Pinnacle West Reports Lower Third Quarter Results

Pinnacle West Capital Corp. (NYSE: PNW) today reported consolidated net income for the quarter ended September 30, 2008, of $151.6 million, or $1.50 per diluted share of common stock. This result compares with $208.7 million, or $2.07 per diluted share, for the same period in 2007.

Rising costs incurred by Arizona Public Service (APS) to operate, maintain and expand its electric system and summertime temperatures that were closer to historical averages (versus last years record temperatures) drove the lower results. Higher fuel costs; the absence of tax credits recorded in 2007 and not repeated in the 2008 quarter; and decreased earnings from Pinnacle Wests real estate operations also contributed to the quarterly decline.

Pinnacle West Chairman Bill Post said the lower results were in line with expectations given the milder weather compared with last years third quarter; and the fact that APS current retail prices do not cover the utilitys true costs of doing business.

Despite the current economic slowdown, we still are experiencing customer growth in our service territory, he said. To meet Arizonas current and future electricity demand, we must continue working with our regulators to establish a comprehensive plan for Arizonas energy future.

Post said that plan should include significant additional investments in new infrastructure, new technology, energy efficiency and more sustainable resources. To accomplish this plan, however, we need a financially strong utility that can finance needed infrastructure at the lowest possible cost while providing high customer service and reliability. This will require timely and supportive regulatory treatment.

For the third quarter of 2008, APS reported lower net income of $159.8 million, compared with net income of $204.3 million for the same period a year ago. The Company and its customers benefited from strong performance at the Palo Verde Nuclear Generating Station, which operated at 97 percent capacity and generated its highest-ever summer production. Palo Verdes three units also operated for 100 consecutive days this summer. Additionally, the plants solid operation helped minimize the need for more expensive natural gas generation and purchased power.

SunCor Development Co, Pinnacle Wests real estate subsidiary, reported a net loss of $6.1 million for the current-year third quarter, compared with net income of $6.0 million in the 2007 quarter. The decrease reflects the distressed national real estate markets.

For more information on Pinnacle Wests 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 managements conference call to discuss the Companys 2008 third-quarter earnings and recent developments at noon (ET) today, November 4. 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 68083352. A replay of the call also will be available until 11:55 p.m. (ET), Tuesday, November 11, 2008, by calling (800) 642-1687 in the U.S. and Canada or (706) 645-9291 internationally and entering the same Conference ID number as above.

Pinnacle West is a Phoenix-based company with consolidated assets of about $11.5 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.

PINNACLE WEST CAPITAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)

(in thousands, except per share amounts)

THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2008 2007 2008 2007
Operating Revenues
Regulated electricity segment $ 1,040,348 $ 1,043,723 $ 2,492,627 $ 2,291,067
Real estate segment 18,965 46,711 103,587 171,662
Marketing and trading 11,737 99,203 119,868 264,311
Other revenues 8,925 15,597 26,824 36,113
Total 1,079,975 1,205,234 2,742,906 2,763,153
Operating Expenses
Regulated electricity segment fuel and purchased power 419,979 407,242 1,016,918 880,932
Real estate segment operations 28,941 46,075 118,906 153,328
Marketing and trading fuel and purchased power 9,503 93,860 106,270 226,337
Operations and maintenance 212,327 178,419 601,360 527,307
Depreciation and amortization 98,568 94,730 291,959 276,584
Taxes other than income taxes 28,423 34,940 94,826 104,416
Other expenses 8,321 11,246 21,081 28,537
Total 806,062 866,512 2,251,320 2,197,441
Operating Income 273,913 338,722 491,586 565,712
Other
Allowance for equity funds used during construction 4,673 5,235 16,211 14,874
Other income 2,274 4,276 10,050 11,976
Other expense (7,132 ) (6,744 ) (22,103 ) (13,685 )
Total (185 ) 2,767 4,158 13,165
Interest Expense
Interest charges 51,231 53,151 157,580 155,104
Capitalized interest (3,976 ) (5,435 ) (14,593 ) (15,455 )
Total 47,255 47,716 142,987 139,649
Income From Continuing Operations Before Income Taxes 226,473 293,773 352,757 439,228
Income Taxes 75,970 92,055 92,489 141,809
Income From Continuing Operations 150,503 201,718 260,268 297,419
Income From Discontinued Operations
Net of Income Taxes 1,083 6,990 20,707 6,813
Net Income $ 151,586 $ 208,708 $ 280,975 $ 304,232
Weighted-Average Common Shares Outstanding - Basic 100,750 100,324 100,642 100,200
Weighted-Average Common Shares Outstanding - Diluted 101,018 100,829 100,911 100,767
Earnings Per Weighted-Average Common Share Outstanding
Income from continuing operations - basic $ 1.49 $ 2.01 $ 2.59 $ 2.97
Net income - basic $ 1.50 $ 2.08 $ 2.79 $ 3.04
Income from continuing operations - diluted $ 1.49 $ 2.00 $ 2.58 $ 2.95
Net income - diluted $ 1.50 $ 2.07 $ 2.78 $ 3.02

Contacts:

Pinnacle West Capital Corp., Phoenix
Media Contact:
Alan Bunnell, 602-250-3376
Analyst Contacts:
Rebecca Hickman, 602-250-5668
Lisa Malagon, 602-250-5671
www.pinnaclewest.com

Data & News supplied by www.cloudquote.io
Stock quotes supplied by Barchart
Quotes delayed at least 20 minutes.
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.