Hawaiian Electric Industries Reports 2012 Year-end & Fourth Quarter Earnings; Webcast to Include EPS Guidance 2012 Net Income of $139 Million Flat Compared to 2011

Hawaiian Electric Company Invests Over $300 Million in Local Infrastructure

American Savings Bank Extends Over $1.7 Billion in Loans and Refinancings

HONOLULU, Feb. 15, 2013 /PRNewswire/ -- Hawaiian Electric Industries, Inc. (NYSE: HE) (HEI) today reported year-end GAAP earnings of $138.7 million, flat with $138.2 million in 2011.  Diluted earnings per share (EPS) were $1.42 for 2012, slightly down compared to $1.44 for 2011.  For the fourth quarter of 2012, reported earnings were $13.8 million or $0.14 EPS, compared to $34.2 million or $0.36 EPS for the same quarter last year.  2012 and fourth quarter earnings include a $24 million after-tax write-down related to the settlement agreement between Hawaiian Electric Company1 and the Hawaii Consumer Advocate, which is subject to approval by the Hawaii Public Utilities Commission. 

"HEI's 2012 earnings reflect Hawaiian Electric Company's agreement with the Consumer Advocate which included a significant write-off of invested capital.  If approved, the agreement will resolve many pending issues, allowing our utilities to continue their focus on reducing Hawaii's dependence on expensive oil," said Constance H. Lau, HEI president and chief executive officer.

"American Savings Bank (American) continued to deliver stable and predictable results, contributing roughly 40% to consolidated HEI earnings in 2012.  Steady loan growth was supported by more than $1.7 billion in new credit and refinancings provided to customers.  Strong capital ratios enabled American to pay 2012 dividends to HEI totaling $45 million, an important source of funding as HEI continues to invest in its Hawaii based businesses," added Lau.

"In 2012, Hawaiian Electric Company invested in local infrastructure totaling over $300 million, more than three times its earnings.  These investments are critical to modernize the electric grid to operate more reliably while integrating more clean energy for our customers and our state.  In 2012, we achieved 13% of sales from renewable energy and are on track to exceed the 15% renewable portfolio standard by 2015," said Lau.

Excluding the write-down of regulatory assets, core earnings2 for 2012 were $163.1 million or $1.68 EPS, compared to $143.9 million or $1.50 EPS in 2011.  For the fourth quarter, core earnings were $38.3 million or $0.39 EPS compared to $39.9 million or $0.42 EPS for the same quarter last year. 

1 "Hawaiian Electric Company" or "utility", unless otherwise defined, refers to the three utilities, Hawaiian Electric Company, Inc. on Oahu, Maui Electric Company, Limited, and Hawaii Electric Light Company, Inc.


2 Non-GAAP measure which excludes the fourth quarter after-tax partial write-off of certain utility regulatory assets of $24.4 million in 2012 and $5.7 million in 2011. See "Explanation of HEI's Use of Certain Unaudited Non-GAAP Measures" and attached tables for GAAP to Non-GAAP reconciliations.

UTILITY EARNINGS REFLECT CLEAN ENERGY AND RELIABILITY INVESTMENTS

Full Year Results:

Reported earnings from the utility of $99.3 million in 2012 were essentially flat with $100.0 million in 2011.  Core earnings were $123.7 million in 2012 compared to $105.7 million in 2011.  The main driver of the $18 million core earnings improvement from the prior year was a full year recovery of costs in 2012 for reliability and clean energy investments on Oahu compared to a partial year recovery of costs in 2011.

Operations and maintenance (O&M) expenses3 (pretax) were $15 million or approximately 4% higher compared to the prior year.  The increases were primarily due to higher customer service expenses, reserves for environmental costs and higher power plant overhaul costs.

Fourth Quarter Results:

Reported earnings from the utility for the fourth quarter of 2012 were $4.2 million compared to $25.8 million in 2011.  Core earnings were $28.7 million in the fourth quarter of 2012 compared to $31.5 million in the fourth quarter of 2011.  The $3 million core earnings decline from the prior year quarter was primarily due to higher O&M expenses, largely offset by the recovery of costs for clean energy and reliability investments, primarily related to our Oahu and Maui utilities.

O&M expenses3 (pretax) were $14 million or 15% higher as expected in the fourth quarter of 2012 compared to the fourth quarter of 2011 largely due to higher customer service expenses and the timing of 2011 expenses weighted more to the first three quarters of the year.

3 Excludes demand side management (DSM) program costs. DSM program costs were $6 million and $4 million for the full year in 2012 and 2011, respectively, and $2 million and $1 million in the fourth quarter of 2012 and 2011, respectively. DSM program costs are recovered through a surcharge.

AMERICAN SAVINGS BANK:   SOLID PERFORMANCE AND LOAN GROWTH

Full Year Results:

American's net income for 2012 was $58.6 million compared to $59.8 million in 2011 reflecting the challenging low interest rate environment. The primary drivers impacting net income for the year were (on an after-tax basis):  $4 million lower net interest income and $5 million higher noninterest expense largely offset by $6 million higher gains on sales of new residential mortgages and $1 million lower provision for loan losses.

Overall, American's return on average equity for the full year remained solid at 11.7% in 2012 compared to 12.0% in 2011 and the return on average assets was 1.18% in 2012 compared to 1.23% in 2011. 

Fourth Quarter Results:

Fourth quarter 2012 net income of $14.4 million was essentially flat with the linked quarter of $14.2 million as higher noninterest income, driven mainly by higher gains on sales of newly originated residential mortgages, was offset by higher noninterest expense and lower net interest income.

Compared to the same quarter of 2011, net income declined by $1.0 million primarily driven by (on an after-tax basis): $2 million lower net interest income and $3 million higher noninterest expense which were largely offset by $4 million higher noninterest income primarily due to higher gains on sale of new residential mortgages and higher fee income.

American's fourth quarter 2012 return on average equity was 11.3%, up slightly from 11.2% in the linked quarter but down from 12.2% in the same quarter last year.  Return on average assets was 1.15% for the fourth quarter of 2012, unchanged from the linked quarter and down from 1.26% in the same quarter last year. 

Also refer to the American news release issued on January 30, 2013.

HOLDING AND OTHER COMPANIES

The holding and other companies' net losses were $19.3 million in 2012 compared to $21.6 million in 2011.  The lower net loss in 2012 was primarily driven by lower interest expense.  Fourth quarter net losses were $4.8 million in 2012 compared to $6.9 million in the fourth quarter 2011 primarily due to HEI funding the HEI Charitable Foundation in the fourth quarter of 2011.

WEBCAST AND CONFERENCE CALL

HEI TO ANNOUNCE 2013 EPS GUIDANCE IN EARNINGS CONFERENCE CALL

Hawaiian Electric Industries, Inc. will conduct a webcast and conference call to review its 2012 earnings on Friday, February 15, 2013, at 12:00 noon Hawaii time (5:00 p.m. Eastern time).  HEI will announce 2013 EPS guidance during the scheduled webcast and conference call.

The event can be accessed through HEI's website at www.hei.com or by dialing (866) 202-3048 and entering passcode:  97355196 for the teleconference call.  The presentation for the webcast will be on HEI's website under the headings "Investor Relations," "News & Events" and "Presentations & Webcasts."  HEI and Hawaiian Electric Company, Inc. (HECO) intend to continue to use HEI's website, www.hei.com, as a means of disclosing additional information.  Such disclosures will be included on HEI's website in the Investor Relations section.  Accordingly, investors should routinely monitor such portions of HEI's website, in addition to following HEI's, HECO's and American's press releases, HEI's and HECO's Securities and Exchange Commission (SEC) filings and HEI's public conference calls and webcasts.  The information on HEI's website is not incorporated by reference in this document or in HEI's and HECO's SEC filings unless, and except to the extent, specifically incorporated by reference.  Investors may also wish to refer to the Public Utilities Commission of the State of Hawaii (PUC) website at dms.puc.hawaii.gov/dms in order to review documents filed with and issued by the PUC.  No information on the PUC website is incorporated by reference in this document or in HEI's and HECO's SEC filings.

An online replay of the webcast will be available at the same website beginning about two hours after the event and will remain on HEI's website for 12 months.  Replays of the conference call will also be available approximately two hours after the event through March 1, 2013, by dialing (888) 286-8010, passcode: 47992097.

HEI supplies power to approximately 450,000 customers or 95% of Hawaii's population through its electric utilities, HECO, Hawaii Electric Light Company, Inc. and Maui Electric Company, Limited and provides a wide array of banking and other financial services to consumers and businesses through American, one of Hawaii's largest financial institutions.

EXPLANATION OF HEI'S USE OF CERTAIN UNAUDITED NON-GAAP MEASURES

HEI and HECO management use certain non-GAAP measures such as core earnings and adjusted return on average common equity (ROE) to evaluate the performance of the utility.  Management believes these non-GAAP measures provide useful information and are a better indicator of the utility's core operating activities.  Core earnings as presented here may not be comparable to similarly titled measures used by other companies.  The tables at the end of this news release provide a reconciliation of reported GAAP earnings to non-GAAP core earnings for both the utility and HEI consolidated and the corresponding adjustments to common equity for purposes of calculating adjusted ROE.

The reconciling adjustments from GAAP earnings to core earnings are the recorded after-tax charges of $24.4 million and $5.7 million in the fourth quarter of 2012 and 2011, respectively, related to settlement charges for the partial write-off of utility regulatory assets in 2012 and 2011.  The 2012 charges are not yet approved by the PUC.  For more information on the settlement charge recorded in 2012, see the Form 8-K filed on January 29, 2013.  Management does not consider these items to be representative of the company's fundamental core earnings.

FORWARD-LOOKING STATEMENTS

This release may contain "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, ongoing business strategies or prospects or possible future actions 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 the accuracy of assumptions concerning 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 are not guarantees of future performance.

Forward-looking statements in this release should be read in conjunction with the "Forward-Looking Statements" and "Risk Factors" discussions (which are incorporated by reference herein) set forth in HEI's Annual Report on Form 10-K for the year ended December 31, 2011, Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 and HEI's future periodic reports that discuss important factors that could cause HEI's results to differ materially from those anticipated in such statements.  These forward-looking statements speak only as of the date of the report, presentation or filing in which they are made.  Except to the extent required by the federal securities laws, HEI, HECO, American and their subsidiaries undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

 

Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries








CONSOLIDATED STATEMENTS OF INCOME








(Unaudited)

Three months ended


Years ended



December 31,


December 31,

(in thousands, except per share amounts) 


2012


2011


2012


2011

Revenues









Electric utility


$  769,182


$  784,363


$3,109,439


$2,978,690

Bank


68,970


66,676


265,539


264,407

Other


(5)


(11)


17


(762)

    Total revenues


838,147


851,028


3,374,995


3,242,335

Expenses









Electric utility


749,739


731,911


2,896,427


2,763,556

Bank


46,945


43,818


177,106


172,806

Other


4,191


7,129


17,266


16,277

    Total expenses


800,875


782,858


3,090,799


2,952,639

Operating income (loss)









Electric utility


19,443


52,452


213,012


215,134

Bank


22,025


22,858


88,433


91,601

Other


(4,196)


(7,140)


(17,249)


(17,039)

     Total operating income 


37,272


68,170


284,196


289,696

Interest expense–other than on deposit liabilities and other bank borrowings


(19,393)


(17,840)


(78,151)


(82,106)

Allowance for borrowed funds used during construction


1,904


767


4,355


2,498

Allowance for equity funds used during construction


1,459


1,833


7,007


5,964

Income before income taxes


21,242


52,930


217,407


216,052

Income taxes


6,933


18,232


76,859


75,932

Net income 


14,309


34,698


140,548


140,120

Preferred stock dividends of subsidiaries


473


473


1,890


1,890

Net income for common stock


$    13,836


$    34,225


$   138,658


$   138,230

Basic earnings per common share


$       0.14


$       0.36


$        1.43


$        1.45

Diluted earnings per common share


$       0.14


$       0.36


$        1.42


$        1.44

Dividends per common share


$       0.31


$       0.31


$        1.24


$        1.24

Weighted-average number of common shares outstanding


97,602


95,939


96,908


95,510

Adjusted weighted-average shares


97,970


96,199


97,338


95,820

Net income (loss) for common stock  by segment










Electric utility


$      4,225


$    25,814


$     99,276


$     99,986


Bank


14,363


15,340


58,637


59,843


Other


(4,752)


(6,929)


(19,255)


(21,599)

Net income for common stock


$    13,836


$    34,225


$   138,658


$   138,230

Comprehensive income attributable to common shareholders


$      3,103


$    21,750


$   131,372


$   131,565

Return on average common equity






8.9%


9.2%










This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI's Annual Report on SEC Form 10-K for the year ended December 31, 2012 (when filed) and HEI's Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2012, June 30, 2012 and

September 30, 2012, as updated by SEC Forms 8-K.

 

Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries



CONSOLIDATED BALANCE SHEETS



(Unaudited)



December 31

2012

2011

(dollars in thousands)



Assets



Cash and cash equivalents

$     219,662

$   270,265

Accounts receivable and unbilled revenues, net

362,823

344,322

Available-for-sale investment and mortgage-related securities

671,358

624,331

Investment in stock of Federal Home Loan Bank of Seattle 

96,022

97,764

Loans receivable held for investment, net

3,737,233

3,642,818

Loans held for sale, at lower of cost or fair value

26,005

9,601

Property, plant and equipment, net of accumulated depreciation of $2,125,286 in 2012 and $2,049,821 in 2011 

3,594,829

3,334,501

Regulatory assets

864,596

669,389

Other

494,414

519,296

Goodwill

82,190

82,190

     Total assets

$10,149,132

$9,594,477

Liabilities and shareholders' equity



Liabilities



Accounts payable

$     212,379

$   216,176

Interest and dividends payable

26,258

25,041

Deposit liabilities

4,229,916

4,070,032

Short-term borrowings—other than bank

83,693

68,821

Other bank borrowings

195,926

233,229

Long-term debt, net—other than bank

1,422,872

1,340,070

Deferred income taxes

439,329

354,051

Regulatory liabilities

322,074

315,466

Contributions in aid of construction

405,520

356,203

Retirement benefits liability

656,394

530,407

Other

526,613

521,982

     Total liabilities

8,520,974

8,031,478




Preferred stock of subsidiaries - not subject to mandatory redemption

34,293

34,293




Shareholders' equity



Preferred stock, no par value, authorized 10,000,000 shares; issued:  none

-

-

Common stock, no par value, authorized 200,000,000 shares; issued

and outstanding:  97,928,403 shares in 2012 and 96,038,328 shares in 2011 

1,403,484

1,349,446

Retained earnings

216,804

198,397

Accumulated other comprehensive loss, net of tax benefits

(26,423)

(19,137)

     Total shareholders' equity

1,593,865

1,528,706

     Total liabilities and shareholders' equity

$10,149,132

$9,594,477




This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI's Annual Report on SEC Form 10-K for the year ended December 31, 2012 (when filed) and HEI's Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2012, June 30, 2012 and September 30, 2012, as updated by SEC Forms 8-K.

 

Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries



CONSOLIDATED STATEMENTS OF CASH FLOWS



(Unaudited)



Years ended December 31

2012

2011

(in thousands)



Cash flows from operating activities



Net income 

$      140,548

$      140,120

Adjustments to reconcile net income to net cash provided by operating activities



      Depreciation of property, plant and equipment

150,389

148,152

      Other amortization

7,958

19,318

      Provision for loan losses

12,883

15,009

      Impairment of utility assets

40,000

9,215

      Loans receivable originated and purchased, held for sale

(519,622)

(267,656)

      Proceeds from sale of loans receivable, held for sale

513,000

273,932

      Change in deferred income taxes

90,848

79,444

      Change in excess tax benefits from share-based payment arrangements

(61)

35

      Allowance for equity funds used during construction

(7,007)

(5,964)

      Change in cash overdraft

-

(2,688)

      Changes in assets and liabilities



           Increase in accounts receivable and unbilled revenues, net

(18,501)

(77,326)

           Decrease (increase) in fuel oil stock

10,129

(18,843)

           Increase in regulatory assets

(72,401)

(40,132)

           Decrease in accounts, interest and dividends payable

(39,738)

(34,480)

           Change in prepaid and accrued income taxes and utility revenue taxes

21,079

73,153

           Contributions to defined benefit pension and other postretirement benefit plans

(77,703)

(74,961)

           Change in other assets and liabilities

(17,259)

14,038

Net cash provided by operating activities

234,542

250,366

Cash flows from investing activities



Available-for-sale investment and mortgage-related securities purchased

(243,633)

(361,876)

Principal repayments on available-for-sale investment and mortgage-related securities

191,253

389,906

Proceeds from sale of available-for-sale investment and mortgage-related securities

3,548

32,799

Net increase in loans held for investment

(112,730)

(181,080)

Proceeds from sale of real estate acquired in settlement of loans

11,336

8,020

Capital expenditures

(325,480)

(235,116)

Contributions in aid of construction

45,982

23,534

Other

2,677

(2,974)

Net cash used in investing activities

(427,047)

(326,787)

Cash flows from financing activities



Net increase in deposit liabilities

159,884

94,660

Net increase in short-term borrowings with original maturities of three months or less

14,872

43,898

Net increase (decrease) in retail repurchase agreements

(37,291)

10,910

Proceeds from other bank borrowings

5,000

-

Repayments of other bank borrowings

(5,000)

(15,000)

Proceeds from issuance of long-term debt

457,000

125,000

Repayment of long-term debt

(375,500)

(150,000)

Change in excess tax benefits from share-based payment arrangements

61

(35)

Net proceeds from issuance of common stock

23,613

15,979

Common stock dividends

(96,202)

(106,812)

Preferred stock dividends of subsidiaries

(1,890)

(1,890)

Other

(2,645)

(675)

Net cash provided by financing activities

141,902

16,035

Net decrease in cash and cash equivalents 

(50,603)

(60,386)

Cash and cash equivalents, January 1

270,265

330,651

Cash and cash equivalents, December 31

$      219,662

$      270,265




This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI's Annual Report on SEC Form 10-K for the year ended December 31, 2012 (when filed) and HEI's Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2012, June 30, 2012 and September 30, 2012, as updated by SEC Forms 8-K.



Hawaiian Electric Company, Inc. (HECO) and Subsidiaries








CONSOLIDATED STATEMENTS OF INCOME









(Unaudited)


Three months ended


Years ended




 December 31,


 December 31,

(dollars in thousands, except per barrel amounts)


2012


2011


2012


2011











Operating revenues


$   767,172


$   782,904


$ 3,101,998


$2,973,764

Operating expenses









Fuel oil


311,343


339,650


1,297,419


1,265,126

Purchased power


184,400


181,473


724,240


689,652

Other operation 


75,311


62,731


272,117


257,065

Maintenance


30,671


28,411


122,312


121,219

Depreciation


35,942


35,302


144,498


142,975

Taxes, other than income taxes


70,692


74,002


292,841


276,504

Income taxes


18,303


19,358


76,594


65,988

     Total operating expenses


726,662


740,927


2,930,021


2,818,529

Operating income


40,510


41,977


171,977


155,235

Other income (deductions)









Allowance for equity funds used during construction


1,459


1,833


7,007


5,964

Impairment of assets


(40,000)


(9,215)


(40,000)


(9,215)

Other, net


630


332


4,441


3,126

Income tax benefits


15,684


4,220


15,546


4,404

     Total other income (deductions)


(22,227)


(2,830)


(13,006)


4,279

Interest and other charges









Interest on long-term debt


14,614


14,383


59,014


57,532

Amortization of net bond premium and expense


629


765


2,905


3,081

Other interest charges (credits)


220


(1,547)


136


(582)

Allowance for borrowed funds used during construction


(1,904)


(767)


(4,355)


(2,498)

     Total interest and other charges


13,559


12,834


57,700


57,533

Net income 


4,724


26,313


101,271


101,981

Preferred stock dividends of subsidiaries


229


229


915


915

Net income attributable to HECO


4,495


26,084


100,356


101,066

Preferred stock dividends of HECO


270


270


1,080


1,080

Net income for common stock


$       4,225


$     25,814


$     99,276


$     99,986

Comprehensive income attributable to common shareholder


$       3,058


$     24,877


$     98,338


$     99,245

OTHER ELECTRIC UTILITY INFORMATION









Kilowatthour sales (millions)









   HECO


1,771


1,799


6,976


7,242

   HELCO


275


276


1,085


1,104

   MECO


290


293


1,145


1,181




2,336


2,368


9,206


9,527

Wet-bulb temperature (Oahu average; degrees Fahrenheit)


69.4


70.0


68.9


70.0

Cooling degree days (Oahu)


1,102


1,273


4,532


4,954

Average fuel oil cost per barrel


$133.37


$134.28


$138.09


$123.63

Return on average common equity (%) (simple average)









   HECO






7.57


6.43

   HELCO






5.90


9.68

   MECO






5.44


7.73

   HECO Consolidated






6.91


7.31











This information should be read in conjunction with the consolidated financial statements and the notes thereto incorporated by reference in HECO's Annual Report on SEC Form 10-K for the year ended December 31, 2012 (when filed) and the consolidated financial statements and the notes thereto in HECO's Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2012, June 30, 2012 and September 30, 2012, as updated by SEC Forms 8-K.

 

Hawaiian Electric Company, Inc. (HECO) and Subsidiaries



CONSOLIDATED BALANCE SHEETS



(Unaudited)






December 31

2012

2011

(dollars in thousands, except par value)



Assets



Utility plant, at cost



Land

$        51,568

$        51,514

Plant and equipment

5,364,400

5,052,027

Less accumulated depreciation

(2,040,789)

(1,966,894)

Construction in progress

151,378

138,838

     Net utility plant

3,526,557

3,275,485

Current assets



Cash and cash equivalents

17,159

48,806

Customer accounts receivable, net 

210,779

183,328

Accrued unbilled revenues, net

134,298

137,826

Other accounts receivable, net

28,176

8,623

Fuel oil stock, at average cost

161,419

171,548

Materials and supplies, at average cost

51,085

43,188

Prepayments and other

32,865

36,667

Regulatory assets

51,267

20,283

     Total current assets 

687,048

650,269

Other long-term assets



Regulatory assets

813,329

649,106

Unamortized debt expense

10,554

12,786

Other

71,305

86,361

     Total other long-term assets

895,188

748,253

          Total assets

$    5,108,793

$    4,674,007

Capitalization and liabilities



Capitalization



Common stock, $6 2/3 par value, authorized 50,000,000 shares; outstanding 



    14,665,264 in 2012 and 14,233,723 shares in 2011

$        97,788

$        94,911

Premium on capital stock

468,045

426,921

Retained earnings

907,273

881,041

Accumulated other comprehensive loss, net of tax benefits

(970)

(32)

     Common stock equity

1,472,136

1,402,841

Cumulative preferred stock – not subject to mandatory redemption

34,293

34,293

Long-term debt, net

1,147,872

1,000,570

     Total capitalization

2,654,301

2,437,704

Current liabilities



Current portion of long-term debt

-

57,500

Accounts payable

186,824

188,580

Interest and preferred dividends payable

21,092

19,483

Taxes accrued

251,066

230,076

Other

62,879

69,353

     Total current liabilities

521,861

564,992

Deferred credits and other liabilities



Deferred income taxes

417,611

337,863

Regulatory liabilities

322,074

315,466

Unamortized tax credits

66,584

60,614

Retirement benefits liability

620,205

494,753

Other

100,637

106,412

     Total deferred credits and other liabilities

1,527,111

1,315,108

Contributions in aid of construction

405,520

356,203

          Total capitalization and liabilities

$    5,108,793

$    4,674,007




This information should be read in conjunction with the consolidated financial statements and the notes thereto incorporated by reference in HECO's Annual Report on SEC Form 10-K for the year ended December 31, 2012 (when filed) and the consolidated financial statements and the notes thereto in HECO's Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2012, June 30, 2012 and September 30, 2012, as updated by SEC Forms 8-K.

 

Hawaiian Electric Company, Inc. (HECO) and Subsidiaries



CONSOLIDATED STATEMENTS OF CASH FLOWS



(Unaudited)



Years ended December 31

2012

2011

(in thousands)



Cash flows from operating activities



Net income

$   101,271

$   101,981

Adjustments to reconcile net income to net cash provided by operating activities



      Depreciation of property, plant and equipment

144,498

142,975

      Other amortization

6,998

17,378

      Impairment of assets

40,000

9,215

      Change in deferred income taxes

86,878

69,091

      Change in tax credits, net

6,075

2,087

      Allowance for equity funds used during construction

(7,007)

(5,964)

      Change in cash overdraft

-

(2,688)

      Changes in assets and liabilities



           Increase in accounts receivable

(47,004)

(44,404)

           Decrease (increase) in accrued unbilled revenues

3,528

(33,442)

           Decrease (increase) in fuel oil stock

10,129

(18,843)

           Increase in materials and supplies

(7,897)

(6,471)

           Increase in regulatory assets

(72,401)

(40,132)

           Decrease in accounts payable

(38,913)

(35,815)

           Change in prepaid and accrued income taxes and utility revenue taxes

25,239

69,736

           Contributions to defined benefit pension and other postretirement benefit plans

(63,075)

(73,176)

           Change in other assets and liabilities

(11,088)

9,866

Net cash provided by operating activities

177,231

161,394

Cash flows from investing activities



Capital expenditures

(310,091)

(226,022)

Contributions in aid of construction

45,982

23,534

Other

-

77

Net cash used in investing activities

(264,109)

(202,411)

Cash flows from financing activities



Common stock dividends

(73,044)

(70,558)

Preferred stock dividends of HECO and subsidiaries

(1,995)

(1,995)

Proceeds from issuance of common stock

44,000

40,000

Proceeds from issuance of long-term debt

457,000

-

Repayment of long-term debt

(368,500)

-

Other

(2,230)

(560)

Net cash provided by (used in) financing activities

55,231

(33,113)

Net decrease in cash and cash equivalents

(31,647)

(74,130)

Cash and cash equivalents, January 1

48,806

122,936

Cash and cash equivalents, December 31

$    17,159

$    48,806




This information should be read in conjunction with the consolidated financial statements and the notes thereto incorporated by reference in HECO's Annual Report on SEC Form 10-K for the year ended December 31, 2012 (when filed) and the consolidated financial statements and the notes thereto in HECO's Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2012, June 30, 2012 and September 30, 2012, as updated by SEC Forms 8-K.

 

American Savings Bank, F.S.B. 











STATEMENTS OF INCOME DATA











(Unaudited)


Three months ended


Years ended



December 31, 


September 30,


December 31, 


December 31,

(in thousands)


2012


2012


2011


2012


2011

Interest income











Interest and fees on loans


$      42,816


$     43,880


$      46,500


$176,057


$     184,485

Interest on investment and mortgage-related securities


3,288


3,432


3,352


13,822


14,568

     Total interest income


46,104


47,312


49,852


189,879


199,053

Interest expense











Interest on deposit liabilities


1,408


1,540


1,837


6,423


8,983

Interest on other borrowings


1,193


1,201


1,362


4,869


5,486

     Total interest expense


2,601


2,741


3,199


11,292


14,469

Net interest income


43,503


44,571


46,653


178,587


184,584

Provision for loan losses


3,379


3,580


4,082


12,883


15,009

Net interest income after provision for loan losses


40,124


40,991


42,571


165,704


169,575

Noninterest income











Fees from other financial services


8,887


7,674


7,476


31,361


28,881

Fee income on deposit liabilities


4,648


4,527


4,486


17,775


18,026

Fee income on other financial products


1,836


1,660


1,364


6,577


6,704

Gain on sale of loans


6,331


4,077


2,760


14,628


5,028

Other income


1,164


1,346


738


5,319


6,715

     Total noninterest income


22,866


19,284


16,824


75,660


65,354

Noninterest expense











Compensation and employee benefits


19,953


18,684


17,820


75,979


71,137

Occupancy


4,313


4,400


4,313


17,179


17,154

Data processing


2,854


2,644


1,676


10,098


8,155

Services


2,800


3,062


1,990


9,866


7,396

Equipment


1,806


1,762


1,762


7,105


6,903

Other expense


9,207


8,096


8,997


32,116


32,648

     Total noninterest expense


40,933


38,648


36,558


152,343


143,393

Income before income taxes


22,057


21,627


22,837


89,021


91,536

Income taxes 


7,694


7,419


7,497


30,384


31,693

Net income


$      14,363


$     14,208


$      15,340


$  58,637


$      59,843

Comprehensive income


$        5,740


$     15,517


$        7,400


$  52,612


$      56,760












OTHER BANK INFORMATION (annualized %, except as of period end)







Return on average assets 


1.15


1.15


1.26


1.18


1.23

Return on average equity  


11.29


11.24


12.24


11.68


11.99

Return on average tangible common equity


13.47


13.41


14.65


13.97


14.35

Net interest margin


3.81


3.92


4.16


3.93


4.12

Net charge-offs to average loans outstanding 


0.13


0.35


0.48


0.24


0.49

Efficiency ratio


61


60


57


59


57

As of period end











Nonperforming assets to loans outstanding











   and real estate owned **


1.87


1.73


2.01





Allowance for loan losses to loans outstanding 


1.11


1.06


1.03





Leverage ratio *


9.1


9.3


9.0





Total risk-based capital ratio *


12.8


12.9


12.9





Tangible common equity to total assets


8.39


8.72


8.42





Dividend paid to HEI (via ASHI) ($ in millions) **


15


10


20


45


63

*  Regulatory basis











** Fourth quarter 2011 includes noncash dividends of $5 million.






















This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI's Annual Report on SEC Form 10-K for the year ended December 31, 2012 (when filed) and HEI's Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2012, June 30, 2012 and September 30, 2012, as updated by SEC Forms 8-K.

 

American Savings Bank, F.S.B. 



BALANCE SHEETS DATA



(Unaudited)






December 31

2012

2011

(in thousands)



Assets



Cash and cash equivalents

$      184,430

$      219,678

Available-for-sale investment and mortgage-related securities

671,358

624,331

Investment in stock of Federal Home Loan Bank of Seattle

96,022

97,764

Loans receivable held for investment

3,779,218

3,680,724

   Allowance for loan losses

(41,985)

(37,906)

      Loans receivable held for investment, net

3,737,233

3,642,818

Loans held for sale, at lower of cost or fair value

26,005

9,601

Other

244,435

233,592

Goodwill

82,190

82,190

     Total assets

$    5,041,673

$    4,909,974




Liabilities and shareholder's equity



Deposit liabilities–noninterest-bearing

$    1,164,308

$      993,828

Deposit liabilities–interest-bearing

3,065,608

3,076,204

Other borrowings

195,926

233,229

Other

117,752

118,078

     Total liabilities

4,543,594

4,421,339




Common stock

333,712

331,880

Retained earnings

179,763

166,126

Accumulated other comprehensive loss, net of tax benefits

(15,396)

(9,371)

     Total shareholder's equity

498,079

488,635

     Total liabilities and shareholder's equity

$    5,041,673

$    4,909,974




This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI's Annual Report on SEC Form 10-K for the year ended December 31, 2012 (when filed) and HEI's Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2012, June 30, 2012 and September 30, 2012, as updated by SEC Forms 8-K.

 

Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries

RECONCILIATION OF GAAP(1) TO NON-GAAP MEASURES

(Unaudited)

















Net Income


 

Diluted Earnings Per Share (EPS)


Shareholders' Equity


Three months ended


Years ended


Three months ended


Years ended


Years ended


December 31, 


December 31, 


December 31, 


December 31, 


December 31, 

(in millions, except EPS amounts)

2012

2011


2012

2011


2012

2011


2012

2011


2012

2011
















GAAP (As Reported)

$  13.8

$  34.2


$  138.7

$  138.2


$  0.14

$  0.36


$  1.42

$  1.44


$  1,593.9

$  1,528.7
















Excluding Special Items:















Settlement agreement, subject to PUC approval, for the partial writedown of certain utility regulated assets

24.4

-


24.4

-


0.25

-


0.25

-


24.4

-
















Settlement agreement for the partial writedown of the East Oahu Transmission Project (EOTP) Phase I costs

-

5.7


-

5.7


-

0.06


-

0.06


-

5.7
















Non-GAAP (Core)

$  38.3

$  39.9


$  163.1

$  143.9


$  0.39

$  0.42


$  1.68

$  1.50


$  1,618.3

$  1,534.4
















Note:  Columns may not foot due to rounding














Years ended














December 31, 














2012

2011

Other Measures:















Average Shareholders' Equity (Simple Average):















Based on GAAP 













$  1,561.3

$  1,504.6

Non-GAAP (Core)













$  1,576.4

$  1,507.4
















Return on Average Common Equity (ROE) (Simple Average):















Based on GAAP 













8.9%

9.2%

Non-GAAP (Core)













10.3%

9.5%































(1)  Generally Accepted Accounting Principles

 

 

Hawaiian Electric Company, Inc. (HECO) and Subsidiaries










RECONCILIATION OF GAAP TO NON-GAAP MEASURES










(Unaudited)































Net Income


Common Stock Equity












Three months ended


Years ended


Years ended












December 31, 


December 31, 


December 31, 










(in millions)


2012

2011


2012

2011


2012

2011





























GAAP (As Reported)


$   4.2

$  25.8


$   99.3

$  100.0


$  1,472.1

$  1,402.8





























Excluding Special Items:



















Settlement agreement, subject to PUC approval, for the partial writedown of certain utility regulated assets


24.4

-


24.4

-


24.4

-





























Settlement agreement for the partial writedown of the EOTP Phase I costs


-

5.7


-

5.7


-

5.7





























Non-GAAP (Core)


$  28.7

$  31.5


$  123.7

$  105.7


$  1,496.6

$  1,408.5





























Note:  Columns may not foot due to rounding









Years ended
December 31, 


















2012

2011










Other Measures:

















Average Common Equity (Simple Average)


















Based on GAAP 







$  1,437.5

$  1,368.5










Non-GAAP (Core)






$  1,452.6

$  1,371.4





























Return on Average Common Equity (ROE) (Simple Average):


















Based on GAAP 







6.9%

7.3%










Non-GAAP (Core)






8.5%

7.7%


















































Hawaiian Electric Company, Inc. (HECO, Oahu)


Hawaii Electric Light Company, Inc. (HELCO)


Maui Electric Company, Limited (MECO)



Net Income


Common Stock Equity


Net Income


Common Stock Equity


Net Income


Common Stock Equity



Years ended


Years ended


Years ended


Years ended


Years ended


Years ended



December 31, 


December 31, 


December 31, 


December 31, 


December 31, 


December 31, 

(in millions)


2012

2011


2012

2011


2012

2011


2012

2011


2012

2011


2012

2011




















GAAP (As Reported)


$  70.4

$  55.4


$  974.2

$  886.7


$      16.2

$      26.7


$  268.9

$  280.5


$  12.6

$  18.0


$  228.9

$  235.6




















Excluding Special Items:



















Settlement agreement, subject to PUC approval, for the partial writedown of certain utility regulated assets


17.7

-


17.7

-


3.4

-


3.4

-


3.4

-


3.4

-




















Settlement agreement for the partial writedown of the EOTP Phase I costs


-

5.7


-

5.7


-

-


-

-


-

-


-

-




















Non-GAAP (Core)


$  88.2

$  61.1


$  991.9

$  892.4


$      19.6

$      26.7


$  272.3

$  280.5


$  16.0

$  18.0


$  232.3

$  235.6




















Note:  Columns may not foot due to rounding






Years ended
December 31, 





Years ended
December 31, 





Years ended
December 31, 






2012

2011





2012

2011





2012

2011

Other Measures:

















Average Common Equity (Simple Average)



















Based on GAAP 



$  930.4

$  860.6





$  274.7

$  275.2





$  232.2

$  232.6

Non-GAAP (Core)



$  942.2

$  863.4





$  276.4

$  275.2





$  233.9

$  232.6




















Return on Average Common Equity (ROE) (Simple Average):



















Based on GAAP 



7.6%

6.4%





5.9%

9.7%





5.4%

7.7%

Non-GAAP (Core)



9.4%

7.1%





7.1%

9.7%





6.8%

7.7%




















 

Contact:

Shelee M.T. Kimura



Manager, Investor Relations &

Telephone: (808) 543-7384


Strategic Planning

E-mail: skimura@hei.com

(Logo: http://photos.prnewswire.com/prnh/20110411/LA80136LOGO)

SOURCE Hawaiian Electric Industries, Inc.



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