CHEVRONTEXACO CORP - 10-Q Quarterly Report

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		For the quarterly period ended September 30, 2004

or

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 1-368-2

ChevronTexaco 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)
6001 Bollinger Canyon Road,
San Ramon, California		94583
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (925) 842-1000

NONE

(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 þ No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes þ No o

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, 2004
Common stock, $.75 par value		2,118,612,197

INDEX


		Page
		No.

	Cautionary Statements Relevant to Forward-Looking Information for the Purpose of “Safe Harbor” Provisions of the Private Securities Litigation Reform Act of 1995		2
PART I FINANCIAL INFORMATION
Item 1.	Consolidated Financial Statements —
	Consolidated Statement of Income for the Three and Nine Months Ended September 30, 2004 and 2003		3
	Consolidated Statement of Comprehensive Income for the Three and Nine Months Ended September 30, 2004 and 2003		4
	Consolidated Balance Sheet at September 30, 2004, and December 31, 2003		5
	Consolidated Statement of Cash Flows for the Nine Months Ended September 30, 2004 and 2003		6
	Notes to Consolidated Financial Statements		7-23
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		24-43
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		43
Item 4.	Controls and Procedures		43
PART II OTHER INFORMATION
Item 1.	Legal Proceedings		45
Item 2.	Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities		45
Item 5.	Other Information		46
Item 6.	Exhibits		47
Signature			48
Exhibits: Computation of Ratio of Earnings to Fixed Charges			50
Rule 13a-14(a)/15d-14(a) Certifications			51-52
Section 1350 Certifications			53-54
EXHIBIT 12.1
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32.1
EXHIBIT 32.2

CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING INFORMATION

FOR THE PURPOSE OF “SAFE HARBOR” PROVISIONS OF THE

PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This quarterly report on Form 10-Q of ChevronTexaco Corporation contains forward-looking statements relating to ChevronTexaco’s operations that are based on management’s current expectations, estimates and projections about the petroleum, chemicals and other energy-related industries. Words such as “anticipates,” “expects,” “intends,” “plans,” “targets,” “projects,” “believes,” “seeks,” “estimates” and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, some of which are beyond management’s control and are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. The reader should not place undue reliance on these forward-looking statements, which speak only as of the date of this report. Unless legally required, ChevronTexaco undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Among the factors that could cause actual results to differ materially are crude oil and natural gas prices; refining margins and marketing margins; chemicals prices and competitive conditions affecting supply and demand for aromatics, olefins and additives products; actions of competitors; the competitiveness of alternate energy sources or product substitutes; technological developments; the results of operations and financial condition of equity affiliates; inability or failure of the company’s joint-venture partners to fund their share of operations and development activities; potential failure to achieve expected production from existing and future crude oil and natural gas development projects; potential delays in the development, construction or start-up of planned projects; potential disruption or interruption of the company’s production or manufacturing facilities due to war, accidents, political events, civil unrest or severe weather; potential liability for remedial actions under existing or future environmental laws or regulations; significant investment or product changes under existing or future environmental regulations (including, particularly, regulations and litigation dealing with gasoline composition and characteristics); potential liability resulting from pending or future litigation; the company’s ability to sell or dispose of assets or operations as expected; and the effects of changed accounting rules under generally accepted accounting principles promulgated by rule-setting bodies. In addition, such statements could be affected by general domestic and international economic and political conditions. Unpredictable or unknown factors not discussed herein also could have material adverse effects on forward-looking statements.

PART I.

FINANCIAL INFORMATION


Item 1.	*Consolidated Financial Statements*

CHEVRONTEXACO CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF INCOME

(Unaudited)



			Three Months Ended				Nine Months Ended
			September 30,				September 30,

			2004		2003		2004		2003


			(Millions of dollars, except per-share amounts)
Revenues and Other Income
Sales and other operating revenues(1)			$	39,598	$	30,041	$	109,203	$	89,502
Income from equity affiliates				612		286		1,797		767
Other income.				505		148		1,566		242
Gain from exchange of Dynegy securities				—		365		—		365

	Total Revenues and Other Income			40,715		30,840		112,566		90,876

Costs and Other Deductions
Purchased crude oil and products				25,649		18,024		68,128		53,403
Operating expenses				2,554		2,225		6,950		6,002
Selling, general and administrative expenses				1,231		1,197		3,238		3,267
Exploration expenses				173		127		423		430
Depreciation, depletion and amortization				1,219		1,390		3,650		3,999
Taxes other than on income(1)				4,948		4,417		14,602		13,258
Interest and debt expense				107		115		294		363
Minority interests				23		24		63		66

	Total Costs and Other Deductions			35,904		27,519		97,348		80,788

Income From Continuing Operations Before Income Tax Expense				4,811		3,321		15,218		10,088
Income tax expense				1,875		1,360		5,643		4,448

Income From Continuing Operations				2,936		1,961		9,575		5,640
Income From Discontinued Operations				265		14		313		51

Income Before Cumulative Effect of Changes in Accounting Principles				3,201		1,975		9,888		5,691
Cumulative effect of changes in accounting principles				—		—		—		(196	)

Net Income			$	3,201	$	1,975	$	9,888	$	5,495

Per-Share of Common Stock(2):
	Income From Continuing Operations(3)
		— Basic	$	1.38	$	1.00	$	4.51	$	2.72
		— Diluted	$	1.38	$	1.00	$	4.50	$	2.72
	Income From Discontinued Operations
		— Basic	$	0.13	$	0.01	$	0.15	$	0.03
		— Diluted	$	0.13	$	0.01	$	0.15	$	0.03
	Cumulative Effect of Changes in Accounting Principles
		— Basic	$	—	$	—	$	—	$	(0.09	)
		— Diluted	$	—	$	—	$	—	$	(0.09	)
	Net Income(3)
		— Basic	$	1.51	$	1.01	$	4.66	$	2.66
		— Diluted	$	1.51	$	1.01	$	4.65	$	2.66
	Dividends		$	0.40	$	0.36	$	1.13	$	1.06
	Weighted Average Number of Shares Outstanding (000’s)(2)
		— Basic		2,113,431		2,125,436		2,120,986		2,124,947
		— Diluted		2,122,337		2,128,181		2,128,009		2,127,927

(1) Includes consumer excise taxes:			$	2,040	$	1,814	$	5,818	$	5,270

(2) Per-share amounts and weighted average number of shares outstanding in all periods reflect a two-for-one stock split effected as a 100 percent stock dividend in September 2004.

(3) The amounts in 2003 include a benefit of $0.08 for the company’s share of a capital stock transaction of its Dynegy affiliate, which under the applicable accounting rules was recorded directly to the company’s retained earnings and not included in net income for the period.

See accompanying notes to consolidated financial statements.

CHEVRONTEXACO CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(Unaudited)



			Three Months Ended						Nine Months Ended
			September 30,						September 30,

			2004			2003			2004			2003


			(Millions of dollars)
Net Income			$	3,201		$	1,975		$	9,888		$	5,495

Other Comprehensive Income
	Currency translation adjustment			(2	)		20			4			31
	Unrealized holding gain (loss) on securities:
		Net gain arising during period		44			99			45			392
		Reclassification to net income of net recognized gain		—			(365	)		—			(365	)

		Total		44			(266	)		45			27
	Net derivatives gain (loss) on hedge transactions:
		Before income taxes		17			4			(4	)		113
		Income taxes		(3	)		—			(3	)		(40	)

		Total		14			4			(7	)		73
	Minimum pension liability adjustment			—			—			3			(17	)

Other Comprehensive Income (Loss), net of tax				56			(242	)		45			114

Comprehensive Income			$	3,257		$	1,733		$	9,933		$	5,609

See accompanying notes to consolidated financial statements.

CHEVRONTEXACO CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(Unaudited)

At September 30,

At December 31,

2004

2003

(Millions of dollars, except

per-share amounts)

ASSETS

Cash and cash equivalents

10,037

4,266

Marketable securities

1,005

1,001

Accounts and notes receivable, net

12,552

9,722

Inventories:

Crude oil and petroleum products

2,291

2,003

Chemicals

175

173

Materials, supplies and other

488

472

Total inventories

2,954

2,648

Prepaid expenses and other current assets

2,272

1,789

Total Current Assets

28,820

19,426

Long-term receivables, net

1,291

1,493

Investments and advances

13,756

12,319

Properties, plant and equipment, at cost

100,629

100,556

Less: accumulated depreciation, depletion and amortization

56,747

56,018

Properties, plant and equipment, net

43,882

44,538

Deferred charges and other assets

2,902

2,594

Assets held for sale

369

1,100

Total Assets

91,020

81,470

LIABILITIES AND STOCKHOLDERS’ EQUITY

Short-term debt

1,037

1,703

Accounts payable

10,975

8,675

Accrued liabilities

3,064

3,172

Federal and other taxes on income

3,211

1,392

Other taxes payable

1,275

1,169

Total Current Liabilities

19,562

16,111

Long-term debt

10,563

10,651

Capital lease obligations

255

243

Deferred credits and other noncurrent obligations

7,877

7,758

Noncurrent deferred income taxes

6,506

6,417

Reserves for employee benefit plans

3,218

3,727

Minority interests

197

268

Total Liabilities

48,178

45,175

Table of Contents

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(2)	Per-share amounts and weighted average number of shares outstanding in all periods reflect a two-for-one stock split effected as a 100 percent stock dividend in September 2004.

(3)	The amounts in 2003 include a benefit of $0.08 for the company’s share of a capital stock transaction of its Dynegy affiliate, which under the applicable accounting rules was recorded directly to the company’s retained earnings and not included in net income for the period.