PHOENIX - Pinnacle West Capital Corporation (NYSE: PNW) today reported consolidated income from continuing operations for the quarter ended September 30, 2000, of $116.0 million or $1.37 per diluted share of common stock. The result compares with income from continuing operations of $125.6 million or $1.48 per share for the same period in 1999. Lower earnings were reported for El Dorado Investment Co., the Company’s investment subsidiary, and Arizona Public Service Co. (APS).
APS earnings for the third quarter were $124.2 million, compared with $129.5 million before an extraordinary charge in the comparable 1999 period. Completion of investment tax credits in 1999, most of which related to APS, accounted for $12.5 million or $0.15 per share in the prior-year period.
El Dorado reported a loss for the quarter of $8.8 million or $0.10 per share. This loss was related primarily to the quarterly adjustment of the value of El Dorado's investment in a technology venture capital partnership. Earnings related to El Dorado’s investments are dependent on stock market conditions, as the investments are valued each quarter based on market prices and other factors.
Year-to-date, Pinnacle West reported consolidated income from continuing operations of $260.0 million, or $3.06 per diluted share of common stock, compared with $225.0 million or $2.64 per share for the corresponding period in 1999.
"Although earnings for the quarter were down somewhat, year-to-date operating results show we met the challenge of stable prices for our customers while producing excellent financial results in an extremely volatile electric market," said Chief Executive Officer Bill Post.
Post said the volatile market, including record bulk power prices, resulted in a sharp increase in the Company’s fuel and purchased power costs, which the Company was able to mitigate by its ongoing risk management activities.
APS has lowered prices in six of the last seven years. The latest, a 1.5 percent price decrease which became effective July 1, 2000, is part of APS’ commitment to reduce residential customer prices a total of 16 percent from 1994 to 2004.
SunCor Development Co., Pinnacle West’s real estate subsidiary, reported net income for the quarter of $2.2 million, due primarily to an increase in land and home sales. This compares to a loss of $0.5 million for the prior-year period.
Third quarter net income of a year-ago for Pinnacle West was $23.7 million or $0.28 per diluted share of common stock, including an extraordinary charge of $139.9 million after income taxes or $1.65 per share. APS recorded the extraordinary charge in the third quarter for a regulatory disallowance. This charge was partially offset by a $38 million or $0.45 per share tax benefit from discontinued operations.
Also today, the Company announced a dividend increase of approximately 7.1 percent or ten cents per share annually. This action will result in an indicated annual dividend of $1.50 per share (37.5 cents per share quarterly). The declared dividends are payable December 1, 2000, to shareholders of record on November 1, 2000.
Post said the Company's dividend policy calls for annual increases by relatively consistent dollar amounts, which will continue dividend growth at a pace well above the industry average but at a payout ratio well below the industry average.
Pinnacle West is a Phoenix-based company with consolidated assets of approximately $7 billion. Through its subsidiaries, the company generates, sells and delivers electricity and sells energy-related products and services to retail and wholesale customers in the western United States. It also develops residential, commercial and industrial real estate projects.
Pinnacle West Capital Corporation Consolidated Statements of Income
(In Thousands, Except Per Share Amounts)
(Unaudited)
Three Months Ended
|
Nine Months Ended
|
Twelve Months Ended
|
|
|
September 30,
|
September 30,
|
September 30,
|
|
|
|
|
|
2000
|
1999
|
2000
|
1999
|
2000
|
1999
|
|
|
|
|
|
|
|
|
Operating Revenues
|
|
Electric
|
$1,567,960
|
$867,630
|
$2,734,362
|
$1,793,047
|
$3,234,499
|
$2,236,573
|
|
Real estate
|
39,396
|
26,640
|
117,659
|
83,870
|
163,958
|
126,705
|
|
|
|
|
Total
|
1,607,356
|
894,270
|
2,852,021
|
1,876,917
|
3,398,457
|
2,363,278
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses
|
|
Fuel and purchased power
|
1,079,436
|
400,961
|
1,495,218
|
636,062
|
1,655,265
|
752,832
|
|
Operations and maintenance
|
113,670
|
109,006
|
331,754
|
319,212
|
459,319
|
425,239
|
|
Real estate operations
|
33,980
|
26,757
|
101,374
|
78,393
|
142,497
|
118,454
|
|
Depreciation and amortization
|
98,628
|
95,068
|
293,607
|
289,361
|
389,814
|
387,644
|
|
Taxes other than income taxes
|
25,641
|
22,184
|
76,643
|
73,028
|
100,221
|
96,400
|
|
|
|
|
Total
|
1,351,355
|
653,976
|
2,298,596
|
1,396,056
|
2,747,116
|
1,780,569
|
|
|
|
Operating Income
|
256,001
|
240,294
|
553,425
|
480,861
|
651,341
|
582,709
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income (Expense)
|
|
Preferred stock dividend requirements of APS
|
--
|
--
|
--
|
(1,016)
|
--
|
(3,059)
|
|
|
|
|
Net other income and expense
|
(14,778)
|
1,040
|
13,785
|
(898)
|
25,476
|
(3,329)
|
|
|
|
|
Total
|
(14,778)
|
1,040
|
13,785
|
(1,914)
|
25,476
|
(6,388)
|
|
|
|
|
|
|
|
|
|
|
Income From Continuing Operations Before Interest and Income Taxes
|
241,223
|
241,334
|
567,210
|
478,947
|
676,817
|
576,321
|
|
|
|
|
|
|
|
|
Interest Expense
|
|
|
|
|
|
|
|
Interest charges
|
42,773
|
39,614
|
126,996
|
121,488
|
167,889
|
163,224
|
|
|
|
|
Capitalized interest
|
(5,240)
|
(1,990)
|
(13,875)
|
(10,253)
|
(15,286)
|
(14,588)
|
|
|
|
|
Total
|
37,533
|
37,624
|
113,121
|
111,235
|
152,603
|
148,636
|
|
|
|
Income From Continuing Operations Before Income Taxes
|
203,690
|
203,710
|
454,089
|
367,712
|
524,214
|
427,685
|
|
|
|
|
|
|
|
|
Income Taxes
|
87,641
|
78,131
|
194,069
|
142,741
|
219,393
|
167,186
|
|
|
|
|
|
|
|
|
|
|
|
Income From Continuing Operations
|
116,049
|
125,579
|
260,020
|
224,971
|
304,821
|
260,499
|
|
|
|
|
|
|
|
|
Income Tax Benefit From Discontinued Operations
|
--
|
38,000
|
--
|
38,000
|
--
|
38,000
|
|
|
|
|
|
|
|
|
Extraordinary Charge - Net of Income Taxes of $94,115
|
--
|
(139,885)
|
--
|
(139,885)
|
--
|
(139,885)
|
|
|
|
Net Income
|
$ 116,049
|
$ 23,694
|
$ 260,020
|
$ 123,086
|
$ 304,821
|
$ 158,614
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Common Shares Outstanding - Basic
|
84,745
|
84,759
|
84,735
|
84,715
|
84,732
|
84,719
|
|
|
|
|
|
|
|
|
Average Common Shares Outstanding - Diluted
|
85,012
|
84,989
|
84,901
|
85,087
|
84,898
|
85,140
|
|
|
|
|
|
|
|
|
|
Earnings Per Average Common Share Outstanding
|
|
Continuing Operations - Basic
|
$ 1.37
|
$ 1.48
|
$ 3.07
|
$ 2.66
|
$ 3.60
|
$ 3.07
|
|
Net Income - Basic
|
$ 1.37
|
$ 0.28
|
$ 3.07
|
$ 1.45
|
$ 3.60
|
$ 1.87
|
|
Continuing Operations - Diluted
|
$ 1.37
|
$ 1.48
|
$ 3.06
|
$ 2.64
|
$ 3.59
|
$ 3.06
|
|
Net Income - Diluted
|
$ 1.37
|
$ 0.28
|
$ 3.06
|
$ 1.45
|
$ 3.59
|
$ 1.86
|
Certain prior year amounts have been restated to conform to the 2000 presentation.
Contacts
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.