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Original Source: FD (FAIR DISCLOSURE) WIRE
OPERATOR: Thank you and welcome to the UniSource Energy year-end 2007 conference call. Today's call will be hosted by James Pignatelli, UniSource Energy Chairman, President and Chief Executive Officer. First, I would like to turn the call over to Ms. Jo Smith, Director of Investor Relations.
JO SMITH, DIRECTOR IR, UNISOURCE ENERGY CORP.: Good morning everyone. In a moment Jim Pignatelli will brief you on UniSource Energy's 2007 financial and operating results and outlook for 2008. However, I first need to inform you that forward-looking information contained in this call with respect to revenues, earnings, performance, plans, strategies, prospects and other aspects of the business of UniSource Energy may involve risks and uncertainties. Actual event 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, the cost of fuel and purchased power, performance at TEP's generating plants, weather, resolution of pending litigation matters, the cost of debt in equity capital, changes in asset depreciable lives, changes in accounting standards, the base and strength of the regional economy, and other factors listed in UniSource Energy's Form 10-K and 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 on the SEC's website. Now I will turn the call over to Jim Pignatelli.
JAMES PIGNATELLI, CHAIRMAN, PRESIDENT, CEO, UNISOURCE ENERGY CORP.: Good morning. Thank you all for joining us today. Today we are reporting our earnings for 2007 at $58 million or $1.57 per share. That is down from the $1.80 per diluted share which we earned in 2006. We are within the guidance we have previously provided, which was $1.50 to $1.75 for 2007; however, I acknowledge we are at the low end of that.
We are at the low end of that because of anticipated fourth quarter outages.
We were pleased that our cash flow from operations once more exceeded $300 million during 2007. And that the Board saw fit to increase the dividend from $0.90 to $0.96, showing its confidence in our forward opportunities.
Looking at the 2008, we are providing guidance of $1.70 to $2.20 per share. This guidance assumes that $65 million, that we in revenue collected after the TRA is fully amortized, will be retained by the Company. I will talk more about that in a little bit. We're also projecting consolidated cash flow from operations to once more exceed $300 million. And we are seeing an improvement in cash flow from operations from TEP.
Now looking specifically at 2007. As I indicated, the net income was down from $58 million at UniSource to $67 million, from $67 million previously. The majority of that decrease was at TEP, with TEP having net income of $54 million.
Primarily we were down because of higher fuel costs and purchased power costs. We do not have a fuel clause. We had managed this business all the time I had been here, 15 years, without a fuel clause. Our gas was up 24% in '07 over '06. Our coal was up $12 million in '07 over '06, and our purchased power was up $40 million in '07 over '06.
We do need a fuel clause. We have filed for a fuel clause. We're confident we're going to get a fuel clause. Just in the last eight years since we have had frozen rates, our fuel costs have gone up 55%. And those of you following natural gas know that it has gone up almost 200%. APS has a fuel clause. UniSource Electric has a fuel clause. UniSource Gas has a fuel clause. I'm confident we are going to get the fuel clause.
Our equivalent availability factor, even though we did have some surprises in the fourth quarter, was still strong at 89.4%. That reflects …