Pinnacle West Reports 2004 Results; Retail Service Territory Remains Among Fastest Growing in U.S.


PHOENIX– Pinnacle West Capital Corporation (NYSE: PNW) today reported consolidated net income for the year 2004 of $243.2 million, or $2.66 per diluted share of common stock. This result compares with $240.6 million, or $2.63 per share, for the year 2003.

On-going consolidated earnings in 2004 were $218.3 million, or $2.39 per share, compared with $218.6 million, or $2.39 per share, for the prior year. On-going earnings for 2004 exclude income after income taxes of $24.9 million, or $0.27 per share, related to the sale of the Company’s interests in the Phoenix Suns professional basketball team and NAC International. For 2003, on-going earnings exclude income tax credits related to prior years and recorded in 2003 of $17.2 million, or $0.19 per share, and income after income taxes of $4.8 million, or $0.05 per share, related to NAC International.

“Our employees’ steadfast focus on customer satisfaction and operational excellence has allowed us to reliably serve one of the fastest growing markets in the U.S.,” said Chairman Bill Post. “Our fundamental growth provides a solid foundation for long-term performance.”

Post said that in 2005, resolution of the Company’s pending rate case is the top priority. “As Arizona’s economy continues to surge, it’s more important than ever for us to achieve a constructive regulatory outcome that recognizes our infrastructure investments and covers the costs of providing reliable service for our fast-growing customer base.”

In 2004, Arizona Public Service (APS) set more meters than in any other year in the Company’s 118-year history. More than 40,000 meters were installed, reflecting retail customer growth rate of about 4 percent, more than three times the U.S. average.

The year-to-year comparison was favorably affected by higher retail sales volumes; lower regulatory asset amortization; and improved wholesale power marketing results.

These favorable factors were substantially offset by a net increase in costs related to new plants placed into service in 2003 and 2004; an increase in customer service and other operating costs; an increase in depreciation for delivery and other assets; the effects of milder weather in 2004 versus 2003;a retail rate decrease in mid-2003; and, as previously forecast, lower contributions from the Company’s unregulated operations.

APS reported net income for 2004 of $199.6 million, compared with $180.9 million for 2003.SunCor Development Co., Pinnacle West’s real estate subsidiary, delivered solid performance, reporting 2004 net income of $44.7 million, compared with its net contribution of $56.1 million in 2003. APS Energy Services, the Company’s competitive retail energy subsidiary, reported net income of $2.9 million for 2004, compared with $16.0 million in 2003, reflecting the dynamics of California’s competitive energy market.

For the 2004 fourth quarter, the Company reported consolidated net income of $33.7 million, or $0.37 per diluted share of common stock. This result compares with consolidated net income of $49.1 million, or $0.54 per share, in last year’s corresponding period. On-going consolidated earnings in the 2004 fourth quarter, excluding the sale of NAC, were $31.0 million, or $0.34 per share, compared with $37.5 million, or $0.41 per share. On-going earnings for 2003’s fourth quarter exclude $11.6 million, or $0.13 per share, related to NAC and income tax credits for prior years and recorded in 2003’s fourth quarter.

All dollar amounts included in this release are reported after income tax effects. For more information on Pinnacle West’s operating statistics and earnings, please visit

Pinnacle West is a Phoenix-based company with consolidated assets of approximately $9.9 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.

Webcast and Conference Call

The Company will hold a conference call and live webcast at 11:00 a.m. (ET) today, Friday, January 28 to discuss its earnings and recent events. The webcast can be accessed at and will be available for replay on the website for 30 days. To access the conference call by telephone, dial (877) 356-3961 and enter reservation number 3179339. A replay of the call also will be available until 11:55 p.m. (ET), Friday, February 4, 2005, by calling (800) 642-1687 in the U.S. and Canada or (706) 645-9291 internationally and entering the same reservation number.


Alan Bunnell, (602) 250-3376

Rebecca Hickman, (602) 250-5668
Lisa Malagon, (602) 250-5671

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