Valero 2009 Annual Report Download - page 18

To Our
Stockholders
2009 was an exceptionally challenging year for Valero and the
rening industry. Low demand for rened products, as a result of
the weak economy and high inventories around the world, resulted
in low product margins. Additionally, lower production of heavy sour
crudes, particularly out of Mexico, and OPEC’s cutbacks of heavier
grades of crude oil contributed to narrower differentials, substantially
limiting the protability of our larger, complex coking reneries.
Consequently, our nancial results were disappointing. For the year,
we had a loss of $55 million, or $0.10 per share, excluding special
items and discontinued operations in Delaware City.*
I can assure you that our nancial results do not reect the
many accomplishments achieved by our hard-working, dedicated
employees. Here are a few highlights:
Safety – Valero employees recorded the second-lowest recordable
injury rate in company history. Our contractors achieved their
lowest-ever recordable injury rate. Year after year, our safety
statistics signicantly beat the industry average, and we continue to
be very supportive of OSHA’s Voluntary Protection Program (VPP),
with 11 sites now certied as VPP Star Sites.
Environmental Progress – We are in the nal stages of construction
of a state-of-the-art ue gas scrubber at our Benicia renery in
California that will cut sulfur dioxide emissions by 95 percent and
nitrogen oxide releases by 55 percent annually. We continue to
implement best practices across our system that have reduced
aring events, wastewater discharges and renery spills to water.
Since 2005, we have improved these incidences by an average
of 75 percent in each category.
Cost Reductions – With critical focus on being a world-class
competitor in the rening industry, we reduced our non-energy
operating costs at our reneries by $215 million versus 2008 – while
signicantly improving our industry benchmarking rank through
operational excellence initiatives. Moreover, our ongoing expense-
reduction efforts at the corporate level resulted in an additional
savings of $70 million in 2009. Many of these savings were afforded
through employees acting as stewards of the company’s dollars.
These efforts reect an ongoing focus to reduce operating expenses
and maximize productivity.
Financial Strength – A strategic decision to shut down the Delaware
City renery in October 2009 is expected to result in an improved
cash position of about $900 million by the end of 2010. This is
*The company reported, on a GAAP basis, a loss from continuing operations of
$352 million, or $0.65 per share, for the full-year 2009. Excluding special items, the loss
is reected accurately at $55 million, or $0.10 per share. The Delaware City renery,
which was shut down in 4Q2009, is classied as discontinued operations. The special
items are fully discussed in the notes to our consolidated nancial statements in our
Annual Report on Form 10-K for the year ended December 31, 2009.