-----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, D7Y1D720xcNpoBPsdkpg2IxibKwuJOshPCUAsPV5TJ8rAh+M9e7i4KXUydd+oRYt pZX7f1aXN4MbPBEsxM5fnw== 0000950144-00-006509.txt : 20000515 0000950144-00-006509.hdr.sgml : 20000515 ACCESSION NUMBER: 0000950144-00-006509 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000512 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: 629060 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 TAMPA ELECTRIC 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (MARK ONE) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2000 --------------------------------------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period _____ 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 (I.R.S. Employer incorporation or organization) Identification Number) 702 N. 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 of 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ] Number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date (April 30, 2000): 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. Index to Exhibits Appears on Page 12 Page 1 of 13 2 FORM 10-Q PART I. FINANCIAL INFORMATION Item 1. Condensed Financial Statements In the opinion of management, the unaudited condensed consolidated financial statements include all adjustments which are of a recurring nature and necessary to present fairly the results for the three-month periods ended March 31, 2000 and 1999. 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, 1999 and to the notes on page 6 of this report. 2 3 FORM 10-Q CONSOLIDATED BALANCE SHEETS (in millions)
MARCH 31, DEC. 31, 2000 1999 UNAUDITED AUDITED --------- -------- ASSETS PROPERTY, PLANT AND EQUIPMENT, AT ORIGINAL COST Utility plant in service Electric $3,898.1 $3,892.1 Gas 609.7 590.0 Construction work in progress 124.0 81.6 -------- -------- 4,631.8 4,563.7 Accumulated depreciation (1,844.0) (1,818.7) -------- -------- 2,787.8 2,745.0 Other property 7.8 7.9 -------- -------- 2,795.6 2,752.9 -------- -------- CURRENT ASSETS Cash and cash equivalents 0.3 26.1 Receivables, less allowance for uncollectibles 139.4 147.1 Inventories, at average cost Fuel 89.7 73.2 Materials and supplies 50.7 49.0 Prepayments 11.4 10.9 -------- -------- 291.5 306.3 -------- -------- DEFERRED DEBITS Unamortized debt expense 13.7 14.2 Deferred income taxes 123.1 121.6 Regulatory asset - tax related 42.3 42.9 Other 70.2 84.6 -------- -------- 249.3 263.3 -------- -------- $3,336.4 $3,322.5 ======== ======== LIABILITIES AND CAPITAL CAPITAL Common stock $1,126.1 $1,043.1 Retained earnings 291.2 283.9 -------- -------- 1,417.3 1,327.0 LONG-TERM DEBT, LESS AMOUNT DUE WITHIN ONE YEAR 689.9 690.3 -------- -------- 2,107.2 2,017.3 -------- -------- CURRENT LIABILITIES Long-term debt due within one year 84.8 84.8 Notes payable 164.2 271.2 Accounts payable 146.5 163.8 Customer deposits 80.4 79.9 Interest accrued 27.0 12.9 Taxes accrued 65.1 30.9 -------- -------- 568.0 643.5 -------- -------- DEFERRED CREDITS Deferred income taxes 458.5 458.3 Investment tax credits 39.3 40.5 Regulatory liability-tax related 54.3 56.1 Other 109.1 106.8 -------- -------- 661.2 661.7 -------- -------- $3,336.4 $3,322.5 ======== ========
The accompanying notes are an integral part of the consolidated financial statements. 3 4 FORM 10-Q CONSOLIDATED STATEMENTS OF INCOME UNAUDITED (MILLIONS) FOR THE THREE MONTHS ENDED MARCH 31, 2000 1999 ------ ------ REVENUES Electric $292.4 $260.9 Gas 86.6 71.1 ------ ------ 379.0 332.0 ------ ------ OPERATING EXPENSES Operation Fuel 79.5 67.5 Purchased power 25.8 20.4 Natural gas sold 40.7 29.3 Other 55.3 52.9 Maintenance 26.7 19.6 Depreciation 45.1 42.7 Taxes-Federal and state income 21.2 20.4 Taxes-Other than income 30.8 29.7 ------ ------ 325.1 282.5 ------ ------ OPERATING INCOME 53.9 49.5 OTHER INCOME (EXPENSE) 0.4 0.6 ------ ------ INCOME BEFORE INTEREST CHARGES 54.3 50.1 ------ ------ INTEREST CHARGES Interest on long-term debt 12.9 12.7 Other interest 4.3 2.8 ------ ------ 17.2 15.5 ------ ------ NET INCOME $ 37.1 $ 34.6 ====== ====== The accompanying notes are an integral part of the consolidated financial statements. 4 5 FORM 10-Q CONSOLIDATED STATEMENTS OF CASH FLOWS UNAUDITED (MILLIONS)
FOR THE THREE MONTHS ENDED MARCH 31, 2000 1999 ------ ------ CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 37.1 $ 34.6 Adjustments to reconcile net income to net cash Depreciation 45.1 42.7 Deferred income taxes (2.0) 1.1 Investment tax credits, net (1.1) (1.1) Allowance for funds used during construction (0.5) -- Deferred revenue -- 1.4 Deferred recovery clause 3.5 2.0 Receivables, less allowance for uncollectibles 7.7 12.9 Inventories (18.2) (20.7) Taxes accrued 34.1 37.3 Interest accrued 14.1 9.0 Accounts payable (17.3) (47.1) Other 13.2 5.1 ------ ------ 115.7 77.2 ------ ------ CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures (88.2) (60.2) Allowance for funds used during construction 0.5 -- ------ ------ (87.7) (60.2) ------ ------ CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from contributed capital from parent 83.0 8.0 Repayment of long-term debt -- (0.3) Net increase (decrease) in short-term debt (107.0) 12.2 Dividends (29.8) (36.8) ------ ------ (53.8) (16.9) ------ ------ NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (25.8) 0.1 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 26.1 0.8 ------ ------ CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 0.3 $ 0.9 ====== ======
The accompanying notes are an integral part of the consolidated financial statements. 5 6 FORM 10-Q NOTES TO CONSOLIDATED FINANCIAL STATEMENTS A. Tampa Electric Company (the 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 2000 are estimated to be $234 million for its electric division (referred to as Tampa Electric) and $66 million for its natural gas division (referred to as Peoples Gas System). Tampa Electric Company is a potentially responsible party for certain superfund sites and, through its Peoples Gas System division, for certain former manufactured gas plant sites. While the joint and several liability associated with these sites presents the potential for significant response costs, the company estimates its ultimate financial liability at approximately $20 million over the next 10 years. The environmental remediation costs associated with these sites are not expected to have a significant impact on customer prices. C. Revenues in the first quarter of 1999 reflected the deferral for refund of $1.4 million of electric revenues at Tampa Electric. These deferred revenues resulted from Tampa Electric's regulatory agreement that ended on Dec. 31, 1999. Tampa Electric expects the Florida Public Service Commission (FPSC) staff to closely monitor the company's achieved return on equity during 2000, but not to require Tampa Electric to negotiate a new regulatory plan. The Florida Industrial Power Users Group (FIPUG) protested the FPSC decisions for Tampa Electric's 1997 and 1998 earnings under the deferred revenue stipulation, including the FPSC decision to cap the company's equity ratio at 58.7-percent. A hearing is scheduled for August 2000. D. CONTRIBUTION BY OPERATING DIVISION (millions)
OPERATING NET REVENUES INCOME INCOME -------- --------- ------ THREE MONTHS ENDED MARCH 31, 2000 Electric division (1) (2) $292.6 $ 42.4 $ 28.6 Peoples Gas System (3) 86.6 11.5 8.5 ------ ------ ------ 379.2 53.9 37.1 Other and eliminations (0.2) -- -- ------ ------ ------ Tampa Electric Company $379.0 $ 53.9 $ 37.1 ====== ====== ====== THREE MONTHS ENDED MARCH 31, 1999 Electric division (1) (2) $260.9 $ 39.5 $ 27.3 Peoples Gas System (3) 71.1 10.0 7.3 ------ ------ ------ 332.0 49.5 34.6 Other and eliminations -- -- -- ------ ------ ------ Tampa Electric Company $332.0 $ 49.5 $ 34.6 ====== ====== ======
(1) Operating income is net of income tax expense of $15.9 million in 2000 and $15.7 million in 1999. (2) The electric division deferred revenues of $1.4 million in 1999 for refund to customers. (See Note C above.) (3) Operating income is net of income tax expense of $5.3 million in 2000 and $4.7 million in 1999. E. On Feb. 29, 2000, Tampa Electric Company, the U.S. Environmental Protection Agency and the U.S. Department of Justice announced they had resolved the federal agencies' pending enforcement actions filed last year against Tampa Electric. The resolution, which was in the form of a consent decree, resulted in full and final settlement of the November 1999 federal litigation and Notice of Violation (NOV) alleging violations of the New Source Review (NSR) requirements of the Clean Air Act. Since no comments were received during the public comment period, the Consent Decree is expected to become effective shortly. 6 7 FORM 10-Q ITEM 2. MANAGEMENT'S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS This Quarterly Report on Form 10-Q contains forward-looking statements which are subject to the inherent uncertainties in predicting future results and conditions. Certain factors that could cause actual results to differ materially from those projected in these forward-looking statements include the following: general economic conditions, particularly those in Tampa Electric's service area affecting energy sales; weather variations affecting energy sales and operating costs; potential competitive changes in the electric and gas industries, particularly in the area of retail competition; regulatory actions affecting Tampa Electric and Peoples Gas System; commodity price changes affecting the competitive positions of Tampa Electric and Peoples Gas System; and changes in and compliance with environmental regulations that may impose additional costs or curtail some activities. These factors are discussed more fully under "Investments Considerations" in TECO Energy's Annual Report on Form 10-K for the year ended Dec. 31, 1999, and reference is made thereto. RESULTS OF OPERATIONS THREE MONTHS ENDED MARCH 31, 2000: Tampa Electric Company's net income for the quarter ended March 31, 2000 was $37.1 million, up from $34.6 million for the three-month period ended March 31, 1999. The 7 percent increase over last year's net income reflects revenue growth at Tampa Electric and Peoples Gas System. Consolidated operating income from continuing operations was $53.9 million compared with last year's operating income of $49.5 million. TAMPA ELECTRIC COMPANY - ELECTRIC DIVISION (TAMPA ELECTRIC) Tampa Electric's net income for the quarter increased approximately 5 percent, reflecting 8 percent higher retail energy volumes, which were partially offset by higher expenses. Total energy sales volumes were higher due to customer growth of 2.8 percent and the favorable impact of slightly cooler weather, offset by slightly lower pricing. Expenses were higher due to the anticipated expiration of U.S. Department of Energy funding related to the Polk Power Station and the scheduling of outages. A summary of the operating statistics for the three-months ended March 31, 2000 and 1999 is below:
OPERATING REVENUES KILOWATT-HOUR SALES -------------------------------- -------------------------------- (in millions) 2000 1999 CHANGE 2000 1999 CHANGE ------ ------ ------ ------- ------- ------ Residential $131.8 $120.3 9.5% 1,592.3 1,474.1 8.0% Commercial 82.7 77.9 6.1% 1,225.4 1,189.6 3.0% Industrial - Phosphate 14.2 11.1 28.4% 334.8 292.4 14.5% Industrial - Other 14.4 13.3 8.7% 258.9 245.9 5.3% Other sales of electricity 21.4 20.1 6.4% 302.3 292.4 3.4% Deferred and other revenues (2.0) (4.6) -56.5% -- -- -- ------ ------ ------- ------- 262.5 238.1 10.2% 3,713.7 3,494.4 6.3% Sales for resale 22.1 15.8 40.0% 514.8 349.9 47.1% Other operating revenue 8.0 7.0 14.8% -- -- -- ------ ------ ------- ------- $292.6 $260.9 12.2% 4,228.5 3,844.3 10.0% ====== ====== ======= ======= Average customers 556.3 540.9 2.8% ====== ======
7 8 FORM 10-Q TAMPA ELECTRIC - NATURAL GAS DIVISION (PEOPLES GAS SYSTEM) Net income at Peoples Gas System (PGS) increased more than 16 percent to $8.5 million for the quarter ended March 31, 2000 compared with $7.3 million for the same period last year. The increase was driven by customer growth of 3.5 percent along with the favorable impact of slightly cooler weather. Natural gas volumes were higher in the first quarter than for the same period last year, with residential volumes up more than 19 percent and commercial volumes up more than 13 percent. Operating expenses and depreciation were higher, primarily reflecting growth, including the addition of PGS' Southwest Florida expansion. A summary of the operating statistics for the three-months ended March 31, 2000 and 1999 is below:
(in millions) OPERATING REVENUES THERMS ------------------------------- ------------------------------ 2000 1999 CHANGE 2000 1999 CHANGE ----- ----- ------ ----- ----- ------ BY CUSTOMER SEGMENT: Residential $25.4 $19.1 33.3% 23.9 20.0 19.4% Commercial 38.4 36.8 4.1% 84.4 74.4 13.3% Industrial 12.7 4.4 185.2% 110.3 79.3 39.1% Power generation 2.5 2.5 1.0% 102.4 86.4 18.6% Other revenues 7.6 8.3 -7.8% -- -- -- ----- ----- ----- ----- $86.6 $71.1 21.8% 321.0 260.1 23.4% ===== ===== ===== ===== BY SALES TYPE: System supply $66.1 $54.8 20.5% 103.9 86.2 20.5% Transportation 12.9 8.0 61.4% 217.1 173.9 24.8% Other revenues 7.6 8.3 -7.8% -- -- -- ----- ----- ----- ----- $86.6 $71.1 21.8% 321.0 260.1 23.4% ===== ===== ===== ===== Average customers 258.6 247.8 4.3% ===== =====
The franchise agreement between the City of Lakeland and PGS expired on March 12, 2000 but negotiations are ongoing for a renewed franchise agreement. Normal operations in Lakeland have continued under the terms of the expired agreement. Lakeland provided approximately $2 million of PGS' annual operating revenues in 1999. OTHER Allowance for funds used during construction (AFUDC) was $0.3 million for the three-months ended March 31, 2000; no AFUDC was recorded for the same period in 1999. AFUDC is expected to increase over the next several years reflecting Tampa Electric's generation expansion activities. Interest charges were $17.2 million for the three-months ended March 31, 2000 compared to $15.5 million for the same period in 1999. Financing costs increased in the first quarter reflecting higher borrowing levels and higher interest rates. YEAR 2000 COMPUTER SYSTEMS The company has encountered no significant problems related to the Year 2000 issue, and all computer systems are performing as expected to date. The company does not anticipate any significant additional costs related to this issue. 8 9 FORM 10-Q ACCOUNTING STANDARDS ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING In 1998, the FASB issued FAS 133, Accounting for Derivative Instruments and Hedging. This standard is effective for fiscal years beginning after June 15, 2000. The new standard, as amended, requires an entity to recognize derivatives as either assets or liabilities in the financial statements, to measure those instruments at fair value and to reflect the changes in fair value of those instruments as either components of comprehensive income or in net income, depending on the types of those instruments. In preparation for adoption of this Statement effective Jan. 1, 2001, the company has completed an analysis of the information required by FAS 133. From time to time, Tampa Electric has entered into futures, swaps and options contracts to limit exposure to gas price increases at both the regulated natural gas utility, and 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. At this point, the company does not anticipate that the adoption of FAS 133 will significantly impact its financial statements since any activity in derivatives has been relatively minimal and short-term in duration. Management will continue to evaluate all current and possible future uses of derivatives, including their effectiveness for hedging treatment, and to apply procedures and methods for valuing them. 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 10-percent increase in Tampa Electric Company's weighted average interest rate on its variable rate debt would not have a significant impact on Tampa Electric Company's pretax earnings over the next fiscal year. A hypothetical 10-percent decrease in interest rates would not have a significant impact on the estimated fair value of Tampa Electric Company's long-term debt at March 31, 2000. Based on policies and procedures approved by the Board of Directors, from time to time Tampa Electric Company may enter into futures, swaps and option contracts to moderate exposure to interest rate changes. Commodity Price Risk Currently, at Tampa Electric and Peoples Gas System, 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, Tampa Electric and Peoples Gas System, may enter into futures, swaps and options contracts to limit exposure to gas price increases at both the regulated natural gas utility. Tampa Electric Company does not use derivatives or other financial products for speculative purposes. 9 10 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 Financial data schedule - three months ended March 31, 2000. (EDGAR filing only) (b) Reports on Form 8-K The registrant filed a Current Report on Form 8-K dated Feb. 29, 2000, reporting under "Item 5. Other Events" announcing Tampa Electric Company's agreement with the U.S. Environmental Protection Agency and the U.S. Department of Justice to resolve the federal agencies' pending enforcement actions against the Tampa Electric Company. 10 11 FORM 10-Q SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. TAMPA ELECTRIC COMPANY (Registrant) Date: May 12, 2000 *By: /s/ G. L. GILLETTE ---------------------------- G. L. GILLETTE Vice President - Finance and Chief Financial Officer (Principal Financial Officer) 11 12 FORM 10-Q INDEX TO EXHIBITS EXHIBIT NO. DESCRIPTION OF EXHIBITS PAGE NO. 12 Ratio of earnings to fixed charges 13 27 Financial data schedule - three months ended March 31, 2000. (EDGAR filing only) -- 12 EX-12 2 RATIO OF EARNINGS TO FIXED CHARGES 1 EXHIBIT 12 TAMPA ELECTRIC COMPANY RATIO OF EARNINGS TO FIXED CHARGES The following table sets forth the company's ratio of earnings to fixed charges for the periods indicated.
THREE MONTHS TWELVE MONTHS YEAR ENDED DECEMBER 31, ENDED ENDED ------------------------------------------------- MARCH 31, 2000 MARCH 31, 2000 1999 1998 1997 1996(4) 1995(4) -------------- -------------- -------- -------- ----- ------- ------- 4.21x 3.79x (1) 3.82x(2) 4.51x(3) 4.38x 4.40x 4.28x
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 non-recurring pretax charges totaling $18.3 million recorded in the third and fourth quarters of 1999. Charges consisted of the following: $10.5 million recorded based on FPSC audits of its 1997 and 1998 earnings which limited its equity ratio to 58.7 percent; $3.5 million to resolve litigation filed by the U.S. Environmental Protection Agency; and $4.3 million for corporate income tax settlements related to prior years' tax returns. The effect of these charges was to reduce the ratio of earnings to fixed charges. Had these charges been excluded from the calculation, the ratio of earning to fixed charges would have been 4.56x for the twelve-months ended March 31, 2000. (2) Includes the effect of one-time, pretax charges totaling $18.3 million described in (1) above. The effect of these charges was to reduce the ratio of earnings to fixed charges. Had these charges been excluded from the calculation, the ratio of earnings to fixed charges would have been 4.61x for the year ended Dec. 31, 1999. (3) Includes the effect of one-time, pretax charges totaling $16.9 million. The effect of these charges was to reduce the ratio of earnings to fixed charges. Had these charges been excluded from the calculation, the ratio of earnings to fixed charges would have been 4.66x for the year ended Dec. 31, 1998. (4) Amounts have been restated to reflect the merger of Peoples Gas System, Inc., with and into Tampa Electric Company. 13 EX-27 3 FINANCIAL DATA SCHEDULE
UT THIS 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 1,000,000 3-MOS DEC-31-2000 JAN-01-2000 MAR-31-2000 PER-BOOK 2,788 8 291 249 0 3,336 119 1,007 291 1,417 0 0 690 0 0 164 85 0 0 0 980 3,336 379 21 304 325 54 0 54 17 37 0 37 30 11 116 .00 .00
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