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 [FEE REQUIRED].
For the fiscal year ended December 31, 1994
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, 1994 and 1993 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, 1994 4 - 6
Notes to Combined Financial Statements 7 - 12
Exhibits Filed 13
INDEPENDENT AUDITORS' REPORT
Arizona Public Service Company:
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, 1994 and 1993, 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, 1994. 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, 1994 and 1993, and the changes in net assets available for benefits
for each of the three years in the period ended December 31, 1994 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 26, 1995
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, 1994
- --------------------------------------------------------------------------------
SUPPLEMENTAL COMBINING INFORMATION
------------------------------------------------------------------------------------
PINNACLE WEST FIXED AGGRESSIVE BALANCED PARTICIPANT
COMBINED STOCK FUND INDEX FUND INCOME FUND EQUITY FUND FUND NOTES FUND
-------- ---------- ---------- ----------- ----------- ---- ----------
ASSETS:
Investments at fair value (cost,
Pinnacle West Stock Fund,
$71,368,427;
Index Fund, $24,064,088;
Fixed Income Fund, $59,721,860;
Aggressive Equity Fund,
$5,918,521;
Balanced Fund, $3,130,806;
Participant Notes
Fund, $13,109,122) $190,819,638 $77,644,238 $31,358,648 $59,721,860 $ 5,947,680 $3,038,090 $13,109,122
Temporary investments (at cost
which approximates fair value) 5,413,499 1,152,230 4,261,269
Contributions receivable 1,020,717 428,944 183,302 296,546 72,990 38,935
Interest receivable 309,490 8,053 301,437
------------ ----------- ----------- ----------- ----------- ---------- -----------
Total assets 197,563,344 79,233,465 31,541,950 64,581,112 6,020,670 3,077,025 13,109,122
------------ ----------- ----------- ----------- ----------- ---------- -----------
LIABILITIES:
Interfund transfers
and other liabilities 5,037 (16,422) (39,374) 252,771 (346,364) (9,883) 164,309
------------ ----------- ----------- ----------- ----------- ---------- -----------
NET ASSETS AVAILABLE
FOR BENEFITS $197,558,307 $79,249,887 $31,581,324 $64,328,341 $6,367,034 $3,086,908 $12,944,813
============ =========== =========== =========== =========== ========== ===========
See notes to combined financial statements.
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, 1993
- --------------------------------------------------------------------------------
SUPPLEMENTAL COMBINING INFORMATION
-------------------------------------------------------
PINNACLE WEST FIXED
COMBINED STOCK FUND INDEX FUND INCOME FUND
------- ---------- ---------- -----------
ASSETS:
Investments at fair value (cost,
Pinnacle West Stock Fund,
$67,481,052;
Index Fund, $25,124,773;
Fixed Income Fund, $56,413,890) $173,491,939 $83,081,488 $ 33,996,561 $56,413,890
Temporary investments (at cost
which approximates fair value) 9,053,863 405,345 8,648,518
Contributions receivable 2,045,622 956,106 452,650 636,866
Interest receivable 333,111 1,391 331,720
------------ ----------- ------------ -----------
Total assets 184,924,535 84,444,330 34,449,211 66,030,994
------------ ----------- ------------ -----------
LIABILITIES:
Interfund transfers and
other liabilities 405,000 285,466 (112,430) 231,964
------------ ----------- ------------ -----------
NET ASSETS AVAILABLE
FOR BENEFITS $184,519,535 $84,158,864 $ 34,561,641 $65,799,030
============ =========== ============ ===========
See notes to combined financial statements.
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, 1994
- --------------------------------------------------------------------------------
SUPPLEMENTAL COMBINING INFORMATION
--------------------------------------------------------------------------------------
PINNACLE WEST FIXED AGGRESSIVE BALANCED PARTICIPANT
COMBINED STOCK FUND INDEX FUND INCOME FUND EQUITY FUND FUND NOTES FUND
-------- ---------- ---------- ----------- ----------- ---- ----------
ADDITIONS TO NET ASSETS
ATTRIBUTED TO:
Investment income
(Note 1):
Dividends $3,381,906 $ 3,080,527 $ 248,031 $ 53,348
Interest income 4,099,965 62,785 $ 3,513,769 $ 523,411
Realized gain (loss)
on sale of investments 2,579,519 693,572 $ 1,885,449 4,540 (4,042)
Unrealized appreciation
(depreciation) of
investments (Note 4) (10,965,410) (9,324,625) (1,577,228) 29,159 (92,716)
------------ ----------- ----------- ----------- ---------- ---------- -----------
Total investment
income (loss) (904,020) (5,487,741) 308,221 3,513,769 281,730 (43,410) 523,411
------------ ----------- ----------- ----------- ---------- ---------- -----------
Contributions (Note 2):
Employers 6,552,535 6,552,535
Participants 19,076,462 4,562,379 5,002,389 7,664,070 1,130,011 717,613
------------ ----------- ----------- ----------- ---------- ---------- -----------
Total contributions 25,628,997 11,114,914 5,002,389 7,664,070 1,130,011 717,613
------------ ----------- ----------- ----------- ---------- ---------- -----------
Total additions 24,724,977 5,627,173 5,310,610 11,177,839 1,411,741 674,203 523,411
------------ ----------- ----------- ----------- ---------- ---------- -----------
DEDUCTIONS FROM NET ASSETS
ATTRIBUTED TO:
Benefit payments 11,620,088 4,787,183 1,690,764 4,816,488 64,788 70,317 190,548
Administrative expenses 66,117 5,216 2,783 57,439 679
Interfund transfers 5,743,751 6,597,380 7,774,601 (5,020,081) (2,483,701) (12,611,950)
------------ ----------- ----------- ----------- ---------- ---------- -----------
Total deductions 11,686,205 10,536,150 8,290,927 12,648,528 (4,955,293) (2,412,705) (12,421,402)
------------ ----------- ----------- ----------- ---------- ---------- -----------
Net increase
(decrease) 13,038,772 (4,908,977) (2,980,317) (1,470,689) 6,367,034 3,086,908 12,944,813
NET ASSETS AVAILABLE FOR
BENEFITS:
Beginning of year 184,519,535 84,158,864 34,561,641 65,799,030
------------ ----------- ----------- ----------- ---------- ---------- -----------
End of year $197,558,307 $79,249,887 $31,581,324 $64,328,341 $6,367,034 $3,086,908 $12,944,813
============ =========== =========== =========== ========== ========== ===========
See notes to combined financial statements.
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, 1993
- --------------------------------------------------------------------------------
SUPPLEMENTAL COMBINING INFORMATION
---------------------------------------------------------
PINNACLE WEST FIXED
COMBINED STOCK FUND INDEX FUND INCOME FUND
-------- ---------- ---------- -----------
ADDITIONS TO NET ASSETS
ATTRIBUTED TO:
Investment income (Note 1):
Dividends $ 737,115 $ 737,115
Interest income 3,555,606 16,649 $ 3,538,957
Realized gain
on sale of investments 1,364,029 966,319 $ 397,710
Unrealized appreciation
of investments (Note 4) 9,200,720 6,756,211 2,444,509
------------ ----------- ----------- -----------
Total investment income 14,857,470 8,476,294 2,842,219 3,538,957
------------ ----------- ----------- -----------
Contributions (Note 2):
Employers 6,224,933 6,224,933
Participants 17,985,573 5,453,864 5,159,788 7,371,921
------------ ----------- ----------- -----------
Total contributions 24,210,506 11,678,797 5,159,788 7,371,921
------------ ----------- ----------- -----------
Total additions 39,067,976 20,155,091 8,002,007 10,910,878
------------ ----------- ----------- -----------
DEDUCTIONS FROM NET ASSETS
ATTRIBUTED TO:
Benefit payments 7,466,844 4,446,946 842,597 2,177,301
Interfund transfers 7,121,035 (512,590) (6,608,445)
------------ ----------- ----------- -----------
Total deductions 7,466,844 11,567,981 330,007 (4,431,144)
------------ ----------- ----------- -----------
Net increase 31,601,132 8,587,110 7,672,000 15,342,022
NET ASSETS AVAILABLE FOR
BENEFITS:
Beginning of year 152,918,403 75,571,754 26,889,641 50,457,008
------------ ----------- ----------- -----------
End of year $184,519,535 $84,158,864 $34,561,641 $65,799,030
============ =========== =========== ===========
See notes to combined financial statements.
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, 1992
- --------------------------------------------------------------------------------
SUPPLEMENTAL COMBINING INFORMATION
-----------------------------------------------------------
PINNACLE WEST FIXED
COMBINED STOCK FUND INDEX FUND INCOME FUND
-------- ---------- ---------- -----------
ADDITIONS TO NET ASSETS
ATTRIBUTED TO:
Investment income (Note 1):
Interest income $ 3,440,006 $ 12,381 $ 5 $ 3,427,620
Realized gain
on sale of investments 476,673 2,595 474,078
Unrealized appreciation
of investments (Note 4) 11,876,679 10,471,653 1,405,026
------------ ----------- ----------- -----------
Total investment income 15,793,358 10,486,629 1,879,109 3,427,620
------------ ----------- ----------- -----------
Contributions (Note 2):
Employers 5,166,994 5,166,994
Participants 15,859,134 4,612,962 4,519,623 6,726,549
------------ ----------- ----------- -----------
Total contributions 21,026,128 9,779,956 4,519,623 6,726,549
------------ ----------- ----------- -----------
Total additions 36,819,486 20,266,585 6,398,732 10,154,169
------------ ----------- ----------- -----------
DEDUCTIONS FROM NET ASSETS
ATTRIBUTED TO:
Benefit payments 6,519,586 3,626,662 764,194 2,128,730
Interfund transfers (215,026) 771,376 (556,350)
------------ ----------- ----------- -----------
Total deductions 6,519,586 3,411,636 1,535,570 1,572,380
------------ ----------- ----------- -----------
Net increase 30,299,900 16,854,949 4,863,162 8,581,789
NET ASSETS AVAILABLE FOR
BENEFITS:
Beginning of year 122,618,503 58,716,805 22,026,479 41,875,219
------------ ----------- ----------- -----------
End of year $152,918,403 $75,571,754 $26,889,641 $50,457,008
============ =========== =========== ===========
See notes to combined financial statements.
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 common stock of
Arizona Public Service Company ("APS") are owned by Pinnacle West Capital
Corporation ("Pinnacle West"). Certain prior year balances have been
reclassified to conform to the current year presentation.
Investments - The Plans consist of a salary reduction arrangement and an
employer matching contribution feature. The investment programs for the
Plans consist of the Pinnacle West Stock Fund, the Index Fund, the Fixed
Income Fund, the Aggressive Equity Fund, and the Balanced Fund. The
Aggressive Equity Fund and the Balanced Fund were added effective April 4,
1994.
The Pinnacle West Stock 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. The Index Fund (consisting of common
stocks maintained by the Trustee (defined below) as part of a commingled
fund) is stated at fair value generally based on the last reported sales
price on the last business day of the calendar year. The Fixed Income Fund
(consisting primarily of several guaranteed interest contracts with varying
rates of interest and varying maturities, with a weighted net rate at
December 31, 1994, 1993, and 1992 of 5.94%, 6.65%, and 8.00%, respectively)
is stated at cost which approximates fair value. The Aggressive Equity Fund
(consisting primarily of common stocks maintained by Putnam Investments as
part of the Putnam Voyager Fund, Class A) is stated at fair value generally
based on the last reported sales price on the last business day of the
calendar year. The Balanced Fund (consisting of common and preferred stocks
and bonds managed by Fidelity Investments as part of the Fidelity Balanced
Fund) is stated at fair value generally based on the last reported sales
price on the last business day of the calendar year. The cost of
investments sold is determined using average costs.
Payment of Benefits - Benefits are recorded when paid.
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.
Eligibility - All employees of APS and 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 may direct their respective Company to
contribute any whole percentage from 1% to 10% of the participants' pre-tax
base pay from their respective Company as their tax deferred contribution
to the Plans. The maximum allowable base pay ($150,000 in 1994) and tax
deferred contribution ($9,240 in 1994) are linked to the cost of living
index and could change on an annual basis. In addition to or in lieu of
making tax deferred contributions to the Plans, participants may elect to
make contributions of up to 10% of their after-tax base pay as a voluntary
contribution, 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.
Prior to March 1, 1995, for the APS Savings Plan and the Pinnacle West
Plan, and April 1, 1995, for the APS Union Plan, the Companies contributed
to the account of each participant in the Plans' matching feature a minimum
amount equal to 30% of such participant's contribution of up to 6% of the
participant's pre-tax base pay (defined here as the participant's "required
contribution"). Employer contributions were increased (i) by an additional
one percent for each one percent increase in Pinnacle West consolidated net
income from continuing operations over the prior year and (ii) by an
additional amount determined at the sole discretion of each Company's Board
of Directors, up to a total Employer contribution of not more than 50% of
participant required contributions. Effective March 1, 1995, for the APS
Savings Plan and the Pinnacle West Plan, and April 1, 1995, for the APS
Union Plan, Employer contributions will be fixed at 50% of the first 6
percent 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, Balanced Fund, or Aggressive Equity Fund. The Balanced Fund
and the Aggressive Equity Fund were available for participant contributions
effective April 4, 1994. All Employer contributions are invested in the
Pinnacle West Stock Fund.
Loan Feature - A loan feature was added April 4, 1994. 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 one 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 in 1994 ranged from 7.75% to 9.50%.
Loan issues are treated as transfers from the participant's investment
funds on a pro-rata basis to the Participant Notes Fund. Loan repayments
are treated as transfers from the Participant Notes Fund 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 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 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 an
immediate distribution 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.
Change to Daily Valuation - In 1994, the Plans changed to a daily
valuation of all accounts. As a result of this change, the participant
accounting in the Pinnacle West Stock Fund was changed to unit accounting
from share accounting.
3. 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 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.
4. UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS
Changes in unrealized appreciation (depreciation) of investments for
each of the three years in the period ended December 31, 1994 were as
follows:
Unrealized Appreciation (Depreciation)
Beginning of Year End of Year Change
------------------ --------------- --------------
1994
----
Pinnacle West Stock Fund $15,600,436 $ 6,275,811 $ (9,324,625)
Index Fund 8,871,788 7,294,560 (1,577,228)
Aggressive Equity Fund -0- 29,159 29,159
Balanced Fund -0- (92,716) (92,716)
----------- ------------ ------------
Total $24,472,224 $13,506,814 $(10,965,410)
=========== ============ ============
1993
----
Pinnacle West Stock Fund $ 8,844,225 $15,600,436 $ 6,756,211
Index Fund 6,427,279 8,871,788 2,444,509
----------- ----------- ------------
Total $15,271,504 $24,472,224 $ 9,200,720
=========== =========== ============
1992
----
Pinnacle West Stock Fund $(1,627,428) $ 8,844,225 $ 10,471,653
Index Fund 5,022,253 6,427,279 1,405,026
----------- ----------- ------------
Total $ 3,394,825 $15,271,504 $ 11,876,679
=========== =========== ============
5. BENEFITS PAYABLE
As of December 31, 1994 and 1993, net assets available for benefits
included benefits of $71,363 and $205,189, respectively, due to
participants who have withdrawn from participation in the Plans.
6. PARTICIPATING EMPLOYEES
As of December 31, 1994 and 1993, the aggregate number of employees
participating in the Plans was 5,411 and 5,715, respectively.
7. NET ASSET VALUE PER UNIT
Prior to April 1, 1994, individual participant account investments in
the Pinnacle West Stock Fund were maintained on a share value basis, while
the individual participant account investments in the Index Fund and Fixed
Income Fund were maintained on a unit value basis. Effective April 1, 1994,
individual participant account investments in the Pinnacle West Stock Fund
were changed to a unit value basis. 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, and Balanced Funds. The number of
units and related net asset value per unit at December 31 are:
Net Asset Value
Per Unit Number of Units
--------------------- ----------------
1994
----
Pinnacle West Stock Fund $ 9.810354 8,078,188
Index Fund 9.025973 3,498,938
Fixed Income Fund 4.415146 14,569,924
Aggressive Equity Fund 42.388872 150,205
Balanced Fund 49.008514 62,987
1993
----
Index Fund $ 8.894559 3,885,706
Fixed Income Fund 4.181903 15,734,232
8. 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 - The Plans held 3,931,354, 3,713,139, and
3,667,407 shares of Pinnacle West common stock in the Pinnacle West Stock
Fund at December 31, 1994, 1993, and 1992, respectively. Employer cash
contributions were $6,442,535, $6,224,933, and $5,166,994 in 1994, 1993,
and 1992, respectively. The Plans made investments in Pinnacle West common
stock of $10,533,406, $4,992,235, and $6,929,118 in 1994, 1993, and 1992,
respectively, and had sales of $7,339,602, $4,356,695, and $439,522, with
an aggregate cost of $6,646,030, $3,390,376, and $436,927 in 1994, 1993,
and 1992, respectively.
Index Fund - The Plans made investments in the Trustee's Index Fund of
$5,251,808, $6,331,838, and $4,999,555 in 1994, 1993, and 1992,
respectively, and had sales of $8,197,947, $1,603,493, and $2,263,445 with
an aggregate cost of $6,312,498, $1,205,783, and $1,789,367 in 1994, 1993,
and 1992, respectively.
Temporary Investments - The Plans made investments in temporary
investment funds managed by the Trustee of $44,448,076, $40,690,552, and
$27,465,000 in 1994, 1993, and 1992, respectively, and had sales with
proceeds of $48,088,440, $36,519,689, and $26,444,000 during those same
periods. The temporary investments are bought and sold at par.
Exhibits Filed.
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Exhibit No. Description
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23.1 Independent Auditors'
Consent
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 28, 1995 By Armando B. Flores
------------------------------------
Armando B. Flores
Chairman of the Committee
and Vice President, Human Resources,
Arizona Public Service Company