Valero 2010 Annual Report Download - page 6

utilization of our conversion capacity, from 2009 to
2010 we improved our average liquid volume yield
from 98.6 percent to 99 percent. This 0.4 percent
gain added $242 million to revenues.
FINANCIALLY STRONGER AND MORE COMPETITIVE
We maintained our investment-grade credit rating
in 2010. In mid-December, we exited a challenging
East Coast rening market with the sale of our
renery in Paulsboro, New Jersey, for $707 million
including working capital. We also divested our
50 percent interest in the Cameron Highway Oil
Pipeline System for $330 million. Early in the year,
we sold our shut-down Delaware City renery site
and equipment for $220 million.
Our general and administrative expenses have
consistently trended downward since 2008, and in
2010, we achieved an additional $225 million in
pre-tax cost savings. Since 2007, our employees
have saved the company nearly $620 million, before
taxes, through the execution of numerous cost
reduction eorts.
Our U.S. and Canadian retail businesses earned
$346 million for the year, nearly matching their
record results in 2008. After adding three
world-class ethanol plants to our system, for a total
of 10, our ethanol business set a record high of
$209 million in operating income for the year.
Moving forward, our nancial strength and
signicant liquidity allow us to complete major
value-added capital projects at our reneries. Valero
is able to take advantage of attractive acquisition
opportunities that will improve our competitiveness
and broaden our geographic footprint. Our pending
acquisition of Chevron’s Pembroke Renery and
marketing assets in the United Kingdom and Ireland
with cash on hand is just one example of this
nancial strength.
2011 WILL BE A MUCH BETTER YEAR
This year, we expect to expand into Europe,
complete our FCC revamp projects at Memphis
and St. Charles, and benet from upgrading
the coke drums at Port Arthur. The bulk of our
active turnaround schedule will be completed by
summer. We expect signicant progress on our
high-return hydrocracker projects at Port Arthur and
St. Charles and our hydrogen plants at McKee and
Memphis. Our competitive Gulf Coast reneries are
well-positioned for today’s higher-margin export
opportunities – a signicant change in our business
that we anticipated and beneted from last year
and so far this year. Another major change in our
business has been the discounted price of inland
domestic sweet crude versus water-borne sweet
crudes like Brent or Louisiana Light Sweet.
However, some challenges remain. Current
government regulations and proposals aecting
greenhouse gases (GHGs) will hurt our industry.
These regulations being discussed are bad for our
industry, bad for consumers, bad for jobs, and bad
for the country – and still would have no impact at
all on global warming or climate change. Having
been unsuccessful in passing cap-and-trade
legislation in Congress, the Obama Administration
is attempting to regulate GHGs under the Clean Air
Act. This debate is continuing in Congress.
While we are proud to be the world’s largest
independent rener and one of the nation’s largest
fuel retailers and ethanol producers, we take
even more pride in being an excellent operator
and corporate citizen. By doing ordinary things
extraordinarily well, our employees ensure that
our company stays the course on safety, reliability,
protability and corporate responsibility. We
continue to add value to society, making people’s
lives better and more productive, and we make our
communities a better place to live and work.
I want to thank our employees for a very dedicated
eort to make our company successful and you for
your support, interest, and investment in Valero.
4TO OUR SHAREHOLDERS
Bill Klesse
Chairman of the Board, Chief Executive Ocer
and President