Chevron 2005 Annual Report Download - page 37

CHEVRON CORPORATION 2005 ANNUAL REPORT 35
corporate-level tax adjustments. Higher charges in 2005 were
associated with environmental remediation of properties that
had been sold or idled and ongoing Unocal corporate-level
activities. Interest expense also was higher in 2005 due to
an increase in interest rates and the debt assumed with the
Unocal acquisition.
The improvement between 2003 and 2004 was primarily
associated with the company’s investment in Dynegy, includ-
ing gains from the redemption of certain Dynegy securities,
higher interest income, lower interest expense and the favor-
able corporate-level tax adjustments.
Net special-item gains in 2003 included a Dynegy-
related net benefi t of $325 million, which was composed of
a gain of $365 million from the exchange of the company’s
investment in Dynegy securities that was partially offset by
a $40 million charge for Chevron’s share of an asset impair-
ment by Dynegy. Other special-item charges were for asset
write-downs of $84 million, primarily in Chevron’s gasifi ca-
tion business, and employee severance costs of $16 million.
CONSOLIDATED STATEMENT OF INCOME
Comparative amounts for certain income statement catego-
ries are shown below. Amounts associated with special items
in the comparative periods are also indicated to assist in the
explanation of the period-to-period changes. Besides the
information in this section, separately disclosed on the face
of the Consolidated Statement of Income are a gain from the
exchange of Dynegy securities and the cumulative effect of
changes in accounting principles. These matters are discussed
elsewhere in Management’s Discussion and Analysis and in
Note 27 to the Consolidated Financial Statements, on page
86. Refer to the Results of Operations section, beginning of
page 31, for additional information relating to special-item
gains and charges.
Millions of dollars 2005 2004 2003
Sales and other operating revenues $ 193,641 $ 150,865 $ 119,575
Sales and other operating revenues in 2005 increased
over 2004 and 2003 due primarily to higher prices for crude
oil, natural gas and refi ned products worldwide. The amount
in 2005 also included revenues for fi ve months from former
Unocal operations.
Millions of dollars 2005 2004 2003
Income from equity affi liates $ 3,731 $ 2,582 $ 1,029
Memo: Special-item gains, before tax $ – $ – $ 179
Improved results for Tengizchevroil and Hamaca (Ven-
ezuela) accounted for nearly three-fourths of the increased
income from equity affi liates in 2005. Profi ts in 2005 also
increased at the company’s CPChem and Dynegy affi li-
ates. The improvement in 2004 from 2003 was the result of
higher earnings from the company’s downstream affi liates in
the Asia-Pacifi c area, Tengizchevroil, CPChem, Dynegy and
the Caspian Pipeline Consortium. Refer to Note 13, begin-
ning on page 68, for a discussion of Chevron’s investment in
affi liated companies.
Millions of dollars 2005 2004 2003
Other income $ 828 $ 1,853 $ 308
Memo: Special-item gains, before tax $ – $ 1,281 $ 217
Other income in 2005 included no special-item gains or
losses; however, net special-item gains relating to upstream
property sales were nearly $1.3 billion in 2004 and more
than $200 million in 2003. The increase from 2003 through
2005 was otherwise partly due to higher interest income in
each period – $400 million in 2005, $200 million in 2004
and $120 million in 2003 – on higher average interest rates
and balances of cash and marketable securities. Foreign cur-
rency losses were $60 million in both 2005 and 2004 and
about $200 million in 2003.
Millions of dollars 2005 2004 2003
Purchased crude oil and products $ 127,968 $ 94,419 $ 71,310
Crude oil and product purchases in 2005 increased
approximately 35 percent from 2004, due mainly to higher
prices for crude oil, natural gas and refi ned products as well
as to the inclusion in 2005 of Unocal-related amounts for
fi ve months. Crude oil and product purchase costs increased
32 percent in 2004 from the prior year as a result of higher
prices and increased purchased volumes of crude oil and
products.
Millions of dollars 2005 2004 2003
Operating, selling, general and
administrative expenses $ 17,019 $ 14,389 $ 12,940
Memo: Special-item charges, before tax $ – $ 85 $ 475
Operating, selling, general and administrative expenses
in 2005 increased 18 percent from a year earlier. Higher
amounts in 2005 included former-Unocal expenses for fi ve
months, and for heritage-Chevron operations, higher costs
for labor and transportation, uninsured costs associated with
storms in the Gulf of Mexico, asset write-offs, repair and
maintenance services, fuel costs for plant operations and a
number of corporate items that individually were not sig-
nifi cant. Total expenses increased from 2003 to 2004 due
mainly to costs for chartering crude oil tankers and other
transportation expenses.
Millions of dollars 2005 2004 2003
Exploration expense $ 743 $ 697 $ 570
Exploration expenses in 2005 increased mainly due to
the inclusion of Unocal amounts for fi ve months. In 2004,
amounts were higher than in 2003 for international opera-
tions, primarily for seismic costs and expenses associated with
evaluating the feasibility of different project alternatives.