Pinnacle West Capital (PNW) 8-K Results of Operations and Financial Condition

Pinnacle West Capital Corporation

Consolidated Statistics By Quarter

2003

																Increase
																(Decrease)
Line		1st Qtr			2nd Qtr		3rd Qtr			4th Qtr			Year-To-Date			vs Prior YTD
	EARNINGS CONTRIBUTION BY SUBSIDIARY ($ Millions)
1	Arizona Public Service	$	16		$	43	$	100		$	21		$	181		$	(18	)
2	Pinnacle West Energy		4			1		2			(15	)		(8	)		11
3	APS Energy Services		8			5		1			3			16			(12	)
4	SunCor		1			2		6			36			46			36
5	El Dorado		—			—		—			—			(1	)		4
6	Parent Company		(11	)		3		—			—			(9	)		(32	)
7	Income From Continuing Operations		18			54		109			45			225			(11	)
8	Income From Discontinued Operations — Net of Tax		7			2		1			4			16			37
9	Cumulative Effect of Change in Accounting — Net of Tax		—			—		—			—			—			66
10	Net Income	$	25		$	56	$	110		$	49		$	241		$	92
	EARNINGS PER SHARE BY SUBSIDIARY — DILUTED
11	Arizona Public Service	$	0.17		$	0.47	$	1.10		$	0.24		$	1.98		$	(0.37	)
12	Pinnacle West Energy		0.05			0.01		0.02			(0.16	)		(0.08	)		0.15
13	APS Energy Services		0.08			0.06		0.01			0.03			0.18			(0.15	)
14	SunCor		0.01			0.03		0.07			0.39			0.50			0.37
15	El Dorado		—			—		—			—			(0.01	)		0.05
16	Parent Company		(0.11	)		0.02		(0.01	)		(0.01	)		(0.10	)		(0.36	)
17	Income From Continuing Operations		0.20			0.59		1.19			0.49			2.47			(0.31	)
18	Income From Discontinued Operations — Net of Tax		0.08			0.02		0.01			0.05			0.16			0.41
19	Cumulative Effect of Change in Accounting — Net of Tax		—			—		—			—			—			0.77
20	Net Income	$	0.28		$	0.61	$	1.20		$	0.54		$	2.63		$	0.87
21	BOOK VALUE PER SHARE	$	29.39		$	29.95	$	30.68		$	30.97		$	30.97		$	1.57
	COMMON SHARES OUTSTANDING - DILUTED (Thousands)
22	Average		91,359			91,450		91,467			91,403			91,405			6,441
23	End of Period		91,257			91,262		91,271			91,288			91,288			33

See Glossary of Terms. Page 20 of 31

Pinnacle West Capital Corporation

Consolidated Statistics By Quarter

2003

													Increase
													(Decrease)
Line		1st Qtr		2nd Qtr		3rd Qtr		4th Qtr		Year-To-Date			vs Prior YTD
	ELECTRIC OPERATING REVENUES (Dollars in Millions)
	REGULATED ELECTRICITY SEGMENT
	Retail
24	Residential	$	168	$	233	$	363	$	193	$	957		$	51
25	Business		196		251		284		222		953			25
26	Total retail		364		484		647		415		1,910			76
	Wholesale revenue on delivered electricity
27	Traditional contracts		3		4		5		3		15			6
28	Off-system sales		—		—		—		—		—			—
29	Transmission for others		6		5		9		7		27			(3	)
30	Other miscellaneous services		7		6		6		7		26			9
31	Total regulated electricity		380		499		667		432		1,978			88
	MARKETING AND TRADING SEGMENT
32	Electricity and other commodity sales		117		101		83		91		392			105
33	Total operating electric revenues	$	497	$	600	$	750	$	523	$	2,370		$	193
	ELECTRIC SALES (GWH)
	REGULATED ELECTRICITY SEGMENT
	Retail sales
34	Residential		2,104		2,543		4,126		2,374		11,147			703
35	Business		2,849		3,450		3,891		3,226		13,416			499
36	Total retail		4,953		5,993		8,017		5,600		24,563			1,202
	Wholesale electricity delivered
37	Traditional contracts		130		131		127		112		500			26
38	Off-system sales		—		—		—		—		—			—
39	Retail load hedge management		109		205		446		333		1,093			(1,549	)
40	Total regulated electricity		5,192		6,329		8,590		6,045		26,156			(321	)
	MARKETING AND TRADING SEGMENT
41	Wholesale sales of electricity		7,372		6,798		7,255		7,377		28,802			5,947
42	Total electric sales		12,564		13,127		15,845		13,422		54,958			5,626
See Glossary of Terms.												page 21 of 31

Pinnacle West Capital Corporation

Consolidated Statistics By Quarter

2003

																	Increase
																	(Decrease)
Line		1st Qtr			2nd Qtr			3rd Qtr			4th Qtr			Year-To-Date			vs Prior YTD
	POWER SUPPLY ADJUSTOR (“PSA”) - - REGULATED ELECTRICITY SEGMENT (Dollars in Millions)
43	Deferred fuel and purchased power regulatory asset — beginning balance	$	—		$	—		$	—		$	—		$	—		$	—
44	Deferred fuel and purchased power costs — current period		—			—			—			—			—			—
45	Amounts recovered through revenues		—			—			—			—			—			—
46	Deferred fuel and purchased power regulatory asset — end of period	$	—		$	—		$	—		$	—		$	—		$	—
	MARKETING AND TRADING SEGMENT PRETAX GROSS MARGIN ANALYSIS (Dollars in Millions)
	Realized and Mark-To-Market Components
47	Electricity and other commodity sales, realized (a)	$	25		$	20		$	4		$	16		$	65		$	(56	)
48	Mark-to-market reversals on realized sales (b)		(3	)		1			(3	)		(1	)		(6	)		35
49	Change in mark-to-market value of forward sales		(3	)		(1	)		(3	)		(5	)		(12	)		(64	)
50	Total gross margin	$	19		$	20		$	(2	)	$	10		$	47		$	(85	)
	By Pinnacle West Entity
51	Parent company marketing and trading division	$	2		$	4		$	(2	)	$	(9	)	$	(5	)	$	(95	)
52	APS		6			4			(6	)		4			8		$	6
53	Pinnacle West Energy		(1	)		—			—			9			8		$	4
54	APS Energy Services		12			12			6			6			36		$	—
55	Total gross margin	$	19		$	20		$	(2	)	$	10		$	47		$	(85	)

(a)	The net effect on pretax gross margin from realization of prior-period mark-to-market included in line 47 and in line 48 is zero. Realization of prior-period mark-to-market relates to cash flow recognition, not earnings recognition. The opposites of amounts included in line 47 are included in line 48. For example, line 48 shows that a prior-period mark-to-market gain of $6 million was transferred to “realized” for the total year 2003. A $6 million realized gain is included in the $65 million on line 47 for the total year 2003.
(b)	Quarterly amounts do not total to the annual amounts because of intra-year mark-to-market eliminations.
See Glossary of Terms.		page 22 of 31

Pinnacle West Capital Corporation

Consolidated Statistics By Quarter

2003

																		Increase
																		(Decrease)
Line		1st Qtr			2nd Qtr			3rd Qtr			4th Qtr			Year-To-Date				vs Prior YTD
	AVERAGE ELECTRIC CUSTOMERS
	Retail customers
56	Residential		827,937			821,331			824,655			839,539			828,366				26,565
57	Business		101,999			102,601			103,262			104,521			103,096				2,868
58	Total		929,936			923,932			927,917			944,060			931,462				29,432
59	Wholesale customers		65			66			66			66			66				(1	)
60	Total customers		930,001			923,998			927,983			944,126			931,528				29,431
61	Customer Growth (% over prior year)		3.3	%		3.1	%		3.2	%		3.4	%		3.3	%			0.2	%
	RETAIL SALES (GWH) — WEATHER NORMALIZED
62	Residential		2,223			2,520			3,872			2,264			10,879				389
63	Business		2,886			3,485			3,858			3,174			13,403				498
64	Total		5,109			6,005			7,730			5,438			24,282				887
	RETAIL USAGE (KWh/Average Customer)
65	Residential		2,541			3,096			5,004			2,828			13,457				432
66	Business		27,927			33,625			37,677			30,865			130,529				1,288
	RETAIL USAGE — WEATHER NORMALIZED (KWh/Average Customer)
67	Residential		2,685			3,067			4,695			2,697			13,133				50
68	Business		28,290			33,969			37,360			30,371			130,006				1,251
	ELECTRICITY DEMAND (MW)
69	System peak demand		3,569			5,571			6,332			5,124			6,332				529
See Glossary of Terms.																	page 23 of 31

Pinnacle West Capital Corporation

Consolidated Statistics By Quarter

2003

																		Increase
																		(Decrease)
Line		1st Qtr			2nd Qtr			3rd Qtr			4th Qtr			Year-To-Date				vs Prior YTD
	ENERGY SOURCES (GWH)
	Generation production
70	Nuclear		2,306			2,047			2,230			1,732			8,315				(666	)
71	Coal		2,770			2,824			2,972			2,800			11,366				(690	)
72	Gas, oil and other		1,288			1,572			2,696			535			6,091				1,722
73	Total		6,364			6,443			7,898			5,067			25,772				366
	Purchased power
74	Firm load		(12	)		606			1,099			1,418			3,111				1,492
75	Marketing and trading		6,489			6,527			7,498			7,235			27,749				4,045
76	Total		6,477			7,133			8,597			8,653			30,860				5,537
77	Total energy sources		12,841			13,576			16,495			13,720			56,632				5,903
	POWER PLANT PERFORMANCE
	Capacity Factors
78	Nuclear		98	%		86	%		93	%		72	%		87	%			(7	)%
79	Coal		75	%		75	%		79	%		74	%		76	%			(4	)%
80	Gas, oil and other		26	%		31	%		44	%		9	%		28	%			1	%
81	System average		58	%		59	%		64	%		41	%		55	%			(8	)%
	Generation Capacity Out of Service and Replaced for Native Load (average MW/day)
82	Nuclear		31			136			61			297			131				64
83	Coal		292			254			277			253			269				102
84	Gas		189			148			154			338			205				157
85	Total		512			538			492			888			605				323
See Glossary of Terms.																	page 24 of 31

Pinnacle West Capital Corporation

Consolidated Statistics By Quarter

2003

																	Increase
																	(Decrease)
Line		1st Qtr			2nd Qtr			3rd Qtr			4th Qtr			Year-To-Date			vs Prior YTD
	ENERGY MARKET INDICATORS (a)
	Electricity Average Daily Spot Prices ($/MWh)
	On-Peak
86	Palo Verde	$	49.66		$	48.88		$	52.88		$	42.98		$	48.60		$	16.32
87	SP15	$	54.35		$	50.73		$	53.54		$	46.88		$	51.38		$	17.16
	Off-Peak
88	Palo Verde	$	36.09		$	25.48		$	36.08		$	30.48		$	32.03		$	12.14
89	SP15	$	39.70		$	28.27		$	37.81		$	32.85		$	34.66		$	12.97
	WEATHER INDICATORS
	Actual
90	Cooling degree-days		76			1,550			2,701			572			4,899			24
91	Heating degree-days		349			17			—			370			736			(64	)
92	Average humidity		44	%		18	%		30	%		34	%		31	%		4	%
	10-Year Averages
93	Cooling degree-days		80			1,491			2,540			420			4,531			—
94	Heating degree-days		521			36			—			415			972			—
95	Average humidity		43	%		24	%		33	%		40	%		35	%		0	%
	ECONOMIC INDICATORS
	Building Permits — Metro Phoenix (b)
96	Single-family		8,030			10,613			11,191			9,817			39,651			5,339
97	Multi-family		863			2,053			1,231			2,580			6,727			(347	)
98	Total		8,893			12,666			12,422			12,397			46,378			4,992
	Arizona Job Growth (c)
99	Payroll job growth (% over prior year)		1.1	%		0.9	%		1.5	%		2.0	%		1.4	%		1.4	%
100	Unemployment rate (%, seasonally adjusted)		5.8	%		5.9	%		5.7	%		5.3	%		5.7	%		(0.5	)%

Sources:
(a)	This price is an average of daily prices obtained and used with permission from Dow Jones & Company, Inc.
(b)	Arizona Real Estate Center, Arizona State University W.P. Carey College of Business
(c)	Arizona Department of Economic Security

See Glossary of Terms. page 25 of 31