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 March 31, 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 1-5007
TAMPA ELECTRIC COMPANY
(Exact name of registrant as specified in its charter)
FLORIDA 59-0475140
(State or other jurisdiction (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 (April 30, 1997):
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 necessary to present fairly the results
for the three-month periods ended March 31, 1997 and 1996.
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,
1996 and to the notes on page 6 of this report.
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FORM 10-Q
BALANCE SHEETS
(in thousands)
March 31, Dec. 31,
1997 1996
Assets
Property, plant and equipment,
at original cost
Utility plant in service $3,553,984 $3,536,573
Construction work in progress 41,348 40,202
3,595,332 3,576,775
Accumulated depreciation (1,328,575) (1,298,496)
2,266,757 2,278,279
Other property 6,089 6,006
2,272,846 2,284,285
Current assets
Cash and cash equivalents 5,463 108
Receivables, less allowance
for uncollectibles 100,976 128,791
Inventories, at average cost
Fuel 63,779 56,968
Materials and supplies 41,927 41,220
Prepayments 2,670 3,480
214,815 230,567
Deferred debits
Unamortized debt expense 17,082 17,429
Deferred income taxes 103,633 102,914
Regulatory asset - tax related 44,088 44,816
Other 52,007 43,220
216,810 208,379
$2,704,471 $2,723,231
Liabilities and Capital
Capital
Common stock $ 935,517 $ 935,516
Retained earnings 182,607 191,662
1,118,124 1,127,178
Preferred stock, redemption not required 19,960 19,960
Long-term debt, less amount due
within one year 660,854 661,103
1,798,938 1,808,241
Current liabilities
Long-term debt due within one year 1,060 1,045
Notes payable 81,000 98,600
Accounts payable 124,615 117,323
Customer deposits 53,458 52,867
Interest accrued 20,524 12,070
Taxes accrued 8,873 7,399
289,530 289,304
Deferred credits
Deferred income taxes 354,535 359,497
Investment tax credits 52,690 53,837
Regulatory liability - tax related 79,614 80,587
Other 129,164 131,765
616,003 625,686
$2,704,471 $2,723,231
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 March 31, 1997 1996
Operating revenues $272,786 $254,746
Operating expenses
Operation
Fuel 88,691 96,292
Purchased power 10,814 9,556
Other 40,339 39,414
Maintenance 16,741 14,513
Depreciation 34,937 28,918
Taxes, federal and state income 15,972 11,263
Taxes, other than income 23,417 22,585
230,911 222,541
Operating income 41,875 32,205
Other income
Allowance for other funds used
during construction 47 5,019
Other income (expense), net (145) (114)
(98) 4,905
Income before interest charges 41,777 37,110
Interest charges
Interest on long-term debt 10,701 9,872
Other interest 3,135 3,314
Allowance for borrowed funds
used during construction (18) (2,051)
13,818 11,135
Net income 27,959 25,975
Preferred dividend requirements 220 892
Balance applicable to common stock $ 27,739 $ 25,083
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 three months ended March 31, 1997 1996
Cash flows from operating activities
Net income $ 27,959 $ 25,975
Adjustments to reconcile net income
to net cash:
Depreciation 34,937 28,918
Deferred income taxes (5,926) (10,379)
Investment tax credits, net (1,147) (1,185)
Allowance for funds used
during construction (65) (7,070)
Deferred recovery clause 5,109 1,364
Deferred revenues (7,283) 20,869
Refund to customers (5,888) --
Amortization of coal contract buyout 676 676
Receivables, less allowance
for uncollectibles 27,815 12,536
Fuel inventories (6,811) 16,829
Taxes accrued 1,474 28,401
Accounts payable 13,180 (40,872)
Other 146 13,289
84,176 89,351
Cash flows from investing activities
Capital expenditures (23,977) (53,628)
Allowance for funds used
during construction 65 7,070
(23,912) (46,558)
Cash flows from financing activities
Proceeds from contributed capital
from parent -- 35,000
Proceeds from long-term debt -- 3,058
Repayment of long-term debt (295) (280)
Net decrease in short-term debt (17,600) (45,600)
Dividends (37,014) (34,965)
(54,909) (42,787)
Net increase in cash and cash equivalents 5,355 6
Cash and cash equivalents
at beginning of period 108 3,832
Cash and cash equivalents at end of period $ 5,463 $ 3,838
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 $122 million for 1997.
C. During the first three months of 1997, the company recognized
$7.3 million of revenues that had been deferred in 1995 and 1996
pursuant to regulatory agreements approved by the Florida Public Service
Commission (FPSC). The company deferred $20.9 million of revenues
during the first three months last year. The company also refunded to
customers $5.9 million of previously deferred revenues during the first
quarter of this year in accordance with the agreements.
As of March 31, 1997, $53 million of deferred revenues were
included in other deferred credits. An additional $13.7 million were
classified in accounts payable to reflect the remaining amount to be
refunded to customers through September 1997.
D. As previously disclosed in its Annual Report on Form 10-K for the
year ended Dec. 31, 1996, TECO Energy entered into an Agreement and Plan
of Merger with Lykes Energy, Inc. ( Lykes Energy ) on Nov. 21, 1996.
Concurrent with this merger, Lykes Energy s natural gas distribution
subsidiary will be merged into Tampa Electric. Completion of the
mergers is expected to occur by mid-year 1997.
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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 March 31, 1997:
Net income of $28.0 million in the first quarter of 1997 was
$2.0 million or 8 percent higher than 1996's first quarter as increased
operating income more than offset the absence of capitalized financing
costs (AFUDC). Operating income was higher than in 1996 because of the
company s regulatory agreements and the completion of Polk Unit One and
its inclusion in rate base for earnings purposes.
Revenues increased 7 percent this year as the company recognized
$7 million of previously deferred revenues under the company s
regulatory agreements, while $21 million of revenues were deferred last
year under these agreements.
Revenues before the recognition of deferred revenues this year
decreased 4 percent from last year s revenues before the revenue
deferral due to lower retail energy sales. Retail sales declined
5 percent as customer growth of 2.3 percent was more than offset by the
effects of mild winter weather in 1997 compared to colder than normal
weather in 1996.
Operating expenses for the first quarter, excluding federal and
state income taxes, were 2 percent higher than in 1996 primarily as a
result of the operation of Polk Unit One.
T h e effective income tax rate for the first quarter was
36.2 percent compared to 30.1 percent last year, primarily due to less
AFUDC-other in 1997.
Total AFUDC decreased in 1997 because the company s Polk Power
Station began commercial service at the end of 1996's third quarter.
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FORM 10-Q
Interest expense before the allowance for borrowed funds used
during construction was 5 percent higher in the current quarter
reflecting higher levels of long-term debt and interest accrued on
revenue deferrals.
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FORM 10-Q
Liquidity, Capital Resources and Changes in Financial Condition
Fuel inventory increased reflecting the seasonal build-up in
anticipation of summer generation.
Tampa Electric currently anticipates that, concurrent with the
merger of Lykes Energy into TECO Energy, the company will redeem all
outstanding shares of Series A, B and D $100 par value Preferred Stock
at the applicable per share redemption prices, plus accrued but unpaid
dividends to the date of redemption. Also at that time, Lykes Energy s
natural gas distribution subsidiary will be merged into the company.
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FORM 10-Q
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
Pursuant to a written consent in lieu of annual meeting of
shareholders dated April 16, 1997, TECO Energy, Inc., the holder
of all of the outstanding common stock of the registrant, elected
the following directors:
Girard F. Anderson
DuBose Ausley
Sara L. Baldwin
Hugh L. Culbreath
James L. Ferman, Jr.
Edward L. Flom
Henry R. Guild, Jr.
Timothy L. Guzzle
Dennis R. Hendrix
Robert L. Ryan
William P. Sovey
J. Thomas Touchton
John A. Urquhart
James O. Welch, Jr.
In April, in conjuction with a tender offer for its
preferred stock, the Company solicited consents from preferred
shareholders to the merger of Lykes Energy s natural gas
distribution subsidiary into the Company. The tender offer
expired May 6 without achieving the requisite consents.
- 10 -<PAGE>
FORM 10-Q
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.
The registrant filed a Current Report on Form 8-K dated
April 16, 1997 reporting under "Item 5. Other Events" on the
shareholder approval of TECO Energy s 1997 Director Equity
Plan as an amendment and restatement of TECO Energy s 1991
Director Stock Option Plan.
- 11 -<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: May 14, 1997 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 14
27. Financial data schedule (EDGAR filing only) --
- 13 -<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.
Three Months Twelve Months
Ended Ended Year Ended December 31,
(1) (2)
March 31, 1997 March 31, 1997 1996 1995 1994 1993 1992
4.00x 4.79x 4.64x 4.50x 4.11x 3.98x 4.16x
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.
(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
STATEMENTS.
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