Shareholders' equity

6 Months Ended

Jun. 30, 2016

Equity [Abstract]

Shareholders' equity

Shareholders’ equity

Equity forward transaction.  On March 19, 2013, HEI entered into an equity forward transaction in connection with a public offering on that date of 6.1 million shares of HEI common stock at $26.75 per share. On March 19, 2013, HEI common stock closed at $27.01 per share. On March 20, 2013, the underwriters exercised their over-allotment option in full and HEI entered into an equity forward transaction in connection with the resulting additional 0.9 million shares of HEI common stock.

The use of an equity forward transaction substantially eliminates future equity market price risk by fixing a common equity offering sales price under the then existing market conditions, while mitigating immediate share dilution resulting from the offering by postponing the actual issuance of common stock until funds are needed in accordance with the Company’s capital investment plans. Pursuant to the terms of these transactions, a forward counterparty borrowed 7 million shares of HEI’s common stock from third parties and sold them to a group of underwriters for $26.75 per share, less an underwriting discount equal to $1.00312 per share. Under the terms of the equity forward transactions, HEI was required to issue and deliver shares of HEI common stock to the forward counterparty at the then applicable forward sale price. The forward sale price was initially determined to be $25.74688 per share at the time the equity forward transactions were entered into, and the amount of cash to be received by HEI upon physical settlement of the equity forward was subject to certain adjustments in accordance with the terms of the equity forward transactions.

The equity forward transactions had no initial fair value since they were entered into at the then market price of the common stock. HEI concluded that the equity forward transactions were equity instruments based on the accounting guidance in Accounting Standards Codification (ASC) Topic 480, “Distinguishing Liabilities from Equity,” and ASC Topic 815, “Derivatives and Hedging,” and that they qualified for an exception from derivative accounting under ASC Topic 815 because the forward sale transactions were indexed to its own stock. On December 19, 2013 and July 14, 2014, HEI settled 1.3 million and 1.0 million shares under the equity forward for proceeds of $32.1 million (net of the underwriting discount of $1.3 million) and $23.9 million (net of underwriting discount of $1.0 million), respectively, which funds were ultimately used to purchase Hawaiian Electric shares. On March 20, 2015, HEI settled the remaining 4.7 million shares under the equity forward for proceeds of $104.5 million (net of the underwriting discount of $4.7 million), which funds were used for the reduction of debt and for general corporate purposes. The proceeds were recorded in equity at the time of settlement. Prior to their settlement, the shares remaining under the equity forward transactions were reflected in HEI’s diluted EPS calculations using the treasury stock method.

Accumulated other comprehensive income.  Changes in the balances of each component of accumulated other comprehensive income/(loss) (AOCI) were as follows:

	HEI Consolidated												Hawaiian Electric Consolidated
(in thousands)	Net unrealized gains (losses) on securities			Unrealized gains (losses) on derivatives			Retirement benefit plans			AOCI			Unrealized gains on derivatives		Retirement benefit plans		AOCI
Balance, December 31, 2015	$	(1,872	)	$	(54	)	$	(24,336	)	$	(26,262	)	$	—	$	925	$	925
Current period other comprehensive income	9,984			311			613			10,908			257		4		261
Balance, June 30, 2016	$	8,112		$	257		$	(23,723	)	$	(15,354	)	$	257	$	939	$	1,186
Balance, December 31, 2014	$	462		$	(289	)	$	(27,551	)	$	(27,378	)	$	—	$	45	$	45
Current period other comprehensive income	(243		)	118			1,056			931			—		7		7
Balance, June 30, 2015	$	219		$	(171	)	$	(26,495	)	$	(26,447	)	$	—	$	52	$	52

Reclassifications out of AOCI were as follows:

	Amount reclassified from AOCI
	Three months ended June 30						Six months ended June 30						Affected line item in the
(in thousands)	2016			2015			2016			2015			Statement of Income
HEI consolidated
Net realized gains on securities	$	(360	)	$	—		$	(360	)	$	—		Revenues-bank (net gains on sales of securities)
Derivatives qualified as cash flow hedges
Interest rate contracts (settled in 2011)	—			59			54			118			Interest expense
Retirement benefit plan items
Amortization of prior service credit and net losses recognized during the period in net periodic benefit cost	3,698			5,780			7,236			11,239			See Note 6 for additional details
Less: reclassification adjustment for impact of D&Os of the PUC included in regulatory assets	(3,401		)	(5,272		)	(6,623		)	(10,183		)	See Note 6 for additional details
Total reclassifications	$	(63	)	$	567		$	307		$	1,174
Hawaiian Electric consolidated
Retirement benefit plan items
Amortization of prior service credit and net losses recognized during the period in net periodic benefit cost	$	3,391		$	5,257		$	6,627		$	10,190		See Note 6 for additional details
Less: reclassification adjustment for impact of D&Os of the PUC included in regulatory assets	(3,401		)	(5,272		)	(6,623		)	(10,183		)	See Note 6 for additional details
Total reclassifications	$	(10	)	$	(15	)	$	4		$	7