EX-99.7 9 ex99-7.txt EARNINGS VARIANCE EXPLANATIONS Exhibit 99.7 Last Updated 7/23/2002 Pinnacle West Capital Corporation Earnings Variance Explanations For Periods Ended June 30, 2002 and 2001 This discussion explains the changes in our earnings for the three, six and twelve months ended June 30, 2002 and 2001. Consolidated income statements for the three, six and twelve months ended June 30, 2002 and 2001 follow this discussion. We will file our Quarterly Report on Form 10-Q on or before August 14, 2002. We suggest this section be read in connection with the Pinnacle West Capital Corporation Annual Report on Form 10-K for the fiscal year ended December 31, 2001. Additional operating and financial statistics and a glossary of terms are available on our website (www.pinnaclewest.com). EARNINGS CONTRIBUTIONS BY SUBSIDIARY The following table summarizes net income for the three, six and twelve months ended June 30, 2002 and the comparable prior-year periods for Pinnacle West and each of our subsidiaries (dollars in millions):
Three Months Ended Six Months Ended Twelve Months Ended June 30, June 30, June 30, 2002 2001 2002 2001 2002 2001 ------ ------ ------ ------ ------ ------ (unaudited) (unaudited) (unaudited) ------------------ ------------------ ------------------- Arizona Public Service (APS) $ 64 $ 70 $ 96 $ 134 $ 243 $ 312 APS Energy Services (APSES) 11 -- 13 (7) 11 (17) SunCor 8 -- 10 -- 13 6 Pinnacle West Energy 1 1 2 1 19 -- El Dorado (3) -- (3) -- (3) (14) Parent company (a) (6) (4) 11 1 44 1 ------ ------ ------ ------ ------ ------ Income before accounting change 75 67 129 129 327 288 Cumulative effect of change in accounting - net of income taxes -- -- -- (3) (12) (3) ------ ------ ------ ------ ------ ------ Net income $ 75 $ 67 $ 129 $ 126 $ 315 $ 285 ====== ====== ====== ====== ====== ======
---------- (a) These amounts primarily include marketing and trading activities. APS amounts also included some marketing and trading activities in 2001, although APS completed the transition of such activities to the parent company in 2001. BUSINESS SEGMENTS We have two principal business segments (determined by products, services and the regulatory environment), which consist of our regulated retail electricity business, regulated traditional wholesale electricity business, and related activities (electric retail business segment) and our competitive business activities (marketing and trading business segment). Our retail business segment currently includes activities related to electricity transmission and distribution, as well as electricity generation. Our marketing and trading business segment currently includes activities related to wholesale marketing and trading and APSES' competitive energy services. The other amounts include activities related to SunCor and El Dorado. The following table summarizes net income by business segment for the three, six and twelve months ended June 30, 2002 and the comparable prior year periods (dollars in millions):
Three Months Ended Six Months Ended Twelve Months Ended June 30, June 30, June 30, 2002 2001 2002 2001 2002 2001 ------ ------ ------ ------ ------ ------ (unaudited) (unaudited) (unaudited) ------------------ ------------------ ------------------- Retail $ 61 $ 11 $ 93 $ 14 $ 231 $ 152 Marketing and trading 9 56 29 114 86 143 Other 5 -- 7 1 10 (7) ------ ------ ------ ------ ------ ------ Income before accounting change 75 67 129 129 327 288 Cumulative effect of change in accounting - net of income taxes -- -- -- (3) (12) (3) ------ ------ ------ ------ ------ ------ Net income $ 75 $ 67 $ 129 $ 126 $ 315 $ 285 ====== ====== ====== ====== ====== ======
We recorded the cumulative effects of a change in accounting for derivatives related to our adoption in 2001 of Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities." EARNINGS VARIANCE EXPLANATIONS Throughout these explanations, we refer to "gross margin." With respect to our electric retail segment and marketing and trading segment, gross margin refers to electric operating revenues less purchased power and fuel costs. Real estate gross margin refers to real estate revenues less real estate operations costs. OPERATING RESULTS - THREE-MONTH PERIOD ENDED JUNE 30, 2002 COMPARED WITH THREE-MONTH PERIOD ENDED JUNE 30, 2001 Our consolidated net income for the three months ended June 30, 2002 was $75 million compared with $67 million for the same period in the prior year. The period-to-period increase was primarily the result of increased earnings contributions from our regulated retail electricity and real estate operations that were partially offset by lower earnings contributions from our marketing and trading activities. The retail comparison was favorably impacted by lower replacement costs for power plant outages, lower costs for purchased power and gas related to lower market prices, customer growth and higher average usage per customer, partially offset by the effects of milder weather. The real estate results benefited primarily from more sales activities. The comparison for marketing and trading activities reflects lower volumes and prices in the wholesale power markets in the western United States. 2 The major factors that increased (decreased) net income were as follows (dollars in millions):
Increase (Decrease) ---------- Electric retail segment gross margin: Lower replacement power costs for plant outages due to lower market prices and fewer unplanned outages $ 58 Lower purchased power and fuel costs related to lower prices, net of hedge management sales 46 Effects of milder weather on retail sales (16) Higher retail sales volumes due to customer growth and higher average usage, excluding weather effects 12 Retail price reductions effective July 1, 2001 (7) Miscellaneous factors - net (5) ---- Net increase in electric retail segment gross margin 88 ---- Marketing and trading segment gross margin: Decrease in generation sales other than native load due to lower market prices and resulting lower sales volumes (26) Decrease in other realized marketing and trading in the current period primarily due to lower unit margins on increased volumes (6)(a) Change in prior period mark-to-market gains on contracts delivered during the current period (b) (14)(a) Lower mark-to-market gains for future period deliveries (b) (33) ---- Net decrease in marketing and trading gross margin (79) ---- Total increase in the electric retail and the marketing and trading segments' gross margins 9 Higher real estate gross margin primarily due to increased sales activities 13 Lower operations and maintenance expense primarily related to lower generation reliability costs partially offset by higher other costs 3 Lower depreciation and amortization expense primarily related to lower regulatory asset amortization 4 Lower net other income (11) Miscellaneous items, net (4) ---- Increase in income before income taxes 14 Higher income taxes primarily due to higher pretax income (6) ---- Increase in net income $ 8 ====
---------- (a) Net marketing and trading gains (excluding the effects of generation sales other than native load) recognized for the current period decreased $20 million. (b) Essentially all of our marketing and trading activities are structured activities. This means our portfolio of forward sales positions is economically hedged with a portfolio of forward purchases that protects the economic value of the sales transactions. 3 ELECTRIC RETAIL SEGMENT GROSS MARGIN Revenues related to our regulated retail and wholesale electricity businesses were $242 million lower in the three-month period ended June 30, 2002, compared to the same period in the prior year as a result of: * decreased revenues related to traditional wholesale sales as a result of lower sales volumes and lower prices ($54 million); * decreased revenues related to retail load hedge management wholesale sales, as a result of lower sales volumes and lower prices ($171 million); * decreased retail revenues related to milder weather ($26 million); * increased retail revenues related to customer growth and higher average usage, excluding weather effects ($21 million); * decreased retail revenues related to a reduction in retail electricity prices ($7 million); and * other miscellaneous factors ($5 million net decrease). Electric retail segment purchased power and fuel costs were $330 million lower in the three-month period ended June 30, 2002, compared to the same period in the prior year as a result of: * decreased costs related to traditional wholesale sales as a result of lower sales volumes and lower prices ($54 million); * decreased costs related to lower prices for hedged natural gas and purchased power ($217 million); * decreased costs related to the effects of milder weather on retail sales ($10 million); * increased costs related to retail sales growth excluding weather effects ($9 million); and * decreased replacement power costs for power plant outages due to lower market prices and fewer unplanned outages ($58 million). MARKETING AND TRADING SEGMENT GROSS MARGIN Marketing and trading segment revenues were $373 million lower in the three-month period ended June 30, 2002, compared to the same period in the prior year as a result of: * decreased revenues from generation sales other than native load due to lower market prices and resulting lower sales volumes ($49 million); * decreased realized revenues from other realized marketing and trading in the current period primarily due to lower prices ($277 million); * change in prior period mark-to-market gains on contracts delivered during the current period due to higher volumes being delivered ($13 million decrease); and * lower mark-to-market gains for future period deliveries primarily as a result of lower market liquidity and lower price volatility, resulting in lower volumes ($34 million). Marketing and trading segment purchased power and fuel costs were $294 million lower in the three-month period ended June 30, 2002, compared to the same period in the prior year as a result of: 4 * decreased fuel costs related to generation sales other than native load primarily because of lower sales volumes and lower natural gas prices ($23 million); and * decreased purchased power costs related to other realized marketing and trading in the current period primarily due to lower prices ($271 million). The increase in real estate gross margin of $13 million was primarily due to increased sales activities. The decrease in operations and maintenance expense of $3 million was due to lower costs related to generation reliability, plant outages and maintenance costs. Operations and maintenance expense was also lower as a result of the reversal of $4 million of a $10 million reserve for the California energy situation. These factors were partially offset with increased employee and other costs. The decrease in depreciation and amortization expense of $4 million primarily related to lower regulatory asset amortization, in accordance with APS' 1999 regulatory settlement, partially offset by increased depreciation on higher plant balances. Net other income (expense) decreased $11 million primarily due to an insurance recovery recorded in the prior period related to environmental remediation costs and losses recorded on El Dorado's investments in the current period, partially offset by lower miscellaneous non-operating costs. OPERATING RESULTS - SIX-MONTH PERIOD ENDED JUNE 30, 2002 COMPARED WITH SIX-MONTH PERIOD ENDED JUNE 30, 2001 Our consolidated net income for the six months ended June 30, 2002 was $129 million compared with $126 million for the same period in the prior year. We recognized a $3 million after-tax loss in the six months ended June 30, 2001 as a cumulative effect of a change in accounting for derivatives, as required by SFAS No.133. Our income before accounting change for the six months ended June 30, 2002 and 2001 was $129 million in both periods. The period-to-period activity was the result of increased earnings contributions from our regulated retail electricity and real estate operations that were partially offset by lower earnings contributions from our marketing and trading activities. The retail comparison was favorably impacted by lower replacement costs for power plant outages, lower costs for purchased power and gas related to lower market prices, customer growth and higher average usage per customer, partially offset by the effects of milder weather and a retail electricity price decrease. The real estate results benefited primarily from more sales activities. The comparison for marketing and trading activities reflects lower volumes and prices in the wholesale power markets in the western United States. 5 The major factors that increased (decreased) income before accounting change were as follows (dollars in millions):
Increase (Decrease) ---------- Electric retail segment gross margin: Lower replacement power costs for plant outages due to lower market prices and fewer unplanned outages $ 108 Lower purchased power and fuel costs related to lower prices, net of hedge management sales 36 Effects of milder weather on retail sales (22) Higher retail sales volumes due to customer growth and higher average usage, excluding weather effects 17 Retail price reductions effective July 1, 2001 (13) Miscellaneous factors - net (3) ----- Net increase in electric retail segment gross margin 123 ----- Marketing and trading segment gross margin: Decrease in generation sales other than native load due to lower market prices and resulting lower sales volumes (71) Increase in other realized marketing and trading in the current period primarily due to higher unit margins on increased volumes 31(a) Change in prior period mark-to-market gains on contracts delivered during the current period (b) (45)(a) Lower mark-to-market gains for future period deliveries (b) (61) ----- Net decrease in marketing and trading gross margin (146) ----- Total decrease in the electric retail and the marketing and trading segments' gross margins (23) Higher real estate gross margin primarily due to increased sales activities 15 Lower operations and maintenance expense primarily related to lower generation reliability costs partially offset by higher other costs 11 Lower depreciation and amortization primarily due to lower regulatory asset amortization 9 Lower net other income (9) Miscellaneous items, net (3) ----- Change in income before income taxes -- Change in income taxes -- ----- Change in income before accounting change $ -- =====
---------- (a) Net marketing and trading gains (excluding the effects of generation sales other than native load) recognized for the current period decreased $14 million. (b) Essentially all of our marketing and trading activities are structured activities. This means our portfolio of forward sales positions is economically hedged with a portfolio of forward purchases that protects the economic value of the sales transactions. 6 ELECTRIC RETAIL SEGMENT GROSS MARGIN Revenues related to our regulated retail and wholesale electricity businesses were $275 million lower in the six-month period ended June 30, 2002, compared to the same period in the prior year as a result of: * decreased revenues related to traditional wholesale sales as a result of lower sales volumes and lower prices ($79 million); * decreased revenues related to retail load hedge management wholesale sales, as a result of lower sales volumes and lower prices ($174 million); * decreased retail revenues related to milder weather ($35 million); * increased retail revenues related to customer growth and higher average usage, excluding weather effects ($29 million); * decreased retail revenues related to a reduction in retail electricity prices ($13 million); and * other miscellaneous factors ($3 million net decrease). Electric retail segment purchased power and fuel costs were $398 million lower in the six-month period ended June 30, 2002, compared to the same period in the prior year as a result of: * decreased costs related to traditional wholesale sales as a result of lower sales volumes and lower prices ($79 million); * decreased costs related to lower prices for hedged natural gas and purchased power ($210 million); * decreased costs related to the effects of milder weather on retail sales ($13 million); * increased costs related to retail sales growth, excluding weather effects ($12 million); and * decreased replacement power costs for power plant outages due to lower market prices and fewer unplanned outages ($108 million). MARKETING AND TRADING SEGMENT GROSS MARGIN Marketing and trading segment revenues were $667 million lower in the six-month period ended June 30, 2002, compared to the same period in the prior year as a result of: * decreased revenues from generation sales other than native load due to lower market prices and resulting lower sales volumes ($128 million); * decreased revenues from other realized marketing and trading in the current period primarily due to lower prices ($441 million); * change in prior period mark-to-market gains on contracts delivered during the current period due to higher volumes being delivered ($37 million decrease); and * lower mark-to-market gains for future period deliveries primarily as a result of lower market liquidity and lower price volatility, resulting in lower volumes ($61 million). Marketing and trading segment purchased power and fuel costs were $521 million lower in the six-month period ended June 30, 2002, compared to the same period in the prior year as a result of: 7 * decreased fuel costs related to generation sales other than native load primarily because of lower sales volumes and lower natural gas prices ($57 million); * decreased purchased power costs related to other realized marketing and trading in the current period primarily due to lower prices ($472 million); and * change in prior period mark-to-market fuel costs for current period deliveries ($8 million net increase). The increase in real estate gross margin of $15 million was primarily due to increased sales activities. The decrease in operations and maintenance expense of $11 million was primarily due to lower costs related to generation reliability, plant outages and maintenance costs. Operation and maintenance expense was also lower as a result of the reversal of $4 million of a $10 million reserve recorded in the prior period for the California energy situation. These decreases were partially offset by increased employee benefit and other costs. The decrease in depreciation and amortization expense of $9 million primarily related to lower regulatory asset amortization, in accordance with APS' 1999 regulatory settlement, partially offset by increased depreciation on higher plant balances. Net other income (expense) decreased $9 million primarily due to an insurance recovery recorded in the prior period related to environmental remediation costs and losses recorded on El Dorado's investments in the current period, partially offset by lower miscellaneous non-operating costs. OPERATING RESULTS - TWELVE-MONTH PERIOD ENDED JUNE 30, 2002 COMPARED WITH TWELVE-MONTH PERIOD ENDED JUNE 30, 2001 Our consolidated net income for the twelve months ended June 30, 2002 was $315 million compared with $285 million for the same period in the prior year. We recognized a $12 million after-tax loss in the twelve months ended June 30, 2002 and a $3 million after-tax loss in the twelve months ended June 30, 2001 as cumulative effects of a change in accounting for derivatives, as required by SFAS No.133. Our income before accounting change for the twelve months ended June 30, 2002 was $327 million compared with $288 million for the same period a year earlier. The period-to-period comparison benefited from increased earnings contributions from our regulated retail electricity and real estate operations that were partially offset by lower earnings contributions from our marketing and trading activities and higher operations and maintenance expenses. The retail comparison was favorably impacted by lower replacement costs for power plant outages, lower costs for purchased power and gas related to lower market prices, customer growth and higher average usage per customer, partially offset by the effects of milder weather and a retail electricity price decrease. The real estate results benefited primarily from more sales activities. The comparison for marketing and trading activities reflects lower volumes and prices in the wholesale power markets in the western United States. 8 The major factors that increased (decreased) income before accounting change were as follows (dollars in millions):
Increase (Decrease) ---------- Electric retail segment gross margin: Lower replacement power costs for plant outages due to lower market prices and fewer unplanned outages $ 126 Lower purchased power and fuel costs related to lower prices, net of hedge management sales 33 Effects of milder weather on retail sales (9) Higher retail sales volumes due to customer growth and higher average usage, excluding weather effects 27 Retail price reductions effective July 1, 2001 (28) Miscellaneous factors - net (1) ----- Net increase in electric retail segment gross margin 148 ----- Marketing and trading segment gross margin: Decrease in generation sales other than native load due to lower market prices and resulting lower sales volumes (112) Increase in other realized marketing and trading in the current period primarily due to higher unit margins on increased volumes 72(a) Change in prior period mark-to-market gains on contracts delivered during the current period (b) (88)(a) Higher mark-to-market gains for future period deliveries (b) 36 ----- Net decrease in marketing and trading gross margin (92) ----- Total increase in the electric retail and the marketing and trading segments' gross margins 56 Higher real estate gross margin primarily due to increased sales activities 16 Higher operations and maintenance expense primarily related to higher generation reliability costs partially offset by lower other costs (29) Lower depreciation and amortization primarily due to lower regulatory asset amortization 12 Lower losses in net other income primarily related to El Dorado 11 Lower net interest expense primarily due to higher capitalized interest 7 Miscellaneous items, net (5) ----- Increase in income before income taxes 68 Lower income taxes primarily due to lower income (29) ----- Increase in income before accounting change $ 39 =====
---------- (a) Net marketing and trading gains (excluding the effects of generation sales other than native load) recognized for the current period decreased $16 million. (b) Essentially all of our marketing and trading activities are structured activities. This means our portfolio of forward sales positions is economically hedged with a portfolio of forward purchases that protects the economic value of the sales transactions. 9 ELECTRIC RETAIL SEGMENT GROSS MARGIN Revenues related to our regulated retail and wholesale electricity businesses were $477 million lower in the twelve-month period ended June 30, 2002, compared to the same period in the prior year as a result of: * decreased revenues related to traditional wholesale sales as a result of lower sales volumes and lower prices ($177 million); * decreased revenues related to wholesale sales, as a result of lower sales volumes and lower prices ($301 million); * decreased retail revenues related to milder weather ($14 million); * increased retail revenues related to customer growth and higher average usage, excluding weather effects ($44 million); * decreased retail revenues related to a reduction in retail electricity prices ($28 million); and * other miscellaneous factors ($1 million net decrease). Electric retail segment purchased power and fuel costs were $625 million lower in the twelve-month period ended June 30, 2002, compared to the same period in the prior year as a result of: * decreased costs related to traditional wholesale sales as a result of lower sales volumes and lower prices ($177 million); * decreased costs related to lower prices for hedged natural gas and purchased power prices ($331 million); * decreased costs related to the effects of milder weather on retail sales ($5 million); * increased costs related to retail sales growth, excluding weather effects ($17 million); * decreased replacement power costs for power plant outages due to lower market prices and fewer unplanned outages ($126 million); and * miscellaneous factors ($3 million net decrease). MARKETING AND TRADING SEGMENT GROSS MARGIN Marketing and trading segment revenues were $616 million lower in the twelve-month period ended June 30, 2002, compared to the same period in the prior year as a result of: * decreased revenues from generation sales other than native load due to lower market prices and resulting lower sales volumes ($212 million); * decreased revenues from other realized marketing and trading in the current period primarily due to lower prices ($359 million); * change in prior period mark-to-market gains on contracts delivered during the current period due to higher volumes being delivered ($80 million decrease); and * higher mark-to-market gains for future period deliveries primarily as a result of greater market liquidity and greater price volatility, resulting in higher volumes ($35 million). 10 Marketing and trading segment purchased power and fuel costs were $524 million lower in the twelve-month period ended June 30, 2002, compared to the same period in the prior year as a result of: * decreased fuel costs related to generation sales other than native load primarily because of lower sales volumes and lower natural gas prices ($100 million); * decreased purchased power costs related to other realized marketing and trading in the current period primarily due to lower prices ($431 million); * change in prior period mark-to-market fuel costs for current period deliveries related to accounting for derivatives ($8 million increase); and * other miscellaneous factors ($1 million decrease). The increase in real estate gross margin of $16 million was primarily due to increased sales activities. The increase in operations and maintenance expense of $29 million was primarily due to higher costs related to generation reliability, plant outages and maintenance costs. Operations and maintenance expense was also higher due to increased employee benefit and other costs. These factors were partially offset as a result of the reversal of $4 million of a $10 million reserve recorded in the prior period for the California energy situation. The decrease in depreciation and amortization expenses of $12 million primarily related to lower regulatory asset amortization, in accordance with APS' 1999 regulatory settlement, partially offset by increased depreciation on higher plant balances. Net other income (expense) improved $11 million primarily due to lower losses recorded on El Dorado's investments in the current period than in the prior period. These reductions were partially offset by the effects of an insurance recovery recorded in the prior period related to environmental remediation costs. Net interest expense decreased $7 million primarily because of the increase in capitalized interest on our generation expansion program and the effects of lower interest rates. These reductions in net interest expense more than offset the increase in interest expense on higher debt balances primarily related to our generation expansion program. 11 PINNACLE WEST CAPITAL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited) (in thousands, except per share amounts)
Three Months Ended June 30, 2002 2001 ----------- ----------- Operating Revenues Electric retail segment $ 496,840 $ 739,317 Marketing and trading segment 148,946 522,041 Real estate 69,152 32,454 ----------- ----------- Total 714,938 1,293,812 ----------- ----------- Operating Expenses Electric retail segment purchased power and fuel 104,590 434,822 Marketing and trading segment purchased power and fuel 129,927 423,935 Operations and maintenance 128,996 132,139 Real estate operations 56,213 32,437 Depreciation and amortization 102,087 106,129 Taxes other than income taxes 27,632 25,462 ----------- ----------- Total 549,445 1,154,924 ----------- ----------- Operating Income 165,493 138,888 ----------- ----------- Other Income (Expense) (7,693) 3,237 ----------- ----------- Interest Expense Interest charges 46,996 43,823 Capitalized interest (14,005) (12,527) ----------- ----------- Total 32,991 31,296 ----------- ----------- Income Before Income Taxes 124,809 110,829 Income Taxes 49,444 43,972 ----------- ----------- Net Income $ 75,365 $ 66,857 =========== =========== Weighted-Average Common Shares Outstanding - Basic 84,794 84,744 Weighted-Average Common Shares Outstanding - Diluted 84,926 85,042 Earnings Per Weighted-Average Common Share Outstanding Net Income - Basic $ 0.89 $ 0.79 Net Income - Diluted 0.89 0.79
12 PINNACLE WEST CAPITAL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited) (in thousands, except per share amounts)
Six Months Ended June 30, 2002 2001 ----------- ----------- Operating Revenues Electric retail segment $ 877,079 $ 1,152,124 Marketing and trading segment 348,479 1,015,728 Real estate 110,337 64,789 ----------- ----------- Total 1,335,895 2,232,641 ----------- ----------- Operating Expenses Electric retail segment purchased power and fuel 166,122 564,449 Marketing and trading segment purchased power and fuel 289,431 810,732 Operations and maintenance 246,426 257,389 Real estate operations 93,571 63,445 Depreciation and amortization 202,000 210,910 Taxes other than income taxes 54,390 50,765 ----------- ----------- Total 1,051,940 1,957,690 ----------- ----------- Operating Income 283,955 274,951 ----------- ----------- Other Income (Expense) (6,605) 2,499 ----------- ----------- Interest Expense Interest charges 91,684 86,572 Capitalized interest (28,128) (22,954) ----------- ----------- Total 63,556 63,618 ----------- ----------- Income Before Income Taxes 213,794 213,832 Income Taxes 84,672 84,770 ----------- ----------- Income Before Accounting Change 129,122 129,062 Cumulative Effect of a Change in Accounting for Derivatives - Net of Income Tax Benefit of $1,793 -- (2,755) ----------- ----------- Net Income $ 129,122 $ 126,307 =========== =========== Weighted-Average Common Shares Outstanding - Basic 84,769 84,736 Weighted-Average Common Shares Outstanding - Diluted 84,910 85,005 Earnings Per Weighted-Average Common Share Outstanding Income Before Accounting Change - Basic $ 1.52 $ 1.52 Net Income - Basic 1.52 1.49 Income Before Accounting Change - Diluted 1.52 1.52 Net Income - Diluted 1.52 1.49
13 PINNACLE WEST CAPITAL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited) (in thousands, except per share amounts)
Twelve Months Ended June 30, 2002 2001 ----------- ----------- Operating Revenues Electric retail segment $ 2,287,043 $ 2,764,355 Marketing and trading segment 1,153,128 1,768,905 Real estate 214,456 144,891 ----------- ----------- Total 3,654,627 4,678,151 ----------- ----------- Operating Expenses Electric retail segment purchased power and fuel 762,536 1,387,776 Marketing and trading segment purchased power and fuel 982,054 1,505,521 Operations and maintenance 519,132 489,810 Real estate operations 183,588 130,473 Depreciation and amortization 418,993 430,839 Taxes other than income taxes 104,693 99,543 ----------- ----------- Total 2,970,996 4,043,962 ----------- ----------- Operating Income 683,631 634,189 ----------- ----------- Other Income (Expense) (14,869) (26,364) ----------- ----------- Interest Expense Interest charges 180,934 171,418 Capitalized interest (53,036) (35,957) ----------- ----------- Total 127,898 135,461 ----------- ----------- Income Before Income Taxes 540,864 472,364 Income Taxes 213,437 184,941 ----------- ----------- Income Before Accounting Change 327,427 287,423 Cumulative Effect of a Change in Accounting for Derivatives - Net of Income Tax Benefits of $8,099 and $1,793 (12,446) (2,755) ----------- ----------- Net Income $ 314,981 $ 284,668 =========== =========== Weighted-Average Common Shares Outstanding - Basic 84,734 84,736 Weighted-Average Common Shares Outstanding - Diluted 84,888 85,007 Earnings Per Weighted-Average Common Share Outstanding Income Before Accounting Change - Basic $ 3.86 $ 3.39 Net Income - Basic 3.72 3.36 Income Before Accounting Change - Diluted 3.86 3.38 Net Income - Diluted 3.71 3.35
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