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 June 30, 1998
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 31, 1998):
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 six-month periods ended June 30, 1998 and
1997. 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,
1997 and to the notes on pages 7 through 9 of this report.
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FORM 10-Q
BALANCE SHEETS
(in millions)
June 30, Dec. 31,
1998 1997
Assets
Property, plant and equipment,
at original cost
Utility plant in service
Electric $3,675.6 $3,632.0
Gas 493.5 471.1
Construction work in progress 46.8 40.6
4,215.9 4,143.7
Accumulated depreciation (1,662.4) (1,595.3)
2,553.5 2,548.4
Other property 8.0 6.5
2,561.5 2,554.9
Current assets
Cash and cash equivalents 2.0 2.8
Receivables, less allowance
for uncollectibles 155.6 161.4
Inventories, at average cost
Fuel 82.5 69.5
Materials and supplies 46.6 45.6
Prepayments 9.9 7.3
296.6 286.6
Deferred debits
Unamortized debt expense 16.6 17.5
Deferred income taxes 114.1 112.2
Regulatory asset - tax related 40.5 41.8
Other 70.7 85.9
241.9 257.4
$3,100.0 $3,098.9
Liabilities and Capital
Capital
Common stock $1,016.1 $ 972.1
Retained earnings 296.8 289.6
1,312.9 1,261.7
Long-term debt, less amount due
within one year 726.8 727.1
2,039.7 1,988.8
Current liabilities
Long-term debt due within one year 4.2 4.1
Notes payable 126.4 219.1
Accounts payable 118.6 118.4
Customer deposits 77.5 77.3
Interest accrued 21.5 18.7
Taxes accrued 42.3 8.5
390.5 446.1
Deferred credits
Deferred income taxes 429.2 415.6
Investment tax credits 47.4 49.7
Regulatory liability - tax related 74.9 77.0
Other 118.3 121.7
669.8 664.0
$3,100.0 $3,098.9
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 June 30, 1998 1997
Operating revenues
Electric $320.9 $300.0
Gas 58.0 57.1
378.9 357.1
Operating expenses
Operation
Fuel - electric generation 94.7 90.7
Purchased power 22.9 15.7
Natural gas sold 26.4 27.0
Other 54.1 54.4
Maintenance 24.6 21.9
Depreciation 41.7 40.2
Taxes, federal and state income 25.2 22.6
Taxes, other than income 29.5 28.3
319.1 300.8
Operating income 59.8 56.3
Other income (expense)
Allowance for other funds used
during construction -- .1
Other income (expense), net (.8) (1.0)
(.8) (.9)
Income before interest charges 59.0 55.4
Interest charges
Interest on long-term debt 12.5 12.9
Other interest 3.6 3.8
16.1 16.7
Net income 42.9 38.7
Preferred dividend requirements -- .2
Balance applicable to common stock $ 42.9 $ 38.5
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 six months ended June 30, 1998 1997
Operating revenues
Electric $594.3 $572.8
Gas 138.6 133.9
732.9 706.7
Operating expenses
Operation
Fuel - electric generation 183.8 179.4
Purchased power 34.2 26.5
Natural gas sold 64.4 65.0
Other 105.3 106.5
Maintenance 46.4 40.0
Non-recurring charge 9.6 --
Depreciation 83.0 80.0
Taxes, federal and state income 41.2 43.1
Taxes, other than income 59.3 57.9
627.2 598.4
Operating income 105.7 108.3
Other income (expense)
Allowance for other funds used
during construction -- .1
Other income (expense), net (2.7) (1.3)
(2.7) (1.2)
Income before interest charges 103.0 107.1
Interest charges
Interest on long-term debt 24.7 25.7
Other interest 8.2 7.7
32.9 33.4
Net income 70.1 73.7
Preferred dividend requirements -- .4
Balance applicable to common stock $ 70.1 $ 73.3
The accompanying notes are an integral part of the financial statements.
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FORM 10-Q
STATEMENTS OF CASH FLOWS
(in millions)
For the six months ended June 30, 1998 1997
Cash flows from operating activities
Net income $ 70.1 $ 73.7
Adjustments to reconcile net income
to net cash:
Depreciation 83.0 80.0
Deferred income taxes 11.2 (.6)
Investment tax credits, net (2.3) (2.3)
Allowance for funds used
during construction -- (.1)
Deferred recovery clause 9.0 1.2
Deferred revenue (19.8) (17.1)
Refund to customers -- (12.1)
Non-recurring charge 9.6 --
Receivables, less allowance
for uncollectibles 5.8 (16.4)
Inventories (14.0) (11.2)
Taxes accrued 33.8 28.1
Accounts payable .2 (3.1)
Other 15.1 (12.6)
201.7 107.5
Cash flows from investing activities
Capital expenditures (90.5) (66.8)
Allowance for funds used
during construction -- .1
(90.5) (66.7)
Cash flows from financing activities
Proceeds from contributed capital
from parent 44.0 5.0
Repayment of long-term debt (.3) (14.0)
Net payments under credit lines -- (10.0)
Net increase (decrease) in short-term debt (92.7) 62.9
Dividends (63.0) (63.4)
(112.0) (19.5)
Net increase (decrease) in cash
and cash equivalents (.8) 21.3
Cash and cash equivalents at
beginning of period 2.8 3.5
Cash and cash equivalents at end of period $ 2.0 $ 24.8
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
during 1998 are estimated to be $146 million for the electric division
and $55 million for Peoples Gas System.
In July 1998, the company announced that it has determined that
t h e most cost-effective method of compliance with the U.S.
Environmental Protection Agency's (EPA) Clean Air Act Amendments Phase
II sulfur dioxide (SO2) reduction requirements is to install a flue
gas desulfurization (FGD) system at Big Bend Station units one and
two. The FGD system will be comparable to the system operated for Big
Bend units three and four. The project's estimated cost is $90
million. Conceptual and preliminary site engineering is underway, and
the project is scheduled to be completed by the middle of 2000.
Carrying charges and other costs associated with the system are
planned to be recovered through the Environmental Cost Recovery
Clause. The electric division's 1998 estimated capital expenditures
include $17.6 million related to this FGD system.
C. The electric division recognized revenues that had been deferred
in 1995 and 1996 pursuant to regulatory agreements approved by the
Florida Public Service Commission (FPSC). For the three- and six-month
periods ended June 30, 1998, $11.1 million and $19.8 million,
respectively, of these revenues were recognized. Previously deferred
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FORM 10-Q
revenues of $9.8 million and $17.1 million were recognized for the
three- and six-month periods ended June 30, 1997, respectively.
As of June 30, 1998, $12.3 million of deferred revenues were
included in other deferred credits. Accrued interest on these deferred
revenues was $8.8 million at June 30, 1998.
Effective Oct. 1, 1997, the company's electric customers began
receiving a $25-million temporary base rate reduction over a 15-month
period pursuant to the same agreements.
D. I n 1997, the Financial Accounting Standards Board issued
Financial Accounting Standards (FAS) 130, Reporting Comprehensive
Income, effective for fiscal periods beginning after Dec. 15, 1997.
The new standard requires that comprehensive income, which includes
net income as well as certain changes in assets and liabilities
recorded in common equity, be reported in the financial statements.
For the three- and six-month periods ended June 30, 1998 and 1997,
there were no components of comprehensive income other than net
income.
E. As discussed in Tampa Electric Company's 1997 Annual Report on
Form 10-K, the FPSC in September 1997 ruled that costs associated with
two Tampa Electric long-term wholesale power sales contracts should be
assigned to the wholesale jurisdiction and that for retail rate making
purposes the costs transferred from retail to wholesale should reflect
average costs rather than the lower incremental costs on which the two
contracts are based. As a result of this decision and the related
reduction of the retail rate base upon which Tampa Electric is allowed
to earn a return, these contracts became uneconomic. One contract was
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FORM 10-Q
terminated in 1997. As to the other contract, which expires in 2001,
Tampa Electric has entered into firm power purchase contracts with
third parties to provide replacement power through 1999. The cost of
purchased power under these contracts exceeds the revenues expected
through 1999. To reflect this difference, Tampa Electric recorded a
$5.9-million after-tax charge in the first quarter of 1998.
F. In the second quarter of 1998, the company filed a registration
statement on Form S-3 allowing for the issuance of up to $200 million
of medium-term notes. On July 31, 1998, the company issued $50 million
of Remarketed Notes (the Notes) due 2038. The Notes are subject to
mandatory tender on July 15, 2001, at which time they will be
remarketed or redeemed. The coupon rate for the initial term is
5.94%. If the remarketing agent appointed by the company in
connection with the issue of the Notes exercises its right to purchase
the Notes on July 15, 2001, for the following ten years the Notes will
bear interest at an annual rate of 5.41% plus a premium based on the
company s then current credit spread above United States Treasury
Notes with ten years to maturity. Otherwise, the Notes may be
remarketed for interest periods selected by the company at fixed or
floating market rates of interest. Net proceeds to the company were
102.1 percent of the principal amount and include a premium paid to
the company by the remarketing agent for the right to purchase the
Notes in 2001. Proceeds from the Note issuance were used to repay
short-term debt.
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FORM 10-Q
Item 2. Management's Narrative Analysis of Results of Operations
Three months ended June 30, 1998:
Net income for the three-month period ended June 30, 1998 was
$42.9 million, up 11 percent from $38.7 million for the same period
last year, as the warmer weather in June and customer growth of over
two percent resulted in higher retail electric energy sales. Peoples
Gas System's results were affected by costs associated with the
decision to discontinue the appliance sales and service business.
Operating income for the quarter of $59.8 million was six percent
higher than in 1997's second quarter.
Contributions by operating division
Operating income
(millions) 1998 1997
Electric division $ 55.9 $ 51.4
Peoples Gas System 3.9 4.9
$ 59.8 $ 56.3
Electric division
Operating revenues for the quarter were seven percent higher than
in 1997 due to five-percent higher retail energy sales, the result of
warmer weather in June and customer growth of 2.2 percent. These
results were partially offset by the impact of the temporary base rate
reduction discussed in Note C on pages 7 and 8. During the second
quarter of 1998, the electric division recognized $11.1 million of
r e v enues previously deferred in accordance with FPSC-approved
agreements, compared to $9.8 million of deferred revenues recognized
in the second quarter of 1997.
Non-fuel operating expenses for the second quarter of 1998 were
four percent higher than in 1997 due to increased depreciation
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FORM 10-Q
expense, the result of higher plant balances, and higher revenue-
related taxes. Operations and maintenance expenses were essentially
the same as in 1997.
Peoples Gas System
At Peoples Gas System, operating income was $1.0 million less
than in 1997's second quarter reflecting $1.6 million pretax of costs
associated with the decision to discontinue the appliance sales and
service business. Peoples Gas System expects to recoup most of these
costs by the end of the year and to realize significant cost savings
going forward.
Total revenues for the quarter were up two percent from 1997,
with residential and commercial natural gas sales (therms) 10 percent
higher than in last year's period due to customer growth and increased
usage.
Six months ended June 30, 1998:
Net income for the six-month period ended June 30, 1998,
including a non-recurring after-tax charge of $5.9 million, was $70.1
million, compared to $73.7 million for the same period last year.
In 1998's first quarter, the electric division recorded a $5.9-
million after-tax charge associated with actions to mitigate the
effects of the 1997 FPSC ruling that separated certain wholesale power
sales contracts from the retail jurisdiction. See the discussion in
Note E on pages 8 and 9.
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FORM 10-Q
Operating income for the 1998 year-to-date period of $111.6
million, excluding the charge discussed above, was up three percent
from 1997's first half as the effect of increased electric energy
sales in the second quarter and gas sales earlier in the year offset
the impact of a $1.6-million pretax charge at the gas division
reflecting costs associated with the decision to discontinue the
appliance sales and service business.
Contributions by operating division
Operating income
(millions) 1998 1997
Electric division (1) $ 97.3 $ 93.3
Peoples Gas System 14.3 15.0
111.6 108.3
Non-recurring charge, after tax (5.9) --
$105.7 $108.3
(1) Operating income for 1998 excludes the after-tax non-recurring
charge discussed above and in Note E on pages 8 and 9.
Electric division
Operating revenues for the current year period increased four
percent from 1997. Retail sales volumes were up three percent
primarily due to warmer weather in the second quarter and customer
growth of over two percent.
Non-fuel operating expenses for the first half, excluding the
$5.9-million after-tax charge discussed in Note E on pages 8 and 9,
were two percent higher than in 1997 due to increased generating unit
maintenance and increased depreciation expense resulting from higher
plant balances.
During the first six months of 1998, Tampa Electric recorded
$1.1 million of after-tax charges relating to its 1996 earnings as a
result of an FPSC audit of that year which involved several
adjustments, including the establishment of an equity ratio cap of
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FORM 10-Q
58.7 percent for the year 1996. Because of the return on equity
thresholds in Tampa Electric s regulatory agreements covering the
years 1995 through 1999, which are described in the company's Annual
Report on Form 10-K for the year ended Dec. 31, 1997, and the
potential for customer refunds in 1999 and 2000, the company expects
continuing audit scrutiny by the FPSC and active involvement of
intervenors in any proceedings involving returns on equity and
potential refunds.
Peoples Gas System
At Peoples Gas System, operating income was lower than in the
first half of 1997 due to restructuring costs, which are expected to
be nearly recouped by the end of the year. Total revenues were up four
percent from 1997, with residential and commercial natural gas sales
(therms) eight percent higher than in last year's period due to
customer growth and increased usage. However, higher expenses along
with $1.6 million of costs associated with discontinuing the appliance
sales and service business led to a reduction in operating income.
Recent Developments
As discussed in Note F on page 9, on July 31, 1998, the company
issued $50 million of Remarketed Notes due 2038. The Notes are subject
to mandatory tender on July 15, 2001, at which time they will be
remarketed or redeemed. The coupon rate for the initial term is 5.94%.
Proceeds from the Note issuance were used to repay short-term debt.
As discussed in Note B on page 7, Tampa Electric announced that
it has determined that the most cost-effective method of compliance
with the U.S. Environmental Protection Agency's (EPA) Clean Air Act
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FORM 10-Q
Amendments Phase II sulfur dioxide (SO2) reduction requirements is to
install a flue gas desulfurization (FGD) system at Big Bend Station
units one and two. The project's estimated cost is $90 million.
Conceptual and preliminary site engineering is underway and the
project is scheduled to be completed by the middle of 2000. Carrying
charges and other costs associated with the system are planned to be
recovered through the Environmental Cost Recovery Clause.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Risk
Tampa Electric Company is exposed to changes in interest rates
primarily as a result of its borrowing activities. A hypothetical
increase in interest rates of 48 basis points (10 percent of the
company's weighted average interest rate on its variable rate debt)
would not have a significant impact on the company's pretax earnings
over the next fiscal year.
A hypothetical decrease of 10 percent in interest rates would not
have a significant impact on the estimated fair value of the company's
long-term debt at June 30, 1998.
From time to time, the company enters into futures, swaps and
options contracts to moderate its exposure to interest rate changes.
The benefits of these arrangements are at risk only in the event of
non-performance by the other party to the agreement, which the company
does not anticipate. The company does not use derivatives or other
financial products for speculative purposes.
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FORM 10-Q
Commodity Price Risk
Currently, at Tampa Electric's electric division and at Peoples
Gas System, the commodity price increases due to changes in market
conditions for fuel, purchased power and natural gas are recovered
through cost recovery clauses, with no effect on earnings.
From time to time, Peoples Gas System enters into futures, swaps
and options contracts to limit the effects of natural gas price
increases on the prices it charges customers. The benefits of these
financial arrangements are at risk only in the event of non-
performance by the other party to the agreement, which the company
does not anticipate.
Tampa Electric Company does not use derivatives or other
financial products for speculative purposes.
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FORM 10-Q
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 Form of Restricted Stock Agreement between TECO Energy, Inc. and
certain executives under the TECO Energy, Inc. 1996 Equity
Incentive Plan.
10.2 Form of Restricted Stock Agreement between TECO Energy, Inc. and
G. F. Anderson under the TECO Energy, Inc. 1996 Equity Incentive
Plan.
12. Ratio of earnings to fixed charges.
27 Financial data schedule - six months ended June 30, 1998. (EDGAR
filing only)
(b) No reports on Form 8-K were filed during the quarter ending June
30, 1998.
The registrant filed a Current Report on Form 8-K dated July 20,
1998 reporting under "Item 5. Other Events" its plan to comply
with Phase II sulfur dioxide emission standards under the Clean
Air Act Amendments.
The registrant filed a Current Report on Form 8-K dated July 28,
1998 reporting under "Item 5. Other Events" that it had entered
into a purchase agreement with Citicorp Securities, Inc. and
M o r gan Stanley & Co. Incorporated for the sale to the
Underwriters of $50 million principal amount of Remarketed Notes
Due 2038 (the Notes). The Notes are a portion of the $200 million
principal amount of debt securities the registrant registered
under the Securities Act of 1933, as amended, on a registration
statement on Form S-3 in the second quarter of 1998.
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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: Aug. 13, 1998 By: /s/G. L. Gillette
G. L. Gillette
Vice President - Finance
and Chief Financial Officer
(Principal Financial Officer)
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FORM 10-Q
INDEX TO EXHIBITS
Exhibit No. Description of Exhibits Page No.
10.1 Form of Restricted Stock Agreement between 19
TECO Energy, Inc. and certain executives under
the TECO Energy, Inc. 1996 Equity Incentive
Plan.
10.2 Form of Restricted Stock Agreement between 23
TECO Energy, Inc. and G. F. Anderson under the
TECO Energy, Inc. 1996 Equity Incentive Plan.
12. Ratio of earnings to fixed charges 27
27 Financial data schedule - six months ended
June 30, 1998 (EDGAR filing only) --
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Exhibit 10.1
TECO ENERGY, INC.
1996 EQUITY INCENTIVE PLAN
Restricted Stock Agreement
TECO Energy, Inc. (the "Company") and ___________________ (the
"Grantee") have entered into this Restricted Stock Agreement (the
"Agreement") dated April 15, 1998 under the Company's 1996 Equity Incentive
Plan (the "Plan"). Capitalized terms not otherwise defined herein have the
meanings given to them in the Plan.
1. Grant of Restricted Stock. Pursuant to the Plan and subject to
the terms and conditions set forth in this Agreement, the Company hereby
grants, issues and delivers to the Grantee ______ shares of its Common
Stock (the "Restricted Stock").
2. Restrictions on Stock. Until the restrictions terminate under
Section 3, unless otherwise determined by the Committee:
(a) the Restricted Stock may not be sold, assigned, pledged or
transferred by the Grantee; and
(b) all shares of Restricted Stock will be forfeited and
returned to the Company if the Grantee ceases to be an employee of the
Company or any business entity in which the Company owns directly or
indirectly 50% or more of the total voting power or has a significant
financial interest as determined by the Committee (an "Affiliate").
3. Termination of Restrictions. The restrictions on all shares of
Restricted Stock will terminate on the earliest to occur of the following
events:
(a) the Grantee's death;
(b) the termination of Grantee's employment with the Company or
any Affiliate because of a disability that would entitle the Grantee to
benefits under the long-term disability benefits program of the Company for
which the Grantee is eligible, as determined by the Committee;
(c) the termination by the Company or any Affiliate of Grantee's
employment other than for Cause as determined by the Committee. "Cause"
means (i) willful and continued failure of the Grantee to substantially
perform his duties with the Company or such Affiliate (other than by reason
o f physical or mental illness) after written demand specifically
identifying such failure is given to the Grantee by the Company, or (ii)
willful conduct by the Grantee that is demonstrably and materially
injurious to the Company. For purposes of this subsection, "willful"
conduct requires an act, or failure to act, that is not in good faith and
that is without reasonable belief that the action or omission was in the
best interest of the Company or the Affiliate;<PAGE>
(d) the Grantee's attainment of the age at which benefits are
payable under the TECO Energy Group Retirement Plan or any successor
thereto without reduction for commencement of benefits before normal
retirement age, or any earlier date that the Committee determines will
constitute a normal retirement for purposes of this Agreement;
(e) upon a Change in Control. For purposes of this Agreement, a
"Change in Control" means a change in control of the Company of a nature
that would be required to be reported in response to Item 6(e) of Schedule
14A of Regulation 14A promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), whether or not the Company is in
fact required to comply therewith; provided, that, without limitation, such
a Change in Control shall be deemed to have occurred if:
(1) any "person" (as such term is used in Sections 13(d)
and 14(d) of the Exchange Act), other than the Company, any trustee or
other fiduciary holding securities under an employee benefit plan of
the Company or a corporation owned, directly or indirectly, by the
shareholders of the Company in substantially the same proportions as
their ownership of stock of the Company is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 30% or more of
t h e combined voting power of the Company's then outstanding
securities;
(2) during any period of twenty-four (24) consecutive
months (not including any period prior to the date of this Agreement),
individuals who at the beginning of such period constitute the Board
of Directors of the Company and any new director (other than a
director designated by a person who has entered into an agreement with
the Company to effect a transaction described in subsections (1), (3)
or (4) of this Section 3(e)) whose election by the Board of Directors
of the Company or nomination for election by the shareholders of the
Company was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the
beginning of such period or whose election or nomination for election
was previously so approved, cease for any reason to constitute a
majority thereof;
(3) the shareholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than
(i) a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) at least 50%
of the combined voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation or
(ii) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no
"person" (as defined above) acquires 30% or more of the combined
voting power of the Company's then outstanding securities; or
(4) the shareholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or
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disposition by the Company of all or substantially all of the
Company's assets; or
(f) the fifth anniversary of the date of this Agreement.
4. Rights as Shareholder. Subject to the restrictions and other
limitations and conditions provided in this Agreement, the Grantee as owner
of the Restricted Stock will have all the rights of a shareholder,
including but not limited to the right to receive all dividends paid on,
and the right to vote, such Restricted Stock.
5. Stock Certificates. Each certificate issued for shares of
Restricted Stock will be registered in the name of the Grantee and
deposited by the Grantee, together with a stock power endorsed in blank,
with the Company and will bear a legend in substantially the following
form:
THE TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES OF STOCK
REPRESENTED HEREBY ARE SUBJECT TO THE TERMS, CONDITIONS AND
RESTRICTIONS (INCLUDING RESTRICTIONS ON TRANSFER AND FORFEITURE
PROVISIONS) CONTAINED IN AN AGREEMENT BETWEEN THE REGISTERED
OWNER AND TECO ENERGY, INC. A COPY OF SUCH AGREEMENT WILL BE
FURNISHED TO THE HOLDER OF THIS CERTIFICATE UPON WRITTEN REQUEST
AND WITHOUT CHARGE.
Upon the termination of the restrictions imposed under this Agreement
as to any shares of Restricted Stock deposited with the Company hereunder,
the Company will return to the Grantee (or to such Grantee's legal
representative, beneficiary or heir) certificates, without such legend, for
such shares.
6. Notice of Election Under Section 83(b). If the Grantee makes an
election under Section 83(b) of the Internal Revenue Code of 1986, as
amended, he will provide a copy thereof to the Company within thirty days
of the filing of such election with the Internal Revenue Service.
7. Withholding Taxes. The Grantee will pay to the Company, or make
provision satisfactory to the Committee for payment of, any taxes required
by law to be withheld in respect of the Restricted Stock no later than the
date of the event creating the tax liability. In the Committee's
discretion, such tax obligations may be paid in whole or in part in shares
of Common Stock, including the Restricted Stock, valued at fair market
value on the date of delivery. The Company and its Affiliates may, to the
extent permitted by law, deduct any such tax obligations from any payment
of any kind otherwise due to the Grantee.
8. The Committee. Any determination by the Committee under, or
interpretation of the terms of, this Agreement or the Plan will be final
and binding on the Grantee.
9. Limitation of Rights. The Grantee will have no right to
continued employment by virtue of this grant of Restricted Stock.
10. Amendment. The Company may amend, modify or terminate this
Agreement, including substituting another Award of the same or a different
- 3 -<PAGE>
type and changing the date of realization, provided that the Grantee's
consent to such action will be required unless the action, taking into
account any related action, would not adversely affect the Grantee.
11. G o verning Law. This Agreement will be governed by and
interpreted in accordance with the laws of Florida.
TECO ENERGY, INC.
By: ______________________
G. F. Anderson
Chairman of the Board and
Chief Executive Officer
_________________________
Signature of Grantee
- 4 -<PAGE>
Exhibit 10.2
TECO ENERGY, INC.
1996 EQUITY INCENTIVE PLAN
Restricted Stock Agreement
TECO Energy, Inc. (the "Company") and _______________________(the
"Grantee") have entered into this Restricted Stock Agreement (the
"Agreement") dated April 15, 1998 under the Company's 1996 Equity Incentive
Plan (the "Plan"). Capitalized terms not otherwise defined herein have the
meanings given to them in the Plan.
1. Grant of Restricted Stock. Pursuant to the Plan and subject to
the terms and conditions set forth in this Agreement, the Company hereby
grants, issues and delivers to the Grantee _________ shares of its Common
Stock (the "Restricted Stock").
2. Restrictions on Stock. Until the restrictions terminate under
Section 3, unless otherwise determined by the Committee:
(a) the Restricted Stock may not be sold, assigned, pledged or
transferred by the Grantee; and
(b) all shares of Restricted Stock will be forfeited and
returned to the Company if the Grantee ceases to be an employee of the
Company or any business entity in which the Company owns directly or
indirectly 50% or more of the total voting power or has a significant
financial interest as determined by the Committee (an "Affiliate").
3. Termination of Restrictions. The restrictions on all shares of
Restricted Stock will terminate on the earliest to occur of the following:
(a) the Grantee's death;
(b) the termination of Grantee's employment with the Company or
any Affiliate because of a disability that would entitle the Grantee to
benefits under the long-term disability benefits program of the Company for
which the Grantee is eligible, as determined by the Committee;
(c) the termination by the Company or any Affiliate of Grantee's
employment other than for Cause as determined by the Committee. "Cause"
means (i) willful and continued failure of the Grantee to substantially
perform his duties with the Company or such Affiliate (other than by reason
o f physical or mental illness) after written demand specifically
identifying such failure is given to the Grantee by the Company, or (ii)
willful conduct by the Grantee that is demonstrably and materially
injurious to the Company. For purposes of this subsection, "willful"
conduct requires an act, or failure to act, that is not in good faith and
that is without reasonable belief that the action or omission was in the
best interest of the Company or the Affiliate;
(d) April 15, 1999; or
(e) upon a Change in Control. For purposes of this Agreement, a
"Change in Control" means a change in control of the Company of a nature
that would be required to be reported in response to Item 6(e) of Schedule<PAGE>
14A of Regulation 14A promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), whether or not the Company is in
fact required to comply therewith; provided, that, without limitation, such
a Change in Control shall be deemed to have occurred if:
(1) any "person" (as such term is used in Sections 13(d)
and 14(d) of the Exchange Act), other than the Company, any trustee or
other fiduciary holding securities under an employee benefit plan of
the Company or a corporation owned, directly or indirectly, by the
shareholders of the Company in substantially the same proportions as
their ownership of stock of the Company is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 30% or more of
t h e combined voting power of the Company's then outstanding
securities;
(2) during any period of twenty-four (24) consecutive
months (not including any period prior to the date of this Agreement),
individuals who at the beginning of such period constitute the Board
of Directors of the Company and any new director (other than a
director designated by a person who has entered into an agreement with
the Company to effect a transaction described in subsections (1), (3)
or (4) of this Section 3(e)) whose election by the Board of Directors
of the Company or nomination for election by the shareholders of the
Company was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the
beginning of such period or whose election or nomination for election
was previously so approved, cease for any reason to constitute a
majority thereof;
(3) the shareholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than
(i) a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) at least 50%
of the combined voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation or
(ii) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no
"person" (as defined above) acquires 30% or more of the combined
voting power of the Company's then outstanding securities; or
(4) the shareholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the
Company's assets.
4. Rights as Shareholder. Subject to the restrictions and other
limitations and conditions provided in this Agreement, the Grantee as owner
of the Restricted Stock will have all the rights of a shareholder,
including but not limited to the right to receive all dividends paid on,
and the right to vote, such Restricted Stock.
5. Stock Certificates. Each certificate issued for shares of
Restricted Stock will be registered in the name of the Grantee and
- 2 -<PAGE>
deposited by the Grantee, together with a stock power endorsed in blank,
with the Company and will bear a legend in substantially the following
form:
THE TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES OF STOCK
REPRESENTED HEREBY ARE SUBJECT TO THE TERMS, CONDITIONS AND
RESTRICTIONS (INCLUDING RESTRICTIONS ON TRANSFER AND FORFEITURE
PROVISIONS) CONTAINED IN AN AGREEMENT BETWEEN THE REGISTERED
OWNER AND TECO ENERGY, INC. A COPY OF SUCH AGREEMENT WILL BE
FURNISHED TO THE HOLDER OF THIS CERTIFICATE UPON WRITTEN REQUEST
AND WITHOUT CHARGE.
Upon the termination of the restrictions imposed under this Agreement
as to any shares of Restricted Stock deposited with the Company hereunder,
the Company will return to the Grantee (or to such Grantee's legal
representative, beneficiary or heir) certificates, without such legend, for
such shares.
6. Notice of Election Under Section 83(b). If the Grantee makes an
election under Section 83(b) of the Internal Revenue Code of 1986, as
amended, he will provide a copy thereof to the Company within thirty days
of the filing of such election with the Internal Revenue Service.
7. Withholding Taxes. The Grantee will pay to the Company, or make
provision satisfactory to the Committee for payment of, any taxes required
by law to be withheld in respect of the Restricted Stock no later than the
date of the event creating the tax liability. In the Committee's
discretion, such tax obligations may be paid in whole or in part in shares
of Common Stock, including the Restricted Stock, valued at fair market
value on the date of delivery. The Company and its Affiliates may, to the
extent permitted by law, deduct any such tax obligations from any payment
of any kind otherwise due to the Grantee.
8. The Committee. Any determination by the Committee under, or
interpretation of the terms of, this Agreement or the Plan will be final
and binding on the Grantee.
9. Limitation of Rights. The Grantee will have no right to
continued employment by virtue of this grant of Restricted Stock.
10. Amendment. The Company may amend, modify or terminate this
Agreement, including substituting another Award of the same or a different
type and changing the date of realization, provided that the Grantee's
consent to such action will be required unless the action, taking into
account any related action, would not adversely affect the Grantee.
- 3 -<PAGE>
11. G o verning Law. This Agreement will be governed by and
interpreted in accordance with the laws of Florida.
TECO ENERGY, INC.
By: ______________________
R. A. Dunn
Vice President-Human Resources
_________________________
Signature of Grantee
- 4 -<PAGE>
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, 1998 June 30, 1998 1997 1996(2) 1995(2) 1994(2) 1993(2)
4.24x (1) 4.35x (1) 4.38x 4.40x 4.28x 3.88x(3) 3.81x(4)
For the purposes of calculating these ratios, 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 $9.6-million pretax charge associated with
Tampa Electric's efforts to mitigate the effects of a 1997 FPSC ruling
on certain wholesale power supply contracts. The effect of this charge
was to reduce the ratio of earnings to fixed charges. Had this charge
been excluded from the calculation, the ratio of earnings to fixed
charges would have been 4.51x and 4.49x for the six- and 12-month
periods ended June 30, 1998, respectively.
(2) Amounts have been restated to reflect the merger of Peoples Gas
System, Inc., with and into Tampa Electric Company.
(3) 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 year ended Dec. 31, 1994.
(4) 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.
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE TAMPA
ELECTIC COMPANY BALANCE SHEETS, STATEMENTS OF INCOME AND STATEMENTS OF CASH
FLOWS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<CIK> 0000096271
<NAME> Tampa Electric Company
<MULTIPLIER> 1000000
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<PERIOD-TYPE> 6-mos
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 2,553
<OTHER-PROPERTY-AND-INVEST> 8
<TOTAL-CURRENT-ASSETS> 297
<TOTAL-DEFERRED-CHARGES> 242
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 3,100
<COMMON> 119
<CAPITAL-SURPLUS-PAID-IN> 897
<RETAINED-EARNINGS> 297
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,313
0
0
<LONG-TERM-DEBT-NET> 727
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 126
<LONG-TERM-DEBT-CURRENT-PORT> 4
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 930
<TOT-CAPITALIZATION-AND-LIAB> 3,100
<GROSS-OPERATING-REVENUE> 733
<INCOME-TAX-EXPENSE> 41
<OTHER-OPERATING-EXPENSES> 586 <F1>
<TOTAL-OPERATING-EXPENSES> 627
<OPERATING-INCOME-LOSS> 106
<OTHER-INCOME-NET> (3)
<INCOME-BEFORE-INTEREST-EXPEN> 103
<TOTAL-INTEREST-EXPENSE> 33
<NET-INCOME> 70
0
<EARNINGS-AVAILABLE-FOR-COMM> 70
<COMMON-STOCK-DIVIDENDS> 63
<TOTAL-INTEREST-ON-BONDS> 22
<CASH-FLOW-OPERATIONS> 202
<EPS-PRIMARY> .00
<EPS-DILUTED> .00
<FN>
<F1> Includes a $9.6-million pretax non-recurring charge.
/FN
<PAGE>
</TABLE>
