Hawaiian Electric Industries Reports Third Quarter 2013 Earnings Diluted Earnings Per Share of $0.48

Hawaiian Electric Company Continues to Integrate Clean Energy Resources

American Savings Bank Delivers Solid Results

Board Declares Dividend of $0.31 Per Share

HONOLULU, Nov. 7, 2013 /PRNewswire/ -- Hawaiian Electric Industries, Inc. (NYSE - HE) (HEI) today reported consolidated net income for common stock for the third quarter of 2013 of $48.2 million, or $0.48 diluted earnings per share (EPS), compared to $47.7 million, or $0.49 diluted EPS for the third quarter of 2012.   

"HEI continued to deliver solid results in the third quarter of 2013.  Higher consolidated net income was driven by higher bank earnings which helped offset lower utility earnings.  EPS declined by one cent due to an increased number of shares which were issued through our dividend reinvestment program to support the capital needs of Hawaiian Electric, Hawaii Electric Light and Maui Electric Company.  In the first nine months of 2013, HEI's three utilities have made local infrastructure investments totaling more than $235 million to ensure safe and reliable service as they integrate more clean energy," said Constance H. Lau, HEI president and chief executive officer.

Through the first nine months of the year, more than 18% of the electricity used by the utilities' customers came from renewable resources, ahead of the state's 2015 goal of 15%. "Our goal is to ensure reliable electric service while pursuing more low-cost clean energy and decreasing the use of imported fossil fuel as quickly as possible.  At the same time, we are committed to increasing efficiencies and are working hard to lower our customers' electric bills," said Lau. 

"At American Savings Bank, year-over-year results were solid as we increased loans to customers at an annualized rate of 9.3% and improved credit quality resulted in a lower provision expense for loan losses helping to offset a challenging bank regulatory and interest rate environment," said Lau.

HAWAIIAN ELECTRIC COMPANY CONTINUES INVESTMENTS TO INTEGRATE MORE CLEAN ENERGY AND BETTER SERVE CUSTOMERS

Hawaiian Electric Company's1 net income for the third quarter of 2013 was $37.8 million compared to $38.4 million in the third quarter of 2012.  The $0.6 million decline from the prior year was driven by the following items (on an after-tax basis): 

  • $2 million higher depreciation expense resulting from additional infrastructure investments for improved reliability and the integration of more clean energy; and
  • $2 million higher operations and maintenance (O&M) expenses2 compared to the same quarter last year largely due to the timing of overhauls and higher customer service expenses, partially offset by lower expenses for substation and generating station maintenance.

These were largely offset by (after-tax):

  • $2 million higher net revenues3 compared to the third quarter of 2012 primarily due to additional recovery of costs, net of lower revenues related to the Maui Electric final rate case decision and lower fuel efficiency performance; and
  • A favorable deferred income tax adjustment of $3 million recorded in the third quarter of 2013 compared to a favorable tax settlement of $1 million recorded in the third quarter of 2012, both related to prior years.

1 Hawaiian Electric Company, 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 Excludes expenses covered by surcharges or by third parties. In both the third quarter of 2013 and 2012, these expenses were $2 million.

3 Net revenues represent the after-tax impact of "Operating revenues" less the following operating expenses which are largely pass through items in revenues: "fuel oil", "purchased power" and "taxes, other than income taxes" as shown on the Hawaiian Electric Company Consolidated Statements of Income.

Note: Amounts indicated as "after-tax" in this earnings release are based upon adjusting items for the composite statutory tax rates of 39% for the utilities and 40% for the bank.

AMERICAN SAVINGS BANK CONTINUES TO DELIVER SOLID PERFORMANCE

American Savings Bank's (American) net income for the third quarter of 2013 was $15.3 million compared to $15.9 million in the second, or linked, quarter of 2013 and $14.2 million in the third quarter of 2012. 

Third quarter 2013 net income was $0.6 million lower than the linked quarter primarily driven by $1 million (after-tax) lower fees from other financial services as expected under the Durbin Amendment of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, which placed a cap on interchange fees that became effective for American on July 1, 2013.  In the quarter, American completed the strategic sale of its credit card portfolio and launched a new, more competitive offering for its customers.  Compared to the linked quarter (on an after-tax basis), the aggregate impact of the transaction was nominal as the net gain of less than $1 million in the third quarter of 2013 was roughly equivalent to the lower provision expense in the second quarter of 2013 related to the release of credit card reserves.  For the full year, the net gain is expected to be largely offset by lower credit card-related income for the remainder of the year.   

Compared to the third quarter of 2012, net income improved by $1.1 million.  The increase was primarily driven by a lower provision for loan losses, a net gain on the sale of the credit card portfolio mentioned above and higher fee income on other financial products.  These were largely offset by lower mortgage banking income and lower fees from other financial services due to the lower interchange fees mentioned above.

Overall, American achieved solid profitability in the third quarter of 2013 with a return on average equity of 12.1% and a return on average assets of 1.20%.  American's solid results enabled it to pay dividends of $10 million to HEI in the quarter while maintaining healthy capital levels.

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

HOLDING AND OTHER COMPANIES

The holding and other companies' net losses were $4.9 million in both the third quarter of 2013 and 2012.

BOARD DECLARES QUARTERLY DIVIDEND

On November 6, 2013, the board of directors maintained HEI's quarterly cash dividend of 31 cents per share, payable on December 11, 2013, to shareholders of record at the close of business on November 20, 2013 (ex-dividend date is November 18, 2013).  The dividend is equivalent to an annual rate of $1.24 per share.

Dividends have been paid continuously since 1901.  At the indicated annual dividend rate and the closing share price on November 6, 2013 of $26.90, HEI's yield is 4.6%.

HEI WEBCAST AND CONFERENCE CALL TO DISCUSS EARNINGS AND EPS GUIDANCE

Hawaiian Electric Industries, Inc. will conduct a webcast and conference call to review its third quarter 2013 earnings and 2013 EPS guidance on Thursday, November 7, 2013, at 12:00 p.m. Hawaii time (5:00 p.m. Eastern time).  The event can be accessed through HEI's website at www.hei.com or by dialing (877) 280-4960, passcode:  82443306 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. (Hawaiian Electric) intend to continue to use HEI's website, www.hei.com, as a means of disclosing material information, as well as other important 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, Hawaiian Electric's and American's press releases, HEI's and Hawaiian Electric's Securities and Exchange Commission (SEC) filings and HEI's public conference calls and webcasts.  Also, at the Investor Relations section of HEI's website, investors may sign up to receive e-mail alerts (based on each investor's selected preferences).  The information on HEI's website is not incorporated by reference into this document or into HEI's and Hawaiian Electric'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 into this document or into HEI's and Hawaiian Electric's SEC filings.

An online replay of the webcast will be available at the same website beginning about two hours after the event.  Replays of the teleconference call will also be available approximately two hours after the event through November 21, 2013, by dialing (888) 286-8010, passcode:  68694218.

HEI supplies power to approximately 450,000 customers or 95% of Hawaii's population through its electric utilities, Hawaiian Electric, 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.

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 Quarterly Report on Form 10-Q for the quarters ended June 30, 2013 and March 31, 2013, respectively, and HEI's subsequent 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, Hawaiian Electric, 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 September 30


Nine months
 ended September 30

(in thousands, except per share amounts)

2013


2012


2013


2012

Revenues








Electric utility

$

766,115


$

801,095


$

2,216,076


$

2,340,257

Bank

65,058


66,596


195,841


196,569

Other

56


29


106


22

Total revenues

831,229


867,720


2,412,023


2,536,848

Expenses








Electric utility

694,201


726,276


2,030,071


2,146,688

Bank

42,223


44,974


126,550


130,161

Other

4,706


4,768


12,276


13,075

Total expenses

741,130


776,018


2,168,897


2,289,924

Operating income (loss)








Electric utility

71,914


74,819


186,005


193,569

Bank

22,835


21,622


69,291


66,408

Other

(4,650)


(4,739)


(12,170)


(13,053)

Total operating income

90,099


91,702


243,126


246,924

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

(20,304)


(20,020)


(59,705)


(58,758)

Allowance for borrowed funds used during construction

498


688


1,626


2,451

Allowance for equity funds used during construction

1,255


1,611


4,030


5,548

Income before income taxes

71,548


73,981


189,077


196,165

Income taxes

22,841


25,804


65,157


69,926

Net income

48,707


48,177


123,920


126,239

Preferred stock dividends of subsidiaries

471


471


1,417


1,417

Net income for common stock

$

48,236


$

47,706


$

122,503


$

124,822

Basic earnings per common share

$

0.49


$

0.49


$

1.24


$

1.29

Diluted earnings per common share

$

0.48


$

0.49


$

1.23


$

1.29

Dividends per common share

$

0.31


$

0.31


$

0.93


$

0.93

Weighted-average number of common shares outstanding

99,204


97,157


98,670


96,674

Adjusted weighted-average shares

99,818


97,518


99,290


97,097

Net income (loss) for common stock by segment








Electric utility

$

37,817


$

38,375


$

90,939


$

95,051

Bank

15,276


14,208


45,350


44,274

Other

(4,857)


(4,877)


(13,786)


(14,503)

Net income for common stock

$

48,236


$

47,706


$

122,503


$

124,822

Comprehensive income attributable to Hawaiian Electric Industries, Inc.

$

47,339


$

49,292


$

113,240


$

128,269

Return on average common equity (twelve months ended)1





8.4%


10.1%


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 and HEI's Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2013, June 30, 2013 and September 30, 2013 (when filed), as updated by SEC Forms 8-K. Results of operations for interim periods are not necessarily indicative of results to be expected for future interim periods or the full year.

1  On a core basis, 2013 and 2012 return on average common equity (twelve months ended September 30) were 9.9% and 10.5%, respectively.  See reconciliation of GAAP to non-GAAP measures.

 

Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(dollars in thousands)

September 30,

 2013


December 31,

 2012

Assets




Cash and cash equivalents

$

215,042


$

219,662

Accounts receivable and unbilled revenues, net

350,083


362,823

Available-for-sale investment and mortgage-related securities

535,264


671,358

Investment in stock of Federal Home Loan Bank of Seattle

93,413


96,022

Loans receivable held for investment, net

4,005,132


3,737,233

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

5,829


26,005

Property, plant and equipment, net of accumulated depreciation of $2,173,583 in 2013 and $2,125,286 in 2012

3,776,305


3,594,829

Regulatory assets

890,419


864,596

Other

475,335


494,414

Goodwill

82,190


82,190

Total assets

$

10,429,012


$

10,149,132

Liabilities and shareholders' equity




Liabilities




Accounts payable

$

206,803


$

212,379

Interest and dividends payable

27,232


26,258

Deposit liabilities

4,310,842


4,229,916

Short-term borrowings—other than bank

131,341


83,693

Other bank borrowings

239,612


195,926

Long-term debt, net—other than bank

1,422,880


1,422,872

Deferred income taxes

493,662


439,329

Regulatory liabilities

337,720


322,074

Contributions in aid of construction

425,916


405,520

Defined benefit pension and other postretirement benefit plans liability

630,904


656,394

Other

512,342


526,613

Total liabilities

8,739,254


8,520,974

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: 99,541,518 shares in 2013 and 97,928,403 shares in 2012

1,443,583


1,403,484

Retained earnings

247,568


216,804

Accumulated other comprehensive income (loss), net of taxes

(35,686)


(26,423)

Total shareholders' equity

1,655,465


1,593,865

Total liabilities and shareholders' equity

$

10,429,012


$

10,149,132


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 and HEI's Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2013, June 30, 2013 and September 30, 2013 (when filed), as updated by SEC Forms 8-K. Results of operations for interim periods are not necessarily indicative of results to be expected for future interim periods or the full year.

 

Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

Nine months ended September 30

2013


2012

(in thousands)




Cash flows from operating activities




Net income

$

123,920


$

126,239

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




Depreciation of property, plant and equipment

120,355


112,946

Other amortization

2,352


4,811

Provision for loan losses

953


9,504

Loans receivable originated and purchased, held for sale

(199,772)


(304,289)

Proceeds from sale of loans receivable, held for sale

223,221


302,844

Gain on sale of credit card portfolio

(2,251)


Change in deferred income taxes

60,580


82,582

Excess tax benefits from share-based payment arrangements

(469)


(65)

Allowance for equity funds used during construction

(4,030)


(5,548)

Changes in assets and liabilities




Decrease (increase) in accounts receivable and unbilled revenues, net

12,740


(30,610)

Decrease (increase) in fuel oil stock

24,332


(31,372)

Increase in regulatory assets

(53,314)


(57,793)

Decrease in accounts, interest and dividends payable

(21,708)


(5,905)

Decrease in prepaid and accrued income taxes and utility revenue taxes

(19,212)


(5,121)

Contributions to defined benefit pension and other postretirement benefit plans

(62,279)


(64,006)

Other increase in defined benefit pension and other postretirement benefit plans liability

61,770


49,950

Change in other assets and liabilities

(20,462)


(62,563)

Net cash provided by operating activities

246,726


121,604

Cash flows from investing activities




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

(39,721)


(146,794)

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

84,487


104,310

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

71,367


3,548

Net increase in loans held for investment

(293,996)


(75,982)

Proceeds from sale of real estate acquired in settlement of loans

8,777


9,659

Capital expenditures

(247,392)


(225,961)

Contributions in aid of construction

23,633


33,106

Proceeds from sale of credit card portfolio

26,386


Other

3,035


865

Net cash used in investing activities

(363,424)


(297,249)

Cash flows from financing activities




Net increase in deposit liabilities

80,926


56,756

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

47,648


13,398

Net decrease in retail repurchase agreements

(6,314)


(22,011)

Proceeds from other bank borrowings

120,000


Repayments of other bank borrowings

(70,000)


Proceeds from issuance of long-term debt

50,000


457,000

Repayment of long-term debt

(50,000)


(368,500)

Excess tax benefits from share-based payment arrangements

469


65

Net proceeds from issuance of common stock

18,383


16,881

Common stock dividends

(73,584)


(71,966)

Preferred stock dividends of subsidiaries

(1,417)


(1,417)

Other

(4,033)


(6,314)

Net cash provided by financing activities

112,078


73,892

Net decrease in cash and cash equivalents

(4,620)


(101,753)

Cash and cash equivalents, beginning of period

219,662


270,265

Cash and cash equivalents, end of period

$

215,042


$

168,512


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 and HEI's Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2013, June 30, 2013 and September 30, 2013 (when filed), as updated by SEC Forms 8-K. Results of operations for interim periods are not necessarily indicative of results to be expected for future interim periods or the full year.

 

Hawaiian Electric Company, Inc. (Hawaiian Electric) and Subsidiaries

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)


Three months
 ended September 30


Nine months
 ended September 30

(in thousands)

2013


2012


2013


2012

Operating revenues

$

763,933


799,203


2,208,923


$

2,334,826

Operating expenses








Fuel oil

283,360


327,173


877,738


986,076

Purchased power

194,861


186,699


526,669


539,840

Other operation

72,008


70,441


209,615


196,806

Maintenance

31,513


30,368


88,555


91,641

Depreciation

38,995


35,941


115,865


108,556

Taxes, other than income taxes

72,382


74,850


208,828


222,149

Income taxes

18,928


22,352


51,356


58,291

Total operating expenses

712,047


747,824


2,078,626


2,203,359

Operating income

51,886


51,379


130,297


131,467

Other income








Allowance for equity funds used during construction

1,255


1,611


4,030


5,548

Other, net

1,099


1,087


4,351


3,810

Income tax expense

(129)


(42)


(420)


(137)

Total other income

2,225


2,656


7,961


9,221

Interest and other charges








Interest on long-term debt

14,615


14,694


43,843


44,400

Amortization of net bond premium and expense

646


870


1,940


2,276

Other interest charges (credits)

1,033


286


1,666


(84)

Allowance for borrowed funds used during construction

(498)


(688)


(1,626)


(2,451)

Total interest and other charges

15,796


15,162


45,823


44,141

Net income

38,315


38,873


92,435


96,547

Preferred stock dividends of subsidiaries

228


228


686


686

Net income attributable to Hawaiian Electric

38,087


38,645


91,749


95,861

Preferred stock dividends of Hawaiian Electric

270


270


810


810

Net income for common stock

$

37,817


$

38,375


$

90,939


$

95,051

Comprehensive income attributable to Hawaiian Electric

$

37,834


$

38,452


$

90,991


$

95,280

OTHER ELECTRIC UTILITY INFORMATION








Kilowatthour sales (millions)








   Hawaiian Electric

1,807


1,796


5,100


5,205

   Hawaii Electric Light

275


274


803


810

   Maui Electric

294


292


843


855


2,376


2,362


6,746


6,870

Wet-bulb temperature (Oahu average; degrees Fahrenheit)

70.6


70.8


68.6


68.7

Cooling degree days (Oahu)

1,468


1,419


3,371


3,430

Average fuel oil cost per barrel

$

127.42


$

139.68


$

130.15


$

139.65


















Twelve months ended

September 30

Return on average common equity (%) (simple average)1





2013


2012

   Hawaiian Electric





6.69


9.40

   Hawaii Electric Light





5.41


7.53

   Maui Electric





6.79


7.14

   Hawaiian Electric Consolidated





6.46


8.64


This information should be read in conjunction with the consolidated financial statements and the notes thereto incorporated by reference in Hawaiian Electric's Annual Report on SEC Form 10-K for the year ended December 31, 2012 and the consolidated financial statements and the notes thereto in Hawaiian Electric's Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2013, June 30, 2013 and September 30, 2013 (when filed), as updated by SEC Forms 8-K. Results of operations for interim periods are not necessarily indicative of results to be expected for future interim periods or the full year.



1   

On a core basis, the 2013 and 2012 return on average common equity (twelve months ended September 30) were 8.5% and 10.0%, respectively for Hawaiian Electric; 6.6% and 7.5%, respectively for Hawaii Electric Light; 8.2% and 7.1%, respectively for Maui Electric and 8.1% and 9.0% respectively, for Hawaiian Electric Consolidated.  See reconciliation of GAAP to non-GAAP measures.

 

Hawaiian Electric Company, Inc. (Hawaiian Electric) and Subsidiaries

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

 

(dollars in thousands, except par value)

September 30,

 2013


December 31,

 2012

Assets




Utility plant, at cost




Land

$

51,834


$

51,568

Plant and equipment

5,593,801


5,364,400

Less accumulated depreciation

(2,093,575)


(2,040,789)

Construction in progress

151,077


151,378

Net utility plant

3,703,137


3,526,557

Current assets




Cash and cash equivalents

25,185


17,159

Customer accounts receivable, net

187,704


210,779

Accrued unbilled revenues, net

139,901


134,298

Other accounts receivable, net

9,174


28,176

Fuel oil stock, at average cost

137,087


161,419

Materials and supplies, at average cost

59,434


51,085

Prepayments and other

45,376


32,865

Regulatory assets

45,723


51,267

Total current assets

649,584


687,048

Other long-term assets




Regulatory assets

844,696


813,329

Unamortized debt expense

9,674


10,554

Other

62,667


71,305

Total other long-term assets

917,037


895,188

Total assets

$

5,269,758


$

5,108,793

Capitalization and liabilities




Capitalization




Common stock ($6 2/3 par value, authorized 50,000,000 shares; outstanding 14,665,264 shares)

$

97,788


$

97,788

Premium on capital stock

468,045


468,045

Retained earnings

937,029


907,273

Accumulated other comprehensive loss, net of income tax benefits-retirement benefit plans

(918)


(970)

Common stock equity

1,501,944


1,472,136

Cumulative preferred stock — not subject to mandatory redemption

34,293


34,293

Long-term debt, net

1,147,880


1,147,872

Total capitalization

2,684,117


2,654,301

Current liabilities




Short-term borrowings from non-affiliates

73,246


Accounts payable

180,957


186,824

Interest and preferred dividends payable

22,397


21,092

Taxes accrued

233,453


251,066

Other

78,534


62,879

Total current liabilities

588,587


521,861

Deferred credits and other liabilities




Deferred income taxes

478,601


417,611

Regulatory liabilities

329,131


322,074

Unamortized tax credits

71,038


66,584

Defined benefit pension and other postretirement benefit plans liability

596,240


620,205

Other

96,128


100,637

Total deferred credits and other liabilities

1,571,138


1,527,111

Contributions in aid of construction

425,916


405,520

Total capitalization and liabilities

$

5,269,758


$

5,108,793


This information should be read in conjunction with the consolidated financial statements and the notes thereto incorporated by reference in Hawaiian Electric's Annual Report on SEC Form 10-K for the year ended December 31, 2012 and the consolidated financial statements and the notes thereto in Hawaiian Electric's Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2013, June 30, 2013 and September 30, 2013 (when filed), as updated by SEC Forms 8-K. Results of operations for interim periods are not necessarily indicative of results to be expected for future interim periods or the full year.

 

 

Hawaiian Electric Company, Inc. (Hawaiian Electric) and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 


Nine months ended September 30,


2013


2012

(in thousands)





Cash flows from operating activities





Net income


$

92,435


$

96,547

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





Depreciation of property, plant and equipment


115,865


108,556

Other amortization


2,470


4,074

Change in deferred income taxes


48,014


82,717

Change in tax credits, net


4,510


3,642

Allowance for equity funds used during construction


(4,030)


(5,548)

Changes in assets and liabilities





   Decrease (increase) in accounts receivable


42,077


(36,907)

   Decrease (increase) in accrued unbilled revenues


(5,603)


5,736

   Decrease (increase) in fuel oil stock


24,332


(31,372)

   Increase in materials and supplies


(8,349)


(7,305)

   Increase in regulatory assets


(53,314)


(57,793)

   Decrease in accounts payable


(22,974)


(3,481)

   Decrease in prepaid and accrued income taxes and utility revenue taxes


(15,416)


(20,665)

   Contributions to defined benefit pension and other postretirement benefit plans


(60,876)


(62,417)

   Other increase in defined benefit pension and other postretirement benefit plans liability


62,364


49,861

   Change in other assets and liabilities


(10,195)


(45,633)

Net cash provided by operating activities


211,310


80,012

Cash flows from investing activities





Capital expenditures


(237,869)


(220,970)

Contributions in aid of construction


23,633


33,106

Other


427


Net cash used in investing activities


(213,809)


(187,864)

Cash flows from financing activities





Common stock dividends


(61,183)


(54,783)

Preferred stock dividends of Hawaiian Electric and subsidiaries


(1,496)


(1,496)

Proceeds from issuance of long-term debt



457,000

Repayment of long-term debt



(368,500)

Net increase in short-term borrowings from non-affiliates and affiliate with original maturities of three months or less


73,246


44,719

Other


(42)


(2,172)

Net cash provided by financing activities


10,525


74,768

Net increase (decrease) in cash and cash equivalents


8,026


(33,084)

Cash and cash equivalents, beginning of period


17,159


48,806

Cash and cash equivalents, end of period


$

25,185


$

15,722


This information should be read in conjunction with the consolidated financial statements and the notes thereto incorporated by reference in Hawaiian Electric's Annual Report on SEC Form 10-K for the year ended December 31, 2012 and the consolidated financial statements and the notes thereto in Hawaiian Electric's Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2013, June 30, 2013 and September 30, 2013 (when filed), as updated by SEC Forms 8-K. Results of operations for interim periods are not necessarily indicative of results to be expected for future interim periods or the full year.

 

American Savings Bank, F.S.B.

STATEMENTS OF INCOME DATA

(Unaudited)

 

 



Three months ended


Nine months ended
September 30

(in thousands)


September 30,

 2013


June 30, 2013


September 30,

 2012


2013


2012

Interest and dividend income











Interest and fees on loans


$

43,337


$

43,624


$

43,880


$

129,564


$

133,241

Interest and dividend on investment and mortgage-related securities


3,025


3,234


3,432


9,723


10,534

Total interest and dividend income


46,362


46,858


47,312


139,287


143,775

Interest expense











Interest on deposit liabilities


1,262


1,296


1,540


3,870


5,015

Interest on other borrowings


1,206


1,178


1,201


3,548


3,676

Total interest expense


2,468


2,474


2,741


7,418


8,691

Net interest income


43,894


44,384


44,571


131,869


135,084

Provision for loan losses


54


(959)


3,580


953


9,504

Net interest income after provision for loan losses


43,840


45,343


40,991


130,916


125,580

Noninterest income











Fees from other financial services


5,728


7,996


7,674


21,367


22,474

Fee income on deposit liabilities


4,819


4,433


4,527


13,566


13,127

Fee income on other financial products


2,714


1,780


1,660


6,288


4,741

Mortgage banking income


1,547


2,003


4,077


6,896


8,297

Gain on sale of securities



1,226



1,226


134

Other income


3,888


1,731


1,346


7,211


4,021

Total noninterest income


18,696


19,169


19,284


56,554


52,794

Noninterest expense











Compensation and employee benefits


20,564


20,063


18,684


60,715


56,026

Occupancy


4,208


4,219


4,400


12,550


12,866

Data processing


2,168


2,827


2,644


7,982


7,244

Services


2,424


2,328


3,062


6,855


7,066

Equipment


1,825


1,870


1,762


5,469


5,299

Other expense


8,539


8,500


8,096


24,634


22,909

Total noninterest expense


39,728


39,807


38,648


118,205


111,410

Income before income taxes


22,808


24,705


21,627


69,265


66,964

Income taxes


7,532


8,786


7,419


23,915


22,690

Net income


$

15,276


$

15,919


$

14,208


$

45,350


$

44,274

Comprehensive income


$

14,107


$

7,340


$

15,517


$

36,931


$

46,872

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









Return on average assets


1.20


1.25


1.15


1.19


1.19

Return on average equity


12.13


12.56


11.24


11.99


11.81

Return on average tangible common equity


14.50


15.00


13.41


14.33


14.14

Net interest margin


3.73


3.79


3.92


3.77


3.98

Net charge-offs to average loans outstanding



0.08


0.35


0.06


0.27

Efficiency ratio


63


62


60


62


59

As of period end











Nonperforming assets to loans outstanding and real estate owned *


1.33


1.56


1.73





Allowance for loan losses to loans outstanding


1.01


1.04


1.06





Tier-1 leverage ratio *


9.3


9.3


9.3





Total risk-based capital ratio *


12.5


12.5


12.9





Tangible common equity to total assets


8.36


8.42


8.72





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


10


10


10






*  Regulatory basis

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 and HEI's Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2013, June 30, 2013 and September 30, 2013 (when filed), as updated by SEC Forms 8-K. Results of operations for interim periods are not necessarily indicative of results to be expected for future interim periods or the full year.

 

American Savings Bank, F.S.B.

BALANCE SHEETS DATA

(Unaudited)

 

 

 

(in thousands)

September 30, 2013


December 31, 2012

Assets




Cash and cash equivalents

$

189,524


$

184,430

Available-for-sale investment and mortgage-related securities

535,264


671,358

Investment in stock of Federal Home Loan Bank of Seattle

93,413


96,022

Loans receivable held for investment

4,046,184


3,779,218

Allowance for loan losses

(41,052)


(41,985)

   Loans receivable held for investment, net

4,005,132


3,737,233

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

5,829


26,005

Other

248,020


244,435

Goodwill

82,190


82,190

   Total assets

$

5,159,372


$

5,041,673





Liabilities and shareholder's equity




Deposit liabilities—noninterest-bearing

$

1,205,526


$

1,164,308

Deposit liabilities—interest-bearing

3,105,316


3,065,608

Other borrowings

239,612


195,926

Other

102,172


117,752

   Total liabilities

4,652,626


4,543,594





Common stock

335,448


333,712

Retained earnings

195,113


179,763

Accumulated other comprehensive income (loss), net of taxes

(23,815)


(15,396)

   Total shareholder's equity

506,746


498,079

   Total liabilities and shareholder's equity

$

5,159,372


$

5,041,673


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 and HEI's Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2013, June 30, 2013 and September 30, 2013 (when filed), as updated by SEC Forms 8-K. Results of operations for interim periods are not necessarily indicative of results to be expected for future interim periods or the full year.

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

HEI and Hawaiian Electric management use certain non-GAAP measures to evaluate the performance of the utility and HEI. Management believes these non-GAAP measures provide useful information and are a better indicator of the companies' core operating activities. Core earnings as presented here may not be comparable to similarly titled measures used by other companies. The accompanying tables provide a reconciliation of reported GAAP1 earnings to non-GAAP core earnings for both the utility and HEI consolidated and the corresponding adjusted return on average common equity (ROACE).

The reconciling adjustments from GAAP earnings to core earnings are limited to the settlement charges for the partial write-off of utility assets in 2012 and 2011. For more information on the settlement charge recorded in 2012, see the Form 8-K filed on March 20, 2013.

Management does not consider these items to be representative of the company's fundamental core earnings.

Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries

RECONCILIATION OF GAAP TO NON-GAAP MEASURES


(Unaudited)




Net Income


Twelve months ended


September 30,

(in millions)

2013

2012

GAAP (as reported)

$

136.3


$

159.0


Excluding special items (after-tax):



Settlement agreement for the partial writedown of certain utility assets

24.4



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


5.7


Non-GAAP (core)

$

160.8


$

164.8


Note:  Columns may not foot due to rounding



Twelve months ended


September 30,

Other measures:

2013

2012

Return on average common equity (ROACE) (simple average):

Based on GAAP

8.4%


10.1%


Based on non-GAAP (core)2

9.9%


10.5%




1  U.S. Generally Accepted Accounting Principles.

2 Calculated as core net income divided by average GAAP common equity.

 

Hawaiian Electric Company, Inc. and Subsidiaries


RECONCILIATION OF GAAP1 TO NON-GAAP MEASURES


(Unaudited)






Net Income



Twelve months ended



September 30,

(in millions)


2013

2012

GAAP (as reported)


$

95.2


$

120.9


Excluding special items (after-tax):




Settlement agreement for the partial writedown of certain utility assets


24.4



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



5.7


Non-GAAP (core)


$

119.6


$

126.6


Note:  Columns may not foot due to rounding






Twelve months ended



September 30,

Other measures:


2013

2012

Return on average common equity (ROACE) (simple average):


Based on GAAP


6.5%


8.6%


Based on non-GAAP (core)2


8.1%


9.0%


 













Hawaiian Electric


Hawaii Electric Light


Maui Electric



Net Income


Net Income


Net Income



Twelve months ended


Twelve months ended


Twelve months ended



September 30,


September 30,


September 30,

(in millions)


2013

2012


2013

2012


2013

2012

GAAP (as reported)


$

63.9


$

82.6



$

15.1


$

21.3



$

16.1


$

17.0


Excluding special items (after-tax):










Settlement agreement for the partial writedown of certain utility assets


17.7




3.4




3.4



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



5.7








Non-GAAP (core)


$

81.6


$

88.3



$

18.5


$

21.3



$

19.5


$

17.0


Note:  Columns may not foot due to rounding










Twelve months ended


Twelve months ended


Twelve months ended



September 30,


September 30,


September 30,

Other measures:


2013

2012


2013

2012


2013

2012

Return on average common equity (ROACE)

(simple average):








Based on GAAP


6.7%


9.4%



5.4%


7.5%



6.8%


7.1%


Based on non-GAAP (core)2


8.5%


10.0%



6.6%


7.5%



8.2%


7.1%









1  U.S. Generally Accepted Accounting Principles.

2 Calculated as core net income divided by average GAAP common equity.

Contact:  Shelee M.T. Kimura
Manager, Investor Relations & Strategic Planning
Telephone:  (808) 543-7384
Email:  skimura@hei.com

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

SOURCE Hawaiian Electric Industries, Inc.



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