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How we get from here to there. HAWAIIAN ELECTRIC INDUSTRIES, INC. To minimize our environmental impact, the Hawaiian Electric Industries 2010 Annual Report to Shareholders was printed on papers containing fibers from products from socially and environmentally responsible forestry. 2010 Annual Report to Shareholders 1 Shareholder Information Corporate Headquarters Dividend Reinvestment and Stock Purchase Plan Hawaiian Electric Industries (HEI), through its subsidiaries, Hawaiian Electric Hawaiian Electric Industries, Inc. Any individual of legal age or any entity may buy HEI common stock 900 Richards Street at market prices directly from the Company. The minimum initial Company (Hawaiian Electric) and American Savings Bank (ASB), provides Honolulu, Hawaii 96813 investment is $250. Additional optional cash investments may be as Telephone: 808-543-5662 small as $25. The annual maximum investment is $120,000. After your essential energy and financial services, ensuring a brighter future for our account is open, you may reinvest all of your dividends to purchase Mailing address: additional shares, or elect to receive some or all of your dividends in shareholders and all stakeholders. P.O. Box 730 cash. You may instruct the Company to electronically debit a regular Honolulu, Hawaii 96808-0730 amount from a checking or savings account. The Company can also deposit dividends automatically to your checking or savings account. New York Stock Exchange A prospectus describing the plan may be obtained through HEI’s Common stock symbol: HE website or by contacting shareholder services. Trust preferred securities symbol: HEPrU (HECO) Annual Meeting Shareholder Services Tuesday, May 10, 2011, 9:30 a.m. Please direct inquiries to: P.O. Box 730 American Savings Bank Tower Chet A. Richardson Honolulu, Hawaii 96808-0730 1001 Bishop Street Senior Vice President, Telephone: 808-532-5841 8th Floor, Room 805 General Counsel, Secretary Toll Free: 866-672-5841 Honolulu, Hawaii 96813 and Chief Administrative Officer Facsimile: 808-532-5868 Telephone: 808-543-5885 E-mail: [email protected] Facsimile: 808-203-1991 Office hours: 7:30 a.m. to 3:30 p.m. H.S.T. Independent Registered Public Accounting Firm Correspondence about common stock and utility preferred PricewaterhouseCoopers LLP stock ownership, dividend payments, transfer requirements, 350 South Grand Avenue, 49th Floor changes of address, lost stock certificates, duplicate mailings, Los Angeles, California 90071 and account status may be directed to shareholder services. Telephone: 213-356-6000 A copy of the 2010 Form 10-K Annual Report for Hawaiian Institutional Investor and Securities Analyst Inquiries Electric Industries, Inc. and Hawaiian Electric Company, Inc., Please direct inquiries to: including financial statements and schedules, will be provided Shelee M. T. Kimura by HEI without charge upon written request directed to Laurie Manager, Investor Relations and Strategic Planning Loo-Ogata, Director, Shareholder Services, at the above Telephone: 808-543-7384 address for shareholder services or through HEI’s website. Facsimile: 808-203-1164 E-mail: [email protected] Website Internet users can access information about HEI and its subsidiaries Transfer Agents at http://www.hei.com. Common stock and utility company preferred stock: Shareholder Services Dividends and Distributions Common stock quarterly dividends are customarily paid on or Common stock only: about the 10th of March, June, September, and December to Continental Stock Transfer & Trust Company shareholders of record on the dividend record date. 17 Battery Place Quarterly distributions on trust preferred securities are paid by New York, New York 10004 HECO Capital Trust III, an unconsolidated financing subsidiary of HECO, Telephone: 212-509-4000 on or about March 31, June 30, September 30, and December 31 to Facsimile: 212-509-5150 holders of record on the business day before the distribution is paid. Utility company preferred stock quarterly dividends are paid on the Trust preferred securities: 15th of January, April, July, and October to preferred shareholders of Contact your investment broker for information on record on the 5th of these months. transfer procedures. Direct Registration HEI common stock can be issued in direct registration (book entry) form. The stock is DRS (Direct Registration System) eligible. Our Answers to Your Questions Throughout this book you will see examples of how HEI is working proactively to improve Forward-Looking Statements the future of Hawaii and its communities. These efforts are integrated into our core business This report contains “forward-looking statements,” which include statements that are predictive in nature, depend upon or refer to future events or conditions, and usually include words such as expects, anticipates, intends, plans, believes, predicts, estimates or similar expressions. In addition, any statements concerning future financial performance (including strategies. By helping our state achieve economic prosperity and a clean environment, and future revenues, expenses, earnings or losses or growth rates), ongoing business strategies or prospects and possible future actions, which may be provided by management, are also forward-looking statements. Forward-looking statements are based on current expectations and projections about future events and are subject to risks, uncertainties and assumptions about HEI and its subsidiaries, the performance of the industries in which they do business and economic and market factors, among other things. These forward-looking statements by addressing our communities’ needs, we build a sustainable future for our companies are not guarantees of future performance. Forward-looking statements should be read in conjunction with the “Forward-Looking Statements” discussion (which is incorporated by reference herein) set forth on pages 2 and 3 and our communities. of the enclosed 2010 Annual Report to Shareholders – Financial and Other Information, and in HEI’s future periodic or current reports that discuss important factors that could cause HEI’s results to differ materially from those anticipated in such statements. Forward-looking statements speak only as of the date of this report. Financial Highlights Years ended December 31 2010 2009 (1) 2008 (2) (dollars in millions, except per share amounts) Operating income $ 256 $ 188 $ 204 Net income (loss) by segment Electric utility 77 79 92 Bank 58 22 18 Other (21) (18) (20) Net income 114 83 90 Basic earnings per common share 1.22 0.91 1.07 Diluted earnings per common share 1.21 0.91 1.07 Dividends per common share 1.24 1.24 1.24 Book value per common share (3) 15.67 15.58 15.35 Market price per common share High 24.99 22.73 29.75 Low 18.63 12.09 20.95 December 31 22.79 20.90 22.14 Return on average common equity 7.8% 5.9% 6.8% Indicated annual yield (3) 5.4% 5.9% 5.6% Price earnings ratio (4) 18.7x 23.0x 20.7x Common shares (millions) December 31 94.7 92.5 90.5 Weighted-average 93.4 91.4 84.6 (1) 2009 consolidated and bank net income included a $19 million after-tax charge ($0.21 per share) resulting from ASB’s sale of its private-issue mortgage-related securities portfolio. Return on average common equity, adjusted to exclude the $19 million after-tax charge, was 7.2%. (2) 2008 consolidated and bank net income included a $36 million after-tax charge ($0.42 per share) resulting from ASB’s balance sheet restructuring. The balance sheet restructuring reduced the size of the bank’s balance sheet by approximately $1 billion, while enabling ASB to maintain its earnings power on a lower capital base and to dividend excess capital to HEI. Return on average common equity, adjusted to exclude the $36 million after-tax balance sheet restructuring charge, was 9.3%. (3) At December 31. (4) Calculated using the December 31 closing market price per common share divided by basic earnings per common share. Forbes Places HEI on 100 Most Trustworthy Companies List HEI has been recognized by Forbes as one of the 100 Most Trustworthy Companies. The list is based on an independent study by Audit Integrity and recognizes companies that have proven over time to have the most transparent accounting, prudent management, and solid corporate governance. With less than 2% of the companies in the entire U.S. stock market qualifying, we are proud to be recognized as part of this group. 1 Letter to our Shareholders How do we get from here to there? Build fundamental earnings and profitability of both operating companies Provide an attractive dividend Create long-term benefits for all stakeholders Beginning in 2008, we initiated strategies to set both of our a diverse portfolio of solutions, including greater conservation operating companies on a new course — our utility entered and efficiency, to achieve our clean energy goals. into an agreement with the State of Hawaii to help create a clean energy future for Hawaii and our bank set new performance How does the utilities’ new regulatory model support standards while continuing our commitment to help our clean energy and benefit our stakeholders? communities grow and prosper. In 2010, we saw major Aligning regulation with the objectives of the clean energy progress on these initiatives and HEI’s unique business model initiative in our state is critical to achieving a greener Hawaii. continues to provide our company with a strong balance sheet The new decoupled regulatory model, which was approved in and the financial resources to invest in the strategic growth 2010 by the Hawaii Public Utilities Commission and implemented of our companies while providing an attractive dividend for for our largest utility on Oahu, will reward energy efficiency, our shareholders. While we have more to accomplish, I am encourage investment in our grids to support clean energy, help confident that we are on the right course to make a difference us earn competitive returns for our shareholders to attract capital in creating a better tomorrow for our shareholders, customers, for clean energy investments, and spur development of the and other stakeholders.