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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: January 27, 1997
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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
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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.
(808) 543-7771 - Hawaiian Electric Company, Inc.
None
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(Former name or former address, if changed since last report.)
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ITEM 5. OTHER EVENTS
On January 27, 1997, Hawaiian Electric Industries, Inc. (HEI), issued the
following news release:
HAWAIIAN ELECTRIC INDUSTRIES, INC. REPORTS 1996 EARNINGS
HONOLULU -- Hawaiian Electric Industries, Inc. (NYSE - HE) today reported net
income for the year ended December 31, 1996 of $78.7 million, or $2.60 per
share, compared with $77.5 million, or $2.66 per share, in 1995. Excluding a
nonrecurring charge in the third quarter on HEI's savings bank subsidiary of
$8.3 million after tax, or 27 cents per share, 1996 net income would have
been $87.0 million, or $2.87 per share.
For the quarter ended December 31, 1996, HEI's net income was $21.1 million,
or 69 cents per share, versus $15.6 million, or 53 cents per share, in the
same period of 1995. A December 1995 ruling by the Hawaii Public Utilities
Commission lowered the Oahu utility's allowed return on equity retroactive to
January 1, 1995 and required a refund to customers. Utility net income in
the fourth quarter of 1995 included the refund related to the first nine
months of the year totaling approximately 14 cents per share.
"Our 1996 results reflect steady improvement by our utility subsidiaries and
Hawaii's gradual economic recovery," said Robert F. Clarke, HEI president and
chief executive officer. "The utilities recorded stronger than expected
kilowatthour sales during the year, as well as productivity gains that helped
offset inflationary cost increases."
Operating income at Hawaiian Electric Company and its subsidiaries (HECO) was
$173.6 million for the year and $41.4 million for the quarter, compared with
$159.0 million and $34.7 million in the respective periods of 1995. The
consolidated earned rate of return on average common equity at HEI's utility
subsidiaries for 1996 was 11.2%.
Utility consolidated kilowatthour sales were down 1.9% in the quarter,
compared with the same quarter last year which was marked by warmer weather
that pushed up sales 4.8%. For 1996, consolidated kilowatthour sales were up
2.1% over 1995, primarily due to Hawaii's gradual economic recovery.
On January 3, 1997, the State Third Circuit Court issued a decision that in
effect permits the utility subsidiary serving the island of Hawaii to use its
land to increase generating capacity at its Keahole power plant. The
decision remains subject to appeal. Other permits for the plant expansion,
including a State Department of Health air permit, also must be obtained.
The nonrecurring charge at American Savings Bank stems from legislation
enacted on September 30, 1996. The Federal Deposit Insurance Corporation
levied a special assessment on thrifts to recapitalize the Savings
Association Insurance Fund. After recording the nonrecurring charge,
American's operating income was $26.2 million for the year, versus
$40.0 million in 1995. Excluding the nonrecurring charge in 1996's third
quarter, the bank's operating income for the year would have been
$40.1 million, essentially unchanged from 1995. For the fourth quarter,
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operating income was $10.1 million, compared with $10.3 million in the same
period of 1995. American's 1996 operating results were affected by the
Treasury yield curve which remained flat, constraining the bank's interest-
rate spread. In addition, the provision for loan losses was increased
$6.3 million, bringing it to $19.2 million. "Net loan losses were only
$1.3 million due to conservative underwriting and underlying collateral,"
Clarke said.
American's interest-rate spread -- the difference between interest from
earning assets and cost of funds -- averaged 2.87% in 1996 versus 2.90% in
1995. In December 1996, American's spread widened to 3.04%. Annual loan
production was $498 million, compared with $382 million in 1995. Without the
effect of the nonrecurring charge, American's return on average common equity
in 1996 would have been 10.6%.
"American's lower insurance-premium rate will increase the bank's earning
power by approximately $2 million per year after tax, or 7 cents per share,"
Clarke said. "American will recover the nonrecurring charge in four years."
The operating results from HEI's other nonutility subsidiaries and corporate
parent were mixed during the year, compared with 1995. Operating earnings
from the maritime freight transportation and passive investment subsidiaries
were more than offset by operating losses at the residential real estate
development unit, start-up expenses at the international power unit and costs
of the corporate parent.
Hawaiian Electric Industries is a diversified holding company that delivers
essential services to the people of Hawaii through its electric utility,
savings bank, maritime freight transportation and residential real estate
development subsidiaries.
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<CAPTION>
CONSOLIDATED STATEMENTS OF INCOME
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Hawaiian Electric Industries, Inc. and subsidiaries
(Unaudited)
Quarters ended Years ended
December 31, December 31,
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(in thousands, except per share amounts) 1996 1995 1996 1995
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<S> <C> <C> <C> <C>
REVENUES
Electric utility........................ $283,627 $249,809 $1,080,868 $ 988,722
Savings bank............................ 71,051 69,143 271,402 254,616
Other................................... 14,324 13,920 58,302 52,586
-------- -------- ---------- ----------
369,002 332,872 1,410,572 1,295,924
-------- -------- ---------- ----------
EXPENSES
Electric utility........................ 242,260 215,149 907,255 829,679
Savings bank............................ 60,973 58,856 231,346 214,572
FDIC special assessment.............. -- -- 13,835 --
Other................................... 20,413 18,257 69,890 64,009
-------- -------- ---------- ----------
323,646 292,262 1,222,326 1,108,260
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OPERATING INCOME (LOSS)
Electric utility........................ 41,367 34,660 173,613 159,043
Savings bank............................ 10,078 10,287 26,221 40,044
Other................................... (6,089) (4,337) (11,588) (11,423)
-------- -------- ---------- ----------
45,356 40,610 188,246 187,664
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Interest expense--electric utility and
other.................................. (17,523) (16,462) (65,832) (62,860)
Allowance for borrowed funds used
during construction.................... 2,260 1,280 5,862 5,112
Preferred stock dividends of electric
utility subsidiaries................... (1,521) (1,702) (6,529) (6,885)
Allowance for equity funds used during
construction........................... 4,544 2,627 11,741 10,202
-------- -------- ---------- ----------
INCOME BEFORE INCOME TAXES.............. 33,116 26,353 133,488 133,233
Income taxes............................ 12,062 10,738 54,830 55,740
-------- -------- ---------- ----------
NET INCOME.............................. $ 21,054 $ 15,615 $ 78,658 $ 77,493
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EARNINGS PER COMMON SHARE............... $0.69 $0.53 $2.60 $2.66
======== ======== ========== ==========
DIVIDENDS PER COMMON SHARE.............. $0.61 $0.60 $2.41 $2.37
======== ======== ========== ==========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING........... 30,705 29,571 30,310 29,187
======== ======== ========== ==========
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On September 30, 1996, President Clinton signed into law the Deposit Insurance
Funds Act of 1996, which authorized a one-time deposit-insurance premium
assessment by the Federal Deposit Insurance Corporation (FDIC) of 65.7 cents per
$100 of deposits insured by the Savings Association Insurance Fund and held as
of March 31, 1995. ASB's assessment was $8.3 million after tax and was accrued
in September 1996.
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<S> <C> <C> <C> <C>
NET INCOME EXCLUDING FDIC SPECIAL
ASSESSMENT............................. $ 21,054 $ 15,615 $ 86,991 $ 77,493
======== ======== ========== ==========
EARNINGS PER COMMON SHARE EXCLUDING
FDIC SPECIAL ASSESSMENT............... $ 0.69 $ 0.53 $ 2.87 $ 2.66
======== ======== ========== ==========
</TABLE>
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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/ Paul Oyer
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Robert F. Mougeot Paul A. Oyer
Financial Vice President and Financial Vice President and
Chief Financial Officer of HEI Treasurer of HECO
(Principal Financial Officer of HEI) (Principal Financial Officer of HECO)
Date: January 27, 1997 Date: January 27, 1997
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