Annual Report (Form 10-K), fiscal year 1994

ITEM 1. BUSINESS
HEI
HEI was incorporated in 1981 under the laws of the State of Hawaii and is a holding company with subsidiaries engaged in the electric utility, savings bank, freight transportation, real estate development and other businesses, in each case primarily or exclusively in the State of Hawaii. HEI's predecessor, HECO, was incorporated under the laws of the Kingdom of Hawaii (now the State of Hawaii) on October 13, 1891.
As a result of a 1983 corporate reorganization, HECO became an HEI subsidiary and common shareholders of HECO became common shareholders of HEI. HECO and its subsidiaries, MECO and HELCO, are regulated operating public utilities providing the only public utility electric service on the islands of Oahu, Maui, Lanai, Molokai and Hawaii. HEI also owns directly or indirectly the following subsidiaries which comprise its diversified companies: HEIDI and its subsidiary, ASB, and ASB's subsidiaries; HTB and its subsidiary; MPC and its subsidiaries; HEIIC; LVI; and PECS.
ASB was acquired in 1988, is the fourth largest financial institution in Hawaii as measured by total assets as of September 30, 1994, and has 46 retail branches as of December 31, 1994. HTB was acquired in 1986 and provides ship assist and charter towing services and owns YB, a regulated intrastate public carrier of waterborne freight among the Hawaiian Islands. MPC was formed in 1985 and develops and invests in real estate. HEIIC was formed in 1984 and is a passive investment company which primarily holds investments in leveraged leases and currently plans no new investments. PECS is a nonutility service company formed in 1994 to promote energy conservation in Hawaii and the Pacific Basin. HEI will be forming a new company to pursue independent power projects in Asia, beginning with the Philippines.
Prior to August 16, 1994, HEIDI was the holder of record of the common stock of HIG, which was acquired in 1987 and provided property and casualty insurance primarily in Hawaii. In March of 1993, pursuant to the decision made in 1992, the stock of HERS, formerly an HEI wind energy subsidiary, was sold to The New World Power Corporation and LVI became a direct subsidiary of HEI. HEI is attempting to transfer LVI's windfarm to HELCO, at no cost to electric customers. For information about the discontinued operations of HIG and HERS, see Note 2 to HEI's Consolidated Financial Statements which is incorporated herein by reference to pages 46 to 47 of HEI's 1994 Annual Report to Stockholders, portions of which are filed herein as HEI Exhibit 13(a).
The financial information about the Company's industry segments is incorporated herein by reference to page 26 of HEI's 1994 Annual Report to Stockholders, portions of which are filed herein as HEI Exhibit 13(a).
For additional information about the Company, reference is made to "Management's Discussion and Analysis of Financial Condition and Results of Operations," incorporated herein by reference to pages 27 to 38 of HEI's 1994 Annual Report to Stockholders, portions of which are filed herein as HEI Exhibit 13(a).
ELECTRIC UTILITY
HECO AND SUBSIDIARIES AND SERVICE AREAS
HECO, MECO and HELCO are regulated operating electric public utilities engaged in the production, purchase, transmission, distribution and sale of electricity on the islands of Oahu; Maui, Lanai and Molokai; and Hawaii, respectively. HECO was incorporated under the laws of the Kingdom of Hawaii (now State of Hawaii) on October 13, 1891. HECO acquired MECO in 1968 and HELCO in 1970.
In 1994, the electric utilities contributed approximately 77% of HEI's consolidated revenues from continuing operations and approximately 78% of HEI's consolidated operating income from continuing operations. At December 31, 1994, the assets of the electric utilities represented approximately 37% of the total assets of the Company. For additional information about the electric utilities, see "Management's Discussion and Analysis of Financial Condition and Results of Operations," incorporated herein by reference to pages 27 to 38 of HEI's 1994 Annual Report to Stockholders,
portions of which are filed herein as HEI Exhibit 13(a) and pages 3 to 10 of HECO's 1994 Annual Report to Stockholders, portions of which are filed herein as HECO Exhibit 13(b).
The islands of Oahu, Maui, Lanai, Molokai and Hawaii have a combined population estimated at 1,123,000, or approximately 95% of the population of the State of Hawaii, and cover a service area of 5,766 square miles. The principal communities served include Honolulu (on Oahu), Wailuku and Kahului (on Maui) and Hilo and Kona (on Hawaii). The service areas also include numerous suburban communities, resorts, U.S. Armed Forces installations and agricultural operations.
HECO, MECO and HELCO have nonexclusive franchises from the state covering certain areas and authorizing them to construct, operate and maintain facilities over and under public streets and sidewalks. HECO's franchise covers the City & County of Honolulu, MECO's franchises cover the County of Maui and the County of Kalawao on the islands of Maui, Lanai and Molokai and HELCO's franchise covers the County of Hawaii. Each of these franchises will continue in effect for an indefinite period of time until forfeited, altered, amended or repealed.
SALES OF ELECTRICITY
HECO, MECO and HELCO provide the only electric public utility service on the islands they serve. The following table sets forth the number of their electric customer accounts as of December 31, 1994, 1993 and 1992 and their electric sales revenues for each of the years then ended:
Revenues from the sale of electricity in 1994 were from the following types of customers in the proportions shown:
Approximately 10% of consolidated operating revenues of HECO and its subsidiaries was derived from the sale of electricity to various federal government agencies in 1994, 1993 and 1992. HECO's fifth largest customer, the Naval Base at Barbers Point, Oahu, is expected to be closed within the next few years. On March 8, 1994, President Clinton signed an Executive Order which mandates that each federal agency develop and implement a program with the intent of reducing energy consumption by 30% by the year 2005 to the extent that these measures are cost-effective. The 30% reductions will be measured relative to the agency's 1985 energy use. HECO is working with various Department of Defense installations to implement demand-side management programs which will help them achieve their energy reduction objectives. It is expected that several Department of Defense installations will sign a Basic Ordering Agreement under which HECO may implement the energy conservation projects. Neither HEI nor HECO management can predict with certainty the impact of President Clinton's Executive Order on the Company's or HECO and subsidiaries' future results of operations.
SELECTED CONSOLIDATED ELECTRIC UTILITY OPERATING STATISTICS
* Sum of the peak demands on all islands served, noncoincident and nonintegrated. ** Includes the one-time effect of a change in the method of estimating unbilled KWH sales and revenues. *** Excluding the effect of a change in the method of estimating unbilled KWH sales and revenues, losses and system uses would have been 5.6%.
GENERATION STATISTICS
The following table contains certain generation statistics as of December 31, 1994, and for the year ended December 31, 1994. The capability available for operation at any given time may be less than the generating capability shown because of capability restrictions or temporary outages for inspection, maintenance, repairs or unforeseen circumstances.
/1/ HECO units at normal ratings less 14.0 MW due to capability restrictions, and MECO and HELCO units at reserve ratings. /2/ Noncoincident and nonintegrated. /3/ Independent power producers--180.0 MW (Kalaeloa), 180.0 MW (AES-BP) and 46.0 MW (H-Power). /4/ Nonutility generation--MECO: 16.0 MW (Hawaiian Commercial & Sugar Company) and HELCO: 25.0 MW (PGV) and 18.0 MW (HCPC-see "Nonutility generation").
INTEGRATED RESOURCE PLANNING AND REQUIREMENTS FOR ADDITIONAL GENERATING CAPACITY
As a result of a proceeding initiated in January 1990, the PUC issued an order in March 1992 (as revised in May 1992) requiring that the energy utilities in Hawaii develop integrated resource plans (IRPs). The goal of integrated resource planning is the identification of the demand-side and supply-side resources and the integration of these resources for meeting near- and long-term consumer energy needs in an efficient and reliable manner at the lowest reasonable cost. In the first phase of the IRP proceeding, the PUC adopted a "framework," which establishes both the process for developing IRPs and guidelines for the development of such plans. The PUC's framework directs that each plan cover a 20-year planning horizon with a five-year program implementation schedule and states that the planning cycle will be repeated every three years. Under the framework, the PUC may approve, reject or require modifications of the utilities' IRPs.
The framework also states that utilities are entitled to recover all appropriate and reasonable integrated resource planning and implementation costs, including the costs of planning and implementing demand-side management (DSM) programs. Under appropriate circumstances, the utilities may recover net lost revenues resulting from DSM programs and earn shareholder incentives.
The PUC will determine the appropriate cost recovery mechanism when a specific DSM program application is filed. The PUC has approved IRP cost recovery provisions (IRP Clauses) for HECO, MECO, and HELCO. Pursuant to the IRP Clauses, the electric utilities may recover through a surcharge the costs for approved DSM programs, and other IRP costs incurred and approved by the PUC, to the extent the costs are not included in their base rates.
Each energy utility has been assigned an individual IRP docket in which the specific issues relative to each company's IRP can be addressed. The PUC provides for public participation in the planning process by requiring each utility to form an advisory group and by holding hearings to review each plan. Any IRP developed will require PUC approval prior to implementation. Management cannot predict, until the completion and approval of the IRPs, what effect, if any, integrated resource planning may eventually have on HECO, MECO and HELCO.
In July 1993, HECO filed with the PUC its 20-year (1994-2013) IRP for the island of Oahu, together with a five-year (1994-1998) implementation schedule. HELCO filed its plan in October 1993. MECO filed its plan in December 1993. These plans identified and evaluated a mix of resources to meet near- and long- term consumer energy needs in an efficient and reliable manner at the lowest reasonable cost. The IRPs include demand-side management (DSM) programs to reduce load and fuel consumption and consider the impact on the environment, culture, community lifestyles and economy of the state. The PUC must review and approve major elements of the resource plans before the utilities may implement them. The utilities proposed modifications to their plans during the course of PUC proceedings to review the plans.
The utilities have characterized their proposed IRPs as planning strategies, rather than fixed courses of action, and the resources ultimately added to their systems may differ from those included in the 20-year plan. Under the IRP framework, the utilities are required to submit annual evaluations of their plans (including a revised five-year program implementation schedule) and to submit new plans on a three-year cycle.
Prior to proceeding with the DSM programs, separate PUC approval proceedings must be completed, in which the PUC will further review the details of the proposed programs and the utilities' proposals for the recovery of DSM program expenditures, net lost revenues and shareholder incentives. HECO has filed separate applications for approval of its proposed DSM programs, and evidentiary hearings on several of these applications were held in January and February of 1995. The evidentiary hearing for the last HECO DSM program application will be held in May of 1995. MECO and HELCO expect to file DSM program applications in 1995.
HECO's IRP. HECO's plan includes proposals for five energy efficiency DSM programs beginning in 1995, which are designed to reduce the rate of increase in Oahu's energy use (allowing HECO to delay construction of power plants), to reduce the state's dependence on oil and to achieve savings for its utility customers who take advantage of the programs, and two load management DSM programs beginning in the year 2000. The DSM programs include several proposed incentives to customers to install efficient lighting, refrigeration, water- heating and air-conditioning equipment and industrial motors. The supply-side programs proposed in the HECO plan include the addition of a "clean coal"
technology unit in 2005, following the retirement of HECO's Honolulu Power Plant (which is assumed, for planning purposes, to be retired at the end of 2004), the repowering of two existing units at its Waiau Power Plant, and the addition of two oil-fired combustion turbines at the end of the first decade in the new century. Consistent with its current plan to continue operation of its Honolulu Power Plant, in 1993 HECO withdrew an application it had filed in December 1989 for approval of a proposed sale and leaseback of the Honolulu Power Plant site. Hearings on HECO's IRP have been completed and HECO is awaiting the PUC's decision.
MECO's IRP. MECO's plan includes proposals for four energy efficiency DSM programs beginning in 1995 similar to those developed for HECO. The supply-side programs proposed by MECO include installing approximately 199 MW of additional generation through the year 2013 on the island of Maui, approximately 11 MW through the year 2001 on the island of Lanai and approximately 13 MW through the year 2013 on the island of Molokai. Hearings on MECO's plan have been held and MECO is awaiting the PUC's decision.
HELCO's IRP. HELCO's plan includes proposals for four energy efficiency DSM programs beginning in 1995 similar to those developed for HECO. In addition to the full-scale DSM programs, HELCO is planning an interruptible load pilot program. The supply-side programs proposed in HELCO's five-year plan include installing a 58-MW dual-train combined-cycle unit at HELCO's Keahole plant site, undertaking transmission and distribution efficiency improvement projects and conducting alternate energy generation resource studies. HELCO's 20-year plan includes adding another diesel-fired dual-train combined-cycle unit and a combustion turbine (first phase of a dual-train combined-cycle unit) at a new West Hawaii site by the year 2009. Hearings on HELCO's IRP have been completed and HELCO is awaiting the PUC's decision.
HELCO expects to file the DSM programs with the PUC in 1995. Depending on the timing of the PUC decision, actual energy reductions are likely to occur starting in 1996, one year later than what HELCO was projecting in the five-year plan.
The schedule for the installation of HELCO's phased combined cycle unit (CT-4, CT-5 and ST-7) at HELCO's Keahole plant site has been revised due to delays in obtaining approval of the Prevention of Significant Deterioration/Covered Source permit and the Conservation District Use Permit (CDUP) amendment for the Keahole power plant site. The proposed service date for CT-4 has been revised to June 1996 followed by CT-5 in August 1996, based on receiving approval of the CDUP amendment by the latest expected date of December 28, 1995. The installation dates could occur earlier in 1996, if CDUP approval is received earlier. The conversion to combined-cycle with the installation of ST-7 is the same as the previous schedule of October 1, 1997.
With the delay in the CT-4 and CT-5 commercial operation schedule, the retirements of several units have been deferred until CT-4 and CT-5 are installed. HELCO is continuing its efforts to complete the development of a contingency plan for delays in the CT-4 and CT-5 projects.
The PUC completed evidentiary hearings in 1994 on the CT-5 and ST-7 phases of the Keahole combined-cycle unit and also on two complaints filed by independent power producers (IPPs) who want to displace HELCO's proposed Keahole unit. The PUC must decide if the IPPs can meet the timing for HELCO's need for capacity and whether the prices for capacity and energy that they have proposed are at or below HELCO's avoided cost.
NONUTILITY GENERATION
The Company has supported state and federal energy policies which encourage the development of alternate energy sources that reduce dependence on fuel oil. Alternate energy sources range from wind, geothermal and hydroelectric power, to energy produced by the burning of bagasse. Other non-oil projects include a generating unit burning municipal waste and a fluidized bed unit burning coal.
The "Power purchase agreements" section in Note 4 to HEI's Consolidated Financial Statements is incorporated herein by reference to pages 49 to 50 of HEI's 1994 Annual Report to Stockholders, portions of which are filed herein as HEI Exhibit 13(a).
HECO power purchase agreements. HECO currently has three major power purchase agreements. In March 1988, HECO entered into a power purchase agreement with AES Barbers Point, Inc. (AES-BP), a Hawaii-based cogeneration subsidiary of Applied Energy Services, Inc. (AES) of Arlington, Virginia. The agreement with AES-BP, as amended in August 1989, provides that, for a period of 30
years, HECO will purchase 180 MW of firm capacity, under the control of HECO's system dispatcher. The AES-BP 180-MW coal-fired cogeneration plant utilizes a "clean coal" technology and became operational in September 1992. The facility is designed to sell sufficient steam to be a "Qualifying Facility" under the Public Utility Regulatory Policies Act of 1978 (PURPA).
In October 1988, HECO entered into an agreement with Kalaeloa Partners, L.P. (Kalaeloa) a limited partnership whose sole general partner is an indirect, wholly owned subsidiary of ASEA Brown Boveri, Inc., which has guaranteed certain of Kalaeloa's obligations and, through affiliates, has contracted to design, build, operate and maintain the facility. The agreement with Kalaeloa, as amended, provides that HECO will purchase 180 MW of firm capacity for a period of 25 years. The Kalaeloa facility, which was completed in the second quarter of 1991, is a combined-cycle operation, consisting of two oil-fired combustion turbines and a steam turbine which utilizes waste heat from the combustion turbines. The facility is designed to sell sufficient steam to be a "Qualifying Facility" under PURPA.
HECO disputed certain amounts (primarily energy charges) billed each month under its power purchase agreements with Kalaeloa and AES-BP. The Kalaeloa and AES-BP power purchase agreements contain provisions whereby either party to the agreement may cause the dispute to be submitted to binding arbitration. Kalaeloa requested that its dispute with HECO be arbitrated, and the arbitration proceedings were completed in August 1994. The arbitrators' decision did not have a material effect on HECO's consolidated financial condition or results of operations. Discussions between HECO and AES-BP to resolve their disputed billing have been held. HECO and AES-BP have agreed to settle the dispute and have signed a letter agreement summarizing terms of the settlement. The financial impact of the settlement will not have a material adverse effect on HECO's consolidated financial condition or results of operations.
HECO also entered into a power purchase contract and a firm capacity amendment with the City and County of Honolulu, which has built a 60-MW refuse-fired plant (H-Power). The H-Power facility began to provide firm energy in the second quarter of 1990 and currently supplies HECO with 46 MW of firm capacity.
The PUC has approved and allowed rate recovery for the costs related to HECO's three major power purchase agreements, which provide a total of 406 MW of firm capacity, representing 24% of HECO's total generating and firm purchased capability on the island of Oahu as of December 31, 1994.
HERS owned and operated a windfarm on the island of Oahu and sold the electricity it generated to HECO. In March 1993, HEI sold the stock of HERS to The New World Power Corporation with the power purchase agreements between HERS and HECO continuing in effect.
HELCO and MECO power purchase agreements. As of December 31, 1994, HELCO and MECO had power purchase agreements for 43 MW and 16 MW of firm capacity, respectively, representing 22% and 7% of their respective total generating and firm purchased capabilities.
HELCO has a power purchase agreement with PGV for 25 MW of firm capacity. PGV, an independent geothermal power producer which experienced substantial delays in commencing commercial operations, passed an acceptance test in June 1993. Although a problem with one of its wells reduced production during 1994, it is now considered to be a firm capacity source for 25 MW. HELCO filed suit against PGV in 1993 for penalties and other relief related to PGV's failure to provide power to HELCO by October 3, 1991. HELCO has recognized energy and capacity purchased from PGV as expenses, but has withheld certain of such firm capacity and energy payments to PGV. On March 7, 1995, HELCO and PGV executed a Settlement Agreement. As to the part of the settlement agreement dealing with penalties, it was agreed that HELCO would keep $3.2 million of the amount previously withheld by HELCO. In addition, PGV has agreed to provide additional energy in the amount of $2.3 million to HELCO above PGV's current firm capacity obligation at a unit cost less than or equal to the current unit cost. HELCO has not yet recognized any income for the $5.5 million settlement amount. The portion of the settlement that HELCO will pass on to customers will be subject to approval by the PUC. The Settlement Agreement is contingent on, among other items, the PUC not denying the inclusion of HELCO's energy payments to PGV, pursuant to an amendment to the power purchase agreement, in HELCO's fuel clause or base rates. The Settlement Agreement will automatically terminate if there is such a denial within sixty days of the execution of the Settlement Agreement.
HELCO has a power purchase agreement with HCPC for 18 MW of firm capacity. HCPC discontinued harvesting sugar in late 1994, as had been announced earlier. On December 12, 1994, HCPC filed a Chapter 11 bankruptcy petition and advised HELCO that it would cease operating its plant in December 1994. HELCO obtained a temporary restraining order and, later, extensions of such order, requiring HCPC to continue operations of the HCPC facility through March 24, 1995, with HELCO to pay an additional amount for the power HCPC supplies. On January 5, 1995, HELCO and HCPC entered into an agreement in principle, subject to the negotiation and execution of a definitive agreement, amending the existing power purchase agreement through December 1999. The definitive agreement must be approved by the bankruptcy court (unless HCPC acts to dismiss the action from Bankruptcy Court) and is subject to cancellation by HELCO if not approved by the PUC within 180 days of its execution. If the definitive agreement is executed and approved, HCPC has indicated that it can increase its power export capability to HELCO by 4 MW (to 22 MW).
The stock of LVI was transferred to HEI prior to the sale of HERS to The New World Power Corporation. As of December 31, 1994, LVI's windfarm on the island of Hawaii consisted of 67 operating wind turbines with a total operating capacity of 1.25 MW. LVI sells its electricity to HELCO and the Hawaii County Department of Water Supply.
Hamakua Sugar Company terminated power delivery to HELCO on October 5, 1994, upon completion of the bankruptcy court-approved final harvest plan. As a result, HELCO's system capability was reduced by 8 MW.
MECO has a power purchase agreement with Hawaiian Commercial & Sugar Company for 16 MW of firm capacity through December 31, 1999.
FUEL OIL USAGE AND SUPPLY
All rate schedules of the Company's electric utility subsidiaries contain energy cost adjustment clauses whereby the charges for electric energy (and consequently the revenues of the subsidiaries generally) automatically vary with the weighted average price paid for fuel oil and certain components of purchased energy, and the relative amounts of company-generated power and purchased power. Accordingly, changes in fuel oil and certain purchased energy costs are passed on to customers. See discussion below under "Rates."
HECO's steam power plants burn low sulfur fuel oil (LSFO). HECO's combustion turbine peaking units on Oahu burn Number 2 diesel fuel (diesel). MECO and HELCO consume medium sulfur fuel oil (MSFO) in their steam generating plants and consume diesel in the operation of their combustion turbine and diesel engine generating units. The LSFO consumed by HECO in its Oahu generating units is primarily derived from Indonesian and other Far East crude oils processed in island refineries. The MSFO supplied to MECO and HELCO is derived from the local refining of U.S. domestic crude oil.
In the second half of 1993, HECO amended previously existing contracts for the purchase of LSFO with Chevron, U.S.A., Inc. (CUSA) and BHP Petroleum Americas Refining Inc. (BHP) providing for an extension for a period of two years commencing January 1, 1994. The PUC approved these amendments and issued a final order in December 1993 that permitted the inclusion of costs incurred under these contracts in HECO's energy cost adjustment clause. HECO pays market- related prices for fuel supplies purchased under these agreements.
HECO, MECO, HELCO and affiliates, HTB and YB, amended previously existing joint fuel supply contracts with CUSA and BHP to provide for the purchase of diesel and MSFO supplies for a period of two years commencing January 1, 1994. The PUC subsequently approved these amendments and issued a final order in December 1993 that permitted the electric utilities to include fuel costs incurred under these contracts in their respective energy cost adjustment clauses. The electric utilities pay market-related prices for diesel and MSFO supplied under these agreements.
The diesel supplies obtained by the Lanai Division of MECO are purchased under an arrangement with a CUSA-branded jobber (wholesale merchant) on Lanai. The Molokai Division of MECO purchases diesel under the joint fuel supply contract with CUSA referred to above.
The fuel oil commitments information in Note 11 to HECO's Consolidated Financial Statements is incorporated herein by reference to pages 24 and 25 of HECO's 1994 Annual Report to Stockholder, portions of which are filed herein as HECO Exhibit 13(b).
The following table sets forth the average cost of fuel oil used to generate electricity in the years 1994, 1993 and 1992:
The average per-unit cost of fuel oil consumed to generate electricity for HECO, MECO and HELCO reflects a different volume mix of fuel types and grades. In 1994, 99.7% of HECO's generation fuel consumption consisted of LSFO. The balance of HECO's fuel consumption was diesel. Diesel also made up approximately two thirds of MECO's and one third of HELCO's fuel consumption. The remainder of fuel consumption of MECO and HELCO consisted of MSFO. In general, MSFO is the least costly fuel, diesel is the most expensive fuel and the price of LSFO falls between the two on a per barrel basis. The average prices of LSFO and diesel in 1994 were significantly less than the respective average prices in 1993. The average price of MSFO was higher in 1994 than in the previous year.
HTB was contractually obligated to ship heavy fuel oil for HELCO and MECO through December 1993. Effective December 31, 1993, HTB exited the heavy fuel oil shipping business. See "Regulation and other matters-Environmental regulation-Water quality controls." HELCO and MECO carried out a bidding process to determine who would ship heavy fuel oil beyond 1993. Several bids were received and evaluated and two contracts were signed with Hawaiian Interisland Towing, Inc., subject to PUC approval. Each of the contracts has a two-year term commencing on January 1, 1994, with an option to extend for up to three two-year periods. In June 1994, the PUC approved both contracts and allowed HELCO and MECO to include the costs for fuel transportation and related costs incurred under the contracts in their respective energy cost adjustment clause.
In 1995, it is estimated that 78% of the net energy generated and purchased by HECO and its subsidiaries will come from oil. Failure by the Company's oil suppliers to provide fuel pursuant to the supply contracts and/or substantial increases in fuel prices could adversely affect HECO and its subsidiaries' and the Company's financial condition and results of operations.
RATES
HECO, MECO and HELCO are subject to the regulatory jurisdiction of the PUC with respect to rates, standards of service, issuance of securities, accounting and certain other matters. See "Regulation and other matters-Electric utility regulation."
All rate schedules of HECO and its subsidiaries contain an energy cost adjustment clause to reflect changes in the price paid for fuel oil and certain components of purchased power, and the relative amounts of company-generated power and purchased power. Under current law and practices, specific and separate PUC approval is not required for each rate change pursuant to automatic rate adjustment clauses previously approved by the PUC. Rate increases, other than pursuant to such automatic adjustment clauses, require the prior approval of the PUC after public and contested case hearings. PURPA requires the PUC to periodically review the energy cost adjustment clauses of electric and gas utilities in the state, and such clauses, as well as the rates charged by the utilities generally, are subject to change.
The PUC has broad discretion in its regulation of the rates charged by the Company's utility subsidiaries and in other matters. Any adverse decision by the PUC concerning the level or method of determining electric utility rates, the authorized returns on equity or other matters, or any prolonged delay in rendering a decision in a rate or other proceeding, could have a material adverse effect on HECO and its subsidiaries, and the Company's financial condition and results of operations. Upon a showing of probable entitlement, the PUC is required to issue an interim decision in a rate case within 10 months from the date of filing a completed application if the evidentiary hearing is completed (subject to extension for 30 days if the evidentiary hearing is not completed). There is no time limit for rendering a final decision. Interim rate increases are subject to refund with interest, pending the final outcome of the case.
The "Recent rate requests" section in "Management's Discussion and Analysis of Financial Condition and Results of Operations" is incorporated herein by reference to pages 30 to 31 of HEI's 1994 Annual Report to Stockholders, portions of which are filed herein as HEI Exhibit 13(a).
In February 1995, MECO applied to the PUC for permission to increase electric rates to provide $23 million in annual revenues, or a 17.4% increase over current rates, based on a 1996 test year and a 13.5% return on average common equity.
In March 1995, HELCO applied to the PUC for permission to increase electric rates to provide $27 million in annual revenues, or an 18.7% increase over current rates, based on a 1996 test year and a 13.5% return on average common equity.
HECO and its subsidiaries participated in the PUC's generic docket to determine whether SFAS No. 106 should be adopted for rate-making purposes. The information on postretirement benefits other than pensions in Management's Discussion and Analysis of Financial Condition and Results of Operations and in Note 17 to HEI's Consolidated Financial Statements is incorporated herein by reference to pages 30 and 63 to 64 of HEI's 1994 Annual Report to Stockholders, portions of which are filed herein as HEI Exhibit 13(a).
Management cannot predict with certainty when decisions in pending or future rate cases will be rendered or the amount of any interim or final rate increase that will be granted.
WAIAU-CAMPBELL INDUSTRIAL PARK TRANSMISSION LINES
In 1993, the PUC held hearings concerning Part 2 of the proposed Waiau- Campbell Industrial Park (CIP) 138-kilovolt transmission lines. These lines will be part of a second transmission corridor in West Oahu, running approximately 15 miles between CIP and HECO's Waiau Power Plant. The new lines are needed (1) to increase system reliability by locating the new lines in a separate corridor from the existing lines, (2) to provide additional transmission capacity to meet expected load growth and (3) to provide transmission capacity for existing and new power generation projects planned for West Oahu. HECO experienced community opposition over the proposed placement of portions of these lines based in part on the potential effects of the lines on aesthetics and the concern of some that the electric and magnetic fields (EMF) from the power lines may have adverse health effects. HECO witnesses addressed EMF, the route selection process (which involved extensive public input), as well as engineering and related subjects.
One proposal by those who oppose the route of the overhead lines is to place Part 2 of the Waiau-CIP lines underground. HECO estimated that this proposal would cost approximately $100 million more than the cost of overhead lines. In April 1994, the PUC issued a decision which permits HECO to construct the lines above ground. While the PUC recognized the concerns of aesthetics and EMF, it felt that neither concern was sufficient to justify the added cost of undergrounding the lines. In May 1994, appeals to the state Supreme Court were filed by intervenors in the PUC proceeding requesting that the Court overturn the PUC's ruling that allows HECO to construct the lines above ground. No stay of the PUC order has been entered and HECO is proceeding with the overhead construction of the lines.
Management cannot predict with certainty the final outcome of this appeal or the impact the final outcome may have on the cost of the lines or on system reliability.
SAVINGS BANK-AMERICAN SAVINGS BANK, F.S.B.
GENERAL
ASB was granted a charter as a federal savings bank in January 1987. Prior to that time, ASB operated as the Hawaii division of American Savings & Loan Association of Salt Lake City, Utah since 1925. At September 30, 1994, ASB's total assets were $2.9 billion and it was the fourth largest financial institution in Hawaii based on total assets. At December 31, 1994, ASB's total assets were $3.1 billion.
HEI agreed with the OTS's predecessor regulatory agency that ASB's regulatory capital would be maintained at a level of at least 6% of ASB's total liabilities, or at such greater amount as may be required from time to time by regulation. Under the agreement, HEI's obligation to contribute additional capital was limited to a maximum aggregate amount of approximately $65.1 million. HEI elected to contribute additional capital of $1.0 million, $0.8 million and $24.0 million to ASB during 1994, 1993 and 1992, respectively. ASB is subject to the OTS regulations for dividends and other distributions applicable to financial institutions regulated by the OTS.
ASB acquired First Nationwide Bank's Hawaii branches and deposits on October 6, 1990. The acquisition increased ASB's statewide retail branch network by 9 branches and its deposit base by $247 million, and provided approximately $239 million in cash.
ASB's earnings depend primarily on its net interest income--the difference between the interest income earned on interest-earning assets (loans receivable, mortgage-backed securities and investments) and the interest expense incurred on interest-bearing liabilities (deposit liabilities and borrowings). Deposits traditionally have been the principal source of ASB's funds for use in lending, meeting liquidity requirements and making investments. ASB also derives funds from receipt of interest and principal on outstanding loans receivable, borrowings from the Federal Home Loan Bank (FHLB) of Seattle, securities sold under agreements to repurchase and other sources, including collateralized medium-term notes. In 1993 and 1994, advances from the FHLB became a more significant source of funds.
For additional information about ASB, reference is made to Note 5 to HEI's Consolidated Financial Statements, incorporated herein by reference to pages 52 through 55 of HEI's 1994 Annual Report to Stockholders, portions of which are filed herein as HEI Exhibit 13(a).
The following table sets forth selected data for ASB for the periods indicated:
/1/ Net income includes amortization of goodwill and core deposit intangibles. /2/ Reflects allocation of corporate-level expenses for segment reporting purposes, which were not billed to ASB. In the second quarter of 1992, HEI changed its method of billing corporate-level expenses to ASB. Under the new billing procedure, only certain direct charges, rather than fully-allocated costs, are billed to ASB. However, no change was made by HEI in the manner in which corporate-level expenses were allocated for segment reporting purposes.
CONSOLIDATED AVERAGE BALANCE SHEET
The following table sets forth average balances of major balance sheet categories for the periods indicated. Average balances for each period have been calculated using the average month-end or daily average balances during the period.
ASSET/LIABILITY MANAGEMENT
Interest rate sensitivity refers to the relationship between market interest rates and net interest income resulting from the repricing of interest-earning assets and interest-bearing liabilities. Interest rate risk arises when an interest-earning asset matures or when its interest rate changes in a time frame different from that of the supporting interest-bearing liability. Maintaining an equilibrium between rate sensitive interest-earning assets and interest-bearing liabilities will reduce some interest rate risk but it will not guarantee a stable net interest spread because yields and rates may change simultaneously or at different times and such changes may occur in differing increments. Market rate fluctuations could materially affect the overall net interest spread even if interest-earning assets and interest-bearing liabilities were perfectly matched. The difference between the amounts of interest-earning assets and interest-bearing liabilities that reprice during a given period is called "gap." An asset-sensitive position or "positive gap" exists when more assets than liabilities reprice within a given period; a liability-sensitive position or "negative gap" exists when more liabilities than assets reprice within a given period. A positive gap generally produces more net interest income in periods of rising interest rates and a negative gap generally produces more net interest income in periods of falling interest rates.
As rates increased during 1994, the gap in the near term (0-6 months) was a negative 7.6% of total assets as compared to a cumulative one-year positive gap position of 3.0% of total assets as of December 31, 1994. The negative near- term gap position reflects increases in FHLB advances and other borrowings to support investment activities. The cumulative one-year 1994 positive gap was primarily due to investments in adjustable rate loans and mortgage-backed securities.
The following table shows ASB's interest rate sensitivity at December 31, 1994:
/1/ The table does not include $182 million of noninterest-earning assets and $51 million of noninterest-bearing liabilities. /2/ The difference between the total interest-earning assets and the total interest-bearing liabilities.
INTEREST INCOME AND INTEREST EXPENSE
The following table sets forth average balances, interest and dividend income, interest expense and weighted average yields earned and rates paid, for certain categories of interest-earning assets and interest-bearing liabilities for the periods indicated. Average balances for each period have been calculated using the average month-end or daily average balances during the period.
/1/ ASB has no material amount of tax-exempt investments for periods shown. Investments include interest-bearing deposits, marketable securities and investments in regulatory agencies.
/2/ Includes interest-bearing deposits in the Federal Home Loan Bank of Seattle.
The following table shows the effect on net interest income of (1) changes in interest rates (change in weighted average interest rate multiplied by prior period average portfolio balance) and (2) changes in volume (change in average portfolio balance multiplied by prior period rate). Any remaining change is allocated to the above two categories on a pro rata basis.
OTHER INCOME
In addition to net interest income, ASB has various sources of other income, including fee income from servicing loans, fees on deposit accounts, rental income from premises and other income. Other income totaled approximately $12.2 million in 1994, compared to $11.1 million in 1993 and $10.4 million in 1992.
LENDING ACTIVITIES
General. ASB's net loan and mortgage-backed securities portfolio totaled approximately $2.9 billion at December 31, 1994, representing 92.8% of its total assets, compared to $2.4 billion, or 90.3%, and $2.2 billion, or 88.3%, at December 31, 1993 and 1992, respectively. ASB's loan portfolio consists primarily of conventional residential mortgage loans which are not insured by the Federal Housing Administration (FHA) nor guaranteed by the Veterans Administration. At December 31, 1994, mortgage-backed securities represented 36.9% of the loan and mortgage-backed securities portfolio, compared to 26.7% at December 31, 1993 and 32.7% at December 31, 1992.
The following tables set forth the composition of ASB's loan and mortgage- backed securities portfolio:
/1/ Includes renegotiated loans.
/1/ Includes renegotiated loans.
Origination, purchase and sale of loans. Generally, loans originated and purchased by ASB are secured by real estate located in Hawaii. As of December 31, 1994, approximately $8.6 million of loans which were purchased from other lenders were secured by properties located in the continental United States. For additional information, including information concerning the geographic distribution of ASB's mortgage-backed securities portfolio and the geographic concentration of credit risk, reference is made to Note 19 to HEI's Consolidated Financial Statements, incorporated herein by reference to page 65 of HEI's 1994 Annual Report to Stockholders, portions of which are filed herein as HEI Exhibit 13(a).
The following table shows the amount of loans originated for the years indicated:
Residential mortgage lending. During 1994, interest rates rose and the demand for adjustable rate mortgage (ARM) loans over fixed rate loans increased compared with 1993. ARM loans carry adjustable interest rates which are typically set according to a short-term index. Payment amounts may be adjusted periodically based on changes in interest rates. ARM loans represented approximately 46.3% of the total originations of first mortgage loans in 1994, compared to 24.7% and 34.0% in 1993 and 1992, respectively. ASB intends to continue to emphasize the origination and purchase of ARM loans to further improve its asset/liability management.
ASB is permitted to lend up to 100% of the appraised value of the real property securing a loan. Its general policy is to require private mortgage insurance when the loan-to-value ratio of owner-occupied property exceeds 80% of the lower of the appraised value or purchase price. On nonowner-occupied residential properties, the loan-to-value ratio may not exceed 80% of the lower of the appraised value or purchase price.
Construction and development lending. ASB provides both fixed and adjustable rate loans for the construction of one-to-four residential unit and commercial properties. Construction and development financing generally involves a higher degree of credit risk than long-term financing on improved, occupied real estate. Accordingly, all construction and development loans are priced higher than loans secured by completed structures. ASB's underwriting, monitoring and disbursement practices with respect to construction and development financing are designed to ensure sufficient funds are available to complete construction projects. As of December 31, 1994, 1993 and 1992, construction and development loans represented 1.7%, 1.5% and 2.2%, respectively, of ASB's gross loan portfolio. See "Loan portfolio risk elements."
Multi-family residential and commercial real estate lending. Permanent loans secured by multi-family properties (generally apartment buildings), as well as commercial and industrial properties (including office buildings, shopping centers and warehouses), are originated by ASB for its own portfolio as well as for participation with other lenders. In 1994, 1993 and 1992, loans on these types of properties accounted for approximately 6.6%, 6.0% and 8.2%, respectively, of ASB's total mortgage loan originations. The objective of commercial real estate lending is to diversify ASB's loan portfolio to include sound, income-producing properties.
Consumer lending. ASB offers a variety of secured and unsecured consumer loans. Loans secured by deposits are limited to 90% of the available account balance. ASB also offers VISA cards, automobile loans, general purpose consumer loans, second mortgage loans, home equity lines of credit, checking account overdraft protection and unsecured lines of credit. In 1994, 1993 and 1992, loans of these types accounted for approximately 6.2%, 4.3% and 4.9%, respectively, of ASB's total loan originations.
Corporate banking/commercial lending. ASB is authorized to make both secured and unsecured corporate banking loans to business entities. This lending activity is designed to diversify ASB's asset structure, shorten maturities, provide rate sensitivity to the loan portfolio and attract business checking deposits. As of December 31, 1994, 1993 and 1992, corporate banking loans represented 1.3%, 1.2% and 1.2%, respectively, of ASB's total net loan portfolio.
Loan origination fee and servicing income. In addition to interest earned on loans, ASB receives income from servicing of loans, for late payments and from other related services. Servicing fees are received on loans originated and subsequently sold by ASB and also on loans for which ASB acts as collection agent on behalf of third-party purchasers.
ASB generally charges the borrower at loan settlement a loan origination fee ranging from 2% to 3% of the amount borrowed. Loan origination fees (net of direct loan origination costs) are deferred and recognized as an adjustment of yield over the life of the loan. Nonrefundable commitment fees (net of direct loan origination costs, if applicable) to originate or purchase loans are deferred. The nonrefundable commitment fees are recognized as an adjustment of yield over the life of the loan if the commitment is exercised. If the commitment expires unexercised, nonrefundable commitment fees are recognized in income upon expiration of the commitment.
Loan portfolio risk elements. When a borrower fails to make a required payment on a loan and does not cure the delinquency promptly, the loan is classified as delinquent. If delinquencies are not cured promptly, ASB normally commences a collection action, including foreclosure proceedings in the case of secured loans. In a foreclosure action, the property securing the delinquent debt is sold at a public auction in which ASB may participate as a bidder to protect its interest. If ASB is the successful bidder, the property is classified in a real estate owned account until it is sold. At December 31, 1994, there were three residential properties acquired in settlement of loans totaling $0.8 million or 0.03% of total assets. At December 31, 1993, there was only one residential property acquired in settlement of a loan totaling $0.2 million, or 0.01% of total assets. At December 31, 1992 there was only one commercial property acquired in settlement of a loan totaling $2.0 million, or 0.08% of total assets.
In addition to delinquent loans, other significant lending risk elements include: (1) accruing loans which are over 90 days past due as to principal or interest, (2) loans accounted for on a nonaccrual basis (nonaccrual loans), and (3) loans on which various concessions are made with respect to interest rate, maturity, or other terms due to the inability of the borrower to service the obligation under the original terms of the agreement (renegotiated loans). ASB has no loans which are over 90 days past due on which interest is being accrued for the years presented in the table below. The level of nonaccrual and renegotiated loans represented 1.4%, 0.5%, 1.0%, 0.1% and 0.1%, of ASB's total net loans outstanding at December 31, 1994, 1993, 1992, 1991 and 1990, respectively. The following table sets forth certain information with respect to nonaccrual and renegotiated loans for the dates indicated:
ASB's policy generally is to place mortgage loans on a nonaccrual status (interest accrual is suspended) when the loan becomes more than 90 days past due or on an earlier basis when there is a reasonable doubt as to its collectability. Loans on nonaccrual status amounted to $23.8 million (1.27% of total loans) at December 31, 1994, $5.7 million (0.32% of total loans) at December 31, 1993, $14.2 million (0.94% of total loans) at December 31, 1992, $1.0 million (0.08% of total loans) at December 31, 1991 and $1.0 million (0.10% of total loans) at December 31, 1990.
The significant increase in loans on nonaccrual status from yearend 1991 to 1992 was primarily due to the effects of Hurricane Iniki on the island of Kauai, such as higher unemployment. As of December 31, 1992, real estate loans with remaining principal balances of $8.9 million were restructured to defer monthly contractual principal and interest payments for three months with repayments of the entire deferred amounts due at the end of the three-month period. These loans had been classified as nonaccrual loans as of December 31, 1992. Substantially all of these loans have resumed their normal repayment schedule and are classified as performing loans.
In 1994, the $18 million increase in nonaccrual real estate loans is a result of Hawaii's weak economy. A rising trend of delinquencies resulted in a $3.8 million increase in nonaccrual residential loans. The $14 million increase in nonaccrual income property loans is primarily due to three commercial real estate loans with principal balances totaling $11.8 million that were restructured/renegotiated to defer monthly principal and interest payments for three to six months. Gross interest income deferred during 1994 relating to these restructured/renegotiated loans amounted to $0.5 million. Based on current evaluations of collection prospects, a specific loss reserve of $1.6 million was established for one of the loans secured by a commercial retail/office building located on the island of Oahu. There were no loan loss provisions with respect to renegotiated loans in 1993, 1992, 1991 and 1990 because the estimated net realizable value of the collateral for such loans was determined to be in excess of the outstanding principal amounts of these loans.
Allowance for loan losses. The provision for loan losses is dependent upon management's evaluation as to the amount needed to maintain the allowance for loan losses at a level considered appropriate in relation to the risk of future losses inherent in the loan portfolio. While management attempts to use the best information available to make evaluations, future adjustments may be necessary as circumstances change and additional information becomes available.
The following table presents the changes in the allowance for loan losses for the periods indicated.
ASB's ratio of provisions for loan losses during the period to average loans outstanding was 0.21%, 0.05%, 0.11%, 0.06% and 0.07% for the years ended December 31, 1994, 1993, 1992, 1991 and 1990, respectively. The increase in provisions for loan losses during 1992 was primarily due to the 27% increase in average loans outstanding and a $0.6 million additional provision for Kauai loans anticipated to be affected by Hurricane Iniki. In 1994, to establish additional specific loss reserves and in response to a rising trend of delinquencies caused by Hawaii's weak economy, ASB increased its loss reserve by $3.5 million.
INVESTMENT ACTIVITIES
In recent years, ASB's investment portfolio has consisted primarily of mortgage-backed securities, federal agency obligations and stock of the FHLB of Seattle. In response to the increasing interest rate environment, management decided to liquidate ASB's portfolio of securities held for trading and the liquidation was completed in October 1994.
The following table sets forth the composition of ASB's investment portfolio, excluding mortgage-backed securities to be held-to-maturity, at the dates indicated:
/1/ On investments during the year ended December 31.
DEPOSITS AND OTHER SOURCES OF FUNDS
General. Deposits traditionally have been the principal source of ASB's funds for use in lending, meeting liquidity requirements and making investments. ASB also derives funds from receipt of interest and principal on outstanding loans receivable and mortgage-backed securities, borrowings from the FHLB of Seattle, securities sold under agreements to repurchase and other sources. ASB borrows on a short-term basis to compensate for seasonal or other reductions in deposit flows. ASB also may borrow on a longer-term basis to support expanded lending or investment activities. In the last two years, advances from the FHLB have become a more significant source of funds as the demand for deposits has decreased. Using higher cost sources of funds puts downward pressure on ASB's net interest income.
Deposits. ASB's deposits are obtained primarily from residents of Hawaii. In 1994, ASB had average deposits aggregating $2.1 billion. Net savings outflows for 1994 and 1993 were approximately $32 million and $9 million, respectively, excluding interest credited to deposit accounts. Net savings inflow for 1992 was approximately $343 million, excluding interest credited to deposit accounts. The decrease in net savings flow for 1994 was due primarily to the effects of rising interest rates and increased competition. The net savings outflow for 1993 was due primarily to the withdrawal of a trust company deposit account of $92 million. The trust company had been acquired by another financial institution. The substantial increase in net savings inflow for 1992 was due to ASB's strategy to increase its retail market by paying higher rates of interest on savings accounts than most of its competitors in Hawaii during this period. The weighted average rate paid on deposits during 1994 decreased to 3.59%, compared to 3.74% and 5.01% in 1993 and 1992, respectively. In the three years ended December 31, 1994, ASB had no deposits placed by or through a broker.
The following table shows the distribution of ASB's average deposits and average daily rates by type of deposit for the years indicated. Average balances for a period have been calculated using the average of month-end balances during the period.
At December 31, 1994, ASB had $203.7 million in certificate accounts of $100,000 or more, maturing as follows:
Borrowings. ASB obtains advances from the FHLB of Seattle, provided certain standards related to credit-worthiness have been met. Advances are secured under a blanket pledge of the common stock ASB owns in the FHLB of Seattle and each note or other instrument held by ASB and the mortgage securing it. FHLB advances generally are available to meet seasonal and other withdrawals of deposit accounts, to expand lending and to assist in the effort to improve asset and liability management. FHLB advances are made pursuant to several different credit programs offered from time to time by the FHLB of Seattle.
At December 31, 1994, 1993 and 1992, advances from the FHLB amounted to $616 million, $290 million and $194 million, respectively. The weighted average rate on the advances from the FHLB outstanding at December 31, 1994, 1993 and 1992 were 6.17%, 6.24% and 7.39%, respectively. The maximum amount outstanding at any month-end during 1994, 1993 and 1992 was $616 million, $290 million and $259 million, respectively. Advances from the FHLB averaged $453 million, $210 million and $221 million during 1994, 1993 and 1992, respectively, and the approximate weighted average rate thereon was 5.77%, 6.84% and 7.65%, respectively. During 1994, increased advances from the FHLB were needed to support investment activities as the effects of rising interest rates and increased competition slowed deposit growth.
At December 31, 1994 and 1992, securities sold under agreements to repurchase consisted of mortgage-backed securities sold to brokers/dealers under fixed- coupon agreements. The agreements are treated as financings and the obligations to repurchase securities sold are reflected as a liability in the consolidated balance sheets. The dollar amount of securities underlying the agreements remains in the asset accounts. At December 31, 1994 and 1992, $123.3 million (including accrued interest of $1.0 million) and $27.2 million (including accrued interest of $0.2 million) of the agreements were to repurchase substantially the same securities, respectively. There were no outstanding securities sold under agreements to repurchase as of December 31, 1993. The weighted average rates on securities sold under agreements to repurchase outstanding at December 31, 1994 and 1992 were 6.22% and 3.34%,
respectively. The maximum amount outstanding at any month-end during 1994, 1993 and 1992 was $123 million, $27 million and $125 million, respectively. Securities sold under agreements to repurchase averaged $21 million, $20 million and $66 million during 1994, 1993 and 1992, respectively, and the approximate weighted average interest rate thereon was 5.14%, 3.39% and 5.15%, respectively.
Subject to obtaining certain approvals from the FHLB of Seattle, ASB may offer collateralized medium-term notes due from nine months to 30 years from the date of issue and bearing interest at a fixed or floating rate established at the time of issue. At December 31, 1994, 1993 and 1992, ASB had no outstanding collateralized medium-term notes.
The following table sets forth information concerning ASB's advances from FHLB and other borrowings at the dates indicated:
/1/ On borrowings at December 31.
COMPETITION
The primary factors in competing for deposits are interest rates, the quality and range of services offered, marketing, convenience of office locations, office hours and perceptions of the institution's financial soundness and safety. Competition for deposits comes primarily from other savings institutions, commercial banks, credit unions, money market and mutual funds and other investment alternatives. Additional competition for deposits comes from various types of corporate and government borrowers, including insurance companies. To meet the competition, ASB offers a variety of savings and checking accounts at competitive rates, convenient business hours, convenient branch locations with interbranch deposit and withdrawal privileges at each office and conducts advertising and promotional campaigns.
The primary factors in competing for first mortgage and other loans are interest rates, loan origination fees and the quality and range of lending services offered. Competition for origination of first mortgage loans comes primarily from other savings institutions, mortgage banking firms, commercial banks, insurance companies and real estate investment trusts. ASB believes that it is able to compete for such loans primarily through the interest rates and loan fees it charges, the type of mortgage loan programs it offers and the efficiency and quality of the services it provides its borrowers and the real estate business community.
OTHER
FREIGHT TRANSPORTATION -- HAWAIIAN TUG & BARGE CORP AND YOUNG BROTHERS, LIMITED -------------------------------------------------------------------------------
GENERAL
HTB and its wholly owned subsidiary, YB, were acquired in 1986. HTB provides marine transportation services in Hawaii and the Pacific area, including charter tug and barge and harbor tug operations. YB, which is a regulated interisland cargo carrier, transports general freight and containerized cargo by barge on a regular schedule between all major ports in Hawaii. YB moved 3.0 million revenue tons of cargo between the islands in 1994, compared to 3.1 million tons of cargo in 1993.
A substantial portion of the state's commodities are imported, and almost all of Hawaii's overseas inbound and outbound cargo moves through Honolulu. Cargo destined for the neighbor islands is transshipped through the Honolulu gateway.
YB has a nonexclusive Certificate of Public Convenience and Necessity from the PUC to operate as an intrastate common carrier by water. The Certificate will remain in effect for an indefinite period unless suspended or terminated by the PUC. Although YB encounters competition from, among others, interstate carriers and unregulated contract carriers, YB is the only authorized common carrier under the Hawaii Water Carrier Act.
YB RATES
YB generally must accept for transport all cargo offered. YB rates and charges must be approved by the PUC and the PUC has broad discretion in its regulation of the rates charged by YB.
In September 1992, YB filed an application for a tariff change in its minimum bill of lading from $10.43 to $21.03 (later increased to $21.62). This application was suspended on October 7, 1992. On November 5, 1992, YB filed a general rate increase application with the PUC for a 17.1% across-the-board increase in rates effective December 20, 1992. On December 18, 1992, the PUC ordered that the two applications be consolidated and that the consolidated application be suspended for a period of six months to and including June 19, 1993. On February 12, 1993, YB reduced its general rate increase request to 15.7% from the 17.1% originally requested. The decrease in the request was primarily due to a decrease in rate base resulting from the change in the test year period and an adjustment to YB's capital structure to reflect more leverage. The revised request was based on a rate of return of 16.7% on an imputed equity of 55%. Hearings for this general rate increase and the tariff change were held in May 1993. On June 30, 1993, the PUC issued a decision granting an $18.00 minimum bill of lading charge and a 4.3% general rate increase on all rates excluding the Minimum Bill of Lading and Marine Cargo Insurance rates. The new rates and charges became effective on July 8, 1993. This decision was based on a rate of return of 15.15% on an imputed equity of 55%. Also, on June 30, 1993, the PUC approved YB's motion to rescind a 1.1% interim rate reduction for the effects of the Tax Reform Act of 1986, effective July 8, 1993.
YB filed an application on May 16, 1994 requesting PUC approval to increase its general freight rates by 5.9% and its Minimum Bill of Lading charge from $18.00 to $20.93 to be effective July 1, 1994. On June 17, 1994, the PUC suspended YB's application for a period of six months to and including December 31, 1994. On August 12, 1994, YB filed its testimonies and exhibits for a 1995 test year and simultaneously filed a Motion to Amend its May 16, 1994 Application to request a 10.3% rate increase. The Consumer Advocate filed its opposition to YB's motion on August 22, 1994. On September 26, 1994, YB filed with the PUC a Stipulation indicating YB and the Consumer Advocate had agreed to stipulate to a 6% general rate increase effective upon PUC approval. On December 12, 1994, the PUC granted YB approval to increase its rates 6% across-the-board, which YB put into effect on December 15, 1994.
YB also participated in the PUC's generic docket to determine whether SFAS No. 106 should be adopted for rate-making purposes. The information on postretirement benefits other than pensions in Management's Discussion and Analysis of Financial Condition and Results of Operations and in Note 17 to HEI's Consolidated Financial Statements is incorporated herein by reference to pages 30 and 63 to 64 of HEI's 1994 Annual Report to Stockholders, portions of which are filed herein as HEI Exhibit 13(a).
REAL ESTATE-MALAMA PACIFIC CORP. --------------------------------
GENERAL
MPC was incorporated in 1985 and engages in real estate development activities, either directly or through joint ventures.
MPC's real estate development investments in residential projects are targeted for Hawaii's owner-occupant market. MPC's subsidiaries are currently involved in the active development of five residential projects (Kipona Hills, Kua' Aina Ridge, Westpark and Westhills at Makakilo Heights, Piilani Village Phase 1 and Sunrise Estates) on the islands of Oahu, Maui and Hawaii encompassing approximately 580 homes or lots, of which nearly 340 have been completed and sold. Either directly or through its joint ventures, MPC's subsidiaries have access to nearly 420 acres of land for future residential development.
Residential development generally requires long lead time to obtain necessary zoning changes, building permits and other required approvals. MPC's projects are subject to the usual risks of real estate development, including fluctuations in interest rates, the receipt of timely and appropriate state and local
zoning and other necessary approvals, possible cost overruns and construction delays, adverse changes in general commerce and local market conditions, compliance with applicable environmental and other regulations, and potential competition from other new projects and resales of existing residences.
In 1994, Malama's real estate development activities continued to experience slow sales activity. Although the local economy has started to strengthen, sales were dampened by significant increases in interest rates. Sales activity is expected to improve gradually in 1995 as the upturn in Hawaii's 1994 visitor count, after three consecutive years of decline, is a signal of improving economic conditions.
JOINT VENTURE DEVELOPMENTS
Makakilo Cliffs. In 1990, MDC and JGL Enterprises Inc. formed Makakilo Cliffs Joint Venture for the development of a 280-unit multi-family residential project on approximately 26 acres in Makakilo, Hawaii (island of Oahu). MDC's partnership interest was assigned to Malama Makakilo Corp., another wholly owned subsidiary of MPC, in August 1990. Sales of the first 81 units closed in 1991 and all remaining units closed in 1992. The joint venture was dissolved in December 1993.
Sunrise Estates. In 1990, MDC and HSC, Inc. formed Sunrise Estates Joint Venture to develop and sell 165 one-acre house lots in Hilo, Hawaii (island of Hawaii). In 1993 and 1992, sales of three lots and 153 lots closed, respectively. There were no sales in 1994. Sales of the remaining nine lots are expected in 1995.
In 1991, HSC, Inc. and Malama Elua Corp., a wholly owned subsidiary of MPC, formed Sunrise Estates II Joint Venture to develop and sell approximately 140 one-acre house lots in Hilo, Hawaii, adjacent to the Sunrise Estates Joint Venture project. Rezoning was completed in 1993, subdivision approvals are in progress and site work is expected to commence in 1996.
Ainalani Associates. MMO and MDT-BF Limited Partnership (MDT) were partners in a joint venture known as Ainalani Associates. In 1992, MMO acquired MDT's 50% interest in Ainalani Associates, and the partnership was dissolved. MMO is completing the development and sale of three projects on the islands of Maui and Hawaii, described below under "MMO projects" and is a 50% partner in Palailai Associates, a partnership with Palailai Holdings, Inc.
Baldwin*Malama. In 1990, MDC acquired a 50% general partnership interest in Baldwin*Malama, a partnership with Baldwin Pacific Properties, Inc. (BPPI), established to acquire about 172 acres of land for potential development of about 780 single and multi-family residential units in Kihei on the island of Maui. In 1994, the project received approval to increase density to approximately 1,000 units. The project has completed site work for the first phase of single family units. At December 31, 1994, 37 homes were completed and sold, two homes were under construction and one completed unit was available for sale.
In May 1993, Baldwin*Malama was reorganized as a limited partnership in which MDC is the sole general partner and BPPI is the sole limited partner. In conjunction with the dissolution of the Baldwin*Malama general partnership and formation of the limited partnership, MPC agreed to loan $1.6 million to BPPI and up to $15 million to the limited partnership. In 1994, MPC agreed to increase the loan amount to Baldwin*Malama up to $19 million. Beginning in May 1993, MDC consolidated the accounts of Baldwin*Malama. Previously, MDC accounted for its investment in Baldwin*Malama under the equity method. At December 31, 1994, the outstanding balance on MPC's loan to BPPI was $1.2 million.
Palailai Associates. MMO assumed Ainalani Associates' interest in Palailai Associates in 1992 upon acquiring MDT's 50% interest in Ainalani Associates. In 1993, Palailai Associates completed the development and sale of the first increment of 107 homes and lots and completed the bulk sale of its 38.8 acres of multi-family zoned land in Makakilo, Oahu. The second increment of 69 single family homes is nearly completed, with 64 homes completed and sold as of December 31, 1994. The third increment of 100 single family homes is in progress with 13 homes completed and sold as of December 31, 1994. Palailai Associates owns approximately 42 acres of adjacent land zoned for residential development.
MMO PROJECTS
In 1992, MMO acquired the Kipona Hills, Kua' Aina Ridge and Kehaulani Place projects of Ainalani as a result of MMO's acquisition of MDT's 50% interest in Ainalani Associates and Ainalani Associates' subsequent dissolution.
Kipona Hills is a 66-unit subdivision located in Waikoloa on the island of Hawaii. Through December 31, 1994, 56 homes or lots were completed and sold, and 10 lots were available for sale.
Kua' Aina Ridge is a 92-lot-only subdivision in Pukalani, Maui. Subdivision improvements have been completed and sales closings commenced in 1993. As of December 31, 1994, 72 lots were available for sale.
Kehaulani Place (formerly known as Hanohano), consisting of approximately 50 acres of land in Pukalani, Maui, is currently zoned for agriculture. Rezoning and land-use reclassification will be required before development can commence. Land planning and presentations to local community groups commenced in 1993.
PROJECT FINANCING
At December 31, 1994, MPC or its subsidiaries were directly liable for $14.1 million of outstanding loans and had additional loan facilities of $0.8 million. In addition, at December 31, 1994, MPC or its subsidiaries had issued (i) guaranties under which they were jointly and severally contingently liable with their joint venture partners for $1.9 million of outstanding loans and (ii) payment guaranties under which MPC or its subsidiaries were severally contingently liable for $7.2 million of outstanding loans and $7.1 million of additional undrawn loan facilities. In total, at December 31, 1994, MPC or its subsidiaries were liable or contingently liable for $23.2 million of outstanding loans and $7.9 million in undrawn loan facilities. All such loans are collateralized by real property. At December 31, 1994, HEI had agreed with the lenders of construction loans and loan facilities, of which approximately $13.3 million was outstanding and $7.9 million was undrawn, that it will maintain ownership of 100% of the stock of MPC and that it intends, subject to good and prudent business practices, to keep MPC financially sound and responsible to meet its obligations. MPC or its subsidiaries may enter into additional commitments in connection with the financing of future phases of development of MPC's projects and HEI may enter into similar agreements regarding the ownership and financial condition of MPC.
MALAMA WATERFRONT CORP.
In 1989, Malama Waterfront Corp., a wholly owned subsidiary of MPC, entered into an agreement to purchase HECO's Honolulu Power Plant in a sale and leaseback transaction subject to PUC approval. HECO withdrew its application for the sale and leaseback of the plant in July 1993. See a further discussion in "Item 2.



ITEM 2. PROPERTIES
HEI leases 15,931 square feet of office space in downtown Honolulu. The leases expire at various dates from March 31, 1996 to April 30, 1999 (with an option for HEI to extend one of the leases on most of the office space to March 31, 2001). HEI also leases 9,667 square feet of office space from HECO in downtown Honolulu. The properties of HEI's subsidiaries are as follows:
ELECTRIC UTILITY
See page 4 for the "Generation statistics" of HECO and its subsidiaries, such as generating and firm purchased capability, reserve margin and annual load factor.
HECO owns and operates three generating plants on the island of Oahu at ---- Honolulu, Waiau and Kahe, with an aggregate generating capability of 1,263 MW at December 31, 1994. The three plants are situated on HECO-owned land having a combined area of 535 acres. In addition, HECO owns a total of 123 acres of land on which are located substations, transformer vault sites, distribution base yards and the Kalaeloa cogeneration facility site.
Electric lines are located over or under public and nonpublic properties. Most of HECO's leases, easements and licenses have been recorded.
HECO owns overhead transmission lines, overhead distribution lines, underground cables, fully-owned or jointly-owned poles and steel or aluminum high voltage transmission towers. The transmission system operates at 46,000 and 138,000 volts. The total capacity of HECO's transmission and distribution substations was 5,673,000 kilovoltamperes at December 31, 1994.
HECO owns a building and approximately 11.5 acres of land located in Honolulu which houses its operating, engineering and information services departments and a warehousing center. It also leases an office building and certain office spaces in Honolulu. The lease for the office building expires in November 2002, with an option to further extend the lease to November 2012. The leases for certain office spaces expire on various dates through November 30, 2004 with options to extend to various dates through November 30, 2014.
HECO owns 19.2 acres of land at Barbers Point used to situate fuel oil storage facilities with a combined capacity of 970,700 barrels. HECO also owns fuel oil tanks at each plant site with a total maximum usable capacity of 915,400 barrels.
The properties of HECO are subject to a first mortgage securing HECO's outstanding first mortgage bonds.
On December 20, 1989, HECO applied to the PUC for the approval of the sale to Malama Waterfront Corp. and leaseback of the Honolulu Power Plant and Iwilei tank farm, the approval of the transfer values and the approval of the accounting and rate-making treatments thereof. Prior to the PUC rendering a decision on this application, HECO determined that changing conditions altered the economics of the proposed sale such that a later retirement of the Honolulu Power Plant may be more favorable. HECO then withdrew its application for the sale and leaseback of the plant in July 1993.
A brief description of the properties of HECO's two electric utility subsidiaries follows:
MECO owns and operates two generating plants on the island of Maui, at Kahului ---- and Maalaea, with an aggregate capability of 201.3 MW. The plants are situated on MECO-owned land having a combined area of 28.6 acres. MECO also owns fuel oil storage facilities at these sites with an aggregate maximum usable storage capacity of 145,300 barrels.
MECO's administrative offices and engineering and distribution departments are located on 9.1 acres of MECO-owned land in Kahului.
MECO also owns and operates smaller distribution and generation systems on the islands of Lanai and Molokai.
The properties of MECO are subject to a first mortgage securing MECO's outstanding first mortgage bonds.
HELCO owns and operates five generating plants on the island of Hawaii. These ----- plants at Hilo (2), Waimea, Kona and Puna have an aggregate generating capability of 154.6 MW (excluding two small run-of-river hydro units). The plants are situated on HELCO-owned land having a combined area of
approximately 43 acres. HELCO owns 6.0 acres of land in Kona, which are used for a baseyard, and it leases 4.0 acres of land for its baseyard in Hilo. The lease expires in 2030. The deeds to the sites located in Hilo contain certain restrictions which do not materially interfere with the use of the sites for public utility purposes.
The properties of HELCO are subject to a first mortgage securing HELCO's outstanding first mortgage bonds.
SAVINGS BANK
ASB owns its executive office building located in downtown Honolulu and land --- and an office building in the Mililani Technology Park on Oahu.
The following table sets forth certain information with respect to branches owned and leased by ASB and its subsidiaries at December 31, 1994.
The net book value of branches and office facilities is approximately $39 million. Of this amount, $32 million represents the net book value of the land and improvements for the branches and office facilities owned by ASB and $7 million represents the net book value of ASB's leasehold improvements.
OTHER
FREIGHT TRANSPORTATION ----------------------
HTB owned seven tugboats ranging from 1,430 to 2,668 HP, two tenders of 500 HP and two flatdecked barges as of December 31, 1994.
HTB owns no real property, but rents on a month-to-month basis its pier property used in its operations from the State of Hawaii under a revocable permit.
YB, HTB's subsidiary, owned four tugboats, two doubledecked and six flatdecked barges and most of its shoreside equipment, including 20-foot containers, chassis, 20-foot and 40-foot refrigerated containers, container vans, hi-lifts, flatracks, automobile racks and other related equipment as of December 31, 1994.
YB has three-year leases expiring at various dates in 1995 through 1996 for shoreside equipment (containers, flatracks and chassis) at a monthly cost of approximately $18,100.
YB owns no real property, but rents on a month-to-month basis or leases various pier property and warehouse facilities from the State of Hawaii under a revocable permit, or under a five-year lease. All lease terms began on January 1, 1992. It is expected that expiring leases will be renewed as necessary.
REAL ESTATE DEVELOPMENT -----------------------
MPC. See Item 1, "Business-Other-Real estate-Malama Pacific Corp." ---
OTHER -----
HEIIC. See Item 1, "Business-Other-HEI Investment Corp." -----
LVI operates a windfarm on the island of Hawaii with a generating capability of 1.25 MW. LVI leases 78 acres of land for its windfarm.
As of March 21, 1995, PECS owns no real property.
ITEM 3.

ITEM 3. LEGAL PROCEEDINGS
Except as provided for below and in "Item 1. Business," there are no known pending legal proceedings, other than ordinary routine litigation incidental to their respective businesses, to which HEI or any of its subsidiaries is a party or of which any of their property is the subject.
DISCONTINUED OPERATIONS
See "The Hawaiian Insurance & Guaranty Company, Limited" in Note 2 to HEI's Consolidated Financial Statements, incorporated herein by reference to pages 46 to 47 of HEI's 1994 Annual Report to Stockholders, portions of which are filed herein as HEI Exhibit 13(a).
HECO POWER OUTAGE
See "HECO power outage" in Note 4 to HEI's Consolidated Financial Statements, incorporated herein by reference to page 51 of HEI's 1994 Annual Report to Stockholders, portions of which are filed herein as HEI Exhibit 13(a).
HELCO RELIABILITY INVESTIGATION
See "HELCO reliability investigation" in Note 4 to HEI's Consolidated Financial Statements, incorporated herein by reference to page 50 of HEI's 1994 Annual Report to Stockholders, portions of which are filed herein as HEI Exhibit 13(a).
ITEM 4.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
HEI AND HECO:
During the fourth quarter of 1994, no matters were submitted to a vote of security holders of the Registrants.
EXECUTIVE OFFICERS OF HEI
The following persons are, or may be deemed, executive officers of HEI. Their ages are given as of February 28, 1995 and their years of company service are given as of December 31, 1994. Officers are appointed to serve until the meeting of the Board of Directors following the next Annual Meeting of Stockholders (which will occur on April 25, 1995) and/or until their successors have been appointed and qualified (or until their earlier resignation or removal). Company service includes service with an HEI subsidiary.
Business experience for past HEI Executive Officers (continued) five years --------------------------------------------------------------------------------
Peter C. Lewis, age 60 Vice President - Administration 10/89 to date (Company service: 26 years)
Charles F. Wall, age 55 Vice President and Corporate Information Officer 7/90 to date (Company service: 4 years) Charles F. Wall, prior to joining the Company, served as Director of Information Management of GTE Hawaiian Tel from 1981 to 1990.
Andrew I. T. Chang, age 55 Vice President - Government Relations 4/91 to date Manager, Government Relations 8/90 to 3/91 Manager, Government Relations, HECO 1/85 to 7/90 (Company service: 10 years)
Constance H. Lau, age 42 Treasurer 4/89 to date (Company service: 10 years)
Curtis Y. Harada, age 39 Controller 1/91 to date Auditor, HECO 7/89 to 1/91 (Company service: 5 years)
Betty Ann M. Splinter, age 49 Secretary 10/89 to date (Company service: 20 years)
Wayne K. Minami, age 52 President and Chief Executive Officer, American Savings Bank, F.S.B 1/87 to date (Company service: 8 years)
HEI's executive officers, with the exception of Charles F. Wall and Andrew I. T. Chang, are officers and/or directors of one or more of HEI's subsidiaries. Mr. Minami is deemed an executive officer of HEI under the definition of Rule 3b-7.
There are no family relationships between any executive officer of HEI and any other executive officer or director of HEI, or any arrangement or understanding between any executive officer and any person pursuant to which the officer was selected.
PART II ITEM 5.

ITEM 5. MARKET FOR REGISTRANTS' COMMON EQUITY AND RELATED STOCKHOLDER MATTERS HEI: The information required by this item is incorporated herein by reference to pages 65 and 67 (Note 18, "Regulatory restrictions on net assets" and Note 21, "Quarterly information (unaudited)," of the Notes to HEI's Consolidated Financial Statements) and page 25 of HEI's 1994 Annual Report to Stockholders, portions of which are filed herein as HEI Exhibit 13(a). Certain restrictions on dividends and other distributions of HEI are described in "Item 1. Business-- Regulation and other matters--Restrictions on dividends and other distributions." The total number of holders of record of HEI common stock as of March 9, 1995, was 23,867.
HECO: The information required with respect to "Market information" and "holders" is not applicable. Since the corporate restructuring on July 1, 1983, all the common stock of HECO has been held solely by its parent, HEI, and is not publicly traded.
The dividends declared and paid on HECO's common stock for the four quarters of 1994 and 1993 were as follows:
The regulatory restrictions on net assets are incorporated herein by reference to page 27 (Note 12 to HECO's Consolidated Financial Statements, "Regulatory restrictions on distributions to parent") of HECO's 1994 Annual Report to Stockholder, portions of which are filed herein as HECO Exhibit 13(b).
ITEM 6.

ITEM 6. SELECTED FINANCIAL DATA
HEI: The information required by this item is incorporated herein by reference to page 25 of HEI's 1994 Annual Report to Stockholders, portions of which are filed herein as HEI Exhibit 13(a).
HECO: The information required by this item is incorporated herein by reference to page 2 of HECO's 1994 Annual Report to Stockholder, portions of which are filed herein as HECO Exhibit 13(b).
ITEM 7.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS HEI: The information required by this item is incorporated herein by reference to pages 27 to 38 of HEI's 1994 Annual Report to Stockholders, portions of which are filed herein as HEI Exhibit 13(a).
HECO: The information required by this item is incorporated herein by reference to pages 3 to 10 of HECO's 1994 Annual Report to Stockholder, portions of which are filed herein as HECO Exhibit 13(b).
ITEM 8.


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HEI: The information required by this item is incorporated herein by reference to the section entitled "Segment financial information" on page 26 and to pages 40 to 67 of HEI's 1994 Annual Report to Stockholders, portions of which are filed herein as HEI Exhibit 13(a).
HECO: The information required by this item is incorporated herein by reference to pages 11 to 30 of HECO's 1994 Annual Report to Stockholder, portions of which are filed herein as HECO Exhibit 13(b).
ITEM 9.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
HEI and HECO: None
PART III
ITEM 10.



ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTS
HEI: Information for this item concerning the executive officers of HEI is set forth on pages 44 through 45 of this report. The list of current directors of HEI is incorporated herein by reference to page 68 of HEI's 1994 Annual Report to Stockholders, portions of which are filed herein as HEI Exhibit 13(a). In 1995, the HEI Board of Directors is recommending to the stockholders the election of James K. Scott, Ed.D., age 43, as a director of HEI. Information on the nominee's and current directors' business experience and directorships is incorporated herein by reference to pages 3 to 6 of the registrant's Definitive Proxy Statement, prepared for the Annual Meeting of Stockholders to be held on April 25, 1995.
There are no family relationships between any director of HEI and any other executive officer or director of HEI, or any arrangement or understanding between any director and any person pursuant to which the director was selected.
The information required under this item by Item 405 of Regulation S-K is incorporated by reference to page 11 of HEI's Definitive Proxy Statement, prepared for the Annual Meeting of Stockholders to be held on April 25, 1995.
HECO: The following persons are, or may be deemed, executive officers of HECO. Their ages are given as of February 28, 1995 and their years of company service are given as of December 31, 1994. Officers are appointed to serve until the meeting of the Board of Directors following the next Annual Meeting and/or until their respective successors have been appointed and qualified. Company service includes service with HECO affiliates.
Business experience for past HECO Executive Officers five years --------------------------------------------------------------------------------
Robert F. Clarke, age 52 Chairman of the Board 1/91 to date (Company service: 7 years)
Harwood D. Williamson, age 63 President and Chief Executive Officer 1/91 to date President and Chief Operating Officer 2/85 to 12/90 Director 4/85 to date Chairman of the Board, HELCO and MECO 3/85 to date (Company service: 38 years)
T. Michael May, age 48 Senior Vice President 2/92 to date (Company service: 3 years) T. Michael May, prior to joining HECO, was a principal partner in Management Assets Group from 9/89 to 1/92.
Joan M. Diamond, age 44 Vice President - Human Resources 2/91 to date Manager, Human Resources 5/89 to 1/91 (Company service: 10 years)
Jackie Mahi Erickson, age 54 Vice President - General Counsel 2/91 to date Corporate Counsel 1/81 to 1/91 (Company service: 14 years)
Charles M. Freedman, age 48 Vice President - Corporate Relations 5/92 to date (Company service: 4 years) Charles M. Freedman, prior to rejoining HECO on 5/92, served as Director of Communications in the Office of the Governor of Hawaii, from 1986 to 4/92.
Edward Y. Hirata, age 61 Vice President - Planning 12/91 to date Vice President, HELCO and MECO 12/91 to date (Company service: 8 years) Edward Y. Hirata, prior to rejoining HECO on 12/91, served as Director of Department of Transportation for the State of Hawaii, from 4/87 to 11/91.
Business experience for past HECO Executive Officers five years --------------------------------------------------------------------------------
George T. Iwahiro, age 57 Vice President - Engineering 2/91 to date Vice President - Consumer, Regulatory and Public Affairs 2/85 to 1/91 Vice President, HELCO and MECO 3/85 to 12/91 (Company service: 35 years)
Thomas L. Joaquin, age 51 Vice President - Operations 5/94 to date General Manager, Production 11/93 to 4/94 Manager, Production 10/92 to 10/93 Manager, Production (MECO) 7/87 to 9/92 (Company service: 22 years)
Richard L. O'Connell, age 65 Vice President - Customer Relations 2/91 to date Vice President - Facilities 6/88 to 1/91 (Company service: 14 years)
Paul A. Oyer, age 54 Financial Vice President and Treasurer 5/89 to date Director 4/85 to date Financial Vice President and Treasurer, HELCO and MECO 3/85 to date (Company service: 28 years)
David M. Rodrigues, age 59 Vice President - Corporate Excellence 11/93 to date Vice President - Operations 5/89 to 10/93 (Company service: 24 years)
Ernest T. Shiraki, age 47 Controller 5/89 to date (Company service: 25 years)
Molly M. Egged, age 44 Secretary 10/89 to date Secretary, HELCO and MECO 10/89 to date Executive Secretary 12/80 to 12/92 (Company service: 14 years)
HECO's executive officers, Robert F. Clarke, Harwood D. Williamson, Edward Y. Hirata, Paul A. Oyer and Molly M. Egged, are officers of one or more of the affiliated HEI companies.
There are no family relationships between any executive officer or director of HECO and any other executive officer or director of HECO, or any arrangement or understanding between any director and any person pursuant to which the director was selected.
The list of current directors of HECO is incorporated herein by reference to page 33 of HECO's 1994 Annual Report to Stockholder, portions of which are filed herein as HECO Exhibit 13(b). Information on the business experience and directorships of directors of HECO who are also directors of HEI is incorporated herein by reference to pages 4 through 6 of HEI's Definitive Proxy Statement, prepared for the Annual Meeting of Stockholders to be held on April 25, 1995.
Mildred D. Kosaki, age 70, and Paul C. Yuen, age 66, as of February 28, 1995 are the only outside directors of HECO who are not directors of HEI. Mrs. Kosaki has been a Director of HECO since 1973. She resigned from the HEI Board in 1987. She was also a Director of the International Pacific University from 1989 to 1991. She is a specialist in education research. Dr. Yuen, who was elected a Director of HECO in April 1993, is Dean of the College of Engineering at the University of Hawaii-Manoa. In the past five years, he has held various administrative positions at the University of Hawaii-Manoa. He also serves on the Boards of Cyanotech Corporation and the Pacific International Center for High Technology Research. Information on Mr. Oyer's business experience and directorship is indicated above.
ITEM 11.

ITEM 11. EXECUTIVE COMPENSATION
HEI: The information required under this item for HEI is incorporated by reference to pages 8 to 9 and 12 to 25 of HEI's Definitive Proxy Statement, prepared for the Annual Meeting of Stockholders to be held on April 25, 1995.
HECO: The following tables set forth the information required for the chief executive officer of HECO and the four other most highly compensated HECO executive officers serving at the end of 1994. All executive compensation amounts presented for Harwood D. Williamson are duplicative of the amounts presented in HEI's Definitive Proxy Statement, prepared for the Annual Meeting of Stockholders to be held on April 25, 1995.
Summary compensation table
The following is the summary compensation table which sets forth the annual and long-term compensation of the chief executive officer of HECO and the four other most highly compensated executive officers of HECO serving at the end of 1994.
SUMMARY COMPENSATION TABLE
/1/ Includes a one-time lump sum transitional payment in 1994, representing two years of "normalized" insider directors' fees following a decision by the Compensation Committee to discontinue all insider directors' fees, effective May 1, 1994; the table includes lump sum payments of $49,000 for Mr. Williamson and $9,800 for Mr. Oyer. Also includes directors' fee of $7,700 for the period January 1 through April 30, 1994, $28,000 for 1993 and $25,000 for 1992 for Mr. Williamson and directors' fee of $1,400 for the period January 1 through April 30, 1994, $5,600 for 1993 and $4,700 for 1992 for Mr. Oyer.
/2/ The named executive officers are eligible for an incentive award under the Company's annual Executive Incentive Compensation Plan (EICP). EICP bonus payouts for the previous year's performance period are made in the first two months of the year following the previous year's performance period; if there is a payout, the amount is reflected as bonus compensation in the table for the previous year for the named executive.
/3/ Covers interest earned on deferred compensation and includes above-market earnings in the amount of $70,055 for 1994, $63,467 for 1993 and $57,498 for 1992 on deferred annual and Long-Term Incentive Plan (LTIP) payouts for Mr. Williamson. Amounts for Mr. Oyer represent above-market earnings on deferred annual payouts.
/4/ Includes a special one-time, premium-priced grant of 40,000 shares of HEI stock without dividend equivalents for Mr. Williamson in 1992. Other options granted in each of the three years for Mr. Williamson included dividend equivalents. For each of the other named executive officers, options granted in 1993 did not include dividend equivalents.
/5/ LTIP payouts are determined in April each year for the three-year cycle ending on December 31 of the previous calendar year; if there is a payout, the amount is reflected as LTIP compensation in the table for the previous year for the named executive officers. In April 1994, LTIP payouts were made for the 1991-1993 performance cycle and are reflected as LTIP compensation in the table for 1993. In 1995 only Mr. Williamson was eligible to receive a LTIP payout. The determination of whether there will be a payout for Mr. Williamson under the 1992-1994 LTIP will not be made until April 1995.
/6/ Represents amounts accrued by the Company in 1993 and 1994 for certain death benefits provided to the named executive officers. In 1992, the Company did not accrue for these benefits. Additional information is incorporated by reference to pages 21-22 of HEI's Definitive Proxy Statement, prepared for the Annual Meeting of Stockholders to be held on April 25, 1995. Covers reimbursement of moving expenses for Mr. May in 1992.
Option grants in last fiscal year
A stock option was granted to one of the named executive officers in the HECO Summary Compensation Table, Mr. Williamson. Additional information required under this item is incorporated by reference to page 13 of HEI's Definitive Proxy Statement, prepared for the Annual Meeting of Stockholders to be held on April 25, 1995.
Aggregated option exercises and fiscal year-end option values
No stock options were exercised by the named executive officers in 1994. The following table shows the number of unexercised options and the value of in the money unexercised options, including dividend equivalents, at the end of 1994. Under the Stock Option and Incentive Plan, dividend equivalents have been granted to Mr. Williamson as part of the stock option grant, except for the one- time, premium-priced grant in May 1992. For each of the other named executive officers, no options were granted in 1994.
Dividend equivalents permit a participant who exercises a stock option to obtain at no additional cost, in addition to the option shares, the amount of dividends declared on the number of shares of common stock with respect to which the option is exercised during the period between the grant and the exercise of the option. Dividend equivalents are computed, as of each dividend record date throughout the four-year vesting period (vesting in equal installments), which begins on date of grant, both with respect to the number of shares underlying the option and with respect to the number of dividend equivalent shares previously credited to the executive officer and not issued during the period prior to the dividend record date.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
/1/ Includes dividend equivalents of $45,681 exercisable for Mr. Williamson. No options were in the money (where the option price is less than the closing price on December 31, 1994) except the 1989 stock option grant with dividend equivalents with an exercise price of $30.24 per share. Value based on closing price of $32.375 per share on the New York Stock Exchange on December 31, 1994.
Long-Term Incentive Plan awards table
A Long-Term Incentive Plan award was made to one of the named executive officers in the HECO Summary Compensation Table, Mr. Williamson. Additional information required under this item is incorporated by reference to page 15 of HEI's Definitive Proxy Statement, prepared for the Annual Meeting of Stockholders to be held on April 25, 1995.
Pension plan
The Retirement Plan for Employees of Hawaiian Electric Industries, Inc. and Participating Subsidiaries (the Retirement Plan) provides a monthly retirement pension for life. Additional information required under this item is incorporated by reference to pages 16 to 17 of HEI's Definitive Proxy Statement, prepared for the Annual Meeting of Stockholders to be held on April 25, 1995. As of December 31, 1994, the named executive officers in the HECO Summary Compensation Table had the following number of years of credited service under the Retirement Plan: Mr. Williamson, 38 years; Mr. May, 2 years; Mr. Oyer, 28 years; Mr. Rodrigues, 24 years; and Mr. Iwahiro, 35 years.
Change-in-Control Agreement
Messrs. Williamson and May are the only named executive officers in the HECO Summary Compensation Table with whom HEI has entered into a Change-in-Control Agreement. Additional information required under this item is incorporated by reference to pages 17 to 18 of HEI's Definitive Proxy Statement, prepared for the Annual Meeting of Stockholders to be held on April 25, 1995.
Based on W-2 earnings for the five most recent years (1990-1994) or the portion of such period during which the executive performed personal service for HEI and its subsidiaries, the lump sum severance payable under these agreements would be as follows: Mr. Williamson - $1,133,837 and Mr. May - $762,197.
Compensation Committee Report on Executive Compensation
Introduction
Decisions on executive compensation for the named executive officers are made by the Compensation Committee of the HEI Board of Directors (the Committee) which is composed of five independent nonemployee directors. All decisions by the Committee are reviewed by the full HEI Board except for decisions about HEI's stock-based plans, which are made solely by the Committee in order to satisfy Securities Exchange Act Rule 16b-3.
The Committee has retained the services of an independent compensation consulting firm to assist in executive compensation matters.
Except for specific compensation decisions regarding Mr. Williamson which are discussed below, additional information required under this item is incorporated by reference to pages 18 through 22 of HEI's Definitive Proxy Statement, prepared for the Annual Meeting of Stockholders to be held on April 25, 1995.
Base Salary
Mr. Williamson's base salary is determined based on the recommendation of Robert F. Clarke, President and Chief Executive Officer of HEI and Chairman of the Board of HECO, within the salary range recommended by the Committee's independent compensation consultant and with the Committee's approval. Mr. Clarke's recommendation is based on an overall evaluation of Mr. Williamson's performance during the preceding year. This evaluation is subjective in nature and takes into account all aspects of Mr. Williamson's responsibilities at the total discretion of Mr. Clarke and the Committee. Mr. Williamson's base salary was raised from an annual rate of $320,000 to an annual rate of $336,000, effective May 1, 1994. This action by the Committee was subsequently ratified by the HECO Board of Directors.
Stock Options
The 1994 stock option grant to Mr. Williamson of 15,000 shares of HEI Common Stock plus dividend equivalents was based on the consultant's recommendation and the independent evaluation of an appropriate grant level by Mr. Clarke and the Committee. In this evaluation, the Committee took into account prior grants to Mr. Williamson and an overall subjective evaluation of Mr. Williamson's job performance.
HECO Board of Directors
Committees of the HECO Board
The Board of Directors of HECO has only one standing committee, the Audit Committee, which is comprised of four nonemployee directors: Ben F. Kaito, Chairman, and Mildred D. Kosaki, Diane J. Plotts and Paul C. Yuen. In 1994, the Audit Committee held five meetings to review with management, the internal auditor and HECO's independent auditors the activities of the internal auditor, the results of the annual audit by the independent auditor and the financial statements which are included in HECO's 1993 Annual Report to Stockholder. The Audit Committee holds such meetings as it deems advisable to review the financial operations of HECO.
Remuneration of HECO Directors and attendance at meetings
In 1994, Mildred D. Kosaki and Paul C. Yuen were the only nonemployee directors of HECO who were not also directors of HEI. They were paid a retainer of $12,000, one-half of which was distributed in the common stock of HEI pursuant to the HEI Nonemployee Director Stock Plan and one-half of which was distributed in cash. The number of shares of stock distributed was based on a price of $33.28 per share, which is equal to the average of the daily high and low sales prices of HEI common stock for all trading days in March 1994, divided into $6,000, with a cash payment made in lieu of any fractional share. In addition, a fee of $700 was paid in cash to each nonemployee director for each Board and Committee meeting attended by the director. The Chairman of the Audit Committee was paid an additional $100 for each Committee meeting attended. Effective May 1, 1994, members of the Board of Directors who are employees of the Company were no longer compensated for attendance at any meeting of the Board or committees of the Board.
In 1994, there were six regular bi-monthly meetings and one special meeting of the Board of Directors. All incumbent directors, attended at least 75% of the combined total number of meetings of the Board and Committee on which they served, except Diane J. Plotts.
HECO participates in the Nonemployee Director Retirement Plan described on page 8 of HEI's Definitive Proxy Statement, prepared for the Annual Meeting of Stockholders to be held on April 25, 1995.
ITEM 12.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
HEI:
The information required under this item is incorporated by reference to pages 10 and 11 of HEI's Definitive Proxy Statement, prepared for the Annual Meeting of Stockholders to be held on April 25, 1995.
HECO:
HEI owns all of the common stock of HECO, which is HECO's only class of voting securities. HECO has also issued and has outstanding various series of preferred stock, the holders of which, upon certain defaults in dividend payments, have the right to elect a majority of the directors of HECO.
The following table shows the shares of HEI common stock beneficially owned by each HECO director, named HECO executive officers as listed in the Summary Compensation Table on page 51 and by HECO directors and officers as a group, as of February 15, 1995, based on information furnished by the respective individuals.
* Excludes HECO directors Messrs. Clarke, Henderson, Kaito, and Williamson and Ms. Plotts, who also serve on the HEI Board of Directors. The information required is incorporated by reference to pages 10 and 11 of HEI's Definitive Proxy Statement, prepared for the Annual Meeting of Stockholders to be held on April 25, 1995. Messrs. Clarke and Williamson are also named executive officers listed in the Summary Compensation Table on pages 12 and 13 of the above-referenced Definitive Proxy Statement of HEI.
** Also a named executive officer listed in the Summary Compensation Table on page 51.
*** The number of shares of common stock beneficially owned by any HECO director or by all HECO directors and officers as a group does not exceed 1% of the outstanding common stock of HEI. (a) Sole voting and investment power. (b) Shared voting and investment power (shares registered in name of respective individual and spouse). (c) Shares owned by spouse, children or other relatives sharing the home of the director or an officer in the group and in which personal interest of the director or officer is disclaimed. (d) Stock options exercisable within 60 days after February 15, 1995, under the 1987 Stock Option and Incentive Plan, as amended. Shares for Mr. Oyer include accompanying dividend equivalents (720 shares) for stock options awarded in 1988 only.
ITEM 13.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
HEI: The information required under this item is incorporated by reference to pages 24 to 26 of HEI's Definitive Proxy Statement, prepared for the Annual Meeting of Stockholders to be held on April 25, 1995.
HECO: As of December 31, 1994, T. Michael May, Senior Vice President of HECO, was indebted to HECO in the amount of $180,000 by reason of loans made to him by HECO for relocation purposes. Mr. May's note bears interest at 6.28% and is due in 2008 or upon demand, if Mr. May ceases to be employed by HECO, and is secured by a second mortgage on real estate.
PART IV
ITEM 14.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)(1) Financial Statements
The following financial statements contained in HEI's 1994 Annual Report to Stockholders and HECO's 1994 Annual Report to Stockholder, portions of which are filed by HEI as Exhibit 13(a) and, portions of which are filed by HECO as Exhibit 13(b), respectively, are incorporated by reference in Part II, Item 8, of this Form 10-K:
1994 Annual Report to Stockholder(s) (Page/s) ------------------- HEI HECO --- ---- Independent Auditors' Reports 39 31
Consolidated Statements of Income, Years Ended December 31, 1994, 1993 and 1992 40 11
Consolidated Statements of Retained Earnings, Years Ended December 31, 1994, 1993 and 1992 40 11
Consolidated Balance Sheets, December 31, 1994 and 1993 41 12
Consolidated Statements of Capitalization, December 31, 1994 and 1993 na 13-14
Consolidated Statements of Cash Flows, Years Ended December 31, 1994, 1993 and 1992 42 15
Notes to Consolidated Financial Statements 43-67 16-30
(a)(2) Financial Statement Schedules
The following financial statement schedules for HEI and HECO are included in this Report on the pages indicated below: Page/s in Form 10-K ----------------- HEI HECO ---- ---- Independent auditors' report 58 59
Schedule I Condensed financial information of registrant, Hawaiian Electric Industries, Inc. (Parent Company) as of December 31, 1994 and 1993 and years ended December 31, 1994, 1993 and 1992 60-62 na
Schedule II Valuation and qualifying accounts, years ended December 31, 1994, 1993 and 1992 63 63
Certain Schedules, other than those listed, are omitted because they are not required, or are not applicable, or the required information is shown in the consolidated financial statements or notes included in HEI's 1994 Annual Report to Stockholders and HECO's 1994 Annual Report to Stockholder, which financial statements are incorporated herein by reference.
(a)(3) Exhibits
Exhibits for HEI and HECO and their subsidiaries are listed in the "Index to Exhibits" found on pages 64 through 71 of this Form 10-K. The exhibits listed for HEI and HECO are listed in the index under the headings "HEI" and "HECO," respectively, except that the exhibits listed under "HECO" are also considered exhibits for HEI.
(b) Reports on Form 8-K
HEI and HECO:
During the fourth quarter of 1994, HEI and HECO filed a Current Report, Form 8-K dated November 29, 1994, with the SEC. HEI and HECO filed information under Item 5 regarding the PUC decision and order on a generic docket to determine whether SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions," should be adopted for rate-making purposes.
[KPMG Peat Marwick letterhead]
Independent Auditors' Report
The Board of Directors and Stockholders Hawaiian Electric Industries, Inc.:
Under date of January 25, 1995, we reported on the consolidated balance sheets of Hawaiian Electric Industries, Inc. and subsidiaries as of December 31, 1994 and 1993, and the related consolidated statements of income, retained earnings and cash flows for each of the years in the three-year period ended December 31, 1994, as contained in the 1994 annual report to stockholders. These consolidated financial statements and our report thereon are incorporated by reference in the annual report on Form 10-K for the year 1994. In connection with our audits of the aforementioned consolidated financial statements, we also have audited the related financial statement schedules as listed in the accompanying index. These financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statement schedules based on our audits.
In our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.
As discussed in note 14 to the consolidated financial statements, effective January 1, 1993, the Company changed its method of accounting for income taxes. Additionally, as discussed in note 17 to the consolidated financial statements, effective January 1, 1993, the Company changed its method of accounting for postretirement benefits other than pensions.
/s/ KPMG Peat Marwick LLP
Honolulu, Hawaii January 25, 1995
[KPMG Peat Marwick letterhead]
Independent Auditors' Report
The Board of Directors and Stockholder Hawaiian Electric Company, Inc.:
Under date of January 25, 1995, we reported on the consolidated balance sheets and consolidated statements of capitalization of Hawaiian Electric Company, Inc. (a wholly-owned subsidiary of Hawaiian Electric Industries, Inc.) and subsidiaries as of December 31, 1994 and 1993, and the related consolidated statements of income, retained earnings and cash flows for each of the years in the three-year period ended December 31, 1994, as contained in the 1994 annual report to stockholder. These consolidated financial statements and our report thereon are incorporated by reference in the annual report on Form 10-K for the year 1994. In connection with our audits of the aforementioned consolidated financial statements, we also have audited the related financial statement schedule as listed in the accompanying index. The financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion on the financial statement schedule based on our audits.
In our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.
As discussed in note 7 to the consolidated financial statements, effective January 1, 1993, the Company changed its method of accounting for income taxes. Additionally, as discussed in note 10 to the consolidated financial statements, effective January 1, 1993, the Company changed its method of accounting for postretirement benefits other than pensions.
/s/ KPMG Peat Marwick LLP
Honolulu, Hawaii January 25, 1995
Hawaiian Electric Industries, Inc. SCHEDULE I -- CONDENSED FINANCIAL INFORMATION OF REGISTRANT HAWAIIAN ELECTRIC INDUSTRIES, INC. (PARENT COMPANY) CONDENSED BALANCE SHEETS
As of December 31, 1994, HEI guaranteed debt of its subsidiaries and affiliates amounting to $11 million.
The aggregate payments of principal required on long-term debt subsequent to December 31, 1994 are $1 million in 1995, $37 million in 1996, $51 million in 1997, $21 million in 1998, $41 million in 1999 and $59 million thereafter.
Hawaiian Electric Industries, Inc. SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (CONTINUED) HAWAIIAN ELECTRIC INDUSTRIES, INC. (PARENT COMPANY) CONDENSED STATEMENTS OF INCOME
Hawaiian Electric Industries, Inc.
SCHEDULE I- CONDENSED FINANCIAL INFORMATION OF REGISTRANT (CONTINUED) HAWAIIAN ELECTRIC INDUSTRIES, INC. (PARENT COMPANY) CONDENSED STATEMENTS OF CASH FLOWS
Supplemental disclosures of noncash activities:
In 1994, $16.9 million of HEI advances to HEIDI were converted to equity in a noncash transaction.
In 1992, HEI converted $9.5 million of long-term debt of HERS to equity. HEI assumed the $9.5 million of HERS' long-term debt in a noncash transaction.
Common stock dividends reinvested by stockholders in HEI common stock in noncash transactions amounted to $18 million in 1994, $17 million in 1993 and $15 million in 1992.
Hawaiian Electric Industries, Inc. and Hawaiian Electric Company, Inc. SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS Years ended December 31, 1994, 1993 and 1992
(a) Primarily bad debts recovered. (b) Bad debts charged off.
INDEX TO EXHIBITS
The exhibits designated by an asterisk (*) are filed herein. The exhibits not so designated are incorporated by reference to the indicated filing. A copy of any exhibit may be obtained upon written request for a $0.20 per page charge from the HEI Stock Transfer Division, P.O. Box 730, Honolulu, Hawaii 96808-0730.
Exhibit no. Description ----------- -----------
HEI: ---
3(i).1(a) HEI's Restated Articles of Incorporation (Exhibit 4(b) to Registration No. 33-7895).
3(i).2(a) Articles of Amendment of HEI filed June 30, 1990 (Exhibit 4(b) to Registration No. 33-40813).
3(ii) HEI's By-Laws (Exhibit 4(c) to Registration No. 33-21761).
4.1 Agreement to provide the SEC with instruments which define the rights of holders of certain long-term debt of HEI and its subsidiaries (Exhibit 4.1 to HEI's Annual Report on Form 10-K for the fiscal year ended December 31, 1992, File No. 1-8503).
4.2 Indenture, dated as of October 15, 1988, between HEI and Citibank, N.A., as Trustee (Exhibit 4 to Registration No. 33-25216).
4.3 First Supplemental Indenture dated as of June 1, 1993 between HEI and Citibank, N.A., as Trustee, to Indenture dated as of October 15, 1988 between HEI and Citibank, N.A., as Trustee (Exhibit 4(a) to HEI's Quarterly Report on Form 10-Q for the quarter ended September 30, 1993, File No. 1-8503).
4.4 Officers' Certificate dated as of November 9, 1988, pursuant to Sections 102 and 301 of the Indenture, dated as of October 15, 1988, between HEI and Citibank, N.A., as Trustee, establishing Medium-Term Notes, Series A (Exhibit 4.2 to HEI's Annual Report on Form 10-K for the fiscal year ended December 31, 1988, File No. 1-8503).
4.5 Pricing Supplements Nos. 1 through 11 to the Registration Statement on Form S-3 of HEI (Registration No. 33-25216) filed in connection with the sale of Medium-Term Notes, Series A (filed under Rule 424(b) in connection with Registration No. 33-25216).
4.6 Pricing Supplements Nos. 1 through 9 to the Registration Statement on Form S-3 of HEI (Registration No. 33-58820) filed in connection with the sale of Medium-Term Notes, Series B (Exhibit 4(b) to HEI's Quarterly Report on Form 10-Q for the quarter ended September 30, 1993, File No. 1-8503).
*4.7 Pricing Supplement No. 10 to Registration Statement on Form S-3 of HEI (Registration No. 33-58820).
4.8 Purchase Agreement dated March 7, 1991 among HEI and the Purchasers named therein, together with the Notes issued to such Purchasers, each dated March 7, 1991, pursuant to the Purchase Agreement (Exhibit 4.5 to HEI's Annual Report on Form 10-K for the fiscal year ended December 31, 1990, File No. 1-8503).
4.9 Composite conformed copy of the Note Purchase Agreement dated as of December 16, 1991 among HEI and the Purchasers named therein (Exhibit 4.6 to HEI's Annual Report on Form 10-K for the fiscal year ended December 31, 1991, File No. 1-8503).
Exhibit no. Description ----------- -----------
10.1 PUC Order Nos. 7070, 7153, 7203 and 7256 in Docket No. 4337, including copy of "Conditions for the Merger and Corporate Restructuring of Hawaiian Electric Company, Inc." dated September 23, 1982 (Exhibit 10 to Amendment No. 1 to Form U-1).
10.2 Regulatory Capital Maintenance/Dividend Agreement dated May 26, 1988, between HEI, HEIDI and the Federal Savings and Loan Insurance Corporation (by the Federal Home Loan Bank of Seattle) (Exhibit (28)- 2 to HEI's Current Report on Form 8-K dated May 26, 1988, File No. 1- 8503).
10.2(a) OTS letter regarding release from Part II.B. of the Regulatory Capital Maintenance/Dividend Agreement dated May 26, 1988 (Exhibit 10.3(a) to HEI's Annual Report on Form 10-K for the fiscal year ended December 31, 1992, File No. 1-8503).
10.3 Executive Incentive Compensation Plan (Exhibit 10(a) to HEI's Annual Report on Form 10-K for the fiscal year ended December 31, 1987, File No. 1-8503).
10.4 HEI Executives' Deferred Compensation Plan (Exhibit 10.5 to HEI's Annual Report on Form 10-K for the fiscal year ended December 31, 1990, File No. 1-8503).
10.5 Retirement Benefit Agreement--Andrew T. F. Ing and HEI (Exhibit 10(b) to HEI's Annual Report on Form 10-K for the fiscal year ended December 31, 1987, File No. 1-8503).
10.6 1987 Stock Option and Incentive Plan of HEI as amended and restated effective April 21, 1992 (Exhibit A to Proxy Statement of HEI, dated March 6, 1992, for the Annual Meeting of Stockholders, File No. 1- 8503).
10.7 HEI Long-Term Incentive Plan (Exhibit 10.11 to HEI's Annual Report on Form 10-K for the fiscal year ended December 31, 1988, File No. 1- 8503).
10.8 HEI Supplemental Executive Retirement Plan effective January 1, 1990 (Exhibit 10.9 to HEI's Annual Report on Form 10-K for the fiscal year ended December 31, 1990, File No. 1-8503).
10.9 HEI Excess Benefit Plan (Exhibit 10.13 (Exhibit A) to HEI's Annual Report on Form 10-K for the fiscal year ended December 31, 1989, File No. 1-8503).
10.10 Change-in-Control Agreement (Exhibit 10.14 to HEI's Annual Report on Form 10-K for the fiscal year ended December 31, 1989, File No. 1- 8503).
10.11 Non-employee Director Retirement Plan, effective as of October 1, 1989 (Exhibit 10.15 to HEI's Annual Report on Form 10-K for the fiscal year ended December 31, 1989, File No. 1-8503).
10.12 HEI 1990 Non-employee Director Stock Plan (Exhibit 10(a) to HEI's Quarterly Report on Form 10-Q for the quarter ended September 30, 1990, File No. 1-8503).
10.13 HEI Non-employee Directors' Deferred Compensation Plan (Exhibit 10.14 to HEI's Annual Report on Form 10-K for the fiscal year ended December 31, 1990, File No. 1-8503).
Exhibit no. Description ----------- -----------
10.14 HEI and HECO Executives' Deferred Compensation Agreement. The agreement pertains to and is substantially identical for all the HEI and HECO executive officers (Exhibit 10.15 to HEI's Annual Report on Form 10-K for the fiscal year ended December 31, 1991, File No. 1- 8503).
10.15 Contract of Sale between HECO and Malama Waterfront Corp., dated December 20, 1989, for the sale and purchase of the Honolulu Power Plant Parcels, Iwilei Tank Farm Parcel and the buildings, structures and other improvements (Exhibit 10.18 to HEI's Annual Report on Form 10-K for the fiscal year ended December 31, 1989, File No. 1-8503).
10.15(a) First Amendment to Contract of Sale by and between HECO and Malama Waterfront Corp., dated September 25, 1990, amending the Contract of Sale between HECO and Malama Waterfront Corp., dated December 20, 1989, for the sale and purchase of the Honolulu Power Plant Parcels, Iwilei Tank Farm Parcel and the buildings, structures and other improvements (Exhibit 10(d) to HEI's Quarterly Report on Form 10-Q for the quarter ended September 30, 1990, File No. 1-8503).
10.16 Settlement Agreement and General Release made and entered into on February 10, 1994, by and between the Insurance Commissioner as Rehabilitator/Liquidator, the HIG Group, HIGA, HEI, HEIDI and others. (Exhibit 10.20 to HEI's Annual Report on Form 10-K for the fiscal year ended December 31, 1993, File No. 1-8503).
*11 Computation of Earnings Per Share of Common Stock. Filed herein as page 72.
*12(a) Computation of Ratio of Earnings to Fixed Charges. Filed herein as pages 73 and 74.
*13(a) Pages 25 to 68 of HEI's 1994 Annual Report to Stockholders (with the exception of the data incorporated by reference in Part I, Part II, Part III and Part IV, no other data appearing in the 1994 Annual Report to Stockholders is to be deemed filed as part of this Form 10-K Annual Report).
*21(a) Subsidiaries of HEI. Filed herein as page 76.
*23 Consent of Independent Auditors. Filed herein as page 78.
*27(a) HEI and subsidiaries financial data schedule, December 31, 1994 and year ended December 31, 1994.
*99.1(a) Annual Report on Form 11-K for the HEI 401-K Retirement Savings Plan for the year ended December 31, 1994.
99.2(a) Amendment 1994-1 to the Hawaiian Electric Industries, Inc. Retirement Savings Plan for incorporation by reference into Registration Statement on Form S-8 (Registration No. 33-52911) (Exhibit 99 to HEI's Quarterly Report on Form 10-Q for the quarter ended March 31, 1994, File No. 1-8503).
*99.3(a) Amendment 1994-2 to the Hawaiian Electric Industries, Inc. Retirement Savings Plan for incorporation by reference into Registration Statement on Form S-8 (Registration No. 33-52911).
Exhibit no. Description ----------- -----------
HECO: ----- 3(i).1(b) HECO's Certificate of Amendment of Articles of Incorporation (filed June 30, 1987) (Exhibit 3.1 to HECO's Annual Report on Form 10-K for the fiscal year ended December 31, 1988, File No. 1-4955).
3(i).2(b) Statement of Issuance of Shares of Preferred or Special Classes in Series for HECO Series R Preferred Stock filed December 15, 1989 (Exhibit 3.1(a) to HECO's Annual Report on Form 10-K for the fiscal year ended December 31, 1989, File No. 1-4955).
3(i).3 Articles of Amendment to HECO's Amended Articles of Incorporation filed December 21, 1989 (Exhibit 3.1(b) to HECO's Annual Report on Form 10-K for the fiscal year ended December 31, 1989, File No. 1-4955).
3(ii) HECO's By-Laws (Exhibit 3.2 to HECO's Annual Report on Form 10-K for the fiscal year ended December 31, 1988, File No. 1-4955).
4.1 Agreement to provide the SEC with instruments which define the rights of holders of certain long-term debt of HECO, HELCO and MECO (Exhibit 4 to HECO's Annual Report on Form 10-K for the fiscal year ended December 31, 1988, File No. 1-4955).
4.2 Indenture dated as of December 1, 1993 between HECO and The Bank of New York, as Trustee (Exhibit 4(a) to Registration No. 33-51025).
4.3 Indenture dated as of December 1, 1993 among MECO, HECO, as guarantor, and The Bank of New York, as Trustee (Exhibit 4(b) to Registration No. 33-51025).
4.4 Indenture dated as of December 1, 1993 among HELCO, HECO, as guarantor, and The Bank of New York, as Trustee (Exhibit 4(c) to Registration No. 33-51025).
4.5 Officers' Certificate dated as of December 22, 1993, pursuant to Sections 102 and 301 of the Indenture dated as of December 1, 1993 between HECO and The Bank of New York, as Trustee, establishing the $20,000,000 Notes, 5.15% Series Due 1996 (Exhibit 4.5 to HECO's Annual Report on Form 10-K for the fiscal year ended December 31, 1993, File No. 1-4955).
4.6 Officers' Certificate dated as of December 22, 1993, pursuant to Sections 102 and 301 of the Indenture dated as of December 1, 1993 between HECO and The Bank of New York, as Trustee, establishing the $30,000,000 Notes, 5.83% Series Due 1998 (Exhibit 4.6 to HECO's Annual Report on Form 10-K for the fiscal year ended December 31, 1993, File No. 1-4955).
4.7 Officers' Certificate dated as of December 22, 1993, pursuant to Sections 102 and 301 of the Indenture dated as of December 1, 1993 among MECO, HECO, as guarantor, and The Bank of New York, as Trustee, establishing the $10,000,000 Notes, 5.15% Series Due 1996 (Exhibit 4.7 to HECO's Annual Report on Form 10-K for the fiscal year ended December 31, 1993, File No. 1-4955).
Exhibit no. Description ----------- -----------
4.8 Officers' Certificate dated as of December 22, 1993, pursuant to Sections 102 and 301 of the Indenture dated as of December 1, 1993 among HELCO, HECO, as guarantor, and The Bank of New York, as Trustee, establishing the $10,000,000 Notes, 4.85% Series Due 1995 (Exhibit 4.8 to HECO's Annual Report on Form 10-K for the fiscal year ended December 31, 1993, File No. 1-4955).
10.1 Power Purchase Agreement between Kalaeloa Partners, L.P., and HECO dated October 14, 1988 (Exhibit 10(a) to HECO's Quarterly Report on Form 10-Q for the quarter ended September 30, 1988, File No. 1-4955).
10.1(a) Amendment No. 1 to Power Purchase Agreement between HECO and Kalaeloa Partners, L.P., dated June 15, 1989 (Exhibit 10(c) to HECO's Quarterly Report on Form 10-Q for the quarter ended June 30, 1989, File No. 1-4955).
10.1(b) Lease Agreement between Kalaeloa Partners, L.P., as Lessor, and HECO, as Lessee, dated February 27, 1989 (Exhibit 10(d) to HECO's Quarterly Report on Form 10-Q for the quarter ended June 30, 1989, File No. 1-4955).
10.1(c) Restated and Amended Amendment No. 2 to Power Purchase Agreement between HECO and Kalaeloa Partners, L.P., dated February 9, 1990 (Exhibit 10.2(c) to HECO's Annual Report on Form 10-K for the fiscal year ended December 31, 1989, File No. 1-4955).
10.1(d) Agreement to Extend the "Cancellation Window" in the Kalaeloa Power Purchase Agreement dated June 21, 1990 (Exhibit 10(e) to HECO's Quarterly Report on Form 10-Q for the quarter ended June 30, 1990, File No. 1-4955).
10.1(e) Amendment No. 3 to Power Purchase Agreement between HECO and Kalaeloa Partners, L.P., dated December 10, 1991 (Exhibit 10.2(e) to HECO's Annual Report on Form 10-K for the fiscal year ended December 31, 1991, File No. 1-4955).
10.2 Purchase Power Agreement between AES Barbers Point, Inc. and HECO, entered into on March 25, 1988 (Exhibit 10(a) to HECO's Quarterly Report on Form 10-Q for the quarter ended March 31, 1988, File No. 1-4955).
10.2(a) Agreement between HECO and AES Barbers Point, Inc., pursuant to letters dated May 10, 1988 and April 20, 1988 (Exhibit 10.4 to HECO's Annual Report on Form 10-K for the fiscal year ended December 31, 1988, File No. 1-4955).
10.2(b) Amendment No. 1 to the Purchase Power Agreement between AES Barbers Point, Inc. and HECO (Exhibit 10 to HECO's Quarterly Report on Form 10-Q for the quarter ended September 30, 1989, File No. 1-4955).
10.2(c) HECO's Conditional Notice of Acceptance to AES Barbers Point, Inc. dated January 15, 1990 (Exhibit 10.3(c) to HECO's Annual Report on Form 10-K for the fiscal year ended December 31, 1989, File No. 1-4955).
10.3 Power Purchase Agreement between HELCO and Hilo Coast Processing Company dated May 31, 1988 (included in Exhibit 10 to HECO's Quarterly Report on Form 10-Q for the quarter ended June 30, 1988, File No. 1-4955).
Exhibit no. Description ----------- -----------
*10.3(a) Letter agreement between HELCO and Hilo Coast Processing Company dated January 5, 1995.
10.4 Agreement between MECO and Hawaiian Commercial & Sugar Company pursuant to letters dated November 29, 1988 and November 1, 1988 (Exhibit 10.8 to HECO's Annual Report on Form 10-K for the fiscal year ended December 31, 1988, File No. 1-4955).
10.4(a) Amended and Restated Power Purchase Agreement by and between A&B- Hawaii, Inc., through its division, Hawaiian Commercial & Sugar Company, and MECO, dated November 30, 1989 (Exhibit 10(e) to HECO's Quarterly Report on Form 10-Q for the quarter ended September 30, 1990, File No. 1-4955).
10.4(b) First Amendment to Amended and Restated Power Purchase Agreement by and between A&B-Hawaii, Inc., through its division, Hawaiian Commercial & Sugar Company, and MECO, dated November 1, 1990, amending the Amended and Restated Power Purchase Agreement dated November 30, 1989 (Exhibit 10(f) to HECO's Quarterly Report on Form 10-Q for the quarter ended September 30, 1990, File No. 1-4955).
10.5 Purchase Power Contract between HELCO and Thermal Power Company, dated March 24, 1986 (Exhibit 10(a) to HECO's Quarterly Report on Form 10-Q for the quarter ended June 30, 1989, File No. 1-4955).
10.5(a) Firm Capacity Amendment between HELCO and Puna Geothermal Venture (assignee of AMOR VIII, who is the assignee of Thermal Power Company), dated July 28, 1989, amending Purchase Power Contract between HELCO and Thermal Power Company, dated March 24, 1986 (Exhibit 10(b) to HECO's Quarterly Report on Form 10-Q for the quarter ended June 30, 1989, File No. 1-4955).
10.6 Purchase Power Contract between HECO and the City and County of Honolulu dated March 10, 1986 (Exhibit 10.9 to HECO's Annual Report on Form 10-K for the fiscal year ended December 31, 1989, File No. 1- 4955).
10.6(a) Firm Capacity Amendment, dated April 8, 1991, to Purchase Power Contract, dated March 10, 1986, by and between HECO and the City & County of Honolulu (Exhibit 10 to HECO's Quarterly Report on Form 10- Q for the quarter ended March 31, 1991, File No. 1-4955).
10.7 Purchase Power Contract between MECO and Zond Pacific, Inc., dated May 24, 1991 (Exhibit 10 to HECO's Quarterly Report on Form 10-Q for the quarter ended June 30, 1991, File No. 1-4955).
10.8 Low Sulfur Fuel Oil Supply Contract by and between CUSA and HECO dated May 29, 1990 (Exhibit 10(a) to HECO's Quarterly Report on Form 10-Q for the quarter ended June 30, 1990, File No. 1-4955).
10.8(a) Second Amendment, dated September 9, 1993, to Low Sulfur Fuel Oil Supply Contract, dated May 29, 1990, by and between CUSA and HECO (Exhibit 10(a) to HECO's Quarterly Report on Form 10-Q for the quarter ended September 30, 1993, File No. 1-4955).
10.8(b) Inter-Island Industrial Fuel Oil and Diesel Fuel Contract by and between CUSA and HECO, MECO, HELCO, HTB and YB dated as of September 23, 1991 (Exhibit 10(a) to HECO's Quarterly Report on Form 10-Q for the quarter ended September 30, 1991, File No. 1-4955).
Exhibit no. Description ----------- -----------
10.8(c) Third Amendment, dated October 1, 1993, to Inter-Island Industrial Fuel Oil and Diesel Fuel Contract dated September 23, 1991, by and between CUSA and HECO, MECO, HELCO, HTB and YB (Exhibit 10(b) to HECO's Quarterly Report on Form 10-Q for the quarter ended September 30, 1993, File No. 1-4955).
10.8(d) Facilities and Operating Contract by and between CUSA and HECO dated as of May 29, 1990 (Exhibit 10.10(b) to HECO's Annual Report Form 10- K for the fiscal year ended December 31, 1991, File No. 1-4955).
10.8(e) Second Amendment, dated September 21, 1993, to the Facilities and Operating Contract dated May 29, 1990, by and between CUSA and HECO (Exhibit 10(c) to HECO's Quarterly Report on Form 10-Q for the quarter ended September 30, 1993, File No. 1-4955).
10.9 Low Sulfur Fuel Oil Supply Contract between HIRI (succeeded by BHP) and HECO dated April 25, 1990 (Exhibit 10(b) to HECO's Quarterly Report on Form 10-Q for the quarter ended June 30, 1990, File No. 1- 4955).
10.9(a) First Amendment, dated October 1, 1993, to Low Sulfur Fuel Oil Supply Contract, dated April 25, 1990, between BHP and HECO (Exhibit 10(d) to HECO's Quarterly Report on Form 10-Q for the quarter ended September 30, 1993, File No. 1-4955).
10.9(b) Inter-Island Industrial Fuel Oil and Diesel Fuel Contract by and between HIRI (succeeded by BHP) and HECO, MECO and HELCO dated September 23, 1991 (Exhibit 10(b) to HECO's Quarterly Report on Form 10-Q for the quarter ended September 30, 1991, File No. 1-4955).
10.9(c) Second Amendment, dated October 7, 1993, to Inter-Island Industrial Fuel Oil and Diesel Fuel Contract, dated September 23, 1991 by and between BHP and HECO, MECO and HELCO (Exhibit 10(e) to HECO's Quarterly Report on Form 10-Q for the quarter ended September 30, 1993, File No. 1-4955).
10.10 Low Sulfur Fuel Oil Sale/Purchase Contract between HECO and C. Itoh & Co. (America), Inc. dated June 7, 1990 (Exhibit 10(c) to HECO's Quarterly Report on Form 10-Q for the quarter ended June 30, 1990, File No. 1-4955).
10.11 Contract of private carriage by and between HITI and HELCO dated November 10, 1993 (Exhibit 10.13 to HECO's Annual Report on Form 10-K for the fiscal year ended December 31, 1993, File No. 1-4955).
10.12 Contract of private carriage by and between HITI and MECO dated November 12, 1993 (Exhibit 10.14 to HECO's Annual Report on Form 10-K for the fiscal year ended December 1, 1993, File No. 1-4955).
10.13 HECO Non-employee Directors' Deferred Compensation Plan (Exhibit 10.16 to HECO's Annual Report on Form 10-K for the fiscal year ended December 31, 1990, File No. 1-4955).
10.14 HEI and HECO Executives' Deferred Compensation Agreement. The agreement pertains to and is substantially identical for all the HEI and HECO executive officers (Exhibit 10.15 to HEI's Annual Report on Form 10-K for the fiscal year ended December 31, 1991, File No. 1- 8503).
Exhibit no. Description ----------- -----------
10.15 Contract of Sale between HECO and Malama Waterfront Corp., dated December 20, 1989, for the sale and purchase of the Honolulu Power Plant Parcels, Iwilei Tank Farm Parcel and the buildings, structures and other improvements (Exhibit 10.18 to HEI's Annual Report on Form 10-K for the fiscal year ended December 31, 1989, File No. 1-8503).
10.15(a) First Amendment to Contract of Sale by and between HECO and Malama Waterfront Corp., dated September 25, 1990, amending the Contract of Sale between HECO and Malama Waterfront Corp., dated December 20, 1989, for the sale and purchase of the Honolulu Power Plant Parcels, Iwilei Tank Farm Parcel and the buildings, structures and other improvements (Exhibit 10(d) to HEI's Quarterly Report on Form 10-Q for the quarter ended September 30, 1990, File No. 1-8503).
*11 Computation of Earnings Per Share of Common Stock. See note on page 2 of HECO's 1994 Annual Report to Stockholder attached as Exhibit 13(b) hereto.
*12(b) Computation of Ratio of Earnings to Fixed Charges. Filed herein as page 75.
*13(b) Pages 2 to 31 and 33 of HECO's 1994 Annual Report to Stockholder (with the exception of the data incorporated by reference in Part I, Part II, Part III and Part IV, no other data appearing in the 1994 Annual Report to Stockholder is to be deemed filed as part of this Form 10-K Annual Report).
*21(b) Subsidiaries of HECO. Filed herein as page 77.
*27(b) HECO and subsidiaries financial data schedule, December 31, 1994 and year ended December 31, 1994.
*99(b) Reconciliation of electric utility operating income per HEI and HECO Consolidated Statements of Income. Filed herein as page 79.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 signatures 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)
By /s/ Robert F. Mougeot By /s/ Paul Oyer ------------------------------- ---------------------------- Robert F. Mougeot Paul A. Oyer Financial Vice President and Financial Vice President, Chief Financial Officer of HEI Treasurer and Director of HECO (Principal Financial Officer of (Principal Financial Officer of HEI) HECO) Date: March 21, 1995 Date: March 21, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrants and in their capacities at March 21, 1995. The signature of each of the undersigned shall be deemed to relate only to matters having reference to the above-named companies and any subsidiaries thereof.
SIGNATURE TITLE --------- -----
/s/ Robert F. Clarke President and Director of HEI ------------------------------------ Chairman of the Board of Directors of HECO Robert F. Clarke (Chief Executive Officer of HEI)
/s/ Harwood D. Williamson Director of HEI ------------------------------------ President and Director of HECO Harwood D. Williamson (Chief Executive Officer of HECO)
/s/ Robert F. Mougeot Financial Vice President and ------------------------------------ Chief Financial Officer of HEI Robert F. Mougeot (Principal Financial Officer of HEI)
/s/ Curtis Y. Harada Controller of HEI ------------------------------------ (Principal Accounting Officer of HEI) Curtis Y. Harada
/s/ Paul Oyer Financial Vice President, Treasurer and ------------------------------------ Director of HECO Paul A. Oyer (Principal Financial Officer of HECO)
SIGNATURES (Continued)
SIGNATURE TITLE --------- -----
/s/ Ernest T. Shiraki Controller of HECO ------------------------------------ (Principal Accounting Officer of HECO) Ernest T. Shiraki
/s/ Edwin L. Carter Director of HEI ------------------------------------ Edwin L. Carter
/s/ John D. Field Director of HEI ------------------------------------ John D. Field
/s/ Richard Henderson Director of HEI and HECO ------------------------------------ Richard Henderson
/s/ Ben F. Kaito Director of HEI and HECO ------------------------------------ Ben F. Kaito
/s/ Mildred D. Kosaki Director of HECO ------------------------------------ Mildred D. Kosaki
/s/Victor Hao Li Director of HEI ------------------------------------ Victor Hao Li
/s/ Bill D. Mills Director of HEI ------------------------------------ Bill D. Mills
/s/ A. Maurice Myers Director of HEI ------------------------------------ A. Maurice Myers
/s/ Ruth M. Ono Director of HEI ------------------------------------ Ruth M. Ono
SIGNATURES (Continued)
SIGNATURE TITLE --------- -----
Director of HEI and HECO ------------------------------------ Diane J. Plotts
Director of HEI ------------------------------------ Oswald K. Stender
Director of HEI ------------------------------------ Kelvin H. Taketa
/s/ Jeffrey N. Watanabe Director of HEI ------------------------------------ Jeffrey N. Watanabe
Director of HECO ------------------------------------ Paul C. Yuen