Consolidation and Nature of Operations

9 Months Ended

Sep. 30, 2012

Consolidation and Nature of Operations

Consolidation and Nature of Operations

1.Consolidation and Nature of Operations

The unaudited condensed consolidated financial statements include the accounts of Pinnacle West and our subsidiaries:  APS and El Dorado Investment Company (“El Dorado”) and formerly SunCor Development Company (“SunCor”) and APS Energy Services Company, Inc. (“APSES”).  See Note 13 for discussion of the bankruptcy filing of SunCor and the sale of APSES.  Intercompany accounts and transactions between the consolidated companies have been eliminated.  The unaudited condensed consolidated financial statements for APS include the accounts of APS and the Palo Verde Nuclear Generating Station (“Palo Verde”) sale leaseback variable interest entities (“VIEs”) (see Note 7 for further discussion).  Our accounting records are maintained in accordance with accounting principles generally accepted in the United States of America (“GAAP”).  The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Weather conditions cause significant seasonal fluctuations in our revenues; therefore, results for interim periods do not necessarily represent results expected for the year.

Our condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments except as otherwise disclosed in the notes) that we believe are necessary for the fair presentation of our financial position, results of operations and cash flows for the periods presented.  These condensed consolidated financial statements and notes have been prepared consistently with the 2011 Form 10-K with the exception of the reclassification of certain prior year amounts on our Condensed Consolidated Statements of Income and Condensed Consolidated Statements of Cash Flows to conform to the current year presentation.

See Note 16 for discussion of amended guidance on the presentation of comprehensive income.

The following tables show the impact of the reclassifications to prior year (previously reported) amounts (dollars in thousands):

Statement of Income for the Three Months Ended September 30, 2011	As previously reported			Reclassifications to conform to current year presentation			Amount reported after reclassifications to conform to current year presentation
Operating Revenues
Regulated electricity segment	$	1,124,049		$	(1,124,049	)	$	—
Other revenues	792			(792		)	—
Operating revenues	—			1,124,841			1,124,841
Statement of Income for the Nine Months Ended September 30, 2011	As previously reported			Reclassifications to conform to current year presentation			Amount reported after reclassifications to conform to current year presentation
Operating Revenues
Regulated electricity segment	$	2,570,692		$	(2,570,692	)	$	—
Other revenues	2,795			(2,795		)	—
Operating revenues	—			2,573,487			2,573,487
Statement of Cash Flows for the Nine Months Ended September 30, 2011	As previously reported			Reclassifications to conform to current year presentation			Amount reported after reclassifications to conform to current year presentation
Cash Flows from Investing Activities
Proceeds from sale of commercial real estate investments	$	1,100		$	(1,100	)	$	—
Other	(2,346		)	1,100			(1,246		)