FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
X Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the fiscal year ended December 31, 1995
OR
Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period _____ 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 of (I.R.S. Employer
incorporation or organization) Identification Number)
TECO Plaza
702 N. Franklin Street
Tampa, Florida 33602
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (813) 228-4111
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
Common Stock, $1.00 par value New York Stock Exchange
Common Stock Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: NONE
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
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendments to this Form 10-K. X
The aggregate market value of the voting stock held by nonaffiliates of the
registrant as of February 29, 1996 was $2,924,007,675.
Number of shares of the registrant's common stock outstanding as of
February 29, 1996 was 116,960,307.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Definitive Proxy Statement relating to the 1996 Annual
Meeting of Shareholders of the registrant are incorporated by reference
into Part III.<PAGE>
PART I
Item 1. BUSINESS.
TECO ENERGY
TECO Energy, Inc. (TECO Energy) was incorporated in Florida in 1981,
as part of a restructuring in which it became the parent corporation of
Tampa Electric Company (Tampa Electric).
TECO Energy currently owns no operating assets but holds all of the
common stock of Tampa Electric and the other subsidiaries listed below.
TECO Energy is a public utility holding company exempt from registration
under the Public Utility Holding Company Act of 1935.
TECO Energy has seven principal, directly-owned subsidiaries:
Tampa Electric, a Florida corporation and TECO Energy's largest
subsidiary, is an electric utility that serves more than 501,000 retail
customers in West Central Florida with a net system generating capability
of 3,404 megawatts (MWs).
TECO Diversified, Inc. (TECO Diversified), a Florida corporation
formed in 1987, has four subsidiaries that conduct a substantial portion of
the diversified activities of TECO Energy: TECO Coal Corporation (TECO
Coal), TECO Coalbed Methane, Inc. (TECO Coalbed Methane), TECO Properties
Corporation (TECO Properties) and TECO Transport & Trade Corporation (TECO
Transport).
TECO Power Services Corporation (TECO Power Services), a Florida
corporation formed in 1987, has subsidiaries that own and operate
independent power projects in Florida and in Guatemala. TECO Power Services
also seeks other opportunities both in the southeastern United States and
Latin America to develop independent power and cogeneration projects.
TECO Investments, Inc. (TECO Investments), a Florida corporation
formed in 1987, invests capital in short- and long-term securities and
financial instruments.
TECO Finance, Inc. (TECO Finance), a Florida corporation formed
in 1987, is a source of debt capital primarily for the diversified activities of
TECO Energy.
TECO Gas & Oil, Inc. (TECO Gas & Oil), a Florida corporation
formed in 1995, is involved in the exploration and development of
conventional gas and oil in the shallow gulf waters off Texas and
Louisiana.
TeCom Inc. (TeCom), a Florida corporation (formerly called TECO Energy
Management Services Corporation) formed in 1994, is developing an advanced
energy management and communications system, and is currently pilot testing
this technology.
For financial information regarding TECO Energy's significant business
segments see Note J on pages 52 and 53.
TECO Energy and its subsidiaries had 4,465 employees as of Dec. 31, 1995.
2<PAGE>
TAMPA ELECTRIC
Tampa Electric was incorporated in Florida in 1899 and was
reincorporated in 1949. Tampa Electric is a public utility operating wholly
within the state of Florida and is engaged in the generation, purchase,
transmission, distribution and sale of electric energy. The retail territory
served comprises an area of about 2,000 square miles in West
Central Florida, including substantially all of Hillsborough County and
parts of Polk, Pasco and Pinellas Counties, and has an estimated population
of over one million. The principal communities served are Tampa, Winter
Haven, Plant City and Dade City. In addition, the utility engages in
wholesale sales to other utilities which consist of broker economy,
requirements and other types of service of varying duration and priority.
Tampa Electric has three electric generating stations in or near Tampa and
two electric generating stations located near Sebring, a city located in
Highlands County in South Central Florida.
Tampa Electric had 2,836 employees as of Dec. 31, 1995, of which 1,164
were represented by the International Brotherhood of Electrical Workers
(IBEW) and 308 by the Office and Professional Employees International
Union.
In 1995, approximately 48 percent of Tampa Electric's total operating
revenue was derived from residential sales, 29 percent from commercial
sales, 10 percent from industrial sales and 13 percent from other sales
including bulk power sales for resale.
The sources of operating revenue for the years indicated were as
follows:
(millions) 1995 1994 1993
Residential $ 523.3 $ 505.5 $ 464.1
Commercial 316.1 316.8 298.3
Industrial-Phosphate 61.7 58.3 55.1
Industrial-Other 45.0 50.0 48.9
Sales for resale 80.0 70.4 76.1
Deferred revenues (50.8) -- --
Other 117.0 93.9 98.8
$1,092.3 $1,094.9 $1,041.3
No material part of Tampa Electric's business is dependent upon a single
customer or a few customers, the loss of any one or more of whom
would have a significantly adverse effect on Tampa Electric, except that 8
customers in the phosphate industry accounted for 6 percent of operating
revenues in 1995.
Tampa Electric's business is not a seasonal one, but winter peak loads
are experienced due to fewer daylight hours and colder temperatures, and
summer peak loads are experienced due to use of air conditioning and other
cooling equipment.
Regulation
The retail operations of Tampa Electric are regulated by the Florida
Public Service Commission (FPSC), which has jurisdiction over retail rates,
the quality of service, issuances of securities, planning, siting and
construction of facilities, accounting and depreciation practices and other
matters. Tampa Electric is also subject to regulation by the Federal Energy
Regulatory Commission (FERC) in various respects including wholesale power
sales, certain wholesale power purchases, transmission services and
accounting and depreciation practices.
Federal, state and local environmental laws and regulations cover air
quality, water quality, land use, power plant, substation and transmission
line siting, noise and aesthetics, solid waste and other environmental
matters. See Environmental Matters on page 7.
3<PAGE>
TECO Transport, TECO Coal and TECO Power Services subsidiaries sell
transportation services, coal, and generating capacity and energy,
respectively, to Tampa Electric and to third parties. The transactions
between Tampa Electric and these affiliates and the prices paid by Tampa
Electric are subject to regulation by the FPSC and FERC, and any charges
deemed to be imprudently incurred may not be allowed to be billed to Tampa
Electric's customers. See Utility Regulation on pages 27 through 30. Except
for transportation services performed by TECO Transport under the U.S. bulk
cargo preference program, the prices charged by TECO Transport and TECO
Coal subsidiaries to third-party customers are not subject to regulatory
oversight. See also TECO Power Services on pages 10 and 11.
Competition
Tampa Electric s retail business is substantially free from direct
competition with other electric utilities, municipalities and public agencies.
At the present time, the principal form of competition at the retail level
consists of natural gas for residences and businesses and the self-generation
option available to larger users of electric energy. Such users, and possibly
commercial and residential customers as well, may seek to expand their options
through legislative and/or regulatory initiatives that would permit competition
at the retail level. Tampa Electric intends to take all appropriate actions to
retain and expand its retail business, to control costs, and provide high
quality service to retail customers. There is presently active competition in
the wholesale power markets in Florida, and this is increasing largely as a
result of the Energy Policy Act of 1992 and related federal initiatives. This
act removed certain regulatory barriers to independent power
producers and required utilities to transmit power from such producers,
utilities and others to wholesale customers under certain circumstances. Tampa
Electric continues its cost reduction efforts to increase its wholesale
business, which is dependent in part on access to transmission systems owned by
others.
In March 1995 the FERC issued its Notice Of Proposed Rulemaking on Open
Access Transmission Services (NOPR). The NOPR would require open access to
transmission systems and utilities owning transmission facilities (including
Tampa Electric) to provide services to wholesale transmission customers
comparable to those they provide to themselves on comparable terms and
conditions, including price. Among other things the
NOPR would unbundle transmission services from power sales and require
owners of transmission systems to take service under their own transmission
tariffs.
In November 1995 the FERC accepted for filing Tampa Electric s open access
transmission tariffs, which conform to the pro forma tariffs contained in the
NOPR, subject to refund and the outcome of the final rule under the NOPR.
Retail Pricing
In general, the FPSC's pricing objective is to set rates at a level
that allows the utility to collect total revenues (revenue requirements)
equal to its cost of providing service, including a reasonable return on
invested capital.
The basic costs, other than fuel and purchased power, of providingelectric
service are recovered through base rates, which are designed to
recover the costs of owning, operating and maintaining the utility system.
These costs include operation and maintenance expenses, depreciation and
taxes, as well as a return on Tampa Electric's investment in assets used
and useful in providing electric service (rate base). The rate of return on
rate base, which is intended to approximate Tampa Electric's weighted cost
of capital, includes its costs for debt and preferred stock, deferred
income taxes at a zero cost rate and an allowed return on common equity.
Base prices are determined in FPSC price setting hearings that occur at
irregular intervals at the initiative of Tampa Electric, the FPSC or other
parties.
Fuel, Clean Air Act allowances, and certain purchased power costs are
recovered through levelized monthly charges established pursuant to the
FPSC's fuel adjustment and cost recovery clauses. These charges, which are
reset semi-annually in an FPSC hearing, are based on estimated costs of
fuel, Clean Air Act allowances and purchased power, and estimated customer
4<PAGE>
usage for a specific recovery period, with a true-up adjustment to reflect
the variance of actual costs from the projected charges for prior periods.
The FPSC may disallow recovery of any costs that it considers
imprudently incurred.
Fuel
About 99 percent of Tampa Electric's generation for 1995 was from its
coal-fired units. About the same level is anticipated for 1996.
Tampa Electric's average fuel cost per million BTU and average cost
per ton of coal burned have been as follows:
Average cost
per million BTU: 1995 1994 1993 1992 1991
Coal $ 2.15 $ 2.22 $ 2.26 $ 2.23 $ 2.22
Oil $ 2.76 $ 2.49 $ 2.69 $ 2.76 $ 3.21
Gas -- -- $ 3.52 $ 2.43 $ 1.98
Composite $ 2.16 $ 2.22 $ 2.27 $ 2.24 $ 2.25
Average cost per ton
of coal burned $50.97 $53.39 $54.55 $53.65 $53.87
Tampa Electric's generating stations burn fuels as follows: Gannon
Station burns low-sulfur coal; Big Bend Station burns coal of a somewhat
higher sulfur content; Hookers Point Station burns low-sulfur oil; Phillips
Station burns oil of a somewhat higher sulfur content; and Dinner Lake
Station, which was placed on long-term reserve standby in March 1994, burns
natural gas and oil.
Coal. Tampa Electric burned approximately 7.4 million tons of coal
during 1995 and estimates that its coal consumption will be 7.3 million
tons for 1996. During 1995, Tampa Electric purchased approximately 68
percent of its coal under long-term contracts with six suppliers, including
TECO Coal, and 32 percent of its coal in the spot market or under
intermediate-term purchase agreements. About 23 percent of Tampa Electric's
1995 coal requirements were supplied by TECO Coal. During December 1995,
the average delivered cost of coal (including transportation) was $47.99
per ton, or $2.01 per million BTU. Tampa Electric expects to obtain
approximately 51 percent of its coal requirements in 1996 under long-term
contracts with five suppliers, including TECO Coal, and the remaining 49
percent in the spot market. Tampa Electric's long-term coal contracts
provide for revisions in the base price to reflect changes in a wide range
of cost factors and for suspension or reduction of deliveries if
environmental regulations should prevent Tampa Electric from burning the
coal supplied, provided that a good faith effort has been made to continue
burning such coal. Tampa Electric estimates that about 19 percent of its
1996 coal requirements will be supplied by TECO Coal. For information
concerning transportation services and sales of coal by affiliated
companies to Tampa Electric, see TECO Coal on pages 8 and 9 and TECO
Transport on pages 9 and 10.
In 1995, about 81 percent of Tampa Electric's coal supply was
deep-mined, approximately 18 percent was surface-mined and 1 percent was a
processed oil by-product known as petroleum coke. Federal surface-mining
laws and regulations have not had any material adverse impact on Tampa
Electric's coal supply or results of its operations. Tampa Electric,
however, cannot predict the effect on the market price of coal of any
future mining laws and regulations. Although there are reserves of
surface-mineable coal dedicated by suppliers to Tampa Electric's account,
high-quality coal reserves in Kentucky that can be economically
surface-mined are being depleted and in the future more coal will be
deep-mined. This trend is not expected to result in any significant
additional costs to Tampa Electric.
Oil. Tampa Electric has supply agreements through Dec. 31, 1996 for
No. 2 fuel oil and No. 6 fuel oil for its four combustion turbine units,
Polk Station, Hookers Point Station and Phillips Station at prices based on
5<PAGE>
Gulf Coast Cargo spot prices. The price for No. 2 fuel oil deliveries taken
in December 1995 was $24.91 per barrel, or $4.29 per million BTU. The price
for No. 6 fuel oil deliveries taken in December 1995 was $17.53 per barrel,
or $2.77 per million BTU.
Franchises
Tampa Electric holds franchises and other rights that, together with
its charter powers, give it the right to carry on its retail business in
the localities it serves. The franchises are irrevocable and are not
subject to amendment without the consent of Tampa Electric, although, in
certain events, they are subject to forfeiture.
Florida municipalities are prohibited from granting any franchise for
a term exceeding 30 years. If a franchise is not renewed by a municipality,
the franchisee has the statutory right to require the municipality to
purchase any and all property used in connection with the franchise at a
valuation to be fixed by arbitration. In addition, all of the
municipalities except for the cities of Tampa and Winter Haven have
reserved the right to purchase Tampa Electric's property used in the
exercise of its franchise, if the franchise is not renewed.
Tampa Electric has franchise agreements with 13 incorporated
municipalities within its retail service area. These agreements have
various expiration dates ranging from December 2005 to September 2021,
including the agreement with the city of Tampa, which expires in August
2006. Tampa Electric has no reason to believe that any of these franchises
will not be renewed.
Franchise fees payable by Tampa Electric, which totaled $20.0 million
in 1995, are calculated using a formula based primarily on electric
revenues.
6<PAGE>
Utility operations in Hillsborough, Pasco, Pinellas and Polk Counties
outside of incorporated municipalities are conducted in each case under one
or more permits to use county rights-of-way granted by the county
commissioners of such counties. There is no law limiting the time for which
such permits may be granted by counties. There are no fixed expiration
dates for the Hillsborough County and Pinellas County agreements. The
agreements covering electric operations in Pasco and Polk counties expire
in September 2033 and March 2004, respectively.
Environmental Matters
Tampa Electric's operations are subject to county, state and federal
environmental regulations. The Hillsborough County Environmental Protection
Commission and the Florida Environmental Regulation Commission are
responsible for promulgating environmental regulations and coordinating
most of the environmental regulation functions performed by the various
departments of state government. The Florida Department of Environmental
Protection (FDEP) is responsible for the administration and enforcement of
the state regulations. The U.S. Environmental Protection Agency (EPA) is
the primary federal agency with environmental responsibility.
Tampa Electric has all required environmental permits. In addition,
monitoring programs are in place to assure compliance with permit
conditions. Tampa Electric has been identified as one of numerous
potentially responsible parties (PRP) with respect to seven Superfund
Sites. While the total costs of remediation at these sites may be
significant, Tampa Electric shares potential liability with other PRPs,
many of which have substantial assets. Tampa Electric expects that its
liability in connection with these sites will not be significant.
Expenditures. During the five years ended Dec. 31, 1995, Tampa
Electric spent $171.4 million on capital additions to meet environmental
requirements, including $117.7 million for the Polk Power Station project.
Environmental expenditures are estimated at $73 million for 1996, including
$66 million for the Polk Power Station, and $9 million in total for 1997-2000.
These totals exclude amounts required to comply with the 1990 amendments to
the Clean Air Act.
Tampa Electric is complying with the Phase I emission limitations imposed by
the Clean Air Act Amendments which became effective Jan. 1, 1995 by using
blends of lower-sulfur coal, controlling stack emissions and using purchased
emission allowances.
In 1995 Tampa Electric successfully integrated Big Bend Unit Three into
the existing scrubber on Big Bend Unit Four. This resulted in an additional
scrubbed unit at a fractionof the cost of a new scrubber. Also as part of its
Phase I compliance plan, Tampa Electric has a long-term contract for the
purchase of low-sulfur coal.
To comply with Phase II emission standards set for 2000 Tampa Electric
would potentially have to scrub additional capacity and is evaluating equipment
and technologies to accomplish compliance in the most cost-effective manner.
Absent capital expenditures for additional scrubbing, Tampa Electric expects to
spend $30 million of capital to comply with Phase II of the Clean Air Act
Amendments for nitrogen oxide reductions and emissions
monitoring equipment. The cost of compliance with Phase I and Phase II is
expected to havelittle impact on Tampa Electric's prices.
In addition to recovering prudently incurred environmental costs
through base rates, Tampa Electric can petition the FPSC for such
recoveries on a current basis pursuant to a statutory environmental cost
recovery procedure.
TECO DIVERSIFIED
TECO Diversified owns all of the common stock of TECO Coal, TECO
Coalbed Methane, TECO Properties and TECO Transport. TECO Diversified and
its subsidiaries had 1,482 employees as of Dec. 31, 1995. TECO Diversified
is a holding company that owns no operating assets.
TECO Coal
TECO Coal, a Kentucky corporation, owns no operating assets but holds
7<PAGE>
all of the common stock of Gatliff Coal Company (Gatliff), Rich Mountain
Coal Company (Rich Mountain), Clintwood Elkhorn Mining Company (Clintwood),
Pike-Letcher Land Company (Pike-Letcher) and Premier Elkhorn Coal Company
(Premier). TECO Coal's subsidiaries own and/or operate surface and
underground mines and coal processing and loading facilities in Kentucky
and Tennessee. In 1995, TECO Coal subsidiaries sold 5.3 million tons of coal,
with approximately 70 percent sold to third parties and 30 percent sold to Tampa
Electric. Rich Mountain has no reserves; it mines coal reserves owned by
Gatliff. About 68 percent of Gatliff's production and third-party purchases were
sold to Tampa Electric. This specialty coal has low-ash fusion temperature
and low-sulfur characteristics specifically suited for Tampa Electric's
Gannon Station units. The majority of production from Clintwood and Premier
is sold to third parties.
Tampa Electric is reducing its specialty coal purchases from Gatliffas a
result of its efforts to reduce costs and its successful fluxing of
conventional steam coal from other sources. TECO Coal's objective is to
more than offset the effects of this reduction by increasing the amount of
coal sold to third parties, principally from the reserves being developed
by Premier.
Primary competitors of TECO Coal's subsidiaries are other coal
suppliers, many of which are located in Central Appalachia.
The operations of underground mines, including all related surfacefacilities,
are subject to the Federal Coal Mine Safety and Health Act of
1977. TECO Coal's subsidiaries are also subject to various Kentucky and
Tennessee mining laws that require approval of roof control, ventilation,
dust control and other facets of the coal mining business. Federal and
state inspectors inspect the mines to ensure compliance with these laws.
TECO Coal's subsidiaries are in compliance with the standards of the
various enforcement agencies. TECO Coal is unaware of any mining laws or
regulations having a prospective effective date that would materially
affect the market price of coal sold by its subsidiaries.
TECO Coal's subsidiaries have not experienced difficulty in complying
with federal, state and local air and water pollution standards in their
mining operations. In 1995, approximately $1.1 million was spent on
environmental protection and reclamation programs. TECO Coal expects to
spend about $1.5 million in 1996 on these programs.
The coal mining operations are also subject to the Surface Mining
Control and Reclamation Act of 1977 which places a charge of $.15 and $.35
on every net ton mined of underground and surface coal, respectively, to
create a fund for reclaiming land and water adversely affected by past coal
mining. Other provisions establish standards for the control of
environmental effects and reclamation of surface coal mining and the
surface effects of underground coal mining, and requirements for federal
and state inspections.
8<PAGE>
TECO Coalbed Methane
TECO Coalbed Methane, an Alabama corporation, participates in the
production of natural gas from coalbeds located in Alabama's Black Warrior
Basin. TECO Coalbed Methane has invested $203 million as the principal
investor in three joint ventures that control, in the aggregate,
approximately 100,000 acres of lease holdings. In the fourth quarter of
1995, TECO Coalbed Methane acquired 5 billion cubic feet of proven reserves
in the Black Warrior Basin through its purchase of royalty interests in
existing holdings. At the end of 1995, TECO Coalbed Methane had interests
in 754 wells that were operational and producing gas for sale. These wells
are operated by Taurus Exploration, a unit of Energen Corporation, and, to
a much lesser extent, other third-party operators.
A non-conventional fuel tax credit is available on all production
through the year 2002. The tax credit, a major economic factor, escalates
with inflation and could be limited by domestic oil prices. In
1995, domestic oil prices would have had to exceed $46 per barrel for this
limitation to be effective.
TECO Coalbed Methane's operations are subject to federal, state and local
regulations for air, water and waste disposal. Its operations are in substantial
compliance with all applicable environmental laws and regulations.
TECO Properties
TECO Properties, a Florida corporation, has $42.7 million invested in
seven projects, solely or as a limited partner, and in undeveloped land in
the Tampa area. TECO Properties plans to continue a conservative investment
approach.
TECO Transport
TECO Transport, a Florida corporation, owns all of the common stock of
four subsidiaries that transport, store and transfer coal and other dry
bulk commodities. TECO Transport currently owns no operating assets.
All of TECO Transport's subsidiaries perform substantial services for
Tampa Electric. In 1995, approximately 50 percent of TECO Transport's
revenues were from third-party customers and 50 percent were from Tampa
Electric. The pricing for services performed by TECO Transport's operating
companies for Tampa Electric is based on a fixed price per ton, adjusted
quarterly for changes in certain fuel and price indices. Most of the
third-party utilization of the ocean-going barges is for domestic phosphate
movements and domestic and international movements of other dry bulk
commodities. Both the terminal and river transport operations handle a
variety of dry bulk commodities for third-party customers.
A substantial portion of TECO Transport's business is dependent upon
Tampa Electric, industrial phosphate customers, export coal and grain
customers, and participation in the U.S. cargo preference program.
Primary competitors of TECO Transport's barge subsidiaries, Gulfcoast
Transit Company (Gulfcoast), which transports products in the Gulf of
Mexico and worldwide, and Mid-South Towing Company (Mid-South), which
operates on the Mississippi and Ohio rivers, are other barge and shipping
lines and railroads. There are a number of companies offering
transportation services on the waterways served by TECO Transport's
subsidiaries. To date, physical and technological improvements have allowed
barge operators to maintain competitive rate structures with alternate
methods of transporting bulk commodities when the origin and destination of
such shipments are contiguous to navigable waterways.
Electro-Coal Transfer Corporation (Electro-Coal) operates a major
transfer and storage terminal on the Mississippi River south of New
Orleans. Demand for the use of such terminals is dependent upon customers'
use of water transportation versus alternate means of moving bulk
commodities and the demand for these commodities. Competition consists
primarily of mid-stream operators and another land-based terminal located
nearby.
9<PAGE>
The business of TECO Transport's subsidiaries, taken as a whole, is
not subject to significant seasonal fluctuation.
The Interstate Commerce Act, as amended in December 1973, exempts from
regulation water transportation of dry bulk commodities that were
transported in bulk as of June 1, 1939. In 1995, all water transportation
by TECO Transport's subsidiaries was within this exemption. TECO Transport's
subsidiaries are also subject to the provisions of
the Clean Water Act of 1977 that authorize the Coast Guard and the EPA to
assess penalties for oil and hazardous substance discharges. Under this
Act, these agencies are also empowered to assess clean-up costs for such
discharges. Compliance with this Act has had no material effect on TECO
Transport's capital expenditures, earnings or competitive position, and no
such effect is anticipated. In 1995, TECO Transport spent $.5 million for
environmental control. Environmental expenditures are estimated at $.8
million in 1996, primarily for work on solid waste disposal and storm water
drainage at the Electro-Coal facility in Louisiana and for fugitive dust
emissions at its coal unloading operations in Florida.
TECO POWER SERVICES
TECO Power Services, a Florida corporation, has subsidiaries that own
and operate independent power projects in Florida and in Guatemala. TECO
Power Services also seeks opportunities to develop other independent power
and cogeneration projects. TECO Power Services had 50 employees as of Dec.
31, 1995.
Hardee Power Partners Limited (Hardee Power), a Florida limited
partnership whose general and limited partners are wholly owned
subsidiaries of TECO Power Services, owns the Hardee Power Station, a
295-MW combined cycle electric generating facility located in Hardee
County, Florida, which began commercial operation on Jan. 1, 1993. Hardee
Power has 20-year power supply agreements, for all of the capacity and
energy of the Hardee Power Station, with Seminole Electric Cooperative
(Seminole Electric), a Florida electric cooperative that provides wholesale
power to 11 electric distribution cooperatives, and with Tampa Electric.
Under the Seminole Electric agreement, Hardee Power has agreed to supply
Seminole Electric with an additional 145 MWs of capacity during the first
10 years of the contract, which it is purchasing from Tampa Electric's
coal-fired Big Bend Unit Four for resale to Seminole Electric, and at the
option of Seminole Electric, to expand the Hardee Power Station's capacity
by 145 MWs for the second 10 years of the contract. Tampa Electric also has
the right under its agreement to require the expansion of the Hardee Power
Station, subordinate to Seminole Electric's expansion option.
The Hardee Power Station is fueled by natural gas or No. 2 fuel oil.
Hardee Power has contracted for the supply and transportation of natural
gas for the Hardee Power Station through Dec. 31, 2002 with an option to
extend the contract through Dec. 31, 2012. Substantially all of Hardee
Power Station's generation for 1995 was from natural gas.
10<PAGE>
Hardee Power's average fuel cost per million BTU has been as follows:
Average cost
per million BTU: 1995 1994 1993
Oil $ 4.64 $ 3.68 $ 4.86
Gas $ 2.70 $ 2.02 $ 2.51
Composite $ 2.71 $ 2.40 $ 2.74
The price for natural gas deliveries taken in December 1995 was $3.91
per thousand cubic feet, or $3.73 per million BTU. The price for fuel oil
deliveries taken in August 1995 was $24.20 per barrel, or $4.15 per million
BTU. There were no fuel oil deliveries taken in the fourth quarter of 1995.
Through its ownership and operation of a wholesale generating facility
in the U.S., TECO Power Services is subject to regulation by the FERC in
various respects. Depending upon the nature of the project, FERC may
regulate, among other things, the rates, terms and conditions for the sale
of electric capacity and energy.
Like Tampa Electric, the U.S. operations of TECO Power Services are
subject to federal, state and local environmental laws and regulations
covering air quality, water quality, land use, power plant, substation and
transmission line siting, noise and aesthetics, solid waste and other
environmental matters.
Tampa Centro Americana de Electricidad, Ltd. (TCAE), an entity
substantially owned by TPS Guatemala One, Inc. (TPS Guatemala One), a
subsidiary of TECO Power Services, has a U.S. dollar-denominated power
sales agreement with an electric utility in Guatemala to provide 78 MWs of
capacity for 15 years beginning in 1995. The project consists of two combustion
turbines with a total cost of approximately $50 million. At Dec. 31, 1995, TPS
Guatemala One owned an 87.5-percent interest in the project, and a
prominent Guatemalan business group owned the remaining 12.5-percent
interest. In March 1996, TPS Guatemala One acquired an additional interest
in TCAE from the Guatemalan business group, bringing its total interest in
TCAE to 98.2 percent. TECO Power Services has obtained insurance from the
Overseas Private Investment Corporation (OPIC), an agency of the U.S.
government, for political risk, currency inconvertibility, expropriation
and political violence covering up to 90 percent of its equity investment
and economic returns.
TECO Power Services expects to obtain non-recourse project financing
from OPIC for 60 percent of the project s cost by mid-year 1996.
TCAE began commercial operation on Sept. 14, 1995. The power sales
agreement that TCAE signed with the power purchaser, Empresa Electrica de
Guatemala, S.A. (EEGSA), on Jan. 24, 1995 is primarily comprised of a
capacity charge, and operations and maintenance expense components. The
capacity charge is subject to adjustment due to output, heat rate and
availability. The monthly available capacity is paid for each month in four
equal installments. EEGSA, a private distribution and generation company formed
in 1894, serves more than 400,000 customers. Approximately 92 percent of this
company is owned by the Guatemalan central government through the Ministry
of Finance, with the remaining 8 percent owned by private Guatemalan
investors. EEGSA s service territory includes Guatemala City. EEGSA is
responsible for providing the fuel for the plant with TECO Power Services
providing assistance in fuel administration.
11<PAGE>
TECO INVESTMENTS
TECO Investments' assets consist of short- and long-term financial
investments. The portfolio includes a continuing investment in leveraged
leases of $65 million. At Dec. 31, 1995, the net leveraged lease investment
had essentially a zero balance.
TECO FINANCE
TECO Finance raises short- and long-term debt capital primarily for
the diversified activities of TECO Energy. It has its own credit ratings,
based on a guarantee by TECO Energy. TECO Finance owns no operating assets.
TECO GAS & OIL
TECO Gas & Oil, a Florida corporation formed in 1995, has entered into
joint ventures with several partners to explore for conventional gas and
oil in the shallow gulf waters off Texas and Louisiana. The joint ventures
have successfully bid for a number of offshore lease blocks at federal
auctions and have negotiated drilling rights on other blocks. The first two
exploratory wells were successfully completed in 1995, with production
facilities to be operational in the second quarter of 1996. The company
expects to invest $25 to $30 million per year for the next few years for
exploration and production.
TeCom
TeCom, formerly TECO Energy Management Services, is a Florida
corporation formed in 1994. TeCom is pilot testing an advanced energy
management and communications system for residential and commercial use and
has under development a system for industrial application. Development and
testing will continue in 1996 with pilot testing at other utilities
expected. The 1996 operating expenses and capital investment for these
pilot programs are not expected to be significant.
Item 2. PROPERTIES.
TECO Energy believes that the physical properties of its operating
companies are adequate to carry on their businesses as currently conducted.
The properties of Tampa Electric and the subsidiaries of TECO Power
Services are generally subject to liens securing long-term debt.
TAMPA ELECTRIC
At Dec. 31, 1995, Tampa Electric had four electric generating plants
and four combustion turbine units in service with a total net winter
generating capability of 3,404 MWs, including Big Bend (1,748-MW capability
from four coal units), Gannon (1,206-MW capability from six coal units),
Hookers Point (212-MW capability from five oil units), Phillips (34-MW
capability from two diesel units) and four combustion turbine units located
at the Big Bend and Gannon stations (204 MWs). Capability as used herein
represents the demonstrable dependable load carrying abilities of the
generating units during winter peak periods as proven under actual
operating conditions. Units at Hookers Point went into service from 1948 to
1955, at Gannon from 1957 to 1967, and at Big Bend from 1970 to 1985. In
1991, Tampa Electric purchased two power plants (Dinner Lake and Phillips)
from the Sebring Utilities Commission (Sebring). Dinner Lake (11-MW
capability from one natural gas unit) and Phillips were placed in service
by Sebring in 1966 and 1983, respectively. In March 1994, Dinner Lake
Station was placed on long-term reserve standby.
Tampa Electric owns approximately 4,350 acres of land in Polk County,
Florida. This site accommodates Polk Unit One, a 250-MW coal gasification
generating plant currently being constructed, and can accommodate
additional generating capacity in the future. Polk Unit One is discussed
12<PAGE>
further under Capital Expenditures on pages 26 and 27.
Tampa Electric owns 178 substations having an aggregate transformer
capacity of 15,777,966 KVA. The transmission system consists of
approximately 1,197 pole miles of high voltage transmission lines, and the
distribution system consists of 6,822 pole miles of overhead lines and
2,444 trench miles of underground lines. As of Dec. 31, 1995, there were
501,909 meters in service. All of the foregoing property is located within
Florida.
All plants and important fixed assets are held in fee except that
title to some of the properties are subject to easements, leases,
contracts, covenants and similar encumbrances and minor defects, of a
nature common to properties of the size and character of those of Tampa
Electric.
Tampa Electric has easements for rights-of-way adequate for the
maintenance and operation of its electrical transmission and distribution
lines that are not constructed upon public highways, roads and streets. It
has the power of eminent domain under Florida law for the acquisition of
any such rights-of-way for the operation of transmission and distribution
lines. Transmission and distribution lines located in public ways are
maintained under franchises or permits.
Tampa Electric has a long-term lease for the office building in
downtown Tampa, Florida, that serves as headquarters for TECO Energy, Tampa
Electric and certain other TECO Energy subsidiaries.
TECO COAL
TECO Coal's subsidiary, Gatliff, has 65,000 acres of coal reserves and
mining property in Knox and Whitley Counties, Kentucky and Campbell County,
Tennessee. Gatliff owns 9,300 acres in fee and leases 59,700 acres under
long-term leases. These properties contain estimated proven and probable
coal reserves of 45 million tons. This coal, which combines low-sulfur and
low-ash fusion temperature characteristics, is found in both deep and
surface mines. Gatliff owns and operates a rapid-loading rail tipple and a
coal preparation plant near its deep mines.
Clintwood has 5,000 acres of coal reserves held under long-term leases
in Pike County, Kentucky. These properties contain estimated proven and
probable reserves of 6 million tons. Clintwood owns and operates a rail
tipple and a coal preparation plant near the mines.
Rich Mountain operates a surface mine for Gatliff in Campbell County,
Tennessee, and does not own any coal reserves. Pike-Letcher controls 43,000
acres in Pike and Letcher Counties,
Kentucky. These properties contain estimated proven and probable reserves
in excess of 112 million tons.
Premier owns and operates a preparation plant and unit-train loadout
facility in Pike County, Kentucky and conducts surface and deep mining
operations of reserves, which are leased from Pike-Letcher. Premier does
not own any coal reserves.
TECO COALBED METHANE
TECO Coalbed Methane's interest in proven gas reserves at Dec. 31,
1995 was independently estimated to be 184 billion cubic feet for 556
wells. Its interests in proven and probable recoverable gas reserves are
estimated by TECO Coalbed Methane at 190 billion cubic feet for a total of
754 wells.
TECO Coalbed Methane's share of production for 1995 was 20.3 billion
cubic feet.
TECO TRANSPORT
Electro-Coal's storage and transfer terminal is on a 1,070-acre site
fronting on the Mississippi River approximately 40 miles south of New
Orleans. Electro-Coal owns 342 of these acres in fee, with the remainder
held under long-term leases.
13<PAGE>
Mid-South owns and operates a fleet of 14 towboats and 535 river
barges, nearly all of which it owns, on the Mississippi and Ohio rivers.
Mid-South owns 15 acres of land fronting on the Ohio River at Metropolis,
Illinois on which its operating offices, warehouse and repair facilities
are located. Fleeting and repair services for its barges and those of other
barge lines are performed at this location and on the upper Mississippi
River near the mouth of the Kaskaskia River.
Gulfcoast owns and operates a fleet of 12 ocean-going tug/barge units,
with a combined cargo capacity of over 329,000 tons.
TECO POWER SERVICES
Hardee Power has a 22-year lease for approximately 1,300 acres of land
in Hardee and Polk Counties, Florida on which the Hardee Power Station is
located. In addition, a TECO Power Services' subsidiary has a significant
interest in a project entity, TCAE, which owns 7 acres in Guatemala on
which a 78-MW generating facility is located.
TECO GAS & OIL
At Dec. 31, 1995 aggregate capitalized costs associated with 12 leases
acquired at two federal auctions were not significant. Reserves associated
with the first two successful wells have yet to be evaluated.
Item 3. LEGAL PROCEEDINGS.
None.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matter was submitted during the fourth quarter of 1995 to a vote of
TECO Energy's security holders, through the solicitation of proxies or
otherwise.
14<PAGE>
EXECUTIVE OFFICERS OF THE REGISTRANT
Information concerning the current executive officers of TECO Energy is as
follows:
Current Positions and Principal
Name Age Occupations During Last Five Years
Timothy L. Guzzle 59 Chairman of the Board and Chief
Executive Officer, July 1994 to date;
and prior thereto, Chairman of the
Board, President and Chief Executive
Officer.
Girard F. Anderson 64 President and Chief Operating Officer,
July 1994 to date; and prior thereto,
Executive Vice President-Utility
Operations and President and Chief
Operating Officer of Tampa Electric
Company.
Keith S. Surgenor 48 President and Chief Operating Officer
of Tampa Electric Company, July 1995 to
date; Vice President-Human Resources,
and President and Chief Operating
Officer of Tampa Electric Company, July
1994 to July 1995; and prior thereto,
Vice President-Human Resources.
Roger H. Kessel 59 Senior Vice President-General Counsel
and Secretary, April 1995 to date; Vice
President-General Counsel and
Secretary, 1992 to April 1995; and
prior thereto, Vice President-General
Counsel.
Alan D. Oak 49 Senior Vice President-Finance and Chief
Financial Officer, April 1995 to date;
and prior thereto, Senior Vice
President-Finance, Treasurer and Chief
Financial Officer.
Roger A. Dunn 53 Vice President-Human Resources, July
1995 to date; and prior thereto, Senior
Vice President-Human Resources and
Corporate Affairs of LTV Corporation
(steel manufacturer), Cleveland, Ohio.
__________________________
There is no family relationship between any of the persons named
above. The term of office of each officer extends to the meeting of the
Board of Directors following the next annual meeting of shareholders,
scheduled to be held on April 17, 1996, and until his successor is elected
and qualified.
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
The following table shows the composite high, low and closing sale
15<PAGE>
prices for shares of TECO Energy common stock, which is listed on the New
York Stock Exchange, and dividends paid per share, per quarter.
1st 2nd 3rd 4th
1995
High $22 1/8 $22 3/4 $23 1/2 $25 3/4
Low $20 $20 1/2 $21 1/4 $23 1/8
Close $21 $22 $23 1/2 $25 5/8
Dividend $.2525 $.265 $.265 $.265
1994
High $22 5/8 $20 7/8 $21 $21
Low $19 1/8 $18 1/4 $18 1/8 $18 1/2
Close $19 1/2 $19 1/8 $19 1/4 $20 1/4
Dividend $.24 $.2525 $.2525 $.2525
___________________
The approximate number of shareholders of record of common stock of
TECO Energy as of Feb. 29, 1996 was 31,251.
TECO Energy's primary source of funds is dividends from its operating
companies. Tampa Electric's Restated Articles of Incorporation and certain
of the supplemental indentures relating to different series of its First
Mortgage Bonds contain restrictions as to the payment of dividends on the
common stock of Tampa Electric and as to the purchase or retirement of
capital stock of Tampa Electric. Substantially all of Tampa Electric's
retained earnings were available for dividends throughout 1995.
16<PAGE>
Item 6. SELECTED FINANCIAL DATA.
Year ended Dec. 31, 1995 1994 1993 1992 1991
Revenues(1) $1,392.3 $1,350.9 $1,283.9 $1,183.2 $1,154.1
Income before cumulative effect
of change in
accounting
principle(1) 186.1 153.2(4) 150.3 149.0 145.3
Cumulative effect
of change in
accounting
principle(1) -- -- 11.2 -- --
Net income(1) $ 186.1 $ 153.2(4) $ 161.5 $ 149.0 $ 145.3
Earnings per average
share outstanding:
Before cumulative
effect of change
in accounting
principle (2) 1.60 1.32(4) 1.30 1.30 1.28
Cumulative effect
of change in
accounting
principle(2) -- -- .10 -- --
Earnings per average
common share
outstanding(2) $ 1.60 $ 1.32(4) $ 1.40 $ 1.30 $ 1.28
Common dividends
paid per share(2) $ 1.0475 $ .9975 $ .9475 $ .8975 $ .8475
Total assets (1)(3) $3,473.4 $3,312.2 $3,123.3 $3,020.6 $2,833.6
Long-term debt(1)(3) $ 994.9 $1,023.9 $1,038.8 $1,044.9 $ 907.9
_________________
(1) Millions of dollars.
(2) Restated to reflect a two-for-one stock split on Aug. 30, 1993.
(3) The total asset and long-term debt balances for 1993 and 1992 have
been restated to reflect current year presentation.
(4) Includes the effect of a corporate restructuring charge which reduced
net income by $15 million and earnings per share by $.13. See Note H
on page 50.
17<PAGE>
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
EARNINGS SUMMARY
TECO Energy achieved earnings of $1.60 per share in 1995 compared to
reported earnings of $1.32 in 1994. These 1995 results were achieved after
the deferral of $50.8 million of revenues at Tampa Electric under a plan
described in the Utility Regulation section. 1994 earnings were $1.45
before a 13-cent charge for corporate restructuring.
Earnings growth in 1995 was driven by strong performance at the
diversified companies as well as continued growth in energy sales and
reduced operating expenses at Tampa Electric. Earnings grew in 1994 on the
strength of increased retail energy sales at Tampa Electric and increased
third-party business at TECO Coal.
The restructuring charge reduced 1994 reported earnings per share by
13 cents. The restructuring program included a 10-percent reduction in
staffing levels and other cost reductions, primarily at Tampa Electric.
Approximately 70 percent of the charge represented costs associated with
retirement benefits.
Earnings per share 1995 Change 1994 Change 1993
Reported earnings
per share $ 1.60 21.2% $ 1.32 -5.7% $ 1.40
Restructuring charge - - .13 - -
Earnings per share before
restructuring charge $ 1.60 10.3% $ 1.45 3.6% $ 1.40
Net income after
restructuring charge
(millions) $186.1 21.5% $153.2 -5.1% $161.5
Net income before
restructuring charge
(millions) $186.1 10.4% $168.6 4.4% $161.5
Average common
shares outstanding
(millions) 116.5 .5% 115.9 .5% 115.3
Return on average
common equity 15.5% 14.8%(1) 15.0%
(1) Excludes the effect of a corporate restructuring charge
OPERATING RESULTS
TECO Energy's Operating Results
The strong performance of the diversified companies, particularly TECO
Transport & Trade, and continued growth at Tampa Electric led to higher
consolidated operating income in 1995. The improved results were achieved
even after the deferral of $50.8 million of revenues at Tampa Electric
under a plan described in the Utility Regulation section. Growth in 1994's
consolidated operating income resulted from Tampa Electric s 5-percent
increase in operating income before the restructuring charge, and from
increased third-party business at TECO Coal.
18<PAGE>
The following table identifies the unconsolidated revenues and
operating income of the significant operating groups.
Contributions by operating group (unconsolidated)
Revenues 1995 Change 1994 Change 1993
(millions)
Tampa Electric $1,092.3(1) -.2% $1,094.9 5.1% $1,041.3
Diversified
companies $ 505.7 7.4% $ 470.9 -.7% $ 474.4
Operating income before
1994 restructuring charge
Tampa Electric $229.5 1.6% $225.8 5.2% $214.6
Diversified
companies(2) $ 96.6 35.9% $ 71.1 -6.3% $ 75.9
(1) 1995 Tampa Electric revenues were net of $50.8 million of revenues
deferred under a plan as described in the Utility Regulation section.
(2) 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 on the non-recourse debt related to the independent power
operations. 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 Results
Tampa Electric's operating income increased almost 2 percent even
after the deferral of $50.8 million of revenues. Two-percent customer
growth and favorable weather increased retail energy sales 5 percent. In
addition, non-fuel operations and maintenance expenses were 5 percent below
last year s levels as Tampa Electric benefited from the 1994 restructuring
efforts.
Tampa Electric's 1994 operating income, before the $21.3-million
pretax restructuring charge, increased 5 percent over 1993. Higher base
revenues from retail customer growth, increased retail energy usage from an
improved economy and a retail price increase effective in January 1994 were
partially offset by higher operating expenses.
1995 Change 1994 Change 1993
(millions)
Revenues $1,092.3(1) -.2% $1,094.9 5.1% $1,041.3
Operating expenses 862.8 -.7% 869.1 5.1% 826.7
Operating income before
1994 restructuring
charge 229.5 1.6% 225.8 5.2% 214.6
Restructuring charge - - 21.3 - -
Operating income $ 229.5 12.2% $ 204.5 -4.7% $ 214.6
(1) 1995 Tampa Electric revenues were net of $50.8 million of revenues
deferred under a plan as described in the Utility Regulation section.
Tampa Electric's Operating Revenues
Tampa Electric s 1995 revenues decreased slightly to $1,092.3 million
reflecting the deferral of $50.8 million of revenues. Tampa Electric's
revenues rose in 1994 with retail customer growth of almost 2 percent,
19<PAGE>
increased retail energy sales of almost 4 percent and a $16-million retail
price increase effective in January 1994.
The economy in Tampa Electric's service area continued to strengthen
in 1995. The combined residential and commercial energy sales grew by more
than 5 percent in 1995. Sales to the phosphate industry grew by almost 11
percent in 1995 as these companies continued to experience strong prices
and demand for their product. Non-phosphate industrial sales declined in
1995 due to the closure of a steel-making facility in the service area.
Total retail energy sales are projected to increase almost 2 percent
annually over the next five years based on continued growth in the local
economy. Annual energy sales growth in the residential and commercial
sectors is projected at 2 percent to 3 percent for the next five years.
Growth in energy sales to non-phosphate industrial customers is projected
to be less after a possible decline in 1996.
In 1996 the Tampa Electric service area economy is expected to grow
moderately, but at rates higher than the country as a whole. The local
economy continues to benefit from a good labor market, available land and
good access through airport and port facilities.
Energy sales to the phosphate industry are expected to decline from
increased self-generation and as mining activity slowly moves out of Tampa
Electric's service area. In 1995 sales to the phosphate customer group
represented less than 6 percent of total operating revenues.
Non-fuel revenues from sales to other utilities in 1995 were $34
million, $33 million in 1994 and $34 million in 1993. Energy sold to other
utilities increased in 1995 due to generating unit availability and lower
fuel cost.
In 1994 energy sold to other utilities declined because of lower-
priced oil and gas-fired generation available on other systems. A shift to
higher-margin, longer-term wholesale power sales agreements resulted in
only a 3-percent decline in 1994 non-fuel revenues despite the 10-percent
decline in energy sales to other utilities. Securing additional longer-
term wholesale power sales agreements
remains a priority. In the past three years, Tampa Electric has added nine
bulk power sales contracts of varying size and duration. Competitive
pricing of coal-fired generation has allowed Tampa Electric to market
available capacity successfully.
Energy Sales:
Megawatt-hour sales 1995 Change 1994 Change 1993
(thousands)
Residential 6,352 6.8% 5,947 4.2% 5,706
Commercial 4,710 2.8% 4,583 3.4% 4,432
Industrial 2,362 3.7% 2,278 1.9% 2,236
Other 1,176 4.6% 1,124 4.7% 1,073
Total retail 14,600 4.8% 13,932 3.6% 13,447
Sales for resale 2,706 28.7% 2,102 -9.8% 2,330
Total energy sold 17,306 7.9% 16,034 1.6% 15,777
Retail customers 495,198 2.0% 485,698 1.8% 477,010
(average)
20<PAGE>
Tampa Electric's Operating Expenses
Effective cost management and improved efficiency continue to be
principal objectives at Tampa Electric. Operating expenses declined in 1995
from the restructuring actions taken in 1994 and continuing efforts to
control costs in all areas of the company.
Operating Expenses:
1995 Change 1994 Change 1993
(millions)
Other operating expenses $163.3 -4.8% $171.6 8.8% $157.7
Maintenance 69.6 -4.5% 72.9 2.1% 71.4
Depreciation 113.3 -1.6% 115.1 2.9% 111.9
Taxes, other than income 87.9 1.3% 86.8 3.9% 83.5
Operating expenses 434.1 -2.8% 446.4 5.2% 424.5
Restructuring charge - - 21.3 - -
Fuel 384.3 -1.3% 389.3 7.2% 363.2
Purchased power 44.4 32.9% 33.4 -14.4% 39.0
Total fuel cost 428.7 1.4% 422.7 5.1% 402.2
Total operating expenses $862.8 -3.1% $890.4 7.7% $826.7
In 1995 non-fuel operations and maintenance expenses declined almost 5
percent from 1994 levels before the restructuring charge. The $11.6-million
reduction was primarily from lower payroll and employee-related expenses as
a result of 217 fewer positions than in 1994.
In both 1994 and 1995 Tampa Electric achieved savings from work
redesign efforts and equipment redesign and enhancements. In 1995 operating
areas of the company achieved lower costs through technology improvements,
the streamlining of maintenance programs, and the sharing of manpower
resources in power generation facilities.
The savings realized from these efforts will partially offset
increased operations and maintenance expenses expected in 1996 from Polk
Unit One. During the first two years of operations, when domestic coals
will be evaluated for use in the gasifier, Tampa Electric will receive $20
million from the U. S. Department of Energy for operations, maintenance and
fuel expenses.
Total operating expenses in 1994 included the restructuring charge
discussed in the Earnings Summary section, a $4-million annual charge to
establish a transmission and distribution property storm-damage reserve in
accordance with regulatory directives described in the Utility Regulation
section, and the effects of accounting for fuel expense in accordance with
Florida Public Service Commission (FPSC) requirements. Absent these three
items, total operating expense increased only 4 percent over 1993
principally as a result of higher employee-related expenses, higher
accruals for self-insurance liability reserves and increased expenses for
regulatory activity. Depreciation expense in 1995 decreased as certain shorter-
lived assets were fully amortized. The decrease more than offset the impact of
normal additions to plant and equipment. The company s efforts to reduce capital
investment in recent years have limited additions to all asset classes,
particularly shorter-life asset classes. The increased depreciation expense
in 1994 from normal additions to plant and equipment was minimized by these
cost-control efforts. Depreciation expense is projected to increase in 1996
as a result of the start of commercial operation of Polk Unit One.
Taxes other than those on income increased each year primarily from
higher gross receipts taxes and franchise fees.
Actual system fuel cost was only 4 percent higher than in 1994 despite
an 8-percent increase in generation. The success in controlling fuel cost
is a result of Tampa Electric's use of lower-priced coals and the mix in
operating generating units. Average coal cost, on a cents-per-million BTU
basis, declined 3 percent in 1995 after a 2-percent drop in 1994.
Fuel and purchased power cost rose only 1 percent in 1995 despite a 9-
21<PAGE>
percent increase in coal burned to meet increased generation. This cost
increase was partially offset by the normal effects of accounting for
deferred fuel expense consistent with the FPSC-approved fuel adjustment
clause. Fuel and purchased power cost was 5 percent higher in 1994 than in
1993 primarily from the normal effects of accounting for deferred fuel
expense consistent with the fuel adjustment clause.
In 1995 Tampa Electric purchased more power from both TECO Power
Services Hardee Power Station and cogenerators than in 1994, primarily to
meet weather-related demand. In 1994 Tampa Electric purchased less energy
from other utilities than in 1993 because of the combination of mild
weather and higher levels of availability of its own generating units.
Substantially all fuel and purchased power expenses were recovered through
the fuel adjustment clause.
Nearly all of Tampa Electric's generation in the last three years has
been from coal, and the fuel mix will continue to be substantially coal.
Coal prices are expected to remain relatively unchanged during the next few
years compared to oil or gas prices. The company continues to work to
reduce its fuel cost.
Coal Contract Buyout:
In December 1994, Tampa Electric bought out a long-term coal supply
contract which would have expired in 2004 for a payment of $25.5 million
and entered into two new contracts with the supplier. The coal supplied
under the new contracts is competitive in price with coals of comparable
quality.
As a result of this buyout Tampa Electric customers will benefit from
anticipated savings of more than $40 million, net of the buyout costs,
through the year 2004. The FPSC has authorized the recovery of the buyout
costs plus carrying costs through the fuel adjustment clause during the
years 1995 through 2004.
Diversified Companies' Operating Results
The diversified companies achieved operating income of $96.6 million
in 1995 compared with $71.1 million in 1994 before the restructuring charge
and $75.9 million in 1993.
The increase in 1995 was the result of strong performances at all of
the diversified companies, led by TECO Transport & Trade. Increased third-
party sales at TECO Coal and TECO Power Services Guatemalan power project
also contributed to the improved results.
The decrease in 1994 operating income from the diversified companies
reflected the effects of a difficult year for TECO Transport & Trade in the
ocean shipping business. TECO Coalbed Methane's operating income was lower,
despite a 16-percent increase in production, because of lower gas prices in
the second half of 1994. These results were only partially offset by
improvements in other diversified businesses.
22<PAGE>
Diversified Companies Results (unconsolidated)
1995 Change 1994 Change 1993
(millions)
Revenues $505.7 7.4% $470.9 -.7% $474.4
Operating expenses 409.1 2.3% 399.8 .3% 398.5
Operating income before
1994 restructuring
charge (1) 96.6 35.9% 71.1 -6.3% 75.9
Restructuring charge - - 2.5 - -
Operating income (1) $ 96.6 40.8% $ 68.6 -9.6% $ 75.9
(1) 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
on 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.
TECO Transport & Trade achieved significantly higher operating income
in 1995 through improved results in all of its businesses. The river
business in particular had an excellent year as a result of higher volumes
and prices. Improved fleet utilization and increased levels of northbound
shipments contributed to increased volumes. A strong demand for northbound
movements and a record 1994 grain harvest together with a better balance in
the supply and demand for barges caused stronger prices throughout the
industry. The transfer facility at the mouth of the Mississippi River
handled more coal tonnage for both Tampa Electric and third-party export
business. The ocean shipping business benefited from increased shipments of
phosphate and higher shipments of coal to Tampa Electric. Lower operating
expenses at all the transportation companies also contributed to the
improved results.
The conditions affecting favorable pricing and strong demand in 1995
are expected to continue in 1996.
TECO Transport & Trade reported lower operating income in 1994 from
reduced overseas grain business, adverse weather early in the year and
lower Tampa Electric volumes which more than offset improved utilization of
the river fleet. TECO Transport's overseas grain business was adversely
impacted by the U. S. Maritime Administration s suspension which was lifted
in April 1994, reduced U. S. bulk cargo preference program tonnage, lower
grain charter prices and a late start to 1994 movements caused by high
grain prices. In addition the loss of an ocean barge in a winter storm off
the coast of Louisiana had an adverse impact on fleet utilization in 1994.
TECO Coal s operating income grew in 1995 as a result of increased
third-party tonnage and a $5.2-million pretax gain from the sale of land
and mineral rights under a condemnation settlement with the state of
Kentucky. The combination of mild winter weather and excess capacity in
domestic steam coal production resulted in soft demand and prices in 1995.
Total 1995 tonnage increased more than 8 percent to 5.3 million tons,
up from 4.9 million tons in 1994 and 4.6 million tons in 1993. This growth
came from sales to third parties which more than offset reduced tonnage to
Tampa Electric. The company completed a high-speed unit-train loading
facility and a state-of-the-art coal washing and preparation plant in late
1994 at the Premier Elkhorn mines, which supported increased third-party
sales.
TECO Coal expects sales to third parties to increase again in 1996 as
eastern utilities meet increasing demand with existing coal-fired
generating capacity and use low-sulfur coal to comply with the Clean Air
Act. In 1996 TECO Coal expects to sell 85 percent of the production from
the Premier mines under existing multi-year contracts.
The increased third-party sales in 1995 more than offset a decline in
the tonnage sold to Tampa Electric. Sales to Tampa Electric decreased in
1995 and are expected to decrease again in 1996. Tampa Electric is reducing
23<PAGE>
its purchases of Gatliff s low-sulfur, low-ash-fusion-temperature coal as a
result of its success in burning more conventional lower-cost steam coals.
TECO Coal s objective is to more than offset the effects of this reduction
by increasing the amount of coal sold to third parties, principally from
the reserves being developed by Premier.
TECO Coalbed Methane's operating income increased as production rose
to 20.3 billion cubic feet (Bcf) in 1995, up from 19.5 Bcf in 1994 and 16.8
Bcf in 1993. Although gas prices strengthened in the fourth quarter,
average gas prices in 1995 were significantly lower than in 1994. 1995's
lower gas prices were more than offset by a 5-percent increase in
production, a 10-percent reduction in operating costs, and a $4.4-million
pretax settlement related to the termination of a gas sales contract and
related agreements. In connection with this settlement, TECO Coalbed
Methane entered into replacement contracts providing for the sale of all
gas produced at spot prices, similar to the original contract, for the life
of the reserves.
In 1994 gas prices declined significantly in the second half of the
year, more than offsetting the impact of 16-percent higher production.
In both 1994 and 1995 TECO Coalbed Methane acquired additional
reserves in Alabama s Black Warrior Basin through the purchase of royalty
interests in wells located on or near TECO Coalbed Methane's existing
holdings.
Production from all reserves is eligible for the alternative energy
tax credits under Section 29 of the Internal Revenue Code through the year
2002.
Assuming normal operating conditions, production is expected to remain
stable in 1996 and then decline gradually in 1997 and beyond.
TECO Power Services operating income increased in 1995 from the
commercial operation of the Alborada Power Station in Guatemala beginning
in September. The power station consists of two combustion turbines
supplying a combined 78 megawatts of power to a local distribution utility
under a 15-year power sales agreement. At Dec. 31, 1995, TECO Power
Services, through a wholly owned subsidiary, owned an 87.5-percent interest
in the project, and a Guatemalan business group owned the remaining
interest. In March 1996, the TECO Power Services subsidiary acquired an
additional interest in the project from the Guatemalan business group, bringing
its total interest to 98.2 percent. TECO Power Services expects to secure
project debt financing from the Overseas Private Investment Corporation (OPIC),
an agency of the U.S. Government, for 60 percent of the project cost by mid-year
1996.
In 1994 operating income for TECO Power Services remained stable
relative to 1993, the year TECO Power Services made its initial
contribution to operating income from its Hardee Power Station.
Diversified Companies' Operating Revenues
Diversified revenues increased significantly in 1995 from better
operating results at all companies. TECO Coal recorded $5.8 million before
expenses from the sale of land and mineral rights under a condemnation
settlement with the state of Kentucky and TECO Coalbed Methane recorded
$4.4 million from the termination of a gas sales contract.
The diversified companies revenues decreased slightly in 1994 as
growth in coal revenues was more than offset by decreased revenues from the
water transportation business.
Diversified Companies' Operating Expenses
Diversified operating expenses increased 2 percent in 1995. TECO Power
Services incurred higher expenses from increased power generation at the
Hardee plant and the new Guatemalan plant. These increases were partially
offset by lower operating expenses at other diversified companies.
In 1994 diversified companies operating expenses increased slightly
in line with higher production of coal and natural gas. The diversified
companies recorded a charge of $2.5 million for corporate restructuring in
1994 related to reductions in staffing levels and other costs.
24<PAGE>
New Businesses
TECO Energy has expanded its natural gas production business through
a new subsidiary, TECO Gas & Oil, Inc., which is participating in joint
ventures in exploration and development of conventional gas and oil in the
shallow gulf waters off Texas and Louisiana. The joint ventures have
successfully bid for several offshore leases at federal auctions and have
negotiated drilling rights on other parcels. The first two exploratory
wells were successfully completed in 1995 with production facilities
planned to be operational in the first half of 1996. The joint ventures are
making extensive use of 3-D seismic data to increase the probability of
successful exploration efforts. The company expects to invest $25 million
to $30 million per year for the next few years for exploration and
production.
In 1995 TECO Energy organized a new subsidiary, TeCom Inc., formerly
named TECO Energy Management Services Corporation, which is pilot testing
an advanced energy management and communications system for residential and
commercial use, and has under development a system for industrial
application. Development and testing will continue in 1996 with pilot
testing at other utilities expected. The 1996 operating expenses and
capital investment for these pilot programs are not expected to be
significant.
NON-OPERATING ITEMSOther Income (Expense)
Other income in 1995 consisted mostly of allowance for funds used
during construction (AFUDC) which increased to $13.7 million from $3.5
million in 1994 and $1.6 million in 1993. AFUDC will increase again in 1996
with the additional investment in the construction of Tampa Electric's Polk
Unit One and is expected to decline to minimal amounts for several years
after the completion of this unit, scheduled for the fourth quarter of
1996. In addition, investment earnings were lower in 1995 primarily because
of lower invested balances.
Other income (expense) in 1993 included a one-time $10-million pretax
charge at Tampa Electric associated with an FPSC-approved settlement
agreement between Tampa Electric and the Office of Public Counsel as
described in the Utility Regulation section. Excluding this $10-million
charge, other income was $2.9 million in 1993.
Interest Charges
Interest charges were $83.2 million in 1995, up 8 percent from 1994
due to higher short-term debt balances and rates. In 1995 interest expense
included $1.5 million of interest accrued on Tampa Electric s $50.8 million
of deferred revenues. Savings from long-term debt refinancings accomplished
in 1993 substantially offset the impact of rising short-term interest rates
in 1994.
Income Taxes
1995 income tax expense increased over 1994 levels primarily from
higher pretax income. 1994 income tax expense was below 1993 levels,
primarily due to higher Section 29 tax credits related to coalbed methane
gas production and lower taxable income because of the restructuring
charge. In addition, 1993 income tax expense included a charge for
restating deferred income tax balances for the diversified companies to
reflect the federal corporate income tax rate increase to 35 percent.
Primarily due to the tax credits related to the production of coalbed
methane, income tax expense was 24 percent of pretax income in 1995, 23
percent in 1994 and 26 percent in 1993. Reflecting increased production,
these tax credits totaled $20.6 million in 1995, up from $19.6 million in
1994 and $16.6 million in 1993. The tax credit rate was estimated at $1.03
per thousand cubic feet in 1995, and was $1.00 in 1994 and 98 cents in
1993. This rate escalates with inflation, and could be limited by domestic
oil prices. In 1995, domestic oil prices would have had to exceed $46 per
barrel for this limitation to have been effective. The federal tax credit
on production of coalbed methane is available through the year 2002.
25<PAGE>
ACCOUNTING STANDARDS
Stock Options
In 1995, the Financial Accounting Standards Board issued FAS 123,
Accounting for Stock Options, effective for fiscal years beginning after
Dec. 15, 1995. FAS 123 encourages, but does not require, companies to
recognize compensation expense based on the fair value of grants of stock,
stock options and other equity instruments to employees. Although expense
recognition for employee stock-based compensation is not mandatory, FAS 123
requires that companies not adopting must disclose pro forma net income and
earnings per share. TECO Energy will continue to apply the prior accounting
rules and make pro forma disclosures.
CAPITAL EXPENDITURES
TECO Energy's 1995 capital expenditures of $433 million consisted of $335
million for Tampa Electric, which included $19 million of AFUDC, and $98
million for the diversified companies.
Tampa Electric spent $199 million in 1995 on construction of Polk Unit
One, a 250-megawatt coal-gasification plant. The capital cost of the plant
is estimated at about $450 million, net of the construction funding from
the U.S. Department of Energy under its Clean Coal Technology Program. An
estimated $70 million will be spent in 1996 to complete this project with
commercial operation expected in the fourth quarter of 1996.
Tampa Electric spent an additional $117 million in 1995 for equipment
and facilities to meet the company's growing customer base and for
generation equipment improvements.
At the diversified companies in 1995 TECO Transport & Trade s capital
program of $32 million included purchasing an ocean barge previously
leased, a program of barge enlargement and refurbishment, and normal
equipment replacement. TECO Coalbed Methane's additional investment of $12
million in 1995 included the purchase of the royalty rights to additional
reserves in the Black Warrior Basin and enhancements to existing wells.
TECO Coal spent $9 million primarily on the completion of its new coal
washing and preparation plant, and the development of new mines. TECO Power
Services spent $38 million for its 87.5-percent share of the 78-megawatt
Alborada Power Station in Guatemala.
TECO Energy estimates total capital expenditures for ongoing
operations at $260 million for 1996 and $779 million for 1997 through 2000,
excluding AFUDC.
Tampa Electric expects to spend $178 million in 1996 and $569 million
during the 1997-2000 period, mainly for distribution facilities to meet
customer growth and for Polk Unit One in 1996. At the end of 1995, Tampa
Electric had outstanding commitments of about $72 million for capital
programs including the construction of Polk Unit One.
Tampa Electric s capital expenditure projections include about $30
million over the 1996 to 2000 period to comply with Phase II of the Clean
Air Act Amendments for nitrogen oxide reductions and emissions monitoring
equipment as described in the Environmental Compliance section.
The diversified companies expect capital expenditures of about $82
million in 1996 and $210 million for the 1997 through 2000 period for coal
mining equipment, exploration and production of conventional gas and oil,
acquisition of river barges and ocean transportation equipment, and normal
asset replacement. At the end of 1995, $12 million had been committed.
ENVIRONMENTAL COMPLIANCE
Tampa Electric is complying with the Phase I emission limitations
imposed by the Clean Air Act Amendments which became effective Jan. 1,
1995 by using blends of lower-sulfur coal, controlling stack emissions and
emission allowances.
In 1995 Tampa Electric successfully integrated Big Bend Unit Three
into the existing scrubber on Big Bend Unit Four. This resulted in an
additional scrubbed unit at a fraction of the cost of a new scrubber.
In connection with its Phase I compliance plan, Tampa Electric
entered into two long-term contracts effective in mid-1994 for the purchase
of low-sulfur coal. In December 1995, one of the sellers ceased operations
26<PAGE>
at the mine supplying this coal. Tampa Electric believes that there will be
no negative impact on its operations because of the availability of alternative
sources of supply and the successful scrubber integration of Big Bend Units
Three and Four.
To comply with Phase II emission standards set for 2000 Tampa Electric
would potentially have to scrub additional capacity and is evaluating
equipment and technologies to accomplish compliance in the most cost
effective manner. Absent capital expenditures for additional scrubbing,
Tampa Electric expects to spend $30 million of capital to comply with Phase
II of the Clean Air Act Amendments for nitrogen oxide reductions and
emissions monitoring equipment. The cost of compliance with Phase I and
Phase II is expected to have little impact on Tampa Electric's prices.
UTILITY REGULATION
Price Increase
1993 and 1994
The FPSC granted Tampa Electric a $1.2-million permanent base revenue
increase and a $10.3-million revenue increase primarily associated with
recovery of purchased power capacity payments effective in February 1993.
The utility received an additional base revenue increase of $16 million
effective Jan. 1, 1994. The FPSC s decision reflected overall allowed
regulatory rates of return of 8.20 percent in 1993 and 8.34 percent in
1994, which included an allowed regulatory rate of return on common equity
(ROE) of 12 percent, the midpoint of a range of 11 percent to 13 percent.
Return on Equity Agreements
1994
In March 1994 the FPSC issued an order which changed Tampa Electric's
authorized ROE to an 11.35-percent midpoint with a range of 10.35 percent
to 12.35 percent, while leaving in effect the rates it had previously
established. The FPSC also ordered a $4-million annual accrual to establish
an unfunded storm damage reserve for transmission and distribution
property.
In July 1994 the FPSC issued an order approving an agreement between
its staff and Tampa Electric to cap the utility s authorized regulatory
rate of return on common equity at 12.45 percent for 1994 only with any
earnings above that amount to be used to increase the storm damage reserve.
Tampa Electric did not exceed the 12.45-percent cap in 1994 and therefore
accrued only the $4.0 million to the storm damage reserve.
1995
Tampa Electric s objective is to place Polk Unit One in service
without increasing the total price that its customers pay for electric
service. A number of actions, discussed in the Tampa Electric s Operating
Expenses section, have been taken to reduce costs. A component of the
strategy to accomplish this objective has been the deferral of certain
revenues.
In 1995 the FPSC approved a plan submitted by Tampa Electric to defer
certain revenues for 1995. Under this plan Tampa Electric s allowed ROE
increased to an 11.75-percent midpoint with a range of 10.75 percent to
12.75 percent and Tampa Electric deferred revenues under certain financial
circumstances related to these returns. For 1995 a minimum of $15 million
of revenues was deferred as well as 50 percent of actual revenues in excess
of an ROE of 11.75 percent up to a net earned ROE of 12.75 percent and all
actual revenues above an ROE of 12.75 percent. In 1995 Tampa Electric
deferred $50.8 million of revenues under this plan. The deferred revenues
accrue interest at the 30-day commercial paper rate specified in the
Florida Administrative Code.
Also as part of this plan the FPSC eliminated Tampa Electric s oil
backout tariff effective Jan. 1, 1996, a reduction of about $12 million of
annual revenues.
27<PAGE>
1996
On Jan. 3, 1996 the FPSC in a proposed agency action approved a plan
by Tampa Electric relating to the deferral in 1996 of revenues under
certain circumstances defined by ROE levels. As a result of protests by the
Office of Public Counsel and the Florida Industrial Power Users Group, this
action did not become effective and there became operative a provision of
the order that required Tampa Electric to hold subject to the FPSC s
jurisdiction any revenues in 1996 contributing to an ROE in excess of 12.75
percent.
On March 25, 1996 Tampa Electric filed with the FPSC an agreement between
Tampa Electric and the two intervenors protesting the January 3 proposed order.
If approved by the FPSC in a proposed agency action proceeding and if no
protests are filed, the agreement would replace the Jan. 3, 1996 order.
This agreement addresses, among other things, Tampa Electric s base rate
levels, ROE levels for 1996 through 1998, and regulatory treatment of all
accumulated deferred revenues through the period ending Dec. 31, 1998.
It provides for Tampa Electric s existing base rates to be frozen at current
levels through Dec. 31, 1998; a refund to its customers of $25 million ($15
million from 1996 operations and $10 million from the 1995 deferred revenues)
plus interest over a period of one year commencing on Oct. 1, 1996; and for the
possibility of an additional refund in 1999.
Under the agreement, for the years 1996 through 1998 Tampa Electric
will keep in each year all revenues contributing to an ROE up to11.75 percent.
Any additional revenues will be allocated according to the
following formula.
In 1996, 40 percent of any actual revenues that contribute to an ROE
in excess of 11.75 percent will be included in 1996 revenues and the
remaining 60 percent will be deferred for use in 1997 and 1998. There will
also be available for use in 1997 and 1998 about $41 million of the
revenues deferred from 1995, after deducting from 1995 deferred revenues
the $10-million portion of the $25-million refund.
In 1997, 40 percent of any revenues that contribute to an ROE in
excess of 11.75 percent up to 12.75 percent will be included in Tampa
Electric s 1997 revenues. The remaining 60 percent will be deferred for use
in 1998. Any revenues contributing to an ROE exceeding 12.75 percent will
be deferred for use during 1998.
The same 40 percent allocation of revenues will be made in 1998 after
taking into account any accumulated deferred revenues not used in previous
years. The remaining 60 percent, as well as all revenues contributing to an
ROE in excess of 12.75 percent, if any, will be refunded to Tampa
Electric s customers in 1999. No refunds resulting from the 1998 portion of
the agreement will commence until a final, non-appealable order has been
issued resolving all issues with respect to the calculation of earned ROE
during the periods covered by the agreement, including the appropriate
regulatory treatment of the Polk Power Station.
Finally, the agreement calls for an expeditious review of the
regulatory treatment of Tampa Electric s Polk Power Station. Tampa
Electric is optimistic that the FPSC will complete this review in the third
quarter of 1996. An objective of the agreement is to maintain price
stability by utilizing the 1995, 1996 and 1997 deferred revenues to offset
a portion of the revenue requirements associated with the Polk Power
Station.
Coal Settlement
In February 1993 the FPSC approved an agreement between Tampa Electric
and the Office of Public Counsel that resolved all issues relating to
prices for coal purchased in the years 1990 through 1992 by Tampa Electric
from its affiliate, Gatliff Coal, a subsidiary of TECO Coal. Tampa Electric
agreed to refund $10 million plus interest to its customers through the
fuel adjustment clause over a 12-month period beginning April 1, 1993.
Tampa Electric refunded $7.6 million to its customers in 1993 and the
remainder in 1994.
28<PAGE>
Utility Competition
Tampa Electric s retail business is substantially free from direct
competition with other electric utilities, municipalities and public
agencies. At the present time, the principal form of competition at the
retail level consists of natural gas for residences and businesses and the
self-generation option available to larger users of electric energy. Such
users, and possibly commercial and residential customers as well, may seek
to expand their options through legislative and/or regulatory initiatives
that would permit competition at the retail level. Tampa Electric intends
to take all appropriate actions to retain and expand its retail business,
to control costs, and provide high quality service to retail customers.
There is presently active competition in the wholesale power markets
in Florida, and this is increasing largely as a result of the Energy Policy
Act of 1992 and related federal initiatives. This act removed certain
regulatory barriers to independent power producers and required utilities
to transmit power from such producers, utilities and others to wholesale
customers under certain circumstances. Tampa Electric continues its cost
reduction efforts to increase its wholesale business, which is dependent on
access to transmission systems owned by others.
In March 1995 the Federal Energy Regulatory Commission (FERC) issued
its Notice Of Proposed Rulemaking on Open Access Transmission Services
(NOPR). The NOPR would require open access to transmission systems and
utilities owning transmission facilities (including Tampa Electric) to
provide services to wholesale transmission customers comparable to those
they provide to themselves on comparable terms and conditions (including
price). Among other things the NOPR would unbundle transmission services
from power sales and require owners of transmission systems to take service
under their own transmission tariffs.
FERC Transmission/Interchange Proceedings
Tampa Electric is one of several utilities that intervened in Florida
Power and Light's (FPL) proceeding before the FERC in which FPL has
requested to change substantially the terms for providing interchange power
and transmission services. In addition to challenging the reasonableness
and fairness of many aspects of FPL s filing, Tampa Electric maintains that
FPL s transmission tariffs adversely affect competition in the wholesale
market and violate FERC s comparability standard governing open access to
wholesale transmission.
In December 1995 an Administrative Law Judge appointed by the FERC
issued his initial decision which is generally favorable to the positions
advocated by Tampa Electric. Briefs on this decision have been filed by the
active intervenors, FERC staff and FPL and the case is now fully submitted
for a decision by the FERC. Any disposition of transmission issues is
expected to reflect FERC action on the NOPR.
Tampa Electric protested transmission tariff filings by Florida Power
Corporation (FPC), likewise based principally on their adverse competitive
effects on the wholesale power market and failure to comply with the FERC s
comparability standard. FPC has withdrawn these tariffs and substituted
tariffs which conform to the pro forma tariffs in the NOPR. The ultimate
terms of these tariffs will be determined after final action by FERC under
the NOPR.
In November 1995 the FERC accepted for filing Tampa Electric s open
access transmission tariffs, which conform to the pro forma tariffs
contained in the NOPR, subject to refund and the outcome of the final rule
under the NOPR.
INVESTMENT ACTIVITY
At Dec. 31, 1995 TECO Energy had $42.5 million in cash, cash
equivalents and short-term investments versus $136.4 million at year-end
1994. In the first quarter of 1995 the company reduced its short-term
investments and cash equivalents by $84 million and used the proceeds
primarily to reduce short-term debt.
Short-term investments at Dec. 31, 1995 included a $32.2-million
investment in a hedged-equity utility portfolio. The company also had $86.3
29<PAGE>
million in longer-term passive investments, including a continuing
investment in leveraged leases of $64.6 million. At Dec. 31, 1995 the net
leveraged lease investment had essentially a zero balance and all leases
were performing on a current basis. The company has made no investment in
leveraged leases since 1989.
TECO Properties has invested $43 million of equity in seven projects
solely or as a limited partner. In 1995 TECO Properties recorded a $1.2
million gain from the sale of an apartment complex and established a
reserve of $1.6 million for the expected 1996 sale of another apartment
complex. TECO Energy plans to continue its conservative real estate
investment approach.
FINANCING ACTIVITY
TECO Energy's 1995 year-end capital structure, excluding the effect of
unearned compensation related to its ESOP, was 52 percent debt, 46 percent
common equity and 2 percent preferred equity. The company's objective is to
maintain a capital structure over time that will support its current credit
ratings.
Credit Ratings/Senior Debt
Duff & Phelps Moody's Standard & Poor s
Tampa Electric AA+ Aa2 AA
TECO Finance/TECO Energy AA- A1 AA-
The current ratings reflect actions taken by Duff & Phelps in March
1995 to increase Tampa Electric s senior and subordinate debt ratings one
level and by Moody s Investor Services in April to lower Tampa Electric s
senior and subordinate debt ratings and TECO Energy s debt rating one
level.
In July 1993 Tampa Electric entered into a forward refunding
arrangement for $85.95 million of outstanding Pollution Control Revenue
Bonds. Under this arrangement $85.95 million of new tax-exempt bonds due
Dec. 1, 2034 were issued on Dec. 1, 1994, at a 6.25-percent interest rate.
The proceeds were used on Feb. 1, 1995 to refund the series having a 9.9-
percent interest rate. For accounting and ratemaking purposes Tampa
Electric began recording interest expense using a blended rate for the
original and refunding bonds. This blended rate was used from July 1993 and
will continue to be used through the maturity dates of the original bonds.
TECO Energy raised $9.4 million of common equity in 1995, $10.6
million in 1994 and $8.3 million in 1993 from the sale of common stock
through its Dividend Reinvestment and Common Stock Purchase Plan (DRP)
implemented in 1992. The company expects to raise a similar amount of
equity through this plan in 1996.
As a part of its risk management program TECO Energy has entered into
interest rate exchange agreements to moderate its exposure to interest rate
changes. The benefit of these agreements are at risk only in the event of
non-performance by the other party to the agreement, which the company does
not anticipate. The company has no other derivative instruments.
LIQUIDITY, CAPITAL RESOURCES
TECO Energy and its operating companies met cash needs during 1995 largely
with internally generated funds with the balance from the sale of certain
short-term investments and from equity raised through the DRP.
At Dec. 31, 1995 TECO Energy had bank credit lines of $370 million, of
which $368 million in credit was available.
30<PAGE>
TECO Energy anticipates meeting its capital requirements for ongoing
operations in 1996 through 2000 substantially from internally generated
funds. In 1996 TECO Power Services expects to secure non-recourse financing
for the Guatemalan project as discussed on page 24 and Tampa Electric
expects to issue about $100 million of long-term debt primarily to reduce
short-term debt and redeem current maturities.
On March 29, 1996, Tampa Electric issued a notice to call and retire
on April 29, 1996, $35 million aggregate par value Series E and F Preferred
Stock at redemption prices of $102 and $101, respectively, plus accrued
dividends.
31<PAGE>
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Page
No.
Report of Independent Accountants 34
Consolidated Balance Sheets, Dec. 31, 1995 and 1994 35
Consolidated Statements of Income for the years ended
Dec. 31, 1995, 1994 and 1993 36
Consolidated Statements of Cash Flows for the years
ended Dec. 31, 1995, 1994 and 1993 37
Consolidated Statements of Common Equity for the years
ended Dec. 31, 1995, 1994 and 1993 38
Notes to Consolidated Financial Statements 39-54
Financial Statement Schedules have been omitted since they are not
required, are inapplicable or the required information is presented in the
financial statements or notes thereto.
32<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
of TECO Energy, Inc.,
We have audited the consolidated balance sheets of TECO Energy, Inc.
and subsidiaries as of Dec. 31, 1995 and 1994, and the related consolidated
statements of income, common equity and cash flows for each of the three
years in the period ended Dec. 31, 1995. These financial statements are the
responsibility of the company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
TECO Energy, Inc. and subsidiaries as of Dec. 31, 1995 and 1994, and the
consolidated results of their operations and their cash flows for each of
the three years in the period ended Dec. 31, 1995, in conformity with
generally accepted accounting principles.
As discussed in Note A to the consolidated financial statements,
effective Jan. 1, 1993 the company adopted Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes.
COOPERS & LYBRAND L.L.P.
Certified Public Accountants
Tampa, Florida
Jan. 15, 1996
33<PAGE>
CONSOLIDATED BALANCE SHEETS
(millions)
Assets
Dec. 31, 1995 1994
Current Assets
Cash and cash equivalents $ 10.3 $ 35.8
Short-term investments 32.2 100.6
Receivables, less allowance for uncollectibles 163.5 144.6
Inventories, at average cost
Fuel 76.7 101.8
Materials and supplies 49.0 49.7
Prepayments 9.6 8.6
341.3 441.1
Property, Plant and Equipment, at Original Cost
Utility plant in service 3,174.5 3,060.8
Construction work in progress 479.6 286.6
Other property 836.4 748.3
4,490.5 4,095.7
Less accumulated depreciation (1,616.2) (1,475.4)
2,874.3 2,620.3
Other Assets
Other investments 86.3 107.0
Deferred income taxes 65.9 52.3
Deferred charges and other assets 105.6 91.5
257.8 250.8
$3,473.4 $3,312.2
Liabilities and Capital
Current Liabilities
Long-term debt due within one year $ 31.3 $ 7.8
Notes payable 361.4 349.9
Accounts payable 146.3 145.3
Customer deposits 51.3 49.5
Interest accrued 13.3 15.4
Taxes accrued 11.7 .2
615.3 568.1
Other Liabilities
Deferred income taxes 396.6 390.8
Investment tax credits 61.3 66.6
Regulatory liability-tax related 47.5 57.5
Other deferred credits 136.1 66.1
Long-term debt, less amount due within one year 994.9 1,023.9
Preferred Stock of Tampa Electric 55.0 55.0
Capital
Common equity 1,240.9 1,163.3
Unearned compensation related to ESOP (74.2) (79.1)
$3,473.4 $3,312.2
The accompanying notes are an integral part of the consolidated financial
statements.
34<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
(millions)
Year ended Dec. 31, 1995 1994 1993
Revenues $ 1,392.3 $ 1,350.9 $ 1,283.9
Expenses
Operation 684.6 670.8 624.9
Maintenance 101.3 101.1 98.9
Restructuring charge and
other cost reductions -- 25.0 --
Depreciation 174.7 174.0 165.3
Taxes, other than income 114.0 110.2 104.3
1,074.6 1,081.1 993.4
Income from Operations 317.7 269.8 (1) 290.5
Other Income (Expense)
Allowance for other funds used
during construction 13.7 3.5 1.6
Other income (expense), net .6 6.4 (7.1)
Preferred dividend requirements of
Tampa Electric (3.6) (3.6) (3.6)
10.7 6.3 (9.1)
Income Before Interest and
Income Taxes 328.4 276.1 281.4
Interest Charges
Interest expense 88.8 79.3 78.2
Allowance for borrowed funds
used during construction (5.6) (2.2) (2.1)
83.2 77.1 76.1
Income Before Provision for
Income Taxes 245.2 199.0 205.3
Provision for income taxes 59.1 45.8 55.0
Income before cumulative effect
of change in accounting principle 186.1 153.2 150.3
Cumulative effect of change in
accounting principle -- -- 11.2
Net Income $ 186.1 $ 153.2 (1) $ 161.5
Average common shares
outstanding during year 116.5 115.9 115.3
Earnings per Average Common Share
Outstanding:
Before cumulative effect of change
in accounting principle $ 1.60 $ 1.32 $ 1.30
Cumulative effect of change in
accounting principle -- -- .10
Earnings per average common share
outstanding $ 1.60 $ 1.32 (1) $ 1.40
The accompanying notes are an integral part of the consolidated financial
statements.
(1) Includes the effect of a corporate restructuring charge which reduced
operating income by $25 million, net income by $15 million and earnings per
share by $0.13. See Note H.
35<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(millions)
Year ended Dec. 31, 1995 1994 1993
Cash Flows from Operating Activities
Net income $186.1 $153.2 $161.5
Adjustments to reconcile net
income to net cash
Depreciation 174.7 174.0 165.3
Deferred income taxes (17.3) (12.1) 7.8
Cumulative effect of change in
accounting principle -- -- (11.2)
Restructuring charge and other
cost reductions -- 25.0 --
Investment tax credits, net (5.3) (6.8) (5.6)
Allowance for funds used
during construction (19.3) (5.7) (3.7)
Amortization of unearned
compensation related to ESOP 4.9 5.7 4.2
Deferred revenue 50.8 -- --
Deferred recovery clause (12.4) 19.9 (10.6)
Fuel cost settlement -- -- 10.0
Refund to customers -- (2.4) (7.6)
Coal contract buyout and amortization 2.0 (25.5) --
Receivables, less allowance for
uncollectibles (18.9) (10.5) (2.8)
Inventories 25.8 (23.7) 9.9
Taxes accrued 11.5 (1.0) (3.9)
Interest accrued (2.1) .6 (1.5)
Accounts payable 1.0 30.0 4.2
Other 25.7 17.5 1.4
407.2 338.2 317.4
Cash Flows from Investing Activities
Capital expenditures (432.7) (309.1) (270.6)
Allowance for funds used
during construction 19.3 5.7 3.7
Investment in short-term investments 68.4 12.5 14.2
Other non-current investments 17.5 (6.0) (1.4)
(327.5) (296.9) (254.1)
Cash Flows from Financing Activities
Common stock 11.1 11.1 12.1
Proceeds from long-term debt .6 .7 15.6
Repayment of long-term debt (6.5) (19.0) (73.2)
Net increase in short-term debt 11.5 84.1 68.6
Dividends (121.9) (115.6) (109.2)
(105.2) (38.7) (86.1)
Net increase (decrease) in
cash and cash equivalents (25.5) 2.6 (22.8)
Cash and cash equivalents at
beginning of year 35.8 33.2 56.0
Cash and cash equivalents at end of year $ 10.3 $ 35.8 $ 33.2
Supplemental Disclosure of Cash Flow Information
Cash paid during the year for:
Interest (net of amounts capitalized) $ 105.4 $ 85.1 $ 80.0
Income taxes $ 66.5 $ 69.2 $ 53.3
The accompanying notes are an integral part of the consolidated financial
statements.
36<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF COMMON EQUITY
(millions)
<CAPTION>
Additional Total
Common Paid-in Retained Unearned Common
Shares(1) Stock(1) Capital(1) Earnings Compensation Equity
<S> <C> <C> <C> <C> <C> <C>
Balance, Dec. 31, 1992 115.0 $ 115.0 $ 308.5 $ 621.3 $ (89.0) $ 955.8
Net income for 1993 161.5 161.5
Common stock issued .6 .6 11.5 12.1
Cash dividends declared
($.9475 per share)(1) (109.2) (109.2)
Amortization of unearned
compensation related
to ESOP 4.2 4.2 Tax benefits-ESOP dividends
and stock options 1.0 2.2 3.2
Balance, Dec. 31, 1993 115.6 115.6 321.0 675.8 (84.8) 1,027.6
Net income for 1994 153.2 153.2
Common stock issued .6 .6 10.5 11.1
Cash dividends declared
($.9975 per share) (115.6) (115.6)
Amortization of unearned
compensation related
to ESOP 5.7 5.7
Tax benefits-ESOP dividends 2.2 2.2
Balance, Dec. 31, 1994 116.2 116.2 331.5 715.6 (79.1) 1,084.2
Net income for 1995 186.1 186.1
Common stock issued .5 .5 10.6 11.1
Cash dividends declared
($1.0475 per share) (121.9) (121.9)
Amortization of unearned
compensation related
to ESOP 4.9 4.9
Tax benefits-ESOP dividends
and stock options .1 2.2 2.3
Balance, Dec. 31, 1995 116.7 $ 116.7 $ 342.2 $ 782.0 $ (74.2) $1,166.7
The accompanying notes are an integral part of the consolidated financial
statements.
(1) Restated to reflect a two-for-one stock split on Aug. 30, 1993.
</TABLE>
37<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. Summary of Significant Accounting Policies
Principles of Consolidation
The significant accounting policies for both utility and diversified
operations are as follows:
The consolidated financial statements include the accounts of TECO
Energy, Inc. (TECO Energy) and its wholly owned subsidiaries.
The equity method of accounting is used to account for investments in
partnership arrangements in which TECO Energy or its subsidiary companies
do not have majority ownership or exercise control.
The proportional share of expenses, revenues and assets reflecting
TECO Coalbed Methane's and TECO Gas & Oil s undivided interest in joint
venture property is included in the consolidated financial statements.
All significant intercompany balances and intercompany transactions
have been eliminated in consolidation.
Basis of Accounting
Tampa Electric maintains its accounts in accordance with recognized
policies prescribed or permitted by the Florida Public Service Commission
(FPSC) and the Federal Energy Regulatory Commission (FERC). These policies
conform with generally accepted accounting principles in all material
respects.
The impact of Financial Accounting Standard (FAS) No. 71, Accounting
for the Effects of Certain Types of Regulation, has been minimal in Tampa
Electric's experience, but when cost recovery is ordered over a longer
period than a fiscal year, costs are recognized in the period that the
regulatory agency recognizes them in accordance with FAS 71.
Tampa Electric's retail and wholesale businesses are regulated by the
FPSC and the FERC, respectively. Prices allowed by both agencies are
generally based on recovery of prudent costs incurred plus a reasonable
return on invested capital.
The use of estimates is inherent in the preparation of financial
statements in accordance with generally accepted accounting principles.
Revenues and Fuel Costs
Revenues include amounts resulting from cost recovery clauses which
provide for monthly billing charges to reflect increases or decreases in
fuel, purchased capacity, oil backout and conservation costs. These
adjustment factors are based on costs projected by Tampa Electric for a
specific recovery period. Any over-recovery or under-recovery of costs
plus an interest factor are refunded or billed to customers during the
subsequent recovery period. Over-recoveries of costs are recorded as
deferred credits and under-recoveries of costs are recorded as deferred
debits.
On May 10, 1995, the FPSC approved the termination of the oil backout
clause effective Jan. 1, 1996. Any oil backout project costs incurred
beginning Jan 1, 1996 will no longer be recovered through the cost
recovery clause.
In December 1994, Tampa Electric bought out a long-term coal supply
contract which would have expired in 2004 for a lump sum payment of $25.5
million and entered into two new contracts with the supplier. The coal
supplied under the new contracts is competitive in price with coals of
comparable quality. As a result of this buyout, Tampa Electric customers
will benefit from anticipated net fuel savings of more than $40 million
through the year 2004. In February 1995, the FPSC authorized the recovery
of the $25.5 million buy-out amount plus carrying costs through the Fuel
and Purchased Power Cost Recovery Clause over the next ten years beginning
April 1, 1995. In 1995, $2 million of buy-out costs were amortized to
expense.
Certain other costs incurred by Tampa Electric are allowed to be
recovered from customers through prices approved in the regulatory
process. These costs are recognized as the associated revenues are billed.
Tampa Electric accrues base revenues for services rendered but
unbilled to provide a closer matching of revenues and expenses.
38<PAGE>
In February 1993, the FPSC approved an agreement between Tampa
Electric and the Office of Public Counsel which resolved all issues
relating to prices for coal purchased in the years 1990 through 1992 by
Tampa Electric from its affiliate, Gatliff Coal, a subsidiary of TECO
Coal. Tampa Electric recognized a $10-million liability in February 1993
and agreed to return this amount plus interest during the 12-month period
effective April 1, 1993. The $10-million charge related to this agreement
is classified in "Other income (expense)" on the income statement.
Depreciation
TECO Energy provides for depreciation primarily by the straight-line
method at annual rates that amortize the original cost, less net salvage,
of depreciable property over its estimated service life. The provision for
utility plant in service, expressed as a percentage of the original cost
of depreciable property, was 3.9% for 1995, and 4.2% for 1994 and 1993.
The original cost of utility plant retired or otherwise disposed of
and the cost of removal less salvage are charged to accumulateddepreciation.
Foreign operations
The functional currency of TPS Guatemala One, Inc. s partnership in
Guatemala is the U.S. dollar. Transactions conducted in Guatemala in the
local currency, the quetzal, are remeasured to the U.S. dollar for
financial reporting purposes with aggregate transaction gains or losses
included in net income. The aggregate loss included in net income during
1995 was not significant.
The partnership is protected from any significant currency gains or
losses by the terms of the power sales agreement where payments are
defined in U.S. dollars.
Deferred Income Taxes
Effective Jan.1, 1993, TECO Energy adopted FAS 109, which changed the
requirements for accounting for income taxes. Although FAS 109 retains the
concept of comprehensive interperiod income tax allocation, it adopts the
liability method in the measurement of deferred income taxes rather than
the deferred method. Under the liability method, the temporary differences
between the financial statement and tax bases of assets and liabilities
are reported as deferred taxes measured at current tax rates. The
cumulative effect of adopting FAS 109 increased TECO Energy's earnings by
$11.2 million in 1993. Since Tampa Electric is a regulated enterprise its
books and records reflect approved regulatory treatment, the adoption of
FAS 109 resulted in certain adjustments to accumulated deferred income
taxes and the establishment of a corresponding regulatory tax liability
reflecting the amount payable to customers through future rates and had no
effect on earnings.
Investment Tax Credits
Investment tax credits have been recorded as deferred credits and are
being amortized to income tax expense over the service lives of the
related property.
39<PAGE>
Allowance for Funds Used During Construction (AFUDC)
AFUDC is a non-cash credit to income with a corresponding charge to
utility plant which represents the cost of borrowed funds and a reasonable
return on other funds used for construction. The rate used to calculate
AFUDC is revised periodically to reflect significant changes in Tampa
Electric's cost of capital. The rate was 7.79% for 1995, 7.28% for 1994,
and 7.70% for 1993. The base on which AFUDC is calculated excludes
construction work in progress which has been included in rate base.
Interest Capitalized
Interest costs for the construction of TECO Coal's preparation plant and
loadout facility and TECO Power Services Alborada Power Station were
capitalized and will be depreciated over the service lives of the related
property. Such interest costs capitalized totaled $.9 million in 1995 for
the Alborada Power Station and $.9 million in 1994 for TECO Coal's
preparation plant.
Cash and Cash Equivalents and Short-Term Investments
Included in cash and cash equivalents and short-term investments at Dec.
31, 1994 are $20.8 million and $70.2 million, respectively, of securities
classified as available-for-sale. Securities classified as available-for-
sale are highly liquid, high-quality debt instruments purchased with a
maturity of three months or less. There are no available-for-sale
securities at Dec. 31, 1995.
Short-term investments also include $32.2 million and $30.3 million
at Dec. 31, 1995 and 1994, respectively of trading securities, which have
a cost basis of $31.4 million and $29.9 million. The estimated fair market
values were based on quoted market prices. Trading securities consist of a
hedged equity investment in a utility portfolio. The utility portfolio is
comprised of various utility equities, hedged by selling short other
utility equities. Realized gains and losses are determined on the specific
identification cost basis. In 1994, TECO Energy adopted FAS 115,
Accounting for Certain Investments in Debt and Equity Securities, which
requires fair value accounting for debt and equity securities. The change
in net unrealized gains and losses on trading securities included in
earnings in 1995 and 1994 was not significant.
Other Investments
Other investments include longer-term passive investments, primarily
leveraged leases.
Coalbed Seam Gas Properties
TECO Coalbed Methane, a subsidiary of TECO Energy, has entered into
agreements with others to develop jointly the natural gas potential in a
portion of Alabama's Black Warrior Basin.
TECO Coalbed Methane utilizes the successful efforts method to
account for its gas operations. Under this method, expenditures for
unsuccessful exploration activities are expensed currently.
Capitalized costs are amortized on the unit-of-production method
using estimates of proven reserves. Investments in unproven properties and
major development projects are not amortized until proven reserves
associated with the projects can be determined or until impairment occurs.
Aggregate capitalized costs related to wells producing and under
development at Dec. 31, 1995 and 1994 were $203.3 million and $190.9
million, respectively. Net proven reserves at Dec. 31, 1995 and 1994 were
184.0 billion cubic feet for 556 wells and 172.7 billion cubic feet for
462 wells, respectively.
40<PAGE>
Conventional Gas and Oil Properties
TECO Gas & Oil, a subsidiary of TECO Energy formed in 1995, has entered
into joint ventures with several partners to explore for conventional gas
and oil in the shallow gulf waters off Texas and Louisiana.
TECO Gas & Oil utilizes the successful efforts method to account for
its gas and oil operations. Under this method, expenditures for
unsuccessful exploration activities are expensed currently.
At Dec. 31, 1995 aggregate capitalized costs were not significant.
Reclassification
Certain 1994 and 1993 amounts were reclassified to conform with current
year presentation.
B. Common Equity
Stock Options
The 1980 Stock Option and Appreciation Rights Plan was succeeded by the
1990 Equity Incentive Plan. Under the Equity Incentive Plan, the
Compensation Committee of the Board of Directors may grant options to
purchase common stock to officers and key employees of TECO Energy and its
subsidiaries. The stock options are exercisable at a price not less than
the fair market value of the common stock on the date of grant. The plan
also provides that the Committee may issue stock appreciation rights. The
exercise price of the stock appreciation rights may not be less than the
fair market value of the common stock on the date of grant or if issued
with a stock option, the exercise price of the related option. Stock
appreciation rights provide for the issuance of common stock or the
payment of cash or a combination of both equal to the difference between
the exercise price of the stock appreciation right and the fair market
value of the common stock on the date of exercise.
In January 1996, The Board of Directors adopted the 1996 Equity
Incentive Plan (the Plan ) as an amendment and restatement of the
company s 1990 Equity Incentive Plan (the 1990 Plan ). This Plan will be
submitted to shareholders for approval at the 1996 Annual Meeting. Upon
such approval, the Plan will supersede the 1990 Plan and no additional
grants will be made thereunder. The rights of the holders of outstanding
options under the 1990 Plan will not be affected. The purpose of the Plan
is to attract and retain key employees of the company, to provide an
incentive for them to achieve long-range performance goals and to enable
them to participate in the long-term growth of the company. The Plan will
continue to be administered by the Compensation Committee. The Plan would
amend the 1990 Plan to increase the number of shares of Common Stock
subject to grants by 3,750,000 shares, expand the types of awards
available to be granted and specify a limit on the maximum number of
shares with respect to which stock options and stock appreciation rights
may be made to any participant under the Plan.
41<PAGE>
Transactions during the last three years under the 1990 Equity
Incentive Plan and the 1980 Stock Option and Appreciation Rights Plan are
summarized as follows:
Equity Incentive Plan and Stock Option and Appreciation Rights Plan
Option
Shares Option
(thousands) Price
1995
Outstanding, beginning of year 1,913 $ 8.6563-$23.5625
Granted 488 $20.75 -$21.625
Exercised 100 $ 8.6563-$23.5625
Canceled 38 $18.8438-$23.5625
Outstanding, end of year 2,263 $11.50 -$23.5625
Exercisable, end of year 2,263 $11.50 -$23.5625
Available for grant 1,936
1994
Outstanding, beginning of year 1,567 $ 8.6563-$23.5625
Granted 401 $19.4375-$20.00
Exercised 55 $10.0469-$18.8438
Canceled --
Outstanding, end of year 1,913 $ 8.6563-$23.5625
Exercisable, end of year 1,505 $ 8.6563-$19.4375
Available for grant 2,386
1993
Outstanding, beginning of year 1,463 $ 8.6563-$18.8438
Granted 416 $23.5625
Exercised 305 $ 8.6563-$23.5625
Canceled 7 $23.5625
Outstanding, end of year 1,567 $ 8.6563-$23.5625
Exercisable, end of year 1,567 $ 8.6563-$23.5625
Available for grant 2,787
The 1991 Director Stock Option Plan provides grants of stock options
to non-employee directors on the first trading day following each annual
meeting of shareholders. This plan provides for an initial grant of
options for 10,000 shares to each new director, and an annual grant of
options for 2,000 shares thereafter, with an exercise price equal to the
fair market value on the date of grant. Transactions during the last three
years under the 1991 Director Stock Option Plan are summarized as follows:
Director Stock Option Plan
Option
Shares Option
(thousands) Price
1995
Outstanding, beginning of year 171 $17.7188-$23.4063
Granted 20 $21.125
Exercised 14 $17.7188-$19.8125
Canceled 2 $23.4063
Outstanding, end of year 175 $17.7188-$23.4063
Exercisable, end of year 175 $17.7188-$23.4063
Available for grant 286
42<PAGE>
1994
Outstanding, beginning of year 149 $17.7188-$23.4063
Granted 22 $19.8125
Exercised --
Outstanding, end of year 171 $17.7188-$23.4063
Exercisable, end of year 149 $17.7188-$19.8125
Available for grant 304
1993
Outstanding, beginning of year 139 $17.7188-$18.5313
Granted 22 $23.4063
Exercised 12 $17.7188-$18.5313
Outstanding, end of year 149 $17.7188-$23.4063
Exercisable, end of year 149 $17.7188-$23.4063
Available for grant 326
In 1995, the Financial Accounting Standards Board issued FAS 123,
Accounting for Stock Options, effective for fiscal years beginning after
Dec. 15, 1995. FAS 123 encourages, but does not require, companies to
recognize compensation expense based on the fair value of grants of stock,
stock options and other equity investments to employees. Although expense
recognition for employee stock-based compensation is not mandatory, FAS
123 requires that companies not adopting must disclose pro forma net
income and earnings per share. TECO Energy will continue to apply the
prior accounting rules and make pro forma disclosures.
Common Stock
The company had 400 million shares of $1 par value common stock authorized
in 1995, 1994 and 1993.
On July 20, 1993, the Board of Directors declared a two-for-one stock
split of the corporation's outstanding common stock, effective Aug. 30,
1993, for shareholders of record as of July 30, 1993. All information
related to TECO Energy common stock, including shares outstanding and per
share amounts, has been calculated as if the stock split had been in
effect for all periods presented.
Dividend Reinvestment Plan
In 1992, TECO Energy implemented a Dividend Reinvestment and Common Stock
Purchase Plan. TECO Energy raised common equity of $9.4 million, $10.6
million and $8.3 million from this plan in 1995, 1994 and 1993,
respectively.
Shareholder Rights Plan
In 1989, TECO Energy declared a distribution of Rights to purchase one
additional share of the company's common stock at a price of $40 per share
for each share outstanding. The Rights expire in May 1999. The Rights will
become exercisable 10 days after a person acquires 20 percent or more of
the company's outstanding common stock or commences a tender offer that
would result in such person owning 30 percent or more of such stock or at
the time the Board of Directors declares a person who acquired 10 percent
or more of such stock to be an "adverse person." If any person acquires
20 percent or more of the outstanding common stock or the Board declares
that a person is an adverse person, the rights of holders, other than such
acquiring person or adverse person, become rights to buy shares of common
stock of the company (or the acquiring company if the company is involved
in a merger or other business combination and is not the surviving
corporation) having a market value of twice the exercise price of each
right.
The company may redeem the Rights at a price of $.005 per Right until
10 days after a person acquires 20 percent or more of the outstanding
common stock but not after the Board has declared a person to be an
adverse person.
Employee Stock Ownership Plan
Effective Jan. 1, 1990, TECO Energy amended the TECO Energy Group
Retirement Savings Plan, a tax-qualified benefit plan available to
substantially all employees, to include an employee stock ownership plan
43<PAGE>
(ESOP). During 1990, the ESOP purchased 7 million shares of TECO Energy
common stock on the open market for $100 million. The share purchase was
financed through a loan from TECO Energy to the ESOP. This loan is at a
fixed interest rate of 9.3% and will be repaid from dividends on ESOP
shares and from TECO Energy's contributions to the ESOP.
TECO Energy's contributions to the ESOP were $4.8 million, $7.6
million and $3.4 million in 1995, 1994 and 1993, respectively. TECO
Energy's annual contribution equals the interest accrued on the loan
during the year plus additional principal payments needed to meet the
matching allocation requirements under the plan, less dividends received
on the ESOP shares. The components of net ESOP expense recognized for the
past three years are as follows:
(millions) 1995 1994 1993
Interest expense $8.3 $8.8 $9.0
Compensation expense 4.9 5.7 4.2
Dividends (7.1) (6.9) (6.6)
Net ESOP expense $6.1 $7.6 $6.6
Compensation expense was determined by the shares allocated method.
At Dec. 31, 1995, the ESOP had 1.5 million allocated shares, .1
million committed-to-be-released shares, and 5.2 million unallocated
shares. Shares are released to provide employees with the company match in
accordance with the terms of the TECO Energy Group Retirement Savings Plan
and in lieu of dividends on allocated ESOP shares. The dividends received
by the ESOP are used to pay debt service.
For financial statement purposes, the unallocated shares of TECO
Energy stock are reflected as a reduction of common equity, classified as
unearned compensation related to ESOP. Dividends on all ESOP shares are
recorded as a reduction of retained earnings, as are dividends on all TECO
Energy common stock. The tax benefit related to the dividends paid to the
ESOP for allocated shares is a reduction of income tax expense and for
unallocated shares is an increase in retained earnings. All ESOP shares
are considered outstanding for earnings per share computations.
C. Preferred Stock
Preferred Stock of TECO Energy - No Par
10 million shares authorized, none outstanding.
Preferred Stock of Tampa Electric - No Par
2.5 million shares authorized, none outstanding.
Preference Stock of Tampa Electric - No Par
2.5 million shares authorized, none outstanding.
44<PAGE>
Preferred Stock of Tampa Electric - $100 Par Value
1.5 million shares authorized
Outstanding Cash Dividends
Dec.31, 1995 Paid in 1995(1)
Current
Redemption Per
Price SharesAmount(2) Share Amount(2)
4.32% Cumulative,
Series A $103.75 49,600 $ 5.0 $4.32 $ .2
4.16% Cumulative,
Series B $102.875 50,000 5.0 $4.16 .2
4.58% Cumulative,
Series D $101.00 100,000 10.0 $4.58 .5
8.00% Cumulative,
Series E (3) $102.00 149,960 15.0 $8.00 1.2
7.44% Cumulative,
Series F (3) $101.00 200,000 20.0 $7.44 1.5
549,560 $55.0 $3.6
(1) Quarterly dividends paid on Feb. 15, May 15, Aug. 15 and Nov. 15.
(2) Millions.
(3) On March 29, 1996, Tampa Electric issued a notice to call and retire
on April 29, 1996, the Series E and F Preferred Stock at redemption
prices set forth plus accrued dividends.
At Dec. 31, 1995, preferred stock had a carrying amount of $55.0
million and an estimated fair market value of $49.1 million. The estimated
fair market value of preferred stock was based on quoted market prices.
D. Short-term Debt
Notes payable consisted primarily of commercial paper with weighted
average interest rates of 5.76% and 5.68%, respectively, at Dec. 31, 1995
and Dec. 31, 1994. The carrying amount of notes payable approximated fair
market value because of the short maturity of these instruments.
Consolidated unused lines of credit at Dec. 31, 1995 were $368 million.
Certain lines of credit require commitment fees ranging from .05% to
.1875% on the unused balances.
During 1995, TECO Finance entered into an interest rate exchange
agreement to moderate its exposure to interest rate changes. This three-
year agreement effectively converted the interest rate on $100 million of
short-term debt from a floating rate to a fixed rate. TECO Finance will
pay a fixed rate of 5.8% and will receive a floating rate based on a 30-
day commercial paper index. There would not have been a significant loss
to terminate this agreement at Dec. 31, 1995. The benefits of this
agreement are at risk only in the event of non-performance by the other
party to the agreement, which the company does not anticipate. The
benefits of this agreement reduced interest expense in 1995.
45<PAGE>
E. Long-term Debt
Dec. 31,
(millions) Due 1995 1994
TECO Energy
Medium-term notes payable: 9.28% for
1995 and 1994(1) 1997-2000 $ 100.0 $ 100.0
Tampa Electric
First mortgage bonds (issuable in series)
5 1/2% 1996 25.0 25.0
7 3/4% 2022 75.0 75.0
5 3/4% 2000 80.0 80.0
6 1/8% 2003 75.0 75.0
Installment contracts payable(2)
5 3/4% 2007 24.4 24.7
7 7/8% Refunding bonds(3) 2021 25.0 25.0
8% Refunding bonds(3) 2022 100.0 100.0
6.25% Refunding bonds(4) 2034 86.0 86.0
Variable rate: 3.81% for 1995 and
4.10% for 1994(1) 2025 51.6 51.6
Variable rate: 3.72% for 1995 and
4.02% for 1994(1) 2018 54.2 54.2
Variable rate: 3.90% for 1995 and
4.23% for 1994(1)(5) 2020 16.9 16.3
613.1 612.8
Diversified Companies
Dock and wharf bonds, variable rate:
3.74% for 1995 and 3.88% for 1994(1)(2) 2007 110.6 110.6
Mortgage notes payable: 7.6% 1996-2003 3.3 4.1
Non-recourse secured facility notes,
Series A: 7.8% 1996-2012 153.2 157.5
267.1 272.2
TECO Finance
Medium-term notes payable, various rates:
7.04% for 1995 and 7.09% for 1994(1) 1997-2002 50.0 50.9
Unamortized debt premium (discount), net (4.0) (4.2)
1,026.2 1,031.7
Less amount due within one year(6) 31.3 7.8
Total long-term debt $ 994.9 $1,023.9
Substantially all of the property, plant and equipment of Tampa Electric is
pledged as collateral.
Maturities and annual sinking fund requirements of long-term debt for
the years 1997, 1998, 1999 and 2000 are $76.7 million, $6.9 million, $28.4
million, and $137.9 million, respectively. Of these amounts $.8 million
per year for 1997 through 2000 may be satisfied by the substitution of
property in lieu of cash payments.
(1) Composite year-end interest rate.
(2) Tax-exempt securities.
(3) Proceeds of these bonds were used to refund bonds with interest rates
of 11 5/8% - 12 5/8%. For accounting purposes, interest expense has
been recorded using blended rates of 8.28%-8.66% on the original and
refunding bonds, consistent with regulatory treatment.
(4) Proceeds of these bonds were used to refund bonds with an interest
rate of 9.9% in February 1995. For accounting purposes, interest
expense has been recorded using a blended rate of 6.52% on the
original and refunding bonds, consistent with regulatory treatment.
(5) This amount is recorded net of $3.1 million and $3.7 million at Dec.
31, 1995 and Dec. 31, 1994, respectively, on deposit with trustee.
46<PAGE>
(6) Of the amount due in 1996, $.8 million may be satisfied by the
substitution of property in lieu of cash payments.
At Dec. 31, 1995, total long-term debt had a carrying amount of
$994.9 million and an estimated fair market value of $1,076.5 million. The
estimated fair market value of long-term debt was based on quoted market
prices for the same or similar issues, on the current rates offered for
debt of the same remaining maturities, or for long-term debt issues with
variable rates that approximate market rates, at carrying amounts. The
carrying amount of long-term debt due within one year approximated fair
market value because of the short maturity of these instruments.
Tampa Electric entered into an interest rate exchange agreement,
which expired Jan. 11, 1996, to reduce the cost of $100 million of fixed
rate long-term debt. The agreement reduced interest expense by $2.3
million per year in 1995, 1994 and 1993.
F. Retirement Plan
TECO Energy has a non-contributory defined benefit retirement plan which
covers substantially all employees. Benefits are based on employees' years
of service and average final earnings.
The company's policy is to fund the plan within the guidelines set by
ERISA for the minimum annual contribution and the maximum allowable as a
tax deduction by the IRS. About 65 percent of plan assets were invested in
common stocks and 35 percent in fixed income investments at Dec. 31, 1995.
Components of Net Pension Expense
(millions)
1995 1994 1993
Service cost
(benefits earned during the period) $ 7.2 $ 8.8 $ 7.7
Interest cost on projected
benefit obligations 17.3 15.8 15.0
Less: Return on plan assets
Actual 66.4 (3.7) 30.5
Less net amortization of unrecognized
transition asset and deferred return 43.3 (25.8) 10.3
Net return on assets 23.1 22.1 20.2
Net pension expense 1.4 2.5 2.5
Effect of restructuring charge -- 13.3 --
Net pension expense recognized
in the Consolidated Statements
of Income $ 1.4 $15.8 $ 2.5
47<PAGE>
Reconciliation of the Funded Status of the Retirement Plan and the Accrued
Pension Prepayment/(Liability)
(millions)
Dec. 31, Dec. 31,
1995 1994
Fair market value of plan assets $ 286.7 $ 239.2
Projected benefit obligation (260.2) (218.0)
Excess of plan assets over projected
benefit obligation 26.5 21.2
Less unrecognized net gain from past
experience different from that assumed 33.4 23.8
Less unrecognized prior service cost (7.1) (7.7)
Less unrecognized net transition asset
(being amortized over 19.5 years) 9.5 10.5
Accrued pension prepayment/(liability) $ (9.3) $ (5.4)
Accumulated benefit obligation
(including vested benefits of
$193.2 for 1995 and $163.8 for 1994) $ 215.2 $ 183.4
Assumptions Used in Determining Actuarial Valuations
1995 1994
Discount rate to determine projected
benefit obligation 7.3% 8.25%
Rates of increase in compensation levels 3.3-5.3% 3.3-5.3%
Plan asset growth rate through time 9% 9%
G. Postretirement Benefit Plan
TECO Energy and its subsidiaries currently provide certain postretirement
health care benefits for substantially all employees retiring after age 55
meeting certain service requirements. The company contribution toward
health care coverage for most employees retiring after Jan. 1, 1990 is
limited to a defined dollar benefit based on years of service.
Postretirement benefit levels are substantially unrelated to salary. The
company reserves the right to terminate or modify the plans in whole or in
part at any time.
In 1993, the company adopted FAS 106 which requires postretirement
benefits be recognized as earned by employees rather than recognized as
paid.
Components of Postretirement Benefit Cost
(millions)
1995 1994 1993
Service cost (benefits earned
during the period) $ 1.9 $ 2.2 $ 1.8
Interest cost on projected
benefit obligations 6.3 5.3 4.9
Amortization of transition obligation
(straight line over 20 years) 2.7 2.8 2.8
Amortization of actuarial (gain)/loss .2 .2 --
Net periodic postretirement
benefit expense 11.1 10.5 9.5
Effect of restructuring charge -- 2.7 --
Net periodic postretirement
benefit expense recognized in the
Consolidated Statements of Income $11.1 $13.2 $ 9.5
48<PAGE>
Reconciliation of the Funded Status of the Postretirement Benefit Plan and
the Accrued Liability (millions)
Dec. 31, Dec. 31,
1995 1994
Accumulated postretirement benefit obligation
Active employees eligible to retire $ (4.8) $(11.8)
Active employees not eligible to retire (30.9) (25.9)
Retirees and surviving spouses (51.9) (41.3)
(87.6) (79.0)
Less unrecognized net gain/(loss)
from past experience (19.2) (13.8)
Less unrecognized transition obligation (46.2) (48.9)
Liability for accrued postretirement benefit $(22.2) $(16.3)
Assumptions Used in Determining Actuarial Valuations
1995 1994
Discount rate to determine projected
benefit obligation 7.3% 8.25%
The assumed health care cost trend rate for medical costs prior to
age 65, and for certain retirees after age 65, was 11% in 1995 and
decreases to 5.75% in 2002 and thereafter. The assumed health care cost
trend rate for medical costs after age 65 was 7.5% in 1995 and decreases
to 5.75% in 2002 and thereafter.
A 1 percent increase in the medical trend rates would produce an 8
percent ($.6 million) increase in the aggregate service and interest cost
for 1995 and a 7 percent ($6.4 million) increase in the accumulated
postretirement benefit obligation as of Dec. 31, 1995.
H. Restructuring Charge
In 1994, TECO Energy implemented a corporate restructuring program which
resulted in a $25 million charge ($15 million after tax) and reduced
earnings per share by $.13. The cost of this restructuring program
reflects charges for 241 early retirements, the elimination of other
positions and other cost control initiatives. Approximately $1.7 million
of this charge was paid in 1994 and $6.3 million in 1995. The impact on
pension cost resulting from the restructuring as determined under the
provisions of FAS 88, Accounting for Settlements and Curtailments of
Defined Benefit Pension Plans and for Termination Benefits, was
approximately $13.3 million. The impact on postretirement benefits as
determined under FAS 106, Accounting for Postretirement Benefits Other
Than Pensions, was approximately $2.7 million. These amounts are included
as part of the total 1994 charge of $25 million. See Note F and Note G.
I. Income Tax Expense
Income tax expense consists of the following components:
(millions) Federal State Total
1995
Currently payable $ 68.4 $ 13.3 $ 81.7
Deferred (16.6) (.7) (17.3)
Amortization of investment tax credits (5.3) -- (5.3)
Total income tax expense $ 46.5 $ 12.6 $ 59.1
49<PAGE>
1994
Currently payable $ 54.7 $ 10.0 $ 64.7
Deferred (8.3) (3.8) (12.1)
Investment tax credits (1.3) -- (1.3)
Amortization of investment tax credits (5.5) -- (5.5)
Total income tax expense $ 39.6 $ 6.2 $ 45.8
1993
Currently payable $ 44.6 $ 8.2 $ 52.8
Deferred 6.5 1.3 7.8
Amortization of investment tax credits (5.6) -- (5.6)
Total income tax expense $ 45.5 $ 9.5 $ 55.0
TECO Energy adopted FAS 109 as of Jan. 1, 1993 and elected not to restate
prior years' financial statements. Deferred taxes result from temporary
differences in the recognition of certain liabilities or assets for tax
and financial reporting purposes. The principal components of the
company's deferred tax assets and liabilities recognized in the balance
sheet are as follows:
(millions) Dec. 31, Dec. 31,
1995 1994
Deferred income tax assets(1)
Property related $ 43.7 $ 33.5
Other 22.2 18.8
Total deferred income tax assets 65.9 52.3
Deferred income tax liabilities(1)
Property related (395.7) (370.2)
Intangible drilling costs (26.9) (25.7)
Revenue deferral plan 19.6 --
Other 6.4 5.1
Total deferred income
tax liabilities (396.6) (390.8)
Accumulated deferred income taxes $(330.7) $(338.5)
(1) Certain property related assets and liabilities have been netted.
The total income tax provisions differ from amounts computed by applying
the federal statutory tax rate to income before income taxes for the
following reasons:
(millions) 1995 1994 1993
Net income $186.1 $153.2 $150.3
Total income tax provision 59.1 45.8 55.0
Preferred dividend requirements 3.6 3.6 3.6
Income before income taxes and
preferred dividend requirements $248.8 $202.6 $208.9
Income taxes on above at federal
statutory rate of 35% $ 87.1 $ 70.9 $ 73.1
Increase (Decrease) due to:
State income tax, net of
federal income tax 8.2 4.0 6.7
Amortization of investment
tax credits (5.3) (5.5) (5.6)
Non-conventional fuels tax credit (20.6) (19.6) (16.6)
Equity portion of AFUDC (4.9) (1.4) (.8)
Other (5.4) (2.6) (1.8)
Total income tax provision $ 59.1 $ 45.8 $ 55.0
Provision for income taxes as a percent
of income before income taxes 23.8% 22.6% 26.3%
50<PAGE>
J. Segment Information
TECO Energy's principal business segment is Energy Services. This
segment has been separated into two components: Regulated Electric
Utility Services and Other Energy Services which includes the
transportation, coal mining, coalbed methane gas and conventional gas
and oil production, and independent power generation subsidiaries.
All other activities of TECO Energy have been included in Other.
Identifiable assets are those assets used directly in a
segment's operations and are presented net of depreciation.
<TABLE>
<CAPTION>
Income Identifiable Capital
From Assets Expenditures
(millions) Revenues Operations Depreciation at Dec. 31, for the Year
<S> <C> <C> <C> <C> <C>
1995
Regulated electric
utility services $1,092.3 $229.5 $113.3 $2,566.7 $334.5
Other energy services 500.4 93.5 (1) 61.1 838.3 95.8
Eliminations (205.3) (8.2)(1) -- (86.1) --
Energy services segment 1,387.4 314.8 174.4 3,318.9 430.3
Other and eliminations 4.9 2.9 .3 154.5 2.4
TECO Energy
consolidated $1,392.3 $317.7 $174.7 $3,473.4 $432.7
1994
Regulated electric
utility services $1,094.9 $204.5 $115.1 $2,348.7 $230.8
Other energy services 465.7 67.3 (1) 58.6 803.2 78.0
Eliminations (214.5) (6.9)(1) -- (19.8) --
Energy services segment 1,346.1 264.9 173.7 3,132.1 308.8
Other and eliminations 4.8 4.9 .3 180.1 .3
TECO Energy
consolidated $1,350.9 $269.8(2) $174.0 $3,312.2 $309.1
1993
Regulated electric
utility services $1,041.3 $214.6 $111.9 $2,199.6 $205.6
Other energy services 470.5 75.2 (1) 53.2 789.0 66.2
Eliminations (231.4) (3.9)(1) -- (19.0) --
Energy services segment 1,280.4 285.9 165.1 2,969.6 271.8
Other and eliminations 3.5 4.6 .2 158.2 (1.2)
TECO Energy
consolidated $1,283.9 $290.5 $165.3 $3,127.8 $270.6
</TABLE>
(1) Income from operations includes non-conventional fuels tax
credit of $20.6 million, $19.6 million and $16.6 million in
1995, 1994 and 1993, respectively, and interest cost on the non-
recourse debt related to independent power operations of $12.4
million in 1995 and $12.7 million in 1994 and 1993. 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.
(2) Income from operations includes the effect of a corporate
restructuring charge of $25 million. See Note H.
K. Commitments and Contingencies
TECO Energy has made certain commitments in connection with its
continuing capital improvements program. TECO Energy estimates that
capital expenditures for ongoing businesses during 1996 will be about
$260 million and approximately $779 million for the years 1997
through 2000, excluding AFUDC.
Tampa Electric's capital expenditures are estimated to be $178
million for 1996 and $569 million for 1997 through 2000 for equipment
and facilities to meet customer growth and for construction of
additional generating capacity to be placed in service in 1996. Tampa
Electric is building a 250-megawatt coal-gasification plant (Polk
Unit One) with a capital cost of about $450 million, net of
construction funding from the Department of Energy under its Clean
Coal Technology Program. Tampa Electric expects to spend $70 million
to complete this project in 1996. At the end of 1995, Tampa Electric
had outstanding commitments of approximately $72 million primarily
for the construction of Polk Unit One. At the diversified companies,
future capital expenditures are estimated at $82 million for 1996 and
$210 million for the years 1997 through 2000, primarily for asset
replacement and refurbishment at TECO Transport & Trade and TECO
Coal, and development of TECO Gas & Oil. This includes commitments of
about $12 million at the end of 1995.
52<PAGE>
L. Quarterly Data (unaudited)
Financial data by quarter is as follows:
Quarter ended
March 31 June 30 Sept. 30 Dec. 31
1995
Revenues(1) $ 319.1 $ 349.7 $ 389.1 $ 334.4
Income from operations(1) $ 66.0 $ 80.7 $ 107.1 $ 63.9
Net income(1) $ 36.5 $ 46.4 $ 63.2 $ 40.0
Earnings per average
common share $ .31 $ .40 $ .55 $ .34
Dividends paid per common
share $ .2525 $ .265 $ .265 $ .265
Stock price per common
share(3)
High $ 22 1/8 $ 22 3/4 $ 23 1/2 $ 25 3/4
Low $ 20 $ 20 1/2 $ 21 1/4 $ 23 1/8
Close $ 21 $ 22 $ 23 1/2 $ 25 5/8
1994
Revenues(1) $ 306.7 $ 353.3 $ 366.6 $ 324.3
Income from operations(1) $ 59.9 $ 75.8 $ 94.7 $ 39.4(2)
Net income(1) $ 33.6 $ 41.9 $ 54.6 $ 23.1(2)
Earnings per average
common share $ .29 $ .36 $ .47 $ .20(2)
Dividends paid per
common share $ .24 $ .2525 $ .2525 $ .2525
Stock price per common
share(3)
High $ 22 5/8 $ 20 7/8 $ 21 $ 21
Low $ 19 1/8 $ 18 1/4 $ 18 1/8 $ 18 1/2
Close $ 19 1/2 $ 19 1/8 $ 19 1/4 $ 20 1/4
(1) Millions.
(2) Includes the effect of a corporate restructuring charge which reduced
operating income by $25 million, net income by $15 million and
earnings per share by $0.13. See Note H.
(3) Trading prices for common shares of TECO Energy, Inc.
53<PAGE>
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
During the period Jan. 1, 1994 to the date of this report, TECO
Energy has not had and has not filed with the Commission a report as to
any changes in or disagreements with accountants on accounting principles
or practices, financial statement disclosure, or auditing scope or
procedure.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
(a) The information required by Item 10 with respect to the directors of
the registrant is included under the caption "Election of Directors" on
pages 1 through 4 of TECO Energy's definitive proxy statement, dated March
7, 1996, (Proxy Statement) for its Annual Meeting of Shareholders to be
held on April 17, 1996, and is incorporated herein by reference.
(b) The information required by Item 10 concerning executive officers of
the registrant is included under the caption "Executive Officers of the
Registrant" on page 15 of this report.
Item 11. EXECUTIVE COMPENSATION.
The information required by Item 11 is included in the Proxy
Statement beginning with the "Summary Compensation Table" on page 9 and
ending just before the caption "Approval of the 1996 Equity Incentive
Plan" on page 12 and under the caption "Election of Directors-Compensation
of Directors" on page 4, and is incorporated herein by reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information required by Item 12 is included under the caption
"Share Ownership" on pages 4 through 5 of the Proxy Statement and is
incorporated herein by reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information required by Item 13 is included under the caption
"Election of Directors" on page 4 of the Proxy Statement and is
incorporated herein by reference.
54<PAGE>
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
8-K.
(a) 1. Financial Statements - See index on page 33.
2. Financial Statement Schedules - See index on page 33.
3. Exhibits
*3.1 Articles of Incorporation, as amended on April 20, 1993
(Exhibit 3, Form 10-Q for the quarter ended March 31, 1993 of
TECO Energy, Inc.).
*3.2 Bylaws of the Company, as amended effective July 18, 1995
(Exhibit 3, Form 10-Q for the quarter ended June 30, 1995 of
TECO Energy, Inc.).
*4.1 Indenture of Mortgage among Tampa Electric Company, State
Street Trust Company and First Savings & Trust Company of
Tampa, dated as of Aug. 1, 1946 (Exhibit 7-A to Registration
Statement No. 2-6693).
*4.2 Ninth Supplemental Indenture, dated as of April 1, 1966, to
Exhibit 4.1 (Exhibit 4-k, Registration Statement No.
2-28417).
*4.3 Thirteenth Supplemental Indenture dated as of Jan. 1, 1974,
to Exhibit 4.1 (Exhibit 2-g-1, Registration Statement No.
2-51204).
*4.4 Sixteenth Supplemental Indenture, dated as of Oct. 30, 1992,
to Exhibit 4.1 (Exhibit 4.1, Form 10-Q for the quarter ended
Sept. 30, 1992 of TECO Energy, Inc.).
*4.5 Eighteenth Supplemental Indenture, dated as of May 1, 1993,
to Exhibit 4.1 (Exhibit 4.1, Form 10-Q for the quarter ended
June 30, 1993 of TECO Energy, Inc.).
*4.6 Installment Purchase and Security Contract between the
Hillsborough County Industrial Development Authority and
Tampa Electric Company, dated as of March 1, 1972 (Exhibit
4.9, Form 10-K for 1986 of TECO Energy, Inc.).
*4.7 First Supplemental Installment Purchase and Security
Contract, dated as of Dec. 1, 1974 (Exhibit 4.10, Form 10-K
for 1986 of TECO Energy, Inc.).
*4.8 Third Supplemental Installment Purchase Contract, dated as of
May 1, 1976 (Exhibit 4.12, Form 10-K for 1986 of TECO Energy,
Inc.).
*4.9 Installment Purchase Contract between the Hillsborough County
Industrial Development Authority and Tampa Electric Company,
dated as of Aug. 1, 1981 (Exhibit 4.13, Form 10-K for 1986 of
TECO Energy, Inc.).
*4.10 Amendment to Exhibit A of Installment Purchase Contract,
dated April 7, 1983 (Exhibit 4.14, Form 10-K for 1989 of
TECO Energy, Inc.).
*4.11 Second Supplemental Installment Purchase Contract, dated as
of June 1, 1983 (Exhibit 4.11, Form 10-K for 1994 of TECO
Energy, Inc.).
*4.12 Third Supplemental Installment Purchase Contract, dated as of
Aug. 1, 1989 (Exhibit 4.16, Form 10-K for 1989 of TECO
Energy, Inc.).
*4.13 Installment Purchase Contract between the Hillsborough County
Industrial Development Authority and Tampa Electric Company,
dated as of Jan. 31, 1984 (Exhibit 4.13, Form 10-K for 1993
of TECO Energy, Inc.).
*4.14 First Supplemental Installment Purchase Contract, dated as of
Aug. 2, 1984 (Exhibit 4.14, Form 10-K for 1994 of TECO
Energy, Inc.).
*4.15 Second Supplemental Installment Purchase Contract, dated as
of July 1, 1993 (Exhibit 4.3, Form 10-Q for the quarter ended
June 30, 1993 of TECO Energy, Inc.).
*4.16 Loan and Trust Agreement among the Hillsborough County
Industrial Development Authority, Tampa Electric Company and
55<PAGE>
NCNB National Bank of Florida, as trustee, dated as of Sept.
24, 1990 (Exhibit 4.1, Form 10-Q for the quarter ended Sept.
30, 1990 for TECO Energy, Inc.).
*4.17 Loan and Trust Agreement, dated as of Oct. 26, 1992 among the
Hillsborough County Industrial Development Authority, Tampa
Electric Company and NationsBank of Florida, N.A., as trustee
(Exhibit 4.2, Form 10-Q for the quarter ended Sept. 30, 1992
of TECO Energy, Inc.).
*4.18 Loan and Trust Agreement, dated as of June 23, 1993, among
the Hillsborough County Industrial Development Authority,
Tampa Electric Company and NationsBank of Florida, N.A., as
trustee (Exhibit 4.2, Form 10-Q for the quarter ended June
30, 1993 of TECO Energy, Inc.).
*4.19 Installment Sales Agreement between the Plaquemines Port,
Harbor and Terminal District (Louisiana) and Electro-Coal
Transfer Corporation, dated as of Sept. 1, 1985 (Exhibit
4.19, Form 10-K for 1986 of TECO Energy, Inc.).
*4.20 Reimbursement Agreement between TECO Energy, Inc. and
Electro-Coal Transfer Corporation, dated as of March 22, 1989
(Exhibit 4.19, Form 10-K for 1988 of TECO Energy, Inc.).
*4.21 Rights Agreement between TECO Energy, Inc. and The First
National Bank of Boston, as Rights Agent, dated as of April
27, 1989 (Exhibit 4, Form 8-K, dated as of May 2, 1989 of
TECO Energy, Inc.).
*4.22 Amendment No. 1 to Rights Agreement dated as of July 20, 1993
between TECO Energy, Inc. and The First National Bank of
Boston, as Rights Agent (Exhibit 1.2, Form 8-A/A, dated as of
July 27, 1993 of TECO Energy, Inc.).
*10.1 1980 Stock Option and Appreciation Rights Plan, as amended on
July 18, 1989 (Exhibit 28.1, Form 10-Q for quarter ended June
30, 1989 of TECO Energy, Inc.).
*10.2 Directors' Retirement Plan, as amended effective July 1, 1995
(Exhibit 10.1, Form 10-Q for quarter ended June 30, 1995 of
TECO Energy, Inc.).
*10.3 Supplemental Executive Retirement Plan for H. L. Culbreath,
as amended on April 27, 1989 (Exhibit 10.14, Form 10-K for
1989 of TECO Energy, Inc.).
*10.4 Supplemental Executive Retirement Plan for T. L. Guzzle, as
amended on July 20, 1993 (Exhibit 10.1, Form 10-Q for the
quarter ended Sept. 30, 1993 of TECO Energy, Inc.), as
further amended by the First Amendment to TECO Energy Group
Supplemental Executive Retirement Plan for T.L. Guzzle,
effective as of Oct. 1, 1994 (Exhibit 10.4, Form 10-K for
1994 of TECO Energy, Inc.).
*10.5 Supplemental Executive Retirement Plan for R. H. Kessel,
dated as of Dec. 4, 1989 (Exhibit 10.16, Form 10-K for 1989
of TECO Energy, Inc.), as amended by the First Amendment to
TECO Energy Group Supplemental Executive Retirement Plan for
R.H. Kessel, effective as of Oct. 1, 1994 (Exhibit 10.5, Form
10-K for 1994 of TECO Energy, Inc.).
*10.6 TECO Energy Group Supplemental Executive Retirement Plan, as
amended on July 18, 1989 (Exhibit 10.17, Form 10-K for 1989
of TECO Energy, Inc.), as further amended by the First
Amendment to TECO Energy Group Supplemental Executive
Retirement Plan, effective as of Oct. 1, 1994 (Exhibit 10.6,
Form 10-K for 1994 of TECO Energy, Inc.).
*10.7 TECO Energy, Inc. Group Supplemental Retirement Benefits
Trust Agreement Amendment and Restatement, effective July 17,
1995, (Exhibit 10.2, Form 10-Q for the quarter ended June 30,
1995 of TECO Energy, Inc.).
*10.8 Terms of R. H. Kessel's Employment, dated as of Dec. 1, 1989
(Exhibit 10.20, Form 10-K for 1989 of TECO Energy, Inc.).
*10.9 Annual Incentive Compensation Plan for TECO Energy and
subsidiaries, as revised January 1993 (Exhibit 10.2, Form
10-Q for quarter ended March 31, 1994 of TECO Energy, Inc.).
56<PAGE>
*10.10 TECO Energy, Inc. Group Supplemental Disability Income Plan,
dated as of March 20, 1989 (Exhibit 10.22, Form 10-K for 1988
of TECO Energy, Inc.).
10.11 Forms of Severance Agreement between TECO Energy, Inc. and
certain senior executives, as amended and restated as of
March 20, 1996.
*10.12 Severance Agreement between TECO Energy, Inc. and H.L.
Culbreath, dated as of April 28, 1989 (Exhibit 10.24, Form
10-K for 1989 of TECO Energy, Inc.).
*10.13 Loan and Stock Purchase Agreement between TECO Energy, Inc.
and Barnett Banks Trust Company, N.A., as trustee of the TECO
Energy Group Savings Plan Trust Agreement (Exhibit 10.3, Form
10-Q for the quarter ended March 31, 1990 for TECO Energy,
Inc.).
*10.14 TECO Energy, Inc. 1990 Equity Incentive Plan (Exhibit 10.1,
Form 10-Q for the quarter ended March 31, 1990 of TECO
Energy, Inc.).
*10.15 TECO Energy, Inc. 1991 Director Stock Option Plan as amended
on Jan. 21, 1992 (Exhibit 10.26, Form 10-K for 1991 of TECO
Energy, Inc.).
*10.16 Supplemental Executive Retirement Plan for A.D. Oak, as
amended on July 20, 1993 (Exhibit 10.2, Form 10-Q for the
quarter ended Sept. 30, 1993 of TECO Energy, Inc.), as
further amended by the First Amendment to TECO Energy Group
Supplemental Executive Retirement Plan for A. D. Oak,
effective as of Oct. 1, 1994 (Exhibit 10.16, Form 10-K for
1994 of TECO Energy, Inc.).
*10.17 Supplemental Executive Retirement Plan for K.S. Surgenor, as
amended on July 20, 1993 (Exhibit 10.3, Form 10-Q for the
quarter ended Sept. 30, 1993 of TECO Energy, Inc.), as
further amended by the First Amendment to TECO Energy Group
Supplemental Executive Retirement Plan for K.S. Surgenor,
effective as of Oct. 1, 1994 (Exhibit 10.17, Form 10-K for
1994 of TECO Energy, Inc.).
*10.18 Terms of T.L. Guzzle's employment, dated as of July 20, 1993
(Exhibit 10, Form 10-Q for the quarter ended June 30, 1993 of
TECO Energy, Inc.).
*10.19 Supplemental Executive Retirement Plan for G.F. Anderson
(Exhibit 10.4, Form 10-Q for the quarter ended Sept. 30, 1993
of TECO Energy, Inc.), as amended by the First Amendment to
TECO Energy Group Supplemental Executive Retirement Plan for
G.F. Anderson, effective as of Oct. 1, 1994 (Exhibit 10.19,
Form 10-K for 1994 of TECO Energy, Inc.).
*10.20 TECO Energy Directors' Deferred Compensation Plan, as amended
and restated effective April 1, 1994 (Exhibit 10.1, Form 10-Q
for the quarter ended March 31, 1994 for TECO Energy, Inc.).
*10.21 TECO Energy Group Retirement Savings Excess Benefit Plan, as
amended and restated effective Aug. 1, 1994 (Exhibit 10.21,
Form 10-K for 1994 of TECO Energy, Inc.).
*10.22 Supplemental Executive Retirement Plan for R. A. Dunn, dated
as of July 17, 1995 (Exhibit 10.3, Form 10-Q for the quarter
ended June 30, 1995 of TECO Energy, Inc.).
11. Computation of earnings per common share.
21. Subsidiaries of the Registrant.
23. Consent of Independent Accountants.
24.1 Power of Attorney.
24.2 Certified copy of resolution authorizing Power of Attorney.
27. Financial Data Schedule (EDGAR filing only).
___________
* Indicates exhibit previously filed with the Securities and Exchange
Commission and incorporated herein by reference. Exhibits filed with
periodic reports of TECO Energy, Inc. were filed under Commission
File No. 1-8180.
57<PAGE>
Executive Compensation Plans and Arrangements
Exhibits 10.1 through 10.12 and 10.14 through 10.22 above are
management contracts or compensatory plans or arrangements in which
executive officers or directors of TECO Energy, Inc. participate.
Certain instruments defining the rights of holders of long-term debt
of TECO Energy, Inc. and its consolidated subsidiaries authorizing in each
case a total amount of securities not exceeding 10 percent of total asset
son a consolidated basis are not filed herewith. TECO Energy, Inc. will
furnish copies of such instruments to the Securities and Exchange
Commission upon request.
(b) TECO Energy, Inc. filed no reports on Form 8-K during the last
quarter of 1995.
The registrant filed a Current Report on Form 8-K dated Jan. 4, 1996
reporting under Item 5. Other Events on a proposed agency action by the
FPSC relating to the deferral in 1996 of revenues at Tampa Electric under
certain circumstances.
The registrant filed a Current Report on Form 8-K dated Feb. 13, 1996
reporting under Item 5. Other Events on the filings with the FPSC by the
Office of Public Counsel and the Florida Industrial Power Users Group,
which protest the FPSC s order of proposed agency action on the deferral
in 1996 of Tampa Electric revenues under certain circumstances.
The registrant filed a Current Report on Form 8-K dated March 25, 1996
reporting under "Item 5. Other Events" the agreement among Tampa Electric,
the Office of Public Counsel and the Florida Industrial Power Users Group
on a multi-year base rate freeze, revenue deferral and refund plan for
Tampa Electric.
58<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 on the
28th day of March, 1996.
TECO ENERGY, INC.
By T. L. GUZZLE*
T. L. GUZZLE, Chairman of the Board,
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the
registrant and in the capacities indicated on March 28, 1996:
Signature Title
T. L. GUZZLE* Chairman of the Board,
T. L. GUZZLE Director and Chief Executive
Officer
(Principal Executive Officer)
/s/ A. D. OAK Senior Vice President-
A. D. OAK Finance and Chief Financial Officer
(Principal Financial
and Accounting Officer)
G. F. ANDERSON* President, Director
G. F. ANDERSON and Chief Operating
Officer
C. D. AUSLEY* Director
C. D. AUSLEY
S. L. BALDWIN* Director
S. L. BALDWIN
H. L. CULBREATH* Director
H. L. CULBREATH
J. L. FERMAN, JR.* Director
J. L. FERMAN, JR.
E. L. FLOM* Director
E. L. FLOM
H. R. GUILD, JR.* Director
H. R. GUILD, JR.
D. R. HENDRIX* Director
D. R. HENDRIX
R. L. RYAN* Director
R. L. RYAN
W. P. SOVEY* Director
W. P. SOVEY
59<PAGE>
J. T. TOUCHTON* Director
J. T. TOUCHTON
J. A. URQUHART* Director
J. A. URQUHART
J. O. WELCH, JR.* Director
J. O. WELCH, JR.
*By: /s/ A. D. OAK
A. D. OAK, Attorney-in-fact
60<PAGE>
INDEX TO EXHIBITS
Exhibit Page
No. Description No.
3.1 Articles of Incorporation, as amended on *
April 20, 1993 (Exhibit 3, Form 10-Q for the quarter
ended March 31, 1993 of TECO Energy, Inc.).
3.2 Bylaws of the Company, as amended effective *
July 18, 1995 (Exhibit 3, Form 10-Q for the
quarter ended June 30, 1995 of TECO Energy, Inc.).
4.1 Indenture of Mortgage among Tampa Electric *
Company, State Street Trust Company and First Savings
& Trust Company of Tampa, dated as of Aug. 1, 1946
(Exhibit 7-A to Registration Statement No. 2-6693).
4.2 Ninth Supplemental Indenture, dated as of *
April 1, 1966, to Exhibit 4.1 (Exhibit 4-k,
Registration Statement No. 2-28417).
4.3 Thirteenth Supplemental Indenture dated as *
of Jan. 1, 1974, to Exhibit 4.1 (Exhibit 2-g-1,
Registration Statement No. 2-51204).
4.4 Sixteenth Supplemental Indenture, dated as *
of Oct. 30, 1992, to Exhibit 4.1 (Exhibit 4.1, Form
10-Q for the quarter ended Sept. 30, 1992 of TECO
Energy, Inc.).
4.5 Eighteenth Supplemental Indenture, dated as *
of May 1, 1993, to Exhibit 4.1 (Exhibit 4.1, Form 10-Q
for the quarter ended June 30, 1993 of TECO Energy,
Inc.).
4.6 Installment Purchase and Security Contract *
between the Hillsborough County Industrial Development
Authority and Tampa Electric Company, dated as of
March 1, 1972 (Exhibit 4.9, Form 10-K for 1986 of TECO
Energy, Inc.).
4.7 First Supplemental Installment Purchase and *
Security Contract, dated as of Dec. 1, 1974 (Exhibit
4.10, Form 10-K for 1986 of TECO Energy, Inc.).
4.8 Third Supplemental Installment Purchase *
Contract, dated as of May 1, 1976 (Exhibit 4.12, Form
10-K for 1986 of TECO Energy, Inc.).
4.9 Installment Purchase Contract between the *
Hillsborough County Industrial Development Authority
and Tampa Electric Company, dated as of Aug. 1, 1981
(Exhibit 4.13, Form 10-K for 1986 of TECO Energy,
Inc.).
4.10 Amendment to Exhibit A of Installment *
Purchase Contract, dated April 7, 1983 (Exhibit 4.14,
Form 10-K for 1989 of TECO Energy, Inc.).
61<PAGE>
4.11 Second Supplemental Installment Purchase *
Contract, dated as of June 1, 1983 (Exhibit 4.11, Form
10-K for 1994 of TECO Energy, Inc.).
4.12 Third Supplemental Installment Purchase *
Contract, dated as of Aug. 1, 1989 (Exhibit 4.16, Form
10-K for 1989 of TECO Energy, Inc.).
4.13 Installment Purchase Contract between the *
Hillsborough County Industrial Development Authority
and Tampa Electric Company, dated as of Jan. 31, 1984
(Exhibit 4.13, Form 10-K for 1993 of TECO Energy,
Inc.).
4.14 First Supplemental Installment Purchase *
Contract, dated as of Aug. 2, 1984 (Exhibit 4.14, Form
10-K for 1994 of TECO Energy, Inc.).
4.15 Second Supplemental Installment Purchase Contract, *
dated as of July 1, 1993 (Exhibit 4.3, Form 10-Q for
the quarter ended June 30, 1993 of TECO Energy, Inc.).
4.16 Loan and Trust Agreement among the Hillsborough *
County Industrial Development Authority, Tampa
Electric Company and NCNB National Bank of Florida, as
trustee, dated as of Sept. 24, 1990 (Exhibit 4.1, Form
10-Q for the quarter ended Sept. 30, 1990 for TECO
Energy, Inc.).
4.17 Loan and Trust Agreement, dated as of Oct. 26, *
1992 among the Hillsborough County Industrial
Development Authority, Tampa Electric Company and
NationsBank of Florida, N.A., as trustee (Exhibit 4.2,
Form 10-Q for the quarter ended Sept. 30, 1992 of TECO
Energy, Inc.).
4.18 Loan and Trust Agreement, dated as of *
June 23, 1993, among the Hillsborough County
Industrial Development Authority, Tampa Electric
Company and NationsBank of Florida, N.A., as trustee
(Exhibit 4.2, Form 10-Q for the quarter ended June 30,
1993 of TECO Energy, Inc.).
4.19 Installment Sales Agreement between the *
Plaquemines Port, Harbor and Terminal District
(Louisiana) and Electro-Coal Transfer Corporation,
dated as of Sept. 1, 1985 (Exhibit 4.19, Form 10-K for
1986 of TECO Energy, Inc.).
4.20 Reimbursement Agreement between TECO Energy, *
Inc. and Electro-Coal Transfer Corporation, dated as
of March 22, 1989 (Exhibit 4.19, Form 10-K for 1988 of
TECO Energy, Inc.).
4.21 Rights Agreement between TECO Energy, Inc. *
and The First National Bank of Boston, as Rights
Agent, dated as of April 27, 1989 (Exhibit 4, Form
8-K, dated as of May 2, 1989 of TECO Energy, Inc.).
4.22 Amendment No. 1 to Rights Agreement dated as *
of July 20, 1993 between TECO Energy, Inc. and The
First National Bank of Boston, as Rights Agent
(Exhibit 1.2, Form 8-A/A, dated as of July 27, 1993 of
TECO Energy, Inc.).
10.1 1980 Stock Option and Appreciation Rights *
Plan, as amended on July 18, 1989 (Exhibit 28.1, Form
10-Q for quarter ended June 30, 1989 of TECO Energy,
Inc.).
10.2 Directors' Retirement Plan, as amended *
62<PAGE>
effective July 1, 1995 (Exhibit 10.1, Form 10-Q for
quarter ended June 30, 1995 of TECO Energy, Inc.).
10.3 Supplemental Executive Retirement Plan for *
H. L. Culbreath, as amended on April 27, 1989 (Exhibit
10.14, Form 10-K for 1989 of TECO Energy, Inc.).
10.4 Supplemental Executive Retirement Plan *
for T. L. Guzzle, as amended on July 20, 1993 (Exhibit
10.1, Form 10-Q for the quarter ended Sept. 30, 1993
of TECO Energy, Inc.), as further amended by the First
Amendment to TECO Energy Group Supplemental Executive
Retirement Plan for T.L. Guzzle, effective as of Oct.
1, 1994 (Exhibit 10.4, Form 10-K for 1994 of TECO
Energy, Inc.).
10.5 Supplemental Executive Retirement Plan for *
R. H. Kessel, dated as of Dec. 4, 1989 (Exhibit 10.16,
Form 10-K for 1989 of TECO Energy, Inc.), as amended
by the First Amendment to TECO Energy Group
Supplemental Executive Retirement Plan for R.H.
Kessel, effective as of Oct. 1, 1994 (Exhibit 10.5,
Form 10-K for 1994 of TECO Energy, Inc.).
10.6 TECO Energy Group Supplemental Executive Retirement *
Plan, as amended on July 18, 1989 (Exhibit 10.17, Form
10-K for 1989 of TECO Energy, Inc.), as further
amended by the First Amendment to TECO Energy Group
Supplemental Executive Retirement Plan, effective as
of Oct. 1, 1994 (Exhibit 10.6, Form 10-K for 1994 of
TECO Energy, Inc.).
10.7 TECO Energy, Inc. Group Supplemental *
Retirement Benefits Trust Agreement Amendment and
Restatement, effective July 17, 1995, (Exhibit 10.2,
Form 10-Q for the quarter ended June 30, 1995 of TECO
Energy, Inc.).
10.8 Terms of R. H. Kessel's Employment, dated *
as of Dec. 1, 1989 (Exhibit 10.20, Form 10-K for 1989
of TECO Energy, Inc.).
10.9 Annual Incentive Compensation Plan for *
TECO Energy and subsidiaries, as revised January 1993
(Exhibit 10.2, Form 10-Q for quarter ended March 31,
1994 of TECO Energy, Inc.).
10.10 TECO Energy, Inc. Group Supplemental Disability *
Income Plan, dated as of March 20, 1989 (Exhibit
10.22, Form 10-K for 1988 of TECO Energy, Inc.).
10.11 Forms of Severance Agreement between TECO 67
Energy, Inc. and certain senior executives, as amended
and restated as of March 20, 1996.
10.12 Severance Agreement between TECO Energy, Inc. *
and H.L. Culbreath, dated as of April 28, 1989
(Exhibit 10.24, Form 10-K for 1989 of TECO Energy,
Inc.).
10.13 Loan and Stock Purchase Agreement between *
TECO Energy, Inc. and Barnett Banks Trust Company,
N.A., as trustee of the TECO Energy Group Savings Plan
Trust Agreement (Exhibit 10.3, Form 10-Q for the
quarter ended March 31, 1990 for TECO Energy, Inc.).
10.14 TECO Energy, Inc. 1990 Equity Incentive *
Plan (Exhibit 10.1, Form 10-Q for the quarter ended
March 31, 1990 of TECO Energy, Inc.)
10.15 TECO Energy, Inc. 1991 Director Stock *
63<PAGE>
Option Plan as amended on Jan. 21, 1992 (Exhibit
10.26, Form 10-K for 1991 of TECO Energy, Inc.).
10.16 Supplemental Executive Retirement Plan *
for A.D. Oak, as amended on July 20, 1993 (Exhibit
10.2, Form 10-Q for the quarter ended Sept. 30, 1993
of TECO Energy, Inc.), as further amended by the First
Amendment to TECO Energy Group Supplemental Executive
Retirement Plan for A. D. Oak, effective as of Oct. 1,
1994 (Exhibit 10.16, Form 10-K for 1994 of TECO
Energy, Inc.).
10.17 Supplemental Executive Retirement Plan *
for K.S. Surgenor, as amended on July 20, 1993
(Exhibit 10.3, Form 10-Q for the quarter ended Sept.
30, 1993 of TECO Energy, Inc.), as further amended by
the First Amendment to TECO Energy Group Supplemental
Executive Retirement Plan for K.S. Surgenor, effective
as of Oct. 1, 1994 (Exhibit 10.17, Form 10-K for 1994
of TECO Energy, Inc.).
10.18 Terms of T.L. Guzzle's employment, dated *
as of July 20, 1993 (Exhibit 10, Form 10-Q for the
quarter ended June 30, 1993 of TECO Energy, Inc.).
64<PAGE>
10.19 Supplemental Executive Retirement Plan *
for G.F. Anderson (Exhibit 10.4, Form 10-Q for the
quarter ended Sept. 30, 1993 of TECO Energy, Inc.), as
amended by the First Amendment to TECO Energy Group
Supplemental Executive Retirement Plan for G.F.
Anderson, effective as of Oct. 1, 1994 (Exhibit 10.19,
Form 10-K for 1994 of TECO Energy, Inc.).
10.20 TECO Energy Directors' Deferred Compensation Plan, *
as amended and restated effective April 1, 1994
(Exhibit 10.1, Form 10-Q for the quarter ended
March 31, 1994 for TECO Energy, Inc.).
10.21 TECO Energy Group Retirement Savings Excess Benefit *
Plan, as amended and restated effective Aug. 1, 1994 (Exhibit
10.21, Form 10-K for 1994 of TECO Energy, Inc.).
10.22 Supplemental Executive Retirement Plan for R. A. Dunn, *
dated as of July 17, 1995 (Exhibit 10.3, Form 10-Q for the
quarter ended June 30, 1995 of TECO Energy, Inc.).
11. Computation of earnings per common share. 103
21. Subsidiaries of the Registrant. 104
23. Consent of Independent Accountants. 105
24.1 Power of Attorney. 106
24.2 Certified copy of resolution authorizing Power of
Attorney. 108
27. Financial Data Schedule (EDGAR filing only)
_____________
* Indicates exhibit previously filed with the Securities and Exchange
Commission and incorporated herein by reference. Exhibits filed with
periodic reports of TECO Energy, Inc. were filed under Commission File No.
1-8180.
65<PAGE>
103<PAGE>
[TECO ENERGY LETTERHEAD] EXHIBIT 10.11
PRIVILEGED AND CONFIDENTIAL
[Date]
Dear :
TECO Energy, Inc. (the "Company") considers it essential to the
best interests of its stockholders to foster the continuous employment
of key management personnel. In this connection, the Board of
Directors of the Company (the "Board") recognizes that, as is the case
with many publicly held corporations, the possibility of a change in
control may exist and that such possibility, and the uncertainty and
questions which it may raise among management, may result in the
departure or distraction of key management personnel to the detriment
of the Company and its stockholders.
The Board has determined that appropriate steps should be taken
to reinforce and encourage the continued attention and dedication of
members of the Company's management, including yourself, to their
assigned duties without distraction in the face of potentially
disturbing circumstances arising from the possibility of a change in
control of the Company.
In order to induce you to remain in the employ of the Company and
in consideration of your agreement set forth in Subsection 2(iii)
hereof, the Company agrees that you shall receive the severance
benefits set forth in this letter agreement (the "Agreement") in the
event your employment with the Company is terminated subsequent to a
"change in control of the Company" (as defined in Section 2(i) hereof)
under the circumstances described below. This Agreement amends and
restates the letter agreement dated between you and the
Company.
Term of Agreement. This Agreement shall commence on the date
hereof and shall continue in effect through June 30, ; provided,
however, that commencing on July 1, and each July 1 thereafter,
the term of this Agreement shall automatically be extended for one
additional year unless, not later than March 31 of such year, the
Company shall have given notice that it does not wish to extend this
Agreement (provided that no such notice may be given during the<PAGE>
[Date]
Page 2
pendency of or within one year following a potential change in control
of the Company, as defined in Section 2(ii) hereof); provided,
further, if a change in control of the Company shall have occurred
during the original or extended term of this Agreement, this Agreement
shall continue in effect for a period of thirty-six (36) months beyond
the month in which such change in control occurred. Notwithstanding
anything provided herein to the contrary, the term of this Agreement
shall not extend beyond the end of the month in which you attain
"normal retirement age" under the provisions of the TECO Energy Group
Retirement Plan (or any successor thereto) or any other tax-qualified
retirement plan of the Company or any of its subsidiaries which is
designed to provide you with your primary source of retirement income
from the Company or its subsidiaries (any such plan being referred to
herein as the "Retirement Plan").
1. Change in Control; Potential Change in Control. (i) No
benefits shall be payable hereunder unless there shall have been a
change in control of the Company, as set forth below. For purposes of
this Agreement, a "change in control of the Company" shall mean a
change in control of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), whether or not the Company is in fact required to comply
therewith; provided, that, without limitation, such a change in
control shall be deemed to have occurred if:
(A) any "person" (as such term is used in Sections 13(d)
and 14(d) of the Exchange Act), other than the Company, any
trustee or other fiduciary holding securities under an employee
benefit plan of the Company or a corporation owned, directly or
indirectly, by the stockholders of the Company in substantially
the same proportions as their ownership of stock of the Company
is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of
the Company representing 30% or more of the combined voting power
of the Company's then outstanding securities;
(B) during any period of twenty-four (24) consecutive
months (not including any period prior to the date of this
Agreement), individuals who at the beginning of such period
constitute the Board and any new director (other than a director
designated by a person who has entered into an agreement with the
Company to effect a transaction described in paragraphs (A), (C)
or (D) of this Section 2(i)) whose election by the Board or
nomination for election by the stockholders of the Company was
approved by a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors at the beginning
of such period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a
majority thereof; or<PAGE>
[Date]
Page 3
(C) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other
than (i) a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding
or by being converted into voting securities of the surviving
entity) at least 50% of the combined voting securities of the
Company or such surviving entity outstanding immediately after
such merger or consolidation or (ii) a merger or consolidation
effected to implement a recapitalization of the Company (or
similar transaction) in which no "person" (as hereinabove
defined) acquires 30% or more of the combined voting power of the
Company's then outstanding securities; or
(D) the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale
or disposition by the Company of all or substantially all of the
Company's assets.
(ii) For purposes of this Agreement, a "potential change in
control of the Company" shall be deemed to have occurred if:
(A) the Company enters into an agreement, the consummation
of which would result in the occurrence of a change in control of
the Company;
(B) any person (as hereinabove defined), including the
Company, publicly announces an intention to take or consider
taking actions which if consummated would constitute a change in
control of the Company;
(C) any person (as hereinabove defined), other than the
Company, any trustee or other fiduciary holding securities under
an employee benefit plan of the Company or a corporation owned,
directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of
the Company (a) is or becomes the beneficial owner, (b) discloses
directly or indirectly to the Company or publicly a plan or
intention to become the beneficial owner, or (c) makes a filing
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, with respect to securities to become the beneficial
owner, directly or indirectly, of securities representing 9.9% or
more of the combined voting power of the outstanding voting
securities of the Company; or
(D) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a potential change in control of the
Company has occurred.<PAGE>
[Date]
Page 4
(iii) You agree that, subject to the terms and conditions
of this Agreement, in the event of a potential change in control of
the Company, you will remain in the employ of the Company until the
earliest of (a) a date which is one (1) year from the occurrence of
such potential change in control of the Company, (b) the termination
by you of your employment after you attain "normal retirement age"
under the provisions of the Retirement Plan or by reason of Disability
as defined in Section 3(i), or (c) the date of the occurrence of a
change in control of the Company.
2. Termination Following Change in Control. If any of the
events described in Subsection 2(i) hereof constituting a change in
control of the Company shall have occurred, you shall be entitled to
the benefits provided in Subsection 4(iii) hereof upon the subsequent
termination of your employment during the term of this Agreement
unless such termination is (A) because of your death or Disability,
(B) by the Company for Cause, or (C) by you other than for Good
Reason. In the event your employment with the Company is terminated
for any reason and subsequently a change in control of the Company
shall occur, you shall not be entitled to any benefits hereunder.
(i) Disability. If, as a result of your incapacity due to
physical or mental illness, you shall have been absent from the full-
time performance of your duties with the Company for six (6)
consecutive months, and within thirty (30) days after written notice
of termination is given you shall not have returned to the full-time
performance of your duties, your employment may be terminated for
"Disability".
(ii) Cause. Termination by the Company of your employment
for "Cause" shall mean termination upon (A) the willful and continued
failure by you to substantially perform your duties with the Company
(other than any such failure resulting from your incapacity due to
physical or mental illness or any such actual or anticipated failure
after the issuance of a Notice of Termination by you for Good Reason,
as defined in Subsections 3(iv) and 3(iii), respectively) after a
written demand for substantial performance is delivered to you by the
Board, which demand specifically identifies the manner in which the
Board believes that you have not substantially performed your duties,
or (B) the willful engaging by you in conduct which is demonstrably
and materially injurious to the Company, monetarily or otherwise. For
purposes of this Subsection, no act, or failure to act, on your part
shall be deemed "willful" unless done, or omitted to be done, by you
not in good faith and without reasonable belief that your action or
omission was in the best interest of the Company. Notwithstanding the
foregoing, you shall not be deemed to have been terminated for Cause
unless and until there shall have been delivered to you a copy of a
resolution duly adopted by the affirmative vote of not less than
three-quarters (3/4) of the entire membership of the Board at a
meeting of the Board called and held for such purpose (after<PAGE>
[Date]
Page 5
reasonable notice to you and an opportunity for you, together with
your counsel, to be heard before the Board), finding that in the good
faith opinion of the Board you were guilty of conduct set forth above
in this Subsection and specifying the particulars thereof in detail.
(iii) Good Reason. You shall be entitled to terminate your
employment for Good Reason. For purposes of this Agreement, "Good
Reason" shall mean (1) during the nine (9) month period following a
change in control of the Company, a good faith determination by you
that as a result of such change in control, you are not able to
discharge your duties effectively or (2) without your express written
consent, the occurrence after a change in control of the Company of
any of the following circumstances:
(A) the assignment to you of any duties inconsistent
(except in the nature of a promotion) with the position in the
Company that you held immediately prior to the change in control
or a substantial adverse alteration in the nature or status of
your position or responsibilities or the conditions of your
employment from those in effect immediately prior to the change
in control of the Company;
(B) a reduction by the Company in your annual base salary
as in effect on the date hereof or as the same may be increased
from time to time;
(C) the Company's requiring you to be based more than
twenty-five (25) miles from the Company's offices at which you
were principally employed immediately prior to the date of the
change in control of the Company except for required travel on
the Company's business to an extent substantially consistent with
your present business travel obligations;
(D) the failure by the Company to pay to you any portion of
your current compensation or compensation under any deferred
compensation program of the Company, within seven (7) days of the
date such compensation is due;
(E) the failure by the Company to continue in effect any
material compensation or benefit plan in which you participate
immediately prior to the change in control of the Company unless
an equitable arrangement (embodied in an ongoing substitute or
alternative plan) has been made with respect to such plan, or the
failure by the Company to continue your participation therein (or
in such substitute or alternative plan) on a basis not materially
less favorable, both in terms of the amount of benefits provided
and the level of your participation relative to other
participants, than existed at the time of the change in control;<PAGE>
[Date]
Page 6
(F) the failure by the Company to continue to provide you
with benefits substantially similar to those enjoyed by you under
any of the Company's pension, life insurance, medical, health and
accident, or disability plans in which you were participating at
the time of the change in control of the Company, the taking of
any action by the Company which would directly or indirectly
materially reduce any of such benefits or deprive you of any
material fringe benefit enjoyed by you at the time of the change
in control of the Company, or the failure by the Company to
provide you with the number of paid vacation days to which you
are entitled on the basis of your years of service with the
Company in accordance with the Company's normal vacation policy
in effect at the time of the change in control of the Company;
(G) the failure of the Company to obtain a satisfactory
agreement from any successor to assume and agree to perform this
Agreement, as contemplated in Section 6 hereof; or
(H) any purported termination of your employment which is
not effected pursuant to a Notice of Termination satisfying the
requirements of Subsection (iv) below (and, if applicable, the
requirements of Subsection (ii) above), which purported
termination shall not be effective for purposes of this
Agreement.
Your right to terminate your employment pursuant to this Subsection
shall not be affected by your incapacity due to physical or mental
illness. Your continued employment shall not constitute consent to,
or a waiver of rights with respect to, any circumstance constituting
Good Reason hereunder.
(iv) Notice of Termination. Any purported termination of
your employment by the Company or by you shall be communicated by
written Notice of Termination to the other party hereto in accordance
with Section 7 hereof. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of your employment under the provision
so indicated.
(v) Date of Termination, Etc. "Date of Termination" shall
mean (A) if your employment is terminated for Disability, thirty (30)
days after Notice of Termination is given (provided that you shall not
have returned to the full-time performance of your duties during such
thirty (30) day period), and (B) if your employment is terminated
pursuant to Subsection (ii) or (iii) above or for any other reason
(other than Disability), the date specified in the Notice of
Termination (which, in the case of a termination pursuant to
Subsection (ii) above shall not be less than thirty (30) days, and in<PAGE>
[Date]
Page 7
the case of a termination pursuant to Subsection (iii) above shall not
be less than fifteen (15) nor more than sixty (60) days, respectively,
from the date such Notice of Termination is given); provided that if
within fifteen (15) days after any Notice of Termination is given, or,
if later, prior to the Date of Termination (as determined without
regard to this proviso), the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning
the termination, the Date of Termination shall be the date on which
the dispute is finally determined, either by mutual written agreement
of the parties or by a binding arbitration award; and provided further
that the Date of Termination shall be extended by a notice of dispute
only if such notice is given in good faith and the party giving such
notice pursues the resolution of such dispute with reasonable
diligence. Notwithstanding the pendency of any such dispute, the
Company will continue to pay you your full compensation in effect when
the notice giving rise to the dispute was given (including, but not
limited to, base salary) and continue you as a participant in all
compensation, benefit and insurance plans in which you were
participating when the notice giving rise to the dispute was given,
until the dispute is finally resolved in accordance with this
Subsection. Amounts paid under this Subsection are in addition to all
other amounts due under this Agreement and shall not be offset against
or reduce any other amounts due under this Agreement.
3. Compensation Upon Termination or During Disability.
Following a change in control of the Company, as defined by Subsection
2(i), upon termination of your employment or during a period of
disability you shall be entitled to the following benefits:
(i) During any period that you fail to perform your full-
time duties with the Company as a result of incapacity due to physical
or mental illness, you shall continue to receive your base salary at
the rate in effect at the commencement of any such period, together
with all compensation payable to you under the Company's disability
plan or program or other similar plan during such period, until this
Agreement is terminated pursuant to Section 3(i) hereof. Thereafter,
or in the event your employment shall be terminated by reason of your
death, your benefits shall be determined under the Company's
retirement, insurance and other compensation programs then in effect
in accordance with the terms of such programs.
(ii) If your employment shall be terminated by the Company
for Cause or by you other than for Good Reason, the Company shall pay
you your full base salary through the Date of Termination at the rate
in effect at the time Notice of Termination is given, plus all other
amounts to which you are entitled under any compensation plan of the
Company at the time such payments are due, and the Company shall have
no further obligations to you under this Agreement.<PAGE>
[Date]
Page 8
(iii) If your employment by the Company shall be terminated
(a) by the Company other than for Cause or Disability or (b) by you
for Good Reason, then you shall be entitled to the benefits provided
below:
(A) the Company shall pay you your full base salary through
the Date of Termination at the rate in effect at the time Notice
of Termination is given, plus all other amounts to which you are
entitled under any compensation plan of the Company, at the time
such payments are due, except as otherwise provided below;
(B) in lieu of any further salary payments to you for
periods subsequent to the Date of Termination, the Company shall
pay as severance pay to you a lump sum severance payment
(together with the payments provided in paragraphs (D), (E) and
(F) below, the "Severance Payments") equal to three (3) or, if
less, the number of years, including fractions, from the Date of
Termination until you reach your normal retirement age under the
Retirement Plan, times the sum of (1) the greater of (a) your
annual rate of base salary in effect on the Date of Termination
or (b) your annual rate of base salary in effect immediately
prior to the change in control of the Company and (2) the
greatest of (a) the average of the last two annual bonuses
(annualized in the case of any bonus paid with respect to a
partial year) paid to you preceding the Date of Termination, (b)
the average of the last two annual bonuses (annualized in the
case of any bonus paid with respect to a partial year) paid to
you preceding such change in control, (c) the most recent annual
bonus (annualized in the case of any bonus paid with respect to a
partial year) paid to you preceding the Date of Termination, or
(d) the most recent annual bonus (annualized in the case of any
bonus paid with respect to a partial year) paid to you preceding
such change in control;
(C) the Company shall also pay to you, within five (5) days
after any such fees or expenses are incurred, all legal fees and
expenses incurred by you as a result of or in connection with
such termination, including all such fees and expenses, if any,
incurred in contesting or disputing any such termination or in
seeking to obtain or enforce any right or benefit provided by
this Agreement (other than any such fees or expenses incurred in
connection with any such claim which is determined by
arbitration, in accordance with Section 11 of this Agreement, to
be frivolous) or in connection with any tax audit or proceeding
to the extent attributable to the application of section 4999 of
the Code to any payment or benefit provided hereunder;
(D) for a thirty-six (36) month period after such
termination, the Company shall arrange to provide you with life,
disability, accident and health insurance benefits substantially<PAGE>
[Date]
Page 9
similar to those which you are receiving immediately prior to the
Notice of Termination. Benefits otherwise receivable by you
pursuant to this Subsection 4(iii)(D) shall be reduced to the
extent comparable benefits are actually received by you from a
subsequent employer during the thirty-six (36) month period
following your termination, and any such benefits actually
received by you shall be reported to the Company;
(E) in addition to the retirement benefits to which you are
entitled under the Retirement Plan, any supplemental retirement
or excess benefit plan maintained by the Company or any of its
subsidiaries or any successor plans thereto (hereinafter
collectively referred to as the "Pension Plans"), the Company
shall pay you in cash a lump sum equal to the excess of (a) the
actuarial equivalent of the retirement pension (taking into
account any early retirement subsidies associated therewith and
determined as a straight life annuity commencing at age sixty-
five (65) or any earlier date, but in no event earlier than the
third anniversary of the Date of Termination, whichever annuity
the actuarial equivalent of which is greatest) which you would
have accrued under the terms of the Pension Plans (without regard
to the limitations imposed by Section 401(a)(17) of the Internal
Revenue Code of 1986, as amended (the "Code"), or any amendment
to the Pension Plans made subsequent to a change in control of
the Company and on or prior to the Date of Termination, which
amendment adversely affects in any manner the computation of
retirement benefits thereunder), determined as if you were fully
vested thereunder and had continued to be employed by the Company
(after the Date of Termination) for thirty-six (36) additional
months and as if you had accumulated thirty-six (36) additional
months of compensation (for purposes of determining your pension
benefits thereunder), each in an amount equal to the sum of the
amounts determined under clauses (1) and (2) of Section 4(iii)(B)
hereof (but in no event shall you be deemed to have continued to
be employed by the Company after your normal retirement age) over
(b) the actuarial equivalent of the vested retirement pension
(taking into account any early retirement subsidies associated
therewith and determined as a straight life annuity commencing at
age sixty-five (65) or any earlier date, but in no event earlier
than the Date of Termination, whichever annuity the actuarial
equivalent of which is greatest) which you had then accrued
pursuant to the provisions of the Pension Plans. For purposes of
this Subsection, "actuarial equivalent" shall be determined using
the same actuarial assumptions utilized in determining the amount
of alternate forms of benefits under the Retirement Plan
immediately prior to the change in control of the Company; and
(F) should you move your residence in order to pursue other
business opportunities within one (1) year of the Date of
Termination, the Company will pay you, within five (5) days after<PAGE>
[Date]
Page 10
any such expenses are incurred, an amount equal to the expenses
incurred by you in connection with such relocation (including
expenses incurred in selling your home to the extent such
expenses were customarily reimbursed by the Company to
transferred executives prior to the change in control of the
Company) and which are not reimbursed by another employer.
(iv) Except as otherwise specifically provided in paragraph
(C) and (F) thereof, the payments provided for in Subsection (iii)
shall be made not later than the fifth day following the Date of
Termination; provided, however, that if the amounts of such payments
cannot be finally determined on or before such day, the Company shall
pay to you on such day an estimate, as determined in good faith by the
Company, of the minimum amount of such payments and shall pay the
remainder of such payments (together with interest at the rate
provided in section 1274(b)(2)(B) of the Code) as soon as the amount
thereof can be determined but in no event later than the thirtieth day
after the Date of Termination. In the event that the amount of the
estimated payments exceeds the amount subsequently determined to have
been due, such excess shall constitute a loan by the Company to you
payable on the fifth day after demand therefor by the Company
(together with interest at the rate provided in section 1274(b)(2)(B)
of the Code).
(v) You shall not be required to mitigate the amount of any
payment provided for in this Section 4 or Section 5 by seeking other
employment or otherwise, nor shall the amount of any payment or
benefit provided for in this Section 4 or Section 5 be reduced by any
compensation earned by you as the result of employment by another
employer, by retirement benefits, by offset against any amount claimed
to be owed by you to the Company, or otherwise.
4. Certain Additional Payments by the Company.
(i) Whether or not you become entitled to payments under this
Agreement, if any of the payments or benefits received or to be
received by you in connection with a change in control of the Company
or the termination of your employment (whether pursuant to the terms
of this Agreement or any other plan, arrangement or agreement with the
Company, any person whose actions result in a change in control of the
Company or any person affiliated with the Company or such person)
(such payments or benefits, including the Severance Payments but
excluding the Gross-Up Payment, being hereinafter referred to as the
"Total Payments") will be subject to the excise tax imposed by section
4999 of the Code or any interest or penalties are incurred by you with
respect to such excise tax (such excise tax, together with any such
interest and penalties, being hereinafter referred to as the "Excise
Tax"), the Company shall pay to you an additional amount (the "Gross-
Up Payment") such that the net amount retained by you, after paying
any Excise Tax on the Total Payments and any federal, state and local<PAGE>
[Date]
Page 11
income and employment taxes and Excise Tax on the Gross-Up Payment,
shall be equal to the Total Payments.
(ii) For purposes of determining whether any of the Total
Payments will be subject to the Excise Tax and the amount of such
Excise Tax, (A) all of the Total Payments shall be treated as
"parachute payments" (within the meaning of section 280G(b)(2) of the
Code) unless, in the opinion of tax counsel ("Tax Counsel") acceptable
to you and selected by the accounting firm which was, immediately
prior to the change in control of the Company, the Company's
independent auditor (the "Auditor"), such payments or benefits (in
whole or in part) do not constitute parachute payments, including by
reason of section 280G(b)(4)(A) of the Code, (B) all "excess parachute
payments" (within the meaning of section 280G(b)(1) of the Code) shall
be treated as subject to the Excise Tax unless, in the opinion of Tax
Counsel, such excess parachute payments (in whole or in part)
represent reasonable compensation for services actually rendered
(within the meaning of section 280G(b)(4)(B) of the Code) in excess of
the "base amount" (within the meaning of section 280G(b)(3) of the
Code) allocable to such reasonable compensation, or are otherwise not
subject to the Excise Tax, and (C) the value of any noncash benefits
or any deferred payment or benefit shall be determined by the Auditor
in accordance with the principles of sections 280G(d)(3) and (4) of
the Code. For purposes of determining the amount of the Gross-Up
Payment, you shall be deemed to pay federal income tax at the highest
marginal rate of federal income taxation in the calendar year in which
the Gross-Up Payment is to be made and state and local income taxes at
the highest marginal rate of taxation in the state and locality of
your residence on the Date of Termination, net of the maximum
reduction in federal income taxes which could be obtained from
deduction of such state and local taxes.
(iii) In the event that the Excise Tax is subsequently
determined to be less than the amount taken into account hereunder at
the time of the termination of your employment, you shall repay to the
Company, at the time that the amount of such reduction in Excise Tax
is finally determined, the portion of the Gross-Up Payment
attributable to such reduction (plus that portion of the Gross-Up
Payment attributable to the Excise Tax and federal, state and local
income and employment taxes imposed on the Gross-Up Payment being
repaid by you to the extent that such repayment results in a reduction
in Excise Tax and/or a federal, state or local income or employment
tax deduction) plus interest on the amount of such repayment at 120%
of the rate provided in section 1274(b)(2)(B) of the Code. In the
event that the Excise Tax is determined to exceed the amount taken
into account hereunder at the time of the termination of your
employment (including by reason of any payment the existence or amount
of which cannot be determined at the time of the Gross-Up Payment),
the Company shall make an additional Gross-Up Payment in respect of
such excess (plus any interest, penalties or additions payable by you<PAGE>
[Date]
Page 12
with respect to such excess) at the time that the amount of such
excess is finally determined. You and the Company shall each
reasonably cooperate with the other in connection with any
administrative or judicial proceedings concerning the existence or
amount of liability for Excise Tax with respect to the Total Payments.
5. Successors; Binding Agreement. (i) The Company will
require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such succession had
taken place. Failure of the Company to obtain such assumption and
agreement prior to the effectiveness of any such succession shall be a
breach of this Agreement and shall entitle you to compensation from
the Company in the same amount and on the same terms as you would be
entitled to hereunder if you terminate your employment for Good Reason
following a change in control of the Company, except that for purposes
of implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Date of Termination. As used in
this Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor to its business and/or assets as aforesaid
which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
(ii) This Agreement shall inure to the benefit of and be
enforceable by your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees. If you should die while any amount would still be payable
to you hereunder if you had continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to your devisee, legatee or other designee or,
if there is no such designee, to your estate.
6. Notice. For the purpose of this Agreement, notices and all
other communications provided for in the Agreement shall be in writing
and shall be deemed to have been duly given when delivered or mailed
by United States registered mail, return receipt requested, postage
prepaid, addressed to the respective addresses set forth on the first
page of this Agreement, provided that all notices to the Company shall
be directed to the attention of the Board with a copy to the Secretary
of the Company, or to such other address as either party may have
furnished to the other in writing in accordance herewith, except that
notices of change of address shall be effective only upon receipt.
7. Miscellaneous. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing and signed by you and such officer
as may be specifically designated by the Board. No waiver by either
party hereto at any time of any breach by the other party hereto of,<PAGE>
[Date]
Page 13
or compliance with, any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have
been made by either party which are not expressly set forth in this
Agreement. The validity, interpretation, construction and performance
of this Agreement shall be governed by the laws of the State of
Florida, without giving effect to the conflicts of law principles
thereof. All references to sections of the Exchange Act or the Code
shall be deemed also to refer to any successor provisions to such
sections. Any payments provided for hereunder shall be paid net of
any applicable withholding required under federal, state or local law.
The obligations of the Company under Sections 4 and 5 shall survive
the expiration of the term of this Agreement.
8. Validity. The invalidity or unenforceability or any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall
remain in full force and effect.
9. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all
of which together will constitute one and the same instrument.
10. Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by
arbitration conducted before a panel of three arbitrators in the State
of Florida in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction; provided,
however, that you shall be entitled to seek specific performance of
your right to be paid until the Date of Termination during the
pendency of any dispute or controversy arising under or in connection
with this Agreement.
11. Entire Agreement. This Agreement sets forth the entire
agreement of the parties hereto in respect of the subject matter
contained herein and during the term of the Agreement supersedes the
provisions of all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or
written, by any officer, employee or representative of any party
hereto with respect to the subject matter hereof.
12. Effective Date. This Agreement shall become effective as of
the date set forth above. If this letter sets forth our agreement on
the subject matter hereof, kindly sign and return to the Company the
enclosed copy of this letter which will then constitute our agreement
on this subject.<PAGE>
[Date]
Page 14
Sincerely,
TECO Energy, Inc.
By____________________________
Name:
Title:
Agreed to this day
of , .
______________________________<PAGE>
[TECO ENERGY LETTERHEAD]
PRIVILEGED AND CONFIDENTIAL
[Date]
Dear :
TECO Energy, Inc. (the "Company") considers it essential to the
best interests of its stockholders to foster the continuous employment
of key management personnel. In this connection, the Board of
Directors of the Company (the "Board") recognizes that, as is the case
with many publicly held corporations, the possibility of a change in
control may exist and that such possibility, and the uncertainty and
questions which it may raise among management, may result in the
departure or distraction of key management personnel to the detriment
of the Company and its stockholders.
The Board has determined that appropriate steps should be taken
to reinforce and encourage the continued attention and dedication of
members of the Company's management, including yourself, to their
assigned duties without distraction in the face of potentially
disturbing circumstances arising from the possibility of a change in
control of the Company.
In order to induce you to remain in the employ of the Company and
in consideration of your agreement set forth in Subsection 2(iii)
hereof, the Company agrees that you shall receive the severance
benefits set forth in this letter agreement (the "Agreement") in the
event your employment with the Company is terminated subsequent to a
"change in control of the Company" (as defined in Section 2(i) hereof)
under the circumstances described below. This Agreement amends and
restates the letter agreement dated between you and the
Company.
Term of Agreement. This Agreement shall commence on the date
hereof and shall continue in effect through June 30, ; provided,
however, that commencing on July 1, and each July 1 thereafter,
the term of this Agreement shall automatically be extended for one
additional year unless, not later than March 31 of such year, the
Company shall have given notice that it does not wish to extend this
Agreement (provided that no such notice may be given during the<PAGE>
[Date]
Page 2
pendency of or within one year following a potential change in control
of the Company, as defined in Section 2(ii) hereof); provided,
further, if a change in control of the Company shall have occurred
during the original or extended term of this Agreement, this Agreement
shall continue in effect for a period of twenty-four (24) months
beyond the month in which such change in control occurred.
Notwithstanding anything provided herein to the contrary, the term of
this Agreement shall not extend beyond the end of the month in which
you attain "normal retirement age" under the provisions of the TECO
Energy Group Retirement Plan (or any successor thereto) or any other
tax-qualified retirement plan of the Company or any of its
subsidiaries which is designed to provide you with your primary source
of retirement income from the Company or its subsidiaries (any such
plan being referred to herein as the "Retirement Plan").
1. Change in Control; Potential Change in Control. (i) No
benefits shall be payable hereunder unless there shall have been a
change in control of the Company, as set forth below. For purposes of
this Agreement, a "change in control of the Company" shall mean a
change in control of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), whether or not the Company is in fact required to comply
therewith; provided, that, without limitation, such a change in
control shall be deemed to have occurred if:
(A) any "person" (as such term is used in Sections 13(d)
and 14(d) of the Exchange Act), other than the Company, any
trustee or other fiduciary holding securities under an employee
benefit plan of the Company or a corporation owned, directly or
indirectly, by the stockholders of the Company in substantially
the same proportions as their ownership of stock of the Company
is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of
the Company representing 30% or more of the combined voting power
of the Company's then outstanding securities;
(B) during any period of twenty-four (24) consecutive
months (not including any period prior to the date of this
Agreement), individuals who at the beginning of such period
constitute the Board and any new director (other than a director
designated by a person who has entered into an agreement with the
Company to effect a transaction described in paragraphs (A), (C)
or (D) of this Section 2(i)) whose election by the Board or
nomination for election by the stockholders of the Company was
approved by a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors at the beginning
of such period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a
majority thereof; or<PAGE>
[Date]
Page 3
(C) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other
than (i) a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding
or by being converted into voting securities of the surviving
entity) at least 50% of the combined voting securities of the
Company or such surviving entity outstanding immediately after
such merger or consolidation or (ii) a merger or consolidation
effected to implement a recapitalization of the Company (or
similar transaction) in which no "person" (as hereinabove
defined) acquires 30% or more of the combined voting power of the
Company's then outstanding securities; or
(D) the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale
or disposition by the Company of all or substantially all of the
Company's assets.
(ii) For purposes of this Agreement, a "potential change in
control of the Company" shall be deemed to have occurred if:
(A) the Company enters into an agreement, the consummation
of which would result in the occurrence of a change in control of
the Company;
(B) any person (as hereinabove defined), including the
Company, publicly announces an intention to take or consider
taking actions which if consummated would constitute a change in
control of the Company;
(C) any person (as hereinabove defined), other than the
Company, any trustee or other fiduciary holding securities under
an employee benefit plan of the Company or a corporation owned,
directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of
the Company (a) is or becomes the beneficial owner, (b) discloses
directly or indirectly to the Company or publicly a plan or
intention to become the beneficial owner, or (c) makes a filing
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, with respect to securities to become the beneficial
owner, directly or indirectly, of securities representing 9.9% or
more of the combined voting power of the outstanding voting
securities of the Company; or
(D) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a potential change in control of the
Company has occurred.<PAGE>
[Date]
Page 4
(iii) You agree that, subject to the terms and conditions
of this Agreement, in the event of a potential change in control of
the Company, you will remain in the employ of the Company until the
earliest of (a) a date which is one (1) year from the occurrence of
such potential change in control of the Company, (b) the termination
by you of your employment after you attain "normal retirement age"
under the provisions of the Retirement Plan or by reason of Disability
as defined in Section 3(i), or (c) the date of the occurrence of a
change in control of the Company.
2. Termination Following Change in Control. If any of the
events described in Subsection 2(i) hereof constituting a change in
control of the Company shall have occurred, you shall be entitled to
the benefits provided in Subsection 4(iii) hereof upon the subsequent
termination of your employment during the term of this Agreement
unless such termination is (A) because of your death or Disability,
(B) by the Company for Cause, or (C) by you other than for Good
Reason. In the event your employment with the Company is terminated
for any reason and subsequently a change in control of the Company
shall occur, you shall not be entitled to any benefits hereunder.
(i) Disability. If, as a result of your incapacity due to
physical or mental illness, you shall have been absent from the full-
time performance of your duties with the Company for six (6)
consecutive months, and within thirty (30) days after written notice
of termination is given you shall not have returned to the full-time
performance of your duties, your employment may be terminated for
"Disability".
(ii) Cause. Termination by the Company of your employment
for "Cause" shall mean termination upon (A) the willful and continued
failure by you to substantially perform your duties with the Company
(other than any such failure resulting from your incapacity due to
physical or mental illness or any such actual or anticipated failure
after the issuance of a Notice of Termination by you for Good Reason,
as defined in Subsections 3(iv) and 3(iii), respectively) after a
written demand for substantial performance is delivered to you by the
Board, which demand specifically identifies the manner in which the
Board believes that you have not substantially performed your duties,
or (B) the willful engaging by you in conduct which is demonstrably
and materially injurious to the Company, monetarily or otherwise. For
purposes of this Subsection, no act, or failure to act, on your part
shall be deemed "willful" unless done, or omitted to be done, by you
not in good faith and without reasonable belief that your action or
omission was in the best interest of the Company. Notwithstanding the
foregoing, you shall not be deemed to have been terminated for Cause
unless and until there shall have been delivered to you a copy of a
resolution duly adopted by the affirmative vote of not less than
three-quarters (3/4) of the entire membership of the Board at a
meeting of the Board called and held for such purpose (after<PAGE>
[Date]
Page 5
reasonable notice to you and an opportunity for you, together with
your counsel, to be heard before the Board), finding that in the good
faith opinion of the Board you were guilty of conduct set forth above
in this Subsection and specifying the particulars thereof in detail.
(iii) Good Reason. You shall be entitled to terminate your
employment for Good Reason. For purposes of this Agreement, "Good
Reason" shall mean, without your express written consent, the
occurrence after a change in control of the Company of any of the
following circumstances:
(A) the assignment to you of any duties inconsistent
(except in the nature of a promotion) with the position in the
Company that you held immediately prior to the change in control
or a substantial adverse alteration in the nature or status of
your position or responsibilities or the conditions of your
employment from those in effect immediately prior to the change
in control of the Company;
(B) a reduction by the Company in your annual base salary
as in effect on the date hereof or as the same may be increased
from time to time;
(C) the Company's requiring you to be based more than
twenty-five (25) miles from the Company's offices at which you
were principally employed immediately prior to the date of the
change in control of the Company except for required travel on
the Company's business to an extent substantially consistent with
your present business travel obligations;
(D) the failure by the Company to pay to you any portion of
your current compensation or compensation under any deferred
compensation program of the Company, within seven (7) days of the
date such compensation is due;
(E) the failure by the Company to continue in effect any
material compensation or benefit plan in which you participate
immediately prior to the change in control of the Company unless
an equitable arrangement (embodied in an ongoing substitute or
alternative plan) has been made with respect to such plan, or the
failure by the Company to continue your participation therein (or
in such substitute or alternative plan) on a basis not materially
less favorable, both in terms of the amount of benefits provided
and the level of your participation relative to other
participants, than existed at the time of the change in control;
(F) the failure by the Company to continue to provide you
with benefits substantially similar to those enjoyed by you under
any of the Company's pension, life insurance, medical, health and
accident, or disability plans in which you were participating at<PAGE>
[Date]
Page 6
the time of the change in control of the Company, the taking of
any action by the Company which would directly or indirectly
materially reduce any of such benefits or deprive you of any
material fringe benefit enjoyed by you at the time of the change
in control of the Company, or the failure by the Company to
provide you with the number of paid vacation days to which you
are entitled on the basis of your years of service with the
Company in accordance with the Company's normal vacation policy
in effect at the time of the change in control of the Company;
(G) the failure of the Company to obtain a satisfactory
agreement from any successor to assume and agree to perform this
Agreement, as contemplated in Section 6 hereof; or
(H) any purported termination of your employment which is
not effected pursuant to a Notice of Termination satisfying the
requirements of Subsection (iv) below (and, if applicable, the
requirements of Subsection (ii) above), which purported
termination shall not be effective for purposes of this
Agreement.
Your right to terminate your employment pursuant to this Subsection
shall not be affected by your incapacity due to physical or mental
illness. Your continued employment shall not constitute consent to,
or a waiver of rights with respect to, any circumstance constituting
Good Reason hereunder.
(iv) Notice of Termination. Any purported termination of
your employment by the Company or by you shall be communicated by
written Notice of Termination to the other party hereto in accordance
with Section 7 hereof. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of your employment under the provision
so indicated.
(v) Date of Termination, Etc. "Date of Termination" shall
mean (A) if your employment is terminated for Disability, thirty (30)
days after Notice of Termination is given (provided that you shall not
have returned to the full-time performance of your duties during such
thirty (30) day period), and (B) if your employment is terminated
pursuant to Subsection (ii) or (iii) above or for any other reason
(other than Disability), the date specified in the Notice of
Termination (which, in the case of a termination pursuant to
Subsection (ii) above shall not be less than thirty (30) days, and in
the case of a termination pursuant to Subsection (iii) above shall not
be less than fifteen (15) nor more than sixty (60) days, respectively,
from the date such Notice of Termination is given); provided that if
within fifteen (15) days after any Notice of Termination is given, or,<PAGE>
[Date]
Page 7
if later, prior to the Date of Termination (as determined without
regard to this proviso), the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning
the termination, the Date of Termination shall be the date on which
the dispute is finally determined, either by mutual written agreement
of the parties or by a binding arbitration award; and provided further
that the Date of Termination shall be extended by a notice of dispute
only if such notice is given in good faith and the party giving such
notice pursues the resolution of such dispute with reasonable
diligence. Notwithstanding the pendency of any such dispute, the
Company will continue to pay you your full compensation in effect when
the notice giving rise to the dispute was given (including, but not
limited to, base salary) and continue you as a participant in all
compensation, benefit and insurance plans in which you were
participating when the notice giving rise to the dispute was given,
until the dispute is finally resolved in accordance with this
Subsection. Amounts paid under this Subsection are in addition to all
other amounts due under this Agreement and shall not be offset against
or reduce any other amounts due under this Agreement.
3. Compensation Upon Termination or During Disability.
Following a change in control of the Company, as defined by Subsection
2(i), upon termination of your employment or during a period of
disability you shall be entitled to the following benefits:
(i) During any period that you fail to perform your full-
time duties with the Company as a result of incapacity due to physical
or mental illness, you shall continue to receive your base salary at
the rate in effect at the commencement of any such period, together
with all compensation payable to you under the Company's disability
plan or program or other similar plan during such period, until this
Agreement is terminated pursuant to Section 3(i) hereof. Thereafter,
or in the event your employment shall be terminated by reason of your
death, your benefits shall be determined under the Company's
retirement, insurance and other compensation programs then in effect
in accordance with the terms of such programs.
(ii) If your employment shall be terminated by the Company
for Cause or by you other than for Good Reason, the Company shall pay
you your full base salary through the Date of Termination at the rate
in effect at the time Notice of Termination is given, plus all other
amounts to which you are entitled under any compensation plan of the
Company at the time such payments are due, and the Company shall have
no further obligations to you under this Agreement.
(iii) If your employment by the Company shall be terminated
(a) by the Company other than for Cause or Disability or (b) by you
for Good Reason, then you shall be entitled to the benefits provided
below:<PAGE>
[Date]
Page 8
(A) the Company shall pay you your full base salary through
the Date of Termination at the rate in effect at the time Notice
of Termination is given, plus all other amounts to which you are
entitled under any compensation plan of the Company, at the time
such payments are due, except as otherwise provided below;
(B) in lieu of any further salary payments to you for
periods subsequent to the Date of Termination, the Company shall
pay as severance pay to you a lump sum severance payment
(together with the payments provided in paragraphs (D), (E) and
(F) below, the "Severance Payments") equal to two (2) or, if
less, the number of years, including fractions, from the Date of
Termination until you reach your normal retirement age under the
Retirement Plan, times the sum of (1) the greater of (a) your
annual rate of base salary in effect on the Date of Termination
or (b) your annual rate of base salary in effect immediately
prior to the change in control of the Company and (2) the
greatest of (a) the average of the last two annual bonuses
(annualized in the case of any bonus paid with respect to a
partial year) paid to you preceding the Date of Termination, (b)
the average of the last two annual bonuses (annualized in the
case of any bonus paid with respect to a partial year) paid to
you preceding such change in control, (c) the most recent annual
bonus (annualized in the case of any bonus paid with respect to a
partial year) paid to you preceding the Date of Termination, or
(d) the most recent annual bonus (annualized in the case of any
bonus paid with respect to a partial year) paid to you preceding
such change in control;
(C) the Company shall also pay to you, within five (5) days
after any such fees or expenses are incurred, all legal fees and
expenses incurred by you as a result of or in connection with
such termination, including all such fees and expenses, if any,
incurred in contesting or disputing any such termination or in
seeking to obtain or enforce any right or benefit provided by
this Agreement (other than any such fees or expenses incurred in
connection with any such claim which is determined by
arbitration, in accordance with Section 11 of this Agreement, to
be frivolous) or in connection with any tax audit or proceeding
to the extent attributable to the application of section 4999 of
the Code to any payment or benefit provided hereunder;
(D) for a twenty-four (24) month period after such
termination, the Company shall arrange to provide you with life,
disability, accident and health insurance benefits substantially
similar to those which you are receiving immediately prior to the
Notice of Termination. Benefits otherwise receivable by you
pursuant to this Subsection 4(iii)(D) shall be reduced to the
extent comparable benefits are actually received by you from a
subsequent employer during the twenty-four (24) month period<PAGE>
[Date]
Page 9
following your termination, and any such benefits actually
received by you shall be reported to the Company;
(E) in addition to the retirement benefits to which you are
entitled under the Retirement Plan, any supplemental retirement
or excess benefit plan maintained by the Company or any of its
subsidiaries or any successor plans thereto (hereinafter
collectively referred to as the "Pension Plans"), the Company
shall pay you in cash a lump sum equal to the excess of (a) the
actuarial equivalent of the retirement pension (taking into
account any early retirement subsidies associated therewith and
determined as a straight life annuity commencing at age sixty-
five (65) or any earlier date, but in no event earlier than the
third anniversary of the Date of Termination, whichever annuity
the actuarial equivalent of which is greatest) which you would
have accrued under the terms of the Pension Plans (without regard
to the limitations imposed by Section 401(a)(17) of the Internal
Revenue Code of 1986, as amended (the "Code"), or any amendment
to the Pension Plans made subsequent to a change in control of
the Company and on or prior to the Date of Termination, which
amendment adversely affects in any manner the computation of
retirement benefits thereunder), determined as if you were fully
vested thereunder and had continued to be employed by the Company
(after the Date of Termination) for twenty-four (24) additional
months and as if you had accumulated twenty-four (24) additional
months of compensation (for purposes of determining your pension
benefits thereunder), each in an amount equal to the sum of the
amounts determined under clauses (1) and (2) of Section 4(iii)(B)
hereof (but in no event shall you be deemed to have continued to
be employed by the Company after your normal retirement age) over
(b) the actuarial equivalent of the vested retirement pension
(taking into account any early retirement subsidies associated
therewith and determined as a straight life annuity commencing at
age sixty-five (65) or any earlier date, but in no event earlier
than the Date of Termination, whichever annuity the actuarial
equivalent of which is greatest) which you had then accrued
pursuant to the provisions of the Pension Plans. For purposes of
this Subsection, "actuarial equivalent" shall be determined using
the same actuarial assumptions utilized in determining the amount
of alternate forms of benefits under the Retirement Plan
immediately prior to the change in control of the Company; and
(F) should you move your residence in order to pursue other
business opportunities within one (1) year of the Date of
Termination, the Company will pay you, within five (5) days after
any such expenses are incurred, an amount equal to the expenses
incurred by you in connection with such relocation (including
expenses incurred in selling your home to the extent such
expenses were customarily reimbursed by the Company to<PAGE>
[Date]
Page 10
transferred executives prior to the change in control of the
Company) and which are not reimbursed by another employer.
(iv) Except as otherwise specifically provided in paragraph
(C) and (F) thereof, the payments provided for in Subsection (iii)
shall be made not later than the fifth day following the Date of
Termination; provided, however, that if the amounts of such payments
cannot be finally determined on or before such day, the Company shall
pay to you on such day an estimate, as determined in good faith by the
Company, of the minimum amount of such payments and shall pay the
remainder of such payments (together with interest at the rate
provided in section 1274(b)(2)(B) of the Code) as soon as the amount
thereof can be determined but in no event later than the thirtieth day
after the Date of Termination. In the event that the amount of the
estimated payments exceeds the amount subsequently determined to have
been due, such excess shall constitute a loan by the Company to you
payable on the fifth day after demand therefor by the Company
(together with interest at the rate provided in section 1274(b)(2)(B)
of the Code).
(v) You shall not be required to mitigate the amount of any
payment provided for in this Section 4 by seeking other employment or
otherwise, nor shall the amount of any payment or benefit provided for
in this Section 4 be reduced by any compensation earned by you as the
result of employment by another employer, by retirement benefits, by
offset against any amount claimed to be owed by you to the Company, or
otherwise.
4. Limit on Severance Payments. In the event that (i) any
payment or benefit received or to be received by you in connection
with a change in control of the Company or the termination of your
employment (whether pursuant to the terms of this Agreement or any
other plan, arrangement or agreement with the Company, any person
whose actions result in a change in control or any person affiliated
with the Company or such person) (collectively with the Severance
Payments, "Total Payments") would not be deductible (in whole or part)
as a result of section 280G of the Code by the Company, an affiliate
or other person making such payment or providing such benefit and (ii)
the net amount retained by you, after paying the excise tax imposed by
section 4999 of the Code and any federal, state and local income and
employment taxes on the Total Payments, would not exceed the net
amount that would have been retained by you after the reduction of the
Severance Payments as set forth below and the payment of any federal,
state and local income and employment taxes on the Total Payments as
so reduced, the Severance Payments shall be reduced until no portion
of the Total Payments is not deductible, or the Severance Payments are
reduced to zero. For purposes of this limitation (a) no portion of
the Total Payments the receipt or enjoyment of which you shall have
effectively waived in writing prior to the date of payment of the
Severance Payments shall be taken into account, (b) no portion of the<PAGE>
[Date]
Page 11
Total Payments shall be taken into account which in the opinion of tax
counsel selected by the Company's independent auditors and acceptable
to you does not constitute a "parachute payment" within the meaning of
section 280G(b)(2) of the Code, (c) the Severance Payments shall be
reduced only to the extent necessary so that the Total Payments (other
than those referred to in clauses (a) or (b)) in their entirety
constitute reasonable compensation for services actually rendered
within the meaning of section 280G(b)(4) of the Code or are otherwise
not subject to disallowance as deductions, in the opinion of the tax
counsel referred to in clause (b); and (d) the value of any non-cash
benefit or any deferred payment or benefit included in the Total
Payments shall be determined by the Company's independent auditors in
accordance with the principles of sections 280G(d)(3) and (4) of the
Code. For purposes of determining the income taxes on the Total
Payments, you shall be deemed to pay federal income tax at the highest
marginal rate of federal income taxation in the calendar year in which
the Total Payments are to be made and local income taxes at the
highest marginal rate of taxation in the state and locality of your
residence on the Date of Termination, net of the maximum reduction in
federal income taxes which could be obtained from deduction of such
state and local taxes.
5. Successors; Binding Agreement. (i) The Company will
require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such succession had
taken place. Failure of the Company to obtain such assumption and
agreement prior to the effectiveness of any such succession shall be a
breach of this Agreement and shall entitle you to compensation from
the Company in the same amount and on the same terms as you would be
entitled to hereunder if you terminate your employment for Good Reason
following a change in control of the Company, except that for purposes
of implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Date of Termination. As used in
this Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor to its business and/or assets as aforesaid
which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
(ii) This Agreement shall inure to the benefit of and be
enforceable by your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees. If you should die while any amount would still be payable
to you hereunder if you had continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to your devisee, legatee or other designee or,
if there is no such designee, to your estate.<PAGE>
[Date]
Page 12
6. Notice. For the purpose of this Agreement, notices and all
other communications provided for in the Agreement shall be in writing
and shall be deemed to have been duly given when delivered or mailed
by United States registered mail, return receipt requested, postage
prepaid, addressed to the respective addresses set forth on the first
page of this Agreement, provided that all notices to the Company shall
be directed to the attention of the Board with a copy to the Secretary
of the Company, or to such other address as either party may have
furnished to the other in writing in accordance herewith, except that
notices of change of address shall be effective only upon receipt.
7. Miscellaneous. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing and signed by you and such officer
as may be specifically designated by the Board. No waiver by either
party hereto at any time of any breach by the other party hereto of,
or compliance with, any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have
been made by either party which are not expressly set forth in this
Agreement. The validity, interpretation, construction and performance
of this Agreement shall be governed by the laws of the State of
Florida, without giving effect to the conflicts of law principles
thereof. All references to sections of the Exchange Act or the Code
shall be deemed also to refer to any successor provisions to such
sections. Any payments provided for hereunder shall be paid net of
any applicable withholding required under federal, state or local law.
The obligations of the Company under Section 4 shall survive the
expiration of the term of this Agreement.
8. Validity. The invalidity or unenforceability or any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall
remain in full force and effect.
9. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all
of which together will constitute one and the same instrument.
10. Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by
arbitration conducted before a panel of three arbitrators in the State
of Florida in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction; provided,
however, that you shall be entitled to seek specific performance of
your right to be paid until the Date of Termination during the<PAGE>
[Date]
Page 13
pendency of any dispute or controversy arising under or in connection
with this Agreement.
11. Entire Agreement. This Agreement sets forth the entire
agreement of the parties hereto in respect of the subject matter
contained herein and during the term of the Agreement supersedes the
provisions of all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or
written, by any officer, employee or representative of any party
hereto with respect to the subject matter hereof.
12. Effective Date. This Agreement shall become effective as of
the date set forth above. If this letter sets forth our agreement on
the subject matter hereof, kindly sign and return to the Company the
enclosed copy of this letter which will then constitute our agreement
on this subject.
Sincerely,
TECO Energy, Inc.
By_________________________________
Name:
Title:
Agreed to this day
of , .
______________________________<PAGE>
[TECO ENERGY LETTERHEAD]
PRIVILEGED AND CONFIDENTIAL
[Date]
Dear :
TECO Energy, Inc. (the "Company") considers it essential to the
best interests of its stockholders to foster the continuous employment
of key management personnel. In this connection, the Board of
Directors of the Company (the "Board") recognizes that, as is the case
with many publicly held corporations, the possibility of a change in
control may exist and that such possibility, and the uncertainty and
questions which it may raise among management, may result in the
departure or distraction of key management personnel to the detriment
of the Company and its stockholders.
The Board has determined that appropriate steps should be taken
to reinforce and encourage the continued attention and dedication of
members of the Company's management, including yourself, to their
assigned duties without distraction in the face of potentially
disturbing circumstances arising from the possibility of a change in
control of the Company.
In order to induce you to remain in the employ of the Company and
in consideration of your agreement set forth in Subsection 2(iii)
hereof, the Company agrees that you shall receive the severance
benefits set forth in this letter agreement (the "Agreement") in the
event your employment with the Company is terminated subsequent to a
"change in control of the Company" (as defined in Section 2(i) hereof)
under the circumstances described below.
Term of Agreement. This Agreement shall commence on the date
hereof and shall continue in effect through June 30, ; provided,
however, that commencing on July 1, and each July 1 thereafter,
the term of this Agreement shall automatically be extended for one
additional year unless, not later than March 31 of such year, the
Company shall have given notice that it does not wish to extend this
Agreement (provided that no such notice may be given during the
pendency of or within one year following a potential change in control
of the Company, as defined in Section 2(ii) hereof); provided,<PAGE>
[Date]
Page 2
further, if a change in control of the Company shall have occurred
during the original or extended term of this Agreement, this Agreement
shall continue in effect for a period of twenty-four (24) months
beyond the month in which such change in control occurred.
Notwithstanding anything provided herein to the contrary, the term of
this Agreement shall not extend beyond the end of the month in which
you attain "normal retirement age" under the provisions of the TECO
Energy Group Retirement Plan (or any successor thereto) or any other
tax-qualified retirement plan of the Company or any of its
subsidiaries which is designed to provide you with your primary source
of retirement income from the Company or its subsidiaries (any such
plan being referred to herein as the "Retirement Plan").
1. Change in Control; Potential Change in Control. (i) No
benefits shall be payable hereunder unless there shall have been a
change in control of the Company, as set forth below. For purposes of
this Agreement, a "change in control of the Company" shall mean a
change in control of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), whether or not the Company is in fact required to comply
therewith; provided, that, without limitation, such a change in
control shall be deemed to have occurred if:
(A) any "person" (as such term is used in Sections 13(d)
and 14(d) of the Exchange Act), other than the Company, any
trustee or other fiduciary holding securities under an employee
benefit plan of the Company or a corporation owned, directly or
indirectly, by the stockholders of the Company in substantially
the same proportions as their ownership of stock of the Company
is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of
the Company representing 30% or more of the combined voting power
of the Company's then outstanding securities;
(B) during any period of twenty-four (24) consecutive
months (not including any period prior to the date of this
Agreement), individuals who at the beginning of such period
constitute the Board and any new director (other than a director
designated by a person who has entered into an agreement with the
Company to effect a transaction described in paragraphs (A), (C)
or (D) of this Section 2(i)) whose election by the Board or
nomination for election by the stockholders of the Company was
approved by a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors at the beginning
of such period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a
majority thereof; or<PAGE>
[Date]
Page 3
(C) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other
than (i) a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding
or by being converted into voting securities of the surviving
entity) at least 50% of the combined voting securities of the
Company or such surviving entity outstanding immediately after
such merger or consolidation or (ii) a merger or consolidation
effected to implement a recapitalization of the Company (or
similar transaction) in which no "person" (as hereinabove
defined) acquires 30% or more of the combined voting power of the
Company's then outstanding securities; or
(D) the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale
or disposition by the Company of all or substantially all of the
Company's assets.
(ii) For purposes of this Agreement, a "potential change in
control of the Company" shall be deemed to have occurred if:
(A) the Company enters into an agreement, the consummation
of which would result in the occurrence of a change in control of
the Company;
(B) any person (as hereinabove defined), including the
Company, publicly announces an intention to take or consider
taking actions which if consummated would constitute a change in
control of the Company;
(C) any person (as hereinabove defined), other than the
Company, any trustee or other fiduciary holding securities under
an employee benefit plan of the Company or a corporation owned,
directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of
the Company (a) is or becomes the beneficial owner, (b) discloses
directly or indirectly to the Company or publicly a plan or
intention to become the beneficial owner, or (c) makes a filing
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, with respect to securities to become the beneficial
owner, directly or indirectly, of securities representing 9.9% or
more of the combined voting power of the outstanding voting
securities of the Company; or
(D) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a potential change in control of the
Company has occurred.<PAGE>
[Date]
Page 4
(iii) You agree that, subject to the terms and conditions
of this Agreement, in the event of a potential change in control of
the Company, you will remain in the employ of the Company until the
earliest of (a) a date which is one (1) year from the occurrence of
such potential change in control of the Company, (b) the termination
by you of your employment after you attain "normal retirement age"
under the provisions of the Retirement Plan or by reason of Disability
as defined in Section 3(i), or (c) the date of the occurrence of a
change in control of the Company.
2. Termination Following Change in Control. If any of the
events described in Subsection 2(i) hereof constituting a change in
control of the Company shall have occurred, you shall be entitled to
the benefits provided in Subsection 4(iii) hereof upon the subsequent
termination of your employment during the term of this Agreement
unless such termination is (A) because of your death or Disability,
(B) by the Company for Cause, or (C) by you other than for Good
Reason. In the event your employment with the Company is terminated
for any reason and subsequently a change in control of the Company
shall occur, you shall not be entitled to any benefits hereunder.
(i) Disability. If, as a result of your incapacity due to
physical or mental illness, you shall have been absent from the full-
time performance of your duties with the Company for six (6)
consecutive months, and within thirty (30) days after written notice
of termination is given you shall not have returned to the full-time
performance of your duties, your employment may be terminated for
"Disability".
(ii) Cause. Termination by the Company of your employment
for "Cause" shall mean termination upon (A) the willful and continued
failure by you to substantially perform your duties with the Company
(other than any such failure resulting from your incapacity due to
physical or mental illness or any such actual or anticipated failure
after the issuance of a Notice of Termination by you for Good Reason,
as defined in Subsections 3(iv) and 3(iii), respectively) after a
written demand for substantial performance is delivered to you by the
Board, which demand specifically identifies the manner in which the
Board believes that you have not substantially performed your duties,
or (B) the willful engaging by you in conduct which is demonstrably
and materially injurious to the Company, monetarily or otherwise. For
purposes of this Subsection, no act, or failure to act, on your part
shall be deemed "willful" unless done, or omitted to be done, by you
not in good faith and without reasonable belief that your action or
omission was in the best interest of the Company. Notwithstanding the
foregoing, you shall not be deemed to have been terminated for Cause
unless and until there shall have been delivered to you a copy of a
resolution duly adopted by the affirmative vote of not less than
three-quarters (3/4) of the entire membership of the Board at a
meeting of the Board called and held for such purpose (after<PAGE>
[Date]
Page 5
reasonable notice to you and an opportunity for you, together with
your counsel, to be heard before the Board), finding that in the good
faith opinion of the Board you were guilty of conduct set forth above
in this Subsection and specifying the particulars thereof in detail.
(iii) Good Reason. You shall be entitled to terminate your
employment for Good Reason. For purposes of this Agreement, "Good
Reason" shall mean, without your express written consent, the
occurrence after a change in control of the Company of any of the
following circumstances:
(A) the assignment to you of any duties inconsistent
(except in the nature of a promotion) with the position in the
Company that you held immediately prior to the change in control
or a substantial adverse alteration in the nature or status of
your position or responsibilities or the conditions of your
employment from those in effect immediately prior to the change
in control of the Company;
(B) a reduction by the Company in your annual base salary
as in effect on the date hereof or as the same may be increased
from time to time;
(C) the Company's requiring you to be based more than
twenty-five (25) miles from the Company's offices at which you
were principally employed immediately prior to the date of the
change in control of the Company except for required travel on
the Company's business to an extent substantially consistent with
your present business travel obligations;
(D) the failure by the Company to pay to you any portion of
your current compensation or compensation under any deferred
compensation program of the Company, within seven (7) days of the
date such compensation is due;
(E) the failure by the Company to continue in effect any
material compensation or benefit plan in which you participate
immediately prior to the change in control of the Company unless
an equitable arrangement (embodied in an ongoing substitute or
alternative plan) has been made with respect to such plan, or the
failure by the Company to continue your participation therein (or
in such substitute or alternative plan) on a basis not materially
less favorable, both in terms of the amount of benefits provided
and the level of your participation relative to other
participants, than existed at the time of the change in control;
(F) the failure by the Company to continue to provide you
with benefits substantially similar to those enjoyed by you under
any of the Company's pension, life insurance, medical, health and
accident, or disability plans in which you were participating at<PAGE>
[Date]
Page 6
the time of the change in control of the Company, the taking of
any action by the Company which would directly or indirectly
materially reduce any of such benefits or deprive you of any
material fringe benefit enjoyed by you at the time of the change
in control of the Company, or the failure by the Company to
provide you with the number of paid vacation days to which you
are entitled on the basis of your years of service with the
Company in accordance with the Company's normal vacation policy
in effect at the time of the change in control of the Company;
(G) the failure of the Company to obtain a satisfactory
agreement from any successor to assume and agree to perform this
Agreement, as contemplated in Section 6 hereof; or
(H) any purported termination of your employment which is
not effected pursuant to a Notice of Termination satisfying the
requirements of Subsection (iv) below (and, if applicable, the
requirements of Subsection (ii) above), which purported
termination shall not be effective for purposes of this
Agreement.
Your right to terminate your employment pursuant to this Subsection
shall not be affected by your incapacity due to physical or mental
illness. Your continued employment shall not constitute consent to,
or a waiver of rights with respect to, any circumstance constituting
Good Reason hereunder.
(iv) Notice of Termination. Any purported termination of
your employment by the Company or by you shall be communicated by
written Notice of Termination to the other party hereto in accordance
with Section 7 hereof. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of your employment under the provision
so indicated.
(v) Date of Termination, Etc. "Date of Termination" shall
mean (A) if your employment is terminated for Disability, thirty (30)
days after Notice of Termination is given (provided that you shall not
have returned to the full-time performance of your duties during such
thirty (30) day period), and (B) if your employment is terminated
pursuant to Subsection (ii) or (iii) above or for any other reason
(other than Disability), the date specified in the Notice of
Termination (which, in the case of a termination pursuant to
Subsection (ii) above shall not be less than thirty (30) days, and in
the case of a termination pursuant to Subsection (iii) above shall not
be less than fifteen (15) nor more than sixty (60) days, respectively,
from the date such Notice of Termination is given); provided that if
within fifteen (15) days after any Notice of Termination is given, or,<PAGE>
[Date]
Page 7
if later, prior to the Date of Termination (as determined without
regard to this proviso), the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning
the termination, the Date of Termination shall be the date on which
the dispute is finally determined, either by mutual written agreement
of the parties or by a binding arbitration award; and provided further
that the Date of Termination shall be extended by a notice of dispute
only if such notice is given in good faith and the party giving such
notice pursues the resolution of such dispute with reasonable
diligence. Notwithstanding the pendency of any such dispute, the
Company will continue to pay you your full compensation in effect when
the notice giving rise to the dispute was given (including, but not
limited to, base salary) and continue you as a participant in all
compensation, benefit and insurance plans in which you were
participating when the notice giving rise to the dispute was given,
until the dispute is finally resolved in accordance with this
Subsection. Amounts paid under this Subsection are in addition to all
other amounts due under this Agreement and shall not be offset against
or reduce any other amounts due under this Agreement.
3. Compensation Upon Termination or During Disability.
Following a change in control of the Company, as defined by Subsection
2(i), upon termination of your employment or during a period of
disability you shall be entitled to the following benefits:
(i) During any period that you fail to perform your full-
time duties with the Company as a result of incapacity due to physical
or mental illness, you shall continue to receive your base salary at
the rate in effect at the commencement of any such period, together
with all compensation payable to you under the Company's disability
plan or program or other similar plan during such period, until this
Agreement is terminated pursuant to Section 3(i) hereof. Thereafter,
or in the event your employment shall be terminated by reason of your
death, your benefits shall be determined under the Company's
retirement, insurance and other compensation programs then in effect
in accordance with the terms of such programs.
(ii) If your employment shall be terminated by the Company
for Cause or by you other than for Good Reason, the Company shall pay
you your full base salary through the Date of Termination at the rate
in effect at the time Notice of Termination is given, plus all other
amounts to which you are entitled under any compensation plan of the
Company at the time such payments are due, and the Company shall have
no further obligations to you under this Agreement.
(iii) If your employment by the Company shall be terminated
(a) by the Company other than for Cause or Disability or (b) by you
for Good Reason, then you shall be entitled to the benefits provided
below:<PAGE>
[Date]
Page 8
(A) the Company shall pay you your full base salary through
the Date of Termination at the rate in effect at the time Notice
of Termination is given, plus all other amounts to which you are
entitled under any compensation plan of the Company, at the time
such payments are due, except as otherwise provided below;
(B) in lieu of any further salary payments to you for
periods subsequent to the Date of Termination, the Company shall
pay as severance pay to you a lump sum severance payment
(together with the payments provided in paragraphs (D), (E) and
(F) below, the "Severance Payments") equal to two (2) or, if
less, the number of years, including fractions, from the Date of
Termination until you reach your normal retirement age under the
Retirement Plan, times the sum of (1) the greater of (a) your
annual rate of base salary in effect on the Date of Termination
or (b) your annual rate of base salary in effect immediately
prior to the change in control of the Company and (2) the
greatest of (a) the average of the last two annual bonuses
(annualized in the case of any bonus paid with respect to a
partial year) paid to you preceding the Date of Termination, (b)
the average of the last two annual bonuses (annualized in the
case of any bonus paid with respect to a partial year) paid to
you preceding such change in control, (c) the most recent annual
bonus (annualized in the case of any bonus paid with respect to a
partial year) paid to you preceding the Date of Termination, or
(d) the most recent annual bonus (annualized in the case of any
bonus paid with respect to a partial year) paid to you preceding
such change in control;
(C) the Company shall also pay to you, within five (5) days
after any such fees or expenses are incurred, all legal fees and
expenses incurred by you as a result of or in connection with
such termination, including all such fees and expenses, if any,
incurred in contesting or disputing any such termination or in
seeking to obtain or enforce any right or benefit provided by
this Agreement (other than any such fees or expenses incurred in
connection with any such claim which is determined by
arbitration, in accordance with Section 11 of this Agreement, to
be frivolous) or in connection with any tax audit or proceeding
to the extent attributable to the application of section 4999 of
the Code to any payment or benefit provided hereunder;
(D) for a twenty-four (24) month period after such
termination, the Company shall arrange to provide you with life,
disability, accident and health insurance benefits substantially
similar to those which you are receiving immediately prior to the
Notice of Termination. Benefits otherwise receivable by you
pursuant to this Subsection 4(iii)(D) shall be reduced to the
extent comparable benefits are actually received by you from a
subsequent employer during the twenty-four (24) month period<PAGE>
[Date]
Page 9
following your termination, and any such benefits actually
received by you shall be reported to the Company;
(E) in addition to the retirement benefits to which you are
entitled under the Retirement Plan, any supplemental retirement
or excess benefit plan maintained by the Company or any of its
subsidiaries or any successor plans thereto (hereinafter
collectively referred to as the "Pension Plans"), the Company
shall pay you in cash a lump sum equal to the excess of (a) the
actuarial equivalent of the retirement pension (taking into
account any early retirement subsidies associated therewith and
determined as a straight life annuity commencing at age sixty-
five (65) or any earlier date, but in no event earlier than the
third anniversary of the Date of Termination, whichever annuity
the actuarial equivalent of which is greatest) which you would
have accrued under the terms of the Pension Plans (without regard
to the limitations imposed by Section 401(a)(17) of the Internal
Revenue Code of 1986, as amended (the "Code"), or any amendment
to the Pension Plans made subsequent to a change in control of
the Company and on or prior to the Date of Termination, which
amendment adversely affects in any manner the computation of
retirement benefits thereunder), determined as if you were fully
vested thereunder and had continued to be employed by the Company
(after the Date of Termination) for twenty-four (24) additional
months and as if you had accumulated twenty-four (24) additional
months of compensation (for purposes of determining your pension
benefits thereunder), each in an amount equal to the sum of the
amounts determined under clauses (1) and (2) of Section 4(iii)(B)
hereof (but in no event shall you be deemed to have continued to
be employed by the Company after your normal retirement age) over
(b) the actuarial equivalent of the vested retirement pension
(taking into account any early retirement subsidies associated
therewith and determined as a straight life annuity commencing at
age sixty-five (65) or any earlier date, but in no event earlier
than the Date of Termination, whichever annuity the actuarial
equivalent of which is greatest) which you had then accrued
pursuant to the provisions of the Pension Plans. For purposes of
this Subsection, "actuarial equivalent" shall be determined using
the same actuarial assumptions utilized in determining the amount
of alternate forms of benefits under the Retirement Plan
immediately prior to the change in control of the Company; and
(F) should you move your residence in order to pursue other
business opportunities within one (1) year of the Date of
Termination, the Company will pay you, within five (5) days after
any such expenses are incurred, an amount equal to the expenses
incurred by you in connection with such relocation (including
expenses incurred in selling your home to the extent such
expenses were customarily reimbursed by the Company to<PAGE>
[Date]
Page 10
transferred executives prior to the change in control of the
Company) and which are not reimbursed by another employer.
(iv) Except as otherwise specifically provided in paragraph
(C) and (F) thereof, the payments provided for in Subsection (iii)
shall be made not later than the fifth day following the Date of
Termination; provided, however, that if the amounts of such payments
cannot be finally determined on or before such day, the Company shall
pay to you on such day an estimate, as determined in good faith by the
Company, of the minimum amount of such payments and shall pay the
remainder of such payments (together with interest at the rate
provided in section 1274(b)(2)(B) of the Code) as soon as the amount
thereof can be determined but in no event later than the thirtieth day
after the Date of Termination. In the event that the amount of the
estimated payments exceeds the amount subsequently determined to have
been due, such excess shall constitute a loan by the Company to you
payable on the fifth day after demand therefor by the Company
(together with interest at the rate provided in section 1274(b)(2)(B)
of the Code).
(v) You shall not be required to mitigate the amount of any
payment provided for in this Section 4 by seeking other employment or
otherwise, nor shall the amount of any payment or benefit provided for
in this Section 4 be reduced by any compensation earned by you as the
result of employment by another employer, by retirement benefits, by
offset against any amount claimed to be owed by you to the Company, or
otherwise.
4. Limit on Severance Payments. In the event that any payment
or benefit received or to be received by you in connection with a
change in control of the Company or the termination of your employment
(whether pursuant to the terms of this Agreement or any other plan,
arrangement or agreement with the Company, any person whose actions
result in a change in control or any person affiliated with the
Company or such person) (collectively with the Severance Payments,
"Total Payments") would not be deductible (in whole or part) as a
result of section 280G of the Code by the Company, an affiliate or
other person making such payment or providing such benefit, the
Severance Payments shall be reduced until no portion of the Total
Payments is not deductible, or the Severance Payments are reduced to
zero. For purposes of this limitation (a) no portion of the Total
Payments the receipt or enjoyment of which you shall have effectively
waived in writing prior to the date of payment of the Severance
Payments shall be taken into account, (b) no portion of the Total
Payments shall be taken into account which in the opinion of tax
counsel selected by the Company's independent auditors and acceptable
to you does not constitute a "parachute payment" within the meaning of
section 280G(b)(2) of the Code, (c) the Severance Payments shall be
reduced only to the extent necessary so that the Total Payments (other
than those referred to in clauses (a) or (b)) in their entirety<PAGE>
[Date]
Page 11
constitute reasonable compensation for services actually rendered
within the meaning of section 280G(b)(4) of the Code or are otherwise
not subject to disallowance as deductions, in the opinion of the tax
counsel referred to in clause (b); and (d) the value of any non-cash
benefit or any deferred payment or benefit included in the Total
Payments shall be determined by the Company's independent auditors in
accordance with the principles of sections 280G(d)(3) and (4) of the
Code.
5. Successors; Binding Agreement. (i) The Company will
require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such succession had
taken place. Failure of the Company to obtain such assumption and
agreement prior to the effectiveness of any such succession shall be a
breach of this Agreement and shall entitle you to compensation from
the Company in the same amount and on the same terms as you would be
entitled to hereunder if you terminate your employment for Good Reason
following a change in control of the Company, except that for purposes
of implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Date of Termination. As used in
this Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor to its business and/or assets as aforesaid
which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
(ii) This Agreement shall inure to the benefit of and be
enforceable by your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees. If you should die while any amount would still be payable
to you hereunder if you had continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to your devisee, legatee or other designee or,
if there is no such designee, to your estate.
6. Notice. For the purpose of this Agreement, notices and all
other communications provided for in the Agreement shall be in writing
and shall be deemed to have been duly given when delivered or mailed
by United States registered mail, return receipt requested, postage
prepaid, addressed to the respective addresses set forth on the first
page of this Agreement, provided that all notices to the Company shall
be directed to the attention of the Board with a copy to the Secretary
of the Company, or to such other address as either party may have
furnished to the other in writing in accordance herewith, except that
notices of change of address shall be effective only upon receipt.
7. Miscellaneous. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or<PAGE>
[Date]
Page 12
discharge is agreed to in writing and signed by you and such officer
as may be specifically designated by the Board. No waiver by either
party hereto at any time of any breach by the other party hereto of,
or compliance with, any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have
been made by either party which are not expressly set forth in this
Agreement. The validity, interpretation, construction and performance
of this Agreement shall be governed by the laws of the State of
Florida, without giving effect to the conflicts of law principles
thereof. All references to sections of the Exchange Act or the Code
shall be deemed also to refer to any successor provisions to such
sections. Any payments provided for hereunder shall be paid net of
any applicable withholding required under federal, state or local law.
The obligations of the Company under Section 4 shall survive the
expiration of the term of this Agreement.
8. Validity. The invalidity or unenforceability or any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall
remain in full force and effect.
9. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all
of which together will constitute one and the same instrument.
10. Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by
arbitration conducted before a panel of three arbitrators in the State
of Florida in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction; provided,
however, that you shall be entitled to seek specific performance of
your right to be paid until the Date of Termination during the
pendency of any dispute or controversy arising under or in connection
with this Agreement.
11. Entire Agreement. This Agreement sets forth the entire
agreement of the parties hereto in respect of the subject matter
contained herein and during the term of the Agreement supersedes the
provisions of all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or
written, by any officer, employee or representative of any party
hereto with respect to the subject matter hereof.
12. Effective Date. This Agreement shall become effective as of
the date set forth above. If this letter sets forth our agreement on
the subject matter hereof, kindly sign and return to the Company the<PAGE>
[Date]
Page 13
enclosed copy of this letter which will then constitute our agreement
on this subject.
Sincerely,
TECO Energy, Inc.
By____________________________
Name:
Title:
Agreed to this day
of , .
______________________________<PAGE>
<TABLE>
TECO ENERGY, INC. EXHIBIT 11
COMPUTATIONS OF EARNINGS PER COMMON SHARE
Year ended Dec. 31, 1995 1994 1993
<CAPTION>
Fully Fully Fully
Primary Diluted Primary Diluted Primary Diluted
Earnings Earnings Earnings Earnings Earnings Earnings
<S> <C> <C> <C> <C> <C> <C>
Income before
cumulative effect of
change in accounting
principle (1) $ 186.1 $ 186.1 $ 153.2 $ 153.2 $ 150.3 $ 150.3
Cumulative effect of
change in accounting
principle (1) -- -- -- -- 11.2 11.2
Net income (1) $ 186.1 $ 186.1 $ 153.2 $ 153.2 $ 161.5 $ 161.5
Common shares
outstanding at
beginning of year(1)(2) 116.2 116.2 115.6 115.6 115.0 115.0
Dividend reinvestment
and common stock
purchase plan:
Shares issued(1)(2) .2 .2 .3 .3 .1 .1
Stock option plans:
Options exercised(1)(2) .1 .1 -- -- .2 .2
Shares under option
at end of year(1)(2) -- 2.4 -- 2.1 -- 1.7
Treasury shares which
could be purchased(1)(2) -- (1.8) -- (1.9) -- (1.3)
Average number of
shares outstanding(1)(2) 116.5 117.1 115.9 116.1 115.3 115.7
Earnings per average
common share outstanding:
Before cumulative
effect of change in
accounting principle $ 1.60 $ 1.59 $ 1.32 $ 1.32 $ 1.30 $ 1.30
Cumulative effect of
change in accounting
principle -- -- -- -- .10 .10
Earnings per average
common share
outstanding $ 1.60 $ 1.59 $ 1.32 $ 1.32 $ 1.40 $ 1.40
</TABLE>
(1) Millions.
(2) Restated to reflect a two-for-one stock split on Aug. 30, 1993.
103<PAGE>
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
TECO Energy, Inc. owns, directly or indirectly, all the common
stock of or a partnership interest in 37 subsidiaries, except as
indicated below. All of the companies are organized under the laws of
Florida except as indicated.
Tampa Electric Company
TERMCO, Inc.
TECO Diversified, Inc.
TECO Transport & Trade Corporation
Electro-Coal Transfer Corporation (a Louisiana corporation)
G C Service Company, Inc.
Gulfcoast Transit Company
Mid-South Towing Company
TECO Towing Company
TECO Coal Corporation (a Kentucky corporation)
Gatliff Coal Company (a Kentucky corporation)
Rich Mountain Coal Company (a Tennessee corporation)
Clintwood Elkhorn Mining Company (a Kentucky corporation)
Pike-Letcher Land Company (a Kentucky corporation)
Premier Elkhorn Coal Company (a Kentucky corporation)
TECO Properties Corporation
CPSC, Inc.
City Plaza Partners, Ltd.
30th Street R & D Park, Inc.
UTC II, Inc.
Tampa Essex, Inc.
Tampa Essex Place Associates, Ltd.
TECO Coalbed Methane, Inc. (an Alabama corporation)
TECO Finance, Inc.
TECO Gas & Oil, Inc.
TECO Investments, Inc.
TECO Power Services Corporation
Hardee Power I, Inc.
Hardee Power II, Inc.
Hardee Power Partners, Ltd.
Lake County Power Resources, Inc.
TPS Clean Coal, Inc.
TPS Guatemala One, Inc.
Tampa Centro Americana de Electricidad, Limitada*
(a Guatemalan Limited Liability Company)
TPS Operations Company
TPS Panama One, Inc. (formerly TPS Honduras One, Inc.)
TeCom Inc. (formerly TECO Energy Management Services Corporation)
* TPS Guatemala One, Inc. had an 87.5-percent partnership
interest at Dec. 31, 1995.
104<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration
statements of TECO Energy, Inc. on Form S-3 (File No. 33-43512) and
Form S-8 (File Nos. 33-35927, 33-40076, 33-5465 and 2-71457) of our
report dated Jan. 15, 1996, on our audits of the consolidated
financial statements of TECO Energy, Inc. and subsidiaries as of Dec.
31, 1995 and 1994 and for the years ended Dec. 31, 1995, 1994 and
1993, which report is included in this Annual Report on Form 10-K.
COOPERS & LYBRAND L.L.P.
CERTIFIED PUBLIC ACCOUNTANTS
Tampa, Florida
March 28, 1996
105<PAGE>
TECO ENERGY, INC. Exhibit 24.1
POWER OF ATTORNEY
WHEREAS, the Board of Directors of TECO Energy, Inc., a Florida
corporation, at a meeting held on January 17, 1996, authorized the officers
and Directors of the Corporation to execute an Annual Report on Form 10-K
and authorized the officers of the Corporation to file said Annual Report
with the Securities and Exchange Commission under the Securities Exchange
Act of 1934, as amended.
NOW, THEREFORE, each of the undersigned in his capacity as a Director
or officer or both, as the case may be, of said Corporation, does hereby
appoint R. H. Kessel, A. D. Oak and D. R. Pokross, Jr., and each of them,
severally, his true and lawful attorneys or attorney to execute in his
name, place and stead, in his capacity as Director or officer or both, as
the case may be, of said Corporation, said Annual Report and any and all
amendments thereto and all instruments necessary or incidental in
connection therewith, and to file the same with the Securities and Exchange
Commission. Each of said attorneys has the power to act hereunder with or
without the other of said attorneys and shall have full power of
substitution and resubstitution. Each of said attorneys shall have full
power and authority to do and perform in the name and on behalf of each of
the undersigned, in any and all capacities, every act whatsoever requisite
or necessary to be done in the premises, as fully and to all intents and
purposes as each of the undersigned might or could do in person, and each
of the undersigned hereby ratifies and approves the acts of said attorneys
and each of them.
IN TESTIMONY WHEREOF, the undersigned have executed this instrument
on the dates set forth below.
/s/ T. L. Guzzle January 17, 1996
T. L. Guzzle, Chairman of the Board,
Director and Chief Executive Officer
(Principal Executive Officer)
/s/ A. D. Oak January 17, 1996
A.D. Oak, Vice President-Finance
(Principal Financial and Accounting Officer)
/s/ G. F. Anderson January 17, 1996
G. F. Anderson, President,
Director and Chief Operating Officer
/s/ C. D. Ausley January 17, 1996
C. D. Ausley, Director
/s/ S. L. Baldwin January 17, 1996
S. L. Baldwin, Director
/s/ H. L. Culbreath January 17, 1996
H. L. Culbreath, Director
/s/ J. L. Ferman, Jr. January 17, 1996
J. L. Ferman, Jr., Director
/s/ E. L. Flom January 17, 1996
E. L. Flom, Director
/s/ H. R. Guild, Jr January 17, 1996
H. R. Guild, Jr., Director
/s/ D. R. Hendrix January 17, 1996
D. R. Hendrix, Director
/s/ R. L. Ryan January 17, 1996
R. L. Ryan, Director
/s/ W. P. Sovey January 17, 1996
W. P. Sovey, Director
/s/ J. T. Touchton January 17, 1996
J. T. Touchton, Director
/s/ J. A. Urquhart January 17, 1996
J. A. Urquhart, Director
/s/ J. O. Welch, Jr. January 17, 1996
J. O. Welch, Jr., Director
Exhibit 24.2
Transcript from Records of Board of Directors
January 17, 1996
*****************************************************************
RESOLVED, that the preparation and filing
with the Securities and Exchange Commission of an
Annual Report on Form 10-K pursuant to the
Securities Exchange Act of 1934, as amended,
including any required exhibits and amendments
thereto and containing the information required by
such form and any additional information as the
officers of the Corporation, with the advice of
counsel, deem necessary, advisable or appropriate
(the Annual Report ) are hereby authorized and
a p p roved; that the Chairman of the Board,
President, any Vice President and the Treasurer of
the Corporation be, and each of them acting singly
hereby is, authorized for and in the name and on
behalf of the Corporation to execute the Annual
R e port and cause it to be filed with the
Securities and Exchange Commission; and that the
officers referred to above be, and each of them
hereby is, authorized to execute said Annual
Report through or by A. D. Oak, D. R. Pokross, Jr.
or R. H. Kessel, or any of them, as duly
authorized attorneys pursuant to a Power of
Attorney in such form as shall be approved by the
Corporation's general counsel.
*****************************************************************
I, R. H. KESSEL, hereby certify that I am Secretary of TECO
Energy, Inc. (the "Corporation"), a Florida corporation, and
there is above set forth a true, correct and complete copy of a
certain resolution duly adopted by the Board of Directors of said
Corporation at a Regular Meeting of said Board convened and held
on January 17, 1996 at which meeting a quorum for the transaction
of business was present and acting throughout.
I further certify that said resolution has not been altered,
amended or rescinded and that the same is now in full force and
effect.
WITNESS my hand and the seal of the Corporation this 26th
day of March, 1996.
/s/ R. H. Kessel
Secretary
TECO ENERGY, INC.
(CORPORATE SEAL)
108<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> DEC-31-1995
<PERIOD-TYPE> YEAR
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,952,097
<OTHER-PROPERTY-AND-INVEST> 922,195
<TOTAL-CURRENT-ASSETS> 341,266
<TOTAL-DEFERRED-CHARGES> 171,532
<OTHER-ASSETS> 86,277
<TOTAL-ASSETS> 3,473,367
<COMMON> 116,732
<CAPITAL-SURPLUS-PAID-IN> 342,141
<RETAINED-EARNINGS> 782,014
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,240,887
0
54,956
<LONG-TERM-DEBT-NET> 994,856
<SHORT-TERM-NOTES> 2,400
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 358,940
<LONG-TERM-DEBT-CURRENT-PORT> 31,327
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 790,001
<TOT-CAPITALIZATION-AND-LIAB> 3,473,367
<GROSS-OPERATING-REVENUE> 1,392,285
<INCOME-TAX-EXPENSE> 59,118
<OTHER-OPERATING-EXPENSES> 1,074,583
<TOTAL-OPERATING-EXPENSES> 1,074,583
<OPERATING-INCOME-LOSS> 317,702
<OTHER-INCOME-NET> 14,315
<INCOME-BEFORE-INTEREST-EXPEN> 328,449
<TOTAL-INTEREST-EXPENSE> 83,204
<NET-INCOME> 189,695
3,568
<EARNINGS-AVAILABLE-FOR-COMM> 186,127
<COMMON-STOCK-DIVIDENDS> 121,956
<TOTAL-INTEREST-ON-BONDS> 42,736
<CASH-FLOW-OPERATIONS> 407,163
<EPS-PRIMARY> 1.60
<EPS-DILUTED> 1.59
<FN>
</TABLE>
