Condensed Consolidating Financial Statements

3 Months Ended

Mar. 31, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

15.

CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

In connection with the completion of the Merger Transaction as described in Note 2, Valero Energy Corporation, the parent company, entered into a guarantee agreement to fully and unconditionally guarantee the prompt payment, when due, of the following debt issued by Valero Energy Partners LP, an indirect wholly owned subsidiary of Valero Energy Corporation, that was outstanding as of March 31, 2019:

•4.375 percent Senior Notes due December 15, 2026, and

•4.5 percent Senior Notes due March 15, 2028.

The following condensed consolidating financial information is provided as an alternative to providing separate financial statements for Valero Energy Partners LP, which has no independent assets or operations. The financial position, results of operations, and cash flows of Valero Energy Partners LP’s wholly owned subsidiaries are included in “Other Non-Guarantor Subsidiaries.” The accounts for all companies reflected herein are presented using the equity method of accounting for investments in subsidiaries.Condensed Consolidating Balance Sheet

March 31, 2019

(in millions)

	Valero Energy Corporation			Valero Energy Partners LP		Other Non- Guarantor Subsidiaries			Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	1,167		$	—	$	1,610		$	—		$	2,777
Receivables, net	—			—		8,289			—			8,289
Receivables from affiliates	4,277			—		11,315			(15,592		)	—
Inventories	—			—		6,554			—			6,554
Prepaid expenses and other	451			—		409			—			860
Total current assets	5,895			—		28,177			(15,592		)	18,480
Property, plant and equipment, at cost	—			—		42,388			—			42,388
Accumulated depreciation	—			—		(13,980		)	—			(13,980		)
Property, plant and equipment, net	—			—		28,408			—			28,408
Investment in affiliates	35,820			2,348		392			(38,560		)	—
Deferred charges and other assets, net	513			—		4,694			—			5,207
Total assets	$	42,228		$	2,348	$	61,671		$	(54,152	)	$	52,095
LIABILITIES AND EQUITY
Current liabilities:
Current portion of debt and finance lease obligations	$	849		$	—	$	261		$	—		$	1,110
Accounts payable	2			—		10,003			—			10,005
Accounts payable to affiliates	10,358			957		4,277			(15,592		)	—
Accrued expenses	152			7		613			—			772
Taxes other than income taxes payable	—			—		961			—			961
Income taxes payable	34			—		31			—			65
Total current liabilities	11,395			964		16,146			(15,592		)	12,913
Debt and finance lease obligations, less current portion	7,091			990		925			—			9,006
Deferred income tax liabilities	—			2		4,865			—			4,867
Other long-term liabilities	1,963			—		1,567			—			3,530
Equity:
Stockholders’ equity:
Common stock	7			—		1			(1		)	7
Additional paid-in capital	6,802			—		9,754			(9,754		)	6,802
Treasury stock, at cost	(14,958		)	—		—			—			(14,958		)
Retained earnings	30,810			—		28,911			(28,911		)	30,810
Partners’ equity	—			392		—			(392		)	—
Accumulated other comprehensive loss	(1,352		)	—		(968		)	968			(1,352		)
Total stockholders’ equity	21,309			392		37,698			(38,090		)	21,309
Noncontrolling interests	470			—		470			(470		)	470
Total equity	21,779			392		38,168			(38,560		)	21,779
Total liabilities and equity	$	42,228		$	2,348	$	61,671		$	(54,152	)	$	52,095

Condensed Consolidating Balance Sheet

December 31, 2018

(in millions)

	Valero Energy Corporation			Valero Energy Partners LP		Other Non- Guarantor Subsidiaries			Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	291		$	152	$	2,539		$	—		$	2,982
Receivables, net	—			—		7,345			—			7,345
Receivables from affiliates	4,369			2		11,025			(15,396		)	—
Inventories	—			—		6,532			—			6,532
Prepaid expenses and other	466			—		355			(5		)	816
Total current assets	5,126			154		27,796			(15,401		)	17,675
Property, plant and equipment, at cost	—			—		42,473			—			42,473
Accumulated depreciation	—			—		(13,625		)	—			(13,625		)
Property, plant and equipment, net	—			—		28,848			—			28,848
Investment in affiliates	36,101			2,267		299			(38,667		)	—
Long-term notes receivable from affiliates	285			—		—			(285		)	—
Deferred charges and other assets, net	572			1		3,059			—			3,632
Total assets	$	42,084		$	2,422	$	60,002		$	(54,353	)	$	50,155
LIABILITIES AND EQUITY
Current liabilities:
Current portion of debt and finance lease obligations	$	—		$	—	$	238		$	—		$	238
Accounts payable	14			—		8,580			—			8,594
Accounts payable to affiliates	10,188			837		4,370			(15,395		)	—
Accrued expenses	155			7		468			—			630
Accrued expenses to affiliates	—			1		—			(1		)	—
Taxes other than income taxes payable	—			—		1,213			—			1,213
Income taxes payable	53			1		—			(5		)	49
Total current liabilities	10,410			846		14,869			(15,401		)	10,724
Debt and finance lease obligations, less current portion	6,955			990		926			—			8,871
Long-term notes payable to affiliates	—			285		—			(285		)	—
Deferred income taxes	—			2		4,960			—			4,962
Other long-term liabilities	1,988			—		879			—			2,867
Equity:
Stockholders’ equity:
Common stock	7			—		1			(1		)	7
Additional paid-in capital	7,048			—		9,754			(9,754		)	7,048
Treasury stock, at cost	(14,925		)	—		—			—			(14,925		)
Retained earnings	31,044			—		28,646			(28,646		)	31,044
Partners’ equity	—			299		—			(299		)	—
Accumulated other comprehensive loss	(1,507		)	—		(1,097		)	1,097			(1,507		)
Total stockholders’ equity	21,667			299		37,304			(37,603		)	21,667
Noncontrolling interests	1,064			—		1,064			(1,064		)	1,064
Total equity	22,731			299		38,368			(38,667		)	22,731
Total liabilities and equity	$	42,084		$	2,422	$	60,002		$	(54,353	)	$	50,155

Condensed Consolidating Statement of Income

Three Months Ended March 31, 2019

(in millions)

	Valero Energy Corporation			Valero Energy Partners LP			Other Non- Guarantor Subsidiaries			Eliminations			Consolidated
Revenues	$	—		$	—		$	24,263		$	—		$	24,263
Cost of sales:
Cost of materials and other	—			—			21,978			—			21,978
Operating expenses (excluding depreciation and amortization expense reflected below)	—			—			1,215			—			1,215
Depreciation and amortization expense	—			—			537			—			537
Total cost of sales	—			—			23,730			—			23,730
Other operating expenses	—			—			2			—			2
General and administrative expenses (excluding depreciation and amortization expense reflected below)	1			—			208			—			209
Depreciation and amortization expense	—			—			14			—			14
Operating income (loss)	(1		)	—			309			—			308
Equity in earnings of subsidiaries	264			82			90			(436		)	—
Other income, net	54			—			147			(179		)	22
Interest and debt expense, net of capitalized interest	(232		)	(15		)	(44		)	179			(112		)
Income before income tax expense	85			67			502			(436		)	218
Income tax expense (benefit)	(82		)	—			133			—			51
Net income	167			67			369			(436		)	167
Less: Net income attributable to noncontrolling interests	26			—			23			(23		)	26
Net income attributable to stockholders	$	141		$	67		$	346		$	(413	)	$	141

Condensed Consolidating Statement of Income

Three Months Ended March 31, 2018

(in millions)

	Valero Energy Corporation			Valero Energy Partners LP			Other Non- Guarantor Subsidiaries			Eliminations			Consolidated
Revenues	$	—		$	—		$	26,439		$	—		$	26,439
Cost of sales:
Cost of materials and other	—			—			23,756			—			23,756
Operating expenses (excluding depreciation and amortization expense reflected below)	—			—			1,136			—			1,136
Depreciation and amortization expense	—			—			485			—			485
Total cost of sales	—			—			25,377			—			25,377
Other operating expenses	—			—			10			—			10
General and administrative expenses (excluding depreciation and amortization expense reflected below)	1			—			237			—			238
Depreciation and amortization expense	—			—			13			—			13
Operating income (loss)	(1		)	—			802			—			801
Equity in earnings of subsidiaries	720			78			163			(961		)	—
Other income, net	69			—			151			(169		)	51
Interest and debt expense, net of capitalized interest	(218		)	(12		)	(60		)	169			(121		)
Income before income tax expense	570			66			1,056			(961		)	731
Income tax expense (benefit)	(12		)	—			161			—			149
Net income	582			66			895			(961		)	582
Less: Net income attributable to noncontrolling interests	113			—			97			(97		)	113
Net income attributable to stockholders	$	469		$	66		$	798		$	(864	)	$	469

Condensed Consolidating Statement of Comprehensive Income

Three Months Ended March 31, 2019

(in millions)

	Valero Energy Corporation		Valero Energy Partners LP		Other Non- Guarantor Subsidiaries		Eliminations			Consolidated
Net income	$	167	$	67	$	369	$	(436	)	$	167
Other comprehensive income:
Foreign currency translation adjustment	155		—		159		(159		)	155
Net gain on pension and other postretirement benefits	3		—		—		—			3
Other comprehensive income before income tax expense	158		—		159		(159		)	158
Income tax expense related to items of other comprehensive income	1		—		—		—			1
Other comprehensive income	157		—		159		(159		)	157
Comprehensive income	324		67		528		(595		)	324
Less: Comprehensive income attributable to noncontrolling interests	—		—		28		—			28
Comprehensive income attributable to stockholders	$	324	$	67	$	500	$	(595	)	$	296

Condensed Consolidating Statement of Comprehensive Income

Three Months Ended March 31, 2018

(in millions)

	Valero Energy Corporation		Valero Energy Partners LP		Other Non- Guarantor Subsidiaries		Eliminations			Consolidated
Net income	$	582	$	66	$	895	$	(961	)	$	582
Other comprehensive income:
Foreign currency translation adjustment	45		—		45		(45		)	45
Net gain on pension and other postretirement benefits	8		—		—		—			8
Other comprehensive income before income tax expense	53		—		45		(45		)	53
Income tax expense related to items of other comprehensive income	2		—		—		—			2
Other comprehensive income	51		—		45		(45		)	51
Comprehensive income	633		66		940		(1,006		)	633
Less: Comprehensive income attributable to noncontrolling interests	—		—		116		—			116
Comprehensive income attributable to stockholders	$	633	$	66	$	824	$	(1,006	)	$	517

Condensed Consolidating Statement of Cash Flows

Three Months Ended March 31, 2019

(in millions)

	Valero Energy Corporation			Valero Energy Partners LP			Other Non- Guarantor Subsidiaries			Eliminations			Consolidated
Net cash provided by (used in) operating activities	$	(21	)	$	(14	)	$	1,069		$	(157	)	$	877
Cash flows from investing activities:
Capital expenditures	—			—			(444		)	—			(444		)
Deferred turnaround and catalyst costs	—			—			(219		)	—			(219		)
Investments in joint ventures	—			—			(63		)	—			(63		)
Capital expenditures of certain VIEs	—			—			(19		)	—			(19		)
Acquisitions of undivided interests	—			—			(1		)	—			(1		)
Intercompany investing activities	307			2			(148		)	(161		)	—
Other investing activities, net	—			—			(1		)	—			(1		)
Net cash provided by (used in) investing activities	307			2			(895		)	(161		)	(747		)
Cash flows from financing activities:
Proceeds from debt issuances and borrowings (excluding borrowings of certain VIEs)	992			—			900			—			1,892
Proceeds from borrowings of certain VIEs	—			—			23			—			23
Repayments of debt and finance lease obligations	—			—			(907		)	—			(907		)
Intercompany financing activities	27			(64		)	(124		)	161			—
Purchases of common stock for treasury	(36		)	—			—			—			(36		)
Common stock dividends	(375		)	—			(81		)	81			(375		)
Acquisition of VLP publicly held common units	—			—			(950		)	—			(950		)
Distributions to unitholders of VLP	—			(76		)	—			76			—
Other financing activities, net	(18		)	—			(7		)	—			(25		)
Net cash provided by (used in) financing activities	590			(140		)	(1,146		)	318			(378		)
Effect of foreign exchange rate changes on cash	—			—			43			—			43
Net increase (decrease) in cash and cash equivalents	876			(152		)	(929		)	—			(205		)
Cash and cash equivalents at beginning of period	291			152			2,539			—			2,982
Cash and cash equivalents at end of period	$	1,167		$	—		$	1,610		$	—		$	2,777

Condensed Consolidating Statement of Cash Flows

Three Months Ended March 31, 2018

(in millions)

	Valero Energy Corporation			Valero Energy Partners LP			Other Non- Guarantor Subsidiaries			Eliminations			Consolidated
Net cash provided by (used in) operating activities	$	(356	)	$	(10	)	$	560		$	(56	)	$	138
Cash flows from investing activities:
Capital expenditures	—			—			(356		)	—			(356		)
Deferred turnaround and catalyst costs	—			—			(220		)	—			(220		)
Investments in joint ventures	—			—			(55		)	—			(55		)
Capital expenditures of certain VIEs	—			—			(28		)	—			(28		)
Acquisitions of undivided interests	—			—			(85		)	—			(85		)
Intercompany investing activities	163			92			(488		)	233			—
Other investing activities, net	—			—			(8		)	—			(8		)
Net cash provided by (used in) investing activities	163			92			(1,240		)	233			(752		)
Cash flows from financing activities:
Proceeds from debt issuances and borrowings	—			498			—			—			498
Repayments of debt and finance lease obligations	—			(410		)	(5		)	—			(415		)
Intercompany financing activities	491			(88		)	(170		)	(233		)	—
Purchases of common stock for treasury	(320		)	—			—			—			(320		)
Common stock dividends	(345		)	—			(17		)	17			(345		)
Contributions from noncontrolling interests	—			—			32			—			32
Distributions to unitholders of VLP	—			(50		)	—			39			(11		)
Other financing activities, net	5			(3		)	(14		)	—			(12		)
Net cash used in financing activities	(169		)	(53		)	(174		)	(177		)	(573		)
Effect of foreign exchange rate changes on cash	—			—			(5		)	—			(5		)
Net increase (decrease) in cash and cash equivalents	(362		)	29			(859		)	—			(1,192		)
Cash and cash equivalents at beginning of period	1,746			42			4,062			—			5,850
Cash and cash equivalents at end of period	$	1,384		$	71		$	3,203		$	—		$	4,658