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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
April 22, 1996
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TEXACO INC.
(Exact name of registrant as specified in its charter)
Delaware 1-27 74-1383447
(State or other jurisdiction of (Commission File (I.R.S. Employer
incorporation) Number) Identification Number)
2000 Westchester Avenue, 10650
White Plains, New York (Zip Code)
(Address of principal executive offices)
(914) 253-4000
(Registrant's telephone number, including area code)
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Item 5. Other Events
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1. On April 22, 1996, the Registrant issued an Earnings Press Release
entitled "Texaco Reports Results for The First Quarter 1996," a copy of
which is attached hereto as Exhibit 99.1 and made a part hereof.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
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(c) Exhibits
99.1 Press Release issued by Texaco Inc. dated April 22, 1996,
entitled "Texaco Reports Results for The First Quarter 1996."
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TEXACO INC.
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(Registrant)
By: R. E. KOCH
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(Assistant Secretary)
Date: April 23, 1996
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APPENDIX
Description of graphic material included in Exhibit 99.1.
The following information is depicted in graphic form in a Press Release issued
by Texaco Inc. dated April 22, 1996, entitled "Texaco Reports Results for the
First Quarter 1996" filed as Exhibit 99.1 to this Form 8-K:
1. The first graph is located within the eighth paragraph of Exhibit 99.1.
Graph is entitled "Texaco Average U.S. Natural Gas Price Per Quarter"
and is shown in dollars per MCF by quarter for the years 1995 and 1996.
The Y axis depicts dollars per MCF from $0.00 to $3.00 with $.50
increments. The X axis depicts the calendar quarters for the years 1995
and 1996. The plot points are as follows:
First Quarter 1995 - $1.60 per MCF
Second Quarter 1995 - $1.67 per MCF
Third Quarter 1995 - $1.52 per MCF
Fourth Quarter 1995 - $1.81 per MCF
First Quarter 1996 - $2.11 per MCF
2. The second graph is located within the ninth paragraph of Exhibit 99.1.
Graph is entitled "Texaco Average U.S. Crude Price Per Quarter" and is
shown in dollars per barrel by quarter for the years 1995 and 1996. The
Y axis depicts dollars per barrel from $12.00 to $20.00 with $2.00
increments. The X axis depicts the calendar quarters for the years 1995
and 1996. The plot points are as follows:
First Quarter 1995 - $14.85 per barrel
Second Quarter 1995 - $15.85 per barrel
Third Quarter 1995 - $14.88 per barrel
Fourth Quarter 1995 - $14.89 per barrel
First Quarter 1996 - $16.51 per barrel
3. The third graph is located within the thirteenth paragraph of Exhibit
99.1. Graph is entitled "Texaco Average Int'l. Crude Price Per Quarter"
and is shown in dollars per barrel by quarter for the years 1995 and
1996. The Y axis depicts dollars per barrel from $12.00 to $20.00 with
$2.00 increments. The X axis depicts the calendar quarters for the
years 1995 and 1996. The plot points are as follows:
First Quarter 1995 - $16.38 per barrel
Second Quarter 1995 - $17.30 per barrel
Third Quarter 1995 - $15.45 per barrel
Fourth Quarter 1995 - $16.18 per barrel
First Quarter 1996 - $18.47 per barrel
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(8Kapr22)
EXHIBIT 99.1
TEXACO REPORTS RESULTS
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FOR THE FIRST QUARTER 1996
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FOR IMMEDIATE RELEASE: MONDAY, APRIL 22, 1996.
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WHITE PLAINS, N.Y., April 22 - Texaco announced today that consolidated
worldwide net income for the first quarter of 1996 was $386 million, or $1.42
per share. Total net income for the first quarter of 1995 was $297 million, or
$1.08 per share, which included special items and the cumulative effect of an
accounting change totaling $.27 per share. Earnings before special items of $386
million in first quarter 1996 compared to $226 million in the first quarter of
1995.
First Quarter
------------------------------------
Texaco Inc. (Millions): 1996 1995
- ------------------------------------------------------------------------------------------------------------------
Net income before special items $ 386 $ 226
Special items - 192
Cumulative effect of accounting
change as of January 1, 1995 - (121)
------ ----
Total net income $ 386 $ 297
=== ====
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In commenting on the results, Alfred C. DeCrane, Jr., Texaco Chairman
and Chief Executive Officer, noted, "First quarter performance continued to
reflect the benefits of our focus on core businesses, coupled with continued
emphasis on reducing overhead and operating expenses. This allowed improved
crude oil and natural gas prices to flow to the bottom line.
"We were benefited by the positioning of our U.S. gas production and
its access to the major markets where winter demands were very strong.
Additionally, results were bolstered by the incrementally stronger prices for
heavy crude oils and increased production of these grades. Our downstream
business, though improved operationally from last year with higher refinery runs
and increased product sales, again experienced low margins, particularly in the
U.S. and in Europe."
- more -
- 2 -
Special items in 1995 included net gains of $192 million resulting from
the sales of non-core U.S. producing properties and from the sale of land by a
Caltex affiliate in Japan. Also included in 1995 was a $121 million non-cash
charge from the write-down of non-core U.S. producing properties held for sale
at January 1, 1995, classified as a cumulative effect of an accounting change in
accordance with the 1995 adoption of Statement of Financial Accounting Standards
(SFAS) 121 "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of."
The February 29, 1996, sale of Texaco's worldwide lubricant additives
business for $196 million, including $136 million in cash and a three-year note
of $60 million, completed the disposition of the company's discontinued chemical
operations. Discontinued operations had no significant impact on first quarter
1996 and 1995 results.
Subsequent to first quarter 1996, Texaco's affiliate Caltex Petroleum
Corporation completed the sale of its 50 percent interest in Nippon Petroleum
Refining Company, Limited for approximately $2 billion. In April, Texaco
received $550 million in cash dividends from Caltex, mainly from the sales
proceeds. Earnings from this sales transaction of some $275 million will be
reported in the second quarter of 1996.
ANALYSIS OF FUNCTIONAL NET INCOME
OPERATING EARNINGS
PETROLEUM AND NATURAL GAS
UNITED STATES
Exploration and Production
First quarter 1996 earnings were $267 million as compared with $144
million, before special items, for the first quarter of 1995. Including a net
gain of $112 million resulting from the sale of non-core producing properties,
first quarter 1995 results totaled $256 million.
- more -
- 3 -
The substantial improvement in 1996 results was due mainly to the
strengthening of natural gas prices which were $.51 per MCF higher than the same
period in 1995, as prolonged cold weather affected large areas of the U.S. The
favorable positioning of the company's producing fields combined with its
strategic distribution assets, including the Henry Hub in Louisiana, enabled
Texaco to benefit from the strengthening market prices.
Crude prices for the first quarter 1996 rose $1.66 per barrel over the same
period in 1995 due to higher demand. Prices for heavy California crude oils,
approximately 40 percent of Texaco's U.S. production, were especially strong as
evidenced by Kern River crude prices which averaged $14.91 per barrel for the
first quarter 1996.
Higher production of crude oil and natural gas from core properties
substantially benefited earnings and significantly offset the low margin
volumes sold with the non-core assets. Exploratory expenses were higher in
1996 due to the company's increased seismic and other drilling activity,
particularly offshore in the Gulf of Mexico, including deep water properties.
Manufacturing, Marketing and Distribution
First quarter 1996 earnings were $4 million, as compared with losses of
$19 million for the first quarter of 1995. Results for 1996 benefited from
refining margins which, while still under pressure, improved over historically
low levels experienced in 1995. Partially offsetting these higher refining
margins were lower marketing results. Although diesel and gasoline sales volumes
increased, with branded gasoline sales up 4 percent, marketing margins narrowed
as sales prices could not fully recover the increases in the raw material
component of product costs.
- more -
- 4 -
Also, the phased introduction of CARB II gasoline into the California
market squeezed margins as the additional costs to manufacture and handle these
products were not fully recouped in the first quarter.
INTERNATIONAL
Exploration and Production
First quarter 1996 earnings were $130 million, as compared with $83 million
for the first quarter of 1995.
Results for 1996 benefited from higher crude oil prices, mainly in the
North Sea and in Indonesia. Increased production due to continuing field
development programs in the Partitioned Neutral Zone between Kuwait and Saudi
Arabia and from new fields in China and Trinidad largely offset the declining
crude oil and natural gas production of maturing fields in the U.K.
Initial gas production from the Dolphin field in Trinidad began in
March 1996 and development work in the U.K. Captain Field continues to be on
schedule for initial production late this year.
Manufacturing, Marketing and Distribution
First quarter 1996 earnings were $92 million, as compared with $104
million before special items for the first quarter of 1995. First quarter 1995
results, including net special gains of $80 million, principally relating to the
sale of land by a Caltex affiliate in Japan, totaled $184 million.
Operating earnings were lower than last year as higher refining margins
in Europe were more than offset by lower marketing margins, particularly in the
U.K. These poor marketing margins resulted from both industry oversupply
conditions and added price pressure in this highly competitive market.
- more -
- 5 -
In the Caltex markets of the Pacific Rim, the impact of somewhat higher
refining margins in Singapore and Bahrain and higher product sales volumes in
Korea were more than offset by lower overall currency exchange benefits.
CORPORATE/NONOPERATING RESULTS
For the first quarter of 1996, corporate/nonoperating charges
were $109 million, as compared with $90 million in the first quarter of 1995.
Results for 1995 included $25 million in gains principally from sales
of equity securities held for investment by the insurance operations.
CAPITAL AND EXPLORATORY EXPENDITURES
Capital and exploratory expenditures, including equity in such
expenditures of affiliates, were $641 million for the first quarter of 1996 as
compared with $513 million for the same period of 1995. This 25 percent increase
reflects the reinvestment of proceeds from sale of non-core business, and
increased focus on upstream opportunities both in the United States and
international areas. Expenditures in downstream operations decreased due to the
completion of refinery upgrades in the U.S. and refinery construction, nearing
completion, by Caltex were partially offset by generally higher marketing
investments worldwide.
- xxx -
NOTE TO EDITORS: Tables for the first quarter are attached.
CONTACTS: David Dickson 914-253-4128
James Swords 914-253-4156
Yorick Fonseca 914-253-7034
Cynthia Michener 914-253-4743
Additional Texaco information is available on the World Wide Web at:
http://www.texaco.com
- 6 -
First Quarter
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1996 1995 (a)
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FUNCTIONAL NET INCOME ($000,000)
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Operating Earnings (Losses)
Petroleum and natural gas
Exploration and production
United States $ 267 $ 256 (b)
International 130 83
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Total 397 339
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Manufacturing, marketing and
distribution
United States 4 (19)
International 92 184 (b)
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Total 96 165
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Total petroleum and natural gas 493 504
Nonpetroleum 2 4
----- -----
Total operating earnings 495 508
Corporate/Nonoperating (109) (90)
---- ----
Net income from continuing operations 386 418
Cumulative effect of adoption of SFAS 121 - (121)
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Total net income (c) $ 386 $ 297
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EARNINGS (LOSS) PER COMMON SHARE
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Net income (loss) in dollars:
Continuing operations before cumulative
effect of accounting change $ 1.42 $ 1.55
Cumulative effect of accounting change - (.47)
----- -----
Total net income $ 1.42 $ 1.08
===== =====
Average number of common shares
outstanding (000,000) 260.7 259.6
a) Previously reported results for 1995 have been restated for the adoption of SFAS 121, as appropriate
b) Includes special items as detailed in news release
c) Includes provision for income taxes ($000,000) $ 278 $ 216
- 7 -
First Quarter
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1996 1995 (a)
---- ----
OTHER FINANCIAL DATA ($000,000)
- -------------------------------
Revenues from continuing operations $10,271 $ 9,067
Total assets as of March 31 (d)$24,700 $ 24,981
Stockholders' equity as of March 31 (d)$ 9,650 $ 9,916
Total debt as of March 31 (d)$ 5,650 $ 6,114
Capital and exploratory expenditures
(includes equity in affiliates)
Exploration and production
United States $ 266 $ 172
International 207 143
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Total 473 315
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Manufacturing, marketing and
distribution
United States 77 74
International 87 119
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Total 164 193
---- ----
Other 4 5
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Total $ 641 $ 513
==== ====
Texaco Inc. and subsidiary companies
Exploratory expenses included above:
United States $ 23 $ 18
International 46 37
---- ----
Total $ 69 $ 55
==== ====
Dividends paid to common stockholders $ 208 $ 208
Dividends per common share (dollars) $ .80 $ .80
Dividend requirements for preferred
stockholders $ 15 $ 16
(a) Previously reported results for 1995 have been restated for the adoption of SFAS 121, as appropriate
(d) Preliminary
- 8 -
First Quarter
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1996 1995
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OPERATING DATA - INCLUDING INTERESTS
- ------------------------------------
IN AFFILIATES
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Net production of crude oil and
natural gas liquids (000 BPD)
United States 382 389
Other Western Hemisphere 12 17
Europe 119 135
Other Eastern Hemisphere 259 238
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Total 772 779
Net production of natural gas -
available for sale (000 MCFPD)
United States 1,648 1,661
Europe 205 258
Other International 168 174
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Total 2,021 2,093
Natural gas sales (000 MCFPD)
United States 3,235 3,277
Europe 297 295
Other International 178 186
----- -----
Total 3,710 3,758
Natural gas liquids sales
(including purchased LPGs) (000 BPD)
United States 245 237
International 116 89
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Total 361 326
Refinery input (000 BPD)
United States 711 685
Other Western Hemisphere 57 23
Europe 334 313
Other Eastern Hemisphere 501 466
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Total 1,603 1,487
Refined product sales (000 BPD)
United States 1,021 890
Other Western Hemisphere 376 349
Europe 475 447
Other Eastern Hemisphere 796 780
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Total 2,668 2,466
