Summary
ConocoPhillips filed its 10-Q report for the period ending September 29, 2002, detailing significant financial changes primarily driven by the merger of Conoco Inc. and Phillips Petroleum Company, effective August 30, 2002. The report shows a net loss of $116 million for the third quarter, a stark contrast to the $364 million profit in the same period of the prior year. This loss is largely attributable to substantial merger-related costs, including a $246 million write-off of in-process research and development and $608 million in restructuring and workforce reduction liabilities. The nine-month period ended September 30, 2002, also resulted in a net loss of $133 million compared to a profit of $1,499 million in the prior year. The balance sheet reflects a significant increase in total assets from $35.2 billion at December 31, 2001, to $77.5 billion at September 30, 2002, largely due to the acquisition of Conoco's assets and the recognition of substantial goodwill and intangible assets. Despite the reported net loss for the quarter, the company's operating activities generated $2.99 billion in cash for the nine-month period, though this was a decrease from the $3.34 billion generated in the prior year. Investors should note the strategic shift and the integration challenges presented by this major combination.
Key Highlights
- 1Conoco and Phillips merger completed on August 30, 2002, creating ConocoPhillips, accounted for using the purchase method with Phillips as the acquirer.
- 2Third quarter 2002 net loss of $116 million compared to a net income of $364 million in Q3 2001, largely due to $469 million in merger-related costs including R&D write-offs and restructuring.
- 3Nine-month 2002 net income of $133 million versus $1,499 million in the prior year, impacted by merger costs and lower commodity prices.
- 4Total Assets increased significantly to $77.5 billion as of September 30, 2002, from $35.2 billion at December 31, 2001, primarily due to the Conoco acquisition and resulting goodwill.
- 5Operating cash flow from continuing operations for the nine months was $2.99 billion, a decrease from $3.34 billion in the same period of 2001.
- 6The company is subject to FTC divestiture requirements as a condition of the merger, with assets classified as 'discontinued operations'.
- 7Debt levels increased significantly due to assumed Conoco debt and fair value adjustments, leading to a higher debt-to-capital ratio.