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Original Source: FD (FAIR DISCLOSURE) WIRE
OPERATOR: Thank you and welcome to the UniSource Energy Q4 2006 Year-End Conference Call. Today's call will be hosted by James S. Pignatelli, UniSource Energy Chairman, President and CEO.
First, I would like to turn the call over to Ms. Jo Smith, Investor Relations.
JO SMITH, INVESTOR RELATIONS, UNISOURCE ENERGY: Thank you and good morning to everyone. In a moment, Jim Pignatelli will brief you on the Company's financial and operating results for 2006 and outlook for 2007.
However, I first need to inform you that forward-looking information contained in this call with respect to the revenues, earnings, performance, plans, strategies, prospects, and other aspects of the business of UniSource Energy may involve risks and uncertainties. Actual events and results may, for a variety of reasons, prove to be materially different from those indicated in the forward-looking statements, estimates, and projections. Factors that could influence actual future outcomes include, but are not limited to, the outcome of regulatory proceedings; regional, economic, and market conditions which could affect customer growth and the cost of fuel of power supplies; weather; fuel and purchase power expense; performance at TEP's generating plant, the cost of debt and equity capital; changes to long-term contracts; changes in asset depreciablized; changes in accounting standards; changes related to the recognition of unbilled revenue; and other factors listed in UniSource Energy's Form 10-K and 10-Q filings. In addition, the forward-looking statements in this call may include "assumptions," "expectations," "predictions," "intentions," or "beliefs" about future events. UniSource Energy cautions that actual future results may vary materially from those expected or implied in any forward-looking statements. More information about the risks and uncertainties related to these forward-looking statements are found in UniSource Energy's SEC filings, which are available free of charge on the SEC Web site.
Now, I will turn the call over to Jim Pignatelli.
JIM PIGNATELLI, CHAIRMAN, PRESIDENT, CEO, UNISOURCE ENERGY: Thank you, Jo. Good morning, everyone.
We're pleased to announce our earnings for the year 2006, $1.91 basic share, versus $1.33 per basic share in 2005. The $1.91 includes a $0.05 loss from discontinued operations. So it is well within the guidance levels that we have provided in the past and it reflects a soft fourth quarter, which I will allude to in the future.
On a diluted basis, and from here forward we are going to start talking in diluted shares, earnings per share, so that everybody is consistent. On a diluted earnings-per-share basis, our earnings were $1.80 for the year 2006, versus $1.28 in 2005. Our cash flow from operations remains strong. We actually exceeded my guidance, which I gave you in the third quarter -- at our third quarter call, and we realized consolidated cash flow from operations of $283 million, up from the $274 million in 2005. And the $283 million reflected the advanced payment of some taxes which we made in the third quarter.
Our board, in viewing the strength and outlook for the Company, increased the dividend by 7% to an annualized rate of $0.90 per share. And the board has reiterated its desire that it is targeting a payout level of approximately 50% of net income.
Looking to 2007, we're providing guidance of $1.65 to $2.05 per basic share, or $1.55 to $1.95 per diluted share. This is consistent with our initial guidance range, which we provided in 2006, and reflects the cost issues which we currently are forecasting.
Going back to 2006, our achievements for 2006 and our earnings were really based on strong performance, operating performance, from our generating fleet. For a full year, our equivalent availability factor of our coal plants was 90.5%. But especially during the summer, the equivalent availability factor was over 96%, which are excellent operating results.
Additionally, we completed Luna, our gas-fired power plant, ahead of schedule and under budget. It came in at $47 million, or $250 a KW installed. If you went into the market now, that value was probably in the $750 to $800 per KW installed.
Springerville 3 came on line in July. It's gone through its normal shakeout difficulties with bringing in a new power plant. We have had to redo some foundations on some pans, but it is up and operating as I speak.
Additionally, we completed the sale of Global Solar, thereby cutting off future losses from that activity. They actually -- the $0.05 loss that I indicated from discontinued operations was the result of the completion of that sale. And you will see no more activity at Global Solar.
Additionally, we were able to amend our credit agreements, which …