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90 Chevron Corporation 2008 Annual Report
Note 25
Other Financial Information
Net income in 2008 included gains of approximately $1,200
relating to the sale of nonstrategic properties. Of this amount,
approximately $1,000 related to upstream assets. Net income
in 2007 included gains of approximately $2,000 relating to the
sale of nonstrategic properties. Of this amount, approximately
$1,100 related to downstream assets and $680 related to the
sale of the company’s investment in Dynegy Inc.
Other financial information is as follows:
Year ended December 31
2008 2007 2006
Total financing interest and debt costs $ 256 $ 468 $ 608
Less: Capitalized interest 256 302 157
Interest and debt expense $ – $ 166 $ 451
Research and development expenses $ 835 $ 562 $ 468
Foreign currency effects* $ 862 $ (352) $ (219)
*
Includes $420, $18 and $15 in 2008, 2007 and 2006, respectively, for the com-
pany’s share of equity affiliates’ foreign currency effects.
The excess of replacement cost over the carrying value of
inventories for which the Last-In, First-Out (LIFO) method
is used was $9,368 and $6,958 at December 31, 2008 and
2007, respectively. Replacement cost is generally based on
average acquisition costs for the year. LIFO profits of $210,
$113 and $82 were included in net income for the years
2008, 2007 and 2006, respectively.
Note 26
Assets Held for Sale
At December 31, 2008, the company classified $252 of net
properties, plant and equipment as “Assets held for sale”
on the Consolidated Balance Sheet. Assets in this category
related to groups of service stations, aviation facilities, lubri-
cants blending plants, and commercial and industrial fuels
business. These assets are anticipated to be sold in 2009.
Note 27
Earnings Per Share
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 Chevron 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 earnings instead of net income. Diluted
EPS includes the effects of these items as well as the dilu-
tive effects of outstanding stock options awarded under the
company’s stock option programs (refer to Note 21, “Stock
Options and Other Share-Based Compensation” beginning
on page 80). The table below sets forth the computation
of basic and diluted EPS:
Year ended December 31
2008 2007 2006
Basic EPS Calculation
Income from operations $ 23,931 $ 18,688 $ 17,138
Add: Dividend equivalents paid on stock units – – 1
Net income available to common stockholders – Basic $ 23,931 $ 18,688 $ 17,139
Weighted-average number of common shares outstanding 2,037 2,117 2,185
Add: Deferred awards held as stock units 1 1 1
Total weighted-average number of common shares outstanding 2,038 2,118 2,186
Per share of common stock
Net income – Basic $ 11.74 $ 8.83 $ 7.84
Diluted EPS Calculation
Income from operations $ 23,931 $ 18,688 $ 17,138
Add: Dividend equivalents paid on stock units – – 1
Add: Dilutive effects of employee stock-based awards – – –
Net income available to common stockholders – Diluted $ 23,931 $ 18,688 $ 17,139
Weighted-average number of common shares outstanding 2,037 2,117 2,185
Add: Deferred awards held as stock units 1 1 1
Add: Dilutive effect of employee stock-based awards 12 14 11
Total weighted-average number of common shares outstanding 2,050 2,132 2,197
Per share of common stock
Net income – Diluted $ 11.67 $ 8.77 $ 7.80
Notes to the Consolidated Financial Statements
Millions of dollars, except per-share amounts