EXHIBIT 11.1 VALERO ENERGY CORPORATION AND SUBSIDIARIES (formerly Valero Refining and Marketing Company) COMPUTATION OF EARNINGS PER SHARE (Thousands of Dollars, Except Per Share Amounts) Three Months Ended Six Months Ended June 30, June 30, 1997 1996 1997 1996 COMPUTATION OF EARNINGS PER SHARE ASSUMING NO DILUTION: Income from continuing operations. . . . . . . . . . . . . . . $ 27,598 $ 18,164 $ 47,409 $ 21,127 Income (loss) from discontinued operations, net of income taxes. . . . $ (10,869) $ 2,677 $ (15,240) $ 19,628 Less: Preferred stock dividend requirements and redemption premium. . . . . . . . . . . . . . . . (1,826) (2,841) (4,592) (5,682) Income (loss) from discontinued operations applicable to common stock. . . . . . . . . . . . . . . . . $ (12,695) $ (164) $ (19,832) $ 13,946 Weighted average number of shares of common stock outstanding . . . . . . . 50,163,762 43,901,049 47,287,734 43,824,800 Earnings (loss) per share assuming no dilution: Continuing operations. . . . . . . . . $ .55 $ .41 $ 1.00 $ .48 Discontinued operations. . . . . . . . (.26) - (.42) .32 Total . . . . . . . . . . . . . . . $ .29 $ .41 $ .58 $ .80 COMPUTATION OF EARNINGS PER SHARE ASSUMING FULL DILUTION: Income from continuing operations assuming full dilution . . . . . . . . $ 27,598 $ 18,164 $ 47,409 $ 21,127 Income (loss) from discontinued operations, net of income taxes . . . . $ (10,869) $ 2,677 $ (15,240) $ 19,628 Less: Preferred stock dividend requirements and redemption premium. . . . . . . . . . . . . . . . (1,826) (2,841) (4,592) (5,682) Add: Reduction of preferred stock dividends applicable to the assumed conversion of Convertible Preferred Stock at the beginning of the period. . . . . . . . . . . . . 1,826 2,696 4,522 5,391 Income (loss) from discontinued operations applicable to common stock assuming full dilution . . . . . $ (10,869) $ 2,532 $ (15,310) $ 19,337 Weighted average number of shares of common stock outstanding . . . . . . . 50,163,762 43,901,049 47,287,734 43,824,800 Weighted average common stock equivalents applicable to stock options. . . . . . . . . . . . . . . . 584,107 553,341 561,703 496,078 Weighted average shares issuable upon assumed conversion of Convertible Preferred Stock at the beginning of the period. . . . . . . . . . . . . 3,596,219 6,381,798 4,989,009 6,381,798 Weighted average shares used for computation . . . . . . . . . . . . . . 54,344,088 50,836,188 52,838,446 50,702,676 Earnings (loss) per share assuming full dilution: Continuing operations. . . . . . . . . $ .51 $ .36 $ .90 $ .42 Discontinued operations. . . . . . . . (.20) .05 (.29) .38 Total . . . . . . . . . . . . . . . $ .31 (a) $ .41 (b) $ .61 (a) $ .80 (b) <FN> (a) This calculation is submitted in accordance with paragraph 601(b)(11) of Regulation S-K although it is contrary to APB Opinion No. 15 because it produces an antidilutive result. (b) This calculation is submitted in accordance with paragraph 601(b)(11) of Regulation S-K although it is not required by APB Opinion No. 15 because it results in dilution of less than 3%.