Valero 2002 Annual Report Download

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2002 SUMMARY ANNUAL REPORTVALERO ENERGY CORPORATION

Table of contents

  • Page 1
    V A L E R O E N E R G Y C O R P O R AT I O N 2 0 0 2 SUMM ARY ANNUAL REPORT

  • Page 2
    TA B L E O F C O N T E N T S 03 06 07 10 19 26 28 29 LETTER TO SHAREHOLDERS FINANCIAL HIGHLIGHTS BIGGER & BETTER FROM COAST TO COAST OPERATIONS: THE BIG PICTURE CONDENSED FINANCIAL INFORMATION OUR MANAGEMENT TEAM OUR BOARD OF DIRECTORS SHAREHOLDER INFORMATION

  • Page 3
    ...'s acquisition of Ultramar Diamond Shamrock Corporation on Dec. 31, 2001. Today, Valero is a Fortune 100 company based in San Antonio, with approximately 20,000 employees and annual revenues of nearly $30 billion. The company currently owns and operates 12 refineries in the United States and Canada...

  • Page 4

  • Page 5
    ... While 2002 was a difficult year for the refining industry, it was a year of major accomplishments at Valero. The acquisition of Ultramar Diamond Shamrock (UDS) at the close of 2001 made Valero the largest independent refining and marketing company in the United States. The acquisition tripled...

  • Page 6
    ... long-term outlook for the refining industry-and for Valero in particular-is just as bullish. Since 1981, the number of U.S. refineries has been cut in half-from 324 to 141. And there is no substantial new capacity coming on-line. In fact, the lower sulfur gasoline and diesel specifications imposed...

  • Page 7
    ... executives-Bill Latham, Senior Vice President of Information Services and Chief Information Officer, and John Krueger, Senior Vice President and Controller-both retired at the close of 2002. These two individuals were largely responsible for the systems integration that we accomplished in a record...

  • Page 8
    ... capital expenditures and deferred turnaround and catalyst costs book value per common share 20 02 $ 26,976 $ $ $ 471 92 0.83 $ 14,465 $ 4,308 $ 780 $ 40.21 2000 2001 2002 $14.7 BILLION $15 BILLION $27 BILLION O P E R AT I N G R E V E N U E S Asphalt from Valero's Wilmington Refinery â-²

  • Page 9
    ..., selling through a bulk and rack marketing network in 40 U.S. states, Canada and Latin America. Innovative industry leader in the production and marketing of clean-burning fuels. REFINING SYSTEM WEST COAST: Benicia Wilmington GULF COAST: Corpus Christi Texas City Houston Three Rivers Krotz Springs...

  • Page 10
    ...QUEBEC (JEAN GAULIN) PAULSBORO BENICIA GRAND JUNCTION DENVER TURPIN ARKANSAS CITY PORT 33 WILMINGTON Texas Panhandle Crude Gathering McKEE AMARILLO ARDMORE WICHITA FALLS RINGGOLD SOUTHLAKE (DALLAS/FT. WORTH) CORSICANA KROTZ SPRINGS HOUSTON SAN ANTONIO THREE RIVERS TEXAS CITY CORPUS CHRISTI...

  • Page 11
    ...ARDMORE DIXON WICHITA FALLS WASSON RINGGOLD SOUTHLAKE EL PASO SAN ANTONIO THREE RIVERS LAREDO EDINBURG ALMEDA HOUSTON ASPHALT HOUSTON HOBBY TEXAS CITY PLACEDO CORPUS CHRISTI HARLINGEN Valero L.P. Pipelines Valero L.P. Feedstock Storage Facilities Valero L.P. Terminals Valero Energy Refineries

  • Page 12
    BIGGER SYNERGIES, BETTER SAVINGS

  • Page 13
    ...with suppliers. The company saved more than $11 million by re-negotiating the power contract for its Texas City, Houston, Three Rivers and Corpus Christi refineries, as well as its pipeline system and retail operations in East Texas. â- Synergies, like these examples, helped bolster Valero's 2002...

  • Page 14
    ... complex refining system in the United States. The majority of Valero's refineries are capable of processing lower cost feedstocks, such as resid and sour crude oil, into premium products, such as reformulated gasoline (RFG), low-sulfur diesel and jet fuel. As a result, Valero's refining system has...

  • Page 15
    BIGGER REFINER, BETTER RETURNS

  • Page 16
    BIGGER MARKETER, BETTER MARGINS

  • Page 17
    ... products such as paints, plastics and adhesives. The remainder of Valero's production-about 60 percent-is marketed through bulk channels. These sales are made to customers throughout the United States, Canada and Latin America, and the products are shipped by pipeline, barge and tanker. 0 GASOLINE...

  • Page 18
    ... programs in place as a result of the growth in its refining and marketing network. In 2002, Valero improved its safety performance in every area of its business, reducing the employee recordable injury rate from the previous year in refining, pipelines/terminals and retail. In fact, the company...

  • Page 19
    BIGGER NETWORK, BETTER NEIGHBOR

  • Page 20
    ... UDS acquisition. But it's even more remarkable considering the fact that the company was able to retain its unique corporate culture. In fact, Valero did such a great job of integrating the employees that it moved up the list of Fortune Magazine's "100 Best Companies to Work for in America," which...

  • Page 21
    ..., 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 2002 Annual Report on Form 10-K and the Proxy Statement also may be accessed via the Company's website at: www.valero.com. TA...

  • Page 22
    ... Company's independent auditors. REPORT OF INDEPENDENT AUDITORS To the Board of Directors and Stockholders of Valero Energy Corporation and Subsidiaries We have audited, in accordance with auditing standards generally accepted in the United States, the consolidated balance sheet of Valero Energy...

  • Page 23
    ...2,211 836 14,400 2002 2001 $ 3,006 4,494 - 1,301 867 $ 4,753 2,517 288 1,388 763 373 373 minority interest in consolidated partnership stockholders' equity total liabilities and stockholders' equity $ 116 4,308 14,465 $ 115 4,203 14,400 â-² Dock in Quebec, Canada by Jean Gaulin Refinery

  • Page 24
    22 FINANCIAL INFORMATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (millions of dollars, except per share amounts) year ended December 31, 2002 2001 2000 OPERATING REVENUES COSTS AND EXPENSES: cost of sales refining operating expenses retail selling expenses administrative expenses ...

  • Page 25
    ...turnaround and catalyst costs proceeds from disposition of assets held for sale payments related to the Golden Eagle Business UDS acquisition, including related advance other acquisitions earn-out payments in connection with acquisitions other, net net cash provided by (used in) investing activities...

  • Page 26
    24 FINANCIAL INFORMATION CONDENSED CONSOLIDATED FIVE-YEAR FINANCIAL AND STATISTICAL REVIEW (millions of dollars, except per share amounts) year ended December 31, 2002 (a) 2001(b) 2000 (c) 1999 1998 (d)(e) OPERATING RESULTS: operating revenues operating income (loss) net income (loss) ...

  • Page 27
    ... ratios and employees include the effect of UDS, which was acquired by Valero on December 31, 2001. (c) Includes the operations related to the Benicia refinery and the California distribution assets beginning May 16, 2000 and the operations related to the California service stations beginning June...

  • Page 28
    ... Vice President and Chief Administrative Officer, led the employee relations and communications during the UDS acquisition. The employees' high morale following the acquisition helped Valero capture its highest ranking on Fortune Magazine's list of the "100 Best Companies to Work for in America...

  • Page 29
    MANAGEMENT TEAM 27 BILL KLESSE, Executive Vice President and Chief Operating Officer, and JOHN HOHNHOLT, Senior Vice President of Development and Planning & Economics, worked together to capture $320 million in synergies after the UDS acquisition. This effort involved all employees, and it ...

  • Page 30
    ...-McGee Corporation. ROBERT G. DETTMER served as Executive Vice President and Chief Financial Officer of PepsiCo, Inc., one of the largest consumer products companies in the world, from 1986 until his retirement in 1996. OUR BOARD OF DIRECTORS PICTURED LEFT TO RIGHT FROM BOTTOM WILLIAM E. GREEHEY...

  • Page 31
    ... INFORMATION VALERO CORPORATE HEADQUARTERS One Valero Place San Antonio, TX 78212-3186 (210) 370-2000 VALERO NORTH CAMPUS 6000 N. Loop 1604 W. San Antonio, TX 78249-1112 (210) 592-2000 WEBSITE www.valero.com INVESTOR INQUIRIES For investor inquiries, please contact: Investor Relations Department...

  • Page 32
    ...ENERGY CORPORATION P.O. BOX 500 SAN ANTONIO, TX 78292-0500 w w w. v a l e r o . c o m Valero has always said its employees are its number-one asset and this point is dramatically illustrated in the photomosaic on the cover of this year's annual report. Approximately 600 photos of Valero's employees...