<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
HAWAIIAN ELECTRIC INDUSTRIES CAPITAL TRUST I
(Exact Name of Registrant as Specified in Its Certificate of Trust)
Commission File Number: 1-8503-01
Delaware 52-6829385
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
c/o The Bank of New York, 101 Barclay Street, 21st Floor, New York,
N.Y. 10286 (212) 815-5084
Attention: Corporate Trust Trustee Administration
(Address, including zip code, and telephone number, including area code, of
principal executive offices)
Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
Title of each class Name of each exchange on which registered
- ------------------- -----------------------------------------
<S> <C>
8.36% Trust Originated Preferred Securities (TOPrS) New York Stock Exchange
(and the related guarantee of Hawaiian Electric
Industries, Inc.)
</TABLE>
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No ___
-
As of September 30, 1998, no common securities of the Registrant were held by
nonaffiliates of the Registrant.
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Hawaiian Electric Industries Capital Trust I
Form 10-Q--Quarter ended September 30, 1998
INDEX
<TABLE>
<CAPTION>
PAGE NO.
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial statements
Balance sheets (unaudited) - September 30, 1998 and December 31, 1997................ 1
Statements of earnings (unaudited) - for the three months ended
September 30, 1998 and 1997, the nine months ended September 30, 1998
and the period February 4, 1997 (inception) to September 30, 1997................. 1
Statements of changes in stockholders' equity (unaudited) - for
the three months ended September 30, 1998 and 1997, the nine
months ended September 30, 1998 and the period
February 4, 1997 (inception) to September 30, 1997................................ 2
Statements of cash flows (unaudited) - for the nine months ended
September 30, 1998 and the period February 4, 1997 (inception) to
September 30, 1997................................................................ 2
Notes to financial statements (unaudited) ........................................... 3
Item 2. Management's discussion and analysis of financial condition
and results of operations......................................................... 4
PART II. OTHER INFORMATION
Item 1. Legal proceedings.................................................................... 5
Item 6. Exhibits and reports on Form 8-K..................................................... 5
Signatures .................................................................................... 5
</TABLE>
ii
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PART I - FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
ITEM 1. FINANCIAL STATEMENTS
Hawaiian Electric Industries Capital Trust I
BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
September 30, December 31,
(in thousands) 1998 1997
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
- ------
Investment in partnership preferred securities.......................... $103,093 $103,093
============ ==============
Stockholders' Equity
- --------------------
Preferred securities (8.36% Trust Originated Preferred
Securities; 4,000,000 authorized, issued and outstanding;
$25 liquidation amount per security)................................. $100,000 $100,000
Common securities (8.36% Trust Common Securities;
123,720 authorized, issued and outstanding;
$25 liquidation amount per security)................................. 3,093 3,093
============ ==============
$103,093 $103,093
============ ==============
</TABLE>
Hawaiian Electric Industries Capital Trust I
STATEMENTS OF EARNINGS (UNAUDITED)
<TABLE>
<CAPTION>
February 4,
Three months Nine months 1997
ended ended (inception)
September 30, September to September
-------------------------------- 30, 30,
(in thousands) 1998 1997 1998 1997
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Earnings-equity in earnings of HEI Preferred
Funding, LP........................................ $ 2,155 $ 2,155 $ 6,464 $ 5,626
Distribution on preferred securities................... (2,090) (2,090) (6,270) (5,457)
-------- --------- -------- -------
Earnings available for common securities............... $ 65 $ 65 $ 194 $ 169
======== ======== ======= =======
</TABLE>
Note: Hawaiian Electric Industries, Inc. owns all of Hawaiian Electric
Industries Capital Trust I's common securities. Therefore, per share
data is not meaningful.
See accompanying notes to financial statements.
1
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Hawaiian Electric Industries Capital Trust I
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)
<TABLE>
<CAPTION>
February 4,
Nine 1997
months (inception)
Three months ended to
ended September September
September 30, 30, 30,
-------------------------
(in thousands) 1998 1997 1998 1997
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Preferred securities, beginning of period............. $ 100,000 $ 100,000 $ 100,000 $ --
Issuance of preferred securities on
February 4, 1997 (inception).................... -- -- -- 100,000
---------- ---------- ---------- ----------
Balance, end of period................................ 100,000 100,000 100,000 100,000
---------- ---------- ---------- ----------
Common securities, beginning of period................ 3,093 3,093 3,093 --
Issuance of common securities on
February 4, 1997 (inception).................... -- -- -- 3,093
---------- ---------- ---------- ----------
Balance, end of period................................ 3,093 3,093 3,093 3,093
---------- ---------- ----------- ----------
Retained earnings, beginning of period................ -- -- -- --
Earnings available for common securities........... 65 65 194 169
Distribution on common securities.................. (65) (65) (194) (169)
---------- ---------- ----------- ----------
Balance, end of period................................ -- -- -- --
---------- ---------- ------------- ----------
Total stockholders' equity............................ $103,093 $103,093 $103,093 $103,093
========== ========== ============= ==========
</TABLE>
Hawaiian Electric Industries Capital Trust I
STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Nine months February 4, 1997
ended (inception) to
(in thousands) September 30, 1998 September 30, 1997
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities
Earnings before distribution on preferred securities................... $ 6,464 $ 5,626
Equity in earnings of HEI Preferred Funding, LP........................ (6,464) (5,626)
Distribution from HEI Preferred Funding, LP............................ 6,464 5,626
---------- --------
Net cash provided by operating activities.............................. 6,464 5,626
---------- --------
Cash flows used in investing activity--purchase of
partnership preferred securities on February 4, 1997
(inception).......................................................... -- (103,093)
---------- ---------
Cash flows from financing activities
Proceeds from issuance of preferred securities on
February 4, 1997 (inception)......................................... -- 100,000
Proceeds from issuance of common securities on
February 4, 1997 (inception)......................................... -- 3,093
Distribution on common securities...................................... (194) (169)
Distribution on preferred securities................................... (6,270) (5,457)
---------- ---------
Net cash provided by (used in) financing activities.................... (6,464) 97,467
---------- ---------
Net change in cash..................................................... -- --
Cash, beginning of period.............................................. -- --
---------- ---------
Cash, end of period.................................................... $ -- $ --
========== =========
</TABLE>
See accompanying notes to financial statements.
2
<PAGE>
Hawaiian Electric Industries Capital Trust I
NOTES TO FINANCIAL STATEMENTS
September 30, 1998
(UNAUDITED)
- --------------------------------------------------------------------------------
(1) BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in conformity
with generally accepted accounting principles (GAAP) for interim financial
information and with the instructions to Securities and Exchange Commission
(SEC) Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by GAAP for complete
financial statements. The accompanying unaudited financial statements should be
read in conjunction with the financial statements and notes thereto in the
Annual Report of Hawaiian Electric Industries Capital Trust I (The Trust) on SEC
Form 10-K for the fiscal year ended December 31, 1997. In preparing the Trust's
financial statements, management is required to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the balance sheet and the
reported amounts of earnings for the period. Actual results could differ
significantly from those estimates.
In the opinion of the management of the Trust, the accompanying unaudited
financial statements contain all material adjustments required by GAAP to
present fairly the Trustis financial position as of September 30, 1998 and
December 31, 1997; the results of its operations for the three months ended
September 30, 1998 and 1997, the nine months ended September 30, 1998 and the
period February 4, 1997 (inception) to September 30, 1997; and its cash flows
for the nine months ended September 30, 1998 and the period February 4, 1997
(inception) to September 30, 1997. All such adjustments are of a normal
recurring nature unless otherwise disclosed in this Form 10-Q or other
referenced material. The Trust was formed under Delaware law on December 19,
1996, but engaged in no activity until it was capitalized through the issuance
of the Trust Preferred Securities and Trust Common Securities on February 4,
1997 (inception) with the proceeds from the sale of the Trust Preferred
Securities and the Common Securities.
3
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
-----------------------------------------------------------------------
OF OPERATIONS
-------------
Hawaiian Electric Industries Capital Trust I (the Trust) is a statutory business
trust formed under the Delaware Business Trust Act, as amended, pursuant to a
trust agreement and a certificate of trust filed with the Secretary of State on
December 19, 1996. The Trust Agreement was subsequently amended by an amended
and restated trust agreement dated as of February 1, 1997. The Trust exists for
the exclusive purposes of (i) issuing trust securities, consisting of 8.36%
Trust Originated Preferred Securities (the Trust Preferred Securities) and trust
common securities (the Trust Common Securities), representing undivided
beneficial ownership interests in the assets of the Trust, (ii) investing the
gross proceeds of the trust securities in 8.36% Partnership Preferred Securities
(the Partnership Preferred Securities) issued by HEI Preferred Funding, LP (the
Partnership), and (iii) engaging in only those other activities necessary or
incidental thereto.
The Registrant's activities are limited to issuing securities and investing the
proceeds as described above. Since the Trust was organized on December 19, 1996,
its activities, as specified in its declaration of trust, have been limited to
the issuance of the Trust Preferred Securities and the Trust Common Securities,
the investing of the proceeds in the Partnership Preferred Securities, and the
payment of distributions on the Trust Preferred Securities and the Trust Common
Securities in accordance with their terms. All of the foregoing activities of
the Trust occurred in or after February 1997.
All expenses of organizing the Trust, carrying out the issuance of its
securities, and conducting its limited activities have been borne by Hawaiian
Electric Industries, Inc. (the Company), either directly or through Hycap
Management, Inc. (Hycap), its wholly owned subsidiary.
The Partnership is a limited partnership formed under the Delaware Revised
Uniform Limited Partnership Act, as amended, pursuant to an agreement of limited
partnership and the filing of a certificate of limited partnership with the
Secretary of State of Delaware on December 23, 1996, which was subsequently
amended by an amended and restated agreement of limited partnership dated as of
February 1, 1997. The Partnership exists for the exclusive purposes of
(a) purchasing certain eligible debt instruments of the Company and the wholly
owned subsidiaries of the Company (collectively, the Affiliate Investment
Instruments) and certain U.S. government obligations and commercial paper of
unaffiliated entities (Eligible Debt Securities) with the proceeds from (i) the
sale of its Partnership Preferred Securities, representing limited partner
interests in the Partnership, to the Trust and (ii) a capital contribution in
exchange for the general partner interest in the Partnership, (b) receiving
interest and other payments on the Affiliate Investment Instruments and the
Eligible Debt Securities held by the Partnership from time to time, (c) making
distributions on the Partnership Preferred Securities and distributions on the
general partner interest in the Partnership if, as, and when declared by the
general partner in its sole discretion, (d) subject to the restrictions and
conditions contained in the agreement of limited partnership, making additional
investments in Affiliate Investment Instruments and Eligible Debt Securities and
disposing of any such investments, and (e) except as otherwise limited in the
agreement of limited partnership, entering into, making and performing all
contracts and other undertakings, and engaging in those activities and
transactions as the general partner deems necessary or advisable for carrying
out the purposes of the Partnership. Since the Partnership was organized on
December 23, 1996, its activities, as specified in its agreement of limited
partnership, have been limited to the issuance of the Partnership Preferred
Securities, the receipt of a capital contribution from Hycap, as general
partner, the investment of the proceeds from the sale of the Partnership
Preferred Securities and the general partner interest in the Affiliate
Investment Instruments and Eligible Debt Securities, and the payment of
distributions on the Partnership Preferred Securities. Hycap is the sole general
partner of the Partnership.
4
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PART II - OTHER INFORMATION
- --------------------------------------------------------------------------------
ITEM 1. LEGAL PROCEEDINGS
- --------------------------
The Registrant knows of no material legal proceedings involving the Trust or its
assets.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- -----------------------------------------
(A) EXHIBITS
Exhibit 12 Computation of ratios of earnings to combined fixed charges and
preferred securities distributions for the nine months ended
September 30, 1998 and for the period February 4, 1997
(inception) to September 30, 1997
Exhibit 27 Hawaiian Electric Industries Capital Trust I -- Financial Data
Schedule September 30, 1998 and nine months ended September 30,
1998
(B) REPORTS ON FORM 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized on the 12th day of November, 1998.
HAWAIIAN ELECTRIC INDUSTRIES
CAPITAL TRUST I
By: /s/ ROBERT F. MOUGEOT
-------------------------------------------
Name: Robert F. Mougeot
Title: Regular Trustee
(Principal Financial Officer of the Trust)
By: /s/ CONSTANCE H. LAU
-------------------------------------------
Name: Constance H. Lau
Title: Regular Trustee
5
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Exhibit 12
----------
Hawaiian Electric Industries Capital Trust I
COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED SECURITIES DISTRIBUTIONS
(unaudited)
<TABLE>
<CAPTION>
For the period
Nine months February 4, 1997
ended (inception) to
September 30, September 30,
(dollars in thousands) 1998 1997
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Earnings............................................................. $ 6,464 $ 5,626
========= =========
Fixed charges........................................................ $ -- $ --
Preferred securities distributions................................... 6,270 5,457
--------- ---------
TOTAL COMBINED FIXED CHARGES AND
PREFERRED SECURITIES DISTRIBUTIONS................................ $ 6,270 $ 5,457
========= =========
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED SECURITIES DISTRIBUTIONS................................ 1.03 1.03
========= =========
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0001029528
<NAME> HAWAIIAN ELECTRIC INDUSTRIES CAPITAL TRUST I
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 0
<SECURITIES> 103,093
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 103,093
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
100,000
<COMMON> 3,093
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 103,093
<SALES> 0
<TOTAL-REVENUES> 6,464
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 6,270
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 194
<INCOME-TAX> 0
<INCOME-CONTINUING> 194
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 194
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
