EX-99 2 hei99.htm EXHIBIT 99 HEI 99
HEI Exhibit 99
February 12, 2015
Contact:
Clifford H. Chen

 
 
Manager, Investor Relations &
Telephone: (808) 543-7300
 
Strategic Planning
E-mail: ir@hei.com
                                            
HAWAIIAN ELECTRIC INDUSTRIES REPORTS 2014 YEAR-END & FOURTH QUARTER EARNINGS

2014 Net Income of $168.3 Million;
2014 Diluted Earnings Per Share (EPS) of $1.64 and Core EPS1 of $1.68
Fourth Quarter Net Income of $33.2 Million; EPS of $0.32 and Core EPS1 of $0.36
Results In Line with EPS Guidance

Selected 2014 Highlights:
Reported net income of $168.3 million vs $161.5 million in 2013, up 4%;
Core net income1 of $173.2 million vs $161.5 million in 2013, up 7%
Reported EPS of $1.64 vs $1.62 in 2013, up 1%;
Core EPS1 of $1.68 vs $1.62 in 2013, up 4%
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

HONOLULU - Hawaiian Electric Industries, Inc. (NYSE - HE) today reported 2014
year-end consolidated net income for common stock of $168.3 million, or diluted earnings per share (EPS) of $1.64. For the fourth quarter of 2014, consolidated net income for common stock was $33.2 million, or $0.32 EPS. Excluding $4.9 million after-tax of merger-related costs associated with the pending merger with NextEra Energy, Inc. and the spin-off of ASB Hawaii, core earnings1 for 2014 were $173.2 million or $1.68 EPS, compared to $161.5 million or $1.62 EPS in 2013. For the fourth quarter of 2014, core earnings1 were $37.5 million or $0.36 EPS compared to $39.0 million or $0.39 EPS for the same quarter last year.
“We continued to grow our businesses in steady fashion and delivered a competitive core return on equity1 of 9.8% for the year as HEI’s combination of companies continues to provide us with the financial resources to efficiently invest in future opportunities,” said Constance Lau, HEI president and chief executive officer. “Our utility continued to invest in the modernization and improvement of our electric grid as we integrated more renewable energy. These investments helped us achieve an energy portfolio powered by 21% renewable sources in 2014, far in excess of Hawaii’s 2015 RPS target of 15%. Thirteen percent of Oahu residential customers now have customer-sited solar, a rate of integration that leads the nation. Even as recent oil price decreases have brought our customers bill relief, we remain
 


____________________
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.

2


focused on further reducing costs for our customers with proposed grid-scale solar and wind projects. We also are working with other stakeholders to bring liquefied natural gas to Hawaii as a cleaner, lower-cost alternative to oil while we continue to aggressively pursue more renewable generation sources. Furthermore, as we did earlier in 2014 for Hawaiian Electric, we recently filed our abbreviated rate case for Maui Electric in which we offered to forgo the opportunity to request additional base revenues.”
“Our bank delivered solid financial results in 2014 in a challenging regulatory and interest rate environment. We produced strong loan growth while improving credit quality and maintaining healthy capital levels. Our bank continues to improve the ways it delivers to its customers and is poised in 2015 to continue growing its balance sheet and earnings,” said Lau.
“Last December we announced our proposed merger with NextEra Energy, and we are looking forward to working with NextEra Energy as a partner to help accelerate Hawaii’s clean energy transformation. We also announced the related spin off of American Savings Bank, and we are very confident that American, as a new, publicly-traded entity, will remain a strong community bank for Hawaii,” added Lau.

HAWAIIAN ELECTRIC COMPANY EARNINGS CONSISTENT WITH EXPECTATIONS
Full Year Results:
Hawaiian Electric Company’s5 full-year 2014 net income was $137.6 million compared to $122.9 million in 2013. The $14.7 million increase from the prior year was driven by the following items on an after-tax basis:
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.
These increases were partially offset by the following on an after-tax basis:
______________
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.

3


$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.
Fourth Quarter Results:
Fourth quarter 2014 net income was $29.1 million compared to $32.0 million in the fourth quarter of 2013. The $2.9 million decline from the prior year quarter was primarily driven by the following items on an after-tax basis:
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.
These increases were partially offset by the following on an after-tax basis:
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.




4



AMERICAN SAVINGS BANK: SOLID PERFORMANCE AND LOAN GROWTH

Full Year Results:
American Savings Bank’s (American) net income for 2014 was $51.5 million compared to $57.5 million in 2013. Lower 2014 earnings compared to the prior year reflected the continued impact of regulatory changes and the low interest rate environment. The primary drivers impacting net income for the year were as follows on an after-tax basis:
$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.
American achieved strong loan growth of 6.8% in 2014 despite the competitive Hawaii market environment, and credit quality improved with the 2014 net charge-off ratio of 0.01% of average loans compared to 0.09% in 2013. Total deposits were $4.6 billion at December 31, 2014, an increase of $251 million from December 31, 2013.
Overall, American’s return on average equity for the full year remained solid at 9.6% in 2014 compared to 11.4% in 2013, and the return on average assets was 0.95% in 2014 compared to 1.13% in 2013.

Fourth Quarter Results:
Fourth quarter 2014 net income of $12.0 million was $1.2 million lower than the linked quarter and $0.2 million lower than the same quarter of 2013. Compared to the linked quarter of 2014, the $1.2 million net income decline was primarily driven by the following on an after-tax basis:

5


$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.
American’s fourth quarter 2014 return on average equity was 8.8%, compared to 9.9% in the linked quarter and 9.6% in the same quarter last year. Return on average assets was 0.87% for the fourth quarter of 2014, compared to 0.98% from the linked quarter and 0.94% in the same quarter last year.
Also refer to the American news release issued on January 30, 2015.

HOLDING AND OTHER COMPANIES
The holding and other companies’ net losses were $20.8 million in 2014 compared to $18.9 million in 2013. Fourth quarter net losses were $8.0 million in 2014 compared to $5.2 million in the fourth quarter 2013. The full year 2014 and the fourth quarter 2014 net loss included $4.9 million after-tax and $4.3 million after-tax, respectively, of costs related to the pending merger with NextEra Energy, Inc. and expenses incurred in connection with plans to spin off ASB Hawaii. Excluding the pending merger-related costs, the full year and the fourth quarter 2014 net loss declined primarily due to lower interest expense compared to 2013.

WEBCAST AND CONFERENCE CALL
HEI TO ANNOUNCE 2015 EPS GUIDANCE IN EARNINGS CONFERENCE CALL
Hawaiian Electric Industries, Inc. will conduct a webcast and conference call to review its 2014 earnings on Thursday, February 12, 2015, at 12:00 noon Hawaii time (5:00 p.m. Eastern time). HEI will announce 2015 EPS guidance during the scheduled webcast and conference call.
Interested parties may listen to the conference by calling (800) 884-5695 and entering passcode: 41634040, or by accessing the webcast on HEI’s website at www.hei.com under the heading “Investor Relations.” HEI and Hawaiian Electric Company intend to continue to use HEI’s website, www.hei.com, as a means of disclosing additional information. Such disclosures will be included on HEI’s website in the Investor Relations section. Accordingly, investors should routinely monitor such portions of HEI’s website, in addition to following HEI’s, Hawaiian Electric Company’s and American’s press releases, HEI’s and Hawaiian Electric Company’s Securities and Exchange

6


Commission (SEC) filings and HEI’s public conference calls and webcasts. The information on HEI’s website is not incorporated by reference in this document or in HEI’s and Hawaiian Electric Company’s SEC filings unless, and except to the extent, specifically incorporated by reference. Investors may also wish to refer to the Public Utilities Commission of the State of Hawaii (PUC) website at dms.puc.hawaii.gov/dms in order to review documents filed with and issued by the PUC. No information on the PUC website is incorporated by reference in this document or in HEI’s and Hawaiian Electric Company’s SEC filings.
An online replay of the webcast will be available at the same website beginning about four hours after the event and will remain on HEI’s website for 12 months. Replays of the conference call will also be available approximately four hours after the event through February 26, 2015, by dialing (888) 286-8010, passcode: 65598214.
HEI supplies power to approximately 450,000 customers or 95% of Hawaii’s population through its electric utilities, Hawaiian Electric Company, Inc., Hawaii Electric Light Company, Inc. and Maui Electric Company, Limited and provides a wide array of banking and other financial services to consumers and businesses through American Savings Bank, one of Hawaii’s largest financial institutions.

NON-GAAP MEASURES
See “Explanation of HEI’s Use of Certain Unaudited Non-GAAP Measures” and related reconciliations on page 17 of this release.

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, ongoing business strategies or prospects or possible future actions 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 the accuracy of assumptions concerning 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.

7


Forward-looking statements in this release should be read in conjunction with the “Forward-Looking Statements” and “Risk Factors” discussions (which are incorporated by reference herein) set forth in HEI’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2014 and HEI’s future periodic reports that discuss important factors that could cause HEI’s results to differ materially from those anticipated in such statements. These forward-looking statements speak only as of the date of the report, presentation or filing in which they are made. Except to the extent required by the federal securities laws, HEI, Hawaiian Electric Company, American and their subsidiaries undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

###


8



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
%
This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI’s Annual Report on SEC Form 10-K for the year ended December 31, 2014 (when filed) and HEI's Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2014, June 30, 2014 and September 30, 2014, as updated by SEC Forms 8-K.


9



Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Unaudited)
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

This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI’s Annual Report on SEC Form 10-K for the year ended December 31, 2014 (when filed) and HEI's Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2014, June 30, 2014 and September 30, 2014, as updated by SEC Forms 8-K.

10



Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
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

This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI’s Annual Report on SEC Form 10-K for the year ended December 31, 2014 (when filed) and HEI's Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2014, June 30, 2014 and September 30, 2014, as updated by SEC Forms 8-K.

11



Hawaiian Electric Company, Inc. (Hawaiian Electric) and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
 
 
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

This information should be read in conjunction with the consolidated financial statements and the notes thereto in Hawaiian Electric’s Annual Report on SEC Form 10-K for the year ended December 31, 2014 (when filed) and the consolidated financial statements and the notes thereto in Hawaiian Electric's Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2014, June 30, 2014 and September 30, 2014 , as updated by SEC Forms 8-K.


12



Hawaiian Electric Company, Inc. (Hawaiian Electric) and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Unaudited)
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

This information should be read in conjunction with the consolidated financial statements and the notes thereto in Hawaiian Electric’s Annual Report on SEC Form 10-K for the year ended December 31, 2014 (when filed) and the consolidated financial statements and the notes thereto in Hawaiian Electric's Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2014, June 30, 2014 and September 30, 2014, as updated by SEC Forms 8-K.

13



Hawaiian Electric Company, Inc. (Hawaiian Electric) and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
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

This information should be read in conjunction with the consolidated financial statements and the notes thereto incorporated by reference in Hawaiian Electric’s Annual Report on SEC Form 10-K for the year ended December 31, 2014 (when filed) and the consolidated financial statements and the notes thereto in Hawaiian Electric's Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2014, June 30, 2014 and September 30, 2014 , as updated by SEC Forms 8-K.

14



American Savings Bank, F.S.B.
STATEMENTS OF INCOME DATA
(Unaudited)
 
 
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

* Regulatory basis
This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI’s Annual Report on SEC Form 10-K for the year ended December 31, 2014 (when filed) and HEI's Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2014, June 30, 2014 and September 30, 2014, as updated by SEC Forms 8-K.


15



American Savings Bank, F.S.B.
BALANCE SHEETS DATA
(Unaudited)
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

 
 
 
 
 

This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI’s Annual Report on SEC Form 10-K for the year ended December 31, 2014 (when filed) and HEI's Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2014, June 30, 2014 and September 30, 2014, as updated by SEC Forms 8-K.


16



EXPLANATION OF HEI’S USE OF CERTAIN UNAUDITED NON-GAAP MEASURES
HEI and Hawaiian Electric Company management use certain non-GAAP measures to evaluate the performance of the utility and HEI. Management believes these non-GAAP measures provide useful information and are a better indicator of the companies’ core operating activities. Core earnings and other financial measures as presented here may not be comparable to similarly titled measures used by other companies. The accompanying tables provide a reconciliation of reported GAAP1 earnings to non-GAAP core earnings and diluted earnings per share for HEI consolidated and the adjusted return on average common equity (ROACE).
The reconciling adjustment from GAAP earnings to core earnings is limited to the costs related to the pending merger between HEI and NextEra Energy, Inc. For more information on the pending merger, see HEI’s Form 8-K filed on December 4, 2014. Management does not consider these items to be representative of the company’s fundamental core earnings.
The accompanying table also provides the calculation of utility GAAP O&M adjusted for “O&M-related net income neutral items” which are O&M expenses covered by specific surcharges or by third parties. This item is grossed-up in revenue and expense and does not impact net income.
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
 
 
 
 
 

17