Item 1. BUSINESS.
Tampa Electric Company (Tampa Electric or the company) was incorporated in Florida in 1899 and was reincorporated in 1949. As a result of restructuring in 1981, the company became a subsidiary of TECO Energy, Inc. (TECO Energy), a diversified energy-related holding company. The company is a public utility operating wholly within the state of Florida and is engaged in the generation, purchase, transmission, distribution and sale of electric energy. The retail territory served comprises an area of about 2,000 square miles in West Central Florida, including substantially all of Hillsborough County and parts of Polk, Pasco and Pinellas Counties and has an estimated population of over one million. The principal communities served are Tampa, Winter Haven, Plant City and Dade City. In addition, the company engages in wholesale sales to other utilities which consist of broker economy, requirements and other types of service of varying duration and priority. The company has three electric generating stations in or near Tampa and two electric generating stations located near Sebring, a city located in Highlands County in South Central Florida.
The company at Dec. 31, 1993 had 3,215 employees, of which 1,295 were represented by the International Brotherhood of Electrical Workers (IBEW) and 382 by the Office and Professional Employees International Union.
In 1993, approximately 44 percent of the company's total operating revenue was generated from residential sales, 29 percent from commercial sales, 10 percent from industrial sales and 17 percent from other sales including bulk power sales for resale. See the detail of revenue per customer class on page 20.
No material part of the company's business is dependent upon a single customer or a few customers, the loss of any one or more of whom would have a materially adverse effect on the company, except that 8 customers in the phosphate industry accounted for 5 percent of operating revenues in 1993.
The company's business is not a seasonal one, but winter peak loads are experienced due to fewer daylight hours and colder temperatures, and summer peak loads are experienced due to use of air conditioning and other cooling equipment.
Regulation
The retail operations of the company are regulated by the Florida Public Service Commission (FPSC), which has jurisdiction over retail rates, the quality of service, issuances of securities, planning, siting and construction of facilities, accounting and depreciation practices and other matters.
The company is also subject to regulation by the Federal Energy Regulatory Commission (FERC) in various respects including wholesale power sales, certain wholesale power purchases, transmission services and accounting and depreciation practices.
Federal, state and local environmental laws and regulations cover air quality, water quality, land use, power plant, substation and transmission line siting, noise and aesthetics, solid waste and other environmental matters. See Environmental Matters on pages 6 and 7.
TECO Transport & Trade Corporation (TECO Transport) and TECO Coal Corporation (TECO Coal), subsidiaries of TECO Energy, sell coal transportation services and coal to the company and to third parties. The transactions between the company and these affiliates and the prices paid by the company are subject to regulation by the FPSC and FERC and any charges deemed to be imprudently incurred would not be allowed to be passed on to the company's customers. See Utility Regulation on pages 14 and 15.
The company's retail business is substantially free from direct competition with other electric utilities, municipalities and public agencies. However, greater levels of competition, particularly in the wholesale business, are developing and may have some impact on the company.
Retail Pricing
The FPSC's pricing objective is to set rates at a level that allows the utility to collect total revenues (revenue requirements) equal to its cost of providing service, including a reasonable return on invested capital.
The basic costs, other than fuel and purchased power, of providing electric service are recovered through base rates, which are designed to recover the costs of owning, operating and maintaining the utility system. These costs include operations and maintenance expenses, depreciation and taxes, as well as a return on the company's investment in assets used and useful in providing electric service (rate base). The rate of return on rate base is intended to approximate the company's weighted cost of capital, which includes its costs for debt and preferred stock, deferred income taxes at a zero cost rate and an allowed return on common equity. Base prices are determined in price setting hearings that occur at irregular intervals at the initiative of the company, the FPSC or other parties.
Fuel and certain purchased power costs are recovered through levelized monthly charges established pursuant to the FPSC's fuel adjustment and cost recovery clauses. These charges, which are reset semi-annually in an FPSC hearing, are based on estimated costs of fuel and purchased power and estimated customer usage for the ensuing six-month period, with a true-up adjustment to reflect the variance of actual costs from the projected charges for prior periods.
The FPSC may disallow recovery of any costs that it considers imprudently incurred.
Certain non-fuel costs and the accelerated recovery of the costs of conversion from oil-fired to coal-fired generation at the company's Gannon Station are recovered through the FPSC's oil backout clause. Accelerated recovery of this project's costs is obtained through accelerated depreciation, which is permitted in an amount equal to two-thirds of the fuel savings of the project. The remaining one-third of the savings is realized on a current basis by customers through the fuel adjustment clause. Prior to Oct. 27, 1992, the company had assigned its right to the oil backout tariffs to the Gannon Project Trust, the owner of the conversion assets. On Oct. 27, 1992, pursuant to FPSC approval, the Gannon Project Trust was terminated and the Trust's net assets and debt were placed on the company's balance sheet. Amounts collected in periods subsequent to Oct. 27, 1992, under the oil backout tariff are included in the company's operating revenues and continue to have no effect on net income. See further discussion in Note A page 25.
Fuel
About 98 percent of the company's generation for 1993 was from its coal-fired units. The same level is anticipated for 1994.
The company's average fuel cost per million BTU and average cost per ton of coal burned have been as follows:
Average cost per million BTU: 1993 1992 1991 1990 1989
Coal $ 2.26 $ 2.23 $ 2.22 $ 2.11 $ 2.02 Oil $ 2.69 $ 2.76 $ 3.21 $ 5.21 $ 4.35 Gas $ 3.52 $ 2.43 $ 1.98 -- -- Composite $ 2.27 $ 2.24 $ 2.25 $ 2.14 $ 2.03
Average cost per ton of coal burned $54.55 $53.65 $53.87 $51.07 $49.30
The company's Gannon Station burns low-sulfur coal; Big Bend Station burns coal of a somewhat higher sulfur content; Hookers Point Station burns low-sulfur oil; Phillips Station burns oil of a somewhat higher sulfur content; and Dinner Lake Station, which was placed on long-term reserve standby in March 1994, burns natural gas and oil.
Coal. The company burned approximately 6.6 million tons of coal during 1993 and estimates that its coal consumption will be 7 million tons for 1994. During 1993, the company purchased approximately 74 percent of its coal under long-term contracts with five suppliers and 26 percent of its coal in the spot market and under intermediate-term purchase agreements. About one-third of the company's 1993 coal requirements were supplied by TECO Coal. During December 1993, the average delivered cost of coal (including transportation) was $51.61 per ton, or $2.13 per million BTU. The company expects to obtain approximately 80 percent of its coal requirements in 1994 under long- term contracts with six suppliers, with the remaining 20 percent available either in the spot market or under intermediate-term purchase agreements. The company's long-term coal contracts provide
for revisions in the base price to reflect changes in a wide range of cost factors and for suspension or reduction of deliveries if environmental regulations should prevent the company from burning the coal supplied, provided that a good faith effort has been made to continue burning such coal. The company estimates that about one-third of its 1994 coal requirements will be supplied by TECO Coal. For information concerning transactions with affiliated companies, see Related Party Transactions on page 32.
In 1993, about 72 percent of the company's coal supply was deep-mined and approximately 28 percent was surface-mined. Federal surface-mining laws and regulations have not had any material adverse impact on the company's coal supply or results of its operations. The company, however, cannot predict the effect on the market price of coal of any future mining laws and regulations. Although there are reserves of surface-mineable coal dedicated by suppliers to the company's account, high quality coal reserves in Kentucky that can be economically surface-mined are being depleted and in the future more coal will be deep-mined. This trend will not necessarily result in a substantial increase in costs to the company.
Oil. The company has a supply agreement through Aug. 31, 1994 for No. 2 fuel oil and a supply agreement through Aug. 31, 1994 for No. 6 fuel oil for its four combustion turbine units and Hookers Point Station at prices based on Gulf Coast Cargo spot prices. The company has a supply agreement through July 31, 1994 for No. 6 fuel oil for Phillips Station at a price based on Gulf Coast Cargo spot prices. The price for No. 2 fuel oil deliveries taken in December 1993 was $25.74 per barrel, or $4.44 per million BTU. The price for the higher sulfur No. 6 fuel oil deliveries taken in December 1993 was $12.33 per barrel, or $1.95 per million BTU.
Gas. The company has supply agreements through Oct. 31, 2000 for natural gas for its Dinner Lake Station, was placed on long-term reserve standby. The price for natural gas deliveries taken in September 1993 was $3.51 per million cubic feet, or $3.51 per million BTU. There were no natural gas deliveries taken in the fourth quarter of 1993.
Franchises
The company holds franchises and other rights that, together with its charter powers, give it the right to carry on its retail business in the localities it serves. The franchises are irrevocable and are not subject to amendment without the consent of the company although, in certain events, they are subject to forfeiture.
Florida municipalities are prohibited from granting any franchise for a term exceeding 30 years. If a franchise is not renewed by a municipality, the franchisee has the statutory right to require the municipality to purchase any and all property used in connection with the franchise at a valuation to be fixed by arbitration. In addition, all of the municipalities except for the cities of Tampa and Winter Haven have reserved the right to purchase the company's property used in the exercise of its franchise, if the franchise is not renewed.
The company has franchise agreements with 13 incorporated municipalities within its retail service area. These agreements have
various expiration dates starting in October 1994 and extending through September 2021, including the City of Tampa, which expires in August 2006 and the City of Oldsmar, which expires in October 1994. The company has no reason to believe that any of these franchises, including the Oldsmar franchise, will not be renewed.
Franchise fees payable by the company, which totaled $18.8 million in 1993, are calculated using a formula based primarily on electric revenues.
Utility operations in Hillsborough, Pasco, Pinellas and Polk Counties outside of incorporated municipalities are conducted in each case under one or more permits to use county rights-of-way granted by the county commissioners of such counties. There is no law limiting the time for which such permits may be granted by counties. There are no fixed expiration dates for the Hillsborough County and Pinellas County agreements. The agreements covering electric operations in Pasco and Polk counties expire in September 2033 and March 2005, respectively.
Environmental Matters
The company's operations are subject to county, state and federal environmental regulations. The Hillsborough County Environmental Protection Commission and the Florida Environmental Regulation Commission are responsible for promulgating environmental regulations and coordinating most of the environmental regulation functions performed by the various departments of state government. The Florida Department of Environmental Protection (FDEP) is responsible for the administration and enforcement of the state regulations. The U.S. Environmental Protection Agency (EPA) is the primary federal agency with environmental responsibility.
The company has all required environmental permits. In addition, a monitoring program is in place to assure compliance with permit conditions. The company has been identified as one of numerous potentially responsible parties with respect to nine Superfund Sites. The company expects that its liability in connection with these sites will not be material.
Expenditures. During the five years ended Dec. 31, 1993, the company spent $49.1 million on capital additions to meet environmental requirements, including $8 million for the Polk Power Station project. Environmental expenditures are estimated at $44 million for 1994 and $150 million in total for 1995-1998, including, respectively, $32 million and $106 million for the planned Polk Power Station. These totals exclude amounts required to comply with the 1990 amendments to the Clean Air Act. The FPSC
has adopted an environmental cost recovery clause that the company believes would allow it to recover the cost of future significant environmental programs.
The company plans to comply with the Phase I emission limitations in 1995 imposed by the Clean Air Act by using blends of lower-sulfur coal. The cost of compliance with Phase I is expected to increase prices less than 3 percent. There is little capital investment associated with fuel blending.
In connection with its Phase I compliance plan, the company has entered into a long-term contract for the purchase of low-sulfur coal beginning in mid-1994. The company is also evaluating the use of purchased sulfur dioxide allowances as a minor component of its overall compliance strategy.
If limited to today's technology, to comply with Phase II emission standards set for 2000, the company would likely have to add either one or two scrubbers. The aggregate effect of Phase I and Phase II compliance on the utility's price structure is estimated to be 5 percent or less.
Item 2.
Item 2. PROPERTIES.
The company believes that its physical properties are adequate to carry on its business as currently conducted. The properties are generally subject to liens securing long-term debt.
The company had five electric generating plants and four combustion turbine units with a total net generating capability at Dec. 31, 1993 of 3,309 megawatts (MWs), including Big Bend (1,687-MW capability for four coal units), Gannon (1,171-MW capability for six coal units), Hookers Point (212-MW capability for five oil units), Dinner Lake (11-MW capability for one natural gas unit), Phillips (34-MW capability for two diesel units) and four combustion turbine units located at Big Bend and Gannon stations (194 Mws). Capability as used herein represents the demonstrable dependable load carrying abilities of the generating units during peak periods as proven under actual operating conditions. Units at Hookers Point went into service from 1948 to 1955, at Gannon from 1957 to 1967, and at Big Bend from 1970 to 1985. In 1991, the company purchased two power plants (Dinner Lake and Phillips) from the Sebring Utilities Commission (Sebring). Dinner Lake and Phillips were placed in service by Sebring in 1966 and 1983, respectively. In March 1994, Dinner Lake Station was placed on long-term reserve standby.
The company owns approximately 4,350 acres of mined-out land located in Polk County, Florida. This site will accommodate the planned Polk Unit One electric power plant and also the projected additional generating capacity that will be required in 2001 and beyond. Polk Unit One is discussed further under Capital Expenditures on pages 13 and 14.
The company owns 179 substations having an aggregate transformer capacity of 15,208,000 KVA. The transmission system consists of approximately 1,182 pole miles of high voltage transmission lines, and the distribution system consists of 6,755 pole miles of overhead lines and 2,283 trench miles of underground lines. As of Dec. 31, 1993, there were 482,447 meters in service. All of the foregoing property is located within Florida.
All plants and important fixed assets are held in fee except that title to some of the properties are subject to easements, leases, contracts, covenants and similar encumbrances and minor defects, of the nature common to properties of the size and character of those of the company.
The company has easements for rights-of-way adequate for the maintenance and operation of most of its electrical transmission and distribution lines that are not constructed upon public highways, roads and streets. It has the power of eminent domain under Florida laws for the acquisition of any such rights-of-way for the operation of transmission and distribution lines. Transmission and distribution lines located in public ways are maintained under franchises or permits.
The company has a long-term lease for the office building in downtown Tampa, Florida, that serves as its headquarters.
Item 3.
Item 3. LEGAL PROCEEDINGS.
None.
Item 4.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matter was submitted during the fourth quarter of 1993 to a vote of the company's security holders through the solicitation of proxies or otherwise.
PART II
Item 5.
Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
All of the company's common stock is owned by TECO Energy, Inc., and hence there is no market for the stock.
The company pays dividends substantially equal to its net income applicable to common stock to TECO Energy. Such dividends totaled $102.4 million for 1993 and $106.4 million for 1992. See Note C on page 27 for a description of restrictions on dividends on the company's common stock.
Item 6.
Item 6. SELECTED FINANCIAL DATA.
(millions of dollars) Year ended Dec. 31, 1993 1992 1991 1990 1989
Operating revenues $1,041.3 $1,005.8 $ 987.5 $ 939.8 $ 934.6 Net income $ 106.6 $ 110.8 $ 107.4 $ 108.2 $ 109.7 Total assets $2,199.6 $2,108.3 $1,994.5 $1,918.8 $1,886.1 Long-term debt $ 611.1 $ 595.1 $ 513.7 $ 513.9 $ 514.5 Preferred stock- Redemption required -- -- -- -- $ 6.0
Item 7.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
EARNINGS SUMMARY
Tampa Electric's net income for 1993 of $106.6 million was 4 percent lower than for 1992 due to a $10 million non-recurring coal settlement charge described in the Other Income (Expense) section. In 1992, net income grew 3 percent to $110.8 million from $107.4 million in 1991 due to higher non-fuel revenues from sales to other utilities, lower interest expense and a continued commitment to cost containment.
OPERATING RESULTS
Operating income was level in 1993 after increasing in 1992. Higher base revenues in 1993 associated with retail customer growth of 1.7 percent and a retail price increase were partially offset by higher operating expenses. The improvement in 1992 operating income resulted from increased sales to other utilities and retail customer growth, partially offset by higher operating expenses. Upon termination of the Gannon Project Trust on Oct. 27, 1992, the revenues and expenses associated with an oil backout cost recovery tariff were included in the financial statements. These revenues, which were exactly offset by associated expenses, amounted to $11.5 million in 1993 and $1.8 million in 1992. The Trust was established in 1983 to fund the conversion of Gannon Station Units One through Four from oil-fired to coal-fired generation. The Florida Public Service Commission (FPSC) approved a specific oil backout cost recovery tariff related to this project.
1993 Change 1992 Change 1991 (millions of dollars)
Operating revenues $1,041.3 3.5% $1,005.7 1.8% $987.5 Operating expenses 887.2 4.1% 852.5 2.1% 835.3
Operating income $ 154.1 .5% $ 153.2 .7% $152.2
Operating Revenues Operating revenues rose in both 1993 and 1992 with retail customer growth of 1.7 percent and 1.5 percent, respectively, and higher sales to other utilities. Also contributing in 1993 was a $12- million price increase effective February 1993, as described in the Utility Regulation section. The economy in the company's service area continues to grow, although energy sales in all categories have been affected by the economic slowdown. Residential and commercial energy sales showed good growth in 1993, but total retail energy sales dropped due to lower sales to the phosphate industry. Retail energy sales are expected to rise with economic recovery and a return to customer growth in the 2 to 2.5 percent range. Energy sold to other utilities declined in 1993 because of milder weather and lower-priced oil generation available on other systems. Despite this decline, non-fuel revenues from sales to other utilities increased to $34 million in 1993 from $32.8 million in 1992 and $16.9 million in 1991. This growth resulted from shifting sales to higher
margin, longer-term contracts and an aggressive sales effort in Florida's bulk power market. In January 1993, the company began selling under a 10-year contract the limited use of 145 MWs of capacity from its Big Bend Unit Four to TECO Power Services for resale to Seminole Electric Cooperative. In the past two years, the company has added several other smaller bulk power sales contracts. Three of these contracts together provide more than 35 MWs of capacity to the cities of Wauchula, Ft. Meade and St. Cloud, Florida; all will be in effect beyond the year 2012.
1993 Change 1992 Change 1991 Megawatt-hour sales (thousands) Residential 5,706 2.6% 5,560 1.0% 5,507 Commercial 4,432 2.3% 4,333 1.4% 4,274 Industrial 2,236 -14.8% 2,625 -1.6% 2,669 Other 1,073 3.8% 1,034 2.9% 1,005 Total retail 13,447 - .8% 13,552 .7% 13,455 Sales for resale 2,330 -14.0% 2,710 5.3% 2,574 Total energy sold 15,777 -3.0% 16,262 1.5% 16,029
Retail customers (average) 477,010 1.7% 468,997 1.5% 462,260
Operating Expenses Effective cost management and efficiency improvement continue to be principal objectives at Tampa Electric. Continued emphasis on cost containment limited growth in operating expenses in 1993 to 3.8 percent, excluding amounts recovered through FPSC-approved cost recovery clauses and $6.3 million related to changes in accounting for postemployment benefits. Certain fuel, purchased capacity, conservation and oil backout costs were fully recovered and had no impact on earnings. 1993 Change 1992 Change 1991 (millions of dollars)
Fuel $363.2 -4.0% $378.2 -2.3% $387.3 Purchased power 39.0 98.0% 19.7 16.6% 16.9 Total fuel and purchased power 402.2 1.1% 397.9 -1.6% 404.2 Other operating expenses 157.7 9.8% 143.6 5.4% 136.2 Maintenance 71.4 4.2% 68.5 4.6% 65.5 Depreciation 111.9 9.6% 102.1 5.6% 96.7 Taxes, federal and state income 60.5 -2.1% 61.8 6.4% 58.1 Taxes, other than income 83.5 6.2% 78.6 5.4% 74.6 Total operating expenses 887.2 4.1% 852.5 2.1% 835.3
Less: recoverable fuel, purchased capacity, conservation and oil backout expenses 421.6 3.7% 406.4 -1.1% 410.9
Net operating expenses $465.6 4.4% $446.1 5.1% $424.4
Total fuel cost remained relatively stable for the last three years. Generation declined 3 percent in 1993 and average fuel price increased 2 percent. More energy was purchased in 1993 to meet peak demand and because of a three-month outage at a major generating unit. Substantially all fuel and purchased power expenses are recovered through the fuel adjustment and cost recovery clauses. Nearly all of the company's generation in the last three years has been from coal, and the fuel mix will continue to be substantially coal. Coal prices are expected to increase slightly during the next few years, but at a slower rate than either oil or gas prices. The increase in other operating expenses in 1993 included $6.3 million related to changes in accounting for postemployment benefits as described in the Accounting Standards section. Increases in the cost of medical coverage and other employee benefits and more regulatory activity also increased 1993 expenses. Maintenance expense was level in 1993 compared to 1992, excluding $2.5 million related to the addition of oil backout costs. The increase in 1992 came from the return to service of Hookers Point Station in December 1991 and from the generating units purchased from the City of Sebring in February 1991. Depreciation expense increased both years because of normal additions to plant and equipment and the acquisition of the Sebring generating units in February 1991. Depreciation expense included an additional $7 million in 1993 and $1.2 million in 1992 which relate to oil backout changes. Taxes other than income taxes were up each year mainly from higher gross receipts taxes, which are included in customers' bills, and from additional property taxes.
NON-OPERATING ITEMS
Other Income (Expense) In 1993, the company recorded as other expense a one-time $10- million pre-tax charge associated with an FPSC-approved settlement agreement between the company and the Office of Public Counsel (Public Counsel). The agreement is described in the Utility Regulation section.
Interest Charges Interest charges were $42.3 million in 1993, level with 1992 and lower than 1991. Interest costs in 1993 were affected by lower interest rates and savings from the refinancings as discussed in the Financing Activity section, which offset higher debt balances. In 1992, the effects of lower interest rates offset higher average debt balances resulting in lower interest charges than in 1991.
Income Taxes Effective Jan. 1, 1993, the federal corporate income tax rate increased from 34 percent to 35 percent. This rate increase lowered 1993 earnings by $1.7 million.
ACCOUNTING STANDARDS
Income Tax Accounting Effective Jan. 1, 1993, the company adopted Financial Accounting Standards (FAS) 109, Accounting for Income Taxes, which requires the use of the liability method in accounting for income taxes. The adoption of FAS 109 had no effect on net income or common equity, but did result in certain adjustments to accumulated deferred income taxes and the establishment of a corresponding regulatory tax liability reflecting the amount payable to customers through future rates. The FPSC adopted a rule for accounting for deferred income taxes under FAS 109 requiring that deferred tax adjustments and the related regulatory tax liability be treated the same as accumulated deferred income taxes had been treated in the past. Based on the FPSC rule, the company believes that there will not be any changes in the computation of income tax expense for rate making purposes and thus, no change in its revenue requirements or earnings due to the adoption of FAS 109.
Postemployment Benefits The company adopted FAS 106, Accounting for Postretirement Benefits Other than Pensions, effective Jan. 1, 1993. The standard requires full cost accrual accounting that recognizes the cost of these benefits over the service lives of employees. Adopting the new standard resulted in estimating a previously unrecognized obligation covering prior years of $41 million. The company is amortizing this transition obligation on a straight-line basis over the average remaining service lives of active employees, approximately 20 years. Full cost accrual under FAS 106 exceeds cash basis expense by approximately $5 million annually. The new rates approved by the FPSC for the company for 1993 and 1994 reflect full cost accrual of postretirement benefits including transition cost amortization.
CAPITAL EXPENDITURES
Capital expenditures for 1993 of $206 million included $71 million for the construction of Polk Unit One, a 250-megawatt coal- gasification plant. The capital cost of the plant is estimated at about $440 million, net of $100 million in construction funding from the Department of Energy under its Clean Coal Technology Program. The FPSC granted the Certificate of Need in 1992 and groundbreaking is planned for mid-1994. In addition, the company spent $135 million for equipment and facilities to meet the company's growing customer base and for generating equipment improvements.
The company estimates total capital expenditures for ongoing operations at $247 million in 1994 and $1 billion during the 1995-1998 period mainly for distribution facilities to meet customer growth and for construction of Polk Unit One. About $100 million is estimated to be spent on this project in 1994, $215 million in 1995 and the remainder in 1996. At the end of 1993, the company had outstanding commitments of about $150 million for the construction of Polk Unit One.
Construction Requirements (millions of dollars)
1993 1994 Actual Estimated
Production $ 99 $147 Transmission 16 23 Distribution 47 50 General 44 27 Total $206 $247
ENVIRONMENTAL COMPLIANCE
The company is subject to various environmental regulations. The company has all of the environmental permits required by the regulations and has a monitoring program in place to assure compliance with permit conditions. The company believes that environmental liabilities are minimal. In addition, the FPSC has adopted an environmental cost recovery clause that the company believes would allow it to recover the cost of future significant environmental programs. The company plans to comply with the Phase I emission limitations in 1995 imposed by the Clean Air Act by using blends of lower-sulfur coal. The cost of compliance with Phase I is expected to increase prices less than 3 percent. There is little capital cost associated with fuel blending. In connection with its Phase I compliance plan, the company has entered into a long-term contract for the purchase of low-sulfur coal beginning in mid-1994. The company is also evaluating the use of purchased sulfur dioxide allowances as a minor component of its overall compliance strategy. If limited to today's technology, to comply with Phase II emission standards set for 2000, the company would likely have to add either one or two scrubbers. The aggregate effect of Phase I and Phase II compliance on the utility's price structure is currently estimated to be 5 percent or less.
UTILITY REGULATION
Price Increase The FPSC granted the company a $1.2 million permanent base revenue increase and a $10.3 million revenue increase primarily associated with recovery of purchased power capacity payments effective in early February 1993. An additional base revenue increase of $16 million was effective Jan. 1, 1994. The FPSC decision reflected overall allowed regulatory rates of return of 8.20 percent in 1993 and 8.34 percent in 1994, which included an allowed regulatory
rate of return on common equity of 12 percent, the midpoint of a range of 11 percent to 13 percent. The FPSC approved $19 million of construction work in progress in rate base in 1993 and $55 million in 1994. Following a separate hearing in February 1994, the FPSC issued an order on March 25, 1994 that changed the company's authorized regulatory rate of return on common equity to an 11.35 percent midpoint and a range of 10.35 percent to 12.35 percent, while leaving in effect the rates it had previously established. In its order, the FPSC approved a $4-million annual accrual for the establishment of an unfunded storm damage reserve for transmission and distribution property and rejected Public Counsel's request that the 1994 rate increase be held subject to refund. Any party to the case has 30 days from the date of the order in which to file an appeal with the Florida Supreme Court.
Coal Settlement In February 1993, the FPSC approved an agreement between the company and Public Counsel that resolved all issues relating to prices for coal purchased in the years 1990 through 1992 by the company from its affiliate, Gatliff Coal Company, a subsidiary of TECO Coal. Tampa Electric agreed to refund $10 million plus interest to its customers through the fuel adjustment clause over a 12-month period beginning April 1, 1993. In 1993, the company refunded $7.6 million to its customers. The agreement approved by the FPSC also established a new regulatory benchmark procedure for 1993 through 1999 with a new price effective Jan. 1, 1993 and annual adjustments based on the change in the Consumer Price Index. The new procedure is expected to avoid the disputes which have arisen over the calculation of the prior benchmark price.
FINANCING ACTIVITY
Tampa Electric's 1993 year-end capital structure was 44 percent debt, 53 percent common equity and 3 percent preferred stock. The company's objective is to maintain a capital structure over time that will support its current credit ratings.
Credit Ratings/Senior Debt Duff & Phelps Moody's Standard & Poor's AA Aa1 AA
The company repaid $48 million of first mortgage bonds due May 1, 1993 with internally generated funds and proceeds from short-term debt. In May 1993, the company sold $80 million of first mortgage bonds due in 2000 at a 5.75 percent interest rate and $75 million of first mortgage bonds due in 2003 at a 6.125 percent interest rate. These bonds were sold at a discount with yields to maturity of 5.83 percent for the 2000 series and 6.25 percent for the 2003 series. Proceeds were used in June 1993 to redeem four outstanding series of first mortgage bonds totaling $155 million. The average interest rate of the refunded bonds was 7.7 percent. In June 1993, the Hillsborough County Industrial Development Authority issued $20 million of Pollution Control Revenue Bonds for the benefit of the company to finance the cost of waste disposal
facilities. The bonds bear interest at a floating rate set daily. At Dec. 31, 1993, $4.4 million remained on deposit with the trustee for future expenditures for qualified facilities. In July 1993, the company entered into a forward refunding arrangement for $85.95 million of outstanding Pollution Control Revenue Bonds. Under this arrangement, $85.95 million of new tax- exempt bonds due Dec. 1, 2034 will be issued in December 1994 at a 6.25 percent interest rate. The proceeds will be used to refund a currently outstanding 9.9 percent series when these bonds become callable in February 1995. For accounting and rate making purposes, from July 1993 the company recorded interest expense using a blended rate for the outstanding and refunding bonds and will continue to use this rate through the original maturity dates of the currently outstanding bonds.
LIQUIDITY, CAPITAL RESOURCES
The company met its cash needs during 1993 largely with internally generated funds and capital contributions from its parent, with the balance from debt. At Dec. 31, 1993, the company had bank credit lines of $140 million available. The company expects to meet its capital requirements for ongoing operations in 1994-1998 substantially from internally generated funds. The company anticipates some capital contributions from parent and debt financing, primarily in 1994 and 1995.
Item 8.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Page No.
Report of Independent Accountants 18
Balance Sheets, Dec. 31, 1993 and 1992 19
Statements of Income for the years ended Dec. 31, 1993, 1992 and 1991 20
Statements of Cash Flows for the years ended Dec. 31, 1993, 1992 and 1991 21
Statements of Retained Earnings for the years ended Dec. 31, 1993, 1992 and 1991 22
Statements of Capitalization, Dec. 31, 1993 and 1992 22-24
Notes to Financial Statements 25-32
Schedules: V - Property, Plant and Equipment for the years ended 33-35 Dec. 31, 1993, 1992 and 1991
VI - Accumulated Depreciation of Property, Plant and 36-38 Equipment for the years ended Dec. 31, 1993, 1992 and 1991
IX - Short-term Borrowings for the years ended 39 Dec. 31, 1993, 1992 and 1991
X - Supplementary Income Statement Information 40 for the years ended Dec. 31, 1993, 1992 and 1991
Schedules other than those listed above have been omitted since they are not required, are inapplicable or the required information is presented in the financial statements or notes thereto.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of Tampa Electric Company,
We have audited the financial statements and the financial statement schedules of Tampa Electric Company, (a wholly owned subsidiary of TECO Energy, Inc.) as listed in the index under Item 8 of this Form 10-K. These financial statements and financial statement schedules are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements and financial statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Tampa Electric Company as of Dec. 31, 1993 and 1992, and the results of its operations and its cash flows for each of the three years in the period ended Dec. 31, 1993, in conformity with generally accepted accounting principles. In addition, in our opinion, the financial statement schedules referred to above, when considered in relation to the basic financial statements taken as a whole, present fairly, in all material respects, the information required to be included therein.
As discussed in Note A to the financial statements, effective Jan. 1, 1993 the company adopted Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes."
COOPERS & LYBRAND Certified Public Accountants
Tampa, Florida Jan. 17, 1994
BALANCE SHEETS (thousands of dollars) Assets Dec. 31, 1993 1992 PROPERTY, PLANT AND EQUIPMENT, AT ORIGINAL COST Utility plant in service $2,773,652 $2,699,290 Construction work in progress 151,311 76,920 2,924,963 2,776,210 Accumulated depreciation (1,052,979) (995,616) 1,871,984 1,780,594 Other property 201 181 1,872,185 1,780,775 CURRENT ASSETS Cash and cash equivalents 4,499 28,260 Short-term investments 216 1,934 Receivables, less allowance for uncollectibles 97,997 94,056 Inventories, at average cost Fuel 77,438 86,468 Materials and supplies 37,726 37,139 Prepayments 10,062 4,381 227,938 252,238 DEFERRED DEBITS Unamortized debt expense 25,718 16,182 Deferred fuel expense 13,721 3,703 Deferred income taxes 37,045 31,145 Other 22,961 24,231 99,445 75,261 $2,199,568 $2,108,274
Liabilities and Capital CAPITAL Common stock $ 664,631 $ 627,631 Retained earnings 182,939 182,273 847,570 809,904 Preferred stock, redemption not required 54,956 54,956 Long-term debt, less amount due within one year 611,082 595,067 1,513,608 1,459,927 CURRENT LIABILITIES Long-term debt due within one year 1,245 49,800 Notes payable 81,500 29,200 Accounts payable 87,791 79,125 Customer deposits 47,358 45,037 Interest accrued 10,522 11,571 Taxes accrued 6,151 4,030 234,567 218,763 DEFERRED CREDITS Deferred income taxes 292,573 337,722 Investment tax credits 66,033 70,946 Regulatory liability-tax related 61,973 -- Other 30,814 20,916 451,393 429,584 $2,199,568 $2,108,274
The accompanying notes are an integral part of the financial statements.
STATEMENTS OF INCOME (thousands of dollars)
Year ended Dec. 31, 1993 1992 1991
OPERATING REVENUES Residential $ 464,096 $ 444,961 $ 436,888 Commercial 298,281 287,422 280,973 Industrial-Phosphate 55,116 70,175 73,948 Industrial-Other 48,906 46,497 45,267 Sales for resale 76,055 72,957 65,980 Other 98,850 83,770 84,469 1,041,304 1,005,782 987,525 OPERATING EXPENSES Operation Fuel 363,250 378,234 387,359 Purchased power 38,961 19,671 16,882 Other 157,701 143,624 136,165 Maintenance 71,397 68,501 65,535 Depreciation 111,866 102,081 96,701 Taxes-Federal and state income 60,559 61,809 58,063 Taxes-Other than income 83,513 78,626 74,580 887,247 852,546 835,285
OPERATING INCOME 154,057 153,236 152,240
OTHER INCOME (EXPENSE) Allowance for other funds used during construction 1,585 -- -- Other income (expense), net (6,676) 186 (325) (5,091) 186 (325)
Income before interest charges 148,966 153,422 151,915
INTEREST CHARGES Interest on long-term debt 39,281 36,896 36,483 Other interest 5,133 6,845 9,176 Allowance for borrowed funds used during construction (2,096) (1,104) (1,098) 42,318 42,637 44,561
NET INCOME 106,648 110,785 107,354 Preferred dividend requirements 3,568 3,567 3,568
BALANCE APPLICABLE TO COMMON STOCK $ 103,080 $ 107,218 $ 103,786
The accompanying notes are an integral part of the financial statements.
STATEMENTS OF CASH FLOWS (thousands of dollars)
Year ended Dec. 31, 1993 1992 1991 CASH FLOWS FROM OPERATING ACTIVITIES Net income $106,648 $110,785 $107,354 Adjustments to reconcile net income to net cash Depreciation 111,866 102,081 96,701 Deferred income taxes 10,793 6,087 11,760 Investment tax credits, net (4,913) (4,139) (4,969) Allowance for funds used during construction (3,681) (1,104) (1,098) Deferred fuel cost (10,018) 2,030 (3,358) Fuel cost settlement 10,000 -- -- Refund to customers (7,572) -- -- Receivables, less allowance for uncollectibles (3,941) 2,502 (719) Inventories 8,443 15,022 8,004 Taxes accrued 2,121 2,556 (3,561) Accounts payable 6,088 16,757 (5,837) Other (306) 5,528 1,050 225,528 258,105 205,327 CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures (205,642) (156,307) (169,626) Allowance for funds used during construction 3,681 1,104 1,098 Short-term investments 1,718 (1,727) (24) (200,243) (156,930) (168,552) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from contributed capital from parent 37,000 14,000 68,007 Proceeds from long-term debt 15,636 75,000 -- Repayment of long-term debt (48,000) (235) (643) Net increase (decrease) in short-term debt 52,300 (60,100) 9,000 Dividends (105,982) (109,947) (104,856) (49,046) (81,282) (28,492) Net increase (decrease) in cash and cash equivalents (23,761) 19,893 8,283 Cash and cash equivalents at beginning of year 28,260 8,367 84 Cash and cash equivalents at end of year $ 4,499 $ 28,260 $ 8,367
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid during the year for: Interest $ 43,540 $ 42,257 $ 46,113 Income taxes $ 51,426 $ 55,781 $ 55,185
The accompanying notes are an integral part of the financial statements.
STATEMENTS OF RETAINED EARNINGS (thousands of dollars)
Year ended Dec. 31, 1993 1992 1991 BALANCE, BEGINNING OF YEAR $182,273 $181,435 $178,937 Add-Net income 106,648 110,785 107,354 288,921 292,220 286,291 Deduct-Cash dividends on capital stock Preferred 3,568 3,567 3,568 Common 102,414 106,380 101,288 105,982 109,947 104,856 BALANCE, END OF YEAR $182,939 $182,273 $181,435
STATEMENTS OF CAPITALIZATION
The accompanying notes are an integral part of the financial statements.
STATEMENTS OF CAPITALIZATION (continued) At Dec. 31, 1993, preferred stock had a carrying amount of $55.0 million and an estimated fair market value of $49.8 million. The estimated fair market value of preferred stock was based on quoted market prices. (thousands of dollars) LONG-TERM DEBT OUTSTANDING AT DEC. 31, Due 1993 1992 First mortgage bonds (issuable in series) 4 1/2% 1993 $ -- $ 48,000 5 1/2% 1996 25,000 25,000 7 1/4% 1998 -- 30,000 7 1/4% 2001 -- 35,000 7 3/8% 2002 -- 40,000 8 1/2% 2004 -- 50,000 7 3/4% 2022 75,000 75,000 5 3/4% 2000 80,000 -- 6 1/8% 2003 75,000 -- Installment contracts payable(1) 5 3/4% 2007 24,920 24,920 7 7/8% Refunding bonds(2) 2021 25,000 25,000 8% Refunding bonds(2) 2022 100,000 100,000 9.9%(3) 2011-2014 85,950 85,950 Variable rate: 2.12% for 1993 and 2.55% for 1992(4) 2025 51,605 51,605 Variable rate: 2.12% for 1993 and 2.49% for 1992(4) 2018 54,200 54,200 Variable rate: 2.28% for 1993(4)(5) 2020 15,636--
Unamortized debt premium 16 192 612,327 644,867 Less amount due within one year(6) 1,245 49,800 TOTAL LONG-TERM DEBT $611,082 $595,067
Maturities and annual sinking fund requirements of long-term debt for the years 1995, 1996, 1997 and 1998 are $1.3 million, $26.0 million, $1.0 million, and $1.1 million, respectively. Of these amounts $1.0 million for 1995 and $0.8 million per year for 1996 through 1998 may be satisfied by the substitution of property in lieu of cash payments. Substantially all of the property, plant and equipment of the company is pledged as collateral. ___________________________ (1) Tax-exempt securities. (2) Proceeds of these bonds were used to refund bonds with interest rates of 11 5/8%-12 5/8%. For accounting purposes, interest expense has been recorded using blended rates of 8.28%-8.66% on the original and refunding bonds, consistent with regulatory treatment. (3) Under a financing arrangement entered into in July 1993, new tax- exempt bonds will be issued in December 1994 to refund this outstanding series when it becomes eligible for refunding. The new refunding series bears an interest rate of 6.25%. For accounting purposes, interest expense has been recorded using a blended rate of the outstanding and refunding bonds from July 1993 forward, consistent with regulatory treatment. (4) Composite year-end interest rate. (5) This amount is recorded net of $4.4 million on deposit with trustee. Composite year-end interest rate of 2.47% for 1993.
(6) Of the amount due in 1994, $1.0 million may be satisfied by the substitution of property in lieu of cash payments.
The accompanying notes are an integral part of the financial statements.
STATEMENTS OF CAPITALIZATION (continued)
At Dec. 31, 1993, total long-term debt had a carrying amount of $611.1 million and an estimated fair market value of $658 million. The estimated fair market value of long-term debt was based on quoted market prices for the same or similar issues, on the current rates offered for debt of the same remaining maturities, or for long-term issues with variable rates that approximate market rates, at carrying amounts. The carrying amount of long-term debt due within one year approximated fair market value because of the short maturity of these instruments.
The company entered into an interest rate exchange agreement to reduce the cost of $100 million of fixed rate long-term debt. The debt has been refinanced but the exchange agreement will remain in effect until January 1996. The benefit derived from the exchange agreement could range up to $2.3 million depending on floating rate levels. The benefits of this agreement are at risk only in the event of nonperformance by the other party to this agreement or if the floating rate reaches 12.55%. The company does not anticipate nonperformance by the other party. The benefit of the interest rate exchange is used to reduce interest expense. The reduction was $2.3 million per year in 1993, 1992 and 1991.
At Dec. 31, 1993, this interest rate exchange agreement had an estimated fair market value of $4.4 million. Estimated fair market value was based on the expected realizable value to the company if the agreement were terminated.
The accompanying notes are an integral part of the financial statements.
NOTES TO FINANCIAL STATEMENTS
A. Summary of Significant Accounting Policies
Basis of Accounting The company maintains its accounts in accordance with recognized policies prescribed or permitted by the Florida Public Service Commission (FPSC) and the Federal Energy Regulatory Commission (FERC). These policies conform with generally accepted accounting principles in all material respects.
The impact of Financial Accounting Standard (FAS) No. 71, Accounting for the Effects of Certain Types of Regulation, has been minimal in the company's experience, but when cost recovery is ordered over a longer period than a fiscal year, costs are recognized in the period that the regulatory agency recognizes them in accordance with FAS 71.
The company's retail and wholesale businesses are regulated by the FPSC and the FERC, respectively. Prices allowed by both agencies are generally based on recovery of prudent costs incurred plus a reasonable return on invested capital.
Revenues and Fuel Costs Revenues include amounts resulting from cost recovery clauses which provide for monthly billing charges to reflect increases or decreases in fuel, purchased capacity, oil backout and conservation costs. These adjustment factors are based on costs projected by the company for a six-month period. Any over-recovery or under-recovery of costs plus an interest factor are refunded or billed to customers during the subsequent six-month period. Over-recoveries of costs are recorded as deferred credits and under-recoveries of costs are recorded as deferred debits.
Certain other costs incurred by the company are allowed to be recovered from customers through prices approved in the regulatory process. These costs are recognized as the associated revenues are billed.
The company accrues base revenues for services rendered but unbilled to provide a closer matching of revenues and expenses.
On Oct. 27, 1992, pursuant to FPSC approval, the Gannon Project Trust was terminated and the Trust's net assets and debt were placed on the company's balance sheet. At that time, the net assets of the Trust totaled $54.2 million, which included $140.3 million of property, plant and equipment, $87.6 million of accumulated depreciation and $1.5 million of other assets and liabilities. Concurrently, the Hillsborough County Industrial Development Authority issued $54.2 million of variable-rate Pollution Control Revenue Refunding Bonds due May 15, 2018 for the benefit of Tampa Electric, the proceeds of which were used to redeem all of the outstanding debt of the Gannon Project Trust. The effect of this non-cash transaction has been netted to arrive at capital expenditures and proceeds from long-term debt in the Statements of Cash Flows.
In February 1993, the FPSC approved an agreement between the company and the Office of Public Counsel that resolved all issues relating to prices for coal purchased in the years 1990 through 1992 by the company from its affiliate, Gatliff Coal, a subsidiary of TECO Coal. The company recognized a $10-million liability in February 1993 and agreed to return this amount plus interest during the 12-month period effective April 1, 1993. The $10 million charge related to this agreement is classified in "Other income (expense)" on the income statement.
Depreciation The company provides for depreciation primarily by the straight- line method at annual rates that amortize the original cost, less net salvage, of depreciable property over its estimated service life. The provision for utility plant in service, expressed as a percentage of the original cost of depreciable property, was 4.2% for 1993, 1992 and 1991.
The original cost of utility plant retired or otherwise disposed of and the cost of removal less salvage are charged to accumulated depreciation.
Deferred Income Taxes Effective Jan. 1, 1993, the company adopted FAS 109, which changed the requirements for accounting for income taxes. Although FAS 109 retains the concept of comprehensive interperiod income tax allocation, it adopts the liability method in the measurement of deferred income taxes rather than the deferred method. Under the liability method, the temporary differences between the financial statement and tax bases of assets and liabilities are reported as deferred taxes measured at current tax rates. Since the company is a regulated enterprise and reflects the expected regulatory treatment, the adoption of FAS 109 resulted in certain adjustments to accumulated deferred income taxes and the establishment of a corresponding regulatory tax liability reflecting the amount payable to customers through future rates and had no effect on earnings.
Investment Tax Credits Investment tax credits have been recorded as deferred credits and are being amortized to income tax expense over the service lives of the related property.
Allowance for Funds Used During Construction (AFUDC) AFUDC is a non-cash credit to income with a corresponding charge to utility plant which represents the cost of borrowed funds and a reasonable return on other funds used for construction. The rate used to calculate AFUDC is revised periodically to reflect significant changes in the company's cost of capital. The rate was 7.70% for 1993 and 7.93% for 1992 and 1991. The base on which AFUDC is calculated excludes construction work in progress which has been included in rate base.
Cash and Cash Equivalents Cash equivalents are all highly liquid debt instruments purchased with a maturity of three months or less. The carrying amount of cash equivalents approximated fair market value because of the short maturity of these instruments.
Investments Short-term investments consist of various equity investments, stated at lower of aggregate cost or market. Income from short-term investments is recognized when realized, with the exception of net unrealized losses that are recognized currently in order to reflect these investments at the lower of cost or market. Net unrealized gains are not recognized until they are realized. Realized gains and losses are determined on the specific identification cost basis. The carrying amount of these investments approximated fair market value because of their short holding period.
Reclassifications Certain 1992 and 1991 amounts were reclassified to conform with current year presentation.
B. Common Stock
The company is a wholly owned subsidiary of TECO Energy, Inc.
Common Stock Issue Shares Amount Expense (thousands of dollars) Balance Dec. 31, 1990 10 $547,316 $1,692 Contributed capital from parent 68,007 -- Balance Dec. 31, 1991 10 615,323 1,692 Contributed capital from parent 14,000 -- Balance Dec. 31, 1992 10 629,323 1,692 Contributed capital from parent 37,000 -- Balance Dec. 31, 1993 10 $666,323 $1,692
C. Retained Earnings
The company's Restated Articles of Incorporation and certain of the company's first mortgage bond issues contain provisions that limit the dividend payment on the company's common stock and the purchase or retirement of the company's capital stock. At Dec. 31, 1993, substantially all of the company's retained earnings were available for dividends on its common stock.
D. Retirement Plan
The company is a participant in the comprehensive retirement plan of TECO Energy, which has a non-contributory defined benefit retirement plan which covers substantially all employees. Benefits are based on employees' years of service and average final salary. TECO Energy's policy is to fund the plan within the guidelines set by ERISA for the minimum annual contribution and the maximum allowable as a tax deduction by the IRS. The company's share of pension expense was $1.1 million for 1993 and $1.8 million for 1992
and 1991. About 62 percent of plan assets were invested in common stocks and 38 percent in fixed income investments at Dec. 31, 1993. Components of net pension expense, reconciliation of the funded status and the accrued pension prepayment are presented below for TECO Energy consolidated.
Components of net pension expense (thousands of dollars) 1993 1992 1991
Service cost (benefits earned during the period) $ 7,665 $ 7,347 $ 6,873
Interest cost on projected benefit obligations 15,052 14,063 12,695 Less: Return on plan assets Actual 30,495 25,896 39,216 Less net amortization of unrecognized transition asset and deferred return 10,284 7,696 22,730 Net return on assets 20,211 18,200 16,486
Net pension expense $ 2,506 $ 3,210 $ 3,082
Reconciliation of the funded status of the retirement plan and the accrued pension prepayment (thousands of dollars) Dec. 31, Dec. 31, 1993 1992
Fair market value of plan assets $254,253 $224,350 Projected benefit obligation (207,282) (177,378) Excess of plan assets over projected benefit obligation 46,971 46,972 Less unrecognized net gain from past experience different from that assumed 36,426 43,252 Less unrecognized prior service cost (8,858) (9,441) Less unrecognized net transition asset (being amortized over 19.5 years) 11,472 12,469 Accrued pension prepayment $ 7,931 $ 692
Accumulated benefit obligation (including vested benefits of $151,213 for 1993 and $124,133 for 1992) $169,212 $138,386
Assumptions used in determining actuarial valuations
Discount rate to determine projected benefit obligation 7.75% 8.75% Rates of increase in compensation levels 3.3-5.3% 4.0-6.2% Plan asset growth rate through time 9% 9%
E. Postretirement Benefit Plan
The company currently provides certain postretirement health care benefits for substantially all employees retiring after age 55 meeting certain service requirements. The company contribution toward health care coverage for most employees retiring after Jan. 1, 1990 is limited to a defined dollar benefit based on years of service. Postretirement benefit levels are substantially unrelated to salary. The company reserves the right to terminate or modify the plan in whole or in part at any time.
In 1993, the company adopted FAS 106 that requires postretirement benefits be recognized as earned by employees rather than recognized as paid. Prior to 1993, the cost of these benefits was recognized as benefits were paid and amounted to $2.2 million for eligible retirees in 1992 and $1.9 million for eligible retirees in 1991.
Components of postretirement benefit cost (thousands of dollars)
Service cost (benefits earned during the period) $1,207 Interest cost on projected benefit obligations 3,616 Amortization of transition obligation (straight line over 20 years) 2,063 Net periodic postretirement benefit expense $6,886
Reconciliation of the funded status of the postretirement benefit plan and the accrued liability (thousands of dollars)
Dec. 31,
Accumulated postretirement benefit obligation Active employees eligible to retire $ 8,324 Active employees not eligible to retire 18,232 Retirees and surviving spouses 20,699 47,255
Less unrecognized net loss from past experience 3,497 Less unrecognized transition obligation 39,199
Accrued postretirement liability $ 4,559
Assumptions used in determining actuarial valuation
Discount rate to determine projected benefit obligation 7.75%
The assumed health care cost trend rate for medical costs prior to age 65 was 12.0% in 1993 and decreases to 6.0% in 2002 and thereafter. The assumed health care cost trend rate for medical costs after age 65 was 8.5% in 1993 and decreases to 6.0% in 2002 and thereafter.
A 1 percent increase in the medical trend rates would produce an 11 percent ($517,000) increase in the aggregate service and interest cost for 1993 and a 9 percent ($4.2 million) increase in the accumulated postretirement benefit obligation as of Dec. 31, 1993.
F. Income Tax Expense
The company is included in the filing of a consolidated Federal income tax return with its parent and affiliates. The company's income tax expense is based upon a separate return computation. Income tax expense consists of the following components:
(thousands of dollars) Federal State Total Currently payable $ 43,616 $ 7,647 $ 51,263 Deferred 9,368 1,425 10,793 Amortization of investment tax credits (4,912) -- (4,912) Total income tax expense $ 48,072 $ 9,072 57,144 Included in other income, net (3,415) Included in operating expenses $ 60,559
Currently payable $ 50,851 $ 8,930 $ 59,781 Deferred 5,187 900 6,087 Investment tax credits (2) -- (2) Amortization of investment tax credits (4,138) -- (4,138) Total income tax expense $ 51,898 $ 9,830 61,728 Included in other income, net (81) Included in operating expenses $ 61,809
Currently payable $ 43,462 $ 7,444 $ 50,906 Deferred 9,734 2,026 11,760 Investment tax credits 5 - 5 Amortization of investment tax credits (4,973) - (4,973) Total income tax expense $ 48,228 $ 9,470 $ 57,698 Included in other income, net (365) Included in operating expenses $ 58,063
The company adopted FAS 109 as of Jan. 1, 1993 and elected not to restate the prior years financial statements. Deferred taxes result from temporary differences in the recognition of certain liabilities or assets for tax and financial reporting purposes.
The principal components of the company's deferred tax assets and liabilities recognized in the balance sheet are as follows: Dec. 31, 1993 Deferred tax assets(1) Property related $ 25,766 Leases 5,306 Insurance reserve 2,485 Early capacity payments 2,565 Other 923 Total deferred income tax assets 37,045 Deferred income tax liabilities(1) Property related (285,291) Other (7,282) Total deferred income tax liabilities (292,573) Accumulated deferred income taxes $(255,528) _________________ (1) Certain property related assets and liabilities have been netted.
Deferred tax expense results from timing differences in the recognition of certain expenses or revenues for tax and financial reporting purposes. The source of these differences and the tax effect of each for 1992 and 1991 are as follows:
1992 1991 Tax depreciation in excess of book depreciation $11,679 $13,125 (Over-recovery)/under-recovery of fuel costs (834) 1,302 Coal contract buyout (1,279) (5,323) Construction-related items capitalized for tax purposes (1,474) (1,378) Other (2,005) 4,034 $ 6,087 $11,760
The total income tax provisions differ from amounts computed by applying the federal statutory tax rate to income before income taxes for the following reasons:
1993 1992 1991 Net income $106,648 $110,785 $107,354 Total income tax provision 57,144 61,728 57,698 Income before income taxes $163,792 $172,513 $165,052
Income taxes on above at federal statutory rate (35% for 1993 and 34% for 1992 and 1991) $ 57,327 $ 58,654 $ 56,118 Increase (decrease) due to State income tax, net of federal income tax 5,921 6,515 6,270 Amortization of investment tax credits (4,912) (4,138) (4,973) Other (1,192) 697 283 Total income tax provision $ 57,144 $ 61,728 $ 57,698 Provision for income taxes as a percent of income before income taxes 34.9% 35.8% 35.0%
G. Short-Term Debt
Notes payable at Dec. 31, 1993 consisted exclusively of commercial paper. The carrying amount of notes payable approximated fair market value because of the short maturity of these instruments. Unused lines of credit at Dec. 31, 1993 were $140 million. Certain lines of credit require commitment fees of .15% on the unused balances.
H. Related Party Transactions (thousands of dollars)
Net transactions with affiliates are as follows:
1993 1992 1991 Fuel related $190,495 $190,085 $200,154 Administrative and general, net $ 14,510 $ 10,358 $ 8,733 Other, net $ -- $ -- $ 10
Amounts due from or to affiliates of the company at year-end are as follows:
1993 1992 Accounts receivable $ 1,720 $ 516 Accounts payable $ 20,693 $ 24,044
Accounts receivable and accounts payable were incurred in the ordinary course of business and do not bear interest.
I. Commitments and Contingencies
The company has made certain commitments in connection with its continuing capital improvements program. The company's capital expenditures are estimated to be $247 million for 1994 and $1 billion for 1995 through 1998 for equipment and facilities to meet customer growth and for construction of additional generating capacity to be placed in service in 1996. The company plans to build a 250-megawatt coal-gasification plant (Polk Unit One) with a capital cost of about $440 million, net of $100 million in construction funding from the Department of Energy under its Clean Coal Technology Program. Tampa Electric spent $71 million on this project in 1993 and expects to spend $100 million in 1994, $215 million in 1995 and the remainder in 1996. At the end of 1993, Tampa Electric had outstanding commitments of approximately $150 million for the construction of Polk Unit One.
SCHEDULE X
SUPPLEMENTARY INCOME STATEMENT INFORMATION Year ended Dec. 31, (thousands of dollars)
Column A Column B Charged to costs and expenses
Item 1993 1992 1991
1. Maintenance and repairs $71,397 $68,501 $65,535
3. Taxes-Other than income taxes, are classified as follows:
Real and personal property $31,664 $28,383 $28,002 State gross receipts 23,101 21,769 18,776 FICA 10,563 10,235 9,940 Local franchise 18,796 18,485 18,230 Other 1,536 1,828 1,631 85,660 80,700 76,579 Charged to utility tax expense 83,513 78,626 74,581 Charged to other accounts $ 2,147 $ 2,074 $ 1,998 __________________
The information called for in items 2, 4 and 5 of this schedule were charged to operating expenses and were not material.
Item 9.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
During the period from Jan. 1, 1992 to the date of this report, the company has not had and has not filed with the Commission a report as to any changes in or disagreements with accountants, accounting principles or practices, or financial statement disclosure.
PART III
Item 10.
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
(a) Information concerning Directors of Tampa Electric is as follows:
Principal Occupation During Last Five Years and Director Name Age Other Directorships Held Since
DuBose Ausley 56 Chairman, Macfarlane, Ausley, 1992 Ferguson & McMullen (attorneys), Tallahassee, Florida; formerly President, Ausley, McMullen, McGehee, Carothers & Proctor, P.A. (attorneys), Tallahassee, Florida; also a director Sprint Corporation and Capital City Bank Group Inc.
Sara L. Baldwin 62 Private Investor; formerly 1980 Vice President, Baldwin and Sons, Inc. (insurance agency), Tampa, Florida
Hugh L. Culbreath 72 Retired; Formerly Chairman of 1971 the Board of TECO Energy, Inc. and Tampa Electric Company
James L. Ferman, Jr. 50 President, Ferman Motor Car 1985 Company, Inc. (automobile dealerships), Tampa, Florida
Edward L. Flom 64 Retired; Formerly Chairman 1980 of the Board and Chief Executive Officer, Florida Steel Corporation (production and fabrication of steel products), Tampa, Florida; also a director of Outback Steakhouse, Inc.
Henry R. Guild, Jr. 65 President and Director, Guild, 1980 Monrad & Oates, Inc. (private trustees and family investment advisers), Boston, Massachusetts
Timothy L. Guzzle 57 Chairman of the Board, 1988 President and Chief Executive Officer, TECO Energy, Inc.; formerly Chief Operating Officer of TECO Energy, Inc.; also a director of NationsBank Corporation
Charles H. Ross, Jr. 56 Executive Vice President 1987 Emeritus of Merrill Lynch & Co., Inc., New York, New York; also a director of Merrill Lynch Ready Assets Trust, Merrill Lynch Capital Fund, Inc. and Enhance Financial Services Group, Inc.
Robert L. Ryan 50 Senior Vice President and 1991 Chief Financial Officer, Medtronic, Inc. (medical devices manufacturer), Minneapolis, Minnesota; formerly Vice President-Finance, Union Texas Petroleum Holdings, Inc. (independent oil and gas exploration and production), Houston, Texas; also a director of Riverwood International Corporation and Inter-Regional Financial Group, Inc.
J. Thomas Touchton 55 Managing Partner, The 1987 Witt-Touchton Company (private investment partnership), Tampa, Florida; also a director of 19 Merrill Lynch-sponsored mutual funds
John A. Urquhart 65 President, John A. Urquhart 1991 Associates (management consultants) Fairfield, Connecticut; formerly Senior Vice President, G. E. Industrial & Power Systems, General Electric Company; also a director of Enron Corp., Hubbell, Inc. and Aquarion Company
James O. Welch, Jr. 62 Retired; formerly Vice Chairman, 1976 RJR Nabisco, Inc. and Chairman, Nabisco Brands, Inc.; also a director of Vanguard Group of Investment Companies
The term of office of each director extends to and expires at the next annual meeting of shareholders, scheduled to be held on April 19, 1994, and until a successor is elected and qualified. At present, all the directors of the company are also directors of TECO Energy.
(b) Information concerning the current executive officers of the company is as follows: Current Positions and Principal Occupations Name Age During Last Five Years
Timothy L. Guzzle 57 Chairman of the Board and Chief Executive Officer, 1991 to date; also Chairman of the Board, President and Chief Executive Officer of TECO Energy, Inc.
Girard F. Anderson 62 President and Chief Operating Officer; also Executive Vice President-Utility Operations of TECO Energy, Inc.
William N. Cantrell 41 Vice President-Energy Resources Planning, 1991 to date; and prior thereto, Vice President-Regulatory Affairs.
Lester L. Lefler 53 Vice President-Controller.
Alan D. Oak 47 Vice President, Treasurer and Chief Financial Officer 1992 to date; and prior thereto Chief Financial Officer; also Senior Vice President-Finance, Treasurer and Chief Financial Officer of TECO Energy, Inc.
William T. Snyder, Jr. 56 Vice President-Customer Services and Marketing.
Keith S. Surgenor 46 Vice President-Human Resources; also Vice President-Human Resources of TECO Energy, Inc.
Robert F. Tomczak 58 Vice President-Production, Operations and Maintenance.
Harry I. Wilson 55 Vice President-Transmission and Distribution.
There is no family relationship between any of the persons named in response to Item 10. The term of office of each officer extends to and expires at the meeting of the Board of Directors following the next annual meeting of shareholders, scheduled to be held on April 19, 1994, and until a successor is elected and qualified.
Item 11.
Item 11. EXECUTIVE COMPENSATION.
The following tables set forth certain compensation information for the Chief Executive Officer of the company and each of the four other most highly compensated executive officers of the company. The share amounts reported below have been restated to reflect the two-for-one stock split on August 30, 1993.
The Compensation Committee of the TECO Energy Board may award options to purchase common stock of TECO Energy and stock appreciation rights (SARs) to officers and key employees of TECO Energy and its subsidiaries, including the company. Information for 1993 with respect to stock options
and stock appreciation rights granted or exercised by the executive officers named in the "Summary Compensation Table" is set forth in the following two tables.
Aggregated Option/SAR Exercises In Last Fiscal Year and Fiscal Year-End Option/SAR Value
Number of Shares Value of Underlying Unexercised Unexercised In-The-Money Options/SARs Options/SARs at Year-End at Year-End Number of Shares Acquired Value Exercisable/ Exercisable/ Name On Exercise Realized Unexercisable Unexercisable
Timothy L. Guzzle 40,000 $357,500 120,000/0 $361,250/0 Girard F. Anderson 22,400 $183,400 72,000/0 $216,750/0 Alan D. Oak 16,000 $153,500 39,000/0 $117,406/0 Keith S. Surgenor 30,000 $267,250 54,000/0 $262,375/0 Robert F. Tomczak 5,000 $ 26,719 9,600/0 $ 18,906/0
Pension Table
The following table shows estimated annual benefits payable under the company's pension plan arrangements for the named executive officers other than Mr. Guzzle.
Years of Service Years of Service Final Three Final Three Years Average Years Average Earnings 15 20 or more Earnings 15 20 or more $100,000 $ 45,000 $ 60,000 $450,000 $202,500 $270,000 150,000 67,500 90,000 500,000 225,000 300,000 200,000 90,000 120,000 550,000 247,500 330,000 250,000 112,500 150,000 600,000 270,000 360,000 300,000 135,000 180,000 650,000 292,500 390,000 350,000 157,500 210,000 700,000 315,000 420,000 400,000 180,000 240,000
The annual benefits payable to each of the named executive officers are equal to a stated percentage of such officer's average earnings for the three years before his retirement multiplied by his number of years of service, up to a stated maximum. The amounts shown in the table are based on 3% of such earnings and a maximum of 20 years of service; the amounts payable to Mr. Guzzle are based on 6% of earnings and a maximum of 10 years of service.
The earnings covered by the pension plan arrangements are the same as those reported as salary and bonus in the summary compensation table above. Years of service for the named executive officers are as follows: Mr. Guzzle (6 years); Mr. Anderson (34 years); Mr. Oak (20 years); Mr. Surgenor (5 years); and Mr. Tomczak (31 years). The pension benefit is computed as a straight-life annuity commencing at age 62 and is reduced by an officer's Social Security benefits. If Mr. Guzzle's employment is terminated by the Corporation without cause or by Mr. Guzzle for good reason (as such terms are defined in Mr. Guzzle's employment agreement referred to below), his age and service for purposes of determining benefits under the pension plan arrangements are increased by two years.
Severance Agreements
TECO Energy has severance agreements with 25 officers of TECO Energy and its subsidiaries, including the five executive officers named above, under which payments will be made under certain circumstances following a change in control of TECO Energy (as defined in the severance agreements). Each officer is required, subject to the terms of the severance agreements, to remain in the employ of TECO Energy or its subsidiaries for one year following a potential change in control (as defined) unless a change in control earlier occurs. The severance agreements provide that in the event employment is terminated by the company or TECO Energy without cause (as defined) or by the officer for good reason (as defined) following a certain change in control, TECO Energy will make a lump sum severance payment to the officer of two times (three times in the cases of Mr. Guzzle, Mr. Anderson, Mr. Oak and Mr. Surgenor) annual salary and bonus. Upon such termination, the severance agreements also provide for: (i) a cash payment equal to the additional retirement benefit which would have been earned under TECO Energy's retirement plans if employment had continued for two years (three years in the cases of Mr. Guzzle, Mr. Anderson, Mr. Oak and Mr. Surgenor) following the date of termination, and (ii) participation in the life, accident and health insurance plans of TECO Energy for such period except to the extent such benefits are provided by a subsequent employer.
Any benefit payable to the officer in connection with a change in control or termination of employment will be reduced to the extent that such payment, together with any other compensation provided by TECO Energy, would not be deductible by TECO Energy, or by any other person making such payment, pursuant to Section 280G of the Internal Revenue Code of 1986.
TECO Energy has an employment agreement with Mr. Guzzle providing that if his employment is terminated by TECO Energy without cause or by Mr. Guzzle for good reason, he will receive benefits
similar to those provided under the severance agreements described above based upon a level of two times annual salary and bonus and a two-year benefit continuation period.
Compensation of Directors
Directors of TECO Energy and the company who are not officers are paid a combined annual retainer of $17,500 ($20,000 effective April 1, 1994) and a fee of $1,000 for attendance at each meeting of the Board of Directors and $500 ($600 for the Committee Chairman) for attendance at each meeting of a Committee of the Board. Directors may elect to defer these amounts with earnings credited at either the 90- day U.S. Treasury bill rate or a rate equal to the total return on TECO Energy's Common Stock.
1991 Director Stock Option Plan. TECO Energy has a Director Stock Option Plan in which all directors of the company and TECO Energy participate except Mr. Guzzle. The plan provides automatic annual grants of options to purchase shares of TECO Energy common stock to each non-employee director serving on the TECO Energy Board at the time of grant. The exercise price is the fair market value of the common stock on the date of grant, payable in whole or in part in cash or TECO Energy common stock. The plan provides for an initial grant of options for 10,000 shares of TECO Energy common stock for each new director following election to the Board and an annual grant of options for 2,000 shares for each continuing director. Annual grants are made on the first trading day of TECO Energy common stock after each annual meeting. The options are exercisable immediately and expire ten years after grant or earlier as provided in the plan following termination of service on the Board.
Directors' Retirement Plan. All Directors who have completed 60 months of service as a Director of TECO Energy and who have not been employees of TECO Energy or any of its subsidiaries are eligible to participate in a Directors' Retirement Plan. Under this plan, a retired Director or his or her surviving spouse will receive a monthly retirement benefit equal to the monthly retainer last paid to such Director for services as a Director of TECO Energy or any of its subsidiaries. Such payments will continue for the lesser of the number of months the Director served as a Director or 120 months, but payments will in any event cease upon the death of the Director or, if the Director's spouse survives the Director, the death of the spouse.
Item 12.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
All outstanding shares of Tampa Electric's common stock are owned by TECO Energy. As of Jan. 31, 1994, none of the directors or executive officers of Tampa Electric or TECO Energy owned any shares of the preferred stock of Tampa Electric.
The following table sets forth the shares of TECO Energy common stock beneficially owned as of Jan. 31, 1994 by directors and nominees, the executive officers named in the summary compensation table and Tampa Electric's directors and executive officers as a group. Except as otherwise noted, such persons have sole investment and voting power over the shares. The number of shares of TECO Energy's common stock beneficially owned by any director or executive officer or by all directors and executive officers as a group does not exceed 1% of such shares outstanding at Jan. 31, 1994.
Name Shares (1)
DuBose Ausley 15,886 Sara L. Baldwin 16,918(2) Hugh L. Culbreath 71,875(3) James L. Ferman, Jr. 21,740(4) Edward L. Flom 16,784(5) Henry R. Guild, Jr. 128,598(6) Timothy L. Guzzle 143,110(7)(8) Charles H. Ross, Jr. 32,000(9) Robert L. Ryan 16,000(10) J. Thomas Touchton 18,000(11) John A. Urquhart 15,150(12) James O. Welch, Jr. 22,600(13) Girard F. Anderson 103,809(7)(14) Alan D. Oak 67,938(7)(15) Keith S. Surgenor 63,736(7)(16) Robert F. Tomczak 24,846(7)(17) 20 directors and executive officers as a group (including those named above) 870,575(7)(18) __________________
(1) The amounts listed include the following shares that are subject to options granted under TECO Energy's stock option plans: Mr. Ausley, 12,000 shares; Mrs. Baldwin and Messrs. Culbreath, Ferman, Flom, Guild, Ross, Ryan, Touchton and Welch, 14,000 shares each; Mr. Urquhart, 11,200 shares; Mr. Guzzle, 120,000 shares; Mr. Anderson, 72,000 shares; Mr. Oak, 39,000 shares; Mr. Surgenor, 54,000 shares; Mr. Tomczak, 9,600 shares; and all directors and executive officers as a group, 528,600 shares. (2) Includes 350 shares held by a trust of which Mrs. Baldwin is a trustee. (3) Includes 8,000 shares owned by Mr. Culbreath s wife, as to which shares he disclaims any beneficial interest. (4) Includes 2,584 shares owned jointly by Mr. Ferman and his wife. Also includes 436 shares owned by Mr. Ferman s wife, as to which shares he disclaims any beneficial interest. (5) Includes 1,596 shares owned by Mr. Flom s wife, as to which shares he disclaims any beneficial interest. (6) Includes 108,598 shares held by trusts of which Mr. Guild is a trustee. Of these shares, 49,875 are held for the benefit of Mr. Culbreath and are also included in the number of shares beneficially owned by him.
(7) The amounts listed include the following shares that are held by the benefit plans of TECO Energy for an officer's account: Mr. Guzzle, 1,110 shares; Mr. Anderson, 7,889 shares; Mr. Oak, 8,808 shares; Mr. Surgenor, 1,482 shares; Mr. Tomczak, 9,578 shares; and all directors and executive officers as a group, 55,517 shares. (8) Includes 20,000 shares owned by a Revocable Living Trust of which Mr. Guzzle is a trustee. (9) Includes 12,000 shares owned jointly by Mr. Ross and his wife. Also includes 6,000 shares owned by Mr. Ross' wife, as to which shares he disclaims any beneficial interest. (10) Includes 2,000 shares owned jointly by Mr. Ryan and his wife. (11) Includes 4,000 shares owned by a Revocable Living Trust of which Mr. Touchton is the sole trustee. (12) Includes 1,000 shares owned by Mr. Urquhart's wife, as to which shares he disclaims any beneficial interest. (13) Includes 2,000 shares owned by a charitable foundation of which Mr. Welch is a trustee. (14) Includes 800 shares owned by Mr. Anderson's wife, as to which shares he disclaims any beneficial interest. (15) Includes 20,130 shares owned jointly by Mr. Oak and his wife. (16) Includes 8,162 shares owned jointly by Mr. Surgenor and his wife. (17) Includes 324 shares owned jointly by Mr. Tomczak and his wife. (18) Includes a total of 54,800 shares owned jointly with spouses. Also includes a total of 17,832 shares owned by spouses, as to which shares beneficial interest is disclaimed.
Item 13.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
TECO Energy paid $842,755 for legal services rendered during 1993 by Ausley, McMullen, McGehee, Carothers & Proctor, P.A., of which Mr. Ausley served as the President. The above firm merged with another law firm effective Feb. 1, 1994, and Mr. Ausley is now Chairman of the successor, Macfarlane, Ausley, Ferguson & McMullen.
In addition, reference is made to Note H on page 32.
PART IV
Item 14.
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) 1. Financial Statements - See index on page 17.
2. Financial Statement Schedules - See index on page 17.
3. Exhibits *3.1 Articles of Incorporation (Exhibit 3.1 to Registration Statement No. 2-70653). *3.2 Bylaws as amended on April 16, 1991 (Exhibit 3, Form 10-Q for quarter ended March 31, 1991 of Tampa Electric Company). *4.1 Indenture of Mortgage among Tampa Electric Company, State Street Trust Company and First Savings & Trust Company of Tampa, dated as of Aug. 1, 1946 (Exhibit 7-A to Registration Statement No. 2-6693). *4.2 Ninth Supplemental Indenture, dated as of April 1, 1966, to Exhibit 4.1 (Exhibit 4-k, Registration Statement No. 2-28417). *4.3 Thirteenth Supplemental Indenture, dated as of Jan. 1, 1974, to Exhibit 4.1 (Exhibit 2-g-l, Registration Statement No. 2-51204). *4.4 Sixteenth Supplemental Indenture, dated as of Oct. 30, 1992, to Exhibit 4.1 (Exhibit 7-A, Registration Statement No. 2-6693). *4.5 Eighteenth Supplemental Indenture, dated as of May 1, 1993, to Exhibit 4.1 (Exhibit 4.1, Form 10-Q for the quarter ended June 30, 1993). *4.6 Installment Purchase and Security Contract between the Hillsborough County Industrial Development Authority and Tampa Electric Company, dated as of March 1, 1972 (Exhibit 4.9, Form 10-K for 1986 of Tampa Electric Company). *4.7 First Supplemental Installment Purchase and Security Contract, dated as of Dec. 1, 1974 (Exhibit 4.10, Form 10-K for 1986 of Tampa Electric Company). *4.8 Third Supplemental Installment Purchase Contract, dated as of May 1, 1976 (Exhibit 4.12, Form 10-K for 1986 of Tampa Electric Company). *4.9 Installment Purchase Contract between the Hillsborough County Industrial Development Authority and Tampa Electric Company, dated as of Aug. 1, 1981 (Exhibit 4.13, Form 10-K for 1986 of Tampa Electric Company). *4.10 Amendment to Exhibit A of Installment Purchase Contract, dated as of April 7, 1983 (Exhibit 4.14, Form 10-K for 1989 of Tampa Electric Company). *4.11 Second Supplemental Installment Purchase Contract, dated as of June 1, 1983 (Exhibit 4.16, Form 10-K for 1985 of Tampa Electric Company). *4.12 Third Supplemental Installment Purchase Contract, dated as of Aug. 1, 1989 (Exhibit 4.16, Form 10-K for 1989 of Tampa Electric Company). 4.13 Installment Purchase Contract between the Hillsborough County Industrial Development Authority
and Tampa Electric Company, dated as of Jan. 31, 1984 (Exhibit 4.16, Form 10-K for 1983 of Tampa Electric Company). *4.14 First Supplemental Installment Purchase Contract, dated as of Aug. 2, 1984 (Exhibit 4.17, Form 10-K for 1984 of Tampa Electric Company). *4.15 Second Supplemental Installment Purchase Contract, dated as of July 1, 1993 (Exhibit 4.3, Form 10-Q for the quarter ended June 30, 1993). *4.16 Loan and Trust Agreement among the Hillsborough County Industrial Development Authority, Tampa Electric Company and NCNB National Bank of Florida, dated as of Sept. 24, 1990 (Exhibit 4.1, Form 10-Q for the quarter ended Sept. 30, 1990 of Tampa Electric Company). *4.17 Loan and Trust Agreement, dated as of Oct. 26, 1992 among the Hillsborough County Industrial Development Authority, Tampa Electric Company and NationsBank of Florida, N.A., as trustee (Exhibit 4.2, Form 10-Q for the quarter ended Sept. 30, 1992 of Tampa Electric Company). *4.18 Loan and Trust Agreement, dated as of June 23, 1993, among the Hillsborough County Industrial Development Authority, Tampa Electric Company and NationsBank of Florida, N.A., as trustee (Exhibit 4.2, Form 10-Q for the quarter ended June 30, 1993 of Tampa Electric Company). *10.1 Agreement between Belcher Oil Company and Tampa Electric Company, dated as of Sept. 1, 1987 (Exhibit 10.4, Form 10-K for 1987 of Tampa Electric Company). *10.2 Settlement Agreement between Pyramid Mining, Inc., Pyramid Equipment, Inc. and Tampa Electric Company, dated as of Oct. 7, 1987 (Exhibit 10.5, Form 10-K for 1987 of Tampa Electric Company). *10.3 Coal Mining Lease Contract by and among Cal-Glo Coal, Inc. and Jack Stewart and Tom Gambrel consisting of Underground Coal Mining Lease Contract dated as of May 3, 1967; Assignment of Lease dated as of Feb. 13, 1969; Supplemental Coal Lease dated as of May 13, 1970; Sublease Agreement dated as of Oct. 18, 1972; Amendment to Lease dated as of Jan. 26, 1976; Amendment to Lease dated as of March 31, 1978; and Consent dated as of May 15, 1978 (Exhibit 10.12, Form 10-K for 1986 of Tampa Electric Company). *10.4 Lease and Agreement dated as of July 23, 1979 between Tampa Electric Company and Franklin Street Associates, Ltd. (Exhibit 10.13, Form 10-K for 1986 of Tampa Electric Company). *10.5 1980 Stock Option and Appreciation Rights Plan, as amended on July 18, 1989 (Exhibit 28.1, Form 10-Q for quarter ended June 30, 1989 of TECO Energy, Inc.). *10.6 Directors' Retirement Plan, dated as of Jan. 24, 1985 (Exhibit 10.23, Form 10-K for 1986 of Tampa Electric Company). *10.7 Supplemental Executive Retirement Plan, as amended on July 18, 1989 (Exhibit 10.14, Form 10-K for 1989 of Tampa Electric Company).
*10.8 TECO Energy, Inc. Group Supplemental Executive Retirement Benefits Trust Agreement Amendment and Restatement, dated as of April 27, 1989 (Exhibit 10.15, Form 10-K for 1989 of Tampa Electric Company). *10.9 Annual Incentive Compensation Plan for Tampa Electric Company, as amended on April 27, 1989 (Exhibit 28.1, Form 10-Q for quarter ended March 31, 1989 of Tampa Electric Company). *10.10 TECO Energy, Inc. Group Supplemental Disability Income Plan, dated as of March 20, 1989 (Exhibit 10.19, Form 10-K for 1988 of Tampa Electric Company). *10.11 Forms of Severance Agreements between TECO Energy, Inc. and certain senior executives, dated as of various dates in 1989 (Exhibit 10.18, Form 10-K for 1989 of Tampa Electric Company). *10.12 TECO Energy, Inc. 1990 Equity Incentive Plan (Exhibit 10.1, Form 10-Q for the quarter ended March 31, 1990 of TECO Energy, Inc.). *10.13 TECO Energy, Inc. 1991 Director Stock Option Plan as amended on Jan. 21, 1992 (Exhibit 10.20, Form 10-K for 1991 of Tampa Electric Company). *10.14 Supplemental Executive Retirement Plan for T. L. Guzzle, as amended on July 20, 1993 (Exhibit 10.1, Form 10-Q for the quarter ended Sept. 30, 1993 of Tampa Electric Company). *10.15 Terms of R. H. Kessel's Employment, dated as of Dec. 1, 1989 (Exhibit 10.20, Form 10-K for 1989 of TECO Energy, Inc.). *10.16 Supplemental Executive Retirement Plan for R. H. Kessel, dated as of Dec. 4, 1989 (Exhibit 10.16, Form 10-K for 1989 of TECO Energy, Inc.). *10.17 Supplemental Executive Retirement Plan for H.L. Culbreath, as amended on April 27, 1989 (Exhibit 10.14, Form 10-K for 1989 of TECO Energy, Inc.). *10.18 Supplemental Executive Retirement Plan for A.D. Oak, dated as of July 20, 1993 (Exhibit 10.2, Form 10-Q for the quarter ended Sept. 30, 1993 of Tampa Electric Company). *10.19 Supplemental Executive Retirement Plan for K.S. Surgenor, dated as of July 20, 1993 (Exhibit 10.3, Form 10-Q for the quarter ended Sept. 30, 1993 of Tampa Electric Company). *10.20 Terms of T.L. Guzzle's employment, dated as of July 20, 1993 (Exhibit 10, Form 10-Q for the quarter ended June 30, 1993 of Tampa Electric Company). *10.21 Supplemental Executive Retirement Plan for G.F. Anderson (Exhibit 10.4, Form 10-Q for the quarter ended Sept. 30, 1993 of Tampa Electric Company). *10.22 TECO Energy, Inc. Group Supplemental Retirement Benefits Trust Agreement Amendment and Restatement, dated as of April 27, 1989 as amended by First Amendment to 1989 Restatement dated as of July 20, 1993 (Exhibit 10.5, Form 10-Q for the quarter ended Sept. 30, 1993 of Tampa Electric Company).
12 Ratio of earnings to fixed charges. 23 Consent of Independent Accountants. 24.1 Power of Attorney. 24.2 Certified copy of resolution authorizing Power of Attorney. _____________ * Indicates exhibit previously filed with the Securities and Exchange Commission and incorporated herein by reference. Exhibits filed with periodic reports of Tampa Electric Company and TECO Energy, Inc. were filed under Commission File Nos. 1-5007 and 1-8180, respectively.
Executive Compensation Plans and Arrangements
Exhibits 10.5 through 10.22 above are management contracts or compensatory plans or arrangements in which executive officers or directors of TECO Energy, Inc. and its subsidiaries participate.
(b) The company filed no reports on Form 8-K during the last quarter of 1993.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, in the city of Tampa and the state of Florida on the 28th day of March, 1994.
TAMPA ELECTRIC COMPANY
By T. L. GUZZLE* T. L. GUZZLE, Chairman of the Board and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons in the capacities indicated on March 28, 1994:
Signature Title
T. L. GUZZLE* Chairman of the Board, T. L. GUZZLE Director and Chief Executive Officer (Principal Executive Officer)
A. D. OAK* Vice President, Treasurer A. D. OAK and Chief Financial Officer (Principal Financial Officer)
/s/ L. L. LEFLER Vice President-Controller L. L. LEFLER
C. D. AUSLEY* Director C. D. AUSLEY
S. L. BALDWIN* Director S. L. BALDWIN
H. L. CULBREATH* Director H. L. CULBREATH
J. L. FERMAN, JR.* Director J. L. FERMAN, JR.
E. L. FLOM* Director E. L. FLOM
H. R. GUILD, JR.* Director H. R. GUILD, JR.
C. H. ROSS, JR.* Director C. H. ROSS, JR.
R. L. RYAN* Director R. L. RYAN
J. T. TOUCHTON* Director J. T. TOUCHTON
J. A. URQUHART* Director J. A. URQUHART
J. O. WELCH, JR.* Director J. O. WELCH, JR.
*By: /s/ L. L. LEFLER L. L. LEFLER, Attorney-in-fact
INDEX TO EXHIBITS
Exhibit Page No. Description No.
3.1 Articles of Incorporation (Exhibit 3.1 to * Registration Statement No. 2-70653). 3.2 Bylaws as amended on April 16, 1991 * (Exhibit 3, Form 10-Q for quarter ended March 31, 1991 of Tampa Electric Company). 4.1 Indenture of Mortgage among Tampa Electric * Company, State Street Trust Company and First Savings & Trust Company of Tampa, dated as of Aug. 1, 1946 (Exhibit 7-A to Registration Statement No. 2-6693). 4.2 Ninth Supplemental Indenture, dated as of * April 1, 1966, to Exhibit 4.1 (Exhibit 4-k, Registration Statement No. 2-28417). 4.3 Thirteenth Supplemental Indenture, dated as of * Jan. 1, 1974, to Exhibit 4.1 (Exhibit 2-g-l, Registration Statement No. 2-51204). 4.4 Sixteenth Supplemental Indenture, dated as of * Oct. 30, 1992, to Exhibit 4.1 (Exhibit 7-A, Registration Statement No. 2-6693). 4.5 Eighteenth Supplemental Indenture, dated as of May 1, * 1993, to Exhibit 4.1 (Exhibit 4.1, Form 10-Q for the quarter ended June 30, 1993). 4.6 Installment Purchase and Security Contract * between and the Hillsborough County Industrial Development Authority and Tampa Electric Company, dated as of March 1, 1972 (Exhibit 4.9, Form 10-K for 1986 of Tampa Electric Company). 4.7 First Supplemental Installment Purchase and * Security Contract, dated as of Dec. 1, 1974 (Exhibit 4.10, Form 10-K for 1986 of Tampa Electric Company). 4.8 Third Supplemental Installment Purchase Contract, * dated as of May 1, 1976 (Exhibit 4.12, Form 10-K for 1986 of Tampa Electric Company). 4.9 Installment Purchase Contract between the * Hillsborough County Industrial Development Authority and Tampa Electric Company, dated as of Aug. 1, 1981 (Exhibit 4.13, Form 10-K for 1986 of Tampa Electric Company). 4.10 Amendment to Exhibit A of Installment Purchase * Contract, dated as of April 7, 1983 (Exhibit 4.14, Form 10-K for 1989 of Tampa Electric Company). 4.11 Second Supplemental Installment Purchase Contract, * dated as of June 1, 1983 (Exhibit 4.16, Form 10-K for 1985 of Tampa Electric Company). 4.12 Third Supplemental Installment Purchase Contract, * dated as of Aug. 1, 1989 (Exhibit 4.16, Form 10-K for 1989 of Tampa Electric Company).
4.13 Installment Purchase Contract between the 61 Hillsborough County Industrial Development Authority and Tampa Electric Company, dated as of Jan. 31, 1984 (Exhibit 4.16, Form 10-K for 1983 of Tampa Electric Company). 4.14 First Supplemental Installment Purchase Contract, * dated as of Aug. 2, 1984 (Exhibit 4.17, Form 10-K for 1984 of Tampa Electric Company). 4.15 Second Supplemental Installment Purchase Contract, * dated as of July 1, 1993 (Exhibit 4.3, Form 10-Q for the quarter ended June 30, 1993). 4.16 Loan and Trust Agreement among the Hillsborough * County Industrial Development Authority, Tampa Electric Company and NCNB National Bank of Florida, dated as of Sept. 24, 1990 (Exhibit 4.1, Form 10-Q for the quarter ended Sept. 30, 1990 of Tampa Electric Company). 4.17 Loan and Trust Agreement, dated as of * Oct. 26, 1992 among the Hillsborough County Industrial Development Authority, Tampa Electric Company and NationsBank of Florida, N.A., as trustee (Exhibit 4.2, Form 10-Q for the quarter ended Sept. 30, 1992 of Tampa Electric Company). 4.18 Loan and Trust Agreement, dated as of June 23, * 1993, among the Hillsborough County Industrial Development Authority, Tampa Electric Company and NationsBank of Florida, N.A., as trustee (Exhibit 4.2, Form 10-Q for the quarter ended June 30, 1993 of Tampa Electric Company). 10.1 Agreement between Belcher Oil Company and * Tampa Electric Company, dated as of Sept. 1, 1987 (Exhibit 10.4, Form 10-K for 1987 of Tampa Electric Company). 10.2 Settlement Agreement between Pyramid Mining, Inc., * Pyramid Equipment, Inc. and Tampa Electric Company, dated as of Oct. 7, 1987 (Exhibit 10.5, Form 10-K for 1987 of Tampa Electric Company). 10.3 Coal Mining Lease Contract by and among * Cal-Glo Coal, Inc. and Jack Stewart and Tom Gambrel consisting of Underground Coal Mining Lease Contract dated as of May 3, 1967; Assignment of Lease dated as of Feb. 13, 1969; Supplemental Coal Lease dated as of May 13, 1970; Sublease Agreement dated as of Oct. 18, 1972; Amendment to Lease dated as of Jan. 26, 1976; Amendment to Lease dated as of March 31, 1978; and Consent dated as of May 15, 1978 (Exhibit 10.12, Form 10-K for 1986 of Tampa Electric Company). 10.4 Lease and Agreement dated as of July 23, 1979 * between Tampa Electric Company and Franklin Street Associates, Ltd. (Exhibit 10.13, Form 10-K for 1986 of Tampa Electric Company). 10.5 1980 Stock Option and Appreciation Rights Plan, * as amended on July 18, 1989 (Exhibit 28.1, Form 10-Q for quarter ended June 30, 1989 of TECO Energy, Inc.).
10.6 Directors' Retirement Plan, dated as of * Jan. 24, 1985 (Exhibit 10.23, Form 10-K for 1986 of Tampa Electric Company). 10.7 Supplemental Executive Retirement Plan, as amended * on July 18, 1989 (Exhibit 10.14, Form 10-K for 1989 of Tampa Electric Company). 10.8 TECO Energy, Inc. Group Supplemental Executive * Retirement Benefits Trust Agreement Amendment and Restatement, dated as of April 27, 1989 (Exhibit 10.15, Form 10-K for 1989 of Tampa Electric Company). 10.9 Annual Incentive Compensation Plan for Tampa * Electric Company, as amended on April 27, 1989 (Exhibit 28.1, Form 10-Q for quarter ended March 31, 1989 of Tampa Electric Company). 10.10 TECO Energy, Inc. Group Supplemental Disability * Income Plan, dated as of March 20, 1989 (Exhibit 10.19, Form 10-K for 1988 of Tampa Electric Company). 10.11 Forms of Severance Agreements between TECO Energy, Inc. * and certain senior executives, dated as of various dates in 1989 (Exhibit 10.18, Form 10-K for 1989 of Tampa Electric Company). 10.12 TECO Energy, Inc. 1990 Equity Incentive Plan * (Exhibit 10.1, Form 10-Q for the quarter ended March 31, 1990 of TECO Energy, Inc.). 10.13 TECO Energy, Inc. 1991 Director Stock Option Plan * as amended on Jan. 21, 1992 (Exhibit 10.20, Form 10-K for 1991 of Tampa Electric Company). 10.14 Supplemental Executive Retirement Plan for * T. L. Guzzle, as amended on July 20, 1993 (Exhibit 10.1, Form 10-Q for the quarter ended Sept. 30, 1993 of Tampa Electric Company). 10.15 Terms of R. H. Kessel's Employment, dated as of * Dec. 1, 1989 (Exhibit 10.20, Form 10-K for 1989 of TECO Energy, Inc.). 10.16 Supplemental Executive Retirement Plan for * R. H. Kessel, dated as of Dec. 4, 1989 (Exhibit 10.16, Form 10-K for 1989 of TECO Energy, Inc.). 10.17 Supplemental Executive Retirement Plan for * H.L. Culbreath, as amended on April 27, 1989 (Exhibit 10.14, Form 10-K for 1989 of TECO Energy, Inc.). 10.18 Supplemental Executive Retirement Plan for * A.D. Oak, dated as of July 20, 1993 (Exhibit 10.2, Form 10-Q for the quarter ended Sept. 30, 1993 of Tampa Electric Company). 10.19 Supplemental Executive Retirement Plan for * K.S. Surgenor, dated as of July 20, 1993 (Exhibit 10.3, Form 10-Q for the quarter ended Sept. 30, 1993 of Tampa Electric Company). 10.20 Terms of T.L. Guzzle's employment, dated * as of July 20, 1993 (Exhibit 10, Form 10-Q for the quarter ended June 30, 1993 of Tampa Electric Company).
10.21 Supplemental Executive Retirement Plan for * G.F. Anderson (Exhibit 10.4, Form 10-Q for the quarter ended Sept. 30, 1993 of Tampa Electric Company). 10.22 TECO Energy, Inc. Group Supplemental * Retirement Benefits Trust Agreement Amendment and Restatement, dated as of April 27, 1989 as amended by First Amendment to 1989 Restatement dated as of July 20, 1993 (Exhibit 10.5, Form 10-Q for the quarter ended Sept. 30, 1993 of Tampa Electric Company). 12 Ratio of earnings to fixed charges. 88 23 Consent of Independent Accountants. 89 24.1 Power of Attorney. 90 24.2 Certified copy of resolution authorizing Power 92 of Attorney. _____________
* Indicates exhibit previously filed with the Securities and Exchange Commission and incorporated herein by reference. Exhibits filed with periodic reports of Tampa Electric Company and TECO Energy, Inc. were filed under Commission File Nos. 1-5007 and 1-8180, respectively.