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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 March 31, 2005
 
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 March 31, 2005
Common stock, $.75 par value   2,098,220,174
 
 

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
   Consolidated Financial Statements —        
     Consolidated Statement of Income for the Three Months Ended March 31, 2005 and 2004     3  
     Consolidated Statement of Comprehensive Income for the Three Months Ended March 31, 2005 and 2004     4  
     Consolidated Balance Sheet at March 31, 2005, and December 31, 2004     5  
     Consolidated Statement of Cash Flows for the Three Months Ended March 31, 2005 and 2004     6  
     Notes to Consolidated Financial Statements     7-23  
   Management’s Discussion and Analysis of Financial Condition and Results of Operations     24-40  
   Quantitative and Qualitative Disclosures about Market Risk     41  
   Controls and Procedures     41  
 PART II

OTHER INFORMATION
   Legal Proceedings     42  
   Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities     42  
   Other Information     43  
   Exhibits     43  
 Signature     44  
 Exhibits: Computation of Ratio of Earnings to Fixed Charges     46  
 Rule 13a-14(a)/15d-14(a) Certifications     47-48  
 Section 1350 Certifications     49-50  
 EXHIBIT 10.13
 EXHIBIT 10.14
 EXHIBIT 10.15
 EXHIBIT 12.1
 EXHIBIT 31.1
 EXHIBIT 31.2
 EXHIBIT 32.1
 EXHIBIT 32.2

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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,” “schedules,” “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 our 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; the ability to successfully consummate the proposed acquisition of Unocal Corporation and successfully integrate the operations of both companies; inability or failure of the company’s joint-venture partners to fund their share of operations and development activities; potential failure to achieve expected net 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 net 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 regulations and litigation; significant investment or product changes under existing or future environmental regulations and litigation (including, particularly, regulations and litigation dealing with gasoline composition and characteristics); potential liability resulting from pending or future litigation; the company’s acquisition or disposition of assets; the effects of changed accounting rules under generally accepted accounting principles promulgated by rule-setting bodies; and the factors set forth under the heading “Risk Factors” in the company’s Annual Report on Form 10-K. 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.

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PART I.
FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
CHEVRONTEXACO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
                     
    Three Months Ended
    March 31,
     
    2005   2004
         
    (Millions of dollars, except
    per-share amounts)
Revenues and Other Income
                
Sales and other operating revenues(1)(2)
   $ 40,441     $ 33,063  
Income from equity affiliates
     889       444  
Other income
     277       138  
             
 
Total Revenues and Other Income
     41,607       33,645  
             
Costs and Other Deductions
                
Purchased crude oil and products(2)
     26,491       20,027  
Operating expenses
     2,469       2,167  
Selling, general and administrative expenses
     999       1,021  
Exploration expenses
     153       85  
Depreciation, depletion and amortization
     1,334       1,190  
Taxes other than on income(1)
     5,126       4,765  
Interest and debt expense
     107       93  
Minority interests
     21       22  
             
 
Total Costs and Other Deductions
     36,700       29,370  
             
Income From Continuing Operations Before Income Tax Expense
     4,907       4,275  
Income Tax Expense
     2,230       1,724  
             
Income From Continuing Operations
     2,677       2,551  
Income From Discontinued Operations
     —       11  
             
Net Income
   $ 2,677     $ 2,562  
             
Per Share of Common Stock(3):
                
 
Income From Continuing Operations
                
   
— Basic
   $ 1.28     $ 1.21  
   
— Diluted
   $ 1.28     $ 1.20  
 
Income From Discontinued Operations
                
   
— Basic
   $ —     $ —  
   
— Diluted
   $ —     $ —  
 
Net Income
                
   
— Basic
   $ 1.28     $ 1.21  
   
— Diluted
   $ 1.28     $ 1.20  
 
Dividends
   $ 0.40     $ 0.36  
 
Weighted Average Number of Shares Outstanding (000s)
                
   
— Basic
     2,090,609       2,126,735  
   
— Diluted
     2,099,899       2,130,735  
           
(1) Includes consumer excise taxes:
   $ 2,116     $ 1,857  
(2) Includes amounts in revenues for buy/sell contracts (associated costs are in “Purchased crude oil and products”). See Note 15 starting on page 18:
   $ 5,290     $ 4,256  
(3) 2004 restated to reflect a two-for-one stock split effected as a 100 percent stock dividend in September 2004
                
See accompanying notes to consolidated financial statements.

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CHEVRONTEXACO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(Unaudited)
                     
    Three Months Ended
    March 31,
     
    2005   2004
         
    (Millions of dollars)
Net Income
   $ 2,677     $ 2,562  
             
 
Currency translation adjustment
     (3 )     1  
 
Unrealized holding (loss) gain on securities
     (33 )     7  
 
Net derivatives gain on hedge transactions
                
   
Before income taxes
     10       4  
   
Income taxes
     (2 )     (2 )
             
 
Total
     8       2  
 
Minimum pension liability adjustment
     1       —  
             
Other Comprehensive (Loss) Gain, Net of Tax
     (27 )     10  
             
Comprehensive Income
   $ 2,650     $ 2,572  
             
See accompanying notes to consolidated financial statements.

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CHEVRONTEXACO CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Unaudited)
                         
    At March 31,   At December 31,
    2005   2004
         
    (Millions of dollars, except
    per-share amounts)
ASSETS
Cash and cash equivalents
   $ 10,687     $ 9,291  
Marketable securities
     1,164       1,451  
Accounts and notes receivable, net
     13,665       12,429  
Inventories:
                
 
Crude oil and petroleum products
     2,455       2,324  
 
Chemicals
     179       173  
 
Materials, supplies and other
     462       486  
             
   
Total inventories
     3,096       2,983  
Prepaid expenses and other current assets
     2,547       2,349  
             
   
Total Current Assets
     31,159       28,503  
Long-term receivables, net
     1,391       1,419  
Investments and advances
     14,547       14,389  
Properties, plant and equipment, at cost
     104,739       103,954  
Less: accumulated depreciation, depletion and amortization
     60,524       59,496  
             
   
Properties, plant and equipment, net
     44,215       44,458  
Deferred charges and other assets
     4,196       4,277  
Assets held for sale
     295       162  
             
     
Total Assets
   $ 95,803     $ 93,208  
             
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Short-term debt
   $ 624     $ 816  
Accounts payable
     11,821       10,747  
Accrued liabilities
     2,805       3,410  
Federal and other taxes on income
     2,966       2,502  
Other taxes payable
     1,458       1,320  
             
   
Total Current Liabilities
     19,674       18,795  
Long-term debt
     10,191       10,217  
Capital lease obligations
     231       239  
Deferred credits and other noncurrent obligations
     8,171       7,942  
Noncurrent deferred income taxes
     7,454       7,268  
Reserves for employee benefit plans
     3,325       3,345  
Minority interests
     165       172  
             
   
Total Liabilities
     49,211       47,978  
             
Preferred stock (authorized 100,000,000 shares, $1.00 par value, none issued)
      —       —  
Common stock (authorized 4,000,000,000 shares, $.75 par value, 2,274,032,014 shares issued at March 31, 2005, and December 31, 2004)
     1,706       1,706  
Capital in excess of par value
     4,199       4,160  
Retained earnings
     47,258       45,414  
Accumulated other comprehensive loss
     (346 )     (319 )
Deferred compensation and benefit plan trust
     (494 )     (607 )
Treasury stock, at cost (175,811,840 and 166,911,890 shares at March 31, 2005, and December 31, 2004, respectively)
     (5,731 )     (5,124 )
             
   
Total Stockholders’ Equity
     46,592       45,230  
             
       
Total Liabilities and Stockholders’ Equity
   $ 95,803     $ 93,208  
             
See accompanying notes to consolidated financial statements.

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CHEVRONTEXACO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
                       
    Three Months Ended
    March 31,
     
    2005   2004
         
    (Millions of dollars)
Operating Activities
                
 
Net income
   $ 2,677     $ 2,562  
 
Adjustments
                
   
Depreciation, depletion and amortization
     1,334       1,190  
   
Dry hole expense
     60       33  
   
Distributions less than income from equity affiliates
     (210 )     (299 )
   
Net before-tax gains on asset retirements and sales
     (144 )     (91 )
   
Net foreign currency losses
     10       12  
   
Deferred income tax provision
     175       242  
   
Net (increase) decrease in operating working capital
     (332 )     209  
   
Minority interest in net income
     21       22  
   
(Increase) decrease in long-term receivables
     (4 )     37  
   
Decrease in other deferred charges
     73       470  
   
Cash contributions to employee pension plans
     (63 )     (549 )
   
Other
     149       (361 )
             
     
Net Cash Provided by Operating Activities
     3,746       3,477  
             
Investing Activities
                
   
Capital expenditures
     (1,310 )     (1,354 )
   
Proceeds from asset sales
     297       381  
   
Net sales (purchases) of marketable securities
     287       (22 )
   
Repayment of loans by equity affiliates
     37       14  
             
     
Net Cash Used for Investing Activities
     (689 )     (981 )
             
Financing Activities
                
   
Net payments of short-term obligations
     (72 )     (3 )
   
Repayments of long-term debt
     (12 )     (141 )
   
Cash dividends
     (836 )     (775 )
   
Dividends paid to minority interests
     (26 )     (2 )
   
Net (purchases) sales of treasury shares
     (568 )     43  
   
Redemption of preferred stock of subsidiary
     (140 )     —  
             
     
Net Cash Used For Financing Activities
     (1,654 )     (878 )
             
Effect of Exchange Rate Changes on Cash and Cash Equivalents
     (7 )     (26 )
             
Net Change in Cash and Cash Equivalents
     1,396       1,592  
Cash and Cash Equivalents at January 1
     9,291       4,266  
             
Cash and Cash Equivalents at March 31
   $ 10,687     $ 5,858  
             
See accompanying notes to consolidated financial statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Interim Financial Statements
      The accompanying consolidated financial statements of ChevronTexaco Corporation and its subsidiaries (the company) have not been audited by independent accountants. 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 item described in Note 2.
      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 2004 Annual Report on Form 10-K.
      The results for the three-month period ended March 31, 2005, are not necessarily indicative of future financial results.
Note 2. Net Income
      Net income for the first quarter 2005 was $2.7 billion, compared with $2.6 billion in the 2004 first quarter. Included in the 2004 results were a special-item charge of $55 million for a litigation matter and income from discontinued operations of $11 million. Information for discontinued operations is discussed in Note 5.
      Foreign currency effects reduced earnings by $21 million and $43 million in the 2005 and 2004 periods, respectively.
Note 3. Agreement to Acquire Unocal
      On April 4, 2005, ChevronTexaco announced plans to acquire Unocal Corporation (Unocal) in a stock and cash transaction valued at approximately $16.5 billion for accounting purposes under FAS 141, “Business Combinations.” The acquisition is subject to approvals by certain regulatory agencies and Unocal shareholders. For additional information on this planned acquisition, refer to the company’s Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission on April 7, 2005.
Note 4. Common Stock Split
      On July 28, 2004, the company’s Board of Directors approved a two-for-one stock split in the form of a stock dividend to the company’s stockholders of record on August 19, 2004, with distribution of shares on September 10, 2004. The total number of authorized common shares and associated par value were unchanged by this action. All per-share amounts in the financial statements reflect the stock split for the periods presented.
Note 5. Assets Held for Sale and Discontinued Operations
      At March 31, 2005, and December 31, 2004, the company classified $295 million and $162 million, respectively, of net properties, plant and equipment as “Assets held for sale” on the Consolidated Balance Sheet. Assets in this category at the end of both periods consist of service stations outside of the United States. These assets are expected to be disposed of in 2005.
      Summarized income statement information relating to discontinued operations is as follows:
                 
    Three Months Ended
    March 31,
     
    2005   2004
         
    (Millions of dollars)
Revenues and other income
   $ —     $ 114  
Income from discontinued operations before income tax expense
      —       21  
Income from discontinued operations, net of tax
      —       11  

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
      No significant gains or losses were recorded for the held-for-sale assets, including those accounted for as discontinued operations, in the 2004 and 2005 first quarters. Revenues and earnings in the comparative periods associated with held-for-sale assets not accounted for as discontinued operations were likewise insignificant.
      Not all assets sold or to be disposed of are classified as discontinued operations, mainly because the cash flows from the assets were not or will not be eliminated from the ongoing operations of the company.
Note 6. Information Relating to the Statement of Cash Flows
      The “Net (increase) decrease in operating working capital” was composed of the following operating changes:
                   
    Three Months Ended
    March 31,
     
    2005   2004
         
    (Millions of dollars)
Increase in accounts and notes receivable
   $ (1,288 )   $ (1,432 )
Increase in inventories
     (113 )     (254 )
Increase in prepaid expenses and other current assets
     (181 )     (22 )
Increase in accounts payable and accrued liabilities
     620       886  
Increase in income and other taxes payable
     630       1,031  
             
 
Net (increase) decrease in operating working capital
   $ (332 )   $ 209  
             
      “Net Cash Provided by Operating Activities” included the following cash payments for interest on debt and for income taxes:
                 
    Three Months Ended
    March 31,
     
    2005   2004