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Form 11-K PINNACLE WEST CAPITAL For: Dec 31

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June 9, 2016 4:10 PM EDT
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 11-K
 
FOR ANNUAL REPORTS OF EMPLOYEE STOCK PURCHASE, SAVINGS
AND SIMILAR PLANS PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 
(Mark One)
ý
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
 
For the fiscal year ended December 31, 2015
 
OR
 
o
TRANSITION REPORT PURSUANT TO 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
 
For the transition period from                             to                            
 
Commission file number  1-8962
 
The Pinnacle West Capital Corporation Savings Plan
(Full title of the plan)
 
Pinnacle West Capital Corporation
(Name of issuer)
 
400 North Fifth Street
P.O. Box 53999
Phoenix, Arizona 85072-3999
(Address of issuer’s principal executive office)



THE PINNACLE WEST CAPITAL CORPORATION SAVINGS PLAN
 
TABLE OF CONTENTS
 
 
NOTE:  Supplemental schedules required by section 2520.103-10 of the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974, other than the schedule listed above, are omitted because of the absence of the conditions under which they are required.



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
To the Investment Committee of
The Pinnacle West Capital Corporation Savings Plan
Phoenix, Arizona
 
We have audited the accompanying statements of net assets available for benefits of The Pinnacle West Capital Corporation Savings Plan (the "Plan") as of December 31, 2015 and 2014, and the related statement of changes in net assets available for benefits for the year ended December 31, 2015.  These financial statements are the responsibility of the Plan's management.  Our responsibility is to express an opinion on these financial statements based on our audits.
 
We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The Plan is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan's internal control over financial reporting.  Accordingly, we express no such opinion.  An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.
 
In our opinion, such financial statements present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2015 and 2014, and the changes in net assets available for benefits for the year ended December 31, 2015 in conformity with accounting principles generally accepted in the United States of America.
 
The supplemental schedule of assets (held at end of year) as of December 31, 2015 has been subjected to audit procedures performed in conjunction with the audit of the Plan's financial statements. The supplemental schedule is the responsibility of the Plan's management. Our audit procedures included determining whether the supplemental schedule reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental schedule. In forming our opinion on the supplemental schedule, we evaluated whether the supplemental schedule, including its form and content, is presented in compliance with the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. In our opinion, the schedule is fairly stated, in all material respects, in relation to the financial statements as a whole.
 
/s/ DELOITTE & TOUCHE LLP
  
Phoenix, Arizona
June 9, 2016



THE PINNACLE WEST CAPITAL CORPORATION SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 2015 AND 2014
 
 
 
2015
 
2014
ASSETS:
 
 

 
 

Participant-directed Investments at fair value (Notes 2 and 5)
 
$
869,023,727

 
$
904,653,337

Participant-directed Investments at contract value (Notes 2 and 4)
 
144,365,278

 
156,834,698

Receivables:
 
 

 
 

Notes receivable from participants (Note 1)
 
24,650,322

 
25,642,627

Participant contributions
 
1,920,322

 
1,741,005

Employer contributions
 
598,657

 
528,680

Interest and other
 
420,426

 
787,266

Total receivables
 
27,589,727

 
28,699,578

Total assets
 
1,040,978,732

 
1,090,187,613

LIABILITIES:
 
 

 
 

Payable for securities purchased
 
31,522

 
1,361,480

Accrued administrative expenses
 
321,536

 
397,326

Total liabilities
 
353,058

 
1,758,806

NET ASSETS AVAILABLE FOR BENEFITS
 
$
1,040,625,674

 
$
1,088,428,807

 
See notes to financial statements.


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THE PINNACLE WEST CAPITAL CORPORATION SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2015
 
ADDITIONS:
 

 
 

Contributions (Note 1):
 

Participants
$
53,188,501

Employer
19,268,592

Rollover
4,535,287

Total contributions
76,992,380

 
 

Investment income (loss) (Note 2):
 

Dividend, interest, and other income
12,294,947

Net realized/unrealized (depreciation) in fair value of investments
(24,620,528
)
Total investment (loss)
(12,325,581
)
 
 

Interest income on notes receivable from participants
1,063,931

 
 

Total additions
65,730,730

 
 

DEDUCTIONS:
 

 
 

Distributions to participants
111,134,476

Administrative expenses (Note 2)
2,399,387

Total deductions
113,533,863

 
 

DECREASE IN NET ASSETS
(47,803,133
)
 
 

NET ASSETS AVAILABLE FOR BENEFITS:
 

 
 

Beginning of year
1,088,428,807

End of year
$
1,040,625,674

 
See notes to financial statements.


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THE PINNACLE WEST CAPITAL CORPORATION SAVINGS PLAN
 
NOTES TO FINANCIAL STATEMENTS

 
1.    DESCRIPTION OF THE PLAN
 
The following description of The Pinnacle West Capital Corporation Savings Plan (the "Plan") provides only general information.  Participants should refer to the Plan document for a more complete description of the Plan’s provisions.
 
General
 
The Plan is a defined contribution plan sponsored by Pinnacle West Capital Corporation ("Pinnacle West" or the "Company").  The Plan is administered by two committees, the Benefit Administration Committee and the Investment Management Committee, appointed by the Pinnacle West Board of Directors (together, the "Committee"). The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). The Trustee and recordkeeper for the Plan is Fidelity Management Trust Company ("Trustee").
 
The Trustee is the appointed investment manager of the Pinnacle West Stock Fund, which is an investment option in the Plan. As the appointed investment manager of this option, the Trustee (1) manages the liquidity of the Pinnacle West Stock Fund and (2) accepts direction regarding the voting of shares held in the Pinnacle West Stock Fund for which no proxies are received. The portion of the Plan invested in the Pinnacle West Stock Fund is an Employee Stock Ownership Plan. To the extent set forth by the terms of the Plan, participants may exercise voting rights by providing instructions to the Trustee related to the number of whole shares of stock represented by the units of the Pinnacle West Stock Fund allocated to their accounts. The Investment Management Committee directs the Trustee on voting proxies received for shares of Pinnacle West common stock on routine matters (for those shares for which the Trustee does not receive participant directions).
 
Eligibility
 
Generally, as defined by the Plan, most active employees of Pinnacle West and its subsidiaries, including Arizona Public Service Company, El Dorado Investment Company and Bright Canyon Energy Corporation (collectively, the "Employer"), are eligible to participate in (1) the pretax, Roth 401(k), and after-tax features of the Plan immediately upon employment or, if later, their attainment of age 18 and (2) the matching feature on the first day of the month following their attainment of age 18 and completion of six months of service.

Contributions
 
The Plan allows participants to contribute up to 50% of their base pay as pretax contributions, Roth 401(k) contributions or after-tax contributions, provided that in no event can the combined total contributions made by any participant in any year exceed 50% of their base pay, or the limits imposed by the Internal Revenue Code.  Eligible employees who do not affirmatively elect to participate or opt out of the Plan are automatically enrolled as soon as administratively possible after 60 days of employment.  Employees automatically enrolled contribute 3% of their base pay as pretax contributions.  The Plan also allows participants attaining the age of 50 before the end of the calendar year to make catch-up contributions in accordance with Section 414(v) of the Internal Revenue Code. The maximum allowable pretax contribution

4

($18,000 for 2015) and catch—up contribution ($6,000 for 2015) may increase in future years as determined annually by the Internal Revenue Service.  Participants may elect to set their pretax contributions to increase automatically on an annual basis based on the percent increase and effective date designated by the participant, up to the maximum limits permitted under the Plan and the Internal Revenue Code.
 
Employer contributions are fixed at 75% of the first 6% of base pay for combined pretax and/or Roth 401(k) participant contributions (excluding catch-up contributions) for all participants other than employees hired prior to January 1, 2003 and who elected not to participate in the Retirement Account Balance feature of the Pinnacle West Capital Corporation Retirement Plan. Participants hired prior to January 1, 2003, and who elected not to participate in the Retirement Account Balance feature receive an Employer match of 50% on the first 6% of base pay contributed, in combination, as pretax and/or Roth 401(k) participant contributions (excluding catch-up contributions).
 
Employer contributions are invested in the same investment funds as participants elect for their participant contributions.  Noncash contributions, if any, are recorded at fair value.
 
The Plan allows rollover contributions from other eligible retirement plans, including 401(k) or other qualified plans (including after-tax dollars), governmental 457(b) plans, Roth 401(k) accounts, 403(b) annuities (including after-tax dollars), or IRAs (excluding after-tax dollars), subject to certain criteria. Rollover contributions are not eligible for company match.
 
Participants may elect to receive dividends on Pinnacle West stock in their account in the form of cash.  If a participant does not elect to receive the dividend in the form of cash prior to the dividend payable date for that dividend, it is automatically reinvested in the Pinnacle West Stock Fund.

Participant Accounts
 
Individual accounts are maintained for each Plan participant.  Allocations of earnings and losses are based on participant account balances.  Each participant has separate accounts that are credited with the participant’s pretax, Roth 401(k), after-tax contributions, rollover contributions (if any), in-plan Roth conversions (if any), the Employer’s matching contributions and an allocation of Plan earnings.  Each participant’s account is charged with withdrawals, an allocation of Plan losses and explicit recordkeeping and administrative fees (See Note 2).  A dollar amount is deducted quarterly from each participant’s account for the explicit recordkeeping and administrative fees.  The benefit to which a participant is entitled is the portion of the participant’s account that has vested, as defined below.
 
Investment Choices
 
Participants direct all contributions into one or more of the following (collectively, the "Funds"): 
 
•Age-based investment options ("Target Retirement Date Funds")* that include:
•Retirement Income Fund
•Target Retirement 2010 Fund
•Target Retirement 2015 Fund
•Target Retirement 2020 Fund
•Target Retirement 2025 Fund
•Target Retirement 2030 Fund
•Target Retirement 2035 Fund
•Target Retirement 2040 Fund
•Target Retirement 2045 Fund

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•Target Retirement 2050 Fund
•Target Retirement 2055 Fund
•Target Retirement 2060 Fund

•Core investment options that include:
•Stable Value Fund*
•US Bond Index
•Bond Fund*
•Diversified Inflation Fund
•US Large Cap Stock Index
•US Large Cap Stock Fund*
•US Small/Mid Cap Stock Index
•US Small/Mid Cap Stock Fund*
•Non-US Stock Index
•Non-US Stock Fund
•Pinnacle West Stock Fund*

* Separately managed accounts, specific to this Plan only.

The Plan provides that in lieu of making their own investment elections in the funds, participants may (a) choose to have an investment allocation set for them through the Plan's personal asset manager program, which provides a personalized mix of the Plan's Core investment options; (b) allow their balance to be invested in the Qualified Default Investment Alternative ("QDIA") which is the family of Target Retirement Date Funds (that are separately managed accounts) that are composed of the Core investment options; (c) establish a self-directed brokerage account ("SDA") to invest up to 90% of their vested account balance in permitted investments of the SDA (which excludes the Funds); or (d) participants may elect to have their investment mix of Funds automatically rebalanced according to their future investment elections on a quarterly, semiannual or annual basis.

Notes Receivable from Participants
 
Participants may borrow money from their pretax contributions account, Roth 401(k) contributions account, vested Employer contributions account, rollover contributions account (if any), and in-plan Roth conversions (if any).  Participants may not borrow against their Employer transfer account or their after-tax contributions account.
 
The minimum participant loan allowed is $1,000. The maximum participant loan allowed 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 are up to five years or up to 15 years for the purchase of the participant’s principal residence.  An administrative fee is charged to the participant’s account for each loan.  Participants with an outstanding loan may continue to make loan repayments upon termination of employment with the Employer, unless they receive a full distribution of their account balance.
 
The interest rate for a participant loan is determined at the time the loan is requested and is fixed for the life of the loan.  The interest rate will be at least as great as the interest rate charged by the Trustee to its individual clients for an unsecured loan on the date the loan is made.  The Trustee currently charges interest at the prime interest rate plus one percent, determined as of the first business day of the month in which the loan is issued.  The interest rate for loans issued during 2015 was 4.25%.  Interest rates for outstanding loans as of

6

December 31, 2015 and 2014, ranged from 4.25% to 10.50%.  As of December 31, 2015, participant loans have maturities through 2031.
 
Loans are treated as an investment of the participant’s accounts.  To fund the loan, transfers are made from the participant’s investment funds on a pro-rata basis.  Amounts credited to a participant’s SDA are not available for a loan.  Loan repayments are invested in the participant’s investment funds based on the participant’s current investment election or in the QDIA, if the participant does not have a current investment election in place.  Loan repayments, including interest, are generally made through irrevocable payroll deductions.  Loan repayments for former participants are made through the automated clearing house system.  Loans are secured by the participant’s account balance.
 
Vesting
 
Each participant is automatically fully vested in the participant’s pretax contributions account, Roth 401(k) contributions account, after-tax contributions account, rollover contributions account (if any), in-plan Roth conversions (if any) (consisting of the participant’s contributions and related income and appreciation or depreciation), Employer transfer account, and Employer contributions account (consisting of Employer contributions and related income and appreciation or depreciation).  Former participants who terminated employment prior to April 1, 2006 were fully vested in their Employer contributions account if their termination was due to death or disability, was after attaining age 65, or was after completing five years of participation in the Plan.  Former participants who terminated prior to April 1, 2006 and returned to service after that date could complete the five year requirement by no later than March 31, 2016, based on a graduated vesting schedule with 100% vesting after five years of service.
 
Withdrawals and Distributions
 
A participant may at any time make a full or partial withdrawal of the balance in the participant’s after-tax contributions account, rollover contributions account (if any), and in-plan Roth conversions (if any).  No withdrawals prior to termination of employment are permitted from a participant’s Employer transfer account.  No withdrawals prior to termination of employment are permitted from the participant’s pretax contributions account and Roth 401(k) contributions account, except under certain limited circumstances relating to financial hardship or after attaining age 59-1/2.  If an employee withdraws pretax or Roth 401(k) contributions due to financial hardship, the only earnings on pretax contributions that can be withdrawn are those credited prior to January 1, 1989, and no earnings on Roth 401(k) contributions can be withdrawn.  Employees taking a financial hardship are subsequently suspended from making contributions to the Plan for six months.  Participants who have participated in the Plan for five complete Plan years may withdraw the amount in their Employer contributions account.  Participants who are at least age 59-1/2 may withdraw any portion of their pretax contributions account, Roth 401(k) contributions account, rollover contributions account (if any), or in-plan Roth conversions (if any) while employed with no restrictions on the reason for withdrawal, and penalties do not apply.  Amounts credited to a participant’s SDA are not available for a withdrawal until transferred back into the Funds.  When the participant’s employment with the Employer is terminated, the participant can elect to receive a full or partial distribution, as soon as administratively possible, of the vested portion of their Employer contributions account together with the participant’s contributions accounts and Employer transfer account.

Forfeitures
 
For former participants who terminated employment prior to April 1, 2006, forfeitures of non-vested Employer contributions occurred upon the earlier of full distribution following termination of employment with the Employer or the end of the fifth calendar year following the calendar year in which the participant

7

terminated employment.  If a former participant who received a distribution and terminated service prior to full vesting at March 31, 2011, and retained non-vested funds in the plan, becomes re-employed prior to the end of the fifth calendar year following the calendar year in which the participant’s earlier termination of employment occurred, the forfeited Employer contributions will be restored to the participant’s Employer contribution account and they will earn additional service and be subject to the graduated vesting on these funds.  Forfeitures will be restored only if the participant repays the full amount previously distributed to them within five years of their date of re-employment or, if earlier, the last day of the fifth calendar year following the calendar year in which the distribution occurred.  As of March 31, 2016, all forfeitures were either fully vested or used to reduce future Employer contributions to the Plan.
 
Termination of the Plan
 
It is the Company’s present expectation that the Plan and the payment of Employer contributions will be continued indefinitely.  However, continuance of any feature of the Plan is not assumed as a contractual obligation.  The Company, at its discretion, may terminate the Plan and distribute net assets, subject to the provisions set forth in ERISA and the Internal Revenue Code, or discontinue contributions.  In this event, the balance credited to the accounts of participants at the date of termination or discontinuance will be fully vested and nonforfeitable.
 
2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
Basis of Accounting
 
The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP").

New Accounting Standard

In July 2015, new guidance was issued that modifies certain plan accounting presentation and disclosure requirements. These changes are intended to reduce the complexity in employee benefit plan accounting and include changes to the presentation and disclosures relating to fully benefit-responsive investment contracts, and the elimination and modification of certain other plan disclosures. The Plan adopted this guidance during 2015 and has applied the guidance retrospectively to all periods presented. Among other changes, as a result of adopting this guidance: fully benefit-responsive investment contracts are now presented on the Statements of Net Assets Available for Benefits only at contract value; fair value disclosures have been modified to present investments by general type of plan asset and are no longer disaggregated by the investment's nature, characteristic and risk; disclosure of investments representing 5% or more of net assets available for benefits has been eliminated as it is no longer required. The adoption of this guidance modifies the Plan's presentation and disclosures, but does not impact the Net Assets Available for Benefits or Changes in Net Assets Available for Benefits. In the Statements of Net Assets Available for Benefits as of December 31, 2015 and 2014, the adoption resulted in the reclassification of the adjustment from fair value to contract value for fully benefit-responsive investment contracts totaling $741,477 and $1,903,347 respectively.
 
Use of Estimates
 
The preparation of financial statements in conformity with GAAP requires the Plan’s management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and changes therein and disclosure of contingent assets and liabilities.  Actual results could differ from those estimates.


8

Risks and Uncertainties
 
The Plan utilizes various investment instruments, including mutual funds, common and collective trusts, stocks, bonds, and a stable value fund.  Investment securities, in general, are exposed to various risks, such as interest rate risk, credit risk, liquidity risk, and overall market volatility.  Due to the level of risk associated with certain investment securities, it is possible that changes in the value of investment securities may occur in the near term and that such changes could materially affect the amounts reported in the financial statements.
 
Investment Valuation
 
The Plan’s investments are stated at fair value (except for fully benefit-responsive investment contracts, which are reported at contract value), less costs to sell, if those costs are significant.  Fair value is the price that would be received upon the sale of an asset or the amount paid to transfer a liability in an orderly transaction between market participants at the measurement date.  See Note 5 for fair value measurements and disclosures of the Plan’s investments reported at fair value.
 
Fully benefit-responsive synthetic guaranteed investment contracts ("GICs") which are among the investments held in the Stable Value Fund option, are reported at contract value. Contract value is the relevant measure for fully benefit-responsive investment contracts because it is the amount Plan participants would receive if they were to initiate permitted transactions under the terms of the Plan.  Contract value represents contributions made under each contract, plus earnings, less participant withdrawals, and administrative expenses. The Statement of Changes in Net Assets Available for Benefits is presented on a contract value basis. (See Note 4).
 
Income Recognition
 
Purchases and sales of securities are recorded as of the trade date.  Interest income is recorded on the accrual basis.  Dividend income is recorded as of the ex-dividend date. 
 
Administrative Expenses
 
Participants pay a quarterly Plan recordkeeping fee. Participants may also pay administrative fees for the origination of a loan or for other services provided by the Trustee. Participants pay investment, sales, recordkeeping and administrative expenses charged by the Funds, if any, which are deducted from income and reflected as a reduction of investment return for the Fund. Pinnacle West pays the remaining Plan administrative expenses, such as legal and trustee expenses of the Plan.

Management fees and operating expenses charged to the Plan for investments in mutual funds are deducted from income earned on a daily basis and are not separately reflected.  Consequently, management fees are reflected as a reduction of investment return for such investments.
 
Notes Receivable From Participants
 
Notes receivable from participants are measured at their unpaid principal balance plus any accrued but unpaid interest.  Delinquent participant loans are recorded as distributions based on the terms of the Plan.
 

9

Payment of Benefits
 
Benefit payments to participants are recorded upon distribution.  As of December 31, 2015 and 2014, there were no amounts allocated to accounts of persons who have elected to withdraw from the Plan, but have not yet been paid.
 
Excess Contributions Payable
 
The Plan is required to return contributions received during the Plan year in excess of the Internal Revenue Code limits.

Net Appreciation/Depreciation

Net appreciation/depreciation includes the Plan's gains and losses on investments bought and sold during the year as well as unrealized gains and losses related to investments held at year end.

 
3.    FEDERAL INCOME TAX STATUS
 
GAAP requires Plan management to evaluate tax positions taken by the Plan and recognize a tax liability if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the Internal Revenue Service ("IRS"). Plan management has concluded that as of December 31, 2015, there are no uncertain positions taken or expected to be taken that would require recognition of a liability or disclosure in the financial statements. The Plan is subject to routine audits by the IRS, however, there are currently no audits for any tax periods in progress.  Plan management believes the Plan is no longer subject to income tax examinations for years prior to 2012.
 
The IRS has determined and informed the Company by a letter dated September 19, 2013, that the Plan was designed in accordance with applicable requirements of the Internal Revenue Code.  The Company and the Plan’s management believe that the Plan is currently designed and operated in compliance with the applicable requirements of the Internal Revenue Code, and the Plan and related trust continue to be tax-exempt.  Accordingly, no provision for income taxes has been included in the Plan’s financial statements.

4.    INVESTMENT CONTRACTS
 
  The Plan's Stable Value Fund includes fully benefit-responsive synthethic guaranteed investment contracts. A synthetic GIC is an investment contract issued by an insurance company or other financial institution ("Wrap Agreement"), backed by a portfolio of bonds, mortgages, or other fixed income instruments that are owned directly by the fund.   The realized and unrealized gains and losses on the underlying assets are not reflected immediately in the value of the contract, but rather are amortized, usually over the time to maturity or the duration of the underlying investments, through adjustments to the future interest crediting rate.  Formulas are provided in each contract that adjust the interest crediting rate to recognize the difference between the fair market value and the book value of the underlying assets. The contract provides for an interest crediting rate that may not be less than zero percent per annum. Interest crediting rates are reviewed monthly for resetting. The Wrap Agreement is intended to guarantee that the qualified participant withdrawals will occur at contract value.
 
Certain events may limit the ability of the Plan to transact at contract value with the issuer.  While the events may differ from contract to contract, the events typically include:  Plan amendments or changes, company mergers or consolidations, participant investment election changes, group terminations or layoffs,

10

implementation of an early retirement program, termination or partial termination of the Plan, failure to meet certain tax qualifications, participant communication that is designed to influence participants not to invest in the Stable Value Fund, transfers to competing options without meeting the equity wash provisions of the Stable Value Fund (if applicable), Plan sponsor withdrawals without the appropriate notice to the Stable Value Fund’s investment manager and/or wrap contract issuers, any changes in laws or regulations that would result in substantial withdrawals from the Plan, and default by the Plan sponsor in honoring its credit obligations, insolvency, or bankruptcy if such events could result in withdrawals.  In general, GIC issuers may terminate the contract and settle at other than contract value due to changes in the qualification status of the company or the Plan, breach of material obligations under the contract and misrepresentation by the contract holder, or failure of the underlying portfolio to conform to the pre-established investment guidelines.  Plan management believes that the occurrence of such events that would cause the Plan to transact at less than contract value is not probable.
 
The Plan’s fully benefit-responsive synthetic GICs are included in the Statement of Net Assets Available for Benefits at contract value at December 31, 2015 and 2014 of $144 million and $157 million, respectively.
 
5.    FAIR VALUE MEASUREMENTS
 
The Plan applies fair value measurements to certain investments and provides disclosure of these assets according to a fair value hierarchy.  The hierarchy ranks the quality and reliability of the inputs used to determine fair values, which are then classified and disclosed in one of three categories.  The three levels of the fair value hierarchy are:
 
Level 1 — Quoted prices in active markets for identical assets or liabilities.  Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide information on an ongoing basis.
 
Level 2 — Quoted prices in active markets for similar assets or liabilities; quoted prices in markets that are not active; and model-derived valuations whose inputs are observable.
 
Level 3 — Model-derived valuations with unobservable inputs that are supported by little or no market activity.
 
Assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. Valuation methodologies maximize the use of observable inputs and minimize the use of unobservable inputs. The Plan’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels. The Plan recognizes transfers among Level 1, Level 2, and Level 3 based on the fair values at the beginning of the period and are triggered by a change in the lowest significant input as of the end of the period. There were no transfers between the hierarchy levels during the years ended December 31, 2015 and December 31, 2014. Investments valued using net asset value as a practical expedient are not classified within the fair value hierarchy.
 
The following is a description of the valuation methodologies used for assets measured at fair value.  There have been no changes in the methodologies used at December 31, 2015 and 2014.
 
Common and Collective Trusts: Valued, as a practical expedient, based on the trusts’ net asset value of units held by the Plan at year-end. Net asset value is based on the market prices of the underlying securities owned by the trusts.  The trusts are similar to mutual funds, except that the trusts’ shares are offered to a

11

limited group of investors and are not traded on an exchange.  Participant redemptions in the trusts do not require a notification period, and may occur on a daily basis at the net asset value.  The trusts have the ability to implement redemption safeguards which could limit the Plan’s ability to transact in the trusts; these safeguards had no effect on participant redemptions at year-end, and are not expected to impact the abilities of participants to transact in the trusts. The Plan has no unfunded commitments to these trusts as of December 31, 2015.
 
Mutual Funds:  Valued and redeemable at the quoted net asset value of shares held by the Plan. The net asset value is based on the quoted price at the end of the day on the active market in which the individual funds are traded. Mutual funds are open-ended funds that are registered with the Securities and Exchange Commission.
 
Common Stocks: Valued at the closing price reported on the active market on which the individual securities are traded.
 
Short-Term Investments: Consists primarily of mutual funds that seek to provide safety of principal, daily liquidity and a competitive yield by investing in U.S. Government Securities, or money market funds. Valuation is based on the quoted net asset value of shares held by the Plan, consistent with the methodology for valuing mutual funds as discussed above.

Self-Directed Brokerage Account: Consists primarily of common stocks, cash equivalents, and mutual funds, that are valued on the basis of readily determinable market prices.

The following table presents by level within the fair value hierarchy, the Plan's assets reported at fair value:
 
 
December 31,
Quoted Prices in Active Markets (Level 1):
2015
 
2014
Common Stocks
$
54,548,994

 
$
58,330,839

Short Term Investments
12,906,863

 
13,929,016

Mutual Funds
119,268,385

 
121,990,224

Pinnacle West Common Stock
87,359,438

 
93,510,720

Self-Directed Brokerage Account
59,360,266

 
67,250,615

Total Level 1 assets and total assets classified in the fair value hierarchy
333,443,946

 
355,011,414

Other:
 
 
 
Common and Collective Trusts (a)
535,579,781

 
549,641,923

Total Investments at fair value
$
869,023,727

 
$
904,653,337


(a) These investments are valued using net asset value as a practical expedient, and therefore have not been classified in the fair value hierarchy.

6.    EXEMPT PARTY-IN-INTEREST TRANSACTIONS
 
Certain Plan investments consist of Pinnacle West common stock and short-term investments which are managed by the Trustee.  These transactions qualified as exempt party-in-interest transactions.  As of December 31, 2015 and 2014, the Plan held 5,556,459 and 5,599,147 units, respectively, of common stock of Pinnacle West, the sponsoring employer with a cost basis of $62,352,902 and $58,929,143, respectively.  During the year ended December 31, 2015, the Plan recorded dividend income from Pinnacle West common

12

stock of $3,291,452. As of December 31, 2015 and 2014, the Plan held $12,906,863 and $13,925,048, respectively, of short-term investments.

Transactions under the Plan's revenue share agreement with the trustee qualify as exempt party-in-interest transactions. Amounts received under this revenue share agreement were immaterial for the year ended December 31, 2015. These revenue share amounts are currently allocated back to participants.

The Plan issues loans to participants which are secured by the vested balances in the participants’ accounts.
 
Certain employees and officers of the Company, who may also be participants in the Plan, perform financial reporting and other services for the Plan, at no cost to the Plan.  The Plan Sponsor pays for these services.

 
7.    RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
 
The following is a reconciliation of Net Assets Available for Benefits per the financial statements to Form 5500:
 
 
 
2015
 
2014
Net Assets Available for Benefits per the financial statements
 
$
1,040,625,674

 
$
1,088,428,807

Adjustment from contract value to fair value for fully benefit-responsive investment contracts
 
741,477

 
1,903,347

Deemed distribution of participant loans
 
(233,023
)
 
(157,072
)
Net Assets per Form 5500
 
$
1,041,134,128

 
$
1,090,175,082

 
The following is a reconciliation of the Changes in Net Assets Available for Benefits per the financial statements to Form 5500 for the year ended December 31, 2015:
 
Decrease in Net Assets Available for Benefits per the financial statements
 
$
(47,803,133
)
Adjustment from contract value to fair value for fully benefit-responsive stable value fund - December 31, 2015
 
741,477

Adjustment from contract value to fair value for fully benefit-responsive stable value fund - December 31, 2014
 
(1,903,347
)
Deemed distribution of participant loans - 2015
 
(233,023
)
Deemed distribution of participant loans - 2014
 
157,072

Net Loss per Form 5500
 
$
(49,040,954
)


13
FORM 5500, SCHEDULE H: PART IV, LINE 4i
SCHEDULE OF ASSETS (HELD AT END OF YEAR)
DECEMBER 31, 2015


Identity of Issuer, Borrower, Lessor, or Similar Party
Description
Cost**
Current Value
Common Stocks
 
 
 
HS Large Capitalization Growth Equity Fund
US Large Cap Stock Fund
 
 
ALPHABET INC CL C
 
 
$
1,217,243

AMC NETWORKS INC CL A
 
 
905,495

AMAZON.COM INC
 
 
131,799

ANHEUSER BUSCH IV SA NV S
 
 
284,375

APPLE INC
 
 
1,378,906

CHEESECAKE FACTORY INC
 
 
682,428

COMCAST CORP CL A
 
 
1,021,383

DIAGEO PLC SPON ADR
 
 
894,374

DISNEY (WALT) CO
 
 
814,370

GENERAL MILLS INC
 
 
751,021

LVMH MOET HENNESSY ADR
 
 
904,694

LULULEMON ATHLETICA INC
 
 
873,625

MCDONALDS CORP
 
 
1,202,075

NESTLE SA REG ADR
 
 
917,227

NIKE INC CL B
 
 
178,125

PRICELINE GROUP INC
 
 
1,026,335

RALPH LAUREN CORP
 
 
920,267

STARBUCKS CORP
 
 
270,135

TIFFANY & CO
 
 
543,566

TIME WARNER INC
 
 
1,034,720

TWITTER INC
 
 
441,974

UNITED PARCEL SVCS CL B
 
 
991,169

VISA INC CL A
 
 
701,828

WAL MART STORES INC
 
 
1,221,403

WILLIAMS-SONOMA INC
 
 
941,861

BBH STIF FUND
 
 
29,290

SUBTOTAL
 
 
20,279,688

 
 
 
 
Robeco Boston Partners Large Capitalization Value Equity Fund
US Large Cap Stock Fund
 
 
ACTIVISION BLIZZARD INC
 
 
309,215

AES CORP
 
 
191,027

ALLSTATE CORPORATION
 
 
168,636

ALLY FINANCIAL INC
 
 
167,611

AMERICAN HOMES 4 REN CL A
 
 
80,135

ANADARKO PETROLEUM CORP
 
 
93,322

ANTHEM INC
 
 
207,626

AON PLC
 
 
141,542

BARRICK GOLD CORP (USA)
 
 
50,250

BB&T CORP
 
 
147,951

BERKSHIRE HATHAWAY CL B
 
 
874,501

BEST BUY CO INC
 
 
72,380


14
FORM 5500, SCHEDULE H: PART IV, LINE 4i
SCHEDULE OF ASSETS (HELD AT END OF YEAR)
DECEMBER 31, 2015


Identity of Issuer, Borrower, Lessor, or Similar Party
Description
Cost**
Current Value
BROCADE COMM SYS
 
 
44,505

CANADIAN NAT'L RES (USD)
 
 
116,856

CAPITAL ONE FIN CORP
 
 
567,407

CARDINAL HEALTH INC
 
 
173,452

CBS CORP CL B
 
 
182,157

CHUBB LTD
 
 
348,213

CIGNA CORP
 
 
228,275

CIMAREX ENERGY CO
 
 
73,560

CISCO SYSTEMS INC
 
 
391,602

CITIGROUP INC
 
 
572,251

COMCAST CORP CL A
 
 
171,660

COMPUTER SCIENCES CORP
 
 
108,792

CRANE CO
 
 
55,638

CROWN HOLDINGS INC
 
 
180,441

CVS HEALTH CORP
 
 
163,569

DELTA AIR INC
 
 
362,586

DIAMONDBACK ENERGY INC
 
 
85,431

DISCOVER FIN SVCS
 
 
340,165

DOW CHEMICAL CO
 
 
148,468

EBAY INC
 
 
194,668

ENERGEN CORP
 
 
90,916

EOG RESOURCES INC
 
 
388,708

EQT CORPORATION
 
 
48,168

EXPRESS SCRIPTS HLDG CO
 
 
349,553

FIFTH THIRD BANCORP
 
 
125,545

FLEXTRONICS INTL LTD
 
 
157,624

GENERAL DYNAMICS CORPORAT
 
 
284,610

GILEAD SCIENCES INC
 
 
326,338

HARRIS CORP
 
 
225,766

HEWLETT PACKARD ENTERPRISE
 
 
170,286

HONEYWELL INTL INC
 
 
97,045

HP INC
 
 
97,704

HUNTSMAN CORP
 
 
97,111

INGERSOLL RAND PLC
 
 
108,700

INTERNATIONAL PAPER CO
 
 
104,391

JOHNSON & JOHNSON
 
 
579,444

JPMORGAN CHASE & CO
 
 
839,902

LEAR CORP NEW
 
 
181,174

LIBERTY BROADBAND CORP C
 
 
81,109

LIBERTY GLOBAL PLC CL C
 
 
328,076

LIBERTY LILAC GROUP-C
 
 
28,810

LIBERTY MEDIA CLASS C
 
 
112,679

LOCKHEED MARTIN CORP
 
 
385,658


15
FORM 5500, SCHEDULE H: PART IV, LINE 4i
SCHEDULE OF ASSETS (HELD AT END OF YEAR)
DECEMBER 31, 2015


Identity of Issuer, Borrower, Lessor, or Similar Party
Description
Cost**
Current Value
MARATHON PETROLEUM CORP
 
 
80,456

MCKESSON CORP
 
 
157,784

MEDTRONIC PLC
 
 
221,607

MERCK & CO INC NEW
 
 
288,556

METHANEX CORP (USD)
 
 
95,168

METLIFE INC
 
 
145,739

MICROSOFT CORP
 
 
635,801

NAVIENT CORP
 
 
88,829

OCCIDENTAL PETROLEUM CORP
 
 
505,790

OMNICOM GROUP INC
 
 
45,547

ORACLE CORP
 
 
194,340

PFIZER INC
 
 
482,877

PHILLIPS 66
 
 
379,307

QEP RESOURCES INC
 
 
92,031

QUEST DIAGNOSTICS INC
 
 
107,208

RAYTHEON CO
 
 
283,181

SEAGATE TECHNOLOGY
 
 
43,185

SIX FLAGS ENTERTAINMENT
 
 
104,771

TARGET CORP
 
 
337,201

TEVA PHARMACEUTICAL IND A
 
 
60,848

TEXTRON INC
 
 
141,658

TIME INC
 
 
33,596

TIME WARNER INC
 
 
169,888

TRAVELERS COMPANIES INC
 
 
135,093

TYSON FOODS INC CL A
 
 
182,069

UNITED CONTINENTAL HLDGS
 
 
177,687

UNITED TECHNOLOGIES CORP
 
 
185,799

VERIZON COMM INC
 
 
388,433

WELLS FARGO & CO
 
 
705,973

WESTERN DIGITAL CORP
 
 
105,688

WESTROCK CO
 
 
138,867

XL GROUP PLC
 
 
172,510

ZIMMER BIOMET HOLDINGS INC
 
 
143,318

BBH STIF FUND
 
 
324,860

SUBTOTAL
 
 
19,578,874

 
 
 
 
Robeco Small/Mid Capitalization Value Equity Fund
US Small/Mid Cap Stock Fund
 
 
ABERCROMBIE & FITCH CL A
 
 
131,517

ABM INDUSTRIES INC
 
 
117,325

ACTUANT CORP CL A
 
 
36,755

AECOM
 
 
80,180

AEGION CORP
 
 
48,989

AES CORP
 
 
75,038


16
FORM 5500, SCHEDULE H: PART IV, LINE 4i
SCHEDULE OF ASSETS (HELD AT END OF YEAR)
DECEMBER 31, 2015


Identity of Issuer, Borrower, Lessor, or Similar Party
Description
Cost**
Current Value
AIR LEASE CORP CL A
 
 
79,348

ALLY FINANCIAL INC
 
 
100,824

AMDOCS LTD
 
 
127,585

AMERICAN CAP MTG INVSTMNT
 
 
31,550

AMERICAN CAPITAL AGENCY
 
 
52,263

AMERICAN EAGLE OUTFITTERS
 
 
171,895

AMERICAN RESIDENTIAL PPTY
 
 
108,656

AMSURG CORP
 
 
99,104

ANWORTH MTG ASSET CORP
 
 
29,254

APOLLO INVT CORP
 
 
38,753

ARES CAPITAL CORP
 
 
42,779

ARES COMMERCIAL REAL ESTA
 
 
98,876

ARROW ELECTRONICS INC
 
 
202,904

ASCENA RETAIL GROUP INC
 
 
88,079

ASSURANT INC
 
 
44,216

ASSURED GUARANTY LTD
 
 
89,043

AVNET INC
 
 
185,026

AXIS CAPITAL HOLDINGS LTD
 
 
141,225

BELDEN INC
 
 
32,184

BMC STK HLDGS INC
 
 
84,001

BOOZ ALLEN HAMILTON CL A
 
 
62,903

BRINKS CO
 
 
33,045

BRISTOW GROUP INC
 
 
129,966

BROCADE COMM SYS
 
 
88,367

BROOKS AUTOMATION INC
 
 
45,636

CABOT CORP
 
 
49,056

CDW CORPORATION
 
 
147,098

CENTENE CORP
 
 
53,767

CHATHAM LODGING TRUST
 
 
95,662

CHEMED CORP
 
 
192,193

CLOUD PEAK ENERGY INC
 
 
26,110

CLUBCORP HLDGS INC
 
 
59,304

COHERENT INC
 
 
78,327

COLONY CAPITAL INC
 
 
120,503

COLUMBIA BANKING SYS INC
 
 
38,784

CONVERGYS CORP
 
 
53,339

CROWN HOLDINGS INC
 
 
155,091

CUBIC CORP
 
 
122,661

CURTISS WRIGHT CORPORATIO
 
 
105,011

CYS INVESTMENTS INC
 
 
145,416

DIAMONDBACK ENERGY INC
 
 
137,078

DILLARDS INC CL A
 
 
41,266

DREW INDUSTRIES INC
 
 
223,162


17
FORM 5500, SCHEDULE H: PART IV, LINE 4i
SCHEDULE OF ASSETS (HELD AT END OF YEAR)
DECEMBER 31, 2015


Identity of Issuer, Borrower, Lessor, or Similar Party
Description
Cost**
Current Value
DRIL-QUIP INC
 
 
44,600

ENERSYS INC
 
 
142,118

ESSENT GROUP LTD
 
 
90,055

EXPRESS INC
 
 
109,037

FEDERATED INVS CL B NV
 
 
66,182

FERROGLOBE PLC
 
 
28,982

FIFTH STREET FINANCE CORP
 
 
50,517

FINISH LINE INC CL A
 
 
85,717

FIRST AMERICAN FIN CORP
 
 
32,131

FIRST CASH FIN SRVS INC
 
 
91,067

FIRST CITIZEN BANCSHARES
 
 
62,994

FIRST REPUBLIC BANK
 
 
44,458

FLEXTRONICS INTL LTD
 
 
121,785

FNF GROUP
 
 
120,929

FOOT LOCKER INC
 
 
137,145

FORUM ENERGY TECH INC
 
 
42,227

FTD COS INC
 
 
59,694

FTI CONSULTING INC
 
 
41,141

G & K SERVICES INC CL A
 
 
54,975

GRANITE CONSTRUCTION INC
 
 
99,551

GRAPHIC PACKAGING HLDGS C
 
 
265,350

GROUP 1 AUTOMOTIVE INC
 
 
67,827

HANGER INC
 
 
49,103

HANOVER INSURANCE GROUP
 
 
56,287

HARRIS CORP
 
 
88,377

HATTERAS FINANCIAL CORP
 
 
108,133

HEIDRICK & STRUGGLES INTL
 
 
65,029

HELIX ENERGY SOL GRP INC
 
 
18,715

HIBBETT SPORTS INC
 
 
43,727

HILLENBRAND INC
 
 
70,460

HUNTINGTON BANCSHARES INC
 
 
120,720

HUNTINGTON INC W/I
 
 
157,167

HUNTSMAN CORP
 
 
29,096

IAC/INTERACTIVECORP
 
 
67,136

ICON PLC
 
 
150,116

INFINITY PPTY & CASUALTY
 
 
44,404

INGRAM MICRO INC CL A
 
 
147,981

INSIGHT ENTERPRISES INC
 
 
38,609

INTEGRA LIFESCIENCES HLDS
 
 
103,161

INTERNATIONAL SPEEDW A (1
 
 
33,585

INVESTORS BANCORP INC NEW
 
 
74,802

KAR AUCTION SERVICES INC
 
 
133,567

KINDRED HEALTHCARE INC
 
 
64,040


18
FORM 5500, SCHEDULE H: PART IV, LINE 4i
SCHEDULE OF ASSETS (HELD AT END OF YEAR)
DECEMBER 31, 2015


Identity of Issuer, Borrower, Lessor, or Similar Party
Description
Cost**
Current Value
KNOLL INC
 
 
48,805

KOSMOS ENERGY LTD
 
 
38,600

LANDSTAR SYSTEM INC
 
 
39,472

LEAR CORP NEW
 
 
152,186

LEUCADIA NATIONAL CORP
 
 
110,374

LIFEPOINT HEALTH INC
 
 
76,630

LIVE NATION ENTERTAINMENT
 
 
81,228

MAIDEN HLDGS LTD
 
 
234,788

MANPOWERGROUP INC
 
 
95,163

MAXIMUS INC
 
 
63,056

MENS WEARHOUSE INC
 
 
125,397

MFA FINANCIAL INC
 
 
122,291

MINERALS TECHNOLOGIES INC
 
 
67,001

MRC GLOBAL INC
 
 
55,664

MUELLER INDUSTRIES INC
 
 
29,214

MULTI PACKAGING SOLUTIONS
 
 
66,242

NATIONSTAR MORTGAGE HLDGS
 
 
79,565

NAVIENT CORP
 
 
104,699

NAVIGANT CONSULTING INC
 
 
124,481

NELNET INC CL A
 
 
39,478

NU SKIN ENTERPRISES CL A
 
 
84,002

ON SEMICONDUCTOR CORP
 
 
135,485

OWENS AND MINOR INC
 
 
42,924

PACKAGING CORP OF AMERICA
 
 
145,898

PAREXEL INTL CORP
 
 
55,518

PARSLEY ENERGY INC CL A
 
 
197,655

PARTNERRE LTD
 
 
101,312

PHH CORP
 
 
111,537

PNM RESOURCES INC
 
 
50,318

QEP RESOURCES INC
 
 
47,195

RADIAN GROUP INC
 
 
114,337

RAYMOND JAMES FIN INC.
 
 
116,520

REALOGY HOLDINGS CORP
 
 
55,372

REINSURANCE GROUP OF AMER
 
 
132,004

RENT A CTR INC
 
 
35,344

RICE ENERGY INC
 
 
41,289

RSP PERMIAN INC
 
 
49,341

RPX CORP
 
 
86,680

SCHWEITZER-MAUDUIT INTL
 
 
80,453

SELECT MEDICAL HLDGS CORP
 
 
55,310

SENSIENT TECH CORP
 
 
46,424

SERVICE CORP INTL INC
 
 
53,575

SILVER BAY RLTY TR CORP
 
 
41,405


19
FORM 5500, SCHEDULE H: PART IV, LINE 4i
SCHEDULE OF ASSETS (HELD AT END OF YEAR)
DECEMBER 31, 2015


Identity of Issuer, Borrower, Lessor, or Similar Party
Description
Cost**
Current Value
SLM CORP
 
 
58,406

STANCORP FINL GROUP INC
 
 
59,901

STARZ - A
 
 
134,670

STEEL DYNAMICS INC
 
 
80,058

STEVEN MADDEN LTD
 
 
102,778

SVB FINL GROUP
 
 
43,042

SYKES ENTERPRISES INC
 
 
71,779

SYMETRA FINANCIAL CORP
 
 
81,268

SYMMETRY SURGICAL INC
 
 
2,337

SYNNEX CORP
 
 
144,248

TEGNA INC
 
 
67,169

TELETECH HOLDINGS INC
 
 
153,784

TERADYNE INC
 
 
87,930

TEREX CORP
 
 
49,360

TETRA TECH INC
 
 
77,071

THOR INDUSTRIES INC
 
 
158,568

TIMKEN CO
 
 
98,778

TORCHMARK CORP
 
 
82,996

TUTOR PERINI CORP
 
 
34,853

TWO HBRS INVT CORP
 
 
143,443

UNIVERSAL CORP
 
 
77,446

VALIDUS HOLDING
 
 
216,915

WALKER & DUNLOP INC
 
 
200,835

WESCO INTERNATIONAL INC
 
 
139,164

WESTERN REFINING INC
 
 
130,155

WORLD FUEL SERVICES CORP
 
 
184,608

BBH STIF FUND
 
 
310,827

SUBTOTAL
 
 
14,690,432

 
 
 
 
Total common stocks
 
 
54,548,994

 
 
 
 
Common and Collective Trusts
 
 
 

Blackrock US Debt Index NL Fund M
US Bond Index
 
107,502,585

Principal Diversified Real Asset Collective Investment Trust Tier 2
Diversified Inflation Fund
 
39,966,108

SSgA Global All Cap Equity Ex US Index Non-Lending Series Fund Class A
Non-US Stock Index
 
100,115,145

SSgA S&P 500 Index Non-Lending Series Fund Class A
US Large Cap Stock Fund/Index
 
206,034,973

SSgA Russell Small/Mid Cap Index Non-Lending Series Fund
Class A
US Small/Mid Cap Stock Fund/Index
 
66,766,014

William Blair Small/Mid Cap Growth Collective Fund
US Small/Mid Cap Stock Fund
 
15,194,956

Total common and collective trusts
 
 
535,579,781

 
 
 
 

Mutual Funds
 
 
 

*Fidelity Institutional Money Market: Government Portfolio - Class I
Short-Term Investments***
 
11,445,038


20
FORM 5500, SCHEDULE H: PART IV, LINE 4i
SCHEDULE OF ASSETS (HELD AT END OF YEAR)
DECEMBER 31, 2015


Identity of Issuer, Borrower, Lessor, or Similar Party
Description
Cost**
Current Value
*Fidelity Institutional Money Market: Money Market Portfolio - Class I
Short-Term Investments***
 
1,461,825

American Funds EuroPacific Growth Fund R6 Shares
Non-US Stock Fund
 
76,154,833

Dodge & Cox Income Fund 1 Shares
Bond Fund
 
21,438,887

Metropolitan West Total Return Bond Fund Institutional Shares
Bond Fund
 
21,674,665

Total mutual funds
 
 
132,175,248

 
 
 
 

Synthetic GICs
Stable Value Fund
 
 

RGA Reinsurance Co yield 1.719%
 
 
 

Morley Stable Income Bond Fund Common and Collective Trust
 
 
50,416,741

Principal Life Ins Co yield 1.650%
 
 
 
Morley Stable Income Bond Fund Common and Collective Trust
 
 
50,077,326

Transamerica Premier Life Ins Co yield 2.155%
 
 
 
Morley Stable Income Bond Fund Common and Collective Trust
 
 
44,612,688

Total Synthetic GICs
 
 
145,106,755

 
 
 
 

Other Investments
 
 
 

*Pinnacle West Common Stock
Pinnacle West Stock Fund
 
87,359,438

Self-Directed Brokerage Account
Self-Directed Brokerage Account
 
59,360,266

*Various participants****
Participant loans
 
24,417,299

Total other investments
 
 
171,137,003

 
 
 
 

Total Assets Held for Investment Purposes
 
 
$
1,038,547,781

 
 
 
 



*Party-in-interest
**Cost information is not required for participant-directed investments and therefore is not included.
***Short-Term Investments represent $11,445,038 held in the Stable Value Fund and $1,461,825 in the Pinnacle West Stock Fund.
****Interest rates for participant loans as of December 31, 2015, ranged from 4.25% to 10.5% with maturity dates ranging from 2016 to 2031. Presented net of $233,023 in deemed loan distributions.
 
See accompanying Report of Independent Registered Public Accounting Firm.


21

Exhibits Filed
 
Exhibit No.
 
Description
 
 
 
23.1

 
Consent of Independent Registered Public Accounting Firm


22

SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Committee has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
THE PINNACLE WEST CAPITAL
 
 
 
CORPORATION SAVINGS PLAN
 
 
 
 
 
 
 
 
Date:
June 9, 2016
By
/s/ Barbara M. Gomez
 
 
 
Barbara M. Gomez
 
 
 
Vice President Human Resources
 
 
 
Arizona Public Service Company


23
EXHIBIT 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statement No. 333-157151 on Form S-8 of our report dated June 9, 2016, relating to the financial statements and financial statement schedule of The Pinnacle West Capital Corporation Savings Plan appearing in this Annual Report on Form 11-K of The Pinnacle West Capital Corporation Savings Plan, for the year ended December 31, 2015.

/s/ DELOITTE & TOUCHE LLP
Phoenix, Arizona
June 9, 2016




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