Pinnacle West Reports Second Quarter Results


PHOENIX, ARIZ. -- Pinnacle West Capital Corporation (NYSE: PNW) today reported consolidated net income for the quarter ended June 30, 1997 of $67.2 million or $0.79 per share of common stock, compared with $59.0 million or $0.67 per share for the corresponding prior-year period.

Results for the second quarter 1996 included a $2.5 million extraordinary charge after tax (three cents per share) for debt prepayment penalties. Chairman Richard Snell said the results reflect the companyís strong ongoing fundamentals, including exceptional customer growth at APS and greater efficiency throughout the company.

"Although earnings from our utility operations were negatively affected by the regulatory agreement that became effective July 1, 1996, we were able to achieve earnings progress due to other factors, including contributions from our non-utility subsidiaries, lower interest expense at the parent, and with respect to earnings per share, a stock buyback program," he said. That agreement with the Arizona Corporation Commission included a 3.4 percent electricity price reduction and accelerated amortization of regulatory assets, which together reduced after-tax earnings for the second quarter by approximately $25 million or $0.29 per share, and for the first six months by approximately $50 million.

Snell said that under the agreement a second price decrease became effective July 1, 1997 and will affect earnings going forward. The $17.6 million or 1.2 percent price reduction is APSí third decrease in as many years.

Positive effects on the quarter-to-quarter comparison included 4.4 percent customer growth at APS, operating expense savings, the timing of Palo Verde refueling, reduced finance costs, warmer weather, and lower property taxes. Earnings per share were also boosted by the effects of the stock buyback program approved earlier this year which authorized repurchase of up to $80 million of the companyís common stock in 1997. The company launched the buyback program in April and repurchased and retired substantially all the authorized amount during the quarter just ended, resulting in a reduction of 2.6 million shares outstanding.

Similar to the first quarter of this year, the companyís stepped-up activity in competitive bulk power markets resulted in notable increases in electric revenues and total fuel expenses.

For the quarter ended June 30, 1997, APS earned $66.3 million, essentially unchanged from the prior-year period.

SunCor Development, Pinnacle Westís real estate development subsidiary, and El Dorado, its investment subsidiary, reported combined earnings of $4.9 million for the quarter versus $215,000 a year ago.

For the six-month period ended June 30, 1997, Pinnacle West reported net income of $92.6 million or $1.07 per share of common stock, compared with $90.2 million (after extraordinary charges) or $1.03 per share of common stock for the prior-year period. APS reported year-to-date earnings in 1997 of $91.3 million compared with $107.2 million a year earlier.

Pinnacle West is a Phoenix-based company with consolidated assets of approximately $7 billion. Its major subsidiary is APS, Arizonaís 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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