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44 Chevron Corporation 2012 Annual Report
Notes to the Consolidated Financial Statements
Millions of dollars, except per-share amounts
Concentrations of Credit Risk e company’s nancial
instruments that are exposed to concentrations of credit risk
consist primarily of its cash equivalents, time deposits, mar-
ketable securities, derivative nancial instruments and trade
receivables. e company’s short-term investments are placed
with a wide array of nancial institutions with high credit
ratings. Company investment policies limit the company’s
exposure both to credit risk and to concentrations of credit
risk. Similar policies on diversication and creditworthiness
are applied to the company’s counterparties in derivative
instruments.
e trade receivable balances, reecting the company’s
diver sied sources of revenue, are dispersed among the
company’s broad customer base worldwide. As a result, the
company believes concentrations of credit risk are limited.
e company routinely assesses the nancial strength of its
customers. When the nancial strength of a customer is not
considered sufficient, alternative risk mitigation measures may
be deployed including requiring pre-payments, letters of credit
or other acceptable collateral instruments to support sales
to customers.
Note 10
Operating Segments and Geographic Data
Although each subsidiary of Chevron is responsible for its
own aairs, Chevron Corporation manages its investments in
these subsidiaries and their aliates. e investments are
grouped into two business segments, Upstream and Down-
stream, representing the company’s “reportable segments” and
“operating segments” as dened in accounting standards for
segment reporting (ASC 280). Upstream operations consist
primarily of exploring for, developing and producing crude oil
and natural gas; liquefaction, transportation and regasication
associated with liqueed natural gas (LNG); transporting
crude oil by major international oil export pipelines; process-
ing, transporting, storage and marketing of natural gas; and a
gas-to-liquids project. Downstream operations consist primar-
ily of rening of crude oil into petroleum products; marketing
of crude oil and rened products; transporting of crude oil and
rened products by pipeline, marine vessel, motor equipment
and rail car; and manufacturing and marketing of commodity
petrochemicals, plastics for industrial uses, and fuel and lubri-
cant additives. All Other activities of the company include
mining operations, power generation businesses, worldwide
cash management and debt nancing activities, corporate
administrative functions, insurance operations, real estate
activities, energy services, alternative fuels, and technology
companies.
e segments are separately managed for investment purposes
under a structure that includes “segment managers” who report to
the company’s “chief operating decision maker” (CODM) (terms
as dened in ASC 280). e CODM is the company’s Executive
Committee (EXCOM), a committee of senior ocers that includes
the Chief Executive Ocer, and EXCOM reports to the Board of
Directors of Chevron Corporation.
e operating segments represent components of the
company, as described in accounting standards for segment
reporting (ASC 280), that engage in activities (a) from which
revenues are earned and expenses are incurred; (b) whose
operating results are regularly reviewed by the CODM,
which makes decisions about resources to be allocated to the
segments and assesses their performance; and (c) for which
discrete nancial information is available.
Note 9 Financial and Derivative Instruments – Continued