STOCKHOLDERS' EQUITY

12 Months Ended

Dec. 31, 2013

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STOCKHOLDERS' EQUITY

STOCKHOLDERS’ EQUITY

DIVIDEND LIMITATIONS

UNS Energy

UNS Energy’s ability to pay cash dividends on Common Stock outstanding depends, in part, upon cash flows from our subsidiaries: TEP, UES, Millennium, and UED, as well as compliance with various debt covenant requirements. UNS Energy and each of its subsidiaries were in compliance with debt covenants at December 31, 2013; therefore, TEP and the other subsidiaries were not restricted from paying dividends.

The merger agreement with Fortis allows UNS Energy's Board of Directors to authorize quarterly dividends of up to $0.48 per share until the merger is completed, including a pro rata dividend determined by the number of days from the last declared record date to the date the merger is completed.

In February 2014, UNS Energy declared a first quarter dividend to shareholders of $0.48 per share of UNS Energy Common Stock. The dividend, totaling approximately $20 million, will be paid on March 25, 2014, to common shareholders of record as of March 13, 2014.

In the first half of 2012, $147 million of the Convertible Senior Notes outstanding were converted into approximately 4.3 million shares of UNS Energy Common Stock increasing common stock equity by $147 million.

TEP

TEP paid dividends to UNS Energy of $40 million in 2013 and $30 million in 2012. TEP paid no dividends to UNS Energy in 2011.

UNS Energy made no capital contributions to TEP in 2013 or 2012, and made capital contributions to TEP of $30 million in 2011.