Visibility to Growth and Disciplined Capital Management

Non-GAAP Disclosures (continued) Adjusted Earnings Per Common Share - assuming dilution VLO defines adjusted earnings per common share - assuming dilution as earnings per common share - assuming dilution excluding the lower of cost or market inventory valuation adjustment and its related income tax effect, asset impairment losses and the income tax benefit from the Aruba disposition. VLO believes this measure is useful to assess our ongoing financial performance because, when reconciled to earnings per common share - assuming dilution, it provides improved comparability between periods through the exclusion of certain items that VLO believes are not indicative of our core operating performance and that their exclusion results in an important measure of our ongoing financial performance to better assess our underlying business results and trends. The GAAP measures most directly comparable to adjusted earnings per common share - assuming dilution are earnings per common share - assuming dilution. Adjusted earnings per common share assuming dilution should not be considered an alternative to earnings per common share assuming dilution presented in accordance with GAAP. Adjusted earnings per common share - assuming dilution has important limitations as an analytical tool because it excludes some, but not all, items that affect earnings per common share assuming dilution. Adjusted earnings per common share - assuming dilution should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Additionally, because adjusted earnings per common share - assuming dilution may be defined differently by other companies in our industry, VLO's definition of adjusted earnings per common share - assuming dilution may not be comparable to similarly titled measures of other companies, thereby diminishing its utility. - Free Cash Flow VLO defines free cash flow as net cash provided by operating activities less capital expenditures, deferred turnaround and catalyst cost expenditures, investments in joint ventures, and changes in current assets and liabilities. VLO believes that the presentation of free cash flow provides useful information to investors in assessing our ability to cover ongoing costs and our ability to generate cash returns to stockholders. The GAAP measures most directly comparable to free cash flow are net cash provided by operating activities and net cash used in investing activities. Free cash flow should not be considered an alternative to net cash provided by operating activities or net cash used in investing activities presented in accordance with GAAP. Free cash flow has important limitations as an analytical tool because it excludes some, but not all, items that affect net cash provided by operating activities or net cash used in investing activities. Free cash flow should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Additionally, because free cash flow may be defined differently by other companies in our industry, VLO's definition of free cash flow may not be comparable to similarly titled measures of other companies, thereby diminishing its utility. 38 Valero

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