SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 1-8180
TECO ENERGY, INC.
(Exact name of registrant as specified in its charter)
FLORIDA 59-2052286
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
702 North Franklin Street, Tampa, Florida 33602
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (813) 228-4111
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
Number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date (October 31, 1997):
Common Stock, $1 Par Value 130,891,118<PAGE>
FORM 10-Q
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
In the opinion of management, the unaudited consolidated
financial statements include all adjustments necessary to
present fairly the results for the three- and nine-month
periods ended Sept. 30, 1997 and 1996. The current year
financial statements include the results of Lykes Energy,
Inc. and West Florida Gas Inc., both of which merged into
TECO Energy, Inc. in June 1997. Both mergers were accounted
for as poolings of interests. Prior year financial
statements have been restated to reflect the Lykes Energy
merger. Reference should be made to the explanatory notes
affecting the income and balance sheet accounts contained in
TECO Energy, Inc.'s Annual Report on Form 10-K for the year
ended Dec. 31, 1996 and to the notes on pages 7 through 10
of this report.
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FORM 10-Q
CONSOLIDATED BALANCE SHEETS
(in millions)
Sept. 30, Dec. 31,
1997 1996
Assets
Current assets
Cash and cash equivalents $ 37.9 $ 15.9
Receivables, less allowance
for uncollectibles 217.6 226.7
Inventories, at average cost
Fuel 80.1 62.2
Materials and supplies 61.6 60.0
Prepayments 12.0 12.8
409.2 377.6
Property, plant and equipment,
at original cost
Utility plant in service
Electric 3,852.4 3,784.7
Gas 465.1 410.4
Construction work in progress 52.2 45.4
Other property 955.3 927.8
5,325.0 5,168.3
Accumulated depreciation (2,089.4) (1,935.5)
3,235.6 3,232.8
Other assets
Other investments 88.6 91.1
Deferred income taxes 85.4 76.7
Deferred charges and other assets 144.6 123.4
318.6 291.2
$3,963.4 $3,901.6
Liabilities and Capital
Current liabilities
Long-term debt due within one year $ 40.6 $ 80.3
Notes payable 394.8 305.7
Accounts payable 148.2 181.5
Customer deposits 77.6 77.7
Interest accrued 31.0 20.2
Taxes accrued 48.2 14.9
740.4 680.3
Deferred income taxes 457.0 458.9
Investment tax credits 53.0 56.3
Regulatory liability-tax related 35.1 35.8
Other deferred credits 156.8 160.9
Long-term debt, less amount due
within one year 1,082.4 1,118.0
Preferred stock of Tampa Electric -- 20.0
Common equity
Common equity - 400 million shares
authorized, $1 par value - issued and
outstanding 130,856,818 in 1997 and
130,530,715 in 1996 1,507.7 1,442.2
Unearned compensation (69.0) (70.8)
$3,963.4 $3,901.6
The accompanying notes are an integral part of the consolidated financial
statements.
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FORM 10-Q
CONSOLIDATED STATEMENTS OF INCOME
(in millions)
For the three months ended Sept. 30, 1997 1996
Revenues $494.7 $458.2
Expenses
Operation 247.5 237.9
Maintenance 30.1 26.1
Depreciation 56.5 50.0
Taxes, other than income 35.0 33.4
369.1 347.4
Income from operations 125.6 110.8
Other income (expense)
Allowance for other funds used
during construction -- 5.8
Other income (expense), net (.5) (.4)
Preferred dividend requirements of
Tampa Electric -- (.2)
(.5) 5.2
Income before interest and income taxes 125.1 116.0
Interest charges
Interest expense 26.4 26.3
Allowance for borrowed funds used during
construction -- (2.3)
26.4 24.0
Income before provision for income taxes 98.7 92.0
Provision for income taxes 31.2 25.8
Net income from continuing operations 67.5 66.2
Net income (loss) from discontinued operations,
net of income tax expense (benefit) of
($3.5 million)for 1997 and $.2 million
for 1996 (6.5) .3
Loss on disposal of discontinued operations,
net of income tax benefit of $.9 million for
1997 (1.7) --
Net income $ 59.3 $ 66.5
Average common shares outstanding 130.8 129.4
Earnings per average common share outstanding:
From continuing operations $ 0.51 $ 0.51
Net income $ 0.45 $ 0.51
Dividend rate per common share outstanding $0.295 $ 0.28
The accompanying notes are an integral part of the consolidated financial
statements.
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FORM 10-Q
CONSOLIDATED STATEMENTS OF INCOME
(in millions)
For the nine months ended Sept. 30, 1997 1996
Revenues $1,405.8 $1,335.2
Expenses
Operation 718.6 722.5
Maintenance 83.3 73.7
Depreciation 168.4 149.4
Taxes, other than income 108.5 105.2
1,078.8 1,050.8
Income from operations 327.0 284.4
Other income (expense)
Allowance for other funds used
during construction .1 16.2
Other income (expense), net 1.7 1.1
Preferred dividend requirements of
Tampa Electric (.5) (1.5)
1.3 15.8
Income before interest and income taxes 328.3 300.2
Interest charges
Interest expense 79.9 78.5
Allowance for borrowed funds used during
construction -- (6.6)
79.9 71.9
Income before provision for income taxes 248.4 228.3
Provision for income taxes 79.6 60.7
Net income from continuing operations 168.8 167.6
Net income (loss) from discontinued operations,
net of income tax benefit of $3.5 million
for 1997 and $.4 million for 1996 (6.5) (.6)
Loss on disposal of discontinued operations,
net of income tax benefit of $.9 million
for 1997 (1.7) --
Net income $ 160.6 $ 167.0
Average common shares outstanding 130.7 129.2
Earnings per average common share outstanding:
From continuing operations $ 1.29 $ 1.30
Net income $ 1.23 $ 1.29
Dividend rate per common share outstanding $ 0.87 $ 0.825
The accompanying notes are an integral part of the consolidated financial
statements.
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FORM 10-Q
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
For the nine months ended Sept. 30, 1997 1996
Cash flows from operating activities
Net income $ 160.6 $ 167.0
Adjustments to reconcile net income
to net cash:
Depreciation 168.4 149.4
Deferred income taxes (17.3) (11.3)
Investment tax credits, net (3.8) (3.8)
Allowance for funds used
during construction (.1) (22.8)
Amortization of unearned compensation 4.5 3.9
Deferred revenue (27.7) 38.1
Deferred recovery clause 2.2 5.6
Refund to customers (19.4) --
Amortization of coal contract buyout 2.0 2.0
Receivables, less allowance
for uncollectibles 11.5 (8.9)
Inventories (19.3) 19.7
Taxes accrued 33.3 31.4
Interest accrued 10.7 11.1
Accounts payable (13.6) (26.6)
Other 6.7 14.1
298.7 368.9
Cash flows from investing activities
Capital expenditures (148.1) (251.4)
Allowance for funds used
during construction .1 22.8
Investment in short-term investments -- (1.6)
Other non-current investments 2.1 3.1
(145.9) (227.1)
Cash flows from financing activities
Common stock 3.8 11.4
Proceeds from long-term debt 29.3 3.1
Repayment of long-term debt (73.6) (31.5)
Net payments under credit lines (49.8) (7.2)
Net increase in short-term debt 88.6 26.1
Redemption of preferred stock,
including premium (20.4) (35.5)
Dividends (108.7) (100.1)
(130.8) (133.7)
Net increase in cash and cash equivalents 22.0 8.1
Cash and cash equivalents
at beginning of period 15.9 14.3
Cash and cash equivalents at end of period $ 37.9 $ 22.4
The accompanying notes are an integral part of the consolidated financial
statements.
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FORM 10-Q
NOTES TO FINANCIAL STATEMENTS
A. In June 1997, TECO Energy completed its merger with Lykes Energy,
Inc. (the Peoples companies) and issued approximately 12.1 million
shares of its common stock with a market value of $300 million in
connection with this tax-free transaction. Concurrent with this
merger, Lykes Energy, Inc. s regulated gas distribution utility,
Peoples Gas System, Inc., was merged into Tampa Electric Company and
now operates as the Peoples Gas division of Tampa Electric Company.
Also in June 1997, TECO Energy completed its merger with West
Florida Gas Inc. (West Florida) and issued about .8 million shares of
its common stock with a market value of $21 million in connection with
this tax-free transaction. Concurrent with this merger, West
Florida s regulated gas distribution utility, West Florida Natural Gas
Company, was merged into Tampa Electric Company and now operates as
part of the Peoples Gas division.
These mergers were accounted for as poolings of interests and,
accordingly, the company s Consolidated Balance Sheet as of Sept. 30,
1997 and its Consolidated Statements of Income and Cash Flows for the
periods ended Sept. 30, 1997 include the results of the Peoples
companies and West Florida.
The Consolidated Balance Sheet as of Dec. 31, 1996 and the
Consolidated Statements of Income and Cash Flows for the periods ended
Sept. 30, 1996 have been restated to include the results of the
Peoples companies. The 1996 statements have not been restated to
reflect the operations and financial position of West Florida due to
its size.
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FORM 10-Q
The company's combined restated revenues and net income from
continuing operations for the three- and nine-month periods ended
Sept. 30, 1997 and 1996 were as follows:
Combining Results
From Continuing Operations
(unaudited)
Three Months Ended Nine Months Ended
Sept. 30, 1997 Sept. 30, 1997
Net Net
(millions) Revenues Income Revenues Income
TECO Energy pre-merger $ -- $ -- $ 753.9 $ 94.1
Peoples companies pre-merger(1) -- -- 157.2 10.5
-- -- 911.1 104.6
Merger related(2) -- (0.1) -- (3.4)
-- (0.1) 911.1 101.2
TECO Energy post-merger 494.7 67.6 494.7 67.6
Combined $494.7 $67.5 $1,405.8 $168.8
Three Months Ended Nine Months Ended
Sept. 30, 1996 Sept. 30, 1996
Net Net
Revenues Income Revenues Income
TECO Energy pre-merger(3) $399.5 $ 65.1 $1,101.4 $155.8
Peoples companies pre-merger(1) 58.7 1.1 233.8 11.8
Combined $458.2 $ 66.2 $1,335.2 $167.6
(1) The Peoples companies include Peoples Gas System, Inc. and the
non-regulated Peoples companies for both 1997 and 1996 and West
Florida Gas Inc. for 1997.
(2) Reflects a net after-tax one-time charge for all merger-related
transactions.
(3) The 1996 amounts were previously reported on Form 10Q for the
quarter ended Sept. 30, 1996.
B. On Aug. 28, 1997, the company announced its plan to discontinue
operations of its conventional oil and gas subsidiary, TECO Oil & Gas,
Inc. Since its formation in the second half of 1995, TECO Oil & Gas
has participated in joint ventures utilizing 3-D seismic imaging in
the exploration for oil and gas. It has acquired a portfolio of
interests in producing wells, discoveries not yet producing and lease
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FORM 10-Q
prospects in the shallow waters of the Gulf of Mexico and on shore in
Texas.
As a result of the company s intention to sell this business, all
activities of the subsidiary through Aug. 31, 1997 were reported as
discontinued operations on the Consolidated Statements of Income. An
estimate of activities at TECO Oil & Gas after that date, including
the sale of the assets at book value, has been reported as a loss on
the disposal of discontinued operations. A summary of net assets is
as follows:
(millions) 9/30/97 12/31/96
Current assets $ 2.5 $ 2.5
Net property, plant and equipment 17.4 11.2
Other assets 7.6 8.3
Total liabilities (1.7) (3.2)
Net assets $25.8 $18.8
Total revenues from discontinued operations for the quarters
ended Sept. 30, 1997 and 1996 were $1.9 million and $1.3 million,
respectively. For the nine-month periods ended Sept. 30, 1997 and
1996, total revenues from discontinued operations were $8.1 million
and $2.1 million, respectively.
As of Sept. 30, 1997, none of the assets of TECO Oil & Gas had
been sold. While no buyer has been identified to date, the sale of
these assets is expected to be completed by the end of 1997. Based on
preliminary market analysis, the company expects to realize more than
book value on the sale of these assets.
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FORM 10-Q
C. TECO Energy, Inc. and its subsidiaries have made certain
commitments in connection with their continuing capital expenditure
p r ogram and estimate that capital expenditures for continuing
operations during 1997 will be as follows:
millions
Tampa Electric Company
Electric division $117
Peoples Gas division 30
TECO Transport Corporation 21
TECO Coal Corporation 9
TECO Power Services 8
Other diversified businesses 4
$189
D. During the first nine months of 1997, the electric division of
Tampa Electric Company recognized $28 million of revenues that had
been deferred in 1995 and 1996 pursuant to regulatory agreements
approved by the Florida Public Service Commission (FPSC). The
electric division deferred $38 million of revenues during the first
nine months of last year. In addition, it refunded $19 million of
previously deferred revenues to customers during the first nine months
of this year in accordance with the agreements.
As of Sept. 30, 1997, $33 million of deferred revenues was
included in other deferred credits.
E. On July 16, 1997, Tampa Electric Company retired all of its
outstanding shares of preferred stock at the per share redemption
prices of $103.75 for Series A, $102.875 for Series B and $101.00 for
Series D.
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FORM 10-Q
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
Three months ended Sept. 30, 1997:
Net income from continuing operations of $68 million in the third
quarter of 1997 was 2 percent higher than in last year's third
quarter, after restating 1996 results to include the effects of the
mergers described in Note A. Improved operating results at TECO
Transport, TECO Coalbed Methane and TECO Coal were partially offset by
the decline in capitalized financing costs (AFUDC) in 1997. Net
income after the discontinued conventional oil and gas operations of
TECO Oil & Gas was $59 million compared to $67 million last year.
Consolidated operating income from continuing operations was up
13 percent from 1996's third quarter primarily because of the
completion of the Polk Unit One electric generating plant and its
inclusion in rate base for earnings purposes at Tampa Electric and
improved results at TECO Transport, TECO Coalbed Methane and TECO
Coal.
The following table identifies the unconsolidated revenues and
o p erating income from continuing operations of TECO Energy's
significant operating groups.
Contributions by operating group (unconsolidated)
Revenues
(millions) 1997 1996
Tampa Electric Company
Electric division $342.3(1) $311.1(2)
Peoples Gas division 49.7 49.0
$392.0 $360.1
Diversified companies $156.7 $152.9
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FORM 10-Q
Operating income
(millions) 1997 1996
Tampa Electric Company
Electric division $ 94.0 $ 82.5
Peoples Gas System 4.6 3.8
$ 98.6 $ 86.3
Diversified companies* $ 28.5 $ 26.1
(1)T h e electric division recognized $11 million of revenues
previously deferred. See Note D on page 10.
(2)The electric division s revenues were net of $8 million of
deferred revenues. See Note D on page 10.
* O perating income includes items that are reclassified for
consolidated financial statement purposes. The principal items are
the non-conventional fuels tax credit related to coalbed methane
production and interest expense of the limited-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. Certain
1996 amounts have also been restated to conform with the current year
presentation.
Tampa Electric Company s Operating Results
Tampa Electric Company's third quarter operating income of
$99 million was higher than operating results in 1996 primarily
because of the completion of the Polk Unit One electric generating
plant and its inclusion in rate base for earnings purposes.
Electric division
Revenues increased 10 percent in this year s third quarter after
the recognition of $11 million of previously deferred revenues while
$8 million of revenues were deferred in the same period last year
under the company s regulatory agreements.
Excluding the effects of deferred revenues, third quarter
revenues increased 4 percent from last year primarily due to 3 percent
higher retail electric energy sales. Retail sales increased due to
2.5-percent customer growth and more than 3 percent higher commercial
and industrial sales, the result of a strong local economy.
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FORM 10-Q
Operating expenses in the third quarter were 9 percent higher
than in 1996 primarily as a result of the operation of Polk Unit One
and increased maintenance on generation equipment.
Third quarter results also reflected a recent decision by the
FPSC to change the regulatory treatment of certain long-term wholesale
p o wer sales contracts through 1999. The third quarter impact
retroactive to Jan. 1, 1997, was $7.5 million pretax. The fourth
quarter impact of this decision is expected to be about $2 million.
Tampa Electric intends to sell these contracts to other power
suppliers by year end.
A s a result of this FPSC decision, Tampa Electric will
concentrate its wholesale power sales efforts on energy broker or
other short-term sales for the next two years.
On Oct. 9, 1997, IMC-Agrico (IMCA) and Duke Energy Power Services
announced they had signed a letter of intent for the construction of a
natural gas fired combined cycle power plant with a minimum capacity
of 240 megawatts. Although IMCA, a large phosphate producer, was the
electric division s largest customer in 1996, it represented less than
3 percent of 1996's base revenues. The proposed plant is intended to
serve electric load currently served by Tampa Electric and two other
utilities. The announcement further indicated that the plant is
expected to begin operation as early as mid-2000 on property currently
owned by IMCA in central Florida. The announcement also stated that
capacity not used by IMCA will be sold in the wholesale market by a
Duke Energy affiliate.
IMCA has sought an order from the FPSC declaring that the project
involves permissible self generation. Tampa Electric has filed a
petition with the FPSC to intervene in this proceeding because it
believes the proposed project will involve retail transactions within
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FORM 10-Q
Tampa Electric s defined service area which are prohibited under
existing Florida regulation.
Because specific information with respect to the proposed plant,
such as the ultimate size, configuration and location has not been
announced, its full effect on Tampa Electric is unclear at this time.
Tampa Electric believes that there would not be a material adverse
financial impact on it if the plant is actually constructed. Under
existing regulation, however, there would likely be a shifting of
costs to other retail customers.
Peoples Gas System
Total revenues at Peoples Gas System increased 1 percent due to
higher residential sales and increased transportation services.
Operating income increased in the quarter due to lower non-fuel
operating expenses.
Diversified Companies Operating Results
Unconsolidated third quarter operating income from TECO Energy's
continuing diversified companies (including the non-regulated Peoples
companies) rose 9 percent, primarily due to improved performance at
TECO Transport, TECO Coalbed Methane and TECO Coal. Revenues were up
3 percent compared to 1996 primarily due to the improved results at
TECO Transport, TECO Coalbed Methane and TECO Coal.
At TECO Transport, better fleet utilization for phosphate and
ocean charter businesses and increased volumes handled at the transfer
terminal contributed to improved operating results.
At TECO Coalbed Methane, higher natural gas prices and lower per
unit operating costs contributed to increased operating income.
At TECO Coal, operating income increased in the third quarter as
a result of restructuring work in 1996 at the Gatliff operations.
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FORM 10-Q
Operating income at TECO Power Services was lower than last year
due to interest on limited-recourse debt issued in 1997 by this
company; debt at the parent was correspondingly reduced.
At TeCom, because of a high level of product enhancement activity
in 1997, product development costs are being capitalized. In the
third quarter, TeCom capitalized $1.5 million pretax of development
costs compared with $1.2 million expensed during the same period last
year.
Consolidated interest expense before capitalized financing costs
was essentially unchanged from last year because increased levels of
long-term debt at Tampa Electric were offset by the repayment of
medium-term notes at the parent company.
Total AFUDC decreased in 1997 because Tampa Electric s Polk Unit
One began commercial service at the end of 1996's third quarter.
The effective income tax rate on net income from continuing
operations for the third quarter was 32 percent compared to 28 percent
last year, primarily due to lower AFUDC-other in 1997.
The third quarter loss from discontinued operations reflects a $6
million after-tax loss at TECO Oil & Gas related to a charge for three
offshore wells which had stopped producing and dry hole expenses from
the ongoing drilling program. The loss on disposal of discontinued
operations indicates the estimated loss for TECO Oil & Gas operations
from the company s announcement of its intention to sell the
conventional oil and gas business to the date of sale, and the sale of
the assets at book value,. (See Note B on pages 8 and 9)
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FORM 10-Q
Nine months ended Sept. 30, 1997:
Net income from continuing operations of $169 million in the
first nine months of 1997 was slightly higher than in 1996's first
nine months. Improved operating results at Tampa Electric and TECO
Coal offset the decline in AFUDC. Net income after the discontinued
operations at TECO Oil & Gas was $161 million compared with $167
million in 1996.
Consolidated operating income from continuing operations was up
15 percent from 1996's first nine months primarily because of the
completion of the Polk Unit One electric generating plant and its
inclusion in rate base for earnings purposes at Tampa Electric and
higher results at TECO Coal.
The following table identifies the unconsolidated revenues and
operating income from continuing operations of TECO Energy's
significant operating groups.
Contributions by operating group (unconsolidated)
Revenues
(millions) 1997 1996
Tampa Electric Company
Electric division $ 915.1(1) $ 838.3(2)
Peoples Gas division 183.6 197.7
$1,098.7 $1,036.0
Diversified companies $ 461.9 $ 452.1
Operating income
(millions) 1997 1996
Tampa Electric Company
Electric division $224.4 $185.7
Peoples Gas division 25.6 24.0
$250.0 $209.7
Diversified companies* $ 83.1 $ 80.5
(1)T h e electric division recognized $28 million of revenues
previously deferred. See Note D on page 10.
(2)The electric division s revenues were net of $38 million of
deferred revenues. See Note D on page 10.
* O perating income includes items that are reclassified for
consolidated financial statement purposes. The principal items are the
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FORM 10-Q
n o n -conventional fuels tax credit related to coalbed methane
production and interest expense of the limited-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. Certain
1996 amounts have also been restated to conform with the current year
presentation.
Tampa Electric Company s Operating Results
Electric division
T h e electric division s year-to-date operating income of
$250 million was higher than its 1996 operating results because of the
completion of the Polk Unit One generating plant and its inclusion in
rate base for earnings purposes.
Revenues increased 9 percent in the first nine months of this
year as $28 million of previously deferred revenues were recognized
under Tampa Electric s regulatory agreements, while $38 million of
revenues were deferred for the same period last year under these
agreements.
Excluding the effects of deferred revenues, year-to-date revenues
were up slightly over last year as milder than normal weather early in
the year partially offset 2.4 percent customer growth.
Operating expenses for the first nine months were 6 percent
higher than in 1996, primarily as a result of the operation of Polk
Unit One and increased maintenance on generation equipment.
Peoples Gas System
Peoples Gas System reported 7 percent higher operating income for
the first nine months due to lower non-fuel operating expenses and the
addition of the West Florida Natural Gas operations.
Total revenues decreased 7 percent and non-fuel revenues by 1
percent, the result of commercial and industrial customers moving from
firm gas purchases to transportation only services.
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FORM 10-Q
Diversified Companies Operating Results
Unconsolidated operating income from TECO Energy's continuing
diversified companies (including the non-regulated Peoples companies)
increased more than 3 percent from last year primarily because of
higher contributions from TECO Coal. Revenues rose 2 percent largely
due to higher third-party sales at TECO Coal.
TECO Coal s operating income was up because of restructuring work
in 1996 at Gatliff, improved operating efficiencies and higher third-
party volumes.
At TECO Coalbed Methane, operating income increased by 2 percent
because lower per unit operating costs more than offset lower prices
and slightly lower volume.
At TECO Transport, operating income was unchanged from last year
as increased volumes to Tampa Electric and higher levels of grain
shipments offset adverse weather early in the year and higher
operating expenses in the river business.
Operating income at TECO Power Services was lower than last year
due to interest on limited-recourse debt issued by this company in
1997; debt at the parent was correspondingly reduced.
Product development activity at TeCom resulted in $4.5 million
pretax of development costs being capitalized. In the first nine
months of 1996, $3.7 million of development costs were expensed.
TECO Energy's consolidated interest expense before capitalized
financing costs was up 2 percent due primarily to higher debt levels
at Tampa Electric.
Total AFUDC decreased in 1997 because Tampa Electric s Polk Unit
One began commercial service at the end of 1996's third quarter.
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FORM 10-Q
The effective income tax rate on net income from continuing
operations for the first nine months was 32 percent compared to 26
percent last year, primarily due to lower capitalized financing costs
and non-deductible merger costs.
Liquidity, Capital Resources and Changes in Financial Condition
Utility plant in service at the Peoples Gas division increased
from year-end 1996 as a result of the addition of West Florida Natural
Gas Company.
Notes payable increased to fund the maturity of $42 million of
TECO Energy medium-term notes, and the redemption of Tampa Electric
preferred stock and debt assumed in the West Florida Natural Gas
Company merger.
TECO Energy enters into futures and options contracts, from time
to time, to hedge the selling price for its physical production at
TECO Coalbed Methane and TECO Oil & Gas and to limit exposure to gas
price increases in both the regulated Peoples Gas System and
unregulated Peoples Gas propane businesses. TECO Energy does not use
derivatives or other hedging instruments for speculative purposes.
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FORM 10-Q
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
11. Computation of earnings per common share.
27.1 Financial data schedule - nine months ended Sept. 30, 1997.
(EDGAR filing only)
27.2 Restated financial data schedule - nine months ended Sept. 30,
1996. (EDGAR filing only)
(b) Reports on Form 8-K
The registrant filed a Current Report on Form 8-K dated
August 28, 1997 reporting under "Item 5. Other Events" the
registrant s plan to sell its conventional oil and gas production
business and a third quarter charge relating to a group of
nonproducing wells.
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FORM 10-Q
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
TECO ENERGY, INC.
(Registrant)
Date: November 12, 1997 By: /s/ A. D. Oak
A. D. Oak
Senior Vice President - Finance
and Chief Financial Officer
(Principal Financial Officer)
- 21 -<PAGE>
FORM 10-Q
INDEX TO EXHIBITS
Exhibit No. Description of Exhibits Page No.
11. Computation of earnings per common share 23
27.1 Financial data schedule - nine months ended
Sept. 30, 1997 (EDGAR filing only) --
27.2 Restated financial data schedule - nine months
ended Sept. 30, 1996 (EDGAR filing only) --
- 22 -<PAGE>
<TABLE>
Exhibit 11
TECO ENERGY, INC.
COMPUTATION OF EARNINGS PER COMMON SHARE
<CAPTION>
Three months ended Sept. 30, 1997 1996(1)
Primary Fully Diluted Primary Fully Diluted
<S> <C> <C> <C> <C> <C>
Earnings Earnings Earnings Earnings
Net income from continuing
operations (000) $ 67,491 $ 67,491 $ 66,245 $ 66,245
Net income (000) $ 59,285 $ 59,285 $ 66,516 $ 66,516
Common shares outstanding
at beginning of period 130,805,115 130,805,115 129,356,421 129,356,421
Dividend reinvestment and
common stock purchase plan:
Shares issued -- -- 46,808 46,808
Stock granted 51 51 -- --
Stock option plans:
Options exercised 36,422 36,422 7,725 7,725
Shares under option at
end of period -- 2,626,162 -- 2,522,572
Treasury shares which could
be purchased -- (2,219,722) -- (2,076,370)
Avg. no. of shares outstanding 130,841,588 131,298,028 129,410,954 129,857,156
Earnings per share from
continuing operations $ 0.51 $ 0.51 $ 0.51 $ 0.51
Earnings per share $ 0.45 $ 0.45 $ 0.51 $ 0.51
Nine months ended Sept. 30, 1997 1996(1)
Primary Fully Diluted Primary Fully Diluted
Earnings Earnings Earnings Earnings
Net income from continuing
operations (000) $ 168,763 $ 168,763 $ 167,561 $ 167,561
Net income (000) $ 160,573 $ 160,573 $ 166,962 $ 166,962
Common shares outstanding
at beginning of period 130,530,715 130,530,715 128,865,058 128,865,058
Dividend reinvestment and
common stock purchase plan:
Shares issued -- -- 143,061 143,061
Stock granted 16,758 16,758 -- --
Restricted stock granted 67,680 67,680 47,760 47,760
Shares canceled (3,649) (3,649) -- --
Stock option plans:
Options exercised 96,069 96,069 174,633 174,633
Shares under option at
end of period -- 2,676,162 -- 2,522,572
Treasury shares which could
be purchased -- (2,253,697) -- (2,038,723)
Avg. no. of shares outstanding 130,707,573 131,130,038 129,230,512 129,714,361
Earnings per share from
continuing operations $ 1.29 $ 1.29 $ 1.30 $ 1.29
Earnings per share $ 1.23 $ 1.23 $ 1.29 $ 1.29
(1) 1996 amounts have been restated to include the effects of the Lykes Energy, Inc. merger.
</TABLE>
- 23 -<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
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-1-1997
<PERIOD-END> SEP-30-1997
<PERIOD-TYPE> 9-MOS
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 2,754,780
<OTHER-PROPERTY-AND-INVEST> 480,841
<TOTAL-CURRENT-ASSETS> 409,174
<TOTAL-DEFERRED-CHARGES> 229,984
<OTHER-ASSETS> 88,654
<TOTAL-ASSETS> 3,963,433
<COMMON> 130,857
<CAPITAL-SURPLUS-PAID-IN> 355,554
<RETAINED-EARNINGS> 1,021,327
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,507,738
0
0
<LONG-TERM-DEBT-NET> 1,082,417
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 394,800
<LONG-TERM-DEBT-CURRENT-PORT> 40,560
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 937,918
<TOT-CAPITALIZATION-AND-LIAB> 3,963,433
<GROSS-OPERATING-REVENUE> 1,405,790 <F1>
<INCOME-TAX-EXPENSE> 79,606
<OTHER-OPERATING-EXPENSES> 1,078,793
<TOTAL-OPERATING-EXPENSES> 1,078,793
<OPERATING-INCOME-LOSS> 326,997 <F1>
<OTHER-INCOME-NET> 1,775
<INCOME-BEFORE-INTEREST-EXPEN> 328,295
<TOTAL-INTEREST-EXPENSE> 79,926
<NET-INCOME> 161,050 <F2>
477
<EARNINGS-AVAILABLE-FOR-COMM> 160,573 <F2>
<COMMON-STOCK-DIVIDENDS> 108,671
<TOTAL-INTEREST-ON-BONDS> 36,130
<CASH-FLOW-OPERATIONS> 298,730
<EPS-PRIMARY> 1.23 <F3>
<EPS-DILUTED> 1.23 <F3>
<FN>
<F1> REPRESENTS RESULTS FROM CONTINUING OPERATIONS.
<F2> INCLUDED AN $8.2 MILLION AFTER-TAX LOSS FROM DISCONTINUED
OPERATIONS.
<F3> INCLUDED A 6 CENT-PER SHARE LOSS FROM DISCONTINUED OPERATIONS.
</FN>
</TABLE>
/TEXT
<PAGE>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-27.2
<SEQUENCE>4
<DESCRIPTION>9/30/96 RESTATED
<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. THIS 1996
FINANCIAL DATA SCHEDULE HAS BEEN RESTATED TO RELFECT THE MERGER OF
LYKES ENERGY, INC. WITH AND INTO THE REGISTRANT IN JUNE 1997. THIS
MERGER WAS ACCOUNTED FOR AS A POOLING OF INTERESTS.
</LEGEND>
<CIK> 0000350563
<NAME> TECO Energy, Inc.
<MULTIPLIER> 1000
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-1-1996
<PERIOD-END> SEP-30-1996
<PERIOD-TYPE> 9-MOS
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 2,763,442
<OTHER-PROPERTY-AND-INVEST> 478,292
<TOTAL-CURRENT-ASSETS> 386,261
<TOTAL-DEFERRED-CHARGES> 194,221
<OTHER-ASSETS> 89,915
<TOTAL-ASSETS> 3,912,131
<COMMON> 129,459
<CAPITAL-SURPLUS-PAID-IN> 345,259
<RETAINED-EARNINGS> 946,111
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,420,829
0
19,960
<LONG-TERM-DEBT-NET> 1,072,035
<SHORT-TERM-NOTES> 2,025
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 385,400
<LONG-TERM-DEBT-CURRENT-PORT> 52,099
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 959,783
<TOT-CAPITALIZATION-AND-LIAB> 3,912,131
<GROSS-OPERATING-REVENUE> 1,335,247 <F1>
<INCOME-TAX-EXPENSE> 60,712
<OTHER-OPERATING-EXPENSES> 1,050,768
<TOTAL-OPERATING-EXPENSES> 1,050,768
<OPERATING-INCOME-LOSS> 284,479 <F1>
<OTHER-INCOME-NET> 17,299
<INCOME-BEFORE-INTEREST-EXPEN> 300,231
<TOTAL-INTEREST-EXPENSE> 71,958
<NET-INCOME> 168,509 <F2>
1,547
<EARNINGS-AVAILABLE-FOR-COMM> 166,962 <F2>
<COMMON-STOCK-DIVIDENDS> 100,064
<TOTAL-INTEREST-ON-BONDS> 32,388
<CASH-FLOW-OPERATIONS> 368,862
<EPS-PRIMARY> 1.29 <F3>
<EPS-DILUTED> 1.29 <F3>
<FN>
<F1> REPRESENTS RESULTS FROM CONTINUING OPERATIONS.
<F2> INCLUDED $.6 MILLION AFTER-TAX LOSS FROM DISCONTINUED OPERATIONS.
<F3> INCLUDED A 1 CENT-PER-SHARE LOSS FROM DISCONTINUED OPERATIONS.
</FN>
</TABLE>
/TEXT
<PAGE>
</DOCUMENT>
</SEC-DOCUMENT>
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