Integrated oil services giant
said Tuesday it will take a $500 million charge to write down its pension liability, citing significant investment losses and merger-related job cuts.
"The investment losses experienced in 2002, together with settlement losses associated mainly with lump-sum cash payments from the pension trust, have been the major factors for an increase in 2002 pension expense for the company's main U.S. pension plans," the company said in its quarterly 10-Q filing with the
Securities and Exchange Commission
. "The accounting for the increase in the liability will result in an after-tax charge of approximately $500 million to 'accumulated other comprehensive loss' in stockholder's equity," it said.
The San Francisco-based company is required to satisfy pension funding requirements under the Employee Income Security Act. Several key tenets are used to determine this obligation, including the plan's funding and expenses, estimated rate of return on plan assets, and the interest rate used to discount the plans' obligations. These factors, along with the market value of those assets, are closely monitored to determine the associated pension plan accounting. The charge is expected to be finalized sometime in December 2002.
The stock has taken its lumps this year, down 26% from its 52-week high of $91.60 set back on March 22, 2002. Chevron's shares were recently up 2 cents at $67.20 on the
New York Stock Exchange.