10-Q 1 vlo-20210930.htm 10-Q vlo-20210930
VALERO ENERGY CORP/TX0001035002FALSE2021Q3--12-31Includes excise taxes on sales by certain of our international operations of $1,610 million and $1,339 million for the three months ended September 30, 2021 and 2020, respectively, and $4,152 million and $3,491 million for the nine months ended September 30, 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 September 30, 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 October 22, 2021 was 408,835,615.



VALERO ENERGY CORPORATION
TABLE OF CONTENTS
Page


i


PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

VALERO ENERGY CORPORATION
CONSOLIDATED BALANCE SHEETS
(millions of dollars, except par value)
September 30,
2021
December 31,
2020
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents$3,498 $3,313 
Receivables, net8,627 6,109 
Inventories6,227 6,038 
Prepaid expenses and other438 384 
Total current assets18,790 15,844 
Property, plant, and equipment, at cost48,235 46,967 
Accumulated depreciation(17,795)(16,578)
Property, plant, and equipment, net30,440 30,389 
Deferred charges and other assets, net5,461 5,541 
Total assets$54,691 $51,774 
LIABILITIES AND EQUITY
Current liabilities:
Current portion of debt and finance lease obligations$1,162 $723 
Accounts payable9,820 6,082 
Accrued expenses1,539 994 
Taxes other than income taxes payable1,548 1,372 
Income taxes payable244 112 
Total current liabilities14,313 9,283 
Debt and finance lease obligations, less current portion13,071 13,954 
Deferred income tax liabilities5,110 5,275 
Other long-term liabilities3,608 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 capital6,830 6,814 
Treasury stock, at cost;
264,680,113 and 265,096,171 common shares
(15,696)(15,719)
Retained earnings27,673 28,953 
Accumulated other comprehensive loss(1,338)(1,254)
Total Valero Energy Corporation stockholders’ equity17,476 18,801 
Noncontrolling interests1,113 841 
Total equity18,589 19,642 
Total liabilities and equity$54,691 $51,774 
See Condensed Notes to Consolidated Financial Statements.

1


VALERO ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(millions of dollars, except per share amounts)
(unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2021202020212020
Revenues (a)$29,520 $15,809 $78,074 $48,308 
Cost of sales:
Cost of materials and other26,624 14,801 70,865 43,832 
Lower of cost or market (LCM) inventory valuation adjustment (313) (19)
Operating expenses (excluding depreciation and amortization
expense reflected below)
1,348 1,117 4,218 3,268 
Depreciation and amortization expense630 602 1,772 1,737 
Total cost of sales28,602 16,207 76,855 48,818 
Other operating expenses19 25 69 30 
General and administrative expenses (excluding depreciation and
amortization expense reflected below)
195 186 579 532 
Depreciation and amortization expense11 12 35 37 
Operating income (loss)693 (621)536 (1,109)
Other income, net32 48 179 107 
Interest and debt expense, net of capitalized interest(152)(143)(451)(410)
Income (loss) before income tax expense (benefit)573 (716)264 (1,412)
Income tax expense (benefit)65 (337)86 (614)
Net income (loss)508 (379)178 (798)
Less: Net income attributable to noncontrolling interests45 85 257 264 
Net income (loss) attributable to Valero Energy Corporation
stockholders
$463 $(464)$(79)$(1,062)
Earnings (loss) per common share$1.13 $(1.14)$(0.20)$(2.62)
Weighted-average common shares outstanding (in millions)407 407 407 407 
Earnings (loss) per common share – assuming dilution$1.13 $(1.14)$(0.20)$(2.62)
Weighted-average common shares outstanding –
assuming dilution (in millions)
408 407 407 407 
__________________________
Supplemental information:
(a) Includes excise taxes on sales by certain of our international
operations
$1,610 $1,339 $4,152 $3,491 

See Condensed Notes to Consolidated Financial Statements.

2


VALERO ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(millions of dollars)
(unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2021202020212020
Net income (loss)$508 $(379)$178 $(798)
Other comprehensive income (loss):
Foreign currency translation adjustment(259)217 (114)(252)
Net gain on pension and other postretirement
benefits
16 12 44 36 
Net gain (loss) on cash flow hedges(17)5 (14)9 
Other comprehensive income (loss) before
income tax expense (benefit)
(260)234 (84)(207)
Income tax expense (benefit) related to items of
other comprehensive income (loss)
(1)4 8 9 
Other comprehensive income (loss)(259)230 (92)(216)
Comprehensive income (loss)249 (149)86 (1,014)
Less: Comprehensive income attributable
to noncontrolling interests
35 87 249 268 
Comprehensive income (loss) attributable to
Valero Energy Corporation stockholders
$214 $(236)$(163)$(1,282)

See Condensed Notes to Consolidated Financial Statements.

3


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 June 30, 2021$7 $6,819 $(15,696)$27,610 $(1,089)$17,651 $1,053 $18,704 
Net income— — — 463 — 463 45 508 
Dividends on common stock
($0.98 per share)
— — — (400)— (400)— (400)
Stock-based compensation
expense
— 11 — — — 11 — 11 
Contributions from noncontrolling
interests
— — — — — — 25 25 
Other comprehensive loss— — — — (249)(249)(10)(259)
Balance as of September 30, 2021$7 $6,830 $(15,696)$27,673 $(1,338)$17,476 $1,113 $18,589 
Balance as of June 30, 2020$7 $6,824 $(15,760)$30,575 $(1,799)$19,847 $787 $20,634 
Net income (loss)— — — (464)— (464)85 (379)
Dividends on common stock
($0.98 per share)
— — — (399)— (399)— (399)
Stock-based compensation
expense
— 12 — — — 12 — 12 
Transactions in connection
with stock-based
compensation plans
— (2)1 — — (1)— (1)
Distributions to noncontrolling
interests
— — — — — — (81)(81)
Other comprehensive income— — — — 228 228 2 230 
Balance as of September 30, 2020$7 $6,834 $(15,759)$29,712 $(1,571)$19,223 $793 $20,016 

See Condensed Notes to Consolidated Financial Statements.

4


VALERO ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF EQUITY (Continued)
(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)— — — (79)— (79)257 178 
Dividends on common stock
($2.94 per share)
— — — (1,201)— (1,201)— (1,201)
Stock-based compensation
expense
— 52 — — — 52 — 52 
Transactions in connection
with stock-based
compensation plans
— (36)23 — — (13)— (13)
Contributions from noncontrolling
interests
— — — — — — 25 25 
Distributions to noncontrolling
interests
— — — — — — (2)(2)
Other comprehensive loss— — — — (84)(84)(8)(92)
Balance as of September 30, 2021$7 $6,830 $(15,696)$27,673 $(1,338)$17,476 $1,113 $18,589 
Balance as of December 31, 2019$7 $6,821 $(15,648)$31,974 $(1,351)$21,803 $733 $22,536 
Net income (loss)— — — (1,062)— (1,062)264 (798)
Dividends on common stock
($2.94 per share)
— — — (1,200)— (1,200)— (1,200)
Stock-based compensation
expense
— 48 — — — 48 — 48 
Transactions in connection
with stock-based
compensation plans
— (35)19 — — (16)— (16)
Open market stock purchases
— — (130)— — (130)— (130)
Distributions to noncontrolling
interests
— — — — — — (208)(208)
Other comprehensive
income (loss)
— — — — (220)(220)4 (216)
Balance as of September 30, 2020$7 $6,834 $(15,759)$29,712 $(1,571)$19,223 $793 $20,016 

See Condensed Notes to Consolidated Financial Statements.

5


VALERO ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(millions of dollars)
(unaudited)
Nine Months Ended
September 30,
20212020
Cash flows from operating activities:
Net income (loss)$178 $(798)
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation and amortization expense1,807 1,774 
LCM inventory valuation adjustment (19)
Gain on sale of partial interest in MVP Terminalling, LLC (MVP)(62) 
Deferred income tax expense (benefit)(150)177 
Changes in current assets and current liabilities1,630 (232)
Changes in deferred charges and credits and other operating activities, net2 (50)
Net cash provided by operating activities3,405 852 
Cash flows from investing activities:
Capital expenditures (excluding variable interest entities (VIEs))(368)(775)
Capital expenditures of VIEs:
Diamond Green Diesel Holdings LLC (DGD)(730)(311)
Other VIEs(59)(196)
Deferred turnaround and catalyst cost expenditures (excluding VIEs)(544)(529)
Deferred turnaround and catalyst cost expenditures of DGD(6)(18)
Proceeds from sale of partial interest in MVP270  
Investments in unconsolidated joint ventures(8)(39)
Other investing activities, net33 16 
Net cash used in investing activities(1,412)(1,852)
Cash flows from financing activities:
Proceeds from debt issuances and borrowings (excluding VIEs) 4,320 
Proceeds from borrowings of VIEs:
DGD100  
Other VIEs29 202 
Repayments of debt and finance lease obligations (excluding VIEs)(672)(461)
Repayments of debt of VIEs(4)(4)
Purchases of common stock for treasury(15)(147)
Common stock dividend payments(1,201)(1,200)
Contributions from noncontrolling interests25  
Distributions to noncontrolling interests(2)(208)
Other financing activities, net1 (32)
Net cash provided by (used in) financing activities(1,739)2,470 
Effect of foreign exchange rate changes on cash(69)(6)
Net increase in cash and cash equivalents185 1,464 
Cash and cash equivalents at beginning of period3,313 2,583 
Cash and cash equivalents at end of period$3,498 $4,047 

See Condensed Notes to Consolidated Financial Statements.

6





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. The term “DGD,” as used in this report, may refer to Diamond Green Diesel Holdings LLC, its wholly owned consolidated subsidiary — Diamond Green Diesel LLC, or both 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 nine months ended September 30, 2021 have been included. All such adjustments are of a normal recurring nature unless disclosed otherwise. Operating results for the nine months ended September 30, 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.

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.

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

At the onset of the COVID-19 pandemic in March 2020, governmental authorities around the world imposed restrictions, such as stay-at-home orders and other social distancing measures, to slow the spread of COVID-19. These measures resulted in significant economic disruption globally as reduced economic

7





VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
activity negatively impacted many businesses, including our business. We experienced a decline in the demand for most of the transportation fuels that we produce and sell, and thus also a decline in the market prices of those products, due to a decrease in the level of individual movement and travel resulting from the restrictions and general public health concerns. Some governmental authorities began lifting restrictions in the latter part of 2020 and this has continued throughout the first nine months of 2021. These actions have contributed to increasing levels of individual movement and travel and a resulting increase in the demand for and market prices of our products. However, some governmental authorities continue to impose some level of restrictions due in part to new outbreaks, including those related to new variants of the COVID-19 virus.

The distribution of vaccines beginning in late 2020 has helped decrease rates of infection and contributed to the lifting of many restrictions. The ongoing distribution of vaccines may result in the continued lifting of restrictions globally and may be seen as a key factor contributing to the ongoing restoration of public confidence, and thus also to stimulating and increasing global economic activity. However, the risk remains that vaccines may not be distributed widely on a timely basis, they may not be as effective against new variants of the 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. Additionally, many governmental authorities have recently announced requirements and mandates, including steep fines for non-compliance, on employers concerning workforce vaccination and testing. Many large companies across the globe, independent of such government regulations, have also begun implementing vaccine requirements and mandates for their workforce, or as a prerequisite to providing customers certain goods and services in person. These requirements and mandates have evoked mixed reactions and have created additional challenges and costs, both administratively and operationally, for employers and employees. Developments with respect to such requirements and mandates are evolving at a rapid pace and the ultimate impact thereof remains uncertain.

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 and may continue to be significant. We believe we have proactively responded to many of the known impacts of the pandemic on our business to the extent practicable and we strive to continue to do so, but there can be no assurance that these or other measures will be fully effective.

3.    INVENTORIES

Inventories consisted of the following (in millions):
September 30,
2021
December 31,
2020
Refinery feedstocks$1,646 $1,979 
Refined petroleum products and blendstocks
3,944 3,425 
Renewable diesel feedstocks and products
113 50 
Ethanol feedstocks and products233 297 
Materials and supplies291 287 
Inventories$6,227 $6,038 


8





VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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 September 30, 2020, we reevaluated our inventories and determined that our cost was lower than market. As a result, our LCM inventory valuation reserve was fully reversed as of September 30, 2020. The change in our LCM inventory valuation reserve resulted in a net benefit of $313 million during the three months ended September 30, 2020. The net benefit of $19 million for the nine months ended September 30, 2020 was due to the foreign currency translation effect of the portion of the LCM inventory valuation adjustment attributable to our international operations. As of September 30, 2021 and December 31, 2020, the replacement cost (market value) of LIFO inventories exceeded their LIFO carrying amounts by $5.2 billion and $1.3 billion, respectively.

During the three and nine months ended September 30, 2020, we recognized the impact of an expected liquidation of LIFO inventory layers that increased cost of materials and other by $326 million. Our LIFO inventory levels decreased throughout the first nine months of 2020 due to lower production resulting from lower demand for our products caused by the negative economic impacts of the COVID-19 pandemic on our business. Consequently, we expected our LIFO inventory levels as of December 31, 2020 would remain below their December 31, 2019 levels.

Our non-LIFO inventories accounted for $1.2 billion and $918 million of our total inventories as of September 30, 2021 and December 31, 2020, respectively.

4.    PROPERTY, PLANT, AND EQUIPMENT

In September 2021 and 2020, we reduced the estimated useful lives of our ethanol plants in Jefferson, Wisconsin and Riga, Michigan, respectively, which reduced their net book values to estimated salvage value. The additional depreciation expense for the three and nine months ended September 30, 2021 and 2020 of $48 million and $30 million, respectively, resulting from these changes did not have a material impact on our results of operations nor was there a material impact to our financial position.

The Jefferson plant was temporarily idled in 2020 at the onset of the COVID-19 pandemic in response to the decreased demand for ethanol resulting from the effects of the pandemic on our business, and we had previously evaluated this plant for potential impairment assuming that operations would resume. However, we completed an evaluation of the plant during the third quarter of 2021 and concluded that it

9





VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
was no longer a strategic asset for our ethanol business. As a result, the plant’s operations have permanently ceased.
The Riga plant was temporarily idled in 2019 due to corn quality issues with the local third-party corn feedstock supply. Although we expected operations to resume after an improved corn harvest, we completed an evaluation of this plant during the third quarter of 2020 and concluded that it was no longer a strategic asset for our ethanol business. The plant’s operations permanently ceased at that time.

5.    DEBT

Public Debt
In September 2021, we redeemed our Floating Rate Senior Notes due September 15, 2023 (the Floating Rate Notes) for $575 million, or 100.00 percent of stated value, plus accrued and unpaid interest.

During the nine months ended September 30, 2020, the following activity occurred:

In September 2020, we issued the following senior notes:

the Floating Rate Notes, which bore interest at a rate of three-month London Interbank Offered Rate (LIBOR) plus 1.150 percent per annum, subject to certain adjustments set forth in the terms of the Floating Rate Notes;
$925 million of 1.200 percent Senior Notes due March 15, 2024;

$400 million of 2.850 percent Senior Notes due April 15, 2025 that constitute an additional issuance of our 2.850 percent Senior Notes due April 15, 2025 that were issued in April 2020 (see below); and
$600 million of 2.150 percent Senior Notes due September 15, 2027.

In April 2020, we issued $850 million of 2.700 percent Senior Notes due April 15, 2023 and $650 million of 2.850 percent Senior Notes due April 15, 2025.
Proceeds from the April and September 2020 debt issuances totaled $4.020 billion before deducting the underwriting discount and other debt issuance costs.


10





VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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):
September 30, 2021
Facility
Amount
Maturity DateOutstanding
Borrowings
Letters of Credit
Issued (a)
Availability
Committed facilities:
Valero Revolver$4,000 March 2024$ $288 $3,712 
Canadian RevolverC$150 November 2021C$ C$5 C$145 
Accounts receivable
sales facility (b)
$1,300 July 2022$ n/a$1,300 
Letter of credit
facility
$50 November 2021n/a$ $50 
Committed facilities of
VIEs (c):
DGD Revolver$400 March 2024$100 $7 $293 
IEnova Revolver$743 February 2028$627 n/a$116 
Uncommitted facilities:
Letter of credit
facilities
n/an/an/a$127 n/a
________________________
(a)Letters of credit issued as of September 30, 2021 expire at various times in 2021 through 2023.
(b)In July 2021, we extended the maturity date of this facility to July 2022 and increased the facility amount from $1.0 billion to $1.3 billion.
(c)Creditors of our VIEs do not have recourse against us.

Activity under our credit facilities was as follows (in millions):
Nine Months Ended
September 30,
20212020
Borrowings:
Accounts receivable sales facility$ $300 
DGD Revolver100  
IEnova Revolver29 202 
Repayments:
Accounts receivable sales facility (400)
DGD Revolver
In March 2021, DGD (as described in Note 7) 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. Initially, the DGD Revolver also provided for the issuance of letters of credit of up to $10 million. In September 2021, the DGD Revolver was amended to increase the letter of credit facility from $10 million to $50 million and to limit DGD’s indebtedness arising under other letters of credit that DGD may obtain up to $25 million at

11





VALERO ENERGY CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
any one time outstanding. This restriction does not impact Valero’s other letter of credit facilities. The DGD Revolver is only available to the operations of DGD. DGD’s lender does 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. As of September 30, 2021, the variable interest rate on the DGD Revolver was 1.840 percent.

IEnova Revolver
In May 2021, the borrowing capacity under the IEnova Revolver was increased from $660 million to $743 million. As of September 30, 2021 and December 31, 2020, the variable weighted-average interest rate on the IEnova Revolver was 3.497 percent and 3.870 percent, respectively. The IEnova Revolver is available only to the operations of Central Mexico Terminals (as described in Note 7). IEnova does not have recourse against us.

Other Disclosures
“Interest and debt expense, net of capitalized interest” is comprised as follows (in millions):
Three Months Ended
September 30,
Nine Months Ended
September 30,
2021202020212020
Interest and debt expense$162 $162 $488 $468 
Less: Capitalized interest10 19 37 58 
Interest and debt expense, net of
capitalized interest
$152 $143 $451 $410 

6.    EQUITY

Share Activity
There was no significant share activity during the nine months ended September 30, 2021 and 2020.

Common Stock Dividends
On October 27, 2021, our board of directors declared a quarterly cash dividend of $0.98 per common share payable on December 9, 2021 to holders of record at the close of business on November 18, 2021.


12





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 September 30,
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
$(373)$(715)$(1)$(1,089)$(1,144)$(653)$(2)$(1,799)
Other comprehensive
income (loss) before
reclassifications
(255) (8)(263)217   217 
Amounts reclassified
from accumulated
other comprehensive
loss
 10 2 12  9 2 11 
Effect of exchange rates 2