EXHIBIT 11.1 VALERO ENERGY CORPORATION AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE (Thousands of Dollars, Except Per Share Amounts) Three Months Ended Nine Months Ended September 30, September 30, 1997 1996 1997 1996 COMPUTATION OF EARNINGS PER SHARE ASSUMING NO DILUTION: Income from continuing operations . . . . . . . . $ 51,993 $ 6,630 $ 99,402 $ 27,757 Income (loss) from discontinued operations, net of income taxes. . . . . . . . . . . . . . $ (432) $ 6,516 $ (15,672) $ 26,144 Less: Preferred stock dividend requirements and redemption premium . . . . . . . . . . . . - (2,844) (4,592) (8,526) Income (loss) from discontinued operations applicable to common stock . . . . . . . . . . $ (432) $ 3,672 $ (20,264) $ 17,618 Weighted average number of shares of common stock outstanding . . . . . . . . . . . 55,949,765 43,983,599 50,175,077 43,877,733 Earnings (loss) per share assuming no dilution: Continuing operations. . . . . . . . . . . . . $ .93 $ .15 $ 1.98 $ .63 Discontinued operations. . . . . . . . . . . . (.01) .08 (.40) .40 Total . . . . . . . . . . . . . . . . . . . $ .92 $ .23 $ 1.58 $ 1.03 COMPUTATION OF EARNINGS PER SHARE ASSUMING FULL DILUTION: Income from continuing operations assuming full dilution. . . . . . . . . . . . . . . . . $ 51,993 $ 6,630 $ 99,402 $ 27,757 Income (loss) from discontinued operations, net of income taxes. . . . . . . . . . . . . . $ (432) $ 6,516 $ (15,672) $ 26,144 Less: Preferred stock dividend requirements and redemption premium . . . . . . . . . . . . - (2,844) (4,592) (8,526) Add: Reduction of preferred stock dividends applicable to the assumed conversion of Convertible Preferred Stock at the beginning of the period. . . . . . . . . . . . - 2,695 4,522 8,086 Income (loss) from discontinued operations applicable to common stock assuming full dilution . . . . . . . . . . . . . . . . $ (432) $ 6,367 $ (15,742) $ 25,704 Weighted average number of shares of common stock outstanding . . . . . . . . . . . 55,949,765 43,983,599 50,175,077 43,877,733 Weighted average common stock equivalents applicable to stock options. . . . 881,822 229,801 764,825 407,319 Weighted average shares issuable upon assumed conversion of Convertible Preferred Stock at the beginning of the period . . . . . . . . - 6,381,798 3,326,006 6,381,798 Weighted average shares used for computation . . . . . . . . . . . . . . . . . . 56,831,587 50,595,198 54,265,908 50,666,850 Earnings (loss) per share assuming full dilution: Continuing operations. . . . . . . . . . . . . $ .92 $ .13 $ 1.83 $ .55 Discontinued operations. . . . . . . . . . . . (.01) .13 (.29) .51 Total . . . . . . . . . . . . . . . . . . . $ .91 (b) $ .26 (a) $ 1.54 (b) $ 1.06 (a) <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%.