Form 8-K PINNACLE WEST CAPITAL For: Feb 20
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): February 20, 2015
Commission File Number | Exact Name of Registrant as Specified in Charter; State of Incorporation; Address and Telephone Number | IRS Employer Identification Number |
1-8962 | Pinnacle West Capital Corporation (an Arizona corporation) 400 North Fifth Street, P.O. Box 53999 Phoenix, AZ 85072-3999 (602) 250-1000 | 86-0512431 |
1-4473 | Arizona Public Service Company (an Arizona corporation) 400 North Fifth Street, P.O. Box 53999 Phoenix, AZ 85072-3999 (602) 250-1000 | 86-0011170 |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
This combined Form 8-K is separately filed or furnished by Pinnacle West Capital Corporation and Arizona Public Service Company. Each registrant is filing or furnishing on its own behalf all of the information contained in this Form 8-K that relates to such registrant and, where required, its subsidiaries. Except as stated in the preceding sentence, neither registrant is filing or furnishing any information that does not relate to such registrant, and therefore makes no representation as to any such information.
Item 2.02. Results of Operations and Financial Condition.
Item 7.01. Regulation FD Disclosure.
The following information is furnished pursuant to both Item 2.02 and 7.01.
On February 20, 2015, Pinnacle West Capital Corporation (“Pinnacle West” or the “Company”) issued a press release regarding its financial results for the fiscal quarter and full year ended December 31, 2014 and its earnings outlook for 2015. A copy of the press release is attached hereto as Exhibit 99.1.
The Company is providing a quarterly and full year consolidated statistical summary and a copy of the slide presentation made in connection with its earnings conference call on February 20, 2015. This information contains Company operating results for the fiscal quarter and fiscal year ended December 31, 2014 and is attached hereto as Exhibits 99.2 and 99.3. The statistical summary and slide presentation are concurrently being posted to the Company’s website at www.pinnaclewest.com, which also contains a glossary of relevant terms.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit No. | Registrant(s) | Description | ||
99.1 | Pinnacle West APS | Earnings News Release issued on February 20, 2015. | ||
99.2 | Pinnacle West APS | Pinnacle West quarterly consolidated statistical summary for the three-month and twelve-month periods ended December 31, 2014 and 2013. | ||
99.3 | Pinnacle West APS | Pinnacle West 4th Quarter and Full-Year 2014 Results slide presentation accompanying February 20, 2015 conference call. | ||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
PINNACLE WEST CAPITAL CORPORATION | ||
(Registrant) | ||
Dated: February 20, 2015 | By: /s/ James R. Hatfield | |
James R. Hatfield | ||
Executive Vice President and | ||
Chief Financial Officer | ||
ARIZONA PUBLIC SERVICE COMPANY | ||
(Registrant) | ||
Dated: February 20, 2015 | By: /s/ James R. Hatfield | |
James R. Hatfield | ||
Executive Vice President and | ||
Chief Financial Officer | ||
Exhibit Index
Exhibit No. | Registrant(s) | Description | ||
99.1 | Pinnacle West APS | Earnings News Release issued on February 20, 2015. | ||
99.2 | Pinnacle West APS | Pinnacle West quarterly consolidated statistical summary for the three-month and twelve-month periods ended December 31, 2014 and 2013. | ||
99.3 | Pinnacle West APS | Pinnacle West 4th Quarter and Full-Year 2014 Results slide presentation accompanying February 20, 2015 conference call. | ||
FOR IMMEDIATE RELEASE | February 20, 2015 | |
Media Contact: Analyst Contact: | Alan Bunnell, (602) 250-3376 Paul Mountain, (602) 250-4952 | |
Website: | pinnaclewest.com | |
PINNACLE WEST REPORTS 2014 FOURTH-QUARTER
AND FULL-YEAR RESULTS
• | Full-year results benefit from superior operational performance and cost management, despite adverse weather |
• | Fourth-quarter results impacted by planned fossil outages, partially offset by higher retail energy sales |
• | Company affirms 2015 guidance |
PHOENIX – Pinnacle West Capital Corporation (NYSE: PNW) today reported consolidated net income attributable to common shareholders of $5.4 million, or $0.05 per diluted share, for the quarter ended December 31, 2014. This result compares with net income of $24.3 million, or $0.22 per share, for the same period a year ago.
For full-year 2014, Pinnacle West reported consolidated net income attributable to common shareholders of $397.6 million, or $3.58 per diluted share, compared to $406.1 million, or $3.66 per share, in 2013.
“Robust operational performance, combined with disciplined cost management, helped us achieve solid full-year financial results, despite weather contributions that were below historical averages and well below last year,” said Pinnacle West Chairman, President and Chief Executive Officer Don Brandt. “And, while our employees had no control over Mother Nature, they remained acutely focused on creating value for customers and shareholders, as evidenced in our top-tier reliability and customer satisfaction metrics, as well as strong performance at the Palo Verde Nuclear Generating Station.”
Palo Verde achieved its 23rd consecutive year as the nation’s largest power producer and, for the tenth time, exceeded its own record for power generation – producing 32.3 million megawatt-hours (MWh). The previous best was 31.9 million MWh in 2012. In addition, Unit 3 produced the second-highest electricity output of any nuclear unit in the world, and all three Palo Verde units individually ranked among the top six producers in the U.S., according to industry data.
Brandt cited additional examples of the Company’s recent achievements:
• | APS’s reliability numbers for 2014 remained in the top quartile among all electric utilities nationally despite one of the most severe monsoon seasons in Arizona history. For the year, the typical APS customer experienced less than one outage (0.79 power outages compared to a national industry median of 1.14 interruptions). Also, the typical APS customer experienced 79 minutes of interrupted service in 2014, compared with an industry median of 130 minutes. (Industry averages are based on the most currently available data from year-end 2013.) |
• | APS launched the Solar Partners residential rooftop solar program, the nation’s first utility-owned research and development program that will make up to 10 megawatts of rooftop solar available to customers, including those with limited income. |
• | APS again was named an industry leader in customer satisfaction by the 2014 J.D. Power Electric Utility Residential Customer Satisfaction Study, maintaining APS’s 5th place ranking out of 54 large investor-owned utilities. |
• | For the third straight year, Pinnacle West increased its common dividend, raising it by 4.85 percent after two previous increases of 4.0 percent; |
• | Pinnacle West’s total return to shareholders was 34.5 percent, and total shareholder value increased $2.0 billion in 2014. |
The 2014 fourth-quarter results comparison to the 2013 period was adversely affected by the following major factors (a non-GAAP reconciliation table is provided at the end of this release):
• | Higher operating expenses impacted earnings by $0.17 per share compared with the prior-year quarter. The increase was largely due to more fossil generation planned outages being completed in the current-year quarter than in the same period a year ago. |
The operating expense variance excludes costs associated with renewable energy, energy efficiency and similar regulatory programs, which are largely offset by comparable amounts of operating revenues.
• | Tax-related items, comprised of a tax benefit recorded in 2013 and the extension of bonus depreciation in the 2014 fourth quarter, negatively impacted earnings by $0.06 per share versus a year ago. |
• | The net effect of other items decreased earnings $0.02 per share. |
The above items were offset in part by the following positive influences:
• | Decreased interest expense, net of AFUDC, contributed $0.04 per share. |
• | The effects of weather variations improved the Company’s earnings by $0.03 per share. Although weather in the 2014 and 2013 fourth quarters were less favorable than normal conditions, this year’s quarter benefitted largely from a warmer October than the same month in 2013, thus spurring an increase in customers’ air conditioning use. |
• | Higher retail electricity sales – excluding the effects of weather variations, but including the effects of customer conservation, energy efficiency programs and distributed renewable generation – improved earnings $0.01 per share. This result marks the second time in 2014 that retail consumption outpaced the impacts of energy efficiency and distributed generation initiatives. Compared to the same quarter a year ago, weather-normalized sales increased 1.9 percent, while total customer growth was 1.4 percent quarter-over-quarter. |
Financial Outlook
For 2015, the Company continues to expect its on-going consolidated earnings will be within a range of $3.75 to $3.95 per diluted share. Longer-term, the Company’s goal is to achieve a consolidated earned return on average common equity of more than 9.5 percent annually through 2016.
Key factors and assumptions underlying the 2015 outlook can be found in the fourth-quarter 2014 earnings presentation slides on the Company’s website at pinnaclewest.com/investors.
Conference Call and Webcast
Pinnacle West invites interested parties to listen to the live webcast of management’s conference call to discuss the Company’s 2014 fourth-quarter and full-year results, as well as recent developments, at 11 a.m. (ET) today, February 20. The webcast can be accessed at pinnaclewest.com/presentations and will be available for replay on the website for 30 days. To access the live conference call by telephone, dial (877) 407-8035 or (201) 689-8035 for international callers. A replay of the call also will be available until 11:59 p.m. (ET), Friday, Feb. 27, 2015, by calling (877) 660-6853 in the U.S. and Canada or (201) 612-7415 internationally and entering conference ID number 13598634.
General Information
Pinnacle West Capital Corp., an energy holding company based in Phoenix, has consolidated assets of about $14 billion, more than 6,400 megawatts of generating capacity and about 6,400 employees in Arizona and New Mexico. Through its principal subsidiary, Arizona Public Service, the Company provides retail electricity service to nearly 1.2 million Arizona homes and businesses. For more information about Pinnacle West, visit the Company’s website at pinnaclewest.com.
Dollar amounts in this news release are after income taxes. Earnings per share amounts are based on average diluted common shares outstanding. For more information on Pinnacle West’s operating statistics and earnings, please visit pinnaclewest.com/investors.
PINNACLE WEST CAPITAL CORPORATION
NON-GAAP FINANCIAL MEASURE RECONCILIATION
Three Months Ended December 31, | ||||||||||||||||||
$ millions pretax, except per share amounts | 2014 | Four Corners Deferral | Palo Verde Lease Extensions2 | 2014 Adjusted | 2013 | Four Corners Deferral | 2013 Adjusted | EPS Impact | ||||||||||
Operations and maintenance1 | $ | 261 | $ | (5) | $ | - | $ | 256 | $ | 239 | $ | (9) | $ | 230 | ||||
Renewable energy (excluding AZ Sun), demand side management and similar regulatory programs | 23 | - | - | 23 | 31 | - | 31 | |||||||||||
Net O&M | 238 | (5) | - | 233 | 208 | (9) | 199 | $ | (0.180) | |||||||||
Depreciation and amortization1 | 107 | 7 | (5) | 109 | 98 | 9 | 107 | $ | 0.01 | |||||||||
Taxes other than income taxes1 | 42 | (2) | - | 40 | 40 | - | 40 | $ | - | |||||||||
Allowance for equity funds used during construction1, 2 | (9) | - | - | (9) | (7) | - | (7) | |||||||||||
Interest charges1 | 49 | (2) | - | 47 | 51 | - | 51 | |||||||||||
Allowance for borrowed funds used during construction1 | (4) | - | - | (4) | (4) | - | (4) | |||||||||||
Interest expense, net AFUDC | 36 | (2) | - | 34 | 40 | - | 40 | $ | 0.04 | |||||||||
Other expenses (operating)1 | 1 | - | - | 1 | 2 | - | 2 | |||||||||||
Other income1 | (2) | 2 | - | - | - | - | - | |||||||||||
Other expense1 | 12 | - | - | 12 | 3 | - | 3 | |||||||||||
Other | 11 | 2 | - | 13 | 5 | - | 5 | $ | (0.050) | |||||||||
Net income attributable to noncontrolling interests1 | 4 | - | 5 | 9 | 9 | - | 9 | N/A | ||||||||||
1 Line items from Consolidated Statements of Income 2 Not tax effected Totals may not sum due to rounding | ||||||||||||||||||
NON-GAAP FINANCIAL INFORMATION
In this press release, we refer to “on-going earnings.” On-going earnings is a “non-GAAP financial measure,” as defined in accordance with SEC rules. In this release we also provide a reconciliation to show various deferral impacts of our Four Corners transaction and impacts to our non-controlling interests for the Palo Verde lease extensions. We believe on-going earnings and the information provided in the reconciliation provide investors with useful indicators of our results that are comparable among periods because they exclude the effects of unusual items that may occur on an irregular basis. Investors should note that these non-GAAP financial measures involve judgments by management, including whether an item is classified as an unusual item. We use on-going earnings, or similar concepts, to measure our performance internally in reports for management.
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements based on our current expectations, including statements regarding our earnings guidance and financial outlook and goals. These forward-looking statements are often identified by words such as “estimate,” “predict,” “may,” “believe,” “plan,” “expect,” “require,” “intend,” “assume” and similar words. Because actual results may differ materially from expectations, we caution readers not to place undue reliance on these statements. A number of factors could cause future results to differ materially from historical results, or from outcomes currently expected or sought by Pinnacle West or APS. These factors include, but are not limited to:
• | our ability to manage capital expenditures and operations and maintenance costs while maintaining reliability and customer service levels; |
• | variations in demand for electricity, including those due to weather, the general economy, customer and sales growth (or decline), and the effects of energy conservation measures and distributed generation; |
• | power plant and transmission system performance and outages; |
• | competition in retail and wholesale power markets; |
• | regulatory and judicial decisions, developments and proceedings; |
• | new legislation or regulation including those relating to environmental requirements, nuclear plant operations and potential deregulation of retail electric markets; |
• | fuel and water supply availability; |
• | our ability to achieve timely and adequate rate recovery of our costs, including returns on debt and equity capital; |
• | our ability to meet renewable energy and energy efficiency mandates and recover related costs; |
• | risks inherent in the operation of nuclear facilities, including spent fuel disposal uncertainty; |
• | current and future economic conditions in Arizona, particularly in real estate markets; |
• | the development of new technologies which may affect electric sales or delivery; |
• | the cost of debt and equity capital and the ability to access capital markets when required; |
• | environmental and other concerns surrounding coal-fired generation; |
• | volatile fuel and purchased power costs; |
• | the investment performance of the assets of our nuclear decommissioning trust, pension, and other postretirement benefit plans and the resulting impact on future funding requirements; |
• | the liquidity of wholesale power markets and the use of derivative contracts in our business; |
• | potential shortfalls in insurance coverage; |
• | new accounting requirements or new interpretations of existing requirements; |
• | generation, transmission and distribution facility and system conditions and operating costs; |
• | the ability to meet the anticipated future need for additional baseload generation and associated transmission facilities in our region; |
• | the willingness or ability of our counterparties, power plant participants and power plant land owners to meet contractual or other obligations or extend the rights for continued power plant operations; and |
• | restrictions on dividends or other provisions in our credit agreements and ACC orders. |
These and other factors are discussed in Risk Factors described in Part 1, Item 1A of the Pinnacle West/APS Annual Report on Form 10-K for the fiscal year ended December 31, 2014, which readers should review carefully before placing any reliance on our financial statements or disclosures. Neither Pinnacle West nor APS assumes any obligation to update these statements, even if our internal estimates change, except as required by law.
# # #
PINNACLE WEST CAPITAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(dollars and shares in thousands, except per share amounts)
THREE MONTHS ENDED | TWELVE MONTHS ENDED | |||||||
DECEMBER 31, | DECEMBER 31, | |||||||
2014 | 2013 | 2014 | 2013 | |||||
Operating Revenues | $ 726,450 | $ 699,762 | $ 3,491,632 | $ 3,454,628 | ||||
Operating Expenses | ||||||||
Fuel and purchased power | 256,828 | 236,493 | 1,179,829 | 1,095,709 | ||||
Operations and maintenance | 260,503 | 238,854 | 908,025 | 924,727 | ||||
Depreciation and amortization | 106,776 | 98,298 | 417,358 | 415,708 | ||||
Taxes other than income taxes | 41,596 | 40,076 | 172,295 | 164,167 | ||||
Other expenses | 563 | 2,141 | 2,883 | 7,994 | ||||
Total | 666,266 | 615,862 | 2,680,390 | 2,608,305 | ||||
Operating Income | 60,184 | 83,900 | 811,242 | 846,323 | ||||
Other Income (Deductions) | ||||||||
Allowance for equity funds used during construction | 8,811 | 6,883 | 30,790 | 25,581 | ||||
Other income | 2,094 | 317 | 9,608 | 1,704 | ||||
Other expense | (12,361) | (2,603) | (21,746) | (16,024) | ||||
Total | (1,456) | 4,597 | 18,652 | 11,261 | ||||
Interest Expense | ||||||||
Interest charges | 48,604 | 50,516 | 200,950 | 201,888 | ||||
Allowance for borrowed funds used during construction | (4,418) | (4,000) | (15,457) | (14,861) | ||||
Total | 44,186 | 46,516 | 185,493 | 187,027 | ||||
Income Before Income Taxes | 14,542 | 41,981 | 644,401 | 670,557 | ||||
Income Taxes | 5,007 | 9,167 | 220,705 | 230,591 | ||||
Net Income | 9,535 | 32,814 | 423,696 | 439,966 | ||||
Less: Net income attributable to noncontrolling interests | 4,125 | 8,554 | 26,101 | 33,892 | ||||
Net Income Attributable To Common Shareholders | $ 5,410 | $ 24,260 | $ 397,595 | $ 406,074 | ||||
Weighted-Average Common Shares Outstanding - Basic | 110,765 | 110,130 | 110,626 | 109,984 | ||||
Weighted-Average Common Shares Outstanding - Diluted | 111,284 | 110,936 | 111,178 | 110,806 | ||||
Earnings Per Weighted-Average Common Share Outstanding | ||||||||
Income from continuing operations attributable to common shareholders - basic | $ 0.05 | $ 0.22 | $ 3.59 | $ 3.69 | ||||
Net income attributable to common shareholders - basic | $ 0.05 | $ 0.22 | $ 3.59 | $ 3.69 | ||||
Income from continuing operations attributable to common shareholders - diluted | $ 0.05 | $ 0.22 | $ 3.58 | $ 3.66 | ||||
Net income attributable to common shareholders - diluted | $ 0.05 | $ 0.22 | $ 3.58 | $ 3.66 | ||||
Last Updated 2/20/2015 Line 2014 2013 Incr (Decr) 2014 2013 Incr (Decr) EARNINGS CONTRIBUTION BY SUBSIDIARY (Dollars in Millions) 1 Arizona Public Service 20$ 39$ (19)$ 447$ 459$ (12)$ 2 El Dorado (8) - (8) (8) (4) (4) 3 Parent Company (3) (6) 3 (15) (15) - 4 Net income 9 33 (24) 424 440 (16) 5 Less: Net Income Attributable to Noncontrolling Interests 4 9 (5) 26 34 (8) 6 Net Income Attributable to Common Shareholders 5$ 24$ (19)$ 398$ 406$ (8)$ EARNINGS PER SHARE BY SUBSIDIARY - DILUTED 7 Arizona Public Service 0.18$ 0.35$ (0.17)$ 4.02$ 4.14$ (0.12)$ 8 El Dorado (0.07) - (0.07) (0.08) (0.04) (0.04) 9 Parent Company (0.02) (0.05) 0.03 (0.13) (0.13) - 10 Net income 0.09 0.30 (0.21) 3.81 3.97 (0.16) 11 Less: Net Income Attributable to Noncontrolling Interests 0.04 0.08 (0.04) 0.23 0.31 (0.08) 12 Net Income Attributable to Common Shareholders 0.05$ 0.22$ (0.17)$ 3.58$ 3.66$ (0.08)$ 13 BOOK VALUE PER SHARE 39.50$ 38.07$ 1.43$ 39.50$ 38.07$ 1.43$ COMMON SHARES OUTSTANDING (Thousands) 14 Average - Diluted 111,284 110,936 348 111,178 110,806 372 15 End of Period 110,571 110,182 389 110,571 110,182 389 Pinnacle West Capital Corporation Quarterly Consolidated Statistical Summary Periods Ended December 31, 2014 and 2013 3 Months Ended December 31, 12 Months Ended December 31, See Glossary of Terms Page 1 of 4
Last Updated 2/20/2015 Line 2014 2013 Incr (Decr) 2014 2013 Incr (Decr) ELECTRIC OPERATING REVENUES (Dollars in Millions) Retail 16 Residential 311$ 298$ 13$ 1,640$ 1,675$ (35)$ 17 Business 354 352 2 1,558 1,558 - 18 Total retail 665 650 15 3,198 3,233 (35) Wholesale revenue on delivered electricity 19 Traditional contracts 11 9 2 52 53 (1) 20 Off-system sales 34 23 11 174 89 85 21 Native load hedge liquidation - 2 (2) - 11 (11) 22 Total wholesale 45 34 11 226 153 73 23 Transmission for others 7 7 - 30 32 (2) 24 Other miscellaneous services 9 8 1 35 33 2 25 Total electric operating revenues 726$ 699$ 27$ 3,489$ 3,451$ 38$ ELECTRIC SALES (GWH) Retail sales 26 Residential 2,586 2,464 122 12,838 13,290 (452) 27 Business 3,486 3,410 76 14,747 14,798 (51) 28 Total retail 6,072 5,874 198 27,585 28,088 (503) Wholesale electricity delivered 29 Traditional contracts 154 99 55 714 683 31 30 Off-system sales 1,038 717 321 4,482 2,998 1,484 31 Retail load hedge management - 68 (68) - 267 (267) 32 Total wholesale 1,192 884 308 5,196 3,948 1,248 33 Total electric sales 7,264 6,758 506 32,781 32,036 745 Pinnacle West Capital Corporation Quarterly Consolidated Statistical Summary Periods Ended December 31, 2014 and 2013 3 Months Ended December 31, 12 Months Ended December 31, See Glossary of Terms Page 2 of 4
Last Updated 2/20/2015 Line 2014 2013 Incr (Decr) 2014 2013 Incr (Decr) AVERAGE ELECTRIC CUSTOMERS Retail customers 34 Residential 1,038,927 1,024,619 14,308 1,033,728 1,019,292 14,436 35 Business 129,812 128,547 1,265 129,351 128,170 1,181 36 Total retail 1,168,739 1,153,166 15,573 1,163,079 1,147,462 15,617 37 Wholesale customers 52 52 - 55 52 3 38 Total customers 1,168,791 1,153,218 15,573 1,163,134 1,147,514 15,620 39 Total customer growth (% over prior year) 1.4% 1.3% 0.1% 1.4% 1.3% 0.1% RETAIL SALES (GWH) - WEATHER NORMALIZED 40 Residential 2,707 2,583 124 13,220 13,131 89 41 Business 3,474 3,482 (8) 14,674 14,771 (97) 42 Total 6,181 6,065 116 27,894 27,902 (8) 43 Retail sales (GWH) (% over prior year) 1.9% (2.0)% 3.9% 0.0% (0.5)% 0.5% RETAIL USAGE (KWh/Average Customer) 44 Residential 2,489 2,405 84 12,419 13,039 (620) 45 Business 26,857 26,530 327 114,007 115,453 (1,446) RETAIL USAGE - WEATHER NORMALIZED (KWh/Average Customer) 46 Residential 2,606 2,521 85 12,789 12,882 (93) 47 Business 26,759 27,089 (330) 113,443 115,246 (1,803) ELECTRICITY DEMAND (MW) 48 Native load peak demand 4,455 4,500 (45) 7,007 6,927 80 WEATHER INDICATORS - RESIDENTIAL Actual 49 Cooling degree-days 24 8 16 1,699 1,800 (101) 50 Heating degree-days 290 323 (33) 535 937 (402) 51 Average humidity 36% 23% 13% 28% 24% 4% 10-Year Averages 52 Cooling degree-days 55 55 - 1,777 1,777 - 53 Heating degree-days 366 366 - 865 865 - 54 Average humidity 30% 30% - 25% 25% - Periods Ended December 31, 2014 and 2013 3 Months Ended December 31, 12 Months Ended December 31, Quarterly Consolidated Statistical Summary Pinnacle West Capital Corporation See Glossary of Terms Page 3 of 4
Last Updated 2/20/2015 Line 2014 2013 Incr (Decr) 2014 2013 Incr (Decr) ENERGY SOURCES (GWH) Generation production 55 Nuclear 2,174 1,923 251 9,406 9,146 260 56 Coal 2,565 2,483 82 11,550 10,899 651 57 Gas, oil and other 1,245 1,301 (56) 7,694 6,127 1,567 58 Total generation production 5,984 5,707 277 28,650 26,172 2,478 Purchased power 59 Firm load 1,463 1,262 201 7,063 6,826 237 60 Marketing and trading 102 105 (3) 453 513 (60) 61 Total purchased power 1,565 1,367 198 7,516 7,339 177 62 Total energy sources 7,549 7,074 475 36,166 33,511 2,655 POWER PLANT PERFORMANCE Capacity Factors 63 Nuclear 86% 76% 10% 94% 91% 3% 64 Coal 60% 64% (4)% 68% 71% (3)% 65 Gas, oil and other 50% 17% 33% 68% 20% 48% 66 System average 36% 40% (4)% 38% 47% (9)% ECONOMIC INDICATORS Building Permits (a) 67 Metro Phoenix 4,426 3,707 719 18,813 15,153 3,660 Arizona Job Growth (b) 68 Payroll job growth (% over prior year) 2.5% 1.9% 0.6% 2.1% 2.1% 0.0% 69 Unemployment rate (%, seasonally adjusted) 6.8% 7.7% (0.9)% 7.0% 8.0% (1.0)% Sources: (a) U.S. Census Bureau (b) Arizona Department of Economic Security 3 Months Ended December 31, 12 Months Ended December 31, Pinnacle West Capital Corporation Quarterly Consolidated Statistical Summary Periods Ended December 31, 2014 and 2013 See Glossary of Terms Page 4 of 4
FOURTH QUARTER AND FULL-YEAR 2014 RESULTS February 20, 2015
2 Fourth Quarter and Full-Year 2014 FORWARD LOOKING STATEMENTS AND NON-GAAP FINANCIAL MEASURES This presentation contains forward-looking statements based on current expectations, including statements regarding our earnings guidance and financial outlook and goals. These forward-looking statements are often identified by words such as “estimate,” “predict,” “may,” “believe,” “plan,” “expect,” “require,” “intend,” “assume” and similar words. Because actual results may differ materially from expectations, we caution you not to place undue reliance on these statements. A number of factors could cause future results to differ materially from historical results, or from outcomes currently expected or sought by Pinnacle West or APS. These factors include, but are not limited to: our ability to manage capital expenditures and operations and maintenance costs while maintaining reliability and customer service levels; variations in demand for electricity, including those due to weather, the general economy, customer and sales growth (or decline), and the effects of energy conservation measures and distributed generation; power plant and transmission system performance and outages; competition in retail and wholesale power markets; regulatory and judicial decisions, developments and proceedings; new legislation or regulation, including those relating to environmental requirements, nuclear plant operations and potential deregulation of retail electric markets; fuel and water supply availability; our ability to achieve timely and adequate rate recovery of our costs, including returns on debt and equity capital; our ability to meet renewable energy and energy efficiency mandates and recover related costs; risks inherent in the operation of nuclear facilities, including spent fuel disposal uncertainty; current and future economic conditions in Arizona, particularly in real estate markets; the development of new technologies which may affect electric sales or delivery; the cost of debt and equity capital and the ability to access capital markets when required; environmental and other concerns surrounding coal-fired generation; volatile fuel and purchased power costs; the investment performance of the assets of our nuclear decommissioning trust, pension, and other postretirement benefit plans and the resulting impact on future funding requirements; the liquidity of wholesale power markets and the use of derivative contracts in our business; potential shortfalls in insurance coverage; new accounting requirements or new interpretations of existing requirements; generation, transmission and distribution facility and system conditions and operating costs; the ability to meet the anticipated future need for additional baseload generation and associated transmission facilities in our region; the willingness or ability of our counterparties, power plant participants and power plant land owners to meet contractual or other obligations or extend the rights for continued power plant operations; and restrictions on dividends or other provisions in our credit agreements and ACC orders. These and other factors are discussed in Risk Factors described in Part I, Item 1A of the Pinnacle West/APS Annual Report on Form 10-K for the fiscal year ended December 31, 2014 which you should review carefully before placing any reliance on our financial statements, disclosures or earnings outlook. Neither Pinnacle West nor APS assumes any obligation to update these statements, even if our internal estimates change, except as required by law. In this presentation, references to net income and earnings per share (EPS) refer to amounts attributable to common shareholders. We present “gross margin” per diluted share of common stock. Gross margin refers to operating revenues less fuel and purchased power expenses. Gross margin is a “non-GAAP financial measure,” as defined in accordance with SEC rules. The appendix contains a reconciliation of this non-GAAP financial measure to the referenced revenue and expense line items on our Consolidated Statements of Income, which are the most directly comparable financial measures calculated and presented in accordance with generally accepted accounting principles in the United States of America (GAAP). We view gross margin as an important performance measure of the core profitability of our operations. We refer to “on-going earnings” in this presentation, which is also a non-GAAP financial measure. We also provide a reconciliation to show various deferral impacts of our Four Corners transaction and impacts to our noncontrolling interests for the Palo Verde lease extensions. We believe on-going earnings and the information provided in the reconciliation provide investors with useful indicators of our results that are comparable among periods because they exclude the effects of unusual items that may occur on an irregular basis. Investors should note that these non-GAAP financial measures may involve judgments by management, including whether an item is classified as an unusual item. These measures are key components of our internal financial reporting and are used by our management in analyzing the operations of our business. We believe that investors benefit from having access to the same financial measures that management uses.
3 Fourth Quarter and Full-Year 2014 CEO • Regulatory Update • 2015 Key Dates • Strategic Investments AGENDA CFO • 2014 Financial Results • Arizona Economic Outlook • Financing • Earnings Guidance
4 Fourth Quarter and Full-Year 2014 CONSOLIDATED EPS COMPARISON 2014 VS. 2013 $0.05 $0.22 2014 2013 4th Quarter GAAP Net Income $0.05 $0.22 4th Quarter On-Going Earnings Full-Year GAAP Net Income $3.58 $3.66 Full-Year On-Going Earnings $3.58 $3.66$3.68 $3.60 Weather- Normalized Weather- Normalized 2014 2013
5 Fourth Quarter and Full-Year 2014 Gross Margin(1) $0.09 ON-GOING EPS VARIANCES FULL YEAR 2014 VS. 2013 (1) Excludes costs, and offsetting operating revenues, associated with renewable energy (excluding AZ Sun), demand side management and similar regulatory programs. Note: Drivers adjusted for the deferral impacts of the Four Corners transaction and impacts to our noncontrolling interests for the Palo Verde lease extensions. See non-GAAP reconciliation in appendix. O&M(1) $(0.04) Other Taxes $(0.01) Effective Tax Rate $(0.02) Other, net $(0.04) Interest, Net of AFUDC $0.10 $3.66 $3.58 Weather $(0.16) 2013 2014 Gross Margin LFCR $0.06 TCA $(0.04) AZ Sun $0.08 Other $(0.01)
6 Fourth Quarter and Full-Year 2014 D&A $0.01Gross Margin (1) $0.07 = Net Decrease $(0.17) ON-GOING EPS VARIANCES 4TH QUARTER 2014 VS. 4TH QUARTER 2013 (1) Excludes costs, and offsetting operating revenues, associated with renewable energy (excluding AZ Sun), demand side management and similar regulatory programs. Note: Drivers adjusted for the deferral impacts of the Four Corners transaction and impacts to our noncontrolling interests for the Palo Verde lease extensions. See non-GAAP reconciliation in appendix. O&M(1) $(0.18) Effective Tax Rate $(0.06) Interest, Net of AFUDC $0.04 Other, Net $(0.05)
7 Fourth Quarter and Full-Year 2014 GROSS MARGIN EPS DRIVERS 4TH QUARTER 2014 VS. 4TH QUARTER 2013 Lost Fixed Cost Recovery Mechanism $0.01 = Net Increase $0.07 AZ Sun $0.01 See non-GAAP reconciliation for gross margin in appendix. Other, Net $0.01 Higher Retail kWh Sales $0.01 Weather $0.03
8 Fourth Quarter and Full-Year 2014 0% 5% 10% 15% 20% 25% '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 Industrial ARIZONA ECONOMIC INDICATORS Nonresidential Building Vacancy – Metro Phoenix Single Family & Multifamily Housing Permits Maricopa County Home Prices – Metro Phoenix Value Relative to Jan ‘05 50 75 100 125 150 175 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 Vacancy Rate Office Retail Job Growth (Total Nonfarm) - Arizona (10.0)% (5.0)% 0.0% 5.0% 10.0% '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 YoY Change E Q4Nov 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 '07 '08 '09 '10 '11 '12 '13 '14 '15 Single Family Multifamily Dec
9 Fourth Quarter and Full-Year 2014 FINANCING $300 $250 $500 $250 $125 $- $100 $200 $300 $400 $500 $600 2015 2016 2017 2018 2019 2020 APS PNW ($Millions) Debt Maturity Schedule 2014 Major Financing Activities • $250 million 30-year 4.70% APS senior unsecured notes issued in January 2014 with proceeds used primarily to fund acquisition of Four Corners • $250 million 10-year 3.35% APS senior unsecured notes issued June 2014 with proceeds used with other funds to pay the $300 million maturity on June 30, 2014 • Refinanced $125 million PNW term loan 2015 Major Financing Activities • $250 million 5-year 2.20% APS senior unsecured notes issued in January 2015 • Currently expect up to an additional $275 million of new long-term debt, in addition to refinancing maturing debt – $300 million (4.65%) APS long-term debt due May 15, 2015 • In addition, there will be tax-exempt series remarketed or refinanced
10 Fourth Quarter and Full-Year 2014 ON-GOING EPS GUIDANCE AS OF FEBRUARY 20, 2015 2014 EPS 2015 Guidance Note: Earned Return on Equity goal based on average Total Shareholders’ Equity for PNW Consolidated, weather-normalized. See key factor and assumptions in appendix. Affirming 2015 Guidance range $3.58 $3.75 - $3.95 Outlook through 2016 • Goal of earning more than 9.5% Return on Equity • Adjustment mechanisms (Lost Fixed Cost Recovery, Transmission Cost Adjustor, AZ Sun, Four Corners, etc.) providing increasing contribution • Modest load growth • Continued focus on sustainable cost management
11 Fourth Quarter and Full-Year 2014 2015 KEY DATES ACC Key Dates Docket # Q1 Q2 Q3 Q4 Key Regulatory Filings Lost Fixed Cost Recovery 11-0224 Jan 15 Net Metering – Quarterly Installation Filings 13-0248 Jan 15 Apr 15 Jul 15 Oct 15 Transmission Cost Adjustor 11-0224 May 15 Renewable Energy Surcharge TBD Jul 1 2014 Integrated Resource Plan (Biennial) and Cholla Unit 2 Retirement Proposal 13-0070 April: ACC Review of 2014 RFP Energy Efficiency 13-0214 TBD Ocotillo Modernization Project 14-0292 Jan – Q2: RFP Rate Design Process 14-0329 TBD Inquiry into Solar DG business models and practices (Generic Docket)* 14-0415 ACC to outline next steps ACC Open Meetings - ACC Open Meetings Held Monthly Other Key Dates Docket # Q1 Q2 Q3 Q4 Arizona State Legislature n/a In Session Jan 12 – End of Q2 Delaney Colorado River Transmission Line (California ISO) n/a Jan: Bidders posted Winning bidder announced * Members of Congress have also sent letters to the Consumer Financial Protection Bureau and US FTC, requesting responses, which may occur in 2015.
APPENDIX
13 Fourth Quarter and Full-Year 2014 • Funded status of the pension plan maintained at 90% YE2014, due in large part to the continued implementation of the liability driven investment strategy. • In October 2014, the Society of Actuaries issued its final report on mortality tables. The data shown incorporates the updated mortality assumptions using a modification of these tables, which better reflect our employee’s demographics. PENSION & OTHER POST RETIREMENT BENEFITS (“OPEB”) 77% 90% 90% YE 2012 YE 2013 YE 2014 Pension Funded Status(1) Expense(2) 2014A 2015E 2016E Pension(1) $14 $14 $7 OPEB $6 ($9) ($8) Contributions 2014A 2015E 2016E 2017E Pension $175 $100 Up to $100 Up to $100 OPEB $1 $1 $1 $1 Assumptions 12/31/2013 12/31/2014 Discount Rate: Pension 4.88% 4.02% Expected Long-Term Return on Plan Assets: Pension 6.90% 6.90% (1) Excludes supplemental excess benefit retirement plan. (2) Excludes approximately 50% of total estimated expense which is attributable to amounts capitalized or billed to electric plant participants. Data as of February 20, 2015 ($ in millions)
14 Fourth Quarter and Full-Year 2014 2015 ON-GOING EPS GUIDANCE Key Factors & Assumptions as of February 20, 2015 2015 Electricity gross margin* (operating revenues, net of fuel and purchased power expenses) $2.30 – $2.35 billion • Retail customer growth about 1.5-2.5% • Weather-normalized retail electricity sales volume about 0-1.0% to prior year taking into account effects of customer conservation, energy efficiency and distributed renewable generation initiatives Operating and maintenance* $795 - $815 million Other operating expenses (depreciation and amortization, and taxes other than income taxes) $650 - $670 million Interest expense, net of allowance for borrowed and equity funds used during construction (Total AFUDC $40 million) $175 - $185 million Net income attributable to noncontrolling interests ~$20 million Effective tax rate 35% Average diluted common shares outstanding ~111.0 million On-Going EPS Guidance $3.75 - $3.95 * Excludes O&M of $113 million, and offsetting revenues, associated with renewable energy and demand side management programs.
15 Fourth Quarter and Full-Year 2014 2015 – 2017 FINANCIAL OUTLOOK Key Factors & Assumptions as of February 20, 2015 Assumption Impact Retail customer growth • Expected to average about 2-3% annually (2015-2017) • Modestly improving Arizona and U.S. economic conditions Weather-normalized retail electricity sales volume growth • About 0.5-1.5% after customer conservation and energy efficiency and distributed renewable generation initiatives Assumption Impact AZ Sun Program • Additions to flow through RES until next base rate case • First 50 MW of AZ Sun is recovered through base rates Lost Fixed Cost Recovery (LFCR) • Offsets 30-40% of revenues lost due to ACC-mandated energy efficiency and distributed renewable generation initiatives Environmental Improvement Surcharge (EIS) • Assumed to recover up to $5 million annually of carrying costs for government- mandated environmental capital expenditures Power Supply Adjustor (PSA) • 100% recovery as of July 1, 2012 Transmission Cost Adjustor (TCA) • TCA is filed each May and automatically goes into rates effective June 1 • Beginning July 1, 2012 following conclusion of the regulatory settlement, transmission revenue is accrued each month as it is earned. Four Corners Acquisition • Four Corners rate increase effective January 1, 2015 Potential Property Tax Deferrals (2012 retail rate settlement) – Assume 60% of property tax increases relate to tax rates, therefore, will be eligible for deferrals (Deferral rates: 50% in 2013; 75% in 2014 and thereafter) Gross Margin – Customer Growth and Weather Gross Margin – Related to 2012 Retail Rate Settlement
16 Fourth Quarter and Full-Year 2014 Benchmark peers and determine gaps Develop Long- term business plan and annual targets Quarterly measurement and discussion to drive accountability SUSTAINABLE COST MANAGEMENT INGRAINED IN BUSINESS PLANNING FRAMEWORK Results to Date: • Reduction of 300+ positions • Palo Verde Unit Production Cost reduced from 2.2¢ to 2.0¢ per kWh • Fossil Generation shifted to fleetwide model in 2010 to streamline costs • Annual Supply savings of $30 million • Realigned corporate resource model • Documented nearly 1,000 policies, processes and procedures documented and completed over 150 process improvements Linked through Tiered Metrics Enterprise Process Improvement is current phase of Sustainable Cost Management -- a standardized, systematic approach to determining how to do our work better including documentation, driven by retiring workforce and need to control costs
17 Fourth Quarter and Full-Year 2014 OPERATIONS & MAINTENANCE OUTLOOK Targeting to be top quartile in peer benchmarking for staffing $749 $754 $761 $788 $805 $121 $150 $124 $137 $103 $113 2010 2011 2012 2013 2014 2015E PNW Consolidated RES/DSM* *Renewable energy and demand side management expenses are offset by revenue adjustors. $795 - $815 ($ Millions) 2015+ Outlook • Goal is to keep O&M per kWh flat • Complete documentation of over 1,800 policies, processes and procedures, including more than 275 process improvements to drive additional efficiencies • Execute targeted initiatives to address specific gaps and inefficiencies
18 Fourth Quarter and Full-Year 2014 $289 $354 $526 $467 $24 $36 $162 $161 $63 $86 $1 $2 $192 $203 $133 $180 $242 $329 $362 $385 $73 $83 $81 $98 2014 2015 2016 2017 CAPITAL EXPENDITURES 70% of capital expenditures are recovered through rate adjustors (30%) and depreciation cash flow (40%) ($ Millions) $883 $1,091 $1,265 2015 – 2017 as disclosed in 2014 Form 10-K Other Distribution Transmission Renewable Generation Environmental Traditional Generation Projected $1,293
19 Fourth Quarter and Full-Year 2014 APS SOLAR PARTNER PROGRAM • APS to implement 10 MW of APS-owned residential rooftop solar in 2015 − On December 19, 2014, ACC voted that it had no objection to APS implementing the program − Equates to approximately 1,500 customers − Will be filed for recovery in next general rate case − 2 MW (of the 10 MW) will only be deployed if coupled with distributed storage • Benefits: − Provides an alternative for those who cannot afford solar or do not want a lease − Study system benefits (i.e. west or SW oriented panels, advanced inverters, etc.) − Participating customers receive monthly credit on their bill through the 20-year life − Support and partner with Arizona solar installers • TBD • APS has track record through the Flagstaff Community Power Project – Launched in 2010 – 1.5 MW of distributed energy from solar panels owned by APS, spread across: • 125 residential rooftops • Schools • Neighborhood-scale solar power plant
20 Fourth Quarter and Full-Year 2014 As of December 31, 2014, about 30,000 residential grid-tied solar photovoltaic (PV) systems have been installed in APS’s service territory, equivalent to over 200 MW. *Note: www.arizonagoessolar.org logs total residential application volume, including cancellations. Solar water heaters can also be found on the site, but are not included in the above chart. 433 251 793 570 513 653 731 787 800 881 744 980 733 549 880 898 250 364 346 453 642 731 658 810 151 93 114 116 70 116 136 124 108 60 115 83 47 30 82 34 28 33 83 38 40 59 60 77 0 200 400 600 800 1,000 1,200 13-Jan 14-Jan 13-Feb2 14-Feb 13-Mar 14-Mar2 13-Apr2 14-Apr3 13-May2 14-May3 Column2 13-Jun2 14-Jun3 13-Jul2 14-Jul3 13-Aug2 14-Aug3 Column3 13-Sep2 14-Sep3 Column4 13-Oct2 14-Oct3 14-Oct4 13-Nov2 14-Nov3 14-Nov4 13-Dec2 14-Dec3 RESIDENTIAL PV APPLICATIONS 2013 Applications* 2014 Applications* 2014 Canceled Apps2013 Canceled Apps Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
21 Fourth Quarter and Full-Year 2014 10 16 (7) (10) (13) 6 (4) (7) $(20) $(10) $0 $10 $20 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 GROSS MARGIN EFFECTS OF WEATHER VARIANCES VS. NORMAL Pretax Millions 2013 $9 Million, as previously reported $11 Million, adjusted for current normals 11 As Previously Reported Adjusted for current 10-year Rolling Average (2003-2012) (4) 12 1 (13) (13) 6 2014 $(18) Million (7)
22 Fourth Quarter and Full-Year 2014 10 12 14 12 10 16 20 14 10 8 15 11 16 19 24 17 15 20 25 17 16 14 17 12 $0 $10 $20 $30 $40 $50 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Renewable Energy Demand Side Management RENEWABLE ENERGY AND DEMAND SIDE MANAGEMENT EXPENSES* * O&M expenses related to renewable energy, demand side management and similar regulatory programs are offset by comparable revenue amounts. Pretax Millions 2012 $124 Million 2013 $137 Million 2014 $103 Million
23 Fourth Quarter and Full-Year 2014 NON-GAAP MEASURE RECONCILIATION GROSS MARGIN $ millions pretax, except per share amounts 2014 2013 Operating revenues* 727$ 700$ Fuel and purchased power expenses* (257) (237) Gross margin 470 463 0.03$ Adjustments: Renewable energy (excluding AZ Sun), demand side management and similar regulatory programs (20) (27) 0.04$ Gross margin - adjusted 450$ 436$ 0.07$ * Line items from Consolidated Statements of Income Three Months Ended December 31, EPS Impact
24 Fourth Quarter and Full-Year 2014 NON-GAAP MEASURE RECONCILIATION OTHER NON-GAAP $ millions pretax, except per share amounts 2014 Four Corners Deferral Palo Verde Lease Extensions2 2014 Adjusted 2013 Four Corners Deferral 2013 Adjusted Operations and maintenance1 261$ (5)$ -$ 256$ 239$ (9)$ 230$ Renewable energy (excluding AZ Sun), demand side management and similar regulatory programs 23 - - 23 31 - 31 Net O&M 238 (5) - 233 208 (9) 199 (0.18)$ Depreciation and amortization1 107 7 (5) 109 98 9 107 0.01$ Taxes other than income taxes1 42 (2) - 40 40 - 40 -$ Allowance for equity funds used during construction1,2 (9) - - (9) (7) - (7) Interest charges1 49 (2) - 47 51 - 51 Allowance for borrowed funds used during construction1 (4) - - (4) (4) - (4) Interest expense, net of AFUDC 36 (2) - 34 40 - 40 0.04$ Other expenses (operating)1 1 - - 1 2 - 2 Other income1 (2) 2 - - - - - Other expense1 12 - - 12 3 - 3 Other 11 2 - 13 5 - 5 (0.05)$ Net income attributable to noncontrolling interests1 4 - 5 9 9 - 9 N/A 1 Line items from Consolidated Statements of Income 2 Not tax effected Totals may not sum due to rounding EPS Impact Three Months Ended December 31,
25 Fourth Quarter and Full-Year 2014 NON-GAAP MEASURE RECONCILIATION GROSS MARGIN $ millions pretax, except per share amounts 2014 2013 Operating revenues* 3,492$ 3,455$ Fuel and purchased power expenses* (1,180) (1,096) Gross margin 2,312 2,359 (0.26)$ Adjustments: Renewable energy (excluding AZ Sun), demand side management and similar regulatory programs (85) (119) 0.19$ Gross margin - adjusted 2,227$ 2,240$ (0.07)$ * Line items from Consolidated Statements of Income Twelve Months Ended December 31, EPS Impact
26 Fourth Quarter and Full-Year 2014 NON-GAAP MEASURE RECONCILIATION OTHER NON-GAAP $ millions pretax, except per share amounts 2014 Four Corners Deferral Palo Verde Lease Extensions2 2014 Adjusted 2013 Four Corners Deferral 2013 Adjusted Operations and maintenance1 908$ (18)$ -$ 890$ 925$ (9)$ 916$ Renewable energy (excluding AZ Sun), demand side management and similar regulatory programs 103 - - 103 137 - 137 Net O&M 805 (18) - 787 788 (9) 779 (0.04)$ Depreciation and amortization1 417 24 (10) 431 416 9 425 -$ Taxes other than income taxes1 172 (6) - 166 164 - 164 (0.01)$ Allowance for equity funds used during construction1,2 (31) - - (31) (26) - (26) Interest charges1 201 (8) - 193 202 - 202 Allowance for borrowed funds used during construction1 (15) - - (15) (15) - (15) Interest expense, net of AFUDC 155 (8) - 147 161 - 161 0.10$ Other expenses (operating)1 3 - - 3 8 - 8 Other income1 (10) 8 - (2) (2) - (2) Other expense1 22 - - 22 16 - 16 Other 15 8 - 23 22 - 22 (0.01)$ Net income attributable to noncontrolling interests1 26 - 10 36 34 - 34 N/A 1 Line items from Consolidated Statements of Income 2 Not tax effected Totals may not sum due to rounding Twelve Months Ended December 31, EPS Impact