SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 1-8180
TECO ENERGY, INC.
(Exact name of registrant as specified in its charter)
FLORIDA 59-2052286
(State or other jurisdiction (IRS Employer
incorporation or organization) Identification No.)
702 North Franklin Street, Tampa, Florida 33602
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (813) 228-4111
Indicate by check mark whether the registrant (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 (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
Number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date (October 31, 1995):
Common Stock, $1 Par Value 116,618,897<PAGE>
FORM 10-Q
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
In the opinion of management, the unaudited consolidated financial
statements include all adjustments (none of which were other than
normal and recurring) necessary to present fairly the results for the
three-month and nine-month periods ended Sept. 30, 1995 and 1994.
Reference should be made to the explanatory notes affecting the income
and balance sheet accounts contained in TECO Energy, Inc.'s Annual
Report on Form 10-K for the year ended Dec. 31, 1994 and to the notes
on pages 7 and 8 of this report.
- 2 -<PAGE>
FORM 10-Q
CONSOLIDATED BALANCE SHEETS
(in thousands)
Sept. 30, Dec. 31,
1995 1994
Assets
Current assets
Cash and cash equivalents $ 13,435 $ 35,797
Short-term investments 31,685 100,539
Receivables, less allowance
for uncollectibles 170,575 144,615
Inventories, at average cost
Fuel 70,410 101,819
Materials and supplies 50,238 49,679
Prepayments 8,462 8,600
344,805 441,049
Property, plant and equipment,
at original cost
Utility plant in service 3,148,371 3,060,759
Construction work in progress 425,870 286,624
Other property 818,254 748,357
4,392,495 4,095,740
Accumulated depreciation (1,584,521) (1,475,452)
2,807,974 2,620,288
Other assets
Other investments 91,589 106,993
Deferred income taxes 57,331 52,299
Deferred charges and other assets 105,429 91,533
254,349 250,825
$3,407,128 $3,312,162
Liabilities and Capital
Current liabilities
Long-term debt due within one year $ 31,622 $ 7,841
Notes payable 312,610 349,900
Accounts payable 123,422 145,323
Customer deposits 50,849 49,457
Interest accrued 22,843 15,391
Taxes accrued 58,049 212
599,395 568,124
Deferred income taxes 381,916 390,795
Investment tax credits 62,663 66,627
Regulatory liability - tax related 51,357 57,500
Other deferred credits 108,367 66,058
Long-term debt, less amount due
within one year 995,846 1,023,881
Preferred stock of Tampa Electric 54,956 54,956
Common equity
Common equity - 400 million shares
authorized, $1 par value - issued and
outstanding 116,572,393 in 1995 and
116,199,423 in 1994 1,227,915 1,163,371
Unearned compensation related to ESOP (75,287) (79,150)
$3,407,128 $3,312,162
The accompanying notes are an integral part of the consolidated financial
statements.
- 3 -<PAGE>
FORM 10-Q
CONSOLIDATED STATEMENTS OF INCOME
(in thousands)
For the three months ended Sept. 30, 1995 1994
Revenues $389,097 $366,593
Expenses
Operation 187,786 176,479
Maintenance 24,563 24,326
Depreciation 41,235 43,536
Taxes, other than income 28,445 27,580
282,029 271,921
Income from operations 107,068 94,672
Other income
Allowance for other funds used
during construction 3,234 459
Other income, net (87) 943
Preferred dividend requirements of
Tampa Electric (892) (892)
2,255 510
Income before interest and income taxes 109,323 95,182
Interest charges
Interest expense 22,318 19,610
Allowance for borrowed funds used during
construction (1,949) (1,071)
20,369 18,539
Income before provision for income taxes 88,954 76,643
Provision for income taxes 25,707 22,076
Net income $ 63,247 $ 54,567
Average shares outstanding 116,517 116,006
Earnings per average common share
outstanding $ 0.55 $ 0.47
Dividends per common share outstanding $ 0.265 $ 0.2525
The accompanying notes are an integral part of the consolidated financial
statements.
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FORM 10-Q
CONSOLIDATED STATEMENTS OF INCOME
(in thousands)
For the nine months ended Sept. 30, 1995 1994
Revenues $1,057,930 $1,026,534
Expenses
Operation 512,825 508,339
Maintenance 74,356 73,332
Depreciation 130,443 130,730
Taxes, other than income 86,456 83,791
804,080 796,192
Income from operations 253,850 230,342
Other income
Allowance for other funds used
during construction 7,554 1,103
Other income, net 371 4,813
Preferred dividend requirements of
Tampa Electric (2,676) (2,676)
5,249 3,240
Income before interest and income taxes 259,099 233,582
Interest charges
Interest expense 66,735 58,901
Allowance for borrowed funds used during
construction (4,552) (2,527)
62,183 56,374
Income before provision for income taxes 196,916 177,208
Provision for income taxes 50,785 47,179
Net income $ 146,131 $ 130,029
Average shares outstanding 116,392 115,852
Earnings per average common share
outstanding $ 1.26 $ 1.12
Dividends per common share outstanding $ 0.7825 $ 0.745
The accompanying notes are an integral part of the consolidated financial
statements.
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FORM 10-Q
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
For the nine months ended Sept. 30, 1995 1994
Cash flows from operating activities
Net income $ 146,131 $ 130,029
Adjustments to reconcile net income
to net cash
Depreciation 130,443 130,730
Deferred income taxes (19,991) (4,161)
Investment tax credits, net (3,964) (4,131)
Allowance for funds used
during construction (12,106) (3,630)
Amortization of unearned compensation
related to ESOP 3,863 4,258
Deferred revenue 30,962 --
Deferred recovery clause (13,976) 20,730
Refund to customers -- (2,428)
Amortization of coal contract buyout 1,352 --
Receivables, less allowance
for uncollectibles (25,960) (16,565)
Inventories 30,850 (6,616)
Taxes accrued 57,837 29,784
Interest accrued 7,452 7,919
Accounts payable (21,901) (1,234)
Other 18,883 10,090
329,875 294,775
Cash flows from investing activities
Capital expenditures (326,950) (198,007)
Allowance for funds used
during construction 12,106 3,630
Investment in short-term investments 68,854 (5,882)
Other non-current investments 18,763 (7,156)
(227,227) (207,415)
Cash flows from financing activities
Common stock 7,758 8,686
Proceeds from long-term debt 620 686
Repayment of long-term debt (5,052) (17,575)
Net increase (decrease) in short-term debt (37,290) 16,210
Dividends (91,046) (86,279)
(125,010) (78,272)
Net increase (decrease) in cash
and cash equivalents (22,362) 9,088
Cash and cash equivalents
at beginning of period 35,797 33,180
Cash and cash equivalents at end of period $ 13,435 $ 42,268
The accompanying notes are an integral part of the consolidated financial
statements.
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FORM 10-Q
NOTES TO FINANCIAL STATEMENTS
A. TECO Energy, Inc. and its subsidiaries have made certain
commitments in connection with their continuing capital improvement
program and estimate that capital expenditures, excluding allowance
for funds used during construction (AFUDC), during 1995 will be as
follows:
millions
Tampa Electric Company $310
TECO Power Services Corporation 45
TECO Transport & Trade Corporation 35
TECO Coal Corporation 12
TECO Coalbed Methane, Inc. 10
TECO Properties, Inc. 3
$415
Included in TECO Power Services' estimated capital expenditures
is $44 million for a 78-megawatt generating facility in Guatemala
which began commercial operation in September.
B. Tampa Electric s deferred revenue plan approved by the Florida
Public Service Commission (FPSC) provides for an 11.75 percent
authorized rate of return on common equity (ROE) for all regulatory
purposes with a range of 10.75 percent to 12.75 percent retroactive to
Jan. 1, 1995. Under the plan Tampa Electric will defer in 1995 $15
million of revenues as well as 50 percent of actual revenues
contributing to a return on average common equity exceeding
11.75 percent and 100 percent of actual revenues contributing to a
return on average common equity exceeding 12.75 percent. Tampa
Electric expects, subject to regulatory approval, that beginning in
1997 these deferred revenues will be used to offset a portion of the
revenue requirements associated with the Polk Power Station. As of
Sept. 30, 1995, Tampa Electric had deferred $31 million in revenues.
The FPSC order also eliminated Tampa Electric s oil backout tariff
- 7 -<PAGE>
FORM 10-Q
effective Jan. 1, 1996. This tariff currently results in
approximately $12 million of annual revenues.
C. Certain 1994 amounts on the consolidated statements of cash flows
have been restated to comply with the current-year presentation.
- 8 -<PAGE>
FORM 10-Q
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
Three months ended Sept. 30, 1995:
Net income of $63.2 million for the third quarter of 1995 was
$8.7 million or 16 percent higher than 1994's third quarter due
primarily to increased sales at Tampa Electric, TECO Coal and TECO
Transport & Trade. Higher AFUDC at Tampa Electric also contributed to
higher net income.
Consolidated operating income was up 13 percent from 1994's third
quarter due to strong performances by Tampa Electric, TECO Coal and
TECO Transport & Trade.
The following table identifies the unconsolidated revenues and
operating income of TECO Energy s significant operating groups.
Contributions by operating group (unconsolidated)
(thousands of dollars)
Revenues
1995 1994
Tampa Electric $308,067 $301,440
Diversified companies $135,454 $119,392
Operating income
1995 1994
Tampa Electric $ 81,921 $ 77,574
Diversified companies* $ 27,033 $ 17,544
* Operating income includes items which are reclassified for
consolidated financial statement purposes. The principal items are the
non-conventional fuels tax credit related to coalbed methane
production and interest expense of the non-recourse debt related to
independent power operations, both of which are included in operating
income for the diversified companies. In the Consolidated Statements
of Income, the tax credit is part of the provision for income taxes
and the interest is part of interest expense.
Tampa Electric's third-quarter operating income of $81.9 million
was 6 percent higher than in 1994 primarily due to higher energy
sales. These results were net of $14.1 million of revenues deferred
- 9 -<PAGE>
FORM 10-Q
under the FPSC-approved plan described on pages 7 and 14.
Tampa Electric s revenues for the quarter increased $6.6 million
or 2 percent after the $14.1 million revenue deferral due to increased
energy sales. Retail energy sales increased 5 percent reflecting
customer growth and warmer weather than 1994's third quarter.
Tampa Electric's total operating expenses for the third quarter
were 1 percent higher than in 1994. The change is primarily due to
higher combined fuel and purchased power expenses resulting from
higher energy sales.
Unconsolidated operating income for TECO Energy's diversified
companies increased 54 percent to $27.0 million on revenues of
$135.5 million.
TECO Coal's operating income increased due to higher third-party
volumes, which more than offset the current soft domestic coal
market s effect on prices. In addition, cost control efforts resulted
in lower production costs. TECO Coal also realized a $2.6 million
gain on the sale of land and mineral rights under a condemnation
settlement.
TECO Transport & Trade benefited from increased third-party
volume, improved pricing and more efficient utilization of the fleet.
A 5 percent increase in gas production at TECO Coalbed Methane
was more than offset by lower gas prices.
Consolidated interest expense was 14 percent higher in the
current quarter due to higher interest rates on floating-rate debt and
an increase in Tampa Electric s short-term debt balances.
Total AFUDC increased in 1995 because of additional investment in
Tampa Electric s Polk Power Station which is under construction.
- 10 -<PAGE>
FORM 10-Q
Nine months ended Sept. 30, 1995:
Net income of $146.1 million for the nine months of 1995 was
$16.1 million or 12 percent higher than in 1994 due primarily to
increased sales at Tampa Electric, TECO Coal and TECO Transport &
Trade. Higher AFUDC and lower operating expenses at Tampa Electric
also contributed to higher net income.
Consolidated operating income was up 10 percent from 1994 due to
strong performances by Tampa Electric, TECO Coal and TECO Transport &
Trade.
The following table identifies the unconsolidated revenues and
operating income of TECO Energy s significant operating groups.
Contributions by operating group (unconsolidated)
(thousands of dollars)
Revenues
1995 1994
Tampa Electric $840,957 $839,393
Diversified companies $372,250 $347,715
Operating income
1995 1994
Tampa Electric $188,240 $178,731
Diversified companies* $ 70,954 $ 52,282
* Operating income includes items which are reclassified for
consolidated financial statement purposes. The principal items are the
non-conventional fuels tax credit related to coalbed methane
production and interest expense of the non-recourse debt related to
independent power operations, both of which are included in operating
income for the diversified companies. In the Consolidated Statements
of Income, the tax credit is part of the provision for income taxes
and the interest is part of interest expense.
Tampa Electric's operating income of $188.2 million for the nine
months was 5 percent higher than in 1994 primarily due to higher
energy sales and lower operating expenses. These results were net of
$31.0 million of revenues deferred under the FPSC-approved plan
described on pages 7 and 14.
- 11 -<PAGE>
FORM 10-Q
Tampa Electric s revenues for the nine months increased
$1.6 million or .2 percent after the $31.0 million revenue deferral
due to increased energy sales. Retail energy sales increased
4 percent from continued growth in the local economy and favorable
weather which resulted in increased energy usage in the residential
and commercial sectors. In addition, the industrial-phosphate sector
used more energy to meet increased demand.
Tampa Electric s non-fuel operation and maintenance expenses for
the nine months were $10.8 million or 6 percent lower than in 1994 as
a result of the corporate restructuring program established in late
1994, additional cost control activities in 1995 and timing of certain
expenses. Tampa Electric's total operating expenses for the nine
months were 1 percent lower than 1994 because increased energy sales
resulted in higher combined fuel and purchased power expenses.
Unconsolidated operating income for TECO Energy's diversified
companies increased 36 percent to $71.0 million on revenues of
$372.3 million.
Both TECO Coal and TECO Transport & Trade had improved results
from increased third-party business. TECO Transport s operating
income was further improved by cost-control efforts. TECO Coal s
preparation and coal handling facilities became fully operational in
early 1995 which contributed to increased coal sales, despite the
current soft domestic coal market. TECO Coal also realized a
$2.6 million gain on the sale of land and mineral rights under a
condemnation settlement.
At TECO Coalbed Methane 5 percent higher volume, lower production
costs and a first quarter $4-million contract termination settlement
more than offset lower gas prices.
- 12 -<PAGE>
FORM 10-Q
Consolidated interest expense was 13 percent higher in the
current year due to higher interest rates on floating-rate debt and an
increase in short-term debt balances.
Total AFUDC increased substantially in 1995 because of additional
investment in Tampa Electric s Polk Power Station which is under
construction.
The effective income tax rate for the nine months of 1995 was
25.4 percent compared to 26.2 percent for the same period last year.
The decrease was primarily due to higher allowance for other funds
used during construction in 1995.
- 13 -<PAGE>
FORM 10-Q
Liquidity, Capital Resources and Changes in Financial Condition
Tampa Electric s FPSC-approved deferred revenue plan provides for
an 11.75 percent authorized ROE for all regulatory purposes with a
range of 10.75 percent to 12.75 percent and the deferral of revenues
under certain financial circumstances related to these returns. Under
the plan Tampa Electric will defer in 1995 $15 million of revenues as
well as 50 percent of actual revenues contributing to a return on
average common equity exceeding 11.75 percent and 100 percent of
actual revenues contributing to a return on average common equity
exceeding 12.75 percent. Tampa Electric expects, subject to
regulatory approval, that beginning in 1997 these deferred revenues
will be used to offset a portion of the revenue requirements
associated with the Polk Power Station. As of Sept. 30, 1995, Tampa
Electric had deferred $31 million in revenues. The FPSC also
eliminated Tampa Electric's oil backout tariff effective Jan. 1, 1996.
This tariff currently results in approximately $12 million of annual
revenues.
The company has recently formed a subsidiary, TECO Energy
Management Services Corporation, that is pilot-testing an advanced
energy management system for residential use and has under development
a system for industrial and commercial applications.
The company has also expanded its natural gas production business
by forming a new subsidiary, TECO Gas & Oil, Inc., which is
participating through a joint venture in an exploration and
development program for gas and oil in the shallow gulf waters off
Texas and Louisiana. The joint venture has successfully bid for
several offshore leases at federal auctions and has negotiated
drilling rights on other parcels. The first exploratory well,
- 14 -<PAGE>
FORM 10-Q
completed in October, was successful. The company expects to make an
initial investment of $10 million to $20 million over the next one to
two years.
Cash and cash equivalents and short-term investments at Sept. 30,
1995 were decreased from Dec. 31, 1994 levels and the proceeds were
applied to reduce short-term debt balances.
Fuel inventory declined as a result of higher levels of
generation at Tampa Electric.
The increase in other property from Dec. 31, 1994 to Sept. 30,
1995 reflected TECO Coal s new facilities which went in service during
the first quarter of 1995.
Other deferred credits increased primarily due to the deferral of
Tampa Electric revenues.
Taxes accrued at Sept. 30, 1995 increased from Dec. 31, 1994
primarily because of the timing of federal income tax and property tax
payments at Tampa Electric.
- 15 -<PAGE>
FORM 10-Q
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
11. Computation of earnings per common share.
27. Financial data schedule. (EDGAR filing only)
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter to which
this report relates.
- 16 -<PAGE>
FORM 10-Q
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.
TECO ENERGY, INC.
(Registrant)
Date: November 13, 1995 By: /s/ A. D. Oak
A. D. Oak
Senior Vice President - Finance,
and Chief Financial Officer
(Principal Financial Officer)
- 17 -<PAGE>
FORM 10-Q
INDEX TO EXHIBITS
Exhibit No. Description of Exhibits Page No.
11. Computation of earnings per common share 19
27. Financial data schedule (EDGAR filing only) --
- 18 -<PAGE>
Exhibit 11
TECO ENERGY, INC.
COMPUTATIONS OF EARNINGS PER COMMON SHARE
Three months ended Sept. 30, 1995 1994
Primary Fully Diluted Primary Fully Diluted
Earnings Earnings Earnings Earnings
Net income (000) $ 63,247 $ 63,247 $ 54,567 $ 54,567
Common shares outstanding
at beginning of period 116,459,568 116,459,568 115,939,782 115,939,782
Dividend reinvestment and
common stock purchase plan:
Shares issued 51,193 51,193 66,077 66,077
Stock option plans:
Options exercised 6,621 6,621 -- --
Shares under option at
end of period -- 2,506,172 -- 2,084,172
Treasury shares which could
be purchased -- (2,021,613) -- (1,971,919)
Avg. no. of shares
outstanding 116,517,382 117,001,941 116,005,859 116,118,112
Earnings per share $ 0.55 $ 0.54 $ 0.47 $ 0.47
Nine months ended Sept. 30, 1995 1994
Primary Fully Diluted Primary Fully Diluted
Earnings Earnings Earnings Earnings
Net income (000) $ 146,131 $ 146,131 $ 130,029 $ 130,029
Common shares outstanding
at beginning of period 116,199,423 116,199,423 115,621,008 115,621,008
Dividend reinvestment and
common stock purchase plan:
Shares issued 167,605 167,605 199,939 199,939
Stock option plans:
Options exercised 25,330 25,330 30,913 30,913
Shares under option at
end of period -- 2,506,172 -- 2,084,172
Treasury shares which could
be purchased -- (2,021,613) -- (1,915,614)
Avg. no. of shares
outstanding 116,392,358 116,876,917 115,851,860 116,020,418
Earnings per share $ 1.26 $ 1.25 $ 1.12 $ 1.12
- 19 -<PAGE>
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<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE TECO
ENERGY, INC. CONSOLIDATED BALANCE SHEETS, CONSOLIDATED STATEMENTS OF INCOME
AND CONSOLIDATED STATEMENTS OF CASH FLOWS AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
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<CIK> 0000350563
<NAME> TECO Energy, Inc.
<MULTIPLIER> 1000
<S> <C>
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-1-1995
<PERIOD-END> SEP-30-1995
<PERIOD-TYPE> 9-MOS
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,944,540
<OTHER-PROPERTY-AND-INVEST> 863,434
<TOTAL-CURRENT-ASSETS> 344,805
<TOTAL-DEFERRED-CHARGES> 162,760
<OTHER-ASSETS> 91,589
<TOTAL-ASSETS> 3,407,128
<COMMON> 116,572
<CAPITAL-SURPLUS-PAID-IN> 338,955
<RETAINED-EARNINGS> 772,388
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,227,915
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54,956
<LONG-TERM-DEBT-NET> 995,846
<SHORT-TERM-NOTES> 2,705
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 309,905
<LONG-TERM-DEBT-CURRENT-PORT> 31,622
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<CAPITAL-LEASE-OBLIGATIONS> 0
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<OTHER-ITEMS-CAPITAL-AND-LIAB> 784,179
<TOT-CAPITALIZATION-AND-LIAB> 3,407,128
<GROSS-OPERATING-REVENUE> 1,057,930
<INCOME-TAX-EXPENSE> 50,785
<OTHER-OPERATING-EXPENSES> 804,080
<TOTAL-OPERATING-EXPENSES> 804,080
<OPERATING-INCOME-LOSS> 253,850
<OTHER-INCOME-NET> 7,925
<INCOME-BEFORE-INTEREST-EXPEN> 259,099
<TOTAL-INTEREST-EXPENSE> 62,183
<NET-INCOME> 148,807
2,676
<EARNINGS-AVAILABLE-FOR-COMM> 146,131
<COMMON-STOCK-DIVIDENDS> 91,046
<TOTAL-INTEREST-ON-BONDS> 31,968
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