UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
December 22, 2004
TECO ENERGY, INC.
(Exact name of registrant as specified in its charter)
| Florida | 1-8180 | 59-2052286 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) | (IRS Employer identification No.) |
702 N. Franklin Street, Tampa, Florida 33602
(Address of principal executive offices) (Zip code)
Registrant’s telephone number, including area code: (813) 228-1111
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Securities Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Section 2 – Financial Information
Item 2.01: Completion of Acquisition or Disposition of Assets
On Dec. 22, 2004, after obtaining all required regulatory approvals and satisfying other closing conditions under the Purchase Agreement, TECO Energy, Inc. and its subsidiaries completed the previously announced sale of Frontera Generation Limited Partnership (Frontera), the owner of the Frontera Power Station in Texas, to a subsidiary of Centrica plc for $133.7 million, consisting of $128.5 million of cash and assumption of $5.2 million of liabilities. TECO Energy has the opportunity, as previously reported, to receive an Annual Earnout Payment if Frontera is the successful bidder and enters into a Reliability Must Run Contract with the Electric Reliability Council of Texas (ERCOT). Both TECO Energy and Centrica plc have guaranteed the payment obligations of their respective direct or indirect subsidiaries under the Purchase Agreement, with Centrica’s obligation limited to 10% of the Adjusted Purchase Price (as defined in the Purchase Agreement). Also as previously reported, TECO Energy will record a pre-tax charge in the fourth quarter of approximately $45 million ($28 million after-tax) to reflect the loss on the sale.
Section 8 – Other Events
Item 8.01: Other Events
On Dec. 23, 2004, TECO Energy used proceeds from the sale of Frontera to repay its unsecured bridge loan facility with JPMorgan Chase Bank and Merrill Lynch Bank USA dated as of September 30, 2004, under which TECO Energy borrowed $124.1 million to fund its purchase of the trust preferred securities of TECO Capital Trust II in the October 2004 remarketing of those securities.
Section 9 – Financial Statements and Exhibits
Item 9.01: Financial Statements and Exhibits
| (b) | Pro forma financial information |
The following unaudited pro forma consolidated balance sheet reflects the disposition of Frontera as if it had occurred on Sept. 30, 2004. The accompanying unaudited pro forma condensed consolidated statement of income for the nine months ended Sep. 30, 2004 and the year ended Dec. 31, 2003 reflects the disposition of Frontera as if the sale had occurred on Jan. 1, 2003. The pro forma financial information does not purport to represent what TECO Energy, Inc.’s consolidated results would have been if the disposition had in fact occurred on these dates, nor does it purport to indicate the future consolidated financial position or future consolidated results of operations of TECO Energy. The pro forma adjustments are based on the Operating Results and related charges for Frontera recorded for the periods.
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TECO Energy, Inc.
Pro Forma Condensed Consolidated Balance Sheet
September 30, 2004
(Unaudited)
| $ millions
|
As reported |
Frontera (1) Adjustments |
Pro Forma | |||||||
| Current assets |
||||||||||
| Cash and cash equivalents |
$ | 102.5 | $ | 132.0 | $ | 234.5 | ||||
| Restricted cash |
57.2 | — | 57.2 | |||||||
| Receivables, less allowance for uncollectibles |
324.0 | — | 324.0 | |||||||
| Current derivative assets |
19.5 | — | 19.5 | |||||||
| Inventories, at average cost |
||||||||||
| Fuel |
59.6 | — | 59.6 | |||||||
| Materials and supplies |
86.6 | (6.2 | ) | 80.4 | ||||||
| Prepayments and other current assets |
167.8 | (0.5 | ) | 167.3 | ||||||
| Assets held for sale |
144.7 | — | 144.7 | |||||||
| Total current assets |
961.9 | 125.3 | 1,087.2 | |||||||
| Total property, plant and equipment (net) |
5,501.3 | (166.2 | ) | 5,335.1 | ||||||
| Other assets |
||||||||||
| Deferred income taxes |
967.7 | 15.4 | 983.1 | |||||||
| Other investments |
11.5 | — | 11.5 | |||||||
| Regulatory assets |
165.4 | — | 165.4 | |||||||
| Investment in unconsolidated affiliates |
254.8 | — | 254.8 | |||||||
| Goodwill |
71.2 | — | 71.2 | |||||||
| Deferred charges and other assets |
146.8 | (5.1 | ) | 141.7 | ||||||
| Assets held for sale |
2,052.3 | — | 2,052.3 | |||||||
| Total other assets |
3,669.7 | 10.3 | 3,680.0 | |||||||
| Total assets |
$ | 10,132.9 | $ | (30.6 | ) | $ | 10,102.3 | |||
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TECO Energy, Inc.
Pro Forma Condensed Consolidated Balance Sheet – continued
September 30, 2004
(Unaudited)
| $ millions
|
As reported |
Frontera(1) Adjustments |
Pro Forma |
|||||||||
| Current liabilities |
||||||||||||
| Long-term debt due within one year |
||||||||||||
| Recourse |
$ | 5.5 | $ | — | $ | 5.5 | ||||||
| Non-recourse |
7.7 | — | 7.7 | |||||||||
| Notes Payable |
25.0 | — | 25.0 | |||||||||
| Accounts Payable |
256.4 | (0.6 | ) | 255.8 | ||||||||
| Customer deposits |
104.0 | — | 104.0 | |||||||||
| Current derivative liabilities |
3.8 | — | 3.8 | |||||||||
| Interest accrued |
96.1 | — | 96.1 | |||||||||
| Taxes accrued |
112.8 | (1.4 | ) | 111.4 | ||||||||
| Liabilities associated with assets held for sale |
1,593.8 | — | 1,593.8 | |||||||||
| Total current liabilities |
2,205.1 | (2.0 | ) | 2,203.1 | ||||||||
| Other liabilities |
||||||||||||
| Deferred income tax |
517.4 | — | 517.4 | |||||||||
| Investment tax credits |
20.6 | — | 20.6 | |||||||||
| Regulatory liabilities |
547.6 | — | 547.6 | |||||||||
| Deferred credits and other liabilities |
361.5 | — | 361.5 | |||||||||
| Liabilities associated with assets held for sale |
675.3 | — | 675.3 | |||||||||
| Long-term debt, less amount due within one year |
||||||||||||
| Recourse |
3,587.4 | — | 3,587.4 | |||||||||
| Non-recourse |
14.1 | — | 14.1 | |||||||||
| Junior subordinated |
400.4 | — | 400.4 | |||||||||
| Minority interest |
2.7 | — | 2.7 | |||||||||
| Total other liabilities |
6,127.0 | — | 6,127.0 | |||||||||
| Capital |
||||||||||||
| Common equity |
199.6 | — | 199.6 | |||||||||
| Additional paid in capital |
1,488.5 | — | 1,488.5 | |||||||||
| Retained earnings |
167.9 | (28.6 | ) | 139.3 | ||||||||
| Accumulated other comprehensive income |
(47.8 | ) | — | (47.8 | ) | |||||||
| Common equity |
1,808.2 | (28.6 | ) | 1,779.6 | ||||||||
| Unearned compensation |
(7.4 | ) | — | (7.4 | ) | |||||||
| Total capital |
1,800.8 | (28.6 | ) | 1,772.2 | ||||||||
| Total liabilities and capital |
$ | 10,132.9 | $ | (30.6 | ) | $ | 10,102.3 | |||||
| (1) | Reflects the assets and liabilities of Frontera and the related loss net of the tax benefit on the sale. |
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TECO Energy, Inc.
Pro Forma Condensed Consolidated Statement of Income
For the nine months ended September 30, 2004
(Unaudited)
| $ millions, except per share amounts
|
As reported |
Frontera (1) Adjustments |
Pro Forma |
|||||||||
| Revenues |
$ | 2,097.6 | $ | 49.8 | $ | 2,047.8 | ||||||
| Operating expenses |
1,886.7 | 50.8 | 1,835.9 | |||||||||
| Income from operations |
210.9 | (1.0 | ) | 211.9 | ||||||||
| Other (Expense) Income |
||||||||||||
| AFUDC - other funds |
0.7 | — | 0.7 | |||||||||
| Other Income |
112.5 | (2.6 | ) | 115.1 | ||||||||
| Loss on debt extinguishment |
(4.3 | ) | — | (4.3 | ) | |||||||
| Impairment on TIE Investment |
(152.3 | ) | — | (152.3 | ) | |||||||
| TMDP arbitration reserve |
5.7 | — | 5.7 | |||||||||
| Earnings from equity Investments |
26.6 | — | 26.6 | |||||||||
| Total Other (expense) income |
(11.1 | ) | (2.6 | ) | (8.5 | ) | ||||||
| Interest charges |
244.9 | — | 244.9 | |||||||||
| Income before income taxes |
(45.1 | ) | (3.6 | ) | (41.5 | ) | ||||||
| Provision (benefit) for income tax |
16.6 | (1.3 | ) | 17.9 | ||||||||
| Minority interest |
61.0 | — | 61.0 | |||||||||
| Net (loss) income from continuing operations |
$ | (0.7 | ) | $ | (2.3 | ) | $ | 1.6 | ||||
| Average common shares outstanding |
||||||||||||
| Basic |
190.5 | 190.5 | ||||||||||
| Diluted |
190.5 | 190.9 | ||||||||||
| Earnings per share from continuing operations |
||||||||||||
| Basic |
$ | 0.00 | $ | 0.01 | ||||||||
| Diluted |
$ | 0.00 | $ | 0.01 | ||||||||
| (1) | Reflects the reversal of the results of operations for Frontera and the related tax impacts. |
5
TECO Energy, Inc.
Pro Forma Condensed Consolidated Statement of Income
For the year ended Dec. 31, 2003
(Unaudited)
| $ millions, except per share amounts
|
As reported |
Frontera (1) Adjustments |
Pro Forma |
|||||||||
| Revenues |
$ | 2,740.0 | $ | 63.1 | $ | 2,676.9 | ||||||
| Operating Expenses |
2,719.9 | 138.7 | 2,581.2 | |||||||||
| Income from Operations |
20.1 | (75.6 | ) | 95.7 | ||||||||
| Other Income (Expense) |
||||||||||||
| AFUDC - Other Funds |
19.8 | — | 19.8 | |||||||||
| Other Income |
114.5 | 2.0 | 112.5 | |||||||||
| TMDP Arbitration Reserve |
(32.0 | ) | — | (32.0 | ) | |||||||
| Earnings from Equity Investments |
(0.4 | ) | — | (0.4 | ) | |||||||
| Total Other Income |
101.9 | 2.0 | 99.9 | |||||||||
| Interest Charges |
320.7 | — | 320.7 | |||||||||
| Income Before Income Taxes |
(198.7 | ) | (73.6 | ) | (125.1 | ) | ||||||
| (Benefit)Provision for Income Tax |
(135.2 | ) | (25.8 | ) | (109.4 | ) | ||||||
| Minority Interest |
48.8 | — | 48.8 | |||||||||
| Net Income from Continuing Operations |
$ | (14.7 | ) | $ | (47.8 | ) | $ | 33.1 | ||||
| Average common shares outstanding |
||||||||||||
| Basic |
179.9 | 179.9 | ||||||||||
| Diluted |
179.9 | 180.2 | ||||||||||
| Earnings per share from continuing operations |
||||||||||||
| Basic |
$ | (0.08 | ) | $ | 0.18 | |||||||
| Diluted |
$ | (0.08 | ) | $ | 0.18 | |||||||
| (1) | Reflects the reversal of the results of operations for Frontera and the related tax impacts. |
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| (c) | Exhibits |
| 2.1 | Purchase and Sales Agreement, dated as of December 1, 2004, by and among TPS Tejas GP, LLC and TPS Tejas LP, LLC as the Sellers, and Frontera Generation GP, Inc. and Centrica US Holdings Inc. as the Purchasers. Portions of this exhibit have been omitted pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and the omitted material has been separately filed with the Securities and Exchange Commission. | |
| 2.2 | Amendment No. 1, dated December 22, 2004 to Purchase and Sales Agreement, by and among TPS Tejas GP, LLC and TPS Tejas LP, LLC as the Sellers, and Frontera Generation GP, Inc. and Centrica US Holdings Inc. as the Purchasers. | |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: December 29, 2004 |
TECO ENERGY, INC. | |
| (Registrant) | ||
| /s/ S. M. PAYNE | ||
| S. M. PAYNE | ||
| Vice President – Corporate | ||
| Accounting and Tax (Principal Accounting Officer) | ||
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Exhibit Index
| Exhibit No. |
Description of Exhibits | |
| 2.1 | Purchase and Sales Agreement, dated as of December 1, 2004, by and among TPS Tejas GP, LLC and TPS Tejas LP, LLC as the Sellers, and Frontera Generation GP, Inc. and Centrica US Holdings Inc. as the Purchasers. Portions of this exhibit have been omitted pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and the omitted material has been separately filed with the Securities and Exchange Commission. | |
| 2.2 | Amendment No. 1, dated December 22, 2004 to Purchase and Sales Agreement, by and among TPS Tejas GP, LLC and TPS Tejas LP, LLC as the Sellers, and Frontera Generation GP, Inc. and Centrica US Holdings Inc. as the Purchasers. | |
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