Pinnacle West Reports 1996 Results Declares Quarterly Dividend


PHOENIX, ARIZ. -- Pinnacle West Capital Corporation (NYSE:PNW) today reported income from continuing operations for the calendar year 1996 of $211.1 million or $2.41 per share of common stock, compared with $199.6 million or $2.28 per share for the prior year.

Results from continuing operations include a fourth quarter charge of $31.7 million ($18.9 million after tax) recorded primarily as operations and maintenance expense for a previously-announced voluntary severance program. Chairman Richard Snell said the program is expected to result in annual pretax savings of approximately $23 million ($17 million and $6 million in operating and capital expenditures, respectively.)

Snell said that results for the year were strong, considering the effects of an agreement with the Arizona Corporation Commission, the severance program and higher fuel costs. The agreement took effect July 1, 1996 and resulted in a 3.4 percent rate reduction and accelerated amortization of regulatory assets.

These negative effects were more than offset by very strong 4.6 percent customer growth (more than three times the national rate); weather effects; lower interest expense at the parent and Arizona Public Service; and lower taxes.

APS earnings for 1996 were $226.4 million compared with $220.4 million in 1995.

In 1996, Pinnacle West's real estate subsidiary, SunCor Development, and its investment capital subsidiary, El Dorado Investment, reported combined net income of $4.5 million, with substantially all of that contributed by SunCor. It was SunCor's third profitable year in a row, and El Dorado's second, although combined they were down from 1995, when a sale of one of El Dorado's investments boosted combined income to more than $12 million.

Including a loss from discontinued operations of $9.5 million or $0.11 per share and an extraordinary charge of $20.3 million or $0.23 per share, Pinnacle West reported net income of $181.2 million or $2.07 per share for the calendar year, compared with $188.0 million or $2.15 per share for 1995.

The loss from discontinued operations related to the remnants of MeraBank legal matters, and the extraordinary charge was for debt prepayment penalties related to the previously- announced prepayment and refinancing of the last of the parent's high-coupon debt.

Snell said that among operating highlights for the year were exceptional customer growth, continued cost containment, excellent power plant performance, a second rate reduction which lowered electricity prices to pre-1986 levels, and the introduction of new services and products.

"It is truly significant that much of our recent progress is the result of achievements in all areas of the company," he said.

"If issues related to the new rules adopted by the Arizona Corporation Commission are adequately addressed, I think 1996 will mark the year a significant step forward was taken toward providing the benefits of competition to electricity customers throughout Arizona," he added.

Snell said the Company is continuing to enhance its ability to prosper in a competitive environment. "Our balance sheet is getting stronger, our operations are increasingly streamlined and our electricity prices are coming down."

Also today, the Pinnacle West board of directors declared a quarterly dividend of 27.5 cents per share of common stock payable on March 1, 1997 to shareholders of record on February 3, 1997. The Company announced in September a ten percent (ten cents per share annually) dividend increase and said that its plans, for at least the next several years, include annual dividend increases by relatively consistent dollar 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 Arizona Public Service, the state's largest electric utility.


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.

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