Exhibit 99.1

[Ÿ]

Dear Valero Stockholder:

We previously announced Valero Energy Corporation’s intention to pursue the separation of its retail business from its other businesses. I am pleased to report that on [•], Corner Store Holdings, Inc., a Delaware corporation, will become an independent public company and will hold, through its subsidiaries, the assets (including the equity interests of certain Valero subsidiaries) and liabilities associated with Valero’s retail business.

The separation and distribution will be completed by way of a pro rata distribution of 80 percent of the outstanding shares of Corner Store common stock to Valero’s stockholders of record as of 5:00 p.m. Eastern Time on [•], the record date for the distribution. Each Valero stockholder of record will receive one share of Corner Store common stock for every [•] shares of Valero common stock held on the record date. The distribution will be made in electronic book-entry form, which means that no physical share certificates will be issued. Instead, the distribution agent will aggregate fractional shares into whole shares, sell the whole shares in the open market at prevailing rates and distribute the net cash proceeds pro rata to each holder who would otherwise have been entitled to receive fractional shares in the distribution.

Valero is seeking a private letter ruling from the Internal Revenue Service to the effect that, among other things, the distribution of Corner Store’s common stock to Valero stockholders, together with certain related transactions, will qualify as a transaction that is generally tax-free for U.S. federal income tax purposes. However, any cash that you receive in lieu of fractional shares generally will be taxable to you. It is a condition to completing the distribution that Valero receive the private letter ruling from the Internal Revenue Service, in form and substance satisfactory to Valero, which condition may be waived by Valero in its discretion. You should consult your own tax adviser as to the particular tax consequences of the distribution to you, including potential tax consequences under state, local and non-U.S. tax laws. The separation is also subject to other conditions, including receipt of necessary regulatory approvals.

The distribution does not require stockholder approval, and you do not need to take any action to receive your shares of Corner Store common stock. Valero’s common stock will continue to trade on the New York Stock Exchange under the ticker symbol “VLO.” Corner Store intends to apply to have its common stock authorized for listing on the New York Stock Exchange under the ticker symbol “CST.”

The enclosed information statement, which we are mailing to all Valero stockholders, describes the separation and the distribution in detail and contains important information about Corner Store, including its historical combined financial statements. We urge you to read this information statement carefully.

We want to thank you for your continued support of Valero.

Sincerely,

Bill Klesse

Chief Executive Officer

and Chairman of the Board

Information contained herein is subject to completion or amendment. A Registration Statement on Form 10 relating to these securities has been filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended.

Preliminary Information Statement

(Subject to Completion, Dated November 16, 2012)

Information Statement

Distribution of Common Stock of

CORNER STORE HOLDINGS, INC.

This information statement is being furnished in connection with the distribution by Valero Energy Corporation of 80 percent of the shares of common stock of Corner Store Holdings, Inc. outstanding immediately prior to the distribution. To implement the distribution, Valero will distribute shares of Corner Store common stock on a pro rata basis to the holders of Valero common stock. Each of you, as a holder of Valero common stock, will receive one share of Corner Store common stock for every [•] shares of Valero common stock that you held at 5:00 p.m. Eastern Time on [•], the record date for the distribution. Following the distribution, Corner Store will hold, through its subsidiaries, the assets (including the equity interests of certain Valero subsidiaries) and liabilities associated with Valero’s retail business.

The distribution will be made in electronic book-entry form, without the delivery of any physical share certificates. Valero will not distribute any fractional shares of Corner Store. Instead, the distribution agent will aggregate fractional shares into whole shares, sell the whole shares in the open market at prevailing rates and distribute the net cash proceeds pro rata to each holder who would otherwise have been entitled to receive fractional shares in the distribution.

The distribution will occur after the New York Stock Exchange market closing on [•]. Immediately after the distribution is completed, Corner Store will be an independent, publicly traded company. It is expected that the distribution will be tax-free to Valero stockholders for United States (“U.S.”) federal income tax purposes, except to the extent that cash is received in lieu of fractional shares.

No vote of the stockholders of Valero is required in connection with the distribution. We are not asking you for a proxy and you are requested not to send us a proxy.

Valero stockholders will not be required to pay any consideration for the shares of Corner Store common stock they receive in the distribution, and they will not be required to surrender or exchange shares of their Valero common stock or take any other action in connection with the distribution. From and after the distribution, certificates representing Valero common stock will continue to represent Valero common stock, which at that point will include the remaining businesses of Valero.

All of the outstanding shares of Corner Store common stock are currently owned by Valero. There currently is no public trading market for Corner Store common stock. We intend to file an application to list Corner Store common stock under the ticker symbol “CST” on the New York Stock Exchange. Assuming that Corner Store common stock is approved for listing, we anticipate that a limited market, commonly known as a “when-issued” trading market, for Corner Store common stock will develop on or shortly before the record date for the distribution and will continue up to and including the date the distribution occurs, and we anticipate that the “regular-way” trading of Corner Store common stock will begin on the first day of trading following the date the distribution occurs.

IN REVIEWING THIS INFORMATION STATEMENT, YOU SHOULD CAREFULLY CONSIDER THE MATTERS DESCRIBED UNDER THE CAPTION “RISK FACTORS” BEGINNING ON PAGE 15 OF THIS INFORMATION STATEMENT.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS INFORMATION STATEMENT IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

THIS INFORMATION STATEMENT DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES.

The date of this information statement is [•].

Valero first mailed this information statement to Valero stockholders on or about [•].

_______________________________

TABLE OF CONTENTS

	Page
Note Regarding the Use of Certain Terms	1
Summary	3
Our Business	3
Questions and Answers About the Separation and the Distribution	7
The Separation and the Distribution	12
Risk Factors	15
Risks Relating to the Separation and the Distribution	15
Risks Relating to Our Industry and Our Business	19
Risks Relating to Our Common Stock	25
Cautionary Statement Regarding Forward-Looking Statements	28
The Separation and the Distribution	30
General	30
Reasons for the Separation and the Distribution	30
The Number of Shares You Will Receive	31
Treatment of Fractional Shares	31
When and How You Will Receive the Distribution of Corner Store Shares	31
Treatment of Stock-Based Compensation	32
Treatment of 401(k) Shares	32
Results of the Separation and the Distribution	32
Material U.S. Federal Income Tax Consequences of the Distribution	32
Market for Our Common Stock	35
Trading Between the Record Date and the Distribution Date	35
Conditions to the Distribution	36
Transferability of Shares of Our Common Stock	36
Reason for Furnishing This Information Statement	37
Manner of Effecting the Separation and the Distribution	37
Business and Properties	38
Overview	38
Retail–U.S.	38
Retail–Canada	43
Dividend Policy	48
Capitalization	49
Unaudited Pro Forma Combined Financial Statements	50
Selected Combined Financial Data	58
Management’s Discussion and Analysis of Financial Condition and Results of Operations	59
Executive Overview	59
Results of Operations	63
Liquidity and Capital Resources	70
New Accounting Policies	74
Critical Accounting Policies Involving Critical Accounting Estimates	75

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Quantitative and Qualitative Disclosures About Market Risk	78
Interest Rate Risk	78
Commodity Price Risk	78
Foreign Currency Risk	78
Corporate Governance and Management	79
Executive Officers Following the Distribution	79
Board of Directors Following the Distribution	79
Committees of the Board of Directors Following the Distribution	79
Selection of Nominees for Directors	81
Decision-Making Process to Determine Director Compensation	81
Board Risk Oversight	81
Communications with the Board of Directors	81
Director Compensation	82
Executive Compensation	82
Stock Ownership and Retention Guidelines for Directors and Officers	82
Compensation Committee Interlocks and Insider Participation	82
Executive Compensation	83
Compensation Discussion and Analysis	84
Introduction	84
Valero 2012 Executive Compensation	84
Effects of the Separation on Outstanding Stock-Based Awards	94
Corner Store Compensation Programs	94
Certain Relationships and Related-Party Transactions	95
The Separation from Valero	95
Related-Party Transactions	95
Agreements Between Us and Valero	95
Recent Sales of Unregistered Securities	99
Security Ownership of Certain Beneficial Owners and Management	100
Description of Capital Stock	102
General	102
Distributions of Securities	102
Common Stock	102
Preferred Stock	103
Restrictions on Payment of Dividends	103
Size of Board and Vacancies; Removal	103
No Stockholder Action by Written Consent	104
Special Meetings of Stockholders	104
Requirements for Advance Notification of Stockholder Nominations and Proposals	104
Amendments to the Certificate of Incorporation and Bylaws	104
Exclusive Forum	105
Delaware Statutory Business Combination Statute	105
Limitation on Liability of Directors, Indemnification of Directors and Officers, and Insurance	105

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Transfer Agent and Registrar	106
Stock Exchange Listing	106
Description of Financing Transactions and Certain Indebtedness	107
Indebtedness in Connection with the Separation	107
Debt Exchange	107
Delivery of Information Statement	108
Where You Can Find More Information	109
Index to Financial Statements	F-1

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NOTE REGARDING THE USE OF CERTAIN TERMS

We use the following terms to refer to the items indicated:

• “We,” “us,” “our” and “company,” unless the context requires otherwise, refer to Corner Store, the entity that at the time of the distribution will hold, through its subsidiaries, the assets (including the equity interests of certain Valero subsidiaries) and liabilities associated with Valero’s retail business, as defined below.

• “Corner Store” refers to Corner Store Holdings, Inc., a Delaware corporation, and, where appropriate in context, to one or more of its subsidiaries, or all of them taken as a whole.

• “Valero” refers to Valero Energy Corporation and, where appropriate in context, to one or more of its subsidiaries, or all of them taken as a whole.

• The term “separation” refers to the separation of the retail business from Valero’s other businesses and the creation of an independent publicly traded company, Corner Store, to hold the assets (including the equity interests of certain Valero subsidiaries) and liabilities associated with the retail business from and after the distribution.

• The term “distribution” refers to the distribution of 80 percent of the shares of Corner Store common stock outstanding immediately prior to the distribution date by Valero to stockholders of Valero as of the record date.

• The term “distribution date” means the date on which the distribution occurs.

• The term “retail site” is a general term that refers to any of the following types of retail locations through which we sell merchandise and/or motor fuel to our customers:

◦ a “convenience store,” which is operated by us and provides motor fuel, food, convenience merchandise items and additional services to our customers;

◦ a “filling station,” which is operated by an independent dealer or agent and provides motor fuel to our customers; or

◦ a “cardlock,” which is an unattended self-service filling station that provides motor fuel to our fleet customers, such as trucking and other commercial customers.

• The term “retail business” or “Valero’s retail business” refers to the assets (including the equity interests of certain Valero subsidiaries) and liabilities associated with Valero’s retail operations in the U.S. and Canada, as described below. All trade names and trademarks of Valero that are referenced herein have been registered by Valero with the appropriate national registration agencies in the U.S. and/or Canada.

◦ Retail–U.S.:

▪ We operate convenience stores and are one of the largest independent retailers of motor fuel and convenience merchandise items in the U.S. As of September 30, 2012, we had 1,027 convenience stores in nine states located predominantly in the southwestern U.S.

▪ Our convenience stores are operated predominantly under the Corner Store name, and we offer a variety of convenience merchandise, such as immediately consumable and take-home items from major consumer products companies, as well as a proprietary line of consumable products under the Fresh Choices, U Force, Cibolo Mountain and Flavors2Go brands.

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▪ Our convenience stores offer motor fuel to our customers primarily under the Valero and Diamond Shamrock brands.

▪ Some of our convenience stores also offer additional products and services, such as car wash, lottery, money orders, air/water/vacuum services for motor vehicles, video and game rentals and access to automated teller machines (“ATMs”).

◦ Retail–Canada:

▪ Our business includes the operation of convenience stores, filling stations and cardlocks, and we are one of the largest independent retailers of motor fuel and convenience merchandise items in eastern Canada. As of September 30, 2012, we had 849 retail sites in six eastern Canada provinces, including 256 convenience stores, 514 filling stations and 79 cardlocks.

▪ Our convenience stores are operated predominantly under the Corner Store/Depanneur du Coin names, and we offer a variety of convenience merchandise items, such as immediately consumable and take-home items from major consumer products companies, as well as a proprietary line of consumable products under the Transit Café brand.

• Some of our convenience stores also offer additional products and services, such as car wash, lottery, air/water/vacuum services for motor vehicles and access to ATMs.

• Our convenience stores offer motor fuel to our retail customers primarily under the Ultramar brand.

▪ We offer Ultramar-branded motor fuel at filling stations and cardlocks.

▪ We also supply Ultramar-branded heating oil to residential customers and Ultramar-branded heating oil and motor fuel to small commercial customers.

• The term “U.S. Fuel Supply Agreements” refers to a Branded Distributor Marketing Agreement, a Petroleum Product Sale Agreement and a Master Agreement expected to be entered into with Valero in connection with the separation and the distribution for the supply of motor fuel for our Retail–U.S. operations.

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SUMMARY

This summary highlights selected information from this information statement relating to Corner Store, Corner Store’s separation from Valero and the distribution of Corner Store common stock by Valero to Valero’s stockholders. For a more complete understanding of our business and the separation and the distribution, you should read the entire information statement carefully, particularly the discussion set forth under “Risk Factors” beginning on page 15 of this information statement, and our audited and unaudited historical combined financial statements, our unaudited pro forma combined financial statements and the respective notes to those statements appearing elsewhere in this information statement.

Except as otherwise indicated or unless the context otherwise requires, the information included in this information statement, including the combined financial statements of Corner Store, assumes the completion of all the transactions referred to in this information statement in connection with the separation and the distribution.

Our Business

Overview

We are one of the largest independent retailers of motor fuel and convenience merchandise items in the U.S. and eastern Canada. Our operations include (i) the sale of motor fuel at convenience stores, filling stations and cardlocks, (ii) the sale of convenience merchandise items and services at convenience stores and (iii) the sale of heating oil to residential customers and heating oil and motor fuel to small commercial customers.

We have two operating segments:

• Retail–U.S. – As of September 30, 2012, we had 1,027 convenience stores located in Arizona, Arkansas, California, Colorado, Louisiana, New Mexico, Oklahoma, Texas and Wyoming; and

• Retail–Canada – As of September 30, 2012, we had 849 retail sites located in New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island and Québec.

Corner Store was formed in November 2012 and at the time of the distribution will hold, through its subsidiaries, the assets (including the equity interests of certain Valero subsidiaries) and liabilities of Valero’s retail business. Our headquarters will be located in San Antonio, Texas, and our telephone number is (210) 345-2000. Our Internet website is www.cornerstore4u.com. Our website and information contained on that site, or connected to that site, are not incorporated by reference into this information statement.

Retail–U.S.

We sell motor fuel primarily under the Valero and Diamond Shamrock brands, convenience merchandise items and other services through convenience stores operated predominantly under the Corner Store name in nine states, with significant concentrations in Texas and Colorado. Most of these retail sites are located in metropolitan areas where there are high concentrations of consumers and daily commuters. Of these retail sites, 828 are owned and 199 are leased under leases that generally contain renewal options for periods ranging from five to ten years.

We carry a broad selection of immediately consumable and take-home items, including beverages, tobacco products, snacks, freshly prepared and pre-packaged foods (including sandwiches, kolaches, tacos, salads, pastries, coffee and fountain drinks), health and beauty products, motor oils and automotive products and general convenience merchandise items. Many of these products are offered under a line of proprietary brands, including Fresh Choices, U Force, Cibolo Mountain and Flavors2Go. At some of our retail sites, we offer a variety of additional products and services, such as car wash, lottery, money orders, air/water/vacuum services for motor vehicles, video and game rentals and access to ATMs. We offer automated car wash services at 194 of our retail sites. We are a Subway® franchisee and currently offer Subway® food services at 31 of our retail sites.

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Our Retail–U.S. segment is substantially a company owned and operated business. We retain the gross margins on motor fuel sales, convenience merchandise sales and services, and the retail sites are operated by company employees.

Retail–Canada

We sell Ultramar-branded motor fuel, convenience merchandise items and other services through convenience stores operated predominantly under the Corner Store/Depanneur du Coin names in six provinces in eastern Canada, with a significant concentration in Québec. We also sell Ultramar-branded motor fuel at filling stations and cardlocks in eastern Canada. Most of our retail sites are located in metropolitan areas where there are high concentrations of consumers and daily commuters. Of these retail sites, 323 are owned and 526 are leased under leases that generally contain renewal options for periods ranging from five to ten years.

Our convenience stores carry a broad selection of immediately consumable and take-home items, including beverages, tobacco products, snacks, freshly prepared and pre-packaged foods (including sandwiches, salads, pastries and coffee), health and beauty products, motor oils and automotive products and general convenience merchandise items. At some of our retail sites, we offer a variety of additional products and services, such as car wash, lottery, air/water/vacuum services for motor vehicles and access to ATMs. We offer automated car wash services at 63 of our retail sites. We are a Subway® and Country Style® franchisee and currently provide these food offerings at 34 of our retail sites.

Our Retail–Canada segment consists of the following operations:

• 256 convenience stores, of which 184 are owned and 72 are leased. We retain the gross margins on motor fuel sales, convenience merchandise sales and services, and the retail sites are operated by company employees.

• 514 retail sites that are dealer/agent operated. At each of these retail sites, we retain title to the motor fuel inventory and sell it directly to our customers; therefore, we manage motor fuel pricing and retain the gross margin on motor fuel sales. We provide a commission to the dealer or agent to operate the retail site. These retail sites consist of the following:

◦ 402 filling stations, where each retail site is typically owned and operated by an independent dealer, and

◦ 112 filling stations, where each retail site is owned by us but operated by an independent agent.

• 79 cardlocks, where the site is owned or leased by us. We retain the gross margin on motor fuel sales at these retail sites.

• We also supply Ultramar-branded heating oil to residential customers and Ultramar-branded heating oil and motor fuel to small commercial customers. Operating revenues from these sales were less than 9 percent of Retail–Canada’s operating revenues for the nine months ended September 30, 2012 and for the year ended December 31, 2011.

Our Competitive Strengths

Our competitive strengths include the following:

Significant Presence in the Attractive Southwestern U.S. and Eastern Canadian Markets

We are one of the largest independent retailers of motor fuel and convenience merchandise items in the U.S. and eastern Canada with nearly 1,900 retail sites. We believe we are competitively positioned in targeted regions that offer high growth potential. In the U.S., over 60 percent of our retail sites and the majority of our capital investment are concentrated in Texas, which has a strong regional economy supported by a lower-than-average unemployment rate, higher-than-average economic growth and a strong housing market. We believe that our market concentration in the major metropolitan areas of Houston and San Antonio gives us an advantage to engage the convenience consumer with the Corner Store brand. Our Canadian retail sites are concentrated in Québec and the eastern Canadian provinces, which have certain governmental regulations on motor fuel pricing that tend to reduce margin volatility and protect against below-cost selling.

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Efficient Supply Chain

We operate our own distribution center in Texas that supplies over 500 of our convenience stores in the U.S., provides us with improved inventory management, allows us to handle a greater product variety and supports the development and growth of our private label packaged goods and fresh food programs. We have a strategic alliance with Core-Mark International, Inc. (“Core-Mark”), a leading distributor of groceries, tobacco and fresh foods, to manage and operate our distribution center. Our distribution center benchmarks at the highest level of efficiency and service level against other Core-Mark distribution centers. Core-Mark also supplies the remainder of our Retail–U.S. network. In Canada, for grocery supply, we have an agreement with Sobeys Québec Inc. (“Sobeys”), which is a leading grocery wholesale distributor in eastern Canada. Sobeys provides Retail–Canada with merchandising expertise, purchasing power and efficient distribution services.

Advantageous Long-Term Motor Fuel Supply Agreements

We expect to have long-term motor fuel supply agreements with Valero, providing stability to our motor fuel supply. These agreements are expected to be based on existing volumes, but we expect to have the ability to seek other supply agreements for any incremental volumes we may add.

Differentiated Cardlock and Heating Oil Operations

Our Retail–Canada cardlock and heating oil operations add diversity to our revenue streams and present additional growth opportunities for our business. Users of our cardlocks must be registered with a membership card, which provides purchasing security and helps promote customer loyalty and retain our customer base. We believe that there is an opportunity to expand our cardlock business into the U.S., and in northern Québec in areas where trucking routes have increased due to increased industrial and mining activity. Our heating oil operations provide multiple revenue streams, including delivery of heating oil and various maintenance services. We are implementing a new onboard global positioning satellite system to increase the efficiency of our heating oil delivery routes and better utilize our fleet of delivery trucks.

Our Business Strategies

Our business strategy is built on four key platforms.

Enhance Profitability Through Optimized Motor Fuel Sales

We seek to maximize our profitability by optimizing our motor fuel offering and pricing throughout our retail system and by increasing our customer loyalty. Currently, we are expanding the availability of automotive diesel throughout our retail system and growing the offering of high-speed diesel, which significantly reduces refueling times, to meet the needs of commercial trucking operations.

In Retail–U.S., we are implementing a new automated fuel pricing system throughout our network. This system will provide analytics that will allow us to improve motor fuel gross margins across our system by enhancing our flexibility to evaluate our competitors’ pricing moves and implement pricing decisions on an instantaneous basis.

In both of our operating segments, we have multiple customer loyalty programs, including Valero’s proprietary credit cards and fleet cards, gift cards and various promotions, coupons and discounts designed to retain our customers and increase our sales and gross margin. We have considerable initiatives underway that engage the interest and loyalty of consumers through social media.

Drive Consistent Growth and Profitability of In-Store Convenience Merchandising

Our merchandise initiatives are focused on achieving sales growth and increased profitability by offering our customers superior convenience, service, quality and variety compared to our competition. We optimize our product offering to meet the unique customer preferences and demand in each of the areas in which we operate by offering food and beverage options specific to each region. Additionally, we have developed strong private label product offerings, which increase our customer loyalty, provide enhanced gross margins versus third-party products and are difficult for our competitors to replicate. We plan to continue to expand these private label products throughout our retail system to drive increased merchandise gross margins in our business. We have a proprietary prepared food offering in approximately 85 percent of our retail sites in Retail–U.S. and approximately 16 percent of our retail sites in Retail–Canada. We also have Subway® and Country Style® food offerings at selected retail sites in our network that provide

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us with enhanced gross margin opportunities and further differentiate us from our competition. We have Subway® in 31 of our retail sites in Retail–U.S. and we have four Subway® locations and 30 Country Style® locations in Retail–Canada. The proprietary and branded food offerings enhance the total gross margin of the retail site, provide differentiation in the market and promote increased sales.

Optimize Use of Capital Through Targeted Investments in Our Existing Network and New-to-Industry Retail Sites

We believe the best use of our capital is a combination of updates to our existing convenience store network, land acquisitions and new convenience store construction supported by the divestiture of underperforming convenience stores and the de-branding of filling stations where we choose not to renew our relationship with the dealers/agents who operate those retail sites. We believe this strategy supports sales growth and allows us to offer our customers a more desirable experience capable of earning higher returns on capital.

In our Retail–U.S. segment, we believe there is significant opportunity to expand our business through new site construction of New-to-Industry (“NTI”) convenience stores. As a separate company from Valero, we believe improved access to capital will allow us to accelerate our growth and better target opportunities to enter new markets. Our typical NTI convenience store incorporates an expanded branded or proprietary food offering and a car wash. We plan to focus our NTI program primarily in Texas, but we will also pursue opportunities in other strong U.S. markets.

In our Retail–Canada segment, we believe we will have opportunities that include a balance between redevelopment of older properties and NTI opportunities focused in growing urban centers or along major highways, including the addition of NTI cardlock locations.

Create Value Through Selective Expansion in Existing and Contiguous Markets

We believe our existing distribution network and merchandising initiatives create a strong platform for growth through acquisition and expansion. In addition, the convenience store industry is fragmented, providing an opportunity for larger competitors with better access to capital that are able to leverage existing infrastructure. We plan to pursue acquisition opportunities of smaller chains (50 or fewer convenience stores) in existing and contiguous markets with overall market characteristics similar to our existing markets. A recent example is our July 2012 acquisition of the Crackerbox chain in Arkansas. This market is contiguous to our existing operations in northeast Texas and northern Louisiana and the acquisition allowed us to expand our operations into an attractive and growing market. In Retail–Canada, we plan to focus on expanding our dealer network, particularly in non-urban markets where we believe the best opportunities for acquisition and expansion exist. This allows us to capitalize on the strong and stable motor fuel gross margins in Canada while deploying minimal capital.

Our supply chain is a key asset that we plan to leverage as we acquire and expand our operations into new and existing markets. Our ability to supply a large variety of proprietary offerings coupled with our expected long-term motor fuel supply agreements with Valero provide us a strong competitive advantage. Other key elements of our infrastructure include human resources, pricing software, information technology (“IT”) and accounting systems. These infrastructure and supply chain systems will allow us to acquire less sophisticated operators and quickly integrate their sites into our existing network in an efficient and cost-effective manner.

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Questions and Answers About the Separation and the Distribution

Q: Why is Valero separating its retail business from its other businesses?

A: The Board of Directors and management of Valero believe the separation and the distribution will allow each company to pursue a more focused, industry-specific strategy; enable the management of each company to concentrate resources wholly on its particular market segments, customers and core businesses, with greater ability to anticipate and respond to changing markets and opportunities; allow each company to recruit and retain employees with expertise directly applicable to its needs; provide Corner Store with a valuable acquisition currency; eliminate competition for capital between Corner Store’s business and Valero’s other businesses and allow more direct and efficient access to capital; and provide investors in each company with a more targeted investment opportunity.

See “The Separation and the Distribution—Reasons for the Separation and the Distribution” included elsewhere in this information statement.

Q: How will Valero accomplish the separation and the distribution of Corner Store?

A: The separation will be accomplished through a series of transactions in which the assets (including the equity interests of certain Valero subsidiaries) and liabilities associated with Valero’s retail business will be transferred to Corner Store or entities that are, or will become prior to the distribution, subsidiaries of Corner Store. In the distribution, Valero will distribute to its stockholders 80 percent of the shares of Corner Store’s common stock. See “The Separation and the Distribution—Manner of Effecting the Separation and the Distribution” included elsewhere in this information statement.

Q: What will I receive in the distribution?

A: Valero will distribute one share of Corner Store common stock for every [•] shares of Valero common stock outstanding at 5:00 p.m. Eastern Time on [•], the record date for the distribution. You will pay no consideration and will not give up any portion of your Valero common stock to receive shares of Corner Store common stock in the distribution.

Q: What is the record date for the distribution, and when will the distribution occur?

A: The record date is [•], and ownership will be determined as of 5:00 p.m., Eastern Time, on that date. When we refer to the “record date,” we are referring to that time and date. Valero will distribute shares of Corner Store common stock on [•], which we refer to as the distribution date.

Q: As a holder of Valero common stock on the record date, what do I need to do to participate in the distribution?

A: Nothing. You do not need to take any action, but we urge you to read this entire document carefully. No stockholder approval of the distribution is required or sought. You are not being asked for a proxy. You are not required to make any payment, surrender or exchange any of your shares of Valero common stock or take any other action to receive your shares of Corner Store common stock.

Q: How will fractional shares be treated in the distribution?

A: Valero will not distribute any fractional shares of Corner Store common stock to Valero stockholders. Fractional shares of Corner Store common stock to which Valero stockholders of record would otherwise be entitled will be aggregated and sold in the public market by the distribution agent. The aggregate net cash proceeds of the sales will be distributed pro rata to each holder who would otherwise have been entitled to receive a fractional share in the distribution. Proceeds from these sales will generally result in a taxable gain or loss to those stockholders. Each stockholder entitled to receive cash proceeds from these shares should consult his, her or its own tax adviser as to such stockholder’s particular circumstances. The tax consequences of the distribution are described in more detail under “The Separation and the Distribution—Material U.S. Federal Income Tax Consequences of the Distribution.”

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Q: If I sell, on or before the distribution date, shares of Valero common stock that I held on the record date, am I still entitled to receive shares of Corner Store common stock in the distribution?

A: Beginning on or shortly before the record date and continuing up to and including the distribution date, we expect there will be two markets in Valero common stock: a “regular way” market and an “ex-distribution” market. Shares of Valero common stock that trade on the regular way market will trade with an entitlement to receive shares of Corner Store common stock to be distributed in the distribution. Shares that trade on the ex-distribution market will trade without an entitlement to receive shares of Corner Store common stock to be distributed in the distribution, so that holders who sell shares ex-distribution will be entitled to receive shares of Corner Store common stock even though they have sold their shares of Valero common stock after the record date. Therefore, if you owned shares of Valero common stock on the record date and sell those shares on the regular way market before the distribution date, you will also be selling the shares of our common stock that would have been distributed to you in the distribution. You are encouraged to consult with your financial adviser regarding the specific implications of selling your Valero common stock prior to or on the distribution date.

Q: Will the distribution affect the number of shares of Valero I currently hold?

A: No. The number of shares of Valero common stock held by a stockholder will be unchanged. The market value of each Valero share, however, is expected to decline to reflect the impact of the distribution. See “The Separation and the Distribution—The Number of Shares You Will Receive” included elsewhere in this information statement.

Q: What are the U.S. federal income tax consequences of the distribution to me?

A: The distribution is conditioned upon, among other matters, Valero’s receipt of a private letter ruling from the U.S. Internal Revenue Service (the “IRS”) in form and substance satisfactory to Valero in its sole discretion, to the effect that the distribution, together with certain related transactions, will qualify as a reorganization for U.S. federal income tax purposes under Sections 355 and 368(a)(1)(D) of the Internal Revenue Code of 1986, as amended (the “Code”).

Valero has applied for a private letter ruling from the IRS, and expects to receive an opinion from a nationally recognized accounting firm, to the effect that the distribution will so qualify. On the basis that the distribution so qualifies, for U.S. federal income tax purposes, you will not recognize any gain or loss, and no amount will be included in your income, upon your receipt of shares of Corner Store common stock pursuant to the distribution, except with respect to any cash received in lieu of fractional shares.

You should consult your own tax adviser as to the particular consequences of the distribution to you, including the applicability and effect of any U.S. federal, state and local tax laws, as well as foreign tax laws, which may result in the distribution being taxable to you. For more information, see “The Separation and the Distribution—Material U.S. Federal Income Tax Consequences of the Distribution” included elsewhere in this information statement.

Q: How will I determine the tax basis I will have in my Valero shares after the distribution and the Corner Store shares I receive in the distribution?

A: Generally, for U.S. federal income tax purposes, your aggregate basis in your shares of Valero common stock and the shares of Corner Store common stock you receive in the distribution (including any fractional share for which cash is received) will equal the aggregate basis of Valero common stock held by you immediately before the distribution. This aggregate basis should be allocated between your shares of Valero common stock and the shares of Corner Store common stock you receive in the distribution (including any fractional share for which cash is received) in proportion to the relative fair market value of each immediately following the distribution. See “The Separation and the Distribution—Material U.S. Federal Income Tax Consequences of the Distribution.”

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Q: Will I receive a stock certificate for Corner Store shares distributed in the distribution?

A: No. Registered holders of Valero common stock (meaning Valero stockholders who hold Valero stock directly through an account with Valero’s transfer agent, Computershare Investor Services LLC (“Computershare”)) who are entitled to participate in the distribution will receive from Computershare a book-entry account statement reflecting their ownership of Corner Store common stock. For additional information, registered stockholders in the U.S. should contact Valero’s transfer agent, Computershare, at (800) 736-3001 or through its website at www.computershare.com. Stockholders from outside the U.S. may call Computershare at (781) 575-3100. See “The Separation and the Distribution—When and How You Will Receive the Distributions of Corner Store Shares.”

Q: What if I hold my shares through a broker, bank or other nominee?

A: Valero stockholders who hold their shares through a broker, bank or other nominee will have their brokerage account credited with Corner Store common stock. For additional information, those stockholders should contact their broker, bank or other nominee directly.

Q: What if I have stock certificates reflecting my shares of Valero common stock? Should I send them to the transfer agent or to Valero?

A: No. You should not send your stock certificates to the transfer agent or to Valero. You should retain your Valero stock certificates.

Q: Can Valero decide to cancel the distribution of Corner Store common stock, even if all the conditions are met?

A: Yes. Until the distribution has occurred, the Valero Board of Directors has the right, in its sole discretion, to terminate the distribution, even if all the conditions are met. See “The Separation and the Distribution—Conditions to the Distribution” included elsewhere in this information statement.

Q: Will Corner Store incur any debt prior to or at the time of separation?

A: Yes. Corner Store intends to enter into new financing arrangements in anticipation of the separation and the distribution. In connection with the separation, it is expected that Corner Store will incur up to $1.05 billion in new debt, which may include bank debt, short term notes, long term notes or a combination thereof. We expect to transfer certain proceeds of the debt to Valero and to issue other debt directly to Valero in consideration for the contribution by Valero to us of the retail business. We expect that Valero will further transfer our debt issued to Valero to certain financial institutions, which we refer to as “exchange counterparties,” in order to satisfy certain of Valero’s then-outstanding debt obligations to such exchange counterparties. We refer to this transfer as a “debt exchange.” We expect that these exchange counterparties will then sell our debt that they received in the debt exchange to third-party investors. As a result of these financing transactions, Valero will receive in connection with the separation approximately $1.05 billion in cash, and we will incur indebtedness of $1.05 billion for which we will not retain any cash following the separation. See “Description of Financing Transactions and Certain Indebtedness” included elsewhere in this information statement.

Following the separation, Corner Store’s debt obligations could restrict its business and may adversely impact its financial condition, results of operations or cash flows. In addition, its separation from Valero’s other businesses may increase the overall cost of debt funding and decrease the overall debt capacity and commercial credit available to the businesses collectively. Corner Store’s business, financial condition, results of operations and cash flows could be harmed by a deterioration of its credit profile or by factors adversely affecting the credit markets generally. See “Risk Factors—Risks Relating to the Separation and the Distribution.”

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Q: Does Corner Store intend to pay dividends?

A: After the distribution, Corner Store intends to pay a cash dividend to its common stockholders at an initial rate of $0.0625 per share per quarter, or $0.25 per share per year. However, the declaration and amount of all dividends to holders of Corner Store’s common stock will be at the discretion of the Board of Directors of Corner Store and will depend upon many factors, including Corner Store’s financial condition, earnings, capital requirements of its business, covenants associated with certain debt obligations, legal requirements, regulatory constraints, industry practice and other factors the Board of Directors deems relevant. Corner Store is a holding company and has no direct operations. As a result, Corner Store will be able to pay dividends on its common stock only from available cash on hand and distributions received from its subsidiaries.

Q: Will my shares of Corner Store common stock trade on a stock market?

A: Yes. Currently, there is no public market for Corner Store common stock. We intend to apply to list Corner Store common stock on the New York Stock Exchange (“NYSE”) under the ticker symbol “CST.” We cannot predict the trading prices for Corner Store common stock when such trading begins.

Q: Will my shares of Valero common stock continue to trade?

A: Yes. Valero common stock will continue to be listed and trade on the NYSE under the ticker symbol “VLO.”

Q: Will the distribution of Corner Store common stock affect the market price of my Valero shares?

A: Yes. As a result of the distribution, the trading price of shares of Valero common stock immediately after the distribution is expected to change from the trading price immediately before the distribution, because the trading price immediately after the distribution will no longer reflect the value of Valero’s retail business. Furthermore, until the market has fully analyzed the value of Valero after the distribution, Valero may experience more stock price volatility than usual. It is possible that the combined trading prices of Valero common stock and Corner Store common stock immediately after the distribution will be less than the trading price of shares of Valero common stock immediately before the distribution.

Q: What will happen to Valero stock options, restricted shares and performance shares?

A: No stock-based awards of Corner Store will be issued in exchange for either vested or non-vested Valero stock-based awards held by Corner Store employees prior to the separation. Valero intends to accelerate the vesting of all of its non-vested stock-based awards held by Corner Store employees at the distribution date. Adjustments to Valero’s outstanding stock-based awards and long-term incentive plans will be addressed in a subsequent amendment to the registration statement of which this information statement is a part. 

Q: What will the relationship be between Valero and Corner Store after the separation and the distribution?

A: Following the distribution, Corner Store will be an independent, publicly owned company, and Valero will retain 20 percent of the common stock of Corner Store. In connection with the separation and the distribution, Corner Store is expected to enter into a Separation and Distribution Agreement and several other agreements with Valero for the purpose of both effecting the separation and governing the relationship of Valero and Corner Store following the separation. Corner Store is also expected to enter into a Stockholder’s and Registration Rights Agreement with Valero pursuant to which, among other things, Corner Store will agree that, upon the request of Valero, it will use its best efforts to effect the registration under applicable securities laws of the shares of common stock retained by Valero.We describe these agreements in more detail under “Certain Relationships and Related-Party Transactions—Agreements Between Us and Valero” included elsewhere in this information statement.

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Q: What does Valero intend to do with the shares of Corner Store common stock that it retains?

A: Valero currently plans to dispose of all of our shares through one or more exchanges for indebtedness of Valero outstanding at the time of such exchange. Any shares not disposed of by Valero pursuant to such exchanges will be otherwise disposed of by Valero as soon as practicable consistent with the business reasons for the retention, but in no event later than five years after the distribution.

Q: How will Valero vote the shares of Corner Store common stock that it retains?

A: It is expected that Valero will agree to vote the shares of Corner Store common stock that it retains in proportion to the votes cast by Corner Store’s other stockholders and to grant Corner Store a proxy with respect to such shares. For additional information, see “Certain Relationships and Related-Party Transactions—Agreements Between Us and Valero—Stockholder’s and Registration Rights Agreement” included elsewhere in this information statement.

Q: Are there risks to owning Corner Store common stock?

A: Yes. There are risks associated with Corner Store’s business, the separation and the distribution, the incurrence by Corner Store of up to $1.05 billion of indebtedness in connection with the separation and Corner Store’s operation as an independent, publicly traded company. These risks are described in the section entitled “Risk Factors” included elsewhere in this information statement. We encourage you to read that entire section carefully.

Q: Will I have appraisal rights in connection with the separation and the distribution?

A: No. Holders of Valero common stock are not entitled to appraisal rights in connection with the separation or the distribution.

Q: Where can I get more information?

A: If you have any questions relating to the transfer or mechanics of the stock distribution, you should contact the distribution agent:

[•]

For other questions relating to the separation or the distribution, prior to the distribution, or for questions relating to Valero’s stock after the distribution, you should contact Valero’s investor relations department:

Valero Investor Relations

One Valero Way

San Antonio, Texas 78249

investorrelations@valero.com

(800) 531-7911

For other questions relating to the separation or the distribution, after the distribution, you should contact Corner Store’s investor relations department:

[•]

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The Separation and the Distribution

Distributing Company	Valero is currently the sole stockholder of Corner Store. Immediately after the distribution, Valero will own 20 percent of the shares of Corner Store’s common stock.
Distributed Company	Corner Store is currently a wholly owned subsidiary of Valero. After the distribution, Corner Store will be an independent, publicly traded company.
Distribution Ratio	One share of Corner Store common stock for every [•] shares of Valero common stock held on the record date.
Shares to Be Distributed	Valero will distribute 80 percent of the shares of Corner Store common stock outstanding immediately before the distribution. Based on approximately [•] shares of Valero common stock outstanding as of [•], assuming distribution of 80 percent of our common stock and applying the distribution ratio, approximately [•] shares of Corner Store common stock will be distributed.
Record Date for the Distribution	5:00 p.m. Eastern Time on [•].
Distribution Date	[•].
Fractional Shares	The distribution agent will not distribute any fractional shares of Corner Store common stock to Valero stockholders. Instead, it will aggregate fractional shares into whole shares, sell the whole shares in the open market at prevailing rates and distribute the net cash proceeds pro rata to each holder who would otherwise have been entitled to receive fractional shares in the distribution. Valero stockholders will not be entitled to any interest on the amount of any payment made in lieu of a fractional share.
Distribution Method	The distribution will be made in electronic book-entry form, without the delivery of any physical share certificates. Registered stockholders will receive additional information from the distribution agent shortly before the distribution date. Beneficial holders will receive information from their brokerage firms.

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Conditions to the Distribution	The distribution is subject to the satisfaction, or waiver by Valero, of the following conditions, among others:
	•	The Securities and Exchange Commission (the “SEC”) will have declared effective our registration statement on Form 10, of which this information statement is a part, under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), with no order suspending the effectiveness of the registration statement in effect and no proceedings for such purposes pending before or threatened by the SEC.
	•	Any required actions and filings with regard to state securities and blue sky laws of the U.S. (and any comparable laws under any foreign jurisdictions) will have been taken and, where applicable, will have become effective or been accepted.
	•	Corner Store’s common stock will have been authorized for listing on the NYSE, or another national securities exchange approved by Valero, subject to official notice of issuance.
	•	Prior to the distribution, this information statement will have been mailed to the holders of Valero common stock as of the record date.
	•	Valero will have received a private letter ruling from the IRS in form and substance satisfactory to Valero in its sole discretion, to the effect that the distribution, together with certain related transactions, will qualify as a reorganization for U.S. federal income tax purposes under Sections 355 and 368(a)(1)(D) of the Code.
	•	No order, injunction, decree or regulation issued by any court or agency of competent jurisdiction or other legal restraint or prohibition preventing completion of the distribution will be in effect.
	•	Any government approvals and other material consents necessary to consummate the distribution will have been obtained and be in full force and effect.
	•	The Separation and Distribution Agreement will not have been terminated.
	See: “The Separation and the Distribution—Conditions to the Distribution” included elsewhere in this information statement.
Stock Exchange Listing	There currently is not a public market for Corner Store common stock. We intend to apply to list Corner Store common stock on the NYSE under the symbol “CST.”

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Dividend Policy after the Distribution	After the distribution, Corner Store intends to pay a cash dividend to its common stockholders at an initial rate of $0.0625 per share per quarter, or $0.25 per share per year. However, the declaration and amount of all dividends to holders of Corner Store’s common stock will be at the discretion of the Board of Directors of Corner Store and will depend upon many factors, including Corner Store’s financial condition, earnings, capital requirements of its business, covenants associated with certain debt obligations, legal requirements, regulatory constraints, industry practice and other factors the Board of Directors deems relevant. There can be no assurance Corner Store will continue to pay any dividend even if it commences the payment of dividends. Corner Store is a holding company and has no direct operations. As a result, Corner Store will be able to pay dividends on its common stock only from available cash on hand and distributions received from its subsidiaries.
Distribution Agent, Transfer Agent and Registrar for Our Shares of Common Stock	[•].
U.S. Federal Income Consequences	On the basis that the distribution, together with certain related transactions, will qualify as a reorganization for U.S. federal income tax purposes, no gain or loss will be recognized by a stockholder of Valero, and no amount will be included in the income of a stockholder of Valero for U.S. federal income tax purposes, upon the receipt of shares of our common stock pursuant to the distribution, except with respect to any cash received in lieu of fractional shares. For more information regarding the potential U.S. federal income tax consequences to you of the distribution, see “The Separation and the Distribution—Material U.S. Federal Income Tax Consequences of the Distribution.”

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RISK FACTORS

You should carefully consider each of the following risks and all of the other information contained in this information statement. Some of these risks relate principally to our separation from Valero, while others relate principally to our business and the industry in which we operate or to the securities markets generally and ownership of our common stock. Our business, prospects, financial condition, results of operations or cash flows could be materially and adversely affected by any of these risks, and, as a result, the trading price of our common stock could decline.

Risks Relating to the Separation and the Distribution

We may not realize the potential benefits from the separation, and our historical and pro forma combined financial information is not necessarily indicative of our future prospects. We may be unable to achieve some or all of the benefits that we expect to achieve as an independent, publicly traded company.

We may not realize the potential benefits we expect from our separation from Valero. We have described those anticipated benefits elsewhere in this information statement. See “The Separation and the Distribution—Reasons for the Separation and the Distribution.” In addition, we will incur significant costs, including those described below, which may exceed our estimates, and we will incur some negative effects from our separation from Valero, including loss of access to some of the financial, managerial and professional resources from which we have benefited in the past.

Our historical and pro forma combined financial statements do not necessarily reflect the financial condition, results of operations or cash flows that we would have achieved as an independent, publicly traded company during the periods presented or those that we will achieve in the future, as a result of the following factors:

• Our historical combined financial results reflect allocations of expenses for services historically provided by Valero, and those allocations may be significantly lower than the comparable expenses we would have incurred as an independent company.

• Our working capital requirements historically have been satisfied as part of Valero’s corporate-wide cash management programs, and our cost of debt and other capital may significantly differ from that reflected in our historical combined financial statements.

• Our historical combined financial information may not fully reflect the costs associated with being an independent public company, including significant changes that may occur in our cost structure, management, financing arrangements and business operations as a result of our separation from Valero.

We based the pro forma adjustments on available information and assumptions that we believe are reasonable; however, our assumptions may prove not to be accurate. In addition, our unaudited pro forma combined financial information may not give effect to various ongoing additional costs we may incur in connection with being an independent public company. Accordingly, our unaudited pro forma combined financial information does not reflect what our financial condition, results of operations or cash flows would have been as an independent public company and is not necessarily indicative of our future financial condition or future results of operations. Please refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Unaudited Pro Forma Combined Financial Statements” and our historical audited and unaudited combined financial statements and the notes to those statements included elsewhere in this information statement.

We have no history operating as an independent public company. We will incur significant costs to create the corporate infrastructure necessary to operate as an independent public company. We may be unable to make, on a timely or cost-effective basis, the changes necessary to operate as an independent company. We may experience increased ongoing costs in connection with being an independent public company.

We have historically used Valero’s corporate infrastructure to support our business functions, including IT systems. Valero has been performing various corporate functions for us, including tax administration, treasury activities, accounting, IT services, ethics and compliance program administration, risk management and public relations. The expenses related to establishing and maintaining this infrastructure were spread among all of Valero’s businesses.

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Following the separation and after the expiration of the transition arrangements described below, we will no longer have access to Valero’s infrastructure, and we will need to establish our own. We expect to incur costs beginning in [•] to establish the necessary infrastructure. See “Unaudited Pro Forma Combined Financial Statements” included elsewhere in this information statement.

Following the separation, Valero will be contractually obligated to provide to us only those transition services specified in the Transition Services Agreements and the other agreements we enter into with Valero in connection with the separation and the distribution. The expiration date of the Transition Services Agreements will vary by service provided, but is expected to be generally no longer than 18 months from the distribution date. See “Certain Relationships and Related-Party Transactions—Agreements Between Us and Valero—Transition Services Agreements” for a description of the terms of the Transition Services Agreements. We may be unable to replace in a timely manner or on comparable terms the services or other benefits that Valero previously provided to us. Upon the expiration of the Transition Services Agreements or other agreements, many of the services that are covered in such agreements will be provided internally or by unaffiliated third parties. We expect that, in some instances, we will incur higher costs to obtain such services than we incurred prior to the separation and the distribution or under the terms of such agreements. If Valero does not effectively perform the services that are called for under the Transition Services Agreements and other agreements, we may not be able to operate our business effectively, and our profitability may decline. After the expiration of the Transition Services Agreements and the other agreements, we may be unable to replace the services specified in such agreements in a timely manner or on comparable terms.

Similarly, we currently purchase a wide variety of products and services, including software licenses, from third parties as part of Valero. We may experience some increased costs after the separation as a result of our inability to continue to purchase products and services on terms that are as favorable to us as those obtained under these combined purchasing arrangements. Although we cannot predict the extent of any such increased costs, it is possible that such costs could have a negative impact on our business and results of operations.

Until the distribution occurs, Valero has sole discretion to change the terms of the distribution in ways that may be unfavorable to us.

Until the distribution occurs, we are a wholly owned subsidiary of Valero. Accordingly, Valero has the sole and absolute discretion to determine and change the terms of the distribution, including the establishment of the record date and distribution date. These changes could be unfavorable to us. In addition, Valero may decide at any time not to proceed with the separation or the distribution.

In connection with our separation from Valero, Valero will indemnify us for certain liabilities, and we will indemnify Valero for certain liabilities. If we are required to act on these indemnities to Valero, we may need to divert cash to meet those obligations, and our financial results could be negatively impacted. In the case of Valero’s indemnity, there can be no assurance that the indemnity will be sufficient to insure us against the full amount of such liabilities, or as to Valero’s ability to satisfy its indemnification obligations in the future.

Pursuant to the Separation and Distribution Agreement and other agreements with Valero, it is expected that Valero will agree to indemnify us for certain liabilities, and we will agree to indemnify Valero for certain liabilities, in each case for uncapped amounts, as discussed further in “Certain Relationships and Related-Party Transactions—Agreements With Valero.” Indemnities that we may be required to provide Valero are not expected to be subject to any cap, may be significant and could negatively impact our business, particularly indemnities relating to our actions that could impact the tax-free nature of the distribution. Third parties could also seek to hold us responsible for any of the liabilities that Valero has agreed to retain. Further, there can be no assurance that the indemnity from Valero will be sufficient to protect us against the full amount of such liabilities, or that Valero will be able to fully satisfy its indemnification obligations. Moreover, even if we ultimately succeed in recovering from Valero any amounts for which we are held liable, we may be temporarily required to bear these losses ourselves. Each of these risks could negatively affect our business, cash flows, results of operations and financial condition.

We will be subject to continuing contingent liabilities of Valero following the separation.

After the separation, there will be several significant areas where the liabilities of Valero may become our obligations. For example, under the Code and the related rules and regulations, each corporation that was a member of the Valero consolidated U.S. federal income tax reporting group during any taxable period or portion of any taxable period ending

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on or before the effective time of the distribution is jointly and severally liable for the U.S. federal income tax liability of the entire Valero consolidated tax reporting group for that taxable period. In connection with the separation, we will enter into a Tax Matters Agreement with Valero that will allocate the responsibility for prior period taxes of the Valero consolidated tax reporting group between us and Valero. See “Certain Relationships and Related-Party Transactions—Agreements Between Us and Valero—Tax Matters Agreement.” However, if Valero is unable to pay any prior period taxes for which it is responsible, we could be required to pay the entire amount of such taxes.

If the distribution, together with certain related transactions, does not qualify as a transaction that is generally tax-free for U.S. federal income tax purposes, you and Valero could be subject to significant tax liability and, in certain circumstances, we could be required to indemnify Valero for material taxes pursuant to indemnification obligations under the Tax Matters Agreement.

If the distribution or certain internal transactions undertaken in anticipation of the distribution are determined to be taxable for U.S. federal income tax purposes, then we, Valero and/or our stockholders could be subject to significant tax liability. Valero has applied for a private letter ruling from the IRS substantially to the effect that, for U.S. federal income tax purposes, the distribution, except for cash received in lieu of fractional shares, will qualify as tax-free under Sections 355 and 361 of the Code, and that certain internal transactions undertaken in anticipation of the distribution will qualify for favorable treatment. Notwithstanding the private letter ruling, the IRS could determine on audit that the distribution or the internal transactions should be treated as taxable transactions if it determines that any of the facts, assumptions, representations or undertakings we or Valero have made or provided to the IRS is not correct, or that the distribution or the internal transactions should be taxable for other reasons, including as a result of a significant change in stock or asset ownership after the distribution. If the distribution ultimately is determined to be taxable, the distribution could be treated as a taxable dividend or capital gain to you for U.S. federal income tax purposes, and you could incur significant U.S. federal income tax liabilities. In addition, Valero would recognize gain in an amount equal to the excess of the fair market value of shares of our common stock distributed to Valero stockholders on the distribution date over Valero’s tax basis in such shares of our common stock. Moreover, Valero could incur significant U.S. federal income tax liabilities if it is ultimately determined that certain internal transactions undertaken in anticipation of the distribution are taxable.

Under the Tax Matters Agreement between Valero and us, it is expected that we would generally be required to indemnify Valero against any tax resulting from the distribution to the extent that such tax resulted from (i) an acquisition of all or a portion of our stock or assets, whether by merger or otherwise, (ii) other actions or failures to act by us or (iii) any of our representations or undertakings being incorrect. For a more detailed discussion, see “Certain Relationships and Related-Party Transactions—Agreements Between Us and Valero—Tax Matters Agreement.” Our indemnification obligations to Valero and its officers and directors are not expected to be limited by any maximum amount. If we are required to indemnify Valero or such other persons under the circumstances set forth in the Tax Matters Agreement, we may be subject to substantial liabilities.

We might not be able to engage in desirable strategic transactions and equity issuances following the distribution because of certain restrictions relating to requirements for tax-free distributions.

To preserve the tax-free treatment to Valero of the distribution, for the two-year period following the distribution, we may be limited or prohibited, except in specified circumstances, from:

• entering into any transaction pursuant to which all or a portion of our stock would be acquired, whether by merger or otherwise;

• issuing equity securities beyond certain thresholds;

• repurchasing our common stock;

• ceasing to actively conduct the retail business; and/or

• taking or failing to take any other action that prevents the distribution and related transactions from being tax-free.

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These restrictions may limit our ability to pursue strategic transactions or engage in new business or other transactions that may maximize the value of our business. For more information, see “The Separation and the Distribution—Material U.S. Federal Income Tax Consequences of the Distribution” and “Certain Relationships and Related-Party Transactions—Agreements Between Us and Valero—Tax Matters Agreement.”

We potentially could have received better terms from unaffiliated third parties than the terms we receive in our agreements with Valero.

The agreements we expect to enter into with Valero in connection with the separation, including the Separation and Distribution Agreement, the Tax Matters Agreement and other agreements, will have been negotiated in the context of the separation while we were still a wholly owned subsidiary of Valero. Accordingly, during the period in which the terms of those agreements will have been negotiated, we will not have had an independent Board of Directors or a management team independent of Valero. As a result, the terms of those agreements may not reflect terms that would have resulted from arm’s-length negotiations between unaffiliated third parties. The terms of the agreements to be negotiated in the context of the separation relate to, among other things, the allocation of assets, liabilities, rights and other obligations between Valero and us. Arm’s-length negotiations between Valero and an unaffiliated third party in another form of transaction, such as a buyer in a sale of a business transaction, may have resulted in more favorable terms to the unaffiliated third party. See “Certain Relationships and Related-Party Transactions—Agreements Between Us and Valero” included elsewhere in this information statement.

Our accounting and other management systems and resources may not be adequately prepared to meet the financial reporting and other requirements to which we will be subject following the separation and the distribution.

Our financial results previously were included within the consolidated results of Valero, and our reporting and control systems were appropriate for those of subsidiaries of a public company. Prior to the distribution, we were not directly subject to reporting and other requirements of the Exchange Act and Section 404 of the Sarbanes-Oxley Act of 2002. After the distribution, we will be subject to such reporting and other requirements, which will require, among other things, annual management assessments of the effectiveness of our internal controls over financial reporting and a report by our independent registered public accounting firm addressing these assessments. These and other obligations will place significant demands on our management and administrative and operational resources, including accounting resources.

To comply with these requirements, we anticipate that we will need to upgrade our systems, including computer hardware infrastructure, implement additional financial and management controls, reporting systems and procedures and hire additional accounting and finance staff. We expect to incur additional annual expenses related to these steps, including with respect to, among other things, directors and officers liability insurance, director fees, reporting with the SEC, transfer agent fees, increased auditing and legal fees and similar expenses, which expenses may be significant. If we are unable to upgrade our financial and management controls, reporting systems, IT and procedures in a timely and effective fashion, our ability to comply with our financial reporting requirements and other rules that apply to reporting companies could be impaired. Any failure to achieve and maintain effective internal controls could have an adverse effect on our business, financial condition, results of operations and cash flows.

After the separation and the distribution, we will have indebtedness, which could restrict our ability to pay dividends and have a negative impact on our financing options and liquidity position.

Immediately following the separation, we expect to bear a total combined indebtedness for borrowed money of approximately $1.05 billion. We may also incur additional indebtedness in the future. Our indebtedness may impose restrictions on us that could have material adverse consequences by:

• limiting our ability to obtain additional financing in the future for working capital, capital expenditures and acquisitions;

• limiting our ability to refinance our indebtedness on terms acceptable to us or at all;

• requiring us to dedicate a significant portion of our cash flows from operations to paying the principal of and interest on our indebtedness, thereby reducing funds available for other corporate purposes;

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• making it more difficult for us to pay our anticipated cash dividends on our common stock; and

• making us more vulnerable to economic downturns and limiting our ability to withstand competitive pressures.

See “Description of Financing Transactions and Certain Indebtedness” included elsewhere in this information statement for more information.

Risks Relating to Our Industry and Our Business

The convenience store and retail motor fuel industries are highly competitive, and new entrants or increased competition could result in reduced gross margins.

The convenience store and retail motor fuel industries in the geographic areas in which we operate are highly competitive and marked by ease of entry and constant change in the number and type of retailers offering the products and services found at our retail sites. We compete with numerous other convenience store chains, independent convenience stores, supermarkets, drugstores, discount clubs, motor fuel service stations, mass merchants, fast food operations and other similar retail outlets. In recent years, several non-traditional retailers, including supermarkets, club stores and mass merchants, have begun to compete directly with convenience stores, particularly in the sale of motor fuel. These non-traditional motor fuel retailers have obtained a significant share of the motor fuel market, and their market share is expected to grow, and these retailers may use promotional pricing or discounts, both at the fuel pump and in the convenience store, to encourage in-store merchandise sales and motor fuel sales. Some of our competitors have been in existence longer than us and have greater financial, marketing and other resources than we do. As a result, our competitors may be able to respond better to changes in the economy and new opportunities within the industry.

Volatility in oil and wholesale motor fuel costs, and seasonality in those costs and in motor fuel sales, could affect our operating results.

Historically, motor fuel revenue has comprised a substantial portion of our overall revenues. Oil and domestic wholesale motor fuel markets are volatile. General political conditions, acts of war or terrorism, instability in oil producing regions, particularly in the Middle East and South America, and the value of U.S. or Canadian dollars relative to other foreign currencies, particularly those of oil producing nations, could significantly affect oil supplies and wholesale motor fuel costs. In addition, the supply of motor fuel and our wholesale purchase costs could be adversely affected in the event of a shortage, which could result from, among other things, lack of capacity at oil refineries, sustained increase in global demand or the fact that our motor fuel contracts do not guarantee an uninterrupted, unlimited supply of motor fuel. Significant increases and volatility in wholesale motor fuel costs could result in lower motor fuel gross margins per gallon. This volatility makes it extremely difficult to predict the effect that future wholesale cost fluctuations will have on our operating results and financial condition. Dramatic increases in oil prices reduce retail motor fuel gross margins, because wholesale motor fuel costs typically increase faster than retailers are able to pass them along to customers. Furthermore, oil prices, wholesale motor fuel costs, motor fuel sales and motor fuel gross margins can be subject to seasonal fluctuations. For example, consumer demand for motor fuel typically increases during the summer driving season, and typically falls during the winter months. A significant change in any of these factors, including a significant decrease in consumer demand (other than typical seasonal variations), could materially affect our motor fuel and merchandise volumes, motor fuel gross profit and overall customer traffic, which in turn could have a material adverse effect on our business, financial condition and results of operations.

Changes in credit card expenses could reduce our gross margin, especially on motor fuel.

A significant portion of our sales involve payment using credit cards. We are assessed credit card fees as a percentage of transaction amounts and not as a fixed dollar amount or percentage of our gross margins. Higher motor fuel prices result in higher credit card expenses, and an increase in credit card use or an increase in credit card fees would have a similar effect. Therefore, credit card fees charged on motor fuel purchases that are more expensive as a result of higher motor fuel prices are not necessarily accompanied by higher gross margins. In fact, such fees may cause lower gross margins. Lower gross margins on motor fuel sales caused by higher credit card fees may decrease our overall gross margin and could have a material adverse effect on our business, financial condition and results of operations.

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General economic conditions that are largely out of our control may adversely affect our financial condition and results of operations.

Recessionary economic conditions, higher interest rates, higher motor fuel and other energy costs, inflation, increases in commodity prices, higher levels of unemployment, higher consumer debt levels, higher tax rates and other changes in tax laws or other economic factors may affect consumer spending or buying habits, and could adversely affect the demand for products we sell at our retail sites. Unfavorable economic conditions, higher motor fuel prices and unemployment levels can affect consumer confidence, spending patterns and miles driven, with many customers “trading down” to lower priced products in certain categories when unfavorable conditions exist. These factors can lead to sales declines in both motor fuel and general merchandise, and in turn have an adverse impact on our business, financial condition and results of operations.

Changes in consumer behavior and travel as a result of changing economic conditions or otherwise could affect our business.

In the convenience store industry, customer traffic is generally driven by consumer preferences and spending trends, growth rates for commercial truck traffic and trends in travel and weather. Changes in economic conditions generally, or in the regions in which we operate, could adversely affect consumer spending patterns and travel in our markets. In particular, weakening economic conditions may result in decreases in miles driven and discretionary consumer spending and travel, which affect spending on motor fuel and convenience items. In addition, changes in the types of products and services demanded by consumers may adversely affect our merchandise sales and gross margin. Additionally, negative publicity or perception surrounding motor fuel suppliers could adversely affect their reputation and brand image, which may negatively affect our motor fuel sales and gross margin. Similarly, advanced technology and increased use of “green” automobiles (e.g., those automobiles that do not use petroleum-based motor fuel or that are powered by hybrid engines) would reduce demand for motor fuel. Our success depends on our ability to anticipate and respond in a timely manner to changing consumer demands and preferences while continuing to sell products and services that remain relevant to the consumer and thus will positively impact overall merchandise gross margin.

Legal, technological, political and scientific developments regarding climate change may decrease demand for motor fuel.

Developments regarding climate change and the effects of greenhouse gas emissions on climate change and the environment may decrease the demand for our major product, petroleum-based motor fuel. Attitudes toward this product and its relationship to the environment may significantly affect our sales and ability to market our product. New technologies developed to steer the public toward non-fuel dependent means of transportation may create an environment with negative attitudes toward motor fuel, thus affecting the public’s attitude toward our major product and potentially having a material adverse effect on our business, financial condition and results of operations. Further, new technologies developed to improve fuel efficiency or governmental mandates to improve fuel efficiency may result in decreased demand for petroleum-based motor fuel, which could have a material adverse effect on our business, financial condition and results of operations.

Future tobacco legislation, campaigns to discourage smoking, increases in tobacco taxes and wholesale cost increases of tobacco products could have a material adverse impact on our operating revenues and gross margin.

Sales of tobacco products have historically accounted for an important portion of our total sales of convenience store merchandise. Significant increases in wholesale cigarette costs and tax increases on tobacco products, as well as future legislation and national and local campaigns to discourage smoking in the U.S. and Canada, may have an adverse effect on the demand for tobacco products, and therefore reduce our revenues and profits. Competitive pressures in our markets can make it difficult to pass price increases on to our customers. These factors could materially and adversely affect our retail price of cigarettes, cigarette unit volume and sales, merchandise gross margin and overall customer traffic. Reduced sales of tobacco products or smaller gross margins on the sales we make could have a material adverse effect on our business, financial condition and results of operations.

Currently, major cigarette manufacturers offer substantial rebates to retailers. We include these rebates as a component of our gross margin. In the event these rebates are no longer offered, or decreased, our profit from cigarette sales will decrease accordingly. In addition, reduced retail display allowances on cigarettes offered by cigarette manufacturers negatively affect gross margins. These factors could materially affect our retail price of cigarettes, cigarette unit volume

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and revenues, merchandise gross margin and overall customer traffic, which could in turn have a material adverse effect on our business, financial condition and results of operations.

We are subject to extensive government laws and regulations, and the cost of compliance with such laws and regulations can be material.

Our business and properties are subject to extensive local, state, provincial and federal governmental laws and regulations relating to, among other things, environmental conditions, the sale of alcohol, tobacco and money orders, employment conditions, including minimum wage requirements, and public accessibility requirements. The cost of compliance with these laws and regulations can have a material adverse effect on our operating results and financial condition. In addition, failure to comply with local, state, provincial and federal laws and regulations to which our operations are subject may result in penalties and costs that could adversely affect our business and our operating results.

In certain areas where our convenience stores are located, provincial, state or local laws limit the convenience stores’ hours of operation or their sale of alcoholic beverages, tobacco products, possible inhalants and lottery tickets, in particular to minors. Moreover, in some Canadian provinces, we are subject to price regulation on products such as gasoline, heating oil, milk, beer and wine. Failure to comply with these laws could adversely affect our revenues and results of operations because these state and local regulatory agencies have the power to revoke, suspend or deny applications for and renewals of permits and licenses relating to the sale of these products or to seek other remedies, such as the imposition of fines or other penalties.

Regulations related to wages also affect our business. Any appreciable increase in the statutory minimum wage would result in an increase in our labor costs and such cost increase, or the penalties for failing to comply with such statutory minimums, could adversely affect our business, financial condition and results of operations.

Further, although we are still evaluating what effect, if any, U.S. health care reform legislation may have on our business, a requirement to provide additional health insurance benefits to our employees, or health insurance coverage to additional employees, would likely increase our costs and expenses, and such increases could be significant enough to materially affect our business, financial position, results of operations and cash flows. We currently estimate that our health care costs will increase by approximately $5 million per year beginning in 2014.

Any changes in the laws or regulations described above that are adverse to us and our properties could affect our operating and financial performance. In addition, new regulations are proposed from time to time which, if adopted, could have a material adverse effect on our operating results and financial condition.

We are subject to extensive federal, provincial, state and local environmental laws.

Our operations are subject to a variety of environmental laws and regulations, including those relating to emissions to the air, discharges into water, releases of hazardous and toxic substances and remediation of contaminated sites. Under various federal, provincial, state and local laws and regulations, we may, as the owner or operator, be liable for the costs of removal or remediation of contamination at our current locations or our former locations, whether or not we knew of, or were responsible for, the presence of such contamination. In particular, as an owner and operator of motor fueling stations, we face risks relating to petroleum product contamination that other convenience store operators not engaged in such activities would not face. The remediation costs and other costs required to clean up or treat contaminated sites could be substantial. Contamination on and from our current or former locations may subject us to liability to third parties or governmental authorities for injuries to persons, property or natural resources and may adversely affect our ability to sell or rent our properties or to borrow money using such properties as collateral.

In the U.S., persons who dispose of or arrange for the disposal or treatment of hazardous or toxic substances away from locations used in a business may also be liable for the costs of removal or remediation of such substances at the disposal sites although such sites are not owned by such persons. Although we do not typically arrange for the treatment or disposal of large quantities of hazardous or toxic substances from any location, our current and historic operation of many locations and the disposal of contaminated soil and groundwater wastes generated during cleanups of contamination at such locations could expose us to such liability.

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We are subject to extensive environmental laws and regulations regulating underground storage tanks (“USTs”) and vapor recovery systems. Compliance with existing and future environmental laws regulating such tanks and systems may require significant expenditures. In the U.S., we pay fees to state “leaking UST” trust funds in states where they exist. These state trust funds are expected to pay or reimburse us for remediation expenses related to contamination associated with USTs subject to their jurisdiction. Such payments are always subject to a deductible paid by us, specified per incident caps and specified maximum annual payments, which vary among the funds. Additionally, such funds may have eligibility requirements that not all of our sites will meet. To the extent state funds or other responsible parties do not pay or delay payments for remediation, we will be obligated to make these payments, which could materially adversely affect our financial condition and results of operations. We cannot assure you that these funds or responsible third parties are or will continue to remain viable.

The nature of our motor fuel operations and those we acquire present risks of soil and groundwater contamination. In the future, we may incur substantial expenditures for remediation of contamination that has not been discovered at existing locations or locations which we may acquire. We regularly monitor our facilities for environmental contamination and record reserves on our financial statements to cover potential environmental remediation and compliance costs as we consider appropriate. However, we cannot assure you that the liabilities we have recorded are the only environmental liabilities relating to our current and former locations, that material environmental conditions not known to us do not exist, that future laws or regulations will not impose material environmental liability on us or that our actual environmental liabilities will not exceed our reserves. In addition, failure to comply with any environmental regulations or an increase in regulations could materially and adversely affect our operating results and financial condition.

Legislative and regulatory initiatives regarding climate change and greenhouse gas emissions have accelerated recently in the U.S. and in Canada. Greenhouse gases are certain gases, including carbon dioxide, that may be contributing to global warming and other climatic changes. If governmental climate change or greenhouse gas reduction initiatives are enacted, they could have a material adverse impact on our business, financial condition and results of operations by increasing our regulatory compliance expenses, increasing our motor fuel costs and/or decreasing customer demand for motor fuel sold at our locations. For example, the California Global Warming Solutions Act, also known as AB 32, directs the California Air Resources Board to develop and issue regulations to reduce greenhouse gas emissions in California to 1990 levels by 2020. The California Air Resources Board has issued a variety of regulations aimed at reaching this goal, including a Low Carbon Fuel Standard, a statewide cap-and-trade program and electricity renewable standards. The California Air Resources Board is also intending to require the establishment of Clean Fuels Outlets for alternative fuel vehicles. In addition, the Canadian province of Québec enacted a regulation creating a cap-and-trade system that will apply to our Canadian subsidiary starting on January 1, 2015. To the degree these programs or greenhouse gas regulations increase costs that we are unable to recover or otherwise adversely affect consumer demand, these matters could have a material adverse effect on our financial position, results of operations and liquidity.

Unfavorable weather conditions, the impact of climate change or other trends or developments in the regions in which we operate could adversely affect our business.

Substantially all of our convenience stores are located in the southwestern U.S., Colorado and in eastern Canada. These regions are susceptible to certain severe weather events, such as hurricanes, severe thunderstorms, snowstorms, tornadoes and extreme heat and cold. Inclement weather conditions could damage our facilities, our suppliers or could have a significant impact on consumer behavior, travel and convenience store traffic patterns, as well as our ability to operate our retail sites. We could also be affected by regional occurrences, such as energy shortages or increases in energy prices, fires or other natural disasters. Besides these more obvious consequences of severe weather, our ability to insure these locations and the related cost of such insurance may also affect our business, financial condition and results of operations.

We could be adversely affected if we are not able to attract and retain a strong management team.

We are dependent on our ability to attract and retain a strong management team. If, for any reason, we are not able to attract and retain qualified senior personnel, our business, financial condition, results of operations and cash flows could be adversely affected. We also are dependent on our ability to recruit qualified convenience store and field managers. If we fail to attract and retain these individuals at reasonable compensation levels, our operating results may be adversely affected.

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Valero will be our principal supplier of motor fuel after the distribution. A disruption in supply or a change in that relationship could have a material adverse effect on our business.

In connection with the separation, we intend to enter into long-term fuel supply agreements with Valero pursuant to which Valero will supply our retail sites with motor fuel.As a result, following the distribution, we will depend on Valero as the principal supplier of our motor fuel. A change of motor fuel suppliers, a disruption in supply or a significant change in our relationship with Valero could have a material adverse effect on our business, cost of sales, financial condition and results of operations.

Pending or future litigation could adversely affect our financial condition and results of operations. Litigation and publicity concerning motor fuel or food quality, health and other related issues could result in significant liabilities or litigation costs and cause consumers to avoid our retail sites.

Convenience store businesses can be adversely affected by litigation and complaints from customers or government agencies resulting from motor fuel or food quality, illness or other health or environmental concerns or operating issues stemming from one or more locations. Adverse publicity about these allegations may negatively affect us, regardless of whether the allegations are true, by discouraging customers from purchasing motor fuel, merchandise or food at one or more of our retail sites. We could also incur significant liabilities if a lawsuit or claim results in a decision against us. Even if we are successful in defending such litigation, our litigation costs could be significant, and the litigation may divert time and money away from our operations and adversely affect our performance. Our defense costs and any resulting damage awards may not be fully covered by our insurance policies.

The dangers inherent in the storage of motor fuel could cause disruptions and could expose us to potentially significant losses, costs or liabilities.

We store motor fuel in storage tanks at our retail sites. Our operations are subject to significant hazards and risks inherent in storing motor fuel. These hazards and risks include, but are not limited to, fires, explosions, spills, discharges and other releases, any of which could result in distribution difficulties and disruptions, environmental pollution, governmentally imposed fines or cleanup obligations, personal injury or wrongful death claims and other damage to our properties and the properties of others. Any such event could have a material adverse effect on our business, financial condition and results of operations.

Future consumer or other litigation could adversely affect our financial condition and results of operations.

Our retail operations are characterized by a high volume of customer traffic and by transactions involving a wide array of product selections. These operations carry a higher exposure to consumer litigation risk when compared to the operations of companies operating in many other industries. Consequently, we may become a party to individual personal injury, off-specification motor fuel, products liability and other legal actions in the ordinary course of our business. While these actions are generally routine in nature, incidental to the operation of our business and immaterial in scope, if our assessment of any action or actions should prove inaccurate, our financial condition and results of operations could be adversely affected. Additionally, we are occasionally exposed to industry-wide or class-action claims arising from the products we carry or industry-specific business practices. For example, we recently reached a settlement in principle of a series of class-action claims alleging that the sale of unadjusted volumes of motor fuel at temperatures in excess of 60 degrees Fahrenheit violates various state consumer protection laws due to the expansion of the motor fuel with the increase of motor fuel temperatures. The settlement is currently pending before the lead court. If the settlement is not ultimately approved by the court, the claims asserted in these lawsuits, if resolved adversely to us, could give rise to substantial damages. Our defense costs and any resulting damage awards may not be fully covered by our insurance policies. Thus, the failure to approve the pending settlement of one or more of these lawsuits could have a material adverse effect on our financial position, liquidity and results of operations in a particular period or periods. See further discussion of this matter in Note 8 under the caption “Litigation Matters” of Notes to Combined Financial Statements that accompany our audited combined financial statements included elsewhere in this information statement.

We rely on our IT systems and network infrastructure to manage numerous aspects of our business, and a disruption of these systems could adversely affect our business.

We depend on our IT systems and network infrastructure to manage numerous aspects of our business and provide analytical information to management. These systems are an essential component of our business and growth strategies, and a serious disruption to them could significantly limit our ability to manage and operate our business efficiently.

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These systems are vulnerable to, among other things, damage and interruption from power loss or natural disasters, computer system and network failures, loss of telecommunications services, physical and electronic loss of data, security breaches and computer viruses, which could result in a loss of sensitive business information, systems interruption or the disruption of our business operations. To protect against unauthorized access or attacks, we have implemented infrastructure protection technologies and disaster recovery plans, but there can be no assurance that a technology systems breach or systems failure will not have a material adverse effect on our financial condition or results of operations.

Our business and our reputation could be adversely affected by the failure to protect sensitive customer, employee or vendor data or to comply with applicable regulations relating to data security and privacy.

In the normal course of our business as a motor fuel and merchandise retailer, we obtain large amounts of personal data, including credit and debit card information from our customers. While we have invested significant amounts in the protection of our IT systems and maintain what we believe are adequate security controls over individually identifiable customer, employee and vendor data provided to us, a breakdown or a breach in our systems that results in the unauthorized release of individually identifiable customer or other sensitive data could nonetheless occur and have a material adverse effect on our reputation, operating results and financial condition. Such a breakdown or breach could also materially increase the costs we incur to protect against such risks. Also, a material failure on our part to comply with regulations relating to our obligation to protect such sensitive data or to the privacy rights of our customers, employees and others could subject us to fines or other regulatory sanctions and potentially to lawsuits.

We are subject to currency exchange risk.

We expect that a significant portion of our sales will be made in Canada. In our combined financial statements, we translate the local currency financial results of our Retail–Canada segment into U.S. dollars based on average exchange rates prevailing during a reporting period. During times of a strengthening U.S. dollar, at a constant level of business, our reported Canadian revenues and earnings will be reduced because the local currency will translate into fewer U.S. dollars.

We expect that substantially all of our indebtedness following the distribution will be denominated in U.S. dollars, while a significant portion of our revenue and cash flow is expected to be generated from our Canadian operations. To the extent that the cash flow generated from our U.S. operations is not sufficient to satisfy the ongoing payment obligations under our U.S. dollar-denominated debt, we will need to convert Canadian dollars into U.S. dollars in order to make the necessary payments and we may incur additional tax expense. Accordingly, a strengthening of the U.S. dollar against the Canadian dollar could make it more difficult for us to repay our indebtedness.

Given the volatility of exchange rates, we may not be able to manage our currency risks effectively, which could have a material adverse effect on our financial condition or results of operations.

We are insured under Valero’s insurance policies for occurrences prior to the completion of the distribution. The specifications and insured limits under those policies, however, are at a level consistent with Valero as a whole. As a result, we are effectively self-insured and are exposed to most losses relating to occurrences prior to the completion of the distribution. Upon completion of the distribution, we expect to obtain comprehensive insurance coverage, but we may incur losses that are not covered by insurance or reserves in whole or in part, and such losses could adversely affect our results of operations and financial position.

We reserve for estimated general liability and workers’ compensation losses, and, in connection with our separation from Valero, we expect to enter into an agreement that will permit us to access Valero’s insurance for general liability and workers’ compensation losses that we incur up to the distribution date. The specifications and insured limits under these policies are at a level consistent with Valero as a whole, and Corner Store may suffer losses for which insurance coverage is not available. Upon our separation from Valero, we expect to carry comprehensive insurance policies to cover general liabilities, workers’ compensation liabilities, employee work injury liabilities, property losses and directors and officers liabilities. We expect both the coverage limits and deductibles will be consistent with industry standards for companies of a similar size and operations. A significant portion of the risk may be self-insured where the risk may not be insurable or cannot be insured at a reasonable cost. Some losses, such as those resulting from wars or acts of terrorism may not be insurable at any cost. Self-insured losses and uninsurable losses, if large enough, could have a material impact on our results of operations and financial position. Should an uninsured loss or a loss in excess of

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insured limits occur, we could lose capital invested in that property, as well as the anticipated future revenues derived from the retailing activities conducted at that property, while remaining obligated for any mortgage debt or other financial obligations related to the property. Any such loss could adversely affect our business, results of operations or financial condition.

Uncertainty and illiquidity in credit and capital markets could impair our ability to obtain credit and financing on acceptable terms.

Our ability to obtain credit and capital depends in large measure on capital markets and liquidity factors that we do not control. Our ability to access credit and capital markets may be restricted at a time when we would like, or need, to access those markets, which could have an impact on our flexibility to react to changing economic and business conditions. In addition, the cost and availability of debt and equity financing may be adversely affected by unstable or illiquid market conditions. Protracted uncertainty and illiquidity in these markets also could have an adverse impact on our lenders, causing them to fail to meet their obligations to us. Our access to credit and capital markets may be affected by the credit ratings assigned to our debt by independent credit rating agencies.

Compliance with and changes in tax laws could adversely affect our performance.

We are subject to extensive tax liabilities imposed by multiple jurisdictions, including income taxes, indirect taxes (excise/duty, sales/use and gross receipts taxes), payroll taxes, franchise taxes, withholding taxes and ad valorem taxes. New tax laws and regulations and changes in existing tax laws and regulations are continuously being enacted or proposed that could result in increased expenditures for tax liabilities in the future. Many of these liabilities are subject to periodic audits by the respective taxing authority. Subsequent changes to our tax liabilities as a result of these audits may subject us to interest and penalties.

Risks Relating to Our Common Stock

There is no existing market for our common stock, and a trading market that will provide you with adequate liquidity may not develop for our common stock. In addition, once our common stock begins trading, the market price of our shares may fluctuate widely.

There is currently no public market for our common stock. We intend to list our common stock on the NYSE under the ticker symbol “CST.” It is anticipated that on or prior to the record date for the distribution, trading of shares of our common stock will begin on a “when-issued” basis and will continue up to and including the distribution date. However, there can be no assurance that an active trading market for our common stock will develop as a result of the distribution or be sustained in the future.

We cannot predict the prices at which our common stock may trade after the distribution. The market price of our common stock may fluctuate widely, depending upon many factors, some of which may be beyond our control, including:

• our business profile and market capitalization may not fit the investment objectives of Valero’s current stockholders, and our common stock may not be included in some indices, causing certain holders to sell their shares, though some of this selling pressure may be offset to the extent our stock is purchased by other investors due to our inclusion in other indices;

• a shift in our investor base;

• our quarterly or annual earnings, or those of other companies in our industry;

• actual or anticipated fluctuations in our operating results;

• announcements by us or our competitors of significant acquisitions or dispositions;

• the failure of securities analysts to cover our common stock after the distribution;

• changes in earnings estimates by securities analysts or our ability to meet our earnings guidance;

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• the operating and stock price performance of other comparable companies;

• overall market fluctuations and general economic conditions; and

• the other factors described in these “Risk Factors” and elsewhere in this information statement.

Stock markets in general have also experienced volatility that has often been unrelated to the operating performance of a particular company. These broad market fluctuations could negatively affect the trading price of our common stock.

Future sales or distributions of our common stock, including the sale by Valero of the shares of our common stock that it retains after the distribution, could depress the market price for shares of our common stock.

The shares of our common stock that Valero distributes to its stockholders generally may be sold immediately in the public market. It is possible that some stockholders of Valero, including possibly some of Valero’s major stockholders and index fund investors, will sell Valero or our common stock received in the distribution for various reasons (for example, if our business profile or market capitalization as an independent company does not fit their investment objectives). The sales of significant amounts of our common stock or the perception in the market that this will occur may result in the lowering of the market price of our common stock. In addition, following the distribution, Valero will retain an ownership interest in 20 percent of our common stock. Pursuant to a Stockholder’s and Registration Rights Agreement with Valero, it is expected that Valero will be required to vote such shares in proportion to the votes cast by our other stockholders. See “Certain Relationships and Related-Party Transactions—Agreements Between Us and Valero—Stockholder’s and Registration Rights Agreement” included elsewhere in this information statement. We further expect that pursuant to the private letter ruling Valero will be required to dispose of such retained shares of our common stock that it owns as soon as practicable and consistent with its reasons for retaining such shares, but in no event later than five years after the distribution. Pursuant to the Stockholder’s and Registration Rights Agreement, it is expected that we will agree that, upon the request of Valero, we will use our best efforts to effect the registration under applicable securities laws of the shares of common stock retained by Valero. Any disposition by Valero, or any significant shareholder, of our common stock in the public market, or the perception that such dispositions could occur, could adversely affect prevailing market prices for our common stock.

Your percentage ownership in us may be diluted in the future.

As with any publicly traded company, your percentage ownership in us may be diluted in the future because of equity issuances for acquisitions, capital market transactions or otherwise, including, without limitation, equity awards that we expect will be granted to our directors, officers and employees.

Certain provisions in our corporate documents and Delaware law may prevent or delay an acquisition of our company, even if that change may be considered beneficial by some of our stockholders.

The existence of some provisions of our certificate of incorporation and bylaws and Delaware law could discourage, delay or prevent a change in control of us that a stockholder may consider favorable. These include provisions:

• providing our Board of Directors with the right to issue preferred stock without stockholder approval;

• prohibiting stockholders from taking action by written consent;

• restricting the ability of our stockholders to call a special meeting;

• providing for a classified Board of Directors;

• providing that the number of directors will be filled by the Board of Directors and vacancies on the Board of Directors, including those resulting from an enlargement of the Board of Directors, will be filled by the Board of Directors;

• requiring cause and an affirmative vote of at least 60 percent of the voting power of the then-outstanding voting stock to remove directors;

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• requiring the affirmative vote of at least 80 percent of the voting power of the then-outstanding voting stock to amend certain provisions of our certificate of incorporation and bylaws; and

• establishing advance notice requirements for nominations of candidates for election to our Board of Directors or for stockholder proposals.

In addition, following the distribution, we will be subject to Section 203 of the Delaware General Corporation Law (the “DGCL”) which may have an anti-takeover effect with respect to transactions not approved in advance by our Board of Directors, including discouraging takeover attempts that could have resulted in a premium over the market price for shares of our common stock.

We believe these provisions protect our stockholders from coercive or otherwise unfair takeover tactics by requiring potential acquirors to negotiate with our Board of Directors and by providing our Board of Directors with more time to assess any acquisition proposal. These provisions are not intended to make our company immune from takeovers. However, these provisions apply even if the offer may be considered beneficial by some stockholders and could delay or prevent an acquisition that our Board of Directors determines is not in the best interests of our company and our stockholders.

See “Description of Capital Stock” included elsewhere in this information statement for more information.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This information statement includes forward-looking statements, including the sections entitled “Summary,” “Risk Factors,” “The Separation and the Distribution,” “Business and Properties” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Forward-looking statements include the information concerning our possible or assumed future results of operations, business strategies, financing plans, competitive position, credit ratings, dividend growth, potential growth opportunities, potential operating performance improvements, potential improvements in return on capital employed, benefits resulting from our separation from Valero, the effects of competition and the effects of future legislation or regulations. You can identify our forward-looking statements by the words “anticipate,” “estimate,” “believe,” “budget,” “continue,” “could,” “intend,” “may,” “plan,” “potential,” “predict,” “seek,” “should,” “will,” “would,” “expect,” “objective,” “projection,” “forecast,” “goals,” “guidance,” “outlook,” “effort,” “target” and similar expressions.

These forward-looking statements include, among other things, statements regarding:

• future retail gross margins, including gasoline, diesel, heating oil and convenience store merchandise gross margins;

• our anticipated level of capital investments and the effect of these capital investments on our results of operations;

• anticipated trends in the demand for gasoline, diesel and heating oil globally and in the regions where we operate;

• expectations regarding environmental, tax and other regulatory initiatives; and

• the effect of general economic and other conditions on retail fundamentals.

In general, we based the forward-looking statements on our current expectations, estimates and projections about our company and the industry in which we operate. We caution you that these statements are not guarantees of future performance as they involved assumptions that, while made in good faith, may prove to be incorrect, and involve risks and uncertainties we cannot predict. In addition, we based many of these forward-looking statements on assumptions about future events that may prove to be inaccurate. Accordingly, our actual outcomes and results may differ materially from what we have expressed or forecasted in the forward-looking statements. Any differences could result from a variety of factors, including the following:

• competitive pressures from convenience stores, filling stations and other non-traditional retailers located in our markets;

• volatility and seasonality in crude oil, wholesale petroleum costs and motor fuel sales;

• increasing consumer preferences for alternative motor fuel, or improvements in fuel efficiency;

• the operation of our retail sites in close proximity to stores of Valero’s other branded wholesale customers;

• seasonal trends in the retail industry;

• severe or unfavorable weather conditions;

• inability to build or acquire and successfully integrate new retail sites;

• our ability to comply with federal, provincial and state regulations, including those related to environmental matters and the sale of alcohol and cigarettes and employment laws and health benefits;

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• dangers inherent in storing and transporting motor fuel;

• pending or future consumer or other litigation;

• wholesale cost increases of tobacco products or future legislation or campaigns to discourage smoking;

• litigation or adverse publicity concerning food quality, food safety or other health concerns related to our restaurant facilities;

• dependence on Valero for motor fuel;

• dependence on suppliers for credit terms;

• dependence on senior management and the ability to attract qualified employees;

• acts of war and terrorism;

• political conditions in oil producing regions and global demand for oil;

• dependence on our IT systems;

• changes in accounting standards, policies or estimates;

• fluctuations in the exchange rate between the U.S. and Canadian currencies;

• impairment of long-lived assets;

• our ability to comply with covenants in any credit agreements or other debt instruments and availability, terms and deployment of capital;

• the impact of the separation and the distribution and risks relating to our ability to operate effectively as an independent, publicly traded company, including any difficulties associated with enhancing our accounting systems and internal controls and complying with financial reporting requirements;

• changes in our cost structure, management, financing and business operations following the separation;

• our different capital structure as an independent company, including our access to capital, credit ratings, debt and ability to raise additional financing;

• any failure to fully and/or timely achieve the expected benefits of the separation and the distribution;

• a determination by the IRS that the distribution or certain related transactions should be treated as a taxable transaction; and

• other unforeseen factors.

You should consider the areas of risk described above, as well as those set forth in the section entitled “Risk Factors” included elsewhere in this information statement, in connection with considering any forward-looking statements that may be made by us and our businesses generally. We cannot assure you that projected results or events reflected in the forward-looking statements will be achieved or will occur. The forward-looking statements included in this document are made as of the date of this information statement. We undertake no obligation to publicly release any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events.

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THE SEPARATION AND THE DISTRIBUTION

General

On July 31, 2012, Valero announced its intention to pursue the separation of Valero’s retail business.

The separation will be accomplished through a series of transactions in which the assets (including the equity interests of certain Valero subsidiaries) and liabilities associated with Valero’s retail business will be transferred to Corner Store or entities that are, or will become prior to the distribution, subsidiaries of Corner Store. In connection with the separation, we expect that Corner Store will incur up to $1.05 billion in new debt for which we will not retain any cash following the separation.

Following the separation, the distribution will be effected on the distribution date by way of a pro rata distribution of 80 percent of the outstanding shares of Corner Store common stock to Valero’s stockholders of record as of 5:00 p.m. Eastern Time on [•], the record date for the distribution.

Reasons for the Separation and the Distribution

The Board of Directors of Valero believes that the separation and the distribution are in the best interests of Valero and its stockholders and will provide opportunities and benefits. The opportunities and benefits that the Valero Board of Directors considered include the following:

• Strategic Focus and Operational Flexibility—Position each company to pursue a more focused, industry-specific strategy, with Corner Store well-positioned to pursue value creation strategies in the retail business and Valero well-positioned to focus on its remaining businesses, and create additional operational flexibility within each of Corner Store and Valero.

• Management Focus—Allow management of each company to concentrate that company’s resources wholly on its particular market segments, customers and core businesses, with greater ability to anticipate and respond rapidly to changing markets and new opportunities. Management of each company will be able to focus on core operations, with greater focus on customized strategies that can deliver long-term shareholder value.

• Recruiting and Retaining Employees—Allow each company to recruit and retain employees with expertise directly applicable to its needs and pursuant to compensation policies that are appropriate for its specific lines of business. In particular, following the distribution, the value of equity-based incentive compensation arrangements offered by each company should be more closely aligned with the performance of its businesses, and the employee benefits offered by each company should be better tailored to the nature of each company’s business. The equity-based compensation arrangements following the distribution should provide enhanced incentives for employee performance and improve the ability of each company to attract, retain and motivate qualified personnel at all levels of the organization.

• Access to Capital and Capital Structure—Eliminate competition for capital between the business lines. Instead, both companies will have direct access to the debt and equity capital markets to fund their respective growth strategies and to establish a capital structure and dividend policy appropriate for their business needs. In addition, the separation will result in separately traded stock that will facilitate each company’s growth strategy.

• Acquisition Currency—Corner Store’s common stock will become a valuable acquisition currency after the distribution. Financial advisers to Corner Store have advised that the distribution may result in a greater willingness of certain targets to accept the equity of Corner Store as merger consideration because of a more aligned investment profile and growth strategy. Accordingly, the distribution is anticipated to further drive Corner Store’s growth by enhancing its mergers and acquisitions program.

• Investor Choice—Provide investors with a more targeted investment opportunity in each company that offers different investment business characteristics, including different opportunities for growth, capital structure,

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business models and financial returns. This will allow investors to evaluate the separate and distinct merits, performance and future prospects of each company.

The Valero Board of Directors also considered a number of potentially negative factors in evaluating the separation and the distribution, including potential loss of synergies from operating as one company, increased costs, loss of joint purchasing power, disruptions to the business as a result of the separation, limitations placed on Corner Store as a result of the agreements it is expected to enter into with Valero in connection with the separation, the impact of Corner Store’s incurrence of new indebtedness in connection with the separation, the risk of not being able to realize the expected benefits of the separation in a timely manner or at all, the risk that the separation might not be completed in a timely manner or at all and the one-time and ongoing costs of the separation. The Valero Board of Directors concluded that notwithstanding these potentially negative factors, the pursuit of the separation and the distribution would be in the best interests of Valero and its stockholders.

The Number of Shares You Will Receive

Each Valero stockholder of record will receive one share of Corner Store common stock for every [•] shares of Valero common stock held on the record date for the distribution.

Treatment of Fractional Shares

Fractional shares will not be distributed in connection with the distribution. Instead, the distribution agent will aggregate fractional shares into whole shares, sell the whole shares in the open market at prevailing market prices and distribute the aggregate cash proceeds from the sales, net of brokerage fees and other costs, pro rata to each holder who would otherwise have been entitled to receive a fractional share in the distribution. Valero stockholders will not be entitled to interest on any cash payment made in lieu of fractional shares.

If you have any questions concerning the mechanics of the issuance of fractional shares of common stock held directly, we encourage you to contact Computershare using the contact information for Computershare set forth elsewhere in this information statement. If you have any questions concerning the mechanics of the issuance of fractional shares of common stock held in “street name,” we encourage you to contact your bank or brokerage firm.

When and How You Will Receive the Distribution of Corner Store Shares

Valero will distribute the shares of Corner Store common stock on [•], the distribution date, to holders of record on the record date. The distribution is expected to occur following the NYSE market closing on the distribution date. It is expected that Valero’s transfer agent and registrar, Computershare, will serve as transfer agent and registrar for the Corner Store common stock and as distribution agent in connection with the distribution.

If you own Valero common stock as of 5:00 p.m. Eastern Time on the record date, the shares of Corner Store common stock that you are entitled to receive in the distribution will be issued electronically, on the distribution date, to your account as follows:

• Registered Stockholders—If you own your shares of Valero stock directly, either in book-entry form through an account at Valero’s transfer agent and/or if you hold paper stock certificates, you will receive your shares of Corner Store common stock by way of direct registration in book-entry form. Registration in book-entry form refers to a method of recording stock ownership in which no physical paper share certificates are issued to stockholders, as is the case in this distribution. Commencing on or shortly after the distribution date, the distribution agent will mail to you an account statement that indicates the number of shares of Corner Store common stock that have been registered in book-entry form in your name. If you have any questions concerning the mechanics of having shares of our common stock registered in book-entry form, we encourage you to contact Computershare using the contact information for Computershare set forth elsewhere in this information statement.

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• Beneficial Stockholders—If you hold your shares of Valero common stock beneficially through a bank or brokerage firm, the bank or brokerage firm would be said to hold the stock in “street name” and ownership would be recorded on the bank or brokerage firm’s books, and your bank or brokerage firm will credit your account for the shares of Corner Store common stock that you are entitled to receive in the distribution. If you have any questions concerning the mechanics of having shares of common stock held in “street name,” we encourage you to contact your bank or brokerage firm.

Treatment of Stock-Based Compensation

No stock-based awards of Corner Store will be issued in exchange for either vested or non-vested Valero stock-based awards held by our employees prior to the separation. Valero intends to accelerate the vesting of all of its non-vested stock-based awards held by our employees at the distribution date. Adjustments to Valero’s outstanding stock-based awards and long-term incentive plans will be addressed in a subsequent amendment to the registration statement of which this information statement is a part. 

Treatment of 401(k) Shares

The treatment of shares of Valero common stock held in retirement plans maintained by Valero has not been finally determined, and we will include information regarding their treatment in an amendment to the registration statement of which this information statement is a part.

Results of the Separation and the Distribution

After the separation and the distribution, we will be an independent, publicly traded company. Immediately following the distribution, we expect to have approximately [•] stockholders of record, based on the number of registered stockholders of Valero common stock on [•], and approximately [•] shares of Corner Store common stock outstanding. The actual number of shares to be distributed will be determined on the record date and will reflect any exercise or vesting of Valero equity-based awards prior to the record date for the distribution.

Before the distribution, we expect to enter into the Separation and Distribution Agreement and several other agreements with Valero to affect the separation and provide a framework for our relationship with Valero after the separation. These agreements will provide for the allocation between Valero and Corner Store of Valero’s assets, liabilities and obligations subsequent to the separation and distribution, including with respect to transition matters, employee matters, intellectual property matters, tax matters and other commercial relationships. We also expect to enter into a Stockholder’s and Registration Rights Agreement with Valero pursuant to which, among other things, it is expected that we will agree that, upon the request of Valero, we will use our best efforts to affect the registration under applicable federal and state securities laws of the shares of common stock retained by Valero after the distribution. For a description of these agreements, see “Certain Relationships and Related-Party Transactions—Agreements Between Us and Valero” included elsewhere in this information statement.

The distribution will not affect the number of outstanding shares of Valero common stock or any rights of Valero stockholders, except that the trading price of Valero shares will likely change as a result of the distribution.

Material U.S. Federal Income Tax Consequences of the Distribution

The following is a summary of the material U.S. federal income tax consequences of the distribution to U.S. Holders (as defined below) of Valero common stock that receive shares of Corner Store common stock in the distribution. This summary is based on the Code, the U.S. Treasury regulations promulgated thereunder and interpretations of the Code and the U.S. Treasury regulations by the courts and the IRS, in effect as of the date hereof, and all of which are subject to change, possibly with retroactive effect. This summary does not discuss all the tax considerations that may be relevant to Valero stockholders in light of their particular circumstances, and it does not address the consequences to Valero stockholders subject to special treatment under the U.S. federal income tax laws (such as holders other than U.S. Holders (as defined below), insurance companies, dealers or brokers in securities or currencies, tax-exempt organizations, financial institutions, mutual funds, pass-through entities and investors in such entities, holders who hold their shares

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as a hedge or as part of a hedging, straddle, conversion, synthetic, security, integrated investment or other risk-reduction transaction or who are subject to alternative minimum tax or holders who acquired their shares upon the exercise of employee stock options or otherwise as compensation). In addition, this summary does not address the U.S. federal income tax consequences to those Valero stockholders who do not hold their Valero common stock as a capital asset. Finally, this summary does not address any state, local or foreign tax consequences.

VALERO STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISERS CONCERNING THE U.S. FEDERAL, STATE AND LOCAL AND NON-U.S. TAX CONSEQUENCES OF THE DISTRIBUTION TO THEM.

For purposes of this discussion, a U.S. Holder is a beneficial owner of Valero common stock that is, for U.S. federal income tax purposes:

• an individual who is a citizen or resident of the U.S.;

• a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the U.S. or any state thereof or the District of Columbia;

• an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or

• a trust, if (1) a court within the U.S. is able to exercise primary supervision over its administration and one or more U.S. persons has the authority to control all of the substantial decisions of such trust or (2) in the case of a trust that was treated as a domestic trust under the law in effect before 1997, a valid election is in place under applicable U.S. Treasury regulations.

If a partnership (including any entity treated as a partnership for U.S. federal income tax purposes) holds Valero common stock, the tax treatment of a partner will generally depend on the status of the partner and on the activities of the partnership. Partners in a partnership holding Valero common stock should consult their own tax advisers regarding the tax consequences of the distribution.

Distribution

The distribution is conditioned upon Valero’s receipt of a private letter ruling from the IRS, substantially to the effect that the distribution, together with certain related transactions, will qualify as a reorganization for U.S. federal income tax purposes under Sections 355 and 368(a)(1)(D) of the Code. Valero has applied for a private letter ruling from the IRS, and expects to receive an opinion from a nationally recognized accounting firm, substantially to the effect that the distribution will so qualify.

On the basis the distribution so qualifies, in general, for U.S. federal income tax purposes: (i) the distribution will not result in any taxable income, gain or loss to Valero, except for taxable income or gain possibly arising as a result of certain intercompany transactions; (ii) no gain or loss will be recognized by (and no amount will be included in the income of) U.S. Holders of Valero common stock upon their receipt of shares of Corner Store common stock in the distribution, except with respect to cash received in lieu of fractional shares measured by the difference between the cash received for such fractional share and the U.S. Holder’s basis in that fractional share, as determined below; (iii) the aggregate basis of the Valero common stock and the Corner Store common stock (including any fractional share interests in Corner Store common stock for which cash is received) in the hands of each U.S. Holder of Valero common stock after the distribution will equal the aggregate basis of Valero common stock held by the U.S. Holder immediately before the distribution, allocated between the Valero common stock and the Corner Store common stock in proportion to the relative fair market value of each on the date of the distribution; and (iv) the holding period of the Corner Store common stock received by each U.S. Holder of Valero common stock (including any fractional share interests in Corner Store common stock for which cash is received) will include the holding period at the time of the distribution for the Valero common stock on which the distribution is made, provided that the Valero common stock is held as a capital asset on the date of the distribution.

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Although a private letter ruling from the IRS generally is binding on the IRS, if the factual representations or assumptions made in the letter ruling request are untrue or incomplete in any material respect, we will not be able to rely on the ruling. Furthermore, the IRS will not rule on whether a distribution satisfies certain requirements necessary to obtain tax-free treatment under Section 355 of the Code. Rather, the ruling is based upon representations by Valero that these conditions have been satisfied, and any inaccuracy in such representations could invalidate the ruling. In addition to obtaining the ruling from the IRS, Valero expects to obtain an opinion from a nationally recognized accounting firm substantially to the effect that the distribution, together with certain related transactions, will qualify as a reorganization for U.S. federal income tax purposes under Sections 355 and 368(a)(1)(D) of the Code. The opinion will rely on the ruling as to matters covered by the ruling. In addition, the opinion will be based on, among other things, certain assumptions and representations made by Valero and us, which if incorrect or inaccurate in any material respect would jeopardize the conclusions reached by the accounting firm in its opinion. The tax opinion will not be binding on the IRS or the courts.

Notwithstanding receipt by Valero of the private letter ruling from the IRS and the opinion from a nationally recognized accounting firm, the IRS could assert that the distribution does not qualify for tax-free treatment for U.S. federal income tax purposes. If the IRS were successful in taking this position, Valero’s stockholders and Valero could be subject to significant U.S. federal income tax liability. In general, Valero would be subject to tax as if it had sold the Corner Store common stock in a taxable sale for its fair market value and Valero stockholders who receive shares of Corner Store common stock in the distribution would be subject to tax as if they had received a taxable distribution equal to the fair market value of such shares. In addition, even if the distribution was otherwise to qualify under Section 355 of the Code, it may be taxable to Valero (but not to Valero stockholders) under Section 355(e) of the Code, if the distribution was later deemed to be part of a plan (or series of related transactions) pursuant to which one or more persons acquires, directly or indirectly, stock representing a 50 percent or greater interest in Valero or us. For this purpose, any acquisitions of Valero stock or of our common stock within the period beginning two years before the distribution and ending two years after the distribution are presumed to be part of such a plan, although we or Valero may be able to rebut that presumption.

U.S. Treasury regulations also generally provide that if a U.S. Holder of Valero common stock holds different blocks of Valero common stock (generally shares of Valero common stock purchased or acquired on different dates or at different prices), the aggregate basis for each block of Valero common stock purchased or acquired on the same date and at the same price will be allocated, to the greatest extent possible, between the shares of Corner Store common stock received in the distribution in respect of such block of Valero common stock and such block of Valero common stock, in proportion to their respective fair market values. The holding period of the shares of Corner Store common stock received in the distribution in respect of such block of Valero common stock will include the holding period of such block of Valero common stock, provided that such block of Valero common stock was held as a capital asset on the distribution date. If a U.S. Holder of Valero common stock is not able to identify which particular shares of Corner Store common stock are received in the distribution with respect to a particular block of Valero common stock, for purposes of applying the rules described above, the U.S. Holder may designate which shares of Corner Store common stock are received in the distribution in respect of a particular block of Valero common stock, provided that such designation is consistent with the terms of the distribution. Holders of Valero common stock are urged to consult their own tax advisers regarding the application of these rules to their particular circumstances.

Tax Matters Agreement

In connection with the distribution, we and Valero intend to enter into a Tax Matters Agreement pursuant to which it is expected that we will agree to be responsible for certain liabilities and obligations following the distribution. In general, under the expected terms of the Tax Matters Agreement, in the event the distribution were to fail to qualify for U.S. federal income tax purposes under Sections 355 and 368(a)(1)(D) of the Code (including as a result of Section 355(e) of the Code) and if such failure were the result of actions taken after the distribution by Valero or us, the party responsible for such failure would be responsible for all taxes imposed on Valero to the extent such taxes result from such actions. However, if such failure was the result of any acquisition of our shares or assets or any of our representations or undertakings being incorrect or breached, we would be responsible for all taxes imposed on Valero as a result of such acquisition. For a more detailed discussion, see “Certain Relationships and Related-Party Transactions—Agreements With Valero—Tax Matters Agreement.” Our indemnification obligations to Valero and its subsidiaries, officers and directors are not expected to be limited in amount or subject to any cap. If we are required to indemnify

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Valero and its subsidiaries and their respective officers and directors under the circumstances set forth in the Tax Matters Agreement, we may be subject to substantial liabilities.

Information Reporting and Backup Withholding

U.S. Treasury regulations require certain stockholders who receive stock in a distribution to attach to the stockholder’s U.S. federal income tax return for the year in which the distribution occurs a detailed statement setting forth certain information relating to the tax-free nature of the distribution. In addition, payments of cash to a Valero stockholder in lieu of fractional shares of Corner Store common stock in the distribution may be subject to information reporting and backup withholding (currently at a rate of 28 percent), unless the stockholder provides proof of an applicable exemption or a correct taxpayer identification number and otherwise complies with the requirements of the backup withholding rules. Backup withholding does not constitute an additional tax, but merely an advance payment, which may be refunded or credited against a stockholder’s U.S. federal income tax liability, provided the required information is timely supplied to the IRS.

THE FOREGOING IS A SUMMARY OF THE MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE DISTRIBUTION UNDER CURRENT LAW AND FOR GENERAL INFORMATION ONLY. THE FOREGOING DOES NOT PURPORT TO ADDRESS ALL U.S. FEDERAL INCOME TAX CONSEQUENCES OR TAX CONSEQUENCES THAT MAY ARISE UNDER THE TAX LAWS OR THAT MAY APPLY TO PARTICULAR CATEGORIES OF STOCKHOLDERS. EACH VALERO STOCKHOLDER SHOULD CONSULT SUCH STOCKHOLDER’S OWN TAX ADVISER AS TO THE PARTICULAR TAX CONSEQUENCES OF THE DISTRIBUTION TO SUCH STOCKHOLDER, INCLUDING THE APPLICATION OF U.S. FEDERAL, STATE, LOCAL AND FOREIGN TAX LAWS, AND THE EFFECT OF POSSIBLE CHANGES IN TAX LAWS THAT MAY AFFECT THE TAX CONSEQUENCES DESCRIBED ABOVE.

Market for Our Common Stock

There is not currently a public market for Corner Store’s common stock. A condition to the distribution is the listing on the NYSE, or another national securities exchange approved by Valero, of our common stock. We intend to apply to have Corner Store’s common stock authorized for listing on the NYSE under the ticker symbol “CST,” subject to official notice of issuance. We cannot predict the prices at which our common stock will trade.

Trading Between the Record Date and the Distribution Date

Beginning on, or shortly before, the record date and continuing up to and including the distribution date, we expect there will be two markets in Valero common stock: a “regular-way” market and an “ex-distribution” market. Shares of Valero common stock that trade on the “regular-way” market will trade with an entitlement to receive shares of Corner Store common stock in the distribution. Shares that trade on the “ex-distribution” market will trade without an entitlement to receive shares of Corner Store common stock in the distribution. Therefore, if you sell shares of Valero common stock in the “regular-way” market after 5:00 p.m. Eastern Time on the record date and up to and including through the distribution date, you will be selling your right to receive shares of Corner Store common stock in the distribution. If you own shares of Valero common stock at 5:00 p.m. Eastern Time on the record date and sell those shares in the “ex-distribution” market, up to and including through the distribution date, you will still receive the shares of Corner Store common stock that you would be entitled to receive in respect of your ownership, as of the record date, of the shares of Valero common stock that you sold.

Furthermore, beginning on or shortly before the record date and continuing up to and including the distribution date, we expect there will be a “when-issued” market in our common stock. “When-issued” trading refers to a sale or purchase made conditionally because the security has been authorized but not yet issued. The “when-issued” trading market will be a market for shares of Corner Store common stock that will be distributed to Valero stockholders on the distribution date. If you own shares of Valero common stock at 5:00 p.m. Eastern Time on the record date, you would be entitled to receive shares of our common stock in the distribution. You may trade this entitlement to receive shares of Corner Store common stock, without trading the shares of Valero common stock you own, in the “when-issued” market. On the first trading day following the distribution date, we expect “when-issued” trading with respect to Corner Store common stock will end and “regular-way” trading will begin.

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Conditions to the Distribution

We expect that the distribution will be effective on [•], the distribution date, provided that, among other conditions set forth in the Separation and Distribution Agreement, the following conditions will have been satisfied or, if permissible under the Separation and Distribution Agreement, waived by Valero:

• The SEC will have declared effective our registration statement on Form 10, of which this information statement is a part, under the Exchange Act, with no order suspending the effectiveness of the registration statement in effect and no proceedings for such purposes pending before or threated by the SEC.

• Any required actions and filings with regard to state securities and blue sky laws of the U.S. (and any comparable laws under any foreign jurisdictions) will have been taken and, where applicable, will have become effective or been accepted.

• Corner Store’s common stock will have been authorized for listing on the NYSE, or another national securities exchange approved by Valero, subject to official notice of issuance.

• Prior to the distribution, this information statement will have been mailed to the holders of Valero common stock as of the record date for the distribution.

• Valero will have received a private letter ruling from the IRS in form and substance satisfactory to Valero in its sole discretion, to the effect that the distribution, together with certain related transactions, will qualify as a reorganization for U.S. federal income tax purposes under Sections 355 and 368(a)(1)(D) of the Code.

• No order, injunction, decree or regulation issued by any court or agency of competent jurisdiction or other legal restraint or prohibition preventing completion of the distribution will be in effect.

• Any government approvals and other material consents necessary to consummate the distribution will have been obtained and be in full force and effect.

• The Separation and Distribution Agreement will not have been terminated.

The fulfillment of the foregoing conditions does not create any obligations on Valero’s part to effect the distribution, and the Valero Board of Directors has reserved the right, in its sole discretion, to abandon, modify or change the terms of the distribution, including by accelerating or delaying the timing of the completion of all or part of the distribution, at any time prior to the distribution date.

Transferability of Shares of Our Common Stock

The shares of our common stock that you will receive in the distribution will be freely transferable, unless you are considered an “affiliate” of ours under Rule 144 under the Securities Act of 1933, as amended (“the Securities Act”). Persons who can be considered our affiliates after the separation generally include individuals or entities that directly, or indirectly through one or more intermediaries, control, are controlled by or are under common control with us, and may include certain of our officers and directors. In addition, individuals who are affiliates of Valero on the distribution date may be deemed to be affiliates of ours. Our affiliates may sell shares of our common stock received in the distribution only:

• under a registration statement that the SEC has declared effective under the Securities Act; or

• under an exemption from registration under the Securities Act, such as the exemption afforded by Rule 144.

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In general, under Rule 144 as currently in effect, an affiliate will be entitled to sell, within any three-month period commencing 180 days after the date the registration statement of which this information statement is a part is declared effective, a number of shares of our common stock that does not exceed the greater of:

• 1.0 percent of our common stock then outstanding; or

• the average weekly trading volume of our common stock during the four calendar weeks preceding the filing of a notice on Form 144 for the sale.

Rule 144 also includes restrictions governing the manner of sale. Sales may not be made under Rule 144 unless certain information about us is publicly available.

For a discussion of certain registration rights with respect to our common shares, see “Certain Relationships and Related-Party Transactions—Agreements Between Us and Valero—Stockholder’s and Registration Rights Agreement” included elsewhere in this information statement.

Reason for Furnishing This Information Statement

This information statement is being furnished solely to provide information to Valero stockholders who are entitled to receive shares of our common stock in the distribution. This information statement is not, and is not to be construed as, an inducement or encouragement to buy, hold or sell any of our securities. We believe that the information in this information statement is accurate as of the date set forth on the cover. Changes may occur after that date, and neither Valero nor we undertake any obligation to update such information except in the normal course of discharging our respective public disclosure obligations.

Manner of Effecting the Separation and the Distribution

The general terms and conditions relating to the separation and the distribution will be set forth in a Separation and Distribution Agreement that we will enter into with Valero. For a description of the terms of that agreement, see “Certain Relationships and Related-Party Transactions—Agreements Between Us and Valero—Separation and Distribution Agreement” included elsewhere in this information statement.

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BUSINESS AND PROPERTIES

Overview

We are currently a wholly owned subsidiary of Valero. Following the distribution, we will be an independent, publicly traded company. Valero will retain 20 percent of our common stock after the distribution. We are a holding company and conduct substantially all of our operations through our subsidiaries, which at the time of the distribution, will hold the assets (including the equity interests of certain Valero subsidiaries) and liabilities associated with Valero’s retail business.

We are incorporated in Delaware. The address of our principal executive offices is One Valero Way, San Antonio, Texas 78249, and our telephone number is (210) 345-2000.

We are one of the largest independent retailers of motor fuel and convenience merchandise items in the U.S. and eastern Canada. Our operations include (i) the sale of motor fuel at convenience stores, filling stations and cardlocks, (ii) the sale of convenience merchandise items and services at convenience stores and (iii) the sale of heating oil to residential customers and heating oil and motor fuel to small commercial customers.

We have two operating segments:

• Retail–U.S. – As of September 30, 2012, we had 1,027 convenience stores located in Arizona, Arkansas, California, Colorado, Louisiana, New Mexico, Oklahoma, Texas and Wyoming; and

• Retail–Canada – As of September 30, 2012, we had 849 retail sites located in New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island and Québec.

Our Internet website is www.cornerstore4u.com. Our website and information contained on that site, or connected to that site, are not incorporated by reference into this information statement.

Retail–U.S.

Overview of Operations

We are one of the largest independent retailers of motor fuel and convenience merchandise items in the U.S.

We sell motor fuel primarily under the Valero and Diamond Shamrock brands, convenience merchandise items and other services through convenience stores operated predominantly under the Corner Store name in nine states, with significant concentrations in Texas and Colorado. Most of these retail sites are located in metropolitan areas where there are high concentrations of consumers and daily commuters. Of these retail sites, 828 are owned and 199 are leased under lease agreements that generally contain renewal options for periods ranging from five to ten years.

We carry a broad selection of immediately consumable and take-home items, including beverages, tobacco products, snacks, freshly prepared and pre-packaged foods (including sandwiches, kolaches, tacos, salads, pastries, coffee and fountain drinks), health and beauty products, motor oils and automotive products and general convenience merchandise items. Many of these products are offered under a line of proprietary brands, including Fresh Choices, U Force, Cibolo Mountain and Flavors2Go. At some of our retail sites, we offer a variety of additional products and services, such as car wash, lottery, money orders, air/water/vacuum services for motor vehicles, video and game rentals and access to ATMs. We offer automated car wash services at 194 of our retail sites. We are a Subway® franchisee and currently offer Subway® food services at 31 of our retail sites. Subway is a registered trademark of Doctor’s Associates Inc.

Our Retail–U.S. segment is substantially a company owned and operated business. We retain the gross margins on motor fuel sales, convenience merchandise sales and services, and the retail sites are operated by company employees.

During the nine months ended September 30, 2012 and the year ended December 31,2011, our Retail–U.S. segment sold 1.4 billion gallons and 1.8 billion gallons, respectively, of branded motor fuel purchased primarily from Valero.

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Industry Trends

We operate within the large and growing U.S. convenience store industry, which is highly fragmented. We believe we will continue to benefit from several key industry trends and characteristics, including:

• increasing size of supermarkets and large format hypermarkets, driving consumers to small box retailers, such as convenience stores, to meet their demand for speed and convenience in daily shopping needs;

• continuing shift of consumer food and general merchandise purchases away from traditional supermarkets and quick service restaurants to convenience stores, hypermarkets and drug stores;

• changing consumer demographics and eating patterns resulting in more food consumed away from home;

• highly fragmented nature of the industry providing larger chain operators with significant scale advantage; and

• continued opportunities to compete more effectively and grow through acquisitions as a result of continued industry consolidation.

Properties

As of September 30, 2012, we owned 828 of our retail sites and leased the real property of the remaining 199 retail sites. We believe that we will be able to negotiate acceptable extensions of the lease agreements for those retail sites that we intend to continue operating. Our convenience store buildings average approximately 2,200 square feet. Twenty-three retail sites also have commercial motor fuel operations catering to independent truckers.

The following table provides the number of our convenience stores by state as of September 30, 2012:

State	Number of Convenience Stores
Arkansas	29
Arizona	63
California	83
Colorado	158
Louisiana	30
New Mexico	37
Oklahoma	2
Texas	621
Wyoming	4
	1,027

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The following table provides a history of our convenience stores opened (reflected as NTIs below), acquired and closed or divested for the last three years and nine months:

	Nine Months Ended September 30, 2012		Year Ended December 31,
			2011		2010		2009
Number at beginning of period	998		994		991		1,010
NTIs	5		8		10		4
Acquired	29		—		—		—
Closed or divested	(5	)	(4	)	(7	)	(23	)
Number at end of period	1,027		998		994		991

We intend to lease approximately 78,000 square feet of office space in San Antonio, Texas from Valero, pursuant to a lease agreement based on market terms, which will serve as our corporate headquarters.

Retail Distribution Center

We lease a 130,000 square-foot distribution center in Schertz, Texas, that supplies over 500 of our convenience stores, provides us with improved inventory management, allows us to handle a greater product variety and supports the development and growth of our private label packaged goods and fresh food programs. Core-Mark operates our distribution center on our behalf under a management agreement. We own the distribution center’s improvements and inventory and pay a fee to Core-Mark for management of the center. We also pay Core-Mark a license fee for use of proprietary software necessary for operating the center.

IT Systems and Store Automation

All of our convenience stores use IT systems, including point-of-sale (“POS”) scanning, that are designed to improve operating efficiencies, streamline back office functions, provide corporate management with timely access to financial, human resource and marketing data, reduce convenience store level and corporate administrative expense and provide better control over cash and motor fuel and merchandise inventories. Our IT platform is highly scalable, which allows new convenience stores to be quickly integrated into our processes and system-wide reporting.

Our IT systems obtain detailed convenience store-level sales and volume data on a daily basis and generate gross margin, payroll and convenience store contribution data on a weekly basis. We utilize price scanning and POS technology in all of our convenience stores that primarily use a single platform, the VeriFone System, supported by on-site computers that are networked to our central server and back office. We analyze and manage our motor fuel pricing through automated fuel pricing software, which is integrated with the VeriFone system. TelaPoint software uses automated tank gauge information to enable us to monitor and coordinate motor fuel inventory management with our motor fuel supplier and transportation service providers. This product has allowed us to better control motor fuel inventory levels. Our systems also facilitate workforce management including employee on-boarding, status changes, labor modeling and labor allocation, employee scheduling, time reporting and associated approval workflows, all of which are handled electronically through proprietary software.

Our merchandise price book, scanning, motor fuel management, merchandise ordering and trend reports are supported by PDI Enterprise software. This system provides us with significant flexibility to continuously review and adjust our pricing and merchandising strategies, automates the traditional convenience store paperwork process, improves the speed and accuracy of category management and controls inventory. We hold a software license for PDI Enterprise software.

Data collected by the PDI Enterprise system is consolidated for financial reporting, data analysis and category management purposes through SAP, which is the enterprise system that Valero uses for payroll, fixed asset accounting, and financial reporting. We expect to have Transition Services Agreements with Valero that will allow us to continue

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using Valero’s SAP and several other sub-systems for up to 18 months after the separation. We anticipate having a cost effective and efficient replacement of SAP by that time.

Our IT network is kept up to date by investing capital each year, replacing end-of-life hardware and updating to the latest software versions. We also invest capital in critical system backup and redundancy, firewall, remote access security and virus and spam protection to ensure a high level of network security. We have business policies and processes around access controls, password expirations and file retention to ensure a high level of control within our IT network.

Supplier Arrangements

Merchandise Supply

We have strong relationships with merchandise suppliers resulting from our high volume purchases allowing us to negotiate preferable prices. Through our retail distribution center and private label products, we believe we have a strategic advantage over our peers in terms of product knowledge and pricing. We have an agreement with Core-Mark, which is a leading grocery and merchandise wholesale distributor, to provide us with merchandising expertise, purchasing power and efficient distribution services.

Motor Fuel Supply

We currently purchase branded motor fuel from Valero at market-based transfer prices. The transfer price formulas vary from terminal to terminal. The actual prices we pay typically change daily, based on market fluctuations. We take legal title to the motor fuel when we receive it at the rack, and payment is due upon delivery. We arrange for a third-party transportation provider to take delivery of the motor fuel at the rack and deliver it to the appropriate retail sites in our network.

Under the U.S. Fuel Supply Agreements, we expect to continue to purchase motor fuel from Valero at per-terminal market-based prices, but we expect that those price formulas will differ from those currently employed. As a result, we expect our annual cost of sales to increase by approximately $14 million. The U.S. Fuel Supply Agreements are also expected to differ from our current arrangement by providing for payment terms of “net 10” days instead of requiring same day payment. The unaudited pro forma combined financial statements included elsewhere in this information statement reflect the new motor fuel pricing arrangements that are expected to exist after the separation, but they do not give effect to the change in the payment terms because the impact of that change cannot be determined and would represent a financial projection.

Competition

The convenience store industry in the U.S. is highly competitive and marked by ease of entry and constant change in the number and type of retailers offering products and services of the type we sell in our convenience stores. We compete with other convenience store chains, independently owned convenience stores, motor fuel stations, supermarkets, drugstores, discount stores, dollar stores, club stores and hypermarkets. Over the past ten years, several non-traditional retailers, such as supermarkets, club stores and hypermarkets, have impacted the convenience store industry, particularly in the geographic areas in which we operate, by entering the motor fuel retail business. These non-traditional motor fuel retailers have captured a significant share of the retail motor fuel market, and we expect their market share will continue to grow. In addition, some large retailers and supermarkets are adjusting their store layouts and product prices in an attempt to appeal to convenience store customers. Major competitive factors include, among others, location, ease of access, product and service selection, motor fuel brands, pricing, customer service, store appearance, cleanliness and safety.

Trade Names, Service Marks and Trademarks

We sell motor fuel primarily under the Valero and Diamond Shamrock brands, which are trademarks of Valero. We also sell motor fuel under the Arco brand at six sites in California. The U.S. Fuel Supply Agreements that we expect to enter into with Valero in connection with the separation will contain customary language granting us the right to continue to use the Valero-owned trademarks throughout the terms of those agreements.

The Corner Store trademark and a number of other registered trademarks and service marks, including Fresh Choices, U Force, Cibolo Mountain and Flavors2Go, are used exclusively in the retail business and not in connection with any other businesses conducted by Valero. We expect these trademarks to be licensed or transferred to us as part of the

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separation. We are not aware of any facts that would negatively affect our continuing use of any of the above trademarks, trade names or service trademarks.

Environmental Laws and Regulations

We are subject to extensive federal, state and local environmental laws and regulations, including those relating to USTs, the release or discharge of materials into the air, water and soil, waste management, pollution prevention measures, the generation, storage, handling, use, transportation and disposal of hazardous materials, the exposure of persons to hazardous materials, greenhouse gas emissions, and characteristics, composition, storage and sale of motor fuel and the health and safety of our employees. We incorporate by reference into this section our disclosures included in Note 8 under the caption “Environmental Matters”of Notes to Combined Financial Statements that accompany our audited combined financial statements included elsewhere in this information statement.

Sale of Regulated Products

In certain areas where our convenience stores are located, state or local laws limit the hours of operation for the sale of alcoholic beverages and restrict the sale of alcoholic beverages and cigarettes to persons younger than a certain age. State and local regulatory agencies have the authority to approve, revoke, suspend or deny applications for and renewals of permits and licenses relating to the sale of alcoholic beverages, as well as to issue fines to convenience stores for the improper sale of alcoholic beverages and cigarettes. Failure to comply with these laws may result in the loss of necessary licenses and the imposition of fines and penalties on us. Such a loss or imposition could have a material adverse effect on our business, liquidity and results of operations. In many states, retailers of alcoholic beverages have been held responsible for damages caused by intoxicated individuals who purchased alcoholic beverages from them. While the potential exposure for damage claims as a seller of alcoholic beverages and cigarettes is substantial, we have adopted procedures intended to minimize such exposure.

Federally mandated anti-money laundering regulations, specifically the USA PATRIOT Act, which amends the Bank Secrecy Act, dictate the rules and documentation requirements we follow for the sales of money orders. In addition, we are subject to random anti-money laundering compliance audits. We have an anti-money laundering compliance officer, who reviews all money order sales transactions to ensure compliance with federal regulations.

We also adhere to the rules governing lottery sales as determined by state lottery commissions in each state in which we make such sales.

Safety

We are subject to comprehensive federal, state and local safety laws and regulations. These regulations address issues ranging from facility design, equipment specific requirements, training, hazardous materials, record retention, self-inspection, equipment maintenance and other worker safety issues, including workplace violence. These regulatory requirements are fulfilled through health, environmental and safety programs.

Other Regulatory Matters

Our retail sites are subject to regulation by federal agencies and to licensing and regulations by state and local health, sanitation, safety, fire and other departments relating to the development and operation of retail sites, including regulations relating to zoning and building requirements and the preparation and sale of food. Difficulties in obtaining or failures to obtain the required licenses or approvals could delay or prevent the development of a new retail site in a particular area.

Our operations are also subject to federal and state laws governing such matters as wage rates, overtime, working conditions and citizenship requirements. At the federal level, there are proposals under consideration from time to time to increase minimum wage rates and to introduce a system of mandated health insurance, both of which could affect our results of operations.

Employees

As of September 30, 2012, we employed 8,888 persons in the U.S., of which approximately 67 percent were full-time employees. Approximately 95 percent of our employees work in our convenience stores and 5 percent work in our corporate or field offices. Our convenience stores typically employ an average of six to seven individuals, who are

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supervised by a single convenience store manager, and one to three assistant convenience store managers. Our field management staff consists of 100 area managers, each of whom is responsible for nine to ten convenience stores, and 13 zone managers, each of whom is responsible for approximately 70 to 90 convenience stores. Our business is seasonal, and as a result, the number of employees fluctuates from a high in the spring and summer to a low in the fall and winter. These employee numbers exclude general corporate overhead employees of Valero who are not fully dedicated to our operations.

Legal Proceedings

We incorporate by reference into this section our disclosures included in Note 8 under the caption “Litigation Matters” of Notes to Combined Financial Statements that accompany our audited combined financial statements included elsewhere in this information statement.

Retail–Canada

Overview of Operations

We are one of the largest independent retailers of motor fuel and convenience merchandise items in eastern Canada. We sell Ultramar-branded motor fuel, convenience merchandise items and other services through convenience stores operated predominantly under the Corner Store/Depanneur du Coin names in six provinces in eastern Canada, with a significant concentration in Québec. We also sell Ultramar-branded motor fuel at filling stations and cardlocks in eastern Canada. Most of our retail sites are located in metropolitan areas where there are high concentrations of consumers and daily commuters. Of these retail sites, 323 are owned and 526 are leased under lease agreements that generally contain renewal options for periods ranging from five to ten years.

Our convenience stores carry a broad selection of immediately consumable and take-home items, including beverages, tobacco products, snacks, freshly prepared and pre-packaged foods (including sandwiches, salads, pastries and coffee), health and beauty products, motor oils and automotive products and general convenience merchandise items. At some of our retail sites, we offer a variety of additional products and services, such as car wash, lottery, air/water/vacuum services for motor vehicles and access to ATMs. We offer automated car wash services at 63 of our retail sites. We are a Subway® and Country Style® franchisee and currently provide these food offerings at 34 of our retail sites. Country Style is a registered trademark of MTY Tiki Ming Enterprises Inc.

Our Retail–Canada segment consists of the following operations:

• 256 convenience stores, of which 184 are owned and 72 are leased. We retain the gross margins on motor fuel sales, merchandise sales and services, and the retail sites are operated by company employees.

• 514 retail sites that are dealer/agent operated. At each of these retail sites, we retain title to the motor fuel inventory and sell it directly to our customers; therefore, we manage motor fuel pricing and retain the gross margin on motor fuel sales. We provide a commission to the dealer or agent to operate the retail site. These retail sites consist of the following:

◦ 402 filling stations, where each retail site is typically owned and operated by an independent dealer, and

◦ 112 filling stations, where each retail site is owned by us but operated by an independent agent.

• 79 cardlocks, where the site is owned or leased by us. We retain the gross margin on motor fuel sales at these retail sites.

• We also supply Ultramar-branded heating oil to residential customers and Ultramar-branded heating oil and motor fuel to small commercial customers. Operating revenues from these sales were less than 9 percent of Retail–Canada’s operating revenues for the nine months ended September 30, 2012 and for the year ended December 31, 2011.

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For the nine months ended September 30, 2012 and year ended December 31, 2011, our Retail–Canada segment sold 789 million gallons and 1.1 billion gallons, respectively, of branded motor fuel purchased primarily from Valero.

Industry Trends

We operate within the Canadian gas and convenience store industry. The industry in which our Retail–Canada segment operates is highly fragmented. We believe we will continue to benefit from several key industry trends and characteristics, including:

• increasing size of supermarkets and large format hypermarkets, driving consumers to small box retailers, such as convenience stores, to meet their demand for speed and convenience in daily shopping needs;

• continuing shift of consumer food and general merchandise purchases away from traditional supermarkets to convenience stores, hypermarkets and drug stores;

• changing consumer demographics and eating patterns resulting in more food consumed away from home;

• highly fragmented nature of the industry providing larger chain operators with significant scale advantage; and

• continued opportunities to compete more effectively and grow through acquisitions as a result of continued industry consolidation.

Properties

As of September 30, 2012, we owned 323 of our retail sites and leased the real property of the remaining 526 retail sites. We believe that we will be able to negotiate acceptable extensions of the lease agreements for those retail sites that we intend to continue operating. Our operations consisted of 849 retail sites, which includes 256 convenience stores. Our convenience store buildings average 1,700 square feet.

The following table provides the number and type of our retail sites by region as of September 30, 2012:

Province	Convenience Stores	Filling Stations	Cardlock	Total
Québec	169	332	44	545
Ontario	15	86	18	119
Maritimes (a)	49	56	12	117
Newfoundland and Labrador	23	40	5	68
Total	256	514	79	849

_______________________

(a) Includes the provinces of Nova Scotia, New Brunswick and Prince Edward Island.

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The following table provides a history of retail sites opened (reflected as NTIs below) and closed, divested or de-branded for the last three years and nine months:

	Nine Months Ended September 30, 2012		Year Ended December 31,
			2011		2010		2009
Number at beginning of period	873		895		907		950
NTIs and new dealers	8		19		24		16
Closed, divested or de-branded (a)	(32	)	(41	)	(36	)	(59	)
Number at end of period	849		873		895		907

________________________

(a)    “De-branded” is a term we use to refer to filling stations where we choose not to renew our relationship with the dealers/agents who operate those retail sites.

We intend to lease approximately 50,000 square feet of office space in Montreal, Québec from Valero to support our Retail–Canada operations.

IT Systems and Store Automation

All of our company operated convenience stores use IT systems, including POS scanning, that are designed to improve operating efficiencies, streamline back office functions, provide corporate management with timely access to financial, human resource and marketing data, reduce convenience store level and corporate administrative expense and provide better control over cash, motor fuel and merchandise inventories. Our IT platform is highly scalable, which allows new retail sites to be quickly integrated into our processes and system-wide reporting.

Our information systems obtain detailed retail site-level sales and volume data on a daily basis and generate gross margin, payroll and convenience store contribution data on a weekly basis. At our company operated convenience stores, we utilize price scanning and POS technology that is consolidated on a single platform, the Bt9000 System from Bulloch technologies, supported by on-site computers that are networked to our central server and back office. We support two POS options for filling stations and certain retail sites, the Bt9000 and the SIR system. In addition, a small number of non-consignee dealer sites utilize a VX570 terminal for credit acceptance. We analyze and manage our motor fuel pricing through an in-house application named Price Information Center. Motor fuel mass price changes are pushed to retail sites by Somum Solutions, an automated call system. Our systems also facilitate workforce management including employee on-boarding, status changes, employee scheduling, time reporting and associated approval workflows, all of which is handled electronically through proprietary software that is integrated with SAP.

All convenience store level, back office, accounting functions, including our merchandise price book, scanning, motor fuel management, merchandise ordering and trend reports, are supported by PDI Enterprise software. This system provides us with significant flexibility to continuously review and adjust our pricing, merchandising strategies and price book, automates the traditional convenience store paperwork process and improves the speed and accuracy of category management and inventory control. We hold the software license for PDI Enterprise software. Data collected by the PDI Enterprise system are consolidated for financial reporting, data analysis and category management purposes through SAP, which is the enterprise system that we use for fixed asset accounting and reporting. We expect to have Transition Services Agreements with Valero that will allow us to continue using Valero’s SAP and several other sub-systems for up to 18 months after the separation.

Our network is kept up to date by investing capital each year, replacing end-of-life hardware and updating to the latest software versions. We also invest capital in critical system backup and redundancy, firewall, remote access security and virus and spam protection to ensure a high level of network security. We have business policies and processes around access controls, password expirations and file retention to ensure a high level of control within our network.

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Supplier Arrangements

Merchandise Supply

We have strong relationships with merchandise suppliers resulting from our high purchase volumes allowing us to negotiate preferable prices. We have an agreement with Sobeys, which is a leading grocery wholesale distributor in eastern Canada, to provide us with merchandising expertise, purchasing power and efficient distribution services.

Motor Fuel Supply

We purchase branded motor fuel from Valero primarily under the Ultramar brand at market-based transfer prices. The transfer price formulas vary from terminal to terminal. The actual prices we pay typically change daily, based on market fluctuations. We take legal title to the motor fuel when we receive it at the rack, and payment is due upon delivery. We arrange for a third-party transportation provider to take delivery of the motor fuel at the rack and deliver it to the appropriate retail sites in our network.

In connection with the separation, we expect to enter into a new Petroleum Product Supply Agreement with Valero, which is described under “Certain Relationships and Related-Party Transactions—Agreements Between Us and Valero—Petroleum Product Supply Agreement (Canada)” included elsewhere in this information statement. The terms and pricing of the agreement have not been finalized and will be provided in an amendment to the registration statement of which this information statement is a part.

Competition

The convenience store industry is highly competitive and marked by ease of entry and constant change in the number and type of retailers offering products and services of the type we sell in our convenience stores and other retail sites. We compete with other convenience store chains, independently owned convenience stores, motor fuel stations, supermarkets, drugstores, discount stores, dollar stores, club stores and hypermarkets. Over the past ten years, several non-traditional retailers, such as supermarkets, club stores and hypermarkets, have impacted the convenience store industry, particularly in the geographic areas in which we operate, by entering the motor fuel retail business. These non-traditional motor fuel retailers have captured a significant share of the retail motor fuel market, and we expect their market share will continue to grow. In addition, some large retailers and supermarkets are adjusting their store layouts and product prices in an attempt to appeal to convenience store customers. Major competitive factors include, among others, location, ease of access, product and service selection, motor fuel brands, pricing, customer service, store appearance, cleanliness and safety.

Trade Names, Service Marks and Trademarks

We sell motor fuel under the Ultramar brand, which is a trademark of Valero. The Corner Store and Depanneur du Coin trademarks and trade names are used exclusively in the retail business and not in connection with any other business conducted by Valero. We expect these trademarks and trade names to be licensed or transferred to us as a part of the separation. We are not aware of any facts that would negatively affect our continuing use of any of the above trademarks, trade names or service marks.

Environmental Laws and Regulations

We are subject to extensive federal, provincial and local environmental laws and regulations, including those relating to USTs, the release or discharge of materials into the air, water and soil, waste management, pollution prevention measures, the generation, storage, handling, use, transportation and disposal of hazardous materials, the exposure of persons to hazardous materials, greenhouse gas emissions and characteristics, composition, storage and sale of motor fuel and the health and safety of our employees. We incorporate by reference into this section our disclosures included in Note 8 under the caption “Environmental Matters” of Notes to Combined Financial Statements that accompany our audited combined financial statements included elsewhere in this information statement.

Sale of Regulated Products

Our activities require certain government permits and licenses, in particular pertaining to the sale of alcoholic beverages, tobacco and lottery tickets and as a distributor of heating oil. Our retail sites are concentrated in Québec and the eastern Canadian provinces, which have certain governmental regulations on motor fuel pricing. Moreover, we sell certain products subject to price regulation in certain provinces, such as milk, beer and wine. In addition, in some instances, provincial or local laws limit the hours of operation for the sale of alcoholic beverages and restrict the sale of alcoholic

46

beverages, cigarettes and lottery tickets to persons younger than a certain age. Provincial and local regulatory agencies have the authority to approve, revoke, suspend or deny applications for and renewals of permits and licenses relating to the sale of alcoholic beverages, as well as to issue fines to convenience stores for the improper sale of alcoholic beverages, cigarettes and lottery tickets. Failure to comply with these laws may result in the loss of necessary licenses and the imposition of fines and penalties on us. Such a loss or imposition could have a material adverse effect on our business, liquidity and results of operations.

Safety

We are subject to provincial and local safety laws and regulations. These regulations address issues such as facility design, equipment specific requirements, training, hazardous materials, record retention, self-inspection, equipment maintenance, inspection of heating oil installations and other health and safety issues. These regulatory requirements are fulfilled through health, environmental and safety programs.

Other Regulatory Matters

Our retail sites are subject to regulation by provincial and/or local agencies related to health, sanitation, safety and fire. Our retail sites are further regulated by other departments relating to the development and operation of retail sites, including regulations relating to zoning and building requirements and the preparation and sale of food. Difficulties in obtaining or failures to obtain the required licenses or approvals could delay or prevent the development of a new retail site in a particular area.

Our operations are also subject to provincial laws governing such matters as wage rates, overtime and working conditions. In each province where we operate, there are proposals under consideration from time to time to increase minimum wage rates which could have an impact on our results of operations.

Employees

As of September 30, 2012, we employed 2,813 persons in Canada, of which approximately 44 percent were full-time employees. Approximately 86 percent of our employees work in our convenience stores and 14 percent work in our field or administrative offices. Our convenience stores typically employ an average of eight to fifteen individuals, who are supervised by a single convenience store manager, and one to three assistant convenience store managers. Our field management staff consists of 23 area managers, each of whom is responsible for eight to 12 convenience stores, and three zone managers, each of whom is responsible for approximately 80 to 90 convenience stores. These employee numbers exclude overhead employees of Valero who are not fully dedicated to our operations.

Legal Proceedings

We incorporate by reference into this section our disclosures included in Note 8 under the caption “Litigation Matters” of Notes to Combined Financial Statements that accompany our audited combined financial statements included elsewhere in this information statement.

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DIVIDEND POLICY

After the distribution, we intend to pay a cash dividend to our common stockholders at an initial rate of $0.0625 per share per quarter, or $0.25 per share per year. However, the declaration and amount of all dividends to holders of our common stock will be at the discretion of our Board of Directors and will depend upon many factors, including our financial condition, earnings, capital requirements of our business, covenants associated with certain debt obligations, legal requirements, regulatory constraints, industry practice and other factors the Board of Directors deems relevant. There can be no assurance we will continue to pay any dividend even if we commence the payment of dividends. We are a holding company and have no direct operations. As a result, we will be able to pay dividends on our common stock only from our available cash on hand and distributions received from our subsidiaries.

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CAPITALIZATION

The following table sets forth (i) our historical capitalization as of September 30, 2012 and (ii) our adjusted capitalization assuming the separation and the distribution and the related transactions described in this information statement, including the incurrence of approximately $1.05 billion of debt, were effective September 30, 2012. The table should be read in conjunction with the audited and unaudited combined financial statements and accompanying notes, the unaudited pro forma combined financial statements and accompanying notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this information statement.

We are providing the capitalization table below for information purposes only. The capitalization table below may not reflect the capitalization or financial condition that would have resulted had we been operating as a separate, independent entity on September 30, 2012 and is not necessarily indicative of our future capitalization or financial condition.

The amounts in the following table are presented in millions.

	September 30, 2012
	Actual		As Adjusted
Debt outstanding:
Current portion of long-term debt and capital lease obligations	$	1	$	1
Debt and capital lease obligations, less current portion	4		1,054
Total debt and capital lease obligations	5		1,055
Net investment / stockholders’ equity:
Common stock, at par value	—		1
Additional paid-in capital	—		343
Accumulated other comprehensive income	169		169
Net parent investment	1,087		—
Total net investment / stockholders’ equity	1,256		513
Total capitalization	$	1,261	$	1,568

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UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

The following unaudited pro forma combined financial statements of Corner Store (the “pro forma financial statements”) have been derived from our historical combined financial statements included elsewhere in this information statement. While the historical combined financial statements reflect the past financial results of Valero’s retail business, these pro forma financial statements give effect to:

• the separation of the assets (including the equity interests of certain subsidiaries) and liabilities related to Valero’s retail business from Valero and the transfer of those assets (including the equity interests of certain subsidiaries) and liabilities to Corner Store;

• the issuance of 100 percent of our common stock to Valero upon the separation of Valero’s retail business;

• the issuance of $1.05 billion of new debt, which includes the issuance of debt to Valero, assumed to be $550 million for purposes of these pro forma financial statements;

• a cash distribution to Valero, assumed to be $500 million for purposes of these pro forma financial statements; and

• the recording of the income tax effects of the separation and the distribution.

The Separation and Distribution Agreement, the Tax Matters Agreement, the Transition Services Agreements, the Employee Matters Agreements, the U.S. Fuel Supply Agreements, the Petroleum Product Supply Agreement, the Office Lease Agreement and the Office Sublease Agreement have not been finalized, and the effects of those agreements are therefore not reflected in the pro forma financial statements, except for the anticipated effects of the U.S. Fuel Supply Agreements as more fully described below. To the extent appropriate, the pro forma financial statements will be revised in future amendments to the registration statement of which this information statement is a part to reflect any material impacts of those agreements.

The pro forma adjustments are based on available information and assumptions management believes are reasonable. In addition, such adjustments are estimates and may not prove to be accurate. The pro forma financial statements do not reflect all of the costs of operating as a stand-alone company, including possible higher IT, tax, accounting, treasury, legal, investor relations, insurance and other similar expenses associated with operating as a stand-alone company. Only costs that management has determined to be factually supportable and recurring are included as pro forma adjustments. Incremental costs and expenses associated with operating as a stand-alone company, which are not reflected in the accompanying pro forma financial statements, are estimated to be in the range of approximately $15 million to $20 million before-tax annually.

Subject to the terms of the Separation and Distribution Agreement, Valero will generally pay all nonrecurring third-party costs and expenses related to the separation. Such nonrecurring amounts are expected to include costs to separate and/or duplicate IT systems, investment banker fees, outside legal and accounting fees and similar costs. After the separation, subject to the terms of the Separation and Distribution Agreement, all costs and expenses related to ongoing support of a stand-alone company (including those related to IT infrastructure capital costs) will be our responsibility. Nonrecurring capital costs associated with the IT infrastructure, which we expect to be reflected in our financial statements within one year after the separation, are estimated to be in the range of $30 million to $35 million.

For additional information regarding the matters discussed above, see “Risk Factors—Risks Relating to the Separation and the Distribution” included elsewhere in this information statement.

In connection with the separation, we intend to enter into the U.S. Fuel Supply Agreements in the U.S. and a Petroleum Product Supply Agreement in Canada with Valero for the supply of motor fuel. These new agreements will change certain pricing provisions from the amounts reflected in our historical results of operations. The expected effects of the U.S. Fuel Supply Agreements are reflected as a pro forma adjustment. The terms and pricing of the Petroleum Product Supply Agreement have not been determined and, therefore, the effects of this agreement are not reflected as a pro

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forma adjustment. We intend to adjust the pro forma adjustments to reflect the finalized agreements in a subsequent amendment to the registration statement of which this information statement is a part.

In connection with the separation and the distribution, Valero expects to accelerate the vesting of all of its stock-based awards held by our employees. As a result, we will be charged for the remaining unrecognized stock-based compensation related to those awards at that time, which we believe will be approximately $2 million. This amount has not been reflected as a pro forma adjustment because it is a nonrecurring item that results directly from the separation and the distribution.

Our cash balance is subject to working capital adjustments immediately preceding the separation and the distribution. The pro forma financial statements do not reflect any impact of those adjustments because such amounts at the separation date are not currently determinable and would represent a financial projection. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Other Matters Impacting Liquidity and Capital Resources—Working Capital Adjustments to Be Made in Connection With the Separation and the Distribution” included elsewhere in this information statement.

The unaudited pro forma combined balance sheet as of September 30, 2012 has been prepared as though the separation occurred on September 30, 2012. The unaudited pro forma combined statements of income for the nine months ended September 30,2012 and the year ended December 31, 2011 have been prepared as though the separation occurred on January 1, 2012 and 2011, respectively. The pro forma financial statements are provided for illustrative purposes only and do not reflect what our financial position and results of operations would have been had the separation occurred on the dates indicated. In addition, they are not necessarily indicative of our future financial position and future results of operations.

The pro forma financial statements should be read in conjunction with our historical combined financial statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this information statement. The pro forma financial statements constitute forward-looking information and are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated. See “Cautionary Statement Regarding Forward-Looking Statements” included elsewhere in this information statement.

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CORNER STORE HOLDINGS, INC.

UNAUDITED PRO FORMA COMBINED BALANCE SHEET

SEPTEMBER 30, 2012

(Millions of Dollars)

	As Reported			Pro Forma Adjustments				Pro Forma
ASSETS
Current assets:
Cash	$	65		$	(13	)	(a)	$	52
Receivables, net	198			4			(b)	202
Inventories	155			—				155
Deferred income taxes	16			(10		)	(c)	6
Prepaid expenses and other	7			—				7
Total current assets	441			(19		)		422
Property and equipment, at cost	1,810			—				1,810
Accumulated depreciation	(575		)	—				(575		)
Property and equipment, net	1,235			—				1,235
Intangible assets, net	43			—				43
Deferred income taxes	—			218			(d)	218
Deferred charges and other assets, net	8			26			(e)	34
Total assets	$	1,727		$	225			$	1,952
LIABILITIES AND NET INVESTMENT / STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of debt and capital lease obligations	$	1		$	—			$	1
Accounts payable	86			—				86
Accrued expenses	39			—				39
Taxes other than income taxes	101			—				101
Total current liabilities	227			—				227
Debt and capital lease obligations, less current portion	4			1,050			(f)	1,054
Deferred income taxes	133			(82		)	(c)	51
Other long-term liabilities	107			—				107
Commitments and contingencies
Net investment / stockholders’ equity:
Common stock	—			1			(g)	1
Additional paid-in capital	—			343			(h)	343
Accumulated other comprehensive income	169			—				169
Net parent investment	1,087			(1,087		)	(h)	—
Total net investment / stockholders’ equity	1,256			(743		)		513
Total liabilities and net investment / stockholders’ equity	$	1,727		$	225			$	1,952

See Notes to Unaudited Pro Forma Combined Financial Statements.

52

CORNER STORE HOLDINGS, INC.

UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME

NINE MONTHS ENDED SEPTEMBER 30,2012

(Millions of Dollars, Except per Share Amounts)

	As Reported		Pro Forma Adjustments				Pro Forma
Operating revenues	$	9,939	$	—			$	9,939
Costs and expenses:
Cost of sales	9,110		10			(i)	9,120
Operating expenses	484		—				484
General and administrative expenses	44		—				44
Depreciation, amortization and accretion expense	83		—				83
Total costs and expenses	9,721		10				9,731
Operating income	218		(10		)		208
Other income, net	1		—				1
Interest and debt expense	—		(41		)	(j)	(41		)
Income before income tax expense	219		(51		)		168
Income tax expense	73		(17		)	(k)	56
Net income	$	146	$	(34	)		$	112
Pro forma earnings per common share							$	1.12		(l)
Pro forma weighted-average common shares outstanding (in millions)							100			(l)

See Notes to Unaudited Pro Forma Combined Financial Statements.

53

CORNER STORE HOLDINGS, INC.

UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME

YEAR ENDED DECEMBER 31,2011

(Millions of Dollars, Except per Share Amounts)

	As Reported			Pro Forma Adjustments				Pro Forma
Operating revenues	$	12,863		$	—			$	12,863
Costs and expenses:
Cost of sales	11,735			14			(i)	11,749
Operating expenses	636			—				636
General and administrative expenses	59			—				59
Depreciation, amortization and accretion expense	113			—				113
Asset impairment loss	3			—				3
Total costs and expenses	12,546			14				12,560
Operating income	317			(14		)		303
Other income, net	1			—				1
Interest and debt expense	(1		)	(55		)	(j)	(56		)
Income before income tax expense	317			(69		)		248
Income tax expense	103			(22		)	(k)	81
Net income	$	214		$	(47	)		$	167
Pro forma earnings per common share								$	1.67		(l)
Pro forma weighted-average common shares outstanding (in millions)								100			(l)

See Notes to Unaudited Pro Forma Combined Financial Statements.

54

CORNER STORE HOLDINGS, INC.

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

(a) This adjustment represents the net impact to cash, resulting from the following (in millions):

Cash received from the issuance of debt (see Note (f))	$	500
Cash paid to Valero (see Note (f))	(500		)
Cash paid for debt issuance costs (see Note (e))	(13		)
Cash pro forma adjustment	$	(13	)

(b) This adjustment reflects the recognition by us of the current portion of a receivable from Valero in connection with Valero’s expected agreement to indemnify us for self-insurance obligations and certain legal matters that we incurred up to and including the distribution date. See Note (e) for the long-term portion of this receivable.

(c) The adjustments to deferred income tax assets and liabilities represent the realization of our net deferred tax liability resulting from the separation and the distribution of the assets (including the equity interests of certain Valero subsidiaries) and liabilities associated with Valero’s retail business from Valero and the transfer of those assets (including the equity interests of certain Valero subsidiaries) and liabilities to us as follows (in millions):

Deferred income tax liabilities:
U.S.	$	(60	)
Canada	(22		)
Deferred income taxes pro forma adjustment	(82		)
Deferred income tax asset (Canada) pro forma adjustment	10
Net deferred income tax liability paid by Valero (see Note (h))	$	(72	)

Upon the distribution, the tax basis of certain of our U.S. assets related to certain historical intercompany transactions between Valero and us will be stepped up, but the historical book basis of these assets will not be stepped up because the distribution represents a transaction with Valero’s stockholders. Therefore, the U.S. adjustment represents the realization by us and the payment by Valero of a portion of our U.S. deferred income tax liabilities. In Canada, the separation of the assets (including the equity interests of a certain Valero subsidiary) and liabilities of Valero’s Canadian retail business and transfer of those assets (including the equity interests of a certain Valero subsidiary) and liabilities to our Canadian subsidiary is a taxable event. Therefore, the Canadian adjustments reflect the realization by us and the payment by Valero of our Canadian net deferred tax liability. These tax amounts are based on the estimated fair value of Valero’s retail business. We believe this estimate is reasonable; however, the fair value will ultimately be determined by an independent appraiser. A significant change to the estimated fair value could have a material impact to these estimated taxes.

(d) As described in Note (c), the separation of the assets (including the equity interests of a certain Valero subsidiary)and liabilities of Valero’s Canadian retail business and transfer of those assets (including the equity interests of a certain Valero subsidiary) and liabilities to our Canadian subsidiary is a taxable event in Canada, and as a result, the tax basis of those assets (including the equity interests of a certain Valero subsidiary) and liabilities will be stepped up to their fair values upon the separation. The historical book basis of those assets (including the equity interests of a certain Valero subsidiary) and liabilities, however, will not be stepped up because they are wholly owned by Valero and will be transferred within the Valero consolidated group. This adjustment, therefore, represents the deferred tax asset of $218 million that we will recognize as a result of the step-up in the tax basis of those assets and liabilities. In addition, upon the separation, we will incur income taxes of $138 million, which will be paid by Valero (see Note (h)), and we will recognize a deferred income tax benefit of $80 million. Because the deferred tax benefit is a nonrecurring item that results directly from the separation, it has been excluded from pro forma income. However, the deferred tax benefit is a component of the deferred tax asset of $218 million and is therefore

55

CORNER STORE HOLDINGS, INC.

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

(Continued)

reflected as an adjustment to additional paid-in capital in Note (h). These tax amounts are based on the estimated fair value of Valero’s Canadian retail business. We believe this estimate is reasonable; however, the fair value will ultimately be determined by an independent appraiser. A significant change to the estimated fair value could have a material impact to these estimated taxes.

(e) This adjustment represents estimated costs and expenses that we expect to incur related to obtaining new debt, which is described in Note (f), and the recognition of the long-term portion of the indemnification receivable from Valero, which is described in Note (b), as follows (in millions):

Debt issuance costs	$	13
Long-term receivable from Valero	13
Deferred charges and other assets pro forma adjustment	$	26

The debt issuance costs will be amortized over the estimated weighted-average term of the related debt of 7.7 years.

(f) We expect to incur $1.05 billion of new long-term debt that will bear an expected weighted-average interest rate of 5.0 percent per annum. We expect to transfer certain proceeds of the new debt (assumed to be $500 million for purposes of these pro forma financial statements) to Valero and to issue certain debt (assumed to be $550 million for purposes of these pro forma financial statements) to Valero in connection with the separation of the assets (including the equity interests of certain Valero subsidiaries) and liabilities of Valero’s retail business from Valero and the transfer of those assets (including the equity interests of certain Valero subsidiaries) and liabilities to us. We expect that Valero will transfer our debt to exchange counterparties to satisfy certain of Valero’s then-outstanding debt obligations. As a result of these financing transactions, we will incur indebtedness of $1.05 billion for which we will not retain any cash following the separation.

(g) This adjustment reflects the issuance by us of our common stock, par value of $0.01 per share, upon the separation of Valero’s retail business. For purposes of these pro forma financial statements, we have assumed that we will issue 100 million shares of our common stock. At the distribution date, Valero will distribute 80 percent of our shares of common stock to its stockholders and retain 20 percent of our shares of common stock.

(h) This adjustment represents the elimination of the net parent investment of Valero and adjustments to additional paid-in capital resulting from the following (in millions):

Reclassification of Valero’s net parent investment	$	1,087
Cash distribution to Valero (see Notes (a) and (f))	(500		)
Issuance of debt obligation to Valero (see Note (f))	(550		)
Recognition of receivable from Valero (see Notes (b) and (e))	17
Tax liabilities paid by Valero (see Notes (c) and (d))	210
Recognition of deferred tax benefit (see Note (d))	80
Total net investment / stockholders’ equity	344
Common stock, $0.01 par value (see Note (g))	(1		)
Total additional paid-in capital	$	343

56

CORNER STORE HOLDINGS, INC.

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

(Continued)

(i) This adjustment represents the increase to our cost of sales related to the increase in the cost of motor fuel purchased from Valero. We expect provisions to be included in the U.S. Fuel Supply Agreements that we intend to enter into with Valero in the U.S. in connection with the separation to increase the price per gallon of motor fuel we purchase from Valero in the U.S. This increase is a fixed amount per gallon; therefore, this pro forma adjustment is calculated by applying the price increase to the actual volumes purchased from Valero during the applicable periods. The terms and pricing of the Petroleum Product Supply Agreement that we intend to enter into with Valero in Canada have not been determined and, therefore, the effects of this agreement are not reflected as a pro forma adjustment. We intend to adjust the pro forma adjustments to reflect the finalized agreements in a subsequent amendment to the registration statement of which this information statement is a part.

(j) This adjustment represents interest expense resulting from the assumed incurrence of $1.05 billion of new debt in connection with the separation, as follows (in millions):

	Nine Months Ended September 30, 2012		Year Ended December 31, 2011
Interest expense on $1.05 billion of new debt (see Note (f))	$	39	$	53
Loan fees and amortization of debt issuance costs	2		2
Total pro forma adjustment to interest expense	$	41	$	55

Pro forma interest expense was calculated based on an assumed weighted-average interest rate of 5.0 percent before debt issuance costs and fees. The interest rate reflects a non-investment grade rating with an appropriate spread over the relevant benchmark rate. Interest expense also includes amortization of debt issuance costs and liquidity facility fees, which are amortized over the term of the associated debt and facility. Actual interest expense may be higher or lower depending on fluctuations in interest rates. A one-eighth percentage change in interest would result in a $1 million change in annual interest expense.

(k) This adjustment represents the net impact to income tax expense of the pro forma adjustments using our effective tax rates of 33.3 percent and 32.5 percent for the nine months ended September 30, 2012, and the year ended December 31, 2011, respectively. Our effective tax rate could be different (either higher or lower) depending on activities subsequent to the separation.

(l) The calculation of pro forma earnings per share and pro forma weighted average shares outstanding for the periods presented is based on the assumption that (i) we will issue 100 million of our shares to Valero upon the separation of the assets (including the equity interests of certain Valero subsidiaries) and liabilities of Valero’s retail business and the transfer of those assets (including the equity interests of certain Valero subsidiaries) and liabilities to us; and (ii) the separation will occur as of the beginning of each period presented and that all shares will remain outstanding during the periods presented. The calculation of pro forma earnings per share and pro forma weighted average shares outstanding will be revised and reflected in an amendment to the registration statement of which this information statement is a part when the number of shares to be issued by us and the distribution ratio are known. Pro forma earnings per share–assuming dilution and weighted-average shares–assuming dilution are not presented because dilutive securities of Valero held by our employees on the distribution date will not convert into our securities.

57

SELECTED COMBINED FINANCIAL DATA

The following selected financial data reflect the combined operations of Corner Store. We derived the selected combined income statement data for the nine months ended September 30, 2012 and 2011, and the selected combined balance sheet data as of September 30, 2012, from the unaudited combined financial statements of Corner Store, which are included elsewhere in this information statement. We derived the selected combined income statement data for the years ended December 31, 2011, 2010 and 2009, and the selected combined balance sheet data as of December 31, 2011 and 2010, from Corner Store’s audited combined financial statements, which are also included elsewhere in this information statement. We derived the selected combined income statement data for the years ended December 31, 2008 and 2007, and the selected combined balance sheet data as of September 30, 2011 and December 31, 2008 and 2007, from the unaudited combined financial statements of Corner Store, which are not included in this information statement.

To ensure a full understanding, you should read the selected combined financial data presented below in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the audited and unaudited combined financial statements and accompanying notes included elsewhere in this information statement.

The financial data below are presented in millions.

	Nine Months Ended September 30,				Year Ended December 31,
	2012		2011		2011		2010		2009		2008		2007
Operating revenues	$	9,939	$	9,745	$	12,863	$	10,371	$	8,780	$	11,531	$	9,867
Operating income	218		247		317		289		222		344		216
Net income	146		166		214		193		146		225		139
Total assets	1,727		1,607		1,691		1,621		1,580		1,569		1,648
Capital lease obligations, less current portion	4		5		5		5		6		2		1
Net investment	1,256		1,213		1,249		1,193		1,197		1,207		1,237

58

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

Management’s discussion and analysis is the analysis of our financial performance and it includes a discussion of significant trends that may affect our future performance. It should be read in conjunction with the audited and unaudited combined financial statements and accompanying notes included elsewhere in this information statement. It contains forward-looking statements, including, without limitation, statements relating to our plans, strategies, objectives, expectations and intentions. The words “anticipate,” “estimate,” “believe,” “budget,” “continue,” “could,” “intend,” “may,” “plan,” “potential,” “predict,” “seek,” “should,” “will,” “would,” “expect,” “objective,” “projection,” “forecast,” “goal,” “guidance,” “outlook,” “effort,” “target” and similar expressions identify forward-looking statements. We do not undertake to update, revise or correct any of the forward-looking information unless required to do so under the federal securities laws. Readers are cautioned that such forward-looking statements should be read in conjunction with our disclosures under “Cautionary Statement Regarding Forward-Looking Statements” included elsewhere in this information statement.

Management’s discussion and analysis is organized as follows:

• Executive Overview—This section provides an overview of the separation of Corner Store from Valero, the basis of presentation with respect to the amounts presented in the discussion of our results of operations, a description of our business segments, an overview of our results of operations and the outlook for our business. This section also provides an overview of our historical liquidity and our expectations about our future liquidity.

• Results of Operations—This section provides an analysis of our results of operations, including the results of operations of our two business segments, for the nine months ended September 30, 2012 and 2011, and for the years ended December 31, 2011, 2010 and 2009.

• Liquidity and Capital Resources—This section provides a discussion of our financial condition and cash flows for the nine months ended September 30, 2012 and 2011, and for the years ended December 31, 2011, 2010 and 2009. It also includes a discussion of how the separation is expected to affect our capital resources.

• New Accounting Policies—This section describes new accounting pronouncements that we have already adopted and those that we are required to adopt in the future.

• Critical Accounting Policies Involving Critical Accounting Estimates—This section describes the accounting policies and estimates that we consider most important for our business and that require significant judgment.

Executive Overview

Overview of the Separation from Valero

On July 31, 2012, Valero announced its intention to pursue the separation of its retail business from its other businesses and create a stand-alone, publicly traded corporation. This separation is expected to be completed in accordance with a Separation and Distribution Agreement between Valero and Corner Store. On the basis that the distribution, together with certain related transactions, qualifies as a reorganization for U.S. federal income tax purposes, in general, we expect, for U.S. federal income tax purposes, that no gain or loss will be recognized by U.S. holders of Valero common stock, and no amount will be included in their income, upon their receipt of shares of Corner Store common stock in the distribution, except with respect to any cash received in lieu of fractional shares. However, the transfer of assets (including the equity interests of certain Valero subsidiaries) and liabilities associated with Valero’s retail business in the U.S. will result in the recognition of certain historical intercompany transactions for which Valero will pay taxes, and the distribution of assets (including the equity interests of a certain Valero subsidiary) and liabilities associated with Valero’s retail business in Canada will be taxable for Canadian income tax purposes. Valero intends to distribute, on a pro rata basis, 80 percent of the shares of Corner Store common stock to Valero stockholders as of the record date for the distribution. Upon completion of the separation, Valero and Corner Store will each be separate, publicly traded companies and have separate management. For additional information, see “The Separation and the Distribution” included elsewhere in this information statement.

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Basis of Presentation

The audited and unaudited combined financial statements of Corner Store included elsewhere in this information statement were prepared in connection with the separation and reflect the combined historical results of operations, financial position and cash flows of Valero’s retail business, including an allocable portion of corporate costs. Although the legal transfer of the retail business of Valero into Corner Store has yet to take place, for ease of reference, these combined financial statements are collectively referred to as those of Corner Store.

The combined financial statements are presented as if Valero’s retail business in the U.S. and Canada had been combined for all periods presented. The assets and liabilities in the combined financial statements have been reflected on a historical cost basis, as immediately prior to the separation all of the assets and liabilities presented are wholly owned by Valero and are being transferred within the Valero consolidated group. The combined statements of income also include expense allocations for certain corporate functions historically performed by Valero and not allocated to its retail business, including allocations of general corporate expenses related to executive oversight, accounting, treasury, tax, legal and IT. These allocations are based primarily on specific identification of time and/or activities associated with Corner Store, employee headcount or capital expenditures. We believe the assumptions underlying the combined financial statements, including the assumptions regarding allocating general corporate expenses from Valero, are reasonable. Nevertheless, the combined financial statements may not include all of the actual expenses that would have been incurred had we operated as a stand-alone company during the periods presented and may not reflect our combined results of operations, financial position and cash flows had we operated as a stand-alone company during the periods presented. Actual costs that would have been incurred if we had operated as a stand-alone company would depend on multiple factors, including organizational structure and strategic decisions made in various areas, including IT and related infrastructure.

Business Segments

Our business is organized into two operating segments: Retail–U.S. and Retail–Canada. Operating segments were determined based on geographic criteria, with each geographic area having separate gross margins, country specific regulatory environments and location-specific supply and demand characteristics. The following provides an overview of our segments; however, for more information about our business segments, see “Business and Properties” included elsewhere in this information statement.

Retail–U.S.

We operate convenience stores and are one of the largest independent retailers of motor fuel and convenience merchandise items in the U.S. As of September 30, 2012, we had 1,027 convenience stores located predominantly in the southwestern U.S. and Colorado. We operate as a retail distributor of motor fuel that we purchase from Valero, and we primarily market motor fuel under the Valero and Diamond Shamrock brands. Subsequent to the separation and the distribution, we will be Valero’s largest retail distributor of motor fuel in the U.S.

The prices we pay for the motor fuel we purchase from Valero are based on market prices in the locations of our retail sites. In addition, the sales prices of our motor fuel are based on local market factors such as supply and demand, competition and local economic factors, among others. Therefore, the gross margins we receive for our sales of motor fuel are commodity-based, change daily and are volatile.

Retail–Canada

We operate convenience stores, filling stations and cardlocks, and are one of the largest independent retailers of motor fuel and convenience merchandise items in eastern Canada. As of September 30, 2012, we had 849 retail sites in six eastern Canada provinces, including 256 convenience stores, 514 filling stations and 79 cardlocks.

The prices we pay for the motor fuel we purchase from Valero are based on market prices in the locations of our retail sites. In addition, the sales prices of our motor fuel are based on local market factors such as supply and demand, competition and local economic factors, among others. Therefore, the gross margins we receive for our sales of motor fuel are commodity-based, change daily and are volatile. However, the regulatory environment in Canada differs from the U.S. and certain provincial laws serve to regulate and preserve the gross margin for motor fuel and protect against below-cost selling. As such, the gross margin for motor fuel in Canada is typically less volatile than in the U.S.

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Overview and Outlook

Overview

A summary of our earnings, along with the earnings of each of our business segments, is provided in the following table (in millions):

	Nine Months Ended September 30,						Year Ended December 31,
	2012			2011			2011			2010			2009
Retail–U.S. operating income	$	165		$	156		$	202		$	197		$	160
Retail–Canada operating income	97			135			174			149			114
Corporate expenses	(44		)	(44		)	(59		)	(57		)	(52		)
Operating income	218			247			317			289			222
Other expenses, net	(72		)	(81		)	(103		)	(96		)	(76		)
Net income	$	146		$	166		$	214		$	193		$	146

The decrease in net income of $20 million in the first nine months of 2012 compared to the first nine months of 2011 was primarily due to:

• An increase of $9 million in the operating income of our Retail–U.S. segment, which was largely attributable to an increase in our merchandise gross margin driven by product pricing changes, along with gross margin growth in our food service offerings.

• A decrease of $38 million in the operating income of our Retail–Canada segment, which was almost entirely the result of a decrease in our motor fuel gross margin. Our motor fuel gross margin declined from $0.279 per gallon in 2011 to $0.238 per gallon in 2012 related to supply and demand conditions during the period.

• A decrease of $9 million in other expenses primarily as a result of a decrease in income tax expense resulting from lower operating income in 2012.

The increase in net income of $21 million in 2011 compared to 2010 was primarily due to an increase of $25 million in the operating income of our Retail–Canada segment. This increase was significantly driven by the strengthening of the Canadian dollar relative to the U.S. dollar year over year. Excluding the impact of the movement in exchange rates, the increase in the operating income of our Retail–Canada segment was $14 million. This increase in Retail–Canada operating income, excluding the impact of the movement in exchange rates, was primarily attributable to a $25 million increase in gross margin resulting from an increase in motor fuel sales volume related to supply and demand conditions during the period, partially offset by an $8 million increase in operating expenses primarily attributable to an increase in salaries and incentive compensation.

The increase in net income of $47 million in 2010 compared to 2009 was primarily due to:

• An increase of $37 million in the operating income of our Retail–U.S. segment, which was largely due to the beneficial impact of blending ethanol with the motor fuel that we sold. For most of 2010, ethanol was a lower cost product than gasoline and this lower cost resulted in an increase in our motor fuel gross margin. Our motor fuel gross margin increased by $27 million year over year, and we estimate that the lower cost of ethanol contributed almost entirely to that increase.

• An increase of $35 million in the operating income of our Retail–Canada segment, which was significantly driven by the strengthening of the Canadian dollar relative to the U.S. dollar year over year. Excluding the impact of the movement in exchange rates, the increase in the operating income of our Retail–Canada segment was $18 million. This increase in operating income was primarily attributable to higher sales volumes

61

associated with NTIs, agreements with new dealers and an active convenience store remodeling program, which led to an increase in customer traffic in our convenience stores.

• An increase of $20 million in other expenses, consisting primarily of a $21 million increase in income tax expense resulting from higher operating income in 2010.

Our cash flows have been strong over the three years and nine months ended September 30,2012, and we have generated positive cash flows from operations during this period. We have used some of the cash generated from operations to invest in our business, incurring capital expenditures of $90 million and $78 million in the first nine months of 2012 and 2011, respectively, and $130 million, $105 million and $64 million in 2011, 2010 and 2009, respectively. In addition, we acquired 29 convenience stores in Little Rock and Hot Springs, Arkansas in 2012 for total consideration of $61 million.

We are wholly owned by Valero, and as a result, we participate in Valero’s centralized cash management system. We transfer cash to Valero daily and Valero funds our operating and investing activities as needed. However, during the three years and nine months ended September 30, 2012, we generated net cash and transferred that cash to Valero. We transferred $152 million and $129 million of cash in the first nine months of 2012 and 2011, respectively, and $150 million, $220 million and $205 million of cash during 2011, 2010 and 2009, respectively, to Valero.

Outlook

The majority of our operations are conducted in areas of the U.S. and Canada that have fared better than many other parts of North America during the economic downturn of the last five years. Although our operations were impacted by the worldwide recession that began in late 2008, we continued to generate operating income and net income, and our operations have improved along with improvements in the North American economy. The economy in Texas has fared better than many other parts of the U.S., partly supported by a solid economy, a relatively stable housing market and strong population growth and job creation. We have also benefited from the significant increase in economic activity in Texas that has resulted from the increased oil and gas drilling activity in Texas. We have a large number of convenience stores in Texas, and these operations have benefited from the increase in population resulting from employees of the oil and gas industry who have moved to Texas to support that industry. In addition, the economy in Canada has been strong, reflecting sustained growth in the domestic economy. This economic growth has been supported by, among other things, strong global demand for Canadian commodities.

Our operations are significantly impacted by the gross margins we receive on our motor fuel sales. These gross margins are commodity-based, change daily and are volatile. While we expect our motor fuel sales volumes to grow and the gross margins we realize on those sales to remain strong, these gross margins can change rapidly due to many factors. These factors include the price of crude oil (which impacts the wholesale price we pay for the motor fuel we purchase), interruptions in supply caused by severe weather, severe refinery mechanical failures for an extended period of time, and competition in the local markets in which we operate. We continue to expand the variety of products we sell in our convenience stores, such as our food services and, in the Retail–U.S. segment, private label branded products and services that provide commissions such as video and game rentals. We also continue to enlarge our convenience stores so that we are able to handle more customers during peak times. We believe that these business strategies help minimize the negative impacts of periods with lower motor fuel gross margins.

We expect to incur up to $1.05 billion in debt in connection with our separation from Valero. In connection with the separation and the distribution, we expect to issue debt to third parties and distribute the cash proceeds to Valero and issue debt directly to Valero in consideration for the contribution by Valero to us of the retail business. As a result, we will not retain or receive any cash from these debt offerings following the separation. We also anticipate incurring $30 million to $35 million in capital costs for IT infrastructure within the first year following the separation in order to operate as a stand-alone company. We believe that we will generate sufficient cash from operations to fund our ongoing operating requirements after the separation. In addition, we expect to have liquidity facilities available to us upon separation from Valero and, to the extent necessary, we will borrow under these facilities to fund our ongoing operating requirements. There can be no assurances, however, that we will generate sufficient cash from operations or obtain the liquidity facilities. In addition, even if we obtain the liquidity facilities, the borrowing capacity under the facilities may not be available to us.

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Results of Operations

Income Statement Analysis

Provided below is an analysis of our income statements, which provides the primary reasons for significant increases and decreases in the various income statement line items from period to period. Our combined statements of income are as follows (in millions):

	Nine Months Ended September 30,					Year Ended December 31,
	2012		2011			2011			2010			2009
Operating revenues	$	9,939	$	9,745		$	12,863		$	10,371		$	8,780
Costs and expenses:
Cost of sales	9,110		8,893			11,735			9,310			7,811
Operating expenses	484		479			636			605			581
General and administrative expenses	44		44			59			57			52
Depreciation, amortization and accretion expense	83		82			113			105			101
Asset impairment loss	—		—			3			5			13
Total costs and expenses	9,721		9,498			12,546			10,082			8,558
Operating income	218		247			317			289			222
Other income, net	1		1			1			2			1
Interest expense	—		(1		)	(1		)	(1		)	(1		)
Income before income tax expense	219		247			317			290			222
Income tax expense	73		81			103			97			76
Net income	$	146	$	166		$	214		$	193		$	146

Nine Months Ended September 30,2012 vs. Nine Months Ended September 30,2011

Operating revenues increased by $194 million, or 2 percent, primarily due to a $261 million increase resulting from strong motor fuel demand leading to higher motor fuel sales volume and higher motor fuel selling price per gallon in our Retail–U.S. segment. We also experienced a $23 million increase in operating revenues in our Retail–Canada segment attributable to higher prices for the motor fuel that we sold resulting from an increase in wholesale motor fuel prices. These operating revenue increases were partially offset by a $90 million decline in the Retail–Canada segment resulting from the weakening of the Canadian dollar relative to the U.S. dollar.

Cost of sales increased by $217 million, or 2 percent, primarily from a $299 million increase due to higher prices for motor fuel purchased by us for resale that resulted from an increase in wholesale motor fuel prices. Partially offsetting that increase is a cost of sales decline of $82 million resulting from the weakening of the Canadian dollar relative to the U.S. dollar.

Income tax expense decreased by $8 million primarily due to the decrease in operating income in the first nine months of 2012.

2011vs. 2010

Operating revenues increased by $2.5 billion, or 24 percent, primarily due to higher prices for the motor fuel that we sold resulting from an increase in wholesale motor fuel prices, as well as a $222 million increase resulting from the strengthening of the Canadian dollar relative to the U.S. dollar.

Cost of sales increased by $2.4 billion, or 26 percent, primarily due to higher prices for motor fuel purchased by us for resale resulting from an increase in wholesale motor fuel prices. Included in this increase is a $200 million increase resulting from the strengthening of the Canadian dollar relative to the U.S. dollar.

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Operating expenses increased by $31 million primarily due to increases of $12 million related to the strengthening of the Canadian dollar relative to the U.S. dollar, $6 million for wages and incentive compensation expenses, $2 million resulting from the impact of a favorable legal settlement in 2010, $1 million from higher electricity usage, $2 million from ad valorem taxes and various other items, none of which were individually significant.

Depreciation, amortization and accretion expense increased by $8 million due primarily to an increase in retail sites placed in service during 2011.

2010 vs. 2009

Operating revenues increased by $1.6 billion, or 18 percent, primarily due to higher prices for the motor fuel that we sold resulting from an increase in wholesale motor fuel prices, as well as a $325 million increase resulting from the strengthening of the Canadian dollar relative to the U.S. dollar.

Cost of sales increased by $1.5 billion, or 19 percent, primarily due to higher prices for motor fuel purchased by us for resale resulting from an increase in wholesale motor fuel prices. Included in this increase is a $289 million increase resulting from the strengthening of the Canadian dollar relative to the U.S. dollar.

Operating expenses increased by $24 million primarily due to an increase of $21 million related to the strengthening of the Canadian dollar relative to the U.S. dollar.

The asset impairment loss was $5 million in 2010 compared to $13 million in 2009. Our operations were impacted by the worldwide recession that began in late 2008, which was a contributing factor to the asset impairment recorded in 2009. As our operations improved in 2010 along with improvements in the North American economy, we incurred fewer asset impairments.

Income tax expense increased by $21 million mainly due to higher operating income.

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Segment Results

Retail–U.S.

The following tables highlight the results of operations of our Retail–U.S. segment and its operating performance. The narrative following these tables provides an analysis of the results of operations of that segment (millions of dollars, except merchandise sales per convenience store per day and per gallon amounts):

	Nine Months Ended September 30,						Year Ended December 31,
	2012			2011			2011			2010			2009
Operating revenues:
Motor fuel	$	5,015		$	4,763		$	6,281		$	4,926		$	4,092
Merchandise	936			930			1,223			1,205			1,171
Other	43			40			53			52			48
Total operating revenues	$	5,994		$	5,733		$	7,557		$	6,183		$	5,311
Gross margin:
Motor fuel	$	201		$	195		$	258		$	251		$	224
Merchandise	280			267			351			341			329
Other	41			40			55			51			51
Total gross margin	522			502			664			643			604
Operating expenses	300			291			384			373			366
Depreciation, amortization and accretion    expense	57			55			76			71			70
Asset impairment loss	—			—			2			2			8
Operating income	$	165		$	156		$	202		$	197		$	160
Adjusted EBITDA (a):
Operating income	$	165		$	156		$	202		$	197		$	160
Add back:
Depreciation, amortization and accretion    expense	57			55			76			71			70
Asset impairment loss	—			—			2			2			8
Adjusted EBITDA	$	222		$	211		$	280		$	270		$	238
Retail sites (end of period)	1,027			994			998			994			991
Motor fuel sales (gallons per store per day)	5,114			5,053			5,059			5,086			4,983
Merchandise sales (per store per day)	$	3,389		$	3,428		$	3,370		$	3,333		$	3,207
Average motor fuel selling price per gallon	$	3.55		$	3.47		$	3.42		$	2.68		$	2.25
Motor fuel gross margin (cents per gallon):
Motor fuel margin, before credit card fees	$	0.182		$	0.185		$	0.186		$	0.174		$	0.154
Credit card fees	(0.040		)	(0.043		)	(0.046		)	(0.037		)	(0.030		)
Motor fuel gross margin	$	0.142		$	0.142		$	0.140		$	0.137		$	0.124
Merchandise gross margin (percentage of    merchandise revenues)	29.9		%	28.7		%	28.7		%	28.3		%	28.1		%

See footnote (a) on page 66.

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(a) EBITDA represents net income before net interest expense, income taxes, depreciation and amortization expense. Adjusted EBITDA further adjusts EBITDA by excluding asset impairment loss. We believe that Adjusted EBITDA is useful to investors in evaluating our operating performance because (a) it facilitates management’s ability to compare the operating performance of our segments on a consistent basis by excluding the impact of items not directly resulting from our retail operations and (b) it is used by our management for internal planning purposes, such as operating budgets, capital project budgets and operating targets. EBITDA and Adjusted EBITDA are not recognized terms under U.S. generally accepted accounting principles (“GAAP”) and do not purport to be an alternative to net income as a measure of operating performance or to cash flows from operating activities as a measure of liquidity. Adjusted EBITDA has limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of our results of operations as reported under GAAP.

Nine Months Ended September 30,2012 vs. Nine Months Ended September 30,2011

Operating revenues increased $261 million, or 5 percent, and gross margin increased $20 million, or 4 percent, which was the primary reason for the operating income increase of $9 million, or 6 percent.

The improved results were driven by:

• An increase in motor fuel sales volumes of 40 million gallons, which increased motor fuel operating revenues by $139 million, or 3 percent, attributable to stronger motor fuel demand in Texas as a result of NTIs and the overall strength of the economy in Texas, which has benefited from oil and gas production activities.

• An increase in the price per gallon of motor fuel that we sold contributed $113 million, or 2 percent, of the increase to our motor fuel operating revenues. Our average selling price was $0.08 per gallon higher for the first nine months of 2012 compared with the first nine months of 2011 due to an increase in wholesale motor fuel prices.

• An increase of $13 million, or 5 percent, to our merchandise gross margin from changes in our product pricing strategy along with growth in the food service category. The food service category growth of $4 million was attributable to expanded food service offerings in our convenience stores.

Our operating expenses increased $9 million, or 3 percent, primarily as a result of an increase in employee-related expenses.

2011 vs. 2010

Operating revenues increased $1.4 billion, or 22 percent, and gross margin increased $21 million, or 3 percent, which was the primary reason for the operating income increase of $5 million, or 3 percent.

The improved results were driven by:

• An increase in operating revenues attributable to:

◦ An increase in the price per gallon of motor fuel that we sold resulted in a $1.4 billion, or 27 percent, increase in motor fuel operating revenues while the volume of motor fuel sold was relatively flat. The average selling price of motor fuel was $3.42 per gallon in 2011 compared to $2.68 per gallon in 2010, or an increase of 28 percent, due to an increase in wholesale motor fuel prices.

• An increase in gross margin attributable to:

◦ An increase of $13 million in our motor fuel gross margin attributable to growth in Texas. This growth was partially offset by a $6 million decline in our motor fuel gross margin in Arizona as a result of an increase in competition along with a decline in demand resulting from poor economic conditions in the state.

◦ An increase in the merchandise gross margin of $10 million mostly attributable to NTIs and remodeled convenience stores.

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◦ An increase in our gross margin of $4 million mostly attributable to the remodeling of car washes, a higher interchange fee on ATM transactions and an increase in video and game rentals.

We experienced an $11 million increase in operating expenses, or 3 percent, attributable to increases of $2 million from NTIs, $3 million related to wages, $1 million from higher consumption of electricity due to record warmth in much of Texas, $1 million from ad valorem taxes, the impact from a favorable legal settlement of $2 million received in 2010 and various other items, none of which were individually significant.

2010 vs. 2009

Operating revenues increased $872 million, or 16 percent, and gross margin increased $39 million, or 6 percent, which was the primary reason for the operating income increase of $37 million, or 23 percent.

The improved results were primarily driven by:

• An increase in operating revenues attributable to:

◦ An increase in the price per gallon of motor fuel that we sold contributed $788 million of the increase in motor fuel operating revenues. Our average motor fuel selling price per gallon in 2010 was $2.68 compared to an average motor fuel selling price per gallon in 2009 of $2.25, or an increase of 19 percent, due to an increase in wholesale motor fuel prices.

◦ An increase in motor fuel sales volumes that contributed $46 million to the increase in motor fuel operating revenue due to to a convenience store remodeling program and more robust economic conditions in our core markets, particularly in Texas.

• An increase in gross margin attributable to:

◦ An estimated $22 million increase in our motor fuel gross margin as the result of the lower cost of ethanol in 2010 compared to 2009. Approximately 80 percent of the gasoline we sold during 2010 contained 10 percent ethanol. Motor fuel gross margin increases were affected by the blending of ethanol into the gasoline sold by us. For most of 2010, ethanol was a lower cost product than gasoline and this lower cost resulted in an increase in our motor fuel gross margin. The remaining $5 million increase in our motor fuel gross margin was primarily attributable to growth in the volume of motor fuel sold in our core markets in Texas.

◦ An increase in our merchandise gross margin of $12 million, or 4 percent, primarily due to fewer low gross margin cigarettes sold as a percentage of merchandise sales in 2010 and an active convenience store remodeling program, which led to an increase in customer traffic in our convenience stores.

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Retail–Canada

The following tables highlight the results of operations of our Retail–Canada segment and its operating performance. The narrative following these tables provides an analysis of the results of operations of that segment (millions of dollars, except merchandise sales per convenience store per day and per gallon amounts):

	Nine Months Ended September 30,						Year Ended December 31,
	2012			2011			2011			2010			2009
Operating revenues:
Motor fuel	$	3,356		$	3,398		$	4,477		$	3,517		$	2,883
Merchandise	194			197			261			240			201
Other	395			417			568			431			385
Total operating revenues	$	3,945		$	4,012		$	5,306		$	4,188		$	3,469
Gross margin:
Motor fuel	$	188		$	225		$	298		$	261		$	229
Merchandise	57			58			77			72			59
Other	62			67			89			85			77
Total gross margin	307			350			464			418			365
Operating expenses	184			188			252			232			215
Depreciation, amortization and accretion    expense	26			27			37			34			31
Asset impairment loss	—			—			1			3			5
Operating income	$	97		$	135		$	174		$	149		$	114
Adjusted EBITDA (a):
Operating income	$	97		$	135		$	174		$	149		$	114
Add back:
Depreciation, amortization and accretion    expense	26			27			37			34			31
Asset impairment loss	—			—			1			3			5
Adjusted EBITDA	$	123		$	162		$	212		$	186		$	150
Retail sites (end of period)	849			881			873			895			907
Motor fuel sales (gallons per store per day)	3,354			3,331			3,320			3,223			3,086
Merchandise sales (per store per day)	$	2,769		$	2,822		$	2,786		$	2,661		$	2,285
Average motor fuel selling price per gallon	$	4.99		$	4.89		$	4.90		$	3.84		$	3.16
Motor fuel gross margin (cents per gallon):
Motor fuel margin, before credit card fees	$	0.260		$	0.300		$	0.299		$	0.263		$	0.231
Credit card fees	(0.022		)	(0.021		)	(0.021		)	(0.016		)	(0.013		)
Motor fuel gross margin	$	0.238		$	0.279		$	0.278		$	0.247		$	0.218
Merchandise gross margin (percentage of    merchandise revenues)	29.4		%	29.4		%	29.5		%	30.0		%	29.4		%

(a) See footnote (a) on page 66.

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Nine Months Ended September 30,2012 vs. Nine Months Ended September 30,2011

Operating revenues decreased $67 million, or 2 percent, and gross margin declined $43 million, or 12 percent, which was the primary reason for the operating income decline of $38 million, or 28 percent.

Significant items impacting these results included:

• A decrease in operating revenues attributable to:

◦ A decline of $90 million in operating revenues due to the weakness of the Canadian dollar relative to the U.S. dollar. On average, Canadian $1 was equal to U.S. $1 during the first nine months of 2012 compared to U.S. $1.02 during the first nine months of 2011, representing a decrease in value of 2 percent.

◦ Excluding the effects of foreign exchange movements, our operating revenues increased $23 million primarily as a result of an increase in the price per gallon of motor fuel that we sold. Our average motor fuel selling price per gallon in the first nine months of 2012 was $4.99 compared with an average motor fuel selling price per gallon for the same period in 2010 of $4.89, or an increase of 2 percent due to an increase in wholesale motor fuel prices.

• A decrease in gross margin attributable to:

◦ The decrease in the Canadian dollar resulted in an $8 million gross margin decline.

◦ A $5 million motor fuel gross margin decline attributable to a decline in the volume of motor fuel sold primarily from the de-branding of 24 filling stations.

◦ A $32 million motor fuel gross margin decline, representing $.04 per gallon, related to supply and demand conditions during the period.

2011 vs. 2010

Operating revenues increased $1.1 billion, or 27 percent, and gross margin increased $46 million, or 11 percent, which was the primary reason for the operating income increase of $25 million, or 17 percent.

The improved results were primarily driven by:

• An increase in operating revenues attributable to:

◦ Excluding the effects of foreign exchange movements, our operating revenues increased $896 million primarily as a result of an increase in the price per gallon of motor fuel that we sold. Our average motor fuel selling price per gallon in 2011 was $4.90 compared with an average motor fuel selling price per gallon in 2010 of $3.84, or an increase of 28 percent, due to an increase in wholesale motor fuel prices.

◦ An increase of $222 million driven by the strengthening of the Canadian dollar relative to the U.S. dollar year over year.

• An increase in gross margin attributable to:

◦ An increase of $22 million due to the stronger Canadian dollar and a $22 million increase attributable to increased demand for motor fuel related to supply and demand conditions during the period.

Operating expenses increased by $20 million, or 9 percent, of which $12 million was due to the stronger Canadian dollar. The remainder of the increase was primarily attributable to higher wages and incentive compensation expenses.

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2010 vs. 2009

Operating revenues increased $719 million, or 21 percent, and gross margin increased $53 million, or 15 percent, which was the primary reason for the operating income increase of $35 million, or 31 percent.

The improved results were primarily driven by:

• Excluding the effects of foreign exchange movements, our operating revenues increased $394 million primarily from an increase in the price per gallon of motor fuel that we sold. Our average motor fuel selling price per gallon in 2010 was $3.84 compared with an average motor fuel selling price per gallon in 2009 of $3.16, or an increase of 22 percent, due to an increase in wholesale motor fuel prices.

• An increase of $325 million in operating revenues from an increase in the value of the Canadian dollar relative to the U.S. dollar and a $20 million increase in merchandise sales volumes primarily attributable to NTIs.

• An increase in our gross margin of $53 million, of which $36 million was due primarily to the stronger Canadian dollar and $17 million was primarily attributable to higher sales volume associated with NTIs, agreements with new dealers and an active convenience store remodeling program, which led to an increase in customers in our convenience stores.

Operating expenses increased by $17 million, or 8 percent, primarily due to the stronger Canadian dollar.

Liquidity and Capital Resources

General

We participate in Valero’s centralized approach to the cash management and financing of our operations. Therefore, our cash is transferred to Valero daily and Valero funds our operating and investing activities, as needed. Accordingly, the cash and cash equivalents held by Valero at the corporate level were not allocated to us for any of the periods presented in our historical combined financial statements. The cash reflected in our historical combined financial statements represents cash on hand at our convenience stores, cash that had not yet been transferred to Valero and cash held by us in ATMs. See “Working Capital Adjustments to Be Made in Connection With the Separation and the Distribution” below for a discussion of changes that we expect to occur prior to the separation and the distribution with respect to the payment for motor fuel purchased from Valero and the transfer of cash to Valero.

During the three years and nine months ended September 30, 2012, we generated net cash and transferred that cash to Valero. These transfers are shown as a component of financing activities on our combined statements of cash flows. We transferred $152 million and $129 million of cash in the first nine months of 2012 and 2011, respectively, and $150 million, $220 million and $205 million of cash during 2011, 2010 and 2009, respectively, to Valero.

Cash Flows

Nine Months Ended September 30,2012

Cash provided by operating activities for the nine months ended September 30,2012 was $236 million compared to $211 million for the nine months ended September 30,2011. The increase was due primarily to the timing for payment of taxes other than income taxes. Changes in cash provided by or used for working capital during the nine months ended September 30,2012 and 2011 are shown in Note 8 of Condensed Notes to Combined Financial Statements that accompany our unaudited combined financial statements included elsewhere in this information statement.

The net cash provided by operating activities during the nine months ended September 30,2012 combined with $67 million of available cash on hand was used to fund $90 million of capital expenditures, fund the acquisition of 29 convenience stores in Little Rock and Hot Springs, Arkansas for $61 million and transfer $152 million to Valero.

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Year Ended December 31,2011

Cash provided by operating activities for the year ended December 31, 2011 was $308 million compared to $323 million for the year ended December 31, 2010. The decrease was due primarily to an increase in receivables in 2011. Changes in cash provided by or used for working capital during the years ended December 31, 2011 and 2010 are shown in Note 14 of Notes to Combined Financial Statements that accompany our audited combined financial statements included elsewhere in this information statement.

The net cash provided by operating activities during the year ended December 31, 2011 was used primarily to fund capital expenditures of $130 million, transfer $150 million to Valero and increase available cash on hand by $30 million.

Year Ended December 31,2010

Cash provided by operating activities for the year ended December 31, 2010 was $323 million compared to $262 million for the year ended December 31, 2009. The increase was due primarily to an increase in operating income as discussed above in “Results of Operations.” Changes in cash provided by or used for working capital during the years ended December 31, 2010 and 2009 are shown in Note 14 of Notes to Combined Financial Statements that accompany our audited combined financial statements included elsewhere in this information statement.

The net cash generated from operating activities during the year ended December 31, 2010 was used to fund capital expenditures of $105 million and transfer $220 million to Valero.

Capital Requirements

Our capital expenditures and investments relate primarily to the acquisition of land and the construction of new convenience stores, which we refer to as NTIs below. We also spend capital to improve our existing retail sites, which we refer to as sustaining capital and, from time to time, we enter into strategic acquisitions. The following table outlines our capital expenditures and investments by segment for the nine months ended September 30,2012 and for the years ended December 31, 2011, 2010 and 2009 (in millions):

	Nine Months Ended September 30, 2012		Year Ended December 31,
			2011		2010		2009
Retail–U.S.:
NTI	$	62	$	38	$	32	$	13
Acquisitions	61		—		—		—
Sustaining capital	6		53		35		26
	$	129	$	91	$	67	$	39
Retail–Canada:
NTI	$	5	$	9	$	8	$	8
Sustaining capital	17		30		30		17
	$	22	$	39	$	38	$	25

In July 2012, we completed the acquisition of 29 convenience stores located in the Little Rock and Hot Springs, Arkansas areas from The Crackerbox, LLC for $61 million. The acquisition of these stores will enhance our existing retail network and supply chain.

We expect total capital expenditures for the fourth quarter of 2012 and for the full year 2013 to be approximately $80 million and $220 million, respectively. These estimates exclude expenditures related to strategic business acquisitions.

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Contractual Obligations

Our contractual obligations as of December 31, 2011 are summarized below (in millions). The amounts in the table below do not reflect contractual obligations that we expect to result from agreements that we will enter into in connection with the separation and the distribution; however, those agreements and the related obligations are described below.

	Payments Due by Period
	2012		2013		2014		2015		2016		Thereafter		Total
Capital lease obligations	$	2	$	2	$	1	$	1	$	1	$	4	$	11
Operating lease obligations	22		19		14		10		7		24		96
Purchase obligations	2		2		1		—		—		—		5
Other long-term liabilities	—		20		7		—		—		74		101
Total	$	26	$	43	$	23	$	11	$	8	$	102	$	213

During the nine months ended September 30,2012, we had no material changes outside the ordinary course of our business with respect to our debt, capital lease obligations, operating leases, purchase obligations or other long-term liabilities.

Debt and Capital Lease Obligations

We have land and certain convenience store properties under capital leases. Capital lease obligations in the table above include both principal and interest.

We expect to incur an aggregate $1.05 billion in debt in connection with the separation and the distribution for which we will not retain any cash following the separation. We expect the indebtedness will consist of bank debt, short term notes, long term notes or a combination thereof. In addition, we expect to have liquidity facilities that will be available for working capital and for general corporate purposes and that we expect will be undrawn at the time the distribution is completed. We will describe the terms and covenants of any notes to be issued, bank debt to be incurred or liquidity facilities to be entered into in an amendment to the registration statement of which this information statement is a part.

Based on our expected capital structure and a comparison with peers in our industry, we expect to receive a non-investment grade credit rating from the rating agencies. We anticipate ensuring adequate liquidity for day-to-day operations and contingencies with initial cash on hand and expected increases in cash resulting from the increase in payment terms to “net 10” days for motor fuel purchases from Valero and other adjustments as more fully described under “Working Capital Adjustments to Be Made in Connection With the Separation and the Distribution” below.

Operating Lease Obligations

Our operating lease obligations include leases for land, office facilities and retail sites. Operating lease obligations reflected in the table above include all operating leases that have initial or remaining noncancelable terms in excess of one year, and are not reduced by minimum rentals to be received by us under subleases. In addition, such amounts do not reflect contingent rentals that may be incurred in addition to minimum rentals. See Note 8 in Notes to Combined Financial Statements that accompany our audited combined financial statements included elsewhere in this information statement for our disclosures of contingent rentals paid related to our operating leases.

In connection with the separation and the distribution from Valero, we expect to enter into an Office Lease Agreement with Valero, pursuant to which we will lease approximately 78,000 square feet of office space at the Valero corporate campus in San Antonio, Texas. The term of the lease is expected to be five years, but we will have the right to terminate the lease at any time without penalty upon 180 days’ prior notice to Valero. Rent and other charges to be paid by us under the lease will be consistent with the rates charged for comparable office space in the San Antonio area.

We also expect to sublease approximately 50,000 square feet of office space from Valero in the building located at 2200 McGill College in Montreal, Québec. The sublease is expected to expire on [•], but we will have the right to terminate the sublease at any time without penalty upon 180 days’ prior notice to Valero. Rent and other charges under the sublease are expected to be straight pass-throughs (prorated based on square footage) of the rents and other charges

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and expenses incurred by Valero under the lease, without markup. The sublease will be subject to the consent of the landlord under the lease.

We expect the lease and sublease agreements with Valero to have non-cancelable terms that are less than one year. Therefore, the amounts to be paid in future periods will not be disclosed in the table of contractual obligations. However, unless we elect to exercise our 180-day early termination right with respect to one or both of them, the above-described office lease and sublease will increase our annual operating lease expense by approximately $4 million.

Purchase Obligations

A purchase obligation is an enforceable and legally binding agreement to purchase goods or services that specifies significant terms, including (i) fixed or minimum quantities to be purchased, (ii) fixed, minimum or variable price provisions and (iii) the approximate timing of the transaction. We currently have insignificant purchase obligations.

In connection with the separation and the distribution, we expect our U.S. Fuel Supply Agreements and Petroleum Product Supply Agreement in Canada to contain minimum annual purchase obligations. The minimum purchase obligation provisions of these agreements have not been determined. We intend to amend this information statement to disclose these purchase obligation amounts when the agreements are finalized.

Other Long-Term Liabilities

Other long-term liabilities are described in Note 7 of Notes to Combined Financial Statements that accompany our audited combined financial statements included elsewhere in this information statement. For purposes of reflecting amounts for other long-term liabilities in the table above, we have made our best estimate of expected payments for each type of liability based on information available as of December 31, 2011.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Other Matters Impacting Liquidity and Capital Resources

Cash Held by Our Canadian Subsidiary

As of September 30, 2012, $14 million of cash was held in Canada. A significant portion of our operating income is from our Retail–Canada segment. We intend to reinvest these earnings indefinitely in our Canadian operations even though we are not restricted from repatriating such earnings to the U.S. in the form of cash dividends.

Should we decide to repatriate such earnings, we would incur and pay taxes on the amounts repatriated. In addition, such repatriation could cause us to record deferred tax expense that could significantly impact our results of operations.

Concentration of Customers

We have no significant concentration of customers.

Dividends

After the distribution, we intend to pay a quarterly cash dividend to our common stockholders of $0.0625 per share, or $0.25 per share per year. However, the declaration and amount of all dividends to holders of our common stock will be at the discretion of our Board of Directors and will depend upon many factors, including our financial conditions, earnings, capital requirements of our business, covenants associated with certain debt obligations, legal requirements, regulatory constraints, industry practices and other factors the Board of Directors deems relevant. We are a holding company and have no direct operations. As a result, we will be able to pay dividends on our common stock only from our available cash on hand and distributions received from our subsidiaries.

Working Capital Adjustments to Be Made in Connection With the Separation and the Distribution

We participate in Valero’s centralized cash management program and the cash generated by us is transferred to Valero daily and Valero funds our operating and investing activities, as needed. The cash collected on our credit card receivables is immediately transferred to Valero. As a result, the cash reflected on our historical combined balance sheets represents cash on hand at our convenience stores, cash that had not yet been transferred to Valero and cash held by us in ATMs.

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We anticipate that prior to the separation and the distribution, certain changes will occur regarding the manner in which we participate in Valero’s centralized cash management program, and these changes are expected to result in an increase to our cash on hand. First, our payment terms on motor fuel purchased from Valero will be increased to “net 10” days after taking title to the motor fuel, which is consistent with terms currently offered by Valero to its other creditworthy retail distributors. In addition, the cash we collect on our credit card receivables will be retained by us rather than transferred to Valero. We expect that the result of these changes will increase our cash on hand because we currently pay Valero for our motor fuel purchases when we take title to the motor fuel and we immediately transfer all cash received from daily credit card settlements.

It has not yet been determined how many days prior to the separation and the distribution that the changes discussed above will occur, and we cannot accurately determine the daily impact to our cash on hand from these changes because such amounts relate to future transactions that we cannot predict. We believe, however, that the increase to our cash on hand will result in a cash balance that is more typical for a company of our size and in our industry.

Health Care Reform

In March 2010, a comprehensive health care reform package composed of the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 (“Health Care Reform”) was enacted into law in the U.S. Provisions of the Health Care Reform are expected to affect the future costs of U.S. health care plans. Valero sponsors U.S. health care plans that are grandfathered under Health Care Reform and has made only those changes to the plans required by Health Care Reform. We expect to receive more guidance on the Health Care Reform provisions, which are required in 2014 and will then be able to better evaluate the potential impact of the Health Care Reform on our financial position and results of operations; however, we currently estimate that our health care costs will increase by approximately $5 million per year beginning in 2014.

Contingencies

Legal Matters

See Note 8 under the caption “Litigation Matters” of Notes to Combined Financial Statements that accompany our audited combined financial statements included elsewhere in this information statement for a discussion of our legal matters.

Environmental Matters

Our operations are subject to extensive environmental regulations by governmental authorities relating to the discharge of materials into the environment, waste management, pollution prevention measures, greenhouse gas emissions and characteristics and composition of gasoline and diesel. Because environmental laws and regulations are becoming more complex and stringent and new environmental laws and regulations are continuously being enacted or proposed, the level of future expenditures required for environmental matters could increase in the future. In addition, any major upgrades in any of our operating facilities could require material additional expenditures to comply with environmental laws and regulations. See Note 8 under the caption “Environmental Matters” of Notes to Combined Financial Statements that accompany our audited combined financial statements included elsewhere in this information statement for a discussion of our environmental matters.

New Accounting Policies

As discussed in Note 1 of Notes to Combined Financial Statements that accompany our audited combined financial statements included elsewhere in this information statement, certain new financial accounting pronouncements have been issued that either have already been reflected in the accompanying financial statements or will become effective for our financial statements at various dates in the future. The adoption of these pronouncements has not had, and is not expected to have, a material effect on our financial statements.

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Critical Accounting Policies Involving Critical Accounting Estimates

We prepare our financial statements in conformity with GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. See Note 1 under the caption “Significant Accounting Policies” of Notes to Combined Financial Statements that accompany our audited combined financial statements included elsewhere in this information statement for a summary of our significant accounting policies.

Critical accounting policies are those we believe are both most important to the portrayal of our financial condition and results, and require our most difficult, subjective or complex judgments, often because we must make estimates about the effect of matters that are inherently uncertain. Judgments and uncertainties affecting the application of those policies may result in materially different amounts being reported under different conditions or using different assumptions. We believe the following policies to be the most critical in understanding the judgments that are involved in preparing our financial statements.

Impairment of Assets

Long-lived assets at the individual retail site level are reviewed for impairment periodically or whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. Our primary indicator that operating store assets may not be recoverable is consistent negative cash flow for a twelve-month period for those retail sites that have been open in the same location for a sufficient period of time to allow for meaningful analysis of ongoing results. Management also monitors other factors when evaluating retail sites for impairment, including individual sites’ execution of their operating plans and local market conditions.

When an evaluation is required, the projected future undiscounted cash flows to be generated from each retail site over its remaining economic life are compared to the carrying value of the long-lived assets of that site to determine if a write-down to fair value is required. When determining future cash flows associated with an individual retail site, management makes assumptions about key variables such as sales volume, gross margins and expenses. Cash flows vary for each retail site year to year and, as a result, we have identified and recorded impairment charges for operating and closed retail sites for each of the past three years as changes in market demographics, traffic patterns, competition and other factors have impacted the overall operations of certain of our individual retail site locations. Similar changes may occur in the future that will require us to record impairment charges. We have not made any material changes in the methodology used to estimate future cash flows of operating retail sites during the past three years.

Our impairment evaluations are based on assumptions we deem to be reasonable. If the actual results of our operating retail sites are not consistent with the estimates and judgments we have made in estimating future cash flows and determining fair values, our actual impairment losses could vary positively or negatively from our estimated impairment losses. Providing sensitivity analysis if other assumptions were used in performing the impairment evaluations is not practical due to the significant number of assumptions involved in the estimates. As discussed further in Note 2 of Notes to Combined Financial Statements that accompany our audited combined financial statements included elsewhere in this information statement, we recorded asset impairment losses of $3 million, $5 million and $13 million for 2011, 2010 and 2009, respectively. Asset impairment losses are reported separately in the statements of income.

Self-Insurance Liabilities

We currently self-insure for expected losses under our workers’ compensation, non-subscriber work injury program and general liability. We have recorded accrued liabilities based on our estimates of the ultimate costs to settle claims, including incurred but not reported claims.

We have not made any material changes in the methodology used to establish our self-insurance liability during the past three years. Our accounting policies regarding self-insurance programs include judgments and actuarial assumptions regarding economic conditions, the frequency and severity of claims, claim development patterns and claim management and settlement practices. Although we have not experienced significant changes in actual expenditures compared to actuarial assumptions as a result of increased medical costs or incidence rates, such changes could occur in the future and could significantly impact our results of operations and financial position. A 10 percent

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change in our estimate for our self-insurance liability would have affected our results of operations for 2011 by approximately $2 million.

Asset Retirement Obligations

As of December 31, 2011, we had approximately 4,700 USTs at our retail sites. We recognize the estimated future cost to remove these USTs over their estimated useful lives. We record a discounted liability for the fair value of an asset retirement obligation with a corresponding increase to the carrying value of the related long-lived asset at the time a UST is installed. We depreciate the amount added to property and equipment and recognize accretion expense in connection with the discounted liability over the remaining life of the UST.

We have not made any material changes in the methodology used to estimate future costs for removal of a UST during the past three fiscal years. We base our estimates of such future costs on our prior experience with removal and include normal and customary costs we expect to incur associated with UST removal. We compare our cost estimates with our actual removal cost experience on an annual basis, and when the actual costs we experience exceed our original estimates, we will recognize an additional liability for estimated future costs to remove the USTs. Because these estimates are subjective and are currently based on historical costs with adjustments for estimated future changes in the associated costs, the dollar amount of these obligations could change as more information is obtained. A 10 percent change in our estimate of anticipated future costs for removal of a UST would increase our asset retirement obligation by approximately $8 million as of December 31, 2011. There were no material changes in our asset retirement obligation estimates during 2011. See also Note 7 under the caption “Asset Retirement Obligation” of Notes to Combined Financial Statements that accompany our audited combined financial statements included elsewhere in this information statement.

Environmental Liabilities

As of December 31, 2011 and 2010, our environmental reserves recorded in the Combined Financial Statements were $4 million and $5 million, respectively. These environmental reserves represent our estimates for future expenditures for remediation and related litigation associated with 61 known contaminated sites as of December 31, 2011 as a result of releases (e.g., overfills, spills and releases) and are based on current regulations, historical results and certain other factors.

Environmental reserves are based on internal and external estimates of costs to remediate sites. Factors considered in the estimates of the reserve are the expected cost and the estimated length of time to remediate each contaminated site. Estimated remediation costs are not discounted because the timing of payments cannot be reasonably estimated. Reimbursements under state trust fund programs are recognized when received because such amounts are insignificant. The adequacy of the liability is evaluated quarterly and adjustments are made based on updated experience at existing sites, newly identified sites and changes in governmental policy. See also Note 8 under the caption “Commitments and Contingencies” of Notes to Combined Financial Statements that accompany our audited combined financial statements included elsewhere in this information statement.

Tax Matters

We are subject to extensive tax liabilities imposed by multiple jurisdictions, including income taxes, indirect taxes (excise/duty, sales/use and gross receipts taxes), payroll taxes, franchise taxes, withholding taxes and ad valorem taxes. New tax laws and regulations and changes in existing tax laws and regulations are continuously being enacted or proposed that could result in increased expenditures for tax liabilities that cannot be predicted at this time. In addition, we have received claims from various jurisdictions related to certain tax matters. Tax liabilities include potential assessments of penalty and interest amounts.

We record tax liabilities based on our assessment of existing tax laws and regulations. A contingent loss related to a transactional tax claim is recorded if the loss is both probable and estimable. The recording of our tax liabilities requires significant judgments and estimates. Actual tax liabilities can vary from our estimates for a variety of reasons, including different interpretations of tax laws and regulations and different assessments of the amount of tax due. In addition, in determining our income tax provision, we must assess the likelihood that our deferred tax assets, primarily consisting of net operating loss and tax credit carryforwards, will be recovered through future taxable income. Significant judgment is required in estimating the amount of valuation allowance, if any, that should be recorded against those deferred income tax assets. If our actual results of operations differ from such estimates or our estimates of future

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taxable income change, the valuation allowance may need to be revised. However, an estimate of the sensitivity to earnings that would result from changes in the assumptions and estimates used in determining our tax liabilities is not practicable due to the number of assumptions and tax laws involved, the various potential interpretations of the tax laws, and the wide range of possible outcomes. See Notes 8 and 11 of Notes to Combined Financial Statements that accompany our audited combined financial statements included elsewhere in this information statement for a further discussion of our tax liabilities.

Legal Matters

See Note 8 under the caption “Litigation Matters” of Notes to Combined Financial Statements that accompany our audited combined financial statements included elsewhere in this information statement for a discussion of our legal matters.

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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

Prior to the separation and the distribution, we have participated in Valero’s centralized cash management program to support and finance our operations as needed. We have transferred cash to Valero daily and Valero has funded our operations and investing activities, as needed. Therefore, we have no debt or other financial instruments where we are exposed to interest rate risk, except for our capital lease obligations, which are insignificant.

In connection with the separation and the distribution, we expect to incur an aggregate of $1.05 billion in new debt, which may include bank debt, short term notes, long term notes or a combination thereof, for which we will not retain any cash following the separation. In addition, we expect to have liquidity facilities that will be available for working capital and for general corporate purposes and that we expect will be undrawn at the time the distribution is completed. We will describe the terms and covenants of any notes to be issued, bank debt to be incurred or liquidity facilities to be entered into in an amendment to the registration statement of which this information statement is a part.

Commodity Price Risk

We have not historically hedged or managed our price risk with respect to our commodity inventories (gasoline and diesel fuel), as the time period between the purchases of our motor fuel inventory and the sales to our customers is very short.

Foreign Currency Risk

Our financial statements are reported in U.S. dollars. However, a substantial portion of our operations are in Canada. As such, our reported results of operations, cash flows and financial position as they relate to our Canadian operations are impacted by fluctuations in the Canadian exchange rate into U.S. dollars. We have not historically hedged or managed our risk associated with our exposure to the Canadian dollar/U.S. dollar exchange rate.

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CORPORATE GOVERNANCE AND MANAGEMENT

Executive Officers Following the Distribution

We are in the process of identifying the individuals who will serve as executive officers following the distribution. These executive officers will be appointed prior to the distribution, and we will include information concerning these executive officers in an amendment to this information statement.

Board of Directors Following the Distribution

We are in the process of identifying the individuals who will be our directors following the distribution, and we will provide information regarding these individuals in an amendment to this information statement.

Qualification of Directors

We expect our Board of Directors to consist of individuals with appropriate skills and experiences to meet board governance responsibilities and contribute effectively to our company. Under its charter, the Nominating and Governance Committee will seek to ensure the Board of Directors reflects a range of talents, ages, skills, diversity and expertise, particularly in the areas of accounting and finance, management, domestic and international markets, governmental/regulatory, leadership and retail-related industries, sufficient to provide sound and prudent guidance with respect to our operations and interests. Our Board of Directors will seek to maintain a diverse membership, but will not have a separate policy on diversity at the time of our separation from Valero.

Composition of the Board of Directors

We currently expect that, upon the completion of the separation, our Board of Directors will consist of [•] members, a majority of whom we expect to satisfy the independence standards established by the Sarbanes-Oxley Act of 2002 and the applicable rules of the SEC and the NYSE.

Committees of the Board of Directors Following the Distribution

Our Board of Directors will establish several standing committees in connection with the discharge of its responsibilities. Effective upon the distribution, our Board of Directors will have the following committees:

Audit Committee

The principal functions of the Audit Committee will include:

• discussing with management, our independent registered public accounting firm and the internal auditors the integrity of the company’s accounting policies, internal controls, financial statements, financial reporting practices and select financial matters, covering our company’s capital structure, complex financial transactions, financial risk management, retirement plans and tax planning;

• reviewing significant corporate risk exposures and steps management has taken to monitor, control and report such exposures;

• monitoring the qualifications, independence and performance of our independent registered public accounting firm and internal auditors;

• monitoring the company’s compliance with legal and regulatory requirements and corporate governance; and

• maintaining open and direct lines of communication with the Board of Directors and the company’s management, internal auditors and independent registered public accounting firm.

The size and composition of the Audit Committee will meet the independence requirements set forth in the applicable listing standards of the SEC and the NYSE and the requirements set forth in the Audit Committee charter. At least one

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member of the Audit Committee will qualify as a financial expert within the meaning of applicable SEC rules. The initial members of the Audit Committee will be determined prior to the distribution.

A more detailed discussion of the committee’s mission, composition and responsibilities is contained in the Audit Committee charter, which will be available on our website: www.cornerstore4u.com.

Executive Committee

The principal functions of the Executive Committee will include exercising the authority of the full Board of Directors between Board meetings on all matters except as limited by law or under our certificate of incorporation or bylaws. The Executive Committee is expected to consist of [•] members. The initial members of the Executive Committee will be determined prior to the distribution.

A more detailed discussion of the committee’s mission, composition and responsibilities is contained in the Executive Committee charter, which will be available on our website: www.cornerstore4u.com.

Compensation Committee

The principal functions of the Compensation Committee will include:

• overseeing our executive compensation policies, plans, programs and practices;

• assisting the Board of Directors in discharging its responsibilities relating to the fair and competitive compensation of our company’s executives and other key employees;

• conducting periodic reviews of director compensation and making recommendations to the Board of Directors regarding director compensation; and

• annually reviewing the performance and setting the compensation of the Chief Executive Officer.

The Compensation Committee will meet the independence requirements set forth in the applicable listing standards of the SEC and the NYSE and the requirements set forth in the Compensation Committee charter. The initial members of the Compensation Committee will be determined prior to the distribution.

In carrying out its duties, the Compensation Committee will have direct access to outside advisers, independent compensation consultants and others to assist them.

A more detailed discussion of the committee’s mission, composition and responsibilities is contained in the Compensation Committee charter, which will be available on our website: www.cornerstore4u.com.

Nominating and Governance Committee

The principal functions of the Nominating and Governance Committee will include:

• selecting and recommending director candidates to the Board of Directors to be submitted for election at the annual meeting of stockholders and to fill any vacancies on the Board of Directors;

• recommending committee assignments to the Board of Directors;

• reviewing and recommending to the Board of Directors appropriate corporate governance policies and procedures for the company; and

• conducting an annual assessment of the qualifications and performance of the Board of Directors.

The Nominating and Governance Committee will meet the independence requirements set forth in the applicable listing standards of the SEC and the NYSE and requirements set forth in the Nominating and Governance Committee charter. The initial members of the Nominating and Governance Committee will be determined prior to the distribution.

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A more detailed discussion of the committee’s mission, composition and responsibilities is contained in the Nominating and Governance Committee charter, which will be available on our website: www.cornerstore4u.com.

Selection of Nominees for Directors

One of the principal functions of the Nominating and Governance Committee will be selecting and recommending director candidates to the Board of Directors to be submitted for election at the annual meeting of stockholders and to fill any vacancies on the Board of Directors. We expect that the Nominating and Governance Committee will identify, investigate and recommend director candidates to the Board of Directors with the goal of creating balance of knowledge, experience and diversity. Generally, the Nominating and Governance Committee is expected to identify candidates through business and organizational contacts of the directors and management. Corner Store’s bylaws to be in effect at the time of the distribution will address the process by which stockholders may nominate candidates for director election at a meeting of stockholders whether or not such nominee is submitted to and evaluated by the Nominating and Governance Committee. The Nominating and Governance Committee will consider and evaluate director candidates recommended by stockholders on the same basis as candidates recommended by the company’s directors, Chief Executive Officer, other executive officers, third-party search firms or other sources.

Decision-Making Process to Determine Director Compensation

Director compensation will be reviewed annually by the Compensation Committee with the assistance of such third-party consultants as the committee deems advisable, and set by action of the Corner Store Board of Directors.

Board Risk Oversight

While our company’s management will be responsible for the day-to-day management of risks to the company, the Board of Directors will have broad oversight responsibility for our risk management programs following the separation from Valero. In this oversight role, the Board of Directors will be responsible for satisfying itself that the risk management processes designed and implemented by management are functioning as intended, and necessary steps are taken to foster a culture of risk-adjusted decision-making throughout the organization. In carrying out its oversight responsibility, the Board of Directors is expected to delegate to individual Board committees certain elements of its oversight function. In this context, the Board of Directors is expected to delegate authority to the Audit Committee to facilitate coordination among the Board’s committees with respect to oversight of our risk management programs. As part of this authority, the Audit Committee regularly will discuss the company’s risk assessment and risk management policies to ensure our risk management programs are functioning properly. The Board of Directors will receive regular updates from its committees on individual areas of risk, such as updates on financial risks from the Audit Committee and compensation program risks from the Compensation Committee.

Communications with the Board of Directors

Upon our separation from Valero, our Board of Directors will maintain a process for stockholders and interested parties to communicate with the Board of Directors. Stockholders and interested parties may write or call our Board of Directors by contacting our Corporate Secretary as provided below:

• Mailing Address: Corporate Secretary, Corner Store Holdings, Inc., One Valero Way, San Antonio, Texas 78249

• Phone Number: (210) 345-2000

Relevant communications will be distributed to the Board of Directors or to any individual director or directors, as appropriate, depending on the facts and circumstances outlined in the communication. In that regard, certain items unrelated to the duties and responsibilities of the Board of Directors will be excluded, such as: business solicitations or advertisements; junk mail and mass mailings; new product suggestions; product complaints; product inquiries; resumes and other forms of job inquiries; spam; and surveys. In addition, material that is unduly hostile, threatening,

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illegal or similarly unsuitable will be excluded. Any communication that is filtered out will be made available to any outside director upon request.

Director Compensation

We will provide information regarding director compensation in an amendment to this information statement.

Executive Compensation

Our executive compensation program is described in “Executive Compensation” and “Compensation Discussion and Analysis” included elsewhere in this information statement.

Stock Ownership and Retention Guidelines for Directors and Officers

We expect to adopt guidelines imposing certain obligations on our directors and officers with respect to the ownership and retention of our common stock. We will provide information regarding our stock ownership and retention guidelines in an amendment to this information statement. Any guidelines adopted will be available on our website: www.cornerstore4u.com.

Compensation Committee Interlocks and Insider Participation

During the fiscal year ended December 31, 2011, Valero’s retail business was operated by subsidiaries of Valero and not through an independent company and therefore did not have a compensation committee or any other committee serving a similar function. Decisions as to the compensation of those who will serve as Corner Store’s executive officers were made by Valero. See “Compensation Discussion and Analysis” included elsewhere in this information statement.

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EXECUTIVE COMPENSATION

The five persons who we expect will be our named executive officers as of the distribution date will be included in a subsequent amendment. For purposes of the Compensation Discussion and Analysis, we refer to them collectively as our “named executive officers.” References in this information statement to Valero’s named executive officers refer to the five executive officers listed in the summary compensation table of Valero’s proxy statement in connection with its 2012 annual meeting of stockholders. Our expectation is that, prior to the separation, each of our named executive officers will have been employed by Valero or its subsidiaries; therefore, the information provided for the years 2012, 2011 and 2010 will reflect compensation earned at Valero or its subsidiaries and the design and objectives of the executive compensation programs in place prior to the separation.

Compensation decisions for our named executive officers prior to the separation will be made by Valero. To the extent such persons are senior officers of Valero, the decisions will be made by the Compensation Committee of Valero, which is composed entirely of independent directors. Executive compensation decisions following the separation will be made by the Compensation Committee of Corner Store.

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COMPENSATION DISCUSSION AND ANALYSIS

Introduction

Because Corner Store is currently part of Valero and not an independent company, the Compensation Committee of Corner Store has not yet been formed. Decisions as to the past compensation of those who currently serve as officers of Corner Store have been made by Valero. This Compensation Discussion and Analysis discusses Valero’s historical compensation practices. Initially, we anticipate that Corner Store’s compensation practices will reflect in some ways those practices employed at Valero. However, given the differing business segments and strategies of Corner Store and Valero, we expect that the compensation practices ultimately approved by Corner Store’s Compensation Committee and Board of Directors will be designed to support Corner Store’s strategies and will likely differ in many ways from Valero’s practices outlined below. Information regarding Corner Store’s compensation programs will be included in subsequent amendments to this information statement.

This Compensation Discussion and Analysis has three main parts:

• Valero 2012 Executive Compensation—This section describes and analyzes the executive compensation programs at Valero in 2012.

• Effects of the Separation on Outstanding Compensation Awards—This section discusses the effect of the separation on outstanding compensation awards for our named executive officers.

• Corner Store Compensation Programs—This section discusses the anticipated executive compensation programs at Corner Store.

Valero 2012 Executive Compensation

Administration of Executive Compensation Programs and Overview

Valero’s executive compensation programs are administered by its Compensation Committee. Valero’s Compensation Committee is comprised of all independent directors who are not participants in Valero’s executive compensation programs. Policies adopted by Valero’s Compensation Committee are implemented by Valero’s compensation and benefits staff. In 2012, Valero’s Compensation Committee retained Exequity LLP and Pay Governance LLC (through July 26, 2012) as independent compensation consultants for executive and director compensation matters.

Valero believes that a significant portion of the compensation paid to its named executive officers should be incentive-based and determined by both company and individual performance. Valero’s executive compensation program is designed to accomplish the following long-term objectives:

• to provide compensation that mirrors the relative results of Valero as measured by both internal and external metrics; and

• to attract and retain the best executive talent in Valero’s industry.

Valero expects superior performance from its executives. To motivate this caliber of talent, Valero targets pay opportunities that are tied to Valero’s performance. Valero believes that an executive’s earn-out of his or her full compensation opportunities should be contingent on achieving performance results that exceed pre-established goals and outperform Valero’s industry peers.

Benchmarking Data

Valero’s Compensation Committee uses peer group compensation data in assessing benchmark rates of base salary, annual incentive compensation and long-term incentive compensation. The Compensation Comparator Group is used to benchmark compensation for Valero’s named executive officers. This reference is sometimes referred to as “compensation survey data” or “competitive survey data.”

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Compensation Comparator Group

The Compensation Comparator Group comprises the following companies from the U.S. domestic oil and gas industry:

BP PLC	Marathon Oil Corporation
Chevron Corporation	Marathon Petroleum Corporation
Exxon Mobil Corporation	Murphy Oil Corporation
Hess Corporation	Royal Dutch Shell
HollyFrontier Corporation	Tesoro Corporation

Valero believes that the Compensation Comparator Group is relevant to Valero’s business because each member of the group had significant downstream refining and marketing operations within its overall business or was recently involved in the oil and refining and marketing industry. Valero competes with these companies for talent at every level from entry-level employees to senior executives. Understanding this group’s compensation programs and levels is vitally important in order to remain competitive in this market for employees. Valero believes that given the size and complexity of its business, Valero employees at all levels would be qualified candidates for similar jobs at any one of the companies included in this group.

Use of Benchmarking Data

Recommendations for base salary, bonuses and other compensation arrangements are developed under the supervision of Valero’s Compensation Committee by Valero’s compensation and benefits staff using the compensation survey data with assistance from Exequity. Use of the data is consistent with Valero’s philosophy of providing executive compensation and benefits that are competitive with companies competing with Valero for executive talent. In addition, the use of competitive compensation survey data and analyses assists Valero’s Compensation Committee in gauging Valero’s levels and targets relative to companies in the Compensation Comparator Group.

Performance Peer Groups

Valero also uses a peer group to measure Valero’s total stockholder return (“TSR”) metric used in Valero’s performance shares incentive program. The companies were selected for this peer group because they engage in U.S. domestic refining and marketing operations.

Valero’s use of different peer groups for compensation and performance is based on the following circumstances and reasoning. While job candidacy can transcend company size, Valero believes that when measuring business performance, companies with similar business models should be included. That being said, comparing the performance of Valero’s generally non-integrated operations with those of integrated oil companies results in anomalies due to the mismatch in how similar industry-specific events impact companies with these varying business models. In addition, there are relatively few companies in Valero’s business against which relevant comparisons can be drawn, rendering a peer group composition more challenging than in most industries.

For TSR measurement applicable to the 2012 awards of performance shares (with TSR measurement periods ending in 2013 and thereafter), the TSR peer group comprises the following entities:

Alon USA Energy Inc.	Marathon Petroleum Corporation
BP PLC	Phillips 66
CVR Energy Inc.	Royal Dutch Shell
Hess Corporation	Tesoro Corporation
HollyFrontier Corporation	Western Refining Inc.

Process and Timing of Compensation Decisions

Valero’s Compensation Committee reviews and approves all compensation targets and payments for the named executive officers. The Chief Executive Officer of Valero evaluates the performance of the other named executive officers of Valero and develops individual recommendations based upon the competitive survey data. Both the Chief Executive Officer and the Committee may make adjustments to the recommended compensation based upon an assessment of an individual’s performance and contributions to Valero. The compensation for Valero’s Chief Executive Officer is

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reviewed by Valero’s Compensation Committee and recommended to the full Board of Directors for approval. This assessment is based on the competitive survey data and other factors described in this Compensation Discussion and Analysis, and adjustments may be made based upon the non-employee directors’ independent evaluation of the Chief Executive Officer’s performance and contributions.

Valero’s Compensation Committee establishes the target levels of annual incentive and long-term incentive compensation for the current fiscal year based upon its review of competitive market data provided by Exequity. Valero’s Compensation Committee also reviews competitive market data for annual salary rates for executive officer positions for the next fiscal year and recommends new salary rates to become effective the next fiscal year. Valero’s Compensation Committee may, however, review salaries or grant long-term incentive awards at other times during the year because of new appointments or promotions during the year.

Elements of Executive Compensation

General

Valero’s executive compensation programs include the following material elements:

• base salary;

• annual incentive bonus;

• long-term equity-based incentives, including performance shares, performance stock options and restricted stock;

• medical and other insurance benefits; and

• retirement benefits.

Valero chose these elements to foster the potential for both current and long-term payouts and to remain competitive in attracting and retaining executive talent. Valero believes that variable pay (i.e., annual incentive bonus and long-term equity-based incentives that do not become a permanent part of base salary), delivered through the appropriate incentives, is ultimately the best way to drive total compensation among Valero’s executive officers. Valero evaluates the total compensation opportunity offered to each executive officer at least once annually and conducts compensation assessments on several occasions during the course of the year.

Valero’s annual incentive program rewards:

• Valero’s attainment of key financial performance measures;

• Valero’s success in key operational and strategic measures;

• safe operations;

• environmental responsibility;

• reliable operations; and

• cost management.

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Valero’s long-term equity incentive awards are designed to tie executives’ financial reward opportunities with rewards to stockholders as measured by:

• long-term stock price performance;

• payment of regular dividends; and

• increased stockholders’ return-on-investment (“ROI”).

Base salary is designed to provide a fixed level of competitive pay that reflects the executive officer’s primary duties and responsibilities, and to provide a base upon which incentive opportunities and benefit levels are established. The term “total direct compensation” refers to the sum of an executive’s base salary, incentive bonus and long-term incentive target awards.

The long-term incentive awards in Valero’s compensation program include performance shares, performance stock options and restricted stock. Valero believes that incentives that drive stockholder value should also drive executive officer pay. Valero believes that performance shares and performance stock options when issued do not accrue value to the executive officer unless and until stockholder value is created through both company performance and TSR. Valero also believes that executive officers should hold an equity stake in the company to further motivate the creation of stockholder value, which is why Valero includes awards of restricted stock in Valero’s long-term incentive program coupled with stock retention guidelines.

Targets

Valero’s Compensation Committee targeted base salaries for Valero’s named executive officers at or near the 50th percentile of competitive survey data and may make decisions to pay above or below this target based on individual circumstances (e.g., performance of the executive, internal parity, management succession planning, etc.), as this benchmark level is important in recruiting and retaining superior executive talent. Base salaries are benchmarked on the 50th percentile of competitive survey data and are calibrated to company size based primarily on annual revenues.

Valero established incentive target opportunities (expressed as a percentage of base salary) for each executive position based upon the 50th percentile benchmark of the Compensation Comparator Group for the annual incentive bonus and long-term incentives and may make decisions to award above or below this target based on individual circumstances (e.g., performance of the executive, internal parity, management succession planning, etc.). The performance peer groups to which Valero’s business results are compared contain companies that operate in segments of the energy business—primarily exploration and production—that have traditionally provided higher returns than those available to Valero’s downstream business segment. Valero faces unique challenges in its peer group because it is a downstream-only company. Accordingly, Valero believes that preserving flexibility to target incentive opportunities above or below the median peer levels helps tailor the incentives to the executive and the role, resulting in a more customized match of competitive pay opportunities and pay-for-performance design attributes.

In addition to benchmarking competitive pay levels to establish compensation levels and targets, Valero also considers the relative importance of a particular management position in comparison to other management positions in the organization. In this regard, when setting the level and targets for compensation for a particular position, Valero evaluates that position’s scope and nature of responsibilities, size of business unit, complexity of duties and responsibilities, as well as that position’s relationship to managerial authorities throughout the management ranks of Valero.

Relative Size of Major Compensation Elements

When setting executive compensation, Valero’s Compensation Committee considers the aggregate amount of compensation payable to an executive officer and the form of the compensation. Valero’s Compensation Committee seeks to achieve an appropriate balance between immediate cash rewards for the achievement of company and personal objectives and long-term incentives that align the interests of Valero’s officers with those of Valero’s stockholders. The size of each element is based on the assessment of competitive market practices as well as company and individual performance. Valero’s Compensation Committee analyzes total compensation from a market competitive perspective, and then evaluates each component relative to its market reference. Valero’s Compensation Committee believes that

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making a significant portion of an executive officer’s incentive compensation contingent on long-term stock price performance more closely aligns the executive officer’s interests with those of Valero’s stockholders.

Because Valero places a large amount of the total compensation opportunity at risk in the form of variable pay (annual bonus and long-term incentives), its Compensation Committee generally does not adjust current compensation based upon realized gains or losses from prior incentive awards, prior compensation, or current stock holdings. For example, Valero normally will not change the size of a target long-term incentive grant in a particular year solely because of Valero’s stock price performance during the immediately preceding years, although this may be taken into account in other compensation decisions. Valero’s Compensation Committee recognizes that refining and marketing is a volatile industry and strives to maintain a measure of predictability consistent with a substantial reliance on variable compensation structures in furtherance of a fundamental pay-for-performance philosophy. An executive officer’s total direct compensation is structured so that realizing the targeted amount is highly contingent on performance due to the executive’s level of at-risk pay. For Valero’s executives, there is an increased percentage of at-risk compensation as an executive officer’s position within the company grows.

Individual Performance and Personal Objectives

Valero’s Compensation Committee evaluates the individual performance of, and performance objectives for, Valero’s named executive officers. Performance and compensation for Valero’s Chief Executive Officer are reviewed and approved by Valero’s Compensation Committee and the independent directors on Valero’s Board of Directors. For officers other than the Chief Executive Officer, individual performance and compensation are evaluated by Valero’s Compensation Committee with recommendations from Valero’s Chief Executive Officer. Individual performance and objectives are specific to each officer position.

The criteria used to measure an individual’s performance may include assessment of objective criteria (e.g., execution of projects within budget parameters, improving an operating unit’s profitability or timely completing an acquisition or divestiture) as well as qualitative factors such as the executive’s ability to lead, ability to communicate and successful adherence to Valero’s stated core values (i.e., commitment to environment and safety, acting with integrity, showing work commitment, communicating effectively and respecting others). There are no specific weights assigned to these various elements of performance.

Base Salaries

Base salaries for Valero’s named executive officers are approved by Valero’s Compensation Committee after taking into consideration median practices for comparable roles among the peer companies. The Compensation Committee also considers the recommendations of the Chief Executive Officer with regard to officers other than the Chief Executive Officer. The base salary and all other compensation of the Chief Executive Officer are reviewed and approved by the independent directors of the Valero Board of Directors.

Base salaries are reviewed annually and may be adjusted to reflect promotions, the assignment of additional responsibilities, individual performance or the performance of Valero. Salaries are also periodically adjusted to remain competitive with companies within the compensation survey data. An executive’s compensation typically increases in relation to his or her responsibilities within Valero, with the level of compensation for more senior executive officers being higher than that for less senior executive officers.

Annual Incentive Bonus

For Valero’s annual incentive bonus, Valero’s Compensation Committee sets quantitative financial enterprise performance measures in two areas that correspond to Valero’s business priorities: Adjusted Net Cash Provided by Operating Activities (“ANC”) and EBITDA. After the completion of the December 31, 2012 performance period, the annual incentive bonus will be funded based on the greater results of ANC multiplied by 0.80 percent or EBITDA multiplied by 0.65 percent.

Valero’s named executive officers can earn annual incentive bonuses based on the results of the quantitative financial performance measures of ANC or EBITDA with consideration of the following factors where Valero’s Compensation Committee may exercise its discretion to adjust the annual incentive bonuses only in a downward fashion below amounts calculated based on the results of ANC or EBITDA:

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• Valero’s realization of quantitative financial performance goals (Financial Performance Measures) and operational performance measures (Operational Performance Measures), and realization of qualitative strategic company goals and objectives of Valero (Strategic Company Goals & Objectives Performance Measures) for the year;

• the position of the named executive officer, which is used to determine a targeted percentage of base salary that may be awarded as incentive bonus; and

• a qualitative evaluation of the individual’s performance.

The amount of the bonus eligible to be paid to a named executive officer is based on the funding results of ANC or EBITDA. The amount of the bonus funded based on the results of ANC or EBITDA is 50 percent for Valero’s Chief Executive Officer, 20 percent for the second highest paid named executive officer of Valero and 10 percent each for the third, fourth and fifth highest paid named executive officers of Valero. The amount of the bonus ultimately paid to a named executive officer takes into consideration Valero’s achievement of the above performance objectives and the potential application of discretion by Valero’s Compensation Committee to reduce payouts below the formula-driven results.

Financial Performance Measures

The Financial Performance Measures taken into consideration for Valero’s named executive officers’ annual incentive bonuses are earnings-per-share (“EPS”) and ROI.The Compensation Committee of Valero established target levels for these measures in the first quarter of 2012. Valero believes that these measures appropriately reflect Valero’s business planning process and corporate philosophy regarding financial performance measurement. Valero believes that the bonus program should consider both the quantity of earnings and the quality of earnings. The quantity of earnings is typically measured by EPS and the quality of earnings is measured by ROI, providing an indication of management’s ability to generate a reasonable rate of return on the capital investment in the business.

Operational Performance Measures

The Operational Performance Measures taken into consideration for Valero’s named executive officers’ annual incentive bonuses are measured against:

• Valero’s achievements in improving refining competitiveness through improved mechanical availability;

• Valero’s achievements in cost management and expense control; and

• Valero’s achievements in health, safety and the environment.

Valero believes that these measures appropriately reflect key business objectives of Valero. After completion of the fiscal year, each of the Operational Performance Measures is measured against Valero’s actual performance in these areas.

Valero’s Compensation Committee established target performance levels for these measures in the first quarter of 2012.

Strategic Company Goals & Objectives Performance Measures

Valero’s Strategic Company Goals & Objectives Performance Measures are established by Valero’s Compensation Committee in consultation with Valero’s Chief Executive Officer. After completion of the fiscal year, the Strategic Company Goals & Objectives Measures are evaluated as a whole.

Long-Term Incentive Awards

Valero provides stock-based, long-term compensation to Valero’s executive officers through Valero’s stockholder-approved equity plans. The plans provide for a variety of stock and stock-based awards, including performance stock options and restricted stock, each of which vests over a period determined by Valero’s Compensation Committee, as well as performance shares that vest (become nonforfeitable) upon Valero’s achievement of an objective performance goal. Valero’s Compensation Committee presently expects to make awards of performance shares, performance stock

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options, and restricted stock annually. Valero believes that these awards create a powerful link between the creation of stockholder value and executive pay delivered. In addition, Valero believes that the balance between absolute performance alignment through performance stock options and restricted shares, and the relative performance objectives underscored by the relative TSR performance shares, is appropriate. In order for executives to fully realize their targeted opportunities, Valero must both perform well and beat the stock price performance of Valero’s peers.

For each officer, a target amount of long-term incentives is established and is expressed as a percentage of base salary. In establishing award sizes, Valero’s Compensation Committee makes primary reference to median peer company grant levels and makes individualized determinations based on additional factors, such as internal parity, management succession planning, etc. In addition, an executive’s targeted award may be adjusted based upon the Compensation Committee’s determination of the officer’s individual performance, which (for officers other than Valero’s Chief Executive Officer) takes into consideration the recommendation of the Chief Executive Officer. As with the annual incentive bonus, Valero’s Compensation Committee retains discretion to determine whether any award at all should be made.

The mix of awards included in the named executive officers’ long-term incentive compensation for fiscal year 2012 consists of 25 percent performance stock options, 30 percent performance shares and 45 percent restricted stock on a share count basis.

Performance Shares

In 2012, performance shares represented 30 percent of each Valero executive officer’s long-term incentive target on a share-count basis. Performance shares are payable in shares of Valero’s common stock on the vesting dates of the performance shares. Shares of Valero’s common stock are earned with respect to vesting performance shares only upon Valero’s achievement of challenging TSR objectives (measured in relation to the TSR of Valero’s peers).

The performance shares awarded in 2012 are subject to vesting in three annual increments, based upon Valero’s TSR compared to Valero’s peer group during one-year, two-year and three-year performance periods. Performance periods measure TSR based on the average closing stock prices for the 30 days of December 2 to December 31 at the beginning and end of the performance periods, including dividends. At the end of each performance period, Valero’s TSR for the period is compared to the TSR of Valero’s peer group. Consistent with typical relative TSR design conventions, shares of Valero’s common stock are awarded based on Valero’s TSR performance versus the peers’ TSR as follows (results are interpolated between the 25th and 75th percentiles):

Percentile TSR Rank	% of Performance Shares Earned
0% to 24th%	—%
25th% (to 49th%)	25% (to 99%)
50th% (to 74%)	100% (to 199%)
75th%	200%

For the performance shares awarded in 2012 and 2011, shares not earned in a given performance period expire and are forfeited. For performance shares awarded in 2010, shares not earned in a given performance period as a result of Valero’s ranking in the 25th percentile or below can be carried forward for one additional performance period and up to 100 percent of the carried amount can still be earned, depending upon Valero’s percentile performance ranking for the subsequent period.

Performance Stock Options and Restricted Stock

Valero’s 2012 long-term incentive awards included an allocation of performance stock options and restricted stock weighted 25 percent in the form of performance stock options and 45 percent in the form of restricted stock, each on a share-count basis. Valero believes that this mix provides an appropriate balance between the pay-for-performance attributes of performance stock options and the equity alignment and retentive qualities of restricted shares. In addition, this mix aligns with market practices, and thus supports recruitment and retention of top-quality executive talent.

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Performance stock options granted in 2012 require a 25 percent stock price improvement over the grant-date stock price before options are exercisable. Performance stock options vest in equal annual installments over a period of three years and expire in ten years. Valero believes that performance stock options link executives’ incentive opportunities tightly with stockholder returns, and thereby support Valero’s pay-for-performance design. Because the price of Valero common stock must increase by 25 percent over the fair market value on the date of grant, performance stock options will provide a benefit to the executive only to the extent that there is significant appreciation in the market price of Valero’s common stock. Performance stock options and restricted stock are subject to forfeiture if an executive terminates his or her employment prior to vesting.

The shares of restricted stock awarded in 2012 vest in equal annual installments over a period of three years. The 2012 grant does not include a performance accelerator feature that was included on the 2011 and 2010 grants that provided for the potential early vesting of one-half of the restricted stock grant.

Valero’s Compensation Committee considers and grants performance stock options and restricted stock to Valero’s officers and certain other employees annually, typically during the fourth quarter in conjunction with the last regularly scheduled meeting of the Compensation Committee for the year. The performance stock option and restricted stock components of Valero’s executive officers’ 2012 long-term incentive awards were granted in November 2012.

As required by Valero’s equity incentive plans, the exercise price for performance stock options cannot be less than the mean of the highest and lowest sales prices per share of Valero’s common stock as reported on the NYSE on the grant date. All awards of performance stock options were reviewed and approved by Valero’s Compensation Committee. All of these performance stock options have a grant date that is equal to the date on which the options were approved by Valero’s Compensation Committee or Valero’s independent directors.

Perquisites and Other Benefits

Perquisites

Consistent with Valero’s goal of providing total compensation and benefit opportunities that are aligned with market practices among Valero’s peers, officers are eligible to receive reimbursement for club dues, personal excess liability insurance, federal income tax preparation, life insurance policy premiums with respect to cash value life insurance and annual health examination. In addition, officers are sometimes provided with tickets to sporting and other entertainment events in a de minimis amount. Valero does not provide executive officers with automobiles or automobile allowances or supplemental executive medical benefits or coverage.

Other Benefits

Valero provides other benefits, including medical, life, dental and disability insurance in line with competitive market conditions. Valero’s named executive officers are eligible for the same benefit plans provided to Valero’s other employees, including Valero’s Thrift Plan and insurance and supplemental plans chosen and paid for by employees who desire additional coverage.

Consistent with typical practices among Valero’s peers, executive officers and other employees whose compensation exceeds certain limits are eligible to participate in non-qualified excess benefit programs whereby those individuals can choose to make larger contributions than allowed under the qualified plan rules and receive correspondingly higher benefits. These plans are described below.

Post-Employment Benefits

Pension Plans

Valero has a noncontributory defined benefit Pension Plan in which most of Valero’s employees, including Valero’s named executive officers, are eligible to participate and under which contributions by individual participants are neither required nor permitted. Valero also has a noncontributory, non-qualified Excess Pension Plan and a non-qualified Supplemental Executive Retirement Plan (“SERP”), which provide supplemental pension benefits to certain highly compensated employees. Valero’s named executive officers are participants in the SERP. The SERP is offered to align with competitive practices among Valero’s peers, and to thus support recruitment and retention of critical executive talent. The Excess Pension Plan and the SERP provide eligible employees with additional retirement savings

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opportunities that cannot be achieved with tax-qualified plans due to the Code’s limits on (i) annual compensation that can be taken into account under qualified plans or (ii) annual benefits that can be provided under qualified plans.

Nonqualified Deferred Compensation Plans

Valero’s named executive officers are eligible to participate in Valero’s Deferred Compensation Plan (“DC Plan”). The DC Plan is offered in order to align with competitive practices among Valero’s peers, and thereby support recruitment and retention of critical executive talent. The DC Plan permits eligible employees to defer a portion of their salary and/or bonus until separation (i.e., retirement or termination of employment). Under the DC Plan, each year eligible employees are permitted to elect to defer up to 30 percent of their salary and/or 50 percent of their cash bonuses to be earned for services performed during the following year.

Valero has made no discretionary contributions to participants’ accounts, and currently Valero has no plans to make any discretionary contributions to participants’ accounts. Valero would likely only consider such contributions in the event of a significant, catastrophic economic event (or series of events) that materially impairs the value of participants’ accounts.

All amounts credited under the DC Plan (other than discretionary credits) are immediately 100 percent vested. Any discretionary credits will vest in accordance with the vesting schedule determined at the time of the grant of discretionary credits. Participant accounts are credited with earnings (or losses) based on investment fund choices made by the participants among available funds selected by Valero’s Benefits Plans Administrative Committee.

Excess Thrift Plan

Valero’s Excess Thrift Plan provides benefits to participants in Valero’s Thrift Plan whose annual additions to the Thrift Plan are subject to the limitations on annual additions as provided under Section 415 of the Code, and/or who are constrained from making maximum contributions under the Thrift Plan by Section 401(a)(17) of the Code, which limits the amount of an employee’s annual compensation that may be taken into account under that plan. Two separate components comprise the Excess Thrift Plan: (i) an “excess benefit plan” as defined under Section 3(36) of ERISA; and (ii) a plan that is unfunded and maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees.

Severance Arrangements

Valero has entered into change of control agreements with each of Valero’s named executive officers. The agreements are intended to assure the continued objectivity and availability of the officers in the event of any merger or acquisition activity that would likely threaten the job security of many top executives. These arrangements are also intended to maintain executive focus and productivity in a period of uncertainty. If a change of control occurs during the term of an agreement, then the agreement becomes operative for a fixed three-year period. The agreements provide generally that the officers’ terms and conditions of employment will not be adversely changed during the three-year period after a change of control.

Impact of Accounting and Tax Treatments

Accounting Treatment

Compensation expense for Valero’s stock-based compensation plans is based on the fair value of the awards granted and is recognized in income on a straight-line basis over the requisite service period of each award. For new grants that have retirement-eligibility provisions, Valero uses the non-substantive vesting period approach, under which compensation cost is recognized immediately for awards granted to retirement-eligible employees or over the period from the grant date to the date retirement eligibility is achieved if that date is expected to occur during the nominal vesting period.

Tax Treatment

Under Section 162(m) of the Code, publicly held corporations may not take a tax deduction for compensation in excess of $1 million paid to Valero’s Chief Executive Officer or the other four most highly compensated executive officers of Valero unless that compensation meets the Code’s definition of “performance based” compensation. Section 162(m) allows a deduction for compensation that exceeds $1 million if it is paid (i) solely upon attainment of one or more performance goals, (ii) pursuant to a qualifying performance-based compensation plan adopted by Valero’s

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Compensation Committee, and (iii) the material terms, including the performance goals, of such plan are approved by the stockholders before payment of the compensation.

Valero’s Compensation Committee considers deductibility under Section 162(m) with respect to compensation arrangements for executive officers. Valero’s Compensation Committee believes that it is in Valero’s best interests for the Committee to retain Valero’s flexibility and discretion to make compensation awards to foster achievement of performance goals established by the Committee and other corporate goals the Committee deems important to Valero’s success, such as encouraging employee retention, rewarding achievement of non-quantifiable goals and achieving progress with specific projects. Valero believes that Valero’s outstanding performance stock options and performance share grants qualify as performance-based compensation and are not subject to any deductibility limitations under Section 162(m). Grants of restricted stock or other equity-based awards that are not subject to specific quantitative performance measures will likely not qualify as “performance based” compensation and, in such event, would be subject to Section 162(m) deduction restrictions.

Compensation-Related Policies

Executive Compensation Clawback Policy

Under Valero’s executive compensation “clawback” policy, in the event of a material restatement of Valero’s financial results, the Board of Directors of Valero, or the appropriate committee thereof, will review all bonuses and other incentive and equity compensation awarded to Valero’s executive officers. The policy provides that if the bonuses and other incentive and equity compensation would have been lower had they been calculated based on such restated results, the Board of Directors (or committee), will, to the extent permitted by governing law and as appropriate under the circumstances, seek to recover for the benefit of Valero all or a portion of the specified compensation awarded to executive officers whose fraud or misconduct caused or partially caused such restatement, as determined by the Board of Directors (or committee). In determining whether to seek recovery, the policy states that the Board of Directors (or committee) shall take into account such considerations as the Board of Directors deems appropriate, including governing law and whether the assertion of a claim may prejudice the interests of Valero in any related proceeding or investigation. The full text of the policy is available on Valero’s website at www.valero.com under the “Corporate Governance” tab in the “Investor Relations” section.

Compensation Consultant Disclosure Policy

Per the terms of Valero’s compensation consultant disclosure policy, Valero will make certain disclosures pertaining to compensation consultants in Valero’s proxy statements for annual meetings of stockholders. For any compensation consultant retained by Valero’s Compensation Committee to provide compensation advice with respect to the compensation disclosed in the Summary Compensation Table in the proxy statement, Valero will disclose (i) the total fees paid annually to the consultant for compensation-related services and non-compensation-related services, (ii) a description of any non-compensation-related services provided by the consultant, and (iii) any services that the consultant has provided to senior executives of Valero and the nature of those services. The compensation consultants retained by Valero in 2012 fully qualify as independent advisers under the final rules promulgated by the SEC in 2012, as well as the proposed NYSE standards. The full text of the policy is available on Valero’s website at www.valero.com under the “Corporate Governance” tab in the “Investor Relations” section.

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Stock Ownership and Retention Guidelines

Valero’s stock ownership and retention guidelines require that nonemployee directors acquire and hold during their service shares of common stock equal in value to at least three times their annual cash retainer and require that officers meet the applicable guideline set forth below:

Officer Position	Value of Shares Owned
Chief Executive Officer	5x Base Salary
President	3x Base Salary
Executive Vice Presidents	2x Base Salary
Senior Vice Presidents	1x Base Salary
Vice Presidents	1x Base Salary

Directors and nonemployee directors have five years to meet the requisite ownership threshold and, once attained, are expected to continuously own sufficient shares to meet that threshold. Compliance with the guidelines is monitored by Valero’s Compensation Committee.

Insider Trading and Speculation in Valero Stock

Valero’s officers, directors and employees are prohibited from purchasing or selling Valero securities while in possession of material, nonpublic information, or otherwise using such information for their personal benefit or in any manner that would violate applicable laws and regulations. In addition, Valero’s policies prohibit Valero’s officers, directors and employees from speculating in Valero’s stock, which includes short selling (profiting if the market price of Valero’s stock decreases), buying or selling publicly traded options (including writing covered calls), hedging or any other type of derivative arrangement that has a similar economic effect. Valero’s Compensation Committee does not time the grants of long-term incentive awards around Valero’s release of undisclosed material information.

Effects of the Separation on Outstanding Stock-Based Awards

No stock-based awards of Corner Store will be issued in exchange for either vested or non-vested Valero stock-based awards held by our employees prior to the separation. Valero intends to accelerate the vesting of all of its non-vested stock-based awards held by our employees at the distribution date. Adjustments to Valero’s outstanding stock-based awards and long-term incentive plans will be addressed in a subsequent amendment to the registration statement of which this information statement is a part.  

Corner Store Compensation Programs

Information regarding Corner Store’s compensation programs will be included in subsequent amendments to the registration statement of which this information statement is a part.

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CERTAIN RELATIONSHIPS AND RELATED-PARTY TRANSACTIONS

The Separation from Valero

The separation will be accomplished by means of the distribution by Valero of 80 percent of the outstanding shares of Corner Store common stock to holders of Valero common stock entitled to such distribution, as described under “The Separation and the Distribution” included elsewhere in this information statement. Completion of the distribution will be subject to satisfaction, or waiver by Valero, of the conditions to the separation and distribution described under “The Separation and the Distribution—Conditions to the Distribution.”

Related-Party Transactions

As a current subsidiary of Valero, we engage in related-party transactions with Valero. Those transactions are described in more detail in Note 12 of Notes to Combined Financial Statements that accompany our audited combined financial statements and Note 6 of Condensed Notes to Combined Financial Statements that accompany our unaudited combined financial statements, both of which are included elsewhere in this information statement.

From and after the distribution date, we expect to have in effect a Code of Business Conduct and Ethics, which will require all directors and executive officers to promptly bring to the attention of the General Counsel and, in the case of directors, the Chairman of the Nominating and Governance Committee or, in the case of executive officers, the Chairman of the Audit Committee, any transaction or relationship that arises and of which she or he becomes aware that reasonably could be expected to constitute a related-party transaction. For purposes of the company’s Code of Business Conduct and Ethics, a related-party transaction is a transaction in which the company (including its affiliates) is a participant and in which any director or executive officer (or their immediate family members) has or will have a direct or indirect material interest. Any such transaction or relationship will be reviewed by our company’s management or the appropriate Board committee to ensure it does not constitute a conflict of interest and is reported appropriately. Additionally, the Nominating and Governance Committee’s charter will provide for the committee to conduct an annual review of related-party transactions between each of our directors and the company (and its affiliates) and to make recommendations to the Board of Directors regarding the continued independence of each Board member.

Agreements Between Us and Valero

As part of the separation and the distribution, we expect to enter into a Separation and Distribution Agreement and several other agreements with Valero to effect the separation and to provide a framework for our relationship with Valero after the separation and the distribution. These agreements will provide for the allocation between us and Valero of the assets, liabilities and obligations of Valero and its subsidiaries, and will govern various aspects of the relationship between us and Valero subsequent to the separation, including with respect to transition services, employee benefits, intellectual property rights, tax matters and other commercial relationships. In addition to the Separation and Distribution Agreement, which contains key provisions related to the separation and the distribution, these agreements are expected to include, among others:

• Tax Matters Agreement;

• Employee Matters Agreements;

• Transition Services Agreements;

• Stockholder’s and Registration Rights Agreement;

• U.S. Fuel Supply Agreements;

• Petroleum Product Supply Agreement (Canada);

• Office Lease Agreement (U.S.); and

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• Office Sublease Agreement (Canada).

The forms of certain of the principal agreements described below will be filed as exhibits in an amendment to the registration statement of which this information statement is a part. The summaries of the material terms of these agreements are qualified in their entirety by reference to the full text of the applicable agreements, which are incorporated by reference into this information statement.

The terms and provisions of the agreements described below that will be in effect following the separation have not yet been finalized. Material changes may be made prior to the separation and will be included in a subsequent amendment to the registration statement of which this information statement is a part. No changes may be made after our separation from Valero without our consent.

Separation and Distribution Agreement

The Separation and Distribution Agreement will govern the terms of the separation of the retail business from Valero’s other businesses. Generally, the Separation and Distribution Agreement will include Valero’s and our agreements relating to the restructuring steps to be taken to complete the separation, including the assets, equity interests and rights to be transferred, liabilities to be assumed, contracts to be assigned and related matters. Subject to the receipt of required governmental and other consents and approvals, in order to accomplish the separation, the Separation and Distribution Agreement will provide for Valero and us to transfer specified assets (including the equity interests of certain Valero subsidiaries) and liabilities between the companies that will operate the retail business after the distribution, on the one hand, and Valero’s remaining businesses, on the other hand.

Except as expressly set forth in the Separation and Distribution Agreement or any ancillary agreement, it is expected that neither Valero nor Corner Store will make any representation or warranty as to the assets, equity interests, business or liabilities transferred or assumed as part of the separation, as to any approvals or notifications required in connection with the transfers, as to the value or freedom from any security interests of any of the assets transferred, as to the absence or presence of any defenses or right of setoff or freedom from counterclaim with respect to any claim or other asset of either Valero or Corner Store or as to the legal sufficiency of any assignment, document or instrument delivered to convey title to any asset or thing of value transferred in connection with the separation. All assets are expected to be transferred on an “as is,” “where is” basis and the respective transferees will bear the economic and legal risks that any conveyance will prove to be insufficient to vest in the transferee good and marketable title, free and clear of any security interest, and that any necessary consents or governmental approvals are not obtained or that any requirements of laws, agreements, security interests or judgments are not complied with.

The Separation and Distribution Agreement will specify those conditions that must be satisfied or waived by Valero prior to the distribution. See “The Separation and the Distribution—Conditions to the Distribution” included elsewhere in this information statement. In addition, we expect that Valero will have the right to determine the date and terms of the distribution, and will have the right to determine to abandon or modify the distribution and to terminate the Separation and Distribution Agreement at any time prior to the distribution.

The Separation and Distribution Agreement is also expected to govern the treatment of aspects relating to indemnification, insurance, litigation responsibility, confidentiality, management, intellectual property (including trademarks) and cooperation.

Tax Matters Agreement

The Tax Matters Agreement will govern Valero’s and our respective rights, responsibilities and obligations with respect to taxes (including taxes arising in the ordinary course of business and taxes, if any, incurred as a result of any failure of the distribution and certain related transactions to qualify as tax-free for federal income tax purposes), tax attributes, tax returns, tax contests and certain other tax matters.

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In general, under the Tax Matters Agreement, we expect that responsibility for taxes for periods prior to the distribution will be allocated in the following manner:

• With respect to any U.S. federal income taxes of the affiliated group of which Valero is the common parent, Valero generally will be responsible for all such taxes.

• With respect to U.S. state or local income taxes of any state or local consolidated, combined or unitary group that includes Valero or one of its subsidiaries and us, Valero generally will be responsible for such taxes to the extent attributable to one of our subsidiaries included in such consolidated, combined or unitary group.

• Valero generally will be responsible for any U.S. federal, state or local or foreign income taxes reportable on returns that include only Valero and its subsidiaries (excluding us and our subsidiaries), and we generally will be responsible for any U.S. federal, state or local or foreign income taxes reportable on returns that include only us or our subsidiaries.

• We and Valero generally will be responsible for certain non-income taxes, such as property, motor fuel, excise, sales and use taxes, attributable to each company and its respective subsidiaries (or property owned by such company or one of its subsidiaries following the distribution).

In addition, the Tax Matters Agreement is expected to impose certain restrictions on us and our subsidiaries (including restrictions on share issuances, business combinations, sales of assets and similar transactions) that are designed to preserve the tax-free status of the distribution and certain related transactions. The Tax Matters Agreement will provide special rules allocating tax liabilities in the event the distribution, together with certain related transactions, is not tax-free. In general, under the Tax Matters Agreement, each party is expected to be responsible for any taxes imposed on Valero that arise from the failure of the distribution and certain related transactions to qualify as a tax-free transaction for federal income tax purposes within the meaning of Sections 355 and 368(a)(1)(D) and certain other relevant provisions of the Code to the extent that the failure to qualify is attributable to actions, events or transactions relating to such party’s respective stock, assets or business, or a breach of the relevant representations or covenants made by that party in the Tax Matters Agreement.

The Tax Matters Agreement will also set forth Valero’s and our obligations as to the filing of tax returns, the administration of tax contests and assistance and cooperation on tax matters.

Employee Matters Agreements

In connection with the separation and the distribution, we expect to enter into two Employee Matters Agreements: one between us and Valero and one between our Canadian subsidiary and Valero. The Employee Matters Agreements will govern Valero’s and our compensation and employee benefit obligations with respect to the current and former employees of each company, and generally will allocate liabilities and responsibilities relating to employee compensation and benefit plans and programs. The Employee Matters Agreements will provide for the treatment of outstanding Valero equity awards. The Employee Matters Agreements are also expected to set forth the general principles relating to employee matters, including with respect to the assignment of employees and the transfer of employees from Valero to us, the assumption and retention of liabilities and related assets, expense reimbursements, workers’ compensation, leaves of absence, the provision of comparable benefits, employee service credits, the sharing of employee information and the duplication or acceleration of benefits.

Transition Services Agreements

In connection with the separation and the distribution, we expect to enter into two Transition Services Agreements: one between us and Valero and one between our Canadian subsidiary and Valero. The Transition Services Agreements will set forth the terms on which Valero will provide to us, and we will provide to Valero, on a temporary basis, certain services or functions that the companies historically have shared. Transition services may include administrative, payroll, human resources, data processing, environmental health and safety, financial audit support, financial transaction support, legal support services, IT and network infrastructure systems and various other support and corporate services. We expect that the Transition Services Agreements will provide for the provision of specified transition services generally for a period of up to eighteen months, on a cost or a cost-plus basis.

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Stockholder’s and Registration Rights Agreement

Prior to the distribution, we and Valero expect to enter into a Stockholder’s and Registration Rights Agreement pursuant to which we expect to agree that, upon the request of Valero, we will use our best efforts to effect the registration under applicable federal and state securities laws of the shares of our common stock retained by Valero after the distribution. In addition, we anticipate that Valero will agree to vote the shares of our common stock that it retains immediately after the distribution in proportion to the votes cast by our other stockholders. In connection with such agreement, we expect that Valero will grant us a proxy to vote its shares of our common stock in such proportion. This proxy, however, will be automatically revoked as to a particular share upon any sale or transfer of such share from Valero to a person other than Valero, and neither the voting agreement nor the proxy will limit or prohibit any such sale or transfer.

U.S. Fuel Supply Agreements

The U.S. Fuel Supply Agreements are expected to provide for a long-term supply of branded motor fuel to our retail sites in the U.S. It is expected that motor fuel will be sold to us at various terminal locations throughout the U.S. at market-based prices and that we will engage third-party transportation companies to deliver the motor fuel to retail sites in our U.S. network. We expect to initially have open credit and payment terms of “net 10” days; however, these could change based on changes in Valero’s standard practices and/or our financial condition. The U.S. Fuel Supply Agreements are expected to include provisions covering the addition and removal of retail sites, the processing of bank cards by Valero (for which we will pay processing fees) and the license to us of the right to use Valero’s brands and trademarks. We expect to have the ability to purchase unbranded motor fuel under certain circumstances.

Petroleum Product Supply Agreement (Canada)

We expect to enter into a long-term Petroleum Product Supply Agreement with Valero to purchase branded motor fuel and heating oil for our Canadian operations. The Petroleum Product Supply Agreement is expected to contain provisions relating to, among other things, the term of the agreement, payment terms and use of supplier’s brand names. It is expected that the motor fuel will be sold to us at various terminal locations throughout Canada at market-based prices. We expect to engage third-party transportation companies to deliver the motor fuel to our Canadian retail sites and to use a combination of company owned and third-party owned and operated vehicles to supply our heating oil customers. We expect to initially have open credit and payment terms of “net 10” days; however, these could change based on changes in Valero’s standard practices and/or our financial condition.

Office Lease Agreement (U.S.)

In connection with the separation and the distribution from Valero, we expect to enter into an Office Lease Agreement with Valero, pursuant to which we will lease approximately 78,000 square feet of office space at the Valero corporate campus in San Antonio, Texas. The term of the lease is expected to be five years, but we will have the right to terminate the lease at any time without penalty upon 180 days’ prior notice to Valero. Rent and other charges to be paid by us under the lease will be consistent with the rates charged for comparable office space in the San Antonio area.

Office Sublease Agreement (Canada)

We also expect to sublease approximately 50,000 square feet of office space from Valero in the building located at 2200 McGill College in Montreal, Québec. The sublease is expected to expire on [•], but we will have the right to terminate the sublease at any time without penalty upon 180 days’ prior notice to Valero. Rent and other charges under the sublease are expected to be straight pass-throughs (prorated based on square footage) of the rents and other charges and expenses incurred by Valero under the lease, without markup. The sublease will be subject to the consent of the landlord under the lease.

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RECENT SALES OF UNREGISTERED SECURITIES

On November 7, 2012, in connection with its incorporation, Corner Store issued 1,000 shares of common stock, par value $0.01 per share, to Valero for $10 pursuant to Section 4(2) of the Securities Act. We did not register the issuance of these shares under the Securities Act because such issuance did not constitute a public offering.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

As of the date of this information statement, all of the outstanding shares of our common stock are owned by Valero. Immediately after the distribution, Valero will retain 20 percent of our common stock. For a description of certain voting arrangements relating to the shares of our common stock retained by Valero, see “Certain Relationships and Related-Party Transactions—Agreements Between Us and Valero—Stockholder’s and Registration Rights Agreement” included elsewhere in this information statement. The following table provides information with respect to the expected beneficial ownership of our common stock immediately after the distribution by (1) each stockholder who is expected to be a beneficial owner of more than 5 percent of our outstanding common stock based on publicly available information, (2) each of our directors, (3) each executive officer named in the Summary Compensation Table and (4) all of our executive officers and director nominees as a group. Except as otherwise noted above or in the footnotes below, each person or entity identified below has sole voting and investment power with respect to such securities. To the extent our directors and executive officers own Valero common stock as of the record date for the distribution, they will participate in the distribution on the same terms as other holders of Valero common stock. The mailing address for each of the directors and executive officers listed below is One Valero Way, San Antonio, Texas 78249.

We have based the percentages below on each person’s beneficial ownership of Valero common stock as of [•], unless we indicate some other basis for the share amounts. We estimate that, based on the [•] shares of Valero common stock outstanding as of [•] (excluding treasury shares and assuming no exercise of Valero options), distribution of 80 percent of our common stock and applying the distribution ratio, we will have approximately [•] shares of common stock outstanding immediately after the distribution.

Principal Stockholders and Address Number of Shares Beneficially Owned  Percent of Common Stock Outstanding

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Director or Named Executive Officer	Number of Shares Beneficially Owned	Percent of Common Stock Outstanding
All directors and named executive officers as a group ([•] persons)

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DESCRIPTION OF CAPITAL STOCK

General

The following is a summary of information concerning our capital stock. The summaries and descriptions below do not purport to be complete statements of the relevant provisions of our certificate of incorporation or of our bylaws to be in effect at the time of the distribution. The summary is qualified in its entirety by reference to these documents, which you must read for complete information on our capital stock. Our certificate of incorporation and bylaws to be in effect at the time of the distribution will be included as exhibits to our registration statement of which this information statement is a part. The summaries and descriptions below do not purport to be complete statements of Delaware corporate law.

Distributions of Securities

On November 7, 2012, in connection with its incorporation, Corner Store issued 1,000 shares of common stock, par value $0.01 per share, to Valero for $10 pursuant to Section 4(2) of the Securities Act. We did not register the issuance of these shares under the Securities Act because such issuance did not constitute a public offering.

In the past three years, Corner Store has not otherwise sold any securities, including sales of reacquired securities, new issues, securities issued in exchange for property, services or other securities and new securities resulting from the modification of outstanding securities.

Common Stock

Immediately after the distribution, our authorized capital stock will consist of [•] shares of common stock, par value $0.01 per share, and [•] shares of preferred stock, par value $0.01, all of which shares of preferred stock will be undesignated.

Shares Outstanding

Immediately following the distribution, we expect that approximately [•] million shares of our common stock will be issued and outstanding based upon approximately [•] shares of Valero common stock outstanding as of [•], and assuming no exercise of Valero options or settlement of Valero stock-based awards in shares of Valero common stock, and applying the distribution ratio of one share of our common stock for every [•] shares of Valero common stock held as of the record date.

Voting Rights

Each share of common stock will be entitled to one vote on all matters submitted to a vote of stockholders. To be elected in an uncontested election for Board members, a director nominee must receive more votes “for” than “against” by shares present in person or by proxy and entitled to vote. In a contested election for Board members, the Board members will be elected by a plurality of shares present in person or by proxy and entitled to vote.

Holders of shares of our common stock will not have cumulative voting rights. In other words, a holder of a single share of common stock cannot cast more than one vote for each position to be filled on our Board of Directors. A consequence of not having cumulative voting rights is that the holders of a majority of the shares of common stock entitled to vote in the election of directors can elect all directors standing for election, which means that the holders of the remaining shares will not be able to elect any directors.

Other Rights

In the event of any liquidation, dissolution or winding up of the company, after the satisfaction in full of the liquidation preferences of holders of any preferred shares, holders of shares of our common stock will be entitled to ratable distribution of the remaining assets available for distribution to stockholders. The shares of our common stock will not be subject to redemption by operation of a sinking fund or otherwise. Holders of shares of our common stock will not be entitled to preemptive or conversion rights or other subscription rights. The rights, preferences and privileges of the

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holders of Corner Store common stock will be subject to, and may be adversely affected by, the rights of the holders of shares of any series or preferred stock that Corner Store may designate and issue in the future.

Fully Paid

The issued and outstanding shares of our common stock will be fully paid and non-assessable. This means the full purchase price for the outstanding shares of our common stock will have been paid and the holders of such shares will not be assessed any additional amounts for such shares. Any additional shares of common stock that we may issue in the future will also be fully paid and non-assessable.

Preferred Stock

Our certificate of incorporation will authorize our Board of Directors, subject to any limitations prescribed by the DGCL or our certificate of incorporation, to designate and issue from time to time one or more series of preferred stock without stockholder approval. Our Board of Directors will be vested with the authority to fix by resolution the designations, preferences and relative, participating, optional or other special rights, and such qualifications, limitations or restrictions thereof, including, without limitation, redemption rights, dividend rights, liquidation preferences and conversion or exchange rights of any class or series of preferred stock, and to fix the number of classes or series of preferred stock, the number of shares constituting any such class or series and the voting powers for each class or series.

The authority of the Board of Directors to issue preferred stock could potentially be used to discourage attempts by third parties to obtain control of our company through a merger, tender offer, proxy contest or otherwise by making such attempts more difficult or more costly. Our Board of Directors may issue preferred stock with voting rights or conversion rights that, if exercised, could adversely affect the voting power of the holders of common stock. No current agreements or understandings exist with respect to the issuance of preferred stock, and, as of the date of this document, our Board of Directors has no intention to issue any shares of preferred stock.

Restrictions on Payment of Dividends

We are incorporated in Delaware and are governed by Delaware law. Holders of shares of our common stock will be entitled to receive dividends, subject to prior dividend rights of the holders of any preferred shares, when, as and if declared by our Board of Directors out of funds legally available for that purpose. After the distribution, we intend to pay a cash dividend to our common stockholders at the initial rate of $0.0625 per share per quarter, or $0.25 per share per year. However, the declaration and amount of all dividends to holders of our common stock will be at the discretion of our Board of Directors and will depend upon many factors, including our financial condition, earnings, capital requirements of our business, covenants associated with certain debt obligations, legal requirements, regulatory constraints, industry practice and other factors that the Board of Directors deems relevant. All decisions regarding the payment of dividends by us will be made by our Board of Directors from time to time in accordance with applicable law. We are a holding company and have no direct operations. As a result, we will be able to pay dividends on our common stock only from our available cash on hand and distributions received from our subsidiaries.

Size of Board and Vacancies; Removal

Upon completion of the separation and the distribution, we expect that [•]individuals will serve on our Board of Directors. Our certificate of incorporation will provide that our directors will be divided into three classes, as nearly equal in number as possible, with the members of each class serving staggered three-year terms. Class I directors will have an initial term expiring in 2014, Class II directors will have an initial term expiring in 2015 and Class III directors will have an initial term expiring in 2016. At each annual meeting of stockholders, directors will be elected to succeed the class of directors whose terms have expired. This classification of our Board of Directors could have the effect of increasing the length of time necessary to change the composition of a majority of the Board of Directors; in general, at least two annual meetings of stockholders will be necessary for stockholders to effect a change in a majority of the members of the Board of Directors.

Our certificate of incorporation and bylaws will provide, subject to the rights of holders of a series of shares of preferred stock to elect one or more directors pursuant to any provisions of any certificate of designation relating to any such

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series, that the number of directors will be fixed exclusively by a majority of the entire Board of Directors from time to time. Our certificate of incorporation will also provide that directors may be removed only with cause and only by the affirmative vote of the holders of at least 60 percent of the voting power of the then-outstanding voting stock. Our bylaws will provide that, unless the Board of Directors determines otherwise, vacancies, however created, may be filled only by a majority of the remaining directors, even if less than a quorum.

No Stockholder Action by Written Consent

Our certificate of incorporation will provide that our stockholders may act only at an annual or special meeting of stockholders and may not act by written consent.

Special Meetings of Stockholders

Our bylaws will provide that special meetings of stockholders may be called only by the Chief Executive Officer or the Board of Directors, pursuant to a resolution adopted by a majority of the directors the company would have if there were no vacancies. Stockholders may not call special meetings.

Requirements for Advance Notification of Stockholder Nominations and Proposals

Our bylaws will contain advance-notice and other procedural requirements that apply to stockholder proposals and stockholder nominations of candidates for the election of directors. Proper notice must be both timely and must include certain information about the stockholder making the proposal or nomination, as applicable, and about the proposal or candidate being nominated, as applicable. In the case of any annual meeting, to be timely, a stockholder proposing to nominate a person for election to our Board of Directors or proposing that any other action be taken must give our corporate secretary written notice of the proposal not less than the 60th day and not earlier than the 90th day before the first anniversary of the preceding year’s annual meeting of stockholders. This deadline is subject to an exception if the date of the annual meeting is more than 30 days before or more than 60 days after the first anniversary of the preceding year’s annual meeting of stockholders, in which case written notice must be given to our corporate secretary not earlier than the 90th day and not later than the 60th day prior to the annual meeting or the 10th day after public announcement of the annual meeting date is first given by the company. If the Chief Executive Officer or the Board of Directors calls a special meeting of stockholders for the election of directors, a stockholder proposing to nominate a person for that election must give our corporate secretary written notice of the proposal not earlier than the 90th day and not later than the 60th day prior to the special meeting, or the 10th day after public announcement of the special meeting date and the nominees proposed by the Board of Directors is first given by the company.

These advance-notice provisions may have the effect of precluding a contest for the election of our directors or the consideration of stockholder proposals if the proper procedures are not followed, and of discouraging or deterring a third party from conducting a solicitation of proxies to elect its own slate of directors or to approve its own proposal, without regard to whether consideration of those nominees or proposals might be harmful or beneficial to us and our stockholders.

Amendments to the Certificate of Incorporation and Bylaws

Our certificate of incorporation will provide that the affirmative vote of the holders of at least 80 percent of our voting stock then outstanding is required to amend certain provisions of the certificate of incorporation, including those relating to the number and classification of the Board of Directors, term and removal of directors, the calling of special meetings of stockholders and exclusive venue for specified disputes. Our certificate of incorporation will also provide that the affirmative vote of holders of at least 80 percent of the voting power of the voting stock then outstanding will be required to amend certain provisions of the bylaws, including those relating to the calling of special meetings of stockholders, stockholder action by written consent, composition and classification of the Board of Directors, vacancies on the Board of Directors, term and removal of directors and director and officer indemnification. Our certificate of incorporation will also confer upon our Board of Directors the right to amend our bylaws.

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Exclusive Forum

Our certificate of incorporation will provide that, unless our Board of Directors otherwise determines, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for any derivative action or proceeding brought on our behalf, any action asserting a claim of breach of a fiduciary duty owed by any of our directors or officers to us or our stockholders, creditors or other constituents, any action asserting a claim against us or any of our directors or officers arising pursuant to any provision of the DGCL or our certificate of incorporation or bylaws (as either may be amended from time to time) or any action asserting a claim against us or any of our directors or officers governed by the internal affairs doctrine. If (and only if) the Court of Chancery of the State of Delaware dismisses any such action for lack of subject matter jurisdiction, such action may be brought in another court sitting in the State of Delaware.

Delaware Statutory Business Combination Statute

We will be subject to Section 203 of the DGCL, an anti-takeover statute. In general, Section 203 prevents an “interested stockholder,” which is defined generally as a person owning 15 percent or more of a Delaware corporation’s outstanding voting stock or any affiliate or associate of that person, from engaging in a broad range of “business combinations” with the corporation for three years following the date on which that person became an interested stockholder unless:

• Before that person became an interested stockholder, the board of directors of the corporation approved the transaction in which that person became an interested stockholder or approved the business combination;

• On completion of the transaction that resulted in that person’s becoming an interested stockholder, that person owned at least 85 percent of the voting stock of the corporation outstanding at the time the transaction commenced, other than stock held by (1) directors who are also officers of the corporation or (2) any employee stock plan that does not provide employees with the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or

• Following the transaction in which that person became an interested stockholder, both the board of directors of the corporation and the holders of at least two-thirds of the outstanding voting stock of the corporation not owned by that person approve the business combination.

Under Section 203, the restrictions described above also do not apply to specific business combinations proposed by an interested stockholder following the announcement or notification of designated extraordinary transactions involving the corporation and a person who had not been an interested stockholder during the previous three years or who became an interested stockholder with the approval of a majority of the corporation’s directors, if a majority of the directors who were directors prior to any person’s becoming an interested stockholder during the previous three years, or were recommended for election or elected to succeed those directors by a majority of those directors, approve or do not oppose that extraordinary transaction.

Limitation on Liability of Directors, Indemnification of Directors and Officers, and Insurance

The DGCL authorizes corporations to limit or eliminate the personal liability of directors to corporations and their stockholders for monetary damages for breaches of directors’ fiduciary duties as directors, and Corner Store’s certificate of incorporation will include such an exculpation provision.

Our certificate of incorporation will provide that no director will be liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation on liability is not permitted under the DGCL, as now in effect or as amended. Currently, Section 102(b)(7) of the DGCL requires that liability be imposed for the following:

• Any breach of the director’s duty of loyalty to our company or our stockholders.

• Any act or omission not in good faith or which involved intentional misconduct or a knowing violation of law.

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• Unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the DGCL.

• Unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the DGCL.

• Any transaction from which the director derived an improper personal benefit.

Additionally, Section 145 of the DGCL provides that a corporation may indemnify directors and officers as well as other employees and individuals against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement in connection with any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, in which such person is made a party by reason of the fact that the person is or was a director, officer, employee or agent of the corporation (other than an action by or in the right of the corporation—a “derivative action”), if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person’s conduct was unlawful. A similar standard is applicable in the case of derivative actions, except that indemnification only extends to expenses (including attorneys’ fees) incurred in connection with the defense or settlement of such action, and the statute requires court approval before there can be any indemnification where the person seeking indemnification has been found liable to the corporation. The statute provides that it is not exclusive of other indemnification that may be granted by a corporation’s bylaws, disinterested director vote, stockholder vote, agreement or otherwise. Our certificate of incorporation and bylaws will provide that, to the fullest extent authorized or permitted by the DGCL, as now in effect or as amended, we will indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding by reason of the fact that such person, or a person of whom he or she is the legal representative, is or was our director or officer, or by reason of the fact that our director or officer is or was serving, at our request, as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans maintained or sponsored by us. We will indemnify such persons against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with such action if such person acted in good faith and in a manner reasonably believed to be in our best interests and, with respect to any criminal proceeding, had no reason to believe their conduct was unlawful. A similar standard will be applicable in the case of derivative actions, except that indemnification will only extend to expenses (including attorneys’ fees) incurred in connection with the defense or settlement of such actions, and court approval will be required before there can be any indemnification where the person seeking indemnification has been found liable to us. Any amendment of this provision will not reduce our indemnification obligations relating to actions taken before an amendment.

We also intend to obtain insurance policies that insure our directors and officers and those of our subsidiaries against certain liabilities they may incur in their capacity as directors and officers. The insurance will provide coverage, subject to its terms and conditions, if the company is unable to (e.g., due to bankruptcy) or unwilling to indemnify the directors and officers for a covered wrongful act.

Transfer Agent and Registrar

The transfer agent and registrar for our common stock will be Computershare. Registered stockholders in the U.S. can contact Computershare at (800) 736-3001 or through its website at www.computershare.com. Stockholders from outside the U.S. can contact Computershare at (781) 575-3100.

Stock Exchange Listing

We intend to apply to list our shares of common stock on the New York Stock Exchange under the ticker symbol “CST.”

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DESCRIPTION OF FINANCING TRANSACTIONS AND CERTAIN INDEBTEDNESS

Indebtedness in Connection with the Separation

In connection with the separation, we expect to incur an aggregate of $1.05 billion in new debt for which we will not retain any cash following the separation. We expect that this indebtedness will consist of bank debt, short term notes, long term notes or a combination thereof.

In addition, we expect to have liquidity facilities that will be available for working capital and for general corporate purposes and that we expect will be undrawn at the time the distribution is completed.

We will describe the terms and covenants of any notes to be issued, bank debt to be incurred or liquidity facilities to be entered into in an amendment to the registration statement of which this information statement is a part.

Debt Exchange

We expect to transfer certain proceeds of our debt to Valero and to issue certain debt directly to Valero in consideration for the contribution by Valero to us of the retail business. We expect that Valero will transfer our debt issued to Valero to exchange counterparties in order to satisfy certain of Valero’s then-outstanding debt obligations to such exchange counterparties. We expect that these exchange counterparties will then sell our debt that they received in the debt exchange to third-party investors. As a result of these financing transactions, Valero will receive in connection with the separation approximately $1.05 billion in cash, and we will incur indebtedness of $1.05 billion for which we will not retain any cash following the separation.

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DELIVERY OF INFORMATION STATEMENT

The SEC has adopted rules that permit companies and intermediaries, such as brokers, to satisfy delivery requirements for information statements with respect to two or more stockholders sharing the same address by delivering a single information statement to those stockholders. This process, known as “householding,” is intended to provide greater convenience for stockholders, and cost savings for companies, by reducing the number of duplicate documents that stockholders receive. Unless contrary instructions from one or more stockholders sharing an address have been received, only one copy of this information statement will be delivered to those multiple stockholders sharing an address.

If, at any time, a stockholder no longer wishes to participate in “householding” and would prefer to receive separate copies of the information statement, the stockholder should notify his or her intermediary or, if shares are registered in the stockholder’s name, should contact us at the address and telephone number provided below. Any stockholder who currently receives multiple copies of the information statement at his or her address and would like to request “householding” of communications should contact his or her intermediary or, if shares are registered in the stockholder’s name, should contact us at the address and telephone number provided below. Additionally, we will deliver, promptly upon written or oral request directed to the address or telephone number below, a separate copy of the information statement to any stockholders sharing an address to which only one copy was mailed.

Valero Investor Relations

One Valero Way

San Antonio, Texas 78249

investorrelations@valero.com

(800) 531-7911

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WHERE YOU CAN FIND MORE INFORMATION

We have filed a registration statement on Form 10 with the SEC with respect to the shares of our common stock that Valero stockholders will receive in the distribution. This information statement is a part of that registration statement and, as allowed by SEC rules, does not include all of the information set forth in the registration statement and the exhibits and schedules to the registration statement. For additional information relating to our company and to the separation and the distribution, reference is made to the registration statement and the exhibits and schedules to the registration statement. Statements contained in this information statement as to the contents of any contract or document referred to are not necessarily complete and, in each instance, if the contract or document is filed as an exhibit to the registration statement, we refer you to the copy of the contract or document filed as an exhibit to the registration statement. Each such statement is qualified in all respects by reference to the applicable contract or document.

Following the distribution, we will file annual, quarterly and special reports, proxy statements and other information with the SEC. We intend to furnish our stockholders with annual reports containing combined financial statements audited by an independent registered public accounting firm. The registration statement is, and any of these future filings with the SEC will be, available to the public over the Internet on the SEC’s website at www.sec.gov. You may read and copy any filed document at the SEC’s public reference rooms in Washington, D.C. at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at (800) SEC-0330 for further information about the public reference rooms.

We plan to make our filings with the SEC available free of charge on our website at www.cornerstore4u.com, and to provide our filings free of charge upon written request to our Investor Relations department at [•].

Our website and the information contained on that site, or connected to that site, are not and shall not be deemed to be incorporated into this information statement or the registration statement of which this information statement is a part or any other filings we make with the SEC.

No person is authorized to give any information or to make any representations or warranties with respect to the matters described in this information statement other than those contained in this information statement and, if given or made, such information or representation or warranty must not be relied upon as having been authorized by us or by Valero. Neither the delivery of this information statement nor the completion of the distribution shall, under any circumstances, create any implication that there has been no change in our affairs or those of Valero since the date of this information statement is correct as of any time after its date.

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FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

CORNER STORE HOLDINGS, INC.

INDEX TO FINANCIAL STATEMENTS

Annual Audited Combined Financial Statements:
Report of Independent Registered Public Accounting Firm	F-2
Combined Balance Sheets as of December 31, 2011 and 2010	F-3
Combined Statements of Income for the Years Ended    December 31, 2011, 2010 and 2009	F-4
Combined Statements of Comprehensive Income for the Years Ended    December 31, 2011, 2010 and 2009	F-5
Combined Statements of Changes in Net Investment for the Years Ended    December 31, 2011, 2010 and 2009	F-6
Combined Statements of Cash Flows for the Years Ended    December 31, 2011, 2010 and 2009	F-7
Notes to Combined Financial Statements	F-8
Interim Unaudited Combined Financial Statements
Combined Balance Sheets as of    September 30, 2012 and December 31, 2011	F-33
Combined Statements of Income    for the Nine Months Ended September 30, 2012 and 2011	F-34
Combined Statements of Comprehensive Income    for the Nine Months Ended September 30, 2012 and 2011	F-35
Combined Statements of Cash Flows    for the Nine Months Ended September 30, 2012 and 2011	F-36
Condensed Notes to Combined Financial Statements	F-37

No financial statement schedules are submitted because they are not applicable or the required information is included in the combined financial statements or notes thereto.

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholder

of Corner Store Holdings, Inc.:

We have audited the accompanying combined balance sheets of Corner Store Holdings, Inc. (the Company) as of December 31, 2011 and 2010, and the related combined statements of income, comprehensive income, changes in net investment and cash flows for each of the years in the three-year period ended December 31, 2011. These combined financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these combined financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the combined financial statements referred to above present fairly, in all material respects, the financial position of Corner Store Holdings, Inc. as of December 31, 2011 and 2010, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2011, in conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP

San Antonio, Texas

November 16, 2012

F-2

CORNER STORE HOLDINGS, INC.

COMBINED BALANCE SHEETS

(Millions of Dollars)

	December 31,
	2011			2010
ASSETS
Current assets:
Cash	$	132		$	102
Receivables, net	172			145
Inventories	159			155
Deferred income taxes	12			14
Prepaid expenses and other	10			6
Total current assets	485			422
Property and equipment, at cost	1,678			1,614
Accumulated depreciation	(525		)	(476		)
Property and equipment, net	1,153			1,138
Intangible assets, net	47			54
Other assets, net	6			7
Total assets	$	1,691		$	1,621
LIABILITIES AND NET INVESTMENT
Current liabilities:
Current portion of capital lease obligations	$	1		$	1
Accounts payable	84			87
Accrued expenses	41			44
Taxes other than income taxes	86			83
Total current liabilities	212			215
Capital lease obligations, less current portion	5			5
Deferred income taxes	124			113
Other long-term liabilities	101			95
Commitments and contingencies
Net investment:
Accumulated other comprehensive income	155			162
Net parent investment	1,094			1,031
Total net investment	1,249			1,193
Total liabilities and net investment	$	1,691		$	1,621

See Notes to Combined Financial Statements.

F-3

CORNER STORE HOLDINGS, INC.

COMBINED STATEMENTS OF INCOME

(Millions of Dollars)

	Year Ended December 31,
	2011			2010			2009
Operating revenues (a)	$	12,863		$	10,371		$	8,780
Costs and expenses:
Cost of sales	11,735			9,310			7,811
Operating expenses	636			605			581
General and administrative expenses	59			57			52
Depreciation, amortization and accretion expense	113			105			101
Asset impairment loss	3			5			13
Total costs and expenses	12,546			10,082			8,558
Operating income	317			289			222
Other income, net	1			2			1
Interest expense	(1		)	(1		)	(1		)
Income before income tax expense	317			290			222
Income tax expense	103			97			76
Net income	$	214		$	193		$	146

Supplemental information:
(a) Includes excise taxes	$	1,947	$	1,853	$	1,717

See Notes to Combined Financial Statements.

F-4

CORNER STORE HOLDINGS, INC.

COMBINED STATEMENTS OF COMPREHENSIVE INCOME

(Millions of Dollars)

	Year Ended December 31,
	2011			2010		2009
Net income	$	214		$	193	$	146
Other comprehensive income (loss):
Foreign currency translation adjustment, net of income tax expense of $-, $- and $-	(7		)	24		50
Comprehensive income	$	207		$	217	$	196

See Notes to Combined Financial Statements.

F-5

CORNER STORE HOLDINGS, INC.

COMBINED STATEMENTS OF CHANGES IN NET INVESTMENT

(Millions of Dollars)

	Accumulated Other Comprehensive Income			Net Parent Investment			Net Investment
Balance as of December 31, 2008	$	88		$	1,119		$	1,207
Net income	—			146			146
Net transfers to Parent	—			(206		)	(206		)
Other comprehensive income	50			—			50
Balance as of December 31, 2009	138			1,059			1,197
Net income	—			193			193
Net transfers to Parent	—			(221		)	(221		)
Other comprehensive income	24			—			24
Balance as of December 31, 2010	162			1,031			1,193
Net income	—			214			214
Net transfers to Parent	—			(151		)	(151		)
Other comprehensive loss	(7		)	—			(7		)
Balance as of December 31, 2011	$	155		$	1,094		$	1,249

See Notes to Combined Financial Statements.

F-6

CORNER STORE HOLDINGS, INC.

COMBINED STATEMENTS OF CASH FLOWS

(Millions of Dollars)

	Year Ended December 31,
	2011			2010			2009
Cash flows from operating activities:
Net income	$	214		$	193		$	146
Adjustments to reconcile net income to net cash provided    by operating activities:
Depreciation, amortization and accretion expense	113			105			101
Asset impairment loss	3			5			13
Non-cash interest expense	1			—			1
Deferred income tax expense	12			6			3
Changes in current assets and current liabilities	(40		)	12			4
Other operating activities, net	5			2			(6		)
Net cash provided by operating activities	308			323			262
Cash flows from investing activities:
Capital expenditures	(130		)	(105		)	(64		)
Proceeds from dispositions of property and equipment	5			3			5
Other investing activities, net	(2		)	(2		)	(3		)
Net cash used in investing activities	(127		)	(104		)	(62		)
Cash flows from financing activities:
Net transfers to Parent	(150		)	(220		)	(205		)
Payments of capital lease obligations	(1		)	(1		)	(1		)
Net cash used in financing activities	(151		)	(221		)	(206		)
Effect of foreign exchange rate changes on cash	—			1			1
Net increase (decrease) in cash	30			(1		)	(5		)
Cash at beginning of year	102			103			108
Cash at end of year	$	132		$	102		$	103

See Notes to Combined Financial Statements.

F-7

CORNER STORE HOLDINGS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

1. THE SEPARATION AND THE DISTRIBITION, BASIS OF PRESENTATION, DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Separation and the Distribution

On July 31, 2012, Valero Energy Corporation (“Valero” or “Parent”) announced approval by its Board of Directors to pursue the separation of its retail business into a stand-alone, publicly traded corporation, Corner Store Holdings, Inc. (“Corner Store”). This separation is expected to be completed in accordance with a separation and distribution agreement to be entered into between Valero and Corner Store. Valero intends to distribute, on a pro rata basis, 80 percent of the shares of Corner Store common stock to the Valero stockholders as of the record date for the distribution. Corner Store was incorporated in Delaware as a wholly owned subsidiary of Valero in November 2012. The separation and the distribution are subject to various conditions, including market conditions, customary regulatory approvals, the receipt of an affirmative Internal Revenue Service ruling with respect to the tax-free nature of the separation and certain related transactions, and final approval by Valero’s Board of Directors.

Basis of Presentation

These combined financial statements were prepared in connection with the expected separation and distribution and are derived from the consolidated financial statements and accounting records of Valero. These statements reflect the combined historical results of operations, financial position and cash flows of Valero’s retail business in the United States (“U.S.”) and Canada that are owned by direct and indirect wholly owned subsidiaries of Valero, including an allocable portion of Valero’s corporate costs. The legal transfer of the assets (including the equity interests of certain Valero subsidiaries), liabilities and operations of Valero’s retail business into Corner Store has yet to take place. However, for ease of reference, these combined financial statements are referred to as those of Corner Store. Unless otherwise stated or the context otherwise indicates, all references in these combined financial statements to “us,” “our,” or “we” mean the retail business of Valero, which is referred to as Corner Store.

The financial statements are presented as if Valero’s U.S. and Canadian retail operations had been combined for all years presented. Neither operation, however, carried out transactions with the other during the years presented; therefore, there were no intercompany transactions or accounts to be eliminated in connection with the combination of these operations. The assets and liabilities in the combined balance sheets have been reflected on a historical cost basis, as immediately prior to the separation and the distribution, and all of the assets and liabilities presented are wholly owned by Valero and are being transferred within the Valero consolidated group. The combined statements of income also include expense allocations for certain corporate functions historically performed by Valero and not allocated to its operating segments, including allocations of general corporate expenses related to executive oversight, accounting, treasury, tax, legal, procurement and information technology. These allocations are based primarily on specific identification of time and/or activities associated with Corner Store, employee headcount or capital expenditures. Our management believes the assumptions underlying the combined financial statements, including the assumptions regarding allocating general corporate expenses from Valero, are reasonable. Nevertheless, the combined financial statements may not include all of the actual expenses that would have been incurred had we been a stand-alone company during the years presented and may not reflect our combined results of operations, financial position and cash flows had we been a stand-alone company during the periods presented. Actual costs that would have been incurred if we had been a stand-alone company would depend on multiple factors, including organizational structure and strategic decisions made in various areas, including information technology and infrastructure.

Valero uses a centralized approach to cash management and the financing of its operations. We transfer cash to Valero daily and Valero funds our operating and investing activities as needed. Accordingly, cash held by Valero at the corporate level was not allocated to us for any of the years presented. Cash presented on our combined balance sheets represents cash on hand at our convenience stores, cash that had not yet been transferred to Valero and cash held by us in automated teller machines (“ATMs”). We reflect transfers of cash to and from Valero’s cash management system as a component of net parent investment on our combined balance sheets, and these net transfers of cash are reflected as a financing activity in our combined statements of cash flows. We also have not included any interest income on the net cash transfers to Valero.

F-8

CORNER STORE HOLDINGS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)

We have evaluated events that occurred after December 31, 2011 through the filing of this Form 10 Registration Statement. Any material subsequent events that occurred during this time have been properly recognized or disclosed in these financial statements.

Description of Business

We are one of the largest independent retailers of motor fuel and convenience merchandise items in the U.S. and eastern Canada. Our operations include (i) the sale of motor fuel at convenience stores, filling stations and cardlocks (which is an unattended self-service filling station that provides motor fuel to fleet customers, such as trucking and other commercial customers), (ii) the sale of convenience merchandise items and services in convenience stores and (iii) the sale of heating oil to residential customers and the sale of heating oil and motor fuel to small commercial customers. We generally refer to a convenience store, filling station or cardlock as a “retail site.”

Subsequent Event

In July 2012, we acquired 29 convenience stores located in the Little Rock and Hot Springs, Arkansas area from The Crackerbox, LLC, including related motor fuel inventories, for total cash consideration of $61 million.

Significant Accounting Policies

Principles of Combination

These combined financial statements were prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and include the accounts of direct and indirect wholly owned subsidiaries of Valero that hold the assets and liabilities and reflect the operations of Valero’s retail business in the U.S. and Canada. These subsidiaries, however, did not carry out any transactions with each other during the years presented; therefore, there were no transactions or accounts to be eliminated in connection with the combination.

Net Parent Investment

The net parent investment represents Valero’s historical investment in Corner Store, Corner Store’s accumulated net earnings after taxes and the net effect of transactions with, and allocations from, Valero.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the amounts reported in the combined financial statements and accompanying notes. Actual results could differ from those estimates. On an ongoing basis, we review our estimates based on currently available information. Changes in facts and circumstances may result in revised estimates.

Comprehensive Income

Effective December 31, 2011, we adopted the provisions of Accounting Standards Codification (“ASC”) Topic 220, “Comprehensive Income,” and have elected to present comprehensive income in a statement that is separate from the statement of income but placed directly after the statement of income.

Receivables

Receivables represent amounts due from credit card companies and from our heating oil customers (“trade receivables”). Trade receivables are carried at original invoice amount. Other receivables consist primarily of amounts due from financial institutions as reimbursement for cash distributed from ATM machines that were funded by us and amounts due from vendors related to vendor rebates (see “Vendor Allowances and Rebates” for our policy regarding the accounting for vendor rebates). We maintain an allowance for doubtful accounts, which is adjusted based on management’s assessment of our customers’ historical collection experience, known credit risks and industry and economic conditions.

F-9

CORNER STORE HOLDINGS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)

Inventories

Inventories are carried at the lower of cost or market. The cost of supplies and convenience store merchandise is determined principally under the weighted-average cost method. The cost of motor fuel inventories is determined under the last-in, first-out (“LIFO”) method using the dollar-value LIFO method, with any increments valued based on purchase prices at the end of the year.

Property and Equipment

The cost of property and equipment purchased or constructed, including betterments of property assets, is capitalized. The cost of repairs and normal maintenance of property and equipment, however, is expensed as incurred. Betterments of property and equipment are those which extend the useful lives of the property and equipment or improve the safety of our operations. Betterments also include additions to and enlargements of our retail sites. The cost of property and equipment constructed includes certain overhead costs allocable to the construction activities.

When property and equipment are retired or replaced, the cost and related accumulated depreciation are eliminated, with any gain or loss reflected in depreciation, amortization and accretion expense, unless such amounts are reported separately due to materiality.

Depreciation of property and equipment is recorded on a straight-line basis over the estimated useful lives of the related assets. Leasehold improvements and assets acquired under capital leases are amortized using the straight-line method over the shorter of the lease term or the estimated useful life of the related asset.

Impairment of Assets

Long-lived assets, which include property and equipment and finite-lived intangible assets, are tested for recoverability whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. A long-lived asset is not recoverable if its carrying amount exceeds the sum of the undiscounted cash flows expected to result from its use and eventual disposition. If a long-lived asset is not recoverable, an impairment loss is recognized for the amount by which the carrying amount of the long-lived asset exceeds its fair value, with fair value determined based on discounted estimated net cash flows or other appropriate methods. See Note 2 for our impairment analysis of our long-lived assets.

Environmental Matters

Liabilities for future remediation costs are recorded when environmental assessments from governmental regulatory agencies and/or remedial efforts are probable and the costs can be reasonably estimated. Other than for assessments, the timing and magnitude of these accruals generally are based on the completion of investigations or other studies or a commitment to a formal plan of action. Environmental liabilities are based on best estimates of undiscounted future costs using currently available technology and applying current regulations, as well as our own internal environmental policies, without establishing a range of loss for these liabilities. Environmental liabilities are difficult to assess and estimate due to uncertainties related to the magnitude of possible remediation, the timing of such remediation and the determination of our obligation in proportion to other parties. Such estimates are subject to change due to many factors, including the identification of new sites requiring remediation, changes in environmental laws and regulations and their interpretation, additional information related to the extent and nature of remediation efforts and potential improvements in remediation technologies. Amounts recorded for environmental liabilities have not been reduced by possible recoveries from third parties.

F-10

CORNER STORE HOLDINGS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)

Asset Retirement Obligations

We record a liability, which is referred to as an asset retirement obligation, at fair value for the estimated cost to remove underground storage tanks (“USTs”) for motor fuel at owned and leased retail sites at the time we incur that liability, which is generally when the UST is installed. We record a discounted liability for the fair value of an asset retirement obligation with a corresponding increase to the carrying value of the related long-lived asset. We depreciate the amount added to property and equipment and recognize accretion expense in connection with the discounted liability over the remaining life of the UST. Accretion expense is reflected in depreciation, amortization and accretion expense. We base our estimates of the anticipated future costs for removal of a UST on our prior experience with removal. Removal costs include the cost to remove and destroy the USTs, soil remediation costs resulting from the spillage of small quantities of motor fuel in the normal operations of our business and other miscellaneous costs. We review our assumptions for computing the estimated liability for the removal of USTs on an annual basis. Any change in estimated cash flows is reflected as an adjustment to the liability and the associated asset.

Foreign Currency Translation

The functional currency of our Canadian operations is the Canadian dollar. Balance sheet accounts are translated into U.S. dollars using exchange rates in effect as of the balance sheet date. Revenue and expense accounts are translated using the weighted-average exchange rates during the year presented. Foreign currency translation adjustments are recorded as a component of accumulated other comprehensive income.

Revenue Recognition

Revenues are recorded upon delivery of the products to our customers, which is the point at which title to the products is transferred, and when payment has either been received or collection is reasonably assured.

We present motor fuel excise taxes on sales on a gross basis with supplemental information regarding the amount of such taxes included in revenues provided in a footnote on the face of the statements of income.

Shipping and Handling Costs

Costs incurred for the shipping and handling of motor fuel and convenience store merchandise are included in inventories, and therefore, reflected in cost of sales when the related item is sold.

Income Taxes

Income taxes are accounted for under the asset and liability method, as if we were a separate taxpayer rather than a member of Valero’s consolidated income tax return. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred amounts are measured using enacted tax rates expected to apply to taxable income in the year those temporary differences are expected to be recovered or settled.

We classify any interest expense and penalties related to the underpayment of income taxes in income tax expense.

Vendor Allowances and Rebates

We receive payments for vendor allowances and volume rebates from various suppliers of convenience store merchandise. Our accounting practices are as follows:

• Vendor allowances for price markdowns are credited to cost of sales during the period the related markdown is taken.

• Volume rebates of merchandise are recorded as reductions to cost of sales when the merchandise qualifying for the rebate is sold.

• Slotting and stocking allowances received from a vendor are recorded as a reduction to cost of sales over the period covered by the agreement.

F-11

CORNER STORE HOLDINGS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)

The aggregate amounts recorded as a reduction to cost of sales for vendor allowances and rebates for the years ended December 31, 2011, 2010 and 2009 were $56 million, $57 million and $58 million, respectively. The recording of vendor allowances and rebates does not require us to make any significant estimates.

Concentration Risk

Valero supplied substantially all of the motor fuel purchased by us for resale during all years presented. No customers are individually material to our operations.

New Accounting Pronouncements

In December 2011, the provisions of ASC Topic 210, “Balance Sheet,” were amended to require an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of these arrangements on its financial position. The guidance requires entities to disclose both gross information and net information about both instruments and transactions eligible for offset in the balance sheet and instruments and transactions subject to an agreement similar to a master netting arrangement. These provisions are effective for interim and annual reporting periods beginning on January 1, 2013. The adoption of this guidance effective January 1, 2013 will not affect our financial position or results of operations but may result in additional disclosures.

In May 2011, the provisions of ASC Topic 820, “Fair Value Measurement,” were amended to clarify the application of existing fair value measurement requirements and to change certain fair value measurement and disclosure requirements. Amendments that change measurement and disclosure requirements relate to (i) fair value measurement of financial instruments that are managed within a portfolio, (ii) application of premiums and discounts in a fair value measurement and (iii) additional disclosures about fair value measurements categorized within Level 3 of the fair value hierarchy. These provisions were effective for the first interim or annual period beginning after December 15, 2011. The adoption of this guidance effective January 1, 2012 did not affect our financial position or results of operations but may result in additional disclosures in future financial statements.

F-12

CORNER STORE HOLDINGS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)

2. IMPAIRMENT

Our retail sites are the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of long-lived assets. Cash flows from each retail site vary from year to year and as a result, we have identified and recorded asset impairment losses for each of the past three years as changes in market demographics, traffic patterns, competition and other factors have impacted the overall operations of certain of our individual retail sites.

For each retail site where events or changes in circumstances indicated that the carrying amount of the assets might not be recoverable, we compared the retail site’s carrying amount to its estimated future undiscounted cash flows to determine recoverability. If the sum of the estimated undiscounted cash flows did not exceed the carrying value, we then estimated the fair value of these retail sites to measure the impairment. To estimate the fair value of our retail sites, we used an income approach reflecting internally developed cash flows that included, among other things, our expectations of future cash flows based on sales volume, gross margins and operating expenses.

As a result of our impairment evaluation process, we concluded that some retail sites were impaired. The aggregate carrying values, estimated fair values and asset impairment loss for each segment were as follows (in millions):

	Year Ended December 31,
	2011		2010		2009
Retail–U.S.:
Carrying values	$	3	$	3	$	11
Less: Estimated fair values	1		1		3
Asset impairment loss	$	2	$	2	$	8
Retail–Canada:
Carrying values	$	1	$	4	$	7
Less: Estimated fair values	—		1		2
Asset impairment loss	$	1	$	3	$	5

F-13

CORNER STORE HOLDINGS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)

3. RECEIVABLES

Receivables consisted of the following (in millions):

	December 31,
	2011			2010
Trade receivables	$	147		$	125
Other	27			22
	174			147
Allowance for doubtful accounts	(2		)	(2		)
Receivables, net	$	172		$	145

Changes in the allowance for doubtful accounts consisted of the following (in millions):

	Year Ended December 31,
	2011			2010			2009
Balance as of beginning of year	$	2		$	2		$	3
Increase in allowance charged to expense	1			1			1
Accounts charged against the allowance, net of recoveries	(1		)	(1		)	(2		)
Balance as of end of year	$	2		$	2		$	2

4. INVENTORIES

Inventories consisted of the following (in millions):

	December 31,
	2011		2010
Convenience store merchandise	$	104	$	100
Motor fuel (at LIFO)	54		54
Supplies	1		1
Inventories	$	159	$	155

As of December 31, 2011 and 2010, the replacement cost (market value) of motor fuel inventories exceeded their LIFO carrying amounts by approximately $56 million and $47 million, respectively.

F-14

CORNER STORE HOLDINGS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)

5. PROPERTY AND EQUIPMENT

Major classes of property and equipment consisted of the following (in millions):

	December 31,
	2011			2010
Land	$	339		$	329
Retail site buildings	406			395
Equipment	535			525
Leasehold improvements	254			234
Other	130			116
Construction in progress	14			15
Property and equipment, at cost	1,678			1,614
Accumulated depreciation	(525		)	(476		)
Property and equipment, net	$	1,153		$	1,138

Depreciation expense for the years ended December 31, 2011, 2010 and 2009 was $101 million, $94 million and $90 million, respectively.

We had land and certain retail sites under capital leases totaling $9 million and $8 million as of December 31, 2011 and 2010, respectively. Accumulated amortization on assets under capital leases was $4 million and $3 million, respectively, as of December 31, 2011 and 2010. See Note 8 for future minimum rentals on capital lease obligations.

6. INTANGIBLE ASSETS

Intangible assets, net consisted of the following (in millions):

	Gross Carrying Amount				Accumulated Amortization
	December 31,				December 31,
	2011		2010		2011			2010
Customer list	$	120	$	121	$	(74	)	$	(68	)
Other	2		2		(1		)	(1		)
Total	$	122	$	123	$	(75	)	$	(69	)

All of our intangible assets are subject to amortization and are amortized on a straight-line basis primarily over 5 to 15 years. Amortization expense for intangible assets was $8 million, $7 million and $8 million for the years ended December 31, 2011, 2010 and 2009, respectively. The estimated aggregate amortization expense for the years ending December 31, 2012 through December 31, 2016 is $9 million per year, after which the customer list will be fully amortized.

F-15

CORNER STORE HOLDINGS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)

7. ACCRUED EXPENSES AND OTHER LONG-TERM LIABILITIES

Accrued expenses and other long-term liabilities consisted of the following (in millions):

	Accrued Expenses				Other Long-Term  Liabilities
	December 31,				December 31,
	2011		2010		2011		2010
Wage and other employee-related liabilities	$	19	$	19	$	—	$	—
Environmental liabilities	2		3		2		2
Self-insurance reserves (see Note 8)	6		7		12		11
Asset retirement obligations	2		3		74		69
Other	12		12		13		13
Accrued expenses and other long-term liabilities	$	41	$	44	$	101	$	95

Environmental Liabilities

Changes in our environmental liabilities during each year in the three-year period ended December 31, 2011 were insignificant, with additions, reductions and settlement activity, each being less than $1 million during each year.

Asset Retirement Obligations

We have asset retirement obligations for the removal of USTs at owned and leased retail sites. There is no legal obligation to remove USTs while they remain in service. However, environmental laws in the U.S. and Canada require that USTs be removed within one to two years after the USTs are no longer in service, depending on the jurisdiction in which the USTs are located. We have estimated that USTs at our owned retail sites will remain in service approximately 20 years and that we will have an obligation to remove those USTs at that time. For our leased retail sites, our lease agreements generally require that we remove certain improvements, primarily USTs and signage, upon termination of the lease. There are no assets that are legally restricted for purposes of settling our asset retirement obligations.

Changes in our asset retirement obligations were as follows (in millions):

	Year Ended December 31,
	2011			2010			2009
Balance as of beginning of year	$	72		$	70		$	66
Additions to accrual	2			1			—
Accretion expense	4			4			3
Settlements	(2		)	(3		)	(2		)
Foreign currency translation	—			—			3
Balance as of end of year	$	76		$	72		$	70

Other

Other accrued expenses include contingent lease accruals, unearned revenue related to our heating oil operations and contingent liabilities related to legal matters and for claims for indirect taxes that are both probable and reasonably estimable.

F-16

CORNER STORE HOLDINGS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)

8. COMMITMENTS AND CONTINGENCIES

Leases

We have long-term operating lease commitments for land for retail sites, office facilities, retail site buildings and related equipment that generally contain renewal options for periods ranging from five to ten years. In addition to minimum rental payments, certain leases require additional contingent payments based on motor fuel volume sold. We also have capital lease commitments for certain retail sites as described in Note 5. In most cases, we expect that in the normal course of business, our leases will be renewed or replaced by other leases.

As of December 31, 2011, our future minimum lease payments for (i) operating leases having initial or remaining noncancelable lease terms in excess of one year and (ii) capital leases were as follows (in millions):

	Operating Leases		Capital Leases
2012	$	22	$	2
2013	19		2
2014	14		1
2015	10		1
2016	7		1
Thereafter	24		4
Total minimum rental payments	$	96	11
Less amount representing interest			(1		)
Net minimum rental payments			$	10

Rental expense was as follows (in millions):

	Year Ended December 31,
	2011		2010		2009
Minimum rental expense	$	25	$	25	$	25
Contingent rental expense	23		23		21
Total rental expense	$	48	$	48	$	46

Litigation Matters

We are party to claims and legal proceedings arising in the ordinary course of business. We have not recorded a loss contingency liability with respect to some of these matters because we have determined that it is remote that a loss has been incurred. For other matters, we have recorded a loss contingency liability where we have determined that it is probable that a loss has been incurred and that the loss is reasonably estimable. These loss contingency liabilities are not material to our financial position. We re-evaluate and update our loss contingency liabilities as matters progress over time, and we believe that any changes to the recorded liabilities will not be material to our financial position or results of operations. Included below is discussion of the nature of the significant litigation matters involving Corner Store.

F-17

CORNER STORE HOLDINGS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)

MTBE Litigation

As of October 2012, we are named in four cases alleging liability related to methyl-tertiary butyl ether (“MTBE”) contamination in groundwater.  The plaintiffs are generally water providers, governmental authorities and private water companies alleging that refiners, marketers or retailers of MTBE and gasoline containing MTBE are liable for manufacturing or distributing a defective product. Three of the cases are pending in federal court and are consolidated for pre-trial proceedings in the U.S. District Court for the Southern District of New York (Multi-District Litigation Docket No. 1358, In re: Methyl-Tertiary Butyl Ether Products Liability Litigation). One case is pending in state court.

We have recorded a loss contingency liability with respect to our MTBE litigation portfolio. However, due to the inherent uncertainty of litigation, we believe that it is reasonably possible that we may suffer a loss with respect to one or more of the lawsuits in excess of the amount accrued. We believe that such an outcome in any one of these lawsuits would not have a material adverse effect on our results of operations or financial position. An estimate of the possible loss or range of loss from an adverse result in all or substantially all of these cases cannot reasonably be made. Valero will fully indemnify us for these matters in connection with the separation and the distribution, which is discussed in Note 1. 

Temperature Adjusted Fuel Complaints

On December 13, 2006, a class action complaint was filed against Valero, Shell Oil Products Company LLC, ConocoPhillips, Chevron USA, Inc., Tesoro Refining and Marketing Company, Wal-Mart Stores, Inc., Costco Wholesale Corporation, The Kroger Company and a few other retailers in San Francisco federal court. The complaint accused the defendants of violating state consumer protection laws by failing to adjust the volume or price of fuel when the fuel temperature exceeded 60 degrees Fahrenheit. Following this filing, numerous other federal complaints were filed and consolidated in the U.S. District Court for the District of Kansas (Multi-District Litigation Docket No. 1840, In re: Motor Fuel Temperature Sales Practices Litigation). In mid-April 2012, Valero and certain of the other defendants reached a preliminary class settlement with the plaintiffs. On September 28, 2012, the court initially denied approval of this settlement concluding that the settling parties had failed to show how the settlement sufficiently benefited the class members. The settling parties, including Valero, agreed with the court and supplemented the record to demonstrate how the settlement will benefit the class, and we expect that the settlement will ultimately be approved.

Because a portion of Valero’s alleged liability in the class action allegedly arises out of our retail operations, we have agreed to indemnify Valero for 50 percent of the monetary portion of the settlement (or otherwise 50 percent of any monetary payment that Valero ultimately may be obligated to pay in final resolution of the class action). We have also agreed to certain actions required under the proposed settlement agreement on a prospective basis, including the posting of fuel temperatures at our U.S. retail sites. The proposed settlement agreement includes a full release from liability for Valero and its affiliates, including us.

We have recorded a loss contingency liability with respect to this matter. However, if the settlement is not approved, we may suffer a loss with respect to one or more of the lawsuits in excess of the amount accrued due to the inherent uncertainty of litigation. We believe that such an outcome in any one of these lawsuits could have a material adverse effect on our results of operations or financial position. An estimate of the possible loss or range of loss from an adverse result in all or substantially all of these cases cannot reasonably be made.

Canadian Price Fixing Claims

Ultramar Ltd., Valero’s principal Canadian subsidiary (“Ultramar”), was named as a defendant in four class actions alleging that Ultramar and other competitors engaged in illegal price fixing in four distinct markets in the province of Québec.  The cases were filed in June 2008 following a guilty plea by Ultramar and an employee and charges laid against several alleged co-conspirators. As a result, four class actions were filed on the same day in the matters of (i) SimonJacques vs Ultramar et al in the Superior Court of Québec, District of Québec City, (ii) Daniel Thouin/ Marcel Lafontaine vs Ultramar et al, Superior Court of Québec, District of Montreal, (iii) Michael Jeanson et al vs Ultramar et al, Superior Court of Québec, District of Hull and (iv) Thibeau vs Ultramar et al, Superior Court of Québec, District

F-18

CORNER STORE HOLDINGS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)

of Montreal. As required pursuant to the civil procedure rules in effect, the first filed claim is given priority, and the others are suspended pending final judgment on the first filed claim. The guilty plea followed an extensive government investigation and was confined to a limited time period and limited geographic area around Thetford Mines and Victoriaville in Québec.  The plaintiffs attempted to widen the scope, alleging the existence of a conspiracy extending between 2002 and 2008 throughout Québec.  The court allowed a time range of 2002 to 2006 but did not expand the geographic area beyond the four limited markets identified by the investigation.  A hearing on class suitability took place in September 2009, and in November 2009, the court authorized the action to proceed on a class basis for the limited geographic area discussed above.  A statement of claim was filed but the proceedings were suspended until May 5, 2011.  The suspension was a result, in part, of damage proof issues for plaintiffs that developed pre-discovery.  The court required the plaintiffs to file a report on damages on May 5, 2011. Ultramar intends to vigorously contest the scope of alleged liability and damages. 

On June 10, 2011, Ultramar was served with a “new” amended motion to institute a class action in the matter of Daniel Thouin/Marcel Lafontaine v. Ultramar Ltd., et al., Superior Court of Québec, District of Québec. This matter had previously been put in abeyance to allow the first filed claim discussed above to proceed. The plaintiff changed the venue and the geographical scope of its recourse alleging that defendants colluded in other regions of Québec. By issuing this motion, the attorney for the plaintiff (the same as for the other price fixing matter) is trying to extend its claim outside the limited territory authorized by the court in the Jacques matter.  On September 6, 2012, the Superior Court of Québec granted the plaintiff’s motion to extend the scope of the territory to be covered by the action.

Ultramar’s alleged liability in these claims arises entirely out of our retail operations in Canada. As a result, we expect that we will agree to indemnify and hold harmless Ultramar fully from any liability associated with these claims pursuant to the separation and distribution agreement. We do not believe that this case has merit, and we intend to vigorously contest the matter.

We have not recorded a loss contingency liability with respect to this matter, but due to the inherent uncertainty of litigation, we believe that it is reasonably possible that we may suffer a loss with respect to one or more of the lawsuits. An estimate of the possible loss or range of loss from an adverse result in all or substantially all of these cases cannot be reasonably made.

Environmental Matters

We are subject to extensive federal, state, provincial and local environmental laws and regulations, including those relating to USTs, the release or discharge of materials into the air, water and soil, waste management, pollution prevention measures, the generation, storage, handling, use, transportation and disposal of hazardous materials, the exposure of persons to hazardous materials, greenhouse gas emissions and characteristics, composition, storage and sale of motor fuel, and the health and safety of our employees.

We are required to make financial expenditures to comply with regulations governing USTs adopted by federal, state, provincial and local regulatory agencies. Pursuant to the Resource Conservation and Recovery Act of 1976, as amended, the U.S. Environmental Protection Agency has established a comprehensive regulatory program for the detection, prevention, investigation and cleanup of leaking USTs. State or local agencies are often delegated the responsibility for implementing the federal program or developing and implementing equivalent state or local regulations. We have a comprehensive program in place for performing routine tank testing and other compliance activities which are intended to promptly detect and investigate any potential releases. In addition, the U.S. Federal Clean Air Act and similar state laws impose requirements on emissions to the air from motor fueling activities in certain areas of the country, including those that do not meet state or national ambient air quality standards. These laws may require the installation of vapor recovery systems to control emissions of volatile organic compounds to the air during the motor fueling process. We believe we are in compliance in all material respects with applicable environmental requirements, including those applicable to our underground storage tanks.

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CORNER STORE HOLDINGS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)

We are in the process of investigating and remediating contamination at a number of our sites as a result of recent or historic releases of motor fuel. In 2012, we expect to spend about $1 million on remediation projects and do not expect to exceed this amount in 2013 or 2014. In addition, we make routine applications to state trust funds for the sharing, recovering and reimbursement of certain cleanup costs and liabilities as a result of releases of motor fuel from storage systems.

Because environmental laws and regulations are becoming more complex and stringent and new environmental laws and regulations are continuously being enacted or proposed, the level of future expenditures required for environmental matters could increase. In addition, any major upgrades in any of our operating facilities could require material additional expenditures to comply with environmental laws and regulations.

Environmental exposures are difficult to assess and estimate for numerous reasons including the complexity and differing interpretations of governmental regulations, the lack of reliable data, the number of potentially responsible parties and their financial capabilities, the multiplicity of possible solutions and the duration of remedial and monitoring activity required. Accruals for environmental liabilities are recorded based on our best estimate using all information that is available at the time. Loss estimates are measured and liabilities are based on currently available facts, existing technology and presently enacted laws and regulations, taking into consideration the likely effects of inflation and other societal and economic factors. Also considered when measuring environmental liabilities are our prior experience in remediation of contaminated sites, other companies’ cleanup experience and data released by the relevant authority.

Legislative and regulatory initiatives regarding climate change and greenhouse gas emissions have accelerated recently in the U.S. and Canada. Greenhouse gases are certain gases, including carbon dioxide, that may be contributing to global warming and other climatic changes. If governmental climate change or greenhouse gas reduction initiatives are enacted, they could have a material adverse impact on our business, financial condition and results of operations by increasing our regulatory compliance expenses, increasing our motor fuel costs and/or decreasing customer demand for motor fuel sold at our locations. For example, the California Global Warming Solutions Act, also known as AB 32, directs the California Air Resources Board (“CARB”) to develop and issue regulations to reduce greenhouse gas emissions in California to 1990 levels by 2020. CARB has issued a variety of regulations aimed at reaching this goal, including a Low Carbon Fuel Standard, a statewide cap-and-trade program and electricity renewable standards. CARB is also intending to require the establishment of Clean Fuels Outlets for alternative fuel vehicles. In addition, the Canadian province of Québec enacted a regulation creating a cap-and-trade system that will apply to us starting on January 1, 2015. To the degree these programs or greenhouse gas regulations increase cost that we are unable to recover or otherwise adversely impact consumer demand, these matters could have a material adverse effect on our financial position, results of operations and liquidity.

Self-Insurance

We are partially self-insured for our general liability insurance. We maintain insurance coverage at levels that are customary and consistent with industry standards for companies of similar size. We are a nonsubscriber under the Texas Workers’ Compensation Act and maintain an employee injury plan in compliance with the Employee Retirement Income Security Act of 1974 in the U.S., which is self insured. For our U.S. operations outside of Texas, we maintain statutory workers’ compensation insurance, which is partially self insured. In Canada, we are a subscriber under the public system workers’ compensation of the provinces where we operate. As of December 31, 2011, there are a number of outstanding claims that are of a routine nature. The estimated incurred but unpaid liabilities relating to these claims are included in other accrued expenses. Additionally, there are open claims under previous policies that have not been resolved as of December 31, 2011. While the ultimate outcome of these claims cannot presently be determined, management believes that the accrued liability of $18 million will be sufficient to cover the related liability and that the ultimate disposition of these claims will have no material effect on our financial position and results of operations. Valero will fully indemnify us for these and similar matters that may be incurred up to the date of the separation and the distribution, which is discussed in Note 1.

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CORNER STORE HOLDINGS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)

We are insured under Valero’s insurance policies for occurrences prior to the completion of the distribution. The specifications and insured limits under those policies, however, are at a level consistent with Valero as a whole. As a result, we are effectively self-insured and are exposed to most losses relating to occurrences prior to the completion of the distribution. Upon completion of the distribution, we expect to obtain comprehensive insurance coverage, but we may incur losses that are not covered by insurance or reserves, in whole or in part, and such losses could adversely affect our results of operations and financial position.

Tax Matters

We are subject to extensive tax liabilities imposed by multiple jurisdictions, including income taxes, indirect taxes (excise/duty, sales/use and gross receipts taxes), payroll taxes, franchise taxes, withholding taxes and ad valorem taxes. New tax laws and regulations and changes in existing tax laws and regulations are continuously being enacted or proposed that could result in increased expenditures for tax liabilities in the future. Many of these liabilities are subject to periodic audits by the respective taxing authority. Subsequent changes to our tax liabilities as a result of these audits may subject us to interest and penalties.

Health Care Reform

In March 2010, a comprehensive health care reform package composed of the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 (“Health Care Reform”) was enacted into law in the U.S. Provisions of the Health Care Reform are expected to affect the future costs of the U.S. health care plans. Valero sponsors U.S. health care plans that are grandfathered under Health Care Reform and have made only those changes required by Health Care Reform to the plans. We expect to receive more guidance on the Health Care Reform provisions, which are required in 2014 and will then be able to better evaluate the potential impact of the Health Care Reform on our financial position and results of operations; however, we currently estimate that our health care costs will increase by approximately $5 million per year beginning in 2014.

9. STOCK-BASED COMPENSATION

Corner Store currently does not have any stock compensation plans. Instead, our eligible employees participate in Valero’s 2011 Omnibus Stock Incentive Plan (the “OSIP”), which authorizes the grant of stock and stock-based awards. Awards available under the OSIP include options to purchase shares of common stock of Valero and restricted stock that vests over a period determined by Valero’s compensation committee. Prior to the approval of the OSIP by Valero’s stockholders, most of the equity awards granted to our employees were made under Valero’s 2005 Omnibus Stock Incentive Plan and 2003 Employee Stock Incentive Plan.

Until the completion of the separation and the distribution described in Note 1, our employees will continue to participate in Valero’s stock-based compensation plans. No stock-based awards of Corner Store will be issued in exchange for either vested or non-vested Valero stock-based awards held by our employees prior to the separation. Valero charges us for the estimated fair value of stock-based awards related to our employees as that expense is recognized by Valero.

Total stock-based compensation expense charged to us was as follows (in millions):

	Year Ended December 31,
	2011		2010		2009
Stock-based compensation expense	$	3	$	2	$	2

As of December 31, 2011, Valero had $2 million of unrecognized stock-based compensation cost that it will charge to us over a period of approximately two years. However, Valero expects to accelerate the vesting of all stock-based awards held by our employees at the time of the separation and the distribution from Valero. As a result, we expect to be charged for all of the remaining unrecognized stock-based compensation at that time.

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CORNER STORE HOLDINGS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)

Summary of Valero Stock-Based Plans

Stock Options

Under the terms of the various stock-based compensation plans, the exercise price of options granted is not less than the fair market value of Valero’s common stock on the date of grant. Stock options become exercisable pursuant to the individual written agreements between the participants and Valero, usually in three or five equal annual installments beginning one year after the date of grant, with unexercised options generally expiring seven or ten years from the date of grant.

Stock options are valued at the date of grant using the Black-Scholes option pricing model, and compensation cost is recognized on a straight-line basis, net of estimated forfeitures, over the requisite service period.

Restricted Stock

Restricted stock granted to employees vests in accordance with individual written agreements between the participants and Valero, usually in equal annual installments over a period of three to five years beginning one year after the date of grant. Restricted stock is generally valued at market value on the date of grant, and compensation cost, net of estimated forfeitures, is generally recognized over the vesting period on a straight-line basis.

10. EMPLOYEE BENEFIT PLANS    

Overview

Our employees are currently employees of Valero, and they will remain employees of Valero until the separation and the distribution from Valero described in Note 1. As a result, our employees currently participate in certain defined benefit and defined contribution plans sponsored by Valero. Valero charges us for all benefit costs associated with our employees and carries the obligations for employee benefit plans in its financial statements. Our share of those costs is charged to us through affiliate billings and reflected in operating expenses and general and administrative expenses.

Because we were not the plan sponsor of these plans, our combined balance sheets do not reflect any assets or liabilities related to these plans. 

Following the separation and the distribution, our active employees will no longer participate in benefit plans sponsored or maintained by Valero and will commence participation in our benefit plans. No assets and/or liabilities under Valero’s plans will be transferred to us following the separation and the distribution.

The information below is limited to amounts associated with our employees.

Valero’s Defined Benefit Plans

Valero is the sponsor of the defined benefit pension plans that cover certain of our employees. These plans provide eligible employees with retirement income based on years of service and compensation during specific periods. Valero funds the pension plans as required by local regulations. The assets of the plans are held by major financial institutions and are well diversified and include investments in domestic and international equities, mutual funds, corporate debt instruments, government securities, common collective trusts, insurance contracts and cash and cash equivalents.

Valero also provides health care and life insurance benefits for certain retired employees through its postretirement benefit plans. Certain of our employees become eligible if, while still working for us, they reach normal retirement age or take early retirement. These plans are unfunded, and retired employees share the cost of the health care benefits.

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CORNER STORE HOLDINGS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)

For our allocation of benefit costs, we recorded expense as follows (in millions):

	Year Ended December 31,
	2011		2010		2009
U.S. pension cost	$	1	$	1	$	1
Canadian pension cost	2		2		2
U.S. postretirement benefit cost	—		—		1

Valero’s Defined Contribution Plans

Valero Savings Plan

Valero is the sponsor of the Valero Savings Plan, which covers certain of our U.S. employees. Under this plan, participants can contribute from 1 percent to 30 percent of their eligible compensation. We contribute $0.60 for every $1.00 of the participant’s contribution up to 6 percent of eligible compensation. At our discretion, we may also make profit-sharing contributions, which can range from 3.5 percent to 5 percent of eligible compensation, to the plan to be allocated to the participants.

Valero Energy Corporation Thrift Plan

Valero is the sponsor of the Valero Energy Corporation Thrift Plan, which covers our U.S. employees who are not covered by the Valero Savings Plan. Employees are immediately eligible to participate in the plan and receive employer matching contributions.

Through December 31, 2009, participants could make basic contributions up to 8 percent of their total annual salary, which includes overtime and cash bonuses. In addition, participants who made a basic contribution of 8 percent could also make a supplemental contribution of up to 22 percent of their total eligible annual salary. We matched 75 percent of each participant’s total basic contributions up to 8 percent based on the participant’s total annual salary, excluding cash bonuses. Commencing on January 1, 2010, we match 100 percent of basic contributions up to 6 percent of each participant’s total annual salary, excluding cash bonuses.

Ultramar Ltd. Savings Plan

Valero is the sponsor of the Ultramar Ltd. Savings Plan, which covers all of our Canadian employees. Permanent employees are eligible after three months of service, temporary employees are eligible after one year of service, and seasonal employees are eligible after 220 days of services during 36 consecutive months. We contribute 9 percent of the employee’s base salary plus 50 percent of the employee’s voluntary contribution, which is limited to 6 percent of base salary. Our contribution does not exceed 12 percent of the base salary.

For our allocation of benefit costs, we recorded expense as follows (in millions):

	Year Ended December 31,
	2011		2010		2009
Valero Savings Plan	$	5	$	6	$	6
Valero Energy Corporation Thrift Plan	1		1		1
Ultramar Ltd. Savings Plan	3		3		3

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CORNER STORE HOLDINGS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)

11. INCOME TAXES

Income before income tax expense from our U.S. and Canadian operations was as follows (in millions):

	Year Ended December 31,
	2011		2010		2009
U.S. operations	$	160	$	157	$	123
Canadian operations	157		133		99
Income before income tax expense	$	317	$	290	$	222

The following is a reconciliation of income tax expense to income taxes computed by applying the U.S. statutory federal income tax rate (35 percent for all years presented) to income before income tax expense (in millions):

	Year Ended December 31,
	2011			2010			2009
Federal income tax expense    at the U.S. statutory rate	$	111		$	101		$	78
U.S. state income tax expense,    net of U.S. federal income tax effect	4			4			3
Canadian operations	(11		)	(7		)	(4		)
Permanent differences	—			—			(1		)
Credits	(1		)	(1		)	—
Income tax expense	$	103		$	97		$	76

Components of income tax expense related to net income were as follows (in millions):

	Year Ended December 31,
	2011			2010			2009
Current:
U.S. federal	$	40		$	44		$	33
U.S. state	5			4			4
Canada	46			43			36
Total current	91			91			73
Deferred:
U.S. federal	14			8			8
U.S. state	1			1			—
Canada	(3		)	(3		)	(5		)
Total deferred	12			6			3
Income tax expense	$	103		$	97		$	76

F-24

CORNER STORE HOLDINGS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)

The tax effects of significant temporary differences representing deferred income tax assets and liabilities were as follows (in millions):

	December 31,
	2011			2010
Deferred income tax assets:
Tax credit carryforwards	$	8		$	8
Net operating losses (“NOLs”)	1			1
Environmental liabilities	1			1
Inventories	10			10
Other assets	17			17
Total deferred income tax assets	37			37
Less: Valuation allowance	(1		)	(1		)
Net deferred income tax assets	36			36
Deferred income tax liabilities:
Property and equipment	(147		)	(135		)
Other	(1		)	—
Total deferred income tax liabilities	(148		)	(135		)
Net deferred income tax liabilities	$	(112	)	$	(99	)

We had the following income tax credit and loss carryforwards as of December 31, 2011 (in millions):

	Amount		Expiration
U.S. state income tax credits	$	12	2026
U.S. state NOL (gross amount)	16		2018

We have recorded a valuation allowance as of December 31, 2011 due to uncertainties related to our ability to utilize our deferred income tax assets, primarily consisting of our state NOLs. The valuation allowance is based on our estimates of future taxable income in the various jurisdictions in which we operate and the period over which deferred income tax assets will be recoverable. The realization of net deferred income tax assets recorded as of December 31, 2011 is primarily dependent upon our ability to generate future taxable income in certain U.S. states.

Subsequently recognized tax benefits in the amount of $1 million related to the valuation allowance for deferred income tax assets as of December 31, 2011 will be allocated as an income tax benefit.

Deferred income taxes have not been provided on the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and the respective tax bases of our Canadian subsidiaries based on the determination that such differences are essentially permanent in duration in that the earnings of these subsidiaries are expected to be indefinitely reinvested in the Canadian operations. If these earnings were not considered indefinitely reinvested, deferred income taxes would have been recorded after consideration of U.S. foreign tax credits. The decision by us to forgo these elections could significantly increase our income tax expense. It is not practicable to estimate the amount of additional tax that might be payable on those earnings, if distributed.

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CORNER STORE HOLDINGS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)

For the years ended December 31, 2011 and 2010, we did not have any unrecognized tax benefits.

As consolidated subsidiaries of Valero, our financial results are included in the U.S. and Canada consolidated tax returns of Valero. As such, with the exception of certain states, we do not make cash tax payments directly to taxing jurisdictions; rather, our share of Valero’s tax payments are reflected as changes in “Net parent investment.” Direct cash payments for certain state income taxes were less than $1 million in each of the years ended December 31, 2011, 2010 and 2009.

12. RELATED-PARTY TRANSACTIONS

Related-party transactions include the purchase of motor fuel from Valero, fees charged by Valero for processing credit card transactions on our behalf, the allocation of medical and life insurance costs, stock-based compensation allocations, employee benefit plan allocations and certain corporate functions performed by Valero. Motor fuel purchased by us from Valero is recorded as a component of cost of sales based on transfer price formulas that vary from terminal to terminal. The actual prices we pay typically change daily, based on market fluctuations. Valero charged us a percentage of credit card sales or, for certain transactions, a percentage as well as a fixed amount per credit card transaction, which we recorded as a component of cost of sales. Medical insurance, life insurance, stock-based compensation and employee benefit plan expenses are allocated to us based on Valero’s determination of actual costs attributable to our employees and are recorded as components of operating expenses and general and administrative expenses. As discussed in Note 1, certain corporate functions performed by Valero on our behalf are charged to us based primarily on specific identification of time and/or activities associated with Corner Store, employee headcount or capital expenditures. We recorded these corporate allocations as a component of general and administrative expenses and believe that the amount allocated to us is a reasonable approximation of the costs related to Corner Store. However, such related-party transactions cannot be presumed to be carried out on an arm’s-length basis as the requisite conditions of competitive, free-market dealings may not exist. For purposes of these financial statements, payables and receivables related to transactions between us and Valero are included as a component of the net parent investment.

The following table reflects significant transactions with related parties (in millions):

	Year Ended December 31,
	2011		2010		2009
Cost of sales	$	10,533	$	8,170	$	6,745
Operating expenses (a)	36		35		28
General and administrative expenses (a)	36		33		30

_______________

(a) Includes stock-based compensation and employee benefit plan expense allocations that are more fully described in Notes 9 and 10, respectively.

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CORNER STORE HOLDINGS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)

Net Parent Investment

The following is a reconciliation of the amounts presented as “Net transfers to Parent” on our statements of changes in net investment and the amounts presented as “Net transfers to Parent” on our statements of cash flows.

	Year Ended December 31,
	2011			2010			2009
Net transfers to Parent per statements of changes in net investment	$	(151	)	$	(221	)	$	(206	)
Non-cash transactions:
Transfers of assets to Parent	1			1			1
Net transfers of cash to Parent per statements of cash flows	$	(150	)	$	(220	)	$	(205	)

13. SEGMENT INFORMATION

We have two reportable segments: Retail–U.S. and Retail–Canada. The Retail–U.S. segment includes convenience stores located in the U.S. The Retail–Canada segment includes convenience stores, filling stations, cardlocks and heating oil operations. Our heating oil operations are not significant and have been included within the Retail–Canada segment information. General and administrative expenses that are not included in either of the two reportable segments are included in the corporate category.

The reportable segments are strategic business units that experience different operating income margins due to geographic supply and demand and country and local regulatory environments. They are managed separately as each business requires unique marketing strategies that address country-specific operating requirements. Performance is evaluated based on operating income. There are no intersegment revenues.

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CORNER STORE HOLDINGS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)

The following table reflects activity related to segment operating income (in millions):

	Retail– U.S.		Retail– Canada		Corporate			Total
Year ended December 31, 2011:
Operating revenues from external customers	$	7,557	$	5,306	$	—		$	12,863
Depreciation, amortization and accretion expense	76		37		—			113
Operating income (loss)	202		174		(59		)	317
Total expenditures for long-lived assets	91		39		—			130
Year ended December 31, 2010:
Operating revenues from external customers	6,183		4,188		—			10,371
Depreciation, amortization and accretion expense	71		34		—			105
Operating income (loss)	197		149		(57		)	289
Total expenditures for long-lived assets	68		37		—			105
Year ended December 31, 2009:
Operating revenues from external customers	5,311		3,469		—			8,780
Depreciation, amortization and accretion expense	70		31		—			101
Operating income (loss)	160		114		(52		)	222
Total expenditures for long-lived assets	39		25		—			64

Operating revenues from external customers for our principal products were as follows (in millions):

	Year Ended December 31,
	2011		2010		2009
Motor fuel sales (gasoline and diesel)	$	10,758	$	8,443	$	6,975
Merchandise sales	1,484		1,445		1,372
Other	621		483		433
Total operating revenues	$	12,863	$	10,371	$	8,780

Operating revenues by geographic area are shown in the table below (in millions). The geographic area is based on location of customer, and no single customer accounted for more than 10 percent of our combined operating revenues.

	Year Ended December 31,
	2011		2010		2009
U.S.	$	7,557	$	6,183	$	5,311
Canada	5,306		4,188		3,469
Total operating revenues	$	12,863	$	10,371	$	8,780

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CORNER STORE HOLDINGS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)

Long-lived assets include property and equipment and intangible assets. Geographic information by country for long-lived assets consisted of the following (in millions):

	December 31,
	2011		2010
U.S.	$	836	$	822
Canada	364		370
Total long-lived assets	$	1,200	$	1,192

Total assets by reportable segment were as follows (in millions):

	December 31,
	2011		2010
Retail–U.S.	$	1,132	$	1,063
Retail–Canada	558		557
Corporate	1		1
Total assets	$	1,691	$	1,621

14. SUPPLEMENTAL CASH FLOW INFORMATION

In order to determine net cash provided by operating activities, net income is adjusted by, among other things, changes in current assets and current liabilities as follows (in millions):

	Year Ended December 31,
	2011			2010			2009
Decrease (increase) in current assets:
Receivables, net	$	(30	)	$	(11	)	$	9
Inventories	(5		)	(3		)	—
Prepaid expenses and other	(4		)	—			—
Increase (decrease) in current liabilities:
Accounts payable	(2		)	7			—
Accrued expenses	(4		)	(1		)	(9		)
Taxes other than income taxes	5			20			4
Changes in current assets and current liabilities	$	(40	)	$	12		$	4

The above changes in current assets and current liabilities differ from changes between amounts reflected in the applicable balance sheets for the respective periods for the following reasons:

• the amounts shown above exclude changes in cash, deferred income taxes and current portion of capital lease obligations;

• amounts accrued for capital expenditures are reflected in investing activities when such amounts are paid; and

• certain differences between balance sheet changes and the changes reflected above result from translating foreign currency denominated amounts at the applicable exchange rates as of each balance sheet date.

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CORNER STORE HOLDINGS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)

There were no significant noncash investing and financing activities for the years ended December 31, 2011, 2010 and 2009.

Cash flows related to interest and income taxes were as follows (in millions):

	Year Ended December 31,
	2011		2010		2009
Interest paid	$	1	$	1	$	1
Income taxes paid, net	91		91		73

As consolidated subsidiaries of Valero, our financial results are included in the U.S. and Canada consolidated tax returns of Valero. As such, with the exception of certain states, we do not make cash tax payments directly to taxing jurisdictions; rather, our share of Valero’s tax payments are reflected as changes in “Net parent investment.” Direct cash payments for certain state income taxes were less than $1 million in each of the years ended December 31, 2011, 2010 and 2009. As a result, the amounts reflected as “income taxes paid, net” represent the current portion of income tax expense for the respective year.

15. FAIR VALUE MEASUREMENTS

General

GAAP requires that certain financial instruments, such as derivative instruments, be recognized at their fair values in our balance sheets. However, other financial instruments, such as debt obligations, are not required to be recognized at their fair values, but GAAP provides an option to elect fair value accounting for these instruments. GAAP requires the disclosure of the fair values of all financial instruments, regardless of whether they are recognized at their fair values or carrying amounts in our balance sheets. For financial instruments recognized at fair value, GAAP requires the disclosure of their fair values by type of instrument, along with other information, including changes in the fair values of certain financial instruments recognized in income or other comprehensive income. We had no financial instruments, however, that were required to be recognized at their fair values in our balance sheets as of December 31, 2011, 2010 or 2009. For financial instruments not recognized at fair value, the disclosure of their fair values is provided below under “Other Financial Instruments.”

Nonfinancial assets, such as property and equipment, and nonfinancial liabilities are recognized at their carrying amounts in our balance sheets. GAAP does not permit nonfinancial assets and liabilities to be remeasured at their fair values. However, GAAP requires the remeasurement of such assets and liabilities to their fair values upon the occurrence of certain events, such as the impairment of property and equipment. In addition, if such an event occurs, GAAP requires the disclosure of the fair value of the asset or liability along with other information, including the gain or loss recognized in income in the period the remeasurement occurred. This information is provided below under “Nonrecurring Fair Value Measurements.”

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.

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CORNER STORE HOLDINGS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)

• Level 3 - Unobservable inputs for the asset or liability for which there is little, if any, market activity at the measurement date. 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.

The financial instruments and nonfinancial assets and liabilities included in our disclosure of fair value measurements are categorized according to the fair value hierarchy based on the inputs used to measure their fair values.

Nonrecurring Fair Value Measurements

As discussed in Note 2, we concluded that certain of our retail sites were impaired as of December 31, 2011, 2010 and 2009. To estimate fair value of the convenience stores, we used an income approach reflecting internally developed discounted cash flows that included, among other things, our expectations of future cash flows based on sales volume, gross margins and operating expenses.

The table below presents the fair value (in millions) of our nonfinancial assets measured on a nonrecurring basis during the years ended December 31, 2011, 2010 and 2009, and categorized according to the fair value hierarchy of the inputs utilized by us to determine the fair values as of December 31, 2011, 2010 and 2009.

	Fair Value Measurements Using
	Quoted  Prices in  Active  Markets  (Level 1)		Significant  Other  Observable  Inputs  (Level 2)		Significant Unobservable  Inputs (Level 3)		Total  Fair Value as of  December 31		Total Loss  Recognized  During the  Year Ended  December 31
2011:
Property and equipment	$	—	$	—	$	1	$	1	$	3
2010:
Property and equipment	—		—		2		2		5
2009:
Property and equipment	—		—		5		5		13

There were no liabilities that were measured at fair value on a nonrecurring basis during the years ended December 31, 2011, 2010 and 2009.

Other Financial Instruments

Cash is a financial instrument that we recognize in our balance sheets at its carrying amount. The fair value of this financial instrument approximates its carrying amount due to the low level of credit risk (Level 1).

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CORNER STORE HOLDINGS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)

16. QUARTERLY FINANCIAL DATA (Unaudited)

The following table summarizes quarterly financial data for the years ended December 31, 2011 and 2010 (in millions).

	2011 Quarter Ended
	March 31		June 30		September 30		December 31
Operating revenues	$	2,962	$	3,430	$	3,353	$	3,118
Operating income	43		120		84		70
Net income	31		80		55		48
	2010 Quarter Ended
	March 31		June 30		September 30		December 31
Operating revenues	$	2,439	$	2,613	$	2,613	$	2,706
Operating income	56		91		89		53
Net income	38		59		54		42

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CORNER STORE HOLDINGS, INC.

COMBINED BALANCE SHEETS

(Millions of Dollars)

	September 30, 2012			December 31, 2011
	(Unaudited)
ASSETS
Current assets:
Cash	$	65		$	132
Receivables, net	198			172
Inventories	155			159
Deferred income taxes	16			12
Prepaid expenses and other	7			10
Total current assets	441			485
Property and equipment, at cost	1,810			1,678
Accumulated depreciation	(575		)	(525		)
Property and equipment, net	1,235			1,153
Intangible assets, net	43			47
Other assets, net	8			6
Total assets	$	1,727		$	1,691
LIABILITIES AND NET INVESTMENT
Current liabilities:
Current portion of capital lease obligations	$	1		$	1
Accounts payable	86			84
Accrued expenses	39			41
Taxes other than income taxes	101			86
Total current liabilities	227			212
Capital lease obligations, less current portion	4			5
Deferred income taxes	133			124
Other long-term liabilities	107			101
Commitments and contingencies
Net investment:
Accumulated other comprehensive income	169			155
Net parent investment	1,087			1,094
Total net investment	1,256			1,249
Total liabilities and net investment	$	1,727		$	1,691

See Condensed Notes to Combined Financial Statements.

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CORNER STORE HOLDINGS, INC.

COMBINED STATEMENTS OF INCOME

(Unaudited)

(Millions of Dollars)

	Nine Months Ended September 30,
	2012		2011
Operating revenues (a)	$	9,939	$	9,745
Costs and expenses:
Cost of sales	9,110		8,893
Operating expenses	484		479
General and administrative expenses	44		44
Depreciation, amortization and accretion expense	83		82
Total costs and expenses	9,721		9,498
Operating income	218		247
Other income, net	1		1
Interest expense	—		(1		)
Income before income tax expense	219		247
Income tax expense	73		81
Net income	$	146	$	166

Supplemental information:
(a) Includes excise taxes	$	1,496	$	1,472

See Condensed Notes to Combined Financial Statements.

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CORNER STORE HOLDINGS, INC.

COMBINED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(Millions of Dollars)

	Nine Months Ended September 30,
	2012		2011
Net income	$	146	$	166
Other comprehensive income (loss):
Foreign currency translation adjustment,    net of income tax expense of $- and $-	14		(17		)
Comprehensive income	$	160	$	149

See Condensed Notes to Combined Financial Statements.

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CORNER STORE HOLDINGS, INC.

COMBINED STATEMENTS OF CASH FLOWS

(Unaudited)

(Millions of Dollars)

	Nine Months Ended September 30,
	2012			2011
Cash flows from operating activities:
Net income	$	146		$	166
Adjustments to reconcile net income to net cash provided    by operating activities:
Depreciation, amortization and accretion expense	83			82
Non-cash interest expense	—			1
Deferred income tax expense (benefit)	5			(3		)
Changes in current assets and current liabilities	(1		)	(40		)
Other operating activities, net	3			5
Net cash provided by operating activities	236			211
Cash flows from investing activities:
Capital expenditures	(90		)	(78		)
Acquisition	(61		)	—
Proceeds from dispositions of property and equipment	2			4
Other investing activities, net	(2		)	—
Net cash used in investing activities	(151		)	(74		)
Cash flows from financing activities:
Net transfers to Parent	(152		)	(129		)
Payments of capital lease obligations	(1		)	(1		)
Net cash used in financing activities	(153		)	(130		)
Effect of foreign exchange rate changes on cash	1			—
Net increase (decrease) in cash	(67		)	7
Cash at beginning of period	132			102
Cash at end of period	$	65		$	109

See Condensed Notes to Combined Financial Statements.

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CORNER STORE HOLDINGS, INC.

CONDENSED NOTES TO COMBINED FINANCIAL STATEMENTS

1. THE SEPARATION AND THE DISTRIBUTION, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Separation and the Distribution

On July 31, 2012, Valero Energy Corporation (“Valero” or “Parent”) announced approval by its Board of Directors to pursue the separation of its retail business into a stand-alone, publicly traded corporation, Corner Store Holdings, Inc. (“Corner Store”). This separation is expected to be completed in accordance with a separation and distribution agreement to be entered into between Valero and Corner Store. Valero intends to distribute, on a pro rata basis, 80 percent of the shares of Corner Store common stock to the Valero stockholders as of the record date for the distribution. Corner Store was incorporated in Delaware as a wholly owned subsidiary of Valero in November 2012. The separation and the distribution are subject to various conditions, including market conditions, customary regulatory approvals, the receipt of an affirmative Internal Revenue Service ruling with respect to the tax-free nature of the separation and certain related transactions, and final approval by Valero’s Board of Directors.

Basis of Presentation

These combined financial statements were prepared in connection with the expected separation and distribution and are derived from the consolidated financial statements and accounting records of Valero. These statements reflect the combined historical results of operations, financial position and cash flows of Valero’s retail business in the United States (“U.S.”) and Canada that are owned by direct and indirect wholly owned subsidiaries of Valero, including an allocable portion of Valero’s corporate costs. The legal transfer of the assets (including the equity interests of certain Valero subsidiaries), liabilities and operations of Valero’s retail business into Corner Store has yet to take place. However, for ease of reference, these combined financial statements are referred to as those of Corner Store. Unless otherwise stated or the context otherwise indicates, all references in these combined financial statements to “us,” “our,” or “we” mean the retail business of Valero, which is referred to as Corner Store.

The financial statements are presented as if Valero’s U.S. and Canadian retail operations had been combined for all years presented. Neither operation, however, carried out transactions with the other during the years presented; therefore, there were no intercompany transactions or accounts to be eliminated in connection with the combination of these operations. The assets and liabilities in the combined balance sheets have been reflected on a historical cost basis, as immediately prior to the separation and the distribution, and all of the assets and liabilities presented are wholly owned by Valero and are being transferred within the Valero consolidated group. The combined statements of income also include expense allocations for certain corporate functions historically performed by Valero and not allocated to its operating segments, including allocations of general corporate expenses related to executive oversight, accounting, treasury, tax, legal, procurement and information technology. These allocations are based primarily on specific identification of time and/or activities associated with Corner Store, employee headcount or capital expenditures. Our management believes the assumptions underlying the combined financial statements, including the assumptions regarding allocating general corporate expenses from Valero, are reasonable. Nevertheless, the combined financial statements may not include all of the actual expenses that would have been incurred had we been a stand-alone company during the years presented and may not reflect our combined results of operations, financial position and cash flows had we been a stand-alone company during the periods presented. Actual costs that would have been incurred if we had been a stand-alone company would depend on multiple factors, including organizational structure and strategic decisions made in various areas, including information technology and infrastructure.

Valero uses a centralized approach to cash management and the financing of its operations. We transfer cash to Valero daily and Valero funds our operating and investing activities as needed. Accordingly, cash held by Valero at the corporate level was not allocated to us for any of the years presented. Cash presented on our combined balance sheets represents cash on hand at our convenience stores, cash that had not yet been transferred to Valero and cash held by us in automated teller machines (“ATMs”). We reflect transfers of cash to and from Valero’s cash management system as a component of net parent investment on our combined balance sheets, and these net transfers of cash are reflected as a financing

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CORNER STORE HOLDINGS, INC.

CONDENSED NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)

activity in our combined statements of cash flows. We also have not included any interest income on the net cash transfers to Valero.

We have evaluated events that occurred after September 30, 2012 through the filing of this Form 10 Registration Statement. Any material subsequent events that occurred during this time have been properly recognized or disclosed in these financial statements.

Interim Financial Information

The interim period financial information presented in these combined financial statements is unaudited and includes all known accruals and adjustments, in the opinion of management, necessary for a fair presentation of the combined financial position of Corner Store and its results of operations and cash flows for the periods presented. All such adjustments are of a normal and recurring nature. To enhance your understanding of these interim financial statements, see the audited combined financial statements and notes included elsewhere in this Information Statement.

New Accounting Pronouncements

In December 2011, the provisions of ASC Topic 210, “Balance Sheet,” were amended to require an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of these arrangements on its financial position. The guidance requires entities to disclose both gross information and net information about both instruments and transactions eligible for offset in the balance sheet and instruments and transactions subject to an agreement similar to a master netting arrangement. These provisions are effective for interim and annual reporting periods beginning on January 1, 2013. The adoption of this guidance effective January 1, 2013 will not affect our financial position or results of operations but may result in additional disclosures.

2. ACQUISITION

In June 2012, we signed an agreement with The Crackerbox, LLC to buy 29 convenience stores located in the Little Rock and Hot Springs, Arkansas areas. In July 2012, we completed the acquisition of these sites, including motor fuel inventories, for total cash consideration of $61 million.

The assets acquired were recognized at their acquisition-date fair values as determined by an independent appraisal and other evaluations as follows (in millions):

Inventories	$	3
Property and equipment	56
Other assets	2
Total consideration	$	61

Neither goodwill nor a gain from a bargain purchase was recognized in conjunction with the acquisition, and no contingent assets or liabilities were acquired or assumed. Because this acquisition was not material to our results of operations, we have not presented pro forma results of operations for the nine months ended September 30, 2012, or actual results of operations from the acquisition date through September 30, 2012. The statements of income for the nine months ended September 30, 2012 include the results of the acquisition as of the acquisition date.

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CORNER STORE HOLDINGS, INC.

CONDENSED NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)

3. INVENTORIES

Inventories consisted of the following (in millions):

	September 30, 2012		December 31, 2011
Convenience store merchandise	$	102	$	104
Motor fuel	51		54
Supplies	2		1
Inventories	$	155	$	159

As of September 30, 2012 and December 31, 2011, the replacement cost (market value) of LIFO inventories exceeded their LIFO carrying amounts by approximately $70 million and $56 million, respectively.

4. COMMITMENTS AND CONTINGENCIES

Tax Matters

We are subject to extensive tax liabilities imposed by multiple jurisdictions, including income taxes, indirect taxes (excise/duty, sales/use and gross receipts taxes), payroll taxes, franchise taxes, withholding taxes and ad valorem taxes. New tax laws and regulations and changes in existing tax laws and regulations are continuously being enacted or proposed that could result in increased expenditures for tax liabilities in the future. Many of these liabilities are subject to periodic audits by the respective taxing authority. Subsequent changes to our tax liabilities as a result of these audits may subject us to interest and penalties.

Litigation Matters

We are party to claims and legal proceedings arising in the ordinary course of business. We have not recorded a loss contingency liability with respect to some of these matters because we have determined that it is remote that a loss has been incurred.  For other matters, we have recorded a loss contingency liability where we have determined that it is probable that a loss has been incurred and that the loss is reasonably estimable.  These loss contingency liabilities are not material to our financial position. We re-evaluate and update our loss contingency liabilities as matters progress over time, and we believe that any changes to the recorded liabilities will not be material to our financial position or results of operations.

There have been no significant changes to the matters discussed in our combined financial statements for the year ended December 31, 2011, which are included elsewhere in this information statement.

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CORNER STORE HOLDINGS, INC.

CONDENSED NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)

5. NET INVESTMENT

The following is a reconciliation of the beginning and ending balances (in millions) of our net investment:

	Nine Months Ended September 30,
	2012			2011
Balance at beginning of period	$	1,249		$	1,193
Net income	146			166
Net transfers to Parent:
Net transfers to Parent per statements of cash flows	(152		)	(129		)
Non-cash adjustment for transfers of assets to Parent	(1		)	—
Other comprehensive income (loss)	14			(17		)
Balance at end of period	$	1,256		$	1,213

6. RELATED-PARTY TRANSACTIONS

Related-party transactions include the purchase of motor fuel from Valero, fees charged by Valero for processing credit card transactions on our behalf, the allocation of medical and life insurance costs, stock-based compensation allocations, employee benefit plan allocations and certain corporate functions performed by Valero. Motor fuel purchased by us from Valero is recorded as a component of cost of sales based on transfer price formulas that vary from terminal to terminal. The actual prices we pay typically change daily, based on market fluctuations. Valero charged us a percentage of credit card sales or, for certain transactions, a percentage as well as a fixed amount per credit card transaction, which we recorded as a component of cost of sales. Medical insurance, life insurance, stock-based compensation and employee benefit plan expenses are allocated to us based on Valero’s determination of actual costs attributable to our employees and are recorded as components of operating expenses and general and administrative expenses. As discussed in Note 1, certain corporate functions performed by Valero on our behalf are charged to us based primarily on specific identification of time and/or activities associated with Corner Store, employee headcount or capital expenditures. We recorded these corporate allocations as a component of general and administrative expenses and believe that the amount allocated to us is a reasonable approximation of the costs related to Corner Store. However, such related-party transactions cannot be presumed to be carried out on an arm’s length basis as the requisite conditions of competitive, free-market dealings may not exist. For purposes of these financial statements, payables and receivables related to transactions between us and Valero are included as a component of the net parent investment.

The following table reflects significant transactions with related parties (in millions):

	Nine Months Ended September 30,
	2012		2011
Cost of sales	$	8,207	$	7,975
Operating expenses	32		28
General and administrative expenses	26		26

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CORNER STORE HOLDINGS, INC.

CONDENSED NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)

7. SEGMENT INFORMATION

The following table reflects activity related to segment operating income (in millions):

	Retail– U.S.		Retail–Canada		Corporate			Total
Nine Months Ended September 30, 2012:
Operating revenues from external customers	$	5,994	$	3,945	$	—		$	9,939
Operating income (loss)	165		97		(44		)	218
Nine Months Ended September 30, 2011:
Operating revenues from external customers	5,733		4,012		—			9,745
Operating income (loss)	156		135		(44		)	247

Total assets by reportable segment were as follows (in millions):

	September 30, 2012		December 31, 2011
Retail–U.S.	$	1,159	$	1,132
Retail–Canada	567		558
Corporate	1		1
Total assets	$	1,727	$	1,691

8. SUPPLEMENTAL CASH FLOW INFORMATION

In order to determine net cash provided by operating activities, net income is adjusted by, among other things, changes in current assets and current liabilities as follows (in millions):

	Nine Months Ended September 30,
	2012			2011
Decrease (increase) in current assets:
Receivables, net	$	(21	)	$	(14	)
Inventories	9			6
Prepaid expenses and other	3			—
Increase (decrease) in current liabilities:
Accounts payable	1			(7		)
Accrued expenses	(5		)	(3		)
Taxes other than income taxes	12			(22		)
Changes in current assets and current liabilities	$	(1	)	$	(40	)

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CORNER STORE HOLDINGS, INC.

CONDENSED NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)

The above changes in current assets and current liabilities differ from changes between amounts reflected in the applicable balance sheets for the respective periods for the following reasons:

• the amounts shown above exclude changes in cash, deferred income taxes and current portion of capital lease obligations;

• amounts accrued for capital expenditures are reflected in investing activities when such amounts are paid; and

• certain differences between balance sheet changes and the changes reflected above result from translating foreign currency denominated amounts at the applicable exchange rates as of each balance sheet date.

There were no significant noncash investing and financing activities for the nine months ended September 30,2012 and 2011.

Cash flows related to interest and income taxes were as follows (in millions):

	Nine Months Ended September 30,
	2012		2011
Interest paid	$	—	$	1
Income taxes paid, net	68		83

As consolidated subsidiaries of Valero, our financial results are included in the U.S. and Canada consolidated tax returns of Valero. As such, with the exception of certain states, we do not make cash tax payments directly to taxing jurisdictions; rather, our share of Valero’s tax payments are reflected as changes in “Net parent investment.” Direct cash payments for certain state income taxes were less than $1 million in each of the years ended December 31, 2011, 2010 and 2009. As a result, the amounts reflected as “income taxes paid, net” represent the current portion of income tax expense for the respective year.

9. FAIR VALUE MEASUREMENTS

Recurring Fair Value Measurements

There were no financial instruments that were required to be recognized at their fair values in our balance sheets as of September 30, 2012 or December 31, 2011.

Nonrecurring Fair Value Measurements

There were no assets or liabilities that were measured at fair value on a nonrecurring basis during the nine months ended September 30,2012 and 2011.

Other Financial Instruments

Cash is a financial instrument that we recognize in our balance sheets at its carrying amount. The fair value of this financial instrument approximates its carrying amount due to the low level of credit risk (Level 1).

F-42