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Power plant
write-off puts HEI
in the red

Its failed Philippine investment
leads to a $24.4 million loss
in the fourth quarter

---

By Russ Lynch
Star-Bulletin

A $36.6 million after-tax charge from writing off its investment in an electricity-generating business in the Philippines pushed Hawaiian Electric Industries Inc. into the red in the fourth quarter of 2000.

The company reported a fourth-quarter loss of $24.4 million, or 74 cents a share, compared to a profit of $31.7 million, or 98 cents a share, a year earlier. Without the one-time charge, HEI would have shown a fourth-quarter profit of $12.2 million.

Despite the adverse report, issued after the stock markets closed yesterday, HEI's stock rose 44 cents to close at $35.50 on the New York Stock Exchange today. The company warned in October that the Philippines investment would hurt the company's earnings in 2000.

Political and economic instability in the Philippines reduced the value of the peso and caused major losses at East Asia Power Resources Corp., operator of generating plants in Manila and Cebu, HEI said yesterday.

The Honolulu-based company paid $87.5 million in March 2000 for a 46 percent interest in EAPRC. Now that HEI no longer has an interest in it, future losses at EAPRC will not affect HEI's earnings, Robert F. Clarke, HEI chairman, president and chief executive, said in a conference call with securities analysts today.

He said another Philippine operation, a Mindanao electricity distribution system in which HEI invested $9.7 million is profitable, as is a Guam generating plant that has a $14 million HEI investment. A power-plant development in China, in which HEI invested $25 million, has been stalled by failure to get connection agreements.

Clarke told the analysts that the HEI board and management are reevaluating all the international investments, which were done through subsidiary HEI Power Corp.

HEI's fourth-quarter revenues were up 12 percent at $458.1 million, vs. $408.9 million in the year-earlier period.

Electric utility revenues for the latest period, not counting the overseas operations, were up 19 percent at $342.6 million, compared with $287.9 million a year earlier. However, electric utilities other than the overseas business showed a 14.9 percent drop in fourth-quarter operating profit, to $36.6 million from a profit of $43 million in the year-earlier quarter.

Utility expenses soared 24.9 percent to $306 million in the last quarter, from a year-earlier $244.9 million. Suzy Hollinger, HEI investor relations manager, said the expenses included higher costs for maintenance and repairs.

HEI's American Savings Bank subsidiary had an 11.7 percent increase in fourth-quarter revenues, to $117.6 million in the latest three months, from $105.3 million in the 1999 quarter. Savings bank expenses were up 10.4 percent at $100.1 million for the quarter, from $90.7 million in the 1999 quarter. The result was an American Savings operating profit of $17.6 million, up 21.4 percent from a profit of $14.5 million in the year-earlier period.

The international power business had a fourth-quarter operating loss of $83.4 million, compared with a loss of $1.2 million in the 1999 quarter.

For all of 2000, strong performance in the electric utilities and American Savings brought HEI a net profit of $45.7 million, after the Philippines write-off, down 53 percent from a profit of $96.8 million in 1999. Full-year earnings per share were $1.41, down 51 percent from $2.89 a share in 1999.

Year 2000 revenues of $1.72 billion were up 13.2 percent from $1.52 billion in 1999.