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2002 ChevronTexaco Corporate Responsibility Report Economic IssuesIntroduction to Economic Issues SectionFinancial Performance DataLinking Financial Performanceand Corporate ResponsibilityAs a commercial enterprise,we areresponsible for effectively managingour operations so we can provideappropriate returns to ourstockholders over time. We viewfinancial performance and corporateresponsibility as mutuallyThe Richmond Refinery in Californiamoves some 340,000 barrels of rawreinforcing: Financial health ismaterial and finished product dailya prerequisite to our being able toacross its dock.make a positive contribution tosociety, and operating in a socially and environmentally responsible waycontributes to our financial success.In our corporate Annual Report to the Securities and Exchange Commissionand our stockholders, we share information about the financial performanceof our company. But we understand that ChevronTexaco – like allcompanies – also has economic impacts that are not captured in traditionalfinancial reporting and that go beyond the boundaries of an organization.These impacts include how our operations contribute to or affect the largereconomies we operate in, at local, national and global levels. For example,in 2002 ChevronTexaco’s total tax liability in the countries where we operatewas US$19.7 billion. These impacts also include how we affect theeconomic conditions, capacity and sufficiency of the range of stakeholdersaffected by our business, including employees, suppliers, business partners,host governments and those living in the communities we operate in.About This SectionAlthough there are standard procedures for companies to measure andreport on financial performance, there are not yet generally acceptedmeasures for reporting on their broader economic impacts. Companiesare experimenting with a variety of indicators in this area – includingwages and benefits paid to employees, investment in work-force trainingand development, taxes paid to governments and money spent withsupplier companies – to help them assess their economic impacts.In this section, we provide several key indicators of our financial performance,as well as select information about our broader economic impacts.We have chosen to focus on the issue of procurement and, in particular,our efforts to contribute to economic development through our supplierdiversity, small business and local content programs.We also are working to better understand our broader economic impactsand identify additional measurements that provide information of valueto us and our stakeholders.31The following highlights selected indicators of our financial performance.Please refer to our 2002 Annual Report for more detailed information.Net IncomeWeak global economies, restraineddemand for petroleum productsand lower production all took atoll on 2002 earnings. For theyear, ChevronTexaco reportednet income of $1.1 billion, comparedwith $3.3 billion in 2001.The company’s financial resultswere hurt by $3.3 billion ofcharges from special items. About$2.3 billion of these charges wererelated to our 26 percent ownershipof Dynegy Inc., an energytrading company that saw a dramaticdecline in its market valuedue to the near collapse of theenergy merchant sector.Sales & Other Operating RevenuesNet IncomeBillions of $U.S.Sales and other operating revenueswere $99 billion in 2002, downSales & OtherOperating RevenuesBillions of $U.S.from $104 billion in 2001 and120$117 billion in 2000. Revenuesfrom worldwide upstream operationsdecreased about 30 percenton lower prices for natural gas,particularly in the United States.Sales volumes of natural gas werealso down in the United States.Partially offsetting these declines,10080604020$98.7sales revenues from refined products098 99 00 01 02increased in 2002, primarilySales and other operating revenues declined5 percent on lower U.S. natural gas priceson higher prices late in the year.and worldwide oil-equivalent production.Of the $98.7 billion of sales revenuesin 2002, sales in the United States accounted for $43.6 billion.The only other country where the company generates significant revenuesis the United Kingdom, where it generated $10.8 billion in 2002.© 2003 ChevronTexaco Corporation. All Rights Reserved.86420$1.1398 99 00 01 02Net income for 2002 and 2001 includedmore than 3 billion $U.S. of special-itemcharges in each year. The decline in 2002mainly reflected exceptionally weakrefined-product margins, lower U.S.natural gas prices and lower oil-equivalentproduction worldwide.