Chevron 2006 Annual Report Download - page 27

FINANCIAL TABLE OF CONTENTS
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Key Financial Results 26
Income From Continuing Operations by Major Operating Area 26
Business Environment and Outlook 26
Operating Developments 29
Results of Operations 30
Consolidated Statement of Income 33
Selected Operating Data 35
Information Related to Investment in Dynegy Inc. 35
Liquidity and Capital Resources 36
Financial Ratios 38
Guarantees, Off-Balance-Sheet Arrangements and Contractual
Obligations, and Other Contingencies 38
Financial and Derivative Instruments 39
Transactions With Related Parties 40
Litigation and Other Contingencies 40
Environmental Matters 43
Critical Accounting Estimates and Assumptions 43
New Accounting Standards 46
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies 56
Note 2. Acquisition of Unocal Corporation 58
Note 3. Information Relating to the Consolidated
Statement of Cash Flows 59
Note 4. Summarized Financial Data – Chevron U.S.A. Inc. 60
Note 5. Summarized Financial Data –
Chevron Transport Corporation Ltd. 60
Note 6. Stockholders’ Equity 60
Note 7. Financial and Derivative Instruments 61
Note 8. Operating Segments and Geographic Data 62
Note 9. Lease Commitments 64
Note 10. Restructuring and Reorganization Costs 64
Note 11. Assets Held for Sale and Discontinued Operations 65
Note 12. Investments and Advances 65
Note 13. Properties, Plant and Equipment 67
Note 14. Accounting for Buy/Sell Contracts 67
Note 15. Litigation 68
Note 16. Taxes 68
Note 17. Short-Term Debt 69
Note 18. Long-Term Debt 70
Note 19. New Accounting Standards 70
Note 20. Accounting for Suspended Exploratory Wells 71
Note 21. Employee Benefit Plans 72
Note 22. Stock Options and Other Share-Based Compensation 77
Note 23. Other Contingencies and Commitments 79
Note 24. Asset Retirement Obligations 82
Note 25. Common Stock Split 82
Note 26. Other Financial Information 83
Note 27. Earnings Per Share 83
Five-Year Operating Summary 85
Five-Year Financial Summary 86
Supplemental Information on Oil and Gas Producing Activities 87
CAUTIONARY STATEMENT RELEVANT TO FORWARD-
LOOKING INFORMATION
For the purpose of “safe harbor” provisions of the private securities
litigation reform act of 1995
This Annual Report of Chevron Corporation contains forward-looking state-
ments relating to Chevron’s operations that are based on management’s
current expectations, estimates and projections about the petroleum, chemicals
and other energy-related industries. Words such as “anticipates,” “expects,”
“intends,” “plans,” “targets,” “projects,” “believes,” “seeks,” ”schedules,”
“estimates” and similar expressions are intended to identify such forward-
looking statements. These statements are not guarantees of future performance
and are subject to certain risks, uncertainties and other factors, some of which
are beyond our control and are difficult to predict. Therefore, actual outcomes
and results may differ materially from what is expressed or forecasted in such
forward-looking statements. You should not place undue reliance on these
forward-looking statements, which speak only as of the date of this report.
Unless legally required, Chevron undertakes no obligation to update publicly
any forward-looking statements, whether as a result of new information, future
events or otherwise.
Among the important factors that could cause actual results to differ
materially from those in the forward-looking statements are unknown or
unexpected problems in the resumption of operations affected by Hurricanes
OTHER INFORMATION
The company has submitted to the New York Stock Exchange a certificate
of the Chief Executive Officer of the company certifying that he is not aware
of any violation by the company of New York Stock Exchange corporate govern-
ance listing standards. The 302 certifications have been filed in the Form 10-K.
CONSOLIDATED FINANCIAL STATEMENTS
Quarterly Results and Stock Market Data 48
Report of Management 49
Report of Independent Registered Public Accounting Firm 50
Consolidated Statement of Income 51
Consolidated Statement of Comprehensive Income 52
Consolidated Balance Sheet 53
Consolidated Statement of Cash Flows 54
Consolidated Statement of Stockholders’ Equity 55
26 56
48
Katrina and Rita and other severe weather in the Gulf of Mexico; crude oil
and natural gas prices; refining margins and marketing margins; chemicals
prices and competitive conditions affecting supply and demand for aromatics,
olefins and additives products; actions of competitors; the competitiveness of
alternate energy sources or product substitutes; technological developments;
the results of operations and financial condition of equity affiliates; the ability
to successfully integrate the operations of Chevron and Unocal Corporation; the
inability or failure of the company’s joint-venture partners to fund their share of
operations and development activities; the potential failure to achieve expected
net production from existing and future crude oil and natural gas development
projects; potential delays in the development, construction or start-up of
planned projects; the potential disruption or interruption of the company’s net
production or manufacturing facilities due to war, accidents, political events,
civil unrest or severe weather; the potential liability for remedial actions under
existing or future environmental regulations and litigation; significant investment
or product changes under existing or future environmental regulations and
litigation (including, particularly, regulations and litigation dealing with gasoline
composition and characteristics); the potential liability resulting from pending or
future litigation; the company’s acquisition or disposition of assets; the effects
of changed accounting rules under generally accepted accounting principles
promulgated by rule-setting bodies. In addition, such statements could be
affected by general domestic and international economic and political conditions.
Unpredictable or unknown factors not discussed in this report could also have
material adverse effects on forward-looking statements.
CHEVRON CORPORATION 2006 ANNUAL REPORT 25