PHOENIX, Ariz. ‚ Pinnacle West Capital Corporation (NYSE:PNW) today reported income from continuing operations for the calendar year 1998 of $242.9 million or $2.85 cents per diluted share of common stock, compared with $235.9 million or $2.74 per share for the prior year.
Chairman Richard Snell said that the performance and growth characteristics that have been at the foundation of the company were evident all year. However, he added that since late 1998, regulatory uncertainty related to the introduction of retail electricity competition in Arizona has negatively affected the company¼s stock price.
"We have had a good record of working with our regulators and we believe we will again achieve a constructive outcome in 1999," he said.
Among highlights for the year, Snell included:
- Customer growth at Arizona Public Service that was more than three times the national average;
- A fourth reduction in electricity prices, dropping electricity prices by 8.4 percent during the last five years;
- Strong performance from the company's power plants including Palo Verde which broke its own 1997 national power record by generating more than 30 billion kilowatt-hours of electricity in 1998. This was the first time a facility of any kind in the United States had crossed the 30-billion kilowatt-hour threshold in any year; and
- Enhanced energy marketing and trading activities primarily in the western United States.
For the year, the benefits of higher sales related to 4.2 percent customer growth and increased usage per customer, expanded power marketing and trading activities and lower financing costs were partially offset by the effects of milder weather and two electricity price reductions. The price reductions were 1.1 percent effective July 1, 1998 and 1.2 percent effective July 1, 1997.
Operating expenses in 1998 were up primarily as a result of customer growth, competition initiatives and expansion of the company¼s power marketing and trading function.
Also negatively affecting the year-to-year comparison were two fuel-related settlements that contributed approximately $21 million before income taxes in 1997, primarily related to prior years.
APS earnings for 1998 were $245.5 million, compared with $238.7 million in 1997.
For the year, Pinnacle West's real estate subsidiary, SunCor Development, and its investment subsidiary, El Dorado, contributed a combined $12 million to consolidated results compared with $13.5 million for the prior year.
Also today, the Pinnacle West board of directors declared a quarterly dividend of 32.5 cents per share of common stock, payable on March 1, 1999 to shareholders of record on February 1, 1999. The company hiked its dividend eight percent (ten cents per share annually) in October, continuing a policy of dividend increases by relatively consistent amounts at a pace that is well above the electric utility industry.
Pinnacle West is a Phoenix-based holding company with consolidated assets of approximately $7 billion. Its major subsidiary is APS, Arizona's largest electric utility. SunCor, its real estate subsidiary, has some 13,000 acres under development.
Pinnacle West Capital Corporation Consolidated Income Statements
(In Thousands, Except Per Share Amounts)
(Unaudited)
Three Months Ended
December 31, |
Twelve Months Ended
December 31, |
|
|
|
|
1998 |
1997 |
1998 |
1997 |
|
|
|
|
|
Operating Revenues |
Electric |
$ |
443,526 |
$ |
407,960 |
$ |
2,006,398 |
$ |
1,878,553 |
Real estate |
|
42,835 |
|
35,835 |
|
124,188 |
|
116,473 |
|
|
|
|
|
Total |
|
486,361 |
|
443,795 |
|
2,130,586 |
|
1,995,026 |
|
|
|
|
|
Fuel Expenses |
Fuel for electric generation |
|
57,093 |
|
46,214 |
|
231,967 |
|
201,341 |
Purchased power |
|
58,207 |
|
47,104 |
|
305,534 |
|
235,286 |
|
|
|
|
|
Total |
|
115,300 |
|
93,318 |
|
537,501 |
|
436,627 |
|
|
|
|
|
Operating Expenses |
Utility operations and maintenance |
|
104,653 |
|
112,154 |
|
414,041 |
|
399,434 |
Real estate operations |
|
40,061 |
|
34,078 |
|
115,331 |
|
111,628 |
Depreciation and amortization |
|
98,283 |
|
92,280 |
|
379,679 |
|
368,285 |
Taxes other than income taxes |
|
26,216 |
|
30,408 |
|
116,906 |
|
121,546 |
|
|
|
|
|
Total |
|
269,213 |
|
268,920 |
|
1,025,957 |
|
1,000,893 |
|
|
|
|
|
Operating Income |
|
101,848 |
|
81,557 |
|
567,128 |
|
557,506 |
|
|
|
|
|
Other Income (Deductions) |
Interest on long-term debt |
|
(37,721) |
|
(40,882) |
|
(153,736) |
|
(164,165) |
Other interest |
|
(4,015) |
|
(3,796) |
|
(15,409) |
|
(18,673) |
Capitalized interest |
|
4,335 |
|
4,708 |
|
18,596 |
|
19,703 |
Preferred stock dividend requirements of APS |
|
(2,043) |
|
(2,998) |
|
(9,703) |
|
(12,803) |
Other - net |
|
(2,431) |
|
(6,414) |
|
609 |
|
4,569 |
|
|
|
|
|
Total |
|
(41,875) |
|
(49,382) |
|
(159,643) |
|
(171,369) |
|
|
|
|
|
Income Before Income Tax |
|
59,973 |
|
32,175 |
|
407,485 |
|
386,137 |
Income Tax Expense |
|
24,445 |
|
13,223 |
|
164,593 |
|
150,281 |
|
|
|
|
|
Net Income |
$ |
35,528 |
$ |
18,952 |
$ |
242,892 |
$ |
235,856 |
|
|
|
|
|
Average Common Shares Outstanding |
|
84,732 |
|
84,727 |
|
84,774 |
|
85,503 |
Earnings Per Average
Common Share Outstanding |
|
|
|
|
|
Net income - basic |
$ |
0.42 |
$ |
0.21 |
$ |
2.87 |
$ |
2.76 |
|
|
|
|
|
Net income - diluted |
$ |
0.42 |
$ |
0.21 |
$ |
2.85 |
$ |
2.74 |
|
|
|
|
|
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.