Pinnacle West Capital Corporation (NYSE:PNW) today reported income from continuing operations for the calendar year 1997 of $235.9 million or $2.76 per share of common stock, compared with $211.1 million or $2.41 per share for the prior year.

"It was yet another good year," said Chairman Richard Snell. "The men and women of the organization have much to be proud of.

"While this is no time for complacency, I like where we are, and I believe we will continue to increase our competitiveness, profitability and financial strength."

Snell said that among the highlights for 1997 were:

• A reduction in the price of electricity for Arizona Public Service customers (the third reduction in four years);
• Operational excellence and ongoing cost management progress throughout the company;
• And, APS retail customer growth, which is currently more than three times the national average.

"Undoubtedly the energy market of the future will hold surprises as it undergoes restructuring, but given our preparation for that eventuality, we have confidence in our ability to deal with the state and federal issues we can anticipate," he said.

For the year, strong customer growth of 3.9 percent, two fuel-related settlements and lower financing costs helped offset the effects of two electricity price reductions and accelerated amortization of regulatory assets, which were part of a 1996 regulatory agreement with the Arizona Corporation Commission. The price reductions were 1.2 percent and 3.4 percent effective July 1, 1997 and July 1, 1996.

Earnings per share also were boosted by the effects of an $80 million stock buyback program completed in 1997, which resulted in a reduction of 2.7 million shares outstanding.

Operating expenses were lower in the year-to-year comparison because of a $32 million pretax charge for a voluntary severance program recorded in the fourth quarter of 1996 and related savings in 1997. These savings were partially offset by increased expenses for marketing, information technology and power plant maintenance.

Reflecting the company's stepped up activity in bulk power marketing in 1997, electric revenues and fuel expenses increased notably during the year but did not significantly affect the earnings comparison.

APS earnings for 1997 were $238.7 million compared with $226.4 million in 1996.

In 1997, Pinnacle West's real estate subsidiary, SunCor Development, and its investment subsidiary, El Dorado, reported combined earnings of $13.5 million, a $9 million increase over 1996. The majority of the increase occurred at El Dorado.

Also today, the Pinnacle West board of directors declared a quarterly dividend of 30 cents per share of common stock, payable on March 1, 1998 to shareholders of record on February 2, 1998. The company hiked its dividend nine percent (ten cents per share annually) in October, continuing a policy of annual dividend increases by relatively consistent amounts at a pace that is well above the electric utility industry average.

Pinnacle West is a Phoenix-based holding company with consolidated assets of approximately $7 billion. Its major subsidiary is APS, the state's largest electric utility.

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This press release contains forward-looking statements that involve risks and uncertainties, which include, but are not limited to, the ongoing restructuring of the electric industry; the outcome of the regulatory proceedings relating to the restructuring; regional economic and market conditions, which could affect customer growth and the cost of power supplies; the cost of debt and equity capital; weather variations affecting customer usage; and the strength of the real estate market. These factors and the other matters discussed above may cause future results to differ materially from historical results, or from results or outcomes currently expected or sought by the Company.