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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):
October 25, 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 October 25, 1994, the Registrant issued a Press Release
announcing the earnings results for the third quarter and nine
months ended September 30, 1994, a copy of which is attached
hereto as Exhibit 99 and made a part hereof.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
99 Press Release of Chevron Corporation dated October
25, 1994, entitled "Chevron Reports Third
Quarter Earnings of $425 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: October 25, 1994
CHEVRON CORPORATION
By M.J. McAuley
-------------------------------
M.J. McAuley
Secretary
EXHIBIT 99
Chevron Corporation [LOGO]
Public Affairs
PO Box 7753
San Francisco, CA 94120-7753
Phone 415 894 4246
NEWS
FOR RELEASE AT 7:00 AM PDT
October 25, 1994
--------------------------
CHEVRON REPORTS THIRD QUARTER EARNINGS OF $425 MILLION
San Francisco, Oct. 25 -- Chevron Corporation today announced third
quarter net income of $425 million ($.65 per share), little changed from the
$420 million ($.64 per share) reported for the third quarter of 1993.
Excluding special items in both periods, results were $407 million ($.63 per
share), down 28 percent from the very strong 1993 third quarter operating
results of $565 million ($.87 per share).
Chairman and CEO Ken Derr said, "Our operating results improved
significantly from this year's second quarter - up 55 percent - primarily due
to higher U.S. refined products sales margins and the absence of refinery
operating problems and incidents that plagued us last quarter. Nevertheless,
margins were not as strong as in last year's third quarter, contributing to
the earnings decline between years."
Third quarter 1994 earnings included a benefit from a previously
announced settlement with the Internal Revenue Service for open tax years 1979
through 1987. Tax and related interest reserves established in prior years
exceeded the net amount of the settlement, resulting in a $301 million benefit
to income. Substantially offsetting this favorable adjustment were
environmental remediation provisions, principally in the U.S. downstream
segment, and other charges totaling $283 million. The net effect of these
special items was a benefit of $18 million to this year's third quarter net
income. In the 1993 third quarter, special items reduced net income by $145
million.
Net income for the first nine months of 1994 was $1.070 billion ($1.64 per
share), up 10 percent from $971 million ($1.49 per share) earned in the 1993
nine months. The 1994 year-to-date earnings were reduced by $23 million of
special charges, whereas the comparable 1993 period included $662 million of
special charges, mostly related to last year's U.S. downstream restructuring
provision.
"Our third quarter operations were also impacted by the decline in U.S.
natural gas prices, which fell during the quarter, averaging about 20 percent
less than in last year's third quarter," continued Derr. "Crude oil prices
also trended down during the quarter, though were still about $1.00 per barrel
higher than in last year's third quarter." Derr also noted that the company's
worldwide net liquids production exceeded one million barrels a day in the
third quarter as international production levels continue to increase.
"On another positive note, our chemicals operations continued to rebound,
reflecting the improved U.S. economy. While the recent flooding in Southeast
Texas has temporarily hindered production, our restructuring programs and
continuing cost reduction efforts have positioned this business to benefit
from the long-awaited industry turnaround that is finally underway," noted
Derr.
- MORE -
- 2 -
"After high second quarter operating expenses, reflecting a number of
refinery operating and other problems, our operating cost performance improved
markedly in the third quarter," Derr said. "Per barrel costs, adjusted for
special items, fell 43 cents from this year's second quarter to $6.53, about
the same level as our per barrel cost for the year 1993."
Total revenues in the 1994 third quarter were $9.5 billion, up 3 percent
from $9.2 billion in the year earlier quarter. Total revenues for the first
nine months of 1994 were $26.6 billion, down 6 percent from $28.2 billion in
the comparable 1993 period. Year-to-date revenues declined because of lower
refined products and crude oil prices in the first half of the year.
Included in third quarter net income were $30 million of foreign exchange
losses, compared with foreign exchange gains of $9 million in the 1993 third
quarter. For the first nine months, foreign exchange losses were $51 million
compared with $42 million of foreign exchange gains in the 1993 period.
EXPLORATION AND PRODUCTION
--------------------------
U.S. EXPLORATION AND PRODUCTION third quarter earnings of $63 million
included special charges totaling $61 million for environmental remediation
and litigation provisions. This compares with third quarter 1993 earnings of
$125 million, which included special charges of $32 million for prior-year tax
adjustments.
Excluding special items, earnings declined as lower natural gas prices and
decreased liquids production more than offset the benefit of higher crude oil
prices. Compared with the third quarter of 1993, average crude oil
realizations increased $1.03 per barrel to $15.03, but average natural gas
prices declined 44 cents per thousand cubic feet to $1.62. Net liquids
production declined 6 percent to 371,000 barrels per day; net natural gas
production volumes were flat at 2.0 billion cubic feet per day.
INTERNATIONAL EXPLORATION AND PRODUCTION earnings for the third quarter
were $131 million, compared with $113 million earned in last year's third
quarter, which included charges of $62 million for prior-year tax adjustments.
Excluding the special charges in last year's results, the earnings decline was
largely due to a $33 million swing in foreign currency effects.
International net liquids production increased 13 percent to 640,000
barrels per day. New production came on stream in early 1994 in the North Sea
and Nigeria and production was also up in Indonesia and Kazakhstan. Natural
gas production increased 22 percent to 573 million cubic feet per day, due to
higher volumes in Canada, Kazakhstan and Australia.
REFINING AND MARKETING
----------------------
U.S. REFINING AND MARKETING operations incurred a net loss of $110 million
in the 1994 third quarter compared with net earnings of $164 million in the
year-ago quarter. This year's results included special charges for
environmental remediation totaling $218 million for various marketing and
refining sites, and reflected the results of the third quarter completion of a
comprehensive evaluation of future clean-up requirements at the company's
service stations and product terminals. The prior-year quarter included $30
million in special charges, mostly related to environmental provisions.
Adjusting for these special charges, third quarter results of $108 million
were down significantly from the $194 million earned in the year-earlier
quarter.
- MORE -
- 3 -
Sales margins for refined products improved from this year's second
quarter, but were still well below those achieved in last year's third
quarter. Ample supplies are holding down product prices. Sales volumes
declined 9 percent, primarily due to the sale of the company's Philadelphia
refinery in August of this year. Output from that refinery had been sold as
unbranded products to third party resellers.
INTERNATIONAL REFINING AND MARKETING net earnings increased to $55 million
from $50 million earned in the 1993 third quarter. Product sales margins
remained depressed, but total sales volumes increased 4 percent. Sales
volumes in the company's marketing operations in Canada, the United Kingdom
and the Caltex areas of operations averaged 12 percent higher, but this was
partially offset by lower sales volumes in the company's international trading
activities. Foreign exchange losses were $1 million, compared with foreign
exchange gains of $4 million in the 1993 quarter.
CHEMICALS
---------
CHEMICALS earnings increased to $68 million in the third quarter, up
sharply from the $6 million earned in the third quarter of 1993. The 1994
quarter included a special charge of $4 million for environmental
remediation; the 1993 quarter included a $9 million charge for prior-year tax
adjustments.
Restructuring and cost reduction programs in recent years have positioned
the company's chemical operations to benefit from the industry upswing. The
improving U.S. economy has stimulated demand, bringing the chemical industry
into better balance. Higher sales volumes and higher prices, particularly for
ethylene and polyethylene, contributed to the increased earnings. Foreign
exchange losses were $8 million and $4 million in the 1994 and 1993
third quarters, respectively.
CORPORATE AND OTHER
-------------------
CORPORATE AND OTHER earnings were $212 million compared with charges of $48
million in the third quarter of 1993. Results in the 1994 quarter included
the reversal of $301 million of tax and related interest reserves resulting
from the company's global settlement with the Internal Revenue Service for
various issues relating to the years 1979 through 1987. The 1993 quarter
included net special charges of $13 million.
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 third quarter included approximately $47 million that, under the
previous method, would have been allocated to the 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 $1.042 billion in the quarter, down 5 percent
from $1.095 billion spent in last year's third quarter. Total expenditures
for the first nine months of 1994 were $3.174 billion, up 10 percent from
$2.887 billion spent in the same period in 1993.
# # #
10/25/94
- 1 -
CHEVRON CORPORATION - FINANCIAL REVIEW
(MILLIONS OF DOLLARS)
CONSOLIDATED STATEMENT OF INCOME
--------------------------------
(unaudited)
THIRD QUARTER NINE MONTHS
------------------ ------------------
REVENUES: 1994 1993 1994 1993
-------- -------- -------- --------
Sales and Other
Operating Revenues (1) $ 9,396 $ 9,097 $ 26,203 $ 27,413
Equity in Net Income of
Affiliated Companies 102 108 286 340
Other Income 11 28 108 416
-------- -------- -------- --------
9,509 9,233 26,597 28,169
-------- -------- -------- --------
COSTS AND OTHER DEDUCTIONS:
Purchased Crude Oil and Products 4,676 4,384 12,560 13,872
Operating, Selling and
Administrative Expenses 1,928 1,925 5,661 6,427
Exploration Expenses 91 92 269 235
Depreciation, Depletion
and Amortization 626 615 1,833 1,800
Taxes Other Than on income (1) 1,405 1,219 4,153 3,583
Interest and Debt Expense 93 76 249 244
-------- -------- -------- --------
8,819 8,311 24,725 26,161
-------- -------- -------- --------
INCOME BEFORE INCOME TAX EXPENSE 690 922 1,872 2,008
Income Tax Expense 265 502 802 1,037
-------- -------- -------- --------
NET INCOME $ 425 $ 420 $ 1,070 $ 971
======== ======== ======== ========
PER SHARE AMOUNTS
NET INCOME $ .65 $ .64 $ 1.64 $ 1.49
DIVIDENDS $ .4625 $ .4375 $ 1.3875 $ 1.3125
AVERAGE COMMON SHARES
OUTSTANDING (000'S) (2) 651,667 651,130 651,656 650,806
EARNINGS BY MAJOR OPERATING AREA
--------------------------------
(UNAUDITED) THIRD QUARTER NINE MONTHS
------------------ ------------------
1994 1993 1994 1993
-------- -------- -------- --------
Exploration and Production
United States $ 63 $ 125 $ 339 $ 527
International 131 113 376 420
-------- -------- -------- --------
Total Exploration and Production 194 238 715 947
-------- -------- -------- --------
Refining, Marketing and Transportation
United States (110) 164 (54) (243)
International 55 50 145 179
-------- -------- -------- --------
Total Refining, Marketing
and Transportation (55) 214 91 (64)
-------- -------- -------- --------
Total Petroleum Operations 139 452 806 883
Chemicals 68 6 143 165
Coal and Other Minerals 6 10 33 38
Corporate and Other (3)(4) 212 (48) 88 (115)
-------- -------- -------- --------
NET INCOME $ 425 $ 420 $ 1,070 $ 971
======== ======== ======== ========
(1) Includes consumer excise taxes. $ 1,220 $ 1,030 $ 3,578 $ 2,970
(2) Share and per share amount for 1993 have been restated to reflect a two-
for-one stock split in May 1994
(3) "Corporate and Other" includes interest expense, interest income on cash
and marketable securities, corporate center costs, and real estate and
insurance activities.
(4) In 1994, the company changed its method of distributing certain
corporate expenses to its business segments. As a result, about $47
million in the third quarter and $125 million in the nine months of 1994
are classified as Corporate and Other that would previously have been
distributed to the various business segments.
- 2 -
CHEVRON CORPORATION - FINANCIAL REVIEW
(MILLIONS OF DOLLARS)
SPECIAL ITEMS BY MAJOR OPERATING AREA
-------------------------------------
(unaudited)
THIRD QUARTER NINE MONTHS
------------------ ------------------
1994 1993 1994 1993
-------- -------- -------- --------
U. S. Exploration and Production $ (61) $ (32) $ (76) $ (44)
International Exploration
and Production - (62) - (69)
U. S. Refining, Marketing
and Transportation (218) (30) (244) (648)
International Refining, Marketing
and Transportation - 1 - 14
Chemicals (4) (9) (4) 126
Coal and Other Minerals - - - 5
Corporate and Other 301 (13) 301 (46)
-------- -------- -------- --------
TOTAL SPECIAL ITEMS $ 18 $ (145) $ (23) $ (662)
======== ======== ======== ========
SUMMARY OF SPECIAL ITEMS
------------------------
(unaudited)
THIRD QUARTER NINE MONTHS
------------------ ------------------
1994 1993 1994 1993
-------- -------- -------- --------
Asset Dispositions $ - $ (4) $ - $ 149
Asset Write-offs and Revaluations - (12) - (36)
Environmental Remediation Provisions (267) (15) (293) (68)
Prior-Year Tax Adjustments 301 (100) 301 (101)
Restructurings & Reorganizations - 9 - (543)
Other, Net (16) (23) (31) (63)
-------- -------- -------- --------
TOTAL SPECIAL ITEMS $ 18 $ (145) $ (23) $ (662)
======== ======== ======== ========
FOREIGN EXCHANGE (LOSSES) GAINS $ (30) $ 9 $ (51) $ 42
EARNINGS BY MAJOR OPERATING AREA
EXCLUDING SPECIAL ITEMS
--------------------------------
(unaudited)
THIRD QUARTER NINE MONTHS
------------------ ------------------
1994 1993 1994 1993
-------- -------- -------- --------
Exploration and Production
United States $ 124 $ 157 $ 415 $ 571
International 131 175 376 489
-------- -------- -------- --------
Total Exploration and Production 255 332 791 1,060
-------- -------- -------- --------
Refining, Marketing and Transportation
United States 108 194 190 405
International 55 49 145 165
-------- -------- -------- --------
Total Refining, Marketing
and Transportation 163 243 335 570
-------- -------- -------- --------
Total Petroleum Operations 418 575 1,126 1,630
Chemicals 72 15 147 39
Coal and Other Minerals 6 10 33 33
Corporate and Other (1) (2) (89) (35) (213) (69)
-------- -------- -------- --------
EARNINGS EXCLUDING SPECIAL ITEMS 407 565 1,093 1,633
Special Items 18 (145) (23) (662)
-------- -------- -------- --------
NET INCOME $ 425 $ 420 $ 1,070 $ 971
======== ======== ======== ========
(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 $47
million in the third quarter and $125 million in the first nine months
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) SEPTEMBER 30, DEC. 31,
1994 1993
-------- --------
ASSETS:
Cash and Cash Equivalents $ 1,275 $ 1,644
Other Current Assets 7,436 7,038
-------- --------
Total Current Assets 8,711 8,682
Investments and Advances 3,961 3,623
Properties, Plant and Equipment-Net 21,717 21,865
Other 605 566
-------- --------
TOTAL ASSETS $ 34,994 $ 34,736
======== ========
LIABILITIES:
Short-Term Debt $ 4,432 $ 3,456
Other Current Liabilities 5,631 7,150
-------- --------
Total Current Liabilities 10,063 10,606
Long-Term Debt and Capital Lease Obligations 4,129 4,082
Deferred Income Taxes 3,071 2,916
Reserves For Employee Benefit Plans 1,565 1,458
Deferred Credits and Other Noncurrent Obligations 1,849 1,677
-------- --------
TOTAL LIABILITIES 20,677 20,739
STOCKHOLDERS' EQUITY 14,317 13,997
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 34,994 $ 34,736
======== ========
CONSOLIDATED STATEMENT OF CASH FLOWS NINE MONTHS
------------------------------------ ------------------
(unaudited) 1994 1993
-------- --------
OPERATING ACTIVITIES
Net Income $ 1,070 $ 971
Adjustments
Depreciation, depletion and amortization 1,833 1,800
Dry hole expense related to prior years' expenditures 43 25
Distributions less than equity in affiliates' income (26) (170)
Net before-tax (gains) losses on asset
retirements and sales (3) 249
Net currency transaction losses (gains) 38 (17)
Net increase in operating working capital (1,820) (374)
Deferred income tax provision 148 (139)
Other 317 65
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,600 2,410
-------- --------
INVESTING ACTIVITIES
Capital expenditures (2,109) (2,227)
Proceeds from asset sales 324 719
Net (purchases) sales of marketable securities (13) -
-------- --------
NET CASH USED FOR INVESTING ACTIVITIES (1,798) (1,508)
-------- --------
FINANCING ACTIVITIES
Net borrowings of short-term obligations 932 483
Proceeds from issuance of long-term debt 352 201
Repayments of long-term debt and
other financing obligations (542) (721)
Cash dividends paid (904) (854)
Purchases of treasury shares (5) (3)
-------- --------
NET CASH USED FOR FINANCING ACTIVITIES (167) (894)
-------- --------
EFFECT OF EXCHANGE RATE ON CASH AND CASH EQUIVALENTS (4) 16
-------- --------
NET CHANGE IN CASH AND CASH EQUIVALENTS (369) 24
CASH AND CASH EQUIVALENTS AT JANUARY 1, 1994 AND 1993 1,644 1,292
-------- --------
CASH AND CASH EQUIVALENTS AT JUNE 30, 1994 AND 1993 $ 1,275 $ 1,316
======== ========
- 4 -
CHEVRON CORPORATION - FINANCIAL REVIEW
CAPITAL AND EXPLORATORY EXPENDITURES (1)
----------------------------------------
(millions of dollars)
THIRD QUARTER NINE MONTHS
------------------ ------------------
1994 1993 1994 1993
-------- -------- -------- --------
UNITED STATES
Exploration and Production $ 169 $ 217 $ 510 $ 522
Refining, Marketing
and Transportation 191 254 589 574
Chemicals 27 45 60 139
Other 41 32 106 69
-------- -------- -------- --------
TOTAL UNITED STATES 428 548 1,265 1,304
-------- -------- -------- --------
INTERNATIONAL
Exploration and Production 412 351 1,318 1,086
Refining, Marketing
and Transportation 191 185 562 460
Chemicals 6 8 17 29
Other 5 3 12 8
-------- -------- -------- --------
TOTAL INTERNATIONAL 614 547 1,909 1,583
-------- -------- -------- --------
Worldwide $ 1,042 $ 1,095 $ 3,174 $ 2,887
======== ======== ======== ========
OPERATING STATISTICS (1)
--------------------
NET LIQUIDS PRODUCTION (MB/D):
United States 371 393 372 396
International 640 564 619 548
-------- -------- -------- --------
Worldwide 1,011 957 991 944
======== ======== ======== ========
NET NATURAL GAS PRODUCTION (MMCF/D):
United States 2,038 2,033 2,124 2,051
International 573 470 541 480
-------- -------- -------- --------
Worldwide 2,611 2,503 2,665 2,531
======== ======== ======== ========
SALES OF NATURAL GAS (MMCF/D):
United States 2,483 2,296 2,609 2,262
International 431 463 462 464
-------- -------- -------- --------
Worldwide 2,914 2,759 3,071 2,726
======== ======== ======== ========
SALES OF NATURAL GAS LIQUIDS (MB/D):
United States 217 204 204 204
International 26 35 31 33
-------- -------- -------- --------
Worldwide 243 239 235 237
======== ======== ======== ========
SALES OF REFINED PRODUCTS (MB/D):
United States 1,349 1,481 1,334 1,423
International 930 891 922 897
-------- -------- -------- --------
Worldwide 2,279 2,372 2,256 2,320
======== ======== ======== ========
REFINERY INPUT (MB/D):
United States 1,265 1,384 1,219 1,308
International 603 539 622 552
-------- -------- -------- --------
Worldwide 1,868 1,923 1,841 1,860
======== ======== ======== ========
CHEMICALS SALES & OTHER OPERATING
REVENUES (millions of dollars) (2)
United States $ 836 $ 662 $ 2,232 $ 2,095
International 174 165 477 447
-------- -------- -------- --------
Worldwide $ 1,010 $ 827 $ 2,709 $ 2,542
======== ======== ======== ========
(1) Includes interest in affiliates.
(2) Includes sales to other Chevron companies.