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 June 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 (July 31, 1997):
Common Stock, $1 Par Value 130,847,805<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 six-month
periods ended June 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 with and into
TECO Energy, Inc. in June 1997. Both mergers were accounted
for as pooling 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 9 of this
report.
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FORM 10-Q
CONSOLIDATED BALANCE SHEETS
(in millions)
June 30, Dec. 31,
1997 1996
Assets
Current assets
Cash and cash equivalents $ 34.8 $ 15.9
Short-term investments -- --
Receivables, less allowance
for uncollectibles 233.7 226.7
Inventories, at average cost
Fuel 74.7 62.2
Materials and supplies 61.8 60.0
Prepayments 15.3 12.8
420.3 377.6
Property, plant and equipment,
at original cost
Utility plant in service
Electric 3,828.5 3,784.7
Gas 456.0 410.4
Construction work in progress 53.2 45.4
Other property 954.5 927.8
5,292.2 5,168.3
Accumulated depreciation (2,040.6) (1,935.5)
3,251.6 3,232.8
Other assets
Other investments 88.9 91.1
Deferred income taxes 79.8 76.7
Deferred charges and other assets 130.9 123.4
299.6 291.2
$3,971.5 $3,901.6
Liabilities and Capital
Current liabilities
Long-term debt due within one year $ 40.1 $ 80.3
Notes payable 412.9 305.7
Accounts payable 162.4 181.5
Customer deposits 77.4 77.7
Interest accrued 22.9 20.2
Taxes accrued 36.4 14.9
752.1 680.3
Deferred income taxes 454.3 458.9
Investment tax credits 54.2 56.3
Regulatory liability-tax related 35.7 35.8
Other deferred credits 152.8 160.9
Long-term debt, less amount due
within one year 1,087.6 1,118.0
Preferred stock of Tampa Electric 20.0 20.0
Common equity
Common equity - 400 million shares
authorized, $1 par value - issued and
outstanding 130,805,115 in 1997 and
129,356,421 in 1996 1,485.5 1,442.2
Unearned compensation (70.7) (70.8)
$3,971.5 $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 June 30, 1997 1996
Revenues $463.6 $435.4
Expenses
Operation 237.3 238.4
Maintenance 29.1 25.3
Depreciation 57.6 50.2
Taxes, other than income 36.1 34.7
360.1 348.6
Income from operations 103.5 86.8
Other income (expense)
Allowance for other funds used
during construction .1 5.4
Other income (expense), net 1.1 .2
Preferred dividend requirements of
Tampa Electric (.2) (.4)
1.0 5.2
Income before interest and income taxes 104.5 92.0
Interest charges
Interest expense 26.7 26.3
Allowance for borrowed funds used during
construction -- (2.2)
26.7 24.1
Income before provision for income taxes 77.8 67.9
Provision for income taxes 27.3 17.5
Net income $ 50.5 $ 50.4
Average shares outstanding 130.7 129.3
Earnings per average common share
outstanding $ 0.39 $ 0.39
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 six months ended June 30, 1997 1996
Revenues $917.2 $877.7
Expenses
Operation 474.9 486.2
Maintenance 53.2 47.6
Depreciation 114.3 99.8
Taxes, other than income 73.4 71.7
715.8 705.3
Income from operations 201.4 172.4
Other income (expense)
Allowance for other funds used
during construction .1 10.4
Other income (expense), net 2.2 1.4
Preferred dividend requirements of
Tampa Electric (.4) (1.3)
1.9 10.5
Income before interest and income taxes 203.3 182.9
Interest charges
Interest expense 53.6 52.3
Allowance for borrowed funds used during
construction -- (4.3)
53.6 48.0
Income before provision for income taxes 149.7 134.9
Provision for income taxes 48.4 34.4
Net income $101.3 $100.5
Average shares outstanding 130.6 129.1
Earnings per average common share
outstanding $ 0.78 $ 0.78
Dividend rate per common share outstanding $0.575 $0.545
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 six months ended June 30, 1997 1996
Cash flows from operating activities
Net income $ 101.3 $ 100.5
Adjustments to reconcile net income
to net cash:
Depreciation 114.3 99.8
Deferred income taxes (10.0) (2.6)
Investment tax credits, net (2.5) (2.5)
Allowance for funds used
during construction (.1) (14.7)
Amortization of unearned compensation 2.8 2.5
Deferred revenues (17.1) 29.9
Deferred recovery clause 1.2 6.3
Refunded to customers (12.2) --
Amortization of coal contract buyout 1.4 1.4
Receivables, less allowance
for uncollectibles (4.6) (4.7)
Inventories (14.1) 7.5
Taxes accrued 21.5 5.8
Interest accrued 2.7 2.7
Accounts payable (9.4) (29.1)
Other (1.7) 7.4
173.5 210.2
Cash flows from investing activities
Capital expenditures (106.9) (156.5)
Allowance for funds used
during construction .1 14.7
Investment in short-term investments -- (1.0)
Other non-current investments 2.1 2.9
(104.7) (139.9)
Cash flows from financing activities
Common stock 2.9 9.0
Proceeds from long-term debt 29.3 3.0
Repayment of long-term debt (68.9) (28.5)
Net payments under lines of credit (49.8) (13.5)
Net increase in short-term debt 106.7 60.4
Redemption of preferred stock,
including premium -- (35.5)
Dividends (70.1) (66.0)
(49.9) (71.1)
Net increase (decrease) in cash
and cash equivalents 18.9 (.8)
Cash and cash equivalents
at beginning of period 15.9 14.3
Cash and cash equivalents at end of period $ 34.8 $ 13.5
The accompanying notes are an integral part of the consolidated
financial statements.
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FORM 10-Q
NOTES TO FINANCIAL STATEMENTS
A. On June 16, 1997, TECO Energy completed its merger with Lykes
Energy, Inc. (the Peoples companies). In connection with this tax-
free, stock-for-stock transaction, the company issued 12,133,377
shares of its common stock with a market value of $300 million in
exchange for all of the outstanding capital stock of Lykes Energy,
Inc. Concurrent with this merger, Lykes Energy s regulated gas
distribution utility, Peoples Gas System, Inc., was merged with and
into Tampa Electric Company and now operates as the Peoples Gas
division of Tampa Electric Company.
On June 30, 1997, TECO Energy completed its merger with West
Florida Gas Inc. (West Florida). In connection with this tax-free,
stock-for-stock transaction, the company issued 844,431 shares of
its common stock with a market value of $21 million in exchange for
all of the outstanding capital stock of West Florida. Concurrent
with this merger, West Florida s regulated gas distribution
utility, West Florida Natural Gas Company, was merged with and into
Tampa Electric Company and now operates as part of the Peoples Gas
division.
These mergers were accounted for as pooling of interests and,
accordingly, the company s Consolidated Balance Sheet as of June
30, 1997 and its Consolidated Statements of Income and Cash Flows
for the period ended June 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 June 30, 1996 have been restated to include the results of
the Peoples companies. The 1996 statements have not been restated
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FORM 10-Q
to reflect the operations and financial position of West Florida
due to its size.
The company's combined restated revenues and net income for
the three- and six-month periods ended June 30, 1997 and 1996 were
as follows:
Combining Results (unaudited)
(millions)
Three Months Ended June 30,
1997 1996
Net Net
Revenues Income Revenues Income
TECO Energy pre-merger(1) $396.5 $ 51.0 $361.5 $ 48.3
Peoples companies(2) 67.1 2.8 73.9 2.1
$463.6 $ 53.8 $435.4 $ 50.4
Merger related(3) -- (3.3) -- --
Combined $463.6 $ 50.5 $435.4 $ 50.4
Six Months Ended June 30,
1997 1996
Net Net
Revenues Income Revenues Income
TECO Energy pre-merger(1) $760.0 $ 94.1 $702.6 $ 89.8
Peoples companies(2) 157.2 10.5 175.1 10.7
$917.2 $104.6 $877.7 $100.5
Merger related(3) -- (3.3) -- --
Combined $917.2 $101.3 $877.7 $100.5
(1)
The 1996 amounts are as previously reported on Form 10-Q for
the quarter ended June 30, 1996.
(2)
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.
(3)
Reflects net after-tax one-time charge for all merger-related
transactions.
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FORM 10-Q
B. TECO Energy, Inc. and its subsidiaries have made certain
commitments in connection with their continuing capital expenditure
program and estimate that capital expenditures during 1997 will be
as follows:
millions
Tampa Electric Company
Electric division $117
Peoples Gas division 27
TECO Transport Corporation 20
TECO Oil & Gas, Inc. 17
TECO Coal Corporation 9
TECO Power Services 8
Other diversified businesses 8
$206
C. During the first six months of 1997, the electric division of
Tampa Electric Company recognized $17 million of revenues that had
been deferred in 1995 and 1996 pursuant to regulatory agreements
approved by the Florida Public Service Commission. The electric
division deferred $30 million of revenues during the first six
months of last year. In addition, it refunded $12 million of
previously deferred revenues to customers during the first six
months of this year in accordance with the agreements.
As of June 30, 1997, $44 million of deferred revenues was
included in other deferred credits. An additional $7 million was
classified in accounts payable to reflect the remaining amount to
be refunded to customers through September 1997.
D. On July 16, 1997, Tampa Electric retired all of its
outstanding shares of cumulative preferred stock at the applicable
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 June 30, 1997:
Net income of $51 million in the second quarter of 1997, after
restatement to include the effects of the mergers described in
Note A, was essentially unchanged from 1996's second quarter, as
improved operating results at Tampa Electric, TECO Transport and
TECO Coal were offset by the decline in capitalized financing costs
(AFUDC) in 1997 and a net $3.3-million (after-tax) one-time charge
for all merger-related transactions.
Consolidated operating income was up 19 percent from 1996's
second quarter primarily due to the recognition of revenue
deferrals at Tampa Electric and improved results at TECO Transport
and TECO Coal.
The following table identifies the unconsolidated revenues and
operating income of TECO Energy s significant operating groups.
Contributions by operating group (unconsolidated)
Revenues
(millions) 1997 1996
Tampa Electric Company (1) (2)
Electric division $300.0 $272.4
Peoples Gas division 57.1 63.0
$357.1 $335.4
Diversified companies $157.8 $151.8
Operating income
(millions) 1997 1996
Tampa Electric Company
Electric division $ 72.5 $ 59.8
Peoples Gas division 6.4 5.5
$ 78.9 $ 65.3
Diversified companies* $ 27.1 $ 23.4
(1)
The electric division recognized $10 million of revenues
previously deferred. See Note C on page 9.
(2)
The electric division s revenues were net of $9 million of
deferred revenues. See Note C on page 9.
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FORM 10-Q
* Operating 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 been restated to conform with
the current year presentation.
Tampa Electric Company s Operating Results
Tampa Electric's second quarter operating income of
$79 million was higher than 1996 operating results primarily
because of the completion of the Polk Unit One electric generating
plant and its inclusion in rate base for earnings purposes.
The electric division s revenues increased 10 percent in this
year s second quarter because $10 million of previously deferred
revenues were recognized under the company s regulatory agreements,
while $9 million of revenues were deferred in the same period last
year under these agreements.
Excluding the effects of deferred revenues, second quarter
revenues at the electric division increased 3 percent from last
year primarily due to higher retail energy sales. Retail sales
increased 3 percent due to 2.5-percent customer growth and almost 4
percent higher commercial and industrial sales, the result of a
strong local economy.
Operating expenses for the electric division in the second
quarter were 7 percent higher than in 1996 primarily as a result of
the operation of Polk Unit One.
The Peoples Gas division reported higher operating income for
the quarter due to lower non-fuel operating expenses.
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FORM 10-Q
Total revenues at the Peoples Gas division decreased 9 percent
while non-fuel revenues declined by only 2 percent as commercial
and industrial customers moved from firm gas purchases to
transportation only services. Milder weather in 1997 also
contributed to lower retail gas sales.
Diversified Companies Operating Results
Unconsolidated operating income from TECO Energy's diversified
companies, restated to include the non-regulated Peoples companies,
rose 16 percent in 1997's second quarter primarily due to higher
results at TECO Transport and TECO Coal. Revenues rose 4 percent
compared to 1996 primarily from the improved results at TECO
Transport and TECO Coal.
The non-regulated Peoples companies include a propane gas
company, a gas appliance sales and service company and a gas
marketing company.
At TECO Transport, higher volumes and prices in the ocean-
going business along with increased shipments on the river improved
operating income.
TECO Coal s continued growth in third-party revenues from both
the Premier and Clintwood mines more than offset the effects of
lower volume to Tampa Electric from the older Gatliff mines.
TECO Oil & Gas operated at break-even in the second quarter
compared to an operating loss in 1996. Production from a group of
three off-shore wells, which was important to 1997 results,
prematurely declined to uneconomic levels. In August the company
began assessing other potential reserves from one of these wells in
a mitigation attempt. Another of the wells also has uphole reserve
potential. TECO Oil & Gas net investment in these wells was about
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FORM 10-Q
$7 million at June 30, 1997. Total production for 1997 is now
estimated to be about 5 billion cubic feet, lower than the level
previously forecast.
At TECO Coalbed Methane, lower gas prices and production
resulted in slightly lower operating income.
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.
At TeCom, product development costs are being capitalized
because of the continued high level of product enhancement activity
in 1997. In the second quarter, TeCom capitalized $2 million
(pretax) of development costs compared with $1 million expensed
during the same period in 1996.
Consolidated interest expense before AFUDC - borrowed funds
was up slightly due to increased levels of long-term debt and
higher short-term rates.
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 for the second quarter was
35 percent compared to 26 percent last year, primarily due to lower
AFUDC-other and non-deductible merger costs.
Description of the Peoples Gas division s business
The Peoples Gas division of Tampa Electric is engaged in the
purchase, distribution and marketing of natural gas for
residential, commercial, industrial and electric power generation
customers wholly in the State of Florida. With more than 230,000
customers, the division has operations in all of Florida s major
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FORM 10-Q
metropolitan areas. Its business is generally affected by a number
of market factors, including competition and seasonality.
Gas is purchased for resale to customers under a supply
portfolio which consists mostly of short-term contracts of one year
or less. The cost of gas purchased and the related interstate
transportation costs are recovered from customers through a
purchased gas adjustment clause, approved by the Florida Public
Service Commission, which provides for full recovery of all
prudently incurred costs.
In some cases, customers elect to purchase natural gas
directly from marketers or producers. In these instances, gas is
delivered to customers for a transportation charge on the
deliveries. The transportation rate charged to customers is
currently the same whether the customer purchases gas from Peoples
Gas division or directly from a marketer or producer.
The Peoples Gas division is not in direct competition with any
other regulated distributors of natural gas for customers within
its service areas. At the present time, the principal form of
competition for residential and small commercial customers is from
companies providing other sources of energy and energy services.
Competition is most prevalent in the large commercial and
industrial markets. In recent years, these classes of customers
have been targeted by companies seeking to sell gas directly either
using Peoples Gas division facilities or transporting gas through
other facilities, thereby bypassing Peoples Gas division
facilities. In response to this competition, various programs have
been developed including the provision of transportation services
at discounted rates.
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FORM 10-Q
In general, Peoples Gas division faces competition from other
energy source suppliers offering fuel oil, electricity and in some
cases liquid petroleum gas. Peoples Gas division has taken actions
to retain and expand its commodity and transportation business,
including managing costs and providing high quality services to
customers.
Peoples Gas division s business is affected by seasonality
because one of the significant markets for natural gas is space
heating. Prices for natural gas also have shown seasonal
fluctuation, with prices lower in the summer than in the winter.
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FORM 10-Q
Six months ended June 30, 1997:
Net income of $101 million in the first half of 1997 was
1 percent higher than in 1996's first half. Improved operating
results at Tampa Electric and TECO Coal more than offset the
decline in AFUDC and a $3.3-million (after-tax) one-time charge for
all merger-related transactions.
Consolidated operating income was up 17 percent from 1996's
first half primarily due to the recognition of revenue deferrals at
Tampa Electric and higher results at TECO Coal.
The following table identifies the unconsolidated revenues and
operating income of TECO Energy s significant operating groups.
Contributions by operating group (unconsolidated)
Revenues
(millions) 1997 1996
Tampa Electric Company (1) (2)
Electric division $572.8 $527.2
Peoples Gas division 133.9 148.7
$706.7 $675.9
Diversified companies $311.4 $299.8
Operating income
(millions) 1997 1996
Tampa Electric Company
Electric division $130.4 $103.2
Peoples Gas division 21.0 20.2
$151.4 $123.4
Diversified companies* $ 54.6 $ 53.0
(1)
The electric division recognized $17 million of revenues
previously deferred. See Note C on page 9. (2)
The electric division s revenues were net of $30 million of
deferred revenues. See Note C on page 9.
* Operating income includes items that are r.eclassified 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 been restated to conform with
the current year presentation.
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FORM 10-Q
Tampa Electric Company s Operating Results
Tampa Electric Company's first half operating income of
$151 million was higher than its 1996 operating results because of
the completion of the Polk Unit One electric generating plant and
its inclusion in rate base for earnings purposes.
The electric division s revenues increased 9 percent in the
first half of this year as $17 million of previously deferred
revenues were recognized under the company s regulatory agreements,
while $30 million of revenues were deferred for the same period
last year under these agreements.
Excluding the effects of deferred revenues, first half
revenues at the electric division were essentially unchanged from
last year as retail electric sales were only slightly lower than in
1996. Customer growth of 2.4 percent and 4 percent higher
commercial and industrial sales offset the effects of milder winter
weather on residential sales.
Operating expenses for the electric division in the first half
were 4 percent higher than in 1996, primarily as a result of the
operation of Polk Unit One.
The Peoples Gas division reported higher operating income for
the first half due to lower non-fuel operating expenses and the
addition of the West Florida Natural Gas operations.
Total revenues at the Peoples Gas division decreased 10
percent while non-fuel revenues declined by only 4 percent as
commercial and industrial customers moved from firm gas purchases
to transportation only services. Milder winter weather in 1997
also contributed to lower retail gas sales.
Diversified Companies Operating Results
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FORM 10-Q
Unconsolidated operating income from TECO Energy's diversified
companies (including the non-regulated Peoples companies) increased
3 percent from last year primarily because of higher contributions
from TECO Coal. Revenues increased 4 percent largely due to
increased third-party sales at TECO Coal.
TECO Coal s operating income increased because higher volumes
and lower production costs on its sales to third parties from the
Premier mines more than offset lower volumes to Tampa Electric from
the older Gatliff mines.
TECO Oil & Gas operated at break-even for the six-month period
compared to an operating loss in 1996. Production from a group of
three off-shore wells, which was important to 1997 results,
prematurely declined to uneconomic levels. In August the company
began assessing other potential reserves from one of these wells in
a mitigation attempt. Another of the wells also has uphole reserve
potential. TECO Oil & Gas net investment in these wells was about
$7 million at the end of June 1997. Total production for 1997 is
now estimated to be about 5 billion cubic feet, lower than the
level previously forecast.
Continued product development activity at TeCom resulted in
$3 million (pretax) of development costs being capitalized. In the
first six months of 1996, $2 million of development costs were
expensed.
At TECO Transport, operating income declined 9 percent due to
adverse weather mainly in the first quarter.
At TECO Coalbed Methane, lower gas prices and production
reduced operating income by 3 percent.
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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 by this
company in 1997; debt at the parent was correspondingly reduced.
Consolidated interest expense before AFUDC - borrowed funds
was up 3 percent due to higher levels of long-term debt and
interest accrued on the electric division s revenue deferrals.
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 for the first half was
32 percent compared to 26 percent last year, primarily due to lower
AFUDC-other and non-deductible merger costs.
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FORM 10-Q
Liquidity, Capital Resources and Changes in Financial Condition
Utility plant in service at the Peoples Gas division of Tampa
Electric increased from year-end 1996 as a result of the addition
of West Florida Natural Gas Company in 1997.
Notes payable increased due to the maturity of $42 million of
TECO Energy medium-term notes, the financing of capital additions
for the operating companies, the timing of cash flows and the
addition of West Florida Gas Company.
TECO Energy enters into exchange-based futures contracts from
time to time for its physical production at TECO Coalbed Methane
and TECO Oil & Gas.
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FORM 10-Q
PART II. OTHER INFORMATION
Item 2. Changes in Securities
TECO Energy, Inc. issued 844,431 common shares in
connection with its merger with West Florida Gas Inc. (West
Florida) on June 30, 1997 as discussed in Note A on
pages 7 and 8. The TECO Energy shares were issued without
registration under the Securities Act of 1933, as amended, in
reliance upon the exemption provided in Section 4(2) thereof.
Reliance upon this exemption was based upon the nature of the
transaction, the number of West Florida shareholders, their
relationship to West Florida, the involvement of a financial
advisor to advise West Florida and its shareholders and
investment representations made by each shareholder. West
Florida was owned by eight common shareholders and one
preferred shareholder.
TECO Energy filed a resale registration statement for the
shares issued in this transaction on Form S-3 (File No. 333-
31447), which became effective on July 29, 1997.
Item 5. Other Events
TECO Energy's revenues and net income for the one-month
period ended July 31, 1997 were $163.6 million and $21.5
million, respectively. This public issuance of 31 days of
unaudited combined postmerger operations information is made
in order to satisfy the requirements for the use of the
pooling-of-interest method of accounting for the mergers
described on pages 7 and 8.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
*3. Bylaws of TECO Energy, Inc., as amended effective April 16,
1997. (Exhibit 4.2 to TECO Energy, Inc. s Registration
Statement on Form S-3 filed on July 17, 1997, File No. 333-
31447)
10. Form of Nonstatutory Stock Option under the TECO Energy, Inc.
1997 Director Equity Plan.
11. Computation of earnings per common share.
27. Financial data schedule. (EDGAR filing only)
* Indicates an exhibit previously filed with the Securities and
Exchange Commission and incorporated herein by reference.
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FORM 10-Q
(b) Reports on Form 8-K
The registrant filed a Current Report on Form 8-K dated
April 16, 1997 reporting under "Item 5. Other Events"
shareholder approval of the registrant s 1997 Director Equity
Plan as an amendment and restatement of the registrant s 1991
Director Stock Option Plan.
The registrant filed a Current Report on Form 8-K dated
June 16, 1997 reporting under "Item 5. Other Events" the
completion of the merger of Lykes Energy, Inc. with and into
the registrant.
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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: August 12, 1997
By: /s/ A. D. Oak
A. D. Oak
Senior Vice President - Finance
and Chief Financial Officer
(Principal Financial Officer)
- 23 -<PAGE>
FORM 10-Q
INDEX TO EXHIBITS
Exhibit No. Description of Exhibits Page No.
3. Bylaws of TECO Energy, Inc., as amended
effective April 16, 1997. *
10. Form of Nonstatutory Stock Option under the
TECO Energy, Inc. 1997 Director Equity Plan 25
11. Computation of earnings per common share 27
27. Financial data schedule (EDGAR filing only) --
* Indicates an exhibit previously filed with the Securities and Exchange
Commission and incorporated herein by reference.
- 24 -<PAGE>
Exhibit 10
TECO ENERGY, INC.
1997 DIRECTOR EQUITY PLAN
Director Stock Option
TECO Energy, Inc. (the "Company") grants to ______________________
(the "Optionee") a nonstatutory stock option (the "Option") dated
April 16, 1997 under the Company's 1997 Director Equity Plan (the
"Plan"). Capitalized terms not otherwise defined herein have the
meanings given to them in the Plan.
1. Grant of Stock Option. Pursuant to the Plan and subject to
the terms and conditions set forth in this Option, the Company hereby
grants to the Optionee the right and option to purchase from the Company
_________ shares of Common Stock at a price of $24.375 per share. This
Option may be exercised in whole or in part with respect to a number of
whole shares, at any time and from time to time after the date hereof
and prior to the expiration of ten years from the date hereof (the
"Expiration Date"), except as otherwise provided herein.
This Option will not be treated as an incentive stock option under
Section 422 of the Internal Revenue Code of 1986, as amended.
2. Exercise and Payment. To exercise this Option, the Optionee
will deliver written notice to the Secretary of the Company specifying
the date of this Option, the number of shares as to which this Option is
being exercised, and a date not later than thirty days after the date of
delivery of the notice when the Optionee will take up and pay for such
shares. On the date specified in such notice, the Company will deliver
to the Optionee one or more certificates for the number of shares
purchased against payment therefor. Payment may be made in cash,
including by check, or in shares of common stock valued at their fair
market value as of the date of exercise determined as provided in the
Plan, or partly in cash and partly in common stock.
3. Termination of Option.
(a) Termination of Service. In the event that the Optionee's
service on the Board of Directors of the Company terminates for any
reason other than disability or death, this Option will expire one year
after the termination but in no event after the Expiration Date.
(b) Disability or Death. In the event that the Optionee's
service on the Board of Directors terminates by reason of disability or
death, this Option will expire one year after the termination regardless
of the Expiration Date. The rights of the Optionee may be exercised by
the Optionee's guardian or legal representative in the case of
disability and by the beneficiary designated by the Optionee in writing
delivered to the Company or, if none has been designated, the Optionee's
estate in the case of death.
4. Adjustment of Terms. In the event of corporate transactions
affecting the Company's outstanding Common Stock, the Board will
equitably adjust the number and kind of shares subject to this Option
and the exercise price hereunder to the extent provided by the Plan.
- 25 -<PAGE>
Exhibit 10
5. No Transfer. This Option will not be transferable other than
by will or the laws of descent and distribution and will be exercisable
during the Optionee's lifetime only by the Optionee or the Optionee's
guardian or legal representative.
6. Securities Laws. The purchase of any shares by the Optionee
upon exercise of this Option will be subject to the conditions that (i)
the Company may in its discretion require that a registration statement
under the Securities Act of 1933 with respect to the sale of such shares
to the Optionee will be in effect, and such shares will be duly listed,
subject to notice of issuance, on any securities exchange on which the
Common Stock may then be listed, (ii) all such other action as the
Company considers necessary to comply with any law, rule or regulation
applicable to the sale of such shares to the Optionee will have been
taken and (iii) the Optionee will have made such representations and
agreements as the Company may require to comply with applicable law.
7. The Board. Any determination by the Board under, or inter-
pretation of the terms of, this Option or the Plan will be final and
binding on the Optionee.
8. Limitation of Rights. The Optionee will have no rights as a
shareholder with respect to any shares subject to this Option until such
shares are issued and delivered against payment therefor. The Optionee
will have no right to be retained as a director of the Company by virtue
of this Option.
9. Amendment. The Board may amend, modify or terminate this
Option, including substituting another Award of the same or a different
type and changing the date of realization, provided that the Optionee's
consent to such action will be required unless the action, taking into
account any related action, would not adversely affect the Optionee.
10. Governing Law. This Option will be governed by and
interpreted in accordance with the laws of Florida.
TECO ENERGY, INC.
By: ______________________
- 26 -<PAGE>
Exhibit 11
TECO ENERGY, INC.
COMPUTATION OF EARNINGS PER COMMON SHARE
(1)
Three months ended June 30, 1997 1996
Primary Fully Diluted Primary Fully Diluted
Earnings Earnings Earnings Earnings
Net income (000) $ 50,507 $ 50,507 $ 50,447 $ 50,447
Common shares outstanding
at beginning of period 130,574,302 130,574,302 129,108,902 129,108,902
Dividend reinvestment and
common stock purchase plan:
Shares issued -- -- 52,000 52,000
Stock granted 16,709 16,709 -- --
Restricted stock granted 84,600 84,600 59,700 59,700
Shares canceled -- -- -- --
Stock option plans:
Options exercised 34,425 34,425 38,912 38,912
Shares under option at
end of period -- 2,743,872 -- 2,532,872
Treasury shares which could
be purchased -- (2,207,812) -- (1,918,163)
Avg. no. of shares
outstanding 130,708,036 131,244,096 129,259,514 129,809,223
Earnings per share $ 0.39 $ 0.38 $ 0.39 $ 0.39
(1)
Six months ended June 30, 1997 1996
Primary Fully Diluted Primary Fully Diluted
Earnings Earnings Earnings Earnings
Net income (000) $ 101,288 $ 101,288 $ 100,446 $ 100,446
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 -- -- 94,409 94,409
Stock granted 9,547 9,547 -- --
Restricted stock granted 48,343 48,343 34,117 34,117
Shares canceled (2,979) (2,979) -- --
Stock option plans:
Options exercised 59,301 59,301 151,806 151,806
Shares under option at
end of period -- 2,743,872 -- 2,532,872
Treasury shares which could
be purchased -- (2,207,812) -- (1,918,163)
Avg. no. of shares
outstanding 130,644,927 131,180,987 129,145,390 129,695,099
Earnings per share $ 0.78 $ 0.77 $ 0.78 $ 0.77
(1)
1996 amounts have been restated to include the effects of the Lykes
Energy, Inc. merger.
- 27 -<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-31-1996
<PERIOD-START> JAN-1-1997
<PERIOD-END> JUN-30-1997
<PERIOD-TYPE> 6-MOS
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 2,759,679
<OTHER-PROPERTY-AND-INVEST> 491,925
<TOTAL-CURRENT-ASSETS> 420,249
<TOTAL-DEFERRED-CHARGES> 210,681
<OTHER-ASSETS> 88,937
<TOTAL-ASSETS> 3,971,471
<COMMON> 130,805
<CAPITAL-SURPLUS-PAID-IN> 354,696
<RETAINED-EARNINGS> 1,000,025
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,485,526
0
19,960
<LONG-TERM-DEBT-NET> 1,087,595
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 412,900
<LONG-TERM-DEBT-CURRENT-PORT> 40,091
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 925,399
<TOT-CAPITALIZATION-AND-LIAB> 3,971,471
<GROSS-OPERATING-REVENUE> 917,207
<INCOME-TAX-EXPENSE> 48,452
<OTHER-OPERATING-EXPENSES> 715,756
<TOTAL-OPERATING-EXPENSES> 715,756
<OPERATING-INCOME-LOSS> 201,451
<OTHER-INCOME-NET> 2,259
<INCOME-BEFORE-INTEREST-EXPEN> 203,270
<TOTAL-INTEREST-EXPENSE> 53,530
<NET-INCOME> 101,728
440
<EARNINGS-AVAILABLE-FOR-COMM> 101,288
<COMMON-STOCK-DIVIDENDS> 67,666
<TOTAL-INTEREST-ON-BONDS> 24,158
<CASH-FLOW-OPERATIONS> 173,542
<EPS-PRIMARY> .78
<EPS-DILUTED> .77
<FN>
<F1> Current year financial statements include the results of Lykes
Energy, Inc. and West Florida Gas Inc.
<FN>
</TABLE>
/TEXT
<PAGE>
</DOCUMENT>
</SEC-DOCUMENT>
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