Exhibit 99.1

 

 

FOR IMMEDIATE RELEASE

TECO ENERGY REPORTS THIRD-QUARTER RESULTS

Results reflect the loss related to the pending sale of TECO Coal

Company narrows 2014 earnings-per-share guidance range to $1.00 to $1.05

TAMPA, Fla. (Oct. 31, 2014) — TECO Energy, Inc. (NYSE:TE) today reported third-quarter 2014 net income of $11.1 million, or $0.04 per share, compared with $62.8 million, or $0.29 per share, in the third quarter of 2013. Net income from continuing operations was $73.0 million, or $0.32 per share, in the 2014 third quarter, compared with $64.3 million, or $0.30 per share, for the same period in 2013. Earnings per share reflect approximately $0.02 of dilution from the issuance of 16.7 million shares of TECO Energy common stock early in the third quarter to finance the Sept. 2 acquisition of New Mexico Gas Co. (NMGC).

As a result of the previously announced agreement to sell TECO Coal (see the Discontinued Operations section later in this release), those operations have been classified as discontinued operations, which for the quarter include TECO Coal’s operating results, a $64.8 million after-tax impairment charge and consolidated tax adjustments.

Third-quarter non-GAAP results from continuing operations, which exclude $0.9 million of transaction and integration costs associated with the acquisition of NMGC, net of tax items, were $73.9 million, or $0.32 on a per-share basis, compared with $66.4 million, or $0.31 on a per-share basis in 2013.

Year-to-date net income was $119.6 million, or $0.54 per share, compared with net income of $155.7 million, or $0.72 per share, in the 2013 period. Net income from continuing operations was $179.0 million, or $0.81 per share, compared with $153.3 million, or $0.71 per share in the 2013 period. Year-to-date earnings per share were reduced approximately $0.01 from the dilution discussed above.

The year-to-date $59.4 million loss in discontinued operations includes the operating results from TECO Coal, the impairment charge and tax adjustments discussed above, and a $3.1 million benefit related to the favorable resolution of an indemnification provision associated with the 2012 sale of TECO Guatemala.

Year-to-date non-GAAP results from continuing operations, which exclude $5.7 million of costs net of tax benefits associated with the acquisition of NMGC, were $184.7 million, or $0.84 on a per-share basis, compared with $157.2 million, or $0.73 on a per-share basis in 2013.

TECO Energy President and Chief Executive Officer John Ramil said, “Our third quarter was a transformational quarter for TECO Energy. In addition to the strong operating performance of our Florida utilities, we expanded our utility operations with our NMGC acquisition. With the expected strong seasonal fourth-quarter results, we expect NMGC to be accretive to full-year results. In addition, the agreement to sell TECO Coal, will, upon closing, complete our return to our utility foundation.”

 

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Non-GAAP Results

Non-GAAP results from continuing operations in the third quarter and year-to-date periods of 2014 exclude transaction and implementation costs associated with the acquisition of NMGC.

The table below compares the TECO Energy GAAP net income with the non-GAAP measures used in this release. Non-GAAP results exclude charges and gains contained in the Results Reconciliation table later in this release. See the Non-GAAP Presentation section and Results Reconciliation table later in this release for reconciliation to GAAP results and a discussion regarding this presentation of non-GAAP results and management’s use of this information.

All amounts included in the non-GAAP table below are after tax.

 

		Results Comparisons
		3 months ended Sept. 30								9 months ended Sept. 30								12 months ended Sept. 30
(millions)		2014				2013				2014				2013				2014				2013
Net income		$	11.1			$	62.8			$	119.6			$	155.7			$	161.6			$	200.8
Discontinued operations			(61.9	)			(1.5	)			(59.4	)			2.4				(52.9	)			12.6
Net income from continuing operations			73.0				64.3				179.0				153.3				214.5				188.2
Costs associated with the acquisition of NMGC			0.9				2.1				5.7				3.9				8.0				3.9
Non-GAAP Results from continuing operations		$	73.9			$	66.4			$	184.7			$	157.2			$	222.5			$	192.1

Segment Reporting

The table below includes TECO Energy segment information on a GAAP basis, which includes all charges and gains for the periods shown.

 

Segment Information		3 months ended Sept. 30								9 months ended Sept. 30								12 months ended Sept. 30
(millions)
Net Income Summary		2014				2013				2014				2013				2014				2013
Tampa Electric		$	79.7			$	68.7			$	187.1			$	151.1			$	226.9			$	187.3
Peoples Gas System			4.8				5.4				26.9				27.1				34.5				34.2
New Mexico Gas Company			(0.9	)			—				(0.9	)			—				(0.9	)			—
Parent & other			(10.6	)			(9.8	)			(34.1	)			(24.9	)			(46.0	)			(33.3	)
Net income from continuing operations			73.0				64.3				179.0				153.3				214.5				188.2
Discontinued operations (1)			(61.9	)			(1.5	)			(59.4	)			2.4				(52.9	)			12.6
Total net income attributable to TECO Energy		$	11.1			$	62.8			$	119.6			$	155.7			$	161.6			$	200.8

 

(1)

In the three- and nine-months ended 2014 periods, discontinued operations include the operating results at TECO Coal, a $64.8 million impairment charge, including a $3.1 million negative valuation allowance for Kentucky tax benefits, and a $2.9 million tax benefit recorded at Parent & other. In the 9- and 12-months ended 2014 periods, discontinued operations also included a $3.1 million benefit related to TECO Guatemala described above.

 

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All amounts included in the operating company discussions below are after tax, unless otherwise noted.

Tampa Electric

Tampa Electric’s net income for the third quarter of 2014 was $79.7 million, compared with $68.7 million for the same period in 2013. Results for the quarter reflected the benefits of the rate case settlement effective Nov. 1, 2013, a 1.6% higher average number of customers, and higher energy sales due to customer growth and favorable summer weather patterns. Results also reflect $0.8 million lower earnings on assets recovered through the Environmental Cost Recovery Clause (ECRC) due to a lower current weighted average cost of capital, which includes the lower return on equity (ROE) from the 2013 rate case settlement. Results reflected higher operations and maintenance expenses, partially offset by lower depreciation expense. Third-quarter net income in 2014 included $2.9 million of Allowance for Funds Used During Construction (AFUDC) equity, which represents allowed equity cost capitalized to construction costs, compared with $1.8 million in the 2013 quarter.

Total degree days in Tampa Electric’s service area in the third quarter of 2014 were essentially normal, and unchanged from the 2013 period. Total net energy for load, which is a calendar measurement of retail energy sales rather than a billing-cycle measurement, increased 2.3% in the third quarter of 2014 compared with the same period in 2013, driven by customer growth and August weather that was warmer and drier than normal and 2013, partially offset by September weather that was cooler and wetter than normal. In the 2014 period, pretax base revenues were approximately $23.0 million higher than in 2013, including approximately $15 million of higher revenue as a result of the 2013 rate case settlement. (The quarterly energy sales shown on the statistical summary that accompanies this earnings release reflect the energy sales based on the timing of billing cycles, which can vary period to period.) Sales to residential customers increased primarily from customer growth and the weather patterns discussed above. Sales to commercial and non-phosphate industrial customers increased due to the improving economy. Sales to lower-margin industrial-phosphate customers decreased as self-generation by those customers increased.

Operations and maintenance expense, excluding all Florida Public Service Commission (FPSC)-approved cost-recovery clauses, was $2.8 million higher than in the 2013 quarter. These results reflect $1.8 million of higher cost to reliably serve customers and operate and maintain the system and $2.2 million higher employee-related costs, including the accrual of performance-based incentive compensation for all employees based on achievement of financial results. These higher costs were partially offset by a $1.2 million benefit from the elimination of the storm-damage accrual as a result of the 2013 rate case settlement, and lower pension expense and lower self-insurance reserves. Depreciation and amortization expense decreased $0.3 million in 2014, primarily as a result of normal additions to facilities to reliably serve customers, more than offset by approximately $1.0 million of lower amortization on software due to the change in expected useful life for software included in the 2013 rate case settlement.

 

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Year-to-date net income was $187.1 million, compared with $151.1 million in the 2013 period, driven primarily by the benefits from the 2013 rate case settlement, 1.7% higher average number of customers, higher energy sales from customer growth, and more favorable weather and a stronger economy, partially offset by higher operations and maintenance and depreciation expenses, and $2.4 million lower earnings on assets recovered through the ECRC. Year-to-date net income in 2014 included $7.3 million of AFUDC equity, compared with $4.3 million in the 2013 period.

Year-to-date total degree days in Tampa Electric’s service area were 2% below normal, and essentially unchanged from the prior year-to-date period. Pretax base revenue was almost $62 million higher than in 2013, including approximately $43 million of higher revenue as a result of the 2013 rate case settlement. In the 2014 year-to-date period, total net energy for load was 1.8% higher than the same period in 2013. Higher energy sales were driven by the same factors as the quarterly sales, and winter weather that was colder than in 2013.

Operations and maintenance expenses, excluding all FPSC-approved cost-recovery clauses, increased $1.0 million in the 2014 year-to-date period reflecting the same factors as in the third quarter. Compared to the 2013 year-to-date period, depreciation and amortization expense increased $2.2 million, reflecting additions to facilities to serve customers, partially offset by approximately $3.0 million of lower amortization on software due to the change in expected useful life for software included in the 2013 rate case settlement.

Peoples Gas

Peoples Gas System reported net income of $4.8 million for the third quarter, compared with $5.4 million in 2013. Average customer growth was 1.9% in the quarter, and therm sales to commercial and industrial customers increased as a result of the stronger Florida economy. Third-quarter results in 2014 reflected almost $1.0 million higher non-fuel operations and maintenance expense driven by higher employee-related costs, including the accrual of performance-based incentive compensation for all employees based on achievement of financial results. Depreciation and amortization increased slightly due to normal additions to facilities to serve customers, partially offset by a change in software amortization similar to Tampa Electric’s discussed above. Sales to power-generation customers and off-system sales decreased due to two power generators not operating and new participants in the off-system sales market.

Peoples Gas reported net income of $26.9 million for the year-to-date period, compared with $27.1 million in the same period in 2013. Results reflect a 1.7% higher average number of customers and higher therm sales to residential and commercial customers due to more-normal winter weather and improving economic conditions. Sales to power generation customers and off-system sales decreased due to the same reasons as in the third quarter. Non-fuel operations and maintenance expense increased $1.4 million compared to the 2013 period, driven by the same factors as in the third quarter, partially offset by a first quarter of 2014 recovery of $1.6 million of costs incurred in connection with a 2010 outage incident.

New Mexico Gas Co.

NMGC reported a typical seasonal loss of $0.9 million for the month of September, which was the first month of operations as a TECO Energy company. Compared to September 2013, customer growth was 0.5%, consisting primarily of residential customers. September weather in New Mexico was slightly milder than normal.

 

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Discontinued Operations – TECO Coal

In September 2014, TECO Energy’s board of directors authorized management to negotiate an agreement to sell TECO Coal, which was signed in October. As a result of this action, TECO Coal was considered to be held for sale as of Sept. 30, 2014 and reported as discontinued operations. A $64.8 million after-tax impairment charge, including a $3.1 million valuation allowance for Kentucky tax benefits, was recorded for TECO Coal in the third quarter of 2014 and reported as a component of the loss from discontinued operations.

Third-quarter results from operations were net income of $0.1 million on sales of 1.3 million tons, compared with a loss of $1.4 million on 1.5 million tons sold in the same period in 2013. In 2014, third-quarter results reflect an average net per-ton selling price, excluding transportation allowances, of $79, almost $3 lower than in 2013. In the third quarter of 2014, the all-in total per-ton cost of sales was $79, compared with almost $84 in the 2013 period.

TECO Coal year-to-date results from operations in 2014 were a net loss of $0.7 million on sales of 4.1 million tons, compared with net income of $2.3 million on 4.2 million tons sold in the 2013 period. The 2014 year-to-date average net per-ton selling price was almost $80, compared with almost $86 in 2013. The all-in total per-ton cost of sales was $81, compared with almost $86 in 2013.

Parent & other

The cost from continuing operations for Parent & other in the third quarter of 2014 was $10.6 million, compared with a cost of $9.8 million in the same period in 2013. The non-GAAP cost from continuing operations for Parent & other in 2014 was $9.7 million, compared with a cost of $7.7 million in 2013. Non-GAAP costs in 2014 excluded $0.9 million of costs, net of tax benefits, associated with the acquisition and integration of NMGC, compared with $2.1 million of NMGC-related costs in 2013. The $0.9 million of NMGC-related costs reflect transaction and integration charges of $8.0 million, and favorable consolidated tax adjustments of $7.1 million. Results in 2014 reflect $0.3 million of interest expense for September related to notes at New Mexico Gas Intermediate, the parent of NMGC, in September.

The 2014 year-to-date cost from continuing operations was $34.1 million, compared with $24.9 million in the 2013 period. The non-GAAP cost from continuing operations for Parent & other was $28.4 million in 2014, which excludes $5.7 million of NMGC acquisition- and integration-related costs, compared with $21.0 million in 2013, which excluded $3.9 million of NMGC acquisition-related costs.

Narrowing 2014 Guidance from Continuing Operations

to a range between $1.00 and $1.05

TECO Energy expects to deliver earnings from continuing operations, excluding non-GAAP charges or gains, in a range between $1.00 and $1.05 in 2014, driven by the factors discussed below.

Tampa Electric expects to earn in the upper half of its authorized allowed ROE range of 9.25% to 11.25%, driven by approximately $50 million of higher base revenues in

 

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2014 as a result of its September 2013 rate case settlement agreement. Based on year-to-date experience, it now expects slightly higher average customer growth of 1.6% and total retail energy sales growth about 0.5% lower than customer growth due to lower average customer usage. Full-year operations and maintenance expenses are expected to be lower than 2013 actual amounts due to lower employee-related costs, lower storm-damage expense accruals and lower pension expense driven by higher discount rate assumptions, partially offset by increased expenses to operate the system and reliably serve customers. Depreciation expense is expected to be higher due to normal additions to facilities to serve customers.

Peoples Gas expects to continue to earn above the middle of its allowed ROE range of 9.75% to 11.75% from moderate customer growth, in line with the trends experienced in 2013. It also expects to benefit from continued interest from customers utilizing petroleum and other fuel sources to convert to natural gas due to the attractive economics.

The expectations for both Tampa Electric and Peoples Gas assume normal weather for the remainder of 2014.

NMGC is expected to deliver seasonally strong financial results for the remainder of 2014 and to be slightly accretive to TECO Energy’s earnings in 2014.

Upon closing of the sale of TECO Coal, TECO Energy expects to record an additional adjustment to consolidated deferred taxes of approximately $13 million to $15 million. This non-GAAP charge will be reflected in continuing operations. In addition, upon closing of the sale of TECO Coal, TECO Energy expects to record a charge of approximately $7.0 million related to certain liabilities in Discontinued Operations.

Non-GAAP Presentation

Management believes it is helpful to present a non-GAAP measure of performance that reflects the ongoing operations of TECO Energy’s businesses and that allows investors to better understand and evaluate the business as it is expected to operate in future periods.

Management and the board of directors use non-GAAP measures as a tool for measuring the company’s performance, for making decisions that are dependent upon the profitability of the company’s various operating units, and for determining levels of incentive compensation.

The non-GAAP measures of financial performance used by the company are not measures of performance under accounting principles generally accepted in the United States and should not be considered an alternative to net income or other GAAP figures as an indicator of the company’s financial performance or liquidity. TECO Energy’s non-GAAP presentation of net income may not be comparable to similarly titled measures used by other companies.

The Results Reconciliation table below presents non-GAAP financial results after eliminating the effects of identified charges and gains. This provides investors additional information to assess the company’s results and future earnings potential.

 

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Results Reconciliation (millions)		3 months ended Sept. 30								9 months ended Sept. 30								12 months ended Sept. 30
		2014				2013				2014				2013				2014				2013
GAAP net income attributable to TECO Energy		$	11.1			$	62.8			$	119.6			$	155.7			$	161.6			$	200.8
Discontinued operations			(61.9	)			(1.5	)			(59.4	)			2.4				(52.9	)			12.6
Net income from continuing operations			73.0				64.3				179.0				153.3				214.5				188.2
Add costs associated with the acquisition of NMGC			0.9				2.1				5.7				3.9				8.0				3.9
Non-GAAP results (1)		$	73.9			$	66.4			$	184.7			$	157.2			$	222.5			$	192.1

 

(1)	A non-GAAP financial measure is a numerical measure that includes or excludes amounts, or is subject to adjustments that have the effect of including or excluding amounts, from the most directly comparable GAAP measure.

Webcast

As previously announced, TECO Energy will host a webcast with the investment community to discuss its quarterly results and outlook for the remainder of 2014 at 9:00 a.m. Eastern time today. The webcast will be accessible through a link on TECO Energy’s website: www.tecoenergy.com. The webcast and accompanying slides will be available for replay for 30 days through the website, beginning approximately two hours after the conclusion of the live event.

TECO Energy Inc. (NYSE: TE) is an energy-related holding company with regulated electric and gas utilities in Florida and New Mexico. Tampa Electric serves more than 700,000 customers in West Central Florida; Peoples Gas System serves more than 350,000 customers across Florida; and New Mexico Gas Co. serves more than 513,000 customers across New Mexico. Other TECO Energy subsidiaries include TECO Coal, which owns and operates coal-production facilities in Kentucky, Tennessee and Virginia.

Note: This press release contains forward-looking statements, which are subject to the inherent uncertainties in predicting future results and conditions. Actual results may differ materially from those forecasted. The forecasted results are based on the company’s current expectations and assumptions, and the company does not undertake to update that information or any other information contained in this press release, except as may be required by law. Factors that could impact actual results include: regulatory actions by federal, state or local authorities; the ability to successfully implement the integration plans for NMGC and generate the financial results to make the acquisition accretive; unexpected capital needs or unanticipated reductions in cash flow that affect liquidity; the ability to access the capital and credit markets when required; general economic conditions affecting energy sales at the utility companies; economic conditions, both national and international, affecting the Florida and New Mexico economies; weather variations and customer energy usage patterns affecting sales and operating costs at the utilities and the effect of weather conditions on energy consumption; the effect of extreme weather conditions or hurricanes; general operating conditions; input commodity prices

 

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affecting cost at all of the operating companies; natural gas demand at the utilities; the ability of TECO Energy’s subsidiaries to operate equipment without undue accidents, breakdowns or failures; and the ability of the purchasers of TECO Coal to obtain suitable financing, for other closing conditions to be satisfied or waived, and for TECO Energy to successfully close the sale transaction. Additional information is contained under “Risk Factors” in TECO Energy, Inc.’s Annual Report on Form 10-K for the period ended Dec. 31, 2013, and as updated in subsequent filings with the SEC.

Summary Information (as of Sept. 30, 2014)

 

		Three Months Ended								Nine Months Ended								Twelve Months Ended
(millions except per share amounts)		2014				2013				2014				2013				2014				2013
Revenues		$	687.2			$	642.1			$	1,870.9			$	1,792.9			$	2,433.1			$	2,346.4
Net income from continuing operations		$	73.0			$	64.3			$	179.0			$	153.3			$	214.5			$	188.2
Net income from discontinued operations attributable to TECO Energy			(61.9	)			(1.5	)			(59.4	)			2.4				(52.9	)			12.6
Net income attributable to TECO Energy		$	11.1			$	62.8			$	119.6			$	155.7			$	161.6			$	200.8
Earnings per share from continuing operations- basic		$	0.32			$	0.30			$	0.81			$	0.71			$	0.97			$	0.87
Earnings per share from discontinued operations attributable to TECO Energy – basic			(0.28	)			(0.01	)			(0.27	)			0.01				(0.24	)			0.06
Total earnings per share attributable to TECO Energy – basic		$	0.04			$	0.29			$	0.54			$	0.72			$	0.73			$	0.93
Total earnings per share – diluted		$	0.04			$	0.29			$	0.54			$	0.72			$	0.73			$	0.93
Average common shares outstanding – basic			227.8				215.2				220.3				214.9				219.1				214.8
Average common shares outstanding – diluted			228.3				215.6				220.8				215.4				219.6				215.3

 

Contact:		News Media: Cherie Jacobs – (813) 228-4945 Investor Relations: Mark Kane – (813) 228-1772 Internet: http://www.tecoenergy.com

 

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SEPTEMBER 2014

Figures appearing in these statements are presented as general information and not in connection with any sale or offer to sell or solicitation of an offer to buy any securities, nor are they intended as a representation by the company of the value of its securities. All figures reported are subject to adjustments as the annual audit by independent accountants may determine to be necessary and to the explanatory notes affecting income and balance sheet accounts contained in the company’s Annual Report on Form 10-K. Reference should also be made to information contained in that and other reports filed by TECO Energy, Inc. and Tampa Electric Company with the Securities and Exchange Commission.

 

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TECO ENERGY, Inc.

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(All significant intercompany transactions have been eliminated in the consolidated financial statements.)

 

		Three Months Ended								Nine Months Ended								Twelve Months Ended
		Sep. 30,								Sep. 30,								Sep. 30,
(millions except share data)		2014				2013				2014				2013				2014				2013
Revenues
Regulated electric and gas		$	685.1			$	639.6			$	1,864.4			$	1,782.7			$	2,424.1			$	2,333.3
Unregulated			2.1				2.5				6.5				10.2				9.0				13.1
Total revenues			687.2				642.1				1,870.9				1,792.9				2,433.1				2,346.4
Expenses
Regulated operations & maintenance
Fuel			204.5				202.8				523.8				517.3				686.6				677.6
Purchased power			21.0				15.7				59.1				50.8				73.0				70.9
Cost of natural gas sold			34.3				26.7				110.5				116.9				135.7				154.2
Other			137.9				127.0				385.3				377.4				532.3				497.7
Operations & maintenance other expense			14.8				3.5				22.6				8.2				26.9				11.5
Depreciation and amortization			78.6				76.1				230.0				222.8				299.1				296.4
Taxes, other than income			50.4				48.6				146.3				139.9				191.1				183.6
Total expenses			541.5				500.4				1,477.6				1,433.3				1,944.7				1,891.9
Income from operations			145.7				141.7				393.3				359.6				488.4				454.5
Other income (expense)
Allowance for other funds used during construction			2.9				1.8				7.3				4.3				9.3				5.3
Other income			1.0				(0.4	)			(0.4	)			2.4				(1.1	)			5.6
Loss on debt extinguishment			0.0				0.0				0.0				0.0				0.0				(1.2	)
Total other income			3.9				1.4				6.9				6.7				8.2				9.7
Interest charges
Interest expense			44.4				40.9				126.8				124.1				167.6				165.7
Allowance for borrowed funds used during construction			(1.5	)			(1.0	)			(3.6	)			(2.5	)			(4.7	)			(3.0	)
Total interest charges			42.9				39.9				123.2				121.6				162.9				162.7
Income before provision for income taxes			106.7				103.2				277.0				244.7				333.7				301.5
Provision for income taxes			33.7				38.9				98.0				91.4				119.2				113.3
Income from continuing operations			73.0				64.3				179.0				153.3				214.5				188.2
Discontinued operations
Income (loss) from discontinued operations			(98.8	)			(2.9	)			(97.6	)			0.0				(92.4	)			10.8
Provision for income taxes			(36.9	)			(1.4	)			(38.2	)			(2.4	)			(39.5	)			(1.8	)
Income (loss) from discontinued operations attributable to TECO Energy, net			(61.9	)			(1.5	)			(59.4	)			2.4				(52.9	)			12.6
Net income attributable to TECO Energy		$	11.1			$	62.8			$	119.6			$	155.7			$	161.6			$	200.8
Average common shares outstanding - basic (millions)			227.8				215.2				220.3				214.9				219.1				214.8
Average common shares outstanding - diluted (millions)			228.3				215.6				220.8				215.4				219.6				215.3
Earnings per average common share outstanding:
Earnings per share from continuing operations — basic		$	0.32			$	0.30			$	0.81			$	0.71			$	0.97			$	0.87
Earnings per share from continuing operations — diluted		$	0.32			$	0.30			$	0.81			$	0.71			$	0.97			$	0.87
Earnings per share from discontinued operations — basic		($	0.28	)		($	0.01	)		($	0.27	)		$	0.01			($	0.24	)		$	0.06
Earnings per share from discontinued operations — diluted		($	0.28	)		($	0.01	)		($	0.27	)		$	0.01			($	0.24	)		$	0.06
Earnings per share attributable to TECO Energy — basic		$	0.04			$	0.29			$	0.54			$	0.72			$	0.73			$	0.93
Earnings per share attributable to TECO Energy — diluted		$	0.04			$	0.29			$	0.54			$	0.72			$	0.73			$	0.93

 

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TECO ENERGY, Inc.

CONSOLIDATED BALANCE SHEETS (Unaudited)

(All significant intercompany transactions have been eliminated in the consolidated financial statements.)

 

		Sep. 30,				Dec. 31,
(millions)		2014				2013
Assets
Current assets
Cash and cash equivalents		$	72.7			$	185.2
Receivables			293.0				287.2
Inventories at average cost
Fuel			92.3				118.7
Materials and supplies			75.0				85.9
Derivative assets			0.2				9.7
Income tax receivables			0.8				1.5
Deferred income taxes			93.6				100.3
Prepayments and other current assets			29.6				34.9
Regulatory assets			24.3				34.3
Assets held for sale			133.7				0.0
Total current assets			815.2				857.7
Property, plant and equipment
Utility plant in service
Electric			7,029.9				6,934.0
Gas			1,950.5				1,308.3
Construction work in progress			545.7				386.7
Other property			14.3				448.3
Property plant and equipment at original cost			9,540.4				9,077.3
Accumulated depreciation			(2,588.0	)			(2,907.2	)
Total property, plant and equipment, net			6,952.4				6,170.1
Other assets
Regulatory assets			342.2				293.1
Goodwill			401.8				0.0
Derivative assets			0.0				0.3
Deferred charges and other assets			63.4				126.8
Assets held for sale			78.6				0.0
Total other assets			886.0				420.2
Total assets		$	8,653.6			$	7,448.0
Liabilities and capital
Current liabilities
Long-term debt due within one year
Recourse		$	274.5			$	83.3
Notes payable			72.0				84.0
Accounts payable		$	231.4			$	261.7
Other current liabilities			17.6				19.5
Customer deposits			174.9				164.5
Derivative liabilities			4.1				0.1
Interest accrued			60.3				31.9
Taxes accrued			76.6				34.6
Regulatory liabilities			65.8				85.8
Liabilities associated with assets held for sale			41.1				0.0
Total current liabilities			1,018.3				765.4
Other liabilities
Deferred income taxes			510.8				444.0
Investment tax credits			9.1				9.4
Regulatory liabilities			727.2				631.4
Derivative liabilities			1.6				0.2
Deferred credits and other liabilities			364.6				426.1
Liabilities associated with assets held for sale			64.4				0.0
Long-term debt, less amount due within one year
Recourse			3,354.8				2,837.8
Total other liabilities			5,032.5				4,348.9
Total liabilities			6,050.8				5,114.3
Capital
Common equity			234.6				217.3
Additional paid in capital			1,867.9				1,581.3
Retained earnings			520.4				548.3
Accumulated other comprehensive (loss)			(20.1	)			(13.2	)
Total capital			2,602.8				2,333.7
Total liabilities and capital		$	8,653.6			$	7,448.0
Book Value Per Share		$	11.09			$	10.74

 

11

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TECO ENERGY, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(All significant intercompany transactions have been eliminated in the consolidated financial statements.)

 

		Three Months Ended								Nine Months Ended								Twelve Months Ended
		Sep. 30,								Sep. 30,								Sep. 30,
(millions)		2014				2013				2014				2013				2014				2013
Cash flows from operating activities
Net income attributable to TECO Energy		$	11.1			$	62.8			$	119.6			$	155.7			$	161.6			$	200.8
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization			86.6				85.4				255.7				251.3				333.9				335.7
Deferred income taxes			(3.3	)			37.0				58.7				89.1				80.0				110.8
Investment tax credits			(0.1	)			(0.1	)			(0.3	)			(0.3	)			(0.3	)			(0.3	)
Allowance for other funds used during construction			(2.9	)			(1.8	)			(7.3	)			(4.3	)			(9.3	)			(5.3	)
Non-cash stock compensation			3.1				3.3				10.2				10.2				13.5				13.7
Loss (gain) on sales of business / assets, pretax			(0.1	)			(0.1	)			(0.2	)			(0.3	)			(1.6	)			3.7
Deferred recovery clause			8.9				2.1				(5.5	)			(3.8	)			(7.8	)			(0.3	)
Asset impairment, pretax			98.4				0.0				98.4				0.0				98.4				(9.0	)
Receivables, less allowance for uncollectibles			10.7				(25.9	)			(25.9	)			(64.4	)			34.0				20.6
Inventories			6.6				22.8				(9.6	)			3.1				(11.6	)			(7.3	)
Prepayments and other current assets			(3.4	)			0.1				(5.5	)			(4.2	)			(3.6	)			(3.0	)
Taxes accrued			14.3				15.9				48.6				44.0				6.0				(2.6	)
Interest accrued			25.3				20.2				27.8				22.2				4.2				(7.3	)
Accounts payable			6.6				(2.4	)			(29.4	)			10.6				(4.1	)			(12.5	)
Other			(16.6	)			(1.0	)			(29.1	)			(2.8	)			(34.6	)			17.5
			245.2				218.3				506.2				506.1				658.7				655.2
Cash flows from investing activities
Capital expenditures			(171.5	)			(121.3	)			(491.8	)			(370.9	)			(653.3	)			(520.8	)
Allowance for other funds used during construction			2.9				1.8				7.3				4.3				9.3				5.3
Purchase of a business, net of cash acquired			(752.5	)			0.0				(752.5	)			0.0				(752.5	)			0.0
Net proceeds from sale of business / assets			0.0				0.1				0.3				0.4				4.2				187.4
Restricted cash			0.0				0.0				0.0				0.0				0.0				8.9
			(921.1	)			(119.4	)			(1,236.7	)			(366.2	)			(1,392.3	)			(319.2	)
Cash flows from financing activities
Dividends			(51.6	)			(47.8	)			(147.5	)			(143.4	)			(195.3	)			(191.0	)
Proceeds from sale of common stock			293.6				0.0				296.6				7.4				295.9				8.1
Proceeds from long-term debt			267.6				0.0				564.2				0.0				564.2				(0.3	)
Repayment of long-term debt / Purchase in lieu of redemption			0.0				(51.6	)			(83.3	)			(51.6	)			(83.3	)			(232.7	)
Net increase (decrease) in short-term debt			72.0				0.0				(12.0	)			0.0				72.0				0.0
Restricted cash			0.0				0.0				0.0				0.0				0.0				(1.9	)
			581.6				(99.4	)			618.0				(187.6	)			653.5				(417.8	)
Net decrease in cash and cash equivalents			(94.3	)			(0.5	)			(112.5	)			(47.7	)			(80.1	)			(81.8	)
Cash and cash equivalents at beginning of period			167.0				153.3				185.2				200.5				152.8				234.6
Cash and cash equivalents at end of period		$	72.7			$	152.8			$	72.7			$	152.8			$	72.7			$	152.8
Non-cash financing activities
Debt assumed from acquisition		$	200.0				0.0			$	200.0				0.0			$	200.0				0.0

 

12

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TECO ENERGY, Inc.

SEGMENT INFORMATION (Unaudited)

 

				Tampa				Peoples				TECO								TECO				Other &				TECO
(millions)				Electric				Gas				Coal				NMGC				Guatemala				Eliminations				Energy
Three months ended Sep. 30,
2014		Revenues - outsiders		$	581.5			$	86.9			$	—			$	16.2			$	—			$	2.6			$	687.2
		Sales to affiliates			0.3				0.0				—				—				—				(0.3	)			—
		Total revenues			581.8				86.9				—				16.2				—				2.3				687.2
		Depreciation and amortization			61.8				13.6				—				2.8				—				0.4				78.6
		Total interest charges (2)			23.8				3.5				—				1.1				—				14.5				42.9
		Allocated interest expense (2)			—				—				—				—				—				—				—
		Provision (Benefit) for income taxes			48.5				3.0				—				(0.5	)			—				(17.3	)			33.7
		Income from continuing operations			79.7				4.8				—				(0.9	)			—				(10.6	)			73.0
		Discontinued operations, net of tax			—				—				(64.8	)			—				—				2.9				(61.9	)
		Net income (loss) (1)		$	79.7			$	4.8			$	(64.8	)		$	(0.9	)		$	—			$	(7.7	)		$	11.1
2013		Revenues - outsiders		$	556.2			$	83.1			$	—			$	—			$	—			$	2.8			$	642.1
		Sales to affiliates			0.2				0.3				—				—				—				(0.5	)			—
		Total revenues			556.4				83.4				—				—				—				2.3				642.1
		Depreciation and amortization			62.2				13.4				—				—				—				0.5				76.1
		Total interest charges (2)			22.8				3.4				—				—				—				13.7				39.9
		Allocated interest expense (2)			—				—				—				—				—				—				—
		Provision (Benefit) for income taxes			42.7				3.4				—				—				—				(7.2	)			38.9
		Income from continuing operations			68.7				5.4				—				—				—				(9.8	)			64.3
		Discontinued operations, net of tax			—				—				(1.4	)			—				—				(0.1	)			(1.5	)
		Net income (loss) (1)		$	68.7			$	5.4			$	(1.4	)		$	—			$	—			$	(9.9	)		$	62.8
Nine months ended Sep. 30,
2014		Revenues - outsiders		$	1,546.9			$	300.0			$	—			$	16.2			$	—			$	7.8			$	1,870.9
		Sales to affiliates			0.8				0.6				—				—				—				(1.4	)			—
		Total revenues			1,547.7				300.6				—				16.2				—				6.4				1,870.9
		Depreciation and amortization			185.6				40.3				—				2.8				—				1.3				230.0
		Total interest charges (2)			69.1				10.3				—				1.1				—				42.7				123.2
		Allocated interest expense (2)			—				—				—				—				—				—				—
		Provision (Benefit) for income taxes			112.2				17.0				—				(0.5	)			—				(30.7	)			98.0
		Income from continuing operations			187.1				26.9				—				(0.9	)			—				(34.1	)			179.0
		Discontinued operations, net of tax			—				—				(65.6	)			—				—				6.2				(59.4	)
		Net income (loss) (1)		$	187.1			$	26.9			$	(65.6	)		$	(0.9	)		$	—			$	(27.9	)		$	119.6
2013		Revenues - outsiders		$	1,476.6			$	306.3			$	—			$	—			$	—			$	10.0			$	1,792.9
		Sales to affiliates			0.7				0.8				—				—				—				(1.5	)			—
		Total revenues			1,477.3				307.1				—				—				—				8.5				1,792.9
		Depreciation and amortization			182.0				39.6				—				—				—				1.2				222.8
		Total interest charges (2)			69.5				10.1				—				—				—				42.0				121.6
		Allocated interest expense (2)			—				—				—				—				—				—				—
		Provision (Benefit) for income taxes			94.0				17.1				—				—				—				(19.7	)			91.4
		Income from continuing operations			151.1				27.1				—				—				—				(24.9	)			153.3
		Discontinued operations, net of tax			—				—				2.3				—				—				0.1				2.4
		Net income (loss) (1)		$	151.1			$	27.1			$	2.3			$	—			$	—			$	(24.8	)		$	155.7
Twelve months ended Sep. 30,
2014		Revenues - outsiders		$	2,019.9			$	386.3			$	—			$	16.2			$	—			$	10.7			$	2,433.1
		Sales to affiliates			1.0				0.7				—				—				—				(1.7	)			—
		Total revenues			2,020.9				387.0				—				16.2				—				9.0				2,433.1
		Depreciation and amortization			242.5				52.1				—				2.8				—				1.7				299.1
		Total interest charges (2)			91.4				13.7				—				1.1				—				56.7				162.9
		Allocated interest expense (2)			—				—				—				—				—				—				—
		Provision (Benefit) for income taxes			135.1				21.9				—				(0.5	)			—				(37.3	)			119.2
		Income from continuing operations			226.9				34.5				—				(0.9	)			—				(46.0	)			214.5
		Discontinued operations, net of tax			—				—				(58.9	)			—				—				6.0				(52.9	)
		Net income (loss) (1)		$	226.9			$	34.5			$	(58.9	)		$	(0.9	)		$	—			$	(40.0	)		$	161.6
2013		Revenues - outsiders		$	1,929.5			$	404.0			$	—			$	—			$	—			$	12.9			$	2,346.4
		Sales to affiliates			0.5				1.8				—				—				—				(2.3	)			—
		Total revenues			1,930.0				405.8				—				—				—				10.6				2,346.4
		Depreciation and amortization			242.4				52.5				—				—				—				1.5				296.4
		Total interest charges (2)			93.1				13.5				—				—				—				56.1				162.7
		Allocated interest expense (2)			—				—				—				—				—				—				—
		Provision (Benefit) for income taxes			117.7				21.6				—				—				—				(26.0	)			113.3
		Income from continuing operations			187.3				34.2				—				—				—				(33.3	)			188.2
		Discontinued operations attributable to TECO Energy, net of tax			—				—				13.1				—				(0.7	)			0.2				12.6
		Net income (loss) attributable to TECO Energy (1)		$	187.3			$	34.2			$	13.1			$	—			$	(0.7	)		$	(33.1	)		$	200.8

 

(1)	Results are based on GAAP net income. For a complete reconciliation between GAAP and non-GAAP items, see Results Reconciliation in Earnings Release.

(2)	Segment net income is reported on a basis that includes internally allocated financing costs. Internally allocated costs were at pretax rates of 6.00% for October 2012 through September 2014.

(3)	All periods have been adjusted to reflect the reclassification of results from operations to discontinued operations for TECO Guatemala, TECO Coal, and certain charges at Parent that directly relate to TECO Guatemala or TECO Coal.

 

13

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TAMPA ELECTRIC COMPANY

ELECTRIC OPERATING STATISTICS (Unaudited)

 

		Operating Revenues*												Sales — Kilowatt-hours*
Three Months Ended Sep. 30,		2014				2013				Percent Change				2014				2013				Percent Change
Residential		$	320,613			$	293,473				9.2				2,779,412				2,674,445				3.9
Commercial			170,329				160,629				6.0				1,773,177				1,714,066				3.4
Industrial — Phosphate			14,012				16,968				(17.4	)			171,992				210,022				(18.1	)
Industrial — Other			27,754				26,195				6.0				310,807				297,204				4.6
Other sales of electricity			48,347				46,149				4.8				493,816				484,735				1.9
			581,055				543,414				6.9				5,529,204				5,380,472				2.8
Deferred and other revenues			(14,573	)			(4,140	)			(252.0	)			—				—				—
Provision for Revenue Stipulation			—				—				—				—				—				—
Sales for resale			1,565				1,569				(0.3	)			38,540				40,959				(5.9	)
Other operating revenue			13,713				15,516				(11.6	)			—				—				—
SO2 Allowance Sales			—				—				—				—				—				—
NOx Allowance Sales			—				—				—				—				—				—
		$	581,760			$	556,359				4.6				5,567,744				5,421,431				2.7
Average customers			707,136				696,141				1.6				—				—				—
Retail Net Energy For Load															5,718,530				5,591,594				2.3
Total Degree Days															1,637				1,630				0.4
		Operating Revenues*												Sales — Kilowatt-hours*
Nine Months Ended Sep. 30,		2014				2013				Percent Change				2014				2013				Percent Change
Residential		$	777,592			$	709,300				9.6				6,691,468				6,461,591				3.6
Commercial			455,358				434,789				4.7				4,653,303				4,568,352				1.9
Industrial — Phosphate			47,275				53,666				(11.9	)			583,776				667,125				(12.5	)
Industrial — Other			78,704				74,984				5.0				876,122				847,594				3.4
Other sales of electricity			136,452				131,878				3.5				1,374,715				1,365,520				0.7
			1,495,381				1,404,617				6.5				14,179,384				13,910,182				1.9
Deferred and other revenues			(1,330	)			19,048				(107.0	)			—				—				—
Provision for Revenue Stipulation			—				—				—				—				—				—
Sales for resale			9,701				6,454				50.3				171,246				170,278				0.6
Other operating revenue			43,950				47,143				(6.8	)			—				—				—
SO2 Allowance Sales			1				—				100.0				—				—				—
NOx Allowance Sales			—				—				—				—				—				—
		$	1,547,703			$	1,477,262				4.8				14,350,630				14,080,460				1.9
Average customers			704,923				693,370				1.7				—				—				—
Retail Net Energy For Load															14,972,532				14,708,543				1.8
Total Degree Days															3,356				3,383				(0.8	)
		Operating Revenues*												Sales — Kilowatt-hours*
Twelve Months Ended Sep. 30,		2014				2013				Percent Change				2014				2013				Percent Change
Residential		$	1,005,126			$	920,698				9.2				8,699,444				8,310,270				4.7
Commercial			601,774				580,016				3.8				6,174,671				6,023,333				2.5
Industrial — Phosphate			65,504				72,929				(10.2	)			812,015				899,228				(9.7	)
Industrial — Other			104,059				99,378				4.7				1,159,976				1,107,747				4.7
Other sales of electricity			181,958				177,964				2.2				1,840,758				1,822,010				1.0
			1,958,421				1,850,985				5.8				18,686,864				18,162,588				2.9
Deferred and other revenues			(8,253	)			5,262				(256.8	)			—				—				—
Provision for Revenue Stipulation			—				—				—				—				—				—
Sales for resale			11,739				9,769				20.2				223,233				220,655				1.2
Other operating revenue			59,026				64,049				(7.8	)			—				—				—
SO2 Allowance Sales			1				—				(100.0	)			—				—				—
NOx Allowance Sales			—				—				—				—				—				—
		$	2,020,934			$	1,930,065				4.7				18,910,097				18,383,243				2.9
Average customers			703,400				691,686				1.7				—				—				—
Retail Net Energy For Load															19,441,831				19,016,774				2.2
Total Degree Days															4,133				4,041				2.3

 

*	in thousands

 

14

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PEOPLES GAS SYSTEM

GAS OPERATING STATISTICS (Unaudited)

 

		Operating Revenues*												Therms*
Three Months Ended Sep. 30,										Percent												Percent
		2014				2013				Change				2014				2013				Change
By Customer Segment:
Residential		$	26,172			$	24,977				4.8				10,652				11,027				(3.4	)
Commercial			30,507				29,070				4.9				101,400				98,217				3.2
Industrial			2,979				3,270				(8.9	)			65,121				63,329				2.8
Off System Sales			12,996				12,546				3.6				29,865				32,332				(7.6	)
Power generation			2,038				2,335				(12.7	)			189,845				189,231				0.3
Other revenues			10,177				9,026				12.8				—				—				—
		$	84,869			$	81,224				4.5				396,883				394,136				0.7
By Sales Type:
System supply		$	48,286			$	46,049				4.9				47,332				50,644				(6.5	)
Transportation			26,406				26,150				1.0				349,551				343,492				1.8
Other revenues			10,177				9,025				12.8				—				—				—
		$	84,869			$	81,224				4.5				396,883				394,136				0.7
Average customers			353,921				347,339				1.9				—				—				—
		Operating Revenues*												Therms*
Nine Months Ended Sep. 30,										Percent												Percent
		2014				2013				Change				2014				2013				Change
By Customer Segment:
Residential		$	106,583			$	96,877				10.0				59,213				56,851				4.2
Commercial			104,764				101,275				3.4				343,283				330,327				3.9
Industrial			9,896				9,905				(0.1	)			201,924				203,049				(0.6	)
Off System Sales			30,826				51,244				(39.8	)			63,765				129,458				(50.7	)
Power generation			5,607				7,931				(29.3	)			494,189				574,583				(14.0	)
Other revenues			36,732				32,194				14.1				—				—				—
		$	294,408			$	299,426				(1.7	)			1,162,374				1,294,268				(10.2	)
By Sales Type:
System supply		$	169,952			$	180,480				(5.8	)			145,429				211,049				(31.1	)
Transportation			87,724				86,752				1.1				1,016,945				1,083,219				(6.1	)
Other revenues			36,732				32,194				14.1				—				—				—
		$	294,408			$	299,426				(1.7	)			1,162,374				1,294,268				(10.2	)
Average customers			353,236				347,179				1.7				—				—				—
		Operating Revenues*												Therms*
										Percent												Percent
Twelve Months Ended Sep. 30,		2014				2013				Change				2014				2013				Change
By Customer Segment:
Residential		$	137,854			$	128,808				7.0				76,732				75,686				1.4
Commercial			136,928				134,811				1.6				451,106				438,115				3.0
Industrial			13,423				13,267				1.2				270,885				271,536				(0.2	)
Off System Sales			36,242				66,795				(45.7	)			77,374				170,178				(54.5	)
Power generation			7,561				10,682				(29.2	)			663,967				757,489				(12.3	)
Other revenues			46,705				41,488				12.6				—				—				—
		$	378,713			$	395,851				(4.3	)			1,540,064				1,713,004				(10.1	)
By Sales Type:
System supply		$	216,280			$	239,924				(9.9	)			183,863				280,258				(34.4	)
Transportation			115,728				114,439				1.1				1,356,201				1,432,746				(5.3	)
Other revenues			46,705				41,488				12.6				—				—				—
		$	378,713			$	395,851				(4.3	)			1,540,064				1,713,004				(10.1	)
Average customers			351,910				346,325				1.6				—				—				—

 

*	in thousands

 

15

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NEW MEXICO GAS COMPANY

GAS OPERATING STATISTICS (Unaudited)

 

		Operating Revenues*								Therms*
Month Ended Sep. 30,		2014				2013		Percent Change		2014				2013				Percent Change
By Customer Segment:
Residential		$	11,085								7,699
Commercial			3,384								3,896
Industrial			113								182
Off System Sales			—								—
On System Transportation			996								20,319
Off System Transportation			85								4,512
Other revenues			530								—
		$	16,193								36,608
By Sales Type:
System supply		$	14,582								11,777
Transportation			1,081								24,831
Other revenues			530								—
		$	16,193								36,608
Average customers			510,250								—				—				—
Total Degree Days											17				38				(55.3	)

 

*	in thousands

 

16