Chevron 2004 Annual Report Download - page 65

CHEVRONTEXACO CORPORATION 2004 ANNUAL REPORT 63
Included฀in฀the฀2004฀after-tax฀amount฀were฀gains฀totaling฀
$257฀related฀to฀the฀sale฀of฀a฀Canadian฀natural-gas฀processing฀
business,฀a฀wholly฀owned฀subsidiary฀in฀the฀Democratic฀Republic฀of฀
the฀Congo฀and฀certain฀producing฀properties฀in฀the฀Gulf฀of฀Mexico.
Not฀all฀assets฀sold฀or฀to฀be฀disposed฀of฀are฀classified฀as฀discon-
tinued฀operations,฀mainly฀because฀the฀cash฀flows฀from฀the฀assets฀
were฀not/will฀not฀be฀eliminated฀from฀the฀ongoing฀operations฀of฀
the฀company.


Equity฀in฀earnings,฀together฀with฀investments฀in฀and฀advances฀
to฀companies฀accounted฀for฀using฀the฀equity฀method฀and฀other฀
investments฀accounted฀for฀at฀or฀below฀cost,฀are฀as฀follows:
Investments and Advances Equity in Earnings
At December 31 Year ended December 31
 2003  2003 2002

 
Tengizchevroil   $ 3,363   $ 611 $ 490
Other  991  200 116
Total Exploration and
Production  4,354  811 606

 
LG-Caltex Oil Corporation  1,561  107 46
Caspian Pipeline Consortium  1,026  52 66
Star Petroleum Refining
Company Ltd.  457  8 (25)
Caltex Australia Ltd.  118  13 (156)
Other  1,069  100 110
Total Refining, Marketing
and Transportation  4,231  280 41

Chevron Phillips Chemical
Company LLC  1,747  24 2
Other  20  1 4
Total Chemicals  1,767  25 6

Dynegy Inc.  698  (56) (679)
Other  761  (31) 1
Total equity method  $ 11,811  $ 1,029 $ (25)
Other at or below cost  508
Total investments and
advances  $ 12,319
Total U.S.   $ 3,905   $ 175 $ (559)
Total International  $ 8,414  $ 854 $ 534
Descriptions฀of฀major฀affiliates฀are฀as฀follows:฀ ฀
Tengizchevroil ChevronTexaco฀has฀a฀50฀percent฀equity฀ownership฀
interest฀in฀TCO,฀a฀joint฀venture฀formed฀in฀1993฀to฀develop฀the฀
Tengiz฀and฀Korolev฀oil฀fields฀in฀Kazakhstan฀over฀a฀40-year฀period.
In฀2004,฀as฀part฀of฀the฀funding฀of฀the฀expansion฀of฀TCO’s฀
production฀facilities,฀ChevronTexaco฀purchased฀from฀TCO฀
$2,200฀of฀6.124฀percent฀Series฀B฀Notes,฀due฀2014,฀guaranteed฀by฀
TCO.฀ Interest฀on฀the฀notes฀is฀payable฀semiannually, ฀and฀principal฀
is฀to฀be฀repaid฀semiannually฀in฀equal฀installments฀beginning฀in฀
February฀2008.฀Immediately฀following฀the฀purchase฀of฀the฀Series฀
B฀Notes,฀ChevronTexaco฀received฀from฀TCO฀approximately฀
$1,800฀representing฀a฀repayment฀of฀subordinated฀loans฀from฀
the฀company,฀interest฀and฀dividends.฀The฀$2,200฀investment฀in฀
the฀Series฀B฀Notes,฀which฀the฀company฀intends฀to฀hold฀to฀their฀


In฀connection฀with฀various฀reorganizations฀and฀restructurings฀
across฀several฀businesses฀and฀corporate฀departments,฀the฀com-
pany฀recorded฀before-tax฀charges฀of฀$258฀($146฀after฀tax)฀during฀
2003฀for฀estimated฀termination฀benefits฀for฀approximately฀4,500฀
employees.฀Nearly฀half฀of฀the฀liability฀related฀to฀the฀global฀down-
stream฀segment.฀Substantially฀all฀of฀the฀employee฀reductions฀are฀
expected฀to฀occur฀by฀the฀end฀of฀2005.
At฀the฀beginning฀of฀2004,฀a฀$100฀liability฀remained฀for฀
employee฀severance฀charges฀recorded฀in฀2002฀and฀2001฀associated฀
with฀the฀merger฀between฀Chevron฀Corporation฀and฀Texaco฀Inc.฀
The฀balance฀related฀primarily฀to฀deferred฀payment฀options฀elected฀
by฀certain฀employees฀who฀were฀terminated฀before฀the฀end฀of฀2003.฀
Approximately฀$80฀of฀the฀liability฀was฀paid฀during฀2004฀and฀the฀
remainder฀in฀January฀2005.
Activity฀for฀the฀company’s฀liability฀related฀to฀reorganizations฀
and฀restructurings฀in฀2004฀is฀summarized฀in฀the฀following฀table:
Amounts฀before฀tax  2003
Balance at January 1   $ 6
Additions   258
Payments  (24)
Balance at December 31   $ 240
Substantially฀all฀of฀the฀balance฀at฀December฀31,฀2004,฀related฀
to฀employee฀severance฀costs฀that฀were฀part฀of฀a฀presumed฀ongoing฀
benefit฀arrangement฀under฀applicable฀accounting฀rules฀in฀FAS฀146,฀
“Accounting฀for฀Costs฀Associated฀with฀Exit฀or฀Disposal฀Activities,”฀
paragraph฀8,฀footnote฀7.฀Therefore,฀the฀company฀accounts฀for฀
severance฀costs฀in฀accordance฀with฀FAS฀88,฀“Employers’฀Accounting฀
for฀Settlements฀and฀Curtailments฀of฀Defined฀Pension฀Plans฀and฀for฀
Termination฀Benefits.”฀At฀December฀31,฀2004,฀the฀amount฀was฀cat-
egorized฀as฀a฀current฀accrued฀liability฀on฀the฀Consolidated฀Balance฀
Sheet฀and฀the฀associated฀charges฀during฀the฀period฀were฀categorized฀
as฀“Operating฀expenses”฀or฀“Selling,฀general฀and฀administrative฀
expenses”฀on฀the฀Consolidated฀Statement฀of฀Income.


At฀December฀31,฀2004,฀and฀December฀31,฀2003,฀the฀company฀
classified฀$162฀and฀$1,100,฀respectively,฀of฀net฀properties,฀plant฀
and฀equipment฀as฀“Assets฀held฀for฀sale”฀on฀the฀Consolidated฀Bal-
ance฀Sheet.฀Assets฀in฀this฀category฀at฀the฀end฀of฀2004฀related฀to฀
a฀group฀of฀service฀stations.฀These฀assets฀are฀expected฀to฀be฀dis-
posed฀of฀in฀2005.
Summarized฀income฀statement฀information฀relating฀to฀dis-
continued฀operations฀is฀as฀follows:
Year ended December 31
 2003 2002
Revenues and other income  $ 485 $ 376
Income from discontinued operations
before income tax expense  94 56
Income from discontinued operations,
net of tax  44 30