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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
July 25, 1994
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TEXACO INC.
(Exact name of registrant as specified in its charter)
Delaware 1-27 74-1383447
(State or other jurisdiction of (Commission File (I.R.S. Employer
incorporation) Number) Identification Number)
2000 Westchester Avenue, 10650
White Plains, New York (Zip Code)
(Address of principal executive offices)
(914) 253-4000
(Registrant's telephone number, including area code)
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Item 5. Other Events
- --------------------
1. On July 25, 1994, the Registrant issued an Earnings Press
Release entitled "Texaco Reports Results for Second Quarter
and First Half 1994," a copy of which is attached hereto as
Exhibit 99.1 and made a part hereof.
Item 7. Financial Statements, Pro Forma Financial Information and
- -----------------------------------------------------------------
Exhibits
- --------
(c) Exhibits
99.1 Press Release issued by Texaco Inc. dated July 25, 1994,
entitled "Texaco Reports Results for the Second Quarter
and First Half 1994."
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
TEXACO INC.
----------------------
(Registrant)
By: R. E. KOCH
----------------------
(Assistant Secretary)
Date: July 25, 1994
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APPENDIX
Description of graphic material included in Exhibit 99.1.
The following information is depicted in graphic form in the Press
Release issued by Texaco Inc. dated July 25, 1994, entitled "Texaco
Reports Results for the Second Quarter and First Half 1994" filed
as Exhibit 99.1 to this Form 8-K:
1. The first graph is located within the fifth paragraph of
Exhibit 99.1. Graph is entitled "Texaco Average U.S. Crude
Price Per Quarter" and is shown in dollars per barrel by
quarter for the year 1993 and first two quarters of 1994. The
Y axis depicts dollars per barrel from $10.00 to $18.00 with
$2.00 increments. The X axis depicts the calendar quarters
for the year 1993 and first two quarters of 1994. The plot
points are as follows:
First Quarter 1993 - $15.46 per barrel
Second Quarter 1993 - $15.70 per barrel
Third Quarter 1993 - $13.55 per barrel
Fourth Quarter 1993 - $12.36 per barrel
First Quarter 1994 - $11.02 per barrel
Second Quarter 1994 - $13.45 per barrel
2. The second graph is located within the ninth paragraph of
Exhibit 99.1. Graph is entitled "Texaco Average U.S. Natural
Gas Price Per Quarter" and is shown in dollars per MCF by
quarters for the year 1993 and first two quarters of 1994.
The Y axis depicts dollars per MCF from $0.00 to $3.00 with
$.50 increments. The X axis depicts the calendar quarters for
the year 1993 and first two quarters of 1994. The plot points
are as follows:
First Quarter 1993 - $1.99 per MCF
Second Quarter 1993 - $2.26 per MCF
Third Quarter 1993 - $2.17 per MCF
Fourth Quarter 1993 - $2.34 per MCF
First Quarter 1994 - $2.32 per MCF
Second Quarter 1994 - $2.02 per MCF
EXHIBIT 99.1
TEXACO REPORTS RESULTS
----------------------
FOR THE SECOND QUARTER AND FIRST HALF 1994
------------------------------------------
FOR IMMEDIATE RELEASE: MONDAY, JULY 25, 1994.
- ---------------------------------------------
WHITE PLAINS, N.Y., July 25 - Texaco Inc. announced today that
consolidated worldwide net income from continuing operations (including
special gains and charges) for the second quarter of 1994 was $115 million,
or $.35 per share, as compared with $312 million, or $1.11 per share, for the
second quarter of 1993. Net income from continuing operations (including
special gains and charges) for the first half of 1994 was $317 million, or
$1.04 per share, as compared with $593 million, or $2.09 per share, for the
first half of 1993.
Second Quarter First Half
-------------- ----------
Texaco Inc. (Millions): 1994 1993 1994 1993
______________________________________________________________________________
Net income from continuing operations before
special items $ 155 $ 312 $ 357 $ 593
Special charges (119) - (119) -
Tax benefit on asset sale 79 - 79 -
----- ----- ------ ------
Total net income from continuing operations 115 312 317 593
Discontinued chemical operations:
Loss from operations - (3) - (6)
Loss on disposal of business (87) - (87) -
----- ----- ------ ------
Total net income $ 28 $ 309 $ 230 $ 587
______________________________________________________________________________
Net income from continuing operations for the second quarter of 1994
included special charges of $119 million related to the company's program to
consolidate some operations and sell marginal activities. The charges included
$88 million for anticipated costs associated with the expected reduction of
approximately 2,500 employees over the next 12 months, as well as charges
to adjust to fair market values certain properties which are being offered
for sale.
Net income from continuing operations for the second quarter of 1994
included $79 million of tax benefits realizable through the sale of an interest
in a subsidiary. Of these benefits, $38 million was realizable due to the
taxable gain on the sale of discontinued chemical operations.
- more -
- 2 -
Net income for the second quarter of 1994 included a charge of $87 million
for discontinued operations relating to the completion of the first phase of a
transaction to sell substantially all of Texaco's worldwide chemical business.
The previously mentioned $38 million tax benefit, coupled with the $87 million
charge for discontinued operations, impacted 1994 earnings by a net charge of
$49 million. At the sale closing, the company received $650 million in cash
and an 11-year subordinated note with a face value of $200 million.
In commenting on 1994s second quarter and six months performance Alfred C.
DeCrane, Jr., Texaco's Chairman of the Board and Chief Executive Officer
stated, "The second quarter 1994 performance reflected upstream benefits from
the steady strengthening of crude oil prices through the period. However,
market conditions precluded recovery of these added costs to the refining and
marketing units. Solid benefits were realized from operating efficiencies and
overhead reductions, but not to sufficient levels to offset this squeeze on
downstream margins. While crude oil prices rose in the period, they still
averaged $3.34 per barrel below the 1993 first half level and $2.25 per barrel
below second quarter 1993.
"The weakened U.S. dollar adversely affected reported earnings, including
a comparative $31 million non-cash charge for currency exchange losses due to
the effect of the weakening of the U.S. dollar against the Pound Sterling on
U.K. deferred income taxes.
"The special charges taken in the period result from major shifts in
operational and organizational functions which are the foundation of the
company's recently announced action plan for growth and enhanced levels of
competitiveness and profitability."
OPERATING EARNINGS FROM CONTINUING OPERATIONS
PETROLEUM AND NATURAL GAS
UNITED STATES
Second Quarter First Half
Exploration & Production (Millions): 1994 1993 1994 1993
______________________________________________________________________________
Operating earnings from continuing
operations before special items $ 121 $ 163 $ 196 $ 296
Special charges (24) - (24) -
----- ----- ----- -----
Total operating earnings $ 97 $ 163 $ 172 $ 296
______________________________________________________________________________
- more -
- 3 -
Comparative earnings in the second quarter of 1994 were adversely impacted
by lower crude oil prices. Although prices have strengthened since the first
quarter of 1994, average prices in the second quarter of 1994 were more than
$2 per barrel below prices for the second quarter of 1993. In addition,
natural gas prices declined $.24 per MCF for the comparative quarters. These
lower prices were partly offset by benefits from continuing reductions in
operating expenses.
For the first half of 1994, earnings were negatively impacted by the more
than $3 per barrel lower average crude oil prices. Partially offsetting the
lower crude prices were continued reductions in operating expenses and slightly
higher natural gas prices.
The company's results in 1994 benefited from its exploration and
development program that has successfully added production.
Special charges for 1994 provide for the estimated cost of employee
separations.
Second Quarter First Half
-------------- ----------
Manufacturing & Marketing (Millions): 1994 1993 1994 1993
_____________________________________________________________________________
Operating earnings from continuing
operations before special items $ 39 $ 60 $ 117 $ 109
Special charges (24) - (24) -
----- ----- ----- -----
Total operating earnings $ 15 $ 60 $ 93 $ 109
_____________________________________________________________________________
Second quarter 1994 margins decreased as a result of rising refinery
feedstock prices that could not be recovered in the marketplace. This
quarterly decrease in margins more than offset the benefits of higher gasoline
sales following the March 1994 successful introduction of Texaco's CleanSystem3
gasolines, as well as the benefits from improved performance at refineries.
Results for the first half of 1994 were somewhat improved due to higher first
quarter margins, mainly on the East and Gulf Coasts, combined with increased
sales of branded gasolines.
Special charges for 1994 relate to the adjustment to fair market value of
certain facilities to be offered for sale and the estimated cost of employee
separations.
- more -
- 4 -
INTERNATIONAL
Second Quarter First Half
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Exploration & Production (Millions): 1994 1993 1994 1993
______________________________________________________________________________
Operating earnings from continuing
operations before special items $ 34 $ 82 $ 79 $ 161
Special charges (16) - (16) -
----- ----- ----- -----
Total operating earnings $ 18 $ 82 $ 63 $ 161
______________________________________________________________________________
The decline in comparative second quarter and first half results were due
to substantially lower crude oil prices as well as higher exploratory expenses.
Partly offsetting these factors were increases in crude oil and natural gas
liquids production, mainly in the U.K. sector of the North Sea, in Indonesia,
and in the Partitioned Neutral Zone between Kuwait and Saudi Arabia. Natural
gas production also increased as compared to the prior year, due to new North
Sea U.K. production.
The 1994 second quarter and first half included a charge of $11 million
compared with benefits of $6 million for the second quarter and first half of
1993 relating to the currency exchange impacts of the Pound Sterling on
deferred income taxes.
Special charges for 1994 related to the adjustment to fair market value
of certain properties being offered for sale and the estimated cost of
employee separations.
Second Quarter First Half
-------------- ----------
Manufacturing & Marketing (Millions): 1994 1993 1994 1993
______________________________________________________________________________
Operating earnings from continuing
operations before special items $ 67 $ 119 $ 192 $ 241
Special charges (38) - (38) -
----- ----- ----- -----
Total operating earnings $ 29 $ 119 $ 154 $ 241
______________________________________________________________________________
Results for 1994 versus 1993 reflected the decline in marketing margins
that occurred during the second quarter, mainly in Europe. Second quarter
results in the Caltex operating areas were unfavorably impacted by currency
exchange effects and refining margins. Partly offsetting these decreases were
higher marketing margins, mainly in Brazil, and increased sales volumes in
Latin America, for the second quarter and first half of 1994. Earnings for
the first half of 1994 benefited from the higher refining margins in Europe,
which occurred in the first quarter of the year.
The 1994 second quarter and first half included a charge of $12 million
compared with benefits of $2 million for the second quarter and first half of
1993 relating to the currency exchange impacts of the Pound Sterling on
deferred income taxes.
Special charges for 1994 related to the estimated cost of employee
separations and the adjustment to fair market value of certain properties
being offered for sale.
- more -
- 5 -
CORPORATE/NONOPERATING RESULTS FROM CONTINUING OPERATIONS
Second Quarter First Half
-------------- ----------
(Millions): 1994 1993 1994 1993
______________________________________________________________________________
Results from continuing operations
before special items $(100) $(110) $(220) $(209)
Special charges (17) - (17) -
Tax benefit on asset sale 79 - 79 -
----- ----- ----- -----
Total corporate/nonoperating $ (38) $(110) $(158) $(209)
______________________________________________________________________________
Corporate/nonoperating expenses for both the second quarter and first
half reflected the impact of lower corporate overhead offset by higher after
tax interest expense. The second quarter 1994 results included a $7 million
gain from the receipt of a cash option payment relative to the sale of a
manufacturing facility currently under construction in Texas.
The second quarter and first half of 1994 included $17 million of charges
related to the estimated cost of employee separations. The 1994 results also
included $79 million of tax benefits realizable through the sale of an interest
in a subsidiary. Of these benefits, $38 million was realizable due to the
taxable gain on the sale of discontinued chemical operations.
CAPITAL AND EXPLORATORY EXPENDITURES
Capital and exploratory expenditures for continuing operations, including
equity in such expenditures of affiliates, were $1,231 million for the first
half of 1994, as compared to $1,155 million for the same period in 1993.
Expenditures for the second quarter of 1994 amounted to $607 million versus
$621 million for the same quarter in 1993.
Upstream expenditures in the United States reflected higher drilling
activities in 1994 with particular emphasis on developmental gas projects
mainly during the first quarter of this year. Internationally, higher
exploration and development activities in Australia, China and Indonesia were
more than offset by lower expenditures in the U.K. North Sea, where successful
project completions have increased production of liquids and natural gas as
compared to 1993.
- more -
- 6 -
Downstream expenditures in 1994 increased as compared to 1993 mainly due
to investments in refinery construction and upgrade projects by Texaco's
affiliate, Caltex, in Thailand and Singapore and higher retail marketing
expenditures in Australia and Singapore. Additionally, Texaco is continuing
its refinery upgrade project in Panama which is scheduled for completion in
1995, and has increased marketing expenditures in the United Kingdom and
selected Latin American countries. In the United States, expenditures
declined due to the completion of refinery upgrade projects underway in 1993
by both Texaco and Texaco's affiliate, Star Enterprise.
- xxx -
NOTE TO EDITORS: Tables for the second quarter and first half are attached.
CONTACTS: Dave Dickson 914-253-4128
Jim Swords 914-253-4103
Jim Reisler 914-253-4389
Cynthia Michener 914-253-4743
- 7 -
Second Quarter First Half
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1994 1993 (b) 1994 1993 (b)
---- ---- ---- ----
FUNCTIONAL NET INCOME ($000,000)
- --------------------------------
Operating Earnings (Losses) from
Continuing Operations (a)
Petroleum and natural gas
Exploration and production
United States $ 97 $ 163 $ 172 $ 296
International 18 82 63 161
----- ----- ----- -----
Total 115 245 235 457
----- ----- ----- -----
Manufacturing, marketing and
distribution
United States 15 60 93 109
International 29 119 154 241
----- ----- ----- -----
Total 44 179 247 350
----- ----- ----- -----
Total petroleum and natural gas 159 424 482 807
Nonpetroleum (6) (2) (7) (5)
----- ----- ----- -----
Total operating earnings 153 422 475 802
Corporate/Nonoperating (a) (38) (110) (158) (209)
----- ----- ----- -----
Net Income from continuing operations 115 312 317 593
Discontinued chemical operations
Loss from operations - (3) - (6)
Loss on disposal (87) - (87) -
----- ----- ----- -----
Total Net Income $ 28 $ 309 $ 230 $ 587
===== ===== ===== =====
Per common share (dollars):
- --------------------------
Net income (loss):
Continuing operations $ .35 $ 1.11 $ 1.04 $ 2.09
Discontinued operations (.34) (.01) (.34) (.02)
------ ------ ------ ------
Total net income $ .01 $ 1.10 $ .70 $ 2.07
Average number of common shares
outstanding (000,000) 259.3 258.8 259.2 258.8
(a) Includes special gains and charges.
(b) Results have been reclassified to separately identify discontinued chemical
operations as appropriate.
- 8 -
Second Quarter First Half
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1994 1993 (b) 1994 1993 (b)
---- ---- ---- ----
OTHER FINANCIAL DATA ($000,000)
- -------------------------------
Revenues from continuing operations $ 8,000 $ 8,773 $15,434 $17,006
Total assets as of June 30 (c) $25,900 $26,301
Stockholders' equity as of June 30 (c) $10,160 $10,198
Total debt as of June 30 (c) $ 6,300 $ 6,678
Capital and exploratory expenditures
Texaco Inc. and subsidiary companies
Exploration and production
United States $ 180 $ 160 $ 450 $ 300
International 142 202 265 378
------- ------- ------- -------
Total 322 362 715 678
------- ------- ------- -------
Manufacturing, marketing and
distribution
United States 52 77 102 130
International 68 46 121 72
------- ------- ------- -------
Total 120 123 223 202
------- ------- ------- -------
Other 8 9 14 16
------- ------- ------- -------
Total Texaco Inc. and
subsidiaries 450 494 952 896
------- ------- ------- -------
Equity in affiliates
United States 26 40 51 77
International 131 87 228 182
------- ------- ------- -------
Total equity in affiliates 157 127 279 259
------- ------- ------- -------
Total continuing
operations 607 621 1,231 1,155
Discontinued chemical operations 1 25 20 48
------- ------- ------- -------
Total $ 608 $ 646 $ 1,251 $ 1,203
======= ======= ======= =======
Dividends paid to common
stockholders $ 208 $ 207 $ 415 $ 414
Dividends per common share (dollars) $ .80 $ .80 $ 1.60 $ 1.60
Dividend requirements for preferred
stockholders $ 25 $ 24 $ 49 $ 51
(b) Results have been reclassified to separately identify discontinued chemical
operations as appropriate.
(c) Preliminary
- 9 -
Second Quarter First Half
-------------- ----------
1994 1993 1994 1993
---- ---- ---- ----
OPERATING DATA - INCLUDING INTERESTS
- ------------------------------------
IN AFFILIATES
-------------
Net production of crude oil and
natural gas liquids (000 BPD)
United States 408 423 408 426
Other Western Hemisphere 20 20 20 21
Europe 104 71 110 74
Other Eastern Hemisphere 231 201 235 199
----- ----- ----- -----
Total 763 715 773 720
Net production of natural gas -
available for sale (000 MCFPD)
United States 1,764 1,713 1,719 1,738
International 281 205 306 223
----- ----- ----- -----
Total 2,045 1,918 2,025 1,961
Natural gas sales (000 MCFPD)
United States 3,175 2,745 3,045 2,762
International 295 219 322 240
----- ----- ----- -----
Total 3,470 2,964 3,367 3,002
Natural gas liquids sales
(including purchased LPGs) (000 BPD)
United States 196 166 196 188
International 56 52 58 45
----- ----- ----- -----
Total 252 218 254 233
Refinery input (000 BPD)
United States 665 681 640 675
Other Western Hemisphere 37 57 44 55
Europe 322 314 325 322
Other Eastern Hemisphere 443 409 460 429
----- ----- ----- -----
Total 1,467 1,461 1,469 1,481
Refined product sales (000 BPD)
United States 872 821 843 817
Other Western Hemisphere 297 281 304 286
Europe 461 465 462 472
Other Eastern Hemisphere 676 704 700 731
----- ----- ----- -----
Total 2,306 2,271 2,309 2,306
- 10 -
Impact of Special Items On Functional Net Income ($000,000)
- -----------------------------------------------------------
Second Quarter First Half
-------------- ----------
1994 1993 (b) 1994 1993 (b)
---- ---- ---- ----
Operating Earnings (Losses) from Continuing
Operations
Exploration and production
United States
Operating earnings before spec. items $ 121 $ 163 $ 196 $ 296
Special charges (24) - (24) -
------ ------ ------ ------
Total operating earnings 97 163 172 296
------ ------ ------ ------
International
Operating earnings before spec. items 34 82 79 161
Special charges (16) - (16) -
------ ------ ------ ------
Total operating earnings 18 82 63 161
------ ------ ------ ------
Manufacturing, marketing and distribution
United States
Operating earnings before spec. items 39 60 117 109
Special charges (24) - (24) -
------ ------ ------ ------
Total operating earnings 15 60 93 109
------ ------ ------ ------
International
Operating earnings before spec. items 67 119 192 241
Special charges (38) - (38) -
------ ------ ------ ------
Total operating earnings 29 119 154 241
------ ------ ------ ------
Nonpetroleum
Operating earnings before spec. items (6) (2) (7) (5)
Special charges - - - -
------ ------ ------ ------
Total operating earnings (6) (2) (7) (5)
------ ------ ------ ------
Corporate/Nonoperating
Total before spec. items (100) (110) (220) (209)
Special charges/gains 62 - 62 -
------ ------ ------ ------
Total Corporate/Nonoperating (38) (110) (158) (209)
------ ------ ------ ------
Net Income from continuing operations 115 312 317 593
------ ------ ------ ------
Discontinued chemical operations
Loss from operations - (3) - (6)
Loss on disposal (87) - (87) -
------ ------ ------ ------
Net Loss from discontinued operations (87) (3) (87) (6)
------ ------ ------ ------
Total Net Income, as reported $ 28 $ 309 $ 230 $ 587
====== ====== ====== ======
(b) Results have been reclassified to separately identify discontinued chemical
operations as appropriate.
