| |  |  | | | | News & Events View printer-friendly version | | << Back | | Hawaiian Electric Industries, Inc. Reports First Quarter 2003 Earnings | | Hawaiian Electric Industries, Inc. (NYSE:HE) today reported net income for the three months ended March 31, 2003, of $24.3 million, or 66 cents per share, compared with $26.9 million, or 75 cents per share, in the same quarter of 2002. Net income was down 9% for the quarter due to lower utility net income that was partially offset by a 1.2% increase in bank net income. "We had a strong first quarter considering the expected increases in retirement benefits costs and the impact of the uncertainties surrounding the war in Iraq on the Hawaii economy," said Robert F. Clarke, HEI chairman, president and chief executive officer. HEI has previously announced that it expected a $16 million increase in retirement benefits expense, net of tax benefits, in 2003 compared to 2002.
Electric utility net income for the first quarter was $17.7 million compared to $20.4 million for the same quarter last year primarily due to higher retirement benefits expense and depreciation expense. These increased expenses were partially offset by higher kilowatthour sales. "Increases in residential usage and the number of residential customers as a result of a strong real estate market in Hawaii helped to boost kilowatthour sales by 2.5% for the quarter," said Clarke. "Going forward, the full impact of the conflict with Iraq on the Hawaii tourism industry and the Company's kilowatthour sales growth is still unknown."
Bank net income in the first quarter was $13.5 million compared to$13.4 million in the same quarter last year. The increase in net income was primarily due to a lower provision for loan losses and slightly higher net interest and other income. The increase was partially offset by writedowns of mortgage servicing rights and higher general and administrative expenses as a result of the bank's continued implementation of its strategic transformation from a retail thrift to a full-service community bank.
"During the first quarter, the bank continued to see loan asset quality and delinquencies improve resulting in a lower provision for loan losses," said Clarke. "However, the low interest rate environment continued to put pressure on the interest rate spread." The interest rate spread was lower at 3.14% in the recent quarter versus 3.27% for the same period in 2002.
HEI will hold its annual shareholders' meeting tomorrow at 9:30 a.m., in Honolulu, Hawaii to elect four Class I directors and the Company's independent auditor, as well as to consider approval of proposed amendments to its 1987 Stock Option and Incentive Plan.
HEI is the largest Hawaii-based company, providing electric utility services to approximately 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 the "Forward-Looking Statements and Risk Factors" discussion (which is incorporated by reference herein) set forth on page vi of HEI's Annual Report on Form 10-K for the year ended December 31, 2002, 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.
Hawaiian Electric Industries, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three months Twelve months
ended March 31, ended March 31,
------------------- -----------------------
(in thousands, except per
share amounts) 2003 2002 2003 2002
----------------------------------------------------------------------
Revenues
Electric utility $328,912 $278,331 $1,307,757 $1,249,212
Bank 95,102 98,842 395,515 427,690
Other 622 263 (2,371) (5,526)
--------- --------- ----------- -----------
424,636 377,436 1,700,901 1,671,376
--------- --------- ----------- -----------
Expenses
Electric utility 287,937 232,727 1,117,430 1,057,673
Bank 72,676 76,671 302,377 343,569
Other 4,935 3,434 20,177 14,291
--------- --------- ----------- -----------
365,548 312,832 1,439,984 1,415,533
--------- --------- ----------- -----------
Operating income (loss)
Electric utility 40,975 45,604 190,327 191,539
Bank 22,426 22,171 93,138 84,121
Other (4,313) (3,171) (22,548) (19,817)
--------- --------- ----------- -----------
59,088 64,604 260,917 255,843
--------- --------- ----------- -----------
Interest expense-other
than bank (17,980) (18,527) (71,745) (77,668)
Allowance for borrowed
funds used during
construction 443 355 1,943 1,937
Preferred stock dividends
of subsidiaries (502) (501) (2,007) (2,005)
Preferred securities
distributions of trust
subsidiaries (4,009) (4,009) (16,035) (16,035)
Allowance for equity funds
used during construction 988 773 4,169 3,747
--------- --------- ----------- -----------
Income from continuing
operations before income
taxes 38,028 42,695 177,242 165,819
Income taxes 13,701 15,823 61,570 58,965
--------- --------- ----------- -----------
Income from continuing
operations 24,327 26,872 115,672 106,854
Discontinued operations,
net of income taxes
Loss from operations - - - (1,235)
Net loss on disposals - - - (22,787)
--------- --------- ----------- -----------
Loss from discontinued
operations - - - (24,022)
--------- --------- ----------- -----------
Net income $24,327 $26,872 $115,672 $82,832
========= ========= =========== ===========
Per common share
Basic earnings (loss)
Continuing operations $0.66 $0.75 $3.17 $3.11
Discontinued
operations - - - (0.70)
--------- --------- ----------- -----------
$0.66 $0.75 $3.17 $2.41
========= ========= =========== ===========
Diluted earnings (loss)
Continuing operations $0.66 $0.75 $3.15 $3.09
Discontinued
operations - - - (0.69)
--------- --------- ----------- -----------
$0.66 $0.75 $3.15 $2.40
========= ========= =========== ===========
Dividends $0.62 $0.62 $2.48 $2.48
========= ========= =========== ===========
Weighted-average number of
common shares
outstanding 36,897 35,818 36,544 34,410
========= ========= =========== ===========
Adjusted weighted-average
shares 37,086 36,014 36,751 34,573
========= ========= =========== ===========
Income (loss) from
continuing operations by
segment
Electric utility $17,656 $20,359 $87,502 $87,234
Bank 13,508 13,351 56,382 50,007
Other (6,837) (6,838) (28,212) (30,387)
--------- --------- ----------- -----------
Income from continuing
operations $24,327 $26,872 $115,672 $106,854
========= ========= =========== ===========
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, 2002 and the consolidated financial statements and
the notes thereto in HEI's Quarterly Report on SEC Form 10-Q for the
quarter ended March 31, 2003 (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.
In 2002, the Company recorded stock option compensation expense
under the fair value based method of accounting prescribed by
Statement of Financial Accounting Standards (SFAS) No. 123, as
amended. In 2001, the Company recorded stock option compensation
expense under the intrinsic value-based method of accounting
prescribed by Accounting Principles Board Opinion No. 25 and related
interpretations. Also, in 2002, the Company no longer amortized
goodwill as prescribed by SFAS No. 142.
Hawaiian Electric Company, Inc. (HECO) and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three months ended March 31 2003 2002
------------------------------------------------------------- --------
(in thousands)
Operating revenues $327,961 $277,333
-------- --------
Operating expenses
Fuel oil 90,839 59,235
Purchased power 85,354 77,101
Other operation 38,527 29,223
Maintenance 14,282 14,012
Depreciation 27,612 26,360
Taxes, other than income taxes 31,077 26,690
Income taxes 11,215 12,791
-------- --------
298,906 245,412
-------- --------
Operating income 29,055 31,921
-------- --------
Other income
Allowance for equity funds used during construction 988 773
Other, net 767 815
-------- --------
1,755 1,588
-------- --------
Income before interest and other charges 30,810 33,509
-------- --------
Interest and other charges
Interest on long-term debt 10,324 10,136
Amortization of net bond premium and expense 513 500
Other interest charges 342 451
Allowance for borrowed funds used during
construction (443) (355)
Preferred stock dividends of subsidiaries 229 229
Preferred securities distributions of trust
subsidiaries 1,919 1,919
-------- --------
12,884 12,880
-------- --------
Income before preferred stock dividends of HECO 17,926 20,629
Preferred stock dividends of HECO 270 270
-------- --------
Net income for common stock $17,656 $ 20,359
======== ========
OTHER ELECTRIC UTILITY INFORMATION
Kilowatthour sales (millions) 2,279 2,223
Cooling degree days (Oahu) 828 819
American Savings Bank, F.S.B. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three months ended March 31 2003 2002
------------------------------------------------------------- --------
(in thousands)
Interest and dividend income:
Interest and fees on loans $50,473 $51,622
Interest on mortgage-related securities 29,277 31,806
Interest and dividends on investment securities 1,757 2,226
------- -------
Total interest and dividend income 81,507 85,654
------- -------
Interest expense:
Interest on deposit liabilities 14,430 20,173
Interest on Federal Home Loan Bank advances 13,566 13,982
Interest on securities sold under repurchase agreements 5,341 3,961
------- -------
Total interest expense 33,337 38,116
------- -------
Net interest income 48,170 47,538
Provision for loan losses 1,150 3,500
------- -------
Net interest income after provision for loan losses 47,020 44,038
------- -------
Other income:
Fees from other financial services 5,685 4,620
Fees from deposit liabilities 3,870 3,475
Fee income on other financial products 2,855 2,687
Fee income on loans serviced by others, net (1,002) 413
Gain on sale of securities 812 156
Other income 1,375 1,837
------- -------
Total other income 13,595 13,188
------- -------
General and administrative expenses:
Compensation and employee benefits 16,093 14,017
Occupancy and equipment 7,192 7,115
Data processing 2,804 2,830
Consulting 2,718 1,646
Other 9,382 9,447
------- -------
Total general and administrative expenses 38,189 35,055
------- -------
Income before minority interest and income taxes 22,426 22,171
Minority interests 34 45
Income taxes 7,531 7,422
------- -------
Income before preferred stock dividends 14,861 14,704
Preferred stock dividends 1,353 1,353
------- -------
Net income for common stock $13,508 $13,351
======= =======
Interest rate spread (%) 3.14 3.27
CONTACT: Hawaiian Electric Industries, Inc.
Suzy P. Hollinger, 808/543-7385
shollinger£hei.com
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