Chevron 2004 Annual Report Download - page 64

62 CHEVRONTEXACO CORPORATION 2004 ANNUAL REPORT
Segment฀Income฀Taxes฀ Segment฀income฀tax฀expenses฀for฀the฀
years฀2004,฀2003฀and฀2002฀are฀as฀follows:
Year ended December 31
 20031 2002

 
United States  $ 1,853 $ 854
International  3,831 3,415

   5,684 4,269

 
United States  300 (254)
International  275 138

   575 (116)

United States  (25) (17)
International  6 17
  (19) –
  (946) (1,155)

   $ 5,294 $ 2,998
1 See Note 25 on page 77 for information concerning the cumulative effect of
changes in accounting principles due to the adoption of FAS 143, “Accounting for
Asset Retirement Obligations.”
2 Income tax expense of $100, $50 and $26 related to discontinued operations for
2004, 2003 and 2002, respectively, is not included.
Other฀Segment฀Information฀ Additional฀information฀for฀the฀
segmentation฀of฀major฀equity฀affiliates฀is฀contained฀in฀Note฀14฀
beginning฀on฀page฀63.฀Information฀related฀to฀properties,฀plant฀and฀
equipment฀by฀segment฀is฀contained฀in฀Note฀15฀on฀page฀65.


The฀company฀and฀many฀other฀companies฀in฀the฀petroleum฀
industry฀have฀used฀methyl฀tertiary฀butyl฀ether฀(MTBE)฀as฀a฀gaso-
line฀additive.
The฀company฀is฀a฀party฀to฀more฀than฀70฀lawsuits฀and฀claims,฀
the฀majority฀of฀which฀involves฀ numerous฀other฀petroleum฀marketers฀
and฀refiners,฀related฀to฀the฀use฀of฀MTBE฀in฀certain฀oxygenated฀
gasolines฀and฀the฀alleged฀seepage฀of฀MTBE฀into฀groundwater.฀
Resolution฀of฀these฀actions฀may฀ultimately฀require฀the฀company฀
to฀correct฀or฀ameliorate฀the฀alleged฀effects฀on฀the฀environment฀
of฀prior฀release฀of฀MTBE฀by฀the฀company฀or฀other฀parties.฀Addi-
tional฀lawsuits฀and฀claims฀related฀to฀the฀use฀of฀MTBE,฀including฀
personal-injury฀claims,฀may฀be฀filed฀in฀the฀future.
The฀company’s฀ultimate฀exposure฀related฀to฀these฀lawsuits฀
and฀claims฀is฀not฀currently฀determinable,฀but฀could฀be฀material฀
to฀net฀income฀in฀any฀one฀period.฀The฀company฀does฀not฀use฀MTBE฀
in฀the฀manufacture฀of฀gasoline฀in฀the฀United฀States,฀and฀there฀are฀
no฀detectable฀levels฀of฀MTBE฀in฀that฀gasoline.


Certain฀noncancelable฀leases฀are฀classified฀as฀capital฀leases,฀and฀
the฀leased฀assets฀are฀included฀as฀part฀of฀“Properties,฀plant฀and฀
equipment,฀at฀cost.”฀Such฀leasing฀arrangements฀involve฀tanker฀
charters,฀crude฀oil฀production฀and฀processing฀equipment,฀service฀
stations,฀and฀other฀facilities.฀Other฀leases฀are฀classified฀as฀operat-
ing฀leases฀and฀are฀not฀capitalized.฀The฀payments฀on฀such฀leases฀
are฀recorded฀as฀expense.฀Details฀of฀the฀capitalized฀leased฀assets฀
are฀as฀follows:
At December 31
 2003
Exploration and Production    $ 246
Refining, Marketing and Transportation  842
Total  1,088
Less: Accumulated amortization  642
Net capitalized leased assets   $ 446
Rental฀expenses฀incurred฀for฀operating฀leases฀during฀2004,฀
2003฀and฀2002฀were฀as฀follows:
Year ended December 31
 2003 2002
Minimum rentals  $ 1,567 $ 1,270
Contingent rentals  3 4
Total  1,570 1,274
Less: Sublease rental income  48 53
Net rental expense  $ 1,522 $ 1,221
Contingent฀rentals฀are฀based฀on฀factors฀other฀than฀the฀pas-
sage฀of฀time,฀principally฀sales฀volumes฀at฀leased฀service฀stations.฀
Certain฀leases฀include฀escalation฀clauses฀for฀adjusting฀rentals฀to฀
reflect฀changes฀in฀price฀indices,฀renewal฀options฀ranging฀up฀to฀
25฀years,฀and฀options฀to฀purchase฀the฀leased฀property฀during฀or฀
at฀the฀end฀of฀the฀initial฀or฀renewal฀lease฀period฀for฀the฀fair฀market฀
value฀or฀other฀specified฀amount฀at฀that฀time.
At฀December฀31,฀2004,฀the฀estimated฀future฀minimum฀lease฀
payments฀(net฀of฀noncancelable฀sublease฀rentals)฀under฀operating฀
and฀capital฀leases,฀which฀at฀inception฀had฀a฀noncancelable฀term฀
of฀more฀than฀one฀year,฀were฀as฀follows:
At December 31
Operating Capital
Leases Leases
Year: 2005 $ 390 $ 83
2006 338 74
2007 280 62
2008 239 51
2009 236 52
Thereafter 749 562
Total $ 2,232 $ 884
Less: Amounts representing interest
and executory costs (292)
Net present values 592
Less: Capital lease obligations
included in short-term debt (353)
Long-term capital lease obligations $ 239
Notes to the Consolidated Financial Statements
Millions฀of฀dollars,฀except฀per-share฀amounts
 OPERATING SEGMENTS AND GEOGRAPHIC DATA – Continued