Chevron 2012 Annual Report Download - page 23

Chevron Corporation 2012 Annual Report 21
Indemnifications Information related to indemnica-
tions is included on page 64 in Note 22 to the Consolidated
Financial Statements under the heading “Indemnications.”
Long-Term Unconditional Purchase Obligations and
Commitments, Including Throughput and Take-or-Pay
Agreements e company and its subsidiaries have certain
other contingent liabilities with respect to long-term uncon-
ditional purchase obligations and commitments, including
throughput and take-or-pay agreements, some of which relate
to suppliers’ nancing arrangements. e agreements typi-
cally provide goods and services, such as pipeline and storage
capacity, drilling rigs, utilities, and petroleum products, to be
used orsold in the ordinary course of the company’s business.
eaggregate approximate amounts of required payments
under these various commitments are: 2013 – $3.7 billion;
2014 – $3.9 billion; 2015 – $4.1 billion; 2016 – $2.4 billion;
2017 – $1.8 billion; 2018 and after – $6.5billion. A por-
tion of these commitments may ultimately be shared with
project partners. Total payments under the agreements were
approximately $3.6 billion in 2012, $6.6 billion in 2011 and
$6.5 billion in 2010.
e following table summarizes the company’s signi-
cant contractual obligations:
Contractual Obligations1
Millions of dollars Payments Due by Period
2014– 2016 – After
Total 2013 2015 2017 2017
On Balance Sheet:2
Short-Term Debt3 $ 127 $ 127 $ — $ — $ —
Long-Term Debt3 11,966 — 5,923 2,000 4,043
Noncancelable Capital
Lease Obligations 189 45 60 25 59
Interest 1,983 210 408 402 963
O Balance Sheet:
Noncancelable Operating
Lease Obligations 3,548 727 1,276 929 616
roughput and
Take-or-Pay Agreements4 17,164 2,705 5,480 2,904 6,075
Other Unconditional
Purchase Obligations4 5,285 1,003 2,470 1,342 470
1 Excludes contributions for pensions and other postretirement benet plans.
Information on employee benet plans is contained in Note 20 beginning on page
57.
2 Does not include amounts related to the company’s income tax liabilities associated with
uncertain tax positions. e company is unable to make reasonable estimates of the peri-
ods in which these liabilities may become payable. e company does not expect
settlement of such liabilities will have a material eect on its consolidated nancial posi-
tion or liquidity in any single period.
3 $5.9 billion of short-term debt that the company expects to renance is included in
long-term debt. e repayment schedule above reects the projected repayment of the
entire amounts in the 2014–2015 period.
4 Does not include commodity purchase obligations that are not xed or determinable.
ese obligations are generally monetized in a relatively short period of time through
sales transactions or similar agreements with third parties. Examples include obligations
to purchase LNG, regasied natural gas and renery products at indexed prices.
Financial Ratios
Financial Ratios
At December 31
2012 2011 2010
Current Ratio 1.6 1.6 1.7
Interest Coverage Ratio 191.3 165.4 101.7
Debt Ratio 8.2% 7.7% 9.8%
Current Ratio – current assets divided by current
liabilities, which indicates the company’s ability to repay
its short-term liabilities with short-term assets. e current
ratio in all periods was adversely aected by the fact that
Chevron’s inventories are valued on a last-in, rst-out basis.
At year-end 2012, the book value of inventory was lower than
replacement costs, based on average acquisition costs during
the year, by approximately $9.3 billion.
Interest Coverage Ratio – income before income tax
expense, plus interest and debt expense and amortization
of capitalized interest, less net income attributable to non-
controlling interests, divided by before-tax interest costs.
is ratio indicates the company’s ability to pay interest on
outstanding debt. e company’s interest coverage ratio in
2012 was higher than 2011 and 2010 due to lower before-tax
interest costs.
Debt Ratio – total debt as a percentage of total debt
plus Chevron Corporation Stockholders’ Equity, which
indicates the company’s leverage. e increase between
2012 and 2011 was due to higher debt, partially oset by a
higher Chevron Corporation stockholders’ equity balance.
e decrease between 2011 and 2010 was due to a higher
Chevron Corporation stockholders’ equity balance.
Guarantees, Off-Balance-Sheet Arrangements and
Contractual Obligations, and Other Contingencies
Direct Guarantees
Millions of dollars Commitment Expiration by Period
2014– 2016– After
Total 2013 2015 2017 2017
Guarantee of non-
consolidated aliate or
joint-venture obligations $ 562 $ 38 $ 76 $ 76 $ 372
e company’s guarantee of $562 million is associated
with certain payments under a terminal use agreement
entered into by an equity aliate. Over the approximate
15-year remaining term of the guarantee, the maximum
guarantee amount will be reduced as certain fees are paid by
the aliate. ere are numerous cross-indemnity agreements
with the aliate and the other partners to permit recovery
ofamounts paid under the guarantee. Chevron has recorded
no liability for its obligation under this guarantee.