Discontinued Operations, Assets Held for Sale and Asset Impairments Sale

9 Months Ended

Sep. 30, 2014

Discontinued Operations And Disposal Groups [Abstract]

Discontinued Operations, Assets Held for Sale and Asset Impairments Sale

15. Discontinued Operations, Assets Held for Sale and Asset Impairments

TECO Coal Company

On Sept. 29, 2014, the Board of Directors of TECO Energy authorized management to enter into negotiations for the sale of TECO Coal. As a result, the TECO Coal segment was accounted for as an asset held for sale and discontinued operation at Sept. 30, 2014, which for the quarter includes TECO Coal’s operating results and a pretax $98.4 million impairment charge related to the held-for-sale TECO Coal assets. This charge represents the write down to TECO Coal’s implied fair value of the binding offer less estimated costs to sell. Although the offer is a binding offer, the fair value measurement is considered a Level 2 measurement since the market is not active as defined by accounting standards (i.e. transactions for these assets are too infrequent to provide pricing information on an ongoing basis).  

As reported in Note 18, on Oct. 17, 2014, TECO Diversified entered into an SPA to sell all of its ownership interest in TECO Coal to Cambrian Coal Corporation for $120 million plus contingent payments of up to $50 million that may be paid between 2015 and 2019 depending on specified coal benchmark prices.  The SPA also contains indemnification provisions subject to specified limitations as to time and amount. Closing on the sale is subject to the purchaser obtaining financing, and other normal closing conditions. After closing, TECO Energy will not have influence over operations of TECO Coal, therefore the contingent payments and indemnification provisions are not considered direct cash flows. The resulting sale price reflected in the SPA did not materially change from implied fair value of the binding offer.

The following table provides a summary of the carrying amounts of the significant assets and liabilities reported in the combined current and non-current “Assets held for sale” and “Liabilities associated with assets held for sale” line items:

Assets held for sale
(millions)	Sep 30, 2014
Current assets	$	133.7
Property, plant and equipment, net and other long-term assets		78.6
Total assets held for sale	$	212.3

Liabilities associated with assets held for sale
(millions)
Current liabilities	$	41.1
Long-term liabilities		64.4
Total liabilities associated with assets held for sale	$	105.5

TECO Guatemala

In 2012, TECO Guatemala completed the sale of its interests in the Alborada and San José power stations, and related solid fuel handling and port facilities in Guatemala. All periods have been adjusted to reflect the reclassification of results from operations to discontinued operations for TECO Guatemala and certain charges at Parent that directly relate to TECO Guatemala. Additionally, in March 2014, an indemnification provision for an uncertain tax position at TCAE that was provided for in the 2012 purchase agreement was reversed due to favorable final decision by the highest court in Guatemala, resulting in the income from operations amount shown in the table below.

Combined Components of Discontinued Operations

The following table provides selected components of discontinued operations related to the sales of TECO Coal and TECO Guatemala:

Components of income from discontinued operations	Three months ended						Nine months ended
	Sep 30,						Sep 30,
(millions)	2014			2013			2014			2013
Revenues	$	101.6		$	123.7		$	328.3		$	370.0
(Loss) Income from operations (1)		(0.4	)		(2.9	)		0.8			0.0
(Loss) on impairment		(98.4	)		0.0			(98.4	)		0.0
(Loss) Income from discontinued operations (2)		(98.8	)		(2.9	)		(97.6	)		0.0
(Benefit) Provision for income taxes (3)		(36.9	)		(1.4	)		(38.2	)		(2.4	)
(Loss) Income from discontinued operations, net	$	(61.9	)	$	(1.5	)	$	(59.4	)	$	2.4

(1) TECO Guatemala related amounts included above are $(0.2) million and $5.0 million during the three months ended Sept. 30, 2013 and nine months ended Sept. 30, 2014, respectively.  Other periods have no reportable amount.

(2) TECO Guatemala related amounts included above are $(0.2) million and $5.0 million during the three months ended Sept. 30, 2013 and nine months ended Sept. 30, 2014, respectively.  Other periods have no reportable amount.

(3) TECO Guatemala related amounts included above are $(0.1) million and $1.9 million during the three months ended Sept. 30, 2013 and nine months ended Sept. 30, 2014, respectively.  Other periods have no reportable amount.