Exact Name of Registrant | Commission | I.R.S. Employer |
as Specified in Its Charter | File Number | Identification No. |
Hawaiian Electric Industries, Inc. | 1-8503 | 99-0208097 |
Hawaiian Electric Company, Inc. | 1-4955 | 99-0040500 |
[ ] | 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)) |
HEI Exhibit 99 | News release, dated February 12, 2015, “Hawaiian Electric Industries Reports 2014 Year-End & Fourth Quarter Earnings” |
HAWAIIAN ELECTRIC INDUSTRIES, INC. | HAWAIIAN ELECTRIC COMPANY, INC. |
(Registrant) | (Registrant) |
/s/ James A. Ajello | /s/ Tayne S. Y. Sekimura |
James A. Ajello | Tayne S. Y. Sekimura |
Executive Vice President and | Senior Vice President and |
Chief Financial Officer | Chief Financial Officer |
Date: February 12, 2015 | Date: February 12, 2015 |
Exhibit No. | Description |
HEI Exhibit 99 | News release, dated February 12, 2015, “Hawaiian Electric Industries Reports 2014 Year-End & Fourth Quarter Earnings” |
Contact: | Clifford H. Chen | |
Manager, Investor Relations & | Telephone: (808) 543-7300 | |
Strategic Planning | E-mail: ir@hei.com |
• | Reported net income of $168.3 million vs $161.5 million in 2013, up 4%; |
• | Reported EPS of $1.64 vs $1.62 in 2013, up 1%; |
• | Reported ROE of 9.6%; Core ROE1 of 9.8% |
• | 114-year history of continuous dividends |
• | Continued legacy of delivering value for customers and Hawaii: |
• | Record 21%2 of electricity used by Hawaiian Electric customers generated from renewable sources |
◦ | Surpassed Hawaii’s 2015 renewable portfolio standard of 15% |
◦ | Avoided-oil equivalent purchase of 2 million barrels which would have cost our state approximately $259 million3 in imported oil in 2014 |
◦ | Led the nation in the integration of customer-sited solar: 13% of Oahu residential customers and 12% of all of our residential customers using rooftop solar by the end of 2014 |
• | Filed utility’s Power Supply Improvement Plan (PSIP) proposals with the Hawaii Public Utilities Commission in 2014 to: |
◦ | Lower electric bills by 20 percent by 2030 |
◦ | Increase renewable energy to more than 65 percent by 2030 |
◦ | Triple the amount of distributed solar by 2030 |
◦ | Offer customers expanded products and services |
1 | Non-GAAP measure which excludes $4.9 million and $4.3 million of merger-related costs after-tax for the full year 2014 and for the fourth quarter of 2014, respectively. See the “Explanation of HEI’s Use of Certain Unaudited Non-GAAP measures” and the related reconciliation. |
2 | Based upon preliminary Renewable Portfolio Standard information as of 12/31/14. |
3 | Estimate based on the 2014 average price per barrel of $129.65. |
• | Limited other operations and maintenance (O&M) expense4 increases to 1% over the 2013 level, less than the 2014 anticipated Honolulu inflation rate of 1.5%, while accommodating approximately $12 million in additional costs associated with strategic initiatives and storm recovery |
• | Bank provided over $1.5 billion of credit to consumers and businesses and originated over 3,600 mortgages |
• | Bank credit quality excellent with net charge offs of only 1 basis point on a loan book of $4.4 billion |
• | Contributed over 16,000 volunteer hours and over $2 million of charitable contributions to community organizations |
• | Announced plans for Hawaiian Electric Industries (HEI) and NextEra Energy to combine, as well as plans to spin off ASB Hawaii, the parent company of American Saving Bank, into a new, publicly traded company, mutually contingent upon the closing of the proposed combination of HEI and NextEra Energy |
4 | Excludes net income neutral expenses covered by surcharges or by third parties of $10 million and $8 million for the full year 2014 and 2013, respectively, and $3 million in both the fourth quarter of 2014 and 2013. See “Explanation of HEI’s Use of Certain Unaudited Non-GAAP measures” and the related reconciliation. |
• | Net revenues6 were $31 million higher compared to the prior year primarily due to $29 million in 2014 revenues attributable to the recovery of costs for clean energy and reliability investments and a $3 million refund to Maui Electric customers which reduced 2013 revenues, partially offset by $1 million due to reduced fuel efficiency performance; and |
• | Higher allowance for funds used during construction of $1 million. |
5 | Hawaiian Electric Company, unless otherwise defined, refers to the three utilities, Hawaiian Electric Company, Inc. on Oahu, Maui Electric Company, Limited, and Hawaii Electric Light Company, Inc. |
6 | Net revenues represent the after-tax impact of “Revenues” less the following expenses which are largely pass through items in revenues: “fuel oil,” “purchased power” and “taxes, other than income taxes” as shown on the Hawaiian Electric Company, Inc. and Subsidiaries’ Consolidated Statements of Income. |
• | $8 million higher depreciation expense in 2014 as a result of increasing investments for the integration of more renewable energy, improved customer reliability and greater system efficiency; |
• | O&M expenses4 were $3 million higher in 2014 compared to the prior year. However, excluding the unanticipated Tropical Storm Iselle restoration expenses and consulting costs associated with our energy transformation plans, O&M expenses for 2014 would have decreased by approximately $4 million compared to the prior year. Included in 2014 O&M expenses were grid modernization program costs for smart grid installations and the upgrade of our customer information system which were more than offset by lower customer services expenses, lower overhaul costs due to reduced scope of work and savings from the deactivation of generating units compared to the prior year; |
• | Higher interest expense and other charges, net of $3 million in 2014, including lower revenue balancing account (RBA) interest income of $2 million primarily due to the lower interest rates applied; and |
• | A favorable deferred income tax adjustment of $3 million recorded in 2013 related to prior years. |
• | O&M expenses4 were $8 million higher in the fourth quarter of 2014 compared to the prior quarter. This is largely due to no major overhauls in the fourth quarter of 2013, consulting costs associated with our energy transformation plans, the customer information system upgrade, and the initial phase of our smart grid installations as part of our grid modernization program, partially offset by the savings from the deactivation of generating units; and |
• | Depreciation expense in the fourth quarter of 2014 was $2 million higher than the prior year quarter due to increases in utility property, plant and equipment. |
• | Net revenues6 were $6 million higher compared to the prior year quarter primarily due to 2014 revenues attributable to the recovery of costs for clean energy and reliability investments; and |
• | Tax-related items of $1 million. |
• | $7 million lower noninterest income primarily due to lower mortgage banking income related to the decline in refinancing volume, lower interchange fees as a result of rate caps mandated by the Durbin Amendment, which became effective for American in July 2013, and the gain reflected in the prior year related to the sale of the credit card portfolio; |
• | $3 million higher provision for loan losses due primarily to normal growth in the loan portfolio and the $1 million release of reserves in 2013 related to the sale of the credit card portfolio; and |
• | $3 million higher net interest income as contributions from loan growth more than offset the lower yields on loans. |
• | $1 million higher noninterest expense largely attributable to the settlement of a purported class action lawsuit related to overdraft fees on debit card transactions and costs related to the strategic designation of a new corporate campus in Honolulu; |
• | $1 million higher provision for loan losses related to loan growth in the quarter; and |
• | $1 million of higher net interest income primarily due to loan growth. |
Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries CONSOLIDATED STATEMENTS OF INCOME (Unaudited) | ||||||||||||||||
Three months ended December 31 | Years ended December 31 | |||||||||||||||
(in thousands, except per share amounts) | 2014 | 2013 | 2014 | 2013 | ||||||||||||
Revenues | ||||||||||||||||
Electric utility | $ | 725,267 | $ | 770,152 | $ | 2,987,323 | $ | 2,980,172 | ||||||||
Bank | 64,726 | 62,306 | 252,497 | 258,147 | ||||||||||||
Other | 47 | 45 | (278 | ) | 151 | |||||||||||
Total revenues | 790,040 | 832,503 | 3,239,542 | 3,238,470 | ||||||||||||
Expenses | ||||||||||||||||
Electric utility | 666,389 | 704,588 | 2,711,555 | 2,734,659 | ||||||||||||
Bank | 47,350 | 44,540 | 176,878 | 171,090 | ||||||||||||
Other | 9,060 | 5,026 | 22,185 | 17,302 | ||||||||||||
Total expenses | 722,799 | 754,154 | 2,910,618 | 2,923,051 | ||||||||||||
Operating income (loss) | ||||||||||||||||
Electric utility | 58,878 | 65,564 | 275,768 | 245,513 | ||||||||||||
Bank | 17,376 | 17,766 | 75,619 | 87,057 | ||||||||||||
Other | (9,013 | ) | (4,981 | ) | (22,463 | ) | (17,151 | ) | ||||||||
Total operating income | 67,241 | 78,349 | 328,924 | 315,419 | ||||||||||||
Interest expense, net—other than on deposit liabilities and other bank borrowings | (17,704 | ) | (19,263 | ) | (76,352 | ) | (75,479 | ) | ||||||||
Allowance for borrowed funds used during construction | 702 | 620 | 2,579 | 2,246 | ||||||||||||
Allowance for equity funds used during construction | 1,838 | 1,531 | 6,771 | 5,561 | ||||||||||||
Income before income taxes | 52,077 | 61,237 | 261,922 | 247,747 | ||||||||||||
Income taxes | 18,447 | 21,751 | 91,712 | 84,341 | ||||||||||||
Net income | 33,630 | 39,486 | 170,210 | 163,406 | ||||||||||||
Preferred stock dividends of subsidiaries | 473 | 473 | 1,890 | 1,890 | ||||||||||||
Net income for common stock | $ | 33,157 | $ | 39,013 | $ | 168,320 | $ | 161,516 | ||||||||
Basic earnings per common share | $ | 0.32 | $ | 0.39 | $ | 1.65 | $ | 1.63 | ||||||||
Diluted earnings per common share | $ | 0.32 | $ | 0.39 | $ | 1.64 | $ | 1.62 | ||||||||
Dividends per common share | $ | 0.31 | $ | 0.31 | $ | 1.24 | $ | 1.24 | ||||||||
Weighted-average number of common shares outstanding | 102,561 | 99,853 | 101,968 | 98,968 | ||||||||||||
Adjusted weighted-average shares | 103,991 | 100,525 | 102,937 | 99,623 | ||||||||||||
Net income (loss) for common stock by segment | ||||||||||||||||
Electric utility | $ | 29,112 | $ | 31,990 | $ | 137,641 | $ | 122,929 | ||||||||
Bank | 12,017 | 12,184 | 51,492 | 57,534 | ||||||||||||
Other | (7,972 | ) | (5,161 | ) | (20,813 | ) | (18,947 | ) | ||||||||
Net income for common stock | $ | 33,157 | $ | 39,013 | $ | 168,320 | $ | 161,516 | ||||||||
Comprehensive income attributable to Hawaiian Electric Industries, Inc. | $ | 19,773 | $ | 57,949 | $ | 157,692 | $ | 171,189 | ||||||||
Return on average common equity | 9.6 | % | 9.7 | % |
December 31 | 2014 | 2013 | ||||||
(dollars in thousands) | ||||||||
Assets | ||||||||
Cash and cash equivalents | $ | 175,542 | $ | 220,036 | ||||
Accounts receivable and unbilled revenues, net | 313,696 | 346,785 | ||||||
Available-for-sale investment securities | 550,394 | 529,007 | ||||||
Stock in Federal Home Loan Bank of Seattle, at cost | 69,302 | 92,546 | ||||||
Loans receivable held for investment, net | 4,389,033 | 4,110,113 | ||||||
Loans held for sale, at lower of cost or fair value | 8,424 | 5,302 | ||||||
Property, plant and equipment, net of accumulated depreciation of $2,250,950 and $2,192,422 at the respective dates | 4,148,774 | 3,865,514 | ||||||
Regulatory assets | 905,264 | 575,924 | ||||||
Other | 541,542 | 512,627 | ||||||
Goodwill | 82,190 | 82,190 | ||||||
Total assets | $ | 11,184,161 | $ | 10,340,044 | ||||
Liabilities and shareholders’ equity | ||||||||
Liabilities | ||||||||
Accounts payable | $ | 186,425 | $ | 212,331 | ||||
Interest and dividends payable | 25,336 | 26,716 | ||||||
Deposit liabilities | 4,623,415 | 4,372,477 | ||||||
Short-term borrowings—other than bank | 118,972 | 105,482 | ||||||
Other bank borrowings | 290,656 | 244,514 | ||||||
Long-term debt, net—other than bank | 1,506,546 | 1,492,945 | ||||||
Deferred income taxes | 631,734 | 529,260 | ||||||
Regulatory liabilities | 344,849 | 349,299 | ||||||
Contributions in aid of construction | 466,432 | 432,894 | ||||||
Defined benefit pension and other postretirement benefit plans liability | 632,845 | 288,539 | ||||||
Other | 531,230 | 524,224 | ||||||
Total liabilities | 9,358,440 | 8,578,681 | ||||||
Preferred stock of subsidiaries - not subject to mandatory redemption | 34,293 | 34,293 | ||||||
Shareholders’ equity | ||||||||
Preferred stock, no par value, authorized 10,000,000 shares; issued: none | — | — | ||||||
Common stock, no par value, authorized 200,000,000 shares; issued and outstanding: 102,565,266 shares and 101,259,800 shares at the respective dates | 1,521,297 | 1,488,126 | ||||||
Retained earnings | 297,509 | 255,694 | ||||||
Accumulated other comprehensive loss, net of tax benefits | (27,378 | ) | (16,750 | ) | ||||
Total shareholders’ equity | 1,791,428 | 1,727,070 | ||||||
Total liabilities and shareholders’ equity | $ | 11,184,161 | $ | 10,340,044 |
Years ended December 31 | 2014 | 2013 | |||||
(in thousands) | |||||||
Cash flows from operating activities | |||||||
Net income | $ | 170,210 | $ | 163,406 | |||
Adjustments to reconcile net income to net cash provided by operating activities | |||||||
Depreciation of property, plant and equipment | 172,762 | 160,061 | |||||
Other amortization | 8,476 | 4,667 | |||||
Provision for loan losses | 6,126 | 1,507 | |||||
Loans receivable originated and purchased, held for sale | (155,755 | ) | (249,022 | ) | |||
Proceeds from sale of loans receivable, held for sale | 155,030 | 273,775 | |||||
Gain on sale of credit card portfolio | — | (2,251 | ) | ||||
Increase in deferred income taxes | 59,184 | 80,399 | |||||
Excess tax benefits from share-based payment arrangements | (277 | ) | (430 | ) | |||
Allowance for equity funds used during construction | (6,771 | ) | (5,561 | ) | |||
Change in cash overdraft | (1,038 | ) | 1,038 | ||||
Changes in assets and liabilities | |||||||
Decrease in accounts receivable and unbilled revenues, net | 33,089 | 16,038 | |||||
Decrease in fuel oil stock | 28,041 | 27,332 | |||||
Increase in regulatory assets | (17,000 | ) | (65,461 | ) | |||
Decrease in accounts, interest and dividends payable | (92,294 | ) | (23,153 | ) | |||
Change in prepaid and accrued income taxes and utility revenue taxes | 12,845 | (19,406 | ) | ||||
Increase (decrease) in defined benefit pension and other postretirement benefit plans liability | 22,251 | (33,014 | ) | ||||
Change in other assets and liabilities | (93,400 | ) | (2,779 | ) | |||
Net cash provided by operating activities | 301,479 | 327,146 | |||||
Cash flows from investing activities | |||||||
Available-for-sale investment securities purchased | (183,778 | ) | (112,654 | ) | |||
Principal repayments on available-for-sale investment securities | 91,013 | 158,558 | |||||
Proceeds from sale of available-for-sale investment securities | 79,564 | 71,367 | |||||
Redemption of stock from Federal Home Loan Bank of Seattle | 23,244 | 3,476 | |||||
Net increase in loans held for investment | (283,810 | ) | (398,426 | ) | |||
Proceeds from sale of real estate acquired in settlement of loans | 3,213 | 9,212 | |||||
Capital expenditures | (339,721 | ) | (353,879 | ) | |||
Contributions in aid of construction | 41,806 | 32,160 | |||||
Proceeds from sale of credit card portfolio | — | 26,386 | |||||
Other | (39 | ) | 40 | ||||
Net cash used in investing activities | (568,508 | ) | (563,760 | ) | |||
Cash flows from financing activities | |||||||
Net increase in deposit liabilities | 250,938 | 142,561 | |||||
Net increase in short-term borrowings with original maturities of three months or less | 13,490 | 21,789 | |||||
Net decrease in retail repurchase agreements | (9,465 | ) | (1,418 | ) | |||
Proceeds from other bank borrowings | 130,601 | 130,000 | |||||
Repayments of other bank borrowings | (75,000 | ) | (80,000 | ) | |||
Proceeds from issuance of long-term debt | 125,000 | 286,000 | |||||
Repayment of long-term debt | (111,400 | ) | (216,000 | ) | |||
Excess tax benefits from share-based payment arrangements | 277 | 430 | |||||
Net proceeds from issuance of common stock | 26,898 | 55,086 | |||||
Common stock dividends | (126,458 | ) | (98,383 | ) | |||
Preferred stock dividends of subsidiaries | (1,890 | ) | (1,890 | ) | |||
Other | (456 | ) | (1,187 | ) | |||
Net cash provided by financing activities | 222,535 | 236,988 | |||||
Net increase (decrease) in cash and cash equivalents | (44,494 | ) | 374 | ||||
Cash and cash equivalents, January 1 | 220,036 | 219,662 | |||||
Cash and cash equivalents, December 31 | $ | 175,542 | $ | 220,036 |
Three months ended December 31 | Years ended December 31 | |||||||||||||||
(dollars in thousands, except per barrel amounts) | 2014 | 2013 | 2014 | 2013 | ||||||||||||
Revenues | $ | 725,267 | $ | 770,152 | $ | 2,987,323 | $ | 2,980,172 | ||||||||
Expenses | ||||||||||||||||
Fuel oil | 265,696 | 307,814 | 1,131,685 | 1,185,552 | ||||||||||||
Purchased power | 175,887 | 184,012 | 722,008 | 710,681 | ||||||||||||
Other operation and maintenance | 115,129 | 102,547 | 410,612 | 403,270 | ||||||||||||
Depreciation | 41,597 | 38,160 | 166,387 | 154,025 | ||||||||||||
Taxes, other than income taxes | 68,080 | 72,055 | 280,863 | 281,131 | ||||||||||||
Total expenses | 666,389 | 704,588 | 2,711,555 | 2,734,659 | ||||||||||||
Operating income | 58,878 | 65,564 | 275,768 | 245,513 | ||||||||||||
Allowance for equity funds used during construction | 1,838 | 1,531 | 6,771 | 5,561 | ||||||||||||
Interest expense and other charges, net | (15,768 | ) | (15,319 | ) | (64,757 | ) | (59,279 | ) | ||||||||
Allowance for borrowed funds used during construction | 702 | 620 | 2,579 | 2,246 | ||||||||||||
Income before income taxes | 45,650 | 52,396 | 220,361 | 194,041 | ||||||||||||
Income taxes | 16,039 | 19,907 | 80,725 | 69,117 | ||||||||||||
Net income | 29,611 | 32,489 | 139,636 | 124,924 | ||||||||||||
Preferred stock dividends of subsidiaries | 229 | 229 | 915 | 915 | ||||||||||||
Net income attributable to Hawaiian Electric | 29,382 | 32,260 | 138,721 | 124,009 | ||||||||||||
Preferred stock dividends of Hawaiian Electric | 270 | 270 | 1,080 | 1,080 | ||||||||||||
Net income for common stock | $ | 29,112 | $ | 31,990 | $ | 137,641 | $ | 122,929 | ||||||||
Comprehensive income attributable to Hawaiian Electric | $ | 28,517 | $ | 33,516 | $ | 137,078 | $ | 124,507 | ||||||||
OTHER ELECTRIC UTILITY INFORMATION | ||||||||||||||||
Kilowatthour sales (millions) | ||||||||||||||||
Hawaiian Electric | 1,720 | 1,759 | 6,782 | 6,859 | ||||||||||||
Hawaii Electric Light | 269 | 273 | 1,062 | 1,076 | ||||||||||||
Maui Electric | 288 | 292 | 1,132 | 1,135 | ||||||||||||
2,277 | 2,324 | 8,976 | 9,070 | |||||||||||||
Wet-bulb temperature (Oahu average; degrees Fahrenheit) | 70.0 | 69.3 | 69.6 | 68.8 | ||||||||||||
Cooling degree days (Oahu) | 1,206 | 1,135 | 4,909 | 4,506 | ||||||||||||
Average fuel oil cost per barrel | $ | 122.04 | $ | 133.88 | $ | 129.65 | $ | 131.10 | ||||||||
Twelve months ended December 31 | 2014 | 2013 | ||||||||||||||
Return on average common equity (%) (simple average) | ||||||||||||||||
Hawaiian Electric | 8.74 | 7.98 | ||||||||||||||
Hawaii Electric Light | 6.71 | 7.41 | ||||||||||||||
Maui Electric | 8.81 | 8.91 | ||||||||||||||
Hawaiian Electric Consolidated | 8.40 | 8.02 |
December 31 | 2014 | 2013 | ||||||
(dollars in thousands, except par value) | ||||||||
Assets | ||||||||
Property, plant and equipment | ||||||||
Utility property, plant and equipment | ||||||||
Land | $ | 52,299 | $ | 51,883 | ||||
Plant and equipment | 6,009,482 | 5,701,875 | ||||||
Less accumulated depreciation | (2,175,510 | ) | (2,111,229 | ) | ||||
Construction in progress | 158,616 | 143,233 | ||||||
Utility property, plant and equipment, net | 4,044,887 | 3,785,762 | ||||||
Nonutility property, plant and equipment, less accumulated depreciation of $1,227 and $1,223 at respective dates | 6,563 | 6,567 | ||||||
Total property, plant and equipment, net | 4,051,450 | 3,792,329 | ||||||
Current assets | ||||||||
Cash and cash equivalents | 13,762 | 62,825 | ||||||
Customer accounts receivable, net | 158,484 | 175,448 | ||||||
Accrued unbilled revenues, net | 137,374 | 144,124 | ||||||
Other accounts receivable, net | 4,283 | 14,062 | ||||||
Fuel oil stock, at average cost | 106,046 | 134,087 | ||||||
Materials and supplies, at average cost | 57,250 | 59,044 | ||||||
Prepayments and other | 66,383 | 52,857 | ||||||
Regulatory assets | 71,421 | 69,738 | ||||||
Total current assets | 615,003 | 712,185 | ||||||
Other long-term assets | ||||||||
Regulatory assets | 833,843 | 506,186 | ||||||
Unamortized debt expense | 8,323 | 9,003 | ||||||
Other | 81,838 | 67,426 | ||||||
Total other long-term assets | 924,004 | 582,615 | ||||||
Total assets | $ | 5,590,457 | $ | 5,087,129 | ||||
Capitalization and liabilities | ||||||||
Capitalization | ||||||||
Common stock ($6 2/3 par value, authorized 50,000,000 shares; outstanding 15,805,327 in 2014 and 15,429,105 shares in 2013) | $ | 105,388 | $ | 102,880 | ||||
Premium on capital stock | 578,938 | 541,452 | ||||||
Retained earnings | 997,773 | 948,624 | ||||||
Accumulated other comprehensive income, net of income taxes-retirement benefit plans | 45 | 608 | ||||||
Common stock equity | 1,682,144 | 1,593,564 | ||||||
Cumulative preferred stock — not subject to mandatory redemption | 34,293 | 34,293 | ||||||
Long-term debt, net | 1,206,546 | 1,206,545 | ||||||
Total capitalization | 2,922,983 | 2,834,402 | ||||||
Current liabilities | ||||||||
Current portion of long-term debt | — | 11,400 | ||||||
Accounts payable | 163,934 | 189,559 | ||||||
Interest and preferred dividends payable | 22,316 | 21,652 | ||||||
Taxes accrued | 250,402 | 249,445 | ||||||
Regulatory liabilities | 632 | 1,916 | ||||||
Other | 65,146 | 63,881 | ||||||
Total current liabilities | 502,430 | 537,853 | ||||||
Deferred credits and other liabilities | ||||||||
Deferred income taxes | 602,872 | 507,161 | ||||||
Regulatory liabilities | 344,217 | 347,383 | ||||||
Unamortized tax credits | 79,492 | 73,539 | ||||||
Defined benefit pension and other postretirement benefit plans liability | 595,395 | 262,162 | ||||||
Other | 76,636 | 91,735 | ||||||
Total deferred credits and other liabilities | 1,698,612 | 1,281,980 | ||||||
Contributions in aid of construction | 466,432 | 432,894 | ||||||
Total capitalization and liabilities | $ | 5,590,457 | $ | 5,087,129 |
Years ended December 31 | 2014 | 2013 | |||||
(in thousands) | |||||||
Cash flows from operating activities | |||||||
Net income | $ | 139,636 | $ | 124,924 | |||
Adjustments to reconcile net income to net cash provided by operating activities | |||||||
Depreciation of property, plant and equipment | 166,387 | 154,025 | |||||
Other amortization | 8,091 | 5,077 | |||||
Increase in deferred income taxes | 82,947 | 64,507 | |||||
Change in tax credits, net | 6,062 | 7,017 | |||||
Allowance for equity funds used during construction | (6,771 | ) | (5,561 | ) | |||
Change in cash overdraft | (1,038 | ) | 1,038 | ||||
Changes in assets and liabilities | |||||||
Decrease in accounts receivable | 26,743 | 49,445 | |||||
Decrease (increase) in accrued unbilled revenues | 6,750 | (9,826 | ) | ||||
Decrease in fuel oil stock | 28,041 | 27,332 | |||||
Decrease (increase) in materials and supplies | 1,794 | (7,959 | ) | ||||
Increase in regulatory assets | (17,000 | ) | (65,461 | ) | |||
Decrease in accounts payable | (90,632 | ) | (20,828 | ) | |||
Change in prepaid and accrued income taxes and revenue taxes | (4,036 | ) | (2,028 | ) | |||
Increase (decrease) in defined benefit pension and other postretirement benefit plans liability | (961 | ) | 2,240 | ||||
Change in other assets and liabilities | (62,959 | ) | (31,499 | ) | |||
Net cash provided by operating activities | 283,054 | 292,443 | |||||
Cash flows from investing activities | |||||||
Capital expenditures | (311,574 | ) | (342,485 | ) | |||
Contributions in aid of construction | 41,806 | 32,160 | |||||
Other | — | (230 | ) | ||||
Net cash used in investing activities | (269,768 | ) | (310,555 | ) | |||
Cash flows from financing activities | |||||||
Common stock dividends | (88,492 | ) | (81,578 | ) | |||
Preferred stock dividends of Hawaiian Electric and subsidiaries | (1,995 | ) | (1,995 | ) | |||
Proceeds from issuance of common stock | 40,000 | 78,500 | |||||
Proceeds from issuance of long-term debt | — | 236,000 | |||||
Repayment of long-term debt | (11,400 | ) | (166,000 | ) | |||
Other | (462 | ) | (1,149 | ) | |||
Net cash provided by (used in) financing activities | (62,349 | ) | 63,778 | ||||
Net increase (decrease) in cash and cash equivalents | (49,063 | ) | 45,666 | ||||
Cash and cash equivalents, January 1 | 62,825 | 17,159 | |||||
Cash and cash equivalents, December 31 | $ | 13,762 | $ | 62,825 |
Three months ended | Years ended December 31, | |||||||||||||||||||
(in thousands) | December 31, 2014 | September 30, 2014 | December 31, 2013 | 2014 | 2013 | |||||||||||||||
Interest and dividend income | ||||||||||||||||||||
Interest and fees on loans | $ | 46,276 | $ | 45,532 | $ | 43,405 | $ | 179,341 | $ | 172,969 | ||||||||||
Interest and dividends on investment securities | 3,187 | 2,773 | 3,372 | 11,945 | 13,095 | |||||||||||||||
Total interest and dividend income | 49,463 | 48,305 | 46,777 | 191,286 | 186,064 | |||||||||||||||
Interest expense | ||||||||||||||||||||
Interest on deposit liabilities | 1,303 | 1,312 | 1,222 | 5,077 | 5,092 | |||||||||||||||
Interest on other borrowings | 1,468 | 1,438 | 1,437 | 5,731 | 4,985 | |||||||||||||||
Total interest expense | 2,771 | 2,750 | 2,659 | 10,808 | 10,077 | |||||||||||||||
Net interest income | 46,692 | 45,555 | 44,118 | 180,478 | 175,987 | |||||||||||||||
Provision for loan losses | 2,560 | 1,550 | 554 | 6,126 | 1,507 | |||||||||||||||
Net interest income after provision for loan losses | 44,132 | 44,005 | 43,564 | 174,352 | 174,480 | |||||||||||||||
Noninterest income | ||||||||||||||||||||
Fees from other financial services | 5,760 | 5,642 | 5,732 | 21,747 | 27,099 | |||||||||||||||
Fee income on deposit liabilities | 5,074 | 5,109 | 4,797 | 19,249 | 18,363 | |||||||||||||||
Fee income on other financial products | 1,806 | 1,971 | 2,117 | 8,131 | 8,405 | |||||||||||||||
Bank-owned life insurance | 1,004 | 1,000 | 978 | 3,949 | 3,928 | |||||||||||||||
Mortgage banking income | 1,164 | 875 | 1,413 | 2,913 | 8,309 | |||||||||||||||
Gains on sale of securities | — | — | — | 2,847 | 1,226 | |||||||||||||||
Other income, net | 455 | 634 | 492 | 2,375 | 4,753 | |||||||||||||||
Total noninterest income | 15,263 | 15,231 | 15,529 | 61,211 | 72,083 | |||||||||||||||
Noninterest expense | ||||||||||||||||||||
Compensation and employee benefits | 19,835 | 19,892 | 22,195 | 79,885 | 82,910 | |||||||||||||||
Occupancy | 4,238 | 4,517 | 4,197 | 17,197 | 16,747 | |||||||||||||||
Data processing | 2,975 | 2,684 | 2,970 | 11,690 | 10,952 | |||||||||||||||
Services | 2,561 | 2,580 | 2,160 | 10,269 | 9,015 | |||||||||||||||
Equipment | 1,638 | 1,672 | 1,826 | 6,564 | 7,295 | |||||||||||||||
Office supplies, printing and postage | 1,602 | 1,415 | 1,427 | 6,089 | 4,233 | |||||||||||||||
Marketing | 1,309 | 948 | 1,319 | 3,999 | 3,373 | |||||||||||||||
FDIC insurance | 820 | 840 | 748 | 3,261 | 3,253 | |||||||||||||||
Other expense | 7,042 | 5,116 | 4,457 | 20,990 | 21,726 | |||||||||||||||
Total noninterest expense | 42,020 | 39,664 | 41,299 | 159,944 | 159,504 | |||||||||||||||
Income before income taxes | 17,375 | 19,572 | 17,794 | 75,619 | 87,059 | |||||||||||||||
Income taxes | 5,358 | 6,312 | 5,610 | 24,127 | 29,525 | |||||||||||||||
Net income | $ | 12,017 | $ | 13,260 | $ | 12,184 | $ | 51,492 | $ | 57,534 | ||||||||||
Comprehensive income | $ | 5,323 | $ | 11,811 | $ | 23,802 | $ | 47,131 | $ | 60,733 | ||||||||||
OTHER BANK INFORMATION (annualized %, except as of period end) | ||||||||||||||||||||
Return on average assets | 0.87 | 0.98 | 0.94 | 0.95 | 1.13 | |||||||||||||||
Return on average equity | 8.84 | 9.87 | 9.56 | 9.62 | 11.38 | |||||||||||||||
Return on average tangible common equity | 10.42 | 11.65 | 11.39 | 11.37 | 13.59 | |||||||||||||||
Net interest margin | 3.65 | 3.62 | 3.67 | 3.62 | 3.74 | |||||||||||||||
Net charge-offs to average loans outstanding | 0.04 | 0.04 | 0.15 | 0.01 | 0.09 | |||||||||||||||
As of period end | ||||||||||||||||||||
Nonperforming assets to loans outstanding and real estate owned * | 0.85 | 0.88 | 1.20 | |||||||||||||||||
Allowance for loan losses to loans outstanding | 1.03 | 1.00 | 0.97 | |||||||||||||||||
Tier-1 leverage ratio * | 8.9 | 9.1 | 9.1 | |||||||||||||||||
Total risk-based capital ratio * | 12.3 | 12.6 | 12.1 | |||||||||||||||||
Tangible common equity to total assets | 8.25 | 8.49 | 8.50 | |||||||||||||||||
Dividend paid to HEI (via ASHI) ($ in millions) | 9 | 9 | 10 | 36 | 40 |
December 31 | 2014 | 2013 | ||||||||||
(in thousands) | ||||||||||||
Assets | ||||||||||||
Cash and due from banks | $ | 107,233 | $ | 108,998 | ||||||||
Interest-bearing deposits | 54,230 | 47,605 | ||||||||||
Available-for-sale investment securities, at fair value | 550,394 | 529,007 | ||||||||||
Stock in Federal Home Loan Bank of Seattle, at cost | 69,302 | 92,546 | ||||||||||
Loans receivable held for investment | 4,434,651 | 4,150,229 | ||||||||||
Allowance for loan losses | (45,618 | ) | (40,116 | ) | ||||||||
Net loans | 4,389,033 | 4,110,113 | ||||||||||
Loans held for sale, at lower of cost or fair value | 8,424 | 5,302 | ||||||||||
Other | 304,435 | 268,063 | ||||||||||
Goodwill | 82,190 | 82,190 | ||||||||||
Total assets | $ | 5,565,241 | $ | 5,243,824 | ||||||||
Liabilities and shareholder’s equity | ||||||||||||
Deposit liabilities–noninterest-bearing | $ | 1,342,794 | $ | 1,214,418 | ||||||||
Deposit liabilities–interest-bearing | 3,280,621 | 3,158,059 | ||||||||||
Other borrowings | 290,656 | 244,514 | ||||||||||
Other | 116,527 | 105,679 | ||||||||||
Total liabilities | 5,030,598 | 4,722,670 | ||||||||||
Common stock | 1 | 1 | ||||||||||
Additional paid in capital | 338,411 | 336,053 | ||||||||||
Retained earnings | 212,789 | 197,297 | ||||||||||
Accumulated other comprehensive loss, net of tax benefits | ||||||||||||
Net unrealized gains (losses) on securities | $ | 462 | $ | (3,663 | ) | |||||||
Retirement benefit plans | (17,020 | ) | (16,558 | ) | (8,534 | ) | (12,197 | ) | ||||
Total shareholder’s equity | 534,643 | 521,154 | ||||||||||
Total liabilities and shareholder’s equity | $ | 5,565,241 | $ | 5,243,824 | ||||||||
RECONCILIATION OF GAAP1 TO NON-GAAP MEASURES | |||||||||||||
Hawaiian Electric Industries, Inc. and Subsidiaries (HEI) | |||||||||||||
Unaudited | |||||||||||||
($ in millions, except per share amounts) | |||||||||||||
Three months ended December 31 | Years ended December 31 | ||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||
HEI CONSOLIDATED NET INCOME | |||||||||||||
GAAP (as reported) | $ | 33.2 | $ | 39.0 | $ | 168.3 | $ | 161.5 | |||||
Excluding special items (after-tax): | |||||||||||||
Costs related to pending merger with NextEra Energy, Inc. | 4.3 | — | 4.9 | — | |||||||||
Non-GAAP (core) | $ | 37.5 | $ | 39.0 | $ | 173.2 | $ | 161.5 | |||||
HEI CONSOLIDATED DILUTED EARNINGS PER SHARE | |||||||||||||
GAAP (as reported) | $ | 0.32 | $ | 0.39 | $ | 1.64 | $ | 1.62 | |||||
Excluding special items (after-tax): | |||||||||||||
Costs related to pending merger with NextEra Energy, Inc. | 0.04 | — | 0.05 | — | |||||||||
Non-GAAP (core) diluted earnings per common share | $ | 0.36 | $ | 0.39 | $ | 1.68 | $ | 1.62 | |||||
HEI CONSOLIDATED RETURN ON AVERAGE COMMON EQUITY (ROACE) (simple average) | |||||||||||||
Based on GAAP | 9.6 | % | 9.7 | % | |||||||||
Based on non-GAAP (core)2 | 9.8 | % | 9.7 | % | |||||||||
RECONCILIATION OF GAAP1 TO NON-GAAP MEASURES | |||||||||||||
Hawaiian Electric Company, Inc. and Subsidiaries | |||||||||||||
Unaudited | |||||||||||||
($ in millions) | |||||||||||||
Three months ended December 31 | Years ended December 31 | ||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||
HAWAIIAN ELECTRIC CONSOLIDATED OTHER OPERATION AND MAINTENANCE (O&M) EXPENSE | |||||||||||||
GAAP (as reported) | $ | 115.1 | $ | 102.5 | $ | 410.6 | $ | 403.3 | |||||
Excluding O&M-related net income neutral items3 | 2.5 | 2.9 | 10.0 | 8.0 | |||||||||
Adjusted other operations and maintenance expense (Non-GAAP measure) | $ | 112.6 | $ | 99.6 | $ | 400.6 | $ | 395.3 | |||||
Note: Columns may not foot due to rounding | |||||||||||||
1 Accounting principles generally accepted in the United States of America | |||||||||||||
2 Calculated as core net income divided by average GAAP common equity | |||||||||||||
3 Expenses covered by surcharges or by third parties recorded in revenues |
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