FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1994
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 1-5007
TAMPA ELECTRIC COMPANY
(Exact name of registrant as specified in its charter)
FLORIDA 59-0475140
(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, 1994):
Common Stock, Without Par Value 10<PAGE>
FORM 10-Q
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
In the opinion of management, the unaudited financial
statements include all adjustments (none of which, except
for the adjustment discussed in Note D on page 8, were other
than normal and recurring) necessary to present fairly the
results for the three-month and nine-month periods ended
Sept. 30, 1994 and 1993. Reference should be made to the
explanatory notes affecting the income and balance sheet
accounts contained in Tampa Electric Company's Annual Report
on Form 10-K for the year ended Dec. 31, 1993 and to the
notes on pages 7 and 8 of this report.
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FORM 10-Q
BALANCE SHEETS
(thousands of dollars)
Sept. 30, Dec. 31,
1994 1993
Assets
Property, plant and equipment,
at original cost
Utility plant in service $2,838,407 $2,773,652
Construction work in progress 205,646 151,311
3,044,053 2,924,963
Accumulated depreciation (1,114,962) (1,052,979)
1,929,091 1,871,984
Other property 184 201
1,929,275 1,872,185
Current assets
Cash and cash equivalents 15,771 4,499
Short-term investments 1,835 216
Receivables, less allowance
for uncollectibles 115,221 97,997
Inventories, at average cost
Fuel 79,876 77,438
Materials and supplies 39,762 37,726
Prepayments 10,775 10,062
263,240 227,938
Deferred debits
Unamortized debt expense 20,080 21,242
Deferred fuel expense 18 13,721
Deferred income taxes 82,939 78,642
Regulatory asset-tax related 30,454 30,859
Other 21,426 22,961
154,917 167,425
$2,347,432 $2,267,548
Liabilities and Capital
Capital
Common stock $ 763,957 $ 664,631
Retained earnings 202,505 182,939
966,462 847,570
Preferred stock, redemption not required 54,956 54,956
Long-term debt, less amount due
within one year 607,210 606,606
1,628,628 1,509,132
Current liabilities
Long-term debt due within one year 1,260 1,245
Notes payable -- 81,500
Accounts payable 78,155 87,791
Customer deposits 48,961 47,358
Interest accrued 15,713 10,522
Taxes accrued 39,580 6,151
183,669 234,567
Deferred credits
Deferred income taxes 332,441 334,170
Investment tax credits 62,387 66,033
Regulatory liability-tax related 89,688 92,832
Other 50,619 30,814
535,135 523,849
$2,347,432 $2,267,548
The accompanying notes are an integral part of the financial statements.
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FORM 10-Q
STATEMENTS OF INCOME
(thousands of dollars)
For the three months ended Sept. 30, 1994 1993
Operating revenues $301,440 $302,782
Operating expenses
Operation
Fuel 109,286 100,895
Purchased power 8,374 16,188
Other 38,758 39,337
Maintenance 16,804 18,195
Depreciation 29,027 28,078
Taxes, federal and state income 24,768 24,677
Taxes, other than income 21,617 23,533
248,634 250,903
Operating income 52,806 51,879
Other income (expense)
Allowance for other funds used
during construction 459 822
Other income (expense), net (109) (178)
350 644
Income before interest charges 53,156 52,523
Interest charges
Interest on long-term debt 9,331 9,351
Other interest 826 1,327
Allowance for borrowed funds
used during construction (1,071) (191)
9,086 10,487
Net income 44,070 42,036
Preferred dividend requirements 892 892
Balance applicable to
common stock $ 43,178 $ 41,144
The accompanying notes are an integral part of the financial statements.
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FORM 10-Q
STATEMENTS OF INCOME
(thousands of dollars)
For the nine months ended Sept. 30, 1994 1993
Operating revenues $839,393 $789,851
Operating expenses
Operation
Fuel 299,662 274,412
Purchased power 26,359 31,356
Other 129,216 113,910
Maintenance 52,602 52,305
Depreciation 86,459 83,607
Taxes, federal and state income 53,778 48,785
Taxes, other than income 66,364 64,106
714,440 668,481
Operating income 124,953 121,370
Other income (expense)
Allowance for other funds used
during construction 1,103 822
Other income (expense), net (304) (6,347)
799 (5,525)
Income before interest charges 125,752 115,845
Interest charges
Interest on long-term debt 27,457 30,123
Other interest 3,662 3,893
Allowance for borrowed funds
used during construction (2,527) (1,527)
28,592 32,489
Net income 97,160 83,356
Preferred dividend requirements 2,676 2,676
Balance applicable to
common stock $ 94,484 $ 80,680
The accompanying notes are an integral part of the financial statements.
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FORM 10-Q
STATEMENTS OF CASH FLOWS
(thousands of dollars)
For the nine months ended Sept. 30, 1994 1993
Cash flows from operating activities
Net income $ 97,160 $ 83,356
Adjustments to reconcile net income
to net cash
Depreciation 86,459 83,607
Deferred income taxes (8,764) 7,069
Investment tax credits, net (3,646) (3,684)
Allowance for funds used
during construction (3,630) (2,349)
Deferred fuel cost 20,126 (14,055)
Fuel cost settlement -- 10,000
Refund to customers (2,428) (5,220)
Receivables, less allowance
for uncollectibles (17,224) (21,531)
Inventories (2,438) 15,050
Taxes accrued 33,429 42,974
Accounts payable (7,058) (537)
Other 22,023 (1,548)
214,009 193,132
Cash flows from investing activities
Capital expenditures (145,421) (124,665)
Allowance for funds used
during construction 3,630 2,349
Short-term investments (1,619) 1,102
(143,410) (121,214)
Cash flows from financing activities
Proceeds from contributed capital
from parent 99,000 37,000
Proceeds from long-term debt 686 14,817
Repayment of long-term debt (245) (48,000)
Net decrease in short-term debt (81,500) (10,400)
Dividends (77,268) (64,595)
(59,327) (71,178)
Net increase in cash and
cash equivalents 11,272 740
Cash and cash equivalents
at beginning of period 4,499 28,260
Cash and cash equivalents
at end of period $ 15,771 $ 29,000
The accompanying notes are an integral part of the financial statements.
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FORM 10-Q
NOTES TO FINANCIAL STATEMENTS
A. Tampa Electric Company is a wholly owned subsidiary of
TECO Energy, Inc.
B. The company has made certain commitments in connection with
its construction program. Total construction expenditures are
estimated to be $228 million for 1994 and $781 million during the
1995-1998 period. The estimate for the 1995-1998 period is
$100 million less than the amount shown in the company's Form 10-Q
for the quarter ended June 30, 1994. This reduction is a result of
a continuing review of engineering and construction requirements
and does not affect the company's generation expansion program.
C. As reported in the 1993 Form 10-K, the Florida Public Service
Commission (FPSC) issued an order on March 25, 1994 that changed
the company's authorized regulatory rate of return on common equity
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 addition, the FPSC ordered the company
to prepare a study of the appropriate amount to be accrued annually
and the appropriate balance for this storm damage reserve. The
study was filed with the FPSC in September 1994 with a staff
recommendation expected in early 1995.
On July 18, 1994, the FPSC issued an order approving an
agreement between its staff and the company to cap the company's
authorized regulatory rate of return on common equity at
12.45 percent for calendar year 1994 only. The company expects
that any earnings above the 12.45 percent cap would be used to
increase the storm damage reserve.
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FORM 10-Q
D. As reported in the 1993 Form 10-K, in February 1993 the FPSC
approved a settlement agreement between the company and Public
Counsel that resolved all issues related to prices for coal
purchased in the years 1990 through 1992 by the company from its
affiliate, Gatliff Coal Company, a subsidiary of TECO Coal. The
company refunded $10 million plus interest to its customers through
the fuel adjustment clause over a 12-month period beginning April
1, 1993. In the first quarter of 1993, the company recorded a one-
time $10-million pretax charge associated with this settlement
under the caption "Other income (expense), net".
E. In September 1994, the company, as part of its continuing
cost-control initiative, offered voluntary early retirement
packages to about 400 employees; it will accept up to 250. In
addition, other position eliminations and cost restructurings are
being implemented. A one-time charge for these programs estimated
to be between $24 million and $26 million will be recorded in the
fourth quarter of 1994.
F. Certain Dec. 31, 1993 amounts on the balance sheet have been
restated to comply with the current year presentation.
- 8 -<PAGE>
FORM 10-Q
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
In the following discussion, all comparisons are with the
corresponding items and periods in the prior year.
Three months ended Sept. 30, 1994:
Net income for 1994's third quarter was $44 million,
$2 million higher than in 1993. Lower operation and maintenance
expense in 1994 was partially offset by a decline in retail energy
sales.
Third quarter 1994 revenues were $1 million lower due to lower
retail energy sales which more than offset the impact of the FPSC-
approved $16-million annual price increase effective in January
1994. Non-fuel revenues from sales to other utilities were $.5
million lower than in 1993.
Total retail energy sales were 2 percent lower with unusually
wet weather affecting the residential sector during the quarter.
Customer growth for the period was 1.9 percent.
Combined fuel and purchased power expense increased
$.6 million due to the timing of the recognition of fuel expense
under the FPSC-approved fuel adjustment clause.
Operation-other and maintenance expenses decreased $2 million
due to adjustments to the storm damage reserve in the current
quarter, which more than offset higher employee-related expenses,
additional accruals for self-insurance liability reserves and
increased expenses for regulatory activity.
The increase in depreciation of $1 million was due to normal
plant additions.
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FORM 10-Q
Income tax expense was the same as in the prior year as higher
pre-tax income was offset by the adjustment recognized in the third
quarter of 1993 to reflect the increase in corporate income tax
rates to 35 percent retroactive to Jan. 1, 1993. Income taxes
were provided at the 35 percent tax rate for 1994.
Taxes, other than income were down $2 million for the period,
mainly from an adjustment of property taxes.
Interest expense, excluding allowance for borrowed funds used
during construction, was slightly lower due to savings from the
company's refinancing of over $240 million of long-term debt in
mid-1993, lower short-term debt balances and lower FPSC-approved
interest rates for customer deposits.
- 10 -<PAGE>
FORM 10-Q
Nine months ended Sept. 30, 1994:
Net income for the nine-month period ended Sept. 30, 1994 was
$97 million, $14 million higher due to increased retail energy
sales, higher retail prices and the $10 million pretax charge ($6
million after tax) recorded in the first quarter of 1993 associated
with the coal pricing settlement discussed in Note D on page 8.
Revenues increased $50 million, or 6 percent, the result of
higher retail energy sales and the FPSC-approved $16-million price
increase effective Jan. 1, 1994. Non-fuel revenues from sales to
other utilities declined $1 million, or 5 percent, as lower-priced
oil- and gas-fired generation available on other electric systems
continued to depress these sales.
Total retail energy sales were up 4 percent, reflecting an
improving economy, more favorable weather and customer growth of
1.8 percent.
Combined fuel and purchased power expense increased
$20 million due to the accounting for deferred fuel expense
consistent with the FPSC-approved fuel adjustment clause.
Operation-other and maintenance expenses increased
$16 million, or 9 percent, reflecting higher employee-related
expenses, accruals to the storm damage reserve and additional
accruals for self-insurance liability reserves.
As discussed in Note E on page 8, in September 1994, the
company, as part of its continuing cost-control initiative, offered
voluntary early retirement packages to about 400 employees; it will
accept up to 250. In addition, other position eliminations and
cost restructurings are being implemented. A one-time charge for
these programs estimated to be between $24 million and $26 million
will be recorded in the fourth quarter of 1994. The payback period
resulting from reduced operating expense is expected to be
approximately two years.
- 11 -<PAGE>
FORM 10-Q
The increase in depreciation expense of $3 million was due to
normal plant additions.
Income tax expense increased $5 million, or 10 percent, due to
higher pretax income.
Taxes, other than income were up $2 million for the period
mainly from higher revenue-related taxes, which are included in
customers' bills, partially offset by lower property taxes.
Interest expense, excluding allowance for borrowed funds used
during construction, was $3 million lower due to savings from the
company's refinancing of over $240 million of long-term debt in
mid-1993 and lower FPSC-approved interest rates on customer
deposits.
- 12 -<PAGE>
FORM 10-Q
Liquidity, Capital Resources and Changes in Financial Condition
Net receivables increased $17 million from Dec. 31, 1993,
reflecting seasonal variations in electric billings.
Deferred fuel expense of $14 million at year end was
essentially all recovered during the nine-month period ended
Sept. 30, 1994.
Other deferred credits increased $20 million from year end due
to the accounting for deferred fuel revenues consistent with the
FPSC-approved fuel adjustment clause and accruals to the storm
damage reserve and other liability reserves.
As discussed in Note C on pages 7 and 8, the FPSC issued an
order on March 25, 1994 that changed the company's authorized
regulatory rate of return on common equity 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 addition the FPSC ordered the company to prepare a
study of the appropriate amount to be accrued annually and the
appropriate balance for this storm damage reserve. The study was
filed with the FPSC in September 1994 with a staff recommendation
expected in early 1995.
On July 18, 1994, the FPSC issued an order approving an
agreement between its staff and the company to cap the company's
authorized regulatory rate of return on common equity at
12.45 percent for calendar year 1994 only. The company expects
that any earnings above the 12.45 percent cap would be used to
increase the storm damage reserve.
- 13 -<PAGE>
FORM 10-Q
As discussed in Note B on page 7, estimated construction
expenditures for the 1995-1998 period are $100 million less than
the amount shown in the company's Form 10-Q for the quarter ended
June 30, 1994. This reduction is a result of a continuing review
of engineering and construction requirements and does not affect
the company's generation expansion program.
- 14 -<PAGE>
FORM 10-Q
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
12. Ratio of earnings to fixed charges.
(b) Reports on Form 8-K
The registrant filed a Current Report on Form 8-K dated
July 5, 1994 reporting under "Item 5. Other Events" on
the action of the Florida Public Service Commission
regarding the 1994 regulatory rate of return on common
equity of the registrant, as discussed in Note C on
pages 7 and 8, and changes in the management of the
registrant.
- 15 -<PAGE>
FORM 10-Q
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly authorized.
TAMPA ELECTRIC COMPANY
(Registrant)
Date: November 14, 1994 By: /s/ L. L. Lefler
L. L. Lefler
Vice President - Controller
( Chief Accounting Officer)
- 16 -<PAGE>
FORM 10-Q
INDEX TO EXHIBITS
Exhibit No. Description of Exhibits Page No.
12. Ratio of earnings to fixed charges. 18
- 17 -<PAGE>
FORM 10-Q
Exhibit 12
TAMPA ELECTRIC COMPANY
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the company's ratio of earnings to
fixed charges for the periods indicated.
Nine Months Twelve Months
Ended Ended Year Ended December 31,
Sept. 30, 1994 Sept. 30, 1994 1993 1992 1991 1990 1989
(1)
4.75x 4.45x 3.98x 4.16x 3.66x 3.64x 3.67x
For the purposes of calculating this ratio, earnings consist of
income before income taxes and fixed charges. Fixed charges consist of
interest on indebtedness, amortization of debt premium, the interest
c o m p onent of rentals and preferred stock dividend
requirements.
(1) Includes the effect of the non-recurring $10 million pretax charge
associated with a coal pricing settlement as discussed in Note D
on page 8. The effect of this charge was to reduce the ratio of
earnings to fixed charges. Had this non-recurring charge been
excluded from the calculation, the ratio of earnings to fixed
charges would have been 4.17x for the year ended Dec. 31, 1993.
- 18 -<PAGE>
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THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE TAMPA
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FLOWS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
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<NAME> Tampa Electric Company
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<PERIOD-START> JAN-1-1994
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<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,929,091
<OTHER-PROPERTY-AND-INVEST> 184
<TOTAL-CURRENT-ASSETS> 263,240
<TOTAL-DEFERRED-CHARGES> 154,917
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<TOTAL-ASSETS> 2,347,432
<COMMON> 118,358
<CAPITAL-SURPLUS-PAID-IN> 645,599
<RETAINED-EARNINGS> 202,505
<TOTAL-COMMON-STOCKHOLDERS-EQ> 966,462
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54,956
<LONG-TERM-DEBT-NET> 607,210
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<INCOME-TAX-EXPENSE> 53,778
<OTHER-OPERATING-EXPENSES> 660,662
<TOTAL-OPERATING-EXPENSES> 714,440
<OPERATING-INCOME-LOSS> 124,953
<OTHER-INCOME-NET> 799
<INCOME-BEFORE-INTEREST-EXPEN> 125,752
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2,676
<EARNINGS-AVAILABLE-FOR-COMM> 94,484
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