Valero 2002 Annual Report Download - 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 our assets,
doubled our revenues, and increased our employee headcount by almost seven times!
Today we have the most complex and geographically diverse refining system in North America with
12 refineries stretching from California to Canada, 4,100 retail and branded wholesale sites, a stake in
4,800 miles of crude oil and product pipelines and approximately 20,000 employees. It’s hard to believe
that it’s been less than six years since Valero had only a single 170,000 barrel-per-day (BPD) refinery
on the Gulf Coast and just 215 employees!
We are proud of this tremendous growth, not
only because it gives Valero the size and scope
to remain competitive in a rapidly consolidating
industry, but also because we have been able
to integrate our new employees and assets
effectively and efficiently—without losing the
special “caring and sharing” spirit that has
been the cornerstone of Valero’s unique culture
and success for the past 23 years.
The fact that Valero was once again named as
“One of The 100 Best Companies to Work for in
America” by
Fortune magazine is a testament
to the tremendous success of our integration
effort. This is evidenced by the fact that two-
thirds of the scoring for this honor is based
on confidential surveys completed by our
employees, 80 percent of whom have been
with the company a year or less!
One of the other great accomplishments in 2002 was our highly successful systems integration, which
we achieved in a record nine months. This full conversion to a common SAP system is critically important
because it gives us the timely information we need to make better business decisions and to control
costs more effectively.
Another really big accomplishment in 2002 was the identification and implementation of $235 million
in recurring synergies and $85 million in non-recurring synergies. These savings helped offset some of
the impact of the year’s challenging earnings environment. In 2003, we expect to achieve an additional
$100 million of recurring synergies and another $80 million in non-recurring synergies as well. These
synergies should have a much more dramatic impact on our bottom line in 2003 with the improved
margin environment that is anticipated.
We will also benefit from several capital projects, which we completed in 2002, that should add more
than $100 million to operating income in 2003.
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LETTER TO SHAREHOLDERS
TO OUR
SHAREHOLDERS
2002 1,913,000 BPD
2001 1,910,000 BPD
2000 985,000 BPD
1999 785,000 BPD
1998 735,000 BPD
1997 530,000 BPD
1996 170,000 BPD
TOTAL REFINING
THROUGHPUT CAPACITY