<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995 Commission file number 1-5663
Or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Central Louisiana Electric Company, Inc.
(Exact name of registrant as specified in its charter)
Louisiana 72-0244480
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2030 Donahue Ferry Road, Pineville, Louisiana 71360-5226
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (318) 484-7400
Indicate by check mark whether the Registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
As of November 1, 1995 there were 22,424,658 shares outstanding of the
Registrant's Common Stock, par value $2.00 per share.
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TABLE OF CONTENTS
Page
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements. . . . . . . . . . . . . . . 1
Report of Independent Accountants . . . . . . . . 2
Consolidated Statements of Income . . . . . . . . 3
Consolidated Balance Sheets. . . . . . . . . . . 5
Consolidated Statements of Cash Flows . . . . . . 7
Note to Consolidated Financial Statements . . . . 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Results of Operations . . . . . . . . . . . . . . 9
Financial Condition . . . . . . . . . . . . . . . 10
PART II. OTHER INFORMATION
Item 5. Other Information
Activities With Respect to Cooperatives. . . . . . 11
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . 12
SIGNATURE . . . . . . . . . . . . . . . . . . . . . . . . . . 13
<PAGE>
PART I
FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
The consolidated financial statements for Central Louisiana Electric
Company, Inc. (the Company) included herein are unaudited but reflect, in
management's opinion, all adjustments, consisting only of normal recurring
adjustments, that are necessary for a fair presentation of the Company's
financial position and the results of its operations for the interim periods
presented. Because of the seasonal nature of the Company's business, the
results of operations for the nine months ended September 30, 1995 are not
necessarily indicative of the results that may be expected for the full fiscal
year. The financial statements included herein should be read in conjunction
with the financial statements and notes thereto included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1994.
The consolidated financial statements included herein have been subjected to a
limited review by Coopers & Lybrand L.L.P., independent accountants for the
Company, whose report is included herein.
1
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Coopers certified public accountants
& Lybrand L.L.P. a professional services firm
REPORT OF INDEPENDENT ACCOUNTANTS
Board of Directors
Central Louisiana Electric Company, Inc.:
We have made a review of the consolidated balance sheet of Central Louisiana
Electric Company, Inc. as of September 30, 1995, and the related consolidated
statements of income for the three-month and nine-month periods and cash flows
for the nine-month periods ended September 30, 1995 and 1994, in accordance
with standards established by the American Institute of Certified Public
Accountants. These financial statements are the responsibility of the Company's
management.
A review of interim financial information consists principally of obtaining an
understanding of the system for the preparation of interim financial
information, applying analytical review procedures to financial data, and
making inquiries of persons responsible for financial and accounting matters.
It is substantially less in scope than an audit in accordance with generally
accepted auditing standards, the objective of which is the expression of an
opinion regarding the financial statements taken as a whole. Accordingly, we
do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the consolidated financial statements referred to above for them to
be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet as of December 31, 1994 and the
related consolidated statements of income, cash flows and changes in common
shareholders' equity for the year then ended (not present herein); and in our
report dated January 27, 1995, we expressed an unqualified opinion on those
financial statements. In our opinion, the information set forth in the
accompanying balance sheet as of December 31, 1994, is fairly stated in all
material respects in relation to the balance sheet from which it has been
derived.
Coopers & Lybrand L.L.P.
New Orleans, Louisiana
October 25, 1995
2
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<TABLE>
CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
CONSOLIDATED STATEMENTS OF INCOME
For the three months ended September 30
(Unaudited)
<CAPTION>
(In thousands, except share and
per share amounts)
1995 1994
---------- ----------
<S> <C> <C>
OPERATING REVENUES $ 123,383 $ 112,633
---------- ----------
OPERATING EXPENSES
Fuel used for electric generation 38,547 37,654
Power purchased 4,755 3,681
Other operation 17,149 13,929
Maintenance 6,223 5,607
Depreciation 10,122 9,924
Taxes other than income taxes 7,751 7,804
Federal and state income taxes 11,392 9,941
---------- ----------
95,939 88,540
---------- ----------
OPERATING INCOME 27,444 24,093
Allowance for other funds used during
construction 278 419
Other income and expenses, net (169) (401)
---------- ----------
INCOME BEFORE INTEREST CHARGES 27,553 24,111
Interest charges, including amortization of
debt expense, premium and discount 7,289 6,698
Allowance for borrowed funds used during
construction (807) (193)
---------- ----------
NET INCOME 21,071 17,606
Preferred dividend requirements, net 515 506
---------- ----------
NET INCOME APPLICABLE TO COMMON STOCK $ 20,556 $ 17,100
========== ==========
WEIGHTED AVERAGE COMMON SHARES
Primary 22,433,451 22,416,619
Fully diluted 23,850,320 23,843,121
EARNINGS PER SHARE
Primary $0.92 $0.76
Fully diluted $0.88 $0.73
CASH DIVIDENDS PAID PER SHARE $0.375 $0.365
<FN>
The accompanying note is an integral part of the consolidated financial
statements.
</FN>
</TABLE>
3
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<TABLE>
CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
CONSOLIDATED STATEMENTS OF INCOME
For the nine months ended September 30
(Unaudited)
<CAPTION>
(In thousands, except share and
per share amounts)
1995 1994
---------- ----------
<S> <C> <C>
OPERATING REVENUES $ 303,854 $ 297,720
---------- ----------
OPERATING EXPENSES
Fuel used for electric generation 86,442 96,888
Power purchased 17,599 14,319
Other operation 45,990 40,597
Maintenance 16,160 16,552
Depreciation 30,614 29,543
Taxes other than income taxes 22,390 22,018
Federal and state income taxes 22,331 19,655
---------- ----------
241,526 239,572
---------- ----------
OPERATING INCOME 62,328 58,148
Allowance for other funds used during
construction 1,176 985
Other income and expenses, net 249 (546)
---------- ----------
INCOME BEFORE INTEREST CHARGES 63,753 58,587
Interest charges, including amortization of
debt expense, premium and discount 22,084 20,100
Allowance for borrowed funds used during
construction (1,494) (469)
---------- ----------
NET INCOME 43,163 38,956
Preferred dividend requirements, net 1,535 1,507
---------- ----------
NET INCOME APPLICABLE TO COMMON STOCK $ 41,628 $ 37,449
========== ==========
WEIGHTED AVERAGE COMMON SHARES
Primary 22,431,216 22,417,161
Fully diluted 23,850,043 23,844,788
EARNINGS PER SHARE
Primary $1.86 $1.67
Fully diluted $1.79 $1.61
CASH DIVIDENDS PAID PER SHARE $1.115 $1.085
<FN>
The accompanying note is an integral part of the consolidated financial
statements.
</FN>
</TABLE>
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<TABLE>
CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<CAPTION>
(In thousands)
September 30, 1995 December 31, 1994
------------------ -----------------
ASSETS
<S> <C> <C>
Utility plant
Property, plant and equipment $ 1,302,708 $ 1,276,266
Accumulated depreciation (435,196) (410,513)
------------------ -----------------
867,512 865,753
Construction work-in-progress 55,950 46,379
------------------ -----------------
Total utility plant, net 923,462 912,132
------------------ -----------------
Investments and other assets 10,310 20,327
------------------ -----------------
Current assets
Cash and cash equivalents 18,512 7,440
Accounts receivable, net 20,869 11,147
Unbilled revenues 4,886 573
Fuel inventory, at average cost 9,956 10,184
Materials and supplies, at average cost 15,436 14,945
Prepayments and other current assets 2,583 2,374
------------------ -----------------
Total current assets 72,242 46,663
------------------ -----------------
Accumulated deferred federal and
state income taxes 66,590 39,377
Prepayments 8,145 7,861
Deferred charges 187,681 151,831
----------------- -----------------
TOTAL ASSETS $ 1,268,430 $ 1,178,191
================= =================
<FN>
The accompanying note is an integral part of the consolidated financial
statements.
</FN>
(Continued on next page)
</TABLE>
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<TABLE>
CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
CONSOLIDATED BALANCE SHEETS (Continued)
(Unaudited)
<CAPTION>
(In thousands,
except share amounts)
September 30, 1995 December 31, 1994
------------------ -----------------
CAPITALIZATION AND LIABILITIES
<S> <C> <C>
Common shareholders' equity
Common stock, $2 par value,
authorized 50,000,000 shares,
issued 22,741,254 and 22,720,074
shares at September 30, 1995 and
December 31, 1994,respectively $ 45,483 $ 45,440
Premium on capital stock 113,360 113,070
Retained earnings 228,073 211,198
Treasury stock at cost, 318,446 and
329,433 shares at September 30,
1995 and December 31, 1994,
respectively (6,459) (6,681)
------------------ -----------------
380,457 363,027
------------------ -----------------
Preferred stock, cumulative, $100 par value
Not subject to mandatory redemption 30,519 30,748
Deferred compensation related to
preferred stock held by ESOP (22,880) (24,404)
------------------ -----------------
7,639 6,344
Subject to mandatory redemption 6,880 6,920
------------------ -----------------
14,519 13,264
------------------ -----------------
Long-term debt, net 360,812 336,589
------------------ -----------------
Total capitalization 755,788 712,880
------------------ -----------------
Current liabilities
Short-term debt 32,250 28,977
Long-term debt due within one year 14,676
Accounts payable 28,379 43,466
Customer deposits 19,690 19,513
Taxes accrued 22,084 3,262
Interest accrued 2,615 8,298
Accumulated deferred fuel 5,160 6,114
Other current liabilities 2,569 2,618
----------------- -----------------
Total current liabilities 112,747 126,924
----------------- -----------------
Deferred credits
Accumulated deferred federal and
state income taxes 265,810 228,803
Accumulated deferred investment tax
credits 33,626 34,987
Other deferred credits 100,459 74,597
----------------- ----------------
Total deferred credits 399,895 338,387
----------------- ----------------
TOTAL CAPITALIZATION AND LIABILITIES $ 1,268,430 $ 1,178,191
================= ================
<FN>
The accompanying note is an integral part of the consolidated financial
statements.
</FN>
</TABLE>
6
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<TABLE>
CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the nine months ended September 30
(Unaudited)
<CAPTION>
(In thousands)
1995 1994
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 43,163 $ 38,956
Adjustments to reconcile net income
to net cash provided by operating activities
Depreciation and amortization 31,533 29,911
Allowance for funds used during construction (2,670) (1,454)
Amortization of investment tax credits (1,361) (1,365)
Deferred income taxes 1,613 1,613
Deferred fuel costs (954) 795
(Gain) loss on disposition of utility plant, net (20) 4
Changes in assets and liabilities
Accounts receivable, net (9,722) (5,403)
Unbilled revenues (4,313) (1,911)
Fuel inventory, materials and supplies (263) (913)
Accounts payable (15,087) (11,644)
Customer deposits 177 710
Other deferred accounts (3,833) (959)
Taxes accrued 18,822 16,064
Interest accrued (5,683) (6,049)
Other, net 515 1,215
---------- ----------
Net cash provided by operating activities 51,917 59,570
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to utility plant (40,807) (37,476)
Allowance for funds used during construction 2,670 1,454
Sale of utility plant 515 239
Purchase of investments (2,413) (142,867)
Sale of investments 12,632 142,861
---------- ----------
Net cash used in investing activities (27,403) (35,789)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock 333 156
Repurchase of common stock (274)
Retirement of long-term debt (15,481) (634)
Issuance of long-term debt 25,000
Increase of short-term debt 3,273 4,384
Redemption of preferred stock (40) (52)
Dividends paid on common and preferred stock, net (26,527) (25,808)
---------- ----------
Net cash used in financing activities (13,442) (22,228)
---------- ----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 11,072 1,553
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 7,440 5,802
---------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 18,512 $ 7,355
========== ==========
Supplementary cash flow information
Interest paid (net of amount capitalized) $ 26,387 $ 26,670
========== ==========
Income taxes paid $ 17,056 $ 17,447
========== ==========
<FN>
The accompanying note is an integral part of the consolidated financial
statements.
</FN>
</TABLE>
7
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CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note A. Contingencies
An audit of the Company's 1991 and 1992 tax returns was completed by agents of
the Internal Revenue Service (IRS) in January 1995. A number of assessments
were proposed that would substantially increase federal and Louisiana taxable
income for those years. The Company is contesting most of these assessments.
Deferred federal taxes have been provided for all temporary differences, and
reserves have been provided for other issues. If the IRS is completely
successful on all of the contested issues, an additional liability in excess
of current reserves would arise for interest and, if assessed, penalties.
In July 1995, agents of the IRS announced that an audit of the Company's
1993 and 1994 tax returns would commence in 1995, and the audit began in
October 1995.
In February 1995 the Company and Teche Electric Cooperative, Inc. (Teche)
executed a purchase and sale agreement calling for the purchase of all of the
assets of Teche by the Company for a purchase price, including the Company's
assumption or other discharge of Teche's liabilities, of approximately $22.4
million. Teche serves about 8,600 customers and its service area, which
comprises parts of Iberia, St. Martin and St. Mary parishes, is adjacent to
the Company's service area. Teche members approved the purchase and sale
agreement at their annual meeting on March 11, 1995. Consummation of the
acquisition is subject to a number of conditions, including approval by the
Louisiana Public Service Commission (LPSC), the Rural Utilities Service (RUS)
and other governmental agencies, successful resolution of Teche's power supply
contract with Cajun Electric Power Cooperative (Cajun) and certain other
conditions. If the acquisition is not consummated on or before the later of
March 31, 1996, or such later date that the Company and Teche may establish by
mutual agreement, either party, if not in default under the purchase and sale
agreement, may terminate such agreement upon written notice given to the other.
The LPSC elected in 1993 to begin a review of the earnings of all electric, gas
and telephone utilities in Louisiana to determine whether the earned returns on
equity of these companies may be higher than returns that would be allowed if
rate levels were set based upon present costs. The action was based upon a
preliminary report by consultants that pointed out a lack of rate increase
activity and a downward trend in capital costs. During 1994, earnings reviews
of two of the four major Louisiana electric utilities were completed and small
rate decreases were ordered. In April 1995, at its monthly business meeting,
the LPSC voted to request bids from consultants to participate in an earnings
review of the Company. At its August 1995 monthly meeting, the LPSC selected
consultants to work on a project team with members of its own staff to conduct
the earnings review of the Company. The project team began its review of the
Company in August 1995 by making initial discovery requests for information
from the Company for the purpose of evaluating the earned return on equity that
is produced by present rates. The earnings review, which is not subject to any
statutory or procedural deadlines, is expected to continue through the
remainder of 1995. The Company believes its current return on equity is in
line with business conditions; and therefore, anticipates that this review will
not have a significant effect on the Company's financial condition or results of
its operations. But at this time, it is not possible to predict the outcome of
these proceedings.
8
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CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Net income applicable to common stock totaled $20.6 million and $41.6
million, respectively, for the three- and nine-month periods ended September
30, 1995, as compared to $17.1 million and $37.4 million, respectively, for
the corresponding periods in 1994. Net income per primary average common
share was $0.92 and $1.86, respectively, for the three- and nine-month periods
ended September 30, 1995, as compared to $0.76 and $1.67, respectively, for
the same periods in 1994. The following principal factors contributed to
these results:
Operating revenues for the three months ending September 30, 1995, increased
$10.8 million, or 9.5%, as compared to the same period in 1994, largely from
the effect of weather related increased kilowatt-hour sales on base revenues.
For the nine months ending September 30, 1995, operating revenues increased
$6.1 million, or 2.1%, as compared to the corresponding period in 1994, from
the effect of weather related increased kilowatt-hour sales on base revenues
which were offset by decreased fuel cost recovery revenues. For the third
quarter 1995, fuel cost recovery revenues were $2.0 million higher than the
third quarter 1994. The increase is attributable to the additional generating
fuel consumed and power purchased to meet the higher summer demand. For the
nine months ending September 30, 1995, fuel cost recovery revenues were $7.0
million lower than the same period in 1994. The decrease is attributable to
lower natural gas prices in 1995 than in 1994. Changes in fuel cost recovery
revenues have historically had no effect on net income, as fuel costs are
generally recovered through a fuel cost adjustment clause that enables the
Company to pass on to customers substantially all changes in the cost of
generating fuel and purchased power. The adjustments regulated by the LPSC
(about 99% of the total fuel cost adjustment) are audited by the LPSC staff
monthly and the remaining portion, regulated by the Federal Energy Regulatory
Commission (FERC), is audited periodically for several years at a time. Until
approval is received, the adjustments are subject to refund.
Base revenues increased $8.7 million and $13.1 million, respectively, for the
three- and nine-month periods ended September 30, 1995, as compared to the
corresponding periods in 1994. Higher base revenues are the product of
increased kilowatt-hour sales to residential customers resulting from the
warmer than normal weather, sales to new and existing industrial customers,
and marketing efforts to increase sales to existing industrial customers. For
the three- and nine-month periods ended September 30, 1995, kilowatt-hour sales
increased 15.0%, and 10.3%, respectively, over the same periods in 1994.
Operating expenses increased $7.4 million, or 8.4%, and $1.9 million, or 0.8%,
respectively, for the three- and nine-month periods ending September 30, 1995,
compared to the same periods in 1994. The increases are primarily due to
increased fuel and purchased power costs, other operation expenses and federal
and state income taxes; however, for the nine months ending September 30,
1995, these same expenses were offset by a decrease in fuel costs. Fuel
expenses and purchased power expenses increased $0.9 million and $1.1 million,
respectively, for the three month period ending September 30, 1995, as
compared to the same period in 1994, as a result of increased generation to
meet demands caused by the warmer than normal weather. For the nine months
ending September 30, 1995, fuel used for electric generation decreased $10.4
million, or 10.8%, over the corresponding period in 1994, primarily due to
lower natural gas prices. For the nine months ending September 30, 1995, the
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increase of $3.3 million in purchased power over the corresponding period in
1994 resulted from warmer weather experienced in the third quarter 1995 and
scheduled outages of the Company's generating units. Other operation expenses
increased $3.2 million, or 23.1%, for the three-month period ending September
30, 1995, and $5.4 million, or 13.3%, for the nine-month period ending
September 30, 1995, resulting in part from costs associated with the Company's
efforts to acquire Teche, the Company's unsuccessful efforts in 1995 to
acquire Washington-St.Tammany Electric Cooperative, Inc. (WST), the
implementation of the Company's 24-hour, 7-day a week call center (during
which time customer service offices also remained open), and increased
right-of-way reclearing efforts on circuits with lower reliability than the
Company's goal . In late July 1995, 15 customer service offices were closed
and their operations were consolidated into ten existing regional offices.
Interest expenses increased $0.6 million, or 8.8%, and $2.0 million, or 9.9%,
respectively, for the three- and nine-month periods ended September 30, 1995,
compared to the same periods in 1994, primarily due to higher short-term
interest rates and higher average balances of short-term debt.
Federal and state income taxes increased $1.5 million, or 14.6%, and $2.7
million, or 13.6%, respectively, for the three- and nine-month periods ended
September 30, 1995, compared to the same periods in 1994, primarily due to
higher taxable income.
FINANCIAL CONDITION
Liquidity and Capital Resources
At September 30, 1995 and 1994, the Company had $32.3 million and $32.8
million, respectively, of short-term debt outstanding in the form of
commercial paper borrowings and bank loans. The Company has a $100 million
revolving credit facility, which provides support for the issuance of
commercial paper. Uncommitted lines of credit with banks totaling $23 million
are also available to meet short-term working capital needs. Additionally, at
September 30, 1995, an unregulated subsidiary of the Company had $16.3 million
of cash and temporary cash investments in securities with original maturities
of 90 days or less.
The Company participates in a program where up to $35 million of its
receivables can be sold on an ongoing basis. The amount of receivables that
may be sold at any time depends upon seasonal fluctuations in the amount of
eligible receivables.
The Company has an effective shelf registration statement and all regulatory
approvals necessary to issue up to $25 million of debt and $50 million of
preferred stock.
Regulatory Matters
On March 29, 1995, the FERC issued a Notice of Proposed Rulemaking (NOPR)
addressing two key issues: open transmission access and recovery of stranded
cost. The open access provisions of the NOPR propose to require FERC-
regulated electric utilities to offer third parties open access to
transmission under the same or comparable terms and conditions as the
utility's use of its own system. Providing unbundled transmission services to
firm-requirements customers may have significant financial consequences to the
utility industry. Providing open access for non-firm sales may have a
significant effect on utility operations.
The stranded-cost proposal would allow utilities to recover investments in
assets stranded by customers departing as a result of opening the transmission
systems. This proposal could mitigate the financial consequences of
10
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unbundling transmission services to wholesale customers. Currently, the
Company has three wholesale full-requirements customers representing about
1.2% of the Company's total kilowatt-hour sales.
At this time, it is not possible to predict whether the NOPR will become a
final rule, and if it does become a final rule, the form of such final rule
and its effect on the Company. If adopted, generic tariffs will be available
to all buyers and sellers of electric energy at wholesale rates and will
become effective 60 days after the date of adoption of the final rule. After
60 days from the date of adoption, utilities and customers may propose changes
to the tariffs.
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of"
(SFAS 121) was issued in March 1995, and effective for fiscal years beginning
after December 15, 1995. SFAS 121 establishes accounting standards for
determining if long-lived assets are impaired, and when losses, if any, should
be recognized and how any such losses should be recognized. In addition, the
Company has recorded regulatory assets and liabilities as a result of past
rate actions of the Company's regulators, pursuant to Statement of Financial
Accounting Standards No. 71, "Accounting for the Effects of Certain Types of
Regulation" (SFAS 71). The effects of potential deregulation of the industry
or possible future changes in the method of rate regulation of the Company
could require that the Company discontinue the application of SFAS 71,
pursuant to Statement of Financial Accounting Standards No. 101, "Regulated
Enterprises--Accounting for the Discontinuation of Application of FASB
Statement No. 71". The effects of these standards on future statements of
position and results of operations will be determined by the facts and
circumstances at that time.
PART II
OTHER INFORMATION
Item 5. OTHER INFORMATION
Activities With Respect to Cooperatives
In February 1995 the Company and Teche executed a purchase and sale
agreement regarding the purchase of all of the assets of Teche by the Company
for a purchase price, including the Company's assumption or other discharge of
Teche's liabilities, of approximately $22.4 million. Teche serves about 8,600
customers and its service area, which comprises parts of Iberia, St. Martin
and St. Mary parishes, is adjacent to the Company's service area. Teche
members approved the purchase and sale agreement at their annual meeting on
March 11, 1995. Consummation of the acquisition is subject to a number of
conditions, including approval by the LPSC, the RUS and other governmental
agencies, successful resolution of Teche's power supply contract with Cajun
and certain other conditions.
Cajun, which provides power to all of the state's electric distribution
cooperatives, including Teche, is in bankruptcy. In March 1995 Cajun filed a
motion in bankruptcy court to stay the Company's acquisition of Teche. A
hearing on the motion has been postponed indefinitely by the court with the
agreement of the Company, Teche and Cajun.
In April and May 1995 the Company, Teche and the RUS filed motions with the
bankruptcy court to appoint an independent trustee to replace Cajun as
debtor-in-possession and to oversee the Cajun bankruptcy, including the
disposition of Teche and its all-requirements contract with Cajun. In August
1995, the court granted the motions and appointed a trustee. Cajun and other
parties have appealed to the U.S. Fifth Circuit Court of Appeals to set aside
11
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the lower court's decision. No decision has been rendered by the appellate
court.
The Antitrust Division of the U.S. Department of Justice submitted to the
Company a civil investigative demand dated August 7, 1995, seeking information
with respect to whether there is, has been or may be a violation of Section 7
of the Clayton Anti-Trust Act by conduct, activities or proposed action
associated with the Company's acquisition of competitor rural electric
cooperatives, including Teche and WST. The information sought also concerned
the Company's involvement in the Cajun bankruptcy proceedings. The Company
believes that it satisfied the demand in a timely fashion by providing
information in response to these requests.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
11 Computation of Net Income Per Common Share for the three
and nine months ended September 30, 1995 and September 30,
1994
12 Computation of Earnings to Fixed Charges and Earnings to
Combined Fixed Charges and Preferred Stock Dividends for
the twelve months ended September 30, 1995
15 Awareness letter, dated November 13, 1995, from Coopers &
Lybrand L.L.P. regarding review of the unaudited interim
financial statements
27 Financial Data Schedule
(b) Reports on Form 8-K
During the three-month period ended September 30, 1995, the
Company filed no Current Reports on Form 8-K.
12
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
(Registrant)
BY: /s/ David K. Warner
--------------------------------
David K. Warner
Vice President - Finance
(Principal Financial Officer)
Date: November 14, 1995
13
<TABLE>
CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
COMPUTATION OF NET INCOME PER COMMON SHARE
For the three months ended September 30,
(Unaudited)
<CAPTION>
(In thousands, except share
and per share amounts)
1995 1994
----------- -----------
<S> <C> <C>
PRIMARY
Net income applicable to common stock $ 20,556 $ 17,100
========== ==========
Weighted average number of shares of
common stock outstanding during the
period 22,421,208 22,397,516
Common stock under stock option grants 12,243 19,103
---------- ----------
Average shares 22,433,451 22,416,619
========== ==========
Primary net income per common share $ 0.92 $ 0.76
========== ==========
FULLY DILUTED
Net income applicable to common stock $ 20,556 $ 17,100
Adjustments to net income related to
Employee Stock Ownership Plan (ESOP)
under the "if-converted" method:
Add loss of deduction from net income
for actual dividends paid on
convertible preferred stock, net of tax 369 372
Deduct additional cash contribution required
which is equal to dividends on preferred
stock less dividends paid at the common
dividend rate, net of tax (42) (51)
Add tax benefit associated with dividends
paid on allocated common shares 48 34
---------- ----------
Adjusted income applicable to common stock $ 20,931 $ 17,455
========== ==========
Weighted average number of shares of
common stock outstanding during the
period 22,421,208 22,397,516
Number of equivalent common shares
attributable to ESOP 1,415,515 1,426,502
Common stock under stock option grants 13,597 19,103
---------- ----------
Average shares 23,850,320 23,843,121
========== ==========
Fully diluted net income per common share $ 0.88 $ 0.73
========== ==========
</TABLE>
<PAGE>
<TABLE>
CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
COMPUTATION OF NET INCOME PER COMMON SHARE
For the nine months ended September 30,
(Unaudited)
<CAPTION>
(In thousands, except share
and per share amounts)
1995 1994
---------- ----------
<S> <C> <C>
PRIMARY
Net income applicable to common stock $ 41,628 $ 37,449
========== ==========
Weighted average number of shares of
common stock outstanding during the
period 22,419,248 22,396,166
Common stock under stock option grants 11,968 20,995
---------- ----------
Average shares 22,431,216 22,417,161
========== ==========
Primary net income per common share $ 1.86 $ 1.67
========== ==========
FULLY DILUTED
Net income applicable to common stock $ 41,628 $ 37,449
Adjustments to net income related to
Employee Stock Ownership Plan (ESOP)
under the "if-converted" method:
Add loss of deduction from net income
for actual dividends paid on
convertible preferred stock, net of tax 1,106 1,116
Deduct additional cash contribution required
which is equal to dividends on preferred
stock less dividends paid at the common
dividend rate, net of tax (134) (162)
Add tax benefit associated with dividends
paid on allocated common shares 132 89
---------- ----------
Adjusted income applicable to common stock $ 42,732 $ 38,492
========== ==========
Weighted average number of shares of
common stock outstanding during the
period 22,419,248 22,396,166
Number of equivalent common shares
attributable to ESOP 1,416,614 1,427,627
Common stock under stock option grants 14,181 20,995
---------- ----------
Average shares 23,850,043 23,844,788
========== ==========
Fully diluted net income per common share $ 1.79 $ 1.61
========== ==========
</TABLE>
<TABLE>
CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
COMPUTATION OF EARNINGS TO FIXED CHARGES
AND EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
For the twelve months ended September 30, 1995
(Unaudited)
<CAPTION>
(In thousands,
except ratios)
----------------
<S> <C>
Earnings $ 49,250
Income taxes 22,577
------------
Earnings from continuing operations before income taxes $ 71,827
------------
Fixed charges
Interest, long-term debt 24,251
Interest, other (including interest on short-term debt) 3,469
Amortization of debt expense, premium, net 1,223
Portion of rentals representative of an interest factor 684
------------
Total fixed charges $ 29,627
------------
Earnings from continuing operations before
income taxes and fixed charges $ 101,454
============
Ratio of earnings to fixed charges 3.42x
============
Fixed charges from above $ 29,627
Preferred stock dividends* 2,944
------------
Total fixed charges and preferred stock dividends $ 32,571
============
Ratio of earnings to combined fixed charges and
preferred stock dividends 3.11x
============
* Preferred stock dividends multiplied by the ratio of pretax
income to net income.
</TABLE>
Coopers Coopers & Lybrand L.L.P. 639 Loyola Avenue telephone (504)529-2700
a professional services firm Suite 1800 facsmile (504)529-1439
& Lybrand New Orleans, LA 70113
November 13, 1995
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Central Louisiana Electric Company, Inc. Registrations
on Form S-8 (Nos. 2-79671,33-10169, 33-38362 and 33-44663)
and Form S-3 (Nos. 33-24895, 33-61068 and 33-62950)
We are aware that our report dated October 25, 1995 on our review of the
interim financial information of Central Louisiana Electric Company, Inc. as of
September 30, 1995 and for the three-month and nine-month periods ended
September 30, 1995 and 1994 included in this Form 10-Q is incorporated by
reference in the above mentioned registration statements. Pursuant to Rule
436(c) under the Securities Act of 1933, this report should not be considered a
part of the registration statements prepared or certified by us within the
meaning of Sections 7 and 11 of that Act.
Coopers & Lybrand L.L.P.
Coopers & Lybrand L.L.P., a registered limited liability partnership, is a
member firm of Coopers & Lybrand International.
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from the
Company's financial statements and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> $ 923,462
<OTHER-PROPERTY-AND-INVEST> $ 10,310
<TOTAL-CURRENT-ASSETS> $ 72,242
<TOTAL-DEFERRED-CHARGES> $ 254,271
<OTHER-ASSETS> $ 8,145
<TOTAL-ASSETS> $1,268,430
<COMMON> $ 45,483
<CAPITAL-SURPLUS-PAID-IN> $ 106,901
<RETAINED-EARNINGS> $ 228,073
<TOTAL-COMMON-STOCKHOLDERS-EQ> $ 380,457
$ 6,880
$ 7,639
<LONG-TERM-DEBT-NET> $ 170,812
<SHORT-TERM-NOTES> $ 520
<LONG-TERM-NOTES-PAYABLE> $ 190,000
<COMMERCIAL-PAPER-OBLIGATIONS> $ 31,730
<LONG-TERM-DEBT-CURRENT-PORT> $ 0
$ 0
<CAPITAL-LEASE-OBLIGATIONS> $ 0
<LEASES-CURRENT> $ 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> $ 480,392
<TOT-CAPITALIZATION-AND-LIAB> $1,268,430
<GROSS-OPERATING-REVENUE> $ 303,854
<INCOME-TAX-EXPENSE> $ 22,331
<OTHER-OPERATING-EXPENSES> $ 219,195
<TOTAL-OPERATING-EXPENSES> $ 241,526
<OPERATING-INCOME-LOSS> $ 62,328
<OTHER-INCOME-NET> $ 1,425
<INCOME-BEFORE-INTEREST-EXPEN> $ 63,753
<TOTAL-INTEREST-EXPENSE> $ 20,590
<NET-INCOME> $ 43,163
$ 1,535
<EARNINGS-AVAILABLE-FOR-COMM> $ 41,628
<COMMON-STOCK-DIVIDENDS> $ 24,993
<TOTAL-INTEREST-ON-BONDS> $ 11,009
<CASH-FLOW-OPERATIONS> $ 51,917
<EPS-PRIMARY> $ 1.86
<EPS-DILUTED> $ 1.79
</TABLE>
