UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2002
Commission File Number 1-13175
VALERO ENERGY CORPORATION THRIFT PLAN
VALERO ENERGY CORPORATION
One Valero Place
San Antonio, Texas 78212
VALERO ENERGY CORPORATION THRIFT PLAN
Index
Page
----
Report of Independent Auditors.................................................................... 3
Statements of Net Assets Available for Benefits as of December 31, 2002 and 2001.................. 4
Statements of Changes in Net Assets Available for Benefits for the Years Ended
December 31, 2002 and 2001...................................................................... 5
Notes to Financial Statements..................................................................... 6
Schedule H, Line 4i - Schedule of Assets (Held at End of Year) as of December 31, 2002............ 14
Signature......................................................................................... 15
Consent of Independent Auditors................................................................... 16
Certifications Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002....................................................................... 17
2
REPORT OF INDEPENDENT AUDITORS
To the Administrative Committee of the
Valero Energy Corporation Thrift Plan
We have audited the accompanying statements of net assets available for benefits
of Valero Energy Corporation Thrift Plan as of December 31, 2002 and 2001, and
the related statements of changes in net assets available for benefits for the
years then ended. These financial statements are the responsibility of the
Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the 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 financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 2002 and 2001, and the changes in its net assets available for
benefits for the years then ended, in conformity with accounting principles
generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedule of assets
(held at end of year) as of December 31, 2002 is presented for purposes of
additional analysis and is not a required part of the financial statements but
is supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. This supplemental schedule is the responsibility of the
Plan's management. The supplemental schedule has been subjected to the auditing
procedures applied in our audit of the financial statements and, in our opinion,
is fairly stated in all material respects in relation to the financial
statements taken as a whole.
/s/ ERNST & YOUNG LLP
San Antonio, Texas
June 24, 2003
3
VALERO ENERGY CORPORATION THRIFT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31,
------------
2002 2001
---- ----
Assets:
Investments:
Common stock............................. $ 171,697,066 $ 112,199,536
Mutual funds............................. 147,025,603 89,379,119
Common/collective trusts................. 67,512,575 12,886,267
Stable Value Fund........................ 47,771,991 37,848,582
Self-directed investments................ 30,454,730 40,713,127
Participant loans........................ 23,743,881 12,782,815
----------- -----------
Total investments.................... 488,205,846 305,809,446
----------- -----------
Receivables:
Employer contributions................... 474,652 588,479
Interest and dividends................... 99,580 89,936
Due from brokers for securities sold..... 153,404 51,971
----------- -----------
Total receivables...................... 727,636 730,386
Cash....................................... 175,469 3,247
----------- -----------
Net assets available for benefits.......... $ 489,108,951 $ 306,543,079
=========== ===========
See Notes to Financial Statements.
4
VALERO ENERGY CORPORATION THRIFT PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Years Ended December 31,
------------------------
2002 2001
---- ----
Additions to net assets:
Investment income:
Interest income................................... $ 3,773,786 $ 3,078,480
Dividend income................................... 5,364,235 3,199,261
----------- -----------
9,138,021 6,277,741
----------- -----------
Contributions:
Employee.......................................... 40,082,839 24,912,366
Employer.......................................... 20,820,947 13,364,333
----------- -----------
60,903,786 38,276,699
----------- -----------
Asset transfers in from other plans:
Valero Savings Plan................................ 189,152,944 -
CRC 401(k) Plan.................................... 6,766,408 -
Ardmore Plan....................................... 5,364,600 -
El Paso employee savings plan...................... - 6,557,174
Huntway 401(k) plan................................ 525 5,704,024
ExxonMobil employee savings plan................... - 37,709
----------- -----------
201,284,477 12,298,907
----------- -----------
Total additions.................................... 271,326,284 56,853,347
----------- -----------
Deductions from net assets:
Withdrawals by participants......................... (25,861,361) (13,392,586)
Administrative expenses............................. (78,016) (106,931)
----------- -----------
Total deductions.................................. (25,939,377) (13,499,517)
Net depreciation in fair value of investments....... (62,821,035) (12,087,398)
------------ -----------
Net increase in net assets available for benefits... 182,565,872 31,266,432
Net assets available for benefits:
Beginning of year................................. 306,543,079 275,276,647
---------- -----------
End of year....................................... $ 489,108,951 $ 306,543,079
=========== ===========
See Notes to Financial Statements.
5
VALERO ENERGY CORPORATION THRIFT PLAN
NOTES TO FINANCIAL STATEMENTS
1. Description of the Plan
As used in this report, the term Valero may refer, depending upon the context,
to Valero Energy Corporation, one or more of its consolidated subsidiaries, or
all of them taken as a whole.
Valero Energy Corporation is a publicly held independent refining and marketing
company with approximately 20,000 employees. Valero owns and operates 12
refineries in the United States and Canada with a combined throughput capacity
of approximately 1.9 million barrels per day. Valero markets refined products
through an extensive bulk and rack marketing network and a network of
approximately 4,100 retail outlets in the United States and eastern Canada under
various brand names including Diamond Shamrock(R), Shamrock(R), Ultramar(R),
Valero(R), Beacon(R), Total(R) and Exxon(R).
Valero's common stock trades on the New York Stock Exchange under the symbol
"VLO."
The following description of the Valero Energy Corporation Thrift Plan (the
Thrift Plan) provides only general information. Participants should refer to the
Thrift Plan document for a complete description of the Thrift Plan's provisions.
General
The Thrift Plan is a qualified profit-sharing plan covering eligible employees
of Valero in which participants' interests in Valero common stock are registered
under the Securities Act of 1933. The Thrift Plan is subject to the provisions
of the Employee Retirement Income Security Act of 1974 (ERISA).
Valero is the plan sponsor. An administrative committee, consisting of persons
selected by Valero, administers the Thrift Plan. The members of the
administrative committee serve without compensation for services in that
capacity. Merrill Lynch Trust Company of Texas is the trustee under the Thrift
Plan and has custody of the securities and investments of the Thrift Plan
through a trust (the Thrift Plan Trust). Merrill Lynch, Pierce, Fenner & Smith
Incorporated is the record keeper for the Thrift Plan.
Plan Mergers and Acquisitions
Asset transfers in from other plans include amounts transferred from other
savings plans related to the following:
o During the second quarter of 2000, Valero acquired Exxon Mobil
Corporation's Benicia, California refinery and Exxon-branded
California retail assets. Former ExxonMobil refinery and certain
retail employees who became Valero employees could elect to transfer
their balances from the ExxonMobil employee savings plan to the Thrift
Plan during 2001.
o In June 2001, Valero acquired El Paso Corporation's Corpus Christi,
Texas refinery and related refined products logistics business. Former
El Paso employees who became Valero employees could elect to transfer
their balances from the El Paso employee savings plan to the Thrift
Plan.
o In June 2001, Valero acquired Huntway Refining Company. The Huntway
401(k) plan was merged into the Thrift Plan effective September 1,
2001.
o In December 2001, Valero acquired Ultramar Diamond Shamrock
Corporation (UDS). The portion of the Valero Savings Plan related to
UDS non-store employees (other than union and HSB employees (defined
below)) was merged into the Thrift Plan effective May 1, 2002, and the
portion related to certain union employees was merged into the Thrift
Plan effective August 1, 2002, for a total of $180,881,797.
6
VALERO ENERGY CORPORATION THRIFT PLAN
NOTES TO FINANCIAL STATEMENTS - (Continued)
o Effective May 16, 2002, Valero sold certain assets and facilities
related to its Golden Eagle Refinery to Tesoro Refining and Marketing
Company (Tesoro) and, as part of this transaction, certain employees
(Held Separate Business employees or HSB employees) of Valero became
employees of Tesoro. Account balances of $8,271,147 for HSB employees
who did not make direct rollover transfers from the Valero Savings
Plan to a defined contribution plan maintained by Tesoro were merged
from the Valero Savings Plan into the Thrift Plan on August 1, 2002.
o Effective May 25, 2002, union employees participating in the Amended
and Restated PACE 401(k) Plan and Trust of Colorado Refining Company
(CRC 401(k) Plan) became eligible to participate in the Thrift Plan.
Effective September 1, 2002, the CRC 401(k) Plan was merged into the
Thrift Plan with a total account balance of $6,766,408.
o Prior to July 1, 2002, Valero maintained the Union of Operating
Engineers, Local 670, AFL-CIO Plan (Ardmore Plan) for the benefit of
certain eligible union employees at Valero's Ardmore Refinery.
Effective July 1, 2002, Ardmore union employees became eligible to
participate in the Thrift Plan. Effective August 1, 2002, the Ardmore
Plan was merged into the Thrift Plan with a total account balance of
$5,364,600.
Participation
Participation in the Thrift Plan is voluntary and is open to Valero employees
who become eligible to participate upon the completion of 30 days of continuous
service. However, retail store employees are not eligible to participate in the
Thrift Plan as they are eligible to participate in other plans sponsored by
Valero. Employees are eligible to participate in Valero's employer matching
contributions after completion of one year of continuous service.
Continuous service begins the first day for which an employee is paid and
terminates on the date of the employee's retirement, death or other termination
from service. If an employee's employment is terminated and the employee is
subsequently reemployed within 12 months, the period between the severance from
service and the date of reemployment is generally included in continuous
service. If the employee is not reemployed within 12 months, the employee is
deemed to have incurred a break in service. Former participants who are
reemployed after a break in service are generally eligible to become
participants immediately following reemployment.
Contributions
Through December 31, 2001, participants could make basic contributions of not
less than 2% or more than 8% of their annual total salary immediately upon
commencement of participation. In addition, participants who made a basic
contribution of 8% could also make a supplemental contribution of up to 14% of
their annual total salary. Annual total salary represented a participant's
current base salary including commissions, overtime, job upgrade pay and shift
differential pay, and was not reduced for pretax contributions for the purchase
of benefits and to reimbursement accounts for medical and child care expenses
under Valero's FlexPlan benefits program and pretax contributions under the
Thrift Plan itself. Effective January 1, 2002, the Thrift Plan was amended to
provide that participants can make a supplemental contribution of up to 22% of
their annual total salary, and the definition of annual total salary was
expanded to include cash bonuses. Participants may change their basic or
supplemental contribution percentages at any time. In addition, any employee may
make rollover contributions. For the years ended December 31, 2002 and 2001,
rollover contributions totaled $1,860,934 and $2,151,577, respectively, and are
included in employee contributions in the statements of changes in net assets
available for benefits.
7
VALERO ENERGY CORPORATION THRIFT PLAN
NOTES TO FINANCIAL STATEMENTS - (Continued)
Participants elect to make contributions to the Thrift Plan on a before-tax
and/or after-tax basis. Federal income taxes on before-tax contributions are
deferred until the time a distribution is made to the participant. The Internal
Revenue Code (the Code) establishes an annual limitation on the amount of
individual pre-tax salary deferral contributions. The limit was $11,000 and
$10,500 for the years ended December 31, 2002 and 2001, respectively. Effective
September 1, 2002, participants who are eligible to make pre-tax contributions
and who have attained age 50 before the end of the year are eligible to make an
additional catch-up pre-tax contribution of up to $1,000.
Valero makes an employer contribution to the Thrift Plan equal to 75% of
participants' basic contributions up to 8% of their annual base salary. Through
December 31, 2001, if Valero's return on equity for the prior year was equal to
or greater than 10%, then Valero's employer contribution would equal 100% of the
participant's basic contributions relating to the participant's annual base
salary for the 12-month period beginning February 1 of the calendar year
following the year in which the 10% return was achieved. Valero's return on
equity for the year ended December 31, 2000 was greater than 10%; therefore,
Valero's matching percentage was increased from 75% to 100% for the 12-month
period beginning February 1, 2001. Effective January 1, 2002, the Thrift Plan
was amended to provide that the maximum match by Valero would be 75% of each
participant's basic contributions up to 8% based on the participant's annual
total salary, including overtime and cash bonuses.
Forfeitures
Valero's employer contributions are reduced by any forfeited non-vested accounts
of terminated participants and increased by the value of prior forfeited
non-vested accounts for participants who are rehired within five years from date
of termination. For the years ended December 31, 2002 and 2001, employer
contributions were reduced by $64,200 and $130,552, respectively, by forfeited
non-vested accounts. As of December 31, 2002, forfeited non-vested accounts
available to reduce future employer contributions were $92,924.
Participant Accounts
Employer contributions are credited to an employer account for each participant
and employee contributions are credited to an employee account maintained under
the Thrift Plan for each participant. The employer and employee accounts for
each participant are adjusted to reflect all contributions, withdrawals, income,
expenses, gains and losses attributable to these accounts.
Vesting
Participants are vested 100% in their employee account at all times.
Participants vest in their employer account at the rate of 20% per year with
100% vesting after the fifth year of continuous service.
The Thrift Plan provides that if an employee incurs a break in service prior to
becoming vested in any part of their employer account, the employee's prior
continuous service will not be disregarded for purposes of the Thrift Plan until
the break in service equals or exceeds the greater of five years or the period
of prior continuous service. Upon a participant's termination of employment for
other than death, total and permanent disability or retirement, the non-vested
portion of the participant's employer account is forfeited. In the event the
participant is reemployed prior to incurring a break in service of five
successive years, any amounts forfeited under this provision will be reinstated.
8
VALERO ENERGY CORPORATION THRIFT PLAN
NOTES TO FINANCIAL STATEMENTS - (Continued)
Investment Options
Participants direct the investment of 100% of their employee contributions and
may transfer existing account balances into any of the funds offered. The funds
offered include the Valero Common Stock Fund, mutual funds, pooled separate
accounts, common/collective trusts and other self-directed investments. Employer
contributions are invested in Valero common stock. Through December 31, 2001,
participants could transfer up to 50% of Valero's employer contributions to any
other investment option offered. Effective January 1, 2002, participants may
transfer 100% of Valero's employer contributions to any other investment option
offered.
Withdrawals and Distributions
Participants may make the following types of withdrawals of all or part of their
respective accounts:
o one withdrawal during any six-month period from a participant's
after-tax employee account and rollover contribution account with no
suspension of future contributions;
o upon completion of five years of participation in the Thrift Plan, one
withdrawal from the participant's after-tax employee account and
employer account, with a similar withdrawal allowed 36 months after
the date of a previous withdrawal under this provision, with no
suspension of future contributions;
o upon reaching age 59 1/2, one withdrawal during any six-month period
from a participant's employee account and employer account; or
o upon furnishing proof of financial necessity, one withdrawal during
any six-month period from the participant's employee account and the
vested portion of the employer account, but, for withdrawals of
before-tax amounts, not to exceed the aggregate amount of the
participant's before-tax contributions.
Upon a participant's death, total and permanent disability or retirement, the
participant or the beneficiary of a deceased participant is entitled to a
distribution of the entire value of the participant's employee account and
employer account regardless of whether or not the accounts are fully vested.
Upon a participant's termination for any other reason, the participant is
entitled to a distribution of only the value of the participant's employee
account and the vested portion of the participant's employer account.
Distributions resulting from any of these occurrences may be received in a
single sum in whole shares of Valero common stock and cash, or entirely in cash.
Alternatively, for distributions commencing after December 31, 2001, a
participant or beneficiary may elect to receive this distribution in the form of
equal monthly installments over a period not exceeding the lesser of (i) five
years or (ii) the participant's life expectancy or the joint life expectancy of
the participant and the participant's designated beneficiary. In addition, when
the value of a distribution to a participant exceeds $5,000, the distribution
may be made prior to the participant attaining age 65 only with the
participant's consent.
Terminated participants may elect to have the Thrift Plan trustee hold their
accounts for distribution to them at a date not later than April 1 of the
calendar year after which they attain age 70 1/2. In this event, terminated
participants continue to share in the earnings and losses of the Thrift Plan
until their accounts are distributed.
Participant Loans
Participants may borrow, subject to certain limitations, amounts credited to
their employee account and the vested portion of their employer account. The
minimum loan amount is $500. The maximum loan amount a participant may have
outstanding is restricted to the lesser of:
9
VALERO ENERGY CORPORATION THRIFT PLAN
NOTES TO FINANCIAL STATEMENTS - (Continued)
(a) $50,000, reduced by the excess of (i) the highest outstanding balance
of the participant's loans during a one-year period over (ii) the
participant's then currently outstanding loan balance on the day any
new loan is made, or
(b) one-half of the current value of the participant's vested interest in
his Thrift Plan accounts.
The term of any loan may not exceed five years unless the loan is for the
purchase of a participant's principal residence, in which case, the term of the
loan may not exceed 15 years. The balance of the participant's employee account
and vested portion of his employer account serve as security for the loan. Loans
bear interest at a reasonable rate as established by the Administrative
Committee, presently at prime plus 1%. Loan repayments of principal and interest
are made through payroll deductions or as otherwise determined. Participants may
have two loans outstanding under the Thrift Plan at any time.
Plan Expenses
Administrative expenses of the Thrift Plan, including trustee fees and expenses
and other costs, are paid by Valero, or at Valero's option, by the Thrift Plan.
During the years ended December 31, 2002 and 2001, Valero paid $162,733 and
$57,044 of administrative expenses.
2. Summary of Significant Accounting Policies
Basis of Accounting
The financial statements of the Thrift Plan are prepared on the accrual basis of
accounting in accordance with United States generally accepted accounting
principles.
Use of Estimates
The preparation of financial statements in conformity with United States
generally accepted accounting principles requires management to make estimates
that affect the amounts of assets and changes therein reported in the financial
statements and disclosure of contingent assets and liabilities. Actual results
could differ from those estimates.
Valuation of Investments
The Thrift Plan's investments are stated at fair value except for the investment
contract, which is valued at contract value. Quoted market prices are used to
value investments. Shares of mutual funds are valued at the net asset value of
shares held by the Thrift Plan as of December 31. The investments in
common/collective trusts are stated at fair value as determined by the issuer of
the fund based on the fair value of the underlying assets. Investments in the
Stable Value Fund are comprised of an investment in an investment contract and a
common/collective trust. Investments in the Multi-Cap Core Fund are comprised of
investments in Vanguard/PRIMECAP (a mutual fund) and a money market fund. Money
market funds and participant loans are valued at cost, which approximates fair
value.
Income Recognition
Purchases and sales of investments are recorded on a trade-date basis. Interest
income is recorded on the accrual basis. Dividends are recorded on the
ex-dividend date.
The net depreciation in fair value of investments consists of net realized gains
and losses on the sale of investments and the net unrealized appreciation
(depreciation) of investments.
Withdrawals by Participants
Withdrawals by participants are recorded when paid.
10
VALERO ENERGY CORPORATION THRIFT PLAN
NOTES TO FINANCIAL STATEMENTS - (Continued)
Risks and Uncertainties
The Thrift Plan's investments, in general, are exposed to various risks, such as
interest rate, credit and overall market volatility risks. Due to the level of
risk associated with certain investments, it is reasonably possible that changes
in the values of investments will occur in the near term and that such changes
could materially affect participants' account balances and amounts reflected in
the statements of net assets available for benefits.
Reclassifications
Certain previously reported amounts have been reclassified to conform to the
2002 presentation.
3. Investments
Investments that represent 5% or more of the Thrift Plan's net assets are as
follows:
December 31,
------------
2002 2001
---- ----
Valero Energy Corporation common stock:
Participant-directed......................... $ 165,779,345 $ 69,047,951
Nonparticipant-directed (a).................. - 32,396,835
Merrill Lynch Retirement Preservation Trust...... 65,864,915 16,339,232
Merrill Lynch Equity Index Trust (b)............. 27,030,268 12,886,267
Fidelity Magellan Fund (c)....................... 22,479,272 27,757,031
MetLife investment contract (c).................. 22,389,383 21,509,350
American Century Ultra Fund (c).................. 19,681,839 17,542,988
-----------------------------------------------------
(a) As of January 1, 2002, all employer contributions (made 100% in Valero
common stock) can be immediately diversified into other funds;
therefore, there are no more nonparticipant-directed investments.
(b) As of December 31, 2001, this investment is less than 5% of the Thrift
Plan's net assets but is shown in the above table for comparative
purposes only.
(c) As of December 31, 2002, this investment is less than 5% of the Thrift
Plan's net assets but is shown in the above table for comparative
purposes only.
During the years ended December 31, 2002 and 2001, the Thrift Plan's investments
(including gains and losses on investments bought and sold, as well as held
during the year) appreciated (depreciated) in value as follows:
Years Ended December 31,
------------------------
2002 2001
---- ----
Common stock.......................................... $ (11,680,712) $ 1,904,383
Mutual funds.......................................... (28,145,548) (13,086,438)
Common/collective trusts.............................. (5,639,982) (1,650,728)
Stable Value Fund..................................... 165 (1)
Self-directed investments:
Common stock......................................... (16,417,881) 1,808,517
Mutual funds......................................... (937,077) (1,063,131)
----------- -----------
Net depreciation in fair value of investments...... $ (62,821,035) $(12,087,398)
========== ==========
11
VALERO ENERGY CORPORATION THRIFT PLAN
NOTES TO FINANCIAL STATEMENTS - (Continued)
4. Nonparticipant-Directed Investments
Through December 31, 2001, nonparticipant-directed investments included the
portion of employer contributions that were required to be invested in the
Valero Common Stock Fund as discussed in Note 1 under Investment Options.
Nonparticipant-directed investments also included forfeited non-vested employer
accounts that are available to reduce future employer contributions. Effective
January 1, 2002, employer contributions, including existing employer
contributions, can immediately be diversified into other funds. As a result, the
December 31, 2001 balance of nonparticipant-directed investments was transferred
to participant-directed investments effective January 1, 2002. Information about
the balance of nonparticipant-directed investments, and significant components
of the changes in those investments, is as follows:
December 31,
------------
2002 2001
---- ----
Valero common stock........................................ $ - $ 32,396,835
========== ==========
Years Ended December 31,
------------------------
2002 2001
---- ----
Changes in nonparticipant-directed investments:
Interest income........................................... $ - $ 1,015
Dividend income........................................... - 272,585
Net appreciation in fair value of investments............. - 400,642
Contributions............................................. - 5,626,200
Withdrawals by participants............................... - (1,260,888)
Participant loan repayments, net of loan
disbursements and other............................. - (12,022)
Transfers to participant-directed investments............. (32,396,835) (888,984)
---------- ----------
Net increase (decrease) in nonparticipant-directed
investments........................................ (32,396,835) 4,138,548
Balance as of beginning of year............................ 32,396,835 28,258,287
---------- ----------
Balance as of end of year.................................. $ - $ 32,396,835
========== ==========
5. Party in Interest Transactions
Certain Thrift Plan investments are shares of Valero common stock, and
common/collective trusts and mutual funds that are managed by Merrill Lynch.
Transactions in these investments qualify as party in interest transactions.
6. Plan Termination
Although it has not expressed any intent to do so, Valero has the right under
the Thrift Plan to discontinue its contributions at any time and to terminate
the Thrift Plan subject to the provisions of ERISA. In the event of any
termination of the Thrift Plan or complete discontinuance of employer
contributions, participants would become 100% vested in their employer account.
12
VALERO ENERGY CORPORATION THRIFT PLAN
NOTES TO FINANCIAL STATEMENTS - (Continued)
7. Tax Status
The Internal Revenue Service has determined and informed Valero by a letter
dated April 26, 2002, that the Thrift Plan is designed in accordance with
applicable sections of the Code. Although the Thrift Plan has been amended since
receiving the determination letter, the Administrative Committee believes that
the Thrift Plan is designed and is currently being operated in compliance with
the applicable requirements of the Code.
8. Reconciliation of Financial Statements to Form 5500
The following is a reconciliation of net assets available for benefits per the
financial statements to the Form 5500 Annual Return/Report of Employee Benefit
Plan:
December 31,
------------
2002 2001
---- ----
Net assets available for benefits per the financial statements......... $ 489,108,951 $ 306,543,079
Amounts allocated to withdrawing participants........................ (176,100) (2,666)
----------- -----------
Net assets available for benefits per the Form 5500.................... $ 488,932,851 $ 306,540,413
=========== ===========
The following is a reconciliation of withdrawals by participants per the
financial statements to the Form 5500 Annual Return/Report of Employee Benefit
Plan:
Years Ended December 31,
------------------------
2002 2001
---- ----
Withdrawals by participants per the financial statements...... $ 25,861,361 $ 13,392,586
Add: Amounts allocated to withdrawing participants
as of end of year....................................... 176,100 2,666
Less: Amounts allocated to withdrawing participants
as of beginning of year................................. (2,666) -
---------- ----------
Benefits paid to participants per the Form 5500............... $ 26,034,795 $ 13,395,252
========== ==========
13
SCHEDULE H, Line 4i
VALERO ENERGY CORPORATION THRIFT PLAN
EIN: 74-1828067
Plan No. 002
Schedule of Assets (Held at End of Year)
As of December 31, 2002
Identity of Issue/Description of Investment Current Value
------------------------------------------- -------------
Common stock:
* Valero Energy Corporation.................................... $ 165,779,345
Citigroup Inc................................................ 3,087,238
PG&E Corporation............................................. 2,830,483
-----------
171,697,066
-----------
Stable Value Fund:
* Merrill Lynch Retirement Preservation Trust.................. 25,382,608
MetLife investment contract.................................. 22,389,383
-----------
47,771,991
-----------
Common/collective trusts:
* Merrill Lynch Retirement Preservation Trust.................. 40,482,307
* Merrill Lynch Equity Index Trust............................. 27,030,268
-----------
67,512,575
-----------
Mutual funds:
The Oakmark Equity and Income Fund........................... 23,332,784
Fidelity Magellan Fund....................................... 22,479,272
Multi-Cap Core Fund.......................................... 22,460,688
American Century Ultra Fund.................................. 19,681,839
* Merrill Lynch Basic Value Fund............................... 15,280,157
American Funds EuroPacific Growth Fund....................... 12,366,765
* Merrill Lynch Intermediate Corporate Bond Fund............... 11,566,744
MFS Massachusetts Investors Growth Stock Fund................ 9,556,507
* Merrill Lynch Global Allocation Fund......................... 5,907,109
Templeton Foreign Fund....................................... 2,684,104
AIM Income Fund.............................................. 1,709,634
-----------
147,025,603
-----------
Self-directed investments....................................... 30,454,730
*Participant loans (interest rates ranging from 5.25% to 11.5%). 23,743,881
-----------
Total....................................................... $ 488,205,846
===========
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* Party in interest to the Thrift Plan.
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SIGNATURE
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934,
the Administrative Committee has duly caused this annual report to be signed on
its behalf by the undersigned hereunto duly authorized.
VALERO ENERGY CORPORATION THRIFT PLAN
By /s/ John D. Gibbons
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John D. Gibbons
Chairman of the Administrative Committee
and Executive Vice President and Chief Financial Officer,
Valero Energy Corporation
Date: June 30, 2003
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