FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 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 (April 30, 1995):
Common Stock, $1 Par Value 116,348,185<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 periods ended March 31, 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 page 6 of this report.
- 2 -<PAGE>
FORM 10-Q
CONSOLIDATED BALANCE SHEETS
(thousands of dollars)
March 31, Dec. 31,
1995 1994
Assets
Current assets
Cash and cash equivalents $ 11,882 $ 35,797
Short-term investments 30,881 100,539
Receivables, less allowance
for uncollectibles 129,122 144,615
Inventories, at average cost
Fuel 109,076 101,819
Materials and supplies 49,591 49,679
Prepayments 6,798 8,600
337,350 441,049
Property, plant and equipment,
at original cost
Utility plant in service 3,072,568 3,060,759
Construction work in progress 319,440 286,624
Other property 798,498 748,357
4,190,506 4,095,740
Accumulated depreciation (1,513,181) (1,475,452)
2,677,325 2,620,288
Other assets
Other investments 107,046 106,993
Deferred income taxes 52,131 52,299
Deferred charges and other assets 96,898 91,533
256,075 250,825
$3,270,750 $3,312,162
Liabilities and Capital
Current liabilities
Long-term debt due within one year $ 6,676 $ 7,841
Notes payable 308,915 349,900
Accounts payable 110,704 145,323
Customer deposits 50,431 49,457
Interest accrued 21,121 15,391
Taxes accrued 16,540 212
514,387 568,124
Deferred income taxes 388,631 390,795
Investment tax credits 65,293 66,627
Regulatory liability - tax related 56,266 57,500
Other deferred credits 72,041 66,058
Long-term debt, less amount due
within one year 1,023,239 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 116,332,208 in 1995 and
116,199,423 in 1994 1,173,855 1,163,371
Unearned compensation related to ESOP (77,918) (79,150)
$3,270,750 $3,312,162
The accompanying notes are an integral part of the consolidated financial
statements.
- 3 -<PAGE>
FORM 10-Q
CONSOLIDATED STATEMENTS OF INCOME
(thousands of dollars)
For the three months ended March 31, 1995 1994
Revenues $319,134 $306,622
Expenses
Operation 155,421 153,332
Maintenance 23,934 22,513
Depreciation 44,597 43,173
Taxes, other than income 29,135 27,707
253,087 246,725
Income from operations 66,047 59,897
Other income
Allowance for other funds used
during construction 1,799 273
Other income (expense), net 192 2,876
Preferred dividend requirements of
Tampa Electric (892) (892)
1,099 2,257
Income before interest and income taxes 67,146 62,154
Interest charges
Interest expense 21,685 19,238
Allowance for borrowed funds used during
construction (1,084) (636)
20,601 18,602
Income before provision for income taxes 46,545 43,552
Provision for income taxes 10,041 9,950
Net income $ 36,504 $ 33,602
Average shares outstanding 116,266,403 115,690,152
Earnings per average common share
outstanding $ 0.31 $ 0.29
Dividends per common share outstanding $ 0.2525 $ 0.24
The accompanying notes are an integral part of the consolidated financial
statements.
- 4 -<PAGE>
FORM 10-Q
CONSOLIDATED STATEMENTS OF CASH FLOWS
(thousands of dollars)
For the three months ended March 31, 1995 1994
Cash flows from operating activities
Net income $ 36,504 $ 33,602
Adjustments to reconcile net income
to net cash
Depreciation 44,597 43,173
Deferred income taxes (3,229) (4,327)
Investment tax credits, net (1,334) (1,376)
Allowance for funds used
during construction (2,883) (909)
Amortization of unearned compensation
related to ESOP 1,232 1,348
Deferred revenue 7,421 --
Deferred recovery clause (5,857) 5,272
Refund to customers -- (2,306)
Receivables, less allowance
for uncollectibles 15,493 8,259
Inventories (7,169) (7,723)
Taxes accrued 16,328 19,922
Interest accrued 5,730 7,071
Accounts payable (34,619) (15,680)
Other 2,607 8,850
74,821 95,176
Cash flows from investing activities
Capital expenditures (102,113) (56,863)
Allowance for funds used
during construction 2,883 909
Investment in short-term investments 69,658 (5,259)
Other non-current investments 308 (7,367)
(29,264) (68,580)
Cash flows from financing activities
Common stock 2,725 2,718
Proceeds from long-term debt 620 --
Repayment of long-term debt (2,486) (10,829)
Net increase (decrease) in short-term debt (40,985) 8,860
Dividends (29,346) (27,754)
(69,472) (27,005)
Net increase (decrease) in cash
and cash equivalents (23,915) (409)
Cash and cash equivalents
at beginning of period 35,797 33,180
Cash and cash equivalents
at end of period $ 11,882 $ 32,771
The accompanying notes are an integral part of the consolidated financial
statements.
- 5 -<PAGE>
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, during 1995 will be as follows:
millions
Tampa Electric Company $320
TECO Power Services Corporation 45
TECO Transport & Trade Corporation 37
TECO Coal Corporation 12
TECO Coalbed Methane, Inc. 8
$422
B. On May 2, 1995, the Florida Public Service Commission (FPSC), in
a proposed agency action, voted to approve a plan submitted by Tampa
Electric to increase the utility's authorized rate of return on
average common equity (ROE) to 11.75 percent with a range of 10.75
percent to 12.75 percent and to defer $15 million of revenues for 1995
and additional amounts related to levels of earned ROE. Tampa Electric
would be limited to a maximum of 12.75 percent regulatory ROE for
1995. Also as part of its proposed agency action, the FPSC voted to
eliminate Tampa Electric's oil backout tariff effective Jan. 1, 1996.
See additional discussion on page 10.
C. Certain 1994 amounts on the consolidated statements of cash flows
have been restated to comply with the current-year presentation.
- 6 -<PAGE>
FORM 10-Q
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
Three months ended March 31, 1995:
Net income of $36.5 million for the first quarter of 1995 was
$2.9 million or 9 percent higher than in the prior year's first
quarter, due to higher energy sales at Tampa Electric and a $4-million
contract termination settlement at TECO Coalbed Methane.
Operating income was up 10 percent from 1994's first quarter, for
the same reasons.
The following table identifies the unconsolidated revenues and
operating income of the significant operating groups of TECO Energy.
Contributions by operating group (unconsolidated)
Revenues
(thousands of dollars) 1995 1994
Tampa Electric $253,796 $244,629
Diversified companies $114,603 $111,598
Operating income
(thousands of dollars) 1995 1994
Tampa Electric $ 45,880 $ 42,422
Diversified companies* $ 21,599 $ 17,714
* Operating income includes items which are reclassified for
consolidated financial statement purposes. The principal items are the
n o n -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.
- 7 -<PAGE>
FORM 10-Q
Tampa Electric's first-quarter operating income of $45.9 million
was 8 percent higher than in 1994 primarily due to higher energy
sales. These results were net of $7.4 million of deferred revenues, as
discussed on page 10.
Tampa Electric's revenues increased $9 million in the first
quarter of 1995, reflecting an almost 3-percent increase in retail
energy sales because of more normal weather in the current quarter
and a continuing strong local economy. Customer growth of 1.8 percent,
slightly higher than in 1994's first quarter, also contributed to
higher revenues. Energy sales to other utilities more than doubled
from 1994's first quarter as a result of normal weather and more
competitive coal prices. Non-fuel revenues from energy sales to other
utilities were $8.4 million, $.7 million higher than in 1994's period.
Tampa Electric's total operating expenses for the first quarter
were 3 percent higher than in 1994 as total fuel and purchased power
costs increased 8 percent, reflective of the increase in energy sales.
This was partially offset by a 5-percent decrease in operation-other
and maintenance expenses, mainly because of self-insurance liability
accruals required in the first quarter of 1994 and the impact in 1995
of reduced costs as a result of the 1994 corporate restructuring
program.
Unconsolidated operating income for TECO Energy's diversified
companies increased 22 percent to $21.6 million on revenues of
$114.6 million.
TECO Coalbed Methane's operating income was up 6 percent due to
the $4-million settlement received for the termination of gas sales
contracts with an interstate pipeline company. The terminated contract
provided for contributions by the buyer to TECO Coalbed Methane's
- 8 -<PAGE>
FORM 10-Q
compression and dehydration expenses. Coincident with this
termination, TECO Coalbed Methane secured a replacement long-term gas
sales contract at prices based on the spot-market for on-shore
Louisiana gas. This settlement and a 5-percent increase in gas
production more than offset the effect of lower gas prices in 1995.
TECO Transport & Trade and TECO Coal both had improved operating
results in 1995's first quarter from higher volumes. TECO Transport's
results also benefitted from lower operating costs. TECO Coal's
results were limited by weak coal prices.
Consolidated interest expense was 13 percent higher in the
current year primarily due to higher rates on short-term and variable-
rate debt.
The increase in consolidated income tax expense resulted from
higher pretax income, which more than offset additional tax credits
associated with coalbed methane gas production.
- 9 -<PAGE>
FORM 10-Q
Liquidity, Capital Resources and Changes in Financial Condition
On May 2, 1995 the FPSC in a proposed agency action voted to
approve a plan submitted by Tampa Electric to increase its allowed ROE
to 11.75 percent with a range of 10.75 percent to 12.75 percent and to
defer revenues under certain financial circumstances related to these
returns. For 1995, a minimum of $15-million of revenues will be
deferred as well as 50 percent of any actual revenues contributing to
an ROE in excess of 11.75 percent up to a net earned ROE of 12.75
percent and all actual revenues contributing to an ROE exceeding 12.75
percent. The deferred revenues, which would accrue interest at the 30-
day commercial paper rate specified in the Florida Administrative
Code, would be credited against Tampa Electric's revenue requirements
to be determined in a future regulatory proceeding. As of March 31,
1995, Tampa Electric had deferred $7.4 million in revenues.
Also as part of its proposed agency action, the FPSC voted to
eliminate Tampa Electric's oil backout tariff effective Jan. 1, 1996.
This tariff currently results in about $12 million of revenues
annually.
The FPSC issued its order on May 10, 1995. The order will become
effective on June 1, 1995, 21 days after issuance, unless an affected
party intervenes.
As described in the company's Current Report on Form 8-K, dated
April 25, 1995, Moody's Investor's Service lowered the unsecured debt
ratings of TECO Energy and its wholly-owned subsidiary, TECO Finance,
Inc., one level to A1 from Aa3. In addition, Moody's lowered the
senior and subordinate debt ratings of Tampa Electric Company one
level to Aa2 and Aa3 from Aa1 and Aa2, respectively. Moody's also
changed its ratings outlook to "stable" from "negative."
- 10 -<PAGE>
FORM 10-Q
Moody's P-1 short-term debt ratings for the commercial paper
programs of Tampa Electric and TECO Finance were unchanged.
In March 1995, Duff & Phelps Credit Rating Co. upgraded Tampa
Electric's first mortgage bond rating to AA+ from AA and the
subordinate debt rating to AA from AA-.
The decrease in cash and cash equivalents and short-term
investments at March 31, 1995 from Dec. 31, 1994 was the result of the
company's decision to liquidate a portion of the corporate cash
portfolio and reduce short-term debt.
The increase in other property was attributable to TECO Coal's
new preparation plant going in service during the first quarter.
- 11 -<PAGE>
FORM 10-Q
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
At the Annual Meeting of Shareholders held on
April 19, 1995, the shareholders of TECO Energy, Inc. elected
four directors. The votes were as follows:
Votes Cast
For Against
Girard F. Anderson 94,877,506 678,549
Timothy L. Guzzle 94,818,203 737,852
J. Thomas Touchton 94,890,702 665,353
John A. Urquhart 94,845,227 710,828
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.
The registrant filed a Current Report on Form 8-K dated
April 20, 1995 reporting under "Item 5. Other Events" on
recommendations by the Staff of the Florida Public Service
Commission.
The registrant filed a Current Report on Form 8-K dated
April 25, 1995 reporting under "Item 5. Other Events" on
changes in debt ratings.
- 12 -<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)
Dated: May 12, 1995 By:/s/ A. D. Oak
A. D. Oak
Senior Vice President -- Finance,
and Chief Financial Officer
(Principal Financial Officer)
- 13 -<PAGE>
FORM 10-Q
INDEX TO EXHIBITS
Exhibit No. Description of Exhibits Page No.
11. Computation of earnings per common share. 15
27. Financial data schedule (EDGAR filing only) --
- 14 -<PAGE>
<TABLE>
Exhibit 11
TECO ENERGY, INC.
COMPUTATIONS OF EARNINGS PER COMMON SHARE
<CAPTION>
Three months ended March 31, 1995 1994
Primary Fully Diluted Primary Fully Diluted
Earnings Earnings Earnings Earnings
<S> <C> <C> <C> <C>
Net income (000) $ 36,504 $ 36,504 $ 33,602 $ 33,602
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 56,944 56,944 61,344 61,344
Stock option plans:
Options exercised 10,036 10,036 7,800 7,800
Shares under option at
end of period 2,063,372 1,703,072
Treasury shares which could
be purchased (1,809,884) (1,489,618)
Avg. no. of shares outstanding 116,266,403 116,519,891 115,690,152 115,903,606
Earnings per share $ 0.31 $ 0.31 $ 0.29 $ 0.29
</TABLE>
15<PAGE>
<TABLE> <S> <C>
<ARTICLE> UT
<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.
</LEGEND>
<CIK> 0000350563
<NAME> TECO Energy, Inc.
<MULTIPLIER> 1000
<S> <C>
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-1-1995
<PERIOD-END> MAR-31-1995
<PERIOD-TYPE> 3-MOS
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,919,434
<OTHER-PROPERTY-AND-INVEST> 757,891
<TOTAL-CURRENT-ASSETS> 337,350
<TOTAL-DEFERRED-CHARGES> 149,029
<OTHER-ASSETS> 107,046
<TOTAL-ASSETS> 3,270,750
<COMMON> 116,332
<CAPITAL-SURPLUS-PAID-IN> 334,162
<RETAINED-EARNINGS> 723,361
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,173,855
0
54,956
<LONG-TERM-DEBT-NET> 1,023,239
<SHORT-TERM-NOTES> 1,315
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 307,600
<LONG-TERM-DEBT-CURRENT-PORT> 6,676
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 703,109
<TOT-CAPITALIZATION-AND-LIAB> 3,270,750
<GROSS-OPERATING-REVENUE> 319,134
<INCOME-TAX-EXPENSE> 10,041
<OTHER-OPERATING-EXPENSES> 253,087
<TOTAL-OPERATING-EXPENSES> 263,128
<OPERATING-INCOME-LOSS> 56,006
<OTHER-INCOME-NET> 1,991
<INCOME-BEFORE-INTEREST-EXPEN> 57,997
<TOTAL-INTEREST-EXPENSE> 20,601
<NET-INCOME> 37,396
892
<EARNINGS-AVAILABLE-FOR-COMM> 36,504
<COMMON-STOCK-DIVIDENDS> 29,346
<TOTAL-INTEREST-ON-BONDS> 10,062
<CASH-FLOW-OPERATIONS> 74,821
<EPS-PRIMARY> .31
<EPS-DILUTED> .31
</TABLE>
