Business Context and Reporting Period
This Form 8-K is a combined current report filed by Pinnacle West Capital Corporation and its subsidiary, Arizona Public Service Company (APS), dated February 19, 2010. The filing reports on events occurring on February 12, 2010, and provides financial results for the fiscal quarter ended December 31, 2009.
Key Financial Metrics and Agreements
New Credit Facilities
- Pinnacle West Facility: Entered into a $200 million unsecured revolving credit facility on February 12, 2010, maturing February 12, 2013. This replaces a prior $283 million facility expiring December 9, 2010.
- APS Facility: Entered into a $500 million unsecured revolving credit facility on February 12, 2010, maturing February 12, 2013. This replaces a prior $377 million facility expiring December 9, 2010.
- Usage: Both facilities are for general corporate purposes, supporting commercial paper issuances, and letters of credit.
- Covenants: Include requirements to maintain specific debt-to-capitalization ratios, negative lien provisions, and ownership percentages (for Pinnacle West regarding APS stock).
Financial Results
The filing references a press release and exhibits (99.1, 99.2, 99.3, 99.4) containing detailed operating results, earnings variance explanations, and consolidated statements of income for the three and twelve months ended December 31, 2009. Specific revenue, profit, cash flow, and margin figures are not contained within the text of this Form 8-K summary.
Material Changes
The primary material change is the restructuring of liquidity facilities for both the parent company and its subsidiary. Pinnacle West reduced its revolver capacity from $283 million to $200 million, while APS increased its capacity from $377 million to $500 million. Both facilities extend the maturity date to 2013 and involve a change in administrative agents and syndication banks.
Guidance, Outlook, and Risks
On February 19, 2010, the Company issued an earnings outlook for 2010 and 2011, the details of which are contained in the attached press release (Exhibit 99.1). The credit facilities include standard events of default, including cross-default provisions and change of control provisions. Borrowing rates are tied to the companies' senior unsecured debt credit ratings.
Investor Verification Checklist
- Review Exhibit 99.1 for specific Q4 2009 revenue, net income, and earnings per share figures.
- Examine Exhibit 99.2 for the consolidated statistical summary comparing 2009 to 2008 performance.
- Verify the specific debt-to-capitalization ratio covenants required under the new credit facilities.
- Check the Company website (www.pinnaclewest.com) for the full earnings conference call presentation (Exhibit 99.3) and variance explanations (Exhibit 99.4).
- Confirm the current senior unsecured debt credit ratings to understand the interest rate basis for the new facilities.