Valero 2015 Annual Report Download - page 120

Table of Contents
VALERO ENERGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
bonds and the exchange of all of our remaining shares of CST common stock with third-party financial institutions in satisfaction of our
short-term debt agreements as described in Note 10.
Cash flows related to interest and income taxes paid were as follows (in millions):
Year Ended December 31,
2015
2014
2013
Interest paid in excess of amount capitalized $ 416
$ 392
$ 361
Income taxes paid, net 2,093
1,624
387
Cash flows related to the discontinued operations of the Aruba Refinery were immaterial for the years ended December 31, 2014 and
2013.
19. FAIR VALUE MEASUREMENTS
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U.S. GAAP requires or permits certain assets and liabilities to be measured at fair value on a recurring or nonrecurring basis in our
balance sheets, and those assets and liabilities are presented below under “Recurring Fair Value Measurements” and “Nonrecurring
Fair Value Measurements.” Assets and liabilities measured at fair value on a recurring basis, such as derivative financial instruments,
are measured at fair value at the end of each reporting period. Assets and liabilities measured at fair value on a nonrecurring basis, such
as the impairment of property, plant and equipment, are measured at fair value in particular circumstances.
U.S. GAAP also requires the disclosure of the fair values of financial instruments when an option to elect fair value accounting has been
provided, but such election has not been made. A debt obligation is an example of such a financial instrument. The disclosure of the
fair values of financial instruments not recognized at fair value in our balance sheet is presented below under “Other Financial
Instruments.”
U.S. GAAP provides a framework for measuring fair value and establishes a three-level fair value hierarchy that prioritizes inputs to
valuation techniques based on the degree to which objective prices in external active markets are available to measure fair value.
Following is a description of each of the levels of the fair value hierarchy.
•Level 1 - Observable inputs, such as unadjusted quoted prices in active markets for identical assets or liabilities.
•Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or
indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar
assets or liabilities in markets that are not active.
•Level 3 - Unobservable inputs for the asset or liability. Unobservable inputs reflect our own assumptions about what market
participants would use to price the asset or liability. The inputs are developed based on the best information available in the
circumstances, which might include occasional market quotes or sales of similar instruments or our own financial data such as
internally developed pricing models, discounted cash flow methodologies, as well as instruments for which the fair value
determination requires significant judgment.
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