-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, V74+OqA0BIErY3zFMDEXaMGd+3f1ZTI55IofxakqDoj7eIUElWJQ/q0b4Ab9BRFL +0MUYdyUVg/lJzM9NiW1Dg== 0000950120-04-000554.txt : 20040824 0000950120-04-000554.hdr.sgml : 20040824 20040824120203 ACCESSION NUMBER: 0000950120-04-000554 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20040823 ITEM INFORMATION: Results of Operations and Financial Condition FILED AS OF DATE: 20040824 DATE AS OF CHANGE: 20040824 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TUCSON ELECTRIC POWER CO CENTRAL INDEX KEY: 0000100122 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 860062700 STATE OF INCORPORATION: AZ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-05924 FILM NUMBER: 04993412 BUSINESS ADDRESS: STREET 1: ONE SOUTH CHURCH AVENUE STREET 2: SUITE 100 CITY: TUCSON STATE: AZ ZIP: 85701 BUSINESS PHONE: 520-571-4000 MAIL ADDRESS: STREET 1: ONE SOUTH CHURCH AVENUE, SUITE 100 STREET 2: P.O. BOX 711 CITY: TUCSON STATE: AZ ZIP: 85702 FORMER COMPANY: FORMER CONFORMED NAME: TUCSON GAS & ELECTRIC CO /AZ/ DATE OF NAME CHANGE: 19790528 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNISOURCE ENERGY CORP CENTRAL INDEX KEY: 0000941138 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 860786732 STATE OF INCORPORATION: AZ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-13739 FILM NUMBER: 04993411 BUSINESS ADDRESS: STREET 1: ONE SOUTH CHURCH AVENUE STREET 2: SUITE 100 CITY: TUCSON STATE: AZ ZIP: 85701 BUSINESS PHONE: 520-571-4000 MAIL ADDRESS: STREET 1: ONE SOUTH CHURCH AVENUE, SUITE 100 STREET 2: P.O. BOX 711 CITY: TUCSON STATE: AZ ZIP: 85702 8-K 1 uni_8k.txt FORM 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED: AUGUST 23, 2004) IRS Employer Commission Registrant; State of Incorporation; Identification File Number Address; and Telephone Number Number - ----------- ----------------------------------- ---------------- 1-13739 UNISOURCE ENERGY CORPORATION 86-0786732 (An Arizona Corporation) One South Church Avenue, Suite 100 Tucson, AZ 85701 (520) 571-4000 1-5924 TUCSON ELECTRIC POWER COMPANY 86-0062700 (An Arizona Corporation) One South Church Avenue, Suite 100 Tucson, AZ 85701 (520) 571-4000 ITEM 2.02. DISCLOSURE OF RESULTS AND FINANCIAL CONDITION - -------------------------------------------------------- On August 23, 2004, UniSource Energy Corporation (UniSource Energy) issued a press release announcing second quarter and year-to-date earnings for the period ended June 30, 2004 for UniSource Energy and Tucson Electric Power Company (TEP). UniSource Energy and TEP will amend their prior Securities and Exchange Commission filings on Form 10-K for the year ended December 31, 2003 and on Form 10-Q for the quarter ended March 31, 2004 to restate prior financial statements to reflect the effect of procedural changes related to the estimation of unbilled revenue. A copy of the press release is attached as Exhibit 99. On August 5, 2004, UniSource Energy disclosed in an 8-K that it would likely delay the filing of its Report on Form 10-Q for the period ended June 30, 2004 and was considering restatement of prior financial statements. The earnings release includes the presentation of TEP, UniSource Energy Services (UES) and Millennium Energy Holdings, Inc.'s (Millennium) net income or loss on a per UniSource Energy share basis. UniSource Energy believes that the presentation of TEP, UES and Millennium net income or loss on a per UniSource Energy share basis, non-GAAP financial measures, provide useful information to investors by disclosing the results of operations of its business segments on a basis consistent with UniSource Energy's reported earnings. Exhibit 99 UniSource Energy Corporation Press Release, dated August 23, 2004. - Page 2 of 3 - SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The signature for each undersigned company shall be deemed to relate only to matters having reference to such company or its subsidiaries. UNISOURCE ENERGY CORPORATION (Registrant) /s/ Kevin P. Larson ----------------------------- Date: August 24, 2004 Vice President and Principal Financial Officer TUCSON ELECTRIC POWER COMPANY (Registrant) /s/ Kevin P. Larson Date: August 24, 2004 ----------------------------------- Vice President and Principal Financial Officer - Page 3 of 3 - EX-99 2 exh99.txt EXHIBIT 99 - PRESS RELEASE [LOGO OMITTED] UNISOURCE ENERGY NEWS FOR IMMEDIATE RELEASE August 23, 2004 Media Contact: Art McDonald, (520) 884-3628 Page 1 of 5 Financial Analyst Contact: Jo Smith, (520) 884-3650 UNISOURCE ENERGY REPORTS SOLID SECOND QUARTER EARNINGS TUCSON, ARIZ. - UniSource Energy Corporation (NYSE: UNS) today reported earnings for the second quarter of 2004 of $13 million, or $0.37 per share of common stock. Increased retail and wholesale electricity sales at Tucson Electric Power Company (TEP), UniSource Energy's principal subsidiary, and higher availability of TEP's coal-fired generators were among several factors that contributed to improved second quarter earnings. During the second quarter of 2004, TEP determined that its methodology for estimating unbilled revenues resulted in an under reporting of revenues in prior periods. As a result, TEP adopted new methodology to estimate unbilled revenues. UniSource Energy and TEP will amend their prior Securities and Exchange Commission filings on Form 10-K for the year ended December 31, 2003 and on Form 10-Q for the quarter ended March 31, 2004 to reflect the effect of these procedural changes in its prior financial statements. These changes will result in TEP (and UniSource Energy on a consolidated basis) recognizing additional net income of $1.3 million in 2003, $1.7 million in 2002, and $2.5 million in 2001. The restated net income for UniSource Energy is $113.9 million in 2003, $34.9 million in 2002 and $63.8 million in 2001. In addition, the effect of restating periods prior to 2001 resulted in an $11.3 million increase in common stock equity from $374.2 million to $385.5 million as of December 31, 2000. In the second quarter of 2004, TEP's utility gross margin (total operating revenues minus fuel and purchased energy) increased $14 million, or 10%, compared with the second quarter of 2003. In the three months ended June 30, 2003, UniSource Energy's restated earnings of $7 million, or $0.20 per share, reflect the impact of unplanned plant outages which led to reduced wholesale energy sales and higher replacement power costs. "Our strong performance reflects the reliability of our utility operations, continued growth in our service territories and the dedication of our employees," said James S. Pignatelli, Chairman, President and Chief Executive Officer. "We haven't allowed our company's pending acquisition to distract us from our central mission to meet the needs of our customers and deliver results for shareholders." In November 2003, UniSource Energy entered into an agreement that provides for the acquisition of all of the company's outstanding common stock for $25.25 per share by Saguaro Utility Group L.P., an Arizona limited partnership whose general partner is Sage Mountain, L.L.C. and whose limited partners include investment funds affiliated with Kohlberg Kravis Roberts & Co., L.P., J.P. Morgan Partners, LLC, and Wachovia Capital Partners. UniSource Energy's shareholders voted on March 29, 2004 to approve the acquisition agreement. The acquisition, which also requires certain regulatory approvals, is expected to occur in the fourth quarter of 2004. Results from the second quarter of 2004 included $1 million in expenses related to the proposed acquisition of UniSource Energy UniSource Energy Services (UES), a subsidiary that provides natural gas and electricity in northern and southern Arizona, contributed $0.5 million to second quarter earnings. Millennium Energy Holdings (MEH), which oversees UniSource Energy's unregulated investments, reported a net loss of $3 million in the second quarter of 2004 after recording a net loss of $4 million in the same period last year. TUCSON ELECTRIC POWER COMPANY TEP reported second quarter earnings of $18 million, or $0.52 per UniSource Energy share, compared with restated earnings of $14 million, or $0.40 per UniSource Energy share, in the same period last year. Retail kilowatt-hour (kWh) sales increased 5 percent in the second quarter of 2004 over the same period last year. Retail revenues increased by $12 million compared with the second quarter of 2003. TEP's retail customer base grew 2 percent to 370,894 between the second quarters of 2003 and 2004. Higher power prices and the increased availability of TEP's coal-fired generating facilities during the second quarter of 2004 led to a $7 million increase in TEP's wholesale revenues compared to the same period last year. Wholesale power prices on the Dow Jones Palo Verde Index averaged $44 per megawatt-hour (MWh) during the second quarter of 2004, compared with $39 per MWh during the second quarter of 2003. Energy output from TEP's coal-fired generating facilities increased 10% in the second quarter of 2004 over the same period last year. Other factors affecting TEP's earnings include a $4 million increase in Transition Recovery Asset amortization and a $3 million decline in total interest expense resulting from lower rates under TEP's credit agreement and lower capital lease obligation balances compared with last year. TEP recorded a $3 million reserve in the second quarter of 2004 to further reduce the amount of its outstanding receivable related to wholesale sales made to California in 2001 and 2000 that it believes are collectible. This amount was recorded as a reduction to wholesale revenue. UNISOURCE ENERGY SERVICES UES reported earnings of $0.5 million, or $0.02 per UniSource Energy share. The utility began providing gas and electric service through UNS Gas and UNS Electric in northern and southern Arizona in August 2003. During the second quarter of 2004, UNS Electric recorded retail revenues of $35 million, while UNS Gas produced retail revenues of $21 million. Customer growth at UES remains strong. Both UNS Gas' and UNS Electric's retail customer bases grew by over 1 percent during the second quarter of 2004. MILLENNIUM ENERGY HOLDINGS MEH reported a net loss of $3 million, or $0.10 per UniSource Energy share, compared with a loss of $4 million in the second quarter of 2003. Global Solar Energy, a MEH subsidiary, lost $2 million during the second quarter of 2004, compared with a loss of $4 million in the same period last year. YEAR-TO-DATE UniSource Energy's consolidated year-to-date earnings through June 30, 2004, were $19 million, or $0.56 per share, compared to $59 million, or $1.75 per share, during the same period last year as restated. Last year's results reflected the adoption of Financial Accounting Standard 143 (FAS 143), a new rule related to accounting for plant retirement and removal costs. TEP recorded a $67 million after-tax gain, or $2.00 per UniSource Energy share, in the first quarter of 2003 as a result of adopting FAS 143. Excluding the impact of FAS 143, UniSource Energy's consolidated year-to-date restated loss through June 2003 was $8 million, or $0.25 per share. QUARTERLY AND YEAR-TO-DATE EARNINGS PER SHARE SUMMARY
2ND QUARTER 2004 2003 Per UniSource Energy share (RESTATED) - --------------------------------------------------------------------- Tucson Electric Power $0.52 $0.40 UniSource Energy Services (1) 0.02 - Millenium Energy Holdings (0.10) (0.13) Inter-Company and Other (0.07) (0.07) - -------------------------------------------------------------------- UniSource Energy Consolidated $0.37 $0.20 ==================================================================== Avg. Shares Outstanding (millions) 34.4 33.8 YEAR-TO-DATE JUNE 30 2004 2003 Per UniSource Energy share (RESTATED) - --------------------------------------------------------------------- Tucson Electric Power $0.55 $0.16 UniSource Energy Services (1) 0.16 - Millenium Energy Holdings (0.04) (0.28) Inter-Company and Other (0.11) (0.13) - -------------------------------------------------------------------- Income Before Cumulative Effect of Accounting Change 0.56 (0.25) Cumulative Effect of Accounting Change - Net of Tax (2) - 2.00 - -------------------------------------------------------------------- UniSource Energy Consolidated $0.56 $1.75 ==================================================================== Avg. Shares Outstanding (millions) 34.3 33.8 (1) UniSource Energy Services began operations on August 11, 2003. (2) TEP results in the first six months of 2003 include an after-tax gain of $67 million for the Cumulative Effect of Accounting Change from the adoption of FAS 143.
UniSource Energy believes that the presentation of TEP, UES and MEH net income or loss on a per UniSource Energy share basis, which are non-GAAP financial measures, provides useful information to investors by disclosing the results of operations of its business segments on a basis consistent with UniSource Energy's reported earnings. EARNINGS OUTLOOK UniSource Energy's management has reaffirmed its 2004 full-year earnings estimate of $1.25 to $1.60 per share. UniSource Energy's earnings are subject to its utilities' seasonal energy sales. Generally, TEP records a significant portion of its earnings during the third quarter as a result of peak energy usage during the summer. In connection with the proposed acquisition of UniSource Energy, during 2004 UniSource Energy will seek to obtain all necessary regulatory approvals and comply with all of the conditions contained in the acquisition agreement so that the acquisition can occur in a timely manner. UniSource Energy's primary subsidiaries include Tucson Electric Power Company; UniSource Energy Services, provider of natural gas and electric service in northern and southern Arizona; and Millennium Energy Holdings, parent company of UniSource Energy's unregulated energy businesses. For more information about UniSource Energy and its subsidiaries, visit www.UniSourceEnergy.com. This news release contains forward-looking information that involves risks and uncertainties, that include, but are not limited to, the ability to obtain necessary approvals and satisfy other closing conditions contained in the acquisition agreement; the outcome of regulatory proceedings; the ongoing restructuring of the electric industry; regional economic and market conditions which could affect customer growth and the cost of fuel and power supplies; changes to long-term contracts; performance of TEP's generating plants; the weather; changes in asset depreciable lives; changes related to the recognition of unbilled revenue; the cost of debt and equity capital; changes in accounting standards; and other factors listed in UniSource Energy's Form 10-K and 10-Q filings with the Securities and Exchange Commission. The preceding factors may cause future results to differ materially from outcomes currently expected by UniSource Energy.
UNISOURCE ENERGY 2004 RESULTS UNISOURCE ENERGY CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME Three Months Ended INCREASE/(DECREASE) (in thousands of dollars, except per share amounts) June 30, ---------------------- (UNAUDITED) 2004 2003 RESTATED AMOUNT PERCENT - ----------------------------------------------------------------------------------------------------------------------- OPERATING REVENUES Electric Retail Sales $ 224,056 $ 177,237 $ 46,819 26.4 Electric Wholesale Sales 42,189 35,160 7,029 20.0 Gas Revenue 20,212 - 20,212 N/M Other Revenues 3,624 3,676 (52) (1.4) - ----------------------------------------------------------------------------------------------------------------------- TOTAL OPERATING REVENUES 290,081 216,073 74,008 34.3 - ----------------------------------------------------------------------------------------------------------------------- OPERATING EXPENSES Fuel 55,340 51,763 3,577 6.9 Purchased Energy 54,350 17,875 36,475 N/M Other Operations and Maintenance 57,646 49,490 8,156 16.5 Depreciation and Amortization 36,560 30,920 5,640 18.2 Amortization of Transition Recovery Asset 12,003 7,892 4,111 52.1 Taxes Other Than Income Taxes 12,611 11,152 1,459 13.1 - ----------------------------------------------------------------------------------------------------------------------- TOTAL OPERATING EXPENSES 228,510 169,092 59,418 35.1 - ----------------------------------------------------------------------------------------------------------------------- OPERATING INCOME 61,571 46,981 14,590 31.1 - ----------------------------------------------------------------------------------------------------------------------- OTHER INCOME (DEDUCTIONS) Interest Income 5,013 5,056 (43) (0.9) Other Income 1,945 1,752 193 11.0 Other Expense (4,305) (777) (3,528) N/M - ----------------------------------------------------------------------------------------------------------------------- TOTAL OTHER INCOME (DEDUCTIONS) 2,653 6,031 (3,378) (56.0) - ----------------------------------------------------------------------------------------------------------------------- INTEREST EXPENSE Long-Term Debt 20,032 19,113 919 4.8 Interest on Capital Leases 20,065 20,796 (731) (3.5) Other Interest Expense, Net of Amounts Capitalized (329) 393 (722) N/M - ----------------------------------------------------------------------------------------------------------------------- TOTAL INTEREST EXPENSE 39,768 40,302 (534) (1.3) - ----------------------------------------------------------------------------------------------------------------------- INCOME BEFORE INCOME TAXES 24,456 12,710 11,746 92.4 Income Tax Expense 11,655 5,790 5,865 N/M - ----------------------------------------------------------------------------------------------------------------------- NET INCOME $ 12,801 $ 6,920 $ 5,881 85.0 ======================================================================================================================= WEIGHTED-AVERAGE SHARES OF COMMON STOCK OUTSTANDING (000) 34,392 33,821 571 1.7 ======================================================================================================================= BASIC EARNINGS PER SHARE $0.37 $0.20 $0.17 85.0 ======================================================================================================================= DILUTED EARNINGS PER SHARE $0.37 $0.20 $0.17 85.0 ======================================================================================================================= DIVIDENDS PAID PER SHARE $0.16 $0.15 $0.01 6.7 ======================================================================================================================= Three Months Ended INCREASE/(DECREASE) TUCSON ELECTRIC POWER June 30, ---------------------- ELECTRIC KWH SALES (000) 2004 2003 RESTATED AMOUNT PERCENT - ----------------------------------------------------------------------------------------------------------------------- Retail Sales 2,178,062 2,078,281 99,781 4.8 Wholesale Sales 935,564 794,905 140,659 17.7 - ----------------------------------------------------------------------------------------------------------------------- TOTAL 3,113,626 2,873,186 240,440 8.4 ======================================================================================================================= N/M - Not Meaningful Reclassifications have been made to prior periods to conform to the current period's presentation.
UNISOURCE ENERGY 2004 RESULTS UNISOURCE ENERGY CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME Six Months Ended INCREASE/(DECREASE) (in thousands of dollars, except per share amounts) June 30, ---------------------- (UNAUDITED) 2004 2003 RESTATED AMOUNT PERCENT - ----------------------------------------------------------------------------------------------------------------------- OPERATING REVENUES Electric Retail Sales $ 398,419 $ 306,372 $ 92,047 30.0 Electric Wholesale Sales 83,889 75,444 8,445 11.2 Gas Revenue 69,013 - 69,013 N/M Other Revenues 8,844 6,504 2,340 36.0 - ----------------------------------------------------------------------------------------------------------------------- TOTAL OPERATING REVENUES 560,165 388,320 171,845 44.3 - ----------------------------------------------------------------------------------------------------------------------- OPERATING EXPENSES Fuel 102,789 98,265 4,524 4.6 Purchased Energy 110,818 33,557 77,261 N/M Other Operations and Maintenance 124,259 101,646 22,613 22.2 Depreciation and Amortization 71,696 61,440 10,256 16.7 Amortization of Transition Recovery Asset 20,600 11,619 8,981 77.3 Taxes Other Than Income Taxes 25,722 22,743 2,979 13.1 - ----------------------------------------------------------------------------------------------------------------------- TOTAL OPERATING EXPENSES 455,884 329,270 126,614 38.5 - ----------------------------------------------------------------------------------------------------------------------- OPERATING INCOME 104,281 59,050 45,231 76.6 - ----------------------------------------------------------------------------------------------------------------------- OTHER INCOME (DEDUCTIONS) Interest Income 9,882 10,290 (408) (4.0) Other Income 10,660 2,794 7,866 N/M Other Expense (5,321) (3,002) (2,319) (77.2) - ----------------------------------------------------------------------------------------------------------------------- TOTAL OTHER INCOME (DEDUCTIONS) 15,221 10,082 5,139 51.0 - ----------------------------------------------------------------------------------------------------------------------- INTEREST EXPENSE Long-Term Debt 43,150 38,385 4,765 12.4 Interest on Capital Leases 40,109 41,534 (1,425) (3.4) Other Interest Expense, Net of Amounts Capitalized (543) 300 (843) N/M - ----------------------------------------------------------------------------------------------------------------------- TOTAL INTEREST EXPENSE 82,716 80,219 2,497 3.1 - ----------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF ACCOUNTING CHANGE 36,786 (11,087) 47,873 N/M Income Tax Expense (Benefit) 17,564 (2,882) 20,446 N/M - ----------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE 19,222 (8,205) 27,427 N/M CUMULATIVE EFFECT OF ACCOUNTING CHANGE - NET OF TAX - 67,471 (67,471) N/M - ----------------------------------------------------------------------------------------------------------------------- NET INCOME $ 19,222 $ 59,266 $ (40,044) (67.6) ======================================================================================================================= WEIGHTED-AVERAGE SHARES OF COMMON STOCK OUTSTANDING (000) 34,288 33,780 508 1.5 ======================================================================================================================= BASIC EARNINGS PER SHARE INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE $0.56 $(0.25) $0.81 N/M CUMULATIVE EFFECT OF ACCOUNTING CHANGE - NET OF TAX - 2.00 (2.00) N/M - ----------------------------------------------------------------------------------------------------------------------- NET INCOME $0.56 $1.75 $(1.19) (68.1) ======================================================================================================================= DILUTED EARNINGS PER SHARE INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE $0.55 $(0.25) $0.80 N/M CUMULATIVE EFFECT OF ACCOUNTING CHANGE - NET OF TAX - 2.00 (2.00) N/M - ----------------------------------------------------------------------------------------------------------------------- NET INCOME $0.55 $1.75 $(1.20) (68.7) ======================================================================================================================= DIVIDENDS PAID PER SHARE $0.32 $0.30 $0.02 6.7 ======================================================================================================================= Six Months Ended INCREASE/(DECREASE) TUCSON ELECTRIC POWER June 30, ---------------------- ELECTRIC KWH SALES (000): 2004 2003 RESTATED AMOUNT PERCENT - ----------------------------------------------------------------------------------------------------------------------- Retail Sales 3,986,808 3,716,429 270,379 7.3 Wholesale Sales 1,824,854 1,733,742 91,112 5.3 - ----------------------------------------------------------------------------------------------------------------------- TOTAL 5,811,662 5,450,171 361,491 6.6 ======================================================================================================================= N/M - Not Meaningful Reclassifications have been made to prior periods to conform to the current period's presentation.
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