Feb. 19

Buyout target UniSource Energy Corp. posted fourth- quarter net income of $28.1 million, or 83 cents per share, compared with earnings of $4.9 million, or 14 cents per share, in the same period in 2002. Fourth-quarter total operating revenues were $281.7 million, up from $191.3 million in 2002.

The company attributed much of the year-over-year earnings increase to a $6 million after-tax gain on fees subsidiary UniSource Energy Services collected for development of a third power plant at the Springerville Generating Station, along with a $15 million tax benefit for subsidiary Tucson Electric Power Co.

For all of fiscal 2003, UniSource reported earnings of $112.6 million, or $3.33 per share, including an after-tax gain of $67.5 million, or $1.99 per share, related to the adoption of a new accounting standard for plant retirement and removal costs.

In fiscal 2002, UniSource posted earnings of $33.3 million, or 99 cents per share.

The company estimated 2004 full-year earnings at $1.25 to $1.60 per share. UniSource expects to complete a proposed leveraged buyout by Saguaro Utility Group L.P., whose limited partners include investment funds of Kohlberg, Kravis & Roberts & Co., J.P. Morgan Partners and Wachovia Capital Partners, in the second half of 2004.

TEP posted 2003 earnings of $127.6 million, or $3.77 per UniSource share, or $60.1 million and $1.78 per share excluding the effect of the accounting change.

TEP's retail power sales rose 2.7 percent in 2003, up $23 million from 2002, on higher summer cooling demand and a 2.2 percent increase in customer base.

Subsidiary Millennium Energy Holdings, parent of Global Solar Energy and other unregulated energy businesses, posted a 2003 net loss of $16.4 million, or 48 cents per UniSource share, compared with a net loss of $15.5 million, or 46 cents per share, in 2002.

Those results reflected operating costs, research-and- development expenses and valuation adjustments, the company said. TEP, the state's second-largest investor-owned electric utility, provides power to more than 360,000 customers in the Tucson metropolitan area. UniSource subsidiary Uni-Source Energy Services provides natural gas and electric service to more than 200,000 customers in Northern and Southern Arizona as part of the system UniSource purchased from Citizens Communications in August.

UniSource reported earnings after the stock market's close Tuesday evening. The company planned to discuss the results during an analysts' conference call this morning.