EXHIBIT 11.1 VALERO ENERGY CORPORATION AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE (Thousands of Dollars, Except Per Share Amounts) Three Months Ended Six Months Ended June 30, June 30, 1998 1997 1998 1997 COMPUTATION OF BASIC EARNINGS PER SHARE: Income from continuing operations............................. $ 39,939 $ 27,598 $ 34,055 $ 47,409 Loss from discontinued operations, net of income tax benefit.. $ - $ (10,869) $ - $ (15,240) Less: Preferred stock dividend requirements and redemption premium..................................... - (1,826) - (4,592) Loss from discontinued operations applicable to common stock.. $ - $ (12,695) $ - $ (19,832) Weighted average number of shares of common stock outstanding. 56,201,333 50,163,762 56,175,129 47,287,734 Earnings (loss) per share: Continuing operations...................................... $ .71 $ .55 $ .61 $ 1.00 Discontinued operations.................................... - (.26) - (.42) Total................................................... $ .71 $ .29 $ .61 $ .58 COMPUTATION OF EARNINGS PER SHARE ASSUMING DILUTION: Income from continuing operations assuming dilution........... $ 39,939 $ 27,598 $ 34,055 $ 47,409 Loss from discontinued operations, net of income tax benefit.. $ - $ (10,869) $ - $ (15,240) Less: Preferred stock dividend requirements and redemption premium..................................... - (1,826) - (4,592) Add: Reduction of preferred stock dividends applicable to the assumed conversion of convertible preferred stock at the beginning of the period............................. - 1,826 - 4,522 Loss from discontinued operations applicable to common stock assuming full dilution........................ $ - $ (10,869) $ - $ (15,310) Weighted average number of shares of common stock outstanding................................... 56,201,333 50,163,762 56,175,129 47,287,734 Effect of dilutive securities: Stock options.............................................. 1,037,938 807,991 1,033,758 815,429 Performance awards......................................... 114,149 91,151 109,647 91,151 Convertible preferred stock................................ - 3,596,219 - 4,989,009 Weighted average number of shares of common stock outstanding assuming dilution................ 57,353,420 54,659,123 57,318,534 53,183,323 Earnings (loss) per share - assuming dilution: Continuing operations...................................... $ .70 $ .50 $ .59 $ .89 Discontinued operations.................................... - (.20) - (.29) Total................................................... $ .70 $ .30 $ .59 $ .60