TECO Energy Reports fourth quarter and full year 1999 earnings
TAMPA, January 20, 2000
TECO Energy, Inc. (NYSE/TE) today reported earnings of $1.42 per share for 1999, compared with $1.57 per share in 1998. Reported earnings included the results of discontinued operations, which reduced earnings by $.11 per share in 1999 and added $.02 per share in 1998. Earnings from continuing operations were $1.53 per share in 1999 compared with $1.55 per share in 1998 and included one-time, non-recurring charges of $.15 per share in both 1999 and 1998. Earnings from continuing operations, excluding non-recurring charges, were $1.68 per share in 1999 compared with $1.70 per share in 1998.
Chairman and Chief Executive Officer Robert D. Fagan said, "Since joining TECO in mid-1999, my focus has been to position the company for a return to solid earnings growth." Fagan added, "With the changes we made in 1999 and with the initiatives we now have in place, I am confident of our prospects for achieving our earnings growth targets, and I am pleased with our progress to this point in the new year."
Gordon L. Gillette, Chief Financial Officer, summarized TECO's 1999 results: "Although we had several one-time charges in 1999, we met our stated targets for the third and fourth quarters, and we showed growth in our independent power, transportation and natural gas distribution businesses. We expect continued strong contributions from each of these businesses. Our core electric utility also performed well, with customer growth continuing at 2.5 percent for the year. This performance enabled Tampa Electric to record only slightly lower earnings compared with 1998, when it received a $17.5 million net benefit from deferred revenues under the regulatory agreement. Having resolved several important regulatory issues, we expect Tampa Electric to realize earnings growth from its electric utility operations at a level that reflects its customer growth and retail energy sales growth in 2000."
Full Year 1999 Results
Consolidated earnings from continuing operations before non-recurring charges totaled $220.5 million in 1999 compared with $223.8 million in 1998.
Results at Tampa Electric were lower in 1999, largely driven by recognition of previously deferred revenues in 1998 that were not available in 1999. This comparative decline in revenues was partially offset by higher base revenues from 2.5 percent customer growth. In addition, operating expenses were lower in 1999, primarily the result of continued efficiency improvements in 1999 and expenses in 1998 to enhance system reliability.
Peoples Gas System showed improved results in 1999, reflecting higher revenues from customer growth of 3.7 percent, partially offset by less favorable weather. Operating expenses were lower in 1999 compared with 1998, which included costs associated with management’s decision to discontinue the appliance sales and service business in mid-1998.
Improved results at TECO Power Services reflected growing contributions from the company's operating projects and investments, and capitalization of interest during construction of the San Jose Power Station.
Improved results at TECO Transport reflected a strong government grain program, higher northbound river volumes and lower expenses. These gains were partially offset by continued weakness in the export coal market and by lower coal movements to Tampa Electric in response to reduced electric demand.
Operating results at TECO Coal declined in 1999, reflecting anticipated lower Tampa Electric volumes and revenues. These reductions were partially offset by continued increases in third party volumes along with continued improvements in unit production costs.
Results from TECO Energy's other diversified companies were lower in 1999 compared with 1998, primarily the result of lower contributions from TECO Coalbed Methane with expected lower production levels.
Consolidated interest expense, excluding the effect of a non-recurring charge for income tax settlements, was 10 percent higher in 1999, reflecting increased borrowing levels associated with investments in the operating businesses.
Consolidated 1999 net income totaled $186.1 million and included non-recurring, after-tax charges of $19.6 million affecting continuing operations and a $14.8 million loss related to discontinued operations. Tampa Electric recorded a $3.5-million charge to net income in the fourth quarter, representing management's estimate of additional expense to resolve the pending litigation filed by the U.S. Environmental Protection Agency (EPA). Previous charges in 1999 included an after-tax charge of $6.4 million based on regulatory decisions by the Florida Public Service Commission (FPSC) for audits of Tampa Electric's 1997 and 1998 earnings which limited the company's equity ratio to 58.7 percent. A $6.1-million after-tax charge reflecting corporate income tax provisions and settlements was also recognized during the year, and an after-tax charge of $3.6 million was recorded to adjust the carrying value of the leveraged lease portfolio.
Charges to discontinued operations reflected management's decision in September to exit TeCom’s automated energy management systems business. Results from 1998 were restated to reflect TeCom’s operating losses as discontinued operations.
Net income in 1998 totaled $206.5 million, including non-recurring, after-tax charges totaling $19.6 million and a net gain of $2.3 million from discontinued oil and gas operations and TeCom.
Fourth Quarter Results
Earnings from continuing operations before non-recurring charges for the fourth quarter 1999 were $46.2 million, or $.36 per share, even with 1998's results.
Including non-recurring charges, earnings from continuing operations were $42.7 million in 1999 compared with $42.4 million in 1998. A $3.5 million charge to net income was taken in the fourth quarter 1999, representing management's estimate of additional expense to resolve the pending litigation filed by the EPA. In 1998, an after-tax charge of $4.4 million was recorded at Tampa Electric, reflecting a regulatory ruling that denied recovery of certain quality price adjustments for coal purchases.
Consolidated net income for 1999 was $42.7 million compared with $24.8 million in 1998. Net income in 1998 included a net after-tax charge of $17.6 million for discontinued operations, reflecting operating losses at TeCom and the write-off of a note received from the sale of offshore oil and gas assets earlier in 1998.
TECO Energy is a diversified energy-related holding company headquartered in Tampa, Florida. Its principal businesses are Tampa Electric, Peoples Gas System, TECO Power Services, TECO Transport, 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 Power Services’ ability to successfully develop and operate its projects; TECO Transport’s ability to successfully enter new markets; and Tampa Electric's ability to successfully resolve its pending litigation with the EPA. Some of 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.
|Segment Information (as of December 31):|
|Three months ended||Twelve months ended|
|TECO Power Services||24.6||25.5||109.5||98.6|
|Other diversified companies||35.1 ||26.1 ||109.8 ||110.6 |
|Other/eliminations||(45.2) ||(46.3) ||(177.0) ||(203.4) |
|Consolidated revenues||$490.0 ||$473.8 ||$1,983.0 ||$1,955.6 |
|Operating income before non-recurring charges|
|TECO Power Services||5.2||3.8||17.3||13.0|
|Other diversified companies||11.3 ||9.1 ||33.0 ||37.8 |
|Non-recurring charges||0.0 ||0.0 ||7.9 ||(23.2) |
|Consolidated operating income from continuing operations||$87.8 ||$89.3 ||$423.6 ||$401.3 |
|Net income before non-recurring charges|
|TECO Power Services||4.1||2.9||14.6||9.7|
|Other diversified companies||8.9||7.6||27.3||30.8|
|Other/eliminations||(7.6) ||(4.0) ||(22.2) ||(14.7) |
|Net income before non-recurring charges||46.2||46.8||220.5||223.8|
|Non-recurring charges||(3.5) ||(4.4) ||(19.6) ||(19.6) |
|Net income from continuing operations||42.7||42.4||200.9||204.2|
|Discontinued operations||0.0 ||(17.6) ||(14.8) ||2.3 |
|Net income||$42.7 ||$24.8 ||$186.1 ||$206.5 |
|Tampa Electric's revenues for the 12-month period ended December 31, 1999 excluded $7.9 million related to the impact of non-recurring items recognized in the third quarter.|
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.
Amounts from 1998 were restated to reflect TeCom's results as discontinued operations.