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, 1996
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, 1996):
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, 1996 and 1995. 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, 1995 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,
1996 1995
Assets
Property, plant and equipment,
at original cost
Utility plant in service $3,494,956 $2,930,178
Construction work in progress 64,049 475,260
3,559,005 3,405,438
Accumulated depreciation (1,271,244) (1,203,284)
2,287,761 2,202,154
Other property 1,048 859
2,288,809 2,203,013
Current assets
Cash and cash equivalents 1,961 3,832
Receivables, less allowance
for uncollectibles 128,919 120,273
Inventories, at average cost
Fuel 47,255 69,977
Materials and supplies 40,911 38,657
Prepayments 3,051 3,547
222,097 236,286
Deferred debits
Unamortized debt expense 17,156 18,297
Deferred income taxes 103,360 94,553
Regulatory asset - tax related 45,431 36,931
Other 49,609 50,135
215,556 199,916
$2,726,462 $2,639,215
Liabilities and Capital
Capital
Common stock $ 935,519 $ 851,957
Retained earnings 210,351 188,191
1,145,870 1,040,148
Preferred stock, redemption not required 19,960 54,956
Long-term debt, less amount due
within one year 586,042 583,097
1,751,872 1,678,201
Current liabilities
Long-term debt due within one year 1,045 26,030
Notes payable 113,500 144,500
Accounts payable 97,899 117,430
Revenue refund 25,000 --
Customer deposits 52,572 51,273
Interest accrued 19,058 8,921
Taxes accrued 43,874 16,487
352,948 364,641
Deferred credits
Deferred income taxes 343,276 331,754
Investment tax credits 55,002 58,499
Regulatory liability - tax related 81,562 84,489
Other 141,802 121,631
621,642 596,373
$2,726,462 $2,639,215
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, 1996 1995
Operating revenues $311,114 $308,067
Operating expenses
Operation
Fuel 101,809 108,710
Purchased power 16,733 13,504
Other 41,055 39,621
Maintenance 17,421 16,328
Depreciation 29,487 26,009
Taxes, federal and state income 26,415 27,974
Taxes, other than income 22,137 21,974
255,057 254,120
Operating income 56,057 53,947
Other income
Allowance for other funds used
during construction 5,773 3,234
Other income (expense), net (47) 1,317
5,726 4,551
Income before interest charges 61,783 58,498
Interest charges
Interest on long-term debt 9,671 9,526
Other interest 3,656 2,521
Allowance for borrowed funds
used during construction (2,359) (1,949)
10,968 10,098
Net income 50,815 48,400
Preferred dividend requirements 220 892
Balance applicable to common stock $ 50,595 $ 47,508
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, 1996 1995
Operating revenues $838,278 $840,957
Operating expenses
Operation
Fuel 288,939 295,128
Purchased power 38,864 34,693
Other 121,646 119,764
Maintenance 48,976 51,287
Depreciation 87,551 84,893
Taxes, federal and state income 55,093 56,467
Taxes, other than income 66,591 66,952
707,660 709,184
Operating income 130,618 131,773
Other income
Allowance for other funds used
during construction 16,218 7,554
Other income (expense), net (131) (435)
16,087 7,119
Income before interest charges 146,705 138,892
Interest charges
Interest on long-term debt 29,297 28,559
Other interest 11,043 7,254
Allowance for borrowed funds
used during construction (6,627) (4,552)
33,713 31,261
Net income 112,992 107,631
Preferred dividend requirements 1,547 2,676
Balance applicable to common stock $111,445 $104,955
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, 1996 1995
Cash flows from operating activities
Net income $ 112,992 $ 107,631
Adjustments to reconcile net income
to net cash:
Depreciation 87,551 84,893
Deferred income taxes (8,712) (11,802)
Investment tax credits, net (3,497) (3,575)
Allowance for funds used
during construction (22,845) (12,106)
Deferred recovery clause (426) (13,975)
Revenue deferral and refund 38,100 30,962
Amortization of coal contract buyout 2,028 1,352
Receivables, less allowance
for uncollectibles (8,646) (19,862)
Fuel inventories 22,722 32,482
Taxes accrued 27,387 58,513
Accounts payable (19,531) (14,235)
Other 18,430 24,324
245,553 264,602
Cash flows from investing activities
Capital expenditures (174,781) (247,137)
Allowance for funds used
during construction 22,845 12,106
(151,936) (235,031)
Cash flows from financing activities
Proceeds from contributed capital
from parent 83,000 56,000
Proceeds from long-term debt 3,058 620
Repayment of long-term debt (25,280) (260)
Net increase in short-term debt (31,000) (19,100)
Dividends (89,770) (73,658)
Redemption of preferred stock,
including premium (35,496) --
(95,488) (36,398)
Net decrease in cash and cash equivalents (1,871) (6,827)
Cash and cash equivalents
at beginning of period 3,832 7,071
Cash and cash equivalents at end of period $ 1,961 $ 244
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 $182 million for 1996, excluding
allowance for funds used during construction (AFUDC).
C. During the first nine months of 1996, the company recognized
$38-million of revenue deferrals and refunds pursuant to a multi-
year base rate freeze, revenue deferral and refund plan (the 1996
Plan) which the Florida Public Service Commission (FPSC) approved
in a final order on May 20, 1996. The company deferred $31 million
during the first nine months last year in accordance with another
plan (the 1995 Plan) approved by the FPSC for 1995. A more
complete description of the 1995 Plan and 1996 Plan is contained in
the company s Annual Report on Form 10-K for the year ended
Dec. 31, 1995.
A total of $89 million of revenue has been recorded on the
balance sheet under the 1995 and 1996 Plans, of which $64 million
is included in other deferred credits. The remaining $25 million
is classified in revenue refund to reflect the refund to customers
which began Oct. 1, 1996.
D. Certain 1995 amounts on the statements of cash flows have been
restated to comply with the current year presentations.
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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, 1996:
Net income of $50.6 million in the third quarter was $3.1
million or 6 percent higher than in 1995's third quarter due to
higher capitalized financing costs (AFUDC) and higher revenues.
Both the 1996 and 1995 results were net of $8 million and $14
million of revenue deferrals, respectively, in accordance with
FPSC-approved plans. Operating income was 4 percent higher than
1995 because of higher revenues.
Revenues for the quarter increased 1 percent due to higher
energy sales and the difference in the level of revenue deferrals.
Retail energy sales increased 3 percent from 1995 because of
2 percent customer growth and warmer weather.
Total operating expenses for the third quarter were unchanged
from 1995. Lower fuel expenses from effective coal contract
administration were offset by higher purchased power expenses from
increased energy sales and higher depreciation.
The effective income tax rate for the third quarter was
34.1 percent compared to 35.1 percent for the same period last
year. The decrease was primarily attributable to higher allowance
for other funds used during construction in 1996.
Total AFUDC increased to $8 million from $5 million in 1995
from the additional investment in the company s Polk Power Station
which was declared in service Sept. 30, 1996.
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FORM 10-Q
Interest expense before the allowance for borrowed funds used
during construction was 11 percent higher in the current quarter
reflecting higher levels of short-term debt, interest on the
revenue deferrals and the effect of the expiration of an interest
rate swap agreement.
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FORM 10-Q
Nine months ended Sept. 30, 1996:
Net income of $111.4 million in the first nine months of 1996
was $6.5 million or 6 percent higher than in 1995's first nine
months due to higher AFUDC and increased energy sales. Operating
income was 1 percent lower than in 1995 reflecting $38 million of
revenue deferrals and refunds in accordance with the 1996 Plan.
Operating income last year was net of a $31-million revenue
deferral in accordance with the 1995 Plan.
Revenues in the first nine months decreased, despite higher
retail energy sales, because of the elimination of the oil backout
recovery clause pursuant to the 1995 Plan, higher revenue deferrals
and lower fuel charges to customers. Retail energy sales increased
4 percent reflecting favorable weather, customer growth of more
than 2 percent and a strong local economy.
Total operating expenses for the first nine months of 1996
were unchanged from 1995. Lower fuel expenses from effective coal
contract administration were offset by higher purchased power and
depreciation expense.
The effective income tax rate for the first nine months of
1996 was 32.7 percent compared to 34.3 percent for the same period
last year. The decrease is primarily attributable to higher
allowance for other funds used during construction in 1996.
Total AFUDC increased in 1996 to $23 million from $12 million
in 1995 from the additional investment in the company s Polk Power
Station which was declared in service Sept. 30, 1996.
Interest expense before the allowance for borrowed funds used
during construction was 13 percent higher in the first nine months
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FORM 10-Q
of the year reflecting higher levels of short-term debt, interest
on the revenue deferrals and refunds and the effect of the
expiration of an interest rate swap agreement.
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FORM 10-Q
Liquidity, Capital Resources and Changes in Financial Condition
The FPSC issued a final order in May 1996 approving a multi-
year base rate freeze, revenue deferral and refund plan. The plan
was set forth in an agreement among the company, the Office of
Public Counsel (OPC) and the Florida Industrial Power Users Group
(FIPUG) covering the years 1996 through 1998. A more complete
description of the 1996 Plan is contained in the company s Annual
Report on Form 10-K for the year ended Dec. 31, 1995.
In October 1996, the FPSC issued a final order approving an
agreement among the company, OPC and FIPUG which resolved all of
the pending regulatory issues related to a prudence review of the
company s new Polk Power Station. This agreement provides for full
recovery of the capital costs not to exceed one percent above
$506 million, and all operation and maintenance expenses associated
with the Polk Power Station. The agreement extends through 1999
the base rate freeze approved in the 1996 Plan. Customers will
also benefit from a $25 million temporary base rate reduction to be
reflected as a credit on customer bills over a 15-month period
beginning Oct. 1, 1997. This temporary rate reduction will offset
refunds which might otherwise have been made in 1999 under the 1996
Plan. In addition, customers will be refunded 60 percent of the
revenues generated in 1999 which contribute to a return on equity
between 12.00 percent and 12.75 percent, and all 1999 revenues
which contribute to a return on equity above 12.75 percent.
Fuel inventory declined from Dec. 31, 1995 due to increased
energy sales and effective management of inventory levels.
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FORM 10-Q
The increase in other deferred credits primarily reflected the
revenue deferrals related to the 1996 Plan and the 1995 Plan.
The $25-million balance in the revenue refund account reflects
the refund to customers to be made over the 12-month period
beginning Oct. 1, 1996 under the 1996 Plan. This refund consists
of $15 million from 1996's revenues and $10 million of revenues
deferred from 1995.
The decrease in notes payable was related to the decrease in
fuel inventory as well as the increase in deferred revenue.
The decrease in preferred stock reflected the company s
redemption of $35 million aggregate par value of preferred stock in
April 1996.
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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
The registrant filed a Current Report on Form 8-K dated
Sept. 25, 1996 reporting under "Item 5. Other Events" on the
agreement among the company, the Office of Public Counsel
and the Florida Industrial Power Users Group to resolve all
regulatory issues related to a prudence review of the
company s Polk Power Station, extend the current base rate
freeze through 1999 and provide for a temporary reduction in
base rates.
The registrant filed a Current Report on Form 8-K dated Oct.
9, 1996 reporting under "Item 5. Other Events" on the
Florida Public Service Commission s vote to approve the
agreement among the company, the Office of Public Counsel
and the Florida Industrial Power Users Group which resolves
all regulatory issues related to a prudence review of the
company s Polk Power Station, extends the current base rate
freeze through 1999 and provides for a temporary reduction
in base rates.
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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, 1996 By: /s/ W. L. Griffin
W. L. Griffin
Vice President - Controller
(Principal 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 17
27. Financial data schedule (EDGAR filing only) --
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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.
Nine Months Twelve Months
Ended Ended Year Ended December 31,
Sept. 30, 1996 Sept. 30, 1996 1995 1994(1) 1993(2) 1992 1991
4.79x 4.45x 4.50x 4.11x 3.98x 4.16x 3.66x
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 a $21.3-million pretax restructuring charge.
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.
(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.
- 17 -<PAGE>
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THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE TAMPA
ELECTRIC COMPANY BALANCE SHEETS, STATEMENTS OF INCOME AND STATEMENTS OF CASH
FLOWS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
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<NAME> Tampa Electric Company
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<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-1-1996
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<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 2,287,761
<OTHER-PROPERTY-AND-INVEST> 1,048
<TOTAL-CURRENT-ASSETS> 222,097
<TOTAL-DEFERRED-CHARGES> 215,556
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<TOTAL-ASSETS> 2,726,462
<COMMON> 118,921
<CAPITAL-SURPLUS-PAID-IN> 816,598
<RETAINED-EARNINGS> 210,351
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,145,870
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19,960
<LONG-TERM-DEBT-NET> 586,042
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<GROSS-OPERATING-REVENUE> 838,278
<INCOME-TAX-EXPENSE> 55,093
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<EARNINGS-AVAILABLE-FOR-COMM> 111,445
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<PAGE>
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