FORM 10-Q
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,June 30, 1995
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 (April 30,(July 31, 1995):
Common Stock, Without Par Value 10
FORM 10-Q
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
In the opinion of management, the unaudited financial
statements include all adjustments (none of which were other
than normal or recurring) necessary to present fairly the
results for the three-month and six-month periods ended
March
31,June 30, 1995 and 1994. 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, 1994 and to the
notes on page 67 of this report.
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FORM 10-Q
BALANCE SHEETS
(thousands of dollars)
March 31,June 30, Dec. 31,
1995 1994
Assets
Property, plant and equipment,
at original cost
Utility plant in service $2,866,045$2,890,794 $2,854,240
Construction work in progress 299,984373,511 246,089
3,166,0293,264,305 3,100,329
Accumulated depreciation (1,139,055)(1,165,234) (1,115,167)
2,026,9742,099,071 1,985,162
Other property 193192 194
2,027,1672,099,263 1,985,356
Current assets
Cash and cash equivalents 177257 7,071
Receivables, less allowance
for uncollectibles 87,883112,415 103,508
Inventories, at average cost
Fuel 98,11276,891 95,831
Materials and supplies 38,84437,476 38,465
Prepayments 1,7822,605 2,675
226,798229,644 247,550
Deferred debits
Unamortized debt expense 19,43819,060 19,782
Deferred income taxes 87,71289,469 86,514
Regulatory asset - tax related 31,33632,500 30,791
Other 48,19253,729 47,828
186,678194,758 184,915
$2,440,643$2,523,665 $2,417,821
Liabilities and Capital
Capital
Common stock $ 800,956826,956 $ 775,956
Retained earnings 173,508188,275 173,299
974,4641,015,231 949,255
Preferred stock, redemption not required 54,956 54,956
Long-term debt, less amount due
within one year 607,669582,978 607,270
1,637,0891,653,165 1,611,481
Current liabilities
Long-term debt due within one year 1,28026,030 1,260
Notes payable 95,300113,000 91,800
Accounts payable 79,87581,641 113,759
Customer deposits 50,43150,687 49,457
Interest accrued 13,7618,788 11,166
Taxes accrued 25,58839,003 2,152
266,235319,149 269,594
Deferred credits
Deferred income taxes 326,262327,287 327,646
Investment tax credits 62,07360,882 63,265
Regulatory liability - tax related 87,60386,565 88,291
Other 61,38176,617 57,544
537,319551,351 536,746
$2,440,643$2,523,665 $2,417,821
The accompanying notes are an integral part of the financial statements.
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FORM 10-Q
STATEMENTS OF INCOME
(thousands of dollars)
For the three months ended March 31,June 30, 1995 1994
Operating revenues $253,796 $244,629$279,094 $293,324
Operating expenses
Operation
Fuel 90,376 84,67796,042 105,699
Purchased power 9,520 7,98311,669 10,002
Other 39,331 42,12140,811 48,337
Maintenance 16,830 16,83618,130 18,962
Depreciation 29,345 28,61329,539 28,819
Taxes, federal and state income 11,617 11,10816,876 17,902
Taxes, other than income 22,514 21,977
219,533 213,31522,464 22,770
235,531 252,491
Operating income 34,263 31,31443,563 40,833
Other income
Allowance for other funds used
during construction 1,799 2732,521 371
Other income (expense), net (658) (14)
1,141 259(1,095) (181)
1,426 190
Income before interest charges 35,404 31,57344,989 41,023
Interest charges
Interest on long-term debt 9,382 8,9449,651 9,182
Other interest 2,227 1,5922,506 1,244
Allowance for borrowed funds
used during construction (1,084) (636)
10,525 9,900(1,519) (820)
10,638 9,606
Net income 24,879 21,67334,351 31,417
Preferred dividend requirements 892 892
Balance applicable to
common stock $ 23,98733,459 $ 20,78130,525
The accompanying notes are an integral part of the financial statements.
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FORM 10-Q
STATEMENTS OF INCOME
(thousands of dollars)
For the six months ended June 30, 1995 1994
Operating revenues $532,890 $537,953
Operating expenses
Operation
Fuel 186,418 190,376
Purchased power 21,189 17,985
Other 80,143 90,458
Maintenance 34,960 35,798
Depreciation 58,883 57,432
Taxes, federal and state income 28,493 29,010
Taxes, other than income 44,978 44,747
455,064 465,806
Operating income 77,826 72,147
Other income
Allowance for other funds used
during construction 4,320 644
Other income (expense), net (1,752) (195)
2,568 449
Income before interest charges 80,394 72,596
Interest charges
Interest on long-term debt 19,033 18,126
Other interest 4,733 2,836
Allowance for borrowed funds
used during construction (2,603) (1,456)
21,163 19,506
Net income 59,231 53,090
Preferred dividend requirements 1,784 1,784
Balance applicable to
common stock $ 57,447 $ 51,306
The accompanying notes are an integral part of the financial statements.
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FORM 10-Q
STATEMENTS OF CASH FLOWS
(thousands of dollars)
For the threesix months ended March 31,June 30, 1995 1994
Cash flows from operating activities
Net income $ 24,87959,231 $ 21,67353,090
Adjustments to reconcile net income
to net cash
Depreciation 29,345 28,61358,883 57,432
Deferred income taxes (3,815) (4,040)(6,749) (9,893)
Investment tax credits, net (1,191) (1,216)(2,383) (2,431)
Allowance for funds used
during construction (2,883) (909)
Deferred revenue 7,421 --(6,923) (2,100)
Deferred recovery clause (5,857) 5,272(13,205) 15,874
Deferred revenue 16,822 --
Amortization of coal contract buyout 676 --
Refund to customers -- (2,306)(2,428)
Receivables, less allowance
for uncollectibles 15,625 9,135(8,907) (16,392)
Inventories (2,660) (4,683)19,929 (7,257)
Taxes accrued 23,436 21,62436,851 25,538
Accounts payable (33,884) (15,757)(32,118) (14,721)
Other 7,346 10,618
57,762 68,02411,223 17,092
133,330 113,804
Cash flows from investing activities
Capital expenditures (71,729) (39,560)(175,372) (91,775)
Allowance for funds used
during construction 2,883 909
Short-term investments -- (29)
(68,846) (38,680)6,923 2,100
(168,449) (89,675)
Cash flows from financing activities
Proceeds from contributed capital
from parent 25,000 40,00051,000 80,000
Proceeds from long-term debt 620 --521
Repayment of long-term debt (260) (245)
Net increase (decrease)increase(decrease) in short-term debt 3,500 (40,300)21,200 (56,321)
Dividends (24,670) (30,114)
4,190 (30,659)(44,255) (50,889)
28,305 (26,934)
Net decrease in cash and cash equivalents (6,894) (1,315)(6,814) (2,805)
Cash and cash equivalents
at beginning of period 7,071 4,499
Cash and cash equivalents at end of period $ 177257 $ 3,1841,694
The accompanying notes are an integral part of the financial statements.
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FORM 10-Q
NOTES TO FINANCIAL STATEMENTS
A. T a m paTampa 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 are
estimated to be $320 million for 1995, excluding allowance for funds
used during construction.construction (AFUDC).
C. On May 2, 1995, theThe Florida Public Service Commission (FPSC), issued an order
effective June 1, 1995 which approved a deferred revenue plan for the
company. The plan provides for an increase in a proposed agency action, voted to approve a plan submitted by the company to increase thecompany's
authorized rate of return on average common equity (ROE) for all regulatory
purposes to a new midpoint of 11.75 percent with a range of
10.75 percent to 12.75 percent, andretroactive to Jan. 1, 1995. For 1995
the company will defer until 1997 $15 million of revenues, for 1995 and additional
amounts related to levelsas well as
50 percent of earned ROE. The company would be limitedactual revenues contributing to a maximumreturn on average
common equity exceeding 11.75 percent and 100 percent of actual
revenues contributing to a return on average common equity exceeding
12.75 percent regulatory ROE for 1995. Also as part
of its proposed agency action, thepercent. The FPSC voted toorder also will eliminate the company'scompany s oil
backout tariff effective Jan. 1, 1996. This tariff currently results
in approximately $12 million of annual revenues. See additional
discussion on page 9.11.
D. Certain 1994 amounts on the statements of cash flows have been
restated to comply with the current year presentation.
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FORM 10-Q
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
Three months ended March 31,June 30, 1995:
Net income of $24.9 million for 1995's firstsecond quarter was $3$34.4 million,
$2.9 million higher than the year-earlier1994's second quarter primarily due to increased energy
sales, higher AFUDC and lower operating expenses. Increased energy
sales.sales and lower operating expenses also contributed to a 7 percent
increase in operating income over 1994. These results were net of
$7.4$9.4 million of revenues deferred revenues, asunder the FPSC-approved plan
discussed on page 9. Operating income for 1995's
first quarter was 9 percent higher than in 1994, as higherpages 7 and 11.
Total revenues and l ower operations-other expense more than offset higher
depreciation expense, and property and payroll taxes.
Revenues increased $9decreased $14.2 million in the firstsecond quarter due
primarily to the deferred revenue plan and lower fuel revenues,
partially offset by the effect of 1995,
reflecting an almost 3-percent increase in retailincreased energy sales. Fuel
revenues declined as a result of the company s ongoing efforts to
lower fuel charges to the customer. Retail energy sales because of more normal weatherincreased 4
percent due to continued strength in the current quarter and a continuing
strong local economy. Customereconomy, including
customer growth of 1.8 percent.
Combined operation-other and maintenance expenses decreased
$8.4 million, or 12 percent, slightly higher
than in 1994's first quarter, also contributed to higher revenues.
Energy sales to other utilities more than doubled from 1994's firstsecond quarter as a result of
normal weatherreduced costs associated with the corporate restructuring program in
late 1994, additional cost control activities and more competitive coal
prices. Non-fuel revenues from energy sales to other utilities were
$8.4 million, $.7 million higher than in 1994's period.the timing of
certain expenses. Combined fuel and purchased power expense increased $7.2decreased
$8.0 million fromfor the prior year's firstsecond quarter reflecting higher total energy
sales which more than offset the effects of 1995 due to lower per-unit fuel
costs per unit.and the timing of the recognition of fuel expense under the
FPSC-approved fuel adjustment clause.
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FORM 10-Q
Operation-other expense decreased $2.8 million, or 7 percent,
mainly because of self-insurance liability accruals required in the
first quarter of 1994 and the impact in 1995 of reduced costs as a
result of the 1994 corporate restructuring program.
The increase in depreciation expense of $.7 million was due to
normal plant additions.
Income tax expense increased $.5 million or 5 percent from the
prior year's first quarter, reflecting higher pretax income.
Interest expense excludingbefore the allowance for borrowed funds used
during construction was 10$1.7 million or 17 percent higher in the
current quarter due to higher interest rates on floating rate debt and
an increase in short-term debt balances.
Total AFUDC increased in 1995 because of additional investment in
the Polk Power Station which is under construction.
The effective income tax rate for the second quarter was
34.1 percent compared to 36.4 percent for the same period last year.
The decrease was primarily due to higher allowance for other funds
used during construction in 1995.
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FORM 10-Q
Six months ended June 30, 1995:
Net income for 1995's first half was $59.2 million, $6.1 million
higher than 1994's period due to increased energy sales, higher AFUDC
and lower operating expenses. These results were net of $16.8 million
of revenues deferred under the plan discussed on pages 7 and 11.
Revenues decreased $5.1 million in the first half of 1995 due
primarily to the $16.8 million revenue deferral which more than offset
the effect of increased energy sales. Retail energy sales were up 3
percent from continued economic growth which resulted in increased
energy usage in the residential, industrial-phosphate, and commercial
sectors.
Operation-other and maintenance expenses decreased $11.2 million
or 9 percent from 1994's first half as a result of the corporate
restructuring program in late 1994, additional cost control activities
and the timing of certain expenses.
Interest expense before the allowance for borrowed funds used
during construction was $2.8 million or 13 percent higher than in 1994'sthe
first quarter,half of 1994 due to higher interest rates on floating rate debt
and an increase in short-term debt balances.
Total AFUDC increased in 1995 because of additional investment in
the Polk Power Station which is under construction.
The effective income tax rate for the first six months of 1995
was 33.7 percent compared to 35.5 percent for the same period last
year. The decrease was primarily due to higher rates on short-term and variable-rate
debt.allowance for other
funds used during construction in 1995.
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FORM 10-Q
Liquidity, Capital Resources and Changes in Financial Condition
On May 2,The FPSC issued an order effective June 1, 1995 the FPSC in a proposed agency action voted to
approveapproving a plan
submitted byfor the company to increase its allowed ROE to 11.75 percent with a
range of 10.75 percent to 12.75 percent and to defer revenues under
certain financial circumstances related to these returns. For 1995
a minimumthe company will defer until 1997 $15 million of $15-million of revenues, will be
deferred as well as
50 percent of any actual revenues contributing to an ROE in excess ofa return on average
common equity exceeding 11.75 percent up to a net earned ROEand 100 percent of 12.75
percent and all actual
revenues contributing to an ROEa return on average common equity exceeding
12.75 percent. The disposition of the deferred revenues, which wouldwill
accrue interest at the 30-
day30-day commercial paper rate specified in the
Florida Administrative Code, wouldwill be subject to a FPSC determination
in a regulatory proceeding. The company expects that the deferred
revenues will be credited against the company's revenue requirements
to
be determinedbeginning in a future regulatory proceeding.1997. As of March 31,June 30, 1995, the company had deferred $7.4$16.8
million in revenues. Also as part of its proposed agency action,The FPSC also eliminated the FPSC voted to
eliminate the company'scompany s oil
backout tariff effective Jan. 1, 1996. This tariff currently results
in aboutapproximately $12 million of revenues
annually.
The FPSC issued its order on May 10, 1995. The order will become
effective on June 1, 1995, 21 days after issuance, unless an affected
party intervenes.
As described in the company's Current Report on Form 8-K, dated
April 25, 1995, Moody's Investor's Service lowered the senior and
subordinate debt ratings of the company one level to Aa2 and Aa3 from
Aa1 and Aa2, respectively. Moody's also changed its ratings outlook to
"stable" from "negative."annual revenues.
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FORM 10-Q
Moody's P-1 short-term debt rating for the commercial paper
program of the company was unchanged.
In March 1995, Duff & Phelps Credit Rating Co. upgraded the
company's first mortgage bond rating to AA+ from AA and the
subordinate debt rating to AA from AA-.
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FORM 10-Q
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
Pursuant to a written consent in lieu of annual meeting of
shareholders dated April 19, 1995, TECO Energy, Inc., the holder
of all of the outstanding common stock of the registrant, elected
the following directors:
Girard F. Anderson
DuBose Ausley
Sara L. Baldwin
Hugh L. Culbreath
James L. Ferman, Jr.
Edward L. Flom
Henry R. Guild, Jr.
Timothy L. Guzzle
Robert L. Ryan
J. Thomas Touchton
John A. Urquhart
James O. Welch, Jr.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3. Bylaws, as amended, effective July 18, 1995.
10.1 Amendment to TECO Energy, Inc. Directors Retirement Plan,
effective July 1, 1995.
10.2 Amendment to TECO Energy Group Supplemental Retirement Benefits
Trust Agreement, effective July 17, 1995.
10.3 Supplemental Executive Retirement Plan for R. A. Dunn, dated as
of July 17, 1995.
12. Ratio of earnings to fixed charges.
27. Financial data scheduleschedule. (EDGAR filing only)
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter
to which this report relates.
The registrant filed a Current Report on Form 8-K dated
April 20, 1995 reporting under "Item 5. Other Events" on
recommendations by the Staff of the Florida Public Service
Commission.
The registrant filed a Current Report on Form 8-K dated
April 25, 1995 reporting under "Item 5. Other Events" on
changes in debt ratings.
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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: May 12,August 14, 1995 By: /s/ L. L. Lefler
L. L. Lefler
Vice President --- Controller
(Chief Accounting Officer)
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FORM 10-Q
Exhibit 12
INDEX TO EXHIBITS
Exhibit No. Description of Exhibits Page No.
3. Bylaws, as amended, effective July 18, 1995 15
10.1 Amendment to TECO Energy, Inc. Directors Retirement
Plan, effective July 1, 1995 22
10.2 Amendment to TECO Energy Group Supplemental Retirement
Benefits Trust Agreement, effective July 17, 1995 23
10.3 Supplemental Executive Retirement Plan for R. A.
Dunn, dated as of July 17, 1995 26
12. Ratio of earnings to fixed charges. 14charges 32
27. Financial data schedule (EDGAR filing only) --
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