Form 8-K, dated 01/20/2003
 
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: January 20, 2003
 

Exact Name of Registrant
as Specified in Its Charter
   

Commission
File Number
  

I.R.S. Employer
Identification No.
Hawaiian Electric Industries, Inc.
Hawaiian Electric Company, Inc.
   
1-8503
1-4955
  
99-0208097
99-0040500
 
 
State of Hawaii
(State or other jurisdiction of incorporation)
 
900 Richards Street, Honolulu, Hawaii 93813
(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
(Former name or former address, if changed since last report.)
 

 
Item 5.    Other Events
 
NEWS RELEASE
 
On January 20, 2003, HEI issued the following news release:
 
HAWAIIAN ELECTRIC INDUSTRIES, INC. REPORTS 2002 YEAREND EARNINGS
 
HONOLULU — Hawaiian Electric Industries, Inc. (NYSE - HE) today reported 2002 income from continuing operations of $118.2 million, or $3.26 per share, compared with $107.7 million, or $3.19 per share in 2001.
 
“The utility, bank and holding company all contributed to the healthy 10% increase in net income from continuing operations in 2002 as compared with 2001,” said Robert F. Clarke, HEI chairman, president and chief executive officer. “Utility net income was up 2%, bank net income was up 16% and holding company net losses were down 3% in 2002—a tremendous performance given the challenges of a Hawaii economy recovering from the effects of September 11th. In addition, the Company faced decreasing retirement benefits income, as turmoil in the stock market adversely affected our retirement plans’ asset performance.”
 
Although income from continuing operations was up 10% this year, basic earnings per share from continuing operations were up only 2% due to a 7% increase in the weighted average number of shares outstanding, resulting from HEI’s November 2001 common stock offering and new issuances of common stock through HEI’s dividend reinvestment and other stock plans.
 
Electric utility net income was $90.2 million in 2002 versus $88.3 million in 2001. “Increases in usage and the number of residential customers caused kilowatthour sales to grow by 1.9% in 2002 despite cooler weather as compared with 2001,” said Clarke. Improved operating efficiency and lower interest expense also had a favorable impact on 2002 utility earnings. Partially offsetting these positives were increased operation and maintenance expenses and depreciation in 2002 versus 2001. Other operations expenses were higher due to a $6.9 million decrease in gross retirement benefits income. Maintenance expenses were higher primarily due to the timing and larger scope of generating unit overhauls.
 
Bank net income was $56.2 million in 2002 compared to $48.5 million in 2001. An increase in the interest rate spread, a lower provision for loan losses, increased fee income on deposits and on financial services and products, lower investment losses and lower intangible asset amortization boosted 2002 bank net income as compared with 2001. Partially offsetting these improvements were losses on sales of securities versus gains on sales of securities in 2001, writedowns of mortgage servicing rights due to increased prepayments on loans serviced for others and increases in general and administrative expenses.
 
“For most of 2002, bank net income benefited from the low interest rate environment, as the bank was able to lower its cost of funds,” said Clarke. “However, in the last quarter of 2002, the low interest rate environment put pressure on the interest rate spread. High levels of mortgage refinancing lowered asset yields while deposit rates decreased only slightly as they were already at low levels.” The interest rate spread was 3.24% in 2002 versus 3.17% in 2001. Delinquencies during 2002 reached five-year lows, which translated into a lower provision for loan losses compared with 2001. The adoption of new accounting rules established by the Financial Accounting Standards Board calling for the discontinuation of goodwill amortization added $3.8 million to bank net income in 2002.

1

 
Holding company net losses were $28.2 million in 2002 versus $29.1 million in 2001 due largely to lower interest expense as $60 million of debt was paid off in 2002. In addition, the Company had lower stock option expenses in 2002 primarily due to the adoption of the fair value recognition provisions of Statement of Financial Accounting Standards (SFAS) No. 123, as amended, which prescribes a different method for computing stock option expenses than was used in 2001. These decreases were partially offset by higher general and administrative costs.
 
HEI is the largest Hawaii-based company (based on 2001 Hawaii revenues), providing electric utility services to 95% of Hawaii’s residents and a wide array of banking services to consumers and businesses through the state’s third largest bank.
 
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 (including future revenues, expenses, earnings or losses or growth rates), ongoing business strategies or prospects and possible future actions, which may be provided by management, 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 assumptions about 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 “Forward-looking statements” (which is incorporated by reference herein) set forth on page v of HEI’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2002 and in HEI’s future periodic reports that discuss important factors that could cause HEI’s actual financial and other results to differ materially from those anticipated in such statements. Forward-looking statements in this release speak only as of the date of this release.
 
###

2

 
Hawaiian Electric Industries, Inc. and Subsidiaries
 
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
 
    
Three months
ended December 31,
     
Years ended
December 31,
  
    
2002
     
2001
     
2002
     
2001
  
    
(in thousands, except per share amounts)
  
Revenue
                                    
Electric utility
   
$
337,533
 
   
$
315,844
 
   
$
1,257,176
 
   
$
1,289,304
 
Bank
   
 
98,622
 
   
 
108,564
 
   
 
399,255
 
   
 
444,602
 
Other
   
 
(452
)
   
 
(5,099
)
   
 
(2,730
)
   
 
(6,629
)
    
  
  
  
    
 
435,703
 
   
 
419,309
 
   
 
1,653,701
 
   
 
1,727,277
 
    
  
  
  
Expenses
                                    
Electric utility
   
 
292,723
 
   
 
274,259
 
   
 
1,062,220
 
   
 
1,095,359
 
Bank
   
 
76,845
 
   
 
83,674
 
   
 
306,372
 
   
 
362,503
 
Other
   
 
6,670
 
   
 
3,888
 
   
 
18,676
 
   
 
13,242
 
    
  
  
  
    
 
376,238
 
   
 
361,821
 
   
 
1,387,268
 
   
 
1,471,104
 
    
  
  
  
Operating income (loss)
                                    
Electric utility
   
 
44,810
 
   
 
41,585
 
   
 
194,956
 
   
 
193,945
 
Bank
   
 
21,777
 
   
 
24,890
 
   
 
92,883
 
   
 
82,099
 
Other
   
 
(7,122
)
   
 
(8,987
)
   
 
(21,406
)
   
 
(19,871
)
    
  
  
  
    
 
59,465
 
   
 
57,488
 
   
 
266,433
 
   
 
256,173
 
    
  
  
  
Interest expense–other than bank
   
 
(17,674
)
   
 
(19,265
)
   
 
(72,292
)
   
 
(78,726
)
Allowance for borrowed funds
used during construction
   
 
463
 
   
 
547
 
   
 
1,855
 
   
 
2,258
 
Preferred stock dividends of subsidiaries
   
 
(502
)
   
 
(502
)
   
 
(2,006
)
   
 
(2,006
)
Preferred securities distributions of trust subsidiaries
   
 
(4,009
)
   
 
(4,009
)
   
 
(16,035
)
   
 
(16,035
)
Allowance for equity funds
used during construction
   
 
977
 
   
 
1,021
 
   
 
3,954
 
   
 
4,239
 
    
  
  
  
Income from continuing operations before income taxes
   
 
38,720
 
   
 
35,280
 
   
 
181,909
 
   
 
165,903
 
Income taxes
   
 
12,345
 
   
 
10,076
 
   
 
63,692
 
   
 
58,157
 
    
  
  
  
Income from continuing operations
   
 
26,375
 
   
 
25,204
 
   
 
118,217
 
   
 
107,746
 
Discontinued operations, net of income taxes
                                    
Loss from operations
   
 
—  
 
   
 
—  
 
   
 
—  
 
   
 
(1,254
)
Net loss on disposals
   
 
—  
 
   
 
(1,966
)
   
 
—  
 
   
 
(22,787
)
    
  
  
  
Loss from discontinued operations
   
 
—  
 
   
 
(1,966
)
   
 
—  
 
   
 
(24,041
)
    
  
  
  
Net income
   
$
26,375
 
   
$
23,238
 
   
$
118,217
 
   
$
83,705
 
    
  
  
  
Per common share
                                    
Basic earnings (loss)
                                    
Continuing operations
   
$
0.72
 
   
$
0.73
 
   
$
3.26
 
   
$
3.19
 
Discontinued operations
   
 
—  
 
   
 
(0.06
)
   
 
—  
 
   
 
(0.71
)
    
  
  
  
    
$
0.72
 
   
$
0.67
 
   
$
3.26
 
   
$
2.48
 
    
  
  
  
Diluted earnings (loss)
                                    
Continuing operations
   
$
0.72
 
   
$
0.73
 
   
$
3.24
 
   
$
3.18
 
Discontinued operations
   
 
—  
 
   
 
(0.06
)
   
 
—  
 
   
 
(0.71
)
    
  
  
  
    
$
0.72
 
   
$
0.67
 
   
$
3.24
 
   
$
2.47
 
    
  
  
  
Dividends
   
$
0.62
 
   
$
0.62
 
   
$
2.48
 
   
$
2.48
 
    
  
  
  
Weighted-average number of common shares outstanding
   
 
36,658
 
   
 
34,644
 
   
 
36,278
 
   
 
33,754
 
    
  
  
  
Adjusted weighted-average shares
   
 
36,869
 
   
 
34,851
 
   
 
36,477
 
   
 
33,942
 
    
  
  
  
Income (loss) from continuing operations by segment
                                    
Electric utility
   
$
20,386
 
   
$
18,464
 
   
$
90,205
 
   
$
88,300
 
Bank
   
 
13,410
 
   
 
15,377
 
   
 
56,225
 
   
 
48,531
 
Other
   
 
(7,421
)
   
 
(8,637
)
   
 
(28,213
)
   
 
(29,085
)
    
  
  
  
Income from continuing operations
   
$
26,375
 
   
$
25,204
 
   
$
118,217
 
   
$
107,746
 
    
  
  
  
 
This information should be read in conjunction with the consolidated financial statements and the notes thereto incorporated by reference in HEI’s Annual Reports on SEC Form 10-K for the years ended December 31, 2001 and 2002 (when filed) 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, 2002, June 30, 2002 and September 30, 2002.

3

 
Hawaiian Electric Industries, Inc. and Subsidiaries
 
GOODWILL
(Unaudited)
 
The Company adopted the provisions of SFAS No. 142, “Goodwill and Other Intangible Assets” on January 1, 2002. SFAS No. 142 requires that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead be tested for impairment at least annually.
 
The Company's $83.2 million of goodwill is in the bank segment and was tested for impairment as of January 1, 2002 and September 30, 2002 and will be tested for impairment annually in the fourth quarter using data as of September 30. As of January 1, 2002 and September 30, 2002, there was no impairment of goodwill. The fair value of the bank was estimated using a valuation method based on a market approach, which takes into consideration market values of comparable publicly traded companies and recent transactions of companies in the industry.
 
Application of the provisions of SFAS No. 142 has affected the comparability of current period results of operations with prior periods because the goodwill in the bank segment is no longer being amortized over a 25 year period. Thus, the following “transitional” disclosures present net income and earnings per common share “adjusted” as shown below:
 
    
Three months ended December 31,
   
Years ended
December 31,
    
2002
   
2001
   
2002
   
2001
    
(in thousands, except per share amounts)
Consolidated
                            
Reported net income
   
$
26,375
   
$
23,238
   
$
118,217
   
$
83,705
Goodwill amortization, net of tax benefits
   
 
—  
   
 
968
   
 
—  
   
 
3,845
    
  
  
  
Adjusted net income
   
$
26,375
   
$
24,206
   
$
118,217
   
$
87,550
    
  
  
  
Per common share
                            
Reported basic earnings
   
$
0.72
   
$
0.67
   
$
3.26
   
$
2.48
Goodwill amortization, net of tax benefits
   
 
—  
   
 
0.03
   
 
—  
   
 
0.11
    
  
  
  
Adjusted basic earnings
   
$
0.72
   
$
0.70
   
$
3.26
   
$
2.59
    
  
  
  
Per common share
                            
Reported diluted earnings
   
$
0.72
   
$
0.67
   
$
3.24
   
$
2.47
Goodwill amortization, net of tax benefits
   
 
—  
   
 
0.03
   
 
—  
   
 
0.11
    
  
  
  
Adjusted diluted earnings
   
$
0.72
   
$
0.70
   
$
3.24
   
$
2.58
    
  
  
  
Bank
                            
Reported net income
   
$
13,410
   
$
15,377
   
$
56,225
   
$
48,531
Goodwill amortization, net of tax benefits
   
 
—  
   
 
968
   
 
—  
   
 
3,845
    
  
  
  
Adjusted net income
   
$
13,410
   
$
16,345
   
$
56,225
   
$
52,376
    
  
  
  

4

 
Hawaiian Electric Industries, Inc. and Subsidiaries
 
STOCK COMPENSATION
(Unaudited)
 
In December 2002, the Company elected to adopt the fair value recognition provisions of SFAS No. 123 “Accounting for Stock-Based Compensation,” as amended by SFAS No. 148, “Accounting for Stock-Based Compensation—Transition and Disclosure,” as of January 1, 2002 using the modified prospective method. The application of SFAS No. 123, as amended, increased net income for the nine months ended September 30, 2002 by $1.2 million, or three cents per share. Previously reported net income, and basic and diluted earnings per share for the quarters ended March 31, 2002, June 30, 2002 and September 30, 2002, were restated as follows:
 
    
Three months ended
  
    
March 31,
2002
     
June 30,
2002
     
September 30,
2002
  
    
(in thousands, except per share amounts)
  
Net income as reported
   
$
26,919
 
   
$
30,984
 
   
$
32,777
 
Add: Stock option expense included in reported net income, net of tax benefits
   
 
131
 
   
 
674
 
   
 
945
 
        
Deduct: Total stock option expense determined under the fair value based method, net of tax benefits
   
 
(178
)
   
 
(200
)
   
 
(210
)
    
  
  
Restated net income
   
$
26,872
 
   
$
31,458
 
   
$
33,512
 
    
  
  
Earnings per share
                           
Basic—as reported
   
$
0.75
 
   
$
0.86
 
   
$
0.90
 
    
  
  
Basic—restated
   
$
0.75
 
   
$
0.87
 
   
$
0.92
 
    
  
  
Diluted—as reported
   
$
0.75
 
   
$
0.85
 
   
$
0.89
 
    
  
  
Diluted—restated
   
$
0.75
 
   
$
0.86
 
   
$
0.91
 
    
  
  
 
If the accounting provisions of SFAS No. 123, as amended, had been applied to all periods presented, the pro forma net income and basic and diluted earnings per share would have been:
 
    
Three months ended
December 31,
     
Years ended
December 31,
  
    
2002
     
2001
     
2002
     
2001
  
    
(in thousands, except per share amounts)
  
Net income as reported
   
$
26,375
 
   
$
23,238
 
   
$
118,217
 
   
$
83,705
 
Add: Stock option expense included in reported net income, net of tax benefits
   
 
300
 
   
 
292
 
   
 
888
 
   
 
1,612
 
           
Deduct: Total stock option expense determined
under the fair value based method, net of tax benefits
   
 
(300
)
   
 
(197
)
   
 
(888
)
   
 
(788
)
    
  
  
  
Pro forma net income
   
$
26,375
 
   
$
23,333
 
   
$
118,217
 
   
$
84,529
 
    
  
  
  
Earnings per share
                                    
Basic—as reported
   
$
0.72
 
   
$
0.67
 
   
$
3.26
 
   
$
2.48
 
    
  
  
  
Basic—pro forma
   
$
0.72
 
   
$
0.67
 
   
$
3.26
 
   
$
2.50
 
    
  
  
  
Diluted—as reported
   
$
0.72
 
   
$
0.67
 
   
$
3.24
 
   
$
2.47
 
    
  
  
  
Diluted—pro forma
   
$
0.72
 
   
$
0.67
 
   
$
3.24
 
   
$
2.49
 
    
  
  
  
 
Previously, the Company expensed stock options in accordance with Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees,” and related interpretations. The method for expensing stock options prescribed by SFAS No. 123, as amended, is considered preferential by the Financial Accounting Standard Board.

5

 
Hawaiian Electric Company, Inc. (HECO) and Subsidiaries
 
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
 
    
Three months ended
December 31,
     
Years ended
December 31,
  
    
2002
     
2001
     
2002
     
2001
  
    
(in thousands)
  
Operating revenues
   
$
336,527
 
   
$
314,333
 
   
$
1,252,929
 
   
$
1,284,312
 
    
  
  
  
Operating expenses
                                    
Fuel oil
   
 
91,694
 
   
 
79,733
 
   
 
310,595
 
   
 
346,728
 
Purchased power
   
 
85,711
 
   
 
84,777
 
   
 
326,455
 
   
 
337,844
 
Other operation
   
 
36,337
 
   
 
34,966
 
   
 
131,910
 
   
 
125,565
 
Maintenance
   
 
20,814
 
   
 
19,049
 
   
 
66,541
 
   
 
61,801
 
Depreciation
   
 
26,361
 
   
 
25,379
 
   
 
105,424
 
   
 
100,714
 
Taxes, other than income taxes
   
 
31,349
 
   
 
29,483
 
   
 
120,118
 
   
 
120,894
 
Income taxes
   
 
12,619
 
   
 
11,224
 
   
 
56,729
 
   
 
55,434
 
    
  
  
  
    
 
304,885
 
   
 
284,611
 
   
 
1,117,772
 
   
 
1,148,980
 
    
  
  
  
Operating income
   
 
31,642
 
   
 
29,722
 
   
 
135,157
 
   
 
135,332
 
    
  
  
  
Other income
                                    
Allowance for equity funds used during construction
   
 
977
 
   
 
1,021
 
   
 
3,954
 
   
 
4,239
 
Other, net
   
 
706
 
   
 
730
 
   
 
3,141
 
   
 
3,197
 
    
  
  
  
    
 
1,683
 
   
 
1,751
 
   
 
7,095
 
   
 
7,436
 
    
  
  
  
Income before interest and other charges
   
 
33,325
 
   
 
31,473
 
   
 
142,252
 
   
 
142,768
 
    
  
  
  
Interest and other charges
                                    
Interest on long-term debt
   
 
10,290
 
   
 
10,169
 
   
 
40,720
 
   
 
40,296
 
Amortization of net bond premium and expense
   
 
509
 
   
 
517
 
   
 
2,014
 
   
 
2,063
 
Other interest charges
   
 
185
 
   
 
452
 
   
 
1,498
 
   
 
4,697
 
Allowance for borrowed funds used during construction
   
 
(463
)
   
 
(547
)
   
 
(1,855
)
   
 
(2,258
)
Preferred stock dividends of subsidiaries
   
 
229
 
   
 
229
 
   
 
915
 
   
 
915
 
Preferred securities distributions of trust subsidiaries
   
 
1,919
 
   
 
1,919
 
   
 
7,675
 
   
 
7,675
 
    
  
  
  
    
 
12,669
 
   
 
12,739
 
   
 
50,967
 
   
 
53,388
 
    
  
  
  
Income before preferred stock dividends of HECO
   
 
20,656
 
   
 
18,734
 
   
 
91,285
 
   
 
89,380
 
Preferred stock dividends of HECO
   
 
270
 
   
 
270
 
   
 
1,080
 
   
 
1,080
 
    
  
  
  
Net income for common stock
   
$
20,386
 
   
$
18,464
 
   
$
90,205
 
   
$
88,300
 
    
  
  
  
OTHER ELECTRIC UTILITY INFORMATION
                         
Kilowatthour sales (millions)
   
 
2,427
 
   
 
2,360
 
   
 
9,544
 
   
 
9,370
 
Cooling degree days (Oahu)
   
 
1,187
 
   
 
1,200
 
   
 
4,798
 
   
 
4,911
 
 

6

American Savings Bank, F.S.B. and Subsidiaries
 
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
    
Three months ended
December 31,
   
Years ended
December 31,
  
    
2002
   
2001
   
2002
     
2001
  
    
(in a thousands)
  
Interest and dividend income
                                
Interest and fees on loans
   
$
50,782
   
$
53,193
   
$
203,082
 
   
$
231,858
 
Interest on mortgage-related securities
   
 
31,618
   
 
36,850
   
 
135,252
 
   
 
152,181
 
Interest and dividends on investment securities
   
 
1,917
   
 
2,449
   
 
7,896
 
   
 
15,612
 
    
  
  
  
    
 
84,317
   
 
92,492
   
 
346,230
 
   
 
399,651
 
    
  
  
  
Interest expense
                                
Interest on deposit liabilities
   
 
16,300
   
 
24,290
   
 
73,631
 
   
 
116,531
 
Interest on Federal Home Loan Bank advances
   
 
15,281
   
 
14,473
   
 
58,608
 
   
 
68,740
 
Interest on securities sold under repurchase agreements
   
 
5,387
   
 
5,392
   
 
20,643
 
   
 
28,314
 
    
  
  
  
    
 
36,968
   
 
44,155
   
 
152,882
 
   
 
213,585
 
    
  
  
  
Net interest income
   
 
47,349
   
 
48,337
   
 
193,348
 
   
 
186,066
 
Provision for loan losses
   
 
1,750
   
 
3,500
   
 
9,750
 
   
 
12,500
 
    
  
  
  
Net interest income after provision for loan losses
   
 
45,599
   
 
44,837
   
 
183,598
 
   
 
173,566
 
    
  
  
  
Other income
                                
Fees from other financial services
   
 
5,873
   
 
4,600
   
 
21,254
 
   
 
17,194
 
Fees from deposit liabilities
   
 
4,017
   
 
2,688
   
 
15,734
 
   
 
9,401
 
Fee income on other financial products
   
 
2,416
   
 
2,601
   
 
10,063
 
   
 
8,451
 
Fee income on loans serviced for others, net
   
 
205
   
 
664
   
 
(164
)
   
 
2,458
 
Gain (loss) on sale of securities
   
 
—  
   
 
4,313
   
 
(640
)
   
 
8,044
 
Loss on investments
   
 
—  
   
 
—  
   
 
—  
 
   
 
(6,164
)
Other
   
 
1,794
   
 
1,206
   
 
6,778
 
   
 
5,567
 
    
  
  
  
    
 
14,305
   
 
16,072
   
 
53,025
 
   
 
44,951
 
    
  
  
  
General and administrative expenses
                                
Compensation and employee benefits
   
 
15,548
   
 
13,285
   
 
59,594
 
   
 
51,932
 
Occupancy and equipment
   
 
7,699
   
 
7,314
   
 
30,086
 
   
 
28,638
 
Data processing
   
 
2,939
   
 
2,893
   
 
11,167
 
   
 
10,408
 
Consulting
   
 
3,319
   
 
1,527
   
 
7,693
 
   
 
3,825
 
Amortization of goodwill and core deposit intangibles
   
 
433
   
 
1,685
   
 
1,731
 
   
 
6,706
 
Other
   
 
8,189
   
 
9,315
   
 
33,469
 
   
 
34,909
 
    
  
  
  
    
 
38,127
   
 
36,019
   
 
143,740
 
   
 
136,418
 
    
  
  
  
Income before minority interest and income taxes
   
 
21,777
   
 
24,890
   
 
92,883
 
   
 
82,099
 
Minority interests
   
 
42
   
 
51
   
 
173
 
   
 
213
 
Income taxes
   
 
6,972
   
 
8,109
   
 
31,074
 
   
 
27,944
 
    
  
  
  
Income before preferred stock dividends
   
 
14,763
   
 
16,730
   
 
61,636
 
   
 
53,942
 
Preferred stock dividends
   
 
1,353
   
 
1,353
   
 
5,411
 
   
 
5,411
 
    
  
  
  
Net income for common stock
   
$
13,410
   
$
15,377
   
$
56,225
 
   
$
48,531
 
    
  
  
  
Interest rate spread (%)
                 
 
3.24
 
   
 
3.17
 

7

 
RETIREMENT BENEFITS
 
On January 13, 2003, the Pension Investment Committee of Hawaiian Electric Industries, Inc. (HEI) and subsidiaries (Company) adopted new discount rate and long-term rate of return on asset assumptions related to its retirement benefit plans as of December 31, 2002. The Company will use a discount rate of 6.75% to calculate its retirement benefit expense for 2003, which has been reduced from 7.25% as of December 31, 2001. For 2003, the Company will assume a long-term rate of return on plan assets of 9%, which has been reduced from the 10% assumption used for 2002. Based upon these revised assumptions and the actual performance of the plans’ assets through December 31, 2002, the Company estimates that net retirement benefits expense will be $12.6 million in 2003 as compared to net retirement benefits income of $4.5 million in 2002. The Company’s utility subsidiaries, Hawaiian Electric Company, Inc. and its subsidiaries, will record the majority of the expense, an estimated $8.9 million of net retirement benefits expense in 2003 as compared to net retirement benefits income of $6.4 million in 2002.
 
FORWARD-LOOKING STATEMENTS
 
This filing contains “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 (including future revenues, expenses, earnings or losses or growth rates), ongoing business strategies or prospects and possible future actions, which may be provided by management, 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 assumptions about the Company, the performance of the industries in which it does business and economic and market factors, among other things. These forward-looking statements are not guarantees of future performance.
 
Forward-looking statements in this filing should be read in conjunction with “Forward-looking statements” (which is incorporated by reference herein) set forth on page v of the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2002 and in the Company’s future periodic reports that discuss important factors that could cause the Company’s actual financial and other results to differ materially from those anticipated in such statements. Forward-looking statements in this filing speak only as of the date of this filing.
 
###

8

 
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.
(Registrant)
      
HAWAIIAN ELECTRIC COMPANY, INC.
(Registrant)
 
/s/ ERIC K. YEAMAN
      
 
/s/ RICHARD A. VON GNECHTEN
Eric K. Yeaman
Financial Vice President, Treasurer
and Chief Financial Officer
(Principal Financial Officer of HEI)
      
Richard A. von Gnechten
Financial Vice President
(Principal Financial Officer of HECO)
 
Date: January 21, 2003
      
Date: January 21, 2003
 
 
 
 
 
 
 

9