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70 Chevron Corporation 2008 Annual Report
Note 9 Operating Segments and Geographic Data – Continued
projects and approves major changes to the annual capital and
exploratory budgets. However, business-unit managers within
the operating segments are directly responsible for decisions
relating to project implementation and all other matters con-
nected with daily operations. Company officers who are
members of the Executive Committee also have individual
management responsibilities and participate in other commit-
tees for purposes other than acting as the CODM.
“All Other” activities include the company’s interest in
Dynegy (through May 2007, when Chevron sold its interest),
mining operations, power generation businesses, worldwide
cash management and debt financing activities, corporate
administrative functions, insurance operations, real estate
activities, alternative fuels, and technology companies.
The company’s primary country of operation is the
United States of America, its country of domicile. Other
components of the company’s operations are reported as
“International” (outside the United States).
Segment Earnings The company evaluates the performance of
its operating segments on an after-tax basis, without consider-
ing the effects of debt financing interest expense or investment
interest income, both of which are managed by the company
on a worldwide basis. Corporate administrative costs and
assets are not allocated to the operating segments. However,
operating segments are billed for the direct use of corporate
services. Nonbillable costs remain at the corporate level in
“All Other.” After-tax segment income by major operating
area is presented in the following table:
Year ended December 31
2008 2007 2006
Income by Major Operating Area
Upstream
United States $ 7,126 $ 4,532 $ 4,270
International 14,584 10,284 8,872
Total Upstream 21,710 14,816 13,142
Downstream
United States 1,369 966 1,938
International 2,060 2,536 2,035
Total Downstream 3,429 3,502 3,973
Chemicals
United States 22 253 430
International 160 143 109
Total Chemicals 182 396 539
Total Segment Income 25,321 18,714 17,654
All Other
Interest expense – (107) (312)
Interest income 192 385 380
Other (1,582) (304) (584)
Net Income $ 23,931 $ 18,688 $ 17,138
Segment Assets Segment assets do not include intercompany
investments or intercompany receivables. Segment assets at
year-end 2008 and 2007 are as follows:
At December 31
2008 2007
Upstream
United States $ 26,071 $ 23,535
International 72,530 61,049
Goodwill 4,619 4,637
Total Upstream 103,220 89,221
Downstream
United States 15,869 16,790
International 23,572 26,075
Total Downstream 39,441 42,865
Chemicals
United States 2,535 2,484
International 1,086 870
Total Chemicals 3,621 3,354
Total Segment Assets 146,282 135,440
All Other*
United States 8,984 6,847
International 5,899 6,499
Total All Other 14,883 13,346
Total Assets – United States 53,459 49,656
Total Assets – International 103,087 94,493
Goodwill 4,619 4,637
Total Assets $ 161,165 $ 148,786
* “All Other” assets consist primarily of worldwide cash, cash equivalents and
marketable securities, real estate, information systems, mining operations, power
generation businesses, technology companies, and assets of the corporate admin-
istrative functions.
Segment Sales and Other Operating Revenues Operating seg-
ment sales and other operating revenues, including internal
transfers, for the years 2008, 2007 and 2006 are presented
in the table on the following page. Products are transferred
between operating segments at internal product values that
approximate market prices.
Revenues for the upstream segment are derived primarily
from the production and sale of crude oil and natural gas,
as well as the sale of third-party production of natural gas.
Revenues for the downstream segment are derived from the
refining and marketing of petroleum products, such as gaso-
line, jet fuel, gas oils, kerosene, lubricants, residual fuel oils
and other products derived from crude oil. This segment
also generates revenues from the transportation and trading
of crude oil and refined products. Revenues for the chemicals
segment are derived primarily from the manufacture and sale
of additives for lubricants and fuel. “All Other” activities
include revenues from mining operations of coal and other
minerals, power generation businesses, insurance operations,
real estate activities, and technology companies.
Notes to the Consolidated Financial Statements
Millions of dollars, except per-share amounts