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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: October 31, 2001
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Exact Name of Registrant Commission I.R.S. Employer
as Specified in Its Charter File Number Identification No.
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Hawaiian Electric Industries, Inc. 1-8503 99-0208097
Hawaiian Electric Company, Inc. 1-4955 99-0040500
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State of Hawaii
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(State or other jurisdiction of incorporation)
900 Richards Street, Honolulu, Hawaii 96813
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(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
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(Former name or former address, if changed since last report.)
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Item 5. Other Events
News release
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On October 31, 2001, HEI issued the following news release:
HAWAIIAN ELECTRIC INDUSTRIES, INC. REPORTS THIRD QUARTER 2001 EARNINGS AND
DISCONTINUATION OF ITS INTERNATIONAL SUBSIDIARY AND PROVIDES NOTICE OF ITS
PROPOSED REGISTERED OFFERING OF COMMON STOCK
HONOLULU -- Hawaiian Electric Industries, Inc. (NYSE - HE) reported net
income from continuing operations for the three months ended September 30, 2001
of $28.7 million, or 85 cents per share, compared with $31.2 million, or 96
cents per share, in the same quarter of 2000. For the nine months ended
September 30, 2001, net income from continuing operations was $82.5 million, or
$2.47 per share, compared with $87.9 million, or $2.71 per share, in the same
period last year. "Although results were down this quarter as compared with the
same quarter in 2000, our core businesses, the utilities and bank, turned in
solid results," said Robert F. Clarke, HEI chairman, president and chief
executive officer.
The Company also announced that it has discontinued its international power
operations effective September 30, 2001. "After evaluating strategic
alternatives for our international operations, we believe it is in the best
interest of our shareholders to exit this business and focus resources on our
Hawaii operations," said Clarke. Over the next year, HEI Power Corp. will wind
down its operations and manage the disposition of its assets.
Net losses from discontinued operations during the third quarter, including
the discontinued international operations, were $21.5 million or 64 cents per
share, compared to $9.2 million, or 28 cents per share, in the same quarter last
year. Net losses from discontinued operations for the nine months ended
September 30, 2001 were $22.1 million, or 66 cents per share, versus $17.8
million, or 55 cents per share, in the same period of 2000.
Electric utility net income during the quarter was $25.7 million versus
$25.0 million in the same quarter last year. Net income for the nine months was
$69.8 million versus $72.8 million in the same period of 2000. "Utility net
income was up slightly this quarter as compared with the same quarter last year.
Warmer weather drove kilowatthour sales higher by 1.6% this quarter," said
Clarke. "Increased sales, along with decreased maintenance costs, were
partially offset by increases in purchased power capacity charges and
depreciation expense for the quarter as compared to the same period in 2000."
Bank net income in the third quarter was $11.1 million, compared to $9.8
million in the same quarter last year. Net income for the nine months was $33.2
million, versus $30.4 million in the same period of 2000. "Our bank earnings
were 12.8% higher this quarter compared with the same quarter last year due
largely to increases in other income," said Clarke. Lower losses from investing
activities, along with increased credit card interchange and ATM fees,
contributed to higher other income in the third quarter. Investment activity
losses were lower due to the disposition of certain trust securities. The
bank's interest rate spread - the difference between the yield on earning assets
and the cost of funds declined 3 basis points to 3.08% in the quarter and 8
basis points for the nine months to 3.10%.
The financial results of HEI's other nonutility subsidiaries and the
corporate parent reflect a larger net loss for the quarter and nine months ended
September 30, 2001 than in the same periods last year due to higher losses from
investments acquired in connection with the disposition by the bank of certain
trust securities and increased interest expense.
1
"While we are pleased with our third quarter results from our core
businesses, the September 11 attacks, as well as the ensuing responses, have
greatly affected the people of Hawaii and will undoubtedly impact our
operations. Resulting declines in Hawaii tourism will have an effect on our
utilities' kilowatthour sales and may eventually lead to increased delinquencies
at our bank," said Clarke. "Volatility in U.S. capital markets may also
negatively impact net pension income, the bank's interest rate spread and
investments at the corporate parent. While the magnitude and duration of the
economic impacts of the September 11 attacks are now unknown, HEI's core
operations have been stable and have generated good cash flows even in difficult
times."
HEI is a diversified holding company. Its core businesses are electric
utilities and a bank.
Notice of Proposed Registered Offering of Common Stock
HEI also announced that it plans to offer in an underwritten, registered
public offering 1.5 million shares of its common stock (or 1.725 million shares
if the underwriters' over-allotment option is exercised). Proceeds from the
sale will be used to repay debt and for other general corporate purposes.
This notice does not constitute an offer of common stock or any other
securities for sale.
###
Forward-looking Statements
This release may contain "forward-looking statements," that are subject to
risks and uncertainties. Forward-looking statements are 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. Forward-looking statements in this
release should be read in conjunction with "Forward-looking statements" set
forth on page v of HEI's Form 10-Q for the quarter ended June 30, 2001
(incorporated by reference herein) 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. and subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Three months Nine months Twelve months
(in thousands, ended September 30, ended September 30, ended September 30,
except per share amounts) 2001 2000 2001 2000 2001 2000
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Revenues
Electric utility $ 341,386 $ 337,324 $ 973,460 $ 934,574 $ 1,316,056 $ 1,222,432
Bank 108,034 114,300 336,038 333,266 453,654 438,516
Other (2,128) 383 (1,530) 1,878 851 16,468
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447,292 452,007 1,307,968 1,269,718 1,770,561 1,677,416
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Expenses
Electric utility 287,064 284,031 821,100 778,036 1,127,143 1,022,889
Bank 88,546 97,321 278,829 280,782 378,888 371,519
Other 2,631 1,011 9,354 6,710 12,502 13,003
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378,241 382,363 1,109,283 1,065,528 1,518,533 1,407,411
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Operating income (loss)
Electric utility 54,322 53,293 152,360 156,538 188,913 199,543
Bank 19,488 16,979 57,209 52,484 74,766 66,997
Other (4,759) (628) (10,884) (4,832) (11,651) 3,465
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69,051 69,644 198,685 204,190 252,028 270,005
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Interest expense-
other than bank (19,937) (18,842) (59,461) (57,587) (79,172) (75,530)
Allowance for borrowed funds
used during construction 524 807 1,711 2,220 2,413 2,841
Preferred stock dividends of
subsidiaries (501) (501) (1,504) (1,505) (2,006) (2,016)
Preferred securities distributions of
trust subsidiaries (4,008) (4,008) (12,026) (12,026) (16,035) (16,035)
Allowance for equity funds
used during construction 998 1,505 3,218 4,102 4,496 5,128
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Income from continuing operations
before income taxes 46,127 48,605 130,623 139,394 161,724 184,393
Income taxes 17,461 17,404 48,081 51,472 57,768 67,736
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Income from continuing operations 28,666 31,201 82,542 87,922 103,956 116,657
Discontinued operations,
net of income taxes
Loss from operations (711) (9,152) (1,254) (17,801) (47,045) (18,784)
Net gain (loss) on disposals (20,821) -- (20,821) -- (20,821) 3,953
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Loss from discontinued operations (21,532) (9,152) (22,075) (17,801) (67,866) (14,831)
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Net income $ 7,134 $ 22,049 $ 60,467 $ 70,121 $ 36,090 $ 101,826
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Per common share
Basic earnings (loss)
Continuing operations $ 0.85 $ 0.96 $ 2.47 $ 2.71 $ 3.12 $ 3.60
Discontinued operations (0.64) (0.28) (0.66) (0.55) (2.04) (0.46)
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$ 0.21 $ 0.68 $ 1.81 $ 2.16 $ 1.08 $ 3.14
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Diluted earnings (loss)
Continuing operations $ 0.84 $ 0.95 $ 2.46 $ 2.70 $ 3.11 $ 3.59
Discontinued operations (0.63) (0.28) (0.66) (0.55) (2.03) (0.46)
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$ 0.21 $ 0.67 $ 1.80 $ 2.15 $ 1.08 $ 3.13
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Dividends $ 0.62 $ 0.62 $ 1.86 $ 1.86 $ 2.48 $ 2.48
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Weighted-average number of
common shares outstanding 33,716 32,642 33,454 32,438 33,305 32,381
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Adjusted weighted-average shares 33,925 32,777 33,634 32,570 33,471 32,513
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Income (loss) from continuing operations
by segment
Electric utility $ 25,695 $ 25,020 $ 69,836 $ 72,759 $ 84,363 $ 91,361
Bank 11,072 9,815 33,154 30,432 43,352 39,763
Other (8,101) (3,634) (20,448) (15,269) (23,759) (14,467)
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Income from continuing operations $ 28,666 $ 31,201 $ 82,542 $ 87,922 $ 103,956 $ 116,657
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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, 2000 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, 2001, June 30, 2001
and September 30, 2001 (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.
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HAWAIIAN ELECTRIC INDUSTRIES, INC.
SUPPLEMENTAL DATA TO 3RD QUARTER 2001 EARNINGS RELEASE
(Unaudited)
Hawaiian Electric Company, Inc. (HECO) and subsidiaries Three months ended Nine months ended
Consolidated Statements of Income September 30, September 30,
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(in thousands) 2001 2000 2001 2000
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Operating revenues $ 340,231 $ 335,263 $ 969,979 $ 930,167
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Operating expenses
Fuel oil 96,665 95,883 266,995 262,130
Purchased power 87,670 85,092 253,067 225,762
Other operation 30,729 30,582 90,599 85,787
Maintenance 14,540 16,156 42,752 42,311
Depreciation 25,363 24,605 75,335 73,269
Taxes, other than income taxes 31,494 31,615 91,411 87,981
Income taxes 16,244 15,828 44,210 46,222
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302,705 299,761 864,369 823,462
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Operating income 37,526 35,502 105,610 106,705
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Other income
Allowance for equity funds used during construction 998 1,505 3,218 4,102
Other, net 530 1,856 2,467 3,569
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1,528 3,361 5,685 7,671
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Income before interest and other charges 39,054 38,863 111,295 114,376
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Interest and other charges
Interest on long-term debt 10,126 10,024 30,127 29,876
Amortization of net bond premium and expense 509 485 1,546 1,452
Other interest charges 832 1,725 4,245 5,257
Allowance for borrowed funds used during construction (524) (807) (1,711) (2,220)
Preferred stock dividends of subsidiaries 228 228 686 686
Preferred securities distributions of trust subsidiaries 1,918 1,918 5,756 5,756
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13,089 13,573 40,649 40,807
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Income before preferred stock dividends of HECO 25,965 25,290 70,646 73,569
Preferred stock dividends of HECO 270 270 810 810
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Net income for common stock $ 25,695 $ 25,020 $ 69,836 $ 72,759
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Other electric utility information
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Kilowatthour sales (millions) 2,471 2,433 7,010 6,902
Cooling degree days (Oahu) 1,578 1,501 3,711 3,536
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Three months ended Nine months ended
American Savings Bank, F.S.B. and subsidiaries September 30, September 30,
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Consolidated Income statement data 2001 2000 2001 2000
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(in thousands)
Interest income $ 96,967 $ 108,326 $ 307,159 $ 314,110
Interest expense 52,118 61,885 169,430 175,937
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Net interest income 44,849 46,441 137,729 138,173
Provision for loan losses (3,000) (3,000) (9,000) (9,400)
Other income 11,067 5,974 28,879 19,156
Operating, administrative and general expenses (33,428) (32,436) (100,399) (95,445)
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Operating income 19,488 16,979 57,209 52,484
Minority interest 48 58 162 168
Income taxes 7,015 5,753 19,835 17,825
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Income before preferred stock dividends 12,425 11,168 37,212 34,491
Preferred stock dividends 1,353 1,353 4,058 4,059
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Net income $ 11,072 $ 9,815 $ 33,154 $ 30,432
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Interest rate spread (%) 3.08 3.11 3.10 3.18
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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/ Robert F. Mougeot /s/ Richard A. von Gnechten
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Robert F. Mougeot Richard A. von Gnechten
Financial Vice President, Treasurer Financial Vice President of HECO
and Chief Financial Officer
(Principal Financial Officer of HEI) (Principal Financial Officer of HECO)
Date: October 31, 2001 Date: October 31, 2001
6