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 June 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 (July 29, 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 six-month periods ended June
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)
June 30, Dec. 31,
1994 1993
Assets
Property, plant and equipment,
at original cost
Utility plant in service $2,816,595 $2,773,652
Construction work in progress 184,280 151,311
3,000,875 2,924,963
Accumulated depreciation (1,095,798) (1,052,979)
1,905,077 1,871,984
Other property 204 201
1,905,281 1,872,185
Current assets
Cash and cash equivalents 1,694 4,499
Short-term investments 178 216
Receivables, less allowance
for uncollectibles 114,390 97,997
Inventories, at average cost
Fuel 83,628 77,438
Materials and supplies 38,793 37,726
Prepayments 11,757 10,062
250,440 227,938
Deferred debits
Unamortized debt expense 24,819 25,718
Deferred fuel expense 37 13,721
Deferred income taxes 42,814 37,045
Other 22,274 22,961
89,944 99,445
$2,245,665 $2,199,568
Liabilities and Capital
Capital
Common stock $ 744,631 $ 664,631
Retained earnings 185,141 182,939
929,772 847,570
Preferred stock, redemption not required 54,956 54,956
Long-term debt, less amount due
within one year 611,339 611,082
1,596,067 1,513,608
Current liabilities
Long-term debt due within one year 1,260 1,245
Notes payable 25,178 81,500
Accounts payable 70,492 87,791
Customer deposits 48,875 47,358
Interest accrued 11,932 10,522
Taxes accrued 31,689 6,151
189,426 234,567
Deferred credits
Deferred income taxes 290,111 292,573
Investment tax credits 63,602 66,033
Regulatory liability - tax related 60,311 61,973
Other 46,148 30,814
460,172 451,393
$2,245,665 $2,199,568
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 June 30, 1994 1993
Operating revenues $293,324 $259,258
Operating expenses
Operation
Fuel 105,699 95,187
Purchased power 10,002 8,014
Other 48,337 38,545
Maintenance 18,962 18,016
Depreciation 28,819 27,824
Taxes, federal and state income 17,902 13,775
Taxes, other than income 22,770 20,363
252,491 221,724
Operating income 40,833 37,534
Other income (expense)
Allowance for other funds used
during construction 371 --
Other income (expense), net (181) 4
190 4
Income before interest charges 41,023 37,538
Interest charges
Interest on long-term debt 9,182 10,237
Other interest 1,244 1,405
Allowance for borrowed funds
used during construction (820) (764)
9,606 10,878
Net income 31,417 26,660
Preferred dividend requirements 892 892
Balance applicable to
common stock $ 30,525 $ 25,768
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 six months ended June 30, 1994 1993
Operating revenues $537,953 $487,069
Operating expenses
Operation
Fuel 190,376 173,518
Purchased power 17,985 15,168
Other 90,458 74,571
Maintenance 35,798 34,110
Depreciation 57,432 55,529
Taxes, federal and state income 29,010 24,108
Taxes, other than income 44,747 40,574
465,806 417,578
Operating income 72,147 69,491
Other income (expense)
Allowance for other funds used
during construction 644 --
Other income (expense), net (195) (6,168)
449 (6,168)
Income before interest charges 72,596 63,323
Interest charges
Interest on long-term debt 18,126 20,773
Other interest 2,836 2,566
Allowance for borrowed funds
used during construction (1,456) (1,336)
19,506 22,003
Net income 53,090 41,320
Preferred dividend requirements 1,784 1,784
Balance applicable to
common stock $ 51,306 $ 39,536
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 six months ended June 30, 1994 1993
Cash flows from operating activities
Net income $ 53,090 $ 41,320
Adjustments to reconcile net income
to net cash
Depreciation 57,432 55,529
Deferred income taxes (9,893) 6,055
Investment tax credits, net (2,431) (2,456)
Allowance for funds used
during construction (2,100) (1,336)
Deferred fuel cost 16,331 (11,932)
Fuel cost settlement -- 10,000
Refund to customers (2,428) (2,317)
Receivables, less allowance
for uncollectibles (16,392) (6,958)
Inventories (6,191) 2,180
Taxes accrued 25,538 18,813
Accounts payable (14,721) (10,440)
Other 15,531 (235)
113,766 98,223
Cash flows from investing activities
Capital expenditures (91,775) (82,952)
Allowance for funds used
during construction 2,100 1,336
Short-term investments 38 1,522
(89,637) (80,094)
Cash flows from financing activities
Proceeds from contributed capital
from parent 80,000 22,000
Proceeds from long-term debt 521 14,757
Repayment of long-term debt (245) (48,000)
Net increase (decrease) in short-term debt (56,321) 42,600
Dividends (50,889) (43,333)
(26,934) (11,976)
Net decrease in cash and
cash equivalents (2,805) 6,153
Cash and cash equivalents
at beginning of period 4,499 28,260
Cash and cash equivalents
at end of period $ 1,694 $ 34,413
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 continuing construction program. Total construction
expenditures are estimated to be $233 million for 1994 and $880
million during the 1995-1998 period. These estimates are $14
million and $100 million less than the amounts for 1994 and 1995-
1998, respectively, shown in Tampa Electric Company's Report on
Form 10-K for the year ended Dec. 31, 1993. These reductions are
based on a continuing review of engineering and construction
requirements.
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 is expected to be filed with the FPSC in the third quarter of
1994.
On April 11, 1994, the Office of Public Counsel (Public
Counsel) filed a petition with the FPSC for reconsideration of the
March 25, 1994 order, rearguing that rates be reset to reflect the
new midpoint of the authorized regulatory return on common equity.
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FORM 10-Q
On June 27, 1994, the FPSC denied Public Counsel's motion for
reconsideration. This docket is now closed.
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. Any earnings above the
12.45 percent cap would be used to increase the storm damage
reserve. Any amounts in excess of this storm damage reserve
requirement would be refunded to customers.
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".
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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, 1994:
Net income for 1994's second quarter was $31.4 million,
$4.8 million higher than in the year-earlier quarter, as a result
of increased retail revenues partially offset by higher operating
costs.
Second quarter 1994 revenues were $34.1 million higher than in
1993 due to higher retail energy sales and the FPSC-approved $16-
million annual price increase effective in January 1994. Non-fuel
revenues from sales to other utilities were level with 1993's
second quarter.
Total retail energy sales were 11 percent higher than in the
prior year's second quarter, reflecting an improving economy, more
favorable weather and customer growth of 1.8 percent.
Combined fuel and purchased power expense increased
$12.5 million from the prior year's second quarter, due to
increased energy sales and the timing of the recognition of fuel
expense under the FPSC-approved fuel adjustment clause.
Operation-other and maintenance expenses increased
$10.7 million, or 19 percent, due to the storm damage reserve
accrual, higher employee-related expenses, additional accruals for
self-insurance liability reserves and increased expenses for
regulatory activity.
The increase in depreciation expense of $1 million was due to
normal plant additions.
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FORM 10-Q
Income tax expense increased $4.1 million, or 30 percent due
to higher pretax income and increased federal corporate income tax
rates. In the third quarter of 1993, the company recorded the
effect of higher income tax rates retroactive to Jan. 1, 1993. The
income tax expense reported for the second quarter of 1993 was not
restated.
Taxes, other than income were up $2.4 million for the period
mainly from higher revenue-related taxes, which are included in
customers' bills, and from additional property and payroll taxes.
Interest expense, excluding allowance for borrowed funds used
during construction, was 10 percent lower than in 1993's second
quarter due to savings from the company's refinancing of over $240
million of long-term debt in mid-1993.
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FORM 10-Q
Six months ended June 30, 1994:
Net income for 1994's first half was $53.1 million,
$11.8 million higher than in the prior year's period, due to
increased retail energy sales and higher retail prices and the
$10 million pretax charge recorded in the first quarter of 1993
associated with the coal pricing settlement discussed in Note D on
page 8.
Revenues increased 10 percent due to higher retail energy
sales and the FPSC-approved $16-million price increase effective
Jan. 1, 1994. Non-fuel revenues from sales to other utilities
decreased 4 percent, as lower-priced oil generation available on
other systems continued to depress these sales.
Total retail energy sales were up 8 percent, reflecting an
improving economy, more favorable weather and customer growth of
1.8 percent.
Combined fuel and purchased power expense increased
$19.7 million from the prior year's first half due to the
accounting for deferred fuel expense consistent with the FPSC-
approved fuel adjustment clause.
Operation-other and maintenance expenses increased
$17.6 million, or 16 percent, due to the storm damage reserve
accrual, higher employee-related expenses, additional accruals for
self-insurance liability reserves and increased expenses for
regulatory activity.
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FORM 10-Q
The increase in depreciation expense of $1.9 million was due
to normal plant additions.
Income tax expense increased $4.9 million or 20 percent due to
higher pretax income and increased federal corporate income tax
rates. In the third quarter of 1993, the company recorded the
effect of higher income tax rates retroactive to Jan. 1, 1993. The
six-month 1993 income tax expense amount was not restated.
Taxes, other than income were up $4.2 million for the period
mainly from higher revenue-related taxes, which are included in
customers' bills, and from additional property taxes.
Interest expense, excluding allowance for borrowed funds used
during construction, was 10 percent lower than in 1993's first half
due to savings from the company's refinancing of over $240 million
of long-term debt in mid-1993.
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FORM 10-Q
Liquidity, Capital Resources and Changes in Financial Condition
Net receivables increased 17 percent from Dec. 31, 1993,
reflecting seasonal variations in electric billings.
Fuel inventory at June 30, 1994 increased $6 million or
8 percent from year end due to coal purchases made to meet higher
summer energy sales.
Deferred fuel expense of $13.7 million at year end was
essentially all recovered in the first half of 1994.
Other deferred credits increased 50 percent from year end, due
to accruals to the storm damage reserve and other liability
reserves and to the accounting for deferred fuel revenues
consistent with the FPSC-approved fuel adjustment clause.
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 is
expected to be filed with the FPSC in the third quarter of 1994.
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. Any earnings above the
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FORM 10-Q
12.45 percent cap would be used to increase the storm damage
reserve. Any amounts in excess of this storm damage reserve
requirement would be refunded to customers.
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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
No reports on Form 8-K were filed during the quarter to
which this report relates.
The registrant filed a Current Report on Form 8-K dated
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.
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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.
TAMPA ELECTRIC COMPANY
(Registrant)
Date: August 12, 1994 By: /s/ L. L. Lefler
L. L. Lefler
Vice President - Controller
(Chief Accounting Officer)
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FORM 10-Q
INDEX TO EXHIBITS
Exhibit No. Description of Exhibits Page No.
12. Ratio of earnings to fixed charges. 18
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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.
Six Months Twelve Months
Ended Ended Year Ended December 31,
June 30, 1994 June 30, 1994 1993 1992 1991 1990 1989
4.01x 4.39x 3.98x(1) 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
component 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.
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