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): June 30, 2008
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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.
TABLE OF CONTENTS
Item 2.02. Results of Operations and Financial Condition
On July 30, 2008, Pinnacle West Capital Corporation (the “Company” or “Pinnacle West”) issued
a press release regarding its financial results for its fiscal quarter ended June 30, 2008. 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 June 30, 2008. This Information is attached hereto as
Exhibits 99.2, 99.3, 99.7 and 99.9.
Exhibit
99.9 to this report contains certain “non-GAAP financial
measures,” as defined in Item 10(e) of Regulation S-K of the
Exchange Act. We describe these non-GAAP financial measures as
“on-going earnings” and “on-going earnings per
share.” Exhibit 99.9 contains a table that reconciles each of
these non-GAAP financial measures to net income, which is the most
directly comparable financial measure calculated and presented in
accordance with accounting principles generally accepted in the
United States of America (“GAAP”). We believe on-going
earnings provide investors with a useful indicator of our results
that is comparable among periods because it excludes the effects of
unusual items that may occur on an irregular basis. Investors should
note that these non-GAAP financial measures involve judgments by
management, including whether an item is classified as an unusual
item. We use on-going earnings, or similar concepts, to measure our
performance internally in reports for management.
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.
2008 Earnings Outlook
We currently estimate that our
on-going consolidated earnings for 2008 will be within a reasonable range of $2.50 per share. We estimate that Arizona
Public Service Company (“APS”) will contribute substantially all of the 2008 on-going earnings and that
SunCor Development
Company’s 2008 earnings contribution will be minimal. Our 2008 on-going earnings estimate excludes $0.30 per share of
tax credits related to prior years recorded in the fiscal quarter ended June 30, 2008. In this discussion,
earnings per share amounts are after income taxes and are based on diluted average 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.
Capital Expenditures and Financings
We are continuing efforts to
improve APS’ financial strength and to reduce our need for external financing.
These efforts consist of the following four components:
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Completion of a previously-announced cost reduction effort implemented earlier this year
(including the elimination of $200 million of capital expenditures for the years
2008-2012 and operations and maintenance expense reductions related to staffing and other costs);
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Attainment of interim rate relief under APS’ general retail rate case currently pending before the Arizona Corporation Commission
(“ACC”); |
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Reduction of at least an additional $500 million in capital expenditures over the next three years, with implementation
beginning in late 2008, due to our reduced customer growth outlook, deferral of several large transmission projects, and reductions in general plant capital expenditures; and |
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Receipt of a constructive process and decision in the pending general retail rate case with the ACC. |
We believe that successful implementation of this program
will eliminate the need for a Pinnacle West equity issuance in 2008.
See “Capital
Expenditures” in Part I, Item 2 of the Pinnacle West/APS Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 2008 (“March 10-Q”) for current capital expenditure estimates, which include the $200
million reduction described above. See the Pinnacle West/APS Report on Form 8-K, filed with the Securities and
Exchange Commission (“SEC”) on June 9, 2008, for information regarding the interim base rate surcharge
request. See “2008 General Rate Case” in Note 5 of Notes to Condensed Consolidated Financial Statements in the
March 10-Q and the Pinnacle West/APS Report on Form 8-K, filed with the SEC on June 2, 2008, for information
regarding the pending general retail rate case.
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Forward-Looking Statements
This
Form 8-K contains forward-looking statements regarding our 2008 earnings outlook, expected decreases in capital expenditures and other expenses resulting from previous and current
cost reduction efforts, achievement of interim rate relief and
receipt of a constructive process and decision in our pending general retail rate case with the ACC, and the successful implementation of our program to improve our financial strength, eliminating the need for a Pinnacle West equity issuance in 2008.
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, 2007, these factors include, but are not limited to, our ability to reduce capital expenditures and other costs while maintaining reliability and
customer service levels and unexpected developments that would limit us from reducing all or some of these capital expenditures; our ability to successfully implement
our program to improve our financial strength in whole or in part and unexpected financial or other developments that would require a Pinnacle West equity issuance before the end of 2008; state and federal
regulatory and legislative decisions and actions, including the outcome or timing of our pending rate cases; the outcome of regulatory,
legislative and judicial proceedings, both current and future, including those related to environmental matters and climate change; the
potential for additional restructuring of the electric industry, including decisions impacting
wholesale competition and the introduction of retail electric competition in Arizona; fluctuations
in market prices for electricity, natural gas, coal, uranium and other fuels used in our generating
facilities, and supplies of such commodities; volatile market liquidity, 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); power
plant performance and outages; transmission outages and constraints; weather variations affecting
local and regional customer energy usage; customer growth and energy usage; national and regional economic and
market conditions, including the strength of the housing and credit markets, volatile fuel and purchased power costs,
the completion of generation and transmission construction in the region, which could affect
customer growth and the cost of power supplies, and the results of litigation and other proceedings resulting from the
California and Pacific Northwest energy situations; ability of power plant participants to meet
contractual or other obligations; the cost of debt and equity capital and access to capital
markets; current credit ratings remaining in effect for any given period of time; 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 trusts, pension and other
postretirement benefit plan 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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