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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 of 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
July 26, 1994
CHEVRON CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 1-368-2 94-0890210
----------------- ------------------------ ---------------------
(State or other (Commission File Number) (I.R.S. Employer No.)
jurisdiction of
incorporation)
225 Bush Street, San Francisco, CA 94104
---------------------------------------- ---------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(415) 894-7700
Item 5. Other Events.
------------
On July 26, 1994, the Registrant issued a Press Release announcing
the earnings results for the second quarter and six months ended
June 30, 1994, a copy of which is attached hereto as Exhibit 99.1
and made a part hereof.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
99.1 Press Release of Chevron Corporation dated July
26, 1994, entitled "Chevron Announces Second
Quarter Earnings of $257 Million."
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
Dated: August 4, 1994
CHEVRON CORPORATION
By M.J. McAuley
-------------------------------
M.J. McAuley
Secretary
Chevron Corporation
Public Affairs
PO Box 7753
San Francisco, CA 94120-7753
Phone 415 894 4246
FOR RELEASE AT 6:00 AM PDT
JULY 26,1994
CHEVRON ANNOUNCES SECOND QUARTER EARNINGS OF $257 MILLION
SAN FRANCISCO, July 26-- Chevron Corporation today reported second
quarter net income of $257 million ($.39 per share). In last year's second
quarter a $515 million special charge was recorded, mostly related to
restructuring the company's U.S. refining and marketing operations, which
reduced net income to $50 million ($.08 per share). Net income in the 1994
second quarter was reduced by $5 million of special charges.
Excluding special items in both quarters, 1994 earnings were $262
million ($.40 per share) compared with 1993's strong second quarter
operating results of $565 million ($.87 per share).
Net income for the first six months of 1994 was $645 million ($.99 per
share), up 17 percent from $551 million ($.85 per share) reported for the
1993 first half. The 1994 six months results were reduced by $41 million of
special charges; the 1993 period included special charges totaling $517
million, related primarily to the restructuring of the U.S. refining and
marketing operations.
"We were extremely disappointed in our refining and marketing results
for the quarter, especially in the U.S. where our downstream operations lost
$42 million," said Chairman and CEO Ken Derr. "The major factor in our low
earnings was the deterioration in the refining margins in our downstream
business. We also experienced some operational problems at our core U.S.
refineries. Our Pascagoula refinery was impacted by a fire which put its FCC
unit out of operation for nearly two months and our two key West Coast
refineries both experienced problems. Finally, our results were affected by
charges for the estimated uninsured costs of the inadvertent contamination
of aviation gasoline by small quantities of jet fuel distributed in Northern
California in May.
"Industry margins were severely squeezed by the rapid rise in crude oil
prices that occurred during the quarter," said Derr. "In the U.S., for
example, our average crude oil prices rose about $3.00 per barrel from the
first quarter, yet our average refined product prices increased only
slightly more than $1.00 per barrel because of market lags in recovering the
higher costs, particularly in the East.
"We began to see some signs of improvement in June," continued Derr.
"In recent weeks, product prices have strengthened and appear to be better
reflecting their raw material costs. If this trend continues, the
improvement in our downstream operations, coupled with higher crude prices
in our upstream operations, should result in stronger earnings during the
second half of this year."
Derr noted that aside from downstream activities, most of the company's
operations improved compared with the first quarter of this year. However,
worldwide upstream earnings were not as strong as last year due to lower oil
and gas prices. Even with the rapid run-up in crude oil prices that occurred
- 2 -
during the quarter, the company's average oil prices in the United States
were still $1.63 per barrel lower than in the year-ago quarter.
International liquids production was up 67,000 barrels per day, or 12
percent, which drove worldwide oil and gas production volumes to over 1.4
million equivalent barrels per day.
Derr continued, "A bright spot in our results was the significant
improvement in chemicals, where quarterly earnings, excluding special items,
were the highest in more than three years. We believe our chemicals business
is well positioned to benefit from improving industry conditions."
Operating expenses for the second quarter were $6.96 per barrel, up 29
cents from the second quarter of 1993. Year-to-date expense was $6.71 versus
$6.60 in the 1993 year-to-date period. Derr said, "Refinery problems had a
major impact on first half 1994 operating expenses. However, despite the
increased costs associated with these problems, we expect annual operating
cost savings versus 1991 to be over $1 billion. Cost awareness has become a
way of life at Chevron, and we are determined to further reduce our cost
structure by continuing the programs we've put in place."
Total revenues were $8.8 billion in the 1994 second quarter, down from
$9.9 billion in last year's second quarter. Total revenues for the first six
months were $17.1 billion, compared with $18.9 billion in 1993's first half.
Revenues declined on lower prices for crude oil and refined products.
Foreign exchange losses totaling $21 million were included in both the
second quarter and first half net income. In contrast, the comparable
prior-year quarter and six months included foreign exchange gains of $37
million and $33 million, respectively.
EXPLORATION AND PRODUCTION
--------------------------
U.S. EXPLORATION AND PRODUCTION net earnings declined to $152 million
in the second quarter from the $207 million earned in the 1993 second
quarter. Although average crude oil realizations increased sharply from the
first quarter of 1994, they were still below last year's second quarter.
Average crude oil realizations were $14.34 per barrel, compared with $15.97
per barrel in the 1993 second quarter. Lower natural gas prices also
contributed to the lower earnings. The company's average natural gas sales
price declined to $1.79 per thousand cubic feet from $2.06 in last year's
second quarter, when prices were unseasonably strong.
Net liquids production for the quarter declined 7 percent to 371,000
barrels per day, largely due to normal field declines, but net natural gas
production volumes were up 6 percent to 2.1 billion cubic feet per day, as
new production in the Gulf of Mexico more than offset normal field declines.
INTERNATIONAL EXPLORATION AND PRODUCTION net earnings for the quarter
were $134 million compared with $142 million in the prior-year second
quarter, which included $26 million of special charges for prior-year tax
adjustments and asset write-offs.
The benefit of higher production volumes did not fully offset lower
crude oil prices. Net liquids production increased 12 percent to 613,000
barrels per day. New field production in the North Sea and Nigeria and
increased production in Indonesia and Kazakhstan contributed to the higher
1994 volumes. Also, natural gas production was up 5 percent to 519 million
cubic feet per day.
Foreign exchange losses were $5 million, compared with gains of $21
million in the prior year second quarter.
- 3 -
REFINING AND MARKETING
----------------------
U.S. REFINING AND MARKETING operations lost $42 million in the 1994
second quarter, compared with earnings of $97 million in the 1993 second
quarter before special charges of $604 million, mostly related to a
restructuring provision. Results for the current year quarter included a
special charge of $5 million for environmental remediation programs.
Excluding special items, the 1994 results reflected poor sales margins
as the surge in crude oil costs during the quarter could not be recovered
through higher refined products prices. In addition, an unusual amount of
refinery downtime resulted in higher operating expenses and required more
costly third-party product purchases to supply the company's marketing
system. Operating expenses also included charges for estimated uninsured
costs related to the inadvertent contamination of aviation gasoline by small
quantities of jet fuel distributed in Northern California in May. Total
refined product sales volumes declined 2 percent from last year's second
quarter.
INTERNATIONAL REFINING AND MARKETING net earnings declined to $27
million from $107 million earned in the 1993 second quarter. Earnings in the
1993 quarter included a $13 million asset sale gain.
Similar to the U.S. industry conditions, refined products prices did
not keep pace with the increase in crude oil costs. Also, results included
foreign exchange losses of $9 million, whereas the prior-year quarter
included $14 million of foreign exchange gains. Total sales volumes declined
4 percent as lower export sales in the company's trading operations more
than offset an increase in marketing sales volumes.
CHEMICALS
---------
CHEMICALS earned $49 million in the 1994 second quarter compared with
$141 million in the prior-year quarter, which included a $135 million gain
from the sale of the Ortho lawn and garden products business. Excluding the
prior-year asset sale gain, earnings improved significantly in the 1994
second quarter, particularly in the company's olefins business. As the U.S.
economy improves, increased demand has resulted in stronger prices and
higher sales volumes for the company's major product lines.
CORPORATE AND OTHER
-------------------
CORPORATE AND OTHER charges were $75 million in the 1994 quarter
compared with charges of $48 million in the comparable period last year,
which included a $33 million litigation provision.
In 1994, the company changed its method of distributing certain
corporate expenses to its business segments. As a result, corporate and
other charges in the 1994 second quarter include approximately $58 million
that, under the previous method, would have been allocated to the various
business segments. This change had no net income effect nor did it affect
any segment operational trends.
CAPITAL AND EXPLORATORY EXPENDITURES
------------------------------------
CAPITAL AND EXPLORATORY EXPENDITURES, including the company's share of
affiliate expenditures, were $1.073 billion in the quarter, up slightly from
$1.014 billion spent in the 1993 second quarter. Total expenditures for the
first six months of 1994 were $2.132 billion, up 19 percent from the $1.792
billion spent in last year's first half.
# # #
7/26/94
- 1 -
CHEVRON CORPORATION - FINANCIAL REVIEW
(MILLIONS OF DOLLARS)
CONSOLIDATED STATEMENT OF INCOME
--------------------------------
(unaudited)
Second Quarter Six Months
------------------ ------------------
REVENUES: 1994 1993 1994 1993
-------- -------- -------- --------
Sales and Other
Operating Revenues (1) $ 8,702 $ 9,413 $ 16,807 $ 18,316
Equity in Net Income of Affiliated
Companies and Other Income 122 441 281 620
-------- -------- -------- --------
8,824 9,854 17,088 18,936
-------- -------- -------- --------
COSTS AND OTHER DEDUCTIONS:
Purchased Crude Oil and Products 4,200 4,883 7,884 9,488
Operating Expenses 1,603 2,401 3,100 3,741
Exploration Expenses 73 69 178 143
Selling and Administrative Expenses 325 395 633 761
Depreciation, Depletion
and Amortization 615 596 1,207 1,185
Taxes Other Than on income (1) 1,403 1,227 2,748 2,364
Interest and Debt Expense 83 81 156 168
-------- -------- -------- --------
8,302 9,652 15,906 17,850
-------- -------- -------- --------
Income Before Income Tax Expense 522 202 1,182 1,086
Income Tax Expense 265 152 537 535
-------- -------- -------- --------
NET INCOME $ 257 $ 50 $ 645 $ 551
======== ======== ======== ========
PER SHARE AMOUNTS
NET INCOME $ .39 $ .08 $ .99 $ .85
DIVIDENDS $ .4625 $ .4375 $ .925 $ .875
Average Common Shares
Outstanding (000's) (2) 651,675 650,810 651,650 650,640
EARNINGS BY MAJOR OPERATING AREA (3)
--------------------------------
(unaudited) Second Quarter Six Months
------------------ ------------------
1994 1993 1994 1993
-------- -------- -------- --------
Exploration and Production
United States $ 152 $ 207 $ 276 $ 402
International 134 142 245 307
-------- -------- -------- --------
Total Exploration and Production 286 349 521 709
-------- -------- -------- --------
Refining, Marketing and Transportation
United States (42) (507) 56 (407)
International 27 107 90 129
-------- -------- -------- --------
Total Refining, Marketing
and Transportation (15) (400) 146 (278)
-------- -------- -------- --------
Total Petroleum Operations 271 (51) 667 431
Chemicals 49 141 75 159
Coal and Other Minerals 12 8 27 28
Corporate and Other (4) (75) (48) (124) (67)
-------- -------- -------- --------
NET INCOME $ 257 $ 50 $ 645 $ 551
======== ======== ======== ========
(1) Includes consumer excise taxes. $ 1,206 $ 1,013 $ 2,358 $ 1,940
(2) On May 11,1994, the company effected a two-for-one stock split. All per
share amounts have been restated to reflect the stock split for all
periods presented.
(3) In 1994, the company changed its method of distributing certain
corporate expenses to its business segments. As a result, about $58
million in the second quarter and $78 million in the first half of 1994
are classified as Corporate and Other that would previously have been
distributed to the various business segments.
(4) "Corporate and other, includes interest expense, interest income on cash
and marketable securities, corporate center costs, and real estate and
insurance activities.
- 2 -
CHEVRON CORPORATION - FINANCIAL REVIEW
(MILLIONS OF DOLLARS)
SPECIAL ITEMS BY MAJOR OPERATING AREA
-------------------------------------
(unaudited)
Second Quarter Six Months
------------------ ------------------
1994 1993 1994 1993
-------- -------- -------- --------
U. S. Exploration and Production $ - $ - $ (15) $ (12)
International Exploration
and Production - (26) - (7)
U. S. Refining, Marketing
and Transportation (5) (604) (26) (618)
International Refining, Marketing
and Transportation - 13 - 13
Chemicals - 135 - 135
Coal and Other Minerals - - - 5
Corporate and Other (1) - (33) - (33)
-------- -------- -------- --------
TOTAL SPECIAL ITEMS $ (5) $ (515) $ (41) $ (517)
======== ======== ======== ========
SUMMARY OF SPECIAL ITEMS
------------------------
(unaudited)
Second Quarter Six Months
------------------ ------------------
1994 1993 1994 1993
-------- -------- -------- --------
Asset Dispositions $ - $ 148 $ - $ 153
Asset Write-offs and Revaluations - (12) - (24)
Environmental Remediation Provisions (5) (39) (26) (53)
Prior-Year Tax Adjustments - (20) - (1)
Restructurings & Reorganizations - (552) - (552)
Other, Net - (40) (15) (40)
-------- -------- -------- --------
TOTAL SPECIAL ITEMS $ (5) $ (515) $ (41) $ (517)
======== ======== ======== ========
FOREIGN EXCHANGE (LOSSES) GAINS $ (21) $ 37 $ (21) $ 33
EARNINGS BY MAJOR OPERATING AREA
EXCLUDING SPECIAL ITEMS
--------------------------------
(unaudited)
Second Quarter Six Months
------------------ ------------------
1994 1993 1994 1993
-------- -------- -------- --------
Exploration and Production
United States $ 152 $ 207 $ 291 $ 414
International 134 168 245 314
-------- -------- -------- --------
Total Exploration and Production 286 375 536 728
-------- -------- -------- --------
Refining, Marketing and Transportation
United States (37) 97 82 211
International 27 94 90 116
-------- -------- -------- --------
Total Refining, Marketing
and Transportation (10) 191 172 327
-------- -------- -------- --------
Total Petroleum Operations 276 566 708 1,055
Chemicals 49 6 75 24
Coal and Other Minerals 12 8 27 23
Corporate and Other (1) (2) (75) (15) (124) (34)
-------- -------- -------- --------
EARNINGS EXCLUDING SPECIAL ITEMS 262 565 686 1,068
Special Items (5) (515) (41) (517)
-------- -------- -------- --------
NET INCOME $ 257 $ 50 $ 645 $ 551
======== ======== ======== ========
(1) "Corporate and Other includes interest expenses, interest income on cash
and marketable securities, corporate center costs, and real estate and
insurance activities.
(2) In 1994, the company changed its method of distributing certain
corporate expenses to its business segments. As a result, about $58
million in the second quarter and $78 million in the first half of 1994
are classified as Corporate and Other that would previously have been
distributed to the various business segments.
- 3 -
CHEVRON CORPORATION - FINANCIAL REVIEW
(MILLIONS OF DOLLARS)
CONSOLIDATED BALANCE SHEET
--------------------------
(Unaudited) June 30, Dec. 31,
1994 1993
-------- --------
ASSETS:
Cash and Cash Equivalents $ 1,203 $ 1,644
Other Current Assets 7,794 7,038
-------- --------
Total Current Assets 8,997 8,682
Investments and Advances 3,942 3,623
Properties, Plant and Equipment-Net 21,831 21,865
Other 606 566
-------- --------
TOTAL ASSETS $ 35,376 $ 34,736
======== ========
LIABILITIES:
Short-Term Debt $ 4,296 $ 3,456
Other Current Liabilities 7,018 7,150
-------- --------
Total Current Liabilities 11,314 10,606
Long-Term Debt and Capital Lease Obligations 3,877 4,082
Deferred Income Taxes 2,985 2,916
Reserves For Employee Benefit Plans 1,548 1,458
Deferred Credits and Other Noncurrent Obligations 1,464 1,677
-------- --------
TOTAL LIABILITIES 21,188 20,739
STOCKHOLDERS' EQUITY 14,188 13,997
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 35,376 $ 34,736
======== ========
CONSOLIDATED STATEMENT OF CASH FLOWS SIX MONTHS
------------------------------------ ------------------
(unaudited) 1994 1993
-------- --------
OPERATING ACTIVITIES
Net Income $ 645 $ 551
Adjustments
Depreciation, depletion and amortization 1,207 1,185
Dry hole expense related to prior years' expenditures 26 10
Distributions less than equity in affiliates' income (22) (114)
Net before-tax (gains) losses on asset
retirements and sales (26) 267
Net currency transaction losses (gains) 9 (19)
Net increase in operating working capital (829) (255)
Deferred income tax provision 76 (237)
Other (73) 3
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,013 1,391
-------- --------
INVESTING ACTIVITIES
Capital expenditures (1,407) (1,410)
Proceeds from asset sales 140 642
Net (purchases) sales of marketable securities (2) 3
-------- --------
NET CASH USED FOR INVESTING ACTIVITIES (1,269) (765)
-------- --------
FINANCING ACTIVITIES
Net borrowings of short-term obligations 880 422
Proceeds from issuance of long-term debt 4 201
Repayments of long-term debt and
other financing obligations (462) (663)
Cash dividends paid (602) (569)
Purchases of treasury shares (3) (2)
-------- --------
NET CASH USED FOR FINANCING ACTIVITIES (183) (611)
-------- --------
EFFECT OF EXCHANGE RATE ON CASH AND CASH EQUIVALENTS (2) 10
NET CHANGE IN CASH AND CASH EQUIVALENTS (441) 25
CASH AND CASH EQUIVALENTS AT JANUARY 1, 1994 AND 1993 1,644 1,292
-------- --------
CASH AND CASH EQUIVALENTS AT JUNE 30, 1994 AND 1993 $ 1,203 $ 1,317
======== ========
- 4 -
CHEVRON CORPORATION - FINANCIAL REVIEW
CAPITAL AND EXPLORATORY EXPENDITURES (1)
----------------------------------------
(millions of dollars)
Second Quarter Six Months
------------------ ------------------
1994 1993 1994 1993
-------- -------- -------- --------
UNITED STATES
Exploration and Production $ 174 $ 184 $ 340 $ 306
Refining, Marketing
and Transportation 213 192 398 319
Chemicals 18 42 34 94
Other 33 23 65 37
-------- -------- -------- --------
TOTAL UNITED STATES 438 441 837 756
-------- -------- -------- --------
INTERNATIONAL
Exploration and Production 424 439 906 735
Refining, Marketing
and Transportation 203 119 371 275
Chemicals 3 13 10 21
Other 5 2 8 5
-------- -------- -------- --------
TOTAL INTERNATIONAL 635 573 1,295 1,036
-------- -------- -------- --------
Worldwide $ 1,073 $ 1,014 $ 2,132 $ 1,792
======== ======== ======== ========
OPERATING STATISTICS (1)
--------------------
NET LIQUIDS PRODUCTION (MB/D):
United States 371 398 372 398
International 613 546 608 540
-------- -------- -------- --------
Worldwide 984 944 980 938
======== ======== ======== ========
NET NATURAL GAS PRODUCTION (MMCF/D):
United States 2,146 2,027 2,168 2,060
International 519 492 525 485
-------- -------- -------- --------
Worldwide 2,665 2,519 2,693 2,545
======== ======== ======== ========
SALES OF NATURAL GAS (MMCF/D):
United States 2,622 2,279 2,673 2,245
International 490 464 478 464
-------- -------- -------- --------
Worldwide 3,112 2,743 3,151 2,709
======== ======== ======== ========
SALES OF NATURAL GAS LIQUIDS (MB/D):
United States 185 201 198 205
International 26 31 33 32
-------- -------- -------- --------
Worldwide 211 232 231 237
======== ======== ======== ========
SALES OF REFINED PRODUCTS (MB/D):
United States 1,344 1,376 1,326 1,394
International 891 931 918 900
-------- -------- -------- --------
Worldwide 2,235 2,307 2,244 2,294
======== ======== ======== ========
REFINERY INPUT (MB/D):
United States 1,237 1,285 1,195 1,269
International 625 540 632 559
-------- -------- -------- --------
Worldwide 1,862 1,825 1,827 1,828
======== ======== ======== ========
CHEMICALS SALES & OTHER OPERATING
REVENUES (millions of dollars) (2)
United States $ 742 $ 706 $ 1,395 $ 1,433
International 156 147 304 282
-------- -------- -------- --------
Worldwide $ 898 $ 853 $ 1,699 $ 1,715
======== ======== ======== ========
(1) Includes interest in affiliates.
(2) Includes sales to other Chevron companies.