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Pinnacle West Reports Lower Fourth Quarter Earnings
PHOENIX-(Business Wire)-January 30, 2008 - Pinnacle West Capital Corporation (NYSE: PNW) today reported consolidated net income for the quarter ended December 31, 2007, of $2.9 million, or $0.03 per diluted share of common stock. This result compares with net income of $18.5 million, or $0.18 per diluted share, for the same quarter a year ago.
The quarterly results were impacted by lower results from the Company's utility and real estate operations. Arizona Public Service (APS), the Company's principal subsidiary, reported net income of $0.3 million, compared with earnings of $12.9 million for the same period a year ago. In addition, real estate subsidiary SunCor Development Co. reported lower net income of $8.1 million, compared with $11.4 million in the final quarter of 2006, reflecting a continued slowdown in the western U.S. real estate markets.
The 2007 fourth-quarter earnings were negatively impacted by increased operation and maintenance costs primarily related to power plant maintenance and planned overhauls, as well as higher customer service, depreciation and other growth-related costs. These factors more than offset increased retail sales at APS primarily due to customer growth of 2.6 percent.
"Arizona's growth and the increasing demand for energy require additional capital investment," said Chairman Bill Post. "Meeting this growth - and finding a way to effectively pay for and recover the associated costs - will require a transparent, collaborative and forward-looking process with all our stakeholders. We are committed to working with our customers, communities and regulators to find solutions to these challenges."
Post added that in 2007 the Company's employees continued meeting the challenges of growth in Arizona. The Company recorded all-time best results in measures such as customer outage frequency and average outage duration, all while setting 35,000 new meters and managing one of the hottest summers on record. APS' top-tier customer service also was recognized in 2007 survey results from J.D. Power and Associates. APS was rated number two among investor-owned electric utilities in the West for superior customer satisfaction by both residential and business customers.
For the year 2007 as a whole, Pinnacle West's consolidated net income decreased 6 percent to $307.1 million, or $3.05 per share, compared with 2006 net income of $327.3 million, or $3.27 per diluted share. APS reported earnings of $283.9 million during the same period compared with $269.7 million in 2006. And, SunCor reported net income of $23.7 million, down from $60.5 million for the same period a year ago.
For more information on Pinnacle West's operating statistics and earnings, please visit www.pinnaclewest.com/financials.
Conference Call
Pinnacle West invites interested parties to listen to the live web cast of management's conference call to discuss the Company's 2007 fourth-quarter earnings and year-end results, as well as recent developments at 11 a.m. (ET) today, January 30. The web cast can be accessed at www.pinnaclewest.com/presentations and will be available for replay on the web site for 30 days. To access the live conference call by telephone, dial (877) 356-3961 and enter conference ID number 28391511. A replay of the call also will be available until 11:55 p.m. (ET), Thursday, February 7, 2008, by calling (800) 642-1687 in the U.S. and Canada or (706) 645-9291 internationally and entering the same reservation number.
Pinnacle West is a Phoenix-based company with consolidated assets of about $11 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. -0- *T PINNACLE WEST CAPITAL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited) (in thousands, except per share amounts) THREE MONTHS ENDED TWELVE MONTHS ENDED DECEMBER 31, DECEMBER 31, —————————- ———————————- 2007 2006 2007 2006 —————————- ———————————- Operating Revenues Regulated electricity segment $627,096 $569,213 $2,918,163 $2,635,036 Real estate segment 42,055 81,470 215,068 399,798 Marketing and trading 78,060 71,390 342,371 330,742 Other revenues 11,905 7,999 48,018 36,172 ————- ————- —————- —————- Total 759,116 730,072 3,523,620 3,401,748 ————- ————- —————- —————- Operating Expenses Regulated electricity segment fuel and purchased power 259,991 225,160 1,140,923 960,649 Real estate segment operations 39,918 76,266 193,926 324,861 Marketing and trading fuel and purchased power 67,899 62,840 294,236 290,637 Operations and maintenance 207,398 180,122 734,705 691,277 Depreciation and amortization 95,921 91,336 373,436 358,644 Taxes other than income taxes 23,802 28,425 128,218 128,395 Other expenses 10,388 5,853 38,925 28,415 ————- ————- —————- —————- Total 705,317 670,002 2,904,369 2,782,878 ————- ————- —————- —————- Operating Income 53,799 60,070 619,251 618,870 ————- ————- —————- —————- Other Allowance for equity funds used during construction 6,321 3,700 21,195 14,312 Other income 12,718 9,568 24,694 44,016 Other expense (12,198) (14,847) (25,883) (27,800) ————- ————- —————- —————- Total 6,841 (1,579) 20,006 30,528 ————- ————- —————- —————- Interest Expense Interest charges 54,268 52,841 212,620 196,826 Capitalized interest (7,608) (6,394) (23,063) (20,989) ————- ————- —————- —————- Total 46,660 46,447 189,557 175,837 ————- ————- —————- —————- Income From Continuing Operations Before Income Taxes 13,980 12,044 449,700 473,561 Income Taxes 10,492 1,518 150,920 156,418 ————- ————- —————- —————- Income From Continuing Operations 3,488 10,526 298,780 317,143 Income (Loss) From Discontinued Operations Net of Income Taxes (577) 7,953 8,363 10,112 ————- ————- —————- —————- Net Income $ 2,911 $ 18,479 $ 307,143 $ 327,255 ========= ========= =========== =========== Weighted-Average Common Shares Outstanding - Basic 100,420 99,832 100,256 99,417 Weighted-Average Common Shares Outstanding - Diluted 100,963 100,474 100,835 100,010 Earnings Per Weighted- Average Common Share Outstanding Income from continuing operations - basic $ 0.03 $ 0.11 $ 2.98 $ 3.19 Net income - basic $ 0.03 $ 0.19 $ 3.06 $ 3.29 Income from continuing operations - diluted $ 0.03 $ 0.10 $ 2.96 $ 3.17 Net income - diluted $ 0.03 $ 0.18 $ 3.05 $ 3.27 *T
