SUPPLEMENTAL CASH FLOW INFORMATION

3 Months Ended

Mar. 31, 2014

A reconciliation of Net Income to Net Cash Flows from Operating Activities follows:



	UNS Energy
	Three Months Ended March 31,
	2014			2013
	Thousands of Dollars
Net Income	$	15,475		$	11,345
Adjustments to Reconcile Net Income
To Net Cash Flows from Operating Activities
Depreciation Expense	39,081			36,300
Amortization Expense	6,176			8,289
Depreciation and Amortization Recorded to Fuel and O&M Expense	1,990			1,759
Amortization of Deferred Debt-Related Costs included in Interest Expense	785			750
Provision for Retail Customer Bad Debts	537			318
Use of Renewable Energy Credits for Compliance	5,528			3,870
Deferred Income Taxes	10,131			22,078
Pension and Retiree Expense	3,942			5,696
Pension and Retiree Funding	(1,694		)	(1,734		)
Share-Based Compensation Expense	985			722
Allowance for Equity Funds Used During Construction	(1,898		)	(1,175		)
Decrease to Reflect PPFAC/PGA Recovery	(8,920		)	(5,368		)
Changes in Assets and Liabilities which Provided (Used)
Cash Exclusive of Changes Shown Separately
Accounts Receivable	27,778			19,003
Materials and Fuel Inventory	(3,057		)	1,574
Accounts Payable	(12,387		)	(13,458		)
Income Taxes	(146		)	(16,028		)
Interest Accrued	(6,426		)	(9,974		)
Taxes Other Than Income Taxes	11,697			12,534
Other	(12,792		)	4,552
Net Cash Flows – Operating Activities	$	76,785		$	81,053



	TEP
	Three Months Ended March 31,
	2014			2013
	Thousands of Dollars
Net Income	$	9,172		$	1,478
Adjustments to Reconcile Net Income
To Net Cash Flows from Operating Activities
Depreciation Expense	30,811			28,558
Amortization Expense	7,099			9,222
Depreciation and Amortization Recorded to Fuel and O&M Expense	1,704			1,493
Amortization of Deferred Debt-Related Costs Included in Interest Expense	635			601
Provision for Retail Customer Bad Debts	342			246
Use of RECs for Compliance	4,844			3,540
Deferred Income Taxes	5,635			12,276
Pension and Retiree Expense	3,412			4,970
Pension and Retiree Funding	(1,657		)	(1,676		)
Share-Based Compensation Expense	792			575
Allowance for Equity Funds Used During Construction	(1,721		)	(850		)
Decrease to Reflect PPFAC Recovery	(1,730		)	(2,360		)
Changes in Assets and Liabilities which Provided (Used)
Cash Exclusive of Changes Shown Separately
Accounts Receivable	16,274			11,408
Materials and Fuel Inventory	(3,182		)	1,654
Accounts Payable	(3,425		)	(6,094		)
Income Taxes	(5		)	(10,877		)
Interest Accrued	(3,260		)	(6,826		)
Taxes Other Than Income Taxes	9,948			10,068
Other	(10,374		)	1,993
Net Cash Flows – Operating Activities	$	65,314		$	59,399

NON-CASH TRANSACTIONS

In March 2013, TEP issued $91 million of tax-exempt bonds and used the proceeds to redeem debt using a trustee. Since the cash flowed through a trust account, the issuance and redemption of debt resulted in a non-cash transaction.