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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 June 30, 2003
 
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
incorporation or organization)		   (I.R.S. Employer
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 June 30, 2003
Common stock, $.75 par value
    1,068,768,509  

 

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 months and six months ended June 30, 2003 and 2002     3  
    Consolidated Statement of Comprehensive Income for the three months and six months ended June 30, 2003 and 2002     4  
    Consolidated Balance Sheet at June 30, 2003 and December 31, 2002     5  
    Consolidated Statement of Cash Flows for the six months ended June 30, 2003 and 2002     6  
    Notes to Consolidated Financial Statements     7-19  
 
Item 2.
  Management’s Discussion and Analysis of Financial Condition and Results of Operations     20-35  
 
Item 3.
  Quantitative and Qualitative Disclosures About Market Risk     36  
 
Item 4.
  Controls and Procedures     36  
PART II

OTHER INFORMATION
 
Item 1.
  Legal Proceedings     37  
 
Item 4.
  Submission of Matters to a Vote of Security Holders     37  
 
Item 6.
  Listing of Exhibits and Reports on Form 8-K     38  
Signature     39  
Exhibits      
  Computation of Ratio of Earnings to Fixed Charges     41  
  Certifications Required by Section 302 of the Sarbanes-Oxley Act of 2002     42-43  
  Certifications Required by Section 906 of the Sarbanes-Oxley Act of 2002     44-45  

1

 

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 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. You 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 of the company’s Dynegy Inc. equity affiliate to successfully execute its recapitalization and restructuring plans; 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 oil and 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 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 (including, particularly, regulations and litigation dealing with gasoline composition and characteristics); potential liability resulting from pending or future litigation; the company’s ability to successfully implement the restructuring of its worldwide downstream organization and other business units; 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.

2

 

PART I

FINANCIAL INFORMATION

 
Item 1. Consolidated Financial Statements

CHEVRONTEXACO CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
                                     
Three Months Ended Six Months Ended
June 30, June 30,
2003 2002 2003 2002
(Millions of dollars, except per-share amounts)
Revenues and Other Income
                                
Sales and other operating revenues(1)
  $ 29,085     $ 25,223     $ 59,737     $ 46,067  
Income from equity affiliates
    215       81       480       193  
Other income
    61       29       109       228  
     
     
     
     
 
 
Total Revenues and Other Income
     29,361       25,333       60,326       46,488  
     
     
     
     
 
Costs and Other Deductions
                                
Purchased crude oil and products
    17,337       14,694       35,612       26,507  
Operating expenses
    1,782       1,699       3,720       3,451  
Selling, general and administrative expenses
    1,061       1,153       2,070       2,016  
Exploration expenses
    147       135       302       220  
Depreciation, depletion and amortization
    1,411       1,241       2,653       2,446  
Write-down of Dynegy investment
    —       702       —       702  
Merger-related expenses
    —       119       —       302  
Taxes other than on income(1)
    4,513       4,137       8,843       7,917  
Interest and debt expense
    118       160       248       307  
Minority interest
    20       10       42       22  
     
     
     
     
 
 
Total Costs and Other Deductions
     26,389       24,050       53,490       43,890  
     
     
     
     
 
Income Before Income Tax Expense
     2,972       1,283       6,836       2,598  
Income Tax Expense
     1,372       876       3,120       1,466  
     
     
     
     
 
Income Before Cumulative Effect of Changes in Accounting Principles
     1,600       407       3,716       1,132  
Cumulative effect of changes in accounting principles, net of tax
    —       —       (196 )     —  
     
     
     
     
 
Net Income
   $ 1,600     $ 407     $ 3,520     $ 1,132  
     
     
     
     
 
Per Share of Common Stock:
                                
 
Income Before Cumulative Effect of Changes in Accounting Principles
                                
   
— Basic
   $ 1.51     $ 0.39     $ 3.50     $ 1.07  
   
— Diluted
   $ 1.50     $ 0.39     $ 3.49     $ 1.07  
 
Net Income
                                
   
— Basic
   $ 1.51     $ 0.39     $ 3.32     $ 1.07  
   
— Diluted
   $ 1.50     $ 0.39     $ 3.31     $ 1.07  
 
Dividends
   $ .70     $ .70     $ 1.40     $ 1.40  
 
Weighted Average Number of Shares Outstanding (000s)
                                
   
— Basic
     1,062,256       1,060,434       1,062,137       1,060,258  
   
— Diluted
     1,063,709       1,062,289       1,063,655       1,062,150  
                               
(1) Includes consumer excise taxes:
  $ 1,765     $ 1,751     $ 3,456     $ 3,439  

See accompanying notes to consolidated financial statements.

3

 

CHEVRONTEXACO CORPORATION AND SUBSIDIARIES

 
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(Unaudited)
                                       
Three Months Ended Six Months Ended
June 30, June 30,
2003 2002 2003 2002
(Millions of dollars)
Net Income
   $ 1,600     $ 407     $ 3,520     $ 1,132  
     
     
     
     
 
Other Comprehensive Gain (Loss)
                                
 
Currency translation adjustment
     15       27       11       10  
     
     
     
     
 
 
Unrealized holding gains on securities:
                                
   
Net gain (loss) arising during period
                               
     
Before income taxes
    304       (297 )     293       (200 )
     
Income taxes
    —       104       —       70  
   
Reclassification to net income of net recognized loss
                               
     
Before income taxes
    —       217       —       217  
     
Income taxes
    —       (76 )     —       (76 )
     
     
     
     
 
 
Total
     304       (52 )     293       11  
     
     
     
     
 
 
Net derivatives gain on hedge transactions:
                                
     
Before income taxes
    101       56       109       63  
     
Income taxes
    (37 )     (20 )     (40 )     (22 )
     
     
     
     
 
 
Total
     64       36       69       41  
     
     
     
     
 
 
Minimum pension liability adjustment:
                                
     
Before income taxes
    —       (85 )     (17 )     (85 )
     
Income taxes
    —       31       —       31  
     
     
     
     
 
 
Total
     —       (54 )     (17 )     (54 )
     
     
     
     
 
Other Comprehensive Gain (Loss), net of tax
     383       (43 )     356       8  
     
     
     
     
 
Comprehensive Income
   $ 1,983     $ 364     $ 3,876     $ 1,140  
     
     
     
     
 

See accompanying notes to consolidated financial statements.

4

 

CHEVRONTEXACO CORPORATION AND SUBSIDIARIES

 
CONSOLIDATED BALANCE SHEET
                       
At June 30, At December 31,
2003 2002
(Unaudited)
(Millions of dollars)
ASSETS
Cash and cash equivalents
  $ 3,092     $ 2,957  
Marketable securities
    835       824  
Accounts and notes receivable
    9,705       9,385  
Inventories:
               
 
Crude oil and petroleum products
    2,268       2,019  
 
Chemicals
    162       193  
 
Materials, supplies and other
    497       551  
     
     
 
   
Total inventories
    2,927       2,763  
Prepaid expenses and other current assets
    1,796       1,847  
     
     
 
   
Total Current Assets
     18,355       17,776  
Long-term receivables
    1,319       1,338  
Investments and advances
    12,073       11,097  
Properties, plant and equipment, at cost
    107,849       105,231  
Less: accumulated depreciation, depletion and amortization
    61,435       61,076  
     
     
 
   
Properties, plant and equipment, net
    46,414       44,155  
Deferred charges and other assets
    2,425       2,993  
     
     
 
     
Total Assets
   $ 80,586     $ 77,359  
     
     
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Short-term debt
  $ 1,534     $ 5,358  
Accounts payable
    8,434       8,455  
Accrued liabilities
    2,876       3,364  
Federal and other taxes on income
    2,551       1,626  
Other taxes payable
    1,120       1,073  
     
     
 
   
Total Current Liabilities
     16,515       19,876  
Long-term debt
    11,331       10,666  
Capital lease obligations
    246       245  
Deferred credits and other noncurrent obligations
    7,556       4,474  
Noncurrent deferred income taxes
    5,825       5,619  
Reserves for employee benefit plans
    4,695       4,572  
Minority interests
    317       303  
     
     
 
   
Total Liabilities
     46,485       45,755  
     
     
 
Preferred stock (authorized 100,000,000 shares, $1.00 par value, none issued)
    —       —  
Common stock (authorized 4,000,000,000 shares, $.75 par value, 1,137,021,057 shares issued)