VALERO ENERGY CORP/TX0001035002FALSE2021Q1--12-31Includes excise taxes on sales by certain of our international operations of $1,120 million and $1,368 million for the three months ended March 31, 2021 and 2020, 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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
Commission File Number 001-13175
VALERO ENERGY CORPORATION
(Exact name of registrant as specified in its charter)
Delaware74-1828067
(State or other jurisdiction of(I.R.S. Employer
incorporation or organization)Identification No.)
One Valero Way
San Antonio, Texas
(Address of principal executive offices)
78249
(Zip Code)
(210345-2000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stockVLONew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  No 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  No 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filerNon-accelerated filer
Smaller reporting companyEmerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No 
The number of shares of the registrant’s only class of common stock, $0.01 par value, outstanding as of April 23, 2021 was 408,760,165.



VALERO ENERGY CORPORATION
TABLE OF CONTENTS
Page



i


Table of Contents
PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

VALERO ENERGY CORPORATION
CONSOLIDATED BALANCE SHEETS
(millions of dollars, except par value)
March 31,
2021
December 31,
2020
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents$2,254 $3,313 
Receivables, net9,014 6,109 
Inventories5,881 6,038 
Prepaid expenses and other442 384 
Total current assets17,591 15,844 
Property, plant, and equipment, at cost47,370 46,967 
Accumulated depreciation(16,991)(16,578)
Property, plant, and equipment, net30,379 30,389 
Deferred charges and other assets, net5,644 5,541 
Total assets$53,614 $51,774 
LIABILITIES AND EQUITY
Current liabilities:
Current portion of debt and finance lease obligations$734 $723 
Accounts payable9,113 6,082 
Accrued expenses1,087 994 
Taxes other than income taxes payable1,233 1,372 
Income taxes payable140 112 
Total current liabilities12,307 9,283 
Debt and finance lease obligations, less current portion13,930 13,954 
Deferred income tax liabilities5,034 5,275 
Other long-term liabilities3,616 3,620 
Commitments and contingencies
Equity:
Valero Energy Corporation stockholders’ equity:
Common stock, $0.01 par value; 1,200,000,000 shares authorized;
673,501,593 and 673,501,593 shares issued
7 7 
Additional paid-in capital6,810 6,814 
Treasury stock, at cost;
264,741,072 and 265,096,171 common shares
(15,700)(15,719)
Retained earnings27,849 28,953 
Accumulated other comprehensive loss(1,165)(1,254)
Total Valero Energy Corporation stockholders’ equity17,801 18,801 
Noncontrolling interests926 841 
Total equity18,727 19,642 
Total liabilities and equity$53,614 $51,774 
See Condensed Notes to Consolidated Financial Statements.

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Table of Contents
VALERO ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(millions of dollars, except per share amounts)
(unaudited)
Three Months Ended
March 31,
20212020
Revenues (a)$20,806 $22,102 
Cost of sales:
Cost of materials and other18,992 19,952 
Lower of cost or market (LCM) inventory valuation adjustment 2,542 
Operating expenses (excluding depreciation and amortization
expense reflected below)
1,656 1,124 
Depreciation and amortization expense566 569 
Total cost of sales21,214 24,187 
Other operating expenses38 2 
General and administrative expenses (excluding depreciation and
amortization expense reflected below)
208 177 
Depreciation and amortization expense12 13 
Operating loss(666)(2,277)
Other income, net45 32 
Interest and debt expense, net of capitalized interest(149)(125)
Loss before income tax benefit(770)(2,370)
Income tax benefit(148)(616)
Net loss(622)(1,754)
Less: Net income attributable to noncontrolling interests82 97 
Net loss attributable to Valero Energy Corporation stockholders$(704)$(1,851)
Loss per common share$(1.73)$(4.54)
Weighted-average common shares outstanding (in millions)407 408 
Loss per common share – assuming dilution$(1.73)$(4.54)
Weighted-average common shares outstanding –
assuming dilution (in millions)
407 408 
__________________________
Supplemental information:
(a) Includes excise taxes on sales by certain of our international
operations
$1,120 $1,368 

See Condensed Notes to Consolidated Financial Statements.

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Table of Contents
VALERO ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(millions of dollars)
(unaudited)
Three Months Ended
March 31,
20212020
Net loss$(622)$(1,754)
Other comprehensive income (loss):
Foreign currency translation adjustment76 (607)
Net gain on pension and other postretirement
benefits
15 12 
Net gain on cash flow hedges
10 29 
Other comprehensive income (loss) before
income tax expense
101 (566)
Income tax expense related to items of
other comprehensive income (loss)
7 6 
Other comprehensive income (loss)94 (572)
Comprehensive loss(528)(2,326)
Less: Comprehensive income attributable
to noncontrolling interests
87 111 
Comprehensive loss attributable to
Valero Energy Corporation stockholders
$(615)$(2,437)

See Condensed Notes to Consolidated Financial Statements.

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Table of Contents
VALERO ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF EQUITY
(millions of dollars)
(unaudited)
Valero Energy Corporation Stockholders’ Equity
Common
Stock
Additional
Paid-in
Capital
Treasury
Stock
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
TotalNon-
controlling
Interests
Total
Equity
Balance as of December 31, 2020$7 $6,814 $(15,719)$28,953 $(1,254)$18,801 $841 $19,642 
Net income (loss)— — — (704)— (704)82 (622)
Dividends on common stock
($0.98 per share)
— — — (400)— (400)— (400)
Stock-based compensation
expense
— 28 — — — 28 — 28 
Transactions in connection
with stock-based
compensation plans
— (32)19 — — (13)— (13)
Distributions to noncontrolling
interests
— — — — — — (2)(2)
Other comprehensive income— — — — 89 89 5 94 
Balance as of March 31, 2021$7 $6,810 $(15,700)$27,849 $(1,165)$17,801 $926 $18,727 
Balance as of December 31, 2019$7 $6,821 $(15,648)$31,974 $(1,351)$21,803 $733 $22,536 
Net income (loss)— — — (1,851)— (1,851)97 (1,754)
Dividends on common stock
($0.98 per share)
— — — (401)— (401)— (401)
Stock-based compensation
expense
— 24 — — — 24 — 24 
Transactions in connection
with stock-based
compensation plans
— (31)14 — — (17)— (17)
Open market stock purchases
— — (130)— — (130)— (130)
Distributions to noncontrolling
interests
— — — — — — (1)(1)
Other comprehensive
income (loss)
— — — — (586)(586)14 (572)
Balance as of March 31, 2020$7 $6,814 $(15,764)$29,722 $(1,937)$18,842 $843 $19,685 

See Condensed Notes to Consolidated Financial Statements.

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Table of Contents
VALERO ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(millions of dollars)
(unaudited)
Three Months Ended
March 31,
20212020
Cash flows from operating activities:
Net loss$(622)$(1,754)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense578 582 
LCM inventory valuation adjustment 2,542 
Deferred income tax benefit(239)(162)
Changes in current assets and current liabilities184 (1,107)
Changes in deferred charges and credits and
other operating activities, net
47 (150)
Net cash used in operating activities(52)(49)
Cash flows from investing activities:
Capital expenditures (excluding variable interest entities (VIEs))(160)(299)
Capital expenditures of VIEs:
Diamond Green Diesel Holdings LLC (DGD)
(153)(74)
Other VIEs
(26)(62)
Deferred turnaround and catalyst cost expenditures (excluding VIEs)(230)(309)
Deferred turnaround and catalyst cost expenditures of DGD(1)(4)
Investments in unconsolidated joint ventures(12)(19)
Other investing activities, net2 10 
Net cash used in investing activities(580)(757)
Cash flows from financing activities:
Proceeds from debt issuances and borrowings (excluding VIEs) 300 
Proceeds from borrowings of VIEs8 70 
Repayments of debt and finance lease obligations (excluding VIEs)(31)(15)
Repayments of debt of VIEs(1)(1)
Purchases of common stock for treasury(14)(147)
Common stock dividend payments(400)(401)
Other financing activities, net(1)(1)
Net cash used in financing activities(439)(195)
Effect of foreign exchange rate changes on cash12 (67)
Net decrease in cash and cash equivalents
(1,059)(1,068)
Cash and cash equivalents at beginning of period3,313 2,583 
Cash and cash equivalents at end of period$2,254 $1,515 
See Condensed Notes to Consolidated Financial Statements.

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Table of Contents



VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.    BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation
General
The terms “Valero,” “we,” “our,” and “us,” as used in this report, may refer to Valero Energy Corporation, one or more of its consolidated subsidiaries, or all of them taken as a whole.

These unaudited financial statements have been prepared in accordance with United States (U.S.) generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities Exchange Act of 1934. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation of our results for the three months ended March 31, 2021 have been included. All such adjustments are of a normal recurring nature unless disclosed otherwise. Operating results for the three months ended March 31, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. The financial statements presented herein should be read in conjunction with the financial statements included in our annual report on Form 10-K for the year ended December 31, 2020.

As discussed in Note 2, the outbreak of COVID-19 and its development into a pandemic in March 2020 resulted in significant economic disruption globally. Developments with respect to COVID-19 have been occurring at a rapid pace and the risk remains that circumstances could change. Demand for and market prices of most of our products began to improve during the latter half of 2020 and continued to improve throughout the first quarter of 2021. These improvements resulted primarily from the lifting or easing of restrictions by many governmental authorities, especially those in our U.S. Gulf Coast and U.S. Mid-Continent regions, in response to decreasing COVID-19 infection rates and increasing numbers of people receiving COVID-19 vaccines, which were approved by a number of regulators throughout the world in late 2020 and early 2021. While many governmental authorities in areas located in our U.S. West Coast and North Atlantic regions, such as California, Canada, and the United Kingdom (U.K.), continue to impose restrictions, some of these restrictions have been or are soon expected to be moderately lifted. The ongoing distribution of vaccines may result in the continued lifting of restrictions and may be seen as a key factor in helping to restore public confidence, and thus stimulate and increase economic activity, potentially to pre-pandemic levels; however, the risk remains that the vaccines may not be distributed widely on a timely basis, they may not be effective against new variants of the COVID-19 virus, the distribution of some or all of the vaccines may be paused or withdrawn due to concerns with potential side effects, and/or the level of individuals’ willingness to receive a vaccine may not be as strong or as timely as needed. Based on these and other circumstances that cannot be predicted, the broader implications of the pandemic on our results of operations and financial position remain uncertain.

The balance sheet as of December 31, 2020 has been derived from our audited financial statements as of that date. For further information, refer to our financial statements and notes thereto included in our annual report on Form 10-K for the year ended December 31, 2020.


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VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Reclassifications
Certain prior year amounts presented in Note 11 have been reclassified to conform to the 2021 presentation. The change was due to the reclassification of amounts for income taxes receivable from prepaid expenses and other to “receivables, net.”
Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the amounts reported in the 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.
Adoption of Accounting Pronouncement
The following Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) was issued and adopted by us on January 7, 2021. Our adoption of this ASU did not have a material impact on our financial statements or related disclosures.
ASUBasis of
Adoption
2021-01Reference Rate Reform (Topic 848): ScopeProspectively

2.    UNCERTAINTIES

The outbreak of COVID-19 and its development into a pandemic in March 2020 resulted in significant economic disruption globally as governmental authorities imposed restrictions, such as stay-at-home orders and other social distancing measures, to slow the spread of COVID-19. These actions significantly reduced global economic activity and negatively impacted many businesses, including our business. We took a number of actions since March 2020 to respond to the impacts from the pandemic on our business, such as reducing transportation fuel production at our refineries and ethanol plants to align with demand. During the three months ended March 31, 2021, our business showed signs of recovery and improvement in demand for and market prices of gasoline and diesel, with both factors reaching near pre-pandemic levels in March 2021. Also, jet fuel has seen improved market indicators, although at a slower pace than other products we produce relative to pre-pandemic levels.

While our business has improved as a result of the increasing demand for and market prices of most of the products that we produce, many uncertainties remain with respect to the pandemic, including its resulting economic effects. Therefore, we are unable to predict the ultimate economic impacts from the pandemic on our business and how quickly national economies can recover once the pandemic subsides, the timing or effectiveness of vaccine distributions or vaccination levels, whether improvements experienced by us so far may reverse, or whether other setbacks may occur. As a result, the adverse impacts of the economic effects of the pandemic on our company may likely continue to be significant. We believe we have proactively responded to many of the known impacts of the COVID-19 pandemic on our business to the extent practicable and we strive to continue to do so, but there can be no assurance that any measures we have taken or may take will be fully effective.


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VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3.    INVENTORIES

Inventories consisted of the following (in millions):
March 31,
2021
December 31,
2020
Refinery feedstocks$1,947 $1,979 
Refined petroleum products and blendstocks
3,284 3,425 
Renewable diesel feedstocks and products
64 50 
Ethanol feedstocks and products297 297 
Materials and supplies289 287 
Inventories$5,881 $6,038 

We compare the market value of inventories to their cost on an aggregate basis, excluding materials and supplies. In determining the market value of our inventories, we assume that feedstocks are converted into refined products, which requires us to make estimates regarding the refined products expected to be produced from those feedstocks and the conversion costs required to convert those feedstocks into refined products. We also estimate the usual and customary transportation costs required to move the inventory from our plants to the appropriate points of sale. We then apply an estimated selling price to our inventories. If the aggregate market value is less than the aggregate cost, we recognize a loss for the difference in our statements of income. To the extent the aggregate market value of our last-in, first-out (LIFO) inventories subsequently increases, we recognize an increase to the value of our inventories (not to exceed cost) and a gain in our statements of income.

The market value of our LIFO inventories fell below their LIFO inventory carrying amounts as of March 31, 2020, and as a result, we recorded an LCM inventory valuation reserve of $2.5 billion in order to state our inventories at market. As of March 31, 2021 and December 31, 2020, the replacement cost (market value) of LIFO inventories exceeded their LIFO carrying amounts by $2.7 billion and $1.3 billion, respectively.

Our non-LIFO inventories accounted for $1.2 billion and $918 million of our total inventories as of March 31, 2021 and December 31, 2020, respectively.


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VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
4.    DEBT

Public Debt
During the three months ended March 31, 2021 and 2020, there was no issuance or redemption activity related to our public debt.

Credit Facilities
Summary of Credit Facilities
We had outstanding borrowings, letters of credit issued, and availability under our credit facilities as follows (amounts in millions and currency in U.S. dollars, except as noted):
March 31, 2021
Facility
Amount
Maturity DateOutstanding
Borrowings
Letters of Credit
Issued (a)
Availability
Committed facilities:
Valero Revolver$4,000 March 2024$ $118 $3,882 
364-day Revolving
Credit Facility (b)
$875 April 2021$ n/a$875 
Canadian RevolverC$150 November 2021C$ C$5 C$145 
Accounts receivable
sales facility
$1,000 July 2021$ n/a$1,000 
Letter of credit
facility
$50 November 2021n/a$ $50 
Committed facilities of
VIEs (c):
DGD Revolver$400 March 2024$ $ $400 
IEnova Revolver (d)$660 February 2028$606 n/a$54 
Uncommitted facilities:
Letter of credit
facilities
n/an/an/a$330 n/a
________________________
(a)Letters of credit issued as of March 31, 2021 expire at various times in 2021 through 2023.
(b)This facility matured on April 12, 2021 and was not renewed.
(c)Creditors of our VIEs do not have recourse against us.
(d)As of March 31, 2021 and December 31, 2020, the variable interest rate on the IEnova Revolver was 3.888 percent and 3.870 percent, respectively.

Activities under our credit facilities were as follows (in millions):
Three Months Ended
March 31,
20212020
Borrowings:
Accounts receivable sales facility$$300
IEnova Revolver870

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VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DGD Revolver
In March 2021, DGD (as described in Note 6) entered into a $400 million unsecured revolving credit facility (the DGD Revolver) that matures in March 2024. DGD has the option to increase the aggregate commitments under the DGD Revolver to $550 million, subject to certain restrictions. The DGD Revolver also provides for the issuance of letters of credit of up to $10 million. The DGD Revolver is available only to the operations of DGD, and the creditors of DGD do not have recourse against us.

Outstanding borrowings under the DGD Revolver generally bear interest, at DGD’s option, at either (i) an alternate base rate plus the applicable margin or (ii) an adjusted LIBOR rate for the applicable interest period in effect from time to time plus the applicable margin. The DGD Revolver also requires payments for customary fees, including unused commitment fees, letter of credit fees, and administrative agent fees.

During the three months ended March 31, 2021, there were no borrowings or repayments under the DGD Revolver.

Other Disclosures
“Interest and debt expense, net of capitalized interest” is comprised as follows (in millions):
Three Months Ended
March 31,
20212020
Interest and debt expense$164 $145 
Less: Capitalized interest15 20 
Interest and debt expense, net of
capitalized interest
$149 $125 

5.    EQUITY

Share Activity
There was no significant share activity during the three months ended March 31, 2021 and 2020.

Common Stock Dividends
On April 16, 2021, our board of directors declared a quarterly cash dividend of $0.98 per common share payable on June 8, 2021 to holders of record at the close of business on May 17, 2021.


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VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Accumulated Other Comprehensive Loss
Changes in accumulated other comprehensive loss by component, net of tax, were as follows (in millions):
Three Months Ended March 31,
20212020
Foreign
Currency
Translation
Adjustment
Defined
Benefit
Plans
Items
Gains
(Losses)
on
Cash Flow
Hedges
TotalForeign
Currency
Translation
Adjustment
Defined
Benefit
Plans
Items
Gains
(Losses)
on
Cash Flow
Hedges
Total
Balance as of beginning
of period
$(515)$(737)$(2)$(1,254)$(676)$(672)$(3)$(1,351)
Other comprehensive
income (loss) before
reclassifications
76 1 (5)72 (606) 21 (585)
Amounts reclassified
from accumulated
other comprehensive
loss
 8 9 17  9 (10)(1)
Other comprehensive
income (loss)
76 9 4 89 (606)9 11 (586)
Balance as of end of
period
$(439)$(728)$2 $(1,165)$(1,282)$(663)$8 $(1,937)

6.    VARIABLE INTEREST ENTITIES

Consolidated VIEs
We consolidate a VIE when we have a variable interest in an entity for which we are the primary beneficiary. As of March 31, 2021, our significant consolidated VIEs included:

DGD, a joint venture with a subsidiary of Darling Ingredients Inc., which owns and operates a plant that processes rendered and recycled materials, including animal fats, used cooking oils, and other vegetable oils, into renewable diesel; and

Central Mexico Terminals, which is a collective group of three subsidiaries of Infraestructura Energetica Nova, S.A.B. de C.V. (IEnova), a Mexican company and subsidiary of Sempra Energy, a U.S. public company. We have terminaling agreements with Central Mexico Terminals that represent variable interests. We do not have an ownership interest in Central Mexico Terminals.

The assets of our VIEs can only be used to settle their own obligations and the creditors of our VIEs have no recourse to our other assets. We do not provide financial guarantees to our VIEs. Although we have provided credit facilities to some of our VIEs in support of their construction or acquisition activities, these transactions are eliminated in consolidation. Our financial position, results of operations, and cash flows are impacted by the performance of our consolidated VIEs, net of intercompany eliminations, to the extent of our ownership interest in each VIE.

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VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following tables present summarized balance sheet information for the significant assets and liabilities of our consolidated VIEs, which are included in our balance sheets (in millions):
March 31, 2021
DGDCentral
Mexico
Terminals
OtherTotal
Assets
Cash and cash equivalents$191 $ $19 $210 
Other current assets272 10 10 292 
Property, plant, and equipment, net1,431 614 94 2,139 
Liabilities
Current liabilities, including current portion
of debt and finance lease obligations
$166 $632 $8 $806 
Debt and finance lease obligations,
less current portion
1  24 25 
December 31, 2020
DGDCentral
Mexico
Terminals
OtherTotal
Assets
Cash and cash equivalents$144 $1 $16 $161 
Other current assets219 24 8 251 
Property, plant, and equipment, net1,232 590 96 1,918 
Liabilities
Current liabilities, including current portion
of debt and finance lease obligations
$90 $620 $8 $718 
Debt and finance lease obligations,
less current portion
1  25 26 

Non-Consolidated VIEs
We hold variable interests in VIEs that have not been consolidated because we are not considered the primary beneficiary. These non-consolidated VIEs are not material to our financial position or results of operations and are accounted for as equity investments.
On April 19, 2021, we sold a 24.99 percent membership interest in MVP Terminalling, LLC (MVP), an unconsolidated joint venture with a subsidiary of Magellan Midstream Partners LP (Magellan), for $270 million. MVP owns and operates a marine terminal located adjacent to the Houston Ship Channel in Pasadena, Texas. We retained a 25.01 percent membership interest in MVP.

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VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7.    EMPLOYEE BENEFIT PLANS

The components of net periodic benefit cost related to our defined benefit plans were as follows (in millions):
Pension PlansOther Postretirement
Benefit Plans
2021202020212020
Three months ended March 31
Service cost$40 $35 $2 $1 
Interest cost18 21 2 2 
Expected return on plan assets(48)(44)  
Amortization of:
Net actuarial loss20 18   
Prior service credit(4)(5)(2)(1)
Net periodic benefit cost
$26 $25 $2 $2 

The components of net periodic benefit cost other than the service cost component (i.e., the non-service cost components) are included in “other income, net” in the statements of income.

As previously disclosed in our annual report on Form 10-K for the year ended December 31, 2020, we plan to contribute approximately $128 million to our pension plans and $22 million to our other postretirement benefit plans during 2021. During the three months ended March 31, 2021 and 2020, we contributed $21 million and $12 million, respectively, to our pension plans and $3 million and $4 million, respectively, to our other postretirement benefit plans.
8.    INCOME TAXES

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security (CARES) Act was enacted, which resulted in significant changes to the U.S. Internal Revenue Code of 1986, as amended. We recognized an overall income tax benefit of $616 million for the three months ended March 31, 2020, of which $110 million was attributable to the tax net operating loss (NOL) carryback provided for under the CARES Act of our 2020 tax NOL to our 2015 income tax year in which we paid federal income tax at a 35 percent tax rate. In addition, we were not limited in the amount of interest expense we could deduct. The remaining income tax benefit was primarily due to the LCM inventory valuation adjustment that resulted in a tax benefit of $551 million.


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VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
9.    EARNINGS (LOSS) PER COMMON SHARE

Earnings (loss) per common share was computed as follows (dollars and shares in millions, except per share amounts):
Three Months Ended
March 31,
20212020
Loss per common share
Net loss attributable to Valero stockholders$(704)$(1,851)
Less: Income allocated to participating securities1 1 
Net loss available to common stockholders$(705)$(1,852)
Weighted-average common shares outstanding407 408 
Loss per common share$(1.73)$(4.54)
Loss per common share – assuming dilution
Net loss attributable to Valero stockholders$(704)$(1,851)
Less: Income allocated to participating securities1  
Net loss available to common stockholders$(705)$(1,851)
Weighted-average common shares outstanding –
assuming dilution
407 408 
Loss per common share – assuming dilution$(1.73)$(4.54)

Participating securities include restricted stock and performance awards granted under our 2020 Omnibus Stock Incentive Plan (OSIP) or our 2011 OSIP.


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VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
10.    REVENUES AND SEGMENT INFORMATION

Revenue from Contracts with Customers
Disaggregation of Revenue
Revenue is presented in the table below under “Segment Information” disaggregated by product because this is the level of disaggregation that management has determined to be beneficial to users of our financial statements.

Contract Balances
Contract balances were as follows (in millions):
March 31,
2021
December 31,
2020
Increase
Receivables from contracts with customers,
included in receivables, net
$4,701 $3,642 $1,059 
Contract liabilities, included in accrued expenses104 55 49 

Receivables from contracts with customers is a component of “receivables, net” as presented on the balance sheet. The increase in “receivables, net” is described in Note 11.

For the three months ended March 31, 2021 and 2020, we recognized as revenue $37 million and $52 million, respectively, that was included in contract liabilities as of December 31, 2020 and 2019, respectively.

Remaining Performance Obligations
We have spot and term contracts with customers, the majority of which are spot contracts with no remaining performance obligations. We do not disclose remaining performance obligations for contracts that have terms of one year or less. The transaction price for our remaining term contracts includes a fixed component and variable consideration (i.e., a commodity price), both of which are allocated entirely to a wholly unsatisfied promise to transfer a distinct good that forms part of a single performance obligation. The fixed component is not material and the variable consideration is highly uncertain. Therefore, as of March 31, 2021, we have not disclosed the aggregate amount of the transaction price allocated to our remaining performance obligations.

Segment Information
We have three reportable segments — refining, renewable diesel, and ethanol. Each segment is a strategic business unit that offers different products and services by employing unique technologies and marketing strategies and whose operations and operating performance are managed and evaluated separately. Operating performance is measured based on the operating income generated by the segment, which includes revenues and expenses that are directly attributable to the management of the respective segment. Intersegment sales are generally derived from transactions made at prevailing market rates. The following is a description of each segment’s business operations.

The refining segment includes the operations of our petroleum refineries, the associated marketing activities, and logistics assets that support our refining operations. The principal

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VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
products manufactured by our refineries and sold by this segment include gasolines and blendstocks, distillates, and other products.

The renewable diesel segment represents the operations of DGD, our consolidated joint venture as discussed in Note 6. The principal product manufactured by DGD and sold by this segment is renewable diesel. This segment sells some renewable diesel to the refining segment, which is then sold to that segment’s customers.

The ethanol segment includes the operations of our ethanol plants, the associated marketing activities, and logistics assets that support our ethanol operations. The principal products manufactured by our ethanol plants are ethanol and distillers grains. This segment sells some ethanol to the refining segment for blending into gasoline, which is sold to that segment’s customers as a finished gasoline product.

Operations that are not included in any of the reportable segments are included in the corporate category.

The following tables reflect information about our operating income (loss) by reportable segment (in millions):
RefiningRenewable
Diesel
EthanolCorporate
and
Eliminations
Total
Three months ended March 31, 2021
Revenues:
Revenues from external customers
$19,469 $352 $985 $ $20,806 
Intersegment revenues
3 79 60 (142)— 
Total revenues
19,472 431 1,045 (142)20,806 
Cost of sales:
Cost of materials and other
18,022 187 924 (141)18,992 
Operating expenses (excluding depreciation
and amortization expense reflected below)
1,471 29 156  1,656 
Depreciation and amortization expense
533 12 21  566 
Total cost of sales
20,026 228 1,101 (141)21,214 
Other operating expenses38    38 
General and administrative expenses (excluding
depreciation and amortization expense
reflected below)
   208 208 
Depreciation and amortization expense
   12 12 
Operating income (loss) by segment$(592)$203 $(56)$(221)$(666)

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VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
RefiningRenewable
Diesel
EthanolCorporate
and
Eliminations
Total
Three months ended March 31, 2020
Revenues:
Revenues from external customers
$20,985 $306 $811 $ $22,102 
Intersegment revenues
2