-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UMO1jdVB0/zZ+qPR5A/0biNY8IXGHVgyJPhEXUaUj2UQvU8jDm+bIVVZN4bB/5nL VugJ9y0endAaDOHcBHKdFQ== 0001193125-05-148156.txt : 20050726 0001193125-05-148156.hdr.sgml : 20050726 20050725174429 ACCESSION NUMBER: 0001193125-05-148156 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20050725 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Other Events FILED AS OF DATE: 20050726 DATE AS OF CHANGE: 20050725 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HAWAIIAN ELECTRIC INDUSTRIES INC CENTRAL INDEX KEY: 0000354707 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 990208097 STATE OF INCORPORATION: HI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-08503 FILM NUMBER: 05972304 BUSINESS ADDRESS: STREET 1: 900 RICHARDS ST CITY: HONOLULU STATE: HI ZIP: 96813 BUSINESS PHONE: 8085435662 MAIL ADDRESS: STREET 1: 900 RICHARDS STREET CITY: HONOLULU STATE: HI ZIP: 96813 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HAWAIIAN ELECTRIC CO INC CENTRAL INDEX KEY: 0000046207 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 990040500 STATE OF INCORPORATION: HI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-04955 FILM NUMBER: 05972305 BUSINESS ADDRESS: STREET 1: 900 RICHARDS ST CITY: HONOLULU STATE: HI ZIP: 96813 BUSINESS PHONE: 8085437771 MAIL ADDRESS: STREET 1: 900 RICHARDS STREET CITY: HONOLULU STATE: HI ZIP: 96813 FORMER COMPANY: FORMER CONFORMED NAME: HAWAIIAN ELECTRIC CO LTD DATE OF NAME CHANGE: 19670212 8-K 1 d8k.htm FORM 8-K Form 8-K

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: July 25, 2005

 


 

Exact Name of Registrant

as Specified in Its Charter


 

Commission File Number


 

I.R.S. Employer

Identification No.


Hawaiian Electric Industries, Inc.

  1-8503   99-0208097

Hawaiian Electric Company, Inc.

  1-4955   99-0040500

 


 

State of Hawaii

(State or other jurisdiction of incorporation)

 

900 Richards Street, Honolulu, Hawaii 96813

(Address of principal executive offices and zip code)

 

Registrant’s telephone number, including area code:

(808) 543-5662 - Hawaiian Electric Industries, Inc. (HEI)

(808) 543-7771 - Hawaiian Electric Company, Inc. (HECO)

 

None

(Former name or former address, if changed since last report.)

 


 

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))

 



Item 2.02 Results of Operations and Financial Condition.

 

The news release dated July 25, 2005 filed under Item 8.01 “Other Events” herein is also furnished pursuant to Item 2.02, “Results of Operations and Financial Condition.”

 

Items 8.01 Other Events.

 

On July 25, 2005, HEI issued the following news release:

 

HAWAIIAN ELECTRIC INDUSTRIES, INC. REPORTS SECOND QUARTER 2005 EARNINGS

 

HONOLULU — Hawaiian Electric Industries, Inc. (NYSE - HE) today reported net income from continuing operations for the three months ended June 30, 2005, of $28.3 million, or 35 cents per share, compared with $11.2 million, or 14 cents per share, in the same quarter of 2004. For the six months ended June 30, 2005, income from continuing operations was $52.4 million or 65 cents per share, compared with $42.2 million or 54 cents per share in the same period last year. The comparative results were impacted by the Company’s recognition in June 2004, of a cumulative $24 million charge to net income (30 cents per share) for an unfavorable tax ruling involving its bank’s real estate investment trust (REIT) subsidiary, which was settled in December 2004.

 

“Consistent with the continued expansion of the Hawaii economy in the second quarter, the utilities experienced increased demand and the bank experienced strong core deposit and loan growth, as well as good asset quality,” said Robert F. Clarke, HEI’s chairman, president and chief executive officer. “However, both companies face challenges—the utilities’ operations and maintenance costs have been higher compared with 2004 and the current interest rate environment continues to pressure the bank’s net interest margin.”

 

Hawaiian Electric Company’s net income for the second quarter of 2005 was $19.6 million compared with $21.7 million for the same quarter last year. Electric utility net income for the six months ended June 30, 2005, was $32.0 million compared with $41.8 million for the same period of 2004.

 

Kilowatthour sales were higher by 1.8% quarter-over-quarter. “Warmer weather and increases in visitor days drove demand for electricity from both residential and commercial customers,” said Clarke.

 

“Increased demand has been a double-edged sword. We have been running our peaking units longer, which requires more operations and maintenance costs. It is also bringing the need for new generation to the forefront,” added Clarke. “To address this need and as part of our broader plans to meet future energy needs, we are asking our customers to conserve energy and are also implementing load control programs.”

 

More than offsetting increased sales, however, were $8.8 million of higher other operations and maintenance expenses and $2.1 million of increased depreciation costs in the second quarter of 2005 compared with the second quarter of 2004. Other operations and maintenance expenses were higher primarily due to 1) an increased number of overhauls and inspections and higher generation station maintenance of $2.4 million; 2) $2.0 million higher retirement benefits expenses due primarily to a decrease in the discount rate assumption used to calculate the benefit obligation; and 3) $0.9 million higher substation maintenance and vegetation management expenses. The remaining increase in operations and maintenance expense of $3.5 million includes increased staffing and other costs to support increased demand, reliability, customer service and energy efficiency programs. Increased operations and maintenance is one reason why HECO filed a request with the Hawaii Public Utilities Commission in November 2004 to increase base rates on Oahu. Hearings are scheduled for September 2005 and an interim decision and order is expected in the fourth quarter of 2005.

 

Bank net income in the second quarter of 2005 was $13.6 million compared to a net loss of $6.9 million in the second quarter of 2004. Bank net income for the six months ended June 30, 2005 was $31.3 million, compared with $9.0 million in the same period last year. The bank’s 2004 results included the impact of the cumulative $24 million charge in June 2004, related to the unfavorable tax court ruling involving the bank’s REIT subsidiary described above.

 

1


Bank net interest income increased to $48.8 million in the second quarter of 2005 compared with $48.0 million in the second quarter of 2004. “Strong growth in loans and core deposits offset margin compression from a flattening yield curve,” said Clarke. The bank’s interest rate spread declined to 3.01% in the second quarter of 2005, compared with 3.08% in the second quarter of 2004. Although yields on the loan portfolio were higher, they were more than offset by increased funding costs, a decline in the yield on mortgage-related securities and the suspension of dividends on FHLB stock in the second quarter.

 

“Continued strong asset quality offset the need to provision for the additional loan growth in the second quarter of 2005,” said Clarke. “Second quarter 2004 results, however, benefited from a $3.0 million release of loan loss reserves.”

 

Other income in the second quarter was $1.2 million lower than in the second quarter of 2004, primarily as a result of lower fee income on loans serviced for others.

 

General and administrative expenses for the quarter ended June 30, 2005, decreased by $2.5 million from the same period in 2004. Expenses for compensation, consulting and other services increased $2.5 million quarter-over-quarter, but were more than offset by $4.9 million less in interest on income taxes. Substantially all of the second quarter 2004 interest on income taxes is included in the charge involving the bank’s REIT subsidiary described above.

 

In December 2004, the bank’s preferred stock was converted to common equity. Accordingly, preferred stock dividends were lower by $1.4 million in the second quarter of 2005 compared with the same quarter of 2004.

 

The holding and other companies’ results were $(4.9) million in the second quarter of 2005 versus $(3.5) million in same quarter of 2004. The holding and other companies’ results for the six months ended June 30, 2005, were $(10.9) million compared with $(8.6) million for the same period of 2004. Second quarter of 2005 results were lower than the same quarter of 2004 due in part to the reduction of preferred dividends from the bank described above.

 

HEI supplies power to over 400,000 customers or 93% of the Hawaii market through its electric utilities, Hawaiian Electric Company, Hawaii Electric Light Company and Maui Electric Company and provides a wide array of banking and other financial services to consumers and businesses through American Savings Bank, the state’s third largest financial institution based on asset size.

 

Forward-Looking Statements

 

This release may contain “forward-looking statements,” which include statements that are predictive in nature, depend upon or refer to future events or conditions, and usually include words such as expects, anticipates, intends, plans, believes, predicts, estimates or similar expressions. In addition, any statements concerning future financial performance (including future revenues, expenses, earnings or losses or growth rates), ongoing business strategies or prospects and possible future actions, which may be provided by management, are also forward-looking statements. Forward-looking statements are based on current expectations and projections about future events and are subject to risks, uncertainties and assumptions about HEI and its subsidiaries, the performance of the industries in which they do business and economic and market factors, among other things. These forward-looking statements are not guarantees of future performance.

 

Forward-looking statements in this release should be read in conjunction with the “Cautionary Statements and Risk Factors that May Affect Future Results” discussion (which is incorporated by reference herein) set forth on page iv of HEI’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2005, and in HEI’s future periodic reports that discuss important factors that could cause HEI’s results to differ materially from those anticipated in such statements. Forward-looking statements speak only as of the date of this release.

 

2


Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

 

(in thousands, except per share amounts)


   Three months ended
June 30,


   

Six months ended

June 30,


   

Twelve months ended

June 30,


 
   2005

    2004

    2005

    2004

    2005

    2004

 

Revenues

                                                

Electric utility

   $ 429,730     $ 370,605     $ 804,505     $ 717,218     $ 1,637,958     $ 1,430,462  

Bank

     91,946       89,982       189,170       179,240       374,214       362,755  

Other

     586       1,211       1,215       2,450       7,867       13,615  
    


 


 


 


 


 


       522,262       461,798       994,890       898,908       2,020,039       1,806,832  
    


 


 


 


 


 


Expenses

                                                

Electric utility

     387,083       324,691       730,252       627,164       1,479,856       1,247,403  

Bank

     69,744       66,971       138,015       130,121       267,204       265,668  

Other

     3,986       3,190       8,503       6,840       18,682       15,952  
    


 


 


 


 


 


       460,813       394,852       876,770       764,125       1,765,742       1,529,023  
    


 


 


 


 


 


Operating income (loss)

                                                

Electric utility

     42,647       45,914       74,253       90,054       158,102       183,059  

Bank

     22,202       23,011       51,155       49,119       107,010       97,087  

Other

     (3,400 )     (1,979 )     (7,288 )     (4,390 )     (10,815 )     (2,337 )
    


 


 


 


 


 


       61,449       66,946       118,120       134,783       254,297       277,809  
    


 


 


 


 


 


Interest expense–other than bank

     (19,130 )     (19,106 )     (37,965 )     (40,553 )     (74,588 )     (73,986 )

Allowance for borrowed funds used during construction

     475       733       902       1,377       2,067       2,402  

Preferred stock dividends of subsidiaries

     (474 )     (475 )     (950 )     (950 )     (1,901 )     (1,953 )

Preferred securities distributions of trust subsidiaries

     —         —         —         —         —         (8,017 )

Allowance for equity funds used during construction

     1,182       1,673       2,269       3,122       4,941       5,412  
    


 


 


 


 


 


Income from continuing operations before income taxes

     43,502       49,771       82,376       97,779       184,816       201,667  

Income taxes

     15,167       38,533       29,946       55,609       66,817       91,536  
    


 


 


 


 


 


Income from continuing operations

     28,335       11,238       52,430       42,170       117,999       110,131  

Loss from discontinued operations, net of income taxes

     (755 )     —         (755 )     —         1,158       —    
    


 


 


 


 


 


Net income

   $ 27,580     $ 11,238     $ 51,675     $ 42,170     $ 119,157     $ 110,131  
    


 


 


 


 


 


Per common share

                                                

Basic earnings (loss) - Continuing operations

   $ 0.35     $ 0.14     $ 0.65     $ 0.54     $ 1.46     $ 1.43  

                                  - Discontinued operations

     (0.01 )     —         (0.01 )     —         0.02       —    
    


 


 


 


 


 


     $ 0.34     $ 0.14     $ 0.64     $ 0.54     $ 1.48     $ 1.43  
    


 


 


 


 


 


Diluted earnings (loss) - Continuing operations

   $ 0.35     $ 0.14     $ 0.65     $ 0.53     $ 1.46     $ 1.43  

                                      - Discontinued operations

     (0.01 )     —         (0.01 )     —       $ 0.01       —    
    


 


 


 


 


 


     $ 0.34     $ 0.14     $ 0.64     $ 0.53     $ 1.47     $ 1.43  
    


 


 


 


 


 


Dividends

   $ 0.31     $ 0.31     $ 0.62     $ 0.62     $ 1.24     $ 1.24  
    


 


 


 


 


 


Weighted-average number of common shares outstanding

     80,814       80,350       80,741       78,544       80,637       76,906  
    


 


 


 


 


 


Adjusted weighted-average shares

     81,213       80,707       81,145       78,895       80,950       77,136  
    


 


 


 


 


 


Income (loss) from continuing operations by segment

                                                

Electric utility

   $ 19,644     $ 21,735     $ 32,029     $ 41,758     $ 71,448     $ 84,457  

Bank

     13,552       (6,949 )     31,313       8,978       63,397       38,237  

Other

     (4,861 )     (3,548 )     (10,912 )     (8,566 )     (16,846 )     (12,563 )
    


 


 


 


 


 


Income from continuing operations

   $ 28,335     $ 11,238     $ 52,430     $ 42,170     $ 117,999     $ 110,131  
    


 


 


 


 


 


 

This information should be read in conjunction with the consolidated financial statements and the notes thereto incorporated by reference in HEI’s Annual Report on SEC Form 10-K for the year ended December 31, 2004 and the consolidated financial statements and the notes thereto in HEI’s Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2005 and June 30, 2005 (when filed). Results of operations for interim periods are not necessarily indicative of results to be expected for future interim periods or the full year. In April 2004, the HEI Board of Directors approved a 2-for-1 stock split in the form of a 100% stock dividend with a distribution date of June 10, 2004. All share and per share information above reflects the stock split.

 

In June 2004, ASB recorded a cumulative after-tax charge to net income of $24 million for an unfavorable tax ruling involving its real estate investment trust subsidiary, which was settled in December 2004. As a result of the settlement, ASB recognized $3 million in additional net income in the fourth quarter of 2004.

 

3


Hawaiian Electric Company, Inc. (HECO) and Subsidiaries

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

 

     Three months ended
June 30,


   

Six months ended

June 30,


 

(in thousands)


   2005

    2004

    2005

    2004

 

Operating revenues

   $ 428,807     $ 369,393     $ 802,497     $ 715,337  
    


 


 


 


Operating expenses

                                

Fuel oil

     148,775       114,496       264,401       211,582  

Purchased power

     106,369       94,267       207,585       186,506  

Other operation

     41,794       36,877       83,110       71,146  

Maintenance

     19,837       15,910       37,775       32,906  

Depreciation

     30,822       28,744       61,642       57,488  

Taxes, other than income taxes

     39,293       34,198       75,264       67,082  

Income taxes

     12,293       13,779       20,031       26,666  
    


 


 


 


       399,183       338,271       749,808       653,376  
    


 


 


 


Operating income

     29,624       31,122       52,689       61,961  
    


 


 


 


Other income

                                

Allowance for equity funds used during construction

     1,182       1,673       2,269       3,122  

Other, net

     777       1,088       1,620       1,729  
    


 


 


 


       1,959       2,761       3,889       4,851  
    


 


 


 


Income before interest and other charges

     31,583       33,883       56,578       66,812  
    


 


 


 


Interest and other charges

                                

Interest on long-term debt

     10,656       10,825       21,565       20,895  

Amortization of net bond premium and expense

     557       577       1,113       1,146  

Other interest charges

     702       980       1,775       3,392  

Allowance for borrowed funds used during construction

     (475 )     (733 )     (902 )     (1,377 )

Preferred stock dividends of subsidiaries

     229       229       458       458  
    


 


 


 


       11,669       11,878       24,009       24,514  
    


 


 


 


Income before preferred stock dividends of HECO

     19,914       22,005       32,569       42,298  

Preferred stock dividends of HECO

     270       270       540       540  
    


 


 


 


Net income for common stock

   $ 19,644     $ 21,735     $ 32,029     $ 41,758  
    


 


 


 


OTHER ELECTRIC UTILITY INFORMATION

                                

Kilowatthour sales (millions)

     2,519       2,473       4,866       4,841  

Cooling degree days (Oahu)

     1,471       1,320       2,251       2,232  

Average fuel cost per barrel

   $ 51.90     $ 40.43     $ 48.96     $ 39.08  

 

This information should be read in conjunction with the consolidated financial statements and the notes thereto incorporated by reference in HECO’s Annual Report on SEC Form 10-K for the year ended December 31, 2004 and the consolidated financial statements and the notes thereto in HECO’s Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2005 and June 30, 2005 (when filed). Results of operations for interim periods are not necessarily indicative of results to be expected for future interim periods or the full year.

 

4


American Savings Bank, F.S.B. and Subsidiaries

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

 

     Three months ended
June 30,


   

Six months ended

June 30,


 

(in thousands)


   2005

   2004

    2005

    2004

 

Interest and dividend income

                               

Interest and fees on loans

   $ 50,657    $ 45,832     $ 99,170     $ 92,241  

Interest on mortgage-related securities

     26,636      27,559       60,464       54,636  

Interest and dividends on investment securities

     887      1,665       1,922       3,413  
    

  


 


 


       78,180      75,056       161,556       150,290  
    

  


 


 


Interest expense

                               

Interest on deposit liabilities

     12,460      11,464       24,477       23,674  

Interest on Federal Home Loan Bank advances

     11,291      10,347       22,116       20,844  

Interest on securities sold under repurchase agreements

     5,602      5,231       12,525       10,477  
    

  


 


 


       29,353      27,042       59,118       54,995  
    

  


 


 


Net interest income

     48,827      48,014       102,438       95,295  

Recovery of loan losses

     —        (3,000 )     (3,100 )     (4,600 )
    

  


 


 


Net interest income after recovery of loan losses

     48,827      51,014       105,538       99,895  
    

  


 


 


Other income

                               

Fees from other financial services

     6,333      6,160       12,196       11,742  

Fee income on deposit liabilities

     4,092      4,276       8,263       8,657  

Fee income on other financial products

     2,154      2,646       4,589       5,622  

Fee income on loans serviced for others, net

     114      907       329       577  

Gain on sale of securities

     175      —         175       16  

Other income

     898      937       2,062       2,336  
    

  


 


 


       13,766      14,926       27,614       28,950  
    

  


 


 


General and administrative expenses

                               

Compensation and employee benefits

     17,441      15,704       34,068       31,459  

Occupancy

     4,088      4,273       8,106       8,529  

Equipment

     3,302      3,378       6,701       7,045  

Data processing

     2,503      2,777       5,548       5,600  

Consulting and other services

     3,941      3,190       7,608       5,721  

Interest on income taxes

     406      5,324       3,082       5,324  

Other

     8,710      8,283       16,884       16,048  
    

  


 


 


       40,391      42,929       81,997       79,726  
    

  


 


 


Income before minority interests and income taxes

     22,202      23,011       51,155       49,119  

Minority interests

     18      23       45       49  

Income taxes

     8,631      28,584       19,793       37,387  
    

  


 


 


Income before preferred stock dividends

     13,553      (5,596 )     31,317       11,683  

Preferred stock dividends

     1      1,353       4       2,705  
    

  


 


 


Net income (loss) for common stock

   $ 13,552    $ (6,949 )   $ 31,313     $ 8,978  
    

  


 


 


Interest rate spread (%)

     3.01      3.08       3.15       3.06  

 

This information should be read in conjunction with the consolidated financial statements and the notes thereto incorporated by reference in HEI’s Annual Report on SEC Form 10-K for the year ended December 31, 2004 and the consolidated financial statements and the notes thereto in HEI’s Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2005 and June 30, 2005 (when filed). Results of operations for interim periods are not necessarily indicative of results to be expected for future interim periods or the full year.

 

In June 2004, ASB recorded a cumulative after-tax charge to net income of $24 million for an unfavorable tax ruling involving its real estate investment trust subsidiary, which was settled in December 2004.

 

# #

 

5


SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrants have duly caused this report to be signed on their behalf by the undersigned thereunto duly authorized. The signature of the undersigned companies shall be deemed to relate only to matters having reference to such companies and any subsidiaries thereof.

 

HAWAIIAN ELECTRIC INDUSTRIES, INC.   HAWAIIAN ELECTRIC COMPANY, INC.
                                                         (Registrant)                                                        (Registrant)

/s/ Eric K. Yeaman


 

/s/ Tayne S. Y. Sekimura


Eric K. Yeaman   Tayne S. Y. Sekimura

Financial Vice President, Treasurer
and Chief Financial Officer

  Financial Vice President
  (Principal Financial Officer of HECO)
(Principal Financial Officer of HEI)   Date: July 25, 2005
Date: July 25, 2005    

 

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