REVENUE BONDS PAYABLE

Governmental Activities — Revenue Bonds are payable from and collateralized by the Department‘s revenues generated from certain capital improvement projects. On December 15, 2011, Highways issued $112,270,000 in State of Hawaii Highway Revenue Bonds of 2011, Series A, with interest rates ranging from 1.0% to 5.0% to finance certain highway capital improvement projects and related projects. The bonds are payable annually January 1 through 2032.

On December 15, 2011, Highways issued $5,095,000 in State of Hawaii Highway Revenue Bonds of 2011, Series B, with an interest rate of 4.0% to advance refund $5,400,000 of certain outstanding highway revenue bonds previously issued. The bond is payable on January 1, 2023.

On April 2, 2009, the State of Hawaii Department of Hawaiian Homelands (DHHL) issued $42,500,000 in Revenue Bonds, Series 2009, with interest rates ranging from 4% to 6% to finance the construction of certain DHHL capital improvement projects. The bonds are payable annually on April 1 through 2039.

On December 17, 2008, Highways issued $125,175,000 in State of Hawaii Highway Revenue Bonds, Series 2008, with interest rates ranging from 4.75% to 6.00% to finance certain highway capital improvement projects and related projects. The bonds are payable annually on January 1 through 2029.

On March 15, 2005, Highways issued $60,000,000 in State of Hawaii Highway Revenue Bonds of 2005, Series A, with interest rates ranging from 3.5% to 5.0% to finance certain highway capital improvement projects and related projects. The bonds are payable annually on July 1 through 2025.

On March 15, 2005, Highways issued $123,915,000 of State of Hawaii Highway Revenue Bonds of 2005, Series B, with interest rates ranging from 3.50% to 5.25% to advance refund $128,705,000 of certain outstanding highway revenue bonds previously issued. The bonds are payable annually on July 1 through 2021.

On April 15, 2003, Highways issued $44,940,000 in State of Hawaii Highway Revenue Bonds, Series of 2003, with interest rates ranging from 4.00% to 5.25% to advance refund $45,350,000 of outstanding State of Hawaii Highway Revenue Bonds, Series of 1993, with an average interest rate of 4.42%. The State made its last bond payment for this series on July 1, 2013.

On July 1, 1998, Highways issued State of Hawaii Highway Revenue Bonds, Series of 1998, in the principal amount of $94,920,000. Bond proceeds related to this issue amounted to $97,542,000, of which $71,921,000 was used to finance certain highway improvements and other related projects for the state highways system, and $25,621,000 was used to advance refund certain outstanding highway revenue bonds. The difference in the principal amount and proceeds relates to bond premium and accrued interest. The bonds bear interest at rates of 5.5% and mature on July 1, 2017 and July 1, 2018.

The bonds are payable solely from and collateralized by the revenues, consisting primarily of highway fuel taxes, vehicle registration fees, vehicle weight taxes, and rental motor vehicle and tour vehicle surcharge

FOR THE YEAR ENDED JUNE 30, 2013

Bonds, Series of 1998 (see above); were placed in irrevocable trusts and used to purchase securities of the U.S. government to meet the debt service requirements of the refunded bonds.

The liabilities for the refunded bond issues and the related securities and trust accounts are not included in the accompanying basic financial statements, as DHHL and Highways defeased their obligations for payment of those bonds upon completion of those refunding transactions.

The following is a summary of Highways and DHHL revenue bonds issued and outstanding at June 30, 2013 (amounts expressed in thousands):

Interest Maturity Original Amount Outstanding

Series Date of Issue Rates Dates of Issue Amount

Highways:

1998 July 1, 1998 5.500 % July 1, 2017–July 1, 2018 $ 94,920 $ 27,580

2003 April 15, 2003 4.00%–5.25% July 1, 2013 44,940 5,360 2005 A March 15, 2005 3.50%–5.00% July 1, 2013–2025 60,000 44,200 2005 B March 15, 2005 3.50%–5.25% July 1, 2013–2021 123,915 101,430 2008 December 17, 2008 4.75%–6.00% January 1, 2014–2029 125,175 109,090 2011 A December 15, 2011 1.00%-5.00% January 1, 2014–2032 112,270 108,580 2011 B December 15, 2011 4.00% January 1, 2023 5,095 5,095 DHHL: 2009 April 2, 2009 4.00%–6.00% April 1, 2014–2039 42,500 39,815 441,150 $

A summary of the revenue bond premium activities for fiscal year 2013 is as follows (amounts expressed in thousands): Revenue Bonds Balance — July 1, 2012 $ 20,770 Current-year additions - Current-year amortization (2,753) Balance — June 30, 2013 $ 18,017

NOTES TO BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED JUNE 30, 2013

Debt service requirements to maturity on revenue bonds are aggregated below (amounts expressed in thousands):

Fiscal Year Principal Interest Total

2014 $ 28,425 $ 21,928 $ 50,353 2015 29,945 20,609 50,554 2016 31,390 19,148 50,538 2017 32,925 17,593 50,518 2018 34,530 15,922 50,452 2019–2023 123,095 58,114 181,209 2024–2028 94,440 32,770 127,210 2029–2033 51,590 10,831 62,421 2034–2038 11,970 3,087 15,057 2039 2,840 170 3,010 441,150 $ $ 200,172 $ 641,322

Business-Type Activities — Revenue bonds are backed by a pledge of resources derived from users of the related facilities and are not supported by the full faith and credit of the State.

Airports System Revenue Bonds — The Airports system revenue bonds are payable solely from and

collateralized by airport revenues, which include all aviation fuel taxes levied. The Airports system revenue bonds are subject to redemption at the option of the Department of Transportation (DOT) and the State during specific years at prices ranging from 102% to 100% of principal.

The following is a summary of the Airports system revenue bonds issued and outstanding at June 30, 2013 (amounts expressed in thousands):

Final Original

Interest Maturity Amount of Outstanding

Series Rates Date (July 1) Issue Amount

2010A, refunding 2.00%–5.25% 2039 $ 478,980 $ 478,395

2010B, refunding 3.00%–5.00% 2020 166,000 150,750

2011, refunding 2.00%-5.00% 2024 300,885 288,885

945,865

$ 918,030

Add unamortized premium 23,672

Less:

Deferred loss on refunding (6,207)

FOR THE YEAR ENDED JUNE 30, 2013

Corporation in December 1990, which was subsequently assigned to Sky Chefs, Inc. (―Sky Chefs‖) effective January 2002. The construction of the related facilities was financed by special facility revenue bonds issued by Airports in the amounts of $25,255,000, $16,600,000, and $6,600,000, respectively. Those bonds are payable solely from and collateralized solely by certain rentals and other monies derived from the special facilities. These bonds are payable solely from and collateralized solely by certain rentals and other monies derived from the special facilities and aggregated to $30,100 at June 30, 2013.

The following is a summary of pertinent information on the Airports special facility revenue bonds at June 30, 2013.

$25,255,000 Issue

The bonds bear interest at 5.625% and are subject to redemption at the option of Airports, upon the request of Continental, at prices ranging from 101% to 100%, depending on the dates of redemption, or at 100%, plus interest if the facilities are destroyed or damaged extensively.

Interest-only payments are due semiannually on May 15 and November 15 of each year until the bonds mature on November 15, 2027, at which time the entire principal amount is due.

$16,600,000 Issue

On July 15, 2000, Airports issued $16,600,000 of term special facility bonds (Continental), Refunding Series of 2000, with an interest rate of 7.00%, due June 1, 2020, to, in part; refund $18,225,000 of its outstanding Series of 1990 bonds (Continental). The bonds are subject to redemption on or after June 1, 2010, at the option of Airports, upon the request of Continental or, if the facilities are destroyed or damaged extensively, at 100% of principal, plus interest.

Special facility revenue bonds payable at June 30, 2013, consisted of the following (amounts expressed in thousands): Total Current portion $ 970 $ - $ 970 Noncurrent portion 7,405 21,725 29,130 8,375 $ $ 21,725 $ 30,100 Continental

The special facility leases are accounted for and recorded as direct financing leases. The remaining lease payments to be paid by the lessees (including debt service requirements on the special facility revenue bonds) are recorded as a restricted asset, and the special facility revenue bonds outstanding are recorded as a liability in the accompanying basic financial statements.

NOTES TO BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED JUNE 30, 2013

The following is a summary of the Harbors revenue bonds as of June 30, 2013 (amounts expressed in thousands):

Principal

Year Final Original Due Due

of Redemption Interest Amount of July 1, January 1,

Issue Date Rates Issue 2013 2014 Total Noncurrent

2000 July 1, 2029 5.75% $ 79,405 $ - $ - $ - $ 14,670 2002 July 1, 2019 3.00%–5.50% 24,420 610 - 610 8,795 2004 January 1, 2024 2.50%–6.00% 52,030 - 1,430 1,430 19,280 2006 January 1, 2031 4.00%–5.25% 96,570 - 2,780 2,780 77,640 2007 July 1, 2027 4.25%–5.50% 51,645 4,475 - 4,475 37,920 2010 July 1, 2040 3.00%–5.75% 201,390 3,360 - 3,360 192,935 505,460 $ 8,445 4,210 12,655 351,240

Add: unamortized premium - - - 1,022

Less:

Unamortized discount - - - (14) Unamortized deferred loss on refunding - - - (4,254)

8,445

$ $ 4,210 $ 12,655 $ 347,994

Current

On August 2, 2013, the Harbors Division issued 23,614,000 Series A of 2013 revenue refunding bonds through a private placement transaction with Capital One Public Funding LLC. These bonds refunded the Series A of 2000 and Series B of 2002 revenue bonds. This bond refunding provided net present value savings of approximately $3,940,000 million as measured from the closing date at a fixed coupon rate of 3.25%.

Debt service requirements to maturity on the business-type activities‘ revenue bonds for fiscal years ending June 30 are aggregated below (amounts expressed in thousands):

Fiscal Year Principal Interest Total

2014 $ 47,835 $ 63,716 $ 111,551 2015 50,045 61,494 111,539 2016 52,360 59,200 111,560 2017 54,780 56,765 111,545 2018 57,450 54,125 111,575 2019–2023 327,665 225,486 553,151 2024–2028 231,595 149,957 381,552 2029–2033 179,255 96,329 275,584 2034–2038 202,150 49,189 251,339 2039–2041 68,585 4,591 73,176 1,271,720 $ $ 820,852 $ 2,092,572

The above debt service requirements are set forth based upon funding requirements. Principal and interest payments are required to be funded in the 12- and 6-month periods, respectively, preceding the date on which

FOR THE YEAR ENDED JUNE 30, 2013

Revenue Bonds Authorized, but Unissued — At June 30, 2013, revenue bonds authorized, but unissued were approximately $4,933,099,000.

Special Purpose Revenue Bonds — HRS Chapter 39A authorizes the State (with legislative approval) to issue special purpose revenue bonds. Proceeds from those bonds are loaned to certain enterprises for projects deemed to be in the public interest. The bonds are not general obligations of the State and are payable solely from monies received by the State under project agreements with the recipients of the bond proceeds. Accordingly, the State has not included those bonds in its basic financial statements. Bonds outstanding at June 30, 2013, amounted to approximately $1,328,058,000. At June 30, 2013, special purpose revenue bonds of $1,236,750,000 were authorized, but unissued.

Improvement District Bonds — The HCDA is authorized to issue improvement district bonds under HRS Chapter 206E. Proceeds from the bond issues are utilized to finance the redevelopment of districts

designated by the State Legislature. The bonds are not general obligations of the State and are payable solely by assessment liens on the real property of the designated district. Accordingly, the State has not included those bonds in its basic financial statements. There were no bonds outstanding as of June 30, 2013.