Chevron 2004 Annual Report Download - page 75
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Please find page 75 of the 2004 Chevron annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report. CHEVRONTEXACO CORPORATION 2004 ANNUAL REPORT 73
Pension Benefits Other
U.S. Int’l. Benefits
2005 $ 489 $ 144 $ 217
2006 $ 507 $ 150 $ 186
2007 $ 524 $ 160 $ 190
2008 $ 540 $ 171 $ 193
2009 $ 553 $ 180 $ 197
2010–2014 $ 2,912 $ 1,038 $ 1,028
EmployeeSavingsInvestmentPlan Eligibleemployeesof
ChevronTexacoandcertainofitssubsidiariesparticipateinthe
ChevronTexacoEmployeeSavingsInvestmentPlan(ESIP).In
2002,theEmployeesThriftPlanofTexacoInc.,EmployeesSav-
ingsPlanofChevronTexacoGlobalEnergyInc.(formerlyCaltex
Corporation),StockPlanofChevronTexacoGlobalEnergy,Inc.,
andEmployeesThriftPlanofFuelandMarineMarketingLLC
weremergedintotheChevronTexacoESIP.
ChargestoexpensefortheESIPrepresentthecompany’s
contributionstotheplan,whicharefundedeitherthroughthepur-
chaseofsharesofcommonstockontheopenmarketorthrough
thereleaseofcommonstockheldintheleveragedemployeestock
ownershipplan(LESOP),whichisdiscussedbelow.Totalcompany
matchingcontributionstoemployeeaccountswithintheESIPwere
$139,$136and$136in2004,2003and2002,respectively.Thiscost
wasreducedbythevalueofsharesreleasedfromtheLESOPtotal-
ing$(138),$(23)and$(73)in2004,2003and2002,respectively.
Theremainingamounts,totaling$1,$113and$63in2004,2003
and2002,respectively,representopenmarketpurchases.
EmployeeStockOwnershipPlan WithintheChevronTexaco
EmployeeSavingsInvestmentPlan(ESIP)isanemployeestock
ownershipplan(ESOP).In1989,Chevronestablishedaleveraged
employeestockownershipplan(LESOP)asaconstituentpartof
theESOP.TheLESOPprovidespartialprefundingofthecompany’s
futurecommitmentstotheESIP.
AspermittedbyAmericanInstituteofCertifiedPublic
Accountants(AICPA)StatementofPosition93-6,“Employers’
AccountingforEmployeeStockOwnershipPlans,”thecompany
haselectedtocontinueitspractices,whicharebasedonAICPA
76-3,“AccountingPracticesforCertainEmployeeStockOwnership
Plans,”andsubsequentconsensusoftheEITFoftheFASB.The
debtoftheLESOPisrecordedasdebt,andsharespledgedascol-
lateralarereportedas“Deferredcompensationandbenefitplan
trust”intheConsolidatedBalanceSheetandtheConsolidated
StatementofStockholders’Equity.
Thecompanyreportscompensationexpenseequalto
LESOPdebtprincipalrepaymentslessdividendsreceivedand
usedbytheLESOPfordebtservice.Interestaccruedonthe
LESOPdebtisrecordedasinterestexpense.Dividendspaidon
LESOPsharesarereflectedasareductionofretainedearnings.
AllLESOPsharesareconsideredoutstandingforearnings-per-
sharecomputations.
Total(credits)expensesrecordedfortheLESOPwere$(29),
$24and$98in2004,2003and2002,respectively,including$23,
$28and$32ofinterestexpenserelatedtoLESOPdebtanda
(credit)chargetocompensationexpenseof$(52),$(4)and$66.
OfthedividendspaidontheLESOPshares,$52,$61and
$49wereusedin2004,2003and2002,respectively,toservice
LESOPdebt.Includedinthe2004amountwasarepaymentof
debtenteredintoin1999topayinterestontheESOPdebt.Inter-
estexpenseonthisdebtwasrecognizedandreportedasLESOP
interestexpensein1999.Inaddition,thecompanymadeno
contributionsin2004andcontributionsof$26and$102in2003
1 Percent 1 Percent
Increase Decrease
Effect on total service and interest
cost components $ 18 $ (15)
Effect on postretirement benefit
obligation $ 86 $ (98)
PlanAssetsandInvestmentStrategy Thecompany’spension
planweighted-averageassetallocationatDecember31byasset
categoryisasfollows:
U.S. International
Asset Category 2003 2003
Equities 70% 55%
Fixed Income 21% 43%
Real Estate 8% 2%
Other 1% –
Total 100% 100%
Thepensionplansinvestprimarilyinassetcategorieswith
sufficientsize,liquidityandcostefficiencytopermitinvestments
ofreasonablesize.Thepensionplansinvestinassetcategories
thatprovidediversificationbenefitsandareeasilymeasured.
Toassesstheplans’investmentperformance,long-termasset
allocationpolicybenchmarkshavebeenestablished.
FortheprimaryU.S.pensionplan,theChevronTexaco
BoardofDirectorshasestablishedthefollowingapprovedasset
allocationranges:Equities40–70percent,FixedIncome20–65
percent,RealEstate0–15percent.Thesignificantinternational
pensionplansalsohaveestablishedmaximumandminimum
assetallocationrangesthatvarybyeachplan.Actualassetallo-
cationwithinapprovedrangesisbasedonavarietyofcurrent
economicandmarketconditionsandconsiderationofspecific
assetcategoryrisk.
Equitiesincludeinvestmentsinthecompany’scommon
stockintheamountof$8and$6atDecember31,2004and2003,
respectively.The“Other”assetcategoryincludesinvestmentsin
privateequitylimitedpartnerships.
CashContributionsandBenefitPayments In2004,thecompany
contributed$1,332and$311toitsU.S.andinternationalpension
plans,respectively.In2005,thecompanyexpectscontributions
tobeapproximately$250and$150toitsU.S.andinternational
pensionplans,respectively.Actualcontributionamountsare
dependentuponinvestmentreturns,changesinpensionobli-
gations,regulatoryenvironmentsandothereconomicfactors.
Additionalfundingmayultimatelyberequiredifinvestment
returnsareinsufficienttooffsetincreasesinplanobligations.
Thecompanyanticipatespayingotherpostretirement
benefitsofapproximately$220in2005,ascomparedwith
$199in2004.
Thefollowingbenefitpayments,whichincludeestimated
futureservice,areexpectedtobepaidbythecompanyinthe
next10years:
EMPLOYEE BENEFIT PLANS – Continued