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Segment financial information
 12 Months Ended
Dec. 31, 2011
Segment financial information  
Segment financial information

2 · Segment financial information

 

The electric utility and bank segments are strategic business units of the Company that offer different products and services and operate in different regulatory environments. The accounting policies of the segments are the same as those described in the summary of significant accounting policies, except that federal and state income taxes for each segment are calculated on a “stand-alone” basis. HEI evaluates segment performance based on net income. The Company accounts for intersegment sales and transfers as if the sales and transfers were to third parties, that is, at current market prices. Intersegment revenues consist primarily of interest, rent and preferred stock dividends.

 

Electric utility

 

HECO and its wholly-owned operating subsidiaries, HELCO and MECO, are public electric utilities in the business of generating, purchasing, transmitting, distributing and selling electric energy on all major islands in Hawaii other than Kauai, and are regulated by the PUC. HECO also owns the following non-regulated subsidiaries: Renewable Hawaii, Inc. (RHI), which was formed to invest in renewable energy projects; HECO Capital Trust III, which is a financing entity; and Uluwehiokama Biofuels Corp. (UBC), which was formed to own a new biodiesel refining plant to be built on the island of Maui, which project has been terminated.

 

Bank

 

ASB is a federally chartered savings bank providing a full range of banking services to individual and business customers through its branch system in Hawaii. ASB is subject to examination and comprehensive regulation by the Office of the Comptroller of the Currency (OCC) (previously by the Department of Treasury, Office of Thrift Supervision (OTS)) and the Federal Deposit Insurance Corporation (FDIC), and is subject to reserve requirements established by the Board of Governors of the Federal Reserve System.

 

Other

 

“Other” includes amounts for the holding companies (HEI and American Savings Holdings, Inc.), other subsidiaries not qualifying as reportable segments and intercompany eliminations.

 

Segment financial information was as follows:

 

(in thousands)

 

Electric utility

 

Bank

 

Other

 

Total

 

 

 

 

 

 

 

 

 

 

 

2011

 

 

 

 

 

 

 

 

 

Revenues from external customers

 

$2,978,547

 

$  264,407

 

$

(619

)

$3,242,335

 

Intersegment revenues (eliminations)

 

143

 

–

 

 

(143

)

–

 

Revenues

 

2,978,690

 

264,407

 

 

(762

)

3,242,335

 

Depreciation and amortization

 

160,353

 

5,909

 

 

1,208

 

167,470

 

Interest expense

 

60,031

 

14,469

 

 

22,075

 

96,575

 

Income (loss) before income taxes

 

163,565

 

91,536

 

 

(39,049

)

216,052

 

Income taxes (benefit)

 

61,584

 

31,693

 

 

(17,345

)

75,932

 

Net income (loss)

 

101,981

 

59,843

 

 

(21,704

)

140,120

 

Preferred stock dividends of subsidiaries

 

1,995

 

–

 

 

(105

)

1,890

 

Net income (loss) for common stock

 

99,986

 

59,843

 

 

(21,599

)

138,230

 

Capital expenditures

 

226,022

 

8,984

 

 

110

 

235,116

 

Tangible assets (at December 31, 2011)

 

4,671,942

 

4,819,557

 

 

10,815

 

9,502,314

 

 

 

 

 

 

 

 

 

 

 

 

2010

 

 

 

 

 

 

 

 

 

 

Revenues from external customers

 

$2,382,211

 

$  282,693

 

$

78

 

$2,664,982

 

Intersegment revenues (eliminations)

 

155

 

–

 

 

(155

)

–

 

Revenues

 

2,382,366

 

282,693

 

 

(77

)

2,664,982

 

Depreciation and amortization

 

157,432

 

749

 

 

947

 

159,128

 

Interest expense

 

61,510

 

20,349

 

 

20,028

 

101,887

 

Income (loss) before income taxes

 

125,452

 

92,512

 

 

(34,717

)

183,247

 

Income taxes (benefit)

 

46,868

 

34,056

 

 

(13,102

)

67,822

 

Net income (loss)

 

78,584

 

58,456

 

 

(21,615

)

115,425

 

Preferred stock dividends of subsidiaries

 

1,995

 

–

 

 

(105

)

1,890

 

Net income (loss) for common stock

 

76,589

 

58,456

 

 

(21,510

)

113,535

 

Capital expenditures

 

174,344

 

7,709

 

 

72

 

182,125

 

Tangible assets (at December 31, 2010)

 

4,285,680

 

4,707,870

 

 

2,905

 

8,996,455

 

 

 

 

 

 

 

 

 

 

 

 

2009

 

 

 

 

 

 

 

 

 

 

Revenues from external customers

 

$2,034,834

 

$  274,719

 

$

37

 

$2,309,590

 

Intersegment revenues (eliminations)

 

175

 

–

 

 

(175

)

–

 

Revenues

 

2,035,009

 

274,719

 

 

(138

)

2,309,590

 

Depreciation and amortization

 

154,578

 

1,309

 

 

784

 

156,671

 

Interest expense

 

57,944

 

43,543

 

 

18,386

 

119,873

 

Income (loss) before income taxes

 

129,217

 

31,705

 

 

(32,098

)

128,824

 

Income taxes (benefit)

 

47,776

 

9,938

 

 

(13,791

)

43,923

 

Net income (loss)

 

81,441

 

21,767

 

 

(18,307

)

84,901

 

Preferred stock dividends of subsidiaries

 

1,995

 

–

 

 

(105

)

1,890

 

Net income (loss) for common stock

 

79,446

 

21,767

 

 

(18,202

)

83,011

 

Capital expenditures

 

286,445

 

2,188

 

 

246

 

288,879

 

Tangible assets (at December 31, 2009)

 

3,978,392

 

4,854,595

 

 

5,625

 

8,838,612

 

 

Intercompany electricity sales of the electric utilities to the bank and “other” segments are not eliminated because those segments would need to purchase electricity from another source if it were not provided by consolidated HECO, the profit on such sales is nominal and the elimination of electric sales revenues and expenses could distort segment operating income and net income for common stock.

Bank fees that ASB charges the electric utility and “other” segments are not eliminated because those segments would pay fees to another financial institution if they were to bank with another institution, the profit on such fees is nominal and the elimination of bank fee income and expenses could distort segment operating income and net income for common stock.