SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________________
Form 11-K
(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, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from__________ to __________
Commission file number 1-8962
________________________________
The Savings Plan for Employees of
Pinnacle West Capital Corporation
Pinnacle West Capital Corporation
(Name of issuer)
400 E. Van Buren Street
P. O. Box 52132
Phoenix, Arizona 85072-2132
(Address of issuer's principal executive office)
<PAGE>
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, 1995 and 1994 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, 1995 4 - 6
Notes to Combined Financial Statements 7 - 13
Exhibits Filed 14
<PAGE>
INDEPENDENT AUDITORS' REPORT
Pinnacle West Capital Corporation
Phoenix, Arizona
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, 1995 and 1994, 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, 1995. 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, 1995 and 1994, and the changes in net assets available for benefits
for each of the three years in the period ended December 31, 1995 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 audit 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
Phoenix, Arizona
June 14, 1996
<PAGE>
<TABLE>
<CAPTION>
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, 1995
- ------------------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL COMBINING INFORMATION
--------------------------------------------------------------------
PINNACLE WEST FIXED AGGRESSIVE
COMBINED STOCK FUND INDEX FUND INCOME FUND EQUITY FUND
-------------- --------------- ---------------- ----------------- -------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments at fair value (cost,
Pinnacle West Stock Fund,
$68,736,455;
Index Fund, $33,262,541;
Fixed Income Fund, $63,401,164;
Aggressive Equity Fund,
$17,706,804;
Balanced Fund, $5,881,302;
Participant Loan Feature,
$16,679,670) $ 266,911,402 $ 107,739,786 $ 52,227,708 $ 63,401,164 $ 20,693,479
Temporary investments (at cost
which approximates fair value) 1,626,939 1,505,568 121,371
Contributions receivable 1,103,604 432,779 230,289 229,659 162,733
Interest receivable 310,179 8,634 301,545
-------------- --------------- ---------------- ----------------- -------------
Total assets 269,952,124 109,686,767 52,457,997 64,053,739 20,856,212
-------------- --------------- ---------------- ----------------- -------------
LIABILITIES:
Interfund transfers and other liabilities 872,875 406,947 (99,811) 189,814 77,954
-------------- --------------- ---------------- ----------------- -------------
NET ASSETS AVAILABLE
FOR BENEFITS $ 269,079,249 $ 109,279,820 $ 52,557,808 $ 63,863,925 $ 20,778,258
============== =============== ================ ================= =============
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------------
----------------------------------------------
BALANCED PARTICIPANT
FUND LOAN FEATURE
-------------- ----------------
<S> <C> <C>
ASSETS:
Investments at fair value (cost,
Pinnacle West Stock Fund,
$68,736,455;
Index Fund, $33,262,541;
Fixed Income Fund, $63,401,164;
Aggressive Equity Fund,
$17,706,804;
Balanced Fund, $5,881,302;
Participant Loan Feature,
$16,679,670) $ 6,169,595 $ 16,679,670
Temporary investments (at cost
which approximates fair value)
Contributions receivable 48,144
Interest receivable
-------------- ----------------
Total assets 6,217,739 16,679,670
-------------- ----------------
LIABILITIES:
Interfund transfers and other liabilities 34,016 263,955
-------------- ----------------
NET ASSETS AVAILABLE
FOR BENEFITS $ 6,183,723 $ 16,415,715
============== ================
</TABLE>
See notes to combined financial statements.
- 2 -
<PAGE>
<TABLE>
<CAPTION>
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
COMBINED STOCK FUND INDEX FUND INCOME FUND
--------------- --------------- --------------- -----------------
<S> <C> <C> <C> <C>
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 Loan Feature,
$13,109,122) $ 190,819,638 $ 77,644,238 $ 31,358,648 $ 59,721,860
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
Interest receivable 309,490 8,053 301,437
--------------- --------------- --------------- -----------------
Total assets 197,563,344 79,233,465 31,541,950 64,581,112
--------------- --------------- --------------- -----------------
LIABILITIES:
Interfund transfers and other liabilities 5,037 (16,422) (39,374) 252,771
--------------- --------------- --------------- -----------------
NET ASSETS AVAILABLE
FOR BENEFITS $ 197,558,307 $ 79,249,887 $ 31,581,324 $ 64,328,341
=============== =============== =============== =================
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------------------------
----------------------------------------------------------
AGGRESSIVE BALANCED PARTICIPANT
EQUITY FUND FUND LOAN FEATURE
-------------- -------------- -----------------
<S> <C> <C> <C>
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 Loan Feature,
$13,109,122) $ 5,947,680 $ 3,038,090 $ 13,109,122
Temporary investments (at cost
which approximates fair value)
Contributions receivable 72,990 38,935
Interest receivable
-------------- -------------- -----------------
Total assets 6,020,670 3,077,025 13,109,122
-------------- -------------- -----------------
LIABILITIES:
Interfund transfers and other liabilitie (346,364) (9,883) 164,309
-------------- -------------- -----------------
NET ASSETS AVAILABLE
FOR BENEFITS $ 6,367,034 $ 3,086,908 $ 12,944,813
============== ============== =================
</TABLE>
See notes to combined financial statements.
- 3 -
<PAGE>
<TABLE>
<CAPTION>
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, 1995
- ------------------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL COMBINING INFORMATION
-------------------------------------------------------------
PINNACLE WEST FIXED
COMBINED STOCK FUND INDEX FUND INCOME FUND
--------------- ---------------- ---------------- -----------------
<S> <C> <C> <C> <C>
ADDITIONS TO NET ASSETS
ATTRIBUTED TO:
Investment income (Note 1):
Dividends $ 4,831,483 $ 3,548,574
Interest income 5,117,786 75,680 $ 3,813,463
Realized gain on sale of
investments 2,859,474 1,552,878 $ 1,161,262
Unrealized appreciation
of investments (Note 4) 47,736,651 32,727,519 11,670,607
--------------- ---------------- ---------------- -----------------
Total investment income 60,545,394 37,904,651 12,831,869 3,813,463
--------------- ---------------- ---------------- -----------------
Contributions (Note 2):
Employers 6,747,587 6,747,587
Participants 20,204,098 4,043,616 5,077,110 6,757,160
--------------- ---------------- ---------------- -----------------
Total contributions 26,951,685 10,791,203 5,077,110 6,757,160
--------------- ---------------- ---------------- -----------------
Total additions 87,497,079 48,695,854 17,908,979 10,570,623
--------------- ---------------- ---------------- -----------------
DEDUCTIONS FROM NET ASSETS
ATTRIBUTED TO:
Benefit payments 15,932,169 9,015,731 1,727,992 4,533,469
Administrative expenses 43,968 4,085 3,855 33,552
Interfund transfers 9,646,105 (4,799,352) 6,468,018
--------------- ---------------- ---------------- -----------------
Total deductions 15,976,137 18,665,921 (3,067,505) 11,035,039
--------------- ---------------- ---------------- -----------------
Net increase (decrease) 71,520,942 30,029,933 20,976,484 (464,416)
NET ASSETS AVAILABLE FOR
BENEFITS:
Beginning of year 197,558,307 79,249,887 31,581,324 64,328,341
--------------- ---------------- ---------------- -----------------
End of year $ 269,079,249 $ 109,279,820 $ 52,557,808 $ 63,863,925
=============== ================ ================ =================
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------
------------------------------------------------------------
AGGRESSIVE BALANCED PARTICIPANT
EQUITY FUND FUND LOAN FEATURE
-------------- -------------- ----------------
<S> <C> <C> <C>
ADDITIONS TO NET ASSETS
ATTRIBUTED TO:
Investment income (Note 1):
Dividends $ 1,084,332 $ 198,577
Interest income $ 1,228,643
Realized gain on sale of
investments 128,349 16,985
Unrealized appreciation
of investments (Note 4) 2,957,516 381,009
-------------- -------------- ----------------
Total investment income 4,170,197 596,571 1,228,643
-------------- -------------- ----------------
Contributions (Note 2):
Employers
Participants 3,185,022 1,141,190
-------------- -------------- ----------------
Total contributions 3,185,022 1,141,190
-------------- -------------- ----------------
Total additions 7,355,219 1,737,761 1,228,643
-------------- -------------- ----------------
DEDUCTIONS FROM NET ASSETS
ATTRIBUTED TO:
Benefit payments 345,062 115,316 194,599
Administrative expenses 1,376 1,100
Interfund transfers (7,402,443) (1,475,470) (2,436,858)
-------------- -------------- ----------------
Total deductions (7,056,005) (1,359,054) (2,242,259)
-------------- -------------- ----------------
Net increase (decrease) 14,411,224 3,096,815 3,470,902
NET ASSETS AVAILABLE FOR
BENEFITS:
Beginning of year 6,367,034 3,086,908 12,944,813
-------------- -------------- ----------------
End of year $ 20,778,258 $ 6,183,723 $ 16,415,715
============== ============== ================
</TABLE>
See notes to combined financial statements.
-4-
<PAGE>
<TABLE>
<CAPTION>
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
COMBINED STOCK FUND INDEX FUND INCOME FUND
--------------- --------------- --------------- -----------------
<S> <C> <C> <C> <C>
ADDITIONS TO NET ASSETS
ATTRIBUTED TO:
Investment income (Note 1):
Dividends $ 3,381,906 $ 3,080,527
Interest income 4,099,965 62,785 $ 3,513,769
Realized gain (loss) on sale of
investments 2,579,519 693,572 $ 1,885,449
Unrealized appreciation
(depreciation) of
investments (Note 4) (10,965,410) (9,324,625) (1,577,228)
--------------- --------------- --------------- -----------------
Total investment income (loss) (904,020) (5,487,741) 308,221 3,513,769
--------------- --------------- --------------- -----------------
Contributions (Note 2):
Employers 6,552,535 6,552,535
Participants 19,076,462 4,562,379 5,002,389 7,664,070
--------------- --------------- --------------- -----------------
Total contributions 25,628,997 11,114,914 5,002,389 7,664,070
--------------- --------------- --------------- -----------------
Total additions 24,724,977 5,627,173 5,310,610 11,177,839
--------------- --------------- --------------- -----------------
DEDUCTIONS FROM NET ASSETS
ATTRIBUTED TO:
Benefit payments 11,620,088 4,787,183 1,690,764 4,816,488
Administrative expenses 66,117 5,216 2,783 57,439
Interfund transfers 5,743,751 6,597,380 7,774,601
--------------- --------------- --------------- -----------------
Total deductions 11,686,205 10,536,150 8,290,927 12,648,528
--------------- --------------- --------------- -----------------
Net increase (decrease) 13,038,772 (4,908,977) (2,980,317) (1,470,689)
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
=============== =============== =============== =================
</TABLE>
<TABLE>
<CAPTION>
---------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
AGGRESSIVE BALANCED PARTICIPANT
EQUITY FUND FUND LOAN FEATURE
-------------- -------------- -----------------
<S> <C> <C> <C>
ADDITIONS TO NET ASSETS
ATTRIBUTED TO:
Investment income (Note 1):
Dividends $ 248,031 $ 53,348
Interest income $ 523,411
Realized gain (loss) on sale of
investments 4,540 (4,042)
Unrealized appreciation
(depreciation) of
investments (Note 4) 29,159 (92,716)
-------------- -------------- -----------------
Total investment income (loss) 281,730 (43,410) 523,411
-------------- -------------- -----------------
Contributions (Note 2):
Employers
Participants 1,130,011 717,613
-------------- -------------- -----------------
Total contributions 1,130,011 717,613
-------------- -------------- -----------------
Total additions 1,411,741 674,203 523,411
-------------- -------------- -----------------
DEDUCTIONS FROM NET ASSETS
ATTRIBUTED TO:
Benefit payments 64,788 70,317 190,548
Administrative expenses 679
Interfund transfers (5,020,081) (2,483,701) (12,611,950)
-------------- -------------- -----------------
Total deductions (4,955,293) (2,412,705) (12,421,402)
-------------- -------------- -----------------
Net increase (decrease) 6,367,034 3,086,908 12,944,813
NET ASSETS AVAILABLE FOR
BENEFITS:
Beginning of year
-------------- -------------- -----------------
End of year $ 6,367,034 $ 3,086,908 $ 12,944,813
============== ============== =================
</TABLE>
See notes to combined financial statements.
-5-
<PAGE>
<TABLE>
<CAPTION>
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
--------------- --------------- --------------- -----------------
<S> <C> <C> <C> <C>
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
=============== =============== =============== =================
</TABLE>
See notes to combined financial statements.
-6-
<PAGE>
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
average crediting interest rate at December 31, 1995, 1994, and 1993 of
6.05%, 5.94%, and 6.65%, respectively) is stated at contract value which
approximates fair value. The average yield for 1995 approximated the
weighted average crediting interest rate. The Aggressive Equity Fund
(consisting primarily of common stocks maintained by Putnam Investments
as part of
-7-
<PAGE>
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.
Use of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles necessarily
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from these estimates.
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 salaried employees of
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
1995) and tax deferred contribution ($9,240 in 1995) 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.
-8-
<PAGE>
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
were 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 1995 ranged from 9.50% to
10.00%.
Loans are treated as transfers from the participant's investment
funds on a pro-rata basis to the Participant Loan Feature. Loan
repayments are treated as transfers from the Loan Feature to the
participant's investment funds, based on the participant's current
investment
-9-
<PAGE>
election. Loan repayments, including interest, are generally made
through irrevocable semi-monthly (for the APS Plans) or bi-weekly (for
the Pinnacle West Plan) 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 a distribution, as soon as
administratively possible, 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.
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<PAGE>
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, 1995 were as
follows:
<TABLE>
<CAPTION>
Unrealized Appreciation (Depreciation)
--------------------------------------
Beginning of Year End of Year Change
---------------------- --------------------- -------------------
<S> <C> <C> <C>
1995
----
Pinnacle West Stock Fund $ 6,275,811 $ 39,003,330 $ 32,727,519
Index Fund 7,294,560 18,965,167 11,670,607
Aggressive Equity Fund 29,159 2,986,675 2,957,516
Balanced Fund (92,716) 288,293 381,009
----------- ------------ ------------
Total $13,506,814 $ 61,243,465 $ 47,736,651
=========== ============ ============
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
=========== =========== =============
</TABLE>
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<PAGE>
5. BENEFITS PAYABLE
As of December 31, 1995 and 1994, net assets available for
benefits included benefits of $0 and $71,363, respectively, due to
participants who had withdrawn from participation in the Plans.
6. PARTICIPATING EMPLOYEES
As of December 31, 1995 and 1994, the aggregate number of
employees participating in the Plans was 5,317 and 5,411, 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
------------------ ------------------
1995
Pinnacle West Stock Fund $ 14.766694 7,400,426
Index Fund 12.412044 4,234,420
Fixed Income Fund 4.681795 13,640,906
Aggressive Equity Fund 59.391589 349,852
Balanced Fund 56.305337 109,825
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
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.
-12-
<PAGE>
Pinnacle West Stock Fund - The Plans held 3,747,471, 3,931,354,
and 3,713,139 shares of Pinnacle West common stock in the Pinnacle West
Stock Fund at December 31, 1995, 1994, and 1993, respectively. Employer
cash contributions were $6,747,587, $6,552,535, and $6,224,933 in 1995,
1994, and 1993, respectively. The Plans made investments in Pinnacle
West common stock of $3,274,433, $10,533,406, and $4,992,235 in 1995,
1994, and 1993, respectively, and had sales of $7,459,282, $7,339,602,
and $4,356,695, with an aggregate cost of $5,906,404, $6,646,030, and
$3,390,376 in 1995, 1994, and 1993, respectively.
Index Fund - The Plans made investments in the Trustee's Index
Fund of $11,841,434, $5,251,808, and $6,331,838 in 1995, 1994, and 1993,
respectively, and had sales of $3,804,238, $8,197,947, and $1,603,493
with an aggregate cost of $2,642,976, $6,312,498, and $1,205,783 in
1995, 1994, and 1993, respectively.
Temporary Investments - The Plans made investments in temporary
investment funds managed by the Trustee of $51,411,186, $44,448,076, and
$40,690,552 in 1995, 1994, and 1993, respectively, and had sales with
proceeds of $55,197,746, $48,088,440, and $36,519,689 during those same
periods. The temporary investments are bought and sold at par.
-13-
<PAGE>
Exhibits Filed.
- ---------------
Exhibit No. Description
- ----------- -----------
23.1 Independent Auditors' Consent
-14-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Administrative Committee of the Pinnacle West Plan has duly caused
this annual report to be signed on its behalf by the undersigned hereunto duly
authorized.
THE SAVINGS PLAN FOR EMPLOYEES OF
PINNACLE WEST CAPITAL CORPORATION
(Name of Plan)
DATE: June 2_, 1996 By: /s/ Faye Widenmann
----------------------------------
Faye Widenmann
Vice President
and Member of the Administrative
Committee of the Pinnacle West Plan
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Post-Effective Amendment No. 2
to Registration Statement No. 33-10442 of Pinnacle West Capital Corporation on
Form S-8 of our report dated June 14, 1996 appearing in this Annual Report on
Form 11-K of The Savings Plan for Employees of Pinnacle West Capital Corporation
for the year ended December 31, 1995.
DELOITTE & TOUCHE LLP
Phoenix, Arizona
June 27, 1996
