EXHIBIT 11
TEXACO INC. AND SUBSIDIARY COMPANIES
COMPUTATION OF EARNINGS PER SHARE OF COMMON STOCK
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
----------------------------------------------------
(Millions of dollars, except per share amounts)
Primary Net Income Per Common Share 1995 1994 1993
- ----------------------------------- ---- ---- ----
Net income from continuing operations, before
cumulative effect of accounting change $ 728 $ 979 $ 1,259
Net loss from discontinued operations -- (69) (191)
Cumulative effect of accounting change (121) -- --
------- --------- ---------
Net income 607 910 1,068
Less: Preferred stock dividend requirements (60) (91) (101)
------- --------- ---------
Primary net income available for common stock $ 547 $ 819 $ 967
======== ========= =========
Average number of primary common shares
outstanding (thousands) 259,983 258,813 258,923
======= ======= =======
Primary net income per common share $ 2.10 $ 3.17 $ 3.74
======== ========= =========
Fully Diluted Net Income Per Common Share
- -----------------------------------------
Net income $ 607 $ 910 $ 1,068
Less: Preferred stock dividend requirements of
non-dilutive and anti-dilutive issues and
adjustments to net income associated with
dilutive securities (60) (90) (64)
-------- --------- --------
Fully diluted net income $ 547 $ 820 $ 1,004
======== ========= =========
Average number of primary common shares
outstanding (thousands) 259,983 258,813 258,923
Additional shares outstanding assuming full
conversion of dilutive convertible securities
into common stock (thousands):
Convertible debentures 147 148 148
Series B ESOP Convertible
Preferred Stock -- -- 10,499
Other 408 69 81
-------- --------- ---------
Average number of fully diluted common
shares outstanding (thousands) 260,538 259,030 269,651
======== ========= =========
Fully diluted net income per common share $ 2.10 $ 3.17 $ 3.72
======== ========= =========
EXHIBIT 12.1
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
OF TEXACO ON A TOTAL ENTERPRISE BASIS (UNAUDITED)
FOR EACH OF THE FIVE YEARS ENDED DECEMBER 31, 1995 (a)
(in millions of dollars)
Years Ended December 31,
----------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
Income from continuing operations, before provision or
benefit for income taxes and cumulative effect of
accounting changes effective 1-1-92 and 1-1-95........ $1,201 $1,409 $1,392 $1,707 $1,744
Dividends from less than 50% owned companies
more or (less) than equity in net income.............. 1 (1) (8) (9) 5
Minority interest in net income.......................... 54 44 17 18 16
Previously capitalized interest charged to
income during the period.............................. 33 29 33 30 23
----- ----- ----- ----- -----
Total earnings................................... 1,289 1,481 1,434 1,746 1,788
----- ----- ----- ----- -----
Fixed charges:
Items charged to income:
Interest charges.................................... 614 594 546 551 644
Interest factor attributable to operating
lease rentals.................................. 110 118 91 94 76
Preferred stock dividends of subsidiaries
guaranteed by Texaco Inc....................... 36 31 4 -- --
----- ----- ----- ----- -----
Total items charged to income.................... 760 743 641 645 720
Interest capitalized.................................. 28 21 57 109 80
Interest on ESOP debt guaranteed by Texaco Inc........ 14 14 14 18 26
----- ----- ----- ----- -----
Total fixed charges.............................. 802 778 712 772 826
----- ----- ----- ----- -----
Earnings available for payment of fixed charges.......... $2,049 $2,224 $2,075 $2,391 $2,508
====== ====== ====== ====== ======
(Total earnings + Total items charged to income)
Ratio of earnings to fixed charges of Texaco
on a total enterprise basis........................... 2.55 2.86 2.91 3.10 3.04
==== ==== ==== ==== ====
(a) Excludes discontinued operations.
EXHIBIT 12.2
DEFINITIONS OF SELECTED FINANCIAL RATIOS
CURRENT RATIO
- -------------
Current assets divided by current liabilities.
RETURN ON AVERAGE STOCKHOLDERS' EQUITY
- --------------------------------------
Net income divided by average stockholders' equity. Average
stockholders' equity is computed using the average of the monthly
stockholders' equity balances.
RETURN ON AVERAGE CAPITAL EMPLOYED
- ----------------------------------
Net income plus minority interest plus after-tax interest expense
divided by average capital employed. Capital employed consists of
stockholders' equity, total debt and minority interest. Average capital
employed is computed on a four-quarter average basis.
TOTAL DEBT TO TOTAL BORROWED AND INVESTED CAPITAL
- -------------------------------------------------
Total debt, including capital lease obligations, divided by total debt
plus minority interest liability and stockholders' equity.
EXHIBIT 13
===========================
Exploration and Production
===========================
Our upstream portfolio contains pro-
jects for increasing production and
supporting earnings growth both in
the near term and well into the 21st
century. Applying technology to
develop our core properties around the
world, we are adding valuable reserves
and expanding profitable production
while sustaining our top-quartile perfor-
mance in reserve replacement and find-
ing and development costs.
During 1995, we replaced our com-
bined worldwide liquid and gas produc-
tion at a rate of 129%. For the year, our
worldwide finding and development
costs were $3.29 per barrel of oil equiv-
alent, compared with $3.54 in 1994.
And we continued to drive down our
lease operating costs with a 14%
decrease over the last two years.
GRAPHIC/IMAGE/ILLUSTRATION MATERIAL APPEARS HERE.
SEE APPENDIX, PART A, ITEM A1.
Upstream Growth in the U.S.
- ---------------------------
Texaco's 1995 upstream performance
in the U.S. confirmed our growth
strategy of focusing people, capital
and technology on high-potential
core properties.
With a 54% increase over 1994 lev-
els for operating earnings before special
items, we exceeded our own ambitious
targets. And we attained this earnings
success concurrent with the sale of non-
core, underperforming assets, including
half of our domestic producing fields,
which brought a modest, temporary
decline in overall production. Production
from our remaining core properties
showed no decline.
Texaco's daily U.S. net production in
1995 averaged 381,500 barrels of crude
oil and natural gas liquids and 1.6 bil-
lion cubic feet of natural gas. And we
realized significant additions of prof-
itable reserves through our application
of leading-edge technology in explo-
ration, drilling and enhanced oil recov-
ery. Excluding sales and purchases, we
replaced U.S. production at a rate of
116% in 1995.
In keeping with our continuous drive
for efficiency improvement, we
decreased lease operating expenses
again in 1995, from $4.33 per barrel of
oil equivalent in 1994 to $3.97, sur-
passing our stretch target - a reduction
of $0.50 a barrel in these expenses,
from $4.60 to $4.10 between 1993 and
the end of 1996.
Through focused efforts such as
this, we improved the profitability of our
U.S. upstream operations, driving return
on capital employed to 14.9%, com-
pared with an 8.5% return in 1994.
Growing Mature Asset Value in the U.S.
- --------------------------------------
Advanced technology and dedicated
work teams pursuing stretch objec-
tives are increasing the value of our
mature domestic assets. Our 100-
year-old Kern River field near
Bakersfield, California, demonstrates
the effectiveness of this strategy.
As recently as five years ago, pro-
jections showed Kern River production
declining from an average of 81,000
barrels of oil a day to the range of
45,000 to 50,000 barrels a day by 1995.
To reverse this trend, highly focused
work teams developed and implemented
innovative methods of heat manage-
ment and cost-effective steamflood
techniques. Their efforts have increased
both productivity and reserve recovery at
our largest U.S. producing operation and
one of the world's largest steamflood
projects. During 1995, production at the
field increased by 10,000 barrels a day,
to more than 90,000 barrels, the highest
producing rate since 1986.
We also added reserves of 67 mil-
lion barrels of oil at Kern River in 1995
and have identified significant addi-
tional reserves that may be added later
through the use of increasingly
advanced reservoir imaging techniques.
We have also focused our ideas and
technology on energy conservation and
the environment at Kern River. On-site
cogeneration plants, fueled by natural
gas, convert half of the field's 30 million
gallons a day of produced water into
steam for enhanced oil recovery and
electricity to operate the field. And we
designed a process to treat and recycle
Texaco Inc. 1995 Annual Report to Stockholders Page 6.
the remainder of Kern River's produced
water for agricultural use, benefiting
local farmers and eliminating the need
for costly underground re-injection.
In our operations across the U.S.,
the integration of technology and team
management is bringing new life to
mature fields. By applying enhanced oil
recovery techniques, three-dimensional
seismic imaging and directional drilling,
we are realizing solid production growth.
For example:
* Carbon dioxide flooding of fields in the
Permian Basin of West Texas increased
1995 production by 13%.
* In southern Louisiana, 3-D seismic and
advancements in directional drilling led
to an 80% drilling success rate and a
daily production increase of 16,000 bar-
rels of oil equivalent over 1994 levels.
Deepwater Discoveries Increase Gulf Resources
- ---------------------------------------------
As we work to maximize the value of
existing assets, we are also expand-
ing our portfolio, with oil discoveries
in the deepwater Gulf of Mexico.
Aided by our development and
application of sophisticated exploration
technology, we drilled three rank wildcat
wells last year, all of which resulted in
discoveries. The wells - on the
Petronius, Fuji and Gemini prospects
(owned by Texaco 50%, 100% and 60%
respectively) - found hydrocarbons in
water depths ranging from approxi-
mately 1,700 feet to more than 4,000
feet.
Following our strategy of accelerat-
ing upstream projects, we began
appraisal drilling of Petronius late in
1995, with the expectation of bringing it
to commercial development within three
years. Testing and appraisal of Fuji and
Gemini are scheduled in 1996.
Using technology to manage eco-
nomic risk and improve the profitability
of deepwater prospects, Texaco devel-
oped a vertical cable seismic technique
that provides higher quality images of
subsurface geology than conventional
3-D seismic. (See pages 8 and 9.)
The application of advanced tech-
nology also plays a key role in the devel-
opment of our core properties on the
Gulf's shallower Outer Continental Shelf.
At a water depth of 850 feet, our 50%-
owned and operated Shasta Prospect in
the Green Canyon area incorporates pro-
duction equipment installed right on the
sea floor that links a number of produc-
tion wells. This technology, which Texaco
has used successfully in the North Sea,
eliminates the need for multiple produc-
ing platforms. Producing 58 million
cubic feet of gas a day, Shasta is a
model for future subsea development in
the Gulf.
As we execute plans for develop-
ment of deepwater prospects, we are
leveraging our leadership within the
DeepStar Project, a consortium of 18 oil
and gas producers, 45 vendors, manu-
facturers and contractors, and represen-
tatives of interested U.S. agencies.
Through this consortium, we are solving
technical problems of deepwater
drilling, mooring, multi-phase flow and
subsea controls. DeepStar's research
will reduce both the cost and the risk
associated with bringing expensive
deepwater fields onstream.
GRAPHIC/IMAGE/ILLUSTRATION MATERIAL APPEARS HERE.
SEE APPENDIX, PART A, ITEM A2.
Capitalizing on Natural Gas Initiatives
- ---------------------------------------
Within our domestic upstream opera-
tions, Texaco's natural gas business
creates value through a wellhead-to-
burner-tip strategy that integrates our
ability to gather, process, store, trans-
port and market natural gas and gas
liquids.
The Texaco Gulf Coast Star Center
serves the premier U.S. marketplace for
buyers and sellers of natural gas, han-
dling the sale of Texaco's daily produc-
tion of 1.6 billion cubic feet of equity
gas, along with another 1.2 billion cubic
feet a day of third-party gas transac-
tions. In 1995, customer surveys by
independent industry research firms
rated Texaco's Star Center a leader in
reliability, competitive pricing and cus-
tomer satisfaction.
Texaco Inc. 1995 Annual Report to Stockholders Page 7.
GRAPHIC/IMAGE/ILLUSTRATION MATERIAL APPEARS HERE.
SEE APPENDIX, PART A, ITEM A3.
Texaco Inc. 1995 Annual Report to Stockholders Page 8 & 9.
The gas marketing services pro-
vided by our Sabine Hub Services
Company at the Henry Hub, the settle-
ment point for gas contracts on the New
York Mercantile Exchange, are also a
growth area for Texaco. Sabine's prof-
itable intra-hub transfer service, which
facilitates trading activities at the Henry
Hub, increased by 50% in 1995.
International Upstream Builds Profitability
- -------------------------------------------
Outside the U.S., our upstream port-
folio continues to provide growth
opportunities in production and
profitability. Teams across the globe
are successfully applying new tech-
nology and swiftly executing plans to
achieve stretch targets that will lead to
increased profitable production - both
now and well into the 21st century.
GRAPHIC/IMAGE/ILLUSTRATION MATERIAL APPEARS HERE.
SEE APPENDIX, PART A, ITEM A4.
* In Latin America, we concluded a
four-year program to rationalize mar-
ginal assets with the sale of the last
of our heavy oil fields in Colombia.
At the same time, we moved forward
with aggressive programs in our core
fields in Colombia and Trinidad. Daily
production of natural gas from opera-
tions in those countries during 1995
was up nearly 8% over 1994 levels,
with more prospects for expansion
beginning in 1996.
Our contract negotiations with
Colombia's national oil company Eco-
petrol, covering the Guajira gas field,
extended our presence in that country
until 2016 and cleared the way for
construction of a second platform in
Guajira by late 1996.
Texaco's 50% share of produc-
tion from Guajira's existing platform
averaged 119 million cubic feet of
gas a day in 1995. We expect the
new platform to raise total daily
production to 500 million cubic feet
a day by the year 2000 to meet
increasing demand.
Trinidad's Dolphin field (50%
Texaco) is poised to contribute signifi-
cantly to Texaco's international gas
production, beginning in the first
quarter of 1996. We anticipate that
field production will peak in 2003 at
275 million cubic feet of gas a day.
Dolphin's gross proved reserves of 550
billion cubic feet of gas are expected
to increase substantially as
development continues.
* In the North Sea, Texaco's production
grew 58% between 1993 and 1995, and
we are stretching to double the 1995
level by the year 2000.
Production added from our newer
fields - Strathspey (67% Texaco) and
Orwell (50% Texaco) - along with
restored production from the Piper field
(23.5% Texaco), contributed to net pro-
duction in 1995 of 150,000 barrels of oil
equivalent a day. Reserve additions
replaced 133% of 1995 production.
Our strategies for reaching our
stretch targets for production and profit
in the North Sea center on applying
advanced technologies to the acceler-
ated development of the Captain and
Erskine projects.
Using team management skills,
we completed the first phase of
Captain's development drilling in 1995,
four months ahead of schedule and
more than $6 million under budget.
We expect the field to be onstream in
late 1996, producing 60,000 barrels
of oil equivalent a day.
Development of these resources
relies on Texaco's demonstrated capabil-
ity in horizontal drilling techniques and
advanced production technology, such
as floating production systems and
high-rate electric submersible pumps.
Advanced technology makes pos-
sible the development of our 50%-owned
Erskine field's estimated recoverable
reserves of 330 billion cubic feet of gas
and 75 million barrels of condensate.
Sophisticated 3-D imaging and reservoir
modeling techniques and a low-cost,
unmanned production platform are turn-
ing a discovery into a profitable asset.
Erskine is the first high-pressure/
high-temperature field in the North Sea.
By transferring our technological exper-
tise employed for similar conditions in
the Gulf of Mexico, we can bring Erskine
Texaco Inc. 1995 Annual Report to Stockholders Page 10.
onstream in 1997, producing an antici-
pated 25,000 barrels a day of conden-
sate and 95 million cubic feet of gas.
In the Danish North Sea, the Danish
Underground Consortium (DUC), in
which Texaco has a 15% interest, is
exceeding its stretch targets. With addi-
tional development and the enhance-
ment of existing production, DUC
projects a 50% increase in gas sales by
1997. DUC achieved record daily pro-
duction of 186,000 barrels of oil and
511 million cubic feet of gas in 1995.
And looking even farther ahead, to
secure Texaco's profitability into the next
century, we are focusing our plans in the
North Sea on several projects that will
contribute to the long-range growth of
our production base and earnings.
Development of these prospects can be
accelerated because of Texaco's techno-
logical expertise in the North Sea.
Concurrently, we are pursuing explo-
ration opportunities in new areas, such
as the deepwater region West of Britain,
which may become a major hydrocarbon
province during the next century. We
have established a solid acreage posi-
tion in the region, including a 50%
interest in five prime blocks acquired in
1995. We will begin a focused explo-
ration program during 1996 to evaluate
these opportunities.
* In Russia, Texaco continues to apply
intellectual technology - fresh ideas
and new approaches - through the
Timan Pechora Company L.L.C. The
company was formed to negotiate and
implement a production-sharing agree-
ment with the Russian Government,
covering a large area in the oil-rich
Timan Pechora Basin. In far eastern
Russia, Texaco and Mobil are negotiat-
ing a production-sharing agreement
covering the 2,700-square-mile Kirinsky
block, offshore Sakhalin Island. The
Russian Government has taken initial
steps to establish laws governing such
arrangements, and Texaco continues
to work with the government, sharing
our ideas and world experience. Never-
the-less, much more remains to be
done to forge legislation required to
encourage major investments. Texaco
will make only minimal expenditures
while it awaits more supportive
legislation.
* In West Africa, with the return of a more
stable climate in Angola, we have
expanded our activity. Offshore Angola, in
a block that Texaco operates with a 20%
interest, six fields are scheduled for devel-
opment in 1996, potentially doubling our
share of crude oil production from 7,000
barrels a day in 1995 to 15,000 barrels by
1997. And leveraging expertise we have
gained in the Gulf of Mexico's deep water,
we have leased promising blocks offshore
Angola and Nigeria. Using 3-D seismic
and leading-edge imaging software, we
are assembling a drilling campaign for
those leases.
GRAPHIC/IMAGE/ILLUSTRATION MATERIAL APPEARS HERE.
SEE APPENDIX, PART A, ITEM A5.
* In the Partitioned Neutral Zone (PNZ)
between Saudi Arabia and Kuwait, we
are transforming our highly prospective
onshore interests, covering 50% of the
PNZ's petroleum resources, to reach new
heights of production and profitability.
During 1995, we completed the first
phase of a major new development pro-
gram, raising average daily gross pro-
duction to a record 170,000 barrels of oil
by year-end. This phase, undertaken with
the Kuwait Oil Company, concentrated on
the South Umm Gudair field, where ex-
tensive workovers of existing wells and
the addition of 12 new development wells
drove that field's daily production from
32,000 barrels of oil in August 1994 to
115,000 barrels by the end of 1995.
The second phase of the program,
begun in late 1995, focuses on the
Wafra field. The first 3-D seismic survey
of Wafra, along with horizontal drilling
and enhanced recovery projects, will
transform this mature asset into a new
opportunity for value creation. These
activities could more than triple PNZ
production over 1994 levels by 2000.
* In Indonesia, we also are creating new
value from old fields through the use of
technology and teamwork. Even after
almost six decades and eight billion bar-
rels of oil production, our affiliate P.T.
Texaco Inc. 1995 Annual Report to Stockholders Page 11.
GRAPHIC/IMAGE/ILLUSTRATION MATERIAL APPEARS HERE.
SEE APPENDIX, PART A, ITEM A6.
Texaco Inc. 1995 Annual Report to Stockholders Page 12 & 13.
Caltex Pacific Indonesia (CPI), owned
equally by Texaco and Chevron, contin-
ues to be Indonesia's largest oil pro-
ducer, accounting for 45% of that
nation's oil production. Since 1993, CPI,
as operator for the production-sharing
contract, has raised daily production for
the entire concession from an average of
675,000 barrels to a record 753,000 bar-
rels in 1995. Texaco's share was 119,000
barrels a day.
A major contributor to this production
is the Duri field in central Sumatra, the
world's largest steamflood project. During
1995, Duri produced its billionth barrel of
crude oil, with daily production from the
field averaging 300,000 barrels of oil.
Duri's production is expected to reach
330,000 barrels a day by 1999, of which
Texaco's net share will be 52,000 barrels.
(See pages 12 and 13.)
Meanwhile, we anticipate that an
enhanced recovery waterflood project in
development at CPI's Minas field in
Sumatra will raise production there from
208,000 to 250,000 barrels a day by
1998. Overall, recoverable reserves in
CPI's contract areas in central Sumatra
currently total some two billion barrels
of oil, with the prospect for the addition
of significantly more reserves.
GRAPHIC/IMAGE/ILLUSTRATION MATERIAL APPEARS HERE.
SEE APPENDIX, PART A, ITEM A7.
* In China, a new strategic core area is
taking shape. In the South China Sea,
the CACT operating consortium of
Agip, Chevron, Texaco and their new
partner, the China National Offshore
Oil Company, added two new fields in
1995, more than doubling production
to 115,000 barrels of oil a day, of which
Texaco's share is 16%.
Building upon our long, successful
relationship with China's petroleum
interests, we are moving onshore with
important new exploration opportunities.
In northwest China, Texaco has a 20%
interest in an international consortium
in the Tarim Basin, a vast desert region
with enormous hydrocarbon potential.
And in central China, the Chinese
National Petroleum Company awarded
Texaco a production-sharing contract
covering more than six million highly
prospective acres in the Sichuan Basin.
In addition to its attractive exploration
potential, the contract area is sur-
rounded by established gas fields and
pipelines, serving an expanding gas
market nearby.
* In the Pacific Rim, still more solid
opportunities fill Texaco's portfolio,
enhancing prospects for profitability
early in the next century. During 1995,
appraisal drilling continued on the
Gorgon natural gas field offshore
western Australia, and a 3-D seismic
program was conducted at the nearby
Chrysaor discovery. These activities are
part of a focused plan to add significant
reserves of natural gas in the growing
Pacific Rim market.
To capture an additional share of
the Asian region's gas market in the
nearer term, we continued exploration in
the Gulf of Thailand and acquired an
exploration block in Myanmar's Gulf of
Martaban, north of Texaco's recently
discovered Yetagun gas field.
Targeting Future Growth
- -----------------------
We are determined that the substan-
tial progress we made in expanding
Texaco's worldwide upstream busi-
ness during 1995 will continue as a
growth pattern over the years
ahead. Only in that way can we achieve
the demanding targets we have set for
ourselves by the turn of the century.
These targets include increasing world-
wide production by 30%, continuing
to lower our per-barrel finding and
development costs and sustaining first-
quartile performance among our com-
petitors in worldwide reserve additions
and lifting costs. Our ultimate goal is to
achieve a return on upstream invest-
ment that will propel Texaco into the top
quartile among its peer companies in
earnings growth and return on capital
employed.
Texaco Inc. 1995 Annual Report to Stockholders Page 14.
============================
Manufacturing and Marketing
============================
In 1995, Texaco's downstream
operations faced the same
challenges of product surpluses
and weak margins that affected so
much of the industry worldwide.
Our 1995 financial results reflect
these constraints on earnings,
underscoring the importance of
executing our strategy to "make
our own margins"-achieving the
stretch targets we've set for
improved reliability and utilization
in our refineries, and persistently
driving down costs. Meanwhile, we
are expanding in profitable
markets, withdrawing from
marginal ones, and capturing new
sources of revenue through
enhanced customer service and
added value from alliances and
associations.
Texaco Inc. 1995 Annual Report to Stockholders Page 15.
============================
Manufacturing and Marketing
============================
Operational results at Texaco's four
wholly owned U.S. refineries in Los
Angeles and Bakersfield, California,
El Dorado, Kansas, and Anacortes,
Washington, illustrate our progress
in improving manufacturing efficiency
to make our own margins. Measured
against 1993, the base year for the
goals of our growth plan, we posted
gains in a number of critical areas in
1995.
* Overall plant utilization increased 17%.
* Plant throughput rose 12%.
* Energy efficiency improved 12%.
* Expense incurred through unscheduled downtime decreased 47%.
* Safety performance improved 46%.
* Overhead costs decreased 25%.
GRAPHIC/IMAGE/ILLUSTRATION MATERIAL APPEARS HERE.
SEE APPENDIX, PART A, ITEM A8.
At the three refineries of Star
Enterprise, our 50/50 joint venture with
the Saudi Arabian Oil Company - in Port
Arthur, Texas; Convent, Louisiana; and
Delaware City, Delaware - team efforts
to improve efficiency were masked by an
extensive scheduled upgrading and
maintenance program in 1995.
During the year, all three Star
Enterprise plants completed major
upgrades in their fluid catalytic crack-
ing units. These projects will raise yields
of gasoline and other high-end products
by more than 22,000 barrels a day.
Texaco is applying technology devel-
oped in our laboratories, as
well as intellectual technology, to find the most
cost-effective ways to conform to ever-
growing environmental regulations. As
an example, our California refineries will
produce California-mandated reformu-
lated gasoline at what we believe is a
competitive cost advantage.
Adapting to the Global Challenge
- --------------------------------
Outside the U.S., Texaco owns or has
interests in 19 refineries, including
our wholly owned Pembroke refinery
in the U.K. In 1995, this plant con-
tinued to experience the pressure of
European overcapacity and oversupply,
coupled with declining demand for
gasoline in Europe as use of diesel fuel
increases.
To mitigate the impact of these
industry conditions, the Pembroke team
is creating its own margins by reducing
costs, increasing energy efficiency,
upgrading refinery yields and enhancing
safety and reliability. These actions
resulted in a 25% improvement in the
refinery's gross margin in 1995.
We have also taken steps to ensure
that our 35%-owned Nerefco refinery in
Rotterdam remains a low-cost competi-
tor in the European refining industry.
Early in 1996, we announced the consol-
idation of the refinery's two linked facili-
ties at one site. Planned improvements
will enhance the refinery's profitability.
In the expanding markets of Latin
America and the Pacific Rim, mean-
while, our refining interests are well
positioned to benefit from regional
growth in energy demand.
An upgrade at our wholly owned
refinery in Panama, completed in 1995,
will increase its production to 60,000
barrels a day. This plant supports
Texaco's strong marketing position in
Central America. It also ensures a cost-
competitive supply of bunker fuel for
ships traversing the Panama Canal, a
niche market for Texaco.
Through Caltex, Texaco's 50% joint
venture with Chevron, we have focused
our refinery investments on projects
designed to increase production of higher
value, lighter products that meet strin-
gent environmental standards. In 1995,
new residuum fluid catalytic crackers
came onstream at Caltex's 50%-owned
Honam refinery in Korea and at its 33%-
owned Singapore refinery. Caltex also
has a 64% share in a new 130,000-
barrel-a-day refinery in Thailand, which
will start up in mid-1996.
As part of its strategy to exit mar-
ginal areas and redirect the funds to
projects with better growth potential,
Caltex announced in late 1995 its plan
to sell its 50% interest in Japan's
Nippon Petroleum Refining Company,
Limited to its partner, Nippon Oil Company,
for approximately $2 billion.
Caltex will close the sale in April 1996.
Texaco Inc. 1995 Annual Report to Stockholders Page 16.
Leveraging Gasification Technology
- ----------------------------------
Our patented Texaco Gasification
Process converts hydrocarbon fuels
into clean-burning synthesis gas, or
syngas, to produce electricity, chemi-
cals, fuels and industrial gases.
We leverage that technology to
improve efficiency and environmental
performance in our own refining opera-
tions and license the technology to other
major refiners around the world.
Gasification at our refinery in El
Dorado, Kansas, will convert low-grade
petroleum coke and other refinery
wastes into syngas to produce all of the
plant's electricity and 40% of its steam
requirements, reducing the refinery's
costs of energy and handling wastes.
Along with its applications in the
refining industry, the Texaco Gasification
Process has gained wide acceptance in
other sectors. In China, for example,
during 1995, we signed a general
license agreement for nine plants to
produce chemical fertilizer. Texaco now
has concluded more than 20 gasifica-
tion agreements in China since 1978.
Maximizing Our Midstream Assets
- -------------------------------
Our subsidiary Texaco Trading and
Transportation Inc. (TTTI) has inter-
ests in 30,000 miles of pipelines that
transport some three million barrels
a day of crude oil, natural gas liquids
and refined products within continental
and offshore areas of the U.S.
The team in TTTI works across divi-
sion boundaries, supplying Texaco's
wholly owned refineries with desirable
crude slates at low delivered cost and
providing low-cost, reliable transporta-
tion for Texaco's equity crude and
refined products. TTTI's marketing,
trucking and pipeline operations also
serve the changing crude and product
needs of third-party customers.
Texaco has growth expectations for
its pipeline system, too. In February
1996, TTTI entered into an agreement
to develop a pipeline in the Gulf of
Mexico, which will support Texaco's
future crude production from deepwater
fields, as well as handling third-party
volumes. Other pipelines planned on
the West Coast, in the mid-continent
region and in Canada will generate
value from movements of Texaco and
third-party crude oil and products.
Marketing Initiatives Build on Strength
- ---------------------------------------
Texaco's strong 1995 performance in
the growth markets of Latin
America and, through our affiliate
Caltex, in the Asia-Pacific region,
set the standard for our worldwide
marketing operations. In Latin America,
we posted a sales volume increase of
9% over 1994. In its preferred markets,
Caltex sustained a strong average mar-
ket share of 18% in motor fuel sales
and 20% in lubricants.
Along with these performance
gains, our strength in marketing
CleanSystem3 (R) (Registered) gasolines, Havoline
Formula3 (R) (Registered) motor oil and our new long-
life anti-freeze/coolant products assures
consumers that we are delivering the
top-quality products they rightly expect
from Texaco brands.
Capitalizing on this powerful brand
identity, we have launched our Global
Brand Initiative, a strategy to differenti-
ate Texaco products, services and facili
ties by focusing on the quality and
convenience our worldwide customers demand.
GRAPHIC/IMAGE/ILLUSTRATION MATERIAL APPEARS HERE.
SEE APPENDIX, PART A, ITEM A9.
U.S. Strategies Target Retail Customers
- ---------------------------------------
Our strategy to make our own mar-
gins also extends to our marketing
activities, as we use alliances and
other initiatives to add new rev-
enue streams.
In the U.S., during 1995, revenues
from our convenience stores and quick
serve restaurants, or "QSRs," contin-
ued to grow, and sales of our premium
grade gasolines also climbed.
At year-end, we had more than 400
Star Marts (R) (Registered) in the Texaco and Star
Texaco Inc. 1995 Annual Report to Stockholders Page 17.
GRAPHIC/IMAGE/ILLUSTRATION MATERIAL APPEARS HERE.
SEE APPENDIX, PART A, ITEM A10.
Texaco Inc. 1995 Annual Report to Stockholders Page 18 & 19.
Enterprise investment chains. By the
year 2000, our expansion program for
the two systems will add nearly 1,400
Star Marts, along with QSRs at some
550 of these locations.
At the same time, we are burnish-
ing the Texaco image with the intro-
duction of a new station design that
we believe will attract additional cus-
tomers and increase profitability. Most
of these newly built or remodeled sta-
tions will incorporate a Star Mart and
one or more QSRs, which we are co-
developing with such franchisers as
Subway (R) (Registered), Taco Bell (R) (Registered)
and Pizza Hut (R) (Registered).
(See pages 18 and 19.)
Lubricants Add Value and Profitable Volumes
- -------------------------------------------
Texaco's lubricant products are inte-
gral to our global marketing strate-
gies. Havoline Formula3, the
top-selling motor oil among major
oil companies, is distributed in
more than 100 countries. And we are
developing other products that are mak-
ing inroads in the international auto
industry.
GRAPHIC/IMAGE/ILLUSTRATION MATERIAL APPEARS HERE.
SEE APPENDIX, PART A, ITEM A11.
In 1995, we introduced Havoline
Extended Life Anti-Freeze/Coolant (R) (Registered), a
revolutionary technology developed by
Texaco researchers at our labs in
Belgium and the U.S., which protects
vehicles much longer than conven-
tional coolants. In the U.S., General
Motors selected this product, under the
name Havoline DEX-COOL(TM) (Trademark), as the
factory-fill coolant in its 1996 model
automobiles and light trucks. Auto
manufacturers in Europe and Latin
America also use this patented Texaco
technology as the factory-fill product in
their vehicles.
As we expand our international
lubricants business, we benefit from
certifying our proprietary lubricant
plants to the ISO 9000 standard. In
1995, all of Texaco's U.S. lube plants
received this credential, and our major
blending plants in Europe and Latin
America are also certified to the
ISO 9000 standard.
In the U.S. automotive lubricants
market, we continue to respond to
motorists' growing demand for quick oil
change by extending our network of
stand-alone Xpress Lube (R) (Registered) facilities. We
are also expanding our profitable Star
Lube (R) (Registered) network with 40 new locations
connected to Texaco retail outlets.
Growing Latin American Markets
- ------------------------------
Texaco sells fuels and lubricant
products in 44 countries of Latin
America and the Caribbean, where
increasing political and social sta-
bility affords opportunities for con-
tinued growth. In these markets, with
energy demand growth of about 4% a
year, Texaco's sales of refined petroleum
products increased 9% in 1995, to a
total of some 355,000 barrels a day.
Earnings from Latin American marketing
operations increased 17% in 1995.
This growth is grounded on a solid
base of experience in customer satis-
faction that is reflected in our signifi-
cant market share. For example, in the
Caribbean/Central America region,
Texaco has built a 25% share of the
retail market and a 34% share in
lubricants. We continue to add value to
our asset base through investment in
focused retail development and
through selective acquisitions and
alliances that contribute new revenue
streams from QSRs, automated bank-
ing and video rentals.
Brazil, another major contributor to
1995 earnings, is Texaco's second
largest retail market, after the U.S. Our
22% share of Brazil's lubricants market
drives our growth with sales in excess of
1.2 million barrels a year.
Meanwhile, we are leveraging our
marketing experience and our ability to
move with urgency in pursuit of new
business opportunities in Ecuador's
recently liberalized retail gasoline mar-
ket. By the end of 1995, we were operat-
ing 39 Texaco-branded stations in
Ecuador, averaging more than 200,000
gallons a month, and we plan to double
the number of our retail outlets there by
the end of 1996.
Texaco Inc. 1995 Annual Report to Stockholders Page 20.
Refocusing European Markets
- ---------------------------
In 1995, we moved aggressively to
streamline our European marketing
operations in order to meet the
challenges of a highly competitive
climate. We reduced total cash
operating expenses by 6.5%, and we
project a further decrease of 3.3% by
the end of 1996.
In the U.K., we face the challenges
of product surpluses and formidable
competition from hypermarkets that
have taken a 25% market share over
the past four years. In response to these
market conditions, we began focusing
our retail network on preferred markets
in areas of high population density.
Within these markets, we expect to par-
tially offset the lower fuel margins that
prevail with increased earnings from
retail sales in our convenience stores
and from co-developments.
In keeping with our strategy to
refocus our marketing operations, lower
costs and grow profitable markets, we
created a marketing joint venture with
Norsk Hydro in Norway and Denmark.
At year-end 1995, Hydro Texaco was the
third largest petroleum marketer in
Scandinavia, with about 850 retail sta-
tions and a major presence in the lubri-
cants, diesel and heating oil markets.
This enterprise - combining our fuel
and lubricant technology and retail
expertise with Norsk Hydro's consumer
and industrial base - posted first-year
operating earnings almost 60% above
what the two companies achieved col-
lectively in 1994.
Caltex Capitalizes on Expanding Markets
- ---------------------------------------
Caltex entered its 60th year of opera-
tions in 1995 with a record as one
of industry's most successful joint
ventures. Caltex markets petroleum
products in approximately 60 coun-
tries in the Asia-Pacific region, the
Middle East and eastern and southern
Africa -including a major presence in
the growth markets of the Pacific Rim.
Its sales of refined products increased
by 6% in 1995 to more than 1.3 million
barrels a day.
During the year, Caltex directed
more than half of its marketing invest-
ment to adding and improving retail
outlets throughout its area. Together
with a focus on dealer selection and
training and standardized customer ser-
vices, these efforts will enable Caltex to
become the brand of choice in its mar-
kets. Major initiatives in 1996 will intro-
duce a new image for the Caltex brand
throughout its area of operations.
Caltex is also increasing its pres-
ence in rapidly developing markets. In
the Guandong Province of China, for
example, it is extending its activities
into the Pearl River Delta and expanding
its lubricants marketing. During 1995,
Caltex entered into a joint venture to
construct China's largest cavern storage
facility for liquefied petroleum gas.
GRAPHIC/IMAGE/ILLUSTRATION MATERIAL APPEARS HERE.
SEE APPENDIX, PART A, ITEM A12.
As part of its plan to improve
underperforming assets, during 1995
Caltex entered a joint venture with
Australia's Ampol, gaining both operat-
ing and cost efficiencies. The new comp-
any, Australian Petroleum Proprietary
Ltd., is the largest in Australia's mature
downstream market, with a 28% share
of the country's motor fuels business.
As a critical part of Texaco's plan for
growth, Caltex is well positioned to con-
tinue creating value from its market
opportunities.
Burnishing the Star
- -------------------
From the refinery to the local Texaco
station, we are dedicated to
enhancing the value of the Texaco
Star, recognized worldwide as a
symbol of quality and convenience.
We will continue to improve our
manufacturing efficiency in order to cre-
ate our own margins; to develop and
implement the advanced technology
that stands behind our fuel and lubri-
cant products; and to focus our world-
wide marketing resources on making
Texaco the brand of choice wherever
we market our products and services.
Texaco Inc. 1995 Annual Report to Stockholders Page 21.
==========================
Texaco's Vision and Values
==========================
Texaco's vision - to be one of the
most admired, profitable and comp-
etitive companies - propels our drive
toward top-quartile industry
performance in both financial and operational
results.
Underlying that vision is a set of
guiding principles that have shaped our
operations since the company's found-
ing in 1902. These principles, and the
values they embrace, express Texaco's
commitment to quality, teamwork, lead-
ership, technological excellence and
customer service, as well as to corpo-
rate responsibility, respect for the indi-
vidual, high ethical standards, open
communication and fully competitive
stockholder return.
GRAPHIC/IMAGE/ILLUSTRATION MATERIAL APPEARS HERE.
SEE APPENDIX, PART A, ITEM A13.
Safeguarding the Environment
- ----------------------------
Participating as a responsible corpo-
rate citizen in the communities
where we operate is a core value on
which Texaco builds sound business
practices. We view our progress in
achieving environmental, health and
safety excellence as a measure of how
well we are meeting our obligations to
stockholders, employees and our operat-
ing communities worldwide.
Our recent accomplishments demon-
strate that, by applying technology, we
are improving our environmental, health
and safety performance at every stage of
our business. In refinery operations, we
are an industry leader in several key
environmental measures, including the
amount of refinery wastes recycled and
emission reductions at our plants.
Texaco's safety record, evident in our low
lost-time incidence rate, also surpasses
the industry average.
In 1995, our environmental auditing
program was again named a leader in
our industry by the consulting firm
Arthur D. Little. And the U.S. Minerals
Management Service recognized
Texaco's environmental record in
upstream operations in Louisiana and
the Gulf of Mexico with its prestigious
1995 Conservation Award for Respecting
the Environment.
We are also applying sophisticated
research in the development of fuels,
fuel additives and lubricant products
that are responsive to environmental
concerns. And we bring state-of-the-art
technology to the safe transportation
and storage of crude oil and refined products.
An important component of our
environmental and safety program is a
global strategy of preparedness, coordi-
nated by our worldwide emergency
response team, which enables us to
respond rapidly should a major incident
occur anywhere we operate.
In 1995, we began expanding our
program to protect birds in the vicinity
of our producing fields by placing pro-
tective covers on all exhaust stacks at
our operations worldwide. And we joined
the Conservation Fund and the Mellon
Foundation in donating more than
10,000 acres of land previously owned
by Texaco to Utah's Department of
Natural Resources to protect rangeland
and a critical wildlife habitat.
Texaco's commitment to responsible
environmental practice is also evident in
our remediation program in Ecuador,
where, until 1990, our affiliate Texaco
Petroleum Company (Texpet) served as
operator and minority partner in a con-
sortium with the Ecuadorean state oil
company, PetroEcuador.
In 1995, Texpet reached an agree-
ment with the Government of Ecuador,
which now frees the company to move
rapidly to remediate areas in the former
consortium's area of operation.
The agreement calls for modifica-
tion of produced water systems and for
the plugging, abandonment and reme-
diation of wells that PetroEcuador no
longer uses. Additionally, Texpet will
revegetate land cleared for the consor-
tium's operations. The remediation
began late in 1995 and should be
completed by the end of 1996.
Texpet is creating a fund for natural
resource projects, which will be adminis-
tered for the local population by Ecuador's
Ministry of Energy and Mines. Texpet
will also finance construction of four
education centers with adjacent medical
Texaco Inc. 1995 Annual Report to Stockholders Page 22.
dispensaries and fund the purchase of two
river ambulances to assist in health and
emergency situations.
Texaco's environmental, health and
safety results and programs are periodi-
cally reported in a special publication.
To request a copy of Texaco's ENVIRON-
MENT, HEALTH AND SAFETY REVIEW, please
call 1-800-283-9785 or write to Texaco
Inc., Investor Services, 2000 Westchester
Avenue, White Plains, NY 10650-0001.
Building a Responsive Workforce
- -------------------------------
As Texaco people around the world
work to execute our plan for growth,
we actively seek to make the fullest
use of their talents and abilities.
In 1995, we continued to build a
workforce that is attuned to the chal-
lenges of today's - and tomorrow's -
competitive marketplace. We intend that
our employees represent a diverse base,
fully responsive to our equally diverse
customer base.
Our commitment to diversity is an
inclusive process, grounded in our core
value of respect for the individual and
in our long-standing policies of equal
opportunity for all employees. And we
are making substantial gains toward
achieving a more diverse workforce with
broader avenues for career development.
Between 1989 and 1994, our
domestic workforce decreased by 20%
overall. During this period, the percent-
age of minorities in our full-time U.S.
workforce grew more than 27%, and the
percentage of women employed full time
in our U.S. operations increased by 23%.
At the same time, the numbers of
women in supervisory, management and
executive positions increased from
12.7% of Texaco's workforce in 1989 to
19.0% in 1994, a gain of nearly 50%.
The percentage of minorities in these
positions grew almost 40%, from 6.8%
of the total in 1989 to 9.5% in 1994.
To further our commitment to pro-
vide opportunities for women, minorities
and disabled employees, in 1995 we
began a program for managers and
supervisors designed to eliminate subtle
ethnic, cultural and gender barriers.
We also encourage the use of supplier com-
panies headed by women and minori-
ties, with a goal of doubling our busi-
ness with these firms by the end of 1996.
Our policies, programs and progress
in this important area are detailed in
EQUAL OPPORTUNITY AND TEXACO: A REPORT,
published in 1995 and available to all
stockholders by calling 1-800-283-9785,
or by writing to Texaco Inc., Investor
Services, 2000 Westchester Avenue,
White Plains, NY 10650-0001.
Along with gains in diversity, we are
improving productivity by empowering
employees to work more flexibly to
achieve the objectives of our growth
plan. As we incorporate the principles of
total quality management in our opera-
tions, our employee teams are learning
new ways of working across organiza-
tional boundaries to accelerate results
and attain stretch targets.
GRAPHIC/IMAGE/ILLUSTRATION MATERIAL APPEARS HERE.
SEE APPENDIX, PART A, ITEM A14.
At our refinery in Anacortes,
Washington, for example, a cross-func-
tional team improved the reliability of
the systems that produce steam and air
used in refinery processes, achieving
significant reductions in energy con-
sumption and maintenance costs.
Another empowered team at Texaco's
Conger Gas Plant in West Texas learned
how to perform major overhauls on com-
pressor engines themselves, rather than
hiring outside contractors, realizing sav-
ings in incremental production as well
as in the cost of maintenance.
We celebrate team achievements
such as these while continuing to
improve our business processes.
Through the collective efforts of Texaco's
dedicated employees and work teams,
we are strengthening performance,
improving cash flow and increasing rev-
enues by reducing costs and expenses.
In 1995, we challenged employees
to help meet our profitability targets
with a special award, tied to the com-
pany's normalized earnings growth com-
pared with our peer companies and to
achievement of a competitive total
return to stockholders. This Challenge
Award was a precursor to the Texaco
Performance Compensation Program,
Texaco Inc. 1995 Annual Report to Stockholders Page 23.
introduced early in 1996, which links
most employees' compensation to the
company's results as well as to individ-
ual performance.
Enhancing Quality of Life
- -------------------------
At Texaco, we recognize that industry
leadership carries a responsibility
to contribute to the quality of life
not only in communities where we
operate, but also in society as a
whole. Through our corporate contribu-
tions and distributions from the Texaco
Foundation, we focus our philanthropic
efforts on organizations active in educa-
tion, the arts and the environment at
both local and national levels.
In the U.S., Texaco was the first
national corporate sponsor of the
National Tree Trust, an organization that
assists community groups in planting
trees. In 1995, we established five grow-
out sites for some 47,000 seedlings at
Texaco and Star Enterprise facilities,
and we are working closely with local
volunteers to plant the young trees.
As a company whose profitability is
linked to scientific and technological
innovation, Texaco has a special stake
in inspiring student achievement in
math and science.
GRAPHIC/IMAGE/ILLUSTRATION MATERIAL APPEARS HERE.
SEE APPENDIX, PART A, ITEM A15.
We have been instrumental in the
creation and evolution of the National
Teacher Training Institute for Math,
Science and Technology (NTTI). In part-
nership with PBS flagship station
Thirteen/WNET in New York and the
Corporation for Public Broadcasting, we
developed NTTI to train teachers in
interactive techniques for integrating
television and computer technology in
math and science instruction. Now in its
sixth year, NTTI has trained some 95,000
teachers, who have used its methods to
teach 13 million students nationwide.
We also support educational pro-
grams in countries where we operate
overseas, among them, an established
curriculum program in the U.K. that pro-
vides students in 30,000 schools with
resource material on the oil industry.
Along with programs in education
and the environment, Texaco also funds
arts programs that contribute to the
quality of life in communities where
Texaco has a major presence. Leading
our support for the arts is Texaco's 55-
year sponsorship of Metropolitan Opera
radio broadcasts, which reach audi-
ences throughout the U.S., Canada and
Europe.
We extended our commitment to the
arts in 1995 through our public televi-
sion sponsorship of MARSALIS ON MUSIC,
a four-part music education series cre-
ated and hosted by acclaimed trumpeter
and composer Wynton Marsalis.
Bringing together our interest in both
the arts and education, we funded the
creation of a teachers' guide for the
series, which was distributed to more
than 60,000 music teachers nationwide.
In the many communities in which
we operate, other arts sponsorships con-
tinue to provide much-needed support
for local symphonies, choirs and ballet
and theater companies. We also reach
out to support our local communities
through our active participation in the
United Way. And our matching gifts pro-
gram allows employees and retirees to
direct Texaco funding equal to their per-
sonal contributions to the schools, col-
leges and universities of their choice.
Fostering Our Vision
- --------------------
Texaco's vision and values are the
enduring principles that add depth
and dimension to our abiding com-
mitment: to be the company of
choice for stockholders, employees,
customers and suppliers. As Texaco
strives for leadership in our industry and
in the communities where we operate, our
commitment to corporate responsibility,
respect for the individual and our other
core values sustains our drive toward
top-quartile operating performance.
Texaco Inc. 1995 Annual Report to Stockholders Page 24.
- -------------------------------------------------------------------------------
Texaco Inc. and Subsidiary Companies
- -------------------------------------------------------------------------------
Financial and Operational Information
- -------------------------------------------------------------------------------
26 Financial Review
----------------
37 Statement of Consolidated Income
--------------------------------
38 Consolidated Balance Sheet
--------------------------
39 Statement of Consolidated Cash Flows
------------------------------------
40 Statement of Consolidated Stockholders' Equity
----------------------------------------------
Notes To Consolidated Financial Statements
------------------------------------------
42 Note 1. Description of Significant Accounting Policies
43 Note 2. Changes in Accounting Principles
44 Note 3. Assets Under Agreements for Sale
44 Note 4. Discontinued Operations
45 Note 5. Inventories
46 Note 6. Investments and Advances
47 Note 7. Properties, Plant and Equipment
47 Note 8. Short-Term Debt, Long-Term Debt, Capital Lease Obligations
and Related Derivatives
49 Note 9. Lease Commitments and Rental Expense
50 Note 10. Preferred Stock and Rights
52 Note 11. Foreign Currency
52 Note 12. Taxes
54 Note 13. Employee Benefit Plans
56 Note 14. Stock Incentive Plan
57 Note 15. Other Financial Information and Commitments
58 Note 16. Financial Instruments
60 Note 17. Contingent Liabilities
60 Note 18. Financial Data by Geographic Area
62 Report of Management
--------------------
63 Report of Independent Public Accountants
----------------------------------------
Supplemental Oil and Gas Information
------------------------------------
64 Estimated Proved Reserves
68 Capitalized Costs
68 Costs Incurred
69 Results of Operations
70 Average Sales Prices and Production Costs - Per Unit
70 Standardized Measure of Discounted Future Net Cash Flows
71 Changes in the Standardized Measure of Discounted Future Net Cash Flows
Selected Financial Data
-----------------------
72 Selected Quarterly Financial Data
73 Five-Year Comparison of Selected Financial Data
74 Investor Information
--------------------
Texaco Inc. 1995 Annual Report to Stockholders Page 25.
- ----------------------------------------------------------------------------------------------------------------------------------
Texaco Inc. and Subsidiary Companies
- ----------------------------------------------------------------------------------------------------------------------------------
Financial Review
- ----------------------------------------------------------------------------------------------------------------------------------
Consolidated Highlights
- ----------------------------------------------------------------------------------------------------------------------------------
(Millions of dollars, except per share and ratio data) 1995 1994 1993
- ----------------------------------------------------------------------------------------------------------------------------------
Revenues from continuing operations $36,787 $33,353 $34,071
Net income from continuing operations before cumulative effect of accounting change
Net income before special items $ 1,152 $ 915 $ 1,132
Special items (424) 64 127
- ----------------------------------------------------------------------------------------------------------------------------------
728 979 1,259
Net loss on discontinued chemical operations - (69) (191)
Cumulative effect of accounting change (121) - -
- ----------------------------------------------------------------------------------------------------------------------------------
Net income $ 607 $ 910 $ 1,068
Stockholders' equity $ 9,519 $ 9,749 $10,279
Total assets $24,937 $25,505 $26,626
Total debt $ 6,240 $ 6,481 $ 6,826
Per common share (dollars)
Net income from continuing operations before cumulative effect of accounting change
Net income before special items $ 4.20 $ 3.19 $ 3.98
Special items (1.63) .24 .49
- ----------------------------------------------------------------------------------------------------------------------------------
2.57 3.43 4.47
Net loss on discontinued chemical operations - (.26) (.73)
Cumulative effect of accounting change (.47) - -
- ----------------------------------------------------------------------------------------------------------------------------------
Net income $ 2.10 $ 3.17 $ 3.74
Cash dividends $ 3.20 $ 3.20 $ 3.20
Current ratio 1.24 1.20 1.44
Return on average stockholders' equity* 7.5% 9.8% 12.5%
Return on average capital employed* 6.9% 8.0% 9.4%
Total debt to total borrowed and invested capital 38.0% 38.5% 38.7%
- ----------------------------------------------------------------------------------------------------------------------------------
*Returns exclude the 1995 cumulative effect of accounting change and
discontinued chemical operations.
Consolidated worldwide net income for the year 1995 was $607 million, or
$2.10 per common share, compared with $910 million, or $3.17 per com-
mon share for the year 1994 and $1,068 million, or $3.74 per common share
for the year 1993.
These results include special gains and charges as well as discontinued
chemical operations as applicable. Results for 1995 reflect the adop-
tion of Statement of Financial Accounting Standards No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of" (SFAS 121). The adoption of this Standard resulted in a non-cash
after-tax charge of $639 million, and required the classification of a
$121 million charge, previously recorded in the first quarter of 1995, as a
cumulative effect of an accounting change.
GRAPHIC MATERIAL APPEARS HERE.
SEE APPENDIX, PART B, ITEM B1.
GRAPHIC MATERIAL APPEARS HERE.
SEE APPENDIX, PART B, ITEM B2.
Texaco Inc. 1995 Annual Report to Stockholders Page 26.
Plan for Growth
===============
Texaco's plan for growth has shown significant progress in achieving its
primary objectives of increasing earnings and stockholder value. By the end
of 1995, the following achievements were attained:
* Over the last two years, assets that were not strategic to our plan for
growth were sold for more than $1.7 billion. The realized cash is being
redirected to focused areas of growth, including expanding oil and gas
production, focused exploration drilling and targeted marketing initiatives.
* Cash expenses have been reduced by some $1 billion over the last three
years despite inflation and higher activity levels. These reductions
reflect operating efficiency gains, sales of assets and lower overhead
expense of nearly $450 million.
* Oil and gas production from growth-potential core properties increased
as compared to 1994 by some 14,000 barrels of oil equivalent per day,
more than offsetting the natural decline of maturing fields.
* For the year 1995, net income before special items was $1,152 million
or 26% higher than 1994.
* Reserve additions continued to add value to Texaco. Over the period
1993-1995, on a worldwide basis, new volumes were added to the reserve
base equal to 117% of production at a highly competitive finding and
development cost of $3.54 per barrel.
In addition, the following actions are targeted for 1996 and
beyond:
* In late December 1995, Texaco announced the signing of an agreement
in principle with Korea Petroleum Development Corporation for their
acquisition of a 15% interest in our Captain Field in the U.K. North Sea for
approximately $210 million. The formation of this alliance will provide access
to business opportunities in the Far East as well as in other potential project
developments.
* Also in December 1995, Caltex Petroleum Corporation (Caltex) jointly
owned by Texaco and Chevron Corporation, announced its plan to sell its
50% interest in Nippon Petroleum Refining Company, Limited in Japan to
its partner Nippon Oil Company for approximately $2 billion. This action is
part of Caltex' long-term strategy to focus its activities on high-growth
areas throughout the Pacific Rim. The sale is expected to be completed in April
1996 and will result in a significant earnings gain. The net proceeds will
provide Caltex and its two stockholders with additional funds for future growth
opportunities.
* Texaco announced a budgeted capital expenditure level for 1996 of
$3.6 billion, including subsidiaries and affiliates, an increase of some
16% from the 1995 spending level. Texaco plans to spend some $20 billion on
capital expenditures over the next five years.
Results of Continuing Operations
================================
The following analysis relates to Texaco's consolidated and functional
results for continuing operations.
Revenues
Consolidated worldwide revenues from continuing operations were $36.8 billion
in 1995 as compared to $33.4 billion in 1994 and $34.1 billion in 1993.
Revenues for 1995 as compared to 1994 increased due to higher worldwide
crude oil prices and sales volumes. Higher worldwide refined product prices
as well as higher volumes of diesel and gasoline in the U.S. and Latin America
also increased revenues. For natural gas operations, revenues decreased
due to lower prices in the U.S. This decrease was partly offset by higher
sales volumes resulting from Texaco's expanding gas marketing activities in
the U.S. and Europe, supported by increased production in the U.K. North Sea.
In addition, revenues benefited from increased gains on asset sales.
In 1994, revenues declined as compared to 1993 due to lower worldwide
average crude oil prices and lower U.S. crude oil volumes, as well as lower
worldwide prices for refined products and natural gas. These decreases were
partially offset by higher volumes of refined products in the U.S. and Latin
America, higher volumes of natural gas in the U.S. and Europe and higher
international crude oil volumes.
Costs and Expenses
Purchases and other costs were $27.2 billion in 1995, $23.9 billion in 1994
and $24.7 billion in 1993. Among the factors contributing to this increase
in 1995 were higher worldwide prices for crude oil and refined products as
well as increased purchased volumes of crude oil, refined products and nat-
ural gas. Partially offsetting these increases were lower natural gas prices
in the U.S. For 1994, costs were lower as compared to 1993 primarily due
to lower worldwide crude oil prices and purchased volumes, partly offset
by higher volumes of natural gas purchased in the U.S.
During 1995, Texaco continued its efforts to achieve greater operating
efficiencies and reduce overhead. Despite inflationary pressures and
higher levels of activity, Texaco's total expenses, excluding special items,
declined by more than 8% over the past three years. While these expense
reductions occurred throughout the company, the U.S. upstream producing
operations generated the greatest portion of these benefits. Contributing
to the overall expense reductions were lower employee levels, as the number
of employees was reduced by 6,600, or approximately 19% during the
three year period.
Depreciation, depletion and amortization expenses increased during 1995
as compared to 1994 mainly due to the effects of the adoption of SFAS 121.
GRAPHIC MATERIAL APPEARS HERE.
SEE APPENDIX, PART B, ITEM B3.
GRAPHIC MATERIAL APPEARS HERE.
SEE APPENDIX, PART B, ITEM B4.
Texaco Inc. 1995 Annual Report to Stockholders Page 27.
Income Taxes
Income tax expense was $258 million in 1995, $225 million in 1994 and a tax
benefit of $87 million in 1993. The year 1995 continued the three-year
trend of higher taxable income from the expanding international producing
operations which are generally subject to higher statutory tax rates.
Additionally, during the three-year period there were decreases in tax benefits
arising from the sales of interests in a subsidiary. The year 1995 includ-
ed significant tax benefit effects from the adoption of SFAS 121. Also, the
year 1993 included certain non-recurring tax benefits from tax law and rate
changes in the United Kingdom.
Net Income
A summary of consolidated net income from continuing operations is provided
below. Consolidated net income from continuing operations includes
special items in addition to net income directly related to the current
production, manufacturing, marketing and distribution of products and services
of the company. Results for 1995 included benefits of $75 million for insurance
recoveries which were offset by charges to establish financial reserves
for associated environmental remediation and other matters. Explanations
of net income are included in the functional analysis which follows.
- -------------------------------------------------------------------------------
(Millions of dollars) 1995 1994 1993
- -------------------------------------------------------------------------------
Net income before special items and
cumulative effect of accounting change $1,152 $ 915 $1,132
Adoption of SFAS 121 (639) - -
Gains on major asset sales 232 23 -
Tax benefits on asset sales 65 189 210
Other special items (82) (148) (83)
- -------------------------------------------------------------------------------
Net income from continuing operations before
cumulative effect of accounting change $ 728 $ 979 $1,259
- -------------------------------------------------------------------------------
The Consolidated Financial Statements and related Notes should be read
in conjunction with this financial review.
Functional Analysis of Net Income
=================================
Worldwide net income from continuing operations is segregated between
operating and corporate/nonoperating in the following tables. Operating
results are further segregated functionally and geographically.
Petroleum and Natural Gas
=========================
Exploration and Production
==========================
- -------------------------------------------------------------------------------
United States
- -------------------------------------------------------------------------------
(Millions of dollars) 1995 1994 1993
- -------------------------------------------------------------------------------
Operating earnings before special items $ 674 $ 438 $ 548
Special items (381) (24) (38)
- -------------------------------------------------------------------------------
Total operating earnings $ 293 $ 414 $ 510
Selected Operating Data
Net production of crude oil and NGL's (MBPD) 381 407 423
Net production of natural gas -
available for sale (MMCFPD) 1,619 1,716 1,729
Natural gas sales (MMCFPD) 3,153 3,092 2,735
- -------------------------------------------------------------------------------
Operating earnings, before special items, were $674 million, $438 million
and $548 million for the years 1995, 1994 and 1993, respectively. Results
for 1995 were 54% higher than 1994 following a decrease of 20% in 1994 versus
1993 results.
Lower operating and overhead expenses for core producing properties,
along with overhead expense reductions associated with the sales of non-
core producing properties, significantly benefited results in all periods. In
addition, operating earnings in 1995 benefited from higher crude oil prices
that averaged $15.10 per barrel, or $1.67 per barrel over the 1994 average
price. Prices for heavy California crudes, which represent approximately
35% of Texaco's U.S. production, were especially strong in 1995. In 1994,
Texaco's average crude oil price of $13.43 per barrel declined $.83 per bar-
rel from the 1993 price, mainly reflecting a steep drop in prices during
the second half of 1993 followed by a modest recovery during 1994.
During the three-year period, crude oil and natural gas production from
core properties remained at essentially equal levels as the impact of normal
production declines from maturing fields was virtually offset by added
production from the company's successful exploration and development programs.
GRAPHIC MATERIAL APPEARS HERE.
SEE APPENDIX, PART B, ITEM B5.
GRAPHIC MATERIAL APPEARS HERE.
SEE APPENDIX, PART B, ITEM B6.
Texaco Inc. 1995 Annual Report to Stockholders Page 28.
Operating earnings in the U.S. were reduced by a deterioration of
average natural gas prices during the three-year period primarily reflecting
abundant supplies in relation to demand. Texaco's average natural gas
price of $1.72 per MCF in 1995 represents a decrease of $.27 per MCF from
1994. However, prices at the end of 1995 strengthened significantly due to
colder weather. Natural gas prices in 1994 were $.20 per MCF lower than
in 1993.
Total operating earnings were $293 million, $414 million and $510 mil-
lion for the years 1995, 1994 and 1993, respectively. Included in total oper-
ating earnings for 1995 were special items of $381 million, comprised of
the write-down of assets associated with the adoption of SFAS 121 of $493
million and a gain of $125 million from the sale of non-core producing
properties which was partly offset by reserves for environmental remediation
on these properties of $13 million. Results for both 1994 and 1993 included
special charges related to employee separations. Also, included in 1993
was a deferred tax charge due to an increase in the U.S. income tax rate.
- -------------------------------------------------------------------------------
International
- -------------------------------------------------------------------------------
(Millions of dollars) 1995 1994 1993
- -------------------------------------------------------------------------------
Operating earnings before special items $343 $269 $212
Special items (3) (16) 110
- -------------------------------------------------------------------------------
Total operating earnings $340 $253 $322
Selected Operating Data
Net production of crude oil and NGL's (MBPD) 381 376 305
Net production of natural gas -
available for sale (MMCFPD) 373 319 238
Natural gas sales (MMCFPD) 435 337 255
- -------------------------------------------------------------------------------
Operating earnings, before special items, were $343 million, $269 million and
$212 million for 1995, 1994 and 1993, respectively.
Operating results benefited in all three years from higher crude oil
and natural gas production. Continuing field development programs in the
Partitioned Neutral Zone between Kuwait and Saudi Arabia increased 1995
crude oil production over 1994 levels. Results for 1994 benefited from sig-
nificantly increased North Sea crude oil and natural gas production primarily
from new production and development at the Strathspey, Saltire, Orwell,
and Piper fields. In 1995, North Sea crude oil production slipped 3% from
the high levels of 1994 due mainly to the natural decline in maturing fields
and temporary operating interruptions for planned well work. In the Pacific
Rim, earnings in 1995 and 1994 included the benefits of higher produc-
tion in Australia from the Roller and Skate fields, as well as higher
production in Indonesia.
Higher international average crude oil prices benefited results for
1995 when compared to 1994. Texaco's average international crude oil price
of $16.29 per barrel in 1995 increased $1.41 per barrel over the 1994 level.
This increase in crude oil prices is in contrast to the decrease of $.87 per
barrel in crude oil prices in 1994 as compared with 1993.
Total operating earnings were $340 million, $253 million and $322
million for 1995, 1994 and 1993, respectively. Included in 1995 results was
a special charge of $3 million related to the write-down of assets associated
with the adoption of SFAS 121. Results for 1994 included special charges
related to asset write-downs and the cost of employee separations. Operating
earnings for 1993 included a benefit of $169 million related to changes
in the U.K. Petroleum Revenue Tax associated with the taxability of certain
items, as well as a tax rate reduction. This benefit was partially offset by
special charges related to employee separations and the write-down of the
carrying value of certain assets principally in the North Sea, brought about
by changes in the Petroleum Revenue Tax laws.
- -------------------------------------------------------------------------------
Manufacturing, Marketing and Distribution
- -------------------------------------------------------------------------------
United States
- -------------------------------------------------------------------------------
(Millions of dollars) 1995 1994 1993
- -------------------------------------------------------------------------------
Operating earnings before special items $141 $281 $306
Special items (20) (24) (91)
- -------------------------------------------------------------------------------
Total operating earnings $121 $257 $215
Selected Operating Data
Refinery input (MBPD) 693 673 658
Refined product sales (MBPD) 934 882 830
- -------------------------------------------------------------------------------
GRAPHIC MATERIAL APPEARS HERE.
SEE APPENDIX, PART B, ITEM B7.
GRAPHIC MATERIAL APPEARS HERE.
SEE APPENDIX, PART B, ITEM B8.
Texaco Inc. 1995 Annual Report to Stockholders Page 29.
Operating earnings, before special items, were $141 million for 1995, versus
$281 million and $306 million in 1994 and 1993, respectively. Results
were depressed in 1995 versus 1994 due to the impact of historically low
refining margins prevailing throughout the U.S. during the first four months
of 1995. Rising crude costs could not be recovered through product prices
which remained relatively flat due to a surplus of products in the market.
These conditions improved only slightly in the East and Gulf Coast markets
and showed some improvement on the West Coast in the latter half of the
year. Operations on the East and Gulf Coasts also were impacted by narrow
light to heavy crude oil differentials which reduced the benefits of refinery
upgrading units. In 1995, storm-related downtime and scheduled maintenance
at the East and Gulf Coast refineries hurt comparative annual results.
On the West Coast, benefits from expense containment, greater energy
efficiency, improved refinery performance and higher sales volumes helped to
mitigate the negative impact of depressed refining margins.
Results for 1994 versus 1993 reflect increased sales of branded
gasolines due to the successful introduction of Texaco's CleanSystem3 and a
greater volume of higher margin premium gasoline sales. However, these
volume improvements were more than offset by decreased margins in 1994
caused by rising crude costs and oversupply conditions in the marketplace,
partly due to highly disruptive market conditions and changing govern-
ment regulations for new reformulated gasolines and an unseasonably warm
winter along the East Coast.
Texaco's trading and pipeline transportation network continued to be a
strong contributor to the downstream results throughout these periods.
Total operating earnings were $121 million, $257 million and $215
million for the years 1995, 1994 and 1993, respectively. Earnings in 1995
included a special charge of $9 million related to the write-down of assets
associated with the adoption of SFAS 121. Results for 1994 included spe-
cial charges related to asset write-downs, while operating earnings for 1993
included reserves for environmental remediation. Additionally, special
items in all three periods included charges related to employee separations.
- -------------------------------------------------------------------------------
International
- -------------------------------------------------------------------------------
(Millions of dollars) 1995 1994 1993
- -------------------------------------------------------------------------------
Operating earnings before special items $358 $375 $464
Special items 7 (15) (30)
- -------------------------------------------------------------------------------
Total operating earnings $365 $360 $434
Selected Operating Data
Refinery input (MBPD) 788 780 812
Refined product sales (MBPD) 1,567 1,470 1,504
- -------------------------------------------------------------------------------
Operating earnings, before special items, were $358 million, $375 million
and $464 million for the years 1995, 1994 and 1993, respectively. Operating
earnings in Europe in 1995 and 1994, as compared to 1993, reflect depressed
refining margins, particularly in the U.K. These margins, which began
to decline during 1994 due to rising feedstock costs and oversupply con-
ditions in the marketplace remained depressed throughout 1995. Operating
earnings for 1994 were also negatively impacted by the Pembroke, Wales,
refinery fire.
In the areas served by the company's affiliate Caltex, including most
Pacific Rim countries and South Africa, earnings were depressed due to lower
refining margins which prevailed during 1995 and 1994 primarily in Japan and
Singapore. However, 1993 earnings benefited from strong margins reflecting
lower crude oil prices. Results were also impacted by favorable foreign tax
effects of $13 million in 1995 as well as inventory valuation benefits of $15
million and $16 million which were realized in 1995 and 1994, respectively.
Results for 1993 included inventory valuation charges of $51 million.
Strong margins and higher product volumes in most of the Latin American
operating areas continued to prevail throughout the three-year period,
1993 through 1995. However, downtime resulting from a 1995 refinery upgrade
project in Panama and the 1994 impact of a fire at that plant lowered
results for both years.
Total operating earnings were $365 million in 1995 compared with
$360 million and $434 million in 1994 and 1993, respectively. Results for
1995 included special charges of $31 million related to the write-down of
assets associated with the adoption of SFAS 121. The year 1995 also includ-
ed a net special gain of $80 million, principally related to the sale of land
by a Caltex affiliate in Japan and special charges of $13 million from restruc-
turing in certain Caltex operations. Operating results for 1994 included
special charges related to the write-down of assets, partly offset by a gain
related to the sale of an interest in a downstream joint venture in Sweden.
Operating results for 1993 included special charges related to the reduc-
tion in the carrying value of certain marketing assets. Additionally, special
items in all periods included charges relating to employee separations.
GRAPHIC MATERIAL APPEARS HERE.
SEE APPENDIX, PART B, ITEM B9.
Texaco Inc. 1995 Annual Report to Stockholders Page 30.
- -------------------------------------------------------------------------------
Nonpetroleum
- -------------------------------------------------------------------------------
(Millions of dollars) 1995 1994 1993
- -------------------------------------------------------------------------------
Operating earnings (losses) before special items $ 32 $ (3) $ (9)
Special items (60) (29) (4)
- -------------------------------------------------------------------------------
Total operating losses $(28) $(32) $(13)
- -------------------------------------------------------------------------------
Operating earnings, before special items, were $32 million for 1995, as
compared to losses of $3 million and $9 million in 1994 and 1993, respective-
ly. Operating results in 1995, as compared to 1994 and 1993, benefited from
the improved loss experience of insurance operations. Results in 1994
and 1993 benefited from higher revenues from the licensing of gasification
technology.
Included in 1995 operating results was a special charge of $87 million
for the write-down of assets associated with the adoption of SFAS 121 and
a special gain of $27 million from the sale of the company's interest in Pekin
Energy Company, a producer of ethanol.
The year 1994 included special charges in the insurance operations
related to property damage from the fires occurring at both the Pembroke,
Wales, and the Panama refineries. The year 1993 included a special charge
relating to an increase in the U.S. income tax rate.
- -------------------------------------------------------------------------------
Corporate/Nonoperating
- -------------------------------------------------------------------------------
(Millions of dollars) 1995 1994 1993
- -------------------------------------------------------------------------------
Corporate/nonoperating before special items $(396) $(445) $(389)
Special items 33 172 180
- -------------------------------------------------------------------------------
Total $(363) $(273) $(209)
- -------------------------------------------------------------------------------
Corporate/nonoperating charges, before special items, were $396 million,
$445 million and $389 million for the years 1995, 1994 and 1993, respec-
tively. These results include interest expense and general corporate expenses
as well as interest income and other nonoperating income.
Results for all three years benefited from reduced overhead expenses
resulting from the continuing progress of the company's overhead reduc-
tion efforts. Results for 1995, as compared to 1994, benefited from higher
interest income and lower interest expense. Results for 1995 included gains
of $25 million, principally from sales of equity securities held for investment
by the insurance operations. Gains on such sales of securities in 1994
were lower than amounts realized in 1995 and 1993. During 1994 as compared to
1993, results reflected a reduction in capitalized interest resulting
from project completions, mainly in the North Sea, as well as lower U.S. tax
benefits associated with interest expense.
Special items for the years 1995, 1994 and 1993 included the impact of
current tax benefits realized and deferred tax benefits realizable due to
sales of interests in a subsidiary of $65 million, $189 million and $210 mil-
lion, respectively. These benefits are realizable due to taxable gains on com-
pleted and announced sales of assets. Also included in 1995 were charges
of $16 million relating to the write-down of assets associated with the adop-
tion of SFAS 121. The year 1993 included benefits from a tax law change, a
windfall profits tax refund and special charges relating to oil and gas issues.
Additionally, special items in all periods included charges relating
to employee separations.
Discontinued Chemical Operations
================================
In 1993, Texaco announced its intention to dispose of substantially all of
its worldwide chemical operations, including its lubricant additives busi-
ness. Texaco has since accounted for these operations as discontinued
operations.
In 1993, Texaco entered into a memorandum of understanding with an
affiliate of the Jon M. Huntsman Group of Companies for the sale of Texaco
Chemical Company and related international chemical operations. On April
21, 1994, Texaco received from Huntsman Corporation $850 million, con-
sisting of $650 million in cash and an 11-year subordinated note with a face
amount of $200 million. The note was prepaid in January, 1996.
Subsequent to the above sale to Huntsman Corporation, Texaco continued
its efforts to sell its worldwide lubricant additives business, which
includes manufacturing facilities in Port Arthur, Texas and Ghent, Belgium,
among others, as well as sales and marketing offices in various locations
in the U.S. and abroad. In late 1995, Texaco entered into an agreement to
sell this business to Ethyl Corporation, a fuel and lubricant additives man-
ufacturer. Under the terms of the purchase and sale agreement, as amended
in February 1996, Ethyl will purchase this business for some $195 mil-
lion. At closing, which is currently planned for February 29, 1996, Texaco
will receive approximately $135 million in cash and a three year note with a
face amount of $60 million.
Summary statements and other detailed financial information on
discontinued chemical operations can be found in Note 4 to the Consolidated
Financial Statements beginning on page 44 of this report.
Employee Severance Program
==========================
On July 5, 1994, Texaco announced its plan for growth which included a series
of action steps to increase competitiveness and profitability. This pro-
gram also called for reductions in overhead, including reduced layers of
supervision, and improvements in operating efficiencies. Implementation of
Texaco's program was expected to result in the reduction of approximately
2,500 employees worldwide by June 30, 1995, involving the U.S. and inter-
national upstream and downstream segments, as well as various support staff
functions. During the second quarter of 1994, Texaco recorded a charge
of $88 million, after-tax, for the anticipated severance costs associated
with the employee reductions.
On October 2, 1995, Texaco announced additional employee separations as
a result of the continued successful application of its overhead reduc-
tion initiative. In this regard, in the third quarter 1995, Texaco recorded an
after-tax charge of $56 million for the cost of these employee separations.
By year-end 1996, these overhead reduction initiatives and asset sales will
have effected workload reductions, resulting in approximately 4,000 fewer
positions worldwide compared with June 1994 levels.
Texaco Inc. 1995 Annual Report to Stockholders Page 31.
As of December 31, 1995, implementation of Texaco's program has
included reductions of over 3,700 employees worldwide with a related com-
mitment to severance payments of $166 million, or an after-tax cost of
$113 million. Of this pre-tax commitment, payments of $151 million have been
made as of December 31, 1995.
Environmental Matters
=====================
Texaco's Environment, Health and Safety (EHS) policies underscore the
importance of safeguarding both the environment wherever the company con-
ducts its business, and the health and safety of our employees and neighbors.
The company has an ongoing EHS process that emphasizes continuous
improvement and works closely with governmental agencies to ensure that
all domestic and international laws and regulations are met. The world-
wide responsibilities for this process are coordinated by a division president
and are overseen by the Public Responsibility Committee of the Board of
Directors. The company has realized improvements in its process for managing
EHS activities which include enhanced facility auditing practices,
more effective remediation and emergency preparedness systems and
innovative processes and technologies that are compatible with fostering a
clean environment while providing our customers with competitively priced
products and services.
Texaco is involved in many proactive organizations that define and
promote environmental standards such as the American Petroleum Institute,
the Global Climate Coalition and the International Chamber of Commerce.
Texaco is associated with over 30 oil spill cooperatives worldwide includ-
ing Oil Spill Response Limited, East Asia Response Limited and the Marine
Spill Response Corporation. Additionally, Texaco maintains response teams
worldwide and conducts regional drills to ensure a high level of preparedness
for any emergency response.
Texaco makes substantial capital and operating expenditures in support
of protecting the environment. These expenditures relate to the reduc-
tion of the release of pollutants into the air and water and to the appropriate
recycling or disposal of wastes. These expenditures also include costs
associated with remediation obligations at company operated sites, previously
operated sites and certain third party sites.
The discussion that follows details environmental expenditures and
reserve information relative to Texaco and its equity in affiliates.
In 1995, Texaco's capital environmental expenditures totaled $275
million, or nearly 10% of Texaco's 1995 capital expenditure program, with
$169 million expended in the United States. Capital environmental expenditures
projected for the company for 1996 and 1997 total $225 million and
$200 million, respectively, and approximately 60% will relate to operations
in the United States. Included in these expenditures are amounts associ-
ated with the modification of the company's refining and distribution systems
to produce reformulated gasolines which are required by the U.S. Clean
Air Act and the State of California.
Texaco spent and expensed $480 million in 1995 associated with
protecting the environment in the company's ongoing operations, the manufac-
turing of cleaner burning fuels and in the management of the company's
environmental programs. A similar level of expenditures is expected in 1996.
Expenditures in 1995 relating to remediation amounted to $134 million.
The company had financial reserves of $723 million at the end of 1995
for the estimated future costs of its environmental remediation programs.
These reserves have been provided to the extent reasonably measurable,
as it is not possible to project the overall costs or a range of costs beyond
that disclosed, due to uncertainty surrounding future developments in
regulations and remediation exposure.
Since the enactment of the Comprehensive Environmental Response,
Compensation and Liability Act (commonly referred to as Superfund), the
Environmental Protection Agency (EPA) and other regulatory agencies and
groups have identified Texaco as a potentially responsible party (PRP) for
cleanup of hazardous waste sites. Texaco has determined that it may have
potential exposure, though limited in certain cases, at about 200 multi-
party hazardous waste sites, of which 81 sites are on the EPA's National Pri-
ority List. Although liability under Superfund is joint and several, the com-
pany is actively pursuing and/or participating in the sharing of Superfund
costs with other identified PRP's on the basis of the weight, volume and tox-
icity of the material contributed by the PRP's. The expenditures in 1995 relat-
ing to remediation include $13 million for multiparty waste sites. The finan-
cial reserves for environmental remediation include $65 million relative to
multiparty waste sites. This reserve is based on the company's analysis of
developments at these sites for which costs can reasonably be estimated.
However, there are potential additional costs for waste sites for which a
range of exposures cannot reasonably be estimated until further information
develops. In many cases, the amounts and types of wastes are still under
investigation by regulatory agencies.
In addition to the environmental remediation reserves, the company
also provides financial reserves to cover the cost of restoration and aban-
donment of its oil and gas producing properties. These reserves at December
31, 1995 totaled $847 million. Expenditures in 1995 for restoration and
abandonment amounted to $46 million.
In summary, Texaco makes every effort to remain in full compliance
with applicable governmental regulations. Changes in governmental regula-
tions and/or Texaco's re-evaluation of its environmental programs may result
in additional future costs to the company. However, it is not believed that
such future costs will be material to the company's financial position nor to
its operating results over any reasonable period of time. It is assumed that
any mandated future costs would be recoverable in the marketplace, since all
companies within the industry would be facing similar requirements.
GRAPHIC MATERIAL APPEARS HERE.
SEE APPENDIX, PART B, ITEM B10.
GRAPHIC MATERIAL APPEARS HERE.
SEE APPENDIX, PART B, ITEM B11.
Texaco Inc. 1995 Annual Report to Stockholders Page 32.
Liquidity and Capital Resources
===============================
The company's cash, cash equivalents and short-term investments totaled
$536 million at December 31, 1995 as compared with $464 million at
year-end 1994.
Texaco's net cash provided by operating activities for 1995 (as
presented on the Statement of Consolidated Cash Flows) was impacted by sever-
al significant items that were not directly related to current period
operations, and which in the aggregate, amounted to a net cash outflow of some
$300 million. Among these items were payments related to employee severance,
litigation (mainly the state of Louisiana royalty dispute settlement)
and certain environmental remediation issues.
During 1995, cash from normal operating activities and proceeds
from asset sales, which are discussed below, were used to support Texaco's
capital and exploratory program of $2.4 billion and for payment of dividends
to common, preferred and minority stockholders of $947 million.
Proceeds from asset sales for 1995 amounted to $1,150 million. These
proceeds included the sale of non-core producing properties in the United
States, mainly some 300 scattered properties sold to Apache Corporation,
the sale and leaseback of equipment in an offshore development project in
the U.K., the sale of Texaco's 50% equity interest in Pekin Energy Company
and the sale of marine vessels. Proceeds from asset sales are key to financ-
ing growth opportunities. In addition to proceeds from asset sales, Texaco's
investing activities for 1995 included $248 million of partial proceeds
from the sale of equipment leasehold interests in conjunction with a sale/
leaseback arrangement. Texaco intends to repurchase these interests with-
in twelve to eighteen months.
In 1995, Texaco reduced total debt some $200 million to $6.2 billion at
year-end 1995. Accordingly, Texaco's ratio of total debt to total borrowed
and invested capital declined to 38.0% at December 31, 1995 from 38.5% at
year-end 1994. At year-end 1995, the company's debt profile continued
to reflect a strong liquidity position as the average maturity of its debt
exceeds 12 years and its contractual annual maturities of long-term debt over
the next five years have been balanced to avoid unusual calls on cash in any
one year. The company's weighted average interest rate at December 31,
1995, including the immaterial effect of debt-related derivatives,
remained at 7.6%.
During 1995, Texaco announced a stock repurchase program to buy up
to $500 million of its common stock through open market or privately nego-
tiated transactions. Subject to market conditions and applicable regulatory
requirements, the stock repurchase program is expected to be complet-
ed around the second quarter of 1997. Financing activities in 1995 also
reflect the issuance of $65 million of preferred stock by Texaco Capital LLC,
a finance subsidiary of Texaco Inc.
Texaco maintains a revolving credit facility with commitments of $2
billion which remained unused at year-end 1995. Additionally, a partially-owned
subsidiary maintains a long-term revolving credit facility for $330 million,
which was fully utilized at year-end 1995 and is reflected in long-term debt.
Subsequent to December 31, 1995, Texaco received some $350 million from
the collection of notes receivable and accrued interest relating to the
1994 sale of its discontinued chemical operations, and from insurance
recoveries relating to environmental and other matters. In addition, Texaco
announced that it has signed an agreement in principle with the Korea
Petroleum Development Corporation for the sale of a 15% interest in Texaco's
Captain Field in the U.K. North Sea for approximately $210 million. Texaco
also has entered into an agreement to sell its worldwide lubricant additives
business to Ethyl Corporation, a fuel and lubricant additives manufacturer
for approximately $135 million in cash and a three year note with a face
amount of $60 million. These sales should be completed during the first half
of 1996.
Texaco also announced that its 50% owned affiliate, Caltex, has signed
an agreement to sell its 50% interest in Nippon Petroleum Refining
Company, Limited to its partner, Nippon Oil Company, for approximately $2
billion. The sale is scheduled to be completed in April 1996, and approxi-
mately half of the net sales proceeds will be distributed to Caltex'
two stockholders, Texaco and Chevron Corporation.
As an international petroleum company, Texaco is exposed to commodity
price, foreign exchange and interest rate risks. These risks are primar-
ily managed by the careful structuring of transactions with their related
exposures. To a lesser extent, the company employs certain commonly used
derivative financial instruments as a cost-effective and efficient means
for managing its risks. Derivative usage is subject to corporate risk man-
agement policies which prohibit speculative positions and restrict the amount
of exposure on all derivative transactions by establishing dollar, term
and volumetric limits. The company's exposure in derivative transactions,
in the aggregate, is immaterial.
The company considers its financial position sufficient to meet its
anticipated future financial requirements.
Reserves
========
Texaco's worldwide net proved reserves at year-end 1995, including equity in
P. T. Caltex Pacific Indonesia (CPI), a 50% owned affiliate operating in
Indonesia, totaled 3.7 billion barrels of oil equivalent, of which 55% are
located in the United States. The worldwide reserves include 2.7 billion bar-
rels of crude oil and natural gas liquids, and 6.1 trillion cubic feet of
natural gas.
GRAPHIC MATERIAL APPEARS HERE.
SEE APPENDIX, PART B, ITEM B12.
GRAPHIC MATERIAL APPEARS HERE.
SEE APPENDIX, PART B, ITEM B13.
Texaco Inc. 1995 Annual Report to Stockholders Page 33.
On a worldwide basis, including equity reserves and excluding purchases
and sales, the company added new volumes to its reserve base equal
to 129% of combined liquids and gas production in 1995, 111% in 1994
and 112% in 1993. During 1995, the company added new volumes to its
reserve base equal to 116% of combined liquids and gas production in the
United States and 146% outside the United States. The three-year world-
wide reserve replacement average for 1993-1995 was 117% and the five-year
replacement average for 1991-1995 was 109%.
Texaco's worldwide finding and development costs were $3.29 in 1995,
$3.54 over the three-year period 1993-1995 and $4.03 over the five-year
period 1991-1995.
See the "Supplemental Oil and Gas Information" section starting
on page 64 for further information regarding Texaco's estimated proved
reserves.
Capital and Exploratory Expenditures
====================================
Worldwide capital and exploratory expenditures for continuing operations,
including equity in such expenditures of affiliates, were $3.1 billion for the
year 1995 as compared to $2.7 billion in 1994 and $2.9 billion in 1993. The
increase in 1995 reflects Texaco's commitment to a worldwide plan for
growth and its determination to reinvest proceeds received from the recent
divestment of non-core assets located primarily in the U.S. As a result,
Texaco continues to add underground oil and gas reserves at a pace faster
than such reserves are depleted through production. Additionally, the effec-
tiveness of this investment has been enhanced by the efficient use of the
latest technologies and exploration and production techniques. While the
focus of Texaco's investment has been increasingly upstream (62% in 1995)
and international (55% in 1995), significant capital expenditures con-
tinue to be spent on key exploration and producing opportunities in the
U.S. and downstream projects. Texaco continues to upgrade refineries to
enhance production of valuable light-end products and improve its marketing
and distribution system. In accordance with the company's long-stand-
ing practice, these investments are made with a sensitivity toward satisfying
environmental concerns and mandates.
United States
Upstream capital and exploratory expenditures in the U.S. increased signi-
ficantly in 1995 over both 1994 and 1993. This represented Texaco's refo-
cused activity in core areas where the company has successfully offset
the decline in maturing fields as well as new exploratory and developmental
activities. Areas of focus include both onshore and offshore Gulf of Mexico
prospects as well as heavy oil recovery in California. Downstream expendi-
tures for Texaco and its affiliate, Star Enterprise, remained relatively
stable with 1994 and 1993. Refinery expenditures declined during the periods
due to the completion of major refinery projects and upgrades in 1993.
However, a shift towards marketing and pipeline investments in 1995, includ-
ing service station upgrades such as the addition of joint marketing
initiatives with quick service restaurants, offset lower refinery spending.
International
Texaco also has a significant number of growth opportunities abroad. Upstream
capital and exploratory expenditures in 1995 increased significant-
ly over both 1994 and 1993 levels. This was primarily due to the continuing
development of several fields including the Captain Field in the North Sea,
where a movable platform, offloading vessel and shuttle vessel under
construction were subsequently sold and leased back with attractive financing
terms, as well as natural gas projects in Denmark, Trinidad and Colombia
and increased expenditures in the Partitioned Neutral Zone between Kuwait
and Saudi Arabia. Through its affiliate P.T. Caltex Pacific Indonesia, Texaco
continues to extend enhanced recovery programs in the vast Duri and Minas
fields in Indonesia.
Downstream expenditures decreased slightly from 1994 but were higher
than 1993 primarily reflecting refinery project completions in 1994. The
lower level of refinery spending was largely offset by increased marketing
investment particularly by the company's new joint venture in Scandinavia
and by Caltex in the fast growing markets in the Pacific Rim. Additionally,
marketing expenditures have increased in selected areas in Latin America
such as Brazil, where Texaco continues to invest in an expanding economy,
and Ecuador and other countries where liberalized government policies are
encouraging economic development.
1996 Capital and Exploratory Expenditures
Texaco's capital and exploratory spending levels, including equity in such
expenditures of affiliates, are planned to approximate $3.6 billion during
1996, an increase of some 16% over 1995 spending levels. This increase is
supported by the company's improved operating results and reflects the
aggressive redeployment of proceeds from asset sales. Texaco's 1996 program
supports the plan for growth by investing in worldwide opportunities
GRAPHIC MATERIAL APPEARS HERE.
SEE APPENDIX, PART B, ITEM B14.
GRAPHIC MATERIAL APPEARS HERE.
SEE APPENDIX, PART B, ITEM B15.
Texaco Inc. 1995 Annual Report to Stockholders Page 34.
which have significant potential to continue solid earnings growth and provide
highly competitive returns on capital employed and for stockholders.
Approximately $2.1 billion of Texaco's investment program is targeted for
international areas and $1.5 billion for domestic initiatives. On a function-
al basis, about 60% has been designated for upstream opportunities,
35% for downstream businesses, and 5% for other activities.
Upstream investments encompass a risk-balanced exploration program
focused in key geographic areas, and the utilization of advanced tech-
nologies such as 3-D and vertical cable seismic, subsea completions and
quadrilateral drilling. Major investments include delineating new oil and
gas finds in the deepwater Gulf of Mexico; continuing the successful projects
in South Louisiana and the Permian Basin in Texas; and developing off-
shore projects in Colombia, the North Sea, Australia, West Africa and South-
east Asia. In addition, expenditures continue to be designated for devel-
opment projects in the Partitioned Neutral Zone, an area of significant promise
for increasing production.
In the downstream, expenditures will be focused more in the marketing
segment of the business, particularly those high growth areas around the
world such as Latin America, and through Caltex, in the Pacific Rim. In the
more mature markets of Western Europe and the U.S., investments will be
focused on enhancing the company's retail presence and continuing strategic
joint marketing initiatives with quick service restaurants.
Other planned investments will support alternate energy opportunities
in cogeneration, gasification and power generation projects.
- -------------------------------------------------------------------------------
Capital and Exploratory Expenditures
- -------------------------------------------------------------------------------
(Millions of dollars) 1995 1994 1993
- -------------------------------------------------------------------------------
Texaco Inc. and subsidiary companies
United States
Exploration $ 193 $ 194 $ 194
Production 707 595 602
Manufacturing, marketing and distribution 305 271 347
Other 43 35 37
- -------------------------------------------------------------------------------
Total 1,248 1,095 1,180
- -------------------------------------------------------------------------------
International
Exploration 257 241 280
Production 661 404 475
Manufacturing, marketing and distribution 317 292 291
Other 7 2 6
- -------------------------------------------------------------------------------
Total 1,242 939 1,052
- -------------------------------------------------------------------------------
Total Texaco Inc. and subsidiary companies 2,490 2,034 2,232
- -------------------------------------------------------------------------------
Equity in affiliates
United States
Exploration and production 4 1 3
Manufacturing, marketing and distribution 148 152 147
Other 1 3 7
- -------------------------------------------------------------------------------
Total 153 156 157
- -------------------------------------------------------------------------------
International
Exploration and production 115 150 151
Manufacturing, marketing and other* 370 401 352
- -------------------------------------------------------------------------------
Total 485 551 503
- -------------------------------------------------------------------------------
Total equity in affiliates 638 707 660
- -------------------------------------------------------------------------------
Total continuing operations 3,128 2,741 2,892
Discontinued operations 2 22 84
- -------------------------------------------------------------------------------
Total worldwide $3,130 $2,763 $2,976
- -------------------------------------------------------------------------------
*Excludes expenditures of Caltex' affiliated companies.
Industry Review
===============
Review of 1995
The world economy grew at a healthy 3.3% rate in 1995, led by robust growth
in the developing world. The pivotal U.S. economy experienced a "soft
landing," braked by the Federal Reserve's restrictive monetary measures.
So too, a strong Deutsche Mark and the adoption of fiscal austerity mea-
sures led to lower-than-anticipated growth in Western Europe. Japan remained
mired in its worst economic slowdown since the 1930's. In the devel-
oping world, on the other hand, economic expansion was generally robust,
particularly in the Pacific Rim countries. Additionally, the economic down-
trend in the former Soviet bloc appears to have bottomed out in 1995, as
Eastern Europe enjoyed relatively strong GDP growth and the large Russian
economy experienced only a small contraction.
The global economic expansion propelled oil demand to a new peak of
69.9 million BPD in 1995, an increase of over one million BPD from the prior
year. Not since the late 1980's has consumption risen so rapidly, largely due
to the expanding energy needs of the developing world. Also of importance, the
significant "pull down" effect on world demand from sharply declining con-
sumption in the former Soviet Union has ceased. In the industrialized nations,
consumption grew by only 0.4 million BPD due to the adverse effects of mild
winter weather in the U.S. and Western Europe, and a cool summer in Japan.
In the developing world, on the other hand, demand rose strongly by one million
BPD, buoyed by the growth in the Pacific Rim countries. Consumption fell
by a mere 0.1 million BPD in the former Soviet bloc (including Eastern Europe)
as the downward trend in Soviet demand bottomed out.
Texaco Inc. 1995 Annual Report to Stockholders Page 35.
- -------------------------------------------------------------------------------
World Petroleum Demand
- -------------------------------------------------------------------------------
(Millions of barrels a day) 1995 1994 1993
- -------------------------------------------------------------------------------
Industrial nations 40.3 39.9 39.0
Developing nations 23.5 22.5 21.7
Former Soviet bloc 6.1 6.2 7.0
- -------------------------------------------------------------------------------
Total 69.9 68.6 67.7
- -------------------------------------------------------------------------------
During 1995, the growth in world oil demand was supplied overwhelmingly from
non-OPEC sources. Overall, non-OPEC crude output averaged 36.1
million BPD, an increase of about 0.9 million BPD from year-ago levels. The
North Sea led the advance, far exceeding all expectations. At the same time,
supplies rose significantly from South America as production from Colombia's
giant Cusiana field reached almost 0.2 million BPD by year-end.
There were also substantial gains in Angola, India, Syria and elsewhere.
Yet, partially offsetting these increases, output from the former Soviet
Union continued to fall, but at a much slower rate than in past years. In the
United States, the decline rate also slowed, due largely to the technologi-
cal advances and success in the deepwater Gulf of Mexico.
OPEC's ability to expand production was constrained by this surge
in non-OPEC supplies. During 1995, OPEC crude oil production averaged 25.3
million BPD, just 0.3 million BPD above its prior-year level. OPEC crude pro-
duction has nevertheless consistently exceeded the group's volumetric quota
which, since late 1993, has been set at 24.5 million BPD.
Improved economic activity, robust demand growth and low oil inventories
contributed to firmer crude oil prices in 1995. Overall, the spot price
of U.S. benchmark West Texas Intermediate (WTI) averaged $18.43 per barrel,
$1.24 per barrel higher than the previous year. Crude oil markets
remained highly volatile, however. For example, spot WTI prices reached about
$20.25 per barrel in the spring in response to low U.S. gasoline stocks
and tight Atlantic basin crude oil supplies, but fell by about $3.00 per barrel
by mid-summer due to high levels of OPEC and North Sea production. By
year end, prices were again above $19.00 per barrel, due in part to the extreme
cold weather in parts of the U.S. and Europe.
Refiners' margins remained depressed throughout 1995 in most
regions despite the growth in world oil consumption. This reflected continued
large-scale additions to refinery upgrading capacity, contributing to a per-
sistent surplus of light product manufacturing capability. The situation was
exacerbated by warm weather early in the year which resulted in a distillate
inventory overhang.
Near-Term Outlook
World economic growth is projected to remain strong in 1996, sustained by
robust expansion in the developing countries overall, modest increases in
the industrialized nations, and some recovery in the former Soviet Union.
Although GDP growth in the United States is forecast to decelerate further in
1996, Japan should gradually emerge from recession. Western Europe is
expected to enjoy continued, but somewhat lower economic expansion in 1996,
sustained by accommodative monetary policy. Within the developing world,
expansion in Asia is expected to moderate slightly, but will still be rela-
tively strong. The former Soviet bloc as a whole is anticipated to show pos-
itive GDP growth for the first time in six years, as the Russian economy will
most likely turn around in 1996.
Worldwide economic expansion is expected to increase oil consumption
to about 71.5 million BPD in 1996, a gain of 1.6 million BPD from prior-
year levels. Growth in the industrialized nations will account for about 0.6
million BPD of the total. Oil demand in the developing countries should rise
by another one million BPD, with most of the growth continued to be con-
centrated in the Pacific Rim countries. In the former Soviet Union, demand is
expected to fall slightly, yet this drop will be offset by increases in Poland,
Hungary and the Czech Republic.
- -------------------------------------------------------------------------------
Near-Term World Supply/Demand Balance
- -------------------------------------------------------------------------------
(Millions of barrels a day) 1996 1995
- -------------------------------------------------------------------------------
Demand 71.5 69.9
Supply
Non-OPEC Crude 37.3 36.1
OPEC Crude 25.3 25.3
Other Liquids 9.1 8.7
- -------------------------------------------------------------------------------
Total Supply 71.7 70.1
- -------------------------------------------------------------------------------
Stock Change 0.2 0.2
- -------------------------------------------------------------------------------
During 1996, the rise in non-OPEC production will continue, once again
boosted by expanding output from the North Sea. Non-OPEC crude output is
expected to rise by 1.2 million BPD to 37.3 million BPD, with half of this
growth coming from combined output from Norway and the United Kingdom.
Significant increases will continue in Argentina, Brazil, Angola, Australia,
Malaysia, and several other non-OPEC nations. The decrease in production
in the former Soviet Union is expected to be a mere 0.1 million BPD, and pro-
duction may even stabilize at 1995 levels. Also, the rate of decline in the
United States is expected to moderate further, with production slippage
of only 0.1 million BPD.
Once again, there appears to be little extra room for significant add-
itional volumes of OPEC oil, given the increases in non-OPEC supplies. OPEC
output is thus expected to remain roughly flat at 1995's level. With some OPEC
members expanding productive capacity (despite essentially flat world
requirements for their oil), petroleum prices could be potentially weak and
volatile. Iraqi "humanitarian" oil exports resulting from acceptance of the
terms of United Nations Resolution 986 could put substantial downward pressure
on oil prices, depending on the response by other OPEC producers.
Spurred by colder-than-normal weather during the last months of 1995,
U.S. natural gas consumption rose sharply to about 21.5 trillion cubic
feet (TCF), up 0.8 TCF from prior-year levels. While natural gas prices surged
toward year-end, they were generally weak during most of the year, a result
of high storage levels and strong competition from nuclear and hydropower. This
year, demand should continue to grow, averaging over 22 TCF.
Texaco Inc. 1995 Annual Report to Stockholders Page 36.
- ----------------------------------------------------------------------------------------------------------------------------------
Texaco Inc. and Subsidiary Companies
- ----------------------------------------------------------------------------------------------------------------------------------
Statement of Consolidated Income
- ----------------------------------------------------------------------------------------------------------------------------------
(Millions of dollars) For the years ended December 31 1995 1994 1993
- ----------------------------------------------------------------------------------------------------------------------------------
Revenues Sales and services (includes transactions with significant affiliates of $3,146
million in 1995, $2,561 million in 1994 and $3,027 million in 1993) $35,551 $32,540 $33,245
Equity in income of affiliates, interest, asset sales and other 1,236 813 826
-----------------------------------------------------------------------------------------------------------------
Total revenues 36,787 33,353 34,071
-----------------------------------------------------------------------------------------------------------------
Deductions Purchases and other costs (includes transactions with significant affiliates
of $1,733 million in 1995, $1,679 million in 1994 and $1,709 million in 1993) 27,237 23,931 24,667
Operating expenses 2,907 3,069 3,086
Selling, general and administrative expenses 1,580 1,679 1,783
Maintenance and repairs 375 390 418
Exploratory expenses 289 307 352
Depreciation, depletion and amortization 2,385 1,735 1,568
Interest expense 483 498 459
Taxes other than income taxes 491 496 549
Minority interest 54 44 17
-----------------------------------------------------------------------------------------------------------------
35,801 32,149 32,899
-----------------------------------------------------------------------------------------------------------------
Income from continuing operations before income taxes and cumulative effect
of accounting change 986 1,204 1,172
Provision for (benefit from) income taxes 258 225 (87)
-----------------------------------------------------------------------------------------------------------------
Net income from continuing operations before cumulative effect of accounting change 728 979 1,259
Discontinued operations
Net loss from operations - - (17)
Net loss on disposal - (69) (174)
-----------------------------------------------------------------------------------------------------------------
- (69) (191)
Cumulative effect of accounting change (121) - -
-----------------------------------------------------------------------------------------------------------------
Net Income $ 607 $ 910 $ 1,068
-----------------------------------------------------------------------------------------------------------------
Preferred stock dividend requirements $ 60 $ 91 $ 101
-----------------------------------------------------------------------------------------------------------------
Net income available for common stock $ 547 $ 819 $ 967
-----------------------------------------------------------------------------------------------------------------
Net Income Per Net income (loss) before cumulative effect of accounting change
Common Share Continuing operations $ 2.57 $ 3.43 $ 4.47
(dollars) Discontinued operations - (.26) (.73)
Cumulative effect of accounting change (.47) - -
-----------------------------------------------------------------------------------------------------------------
Net income $ 2.10 $ 3.17 $ 3.74
-----------------------------------------------------------------------------------------------------------------
Average Number of Common Shares Outstanding (thousands) 259,983 258,813 258,923
- ----------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
Texaco Inc. 1995 Annual Report to Stockholders Page 37.
- ----------------------------------------------------------------------------------------------------------------------------------
Texaco Inc. and Subsidiary Companies
- ----------------------------------------------------------------------------------------------------------------------------------
Consolidated Balance Sheet
- ----------------------------------------------------------------------------------------------------------------------------------
(Millions of dollars) As of December 31 1995 1994
- ----------------------------------------------------------------------------------------------------------------------------------
Assets Current Assets
Cash and cash equivalents $ 501 $ 404
Short-term investments-at fair value 35 60
Accounts and notes receivable (includes receivables from significant
affiliates of $240 million in 1995 and $142 million in 1994), less allowance
for doubtful accounts of $28 million in 1995 and $25 million in 1994 4,177 3,297
Inventories 1,357 1,358
Assets under agreements for sale (see Note 3) - 488
Net assets of discontinued operations (see Note 4) 164 195
Deferred income taxes and other current assets 224 217
-----------------------------------------------------------------------------------------------------------------
Total current assets 6,458 6,019
Investments and Advances 5,278 5,336
Net Properties, Plant and Equipment 12,580 13,483
Deferred Charges 621 667
-----------------------------------------------------------------------------------------------------------------
Total $24,937 $25,505
-----------------------------------------------------------------------------------------------------------------
Liabilities and Current Liabilities
Stockholders' Notes payable, commercial paper and current portion of long-term debt $ 737 $ 917
Equity Accounts payable and accrued liabilities (includes payables to significant
affiliates of $123 million in 1995 and $93 million in 1994)
Trade liabilities 2,396 1,980
Accrued liabilities 1,381 1,317
Estimated income and other taxes 692 801
-----------------------------------------------------------------------------------------------------------------
Total current liabilities 5,206 5,015
Long-Term Debt and Capital Lease Obligations 5,503 5,564
Deferred Income Taxes 634 879
Employee Retirement Benefits 1,138 1,130
Deferred Credits and Other Noncurrent Liabilities 2,270 2,558
Minority Interest in Subsidiary Companies 667 610
-----------------------------------------------------------------------------------------------------------------
Total 15,418 15,756
Stockholders' Equity
Market Auction Preferred Shares 300 300
ESOP Convertible Preferred Stock 495 515
Unearned employee compensation and benefit plan trust (437) (282)
Common stock-274,293,417 shares issued 1,714 1,714
Paid-in capital in excess of par value 655 654
Retained earnings 7,186 7,463
Currency translation adjustment 61 87
Unrealized net gain on investments 62 51
-----------------------------------------------------------------------------------------------------------------
10,036 10,502
Less-Common stock held in treasury, at cost 517 753
-----------------------------------------------------------------------------------------------------------------
Total stockholders' equity 9,519 9,749
-----------------------------------------------------------------------------------------------------------------
Total $24,937 $25,505
- ----------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
Texaco Inc. 1995 Annual Report to Stockholders Page 38.
- ----------------------------------------------------------------------------------------------------------------------------------
Texaco Inc. and Subsidiary Companies
- ----------------------------------------------------------------------------------------------------------------------------------
Statement of Consolidated Cash Flows
- ----------------------------------------------------------------------------------------------------------------------------------
(Millions of dollars) For the years ended December 31 1995 1994 1993
- ----------------------------------------------------------------------------------------------------------------------------------
Operating Net income $ 607 $ 910 $ 1,068
Activities Reconciliation to net cash provided by (used in) operating activities
Cumulative effect of accounting change 121 - -
Loss on disposal of discontinued operations - 103 223
Depreciation, depletion and amortization 2,385 1,735 1,631
Deferred income taxes (102) (213) (283)
Exploratory expenses 289 307 352
Minority interest in net income 54 44 17
Dividends from affiliates, less than equity in income (103) (79) (227)
Gains on asset sales (320) (125) (23)
Changes in operating working capital
Accounts and notes receivable (766) 278 (275)
Inventories (29) (60) 26
Accounts payable and accrued liabilities (116) (350) (215)
Other-mainly estimated income and other taxes (44) 23 (108)
Other-net 146 286 176
--------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 2,122 2,859 2,362
Investing Capital and exploratory expenditures (2,386) (2,050) (2,326)
Activities Proceeds from sale of discontinued operations,
net of cash and cash equivalents sold - 645 -
Proceeds from sales of assets 1,150 328 373
Sale of leasehold interests 248 - -
Purchases of investment instruments (1,238) (693) (1,342)
Sales/maturities of investment instruments 1,273 672 1,258
Other-net 12 (7) (7)
--------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (941) (1,105) (2,044)
Financing Borrowings having original terms in excess of three months
Activities Proceeds 313 660 821
Repayments (358) (707) (796)
Net increase (decrease) in other borrowings (137) (251) 296
Issuance of preferred stock by subsidiaries 65 112 425
Redemption of Series C Preferred Stock - (267) -
Purchases of common stock (4) (381) -
Dividends paid to the company's stockholders
Common (832) (830) (828)
Preferred (60) (91) (101)
Dividends paid to minority stockholders (55) (87) (84)
Other-net (2) (3) (11)
--------------------------------------------------------------------------------------------------------------------
Net cash used in financing activities (1,070) (1,845) (278)
Cash and Effect of exchange rate changes (14) 7 (13)
Cash --------------------------------------------------------------------------------------------------------------------
Equivalents Increase (decrease) during year 97 (84) 27
Beginning of year 404 488 461
--------------------------------------------------------------------------------------------------------------------
End of year $ 501 $ 404 $ 488
- ----------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
Texaco Inc. 1995 Annual Report to Stockholders Page 39.
- ----------------------------------------------------------------------------------------------------------------------------------
Texaco Inc. and Subsidiary Companies
- ----------------------------------------------------------------------------------------------------------------------------------
Statement of Consolidated Stockholders' Equity
- ----------------------------------------------------------------------------------------------------------------------------------
Shares Amount Shares Amount Shares Amount
- --------------------------------------------------------------------------------------------- ----------------- ----------------
(Shares in thousands; amounts in millions of dollars) 1995 1994 1993
- --------------------------------------------------------------------------------------------- ----------------- ----------------
Preferred par value $1; Shares authorized-30,000,000
Stock Series C Variable Rate Cumulative Preferred Stock-
stated value of $50 per share
Beginning of year - $ - 5,334 $ 267 5,334 $ 267
Redemption - - (5,334) (267) - -
--------------------------------------------------------------------------------------------------------------------
End of year - - - - 5,334 267
--------------------------------------------------------------------------------------------------------------------
Series E Variable Rate Cumulative Preferred Stock-
stated value of $100,000 per share
Beginning of year - - 4 381 4 381
Redemption - - (4) (381) - -
--------------------------------------------------------------------------------------------------------------------
End of year - - - - 4 381
--------------------------------------------------------------------------------------------------------------------
Market Auction Preferred Shares (Series G, H, I and J)-
liquidation preference of $250,000 per share
Beginning and end of year 1 300 1 300 1 300
--------------------------------------------------------------------------------------------------------------------
Series B ESOP Convertible Preferred Stock-
liquidation value of $600 per share
Beginning of year 780 468 812 487 823 494
Retirements (29) (18) (32) (19) (11) (7)
--------------------------------------------------------------------------------------------------------------------
End of year 751 450 780 468 812 487
--------------------------------------------------------------------------------------------------------------------
Series F ESOP Convertible Preferred Stock-
liquidation value of $737.50 per share
Beginning of year 63 47 66 49 67 49
Retirements (3) (2) (3) (2) (1) -
--------------------------------------------------------------------------------------------------------------------
End of year 60 45 63 47 66 49
--------------------------------------------------------------------------------------------------------------------
Unearned (related to ESOP preferred stock and
Employee restricted stock awards)
Compensation Beginning of year (282) (337) (385)
Awards (8) (5) (10)
Amortization and other 56 60 58
--------------------------------------------------------------------------------------------------------------------
End of year (234) (282) (337)
--------------------------------------------------------------------------------------------------------------------
Benefit Plan (common stock)
Trust Establishment 4,000 (203)
--------------------------------------------------------------------------------------------------------------------
End of year 4,000 (203)
--------------------------------------------------------------------------------------------------------------------
Common Stock par value $6.25;
Shares authorized-350,000,000
Issued 274,293 1,714 274,293 1,714 274,293 1,714
--------------------------------------------------------------------------------------------------------------------
Common Stock Beginning of year 14,761 (753) 15,273 (776) 15,545 (789)
Held in Purchases of common stock 51 (4) 6,107 (381) - -
Treasury, at Preferred stock exchange - - (6,107) 381 - -
cost Other-mainly employee benefit plans (4,736) 240 (512) 23 (272) 13
--------------------------------------------------------------------------------------------------------------------
End of year 10,076 $ (517) 14,761 $ (753) 15,273 $ (776)
- ----------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements. (Continued on next page)
Texaco Inc. 1995 Annual Report to Stockholders Page 40.
- ----------------------------------------------------------------------------------------------------------------------------------
Texaco Inc. and Subsidiary Companies
- ----------------------------------------------------------------------------------------------------------------------------------
Statement of Consolidated Stockholders' Equity (continued)
- ----------------------------------------------------------------------------------------------------------------------------------
(Millions of dollars) 1995 1994 1993
- ----------------------------------------------------------------------------------------------------------------------------------
Paid-in Beginning of year $ 654 $ 655 $ 654
Capital in Issuance and redemption of preferred stock, treasury stock transactions
Excess of relating to investor services plan and employee compensation plans 1 (1) 1
Par Value --------------------------------------------------------------------------------------------------------------------
End of year 655 654 655
--------------------------------------------------------------------------------------------------------------------
Retained Balance at beginning of year 7,463 7,463 7,312
Earnings Add:
Net income 607 910 1,068
Tax benefit associated with dividends on unallocated ESOP Convertible
Preferred Stock 8 11 13
Deduct: Dividends declared on
Common stock ($3.20 per share in 1995, 1994 and 1993) 832 830 828
Preferred stock
Series C Variable Rate Cumulative Preferred Stock - 13 18
Series E Variable Rate Cumulative Preferred Stock - 19 25
Market Auction Preferred Shares (Series G, H, I and J) 13 10 8
Series B ESOP Convertible Preferred Stock 43 45 47
Series F ESOP Convertible Preferred Stock 4 4 4
--------------------------------------------------------------------------------------------------------------------
Balance at end of year 7,186 7,463 7,463
--------------------------------------------------------------------------------------------------------------------
Currency Beginning of year 87 18 (24)
Translation Change during year (26) 69 42
Adjustment --------------------------------------------------------------------------------------------------------------------
End of year 61 87 18
--------------------------------------------------------------------------------------------------------------------
Unrealized Beginning of year 51 58 -
Net Gain On Change during year 11 (7) 58
Investments --------------------------------------------------------------------------------------------------------------------
End of year 62 51 58
--------------------------------------------------------------------------------------------------------------------
Stockholders'
Equity End of year (including preceding page) $9,519 $9,749 $10,279
--------------------------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
Texaco Inc. 1995 Annual Report to Stockholders Page 41.
- -------------------------------------------------------------------------------
Texaco Inc. and Subsidiary Companies
- -------------------------------------------------------------------------------
Notes to Consolidated Financial Statements
- -------------------------------------------------------------------------------
Note One -- Description of Significant Accounting Policies
===============================================================================
Principles of Consolidation
The consolidated financial statements consist of the accounts of Texaco Inc.
and subsidiary companies owned directly or indirectly more than
50 percent. Intercompany accounts and transactions are eliminated.
The U.S. Dollar is the functional currency of all the company's operations
and of a substantial portion of the operations of its affiliates accounted
for on the equity method. For these operations, all gains and losses from
transactions not denominated in the functional currency are included in
income currently, except for certain hedging transactions. The cumulative
translation effects for the equity affiliates using functional currencies other
than the U.S. Dollar are included in the currency translation adjustment in
stockholders' equity.
Use of Estimates
The preparation of Texaco's consolidated financial statements in accordance
with generally accepted accounting principles requires the use of esti-
mates and management's judgment. While all available information has been
considered, actual amounts could differ from those reported as assets
and liabilities and related revenues, costs and expenses and the disclosed
amounts of contingencies.
Cash Equivalents
Highly liquid investments with a maturity of three months or less when
purchased are generally considered to be cash equivalents.
Inventories
Virtually all inventories of crude oil, petroleum products and petrochemicals
are stated at cost, determined on the last-in, first-out (LIFO) method.
Other merchandise inventories are stated at cost, determined on the first-in,
first-out (FIFO) method. Materials and supplies are stated at average
cost. Inventories are valued at the lower of cost or market.
Investments and Advances
The equity method of accounting is used for investments in certain affiliates
owned 50 percent or less, including corporate joint-ventures and part-
nerships. Under this method, equity in the pre-tax income or losses of
partnerships and in the net income or losses of corporate joint-venture compa-
nies is reflected currently in Texaco's revenues, rather than when realized
through dividends or distributions. Investments in the entities accounted
for on this method generally reflect Texaco's equity in their underlying net
assets.
The company's interest in the net income of affiliates accounted for at
cost is reflected in net income when realized through dividends.
Investments in debt securities and in equity securities with readily
determinable fair values are accounted for at fair value if classified as
available-for-sale.
Properties, Plant and Equipment and Depreciation, Depletion and Amortization
Texaco follows the "successful efforts" method of accounting for its oil and
gas exploration and producing operations.
Lease acquisition costs related to properties held for oil, gas and
mineral production are capitalized when incurred. Unproved properties with
acquisition costs which are individually significant are assessed on a property-
by-property basis, and a loss is recognized, by provision of a valuation
allowance, when the assessment indicates an impairment in value. Unproved
properties with acquisition costs which are not individually significant
are generally aggregated and the portion of such costs estimated to be non-
productive, based on historical experience, is amortized on an average hold-
ing period basis.
Exploratory costs, excluding the costs of exploratory wells, are charged
to expense as incurred. Costs of drilling exploratory wells, including strati-
graphic test wells, are capitalized pending determination whether the wells
have found proved reserves which justify commercial development. If such
reserves are not found, the drilling costs are charged to exploratory expenses.
Intangible drilling costs applicable to productive wells and to develop-
ment dry holes, as well as tangible equipment costs related to the development
of oil and gas reserves, are capitalized.
As discussed in Note 2, Texaco adopted SFAS 121 in 1995. Commencing in
1995, for purposes of determining and recognizing permanent
impairment of long-lived assets to be held and used, the applicable carrying
value is tested against the undiscounted projection of net future pre-tax
cash flows. In the case of productive oil and gas properties located in the
United States, the test is performed on an individual field basis, including
related depreciable investment. For similar properties located outside the
United States, the test is performed on a field, concession or contract area
basis, depending on the circumstances. For other depreciable investments,
the applicable grouping of assets is based on the lowest practicable lev-
els of identifiable cash flows, consistent with the manner in which those
assets are managed. If an impairment exists, the carrying amount is adjusted
to fair value.
Texaco Inc. 1995 Annual Report to Stockholders Page 42.
Assets to be disposed of are generally accounted for at the lower of
amortized cost or fair value less cost to sell.
The costs of productive leaseholds and other capitalized costs related
to producing activities, including tangible and intangible costs, are amor-
tized principally by field on the unit-of-production basis by applying the
ratio of produced oil and gas to estimated recoverable proved oil and gas
reserves. Estimated future restoration and abandonment costs are taken into
account in determining amortization and depreciation rates.
Depreciation of properties, plant and equipment related to facilities
other than producing properties is provided generally on the group plan,
using the straight-line method, with depreciation rates based upon estimated
useful life applied to the cost of each class of property. Assets not on
the group plan are depreciated based on estimated useful lives using the
straight-line method.
Capitalized nonmineral leases are amortized over the estimated
useful life of the asset or the lease term, as appropriate, using the
straight-line method.
Periodic maintenance and repairs applicable to marine vessels and
manufacturing facilities are accounted for on the accrual basis. Normal
maintenance and repairs of all other properties, plant and equipment are
charged to expense as incurred. Renewals, betterments and major repairs
that materially extend the useful life of properties are capitalized and the
assets replaced, if any, are retired.
When capital assets representing complete units of property are
disposed of, the difference between the disposal proceeds and net book value
is credited or charged to income. When miscellaneous business properties
are disposed of, the difference between asset cost and salvage value is
charged or credited to accumulated depreciation.
Environmental Expenditures
When remediation of a property is probable and the related costs can be
reasonably estimated, environmentally-related remediation costs are
expensed and recorded as liabilities. If recoveries of environmental costs
from third parties are probable, a receivable is recorded. Other environmen-
tal expenditures, principally maintenance or preventive in nature, are
recorded when expended and are expensed or capitalized as appropriate.
Minority Interest in Subsidiary Companies
Minority interest in the Consolidated Balance Sheet reflects minority owners'
share of stockholders' equity in subsidiaries.
Deferred Income Taxes
Deferred income taxes are determined utilizing a liability approach. The
income statement effect is derived from changes in deferred income taxes on
the balance sheet. This approach gives consideration to the future tax
consequences associated with differences between financial accounting and
tax bases of assets and liabilities. These differences relate to items such as
depreciable and depletable properties, exploratory and intangible drilling
costs, nonproductive leases, merchandise inventories and certain liabilities.
This approach gives immediate effect to changes in income tax laws
upon enactment.
Provision is not made for possible income taxes payable upon distri-
bution of accumulated earnings of foreign subsidiary companies and affili-
ated corporate joint-venture companies when such earnings are deemed to be
permanently reinvested.
Net Income Per Common Share
Primary net income per common share is based on net income less preferred
stock dividend requirements divided by the average number of common
shares outstanding and common equivalents. Fully diluted net income per
common share assumes full conversion of all convertible securities into
common stock at the later of the beginning of the year or date of issuance
(unless antidilutive).
Accounting for Contingencies
Certain conditions may exist as of the date financial statements are issued,
which may result in a loss to the company, but which will only be resolved
when one or more future events occur or fail to occur. Such contingent
liabilities are assessed by the company's management and legal counsel. The
assessment of loss contingencies necessarily involves an exercise of judgment
and is a matter of opinion. In assessing loss contingencies related to
legal proceedings that are pending against the company or unasserted claims
that may result in such proceedings, the company's legal counsel eval-
uates the perceived merits of any legal proceedings or unasserted claims as
well as the perceived merits of the amount of relief sought or expected to
be sought therein.
If the assessment of a contingency indicates that it is probable that a
material loss has been incurred and the amount of the liability can be esti-
mated, then the estimated liability would be accrued in the company's financial
statements. If the assessment indicates that a potentially material
loss contingency is not probable, but is reasonably possible, or is probable
but cannot be estimated, then the nature of the contingent liability, together
with an estimate of the range of possible loss if determinable and material,
would be disclosed.
Loss contingencies considered remote are generally not disclosed unless
they involve guarantees, in which case the nature of the guarantee
would be disclosed. However, in some instances in which disclosure is not
otherwise required, the company may disclose contingent liabilities of an
unusual nature which, in the judgment of management and its legal counsel,
may be of interest to stockholders or others.
===============================================================================
Note Two -- Changes in Accounting Principles
===============================================================================
During 1995, Texaco adopted Statement of Financial Accounting Standards,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of" (SFAS 121). Under SFAS 121, assets whose carrying
amounts are not expected to be fully recovered by future use or disposi-
tion must be written down to their fair values.
Adoption of this Standard resulted in a non-cash after-tax charge of
$639 million against fourth quarter 1995 earnings. Application of SFAS 121
to assets that the company intends to retain resulted in a pre-tax fourth
quarter charge of $775 million, principally to depreciation, depletion and
Texaco Inc. 1995 Annual Report to Stockholders Page 43.
amortization expense. On an after-tax basis, this charge amounted to $514
million and primarily reflects the write-down to their estimated fair val-
ues of certain of the company's producing properties in the United States which
are now being evaluated for impairment on a field-by-field basis rather
than in the aggregate. Fair values were based on estimated future discounted
cash flows. To a large extent, the impairments result from acquisitions
of U.S. upstream properties at times when price assumptions and reserve
estimates were higher than are currently anticipated. Additionally, con-
straints on production and development in certain areas due to environmental
concerns have curtailed originally projected production levels and
increased costs to the point that original investments cannot be fully re-
covered. Also in the fourth quarter, certain non-core coal and marketing prop-
erties, surplus buildings and other properties and equipment that the company
intends to abandon or dispose of pursuant to its plan for growth were
written-down by a $184 million charge, principally to depreciation, depletion
and amortization expense. Including estimated disposal costs, this
charge to income was $125 million, net-of-tax.
In accordance with SFAS 121, a $121 million after-tax write-down of
non-core domestic producing properties held for sale at January 1, 1995,
previously recorded in the first quarter of 1995 in income from continuing
operations, has now been classified as the cumulative effect of an account-
ing change. Additionally, results for the first three quarters of 1995 have
been restated, principally to reflect the reversal of previously recorded depre-
ciation, depletion and amortization of assets being held for disposal.
There were no material changes in the estimated fair values of assets
to be disposed of subsequent to the determination of their impairment. At
year-end 1995, the carrying amount of assets to be disposed of was $111
million. Disposition of these assets is generally expected to be completed in
approximately one year.
Adoption of SFAS 121 by Star Enterprise and the Caltex group of
companies, each owned 50% by Texaco, had no effect on 1995 net income.
During the first quarter of 1994, the Caltex group of companies, owned
50% by Texaco, adopted the following Statement of Financial Accounting
Standards (SFAS).
Accounting For Certain Investments in Debt and Equity Securities --
SFAS 115 requires that certain investments be classified into three cate-
gories based on management's intent and be reported at fair value unless
intended to be held to maturity. Adoption of SFAS 115, which was effective
January 1, 1994, had no effect on reported net income. The cumulative effect
on Texaco of Caltex's adoption of SFAS 115 at January 1, 1994 was not
material, resulting in an increase in stockholders' equity of $35 million.
The net effect on Texaco for the year 1994 was an additional net increase to
stockholders' equity of $5 million. These increases were primarily unrealized
gains on investments classified as available-for-sale by certain affili-
ates of Caltex.
In 1993, Texaco adopted the following Statements.
Employers' Accounting for Postemployment Benefits -- SFAS 112 requires
companies to accrue the cost of postemployment benefits either dur-
ing the years that the employee renders the necessary service or at the date
of the event giving rise to the benefit, depending upon whether certain con-
ditions are met. Adoption of the Standard as of January 1, 1993 did not
impact 1993 net income since the company had been accounting for
substantially all of these costs in accordance with the new Standard.
Accounting for Certain Investments in Debt and Equity Securities --
SFAS 115 requires that investments in equity securities that have readily
determinable fair values and all investments in debt securities be classified
into three categories based on management's intent. Such investments
are to be reported at fair value except for investments intended to be held
to maturity which are to be reported at amortized cost. Previously, all such
investments were accounted for at amortized cost.
The cumulative effect on the consolidated financial statements of
adopting SFAS 115 as of December 31, 1993 was not material. Adoption of this
Standard resulted in an increase in stockholders' equity of $58 million, after
related income taxes, representing unrealized net gains applicable to
securities categorized as available-for-sale under the new Standard. SFAS 115
prohibits restatement of previous financial statements.
===============================================================================
Note Three -- Assets Under Agreements for Sale
===============================================================================
In 1994, Texaco announced that it agreed to sell more than 300 domestic
producing fields to Apache Corporation and agreed to form a strategic alliance
with STENA, involving the sale of a portion of its international marine fleet.
At December 31, 1994, the net properties, plant and equipment and deferred
income taxes relating to those assets, and other non-core assets for which
sales agreements had been signed, were classified as current assets on the
Consolidated Balance Sheet. In 1995, virtually all of these non-core asset
sales were completed, generating approximately $650 million in cash proceeds.
===============================================================================
Note Four -- Discontinued Operations
===============================================================================
In 1993, Texaco announced its intention to dispose of substantially all of its
worldwide chemical operations, including its lubricant additives busi-
ness. Texaco has since accounted for these operations as discontinued
operations.
In 1993, Texaco entered into a memorandum of understanding with an
affiliate of the Jon M. Huntsman Group of Companies for the sale of Texaco
Chemical Company and related international chemical operations. On April 21,
1994, Texaco Inc. received from Huntsman Corporation $850 million,
consisting of $650 million in cash and an 11-year subordinated note with a
face amount of $200 million. The note was prepaid in January, 1996.
Subsequent to the above sale to Huntsman Corporation, Texaco continued
its efforts to sell its worldwide lubricant additives business, which
includes manufacturing facilities in Port Arthur, Texas and Ghent, Belgium,
among others, as well as sales and marketing offices in various loca-
tions in the U.S. and abroad. In late 1995, Texaco entered into an agreement
to sell this business to Ethyl Corporation, a fuel and lubricant additives
manufacturer. Under the terms of the purchase and sale agreement, as
amended in February 1996, Ethyl will purchase this business for approxi-
Texaco Inc. 1995 Annual Report to Stockholders Page 44.
mately $195 million. At closing, which is currently planned for February 29,
1996, Texaco will receive approximately $135 million in cash and a three
year note with a face a mount of $60 million.
The results for these operations have been classified as discontinued
operations for all periods presented in the Statement of Consolidated
Income. The assets and liabilities of discontinued operations have been
classified in the Consolidated Balance Sheet as "Net assets of discontinued
operations" and as of December 31, 1995 and 1994, the balance in this caption
reflects the assets and liabilities of the worldwide lubricant additives
business. Discontinued operations have not been segregated in the Statement
of Consolidated Cash Flows and, therefore, amounts for certain cap-
tions will not agree with the respective Statement of Consolidated Income.
Related party transactions between the discontinued operations and
Texaco's significant affiliates included both sale and purchase transac-
tions. Sales to affiliates amounted to $26 million, $35 million and $67 mil-
lion for 1995, 1994 and 1993, respectively. For the year 1995 there were no
purchases from affiliates as compared with purchases of $20 million and $118
million for 1994 and 1993, respectively. Receivables from and payables
to these affiliates at the end of each of these periods were immaterial.
The summarized results of discontinued operations and related per
common share effects are as follows:
- -------------------------------------------------------------------------------
(Millions of dollars)
- -------------------------------------------------------------------------------
For the years ended December 31 1995 1994 1993
- -------------------------------------------------------------------------------
Revenues $ 222 $ 415 $1,114
- -------------------------------------------------------------------------------
Loss from operations before income taxes $ - $ - $ (19)
Benefit from income taxes - - 2
- -------------------------------------------------------------------------------
Net loss from operations $ - $ - $ (17)
- -------------------------------------------------------------------------------
Loss on disposal before income taxes* $ - $ (103) $ (223)
Benefit from income taxes - 34 49
- -------------------------------------------------------------------------------
Net loss on disposal $ - $ (69) $ (174)
- -------------------------------------------------------------------------------
Total net loss $ - $ (69) $ (191)
- -------------------------------------------------------------------------------
*1995 includes $11 million of income, 1994 includes $15 million of income and
1993 includes $19 million of losses during the phase-out period.
Per common share (dollars)
Net loss from operations $ - $ - $ (.06)
Loss on disposal - (.26) (.67)
- -------------------------------------------------------------------------------
Total net loss $ - $ (.26) $ (.73)
- -------------------------------------------------------------------------------
Summarized balance sheet data for the discontinued operations is as
follows:
- -------------------------------------------------------------------------------
(Millions of dollars) As of December 31 1995 1994
- -------------------------------------------------------------------------------
Assets
Current Assets
Accounts receivable $ 29 $ 31
Inventories 33 30
Other - 6
- -------------------------------------------------------------------------------
Total current assets 62 67
Net Properties, Plant and Equipment 130 148
- -------------------------------------------------------------------------------
Total $ 192 $ 215
- -------------------------------------------------------------------------------
Liabilities
Current Liabilities $ 27 $ 19
Noncurrent Liabilities 1 1
- -------------------------------------------------------------------------------
Total $ 28 $ 20
- -------------------------------------------------------------------------------
Net assets of discontinued operations $ 164 $ 195
- -------------------------------------------------------------------------------
Net assets of discontinued operations decreased $31 million from year-end 1994
mainly due to revisions of assets to be sold and lower working capital.
===============================================================================
Note Five -- Inventories
===============================================================================
- -------------------------------------------------------------------------------
(Millions of dollars) As of December 31 1995 1994
- -------------------------------------------------------------------------------
Crude oil $ 294 $ 284
Petroleum products and petrochemicals 839 854
Other merchandise 27 30
Materials and supplies 197 190
- -------------------------------------------------------------------------------
Total $1,357 $1,358
- -------------------------------------------------------------------------------
The excess of estimated current cost over the book value of inventories
carried on the LIFO basis of accounting was approximately $231 million
and $207 million at December 31, 1995 and 1994, respectively.
Texaco Inc. 1995 Annual Report to Stockholders Page 45.
===============================================================================
Note Six -- Investments and Advances
===============================================================================
Investments in affiliates, including corporate joint-ventures and partnerships,
owned 50% or less are accounted for on the equity method. Texaco's total
investments and advances are summarized as follows:
- -------------------------------------------------------------------------------
(Millions of dollars) As of December 31 1995 1994
- -------------------------------------------------------------------------------
Affiliates accounted for on the equity method
Caltex group of companies
Exploration and production $ 445 $ 494
Manufacturing, marketing and distribution 2,035 1,873
- -------------------------------------------------------------------------------
Total Caltex group of companies 2,480 2,367
Star Enterprise 755 830
Other affiliates 850 709
- -------------------------------------------------------------------------------
4,085 3,906
Miscellaneous investments, long-term receivables, etc.,
accounted for at
Fair value 682 631
Cost, less reserve 511 799
- -------------------------------------------------------------------------------
Total $5,278 $5,336
- -------------------------------------------------------------------------------
Texaco's equity in the net income of affiliates accounted for on the
equity method, adjusted to reflect income taxes for partnerships whose income
is directly taxable to Texaco, is as follows:
- -------------------------------------------------------------------------------
(Millions of dollars)
For the years ended December 31 1995 1994 1993
- -------------------------------------------------------------------------------
Equity in net income (loss)
Caltex group of companies
Exploration and production $ 156 $ 136 $ 134
Manufacturing, marketing and distribution 294 210 227
- -------------------------------------------------------------------------------
Total Caltex group of companies 450 346 361
Star Enterprise (47) 37 61
Other affiliates 121 111 108
- -------------------------------------------------------------------------------
Total $ 524 $ 494 $ 530
- -------------------------------------------------------------------------------
Dividends received from these companies $ 427 $ 467 $ 366
The undistributed earnings of these affiliates included in Texaco's
retained earnings were $2,768 million, $2,657 million and $2,585 million as
of December 31, 1995, 1994 and 1993, respectively.
Caltex Group
Texaco has investments in the Caltex group of companies, owned 50% by Texaco
and 50% by Chevron Corporation. The Caltex group consists of Caltex
Petroleum Corporation and subsidiaries, P.T. Caltex Pacific Indonesia and
American Overseas Petroleum Limited and subsidiary. This group of com-
panies is engaged in the exploration for and production, transportation,
refining and marketing of crude oil and products in Africa, Asia, the Middle
East, Australia and New Zealand.
Caltex Petroleum Corporation has signed an agreement to sell its 50%
interest in Nippon Petroleum Refining Company, Limited to its partner
Nippon Oil Company for approximately $2 billion. The sale is scheduled to be
completed in April 1996 and will result in a significant earnings gain.
Approximately half of the net sales proceeds will be distributed to its
stockholders.
Star Enterprise
Star Enterprise (Star) is a joint-venture partnership owned 50% by Texaco
and 50% by the Saudi Arabian Oil Company. The partnership refines,
distributes and markets Texaco-branded petroleum products in 26 East and Gulf
Coast states and the District of Columbia.
. . . . . . . . . .
The following table provides summarized financial information on a
100% basis for the Caltex group, Star and all other affiliates accounted for
on the equity method, as well as Texaco's share. The net income of all partner-
ships, including Star, is net of estimated income taxes. The actual income
tax liability is reflected in the accounts of the respective partners and not
shown in the following table.
Star's assets at the respective balance sheet dates include the remaining
portion of the assets which were originally transferred from Texaco to Star
at the fair market value on the date of formation. Texaco's investment and
equity in the income of Star, as reported in the consolidated financial state-
ments, reflect the remaining unamortized historical carrying cost of the assets
transferred to Star at formation. Additionally, Texaco's investment includes
adjustments necessary to reflect contractual arrangements on the formation of
this partnership, principally involving contributed inventories.
Texaco Inc. 1995 Annual Report to Stockholders Page 46.
- ---------------------------------------------------------------------------------------------------------------------------------
Other
Caltex group Star Enterprise equity affiliates Texaco's share
- ------------------------------------------------------ ---------------------- ---------------------- -------------------------
(Millions of dollars) 1995 1994 1993 1995 1994 1993 1995 1994 1993 1995 1994 1993
- ------------------------------------------------------ ---------------------- ---------------------- -------------------------
For the years ended
December 31:
Gross revenues $15,622 $15,148 $15,648 $6,619 $6,100 $6,399 $3,662 $3,058 $3,233 $12,567 $11,766 $12,224
Income (loss) before
income taxes $ 1,366 $ 1,111 $ 1,178 $ (135) $ 101 $ 194 $ 691 $ 639 $ 633 $ 818 $ 780 $ 852
Net income (loss) $ 899 $ 689 $ 720 $ (88) $ 66 $ 126 $ 507 $ 410 $ 406 $ 524 $ 494 $ 530
- ---------------------------------------------------------------------------------------------------------------------------------
As of December 31:
Current assets $ 2,351 $ 2,421 $ 2,123 $ 832 $ 928 $1,015 $ 925 $ 641 $ 635 $ 1,753 $ 1,711 $ 1,637
Noncurrent assets 7,836 7,389 6,266 3,299 3,247 3,188 3,622 3,351 3,481 6,841 6,453 5,888
Current liabilities (3,251) (3,072) (2,411) (745) (748) (647) (1,180) (759) (755) (2,434) (2,213) (1,835)
Noncurrent
liabilities and
deferred credits (1,841) (1,853) (1,537) (1,207) (1,109) (1,161) (1,703) (1,835) (1,928) (2,007) (1,969) (1,876)
Minority interest
in subsidiary
companies (136) (152) (146) - - - - - - (68) (76) (73)
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets (or
partners' equity)* $ 4,959 $ 4,733 $ 4,295 $2,179 $2,318 $2,395 $1,664 $1,398 $1,433 $ 4,085 $ 3,906 $ 3,741
- ---------------------------------------------------------------------------------------------------------------------------------
*Net assets for the Caltex group includes the cumulative effect at January 1,
1994 of the adoption of SFAS 115, resulting in an increase in stockholders'
equity of $70 million and an additional increase of $9 million during the
year 1994.
===============================================================================
Note Seven -- Properties, Plant and Equipment
===============================================================================
- -------------------------------------------------------------------------------
Gross Net Gross Net
- --------------------------------------------------------- --------------------
(Millions of dollars) As of December 31 1995 1994
- --------------------------------------------------------- --------------------
Exploration and production $22,604 $ 7,094 $22,467 $ 8,050
Manufacturing 3,370 2,115 3,140 2,004
Marketing 3,360 2,376 3,319 2,351
Marine 226 12 242 47
Pipe lines 950 393 943 399
Other 982 590 984 632
- -------------------------------------------------------------------------------
Total $31,492 $12,580 $31,095 $13,483
- -------------------------------------------------------------------------------
Capital lease amounts included above $ 559 $ 60 $ 560 $ 92
- -------------------------------------------------------------------------------
Accumulated depreciation, depletion and amortization totaled $18,912
million and $17,612 million at December 31, 1995 and 1994, respectively.
===============================================================================
Note Eight -- Short-Term Debt, Long-Term Debt, Capital Lease Obligations and
Related Derivatives
===============================================================================
- -------------------------------------------------------------------------------
Notes payable, commercial paper and current portion of long-term debt
- -------------------------------------------------------------------------------
(Millions of dollars) As of December 31 1995 1994
- -------------------------------------------------------------------------------
Commercial paper $ 609 $ 862
Notes payable to banks and others with
originating terms of one year or less 464 198
Current portion of long-term debt and capital
lease obligations
Indebtedness 684 497
Capital lease obligations 27 31
- -------------------------------------------------------------------------------
1,784 1,588
Less short-term obligations intended to be refinanced 1,047 671
- -------------------------------------------------------------------------------
Total $ 737 $ 917
- -------------------------------------------------------------------------------
The weighted average interest rates of commercial paper and notes
payable to banks at December 31, 1995 and 1994 were 6.1% and 6.0%,
respectively.
Texaco Inc. 1995 Annual Report to Stockholders Page 47.
- -------------------------------------------------------------------------------
Long-term debt and capital lease obligations
- -------------------------------------------------------------------------------
(Millions of dollars) As of December 31 1995 1994
- -------------------------------------------------------------------------------
Long-Term Debt
6-7/8% Guaranteed notes, due 1999 $ 200 $ 200
6-7/8% Guaranteed debentures, due 2023 195 195
7-1/2% Guaranteed debentures, due 2043 198 198
7-3/4% Guaranteed debentures, due 2033 199 198
7-7/8% Guaranteed notes, due 1995 - 150
8% Guaranteed debentures, due 2032 147 147
8-1/4% Guaranteed debentures, due 2006 150 149
8-3/8% Guaranteed debentures, due 2022 198 198
8-1/2% Guaranteed notes, due 2003 199 199
8-5/8% Guaranteed debentures, due 2010 150 150
8-5/8% Guaranteed debentures, due 2031 199 199
8-5/8% Guaranteed debentures, due 2032 199 199
8.65% Guaranteed notes, due 1998 200 200
8-7/8% Guaranteed debentures, due 2021 150 150
9% Guaranteed notes, due 1996 400 400
9% Guaranteed notes, due 1997 200 200
9% Guaranteed notes, due 1999 200 200
9-3/4% Guaranteed debentures, due 2020 250 250
Medium-term notes, maturing from 1996 to 2043 (7.9%) 573 634
Revolving Credit Facility, due 1998-2002-
variable rate (6.1%) 330 330
Pollution Control Revenue Bonds, due 2012-
variable rate (3.7%) 166 166
Other long-term debt:
Texaco Inc.-Guarantee of ESOP Series B and F loans-
fixed and variable rates (5.4%) 213 269
U.S. dollars (6.7%) 295 259
Other currencies (7.3%) 38 32
- -------------------------------------------------------------------------------
Total 5,049 5,272
Capital Lease Obligations (see Note 9) 118 149
- -------------------------------------------------------------------------------
5,167 5,421
Less current portion of long-term debt and
capital lease obligations 711 528
- -------------------------------------------------------------------------------
4,456 4,893
Short-term obligations intended to be refinanced 1,047 671
- -------------------------------------------------------------------------------
Total long-term debt and capital lease obligations $5,503 $5,564
- -------------------------------------------------------------------------------
The percentages reflected for variable-rate debt are the interest
rates at December 31, 1995. The percentages reflected for the categories
"Medium-term notes" and "Other long-term debt" are the weighted average
interest rates at year-end 1995. Where applicable, principal amounts
reflected in the preceding schedule include unamortized premium or discount.
At December 31, 1995, Texaco was also party to a revolving credit fac-
ility with commitments of $2 billion with a syndicate of major U.S. and inter-
national banks, available as support of the issuance of the company's
commercial paper, as well as for working capital and for other general corpo-
rate purposes. Texaco had no amounts outstanding under this facility at year-
end 1995. Texaco pays a facility fee on the $2 billion facility. The banks
reserve the right to terminate the credit facility upon the occurrence of
certain specific events, including change in control. In addition, a partially
owned subsidiary of Texaco maintains a revolving credit facility for $330
million, which was fully utilized as of December 31, 1995.
At December 31, 1995, Texaco's long-term debt included $1,047 million
of short-term obligations scheduled to mature during 1996, which the
company has both the intent and the ability to refinance on a long-term
basis, through the use of its $2 billion revolving credit facility.
Contractual annual maturities of long-term debt, including sinking
fund payments and other redemption requirements, for the five years sub-
sequent to December 31, 1995 are as follows (in millions): 1996-$684;
1997-$344; 1998-$315; 1999-$534; and 2000-$179. The preceding
maturities are before consideration of short-term obligations intended to
be refinanced and also exclude capital lease obligations.
Debt-related derivatives
Texaco seeks to maintain a balanced capital structure that will provide
financial flexibility and support the company's strategic objectives while
achieving a low cost of capital. This is achieved by balancing the company's
liquidity and interest rate exposures. These exposures are managed pri-
marily through the use of long-term and short-term debt instruments which
are reported on the balance sheet. However, off-balance sheet derivative
instruments, primarily interest rate swaps, are also used as a management
tool in achieving the company's objectives. These instruments are used
to manage identifiable exposures on a non-leveraged, non-speculative basis.
As part of its interest rate exposure management, the company seeks to
balance the benefit of the lower cost of floating rate debt, with its inher-
ent increased risk, with fixed rate debt having less market risk.
Texaco Inc. 1995 Annual Report to Stockholders Page 48.
Summarized below are the carrying amounts and fair values of the
company's debt and debt-related derivatives at December 31, 1995 and 1994.
Derivative usage during the periods presented was limited to interest rate
swaps and forward rate agreements, where the company either paid or
received the net effect of a fixed rate versus a floating rate (commercial
paper or LIBOR) index at specified intervals, calculated by reference to an
agreed notional principal amount.
- ----------------------------------------------------------------------------------------------------------------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
- ------------------------------------------------------------------------------------------------------ --------------------------
(Millions of dollars) At December 31 1995 1994
- ------------------------------------------------------------------------------------------------------ --------------------------
Notes Payable and Commercial Paper $1,073 $1,073 $1,060 $1,060
Related Derivatives--Payable - 3 1 3
Notional principal amount $200 $425
Weighted average maturity (years) 6.0 0.9
Weighted average fixed pay rate 7.35% 8.01%
Weighted average floating receivable rate 5.69% 6.26%
Long-Term Debt, including current maturities $5,049 $5,626 $5,272 $5,225
Related Derivatives--(Receivable) Payable - (6) - 55
Notional principal amount $596 $777
Weighted average maturity (years) 2.7 3.2
Weighted average fixed receivable rate 5.78% 5.60%
Weighted average floating pay rate 5.63% 6.27%
Unamortized net gain on terminated swaps $ 3 $ 6
- ----------------------------------------------------------------------------------------------------------------------------------
During 1995, pay fixed rate swaps having an aggregate notional principal
amount of $325 million matured and were partly replaced with a $100 million
swap that matures in the year 2006. Also during 1995, pay floating rate swaps
having an aggregate notional principal amount of $6 million were amor-
tized or matured and $175 million were terminated.
Fair values noted above are based upon quoted market prices, as well
as rates currently available to the company for borrowings with similar
terms and maturities. The fair value of swaps is the estimated amount that
would be received or paid to terminate the agreements at year-end, tak-
ing into account current interest rates and the current creditworthiness of
the swap counterparties.
Amounts receivable or payable based on the interest rate differentials
of derivatives are accrued monthly and are reflected in interest expense
as a hedge of interest on outstanding debt. Gains and losses on terminated
swaps are deferred and amortized over the life of the associated debt or
the original term of the swap, whichever is shorter.
Since counterparties to the company's derivative transactions are major
financial institutions with strong credit ratings, exposure to credit risk
on the net interest differential on notional amounts is minimal. The notional
amounts of derivative contracts do not represent cash flow and are not
subject to credit risk. The company's counterparty credit exposure limits
have been set based upon the maturity and notional amounts of new trans-
actions, as well as on the fair value of outstanding transactions.
===============================================================================
Note Nine -- Lease Commitments and Rental Expense
===============================================================================
The company has leasing arrangements involving service stations, tanker
charters, a manufacturing plant and other facilities. Amounts due under
capital leases are reflected in the company's balance sheet as obligations,
while Texaco's interest in the related assets is principally reflected as prop-
erties, plant and equipment. The remaining lease commitments are operating
leases, and payments on such leases are recorded as rental expense.
As of December 31, 1995, Texaco Inc. and its subsidiary companies
(excluding discontinued operations) had estimated minimum commitments for
payment of rentals (net of noncancelable sublease rentals) under leases which,
at inception, had a noncancelable term of more than one year, as follows:
- -------------------------------------------------------------------------------
(Millions of dollars) Operating leases Capital leases
- -------------------------------------------------------------------------------
1996 $ 193 $ 38
1997 608 20
1998 67 18
1999 64 18
2000 69 17
After 2000 487 67
- -------------------------------------------------------------------------------
Total lease commitments $1,488 178
- -------------------------------------------------------
Less amounts representing
Executory costs 32
Interest 83
Add noncancelable sublease rentals netted
in capital lease commitments above 55
- -------------------------------------------------------------------------------
Present value of total capital lease obligations $118
- -------------------------------------------------------------------------------
Included in operating lease commitments above is $547 million on the lease of
a manufacturing plant, of which $511 million relates to year 1997.
Texaco Inc. 1995 Annual Report to Stockholders Page 49.
Rental expense (excluding discontinued operations) relative to operating
leases, including contingent rentals based on factors such as gallons sold,
is provided in the table below. Such payments do not include rentals on leases
covering oil and gas mineral rights.
- -------------------------------------------------------------------------------
(Millions of dollars) 1995 1994 1993
- -------------------------------------------------------------------------------
Rental expense
Minimum lease rentals $224 $205 $238
Contingent rentals 16 15 20
- -------------------------------------------------------------------------------
Total 240 220 258
Less rental income on properties
subleased to others 43 40 36
- -------------------------------------------------------------------------------
Net rental expense $197 $180 $222
- -------------------------------------------------------------------------------
In 1995, Texaco as lessee entered into a lease agreement for equipment related
to the production and processing of crude oil from the Captain Field in
the United Kingdom sector of the North Sea. The equipment is principally
comprised of a movable drilling and production platform and a floating pro-
duction storage offloading vessel, both presently under construction. The
lease has an initial noncancelable term of five years with renewal options
for an additional six years. The agreement also provides for residual value
guarantees if a renewal option or purchase option is not exercised by Texaco.
Both the lease payment amounts and residual value guarantee for this operating
lease are dependent upon the final construction costs of the equip-
ment and accordingly, are not included in the preceding table of minimum
lease commitments as construction is expected to be completed in late
1996 or early 1997. The accumulated construction in progress was $270 million
at December 31, 1995.
===============================================================================
Note Ten -- Preferred Stock and Rights
===============================================================================
Series B ESOP Convertible Preferred Stock
An amendment to Texaco Inc.'s Employees Thrift Plan created an Employee
Stock Ownership Plan (ESOP) feature. In 1988, the ESOP purchased
833,3331/3 shares of Series B ESOP Convertible Preferred Stock (Series B)
from the company for $600 per share, or an aggregate purchase price of $500
million. Texaco Inc. guaranteed a $500 million variable-rate loan made
to the ESOP which was used to acquire the shares of Series B. Subsequently,
in 1991, Texaco Inc. refinanced approximately $103 million of the outstanding
balance through a Grantor Trust structure at a fixed interest rate. The
current fixed interest rate is 6.13%.
Dividends on each share of Series B are cumulative and are payable
semiannually at the rate of $57 per annum. Dividends on Series B totaled
$43 million for 1995, $45 million for 1994 and $47 million for 1993.
Participants may partially convert their Series B into common stock
beginning at age 55, and may elect full conversion upon retirement or sep-
aration from service with the company. The conversion ratio and number of
votes per share of Series B are subject to adjustment under certain condi-
tions. At present, the Series B entitles a participant to 12.9 votes per
share, voting together with the holders of common stock, and is currently
convertible into 12.868 shares of common stock. As an alternative to conver-
sion, a participant can elect to receive $600 per share of Series B, payable
in cash or common stock. If the participant elects to receive common stock,
the company provides shares of common stock to the plan trustee, who
then transmits the shares to the participant. Should the participant elect to
receive cash, it is the intent of the company to provide the plan trustee
with shares of common stock, so that the trustee can sell such shares in the
open market and have sufficient cash to transmit to the participant. The
outstanding shares of Series B may be redeemed by Texaco Inc. at $617.10 per
share through December 19, 1996, and at prices declining to $600 per
share on or after December 20, 1998. Also, Texaco Inc. may be required to
redeem all outstanding shares of Series B undercertain circumstances.
Series C Variable Rate Cumulative Preferred Stock
In 1989, the company distributed to its stockholders as a special dividend
one share of Series C Variable Rate Cumulative Preferred Stock (Series C),
with a stated value of $50 per share, for each 50 shares of common stock
owned. The shares of Series C had an aggregate liquidation preference of
$267 million. On September 30, 1994, the company redeemed in cash and retired
all outstanding shares of Series C.
During 1994 and 1993, dividends on the Series C totaled $13 million
($2.43 per share) and $18 million ($3.26 per share), respectively.
Series D Junior Participating Preferred Stock and Rights
In 1989, the company declared a dividend distribution of one Right for each
outstanding share of common stock. Under certain circumstances, each
Right may be exercised to purchase from the company a unit consisting of
1/100th of a share (Unit) of Series D Junior Participating Preferred Stock
(Series D), par value $1.00 per share, at a purchase price of $150 per Unit
(the Purchase Price), subject to adjustment.
The Rights may be exercised only after a person has acquired, or
obtained the right to acquire, beneficial ownership of 20% or more of the com-
pany's common stock other than pursuant to a Qualifying Offer, or has
commenced a tender offer that would result in that person owning 20% or more
of the common stock.
A Qualifying Offer is an all-cash, fully financed tender offer for all
outstanding shares of common stock which remains open for 45 days, which
results in the acquiror owning a majority of the company's voting stock, and
in which the acquiror agrees to purchase for cash all remaining shares of
common stock.
The Rights expire on April 3, 1999, or sooner, upon the acquisition of
the company pursuant to a Qualifying Offer, and may be redeemed by the
company at a price of $.01 per Right at any time prior to 10 days after the
Rights become exercisable.
In the event that a person becomes the beneficial owner of 20% or more
of the common stock other than pursuant to a Qualifying Offer, each Right
will thereafter entitle the holder to receive, upon exercise of the Right, in
lieu of the Series D, a number of shares of common stock, property, cash or
other securities having a formula value equal to two times the exercise price
of the Right.
Texaco Inc. 1995 Annual Report to Stockholders Page 50.
In the event that the company is acquired in a transaction in which the
company is not the surviving corporation, or in the event 50% or more of
the company's assets or earning power is sold or transferred, each holder of
a Right thereafter has the right to receive, upon exercise, common stock
of the acquiring company having a value equal to two times the exercise price
of the Right.
Until a Right is exercised, the holder thereof, as such, has no rights
as a stockholder of the company, including the rights to vote or to
receive dividends.
As of December 31, 1995, there were 3,000,000 shares designated as
Series D with a liquidation value of $100 per share. In general, the terms
of the Series D have been designed so that each Unit of Series D should be
substantially the economic equivalent of one share of common stock. The
Series D will, if issued, be junior to any other series of Preferred Stock
which may be authorized and issued, unless the terms of such other series pro-
vide otherwise. Each share of the Series D which may be issued will entitle
the holder to receive a quarterly dividend equal to the greater of (i) $5.00
per share or (ii) 100 times the quarterly dividend declared per share of
common stock, subject to adjustment.
In the event of liquidation of the company, the holders of the Series D
will be entitled to receive a preferred liquidation payment of $100 per share
plus accrued and unpaid dividends to the date of payment, but in no event
less than an amount equal to 100 times the payment made per share of
common stock, if greater. The Series D will be redeemable as a whole, or in
part, at any time,or from time to time, at the option of the company at a
redemption price per share equal to 100 times the then market price of
a share of common stock, plus accrued and unpaid dividends through the
redemption date. Each share of the Series D will have 100 votes, voting
together with the common stock.
In the event of any merger, consolidation or other transaction in which
the shares of common stock are exchanged, each share of the Series D will
entitle the holder thereof to receive 100 times the amount received per share
of common stock.
If dividends on the Series D are in arrears in an aggregate amount equal
to six quarterly dividends, the number of directors of the company will
be increased by two, and the holders of the Series D outstanding at the time
of such dividend arrearage, voting separately as a class with any other
series of preferred stock likewise qualified to vote, will be entitled at the
next annual meeting to elect two directors. The Series D will also have a sep-
arate class vote on certain matters which would adversely affect the rights
and preferences of the Series D.
The Purchase Price payable and the number of Units of Series D or other
securities or property issuable upon exercise of the Rights are subject to
adjustment from time to time in certain events to prevent dilution.
Series E Variable Rate Cumulative Preferred Stock
In 1989, the company issued 3,814 shares of Series E Variable Rate Cumulative
Preferred Stock (Series E), with a stated value of $100,000 per share,
in connection with a merger transaction. The shares of Series E had an
aggregate liquidation preference of $381 million. On November 8, 1994, the
company exchanged 6.1 million shares of its common stock held in treasury,
which were acquired during the year, for all of the issued and outstand-
ing shares of Series E, which were then retired.
During 1994 and 1993, dividends on Series E totaled $19 million
($4,850 per share) and $25 million ($6,513 per share), respectively.
Series F ESOP Convertible Preferred Stock
An amendment to Texaco Inc.'s Employees Savings Plan created an Employee
Stock Ownership Plan (ESOP) feature. In 1990, the ESOP purchased
67,796.61 shares of Series F ESOP Convertible Preferred Stock (Series F)
from the company for $737.50 per share, or an aggregate purchase price of
$50 million. Texaco Inc. guaranteed a $50 million variable-rate loan made
to the ESOP which was used to acquire the shares of Series F.
Dividends on each share of Series F are cumulative and are payable
semiannually at the rate of $64.53 per annum. Annual dividends on Series F
totaled $4 million for 1995, 1994 and 1993.
Participants may partially convert their Series F into common stock
beginning at age 55, and may elect full conversion upon retirement or sepa-
ration from service with the company. The conversion ratio and number of
votes per share of Series F are subject to adjustment under certain condi-
tions. At present, Series F entitles a participant to 10 votes per share,
voting together with the holders of common stock, and is convertible into 10
shares of common stock. As an alternative to conversion, a participant can
elect to receive $737.50 per share of Series F, in cash or common stock. If
the participant elects to receive common stock, the company provides shares
of common stock to the plan trustee, who then transmits the shares to
the participant. Should the participant elect to receive cash, it is the
intent of the company to provide the plan trustee with shares of common stock,
so that the trustee can sell such shares in the open market and have suffic-
ient cash to transmit to the participant. The outstanding shares of Series
F may be redeemed by Texaco Inc. at $763.31 per share through February
12, 1997, and at prices declining to $737.50 per share on or after February
13, 2000. Also, Texaco Inc. may be required to redeem all outstanding shares
of Series F under certain circumstances.
Market Auction Preferred Shares
In 1992, the company issued 1,200 shares of cumulative variable rate
preferred stock, called Market Auction Preferred Shares (MAPS) in a private
placement, for an aggregate purchase price of $300 million. The MAPS are
grouped into four series (300 shares each of Series G, H, I and J) of $75 mil-
lion each.
The dividend rates for each series are determined by Dutch auctions
conducted at seven-week intervals. The length of the dividend periods can
be changed at each auction. During 1995, the annual dividend rate for
the MAPS ranged between 4.22% and 4.65 % and dividends totaled $13 mil-
lion ($12,255, $10,558, $10,521 and $10,531 per share for Series G, H,
I and J, respectively).
During 1994, the annual dividend rate for the MAPS ranged between
2.48% and 4.57% and dividends totaled $10 million ($7,784, $8,057,
$9,156 and $9,356 per share for Series G, H, I and J, respectively). For
1993, the annual dividend rate for the MAPS ranged between 2.40% and 3.25%
and dividends totaled $8 million ($6,281, $6,396, $6,549 and $6,762 per share
for Series G, H, I and J, respectively). Alternatively, the dividend rate
and the dividend period can be negotiated with potential investors.
Texaco Inc. 1995 Annual Report to Stockholders Page 51.
The company may redeem the MAPS, in whole or in part at any time at
a liquidation preference of $250,000 per share, plus premium, if any, and
accrued and unpaid dividends thereon.
The MAPS are non-voting, except under certain limited circumstances.
===============================================================================
Note Eleven -- Foreign Currency
===============================================================================
Currency translations resulted in a pre-tax gain of $23 million in 1995,
compared to a loss of $18 million in 1994 and a gain of $35 million in 1993.
After applicable taxes, the gain in 1995 was $30 million, compared to a
loss in 1994 of $49 million and again in 1993 of $49 million. These amounts
include Texaco's equity in such gains and losses of affiliates accounted for
on the equity method of accounting.
Currency exchange impacts for the years 1993 through 1995 were
primarily due to operations in developing countries reflecting the impact of
strong inflationary factors, as well as the effects of SFAS 109 "Accounting
for Income Taxes" with respect to the Pound Sterling on deferred income
taxes.
Currency translation adjustments reflected in the separate stock-
holders' equity account result from translation items pertaining to certain
affiliates of Caltex.
==============================================================================
Note Twelve -- Taxes
===============================================================================
- ----------------------------------------------------------------------------------------------------------------------------------
United United United
States Foreign Total States Foreign Total States Foreign Total
- -------------------------------------------------------------------------- -------------------------- --------------------------
(Millions of dollars) 1995 1994 1993
- -------------------------------------------------------------------------- -------------------------- --------------------------
Direct taxes
Provision (benefit) for income taxes
Current
U.S. Federal and foreign $ 34 $ 357 $ 391 $ (68) $ 296 $ 228 $ 5 $ 143 $ 148
U.S. state and local (31) - (31) 36 - 36 14 - 14
Deferred
Tax law changes - - - - - - 17 (169) (152)
Other (90) (12) (102) (33) (6) (39) (141) 44 (97)
- ----------------------------------------------------------------------------------------------------------------------------------
Total provision (benefit) for income taxes (87) 345 258 (65) 290 225 (105) 18 (87)
Taxes other than income taxes
Oil and gas production 91 3 94 101 8 109 122 17 139
Sales and use - 73 73 - 55 55 5 59 64
Property 109 18 127 111 18 129 124 16 140
Payroll 72 44 116 78 39 117 87 29 116
Other 63 18 81 38 48 86 75 15 90
- ----------------------------------------------------------------------------------------------------------------------------------
Total taxes other than income taxes 335 156 491 328 168 496 413 136 549
Import duties and other governmental levies 43 3,914 3,957 53 3,939 3,992 42 3,735 3,777
- ----------------------------------------------------------------------------------------------------------------------------------
Total direct taxes 291 4,415 4,706 316 4,397 4,713 350 3,889 4,239
Taxes collected from consumers
for governmental agencies 1,266 1,803 3,069 1,313 2,124 3,437 1,068 2,060 3,128
- ----------------------------------------------------------------------------------------------------------------------------------
Total $1,557 $6,218 $7,775 $1,629 $6,521 $8,150 $1,418 $5,949 $7,367
- ----------------------------------------------------------------------------------------------------------------------------------
All information in this note excludes discontinued operations.
The deferred income tax assets and liabilities included in the
Consolidated Balance Sheet as of December 31, 1995 and 1994 amounted to $99
million and $150 million, respectively, as net current assets and $634 million
and $879 million, respectively, as net noncurrent liabilities. The table
that follows shows deferred income tax assets and liabilities by category.
Deferred income taxes are not recorded on differences between financial
reporting and tax bases of investments in stock of subsidiary companies, un-
less realization of the effect is probable in the foreseeable future. Certain
potential deferred tax asset amounts for which possibility of realization is
deemed extremely remote have been eliminated and are therefore excluded
from the following table.
Texaco Inc. 1995 Annual Report to Stockholders Page 52.
- -------------------------------------------------------------------------------
(Liability)
Asset
- -------------------------------------------------------------------------------
(Millions of dollars) As of December 31 1995 1994
- -------------------------------------------------------------------------------
Depreciation $ (912) $ (786)
Depletion (327) (624)
Intangible drilling costs (501) (641)
Other deferred tax liabilities (343) (183)
- -------------------------------------------------------------------------------
Total (2,083) (2,234)
Employee benefit plans 524 464
Tax loss carryforwards 907 677
Tax-related reserves 36 152
Tax credit carryforwards 388 280
Environmental reserves 211 219
Other deferred tax assets 383 525
- -------------------------------------------------------------------------------
Total 2,449 2,317
Total before valuation allowance 366 83
Valuation allowance (901) (812)
- -------------------------------------------------------------------------------
Total -- net $ (535) $ (729)
- -------------------------------------------------------------------------------
The following schedule reconciles the differences between the U.S.
Federal income tax rate and the effective income tax rate:
- -------------------------------------------------------------------------------
1995 1994 1993
- -------------------------------------------------------------------------------
U.S. Federal income tax rate
assumed to be applicable 35.0% 35.0% 35.0%
Net earnings and dividends attributable
to affiliated corporations accounted
for on the equity method (17.1) (10.5) (11.6)
Aggregate earnings and losses from
international operations before
tax law changes 18.5 11.1 3.5
Tax law changes - - (13.0)
Sales of stock of subsidiaries (6.6) (15.7) (17.9)
Energy credits (3.3) (2.4) (2.5)
Other (.4) 1.2 (.9)
- -------------------------------------------------------------------------------
Effective income tax rate 26.1% 18.7% (7.4%)
- -------------------------------------------------------------------------------
The increase in the 1995 effective tax rate as compared to 1994 is
mainly due to higher earnings from international producing operations and
lower tax benefits related to sales of interests in a subsidiary. The increase
between 1994 and 1993 is also due to higher earnings from international
producing operations and net deferred tax benefits arising from 1993 tax law
and rate changes in the U.K. and the United States.
For companies operating in the United States, pre-tax earnings from
continuing operations before cumulative effect of accounting change
aggregated $40 million in 1995, $402 million in 1994 and $397 million in
1993. For companies with operations located outside the United States, pre-
tax earnings on that basis aggregated $946 million in 1995, $802 million in
1994 and $775 million in 1993.
Income taxes paid, net of refunds, amounted to $554 million, $329
million and $326 million in 1995, 1994 and 1993, respectively.
The undistributed earnings of subsidiary companies and of affiliated
corporate joint-venture companies accounted for on the equity method, for
which deferred U.S. income taxes have not been provided at December 31,
1995 amounted to $1,262 million and $2,308 million, respectively. The cor-
responding amounts at December 31, 1994 were $1,290 million and $2,148
million, respectively. Recording of deferred income taxes on these undis-
tributed earnings is not required relative to foreign companies and
pre-1993 earnings of domestic companies when the earnings have been
permanently reinvested. These amounts would be subject to possible U.S.
taxation only if remitted as dividends. The determination of the hypotheti-
cal amount of unrecognized deferred U.S. taxes on undistributed earnings of
foreign entities is not practicable. For domestic entities, such unrecorded
deferred income taxes were not material.
For the years 1995, 1994 and 1993 there was no utilization of loss
carryforwards for U.S. Federal income taxes. For the years 1995, 1994 and 1993,
the utilization of loss carryforwards resulted in income tax benefits of $13
million, $57 million and $20 million in foreign income taxes, respectively.
At December 31, 1995, Texaco had worldwide tax basis loss carryforwards
of approximately $2,171 million, including $972 million which do not
have an expiration date. The remainder expire at various dates through 2019.
Foreign tax credit carryforwards available for U.S. Federal income
tax purposes amounted to approximately $110 million at December 31, 1995,
expiring at various dates through 1998. Alternative minimum tax and other
tax credit carryforwards available for U.S. Federal income tax purposes
were $388 million at December 31, 1995, of which $356 million have no
expiration date. The remaining credits expire at various dates through 2010.
The credits that are not utilized by the expiration dates may be taken as
deductions for U.S. Federal income tax purposes.
Texaco Inc. 1995 Annual Report to Stockholders Page 53.
===============================================================================
Note Thirteen -- Employee Benefit Plans
===============================================================================
Texaco Inc. and certain of its non-U.S. subsidiaries sponsor various benefit
plans for active employees and retirees. The costs of the savings, health
care and life insurance plans relative to employees' active service are
shared by the company and its employees, with Texaco's costs for these plans
charged to expense as incurred. In addition, reserves for employee benefit
plans are provided principally for the unfunded costs of various pension
plans, retiree health and life insurance benefits, incentive compensation
plans and for separation benefits payable to employees.
As of January 1, 1993, Texaco adopted SFAS 112, "Employers' Accounting
for Postemployment Benefits". Adoption of SFAS 112 did not impact
1993 net income since the company had been accounting for substantially all
of these costs in accordance with the new Standard.
The discussion of employee benefit plans that follows is for total plan
activity, including benefits and amounts applicable to employees of the
discontinued operations. Amounts relative to the discontinued operations are
not material for any of the years discussed.
Employee Stock Ownership Plans (ESOP)
Texaco recorded ESOP expense of $28 million in 1995 and $20 million in
both 1994 and 1993. Company contributions to the Employees Thrift Plan of
Texaco Inc. and the Employees Savings Plan of Texaco Inc. (the Plans)
amounted to $17 million in 1995 and $20 million in both 1994 and 1993. These
Plans are designed to provide participants with a benefit of approximately
6% of base pay. Included in the 1995 ESOP expense is $11 million relating
to an employee incentive award program. Award payments will be made in early
1996 to individual participants' ESOP accounts.
In 1995, 1994 and 1993, the company paid $47 million, $49 million and
$51 million, respectively, in dividends on Series B and Series F stock. The
dividends are applied by the trustee to fund interest payments which
amounted to $14 million, $13 million and $14 million for 1995, 1994 and 1993,
respectively, as well as to reduce principal on the ESOP loans. Dividends on
the shares of Series B and Series F used to service debt of the Plans are tax
deductible to the company.
Reflected in Texaco's long-term debt are the Plans' ESOP loans which
are guaranteed by Texaco Inc. Commensurate with each repayment on the
ESOP loans and as a result of the allocation of the Series B and Series F
stock by the trustee of the Plans to the individual participating employees,
there is a reduction in the remaining ESOP-related unearned employee
compensation included as a component of stockholders' equity.
Benefit Plan Trust
During 1995, Texaco established a benefit plan trust (Trust) for funding
company obligations under certain benefit plans. Texaco transferred four
million shares of treasury stock to the Trust. The company intends to continue
to pay its obligations under its benefit plans. The Trust will use the shares,
proceeds from the sale of such shares and dividends on such shares to pay
benefits only to the extent not paid by the company. The shares held in the
Trust will be voted by the trustee as instructed by the Trust's beneficiaries.
The shares held by the Trust are not considered outstanding for earnings
per share purposes until distributed or sold by the Trust in payment of
benefit obligations.
Pension Plans
The company sponsors pension plans that cover the majority of employees.
Generally, these plans provide defined pension benefits based on years of
service and final average pay. However, the level of benefits and terms of
vesting vary among plans. Amounts charged to pension expense, as well as
amounts funded, are generally based on actuarial studies. Pension plan
assets are administered by trustees and are principally invested in equity
and fixed income securities and deposits with insurance companies.
The total worldwide expense for all employee pension plans of Texaco,
including pension supplementations and the smaller non-U.S. plans, was
$86 million in 1995, $109 million in 1994 and $111 million in 1993.
The following data are provided for U.S. plans and principal non-U.S.
plans.
- ----------------------------------------------------------------------------------------------------------------------------------
Components of Pension Expense
- ----------------------------------------------------------------------------------------------------------------------------------
United States Plans Non-U.S. Plans
- ---------------------------------------------------------------------------------------------------- ----------------------------
(Millions of dollars) 1995 1994 1993 1995 1994 1993
- ---------------------------------------------------------------------------------------------------- ----------------------------
Benefits earned during the year $ 48 $ 69 $ 67 $ 16 $ 22 $ 14
Actual investment return on plan assets, (gain) loss (279) 27 (158) (123) 33 (155)
Interest cost on projected benefit obligations 114 125 125 81 74 61
Amortization of net deferred amounts 158 (145) 39 64 (104) 112
- ----------------------------------------------------------------------------------------------------------------------------------
Total $ 41 $ 76 $ 73 $ 38 $ 25 $ 32
- ----------------------------------------------------------------------------------------------------------------------------------
The assumed long-term return on plan assets for U.S. plans was 10% for 1995 and
9% for 1994 and 1993; for non-U.S. plans the weighted average rate was 8.7% for
1995, 8.5% for 1994 and 8.6% for 1993.
Texaco Inc. 1995 Annual Report to Stockholders Page 54.
- ----------------------------------------------------------------------------------------------------------------------------------
Funded Status of Pension Plans
- ----------------------------------------------------------------------------------------------------------------------------------
United States Plans
------------------------------------------------------------------
Assets Exceed Accumulated Assets Exceed Accumulated
Accumulated Benefits Accumulated Benefits
Benefits Exceed Assets Benefits Exceed Assets
- ----------------------------------------------------------------------------------------------------------------------------------
(Millions of dollars) As of December 31 1995 1994
- ----------------------------------------------------------------------------------------------------------------------------------
Present value of the estimated pension
benefits to be paid in the future
Vested benefits $(1,132) $ (83) $ (888) $ (59)
Nonvested benefits (105) (3) (61) (3)
- ----------------------------------------------------------------------------------------------------------------------------------
Accumulated benefit obligations (1,237) (86) (949) (62)
Effect of projected future salary increases (394) (21) (354) (17)
- ----------------------------------------------------------------------------------------------------------------------------------
Total projected benefit obligations (1,631) (107) (1,303) (79)
- ----------------------------------------------------------------------------------------------------------------------------------
Amount of assets available for benefits
Funded assets of the plans, at fair value 1,361 - 1,116 -
Net pension liability (asset) recorded on
Texaco's Consolidated Balance Sheet 68 86 129 62
- ----------------------------------------------------------------------------------------------------------------------------------
Total assets 1,429 86 1,245 62
- ----------------------------------------------------------------------------------------------------------------------------------
Assets in excess of (less than)
projected benefit obligations(1) $ (202) $ (21) $ (58) $ (17)
- ----------------------------------------------------------------------------------------------------------------------------------
(1)Consisting of:
Net transition asset (liability)
not yet recognized $ 47 $ (10) $ 63 $ (13)
Unrecognized cost of retroactive
benefits granted by a plan amendment (70) (15) (78) (14)
Effect of changes in assumptions and differences
between actual and estimated experience (179) 4 (43) 10
- ----------------------------------------------------------------------------------------------------------------------------------
Total $ (202) $ (21) $ (58) $ (17)
- ----------------------------------------------------------------------------------------------------------------------------------
- --2nd section--
- ----------------------------------------------------------------------------------------------------------------------------------
Funded Status of Pension Plans (continued)
- ----------------------------------------------------------------------------------------------------------------------------------
Non-U.S. Plans
------------------------------------------------------------------
Assets Exceed Accumulated Assets Exceed Accumulated
Accumulated Benefits Accumulated Benefits
Benefits Exceed Assets Benefits Exceed Assets
- ----------------------------------------------------------------------------------------------------------------------------------
(Millions of dollars) As of December 31 1995 1994
- ----------------------------------------------------------------------------------------------------------------------------------
Present value of the estimated pension
benefits to be paid in the future
Vested benefits $ (426) $(221) $ (418) $(218)
Nonvested benefits (22) (19) (20) (23)
- ----------------------------------------------------------------------------------------------------------------------------------
Accumulated benefit obligations (448) (240) (438) (241)
Effect of projected future salary increases (26) (16) (31) (24)
- ----------------------------------------------------------------------------------------------------------------------------------
Total projected benefit obligations (474) (256) (469) (265)
- ----------------------------------------------------------------------------------------------------------------------------------
Amount of assets available for benefits
Funded assets of the plans, at fair value 714 - 706 -
Net pension liability (asset) recorded on
Texaco's Consolidated Balance Sheet (234) 241 (253) 241
- ----------------------------------------------------------------------------------------------------------------------------------
Total assets 480 241 453 241
- ----------------------------------------------------------------------------------------------------------------------------------
Assets in excess of (less than)
projected benefit obligations(1) $ 6 $ (15) $ (16) $ (24)
- ----------------------------------------------------------------------------------------------------------------------------------
(1)Consisting of:
Net transition asset (liability)
not yet recognized $ 46 $ (10) $ 84 $ (14)
Unrecognized cost of retroactive
benefits granted by a plan amendment (25) (31) (47) (34)
Effect of changes in assumptions and differences
between actual and estimated experience (15) 26 (53) 24
- ----------------------------------------------------------------------------------------------------------------------------------
Total $ 6 $ (15) $ (16) $ (24)
- ----------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Weighted Average Rate Assumptions Used in Estimating Pension Benefit Obligations
- --------------------------------------------------------------------------------
United States Plans Non-U.S. Plans
- --------------------------------------------------------- ---------------------
1995 1994 1995 1994
- --------------------------------------------------------- ---------------------
Discount rate 7.0% 8.5% 11.5% 12.6%
Rate of increase in compensation levels 4.0% 4.8% 7.9% 10.2%
- -------------------------------------------------------------------------------
Other Postretirement Benefits
Texaco sponsors postretirement plans in the U.S. that provide health care and
life insurance for retirees and eligible dependents. The company's U.S.
health insurance obligation is its fixed dollar contribution. The plans are
unfunded, and the costs are shared by the company and its employees and
retirees.
The determination of the company's obligation is based on the terms
of the life and health insurance plans, along with applicable actuarial
assumptions. The company continues to fund these benefit costs on a pay-as-
you-go basis, with retirees paying the excess over the company's fixed
dollar contribution for health insurance. For employees who retire from Texaco
between age 55 and 65, most will be eligible to receive health care ben-
efits, similar to those available to active employees, as well as life
insurance benefits. The company's cost to provide these postretirement benefits
for health insurance is currently equal to the company's cost for an active
employee. After attaining age 65, the retirees' health care coverage is coor-
dinated with available Medicare benefits.
The trend rates used for the purpose of estimating contribution amounts
reflect the expected increase in the health care cost component of the
U.S. Consumer Price Index. For retirees between age 55 and 65, the 1996 fixed
dollar contribution for health care benefits is expected to remain at 1995
levels. Commencing in 1997, the fixed dollar contribution is expected to
increase by 7% per annum and then decrease to an ultimate rate of 4% in the
year 2002, at which time the company expects general U.S. health care infla-
tion to increase at a rate approximating general inflation. The fixed dol-
lar contribution for retirees 65 and older is also assumed to remain at 1995
levels in 1996 and then increase by 4% per year. The fixed dollar contri-
butions derived from these assumptions do not necessarily represent an
obligation of the company.
Assuming a 1% increase in the annual rate of increase in the fixed
dollar contribution for health insurance, the accumulated postretirement ben-
efit obligation and annual expense would increase by approximately $52
million and $5 million, respectively.
Certain of the company's non-U.S. subsidiaries have postretirement
benefit plans. However, most retirees outside the U.S. are covered by gov-
ernment sponsored and administered programs, the cost of which is not
significant to the company.
Texaco Inc. 1995 Annual Report to Stockholders Page 55.
The following tables provide information on the status of the principal
postretirement plans:
- ----------------------------------------------------------------------------------------------------------------------------------
Components of Other Postretirement Benefit Expense
- ----------------------------------------------------------------------------------------------------------------------------------
Health Life Health Life Health Life
Care Insurance Total Care Insurance Total Care Insurance Total
- ---------------------------------------------------------------------------- ------------------------- -------------------------
(Millions of dollars) 1995 1994 1993
- ---------------------------------------------------------------------------- ------------------------- -------------------------
Benefits earned during the year $ 7 $ 2 $ 9 $12 $ 4 $16 $13 $ 4 $17
Interest cost on accumulated
postretirement benefit obligations 33 21 54 38 20 58 40 19 59
Amortization of net deferred amounts (3) (1) (4) - - - - - -
- ----------------------------------------------------------------------------------------------------------------------------------
Total $37 $22 $59 $50 $24 $74 $53 $23 $76
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Funded Status of Other Postretirement Plans
- ----------------------------------------------------------------------------------------------------------------------------------
Health Life Health Life
Care Insurance Total Care Insurance Total
- ------------------------------------------------------------------------------------------------------ --------------------------
(Millions of dollars) As of December 31 1995 1994
- ------------------------------------------------------------------------------------------------------ --------------------------
Accumulated unfunded postretirement benefit obligations
Retirees $272 $242 $514 $267 $204 $471
Fully eligible active participants 33 1 34 35 17 52
Other active plan participants 125 67 192 108 39 147
- ----------------------------------------------------------------------------------------------------------------------------------
Total accumulated unfunded postretirement benefit obligations 430 310 740 410 260 670
Unrecognized net gain 72 5 77 89 45 134
- ----------------------------------------------------------------------------------------------------------------------------------
Net other postretirement benefit liability recorded on
Texaco's Consolidated Balance Sheet $502 $315 $817 $499 $305 $804
- ----------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Weighted Average Rate Assumptions Used in Estimating Other Postretirement
Benefit Obligations
- -------------------------------------------------------------------------------
1995 1994
- -------------------------------------------------------------------------------
Discount rate 7.0% 8.5%
Rate of increase in compensation levels 4.0% 4.8%
- -------------------------------------------------------------------------------
===============================================================================
Note Fourteen -- Stock Incentive Plan
===============================================================================
Under the company's stock incentive plan (the Plan) approved by stockholders,
among the awards that may be granted to executives and certain key
employees are stock options, with or without stock appreciation rights, and
restricted stock. The total number of shares available each year for issuance
under the Plan through December 31, 2002 is eight-tenths of one percent
(0.8%) of the aggregate number of shares of common stock issued and out-
standing on December 31 of the previous year, adjusted for certain plan
activity. Shares not issued in the current year are available for future grant.
The option price per share cannot be less than the fair market value of a
share of common stock on the date granted unless adjusted as provided in
the Plan. At December 31, 1995, there were 3,539,072 shares available for
awards during 1996, of which 2,851,983 shares were available to all par-
ticipants and 687,089 shares were available to those participants who are not
officers or directors. At December 31, 1994, there were 2,534,044 shares
available for awards during 1995, of which 1,981,129 shares were available
to all participants and 552,915 shares were available to those partici-
pants who are not officers or directors. At December 31, 1993, there were
1,824,282 shares available for awards during 1994, of which 1,243,873
shares were available to all participants and 508,409 shares were available
to those participants who are not officers or directors.
Stock options granted under the Plan extend for 10 years from the
date of grant and become 50% exercisable on the first anniversary. These
options are fully exercisable on the second anniversary, except for the
January 1990 awards, which became fully exercisable on the fourth anniversary
of the award.
The Plan permits the company to grant restored options to a participant
in the Plan who has previously been granted stock options. This feature
enables a participant, who exercises an option by exchanging previously
acquired common stock or who has shares withheld by the company to sat-
isfy tax withholding obligations, to receive new options, exercisable at
the then market value, for the same number of shares as were exchanged or
withheld. Under existing regulations, restored options are fully exercisable
six months after the date of grant.
Option activity during 1995, 1994 and 1993 is summarized in the
following table:
- -------------------------------------------------------------------------------
Price Range
Stock Options 1995 1994 1993 Per Share
- ------------------------------------------------------------------------------
Outstanding January 1 3,964,098 3,368,949 2,651,746 $46.78-69.25
Granted 945,367 643,985 776,375 57.94-66.31
Exercised (2,177,630) (732,286) (831,869) 46.78-68.69
Restored 1,935,809 683,450 772,697 58.13-79.94
Outstanding December 31 4,667,644 3,964,098 3,368,949 46.78-79.94
Exercisable December 31 2,148,743 2,671,225 1,394,718 46.78-69.25
- -------------------------------------------------------------------------------
Texaco Inc. 1995 Annual Report to Stockholders Page 56.
===============================================================================
Note Fifteen -- Other Financial Information and Commitments
===============================================================================
Environmental Reserves
Texaco Inc. and subsidiary companies have financial reserves relating to
environmental remediation programs which the company believes are suf-
ficient for known requirements. At December 31, 1995, reserves for future
environmental remediation costs amounted to $678 million and reserves
relative to the future cost of restoring and abandoning existing oil and gas
properties were $804 million. Texaco's significant affiliates also have
recorded reserves for environmental remediation and restoration and
abandonment costs.
Texaco has provided, to the extent reasonably measurable, financial
reserves for its probable environmental remediation liabilities. The record-
ing of these obligations is based on technical evaluations of the currently
available facts, interpretation of the regulations and the company's expe-
rience with similar sites. Additional financial reserve requirements relative
to existing and new remediation sites may be necessary in the future when more
facts are known. The potential also exists for further legislation to provide
limitations on liability. It is not possible to project the overall costs or
a range of costs for environmental items beyond that disclosed above due
to uncertainty surrounding future developments, both in relation to reme-
diation exposure and to regulatory initiatives. However, while future
environmental expenditures that will be incurred by the petroleum industry may
certainly be significant in the absolute, they will be a cost of doing business
that will have to be recovered in the marketplace. Moreover, it is not believed
that such future costs will be material to the company's financial position
nor to its operating results over any reasonable period of time.
Interest Paid and Interest Capitalized
Interest paid, net of amounts capitalized, amounted to $482 million in 1995,
$500 million in 1994 and $439 million in 1993.
Interest capitalized as part of properties, plant and equipment was $20
million in 1995, $13 million in 1994 and $49 million in 1993.
Preferred Stock of Subsidiary Companies
At December 31, 1995 and 1994, minority holders owned $602 million and $537
million, respectively, of preferred stock of subsidiary companies. Such
amounts are reflected in minority interest in subsidiary companies in the
Consolidated Balance Sheet.
In October 1993, a wholly owned subsidiary, MVP Production Inc., issued
variable rate cumulative preferred stock in a private placement for an
aggregate purchase price of $75 million. The shares have voting rights
in the subsidiary and are redeemable on September 30, 2003. Dividend
requirements on these shares totaled $4 million in 1995 and $3 million in 1994.
In November 1993, a wholly owned subsidiary, Texaco Capital LLC, issued
14 million shares of Cumulative Guaranteed Monthly Income Preferred
Shares, Series A (Series A), in a public offering, for an aggregate purchase
price of $350 million. In June 1994, Texaco Capital LLC issued 4.5 million
shares of Cumulative Adjustable Rate Monthly Income Preferred Shares,
Series B (Series B), in a public offering for an aggregate purchase price of
$112 million. In December 1995, Texaco Capital LLC issued 3.6 million shares
of Deferred Preferred Shares, Series C (Series C) in Canadian dollars, in
a public offering. The aggregate purchase price was $65 million. Texaco
Capital LLC's sole assets are notes receivable from Texaco Inc.
The dividend rate for Series A is 6 7/8% per annum and the initial
dividend rate for Series B was 6.4% per annum through September 30, 1994,
6.75% per annum for the fourth quarter of 1994 and 6.26% for the year 1995.
The dividend rate on Series B is reset quarterly and is equal to 88% of
the highest of three U.S. Treasury maturities (three-month, ten-year and
thirty-year), but in no event less than 4.5% per annum nor greater than 10.5%
per annum. The payment of dividends and payments on liquidation or redemption
with respect to Series A and Series B are guaranteed by Texaco Inc.
Dividends on Series A and Series B are paid monthly. Dividends on Series A
for 1995 and 1994 totaled $24 million for each year and $4 million for 1993.
Dividends on Series B in 1995 and 1994 totaled $7 million and $4 million,
respectively.
Series A and Series B are redeemable, at the option of Texaco Capital LLC
(with Texaco Inc.'s consent) in whole or in part, from time to time, at $25
per share on or after October 31, 1998 for Series A and June 30, 1999 for
Series B, plus, in each case, accrued and unpaid dividends to the date fixed
for redemption. In addition, under certain circumstances, Texaco Capital LLC
(with Texaco Inc.'s consent) can redeem Series A and Series B at anytime,
in whole or in part, at $25 per share plus accrued and unpaid dividends.
Dividends on Series C at a rate of 7.17% per annum, compounded annually,
will be paid at the redemption date of February 28, 2005 unless earlier
redemption occurs. Early redemption may result upon the occurrence of
certain specific events. The payment of dividends and payments on liquida-
tion or redemption of Series C are guaranteed by Texaco Inc. The par value
and dividends payable in Canadian dollars have been hedged by a swap
contract to eliminate foreign currency risk.
Series A, Series B and Series C are non-voting, except under certain
limited circumstances.
The above preferred stock issues currently require annual dividend
payments of approximately $35 million. The company is required to redeem
$75 million of this preferred stock in 2003, $65 million (plus accreted div-
idends of $59 million) in 2005, $112 million in 2024 and $350 million in 2043.
Texaco has the ability to extend the required redemption dates for the $112
million and $350 million of preferred stock beyond 2024 and 2043, respec-
tively.
Financial Guarantees
The company has guaranteed the payment of certain debt and other obligations
of third parties and affiliate companies. These guarantees totaled
$206 million and $176 million at December 31, 1995 and 1994, respectively.
Exposure to credit risk in the event of non-payment by the obligors is
represented by the contractual amount of these instruments. No loss is antic-
ipated under these guarantees.
Texaco Inc. 1995 Annual Report to Stockholders Page 57.
Throughput Agreements
Texaco Inc. and certain of its subsidiary companies have entered into
certain long-term agreements wherein they have committed either to ship
through affiliated pipeline companies and an offshore oil port, or to refine
at an affiliated refining company a sufficient volume of crude oil or petro-
leum products to enable these affiliated companies to meet a specified portion
of their individual debt obligations, or, in lieu thereof, to advance suf-
ficient funds to enable these affiliated companies to meet these obligations.
Additionally, Texaco has entered into long-term purchase commitments
with third parties for take or pay gas transportation. At December 31,
1995 and 1994 the company's maximum exposure to loss was estimated to be
$713 million and $726 million, respectively.
However, based on Texaco's right of counterclaim against third parties
in the event of nonperformance, Texaco's net exposure was estimated to
be $546 million and $561 million at December 31, 1995 and 1994, respectively.
No losses are anticipated as a result of these obligations.
Other Commitments
In 1995, Texaco sold its leasehold interest in certain equipment not yet in
service and received payments totaling $248 million. Additional payments
will be received in 1996, contingent upon the amount of future costs of the
equipment prior to the in-service date. Under a related agreement, Texaco
as lessee will lease back this leasehold interest. The lease provides that col-
lateral or third party security in specified forms is required as a guarantee
of the lease payments. Texaco intends to satisfy this requirement by a cash
payment, expected to occur in 1997, resulting in the release of Texaco from
future lease commitments under this agreement. This payment will effectively
repurchase the leasehold interests previously sold.
==============================================================================
Note Sixteen -- Financial Instruments
==============================================================================
In the normal course of its business, the company utilizes various types of
financial instruments. These instruments include recorded assets and lia-
bilities, and also items which principally involve off-balance sheet risk.
Information about the company's financial instruments, including deriva-
tives, is presented below.
Cash and cash equivalents -- Fair value approximates cost as
reflected in the Consolidated Balance Sheet at December 31, 1995 and 1994
because of the short-term maturities of these instruments. Cash equivalents
are classified as held-to-maturity. The amortized cost of cash equiva-
lents was as follows:
- -------------------------------------------------------------------------------
(Millions of dollars) As of December 31 1995 1994
- -------------------------------------------------------------------------------
Time deposits and certificates of deposit $ 111 $ 56
Commercial paper and other 155 117
- -------------------------------------------------------------------------------
$ 266 $ 173
- -------------------------------------------------------------------------------
Short-term and long-term investments -- Fair value is primarily based on
quoted market prices and valuation statements obtained from major finan-
cial institutions. Information concerning investments held at December 31,
1995 and 1994 in short-term and long-term debt securities and in pub-
licly-traded equity securities that are classified as available-for-sale is
shown in the tables that follow. Excluded from the tables is a $4 million
investment in a time deposit at December 31, 1995 and 1994, which the company
intends to hold to its maturity in the year 2001.
- -------------------------------------------------------------------------------
Amortized Estimated Amortized Estimated
Cost Fair Value Cost Fair Value
- -------------------------------------------------------- ---------------------
(Millions of dollars) As of December 31 1995 1994
- -------------------------------------------------------- ---------------------
U.S. government securities $156 $159 $231 $213
Foreign government securities 212 218 284 263
Corporate and other debt securities 246 251 137 130
Equity securities 59 89 22 85
- -------------------------------------------------------------------------------
$673 $717 $674 $691
- -------------------------------------------------------------------------------
For the above items at year-end 1995, there were gross unrealized gains of
$54 million, primarily related to investments in equity and foreign govern-
ment debt securities, and gross unrealized losses of $10 million, principally
from foreign government debt securities. At year-end 1994, there were
gross unrealized gains of $66 million, primarily related to equity securities,
and gross unrealized losses of $49 million principally from investments
in U.S. and foreign government debt securities. Proceeds from sales of
available-for-sale securities were $1,175 million in 1995 and $610 million in
1994. These sales resulted in gross realized gains of $81 million and $19
million and gross realized losses of $27 million and $14 million in 1995 and
1994, respectively.
At December 31, 1995, available-for-sale debt securities had the
following scheduled maturities:
- -------------------------------------------------------------------------------
Amortized Estimated
Cost Fair Value
- -------------------------------------------------------------------------------
(Millions of dollars) As of December 31 1995
- -------------------------------------------------------------------------------
Due in one year or less $ 35 $ 35
Due after one year through five years 223 220
Due after five years 356 373
- -------------------------------------------------------------------------------
$614 $628
- -------------------------------------------------------------------------------
Texaco Inc. 1995 Annual Report to Stockholders Page 58.
The estimated fair value of other long-term investments not included
above, for which it is practicable to estimate fair value, approximated the
December 31, 1995 and 1994 carrying values of $133 million and $369 million,
respectively.
Short-term debt, long-term debt and related derivatives -- Shown below
are the carrying amounts and fair values of Texaco's debt and related deriv-
atives as of year-end 1995 and 1994.
- -------------------------------------------------------------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
- ------------------------------------------------------------ -----------------
(Millions of dollars) As of December 31 1995 1994
- ------------------------------------------------------------ -----------------
Short-term and long-term debt $6,122 $6,699 $6,332 $6,285
Debt-related derivatives-(receivables)
payables $ - $ (3) $ 1 $ 58
- -------------------------------------------------------------------------------
Refer to Note 8 for additional information concerning debt and
related derivatives outstanding at December 31, 1995 and 1994.
Forward Exchange Contracts -- As an international company, Texaco is
exposed to foreign currency exchange risk. To hedge against adverse changes
in foreign currency exchange rates, the company will buy and sell foreign
currencies forward. Texaco's currency hedging program involves managing
its foreign currency monetary exposures, capital expenditure commitments
and foreign currency denominated investment portfolio. The company had
forward exchange contracts outstanding to buy $1,356 million and sell $285
million of foreign currencies at year-end 1995. At year-end 1994, there
were outstanding contracts to buy $552 million and sell $254 million of
foreign currencies. Unrealized gains and losses applicable to these contracts
were immaterial at December 31, 1995 and 1994 since the forward rates
approximated the year-end spot rates. The company's exposure to credit risk
on forward exchange contracts is minimal since the counterparties are major
financial institutions with strong credit ratings. The company does not
anticipate nonperformance by any of the multiple counterparties. Market risk
exposure is essentially limited to the risk related to currency rate move-
ments. The business purposes of forward exchange contracts are explained
below.
At year-end 1995, Texaco had outstanding forward exchange contracts,
primarily to buy $789 million of foreign currencies, as a hedge against the
net liability position of certain of its foreign operations. These contracts
were mainly comprised of $272 million of Australian dollars, $177 million of
Dutch guilders and $174 million of British pounds and generally had contract
terms of 60 days or less. At year-end 1994, there were forward exchange
contracts outstanding to buy $105 million of Australian dollars as protection
against the net liability position of Texaco's Australian operations. These
contracts generally had terms of 45 days or less. Contracts that hedge foreign
currency monetary exposures are marked-to-market monthly, with gains and
losses included in income currently as other costs.
In managing its capital expenditure program, the company will buy foreign
currencies forward to hedge portions of significant future foreign cur-
rency denominated capital expenditures and lease commitments. The amount
of hedge coverage is assessed periodically and may be adjusted upward
or downward based on current and anticipated market conditions by subsequent
forward purchases or sales of foreign currencies. At December 31, 1995,
there were forward exchange contracts outstanding of $483 million to purchase
foreign currencies in connection with the capital expenditures hedging
program. Capital expenditure commitments under this program approximated
765 million Danish krone and 547 million British pounds. Outstanding
hedge contracts represented about 34% and 31% of the Danish krone and
British pound commitments, respectively. At December 31, 1994, there were
forward contracts outstanding of $425 million and $57 million to buy and sell
foreign currencies, respectively, in connection with the capital expenditure
hedging program. Capital expenditure commitments under this program
approximated 471 million British pounds and 1,076 million Danish krone. Of
these planned expenditures, approximately 29% of the British pound
commitments and 21% of the Danish krone commitments were hedged by forward
contracts. Contracts in both years generally had terms of 60 days or less.
Realized gains and losses on hedges of foreign currency commitments are ini-
tially recorded to deferred charges. Subsequently, the amounts are applied
to the capitalized project cost on a percentage-of-completion basis, and are
amortized to expense over the applicable life. At year-end 1995 and 1994, there
were net unamortized gains of $23 million and $29 million, respectively.
The company also enters into forward exchange contracts to purchase
and sell foreign currency to hedge a portion of its investment portfolio
denominated in foreign currencies. The company's strategy is to hedge the full
value of this portion of the investment portfolio and to close out forward
contracts upon the sale or maturity of the corresponding investment. At
December 31, 1995, there were outstanding contracts of $279 million and $70
million to sell and purchase, respectively, foreign currencies in connection
with this hedging program. At December 31, 1994, there were outstanding
$203 million of contracts primarily to sell foreign currencies. For both
years, the contracts primarily involve major European currencies. These con-
tracts are valued at market based upon the foreign currency exchange rates
in effect at the balance sheet dates. Increases and decreases in the value
of these contracts are recorded in investments along with the corresponding
instruments being hedged. Related unrealized gains and losses are
recorded, net of applicable income taxes, to stockholders' equity until the
related investment is sold or matures, at which time they are recorded in
income. Realized gains and losses on the settlement of forward contracts
used to hedge foreign currency investments held as of the balance sheet
dates are deferred and included in stockholders' equity until such time as
the corresponding investments are sold or mature.
Interest Rate and Currency Swap -- In connection with the December 1995
sale of Series C preferred stock by Texaco Capital LLC, Texaco entered into
an interest rate and currency swap contract that matures in the year 2005.
Over the life of the interest rate swap component of the contract,
Texaco will make LIBOR-based floating rate interest payments based on a
notional principal amount of $65 million. Canadian dollar interest will
accrue to Texaco at a fixed rate applied to the accreted notional principal
amount, which was 87 million Canadian dollars at December 31, 1995.
The currency swap component of the transaction calls for Texaco to ex-
change $65 million for 170 million Canadian dollars, which includes 87 million
Canadian dollars plus accrued interest on the contract's maturity date. At
year-end 1995, fair values associated with this transaction were not material.
Commodity Hedging -- The company hedges a portion of the market risks
associated with its crude oil, natural gas and petroleum product purchases,
sales and exchange activities. All hedge transactions are subject to the
company's corporate risk management policy which sets out dollar, volumetric
Texaco Inc. 1995 Annual Report to Stockholders Page 59.
and term limits, as well as to management approvals as set forth in the
company's delegations of authorities. Company policy does not permit
speculative position taking using derivative financial instruments.
The company uses established petroleum futures exchanges, as
well as "over-the-counter" hedge instruments, including forwards, options,
swaps and other derivative products. These hedge tools are used to reduce the
company's exposure to price volatility by establishing margins, costs or
revenues on designated transactions as well as for planned future purchases
and sales, inventory, production and processing. In carrying out its hedg-
ing programs, the company analyzes its major commodity streams for fixed
cost, fixed revenue and margin exposure to market price changes. Based on
this corporate risk profile, forecasted trends, and overall business object-
ives, a determination is made as to an appropriate strategy for risk reduction.
Hedge positions are marked-to-market for valuation purposes. Gains
and losses on hedge transactions, which offset losses and gains on the
underlying "cash market" transactions, are recorded to deferred income or
charges until the hedged transaction is closed, or until the anticipated
future purchases, sales, or production occur. At that time, any gain or loss
on the hedging contract is recorded to operating revenues as an increase or
decrease in margins, or to inventory, as appropriate.
Over-the-counter hedge positions expose the company to counterparty
credit risk. However, because the hedge contracts are placed with parties
whose creditworthiness has been pre-determined in accordance with the
company's credit policy, non-performance by any counterparty is not
anticipated. Such over-the-counter commodity contracts do not expose the
company to any concentrations of credit risk because of the dollar limits
incorporated in risk management policies.
At December 31, 1995 and 1994, there were open derivative commodity
contracts required to be settled in cash, consisting mostly of swaps.
Notional contract amounts, excluding unrealized gains and losses, were $868
million and $511 million, respectively, at year-end 1995 and 1994. These
amounts principally represent future values of contract volumes over the
remaining duration of outstanding swap contracts at the respective dates.
These contracts hedge a small fraction of the company's business activities
generally for the next twelve months. Unrealized gains and losses on con-
tracts outstanding at year-end 1995 were $28 million and $67 million,
respectively. At year-end 1994, unrealized gains and losses were immaterial.
===============================================================================
Note Seventeen -- Contingent Liabilities
===============================================================================
Internal Revenue Service Claims
During 1989, Texaco commenced an action in the United States Tax Court (Tax
Court), to challenge certain claimed increases in the company's 1979-1982
Federal income tax liability. The company's action contested, among other
items, an Internal Revenue Service (IRS) claim that during the 1979-1981 years,
Texaco should be taxed as if it had resold Saudi crude oil at prices higher
than those mandated by the Saudi Arab Government (Aramco Advantage issue).
On December 22, 1993, the Tax Court issued an opinion upholding the
company's position on the Aramco Advantage issue. The Tax Court held that
the IRS was barred from taxing the company on income never received, and
which could only have been received by violating Saudi law. Finding that
the Saudi Arab Government's mandate represented the sovereign law of that
country, the Tax Court determined that the company was required to com-
ply with the Saudi Arab Government's mandate and did in fact observe it.
The IRS has appealed to the United States Court of Appeals for the Fifth
Circuit. All other issues relating to the 1979-1982 years have been resolved
by trial or settlement.
In March 1988, prior to the commencement of the Tax Court action,
the company, as a condition of its emergence from Chapter 11 proceedings,
agreed to make certain cash deposits with the IRS in contemplation of poten-
tial tax claims (Deposit Fund). From time to time, the company has applied
Deposit Fund amounts to final liabilities agreed upon by the company and the
IRS for income tax and windfall profit tax years of Texaco and Getty not
involved in the Tax Court litigation. A portion of the Deposit Fund also will
be applied to issues settled in the 1979-1982 litigation years. After satis-
faction of all liabilities associated with settled issues, it is anticipated
that approximately $700 million will remain in the Deposit Fund and continue
to accrue interest. If the company ultimately prevails on the appeal of the
Aramco Advantage issue, the amount remaining in the Deposit Fund will be
refunded to the company, with interest.
. . . . . . . . . .
In the company's opinion, while it is impossible to ascertain the
ultimate legal and financial liability with respect to the above-mentioned and
other contingent liabilities and commitments, including lawsuits, claims,
guarantees, taxes and regulations, the aggregate amount of such liability
in excess of financial reserves, together with deposits and prepayments made
against disputed tax claims, is not anticipated to be materially impor-
tant in relation to the consolidated financial position or results of
operations of Texaco Inc. and its subsidiaries.
===============================================================================
Note Eighteen -- Financial Data by Geographic Area
===============================================================================
Texaco Inc. and its subsidiary companies, together with affiliates, represent
a vertically integrated enterprise principally engaged in the worldwide
exploration for and production, transportation, refining and marketing of
crude oil, natural gas and petroleum and other processed products, as well
as nonpetroleum operations such as insurance and alternate energy
activities. These products and services are sold and provided to various
purchasers including wholesale and retail distributors, utilities, industrial
end users and governmental agencies throughout the world. Operations
and investments in some foreign areas are subject to political and business
risks, the nature of which varies from country to country and from time to
time. At year-end 1995, net assets located outside the United States amounted
to $1,109 million, $3,399 million and $2,980 million in Other Western
Hemisphere, Europe and Other Eastern Hemisphere areas, respectively.
Operating profit represents total sales and services as shown on the
Statement of Consolidated Income less operating costs and expenses, net of
income taxes. Corporate/nonoperating includes interest income and expense,
general corporate expenses and other nonoperating items, net of income
taxes. Equity in income or losses of partnership joint-venture companies is
reflected net of taxes, since this income is directly taxable to Texaco.
Texaco Inc. 1995 Annual Report to Stockholders Page 60.
Intergeographic sales and services shown are based on prices which are
generally representative of market prices or arm's-length negotiated prices.
Identifiable assets are those from continuing operations which can be
directly identified or associated with operations which have been geo-
graphically segregated. Net assets of discontinued operations (see Note 4)
are reflected in corporate/nonoperating to conform to the presentation of
net income (loss) from discontinued operations. Investments in affiliates
pertain to those affiliates which are accounted for on the equity method.
Investments in affiliates relating to discontinued operations are reflected
in corporate/nonoperating. Corporate assets include cash and cash invest-
ments, as well as receivables, properties, plant and equipment and other
assets which are corporate in nature.
- ----------------------------------------------------------------------------------------------------------------------------------
Other Other
United Western Eastern Corporate/
States Hemisphere Europe Hemisphere Nonoperating* Consolidated
- ----------------------------------------------------------------------------------------------------------------------------------
(Millions of dollars)
- ----------------------------------------------------------------------------------------------------------------------------------
Year 1995
Sales and services
Outside $17,302 $5,440 $8,906 $3,903 $ - $35,551
Intergeographic 410 40 228 59 (737) -
- ----------------------------------------------------------------------------------------------------------------------------------
Total sales and services $17,712 $5,480 $9,134 $3,962 $ (737) $35,551
- ----------------------------------------------------------------------------------------------------------------------------------
Net income (loss)
Operating profit $ 291 $ 166 $ 32 $ 78 $ - $ 567
Equity in income of affiliates 45 6 21 452 - 524
Corporate/nonoperating - - - - (363) (363)
- ----------------------------------------------------------------------------------------------------------------------------------
Net income (loss) before cumulative effect
of accounting change 336 172 53 530 (363) 728
Cumulative effect of accounting change - - - - (121) (121)
- ----------------------------------------------------------------------------------------------------------------------------------
Total net income (loss) $ 336 $ 172 $ 53 $ 530 $ (484) $ 607
- ----------------------------------------------------------------------------------------------------------------------------------
Identifiable assets $11,068 $1,800 $4,480 $1,386 $ - $18,734
Net assets of discontinued operations - - - - 164 164
Investments in affiliates 1,042 24 540 2,479 - 4,085
Corporate assets - - - -- 1,954 1,954
- ----------------------------------------------------------------------------------------------------------------------------------
Total assets $12,110 $1,824 $5,020 $3,865 $ 2,118 $24,937
==================================================================================================================================
Year 1994
Sales and services
Outside $15,936 $4,710 $8,479 $3,415 $ - $32,540
Intergeographic 335 198 764 43 (1,340) -
- ----------------------------------------------------------------------------------------------------------------------------------
Total sales and services $16,271 $4,908 $9,243 $3,458 $(1,340) $32,540
- ----------------------------------------------------------------------------------------------------------------------------------
Net income (loss)
Operating profit $ 522 $ 104 $ 65 $ 67 $ - $ 758
Equity in income of affiliates 134 6 1 353 - 494
Corporate/nonoperating - - - - (273) (273)
- ----------------------------------------------------------------------------------------------------------------------------------
Net income (loss) before discontinued operations 656 110 66 420 (273) 979
Discontinued operations - - - - (69) (69)
- ----------------------------------------------------------------------------------------------------------------------------------
Total net income (loss) $ 656 $ 110 $ 66 $ 420 $ (342) $ 910
- ----------------------------------------------------------------------------------------------------------------------------------
Identifiable assets $11,851 $1,587 $4,641 $1,180 $ - $19,259
Net assets of discontinued operations - - - - 195 195
Investments in affiliates 1,144 26 370 2,366 - 3,906
Corporate assets - - - - 2,145 2,145
- ----------------------------------------------------------------------------------------------------------------------------------
Total assets $12,995 $1,613 $5,011 $3,546 $ 2,340 $25,505
==================================================================================================================================
Year 1993
Sales and services
Outside $17,417 $4,245 $8,416 $3,167 $ - $33,245
Intergeographic 289 241 725 43 (1,298) -
- ----------------------------------------------------------------------------------------------------------------------------------
Total sales and services $17,706 $4,486 $9,141 $3,210 $(1,298) $33,245
- ----------------------------------------------------------------------------------------------------------------------------------
Net income (loss)
Operating profit $ 562 $ 107 $ 245 $ 24 $ - $ 938
Equity in income of affiliates 146 8 8 368 - 530
Corporate/nonoperating - - - - (209) (209)
- ----------------------------------------------------------------------------------------------------------------------------------
Net income (loss) before discontinued operations 708 115 253 392 (209) 1,259
Discontinued operations - - - - (191) (191)
- ----------------------------------------------------------------------------------------------------------------------------------
Total net income (loss) $ 708 $ 115 $ 253 $ 392 $ (400) $ 1,068
- ----------------------------------------------------------------------------------------------------------------------------------
Identifiable assets $12,603 $1,435 $4,556 $1,107 $ - $19,701
Net assets of discontinued operations - - - - 1,180 1,180
Investments in affiliates 1,171 29 388 2,153 - 3,741
Corporate assets - - - - 2,004 2,004
- ----------------------------------------------------------------------------------------------------------------------------------
Total assets $13,774 $1,464 $4,944 $3,260 $ 3,184 $26,626
==================================================================================================================================
*Includes intergeographic sales and services eliminations.
Texaco Inc. 1995 Annual Report to Stockholders Page 61.
- -------------------------------------------------------------------------------
Texaco Inc. and Subsidiary Companies
- -------------------------------------------------------------------------------
Report of Management
- -------------------------------------------------------------------------------
The consolidated financial statements are the responsibility of the
management of Texaco Inc. They were prepared in accordance with generally
accepted accounting principles and are, in part, based on certain estimates
and judgments, as required. Other information contained in this Annual
Report is presented on a basis consistent with the financial statements.
To meet these responsibilities, it is Texaco's long-established corporate
policy to maintain a control conscious environment and an effective inter-
nal control system throughout its worldwide operations. Included in this
system are Corporate Conduct Guidelines which require that all employees
maintain the highest level of ethical standards. The internal control system
provides reasonable assurance that assets are safeguarded against unau-
thorized acquisition, use or disposition, and that financial records are accu-
rately and objectively maintained, thus serving as a reliable basis for the
preparation of financial statements. This system is augmented by written
policies and procedures and an organizational structure that provides for
an appropriate division of responsibility. Management personnel are required
to formally certify each year that an effective internal control system is
maintained. The internal controls are complemented by Texaco's internal
auditors who conduct regular and extensive internal audits throughout the
company. In addition, the independent public accounting firm of Arthur
Andersen LLP is engaged to provide an objective, independent audit of the
company's financial statements. Their accompanying report is based on an
audit conducted in accordance with generally accepted auditing stan-
dards, which included obtaining a sufficient understanding of the company's
internal controls to plan their audit and determine the nature, timing
and extent of audit tests to be performed. In conducting their audits, both
the internal and independent auditors have access to the minutes of all
meetings of the company's Board of Directors. The appointment of the
independent auditors is presented to the stockholders for approval at each
Annual Meeting of the Stockholders.
The Board of Directors of Texaco Inc. maintains an Audit Committee
which has been in place since 1939. This Committee, currently comprised of
five nonemployee Directors, met two times in 1995. Depending on the nature
of the matters under review, the independent auditors, as well as certain
officers and employees of the company, may attend all or part of a meeting.
The Committee reviews and evaluates the company's accounting policies
and reporting practices, internal auditing, internal controls, security
procedures and other matters deemed appropriate. The Audit Committee also
reviews the performance of Arthur Andersen LLP in their audit of Texaco's
financial statements and evaluates their independence and professional
competence, as well as the scope of their audit. Both the internal and
independent auditors have unrestricted access to the Audit Committee to dis-
cuss the results of their audits and the quality of the company's financial
reporting and internal control system.
(A. C. DeCrane, Jr.) (Willaim C. Bousquette) (Robert C. Oelkers)
A. C. DeCrane, Jr. William C. Bousquette Robert C. Oelkers
Chairman of the Board and Senior Vice President and Comptroller
Chief Executive Officer Chief Financial Officer
Texaco Inc. 1995 Annual Report to Stockholders Page 62.
- -------------------------------------------------------------------------------
Arthur Andersen LLP
- -------------------------------------------------------------------------------
Report of Independent Public Accountants
- -------------------------------------------------------------------------------
To the Stockholders, Texaco Inc.:
We have audited the accompanying consolidated balance sheet of Texaco Inc.
(a Delaware corporation) and subsidiary companies as of December 31,
1995 and 1994, and the related statements of consolidated income, cash flows
and stockholders' equity for each of the three years in the period ended
December 31, 1995. These financial statements are the responsibility of
the company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits pro-
vide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Texaco Inc. and sub-
sidiary companies as of December 31, 1995 and 1994, and the results of their
operations and their cash flows for each of the three years in the period
ended December 31, 1995 in conformity with generally accepted accounting
principles.
As explained in Note 2 to the Consolidated Financial Statements, in
1995 the company changed its method of accounting for long-lived assets
to be held and used and for long-lived assets to be disposed of.
(Arthur Andersen LLP)
Arthur Andersen LLP
February 22, 1996
New York, N.Y.
Texaco Inc. 1995 Annual Report to Stockholders Page 63.
- -------------------------------------------------------------------------------
Texaco Inc. and Subsidiary Companies
- -------------------------------------------------------------------------------
Supplemental Oil and Gas Information
- -------------------------------------------------------------------------------
The following information for Texaco Inc. and consolidated subsidiaries, as
well as Texaco's equity in P.T. Caltex Pacific Indonesia (CPI), a 50%-owned
affiliate operating in Other Eastern Hemisphere areas, is presented in
accordance with Statement of Financial Accounting Standards No. 69,
"Disclosures about Oil and Gas Producing Activities" (SFAS 69).
Estimated Proved Reserves
=========================
Volumes reported for proved liquid and gas reserves are based upon reasonable
estimates. These estimates are consistent with current knowledge of
the characteristics and production history of the reserves. Although they are
based upon sound geological and engineering principles, by their very
nature, such estimates are subject to upward and downward revision as
additional information about producing fields and technology becomes
available. Reported volumes include only such reserves as can reasonably
be classified as proved. Net reserves represent the volumes estimated to
be available after deduction of the royalty interests of others from gross re-
serves. In addition to reported reserves, Texaco has a large inventory of po-
tential reserves that will add to the company's proved reserve base as future
investments are made in exploration and development programs.
CPI's estimated liquid reserves include volumes projected to be re-
covered as reimbursement for a portion of costs incurred. Accordingly, these
volumes will fluctuate annually with the price of crude oil. CPI's natural gas
production is all consumed in its operations.
Annually, Texaco Inc. provides information concerning oil and gas
reserves to the U.S. Department of Energy and to certain governmental bodies.
Such information is consistent with the information presented in this Annual
Report.
During 1995, reserve increases, including equity and excluding pur-
chases and sales, replaced 129% of worldwide combined oil and gas pro-
duction. Of such reserve replacements, 74% were additions comprised of new
fields, new sands, new plants, extensions, and improved recovery, and
26% were comprised of revisions to previous estimates. Texaco recognizes
only those reserves where it is reasonably certain that such reserves can
be economically produced. Subsequent revisions naturally result as new in-
formation is obtained from development drilling, production profiles, and
changes in economic factors. During the three-year period 1993-1995,
Texaco's reserve increases were 117% of worldwide production. During this
period, additions accounted for 73% of reserve increases and revisions
accounted for 27%. During the five-year period 1991-1995, Texaco's reserve
increases were 109% of worldwide production. During this period, additions
accounted for 68% of reserve increases and revisions accounted for 32%.
Increases in proved reserves during 1995 were primarily due to the following:
In the United States, liquid and gas reserves were added by drilling that
extended the productive limits of existing fields in California, Louisiana,
Oklahoma, New Mexico, Texas, Utah and Wyoming. Other liquid and gas reserve
increases from drilling resulted from the discovery of new productive
formations in Colorado, Oklahoma, Texas and onshore and offshore Louisiana.
Liquid reserve increases also resulted from improved recovery at a
steamflood project in California as a result of expanding the steamflood
and also from lowering the economic limit due to revenues received from
cogeneration. Upward revisions that resulted from improved performance of
gas plants in Alabama, Louisiana, New Mexico, Oklahoma, and Texas also
added liquid reserves. Additions to natural gas reserves resulted from drill-
ing in a coal-bed methane field in Utah. Sales of minerals-in-place reflect
the sale of numerous economically marginal properties that did not fit into
Texaco's business goals.
Outside the United States, in the Other Western Hemisphere area, gas
reserve additions mainly reflect a gas contract renewal in Colombia and
upward revisions for a gas field offshore Trinidad resulting from a combined
geological and engineering technical study. Sales of minerals-in-place
reflect the sale of heavy oil reserves in Colombia. In Europe, increases in
liquid and gas reserves were from a new offshore field in the United Kingdom
sector of the North Sea. Additional volumes of liquids were added from
improved recovery at two fields in the Danish sector of the North Sea. In the
Other Eastern Hemisphere area, significant liquid reserves were added from
extensions as a result of additional drilling at two fields in the Partitioned
Neutral Zone between Saudi Arabia and Kuwait. Improved performance of a
field offshore Indonesia also increased liquid reserves. Gas reserves were
increased for the Partitioned Neutral Zone due to an increase in the use of
gas consumed in operations. Affiliate liquid reserves were increased due to
additional development of steamflood in Indonesia.
During 1996, Texaco expects that net production of natural gas will
approximate 2.1 billion cubic feet per day. This estimate is based upon past
performance and on the assumption that such gas quantities can be produced
under operating and economic conditions existing at December 31,
1995. Possible future changes in prices or world economic conditions were
not factored into this estimate. These expected production volumes,
together with normal related supply arrangements, are sufficient to meet
anticipated delivery requirements under contractual arrangements.
Approximately 31% of Texaco's proved natural gas reserves in the United
States as of December 31, 1995, and 33% at December 31, 1994 and 1993
were covered by long-term sales contracts. These agreements are primarily
priced at market.
Texaco Inc. 1995 Annual Report to Stockholders Page 64.
- ----------------------------------------------------------------------------------------------------------------------------------
Estimated Net Proved Developed and Undeveloped Reserves of Crude Oil
- ----------------------------------------------------------------------------------------------------------------------------------
Texaco Inc. and Consolidated Subsidiaries Equity Total
------------------------------------------------------ ---------- ----------
Affiliate-
Other Other Other
United Western Eastern Eastern
States Hemisphere Europe Hemisphere Worldwide Hemisphere
- ---------------------------------------------------------------------------------------------------------- ---------- ----------
(Millions of barrels)
- ----------------------------------------------------------------------------------------------------------------------------------
As of December 31, 1992 1,305 85 256 394 2,040 432 2,472
Increase (decrease) attributable to:
Extensions, discoveries and other additions 36 1 50 8 95 1 96
Improved recovery 37 - 9 - 46 52 98
Revisions of previous estimates 37 (2) 3 14 52 18 70
Purchases of minerals-in-place 1 - - - 1 - 1
Sales of minerals-in-place (15) (3) (5) - (23) - (23)
Production (123) (7) (28) (36) (194) (47) (241)
- ----------------------------------------------------------------------------------------------------------------------------------
As of December 31, 1993* 1,278 74 285 380 2,017 456 2,473
Increase (decrease) attributable to:
Extensions, discoveries and other additions 29 2 66 71 168 - 168
Improved recovery 21 - 7 7 35 24 59
Revisions of previous estimates 5 5 4 10 24 16 40
Sales of minerals-in-place (9) (2) (5) - (16) - (16)
Production (119) (7) (41) (41) (208) (57) (265)
- ----------------------------------------------------------------------------------------------------------------------------------
As of December 31, 1994* 1,205 72 316 427 2,020 439 2,459
Increase (decrease) attributable to:
Extensions, discoveries and other additions 30 - 32 71 133 1 134
Improved recovery 51 - 15 - 66 45 111
Revisions of previous estimates 56 (2) (2) 25 77 2 79
Purchases of minerals-in-place 1 - - - 1 - 1
Sales of minerals-in-place (98) (11) - - (109) - (109)
Production (110) (6) (39) (48) (203) (55) (258)
- ----------------------------------------------------------------------------------------------------------------------------------
As of December 31, 1995* 1,135 53 322 475 1,985 432 2,417
- ----------------------------------------------------------------------------------------------------------------------------------
*Includes net proved developed reserves
As of December 31, 1993 991 67 123 347 1,528 354 1,882
As of December 31, 1994 947 68 152 365 1,532 356 1,888
As of December 31, 1995 928 51 133 413 1,525 344 1,869
- ----------------------------------------------------------------------------------------------------------------------------------
Texaco Inc. 1995 Annual Report to Stockholders Page 65.
- ----------------------------------------------------------------------------------------------------------------------------------
Estimated Net Proved Developed and Undeveloped Reserves of Natural Gas Liquids
- ----------------------------------------------------------------------------------------------------------------------------------
Texaco Inc. and Consolidated Subsidiaries Equity Total
------------------------------------------------------ ---------- ----------
Affiliate-
Other Other Other
United Western Eastern Eastern
States Hemisphere Europe Hemisphere Worldwide Hemisphere
- ---------------------------------------------------------------------------------------------------------- ---------- ----------
(Millions of barrels)
- ----------------------------------------------------------------------------------------------------------------------------------
As of December 31, 1992 195 2 25 - 222 6 228
Increase (decrease) attributable to:
Extensions, discoveries and other additions 5 - - - 5 - 5
Revisions of previous estimates 15 (1) 3 - 17 (1) 16
Sales of minerals-in-place (3) - - - (3) - (3)
Production (32) - (2) - (34) - (34)
- ----------------------------------------------------------------------------------------------------------------------------------
As of December 31, 1993* 180 1 26 - 207 5 212
Increase (decrease) attributable to:
Extensions, discoveries and other additions 32 - 3 - 35 - 35
Revisions of previous estimates 12 - 1 - 13 1 14
Sales of minerals-in-place (4) - - - (4) - (4)
Production (29) - (3) - (32) - (32)
- ----------------------------------------------------------------------------------------------------------------------------------
As of December 31, 1994* 191 1 27 - 219 6 225
Increase (decrease) attributable to:
Extensions, discoveries and other additions 28 - 5 - 33 - 33
Improved recovery 5 - - - 5 - 5
Revisions of previous estimates 22 - (1) - 21 - 21
Sales of minerals-in-place (11) - - - (11) - (11)
Production (29) - (3) - (32) - (32)
- ----------------------------------------------------------------------------------------------------------------------------------
As of December 31, 1995* 206 1 28 - 235 6 241
- ----------------------------------------------------------------------------------------------------------------------------------
*Includes net proved developed reserves
As of December 31, 1993 174 1 7 - 182 5 187
As of December 31, 1994 182 1 11 - 194 5 199
As of December 31, 1995 197 1 9 - 207 6 213
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Grand Total Reserves of Crude Oil and Natural Gas Liquids
- ----------------------------------------------------------------------------------------------------------------------------------
As of December 31, 1993 1,458 75 311 380 2,224 461 2,685
As of December 31, 1994 1,396 73 343 427 2,239 445 2,684
As of December 31, 1995 1,341 54 350 475 2,220 438 2,658
- ----------------------------------------------------------------------------------------------------------------------------------
Texaco Inc. 1995 Annual Report to Stockholders Page 66.
- ----------------------------------------------------------------------------------------------------------------------------------
Estimated Net Proved Developed and Undeveloped Reserves of Natural Gas
- ----------------------------------------------------------------------------------------------------------------------------------
Texaco Inc. and Consolidated Subsidiaries Equity Total
------------------------------------------------------ ---------- ----------
Affiliate-
Other Other Other
United Western Eastern Eastern
States Hemisphere Europe Hemisphere Worldwide Hemisphere
- ---------------------------------------------------------------------------------------------------------- ---------- ----------
(Billions of cubic feet)
- ----------------------------------------------------------------------------------------------------------------------------------
As of December 31, 1992 4,526 655 648 83 5,912 158 6,070
Increase (decrease) attributable to:
Extensions, discoveries and other additions 344 128 110 1 583 - 583
Improved recovery 26 6 4 - 36 - 36
Revisions of previous estimates 257 - 149 (37) 369 - 369
Purchases of minerals-in-place 2 4 - 1 7 - 7
Sales of minerals-in-place (174) (14) - (1) (189) - (189)
Production (652) (57) (36) (3) (748) (18) (766)
- ----------------------------------------------------------------------------------------------------------------------------------
As of December 31, 1993* 4,329 722 875 44 5,970 140 6,110
Increase (decrease) attributable to:
Extensions, discoveries and other additions 522 17 71 - 610 26 636
Improved recovery 2 - 2 1 5 - 5
Revisions of previous estimates 260 22 15 4 301 (5) 296
Purchases of minerals-in-place - 9 - 1 10 - 10
Sales of minerals-in-place (61) (1) (20) - (82) - (82)
Production (645) (57) (66) (3) (771) (11) (782)
- ----------------------------------------------------------------------------------------------------------------------------------
As of December 31, 1994* 4,407 712 877 47 6,043 150 6,193
Increase (decrease) attributable to:
Extensions, discoveries and other additions 397 100 164 6 667 6 673
Improved recovery 21 - - - 21 - 21
Revisions of previous estimates 103 103 (15) 39 230 14 244
Purchases of minerals-in-place 26 - - - 26 - 26
Sales of minerals-in-place (287) (6) (2) (1) (296) - (296)
Production (605) (62) (80) (4) (751) (15) (766)
- ----------------------------------------------------------------------------------------------------------------------------------
As of December 31, 1995* 4,062 847(a) 944 87 5,940 155 6,095
- ----------------------------------------------------------------------------------------------------------------------------------
*Includes net proved developed reserves
As of December 31, 1993 3,971 575 362 41 4,949 128 5,077
As of December 31, 1994 3,899 558 465 44 4,966 133 5,099
As of December 31, 1995 3,666 522 452 84 4,724 140 4,864
- ----------------------------------------------------------------------------------------------------------------------------------
(a) In addition to proved reserves at December 31, 1995, there was approximately 517 billion
cubic feet of natural gas in the Other Western Hemisphere which will be available from pro-
duction during the period 2005-2016 under a long-term purchase arrangement associated with
a field operated by Texaco. Purchases during that period will be priced at then prevailing
market prices.
Texaco Inc. 1995 Annual Report to Stockholders Page 67.
Capitalized Costs
=================
Capitalized costs represent cumulative expenditures for proved and unproved
properties and support equipment and facilities used in oil and gas
exploration and producing operations together with related accumulated
depreciation, depletion and amortization (including aggregate provisions
for restoration and abandonment costs, net of such costs expended to date).
- ----------------------------------------------------------------------------------------------------------------------------------
Texaco Inc. and Consolidated Subsidiaries Equity Total
------------------------------------------------------ ---------- ----------
Affiliate-
Other Other Other
United Western Eastern Eastern
States Hemisphere Europe Hemisphere Worldwide Hemisphere
- ---------------------------------------------------------------------------------------------------------- ---------- ----------
(Millions of dollars)
- ----------------------------------------------------------------------------------------------------------------------------------
As of December 31, 1995
Proved properties $ 15,973 $ 505 $ 3,551 $1,279 $ 21,308 $ 900 $ 22,208
Unproved properties 383 11 125 116 635 320 955
Support equipment and facilities 381 28 47 133 589 494 1,083
- ----------------------------------------------------------------------------------------------------------------------------------
Gross capitalized costs 16,737 544 3,723 1,528 22,532 1,714 24,246
Accumulated depreciation,
depletion and amortization (11,887) (291) (2,520) (905) (15,603) (793) (16,396)
- ----------------------------------------------------------------------------------------------------------------------------------
Net capitalized costs $ 4,850 $ 253 $ 1,203 $ 623 $ 6,929 $ 921 $ 7,850
- ----------------------------------------------------------------------------------------------------------------------------------
As of December 31, 1994
Proved properties $ 18,103 $ 544 $ 3,483 $1,202 $ 23,332 $ 805 $ 24,137
Unproved properties 361 23 182 96 662 353 1,015
Support equipment and facilities 371 40 117 98 626 455 1,081
- ----------------------------------------------------------------------------------------------------------------------------------
Gross capitalized costs 18,835 607 3,782 1,396 24,620 1,613 26,233
Accumulated depreciation,
depletion and amortization (12,723) (384) (2,254) (812) (16,173) (699) (16,872)
- ----------------------------------------------------------------------------------------------------------------------------------
Net capitalized costs $ 6,112 $ 223 $ 1,528 $ 584 $ 8,447 $ 914 $ 9,361
- ----------------------------------------------------------------------------------------------------------------------------------
Costs Incurred
==============
Costs incurred represent amounts capitalized or charged against income as
expended. Property acquisition costs include costs to purchase or lease
proved and unproved properties. Exploration costs include the costs of
geological and geophysical work, carrying and retaining undeveloped proper-
ties and drilling and equipping exploratory wells. Development costs
include expenditures to drill and equip development wells; to provide improved
recovery systems; to construct facilities for extraction, treating, gathering
and storing liquids and natural gas; and to maintain producing facilities
for existing developed reserves. Exploration and development costs include
applicable depreciation of support equipment and facilities used in those
activities, rather than the expenditures to acquire such assets. Development
costs incurred in Europe during 1994 for the Captain Field include
$59 million which was recovered during 1995 in a sale of incomplete
construction on property to be leased by Texaco. (See Note 9.)
- ----------------------------------------------------------------------------------------------------------------------------------
Texaco Inc. and Consolidated Subsidiaries Equity Total
------------------------------------------------------ ---------- ----------
Affiliate-
Other Other Other
United Western Eastern Eastern
States Hemisphere Europe Hemisphere Worldwide Hemisphere
- ---------------------------------------------------------------------------------------------------------- ---------- ----------
(Millions of dollars)
- ----------------------------------------------------------------------------------------------------------------------------------
For the year ended December 31, 1995
Proved property acquisition $ 7 $ 31 $ - $ - $ 38 $ - $ 38
Unproved property acquisition 35 3 2 11 51 - 51
Exploration 151 48 76 117 392 11 403
Development 845 66 207 105 1,223 99 1,322
- ----------------------------------------------------------------------------------------------------------------------------------
Total $ 1,038 $ 148 $ 285 $ 233 $ 1,704 $ 110 $ 1,814
- ----------------------------------------------------------------------------------------------------------------------------------
For the year ended December 31, 1994
Proved property acquisition $ 5 $ 2 $ - $ - $ 7 $ - $ 7
Unproved property acquisition 13 2 - 33 48 - 48
Exploration 165 19 58 110 352 9 361
Development 729 43 253 108 1,133 129 1,262
- ----------------------------------------------------------------------------------------------------------------------------------
Total $ 912 $ 66 $ 311 $ 251 $ 1,540 $ 138 $ 1,678
- ----------------------------------------------------------------------------------------------------------------------------------
For the year ended December 31, 1993
Proved property acquisition $ 15 $ 2 $ - $ 3 $ 20 $ - $ 20
Unproved property acquisition 15 1 - 8 24 - 24
Exploration 157 9 141 111 418 10 428
Development 690 29 299 119 1,137 137 1,274
- ----------------------------------------------------------------------------------------------------------------------------------
Total $ 877 $ 41 $ 440 $ 241 $ 1,599 $ 147 $ 1,746
- ----------------------------------------------------------------------------------------------------------------------------------
Texaco Inc. 1995 Annual Report to Stockholders Page 68.
Results of Operations - Oil and Gas Exploration and Producing Activities
========================================================================
The results below solely relate to Texaco's exploration for and net production
of liquids and natural gas reserves. They exclude special items (includ-
ing the effect associated with the adoption of SFAS 121, which resulted in
a net-of-tax non-cash charge against 1995 earnings of $496 million, prin-
cipally in the United States) and operating earnings related to the sale of
purchased oil and gas, equity earnings of certain affiliates, liquids and gas
trading activity, general overhead, and miscellaneous operating income.
Related estimated income tax expense was computed by applying the statu-
tory income tax rates, including state and local income taxes, to the pre-tax
results of operations and reflects applicable credits and allowances.
- ----------------------------------------------------------------------------------------------------------------------------------
Texaco Inc. and Consolidated Subsidiaries Equity Total
------------------------------------------------------ ---------- ----------
Affiliate-
Other Other Other
United Western Eastern Eastern
States Hemisphere Europe Hemisphere Worldwide Hemisphere
- ---------------------------------------------------------------------------------------------------------- ---------- ----------
(Millions of dollars)
- ----------------------------------------------------------------------------------------------------------------------------------
For the year ended December 31, 1995
Gross revenues from:
Sales and transfers to affiliates and to
divisions and subsidiaries within Texaco $ 2,652 $ - $ 394 $ 613 $ 3,659 $ 583 $ 4,242
Sales to unaffiliated entities 291 127 485 131 1,034 35 1,069
Production costs (951) (45) (314) (198) (1,508) (169) (1,677)
Exploration expenses (87) (35) (79) (96) (297) (9) (306)
Depreciation, depletion and amortization (682) (20) (293) (109) (1,104) (94) (1,198)
Other expenses (254) (6) - (24) (284) (13) (297)
- ----------------------------------------------------------------------------------------------------------------------------------
Results before estimated income taxes 969 21 193 317 1,500 333 1,833
Estimated income taxes (295) (14) (74) (260) (643) (177) (820)
- ----------------------------------------------------------------------------------------------------------------------------------
Net results $ 674 $ 7 $ 119 $ 57 $ 857 $ 156 $ 1,013
- ----------------------------------------------------------------------------------------------------------------------------------
For the year ended December 31, 1994
Gross revenues from:
Sales and transfers to affiliates and to
divisions and subsidiaries within Texaco $ 2,672 $ - $ 336 $ 491 $ 3,499 $ 514 $ 4,013
Sales to unaffiliated entities 403 129 448 113 1,093 24 1,117
Production costs (1,100) (41) (325) (198) (1,664) (163) (1,827)
Exploration expenses (115) (17) (53) (115) (300) (9) (309)
Depreciation, depletion and amortization (934) (29) (295) (96) (1,354) (74) (1,428)
Other expenses (249) (8) - (27) (284) (27) (311)
- ----------------------------------------------------------------------------------------------------------------------------------
Results before estimated income taxes 677 34 111 168 990 265 1,255
Estimated income taxes (217) (31) (43) (130) (421) (131) (552)
- ----------------------------------------------------------------------------------------------------------------------------------
Net results $ 460 $ 3 $ 68 $ 38 $ 569 $ 134 $ 703
- ----------------------------------------------------------------------------------------------------------------------------------
For the year ended December 31, 1993
Gross revenues from:
Sales and transfers to affiliates and to
divisions and subsidiaries within Texaco $ 2,945 $ - $ 184 $ 457 $ 3,586 $ 486 $ 4,072
Sales to unaffiliated entities 464 130 350 98 1,042 23 1,065
Production costs (1,203) (50) (252) (205) (1,710) (146) (1,856)
Exploration expenses (102) (13) (76) (92) (283) (9) (292)
Depreciation, depletion and amortization (967) (28) (164) (93) (1,252) (64) (1,316)
Other expenses (213) (11) - (21) (245) (4) (249)
- ----------------------------------------------------------------------------------------------------------------------------------
Results before estimated income taxes 924 28 42 144 1,138 286 1,424
Estimated income taxes (303) (23) (6) (115) (447) (152) (599)
- ----------------------------------------------------------------------------------------------------------------------------------
Net results $ 621 $ 5 $ 36 $ 29 $ 691 $ 134 $ 825
- ----------------------------------------------------------------------------------------------------------------------------------
Texaco Inc. 1995 Annual Report to Stockholders Page 69.
Average Sales Prices and Production Costs - Per Unit
====================================================
Average sales prices per unit are based upon the gross revenues reported
in the Results of Operations - Oil and Gas Exploration and Producing
Activities table. Average production costs per composite barrel include
related depreciation, depletion and amortization of support equipment and
facilities. It also includes cash lifting costs, excluding payments for royal-
ties and income taxes. However, users of this information are cautioned that
such income taxes and royalties substantially add to the total cost of pro-
ducing operations and substantially reduce the profitability and cash flow
from such operations.
- ----------------------------------------------------------------------------------------------------------------------------------
Average sales prices
-----------------------------------------------------------------------------
Crude oil Natural Crude oil Natural Crude oil Natural
and natural gas per and natural gas per and natural gas per Average
gas liquids thousand gas liquids thousand gas liquids thousand production costs
per barrel cubic feet per barrel cubic feet per barrel cubic feet (per composite barrel)
- ------------------------------------------------- ------------------------- ------------------------- -------------------------
1995 1994 1993 1995 1994 1993
- ------------------------------------------------- ------------------------- ------------------------- -------------------------
United States $14.25 $1.62 $12.81 $1.87 $13.61 $2.07 $3.97 $4.33 $4.60
Other Western Hemisphere 13.34 .87 10.94 .87 11.11 .89 2.92 2.66 3.06
Europe 16.57 2.50 15.24 2.17 16.06 2.33 6.08 6.01 8.58
Other Eastern Hemisphere 15.90 2.61 14.58 2.70 15.18 2.58 4.30 4.92 5.49
Affiliate -
Other Eastern Hemisphere 14.05 - 11.96 - 13.45 - 3.37 3.13 3.21
- ----------------------------------------------------------------------------------------------------------------------------------
Standardized Measure of Discounted Future Net Cash Flows
========================================================
The following table shows estimated future net cash flows from future pro-
duction of net developed and undeveloped proved reserves of crude oil, nat-
ural gas liquids and natural gas (including amounts applicable to a long-term
purchase arrangement); therefore, reserves exclude the royalty inter-
ests of others. As prescribed by SFAS 69, such future net cash flows were
estimated using year-end prices, costs, and tax rates, and a 10% annual dis-
count factor. Future production costs are based upon current year costs
used uniformly throughout the life of the reserves. Future development costs
include restoration and abandonment costs, net of residual salvage value.
Estimated future income taxes were computed by applying the statutory
income tax rates, including state and local taxes, to the future pre-tax net
cash flows less appropriate tax deductions, giving effect to tax credits.
Effective tax rates were used for certain foreign areas.
Texaco is presenting this information in accordance with the requirements
of SFAS 69 and has exercised all due care in developing the data. It is
necessary to caution investors and other users of the information to avoid
its simplistic use. While the intent of this disclosure is to provide a common
benchmark to help financial statement users project future cash flows and
compare companies, users should note the following: data in this table
excludes the effect of future changes in prices, costs, and tax rates which
past experience indicates will occur. Such future changes could significantly
impact the disclosed discounted net cash flows. The data also excludes the
estimated net cash flows from reserves that are yet to be proved. Extensive
judgment is used to estimate the timing of production and future costs over
the remaining life of the reserves utilized in developing this disclosure.
Values can be distorted by the use of year-end prices that may reflect
seasonal factors or unpredictable distortions from wars and other significant
world events. For all the preceding reasons, this disclosure is not necessarily
indicative of Texaco's perception of the future cash flows to be derived
from underground reserves.
Texaco Inc. 1995 Annual Report to Stockholders Page 70.
- ----------------------------------------------------------------------------------------------------------------------------------
Standardized Measure of Discounted Future Net Cash Flows
- ----------------------------------------------------------------------------------------------------------------------------------
Texaco Inc. and Consolidated Subsidiaries Equity Total
------------------------------------------------------ ---------- ----------
Affiliate-
Other Other Other
United Western Eastern Eastern
States Hemisphere Europe Hemisphere Worldwide Hemisphere
- ---------------------------------------------------------------------------------------------------------- ---------- ----------
(Millions of dollars)
- ----------------------------------------------------------------------------------------------------------------------------------
As of December 31, 1995
Future cash inflows from sale of oil and gas $ 28,603 $2,144 $ 8,753 $ 7,820 $ 47,320 $ 5,357 $ 52,677
Future production costs (8,232) (628) (2,150) (2,210) (13,220) (1,448) (14,668)
Future development costs (2,618) (181) (1,352) (439) (4,590) (515) (5,105)
Future income tax expense (5,505) (573) (1,457) (3,862) (11,397) (1,799) (13,196)
- ----------------------------------------------------------------------------------------------------------------------------------
Net future cash flows before discount 12,248 762 3,794 1,309 18,113 1,595 19,708
10% discount for timing of future cash flows (4,988) (375) (1,502) (418) (7,283) (553) (7,836)
- ----------------------------------------------------------------------------------------------------------------------------------
Standardized measure:
discounted future net cash flows $ 7,260 $ 387 $ 2,292 $ 891 $ 10,830 $ 1,042 $ 11,872
- ----------------------------------------------------------------------------------------------------------------------------------
As of December 31, 1994
Future cash inflows from sale of oil and gas $ 26,545 $1,568 $ 6,933 $ 6,006 $ 41,052 $ 4,664 $ 45,716
Future production costs (9,374) (609) (2,434) (2,567) (14,984) (1,393) (16,377)
Future development costs (3,011) (134) (1,372) (354) (4,871) (193) (5,064)
Future income tax expense (3,968) (361) (966) (2,229) (7,524) (1,632) (9,156)
- ----------------------------------------------------------------------------------------------------------------------------------
Net future cash flows before discount 10,192 464 2,161 856 13,673 1,446 15,119
10% discount for timing of future cash flows (4,313) (155) (814) (271) (5,553) (554) (6,107)
- ----------------------------------------------------------------------------------------------------------------------------------
Standardized measure:
discounted future net cash flows $ 5,879 $ 309 $ 1,347 $ 585 $ 8,120 $ 892 $ 9,012
- ----------------------------------------------------------------------------------------------------------------------------------
As of December 31, 1993
Future cash inflows from sale of oil and gas $ 24,897 $1,373 $ 5,444 $ 4,044 $ 35,758 $ 4,113 $ 39,871
Future production costs (10,678) (774) (3,023) (1,879) (16,354) (1,573) (17,927)
Future development costs (2,831) (166) (1,060) (418) (4,475) (636) (5,111)
Future income tax expense (3,060) (156) (487) (1,228) (4,931) (1,009) (5,940)
- ----------------------------------------------------------------------------------------------------------------------------------
Net future cash flows before discount 8,328 277 874 519 9,998 895 10,893
10% discount for timing of future cash flows (3,231) (113) (305) (168) (3,817) (349) (4,166)
- ----------------------------------------------------------------------------------------------------------------------------------
Standardized measure:
discounted future net cash flows $ 5,097 $ 164 $ 569 $ 351 $ 6,181 $ 546 $ 6,727
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Changes in the Standardized Measure of Discounted Future Net Cash Flows
- ----------------------------------------------------------------------------------------------------------------------------------
Total Including Equity
Texaco Inc. and Consolidated in Affiliate-
Subsidiaries-Worldwide Other Eastern Hemisphere
- ------------------------------------------------------------------------------------------------- -------------------------------
(Millions of dollars) 1995 1994 1993 1995 1994 1993
- ------------------------------------------------------------------------------------------------- -------------------------------
Standardized measure - Beginning of year $ 8,120 $ 6,181 $ 8,894 $ 9,012 $ 6,727 $ 9,716
Sales of minerals-in-place (679) (104) (211) (679) (104) (211)
- ----------------------------------------------------------------------------------------------------------------------------------
7,441 6,077 8,683 8,333 6,623 9,505
Changes in ongoing oil and gas operations:
Sales and transfers of produced oil and gas, net of
production costs during the period (3,185) (2,932) (2,918) (3,634) (3,307) (3,281)
Net changes in prices, production and development costs 4,265 3,024 (5,512) 4,564 3,707 (6,001)
Extensions, discoveries and improved recovery,
less related costs 1,770 1,355 955 1,891 1,479 963
Development costs incurred during the period 1,223 1,133 1,137 1,322 1,262 1,274
Timing of production and other changes (733) (618) (488) (677) (648) (564)
Revisions of previous quantity estimates 988 537 725 990 626 787
Purchases of minerals-in-place 42 7 6 42 7 6
Accretion of discount 1,238 907 1,398 1,428 1,023 1,566
Net change in discounted future income taxes (2,219) (1,370) 2,195 (2,387) (1,760) 2,472
- ----------------------------------------------------------------------------------------------------------------------------------
Standardized measure - End of year $10,830 $ 8,120 $ 6,181 $11,872 $ 9,012 $ 6,727
- ----------------------------------------------------------------------------------------------------------------------------------
Texaco Inc. 1995 Annual Report to Stockholders Page 71.
- ----------------------------------------------------------------------------------------------------------------------------------
Texaco Inc. and Subsidiary Companies
- ----------------------------------------------------------------------------------------------------------------------------------
Selected Quarterly Financial Data
- ----------------------------------------------------------------------------------------------------------------------------------
First Second Third Fourth First Second Third Fourth
Quarter Quarter Quarter Quarter Quarter Quarter Quarter Quarter
- ------------------------------------------------------------------------------------------ --------------------------------------
(Millions of dollars) 1995 1994
- ------------------------------------------------------------------------------------------ --------------------------------------
Revenues
Sales and services $8,585 $9,031 $8,621 $ 9,314 $7,232 $7,865 $8,725 $8,718
Equity in income of affiliates, interest,
asset sales and other 482 228 193 333 202 135 235 241
- ----------------------------------------------------------------------------------------------------------------------------------
9,067 9,259 8,814 9,647 7,434 8,000 8,960 8,959
- ----------------------------------------------------------------------------------------------------------------------------------
Deductions
Purchases and other costs 6,526 6,980 6,556 7,175 5,183 5,787 6,461 6,500
Operating expenses 731 696 713 767 731 790 818 730
Selling, general and administrative expenses 371 377 411 421 391 472 366 450
Maintenance and repairs 88 96 88 103 90 95 97 108
Exploratory expenses 55 59 66 109 66 90 52 99
Depreciation, depletion and amortization 397 348 346 1,294 408 431 445 451
Interest expense, taxes other than income
taxes and minority interest 265 256 248 259 258 248 265 267
- ----------------------------------------------------------------------------------------------------------------------------------
8,433 8,812 8,428 10,128 7,127 7,913 8,504 8,605
- ----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from continuing operations
before income taxes 634 447 386 (481) 307 87 456 354
Provision for (benefit from) income taxes 216 176 96 (230) 105 (28) 175 (27)
- ----------------------------------------------------------------------------------------------------------------------------------
Net income (loss) from continuing operations 418 271 290 (251) 202 115 281 381
Gain (loss) on disposal of discontinued operations - - - - - (87) - 18
Cumulative effect of accounting change (121) - - - - - - -
- ----------------------------------------------------------------------------------------------------------------------------------
Net income $ 297 $ 271 $ 290 $ (251) $ 202 $ 28 $ 281 $ 399
- ----------------------------------------------------------------------------------------------------------------------------------
Per common share (dollars)
Net income (loss)
Continuing operations $ 1.55 $ .99 $ 1.06 $ (1.02) $ .69 $ .35 $ .98 $ 1.42
Discontinued operations - - - - - (.34) - .07
Cumulative effect of accounting change (.47) - - - - - - -
- ----------------------------------------------------------------------------------------------------------------------------------
Net income $ 1.08 $ .99 $ 1.06 $ (1.02) $ .69 $ .01 $ .98 $ 1.49
- ----------------------------------------------------------------------------------------------------------------------------------
Fourth quarter 1995 results include a pre-tax charge of $959 million,
primarily to depreciation, depletion and amortization, due to the adoption
of SFAS 121. (Refer to Note 2 - Changes in Accounting Principles for
further details.) On an after-tax basis, this charge amounted to $639
million. First quarter results include the reclassification of a $121 million
charge for the write-down of properties held for sale at January 1, 1995,
from "Income from continuing operations" to "Cumulative effect of accounting
change." Also, results for the first three quarters of 1995 have been
restated, primarily to reflect the reversal of depreciation, deple-
tion and amortization of assets held for sale.
See accompanying notes to consolidated financial statements.
Texaco Inc. 1995 Annual Report to Stockholders Page 72.
- ----------------------------------------------------------------------------------------------------------------------------------
Texaco Inc. and Subsidiary Companies
- ----------------------------------------------------------------------------------------------------------------------------------
Five-Year Comparison of Selected Financial Data
- ----------------------------------------------------------------------------------------------------------------------------------
(Millions of dollars) 1995 1994 1993 1992 1991
- ----------------------------------------------------------------------------------------------------------------------------------
For the Year:
Revenues from continuing operations $36,787 $33,353 $34,071 $36,530 $37,162
Net income (loss) before cumulative effect of accounting changes
Continuing operations $ 728 $ 979 $ 1,259 $ 1,038 $ 1,292
Discontinued operations - (69) (191) (26) 2
Cumulative effect of accounting changes (121) - - (300) -
- ----------------------------------------------------------------------------------------------------------------------------------
Net income $ 607 $ 910 $ 1,068 $ 712 $ 1,294
- ----------------------------------------------------------------------------------------------------------------------------------
Per common share (dollars)
Net income (loss) before cumulative effect of accounting changes
Continuing operations $ 2.57 $ 3.43 $ 4.47 $ 3.63 $ 4.60
Discontinued operations - (.26) (.73) (.10) .01
Cumulative effect of accounting changes (.47) - - (1.16) -
- ----------------------------------------------------------------------------------------------------------------------------------
Net income $ 2.10 $ 3.17 $ 3.74 $ 2.37 $ 4.61
- ----------------------------------------------------------------------------------------------------------------------------------
Dividends $ 3.20 $ 3.20 $ 3.20 $ 3.20 $ 3.20
Total cash dividends paid on common stock $ 832 $ 830 $ 828 $ 828 $ 827
At End of Year:
Total assets $24,937 $25,505 $26,626 $25,992 $26,182
Debt and capital lease obligations
Short-term $ 737 $ 917 $ 669 $ 140 $ 1,331
Long-term 5,503 5,564 6,157 6,441 5,173
- ----------------------------------------------------------------------------------------------------------------------------------
Total debt and capital lease obligations $ 6,240 $ 6,481 $ 6,826 $ 6,581 $ 6,504
- ----------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
Texaco Inc. 1995 Annual Report to Stockholders Page 73.
- -------------------------------------------------------------------------------
Texaco Inc. and Subsidiary Companies
- -------------------------------------------------------------------------------
Investor Information
- -------------------------------------------------------------------------------
Stockholder Communications
- --------------------------
For information about Texaco Security analysts and
or assistance with your institutional investors
account, please contact: should contact:
Texaco Inc. Elizabeth P. Smith
Investor Services Vice President, Texaco Inc.
2000 Westchester Avenue Phone: (914) 253-4478
White Plains, NY 10650-0001 E-mail address:smithep@texaco.com
Phone: 1-800-283-9785
Fax: (914) 253-6286
Common Stock Market and Dividend Information
- --------------------------------------------
Texaco Inc. common stock (symbol TX) is traded principally on the New York
Stock Exchange. As of February 22, 1996, there were 198,591 stockholders
of record. Texaco's common stock price reached a 26-year high of $80.50
during the fourth quarter of 1995 and closed at $78.50, providing a total
return to Texaco stockholders of more than 37% for the year.
- -------------------------------------------------------------------------------
Common Stock Price Range Dividends
---------------------------------- --------------
High Low High Low
- ------------------------------------------- ------------------ --------------
1995 1994 1995 1994
- ------------------------------------------- ------------------ --------------
First Quarter $66.75 $59.75 $68.13 $61.50 $.80 $.80
Second Quarter 69.63 64.25 66.00 60.00 .80 .80
Third Quarter 67.63 62.75 64.25 58.13 .80 .80
Fourth Quarter 80.50 64.00 65.50 59.38 .80 .80
- -------------------------------------------------------------------------------
Stock Transfer Agent
- --------------------
Texaco Inc.
Investor Services
2000 Westchester Avenue
White Plains, NY 10650-0001
Phone: 1-800-283-9785
Fax: (914) 253-6286
NY Drop Agent
- -------------
Chemical Mellon Shareholder Services
120 Broadway - 13th Floor
New York, NY 10271
Phone: 1-800-526-0801
Fax: (212) 571-0871
Co-Transfer Agent
- -----------------
Montreal Trust Company
151 Front Street West -8th Floor
Toronto, Ontario, Canada M5J 2N1
Phone: 1-800-663-9097
Fax: (416) 981-9507
Annual Meeting
- --------------
Texaco Inc.'s Annual Stockholders Meeting will be held at the Hyatt
Regency Houston, 1200 Louisiana Street, Houston, Texas 77002, on Tuesday,
May 14, 1996. A formal notice of the meeting, together with a proxy statement
and proxy form, is being mailed to stockholders with this Report.
Investor Services Plan
- ----------------------
Our Investor Services Plan offers a variety of benefits to individuals seek-
ing an easy way to invest in Texaco Inc. common stock. Enrollment in the Plan
is open to anyone, and all investors may make initial investments directly
through the company. The Plan features dividend reinvestment, optional
cash investments and custodial service for stock certificates. Texaco's
Investor Services Plan is an excellent way to start an investment program for
friends or family members. For a complete informational package, including
a Plan prospectus, call 1-800-283-9785.
Publications for Stockholders
- -----------------------------
IN ADDITION TO THE ANNUAL REPORT, TEXACO ISSUES SEVERAL FINANCIAL AND
INFORMATIONAL PUBLICATIONS WHICH ARE AVAILABLE FREE OF CHARGE TO INTERESTED
STOCKHOLDERS ON REQUEST FROM INVESTOR SERVICES AT THE ABOVE ADDRESS:
TEXACO INC.'S 1995 ANNUAL REPORT ON FORM 10-K FILED WITH THE U.S.
SECURITIES AND EXCHANGE COMMISSION.
Financial and Operational Supplement - Comprehensive data on
Texaco's 1995 activities.
Texaco Foundation 1995 Annual Report - Information on charitable
contributions to select tax-exempt organizations in the U.S.
Equal Opportunity and Texaco: A Report - A description of Texaco's programs
that foster equal employment opportunity.
Environment, Health and Safety Review - A periodic report on
Texaco's programs, policies and results in these critical areas of
corporate responsibility.
Look for additional information on Texaco's Internet home page:
http://www.texaco.com
Texaco Inc. 1995 Annual Report to Stockholders Page 74.
EXHIBIT 21
--------------------------
Subsidiaries of Registrant
1995
Parents of Registrant
None
Registrant
Texaco Inc.
The operations of the Registrant and its subsidiaries are generally grouped
by divisions. The divisions are comprised of various subsidiaries and
affiliates. The significant subsidiaries included in the consolidated financial
statements of the Registrant, grouped by the division primarily responsible for
each, are as follows:
Organized
under
Texaco U.S.A. the laws of
- ------------- -----------
Four Star Oil and Gas Company Delaware
Texaco Cogeneration Company Delaware
Texaco Exploration and Production Inc. Delaware
Texaco Natural Gas Inc. Delaware
Texaco Pipeline Inc. Delaware
Texaco Refining and Marketing Inc. Delaware
Texaco Refining and Marketing (East) Inc. Delaware
Texaco Trading and Transportation Inc. Delaware
Texaco Europe
- -------------
Texaco Britain Limited England
Texaco Denmark Inc. Delaware
Texaco Investments (Netherlands), Inc. Delaware
Texaco Limited England
Texaco North Sea U.K. Company Delaware
Texaco Latin America/West Africa
- --------------------------------
Texaco Brasil S.A. Produtos de Petroleo Brazil
Texaco Overseas (Nigeria) Petroleum Company Nigeria
Texaco Overseas Petroleum Company Delaware
Texaco Panama Inc. Panama
Texas Petroleum Company New Jersey
Other significant subsidiaries of the Registrant not within
- -----------------------------------------------------------
the above divisions
- -------------------
Heddington Insurance Ltd. Bermuda
Saudi Arabian Texaco Inc. Delaware
Texaco International Trader Inc. Delaware
Texaco Overseas Holdings Inc. Delaware
TEPI Holdings Inc. Delaware
TRMI Holdings Inc. Delaware
Names of certain subsidiary companies are omitted because, considered in
the aggregate as a single subsidiary company, they do not constitute a
significant subsidiary company.
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference of our report dated February 22, 1996 incorporated by reference in
Texaco Inc.'s Form 10-K for the year ended December 31, 1995, into the following
previously filed Registration Statements:
1. Form S-3 File Number 2-37010
2. Form S-3 File Number 33-31148
3. Form S-8 File Number 2-67125
4. Form S-8 File Number 2-76755
5. Form S-8 File Number 2-90255
6. Form S-8 File Number 33-34043
7. Form S-3 File Number 33-40309
8. Form S-8 File Number 33-45952
9. Form S-8 File Number 33-45953
10. Form S-3 File Number 33-63996
11. Form S-3 File Number 33-50553 and 33-50553-01
(ARTHUR ANDERSEN LLP)
ARTHUR ANDERSEN LLP
New York, N.Y.
March 28, 1996
EXHIBIT 24.1
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of
TEXACO INC., a Delaware corporation (the "Company"), hereby makes, designates,
constitutes and appoints CARL B. DAVIDSON and ROBERT E. KOCH, and either of them
(with full power to act without the other), as the undersigned's true and lawful
attorneys-in-fact and agents, with full power and authority to act in any and
all capacities for and in the name, place and stead of the undersigned in
connection with the filing of: (i) any and all registration statements and all
amendments and post-effective amendments thereto (collectively, "Registration
Statements") under the Securities Act of 1933, as amended, with the Securities
and Exchange Commission, and any and all registrations, qualifications or
notifications under the applicable securities laws of any and all states and
other jurisdictions, with respect to the securities of the Company of whatever
class, including without limitation thereon the Company's Common Stock, par
value $6.25 per share, and preferred stock, par value $1.00 per share, however
offered, sold, issued, distributed, placed or resold by the Company, by any of
its subsidiary companies, or by any other person or entity, that may be required
to effect: (a) any such filing, (b) any primary or secondary offering, sale,
distribution, exchange, or conversion of the Company's securities, (c) any
acquisition, merger, reorganization or consolidation involving the issuance of
the Company's securities, (d) any stock option, restricted stock grant,
incentive, investment, thrift, profit sharing, or other employee benefit plan
relating to the Company's securities, or (e) any dividend reinvestment or stock
purchase plan relating to the Company's securities; (ii) the Company's Annual
Report to the Securities and Exchange Commission for the year ended December 31,
1995, on Form 10-K, and any and all amendments thereto on Form 8 or otherwise,
under the Securities Exchange Act of 1934, as amended ("Exchange Act"), and
(iii) Statements of Changes of Beneficial Ownership of Securities on Form 4 or
Form 5 (or such other forms as may be designated from time to time for such
purposes), pursuant to Section 16(a) of the Exchange Act.
Without limiting the generality of the foregoing grant of authority,
such attorneys-in-fact and agents, or either of them, are hereby granted full
power and authority, on behalf of and in the name, place and stead of the
undersigned, to execute and deliver all such Registration Statements,
registrations, qualifications, or notifications, the Company's Form 10-K, any
and all amendments thereto, statements of changes, and any and all other
documents in connection with the foregoing, and take such other and further
action as such attorneys-in-fact and agents, or either of them, deem necessary
or appropriate. The powers and authorities granted herein to such
attorneys-in-fact and agents, and either of them, also include the full right,
power and authority to effect necessary or appropriate substitutions or
revocations. The undersigned hereby ratifies, confirms, and adopts, as his own
act and deed, all action lawfully taken pursuant to the powers and authorities
herein granted by such attorneys-in-fact and agents, or either of them, or by
their respective substitutes. This Power of Attorney expires by its terms and
shall be of no further force and effect on March 31, 1997.
IN WITNESS WHEREOF, the undersigned has hereunto set his name and seal
as of the 22nd day of January, 1996.
ALFRED C. DE CRANE, JR.
-----------------------
. EXHIBIT 24.2
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of
TEXACO INC., a Delaware corporation (the "Company"), hereby makes, designates,
constitutes and appoints CARL B. DAVIDSON and ROBERT E. KOCH, and either of them
(with full power to act without the other), as the undersigned's true and lawful
attorneys-in-fact and agents, with full power and authority to act in any and
all capacities for and in the name, place and stead of the undersigned in
connection with the filing of: (i) any and all registration statements and all
amendments and post-effective amendments thereto (collectively, "Registration
Statements") under the Securities Act of 1933, as amended, with the Securities
and Exchange Commission, and any and all registrations, qualifications or
notifications under the applicable securities laws of any and all states and
other jurisdictions, with respect to the securities of the Company of whatever
class, including without limitation thereon the Company's Common Stock, par
value $6.25 per share, and preferred stock, par value $1.00 per share, however
offered, sold, issued, distributed, placed or resold by the Company, by any of
its subsidiary companies, or by any other person or entity, that may be required
to effect: (a) any such filing, (b) any primary or secondary offering, sale,
distribution, exchange, or conversion of the Company's securities, (c) any
acquisition, merger, reorganization or consolidation involving the issuance of
the Company's securities, (d) any stock option, restricted stock grant,
incentive, investment, thrift, profit sharing, or other employee benefit plan
relating to the Company's securities, or (e) any dividend reinvestment or stock
purchase plan relating to the Company's securities; (ii) the Company's Annual
Report to the Securities and Exchange Commission for the year ended December 31,
1995, on Form 10-K, and any and all amendments thereto on Form 8 or otherwise,
under the Securities Exchange Act of 1934, as amended ("Exchange Act"), and
(iii) Statements of Changes of Beneficial Ownership of Securities on Form 4 or
Form 5 (or such other forms as may be designated from time to time for such
purposes), pursuant to Section 16(a) of the Exchange Act.
Without limiting the generality of the foregoing grant of authority,
such attorneys-in-fact and agents, or either of them, are hereby granted full
power and authority, on behalf of and in the name, place and stead of the
undersigned, to execute and deliver all such Registration Statements,
registrations, qualifications, or notifications, the Company's Form 10-K, any
and all amendments thereto, statements of changes, and any and all other
documents in connection with the foregoing, and take such other and further
action as such attorneys-in-fact and agents, or either of them, deem necessary
or appropriate. The powers and authorities granted herein to such
attorneys-in-fact and agents, and either of them, also include the full right,
power and authority to effect necessary or appropriate substitutions or
revocations. The undersigned hereby ratifies, confirms, and adopts, as his own
act and deed, all action lawfully taken pursuant to the powers and authorities
herein granted by such attorneys-in-fact and agents, or either of them, or by
their respective substitutes. This Power of Attorney expires by its terms and
shall be of no further force and effect on March 31, 1997.
IN WITNESS WHEREOF, the undersigned has hereunto set his name and seal
as of the 19th day of March, 1996.
PETER I. BIJUR
--------------
EXHIBIT 24.3
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of
TEXACO INC., a Delaware corporation (the "Company"), hereby makes, designates,
constitutes and appoints CARL B. DAVIDSON and ROBERT E. KOCH, and either of them
(with full power to act without the other), as the undersigned's true and lawful
attorneys-in-fact and agents, with full power and authority to act in any and
all capacities for and in the name, place and stead of the undersigned in
connection with the filing of: (i) any and all registration statements and all
amendments and post-effective amendments thereto (collectively, "Registration
Statements") under the Securities Act of 1933, as amended, with the Securities
and Exchange Commission, and any and all registrations, qualifications or
notifications under the applicable securities laws of any and all states and
other jurisdictions, with respect to the securities of the Company of whatever
class, including without limitation thereon the Company's Common Stock, par
value $6.25 per share, and preferred stock, par value $1.00 per share, however
offered, sold, issued, distributed, placed or resold by the Company, by any of
its subsidiary companies, or by any other person or entity, that may be required
to effect: (a) any such filing, (b) any primary or secondary offering, sale,
distribution, exchange, or conversion of the Company's securities, (c) any
acquisition, merger, reorganization or consolidation involving the issuance of
the Company's securities, (d) any stock option, restricted stock grant,
incentive, investment, thrift, profit sharing, or other employee benefit plan
relating to the Company's securities, or (e) any dividend reinvestment or stock
purchase plan relating to the Company's securities; (ii) the Company's Annual
Report to the Securities and Exchange Commission for the year ended December 31,
1995, on Form 10-K, and any and all amendments thereto on Form 8 or otherwise,
under the Securities Exchange Act of 1934, as amended ("Exchange Act"), and
(iii) Statements of Changes of Beneficial Ownership of Securities on Form 4 or
Form 5 (or such other forms as may be designated from time to time for such
purposes), pursuant to Section 16(a) of the Exchange Act.
Without limiting the generality of the foregoing grant of authority,
such attorneys-in-fact and agents, or either of them, are hereby granted full
power and authority, on behalf of and in the name, place and stead of the
undersigned, to execute and deliver all such Registration Statements,
registrations, qualifications, or notifications, the Company's Form 10-K, any
and all amendments thereto, statements of changes, and any and all other
documents in connection with the foregoing, and take such other and further
action as such attorneys-in-fact and agents, or either of them, deem necessary
or appropriate. The powers and authorities granted herein to such
attorneys-in-fact and agents, and either of them, also include the full right,
power and authority to effect necessary or appropriate substitutions or
revocations. The undersigned hereby ratifies, confirms, and adopts, as his own
act and deed, all action lawfully taken pursuant to the powers and authorities
herein granted by such attorneys-in-fact and agents, or either of them, or by
their respective substitutes. This Power of Attorney expires by its terms and
shall be of no further force and effect on March 31, 1997.
IN WITNESS WHEREOF, the undersigned has hereunto set his name and seal
as of the 18th day of January, 1996.
ALLEN J. KROWE
--------------
EXHIBIT 24.4
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an officer of
TEXACO INC., a Delaware corporation (the "Company"), hereby makes, designates,
constitutes and appoints CARL B. DAVIDSON and ROBERT E. KOCH, and either of them
(with full power to act without the other), as the undersigned's true and lawful
attorneys-in-fact and agents, with full power and authority to act in any and
all capacities for and in the name, place and stead of the undersigned in
connection with the filing of: (i) any and all registration statements and all
amendments and post-effective amendments thereto (collectively, "Registration
Statements") under the Securities Act of 1933, as amended, with the Securities
and Exchange Commission, and any and all registrations, qualifications or
notifications under the applicable securities laws of any and all states and
other jurisdictions, with respect to the securities of the Company of whatever
class, including without limitation thereon the Company's Common Stock, par
value $6.25 per share, and preferred stock, par value $1.00 per share, however
offered, sold, issued, distributed, placed or resold by the Company, by any of
its subsidiary companies, or by any other person or entity, that may be required
to effect: (a) any such filing, (b) any primary or secondary offering, sale,
distribution, exchange, or conversion of the Company's securities, (c) any
acquisition, merger, reorganization or consolidation involving the issuance of
the Company's securities, (d) any stock option, restricted stock grant,
incentive, investment, thrift, profit sharing, or other employee benefit plan
relating to the Company's securities, or (e) any dividend reinvestment or stock
purchase plan relating to the Company's securities; (ii) the Company's Annual
Report to the Securities and Exchange Commission for the year ended December 31,
1995, on Form 10-K, and any and all amendments thereto on Form 8 or otherwise,
under the Securities Exchange Act of 1934, as amended ("Exchange Act"), and
(iii) Statements of Changes of Beneficial Ownership of Securities on Form 4 or
Form 5 (or such other forms as may be designated from time to time for such
purposes), pursuant to Section 16(a) of the Exchange Act.
Without limiting the generality of the foregoing grant of authority,
such attorneys-in-fact and agents, or either of them, are hereby granted full
power and authority, on behalf of and in the name, place and stead of the
undersigned, to execute and deliver all such Registration Statements,
registrations, qualifications, or notifications, the Company's Form 10-K, any
and all amendments thereto, statements of changes, and any and all other
documents in connection with the foregoing, and take such other and further
action as such attorneys-in-fact and agents, or either of them, deem necessary
or appropriate. The powers and authorities granted herein to such
attorneys-in-fact and agents, and either of them, also include the full right,
power and authority to effect necessary or appropriate substitutions or
revocations. The undersigned hereby ratifies, confirms, and adopts, as his own
act and deed, all action lawfully taken pursuant to the powers and authorities
herein granted by such attorneys-in-fact and agents, or either of them, or by
their respective substitutes. This Power of Attorney expires by its terms and
shall be of no further force and effect on March 31, 1997.
IN WITNESS WHEREOF, the undersigned has hereunto set his name and seal
as of the 16th day of January, 1996.
WILLIAM C. BOUSQUETTE
---------------------
Senior Vice President and Chief Financial Officer
(Principal Financial Officer)
EXHIBIT 24.5
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an officer of
TEXACO INC., a Delaware corporation (the "Company"), hereby makes, designates,
constitutes and appoints CARL B. DAVIDSON and ROBERT E. KOCH, and either of them
(with full power to act without the other), as the undersigned's true and lawful
attorneys-in-fact and agents, with full power and authority to act in any and
all capacities for and in the name, place and stead of the undersigned in
connection with the filing of: (i) any and all registration statements and all
amendments and post-effective amendments thereto (collectively, "Registration
Statements") under the Securities Act of 1933, as amended, with the Securities
and Exchange Commission, and any and all registrations, qualifications or
notifications under the applicable securities laws of any and all states and
other jurisdictions, with respect to the securities of the Company of whatever
class, including without limitation thereon the Company's Common Stock, par
value $6.25 per share, and preferred stock, par value $1.00 per share, however
offered, sold, issued, distributed, placed or resold by the Company, by any of
its subsidiary companies, or by any other person or entity, that may be required
to effect: (a) any such filing, (b) any primary or secondary offering, sale,
distribution, exchange, or conversion of the Company's securities, (c) any
acquisition, merger, reorganization or consolidation involving the issuance of
the Company's securities, (d) any stock option, restricted stock grant,
incentive, investment, thrift, profit sharing, or other employee benefit plan
relating to the Company's securities, or (e) any dividend reinvestment or stock
purchase plan relating to the Company's securities; (ii) the Company's Annual
Report to the Securities and Exchange Commission for the year ended December 31,
1995, on Form 10-K, and any and all amendments thereto on Form 8 or otherwise,
under the Securities Exchange Act of 1934, as amended ("Exchange Act"), and
(iii) Statements of Changes of Beneficial Ownership of Securities on Form 4 or
Form 5 (or such other forms as may be designated from time to time for such
purposes), pursuant to Section 16(a) of the Exchange Act.
Without limiting the generality of the foregoing grant of authority,
such attorneys-in-fact and agents, or either of them, are hereby granted full
power and authority, on behalf of and in the name, place and stead of the
undersigned, to execute and deliver all such Registration Statements,
registrations, qualifications, or notifications, the Company's Form 10-K, any
and all amendments thereto, statements of changes, and any and all other
documents in connection with the foregoing, and take such other and further
action as such attorneys-in-fact and agents, or either of them, deem necessary
or appropriate. The powers and authorities granted herein to such
attorneys-in-fact and agents, and either of them, also include the full right,
power and authority to effect necessary or appropriate substitutions or
revocations. The undersigned hereby ratifies, confirms, and adopts, as his own
act and deed, all action lawfully taken pursuant to the powers and authorities
herein granted by such attorneys-in-fact and agents, or either of them, or by
their respective substitutes. This Power of Attorney expires by its terms and
shall be of no further force and effect on March 31, 1997.
IN WITNESS WHEREOF, the undersigned has hereunto set his name and seal
as of the 19th day of January, 1996.
ROBERT C. OELKERS
-----------------
Comptroller
(Principal Accounting Officer)
EXHIBIT 24.6
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of
TEXACO INC., a Delaware corporation (the "Company"), hereby makes, designates,
constitutes and appoints CARL B. DAVIDSON and ROBERT E. KOCH, and either of them
(with full power to act without the other), as the undersigned's true and lawful
attorneys-in-fact and agents, with full power and authority to act in any and
all capacities for and in the name, place and stead of the undersigned in
connection with the filing of: (i) any and all registration statements and all
amendments and post-effective amendments thereto (collectively, "Registration
Statements") under the Securities Act of 1933, as amended, with the Securities
and Exchange Commission, and any and all registrations, qualifications or
notifications under the applicable securities laws of any and all states and
other jurisdictions, with respect to the securities of the Company of whatever
class, including without limitation thereon the Company's Common Stock, par
value $6.25 per share, and preferred stock, par value $1.00 per share, however
offered, sold, issued, distributed, placed or resold by the Company, by any of
its subsidiary companies, or by any other person or entity, that may be required
to effect: (a) any such filing, (b) any primary or secondary offering, sale,
distribution, exchange, or conversion of the Company's securities, (c) any
acquisition, merger, reorganization or consolidation involving the issuance of
the Company's securities, (d) any stock option, restricted stock grant,
incentive, investment, thrift, profit sharing, or other employee benefit plan
relating to the Company's securities, or (e) any dividend reinvestment or stock
purchase plan relating to the Company's securities; (ii) the Company's Annual
Report to the Securities and Exchange Commission for the year ended December 31,
1995, on Form 10-K, and any and all amendments thereto on Form 8 or otherwise,
under the Securities Exchange Act of 1934, as amended ("Exchange Act"), and
(iii) Statements of Changes of Beneficial Ownership of Securities on Form 4 or
Form 5 (or such other forms as may be designated from time to time for such
purposes), pursuant to Section 16(a) of the Exchange Act.
Without limiting the generality of the foregoing grant of authority,
such attorneys-in-fact and agents, or either of them, are hereby granted full
power and authority, on behalf of and in the name, place and stead of the
undersigned, to execute and deliver all such Registration Statements,
registrations, qualifications, or notifications, the Company's Form 10-K, any
and all amendments thereto, statements of changes, and any and all other
documents in connection with the foregoing, and take such other and further
action as such attorneys-in-fact and agents, or either of them, deem necessary
or appropriate. The powers and authorities granted herein to such
attorneys-in-fact and agents, and either of them, also include the full right,
power and authority to effect necessary or appropriate substitutions or
revocations. The undersigned hereby ratifies, confirms, and adopts, as his own
act and deed, all action lawfully taken pursuant to the powers and authorities
herein granted by such attorneys-in-fact and agents, or either of them, or by
their respective substitutes. This Power of Attorney expires by its terms and
shall be of no further force and effect on March 31, 1997.
IN WITNESS WHEREOF, the undersigned has hereunto set his name and seal
as of the 15th day of January, 1996.
ROBERT A. BECK
--------------
EXHIBIT 24.7
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of
TEXACO INC., a Delaware corporation (the "Company"), hereby makes, designates,
constitutes and appoints CARL B. DAVIDSON and ROBERT E. KOCH, and either of them
(with full power to act without the other), as the undersigned's true and lawful
attorneys-in-fact and agents, with full power and authority to act in any and
all capacities for and in the name, place and stead of the undersigned in
connection with the filing of: (i) any and all registration statements and all
amendments and post-effective amendments thereto (collectively, "Registration
Statements") under the Securities Act of 1933, as amended, with the Securities
and Exchange Commission, and any and all registrations, qualifications or
notifications under the applicable securities laws of any and all states and
other jurisdictions, with respect to the securities of the Company of whatever
class, including without limitation thereon the Company's Common Stock, par
value $6.25 per share, and preferred stock, par value $1.00 per share, however
offered, sold, issued, distributed, placed or resold by the Company, by any of
its subsidiary companies, or by any other person or entity, that may be required
to effect: (a) any such filing, (b) any primary or secondary offering, sale,
distribution, exchange, or conversion of the Company's securities, (c) any
acquisition, merger, reorganization or consolidation involving the issuance of
the Company's securities, (d) any stock option, restricted stock grant,
incentive, investment, thrift, profit sharing, or other employee benefit plan
relating to the Company's securities, or (e) any dividend reinvestment or stock
purchase plan relating to the Company's securities; (ii) the Company's Annual
Report to the Securities and Exchange Commission for the year ended December 31,
1995, on Form 10-K, and any and all amendments thereto on Form 8 or otherwise,
under the Securities Exchange Act of 1934, as amended ("Exchange Act"), and
(iii) Statements of Changes of Beneficial Ownership of Securities on Form 4 or
Form 5 (or such other forms as may be designated from time to time for such
purposes), pursuant to Section 16(a) of the Exchange Act.
Without limiting the generality of the foregoing grant of authority,
such attorneys-in-fact and agents, or either of them, are hereby granted full
power and authority, on behalf of and in the name, place and stead of the
undersigned, to execute and deliver all such Registration Statements,
registrations, qualifications, or notifications, the Company's Form 10-K, any
and all amendments thereto, statements of changes, and any and all other
documents in connection with the foregoing, and take such other and further
action as such attorneys-in-fact and agents, or either of them, deem necessary
or appropriate. The powers and authorities granted herein to such
attorneys-in-fact and agents, and either of them, also include the full right,
power and authority to effect necessary or appropriate substitutions or
revocations. The undersigned hereby ratifies, confirms, and adopts, as his own
act and deed, all action lawfully taken pursuant to the powers and authorities
herein granted by such attorneys-in-fact and agents, or either of them, or by
their respective substitutes. This Power of Attorney expires by its terms and
shall be of no further force and effect on March 31, 1997.
IN WITNESS WHEREOF, the undersigned has hereunto set his name and seal
as of the 23rd day of January, 1996.
JOHN BRADEMAS
-------------
EXHIBIT 24.8
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of
TEXACO INC., a Delaware corporation (the "Company"), hereby makes, designates,
constitutes and appoints CARL B. DAVIDSON and ROBERT E. KOCH, and either of them
(with full power to act without the other), as the undersigned's true and lawful
attorneys-in-fact and agents, with full power and authority to act in any and
all capacities for and in the name, place and stead of the undersigned in
connection with the filing of: (i) any and all registration statements and all
amendments and post-effective amendments thereto (collectively, "Registration
Statements") under the Securities Act of 1933, as amended, with the Securities
and Exchange Commission, and any and all registrations, qualifications or
notifications under the applicable securities laws of any and all states and
other jurisdictions, with respect to the securities of the Company of whatever
class, including without limitation thereon the Company's Common Stock, par
value $6.25 per share, and preferred stock, par value $1.00 per share, however
offered, sold, issued, distributed, placed or resold by the Company, by any of
its subsidiary companies, or by any other person or entity, that may be required
to effect: (a) any such filing, (b) any primary or secondary offering, sale,
distribution, exchange, or conversion of the Company's securities, (c) any
acquisition, merger, reorganization or consolidation involving the issuance of
the Company's securities, (d) any stock option, restricted stock grant,
incentive, investment, thrift, profit sharing, or other employee benefit plan
relating to the Company's securities, or (e) any dividend reinvestment or stock
purchase plan relating to the Company's securities; (ii) the Company's Annual
Report to the Securities and Exchange Commission for the year ended December 31,
1995, on Form 10-K, and any and all amendments thereto on Form 8 or otherwise,
under the Securities Exchange Act of 1934, as amended ("Exchange Act"), and
(iii) Statements of Changes of Beneficial Ownership of Securities on Form 4 or
Form 5 (or such other forms as may be designated from time to time for such
purposes), pursuant to Section 16(a) of the Exchange Act.
Without limiting the generality of the foregoing grant of authority,
such attorneys-in-fact and agents, or either of them, are hereby granted full
power and authority, on behalf of and in the name, place and stead of the
undersigned, to execute and deliver all such Registration Statements,
registrations, qualifications, or notifications, the Company's Form 10-K, any
and all amendments thereto, statements of changes, and any and all other
documents in connection with the foregoing, and take such other and further
action as such attorneys-in-fact and agents, or either of them, deem necessary
or appropriate. The powers and authorities granted herein to such
attorneys-in-fact and agents, and either of them, also include the full right,
power and authority to effect necessary or appropriate substitutions or
revocations. The undersigned hereby ratifies, confirms, and adopts, as his own
act and deed, all action lawfully taken pursuant to the powers and authorities
herein granted by such attorneys-in-fact and agents, or either of them, or by
their respective substitutes. This Power of Attorney expires by its terms and
shall be of no further force and effect on March 31, 1997.
IN WITNESS WHEREOF, the undersigned has hereunto set his name and seal
as of the 30th day of January, 1996.
WILLARD C. BUTCHER
------------------
EXHIBIT 24.9
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of
TEXACO INC., a Delaware corporation (the "Company"), hereby makes, designates,
constitutes and appoints CARL B. DAVIDSON and ROBERT E. KOCH, and either of them
(with full power to act without the other), as the undersigned's true and lawful
attorneys-in-fact and agents, with full power and authority to act in any and
all capacities for and in the name, place and stead of the undersigned in
connection with the filing of: (i) any and all registration statements and all
amendments and post-effective amendments thereto (collectively, "Registration
Statements") under the Securities Act of 1933, as amended, with the Securities
and Exchange Commission, and any and all registrations, qualifications or
notifications under the applicable securities laws of any and all states and
other jurisdictions, with respect to the securities of the Company of whatever
class, including without limitation thereon the Company's Common Stock, par
value $6.25 per share, and preferred stock, par value $1.00 per share, however
offered, sold, issued, distributed, placed or resold by the Company, by any of
its subsidiary companies, or by any other person or entity, that may be required
to effect: (a) any such filing, (b) any primary or secondary offering, sale,
distribution, exchange, or conversion of the Company's securities, (c) any
acquisition, merger, reorganization or consolidation involving the issuance of
the Company's securities, (d) any stock option, restricted stock grant,
incentive, investment, thrift, profit sharing, or other employee benefit plan
relating to the Company's securities, or (e) any dividend reinvestment or stock
purchase plan relating to the Company's securities; (ii) the Company's Annual
Report to the Securities and Exchange Commission for the year ended December 31,
1995, on Form 10-K, and any and all amendments thereto on Form 8 or otherwise,
under the Securities Exchange Act of 1934, as amended ("Exchange Act"), and
(iii) Statements of Changes of Beneficial Ownership of Securities on Form 4 or
Form 5 (or such other forms as may be designated from time to time for such
purposes), pursuant to Section 16(a) of the Exchange Act.
Without limiting the generality of the foregoing grant of authority,
such attorneys-in-fact and agents, or either of them, are hereby granted full
power and authority, on behalf of and in the name, place and stead of the
undersigned, to execute and deliver all such Registration Statements,
registrations, qualifications, or notifications, the Company's Form 10-K, any
and all amendments thereto, statements of changes, and any and all other
documents in connection with the foregoing, and take such other and further
action as such attorneys-in-fact and agents, or either of them, deem necessary
or appropriate. The powers and authorities granted herein to such
attorneys-in-fact and agents, and either of them, also include the full right,
power and authority to effect necessary or appropriate substitutions or
revocations. The undersigned hereby ratifies, confirms, and adopts, as his own
act and deed, all action lawfully taken pursuant to the powers and authorities
herein granted by such attorneys-in-fact and agents, or either of them, or by
their respective substitutes. This Power of Attorney expires by its terms and
shall be of no further force and effect on March 31, 1997.
IN WITNESS WHEREOF, the undersigned has hereunto set his name and seal
as of the 17th day of January, 1996.
EDMUND M. CARPENTER
-------------------
EXHIBIT 24.10
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of
TEXACO INC., a Delaware corporation (the "Company"), hereby makes, designates,
constitutes and appoints CARL B. DAVIDSON and ROBERT E. KOCH, and either of them
(with full power to act without the other), as the undersigned's true and lawful
attorneys-in-fact and agents, with full power and authority to act in any and
all capacities for and in the name, place and stead of the undersigned in
connection with the filing of: (i) any and all registration statements and all
amendments and post-effective amendments thereto (collectively, "Registration
Statements") under the Securities Act of 1933, as amended, with the Securities
and Exchange Commission, and any and all registrations, qualifications or
notifications under the applicable securities laws of any and all states and
other jurisdictions, with respect to the securities of the Company of whatever
class, including without limitation thereon the Company's Common Stock, par
value $6.25 per share, and preferred stock, par value $1.00 per share, however
offered, sold, issued, distributed, placed or resold by the Company, by any of
its subsidiary companies, or by any other person or entity, that may be required
to effect: (a) any such filing, (b) any primary or secondary offering, sale,
distribution, exchange, or conversion of the Company's securities, (c) any
acquisition, merger, reorganization or consolidation involving the issuance of
the Company's securities, (d) any stock option, restricted stock grant,
incentive, investment, thrift, profit sharing, or other employee benefit plan
relating to the Company's securities, or (e) any dividend reinvestment or stock
purchase plan relating to the Company's securities; (ii) the Company's Annual
Report to the Securities and Exchange Commission for the year ended December 31,
1995, on Form 10-K, and any and all amendments thereto on Form 8 or otherwise,
under the Securities Exchange Act of 1934, as amended ("Exchange Act"), and
(iii) Statements of Changes of Beneficial Ownership of Securities on Form 4 or
Form 5 (or such other forms as may be designated from time to time for such
purposes), pursuant to Section 16(a) of the Exchange Act.
Without limiting the generality of the foregoing grant of authority,
such attorneys-in-fact and agents, or either of them, are hereby granted full
power and authority, on behalf of and in the name, place and stead of the
undersigned, to execute and deliver all such Registration Statements,
registrations, qualifications, or notifications, the Company's Form 10-K, any
and all amendments thereto, statements of changes, and any and all other
documents in connection with the foregoing, and take such other and further
action as such attorneys-in-fact and agents, or either of them, deem necessary
or appropriate. The powers and authorities granted herein to such
attorneys-in-fact and agents, and either of them, also include the full right,
power and authority to effect necessary or appropriate substitutions or
revocations. The undersigned hereby ratifies, confirms, and adopts, as his own
act and deed, all action lawfully taken pursuant to the powers and authorities
herein granted by such attorneys-in-fact and agents, or either of them, or by
their respective substitutes. This Power of Attorney expires by its terms and
shall be of no further force and effect on March 31, 1997.
IN WITNESS WHEREOF, the undersigned has hereunto set his name and seal
as of the 15th day of January, 1996.
MICHAEL C. HAWLEY
-----------------
EXHIBIT 24.11
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of
TEXACO INC., a Delaware corporation (the "Company"), hereby makes, designates,
constitutes and appoints CARL B. DAVIDSON and ROBERT E. KOCH, and either of them
(with full power to act without the other), as the undersigned's true and lawful
attorneys-in-fact and agents, with full power and authority to act in any and
all capacities for and in the name, place and stead of the undersigned in
connection with the filing of: (i) any and all registration statements and all
amendments and post-effective amendments thereto (collectively, "Registration
Statements") under the Securities Act of 1933, as amended, with the Securities
and Exchange Commission, and any and all registrations, qualifications or
notifications under the applicable securities laws of any and all states and
other jurisdictions, with respect to the securities of the Company of whatever
class, including without limitation thereon the Company's Common Stock, par
value $6.25 per share, and preferred stock, par value $1.00 per share, however
offered, sold, issued, distributed, placed or resold by the Company, by any of
its subsidiary companies, or by any other person or entity, that may be required
to effect: (a) any such filing, (b) any primary or secondary offering, sale,
distribution, exchange, or conversion of the Company's securities, (c) any
acquisition, merger, reorganization or consolidation involving the issuance of
the Company's securities, (d) any stock option, restricted stock grant,
incentive, investment, thrift, profit sharing, or other employee benefit plan
relating to the Company's securities, or (e) any dividend reinvestment or stock
purchase plan relating to the Company's securities; (ii) the Company's Annual
Report to the Securities and Exchange Commission for the year ended December 31,
1995, on Form 10-K, and any and all amendments thereto on Form 8 or otherwise,
under the Securities Exchange Act of 1934, as amended ("Exchange Act"), and
(iii) Statements of Changes of Beneficial Ownership of Securities on Form 4 or
Form 5 (or such other forms as may be designated from time to time for such
purposes), pursuant to Section 16(a) of the Exchange Act.
Without limiting the generality of the foregoing grant of authority,
such attorneys-in-fact and agents, or either of them, are hereby granted full
power and authority, on behalf of and in the name, place and stead of the
undersigned, to execute and deliver all such Registration Statements,
registrations, qualifications, or notifications, the Company's Form 10-K, any
and all amendments thereto, statements of changes, and any and all other
documents in connection with the foregoing, and take such other and further
action as such attorneys-in-fact and agents, or either of them, deem necessary
or appropriate. The powers and authorities granted herein to such
attorneys-in-fact and agents, and either of them, also include the full right,
power and authority to effect necessary or appropriate substitutions or
revocations. The undersigned hereby ratifies, confirms, and adopts, as his own
act and deed, all action lawfully taken pursuant to the powers and authorities
herein granted by such attorneys-in-fact and agents, or either of them, or by
their respective substitutes. This Power of Attorney expires by its terms and
shall be of no further force and effect on March 31, 1997.
IN WITNESS WHEREOF, the undersigned has hereunto set his name and seal
as of the 14th day of February, 1996.
FRANKLYN G. JENIFER
-------------------
EXHIBIT 24.12
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of
TEXACO INC., a Delaware corporation (the "Company"), hereby makes, designates,
constitutes and appoints CARL B. DAVIDSON and ROBERT E. KOCH, and either of them
(with full power to act without the other), as the undersigned's true and lawful
attorneys-in-fact and agents, with full power and authority to act in any and
all capacities for and in the name, place and stead of the undersigned in
connection with the filing of: (i) any and all registration statements and all
amendments and post-effective amendments thereto (collectively, "Registration
Statements") under the Securities Act of 1933, as amended, with the Securities
and Exchange Commission, and any and all registrations, qualifications or
notifications under the applicable securities laws of any and all states and
other jurisdictions, with respect to the securities of the Company of whatever
class, including without limitation thereon the Company's Common Stock, par
value $6.25 per share, and preferred stock, par value $1.00 per share, however
offered, sold, issued, distributed, placed or resold by the Company, by any of
its subsidiary companies, or by any other person or entity, that may be required
to effect: (a) any such filing, (b) any primary or secondary offering, sale,
distribution, exchange, or conversion of the Company's securities, (c) any
acquisition, merger, reorganization or consolidation involving the issuance of
the Company's securities, (d) any stock option, restricted stock grant,
incentive, investment, thrift, profit sharing, or other employee benefit plan
relating to the Company's securities, or (e) any dividend reinvestment or stock
purchase plan relating to the Company's securities; (ii) the Company's Annual
Report to the Securities and Exchange Commission for the year ended December 31,
1995, on Form 10-K, and any and all amendments thereto on Form 8 or otherwise,
under the Securities Exchange Act of 1934, as amended ("Exchange Act"), and
(iii) Statements of Changes of Beneficial Ownership of Securities on Form 4 or
Form 5 (or such other forms as may be designated from time to time for such
purposes), pursuant to Section 16(a) of the Exchange Act.
Without limiting the generality of the foregoing grant of authority,
such attorneys-in-fact and agents, or either of them, are hereby granted full
power and authority, on behalf of and in the name, place and stead of the
undersigned, to execute and deliver all such Registration Statements,
registrations, qualifications, or notifications, the Company's Form 10-K, any
and all amendments thereto, statements of changes, and any and all other
documents in connection with the foregoing, and take such other and further
action as such attorneys-in-fact and agents, or either of them, deem necessary
or appropriate. The powers and authorities granted herein to such
attorneys-in-fact and agents, and either of them, also include the full right,
power and authority to effect necessary or appropriate substitutions or
revocations. The undersigned hereby ratifies, confirms, and adopts, as his own
act and deed, all action lawfully taken pursuant to the powers and authorities
herein granted by such attorneys-in-fact and agents, or either of them, or by
their respective substitutes. This Power of Attorney expires by its terms and
shall be of no further force and effect on March 31, 1997.
IN WITNESS WHEREOF, the undersigned has hereunto set his name and seal
as of the 30th day of January, 1996.
THOMAS S. MURPHY
----------------
EXHIBIT 24.13
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of
TEXACO INC., a Delaware corporation (the "Company"), hereby makes, designates,
constitutes and appoints CARL B. DAVIDSON and ROBERT E. KOCH, and either of them
(with full power to act without the other), as the undersigned's true and lawful
attorneys-in-fact and agents, with full power and authority to act in any and
all capacities for and in the name, place and stead of the undersigned in
connection with the filing of: (i) any and all registration statements and all
amendments and post-effective amendments thereto (collectively, "Registration
Statements") under the Securities Act of 1933, as amended, with the Securities
and Exchange Commission, and any and all registrations, qualifications or
notifications under the applicable securities laws of any and all states and
other jurisdictions, with respect to the securities of the Company of whatever
class, including without limitation thereon the Company's Common Stock, par
value $6.25 per share, and preferred stock, par value $1.00 per share, however
offered, sold, issued, distributed, placed or resold by the Company, by any of
its subsidiary companies, or by any other person or entity, that may be required
to effect: (a) any such filing, (b) any primary or secondary offering, sale,
distribution, exchange, or conversion of the Company's securities, (c) any
acquisition, merger, reorganization or consolidation involving the issuance of
the Company's securities, (d) any stock option, restricted stock grant,
incentive, investment, thrift, profit sharing, or other employee benefit plan
relating to the Company's securities, or (e) any dividend reinvestment or stock
purchase plan relating to the Company's securities; (ii) the Company's Annual
Report to the Securities and Exchange Commission for the year ended December 31,
1995, on Form 10-K, and any and all amendments thereto on Form 8 or otherwise,
under the Securities Exchange Act of 1934, as amended ("Exchange Act"), and
(iii) Statements of Changes of Beneficial Ownership of Securities on Form 4 or
Form 5 (or such other forms as may be designated from time to time for such
purposes), pursuant to Section 16(a) of the Exchange Act.
Without limiting the generality of the foregoing grant of authority,
such attorneys-in-fact and agents, or either of them, are hereby granted full
power and authority, on behalf of and in the name, place and stead of the
undersigned, to execute and deliver all such Registration Statements,
registrations, qualifications, or notifications, the Company's Form 10-K, any
and all amendments thereto, statements of changes, and any and all other
documents in connection with the foregoing, and take such other and further
action as such attorneys-in-fact and agents, or either of them, deem necessary
or appropriate. The powers and authorities granted herein to such
attorneys-in-fact and agents, and either of them, also include the full right,
power and authority to effect necessary or appropriate substitutions or
revocations. The undersigned hereby ratifies, confirms, and adopts, as his own
act and deed, all action lawfully taken pursuant to the powers and authorities
herein granted by such attorneys-in-fact and agents, or either of them, or by
their respective substitutes. This Power of Attorney expires by its terms and
shall be of no further force and effect on March 31, 1997.
IN WITNESS WHEREOF, the undersigned has hereunto set his name and seal
as of the 19th day of January, 1996.
CHARLES H. PRICE, II
--------------------
EXHIBIT 24.14
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of
TEXACO INC., a Delaware corporation (the "Company"), hereby makes, designates,
constitutes and appoints CARL B. DAVIDSON and ROBERT E. KOCH, and either of them
(with full power to act without the other), as the undersigned's true and lawful
attorneys-in-fact and agents, with full power and authority to act in any and
all capacities for and in the name, place and stead of the undersigned in
connection with the filing of: (i) any and all registration statements and all
amendments and post-effective amendments thereto (collectively, "Registration
Statements") under the Securities Act of 1933, as amended, with the Securities
and Exchange Commission, and any and all registrations, qualifications or
notifications under the applicable securities laws of any and all states and
other jurisdictions, with respect to the securities of the Company of whatever
class, including without limitation thereon the Company's Common Stock, par
value $6.25 per share, and preferred stock, par value $1.00 per share, however
offered, sold, issued, distributed, placed or resold by the Company, by any of
its subsidiary companies, or by any other person or entity, that may be required
to effect: (a) any such filing, (b) any primary or secondary offering, sale,
distribution, exchange, or conversion of the Company's securities, (c) any
acquisition, merger, reorganization or consolidation involving the issuance of
the Company's securities, (d) any stock option, restricted stock grant,
incentive, investment, thrift, profit sharing, or other employee benefit plan
relating to the Company's securities, or (e) any dividend reinvestment or stock
purchase plan relating to the Company's securities; (ii) the Company's Annual
Report to the Securities and Exchange Commission for the year ended December 31,
1995, on Form 10-K, and any and all amendments thereto on Form 8 or otherwise,
under the Securities Exchange Act of 1934, as amended ("Exchange Act"), and
(iii) Statements of Changes of Beneficial Ownership of Securities on Form 4 or
Form 5 (or such other forms as may be designated from time to time for such
purposes), pursuant to Section 16(a) of the Exchange Act.
Without limiting the generality of the foregoing grant of authority,
such attorneys-in-fact and agents, or either of them, are hereby granted full
power and authority, on behalf of and in the name, place and stead of the
undersigned, to execute and deliver all such Registration Statements,
registrations, qualifications, or notifications, the Company's Form 10-K, any
and all amendments thereto, statements of changes, and any and all other
documents in connection with the foregoing, and take such other and further
action as such attorneys-in-fact and agents, or either of them, deem necessary
or appropriate. The powers and authorities granted herein to such
attorneys-in-fact and agents, and either of them, also include the full right,
power and authority to effect necessary or appropriate substitutions or
revocations. The undersigned hereby ratifies, confirms, and adopts, as his own
act and deed, all action lawfully taken pursuant to the powers and authorities
herein granted by such attorneys-in-fact and agents, or either of them, or by
their respective substitutes. This Power of Attorney expires by its terms and
shall be of no further force and effect on March 31, 1997.
IN WITNESS WHEREOF, the undersigned has hereunto set her name and seal
as of the 17th day of January, 1996.
ROBIN B. SMITH
--------------
EXHIBIT 24.15
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of
TEXACO INC., a Delaware corporation (the "Company"), hereby makes, designates,
constitutes and appoints CARL B. DAVIDSON and ROBERT E. KOCH, and either of them
(with full power to act without the other), as the undersigned's true and lawful
attorneys-in-fact and agents, with full power and authority to act in any and
all capacities for and in the name, place and stead of the undersigned in
connection with the filing of: (i) any and all registration statements and all
amendments and post-effective amendments thereto (collectively, "Registration
Statements") under the Securities Act of 1933, as amended, with the Securities
and Exchange Commission, and any and all registrations, qualifications or
notifications under the applicable securities laws of any and all states and
other jurisdictions, with respect to the securities of the Company of whatever
class, including without limitation thereon the Company's Common Stock, par
value $6.25 per share, and preferred stock, par value $1.00 per share, however
offered, sold, issued, distributed, placed or resold by the Company, by any of
its subsidiary companies, or by any other person or entity, that may be required
to effect: (a) any such filing, (b) any primary or secondary offering, sale,
distribution, exchange, or conversion of the Company's securities, (c) any
acquisition, merger, reorganization or consolidation involving the issuance of
the Company's securities, (d) any stock option, restricted stock grant,
incentive, investment, thrift, profit sharing, or other employee benefit plan
relating to the Company's securities, or (e) any dividend reinvestment or stock
purchase plan relating to the Company's securities; (ii) the Company's Annual
Report to the Securities and Exchange Commission for the year ended December 31,
1995, on Form 10-K, and any and all amendments thereto on Form 8 or otherwise,
under the Securities Exchange Act of 1934, as amended ("Exchange Act"), and
(iii) Statements of Changes of Beneficial Ownership of Securities on Form 4 or
Form 5 (or such other forms as may be designated from time to time for such
purposes), pursuant to Section 16(a) of the Exchange Act.
Without limiting the generality of the foregoing grant of authority,
such attorneys-in-fact and agents, or either of them, are hereby granted full
power and authority, on behalf of and in the name, place and stead of the
undersigned, to execute and deliver all such Registration Statements,
registrations, qualifications, or notifications, the Company's Form 10-K, any
and all amendments thereto, statements of changes, and any and all other
documents in connection with the foregoing, and take such other and further
action as such attorneys-in-fact and agents, or either of them, deem necessary
or appropriate. The powers and authorities granted herein to such
attorneys-in-fact and agents, and either of them, also include the full right,
power and authority to effect necessary or appropriate substitutions or
revocations. The undersigned hereby ratifies, confirms, and adopts, as his own
act and deed, all action lawfully taken pursuant to the powers and authorities
herein granted by such attorneys-in-fact and agents, or either of them, or by
their respective substitutes. This Power of Attorney expires by its terms and
shall be of no further force and effect on March 31, 1997.
IN WITNESS WHEREOF, the undersigned has hereunto set his name and seal
as of the 15th day of January, 1996.
WILLIAM C. STEERE, JR.
----------------------
EXHIBIT 24.16
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of
TEXACO INC., a Delaware corporation (the "Company"), hereby makes, designates,
constitutes and appoints CARL B. DAVIDSON and ROBERT E. KOCH, and either of them
(with full power to act without the other), as the undersigned's true and lawful
attorneys-in-fact and agents, with full power and authority to act in any and
all capacities for and in the name, place and stead of the undersigned in
connection with the filing of: (i) any and all registration statements and all
amendments and post-effective amendments thereto (collectively, "Registration
Statements") under the Securities Act of 1933, as amended, with the Securities
and Exchange Commission, and any and all registrations, qualifications or
notifications under the applicable securities laws of any and all states and
other jurisdictions, with respect to the securities of the Company of whatever
class, including without limitation thereon the Company's Common Stock, par
value $6.25 per share, and preferred stock, par value $1.00 per share, however
offered, sold, issued, distributed, placed or resold by the Company, by any of
its subsidiary companies, or by any other person or entity, that may be required
to effect: (a) any such filing, (b) any primary or secondary offering, sale,
distribution, exchange, or conversion of the Company's securities, (c) any
acquisition, merger, reorganization or consolidation involving the issuance of
the Company's securities, (d) any stock option, restricted stock grant,
incentive, investment, thrift, profit sharing, or other employee benefit plan
relating to the Company's securities, or (e) any dividend reinvestment or stock
purchase plan relating to the Company's securities; (ii) the Company's Annual
Report to the Securities and Exchange Commission for the year ended December 31,
1995, on Form 10-K, and any and all amendments thereto on Form 8 or otherwise,
under the Securities Exchange Act of 1934, as amended ("Exchange Act"), and
(iii) Statements of Changes of Beneficial Ownership of Securities on Form 4 or
Form 5 (or such other forms as may be designated from time to time for such
purposes), pursuant to Section 16(a) of the Exchange Act.
Without limiting the generality of the foregoing grant of authority,
such attorneys-in-fact and agents, or either of them, are hereby granted full
power and authority, on behalf of and in the name, place and stead of the
undersigned, to execute and deliver all such Registration Statements,
registrations, qualifications, or notifications, the Company's Form 10-K, any
and all amendments thereto, statements of changes, and any and all other
documents in connection with the foregoing, and take such other and further
action as such attorneys-in-fact and agents, or either of them, deem necessary
or appropriate. The powers and authorities granted herein to such
attorneys-in-fact and agents, and either of them, also include the full right,
power and authority to effect necessary or appropriate substitutions or
revocations. The undersigned hereby ratifies, confirms, and adopts, as his own
act and deed, all action lawfully taken pursuant to the powers and authorities
herein granted by such attorneys-in-fact and agents, or either of them, or by
their respective substitutes. This Power of Attorney expires by its terms and
shall be of no further force and effect on March 31, 1997.
IN WITNESS WHEREOF, the undersigned has hereunto set his name and seal
as of the 16th day of January, 1996.
THOMAS A. VANDERSLICE
---------------------
EXHIBIT 24.17
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of
TEXACO INC., a Delaware corporation (the "Company"), hereby makes, designates,
constitutes and appoints CARL B. DAVIDSON and ROBERT E. KOCH, and either of them
(with full power to act without the other), as the undersigned's true and lawful
attorneys-in-fact and agents, with full power and authority to act in any and
all capacities for and in the name, place and stead of the undersigned in
connection with the filing of: (i) any and all registration statements and all
amendments and post-effective amendments thereto (collectively, "Registration
Statements") under the Securities Act of 1933, as amended, with the Securities
and Exchange Commission, and any and all registrations, qualifications or
notifications under the applicable securities laws of any and all states and
other jurisdictions, with respect to the securities of the Company of whatever
class, including without limitation thereon the Company's Common Stock, par
value $6.25 per share, and preferred stock, par value $1.00 per share, however
offered, sold, issued, distributed, placed or resold by the Company, by any of
its subsidiary companies, or by any other person or entity, that may be required
to effect: (a) any such filing, (b) any primary or secondary offering, sale,
distribution, exchange, or conversion of the Company's securities, (c) any
acquisition, merger, reorganization or consolidation involving the issuance of
the Company's securities, (d) any stock option, restricted stock grant,
incentive, investment, thrift, profit sharing, or other employee benefit plan
relating to the Company's securities, or (e) any dividend reinvestment or stock
purchase plan relating to the Company's securities; (ii) the Company's Annual
Report to the Securities and Exchange Commission for the year ended December 31,
1995, on Form 10-K, and any and all amendments thereto on Form 8 or otherwise,
under the Securities Exchange Act of 1934, as amended ("Exchange Act"), and
(iii) Statements of Changes of Beneficial Ownership of Securities on Form 4 or
Form 5 (or such other forms as may be designated from time to time for such
purposes), pursuant to Section 16(a) of the Exchange Act.
Without limiting the generality of the foregoing grant of authority,
such attorneys-in-fact and agents, or either of them, are hereby granted full
power and authority, on behalf of and in the name, place and stead of the
undersigned, to execute and deliver all such Registration Statements,
registrations, qualifications, or notifications, the Company's Form 10-K, any
and all amendments thereto, statements of changes, and any and all other
documents in connection with the foregoing, and take such other and further
action as such attorneys-in-fact and agents, or either of them, deem necessary
or appropriate. The powers and authorities granted herein to such
attorneys-in-fact and agents, and either of them, also include the full right,
power and authority to effect necessary or appropriate substitutions or
revocations. The undersigned hereby ratifies, confirms, and adopts, as his own
act and deed, all action lawfully taken pursuant to the powers and authorities
herein granted by such attorneys-in-fact and agents, or either of them, or by
their respective substitutes. This Power of Attorney expires by its terms and
shall be of no further force and effect on March 31, 1997.
IN WITNESS WHEREOF, the undersigned has hereunto set his name and seal
as of the 29th day of January, 1996.
WILLIAM WRIGLEY
---------------
5
0000097349
TEXACO INC.
1,000,000
YEAR
DEC-31-1995
JAN-1-1995
DEC-31-1995
501
35
4,205
28
1,357
6,458
31,492
18,912
24,937
5,206
5,503
0
561
1,649
7,309
24,937
35,551
36,787
27,237
30,144
5,174
0
483
986
258
728
0
0
(121)
607
2.10
2.10
