Consolidating financial information - HECO (Hawaiian Electric Company and Subsidiaries)

3 Months Ended

Mar. 31, 2012

Hawaiian Electric Company and Subsidiaries

Consolidating financial information

11 ·Consolidating financial information

HECO is not required to provide separate financial statements or other disclosures concerning HELCO and MECO to holders of the 2004 Debentures issued by HELCO and MECO to Trust III since all of their voting capital stock is owned, and their obligations with respect to these securities have been fully and unconditionally guaranteed, on a subordinated basis, by HECO. Consolidating information is provided below for these and other HECO subsidiaries for the periods ended and as of the dates indicated.

HECO also unconditionally guarantees HELCO’s and MECO’s obligations (a) to the State of Hawaii for the repayment of principal and interest on Special Purpose Revenue Bonds issued for the benefit of HELCO and MECO and (b) relating to the trust preferred securities of Trust III (see Note 2 above). HECO is also obligated, after the satisfaction of its obligations on its own preferred stock, to make dividend, redemption and liquidation payments on HELCO’s and MECO’s preferred stock if the respective subsidiary is unable to make such payments.

Hawaiian Electric Company, Inc. and Subsidiaries

Consolidating Statement of Income (Loss) (unaudited)

Three months ended March 31, 2012

(in thousands)	HECO			HELCO		MECO		RHI		UBC	Reclassifications and eliminations		HECO Consolidated
Operating revenues	$	530,613		112,327		104,998		—		—	—		$	747,938
Operating expenses
Fuel oil	235,026			32,410		60,403		—		—	—		327,839
Purchased power	124,780			33,908		6,101		—		—	—		164,789
Other operation	39,948			9,015		12,886		—		—	—		61,849
Maintenance	20,836			4,249		4,953		—		—	—		30,038
Depreciation	22,571			8,436		5,475		—		—	—		36,482
Taxes, other than income taxes	50,553			10,463		9,979		—		—	—		70,995
Income taxes	11,963			4,223		1,179		—		—	—		17,365
Total operating expenses	505,677			102,704		100,976		—		—	—		709,357
Operating income	24,936			9,623		4,022		—		—	—		38,581
Other income (loss)
Allowance for equity funds used during construction	1,581			125		234		—		—	—		1,940
Equity in earnings of subsidiaries	8,490			—		—		—		—	(8,490	)	—
Other, net	1,064			101		111		(1	)	—	(10	)	1,265
Total other income (loss)	11,135			226		345		(1	)	—	(8,500	)	3,205
Interest and other charges
Interest on long-term debt	9,130			2,985		2,268		—		—	—		14,383
Amortization of net bond premium and expense	483			137		125		—		—	—		745
Other interest charges (credits)	(387		)	33		93		—		—	(10	)	(271		)
Allowance for borrowed funds used during construction	(725		)	(51	)	(94	)	—		—	—		(870		)
Total interest and other charges	8,501			3,104		2,392		—		—	(10	)	13,987
Net income (loss)	27,570			6,745		1,975		(1	)	—	(8,490	)	27,799
Preferred stock dividend of subsidiaries	—			134		95		—		—	—		229
Net income (loss) attributable to HECO	27,570			6,611		1,880		(1	)	—	(8,490	)	27,570
Preferred stock dividends of HECO	270			—		—		—		—	—		270
Net income (loss) for common stock	$	27,300		6,611		1,880		(1	)	—	(8,490	)	$	27,300

Hawaiian Electric Company, Inc. and Subsidiaries

Consolidating Statement of Comprehensive Income (Loss) (unaudited)

Three months ended March 31, 2012

(in thousands)	HECO			HELCO		MECO		RHI		UBC	Reclassifications and eliminations		HECO Consolidated
Net income (loss) for common stock	$	27,300		6,611		1,880		(1	)	—	(8,490	)	$	27,300
Other comprehensive income, net of taxes:
Retirement benefit plans:
Less: amortization of net loss, prior service gain and transition obligation included in net periodic benefit cost, net of tax benefits	3,472			532		473		—		—	(1,005	)	3,472
Less: reclassification adjustment for impact of D&Os of the PUC included in regulatory assets, net of taxes	(3,395		)	(526	)	(467	)	—		—	993		(3,395		)
Other comprehensive income, net of taxes	77			6		6		—		—	(12	)	77
Comprehensive income attributable to common shareholder	$	27,377		6,617		1,886		(1	)	—	(8,502	)	$	27,377

Hawaiian Electric Company, Inc. and Subsidiaries

Consolidating Statement of Income (Loss) (unaudited)

Three months ended March 31, 2011

(in thousands)	HECO			HELCO		MECO		RHI		UBC		Reclassifications and eliminations		HECO Consolidated
Operating revenues	$	449,824		99,635		94,842		—		—		—		$	644,301
Operating expenses
Fuel oil	183,266			26,491		51,103		—		—		—		260,860
Purchased power	112,751			30,022		5,185		—		—		—		147,958
Other operation	47,255			8,268		10,008		—		—		—		65,531
Maintenance	21,192			3,851		4,153		—		—		—		29,196
Depreciation	22,883			8,323		5,226		—		—		—		36,432
Taxes, other than income taxes	41,889			9,173		8,933		—		—		—		59,995
Income taxes	4,698			3,769		3,143		—		—		—		11,610
Total operating expenses	433,934			89,897		87,751		—		—		—		611,582
Operating income	15,890			9,738		7,091		—		—		—		32,719
Other income (loss)
Allowance for equity funds used during construction	960			83		201		—		—		—		1,244
Equity in earnings of subsidiaries	11,490			—		—		—		—		(11,490	)	—
Other, net	732			106		92		(2	)	(3	)	(15	)	910
Total other income (loss)	13,182			189		293		(2	)	(3	)	(11,505	)	2,154
Interest and other charges
Interest on long-term debt	9,130			2,985		2,268		—		—		—		14,383
Amortization of net bond premium and expense	513			143		127		—		—		—		783
Other interest charges	378			81		95		—		—		(15	)	539
Allowance for borrowed funds used during construction	(408		)	(33	)	(79	)	—		—		—		(520		)
Total interest and other charges	9,613			3,176		2,411		—		—		(15	)	15,185
Net income (loss)	19,459			6,751		4,973		(2	)	(3	)	(11,490	)	19,688
Preferred stock dividend of subsidiaries	—			134		95		—		—		—		229
Net income (loss) attributable to HECO	19,459			6,617		4,878		(2	)	(3	)	(11,490	)	19,459
Preferred stock dividends of HECO	270			—		—		—		—		—		270
Net income (loss) for common stock	$	19,189		6,617		4,878		(2	)	(3	)	(11,490	)	$	19,189

Hawaiian Electric Company, Inc. and Subsidiaries

Consolidating Statement of Comprehensive Income (Loss) (unaudited)

Three months ended March 31, 2011

(in thousands)	HECO			HELCO		MECO		RHI		UBC		Reclassifications and eliminations		HECO Consolidated
Net income (loss) for common stock	$	19,189		6,617		4,878		(2	)	(3	)	(11,490	)	$	19,189
Other comprehensive income (loss), net of taxes:
Retirement benefit plans:
Less: amortization of net loss, prior service gain and transition obligation included in net periodic benefit cost, net of tax benefits	2,274			357		283		—		—		(640	)	2,274
Less: reclassification adjustment for impact of D&Os of the PUC included in regulatory assets, net of taxes	(2,247		)	(357	)	(286	)	—		—		643		(2,247		)
Other comprehensive income (loss), net of taxes	27			—		(3	)	—		—		3		27
Comprehensive income (loss) attributable to common shareholder	$	19,216		6,617		4,875		(2	)	(3	)	(11,487	)	$	19,216

Hawaiian Electric Company, Inc. and Subsidiaries

Consolidating Balance Sheet (unaudited)

March 31, 2012

(in thousands)	HECO			HELCO		MECO		RHI	UBC	Reclassifications and eliminations		HECO Consolidated
Assets
Utility plant, at cost
Land	$	43,306		5,182		3,016		—	—	—		$	51,504
Plant and equipment	3,125,717			1,051,112		918,251		—	—	—		5,095,080
Less accumulated depreciation	(1,146,385		)	(420,069	)	(414,510	)	—	—	—		(1,980,964		)
Construction in progress	126,837			11,494		12,336		—	—	—		150,667
Net utility plant	2,149,475			647,719		519,093		—	—	—		3,316,287
Investment in wholly owned subsidiaries, at equity	520,247			—		—		—	—	(520,247	)	—
Current assets
Cash and cash equivalents	1,980			2,676		1,088		80	26	—		5,850
Advances to affiliates	—			35,900		4,000		—	—	(39,900	)	—
Customer accounts receivable, net	108,241			27,597		23,041		—	—	—		158,879
Accrued unbilled revenues, net	92,140			18,442		16,060		—	—	—		126,642
Other accounts receivable, net	10,958			1,848		2,072		—	—	(6,807	)	8,071
Fuel oil stock, at average cost	139,856			21,275		24,875		—	—	—		186,006
Materials and supplies, at average cost	27,416			5,828		13,505		—	—	—		46,749
Prepayments and other	19,056			3,302		9,250		—	—	(398	)	31,210
Regulatory assets	24,005			1,156		1,203		—	—	—		26,364
Total current assets	423,652			118,024		95,094		80	26	(47,105	)	589,771
Other long-term assets
Regulatory assets	481,165			86,036		84,109		—	—	—		651,310
Unamortized debt expense	8,233			2,383		1,861		—	—	—		12,477
Other	57,523			12,429		16,267		—	—	—		86,219
Total other long-term assets	546,921			100,848		102,237		—	—	—		750,006
Total assets	$	3,640,295		866,591		716,424		80	26	(567,352	)	$	4,656,064
Capitalization and liabilities
Capitalization
Common stock equity	$	1,415,200		284,388		235,753		80	26	(520,247	)	$	1,415,200
Cumulative preferred stock—not subject to mandatory redemption	22,293			7,000		5,000		—	—	—		34,293
Long-term debt, net	629,774			204,118		166,710		—	—	—		1,000,602
Total capitalization	2,067,267			495,506		407,463		80	26	(520,247	)	2,450,095
Current liabilities
Short-term borrowings-nonaffiliates	84,942			—		—		—	—	—		84,942
Short-term borrowings-affiliate	39,900			—		—		—	—	(39,900	)	—
Accounts payable	114,634			27,241		16,816		—	—	—		158,691
Interest and preferred dividends payable	11,443			3,888		3,509		—	—	(5	)	18,835
Taxes accrued	125,311			30,588		27,772		—	—	(398	)	183,273
Other	40,144			10,516		15,089		—	—	(6,802	)	58,947
Total current liabilities	416,374			72,233		63,186		—	—	(47,105	)	504,688
Deferred credits and other liabilities
Deferred income taxes	250,654			63,610		43,710		—	—	—		357,974
Regulatory liabilities	215,187			63,472		37,901		—	—	—		316,560
Unamortized tax credits	36,183			12,982		12,776		—	—	—		61,941
Retirement benefits liability	355,871			59,935		62,711		—	—	—		478,517
Other	73,087			21,259		13,904		—	—	—		108,250
Total deferred credits and other liabilities	930,982			221,258		171,002		—	—	—		1,323,242
Contributions in aid of construction	225,672			77,594		74,773		—	—	—		378,039
Total capitalization and liabilities	$	3,640,295		866,591		716,424		80	26	(567,352	)	$	4,656,064

Hawaiian Electric Company, Inc. and Subsidiaries

Consolidating Balance Sheet (unaudited)

December 31, 2011

(in thousands)	HECO			HELCO		MECO		RHI	UBC	Reclassifications and eliminations		HECO Consolidated
Assets
Utility plant, at cost
Land	$	43,316		5,182		3,016		—	—	—		$	51,514
Plant and equipment	3,091,908			1,048,599		911,520		—	—	—		5,052,027
Less accumulated depreciation	(1,141,839		)	(414,769	)	(410,286	)	—	—	—		(1,966,894		)
Construction in progress	117,625			8,144		13,069		—	—	—		138,838
Net utility plant	2,111,010			647,156		517,319		—	—	—		3,275,485
Investment in wholly owned subsidiaries, at equity	517,216			—		—		—	—	(517,216	)	—
Current assets
Cash and cash equivalents	44,819			3,383		496		82	26	—		48,806
Advances to affiliates	—			46,150		18,500		—	—	(64,650	)	—
Customer accounts receivable, net	130,190			28,602		24,536		—	—	—		183,328
Accrued unbilled revenues, net	103,328			18,499		15,999		—	—	—		137,826
Other accounts receivable, net	8,987			1,186		3,008		—	—	(4,558	)	8,623
Fuel oil stock, at average cost	128,037			19,217		24,294		—	—	—		171,548
Materials and supplies, at average cost	25,096			4,700		13,392		—	—	—		43,188
Prepayments and other	21,135			6,575		7,033		—	—	(141	)	34,602
Regulatory assets	18,038			1,115		1,130		—	—	—		20,283
Total current assets	479,630			129,427		108,388		82	26	(69,349	)	648,204
Other long-term assets
Regulatory assets	478,851			86,394		83,861		—	—	—		649,106
Unamortized debt expense	8,446			2,464		1,876		—	—	—		12,786
Other	58,672			11,843		15,846		—	—	—		86,361
Total other long-term assets	545,969			100,701		101,583		—	—	—		748,253
Total assets	$	3,653,825		877,284		727,290		82	26	(586,565	)	$	4,671,942
Capitalization and liabilities
Capitalization
Common stock equity	$	1,406,084		281,055		236,054		81	26	(517,216	)	$	1,406,084
Cumulative preferred stock—not subject to mandatory redemption	22,293			7,000		5,000		—	—	—		34,293
Long-term debt, net	629,757			204,110		166,703		—	—	—		1,000,570
Total capitalization	2,058,134			492,165		407,757		81	26	(517,216	)	2,440,947
Current liabilities
Current portion of long-term debt	42,580			7,200		7,720		—	—	—		57,500
Short-term borrowings-affiliate	64,650			—		—		—	—	(64,650	)	—
Accounts payable	140,044			29,616		18,920		—	—	—		188,580
Interest and preferred dividends payable	12,648			4,074		2,762		—	—	(1	)	19,483
Taxes accrued	152,315			37,638		34,956		—	—	(141	)	224,768
Other	50,828			9,478		13,603		1	—	(4,557	)	69,353
Total current liabilities	463,065			88,006		77,961		1	—	(69,349	)	559,684
Deferred credits and other liabilities
Deferred income taxes	236,890			61,044		39,929		—	—	—		337,863
Regulatory liabilities	215,401			62,049		38,016		—	—	—		315,466
Unamortized tax credits	34,877			12,951		12,786		—	—	—		60,614
Retirement benefits liability	368,245			62,036		64,840		—	—	—		495,121
Other	72,418			22,391		11,235		—	—	—		106,044
Total deferred credits and other liabilities	927,831			220,471		166,806		—	—	—		1,315,108
Contributions in aid of construction	204,795			76,642		74,766		—	—	—		356,203
Total capitalization and liabilities	$	3,653,825		877,284		727,290		82	26	(586,565	)	$	4,671,942

Hawaiian Electric Company, Inc. and Subsidiaries

Consolidating Statement of Changes in Common Stock Equity (unaudited)

Three months ended March 31, 2012

(in thousands)	HECO			HELCO		MECO		RHI		UBC	Reclassifications and eliminations		HECO Consolidated
Balance, December 31, 2011	$	1,406,084		281,055		236,054		81		26	(517,216	)	$	1,406,084
Net income (loss) for common stock	27,300			6,611		1,880		(1	)	—	(8,490	)	27,300
Other comprehensive income, net of taxes	77			6		6		—		—	(12	)	77
Common stock dividends	(18,261		)	(3,284	)	(2,187	)	—		—	5,471		(18,261		)
Balance, March 31, 2012	$	1,415,200		284,388		235,753		80		26	(520,247	)	$	1,415,200

Hawaiian Electric Company, Inc. and Subsidiaries

Consolidating Statement of Changes in Common Stock Equity (unaudited)

Three months ended March 31, 2011

(in thousands)	HECO			HELCO		MECO		RHI		UBC		Reclassifications and eliminations		HECO Consolidated
Balance, December 31, 2010	$	1,337,398		270,573		230,137		86		5		(500,801	)	$	1,337,398
Net income (loss) for common stock	19,189			6,617		4,878		(2	)	(3	)	(11,490	)	19,189
Other comprehensive income (loss), net of taxes	27			—		(3	)	—		—		3		27
Common stock dividends	(17,640		)	(4,031	)	(3,001	)	—		—		7,032		(17,640		)
Balance, March 31, 2011	$	1,338,974		273,159		232,011		84		2		(505,256	)	$	1,338,974

Hawaiian Electric Company, Inc. and Subsidiaries

Consolidating Statement of Cash Flows (unaudited)

Three months ended March 31, 2012

(in thousands)	HECO			HELCO		MECO		RHI		UBC	Elimination addition to (deduction from) cash flows		HECO Consolidated
Cash flows from operating activities:
Net income (loss)	$	27,570		6,745		1,975		(1	)	—	(8,490	)	$	27,799
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Equity in earnings of subsidiaries	(8,515		)	—		—		—		—	8,490		(25		)
Common stock dividends received from subsidiaries	5,471			—		—		—		—	(5,471	)	—
Depreciation of property, plant and equipment	22,571			8,436		5,475		—		—	—		36,482
Other amortization	485			622		454		—		—	—		1,561
Change in deferred income taxes	13,721			2,563		3,777		—		—	—		20,061
Change in tax credits, net	1,320			36		—		—		—	—		1,356
Allowance for equity funds used during construction	(1,581		)	(125	)	(234	)	—		—	—		(1,940		)
Changes in assets and liabilities:
Decrease in accounts receivable	19,978			343		2,431		—		—	2,249		25,001
Decrease (increase) in accrued unbilled revenues	11,188			57		(61	)	—		—	—		11,184
Increase in fuel oil stock	(11,819		)	(2,058	)	(581	)	—		—	—		(14,458		)
Increase in materials and supplies	(2,320		)	(1,128	)	(113	)	—		—	—		(3,561		)
Increase in regulatory assets	(11,612		)	(1,039	)	(1,297	)	—		—	—		(13,948		)
Decrease in accounts payable	(27,400		)	(2,941	)	(2,833	)	—		—	—		(33,174		)
Change in prepaid and accrued income and utility revenue taxes	(29,011		)	(5,741	)	(9,809	)	—		—	—		(44,561		)
Contributions to defined benefit pension and other postretirement benefit plans	(19,428		)	(3,279	)	(3,476	)	—		—	—		(26,183		)
Change in other assets and liabilities	(2,190		)	2,320		5,589		(1	)	—	(2,249	)	3,469
Net cash provided by (used in) operating activities	(11,572		)	4,811		1,297		(2	)	—	(5,471	)	(10,937		)
Cash flows from investing activities:
Capital expenditures	(51,026		)	(6,727	)	(5,683	)	—		—	—		(63,436		)
Contributions in aid of construction	20,748			1,579		528		—		—	—		22,855
Advances from affiliate	—			10,250		14,500		—		—	(24,750	)	—
Net cash provided by (used in) investing activities	(30,278		)	5,102		9,345		—		—	(24,750	)	(40,581		)
Cash flows from financing activities:
Common stock dividends	(18,261		)	(3,284	)	(2,187	)	—		—	5,471		(18,261		)
Preferred stock dividends of HECO and subsidiaries	(270		)	(134	)	(95	)	—		—	—		(499		)
Repayment of long-term debt	(42,580		)	(7,200	)	(7,720	)	—		—	—		(57,500		)
Net increase in short-term borrowings from nonaffiliates and affiliate with original maturities of three months or less	60,192			—		—		—		—	24,750		84,942
Other	(70		)	(2	)	(48	)	—		—	—		(120		)
Net cash used in financing activities	(989		)	(10,620	)	(10,050	)	—		—	30,221		8,562
Net increase (decrease) in cash and cash equivalents	(42,839		)	(707	)	592		(2	)	—	—		(42,956		)
Cash and cash equivalents, beginning of period	44,819			3,383		496		82		26	—		48,806
Cash and cash equivalents, end of period	$	1,980		2,676		1,088		80		26	—		$	5,850

Hawaiian Electric Company, Inc. and Subsidiaries

Consolidating Statement of Cash Flows (unaudited)

Three months ended March 31, 2011

(in thousands)	HECO			HELCO		MECO		RHI		UBC		Elimination addition to (deduction from) cash flows		HECO Consolidated
Cash flows from operating activities:
Net income (loss)	$	19,459		6,751		4,973		(2	)	(3	)	(11,490	)	$	19,688
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Equity in earnings of subsidiaries	(11,515		)	—		—		—		—		11,490		(25		)
Common stock dividends received from subsidiaries	7,057			—		—		—		—		(7,032	)	25
Depreciation of property, plant and equipment	22,883			8,323		5,226		—		—		—		36,432
Other amortization	1,167			660		461		—		—		—		2,288
Change in deferred income taxes	7,674			2,849		2,998		—		—		—		13,521
Change in tax credits, net	592			154		9		—		—		—		755
Allowance for equity funds used during construction	(960		)	(83	)	(201	)	—		—		—		(1,244		)
Change in cash overdraft	—			(2,527	)	(161	)	—		—		—		(2,688		)
Changes in assets and liabilities:
Increase in accounts receivable	(3,982		)	(1,192	)	(3,927	)	—		—		(2,170	)	(11,271		)
Decrease (increase) in accrued unbilled revenues	(10,127		)	(514	)	1,239		—		—		—		(9,402		)
Decrease (increase) in fuel oil stock	6,381			(685	)	(9,209	)	—		—		—		(3,513		)
Increase in materials and supplies	(38		)	(415	)	(612	)	—		—		—		(1,065		)
Increase in regulatory assets	(6,518		)	(708	)	(646	)	—		—		—		(7,872		)
Decrease in accounts payable	(35,481		)	(1,603	)	(5,039	)	—		—		—		(42,123		)
Change in prepaid and accrued income and utility revenue taxes	(2,688		)	270		2,658		—		—		—		240
Contributions to defined benefit pension and other postretirement benefit plans	(23,871		)	(3,390	)	(3,432	)	—		—		—		(30,693		)
Change in other assets and liabilities	4,712			1,143		1,287		—		3		2,170		9,315
Net cash provided by (used in) operating activities	(25,255		)	9,033		(4,376	)	(2	)	—		(7,032	)	(27,632		)
Cash flows from investing activities:
Capital expenditures	(25,594		)	(6,752	)	(5,210	)	—		—		—		(37,556		)
Contributions in aid of construction	3,218			2,122		409		—		—		—		5,749
Advances from affiliate	—			150		12,500		—		—		(12,650	)	—
Net cash provided by (used in) investing activities	(22,376		)	(4,480	)	7,699		—		—		(12,650	)	(31,807		)
Cash flows from financing activities:
Common stock dividends	(17,640		)	(4,031	)	(3,001	)	—		—		7,032		(17,640		)
Preferred stock dividends of HECO and subsidiaries	(270		)	(134	)	(95	)	—		—		—		(499		)
Net decrease in short-term borrowings from nonaffiliates and affiliate with original maturities of three months or less	(12,650		)	—		—		—		—		12,650		—
Other	(4		)	—		—		—		—		—		(4		)
Net cash used in financing activities	(30,564		)	(4,165	)	(3,096	)	—		—		19,682		(18,143		)
Net increase (decrease) in cash and cash equivalents	(78,195		)	388		227		(2	)	—		—		(77,582		)
Cash and cash equivalents, beginning of period	121,019			1,229		594		89		5		—		122,936
Cash and cash equivalents, end of period	$	42,824		1,617		821		87		5		—		$	45,354