-----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, GfLDiDfxWxFmwE6YhG2CF8LoE4YU+Vu6zwRInDyjd4b457vSyEbtEo0bnc/ZlbPt iolNdsQlACoyWNzaCp4qhQ== 0000350563-98-000033.txt : 19980817 0000350563-98-000033.hdr.sgml : 19980817 ACCESSION NUMBER: 0000350563-98-000033 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980814 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: 98687376 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 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. 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. - 2 - 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. - 3 - 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. - 4 - 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. - 5 - 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. - 6 - 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 - 7 - 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 - 8 - 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. - 9 - 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 - 10 - 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. - 11 - 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 - 12 - 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 - 13 - 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. - 14 - 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. - 15 - 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. - 16 - 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) - 17 - 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) -- - 18 - EX-10.1 2 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; (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 - 2 - 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 - 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 - EX-10.2 3 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 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 - 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 - 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 - EX-12 4 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. EX-27 5
UT 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. 0000096271 Tampa Electric Company 1000000 DEC-31-1998 JUN-30-1998 6-mos PER-BOOK 2,553 8 297 242 0 3,100 119 897 297 1,313 0 0 727 0 0 126 4 0 0 0 930 3,100 733 41 586 627 106 (3) 103 33 70 0 70 63 22 202 .00 .00 Includes a $9.6-million pretax non-recurring charge. /FN
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