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Form 8-K HAWAIIAN ELECTRIC INDUST For: Nov 06

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November 6, 2014 4:18 PM EST


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: November 6, 2014


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


State of Hawaii
(State or other jurisdiction of incorporation)
�
1001 Bishop Street, Suite�2900, Honolulu, Hawaii� 96813 - Hawaiian Electric Industries,�Inc. (HEI)
900 Richards Street, Honolulu, Hawaii� 96813 - Hawaiian Electric Company,�Inc. (Hawaiian Electric)
(Address of principal executive offices and zip code)
�
Registrants telephone number, including area code:
�
(808) 543-5662 - HEI
(808) 543-7771 - Hawaiian Electric
�
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.
On November 6, 2014, HEI issued a news release, Hawaiian Electric Industries Reports Third Quarter 2014 Earnings. This news release is furnished as HEI Exhibit 99.



Item 9.01 Financial Statements and Exhibits.

(d) Exhibits����

HEI Exhibit 99
News release, dated November 6, 2014, Hawaiian Electric Industries Reports Third Quarter 2014 Earnings





















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/ 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: November 6, 2014
Date: November 6, 2014
�
�


1
HEI Exhibit 99


November 6, 2014

Contact:
Clifford H. Chen

�
�
Manager, Investor Relations &
Telephone: (808) 543-7384
�
Strategic Planning
��������������������������������������������
HAWAIIAN ELECTRIC INDUSTRIES REPORTS THIRD QUARTER 2014 EARNINGS

Consolidated Earnings Per Share of $0.46
Utility and Bank Deliver Solid Results In Line with Expectations
Board Declares Dividend of $0.31 Per Share

HONOLULU - Hawaiian Electric Industries, Inc. (NYSE - HE) (HEI) today reported consolidated net income for common stock for the third quarter of 2014 of $47.8 million, or $0.46 diluted earnings per share (EPS), compared to $48.2 million, or $0.48 diluted EPS for the third quarter of 2013.
At the utility, we continue to work aggressively to lower customer bills by reducing Hawaiis dependence on imported oil.� The recent energy plans we filed with the PUC are providing the starting point to launch important initiatives with a broad set of stakeholders to achieve our shared vision for Hawaiis clean energy future, said Constance H. Lau, HEI president and chief executive officer. In addition, we are proud of our dedicated utility company employees who worked tirelessly to restore power and help customers after Tropical Storm Iselle while completing our energy plans on time, added Lau.
American Savings Bank continued to deliver profitable growth with year-to-date annualized loan growth of 5.9% and strong credit quality. American paid dividends of $9�million to HEI in the quarter while maintaining strong capital levels, said Lau.

��



HAWAIIAN ELECTRIC COMPANY CONTINUES INVESTMENTS FOR IMPROVED RELIABILITY TO BETTER SERVE OUR CUSTOMERS
Hawaiian Electric Companys1 net income for the third quarter of 2014 was $38.9�million compared to $37.8 million in the third quarter of 2013. The $1.1 million increase from the prior year was driven by the following items (on an after-tax basis):
"
Net revenues2 were $8 million higher compared to the third quarter of 2013 primarily due to $7 million in 2014 revenues attributable to the recovery of costs for clean energy and reliability investments and $1 million for better fuel efficiency performance.
These increases were partially offset by the following (on an after-tax basis):
"
Operations and maintenance (O&M) expenses3 were $2 million higher in the third quarter of 2014 compared to the same quarter last year. This is largely due to consulting costs associated with recent regulatory filings, storm restoration expenses and the initial phase of our smart grid installations as part of our grid modernization program, partially offset by lower customer service expenses, lower overhaul costs and savings from the deactivation of generating units;
"
Depreciation expense for the third quarter of 2014 was $2 million higher as a result of increasing investments for the integration of more renewable energy, improved customer reliability and greater system efficiency; and
"
A favorable deferred income tax adjustment of $3 million recorded in the third quarter of 2013 related to prior years.




______
1
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.
2
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 Consolidated Statements of Income.
3 �
Excludes net income neutral expenses covered by surcharges or by third parties of $3 million in the third quarter of 2014 and $2 million in the third quarter of 2013. See Explanation of HEIs Use of Certain Unaudited Non-GAAP measures and the related reconciliation.

Note: Amounts indicated as after-tax in this earnings release are based upon adjusting items for the composite statutory tax rates of 39% for the utilities and 40% for the bank.

2

AMERICAN SAVINGS BANK CONTINUES TO DELIVER SOLID PERFORMANCE
American Savings Banks (American) net income for the third quarter of 2014 was $13.3�million compared to $11.7 million in the second, or linked, quarter of 2014 and $15.3 million in the third quarter of 2013.
Third quarter 2014 net income was $1.6 million higher than the linked quarter primarily driven by (on an after-tax basis) higher mortgage banking and fee income of $1 million and higher net interest income of $1 million due to higher loan balances and the recognition of interest associated with the payoff of a non-performing commercial loan.
Compared to the third quarter of 2013, net income decreased by�$2.0�million. The decrease was primarily driven by (on an after-tax basis): $1 million higher provision for loan losses, $1�million lower fee income on other financial products and mortgage banking income and $1�million net gain on the strategic sale of the credit card portfolio in the third quarter of 2013, partially offset by $1 million higher net interest income.
Overall, American achieved solid profitability with a year-to-date annualized return on average equity of 9.9% and a return on average assets of 0.98%.
Please also refer to the American news release issued on October 30, 2014.
HOLDING AND OTHER COMPANIES
The holding and other companies net losses were $4.3�million in the third quarter of 2014 compared to $4.9 million in the third quarter of 2013. The lower net loss was primarily due to lower interest expense.
BOARD DECLARES QUARTERLY DIVIDEND
On November 5, 2014, the board of directors maintained HEIs quarterly cash dividend of 31�cents per share, payable on December 10, 2014, to shareholders of record at the close of business on November 21, 2014 (ex-dividend date is November 19, 2014). The dividend is equivalent to an annual rate of $1.24 per share.
Dividends have been paid continuously since 1901. At the indicated annual dividend rate and the closing share price on November 5, 2014 of $28.12, HEIs yield is 4.41%.

3

HEI WEBCAST AND CONFERENCE CALL TO DISCUSS EARNINGS AND EPS GUIDANCE
Hawaiian Electric Industries, Inc. will conduct a webcast and conference call to review its third quarter 2014 earnings and 2014 EPS guidance on Thursday, November 6, 2014 at 12:00�p.m. Hawaii time (5:00 p.m. Eastern time). The event can be accessed through HEIs website at www.hei.com or by dialing (800) 299-9086, passcode: 92619059 for the teleconference call. The presentation for the webcast will be on HEIs website under the heading Investor Relations. HEI and Hawaiian Electric Company intend to continue to use HEIs website, www.hei.com, as a means of disclosing additional information. Such disclosures will be included on HEIs website in the Investor Relations section. Accordingly, investors should routinely monitor such portions of HEIs website, in addition to following HEIs, Hawaiian Electric Companys and Americans press releases, HEIs and Hawaiian Electric Companys Securities and Exchange Commission (SEC) filings and HEIs public conference calls and webcasts. Also, at the Investor Relations section of HEI's website, investors may sign up to receive e-mail alerts (based on each investor's selected preferences).� The information on HEIs website is not incorporated by reference in this document or in HEIs and Hawaiian Electric Companys 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 HEIs and Hawaiian Electric Companys SEC filings.
An on-line replay of the webcast will be available on HEIs website beginning about two hours after the event. Audio replays of the teleconference will also be available approximately two hours after the event through November 20, 2014, by dialing (888)�286-8010, passcode: 41279979.
HEI supplies power to approximately 450,000 customers or 95% of Hawaiis 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 Hawaiis largest financial institutions.

4

NON-GAAP MEASURES
See Explanation of HEIs Use of Certain Unaudited Non-GAAP Measures and related reconciliations on pages 14 to 15 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.
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 HEIs Annual Report on Form 10-K for the year ended December�31,�2013, HEIs Quarterly Report on Form 10-Q for the quarter ended September�30,�2014 and HEIs future periodic reports that discuss important factors that could cause HEIs 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.
###




5


Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
�
�
Three months ended September 30
�
Nine months ended September 30
(in�thousands,�except�per�share�amounts)
�
2014
�
2013
�
2014
�
2013
Revenues
�
�
�
�
�
�
�
�
Electric utility
�
$
803,565

�
$
764,054

�
$
2,262,056

�
$
2,210,020

Bank
�
63,536

�
65,058

�
187,771

�
195,841

Other
�
(5
)
�
56

�
(325
)
�
106

Total revenues
�
867,096

�
829,168

�
2,449,502

�
2,405,967

Expenses
�
�
�
�
�
�
�
�
Electric utility
�
727,409

�
694,201

�
2,045,166

�
2,030,071

Bank
�
43,964

�
42,223

�
129,528

�
126,550

Other
�
4,621

�
4,706

�
13,125

�
12,276

Total expenses
�
775,994

�
741,130

�
2,187,819

�
2,168,897

Operating income (loss)
�
�
�
�
�
�
�
�
Electric utility
�
76,156

�
69,853

�
216,890

�
179,949

Bank
�
19,572

�
22,835

�
58,243

�
69,291

Other
�
(4,626
)
�
(4,650
)
�
(13,450
)
�
(12,170
)
Total operating income
�
91,102

�
88,038

�
261,683

�
237,070

Interest expense, netother than on deposit liabilities and other bank borrowings
�
(19,170
)
�
(19,043
)
�
(58,648
)
�
(56,216
)
Allowance for borrowed funds used during construction
�
740

�
498

�
1,877

�
1,626

Allowance for equity funds used during construction
�
1,937

�
1,255

�
4,933

�
4,030

Income before income taxes
�
74,609

�
70,748

�
209,845

�
186,510

Income taxes
�
26,323

�
22,041

�
73,265

�
62,590

Net income
�
48,286

�
48,707

�
136,580

�
123,920

Preferred stock dividends of subsidiaries
�
471

�
471

�
1,417

�
1,417

Net income for common stock
�
$
47,815

�
$
48,236

�
$
135,163

�
$
122,503

Basic earnings per common share
�
$
0.47

�
$
0.49

�
$
1.33

�
$
1.24

Diluted earnings per common share
�
$
0.46

�
$
0.48

�
$
1.32

�
$
1.23

Dividends per common share
�
$
0.31

�
$
0.31

�
$
0.93

�
$
0.93

Weighted-average number of common shares outstanding
�
102,416

�
99,204

�
101,768

�
98,670

Adjusted weighted-average shares
�
103,026

�
99,818

�
102,478

�
99,290

Net income (loss) for common stock by segment
�
�
�
�
�
�
�
�
Electric utility
�
$
38,879

�
$
37,817

�
$
108,529

�
$
90,939

Bank
�
13,260

�
15,276

�
39,475

�
45,350

Other
�
(4,324
)
�
(4,857
)
�
(12,841
)
�
(13,786
)
Net income for common stock
�
$
47,815

�
$
48,236

�
$
135,163

�
$
122,503

Comprehensive income attributable to Hawaiian Electric Industries, Inc.
�
$
46,504

�
$
47,339

�
$
137,919

�
$
113,240

Return on average common equity (twelve months ended)1
�
�
�
�
�
10.1
%
�
8.4
%
This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEIs Annual Report on SEC Form 10-K for the year ended December 31, 2013 and HEI's Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2014, June 30, 2014 and September 30, 2014 (when filed), as updated by SEC Forms 8-K. Results of operations for interim periods are not necessarily indicative of results to be expected for future interim periods or the full year.
1 On a core basis, 2014 and 2013 return on average common equity (twelve months ended September 30) were 10.1% and 9.9%, respectively.� See reconciliation of GAAP to non-GAAP measures.

6


Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(dollars�in�thousands)
�
September 30, 2014
�
December 31, 2013
Assets
�
�

�
�

Cash and cash equivalents
�
$
192,555

�
$
220,036

Accounts receivable and unbilled revenues, net
�
365,728

�
346,785

Available-for-sale investment and mortgage-related securities
�
531,603

�
529,007

Investment in stock of Federal Home Loan Bank of Seattle
�
75,063

�
92,546

Loans receivable held for investment, net
�
4,291,960

�
4,110,113

Loans held for sale, at lower of cost or fair value
�
2,328

�
5,302

Property, plant and equipment, net of accumulated depreciation of $2,241,677 and $2,192,422 at the respective dates
�
4,048,106

�
3,865,514

Regulatory assets
�
575,712

�
575,924

Other
�
505,226

�
512,627

Goodwill
�
82,190

�
82,190

Total assets
�
$
10,670,471

�
$
10,340,044

Liabilities and shareholders equity
�
�

�
�

Liabilities
�
�

�
�

Accounts payable
�
$
177,495

�
$
212,331

Interest and dividends payable
�
26,051

�
26,716

Deposit liabilities
�
4,533,797

�
4,372,477

Short-term borrowingsother than bank
�
150,576

�
105,482

Other bank borrowings
�
263,204

�
244,514

Long-term debt, netother than bank
�
1,517,946

�
1,492,945

Deferred income taxes
�
585,432

�
529,260

Regulatory liabilities
�
357,090

�
349,299

Contributions in aid of construction
�
448,811

�
432,894

Defined benefit pension and other postretirement benefit plans liability
�
274,909

�
288,539

Other
�
499,459

�
524,224

Total liabilities
�
8,834,770

�
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: 102,562,464 shares and 101,259,800 shares at the respective dates
�
1,519,256

�
1,488,126

Retained earnings
�
296,146

�
255,694

Accumulated other comprehensive loss, net of tax benefits
�
(13,994
)
�
(16,750
)
Total shareholders equity
�
1,801,408

�
1,727,070

Total liabilities and shareholders equity
�
$
10,670,471

�
$
10,340,044

This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEIs Annual Report on SEC Form 10-K for the year ended December 31, 2013 and HEI's Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2014, June 30, 2014 and September 30, 2014 (when filed), as updated by SEC Forms 8-K.

7


Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine months ended September 30
�
2014
�
2013
(in�thousands)
�
�
�
�
Cash flows from operating activities
�
�

�
�

Net income
�
$
136,580

�
$
123,920

Adjustments to reconcile net income to net cash provided by operating activities
�
�

�
�

Depreciation of property, plant and equipment
�
129,574

�
120,355

Other amortization
�
5,454

�
2,352

Provision for loan losses
�
3,566

�
953

Loans receivable originated and purchased, held for sale
�
(102,523
)
�
(199,772
)
Proceeds from sale of loans receivable, held for sale
�
106,918

�
223,221

Gain on sale of credit card portfolio
�


�
(2,251
)
Increase in deferred income taxes
�
48,900

�
60,580

Excess tax benefits from share-based payment arrangements
�
(271
)
�
(469
)
Allowance for equity funds used during construction
�
(4,933
)
�
(4,030
)
Change in cash overdraft
�
(1,038
)
�


Changes in assets and liabilities
�
�

�
�

Decrease (increase) in accounts receivable and unbilled revenues, net
�
(18,943
)
�
12,740

Decrease in fuel oil stock
�
15,784

�
24,332

Increase in regulatory assets
�
(17,531
)
�
(53,314
)
Decrease in accounts, interest and dividends payable
�
(75,812
)
�
(21,708
)
Change in prepaid and accrued income taxes and utility revenue taxes
�
(2,044
)
�
(19,212
)
Decrease in defined benefit pension and other postretirement benefit plans liability
�
(2,594
)
�
(509
)
Change in other assets and liabilities
�
(47,677
)
�
(20,462
)
Net cash provided by operating activities
�
173,410

�
246,726

Cash flows from investing activities
�
�

�
�

Available-for-sale investment and mortgage-related securities purchased
�
(130,578
)
�
(39,721
)
Principal repayments on available-for-sale investment and mortgage-related securities
�
52,678

�
84,487

Proceeds from sale of available-for-sale investment securities
�
79,564

�
71,367

Redemption of stock from Federal Home Loan Bank of Seattle
�
17,482

�
2,609

Net increase in loans held for investment
�
(184,766
)
�
(293,996
)
Proceeds from sale of real estate acquired in settlement of loans
�
2,930

�
8,777

Capital expenditures
�
(236,003
)
�
(247,392
)
Contributions in aid of construction
�
21,740

�
23,633

Proceeds from sale of credit card portfolio
�


�
26,386

Other
�
(39
)
�
426

Net cash used in investing activities
�
(376,992
)
�
(363,424
)
Cash flows from financing activities
�
�

�
�

Net increase in deposit liabilities
�
161,320

�
80,926

Net increase in short-term borrowings with original maturities of three months or less
�
45,094

�
47,648

Net decrease in retail repurchase agreements
�
(6,306
)
�
(6,314
)
Proceeds from other bank borrowings
�
90,000

�
120,000

Repayments of other bank borrowings
�
(65,000
)
�
(70,000
)
Proceeds from issuance of long-term debt
�
125,000

�
50,000

Repayment of long-term debt
�
(100,000
)
�
(50,000
)
Excess tax benefits from share-based payment arrangements
�
271

�
469

Net proceeds from issuance of common stock
�
26,910

�
18,383

Common stock dividends
�
(94,674
)
�
(73,584
)
Preferred stock dividends of subsidiaries
�
(1,417
)
�
(1,417
)
Other
�
(5,097
)
�
(4,033
)
Net cash provided by financing activities
�
176,101

�
112,078

Net decrease in cash and cash equivalents
�
(27,481
)
�
(4,620
)
Cash and cash equivalents, beginning of period
�
220,036

�
219,662

Cash and cash equivalents, end of period
�
$
192,555

�
$
215,042

This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEIs Annual Report on SEC Form 10-K for the year ended December 31, 2013 and HEI's Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2014, June 30, 2014 and September 30, 2014 (when filed), as updated by SEC Forms 8-K. Cash flows for interim periods are not necessarily indicative of cash flows to be expected for future interim periods or the full year.

8


Hawaiian Electric Company, Inc. (Hawaiian Electric) and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
�
�
Three months ended September 30
�
Nine months ended September 30
(dollars in�thousands, except per barrel amounts)
�
2014
�
2013
�
2014
�
2013
Revenues
�
$
803,565

�
$
764,054

�
$
2,262,056

�
$
2,210,020

Expenses
�
�
�
�
�
�

�
�

Fuel oil
�
309,432

�
283,360

�
865,989

�
877,738

Purchased power
�
192,882

�
194,861

�
546,121

�
526,669

Other operation and maintenance
�
108,313

�
104,513

�
295,483

�
300,723

Depreciation
�
41,594

�
38,995

�
124,790

�
115,865

Taxes, other than income taxes
�
75,188

�
72,472

�
212,783

�
209,076

Total expenses
�
727,409

�
694,201

�
2,045,166

�
2,030,071

Operating income
�
76,156

�
69,853

�
216,890

�
179,949

Allowance for equity funds used during construction
�
1,937

�
1,255

�
4,933

�
4,030

Interest expense and other charges, net
�
(16,414
)
�
(15,033
)
�
(48,989
)
�
(43,960
)
Allowance for borrowed funds used during construction
�
740

�
498

�
1,877

�
1,626

Income before income taxes
�
62,419

�
56,573

�
174,711

�
141,645

Income taxes
�
23,042

�
18,258

�
64,686

�
49,210

Net income
�
39,377

�
38,315

�
110,025

�
92,435

Preferred stock dividends of subsidiaries
�
228

�
228

�
686

�
686

Net income attributable to Hawaiian Electric
�
39,149

�
38,087

�
109,339

�
91,749

Preferred stock dividends of Hawaiian Electric
�
270

�
270

�
810

�
810

Net income for common stock
�
$
38,879

�
$
37,817

�
$
108,529

�
$
90,939

Comprehensive income attributable to Hawaiian Electric
�
$
38,889

�
$
37,834

�
$
108,561

�
$
90,991

OTHER ELECTRIC UTILITY INFORMATION
�
�
�
�
�
�
�
�
Kilowatthour sales (millions)
�
�
�
�
�
�
�
�
���Hawaiian Electric
�
1,815

�
1,807

�
5,062

�
5,100

���Hawaii Electric Light
�
273

�
275

�
793

�
803

���Maui Electric
�
296

�
294

�
844

�
843

�
�
2,384

�
2,376

�
6,699

�
6,746

Wet-bulb temperature (Oahu average; degrees Fahrenheit)
�
72.2

�
70.6

�
69.5

�
68.6

Cooling degree days (Oahu)
�
1,631

�
1,468

�
3,703

�
3,371

Average fuel oil cost per barrel
�
$
133.26

�
$
127.42

�
$
132.19

�
$
130.15

�
�
�
�
�
�
�
�
�
Twelve months ended September 30
�
�
�
�
�
2014
�
2013
Return on average common equity (%) (simple average)1
�
�
�
�
�
�
�
�
���Hawaiian Electric
�
�
�
�
�
9.63

�
6.69

���Hawaii Electric Light
�
�
�
�
�
6.77

�
5.41

���Maui Electric
�
�
�
�
�
8.55

�
6.79

���Hawaiian Electric Consolidated
�
�
�
�
�
8.96

�
6.46

This information should be read in conjunction with the consolidated financial statements and the notes thereto incorporated by reference in Hawaiian Electrics Annual Report on SEC Form 10-K for the year ended December 31, 2013 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 (when filed), as updated by SEC Forms 8-K. Results of operations for interim periods are not necessarily indicative of results to be expected for future interim periods or the full year.
1 �
On a core basis, the 2014 and 2013 return on average common equity (twelve months ended September 30) were 9.6% and 8.5%, respectively for Hawaiian Electric; 6.8% and 6.6%, respectively for Hawaii Electric Light; 8.6% and 8.2%, respectively for Maui Electric and 9.0% and 8.1% respectively, for Hawaiian Electric Consolidated. See reconciliation of GAAP to non-GAAP measures.

9


Hawaiian Electric Company, Inc. (Hawaiian Electric) and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(dollars in thousands, except par value)
�
September 30, 2014

�
December 31, 2013

Assets
�
�

�
�

Property, plant and equipment
�
�
�
�
Utility property, plant and equipment
�
�

�
�

Land
�
$
52,344

�
$
51,883

Plant and equipment
�
5,902,397

�
5,701,875

Less accumulated depreciation
�
(2,167,545
)
�
(2,111,229
)
Construction in progress
�
179,190

�
143,233

Utility property, plant and equipment, net
�
3,966,386

�
3,785,762

Nonutility property, plant and equipment, less accumulated depreciation of $1,229 and $1,223 at respective dates
�
6,561

�
6,567

Total property, plant and equipment, net
�
3,972,947

�
3,792,329

Current assets
�
�

�
�

Cash and cash equivalents
�
18,387

�
62,825

Customer accounts receivable, net
�
189,733

�
175,448

Accrued unbilled revenues, net
�
143,153

�
144,124

Other accounts receivable, net
�
19,508

�
14,062

Fuel oil stock, at average cost
�
118,303

�
134,087

Materials and supplies, at average cost
�
60,639

�
59,044

Prepayments and other
�
50,270

�
52,857

Regulatory assets
�
54,700

�
69,738

Total current assets
�
654,693

�
712,185

Other long-term assets
�
�

�
�

Regulatory assets
�
521,012

�
506,186

Unamortized debt expense
�
8,619

�
9,003

Other
�
67,891

�
67,426

Total other long-term assets
�
597,522

�
582,615

Total assets
�
$
5,225,162

�
$
5,087,129

Capitalization and liabilities
�
�

�
�

Capitalization
�
�

�
�

Common stock ($6 2/3 par value, authorized 50,000,000 shares; outstanding 15,429,105 shares)
�
$
102,880

�
$
102,880

Premium on capital stock
�
541,447

�
541,452

Retained earnings
�
990,784

�
948,624

Accumulated other comprehensive income, net of income taxes-retirement benefit plans
�
640

�
608

Common stock equity
�
1,635,751

�
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
�
2,876,590

�
2,834,402

Current liabilities
�
�

�
�

Current portion of long-term debt
�
11,400

�
11,400

Short-term borrowings from non-affiliates
�
84,987

�


Accounts payable
�
151,978

�
189,559

Interest and preferred dividends payable
�
24,401

�
21,652

Taxes accrued
�
236,481

�
249,445

Regulatory liabilities
�
528

�
1,916

Other
�
62,400

�
63,881

Total current liabilities
�
572,175

�
537,853

Deferred credits and other liabilities
�
�

�
�

Deferred income taxes
�
565,499

�
507,161

Regulatory liabilities
�
356,562

�
347,383

Unamortized tax credits
�
79,268

�
73,539

Defined benefit pension and other postretirement benefit plans liability
�
248,338

�
262,162

Other
�
77,919

�
91,735

Total deferred credits and other liabilities
�
1,327,586

�
1,281,980

Contributions in aid of construction
�
448,811

�
432,894

Total capitalization and liabilities
�
$
5,225,162

�
$
5,087,129

This information should be read in conjunction with the consolidated financial statements and the notes thereto incorporated by reference in Hawaiian Electrics Annual Report on SEC Form 10-K for the year ended December 31, 2013 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 (when filed), as updated by SEC Forms 8-K.

10


Hawaiian Electric Company, Inc. (Hawaiian Electric) and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine months ended September 30
�
2014
�
2013
(in�thousands)
�
�
�
�
Cash flows from operating activities
�
�

�
�

Net income
�
$
110,025

�
$
92,435

Adjustments to reconcile net income to net cash provided by operating activities
�
�

�
�

Depreciation of property, plant and equipment
�
124,790

�
115,865

Other amortization
�
4,662

�
2,470

Increase in deferred income taxes
�
67,392

�
48,014

Change in tax credits, net
�
5,816

�
4,510

Allowance for equity funds used during construction
�
(4,933
)
�
(4,030
)
Change in cash overdraft
�
(1,038
)
�


Changes in assets and liabilities
�
�

�
�

Decrease (increase) in accounts receivable
�
(19,731
)
�
42,077

Decrease (increase) in accrued unbilled revenues
�
971

�
(5,603
)
Decrease in fuel oil stock
�
15,784

�
24,332

Increase in materials and supplies
�
(1,595
)
�
(8,349
)
Increase in regulatory assets
�
(17,531
)
�
(53,314
)
Decrease in accounts payable
�
(77,893
)
�
(22,974
)
Change in prepaid and accrued income taxes and utility revenue taxes
�
(18,075
)
�
(15,416
)
Increase (decrease) in defined benefit pension and other postretirement benefit plans liability
�
(748
)
�
1,488

Change in other assets and liabilities
�
(41,629
)
�
(10,195
)
Net cash provided by operating activities
�
146,267

�
211,310

Cash flows from investing activities
�
�

�
�

Capital expenditures
�
(229,105
)
�
(237,869
)
Contributions in aid of construction
�
21,740

�
23,633

Other
�


�
427

Net cash used in investing activities
�
(207,365
)
�
(213,809
)
Cash flows from financing activities
�
�

�
�

Common stock dividends
�
(66,369
)
�
(61,183
)
Preferred stock dividends of Hawaiian Electric and subsidiaries
�
(1,496
)
�
(1,496
)
Net increase in short-term borrowings from non-affiliates and affiliate with original maturities of three months or less
�
84,987

�
73,246

Other
�
(462
)
�
(42
)
Net cash provided by financing activities
�
16,660

�
10,525

Net increase (decrease) in cash and cash equivalents
�
(44,438
)
�
8,026

Cash and cash equivalents, beginning of period
�
62,825

�
17,159

Cash and cash equivalents, end of period
�
$
18,387

�
$
25,185

This information should be read in conjunction with the consolidated financial statements and the notes thereto incorporated by reference in Hawaiian Electrics Annual Report on SEC Form 10-K for the year ended December 31, 2013 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 (when filed), as updated by SEC Forms 8-K. Cash flows for interim periods are not necessarily indicative of cash flows to be expected for future interim periods or the full year.

11


American Savings Bank, F.S.B.
STATEMENTS OF INCOME DATA
(Unaudited)
�
�
Three months ended�
�
Nine months ended September30
(in�thousands)
�
September 30, 2014
�
June 30, 2014
�
September 30, 2013
�
2014
�
2013
Interest and dividend income
�
�

�
�

�
�
�
�

�
�

Interest and fees on loans
�
$
45,532

�
$
43,851

�
$
43,337

�
$
133,065

�
$
129,564

Interest and dividends on investment and mortgage-related securities
�
2,773

�
2,950

�
3,025

�
8,758

�
9,723

Total interest and dividend income
�
48,305

�
46,801

�
46,362

�
141,823

�
139,287

Interest expense
�
�

�
�

�
�

�
�

�
�

Interest on deposit liabilities
�
1,312

�
1,237

�
1,262

�
3,774

�
3,870

Interest on other borrowings
�
1,438

�
1,420

�
1,206

�
4,263

�
3,548

Total interest expense
�
2,750

�
2,657

�
2,468

�
8,037

�
7,418

Net interest income
�
45,555

�
44,144

�
43,894

�
133,786

�
131,869

Provision for loan losses
�
1,550

�
1,021

�
54

�
3,566

�
953

Net interest income after provision for loan losses
�
44,005

�
43,123

�
43,840

�
130,220

�
130,916

Noninterest income
�
�

�
�

�
�

�
�

�
�

Fees from other financial services
�
5,642

�
5,217

�
5,728

�
15,987

�
21,367

Fee income on deposit liabilities
�
5,109

�
4,645

�
4,819

�
14,175

�
13,566

Fee income on other financial products
�
1,971

�
2,064

�
2,714

�
6,325

�
6,288

Mortgage banking income
�
875

�
246

�
1,547

�
1,749

�
6,896

Gain on sale of securities
�


�


�


�
2,847

�
1,226

Other income, net
�
1,634

�
1,643

�
3,888

�
4,865

�
7,211

Total noninterest income
�
15,231

�
13,815

�
18,696

�
45,948

�
56,554

Noninterest expense
�
�

�
�

�
�

�
�

�
�

Compensation and employee benefits
�
19,892

�
19,872

�
20,564

�
60,050

�
60,715

Occupancy
�
4,517

�
4,489

�
4,208

�
12,959

�
12,550

Data processing
�
2,684

�
2,971

�
2,168

�
8,715

�
7,982

Services
�
2,580

�
2,855

�
2,424

�
7,708

�
6,855

Equipment
�
1,672

�
1,609

�
1,825

�
4,926

�
5,469

Office supplies, printing and postage
�
1,415

�
1,456

�
907

�
4,487

�
2,806

Marketing
�
948

�
1,031

�
692

�
2,690

�
2,054

Communication
�
412

�
448

�
479

�
1,363

�
1,374

Other expense
�
5,544

�
5,159

�
6,461

�
15,026

�
18,400

Total noninterest expense
�
39,664

�
39,890

�
39,728

�
117,924

�
118,205

Income before income taxes
�
19,572

�
17,048

�
22,808

�
58,244

�
69,265

Income taxes
�
6,312

�
5,372

�
7,532

�
18,769

�
23,915

Net income
�
$
13,260

�
$
11,676

�
$
15,276

�
$
39,475

�
$
45,350

Comprehensive income
�
$
11,811

�
$
14,434

�
$
14,107

�
$
41,808

�
$
36,931

OTHER BANK INFORMATION (annualized %, except as of period end)
�
�
�
�
�
�
�
�
Return on average assets
�
0.98

�
0.87

�
1.20

�
0.98

�
1.19

Return on average equity
�
9.87

�
8.78

�
12.13

�
9.89

�
11.99

Return on average tangible common equity
�
11.65

�
10.39

�
14.50

�
11.70

�
14.33

Net interest margin
�
3.62

�
3.55

�
3.73

�
3.60

�
3.77

Net charge-offs (recoveries) to average loans outstanding
�
0.04

�
(0.04
)
�


�
0.01

�
0.06

As of period end
�
�
�
�
�
�
�
�
�
�
Nonperforming assets to loans outstanding and real estate owned *
�
0.88

�
1.05

�
1.33

�
�
�
�
Allowance for loan losses to loans outstanding
�
1.00

�
0.99

�
1.01

�
�
�
�
Tier-1 leverage ratio *
�
9.1

�
9.0

�
9.3

�
�
�
�
Total risk-based capital ratio *
�
12.6

�
12.6

�
12.5

�
�
�
�
Tangible common equity to total assets
�
8.49

�
8.46

�
8.36

�
�
�
�
Dividend paid to HEI (via ASHI) ($ in millions)
�
9

�
10

�
10

�
�
�
�
* Regulatory basis
This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEIs Annual Report on SEC Form 10-K for the year ended December 31, 2013 and HEI's Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2014, June 30, 2014 and September 30, 2014 (when filed), as updated by SEC Forms 8-K. Results of operations for interim periods are not necessarily indicative of results to be expected for future interim periods or the full year.

12


American Savings Bank, F.S.B.
BALANCE SHEETS DATA
(Unaudited)
(in�thousands)
�
September 30, 2014
�
December 31, 2013
Assets
�
�

�
�

�
�

�
�

Cash and due from banks
�
�

�
$
98,879

�
�

�
$
108,998

Interest-bearing deposits
�
�
�
74,654

�
�
�
47,605

Available-for-sale investment and mortgage-related securities
�
�

�
531,603

�
�

�
529,007

Investment in stock of Federal Home Loan Bank of Seattle
�
�

�
75,063

�
�

�
92,546

Loans receivable held for investment
�
�

�
4,335,421

�
�

�
4,150,229

Allowance for loan losses
�
�

�
(43,461
)
�
�

�
(40,116
)
Loans receivable held for investment, net
�
�

�
4,291,960

�
�

�
4,110,113

Loans held for sale, at lower of cost or fair value
�
�

�
2,328

�
�

�
5,302

Other
�
�

�
285,659

�
�

�
268,063

Goodwill
�
�

�
82,190

�
�

�
82,190

Total assets
�
�

�
$
5,442,336

�
�

�
$
5,243,824

�
�
�
�
�
�
�
�
�
Liabilities and shareholders equity
�
�

�
�

�
�

�
�

Deposit liabilitiesnoninterest-bearing
�
�

�
$
1,298,726

�
�

�
$
1,214,418

Deposit liabilitiesinterest-bearing
�
�

�
3,235,071

�
�

�
3,158,059

Other borrowings
�
�

�
263,204

�
�

�
244,514

Other
�
�

�
107,814

�
�

�
105,679

Total liabilities
�
�

�
4,904,815

�
�

�
4,722,670

Common stock
�
�

�
1

�
�

�
1

Additional paid in capital
�
�
�
337,862

�
�
�
336,053

Retained earnings
�
�

�
209,522

�
�

�
197,297

Accumulated other comprehensive loss, net of tax benefits
�
�

�
�

�
�

�
�

Net unrealized losses on securities
�
$
(1,972
)
�
�

�
$
(3,663
)
�
�

Retirement benefit plans
�
(7,892
)
�
(9,864
)
�
(8,534
)
�
(12,197
)
Total shareholders equity
�
�

�
537,521

�
�

�
521,154

Total liabilities and shareholders equity
�
�

�
$
5,442,336

�
�

�
$
5,243,824


This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEIs Annual Report on SEC Form 10-K for the year ended December 31, 2013 and HEI's Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2014, June 30, 2014 and September 30, 2014 (when filed), as updated by SEC Forms 8-K.


13


EXPLANATION OF HEIS 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 for both the utility and HEI consolidated and the corresponding adjusted return on average common equity (ROACE).
The reconciling adjustments from GAAP earnings to core earnings are limited to the settlement charge for the partial write-off of utility assets in the fourth quarter of 2012. For more information on the settlement charge recorded in 2012, see the Form 8-K filed on March 20, 2013. Management does not consider these items to be representative of the companys 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)
�
�
�
�
�
Twelve months ended September 30
2014
2013
HEI CONSOLIDATED NET INCOME
�
�
GAAP (as reported)
$
174.2

$
136.3

Excluding special items (after-tax):
�
�
Settlement agreement for the partial writedown of certain utility assets


24.4

Non-GAAP (core)
$
174.2

$
160.8

HEI CONSOLIDATED RETURN ON AVERAGE COMMON EQUITY (ROACE) (simple average)
Based on GAAP
10.1
%
8.4
%
Based on non-GAAP (core)2
10.1
%
9.9
%
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

14


RECONCILIATION OF GAAP1�TO NON-GAAP MEASURES
�
Hawaiian Electric Company, Inc. and Subsidiaries
�
Unaudited
�
�
�
($ in millions)
�
�
�
�
�
Twelve months ended September 30
�
2014
2013
HAWAIIAN ELECTRIC CONSOLIDATED NET INCOME
�
�
�
GAAP (as reported)
�
$
140.5

$
95.2

Excluding special items (after-tax):
�
�
�
Settlement agreement for the partial writedown of certain utility assets
�


24.4

Non-GAAP (core)
�
$
140.5

$
119.6

�
�
�
�
HAWAIIAN ELECTRIC CONSOLIDATED RETURN ON AVERAGE COMMON EQUITY (ROACE) (simple average):
�
�
�
Based on GAAP
�
9.0
%
6.5
%
Based on non-GAAP (core)2
�
9.0
%
8.1
%

�
�
Hawaiian Electric
�
Hawaii Electric Light
�
Maui Electric
Twelve months ended September 30
�
2014
2013
�
2014
2013
�
2014
2013
NET INCOME
�
�
�
�
�
�
�
�
�
GAAP (as reported)
�
$
101.0

$
63.9

�
$
18.7

$
15.1

�
$
20.8

$
16.1

Excluding special items (after-tax):
�
�
�
�
�
�
�
�
�
Settlement agreement for the partial writedown of certain utility assets
�


17.7

�


3.4

�


3.4

Non-GAAP (core)
�
$
101.0

$
81.6

�
$
18.7

$
18.5

�
$
20.8

$
19.5

�
�
�
�
�
�
�
�
RETURN ON AVERAGE COMMON EQUITY (ROACE) (simple average):
�
�
�
�
Based on GAAP
�
9.6
%
6.7
%
�
6.8
%
5.4
%
�
8.6
%
6.8
%
Based on non-GAAP (core)2
�
9.6
%
8.5
%
�
6.8
%
6.6
%
�
8.6
%
8.2
%
�
�
�
�
�
�
�
�
�
�
Three months ended September 30
�
�
�
�
�
�
�
2014
2013
HAWAIIAN ELECTRIC CONSOLIDATED OTHER OPERATION AND MAINTENANCE (O&M) EXPENSE
GAAP (as reported)
�
�
�
�
�
�
�
$
108.3

$
104.5

Excluding O&M-related net income neutral items3
�
�
�
�
�
�
�
(2.5
)
(1.5
)
Adjusted O&M expense (Non-GAAP measure)
�
�
�
�
�
�
�
$
105.8

$
103.0

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
�
�
�


15

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