Basis of presentation - HECO

9 Months Ended

Sep. 30, 2012

Basis of presentation

1 · Basis of presentation

The accompanying unaudited consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (GAAP) for interim financial information, the instructions to SEC Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the balance sheet and the reported amounts of revenues and expenses for the period. Actual results could differ significantly from those estimates. The accompanying unaudited consolidated financial statements and the following notes should be read in conjunction with the audited consolidated financial statements and the notes thereto in HEI’s Form 10-K for the year ended December 31, 2011and the unaudited consolidated financial statements and the notes thereto in HEI’s Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2012 and June 30, 2012.

In the opinion of HEI’s management, the accompanying unaudited consolidated financial statements contain all material adjustments required by GAAP to fairly state the Company’s financial position as of September 30, 2012 and December 31, 2011, the results of its operations for the three and nine months ended September 30, 2012 and 2011 and cash flows for the nine months ended September 30, 2012 and 2011. All such adjustments are of a normal recurring nature, unless otherwise disclosed in this Form 10-Q or other referenced material. Results of operations for interim periods are not necessarily indicative of results for the full year. The December 31, 2011 balance sheet information has been derived from the HEI 2011 financial statements. When required, certain reclassifications are made to the prior period’s consolidated financial statements to conform to the current presentation.

The Company has revised its electric utilities’ previously issued financial statements to correct an error that resulted in the understatement of franchise taxes, net of tax benefits, that should have been recorded in years prior to 2010. The Company determined the cumulative impact for periods prior to 2010 to be a charge to its earnings of $3.2 million. These adjustments were not considered to be material individually or in the aggregate to previously issued financial statements. The table below illustrates the effects of this revision on the Company’s Consolidated Financial Statements for those line items affected (these revisions have no impact on the Company’s Consolidated Statements of Income and Cash Flows for the periods reported):

(in thousands)	As previously filed		As revised		Difference
December 31, 2011
Consolidated Balance Sheet
Other assets	$	517,550	$	519,296	$	1,746
Total assets	9,592,731		9,594,477		1,746
Other liabilities	516,990		521,979		4,989
Total liabilities	8,026,489		8,031,478		4,989
Retained earnings	201,640		198,397		(3,243		)
Total shareholders’ equity	1,531,949		1,528,706		(3,243		)
Total liabilities and shareholders’ equity	9,592,731		9,594,477		1,746
Consolidated Statement of Changes in Shareholders’ Equity
Retained earnings	201,640		198,397		(3,243		)
Total shareholders’ equity	1,531,949		1,528,706		(3,243		)
December 31, 2010
Consolidated Statement of Changes in Shareholders’ Equity
Retained earnings	181,910		178,667		(3,243		)
Total shareholders’ equity	1,483,637		1,480,394		(3,243		)

Hawaiian Electric Company, Inc. and Subsidiaries

Basis of presentation

1 · Basis of presentation

The accompanying unaudited consolidated financial statements have been prepared in conformity with GAAP for interim financial information, the instructions to SEC Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the balance sheet and the reported amounts of revenues and expenses for the period. Actual results could differ significantly from those estimates. The accompanying unaudited consolidated financial statements and the following notes should be read in conjunction with the audited consolidated financial statements and the notes thereto incorporated by reference in HECO’s Form 10-K for the year ended December 31, 2011and the unaudited consolidated financial statements and the notes thereto in HECO’s Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2012 and June 30, 2012.

In the opinion of HECO’s management, the accompanying unaudited consolidated financial statements contain all material adjustments required by GAAP to fairly state the financial position of HECO and its subsidiaries as of September 30, 2012 and December 31, 2011, the results of their operations for the three and nine months ended September 30, 2012 and 2011 and their cash flows for the nine months ended September 30, 2012 and 2011. All such adjustments are of a normal recurring nature unless otherwise disclosed in this Form 10-Q or other referenced material. Results of operations for interim periods are not necessarily indicative of results for the full year. The December 31, 2011 balance sheet information has been derived from the HECO 2011 financial statements. When required, certain reclassifications are made to the prior period’s consolidated financial statements to conform to the current presentation.

HECO and its subsidiaries revised their previously issued financial statements to correct an error that resulted in the understatement of franchise taxes, net of tax benefits, that should have been recorded in years prior to 2010. HECO and its subsidiaries determined the cumulative impact for periods prior to 2010 to be a charge to earnings of $3.2 million. These adjustments were not considered to be material individually or in the aggregate to previously issued financial statements. The table below illustrates the effects of this revision on HECO and its subsidiaries’ Consolidated Financial Statements for those line items affected (these revisions have no impact on HECO and its subsidiaries’ Consolidated Statements of Income and Cash Flows for the periods reported):

(in thousands)	As previously filed		As revised		Difference
December 31, 2011
Consolidated Balance Sheet
Prepayments and other	$	34,602	$	36,667	$	2,065
Total current assets	648,204		650,269		2,065
Total assets	4,671,942		4,674,007		2,065
Retained earnings	884,284		881,041		(3,243		)
Common stock equity	1,406,084		1,402,841		(3,243		)
Total capitalization	2,440,947		2,437,704		(3,243		)
Taxes accrued	224,768		230,076		5,308
Total current liabilities	559,684		564,992		5,308
Total capitalization and liabilities	4,671,942		4,674,007		2,065
Consolidated Statement of Changes in Common Stock Equity
Retained earnings	884,284		881,041		(3,243		)
Common stock equity	1,406,084		1,402,841		(3,243		)
December 31, 2010
Consolidated Statement of Changes in Common Stock Equity
Retained earnings	854,856		851,613		(3,243		)
Common stock equity	1,337,398		1,334,155		(3,243		)