TECO Energy Reports Significantly Improved Third Quarter Results

TAMPA, Fla., Nov. 4 /PRNewswire-FirstCall/ -- TECO Energy, Inc. today reported third quarter net income of $94.6 million, compared to $41.3 million in the third quarter of 2004. Earnings per share for the quarter were $0.46, compared to $0.21 per share in the third quarter of 2004. The number of shares outstanding was 6.7% higher in 2005 than in the 2004 period, primarily due to common shares issued in the settlement of the 9.5% adjustable conversion-rate equity security units in January 2005.

Third quarter net income and earnings per share from continuing operations were $94.5 million and $0.46, respectively, in 2005, compared to $45.8 million and $0.23 for the same period in 2004. Third quarter results from continuing operations, excluding charges and gains (non-GAAP), were $95.5 million in 2005, compared to $49.3 million in the same period in 2004 (see the results reconciliation table, Table 1).

Year-to-date net income and earnings per share were $222.5 million and $1.08, respectively, in 2005, compared to a loss of $64.4 million and a per share loss of $0.34 for the same period in 2004. Shares outstanding in the year-to-date period were 8.1% higher than in 2004.

The year-to-date net income and earnings per share from continuing operations were $158.4 million and $0.77, respectively, in 2005, compared to a loss from continuing operations of $4.4 million and a per share loss of $0.02 for the same period in 2004. Year-to-date results from continuing operations, excluding charges and gains (non-GAAP), were $204.4 million in 2005, compared to $115.8 million in the same period in 2004 (see the results reconciliation table, Table 1).

Chairman and CEO Sherrill Hudson said, "We had a great quarter, and our operating companies produced very strong results, in spite of two major hurricanes impacting TECO Transport. I'm proud of the way team members from across TECO Energy have pulled together to help TECO Transport in restoring its operations and assisting its people with relief efforts.

"With a little help from the weather, Tampa Electric had a very strong quarter, and the robust coal prices at TECO Coal produced much improved results this quarter. With merchant power now behind us, net income from continuing operations more than doubled over last year's third quarter. Our year-to-date financial performance and the excellent work being done at all of our operating companies allow us to increase our 2005 guidance for per- share results from continuing operations, excluding charges and gains, to a range of $1.15 to $1.20. This shows that we've already come a long way toward meeting our previously announced goal of making 2005 a baseline year against which our future performance can be measured," added Hudson.

Charges and Gains

TECO Transport's results for the 2005 quarter included $2.9 million of after-tax direct costs for Hurricane Katrina-related restoration and reclamation efforts at TECO Bulk Terminal and TECO Barge Line. Consolidated results also included a $1.9 million after-tax net benefit related to closing the sale of the Dell Power Station in August 2005, which included an increase in reserves for remaining contractual liabilities associated with the Dell and McAdams power stations (see the results reconciliation table, Table 1).

Year-to-date net income in 2005 included a $45.0 million after-tax debt- extinguishment charge associated with the June redemption of $380 million of 10.5% notes due in 2007. This charge was more than offset by the $76.5 million after-tax gain recorded in discontinued operations upon the final transfer of the Union and Gila River merchant power projects to the lenders effective May 31, 2005. The gain related to the transferred power projects represented the accumulated unfunded operating losses recorded against equity for the period from December 2003, the date the company decided to exit the projects, through the effective date of the transfer to the lending group (see the results reconciliation table, Table 1).

Non-GAAP Earnings

Third quarter non-GAAP results from continuing operations were $95.5 million, which exclude the identified charges and gains shown in Table 1 below. Non-GAAP results from continuing operations were $49.3 million in 2004, excluding the charges and gains identified in the same table. Table 1 also provides non-GAAP results for the nine- and 12-month periods ended Sept. 30, 2005 and Sept. 30, 2004.

For a discussion regarding this presentation of non-GAAP results and management's use of this information, please see the Non-GAAP Presentation section later in this release.

Segment Reporting

Effective with first quarter 2005 results, TECO Energy revised its segment reporting to separately report the results of TECO Guatemala, which includes the results for the San Jose and Alborada power stations and the 24% ownership interest in EEGSA, Guatemala's largest distribution utility. The results for these operations were previously reported in the "Other unregulated" segment. Following the sales of the larger energy services businesses, which were previously reported in the "Other unregulated" segment, the remaining small operations of TECO Solutions are now reported in the Parent/other results. Following the merchant power dispositions, the current-period TWG Merchant segment includes only the results for the uncompleted McAdams Power Station, the Dell Power Station through the closing of its sale in August 2005 and the costs associated with the TWG Merchant parent. Prior periods also included the results for the ownership interest in the Texas Independent Energy (TIE) projects in the TWG Merchant segment.

Results for the unregulated business segments include internally allocated interest expense. Interest expense is not allocated to discontinued operations and instead remains at the TECO Energy parent level.

Table 1 - Results 3 months ended 9 months ended 12 months ended Reconciliation Sept. 30 Sept. 30 Sept. 30 (in millions) 2005 2004 2005 2004 2005 2004 GAAP net income (loss) $94.6 $41.3 $222.5 ($64.4) ($265.1)($855.1) Exclude discontinued operations(1) (0.1) 4.5 (64.1) 60.0 72.3 874.5 GAAP net income (loss) from continuing operations $94.5 $45.8 $158.4 ($4.4) ($192.8) $19.4 Add TECO Transport hurricane costs 2.9 -- 2.9 -- 2.9 -- Add parent debt extinguishment(2) -- (0.2) 45.0 (0.2) 44.7 (0.2) Add TIE write-off -- 0.3 -- 99.0 -- 99.0 Add Guatemalan debt extinguishment -- -- -- 6.7 -- 6.7 Add tax on Guatemalan cash repatriation -- -- -- 19.3 (1.9) 19.3 Add TECO Solutions valuation adjustment -- -- -- 3.4 -- 3.4 Add TECO Transport valuation adjustment -- -- -- 0.8 (0.2) 0.8 Add unutilized tax credits -- -- -- (7.0) 9.7 Add Dell & McAdams valuation adjustment and gain on sale, net (1.9) -- (1.9) -- 379.8 -- Add Hamakua FIN 46 accounting adjustment -- -- -- -- -- 3.2 Add corporate restructuring costs -- 3.4 -- 3.4 3.1 11.7 Add steam turbine write-offs -- -- -- -- 12.8 13.2 Add TWG cancelled project write-offs -- -- -- -- -- 9.0 Add gain on sale of Hardee Power Station and results of operations -- -- -- -- -- (34.4) Add gain on propane business sale -- -- -- (12.2) (0.2) (12.2) Total charges and gains 1.0 3.5 46.0 120.2 434.0 129.2 Non-GAAP results from continuing operations (3) $95.5 $49.3 $204.4 $115.8 $241.2 $148.6 (1) Results included in discontinued operations are the losses associated with operations of the Union, Gila River, Commonwealth Chesapeake and Frontera power stations, and the energy services companies for the 2004 and 12-month-ended 2005 periods. The 9-month-ended 2005 period reflects primarily the gain on the transfer of the Union and Gila River power stations to the lender group in May 2005. (2) Includes the second quarter "make-whole" premium and unamortized debt issuance costs associated with the June 2005 redemption of the 10.5% notes due in 2007. (3) A non-GAAP financial measure is a numerical measure of historical or future financial performance, financial position or cash flow that includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable GAAP measure so calculated and presented. Operating Results Table 2 - Segment Information (1) (in millions) 3 months ended 9 months ended 12 months ended Net Income (Loss) Sept. 30 Sept. 30 Sept. 30 Summary 2005 2004 2005 2004 2005 2004 Tampa Electric $62.7 $53.4 $123.5 $119.2 $150.3 $134.2 Peoples Gas System 4.1 3.0 22.9 21.7 28.9 26.7 Total regulated 66.8 56.4 146.4 140.9 179.2 160.9 TECO Coal 34.6 12.5 90.5 45.6 106.2 57.8 TECO Transport 0.9 0.6 10.3 3.6 16.9 6.5 TECO Guatemala 14.0 14.5 33.4 9.3 29.8 20.0 TWG Merchant (0.3) (14.0) (14.6) (142.7) (405.9) (166.2) Parent/other (21.5) (24.2) (107.6) (61.1) (119.0) (59.6) Total unregulated 27.7 (10.6) 12.0 (145.3) (372.0) (141.5) Net income from continuing operations 94.5 45.8 158.4 (4.4) (192.8) 19.4 Discontinued operations 0.1 (4.5) 64.1 (60.0) (72.3) (874.5) Total net income (loss) $94.6 $41.3 $222.5 ($64.4)($265.1)($855.1) 1) Table 2, Segment Information, presents segment net income on a GAAP basis, which includes the charges and gains detailed in Table 1. Tampa Electric

Tampa Electric's net income for the third quarter was $62.7 million, compared to $53.4 million for the same period in 2004. Results in 2005 reflect 2.7% customer growth; weather that was hotter than normal and hotter than 2004; a $1.9 million after-tax benefit for the wholesale component of the sale of sulfur dioxide (SO2) emissions credits, which does not flow through the Environmental Cost Recovery Clause; higher non-fuel operations and maintenance expenses (O&M) due to lower O&M in 2004 when hurricane restoration efforts were charged to the hurricane storm reserve, and higher depreciation expense from normal plant additions. Results in 2005 also include a $2.2 million after-tax reduction in revenue to reflect the Florida Public Service Commission's decision in the third quarter of 2004 to disallow recovery of a portion of Tampa Electric's waterborne solid fuel transportation costs, compared to 2004's third quarter results, which included a $6.4 million after-tax adjustment to reflect three quarters of the disallowance.

Year-to-date net income was $123.5 million in 2005, compared to $119.2 million for the same period in 2004. These results reflect the benefits of 2.4% customer growth and strong third quarter energy sales that more than offset weak energy sales in the first half of 2005 due to mild weather; non-fuel operations and maintenance expenses higher than 2004 and higher depreciation expense from normal plant additions. Year-to-date results in 2005 also reflect a $6.8 million reduction in after-tax income related to the waterborne solid fuel transportation disallowance.

Retail energy sales increased more than 9% compared to the third quarter of 2004, as strong customer growth and hotter than normal weather combined to boost energy sales to weather-sensitive residential customers. Sales to commercial and industrial customers increased, reflecting the strong local economy. Total heating and cooling degree-days for the Tampa area in the quarter were almost 7% above normal and 11% above 2004 levels. Year-to-date retail energy sales were 3% higher in 2005 than the same period in 2004, as lower energy sales in the first half of the year due to mild weather were recovered in the third quarter. Total heating and cooling degree-days for the Tampa area for the 2005 year-to-date period were more than 5% below normal but only 2% below 2004 levels.

Peoples Gas

Peoples Gas System reported net income of $4.1 million for the third quarter, compared to $3.0 million for the same period in 2004. Quarterly results reflected customer growth of 3.8% over 2004, higher therm sales to residential and commercial customers and higher volumes for power generation customers and off-system sales. Year-to-date net income was $22.9 million, compared to $21.7 million for the 2004 period. The year-to-date results reflect 4.0% customer growth, residential and commercial therm sales growth and strong volumes for off-system and power generation customers. In both the quarter and year-to-date periods, strong sales to commercial customers reflected growth in the Florida economy and high levels of tourism, which enhance commercial sales to hotels and restaurants, while sales of low-margin transportation service for interruptible customers declined.

TECO Coal

TECO Coal reported net income of $34.6 million for the third quarter on total sales of 2.3 million tons, compared to $12.5 million reported in the same period in 2004 on 2.3 million tons. Synfuel sales, which are included in the total sales, were 1.6 million tons in both the 2005 and 2004 periods. Compared to the same period in 2004, results reflect a 50% higher average net selling price per ton and a 13% increase in the average cash cost of sales, excluding synfuel costs. In 2005, results for the quarter also reflected the 98% ownership in Pike Letcher Synfuel, LLC sold to third parties, compared to 90% in the 2004 period. The results in 2005 also included a $3.5 million after-tax mark-to-market gain on hedges placed to protect the company's synfuel benefits against rising oil prices.

Year-to-date net income in 2005 was $90.5 million on total sales of 7.1 million tons, compared to $45.6 million on 6.9 million tons for the same period in 2004. Synfuel sales, which are included in the total sales, were 4.9 million tons in 2005, compared to 4.8 million tons in the 2004 period. Results for the year-to-date period reflect an average net selling price per ton more than 45% higher than 2004; average cash cost of sales, excluding synfuel costs, more than 20% higher than 2004; and increased third-party ownership in the synfuel production facilities. The cash cost of sales was driven by higher prices for diesel fuel, labor and steel products. Year-to- date results for 2004 also included a $1.6 million pretax benefit from the 2004 Section 29 tax credit rate to the benefit of 2005 results, which was adjusted to reflect $1.13 per million Btu on an actual basis versus the $1.12 per million Btu estimated in 2004, a $3.0 million year-to-date after- tax mark-to-market gain on oil price hedges, and a $2.4 million negative adjustment to deferred tax assets which was made due to a reduction in the Kentucky state income tax rate recorded in the first quarter.

TECO Synfuel Holdings, LLC had previously sold 90% of its membership interest to two third parties, along with associated percentage rights to benefits in the business that adjust from time to time. Allocation of the benefits was temporarily increased 8% in the first and second quarters such that 98% of the benefits went to the third parties. In July 2005, a permanent increase in the third-party ownership of the synfuel facilities of 8% was achieved through the sale of this interest to a different third party. Under third-party ownership transactions, TECO Coal is paid to provide feedstock, operate the synthetic fuel production facilities and sell the output while the purchasers have the risks and rewards of ownership, and are allocated 98% of the tax credits and operating costs.

TECO Transport

TECO Transport recorded third quarter net income of $0.9 million, compared to $0.6 million in the same period in 2004. TECO Transport's non- GAAP third quarter results were $3.8 million, which excluded the $2.9 million after-tax direct costs associated with the restoration and recovery efforts for Hurricane Katrina (see Table 1), compared to $1.7 million in 2004, which excluded $1.1 million of after-tax management restructuring costs. These results reflect higher river barge rates, northbound shipments and tonnage moved for Tampa Electric at TECO Barge Line. These results also reflect the qualification of a second oceangoing vessel for the benefits of tax law changes under the Jobs Creation Act to keep U.S. flag vessels competitive with non-U.S. flag vessels, which reduces taxes on income earned by U.S. flag vessels engaged in full-time international trade. Higher fuel costs were largely offset by $1.9 million after-tax benefit from fuel hedges. TECO Transport estimates that the business interruptions associated with Hurricanes Katrina and Rita reduced third quarter net income by about $3.0 million. In 2004's third quarter, TECO Transport's net income was reduced by about $2.5 million due to the business interruptions associated with four hurricanes in that period.

TECO Transport recorded year-to-date net income of $10.3 million, compared to $3.6 million in the same period in 2004. Non-GAAP results in 2005 were $13.2 million, which excluded direct hurricane costs, compared to $5.5 million, which excluded the management restructuring costs and $0.8 million of valuation adjustments on oceangoing equipment (see Table 1), in 2004. These results reflect the same factors as in the third quarter and increased movements of export coal, petroleum coke and other products through TECO Bulk Terminal. Higher fuel costs were largely offset by a $2.6 million after-tax benefit from fuel hedges.

TECO Guatemala

TECO Guatemala reported third quarter net income of $14.0 million in 2005, compared to $14.5 million in the 2004 period. Third quarter results in 2004 included a $5.6 million benefit from reducing previously deferred income taxes due to a change in Guatemalan tax law. The 2005 results reflect higher capacity revenues and energy sales from the generating facilities and customer growth and higher energy sales at EEGSA, partially offset by higher operations and maintenance expenses and unfavorable foreign currency exchange rates. Year-to-date net income was $33.4 million in 2005, compared to $9.3 million in 2004. Non-GAAP results were also $33.4 million, compared to $35.3 million in 2004. Results in 2004 exclude charges related to debt extinguishment and taxes on repatriated cash (see Table 1). The 2005 results reflect higher operations and maintenance expenses early in the year partially offset by energy sales and customer growth at EEGSA and higher capacity revenues for the power plants.

TWG Merchant

In 2005, TWG Merchant recorded a third quarter net loss of $0.3 million, compared to a loss of $14.0 million for the same period in 2004. Third quarter non-GAAP results in 2005, which excluded the $1.9 million net benefit from the sale of the Dell Power Station and the recognition of additional liabilities relating to both the Dell and McAdams power stations, were $2.2 million (see Table 1). The improvement in 2005 is primarily the result of the discontinuation of interest allocation to the uncompleted Dell and McAdams power stations and the sale of the Dell Power Station in August. Parent/Other results will absorb this impact going forward. The year-to-date net loss was $14.6 million in 2005, compared to a loss of $142.7 million for the same period in 2004. Results in 2004 included the losses from the ownership interest in the TIE projects, which was sold in July 2004. In 2005, the year-to-date non-GAAP net loss was $16.5 million, excluding the third quarter net benefit, compared to $43.7 million, excluding the TIE write-off, in 2004 (see Table 1).

Parent/Other

The net loss for Parent/other in the third quarter was $21.5 million, compared to $24.2 million in the same period in 2004. Non-GAAP third quarter results in 2005 were a loss of $21.5 million, compared to $22.1 million in 2004, which excluded the $2.3 million corporate restructuring charge at the parent and the $0.2 million benefit from the early exchange (see Table 1). Although total parent interest expense declined $7.9 million in the 2005 quarter due to the redemption of the trust preferred debt associated with the early settlement and final conversion of the variable conversion-rate equity security units and the retirement of the 10.5% notes in June 2005, interest expense at the parent reflects the impact of no longer allocating interest to TWG Merchant beginning in the third quarter. In 2005, the year-to-date net loss was $107.6 million compared to $61.1 million in 2004. In 2005, the year-to-date non-GAAP results were a loss of $62.6 million, excluding the second quarter $45.0 million after-tax charge related to the TECO Energy debt extinguishment, compared to a non-GAAP loss of $67.8 million in the same period in 2004, excluding charges and gains (see Table 1).

Discontinued Operations

Net income from discontinued operations for the 2005 third quarter was $0.1 million, compared to a net loss of $4.5 million in the same period of 2004. Discontinued operations in the quarter consisted primarily of true-up amounts from previously divested assets. In 2005, year-to-date net income from discontinued operations was $64.1 million, compared to a loss of $60.0 million in 2004. These results include the operating results from the Union and Gila River power stations through the end of May 2005 and the $76.5 million after-tax gain recorded upon the final disposition of the plants in the second quarter. Discontinued operations also include results for the Commonwealth Chesapeake Power Station until its sale in April 2005.

Cash and Liquidity

TECO Energy's consolidated cash and cash equivalents, excluding all restricted cash, totaled $354.3 million at Sept. 30, 2005. Restricted cash of $57.4 million includes $50.0 million held in escrow until the end of 2007 related to the sale of a 49 percent interest in the synthetic coal production facilities. Cash at Sept. 30, 2005 excludes the San Jose and Alborada power stations' unrestricted cash balances of $22.0 million and restricted cash of $8.2 million, as these companies were deconsolidated due to the adoption of FIN 46R, Consolidation of Variable Interest Entities, effective Jan. 1, 2004.

In addition, at Sept. 30, 2005, aggregate availability under bank credit facilities was $590.7 million, net of letters of credit of $14.3 million outstanding under these facilities and $20 million drawn on Tampa Electric Company's credit facilities. At the end of the quarter, total liquidity, including cash plus credit facilities, was $967.0 million, which included $423.9 million at Tampa Electric Company, consisting of $405.0 million of undrawn credit facilities and $18.9 million of cash.

TECO Energy parent had total liquidity of $497.4 million at Sept. 30, 2005, consisting of $311.7 million of cash and availability of $185.7 million under its credit facilities.

Consolidated cash flow from operations for the third quarter included $77.7 million of proceeds from the sale of SO2 emissions allowances by Tampa Electric, which partially offset the cumulative under-recovery of fuel expense caused by rising natural gas prices in 2005.

Other sources of cash in the third quarter of 2005 were $52.9 million of proceeds from the third-party investors for synfuel production and $75 million of gross proceeds from the sale of the Dell Power Station. Cash used in financing activities included dividends of $39.5 million on TECO Energy common stock. Capital expenditures for the quarter were $71.5 million.

2005 Outlook

Earnings: TECO Energy today raised its estimate for 2005 per share results from continuing operations, excluding charges and gains, to a range of $1.15 to $1.20. This range excludes both the direct costs associated with Hurricane Katrina restoration and any insurance recoveries that might occur to offset these direct costs at TECO Transport. These forecasted results are based on the company's current expectations and assumptions for the remainder of the year, including those described below, which are subject to risks and uncertainties.

Tampa Electric expects continued strong customer growth of about 2.5% and slightly higher energy sales growth, assuming normal weather for the remainder of the year. Peoples Gas expects customer growth of about 4% in 2005. Operations and maintenance expenses at the utilities are expected to increase at about the level of inflation for the full year compared to 2004. The after-tax impact of the disallowance of Tampa Electric's recovery of a portion of its waterborne fuel transportation costs is expected to be in the range of $9 million to $10 million for the full year.

Results at TECO Coal are expected to improve due to fourth quarter coal prices being more than 50% higher than 2004, partially offset by slightly higher production costs than 2004's fourth quarter. TECO Coal expects full- year production costs to be more than 12% higher than 2004 levels. The forecast assumes that TECO Coal will benefit from continued strong earnings and cash flow from the sale of 98% of the ownership of its synfuel facilities to third parties. These estimates of earnings and cash flow assume no material reduction in Section 29 tax credits due to limitations that could result from oil prices exceeding the average reference price for the full year. The company estimates that oil prices, as quoted on NYMEX, would have to average more than $68 per barrel for the remainder of 2005 before any limitation would be effective for this year.

TECO Transport anticipates continued robust river market pricing as a result of disruptions in river barge availability throughout the industry following Hurricane Katrina, further supporting an already good balance in the supply and demand for river barges. The company also expects two of its oceangoing vessels to benefit from the tax law changes that reduce taxes on income earned by U.S. flag vessels in international trade and forecasts continued good operating efficiencies for both the ocean-going and river barge operations.

TECO Guatemala expects to continue to provide strong earnings and cash flow and now expects to exceed the $35 million of net income previously forecasted for the year.

Cash Flow: If natural gas prices continue at or near the levels experienced in the third quarter through year-end, Tampa Electric expects its 2005 net under-recovery balance for its fuel and environmental cost recovery clauses to be $125 million by year end caused by the significantly higher gas prices. The gas prices, higher than the July forecast, are the result of the impacts of Hurricanes Katrina and Rita on Gulf of Mexico gas production facilities. This amount includes approximately $200 million of fuel under- recovery net of $78 million in proceeds from the sale of SO2 emissions credits, which flow through the company's Environmental Cost Recovery Clause.

This under-recovery is approximately $90 million higher than previously forecasted. As a result, TECO Energy currently forecasts 2005 consolidated cash flow from operations in a range of $150 to $200 million. This forecast includes the cash make-whole premium paid to redeem the 10.5% notes in June, improved operating company results, and the current forecasted under-recovery at Tampa Electric.

In 2005, net cash generation at TECO Energy parent is now expected in a range of $150 million to $200 million, with an expected range of $150 million to $200 million for TECO Energy consolidated. The change in parent cash generation is a result of lower tax payments by Tampa Electric directly related to the current under-recovery of fuel driven by current gas prices expectations of $11 per million Btu compared to $8 per million Btu forecast in July. The tax payments to TECO Energy parent are expected to be recovered on the same schedule as the under-recovered fuel costs at Tampa Electric are recovered in future periods. The change in consolidated cash generation is a result of the net under-recovery of fuel, offset by higher short-term debt balances at Tampa Electric. Capital expenditures are estimated to remain about $300 million in addition to the $31.8 million paid to the lenders upon the final transfer of the Union and Gila River power stations. Expected net cash generation also reflects the proceeds from the final settlement of the adjustable conversion-rate equity security units, the cash proceeds from the third-party investors for synfuel production, the proceeds from the sale of the Commonwealth Chesapeake and Dell power stations, the issuance of $300 million of long-term debt, and the redemption of $380 million of long- term debt. The forecast also assumes the planned retirement of half of the $200 million of 8.5% trust preferred securities in December 2005 and the payment of common stock dividends at current levels.

The company does not expect to require additional capital from external sources to meet cash needs in 2005, except for Tampa Electric's short-term borrowings under its credit facilities for its needs.

Taxability of TECO Energy Dividends

The company previously reported, that following the transfer of the Union and Gila River power stations to the lenders, some of its future common stock distributions might be characterized as return of capital distributions rather than ordinary dividend income for tax purposes. A return of capital distribution is generally nontaxable and reduces the original purchase tax basis. This reduction in basis could affect future gains or losses, if any, on the sale of the shares, which would generally be taxed as capital gains or losses.

The tax status of dividends depends upon the availability of the company's earnings and profits, as defined by the Internal Revenue Code, first for the current year and then on an accumulated basis. If the distribution is determined to be out of earnings and profits, it is treated as ordinary taxable dividend income. If current and accumulated earnings and profits are negative, the distribution is treated as a return of capital distribution. The preliminary results of a detailed earnings and profits study indicate that the company may have negative current and accumulated earnings and profits when the upcoming distribution is made. Due to the rules for calculating earnings and profits, the company cannot know the characterization of any distribution with certainty until after the end of the year. The company will be updating information regarding the taxability of its dividends when it is available and no later than when it provides the IRS Form 1099 to shareholders to report the quarterly dividends received from the company in 2005.

Shareholders should consult their tax advisors for details as to what, if any, impact the tax treatment of these distributions will have on their individual tax situations.

Non-GAAP Presentation

Table 1, "Results Reconciliation," presents non-GAAP financial results after elimination of the effects of certain identified gains and charges in the 2005 and 2004 quarterly, year-to-date and 12 months-ended periods. Management believes that the presentation of this non-GAAP financial performance provides investors a measure that reflects the company's operations under its business strategy, which is focused on its five core businesses. Management also believes that it is helpful to present a non-GAAP measure of performance that clearly reflects the ongoing operations of TECO Energy's business and which allows investors to better understand and evaluate the business as it is expected to operate in future periods.

The non-GAAP measure of financial performance used by the company is not a measure 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.

Management and the Board of Directors use this non-GAAP presentation as a yardstick for measuring the company's performance, making decisions that are dependent upon the profitability of the company's various operating units and in determining levels of incentive compensation.

While each of the particular excluded items is not expected to recur, there may be true-ups to charges related to merchant power facilities or additional debt extinguishment activities. Management recognizes that there may be items that could be excluded in the future. Even though charges may occur, management believes the non-GAAP measure is an important addition to GAAP net income for assessing the company's potential future performance because excluded items are limited to those that management believes are not indicative of future performance.

Webcast

As previously announced, TECO Energy will Webcast a presentation to the investment community at the Edison Electric Institute's Financial Conference on its third quarter results and outlook at 7:30 AM Eastern time, Tuesday, November 8, 2005. The Webcast can be accessed by following the link on TECO Energy's Website: http://www.tecoenergy.com/ . The Webcast and accompanying slides will be available for replay for 30 days through the Website after the conclusion of the live event.

TECO Energy, Inc. is an integrated energy-related holding company with regulated utility businesses, complemented by a family of unregulated businesses. Its principal subsidiary, Tampa Electric Company, is a regulated utility with both electric and gas divisions (Tampa Electric and Peoples Gas System). Other subsidiaries are engaged in waterborne transportation, coal and synthetic fuel production and electric generation and distribution in Guatemala.

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 expectations for 2005 described above. Additional factors that could impact actual results include: unforeseen regulatory actions by federal, state or local authorities that could impact operations; any adverse outcome in the previously disclosed litigation; any additional debt extinguishment costs or premiums associated with the early retirement of TECO Energy debt; unexpected capital needs or unanticipated reductions in cash flow that affect liquidity; oil prices in excess of the annual reference price, which would reduce or eliminate Section 29 tax credits and reduce or eliminate the earnings and cash flow from the sale of membership interests in the synfuel production facilities at TECO Coal; the availability of adequate rail transportation capacity for the shipment of TECO Coal's production; general economic conditions in Tampa Electric's service area affecting energy sales; economic conditions, both national and international, affecting the demand for TECO Transport's waterborne transportation services; weather variations affecting sales and operating costs at Tampa Electric and Peoples Gas and the effect of extreme weather conditions; commodity price changes affecting the margins at TECO Coal or natural gas demand at Peoples Gas; the ability of TECO Energy's subsidiaries to operate equipment without undue accidents, breakdowns or failures; changes in electric tariffs or contract terms affecting TECO Guatemala's operations; and TECO Coal's ability to successfully operate its synthetic fuel production facilities in a manner qualifying for Section 29 federal income tax credits, which could be impacted by changes in law, regulation or administration. Additional information is contained under "Investment Considerations" in Exhibit 99.1 to TECO Energy Inc.'s Quarterly Report on Form 10Q for the quarter ended Jun. 30, 2005.

Summary Information 3 months ended 9 months ended 12 months ended (in millions, except Sept. 30 Sept. 30 Sept. 30 per share amounts) 2005 2004 2005 2004 2005 2004 Revenues $836.4 $698.1 $2,240.1 $1,983.0 $2,896.4 $2,575.4 Net income (loss) from continuing operations $94.5 $45.8 $158.4 ($4.4) ($192.8) $19.4 Net income (loss) from discontinued operations 0.1 (4.5) 64.1 (60.0) (72.3) (874.5) Net income (loss) $94.6 $41.3 $222.5 ($64.4) ($265.1) ($855.1) Earnings (loss) per share from continuing operations- basic $0.46 $0.23 $0.77 ($0.02) ($0.95) $0.10 Earnings (loss) per share from discontinued operations- basic 0.00 (0.02) 0.31 (0.32) (0.35) (4.60) Earnings (loss) per share - basic $0.46 $0.21 $1.08 ($0.34) ($1.30) ($4.50) Earnings (loss) per share - diluted $0.45 $0.21 $1.07 ($0.34) ($1.30) ($4.49) Average common shares outstanding - basic 207.1 194.1 206.0 190.5 204.4 189.9 Average common shares outstanding - diluted 209.3 194.4 207.8 190.5 204.4 190.3 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 September 30, September 30, (thousands) 2005 2004 2005 2004 Revenues $836,402 $698,048 $2,240,080 $1,983,002 Expenses Operation 560,423 476,665 1,480,682 1,320,047 Maintenance 52,462 31,744 128,520 98,253 Asset Impairment -- -- -- 6,747 Goodwill Impairment -- -- -- -- Restructuring Charges -- 6 (37) 45 Depreciation 71,171 68,030 211,228 206,945 Taxes, other than income 51,740 45,200 146,525 141,077 Total expenses 735,796 621,645 1,966,918 1,773,114 Income from operations $100,606 $76,403 $273,162 $209,888 Other income (expense) Allowance for other funds used during construction -- -- -- 718 Other income (expense), net 64,921 28,826 136,359 113,559 Loss on Debt Extinguishment -- (4,292) (71,507) (4,292) Impairment on TIE Investment -- (426) -- (152,287) Contingent Arbitration Reserve -- -- -- -- Earnings from equity investments 14,781 20,701 43,667 26,611 Total other income (expense) 79,702 44,809 108,519 (15,691) Interest charges Interest expense 68,291 75,238 220,151 245,335 Allowance for borrowed funds used during construction -- -- -- (277) Total interest charges 68,291 75,238 220,151 245,058 Income before provision for income taxes 112,017 45,974 161,530 (50,861) (Benefit)Provision for income taxes 39,224 19,525 71,019 14,453 Net income from continuing operations before minority interest 72,793 26,449 90,511 (65,314) Minority Interest 21,669 19,322 67,872 60,932 Net income from continuing operations 94,462 45,771 158,383 (4,382) Discontinued Operations Income from discontinued operations (1,938) (6,696) 88,231 (92,229) Income tax expense (benefit)- discontinued operations (2,117) (2,200) 24,079 (32,206) Net income from discontinued operations 179 (4,496) 64,152 (60,023) Cumulative effect of a change in accounting principle, net of tax -- -- -- -- Net Income $94,641 $41,275 $222,535 ($64,405) Average common shares outstanding during the period (thousands) 207,136 194,081 205,991 190,513 Earnings per average common share outstanding: Earnings per share from continuing operations -- basic $0.46 $0.23 $0.77 ($0.02) Earnings per share -- basic $0.46 $0.21 $1.08 ($0.34) Earnings per share from continuing operations -- diluted $0.45 $0.23 $0.76 ($0.02) Earnings per share -- diluted $0.45 $0.21 $1.07 ($0.34) TECO ENERGY, Inc. CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (All significant intercompany transactions have been eliminated in the consolidated financial statements.) Twelve Months Ended September 30, (thousands) 2005 2004 Revenues $2,896,448 $2,575,381 Expenses Operation 1,944,504 1,720,578 Maintenance 167,707 139,920 Asset Impairment 625,423 35,484 Goodwill Impairment 4,757 6,674 Restructuring Charges 1,135 13,625 Depreciation 280,201 284,582 Taxes, other than income 189,756 183,626 Total expenses 3,213,483 2,384,489 Income from operations ($317,035) $190,892 Other income (expense) Allowance for other funds used during construction -- 4,830 Other income (expense), net 165,785 178,485 Loss on Debt Extinguishment (71,607) (4,292) Impairment on TIE Investment -- (152,286) Contingent Arbitration Reserve -- 5,633 Earnings from equity investments 53,125 19,570 Total other income (expense) 147,303 51,940 Interest charges Interest expense 298,010 334,502 Allowance for borrowed funds used during construction -- (1,865) Total interest charges 298,010 332,637 Income before provision for income taxes (467,742) (89,805) (Benefit)Provision for income taxes (188,558) (34,177) Net income from continuing operations before minority interest (279,184) (55,628) Minority Interest 86,404 75,043 Net income from continuing operations (192,780) 19,415 Discontinued Operations Income from discontinued operations (113,582) (1,362,578) Income tax expense (benefit)- discontinued operations (41,310) (488,091) Net income from discontinued operations (72,272) (874,487) Cumulative effect of a change in accounting principle, net of tax -- -- Net Income ($265,052) ($855,072) Average common shares outstanding during the period (thousands) 204,369 189,896 Earnings per average common share outstanding: Earnings per share from continuing operations -- basic ($0.95) $0.10 Earnings per share -- basic ($1.30) ($4.50) Earnings per share from continuing operations -- diluted ($0.95) ($0.10) Earnings per share -- diluted ($1.30) ($4.49) TECO ENERGY, Inc. CONSOLIDATED BALANCE SHEETS (Unaudited) (All significant intercompany transactions have been eliminated in the consolidated financial statements.) Sep. 30, Dec. 31, (thousands) 2005 2004 ASSETS Current assets Cash and cash equivalents $354,344 $96,739 Restricted cash 57,407 57,119 Short-term investments 8 6 Receivables, less allowance for uncollectibles 338,399 286,760 Inventories, at average cost Fuel 82,779 46,207 Materials and supplies 71,335 74,586 Current derivative asset 136,819 3,761 Prepayments and other current assets 26,164 26,860 Assets held for sale, current -- 128,801 Total current assets 1,067,255 720,839 Property, plant and equipment Utility plant in service-electric 4,845,031 4,857,881 Utility plant in service-gas 827,881 810,781 Construction work in progress 205,383 207,123 Other property 822,418 847,548 6,700,713 6,723,333 Accumulated depreciation (2,150,459) (2,065,450) Total property, plant and equipment, net 4,550,254 4,657,883 Other assets Other investments 7,959 7,959 Investment in unconsolidated affiliates 285,622 262,959 Goodwill 59,360 59,360 Long term derivative asset 21,455 -- Regulatory asset 341,526 200,963 Deferred income taxes 715,408 875,138 Deferred charges and other assets 134,838 128,207 Assets held for sale 8,336 2,059,116 Total other assets 1,574,504 3,593,702 Total assets 7,192,013 8,972,424 LIABILITIES AND CAPITAL Current liabilities Long-term debt due within one year Recourse $5,500 $5,500 Non-recourse 1,280 8,083 Notes payable 20,000 115,000 Accounts payable 348,054 257,735 Current derivative liability -- 11,474 Customer deposits 112,822 105,841 Interest accrued 84,274 50,598 Taxes accrued 70,135 36,349 Liabilities associated with held for sale, current 2,076 1,631,820 Total current liabilities 644,141 2,222,400 Other liabilities Investment tax credits 17,915 19,955 Regulatory liability 787,613 538,948 Long term derivative liability -- 542 Other deferred credits and other liabilities 349,635 351,529 Liabilities associated with assets held for sale -- 672,220 Long-term debt, less amount due within one year Recourse 3,520,036 3,588,930 Non-recourse 11,720 13,396 Preferred company securities 277,675 277,675 Minority interest -- 2,946 Capital Common equity (outstanding 208,114,287 shares in 2005 and 199,747,809 shares in 2004) 1,592,393 1,287,652 Unearned compensation (9,115) (3,769) Total liabilities and capital 7,192,013 8,972,424 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 September 30, September 30, (thousands) 2005 2004 2005 2004 Cash flows from operating activities Net income $94,641 $41,275 $222,535 $(64,405) Adjustments to reconcile net income to net cash: Depreciation 71,171 71,816 211,228 217,395 Deferred income taxes 34,622 18,426 84,573 (92,636) Investment tax credit, net (662) (697) (2,040) (2,167) Allowance for funds used during construction -- -- -- (995) Amortization of unearned compensation 262 3,380 4,081 10,220 Gain on asset sales, pretax (51,766) (27,329) (232,851)(108,884) Noncash debt extinguishment, pretax -- -- 17,152 -- Equity in earnings of unconsolidated affiliates (11,247) (19,223) (22,310) (25,021) Minority interest (21,669) (19,353) (67,872) (60,983) Asset impairment, pretax -- 426 -- 61,464 Goodwill impairment and intangible asset impairment, pretax -- -- -- -- Contingent arbitration reserve, pretax -- (5,633) -- (5,633) Deferred recovery clause (41,423) 1,395 (60,988) 27,555 Receivables, less allowance for uncollectibles (26,199) 15,897 (66,496) (7,185) Inventories (10,024) 9,417 (38,313) 21,959 Prepayments and other current assets 2,999 3,252 3,845 4,262 Taxes accrued 17,905 (73,708) 27,266 28,846 Interest accrued 30,932 60,816 51,691 92,623 Accounts payable 101,434 (28,734) 117,597 (72,309) Other (8,253) 51,277 (10,938) 38,632 182,723 102,700 238,160 162,738 Cash flows from investing activities Capital expenditures (71,496) (48,390) (213,816)(172,304) Allowance for funds used during construction -- -- -- 995 Net proceeds from sale of assets 114,830 45,637 269,685 187,056 Net proceeds from sale of business -- -- -- -- Cash paid on disposition of business -- -- (31,800) -- Net cash reduction from deconsolidation -- -- -- (22,755) Restricted cash (267) (30,992) 27,734 (40,305) Investment in unconsolidated affiliates -- -- 113 43,927 Other non-current investments -- 4,202 4,200 16,953 43,067 (29,543) 56,116 13,567 Cash flows from financing activities Dividends (39,507) (35,825) (118,205)(107,326) Common stock 3,816 1,535 194,746 8,025 Proceeds from long-term debt 13,000 -- 311,888 -- Minority interest 18,506 16,815 65,939 60,312 Restricted cash -- -- -- -- Repayment of long-term debt (5,501) (11,107) (394,061) (97,686) Early exchange of equity units -- (17,634) -- (17,634) Net increase (decrease) in short- term debt (50,000) (5,000) (95,000) (12,500) Equity contract adjustment payments -- (5,083) (1,978) (15,248) (59,686) (56,299) (36,671)(182,057) Net increase (decrease) in cash and cash equivalents 166,104 16,858 257,605 (5,752) Cash and cash equivalents at beginning of period 188,240 85,618 96,739 108,228 Cash and cash equivalents at end of period $354,344 $102,476 $354,344 $102,476 TECO ENERGY, Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (All significant intercompany transactions have been eliminated in the consolidated financial statements.) Twelve Months Ended September 30, (thousands) 2005 2004 Cash flows from operating activities Net income $(265,052) $(855,072) Adjustments to reconcile net income to net cash: Depreciation 283,455 318,817 Deferred income taxes (178,331) (667,153) Investment tax credit, net (2,737) (3,336) Allowance for funds used during construction -- (6,695) Amortization of unearned compensation 7,471 15,903 Gain on asset sales, pretax (216,827) (174,145) Noncash debt extinguishment, pretax 17,152 -- Equity in earnings of unconsolidated affiliates (31,608) (16,961) Minority interest (86,404) (75,094) Asset impairment, pretax 715,239 1,388,080 Goodwill impairment and intangible asset impairment, pretax 16,585 27,506 Contingent arbitration reserve, pretax -- (5,633) Deferred recovery clause (63,384) 24,784 Receivables, less allowance for uncollectibles (27,223) 71,721 Inventories (18,418) 9,461 Prepayments and other current assets 3,201 25,296 Taxes accrued (83,571) 102,287 Interest accrued 35,780 66,997 Accounts payable 120,718 (89,275) Other (11,012) 46,741 215,034 204,229 Cash flows from investing activities Capital expenditures (314,667) (302,422) Allowance for funds used during construction -- 6,695 Net proceeds from sale of assets 432,144 207,813 Net proceeds from sale of business -- 107,718 Cash paid on disposition of business (31,800) -- Net cash reduction from deconsolidation -- (22,755) Restricted cash 33,746 (23,000) Investment in unconsolidated affiliates 1,561 42,483 Other non-current investments 11,967 21,237 132,951 37,769 Cash flows from financing activities Dividends (156,131) (143,012) Common stock 196,938 8,825 Proceeds from long-term debt 311,888 5,618 Minority interest 81,693 72,465 Restricted cash -- 26,368 Repayment of long-term debt (521,348) (108,476) Early exchange of equity units (48) (17,634) Net increase (decrease) in short-term debt (5,000) (372,500) Equity contract adjustment payments (4,109) (20,330) (96,117) (548,676) Net increase (decrease) in cash and cash equivalents 251,868 (306,678) Cash and cash equivalents at beginning of period 102,476 409,154 Cash and cash equivalents at end of period $354,344 $102,476 TECO ENERGY, INC. SEGMENT INFORMATION (Unaudited) (1) (2) (millions) Tampa Peoples TECO TECO Three Months ended September 30, Electric Gas Coal Transport 2005 Revenues - outsiders $524.0 $139.2 $127.0 $42.6 Sales to affiliates 0.6 -- -- 22.2 Total revenues 524.6 139.2 127.0 64.8 Depreciation 46.7 8.8 9.9 5.4 Total Interest charges (including Alloc Interest) (3) 24.0 3.7 3.2 1.3 Allocated interest expense (3) -- -- 3.1 (0.2) Provisions (benefit) for income taxes 38.1 2.6 16.5 (1.7) Net income (loss) from continuing operations $62.7 $4.1 $34.6 $0.9 (7) 2004 Revenues - outsiders $472.8 $92.3 $84.1 $42.1 Sales to affiliates 1.1 -- -- 20.0 Total revenues 473.9 92.3 84.1 62.1 Depreciation 44.4 8.5 8.9 5.6 Total Interest charges (including Alloc Interest) (3) 23.4 3.7 2.8 1.2 Allocated interest expense (3) -- -- 2.9 (0.2) (Benefit) provisions for income taxes 32.9 1.9 7.0 0.1 Net (loss) income from continuing operations $53.4 $3.0 $12.5 $0.6 TECO ENERGY, INC. SEGMENT INFORMATION (Unaudited) (1) (2) (millions) Three Months ended September 30, TECO TWG Other & TECO (2) Guatemala Merchant Eliminations Energy 2005 Revenues - outsiders $1.9 $0.1 $1.6 $836.4 Sales to affiliates -- -- (22.8) -- Total revenues 1.9 0.1 (21.2) 836.4 Depreciation 0.2 0.1 0.1 71.2 Total Interest charges (including Alloc Interest) (3) 3.6 -- 32.5 68.3 Allocated interest expense (3) 3.6 -- (6.5) -- Provisions (benefit) for income taxes (3.7) (0.2) (12.4) 39.2 Net income (loss) from continuing operations $14.0 $(0.3) $(21.5) $94.5 2004 Revenues - outsiders $3.0 $0.8 $3.0 $698.1 Sales to affiliates -- -- (21.1) -- Total revenues 3.0 0.8 (18.1) 698.1 Depreciation 0.3 0.3 0.1 68.1 Total Interest charges (including Alloc Interest) (3) 3.3 13.0 27.8 75.2 Allocated interest expense (3) 3.3 12.9 (19.2) (0.3) (Benefit) provisions for income taxes 1.9 (9.3) (15.0) 19.5 Net (loss) income from continuing operations $14.5 $(14.0) (6) $(24.2) $45.8 Nine Months ended September 30, Tampa Peoples TECO TECO Electric Gas Coal Transport 2005 Revenues - outsiders $1,328.1 $394.9 $365.0 $136.7 Sales to affiliates 2.0 -- -- 66.0 Total revenues 1,330.1 394.9 365.0 202.7 Depreciation 139.9 26.1 27.8 16.2 Total Interest charges (including Alloc Interest) (3) 72.1 11.3 9.6 3.9 Allocated interest expense (3) -- -- 9.4 (0.4) Provisions (benefit) for income taxes 74.6 14.4 50.9 2.5 Net income (loss) from continuing operations $123.5 $22.9 $90.5 $10.3 (7) 2004 Revenues - outsiders $1,271.7 $315.8 $245.5 $122.2 Sales to affiliates 2.7 -- -- 58.3 Total revenues 1,274.4 315.8 245.5 180.5 Depreciation 135.5 25.4 27.5 16.5 Total Interest charges (including Alloc Interest) (3) 71.8 11.4 7.7 3.6 Allocated interest expense (3) -- -- 7.8 (0.7) (Benefit) provisions for income taxes 72.1 13.6 25.3 1.6 Net (loss) income from continuing operations $119.2 $21.7 $45.6 $3.6 (7) Nine Months ended September 30, TECO TWG Other & TECO (2) Guatemala Merchant Eliminations Energy 2005 Revenues - outsiders $5.8 $0.5 $9.1 $2,240.1 Sales to affiliates -- -- (68.0) -- Total revenues 5.8 0.5 (58.9) 2,240.1 Depreciation 0.5 0.4 0.3 211.2 Total Interest charges (including Alloc Interest) (3) 10.7 10.2 102.4 220.2 Allocated interest expense (3) 10.6 10.2 (29.8) -- Provisions (benefit) for income taxes (2.8) (8.2) (60.4) 71.0 Net income (loss) from continuing operations $33.4 $(14.6) $(107.6) (4) $158.4 2004 Revenues - outsiders $10.0 $4.5 $13.3 $1,983.0 Sales to affiliates -- -- (61.0) -- Total revenues 10.0 4.5 (47.7) 1,983.0 Depreciation 0.6 0.8 0.7 207.0 Total Interest charges (including Alloc Interest) (3) 11.1 40.8 98.6 245.0 Allocated interest expense (3) 10.9 40.7 (60.1) (1.4) (Benefit) provisions for income taxes 18.8 (5) (78.5) (38.4) 14.5 Net (loss) income from continuing operations $9.3 (5) $(142.7) (6) $(61.1)(4) $(4.4) Twelve Months Ended September 30, Tampa Peoples TECO TECO Electric Gas Coal Transport 2005 Revenues - outsiders $1,740.2 $496.3 $447.1 $188.0 Sales to affiliates 2.9 -- -- 83.9 Total revenues 1,743.1 496.3 447.1 271.9 Depreciation 185.3 34.8 36.6 21.7 Restructuring costs -- 0.6 -- -- Total Interest charges (including Alloc Interest) (3) 96.0 15.1 13.0 5.1 Allocated interest expense (3) -- -- 12.8 (0.6) (Benefit) provision for income taxes 86.4 18.1 48.4 (8) 5.5 Net (loss) income from continuing operations $150.3 $28.9 $106.2 (8) $16.9 (7) 2004 Revenues - outsiders $1,651.1 $399.3 $315.9 $168.0 Sales to affiliates 3.5 -- -- 77.6 Total revenues 1,654.6 399.3 315.9 245.6 Depreciation 187.7 33.5 36.7 21.8 Restructuring costs 7.7 2.4 -- 1.7 Total Interest charges (including Alloc Interest) (3) 90.6 15.2 10.8 4.8 Allocated interest expense (3) -- -- 10.8 (0.9) (Benefit) provision for income taxes 81.9 17.0 14.5 (8) 3.1 Net income (loss) from continuing operations $134.2 $26.7 $57.8 (8) $6.5 (7) Twelve Months Ended September 30, TECO TWG Other & TECO (2) Guatemala Merchant Eliminations Energy 2005 Revenues - outsiders $7.2 $3.5 $14.1 $2,896.4 Sales to affiliates -- -- (86.8) -- Total revenues 7.2 3.5 (72.7) 2,896.4 Depreciation 0.7 0.6 0.5 280.2 Restructuring costs -- 0.5 -- 1.1 Total Interest charges (including Alloc Interest) (3) 14.4 20.0 134.4 298.0 Allocated interest expense (3) 14.0 20.1 (46.6) (0.3) (Benefit) provision for income taxes (13.5) (243.7) (89.8) (188.6) Net (loss) income from continuing operations $29.8 (5) $(405.9) (6) $(119.0) (4)$(192.8) 2004 Revenues - outsiders $26.2 $0.4 $14.5 $2,575.4 Sales to affiliates -- -- (81.1) -- Total revenues 26.2 0.4 (66.6) 2,575.4 Depreciation 3.2 0.9 0.8 284.6 Restructuring costs 0.7 0.1 1.0 13.6 Total Interest charges (including Alloc Interest) (3) 11.1 59.7 140.4 332.6 Allocated interest expense (3) 14.5 54.3 (81.1) (2.4) (Benefit) provision for income taxes 25.2 (5) (92.7) (83.2) (34.2) Net income (loss) from continuing operations $20.0 (5) $(166.2) (6) $(59.6) (4) $19.4 (1) During the first quarter of 2005, as part of its continued focus on core utility and profitable unregulated operations, the company revised internal reporting information used for decision-making purposes. With this change, management began to view the results and performance of TECO Guatemala, Inc. (formerly Non-Merchant, Inc.), or TECO Guatemala, as a separate reportable segment comprised of all Guatemalan operations. TECO Guatemala includes the results of operations for the San Jose and Alborada power plants, its minority ownership interest in EEGSA and Hardee Power Partners (HPP) prior to its sale in October 2003. Results for TECO Guatemala were previously reported in the Other Unregulated segment which is now reported in Other & Eliminations. Prior year results have been restated to reflect the revised segment structure. (2) All periods have been adjusted to reflect the reclassification of results from continuing operations to discontinued operations for the Commonwealth Chesapeake and Frontera operations (previously part of TWG Merchant), and BCH Mechanical and other Energy Services operations (previously part of Other Unregulated). (3) Segment net income is reported on a basis that includes internally allocated financing costs. Allocated interest is included in Total interest charges. (4) Results for the 9 months, and 12 months ended Sep. 30, 2005 include a $45.0 million after-tax debt extinguishment charge at TECO Parent. The 9 months and 12 months ended Sep. 30, 2004 include a $12.2 million after-tax gain for the propane sale, partially offset by a $3.4 million after-tax impairment charge at TECO Fiber. (5) TECO Guatemala's results for the 12 months ended Sep. 30, 2005 include a $12.8 million after-tax impairment charge for steam turbines. Results for the 9 months and 12 months ended Sep. 30, 2004 include a $6.7 million after-tax charge related to the refinancing of the debt associated with the San Jose power station in Guatemala and $19.3 million for income taxes due to the repatriation of cash from Guatemala following the refinancing. Additionally, results for the 12 months ended Sep. 30, 2004 include after-tax charges of $13.2 million for steam turbine impairments, $9.0 million for asset impairments on cancelled TWG projects, $5.9 million of other charges, and $34.4 million for the after-tax operating income and gain and on the sale of Hardee Power Partners. (6) TWG Merchant's results for the 12 months ended Sep. 30, 2005 include after-tax charges of $379.8 million for valuation adjustments for the Dell and McAdams power stations. Results for the 9 months and 12 months ended Sep. 30, 2004 include a $99.0 million after-tax write-off for its investment in the Texas Independent Energy (TIE) project. (7) TECO Transport's results for the 3 months, 9 months and 12 months ended Sep. 30, 2005 include a $2.9 million loss from direct storm costs. The 9 months and 12 months ended Sep. 30, 2004 include a $0.8 million after-tax asset impairment charge. (8) TECO Coal's results for the 12 months ended Sep. 30, 2005 include a $7.0 million positive adjustment related to Section 29 tax credits that had been written-off in 2003's fourth quarter due to projected limitations on taxable income prior to filing the TECO Energy 2003 tax return. The 12 months ended Sep. 30, 2004 include a $7.0 million tax credit write-off. TAMPA ELECTRIC COMPANY ELECTRIC OPERATING STATISTICS (Unaudited) Operating Revenues* Three Months Ended Percent September 30, 2005 2004 Change Residential $270,722 $248,151 9.1 Commercial 147,695 139,507 5.9 Industrial -- Phosphate 16,313 15,339 6.3 Industrial -- Other 25,679 24,717 3.9 Other sales of electricity 38,733 36,876 5.0 Deferred and other revenues (78,951) (12,102) -- $420,191 $452,488 (7.1) Sales for resale 14,391 11,232 28.1 Other operating revenue 10,346 10,220 1.2 SO2 Allowance Sales 79,758 -- -- $524,686 $473,940 10.7 Average customers 637,110 620,114 2.7 Sales -- Kilowatt-hours* Three Months Ended Percent September 30, 2005 2004 Change Residential 2,813,497 2,543,240 10.6 Commercial 1,810,958 1,665,683 8.7 Industrial -- Phosphate 284,557 258,307 10.2 Industrial -- Other 352,836 335,271 5.2 Other sales of electricity 464,395 428,860 8.3 Deferred and other revenues -- -- -- 5,726,243 5,231,361 9.5 Sales for resale 232,684 181,814 28.0 Other operating revenue -- -- -- SO2 Allowance Sales -- -- -- 5,958,927 5,413,175 10.1 Average customers -- -- -- Retail Output to Line 6,058,064 5,509,569 10.0 Operating Revenues* Nine Months Ended September 30, Percent 2005 2004 Change Residential $640,504 $627,313 2.1 Commercial 387,970 378,296 2.6 Industrial -- Phosphate 49,371 50,660 (2.5) Industrial -- Other 72,255 73,440 (1.6) Other sales of electricity 104,484 103,630 0.8 Deferred and other revenues (72,029) (17,072) -- $1,182,555 $1,216,267 (2.8) Sales for resale 38,926 30,477 27.7 Other operating revenue 28,880 27,698 4.3 SO2 Allowance Sales 79,758 -- -- $1,330,119 $1,274,442 4.4 Average customers 633,278 618,281 2.4 Sales -- Kilowatt-hours* Nine Months Ended September 30, Percent 2005 2004 Change Residential 6,552,081 6,351,228 3.2 Commercial 4,688,059 4,480,587 4.6 Industrial -- Phosphate 896,729 908,591 (1.3) Industrial -- Other 996,837 1,000,744 (0.4) Other sales of electricity 1,223,450 1,191,146 2.7 Deferred and other revenues -- -- -- 14,357,156 13,932,296 3.0 Sales for resale 610,232 491,084 24.3 Other operating revenue -- -- -- SO2 Allowance Sales -- -- -- 14,967,388 14,423,380 3.8 Average customers -- -- -- Retail Output to Line 15,265,509 14,781,553 3.3 Operating Revenues* Twelve Months Ended September 30, Percent 2005 2004 Change Residential $833,412 $807,399 3.2 Commercial 515,136 494,119 4.3 Industrial -- Phosphate 67,353 66,898 0.7 Industrial -- Other 96,150 95,696 0.5 Other sales of electricity 140,048 136,613 2.5 Deferred and other revenues (77,265) (20,534) -- $1,574,834 $1,580,191 (0.3) Sales for resale 49,516 39,300 26.0 Other operating revenue 38,959 35,041 11.2 SO2 Allowance Sales 79,758 -- -- $1,743,067 $1,654,532 5.4 Average customers 630,784 616,318 2.3 Sales -- Kilowatt-hours* Twelve Months Ended September 30, Percent 2005 2004 Change Residential 8,493,681 8,256,357 2.9 Commercial 6,195,524 5,938,426 4.3 Industrial -- Phosphate 1,216,887 1,227,110 (0.8) Industrial -- Other 1,323,011 1,328,401 (0.4) Other sales of electricity 1,632,426 1,594,891 2.4 Deferred and other revenues -- -- -- 18,861,529 18,345,185 2.8 Sales for resale 783,772 627,450 24.9 Other operating revenue -- -- -- SO2 Allowance Sales -- -- -- 19,645,301 18,972,635 3.5 Average customers -- -- -- Retail Output to Line 19,865,716 19,278,377 3.0 * in thousands PEOPLES GAS SYSTEM GAS OPERATING STATISTICS (Unaudited) Operating Revenues* Therms* Three Months Ended Percent Percent September 30, 2005 2004 Change 2005 2004 Change By Customer Segment: Residential $21,526 $18,931 13.7 9,603 8,974 7.0 Commercial 33,548 29,605 13.3 79,229 77,292 2.5 Industrial 3,159 2,081 51.8 45,393 46,344 (2.1) Off System Sales 68,374 31,866 -- 64,650 55,701 16.1 Power generation 4,388 2,604 68.5 107,483 75,902 41.6 Other revenues 8,177 7,149 14.4 -- $139,172 $92,236 50.9 306,358 264,213 16.0 By Sales Type: System supply $110,787 $67,378 64.4 90,545 80,210 12.9 Transportation 20,208 17,709 14.1 215,813 184,003 17.3 Other revenues 8,177 7,149 14.4 -- -- -- $139,172 $92,236 50.9 306,358 264,213 16.0 Average customers 318,475 306,856 3.8 -- -- -- Operating Revenues* Therms* Nine Months Ended Percent Percent September 30, 2005 2004 Change 2005 2004 Change By Customer Segment: Residential $98,074 $87,653 11.9 53,423 51,179 4.4 Commercial 124,611 115,507 7.9 287,584 276,871 3.9 Industrial 8,443 7,737 9.1 156,996 167,893 (6.5) Off System Sales 128,870 71,673 79.8 152,082 136,643 11.3 Power generation 9,989 8,093 23.4 227,628 220,564 3.2 Other revenues 24,913 25,132 (0.9) -- $394,900 $315,795 25.0 877,713 853,150 2.9 By Sales Type: System supply $305,088 $230,086 32.6 267,672 250,971 6.7 Transportation 64,899 60,577 7.1 610,041 602,179 1.3 Other revenues 24,913 25,132 (0.9) -- $394,900 $315,795 25.0 877,713 853,150 2.9 Average customers 318,233 306,124 4.0 -- -- -- Operating Revenues* Therms* Twelve Months Ended Percent Percent September 30, 2005 2004 Change 2005 2004 Change By Customer Segment: Residential $125,424 $113,148 10.8 68,064 66,012 3.1 Commercial 160,887 149,898 7.3 378,835 367,508 3.1 Industrial 10,864 10,355 4.9 210,354 224,653 (6.4) Off System Sales 153,540 82,569 86.0 193,639 164,491 17.7 Power generation 13,022 10,586 23.0 298,707 298,431 0.1 Other revenues 32,539 32,766 (0.7) -- -- $496,276 $399,322 24.3 1,149,599 1,121,095 2.5 By Sales Type: System supply $378,139 $286,328 32.1 343,102 314,639 9.0 Transportation 85,598 80,228 6.7 806,497 806,456 0.0 Other revenues 32,539 32,766 (0.7) -- -- $496,276 $399,322 24.3 1,149,599 1,121,095 2.5 Average customers 316,453 303,505 4.3 -- -- --