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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996 Commission file number 1-27
TEXACO INC.
(Exact name of the registrant as specified in its charter)
Delaware 74-1383447
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2000 Westchester Avenue
White Plains, New York 10650
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (914) 253-4000
Texaco Inc. (1) HAS FILED all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and
(2) HAS BEEN subject to such filing requirements for the past 90 days.
As of April 30, 1996, there were outstanding 264,193,412 shares of Texaco
Inc. Common Stock - par value $6.25.
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PART I - FINANCIAL INFORMATION
TEXACO INC. AND SUBSIDIARY COMPANIES
STATEMENT OF CONSOLIDATED INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
--------------------------------------------------
(Millions of dollars, except per share amounts)
(Unaudited)
---------------------
For the three months
ended March 31,
---------------------
1996 1995 (a)
---- ----
REVENUES
Sales and services $10,059 $8,585
Equity in income of affiliates, and income from
interest, asset sales and other 212 482
------- ------
10,271 9,067
------- ------
DEDUCTIONS
Purchases and other costs 7,782 6,526
Operating expenses 684 731
Selling, general and administrative expenses 400 371
Maintenance and repairs 88 88
Exploratory expenses 69 55
Depreciation, depletion and amortization 350 397
Interest expense 113 124
Taxes other than income taxes 105 124
Minority interest 16 17
------- ------
9,607 8,433
------- ------
Income from continuing operations before income taxes
and cumulative effect of accounting change 664 634
Provision for income taxes 278 216
------- ------
Net income from continuing operations before cumulative
effect of accounting change 386 418
Cumulative effect of accounting change - (121)
------- ------
NET INCOME $ 386 $ 297
======= ======
Preferred stock dividend requirements $ 15 $ 16
------- ------
Net income available for common stock $ 371 $ 281
======= ======
Per common share (dollars)
Net income from continuing operations before
cumulative effect of accounting change $ 1.42 $ 1.55
Cumulative effect of accounting change - (.47)
------- ------
Net income $ 1.42 $ 1.08
======= ======
Cash dividends paid $ .80 $ .80
Average number of common shares outstanding
for computation of earnings per share (thousands) 260,654 259,623
(a) Results for 1995 have been reclassified and restated for the adoption of SFAS 121.
See accompanying notes to consolidated financial statements.
- 1 -
TEXACO INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 1996 AND DECEMBER 31, 1995
------------------------------------------
(Millions of dollars)
March 31, December 31,
1996 1995
----------- -----------
(Unaudited)
-----------
ASSETS
Current Assets
Cash and cash equivalents $ 468 $ 501
Short-term investments - at fair value 34 35
Accounts and notes receivable, less allowance for doubtful
accounts of $28 million in 1996 and 1995 3,803 4,177
Inventories 1,361 1,357
Net assets of discontinued operations - 164
Deferred income taxes and other current assets 231 224
------- -------
Total current assets 5,897 6,458
Investments and Advances 5,361 5,278
Properties, Plant and Equipment - at cost 31,186 31,492
Less - accumulated depreciation, depletion and amortization 18,558 18,912
------- -------
Net properties, plant and equipment 12,628 12,580
Deferred Charges 753 621
------- -------
Total $24,639 $24,937
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Short-term debt $ 504 $ 737
Accounts payable and accrued liabilities 3,583 3,777
Estimated income and other taxes 892 692
------- -------
Total current liabilities 4,979 5,206
Long-Term Debt and Capital Lease Obligations 5,129 5,503
Deferred Income Taxes 627 634
Employee Retirement Benefits 1,169 1,138
Deferred Credits and Other Noncurrent Liabilities 2,409 2,270
Minority Interest in Subsidiary Companies 673 667
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Total 14,986 15,418
Stockholders' Equity
Market Auction Preferred Shares 300 300
ESOP Convertible Preferred Stock 487 495
Unearned employee compensation and benefit plan trust (414) (437)
Common stock (authorized: 350,000,000 shares, $6.25 par
value; 274,293,417 shares issued) 1,714 1,714
Paid-in capital in excess of par value 655 655
Retained earnings 7,360 7,186
Currency translation adjustment 33 61
Unrealized net gain on investments 47 62
------- -------
10,182 10,036
Less - Treasury stock, at cost 529 517
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Total stockholders' equity 9,653 9,519
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Total $24,639 $24,937
======= =======
See accompanying notes to consolidated financial statements.
-2-
TEXACO INC. AND SUBSIDIARY COMPANIES
CONDENSED STATEMENT OF CONSOLIDATED CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
--------------------------------------------------
(Millions of dollars)
(Unaudited)
--------------------
For the three months
ended March 31,
--------------------
1996 1995 (a)
---- ----
OPERATING ACTIVITIES
Net income $386 $297
Reconciliation to net cash provided by (used in)
operating activities
Cumulative effect of accounting change - 121
Depreciation, depletion and amortization 350 397
Deferred income taxes 20 66
Exploratory expenses 69 55
Minority interest in net income 16 17
Dividends from affiliates, less than equity
in income (59) (114)
Gains on asset sales (29) (208)
Changes in operating working capital 196 (244)
Other - net (61) (26)
---- ----
Net cash provided by operating activities 888 361
INVESTING ACTIVITIES
Capital and exploratory expenditures (613) (440)
Proceeds from sale of discontinued operations 344 -
Proceeds from sales of assets 78 602
Sale of leasehold interests 69 -
Purchases of investment instruments (507) (168)
Sales/maturities of investment instruments 554 222
Other - net (4) 4
---- ----
Net cash provided by (used in) investing activities (79) 220
FINANCING ACTIVITIES
Borrowings having original terms in excess
of three months
Proceeds 58 54
Repayments (53) (32)
Net decrease in other borrowings (599) (384)
Purchases of common stock (22) -
Dividends paid to the company's stockholders
Common (208) (208)
Preferred (5) (6)
Dividends paid to minority shareholders (10) (20)
---- ----
Net cash used in financing activities (839) (596)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
CASH EQUIVALENTS (3) 2
---- ----
DECREASE IN CASH AND CASH EQUIVALENTS (33) (13)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 501 404
---- ----
CASH AND CASH EQUIVALENTS AT END OF PERIOD $468 $391
==== ====
(a) Results for 1995 have been reclassified and restated for the adoption of SFAS 121.
See accompanying notes to consolidated financial statements.
-3-
TEXACO INC. AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
Note 1. Change in Accounting Principle
- --------------------------------------
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 disposition must be written
down to their fair values.
Adoption of SFAS 121 resulted in a non-cash after-tax charge of $639 million
against fourth quarter 1995 earnings. Additionally, 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, was reclassified as a cumulative
effect of an accounting change.
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.
Note 2. Discontinued Operations
- -------------------------------
On February 29, 1996, Texaco completed the disposition of its operations
classified as discontinued operations by completing the sale of its worldwide
lubricant additives business, which included manufacturing facilities, as well
as sales and marketing offices in various locations in the U.S. and abroad, to
Ethyl Corporation, a fuel and lubricant additives manufacturer. Ethyl purchased
this business for $196 million, comprised of $136 million in cash and a
three-year note of $60 million.
The results for Texaco's worldwide lubricant additives business had been
accounted for as discontinued operations and the assets and liabilities had been
classified in the Consolidated Balance Sheet as "Net assets of discontinued
operations."
Revenues for the discontinued operations totaled $33 million for the first two
months of 1996, representing activities through the sale date, and $54 million
for the first quarter of 1995.
Discontinued operations had no significant impact on first quarter 1996 and
1995 results.
- 4 -
Note 3. Inventories
- -------------------
The inventories of Texaco Inc. and consolidated subsidiary companies were as
follows:
As of
-------------------------------------
March 31, December 31,
1996 1995
---- ----
(Unaudited)
(Millions of dollars)
Crude oil $ 315 $ 294
Petroleum products and other 854 866
Materials and supplies 192 197
------ ------
Total $1,361 $1,357
====== ======
Note 4. Contingent Liabilities
- ------------------------------
Information relative to commitments and contingent liabilities of Texaco Inc.
and subsidiary companies is presented in Notes 15 and 17, pages 57-58 and 60,
respectively, of Texaco Inc.'s 1995 Annual Report to Stockholders.
----------
In the company's opinion, while it is impossible to ascertain the ultimate legal
and financial liability with respect to the above-referenced 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 important in relation to the
consolidated financial position or results of operations of Texaco Inc. and its
subsidiaries.
- 5 -
Note 5. Caltex Group of Companies
- ---------------------------------
Summarized unaudited financial information for the Caltex Group of companies,
owned 50% by Texaco and 50% by Chevron Corporation, is presented below and is
reflected on a 100% Caltex Group basis:
For the three months
ended March 31,
--------------------
1996 1995
---- ----
(Millions of dollars)
Gross revenues $4,157 $4,371
Income before income taxes $ 313 $ 542
Net income $ 194 $ 416
Net income for the first quarter of 1995 includes a net gain for U.S. financial
reporting of $171 million relating to the sale of a portion of land and air
utility rights by a Caltex Petroleum Corporation ("Caltex") affiliate in Japan
required for a public project. The proceeds included compensation that will be
used to remove and relocate or replace existing fixed operating assets affected
by the sale.
On April 2, 1996 Caltex completed the sale of its 50% interest in Nippon
Petroleum Refining Company, Limited to its partner Nippon Oil Company for
approximately $2 billion. Earnings from this sale, totaling some $650 million,
will be reported by Caltex in the second quarter of 1996.
* * * * * * * * * * *
In the determination of preliminary and unaudited financial statements for the
three-month periods ended March 31, 1996 and 1995, Texaco's accounting policies
have been applied on a basis consistent with the application of such policies in
Texaco's financial statements issued in its 1995 Annual Report to Stockholders.
In the opinion of Texaco, all adjustments and disclosures necessary to present
fairly the results of operations for such periods have been made. These
adjustments include normal recurring adjustments. The information is subject to
year-end audit by independent public accountants. Texaco makes no forecasts or
representations with respect to the level of net income for the year 1996.
- 6 -
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
RESULTS OF OPERATIONS
- ---------------------
Consolidated worldwide net income for the first quarter of 1996 was $386
million, or $1.42 per share, as compared with $297 million, or $1.08 per share,
for the first quarter of 1995, which included special items and the cumulative
effect of an accounting change. For the first quarter of 1995, earnings before
special items and the cumulative effect of accounting change totaled $226
million.
First quarter 1996 performance continued to reflect the benefits of the
company's 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.
The company benefited by the positioning of its 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. The 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.
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."
On February 29, 1996, Texaco completed the sale of its worldwide lubricant
additives business for $196 million, comprised of $136 million in cash and a
three-year note of $60 million. This sale completed the disposition of the
operations classified as discontinued operations. Discontinued operations had no
significant impact on first quarter 1996 and 1995 results.
Subsequent to first quarter 1996, Texaco's affiliate, Caltex, completed the sale
of its 50% 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 sale,
totaling some $275 million, will be reported in the second quarter of 1996.
- 7 -
OPERATING EARNINGS
PETROLEUM AND NATURAL GAS
UNITED STATES
Exploration and Production
Exploration and production earnings in the U.S. for the first quarter of 1996
were $267 million, as compared with $256 million for the first quarter of 1995,
which included a net special gain of $112 million resulting from the sale of
non-core producing properties. Excluding the net special gain, first quarter
1995 results totaled $144 million.
The substantial improvement in comparable period results, before special items,
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
Manufacturing, marketing and distribution results in the U.S. for the first
quarter of 1996 were earnings of $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 four percent, marketing margins narrowed as sales
prices could not fully recover the increases in the raw material component of
product costs. 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
Exploration and production earnings outside the U.S. for the first quarter of
1996 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
Manufacturing, marketing and distribution earnings outside the U.S. for the
first quarter of 1996 were $92 million, as compared with $184 million for the
first quarter of 1995, which included net special gains of $80 million,
principally relating to the sale of land by a Caltex affiliate in Japan.
Excluding the net special gains, first quarter 1995 results totaled $104
million.
- 8 -
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.
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.
NONPETROLEUM
Net income was $2 million for the first quarter of 1996, as compared with $4
million for the first quarter of 1995.
CORPORATE/NONOPERATING
For the first quarter of 1996, corporate/nonoperating charges were $109 million,
as compared with $90 million in the first quarter of 1995, which included $25
million in gains principally from sales of equity securities held for investment
by the insurance operations.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
As of March 31, 1996, Texaco's cash, cash equivalents and short-term investments
totaled $502 million, as compared with the 1995 year-end level of $536 million.
Texaco's total cash from operating activities for the first quarter of 1996 of
$888 million included several significant items that were not directly related
to current period operations, and which in the aggregate, amounted to a net
inflow of some $80 million. These items included the collection of receivables,
primarily insurance recoveries relating to environmental matters, and payments
related to litigation matters, mainly the final payment for the state of
Louisiana royalty dispute settlement.
During the first quarter of 1996, cash generated from normal operating
activities, proceeds from the sale of discontinued operations (discussed below)
and proceeds from normal asset sales were used to support Texaco's capital and
exploratory expenditures of $613 million, for payment of dividends to common,
preferred and minority shareholders of $223 million, and for the reduction of
debt.
Total debt at March 31, 1996 amounted to $5.6 billion as compared with $6.2
billion at year-end 1995. Texaco's ratio of total debt to total borrowed and
invested capital was 35.3% at March 31, 1996 as compared with 38.0% at year-end
1995. At March 31, 1996, Texaco's long-term debt included $716 million of debt
scheduled to mature within one year, which the company has both the intent and
the ability to refinance on a long-term basis. Texaco maintains a revolving
credit facility with commitments of $2.0 billion, which remained unused at both
March 31, 1996 and at year-end 1995. Additionally, a subsidiary maintains a
long-term revolving credit facility for $330 million, which was fully utilized
at March 31, 1996 and year-end 1995 and is reflected in long-term debt.
During the first quarter of 1996, Texaco sold its worldwide lubricant additive
business for $196 million, comprised of $136 million in cash and a three-year
note of $60 million. Also during the first quarter of 1996, Texaco received $208
million from the prepayment of the note received as part of the consideration
for the 1994 sale of Texaco Chemical Company and related international chemical
operations to Huntsman Corporation.
In March 1996, Texaco received $69 million from the sale of certain equipment
leasehold interests in conjunction with a sale/leaseback arrangement. In the
aggregate, through March 31, 1996, Texaco has received $317 million for these
interests. Additional payments are expected to be received over the remainder of
1996. Texaco will repurchase the total interests when the related equipment is
placed in service, which is currently expected by the end of 1996.
- 9 -
During 1995, Texaco announced a stock repurchase program to buy up to $500
million of its common stock through open market or privately negotiated
transactions. Subject to market conditions and applicable regulatory
requirements, the stock repurchase program is expected to be completed around
the second quarter of 1997.
Texaco also 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, $20
million of which has been received, as a first installment, during the first
quarter of 1996. This sale is expected to be completed in late 1996.
Subsequent to March 31, 1996, Texaco's 50% owned affiliate, Caltex Petroleum
Corporation ("Caltex"), sold its 50% interest in Nippon Petroleum Refining
Company, Limited to its partner, Nippon Oil Company, for approximately $2
billion. In April, Texaco received $550 million in cash dividends from Caltex,
mainly from the sale proceeds.
The company considers its financial position sufficient to meet its anticipated
future financial requirements.
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 program 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 international upstream and downstream
segments, as well as various support staff functions. During the second quarter
of 1994, Texaco recorded an after-tax charge of $88 million for the anticipated
severance costs associated with the employee reductions. As a result of the
continued successful application of its overhead reduction initiative, Texaco
announced on October 2, 1995 that it had expanded this program to include
approximately 1,500 additional employee separations worldwide by year-end 1996.
In this regard, in the third quarter of 1995, Texaco recorded an after-tax
charge of $56 million for the cost of these additional employee separations.
As of March 31, 1996, implementation of Texaco's program has included reductions
of approximately 4,100 employees worldwide with a related commitment to
severance payments of $189 million, or an after-tax cost of $130 million. Of
this pre-tax commitment, payments of $168 million have been made as of March 31,
1996. Currently, there is no change in the company's estimated total cost under
this program.
CAPITAL AND EXPLORATORY EXPENDITURES
- ------------------------------------
Capital and exploratory expenditures for continuing operations, 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%
increase reflects the reinvestment of proceeds from sales of non-core assets,
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.
- 10 -
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
- -------------------------
Reference is made to the discussion of Contingent Liabilities in Note 4 to the
Consolidated Financial Statements of this Form 10-Q and to Item 3 of Texaco
Inc.'s 1995 Annual Report on Form 10-K, which are incorporated herein by
reference.
Environmental Matters
As of March 31, 1996, Texaco Inc. and/or its subsidiaries were parties to
various proceedings, instituted by governmental authorities arising under the
provisions of applicable laws or regulations relating to the discharge of
materials into the environment or otherwise relating to the protection of the
environment, none of which is material to the business or financial condition of
the company. The following is a brief description of new proceedings which,
because of the amounts involved, require disclosure under applicable Securities
and Exchange Commission regulations:
On February 22, 1996, the Los Angeles Air Quality Management District
("AQMD") issued a notice of violation to Texaco Refining and Marketing Inc.
("TRMI") in connection with refrigerant use and maintenance at TRMI's Los
Angeles refinery. AQMD penalties for violation of certain air regulations
may exceed $100,000.
In a matter first reported in Texaco's 1995 Annual Report on Form 10-K, the
U.S. Department of Justice has filed suit against Texaco Trading and
Transportation Inc. ("TTTI") in connection with spills along Texaco
Pipeline Inc. systems in Kansas in 1991. The suit seeks civil penalties of
approximately $4,200,000 and injunctive relief. TTTI has not been served
with the complaint, and the parties continue to discuss this matter.
- 11 -
Item 5. Other Information
- -------------------------
(Unaudited)
----------------------
For the three months
ended March 31,
----------------------
1996 1995 (a)
---- ----
(Millions of dollars)
FUNCTIONAL NET INCOME
Operating earnings (losses) from continuing operations
before cumulative effect of accounting change
Petroleum and natural gas
Exploration and production
United States $ 267 $ 256
International 130 83
----- -----
Total 397 339
----- -----
Manufacturing, marketing and distribution
United States 4 (19)
International 92 184
----- -----
Total 96 165
----- -----
Total petroleum and natural gas 493 504
Nonpetroleum 2 4
----- -----
Total operating earnings 495 508
Corporate/Nonoperating (109) (90)
----- -----
Net income from continuing operations before cumulative
effect of accounting change 386 418
Cumulative effect of accounting change - (121)
----- -----
Net income $ 386 $ 297
===== =====
CAPITAL AND EXPLORATORY EXPENDITURES - INCLUDING
EQUITY IN AFFILIATES
Exploration and production
United States $ 266 $ 172
International 207 143
----- -----
Total 473 315
----- -----
Manufacturing, marketing and distribution
United States 77 74
International 87 119
----- -----
Total 164 193
----- -----
Other 4 5
----- -----
Total 641 513
Discontinued operations - 1
----- -----
Total, including equity in affiliates $ 641 $ 514
===== =====
(a) Results for 1995 have been reclassified and restated for the adoption of SFAS 121.
- 12 -
(Unaudited)
----------------------
For the three months
ended March 31,
-----------------------
1996 1995
---- ----
OPERATING DATA - INCLUDING INTERESTS
IN AFFILIATES
- ------------------------------------
Net production of crude oil and natural gas liquids
(thousands of barrels per day)
United States 382 389
Other Western Hemisphere 12 17
Europe 119 135
Other Eastern Hemisphere 259 238
----- -----
Total 772 779
Net production of natural gas available for sale
(millions of cubic feet per day)
United States 1,648 1,661
Europe 205 258
Other International 168 174
----- -----
Total 2,021 2,093
Natural gas sales (millions of cubic feet per day)
United States 3,235 3,277
Europe 297 295
Other International 178 186
----- -----
Total 3,710 3,758
Natural gas liquids sales, including purchased LPG's
(thousands of barrels per day)
United States 245 237
International 116 89
----- -----
Total 361 326
Refinery input (thousands of barrels per day)
United States 711 685
Other Western Hemisphere 57 23
Europe 334 313
Other Eastern Hemisphere 501 466
----- -----
Total 1,603 1,487
Refined product sales (thousands of barrels per day)
United States 1,021 890
Other Western Hemisphere 376 349
Europe 475 447
Other Eastern Hemisphere 796 780
----- -----
Total 2,668 2,466
- 13 -
Item 6. Exhibits and Reports on Form 8-K
- ----------------------------------------
(a) Exhibits
-- (11) Computation of Earnings Per Share of Common Stock of Texaco Inc.
and Subsidiary Companies.
-- (12) Computation of Ratio of Earnings to Fixed Charges of Texaco on a
Total Enterprise Basis.
-- (20) Copy of Texaco Inc.'s Annual Report on Form 10-K for the
fiscal year ended December 31, 1995 (including portions of Texaco
Inc.'s Annual Report to Stockholders for the year 1995), as
previously filed by the Registrant with the Securities and
Exchange Commission, File No. 1-27.
-- (27) Financial Data Schedule.
(b) Reports on Form 8-K:
During the first quarter of 1996, the Registrant filed a Current Report on
Form 8-K for the following event:
1. January 23, 1996 (date of earliest event reported: January 22, 1996)
Item 5. Other Events -- reported that Texaco issued an Earnings Press
Release for the fourth quarter and year 1995. Texaco appended as an
exhibit thereto a copy of the Press Release entitled "Texaco Reports
Results for the Fourth Quarter and Year 1995," dated January 22, 1996.
- 14 -
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, thereunto duly authorized.
Texaco Inc.
----------------------
(Registrant)
By: R.C. Oelkers
----------------------
(Comptroller)
By: R.E. Koch
----------------------
(Assistant Secretary)
Date: May 10, 1996
------------
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EXHIBIT 11
TEXACO INC. AND SUBSIDIARY COMPANIES
COMPUTATION OF EARNINGS PER SHARE OF COMMON STOCK
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
--------------------------------------------------
(Millions of dollars, except per share amounts)
(Unaudited)
-----------
For the three months
ended March 31,
---------------
Primary Net Income Per Common Share 1996 1995
- ----------------------------------- ---- ----
Net income from continuing operations before cumulative
effect of accounting change $ 386 $ 418
Cumulative effect of accounting change - (121)
------- -------
Net income 386 297
Less: Preferred stock dividend requirements (15) (16)
------- -------
Primary net income available for common stock $ 371 $ 281
======= =======
Average number of primary common shares outstanding
for computation of earnings per share (thousands) 260,654 259,623
======= =======
Primary net income per common share $ 1.42 $ 1.08
======= =======
Fully Diluted Net Income Per Common Share
Net income $ 386 $ 297
Less: Preferred stock dividend requirements of non-dilutive
and anti-dilutive issues and adjustments to net income
associated with dilutive securities (6) (6)
------- -------
Fully diluted net income $ 380 $ 291
======= =======
Average number of primary common shares outstanding
for computation of earnings per share (thousands) 260,654 259,623
Additional shares outstanding assuming full conversion of dilutive
convertible securities into common stock, (thousands):
Convertible debentures 147 148
Convertible Preferred Stock
Series B ESOP 9,526 9,988
Series F ESOP 623 673
Other 158 84
------- -------
Average number of fully diluted common shares outstanding
for computation of earnings per share (thousands) 271,108 270,516
======= =======
Fully diluted net income per common share $ 1.40 $ 1.07
======= =======
EXHIBIT 12
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
OF TEXACO ON A TOTAL ENTERPRISE BASIS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND
FOR EACH OF THE FIVE YEARS ENDED DECEMBER 31, 1995 (a)
------------------------------------------------------
(Millions of dollars)
For the Three Years Ended December 31,
Months Ended ------------------------------------------
March 31, 1996 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.......... $ 713 $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 (1) (8) (9) 5
Minority interest in net income............................ 16 54 44 17 18 16
Previously capitalized interest charged to
income during the period................................ 7 33 29 33 30 23
------- ------ ------ ------ ------ ------
Total earnings..................................... 735 1,289 1,481 1,434 1,746 1,788
------- ------ ------ ------ ------ ------
Fixed charges Items charged to income:
Interest charges...................................... 146 614 594 546 551 644
Interest factor attributable to operating
lease rentals.................................... 26 110 118 91 94 76
Preferred stock dividends of subsidiaries
guaranteed by Texaco Inc......................... 10 36 31 4 - -
------- ------ ------ ------ ------ ------
Total items charged to income...................... 182 760 743 641 645 720
Interest capitalized.................................... 5 28 21 57 109 80
Interest on ESOP debt guaranteed by Texaco Inc.......... 3 14 14 14 18 26
------- ------ ------ ------ ------ ------
Total fixed charges................................ 190 802 778 712 772 826
------- ------ ------ ------ ------ ------
Earnings available for payment of fixed charges............ $ 917 $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............................. 4.83 2.55 2.86 2.91 3.10 3.04
======= ====== ====== ====== ====== ======
(a) Excludes discontinued operations.
5
0000097349
TEXACO INC.
1,000,000
3-MOS
DEC-31-1996
JAN-1-1996
MAR-31-1996
468
34
3,831
28
1,361
5,897
31,186
18,558
24,639
4,979
5,129
0
576
1,637
7,440
24,639
10,059
10,271
7,782
8,466
1,028
0
113
664
278
386
0
0
0
386
1.42
1.40
