Exhibit 99.1
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| FOR IMMEDIATE RELEASE | | February 24, 2010 |
| Media Contact: Joe Salkowski, (520) 884-3625 | | Page 1 of 10 |
| Financial Analyst Contact: Jo Smith, (520) 884-3650 | | |
UNISOURCE ENERGY REPORTS 2009 EARNINGS, ISSUES EARNINGS GUIDANCE FOR 2010
| • | | UniSource Energy’s net income for 2009 was $104.3 million, or $2.69 per diluted share of common stock, compared with net income of $14.0 million, or $0.39 per diluted share in 2008. |
| | • | | Earnings include a $6 million pre-tax gain on the sale of an interest in one of UniSource Energy’s unregulated energy investments offset by reserves of $5.6 million, related primarily to wholesale sales to the California Power Exchange in 2000 and 2001. |
| • | | Improvement in 2009 earnings is due primarily to higher retail revenues, lower fuel and purchased power expenses and regulatory and accounting adjustments in 2008 that did not recur in 2009. |
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| • | | Strong operating cash flows of $347.3 million compared with $277.0 million in 2008. |
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| • | | UniSource Energy estimates 2010 diluted earnings per share of between $2.75 and $3.00. |
Tucson, Ariz. —UniSource Energy Corporation (NYSE: UNS) today reported 2009 net income of $104.3 million, or $2.69 per diluted share of common stock, compared with $14.0 million, or $0.39 per diluted share in 2008.
For the three months that ended December 31, 2009, UniSource Energy reported net income of $10.4 million, or $0.28 per diluted share of common stock, compared with $22.9 million, or $0.60 per diluted share of common stock, in the fourth quarter of 2008. Earnings in the fourth quarter of 2008 benefited from gains resulting from reinstatement of regulatory accounting at UniSource Energy’s principal subsidiary, Tucson Electric Power (TEP).
UniSource Energy’s financial results primarily reflect those of TEP, which reported net income of $89.2 million in 2009, compared with $4.4 million in 2008. In 2008, TEP’s full-year earnings were adversely impacted by amortization of a regulatory asset and revenue deferrals that did not recur in 2009. In addition, during 2008 TEP was exposed to the power markets when average wholesale power costs were twice as high as 2009 levels.
Although the weak economy led to lower energy sales in 2009, TEP’s electric retail sales revenues increased due to higher base rates. Despite the economic slowdown, TEP’s customer base also expanded by 0.6 percent in 2009.
“While the weak economy continued to put downward pressure on our sales volumes throughout the year, we responded by tightly controlling our costs without compromising safety or reliability,” said Paul Bonavia, Chairman, President and CEO of UniSource Energy. “The success of our efforts is evidenced by our operating and maintenance costs for 2009, which were 3 percent below the level anticipated at the beginning of the year.”
UniSource Energy’s 2009 operating and maintenance expense (O&M), excluding costs directly offset by customer surcharges and third-party reimbursements, increased by $12 million compared with
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2008. Excluding pension expense, which is primarily a function of stock market performance and interest rates, O&M increased $2.8 million over the previous year due primarily to higher generating plant maintenance costs.
UniSource Energy posted strong operating cash flows in 2009 of $347.3 million, a level more than adequate to cover the company’s capital expenditures of $287.1 million.
Outlook
“UniSource Energy’s 2009 financial performance and our outlook for earnings stability and continued strong operating performance allowed us to increase the dividend.” said Bonavia. On February 12, 2010, UniSource Energy’s board of directors increased the quarterly dividend to 39 cents per share from 29 cents per share. Bonavia continued, “Looking forward to 2010, we estimate diluted earnings per share of between $2.75 and $3.00.”
In conjunction with this earnings announcement, UniSource Energy has provided detailed information on its 2009 performance, and factors that could impact the Company’s earnings outlook for 2010 and 2011. These materials have been filed with the Securities and Exchange Commission and are also available atuns.com
Seasonality of Earnings
The net income and results of operations of UniSource Energy’s utility businesses are seasonal in nature. TEP and UNS Electric are summer-peaking utilities and historically have recorded a majority of their net income during the second and third quarters, when hot weather drives increases in energy consumption. TEP’s retail rates, which include higher charges for higher levels of energy use, shift a larger share of the company’s earnings into those periods.
Energy demand from UNS Gas customers typically peaks during the winter. Accordingly, UNS Gas records the majority of its net income during the first and fourth quarters.
Tucson Electric Power
TEP reported net income of $8.0 million in the fourth quarter of 2009, compared with $19.7 million in the same period of 2008. For the twelve months ended December 31, 2009, TEP reported net income of $89.2 million, compared with net income of $4.4 million in 2008.
Retail kWh Sales
| • | | In the fourth quarter of 2009, TEP’s total retail kWh sales were 2.7 percent below those from the same period last year. Residential sales were up 0.2 percent; commercial sales were down 4.5 percent, industrial sales were down 5.7 percent and sales to mining customers were down 3.0 percent compared with the fourth quarter of 2008. |
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| • | | For the twelve months ended December 31, 2009, TEP’s total retail kWh sales were 1.4 percent below 2008 levels. When adjusted for average weather, TEP estimates its retail sales were down 2.4 percent. Cooling degree days in 2009 were 20 percent above 2008 levels and 9 percent higher than the 10-year average. Residential sales were up 1.4 percent, commercial sales were down 2.3 percent, industrial sales were down 4.5 percent and sales to mining customers were down 2.8 percent compared with 2008. |
Retail Revenues
| | • | | Retail electric revenues increased $39.8 million or 5 percent, in 2009, due to higher base rates combined with a new rate structure that incorporates higher charges for higher levels of energy use. The $39.8 million increase does not include a $20.3 million increase in customer surcharges |
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| | | | used to fund renewable energy and energy efficiency programs in 2009 and $58.1 million of non-cash revenue deferrals in 2008. |
Wholesale Revenues
| | • | | Long-term wholesale revenues fell $9.3 million, or 16 percent, in 2009 due primarily to lower sales volumes. TEP’s margin on long-term wholesale sales for 2009 was $24.0 million. In the fourth quarter of 2009, TEP recorded a $4.2 million provision for possible wholesale refunds related to transactions in 2000 and 2001 with the California Power Exchange that are under dispute. Revenues from short-term wholesale sales offset the costs included in TEP’s Purchased Power and Fuel Adjustor Clause (PPFAC). |
PPFAC
| | • | | TEP’s PPFAC which took effect in January 2009 and allows the company to pass through its actual fuel, purchased power and transmission costs net of short-term wholesale revenues and other offsets to its retail customers. For comparative purposes, those PPFAC related costs decreased by $30.5 million in 2009 compared with 2008. The decrease was due primarily to lower wholesale market prices for energy and natural gas. |
Other
| | • | | O&M expense, excluding costs directly offset by customer surcharges for renewable energy and energy efficiency programs and third party reimbursements, increased by $10.8 million. Cost containment measures helped offset a $14.4 million increase in pension and generating plant maintenance expenses. |
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| | • | | Depreciation and amortization increased $26.9 million due primarily to plant additions, new depreciation rates for generating assets , amortization of regulatory assets resulting from the 2008 TEP rate order and a $4 million adjustment related to a change in accounting for TEP’s investment in Springerville Unit 1 lease equity. |
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| | • | | In 2008, TEP recorded $24 million of amortization related to the Transition Recovery Asset that did not recur in 2009. |
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| | • | | Interest expense decreased $11 million in 2009 due primarily to lower interest rates on variable rate debt, lower balances of capital lease obligations and a $2 million adjustment related to a change in accounting for TEP’s investment in Springerville Unit 1 lease equity. |
UNS Gas
UNS Gas reported net income of $7.4 million in 2009, compared with $8.5 million in 2008. The decrease in net income is primarily attributed to a 4 percent reduction in therm sales resulting from the weak economy and mild winter weather.
In November 2008, UNS Gas filed a general rate case with the Arizona Corporation Commission (ACC) requesting an average base rate increase of 6 percent, or approximately $9.5 million, to cover increases in capital and operating costs. The ACC staff recommended a rate increase that would result in additional revenue of $3.4 million. A hearing before an administrative law judge (ALJ) concluded in August 2009, and the company expects the ACC to issue a final order by the end of the first quarter of 2010.
UNS Electric
UNS Electric reported net income of $5.9 million in 2009, compared with $3.8 million in 2008. The increase is due primarily to the operations of a new copper mine in UNS Electric’s service area which
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led to a 7 percent increase in retail kWh sales. Excluding mining sales, UNS Electric’s retail kWh sales decreased by 0.8 percent compared with 2008 levels due to weak economic conditions.
In April 2009, UNS Electric filed a general rate case with the ACC requesting an average base rate increase of $13.5 million, or 7.4 percent, to cover its operating and capital costs. The ACC staff recommended a rate increase that would result in additional revenue of approximately $8 million. A hearing before an ALJ was completed in mid-February, and we expect the ACC to issue a final order in the second half of 2010.
Millennium
In June 2009, Millennium Energy Holdings (Millennium) recorded a pre-tax gain of $6 million from the sale of its equity interest in Carboelectrica Sabinas, S. de R.L. de C.V. (Sabinas), a Mexican coal supplier and owner of coal and associated gas reserves. The interest in Sabinas represented Millennium’s largest unregulated energy investment. Millennium received $5 million in cash and a $15 million three-year secured note bearing interest at 6 percent for the sale of its interest in Sabinas. At December 31, 2009, Millennium’s cash, investments and note receivable totaled approximately $32 million.
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Net Income and Earnings Per Share Summary
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| | | 4th Quarter | | | YTD Dec. 31 | |
| | | 2009 | | | 2008 | | | 2009 | | | 2008 | |
| Net Income | | -Millions- | | | -Millions- | |
| Tucson Electric Power | | $ | 8.0 | | | $ | 19.7 | | | $ | 89.2 | | | $ | 4.4 | |
| UNS Gas | | | 3.8 | | | | 3.2 | | | | 7.4 | | | | 8.5 | |
| UNS Electric | | | 0.0 | | | | 0.1 | | | | 5.9 | | | | 3.8 | |
| Other (1) | | | (1.4 | ) | | | (0.1 | ) | | | 1.8 | | | | (2.7 | ) |
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| Net Income | | $ | 10.4 | | | $ | 22.9 | | | $ | 104.3 | | | $ | 14.0 | |
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| Avg. Basic Shares Outstanding (millions) | | | 35.9 | | | | 35.7 | | | | 35.9 | | | | 35.6 | |
| Avg. Diluted Shares Outstanding (millions) | | | 40.5 | | | | 40.1 | | | | 40.5 | | | | 40.4 | |
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| | | 4th Quarter | | | YTD Dec. 31 | |
| Earnings Per UniSource Energy Share | | 2009 | | | 2008 | | | 2009 | | | 2008 | |
| Tucson Electric Power | | $ | 0.22 | | | $ | 0.55 | | | $ | 2.49 | | | $ | 0.12 | |
| UNS Gas | | | 0.11 | | | | 0.09 | | | | 0.20 | | | | 0.24 | |
| UNS Electric | | | 0.00 | | | | 0.00 | | | | 0.17 | | | | 0.11 | |
| Other (1) | | | (0.04 | ) | | | 0.00 | | | | 0.05 | | | | (0.08 | ) |
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| Net Income per Basic Share | | $ | 0.29 | | | $ | 0.64 | | | $ | 2.91 | | | $ | 0.39 | |
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| Net Income per Diluted Share(2) | | $ | 0.28 | | | $ | 0.60 | | | $ | 2.69 | | | $ | 0.39 | |
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| (1) | | Includes UniSource Energy on a stand-alone basis and results from Millennium Energy Holdings, Inc. and UniSource Energy Development, wholly-owned subsidiaries of UniSource Energy. |
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| (2) | | For the year ended December 31, 2008, 4 million potentially dilutive shares from the conversion of convertible senior notes, and after-tax interest expense of $4 million was not included in the computation of diluted EPS because to do so would be anti-dilutive. |
UniSource Energy believes the presentation of TEP, UNS Gas, UNS Electric and Other segment net income or loss on a per basic 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 or losses.
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Conference Call and Webcast
The company will host a conference call on Thursday, February 25 at 12:00 noon EST to discuss the financial results and outlook. To participate in the call, please dial in five to 10 minutes prior to the start.
Dial-in number:(877) 582-0446
Reference code: 58320982
The conference call also can be heard live on UniSource Energy’s Web site. The webcast can be accessed at uns.com and will be available for replay for seven days.
Replay number: (800) 642-1687
Reference code: 58320982
UniSource Energy is a Tucson, Arizona-based company with consolidated assets of approximately $3.5 billion. UniSource Energy’s primary subsidiaries include Tucson Electric Power Company, which serves more than 400,000 customers in southern Arizona, and UniSource Energy Services, provider of natural gas and electric service for about 235,000 customers in northern and southern Arizona.
For more information about UniSource Energy and its subsidiaries, visit uns.com.
This release contains forward-looking information that involves risks and uncertainties, including factors that could affect UniSource Energy’s ability to reach the 2010 earnings guidance. These risks and uncertainties include, but are not limited to: state and federal regulatory and legislative decisions and actions; regional economic and market conditions which could affect customer growth and energy usage; weather variations affecting energy usage; the cost of debt and equity capital and access to capital markets; the performance of the stock market and changing interest rate environment, which affect the value of the company’s pension and other postretirement benefit plan assets and the related contribution requirements and expense; unexpected increases in O&M expense; resolution of pending litigation matters; changes in accounting standards; changes in critical accounting estimates; the ongoing restructuring of the electric industry; changes to long-term contracts; the cost of fuel and power supplies; performance of TEP’s generating plants; 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.
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UNISOURCE ENERGY 2009 RESULTS
UniSource Energy Corporation
Comparative Condensed Consolidated Statements of Income
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| | | Three Months Ended | | | | |
| (in thousands of dollars, except per share amounts) | | December 31, | | | Increase / (Decrease) | |
| (UNAUDITED) | | 2009 | | | 2008 | | | Amount | | | Percent | |
Operating Revenues | | | | | | | | | | | | | | | | |
| Electric Retail Sales | | $ | 230,129 | | | $ | 218,628 | | | $ | 11,501 | | | | 5.3 | |
| Provision for Rate Refunds — CTC Revenue | | | — | | | | (13,677 | ) | | | 13,677 | | | | N/M | |
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| Net Electric Retail Sales | | | 230,129 | | | | 204,951 | | | | 25,178 | | | | 12.3 | |
| Electric Wholesale Sales | | | 36,596 | | | | 47,289 | | | | (10,693 | ) | | | (22.6 | ) |
| California Power Exchange (CPX) Provision for Wholesale Refunds | | | (4,172 | ) | | | — | | | | (4,172 | ) | | | N/M | |
| Gas Revenue | | | 45,420 | | �� | | 48,975 | | | | (3,555 | ) | | | (7.3 | ) |
| Other Revenues | | | 22,571 | | | | 17,989 | | | | 4,582 | | | | 25.5 | |
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Total Operating Revenues | | | 330,544 | | | | 319,204 | | | | 11,340 | | | | 3.6 | |
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Operating Expenses | | | | | | | | | | | | | | | | |
| Fuel | | | 74,897 | | | | 42,393 | | | | 32,504 | | | | 76.7 | |
| Purchased Energy | | | 77,463 | | | | 75,565 | | | | 1,898 | | | | 2.5 | |
| Transmission | | | 2,574 | | | | 2,479 | | | | 95 | | | | 3.8 | |
| Increase (Decrease) to reflect PPFAC/PGA Recovery Treatment | | | (12,008 | ) | | | 2,099 | | | | (14,107 | ) | | | N/M | |
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Total Fuel and Purchased Energy | | | 142,926 | | | | 122,536 | | | | 20,390 | | | | 16.6 | |
| Other Operations and Maintenance | | | 90,455 | | | | 84,134 | | | | 6,321 | | | | 7.5 | |
| Depreciation and Amortization | | | 44,137 | | | | 38,493 | | | | 5,644 | | | | 14.7 | |
| Taxes Other Than Income Taxes | | | 9,941 | | | | 4,141 | | | | 5,800 | | | | N/M | |
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Total Operating Expenses | | | 287,459 | | | | 249,304 | | | | 38,155 | | | | 15.3 | |
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Operating Income | | | 43,085 | | | | 69,900 | | | | (26,815 | ) | | | (38.4 | ) |
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Other Income (Deductions) | | | | | | | | | | | | | | | | |
| Interest Income | | | 2,542 | | | | 2,287 | | | | 255 | | | | 11.1 | |
| Other Income | | | 1,779 | | | | 1,571 | | | | 208 | | | | 13.2 | |
| Other Expense | | | (3,252 | ) | | | (3,567 | ) | | | 315 | | | | 8.8 | |
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Total Other Income (Deductions) | | | 1,069 | | | | 291 | | | | 778 | | | | N/M | |
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Interest Expense | | | | | | | | | | | | | | | | |
| Long-Term Debt | | | 14,454 | | | | 16,625 | | | | (2,171 | ) | | | (13.1 | ) |
| Interest on Capital Leases | | | 12,508 | | | | 13,180 | | | | (672 | ) | | | (5.1 | ) |
| Other Interest Expense | | | 1,057 | | | | 463 | | | | 594 | | | | N/M | |
| Interest Capitalized | | | (522 | ) | | | (1,086 | ) | | | 564 | | | | 51.9 | |
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Total Interest Expense | | | 27,497 | | | | 29,182 | | | | (1,685 | ) | | | (5.8 | ) |
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Income Before Income Taxes | | | 16,657 | | | | 41,009 | | | | (24,352 | ) | | | (59.4 | ) |
| Income Tax Expense | | | 6,239 | | | | 18,082 | | | | (11,843 | ) | | | (65.5 | ) |
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Net Income | | $ | 10,418 | | | $ | 22,927 | | | $ | (12,509 | ) | | | (54.6 | ) |
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Weighted-average Shares of Common Stock Outstanding (000) | | | 35,948 | | | | 35,681 | | | | 267 | | | | 0.7 | |
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Basic Earnings per Share | | $ | 0.29 | | | $ | 0.64 | | | $ | (0.35 | ) | | | (54.7 | ) |
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Diluted Earnings per Share | | $ | 0.28 | | | $ | 0.60 | | | $ | (0.32 | ) | | | (53.3 | ) |
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Dividends Declared per Share | | $ | 0.29 | | | $ | 0.24 | | | $ | 0.05 | | | | 20.8 | |
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| | | Three Months Ended | | | | |
| Tucson Electric Power | | December 31, | | | Increase / (Decrease) | |
| Electric MWh Sales: | | 2009 | | | 2008 | | | Amount | | | Percent | |
| Retail Sales | | | 2,049,142 | | | | 2,106,483 | | | | (57,341 | ) | | | (2.7 | ) |
| Long-Term Wholesale Sales | | | 266,582 | | | | 272,912 | | | | (6,330 | ) | | | (2.3 | ) |
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| N/M | | - Not Meaningful |
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| Reclassifications have been made to prior periods to conform to the current period’s presentation. |
UNISOURCE ENERGY 2009 RESULTS
UniSource Energy Corporation
Comparative Condensed Consolidated Statements of Income
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| | | Years Ended | | | | |
| (in thousands of dollars, except per share amounts) | | December 31, | | | Increase / (Decrease) | |
| (UNAUDITED) | | 2009 | | | 2008 | | | Amount | | | Percent | |
Operating Revenues | | | | | | | | | | | | | | | | |
| Electric Retail Sales | | $ | 1,047,619 | | | $ | 988,612 | | | $ | 59,007 | | | | 6.0 | |
| Provision for Rate Refunds — CTC Revenue | | | — | | | | (58,092 | ) | | | 58,092 | | | | N/M | |
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| Net Electric Retail Sales | | | 1,047,619 | | | | 930,520 | | | | 117,099 | | | | 12.6 | |
| Electric Wholesale Sales | | | 128,627 | | | | 236,300 | | | | (107,673 | ) | | | (45.6 | ) |
| California Power Exchange (CPX) Provision for Wholesale Refunds | | | (4,172 | ) | | | — | | | | (4,172 | ) | | | N/M | |
| Gas Revenue | | | 144,609 | | | | 163,977 | | | | (19,368 | ) | | | (11.8 | ) |
| Other Revenues | | | 77,741 | | | | 66,714 | | | | 11,027 | | | | 16.5 | |
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Total Operating Revenues | | | 1,394,424 | | | | 1,397,511 | | | | (3,087 | ) | | | (0.2 | ) |
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Operating Expenses | | | | | | | | | | | | | | | | |
| Fuel | | | 298,655 | | | | 299,987 | | | | (1,332 | ) | | | (0.4 | ) |
| Purchased Energy | | | 294,584 | | | | 442,210 | | | | (147,626 | ) | | | (33.4 | ) |
| Transmission | | | 10,181 | | | | 19,214 | | | | (9,033 | ) | | | (47.0 | ) |
| Increase (Decrease) to reflect PPFAC/PGA Recovery Treatment | | | (17,091 | ) | | | (10,975 | ) | | | (6,116 | ) | | | (55.7 | ) |
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Total Fuel and Purchased Energy | | | 586,329 | | | | 750,436 | | | | (164,107 | ) | | | (21.9 | ) |
| Other Operations and Maintenance | | | 333,887 | | | | 295,658 | | | | 38,229 | | | | 12.9 | |
| Depreciation and Amortization | | | 176,018 | | | | 147,690 | | | | 28,328 | | | | 19.2 | |
| Amortization of Transition Recovery Asset | | | — | | | | 23,945 | | | | (23,945 | ) | | | N/M | |
| Taxes Other Than Income Taxes | | | 45,857 | | | | 39,339 | | | | 6,518 | | | | 16.6 | |
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Total Operating Expenses | | | 1,142,091 | | | | 1,257,068 | | | | (114,977 | ) | | | (9.1 | ) |
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Operating Income | | | 252,333 | | | | 140,443 | | | | 111,890 | | | | 79.7 | |
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Other Income (Deductions) | | | | | | | | | | | | | | | | |
| Interest Income | | | 12,072 | | | | 11,011 | | | | 1,061 | | | | 9.6 | |
| Other Income | | | 18,063 | | | | 7,838 | | | | 10,225 | | | | N/M | |
| Other Expense | | | (5,292 | ) | | | (9,286 | ) | | | 3,994 | | | | 43.0 | |
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Total Other Income (Deductions) | | | 24,843 | | | | 9,563 | | | | 15,280 | | | | N/M | |
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Interest Expense | | | | | | | | | | | | | | | | |
| Long-Term Debt | | | 58,134 | | | | 70,227 | | | | (12,093 | ) | | | (17.2 | ) |
| Interest on Capital Leases | | | 49,270 | | | | 52,511 | | | | (3,241 | ) | | | (6.2 | ) |
| Other Interest Expense | | | 3,468 | | | | 1,837 | | | | 1,631 | | | | 88.8 | |
| Interest Capitalized | | | (2,302 | ) | | | (5,565 | ) | | | 3,263 | | | | 58.6 | |
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Total Interest Expense | | | 108,570 | | | | 119,010 | | | | (10,440 | ) | | | (8.8 | ) |
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Income Before Income Taxes | | | 168,606 | | | | 30,996 | | | | 137,610 | | | | N/M | |
| Income Tax Expense | | | 64,348 | | | | 16,975 | | | | 47,373 | | | | N/M | |
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Net Income | | $ | 104,258 | | | $ | 14,021 | | | $ | 90,237 | | | | N/M | |
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Weighted-average Shares of Common Stock Outstanding (000) | | | 35,858 | | | | 35,632 | | | | 226 | | | | 0.6 | |
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Basic Earnings per Share | | $ | 2.91 | | | $ | 0.39 | | | $ | 2.52 | | | | N/M | |
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Diluted Earnings per Share | | $ | 2.69 | | | $ | 0.39 | | | $ | 2.30 | | | | N/M | |
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Dividends Declared per Share | | $ | 1.16 | | | $ | 0.96 | | | $ | 0.20 | | | | 20.8 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | Years Ended | | | | |
| Tucson Electric Power | | December 31, | | | Increase / (Decrease) | |
| Electric MWh Sales: | | 2009 | | | 2008 | | | Amount | | | Percent | |
| Retail Sales | | | 9,370,743 | | | | 9,502,644 | | | | (131,901 | ) | | | (1.4 | ) |
| Long-Term Wholesale Sales | | | 832,847 | | | | 1,096,092 | | | | (263,245 | ) | | | (24.0 | ) |
| | | |
| N/M | | — Not Meaningful |
| |
| Reclassifications have been made to prior periods to conform to the current period’s presentation. |
TUCSON ELECTRIC POWER COMPANY 2009 RESULTS
TUCSON ELECTRIC POWER COMPANY
Comparative Condensed Consolidated Statements of Income
| | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | | |
| (in thousands of dollars) | | December 31, | | | Increase / (Decrease) | |
| (UNAUDITED) | | 2009 | | | 2008 | | | Amount | | | Percent | |
Operating Revenues | | | | | | | | | | | | | | | | |
| Electric Retail Sales | | $ | 192,326 | | | $ | 177,564 | | | $ | 14,762 | | | | 8.3 | |
| Provision for Rate Refunds — CTC Revenue | | | — | | | | (13,677 | ) | | | 13,677 | | | | N/M | |
| Net Electric Retail Sales | | | 192,326 | | | | 163,887 | | | | 28,439 | | | | 17.4 | |
| Electric Wholesale Sales | | | 42,917 | | | | 50,157 | | | | (7,240 | ) | | | (14.4 | ) |
| California Power Exchange (CPX) Provision for Wholesale Refunds | | | (4,172 | ) | | | — | | | | (4,172 | ) | | | N/M | |
| Other Revenues | | | 23,633 | | | | 19,154 | | | | 4,479 | | | | 23.4 | |
| | | | | | | | | | | | | |
Total Operating Revenues | | | 254,704 | | | | 233,198 | | | | 21,506 | | | | 9.2 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Operating Expenses | | | | | | | | | | | | | | | | |
| Fuel | | | 72,902 | | | | 38,419 | | | | 34,483 | | | | 89.8 | |
| Purchased Energy | | | 29,836 | | | | 26,829 | | | | 3,007 | | | | 11.2 | |
| Transmission | | | 627 | | | | 948 | | | | (321 | ) | | | (33.9 | ) |
| Increase (Decrease) to reflect PPFAC Recovery Treatment | | | (3,826 | ) | | | — | | | | (3,826 | ) | | | N/M | |
| | | | | | | | | | | | | |
Total Fuel and Purchased Energy | | | 99,539 | | | | 66,196 | | | | 33,343 | | | | 50.4 | |
| Other Operations and Maintenance | | | 76,696 | | | | 72,683 | | | | 4,013 | | | | 5.5 | |
| Depreciation and Amortization | | | 38,362 | | | | 32,842 | | | | 5,520 | | | | 16.8 | |
| Taxes Other Than Income Taxes | | | 8,205 | | | | 2,507 | | | | 5,698 | | | | N/M | |
| | | | | | | | | | | | | |
Total Operating Expenses | | | 222,802 | | | | 174,228 | | | | 48,574 | | | | 27.9 | |
| | | | | | | | | | | | | |
Operating Income | | | 31,902 | | | | 58,970 | | | | (27,068 | ) | | | (45.9 | ) |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Other Income (Deductions) | | | | | | | | | | | | | | | | |
| Interest Income | | | 2,295 | | | | 2,196 | | | | 99 | | | | 4.5 | |
| Other Income | | | 1,320 | | | | 732 | | | | 588 | | | | 80.3 | |
| Other Expense | | | (1,288 | ) | | | (2,961 | ) | | | 1,673 | | | | 56.5 | |
| | | | | | | | | | | | | |
Total Other Income (Deductions) | | | 2,327 | | | | (33 | ) | | | 2,360 | | | | N/M | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Interest Expense | | | | | | | | | | | | | | | | |
| Long-Term Debt | | | 8,994 | | | | 10,803 | | | | (1,809 | ) | | | (16.7 | ) |
| Interest on Capital Leases | | | 12,505 | | | | 13,176 | | | | (671 | ) | | | (5.1 | ) |
| Other Interest Expense | | | 467 | | | | 355 | | | | 112 | | | | 31.5 | |
| Interest Capitalized | | | (359 | ) | | | (1,043 | ) | | | 684 | | | | 65.6 | |
| | | | | | | | | | | | | |
Total Interest Expense | | | 21,607 | | | | 23,291 | | | | (1,684 | ) | | | (7.2 | ) |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Income Before Income Taxes | | | 12,622 | | | | 35,646 | | | | (23,024 | ) | | | (64.6 | ) |
| Income Tax Expense | | | 4,603 | | | | 15,950 | | | | (11,347 | ) | | | (71.1 | ) |
| | | | | | | | | | | | | |
Net Income | | $ | 8,019 | | | $ | 19,696 | | | $ | (11,677 | ) | | | (59.3 | ) |
| | | | | | | | | | | | | |
N/M — Not Meaningful
Reclassifications have been made to prior periods to conform to the current period’s presentation.
TUCSON ELECTRIC POWER COMPANY 2009 RESULTS
TUCSON ELECTRIC POWER COMPANY
Comparative Condensed Consolidated Statements of Income
| | | | | | | | | | | | | | | | | |
| | | Years ended | | | | |
| (in thousands of dollars) | | December 31, | | | Increase / (Decrease) | |
| (UNAUDITED) | | 2009 | | | 2008 | | | Amount | | | Percent | |
Operating Revenues | | | | | | | | | | | | | | | | |
| Electric Retail Sales | | $ | 867,516 | | | $ | 805,528 | | | $ | 61,988 | | | | 7.7 | |
| Provision for Rate Refunds — CTC Revenue | | | — | | | | (58,092 | ) | | | 58,092 | | | | N/M | |
| | | | | | | | | | | | | |
| Net Electric Retail Sales | | | 867,516 | | | | 747,436 | | | | 120,080 | | | | 16.1 | |
| Electric Wholesale Sales | | | 150,679 | | | | 259,855 | | | | (109,176 | ) | | | (42.0 | ) |
| California Power Exchange (CPX) Provision for Wholesale Refunds | | | (4,172 | ) | | | — | | | | (4,172 | ) | | | N/M | |
| Other Revenues | | | 82,688 | | | | 71,962 | | | | 10,726 | | | | 14.9 | |
| | | | | | | | | | | | | |
Total Operating Revenues | | | 1,096,711 | | | | 1,079,253 | | | | 17,458 | | | | 1.6 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Operating Expenses | | | | | | | | | | | | | | | | |
| Fuel | | | 281,710 | | | | 289,985 | | | | (8,275 | ) | | | (2.9 | ) |
| Purchased Energy | | | 142,252 | | | | 238,024 | | | | (95,772 | ) | | | (40.2 | ) |
| Transmission | | | 3,066 | | | | 10,515 | | | | (7,449 | ) | | | (70.8 | ) |
| Increase (Decrease) to reflect PPFAC Recovery Treatment | | | (20,724 | ) | | | — | | | | (20,724 | ) | | | N/M | |
| | | | | | | | | | | | | |
Total Fuel and Purchased Energy | | | 406,304 | | | | 538,524 | | | | (132,220 | ) | | | (24.6 | ) |
| Other Operations and Maintenance | | | 289,765 | | | | 256,584 | | | | 33,181 | | | | 12.9 | |
| Depreciation and Amortization | | | 152,901 | | | | 126,040 | | | | 26,861 | | | | 21.3 | |
| Amortization of Transition Recovery Asset | | | — | | | | 23,945 | | | | (23,945 | ) | | | N/M | |
| Taxes Other Than Income Taxes | | | 37,618 | | | | 31,650 | | | | 5,968 | | | | 18.9 | |
| | | | | | | | | | | | | |
Total Operating Expenses | | | 886,588 | | | | 976,743 | | | | (90,155 | ) | | | (9.2 | ) |
| | | | | | | | | | | | | |
Operating Income | | | 210,123 | | | | 102,510 | | | | 107,613 | | | | N/M | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Other Income (Deductions) | | | | | | | | | | | | | | | | |
| Interest Income | | | 11,471 | | | | 9,900 | | | | 1,571 | | | | 15.9 | |
| Other Income | | | 10,991 | | | | 5,708 | | | | 5,283 | | | | 92.6 | |
| Other Expense | | | (2,904 | ) | | | (6,249 | ) | | | 3,345 | | | | 53.5 | |
| | | | | | | | | | | | | |
Total Other Income (Deductions) | | | 19,558 | | | | 9,359 | | | | 10,199 | | | | N/M | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Interest Expense | | | | | | | | | | | | | | | | |
| Long-Term Debt | | | 36,226 | | | | 47,456 | | | | (11,230 | ) | | | (23.7 | ) |
| Interest on Capital Leases | | | 49,258 | | | | 52,491 | | | | (3,233 | ) | | | (6.2 | ) |
| Other Interest Expense | | | 1,571 | | | | 1,367 | | | | 204 | | | | 14.9 | |
| Interest Capitalized | | | (1,752 | ) | | | (4,675 | ) | | | 2,923 | | | | 62.5 | |
| | | | | | | | | | | | | |
Total Interest Expense | | | 85,303 | | | | 96,639 | | | | (11,336 | ) | | | (11.7 | ) |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Income Before Income Taxes | | | 144,378 | | | | 15,230 | | | | 129,148 | | | | N/M | |
| Income Tax Expense | | | 55,130 | | | | 10,867 | | | | 44,263 | | | | N/M | |
| | | | | | | | | | | | | |
Net Income | | $ | 89,248 | | | $ | 4,363 | | | $ | 84,885 | | | | N/M | |
| | | | | | | | | | | | | |
N/M — Not Meaningful
Reclassifications have been made to prior periods to conform to the current period’s presentation.
