Texaco Press Release - Texaco Chairman Cites Strong Financial Results in 1996, Company Positioned
Texaco On Track to Meeting Rigorous Diversity/Economic Outreach Goals
FOR RELEASE: TUESDAY, MAY 13, 1997
RYE BROOK, N.Y., May 13 - Characterizing 1996 as "one of the most successful and challenging" years in the company's history, Texaco Inc. Chairman and Chief Executive Officer Peter I. Bijur reported to stockholders today that Texaco's robust operational performance has put the company "well on track" for meeting its ambitious growth and profitability objectives.
Speaking at Texaco's annual meeting of stockholders, Bijur also delivered an interim progress report on the company's initiatives to ensure equal opportunity and diversity in its work force and business partnering programs. In describing these efforts, Bijur noted that Texaco has become a "stronger and better company, one that is more competitive" in the global marketplace.
Strong Financial Performance
Among the 1996 financial highlights Bijur highlighted were:
- Total net income of $2.0 billion on revenues of $45.5 billion;
- 45 percent gain over 1995 in net income from operations;
- Reserve replacement ratio of 113 percent; and
- Net oil and gas production increase of three percent.
"These results had a positive bearing on the value of the securities you own," Bijur told the stockholders. "Our stock delivered a 30 percent total return to shareholders in 1996, including an increased dividend -- ahead of both the S&P 500 and our peer group index. This performance followed a 37 percent total return to shareholders in 1995."
Demonstrating continued strong performance into 1997, Bijur cited the company's first quarter results:
- Net income from operations reached $492 million (the highest level in this decade);
- Total net income increased to $980 million (including a $488 million benefit from the resolution of the long-standing "Aramco Advantage" case with the U.S. Internal Revenue Service);
- Worldwide daily production rose four percent;
- Capital expenditures grew 25 percent to $800 million; and
- Debt-to-borrowed and invested capital ratio was further reduced to 32 percent.
Commenting on the company's outlook, Bijur stated, "Today we are well on track for meeting the ambitious goals we set for ourselves: to maintain a strong balance sheet; increase production from 1.1 million barrels to 1.6 million barrels per day; achieve a 15 percent or better return on stockholders' equity; deliver return on average capital employed of at least 13 percent; more than double our 1995 earnings by the year 2000; and lay the foundation for strong growth well into the next century."
"Case for Change" In Downstream Marketplace
In his remarks, Bijur provided a status report on the restructuring of the manufacturing and marketing in the U.S. and laid out the rationale for the initiative. "We concluded that there was a compelling case for a fundamental change in our operations," Bijur said.
Representing the first major downstream alliance in the U.S., Texaco and Shell Oil Company signed a memorandum of understanding in March, 1997, to merge major elements of the companies' refining, transportation and marketing businesses in the western U.S. Bijur noted that Texaco expects to complete a similar agreement among Texaco, Shell and Saudi Aramco encompassing the companies' downstream assets in the eastern U.S.
"When the alliance is fully in place, it will have the size, operational synergy and brand name strengths to thrive in the ultra-competitive marketplace and continue to provide our customers with quality and competitive products," Bijur said, adding that the globally-recognized Texaco Star logo "will be one of the most valuable assets of the new company, and we are committed to the quality of the brand here in the U.S."
Interim Report on Diversity & Economic Outreach Initiatives
During his remarks to stockholders, Bijur outlined progress made on Texaco's initiatives designed to ensure equal opportunity and workplace diversity. "We have long been convinced that success in our global business demands a diverse workforce, drawing upon the best talent from a variety of backgrounds and perspectives.
"After the first three months of our five-year program, I can tell you that Texaco is on track to meet our ambitious workplace opportunity and diversity goals." These goals include the implementation of programs and policies in the areas of recruitment, hiring, retention and promotion, along with business partnering and economic outreach.
In the area of employment, Bijur noted that, during the first quarter of 1997, the total number of women and minorities in the workforce increased as a percentage of total workforce; of the total number of promotions, 40 percent were women and 20 percent were minorities. In addition, during the first quarter 49 percent of new hires were women and 35 percent were minorities.
With respect to business partnering and economic outreach, Bijur reported that direct expenditures with minority and women-owned businesses totaled $36.3 million during the first quarter, an increase over the first quarter of 1996. Of Texaco's 1997 goal to add 40 new minority and women business partnerships in the wholesale and retail fuels and lubricants sector, Bijur noted that twelve have been established and discussions are underway with an additional 20 potential partners.
"These specifics demonstrate three things," Bijur said. "First, to those who said we have not made sufficient progress, the facts make clear that we are on target after the first three months of our five year program. Second, they show the early results of our unwavering commitment to create greater opportunity for all those with whom we work. And third, these specifics demonstrate that when Texaco makes a commitment, we keep it.
"It is important to note that all of the progress we are making, and our initiatives themselves, are made within the context of our business strategy and our growth plans," Bijur said. "Every decision on our initiatives, as is the case with all our business decisions, must help us achieve our business goals -- and these do."
Concluding his remarks, Bijur described Texaco as "an enterprise launched on a path of focused action in pursuit of value. We will pursue that path energized by a great work force, a strong balance sheet, exciting new partnerships and technologies, and by the respect accorded every employee."
Responding to Shareholder Comments
In addition to outlining Texaco's 1996 performance and future plans, Bijur responded to shareholder queries on other issues relating to the company.
Concerning a stockholder proposal relating to diversity on the Board of Directors, Bijur commented, "Texaco has repeatedly and publicly stated its strong commitment to diversity and inclusiveness not only on the Board of Directors, but throughout the company. We are pleased that our 13-member Board already includes a woman and a minority, and we are moving aggressively to enhance the diversity of the Board. While we appreciate the intent of the stockholder proposal, we are concerned that the mandates in the proposal would be too restrictive to allow the Board to identify the best candidates to represent the interests of the stockholders."
Regarding the company's project in Myanmar, Bijur noted in his remarks that the company reached a key milestone in March of this year by signing a contract with Thailand for the sale of Yetagun gas. "As part of the company's continuous review process, which all of our assets undergo, we are examining ways to maximize the value of our Myanmar investment. The gas sales contract has created alternatives for us that did not exist before. So we have prepared and circulated project data to see if other options -- such as a sale or a swap with another company -- would yield greater value for this asset. We believe this review is consistent with good business."
Commenting on a U.S. Presidential order banning new investment in Myanmar, Bijur said, "Texaco will comply with the terms of sanctions should it be determined that they apply to our activities in Myanmar. Broadly speaking, we believe that unilateral sanctions against any country are ineffective, and also place U.S.-based companies at a competitive disadvantage to foreign-based firms who would not be restricted by sanctions."
Bijur also addressed human rights concerns in Myanmar. "Texaco's role in the countries in which it has a presence, such as Myanmar, is to act as a responsible international company and provide a positive influence by respecting the rights of individuals and by conducting our operations in an ethical manner."
With regard to the company's former consortium operations in Ecuador and alleged environmental neglect, Bijur stated that the facts told a very different story. "Two independent environmental assessments concluded that there was minimal environmental impact from the consortium's operations. Nonetheless, in late 1995, Texaco Petroleum Company began an environmental remediation program under the supervision of the Ecuadoran Government, and that work is substantially complete."
Bijur noted that, contrary to claims that Texaco Petroleum Company profited unjustly from its operations in Ecuador, the truth is very different. "The numbers reveal that approximately 98 percent of the total proceeds from these operations went to the Government of Ecuador," he said, adding that Petroecuador, Ecuador's state oil company, was the majority owner of the consortium with 62.5 percent equity from 1977 until 1992.
Updated: May 1997