-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, I1OhJRPNP0C6LBkQDMUD64Mmtv0Arfup21tv2VVNdARvIUYbR32B7xqzHMbwrmkv 6DvPXgbnyv/ikx2IHL+OWg== 0000950147-98-000503.txt : 19980630 0000950147-98-000503.hdr.sgml : 19980630 ACCESSION NUMBER: 0000950147-98-000503 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980629 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ARIZONA PUBLIC SERVICE CO CENTRAL INDEX KEY: 0000007286 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC & OTHER SERVICES COMBINED [4931] IRS NUMBER: 860011170 STATE OF INCORPORATION: AZ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 11-K SEC ACT: SEC FILE NUMBER: 001-04473 FILM NUMBER: 98656218 BUSINESS ADDRESS: STREET 1: 400 N FIFTH ST STREET 2: P O BOX 53999 CITY: PHOENIX STATE: AZ ZIP: 85004 BUSINESS PHONE: 6022501000 11-K 1 FORM 11-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 11-K ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED, EFFECTIVE OCTOBER 7, 1996]. For the fiscal year ended December 31, 1997 OR [ ] TRANSITION REPORT PURSUANT TO 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]. For the transition period from ___________ to ____________ Commission file number 1-4473 ------ The Savings Plan for Employees of Arizona Public Service Company and The Savings Plan for Union Employees of Arizona Public Service Company (Full titles of the plans) 400 North Fifth Street Station 8478, P.O. Box 53999 Phoenix, Arizona 85004 (Address of the plans) Pinnacle West Capital Corporation (Name of issuer) 400 East Van Buren P.O. Box 52132 Phoenix, Arizona 85072 (Address of issuer's principal executive office) THE SAVINGS PLAN FOR EMPLOYEES OF ARIZONA PUBLIC SERVICE COMPANY, THE SAVINGS PLAN FOR UNION EMPLOYEES OF ARIZONA PUBLIC SERVICE COMPANY AND THE SAVINGS PLAN FOR EMPLOYEES OF PINNACLE WEST CAPITAL CORPORATION - -------------------------------------------------------------------------------- TABLE OF CONTENTS ----------------- PAGE ---- Independent Auditors' Report 1 Combined Statements of Net Assets Available for Benefits with Supplemental Combining Information as of December 31, 1997 and 1996 2 - 3 Combined Statements of Changes in Net Assets Available for Benefits with Supplemental Combining Information for Each of the Three Years in the Period Ended December 31, 1997 4 - 6 Notes to Combined Financial Statements 7 - 15 Exhibits Filed 16 INDEPENDENT AUDITORS' REPORT Arizona Public Service Company Phoenix, Arizona We have audited the accompanying combined statements of net assets available for benefits of The Savings Plan for Employees of Arizona Public Service Company, The Savings Plan for Union Employees of Arizona Public Service Company and The Savings Plan for Employees of Pinnacle West Capital Corporation (the "Plans") as of December 31, 1997 and 1996, and the related combined statements of changes in net assets available for benefits for each of the three years in the period ended December 31, 1997. These combined financial statements are the responsibility of the Plans' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such combined financial statements present fairly, in all material respects, the net assets available for benefits of the Plans as of December 31, 1997 and 1996, and the changes in net assets available for benefits for each of the three years in the period ended December 31, 1997 in conformity with generally accepted accounting principles. Our audits were conducted for the purpose of forming an opinion on the basic combined financial statements taken as a whole. The supplemental combining information by fund is presented for the purpose of additional analysis of the basic combined financial statements rather than to present information regarding the net assets available for benefits and changes in net assets available for benefits of the individual funds, and is not a required part of the basic financial statements. This supplemental information is the responsibility of the Plans' management. Such supplemental combining information by fund has been subjected to the auditing procedures applied in our audits of the basic combined financial statements and, in our opinion, is fairly stated in all material respects when considered in relation to the basic combined financial statements taken as a whole. DELOITTE & TOUCHE LLP DELOITTE & TOUCHE LLP Phoenix, Arizona June 22, 1998 THE SAVINGS PLAN FOR EMPLOYEES OF ARIZONA PUBLIC SERVICE COMPANY, THE SAVINGS PLAN FOR UNION EMPLOYEES OF ARIZONA PUBLIC SERVICE COMPANY AND THE SAVINGS PLAN FOR EMPLOYEES OF PINNACLE WEST CAPITAL CORPORATION
- -------------------------------------------------------------------------------------------------------------------------------- COMBINED STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS WITH SUPPLEMENTAL COMBINING INFORMATION DECEMBER 31, 1997 - -------------------------------------------------------------------------------------------------------------------------------- SUPPLEMENTAL COMBINING INFORMATION -------------------------------------------------------------- PINNACLE WEST FIXED AGGRESSIVE COMBINED STOCK FUND INDEX FUND INCOME FUND EQUITY FUND ------------- ------------- ------------- ------------- ------------- ASSETS: Investments at fair value except for Fixed Income Fund that is at contract value which approximates fair value (cost, Pinnacle West Stock Fund, $64,852,152; Index Fund, $55,556,633; Fixed Income Fund, $53,078,299; Aggressive Equity Fund, $36,416,877; International Equity Fund, $7,067,988; Lifestyle Conservative Fund, $2,184,528; Lifestyle Moderate Fund, $5,994,426; Lifestyle Aggressive Fund, $6,698,117; Participant Loan Feature, $19,767,046) $ 388,014,445 $ 141,053,827 $ 106,580,249 $ 53,078,299 $ 44,685,290 Temporary investments (at cost which approximates fair value) 7,548,392 1,906,886 5,638,399 Interest/Other receivable 314,277 9,229 305,048 ------------- ------------- ------------- ------------- ------------- Total assets 395,877,114 142,969,942 106,580,249 59,021,746 44,685,290 ------------- ------------- ------------- ------------- ------------- LIABILITIES: Interfund transfers and other liabilities 612,967 585,513 (180,210) 192,865 1,480 ------------- ------------- ------------- ------------- ------------- NET ASSETS AVAILABLE FOR BENEFITS $ 395,264,147 $ 142,384,429 $ 106,760,459 $ 58,828,881 $ 44,683,810 ============= ============= ============= ============= ============= SUPPLEMENTAL COMBINING INFORMATION -------------------------------------------------------------------------------- LIFESTYLE LIFESTYLE LIFESTYLE INTERNATIONAL CONSERVATIVE MODERATE AGGRESSIVE PARTICIPANT EQUITY FUND FUND FUND FUND LOAN FEATURE ------------- ------------- ------------- ------------- ------------- ASSETS: Investments at fair value except for Fixed Income Fund that is at contract value which approximates fair value (cost, Pinnacle West Stock Fund, $64,852,152; Index Fund, $55,556,633; Fixed Income Fund, $53,078,299; Aggressive Equity Fund, $36,416,877; International Equity Fund, $7,067,988; Lifestyle Conservative Fund, $2,184,528; Lifestyle Moderate Fund, $5,994,426; Lifestyle Aggressive Fund, $6,698,117; Participant Loan Feature, $19,767,046) $ 6,633,636 $ 2,293,984 $ 6,592,923 $ 7,329,191 $ 19,767,046 Temporary investments (at cost which approximates fair value) 3,107 Interest/Other receivable ------------- ------------- ------------- ------------- ------------- Total assets 6,633,636 2,293,984 6,596,030 7,329,191 19,767,046 ------------- ------------- ------------- ------------- ------------- LIABILITIES: Interfund transfers and other liabilities 42,145 (9,259) (18,518) (38,349) 37,300 ------------- ------------- ------------- ------------- ------------- NET ASSETS AVAILABLE FOR BENEFITS $ 6,591,491 $ 2,303,243 $ 6,614,548 $ 7,367,540 $ 19,729,746 ============= ============= ============= ============= =============
See notes to combined financial statements. -2- THE SAVINGS PLAN FOR EMPLOYEES OF ARIZONA PUBLIC SERVICE COMPANY, THE SAVINGS PLAN FOR UNION EMPLOYEES OF ARIZONA PUBLIC SERVICE COMPANY AND THE SAVINGS PLAN FOR EMPLOYEES OF PINNACLE WEST CAPITAL CORPORATION
- ----------------------------------------------------------------------------------------------- COMBINED STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS WITH SUPPLEMENTAL COMBINING INFORMATION DECEMBER 31, 1996 - ----------------------------------------------------------------------------------------------- COMBINED ------------ ASSETS: Investments at fair value except for Fixed Income Fund that is at contract value which approximates fair value (cost, Pinnacle West Stock Fund, $67,839,594; Index Fund, $43,143,965; Fixed Income Fund, $52,542,392; Aggressive Equity Fund, $33,506,467; International Equity Fund, $3,159,997; Lifestyle Conservative Fund, $1,297,857; Lifestyle Moderate Fund, $3,483,624; Lifestyle Aggressive Fund, $2,496,232; Participant Loan Feature, $18,564,771) $306,635,785 Temporary investments (at cost which approximates fair value) 15,173,420 Interest receivable 336,604 ------------ Total assets 322,145,809 ------------ LIABILITIES: Interfund transfers and other liabilities 543,692 ------------ NET ASSETS AVAILABLE FOR BENEFITS $321,602,117 ============ SUPPLEMENTAL COMBINING INFORMATION -------------------------------------------------------------------------- PINNACLE WEST FIXED AGGRESSIVE BALANCED STOCK FUND INDEX FUND INCOME FUND EQUITY FUND FUND ------------ ------------ ------------ ------------ ------------ ASSETS: Investments at fair value except for Fixed Income Fund that is at contract value which approximates fair value (cost, Pinnacle West Stock Fund, $67,839,594; Index Fund, $43,143,965; Fixed Income Fund, $52,542,392; Aggressive Equity Fund, $33,506,467; International Equity Fund, $3,159,997; Lifestyle Conservative Fund, $1,297,857; Lifestyle Moderate Fund, $3,483,624; Lifestyle Aggressive Fund, $2,496,232; Participant Loan Feature, $18,564,771) $114,661,023 $ 73,255,751 $ 52,542,392 $ 36,879,918 $ Temporary investments (at cost which approximates fair value) 1,703,669 13,469,751 Interest receivable 6,821 329,783 ------------ ------------ ------------ ------------ ------------ Total assets 116,371,513 73,255,751 66,341,926 36,879,918 ------------ ------------ ------------ ------------ ------------ LIABILITIES: Interfund transfers and other liabilities 534,074 9,070 (14,520) (19,464) ------------ ------------ ------------ ------------ ------------ NET ASSETS AVAILABLE FOR BENEFITS $115,837,439 $ 73,246,681 $ 66,356,446 $ 36,899,382 $ ============ ============ ============ ============ ============ SUPPLEMENTAL COMBINING INFORMATION -------------------------------------------------------------------------- LIFESTYLE LIFESTYLE LIFESTYLE INTERNATIONAL CONSERVATIVE MODERATE AGGRESSIVE PARTICIPANT EQUITY FUND FUND FUND FUND LOAN FEATURE ------------ ------------ ------------ ------------ ------------ ASSETS: Investments at fair value except for Fixed Income Fund that is at contract value which approximates fair value (cost, Pinnacle West Stock Fund, $67,839,594; Index Fund, $43,143,965; Fixed Income Fund, $52,542,392; Aggressive Equity Fund, $33,506,467; International Equity Fund, $3,159,997; Lifestyle Conservative Fund, $1,297,857; Lifestyle Moderate Fund, $3,483,624; Lifestyle Aggressive Fund, $2,496,232; Participant Loan Feature, $18,564,771) $ 3,269,793 $ 1,284,840 $ 3,574,423 $ 2,602,874 $ 18,564,771 Temporary investments (at cost which approximates fair value) Interest receivable ------------ ------------ ------------ ------------ ------------ Total assets 3,269,793 1,284,840 3,574,423 2,602,874 18,564,771 ------------ ------------ ------------ ------------ ------------ LIABILITIES: Interfund transfers and other liabilities 860 (2,820) 943 35,549 ------------ ------------ ------------ ------------ ------------ NET ASSETS AVAILABLE FOR BENEFITS $ 3,268,933 $ 1,284,840 $ 3,577,243 $ 2,601,931 $ 18,529,222 ============ ============ ============ ============ ============
See notes to combined financial statements. -3- THE SAVINGS PLAN FOR EMPLOYEES OF ARIZONA PUBLIC SERVICE COMPANY, THE SAVINGS PLAN FOR UNION EMPLOYEES OF ARIZONA PUBLIC SERVICE COMPANY AND THE SAVINGS PLAN FOR EMPLOYEES OF PINNACLE WEST CAPITAL CORPORATION
- ---------------------------------------------------------------------------------------------------------------------- COMBINED STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH SUPPLEMENTAL COMBINING INFORMATION FOR THE YEAR ENDED DECEMBER 31, 1997 - ---------------------------------------------------------------------------------------------------------------------- SUPPLEMENTAL COMBINING INFORMATION --------------------------------------------------------------- PINNACLE WEST FIXED AGGRESSIVE COMBINED STOCK FUND INDEX FUND INCOME FUND EQUITY FUND ------------- ------------- ------------- ------------- ------------- ADDITIONS TO NET ASSETS ATTRIBUTED TO: Investment income (Note 1): Dividends $ 7,934,514 $ 3,872,745 $ 2,630,859 Interest/other income 5,610,801 75,931 $ 19,288 $ 3,809,025 6,050 Realized gain on sale of investments 11,404,543 5,727,161 4,166,257 1,234,978 Unrealized appreciation (depreciation) of investments (Note 5) 55,797,490 29,380,243 20,911,830 4,894,962 ------------- ------------- ------------- ------------- ------------- Total investment income 80,747,348 39,056,080 25,097,375 3,809,025 8,766,849 ------------- ------------- ------------- ------------- ------------- Contributions (Note 2): Employers 7,068,458 7,068,458 Participants 22,670,941 3,063,982 7,183,166 4,170,698 5,456,080 ------------- ------------- ------------- ------------- ------------- Total contributions 29,739,399 10,132,440 7,183,166 4,170,698 5,456,080 ------------- ------------- ------------- ------------- ------------- Total additions 110,486,747 49,188,520 32,280,541 7,979,723 14,222,929 ------------- ------------- ------------- ------------- ------------- DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO: Benefit payments 36,772,690 15,124,527 6,933,307 9,960,275 2,546,306 Administrative expenses 52,027 3,533 13,052 31,408 3,403 Interfund transfers 7,513,470 (8,179,596) 5,515,605 3,888,792 ------------- ------------- ------------- ------------- ------------- Total deductions 36,824,717 22,641,530 (1,233,237) 15,507,288 6,438,501 ------------- ------------- ------------- ------------- ------------- Net increase (decrease) 73,662,030 26,546,990 33,513,778 (7,527,565) 7,784,428 NET ASSETS AVAILABLE FOR BENEFITS: Beginning of year 321,602,117 115,837,439 73,246,681 66,356,446 36,899,382 ------------- ------------- ------------- ------------- ------------- End of year $ 395,264,147 $ 142,384,429 $ 106,760,459 $ 58,828,881 $ 44,683,810 ============= ============= ============= ============= ============= SUPPLEMENTAL COMBINING INFORMATION --------------------------------------------------------------------------------- LIFESTYLE LIFESTYLE LIFESTYLE INTERNATIONAL CONSERVATIVE MODERATE AGGRESSIVE PARTICIPANT EQUITY FUND FUND FUND FUND LOAN FEATURE ------------- ------------- ------------- ------------- ------------- ADDITIONS TO NET ASSETS ATTRIBUTED TO: Investment income (Note 1): Dividends $ 740,870 $ 106,997 $ 307,271 $ 275,772 Interest/other income 1,538 130 434 367 $ 1,698,038 Realized gain on sale of investments 49,201 17,845 134,060 75,041 Unrealized appreciation (depreciation) of investments (Note 5) (544,148) 122,473 507,698 524,432 ------------- ------------- ------------- ------------- ------------- Total investment income 247,461 247,445 949,463 875,612 1,698,038 ------------- ------------- ------------- ------------- ------------- Contributions (Note 2): Employers Participants 868,477 154,334 776,314 997,890 ------------- ------------- ------------- ------------- ------------- Total contributions 868,477 154,334 776,314 997,890 ------------- ------------- ------------- ------------- ------------- Total additions 1,115,938 401,779 1,725,777 1,873,502 1,698,038 ------------- ------------- ------------- ------------- ------------- DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO: Benefit payments 404,798 285,061 499,308 205,874 813,234 Administrative expenses 194 31 200 206 Interfund transfers (2,611,612) (901,716) (1,811,036) (3,098,187) (315,720) ------------- ------------- ------------- ------------- ------------- Total deductions (2,206,620) (616,624) (1,311,528) (2,892,107) 497,514 ------------- ------------- ------------- ------------- ------------- Net increase (decrease) 3,322,558 1,018,403 3,037,305 4,765,609 1,200,524 NET ASSETS AVAILABLE FOR BENEFITS: Beginning of year 3,268,933 1,284,840 3,577,243 2,601,931 18,529,222 ------------- ------------- ------------- ------------- ------------- End of year $ 6,591,491 $ 2,303,243 $ 6,614,548 $ 7,367,540 $ 19,729,746 ============= ============= ============= ============= =============
See notes to combined financial statements. -4- THE SAVINGS PLAN FOR EMPLOYEES OF ARIZONA PUBLIC SERVICE COMPANY, THE SAVINGS PLAN FOR UNION EMPLOYEES OF ARIZONA PUBLIC SERVICE COMPANY AND THE SAVINGS PLAN FOR EMPLOYEES OF PINNACLE WEST CAPITAL CORPORATION
- ---------------------------------------------------------------------------------------------------------- COMBINED STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH SUPPLEMENTAL COMBINING INFORMATION FOR THE YEAR ENDED DECEMBER 31, 1996 - ---------------------------------------------------------------------------------------------------------- COMBINED ------------ ADDITIONS TO NET ASSETS ATTRIBUTED TO: Investment income (Note 1): Dividends $ 6,557,131 Interest income 5,370,324 Income from settlement (Note 3) 957,427 Realized gain on sale of investments 5,832,026 Unrealized appreciation (depreciation) of investments (Note 5) 19,357,421 ------------ Total investment income (loss) 38,074,329 ------------ Contributions (Note 2): Employers 7,225,732 Participants 22,693,280 ------------ Total contributions 29,919,012 ------------ Total additions 67,993,341 ------------ DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO: Benefit payments 15,425,820 Administrative expenses 44,653 Interfund transfers ------------ Total deductions 15,470,473 ------------ Net increase (decrease) 52,522,868 NET ASSETS AVAILABLE FOR BENEFITS: Beginning of year 269,079,249 ------------ End of year $321,602,117 ============ SUPPLEMENTAL COMBINING INFORMATION -------------------------------------------------------------------------- PINNACLE WEST FIXED AGGRESSIVE BALANCED STOCK FUND INDEX FUND INCOME FUND EQUITY FUND FUND ------------ ------------ ------------ ------------ ------------ ADDITIONS TO NET ASSETS ATTRIBUTED TO: Investment income (Note 1): Dividends $ 3,761,585 $ 2,322,589 $ 158,356 Interest income 59,289 $ 3,747,325 Income from settlement (Note 3) 351,831 $ 154,273 324,919 101,025 Realized gain on sale of investments 3,180,929 1,977,669 489,947 96,850 Unrealized appreciation (depreciation) of investments (Note 5) 7,818,099 11,146,619 386,776 (288,293) ------------ ------------ ------------ ------------ ------------ Total investment income (loss) 15,171,733 13,278,561 4,072,244 3,300,337 (33,087) ------------ ------------ ------------ ------------ ------------ Contributions (Note 2): Employers 7,225,732 Participants 3,720,945 6,509,011 5,416,753 5,809,125 627,436 ------------ ------------ ------------ ------------ ------------ Total contributions 10,946,677 6,509,011 5,416,753 5,809,125 627,436 ------------ ------------ ------------ ------------ ------------ Total additions 26,118,410 19,787,572 9,488,997 9,109,462 594,349 ------------ ------------ ------------ ------------ ------------ DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO: Benefit payments 8,533,725 1,863,410 3,741,062 669,266 128,928 Administrative expenses 3,444 8,217 30,082 1,975 935 Interfund transfers 11,023,622 (2,772,928) 3,225,332 (7,682,903) 6,648,209 ------------ ------------ ------------ ------------ ------------ Total deductions 19,560,791 (901,301) 6,996,476 (7,011,662) 6,778,072 ------------ ------------ ------------ ------------ ------------ Net increase (decrease) 6,557,619 20,688,873 2,492,521 16,121,124 (6,183,723) NET ASSETS AVAILABLE FOR BENEFITS: Beginning of year 109,279,820 52,557,808 63,863,925 20,778,258 6,183,723 ------------ ------------ ------------ ------------ ------------ End of year $115,837,439 $ 73,246,681 $ 66,356,446 $ 36,899,382 $ ============ ============ ============ ============ ============ SUPPLEMENTAL COMBINING INFORMATION ---------------------------------------------------------------------------- LIFESTYLE LIFESTYLE LIFESTYLE INTERNATIONAL CONSERVATIVE MODERATE AGGRESSIVE PARTICIPANT EQUITY FUND FUND FUND FUND LOAN FEATURE ------------ ------------ ------------ ------------ ------------ ADDITIONS TO NET ASSETS ATTRIBUTED TO: Investment income (Note 1): Dividends $ 109,897 $ 42,362 $ 77,063 $ 85,279 Interest income $ 1,563,710 Income from settlement (Note 3) 6,662 1,980 8,351 8,386 Realized gain on sale of investments 1,454 552 74,490 10,135 Unrealized appreciation (depreciation) of investments (Note 5) 109,796 (13,017) 90,799 106,642 ------------ ------------ ------------ ------------ ------------ Total investment income (loss) 227,809 31,877 250,703 210,442 1,563,710 ------------ ------------ ------------ ------------ ------------ Contributions (Note 2): Employers Participants 163,786 32,290 199,787 214,147 ------------ ------------ ------------ ------------ ------------ Total contributions 163,786 32,290 199,787 214,147 ------------ ------------ ------------ ------------ ------------ Total additions 391,595 64,167 450,490 424,589 1,563,710 ------------ ------------ ------------ ------------ ------------ DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO: Benefit payments 12,741 264 83,506 15,224 377,694 Administrative expenses Interfund transfers (2,890,079) (1,220,937) (3,210,259) (2,192,566) (927,491) ------------ ------------ ------------ ------------ ------------ Total deductions (2,877,338) (1,220,673) (3,126,753) (2,177,342) (549,797) ------------ ------------ ------------ ------------ ------------ Net increase (decrease) 3,268,933 1,284,840 3,577,243 2,601,931 2,113,507 NET ASSETS AVAILABLE FOR BENEFITS: Beginning of year 16,415,715 ------------ ------------ ------------ ------------ ------------ End of year $ 3,268,933 $ 1,284,840 $ 3,577,243 $ 2,601,931 $ 18,529,222 ============ ============ ============ ============ ============
See notes to combined financial statements. -5- THE SAVINGS PLAN FOR EMPLOYEES OF ARIZONA PUBLIC SERVICE COMPANY, THE SAVINGS PLAN FOR UNION EMPLOYEES OF ARIZONA PUBLIC SERVICE COMPANY AND THE SAVINGS PLAN FOR EMPLOYEES OF PINNACLE WEST CAPITAL CORPORATION
- --------------------------------------------------------------------------------------------------------------- COMBINED STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH SUPPLEMENTAL COMBINING INFORMATION FOR THE YEAR ENDED DECEMBER 31, 1995 - --------------------------------------------------------------------------------------------------------------- SUPPLEMENTAL COMBINING INFORMATION ------------------------------------------- PINNACLE WEST FIXED COMBINED STOCK FUND INDEX FUND INCOME FUND ------------ ------------ ------------ ------------ ADDITIONS TO NET ASSETS ATTRIBUTED TO: Investment income (Note 1): Dividends $ 4,831,483 $ 3,548,574 Interest income 5,117,786 75,680 $ 3,813,463 Realized gain on sale of investments 2,859,474 1,552,878 $ 1,161,262 Unrealized appreciation of investments (Note 5) 47,736,651 32,727,519 11,670,607 ------------ ------------ ------------ ------------ Total investment income 60,545,394 37,904,651 12,831,869 3,813,463 ------------ ------------ ------------ ------------ Contributions (Note 2): Employers 6,747,587 6,747,587 Participants 20,204,098 4,043,616 5,077,110 6,757,160 ------------ ------------ ------------ ------------ Total contributions 26,951,685 10,791,203 5,077,110 6,757,160 ------------ ------------ ------------ ------------ Total additions 87,497,079 48,695,854 17,908,979 10,570,623 ------------ ------------ ------------ ------------ DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO: Benefit payments 15,932,169 9,015,731 1,727,992 4,533,469 Administrative expenses 43,968 4,085 3,855 33,552 Interfund transfers 9,646,105 (4,799,352) 6,468,018 ------------ ------------ ------------ ------------ Total deductions 15,976,137 18,665,921 (3,067,505) 11,035,039 ------------ ------------ ------------ ------------ Net increase (decrease) 71,520,942 30,029,933 20,976,484 (464,416) NET ASSETS AVAILABLE FOR BENEFITS: Beginning of year 197,558,307 79,249,887 31,581,324 64,328,341 ------------ ------------ ------------ ------------ End of year $269,079,249 $109,279,820 $ 52,557,808 $ 63,863,925 ============ ============ ============ ============ SUPPLEMENTAL COMBINING INFORMATION -------------------------------------------- AGGRESSIVE BALANCED PARTICIPANT EQUITY FUND FUND LOAN FEATURE ------------ ------------ ------------ ADDITIONS TO NET ASSETS ATTRIBUTED TO: Investment income (Note 1): Dividends $ 1,084,332 $ 198,577 Interest income $ 1,228,643 Realized gain on sale of investments 128,349 16,985 Unrealized appreciation of investments (Note 5) 2,957,516 381,009 ------------ ------------ ------------ Total investment income 4,170,197 596,571 1,228,643 ------------ ------------ ------------ Contributions (Note 2): Employers Participants 3,185,022 1,141,190 ------------ ------------ ------------ Total contributions 3,185,022 1,141,190 ------------ ------------ ------------ Total additions 7,355,219 1,737,761 1,228,643 ------------ ------------ ------------ DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO: Benefit payments 345,062 115,316 194,599 Administrative expenses 1,376 1,100 Interfund transfers (7,402,443) (1,475,470) (2,436,858) ------------ ------------ ------------ Total deductions (7,056,005) (1,359,054) (2,242,259) ------------ ------------ ------------ Net increase (decrease) 14,411,224 3,096,815 3,470,902 NET ASSETS AVAILABLE FOR BENEFITS: Beginning of year 6,367,034 3,086,908 12,944,813 ------------ ------------ ------------ End of year $ 20,778,258 $ 6,183,723 $ 16,415,715 ============ ============ ============
See notes to combined financial statements. -6- THE SAVINGS PLAN FOR EMPLOYEES OF ARIZONA PUBLIC SERVICE COMPANY, THE SAVINGS PLAN FOR UNION EMPLOYEES OF ARIZONA PUBLIC SERVICE COMPANY AND THE SAVINGS PLAN FOR EMPLOYEES OF PINNACLE WEST CAPITAL CORPORATION NOTES TO COMBINED FINANCIAL STATEMENTS -------------------------------------- 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Method of Accounting - The financial statements in this report reflect the combined assets, liabilities and net assets available for benefits of The Savings Plan for Employees of Arizona Public Service Company (the "APS Savings Plan"), The Savings Plan for Union Employees of Arizona Public Service Company (the "APS Union Plan"), and The Savings Plan for Employees of Pinnacle West Capital Corporation (the "Pinnacle West Plan"). The APS Savings Plan, the APS Union Plan, and the Pinnacle West Plan are collectively referred to as the "Plans." The combined financial statements have been prepared on the accrual basis of accounting. Investment transactions are recorded as of the trade date. Dividend income is recorded as of ex-dividend dates. All the outstanding shares of common stock of Arizona Public Service Company ("APS") are owned by Pinnacle West Capital Corporation ("Pinnacle West"). Investments - The Plans consist of a salary reduction arrangement and an employer matching contribution feature. The investment programs for the Plans consist of: Pinnacle West Stock Fund -- The fund consists primarily of common stock of Pinnacle West. The common stock is stated at fair value based on quoted market prices in an active market. Index Fund -- The fund consists of common stocks maintained by the Trustee (defined below) as part of a commingled fund. The fund is stated at fair value generally based on the last reported sales price on the last business day of the calendar year. Fixed Income Fund -- The fund consists primarily of several guaranteed investment contracts with varying rates of interest and varying maturities. The fund is stated at contract value which approximates fair value. -7- Aggressive Equity Fund -- The fund consists primarily of common stocks maintained by Putnam Investments as part of the Putnam Voyager Fund, Class A. The fund is stated at fair value generally based on the last reported sales price on the last business day of the calendar year. Balanced Fund -- The fund consists of common and preferred stocks and bonds managed by Fidelity Investments as part of the Fidelity Balanced Fund. The fund is stated at fair value generally based on the last reported sales price on the last business day of the calendar year. Effective June 27, 1996, the fund was no longer offered as an investment choice. International Equity Fund -- The fund consists primarily of stocks outside the United States and maintained by Franklin Templeton as part of the Templeton Foreign Fund. The fund is stated at fair value generally based on the last reported sales price on the last business day of the calendar year. The fund was added as an investment choice effective July 1, 1996. The APS Union Plan does not participate in the International Equity Fund. Conservative, Moderate and Aggressive Lifestyle Funds -- The funds consist primarily of cash, domestic stocks, international stocks, and domestic bonds and are maintained by the Vanguard Group as part of the Lifestrategy Portfolios: Conservative Growth Portfolio, Moderate Growth Portfolio, and Growth Portfolio. The funds are stated at fair value generally based on the last reported sales price on the last business day of the calendar year. The funds were added as an investment choice effective July 1, 1996. The APS Union Plan does not participate in the Conservative and Aggressive Lifestyle Funds. Payment of Benefits - Benefits are recorded when paid. Realized Gain (Loss) and Unrealized Appreciation (Depreciation) - Realized gains (losses) are determined based on the average historical cost. Unrealized appreciation (depreciation) is determined based on the fair value of assets at the beginning of the Plan year. Use of Estimates - The preparation of financial statements in conformity with generally accepted accounting principles necessarily requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. -8- 2. DESCRIPTION OF THE PLANS General - The APS Savings Plan and APS Union Plan (collectively, the "APS Plans") are administered by a committee appointed by the APS Board of Directors. The Pinnacle West Plan is administered by a committee appointed by the Pinnacle West Board of Directors. The Plans are subject to the provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"). State Street Bank and Trust Company (the "Trustee") is the Trustee for the Plans under a master trust agreement. Eligibility - All employees of APS and salaried employees of Pinnacle West (collectively, the "Companies" or the "Employer") are eligible to participate in the pre-tax and after-tax features of the Plans upon attaining age 21 and completing thirty-one days of consecutive employment for the APS Plans and thirty days of consecutive employment for the Pinnacle West Plan, and are eligible to participate in the matching feature upon attaining age 21 and completing one year of service. The Pinnacle West Plan allows participation by employees of a company that becomes an affiliate of Pinnacle West if such employees were formerly participants in a certain type of qualified plan sponsored by their employer, regardless of whether they have satisfied the Pinnacle West Plan's other eligibility requirements. Contributions - Participants in the APS Union Plan may direct APS to contribute any whole percentage from 1% to 10% of the participants' pre-tax base pay as their tax deferred contribution to the Plan. In addition to or in lieu of making tax deferred contributions to the APS Union Plan, participants may elect to make contributions of up to 10% of their after-tax base pay as a voluntary contribution, provided that in no event can the total tax deferred and voluntary contributions made by any participant in any year exceed 16% of his or her base pay. Effective January 1, 1996, the APS Savings Plan and the Pinnacle West Plan were changed to allow employees to contribute up to 16% of their pre-tax base pay and up to 16% of their after-tax base pay, provided that in no event would the total tax deferred and voluntary contributions made by any participant in any year exceed 16% of his or her base pay. Previously, the maximum allowable contribution for participants in the APS Savings Plan and the Pinnacle West Plan were the same as the APS Union Plan. The maximum allowable base pay ($160,000 in 1997, $150,000 in 1996) and tax deferred contribution ($9,500) are linked to the cost of living index and could change on an annual basis. Prior to March 1, 1995, for the APS Savings Plan and the Pinnacle West Plan, and April 1, 1995, for the APS Union Plan, the Companies contributed to the account of each participant in the Plans' matching feature a minimum amount equal to 30% of such participant's contribution of up to 6% of the participant's pre-tax base pay (defined here as the participant's "required contribution"). Employer contributions were increased (i) by an additional one percent for each one percent increase in Pinnacle West consolidated net income from continuing operations over the prior year and (ii) by an additional amount determined at the sole discretion of each Company's Board of Directors, up to a total -9- Employer contribution of not more than 50% of participant required contributions. Effective March 1, 1995, for the APS Savings Plan and the Pinnacle West Plan, and April 1, 1995, for the APS Union Plan, Employer contributions were fixed at 50% of the first 6% of an employee's pre-tax contributions. The Employer contributions may be in cash, common stock or other property acceptable to the Trustee. The Plans allow rollover contributions from another qualified plan or individual retirement rollover account, subject to certain criteria. Investment Programs - Participants' contributions may be invested in one or more of the following funds: Pinnacle West Stock Fund, Index Fund, Fixed Income Fund, Aggressive Equity Fund, International Equity Fund, Lifestyle Conservative Fund, Lifestyle Moderate Fund, and Lifestyle Aggressive Fund. Participants in the APS Union Plan may not invest in the International Equity Fund, Lifestyle Conservative Fund, or Lifestyle Aggressive Fund. The balance of non-participant-directed contributions and related earnings represents approximately $88,436,178 and $68,028,037 of the net assets available for benefits in the Pinnacle West Stock and Fixed Income Funds for 1997 and 1996, respectively. The Balanced Fund was no longer offered as an investment choice as of June 27, 1996. Employee funds invested in the Balanced Fund were automatically transferred into the Fixed Income Fund on June 27, 1996. Participants had the opportunity to make a one-time special interfund transfer between July 1, 1996 and July 14, 1996, to transfer the funds out of the Fixed Income Fund. Loan Feature - Participants may borrow money from their pre-tax contributions account, vested Employer contributions account and rollover account (if any). Participants may not borrow against their Employer transfer account or their after-tax contributions accounts. The minimum participant loan available is $1,000, and the maximum available is 50% of the participant's vested account balance, up to $50,000, reduced by the participant's highest outstanding loan balance in the 12-month period ending on the day before the loan is made. Only one loan per participant may be outstanding at any one time. Loan terms range from six months to five years, or up to 15 years for the purchase of a principal residence. An administrative fee is charged to the participant's account for each loan. The interest rate is determined at the time the loan is requested and is fixed for the life of the loan. The interest rate is the State Street Bank and Trust Company's prime interest rate plus one percent, determined as of the first business day of the month in which the loan is issued. Interest rates for loans issued during 1997 ranged from 9.25% to 9.50%. Loans are treated as transfers from the participant's investment funds on a pro-rata basis to the Participant Loan Feature. Loan repayments are treated as transfers from the -10- Loan Feature to the participant's investment funds, based on the participant's current investment election. Loan repayments, including interest, are generally made through irrevocable semi-monthly (for the APS Plans) or bi-weekly (for the Pinnacle West Plan) payroll deductions. Vesting - Each participant is fully vested as to the participant's contribution account (consisting of the participant's contributions and related income and appreciation or depreciation). The participants become vested in their Employer contribution account (consisting of Employer contributions and related income and appreciation or depreciation) in the event of termination of service by death, disability or retirement, upon attaining the age of sixty-five, upon completion of five years of service, upon termination of the Plans, or upon complete discontinuance of Employer contributions; otherwise, participants vest in graduated amounts with 100 percent vesting in five years of Plan participation, beginning with the first Plan year of Employee participation. Withdrawals and Distributions - A participant may at any time make a full or partial withdrawal of the balance in the participant's after-tax contribution account and rollover contribution account. No withdrawals are permitted from a participant's transfer account. No withdrawals are permitted from the participant's pre-tax contribution account, except under certain limited circumstances relating to financial hardship. If an employee withdraws pre-tax contributions, the only earnings on those contributions that can be withdrawn are those credited prior to 1989. Generally, participants who are fully vested and who have participated in the Plans for five complete Plan years may withdraw the amount in their Employer contribution account. When the participant's employment with the Companies is terminated, the participant generally can elect to receive a distribution, as soon as administratively possible, of the vested portion of his or her Employer contribution account together with the participant's contribution accounts. Forfeitures - Forfeitures of nonvested Employer contributions will occur upon distribution following termination of employment with the Companies. However, if a former participant again becomes an employee of the Companies prior to the end of the fifth calendar year following the calendar year in which the participant's earlier termination of employment occurred (and, in the case of the APS Plans, only if the participant, upon reemployment, repays in full the amount previously distributed from the APS Plans), the forfeited Employer contributions will be restored to the participant's Employer contribution account. Forfeitures are used to reduce future Employer contributions to the Plans. Termination of the Plans - It is the Companies' present expectation that these Plans and the payment of Employer contributions will be continued indefinitely. However, continuance of any feature of the Plans is not assumed as a contractual obligation. The Companies, at their discretion, may terminate their respective plans and distribute net assets. In this event, the balance credited to the accounts of participants at the date of termination shall be fully vested and nonforfeitable. -11- 3. INCOME FROM SETTLEMENT Pursuant to the settlement of a class action lawsuit, payment was made during 1996 on behalf of certain purchasers of Pinnacle West common stock, and certain participants in the Plans were entitled to receive a portion of the settlement. A settlement check of $903,751 was deposited into the Lifestyle Moderate Fund on September 20, 1996. Earnings within the Lifestyle Moderate Fund on the settlement distribution were $53,676. On December 20, 1996, the settlement distribution and related earnings were transferred out of the Lifestyle Moderate Fund and allocated into the respective participant accounts, based on each participant's current election option. If an individual previously received a full distribution from the TRAYSOP\PAYSOP Plan, which was previously liquidated and terminated, the settlement attributable to that plan was distributed by separate check in 1997. 4. INCOME TAX STATUS The Plans have been determined by the Internal Revenue Service to be qualified plans under the provisions of the Internal Revenue Code. As long as the Plans continue to be so qualified, under present Federal income tax laws and regulations: (a) participants will not be currently taxed on Employer contributions, on their own pre-tax contributions (see Note 2), or on investment earnings on any contributions at the time such investment earnings are received by the Trustee, but will be subject to tax thereon at such time as they receive actual benefits from the Plans; and (b) the Plans will not be taxed on their dividend and interest income or any capital gains realized by them or on any unrealized appreciation of investments. 5. UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS Changes in unrealized appreciation (depreciation) of investments for each of the three years in the period ended December 31, 1997 were as follows: Unrealized Appreciation (Depreciation) --------------------------------------
Beginning of Year End of Year Change ----------------- ----------------- ----------------- 1997 ---- Pinnacle West Stock Fund $ 46,821,429 $ 76,201,672 $ 29,380,243 Index Fund 30,111,786 51,023,616 20,911,830 Aggressive Equity Fund 3,373,451 8,268,413 4,894,962 International Equity Fund 109,796 (434,352) (544,148) Lifestyle Conservative Fund (13,017) 109,456 122,473 Lifestyle Moderate Fund 90,799 598,497 507,698 Lifestyle Aggressive Fund 106,642 631,074 524,432 ------------- ------------- ------------- Total $ 80,600,886 $ 136,398,376 $ 55,797,490 ============= ============= =============
-12-
1996 ---- Pinnacle West Stock Fund $ 39,003,330 $ 46,821,429 $ 7,818,099 Index Fund 18,965,167 30,111,786 11,146,619 Aggressive Equity Fund 2,986,675 3,373,451 386,776 Balanced Fund 288,293 0 (288,293) International Equity Fund 0 109,796 109,796 Lifestyle Conservative Fund 0 (13,017) (13,017) Lifestyle Moderate Fund 0 90,799 90,799 Lifestyle Aggressive Fund 0 106,642 106,642 ------------ ------------ ------------ Total $ 61,243,465 $ 80,600,886 $ 19,357,421 ============ ============ ============ 1995 ---- Pinnacle West Stock Fund $ 6,275,811 $ 39,003,330 $ 32,727,519 Index Fund 7,294,560 18,965,167 11,670,607 Aggressive Equity Fund 29,159 2,986,675 2,957,516 Balanced Fund (92,716) 288,293 381,009 ------------ ------------ ------------ Total $ 13,506,814 $ 61,243,465 $ 47,736,651 ============ ============ ============
6. GUARANTEED INVESTMENT CONTRACTS Under the contracts, interest rates on guaranteed investment contracts (GICs) vary within the Fixed Income Fund. The contracts have a weighted average crediting interest rate at December 31, 1997, 1996, and 1995 of 6.82%, 6.31%, and 6.05%, respectively. The average yield for 1997 approximated the weighted average crediting interest rate. The crediting interest rates on the GICs may be reset on a quarterly or semi-annual basis, or may be fixed, based on the terms of the contract. Four of the GICs are managed synthetic investment contracts. The fair value of the trust assets related to these contracts is $10,553,461. The contract value of the trust assets is $10,487,314. 7. BENEFITS PAYABLE As of December 31, 1997 and 1996, net assets available for benefits included benefits of $1,958 and $125,711, respectively, due to participants who had withdrawn from participation in the Plans. 8. PARTICIPATING EMPLOYEES As of December 31, 1997 and 1996, the aggregate number of employees participating in the Plans was 5,417 and 5,346, respectively. -13- 9. NET ASSET VALUE PER UNIT In accordance with the provisions of the Plans, the Trustee maintains separate units of participation in the Plans and related net asset value per unit for the Pinnacle West Stock, Index, Fixed Income, Aggressive Equity, International Equity, and Lifestyle Conservative, Moderate and Aggressive Funds. The number of units and related net asset value per unit at December 31 are: Net Asset Value Per Unit Number of Units ---------------- --------------- 1997 ---- Pinnacle West Stock Fund $ 23.231300 6,128,991 Index Fund 20.346475 5,247,123 Fixed Income Fund 5.290992 11,118,686 Aggressive Equity Fund 84.349358 529,747 International Equity Fund 40.307033 163,532 Lifestyle Conservative 18.656291 123,457 Lifestyle Moderate 25.870800 255,676 Lifestyle Aggressive 33.196047 221,940 1996 ---- Pinnacle West Stock Fund $ 16.880499 6,862,205 Index Fund 15.263426 4,798,836 Fixed Income Fund 4.969295 13,353,292 Aggressive Equity Fund 66.977409 550,923 International Equity Fund 37.843382 86,381 Lifestyle Conservative 15.979735 80,404 Lifestyle Moderate 21.594078 165,659 Lifestyle Aggressive 27.182799 95,720 10. RELATED PARTY TRANSACTIONS Costs of Administration - Substantially all costs of administration of the Plans have been paid by the Companies except for loan administration fees. Pinnacle West Stock Fund ------------------------
1997 1996 1995 ---- ---- ---- Shares of Pinnacle West common stock held by the Plans 3,328,704 3,611,371 3,747,471 Employer cash contributions $ 7,068,458 $ 7,225,732 $ 6,747,587 Investments by the Plans in Pinnacle West common stock $ 5,675,942 $ 4,494,219 $ 3,274,433 Sales made by the Plans of Pinnacle West common stock $14,390,546 $ 8,572,009 $ 7,459,282 Aggregate cost of Pinnacle West common stock sold $ 8,663,385 $ 5,391,080 $ 5,906,404
-14- Index Fund ----------
1997 1996 1995 ---- ---- ---- Investments by the Plans in Trustee's Index Fund $17,339,038 $13,147,476 $11,841,434 Sales made by the Plans of Trustee's Index Fund $ 9,092,627 $ 5,243,720 $ 3,804,238 Aggregate cost of Trustee's Index Fund sold $ 4,926,370 $ 3,266,052 $ 2,642,976
Temporary Investments in Funds Managed by the Trustee -----------------------------------------------------
1997 1996 1995 ---- ---- ---- Investments by the Plans in temporary investment funds $50,617,593 $46,840,277 $51,411,186 Sales made by the Plans of temporary investment funds $58,245,727 $33,293,798 $55,197,746
The temporary investments are bought and sold at par. -15- Exhibits Filed. - --------------- Exhibit No. Description - ----------- ----------- 23.1 Independent Auditors' Consent SIGNATURES The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the Committee has duly caused this annual report to be signed by the undersigned hereunto duly authorized. THE SAVINGS PLAN FOR EMPLOYEES OF ARIZONA PUBLIC SERVICE COMPANY THE SAVINGS PLAN FOR UNION EMPLOYEES OF ARIZONA PUBLIC SERVICE COMPANY (Name of Plans) Date: June 29, 1998 By Armando B. Flores -------------------------------- Armando B. Flores Chairman of the Committee and Senior Vice President, Corporate Business Services, Arizona Public Service Company EX-23.1 2 INDEPENDENT AUDITORS' CONSENT EXHIBIT 23.1 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in Registration Statement Nos. 33-39208 and 33-58372 on Form S-8 of our report dated June 22, 1998 appearing in this Annual Report on Form 11-K of The Savings Plan for Union Employees of Arizona Public Service Company and The Savings Plan for Employees of Arizona Public Service Company for the year ended December 31, 1997. DELOITTE & TOUCHE LLP DELOITTE & TOUCHE LLP Phoenix, Arizona June 27, 1998 -----END PRIVACY-ENHANCED MESSAGE-----