
11.	DEBT AND CAPITAL LEASE OBLIGATIONS

Debt, at stated values, and capital lease obligations consisted of the following (in millions):



	Final Maturity	December 31,
	Final Maturity	2011			2010
Bank credit facilities	Various	$	—		$	—
Industrial revenue bonds:
Tax-exempt Revenue Refunding Bonds:
Series 1997A, 5.45%	2027	18			21
Series 1997B, 5.4%	2018	—			30
Series 1997C, 5.4%	2018	—			30
Tax-exempt Waste Disposal Revenue Bonds:
Series 1997, 5.6%	2031	25			25
Series 1998, 5.6%	2032	25			25
Series 1999, 5.7%	2032	25			25
Series 2001, 6.65%	2032	19			19
4.5% notes	2015	400			400
4.75% notes	2013	300			300
4.75% notes	2014	200			200
6.125% notes	2017	750			750
6.125% notes	2020	850			850
6.625% notes	2037	1,500			1,500
6.875% notes	2012	750			750
7.5% notes	2032	750			750
8.75% notes	2030	200			200
Debentures:
7.65%	2026	100			100
8.75%	2015	75			75
Senior Notes:
6.125%	2011	—			200
6.7%	2013	180			180
6.75%	2011	—			210
6.75%	2037	24			24
7.2%	2017	200			200
7.45%	2097	100			100
9.375%	2019	750			750
10.5%	2039	250			250
Gulf Opportunity Zone Revenue Bonds, Series 2010, variable rate	2040	—			300
Accounts receivable sales facility	2012	250			100
Net unamortized discount, including fair value adjustments		(51		)	(64		)
Total debt		7,690			8,300
Capital lease obligations, including unamortized fair value adjustments		51			37
Total debt and capital lease obligations		7,741			8,337
Less current portion		(1,009		)	(822		)
Debt and capital lease obligations, less current portion		$	6,732		$	7,515

Bank Debt and Credit Facilities

In December 2011, we entered into a $3 billion revolving credit facility (the Revolver) that has an initial maturity date of December 2016, which replaced our maturing $2.4 billion revolving credit facility. Borrowings under the Revolver bear interest at LIBOR plus a margin, or an alternate base rate as defined under the agreement, plus a margin. We are also charged various fees and expenses in connection with the Revolver, including facility fees and letter of credit fees. The interest rate and fees under the Revolver are subject to adjustment based upon the credit ratings assigned to our non-bank debt. The Revolver has certain restrictive covenants, including a maximum debt-to-capitalization ratio of 60 percent. As of December 31, 2011 and 2010, our debt-to-capitalization ratios, calculated in accordance with the terms of the Revolver, were 29 percent and 25 percent, respectively. We believe that we will remain in compliance with this covenant.

In addition to the Revolver, one of our Canadian subsidiaries has a committed revolving credit facility under which it may borrow and obtain letters of credit up to C$115 million.

During the years ended December 31, 2011 and 2010, we had no borrowings or repayments under the Revolver or the Canadian revolving credit facility. During the year ended December 31, 2009, we borrowed and repaid $39 million under the Revolver and had no borrowings or repayments under the Canadian revolving credit facility.

We had outstanding letters of credit under our committed lines of credit as follows (in millions):



				Amounts Outstanding
	Borrowing Capacity		Expiration	December 31, 2011		December 31, 2010
Letter of credit facilities	$	500	June 2012	$	300	$	100
Revolver	$	3,000	December 2016	$	119	$	399
Canadian revolving credit facility	C$	115	December 2012	C$	20	C$	20

We also have various other uncommitted short-term bank credit facilities. As of December 31, 2011 and 2010, we had no borrowings outstanding under our uncommitted short-term bank credit facilities; however, there were letters of credit outstanding under such facilities of $391 million and $176 million, respectively, for which we are charged letter of credit issuance fees. The uncommitted credit facilities have no commitment fees or compensating balance requirements.

In connection with the Pembroke Acquisition, we assumed a €2.8 million short-term demand loan, which bore interest at EURIBOR plus a margin. We repaid this loan in full in November 2011.

Non-Bank Debt

During the year ended December 31, 2011, the following activity occurred:


•	in December 2011, we redeemed our Series 1997B 5.4% and Series 1997C 5.4% industrial revenue bonds for $56 million, or 100% of their stated values;


•	in May 2011, we made a scheduled debt repayment of $200 million related to our 6.125% senior notes;


•	in April 2011, we made scheduled debt repayments of $8 million related to our Series 1997A 5.45%, Series 1997B 5.4%, and Series 1997C 5.4% industrial revenue bonds;


•	in February 2011, we made a scheduled debt repayment of $210 million related to our 6.75% senior notes; and


•	in February 2011, we paid $300 million to acquire the Gulf Opportunity Zone Revenue Bonds Series 2010 (GO Zone Bonds), which were subject to mandatory tender. We expect to hold the GO Zone Bonds for our own account until conditions permit the remarketing of these bonds at an interest rate acceptable to us.

During the year ended December 31, 2010, the following activity occurred:

•

in December 2010, the Parish of St. Charles, State of Louisiana (Issuer) issued GO Zone Bonds totaling $300 million, with a maturity date of December 1, 2040. The GO Zone Bonds initially bore interest at a weekly rate with interest payable monthly, commencing January 5, 2011. Pursuant to a financing agreement, the Issuer lent the proceeds of the sale of the GO Zone Bonds to us to finance a portion of the construction costs of a hydrocracker project at our St. Charles Refinery. We received proceeds of $300 million. Under the financing agreement, we were obligated to pay the Issuer amounts sufficient for the Issuer to pay principal and interest on the GO Zone Bonds;


•	in June 2010, we made a scheduled debt repayment of $25 million related to our 7.25% debentures;


•	in May 2010, we redeemed our 6.75% senior notes with a maturity date of May 1, 2014 for $190 million, or 102.25% of stated value;


•	in April 2010, we made scheduled debt repayments of $8 million related to our Series 1997A 5.45%, Series 1997B 5.4%, and Series 1997C 5.4% industrial revenue bonds;


•	in March 2010, we redeemed our 7.5% senior notes with a maturity date of June 15, 2015 for $294 million, or 102.5% of stated value, and


•	in February 2010, we issued $400 million of 4.5% notes due February 1, 2015 and $850 million of 6.125% notes due in February 1, 2020 for total net proceeds of $1.2 billion.

During the year ended December 31, 2009, the following activity occurred:


•	in October 2009, we redeemed $76 million of our 6.75% senior notes with a maturity date of October 15, 2037 at 100% of stated value;


•	in April 2009, we made scheduled debt repayments of $200 million related to our 3.5% notes and $9 million related to our 5.125% Series 1997D industrial revenue bonds; and


•	in March 2009, we issued $750 million of 9.375% notes due March 15, 2019 and $250 million of 10.5% notes due March 15, 2039. Proceeds from the issuance of these notes totaled $998 million.

Accounts Receivable Sales Facility

We have an accounts receivable sales facility with a group of third-party entities and financial institutions to sell on a revolving basis up to $1 billion of eligible trade receivables. We amended our agreement in June 2011 to extend the maturity date to June 2012. Under this program, one of our marketing subsidiaries (Valero Marketing) sells eligible receivables, without recourse, to another of our subsidiaries (Valero Capital), whereupon the receivables are no longer owned by Valero Marketing. Valero Capital, in turn, sells an undivided percentage ownership interest in the eligible receivables, without recourse, to the third-party entities and financial institutions. To the extent that Valero Capital retains an ownership interest in the receivables it has purchased from Valero Marketing, such interest is included in our financial statements solely as a result of the consolidation of the financial statements of Valero Capital with those of Valero Energy Corporation; the receivables are not available to satisfy the claims of the creditors of Valero Marketing or Valero Energy Corporation.

As of December 31, 2011 and 2010, $3.3 billion and $2.2 billion, respectively, of our accounts receivable composed the designated pool of accounts receivable included in the program. All amounts outstanding under the accounts receivable sales facility are reflected as debt on our balance sheets and proceeds and repayments are reflected as cash flows from financing activities on the statements of cash flows. Changes in the amounts outstanding under our accounts receivable sales facility were as follows (in millions):



	Year Ended December 31,
	2011		2010			2009
Balance as of beginning of year	$	100	$	200		$	100
Proceeds from the sale of receivables	150		1,225			950
Repayments	—		(1,325		)	(850		)
Balance as of end of year	$	250	$	100		$	200

Capitalized Interest

For the years ended December 31, 2011, 2010, and 2009, capitalized interest was $152 million, $90 million, and $105 million, respectively.

Other Disclosures

In addition to the maximum debt-to-capitalization ratio applicable to the Revolver discussed above under “Bank Credit Facilities,” our bank credit facilities and other debt arrangements contain various customary restrictive covenants, including cross-default and cross-acceleration clauses.

Principal payments on our debt obligations and future minimum rentals on capital lease obligations as of December 31, 2011 were as follows (in millions):



	Debt			Capital Lease Obligations
2012	$	1,004		$	11
2013	484			10
2014	200			9
2015	475			8
2016	—			8
Thereafter	5,578			37
Net unamortized discount and fair value adjustments	(51		)	—
Less interest expense	—			(32		)
Total	$	7,690		$	51