UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 30, 2007
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Exact Name of Registrant as Specified in |
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Charter; State of Incorporation; |
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IRS Employer |
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Address and Telephone Number |
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Identification Number |
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1-8962
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Pinnacle West Capital Corporation
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86-0512431 |
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(an Arizona corporation) |
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400 North Fifth Street, P.O. Box 53999 |
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Phoenix, AZ 85072-3999 |
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(602) 250-1000 |
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1-4473
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Arizona Public Service Company
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86-0011170 |
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(an Arizona corporation) |
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400 North Fifth Street, P.O. Box 53999 |
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Phoenix, AZ 85072-3999 |
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(602) 250-1000 |
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c)) |
This combined Form 8-K is separately filed by Pinnacle West Capital Corporation and Arizona
Public Service Company. Each registrant is filing on its own behalf all of the information
contained in this Form 8-K that relates to such registrant and, where required, its subsidiaries.
Except as stated in the preceding sentence, neither registrant is filing any information that does
not relate to such registrant, and therefore makes no representation as to any such information.
Item 2.02. Results of Operations and Financial Condition
On October 25, 2007, Pinnacle West Capital Corporation (the “Company” or “Pinnacle West”)
issued a press release regarding its financial results for its fiscal quarter ended September 30,
2007. A copy of the press release is attached hereto as Exhibit 99.9.
Certain of the Information referenced in Item 7.01 below relates to the Company’s results of
operations for its fiscal quarter ended September 30, 2007. This Information is attached hereto as
Exhibits 99.2, 99.3, 99.7 and 99.9.
Item 7.01. Regulation FD Disclosure
Financial and Business Information
The Company is providing quarterly consolidated statistical summaries, earnings variance
explanations, and a glossary of relevant terms (collectively, “Information”) to help interested
parties better understand its business (see Exhibits 99.1, 99.2, 99.3, 99.4, 99.5, 99.6, 99.7 and
99.8). This Information is concurrently being posted to the Company’s website at
www.pinnaclewest.com. The Information may not represent all of the factors that could
affect the Company’s operating or financial results for various periods. Some of the Information
is preliminary in nature and could be subject to significant adjustment. Some of the Information
is based on information received from third parties and may contain inaccuracies. The Company is
not responsible for any such inaccuracies. Although the Company may update or correct the
Information if it is aware that such Information has been revised or is inaccurate, the Company
assumes no obligation to update or correct the Information and reserves the right to discontinue
the provision of all or any portion of the Information at any time or to change the type of
Information provided.
2007 Earnings Outlook
We are updating Pinnacle West’s 2007 earnings outlook. The differences between our current
guidance and our previous guidance are described below. In this discussion, earnings per share
amounts are after income taxes and are based on diluted common shares outstanding. The earnings
guidance in this Form 8-K supersedes all previous earnings guidance provided by Pinnacle West. Our
earnings forecasts are subject to numerous risks, including those described under “Forward-Looking
Statements” below.
We currently estimate that our consolidated earnings for 2007 will be within a reasonable
range of $2.90 per share. We estimate that Arizona Public Service Company’s (“APS”) earnings
contribution included in such 2007 consolidated earnings will be within a reasonable range of $2.70
per share (equivalent to a return on APS’ average common equity of 8.25%). These estimates include
the $8 million ($0.08 per share) after-tax regulatory disallowance recorded in the second quarter
of 2007 as a result of the general retail rate case decision; and $13 million ($0.13 per share) of
income tax benefits related to prior years resolved in 2007. We currently estimate that net income
for 2007 for our real estate subsidiary, SunCor Development Company (“SunCor”), will be
approximately $20 million. See “APS General Rate Case and Power Supply Adjustor” in Note 5 of
Notes to Condensed Consolidated Financial Statements in the Pinnacle West/APS Quarterly Report on
Form 10-Q for the quarterly period ended June 30, 2007 for additional information about the rate
case decision.
We previously estimated that our consolidated earnings for 2007 would be within a reasonable
range of $2.55 per share. See the Pinnacle West/APS Report on Form 8-K filed with the Securities
and Exchange Commission on July 26, 2007 for further information on our prior 2007 guidance. Our
current guidance differs from our prior guidance principally due to the following factors:
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Hotter than normal weather during the three months ended September 30, 2007
increased our estimate by $0.14 per share. |
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Income tax benefits related to prior years, but resolved during 2007, increased our
estimate by $0.13 per share. |
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Lower earnings expectations for SunCor attributable to
deteriorating credit markets in the second half of 2007 decreased
our estimate by $0.10 per share. |
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The net effect of numerous other factors increased our estimate by $0.18 per share. These
factors are minor individually and include, among other items, lower effective income
tax rates, higher retail sales and lower interest expense. |
Forward-Looking Statements
This Form 8-K contains forward-looking statements regarding our 2007 earnings outlook. Neither
the Company nor APS assumes any obligation to update these statements or make any further
statements on any of these issues, except as required by applicable law. Because actual results
may differ materially from expectations, we caution readers not to place undue reliance on these
statements. A number of factors could cause future results to differ materially from historical
results, or from results or outcomes currently expected or sought by Pinnacle West or APS. In
addition to the Risk Factors described in Item 1A of the Pinnacle West/APS Annual Report on Form
10-K for the fiscal year ended December 31, 2006, these factors include, but are not limited to,
state and federal regulatory and legislative decisions and actions, particularly those affecting
our rates and recovery of fuel and purchased power costs; the ongoing restructuring of the electric
industry, including the introduction of retail electric competition in Arizona and decisions
impacting wholesale competition; the outcome of regulatory, legislative and judicial proceedings,
both current and future, relating to the restructuring and
environmental matters (including those relating to climate change); market prices for electricity and natural
gas; power plant performance and outages; transmission outages and constraints; weather variations
affecting local and regional customer energy usage; customer growth and energy usage; regional
economic and market conditions, including the results of litigation and other proceedings resulting
from the California energy situation, volatile fuel and purchased power costs and the completion of
generation and transmission construction in the region, which could affect customer growth and the
cost of power supplies; the cost of debt and equity capital and access to capital markets; current
credit ratings remaining in effect for any given period of time; our ability to compete
successfully outside traditional regulated markets (including the wholesale market); the
performance of our marketing and trading activities due to volatile market liquidity and any
deteriorating counterparty credit and the use of derivative contracts in our business (including
the interpretation of the subjective and complex accounting rules related to these contracts);
changes in accounting principles generally accepted in the United States of America and the
interpretation of those principles; the performance of the stock market and the changing interest
rate environment, which affect the value of our nuclear decommissioning trust, pension, and other
postretirement benefit plans assets, the amount of required contributions to Pinnacle West’s
pension plan and contributions to APS’ nuclear decommissioning trust funds, as well as the reported
costs of providing pension and other postretirement benefits; technological developments in the
electric industry; the strength of the real estate market in SunCor’s market areas, which include
Arizona, Idaho, New Mexico and Utah; and other uncertainties, all of which are difficult to predict
and many of which are beyond the control of Pinnacle West and APS.
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