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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, 2000
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 1-8962
The Pinnacle West Capital Corporation Savings Plan
(Full title of the plan)
Pinnacle West Capital Corporation
(Name of issuer)
400 North Fifth Street
P.O. Box 53999
Phoenix, Arizona 85072-3999
(Address of issuer's principal executive office)
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TABLE OF CONTENTS
PAGE
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Independent Auditors' Report 1
Statements of Net Assets Available for Benefits
as of December 31, 2000 and 1999 2
Statements of Changes in Net Assets Available for Benefits
for the Years Ended December 31, 2000 and 1999 3
Notes to Financial Statements 4 - 10
Schedule of Assets Held for Investment Purposes 11
Exhibits Filed 12
INDEPENDENT AUDITORS' REPORT
To the Trustees and Participants of
The Pinnacle West Capital Corporation Savings Plan
Phoenix, Arizona
We have audited the accompanying statements of net assets available for benefits
of The Pinnacle West Capital Corporation Savings Plan (the "Plan") as of
December 31, 2000 and 1999, and the related statements of changes in net assets
available for benefits for the years then ended. These financial statements are
the responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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 financial statements present fairly, in all material
respects, information regarding the Plan's net assets available for benefits as
of December 31, 2000, and the changes therein for the year then ended and its
financial status as of December 31, 1999, and the changes therein for the year
then ended in conformity with accounting principles generally accepted in the
United States of America.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets held
for investment purposes as of December 31, 2000, is presented for the purpose of
additional analysis and is not a required part of the basic financial
statements, but is supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. This schedule is the responsibility of
the Plan's management. Such schedule has been subjected to the auditing
procedures applied in our audit of the basic 2000 financial statements and, in
our opinion, is fairly stated in all material respects when considered in
relation to the basic financial statements taken as a whole.
DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Phoenix, Arizona
June 25, 2001
1
THE PINNACLE WEST CAPITAL CORPORATION SAVINGS PLAN
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STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31,
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2000 1999
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ASSETS:
Investments at fair value except for
Fixed Income Fund that is at
contract value which
approximates fair value $555,613,383 $502,218,041
Temporary investments (at cost
which approximates fair value) 4,685,117 12,196,055
Contributions receivable 1,460,970 --
Interest/other receivable 22,625 1,364,046
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TOTAL ASSETS 561,782,095 515,778,142
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LIABILITIES:
Securities purchased 803,188 --
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NET ASSETS AVAILABLE FOR BENEFITS $560,978,907 $515,778,142
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See notes to financial statements.
2
THE PINNACLE WEST CAPITAL CORPORATION SAVINGS PLAN
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STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31,
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2000 1999
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ADDITIONS TO NET ASSETS ATTRIBUTED TO:
Investment income (Note 1):
Dividends $ 5,577,441 $ 174,487
Interest/other income 2,680,044 77,888
Net appreciation (depreciation)
in fair value of investments 28,038,446 339,471
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Total investment income 36,295,931 591,846
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Contributions (Note 2):
Pinnacle West Capital Corporation 8,317,161 254,449
Participants 28,937,199 889,554
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Total contributions 37,254,360 1,144,003
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Total additions 73,550,291 1,735,849
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DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO:
Benefit payments 28,146,206 886,238
Administrative expenses 251,111 383
Interplan transfers (47,791) 19,718
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Total deductions 28,349,526 906,339
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Net increase 45,200,765 829,510
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NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 515,778,142 9,806,673
End of year before transfer of assets 560,978,907 10,636,183
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Transfer of assets from the Savings Plan for
Employees of Arizona Public Service Company
and the Savings Plan for Union Employees of
Arizona Public Service Company -- 505,141,959
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End of year after transfer of assets $ 560,978,907 $ 515,778,142
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See notes to financial statements.
3
THE PINNACLE WEST CAPITAL CORPORATION
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
METHOD OF ACCOUNTING - The financial statements in this report reflect
the total assets, liabilities and net assets available for benefits and
changes therein of The Pinnacle West Capital Corporation Savings Plan (the
"Plan"). The financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America
using the accrual basis of accounting. Investment transactions are recorded
as of the trade date. Dividend income is recorded as of ex-dividend dates.
INVESTMENTS - The Plan consists of a salary reduction arrangement and
an employer matching contribution feature. The investment choices for the
Plan during 2000 consisted of:
Pinnacle West Stock Fund -- The fund consists primarily of common
stock of Pinnacle West Capital Corporation ("Pinnacle West,"
"Company," or "Employer"). 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
benefit-responsive guaranteed investment contracts with varying rates
of interest and varying maturities. The fund is stated at contract
value which approximates fair value.
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 is maintained by Deutsche Asset
Management 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.
Conservative, Moderate and Aggressive Lifestyle Funds -- These
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.
4
Temporary investments - Temporary investments represent cash or other
cash equivalents that are held until investments in other funds can be
made.
PAYMENT OF BENEFITS - Benefits are recorded when paid.
USE OF ESTIMATES - The preparation of financial statements in
conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions
that affect the reported amounts of net assets available for benefits and
changes therein. Actual results could differ from those estimates. The Plan
utilizes various investment instruments. Investment securities, in general,
are exposed to various risks, such as interest rate, credit, and overall
market volatility. Due to the level of risk associated with certain
investment securities, it is reasonably possible that changes in the values
of investment securities will occur in the near term and that such changes
could materially affect the amounts reported in the statements of net
assets available for plan benefits.
2. DESCRIPTION OF THE PLAN
The following description of the Plan provides only general
information. Participants should refer to the plan agreement for a more
complete description of the Plan's provisions.
GENERAL - The Plan is administered by a committee appointed by the
Pinnacle West Board of Directors. The Plan is subject to the provisions of
the Employee Retirement Income Security Act of 1974 ("ERISA"), as amended.
Effective July 1, 1999, Norwest Bank of Minnesota N.A., which changed
its name to Wells Fargo, Minnesota, N.A., effective January 1, 2000 (the
"Trustee",) became the trustee of the master trust agreement in which the
Plan, The Savings Plan for Employees of Arizona Public Service Company and
The Savings Plan for Union Employees of Arizona Public Service Company
(collectively referred to as the "APS Plans") participated. Prior to July
1, 1999, State Street Bank and Trust Company was the trustee for this
master trust.
In June 1999, the Board of Directors of Pinnacle West and in July
1999, the Board of Directors of Arizona Public Service Company ("APS")
agreed to merge the APS Plans into the Plan effective December 31, 1999,
thereby eliminating the need for the master trust. Pinnacle West continues
to be the sponsor of the Plan.
ELIGIBILITY - Generally, all active employees of Pinnacle West and its
subsidiaries, including, APS, Pinnacle West Energy Corporation, APS Energy
Services Company, Inc., El Dorado Investment Company and the active
salaried employees of SunCor Development Company are eligible to
participate in the pre-tax and after-tax features of the Plan upon
5
attaining age 21 and completing thirty-one days of consecutive employment
and are eligible to participate in the matching feature upon attaining age
21 and completing one year of service. Subject to the approval of the Board
of Directors of the Company of an affiliate's participation in the Plan as
a contributing employer, the Plan allows for participation by employees of
a company that becomes an affiliate of Pinnacle West if such employees were
formerly participants in a qualified plan sponsored by their employer,
regardless of whether they have satisfied the Plan's other eligibility
requirements.
CONTRIBUTIONS - The Plan is a defined contribution plan. The Plan
allows 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 ($170,000) and tax-deferred contribution
($10,500) are linked to the cost of living index and could change on an
annual basis.
Employer contributions 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 Plan allows rollover contributions from another qualified plan or
individual retirement rollover account, subject to certain criteria.
INVESTMENT CHOICES - 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,
Conservative Lifestyle Fund, Moderate Lifestyle Fund, and Aggressive
Lifestyle Fund. Information about the net assets and the significant
components of the changes in net assets relating to the
nonparticipant-directed investments is as follows as of December 31, 2000:
2000
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Pinnacle West Stock Fund Net Assets - 12/31/99 $69,138,017
Changes in net assets during 2000:
Net appreciation 41,365,006
Employer contributions 8,317,161
Benefits paid to participants (10,853,763)
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Pinnacle West Stock Fund Net Assets - 12/31/00 $107,966,421
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The 1999 balance of non-participant directed contributions includes a
$67,374,910 transfer from The Savings Plan for Employees of Arizona Public
Service Company and The Savings Plan for Union Employees of Arizona Public
Service Company, as a result of the merger of the APS Plans and the Plan
(see "General" above).
6
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 account.
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 Trustee'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 2000 ranged from 8.75% to 9.50%.
Loans are treated as an investment of the participant's accounts. To
fund the loan, transfers are made from the participant's investment funds
on a pro-rata basis. Loan repayments are invested in the participant's
investment funds based on the participant's current investment election.
Loan repayments, including interest, are generally made through irrevocable
semi-monthly 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 Plan, 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
before retirement are permitted from a participant's transfer account. No
withdrawals before retirement 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 Plan for five complete plan years may withdraw
the amount in their Employer contribution account. When the participant's
employment with the Company is terminated, the participant generally can
elect to receive, as soon as administratively possible, a distribution of
the vested portion of his or her Employer contribution account together
with the participant's contribution accounts.
7
FORFEITURES - Forfeitures of nonvested Employer contributions will
occur upon distribution following termination of employment with the
Company. However, if a former participant again becomes an employee of the
Company prior to the end of the fifth calendar year following the calendar
year in which the participant's earlier termination of employment occurred,
the forfeited Employer contributions will be restored to the participant's
Employer contribution account, provided the participant repays the full
amount previously distributed to him or her. Forfeitures are used to reduce
future Employer contributions to the Plan.
TERMINATION OF THE PLAN - It is the Company's present expectation that
the Plan and the payment of Employer contributions will be continued
indefinitely. However, continuance of any feature of the Plan is not
assumed as a contractual obligation. The Company, at its discretion, may
terminate the Plan 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 TAX STATUS
A determination letter dated September 8, 1995 has been received from
the Internal Revenue Service indicating that the Plan has been determined
to be a qualified plan under the provisions of the Internal Revenue Code.
The Plan has been amended since receiving the determination letter. The
Company's management and plan administrator believes that the Plan is
designed and is currently being operated in compliance with the applicable
requirements of the Internal Revenue Code.
4. GUARANTEED INVESTMENT CONTRACTS
Under the benefit-responsive contracts, interest rates on guaranteed
investment contracts ("GICs") vary within the Fixed Income Fund. The
contracts held in the Plan have a weighted average crediting interest rate
at December 31, 2000 of 6.44% and December 31, 1999 of 6.42%. The average
yield for 2000 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.
Fourteen of the GICs are managed synthetic investment contracts. The
fair value of the assets related to these contracts is $36,461,994. The
contract value of these assets is $37,515,608.
5. INVESTMENTS AND UNITS OF PARTICIPATION
In accordance with the provisions of the Plan, the Trustee maintains
separate units of participation in the Plan and related net asset value per
unit for the Pinnacle West Stock, Index,
8
Fixed Income, Aggressive Equity, International Equity, and Conservative,
Moderate and Aggressive Lifestyle Funds. The number of units and the
related value at December 31 are:
2000 Number of Units Value
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Pinnacle West Stock Fund 3,487,052 $166,480,849
Index Fund 3,870,143 148,052,969
Fixed Income Fund 6,126,617 67,305,627
Aggressive Equity Fund 4,952,745 106,890,926
International Equity Fund 742,860 9,897,831
Conservative Lifestyle Fund 330,329 4,863,689
Moderate Lifestyle Fund 794,673 13,757,799
Aggressive Lifestyle Fund 770,661 15,184,606
Participant Loans 23,179,087
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Total $555,613,383
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1999 Number of Units Value
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Pinnacle West Stock Fund 3,708,593 $113,343,874
Index Fund 4,054,252 170,238,042
Fixed Income Fund 6,654,449 69,024,641
Aggressive Equity Fund 2,889,001 89,443,463
International Equity Fund 411,873 7,581,670
Conservative Lifestyle Fund 264,441 3,993,052
Moderate Lifestyle Fund 1,283,120 12,995,189
Aggressive Lifestyle Fund 599,457 12,834,374
Participant Loans 22,763,736
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Total $502,218,041
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9
6. RELATED PARTY TRANSACTIONS
The following information relates to related party transactions within the
Plan. The amounts for prior year are on a master trust basis.
COSTS OF ADMINISTRATION - Substantially all costs of administration of
the Plan, except for loan administration fees, have been paid by the
Company.
PINNACLE WEST STOCK FUND
2000 1999
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Shares of Pinnacle West common stock held by the Plan 3,487,052 3,708,593
Employer cash contributions $ 8,317,161 $ 7,927,434
Investments by the Plan in Pinnacle West common stock $ 2,822,589 $ 14,433,399
Sales made by the Plan of Pinnacle West common stock $ 11,265,098 $ 1,361,502
Aggregate cost of Pinnacle West common stock sold $ 5,429,877 $ 726,050
Dividend income $ 5,199,271 $ 4,663,182
INDEX FUND
2000 1999
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Investments by the Plan in Trustee's Index Fund $ 23,279,698 $ 19,377,247
Sales made by the Plan of Trustee's Index Fund $ 28,293,448 $ 19,546,004
Aggregate cost of Trustee's Index Fund sold $ 27,042,881 $ 15,506,166
TEMPORARY INVESTMENTS IN FUNDS MANAGED BY THE TRUSTEE
2000 1999
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Investments by the Plan in temporary investment funds $222,277,470 $114,185,293
Sales made by the Plan of temporary investment funds $219,595,681 $104,867,886
The temporary investments are bought and sold at par.
10
THE PINNACLE WEST CAPITAL CORPORATION SAVINGS PLAN
SCHEDULE H: SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 2000
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Identity of Issuer, Borrower, Description of Current
Lessor or Similar Party Fund Name Investment Units Cost Value
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Pinnacle West Capital Pinnacle West Stock Fund Shares of company 3,487,052 $78,013,467 $166,480,849
Corporation Stock Fund common stock
S&P 500 Index Fund Index Fund Shares of mutual 3,870,143 * 148,052,969
fund investments
Morley Capital Fixed Fixed Income Fund Guaranteed investment 6,126,617 * 67,305,627
Income Fund contracts, interest
rates, 5.62% - 7.82%
Putnam Voyager Aggressive Equity Fund Shares of mutual 4,952,745 * 106,890,926
Income Fund fund investments
Deutsche Institutional International Equity Fund Shares of mutual 742,860 * 9,897,831
International Equity Fund fund investments
Vanguard Lifestrategy Conservative Lifestyle Fund Shares of mutual 330,329 * 4,863,689
Conservative Growth Fund fund investments
Vanguard Lifestrategy Moderate Lifestyle Fund Shares of mutual 794,673 * 13,757,799
Moderate Growth Fund fund investments
Vanguard Lifestrategy Aggressive Lifestyle Fund Shares of mutual 770,661 * 15,184,606
Growth Fund fund investments
Participant Loans Participant Loans Interest rates, N/A * 23,179,087
8.75% - 10.00%
Cash and Other N/A * 4,685,117
Short-Term Investments
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Total Assets Held for $560,298,500
Investment Purposes ============
* Cost information not provided as investments are participant directed.
11
Exhibits Filed.
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Exhibit No. Description
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23.1 Independent Auditors' Consent
12
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 PINNACLE WEST CAPITAL CORPORATION SAVINGS PLAN
(Name of Plan)
Date: June 26, 2001 By Armando B. Flores
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Armando B. Flores
Chairman of the Administrative Committee and
Executive Vice President, Corporate Business
Services Pinnacle West Capital Corporation
13