Long-Term Debt

12 Months Ended

Dec. 31, 2012

7. Long-Term Debt

At Dec. 31, 2012, total long-term debt had a carrying amount of $2,972.7 million and an estimated fair market value of $3,439.4 million. At Dec. 31, 2011, total long-term debt had a carrying amount of $3,073.4 million and an estimated fair market value of $3,432.9 million. The company uses the market approach in determining fair value. The majority of the outstanding debt is valued using real-time financial market data obtained from Bloomberg Professional Service. The remaining securities are valued using prices obtained from the Municipal Securities Rulemaking Board and by applying estimated credit spreads obtained from a third party to the par value of the security. All debt securities are level 2 instruments.

TECO Finance is a wholly-owned subsidiary of TECO Energy. TECO Finance’s sole purpose is to raise capital for TECO Energy’s diversified businesses. TECO Energy is a full and unconditional guarantor of TECO Finance’s securities, and no other subsidiaries of TECO Energy, Inc. guarantee TECO Finance’s securities.

A substantial part of Tampa Electric’s tangible assets are pledged as collateral to secure its first mortgage bonds. There are currently no bonds outstanding under Tampa Electric’s first mortgage bond indenture.

TECO Energy’s maturities and annual sinking fund requirements of long-term debt for 2013 through 2017 and thereafter are as follows:


Long-Term Debt Maturities

As of Dec. 31, 2012 (millions)	2013		2014		2015		2016		2017		Thereafter		Total Long-Term Debt

TECO Finance		$0.0		$0.0		$191.2		$250.0		$300.0		$300.0		$1,041.2
Tampa Electric		0.0		83.3		83.3		83.4		0.0		1,452.5		1,702.5
PGS		0.0		0.0		0.0		0.0		0.0		231.7		231.7

Total long-term debt maturities		$0.0		$83.3		$274.5		$333.4		$300.0		$1,984.2		$2,975.4

Debt Securities

Redemption of TECO Energy, Inc. 6.75% Notes due 2015

On Dec. 5, 2012, TECO Energy redeemed $8.8 million of 6.75% Notes due May 15, 2015. The redemption price was equal to $1,141.86 per $1,000.00 principal amount of notes redeemed, plus accrued and unpaid interest on the redeemed notes up to the redemption date. In connection with this transaction, $1.2 million of premiums were expensed, and are included in “Loss on debt extinguishment” on the Consolidated Statements of Income and as part of the “Cash flows from operating activities” in the Consolidated Statements of Cash Flows for the twelve months ended Dec. 31, 2012.

Redemption of Hillsborough County Industrial Development Authority Pollution Control Revenue Refunding Bonds (Tampa Electric Company Project), Series 2002

On Oct. 1, 2012, TEC redeemed $147.1 million of Hillsborough County Industrial Development Authority Pollution Control Revenue Refunding Bonds (Tampa Electric Company Project), Series 2002 due Oct. 1, 2013 and Oct. 1, 2023 (2002 Bonds) at a redemption price equal to 100% of the principal amount of the 2002 Bonds to be redeemed, plus accrued and unpaid interest to Oct. 1, 2012. Before the optional redemption, $60.7 million of the 2002 Bonds due Oct. 1, 2013 bore interest at 5.1% and $86.4 million of the 2002 Bonds due Oct. 1, 2023 bore interest at 5.5%.

Issuance of Tampa Electric Company 2.60% Notes due 2022

On Sept. 28, 2012, TEC completed an offering of $250 million aggregate principal amount of 2.60% Notes due 2022 (the 2022 Notes). The 2022 Notes were sold at 99.878% of par. The offering resulted in net proceeds to TEC (after deducting underwriting discounts and commissions and estimated offering expenses) of approximately $247.7 million. Net proceeds were used to repay the 2002 Bonds. The remaining net proceeds were used to repay short-term debt and for general corporate purposes. At any time prior to June 15, 2022, TEC may redeem all or any part of the 2022 Notes at its option at a redemption price equal to the greater of (i) 100% of the principal amount of 2022 Notes to be redeemed or (ii) the sum of the present values of the remaining payments of principal and interest on the 2022 Notes to be redeemed, discounted to the redemption date on a semiannual basis at an applicable treasury rate, plus 15 basis points; in either case, the redemption price would include accrued and unpaid interest to the redemption date. At any time on or after June 15, 2022, TEC may at its option redeem the 2022 Notes, in whole or in part, at 100% of the principal amount of the 2022 Notes being redeemed plus accrued and unpaid interest thereon to but excluding the date of redemption.

Issuance of Tampa Electric Company 4.10% Notes due 2042

On June 5, 2012, TEC completed an offering of $300 million aggregate principal amount of 4.10% Notes due 2042 (the 2042 Notes). The 2042 Notes were sold at 99.724% of par. The offering resulted in net proceeds to TEC (after deducting underwriting discounts, commissions, and estimated offering expenses and before settlement of interest rate swaps) of approximately $296.2 million. Net proceeds were used to repay maturing long-term debt, to repay short-term debt and for general corporate purposes. At any time prior to Dec. 15, 2041, TEC may redeem all or any part of the 2042 Notes at its option and from time to time at a redemption price equal to the greater of (i) 100% of the principal amount of the 2042 Notes to be redeemed or (ii) the sum of the present value of the remaining payments of principal and interest on the 2042 Notes to be redeemed, discounted at an applicable treasury rate, plus 25 basis points; in either case, the redemption price would include accrued and unpaid interest to the redemption date. At any time on or after Dec. 15, 2041, TEC may at its option redeem the 2042 Notes, in whole or in part, at 100% of the principal amount of the 2042 Notes being redeemed plus accrued and unpaid interest thereon to but excluding the date of redemption.

Purchase in Lieu of Redemption of Hillsborough County Industrial Development Authority Pollution Control Revenue Refunding Bonds, Series 2006 and Polk County Industrial Development Authority Solid Waste Disposal Facility Revenue Refunding Bonds (Tampa Electric Company Project), Series 2010

On March 15, 2012, TEC purchased in lieu of redemption $86 million HCIDA Pollution Control Revenue Refunding Bonds (Tampa Electric Company Project), Series 2006 (the HCIDA Bonds). On March 19, 2008, the HCIDA remarketed the HCIDA Bonds in a term-rate mode pursuant to the terms of the Loan and Trust Agreement governing those bonds. The HCIDA Bonds bore interest at a term rate of 5.00% per annum from March 19, 2008 to March 15, 2012. TEC is responsible for payment of the interest and principal associated with the HCIDA Bonds. Regularly scheduled principal and interest when due are insured by Ambac Assurance Corporation.

On March 1, 2011, TEC purchased in lieu of redemption $75 million PCIDA Solid Waste Disposal Facility Revenue Refunding Bonds (Tampa Electric Company Project), Series 2010 (the PCIDA Bonds). On Nov. 23, 2010, the PCIDA issued the PCIDA Bonds in a term-rate mode pursuant to the terms of the Loan and Trust Agreement governing those bonds. Proceeds of the PCIDA Bonds were used to redeem $75 million PCIDA Solid Waste Disposal Facility Revenue Refunding Bonds (Tampa Electric Company Project), Series 2007, which previously were in auction rate mode and were held by TEC since March 26, 2008. The PCIDA Bonds bore interest at the initial term rate of 1.50% per annum from Nov. 23, 2010 to March 1, 2011.

On March 26, 2008, TEC purchased in lieu of redemption $20 million HCIDA Pollution Control Revenue Refunding Bonds (Tampa Electric Company Project), Series 2007C. $181 million in bonds purchased in lieu of redemption were held by the trustee at the direction of TEC as of Dec. 31, 2012 (the Held Bonds) to provide an opportunity to evaluate refinancing alternatives. The Held Bonds effectively offset the outstanding debt balances and are presented net on the balance sheet.

Redemption of TECO Guatemala San José Project Notes

On Dec. 19, 2012, in conjunction with the closing on the sale of its equity interests in the San José Power Station, TECO Energy utilized $25.3 million of the sale proceeds to repay the San José project notes.

At Dec. 31, 2012 and 2011, TECO Energy had the following long-term debt outstanding:



Long-Term Debt *(millions) Dec. 31,*		Due	2012			2011

TECO Energy	Notes ⁽¹⁾⁽²⁾: 6.75% (effective rate of 6.9% for 2011)	2015		$0.0			$8.8

TECO Finance	Notes ^(1)(2)(3): 6.75% (effective rate of 6.9%)	2015		191.2			191.2
	4.0% (effective rate of 4.2%)	2016		250.0			250.0
	6.572% (effective rate of 7.3%)	2017		300.0			300.0
	5.15% (effective rate of 5.3%)	2020		300.0			300.0

Total long-term debt of TECO Finance				1,041.2			1,041.2

Tampa Electric	Installment contracts payable ⁽⁴⁾:
	5.1% Refunding bonds (effective rate of 5.6% for 2011)	2013		0.0			60.7
	5.65% Refunding bonds (effective rate of 5.9%)	2018		54.2			54.2
	Variable rate bonds repurchased in 2008 ⁽⁵⁾	2020		0.0			0.0
	5.5% Refunding bonds (effective rate of 6.2% for 2011)	2023		0.0			86.4
	5.15% Refunding bonds (effective rate of 5.4%) ⁽⁶⁾	2025		51.6			51.6
	1.5% Term rate bonds repurchased in 2011 ⁽⁷⁾	2030		0.0			0.0
	5.0% Refunding bonds repurchased in 2012
	(effective rate of 5.8% for 2011) ⁽⁸⁾	2034		0.0			86.0
	Notes ⁽¹⁾: 6.875% (effective rate of 7.1% for 2011)	2012		0.0			99.6
	6.375% (effective rate of 7.9% for 2011)	2012		0.0			208.7
	6.25% (effective rate of 6.3%) ⁽²⁾	2014-2016		250.0			250.0
	6.1% (effective rate of 6.4%)	2018		200.0			200.0
	5.4% (effective rate of 5.9%)	2021		231.7			231.7
	2.6% (effective rate of 2.7%)	2022		225.0			0.0
	6.55% (effective rate of 6.6%)	2036		250.0			250.0
	6.15% (effective rate of 6.2%)	2037		190.0			190.0
	4.1% (effective rate of 4.2%)	2042		250.0			0.0

Total long-term debt of Tampa Electric				1,702.5			1,768.9

PGS	Senior Notes ⁽¹⁾⁽²⁾: 8.00% for 2011	2012		0.0			3.4
	Notes ⁽¹⁾: 6.875% (effective rate of 7.1% for 2011)	2012		0.0			19.0
	6.375% (effective rate of 7.9% for 2011)	2012		0.0			44.3
	6.1% (effective rate of 7.0%)	2018		50.0			50.0
	5.4% (effective rate of 5.8%)	2021		46.7			46.7
	2.6% (effective rate of 2.7%)	2022		25.0			0.0
	6.15% (effective rate of 6.2%)	2037		60.0			60.0
	4.1% (effective rate of 4.2%)	2042		50.0			0.0

Total long-term debt of PGS				231.7			223.4

TECO Guatemala	San José Project Notes ⁽¹⁾⁽²⁾: 3.00% Fixed rate for 2011			0.0			33.5

Total long-term debt of TECO Energy				2,975.4			3,075.8

Unamortized debt discount, net				(2.7	)		(2.4)

Total carrying amount of long-term debt				2,972.7			3,073.4
Less amount due within one year				0.0			386.1

Total long-term debt				$2,972.7			$2,687.3

(1)	These securities are subject to redemption in whole or in part, at any time, at the option of the company.

(2)	These long-term debt agreements contain various restrictive financial covenants.

(3)	Guaranteed by TECO Energy.

(4)	Tax-exempt securites.

(5)	In March 2008 these bonds, which were in auction rate mode, were purchased in lieu of redemption by TEC. These held variable rate bonds have a par amount of $20.0 million due in 2020.

(6)	These bonds were converted in March 2008 from an auction rate mode to a fixed rate mode for the term ending Sep. 1, 2013.

(7)	In March 2011 these bonds, which were in term rate mode, were purchased in lieu of redemption by TEC. These held term rate bonds have a par amount of $75.0 million due in 2030.

(8)	In March 2012 these bonds, which were in term rate mode, were purchased in lieu of redemption by TEC. These held term rate bonds have a par amount of $86.0 million due in 2034.

TAMPA ELECTRIC CO [Member]

Long-Term Debt

7. Long-Term Debt

Debt Securities

Redemption of Hillsborough County Industrial Development Authority Pollution Control Revenue Refunding Bonds (Tampa Electric Company Project), Series 2002

On Oct. 1, 2012, TEC redeemed $147.1 million of Hillsborough County Industrial Development Authority Pollution Control Revenue Refunding Bonds (Tampa Electric Company Project), Series 2002 due Oct. 1, 2013 and Oct. 1, 2023 (the 2002 Bonds) at a redemption price equal to 100% of the principal amount of the 2002 Bonds to be redeemed, plus accrued and unpaid interest to Oct. 1, 2012. Before the optional redemption, $60.7 million of the 2002 Bonds due Oct. 1, 2013 bore interest at 5.1% and $86.4 million of the 2002 Bonds due Oct. 1, 2023 bore interest at 5.5%.

Issuance of Tampa Electric Company 2.60% Notes due 2022

Issuance of Tampa Electric Company 4.10% Notes due 2042