Uns Energy (UNS) 8-K/A Other Events

EXHIBIT 99.2

ITEM 6. - SELECTED CONSOLIDATED FINANCIAL DATA 

UniSource Energy	2005			2004			2003			2002			2001
	- In Thousands - (except per share data)
Summary of Operations
Operating Revenues (1)	$	1,224,056		$	1,164,988		$	970,651		$	838,829		$	1,607,156
Loss Before Income Taxes of Millennium Energy Businesses	$	(9,449	)	$	(6,920	)	$	(26,350	)	$	(30,702	)	$	(14,455	)
Income Before Discontinued Operations, Extraordinary Item and Accounting Change (1)	$	52,253		$	50,982		$	53,942		$	47,847		$	73,295
Net Income (1) (2)	$	46,144		$	45,919		$	113,941		$	34,928		$	63,839
Basic Earnings per Share:
Before Discontinued Operations, Extraordinary Item & Accounting Change	$	1.51		$	1.49		$	1.60		$	1.42		$	2.20
Net Income	$	1.33		$	1.34		$	3.37		$	1.04		$	1.91
Diluted Earnings per Share:
Before Discontinued Operations, Extraordinary Item & Accounting Change	$	1.44		$	1.45		$	1.57		$	1.40		$	2.15
Net Income	$	1.28		$	1.31		$	3.32		$	1.02		$	1.87
Shares of Common Stock Outstanding
Average		34,798			34,380			33,828			33,665			33,398
End of Year		34,874			34,255			33,788			33,579			33,502
Year-end Book Value per Share	$	17.69		$	16.95		$	16.47		$	13.60		$	13.17
Cash Dividends Declared per Share	$	0.76		$	0.64		$	0.60		$	0.50		$	0.40
Financial Position
Total Utility Plant - Net	$	2,171,461		$	2,081,137		$	2,069,215		$	1,835,904		$	1,832,164
Investments in Lease Debt and Equity	$	156,301		$	170,893		$	178,789		$	191,867		$	84,459
Other Investments and Other Property	$	55,694		$	68,846		$	90,137		$	104,884		$	84,172
Total Assets	$	3,138,319		$	3,186,936		$	3,135,013		$	2,897,932		$	2,931,302
Long-Term Debt (3)	$	1,212,420		$	1,257,595		$	1,286,320		$	1,128,963		$	802,804
Non-Current Capital Lease Obligations		665,737			701,931			762,968			801,611			853,793
Common Stock Equity		616,741			580,718			556,472			456,640			441,133
Total Capitalization	$	2,494,898		$	2,540,244		$	2,605,760		$	2,387,214		$	2,097,730
Selected Cash Flow Data
Net Cash Flows From Operating Activities	$	276,410		$	306,979		$	263,396		$	176,437		$	215,379
Capital Expenditures	$	(203,362	)	$	(166,861	)	$	(135,731	)	$	(105,359	)	$	(119,609	)
Other Investing Cash Flows		32,794			10,672			(215,001	)		(165,531	)		2,762
Net Cash Flows From Investing Activities	$	(170,568	)	$	(156,189	)	$	(350,732	)	$	(270,890	)	$	(116,847	)
Net Cash Flows From Financing Activities	$	(115,191	)	$	(98,028	)	$	97,674		$	(42,773	)	$	(33,382	)
Ratio of Earnings to Fixed Charges (4)		1.55			1.48			1.44			1.50			1.87

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⁽¹⁾ In 2003, Operating Revenues, Income Before Extraordinary Item and Accounting Change and Net Income include results from UES for the period from August 11, 2003 to December 31, 2003.

⁽²⁾ Net Income includes an after-tax loss for discontinued operations of $5 million in 2005, $5 million in 2004, $7 million in 2003, $13 million in 2002 and $10 million in 2001. Net income includes an after-tax loss of $0.6 million for the Cumulative Effect of Accounting Change from the implementation of FIN 47 in 2005, an after-tax gain of $67 million for the Cumulative Effect of Accounting Change from the implementation of FAS 143 in 2003 and $0.5 million for the Cumulative Effect of Accounting Change from the implementation of FAS 133 in 2001.

⁽³⁾ TEP’s tax-exempt variable rate bonds in the amount of $329 million are backed by LOCs issued under TEP’s Credit Agreement. TEP’s obligations under the Credit Agreement are collateralized with 1992 Mortgage Bonds. In November 2002, TEP obtained new LOCs in the amount of $341 million to replace the LOCs provided under its then existing Credit Agreement that would have expired on December 30, 2002. The 2002 LOCs would have expired in 2006. Accordingly, these IDBs were classified as short-term debt at December 31, 2001 and classified as long-term debt at December 31, 2002. TEP entered into a new Credit Agreement in May 2005, which provided LOCs that expire in 2010.

⁽⁴⁾ For purposes of this computation, earnings are defined as pre-tax earnings from continuing operations before minority interest, plus interest expense, and amortization of debt discount and expense related to indebtedness. Fixed charges are interest expense, including amortization of debt discount and expense on indebtedness.

See Item 7. - Management’s Discussion and Analysis of Financial Condition and Results of Operations.

ITEM 6. - SELECTED CONSOLIDATED FINANCIAL DATA 

TEP	2005			2004			2003			2002			2001
	-Thousands of Dollars-
Summary of Operations
Operating Revenues	$	937,470		$	889,298		$	851,551		$	834,447		$	1,604,961
Income Before Extraordinary Item and Accounting Change	$	48,893		$	46,127		$	61,442		$	55,390		$	77,308
Net Income (1)	$	48,267		$	46,127		$	128,913		$	55,390		$	77,778
Financial Position
Total Utility Plant - Net	$	1,866,622		$	1,816,782		$	1,832,156		$	1,835,904		$	1,832,164
Investments in Lease Debt and Equity	$	156,301		$	170,893		$	178,789		$	191,867		$	84,459
Other Investments and Other Property	$	24,238		$	23,393		$	41,285		$	21,358		$	21,416
Total Assets	$	2,575,435		$	2,742,168		$	2,767,047		$	2,808,810		$	2,824,555
Long-Term Debt(2)	$	821,170		$	1,097,595		$	1,126,320		$	1,128,410		$	801,924
Non-Current Capital Lease Obligations		665,299			701,405			762,323			801,508			853,447
Common Stock Equity		558,646			414,510			406,054			353,832			337,082
Total Capitalization	$	2,045,115		$	2,213,510		$	2,294,697		$	2,283,750		$	1,992,453
Selected Cash Flow Data
Net Cash Flows From Operating Activities	$	243,013		$	275,151		$	260,989		$	206,991		$	261,169
Capital Expenditures	$	(149,906	)	$	(129,505	)	$	(121,854	)	$	(103,307	)	$	(103,913	)
Other Investing Cash Flows		21,001			3,743			11,408			(151,035	)		(8,861	)
Net Cash Flows From Investing Activities	$	(128,905	)	$	(125,762	)	$	(110,446	)	$	(254,342	)	$	(112,774	)
Net Cash Flows From Financing Activities	$	(173,882	)	$	(101,444	)	$	(141,059	)	$	(56,551	)	$	(77,427	)
Ratio of Earnings to Fixed Charges(3)		1.60			1.52			1.51			1.60			1.85

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⁽¹⁾ Net Income includes an after-tax loss of $0.6 million for the Cumulative Effect of Accounting Change from the implementation of FIN 47 in 2005, an after-tax gain of $67 million for the Cumulative Effect of Accounting Change from the implementation of FAS 143 in 2003 and $0.5 million for the Cumulative Effect of Accounting Change from the implementation of FAS 133 in 2001.

⁽²⁾ TEP’s tax-exempt variable rate bonds in the amount of $329 million are backed by LOCs issued under TEP’s Credit Agreement. TEP’s obligations under the Credit Agreement are collateralized with 1992 Mortgage Bonds. In November 2002, TEP obtained new LOCs in the amount of $341 million to replace the LOCs provided under its then existing Credit Agreement that would have expired on December 30, 2002. The 2002 LOCs would have expired in 2006. Accordingly, these IDBs were classified as short-term debt at December 31, 2001 and classified as long-term debt at December 31, 2002. TEP entered into a new Credit Agreement in May 2005, which provided LOCs that expire in 2010.

⁽³⁾ For purposes of this computation, earnings are defined as pre-tax earnings from continuing operations before minority interest, plus interest expense and amortization of debt discount and expense related to indebtedness. Fixed charges are interest expense, including amortization of debt discount and expense on indebtedness.

Note: Disclosure of earnings per share information for TEP is not presented as the common stock of TEP is not publicly traded.

See Item 7. - Management’s Discussion and Analysis of Financial Condition and Results of Operations.

NON-GAAP MEASURES

Adjusted EBITDA

Adjusted EBITDA represents EBITDA excluding the cumulative effect of accounting change which is a non-cash item. EBITDA is earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA is presented here as a measure of liquidity because it can be used as an indication of a company’s ability to incur and service debt and is commonly used as an analytical indicator in our industry. Adjusted EBITDA measures presented may not be comparable to similarly titled measures used by other companies. Adjusted EBITDA is not a measurement presented in accordance with United States generally accepted accounting principles (GAAP), and we do not intend Adjusted EBITDA to represent cash flows from operations as defined by GAAP. Adjusted EBITDA should not be considered to be an alternative to cash flows from operations or any other items calculated in accordance with GAAP or an indicator of our operating performance.

UniSource Energy and TEP believe Adjusted EBITDA, which is a non-GAAP financial measure, provides useful information to investors as a measure of liquidity. The most directly comparable GAAP measure to Adjusted EBITDA is Net Cash Flows from Operating Activities.

Adjusted EBITDA and Net Cash Flows from Operating Activities

UniSource Energy	2005		2004		2003		2002
	- Millions of Dollars -
Adjusted EBITDA	$	445	$	444	$	404	$	384
Net Cash Flows from Operating Activities	$	276	$	307	$	263	$	176

TEP	2005		2004		2003		2002
	- Millions of Dollars -
Adjusted EBITDA	$	400	$	411	$	403	$	399
Net Cash Flows from Operating Activities	$	243	$	275	$	261	$	207

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Reconciliation of Adjusted EBITDA to Cash Flows from Operations

UniSource Energy	2005		2004		2003		2002
	- Millions of Dollars -
Adjusted EBITDA (1)	$	445	$	444	$	404	$	384
Amounts from the Income Statements:
Less:  Income Taxes		38		37		17		26
Total Interest Expense		160		168		167		155

Changes in Assets and Liabilities and Other Non-Cash Items		29		68		43		(27	)
Net Cash Flows from Operating Activities	$	276	$	307	$	263	$	176

TEP	2005		2004		2003		2002
	- Millions of Dollars -
Adjusted EBITDA (1)	$	400	$	411	$	403	$	399
Amounts from the Income Statements:
Less:  Income Taxes		34		35		21		36
Total Interest Expense		140		157		161		154
Changes in Assets and Liabilities and Other Non-Cash Items		17		56		40		(2	)
Net Cash Flows from Operating Activities	$	243	$	275	$	261	$	207

⁽¹⁾ Adjusted EBITDA was calculated as follows:

UniSource Energy	2005			2004			2003			2002
	- Millions of Dollars -
Net Income	$	46		$	46		$	114		$	35
Amounts from the Income Statements:
Less: Discontinued Operations		(5	)		(5	)		(7	)		(13	)
Cumulative Effect of Accounting Change		(1	)		-			67			-
Plus:  Income Taxes		38			37			17			26
Total Interest Expense		160			168			167			155
Depreciation and Amortization		133			132			128			125
Amortization of Transition Recovery Asset		56			50			32			24
Depreciation Included in Fuel and Other O&M
Expense (See Note 20 of Notes to Consolidated
Financial Statements)		6			6			6			6
Adjusted EBITDA	$	445		$	444		$	404		$	384

TEP	2005			2004		2003		2002
	- Millions of Dollars -
Net Income	$	48		$	46	$	129	$	55
Amounts from the Income Statements:
Less: Cumulative Effect of Accounting Change		(1	)		-		67		-
Plus:  Income Taxes		34			35		21		36
Total Interest Expense		140			157		161		154
Depreciation and Amortization		115			117		121		124
Amortization of Transition Recovery Asset		56			50		32		24
Depreciation Included in Fuel and Other O&M
Expense (See Note 20 of Notes to Consolidated
Financial Statements)		6			6		6		6
Adjusted EBITDA	$	400		$	411	$	403	$	399

Net Debt and Total Debt and Capital Lease Obligations - TEP

Net Debt represents the current and non-current portions of TEP’s long-term debt and capital lease obligations less investment in lease debt. We have subtracted investment in lease debt because it represents TEP’s ownership of the debt component of its own capital lease obligations. Net Debt measures presented may not be comparable to similarly titled measures used by other companies. Net Debt is not a measurement

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presented in accordance with GAAP and we do not intend Net Debt to represent debt as defined by GAAP. You should not consider Net Debt to be an alternative to debt or any other items calculated in accordance with GAAP. We believe Net Debt, which is a non-GAAP measure, provides useful information to investors as a measure of TEP’s debt and capital lease obligations.

As of December 31,	2005		2004		2003		2002
	- Millions of Dollars -
Net Debt	$	1,379	$	1,684	$	1,761	$	1,783
Total Debt and Capital Lease Obligations	$	1,535	$	1,855	$	1,940	$	1,975

Reconciliation of Total Debt and Capital Lease Obligations to Net Debt

As of December 31,	2005			2004			2003			2002
	- Millions of Dollars -
Long-Term Debt	$	821		$	1,098		$	1,126		$	1,182
Current Portion - Long-Term Debt		-			2			2			2
Total Debt		821			1,100			1,128			1,130
Capital Lease Obligations		665			701			762			802
Current Portion - Capital Lease Obligations		49			54			50			43
Total Debt and Capital Lease Obligations		1,535			1,855			1,940			1,975
Investment in Lease Debt		(156	)		(171	)		(179	)		(192	)
Net Debt	$	1,379		$	1,684		$	1,761		$	1,783

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