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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
July 5, 1994
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TEXACO INC.
(Exact name of registrant as specified in its charter)
Delaware 1-27 74-1383447
(State or other jurisdiction of (Commission File (I.R.S. Employer
incorporation) Number) Identification Number)
2000 Westchester Avenue, 10650
White Plains, New York (Zip Code)
(Address of principal executive offices)
(914) 253-4000
(Registrant's telephone number, including area code)
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Item 5. Other Events
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1. On July 5, 1994, the Registrant announced that it will undertake a series
of action steps to increase growth, competitiveness and profitability,
focusing on asset redeployment, the reduction of overheads, and operating
efficiencies through elimination of layers of supervision, cost control
and strengthened core businesses.
Specific action steps are outlined in a July 5, 1994 press release issued
by the Registrant entitled "Texaco Announces Worldwide Plan For Enhanced
Growth", a copy of which is attached hereto as Exhibit 99.1 and made a
part hereof.
The combined effects of these steps will result in a charge to earnings
of approximately $165 million during the second quarter of 1994 covering:
a provision for employee separations; the write-down to fair market value
of certain international properties being offered for sale; and the write-
down to market value of certain office facilities that will become excess
as a result of consolidations. Also included is a net charge of $49.5
million, as previously disclosed, relative to the completion of the sale
of Texaco Chemical Company in April, 1994.
Item 7. Financial Statement, Pro Forma Financial Information and Exhibits
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(c) Exhibits
99.1 Press Release issued by Texaco Inc. dated July 5, 1994, entitled
"Texaco Announces Worldwide Plan For Enhanced Growth."
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SIGNATURES
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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: July 6, 1994
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TEXACO ANNOUNCES
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WORLDWIDE PLAN FOR ENHANCED GROWTH
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Steps Outlined to Increase Growth, Competitiveness and Profitability
FOR IMMEDIATE RELEASE: TUESDAY, JULY 5, 1994.
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WHITE PLAINS, N.Y., July 5 - Texaco Inc. announced today a series
of action steps for growth, designed to thrust the company into top quartile
performance among petroleum industry competitors. Building on the company's
demonstrated successes as a fully cost-competitive finder of oil and natural
gas resources, the action plan focuses on asset redeployment, the reduction
of overheads totalling some $300 million, and operating efficiencies through
elimination of layers of supervision, cost control and strengthened core
businesses.
Texaco Inc. Chairman of the Board and Chief Executive Officer Alfred C.
DeCrane, Jr., enumerated a number of the specific action steps for value
growth:
- - - Upstream Actions:
- Approximately 50 percent of the more than 600 producing fields in
the U.S. will be traded or sold. Future activities will be focused
on those remaining core U.S. oil and gas assets, which account for
more than 90 percent of the profits, cash flow, production and
reserve base in the U.S.
- Proceeds from the fields being sold will be redirected to the
multiple growth opportunities in the core U.S. areas, which are
programmed for production and earnings growth through the end of
the decade, and to selected international opportunities where
production growth is also programmed.
- U.S. producing operations will be consolidated into fewer offices
with reduced layers of supervision and broadened field level
responsibilities.
- Internationally, aggressive rationalization programs also are under
way, including the sale of heavy oil producing properties in
Colombia.
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- - - Midstream Actions:
- Texaco Trading and Transportation Inc., the subsidiary that operates
the company's large crude oil and product transportation system,
under a restructuring announced last month, is reducing several
layers of activity and will focus on strengthening its crude oil
supply capability, including improved capability to deliver imported
crude oil to the Mid-Continent region.
- The company is actively engaged in the formation of a strategic
alliance which will significantly reduce the cost of marine
transportation while fully protecting quality and professionalism
in meeting the company's marine requirements.
- - - Downstream Actions:
- Texaco's refining and marketing segments in the U.S. will
consolidate units, eliminate layers of management and effect a more
than 20-percent reduction in general administrative services and
support costs.
- Programs are in place to support the targeted growth effort for
branded CleanSystem3 gasoline sales of one percent in excess of the
overall demand growth over the forward period. This follows on the
comparable growth Texaco experienced with the 1989 introduction
of the original System3 gasolines.
- The company is on track to complete the sale of its lubricant
additives business and open its proprietary-process PO/MTBE plant
during 1994. The new facility in Port Neches, Texas, will produce
some 400 million pounds per year of propylene oxide and 14,000
barrels per day of methyl tertiary butyl ether.
- A program of downstream regionalization is well under way in Europe
and Latin America, reducing layers of management and consolidating
accounting, financial and related activities. The programs also
include asset monetization and rationalization.
- Bids are being received for the sale of Texaco's equity interest in
downstream activities in Nigeria and other West African countries.
The company's key affiliate units, Star Enterprise, Caltex Petroleum
Corp. and Caltex Pacific Indonesia, also have on-going programs focused on
value growth, cost-containment and streamlining programs which parallel those
of Texaco.
Under consolidations and other initiatives completed over the last two
years, Texaco's workforce was reduced by more than 13 percent, not including
reductions related to the sale of assets, such as the April 1994 sale of
Texaco Chemical Company to the Huntsman organization.
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Implementation of Texaco's broad program is expected to result in the
reduction of approximately 2,500 employees worldwide over the next 12 months.
These reductions will be accomplished through normal attrition, retirements
and separations. Where possible, the company will redeploy employees to areas
of growth opportunities.
The combined effects of the growth program's action steps will result in
a charge to earnings of approximately $165 million during the second quarter
of 1994 covering: a provision for employee separations; the write-down to
fair market value of certain international properties being offered for sale;
and the write-down to market value of certain office facilities that will
become excess as a result of consolidations. Included in the above figure,
and as indicated at the end of the first quarter of 1994, is a net charge of
$49.5 million, relative to the completion of the sale of Texaco Chemical
Company to Huntsman Corporation.
"Texaco is an industry leader in several key measurements of competitive
strength, including: reserve replacement, averaging 106 percent of production
over the last five years, and in our finding and development costs, which were
$4.10 per barrel over that same period," said DeCrane. "We have arrested the
decline in U.S. production, while increasing production by some 25,000 barrels
per day internationally, and have successfully launched our new generation of
gasolines, CleanSystem3, while reducing overall operating costs. Over the six
years since the successful operational and financial restructuring was
undertaken by the company in 1988, total shareholder return has averaged 18.4
percent per year, a top performance among our primary competitors.
"Even with these accomplishments, we saw the need to set rigorous new
objectives for the company in order to propel Texaco to a position at or near
the top of its industry in additional measures of competitive performance over
the next several years," said DeCrane.
"The action steps outlined today are designed to build on previous success
and to accelerate the drive to achieve our vision to be a leader in our
industry. Texaco employees have shown a tremendous dedication to building the
company over recent years. We anticipate the same kind of commitment to the
prompt attainment of these difficult, but important changes," said DeCrane.
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MEDIA CONTACTS: Anita Larsen 914-253-4155
Jim Swords 914-253-4103
Jim Reisler 914-253-4389
Cynthia Michener 914-253-4743
