-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, J+ESbJgScvxVF96WN71crFQLLA35vL9aiR1kUAeEqqZyQZVgzTyNBLNvnxwnbE+i wCsFK05MFMLSesjaccnX/g== 0000350563-97-000048.txt : 19971113 0000350563-97-000048.hdr.sgml : 19971113 ACCESSION NUMBER: 0000350563-97-000048 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971113 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: TAMPA ELECTRIC CO CENTRAL INDEX KEY: 0000096271 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 590475140 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-05007 FILM NUMBER: 97715423 BUSINESS ADDRESS: STREET 1: 702 N FRANKLIN ST STREET 2: TECO PLZA CITY: TAMPA STATE: FL ZIP: 33602 BUSINESS PHONE: 8132284111 MAIL ADDRESS: STREET 1: TAMPA ELECTRIC CO STREET 2: TECO PLAZA 702 N FRANKLIN ST CITY: TAMPA STATE: FL ZIP: 33602 10-Q 1 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. 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. - 2 - 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. - 3 - 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 - 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 - 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 - 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: - 7 - FORM 10-Q - 8 - 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 - 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 - 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 - 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 - 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 - 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 - 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 - 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 - 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 - EX-12 2 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 - EX-27.1 3 9/30/97
UT 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. 0000096271 Tampa Electric Company 1000 DEC-31-1996 JAN-1-1997 SEP-30-1997 9-MOS PER-BOOK 2,539,281 6,245 286,782 253,247 0 3,085,555 118,986 853,129 319,174 1,291,289 0 0 726,976 0 0 141,200 4,160 0 0 0 921,930 3,085,555 1,098,715 73,839 848,703 922,542 176,173 (1,555) 174,618 49,724 124,894 477 124,417 92,646 33,048 211,112 0 0
/TEXT EX-27.2 4 9/30/96 RESTATED
UT 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. INTO TECO ENERGY, INC. THESE MERGERS WERE ACCOUNTED FOR AS POOLINGS OF INTEREST. 0000096271 Tampa Electric Company 1000 DEC-31-1995 JAN-1-1996 SEP-30-1996 9-MOS PER-BOOK 2,539,240 1,048 253,644 226,019 0 3,019,951 118,920 842,755 301,040 1,262,715 0 19,960 665,142 0 0 113,500 3,745 0 0 0 954,889 3,019,951 1,036,011 61,458 826,269 887,727 148,284 16,233 164,517 41,063 123,454 1,547 121,907 87,892 29,297 278,316 0 0
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