAR FOR VALERO.
WE EARNED $7.72 PER SHARE FROM
CONTINUING OPERATIONS, MAkING THIS
ONE OF THE BEST YEARS IN OUR HISTORY.
WE WERE VOTED FORTUNE MAGAzINE’S
No. 1 BEST BIG COMPANY TO WORk FOR IN
AMERICA. IT WAS ALSO A GREAT YEAR FOR
OUR STOCkHOLDERS. VALERO CONTINUED
TO GROW SHAREHOLDER VALUE WITH A
TOTAL SHAREHOLDER RETURN OF MORE
THAN 37 PERCENT – FAR BETTER THAN THE
S&P 500’S 5.5 PERCENT RETURN. CASH
RETURNED TO YOU, OUR STOCkHOLDERS,
WAS AT AN ALL-TIME HIGH. WE RETURNED
$6 BILLION IN CASH BY INCREASING OUR
ANNUAL DIVIDEND 50 PERCENT TO $.48 PER
SHARE, AND PURCHASING 14 PERCENT OF
OUR SHARES OUTSTANDING. OVER THE
LAST TWO YEARS, WE HAVE PURCHASED
NEARLY 120 MILLION SHARES OR 19
PERCENT OF OUR OUTSTANDING SHARE
COUNT. OUR EARNINGS POWER HAS
NEVER BEEN STRONGER, AND OUR YEAR-
END BALANCE SHEET WAS ONE OF THE
STRONGEST WE’VE EVER HAD.
OPERATIONAL EXCELLENCE IS wHAT wILL SET US APART
FROM OUR COMPETITORS AND MAKE US STRONG IN
ANY BUSINESS CYCLE. Our tremendous growth over the
past decade also brought certain challenges, as many
of the refineries we acquired had experienced years of
OUR VISION IS TO BECOME A wORLD-CLASS COMPETITOR
underinvestment and reliability issues. We have a tremendous
IN THE GLOBAL ENERGY BUSINESS, GENERATING INDUSTRY-
opportunity to improve our operating reliability as we address
LEADING RETURNS ON OUR INVESTMENTS. As we strive to
these issues for the long term. We are aggressively investing in
achieve this vision, we are committed to pursuing excellence
high-return capital projects at our most competitive refineries,
in all aspects of our business and are making investments to
restructuring business units to take advantage of efficiencies,
achieve the best results for our stockholders. We remain
and optimizing our asset base to capitalize on the strengths of
employee-focused, socially conscious, community-minded, safe,
our logistically advantaged and complex refineries. Through all
reliable and environmentally responsible.
of our initiatives, we remain focused on safety and reliability.
2 < VALERO 2007 ANNUAL REPORT
OUR COMMITMENT TO EXCELLENCE AT VALERO ALwAYS
CHIEF EXECUTIVE OFFICER’S COMMITTEE
MEANS SAFETY FIRST, BOTH OCCUPATIONAL SAFETY AND
LEFT TO RIGHT – BACK ROW
PROCESS SAFETY. We are very supportive of OSHA and its
Mike Crownover, Senior Vice President – Human Resources;
Jay Browning, Senior Vice President – Corporate Law and Secretary;
Voluntary Protection Program (VPP), and have made it our goal
Clay Killinger, Senior Vice President and Controller; Gary Arthur Jr., Senior
to have each of our refineries designated as a Star Site under
Vice President – Retail Marketing; Hal Zesch, Senior Vice President
and Chief Information Officer; Kim Bowers, Senior Vice President and
this program. In total, the company has 11 VPP Star Sites, of only
General Counsel; Rich Marcogliese, Executive Vice President and Chief
24 nationwide. Having VPP recognition means that these sites
have achieved the highest recognition by OSHA for the personal
safety of our employees. In 2007, three plants earned Star
Site recertification under OSHA’s even more stringent National
Emphasis Program standards. Because safety is a team
Operating Officer; Mike Ciskowski, Executive Vice President and Chief
Financial Officer.
LEFT TO RIGHT – SEATED
Donna Titzman, Vice President and Treasurer; Eric Fisher, Vice President –
Investor and Corporate Communications; Joe Gorder, Executive
Vice President – Marketing and Supply; Gene Edwards, Executive Vice
President – Corporate Development and Strategic Planning; Bill Klesse,
effort, several of our contractors have also been certified. We
Chief Executive Officer, President and Chairman of the Board.
thank them for their support and commitment to our success.
VALERO 2007 ANNUAL REPORT > 3
However, VPP Star Site certification is not enough. We are also
focused on process safety. Our Process Safety Management
(PSM) initiative is focused on identifying and implementing best-in-
class processes in our facilities to not only keep our people safe,
but keep our equipment performing properly and reliably. We are
on track to make our PSM program rank among the best in our
industry. Improved reliability is central to our success and the safety
of our employees.
VALERO’S CAPITAL PROJECTS ARE KEY TO IMPROVED AND
MORE PROFITABLE OPERATIONS – AND wE ARE MAKING
STRIDES. As part of a 2007 capital expenditure program totaling
$2.8 billion, we successfully commissioned major upgrade projects
at our St. Charles, Houston, Corpus Christi, Ardmore, Port Arthur
and Benicia refineries. We also have announced plans to construct
two state-of-the-art hydrocrackers, one at St. Charles and the other
at Port Arthur, as well as a new coker at Port Arthur. These projects
are the largest ever initiated by Valero and are expected to be a
$3.8 billion investment. When completed over the next three years,
these projects will position our St. Charles and Port Arthur refineries
among the leaders in the U.S. refining industry.
VALERO IS SEIZING THE OPPORTUNITY TO UPGRADE AND
OPTIMIZE ITS PORTFOLIO OF ASSETS. For our stockholders,
generating the highest returns possible is critical. As we exercise
discipline in allocating capital across our portfolio of assets, we
recognize that it does not make sense to invest strategically in
every plant, particularly our smaller or less-complex facilities.
Hard decisions must be made. Some of our plants may be more
valuable to another owner with a different set of opportunities than
Valero. As an example, the Lima, Ohio refinery, which we sold in
2007, was a good fit for the acquirer, Husky Energy. Lima refinery
employees and the community now have better opportunities.
Today, we are looking at strategic alternatives for four other
refineries: Aruba, Memphis, Krotz Springs and Ardmore. At the end
of this process, we believe that Valero will be a stronger, more
competitive business for all of our stakeholders: our employees, our
investors, our communities and our customers.
wE ARE COMMITTED TO EVALUATING ALL ASPECTS OF OUR
BUSINESS FOR MORE EFFICIENCIES. In 2007, we restructured
our retail business to make it more competitive by reducing its
administrative costs. This contributed to our retail division’s most
profitable year ever. We also restructured our refinery accounting
4 < VALERO 2007 ANNUAL REPORT
and procurement business units and are centralizing more of
continues to demonstrate that with technology and ingenuity,
our procurement activities to achieve better standardization and
it is possible to produce clean-burning fuels and be a good
cost savings.
environmental steward.
wE ARE COMMITTED TO INVESTING IN OUR ENVIRONMENT.
OUR EMPLOYEES DRIVE ALL OF OUR INITIATIVES, THE
We made significant investments in environmental initiatives,
SUCCESS OF OUR COMPANY, AND IMPROVED SHAREHOLDER
not only to comply with increasingly stringent local, state and
RETURNS. Throughout this 2007 Annual Report, you will be
federal environmental regulations, but also to participate
reading about successes, milestones, accomplishments,
in voluntary environmental programs. While our industry is
projects and commitments. Behind every achievement in this
constantly challenged by new environmental regulations, Valero
report are hard-working, dedicated, smart people who drive our
business and care for our communities. We are proud of our
people and are committed to providing them with a challenging,
enjoyable and rewarding work environment with opportunities for
professional growth and development. Our goal is to continue to
foster their growth so that, together, we can realize our vision and
the earnings potential of our assets.
VALERO IS POSITIONING ITSELF TO MEET THE CHALLENGES
FACING OUR INDUSTRY. As we enter 2008, we have very high
prices for crude oil, and gasoline margins have fallen from last
year’s very high levels. In a political climate of mixed messages,
Congress has enacted new CAFE targets, maintained limited
VALERO 2007 ANNUAL REPORT > 5
For these reasons, 2008 could be a challenging year for Valero.
However, there is no doubt in my mind that oil and natural gas will
continue to be the low-cost and more efficient energy source for
the world. As we invest in projects at our refineries that enhance
our ability to turn low-cost feedstocks into high-quality refined
products, we further position our company to continue to be an
efficient producer of the fuels that keep America on the move.
OUR PRODUCTS IMPROVE PEOPLE’S LIVES. Things have
changed in our industry over the decades, but one thing remains
constant: our products add value to people’s lives. Our products
power the world economy, and our industry has remained
extremely reliable at supplying the market. Gasoline, diesel,
heating oil, jet fuel, lubricants, chemicals – all of these products
greatly enhance quality of life. In everything from plastics to
clothing to medical supplies to computers, what we do adds real
value. If you think about how our industry does it – the complexity
of our processes compared with the low prices at which we
deliver these products to the market – it is amazing. Our industry
is truly a model of efficiency, and I am very proud to be a part of it.
access to the offshore Continental Shelf for exploration and
production of oil, and is considering more intense greenhouse
gas legislation that we believe will further increase the cost
to consumers for refined products and weaken our global
competitiveness. Valero continues to work to reduce emissions,
but new product specifications continue to require refineries
to install more heaters, furnaces and boilers, which increase
greenhouse gas emissions. Ethanol can be a viable component
of the fuel supply, but it also has greenhouse gas implications.
We are concerned that the renewable fuels industry’s effect
Thank you to all of our employees, customers, partners and
of increasing grain prices may have a far worse impact on the
stockholders. We appreciate your support. We are focused on
world than climate change. We believe that a balanced, well-
thought-out energy policy, based on good science, will yield
our vision and committed to pursuing excellence. We look forward
to making our operations better than ever and strengthening our
sound economic decisions.
position as a world-class competitor.
Bill Klesse
CEO, President & Chairman of the Board
COMPARISON OF FIVE-YEAR
CUMULATIVE TOTAL RETURN
The peer group consists of: Chevron Corp., Conoco
Phillips, Exxon Mobil Corp., Frontier Oil Corp., Hess
Corp., Marathon Oil Corp., Murphy Oil Corp., Occidental
Inc. and Tesoro Corp.
Petroleum Corp., Sunoco,
Calculation of cumulative total return based on $100
investment on December 31, 2002.
6 < VALERO 2007 ANNUAL REPORT
Investing IN
shareholder value
annual dividend by 50 percent to $0.48 per share and delivered
$271 million in dividend payments to its stockholders in 2007.
Today, its common stock dividend yield is competitive with its
peers and the S&P 500 average.
Valero remains committed to taking a balanced approach to
allocating free cash flow. Delivering on that commitment through
FOR OVER A DECADE, VALERO HAS
a stock buyback program, Valero returned approximately
FOCUSED ON THE FUTURE, AND IT HAS
$5.8 billion to stockholders in 2007 by purchasing over 84 million
PAID OFF. TODAY, WHILE THE COMPANY’S
STRATEGY HAS SHIFTED FROM RAPID
GROWTH THROUGH ACqUISITIONS TO
shares of its common stock, or approximately 14 percent of
its outstanding shares at the beginning of the year. Since the
beginning of 2006, the company has purchased nearly
120 million shares of its stock, which represents 19 percent
ACHIEVING HIGHER RETURNS FROM ITS
of its outstanding shares at the end of 2005.
ASSETS, VALERO REMAINS COMMITTED TO
ENHANCING SHAREHOLDER VALUE IN ALL
THAT IT DOES.
After a decade of rapid growth through acquisitions, Valero
is focused on achieving higher returns from its existing asset
base. The company is strengthening itself through optimizing its
assets and focusing on value-enhancing strategic projects. Major
hydrocracker projects at its St. Charles and Port Arthur refineries
Valero has grown from a regional energy company with a
will position these refineries among the leaders in the U.S. refining
single refinery to North America’s largest refiner and one of
industry and make them even more competitive globally. These
the nation’s largest retailers, with 17 refineries stretching from
projects signal major investments in Valero’s internal growth
California to Canada to the Caribbean. With this network of
strategy, which, coupled with the stock buyback program,
refineries, Valero has a combined throughput capacity of
complement Valero’s continued effort to maximize shareholder
3.1 million barrels per day.
value by taking a balanced approach to allocating cash flow.
Valero is the 16th largest company on the Fortune 500,
Through disciplined investments in projects at Valero’s logistically
with more than $95 billion in annual revenues and nearly
advantaged and more complex refineries, we believe we are
22,000 employees.
building a better, stronger, more valuable Valero.
Geographic diversity and operating flexibility are the
cornerstones of Valero’s operations. With a presence in
four different markets, Valero is able to capitalize on the
differences in regional margins that often move independently.
Its refineries’ operating flexibilities and high conversion
capacities allow the company to process low-quality
feedstocks into high-quality fuels and benefit from the use of
feedstocks that price below light sweet crude oil.
In the past five years, the company increased its number of
branded wholesale locations by 114 percent, from 1,800 to 3,850,
which moved 126,000 barrels per day of products from the spot
market to the higher-margin branded wholesale channel.
A newly structured retail organization is growing in-store sales
of Valero’s products at a record pace.
Valero’s financial performance in 2007 demonstrates a strong
commitment to stockholders. The company increased its
RETURNING MORE CASH
THAN EVER TO STOCkHOLDERS
Valero Earnings Payout Ratio: (Dividends + Buybacks)/Earnings
VALERO 2007 ANNUAL REPORT > 7
investing
in our assets
IN 1997, A SPIN-OFF OF THE REFINERY
BUSINESS LEFT VALERO WITH CASH AND
ONE REFINERY IN CORPUS CHRISTI, TExAS.
WITH REFINERIES FOR SALE AT CENTS
ON THE REPLACEMENT DOLLAR, IT WAS A
TREMENDOUS TIME TO ACqUIRE ASSETS
AT LOW PRICES AND GROW THE BUSINESS.
OVER THE NExT NINE YEARS, VALERO
ACqUIRED REFINERIES AT VERY LOW PRICES
RELATIVE TO REPLACEMENT COST, AND
EVEN BOUGHT ONE OUT OF BANkRUPTCY.
VALERO IS TRULY A PHENOMENAL
GROWTH STORY – IN THE RIGHT PLACE
AT THE RIGHT TIME.
With Valero’s tremendous growth came challenges that it
continues to face today. Many of the plants Valero acquired had
suffered years of underinvestment under previous ownership.
Because of this, Valero continues to have tremendous opportunity
to improve operations and Valero’s earnings power. As part of
the company’s strategic assessment of its refinery portfolio, the
most valuable opportunities lay in its logistically advantaged and
complex refineries, which can upgrade low-cost feedstocks into
high-value, clean products. By investing in these assets, the
company firmly believes that it can achieve operational excellence
and even higher returns for Valero’s stockholders.
Reflecting the significant projected growth in U.S. and global
demand for diesel, as well as the move towards cleaner-burning
fuels, Valero marked 2007 with the completion of major projects
focused on increasing production of ultra-low-sulfur diesel (ULSD).
Investing $1.2 billion, the company completed major installations
of ULSD-producing units at its Houston, St. Charles, Benicia and
Corpus Christi refineries. The investments were timely, as the
8 < VALERO 2007 ANNUAL REPORT
VALERO 2007 ANNUAL REPORT > 9
company continues to capitalize on a great margin environment
discounts to light sweet crude oil. The projects are expected to be
for diesel, which it expects to continue.
complete by 2011.
In addition to these strategic projects, Valero invested more
Valero’s 2007 projects, together with its planned future
than $1 billion in 2007 for initiatives focused primarily on improving
investments, are examples of the company’s strategy to convert
the reliability, safety and operational integrity of its refineries.
low-cost feedstocks into premium, cleaner-burning fuels,
Valero will continue with these investments as our commitment to
particularly ULSD. Sour crude and residual fuel oils, which cost
reliability initiatives remains at the forefront in 2008.
less than light sweet crude oil, make up more than 60 percent
Focusing on the future, Valero recently announced the two
of Valero’s raw materials input, which provides significant cost
largest capital projects in the company’s history – a $1.4 billion
advantages. With a focus on investments that enhance Valero’s
gas oil hydrocracker at its St. Charles refinery and a $2.4 billion
conversion capacity at its core refineries, and a goal of operational
hydrocracker/coker at Port Arthur. These major investments
excellence, the company believes that its vision to become a
are expected to boost these refineries’ production of ULSD by
world-class competitor, generating industry-leading returns on
49,000 barrels per day and 54,000 barrels per day, respectively.
investments, is in clear sight.
The completed projects will position these refineries among
the leaders in the U.S. refining industry, adding more capacity to
produce ULSD and process heavy, sour feedstocks that trade at
FOCUS ON THE FUTURE
ST. CHARLES
• 50,000 bpd hydrocracker
• Crude expansion from 190,000 to 235,000 bpd
• Coker expansion from 70,000 to 80,000 bpd
• Expected increase in ULSD production of 49,000 bpd
• Expected increase in gasoline production of 11,000 bpd
PORT ARTHUR
• 50,000 bpd hydrocracker
• 45,000 bpd coker
• Expected increase in ULSD production of 54,000 bpd
• Expected increase in gasoline production of 7,000 bpd
RELIABILITY AND ENERGY INITIATIVES
• Replace coke drums at Port Arthur and St. Charles with
state-of-the-art technology
• Major FCCU revamp at St. Charles
• FCCU power recovery at St. Charles and
Texas City
• Enhanced power systems at Benicia
10 < VALERO 2007 ANNUAL REPORT
In 2007 Valero completed a ULSD-producing unit at its Benicia refinery.
ExPECTED INCREASE IN DIESEL % Y IELD
Includes disposition of Lima refinery in 2007. Assumes exclusion of
Aruba, Memphis, Krotz Springs and Ardmore refineries at end of 2008.
2007 AND 2008 CAPITAL ExPENDITURES
VALERO’S 2007 FEEDSTOCk SLATE
$2,778
$750
$896
$518
$614
$1,590
$400
Light
Sweet
Crudes
36%
Heavy
Sour Crudes
and Residual
Feedstocks
35%
Sour and
Acidic
Crudes
29%
PRICE BELOW
LIGHT SWEET
CRUDE OIL
Figures shown are in millions of dollars.
Flexibility in Valero’s system enables the use of a wide variety of feedstocks.
Almost 2/3 of Valero’s feedstocks price below light sweet crude oil.
VALERO 2007 ANNUAL REPORT > 11
investing
IN safety
AT VALERO, THE SAFETY OF ITS
EMPLOYEES, OPERATIONS AND
COMMUNITIES IS ITS HIGHEST
PRIORITY. SAFETY IS INTEGRATED
INTO EVERY FACET OF THE COMPANY
AND SERVES AS THE GUIDING
PRINCIPLE FOR ITS OPERATIONS. SO,
IT SHOULD BE NO SURPRISE THAT
NEARLY HALF OF THE COMPANY ’S
CAPITAL ExPENDITURES IS INVESTED
IN MAINTENANCE AND PROCESS
IMPROVEMENTS THAT ENHANCE THE
COMPANY’S SAFETY AND RELIABILITY .
Valero’s commitment to occupational safety is reflected in the
organizations and from industry peers, including the NPRA.
company’s recordable incident rate, which has consistently
Valero’s investment in safety runs so deep that the company
been among the best in the industry. In 2007, its refining system
has committed all of its refineries to achieving certification
achieved a total recordable incident rate (TRIR) that was 12
through OSHA’s Voluntary Protection Program (VPP). Earning
percent better than the three-year industry average reported
certification is a rigorous and complex process designed to
by the National Petrochemical & Refiners Association (NPRA).
ensure that only the best safety programs qualify – and Valero’s
Valero’s lost time incident rate improved by 27 percent over
safety program does, time and time again.
the previous year. Valero also works closely with its contract
Eleven of Valero’s refineries have achieved VPP Star Site
workforce to ensure high safety standards and, as a result,
certification, which is significant considering that only 24 out of
the contractor TRIR for 2007 was 26 percent better than the
149 refineries in the U.S. have earned this prestigious designation.
previous year.
The company’s remaining refineries are on track to earn the
Valero’s health and safety program is successful because it
certification in the coming years.
is developed, supported and carried out by all employees, from
Occupational safety, however, is not enough. In 2007, Valero
executive management to the newest hire. As a result, Valero has
invested in the development of a strong Process Safety
received consistent recognition and awards from national safety
Management (PSM) initiative, focused on identifying and
12 < VALERO 2007 ANNUAL REPORT
BETTER THAN THE INDUSTRY AVERAGE
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implementing best-in-class processes at its facilities to keep
people safe and equipment performing reliably. Most notably,
three Valero refineries were VPP recertified in 2007 using OSHA’s
more stringent National Emphasis Program (NEP) standards,
which focus exclusively on process safety. Refineries in Ardmore,
Paulsboro and Houston underwent rigorous reviews under the
NEP standards and were recertified, with accolades, by OSHA.
Valero is on track to be a pacesetter in PSM.
Valero will continue to be on the forefront of safety initiatives
to place the company in the best position for success.
It remains committed to investing financial and human
resources to ensure safe and reliable operations throughout
its system.
The quebec City, Three Rivers and St. Charles refineries’ superior performance
earned the Chairman’s Awards for Reliability, Environmental Excellence and Safety.
VALERO 2007 ANNUAL REPORT > 13
investing IN
our environment
VALERO IS COMMITTED TO INVESTING IN
THE ENVIRONMENT. THROUGHOUT THE
COMPANY, THE HIGHEST ENVIRONMENTAL
STANDARDS ARE SET TO ENSURE THE
COMPANY’S ACTIONS TODAY WILL NOT
ONLY PROVIDE FUEL TO MEET GROWING
GLOBAL DEMAND, BUT WILL ALSO SECURE
A STABLE ENVIRONMENT FOR TOMORROW.
Valero’s state-of-the-art scrubber units like this one at the Delaware
City refinery reduce sulfur dioxide emissions by over 95 percent.
Valero invests in equipment, people, policies and procedures to
endeavors to apply the best available technology to reduce
minimize the environmental impact of its operations and improve
emissions and protect our world.
surrounding communities. The company proactively seeks to
Its ULSD program significantly reduces sulfur emissions from
improve efficiency and reduce emissions at each of its facilities.
on-road and off-road diesel vehicles. Similarly, the company’s
With more than $600 million of environmental capital
low-sulfur gasoline program works to reduce sulfur in gasoline
spending in 2007 alone and a $1.9 billion projected investment
and enable new automobile technologies to reduce emissions of
over the next three years, Valero is committed to protecting
nitrogen oxide – a major component of smog.
the environment. From state-of-the-art scrubbers, to infrared
In addition to following strict environmental regulations, Valero
imaging technology, to flare-gas recovery systems, Valero
proudly works with local communities to meet their specific
14 < VALERO 2007 ANNUAL REPORT
environmental needs. In Port Arthur, Texas, for example, Valero’s
CCA web site and a newsletter filled with tips on how to protect
refinery team has volunteered to work with local environmental
the nation’s coastline and coastal waterways.
groups to restore and preserve a local wetland habitat. In other
Acknowledging that Valero employees are stewards for its
regions, Valero worked closely with environmental organizations
environmental commitment, the company strives to ensure
to support improvement projects, educate the community and
that its employees – and business partners – are informed
enhance the quality of life for its neighbors. A partnership with the
of the company’s policies and aware of their environmental
Coastal Conservation Association (CCA), started in September
responsibility. In addition, Valero invests significant resources
2007, will mean more conservation education for children in the
in environmental training for its employees in the areas of
Gulf Coast region through teacher lesson plans, an expanded
hazardous-waste minimization, spill prevention and response
training, from the refineries to the retail level.
VALERO 2007 ANNUAL REPORT > 15
investing
in marketing
grow. This growth was fueled by our commitment to providing
branded wholesale customers with a dependable supply of
high-quality products, an attractive image package, competitive
pricing and unparalleled service. In 2007, Valero added 574 new
branded wholesale sites to its network, representing an increase
WITH ITS CONTINUED COMMITMENT
of nearly 1 billion gallons in fuel sales per year. This continued
TO MARkETING ExCELLENCE, VALERO’S
growth brings Valero’s branded network to approximately
RETAIL AND BRANDED WHOLESALE
3,850 sites.
NETWORk HAS GROWN TO OVER
5,800 OUTLETS IN THE UNITED STATES,
CANADA AND THE CARIBBEAN,
MAINTAINING VALERO’S STRONG
POSITION AS ONE OF THE NATION’S
LARGEST MARkETERS.
On the unbranded side of the business, 2007 saw the creation
of an unbranded National Accounts department to provide an even
higher level of sales and service to Valero’s largest customers. This
line of business now represents 136,000 barrels per day of fuel sales.
RETAIL . Valero’s Retail Division is in the business of delivering
products that improve people’s lives by providing quality fuel and
services that allow people to enjoy the fun and freedom of the
open road – freedom to go where you want, when you want.
The Retail Division takes this business very seriously. 2007
marked its most profitable year ever! It achieved its highest
per-store earnings in history, growing per-store inside sales
by 9.6 percent and gross profit by 10.2 percent. The U.S. Retail
Division logged a 36 percent increase in operating income
over 2006, contributing $154 million to the company’s operating
income.
In 2007, Valero strategically positioned the Retail Division by
restructuring its workforce, continuing to divest its marginal sites
and investing in top-performing stores. And Valero continues to
OTHER PRODUCTS. In addition to gasoline and distillates,
grow its Corner Store brand. In 2007, Valero remodeled 91 sites,
Valero’s refineries safely produce other products to help
rebranded five sites and built six new-to-industry stores.
Valero’s retail team continues to expand its food offerings,
improve consumers’ lives: asphalt to support the roofing and
paving industries; lube base oils to support manufacturing;
develop private label products and offer exciting in-store programs
petroleum coke for power generation and cement
– all with the goal of making the network more competitive.
manufacturing; sulfur for the agricultural sector; and aromatic
solvents and propylene to the chemical industry for processing
wHOLESALE. With a new, upbeat “Life is a Highway” commercial
into such products as paints, plastics, and adhesives. Valero
– set to the hit song by Rascal Flatts – airing nationwide, Valero
has the second-largest asphalt production capacity in the U.S.,
Wholesale hit a high note in 2007. The exciting national ad
with six refineries producing the material, and markets in 20
campaign heightens brand awareness and reminds viewers of
states. The company also produces packaged roofing products
the freedom Valero’s fuels provide.
at three manufacturing facilities and modified paving asphalts
In 2007, Valero’s branded wholesale network continued to
at nine polymer modifying plants. Valero’s asphalt division
achieved record operating income of $34.2 million in 2007.
16 < VALERO 2007 ANNUAL REPORT
map of operations
VALERO IS A LEADER IN THE REFINING
INDUSTRY AND ONE OF THE NATION’S
LARGEST RETAIL OPERATORS. THE
COMPANY’S LARGE, GEOGRAPHICALLY
DIVERSE NETWORk OF COMPLEx
REFINERIES STRETCHES FROM CANADA
TO THE U.S. GULF AND WEST COASTS.
RETAIL AND BRANDED WHOLESALE PRESENCE
THIRD-PARTY OFFSHORE PLATFORMS
WHOLESALE MARkETING PRESENCE
VALERO HEADqUARTERS
VALERO REFINERIES
ULTRAMAR - CANADIAN OPERATIONS
CAMERON HIGHWAY OIL PIPELINE PROjECT
(jOINT VENTURE)
CREDIT CARD CENTER
qUEBEC CITY
BENICIA
WILMINGTON
ARUBA
PAULSBORO
DELAWARE CITY
MEMPHIS
SAN ANTONIO
MCkEE
ARDMORE
THREE RIVERS
ST. CHARLES
kROTz SPRINGS
CORPUS CHRISTI
(EAST & WEST)
PORT ARTHUR
HOUSTON
TExAS CITY
VALERO 2007 ANNUAL REPORT > 17
investing in
our Employees
FROM TOP MANAGEMENT TO PART-
TIMERS, VALERO’S WORk FORCE
IS THE HEART OF ITS SUCCESS.
VALERO IS COMMITTED TO PROVIDING
EMPLOYEES WITH A CHALLENGING,
ENjOYABLE AND REWARDING WORk
ENVIRONMENT. FOR ITS No. 1 ASSET,
THE COMPANY STRIVES TO FOSTER
CREATIVE THINkING, TEAMWORk,
OPEN COMMUNICATION AND AN
OPPORTUNITY FOR INDIVIDUAL
PROFESSIONAL GROWTH AND
DEVELOPMENT.
Valero believes that an investment in its employees – from
understanding, strategic flexibility and excellence in relationship
competitive pay and benefits to a caring company culture – is an
management” was cited.
investment in the future of Valero. Resources that fuel growth and
Additionally, Valero was honored to be named one of the 2007
job satisfaction are critical. Core competencies, communicated
“10 Best Corporate Citizens” in the energy industry by Corporate
through a systemwide learning and development program, help
Responsibility Officer magazine, and it remains a top-ranked
employees understand the expectations of the company and
company on Forbes’ annual Global 2000 list. Valero also stands
realize the breadth of opportunity that exists in their career track.
out among top employers in Canada, and continues to earn
Valero is thankful to have the support of nearly 22,000 employees,
respect for its focus on diversity in the work force.
who year after year earn the company special industry and
At a time in history when job turnover is high nationwide and
community recognition. In 2007, Valero was named one of
job satisfaction is low, Valero is proud to employ hard-working
Fortune magazine’s 100 Best Companies to Work For in America
individuals with incredible dedication. Thank you to Valero’s
– for the eighth straight year. The company also was named
global family of employees, whose investments of time and talent
Downstream Business of the Year at the 2007 Platts Global Energy
in 2007 brought such positive returns for stockholders.
Awards, where Valero’s “operational discipline, brilliant market
18 < VALERO 2007 ANNUAL REPORT
VALERO 2007 ANNUAL REPORT > 19
investing
in our communities
IT BLOSSOMED LONG BEFORE THE
REFINERIES CAME – AN IDEA TO
BUILD THE COMPANY’S COMMUNITY
SPIRIT BEFORE A SINGLE PLANT WAS
PURCHASED. EMPLOYEES WOULD
GIVE OF THEMSELVES IN ExCHANGE
FOR NOTHING, ExCEPT PERHAPS
THE PRIDE IN kNOWING SOMEONE’S
LIFE HAD BEEN TOUCHED FOR THE
BETTER BECAUSE OF A COMPANY’S
COMMITMENT TO kINDNESS.
More than 25 years (and 17 refineries) later, Valero is still anchored
by a giving spirit. At refineries, terminals and retail outlets across
the U.S., Canada and the Caribbean, employees donated a
staggering 190,000 volunteer hours in 2007 toward improving
lives in their communities. Battered women’s shelters received
makeovers. Homebound senior citizens were befriended and
fed a warm meal. Children – particularly through the Valero
Texas Open Benefit for Children Golf Classic – received funds to
continue benefiting from after-school programs, group homes,
shelters and special-needs agencies.
The company also served as a mentor in 2007, offering
guidance in volunteerism to cities and local groups interested
in growing their own commitments to the community. The
effort sparked new corporate partnerships and is expected to
produce even bigger results in 2008.
As part of its commitment to excellence, Valero continues to
foster the company’s community spirit. From taking leadership
roles in the community, to financial support, to employee
involvement at all levels, Valero employees are contributing to the
betterment of our world.
From building homes to building relationships, in 2007 Valero Volunteers gave 190,000 service hours to improve communities where Valero operates.
20 < VALERO 2007 ANNUAL REPORT
In 2007, Valero employees:
• Donated 190,000 volunteer hours for hundreds
of community projects, including mentorships,
feeding the hungry, organizing fundraisers,
clean-up events, youth center assistance
and more.
• Pledged $12.5 million to the United Way.
• Helped raise a record-breaking $8 million
for charities nationwide, through the PGA TOUR -
Through the leadership and participation of Valero employees at all
levels, the Valero MS 150 Bike to the Beach charity ride has become
a major fundraising resource to fight multiple sclerosis.
sponsored Valero Texas Open and Benefit for
Children Golf Classic. The contribution stands
as the largest charity gift of any tournament
in PGA TOUR history.
• Raised more than $1.3 million for the Muscular
Dystrophy Association.
• Raised $1.1 million for 30 Children’s Miracle
Network hospitals located in communities where
Valero has operations.
• Helped raise nearly $2 million for the National
Multiple Sclerosis Society through Velo Valero,
the company’s official cycling team. Velo Valero
has been one of the largest fundraising teams
for the MS 150 for two years.
The 2007 Valero Texas Open crowned justin Leonard as champion,
but the true winners were hundreds of charities nationwide that
shared in a record $8 million fundraising effort.
VALERO ENERGY FOUNDATION — EXCELLENCE IN PHILANTHROPY. Through the Valero Energy
Foundation — the nonprofit, philanthropic arm of Valero Energy Corporation — additional lives were
touched through major financial contributions totaling $11.2 million. Among them: A $5 million gift to
The University of Texas Health Science Center at San Antonio for its transplant research and education
program. The contribution stands as one of the largest private gifts in the medical center’s history.
The donation was granted on behalf of all Valero employees and the stockholders they support.
The Foundation also proudly began a multi-year financial commitment to the Coastal Conservation
Association to improve its educational tools for children, including an interactive web page and lesson
plans for teachers that promote protection of the nation’s coastline and coastal waterways.
VALERO 2007 ANNUAL REPORT > 21
CONDENSED
FINANCIAL
INFORMATION
THE FINANCIAL INFORMATION
PRESENTED ON PAGES 23-27 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 FORM
10-k FOR THE YEAR ENDED
DECEMBER 31, 2007 AND VALERO’S
PROxY STATEMENT FOR THE
2008 ANNUAL MEETING OF
STOCkHOLDERS. THESE DOCUMENTS
WERE MADE AVAILABLE TO ALL
STOCkHOLDERS OF RECORD AS OF
MARCH 3, 2008. IN ADDITION, YOU
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 PAGE 30 OF THIS REPORT.
VALERO’S 2007 ANNUAL REPORT
ON FORM 10-k AND THE PROxY
STATEMENT ALSO MAY BE ACCESSED
VIA THE COMPANY’S WEB SITE AT:
www.VALERO.COM.
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of Valero
Energy Corporation and Subsidiaries
We have audited, in accordance with the standards of
the Public Company Accounting Oversight Board (United
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.
States), the consolidated balance sheets of Valero
In our opinion, the information set forth in the
Energy Corporation and subsidiaries (the Company) as of
accompanying condensed consolidated balance sheets
December 31, 2007 and 2006, and the related consolidated
as of December 31, 2007 and 2006, and the related
statements of income, stockholders’ equity, cash flows
condensed consolidated statements of income and cash
and comprehensive income for each of the years in the
flows for each of the years in the three-year period ended
three-year period ended December 31, 2007 appearing
December 31, 2007, is fairly stated, in all material respects,
in the Company’s 2007 Annual Report on Form 10-k (not
in relation to the consolidated financial statements from
presented herein). In our report dated February 27, 2008,
which it has been derived.
also appearing in that Annual Report, we expressed an
unqualified opinion on those consolidated financial statements.
kPMG LLP
San Antonio, Texas
February 27, 2008
CONDENSED CONSOLIDATED BALANCE SHEETS
[MILLIONS OF DOLLARS]
DECEMBER 31,
ASSETS
Current Assets
Property, Plant and Equipment, Net
Goodwill
Intangible Assets, Deferred Charges and Other Assets, Net
TOTAL ASSETS
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Long-Term Debt and Capital Lease Obligations,
Less Current Portion
Deferred Income Taxes
Other Long-Term Liabilities
Stockholders’ Equity
TOTAL LIABILITIES AND
STOCKHOLDERS’ EQUITY
2007
2006
$ 14,792
21,709
4,061
2,160
$ 42,722
$ 1 1,914
6,470
4,021
1,810
18,507
$ 42,722
$
1 1 ,831
20,180
4,103
1,639
$ 37,753
$
8,860
4,6 1 9
4,047
1,622
18,605
$ 37,753
VALERO 2007 ANNUAL REPORT > 23
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
[MILLIONS OF DOLLARS, EXCEPT PER SHARE AMOUNTS]
YEAR ENDED DECEMBER 31,
2007
2006
2005
$ 95,327
$ 87,640
$ 80,6 1 6
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
81,645
4,016
750
638
1,360
88,409
6,918
EqUITY IN EARNINGS OF NUSTAR ENERGY L.P.
—
OTHER INCOME, NET
INTEREST AND DEBT ExPENSE, NET
MINORITY INTEREST IN NET INCOME OF
NUSTAR GP HOLDINGS, LLC
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAx ExPENSE
INCOME TAx ExPENSE
INCOME FROM CONTINUING OPERATIONS
INCOME FROM DISCONTINUED OPERATIONS,
NET OF INCOME TAx ExPENSE
NET INCOME
PREFERRED STOCk DIVIDENDS
167
( 359 )
—
6,726
2,1 6 1
4,565
669
5,234
—
73,863
3,622
719
598
1,1 16
79,918
7,722
45
350
( 212 )
( 7 )
7,898
2,6 1 1
5,287
176
5,463
2
NET INCOME APPLICABLE TO COMMON STOCk
$ 5,234
$ 5,461
70,438
2,816
700
558
836
75,348
5,268
4 1
53
( 268 )
—
5,094
1,62 1
3,473
1 1 7
3,590
13
$ 3,577
$
6.30
0.2 1
$
6.5 1
$
8.08
1.19
$
9.27
$
8.65
0.29
$
8.94
565
6 1 1
549
$
7.72
1.16
$
8.88
579
$
0.48
$
8.36
0.28
$
8.64
632
$
0.30
$
5.90
0.20
$
6. 10
588
$ 0. 19
EARNINGS PER COMMON SHARE:
C ontinuing Operations
Discontinued Operations
T otal
Weighted-Average Common Shares Outstanding
(in millions)
EARNINGS PER COMMON SHARE —
ASSUMING DILUTION:
C ontinuing Operations
Discontinued Operations
T otal
Weighted-Average Common Shares
Outstanding—Assuming Dilution (in millions)
DIVIDENDS PER COMMON SHARE
24 < VALERO 2007 ANNUAL REPORT
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLO wS
[MILLIONS OF DOLLARS]
YEAR ENDED DECEMBER 31,
2007
2006
2005
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income
$ 5,234
$ 5,463
$ 3,590
Adjustments to Reconcile Net Income
to Net Cash Provided by Operating Activities:
Depreciation and Amortization Expense
Gain on Sale of Lima Refinery
Deferred Income Tax Expense (Benefit)
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 Lima Refinery
Proceeds from Sale of NuStar GP Holdings, LLC
Proceeds from Minor Dispositions of Assets
Acquisition of Premcor Inc.
Contingent Payments in Connection with Acquisitions
Other, Net
Net Cash Used in Investing Activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Debt Borrowings (Repayments), Net
Termination of Interest Rate Swaps
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 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
1,376
( 827 )
( 131 )
( 394 )
5,258
( 2,778 )
2,428
—
63
—
( 75 )
( 220 )
( 582 )
1,782
—
31 1
( 271 )
( 5,629 )
( 24 )
( 3,831 )
29
874
1,590
1,155
—
290
( 596 )
6,312
840
—
255
1, 165
5,850
( 3,756 )
( 2,574 )
—
880
64
—
( 1 0 1 )
( 58 )
( 2,97 1 )
( 249 )
( 54 )
206
( 184 )
( 1,898 )
( 9 )
( 2,188 )
1
1,154
436
—
—
153
( 2,343 )
( 85 )
( 51 )
( 4,900 )
( 874 )
—
—
( 106 )
( 389 )
( 13 )
( 1,382 )
4
( 428 )
864
$ 2,464
$ 1,590
$ 436
VALERO 2007 ANNUAL REPORT > 25
CONDENSED CONSOLIDATED
5-YR FINANCIAL AND STATISTICAL REVIEw
[MILLIONS OF DOLLARS, EXCEPT PER
SHARE AND PER BARREL AMOUNTS]
2007 (A)
2007 (a)
2006 (a)
2005 (a) (b)
2004 (c)
2003 (d)
OPERATING RESULTS FOR YEAR
ENDED DECEMBER 31:
Operating Revenues
Operating Income
$ 95,327
$ 87,640
$ 80,61 6
$ 54,589
$ 6,918
$ 7,722
$ 5,268
$ 2,979
Income from Continuing Operations
$ 4,565
$ 5,287
$ 3,473
$
1,804
$ 37,951
$
$
1,222
622
Earnings per Common Share from
Continuing Operations—Assuming Dilution
FINANCIAL POSITION AS
OF DECEMBER 31:
$
7.72
$
8.36
$
5.90
$
3.27
$
1.27
Current Assets
$ 14,792
$ 1 1,831
$ 8,919
$ 5,264
$ 3,817
Property, Plant and Equipment, Net
Goodwill
Intangible Assets, Deferred Charges
and Other Assets, Net
Total Assets
Current Liabilities
Long-Term Debt and Capital Lease
Obligations, Less Current Portion
Deferred Income Taxes
Other Long-Term Liabilities
Stockholders’ Equity
21,709
4,061
20,180
4,103
17,378
4,837
10,3 17
2,401
2,160
1,639
1,664
1,410
$ 42,722
$ 37,753
$ 32,798
$ 19,392
$ 1 1,914
$ 8,860
$ 7,375
$ 4,534
6,470
4,021
1,810
18,507
4,619
4,047
1,622
5,156
3,615
1,602
3,901
2 ,0 1 1
1,148
18,605
15,050
7,798
5,735
8,195
2,402
1,250
$ 15,664
$ 3,064
4,245
1,605
1,015
Total Liabilities and Stockholders’ Equity
$ 42,722
$ 37,753
$ 32,798
$ 19,392
$ 15,664
26 < VALERO 2007 ANNUAL REPORT
YEAR ENDED DECEMBER 31,
2007 (a)
2006 (a)
2005 (a) (b)
2004 (c)
2003 (d)
COMMON STOCk DATA:
Dividends per Common Share
$ 0.48
$ 0.30
$ 0.19
$ 0.145
$ 0.105
Number of Shares Outstanding,
End of Year (in millions)
Number of Registered Stockholders,
End of Year
Market Price:
High
Low
OTHER DATA:
537
604
617
5 1 1
4 81
7,051
8,507
7,233
6,554
6,564
$ 78.68
$ 47.66
$ 70.75
$ 46.84
$ 58.63
$ 21.01
$ 23.9 1
1 1.43
$
$ 1 1 .77
$ 8.05
Capital Expenditures and Deferred
Turnaround and Catalyst Costs
$ 2,778
$ 3,756
$ 2,574
$ 1,596
Number of Employees, End of Year
21,798
21,855
21,923
19,879
OPERATING STATISTICS:
Throughput Volumes (mbbls per day)
2,798
2,8 1 1
2,435
2,162
Throughput Margin per Barrel
$
12.33
$ 12.47
$ 1 1.10
$
7.44
Operating Costs per Barrel:
Refining Operating Expenses
Depreciation and Amortization
Total Operating Costs per Barrel
$ 3.93
1.20
$ 5. 1 3
$ 3.53
0.96
$ 4.49
$ 3.1 7
0. 8 1
$ 3.98
$ 2.65
0.66
$ 3.31
$ 1 , 1 1 2
19,74 1
1,835
$ 5.13
$ 2.43
0.62
$ 3.05
(a) Effective July 1, 2007, Valero sold its Lima Refinery. Therefore, the assets and liabilities related to the sale are presented as “assets held for sale” and “liabilities related to assets held
for sale,” respectively, in the consolidated balance sheets as of December 31, 2006 and 2005. In addition, the results of operations of the Lima Refinery are reported as discontinued
operations for the years ended December 31, 2007, 2006, and 2005, and therefore are not included in the statement of income and operating statistic information presented in this table.
(b) Includes the operations related to the Premcor Acquisition beginning September 1, 2005.
(c) Includes the operations related to the Aruba Acquisition beginning March 5, 2004.
(d) Includes the operations of the St. Charles Refinery beginning July 1, 2003.
VALERO 2007 ANNUAL REPORT > 27
board of
directors
BILL KLESSE is Chairman of the Board,
Chief Executive Officer and President
of Valero Energy Corporation. He was
elected Chairman of the Board in january
2007, and was named Chief Executive
Officer 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 and Ultramar Diamond Shamrock
Corporation.
BOB MARBUT is Chairman and Co-
CEO of Argyle Security, Inc., a provider of
physical electronic security solutions, a
company he co-founded in 2005 as Argyle
Security Acquisition Corporation. Also,
since 2004, he has served as Execu-
tive Chairman of Electronics Line 3000,
Ltd, a provider of wireless security with
remote management solutions. He is also
IRL ENGELHARDT is Chairman of the
Board of Directors and Executive Advisor
of Patriot Coal Corporation. Mr. Engelhardt
served as Chairman and Chief Executive
Officer of Peabody Energy Corporation
from 1990 to December 2005, and as
RUBEN ESCOBEDO, a Certified
Public Accountant, owned and operated
Chairman of the Board of Directors from
his own certified public accounting firm,
a director of Tupperware Brands Corpora-
2006 to October 2007. Mr. Engelhardt
Ruben Escobedo & Company, CPAs,
tion and Hearst-Argyle Television, Inc. Mr.
is also a director of The Williams
in San Antonio since its formation in
Marbut was previously founder and Chief
Companies, Inc., Chairman of The Federal
1977 until his retirement in 2007. He also
Executive Officer of SecTecGLOBAL, Inc.
Reserve Bank of St. Louis and General
serves as a director of Cullen/Frost
(now a subsidiary of Electronics Line 3000,
Manager of White Walnut Farms LLC.
Bankers, Inc.
Ltd) from 2002 through 2006.
28 < VALERO 2007 ANNUAL REPORT
BILL BRADFORD is the retired
Chairman of the Board of Halliburton
DR. RON CALGAARD serves
as Chairman of the Ray Ellison
JERRY CHOATE is retired from
Allstate Corporation, where he served
Company. Prior to the Halliburton-
Grandchildren Trust, and as director
as Chairman of the Board and Chief
Dresser merger, he was Chairman of
of The Trust Company, N.A. Previously,
Executive Officer from 1995 through the
the Board and Chief Executive Officer
he served as Chairman and Chief
end of 1998. Currently, Mr. Choate serves
of Dresser Industries, Inc., and he held
Executive Officer of Austin, Calvert &
as a director of Amgen, Inc. and Van
various positions in production and
Flavin, Inc. in San Antonio. Prior to that,
kampen Mutual Funds.
management during his tenure there.
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.
SENATOR DON NICKLES retired
in 2005 as U.S. Senator from Oklahoma
after 24 years in office. 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. Senator Nickles
also is a director of Chesapeake Energy
Corporation, Fortress International and
Washington Mutual Investors Fund.
DR. SUSAN KAUFMAN PURCELL
is the Director of the Center for
Hemispheric Policy at the University of
Miami. The Center examines political,
economic, financial, trade and security
issues in Latin America, as well as U.S.
-Latin America relations. Dr. Purcell
previously served as Vice President of
BOB PROFUSEK is a partner in
the jones Day law firm and heads its
Mergers and Acquisitions department.
the Council of the Americas, a non-profit
Mr. Profusek also serves as a director of
business organization of Fortune 500
CTS Corporation. Previously, he served
companies with investments in Latin
as Executive Vice President of Omnicom
America, and of the Americas Society, a
Group Inc. and as a director of the
managing partner of Valero L.P.
non-profit educational institution, both in
New York City.
VALERO 2007 ANNUAL REPORT > 29
STOCKHOLDER
information
ANNUAL MEETING
Valero’s annual meeting of stockholders is scheduled to be
held at 10 a.m., Thursday, May 1, 2008, 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.
VALERO ENERGY CORPORATION COMMON STOCK
Valero’s common stock trades on the New York Stock Exchange
under the ticker symbol “VLO.”
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)
TRANSFER AGENT AND REGISTRAR
and Management’s Discussion and Analysis of Financial Condition
Computershare Investor Services has been appointed transfer
and Results of Operations. This and other information about Valero
agent, registrar and dividend disbursing agent for Valero’s
is contained in Valero’s Annual Report on Form 10-K for the year
common stock. Inquiries with respect to stock accounts and
ended December 31, 2007 and Valero’s Notice of the 2008 Annual
dividends and all requests to transfer certificates should be
Meeting of Stockholders and Proxy Statement.
addressed to:
Computershare Investor Services
250 Royall Street
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.
VALERO CORPORATE HEADQUARTERS
One Valero Way
San Antonio, Tx 78249-1616
(210) 345-2000
wEB SITE
www.valero.com
INVESTOR INQUIRIES
For investor inquiries, please contact:
Investor Relations Department
P.O. Box 696000
San Antonio, Tx 78269-6000
(800) 531-7911 or (210) 345-2198
(210) 345-2103 (fax)
investorrelations@valero.com
MEDIA INQUIRIES
For media inquiries, please contact:
Media Relations Department
P.O. Box 696000
San Antonio, Tx 78269-6000
(800) 531-7911 or (210) 345-2928
(210) 345-2327 (fax)
corporatecommunications@valero.com
30 < VALERO 2007 ANNUAL REPORT
PRINTED IN THE U.S.A.