TAMPA, Fla., Oct. 15, 2002 — TECO Energy Inc. reported preliminary third quarter results and announced it is accelerating a portion of its 2003 plan and increasing its certainty by selling new shares.
The company reported preliminary third quarter earnings from continuing operations of $.72 per share (basic), up 7 percent from $.67 per share in 2001. Net income from continuing operations for the quarter was $112.8 million, 24 percent higher than the $90.8 million recorded in the 2001 period.
Because a part of TECO Energy’s announced financial plan calls for the sale of TECO Coalbed Methane’s gas producing assets, TECO Coalbed Methane is shown as discontinued operations effective with the third quarter results. Total earnings per share including discontinued operations at TECO Coalbed Methane were $.76 compared with $.72 for the third quarter last year.
The average number of common shares outstanding in the third quarter was 15 percent higher than in the same period in 2001. Net income from discontinued operations and net income and earnings per share are shown in the summary information that follows. A complete release of the quarter’s results including segment information and financial statements is planned for the originally scheduled date of October 17, 2002.
Third quarter results include $6 million in after-tax income from a settlement agreement with the Electric Reliability Council of Texas (ERCOT) relating to amounts due for ancillary services provided by TECO Power Services’ Frontera Power Station in the second quarter.
This settlement agreement has been executed, subject to ERCOT board approval later this month, and is separate from the company’s previously announced agreement with ERCOT for a reliability must run (RMR) contract. Also included in third quarter results is a $3.0 million after-tax charge for an aircraft leased to US Airways by the company’s TECO Investments subsidiary.
Year-to-date earnings per share from continuing operations increased more than 11 percent to $1.80 from $1.61 per share for the nine-month period ended Sept. 30, 2002.
Net income from continuing operations for the 2002 nine-month period increased almost 23 percent to $263.6 million, compared with $214.7 million for the same period last year. Total earnings per share including the discontinued operations of TECO Coalbed Methane were $1.91, compared with $1.79 for the first nine months last year.
On September 23, the company announced a financial plan that called for no incremental debt financing and for maintenance of its dividend. The plan included $250 million of capital expenditure reductions, $400 million of monetizations and asset sales and it identified $250 million in proceeds from offshore cash repatriation, non-recourse refinancing, and other financial transactions and asset sales.
The sale of the common stock referred to below will virtually eliminate reliance on these other financial transactions and asset sales.
Chairman and CEO Robert Fagan said, “Our decision to issue equity enhances our overall plan by accelerating its completion and strengthening our balance sheet position immediately. The monetizations and asset sales identified in our plan are moving forward at a fast pace. A letter of intent for the sale of Tampa Electric’s gasifier to a third party has been signed on terms that would allow the company to continue to operate the facility and purchase its output, and negotiations on a definitive agreement are proceeding. The offering memoranda for the monetization of TECO Coal’s synfuel production and for the sale of the coalbed methane properties are available, and we are seeking to complete both transactions as soon as possible and at least one by year end.”
Earnings per share guidance for 2002 and 2003 given at the end of September are being adjusted for the issuance of the new shares. The new shares are expected to reduce 2002 earnings by 5 cents and 2003 earnings by 10 cents from the previous guidance.
Common Stock Offering
TECO Energy plans to offer 15 million shares of its common stock through underwriters led by Morgan Stanley. This offering is expected to be marketed to retail and institutional investors. The sale of the common stock will be made under the company’s existing shelf registration statement. The company expects to commence the offering during the week of October 7.
In connection with the offering, TECO Energy will also grant the underwriters an option for a period of 30 days to purchase an additional 2.25 million shares of the company’s common stock to cover any over- allotments.
The proceeds from the sale of these shares are expected to be used to reduce short-term debt.
TECO Energy (www.tecoenergy.com) is a diversified, energy-related holding company headquartered in Tampa. Its principal businesses are Tampa Electric, Peoples Gas, TECO Power Services, TECO Transport, TECO Coal, TECO Coalbed Methane, and TECO Solutions.
Source: TECO Energy, Inc.