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78 CHEVRONTEXACO CORPORATION 2004 ANNUAL REPORT
In฀the฀first฀quarter฀2003,฀the฀company฀recorded฀a฀net฀after-
tax฀charge฀of฀$200฀for฀the฀cumulative฀effect฀of฀the฀adoption฀of฀
FAS฀143,฀including฀the฀company’s฀share฀of฀amounts฀attributable฀to฀
equity฀affiliates.฀The฀cumulative-effect฀adjustment฀also฀increased฀
the฀following฀balance฀sheet฀categories:฀“Properties,฀plant฀and฀
equipment,”฀$2,568;฀“Accrued฀liabilities,”฀$115;฀and฀“Deferred฀
credits฀and฀other฀noncurrent฀obligations,”฀$2,674.฀“Noncurrent฀
deferred฀income฀taxes”฀decreased฀by฀$21.฀
Upon฀adoption,฀no฀significant฀asset฀retirement฀obligations฀
associated฀with฀any฀legal฀obligations฀to฀retire฀refining,฀market-
ing฀and฀transportation฀(downstream)฀and฀chemical฀long-lived฀
assets฀generally฀were฀recognized,฀as฀indeterminate฀settlement฀
dates฀for฀the฀asset฀retirements฀prevented฀estimation฀of฀the฀fair฀
value฀of฀the฀associated฀ARO.฀The฀company฀performs฀periodic฀
reviews฀of฀its฀downstream฀and฀chemical฀long-lived฀assets฀for฀any฀
changes฀in฀facts฀and฀circumstances฀that฀might฀require฀recognition฀
of฀a฀retirement฀obligation.฀
Other฀than฀the฀cumulative-effect฀net฀charge,฀the฀effect฀of฀
the฀new฀accounting฀standard฀on฀net฀income฀in฀2003฀was฀not฀
materially฀different฀from฀what฀the฀result฀would฀have฀been฀under฀
FAS฀19฀accounting.฀Included฀in฀“Depreciation,฀depletion฀and฀
amortization”฀were฀$52฀related฀to฀the฀depreciation฀of฀the฀ARO฀
asset฀and฀$132฀related฀to฀the฀accretion฀of฀the฀ARO฀liability.
The฀following฀table฀illustrates฀what฀the฀company’s฀net฀income฀
before฀extraordinary฀items,฀net฀income฀and฀related฀per-share฀
amounts฀would฀have฀been฀if฀the฀provisions฀of฀FAS฀143฀had฀been฀
applied฀retroactively:
Year Ended December 31
2003 2002
Pro forma net income before
extraordinary items   $ 7,4301 $ 1,1372
Earnings per share – basic3 $ 3.57 $ 0.53
Earnings per share – diluted3 $ 3.57 $ 0.53
Pro forma net income $ 7,4301 $ 1,1372
Earnings per share – basic4 $ 3.57 $ 0.53
Earnings per share – diluted4 $ 3.57 $ 0.53
1 Excludes cumulative-effect charge of $200 ($0.09 per basic and diluted share) for the
adoption of FAS 143.
2 Includes benefit of $5 that represents the reversal of FAS 19 depreciation related to
abandonment offset partially by pro forma expenses for the depreciation and accre-
tion of the ARO asset and liability, net of tax. There is a de minimis effect to net
income per basic or diluted share.
3 Reported net income before extraordinary items was also $3.57 per basic and diluted
shares for 2003 and $0.53 per basic and diluted shares for 2002.
4 Reported net income was $3.48 per basic and diluted shares for 2003 and $0.53 per
basic and diluted shares for 2002.
Notes to the Consolidated Financial Statements
Millions฀of฀dollars,฀except฀per-share฀amounts
 FAS 143 – ASSET RETIREMENT OBLIGATIONS – Continued
Prior฀to฀the฀implementation฀of฀FAS฀143,฀the฀company฀had฀
recorded฀a฀provision฀for฀abandonment฀that฀was฀part฀of฀“Accu-
mulated฀depreciation,฀depletion฀and฀amortization.”฀Upon฀
implementation฀of฀FAS฀143,฀the฀provision฀for฀abandonment฀was฀
reversed,฀and฀ARO฀liability฀was฀recorded.฀The฀amount฀of฀the฀
abandonment฀reserve฀at฀the฀end฀of฀2002฀was฀$2,263.฀The฀2002฀
pro-forma฀ARO฀liability฀at฀January฀1฀and฀December฀31฀was฀
$2,792฀and฀$2,797,฀respectively.
The฀following฀table฀indicates฀the฀changes฀to฀the฀company’s฀
before-tax฀asset฀retirement฀obligations฀in฀2004฀and฀2003:
2003
Balance at January 1   $ 2,797*
Liabilities incurred  14
Liabilities settled  (128)
Accretion expense  132
Revisions in estimated cash flows  41
Balance at December 31   $ 2,856
*Includes the cumulative effect of the accounting change.


Basic฀earnings฀per฀share฀(EPS)฀is฀based฀upon฀net฀income฀less฀
preferred฀stock฀dividend฀requirements฀and฀includes฀the฀effects฀
of฀deferrals฀of฀salary฀and฀other฀compensation฀awards฀that฀are฀
invested฀in฀ChevronTexaco฀stock฀units฀by฀certain฀officers฀and฀
employees฀of฀the฀company฀and฀the฀company’s฀share฀of฀stock฀
transactions฀of฀affiliates,฀which,฀under฀the฀applicable฀accounting฀
rules,฀may฀be฀recorded฀directly฀to฀the฀company’s฀retained฀earn-
ings฀instead฀of฀net฀income.฀Diluted฀EPS฀includes฀the฀effects฀of฀
these฀items฀as฀well฀as฀the฀dilutive฀effects฀of฀outstanding฀stock฀
options฀awarded฀under฀the฀company’s฀stock฀option฀programs฀
(see฀Note฀23,฀“Stock฀Options,”฀beginning฀on฀page฀74).฀The฀follow-
ing฀table฀sets฀forth฀the฀computation฀of฀basic฀and฀diluted฀EPS: