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, 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 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, 1997):
Common Stock, Without Par Value 10
The registrant meets the conditions set forth in General Instruction
(H)(1)(a) and (b) of Form 10-Q and is therefore filing this form with
the reduced disclosure format.<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- and nine-month periods
ended Sept. 30, 1997 and 1996. The current year financial
statements include the results of Peoples Gas System, Inc.
and West Florida Natural Gas Company, both of which were
merged into Tampa Electric Company in June 1997. Both
mergers were accounted for as poolings of interests. Prior
year financial statements have been restated to reflect the
results of Peoples Gas System. 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 pages 7 through 9 of this report.
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FORM 10-Q
BALANCE SHEETS
(in millions)
Sept. 30, Dec. 31,
1997 1996
Assets
Property, plant and equipment,
at original cost
Utility plant in service
Electric $3,604.0 $3,536.6
Gas 465.1 410.4
Construction work in progress 38.7 40.2
4,107.8 3,987.2
Accumulated depreciation (1,568.5) (1,456.7)
2,539.3 2,530.5
Other property 6.2 6.0
2,545.5 2,536.5
Current assets
Cash and cash equivalents 15.8 3.5
Receivables, less allowance
for uncollectibles 152.4 162.0
Inventories, at average cost
Fuel 68.6 57.0
Materials and supplies 44.9 42.9
Prepayments 5.1 4.9
286.8 270.3
Deferred debits
Unamortized debt expense 17.9 18.3
Deferred income taxes 110.0 102.9
Regulatory asset - tax related 42.6 44.8
Other 82.8 53.1
253.3 219.1
$3,085.6 $3,025.9
Liabilities and Capital
Capital
Common stock $ 972.1 $ 961.7
Retained earnings 319.2 285.7
1,291.3 1,247.4
Preferred stock, redemption not required -- 20.0
Long-term debt, less amount due
within one year 727.0 740.2
2,018.3 2,007.6
Current liabilities
Long-term debt due within one year 4.2 3.7
Notes payable 141.2 98.6
Accounts payable 114.1 153.7
Customer deposits 77.0 77.1
Interest accrued 25.3 15.9
Taxes accrued 47.1 11.9
408.9 360.9
Deferred credits
Deferred income taxes 401.4 382.4
Investment tax credits 50.8 53.8
Regulatory liability - tax related 77.7 80.6
Other 128.5 140.6
658.4 657.4
$3,085.6 $3,025.9
The accompanying notes are an integral part of the financial statements.
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FORM 10-Q
STATEMENTS OF INCOME
(in millions)
For the three months ended Sept. 30, 1997 1996
Operating revenues
Electric $342.3 $311.1
Gas 49.7 49.0
392.0 360.1
Operating expenses
Operation
Fuel - electric generation 98.3 101.8
Purchased power 29.1 16.7
Natural gas sold 22.2 23.5
Other 53.9 52.9
Maintenance 22.1 18.6
Depreciation 40.3 33.8
Taxes, federal and state income 30.7 26.9
Taxes, other than income 27.5 26.5
324.1 300.7
Operating income 67.9 59.4
Other income
Allowance for other funds used
during construction -- 5.8
Other income (expense), net (.4) --
(.4) 5.8
Income before interest charges 67.5 65.2
Interest charges
Interest on long-term debt 12.5 11.5
Other interest 3.9 4.2
Allowance for borrowed funds
used during construction -- (2.3)
16.4 13.4
Net income 51.1 51.8
Preferred dividend requirements -- .2
Balance applicable to common stock $ 51.1 $ 51.6
The accompanying notes are an integral part of the financial statements.
- 4 -<PAGE>
FORM 10-Q
STATEMENTS OF INCOME
(in millions)
For the nine months ended Sept. 30, 1997 1996
Operating revenues
Electric $ 915.1 $ 838.3
Gas 183.6 197.7
1,098.7 1,036.0
Operating expenses
Operation
Fuel - electric generation 277.7 288.9
Purchased power 55.7 38.9
Natural gas sold 87.2 100.5
Other 160.4 161.8
Maintenance 62.0 52.6
Depreciation 120.3 100.4
Taxes, federal and state income 73.8 61.4
Taxes, other than income 85.4 83.2
922.5 887.7
Operating income 176.2 148.3
Other income
Allowance for other funds used
during construction .1 16.2
Other income (expense), net (1.7) --
(1.6) 16.2
Income before interest charges 174.6 164.5
Interest charges
Interest on long-term debt 38.1 34.7
Other interest 11.6 13.0
Allowance for borrowed funds
used during construction -- (6.6)
49.7 41.1
Net income 124.9 123.4
Preferred dividend requirements .5 1.5
Balance applicable to common stock $ 124.4 $ 121.9
The accompanying notes are an integral part of the financial statements.
- 5 -<PAGE>
FORM 10-Q
STATEMENTS OF CASH FLOWS
(in millions)
For the nine months ended Sept. 30, 1997 1996
Cash flows from operating activities
Net income $ 124.9 $ 123.4
Adjustments to reconcile net income
to net cash:
Depreciation 120.3 100.4
Deferred income taxes 4.9 (7.2)
Investment tax credits, net (3.5) (3.5)
Allowance for funds used
during construction (.1) (22.8)
Deferred recovery clause 2.2 5.6
Deferred revenue (27.7) 38.1
Refund to customers (19.4) --
Amortization of coal contract buyout 2.0 2.0
Receivables, less allowance
for uncollectibles 11.6 (.6)
Fuel inventories (13.6) 23.1
Taxes accrued 35.2 29.4
Accounts payable (19.7) (23.1)
Other (6.0) 13.5
211.1 278.3
Cash flows from investing activities
Capital expenditures (104.6) (195.5)
Allowance for funds used
during construction .1 22.8
(104.5) (172.7)
Cash flows from financing activities
Proceeds from contributed capital
from parent 5.0 83.0
Proceeds from long-term debt -- 3.1
Repayment of long-term debt (16.7) (26.3)
Net payments under credit lines (10.0) --
Net increase (decrease) in short-term debt 41.0 (31.0)
Dividends (93.2) (99.8)
Redemption of preferred stock,
including premium (20.4) (35.5)
(94.3) (106.5)
Net increase (decrease) in cash
and cash equivalents 12.3 (.9)
Cash and cash equivalents
at beginning of period 3.5 7.5
Cash and cash equivalents at end of period $ 15.8 $ 6.6
The accompanying notes are an integral part of the financial statements.
- 6 -<PAGE>
FORM 10-Q
NOTES TO FINANCIAL STATEMENTS
A. Tampa Electric Company is a wholly owned subsidiary of
TECO Energy, Inc.
B. In June 1997, TECO Energy completed its merger with Lykes
Energy, Inc. Concurrent with this merger, Lykes Energy, Inc. s
regulated gas distribution utility, Peoples Gas System, Inc., was
merged into Tampa Electric Company and now operates as its
Peoples Gas division.
Also in June 1997, TECO Energy completed its merger with
West Florida Gas Inc. (West Florida). Concurrent with this
merger, West Florida s regulated gas distribution utility, West
Florida Natural Gas Company, was merged into Tampa Electric
Company and now operates as part of the Peoples Gas division.
These mergers were accounted for as poolings of interests
and, accordingly, the company s Balance Sheet as of Sept. 30,
1997 and its Statements of Income and Cash Flows for the periods
ended Sept. 30, 1997 include the results of Peoples Gas System
and West Florida.
The Balance Sheet as of Dec. 31, 1996 and the Statements of
Income and Cash Flows for the periods ended Sept. 30, 1996 have
been restated to include the results of Peoples Gas System. The
1996 statements have not been restated to reflect the operations
and financial position of West Florida Natural Gas due to its
size.
The company's combined restated revenues and net income for
the three- and nine-month periods ended Sept. 30, 1997 and 1996
were as follows:
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FORM 10-Q
- 8 -<PAGE>
FORM 10-Q
Combining Results
(unaudited)
Three Months Ended Nine Months Ended
Sept. 30, 1997 Sept. 30, 1997
Net Net
(millions) Revenues Income Revenues Income
Tampa Electric pre-merger $ -- $ -- $ 572.8 $ 64.2
Peoples Gas Division pre-merger -- -- 124.0 9.2
West Florida Gas pre-merger -- -- 9.9 0.6
-- -- 706.7 74.0
Merger related(1) -- -- -- (0.2)
-- -- 706.7 73.8
Tampa Electric post-merger 392.0 51.1 392.0 51.1
Combined $392.0 $51.1 $1,098.7 $124.9
Three Months Ended Nine Months Ended
Sept. 30, 1996 Sept. 30, 1996
Net Net
(Millions) Revenues Income Revenues Income
Tampa Electric pre-merger(2) $311.1 $50.8 $ 838.3 $113.0
Peoples Gas Division pre-merger 49.0 1.0 197.7 10.4
Combined $360.1 $51.8 $1,036.0 $123.4
(1) Reflects a net after-tax one-time charge for merger-related
transactions.
(2) The 1996 amounts were previously reported on Form 10Q for
the quarter ended Sept. 30, 1996.
C. The company has made certain commitments in connection with
i t s continuing construction program. Total construction
expenditures are estimated to be $117 million for the electric
division and $30 million for the Peoples Gas division.
D. During the first nine months of 1997, the electric division
recognized $28 million of revenues that had been deferred in 1995
and 1996 pursuant to regulatory agreements approved by the
Florida Public Service Commission (FPSC). The electric division
deferred $38 million of revenues during the first nine months of
last year. In addition, it refunded $19 million of previously
deferred revenues to customers during the first nine months of
this year in accordance with the agreements.
- 9 -<PAGE>
FORM 10-Q
As of Sept. 30, 1997, $33 million of deferred revenues was
included in other deferred credits.
E. On July 16, 1997, the company retired all of its outstanding
shares of preferred stock at the per share redemption prices of
$103.75 for Series A, $102.875 for Series B and $101.00 for
Series D.
- 10 -<PAGE>
FORM 10-Q
Item 2. Management's Narrative Analysis of Results of Operations
Nine months ended Sept. 30, 1997:
Net income of $125 million in the first nine months was 1
percent higher than in 1996's first nine months as increased
operating income more than offset the decline in AFUDC.
Contributions by operating division
Operating income
(millions) 1997 1996
Electric division $157.5 $130.6
Peoples Gas division 18.7 17.7
$176.2 $148.3
Operating income of $176 million was higher than in 1996
primarily because of the completion of the Polk Unit One
generating plant and its inclusion in rate base for earnings
purposes.
Electric division
Revenues increased 9 percent in this year s first nine
months as $28 million of previously deferred revenues were
recognized under the company s regulatory agreements, while
$38 million of revenues were deferred in the same period last
year under these agreements.
Excluding the effects of deferred revenues, year-to-date
revenues were up from last year as milder weather early in the
year partially offset 2.4 percent customer growth.
Operating expenses for the first nine months were 6 percent
higher than in 1996, primarily as a result of the operation of
Polk Unit One and increased maintenance on generation equipment.
Year-to-date results also reflected a recent decision by the
FPSC to change the regulatory treatment of certain long-term
- 11 -<PAGE>
FORM 10-Q
wholesale power sales contracts through 1999. The impact,
retroactive to Jan. 1, 1997, was $7.5 million pretax. The
fourth quarter impact of this decision is expected to be about $2
million. The company intends to sell these contracts to other
power suppliers by year end.
As a result of this decision, the company will concentrate
its wholesale power sales efforts on energy broker or other
short-term sales for the next two years.
On Oct. 9, 1997, IMC-Agrico (IMCA) and Duke Energy
Power Services announced they had signed a letter of intent for
the construction of a natural gas fired combined cycle power
plant with a minimum capacity of 240 megawatts. Although IMCA, a
large phosphate producer, was the company s largest customer in
1996, it represented less than 3 percent of 1996's base revenues.
The proposed plant is intended to serve electric load currently
s e rved by Tampa Electric and two other utilities. The
announcement further indicated that the plant is expected to
begin operation as early as mid-2000 on property currently owned
by IMCA in central Florida. The announcement also stated that
capacity not used by IMCA will be sold in the wholesale market by
a Duke Energy affiliate.
IMCA has sought an order from the FPSC declaring that the
project involves permissible self generation. Tampa Electric has
filed a petition with the FPSC to intervene in this proceeding
because it believes the proposed project will involve retail
transactions within the company s defined service area which are
prohibited under existing Florida regulation.
- 12 -<PAGE>
FORM 10-Q
Because specific information with respect to the proposed
plant, such as the ultimate size, configuration and location has
not been announced, its full effect on Tampa Electric is unclear
at this time. The company believes that there would not be a
material adverse financial impact on it if the plant is actually
constructed. Under existing regulation, however, there would
likely be a shifting of costs to other retail customers.
Peoples Gas System
Total revenues decreased 7 percent while non-fuel revenues
declined by only 1 percent, the result of commercial and
i n d u strial customers moving from firm gas purchases to
transportation only services. Operating income increased as a
result of lower non-fuel operating expenses and the addition of
the West Florida Natural Gas operations.
Tampa Electric s effective income tax rate for the first
nine months of 1997 was 37 percent compared to 33 percent for the
same period last year, primarily due to lower capitalized
financing costs.
Total AFUDC decreased in 1997 because the Polk Unit One
began commercial service at the end of 1996's third quarter.
Interest expense before AFUDC-borrowed funds was up 4
percent due to higher levels of long-term debt.
Derivatives and Hedging Policy
- 13 -<PAGE>
FORM 10-Q
During 1997, Peoples Gas System has utilized natural gas
options contracts, from time to time, to limit the effects of
natural gas price increases on the prices it charges customers.
Tampa Electric does not use derivatives or other hedging
instruments for speculative purposes.
- 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.
27.1 Financial data schedule - nine months ended Sept. 30, 1997.
(EDGAR filing only)
27.2 Restated financial data schedule - nine months ended Sept.
30, 1996. (EDGAR filing only)
- 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)
Dated: November 12, 1997 By: /s/ W. L. Griffin
W. L. Griffin
Vice President - Controller
(Principal Accounting Officer)
- 14 -<PAGE>
FORM 10-Q
INDEX TO EXHIBITS
Exhibit No. Description of Exhibits Page No.
12. Ratio of earnings to fixed charges 16
27.1 Financial data schedule - nine months ended
Sept. 30, 1997 (EDGAR filing only) --
27.2 Restated financial data schedule - nine months
ended Sept. 30, 1996 (EDGAR filing only) --
- 15 -<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,(1)
Sept. 30, 1997 Sept. 30, 1997 1996 1995 1994(2) 1993(3) 1992
4.78x 4.59x 4.40x 4.28x 3.88x 3.81x 3.92x
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
i n t e r est component of rentals and preferred stock dividend
requirements.
(1) Prior year amounts have been restated to reflect the merger of
Peoples Gas System, Inc. with and into Tampa Electric Company.
(2) 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 4.23x for the period ended Dec. 31, 1994.
(3) 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 3.97x for
the year ended Dec. 31, 1993.
- 16 -<PAGE>
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<ARTICLE> UT
<LEGEND>
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
STATEMENTS.
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<CIK> 0000096271
<NAME> Tampa Electric Company
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<TOTAL-ASSETS> 3,085,555
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<OTHER-OPERATING-EXPENSES> 848,703
<TOTAL-OPERATING-EXPENSES> 922,542
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<TYPE>EX-27.2
<SEQUENCE>4
<DESCRIPTION>9/30/96 RESTATED
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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
STATEMENTS. THIS 1996 FINANCIAL DATA SCHEDULE HAS BEEN RESTATED TO REFLECT
THE MERGER OF PEOPLES GAS SYSTEM, INC. (PGS) INTO THE REGISTRANT CONCURRENT
WITH THE MERGER OF LYKES ENERGY, INC. <PGS PARENT> INTO TECO ENERGY, INC.
THESE MERGERS WERE ACCOUNTED FOR AS POOLINGS OF INTEREST.
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<NAME> Tampa Electric Company
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<PERIOD-TYPE> 9-MOS
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<TOTAL-NET-UTILITY-PLANT> 2,539,240
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<TOTAL-CURRENT-ASSETS> 253,644
<TOTAL-DEFERRED-CHARGES> 226,019
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<TOTAL-ASSETS> 3,019,951
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<CAPITAL-SURPLUS-PAID-IN> 842,755
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<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,262,715
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