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, 1995
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, 1995):
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 were other than normal or
recurring) necessary to present fairly the results for the three-month
and nine-month periods ended Sept. 30, 1995 and 1994. 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, 1994 and to the notes
on page 7 of this report.
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FORM 10-Q
BALANCE SHEETS
(in thousands)
Sept. 30, Dec. 31,
1995 1994
Assets
Property, plant and equipment,
at original cost
Utility plant in service $2,912,043 $2,854,240
Construction work in progress 418,825 246,089
3,330,868 3,100,329
Accumulated depreciation (1,186,577) (1,115,167)
2,144,291 1,985,162
Other property 194 194
2,144,485 1,985,356
Current assets
Cash and cash equivalents 244 7,071
Receivables, less allowance
for uncollectibles 123,370 103,508
Inventories, at average cost
Fuel 63,349 95,831
Materials and supplies 38,845 38,465
Prepayments 1,596 2,675
227,404 247,550
Deferred debits
Unamortized debt expense 18,679 19,782
Deferred income taxes 91,469 86,514
Regulatory asset - tax related 34,170 30,791
Other 54,909 47,828
199,227 184,915
$2,571,116 $2,417,821
Liabilities and Capital
Capital
Common stock $ 831,956 $ 775,956
Retained earnings 207,272 173,299
1,039,228 949,255
Preferred stock, redemption not required 54,956 54,956
Long-term debt, less amount due
within one year 583,038 607,270
1,677,222 1,611,481
Current liabilities
Long-term debt due within one year 26,030 1,260
Notes payable 72,700 91,800
Accounts payable 99,524 113,759
Customer deposits 50,849 49,457
Interest accrued 15,716 11,166
Taxes accrued 60,665 2,152
325,484 269,594
Deferred credits
Deferred income taxes 326,942 327,646
Investment tax credits 59,690 63,265
Regulatory liability - tax related 85,527 88,291
Other 96,251 57,544
568,410 536,746
$2,571,116 $2,417,821
The accompanying notes are an integral part of the financial statements.
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FORM 10-Q
STATEMENTS OF INCOME
(in thousands)
For the three months ended Sept. 30, 1995 1994
Operating revenues $308,067 $301,440
Operating expenses
Operation
Fuel 108,710 109,286
Purchased power 13,504 8,374
Other 39,621 38,758
Maintenance 16,328 16,804
Depreciation 26,009 29,027
Taxes, federal and state income 27,974 24,768
Taxes, other than income 21,974 21,617
254,120 248,634
Operating income 53,947 52,806
Other income
Allowance for other funds used
during construction 3,234 459
Other income (expense), net 1,317 (109)
4,551 350
Income before interest charges 58,498 53,156
Interest charges
Interest on long-term debt 9,526 9,331
Other interest 2,521 826
Allowance for borrowed funds
used during construction (1,949) (1,071)
10,098 9,086
Net income 48,400 44,070
Preferred dividend requirements 892 892
Balance applicable to
common stock $ 47,508 $ 43,178
The accompanying notes are an integral part of the financial statements.
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FORM 10-Q
STATEMENTS OF INCOME
(in thousands)
For the nine months ended Sept. 30, 1995 1994
Operating revenues $840,957 $839,393
Operating expenses
Operation
Fuel 295,128 299,662
Purchased power 34,693 26,359
Other 119,764 129,216
Maintenance 51,287 52,602
Depreciation 84,893 86,459
Taxes, federal and state income 56,467 53,778
Taxes, other than income 66,952 66,364
709,184 714,440
Operating income 131,773 124,953
Other income
Allowance for other funds used
during construction 7,554 1,103
Other income (expense), net (435) (304)
7,119 799
Income before interest charges 138,892 125,752
Interest charges
Interest on long-term debt 28,559 27,457
Other interest 7,254 3,662
Allowance for borrowed funds
used during construction (4,552) (2,527)
31,261 28,592
Net income 107,631 97,160
Preferred dividend requirements 2,676 2,676
Balance applicable to
common stock $104,955 $ 94,484
The accompanying notes are an integral part of the financial statements.
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FORM 10-Q
STATEMENTS OF CASH FLOWS
(in thousands)
For the nine months ended Sept. 30, 1995 1994
Cash flows from operating activities
Net income $ 107,631 $ 97,160
Adjustments to reconcile net income
to net cash
Depreciation 84,893 86,459
Deferred income taxes (11,802) (8,764)
Investment tax credits, net (3,575) (3,646)
Allowance for funds used
during construction (12,106) (3,630)
Deferred recovery clause (13,975) 20,730
Deferred revenue 30,962 --
Amortization of coal contract buyout 1,352 --
Refund to customers -- (2,428)
Receivables, less allowance
for uncollectibles (19,862) (17,224)
Inventories 32,102 (4,475)
Taxes accrued 58,513 33,429
Accounts payable (14,235) (7,058)
Other 24,704 23,456
264,602 214,009
Cash flows from investing activities
Capital expenditures (247,137) (145,421)
Allowance for funds used
during construction 12,106 3,630
Short-term investments -- (1,619)
(235,031) (143,410)
Cash flows from financing activities
Proceeds from contributed capital
from parent 56,000 99,000
Proceeds from long-term debt 620 686
Repayment of long-term debt (260) (245)
Net decrease in short-term debt (19,100) (81,500)
Dividends (73,658) (77,268)
(36,398) (59,327)
Net increase (decrease) in cash
and cash equivalents (6,827) 11,272
Cash and cash equivalents
at beginning of period 7,071 4,499
Cash and cash equivalents at end of period $ 244 $ 15,771
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 $310 million for 1995, excluding allowance for funds
used during construction (AFUDC).
C. The company s deferred revenue plan approved by the Florida
Public Service Commission (FPSC) provides for an 11.75 percent
authorized rate of return on common equity (ROE) for all regulatory
purposes with a range of 10.75 percent to 12.75 percent retroactive to
Jan. 1, 1995. Under the plan the company will defer in 1995
$15 million of revenues as well as 50 percent of actual revenues
c o n tributing to a return on average common equity exceeding
11.75 percent and 100 percent of actual revenues contributing to a
return on average common equity exceeding 12.75 percent. The company
expects, subject to regulatory approval, that beginning in 1997 these
deferred revenues will be used to offset a portion of the revenue
requirements associated with the Polk Power Station. As of Sept. 30,
1995, the company had deferred $31 million in revenues. The FPSC
order also eliminated the company s oil backout tariff effective Jan.
1, 1996. This tariff currently results in approximately $12 million
of annual revenues.
D. Certain 1994 amounts on the statements of cash flows have been
restated to comply with the current-year presentation.
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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, 1995:
Net income of $48.4 million for the third quarter of 1995 was
$4.3 million or 10 percent higher than 1994's third quarter due
primarily to increased energy sales and higher AFUDC. Increased
energy sales also contributed to 2 percent higher operating income in
1995. These results were net of $14.1 million of revenues deferred
under the FPSC-approved plan described on pages 7 and 12.
Revenues for the quarter increased $6.6 million or 2 percent
after the $14.1 million revenue deferral due to increased energy
sales. Retail energy sales increased 5 percent reflecting customer
growth of 2 percent and warmer weather than 1994's third quarter.
Combined fuel and purchased power expenses increased $4.6 million
or 4 percent for the third quarter of 1995 reflecting higher energy
sales.
Depreciation expense decreased $3.0 million because of a one-time
adjustment in the third quarter of 1995 reflecting a change from an
accelerated to a straight-line method of depreciation for the energy
management system facility.
The effective income tax rate for the third quarter was
35.1 percent compared to 36.1 percent for the same period last year.
The decrease was primarily due to higher allowance for other funds
used during construction in 1995.
Total AFUDC increased in 1995 because of additional investment in
the Polk Power Station which is under construction.
Interest expense before the allowance for borrowed funds used
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FORM 10-Q
during construction was $1.9 million, or 19 percent higher in the
current quarter, due to higher interest rates on floating-rate debt
and an increase in short-term debt balances.
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FORM 10-Q
Nine months ended Sept. 30, 1995:
Net income of $107.6 million for the nine months of 1995 was
$10.5 million or 11 percent higher than 1994's nine months due to
increased energy sales, higher AFUDC and lower operating expenses.
These results were net of $31.0 million of revenues deferred under the
plan discussed on pages 7 and 12.
Revenues for the nine months increased $1.6 million or .2 percent
after the $31.0 million revenue deferral due to increased energy
sales. Retail energy sales increased 4 percent from continued growth
in the local economy and favorable weather which resulted in increased
energy usage in the residential and commercial sectors. In addition,
the industrial-phosphate sector use more energy to meet increased
demand.
Operation-other and maintenance expenses decreased $10.8 million
or 6 percent as a result of the corporate restructuring program
established in late 1994, additional cost control activities in 1995
and timing of certain expenses.
Combined fuel and purchased power expenses increased $3.8 million
or 1 percent for the nine months of 1995 reflecting higher energy
sales.
The effective income tax rate for the nine months of 1995 was
34.3 percent compared to 35.8 percent for the same period last year.
The decrease was primarily due to higher allowance for other funds
used during construction in 1995.
Total AFUDC increased substantially in 1995 because of additional
investment in the Polk Power Station which is under construction.
Interest expense before the allowance for borrowed funds used
during construction increased $4.7 million or 15 percent due to higher
- 10 -<PAGE>
FORM 10-Q
interest rates on floating-rate debt and an increase in short-term
debt balances.
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FORM 10-Q
Liquidity, Capital Resources and Changes in Financial Condition
The company s FPSC-approved deferred revenue plan provides for an
11.75 percent authorized ROE for all regulatory purposes with a range
of 10.75 percent to 12.75 percent and the deferral of revenues under
certain financial circumstances related to these returns. Under the
plan the company will defer in 1995 $15 million of revenues as well as
50 percent of actual revenues contributing to a return on average
common equity exceeding 11.75 percent and 100 percent of actual
revenues contributing to a return on average common equity exceeding
12.75 percent. Tampa Electric expects, subject to regulatory
approval, that beginning in 1997 these deferred revenues will be used
to offset a portion of the revenue requirements associated with the
Polk Power Station. As of Sept. 30, 1995, the company had deferred
$31 million in revenues. The FPSC also eliminated the company's oil
backout tariff effective Jan. 1, 1996. This tariff currently results
in approximately $12 million of annual revenues.
Net receivables increased $19.9 million, reflecting seasonal
variations in electric billings.
Fuel inventory decreased $32.5 million, primarily as a result of
higher energy sales.
Taxes accrued increased $58.5 million because of higher income
taxes, revenue-related taxes, and the timing of property tax payments.
Other deferred credits increased $38.7 million from year-end
primarily due to the deferral of revenues as discussed above.
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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.
27. Financial data schedule. (EDGAR filing only)
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter to which
this report relates.
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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)
Dated: November 13, 1995 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 16
27. Financial data schedule (EDGAR filing only) --
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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, 1995 Sept. 30, 1995(1) 1994(1) 1993(2) 1992 1991 1990
4.88x 4.24x 4.11x 3.98x 4.16x 3.66x 3.64x
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 restructuring charge of $21.3 million pretax.
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
4.52x for the period ended Dec. 31, 1994 and 4.63x for the twelve
months ended Sept. 30, 1995.
(2) Includes the effect of the non-recurring $10-million pretax charge
associated with a coal pricing settlement. 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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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-1-1995
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<TOTAL-ASSETS> 2,571,116
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<PAGE>
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