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, 1996
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, 1996):
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 June 30, 1996 and 1995.
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,
1995 and to the notes on page 7 of this report.
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FORM 10-Q
BALANCE SHEETS
(in thousands)
June 30, Dec. 31,
1996 1995
Assets
Property, plant and equipment,
at original cost
Utility plant in service $2,985,268 $2,930,178
Construction work in progress 518,137 475,260
3,503,405 3,405,438
Accumulated depreciation (1,245,246) (1,203,284)
2,258,159 2,202,154
Other property 1,043 859
2,259,202 2,203,013
Current assets
Cash and cash equivalents 1,409 3,832
Receivables, less allowance
for uncollectibles 117,024 120,273
Inventories, at average cost
Fuel 55,463 69,977
Materials and supplies 40,638 38,657
Prepayments 3,954 3,547
218,488 236,286
Deferred debits
Unamortized debt expense 17,534 18,297
Deferred income taxes 100,535 94,553
Regulatory asset - tax related 42,363 36,931
Other 46,414 50,135
206,846 199,916
$2,684,536 $2,639,215
Liabilities and Capital
Capital
Common stock $ 905,519 $ 851,957
Retained earnings 185,045 188,191
1,090,564 1,040,148
Preferred stock, redemption not required 19,960 54,956
Long-term debt, less amount due
within one year 585,980 583,097
1,696,504 1,678,201
Current liabilities
Long-term debt due within one year 1,045 26,030
Notes payable 168,000 144,500
Accounts payable 101,873 117,430
Revenue refund 25,000 --
Customer deposits 52,713 51,273
Interest accrued 11,117 8,921
Taxes accrued 22,047 16,487
381,795 364,641
Deferred credits
Deferred income taxes 335,878 331,754
Investment tax credits 56,168 58,499
Regulatory liability - tax related 82,538 84,489
Other 131,653 121,631
606,237 596,373
$2,684,536 $2,639,215
The accompanying notes are an integral part of the financial statements.
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FORM 10-Q
STATEMENTS OF INCOME
(in thousands)
For the three months ended June 30, 1996 1995
Operating revenues $272,418 $279,094
Operating expenses
Operation
Fuel 90,838 96,042
Purchased power 12,575 11,669
Other 41,176 40,811
Maintenance 17,043 18,130
Depreciation 29,146 29,539
Taxes, federal and state income 17,415 16,876
Taxes, other than income 21,869 22,464
230,062 235,531
Operating income 42,356 43,563
Other income
Allowance for other funds used
during construction 5,425 2,521
Other income (expense), net 31 (1,095)
5,456 1,426
Income before interest charges 47,812 44,989
Interest charges
Interest on long-term debt 9,754 9,651
Other interest 4,073 2,506
Allowance for borrowed funds
used during construction (2,217) (1,519)
11,610 10,638
Net income 36,202 34,351
Preferred dividend requirements 435 892
Balance applicable to common stock $ 35,767 $ 33,459
The accompanying notes are an integral part of the financial statements.
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FORM 10-Q
STATEMENTS OF INCOME
(in thousands)
For the six months ended June 30, 1996 1995
Operating revenues $527,165 $532,890
Operating expenses
Operation
Fuel 187,130 186,418
Purchased power 22,131 21,189
Other 80,591 80,143
Maintenance 31,555 34,960
Depreciation 58,064 58,883
Taxes, federal and state income 28,678 28,493
Taxes, other than income 44,455 44,978
452,604 455,064
Operating income 74,561 77,826
Other income
Allowance for other funds used
during construction 10,444 4,320
Other income (expense), net (84) (1,752)
10,360 2,568
Income before interest charges 84,921 80,394
Interest charges
Interest on long-term debt 19,625 19,033
Other interest 7,388 4,733
Allowance for borrowed funds
used during construction (4,268) (2,603)
22,745 21,163
Net income 62,176 59,231
Preferred dividend requirements 1,327 1,784
Balance applicable to common stock $ 60,849 $ 57,447
The accompanying notes are an integral part of the financial statements.
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FORM 10-Q
STATEMENTS OF CASH FLOWS
(in thousands)
For the six months ended June 30, 1996 1995
Cash flows from operating activities
Net income $ 62,176 $ 59,231
Adjustments to reconcile net income
to net cash:
Depreciation 58,064 58,883
Deferred income taxes (9,242) (6,749)
Investment tax credits, net (2,331) (2,383)
Allowance for funds used
during construction (14,712) (6,923)
Deferred recovery clause 1,296 (13,205)
Revenue reduction 29,928 16,822
Amortization of coal contract buyout 1,352 676
Receivables, less allowance
for uncollectibles 3,249 (8,907)
Fuel inventories 14,514 18,940
Taxes accrued 5,560 36,851
Accounts payable (15,557) (32,118)
Other 9,253 12,212
143,550 133,330
Cash flows from investing activities
Capital expenditures (115,207) (175,372)
Allowance for funds used
during construction 14,712 6,923
(100,495) (168,449)
Cash flows from financing activities
Proceeds from contributed capital
from parent 53,000 51,000
Proceeds from long-term debt 3,058 620
Repayment of long-term debt (25,280) (260)
Net increase in short-term debt 23,500 21,200
Dividends (64,260) (44,255)
Redemption of preferred stock,
including premium (35,496) --
(45,478) 28,305
Net decrease in cash and cash equivalents (2,423) (6,814)
Cash and cash equivalents
at beginning of period 3,832 7,071
Cash and cash equivalents at end of period $ 1,409 $ 257
The accompanying notes are an integral part of the financial statements.
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FORM 10-Q
NOTES TO FINANCIAL STATEMENTS
A. Tampa Electric Company is a wholly-owned subsidiary of
TECO Energy, Inc.
B. The company has made certain commitments in connection with its
continuing construction program. Total construction expenditures are
estimated to be $179 million for 1996, excluding allowance for funds
used during construction (AFUDC).
C. During the first half of 1996, the company recognized $30-million
of revenue deferrals and refunds pursuant to a multi-year base rate
freeze, revenue deferral and refund plan (the 1996 Plan) which the
Florida Public Service Commission (FPSC) approved in a final order on
May 20, 1996. The company deferred $17 million during the first six
months last year in accordance with another plan (the 1995 Plan)
approved by the FPSC for 1995. A total of $81 million of revenues has
been recorded on the balance sheet under the plans in 1995 and 1996,
of which $56 million is included in other deferred credits and $25
million is classified in revenue refund to reflect the refund to
customers beginning Oct. 1, 1996.
D. On April 29, 1996, the company retired $35 million aggregate par
value of 8.00% Series E and 7.44% Series F preferred stock at
redemption prices of $102.00 and $101.00 per share, respectively.
E. Certain 1995 amounts on the statements of cash flows have been
restated to comply with the current year presentations.
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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 June 30, 1996:
Net income of $36.2 million in the second quarter was $1.9
million or 5 percent higher than in 1995's second quarter due to
higher capitalized financing costs (AFUDC) and lower operating
expenses. Both the 1996 and 1995 results were net of $9-million of
revenue deferrals in accordance with FPSC-approved plans. Operating
income was 3 percent lower than 1995 reflecting lower revenues.
Revenues for the quarter decreased 2 percent due to lower fuel
charges to the customer and the elimination of the oil backout
recovery clause as part of the 1995 Plan. In the absence of this
elimination, the oil backout recovery clause would have contributed
$3 million in revenues for the quarter.
Retail energy sales were essentially unchanged. Energy sales in
1996 were favorably affected by customer growth of 2 percent while
warmer weather favorably affected energy sales in 1995.
Combined fuel and purchased power expense decreased 4 percent for
the second quarter due to effective coal contract administration which
resulted in lower per-unit fuel costs.
Operation-other and maintenance expenses decreased slightly
primarily due to continued cost control efforts throughout the
company.
The effective income tax rate for the second quarter was
32.5 percent compared to 34.1 percent for the same period last year.
The decrease was primarily attributable to higher allowance for other
funds used during construction in 1996.
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FORM 10-Q
Total AFUDC increased to $8 million from $4 million in 1995 with
additional investment in the company s Polk Power Station, which is
scheduled for commercial operation in the fourth quarter of 1996.
Interest expense before the allowance for borrowed funds used
during construction was 14 percent higher in the current quarter
reflecting higher levels of short-term debt, interest on the revenue
deferrals and the effect of the expiration of an interest rate swap
agreement.
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FORM 10-Q
Six months ended June 30, 1996:
Net income of $62.2 million in the first half of 1996 was
$2.9 million or 5 percent higher than in 1995's first half due to
higher AFUDC, increased energy sales and lower operating expenses.
Operating income was 4 percent lower than 1995 reflecting $30-million
of revenue deferrals and refunds in accordance with the 1996 Plan.
Operating income last year was net of a $17-million revenue deferral
in accordance with the 1995 Plan.
Revenues in the first half decreased from 1995 because the 1996
revenue deferrals and refunds were higher than the 1995 revenue
deferrals. Increased base revenues from 4 percent higher retail
energy sales reflecting favorable weather, customer growth of more
than 2 percent and a strong local economy were offset by lower fuel
charges to the customer and the elimination of the oil backout
recovery clause. In the absence of this elimination, the oil backout
clause would have contributed $6 million in revenues for the first
half of 1996.
Total operating expenses for the first half of 1996 were
essentially unchanged from 1995. Non-fuel operations and maintenance
expenses, down 3 percent as a result of continued cost control efforts
throughout the company, were offset by higher combined fuel and
purchased power expenses from increased energy sales.
The effective income tax rate for the first six months of 1996
was 31.5 percent compared to 33.7 percent for the same period last
year. The decrease is primarily attributable to higher allowance for
other funds used during construction in 1996.
Total AFUDC increased in 1996 to $15 million from $7 million in
1995 with additional investment in the company s Polk Power Station,
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FORM 10-Q
which is scheduled for commercial operation in the fourth quarter of
1996.
Interest expense before the allowance for borrowed funds used
during construction was 14 percent higher in the first half of the
year reflecting higher levels of short-term debt, interest on the
revenue deferrals and refunds and the effect of the expiration of an
interest rate swap agreement.
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FORM 10-Q
Liquidity, Capital Resources and Changes in Financial Condition
The FPSC issued a final order approving a multi-year base rate
freeze, revenue deferral and refund plan on May 20, 1996. The plan is
set forth in an agreement among the company, the Office of Public
Counsel and the Florida Industrial Power Users Group covering the
years 1996 through 1998. A more complete description of the plan is
contained in the company s Annual Report on Form 10-K for the year
ended Dec. 31, 1995.
As contemplated by the 1996 Plan, the FPSC hearings concerning
the regulatory treatment of the investment and expenses associated
with the company s Polk Power Station were held on July 17 and 18.
The FPSC staff recommendation on the issues is due September 19 and a
FPSC decision is expected October 1.
Fuel inventory declined from Dec. 31, 1995 due to increased
energy sales and effective management of coal contracts and inventory
levels.
The increase in other deferred credits primarily reflected the
revenue deferrals related to the 1996 Plan and the 1995 Plan.
The $25-million balance in the revenue refund account provides
for the refund to customers to be made over the 12-month period
beginning Oct. 1, 1996 under the 1996 Plan and consists of $15 million
from 1996's revenues and $10 million of revenues deferred in 1995.
The increase in notes payable was related to the Polk Unit One
construction program as well as funding of the retirement of $25
million of long-term debt that matured.
The decrease in preferred stock reflected the company s
redemption of $35 million aggregate par value of preferred stock in
1996. (See Note D on page 7)
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FORM 10-Q
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 Form of Nonstatutory Stock Option under the TECO Energy, Inc.
1996 Equity Incentive Plan.
10.2 Form of Restricted Stock Agreement between TECO Energy, Inc.
and certain senior executives under the TECO Energy, Inc. 1996
Equity Incentive Plan.
10.3 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. (EDGAR filing only)
(b) Reports on Form 8-K
The registrant filed a Current Report on Form 8-K dated May 20,
1996 reporting under "Item 5. Other Events" on the FPSC order
approving the agreement among the registrant, the Office of
Public Counsel and the Florida Industrial Power Users Group
providing for a multi-year base rate freeze, revenue deferral
and refund plan for the company.
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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: August 13, 1996 By: /s/ W. L. Griffin
W. L. Griffin
Vice President - Controller
(Principal Accounting Officer)
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FORM 10-Q
INDEX TO EXHIBITS
Exhibit No. Description of Exhibits Page No.
10.1 Form of Nonstatutory Stock Option under the
TECO Energy, Inc. 1996 Equity Incentive Plan 16
10.2 Form of Restricted Stock Agreement between
TECO Energy, Inc. and certain senior executives under
the TECO Energy, Inc. 1996 Equity Incentive Plan 21
10.3 Form of Restricted Stock Agreement between
TECO Energy, Inc. and G.F. Anderson under the
TECO Energy, Inc. 1996 Equity Incentive Plan 25
12. Ratio of earnings to fixed charges 29
27. Financial data schedule (EDGAR filing only) --
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