Good day, ladies and gentlemen, and welcome to the Q4 2014 Hawaiian Electric Industries, Inc. Earnings Conference Call. My name is Alex, and I will be your operator for today. [Operator Instructions] As a reminder, this call is being recorded for replay purposes. I would now like to turn the conference over to Clifford Chen, Manager of Investor Relations and Strategic Planning. Please proceed, sir.

Thank you, Alex, and welcome to Hawaiian Electric Industries 2014 Fourth Quarter and Year-end Earnings Conference Call. Joining me this morning are Connie Lau, HEI President and Chief Executive Officer; Jim Ajello, HEI Executive Vice President and Chief Financial Officer; Alan Oshima, Hawaiian Electric Company President and Chief Executive Officer as well as other members of senior management. Connie will provide an overview of the year and recent company updates. Jim will then update you on Hawaii's economy, our results for the fourth quarter and year-end and will provide 2015 earnings guidance. They will conclude with questions and answers. In today's presentation, management will be using non-GAAP financial measures to describe the company's operating performance. Our press release and webcast presentation materials, which are posted on our Investor Relations website, contain additional disclosures regarding these non-GAAP measures, including reconciliations of those measures to the equivalent GAAP measures. Forward-looking statements will also be made on today's call. Actual results could differ materially from what is described in those statements. Please reference the forward-looking statements disclosure accompanying the webcast slides, which provides additional information on important factors that could cause results to differ. The company undertakes no obligation to publicly update or revise any forward-looking statements, including EPS guidance, whether as a result of new information, future events or otherwise. I'll now turn the call over to our CEO, Connie Lau.

Thank you, Cliff, and aloha to everyone. 2014 was an eventful year for us, as we filed comprehensive energy transformation plans for Hawaii and announced a merger with NextEra energy. Our operating companies delivered solid financial results with earnings in line with our 2014 EPS guidance. Earned ROE was 9.6% on a GAAP basis and 9.8%, excluding merger-related expenses. At the utility, we continue to invest in the modernization and improvement of our electric grid, as we integrated more renewable energy. Even as recent oil price decreases have brought our customers bill relief, we remain focused on further reducing and stabilizing costs for our customers as well as continuing to bring cleaner sources of energy to Hawaii. And similar to Hawaiian Electric's June abbreviated rate case filing for Oahu, we filed an abbreviated rate case for Maui Electric at the end of December in which we offered to forego the opportunity to request additional base revenue. Our bank delivered solid financial results in 2014 in a challenging regulatory and interest rate environment. We produced strong loan growth of 6.8% while improving credit quality and maintaining healthy capital level. And finally, we are making good progress on our utility merger and bank spinoff. Our pending combination with NextEra Energy brings together 2 industry leaders in clean energy. With NextEra as a partner, we are confident we can accelerate Hawaii's clean energy transformation. And we are also confident our bank can and will thrive as an independent public company upon spinoff. Hawaiian Electric has, indeed, put Hawaii on the leading edge of clean energy nationally. We continue to make significant progress towards integrating more renewable energy to achieve the state's clean energy goals to reduce Hawaii's dependence on oil as quickly as possible. Renewable sources met 21% of our customers' energy needs…

Thanks, Connie. On Hawaii's economy, 2014 was the third consecutive record year for both visitor arrivals and expenditures, which were up 1.3% and 2.3%, respectively, from 2013 and still robust after many years of strong growth. 2014 arrivals reached 8.3 million, and total spend was at $14.7 billion. Statewide unemployment remained low at 4% in December of '14 and 3.4% in Honolulu County compared to 4.7% a year ago for the state and significantly below the current national unemployment rate of 5.7% as of January 2015. Hawaii real estate activity remains strong with the median sales price for single-family homes on Oahu increasing 3.8% in 2014 over 2013. However, the number of closed sales was slightly down by 0.9% year-over-year. The December 2014 Oahu median single-family home price was at $690,000. Construction activity reflected by the value of private building permits increased 21.9% in 2014 compared to 2013, driven by the increase in commercial and industrial new projects, additions and alterations. The University of Hawaii Economic Research Organization has estimated that Hawaii will save $1.4 billion over the span of a year from the decline of petroleum prices if recent prices are sustained. Overall, we expect to see continuing growth in Hawaii's economy in 2015 supported by the construction industry, steady performance of the tourism industry and petroleum prices. As shown on Slide 7, 2014 GAAP earnings per share were $1.64 and in line with our 2014 EPS guidance range of $1.60 to $1.67. Excluding merger-related expenses, core earnings per share were $1.68, up $0.06 on a comparable basis versus $1.62 per share in 2013. Pace of earnings in 2014 can be skewed more towards the first 3 quarters of 2014 with fourth quarter 2014 earnings lower than the prior 3 quarters due to the timing of expenses. As shown…

Thanks, Jim. In summary, our utility is a leader in the industry in integrating renewable and distributed generation. Together with our regulators, policymakers and other stakeholders, we are making Hawaii a leader in clean energy. As we continue to transition to a clean-energy future, our utility continues to be focused on customer choice and affordable and equitable distributed costs for all of our customers. Our bank continues to be a solid performer and will continue to focus on its core banking business, targeting mid-single-digit loan growth and strong credit quality. Overall, HEI's business model continues to provide our company with the financial resources to invest in the strategic growth of our company while supporting the continued stability of our dividend, which we have paid for over 100 consecutive years. This week, we announced that our board maintained the quarterly dividend of $0.31 per share. Our dividend yield continues to be attractive at 3.7% as of yesterday's market close. And finally, as our PUC application outlined, joining with NextEra Energy as a partner will help strengthen and accelerate Hawaii's clean energy transformation. Plus, we are confident that after its related spinoff, American Savings Bank, as a new publicly traded entity, will remain a strong community bank for Hawaii poised to generate shareholder value. And with that, we look forward to hearing your questions.

[Operator Instructions] Your first question comes from the line of Paul Patterson with Glenrock Associates.

A couple of things. I mean, we've had some coverage of the governor's comments. Some legislation's been introduced regarding municipalization and increased renewable goals and what have you. And there's a new PUC Chair who's concerned about, among other things, the number of vacancies and unfunded positions. And there's also a poll that's come out that sort of indicates that maybe customers, or at least those who are polled, don't have a complete view as to the value that's being provided by the merger. And I'm just wondering, it's all sort of been in the last month, and I know that it's been moving. You guys have obviously been filing things, and a lot of stuff has been happening sort of concurrently. But I am just sort of trying to get a sense as to how you feel about sort of the game plan of sort of getting this thing through and making people feel more comfortable with the proposed transaction. And is there a risk that this could drag out longer -- this approval process because of the vacancies and just -- the review process might take longer because there's only so many people to do the job kind of thing. I mean, if you could just sort of address that sort of.

Sure. Paul, let me just start with the poll that you cited and just give you a little more clarity as to the timing of that, because you really did state it right that the poll was saying that people needed more information about what the combination would bring in terms of advantages for customers. And it's quite understandable why it came out that way because the poll was actually done before the filing of the application with the Public Utilities Commission that actually outlined the benefits for customers in the form of a 4-year stay-out for increases in base rates and also the foregoing of the increases in O&M that we would normally get through the decoupling mechanism, and that was the quantified savings of about $60 million. So that information was actually not out in the public at the time that the poll was done. And then overall, I think to your question, it's really in the very, very early stages, and I think most of the statements that have come out from almost everyone, whether it is the governor or our legislators, have been about needing to just make sure that the transaction is really scrutinized carefully to ensure that it is going to be in the interest of the customers here in Hawaii. I'm not sure I can tell you much more than that at this point because I say it is quite early in the process. That application was only filed, what, just a few weeks?

January 29.

Yes, January 29, not very long ago at all. And as to the staffing levels at the Public Utilities Commission and its Consumer Advocate, I think unfortunately, in a small state like ours, we always have lived with those shortages of resources. But there have been commitments to try to bump up those resources to deal with all of these issues before our commission. They've been pretty stretched for the last few years largely because Hawaii has this very aggressive public policy position to move the state to renewable energy and to get off of oil.

The next question comes from the line of Charles Fishman with Morningstar.

Yes, just a follow-up on Paul's question. So the Hawaii PUC is still what you expect to be the last approval.

The last -- yes, we actually have a whole series of approvals. I guess, what I would say, Charles, is that, that's going to be one of the big approvals that we need to get and, of course, the other one is the shareholder approval. Some of the other so-called approvals like the Federal Reserve Board may not come until just before the bank spin.

Okay. So I mean -- but the PUC is what drags this to year-end. I mean, because obviously, your shareholder vote is in the spring, so you'll know up or down then.

Yes, it is the process that takes the longest period of time.

Okay. Maybe that was a better way to phrase it. And then just the $0.06 per share difference between core and GAAP, I mean, if I'm reading the last page right and part of the problem here could where the page break was, does the -- the entire $0.06 was due to the merger. Correct?

Yes, and it is $0.04.

$0.04 in the fourth quarter but $0.06 for the full year or am I reading that correctly?

Yes. Charles, yes. Jim Ajello. $4.9 million represents the difference all together, and some of the expenses were incurred in the third quarter and some in the fourth quarter. So I cited that there was $1.64 versus $1.68. Some rounding brings you to about $0.05.

Okay. And then Connie, I was intrigued by your comment about the community solar for apartment buildings. Could you elaborate on that, exactly how that would work?

Sure. And actually, since Alan is here, maybe I'll let him answer that question because as we've been going out into the communities there's been quite a bit of interest in that community solar, and particularly in Hawaii, because we don't have a whole lot of land. So we do have a lot of condominiums. Not everybody's got a roof.

Yes. So we have, as Connie mentioned, a lot of people in high-rises or apartment dwellers, renters, nonprofits who rent premises are interested in getting some of the benefits of a lower bill but really don't have a rooftop to install rooftop PV. We're looking at some solar grid farms that would be offered to the public to purchase designated bill credits as a part of the savings that they could accrue. The bill credits would then follow them from place to place. It wouldn't be tied to the real estate that they're currently located at. So this affords more people to get clean renewable energy as a part of their bill reduction. It won't be 1 for 1 as is with solar, but the upfront investment would not be as great as well. So there'll still be a good payback, and we're looking to install the first pilots with PUC approval sometime this year.

That's interesting. I sincerely hope you're new owner continues to treat Hawaiian Electric as a solar laboratory for the world. It's real interesting.

Thank you.

Yes. I think they've said that's one of the reasons that they were interested in Hawaiian Electric is because so much is going on here.

And your next question from the line of Nick Yuelys with Gabelli & Company.

Congrats, again, on the merger. Just one quick question on the 2016 CapEx, can you just walk us through why it's about $300 million lower than what you filed in the PSIP?

Okay. Tayne is going to answer that.

Yes. So basically, what we did from -- using the PSIP sort of as a baseline, there has been a number of changes, and we had a number of updates to our forecast. And they would include things like looking at battery energy storage and after understanding our needs, re-scoping those types of projects. We looked at probability of executing on our projects, given the schedules, and we've flipped some projects out of the 2016 time frame. So those are just sort of general comments about an update from what we filed in August.

Your next question comes from the line of Sachin Shah with Albert Fried. Sachin Narendra Shah - Albert Fried & Company, LLC, Research Division: I just had a couple questions on the regulatory approvals. I just saw the amended S-4 being filed, but I didn't see any updates on the regulatory approvals, all of them specifically, and if they were filed and when some of the waiting periods may be ending. I know you were talking about the PUC, but just curious to see if there's an update on that.

Sure. So what's filed -- the first document that was filed was the S-4, and so we've just received some comments from the SEC the process is that we need to work through those with the SEC, and then they will declare that statement effective. And as we mentioned, we're expecting that we would be able to work through the comments and obtain the effective dates so that we could go forward sometime this spring with the vote for shareholders. The second document that was filed, and that was just a little less than 2 weeks ago, was the application with the Public Utilities Commission. As you noted, we talked quite a bit about that. There has been no schedule that has been issued around that very recent filing. In addition, we have filed with the Federal Energy Regulatory Commission and also the Federal Reserve Board. And those have, again, just been filed, I guess, within the last week. Jim?

Correct.

So they're pretty new as well, and then Hart-Scott-Rodino is a waiting period that will go now for the next few months.

Yes, HSR -- it's Jim -- HSR has a waiting period once filed. And the approval, assuming it comes, has a 12-month shelf life. So you want to stage the filing and hopefully, the approval of that to be fresh enough to complete the transaction once it's consummated and the PUC approval. Sachin Narendra Shah - Albert Fried & Company, LLC, Research Division: Okay. So as far as the HSR, that has been filed. So if that's the case, then...

It's not been filed. HSR has not been filed. Sachin Narendra Shah - Albert Fried & Company, LLC, Research Division: Okay. Any idea when you may be expected to file that, Jim?

We'll need a little more line of sight on the rest of the filings in the approval process because, as I mentioned, that it has a shelf life associated with it, and so we'll want to make sure... Sachin Narendra Shah - Albert Fried & Company, LLC, Research Division: Okay. So you don't want to do it too early because you want the process to kind of procedurally move forward, and then strategically, you want to file it so you'll have that window.

That's correct, and by the way, both partners to the -- or parties to the merger file an HSR.

And given that the 2 utilities are 5,000 miles away, no, we're not expecting that Hart-Scott-Rodino would be the critical item in all the approval process. I guess, I should mention one other filing, and that is something called a Form 10 filing, which we also need to make with respect to the bank side of the transaction, and that is the document needed in order to spin the bank. That filing, we would expect to make within the next few weeks. Sachin Narendra Shah - Albert Fried & Company, LLC, Research Division: Okay. So the path to completion, again, it seems with these various filings, have been made or yet to be made is really just the PUC for the most part. Is that -- and obviously, the Form 10 for the spinoff, that's an important part as well.

Yes. It's really the PUC approval and the shareholder approval. Sachin Narendra Shah - Albert Fried & Company, LLC, Research Division: Okay. The shareholder approval, as you mentioned, shareholder vote, we're potentially looking kind of like an April-May time frame.

Yes. Sachin Narendra Shah - Albert Fried & Company, LLC, Research Division: Okay. Then it all comes down to kind of procedurally waiting for the PUC later in the year.

Yes.

And there are no questions at this time. [Operator Instructions] And I show no additional questions in queue at this time.

Okay. Well, thank you, all, very much for joining us on the call today. And if you have any follow-up questions, please feel free to contact Cliff.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Have a great day.