-----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, Hfg6fGwjvsgrFbGCoaD70DyEJVwh0G6w59RCA/VAH31tO9VuYFN3jCvTzP3aikzE Eszqe8548CM2FLe5/7nlQA== 0000950147-99-000671.txt : 19990629 0000950147-99-000671.hdr.sgml : 19990629 ACCESSION NUMBER: 0000950147-99-000671 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990628 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: 99653047 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 FOR FISCAL YEAR ENDED 12/31/1998 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, 1998 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, 1998 and 1997 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, 1998 4 - 6 Notes to Combined Financial Statements 7 - 14 Exhibits Filed 15 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, 1998 and 1997, 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, 1998. 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, 1998 and 1997, and the changes in net assets available for benefits for each of the three years in the period ended December 31, 1998 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 23, 1999 -1- 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, 1998 - --------------------------------------------------------------------------------
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, $68,965,125; Index Fund, $65,075,966; Fixed Income Fund, $57,922,524; Aggressive Equity Fund, $43,316,881; International Equity Fund, $5,716,888; Lifestyle Conservative Fund, $3,765,401; Lifestyle Moderate Fund, $9,292,635; Lifestyle Aggressive Fund, $9,022,549; Participant Loan Feature, $21,693,553) $450,665,341 $141,857,042 $140,562,235 $ 57,922,524 $ 56,929,532 Temporary investments (at cost which approximates fair value) 10,322,875 2,418,190 312,114 7,359,873 105,587 Interest/other receivable 327,981 8,928 3,850 309,080 610 ------------ ------------ ------------ ------------ ------------ Total assets 461,316,197 144,284,160 140,878,199 65,591,477 57,035,729 ------------ ------------ ------------ ------------ ------------ LIABILITIES: Interfund transfers and other liabilities (8,701) (112,200) 21,402 (167,013) 97,980 ------------ ------------ ------------ ------------ ------------ NET ASSETS AVAILABLE FOR BENEFITS $461,324,898 $144,396,360 $140,856,797 $ 65,758,490 $ 56,937,749 ============ ============ ============ ============ ============ 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 contrac value which approximates fair value (cost, Pinnacle West Stock Fund, $68,965,125; Index Fund, $65,075,966; Fixed Income Fund, $57,922,524; Aggressive Equity Fund, $43,316,881; International Equity Fund, $5,716,888; Lifestyle Conservative Fund, $3,765,401; Lifestyle Moderate Fund, $9,292,635; Lifestyle Aggressive Fund, $9,022,549; Participant Loan Feature, $21,693,553) $ 5,920,928 $ 4,086,200 $ 10,826,419 $ 10,866,908 $ 21,693,553 Temporary investments (at cost which approximates fair value) 34,356 31,833 60,138 784 Interest/other receivable 3,020 1,385 1,108 ----------- ----------- ------------ ------------ ------------ Total assets 5,955,284 4,121,053 10,887,942 10,868,800 21,693,553 ----------- ----------- ------------ ------------ ------------ LIABILITIES: Interfund transfers and other liabilities (37,322) (588) 69,930 128,750 (9,640) ----------- ----------- ------------ ------------ ------------ NET ASSETS AVAILABLE FOR BENEFITS $ 5,992,606 $ 4,121,641 $ 10,818,012 $ 10,740,050 $ 21,703,193 =========== =========== ============ ============ ============
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, 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. -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, 1998 - --------------------------------------------------------------------------------
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 $ 9,528,178 $ 4,030,519 $ 3,842,332 Interest/other income 5,968,437 85,828 $ 9,577 $ 3,921,198 3,626 Realized gain (loss) on sale of investments 10,084,967 3,159,079 6,193,850 1,559,099 Unrealized appreciation (depreciation) of investments (Note 5) 29,495,440 (3,309,756) 24,462,652 5,344,238 ------------ ------------- ------------ ------------ ----------- Total investment income 55,077,022 3,965,670 30,666,079 3,921,198 10,749,295 ------------ ------------- ------------ ------------ ----------- Contributions (Note 2): Employers 7,539,003 7,539,003 Participants 24,947,630 3,068,190 8,705,891 3,527,666 5,874,733 ------------ ------------- ------------ ------------ ----------- Total contributions 32,486,633 10,607,193 8,705,891 3,527,666 5,874,733 ------------ ------------- ------------ ------------ ----------- Total additions 87,563,655 14,572,863 39,371,970 7,448,864 16,624,028 ------------ ------------- ------------ ------------ ----------- DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO: Benefit payments 21,457,929 10,938,492 3,841,331 3,908,261 1,306,601 Administrative expenses 44,975 9,165 14,748 9,320 8,149 Interfund transfers 1,613,275 1,419,553 (3,398,326) 3,055,339 ------------ ------------- ------------ ------------ ----------- Total deductions 21,502,904 12,560,932 5,275,632 519,255 4,370,089 ------------ ------------- ------------ ------------ ----------- Net increase (decrease) 66,060,751 2,011,931 34,096,338 6,929,609 12,253,939 NET ASSETS AVAILABLE FOR BENEFITS: Beginning of year 395,264,147 142,384,429 106,760,459 58,828,881 44,683,810 ------------ ------------- ------------ ------------ ----------- End of year $461,324,898 $ 144,396,360 $140,856,797 $ 65,758,490 $56,937,749 ============ ============= ============ ============ =========== 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 $ 624,563 $ 196,635 $ 457,138 $ 376,991 Interest/other income 505 227 685 741 $ 1,946,050 Realized gain (loss) on sale of investments (1,249,133) 97,076 147,665 177,331 Unrealized appreciation (depreciation) of investments (Note 5) 638,392 211,343 935,286 1,213,285 ----------- ----------- ------------ ------------ ------------ Total investment income 14,327 505,281 1,540,774 1,768,348 1,946,050 ----------- ----------- ------------ ------------ ------------ Contributions (Note 2): Employers Participants 833,765 302,946 1,192,862 1,441,577 ----------- ----------- ------------ ------------ ------------ Total contributions 833,765 302,946 1,192,862 1,441,577 ----------- ----------- ------------ ------------ ------------ Total additions 848,092 808,227 2,733,636 3,209,925 1,946,050 ----------- ----------- ------------ ------------ ------------ DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO: Benefit payments 133,578 420,405 492,304 169,535 247,422 Administrative expenses 634 365 1,170 1,424 Interfund transfers 1,312,765 (1,430,941) (1,963,302) (333,544) (274,819) ----------- ----------- ------------ ------------ ------------ Total deductions 1,446,977 (1,010,171) (1,469,828) (162,585) (27,397) ----------- ----------- ------------ ------------ ------------ Net increase (decrease) (598,885) 1,818,398 4,203,464 3,372,510 1,973,447 NET ASSETS AVAILABLE FOR BENEFITS: Beginning of year 6,591,491 2,303,243 6,614,548 7,367,540 19,729,746 ----------- ----------- ------------ ------------ ------------ End of year $ 5,992,606 $ 4,121,641 $ 10,818,012 $ 10,740,050 $ 21,703,193 =========== =========== ============ ============ ============
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, 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. -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, 1996 - --------------------------------------------------------------------------------
SUPPLEMENTAL COMBINING INFORMATION -------------------------------------------------------------------- PINNACLE WEST FIXED AGGRESSIVE BALANCED COMBINED STOCK FUND INDEX FUND INCOME FUND EQUITY FUND FUND ------------ ------------ ------------ ----------- ------------ ----------- ADDITIONS TO NET ASSETS ATTRIBUTED TO: Investment income (Note 1): Dividends $ 6,557,131 $ 3,761,585 $ 2,322,589 $ 158,356 Interest income 5,370,324 59,289 $ 3,747,325 Income from settlement (Note 3) 957,427 351,831 $ 154,273 324,919 101,025 Realized gain on sale of investments 5,832,026 3,180,929 1,977,669 489,947 96,850 Unrealized appreciation (depreciation) of investments (Note 5) 19,357,421 7,818,099 11,146,619 386,776 (288,293) ------------ ------------ ----------- ----------- ----------- ----------- Total investment income (loss) 38,074,329 15,171,733 13,278,561 4,072,244 3,300,337 (33,087) ------------ ------------ ----------- ----------- ----------- ----------- Contributions (Note 2): Employers 7,225,732 7,225,732 Participants 22,693,280 3,720,945 6,509,011 5,416,753 5,809,125 627,436 ------------ ------------ ----------- ----------- ----------- ----------- Total contributions 29,919,012 10,946,677 6,509,011 5,416,753 5,809,125 627,436 ------------ ------------ ----------- ----------- ----------- ----------- Total additions 67,993,341 26,118,410 19,787,572 9,488,997 9,109,462 594,349 ------------ ------------ ----------- ----------- ----------- ----------- DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO: Benefit payments 15,425,820 8,533,725 1,863,410 3,741,062 669,266 128,928 Administrative expenses 44,653 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 15,470,473 19,560,791 (901,301) 6,996,476 (7,011,662) 6,778,072 ------------ ------------ ----------- ----------- ----------- ----------- Net increase (decrease) 52,522,868 6,557,619 20,688,873 2,492,521 16,121,124 (6,183,723) NET ASSETS AVAILABLE FOR BENEFITS: Beginning of year 269,079,249 109,279,820 52,557,808 63,863,925 20,778,258 6,183,723 ------------ ------------ ----------- ----------- ----------- ----------- End of year $321,602,117 $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. -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 Arizona Public Service Company ("APS") stock 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. International Equity Fund -- The fund consists primarily of stocks outside the United States and was maintained by Franklin Templeton as part of the Templeton Foreign Trust. Effective December 1, 1998, the fund was maintained by Banker's Trust International Equity. 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 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 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. 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. Subsequent to the Plans' year end, the Plans' administrators decided to change the trustee from State Street Bank and Trust Company to Norwest Bank Minnesota, N.A. -8- 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' 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 base pay as a voluntary contribution on an after tax basis, 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. The APS Savings Plan and the Pinnacle West Plan allow employees to contribute up to 16% of their base pay on a pre-tax basis and up to 16% of their base pay on an after tax basis, 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. The maximum allowable base pay ($160,000) and tax deferred contribution ($10,000 in 1998) are linked to the cost of living index and could change on an annual basis. Employer contributions to the Plans are 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 $89,484,743 and $88,436,178 of the net assets available for benefits in the Pinnacle West Stock and Fixed Income Funds for 1998 and 1997, respectively. -9- 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 1998 ranged from 8.75% 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 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 -10- 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. 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 -11- 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, 1998 were as follows: Unrealized Appreciation (Depreciation) Beginning of Year End of Year Change ------------- ------------- ------------ 1998 ---- Pinnacle West Stock Fund $ 76,201,672 $ 72,891,916 $ (3,309,756) Index Fund 51,023,616 75,486,268 24,462,652 Aggressive Equity Fund 8,268,413 13,612,651 5,344,238 International Equity Fund (434,352) 204,040 638,392 Lifestyle Conservative Fund 109,456 320,799 211,343 Lifestyle Moderate Fund 598,497 1,533,783 935,286 Lifestyle Aggressive Fund 631,074 1,844,359 1,213,285 ------------- ------------- ------------ Total $ 136,398,376 $ 165,893,816 $ 29,495,440 ============= ============= ============ 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 ============= ============= ============ 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 ============= ============= ============ -12- 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, 1998, 1997, and 1996 of 6.65%, 6.82%, and 6.31%, respectively. The average yield for 1998 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. Nine of the GICs are managed synthetic investment contracts. The fair value of the trust assets related to these contracts is $26,545,286. The contract value of the trust assets is $26,581,790. 7. BENEFITS PAYABLE As of December 31, 1998 and 1997, net assets available for benefits included benefits of $119 and $1,958, respectively, due to participants who had withdrawn from participation in the Plans. 8. PARTICIPATING EMPLOYEES As of December 31, 1998 and 1997, the aggregate number of employees participating in the Plans was 5,093 and 5,417, respectively. 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 --------------- --------------- 1998 ---- Pinnacle West Stock Fund $ 23.887787 6,044,778 Index Fund 26.157241 5,385,002 Fixed Income Fund 5.644700 11,649,599 Aggressive Equity Fund 104.625244 544,207 International Equity Fund 40.791974 146,906 Lifestyle Conservative 21.622221 190,621 Lifestyle Moderate 30.785558 351,399 Lifestyle Aggressive 40.298341 266,513 -13- 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 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 ------------------------ 1998 1997 1996 ---- ---- ---- Shares of Pinnacle West common stock held by the Plans 3,347,659 3,328,704 3,611,371 Employer cash contributions $7,539,003 $ 7,068,458 $7,225,732 Investments by the Plans in Pinnacle West common stock $6,816,758 $ 5,675,942 $4,494,219 Sales made by the Plans of Pinnacle West common stock $5,862,863 $14,390,546 $8,572,009 Aggregate cost of Pinnacle West common stock sold $2,703,784 $ 8,663,385 $5,391,080 Index Fund ---------- 1998 1997 1996 ---- ---- ---- Investments by the Plans in Trustee's Index Fund $15,840,086 $17,339,038 $13,147,476 Sales made by the Plans of Trustee's Index Fund $12,514,603 $ 9,092,627 $ 5,243,720 Aggregate cost of Trustee's Index Fund sold $ 6,320,752 $ 4,926,370 $ 3,266,052 Temporary Investments in Funds Managed by the Trustee ----------------------------------------------------- 1998 1997 1996 ---- ---- ---- Investments by the Plans in temporary investment funds $53,891,371 $50,617,593 $46,840,277 Sales made by the Plans of temporary investment funds $51,658,594 $58,245,727 $33,293,798
The temporary investments are bought and sold at par. -14- Exhibits Filed. Exhibit No. Description - ----------- ----------- 23.1 Independent Auditors' Consent -15- 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 25, 1999 By Armando B. Flores -------------------------------- Armando B. Flores Chairman of the Administrative Committee and Executive Vice President, Corporate Business Services, Arizona Public Service Company EX-23.1 2 CONSENT OF DELOITTE & TOUCHE LLP INDEPENDENT AUDITOR'S 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 23, 1999 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, 1998. DELOITTE & TOUCHE LLP DELOITTE & TOUCHE LLP Phoenix, Arizona June 25, 1999 EXHIBIT 23.1 -----END PRIVACY-ENHANCED MESSAGE-----