Consolidation and Nature of Operations

9 Months Ended

Sep. 30, 2013

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”).  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 6 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 2012 Form 10-K, with the exception of the reclassification of certain prior year amounts on our Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Cash Flows to conform to the current year presentation.

The following tables show the impact of the reclassifications to prior year (previously reported) amounts of the deferred investment tax credit and income tax receivables which have become more material in 2013 (dollars in thousands):

Balance Sheets - December 31, 2012	As previously reported		Reclassifications			Amount reported after reclassifications
Deferred investment tax credit	$	—	$	99,819		$	99,819
Deferred credits — other	283,654		(99,819		)	183,835

Statement of Cash Flows for the Nine Months Ended September 30, 2012	As previously reported			Reclassifications			Amount reported after reclassifications
Cash Flows from Operating Activities
Deferred income taxes	$	206,501		$	(8,974	)	$	197,527
Deferred investment tax credit	—			8,974			8,974
Income tax receivable	—			6,466			6,466
Accrued taxes	76,365			(6,466		)	69,899
Change in long-term income tax receivable	—			(1,320		)	(1,320		)
Change in other long-term assets	(15,205		)	1,320			(13,885		)

Supplemental Cash Flow Information

The following table summarizes supplemental Pinnacle West cash flow information (dollars in thousands):

	Nine Months Ended September 30,
	2013		2012
Cash paid during the period for:
Income taxes, net of (refunds)	$	3,412	$	(651	)
Interest, net of amounts capitalized	141,047		152,582
Significant non-cash investing and financing activities:
Accrued capital expenditures	$	11,377	$	11,281