UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): January 28, 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 9. Regulation FD Disclosure
--------------------------------
In connection with a proposed refinancing of Tucson Electric Power Company's
(TEP) credit facilities and a presentation to potential investors, TEP and
UniSource Energy Corporation are disclosing the non-GAAP financial measures set
forth below in respect to TEP. The most directly comparable financial measure
calculated and presented in accordance with GAAP is also set forth directly
below each such non-GAAP financial measure. Such refinancing, if successfully
completed, is expected to reduce TEP's annual interest expense, including letter
of credit fees, related to its credit facilities by up to $8 million on a
pre-tax basis, as well as extend the term of such facilities.
EBITDA AND NET INCOME
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------------------------------- -------------------------- --------------
($ in millions) Year Ended December 31
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2000 2001 2002 LTM 9/30/03*
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EBITDA $361.5 $409.5 $362.9 $365.0
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Net Income $ 51.2 $75.3 $53.7 $114.6
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* LTM = Last twelve months
EBITDA represents earnings before interest, taxes, depreciation, and
amortization. EBITDA is presented here because it can be used as an indication
of a company's ability to incur and service debt and is commonly used as an
analytical indicator in our industry. EBITDA measures presented may not be
comparable to similar titled measures used by other companies. EBITDA is not a
measurement presented in accordance with United Stated generally accepted
accounting principles, or GAAP, and we do not intend EBITDA to represent net
income or cash flows from operations as defined by GAAP. You should not consider
EBITDA to be an alternative to net income, cash flows from operations or any
other items calculated in accordance with GAAP or an indicator of our operating
performance.
The following are the components of TEP's EBITDA:
-------------------------------------------------- ------------------------------------------ ---------------
($ in millions) Year Ended December 31
-------------------------------------------------- -------------- ------------- ------------- ---------------
2000 2001 2002 LTM 9/30/03
-------------------------------------------------- -------------- ------------- ------------- ---------------
Net Income $ 51.2 $75.3 $53.7 $114.6
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Adjustments:
-------------------------------------------------- -------------- ------------- ------------- ---------------
Less: After Tax Items - (0.5) - (67.5)
-------------------------------------------------- -------------- ------------- ------------- ---------------
Plus: Income Taxes 26.6 55.9 35.4 34.9
-------------------------------------------------- -------------- ------------- ------------- ---------------
Plus: Interest Expense 166.3 158.5 153.8 160.0
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Less: Other Income/Deductions (18.7) (23.7) (33.8) (32.7)
-------------------------------------------------- -------------- ------------- ------------- ---------------
Plus: Allowance for Funds Used During
Construction - Equity 1.3 0.8 0.7 1.2
-------------------------------------------------- -------------- ------------- ------------- ---------------
Plus: Depreciation and Amortization 113.5 117.1 124.1 121.0
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Plus: Amortization of Transition
Recovery Asset 17.0 21.6 24.6 29.1
-------------------------------------------------- -------------- ------------- ------------- ---------------
Plus: Depreciation included in Fuel
Expense 4.3 4.5 4.4 4.4
-------------------------------------------------- -------------- ------------- ------------- ---------------
EBITDA $361.5 $409.5 $362.9 $365.0
-------------------------------------------------- -------------- ------------- ------------- ---------------
NET DEBT AND TOTAL DEBT AND CAPITAL LEASE OBLIGATIONS
-----------------------------------------------------
----------------------------- ----------- ----------- ------------- ----------- ----------- -----------
($ in millions) 12/31/98 12/31/99 12/31/00 12/31/01 12/31/02 9/30/03
----------------------------- ----------- ----------- ------------- ----------- ----------- -----------
Net Debt $2,069.5 $2,056.2 $1,943.2 $1,921.2 $1,782.6 $1,781.4
----------------------------- ----------- ----------- ------------- ----------- ----------- -----------
Total Debt and Capital
Lease Obligations $2,087.3 $2,100.8 $2,012.7 $2,005.7 $1,974.5 $1,960.4
----------------------------- ----------- ----------- ------------- ----------- ----------- -----------
Net Debt represents TEP's debt and capital lease obligations less investment in
lease debt. We have subtracted investment in lease debt because it represents
TEP's ownership of its own capital lease obligations. Net Debt measures
presented may not be comparable to similarly titled measures used by other
companies. Net Debt is not a measurement presented in accordance with GAAP and
we do not intend Net Debt to represent debt as defined by GAAP. You should not
consider Net Debt to be an alternative to debt or any other items calculated in
accordance with GAAP.
-------------------------------------------------------------------------------------------------------
RECONCILIATION OF TOTAL DEBT AND CAPITAL LEASE OBLIGATIONS TO NET DEBT
----------------------------- ----------- ----------- ------------- ----------- ----------- -----------
($ in millions) 12/31/98 12/31/99 12/31/00 12/31/01 12/31/02 9/30/03
----------------------------- ----------- ----------- ------------- ----------- ----------- -----------
Long-Term Debt $1,184.4 $1,135.8 $1,132.4 $801.9 $1,128.4 $1,126.7
----------------------------- ----------- ----------- ------------- ----------- ----------- -----------
Current Portion - Long-Term $1.7 $48.6 $1.7 $330.3 $1.7 $1.7
Debt
----------------------------- ----------- ----------- ------------- ----------- ----------- -----------
Short-Term Debt $- $- $- $- $- $20.0
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TOTAL DEBT $1,186.1 $1,184.4 $1,134.1 $1,132.2 $1,130.1 $1,148.4
----------------------------- ----------- ----------- ------------- ----------- ----------- -----------
Capital Lease Obligations $889.6 $880.1 $857.5 $853.4 $801.5 $761.8
----------------------------- ----------- ----------- ------------- ----------- ----------- -----------
Current Portion - Capital $11.6 $36.3 $21.0 $20.0 $42.9 $50.2
Lease Obligations
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TOTAL DEBT AND CAPITAL $2,087.3 $2,100.8 $2,012.6 $2,005.6 $1,974.5 $1,960.4
LEASE OBLIGATIONS
----------------------------- ----------- ----------- ------------- ----------- ----------- -----------
Investment in Lease Debt ($17.8) ($44.6) ($69.4) ($84.4) ($191.9) ($179.0)
----------------------------- ----------- ----------- ------------- ----------- ----------- -----------
NET DEBT $2,069.5 $2,056.2 $1,943.2 $1,921.2 $1,782.6 $1,781.4
----------------------------- ----------- ----------- ------------- ----------- ----------- -----------
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.
UNISOURCE ENERGY CORPORATION
(Registrant)
Date: January 28, 2004 /s/Kevin P. Larson
------------------------------------
Kevin P. Larson
Vice President and
Principal Financial Officer
TUCSON ELECTRIC POWER COMPANY
(Registrant)
Date: January 28, 2004 /s/Kevin P. Larson
------------------------------------
Kevin P. Larson
Vice President and
Principal Financial Officer