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News Release

TECO Energy Reports third quarter earnings from continuing operations of $.42 per share

TAMPA, October 15, 1999

TECO Energy, Inc. (NYSE/TE) today reported third-quarter earnings from continuing operations of $.42 per share compared with $.54 per share in 1998. Excluding one-time charges recorded in 1999’s third quarter, earnings from continuing operations were level with last year at $.54 per share. These per share results were not affected by the company’s stock repurchase program that began in late September.

Net income from continuing operations for the quarter was $55.9 million, or $72.0 million before one-time charges, showing slight improvement over the $71.2 million for the same period last year. Net income, including the effects of discontinued operations, was $42.2 million, compared with last year’s net income of $70.8 million.

Year-to-date income from continuing operations was $158.2 million, compared with $161.8 million last year. Excluding one-time charges, year-to-date income from continuing operations was $174.3 million, compared with last year’s $177.0 million. Including the effects of discontinued operations, year-to-date net income was $143.4 million compared with $181.7 million last year.

Robert D. Fagan, TECO Energy’s president and chief executive officer, said, "The reported quarterly results don’t fully reflect the solid underlying fundamentals of our company because of the one-time charges and a decision to exit our small, high-tech energy systems business. The focus for the balance of 1999 will be to ensure that we have the necessary elements in place to deliver the strong earnings growth we expect to achieve next year and beyond."

In the third quarter, one-time charges totaling $16.1 million to continuing operations and $13.7 million related to discontinued operations were taken.
A one-time charge of $6.4 million after-tax was recorded at Tampa Electric. This charge was based on recent regulatory decisions by the Florida Public Service Commission for audits of the company’s 1997 and 1998 earnings which limited Tampa Electric’s equity ratio to 58.7 percent. A $6.1-million after tax charge reflecting corporate income tax provisions and settlements was also recognized this quarter. A charge of $3.6 million after-tax was recorded to adjust the carrying value of the leveraged lease portfolio.

The one-time charge to discontinued operations reflects a recent decision by management to exit TeCom’s automated energy management systems business. Fagan said, "TeCom has done a good job developing a number of innovative energy-related products, but it does not have the right distribution channels to effectively reach the market. So we’ve decided to exit that business." Results from last year were restated to reclassify TeCom’s operating losses as discontinued operations.

Segment Operating Results
Tampa Electric’s operating income for the third quarter, excluding one-time charges, was $96.7 million on revenues of $358.6 million, compared with $94.6 million and $353.7 million for the same period last year. Quarterly revenue comparisons reflect recognition of $11.8 million of previously deferred revenues in 1998 that were not available in 1999 under the current regulatory agreement. Deferred revenues recognized in 1998’s third quarter were partially offset by $6.1 million in temporary base rate reductions.

The company showed improved results as a result of revenue growth and effective cost control. Customer growth remained strong at 2.4 percent for the quarter and was 2.5 percent for the nine-month period, which helped drive revenues higher than last year despite more favorable weather in 1998 than in 1999 and the recognition of deferred revenues in 1998. Included in Tampa Electric’s results from continuing operations before one-time charges are the effects through the third quarter of adjusting the company’s 1999 equity ratio to the 58.7 percent mandated by the Commission for 1997 and 1998.

Tampa Electric’s year-to-date operating income, excluding one-time charges, was $220.0 million compared with $231.0 million last year. Revenues were $923.8 million, compared with $948.0 million last year, which included recognition in 1998 of previously deferred revenues of $31.7 million, partially offset by a temporary base rate reduction of $15.6 million. Off-system sales were lower this year, primarily as a result of warmer winter weather in the first quarter compared to 1998.

Peoples Gas System reported operating income of $6.4 million and revenues of $57.2 million for the quarter compared with operating income of $3.2 million and revenues of $49.6 million last year. Quarterly results reflect increased sales volumes and strong customer growth of 3.9 percent, along with substantial expense savings from last year’s restructuring.

Year-to-date results at Peoples Gas System improved 28 percent over last year, with operating income increasing to $29.7 million, versus $23.3 million last year. Year-to-date customer growth of 3.2 percent partially offset the effects of mild winter weather for the year, with revenues totaling $185.1 million this year, compared with $188.2 million in 1998. Expense savings from last year’s restructuring also favorably impacted current year results.

TECO Transport reported operating income of $12.2 million and revenues of $65.1 million in the third quarter, compared with operating income of $11.9 million and revenues of $61.0 million last year. For the year, operating income was $35.4 million and revenues were $183.5 million, compared with $30.5 million and $171.4 million in 1998. Driving the current period’s more favorable results were a strong increase in grain shipments and higher northbound volumes, partially offset by lower movements to Tampa Electric in response to reduced coal shipment needs earlier in the year.

In 1998, delays and temporary tow restrictions associated with flooding along the river system unfavorably affected earnings. Weakness in the export coal and petroleum coke markets, however, has continued through the third quarter of 1999.

TECO Power Services’ operating income for the quarter was $3.7 million, compared with $2.6 million last year, and revenues were $32.2 million compared with last year’s $29.3 million. Year-to-date, operating income was $12.1 million, compared with $9.2 million last year, and revenues were $84.9 million compared with $73.1 million last year.

Improvements for the quarter and year-to-date periods reflected contributions from the company’s recent growth initiatives and capitalization of interest during construction on the company’s investment in the San Jose Power Station.

TECO Coal achieved third-quarter operating income of $5.5 million, down from $8.3 million last year. Revenues were $60.5 million, compared with $62.5 million last year. Year to date, operating income was $15.7 million on revenues of $172.9 million, compared with operating income of $17.7 million on revenues of $173.6 million in 1998.

Operating income for 1998 excluded a one-time pretax charge of $13.6 million for asset valuation adjustments. Higher third-party coal sales and continued lower unit production costs in 1999 were more than offset by lower revenues from the expected reductions in Tampa Electric volumes.

TECO Energy’s other diversified companies recorded operating income of $8.3 million for the third quarter on revenues of $28.1 million. This compares with operating income of $9.6 million on revenues of $28.9 million for the same period last year. Year-to-date operating income and revenues were $21.7 million and $74.6 million, compared with $28.7 million and $84.5 million last year. These amounts have been restated to exclude the results of TeCom.

Results at TECO Coalbed Methane were even with last year for the quarter and reflected improved gas prices along with lower operating expenses, which offset production declines of 5.3 percent. Year-to-date results at TECO Coalbed Methane were $4.9 million below last year, reflecting production declines of 6.5 percent and average gas prices that were almost 12 percent below last year. The 1998 results for TECO Energy’s other diversified companies also reflected gains at TECO Properties on the sale of real estate investments in 1998.

TECO Energy is a diversified energy-related holding company headquartered in Tampa. Its principal businesses are Tampa Electric, Peoples Gas System, TECO Transport, TECO Power Services, TECO Coal, TECO Coalbed Methane, Peoples Gas Company and Bosek, Gibson and Associates.


This press release contains forward-looking statements which are subject to the inherent uncertainties in predicting future results and conditions. Certain factors that could cause actual results to differ materially from those projected in these forward-looking statements include the following: general economic conditions, particularly those in Tampa Electric's service area affecting energy sales; weather variations affecting energy sales and operating costs; potential competitive changes in the electric and gas industries, particularly in the area of retail competition; regulatory actions affecting Tampa Electric and Peoples Gas System; commodity price changes affecting the competitive positions of Tampa Electric and the Peoples Gas companies as well as the margins at TECO Coalbed Methane and TECO Coal; changes in and compliance with environmental regulations that may impose additional costs or curtail some activities; TECO Energy's ability to successfully implement the stock repurchase program; TECO Power Services' ability to successfully develop and operate its projects; and TECO Transport's ability to successfully enter new markets and complete acquisitions. These factors are discussed more fully under "Investment Considerations" in the company's Annual Report on Form 10-K for the year-ended December 31, 1998, and reference is made thereto.

Summary information (as of September 30):

Three months ended Nine months ended Twelve months ended
(millions except per share amounts)1999 1998 1999 1998 1999 1998
Revenues$ 555.9$ 525.3$1,493.0$1,481.8$1,968.9$1,937.5
Net income from continuing
operations (after one-time
charges) (1)
$ 55.9$ 71.2$ 158.2$ 161.8$ 200.6$ 204.4
Net income (loss) from
discontinued operations
(.7)(.4)(2.5)(2.3)(3.9)(2.3)
Gain (loss) on disposal of
discontinued operations
(132.0)--(12.3)22.2(28.5)20.9
Net income$ 42.2
–––––––
$ 70.8
–––––––
$ 143.4
–––––––
$ 181.7
–––––––
$ 168.2
–––––––
$ 223.0
–––––––
Earnings per share from continuing
operations - basic (2)
$.42$.54$1.20$1.23$1.52$1.55
Earnings per share from continuing
operations - diluted
$.42$.54$1.19$1.22$1.52$1.54
Earnings per share - basic$.32$.54$1.09$1.38$1.27$1.70
Earnings per share - diluted$.32$.54$1.08$1.37$1.27$1.69
Average common shares
outstanding - basic
131.9131.8132.0131.7131.9131.5
Average common shares
outstanding - diluted
132.0132.2132.2132.2132.3131.9
1. NI from continuing oper.
(before one-time charges)
$72.0$71.2$174.3$177.0$221.3$221.5
2. EPS from continuing oper.
(before one-time charges)
$.54$.54$1.32$1.34$1.68$1.68

Summary information (as of September 30):

Three months ended Nine months ended Twelve months ended
(in millions)

Operating Income Summary:

1999 1998 1999 1998 1999 1998
Oper. inc. before one-time charges
Tampa Electric$ 96.7$ 94.6$ 220.0$ 231.0$ 268.6$ 278.1
Peoples Gas System6.43.229.723.342.331.3
TECO Transport12.211.935.430.548.142.1
TECO Coal5.58.315.717.721.621.2
TECO Power Services3.72.612.19.215.813.4
Other Diversified Companies8.59.821.728.73.0541.5
133.0130.4334.6340.4426.9427.6
Other/Eliminations(2.1)(1.5)(6.7)(5.2)(10.0)(6.8)
One-time charges7.9--7.9(23.2)7.9(23.2)
Consolidated operating income
from continuing operations
$ 138.8
–––––––
$ 128.9
–––––––
$ 335.8
–––––––
$ 312.0
–––––––
$ 424.8
–––––––
$ 397.6
–––––––
Net Income Summary:
Net inc. before one-time charges
Tampa Electric$ 53.0$ 51.4$ 115.1$ 118.5$ 137.8$ 139.9
Peoples Gas System2.5.513.39.419.412.8
TECO Transport6.86.519.916.827.023.8
TECO Coal4.26.111.713.016.215.9
TECO Power Services3.72.610.46.813.49.4
Other Diversified Companies6.98.018.523.726.132.8
Other/Eliminations(5.1)(3.9)(14.6)(11.2)(18.6)(13.1)
Net income before one-time charges72.071.2174.3177.0221.3221.5
One-time charges(16.1)--(16.1)(15.2)(20.7)(17.1)
Net income from continuing
operations
55.971.2158.2161.8200.6204.4
Discontinued operations(13.7)(.4)(14.8)19.9(32.4)18.6
Net income$ 42.2
–––––––
$ 70.8
–––––––
$ 143.4
–––––––
$ 181.7
–––––––
$168.2
–––––––
$ 223.0
–––––––

Operating income for TECO Power Services was net of interest costs on the company’s limited recourse debt. Operating income for TECO Coalbed Methane included a tax credit on coalbed methane production.

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