================================================================================
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 June 30, 2000
-------------
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 1-368-2
-------
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)
575 Market Street, San Francisco, California 94105
-------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (415) 894-7700
--------------
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 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 June 30, 2000
---------------------------------- -------------------------------
Common stock, $.75 par value 652,667,695
================================================================================
<PAGE>
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 1
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statement of Income for the three
months and six months ended June 30, 2000 and 1999 2
Consolidated Statement of Comprehensive Income
for the three months and six months ended
June 30, 2000 and 1999 2
Consolidated Balance Sheet at June 30, 2000 and
December 31, 1999 3
Consolidated Statement of Cash Flows for the
six months ended June 30, 2000 and 1999 4
Notes to Consolidated Financial Statements 5-12
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 13-24
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 25
Item 4. Submission of Matters to a Vote of Security Holders 25
Item 6. Listing of Exhibits and Reports on Form 8-K 26
Signature 26
Exhibit: Computation of Ratio of Earnings to Fixed Charges 27
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 contains forward-looking statements relating
to Chevron's operations that are based on management's current expectations,
estimates and projections about the petroleum and chemicals industries. Words
such as "expects," "intends," "plans," "projects," "believes," "estimates" and
similar expressions are used to identify such forward-looking statements. These
statements are not guarantees of future performance and involve certain risks,
uncertainties and assumptions that are difficult to predict. Therefore, actual
outcomes and results may differ materially from what is expressed or forecast in
such forward-looking statements.
Among the factors that could cause actual results to differ materially are crude
oil and natural gas prices; refining and marketing margins; chemicals prices and
competitive conditions affecting supply and demand for the company's aromatics,
olefins and additives products; 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 accidents or political events; potential liability for
remedial actions under existing or future environmental regulations and
litigation (including, regulations and litigation dealing with gasoline
composition and characteristics); and potential liability resulting from pending
or future litigation. 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. Chevron undertakes no obligation to update publicly
any forward-looking statements, whether as a result of new information, future
events or otherwise.
-1-
<PAGE>
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
CHEVRON CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- ----------------------
Millions of Dollars, Except Per-Share Amounts 2000 1999 2000 1999
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues
Sales and other operating revenues* $ 12,949 $ 8,473 $ 24,305 $ 14,872
Income from equity affiliates 175 133 371 277
Other income 67 135 213 281
--------------------------------------------------------
Total Revenues 13,191 8,741 24,889 15,430
--------------------------------------------------------
Costs and Other Deductions
Purchased crude oil and products 7,258 4,286 13,507 7,067
Operating expenses 1,304 1,444 2,542 2,604
Selling, general and administrative expenses 386 449 763 846
Exploration expenses 123 96 219 184
Depreciation, depletion and amortization 699 633 1,350 1,199
Taxes other than on income* 1,161 1,143 2,270 2,221
Interest and debt expense 126 113 255 218
--------------------------------------------------------
Total Costs and Other Deductions 11,057 8,164 20,906 14,339
--------------------------------------------------------
Income Before Income Tax Expense 2,134 577 3,983 1,091
Income Tax Expense 1,018 227 1,823 412
--------------------------------------------------------
Net Income $ 1,116 $ 350 $ 2,160 $ 679
========================================================
Per Share of Common Stock:
Net Income - Basic $ 1.71 $ .54 $ 3.30 $ 1.04
- Diluted $ 1.71 $ .53 $ 3.30 $ 1.03
Dividends $ .65 $ .61 $ 1.30 $ 1.22
Weighted Average Number of
Shares Outstanding (000s) - Basic 653,317 656,910 654,724 655,800
- Diluted 654,700 660,033 655,976 658,770
* Includes consumer excise taxes. $ 987 $ 986 $ 1,900 $ 1,898
</TABLE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- ----------------------
Millions of Dollars 2000 1999 2000 1999
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Income $ 1,116 $ 350 $ 2,160 $ 679
--------------------------------------------------------
Currency translation adjustment (3) (11) (3) (11)
Unrealized holding (loss) gain on securities (6) 28 4 22
Minimum pension liability adjustment - - (15) (11)
--------------------------------------------------------
Other Comprehensive (Loss) Income, net of tax (9) 17 (14) -
--------------------------------------------------------
Comprehensive Income $ 1,107 $ 367 $ 2,146 $ 679
========================================================
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
-2-
<PAGE>
<TABLE>
<CAPTION>
CHEVRON CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
At June 30,
2000 At December 31,
Millions of Dollars (Unaudited) 1999
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 1,102 $ 1,345
Marketable securities 622 687
Accounts and notes receivable 4,161 3,688
Inventories:
Crude oil and petroleum products 694 585
Chemicals 530 526
Materials, supplies and other 288 291
------------------------------------
Total inventories 1,512 1,402
Prepaid expenses and other current assets 1,169 1,175
------------------------------------
Total Current Assets 8,566 8,297
Long-term receivables 830 815
Investments and advances 5,775 5,231
Properties, plant and equipment, at cost 54,701 54,212
Less: accumulated depreciation, depletion and amortization 29,608 28,895
------------------------------------
Properties, plant and equipment, net 25,093 25,317
Deferred charges and other assets 1,114 1,008
------------------------------------
Total Assets $41,378 $40,668
====================================
-------------------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term debt $ 2,177 $ 3,434
Accounts payable 3,382 3,103
Accrued liabilities 1,031 1,210
Federal and other taxes on income 1,332 718
Other taxes payable 474 424
------------------------------------
Total Current Liabilities 8,396 8,889
Long-term debt 5,064 5,174
Capital lease obligations 302 311
Deferred credits and other noncurrent obligations 1,813 1,739
Deferred income taxes 5,207 5,010
Reserves for employee benefit plans 1,846 1,796
------------------------------------
Total Liabilities 22,628 22,919
------------------------------------
Preferred stock (authorized 100,000,000
shares, $1.00 par value, none issued) - -
Common stock (authorized 2,000,000,000 shares,
$.75 par value at June 30, 2000 and 1,000,000,000 shares,
$1.50 par value at December 31, 1999; 712,487,068 shares issued) 534 1,069
Capital in excess of par value 2,792 2,215
Deferred compensation (636) (646)
Accumulated other comprehensive income (129) (115)
Retained earnings 18,715 17,400
Treasury stock, at cost (59,819,373 and 56,140,994 shares
at June 30, 2000 and December 31, 1999, respectively) (2,526) (2,174)
------------------------------------
Total Stockholders' Equity 18,750 17,749
------------------------------------
Total Liabilities and Stockholders' Equity $41,378 $40,668
====================================
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
-3-
<PAGE>
<TABLE>
<CAPTION>
CHEVRON CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Six Months Ended
June 30,
--------------------------
Millions of Dollars 2000 1999
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operating Activities
Net income $ 2,160 $ 679
Adjustments
Depreciation, depletion and amortization 1,350 1,199
Dry hole expense related to prior years' expenditures 20 24
Distributions less than income from equity affiliates (72) (164)
Net before-tax gains on asset retirements and sales (67) (250)
Net foreign currency (gains) losses (41) 28
Deferred income tax provision 233 (58)
Net decrease in operating working capital 182 1,254
Other (18) (722)
--------------------------
Net Cash Provided by Operating Activities 3,747 1,990
--------------------------
Investing Activities
Capital expenditures (1,787) (1,641)
Proceeds from asset sales 281 361
Net sales (purchases) of marketable securities 72 (121)
Other investing cash flows, net - 54
--------------------------
Net Cash Used for Investing Activities (1,434) (1,347)
--------------------------
Financing Activities
Net (repayments) borrowings of short-term obligations (1,268) 631
Proceeds from issuance of long-term debt 39 48
Repayments of long-term debt and other financing obligations (137) (433)
Cash dividends (851) (800)
Net (purchases) sales of treasury shares (338) 95
--------------------------
Net Cash Used For Financing Activities (2,555) (459)
--------------------------
Effect of Exchange Rate Changes on Cash and Cash Equivalents (1) (1)
--------------------------
Net Change in Cash and Cash Equivalents (243) 183
Cash and Cash Equivalents at January 1 1,345 569
--------------------------
Cash and Cash Equivalents at June 30 $ 1,102 $ 752
==========================
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
-4-
<PAGE>
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, 1999. 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 2, and
the material reclassification in 1999 described in Note 3.
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 1999 Annual Report on Form 10-K.
The results for the three- and six-month periods ended June 30, 2000, are not
necessarily indicative of future financial results.
Note 2. Net Income
Net income for the second quarter 2000 included a $25 million special charge
related to prior-year tax adjustments. The 1999 second quarter included charges
of $146 million for staff reductions and other restructuring costs, $74 million
for net environmental remediation provisions, $43 million for asset write-offs
and $23 million for a regulatory matter. These were partially offset by benefits
of $92 million from gains on asset dispositions and $60 million from favorable
prior-year tax adjustments.
Net income for the first six months of 2000 included net charges of $87 million
from special items, compared with net charges of $86 million in the comparable
1999 period. In addition to the special charge in the second quarter 2000, six
months 2000 net income included a $62 million special charge related to a patent
litigation issue. In 1999, the second quarter net special charges were partially
offset by first quarter net benefits of $48 million from special items.
Foreign currency gains of $29 million were included in second quarter 2000 net
income, compared with losses of $32 million in the comparable 1999 quarter. For
the six-month periods, foreign currency gains were $75 million in 2000, compared
with losses of $41 million in 1999.
Note 3. Information Relating to the Statement of Cash Flows
The "Net decrease in operating working capital" is composed of the following:
<TABLE>
<CAPTION>
Six Months Ended
June 30,
--------------------------
Millions of Dollars 2000 1999
------------------------------------------------------------------------------------------
<S> <C> <C>
Increase in accounts and notes receivable $ (484) $ (216)
(Increase) decrease in inventories (110) 47
Increase in prepaid expenses and other current assets (17) (111)
Increase in accounts payable and accrued liabilities 111 1,191
Increase in income and other taxes payable 682 343
------------------------------------------------------------------------------------------
Net decrease in operating working capital $ 182 $ 1,254
------------------------------------------------------------------------------------------
</TABLE>
In June 1999, the company reclassified a reserve of $964 million established for
the Cities Service litigation from "Deferred credits and other noncurrent
obligations" to "Accrued liabilities."
-5-
<PAGE>
"Net Cash Provided by Operating Activities" includes the following cash payments
for interest on debt and for income taxes:
<TABLE>
<CAPTION>
Six Months Ended
June 30,
-------------------------
Millions of Dollars 2000 1999
------------------------------------------------------------------------------------------
<S> <C> <C>
Interest on debt (net of capitalized interest) $ 258 $ 220
Income taxes $ 973 $ 189
------------------------------------------------------------------------------------------
</TABLE>
The "Net (purchases) sales of marketable securities" consists of the following
gross amounts:
<TABLE>
Six Months Ended
June 30,
--------------------------
Millions of Dollars 2000 1999
------------------------------------------------------------------------------------------
<S> <C> <C>
Marketable securities purchased $(1,337) $(1,551)
Marketable securities sold 1,409 1,430
------------------------------------------------------------------------------------------
Net sales (purchases) of marketable securities $ 72 $ (121)
------------------------------------------------------------------------------------------
</TABLE>
The Consolidated Statement of Cash Flows excludes the following non-cash
transactions:
The company's Employee Stock Ownership Plan (ESOP) repaid $10 million and $70
million of matured debt guaranteed by Chevron Corporation in January of 2000 and
1999, respectively. These payments were recorded by the company as a reduction
in its debt outstanding and in "Deferred compensation." In June 1999, the ESOP
borrowed an additional $25 million, which is guaranteed by Chevron Corporation.
This was recorded by the company as an increase in its debt outstanding and in
"Deferred compensation."
Note 4. Common Stock
In April 2000, Chevron's stockholders approved an amendment to the company's
Restated Certificate of Incorporation to increase the number of authorized
shares of Common Stock from 1 billion shares to 2 billion and to reduce the par
value per share from $1.50 to $0.75. Accordingly, Chevron recorded a decrease of
$535 in "Common stock" and a corresponding increase in "Capital in excess of par
value."
Note 5. Operating Segments and Geographic Data
Chevron manages its exploration and production; refining, marketing and
transportation; and chemicals businesses separately. The company's primary
country of operation is the United States, its country of domicile. Activities
in no other country meet the materiality requirements for separate disclosure.
On July 1, 2000, Chevron and Phillips Petroleum Co. combined their
petrochemicals businesses. The venture - Chevron Phillips Chemical Co. - is
owned 50 percent by each partner and headquartered in Houston. The new company
has about $6 billion in assets.
"All Other" activities include the company's share of earnings from and
investment in Dynegy Inc., corporate administrative costs, worldwide cash
management and debt financing activities, coal mining operations, insurance
operations, and real estate activities.
-6-
<PAGE>
Sales and other operating revenues by segments, including internal transfers,
for the three-and six-month periods ended June 30, 2000 and 1999, are presented
in the following table.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------ ---------------------
Millions of Dollars 2000 1999 2000 1999
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Exploration and Production
--------------------------
United States $ 1,340 $ 835 $ 2,561 $ 1,463
International 2,588 1,393 4,948 2,381
---------------------------------------------------------
Sub-total 3,928 2,228 7,509 3,844
Intersegment Elimination - United States (724) (416) (1,480) (722)
Intersegment Elimination - International (1,224) (648) (2,243) (1,088)
---------------------------------------------------------
Total Exploration and Production 1,980 1,164 3,786 2,034
---------------------------------------------------------
Refining, Marketing and Transportation
--------------------------------------
United States 7,462 5,208 14,177 9,026
International 2,435 1,243 4,200 2,162
---------------------------------------------------------
Sub-total 9,897 6,451 18,377 11,188
Intersegment Elimination - United States (152) (85) (282) (148)
Intersegment Elimination - International (3) (4) (7) (8)
---------------------------------------------------------
Total Refining, Marketing and Transportation 9,742 6,362 18,088 11,032
---------------------------------------------------------
Chemicals
---------
United States 1,056 720 1,973 1,347
International 150 192 400 368
---------------------------------------------------------
Sub-total 1,206 912 2,373 1,715
Intersegment Elimination - United States (46) (41) (99) (80)
---------------------------------------------------------
Total Chemicals 1,160 871 2,274 1,635
---------------------------------------------------------
All Other
---------
United States 88 87 201 194
International 4 2 8 4
---------------------------------------------------------
Sub-total 92 89 209 198
Intersegment Elimination - United States (22) (12) (46) (25)
Intersegment Elimination - International (3) (1) (6) (2)
---------------------------------------------------------
Total All Other 67 76 157 171
---------------------------------------------------------
Sales and Other Operating Revenues
----------------------------------
United States 9,946 6,850 18,912 12,030
International 5,177 2,830 9,556 4,915
--------------------------------------------------------------------------------------------------------------
Sub-total 15,123 9,680 28,468 16,945
Intersegment Elimination - United States (944) (554) (1,907) (975)
Intersegment Elimination - International (1,230) (653) (2,256) (1,098)
--------------------------------------------------------------------------------------------------------------
Total Sales and Other Operating Revenues $ 12,949 $8,473 $24,305 $14,872
==============================================================================================================
</TABLE>
-7-
<PAGE>
The company evaluates the performance of its operating segments on an after-tax
basis, excluding the effects of debt financing interest expense or investment
interest income, both of which are managed by Chevron Corporation on a worldwide
basis. Corporate administrative costs and assets are not allocated to the
operating segments; however, operating segments are billed directly for
corporate services when they are used. Nonbilled corporate costs remain as
corporate center expenses. After-tax earnings by segment for the three- and
six-month month periods ended June 30, 2000 and 1999 are presented in the
following table.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------- -----------------------
Millions of Dollars 2000 1999 2000 1999
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Exploration and Production
--------------------------
United States* $ 388 $ 90 $ 753 $ 128
International 580 221 1,233 337
----------------------------------------------------
Total Exploration and Production 968 311 1,986 465
----------------------------------------------------
Refining, Marketing and Transportation
--------------------------------------
United States 167 109 160 191
International 20 61 29 148
----------------------------------------------------
Total Refining, Marketing and Transportation 187 170 189 339
----------------------------------------------------
Chemicals
---------
United States 43 (59) 90 (21)
International 8 19 29 31
----------------------------------------------------
Total Chemicals 51 (40) 119 10
----------------------------------------------------
Total Segment Income $ 1,206 $ 441 $ 2,294 $ 814
----------------------------------------------------
Interest Expense (87) (80) (176) (154)
Interest Income 20 14 35 27
Other* (23) (25) 7 (8)
---------------------------------------------------------------------------------------------------------------
Net Income $ 1,116 $ 350 $ 2,160 $ 679
===============================================================================================================
<FN>
* 1999 restated to conform to the 2000 presentation. Effective January 1, 2000, the company's share of
earnings from Dynegy, Inc. is reported in Other.
</FN>
</TABLE>
-8-
<PAGE>
Segment assets at June 30, 2000, and year-end 1999 are presented in the
following table. Segment assets do not include intercompany investments or
intercompany receivables.
<TABLE>
<CAPTION>
At June 30, At December 31,
Millions of Dollars 2000 1999
-------------------------------------------------------------------------------------------------------
<S> <C> <C>
Exploration and Production
--------------------------
United States $ 5,384 $ 5,215
International 13,894 13,748
--------------------------------
Total Exploration and Production 19,278 18,963
--------------------------------
Refining, Marketing and Transportation
--------------------------------------
United States 8,292 8,178
International 4,052 3,609
--------------------------------
Total Refining, Marketing and Transportation 12,344 11,787
--------------------------------
Chemicals
---------
United States 3,416 3,303
International 901 923
--------------------------------
Total Chemicals 4,317 4,226
--------------------------------
Total Segment Assets 35,939 34,976
--------------------------------
All Other
---------
United States 3,575 3,825
International 1,864 1,867
--------------------------------
Total All Other 5,439 5,692
--------------------------------
Total Assets - United States 20,667 20,521
Total Assets - International 20,711 20,147
-------------------------------------------------------------------------------------------------------
Total Assets $41,378 $40,668
=======================================================================================================
</TABLE>
Note 6. Summarized Financial Data - Chevron U.S.A. Inc.
At June 30, 2000, Chevron U.S.A. Inc. was Chevron Corporation's principal
operating company, consisting primarily of the company's U.S. integrated
petroleum operations (excluding most of the domestic pipeline operations) and
the majority of the company's worldwide petrochemical operations. These
operations were conducted by Chevron U.S.A. Production Company, Chevron Products
Company and Chevron Chemical Company LLC. Summarized financial information for
Chevron U.S.A. Inc. and its consolidated subsidiaries is presented as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ --------------------
Millions of Dollars 2000 1999 2000 1999
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales and other operating revenues $10,538 $7,047 $19,683 $12,299
Costs and other deductions 9,754 6,993 18,493 12,224
Net income 492 130 828 208
======================================================================================================
</TABLE>
-9-
<PAGE>
<TABLE>
<CAPTION>
At June 30, At December 31,
Millions of Dollars 2000 1999*
------------------------------------------------------------------------------------------------------
<S> <C> <C>
Current assets $ 4,284 $ 3,889
Other assets 19,944 20,687
Current liabilities 3,388 4,685
Other liabilities 9,797 9,730
Net equity 11,043 10,161
======================================================================================================
<FN>
* Certain asset and liability balances have been restated. Net equity
remains unchanged.
</FN>
</TABLE>
Note 7. Summarized Financial Data - Chevron Transport Corporation
Chevron Transport Corporation Limited (CTC), a Bermuda corporation, is an
indirect, wholly owned subsidiary of Chevron Corporation. Effective July 1999,
Chevron Transport Corporation, a Liberian corporation, was merged into CTC,
which assumed all of the assets and liabilities of Chevron Transport
Corporation. CTC is the principal operator of Chevron's international tanker
fleet and is engaged in the marine transportation of crude oil and refined
petroleum products. Most of CTC's shipping revenue is derived by providing
transportation services to other Chevron companies. Chevron Corporation has
guaranteed this subsidiary's obligations in connection with certain debt
securities where CTC is deemed to be an issuer. In accordance with the
Securities and Exchange Commission's disclosure requirements, summarized
financial information for CTC and its consolidated subsidiaries is presented
below. This summarized financial data was derived from the financial statements
prepared on a stand-alone basis, in conformity with accounting principles
generally accepted in the United States.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------- -------------------
Millions of Dollars 2000 1999 2000 1999
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales and other operating revenues $171 $148 $293 $270
Costs and other deductions 193 161 343 297
Net loss (24) (5) (52) (11)
======================================================================================================
</TABLE>
<TABLE>
<CAPTION>
At June 30, At December 31,
Millions of Dollars 2000 1999
------------------------------------------------------------------------------------------------------
<S> <C> <C>
Current assets $ 200 $ 184
Other assets 561 742
Current liabilities 451 580
Other liabilities 250 264
Net equity 60 82
======================================================================================================
</TABLE>
In April 2000, CTC's parent contributed an additional $30 million of paid in
capital to CTC.
Separate financial statements and other disclosures with respect to CTC are
omitted, as such separate financial statements and other disclosures are not
material to investors in the debt securities deemed issued by CTC. There were no
restrictions on CTC's ability to pay dividends or make loans or advances at June
30, 2000.
-10-
<PAGE>
Note 8. Summarized Financial Data - Caltex Group of Companies
Summarized financial information for the Caltex Group of Companies, owned 50
percent each by Chevron and Texaco Inc., is as follows (amounts reported are on
a 100 percent Caltex Group basis):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -----------------
Millions of Dollars 2000 1999 2000 1999
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Gross revenues* $4,795 $3,247 $8,905 $6,137
Income before income taxes 264 229 483 518
-----------------------------------------------
Net income 128 140 230 343
======================================================================================================
<FN>
*1999 reclassified to conform to the 2000 presentation, netting certain
offsetting trading sale and purchase contracts. The reclassification had
no impact on net income.
</FN>
</TABLE>
Note 9. Income Taxes
Income tax expense for the second quarter and first half of 2000 was $1,018 and
$1,823 million, respectively, compared with $227 million and $412 million for
the comparable 1999 periods. The effective tax rate for the 2000 six months was
45.8 percent, compared with 37.7 percent for last year's first half. The
increase in the effective tax rate in 2000 was primarily the result of a lower
proportion of after-tax earnings from equity affiliates included in pre-tax
income and lower tax credits.
Note 10. Employee Termination Benefits
In 1999, the company implemented a staff reduction program in all of its
operating segments across several business functions and accrued $220 million
before tax for severance and other termination benefits for approximately 3,500
employees. Employees affected were primarily U.S.-based. All employee
terminations were completed by June 30, 2000, and no significant adjustments
were required for amounts previously accrued. Termination benefits for
approximately 3,100 of the 3,500 employees - accrued in accordance with SFAS No.
88, "Employers' Accounting for Settlements and Curtailments of Defined Benefit
Plans and for Termination Benefits" - were payable from the assets of the
company's U.S. and Canadian pension plans.
Note 11. Litigation
Chevron and five other oil companies filed suit in 1995 contesting the validity
of a patent granted to Unocal Corporation for reformulated gasoline, which
Chevron sells in California in certain months of the year. In March 2000, the U.
S. Court of Appeals for the Federal Circuit upheld a trial court's decision that
Unocal's patent was valid and enforceable, and assessed damages of 5.75 cents
per gallon for gasoline produced in infringement of the patent. In May 2000, the
Federal Circuit Court denied a petition for rehearing with the U.S. Court of
Appeals for the Federal Circuit filed by Chevron and the five other defendants
in this case. The defendant companies plan to petition the U.S. Supreme Court
for certiorari. Such petition must be filed on or before August 16, 2000. If
Unocal's patent ultimately is upheld, the company's financial exposure includes
royalties, plus interest, for production of gasoline that is ruled to have
infringed the patent. As a result of the March 2000 ruling, the company recorded
a special after-tax charge of $62 million in the first quarter. The majority of
this charge pertained to the estimated royalty on gasoline production in the
early part of a four-year period ending December 31, 1999, before the company
modified its manufacturing processes to minimize the production of gasoline that
allegedly infringed on Unocal's patented formulations. Subsequently, the company
has accrued in the normal course of business additional amounts for potential
infringement of the patent covered by the Court's ruling. In June 2000, Chevron
paid $22.7 million to Unocal - $17.2 million for the original court judgement
and $5.5 million of interest and fees. Unocal has obtained additional patents
for alternate formulations that could affect a larger share of U.S. gasoline
production. Chevron believes these additional patents are invalid and
unenforceable. However, if such patents are ultimately upheld, the competitive
and financial effects on the company's refining and marketing operations, while
presently indeterminable, could be material.
-11-
<PAGE>
There is an ongoing public debate concerning the petroleum industry's use of
MTBE and its potential environmental impact through seepage into groundwater.
Along with other oil companies, the company is a party to actions related to the
use of the chemical MTBE in certain oxygenated gasolines. These actions may
require the company to take action to correct or ameliorate the alleged effects
on the environment of prior disposal or release of MTBE by the company or other
parties. Additional lawsuits and claims related to the use of MTBE may be filed
in the future. Costs to the company related to these lawsuits and claims are
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
third parties. Chevron has eliminated the use of MTBE in gasoline it sells in
certain areas.
Note 12. Other Contingencies and Commitments
The U.S. federal income tax liabilities of the company have been settled through
1993. The company's California franchise tax liabilities have been settled
through 1991. Settlement of open tax years, as well as tax issues in other
countries where the company conducts its businesses, is not expected to have a
material effect on the consolidated financial position or liquidity of the
company and, in the opinion of management, adequate provision has been made for
income and franchise taxes for all years under examination or subject to future
examination.
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 long-term unconditional purchase obligations and commitments,
throughput agreements and take-or-pay agreements, some of which relate to
suppliers' financing arrangements.
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, including MTBE, by the company or other
parties. Such contingencies may exist for various sites including, but not
limited to: Superfund sites and refineries, oil fields, service stations,
terminals, and land development areas, whether operating, closed or sold. The
amount of such future cost is indeterminable due to factors such 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 third parties. While the company has provided
for known environmental obligations that are probable and reasonably estimable,
the amount of future costs may be material to results of operations in the
period in which they are recognized. The company does not expect these costs to
have a material effect on its consolidated financial position or liquidity.
The company believes it has no material market or credit risk to its operations,
financial position or liquidity as a result of its commodities, and other
derivatives activities. However, the results of operations and financial
position of the company's equity affiliates Caltex and Dynegy, may be affected
by their business activities involving the use of derivative instruments.
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 in which it operates, including the United States. 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, Canada, Australia, the United
Kingdom, Norway, Republic of Congo, Angola, Nigeria, Democratic Republic of
Congo, Papua New Guinea, China, Venezuela, Thailand, Argentina and Brazil. The
company's Caltex affiliates have significant operations in Indonesia, Korea,
Australia, Thailand, the Philippines, Singapore, and South Africa. The company's
Tengizchevroil affiliate operates in Kazakhstan. The company's Dynegy affiliate
has operations in the United States, Canada, the United Kingdom and other
European countries.
-12-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Second Quarter 2000 Compared With Second Quarter 1999
And First Half 2000 Compared With First Half 1999
Financial Results
-----------------
<TABLE>
<CAPTION>
EARNINGS SUMMARY
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- -------------------
Millions of Dollars 2000 1999 2000 1999
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating Earnings
Exploration and Production $ 968 $ 366 $1,986 $ 517
Refining, Marketing and Transportation 187 129 251 313
Chemicals and Other (14) (11) 10 (65)
----------------------------------------------------------------------------------------------------------
Total* 1,141 484 2,247 765
Special Items (25) (134) (87) (86)
----------------------------------------------------------------------------------------------------------
Net Income* $1,116 $ 350 $2,160 $ 679
==========================================================================================================
<FN>
* Includes Foreign Currency Gains (Losses) $ 29 $ (32) $ 75 $ (41)
</FN>
</TABLE>
Net income for the second quarter 2000 was $1.116 billion ($1.71 per share -
diluted), compared with net income of $350 million ($0.53 per share - diluted)
for the 1999 second quarter. Net income for this year's second quarter included
a special charge of $25 million for prior-year tax adjustments. Last year's
second quarter net special charges of $134 million included $146 million for
restructuring costs, $74 million for net environmental remediation provisions,
$43 million for asset write-downs, and $23 million for litigation provisions.
These charges were partially offset by gains of $92 million from asset sales and
$60 million from favorable prior-year tax adjustments. Excluding special items
in both quarters, operating earnings were $1.141 billion ($1.75 per share -
diluted), more than doubling last year's quarterly results of $484 million
($0.73 per share - diluted). Net income and operating earnings for the second
quarter 2000 were both company records.
Net income for the first six months of 2000 was $2.160 billion ($3.30 per share
- diluted), more than three times the $679 million ($1.03 per share - diluted)
recorded in the first half of 1999. Net income for the first six months of 2000
included net special charges of $87 million, while the 1999 period included
special charges of $86 million. Excluding these items, six-month operating
earnings were $2.247 billion in 2000 compared with $765 million earned in the
first half of 1999.
The improved financial performance for the quarter and year-to-date 2000
primarily reflected the strength of the company's worldwide exploration and
production (upstream) operations and the benefit of sharply higher crude oil and
natural gas prices. The company's refining, marketing and transportation
(downstream) business showed a modest improvement to operating earnings in the
second quarter versus the year-ago period. U.S. downstream results in the second
quarter 2000 reflected stronger industry margins on the Gulf Coast and the
absence of refinery operating problems experienced in the 1999 period on the
West Coast. International downstream operating earnings were lower for both the
three- and six-month periods, as results from the company's Caltex affiliate
continued to be depressed. Additionally, the company's international shipping
operations were unable to recover higher costs for in-charters through freight
rates charged to the U.S. downstream segment.
The improvement in operating earnings boosted the company's average return on
capital employed for the 12 months ending June 30, 2000, to 16 percent from less
than 8 percent a year ago.
-13-
<PAGE>
Operating Environment and Outlook
---------------------------------
Chevron's earnings are affected significantly by fluctuations in the price of
crude oil and natural gas. Prices in the first half of 2000 were significantly
higher than the corresponding period in 1999 - the result of the 1999 agreement
among certain OPEC and non-OPEC oil producing countries to restrict the
production of crude oil, rising demand and low petroleum inventories worldwide.
The average spot price for West Texas Intermediate (WTI), a benchmark crude oil,
was $28.87 per barrel for the first half of 2000, up 87 percent from $15.44 per
barrel in the 1999 corresponding period. Average U.S. natural gas prices for the
first half of 2000 were also significantly higher. Henry Hub spot natural gas
prices increased 54 percent, compared with the first half of 1999, to $3.09 per
thousand cubic feet. Crude oil and natural gas prices will continue to
fluctuate, but are likely to remain higher than last year's levels if worldwide
demand continues to strengthen and the oil producing countries continue to
restrict production.
Earnings from the company's worldwide refining, marketing and transportation
businesses continue to be low relative to the amount of capital employed.
Competitive pressures limit the company's ability to raise prices sufficiently
to pass through the effect of higher crude oil costs and improve margins. Caltex
operations in the Far East continue to suffer from weak refined product margins
resulting from over-capacity, higher feedstock costs and competitive price
discounting. Caltex may continue to be adversely affected by these conditions
throughout the second half of this year.
Chevron's production levels had not been materially affected by production
curtailments prior to the easing of the OPEC and non-OPEC restrictions.
Similarly, the company does not expect any change to these restrictions to have
a material impact on its overall production levels. However, such curtailments
or limits may have an effect on the level of new production from current and
future development projects. As producing countries' revenue streams fluctuate
with changing prices and production, the amount of funds available to fund
petroleum development activities may change. In addition, civil unrest,
political uncertainty and economic conditions may affect the company's producing
operations. Community protests have disrupted the company's production in the
past, most notably in Nigeria. The company continues to monitor developments
closely in the countries in which it operates.
Significant Developments Since the First Quarter 2000
-----------------------------------------------------
Some of the operational highlights since the first quarter of this year were as
follows:
Chemicals Joint Venture: Chevron and Phillips Petroleum Co. combined their
petrochemicals businesses effective July 1. The venture - Chevron Phillips
Chemical Co. - is owned 50 percent by each partner and headquartered in Houston.
The new combined company has about $6 billion in assets. After formation in
July, the joint venture obtained debt financing, and made a distribution of $835
million to each owner.
Caspian Pipeline: The Caspian Pipeline Consortium (CPC) has spent more than $1
billion to date for its pipeline construction project in which Chevron owns a 15
percent interest. More than 300 miles of the 460 miles of new pipe have been
installed, and refurbishment of the existing 475 miles of the pipeline has
begun. The CPC pipeline will run from the Tengiz Field in western Kazakhstan to
the Black Sea port of Novorossiysk and is on schedule for a mid-2001 start-up.
The company anticipates that completion of the CPC pipeline will enhance the
profitability of Tengizchevroil's production in Kazakhstan.
Tengiz: Tengizchevroil (TCO), owned 45 percent by Chevron, will be a primary
user of the CPC pipeline. In June, TCO commissioned its three-year plant
expansion, Train 5, which will increase production from 215,000 to 260,000
barrels per day by the fourth quarter of this year. For the first half of 2000,
TCO's average total liquids production was 214,000 barrels per day. Chevron is
finalizing the acquisition of an additional 5 percent interest in TCO from the
Republic of Kazakhstan, increasing the company's ownership to 50 percent.
Canada: The owners of the Hibernia oil project, offshore Newfoundland, have
proposed a change to the royalty agreement with the government. That change will
permit an increase in the maximum short-term oil production from Hibernia to
about 200,000 barrels per day, with an approved maximum annual average
-14-
<PAGE>
production of 180,000 barrels per day. Chevron holds a 27 percent interest in
the project, which currently produces about 150,000 barrels per day.
First production of natural gas flowed from the K-29 discovery well, near Fort
Liard, Northwest Territories in April. Gross production for the last several
months of the year is expected to average 70 million cubic feet per day from the
discovery, operated and owned 43 percent by Chevron. Another similar well at
Fort Liard is expected to begin production in the fourth quarter of 2000.
Chevron also acquired two large oil and gas concessions in northern Canada's
Mackenzie Delta - Inuvik Blocks 1 and 2.
Brazil: As part of a strategy to expand its deepwater prospects and other
interests in South America, the company acquired a 65 percent interest in
exploration block BM-S-7 and was designated operator. A 25 percent interest was
also acquired in exploration block BM-S-10 with Petrobras as operator. Both of
these blocks are located in the Santos Basin, offshore Brazil. These tracts,
combined with the rights won in January 2000 for 50 percent interests in two
other offshore blocks, provide Chevron with a substantial portfolio of offshore
exploration interests.
Equatorial Guinea: Chevron signed a five-year production sharing contract with
the Republic of Equatorial Guinea in West Africa to explore for oil in water
depths up to 6,500 feet in offshore Block L, which covers 1,640 square miles.
e-Business: The company announced additional initiatives as part of its
aggressive strategy to capture value associated with Internet technologies and
improve the performance of core businesses. In June, Chevron announced the
formation of Silicon Valley Oil Co., an online marketplace that will enable the
sale of fuels and lubricants to commercial and industrial customers via the
Internet. Chevron also participated as a founding partner in the start-up of
PetroCosm, a global, independent online marketplace for the energy industry,
linking buyers and sellers of oil and gas equipment and services. Another
Chevron e-business in development is RetailersMarketXchange, an Internet trade
exchange designed as a full service marketplace for convenience store and
small-business retailers and their suppliers.
Contingencies and Significant Litigation
----------------------------------------
Chevron and five other oil companies filed suit in 1995 contesting the validity
of a patent granted to Unocal Corporation for reformulated gasoline, which
Chevron sells in California in certain months of the year. In March 2000, the U.
S. Court of Appeals for the Federal Circuit upheld a trial court's decision that
Unocal's patent was valid and enforceable and assessed damages of 5.75 cents per
gallon for gasoline produced in infringement of the patent. In May 2000, the
Federal Circuit Court denied a petition for rehearing with the U.S. Court of
Appeals for the Federal Circuit filed by Chevron and the five other defendants
in this case. The defendant companies plan to petition the U.S. Supreme Court
for certiorari. Such petition must be filed on or before August 16, 2000. If
Unocal's patent ultimately is upheld, the company's financial exposure includes
royalties, plus interest, for production of gasoline that is ruled to have
infringed the patent. As a result of the March 2000 ruling, the company recorded
a special after-tax charge of $62 million in the first quarter. The majority of
this charge pertained to the estimated royalty on gasoline production in the
early part of a four-year period ending December 31, 1999, before the company
modified its manufacturing processes to minimize the production of gasoline that
allegedly infringed on Unocal's patented formulations. Subsequently, the company
has accrued in the normal course of business any future estimated liability for
potential infringement of the patent covered by the Court's ruling. In June
2000, Chevron paid $22.7 million to Unocal - $17.2 million for the original
court judgement and $5.5 million of interest and fees. Unocal has obtained
additional patents for alternate formulations that could affect a larger share
of U.S. gasoline production. Chevron believes these additional patents are
invalid and unenforceable. However, if such patents are ultimately upheld, the
competitive and financial effects on the company's refining and marketing
operations, while presently indeterminable, could be material.
There is an ongoing public debate concerning the petroleum industry's use of
MTBE and its potential environmental impact through seepage into groundwater.
Along with other oil companies, the company is a party to actions related to the
use of the chemical MTBE in certain oxygenated gasolines. These actions may
require the company to take action to correct or ameliorate the alleged effects
on the environment of prior disposal or release of MTBE by the company or other
parties. Additional lawsuits and claims related
-15-
<PAGE>
to the use of MTBE may be filed in the future. Costs to the company related to
these lawsuits and claims are not presently determinable.
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, including MTBE, by the company or other
parties. Such contingencies may exist for various sites including, but not
limited to: Superfund sites and refineries, oil fields, service stations,
terminals, and land development areas, whether operating, closed or sold. The
amount of such future cost is indeterminable due to factors such 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 third parties. While the company has provided
for known environmental obligations that are probable and reasonably estimable,
the amount of future costs may be material to results of operations in the
period in which they are recognized. The company does not expect these costs to
have a material effect on its consolidated financial position or liquidity.
The company and its subsidiaries have certain other contingent liabilities with
respect to guarantees, direct or indirect, debt of affiliated companies or
others, long-term unconditional purchase obligations and commitments, throughput
agreements and take-or-pay agreements, some of which relate to suppliers'
financing arrangements.
The company utilizes various derivative instruments to manage its exposure to
price risk stemming from its integrated petroleum activities. All these
instruments are commonly used in oil and gas trading activities and are
relatively straightforward, involve little complexity and are of a short-term
duration. Most of the activity in these instruments is intended to hedge a
physical transaction; hence, gains and losses arising from these instruments
offset, and are recognized concurrently with gains and losses from the
underlying transactions. The company believes it has no material market or
credit risks to its operations, financial position or liquidity as a result of
its commodities and other derivatives activities, including forward exchange
contracts and interest rate swaps. Chevron's control systems are designed to
monitor and manage its financial exposures in accordance with company policies
and procedures. The results of operations and financial position of the
company's equity affiliates Dynegy and Caltex may be affected by their business
activities involving the use of derivative instruments.
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 in which it operates, including the United States. 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, Canada, Australia, the United
Kingdom, Norway, Republic of Congo, Angola, Nigeria, Democratic Republic of
Congo, Papua New Guinea, China, Venezuela, Thailand, Argentina and Brazil. The
company's Caltex affiliates have significant operations in Indonesia, Korea,
Australia, Thailand, the Philippines, Singapore, and South Africa. The company's
Tengizchevroil affiliate operates in Kazakhstan. The company's Dynegy affiliate
has operations in the United States, Canada, the United Kingdom and other
European countries.
The company receives claims from, and submits claims to, customers, trading
partners, host governments, contractors, insurers and suppliers. The amounts of
these claims, individually and in the aggregate, may be significant and take
lengthy periods to resolve. The company also suspends the costs of exploratory
wells pending a final determination of the commercial potential of the related
oil and gas fields. The ultimate disposition of these well costs is dependent on
the results of future drilling activity and/or development decisions. If the
company decides not to continue development, the costs of these wells are
expensed. The company and its affiliates also continue to review and analyze
their operations and may close, abandon, sell, exchange, acquire or restructure
assets to achieve operational or strategic benefits and to improve
-16-
<PAGE>
competitiveness and profitability. These activities, individually or together,
may result in gains or losses in future periods.
Employee Staff Reductions and Restructurings
--------------------------------------------
During the second quarter of 1999, Chevron began implementing a 3,500-employee
staff reduction program and other restructuring activities across the company.
All employees were terminated by June 30, 2000, and no significant adjustments
were required for amounts previously accrued. While the programs affected the
activities of all the company's business segments, most of the net costs related
to the termination and relocation of U.S.-based employees.
Review of Operations
--------------------
Total revenues for the quarter were $13.2 billion, a 52 percent increase from
$8.7 billion in last year's second quarter. For the first six months of 2000,
total revenues were $24.9 billion compared with $15.4 billion in the first half
of 1999. Revenues increased primarily on sharply higher prices for crude oil,
natural gas and refined products.
Second quarter 2000 total operating expenses (operating, selling, general and
administrative expenses) were $1.696 billion, excluding special items, $127
million higher than during the 1999 second quarter. For the six-month period,
total operating expenses, excluding special items, were $3.216 billion, compared
with $3.108 billion in last year's first half. On a per-barrel basis, the
company's total operating expenses were up 53 cents to $5.65 per barrel in the
first half of 2000, compared with the 1999 period. Most of the increase was
attributable to higher fuel costs - associated with higher crude oil and natural
gas prices - for the company's refineries and other operations.
Depreciation, depletion and amortization (DD&A) expense of $699 million in the
second quarter 2000 was $66 million higher than the 1999 quarter. For the
six-month period, DD&A of $1,350 million was $151 million higher than the first
half of 1999. There were no special-item effects on DD&A in 2000. However,
special items related to asset write-offs raised DD&A expenses by $55 million
for the second quarter and first half of 1999. The increases between years
occurred primarily in the company's international upstream operations.
Depreciation from properties in Thailand and Argentina acquired in 1999 and
amortization of exploration bonus payments in Brazil were primary reasons for
the increase.
Taxes on income for the second quarter and first half of 2000 were $1,018
million and $1,823 million, respectively, compared with $227 million and $412
million for the comparable 1999 periods. The effective tax rate for the 2000 six
months was 45.8 percent compared with 37.7 percent in last year's first half.
The increase in the effective tax rate was primarily the result of a
proportional decrease in the company's share of equity affiliates' earnings
included in revenues on an after-tax basis and lower tax credits.
Foreign currency gains increased second quarter 2000 net income by $29 million,
while losses of $32 million decreased earnings in the year-ago quarter. For the
six-month periods, foreign currency gains were $75 million in 2000, compared
with losses of $41 million in the 1999 first half. During 2000, the U.S. dollar
strengthened against the currencies of Canada and several countries where
Chevron and Caltex have operations, including Australia.
-17-
<PAGE>
The following table details the company's after-tax net income by major
operating area.
<TABLE>
<CAPTION>
NET INCOME BY MAJOR OPERATING AREA
Three Months Ended Six Months Ended
June 30, June 30,
--------------------- ------------------
Millions of Dollars 2000 1999 2000 1999
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Exploration and Production
United States 1 $ 388 $ 90 $ 753 $128
International 580 221 1,233 337
----------------------------------------------------------------------------------------------------------
Total Exploration and Production 968 311 1,986 465
----------------------------------------------------------------------------------------------------------
Refining, Marketing and Transportation
United States 167 109 160 191
International 20 61 29 148
----------------------------------------------------------------------------------------------------------
Total Refining, Marketing and Transportation 187 170 189 339
----------------------------------------------------------------------------------------------------------
Chemicals 51 (40) 119 10
All Other 1, 2 (90) (91) (134) (135)
----------------------------------------------------------------------------------------------------------
Net Income $1,116 $350 $2,160 $679
==========================================================================================================
<FN>
1 1999 restated to conform to the 2000 presentation. Effective with the first
quarter 2000, the company's share of earnings for Dynegy, Inc. is reported
in All Other.
2 Includes coal-mining operations, the company's ownership in Dynegy Inc.,
worldwide cash management and debt financing activities, corporate
administrative costs, marketable securities, corporate center costs,
insurance operations and real estate activities.
</FN>
</TABLE>
U.S. Exploration and Production
-------------------------------
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------- -------------------------
Millions of Dollars 2000 1999 2000 1999
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating Earnings $ 388 $ 145 $ 753 $ 180
Special Items - (55) - (52)
----------------------------------------------------------------------------------------------------------
Net Income $ 388 $ 90 $ 753 $ 128
==========================================================================================================
</TABLE>
The improvement in operating earnings in 2000 resulted from higher crude oil and
natural gas realizations, offset partially by higher well write-offs and
operating expenses. Fuel costs and well work-over activities increased during
2000 and contributed to the higher operating expenses. Special items reduced
second quarter 1999 net income $26 million for staff reductions and other
restructuring costs; $23 million for litigation and regulatory provisions and $6
million for environmental remediation accruals. In addition to the second
quarter items, net income for the 1999 six months benefited $3 million from the
first quarter 1999 reversal of certain environmental remediation provisions.
The average second quarter 2000 crude oil realization of $25.39 per barrel
increased 78 percent from the prior-year period and the average natural gas
realization of $3.35 per thousand cubic feet rose 63 percent. On a year-to-date
basis, the crude oil realization was $25.79 per barrel, compared with $12.16 per
barrel in 1999. Natural gas prices for the first six months of 2000 averaged
$2.87 per thousand cubic feet, an increase of 55 percent from $1.85 per thousand
cubic feet last year.
Net liquids production averaged 309,000 barrels per day in the second quarter of
2000 and 308,000 barrels per day year to date. In 1999, liquids production was
312,000 barrels per day in the second quarter and 309,000 barrels per day year
to date. Net natural gas production of 1.506 billion cubic feet per day in this
year's second quarter and 1.512 billion cubic feet per day for six months
declined from 1.638 billion cubic feet per day and 1.657 billion cubic feet per
day for the respective 1999 periods. On a combined oil-equivalent basis, new
production in deepwater and other areas of the Gulf of Mexico was more than
offset by the effects of asset sales and normal field declines, resulting in an
overall production decrease of about 4 percent in both periods.
-18-
<PAGE>
International Exploration and Production
----------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------- ------------------
Millions of Dollars 2000 1999 2000 1999
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating Earnings* $ 580 $ 221 $1,233 $ 337
Special Items - - - -
----------------------------------------------------------------------------------------------------------
Net Income* $ 580 $ 221 $1,233 $ 337
==========================================================================================================
<FN>
* Includes Foreign Currency Gains (Losses) $ 21 $ (12) $ 49 $ (28)
</FN>
</TABLE>
The increase in operating earnings for the quarter and year to date reflected
higher crude oil and natural gas prices and higher crude oil and natural gas
production. There were no special items this year. In the 1999 second quarter,
special charges for staff reductions and other restructuring costs were
completely offset by a gain from the sale of Canadian seismic data.
The average crude oil realization of $25.93 per barrel in the 2000 second
quarter improved about 75 percent over last year's $14.86 per barrel. The
average natural gas realization in the 2000 quarter was $2.21 per thousand cubic
feet, 44 cents higher than in the second quarter of last year. On a year-to-date
basis, this year's crude oil realization was $25.84 per barrel, twice as much as
the $12.81 per barrel in 1999. The average natural gas realization was $2.22 per
thousand cubic feet, an increase of 23 percent from $1.80 per thousand cubic
feet last year.
Net liquids production of 841,000 barrels per day for this year's second quarter
increased 45,000 barrels per day, compared with last year's second quarter.
Production increases in Angola and Australia, combined with production from
properties acquired last year in Argentina and Thailand, offset declines in
Colombia and Indonesia. The lower production in Indonesia was primarily
associated with the effect of higher prices on cost-oil recovery volumes under
the production-sharing agreement. Year-to-date production was 843,000 barrels
per day, a 5 percent increase from 803,000 barrels per day produced in 1999.
Volumes do not include production from Colombia after January 2000, at which
time Chevron began operating under an operating service agreement that expired
at the end of July 2000.
Net natural gas production increased 9 percent over last year's quarter to 913
million cubic feet per day. Increases occurred in the United Kingdom and new
production was recorded for properties acquired last year in Thailand and
Argentina. These production increases were partially offset by a decline in
Canadian volumes. Year-to-date production was 914 million cubic feet per day, up
9 percent from last year.
Results for the 2000 second quarter and six months included net foreign currency
gains of $21 million and $49 million, respectively, compared with losses of $12
million and $28 million in the corresponding periods of 1999. The changes
primarily reflect this year's favorable currency swings of the U.S. dollar
relative to Australian and Canadian dollars.
-19-
<PAGE>
U.S. Refining, Marketing and Transportation
-------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- -----------------
Millions of Dollars 2000 1999 2000 1999
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating Earnings $ 167 $ 98 $ 222 $ 195
Special Items - 11 (62) (4)
----------------------------------------------------------------------------------------------------------
Net Income $ 167 $ 109 $ 160 $ 191
==========================================================================================================
</TABLE>
Operating earnings for the second quarter and six months 2000 were about 70
percent and 14 percent above the corresponding year-ago periods. Last year's
periods included the adverse second-quarter effects of operational incidents at
the company's Richmond, Calif., refinery, including the need to substitute
higher priced, third-party refined products purchases for the company's own
production to meet marketplace demand.
There were no special items in the 2000 quarter. In the year-ago quarter, a $75
million gain from the sale of the company's interest in a pipeline affiliate was
partially offset by net charges of $40 million for environmental remediation and
a $24 million provision for staff reductions and other restructuring costs.
In the first halves of 2000 and 1999, special charges reduced net income $62
million and $4 million, respectively. Included in this year's results was a
special charge of $62 million for a patent litigation matter recorded in the
first quarter. In addition to the second quarter special items in 1999, the
six-month period included provisions of $15 million for environmental
remediation.
The company's average refined product sales realization for the second quarter
2000 increased about 50 percent to $37.65 per barrel. Chevron benefited from
higher industry margins on the Gulf Coast in the 2000 quarter. However, industry
margins on the West Coast were lower than last year's quarter, when supplies of
gasoline and other refined products were constrained by the loss of production
resulting from incidents at several West Coast refineries. The company's average
refined product price was $37.08 per barrel in the 2000 first half, compared
with $23.25 in the 1999 six months.
Refined product sales volumes increased marginally to 1,382,000 barrels per day
in the 2000 quarter. However, branded gasoline sales were down about 2 percent.
Sales of diesel and other fuels were also lower than last year, adversely
impacted by higher prices in 2000. Year to date, sales volumes were up
marginally to 1.297 million barrels per day.
International Refining, Marketing and Transportation
----------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------- -----------------
Millions of Dollars 2000 1999 2000 1999
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating Earnings* $ 20 $ 31 $ 29 $ 118
Special Items - 30 - 30
----------------------------------------------------------------------------------------------------------
Net Income* $ 20 $ 61 $ 29 $ 148
==========================================================================================================
<FN>
* Includes Foreign Currency Gains (Losses) $ 14 $(21) $ 34 $ (16)
</FN>
</TABLE>
Adjusted for special items and foreign currency effects, results in 2000 were
lower partially because of losses in the company's international shipping
operations. These losses stemmed from the inability to recover higher costs for
in-charters through freight rates charged to the company's U.S. downstream
segment. Additionally, earnings were lower on reduced sales volumes and
depressed margins in the international areas of the company's operations.
There were no special items this year, but results for the quarter and six
months of 1999 included net benefits of $30 million from special items. These
net benefits were composed of favorable Korean tax
-20-
<PAGE>
adjustments that were partially offset by restructuring charges attributable to
both Caltex and Chevron operations.
Chevron's total international downstream sales volumes were lower in the 2000
periods due mainly to the absence in 2000 of Caltex's share of sales by an
affiliate that was sold in the 1999 third quarter. Quarterly sales volumes
declined from 890,000 barrels per day to 780,000 barrels per day. Sales volumes
for the first six months of 2000 declined to 796,000 barrels per day, compared
with 894,000 barrels per day in the 1999 period.
Net income from Caltex operations contains the effects from special items, other
non-recurring items, and foreign currency gains and losses. The following table
identifies the effects of these items:
Caltex
------
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- -----------------
Millions of Dollars 2000 1999 2000 1999
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Reported Net Income $ 4 $ 41 $ (3) $115
Less:
Special Items - 35 - 35
Foreign Currency Gain(Loss) 12 (19) 30 (12)
Inventory Adjustments - 34 - 64
----------------------------------------------------------------------------------------------------
Adjusted Net (Loss) Income $ (8) $ (9) $ (33) $ 28
====================================================================================================
</TABLE>
Caltex's Asia-Pacific market continues to suffer from surplus refined products
manufacturing capacity and a highly competitive environment, which has limited
the ability of companies to raise product prices to recover higher crude costs
and improve margins. First quarter 2000 margins were significantly lower than in
the corresponding 1999 period. Caltex sales volumes fell about 12 percent in
both the 2000 second quarter and year to date due primarily to the absence of
Caltex's share of sales by a Japanese affiliate that was sold in the 1999 third
quarter.
Chemicals
---------
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -----------------
Millions of Dollars 2000 1999 2000 1999
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating Earnings* $ 51 $ 51 $ 119 $ 101
Special Items - (91) - (91)
----------------------------------------------------------------------------------------------------------
Net Income* $ 51 $ (40) $ 119 $ 10
==========================================================================================================
<FN>
* Includes Foreign Currency (Losses) Gains $ (2) $ - $ (2) $ 2
</FN>
</TABLE>
Second quarter operating earnings were flat between years, although year-to-date
2000 chemical operating earnings improved $18 million versus the first half of
1999. Stronger prices boosted margins for olefins, more than offsetting
increases in fuel and utility expenses in the year-to-date periods. Margin
changes for other commodity chemicals were mixed and mostly offsetting. Net
income for the second quarter and six months of 1999 included special charges of
$43 million for asset write-downs, $28 million for environmental remediation,
and $20 million for staff reductions and other restructuring costs. There were
no special items this year. Chevron's equity share of the earnings from the
Chevron Phillips Chemical Company will be reflected in this segment beginning in
the third quarter 2000. Earnings of this joint venture will include the effect
of interest expense on any of its debt.
-21-
<PAGE>
All Other
---------
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- ------------------
Millions of Dollars 2000 1999 2000 1999
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Operating Charges* $ (65) $ (62) $ (109) $ (166)
Special Items (25) (29) (25) 31
----------------------------------------------------------------------------------------------------------
Net Loss* $ (90) $ (91) $ (134) $ (135)
==========================================================================================================
<FN>
* Includes Foreign Currency (Losses) Gains $(4) $1 $(6) $1
</FN>
</TABLE>
All Other activities include coal-mining operations, the company's ownership
interest in Dynegy Inc., worldwide cash management and debt financing
activities, corporate administrative costs, insurance operations and real estate
activities. Results in this year's second quarter included special charges of
$25 million for prior-year tax adjustments, while employee termination benefits
reduced earnings $29 million in the 1999 second quarter. The 1999 first half
also included gains of $60 million from the sale of a coal-mining affiliate.
The company's coal operations incurred an operating loss of $2 million in the
second quarter of 2000, compared with earnings of $3 million in last year's
second quarter. Six months operating earnings were $1 million in 2000, down from
$22 million last year. Operating earnings in 2000 were down primarily due to the
effects of United Mine Workers of America work stoppages at two of the company's
mines that began in May and did not end until early August, coupled with lower
sales prices for coal this year.
For activities other than coal, net operating charges were lower in the 2000
periods because of higher pension settlement gains and higher equity earnings
from Dynegy Inc.
Liquidity and Capital Resources
-------------------------------
Cash and cash equivalents totaled $1.102 billion at June 30, 2000 - a $243
million decrease from year-end 1999. Cash provided by operating activities was
$3.747 billion in the first half of 2000, up $1.757 billion from the
corresponding 1999 period. Capital expenditures and dividend payments to
stockholders totaled $2.638 billion in the first half of 2000. Cash provided by
operating activities in 2000 benefited from the significantly higher crude oil
and natural gas prices. The increase in cash flows enabled the company to reduce
short-term debt by nearly $1.3 billion and repurchase about $400 million in the
company's common shares in the 2000 first half.
Total debt and capital lease obligations were $7.543 billion at June 30, 2000, a
decrease of $1.376 billion from year-end 1999.
At June 30, 2000, Chevron had $3.250 billion in committed credit facilities with
various major banks, $2.725 billion of which had termination dates beyond one
year. These facilities support commercial paper borrowing and also can be used
for general requirements. No borrowings were outstanding under these facilities
at June 30, 2000.
The company benefits from lower interest rates available on short-term debt;
however, Chevron's proportionately large amount of short-term debt keeps its
ratio of current assets to current liabilities at relatively low levels. The
current ratio was 1.02 at June 30, 2000, up slightly from December 31, 1999. The
company's short-term debt, consisting primarily of commercial paper and the
current portion of long-term debt, totaled $4.902 billion at June 30, 2000.
Short-term debt of $2.725 billion was reclassified to long-term debt because
settlement of these obligations is not expected to require the use of working
capital during the next twelve months, as the company has the intent and the
ability, as evidenced by committed credit arrangements, to refinance them on a
long-term basis. The company's practice has been to continually refinance its
commercial paper, maintaining levels it believes to be appropriate.
The company's debt ratio (total debt to total-debt-plus-equity) was 28.7 percent
at June 30, 2000, down from 33.4 percent at year-end 1999. The company
continually monitors its spending levels, market conditions and related interest
rates to maintain what it perceives to be reasonable debt levels.
-22-
<PAGE>
In December 1997, Chevron's Board of Directors approved the repurchase of up to
$2 billion of its outstanding common stock, providing shares for use in its
employee stock option programs. Through August 7, 2000, Chevron had purchased
8.7 million shares of its common stock at an average cost of $80.57 per share,
for a total cost of about $705 million, during 2000. Since the inception of the
share repurchase program, 15.1 million shares have been bought on the open
market for about $1.2 billion, at an average cost of $78.60 per share.
In early July, the newly formed affiliate, Chevron Phillips Chemical Company,
obtained debt financing and made a $835 million cash distribution to each of its
owners - Chevron and Phillips Petroleum Company.
On July 26, 2000, Chevron declared a quarterly dividend of 65 cents per share,
unchanged from the preceding quarter.
Worldwide capital and exploratory expenditures for the first half of 2000,
including the company's share of affiliates' expenditures, were $2.448 billion,
compared with $2.609 billion in the first half of 1999. Expenditures for
international exploration and production projects were $898 million, or 37
percent of total expenditures, reflecting the company's continued emphasis on
increasing international oil and gas production. Expenditures for the first half
of 2000 included an additional investment of about $300 million in Dynegy Inc.,
which maintained Chevron's approximate 28 percent ownership interest following
Dynegy's February merger with Illinova. Expenditures in last year's period
included about $500 million attributable to the acquisition of Rutherford-Moran
Oil Corp. and another interest in Block B8/32 offshore Thailand.
<TABLE>
<CAPTION>
CAPITAL AND EXPLORATORY EXPENDITURES BY MAJOR OPERATING AREA
------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -----------------
Millions of Dollars 2000 1999 2000 1999
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
United States
Exploration and Production $ 352 $ 238 $ 562 $ 463
Refining, Marketing and Transportation 94 97 175 210
Chemicals 42 72 65 173
All Other 182 100 483 148
---------------------------------------------
Total United States 670 507 1,285 994
---------------------------------------------
International
Exploration and Production 442 558 898 1,418
Refining, Marketing and Transportation 128 89 236 142
Chemicals 13 30 29 55
---------------------------------------------
Total International 583 677 1,163 1,615
---------------------------------------------
Worldwide $1,253 $1,184 $2,448 $2,609
=============================================
</TABLE>
-23-
<PAGE>
<TABLE>
<CAPTION>
SELECTED OPERATING DATA (1),(2)
Three Months Ended Six Months Ended
June 30, June 30,
--------------------- --------------------
2000 1999 2000 1999
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Exploration and Production
Net Crude Oil and Natural Gas Liquids Production (MBPD) 309 312 308 309
Net Natural Gas Production (MMCFPD) 1,506 1,638 1,512 1,657
Sales of Natural Gas (MMCFPD) 3,353 3,265 3,342 3,312
Sales of Natural Gas Liquids (MBPD) 160 109 137 128
Revenue from Net Production
Crude Oil ($/Bbl.) $25.39 $14.29 $25.79 $12.16
Natural Gas ($/MCF) $ 3.35 $ 2.06 $ 2.87 $ 1.85
International Exploration and Production
Net Crude Oil and Natural Gas Liquids Production (MBPD) 841 796 843 803
Net Natural Gas Production (MMCFPD) 913 837 914 835
Sales of Natural Gas (MMCFPD) 1,801 1,679 1,926 1,793
Sales of Natural Gas Liquids (MBPD) 57 51 63 51
Revenue from Liftings
Liquids ($/Bbl.) $25.93 $14.86 $25.84 $12.81
Natural Gas ($/MCF) $ 2.21 $ 1.77 $ 2.22 $ 1.80
Other Produced Volumes (MBPD) (3) 141 96 127 100
U.S. Refining, Marketing and Transportation
Sales of Gasoline (MBPD) (4) 729 694 687 655
Sales of Other Refined Products (MBPD) 653 674 610 623
Refinery Input (MBPD) 1,021 969 919 946
Average Refined Product Sales Price ($/Bbl.) $37.65 $25.79 $37.08 $23.25
International Refining, Marketing and Transportation
Sales of Refined Products (MBPD) (5) 780 890 796 894
Refinery Input (MBPD) 416 475 407 485
Chemical Sales and Other Operating Revenues (6)
United States $1,056 $ 720 $1,973 $1,347
International 150 192 400 368
-----------------------------------------------------------------------------------------------------------
Worldwide $1,206 $ 912 $2,373 $1,715
===========================================================================================================
<FN>
(1) Includes equity in affiliates.
(2) MBPD = thousand barrels per day; MMCFPD = million cubic feet per day; Bbl. = barrel; MCF = thousand cubic feet
(3) Represents total field production under the Boscan operating service agreement in Venezuela, and other operating
service agreements.
(4) Includes branded and unbranded gasoline.
(5) 1999 amounts restated to conform to 2000 presentation.
(6) Millions of dollars. Includes sales to other Chevron companies.
</FN>
</TABLE>
-24-
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 4. Submission of Matters to a Vote of Security Holders
The following matters were submitted to a vote of stockholders at the Annual
Meeting on April 26, 2000.
Voters elected 12 incumbent directors for one-year terms. The vote tabulation
for individual directors was:
Shares Shares
Directors For Withheld
---------------------------------------------------------------------------
S. H. Armacost 494,753,742 6,246,552
S. Ginn 495,461,126 5,539,168
C. A. Hills 494,950,108 6,050,186
J. B. Johnston 494,848,057 6,152,237
R. H. Matzke 495,087,780 5,912,514
D. J. O'Reilly 495,547,315 5,452,979
C. M. Pigott 494,926,343 6,073,951
C. Rice 495,053,628 5,946,666
F. A. Shrontz 494,990,228 6,010,066
J. N. Sullivan 495,162,308 5,837,986
C. Tien 495,139,114 5,861,180
J. A. Young 495,302,836 5,697,458
Voters approved amending Chevron's Restated Certificate of Incorporation to
increase the number of authorized shares of Common Stock from one billion shares
of $1.50 par value to two billion shares of $.75 par value by a vote of
476,927,106 (95.8 percent) for and 20,743,552 (4.2 percent) against. There were
also 3,327,732 abstentions and 1,904 broker non-votes.
Voters approved the appointment of PricewaterhouseCoopers LLP as the company's
independent accountants by a vote of 496,153,859 (99.6 percent) for and
1,769,052 (0.4 percent) against. There were also 3,077,372 abstentions and 11
broker non-votes.
A stockholder proposal to eliminate Bioaccumulative Halogenated Pollutants at
its facilities was rejected. There were 26,238,638 votes (6.7 percent) for the
proposal and 364,666,135 votes (93.3 percent) against. There were also
23,115,637 abstentions and 86,979,884 broker non-votes.
A stockholder proposal to report on potential environmental damage to the Arctic
National Wildlife Refuge was rejected. There were 27,804,080 votes (7.1 percent)
for the proposal and 363,730,336 votes (92.9 percent) against. There were also
22,495,539 abstentions and 86,970,339 broker non-votes.
A stockholder proposal to report on greenhouse gas emissions was rejected. There
were 34,366,814 votes (8.8 percent) for the proposal and 356,911,119 votes (91.2
percent) against. There were also 22,752,425 abstentions and 86,939,936 broker
non-votes.
-25-
<PAGE>
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 for the six months ended June 30, 2000
(b) Reports on Form 8-K
(1) A Current Report on Form 8-K was filed by the company on June 2,
2000. In this report, Chevron filed a Contribution Agreement dated
May 23, 2000 between Chevron Corporation and Phillips Petroleum
Company related to the combination of certain of the companies'
chemicals businesses in Chevron Phillips Chemical Company LLC.
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 August 9, 2000 /s/ S.J. Crowe
------------------------------------- --------------------------------
S. J. Crowe, Vice President and
Comptroller
(Principal Accounting Officer and
Duly Authorized Officer)
-26-
