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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 1994
------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 1-368-2
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CHEVRON CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 94-0890210
- ------------------------------- -----------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
225 Bush Street, San Francisco, California 94104
- ------------------------------------------ -----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (415) 894-7700
---------------
NONE
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(Former name or former address, if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate the number of shares of each of the issuer's classes of common stock,
as of the latest practicable date:
Class Outstanding as of September 30, 1994
----------------------------- --------------------------------------
Common stock, $1.50 par value 651,670,433
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INDEX
Page No.
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statement of Income for the three months
and nine months ended September 30, 1994 and 1993 2
Consolidated Balance Sheet at September 30, 1994 and
December 31, 1993 3
Consolidated Statement of Cash Flows for the nine months
ended September 30, 1994 and 1993 4
Notes to Consolidated Financial Statements 5-9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10-16
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 17
Item 6. Listing of Exhibits and Reports on Form 8-K 17
Signature 18
- 1 -
PART I. FINANCIAL INFORMATION
CHEVRON CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------ ------------------
Millions of Dollars,
Except Per Share Amounts 1994 1993 1994 1993
- ----------------------------------------------------------------------------
REVENUES
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
----------------------------------------
TOTAL REVENUES 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 expenses 1,937 1,566 5,037 5,307
Exploration expenses 91 92 269 235
Selling, general and
administrative expenses (9) 359 624 1,120
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
----------------------------------------
TOTAL COSTS AND OTHER DEDUCTIONS 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
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NET INCOME $ 425 $ 420 $ 1,070 $ 971
----------------------------------------
PER SHARE OF COMMON STOCK:(2)
NET INCOME $ .65 $ .64 $ 1.64 $ 1.49
DIVIDENDS $ .4625 $ .4375 $ 1.3875 $ 1.3125
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING (000S)(2) 651,667 651,131 651,656 650,806
(1) Includes consumer excise taxes. $ 1,220 $ 1,030 $ 3,578 $ 2,970
(2) All share and per share amounts for 1993 have been restated to reflect a
two-for-one stock split in May 1994.
See accompanying notes to consolidated financial statements.
- 2 -
CHEVRON CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, DECEMBER 31,
Millions of Dollars 1994 1993
- ------------------------------------------------------------------------------
ASSETS
Cash and cash equivalents $ 1,275 $ 1,644
Marketable securities 383 372
Accounts and notes receivable 4,075 3,808
Inventories:
Crude oil and petroleum products 1,073 1,108
Chemicals 405 423
Materials and supplies 252 252
Other merchandise 17 18
------------------------
1,747 1,801
Prepaid expenses and other current assets 1,231 1,057
------------------------
TOTAL CURRENT ASSETS 8,711 8,682
Long-term receivables 101 94
Investments and advances 3,961 3,623
Properties, plant and equipment, at cost 46,078 44,807
Less: accumulated depreciation, depletion
and amortization 24,361 22,942
------------------------
21,717 21,865
Deferred charges and other assets 504 472
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TOTAL ASSETS $34,994 $34,736
------------------------
- ------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 3,040 $ 3,325
Accrued liabilities 1,519 2,538
Short-term debt 4,432 3,456
Federal and other taxes on income 508 782
Other taxes payable 564 505
------------------------
TOTAL CURRENT LIABILITIES 10,063 10,606
Long-term debt and capital lease obligations 4,129 4,082
Non-current deferred income taxes 3,071 2,916
Reserves for employee benefit plans 1,565 1,458
Deferred credits and other non-current obligations 1,849 1,677
------------------------
TOTAL LIABILITIES 20,677 20,739
------------------------
Preferred stock (authorized 100,000,000
shares, $1.00 par value, none issued) - -
Common stock (authorized 1,000,000,000 shares,
$1.50 par value, 712,487,068 shares issued) 1,069 1,069
Capital in excess of par value 1,857 1,855
Deferred compensation - Employee Stock
Ownership Plan (ESOP) (895) (920)
Currency translation adjustment and other 216 108
Retained earnings 14,136 13,955
Treasury stock, at cost (shares 60,816,635
and 61,008,858 at September 30, 1994 and
December 31, 1993, respectively)* (2,066) (2,070)
------------------------
TOTAL STOCKHOLDERS' EQUITY 14,317 13,997
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $34,994 $34,736
------------------------
* Share amounts for 1993 have been restated to reflect a two-for-one stock
split in May 1994.
See accompanying notes to consolidated financial statements.
- 3 -
CHEVRON CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
NINE MONTHS ENDED
SEPTEMBER 30,
-----------------------
Millions of Dollars 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 translation losses (gains) 38 (17)
Deferred income tax provision 148 (139)
Net increase in operating working capital (1,820) (374)
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 CHANGES ON CASH AND
CASH EQUIVALENTS (4) 16
-----------------------
NET CHANGE IN CASH AND CASH EQUIVALENTS (369) 24
CASH AND CASH EQUIVALENTS AT JANUARY 1 1,644 1,292
-----------------------
CASH AND CASH EQUIVALENTS AT SEPTEMBER 30 $1,275 $1,316
-----------------------
See accompanying notes to consolidated financial statements.
- 4 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. INTERIM FINANCIAL STATEMENTS
The accompanying consolidated financial statements of Chevron Corporation and
its subsidiaries (the company) have not been audited by independent
accountants, except for the balance sheet at December 31, 1993. In the
opinion of the company's management, the interim data include all adjustments
necessary for a fair statement of the results for the interim periods. These
adjustments were of a normal recurring nature, except for the special items
described in Note 3.
The consolidated financial statements for the first nine months of 1994
include the effects of the company's adoption of Statements of Financial
Accounting Standards No. 112, "Employers' Accounting for Postemployment
Benefits," and No. 115, "Accounting for Certain Investments in Debt and Equity
Securities." The company's prior accounting practices were substantially in
compliance with the new standards and adoption of the new standards did not
have a material effect on the company's consolidated financial statements or
its liquidity.
Certain notes and other information have been condensed or omitted from the
interim financial statements presented in this Quarterly Report on Form 10-Q.
Therefore, these financial statements should be read in conjunction with the
company's 1993 Annual Report on Form 10-K.
The results for the three-month and nine month periods ended September 30,
1994 are not necessarily indicative of future financial results.
NOTE 2. STOCK SPLIT
At the company's annual meeting on May 3, 1994, stockholders approved an
increase in the authorized shares of common stock from 500 million to 1
billion and approved a two-for-one split of the company's issued common stock.
The split was effective on May 11, 1994 for stockholders of record on that
date. All share and per share value amounts reflect the stock split for all
periods presented.
NOTE 3. NET INCOME
Third quarter 1994 net income included a net benefit of $18 million from
special items. Included in these special items was a benefit of $301 million
from the reversal of tax and related interest reserves resulting from the
company's global settlement with the Internal Revenue Service (IRS) for
various issues relating to the years 1979 through 1987. Partially offsetting
this benefit was a special charge of $267 million for environmental
remediation provisions and expenses, primarily reflecting 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. In
addition, a $16 million litigation provision was recorded in the third quarter
1994.
Special items reduced net income by $23 million for the nine-month period
ended September 30, 1994. These charges included provisions of $293 million
for estimated environmental assessment and cleanup liabilities, $15 million
for a reserve adjustment related to the resolution of certain regulatory
issues with the Minerals Management Service, and a $16 million litigation
provision. These were partially offset by the $301 million benefit resulting
from the aforementioned global tax settlement with the IRS.
Net income for the third quarter 1993 included special charges of $145
million. The one percent increase in the U.S. corporate income tax rate in
1993 resulted in a net charge of $46 million, including an $8 million benefit
applicable to special items recorded in previous quarters during 1993, for
adjustments to the company's deferred tax balances. Additionally, special
charges in the third quarter 1993 included other prior years' tax adjustments
of $46 million, $25 million for litigation reserves and other items, $16
million for environmental cleanup liabilities for U.S. marketing sites and $12
million for asset write-offs.
Net charges of $662 million for special items reduced net income for the
nine-month period ended September 30, 1993. These special items included the
unfavorable effects of a $543 million provision, after adjustment for the
-5 -
change in the U.S. corporate income tax rate, for the restructuring of the
company's U.S. refining and marketing operations, $101 million of tax related
adjustments including $54 million for the effect of the increase in the U.S.
corporate income tax rate on the company's deferred tax balances, $68 million
of environmental cleanup provisions for the company's U.S. refineries and
marketing sites, $63 million in provisions for litigation liabilities and $36
million from the write-off of assets. These were partially offset by gains of
$149 million from the sales of assets, primarily the company's Ortho lawn and
garden products business.
Foreign exchange losses included in third quarter 1994 net income were $30
million, compared with gains of $9 million in third quarter 1993. For the
nine-month period ending September 30, 1994, net income included foreign
exchange losses of $51 million, compared with gains of $42 million in the same
period of 1993.
NOTE 4. INFORMATION RELATING TO THE STATEMENT OF CASH FLOWS
The "Net increase in operating working capital" is composed of the following:
NINE MONTHS ENDED
SEPTEMBER 30,
----------------------
Millions of Dollars 1994 1993
------------------------------------------------------------------------
(Increase) decrease in accounts
and notes receivable $ (245) $ 32
Decrease in inventories 54 21
Increase in prepaid expenses
and other current assets (221) (163)
Decrease in accounts payable and
accrued liabilities (1,187) (268)
(Decrease) increase in income and other
taxes payable (221) 4
------------------------------------------------------------------------
Net increase in operating working capital $(1,820) $ (374)
------------------------------------------------------------------------
"Net Cash Provided by Operating Activities" includes the following cash
payments for interest on debt and for income taxes:
NINE MONTHS ENDED
SEPTEMBER 30,
----------------------
Millions of Dollars 1994 1993
------------------------------------------------------------------------
Interest paid on debt (net of
capitalized interest) $ 307 $ 264
Income taxes paid $ 926 $ 1,217
------------------------------------------------------------------------
The "Net (purchases) sales of marketable securities" consists of the following
gross amounts:
NINE MONTHS ENDED
SEPTEMBER 30,
----------------------
Millions of Dollars 1994 1993
------------------------------------------------------------------------
Marketable securities purchased $(1,021) $(1,531)
Marketable securities sold 1,008 1,531
------------------------------------------------------------------------
Net (purchases) sales of marketable securities $ (13) $ -
------------------------------------------------------------------------
The Consolidated Statement of Cash Flows excludes the following non-cash
transactions:
In February 1994, the company took delivery of a new tanker, the Chevron
Employee Pride, under a capital lease arrangement. This asset was recorded as
a $65 million addition to properties, plant and equipment and to capital lease
obligations.
The company's Employee Stock Ownership Plan (ESOP) repaid $40 million and $30
million of matured debt guaranteed by Chevron Corporation in January of 1994
and 1993, respectively. These payments were recorded by the company as a
reduction in its debt outstanding and in Deferred Compensation - ESOP.
- 6 -
During the first nine months of 1993, the company refinanced in excess of $330
million in tax exempt capital lease obligations.
In April 1993, the company acquired a 50 percent interest in the
Tengizchevroil joint venture (TCO) in the Republic of Kazakhstan through a
series of cash and non-cash transactions. The company's interest in TCO is
accounted for using the equity method of accounting and is recorded in
"Investments and advances" in the consolidated balance sheet. The cash
expended in connection with the formation of TCO and subsequent advances to
TCO are included in the consolidated statement of cash flows in "Capital
expenditures." The deferred payment portion of the TCO investment totaled $480
million at September 30, 1994 and is recorded in "Accrued liabilities" and
"Deferred credits and other non-current obligations" in the consolidated
balance sheet. Payments related to the deferred portion of the TCO investment
are classified as "Repayments of long-term debt and other financing
obligations" in the consolidated statement of cash flows.
NOTE 5. SUMMARIZED FINANCIAL DATA - CHEVRON U.S.A. INC.
Chevron U.S.A. Inc. is Chevron Corporation's principal operating company,
consisting primarily of the company's United States integrated petroleum
operations (excluding most of the domestic pipeline operations). These
operations are conducted by three divisions: Chevron U.S.A. Production
Company, Chevron U.S.A. Products Company and Warren Petroleum Company.
Summarized financial information for Chevron U.S.A. Inc. and its consolidated
subsidiaries is presented below:
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------ ------------------
Millions of Dollars 1994 1993 1994 1993
- -----------------------------------------------------------------------------
Sales and other operating revenues $6,908 $7,033 $19,366 $21,288
Costs and other deductions 6,866 6,552 19,069 20,968
Net income 123 267 359 214
- -----------------------------------------------------------------------------
SEPTEMBER 30, DECEMBER 31,
Millions of Dollars 1994 1993
- ----------------------------------------------------------------------------
Current assets $ 3,722 $ 3,661
Other assets 15,282 14,099
Current liabilities 7,236 5,936
Other liabilities 5,426 5,738
Net worth 6,342 6,086
- ----------------------------------------------------------------------------
NOTE 6. SUMMARIZED FINANCIAL DATA - CALTEX GROUP OF COMPANIES
Summarized financial information for the Caltex Group of Companies, owned 50
percent by Chevron and 50 percent by Texaco Inc., is as follows (amounts
reported are on a 100 percent Caltex Group basis):
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------ ------------------
Millions of Dollars 1994 1993 1994 1993
- -----------------------------------------------------------------------------
Sales and other operating revenues 3,822 $3,616 $10,638 $11,572
Operating income 215 253 642 797
Net income 151 165 448 548
- -----------------------------------------------------------------------------
- 7 -
Effective January 1, 1994, the Caltex group adopted Statement of Financial
Accounting Standards (SFAS) No. 115, "Accounting for Certain Investments in
Debt and Equity Securities." Adoption of SFAS 115 had no effect on Caltex's
reported earnings. However, at January 1, 1994, Caltex's stockholders' equity
was increased by $60 million, after-tax, to reflect the write-up to fair
market value of investments held by certain affiliates. An additional net
increase of $20 million has been recorded as of September 30, 1994.
NOTE 7. INCOME TAXES
The effective income tax rate for the first nine months of 1994 decreased to
42.8 percent from 51.6 percent in the comparable 1993 period. The decrease
was primarily due to the favorable adjustment to prior year's income taxes
resulting from the IRS settlement in third quarter 1994, whereas the 1993
period included the effects of unfavorable prior-year adjustments, including
an increase in deferred income taxes resulting from the one percent increase
in the U.S corporate tax rate.
NOTE 8. CONTINGENT LIABILITIES
LITIGATION -
The company is a defendant in numerous lawsuits, in addition to those
mentioned in this note. Plaintiffs may seek to recover large and sometimes
unspecified amounts, and some matters may remain unresolved for several years.
A lawsuit brought against Chevron U.S.A. Inc. and GOC Acquisition Corporation
(a former subsidiary of Gulf Oil Corporation) by OXY U.S.A., the successor in
interest to Cities Service Company ("Cities"), remains pending in an Oklahoma
state court. The suit involves claims for breach of contract and
misrepresentation related to the termination of Gulf Oil Corporation's offer
to purchase Cities' stock in 1982 (Gulf was acquired by Chevron in 1984). In
1994, plaintiff amended and supplemented its petition to add claims for
willful and malicious breach of contract, negligent misrepresentation, and
interference with prospective economic advantage in connection with the 1989
proposed OXY U.S.A.-Cities DOE settlement, and included the claimed Department
of Energy liability as additional contract damages and as additional fraud
damages. The amended and supplemented petition also adds a claim for punitive
damages based upon the alleged fraud, negligent misrepresentation, willful
breach and interference claims. Defendants have answered, in part, the
plaintiff's Second Amended Petition. The court has dismissed defendants'
counterclaim based upon the Federal Entitlements Program. Defendants' motions
to dismiss certain of plaintiff's new claims have been denied.
In April 1991, a United States District Court in Texas ruled favorably on
claims brought by former employees of Gulf and participants in the Gulf
Pension Plan that a partial termination of the plan had occurred. However,
the court denied plaintiffs' claims to a share of any surplus plan assets. In
October 1991, parties agreed not to appeal the partial termination claims
except as relevant to plaintiffs' claims for a share of surplus plan assets.
On October 21, 1994, the Fifth Circuit Court of Appeals affirmed the District
Court's determination that the plaintiffs are not entitled to surplus assets
of the plan. Plaintiffs have indicated that a petition for rehearing will be
filed on or before November 18, 1994.
Management is of the opinion that resolution of the lawsuits will not result
in any significant liability to the company in relation to its consolidated
financial position or liquidity.
OTHER CONTINGENCIES -
The U.S. federal income tax and California franchise tax liabilities of the
company have been settled through 1976 and 1987, respectively. For federal
income tax purposes, all issues other than the allocation of state income
taxes and the creditability of taxes paid to the Government of Indonesia
have been resolved through 1987. The Indonesia issue applies only to years
after 1982. Settlement of open tax matters is not expected to have a material
effect on the consolidated net assets or liquidity of the company and, in the
opinion of management, adequate provision has been made for income and
franchise taxes for all years either under examination or subject to future
examination.
- 8 -
The company and its subsidiaries have certain other contingent liabilities
with respect to guarantees, direct or indirect, of debt of affiliated
companies or others and guarantees, claims and long-term commitments under
various agreements, the payments and future commitments for which are not
material in the aggregate.
In March 1992, an agency within the Department of Energy (DOE) issued a
Proposed Remedial Order (PRO) claiming Chevron failed to comply with DOE
regulations in the course of its participation in the Tertiary Incentive
Program. Although the DOE regulations involved were rescinded in March 1981,
following decontrol of crude oil prices in January 1981, and the statute
authorizing the regulations expired in September 1981, the PRO purports to be
for the period April 1980 through April 1990. The DOE claims the company
overrecouped under the regulations by $125 million during the period in
question. Including interest through September 30, 1994, the total claim
amounts to $290 million. The company asserts that in fact it incurred a loss
through participation in the DOE program. The case is being heard by the
DOE's Office of Hearings and Appeals and is currently in the discovery phase.
A hearing on Chevron's no benefit argument is scheduled for mid-December.
The company is subject to loss contingencies pursuant to environmental laws
and regulations that in the future may require the company to take action to
correct or ameliorate the effects on the environment of prior disposal or
release of chemical or petroleum substances by the company or other parties.
Such contingencies may exist for various sites including, but not limited to:
Superfund sites, operating refineries, oil fields, service stations, terminals
and land development areas. In addition, the company may have obligations
relating to prior asset sales or closed facilities, or for future costs to be
incurred upon the sale or disposition of existing operating facilities. The
amount of such future cost is indeterminable due to such factors as the
unknown magnitude of possible contamination, the unknown timing and extent of
the corrective actions that may be required, the determination of the
company's liability in proportion to other responsible parties and the extent
to which such costs are recoverable from insurance. While the amounts of
future costs may be material to the company's results of operations in the
period in which they are recognized, the company believes the possibility that
these costs will have a material effect on Chevron's consolidated financial
position or liquidity is remote.
The company's operations, particularly oil and gas exploration and production,
can be affected by changing economic, regulatory and political environments in
the various countries, including the United States, in which it operates. In
certain locations, host governments have imposed restrictions, controls and
taxes, and, in others, political conditions have existed that may threaten the
safety of employees and the company's continued presence in those countries.
Internal unrest or strained relations between a host government and the
company or other governments may affect the company's operations. Those
developments have, at times, significantly affected the company's related
operations and results, and are carefully considered by management when
evaluating the level of current and future activity in such countries.
Areas in which the company has significant operations include the United
States, Australia, United Kingdom, Canada, Nigeria, Angola, Congo, Papua New
Guinea, China, Indonesia and Zaire. The company's Caltex affiliates have
significant operations in Indonesia, Japan, Korea, Australia, the Philippines,
Thailand and South Africa. The company's Tengizchevroil affiliate operates in
the Republic of Kazakhstan.
- 9 -
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THIRD QUARTER 1994 COMPARED WITH THIRD QUARTER 1993
AND FIRST NINE MONTHS 1994 COMPARED WITH FIRST NINE MONTHS 1993
OVERVIEW AND OUTLOOK (1)
- --------------------
Net income for the third quarter of 1994 was $425 million ($.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 strong 1993 third quarter
operating results of $565 million ($.87 per share).
Third quarter 1994 earnings included a benefit from a previously announced
settlement with the Internal Revenue Service (IRS) 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, primarily related to prior
year taxes, 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) reported for the
1993 nine months. The 1994 year-to-date earnings were reduced by $23 million
of special charges, whereas earnings in the comparable 1993 period were
reduced by $662 million of special charges, mostly related to last year s U.S.
downstream restructuring provision.
Third quarter refined product sales margins, although improved from this
year's second quarter, were not as strong as in the third quarter of last
year, and were a major factor in the decline in operating results.
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. Crude oil prices also trended down during the
quarter, although they were still about $1.00 per barrel higher than in the
year-ago quarter. The company's worldwide net liquids production increased
almost 6 percent and exceeded one million barrels a day in the third quarter
as international production levels continued to increase.
The company's chemicals operations continued to rebound, reflecting the
improved U.S. economy. Restructuring programs and continuing cost reduction
efforts have positioned this business to benefit from the long-awaited
industry turnaround that is currently underway.
Following abnormally high second quarter 1994 operating expenses, which
reflected refinery operating and other problems, operating cost performance
improved markedly in the third quarter. Operating, general and administrative
expenses, adjusted for special items, were $1.812 billion in the third quarter
and $5.480 billion for the first nine months of 1994, compared with $1.817
billion in the third quarter and $5.297 billion in the first nine months of
1993. Operating expenses for the 1994 third quarter reported in the
consolidated statement of income included $435 million of environmental
remediation and litigation provisions; selling, general and administrative
expenses included the reversal of $319 million of accrued interest reserves on
Federal income taxes payable resulting from the company's settlement with the
IRS.
Total revenues in the 1994 third quarter were $9.509 billion, up 3 percent
from $9.233 billion in the year earlier quarter. Revenues increased on higher
crude oil prices and sales volumes and increased chemical revenues, partly
offset by lower sales volumes of refined products. Total revenues for the
first nine months of 1994 were $26.597 billion, down 6 percent from $28.169
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.
- -------------
(1) Per share amounts reflect a two-for-one split of the company's common
stock, effective May 11, 1994.
- 10 -
Taxes on income for the third quarter and first nine months of 1994 were $265
million and $802 million, respectively, compared with $502 million and $1.037
billion for the comparable 1993 periods. The effective income tax rate for
the first nine months of 1994 decreased to 42.8 percent from 51.6 percent in
the 1993 first nine months. The primary reason for the decrease was the third
quarter favorable adjustment to prior year's income taxes resulting from the
IRS settlement, whereas the 1993 period included the effects of unfavorable
prior-year adjustments and an increase in deferred income taxes resulting from
the one percent increase in the U.S. corporate tax rate.
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. The
losses on currency transactions in 1994 resulted primarily from fluctuations
in the value of the Australian currency relative to the U.S. dollar, while
1993's gains relate primarily to fluctuations in the Nigerian currency.
Crude oil prices have remained relatively stable into the fourth quarter. The
company's average posted price for West Texas Intermediate, a benchmark crude,
was $16.78 per barrel in October compared with $16.46 in September. Natural
gas prices in the U.S. have continued at their lower levels. October natural
gas spot prices were little changed from September; future prices will vary
depending on the weather, availability of supply and customer inventory
levels. Refined product prices in October were relatively unchanged from the
third quarter.
Heavy rains in Southeast Texas in mid-October flooded portions of the
company's chemical plant in Cedar Bayou. The plant produces 4 billion pounds
a year of ethylene, polyethylene, propylene and alphaolefins. Repairs are
expected to take until the end of November. Although earnings from the
company's chemical operations will likely be adversely affected, the impact on
the company's consolidated results of operations is not expected to be
material.
CURRENT DEVELOPMENTS
- --------------------
Liquids production from the Tengizchevroil (TCO) joint venture with the
Republic of Kazakhstan averaged about 54,000 barrels per day in the third
quarter, reflecting the August 1994 increase in TCO's quota by Russia for oil
exports from Kazakhstan through Russia.
Because of the lack of progress made in negotiating terms for an export
pipeline that would enable TCO to market its output directly to world markets,
and because of the constraints under the current transportation arrangements
with Russia, the joint venture partners have decided to further defer
development expenditures until such time as increased production is assured of
being sold. In the past, Russia has restricted the amount of oil allowed into
its pipelines because of the oil's foul smell, which is caused by sulphur
compounds (mercaptans). However, the addition of chemical scavengers has
reduced the mercaptans enough to allow an increase in the oil exports. In
addition, a demercaptanization plant is currently under construction which
will remove the mercaptans. A second processing plant, which can double
production capacity to 130,000 barrels per day, is being constructed.
There were no significant developments in the continuing negotiations between
the company and the Caspian Pipeline Consortium for the terms of an export
pipeline system that would enable the project to market its output directly to
world markets. The Consortium is composed of the Republics of Kazakhstan and
Russia and the Sultanate of Oman. Negotiations are continuing to be very
difficult, and it is currently impossible to predict the eventual outcome or
its impact on the joint venture. Chevron's cash investment in the project at
September 30, 1994 was $680 million.
The Nigerian oil workers' strike that began in July ended without incident in
early September. The company's production was generally unaffected by the
strike and operations are now back to normal. The company's share of
production from its fields in Nigeria averaged 127,000 barrels per day in the
third quarter. In October, Chevron signed a production-sharing agreement with
the Nigerian government to explore for oil in the Benue River trough in
central Nigeria. Chevron will finance the exploration and recover its costs
from future production in accordance with a production sharing contract.
- 11 -
The company reached agreement with Elf Congo to acquire a 22.5 percent
interest in the Haute Mer permit area in the waters offshore Congo and
adjacent to Chevron's Angola concession. Elf Congo, with a 62.5 percent
interest, will continue as operator. Hydro Congo, the state oil company,
holds the remaining 15 percent interest. The area includes the recently
discovered N'Kossa oil field. The field is being developed with first
production at about 80,000 barrels per day expected in 1996. Also, the
government of Congo granted Chevron and its partners, Agip and Hydro Congo, a
permit to develop the Kitina oil discovery offshore Congo. Chevron has a
29.25 percent interest in the Kitina field. Agip, with a 35.75 percent
interest, is the operator.
In early October, the Hibernia project's gravity base structure was lifted off
and floated in the drydock area. It is scheduled to be towed out to the deep
water construction site in early November. The company's capitalized
investment in the project, including capitalized interest, was $577 million at
September 30, 1994.
In August 1994, Chevron completed the previously announced sale of its
Philadelphia, Pennsylvania, refinery to Sun Company, Inc. and also signed a
definitive agreement with Clark Refining and Marketing, Inc. for the sale of
the Port Arthur, Texas, refinery. That sale is expected to close by year-end.
Both sales are a part of the major downstream restructuring announced in May
1993. Generally, Chevron will retain primary responsibility for remediation
of most existing environmental contamination at the Port Arthur refinery.
Testing and investigation has not been completed and therefore it is not
possible to estimate the degree of contamination or the magnitude of required
clean-up costs, which will also depend on the remediation plans ultimately
negotiated with applicable federal and state agencies. While the company
continues to believe that the reserve established in the second quarter of
1993 will be sufficient to complete the restructuring, the ultimate amount
will be dependent upon the outcome of the investigations and negotiations, as
well as crude oil and product prices at the time of sale. Accordingly,
additional provisions may be necessary in the future.
In October 1994, the company announced a natural gas field discovery in the
Gulf of Mexico Norphlet Trend. The trend, in which Chevron holds several
leases, extends some 80 miles east-west off the coasts of Florida, Alabama and
Mississippi. Chevron's discovery is in 60 feet of water and is located 39
miles southwest of Mobile, Alabama. Chevron is the operator and holds a 71
percent interest. Production is scheduled for 1996.
REVIEW OF OPERATIONS
- --------------------
The following tables detail the company's after-tax earnings by major
operating area and selected operating data.
EARNINGS BY MAJOR OPERATING AREA
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------ -----------------
(Millions of Dollars) 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 212 (48) 88 (115)
- ----------------------------------------------------------------------------
Net Income $425 $420 $1,070 $971
- ----------------------------------------------------------------------------
- 12 -
SELECTED OPERATING DATA
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------ -----------------
1994 1993 1994 1993
- ----------------------------------------------------------------------------
U.S. EXPLORATION AND PRODUCTION
Net Crude Oil and Natural Gas
Liquids Production (MBPD) 371 393 372 396
Net Natural Gas Production (MMCFPD) 2,038 2,033 2,124 2,051
Sales of Natural Gas Liquids (MBPD) 217 204 204 204
Revenue from Net Production
Crude Oil ($/BBL.) $15.03 $14.00 $13.64 $15.19
Natural Gas ($/MCF) $ 1.62 $ 2.06 $ 1.85 $ 1.98
INTERNATIONAL EXPLORATION AND PRODUCTION (1)
Net Crude Oil and Natural Gas
Liquids Production (MBPD) 640 564 619 548
Net Natural Gas Production (MMCFPD) 573 470 541 480
Revenue from Liftings
Liquids ($/Bbl.) $15.89 $15.75 $14.66 $16.70
Natural Gas ($/MCF) $ 1.78 $ 1.96 $ 1.89 $ 2.07
U.S. REFINING AND MARKETING
Sales of Gasoline (MBPD) 611 678 627 659
Sales of Other Refined Products (MBPD) 738 803 707 764
Refinery Input (MBPD) 1,265 1,384 1,219 1,308
Average Refined Product Sales
Price ($/Bbl.) $25.44 $24.92 $24.05 $25.84
INTERNATIONAL REFINING AND MARKETING (1)
Sales of Refined Products (MBPD) 930 891 922 897
Refinery Input (MBPD) 603 539 622 552
CHEMICAL SALES AND OTHER OPERATING REVENUES (2)
United States $836 $662 $2,232 $2,095
International 174 165 477 447
-------------------------------------
Worldwide $1,010 $827 $2,709 $2,542
- ----------------------------------------------------------------------------
(1) Includes equity in affiliates. Refinery input in 1994 includes South
Africa, where local government restrictions prohibited this disclosure
prior to the fourth quarter of 1993.
(2) Millions of dollars. Includes Sales to Other Chevron Companies.
- ------------------
MBPD=thousand barrels per day; MMCFPD=million cubic feet per day; BBL.=barrel;
MCF=thousand cubic feet
WORLDWIDE EXPLORATION AND PRODUCTION earned $194 million in the third quarter
of 1994 compared with $238 million in the corresponding 1993 period. Earnings
of $715 million in the first nine months of 1994 were 24 percent lower than
the $947 million earned in the 1993 nine months.
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 1993 third quarter earnings of $125
million, which included special charges of $32 million for prior-year tax
adjustments. Excluding special items, third quarter 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 in
the third quarter.
Earnings for the first nine months of 1994 were $339 million compared with
$527 million last year. Special charges totaled $76 million and $44 million
for the nine months of 1994 and 1993, respectively. Crude oil prices declined
10 percent to $13.64 per barrel from the 1993 nine month period due to sharply
lower crude oil prices early in the year. Liquids production was down 24,000
barrels per day to 372,000 and natural gas prices were off nearly 7 percent to
$1.85 per thousand cubic feet, more than offsetting a 4 percent increase in
natural gas production for the 1994 nine months.
- 13 -
INTERNATIONAL EXPLORATION AND PRODUCTION earnings for the third quarter were
$131 million, compared with $113 million earned in last year's third quarter.
Reported earnings for the first nine months of 1994 and 1993 were $376 million
and $420 million, respectively. Excluding special charges of $62 million and
$69 million for tax adjustments in last year's third quarter and year-to-date
results, earnings declines in both periods were largely due to a swing in
foreign currency effects of $33 million and $59 million in the third quarter
and nine months, respectively. The 1994 quarter and nine months included
foreign exchange losses of $14 million and $15 million, respectively, compared
with gains of $19 million and $44 million in last year's third quarter and
nine months.
International net liquids production increased 13 percent in both 1994 periods
to 640,000 barrels per day in the third quarter and 619,000 barrels per day
year-to-date. 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 in the
third quarter and 13 percent to 541 million cubic feet per day for the nine
months, due to higher volumes in Canada, Kazakhstan and Australia. Crude oil
prices were generally flat quarter to quarter, but for the nine months were
about $2.00 per barrel lower than last year. Natural gas prices declined in
both the 1994 third quarter and nine months.
WORLDWIDE REFINING AND MARKETING operations reported a loss of $55 million in
the 1994 third quarter compared with earnings of $214 million for the 1993
third quarter. The 1994 nine months earnings were $91 million compared with
losses of $64 million in the corresponding 1993 period.
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 third quarter results included special charges
for environmental remediation totaling $218 million, primarily reflecting 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.
Losses for the 1994 nine months amounted to $54 million compared with losses
of $243 million in the prior-year period. Special charges, primarily the
third quarter environmental remediation provisions, totaled $244 million for
the first nine months of 1994. Special charges in the 1993 period were $648
million, consisting primarily of a restructuring provision of $543 million for
the financial effects of the company's decision to sell its Port Arthur and
Philadelphia refineries. Other special charges in the prior year included
environmental provisions of $68 million and prior-year tax and other
provisions of $37 million.
Adjusting for these special charges, 1994 third quarter and nine months
operational earnings of $108 million and $190 million were down significantly
from the $194 million and $405 million, respectively, earned in the
year-earlier periods.
In the third quarter, 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 and first nine months. Ample supplies are holding down product
prices and squeezing margins. Third quarter 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. Sales for the 1994 year-to-date period were down 6
percent, primarily due to unscheduled downtime at several of the company's
refineries and the sale of the Philadelphia refinery. Year-to-date results
were also negatively affected by refinery operating and other problems earlier
in the year that resulted in high operating expenses and increased purchases
of refined products for resale.
INTERNATIONAL REFINING AND MARKETING third quarter net earnings in 1994
increased to $55 million from the $50 million earned in the 1993 third
quarter. However, nine month 1994 earnings trailed 1993's levels, $145
million compared with $179 million. The 1993 nine months included benefits of
$14 million from asset sales. Product sales margins in the 1994 third quarter
and year-to-date remained depressed. Sales volumes increased about 4 percent
in the third quarter and 3 percent for the nine months of 1994. Sales volumes
were strong in all the company's
- 14 -
primary international marketing operations - Canada, the United Kingdom and
the Caltex areas of operations, averaging 12 percent and 7 percent higher for
the third quarter and nine months, respectively. However, these higher sales
volumes were mostly offset by lower sales volumes in the company's
international trading activities.
Foreign exchange losses were $1 million and $9 million in the 1994 third
quarter and nine months,respectively, compared with foreign exchange gains of
$4 million and $14 million in the 1993 periods.
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.
Earnings for the nine months of 1994 were $143 million compared to $165
million in the 1993 period. However, the 1993 period included special
benefits of $126 million, mostly related to the sale of the Ortho lawn and
garden products business. Excluding special items in both nine-month periods,
1994 operating earnings increased to $147 million from $39 million in the 1993
period.
The improving U.S. economy in 1994 has stimulated demand for commodity
chemicals, bringing the chemical industry into better balance. Restructuring
and cost reduction programs in recent years have positioned the company's
chemical operations to benefit from the industry upswing. Higher sales
volumes and higher prices, particularly for ethylene and polyethylene,
contributed to the increased operating earnings. The 1993 nine month period
included earnings of the Ortho business, which was sold in May 1993.
Foreign exchange losses were $8 million and $4 million in the 1994 and 1993
third quarters, respectively, and $13 million and $8 million in the
corresponding nine month periods.
CORPORATE AND OTHER earnings were $212 million compared with charges of $48
million in the third quarter of 1993. Nine month earnings were $88 million
compared with charges of $115 million in the comparable 1993 period. Results
in the 1994 quarter and nine months 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 third quarter and nine months included
net special charges of $13 million and $46 million, respectively, primarily
litigation provisions and asset write-downs, partially offset by favorable tax
adjustments.
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 and nine months included approximately $47 million
and $125 million, respectively, that would have been allocated to the business
segments under the previous method. This change had no net income effect, nor
did it affect any segment operational trends.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Cash and cash equivalents totaled $1.3 billion at September 30, 1994, a $369
million decrease from year-end 1993. The draw-down of cash, cash from
operations and net increases in debt outstanding were used to fund the
company's capital expenditures and dividend payments to stockholders.
The company's debt and capital lease obligations totaled $8.561 billion at
September 30, 1994, up $1.023 billion from $7.538 billion at year-end 1993.
The increase is primarily from $932 million of net short-term borrowings,
largely the issuance of commercial paper, the issuance of $350 million of 7.45
percent notes due in the year 2004 and $65 million in capital lease
obligations associated with the delivery of a new vessel. These increases
were partially offset by the first quarter 1994 prepayment of $200 million of
7 7/8 percent public debt originally due March 1, 1997. The company also
retired $40 million of debt related to the Employee Stock Ownership Plan in
January 1994.
The company's short-term debt, consisting primarily of commercial paper and
current portion of long-term debt, totaled $6.232 billion at September 30,
1994. This amount includes $1.800 billion of short-term obligations that have
been classified as long-term since the company has both the intent and
ability, as evidenced by revolving credit arrangements, to refinance it on a
long-term basis. The company's practice has been to continually refinance its
commercial paper, maintaining levels it believes to be appropriate.
- 15 -
In August, the company reached a settlement agreement with the Internal
Revenue Service that substantially resolved all open tax issues for the nine
years 1979 through 1987. The payment of approximately $675 million, partially
funded by issuing commercial paper, is the principal reason for the company's
decline in cash provided by operations and the increase in total debt.
Although the company benefits from lower interest rates on short-term debt,
the large amount of short-term debt adversely affects Chevron's ratio of
current assets to current liabilities, which was .82 at year-end 1993 and .87
at September 30, 1994. The improvement in the company's current ratio since
year-end is primarily due to its settlement with the Internal Revenue Service
for an amount less than had been reserved in prior years.
The company's debt ratio (total debt to total debt plus equity) was 37.4
percent at September 30, 1994, up from 35.0 percent at year-end 1993. The
company will continue to monitor its spending levels, market conditions and
related interest rates to maintain what it perceives to be reasonable debt
levels.
The company believes it has the flexibility, financial resources and borrowing
capacity to fund its capital programs, pay dividends and meet unanticipated
cash requirements.
Worldwide capital and exploratory expenditures for the first nine months of
1994, including the company's share of affiliates' expenditures, totaled
$3.174 billion, a 10 percent increase from the $2.887 billion spent in the
1993 nine months. The increase was largely due to expenditures for the
development of the Tengiz oil field in Kazakhstan and for refinery
construction and expansion projects by the company's Caltex affiliate. Total
expenditures for exploration and production activities represented 58 percent
of total outlays in 1994 and 56 percent in 1993. Expenditures outside the
United States were 60 percent of the total outlays for the 1994 nine months,
compared with 55 percent in 1993.
- 16 -
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Cities Service Tender Offer Case -
The description contained in Part I, Item 3, Paragraph A of the company's
Annual Report on Form 10-K for the year ended December 31, 1993, as amended in
Part II, Item 1 of each of the company's Quarterly Reports on Form 10-Q for
the periods ended March 30, 1994 and June 30, 1994, is hereby further amended
as follows:
Defendant Chevron Corporation has been dismissed from the case for lack of
jurisdiction and the remaining defendants are Chevron U.S.A. Inc. and GOC
Acquisition Corporation (a former subsidiary of Gulf Oil Corporation). The
court has dismissed defendants' counterclaim based upon the Federal
Entitlements Program. Motions are pending to reconsider the court's order
granting plaintiff partial summary judgment with respect to defenses based
upon the contract and claims against plaintiff under the Federal Entitlements
Program.
In re Gulf Pension Litigation -
The description contained in Part I, Item 3, paragraph B of the company's
Annual Report on Form 10-K for the year ended December 31, 1993, is hereby
amended as follows:
On October 21, 1994, the Fifth Circuit Court of Appeals affirmed the district
court's determination that the plaintiffs are not entitled to surplus assets
of the Gulf Pension Plan. Plaintiffs have indicated that a petition for
rehearing will be filed on or before November 18, 1994.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
(4) Pursuant to the Instructions to Exhibits, certain instruments
defining the rights of holders of long-term debt securities of the
company and its consolidated subsidiaries are not filed because
the total amount of securities authorized under any such instrument
does not exceed 10 percent of the total assets of the company
and its subsidiaries on a consolidated basis. A copy of any such
instrument will be furnished to the Commission upon request.
(12) Computation of Ratio of Earnings to Fixed Charges
(27) Financial Data Schedule
(b) Reports on Form 8-K
An amended Current Report on Form 8-K/A, dated August 1, 1994, was filed
by the company on August 16, 1994. This report amended page 28 of the
First Supplemental Indenture which was filed on August 11, 1994 as Exhibit
99.1 to the company's Current Report on Form 8-K, dated August 1, 1994.
A Current Report on Form 8-K, dated October 25, 1994, was filed by the
company on October 25, 1994. This report announced unaudited earnings for
the quarter and the nine months ended September 30, 1994.
A Current Report on Form 8-K, dated October 28, 1994, was filed by the
company on October 28, 1994. This report presented under "Item 5. Other
Events," restated earnings per share for the five year period ended
December 31, 1993 to reflect a two-for-one stock split effective on May
11, 1994.
- 17 -
SIGNATURE
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 thereunto duly authorized.
CHEVRON CORPORATION
----------------------------
(Registrant)
Date November 10, 1994 /s/ DONALD G. HENDERSON
---------------------- ----------------------------
Donald G. Henderson,
Vice-President & Comptroller
(Principal Accounting Office
and Duly Authorized Officer)
- 18 -
EXHIBIT 12
CHEVRON CORPORATION - TOTAL ENTERPRISE BASIS
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in Millions)
NINE MONTHS
ENDED YEAR ENDED DECEMBER 31,
SEPTEMBER 30, -------------------------------------------
1994 1993 1992(1) 1991 1990 1989
------------- ------- ------- ------- ------- -------
Net Income before
Cumulative Effect of
Changes in Accounting
Principles $1,070 $1,265 $2,210 $1,293 $2,157 $ 251
Income Tax Expense 971 1,389 1,508 1,302 2,387 1,322
Distributions (Less Than)
Greater Than Equity
in Earnings of Less
Than 50% Owned
Affiliates (6) 6 (9) (20) (6) (9)
Minority Interest 1 (2) 2 2 6 3
Previously Capitalized
Interest Charged to
Earnings During Period 22 20 18 17 15 15
Interest and Debt Expense 321 390 490 585 707 718
Interest Portion of
Rentals (2) 116 169 152 153 163 118
------- ------- ------- ------- ------- -------
EARNINGS BEFORE PROVISION
FOR TAXES AND
FIXED CHARGES $2,495 $3,237 $4,371 $3,332 $5,429 $2,418
======= ======= ======= ======= ======= =======
Interest and Debt Expense $ 321 $ 390 $ 490 $ 585 $ 707 $ 718
Interest Portion of
Rentals(2) 116 169 152 153 163 118
Capitalized Interest 56 60 46 30 24 42
------- ------- ------- ------- ------- -------
TOTAL FIXED CHARGES $ 493 $ 619 $ 688 $ 768 $ 894 $ 878
======= ======= ======= ======= ======= =======
- -------------------------------------------------------------------------------
RATIO OF EARNINGS
TO FIXED CHARGES 5.06 5.23 6.35 4.34 6.07 2.75
- -------------------------------------------------------------------------------
(1) The information for 1992 and subsequent periods reflects the company's
adoption of the Financial Accounting Standards Board Statements No. 106,
"Employers' Accounting for Postretirement Benefits Other than Pensions"
and No. 109, "Accounting for Income Taxes," effective January 1, 1992.
(2) Calculated as one-third of rentals.