Chevron 2006 Annual Report Download - page 71

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CHEVRON CORPORATION 2006 ANNUAL REPORT 69CHEVRON CORPORATION 2006 ANNUAL REPORT 69
NOTE 16. TAXES – Continued
increase was primarily related to increased temporary differ-
ences for properties, plant and equipment.
Deferred tax assets increased by approximately $3,800
in 2006. The increase related primarily to higher pension and
other benefi t obligations resulting from the implementation of
FAS 158, increased foreign tax credits resulting from higher
crude oil prices in tax jurisdictions with high income tax rates,
and increased asset retirement obligations.
The overall valuation allowance relates to foreign tax
credit carry forwards, tax loss carryforwards and temporary
differences for which no benefi t is expected to be realized. Tax
loss carry forwards exist in many international jurisdictions.
Whereas some of these tax loss carry forwards do not have
an expiration date, others expire at various times from 2007
through 2029. Foreign tax credit carryforwards of $1,916 will
expire between 2009 and 2016.
At December 31, 2006 and 2005, deferred taxes were
classifi ed in the Consolidated Balance Sheet as follows:
At December 31
2006 2005
Prepaid expenses and other current assets $ (1,167) $ (892)
Deferred charges and other assets (844) (547)
Federal and other taxes on income 76 1
Noncurrent deferred income taxes 11,647 11,262
Total deferred income taxes, net $ 9,712 $ 9,824
Income taxes are not accrued for unremitted earnings
of international operations that have been or are intended
to be reinvested indefi nitely. Undistributed earnings of inter-
national consolidated subsidiaries and affiliates for which
no deferred income tax provision has been made for possible
future remittances totaled $21,035 at December 31, 2006.
A signifi cant majority of this amount represents earnings
reinvested as part of the company’s ongoing international
business. It is not practicable to estimate the amount of taxes
that might be payable on the eventual remittance of such
earnings. The company does not anticipate incurring signifi -
cant additional taxes on remittances of earnings that are not
indefi nitely reinvested.
American Jobs Creation Act of 2004 In October 2004, the
Amer ican Jobs Creation Act of 2004 was passed into law. The
Act provides a deduction for income from qualifi ed domestic
refi ning and upstream production activities, which is to be
phased in from 2005 through 2010. The company expects the
net effect of this provision of the Act to result in a decrease
in the federal effective tax rate for 2007 to approximately 33
percent, based on current earnings levels. In the long term,
the company expects that the new deduction will result in a
decrease of the annual effective tax rate to about 32 percent
for that category of income, based on current earnings levels.
Taxes other than on income were as follows:
Year ended December 31
2006 2005 2004
United States
Excise and other similar taxes on
products and merchandise $ 4,831 $ 4,521 $ 4,147
Import duties and other levies 32 8 5
Property and other
miscellaneous taxes 475 392 359
Payroll taxes 155 149 137
Taxes on production 360 323 257
Total United States 5,853 5,393 4,905
International
Excise and other similar taxes on
products and merchandise 4,720 4,198 3,821
Import duties and other levies 9,618 10,466 10,542
Property and other
miscellaneous taxes 491 535 415
Payroll taxes 75 52 52
Taxes on production 126 138 86
Total International 15,030 15,389 14,916
Total taxes other than on income* $ 20,883 $ 20,782 $ 19,821
* Includes taxes on discontinued operations of $3 in 2004.
NOTE 17.
SHORT-TERM DEBT
At December 31
2006 2005
Commercial paper* $ 3,472 $ 4,098
Notes payable to banks and others with
originating terms of one year or less 122 170
Current maturities of long-term debt 2,176 467
Current maturities of long-term
capital leases 57 70
Redeemable long-term obligations
Long-term debt 487 487
Capital leases 295 297
Subtotal 6,609 5,589
Reclassifi ed to long-term debt (4,450) (4,850)
Total short-term debt $ 2,159 $ 739
* Weighted-average interest rates at December 31, 2006 and 2005, were 5.25 percent and
4.18 percent, respectively.
Redeemable long-term obligations consist primarily
of tax-exempt variable-rate put bonds that are included as
current liabilities because they become redeemable at the
option of the bondholders during the year following the
balance sheet date.
The company periodically enters into interest rate swaps
on a portion of its short-term debt. See Note 7, beginning on
page 61, for information concerning the company’s debt-
related derivative activities.
At December 31, 2006, the company had $4,950 of com-
mitted credit facilities with banks worldwide, which permit
the company to refi nance short-term obligations on a long-
term basis. The facilities support the company’s commercial