UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1994 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
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
Name of each exchange
Title of each class on which registered
------------------- ---------------------
COMMON STOCK, $2.00 PAR VALUE New York Stock Exchange
Pacific Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
Title of each class
-------------------
Cumulative Preferred Stock, $100 Par Value
4.50%
4.50%, Series of 1955
4.65%, Series of 1964
4.75%, Series of 1965
Convertible, Series of 1991
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 [ ].
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
As of February 21, 1995, the aggregate value of the Registrant's voting stock
held by non-affiliates was $525,826,752. The Registrant's Cumulative Preferred
Stock is not listed on any exchange, nor are prices for the Cumulative Preferred
Stock quoted on NASDAQ; therefore, its market value is not readily determinable
and is not included in the foregoing amount.
As of March 17, 1995, there were 22,416,708 shares outstanding of the
Registrant's Common Stock, par value $2.00 per share.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Shareholders for the year ended
December 31, 1994, furnished to the Securities and Exchange Commission pursuant
to Rule 14a - 3(b) under the Securities Exchange Act of 1934 (1994 Annual Report
to Shareholders), are filed as Exhibit 13 to this report and incorporated by
reference into Part II herein. Portions of the Registrant's definitive Proxy
Statement dated March 8, 1995, for the Annual Meeting of Shareholders to be held
on April 21, 1995, are incorporated by reference into Part III herein.
<PAGE>
TABLE OF CONTENTS
PART I Page
----
Item 1. Business
General..................................... 1
Electric Operations......................... 1
Regulatory and Environmental Matters........ 6
Item 2. Properties................................... 14
Item 3. Legal Proceedings............................ 15
Item 4. Submission of Matters to a Vote
of Security Holders......................... 15
Executive Officers of the Registrant................... 16
PART II
Item 5. Market for Registrant's Common Equity
and Related Stockholder Matters............. 17
Item 6. Selected Financial Data...................... 18
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................. 19
Item 8. Financial Statements and
Supplementary Data.......................... 19
Item 9. Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure........................ 19
PART III
Item 10. Directors and Executive Officers
of the Registrant........................... 19
Item 11. Executive Compensation....................... 19
Item 12. Security Ownership of Certain Beneficial
Owners and Management....................... 19
Item 13. Certain Relationships and Related
Transactions................................ 19
PART IV
Item 14. Exhibits, Financial Statement
Schedule, and Reports on Form 8-K........... 20
<PAGE>
PART I
ITEM 1. BUSINESS
GENERAL
Central Louisiana Electric Company, Inc. (the Company) was incorporated in
1934 under the laws of the State of Louisiana and is engaged principally in the
generation, transmission, distribution and sale of electric energy to
approximately 218,000 customers in 63 communities and contiguous rural areas in
a 14,000 square mile region in the State of Louisiana. At December 31, 1994 the
Company employed 1,220 persons. The Company's mailing address is P. O. Box 5000,
Pineville, Louisiana 71361-5000, and its telephone number is (318) 484-7400.
ELECTRIC OPERATIONS
CERTAIN FACTORS AFFECTING THE COMPANY'S ELECTRIC OPERATIONS
As an electric utility, the Company has been affected, to varying degrees, by
a number of factors affecting the electric utility industry in general. These
factors include increasingly competitive business conditions, the cost of
compliance with environmental regulations, and changes in the federal regulation
of the generation and transmission of electricity. For a discussion of various
regulatory changes affecting the Company and other electric utilities, see
"Regulatory and Environmental Matters - Energy Policy Act of 1992" and
"- Competition" below.
POWER GENERATION
The Company operates and either owns or has an ownership interest in four
steam electric generating stations. The Company is the sole owner of Coughlin
Power Station, Teche Power Station and Rodemacher Power Station Unit 1. The
Company owns a 50% interest in Dolet Hills Power Station Unit 1 (Dolet Hills
Unit 1), and a 30% interest in Rodemacher Power Station Unit 2 (Rodemacher Unit
2). At December 31, 1994 the Company's aggregate electric generating capacity at
the four stations was 1,686,000 kilowatts. The following table sets forth
certain information with respect to the Company's generating facilities.
YEAR CAPACITY TYPE OF
OF AT FUEL
GENERATING INITIAL 12/31/94 USED FOR
GENERATING STATION UNIT # OPERATION (KILOWATTS) GENERATION (1)
------------------------- ---------- --------- ----------- ----------------
Coughlin Power Station 6 1961 110,000 gas/oil(standby)
7 1966 224,000 gas/oil(standby)
Teche Power Station 1 1953 23,000 gas
2 1956 48,000 gas
3 1971 359,000 gas/oil(standby)
Rodemacher Power Station 1 1975 440,000 gas/oil
2 1982 157,000(2) coal/gas
Dolet Hills Power Station 1 1986 325,000(3) lignite
---------
Total Generating Capability 1,686,000
=========
-----------
(1) Where oil is used on a standby basis, capacity may be reduced.
(2) Represents the Company's 30% interest in the capacity of Rodemacher
Unit 2, a 523,000-kilowatt generating unit.
(3) Represents the Company's 50% interest in the capacity of Dolet Hills
Unit 1, a 650,000-kilowatt generating unit.
1
<PAGE>
FUEL
The following table sets forth, for the periods indicated, the percentages of
power generated from various fuels at the Company's electric generating plants,
the cost of fuel used per kilowatt hour (KWH) attributable to each such fuel and
the weighted average fuel cost per KWH.
<TABLE>
<CAPTION>
LIGNITE COAL GAS FUEL OIL WEIGHTED
---------------------- --------------------- --------------------- ------------------------ AVERAGE
COST COST COST COST COST
PER PERCENT PER PERCENT PER PERCENT PER PERCENT PER
KWH OF KWH OF KWH OF KWH OF KWH
YEAR (MILLS) GENERATION (MILLS) GENERATION (MILLS) GENERATION (MILLS) GENERATION (MILLS)
---- ------- ---------- ------- ---------- ------- ---------- ------- ---------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1994 15.09 36.5 19.53 16.0 22.28 47.4 21.0 0.1 19.22
1993 15.50 32.7 20.28 19.5 25.11 47.8 - - 21.02
1992 14.96 37.0 20.07 16.7 21.48 46.3 - - 18.83
1991 14.96 37.2 21.07 15.2 19.94 47.6 - - 18.26
1990 14.83 36.0 19.60 17.4 23.88 46.6 - - 19.87
</TABLE>
For information with respect to the Company's ability to pass through
changes in costs of fuel to its customers, see "Regulatory and Environmental
Matters - Rates" below.
Natural Gas Supply
During 1994 the Company purchased a total of 31,001 billion British thermal
units (MMMBtu) of natural gas for the generation of electricity. The annual and
average per-day quantities of gas purchased by the Company from each supplier
are shown in the table below.
AVERAGE
AMOUNT
1994 PURCHASED PERCENT
PURCHASES PER DAY OF TOTAL
NATURAL GAS SUPPLIER (MMMBTU) (MMMBTU) GAS USED
-------------------- --------- --------- --------
NorAm Energy Services, Inc. ............... 19,391 53.1 62.5
Louisiana Intrastate Gas Corporation ...... 9,695 26.6 31.3
LL&E Gas Marketing, Inc. .................. 1,825 5.0 5.9
Other ..................................... 90 0.2 0.3
------ ---- -----
31,001 84.9 100.0
====== ==== =====
The Company has contracted with NorAm Energy Services, Inc. (NES), formerly
Arkla General Supply Company, a subsidiary of NorAm Energy Corp., for the sale
of natural gas to be delivered to the Company's four power stations. The
contract provides for a firm gas supply through the year 2000 in quantities
sufficient to meet the Company's internal system requirements and contains
options designed to enable the Company to manage the natural gas component of
its total fuel costs. The contract with NES contains pricing mechanisms for gas
purchased thereunder which are intended to approximate current market prices at
the time of purchase and are designed to be competitive with prices paid by
other Louisiana utility companies.
The contract also contains minimum and maximum supply obligations which are
based upon the Company's seasonal generation
2
requirements. The Company is obligated to purchase certain quantities of gas
from NES on an annual basis. A minimum or base quantity of 20,000 MMMBtu of gas
must be purchased during a year, adjusted by plus or minus 10% at the option of
the Company each year, if all gas is purchased from NES. A minimum of 25,000
MMMBtu must be purchased during a year if any gas is purchased from third party
suppliers, unless permitted under the contract. During 1994 the Company
purchased a base quantity of 19,391 MMMBtu of natural gas, including natural gas
purchased on behalf of Southwestern Electric Power Company (SWEPCO), joint owner
of Dolet Hills Unit 1, and Louisiana Energy and Power Authority (LEPA) and
Lafayette Public Power Authority (LPPA), joint owners of Rodemacher Unit 2. In
addition, the Company purchased power totaling an equivalent gas volume of 665
MMMBtu from NES which was applied to the contract obligation, bringing the total
natural gas and natural gas equivalent purchased from NES during 1994 to 20,056
MMMBtu, thereby meeting the Company's minimum purchase obligations under the
contract. The contract also allows for the purchase of natural gas from
suppliers other than Louisiana Intrastate Gas Corporation (LIG) or LL&E Gas
Marketing, Inc. (LL&E), if the gas is purchased for sales to other utilities.
During 1994 a total of 89 MMMBtu of natural gas was purchased from Natural Gas
Clearinghouse and was transported by LIG for sales to other utilities.
During 1993 the Company entered into a contract with LIG for the sale and
transportation of natural gas to the Company's power stations. A total of 9,695
MMMBtu of "spot" and surplus gas was purchased from LIG during 1994 under an
interim sale and transportation agreement. The contract with LIG provides for
the purchase of spot gas for the Company's internal system requirements when the
price of such gas is less than that of energy purchases from other utilities and
provides for the purchase of surplus gas, if and when it is available, for
energy sales to other utilities. The Company has a separate contract with LIG
which provides for the transportation of gas purchased by the Company from third
party suppliers or under circumstances if NES were to fail to meet its contract
obligations.
The Company has contracted with LL&E, an affiliate of Louisiana Land &
Exploration Company, for the purchase of up to 5 MMMBtu of gas per day on a
month-to-month basis, subject to termination by either party. The purchase price
of the gas is based on a monthly index plus a markup and transportation fee.
Purchased gas is transported via the intrastate pipeline system owned and
operated by LIG.
The Company has never incurred a liability for any gas not taken under the
take-or-pay provisions of its gas supply agreements. The Company believes that
it will be able to renew its long-term gas supply contracts as they expire or
enter into similar contractual arrangements with other natural gas suppliers.
Although natural gas has been relatively plentiful in recent years, supplies
available to the Company and other consumers are vulnerable to disruption due to
weather conditions, transportation disruption, price changes and other events.
Large boiler-fuel users of natural gas, including electric utilities, generally
have the lowest priority among gas users in the event pipeline suppliers are
forced to curtail deliveries due to inadequate supplies. Thus, supplies
3
of natural gas may become unavailable from time to time, or prices may increase
rapidly in response to temporary supply disruptions. Such events may require the
Company to shift its gas-fired generation to alternative fuel sources, such as
fuel oil, to the extent it has the capability to burn those alternative fuels.
Currently, the Company anticipates that its alternative fuel capability,
combined with its solid-fuel generating resources, is adequate to meet fuel
needs during any temporary interruption of gas supplies.
Coal and Lignite Supply
Substantially all of the coal for Rodemacher Unit 2 is purchased under a
long-term contract with Kerr-McGee Coal Corporation from mines in Wyoming. The
price of coal under the contract is a base price per ton plus a "total
escalation charge" to reflect changes in certain indices specified in the
contract. After purchasing a given annual quantity of base coal (510,000 tons in
1994), the Company has the right to purchase coal from third parties in the spot
market, and Kerr-McGee has the right to meet the terms of the proposed purchase
if it chooses to do so. The coal is transported to the Rodemacher Unit 2 site
under terms of a long-term rail transportation contract in unit trains which are
leased by the Company pursuant to various long-term leases.
Substantially all of the lignite used to fuel Dolet Hills Unit 1 is
obtained under two long-term agreements. The Company and SWEPCO, joint owner of
Dolet Hills Unit 1, have entered into agreements pursuant to which each acquired
an undivided 50% interest in the other's leased and owned lignite reserves in
northwestern Louisiana. The Company and SWEPCO have also entered into a
long-term agreement with the Dolet Hills Mining Venture for the mining and
delivery of such lignite reserves, which reserves are expected to provide a
substantial portion of the fuel requirements for the projected operating life of
Dolet Hills Unit 1. The price of lignite delivered pursuant to the agreement is
a base price per ton, subject to escalation based on certain inflation indices,
plus specified "pass-through" costs.
Additionally, the Company is a party to a long-term agreement with Red
River Mining Co., a joint venture of the North American Coal Corp. and Phillips
Coal Company, which provides for base contract purchases and spot purchases of
lignite. The minimum annual purchase requirement is 200,000 tons. The base
lignite price under the contract is a base price per MMMBtu, subject to
escalation, plus certain pass-through costs, while the spot lignite price is a
base price which is escalated in proportion to the escalation in the Dolet Hills
Mining Venture agreement's price.
The continuous supply of coal and lignite from the mining sources may be
subject to interruption due to adverse weather conditions or other factors which
may disrupt mining operations or transportation. At December 31, 1994 the
Company's coal inventory at Rodemacher Unit 2 was approximately 83,000 tons
(about a 38-day supply) and the Company's lignite inventory was approximately
245,000 tons (about a 43-day supply).
4
Oil Supply
The Company stores fuel oil as an alternative fuel source. Rodemacher Power
Station has storage capacity for an approximate 75-day supply, and other
generating stations have storage capacity totaling about a 20-day supply. At
December 31, 1994 the Company had minimal inventories of fuel oil at its
generating stations. The Company has been able to obtain fuel oil by spot
purchases as needed.
POWER PURCHASES
The Company purchases electric energy from neighboring utilities when the
price of the energy purchased is less than the cost to the Company of generating
such energy from its own facilities. Additionally, the Company has a long-term
contract under which it purchases a small percentage of its total energy
requirements from a hydroelectric generating plant. During 1994 the Company
purchased 818 million KWH of electricity, or approximately 11% of its total
energy requirements.
SALES
The Company is a "public utility" engaged principally in the generation,
transmission, distribution and sale of electricity solely within Louisiana. For
further information regarding the Company's generating stations and its
transmission and distribution facilities, see "Power Generation" above and
"Properties" in Item 2 of this report. The following table sets forth
information concerning sales by the Company to various classes of customers for
each of the last three years.
SALES (MILLION KWH)
-------------------------------
1994 1993 1992
----- ----- -----
Residential ............................. 2,532 2,470 2,353
Commercial .............................. 1,180 1,109 1,062
Industrial .............................. 2,030 2,005 1,972
Other retail ............................ 487 463 477
Sales for resale ........................ 210 175 146
----- ----- -----
Total sales to regular customers ....... 6,439 6,222 6,010
Short-term sales to other utilities ..... 174 266 88
----- ----- -----
Total kilowatt-hour sales .............. 6,613 6,488 6,098
===== ===== =====
The Company's 1994 system peak demand occurred in June and was 1,310,000
kilowatts. Sales and peak demand are affected by seasonal demand influenced by
weather and are generally highest during the summer air-conditioning and winter
heating seasons. The financial effects of seasonal demand on the Company's
quarterly operating results are listed in Note L to the Consolidated Financial
Statements on page 32 of the 1994 Annual Report to Shareholders, which
information is filed as Exhibit 13 to this report and incorporated into Part II
herein by reference.
The Company expects the peak demand on the system to grow at a compound
annual rate of approximately 1.85% over the next ten years. An ongoing review of
future generating requirements continues to indicate that additional generating
capacity should not be needed until after the year 2000. The Company continues
to
5
examine postponement of additional new capacity by developing a demand-side
management program to reduce the load on the system along with refurbishing two
retired gas units not currently in service. Such measures are currently under
study.
No customer accounted for 10% or more of the Company's revenues in 1994.
Additional information regarding the Company's sales and revenues is set forth
on pages 14 and 15 under the subcaption "Results of Operations" under the
caption "Management's Discussion and Analysis" in the 1994 Annual Report to
Shareholders, which is filed as Exhibit 13 to this report and incorporated
herein by reference.
CONSTRUCTION AND FINANCING
For information on the Company's construction program and financing related
matters, see "Financial Condition" under "Management's Discussion and Analysis"
on pages 17 and 18 of the 1994 Annual Report to Shareholders, which information
is filed as Exhibit 13 to this report and incorporated into Part II herein by
reference.
REGULATORY AND ENVIRONMENTAL MATTERS
RATES
Retail electric operations of the Company are subject to the jurisdiction
of the Louisiana Public Service Commission (LPSC) with respect to rates,
standards of service, accounting and other matters. The LPSC establishes base
rates based upon nonfuel costs, including the cost of capital, and sales. The
Company is also subject to the jurisdiction of the Federal Energy Regulatory
Commission (FERC) with respect to certain aspects of its electric business,
including rates for wholesale service and interconnections with, and the
transmission of power for, other utilities. Periodically, the Company has sought
and received increases in base rates from both the LPSC and the FERC to cover
increases in operating costs and costs associated with additions to generating,
transmission and distribution facilities.
The Company's electric rates include a fuel and purchased power cost
adjustment clause which enables the Company to reflect monthly fluctuations in
the cost of fuel and short-term purchased power. Additionally, pretax income
from certain off-system sales to other utilities is passed on to customers
through the fuel cost adjustment clause. Fuel costs and fuel adjustment billing
factors are approved by the LPSC and the FERC. These cost adjustments are based
on costs from earlier periods which result in over or under-recovery for the
period in which the adjustment is made. Any over or under-recovery is corrected
by adjustment in later periods. As of December 31, 1994, the net accumulated
balance of over-recovery on sales subject to the LPSC's jurisdiction was
approximately $6.1 million.
The Company, along with three other investor-owned electric utility
companies operating within the State of Louisiana, was named by consultants in a
preliminary report provided to the LPSC at its regularly scheduled June 1993
meeting as having a current
6
return on equity which may be higher than a return which would be awarded if
rates were established currently. The LPSC offered all four utility companies
the opportunity to respond to the consultants' comments and considered the
responses of all four companies at its August 1993 meeting. The LPSC
subsequently elected to review the earnings of all electric, gas, water and
telecommunication utilities regulated by it to determine if the returns on
equity earned by these companies may be higher than returns that might be
awarded in the current economic environment. The Company is scheduled to be
reviewed in mid-1995. The Company believes its currently earned 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 the
results of its operations.
FRANCHISES
The Company operates under franchise rights granted by governmental units
and enforced by state regulation. Such franchises are for fixed terms and expire
from time to time. In the past, the Company has been successful in the renewal
of such franchises in a timely manner. In July 1994 the Company renewed a
nonexclusive municipal franchise affecting about 6,500 customers, or about 3% of
the Company's customers. During negotiations the city administration had
indicated that it might attempt to acquire ownership of the Company's electric
system within the city limits by condemnation or otherwise. However, the new
franchise was successfully negotiated without any attempts to acquire the
Company's local electric system or its customers.
Another nonexclusive municipal franchise affecting approximately 5,000
customers, or about 2% of the Company's customers, expired at the end of 1994.
The Company is currently negotiating this franchise agreement and expects that
it will be renewed in May 1995.
ENERGY POLICY ACT OF 1992
The Energy Policy Act, adopted in October 1992, significantly changed U.S.
energy policy, including that governing the electric utility industry. The
Energy Policy Act allows the FERC, on a case-by-case basis and with certain
restrictions, to order wholesale transmission access and to order electric
utilities to enlarge their transmission systems. The Energy Policy Act does,
however, prohibit FERC-ordered retail wheeling (I.E., opening up the electric
utility systems to allow customer choice of energy suppliers at the retail
level), including "sham" wholesale transactions. Further, under the Energy
Policy Act a FERC transmission order requiring a transmitting utility to provide
wholesale transmission services must include provisions generally that permit
the utility to recover from the FERC applicant all of the costs incurred in
connection with the transmission services, any enlargement of the transmission
system and associated services.
In addition, the Energy Policy Act revised the Public Utility Holding
Company Act of 1935 (the Holding Company Act) to permit utilities, including
registered holding companies, and nonutilities to form "exempt wholesale
generators" without the
7
principal restrictions of the Holding Company Act. Under prior law, independent
power producers were generally required to adopt inefficient and complex
ownership structures to avoid pervasive regulation under the Holding Company
Act. Management believes that the Energy Policy Act will make wholesale markets
more competitive.
COMPETITION
The LPSC does not provide exclusive service territories for electric
utilities under its jurisdiction. Instead, retail service to municipalities is
obtained through long-term non-exclusive franchises. The LPSC has used a "300
foot rule" for determining the supplier for new customers. The application of
this rule has led to competition with neighboring utilities for retail customers
at the borders of the Company's franchised service areas. The Company also
competes in its service area with suppliers of alternative forms of energy, some
of which may be less costly for certain applications than electricity. The
Company could experience some competition for electric sales to industrial
customers in the form of cogeneration or independent power producers. However,
the Company believes that its rates, and the quality and reliability of its
service, places it in a favorable competitive position in current retail
markets.
Wholesale energy markets, including the market for wholesale electric
power, have been competitive, and are becoming even more so as the number of
competitors in these markets increases as a result of enactment of the Energy
Policy Act. The Company competes with other public utilities, cogenerators and
qualified facilities in other forms for sales of electric power at wholesale.
Under the Energy Policy Act, any participant in the wholesale market can obtain
a FERC order requiring transmission services be provided by the Company under
certain conditions.
Various legislative and regulatory bodies are considering a number of
issues, including the extent of any deregulation of retail sales of power, the
pricing of transmission service on an electric utility's transmission system,
and the role of utilities, independent power producers and competitive bidding
in the construction and operation of new generation capacity. In order to
compete successfully in this developing environment, the Company plans to meet
the challenges by continuing its planned course of action.
First, the Company intends to retain its low-cost supplier status by
continuing to enhance customer service while reducing costs. In 1993 the Company
conducted an organizational effectiveness study which resulted in a plan to
improve operations and provide better customer service at lower costs. As a
result of this study, the Company's organizational structure was streamlined in
1993. The second phase of the Company's reorganization includes plans to
consolidate 25 customer service offices into ten regional offices by June 1995.
This consolidation plan will be implemented in conjunction with the
establishment of a 24-hour customer call center and a network of authorized
payment locations throughout the service area by mid-1995. In addition to staff
reductions and
8
customer service office consolidation, the Company plans to delay until after
the year 2000 addition of any generation capacity and when new generation
is needed, to add it in small, inexpensive increments to minimize risk and
expense. For instance, the Company is planning to delay until after 2000 the
refurbishment of two retired gas units not currently in service.
Second, the Company has adopted a strategy of adding retail customers near
its present retail markets. The Company's efforts to acquire Teche Electric
Cooperative, Inc. (Teche) and Washington - St. Tammany Electric Cooperative,
Inc. are part of this strategy. For more information on acquisition efforts, see
pages 15 and 16 under the subcaption "Results of Operations - Co-op
Developments" under the caption "Management's Discussion and Analysis" in the
1994 Annual Report to Shareholders, which information is filed as Exhibit 13 to
this report and incorporated into Part II herein by reference.
Additionally, in recent years, the Company has been successful in competing
for wholesale sales within its service territory, including short-term sales to
the city of Alexandria and a full requirement sale to the city of St.
Martinville. Sales under the St. Martinville agreement, which represents an
approximate 13 MW load, will begin in May 1995 and extend through December 2000.
The agreement is expected to provide additional base revenues, net of facility
payments, of about $4 million over the term of the agreement. The contract was
filed with the FERC for approval in 1993. LEPA, the city of Lafayette and
American Public Power Association (APPA) intervened before the FERC asserting
unduly preferential, discriminatory and predatory pricing. The Company contested
these assertions and the case was heard by an administrative law judge (ALJ). In
February 1995 a decision was issued in which the ALJ concluded that the
agreement between the Company and St. Martinville is just and reasonable and not
unduly discriminatory. LEPA, the city of Lafayette and APPA have until April 21,
1995 to file an appeal.
At this time it is not possible to predict what changes to the electric
utility industry will emerge as a result of any federal or state regulatory and
legislative initiatives or from specific regulatory decisions of the LPSC or
FERC, or the impact of such changes on the Company. It seems likely that such
changes will ultimately increase the competition the Company faces in supplying
electric energy to its customers.
REGULATORY ACCOUNTING
The Company follows the accounting for regulated entities prescribed by
Statement of Financial Accounting Standards No. 71, "Accounting for the Effects
of Certain Types of Regulation" (FAS 71). FAS 71 requires a rate-regulated
entity to reflect the effects of regulatory decisions in its financial
statements. In accordance with FAS 71, the Company has deferred certain costs
pursuant to rate actions of the LPSC and the FERC and is recovering, or expects
to recover, such costs in electric rates charged to its customers. Although
recent developments, such as retail wheeling, in other states indicate that the
electric utility industry is becoming increasingly competitive, the degree to
which
9
regulatory oversight in Louisiana will be lifted and competition will be
permitted to establish the cost of service to the consumer is uncertain.
Therefore, the Company believes that continued accounting under FAS 71 is
appropriate. In the event the Company is no longer able to apply FAS 71 due to
future changes in regulation or competition, the Company's ability to recover
its assets may not be assured.
ENVIRONMENTAL QUALITY
The Company is subject to numerous laws and regulations administered by
federal, state and local authorities to protect the environment. These statutory
and regulatory provisions impose various substantive requirements, the violation
of which may result in substantial fines and penalties. Environmental
requirements continue to increase as a result of new legislation, administrative
actions and judicial interpretations. Therefore, the precise future effects of
existing and potential requirements are difficult to determine. During 1994 the
Company's capital expenditures related to environmental compliance were
approximately $3.5 million and such expenditures are estimated to total
approximately $1.9 million in 1995.
Air Quality
The State of Louisiana regulates emissions from each of the Company's
generating units through regulations issued by the Air Quality Division (AQD) of
the Louisiana Department of Environmental Quality (LDEQ). In addition, the AQD
implements certain programs initially established by the Environmental
Protection Agency (EPA). The AQD requires permits for certain generating units
including the Company's three most recently constructed generating units,
Rodemacher Units 1 and 2 and Dolet Hills Unit 1. All three of these units have
received AQD permits. Teche Unit 3 received a permit in 1973 when the unit was
modified to burn low-sulfur fuel oil. Emissions from the Company's other units
are regulated by Emission Inventory Questionnaires (EIQs), or compliance
schedules, which are submitted to the AQD.
The federal Clean Air Act Amendments of 1990 (the Act) established a
regulatory program to address the effects of acid rain that imposes restrictions
on sulfur dioxide (SO2) emissions from certain utility units. It essentially
requires that utilities must hold a regulatory "allowance" for each ton of SO2
emitted after a certain date. The EPA is required to allocate a set number of
allowances to each affected unit based on its historic operations. The Company
requested an adjustment to the allowance allocation for Rodemacher Unit 2
because of an extended outage on the unit during one of the years used in the
EPA's calculation. Because the final allowance allocation did not reflect the
requested adjustment, the Company filed a petition for judicial review of the
EPA's action on May 21, 1993 in the United States Court of Appeals for the
District of Columbia Circuit. The Company has met with the EPA and provided
additional information regarding the outage of Rodemacher Unit 2. The EPA
recently advised the Company that it will adjust the allowance allocation for
Rodemacher Unit 2 at a future date. If the additional allowances requested from
the EPA are not ultimately allocated to Rodemacher Unit 2,
10
that unit may have to procure additional allowances through purchase or transfer
from other Company units. At this time, the Company does not expect either of
these options to involve a significant increase in the Company's five-year
construction plan.
The allowance requirement may prove to be a critical factor in the
construction of any new solid-fuel units, since the EPA will not allocate
allowances to new units. A utility will be required to offset all SO2 emissions
from any new unit by utilizing excess allowances it may have from its other
units, or by reducing SO2 emissions from those units. As an existing unit is
retired, the allowances allocated to it may be used to offset SO2 emissions from
a new unit. A utility may also purchase SO2 allowances through an allowance
trading system. Compliance with this requirement of the Act will, therefore,
make the construction of new solid-fuel units more costly.
The Company's two existing solid-fuel generating units, Rodemacher Unit 2
and Dolet Hills Unit 1, either burn low-sulfur coal or utilize pollution control
equipment to reduce SO2 emissions. Phase II of the acid rain program of the Act,
effective in the year 2000, will impose limits on SO2 emissions from both of
these existing generating units, but the Company does not expect that these
limits will significantly affect the way these units are operated.
The Act also requires the EPA to revise nitrogen oxides (NOx) emission
limits for existing coal-fired boilers. In March 1994 the EPA lowered the NOx
emission rate for certain boilers, including Rodemacher Unit 2 and Dolet Hills
Unit 1. Rodemacher Unit 2 and Dolet Hills Unit 1 will have to meet this new
emission rate by January 1, 2000. In 1997 the EPA has the option of lowering the
NOx emission rate again. Affected boilers, including Rodemacher Unit 2 and Dolet
Hills Unit 1, would still have to comply with any revision by the same January
1, 2000 deadline. If the Company elects to comply with the newest NOx rate by
1997 instead of 2000, Rodemacher Unit 2 and Dolet Hills Unit 1 would be
protected from any lower rate which the EPA might finalize in 1997 until the
year 2008. The Company is evaluating its options under these NOx rules.
Significant reductions in NOx emission limits may require modification of
burners or other capital improvements at Rodemacher Unit 2 and Dolet Hills Unit
1.
The Act also requires the installation of continuous emission monitoring
systems (CEMS) on seven of the Company's generating units affected by the acid
rain program. These CEMS were installed in 1994 at a cost of approximately $2.0
million.
Title V of the Act requires certain utility and industrial facilities to
obtain operating permits. States are required to develop operating permit
programs as part of their State Implementation Plans. In November 1993 the LDEQ
promulgated new regulations to comply with the requirements of Title V of the
Act that have been submitted to the EPA for review. EPA approval is expected in
1995 and permit applications must then be submitted in 1996. The operating
permits will contain all acid rain permit requirements as well as requirements
of existing state and federal
11
air programs. Title V allows states to collect fees up to $25 per ton of
regulated emissions to support their operating permit programs. Fee assessments
on the Company's affected units have already increased because of this
provision. The LDEQ currently charges $9 per ton and that amount is expected to
increase.
Title III of the Act addresses the effects of hazardous air pollutants.
Under this provision, a three-year study of utility air emissions was
undertaken. If the results of this study indicate that it is appropriate and
necessary to regulate utility emissions as hazardous emissions, the EPA will be
authorized to regulate these emissions. The EPA study has been completed, but
the EPA has not determined whether the results warrant additional regulation
under the Act.
The Company is participating in the Utility Forest Carbon Management
Program which is one of the industry initiatives in the Climate Challenge
Program. The Climate Challenge Program represents the federal government's
commitment to reduce greenhouse gases to 1990 levels by voluntary initiatives.
The Company is evaluating what is necessary to fulfill its part in meeting this
goal.
Water Quality
The Company has received from the EPA all National Pollutant Discharge
Elimination System (NPDES) permits required under the Clean Water Act for
discharges from its four generating stations. NPDES permits have fixed dates of
expiration, and the Company has applied for renewal of these permits within the
applicable time periods. The Water Pollution Control Division of the LDEQ
requires facilities which discharge wastewater into Louisiana waters to be
permitted under the Louisiana Water Discharge Permit System (LWDPS). The Company
has applied for and received LWDPS permits for its four generating stations.
The most recently issued NPDES permit for Dolet Hills Unit 1 contained an
Administrative Order requiring biomonitoring of the discharge from the
impoundment associated with the Fly Ash/Scrubber Sludge Landfill. The Order
requires four biomonitoring tests to be performed on a quarterly basis. The four
quarterly discharges tested have failed all or part of the biomonitoring test
criteria, which in turn, triggered three additional tests to be performed. The
failure of the third of these additional tests once again triggered a
requirement for additional testing. This time, two subsequent tests are
required. Failure of either of these two subsequent tests will require the
Company to submit a plan describing options for reducing certain constituents in
the discharge to the EPA. None of the options, if implemented, would affect the
operation of the unit, or involve a significant increase in the Company's five-
year construction plan.
Solid Waste Disposal
The Solid Waste Division of the LDEQ has adopted regulations and a
permitting system for the management and disposal of solid waste generated by
electric utilities. The Company has received all required permits from the Solid
Waste Division for the on-site
12
disposal of solid waste generated at its generating stations.
In 1993 the LDEQ promulgated extensive revisions to rules regulating the
disposal of solid wastes. The revised rules required modification documents to
be submitted by February 1, 1994 for all disposal facilities which have
previously received permits. The Company has submitted modification documents
for all of its currently permitted solid-waste disposal facilities. The Company
has requested an exemption from parts of the revised rules for the Dolet Hills
landfill facility and has received conditional approval from the LDEQ for the
continued utilization of an alternate liner system. The Company is in the
process of obtaining additional information which will make the approval
permanent. The exemption, if granted, is expected to save $360,000 to $900,000
per year in operating costs at the landfill.
Hazardous Waste Generation
The Company produces certain wastes at its four generating stations and at
other locations which are classified as hazardous. The Hazardous Waste Division
of the LDEQ regulates these wastes and has issued identification numbers to the
sites where such wastes are produced. The Company does not treat, store or
dispose of these wastes on site; therefore, no permits are required. All
hazardous wastes produced by the Company are disposed of at federally permitted
hazardous waste disposal sites.
PCB Disposal
In 1986 the Company was named a Potentially Responsible Party (PRP) by the
EPA under the Comprehensive Environmental Response, Compensation, and Liability
Act of 1980 (CERCLA) for its involvement at the Rose Chemicals (Rose) disposal
site in Holden, Missouri. The Company had contracted with Rose for disposal of
polychlorinated biphenyl (PCB) materials at the site from 1983 through 1986. In
naming the Company a PRP, the EPA advised that Rose was no longer authorized to
process PCBs for disposal and that the Company, as one of the generators of the
materials previously sent to the site, was potentially responsible for the
removal and disposal of PCBs remaining at the site pursuant to CERCLA. Under
CERCLA, the Company could be held jointly and severally liable for the cost of
cleaning up the site. The Company, along with other PRPs, has entered into two
Administrative Orders on Consent with Region VII of the EPA for the removal of
certain PCB materials from the site. These materials have now been removed and
disposed of at federally permitted PCB disposal facilities. All clean-up
activities at the site are expected to be completed in 1995. After the site is
closed, it will be monitored for a set number of years. The Company has
contributed $337,000 to the cleanup of this site and does not presently
anticipate any requirement to make additional contributions.
The Company has complied with the statutory requirements established by the
EPA for the general removal from service and disposal of certain equipment
containing PCBs. The EPA has authorized the continued use of such equipment in
locations where its use does not pose an exposure risk, and the Company uses
such equipment only in restricted or remote areas. In 1994 the Company spent
$401,000 on the disposal of PCB materials used in its system.
13
OTHER EVENTS
Co-op Developments
At their annual meeting on March 11, 1995, Teche members approved a
purchase and sale agreement regarding a purchase of all of the assets of Teche
by the Company for consideration consisting of cash and debt assumption
aggregating $22.4 million. Required approvals from governmental authorities,
including the LPSC and the Rural Utilities Service (formerly the Rural
Electrification Administration) have not yet been obtained, and other conditions
to the sale have not yet been satisfied. Among other things, the purchase and
sale agreement is contingent upon satisfactory renegotiation or assumption of
Teche's power supply contract with Cajun Electric Power Cooperative Inc.
(Cajun), which filed in Decemer 1994 for protection from creditors under
Chapter 11 of the Bankruptcy Code. Teche has an agreement with Cajun to buy all
of its power from Cajun through the year 2026. Cajun filed a motion in March
1995 to prevent its member utilities, including Teche, from being acquired
without bankruptcy court approval. The Company and Teche have vigorously
contested that motion. Cajun, Teche and the Company have agreed to postpone a
hearing on that motion indefinitely. Each party has the right to terminate this
standstill agreement upon notice to the others. No assurance can be given as to
the outcome of that litigation or the consummation of the Teche acquisition.
Reversal of Suspension of Local Sales Tax Exemption
On January 27, 1995, the Louisiana Supreme Court reversed itself in the BP
OIL VS. PLAQUEMINES PARISH GOVERNMENT case, ruling that the suspension of state
sales and use tax exemptions does not apply to local sales tax exemptions. The
court reheard arguments in the case on January 20, 1995, and rendered a
unanimous decision to overturn its 5-2 ruling of last September. The September
1994 ruling could have allowed local governments to collect sales taxes for all
open and future tax periods on traditionally exempt items, such as retail sales
of electricity.
ITEM 2. PROPERTIES
All of the Company's electric generating stations and all other operating
properties are located in the State of Louisiana. The Company considers all of
its properties to be well maintained, in good operating condition and suitable
for their intended purposes.
ELECTRIC GENERATING STATIONS
As of December 31, 1994, the Company either owned or had an ownership
interest in four steam electric generating stations with a combined electric
generating capacity of 1,686,000 kilowatts. For additional information regarding
the Company's generating facilities, see "Power Generation" under the caption
"Electric Operations" in Item 1 of this report.
SUBSTATIONS
As of December 31, 1994, the Company owned 79 transmission substations and
308 distribution substations.
14
ELECTRIC LINES
As of December 31, 1994, the Company's transmission system consisted of
approximately 67 circuit miles of 500 kilovolt (KV) lines; 450 circuit miles of
230 KV lines; 647 circuit miles of 138 KV lines; and 15 circuit miles of 69 KV
lines. The Company's distribution system consisted of approximately 1,996
circuit miles of 34.5 KV lines and 10,183 circuit miles of other lines.
GENERAL PROPERTIES
The Company owns various properties which include a seven-story
headquarters office building, regional offices, a central warehouse, service
centers, telecommunications equipment and other facilities owned for general
purposes.
TITLE
The Company's electric generating plants and certain other principal
properties are owned in fee. Electric transmission and distribution lines are
located either on private rights-of-way or along streets or highways by public
consent.
Substantially all of the Company's property, plant and equipment is subject
to liens securing obligations of the Company under an Indenture of Mortgage,
none of which impairs the use of such properties in the operation of its
business.
ITEM 3. LEGAL PROCEEDINGS
The Company is not aware of any legal proceeding to which it is a party
which would have a material adverse effect on its financial condition, results
of operations or competitive position. For a discussion of certain legal
proceedings and regulatory matters involving the Company, see (i) "Regulatory
and Environmental Matters - Competition" and "-Environmental Quality" in Item 1
of this report and (ii) page 15 under the subcaption "Results of
Operations-Nonfuel Operating Expenses and Income Taxes" under the caption
"Management's Discussion and Analysis" in the 1994 Annual Report to
Shareholders, which sections are incorporated herein by reference.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders of the
Company during the fourth quarter of 1994.
15
EXECUTIVE OFFICERS OF THE REGISTRANT
The names of the executive officers of the Company, their positions held,
five-year employment history, ages and years of service as of December 31, 1994,
are presented below. Executive officers are appointed annually to serve for the
ensuing year or until their successors have been appointed.
POSITION AND FIVE-YEAR
NAME OF EXECUTIVE OFFICER EMPLOYMENT HISTORY
------------------------- -------------------------------------
Gregory L. Nesbitt........ President and Chief Executive Officer
since April 1993; President and Chief
Operating Officer from April 1992 to
April 1993; Executive Vice President
and Chief Operating Officer from July
1991 to April 1992; Executive Vice
President from January 1988 to July
1991. (Age 56; 14 years of service)
Robert L. Duncan.......... Vice President-Customer Operations
since July 1984. (Age 52; 29 years
of service)
David M. Eppler........... Vice President-Finance since October
1993; Vice President and Treasurer
from July 1987 to October 1993. (Age
44; 13 years of service)
Leonard G. Fontenot....... Vice President-Power Supply and
Energy Transmission since April 1986.
(Age 57; 32 years of service)
Catherine C. Scheffler.... Vice President-Human Resources since
October 1993; General Manager-Human
Resources from August 1993 to October
1993; Administrator-Compensation from
May 1991 to August 1993; Vice
President at Rapides Bank and Trust
Company from December 1987 to April
1991. (Age 39; 3 years of service)
David K. Warner........... Vice President-Administrative
Services since April 1988. (Age 44;
14 years of service)
John L. Baltes, Jr........ Controller since April 1989. (Age
48; 13 years of service)
Michael P. Prudhomme...... Secretary-Treasurer since January
1994; Secretary from October 1993 to
January 1994; Vice President-Customer
Services from May 1985 to October
1993. (Age 51; 25 years of service)
16
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The Company's common stock is listed for trading on the New York Stock
Exchange (NYSE) and the Pacific Stock Exchange. The following table sets forth
high and low sales prices for the Company's common stock as reported on the NYSE
Composite Transactions Tape and dividends paid per share during each calendar
quarter of 1994 and 1993.
1994 1993
--------------------------- ---------------------------
SALES PRICE SALES PRICE
----------------- -----------------
HIGH LOW DIVIDENDS HIGH LOW DIVIDENDS
------- ------- --------- ------- ------- ---------
First Quarter ....... $24-7/8 $21-1/4 $.355 $25-3/8 $23-1/2 $.345
Second Quarter ...... $25-5/8 $22-1/4 $.365 $26-3/4 $24-3/4 $.355
Third Quarter ....... $24-3/8 $21-1/4 $.365 $27-1/8 $25-1/4 $.355
Fourth Quarter ...... $23-5/8 $20-7/8 $.365 $27 $23 $.355
Subject to the prior rights of the holders of the respective series of the
Company's preferred stock, such dividends as determined by the Board of
Directors of the Company may be declared and paid on the common stock from time
to time out of funds legally available therefor. The provisions of the Company's
charter applicable to preferred stock and certain provisions contained in the
debt instruments of the Company under certain circumstances restrict the amount
of retained earnings available for the payment of dividends by the Company. The
most restrictive covenant requires that common shareholders' equity be not less
than 30% of total capitalization, including short-term debt. At December 31,
1994, approximately $136,000,000 of retained earnings was not restricted. On
January 27, 1995 the Board of Directors of the Company declared a quarterly
dividend of $.365 per share which was paid on February 15, 1995, to common
shareholders of record on February 6, 1995.
As of March 17, 1995, there were 12,541 holders of record of the Company's
common stock, and the closing price of the Company's common stock as reported on
the NYSE Composite Transactions Tape was $22.625 per share.
17
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth certain selected financial data for the
respective periods presented and should be read in conjunction with the
Consolidated Financial Statements and the related Notes thereto set forth on
pages 20 through 33 in the 1994 Annual Report to Shareholders, which information
is filed as Exhibit 13 to this report and incorporated into Item 8 herein by
reference.
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1994 1993 1992 1991 1990
---------- ---------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
FINANCIAL DATA (IN THOUSANDS, EXCEPT
PER SHARE AMOUNTS AND RATIOS)
Statement of Income Data
Operating revenues ................ $ 379,603 $ 382,433 $351,613 $343,350 $341,188
Net income ........................ $ 45,043 $ 41,812 $ 45,239 $ 44,929 $ 42,544
Net income applicable
to common stock ................. $ 43,017 $ 39,827 $ 43,010 $ 42,957 $ 41,663
Primary net income
per common share<F1> ............ $ 1.92 $ 1.78 $ 1.93 $ 1.92 $ 1.85
Fully diluted net income
per common share<F1> ............ $ 1.86 $ 1.73 $ 1.89 $ 1.87 $ 1.85
Cash dividends paid per
common share<F1> ................ $ 1.450 $ 1.410 $ 1.370 $ 1.325 $ 1.265
Ratio of earnings to
fixed charges ................... 3.35x 3.30x 3.16x 2.99x 2.84x
Ratio of earnings to
combined fixed charges and
preferred stock dividends ....... 3.02x 2.96x 2.83x 2.73x 2.73x
Balance Sheet Data (at end of period)
Total assets ...................... $1,178,191 $1,161,635 $978,220 $973,472 $920,999
Long-term obligations and
redeemable preferred stock ...... $ 343,509 $ 358,329 $318,214 $400,605 $328,526
OPERATING STATISTICS
Electric sales - regular system
customers (million KWH)
Residential ...................... 2,532 2,470 2,353 2,313 2,225
Commercial ....................... 1,180 1,109 1,062 1,043 997
Industrial ....................... 2,030 2,005 1,972 1,928 1,971
Other retail ..................... 487 463 477 464 434
Sales for resale ................. 210 175 146 141 216
---------- ---------- -------- -------- --------
Total sales to regular customers ... 6,439 6,222 6,010 5,889 5,843
Short-term energy sales to other
utilities (million KWH) ............ 174 266 88 121 86
---------- ---------- -------- -------- --------
Total electric sales ............. 6,613 6,488 6,098 6,010 5,929
========== ========== ======== ======== ========
System peak (thousand kilowatts) ..... 1,310 1,346 1,308 1,233 1,218
========== ========== ======== ======== ========
Electric customers ................... 217,568 212,559 213,941 211,332 201,763
========== ========== ======== ======== ========
<FN>
<F1> All prior-period per share amounts have been restated to reflect a
two-for-one stock split effective in May 1992.
</FN>
</TABLE>
18
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The information set forth on pages 14 through 18 under the caption
"Management's Discussion and Analysis" in the Company's 1994 Annual Report to
Shareholders is incorporated herein by reference; such information is filed as
Exhibit 13 to this report.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information set forth on pages 20 through 33 in the 1994 Annual Report to
Shareholders is incorporated herein by reference; such information is filed as
Exhibit 13 to this report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information set forth (i) under the subcaption "Directors" under the
caption "Election of Directors" and (ii) in the last paragraph under the caption
"Security Ownership of Directors and Management" in the Company's definitive
Proxy Statement dated March 8, 1995, filed with the Securities and Exchange
Commission pursuant to Regulation 14A under the Securities Exchange Act of 1934
(1995 Proxy Statement), is incorporated herein by reference. See also "Executive
Officers of the Registrant" on page 16 of this report.
ITEM 11. EXECUTIVE COMPENSATION
The information set forth under the subcaption "Organization and Compensation
of the Board of Directors" under the caption "Election of Directors" and under
the caption "Executive Compensation" in the 1995 Proxy Statement (excluding the
information required by paragraphs (k) and (l) of Item 402 of Regulation S-K) is
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The information set forth under the caption "Security Ownership of Directors
and Management" and under the caption "Security Ownership of Certain Beneficial
Owners" in the 1995 Proxy Statement
is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information set forth under the subcaption "Compensation Committee
Interlocks and Insider Participation" under the caption "Election of Directors"
in the 1995 Proxy Statement is incorporated herein by reference.
19
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS
ON FORM 8-K
REFERENCE (PAGE)
----------------------------
1994 ANNUAL
FORM 10-K REPORT TO
ANNUAL REPORT SHAREHOLDERS
------------- ------------
14(a)(1) Consolidated Financial Statements and
Supplementary Data on pages 20 through 33
in the Company's 1994 Annual Report to
Shareholders are filed as Exhibit 13 to
this report and are incorporated herein
by reference.
Consolidated Statements of Income for the
years ended December 31, 1994, 1993 and
1992....................................... 20
Consolidated Balance Sheets at December
31, 1994 and 1993.......................... 21
Consolidated Statements of Cash Flows for
the years ended December 31, 1994, 1993
and 1992................................... 22
Consolidated Statements of Changes in
Common Shareholders' Equity for the
years ended December 31, 1994, 1993 and
1992....................................... 23
Notes to Consolidated Financial
Statements................................. 24
Report of Independent Accountants........... 33
14(a)(2) Financial Statement Schedules
Report of Independent Accountants........... 29
Schedule II - Valuation and Qualifying
Accounts................................... 30
Financial Statement Schedules other than
those shown in the above index are
omitted because they are either not
required or are not applicable or the
required information is shown in the
Consolidated Financial Statements and
Notes thereto.
20
<PAGE>
14(a)(3) List of Exhibits
The Exhibits designated by an asterisk are filed herewith. The Exhibits not so
designated have been previously filed with the Securities and Exchange
Commission, and are incorporated herein by reference. The Exhibits designated by
two asterisks are management contracts and compensatory plans and arrangements
required to be filed as Exhibits to this report.
<TABLE>
<CAPTION>
SEC FILE OR REGISTRATION
REGISTRATION STATEMENT EXHIBIT
EXHIBITS NUMBER OR REPORT NUMBER
---------------------------------------------------- ------------ -------------- ---------
<S> <C> <C> <C> <C>
3(a) Restated Articles of Incorporation of the 1-5663 10-Q(3/92) 3
Company dated as of July 24, 1989,
as amended through April 24, 1992
3(b) Amended and Restated Bylaws of the 1-5663 10-Q(3/94) 3
Company, as amended to April 22, 1994
4(a)(1) Indenture of Mortgage dated as of July 1, 2-27284 S-1(10/17/67) 4(b)(1)
1950, between the Company and First
National Bank of New Orleans, as Trustee
4(a)(2) First Supplemental Indenture dated as 2-27284 S-1(10/17/67) 4(b)(2)
of October 1, 1951, to Exhibit 4(a)(1)
4(a)(3) Second Supplemental Indenture dated as 2-27284 S-1(10/17/67) 4(b)(3)
of June 1, 1952, to Exhibit 4(a)(1)
4(a)(4) Third Supplemental Indenture dated as 2-27284 S-1(10/17/67) 4(b)(4)
of January 1, 1954, to Exhibit 4(a)(1)
4(a)(5) Fourth Supplemental Indenture dated as 2-27284 S-1(10/17/67) 4(b)(5)
of November 1, 1954, to Exhibit 4(a)(1)
4(a)(6) Tenth Supplemental Indenture dated as 1-5663 10-K(1986) 4(a)(11)
of September 1, 1965, to Exhibit 4(a)(1)
4(a)(7) Eleventh Supplemental Indenture dated 2-32069 S-9(4/7/69) 2(m)
as of April 1, 1969, to Exhibit 4(a)(1)
4(a)(8) Eighteenth Supplemental Indenture dated as 1-5663 10-K(1993) 4(a)(8)
of December 1, 1982, to Exhibit 4(a)(1)
4(a)(9) Nineteenth Supplemental Indenture dated as 1-5663 10-K(1993) 4(a)(9)
of January 1, 1983, to Exhibit 4(a)(1)
4(a)(10) Twenty-Sixth Supplemental Indenture dated as 1-5663 8-K(3/90) 4(a)(27)
of March 15, 1990, to Exhibit 4(a)(1)
4(a)(11) Twenty-Seventh Supplemental Indenture dated as 2-27284 S-1(10/17/67) 4(f)(1)
of July 15, 1991, to Exhibit 4(a)(1)
4(b)(1) Indenture dated December 29, 1948, between 2-27284 S-1(10/17/67) 4(f)(2)
Louisiana Rural Electric Corporation (LREC)
and Fidelity National Bank of Baton Rouge,
as Trustee
21
4(b)(2) Supplemental Indenture dated August 25, 1949, 2-27284 S-1(10/17/67) 4(f)(3)
to Exhibit 4(b)(1)
4(b)(3) Supplemental Indenture dated July 13, 1951, to 1-5663 10-K(1986) 4(b)(4)
Exhibit 4(b)(1)
4(b)(4) Supplemental Indenture dated July 11, 1958, to 2-27284 S-1(10/17/67) 4(f)(4)
Exhibit 4(b)(1)
4(b)(5) Supplemental Indenture dated September 26, 1961, 1-5663 10-K(1988) 4(b)(6)
to Exhibit 4(b)(1)
4(b)(6) Assumption Agreement dated July 25, 1978, 1-5663 10-K(1988) 4(b)(7)
between the Company and the United States of
America, relating to Exhibit 4(b)(1)
4(b)(7) Sale and Assumption of Mortgages dated August 1, 1-5663 10-K(1990) 4(g)
1978, between the Company and LREC, relating to
Exhibit 4(b)(1)
4(c) Agreement dated October 2, 1980, between the 33-24896 S-3(10/11/88) 4(b)
Company and the City of Franklin, Louisiana
4(d) Indenture between the Company and Bankers
Trust Company, as Trustee, dated as of
October 1, 1988
4(e) Trust Indenture (The Industrial Development 1-5663 10-K(1991) 4(i)
Board of the Parish of Rapides, Inc.
(Louisiana) Adjustable Tender Pollution
Control Revenue Refunding Bonds, Series 1991)
dated as of May 1, 1991, between The Industrial
Development Board of the Parish of Rapides, Inc.
and First National Bank of Commerce
*4(e)(1) First Supplemental Trust Indenture (The Industrial
Development Board of the Parish of Rapides, Inc.
(Louisiana) Adjustable Tender Pollution Control
Revenue Refunding Bonds, Series 1991) dated as of
May 1, 1993, between The Industrial Development
Board of the Parish of Rapides, Inc. and First
National Bank of Commerce, relating to Exhibit 4(e)
4(f) Refunding Agreement (The Industrial 1-5663 10-Q(6/91) 10(a)
Development Board of the Parish of Rapides,
Inc. (Louisiana) Adjustable Tender Pollution
Control Revenue Refunding Bonds, Series
1991) dated as of May 1, 1991, between the
Company and The Industrial Development
Board of the Parish of Rapides, Inc.
22
4(g) Trust Indenture (Parish of DeSoto, State of 1-5663 10-K(1991) 4(k)
Louisiana Adjustable Tender Pollution Control
Revenue Refunding Bonds, Series 1991A) dated
as of May 1, 1991, between Parish of Desoto,
State of Louisiana and First National Bank
*4(g)(1) First Supplemental Trust Indenture (The
Industrial Development Board of
the Parish of Rapides, Inc. (Louisiana)
Adjustable Tender Pollution Control
Revenue Refunding Bonds, Series 1991A)
dated as of May 1, 1993, between The
Industrial Development Board of the Parish
of Rapides, Inc. and First National
Bank of Commerce, relating to Exhibit 4(g)
4(h) Refunding Agreement (Parish of DeSoto, 1-5663 10-Q(6/91) 10(b)
State of Louisiana Adjustable Tender Pollution
Control Revenue Refunding Bonds, Series
1991A) dated as of May 1, 1991, between
the Parish of DeSoto, State of Louisiana
and the Company
4(i) Trust Indenture (Parish of DeSoto, State of 1-5663 10-K(1991) 4(m)
Louisiana Adjustable Tender Pollution
Control Revenue Refunding Bonds, Series 1991B)
dated as of May 1, 1991, between Parish of
DeSoto, State of Louisiana and First National
Bank of Commerce
*4(i)(1) First Supplemental Trust Indenture (The Industrial
Development Board of the Parish of Rapides, Inc.
(Louisiana) Adjustable Tender Pollution Control
Revenue Refunding Bonds, Series 1991B) dated
as of May 1, 1993, between The Industrial
Development Board of the Parish of Rapides, Inc.
and First National Bank of Commerce, relating to
Exhibit 4(i)
4(j) Refunding Agreement (Parish of DeSoto, 1-5663 10-Q(6/91) 10(c)
State of Louisiana Adjustable Tender Pollution
Control Revenue Refunding Bonds, Series
1991B) dated as of May 1, 1991, between
the Parish of DeSoto, State of Louisiana
and the Company
23
4(k) $100,000,000 Credit Agreement dated as of 1-5663 10-K(1992) 4(k)
April 30, 1992, among the Company, certain
Banks parties thereto, and Citibank,
N.A., as Agent
*4(k)(1) Letter Amendment to $100,000,000 Credit Agreement
dated as of April 30,1992, among the Company,
certain Banks parties thereto, and Citibank,
N.A., as agent, relating to Exhibit 4(k), and
First National Bank of Commerce, relating to
Exhibit 4(e)
**10(a) 1990 Long-Term Incentive Compensation Plan 1-5663 1990 Proxy A
Statement (4/90)
**10(b) 1981 Incentive Stock Option Plan 1-5663 10-K(1992) 10(i)
**10(c) Amended Description of Incentive Compensation 1-5663 10-K(1985) 10(k)
Plan
**10(d) Deferred Compensation Plan for Directors 1-5663 10-K(1992) 10(n)
**10(e)(1) Supplemental Executive Retirement Plan 1-5663 10-K(1992) 10(o)(1)
**10(e)(2) Supplemental Executive Retirement Plan 1-5663 10-K(1992) 10(o)(2)
Participation Agreement
**10(f) Executive Severance Agreement between the 1-5663 10-K(1992) 10(p)
Company and Gregory L. Nesbitt
**10(g) Executive Severance Agreement between the 1-5663 10-K(1992) 10(r)
Company and Robert L. Duncan
**10(h) Executive Severance Agreement between the 1-5663 10-K(1992) 10(t)
Company and David M. Eppler
**10(i) Executive Severance Agreement between the 1-5663 10-K(1992) 10(u)
Company and Leonard G. Fontenot
**10(j) Executive Severance Agreement between the 1-5663 10-K(1992) 10(w)
Company and Michael P. Prudhomme
**10(k) Executive Severance Agreement between the 1-5663 10-K(1992) 10(x)
Company and David K. Warner
**10(l) Executive Severance Agreement between the 1-5663 10-K(1992) 10(y)
Company and John L. Baltes, Jr.
**10(m) Agreement between the Company and 1-5663 10-K(1992) 10(z)
Scott O. Brame in connection with payment
of bonus for 1992
*10(n)(1) Receivables Purchase Agreement, dated
as of April 9, 1990, as Amended and
Restated as of March 1, 1995, among the
Company, Corporate Asset Funding Company,
Inc. and Citicorp North America, Inc.
24
*10(n)(2) Receivables Purchase Agreement, dated
as of April 9, 1990, as Amended and Restated
as of March 1, 1995, among the Company, Citicorp,
N.A. and Citicorp North America, Inc.
10(o)(1) Term Loan Agreement dated as of April 2, 1991, 1-5663 10-Q(3/91) 4(b)
among the 401(k) Savings and Investment Plan
ESOP Trust, the Company, as Guarantor, the
Banks listed therein and The Bank of New York,
as Agent, relating to Exhibit 10(t)
10(o)(2) Assignment and Assumption Agreement, effective 1-5663 10-Q(3/91) 4(c)
as of May 6, 1991, between The Bank of New York
and the Canadian Imperial Bank of Commerce,
relating to Exhibit 10(o)(1)
10(o)(3) Assignment and Assumption Agreement dated as of 1-5663 10-K(1991) 10(y)(3)
July 3, 1991, between The Bank of New York and
Rapides Bank and Trust Company in Alexandria,
relating to Exhibit 10(o)(1)
10(o)(4) Assignment and Assumption Agreement dated as of 1-5663 10-K(1992) 10(bb)(4)
July 6, 1992, among The Bank of New York,
CIBC, Inc. and Rapides Bank and Trust Company
in Alexandria, as Assignors, the 401(k)
Savings and Investment Plan ESOP Trust, as
Borrower, and the Company, as Guarantor
10(p) Reimbursement Agreement (The Industrial 1-5663 10-Q(6/91) 4(a)
Development Board of the Parish of Rapides,
Inc. (Louisiana) Adjustable Tender Pollution
Control Revenue Refunding Bonds, Series
1991) dated as of May 29, 1991, among the
Company, various financial institutions,
Swiss Bank Corporation and The First
National Bank of Chicago
10(p)(1) Remarketing Agreement (The Industrial Development 1-5663 10-Q(9/94) 10(a)
Board of the Parish of Rapides, Inc. (Louisiana)
Adjustable Tender Pollution Control Revenue
Refunding Bonds, Series 1991) dated as of
July 19,1994, between the Company and PaineWebber
Incorporated
25
10(p)(2) Tender Agreement (The Industrial Development Board 1-5663 10-K(1991) 10(z)(2)
of the Parish of Rapides, Inc. (Louisiana)
Adjustable Tender Pollution Control Revenue
Refunding Bonds, Series 1991) dated as of
May 1, 1991, among First National Bank of Commerce,
as Trustee, the Company, The First National
Bank of Chicago, as Tender Agent and Registrar,
Smith Barney, Harris Upham & Co. Incorporated,
as Remarketing Agent, and Swiss Bank Corporation,
as Bank
*10(p)(3) Amendment No. 1 to Reimbursement Agreements (The
Industrial Development Board of the Parish of
Rapides, Inc. (Louisiana) Adjustable Tender
Pollution Control Revenue Refunding Bonds, series
1991, 1991A and 1991B) dated as of December 9, 1994,
among the Company, various financial institutions,
Swiss Bank Corporation, New York Branch, as Issuer
of the Letters of Credit, and Swiss Bank
Corporation, New York Branch, as Agent, relating to
Exhibits 10(p), 10(q) and 10(r).
10(q) Reimbursement Agreement (Parish of DeSoto, 1-5663 10-Q(6/91) 4(b)
State of Louisiana Adjustable Tender Pollution
Control Revenue Refunding Bonds, Series
1991A) dated as of May 29, 1991, among the
Company, various financial institutions,
Swiss Bank Corporation and The First
National Bank of Chicago
10(q)(1) Remarketing Agreement (Parish of DeSoto, State of 1-5663 10-Q(9/94) 10(b)
Louisiana Adjustable Tender Pollution Control
Revenue Refunding Bonds, Series 1991A) dated as
of July 19, 1994, between the Company and
PaineWebber Incorporated
26
10(q)(2) Tender Agreement (Parish of DeSoto, State of 1-5663 10-K(1991) 10(aa)(2)
Louisiana Adjustable Tender Pollution Control
Revenue Refunding Bonds, Series 1991A) dated as
of May 1, 1991, among First National Bank of
Commerce, as Trustee, the Company, The
First National Bank of Chicago, as Tender Agent
and Registrar, Smith Barney, Harris Upham &
Co. Incorporated, as Remarketing Agent, and
Swiss Bank Corporation, as Bank
10(r) Reimbursement Agreement (Parish of DeSoto, 1-5663 10-Q(6/91) 4(c)
State of Louisiana Adjustable Tender
Pollution Control Revenue Refunding Bonds,
Series 1991B) dated as of May 29, 1991, among
the Company, various financial institutions,
Swiss Bank Corporation and The First National
Bank of Chicago
10(r)(1) Remarketing Agreement (Parish of DeSoto, State of 1-5663 10-Q(9/94) 10(c)
Louisiana Adjustable Tender Pollution Control
Revenue Refunding Bonds, Series 1991B) dated as
of July 19, 1994, between the Company and
PaineWebber Incorporated
10(r)(2) Tender Agreement (Parish of DeSoto, State of 1-5663 10-K(1991) 10(bb)(2)
Louisiana Adjustable Tender Pollution Control
Revenue Refunding Bonds, Series 1991B) dated as
of May 1, 1991, among First National Bank of
Commerce, as Trustee, the Company, The
First National Bank of Chicago, as Tender Agent
and Registrar, Smith Barney, Harris Upham & Co.
Incorporated, as Remarketing Agent, and Swiss
Bank Corporation, as Bank
10(s) Selling Agency Agreement between the Company 1-5663 8-K(2/92) 1
and Salomon Brothers Inc, The First Boston
Corporation and Smith Barney, Harris Upham &
Co. Incorporated dated as of February 27, 1992
10(t) 401(k) Savings and Investment Plan ESOP 1-5663 10-Q(3/91) 4(a)
Trust Agreement dated as of April 2, 1991,
between State Street Bank and Trust
Company and the Company
*11 Computation of Net Income Per Common Share
*12 Computation of Earnings to Fixed Charges and
Earnings to Combined Fixed Charges and
Preferred Stock Dividends
27
*13 Management's Discussion and Analysis of Financial
Condition and Results of Operations, Consolidated
Financial Statements and Notes and Report of
Independent Accountants
*23 Consent of Independent Accountants
*24 Power of Attorney from each Director of the Company
whose signature is affixed to this Form 10-K
for the year ended December 31, 1994
*27 Financial Data Schedule UT
</TABLE>
14(b) Reports on Form 8-K
The Company filed a Report on Form 8-K dated as of February 1, 1995 to
announce that a purchase and sale agreement regarding a purchase of all of the
assets of Teche by the Company had been executed. For more information, see
pages 15 and 16 under the subcaption "Results of Operations - Co-op
Developments" under the caption "Management's Discussion and Analysis" in the
1994 Annual Report to Shareholders, which information is filed as Exhibit 13 to
this report and incorporated into Part II herein by reference.
28
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders
of Central Louisiana Electric Company, Inc.:
Our report on the consolidated financial statements of Central Louisiana
Electric Company, Inc. has been incorporated by reference in this Form 10-K from
page 33 of the 1994 Annual Report to Shareholders of Central Louisiana Electric
Company, Inc. In connection with our audits of such financial statements, we
have also audited the related financial statement schedule listed in Item
14(a)(2) on page 20 of this Form 10-K. This financial statement schedule is the
responsibility of the Company's management. Our responsibility is to express an
opinion on this financial statement schedule based upon our audit.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information required to be
included therein.
COOPERS & LYBRAND L.L.P.
New Orleans, Louisiana
January 27, 1995
29
<PAGE>
CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Years ended December 31, 1994, 1993 and 1992
(In thousands)
================================================================================
COL. A COL. B COL. C COL. D COL. E
--------------------------------------------------------------------------------
ADDITIONS UNCOLLECTIBLE
BALANCE AT CHARGED TO ACCOUNTS BALANCE AT
ALLOWANCE FOR BEGINNING COST AND WRITE-OFFS, END
UNCOLLECTIBLE ACCOUNTS OF PERIOD EXPENSES LESS RECOVERIES OF PERIOD(1)
--------------------------------------------------------------------------------
Year Ended
December 31, 1994 ... $537 $442 $535 $444
Year Ended
December 31, 1993 ... $779 $ 92 $334 $537
Year Ended
December 31, 1992 ... $733 $240 $194 $779
-----------
(1) Deducted in the balance sheet
30
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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: GREGORY L. NESBITT
(Gregory L. Nesbitt, President
and Chief Executive Officer)
Date: March 30, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
GREGORY L. NESBITT President, Chief Executive
(Gregory L. Nesbitt) Officer and Director March 30, 1995
(Principal Executive Officer)
DAVID M. EPPLER
(David M. Eppler) Vice President March 30, 1995
(Principal Financial Officer)
JOHN L. BALTES, JR.
(John L. Baltes, Jr.) Controller March 30, 1995
(Principal Accounting Officer)
________
SHERIAN G. CADORIA |
|
J. PATRICK GARRETT |
|
F. BEN JAMES, JR. |
|
HUGH J. KELLY |
|
WILLIAM A. LOCKWOOD > DIRECTORS*
|
A. DELOACH MARTIN, JR. |
|
ROBERT T. RATCLIFF |
|
EDWARD D. SIMMONS |
|
ERNEST L. WILLIAMSON ______|
*BY: DAVID M. EPPLER
(David M. Eppler, as March 30, 1995
Attorney-in-Fact)
31
EXHIBIT INDEX
The Exhibits designated by an asterisk are filed herewith. The Exhibits not so
designated have been previously filed with the Securities and Exchange
Commission, and are incorporated herein by reference. The Exhibits designated by
two asterisks are management contracts and compensatory plans and arrangements
required to be filed as Exhibits to this report.
<TABLE>
<CAPTION>
SEC FILE OR REGISTRATION
REGISTRATION STATEMENT EXHIBIT
EXHIBITS NUMBER OR REPORT NUMBER
---------------------------------------------------- ------------ -------------- ---------
<S> <C> <C> <C> <C>
3(a) Restated Articles of Incorporation of the 1-5663 10-Q(3/92) 3
Company dated as of July 24, 1989,
as amended through April 24, 1992
3(b) Amended and Restated Bylaws of the 1-5663 10-Q(3/94) 3
Company, as amended to April 22, 1994
4(a)(1) Indenture of Mortgage dated as of July 1, 2-27284 S-1(10/17/67) 4(b)(1)
1950, between the Company and First
National Bank of New Orleans, as Trustee
4(a)(2) First Supplemental Indenture dated as 2-27284 S-1(10/17/67) 4(b)(2)
of October 1, 1951, to Exhibit 4(a)(1)
4(a)(3) Second Supplemental Indenture dated as 2-27284 S-1(10/17/67) 4(b)(3)
of June 1, 1952, to Exhibit 4(a)(1)
4(a)(4) Third Supplemental Indenture dated as 2-27284 S-1(10/17/67) 4(b)(4)
of January 1, 1954, to Exhibit 4(a)(1)
4(a)(5) Fourth Supplemental Indenture dated as 2-27284 S-1(10/17/67) 4(b)(5)
of November 1, 1954, to Exhibit 4(a)(1)
4(a)(6) Tenth Supplemental Indenture dated as 1-5663 10-K(1986) 4(a)(11)
of September 1, 1965, to Exhibit 4(a)(1)
4(a)(7) Eleventh Supplemental Indenture dated 2-32069 S-9(4/7/69) 2(m)
as of April 1, 1969, to Exhibit 4(a)(1)
4(a)(8) Eighteenth Supplemental Indenture dated as 1-5663 10-K(1993) 4(a)(8)
of December 1, 1982, to Exhibit 4(a)(1)
4(a)(9) Nineteenth Supplemental Indenture dated as 1-5663 10-K(1993) 4(a)(9)
of January 1, 1983, to Exhibit 4(a)(1)
4(a)(10) Twenty-Sixth Supplemental Indenture dated as 1-5663 8-K(3/90) 4(a)(27)
of March 15, 1990, to Exhibit 4(a)(1)
4(a)(11) Twenty-Seventh Supplemental Indenture dated as 2-27284 S-1(10/17/67) 4(f)(1)
of July 15, 1991, to Exhibit 4(a)(1)
4(b)(1) Indenture dated December 29, 1948, between 2-27284 S-1(10/17/67) 4(f)(2)
Louisiana Rural Electric Corporation (LREC)
and Fidelity National Bank of Baton Rouge,
as Trustee
4(b)(2) Supplemental Indenture dated August 25, 1949, 2-27284 S-1(10/17/67) 4(f)(3)
to Exhibit 4(b)(1)
4(b)(3) Supplemental Indenture dated July 13, 1951, to 1-5663 10-K(1986) 4(b)(4)
Exhibit 4(b)(1)
4(b)(4) Supplemental Indenture dated July 11, 1958, to 2-27284 S-1(10/17/67) 4(f)(4)
Exhibit 4(b)(1)
4(b)(5) Supplemental Indenture dated September 26, 1961, 1-5663 10-K(1988) 4(b)(6)
to Exhibit 4(b)(1)
4(b)(6) Assumption Agreement dated July 25, 1978, 1-5663 10-K(1988) 4(b)(7)
between the Company and the United States of
America, relating to Exhibit 4(b)(1)
4(b)(7) Sale and Assumption of Mortgages dated August 1, 1-5663 10-K(1990) 4(g)
1978, between the Company and LREC, relating to
Exhibit 4(b)(1)
4(c) Agreement dated October 2, 1980, between the 33-24896 S-3(10/11/88) 4(b)
Company and the City of Franklin, Louisiana
4(d) Indenture between the Company and Bankers
Trust Company, as Trustee, dated as of
October 1, 1988
4(e) Trust Indenture (The Industrial Development 1-5663 10-K(1991) 4(i)
Board of the Parish of Rapides, Inc.
(Louisiana) Adjustable Tender Pollution
Control Revenue Refunding Bonds, Series 1991)
dated as of May 1, 1991, between The Industrial
Development Board of the Parish of Rapides, Inc.
and First National Bank of Commerce
*4(e)(1) First Supplemental Trust Indenture (The Industrial
Development Board of the Parish of Rapides, Inc.
(Louisiana) Adjustable Tender Pollution Control
Revenue Refunding Bonds, Series 1991) dated as of
May 1, 1993, between The Industrial Development
Board of the Parish of Rapides, Inc. and First
National Bank of Commerce, relating to Exhibit 4(e)
4(f) Refunding Agreement (The Industrial 1-5663 10-Q(6/91) 10(a)
Development Board of the Parish of Rapides,
Inc. (Louisiana) Adjustable Tender Pollution
Control Revenue Refunding Bonds, Series
1991) dated as of May 1, 1991, between the
Company and The Industrial Development
Board of the Parish of Rapides, Inc.
4(g) Trust Indenture (Parish of DeSoto, State of 1-5663 10-K(1991) 4(k)
Louisiana Adjustable Tender Pollution Control
Revenue Refunding Bonds, Series 1991A) dated
as of May 1, 1991, between Parish of Desoto,
State of Louisiana and First National Bank
*4(g)(1) First Supplemental Trust Indenture (The
Industrial Development Board of
the Parish of Rapides, Inc. (Louisiana)
Adjustable Tender Pollution Control
Revenue Refunding Bonds, Series 1991A)
dated as of May 1, 1993, between The
Industrial Development Board of the Parish
of Rapides, Inc. and First National
Bank of Commerce, relating to Exhibit 4(g)
4(h) Refunding Agreement (Parish of DeSoto, 1-5663 10-Q(6/91) 10(b)
State of Louisiana Adjustable Tender Pollution
Control Revenue Refunding Bonds, Series
1991A) dated as of May 1, 1991, between
the Parish of DeSoto, State of Louisiana
and the Company
4(i) Trust Indenture (Parish of DeSoto, State of 1-5663 10-K(1991) 4(m)
Louisiana Adjustable Tender Pollution
Control Revenue Refunding Bonds, Series 1991B)
dated as of May 1, 1991, between Parish of
DeSoto, State of Louisiana and First National
Bank of Commerce
*4(i)(1) First Supplemental Trust Indenture (The Industrial
Development Board of the Parish of Rapides, Inc.
(Louisiana) Adjustable Tender Pollution Control
Revenue Refunding Bonds, Series 1991B) dated
as of May 1, 1993, between The Industrial
Development Board of the Parish of Rapides, Inc.
and First National Bank of Commerce, relating to
Exhibit 4(i)
4(j) Refunding Agreement (Parish of DeSoto, 1-5663 10-Q(6/91) 10(c)
State of Louisiana Adjustable Tender Pollution
Control Revenue Refunding Bonds, Series
1991B) dated as of May 1, 1991, between
the Parish of DeSoto, State of Louisiana
and the Company
4(k) $100,000,000 Credit Agreement dated as of 1-5663 10-K(1992) 4(k)
April 30, 1992, among the Company, certain
Banks parties thereto, and Citibank,
N.A., as Agent
*4(k)(1) Letter Amendment to $100,000,000 Credit Agreement
dated as of April 30,1992, among the Company,
certain Banks parties thereto, and Citibank,
N.A., as agent, relating to Exhibit 4(k), and
First National Bank of Commerce, relating to
Exhibit 4(e)
**10(a) 1990 Long-Term Incentive Compensation Plan 1-5663 1990 Proxy A
Statement (4/90)
**10(b) 1981 Incentive Stock Option Plan 1-5663 10-K(1992) 10(i)
**10(c) Amended Description of Incentive Compensation 1-5663 10-K(1985) 10(k)
Plan
**10(d) Deferred Compensation Plan for Directors 1-5663 10-K(1992) 10(n)
**10(e)(1) Supplemental Executive Retirement Plan 1-5663 10-K(1992) 10(o)(1)
**10(e)(2) Supplemental Executive Retirement Plan 1-5663 10-K(1992) 10(o)(2)
Participation Agreement
**10(f) Executive Severance Agreement between the 1-5663 10-K(1992) 10(p)
Company and Gregory L. Nesbitt
**10(g) Executive Severance Agreement between the 1-5663 10-K(1992) 10(r)
Company and Robert L. Duncan
**10(h) Executive Severance Agreement between the 1-5663 10-K(1992) 10(t)
Company and David M. Eppler
**10(i) Executive Severance Agreement between the 1-5663 10-K(1992) 10(u)
Company and Leonard G. Fontenot
**10(j) Executive Severance Agreement between the 1-5663 10-K(1992) 10(w)
Company and Michael P. Prudhomme
**10(k) Executive Severance Agreement between the 1-5663 10-K(1992) 10(x)
Company and David K. Warner
**10(l) Executive Severance Agreement between the 1-5663 10-K(1992) 10(y)
Company and John L. Baltes, Jr.
**10(m) Agreement between the Company and 1-5663 10-K(1992) 10(z)
Scott O. Brame in connection with payment
of bonus for 1992
*10(n)(1) Receivables Purchase Agreement, dated
as of April 9, 1990, as Amended and
Restated as of March 1, 1995, among the
Company, Corporate Asset Funding Company,
Inc. and Citicorp North America, Inc.
*10(n)(2) Receivables Purchase Agreement, dated
as of April 9, 1990, as Amended and Restated
as of March 1, 1995, among the Company, Citicorp,
N.A. and Citicorp North America, Inc.
10(o)(1) Term Loan Agreement dated as of April 2, 1991, 1-5663 10-Q(3/91) 4(b)
among the 401(k) Savings and Investment Plan
ESOP Trust, the Company, as Guarantor, the
Banks listed therein and The Bank of New York,
as Agent, relating to Exhibit 10(t)
10(o)(2) Assignment and Assumption Agreement, effective 1-5663 10-Q(3/91) 4(c)
as of May 6, 1991, between The Bank of New York
and the Canadian Imperial Bank of Commerce,
relating to Exhibit 10(o)(1)
10(o)(3) Assignment and Assumption Agreement dated as of 1-5663 10-K(1991) 10(y)(3)
July 3, 1991, between The Bank of New York and
Rapides Bank and Trust Company in Alexandria,
relating to Exhibit 10(o)(1)
10(o)(4) Assignment and Assumption Agreement dated as of 1-5663 10-K(1992) 10(bb)(4)
July 6, 1992, among The Bank of New York,
CIBC, Inc. and Rapides Bank and Trust Company
in Alexandria, as Assignors, the 401(k)
Savings and Investment Plan ESOP Trust, as
Borrower, and the Company, as Guarantor
10(p) Reimbursement Agreement (The Industrial 1-5663 10-Q(6/91) 4(a)
Development Board of the Parish of Rapides,
Inc. (Louisiana) Adjustable Tender Pollution
Control Revenue Refunding Bonds, Series
1991) dated as of May 29, 1991, among the
Company, various financial institutions,
Swiss Bank Corporation and The First
National Bank of Chicago
10(p)(1) Remarketing Agreement (The Industrial Development 1-5663 10-Q(9/94) 10(a)
Board of the Parish of Rapides, Inc. (Louisiana)
Adjustable Tender Pollution Control Revenue
Refunding Bonds, Series 1991) dated as of
July 19,1994, between the Company and PaineWebber
Incorporated
10(p)(2) Tender Agreement (The Industrial Development Board 1-5663 10-K(1991) 10(z)(2)
of the Parish of Rapides, Inc. (Louisiana)
Adjustable Tender Pollution Control Revenue
Refunding Bonds, Series 1991) dated as of
May 1, 1991, among First National Bank of Commerce,
as Trustee, the Company, The First National
Bank of Chicago, as Tender Agent and Registrar,
Smith Barney, Harris Upham & Co. Incorporated,
as Remarketing Agent, and Swiss Bank Corporation,
as Bank
*10(p)(3) Amendment No. 1 to Reimbursement Agreements (The
Industrial Development Board of the Parish of
Rapides, Inc. (Louisiana) Adjustable Tender
Pollution Control Revenue Refunding Bonds, series
1991, 1991A and 1991B) dated as of December 9, 1994,
among the Company, various financial institutions,
Swiss Bank Corporation, New York Branch, as Issuer
of the Letters of Credit, and Swiss Bank
Corporation, New York Branch, as Agent, relating to
Exhibits 10(p), 10(q) and 10(r).
10(q) Reimbursement Agreement (Parish of DeSoto, 1-5663 10-Q(6/91) 4(b)
State of Louisiana Adjustable Tender Pollution
Control Revenue Refunding Bonds, Series
1991A) dated as of May 29, 1991, among the
Company, various financial institutions,
Swiss Bank Corporation and The First
National Bank of Chicago
10(q)(1) Remarketing Agreement (Parish of DeSoto, State of 1-5663 10-Q(9/94) 10(b)
Louisiana Adjustable Tender Pollution Control
Revenue Refunding Bonds, Series 1991A) dated as
of July 19, 1994, between the Company and
PaineWebber Incorporated
10(q)(2) Tender Agreement (Parish of DeSoto, State of 1-5663 10-K(1991) 10(aa)(2)
Louisiana Adjustable Tender Pollution Control
Revenue Refunding Bonds, Series 1991A) dated as
of May 1, 1991, among First National Bank of
Commerce, as Trustee, the Company, The
First National Bank of Chicago, as Tender Agent
and Registrar, Smith Barney, Harris Upham &
Co. Incorporated, as Remarketing Agent, and
Swiss Bank Corporation, as Bank
10(r) Reimbursement Agreement (Parish of DeSoto, 1-5663 10-Q(6/91) 4(c)
State of Louisiana Adjustable Tender
Pollution Control Revenue Refunding Bonds,
Series 1991B) dated as of May 29, 1991, among
the Company, various financial institutions,
Swiss Bank Corporation and The First National
Bank of Chicago
10(r)(1) Remarketing Agreement (Parish of DeSoto, State of 1-5663 10-Q(9/94) 10(c)
Louisiana Adjustable Tender Pollution Control
Revenue Refunding Bonds, Series 1991B) dated as
of July 19, 1994, between the Company and
PaineWebber Incorporated
10(r)(2) Tender Agreement (Parish of DeSoto, State of 1-5663 10-K(1991) 10(bb)(2)
Louisiana Adjustable Tender Pollution Control
Revenue Refunding Bonds, Series 1991B) dated as
of May 1, 1991, among First National Bank of
Commerce, as Trustee, the Company, The
First National Bank of Chicago, as Tender Agent
and Registrar, Smith Barney, Harris Upham & Co.
Incorporated, as Remarketing Agent, and Swiss
Bank Corporation, as Bank
10(s) Selling Agency Agreement between the Company 1-5663 8-K(2/92) 1
and Salomon Brothers Inc, The First Boston
Corporation and Smith Barney, Harris Upham &
Co. Incorporated dated as of February 27, 1992
10(t) 401(k) Savings and Investment Plan ESOP 1-5663 10-Q(3/91) 4(a)
Trust Agreement dated as of April 2, 1991,
between State Street Bank and Trust
Company and the Company
*11 Computation of Net Income Per Common Share
*12 Computation of Earnings to Fixed Charges and
Earnings to Combined Fixed Charges and
Preferred Stock Dividends
*13 Management's Discussion and Analysis of Financial
Condition and Results of Operations, Consolidated
Financial Statements and Notes and Report of
Independent Accountants
*23 Consent of Independent Accountants
*24 Power of Attorney from each Director of the Company
whose signature is affixed to this Form 10-K
for the year ended December 31, 1994
*27 Financial Data Schedule UT
</TABLE>
EXHIBIT 4(e)(1)
FIRST SUPPLEMENTAL TRUST INDENTURE
This FIRST SUPPLEMENTAL TRUST INDENTURE, made and entered into as of the
first day of May, 1993, by and between the INDUSTRIAL DEVELOPMENT BOARD OF THE
PARISH OF RAPIDES, INC., a public corporation and instrumentality of the Parish
of Rapides, State of Louisiana (hereinafter referred to as the "Issuer") and
FIRST NATIONAL BANK OF COMMERCE, in the City of New Orleans, Louisiana,
appearing herein in its capacity as Trustee pursuant to the Indenture
(hereinafter defined) (the "Trustee"),
WITNESSETH:
WHEREAS, on May 29, 1991, the Issuer issued its $11,150,000 Adjustable
Tender Pollution Control Revenue Refunding Bonds (Central Louisiana Electric
Company, Inc. Project) Series 1991 (the "Bonds") for the purpose of providing
funds to refund the Issuer's $11,150,000 Annual Tender Pollution Control Revenue
Bonds (Central Louisiana Electric Company, Inc. Project) Series 1983 (the "Prior
Bonds"), which Prior Bonds were issued to provide funds for the acquisition of
Central Louisiana Electric Company, Inc.'s (the "Company") undivided percentage
interest in certain air and water pollution control facilities at the Company's
Rodemacher Power Station Unit No. 2 located near Lena, Rapides Parish,
Louisiana (the "Project"); and
WHEREAS, the Bonds were issued pursuant to a Trust Indenture dated as of
May 1, 1991 by and between the Issuer and the Trustee (the "Indenture"), and a
Refunding Agreement dated as of May 1, 1991 (the "Agreement") by and between the
Issuer and the Company; and
WHEREAS, Section 12.02 of the Indenture permits the Issuer and the Trustee
to enter into an indenture or indentures supplemental to the Indenture without
the consent or notice to the owners of the Bonds; and
WHEREAS, the Company has consented and agreed to the terms, conditions and
other details of this First Supplemental Trust Indenture, which consent is
evidenced by its execution of the "Consent" attached to this First Supplemental
Trust Indenture; and
WHEREAS, the Issuer, the Company and the Trustee wish to amend the
Indenture in order to clarify the qualifications of the Remarketing Agent.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration and of the mutual benefits, covenants and agreements
herein expressed, the Issuer and the Trustee hereby agree as follows:
SECTION 1. All terms used herein shall have the same meanings assigned to
them in the Indenture.
SECTION 2. Section 13.02(a) of the Indenture is hereby amended to read as
follows:
"(a) The Remarketing Agent and any successor to the Remarketing Agent
shall be a member of the National Association of Securities Dealers,Inc.,
having a combined capital stock, surplus and undivided profits of at least
$15,000,000 and authorized by law to perform all the duties imposed upon
it by this Indenture. Any successor to the initial
-1-
Remarketing Agent shall also be (i) rated as least Baa-3/Prime 3 and (ii)
approved in writing by the Bank and by Moody's if the Bonds shall then be
rated by Moody's and by S&P, if the Bonds shall then be rated by S&P. The
Remarketing Agent may at any time resign and be discharged of the duties
and obligations created by this Indenture by giving at least 30 Business
Days' notice to the Issuer, the Trustee, the Tender Agent, the Bank and
the Company. The Remarketing Agent may resign with immediate effect if it
shall determine in its reasonable judgment that a material misstatement
or omission in any disclosure document provided by the Company in
connection with the remarketing of the Bonds makes it inadvisable to
attempt to remarket the Bonds. The Company may, with the prior written
consent of the Bank, remove the Remarketing Agent at any time by giving at
least 10 Business Days' notice to the Issuer, the Tender Agent, the Bank
and the Trustee."
SECTION 3. Reference is made to the Indenture, the terms of which are
incorporated herein by reference, and the Indenture, other than as modified
hereby, is hereby ratified and confirmed in its entirety.
-2-
IN WITNESS WHEREOF, the Issuer has caused this First Supplemental Trust
Indenture to be executed in its name and its seal to be hereunto affixed and
attested by their duly authorized officer, all as of the date first above
written, but actually executed on this 4th day of May, 1993.
THE INDUSTRIAL DEVELOPMENT
BOARD OF THE PARISH OF RAPIDES, INC.
By: HENRY E. BLAKE
President
ATTEST:
By: TOM J. HARDIN
Secretary-Treasurer
(SEAL)
WITNESSES:
RODNEY V. NOLES
WILLIAM S. BOYD
H. BRENNER SADLER
Notary Public
-3-
IN WITNESS WHEREOF, the Trustee has caused this First Supplemental Trust
Indenture to be executed in its name and its seal to be hereunto affixed and
attested by its duly authorized officer, all as of the date first above written,
but actually executed on this 12th day of May, 1993.
FIRST NATIONAL BANK OF COMMERCE
By: DENIS L. MILLINER
Vice President and Trust Officer
(SEAL)
WITNESSES:
DEBORAH S. COMPTON-BOUDREAUX
PATRICIA A. LYONS
WARREN P. MIGUEZ
Notary Public
-4-
CONSENT
The undersigned David M. Eppler, Vice President and Treasurer, of Central
Louisiana Electric Company, Inc., hereby consents to the execution of the
foregoing First Supplemental Trust Indenture.
CENTRAL LOUISIANA ELECTRIC
COMPANY, INC.
By: DAVID M. EPPLER
May 20, 1993
EXHIBIT 4(g)(1)
FIRST SUPPLEMENTAL TRUST INDENTURE
This FIRST SUPPLEMENTAL TRUST INDENTURE, made and entered into as of the
first day of May, 1993, by and between the PARISH OF DESOTO, STATE OF LOUISIANA,
a political subdivision of the State of Louisiana (hereinafter referred to as
the "Issuer") and FIRST NATIONAL BANK OF COMMERCE, in the City of New Orleans,
Louisiana, appearing herein in its capacity as Trustee pursuant to the Indenture
(hereinafter defined) (the "Trustee"),
WITNESSETH:
WHEREAS, on May 29, 1992, the Issuer issued its $25,110,000 Annual Tender
Pollution Control Revenue Refunding Bonds (Central Louisiana Electric Company,
Inc. Project) Series 1991A (the "Bonds") together with a separate series of
bonds in the amount of $25,000,000 and designated "Adjustable Tender Pollution
Control Revenue Refunding Bonds (Central Louisiana Electric Company, Inc.
Project) Series 1991B" for the purpose of providing funds for to refund the
Issuer's Annual Tender Pollution Control Revenue Bonds (Central Louisiana
Electric Company, Inc. Project) Series 1983 (the "Prior Bonds"), which Prior
Bonds were issued to provide funds for the acquisition of Central Louisiana
Electric Company, Inc.'s (the "Company") undivided percentage interest in
certain air and water pollution control facilities at the Company's jointly
owned Dolet Hills lignite fired electric generating located in DeSoto Parish,
Louisiana (the "Project"); and
WHEREAS, the Bonds were issued pursuant to a Trust Indenture dated as of
May 1, 1991 by and between the Issuer and the Trustee (the "Indenture"), and a
Refunding Agreement dated as of May 1, 1991 (the "Agreement") by and between the
Issuer and the Company; and
WHEREAS, Section 12.02 of the Indenture permits the Issuer and the Trustee
to enter into an indenture or indentures supplemental to the Indenture without
the consent or notice to the owners of the Bonds; and
WHEREAS, the Company has consented and agreed to the terms, conditions and
other details of this First Supplemental Trust Indenture, which consent is
evidenced by its execution of the "Consent" attached to this First Supplemental
Trust Indenture; and
WHEREAS, the Issuer, the Company and the Trustee wish to amend the
Indenture in order to clarify the qualifications of the Remarketing Agent.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration and of the mutual benefits, covenants and agreements
herein expressed, the Issuer and the Trustee hereby agree as follows:
SECTION 1. All terms used herein shall have the same meanings assigned to
them in the Indenture.
SECTION 2. Section 13.02(a) of the Indenture is hereby amended to read as
follows:
"(a) The Remarketing Agent and any successor to the Remarketing Agent
shall be a member of the National Association of Securities Dealers, Inc.,
having a combined capital stock, surplus and undivided profits of at least
$15,000,000 and authorized by law to perform all the
-1-
duties imposed upon it by this Indenture. Any successor to the initial
Remarketing Agent shall also be (i) rated as least Baa-3/Prime 3 and (ii)
approved in writing by the Bank and by Moody's if the Bonds shall then be
rated by Moody's and by S&P, if the Bonds shall then be rated by S&P. The
Remarketing Agent may at any time resign and be discharged of the duties
and obligations created by this Indenture by giving at least 30 Business
Days' notice to the Issuer, the Trustee, the Tender Agent, the Bank and
the Company. The Remarketing Agent may resign with immediate effect if it
shall determine in its reasonable judgment that a material misstatement
or omission in any disclosure document provided by the Company in
connection with the remarketing of the Bonds makes it inadvisable to
attempt to remarket the Bonds. The Company may, with the prior written
consent of the Bank, remove the Remarketing Agent at any time by giving at
least 10 Business Days' notice to the Issuer, the Tender Agent, the Bank
and the Trustee."
SECTION 3. Reference is made to the Indenture, the terms of which are
incorporated herein by reference, and the Indenture, other than as modified
hereby, is hereby ratified and confirmed in its entirety.
-2-
IN WITNESS WHEREOF, the Issuer has caused this First Supplemental Trust
Indenture to be executed in its name and its seal to be hereunto affixed and
attested by its duly authorized officer, all as of the date first above written,
but actually executed on this 10th day of March, 1993.
PARISH OF DESOTO,
STATE OF LOUISIANA
By: PERSLEY WHITE, JR.
President
ATTEST:
By: SHIRLEY C. WHELESS
Secretary
(SEAL)
WITNESSES:
CECILIA RUTHERFORD
BONNIE GUIN
ROBERT E. PLUMMER
Notary Public
-3-
IN WITNESS WHEREOF, the Issuer has caused this First Supplemental Trust
Indenture to be executed in its name and its seal to be hereunto affixed and
attested by its duly authorized officer, all as of the date first above written,
but actually executed on this 12th day of May, 1993.
FIRST NATIONAL BANK OF COMMERCE
By: DENIS L. MILLINER
Vice President and Trust Officer
(SEAL)
WITNESSES:
DEBORAH S. COMPTON-BOUDREARX
PATRICIA A. LYONS
WARREN P. MIGUEZ
Notary Public
-4-
CONSENT
The undersigned David M. Eppler, Vice President and Treasurer of Central
Louisiana Electric Company, Inc., hereby consents to the execution of the
foregoing First Supplemental Trust Indenture.
CENTRAL LOUISIANA ELECTRIC
COMPANY, INC.
By: DAVID M. EPPLER
May 20, 1993
EXHIBIT 4(i)(1)
FIRST SUPPLEMENTAL TRUST INDENTURE
This FIRST SUPPLEMENTAL TRUST INDENTURE, made and entered into as of the
first day of May, 1993, by and between the PARISH OF DESOTO, STATE OF LOUISIANA,
a political subdivision of the State of Louisiana (hereinafter referred to as
the "Issuer") and FIRST NATIONAL BANK OF COMMERCE, in the City of New Orleans,
Louisiana, appearing herein in its capacity as Trustee pursuant to the Indenture
(hereinafter defined) (the "Trustee"),
WITNESSETH:
WHEREAS, on May 29, 1992, the Issuer issued its $25,000,000 Annual Tender
Pollution Control Revenue Refunding Bonds (Central Louisiana Electric Company,
Inc. Project) Series 1991B (the "Bonds") together with a separate series of
bonds in the amount of $25,110,000 and designated "Adjustable Tender Pollution
Control Revenue Refunding Bonds (Central Louisiana Electric Company, Inc.
Project) Series 1991A" for the purpose of providing funds for to refund the
Issuer's Annual Tender Pollution Control Revenue Bonds (Central Louisiana
Electric Company, Inc. Project) Series 1983 (the "Prior Bonds"), which Prior
Bonds were issued to provide funds for the acquisition of Central Louisiana
Electric Company, Inc.'s (the "Company") undivided percentage interest in
certain air and water pollution control facilities at the Company's jointly
owned Dolet Hills lignite fired electric generating located in DeSoto Parish,
Louisiana (the "Project"); and
WHEREAS, the Bonds were issued pursuant to a Trust Indenture dated as of
May 1, 1991 by and between the Issuer and the Trustee (the "Indenture"), and a
Refunding Agreement dated as of May 1, 1991 (the "Agreement") by and between the
Issuer and the Company; and
WHEREAS, Section 12.02 of the Indenture permits the Issuer and the Trustee
to enter into an indenture or indentures supplemental to the Indenture without
the consent or notice to the owners of the Bonds; and
WHEREAS, the Company has consented and agreed to the terms, conditions and
other details of this First Supplemental Trust Indenture, which consent is
evidenced by its execution of the "Consent" attached to this First Supplemental
Trust Indenture; and
WHEREAS, the Issuer, the Company and the Trustee wish to amend the
Indenture in order to clarify the qualifications of the Remarketing Agent.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration and of the mutual benefits, covenants and agreements
herein expressed, the Issuer and the Trustee hereby agree as follows:
SECTION 1. All terms used herein shall have the same meanings assigned to
them in the Indenture.
SECTION 2. Section 13.02(a) of the Indenture is hereby amended to read as
follows:
"(a) The Remarketing Agent and any successor to the Remarketing Agent
shall be a member of the National Association of Securities Dealers, Inc.,
having a combined capital stock, surplus and undivided profits of at least
$15,000,000 and authorized by law to perform all the
-1-
duties imposed upon it by this Indenture. Any successor to the initial
Remarketing Agent shall also be (i) rated as least Baa-3/Prime 3 and (ii)
approved in writing by the Bank and by Moody's if the Bonds shall then be
rated by Moody's and by S&P, if the Bonds shall then be rated by S&P. The
Remarketing Agent may at any time resign and be discharged of the duties
and obligations created by this Indenture by giving at least 30 Business
Days' notice to the Issuer, the Trustee, the Tender Agent, the Bank and
the Company. The Remarketing Agent may resign with immediate effect if it
shall determine in its reasonable judgment that a material misstatement
or omission in any disclosure document provided by the Company in
connection with the remarketing of the Bonds makes it inadvisable to
attempt to remarket the Bonds. The Company may, with the prior written
consent of the Bank, remove the Remarketing Agent at any time by giving at
least 10 Business Days' notice to the Issuer, the Tender Agent, the Bank
and the Trustee."
SECTION 3. Reference is made to the Indenture, the terms of which are
incorporated herein by reference, and the Indenture, other than as modified
hereby, is hereby ratified and confirmed in its entirety.
-2-
IN WITNESS WHEREOF, the Issuer has caused this First Supplemental Trust
Indenture to be executed in its name and its seal to be hereunto affixed and
attested by its duly authorized officer, all as of the date first above written,
but actually executed on this 10th day of March, 1993.
PARISH OF DESOTO,
STATE OF LOUISIANA
By: PERSLEY WHITE, JR.
President
ATTEST:
By: SHIRLEY C. WHELESS
Secretary
(SEAL)
WITNESSES:
CECILIA RUTHERFORD
BONNIE GUIN
ROBERT E. PLUMMER
Notary Public
-3-
IN WITNESS WHEREOF, the Trustee has caused this First Supplemental Trust
Indenture to be executed in its name and its seal to be hereunto affixed and
attested by its duly authorized officer, all as of the date first above written,
but actually executed on this 12th day of May, 1993.
FIRST NATIONAL BANK OF COMMERCE
By: DENNIS L. MILLINER
Vice President and Trust Officer
(SEAL)
WITNESSES:
DEBORAH S. COMPTON-BOUDREAUX
PATRICIA A. LYONS
WARREN P. MIGUEZ
Notary Public
-4-
CONSENT
The undersigned David M. Eppler, Vice President and Treasurer of Central
Louisiana Electric Company, Inc., hereby consents to the execution of the
foregoing First Supplemental Trust Indenture.
CENTRAL LOUISIANA ELECTRIC
COMPANY, INC.
By: DAVID M. EPPLER
May 20, 1993
EXHIBIT 4(k)(1)
EXECUTION COPY
LETTER AMENDMENT
Dated as of July 31, 1994
To the Lenders listed on the
signature pages below
Ladies and Gentlemen:
We refer to the Credit Agreement, dated as of April 30, 1992 (the "CREDIT
AGREEMENT"), among the undersigned, you and Citibank, N.A., as Agent. Unless
otherwise defined herein, the terms defined in the Credit Agreement are used
herein as therein defined.
CIBC Inc. ("CIBC"), formerly known as "Canadian Imperial Bank of
Commerce", has informed us that it no longer wishes to be a Lender under the
Credit Agreement, and we have agreed to request an amendment to the Credit
Agreement to remove CIBC as a Lender thereunder. We nevertheless wish to
maintain Commitments under the Credit Agreement in the aggregate amount of
$100,000,000 and therefore request that each Lender other than CIBC
(collectively, the "REMAINING LENDERS") increase its Commitment by an amount
equal to such Lender's ratable share (calculated on the basis of the aggregate
Commitments of the Remaining Lenders before giving effect to this letter
amendment) of the Commitment of CIBC.
Pursuant to Section 2.17(b) of the Credit Agreement, the Borrower hereby
also requests that the Remaining Lenders consent to a one-year extension of the
Termination Date, to July 31, 1997. In addition, the Borrower hereby requests
that the Remaining Lenders consent to a waiver of the time requirements of
Section 2.17(b) of the Credit Agreement for submitting this request and
obtaining the consent of the Remaining Lenders; provided that the consent of all
Remaining Lenders shall be obtained no later than July 31, 1994.
You have indicated your willingness to agree to the foregoing.
Accordingly, the Borrower and all the Lenders agree that the Credit Agreement
is, effective as of the date first above written, hereby amended and modified as
follows:
-1-
(a) The reference to "Canadian Imperial Bank of Commerce" is deleted from
the signature pages of the Credit Agreement, and CIBC shall no longer have any
Commitment thereunder.
(b) The Commitment of each Remaining Lender shall be the amount set
opposite such Remaining Lender's name on the signature pages hereof, as such
amount may be reduced pursuant to Section 2.05 of the Credit Agreement, and
subject to the proviso set forth in the first sentence of Section 2.01 of the
Credit Agreement.
The Remaining Lenders, effective as of the date first above written,
further consent to the Borrower's request for an extension of the Termination
Date to July 31,1997.
On and after the effective date of this letter amendment, each reference
in the Credit Agreement to "this Agreement", "hereunder", "hereof" or words of
like import referring to the Credit Agreement and each reference in the Notes to
the "Credit Agreement", "thereunder", "thereof" or words of like import
referring to the Credit Agreement, shall mean and be a reference to the Credit
Agreement as amended by this letter amendment. The Credit Agreement, as amended
by this letter amendment, is and shall continue to be in full force and effect
and is hereby in all respects ratified and confirmed.
If you agree to the terms and provisions hereof, please evidence such
agreement by executing and returning five counterparts of this letter amendment
to the Agent, in care of King & Spalding, 120 West 45th Street, 32nd Floor, New
York, New York 10036, Attention: Judy Shatzoff, Legal Assistant. This letter
amendment shall become effective as of the date first written above if, on or
before such date, (i) counterparts of this letter amendment shall have been
executed by all the Lenders, (ii) the Agent shall have received Notes, duly
completed and executed by the Borrower, payable to the Remaining Lenders in the
amounts of their respective Commitments (after giving effect to this letter
amendment), (iii) the Agent shall have received the documents required to be
delivered to the Agent and the Lenders by the Borrower pursuant to Section 2.17
(b) of the Credit Agreement and (iv) the Borrower shall have paid to CIBC all
amounts payable to CIBC as of such date under the Credit Agreement, including,
without limitation, the principal amount of all Advances made by CIBC and all
accrued interest and fees payable to CIBC as of such date. This letter amendment
shall be
-2-
effective solely for the purpose described herein and shall have no effect on
any other provision contained in the Credit Agreement. This letter amendment
shall be governed by, and construed in accordance with, the laws of the State of
New York.
This letter amendment may be executed in any number of counterparts and by
any combination of parties hereto in separate counterparts, each of which
counterparts shall be an original and all of which taken together shall
constitute one and the same agreement.
Very truly yours,
CENTRAL LOUISIANA ELECTRIC
COMPANY, INC.
By: DAVID M. EPPLER
Name: David M. Eppler
Title: Vice President (Finance)
Agreed as of the date
first above written:
CITIBANK, N.A., AS AGENT Commitment
AND AS LENDER
$33,522,727.28
By: JONI JENSEN
Name: Joni Jensen
Title: Vice President
-3-
THE BANK OF NEW YORK Commitment
By: DENNIS M. PIDHERNY $25,000,000.00
Name: Dennis M. Pidherny
Title: Vice President
THE FIRST NATIONAL BANK Commitment
OF CHICAGO
$25,000,000.00
By: MICHAEL J. JOHNSON
Name: Michael J. Johnson
Title: Vice President
WACHOVIA BANK OF GEORGIA, Commitment
NATIONAL ASSOCIATION
$ 7,954,545.45
By: TERRY L. AKINS
Name: Terry L. Akins
Title: Senior Vice President
COMMERCIAL NATIONAL BANK Commitment
IN SHREVEPORT
$ 2,840,909.09
By: EDWIN E. CLARKE, JR.
Name: Edwin E. Clarke, Jr.
Title: Vice President
-4-
RAPIDES BANK & TRUST COMPANY Commitment
By: R. BLAKE CHATELAIN $ 2,840,909.09
Name: R. Blake Chatelain
Title: Senior Vice President
HIBERNIA NATIONAL BANK Commitment
By: JUSTIN J. DEKEYZER $ 2,840,909.09
CIBC INC. Commitment
By: JOEL W. PETERSON $ 0.00
Name: Joel W. Peterson
Title: Managing Director
-5-
EXHIBIT 10(n)(1)
[EXECUTION COPY]
U.S. $35,000,000
RECEIVABLES PURCHASE AGREEMENT
Dated as of April 9, 1990
as Amended and Restated as of March 1, 1995
Among
CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
AS SELLER
and
CORPORATE ASSET FUNDING COMPANY, INC.
and
CITICORP NORTH AMERICA, INC.
INDIVIDUALLY AND AS AGENT
<PAGE>
TABLE OF CONTENTS
SECTION PAGE
------- ----
Preliminary Statements.................................................1
ARTICLE I
AMOUNTS AND TERMS OF THE PURCHASES
Section 1.01 Purchase Facility..............................................1
Section 1.02 Making Purchases...............................................2
Section 1.03 Determination of Investor Rate and Fixed Periods Therefor......2
Section 1.04 Receivable Interest Percentage.................................4
Section 1.05 Settlement Procedures..........................................4
Section 1.06 Fees...........................................................6
Section 1.07 Payments and Computations, Etc.................................6
Section 1.08 Dividing or Combining Receivable Interests.....................7
Section 1.09 Recourse for Defaulted Receivables.............................7
Section 1.10 Eurodollar Increased Costs.....................................8
Section 1.11 Additional Yield on Receivable Interest
Bearing a Eurodollar Rate......................................8
Section 1.12 Breakage Fee and Indemnity.....................................9
ARTICLE II
REPRESENTATIONS AND WARRANTIES;
COVENANTS; EVENTS OF TERMINATION
Section 2.01 Representations and Warranties; Covenants.....................10
Section 2.01 Events of Termination.........................................10
ARTICLE III
INDEMNIFICATION
Section 3.01 Indemnities by the Seller.....................................10
ARTICLE IV
MISCELLANEOUS
Section 4.01 Amendments, Etc...............................................13
Section 4.02 Notices, Etc..................................................13
Section 4.03 Assignability; Termination....................................13
Section 4.04 Costs, Expenses and Taxes.....................................14
Section 4.05 No Proceedings................................................15
Section 4.06 Confidentiality...............................................15
Section 4.07 Governing Law; Execution in Counterparts......................15
LIST OF EXHIBITS, ANNEXES AND SCHEDULES
Exhibit I Definitions
Exhibit II Conditions of Purchases
1. Conditions Precedent to Initial Purchase
2. Conditions Precedent to All Purchases and
Reinvestments
3. Conditions Precedent to Amendment and Restatement
Exhibit III Representations and Warranties
Exhibit IV Covenants
Exhibit V Events of Termination
Annex A Form of Investor Report
Annex B Forms of Legal Opinions of Counsel to the Seller
Annex C Form of Notice of Purchase and/or Investor Rate
Schedule I List of Special Account Banks
Schedule II Description of Credit and Collection Policy
RECEIVABLES
PURCHASE AGREEMENT
Dated as of April 9, 1990
as Amended and Restated as of March 1, 1995
CENTRAL LOUISIANA ELECTRIC COMPANY, INC., a Louisiana corporation
(the "Seller"), CORPORATE ASSET FUNDING COMPANY, INC. ("CAFCO"), a Delaware
corporation, and CITICORP NORTH AMERICA, INC., a Delaware corporation,
individually ("CNA") and as agent (the "Agent") for the Investor (as defined in
Exhibit I to this Agreement), agree as follows:
PRELIMINARY STATEMENTS. Certain terms that are capitalized and used
throughout this Agreement are defined in Exhibit I to this Agreement. References
in the Exhibits to "the Agreement" refer to this Agreement.
The Seller has Receivables in which it is prepared to sell undivided
fractional ownership interests (referred to herein as "Receivable Interests").
CAFCO is prepared to purchase such Receivable Interests on the terms set forth
herein.
The Seller, CAFCO, CNA and the Agent entered into a Receivables
Purchase Agreement, dated as of April 9, 1990 (the "Original Agreement").
The Seller, CAFCO, CNA and the Agent desire to amend and restate the
Original Agreement.
Accordingly, the parties agree as follows:
ARTICLE I
AMOUNTS AND TERMS OF THE PURCHASES
SECTION 1.01. PURCHASE FACILITY. (a) On the terms and conditions
hereinafter set forth, CAFCO may, in its sole discretion, purchase Receivable
Interests from the Seller from time to time during the period from the date
hereof to the Facility Termination Date. Under no circumstances shall CAFCO make
any such purchase if after giving effect to such purchase the aggregate
outstanding Capital of Receivable Interests, together with the aggregate
outstanding "Capital" of "Receivable Interests" under the Citibank Agreement,
would exceed the Purchase Limit.
(b) The Seller may, upon at least five Business Days' notice to the
Agent, terminate in whole the Purchase Limit or reduce in part the unused
portion of the Purchase Limit;
1
PROVIDED that each partial reduction shall be in the amount of at least
$1,000,000 or an integral multiple thereof; and PROVIDED, FURTHER, that on the
effective date of any termination in whole of the Purchase Limit occurring prior
to the first anniversary of the Original Agreement, the Seller shall pay to the
Agent (i) all accrued and unpaid Administration Fees and Program Fees, plus (ii)
an amount equal to the lesser of $75,000 or the sum of the Administration Fee
and Program Fee that would have accrued from such effective date to the first
anniversary of the Original Agreement pursuant to Section 1.06.
SECTION 1.02. MAKING PURCHASES. Each purchase shall be made on
notice from the Seller to the Agent, given not later than 11:00 A.M. (New York
City time) on the second Business Day before the date of such purchase if the
Seller requests as the Investor Rate the CP Rate in connection with such
purchase and not later than 11:00 A.M. (New York City time) on the fifth
Business Day before the date of such purchase if the Seller requests as the
Investor Rate either the MTN Fixed Rate or the MTN Floating Rate in connection
with such purchase. Each such notice of a proposed purchase (i) if the Seller
requests as the Investor Rate the CP Rate in connection with such purchase,
shall be by telephone, telecopier, telex or cable, specifying the requested (A)
amount of such purchase to be paid to the Seller (which amount shall not be less
than $1,000,000) and (B) Business Day of such purchase and duration of the
initial Fixed Period for the Receivable Interest to be purchased and (ii) if the
Seller requests as the Investor Rate either the MTN Fixed Rate or the MTN
Floating Rate in connection with such purchase, shall be by telephone (confirmed
immediately in writing) or by telecopier, telegraph, telex or cable, confirmed
immediately in writing, in substantially the form of a Notice of Purchase and/or
Investor Rate referred to in Section 1.03, specifying therein the requested (A)
amount of such purchase to be paid to the Seller (which amount shall not be less
than $35,000,000 in the case of the initial purchase of a Receivable Interest
and $1,000,000 in the case of any subsequent purchase of a Receivable Interest),
(B) Business Day of such purchase and duration of the initial Fixed Period for
the Receivable Interest to be purchased and (C) the other information to
establish such Investor Rate as required by Section 1.03. CAFCO shall promptly
notify the Agent whether it has determined to make such purchase. The Agent
shall promptly thereafter notify the Seller whether CAFCO has determined to make
such purchase and whether the conditions for the requested Investor Rate set
forth in Section 1.03 have been satisfied. On the date of each purchase, CAFCO
shall, upon satisfaction of the applicable conditions set forth in Exhibit II
hereto, make available to the Agent the amount of its purchase by deposit of
such amount in same day funds to the Agent's Account, and, after receipt by the
Agent of such funds, the Agent will cause such funds to be made immediately
available to the Seller at Citibank, N.A., New York, New York, Account No.
00025494. CAFCO shall on the date of each purchase, and the Investor of each
Receivable Interest shall on the first day of each Fixed Period (other than the
initial Fixed Period) for such Receivable Interest, notify the Agent of the
Investor Rate for such Fixed Period.
SECTION 1.03. DETERMINATION OF INVESTOR RATE AND FIXED PERIODS
THEREFOR. (a) The Seller shall request the Investor Rate for each Fixed Period
for each Receivable Interest by notice from the Seller to the Agent (i) in the
case of the initial Fixed Period for such Receivable Interest, in the notice of
the proposed purchase of such Receivable Interest given by the Seller pursuant
to Section 1.02 and (ii) in the case of each subsequent Fixed Period for such
Receivable
2
Interest, given not later than 11:00 A.M. (New York City time) on the first day
of such Fixed Period if the Seller requests as such Investor Rate the CP Rate
and not later than 11:00 A.M. (New York City time) on the fifth Business Day
before the first day of such Fixed Period if the Seller requests as such
Investor Rate either the MTN Fixed Rate or the MTN Floating Rate. Each such
notice (i) if the Seller requests as the Investor Rate the CP Rate, shall be by
telephone, telecopier, telex or cable, specifying in accordance with the other
provisions of this Section 1.03 the requested Fixed Period and Investor Rate
therefor and (ii) if the Seller requests as the Investor Rate either the MTN
Fixed Rate or the MTN Floating Rate, shall be by telephone (confirmed
immediately in writing) or by telecopier, telegraph, telex or cable, confirmed
immediately in writing, in substantially the form of Annex C hereto (a "Notice
of Purchase and/or Investor Rate", specifying therein, in accordance with the
other provisions of this Section 1.03, the requested Fixed Period and Investor
Rate therefor (including, in the case of a requested MTN Floating Rate, the
requested "Spread" or "Spread Multiplier", "Interest Rate Base", "Index
Maturity", and "Interest Reset Dates", specified in such Notice of Purchase
and/or Investor Rate).
(b) If the Seller shall request as the Investor Rate for any Fixed
Period the CP Rate for such Fixed Period in accordance with subsection (a) above
and if the Agent shall approve such request, (i) such Investor Rate shall be the
CP Rate for such Fixed Period and (ii) such Fixed Period shall be such number of
days, not exceeding 270 days, as the Seller shall request, and the Agent shall
so approve; PROVIDED, HOWEVER, that if the Agent shall not have received a
notice requesting such Investor Rate, or the Agent shall not have approved such
Fixed Period, before 11:00 A.M. (New York City time) on the first day of such
Fixed Period and no other Fixed Period or Investor Rate shall be otherwise
applicable pursuant to the provisions of this Agreement, such Fixed Period shall
be one day and the Investor Rate for such Fixed Period shall be the CP Rate.
(c) If the Seller shall request as the Investor Rate for any Fixed
Period the MTN Fixed Rate or the MTN Floating Rate for such Fixed Period in
accordance with subsection (a) above and if the Agent shall approve such request
and if (in the event that clause (ii) of the definition of "Breakage Reserve"
contained in Exhibit I hereto applies) the Seller and the Agent shall have
agreed in writing to the computation of the Breakage Reserve for such Fixed
Period, (i) such Investor Rate shall be the MTN Fixed Rate or the MTN Floating
Rate (with, in the case of the MTN Floating Rate, the "Spread" or "Spread
Multiplier", "Interest Rate Base", "Index Maturity", and "Interest Reset Dates",
specified in such Notice of Purchase and/or Investor Rate), as so requested, for
such Fixed Period and (ii) such Fixed Period shall be such duration, exceeding
270 days but not exceeding five years, as the Seller shall request, and the
Agent shall approve, in the Notice of Purchase and/or Investor Rate related
thereto; PROVIDED, HOWEVER, that if either (A) the Agent shall not have received
such Notice of Purchase and/or Investor Rate, or the Agent shall not have
approved such Investor Rate or such Fixed Period, before 11:00 A.M. (New York
City time) on the fifth Business Day before the first day of such Fixed Period
or (B) on or before the first day of such Fixed Period any Person who has agreed
to purchase the Medium Term Notes with reference to which such MTN Fixed Rate or
MTN Floating Rate is to be determined hereunder refuses to purchase and pay for
such Medium Term Notes, then such Fixed Period shall be one day and the Investor
Rate for such Fixed Period shall be the CP Rate.
3
(d) Anything herein to the contrary notwithstanding, if the
provisions of the definition of "Investor Rate" contained in Exhibit I hereto
shall specify that the Investor Rate for any Fixed Period shall be the Assignee
Rate (or such other rate as the Agent and the Seller may agree to in writing),
the Investor Rate for such Fixed Period shall be the Assignee Rate (or such
other rate) for such Fixed Period.
SECTION 1.04. RECEIVABLE INTEREST PERCENTAGE. (a) Each Receivable
Interest shall be initially computed on its date of purchase. Thereafter until
the Termination Date for such Receivable Interest, such Receivable Interest
shall be automatically recomputed (or deemed to be recomputed) on each day other
than a Liquidation Day. Any Receivable Interest, as computed (or deemed
recomputed) as of the day immediately preceding the Termination Date for such
Receivable Interest, shall thereafter remain constant. Such Receivable Interest
shall become zero when Capital thereof and Yield thereon shall have been paid in
full and the Collection Agent shall have received the accrued Collection Agent
Fee thereon.
(b) If any Receivable Interest would otherwise be reduced on any day
on account of newly arising Pool Receivables, the Investor may prevent such
reduction by notifying the Collection Agent on such day that the Receivables
Pool and the Net Receivables Pool Balance for such Receivable Interest will
include, with respect to Receivables arising as Pool Receivables on such day,
only such number or portion of such Receivables as shall cause such Receivable
Interest to remain constant. The remainder of such Receivables or portion
thereof shall be treated as Receivables arising on the next succeeding Business
Day (subject to reapplication of this subsection (b)).
SECTION 1.05. SETTLEMENT PROCEDURES. (a) Collection of the Pool
Receivables shall be administered by a Collection Agent, in accordance with the
terms of this Agreement and the Collection Agent Agreement. The Seller shall
provide to the Collection Agent (if other than the Seller) on a timely basis all
information needed for such administration, including notice of the occurrence
of any Liquidation Day or Provisional Liquidation Day and current computations
of each Receivable Interest.
(b) The Collection Agent shall, on each day on which Collections of
Pool Receivables are received by it with respect to any Receivable Interest:
(i) set aside and hold in trust for the Investor, out of the
percentage of such Collections represented by such Receivable Interest, an
amount equal to the Yield and Collection Agent Fee accrued through such day for
such Receivable Interest and not previously set aside;
(ii) if such day is neither a Liquidation Day nor a
Provisional Liquidation Day, reinvest on behalf of the Investor the remainder of
such percentage of Collections, to the extent representing a return of Capital,
by recomputation of such Receivable Interest pursuant to Section 1.04;
4
(iii) if such day is a Liquidation Day or a Provisional
Liquidation Day, set aside and hold in trust for the Investor the entire
remainder of such percentage of Collections; PROVIDED that amounts set aside and
held in trust on any Provisional Liquidation Day that is subsequently determined
not to be a Liquidation Day thereupon shall, to the extent representing a return
of Capital, be reinvested in accordance with the preceding paragraph (ii); and
(iv) during such times as amounts are required to be
reinvested in accordance with the foregoing paragraph (ii) or the proviso to
paragraph (iii), release to the Seller for its own account any Collections in
excess of such amounts and the amounts that are required to be set aside
pursuant to paragraph (i) above.
(c) The Collection Agent shall deposit into the Agent's Account, on
the last day of each Settlement Period for a Receivable Interest, Collections
held for the Investor that relate to such Receivable Interest and which have not
been reinvested pursuant to Section 1.05(b). The aggregate amount so deposited
with respect to a Receivable Interest shall not exceed the sum of the Capital of
and accrued Yield (including without limitation, the Breakage Fee for each
Receivable Interest then payable pursuant to Section 1.12) and Collection Agent
Fee on such Receivable Interest plus the aggregate of any other amounts then
owed by the Seller to the Investor or the Agent hereunder.
(d) Upon receipt of funds deposited into the Agent's Account, the
Agent shall distribute them as follows:
(i) if such distribution occurs on a day that is neither a
Liquidation Day nor a Provisional Liquidation Day, first to the Investor in
payment in full of all accrued Yield and then to the Collection Agent in payment
in full of all accrued Collection Agent Fee;
(ii) if such distribution occurs on either a Liquidation Day
or a Provisional Liquidation Day, first to the Investor in payment in full of
all accrued Yield, second to the Investor in reduction to zero of all Capital,
third to the Investor or the Agent in payment of any other amounts owed by the
Seller hereunder, and fourth to the Collection Agent in payment in full of all
accrued Collection Agent Fee.
After the Capital and Yield and Collection Agent Fee with respect to
a Receivable Interest, and any other amounts payable by the Seller to the
Investor or the Agent hereunder, have been paid in full, all additional
Collections with respect to such Receivable Interest shall be paid to the Seller
for its own account.
(e) For the purposes of this Section 1.05:
(i) if on any day the Outstanding Balance of any Pool
Receivable is
5
reduced or adjusted as a result of any merchandise, electricity or services
being or alleged to be defective or being rejected or returned, or any cash
discount or other adjustment made by the Seller, or any setoff, the Seller shall
be deemed to have received on such day a Collection of such Pool Receivable in
the amount of such reduction or adjustment;
(ii) if on any day any of the representations or warranties in
paragraph (h) of Exhibit III is no longer true with respect to any Pool
Receivable, the Seller shall be deemed to have received on such day a Collection
of such Pool Receivable in full;
(iii) except as provided in paragraph (i) or (ii) of this
Section 1.05(e), or as otherwise required by applicable law or the relevant
Contract, all Collections received from an Obligor of any Receivables shall be
applied to the Receivables of such Obligor in the order of the age of such
Receivables, starting with the oldest such Receivable, unless such Obligor
designates its payment for application to specific Receivables; and
(iv) if and to the extent the Agent or the Investor shall be
required for any reason to pay over to an Obligor any amount received on its
behalf hereunder, such amount shall be deemed not to have been so received but
rather to have been retained by the Seller and, accordingly, the Agent or the
Investor, as the case may be, shall have a claim against the Seller for such
amount, payable when and to the extent that any distribution from or on behalf
of such Obligor is made in respect thereof.
SECTION 1.06. FEES. The Seller shall pay fees to the Agent
pursuant to separate letter agreements executed from time to time.
SECTION 1.07. PAYMENTS AND COMPUTATIONS, ETC. (a) All amounts to be
paid or deposited by the Seller or the Collection Agent hereunder, under the
letter agreement referred to in Section 1.06, or under the Collection Agent
Agreement shall be paid or deposited no later than 11:00 A.M. (New York City
time) on the day when due in same day funds to the Agent's Account.
(b) The Seller shall, to the extent permitted by law, pay interest
on any amount not paid or deposited by the Seller (whether as Collection Agent
or otherwise) when due hereunder or under the letter agreement referred to in
Section 1.06, at an interest rate per annum equal to the Alternate Base Rate,
payable on demand.
(c) All computations of interest under subsection (b) above and all
computations of Yield, fees, and other amounts hereunder shall be made on the
basis of a year of 360 days for the actual number of days elapsed EXCEPT that
(i) computations of the MTN Fixed Rate and Yield computed by reference to the
MTN Fixed Rate shall be made on the basis of a 360-day year
6
consisting of twelve 30-day months and (ii) computations of any MTN Floating
Rate and Yield computed by reference to any MTN Floating Rate shall be made on
the basis for the computation of interest applicable to the Medium Term Notes
with reference to which such MTN Floating Rate is determined hereunder. Whenever
any payment or deposit to be made hereunder shall be due on a day other than a
Business Day, such payment or deposit shall be made on the next succeeding
Business Day and such extension of time shall be included in the computation of
such payment or deposit.
SECTION 1.08. DIVIDING OR COMBINING RECEIVABLE INTERESTS. The Seller
may, on notice to and consent by the Agent received at least three Business Days
prior to the last day of any Fixed Period, either (i) divide any Receivable
Interest into two or more Receivable Interests having aggregate Capital equal to
the Capital of such divided Receivable Interest, or (ii) combine any two or more
Receivable Interests originating on such last day or having Fixed Periods ending
on such last day into a single Receivable Interest having Capital equal to the
aggregate of the Capital of such Receivable Interests.
SECTION 1.09. RECOURSE FOR DEFAULTED RECEIVABLES. (a) To the extent
of the Default Recourse Limit (as defined below) at such time, on the last day
of each Settlement Period for each Receivable Interest as to which a Liquidation
Day has occurred, the Seller shall be obligated to pay to the Agent for the
account of the owner of such Receivable Interest, without prejudice to any other
rights that the Investor or any other owner of a Receivable Interest may have
hereunder or under applicable law, an amount equal to such Receivable Interest
multiplied by the Outstanding Balance of any Pool Receivable that at such time
is a Defaulted Receivable (but without duplication of amounts previously paid
under this subsection (a) with respect to such interest in such Defaulted
Receivable).
(b) "Default Recourse Limit" means at any time an amount equal to:
(i) the applicable Loss Percentage multiplied by the Capital
of such Receivable Interest at such time, PROVIDED the foregoing amount shall
not be recomputed (and shall remain fixed) on any day that is a Liquidation Day
for such Receivable Interest, PROVIDED FURTHER that such amount shall again be
recomputed (and no longer shall remain fixed) on any day that is no longer a
Liquidation Day for such Receivable Interest; PLUS
(ii) an amount equal to (a) the aggregate Outstanding Balance
of all Pool Receivables of any Obligor for which there is a Special
Concentration Limit, up to but not exceeding an amount equal to the product of
such Special Concentration Limit multiplied by the aggregate Outstanding Balance
of all Pool Receivables, MINUS (b) the amount of the product of the
Concentration Limit multiplied by the aggregate Outstanding Balance of all Pool
Receivables; MINUS
7
(iii) an amount equal to the aggregate payments made prior to
such time (but subsequent to the most recently preceding day which is not a
Liquidation Day) by the Seller under Section 1.09(a) above; PLUS
(iv) an amount equal to such Receivable Interest multiplied by
any Collections with respect to each Defaulted Receivable in respect of which
payments shall have been made prior to such time by the Seller under subsection
(a) above, PROVIDED that the Default Recourse Limit for any Receivable Interest
shall not at any time by reason of this clause (iii) exceed the Default Recourse
Limit that was in effect as of the then most recent date of recomputation in
accordance with clause (i) above.
(c) The proceeds of any payment made pursuant to subsection (a)
above shall be deemed to be a Collection in respect of each Receivable in
respect of which such payments are made by the Seller, and the amount of each
such Collection shall be applied as provided in Section 1.05.
SECTION 1.10. EURODOLLAR INCREASED COSTS. If, due to either (i) the
introduction of or any change (other than any change by way of imposition or
increase of reserve requirements referred to in Section 1.11) in or in the
interpretation of any law or regulation or (ii) the compliance with any
guideline or request from any central bank or other governmental authority
(whether or not having the force of law), there shall be any increase in the
cost to the Investor of agreeing to purchase or purchasing, or maintaining the
ownership of, Receivable Interests in respect of which Yield is computed by
reference to the Eurodollar Rate, then, upon demand by the Investor (with a copy
to the Agent), the Seller shall immediately pay to the Agent, for the account of
the Investor (as a third-party beneficiary), from time to time as specified,
additional amounts sufficient to compensate the Investor for such increased
costs. Such increased costs shall be determined by the Investor and notified to
the Seller through the Agent within 30 days after all Capital of Receivable
Interests is reduced to zero. A certificate as to such amounts submitted to the
Seller and the Agent by the Investor shall be conclusive and binding for all
purposes, absent manifest error.
SECTION 1.11. ADDITIONAL YIELD ON RECEIVABLE INTERESTS BEARING A
EURODOLLAR RATE. The Seller shall pay to the Investor, so long as the Investor
shall be required under regulations of the Board of Governors of the Federal
Reserve System to maintain reserves with respect to liabilities or assets
consisting of or including Eurocurrency Liabilities, additional Yield on the
Capital of each Receivable Interest of the Investor during each Fixed Period in
respect of which Yield is computed by reference to the Eurodollar Rate, for such
Fixed Period, at a rate per annum equal at all times during such Fixed Period to
the remainder obtained by subtracting (i) the Eurodollar Rate for such Fixed
Period from (ii) the rate obtained by dividing such Eurodollar Rate referred to
in clause (i) above by that percentage equal to 100% minus the Eurodollar Rate
Reserve Percentage of the Investor for such Fixed Period, payable on each date
on which Yield is payable on such Receivable Interest. Such additional Yield
shall be determined by the Investor and notified to the Seller through the Agent
within 30 days after any Yield payment is made with
8
respect to which such additional Yield is requested. A certificate as to such
additional Yield submitted to the Seller and the Agent shall be conclusive and
binding for all purposes, absent manifest error.
SECTION 1.12. BREAKAGE FEE AND INDEMNITY. If any Liquidation Day, or
the Termination Date, for any Receivable Interest shall occur during any Fixed
Period (computed, for purposes of this Section 1.12, without regard to clause
(iv) of the definition of "Fixed Period" contained in Exhibit I hereto) for such
Receivable Interest and the Investor Rate for such Fixed Period for such
Receivable Interest shall be the MTN Fixed Rate or the MTN Floating Rate for
such Fixed Period, the Seller shall indemnify and hold harmless the Investor of
such Receivable Interest for all losses, costs, liabilities and expenses which
such Investor may incur as a result of the occurrence of such Liquidation Day or
Termination Date, including the Breakage Fee (as defined below).
"Breakage Fee" for a Receivable Interest means a fee, provided that
"F" (as defined below) shall be greater than "R" (as defined below), to be
computed cumulatively as of each Fee Determination Date for such Receivable
Interest as follows:
[C x (F-R)] x [1 - (1 + R/f)-n]
[ f ] [ R/f ]
where:
C = the amount by which Capital of such Receivable Interest is
reduced on such Fee Determination Date
F = if the Investor Rate for such Fixed Period shall be the MTN
Fixed Rate, the MTN Fixed Rate for such Receivable Interest for such Fixed
Period; and if the Investor Rate for such Fixed Period shall be the MTN Floating
Rate, the MTN Floating Rate for such Receivable Interest in effect on such Fee
Determination Date for such Receivable Interest
R = the highest rate of interest (which will be a fixed interest
rate if the MTN Fixed Rate shall apply for such Fixed Period, and which will be
a floating interest rate, based on the "Interest Rate Base" (as identified in
the related Notice of Purchase and/or Investor Rate) in effect on such Fee
Determination Date, if the MTN Floating Rate shall apply for such Fixed Period)
at which the Agent on behalf of the Investor shall be permitted under the
Investor's credit and investment policy to reinvest on such Fee Determination
Date the amount of "C" above; PROVIDED, HOWEVER, that "R" shall not be less than
the yield to maturity of U.S. Treasury notes trading closest to par value and
maturing within three months of the last day of such
9
Interest Period
f = the frequency per year (maximum amount of times per year) that
Yield for such Receivable Interest for such Fixed Period shall be payable
n = the number of originally scheduled Settlement Periods (in whole
or in part) remaining in such Fixed Period from such Fee Determination Date to
the last day of such Fixed Period
The portion of the Breakage Fee for such Receivable Interest computed as of each
Fee Determination Date for such Receivable Interest shall be payable by the
Seller within 2 Business Days after such Fee Determination Date.
ARTICLE II
REPRESENTATIONS AND WARRANTIES; COVENANTS;
EVENTS OF TERMINATION
SECTION 2.01. REPRESENTATIONS AND WARRANTIES; COVENANTS. The Seller
hereby makes the representations and warranties, and hereby agrees to perform
and observe the covenants, set forth in Exhibits III and IV, respectively,
hereto.
SECTION 2.02. EVENTS OF TERMINATION. If any of the Events of
Termination set forth in Exhibit V hereto shall occur and be continuing, the
Agent may, by notice to the Seller, take either or both of the following
actions: (x) declare the Facility Termination Date to have occurred (in which
case the Facility Termination Date shall be deemed to have occurred), and (y)
without limiting any right under the Collection Agent Agreement to replace the
Collection Agent, designate another Person to succeed the Seller as the
Collection Agent; PROVIDED that, automatically upon the occurrence of any event
(without any requirement for the passage of time or the giving of notice)
described in subsection (g) of Exhibit V, the Facility Termination Date shall
occur, the Seller (if it is then serving as the Collection Agent) shall cease to
be the Collection Agent, and the Agent or its designee shall become the
Collection Agent. Upon any such declaration or designation or upon any such
automatic termination, the Investor and the Agent shall have, in addition to the
rights and remedies which they may have under this Agreement, all other rights
and remedies provided under applicable law, which rights and remedies shall be
cumulative.
ARTICLE III
INDEMNIFICATION
SECTION 3.01. INDEMNITIES BY THE SELLER. Without limiting any other
rights that the Agent or the Investor (each, an "Indemnified Party") may have
hereunder or under applicable
10
law, the Seller hereby agrees to indemnify each Indemnified Party from and
against any and all claims, losses and liabilities (including reasonable
attorneys' fees) (all of the foregoing being collectively referred to as
"Indemnified Amounts") arising out of or resulting from this Agreement or the
use of proceeds of purchases or reinvestments or the ownership of Receivable
Interests or in respect of any Receivable or any Contract, EXCLUDING, HOWEVER,
(a) Indemnified Amounts to the extent resulting from gross negligence or willful
misconduct on the part of such Indemnified Party, (b) Indemnified Amounts to the
extent arising out of, relating to, or resulting from any act or omission on the
part of such Indemnified Party or any Collection Agent, other than the Seller,
appointed by any Indemnified Party, (c) recourse (except as otherwise
specifically provided in this Agreement) for uncollectible Receivables, (d) any
income taxes incurred by such Indemnified Party arising out of or as a result of
this Agreement or the ownership of Receivable Interests or in respect of any
Receivable or any Contract, (e) Indemnified Amounts arising from the failure of
any Indemnified Party to comply with any applicable laws, unless such failure
arose out of the breach by the Seller of any representation, warranty or
covenant of this Agreement, and (f) Indemnified Amounts arising from the sale of
commercial paper and/or Medium Term Notes by any Indemnified Party or the
operations or administration of any Indemnified Party generally (except to the
extent of the Seller's share of Other Costs as set forth in Section 4.04(c)) or
which would have existed or arisen even had such Indemnified Party not entered
into this Agreement, unless in each case such Indemnified Amounts arose out of
the breach by the Seller of any representation, warranty or covenant of this
Agreement; PROVIDED that in connection with any Indemnified Amounts covered by
this Agreement and one or more other agreements pursuant to which CAFCO has
purchased receivables or interests therein from other Persons and arising out of
or resulting from the same act, omission or occurrence, the Seller's liability
under this Section shall not exceed its ratable portion thereof determined in
accordance with its usage and the usage of such other Persons under their
respective facilities; PROVIDED, FURTHER, that if such Indemnified Amounts are
attributable to Other Sellers (as defined in Section 4.04(c)) and not
attributable to the Seller, such Other Sellers shall be solely liable for such
Indemnified Amounts; PROVIDED, FURTHER, HOWEVER, that if such Indemnified
Amounts are attributable to the Seller and not attributable to any Other Seller,
the Seller shall be solely liable for such Indemnified Amounts. Without limiting
or being limited by the foregoing, the Seller shall pay on demand to each
Indemnified Party any and all amounts necessary to indemnify such Indemnified
Party from and against any and all Indemnified Amounts relating to or resulting
from any of the following:
(i) the creation of an undivided percentage ownership interest
in any Receivable which is not at the date of the creation of such interest an
Eligible Receivable or which thereafter ceases to be an Eligible Receivable;
(ii) reliance on any representation or warranty or statement
made or deemed made by the Seller (or any of its officers) under or in
connection with this Agreement which shall have been incorrect in any material
respect when made;
(iii) the failure by the Seller to comply with any applicable
law, rule or regulation with respect to any Pool Receivable or the related
Contract; or the failure of any Pool Receivable or the related Contract to
conform to any such
11
applicable law, rule or regulation;
(iv) the failure to vest in the Investor an undivided
percentage ownership interest, to the extent of each Receivable Interest, in the
Receivables in, or purporting to be in, the Receivables Pool and the Related
Security and Collections in respect thereof, free and clear of any Adverse
Claim;
(v) the failure to have filed, or any delay in filing,
financing statements or other similar instruments or documents under the UCC of
any applicable jurisdiction or other applicable law, with respect to any
Receivables in, or purporting to be in, the Receivables Pool and the Related
Security and Collections in respect thereof, whether at the time of any purchase
or reinvestment or at any subsequent time;
(vi) any dispute, claim, offset or defense (other than
discharge in bankruptcy of the Obligor) of the Obligor to the payment of any
Receivable in, or purporting to be in, the Receivables Pool (including, without
limitation, a defense based on such Receivable or the related Contract not being
a legal, valid and binding obligation of such Obligor enforceable against it in
accordance with its terms), or any other claim resulting from the sale of the
electricity or services related to such Receivable or the furnishing or failure
to furnish such electricity or services;
(vii) any failure in any material respect of the Seller, as
Collection Agent or otherwise, to perform its duties or obligations in
accordance with the provisions hereof or of the Collection Agent Agreement or to
perform its duties or obligations under the Contracts;
(viii) any products liability claim arising out of or in
connection with electricity or services which are the subject of any
Contract;
(ix) the commingling of Collections of Pool Receivables at
any time with other funds;
(x) any investigation, litigation or proceeding, initiated by
a third party involving any act or omission on the part of the Seller which is
related to this Agreement or the use of proceeds of purchases or reinvestments
or the ownership of Receivable Interests or any Receivable, Related Security or
Contract;
(xi) any Adverse Claim affecting the Pool Receivables arising
from the Mortgage or the LREC Indenture or the filing or existence of
assignments, financing statements or similar instruments with respect to the
Mortgage or the LREC Indenture; and
12
(xii) any failure to obtain any acknowledgment, authorization
or approval under, or provide any notice required by, the Federal Assignment of
Claims Act of 1940, as amended, in respect of Government Receivables, or any
failure to obtain any acknowledgment, authorization or approval under, or
provide any notice required by, any similar law of the State of Louisiana or any
local or municipal government within such State, in respect of any Receivable
whose Obligor is the State of Louisiana, any governmental subdivision or agency
thereof or any locality or municipality therein.
ARTICLE IV
MISCELLANEOUS
SECTION 4.01. AMENDMENTS, ETC. No amendment or waiver of any
provision of this Agreement or consent to any departure by the Seller therefrom
shall be effective unless in a writing signed by the Agent, and then such
amendment, waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given. No failure on the part of the
Investor or the Agent to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder preclude any other or further exercise thereof
or the exercise of any other right.
SECTION 4.02. NOTICES, ETC. All notices and other communications
hereunder shall, unless otherwise stated herein, be in writing (including
facsimile communication) and faxed or delivered, to each party hereto, at its
address set forth under its name on the signature pages hereof or at such other
address as shall be designated by such party in a written notice to the other
parties hereto. Notices and communications shall be effective when received.
SECTION 4.03. ASSIGNABILITY; TERMINATION. (a) This Agreement and the
Investor's rights and obligations herein (including ownership of each Receivable
Interest) shall be assignable by the Investor and its successors and assigns to
any Eligible Assignee. The Seller may not assign its rights hereunder or any
interest herein without the prior written consent of the Agent.
(b) Each assignor of a Receivable Interest or any interest therein
shall notify the Agent and the Seller of any such assignment.
(c) The provisions of Sections 1.09, 1.10, 1.11, 3.01, 4.04, 4.05
and 4.06 shall survive any termination of this Agreement; PROVIDED, that each of
the indemnities under Section 3.01 which relate to claims against any
Indemnified Party shall not survive beyond the expiration of any statute of
limitations applicable to such claim (unless such claim is asserted against any
Indemnified Party prior to such expiration), and each of the other indemnities
of Section 3.01 and each of the provisions of Section 4.04 shall not survive
beyond the second anniversary of the later of the Facility Termination Date or
the date on which all Capital of all Receivable Interests is reduced to zero
(except for claims for indemnification and demands for payment asserted by any
13
Indemnified Party prior to such second anniversary).
SECTION 4.04. COSTS, EXPENSES AND TAXES. (a) In addition to the
rights of indemnification granted under Section 3.01 hereof, the Seller agrees
to pay on demand all reasonable costs and expenses in connection with the
preparation, execution, delivery and administration (including periodic auditing
of Receivables) of this Agreement and the other documents and agreements to be
delivered hereunder, including, without limitation, the reasonable fees and
out-of-pocket expenses of counsel for the Agent and CAFCO with respect thereto
and with respect to advising the Agent and CAFCO as to their rights and remedies
under this Agreement, and all costs and expenses, if any (including reasonable
counsel fees and expenses) of the Investor or the Agent, in connection with the
enforcement of this Agreement and the other documents and agreements to be
delivered hereunder.
(b) In addition, the Seller shall pay any and all commissions of
placement agents and dealers in respect of Commercial Paper Notes or Medium Term
Notes, or both, issued to fund the purchase or maintenance of any Receivable
Interest and any and all stamp and other taxes and fees payable in connection
with the execution, delivery, filing and recording of this Agreement or the
other documents or agreements to be delivered hereunder, and agrees to save each
Indemnified Party harmless from and against any liabilities with respect to or
resulting from any delay on the part of the Seller in paying or omission to pay
such taxes and fees.
(c) The Seller also shall pay on demand all other costs, expenses
and taxes (excluding income taxes) incurred by CAFCO or any stockholder of CAFCO
("Other Costs"), including the cost of auditing CAFCO's books by certified
public accountants, the cost of rating CAFCO's Commercial Paper Notes or Medium
Term Notes, or both, by independent financial rating agencies, the issuance fee
in respect of CAFCO's Medium Term Notes charged by and payable to the Agent, the
cost of issuing CAFCO's Commercial Paper Notes or Medium Term Notes, or both,
the taxes (excluding income taxes) resulting from CAFCO's operations, and the
reasonable fees and out-of-pocket expenses of counsel for CAFCO with respect to
advising as to rights and remedies under this Agreement, the enforcement of this
Agreement, advising as to matters relating to CAFCO's operations or advising
CAFCO as to the issuance of CAFCO's Commercial Paper Notes or Medium Term Notes,
or both, and acting in connection with such issuance; PROVIDED that the Seller
and any other Persons who from time to time sell receivables or interests
therein to CAFCO ("Other Sellers") each shall only be liable for such Other
Costs ratably in accordance with the usage under their respective facilities;
and PROVIDED FURTHER that if such Other Costs are attributable to the Seller and
not attributable to any Other Seller, the Seller shall be solely liable for such
Other Costs.
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SECTION 4.05. NO PROCEEDINGS. Each of the Seller, the Agent, the
Investor, each assignee of a Receivable Interest or any interest therein and
each entity which enters into a commitment to purchase Receivable Interests or
interests therein hereby agrees that it will not institute against CAFCO any
proceeding of the type referred to in paragraph (g) of Exhibit V so long as any
Commercial Paper Notes or Medium Term Notes issued by the Investor shall be
outstanding or there shall not have elapsed one year plus one day since the last
day on which any such Commercial Paper Notes or Medium Term Notes shall have
been outstanding.
SECTION 4.06. CONFIDENTIALITY. (a) Unless otherwise required by
applicable law, the Seller agrees to maintain the confidentiality of this
Agreement (and all drafts thereof) in communications with third parties and
otherwise; PROVIDED that this Agreement may be disclosed (i) to third parties to
the extent such disclosure is made pursuant to a written agreement of
confidentiality in form and substance reasonably satisfactory to the Agent, (ii)
to the Seller's legal counsel and auditors, and (iii) to the extent required by
applicable law (including, without limitation, the Securities Exchange Act of
1934, as amended) or by any court, regulatory body or agency having jurisdiction
over the Seller; and PROVIDED, FURTHER, that the Seller shall have no obligation
of confidentiality in respect of any information which may be generally
available to the public or becomes available to the public through no fault of
the Seller, except that the Seller will not take any affirmative actions to
further disclose such information (except to the extent otherwise permitted by
this Section 4.06(a)).
(b) CAFCO, CNA and the Agent each agrees to maintain the
confidentiality of all information with respect to the Seller furnished or
delivered to it pursuant to paragraph (g) of Exhibit IV; PROVIDED, that such
information may be disclosed (i) to such party's legal counsel and auditors,
(ii) to the extent required by applicable law or by any court, regulatory body
or agency having jurisdiction over such party, and (iii) to Investors and
prospective Investors if they agree to hold it confidential to the extent set
forth in this Section 4.06(b); and PROVIDED, FURTHER, that such party shall have
no obligation of confidentiality in respect of any information which may be
generally available to the public or becomes available to the public through no
fault of such party, except that such party will not take any affirmative
actions to further disclose such information (except to the extent otherwise
permitted by this Section 4.06(b)).
SECTION 4.07. GOVERNING LAW; EXECUTION IN COUNTERPARTS. (a) This
Agreement shall be governed by, and construed in accordance with, the law of the
State of New York, except to the extent that the validity or perfection of the
interests of the Investors in the Receivables, or remedies hereunder, in respect
thereof, are governed by the laws of a jurisdiction other than the State of New
York.
(b) This Agreement may be executed in any number of counterparts,
each of which when so executed shall be deemed to be an original and all of
which when taken together shall constitute one and the same agreement.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
By: DAVID M. EPPLER
Title: Vice President-Finance
2030 Donahue Ferry Road
Pineville, Louisiana 71360
Attention: Michael P. Prudhomme
Facsimile No. 318-484-7697
CORPORATE ASSET FUNDING COMPANY, INC.
By: Citicorp North America,
Inc., as Attorney-in-Fact
By: ARTHUR B. BOVINO, JR.
Vice President
450 Mamaroneck Avenue
Harrison, New York 10528
Attention: Corporate Asset Funding
Facsimile No. 914-899-7015
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CITICORP NORTH AMERICA, INC.,
individually and as Agent
By: ARTHUR B. BOVINO, JR.
Vice President
450 Mamaroneck Avenue
Harrison, New York 10528
Attention: Corporate Asset Funding
Facsimile No. 914-899-7015
17
EXHIBIT I
DEFINITIONS
As used in the Agreement (including its Exhibits), the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):
"ADVERSE CLAIM" means a lien, security interest or other charge or
encumbrance, or any other type of preferential arrangement.
"AFFILIATE" means, as to any Person, any other Person that, directly
or indirectly, is in control of, is controlled by or is under common control
with such Person or is a director or officer of such Person.
"AFFILIATED OBLIGOR" means any Obligor that is an Affiliate of
another Obligor.
"AGENT'S ACCOUNT" means the special account (account number
4054-8804) of the Agent maintained at the office of Citibank, N.A. at 399
Park Avenue, New York, New York.
"ALTERNATE BASE RATE" means a fluctuating interest rate per annum as
shall be in effect from time to time, which rate shall be at all times equal to
the higher of:
(a) the rate of interest announced publicly by Citibank, N.A. in
New York, New York, from time to time as Citibank, N.A.'s base rate; or
(b) 1/2 of one percent above the latest three-week moving average of
secondary market morning offering rates in the United States for three-month
certificates of deposit of major United States money market banks, such
three-week moving average being determined weekly on each Monday (or, if such
day is not a Business Day, on the next succeeding Business Day) for the
three-week period ending on the previous Friday by Citibank, N.A. on the basis
of such rates reported by certificate of deposit dealers to and published by the
Federal Reserve Bank of New York or, if such publication shall be suspended or
terminated, on the basis of quotations for such rates received by Citibank, N.A.
from three New York certificate of deposit dealers of recognized standing
selected by Citibank, N.A., in either case adjusted to the nearest 1/4 of one
percent or, if there is no nearest 1/4 of one percent, to the next higher 1/4 of
one percent.
"ASSESSMENT RATE" for any Fixed Period means the annual
assessment rate per annum estimated by Citibank, N.A. on the first day of
such Fixed Period for determining the then current annual assessment payable
by Citibank, N.A. to the Federal Deposit Insurance Corporation (or any
successor) for insuring U.S. dollar deposits of Citibank, N.A. in the United
States.
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"ASSIGNEE RATE" for any Fixed Period for any Receivable Interest
means an interest rate per annum equal to
(x) the sum of:
(a) the rate per annum obtained by dividing (i) the consensus bid
rate determined by Citibank, N.A. (rounded upward to the nearest whole multiple
of 1/100 of 1% per annum, if such consensus bid rate is not such a multiple) for
the bid rates per annum, at 9:00 A.M. (New York City time) (or as soon
thereafter as practicable on the first day of such Fixed Period) of New York
certificate of deposit dealers of recognized standing selected by Citibank, N.A.
for the purchase at face value of certificates of deposit of Citibank, N.A. in
New York City in an amount substantially equal to the Capital of such Receivable
Interest on such first day and with a maturity equal to such Fixed Period, by
(ii) a percentage equal to 100% minus the CD Reserve Percentage for such Fixed
Period, PLUS
(b) the Assessment Rate for such Fixed Period, PLUS
(c) during any period when the condition set forth in paragraph
2(iii) of Exhibit II to the Agreement was not satisfied (or, if none of the
Seller's long-term public senior debt securities are publicly rated at such
time, the Agent shall have determined, in its sole discretion, that any of such
securities would not receive at least the specified ratings if they were
publicly rated), a rate of 1% per annum;
or (y), at the option of the Agent, upon notice to the Seller,
(a) 0.175% per annum above the Eurodollar Rate for such Fixed
Period, OR
(b) during any period when the condition set forth in paragraph
2(iii) of Exhibit II to the Agreement was not satisfied (or, if none of the
Seller's long-term public senior debt securities are publicly rated at such
time, the Agent shall have determined, in its sole discretion, that any of such
securities would not receive at least the specified ratings if they were
publicly rated), 1% per annum above the Eurodollar Rate for such Fixed Period;
PROVIDED, HOWEVER, that (i) for any Fixed Period on or prior to the first day on
which the Investor shall have notified the Agent that the introduction of or any
change in or in the interpretation of any law or regulation makes it unlawful,
or any central bank or other governmental authority asserts that it is unlawful,
for the Investor to fund such Receivable Interest at the Assignee Rate set forth
above (and the Investor shall not have subsequently notified the Agent that such
circumstances no longer exist), (ii) in the case of any Fixed Period of one to
(and including) 29 days, (iii) in the case of any Fixed Period as to which the
Agent does not receive notice by 12:00 noon (New York City time) on the third
Business Day preceding the first day of such Fixed Period, that the related
Receivable Interest will not be funded by issuance of commercial paper or Medium
Term Notes, and (iv) in the case of any Fixed Period for a Receivable Interest
the Capital of which allocated to the Investor is less than $500,000, the
"ASSIGNEE RATE" for such Fixed Period shall be an interest rate per annum equal
to the Alternate Base Rate in effect on the first day of such Fixed Period;
PROVIDED FURTHER that the Agent and the Seller may agree in writing from time to
time upon a different "ASSIGNEE RATE".
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"AVERAGE MATURITY" means at any time that period of days equal to
the average maturity of the Pool Receivables calculated by the Collection Agent
in the then most recent Investor Report; PROVIDED if the Agent shall disagree
with any such calculation, the Agent may recalculate such Average Maturity.
"BREAKAGE FEE" has the meaning specified in Section 1.12.
"BREAKAGE RESERVE" at any time during a Fixed Period means, (i) for
any Receivable Interest for which the Investor Rate for such Fixed Period shall
be either an MTN Fixed Rate less than 12% per annum, or an initial MTN Floating
Rate less than 12% per annum, an amount equal to the Breakage Fee for such
Receivable Interest at such time, computed in accordance with the formula
contained in Section 1.12 but giving effect to the Breakage Reserve Adjustments
described below, (ii) for any Receivable Interests for which the Investor Rate
for such Fixed Period shall be either an MTN Fixed Rate equal to or higher than
12% per annum, or an initial MTN Floating Rate equal to or higher than 12% per
annum, an amount to be determined by a computation to which the Agent and the
Seller shall have agreed in writing pursuant to Section 1.03(c), and (iii) for
any Receivable Interest at any other time, zero. The Breakage Reserve
Adjustments shall, in the determination at any time of the Breakage Reserve for
any Receivable Interest for any Fixed Period, be:
"C" in the formula contained in Section 1.12 shall equal the entire
amount of the Capital of such Receivable Interest at such time, and
"R" in such formula shall equal the fixed interest rate per annum
borne by Medium Term Notes, if any, issued by the Owner of such Receivable
Interest on the date of such determination and having a term equal to the period
from such date to the last day of such Fixed Period, or, if there shall be no
such Medium Term Notes, the fixed interest rate per annum which would be borne
by Medium Term Notes if issued by such Owner on the date of such determination
for such a term, such rate to be the average of quotations for such rate
received by the Agent from two securities dealers of recognized standing
selected by the Agent, adjusted to the nearest 1/8 of 1% per annum or, if there
is no nearest 1/8 of 1% per annum, to the next higher 1/8 of 1% per annum.
"BUSINESS DAY" means any day on which (i) banks are not authorized
or required to close in New York City and (ii) if this definition of "Business
Day" is utilized in connection with the Eurodollar Rate, dealings are carried
out in the London interbank market.
"CAFCO" shall include Corporate Asset Funding Company, Inc. and
any successor or assign of Corporate Asset Funding Company, Inc. that is a
receivables investment company which in the ordinary course of its business
issues commercial paper or other securities to fund its acquisition and
maintenance of receivables.
"CAPITAL" of any Receivable Interest means the original amount paid
to the Seller for such Receivable Interest at the time of its purchase by CAFCO
pursuant to the Agreement, or
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such amount divided or combined in accordance with Section 1.08, in each case
reduced from time to time by Collections distributed on account of such Capital
pursuant to Section 1.05; PROVIDED that if such Capital shall have been reduced
by any distribution and thereafter all or a portion of such distribution is
rescinded or must otherwise be returned for any reason, such Capital shall be
increased by the amount of such rescinded or returned distribution, as though it
had not been made.
"CD RESERVE PERCENTAGE" for any Fixed Period means the reserve
percentage applicable on the first day of such Fixed Period under regulations
issued from time to time by the Board of Governors of the Federal Reserve System
(or any successor) for determining the maximum reserve requirement (including,
but not limited to, any emergency, supplemental or other marginal reserve
requirement) for Citibank, N.A. with respect to liabilities consisting of or
including (among other liabilities) U.S. dollar nonpersonal time deposits in the
United States with a maturity equal to such Fixed Period.
"CITIBANK AGREEMENT" means the Receivables Purchase Agreement, dated
as of the date hereof, among the Seller, Citibank, N.A. and CNA, individually
and as Agent, as the same may, from time to time, be amended, modified or
supplemented.
"COLLECTION AGENT" means at any time the Person then authorized
pursuant to the Collection Agent Agreement to administer and collect Pool
Receivables.
"COLLECTION AGENT AGREEMENT" means an agreement between the Seller
and the Agent (and, if the Seller does not act as Collection Agent, consented to
by the Collection Agent), in form and substance satisfactory to them, governing
the appointment and responsibilities of the Collection Agent as to
administration and collection of the Pool Receivables, and requiring the
Collection Agent to perform its obligations set forth in the Agreement.
"COLLECTION AGENT FEE" means the collection agent fee referred to in
the Collection Agent Agreement.
"COLLECTION AGENT FEE RESERVE" for any Receivable Interest at any
time means the sum of (i) the Liquidation Collection Agent Fee for such
Receivable Interest at such time plus (ii) the unpaid Collection Agent Fee
relating to such Receivable Interest accrued to such time.
"COLLECTIONS" means, with respect to any Receivable, all cash
collections and other cash proceeds of such Receivable, including, without
limitation, all cash proceeds of Related Security with respect to such
Receivable, and any Collection of such Receivable deemed to have been received
pursuant to Section 1.05.
"COMMERCIAL PAPER NOTE" means a promissory note having a term not
exceeding 270 days.
"CONCENTRATION LIMIT" for any Obligor means at any time 2%, or such
other percentage ("Special Concentration Limit") for such Obligor designated by
the Agent in a writing delivered to the Seller; PROVIDED that in the case of an
Obligor with any Affiliated Obligor, the Concentration Limit shall be calculated
as if such Obligor and such Affiliated Obligor are one
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Obligor; PROVIDED FURTHER that the Agent may cancel any Special Concentration
Limit upon three Business Days' notice to the Seller.
"CONTRACT" means, collectively, (i) any of the Tariffs, and (ii) any
joint plant operating agreement (or other similar agreement) between the Seller
and an Obligor which is a joint owner of a utility plant pursuant to which the
Seller pays from time to time operating and/or capital expenses necessary for
the operation of the plant and such Obligor shall be obligated to reimburse the
Seller for its allocated portion of such expenses.
"CP RATE" for any Fixed Period for any Receivable Interest means the
interest rate per annum equivalent to the rate (or if more than one rate, the
weighted average of the rates) at which Commercial Paper Notes of the Investor
of such Receivable Interest thereof having a term equal to such Fixed Period and
to be issued to fund the purchase or maintenance of such Receivable Interest by
such Investor may be sold by any placement agent or dealer selected by such
Investor, as agreed between each such agent or dealer and such Investor and
notified by such Investor to the Agent and the Collection Agent; PROVIDED,
HOWEVER, if the rate (or rates) as agreed between any such agent or dealer and
such Investor with regard to any Fixed Period for any Receivable Interest is a
discount rate (or rates), the "CP RATE" for such Fixed Period shall be the rate
(or if more than one rate, the weighted average of the rates) resulting from
converting such discount rate (or rates) to an interest-bearing equivalent rate
per annum.
"CREDIT AND COLLECTION POLICY" means those receivables credit and
collection policies and practices of the Seller in effect on the date of the
Agreement and described in Schedule II hereto, as modified in compliance with
the Agreement.
"DEBT" means (i) indebtedness for borrowed money, (ii) obligations
evidenced by bonds, debentures, notes or other similar instruments, (iii)
obligations to pay the deferred purchase price of property or services, (iv)
obligations as lessee under leases which shall have been or should be, in
accordance with generally accepted accounting principles, recorded as capital
leases, (v) obligations under direct or indirect guaranties in respect of, and
obligations (contingent or otherwise) to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, indebtedness or
obligations of others of kinds referred to in clauses (i) through (iv) above,
and (vi) liabilities in respect of unfunded vested benefits under plans covered
by Title IV of ERISA.
"DEFAULT RATIO" means the ratio (expressed as a percentage) computed
as of the last day of each calendar month by dividing (i) the aggregate
Outstanding Balance of all Pool Receivables that were Defaulted Receivables on
such day or that would have been Defaulted Receivables on such day had they not
been written off the books of the Seller during such month by (ii) the aggregate
Outstanding Balance on such day of all Pool Receivables that have been billed.
"DEFAULTED RECEIVABLE" means a Receivable:
(i) as to which any payment, or part thereof, remains
unpaid for 91 days from the original due date for such payment;
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(ii) as to which the Obligor thereof or any other Person
obligated thereon or owning any Related Security in respect thereof has taken
any action, or suffered any event to occur, of the type described in paragraph
(g) of Exhibit V; or
(iii) which, consistent with the Credit and Collection Policy,
would be written off the Seller's books as uncollectible.
"DELINQUENCY RATIO" means the ratio (expressed as a percentage)
computed as of the last day of each calendar month by dividing (i) the aggregate
Outstanding Balance of all Pool Receivables that were Delinquent Receivables on
such day by (ii) the aggregate Outstanding Balance on such day of all Pool
Receivables that have been billed.
"DELINQUENT RECEIVABLE" means a Receivable that is not a Defaulted
Receivable and:
(i) as to which any payment, or part thereof, remains unpaid
for 31 days from the original due date for such payment; or
(ii) which, consistent with the Credit and Collection Policy,
would be classified as delinquent by the Seller.
"DESIGNATED ACCOUNT" means an account in the name of, and owned by,
CNA, as Agent, designated by the Agent for the purpose of receiving Collections
of Pool Receivables.
"DESIGNATED OBLIGOR" means, at any time, each Obligor; PROVIDED,
HOWEVER, that any Obligor shall cease to be a Designated Obligor upon three
Business Days' notice by the Agent to the Seller.
"ELIGIBLE ASSIGNEE" means (i) Citibank, N.A., CNA, or any of their
Affiliates, (ii) any Person managed by Citibank, N.A., CNA or any of their
Affiliates, or (iii) a financial institution or other entity which is acceptable
to the Agent and is approved by the Seller, which approval shall not be
unreasonably withheld.
"ELIGIBLE RECEIVABLE" means, at any time, a Receivable:
(i) the Obligor of which, at the time of the initial creation
of an interest therein under the Agreement, (A) is a United States resident, (B)
is not an Affiliate of any of the parties hereto, and (C) is not the United
States Government or any agency thereof;
(ii) the Obligor of which, at the time of the initial creation
of an interest therein under the Agreement, is a Designated Obligor and is not
the Obligor of any Defaulted Receivables which in the aggregate constitute 5% or
more of the aggregate Outstanding Balance of all Receivables of such Obligor;
(iii) which at the time of the initial creation of an
interest therein under the Agreement is not a Defaulted or Delinquent
Receivable;
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(iv) which, according to the Contract related thereto, is
required to be paid in full within 30 days of the original billing date
therefor;
(v) which is an open account receivable, note or other
obligation representing part or all of the sales price of merchandise, insurance
or services within the meaning of Section 3(c)(5) of the Investment Company Act
of 1940, as amended; the nature of which is such that its purchase with the
proceeds of commercial paper notes issued by the Seller would constitute a
"current transaction" within the meaning of Section 3(a)(3) of the Securities
Act of 1933, as amended; and which is not being used by the Seller or any of its
subsidiaries in determining the total "current transactions" of the Seller and
its subsidiaries in claiming an exemption from registration under Section
3(a)(3) of the Securities Act of 1933, as amended, for any securities issued by
the Seller or any of its subsidiaries;
(vi) which is (x) an "account" within the meaning of Section
9-106 of the UCC of the applicable jurisdictions governing the perfection of the
interest created by a Receivable Interest or (y) with respect to any Special
Receivable, a "general intangible" within the meaning of Section 9-106 of the
UCC of the applicable jurisdiction governing the perfection of the interest
created by a Receivable Interest;
(vii) which is denominated and payable only in United
States dollars in the United States;
(viii) which, at the time of the initial creation of an
interest therein under the Agreement, arises under a Contract which, together
with such Receivable, is in full force and effect and constitutes a legal, valid
and binding obligation of the Obligor of such Receivable and is not subject to
any dispute (other than hearings, actions or administrative proceedings
attributable to rate matters or Tariffs involving the Seller's Receivables
generally and arising in the ordinary course of the Seller's business), offset,
counterclaim or defense whatsoever (except the potential discharge in bankruptcy
of such Obligor);
(ix) which, at the time of the initial creation of an interest
therein under the Agreement, together with the Contract related thereto, does
not contravene in any material respect any laws, rules or regulations applicable
thereto (including, without limitation, laws, rules and regulations relating to
usury, consumer protection, truth in lending, fair credit billing, fair credit
reporting, equal credit opportunity, fair debt collection practices and privacy)
and with respect to which no party to the Contract related thereto is in
violation of any such law, rule or regulation in any material respect;
(x) which, at the time of the initial creation of an interest
therein under the Agreement, (A) satisfies all applicable requirements of the
Credit and Collection Policy and (B) complies with such other criteria and
requirements (other than
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those relating to the collectibility of such Receivable) as the Agent may from
time to time specify to the Seller upon 30 days' notice;
(xi) as to which, at or prior to the time of the initial
creation of an interest therein under the Agreement, the Agent has not notified
the Seller that such Receivable (or class of Receivables) is no longer
acceptable for purchase by CAFCO hereunder; and
(xii) the Outstanding Balance of which, at the time of the
initial creation of an interest therein under the Agreement, if it is a Special
Receivable, when aggregated with the Outstanding Balances of all other Special
Receivables, does not exceed the lesser of (x) $5,000,000 and (y) 20% of the
Outstanding Balance of all Pool Receivables.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) which together with the Seller would be treated as a single
employer or as a member of a group under common control under the provisions of
Section 414 of the Internal Revenue Code of 1986, as amended, or Title I or
Title IV of ERISA and the regulations thereunder.
"EUROCURRENCY LIABILITIES" has the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"EURODOLLAR RATE" means, for any Fixed Period, an interest rate per
annum equal to the rate per annum at which deposits in U.S. dollars are offered
by the principal office of Citibank, N.A. in London, England to prime banks in
the London interbank market at 11:00 A.M. (London time) two Business Days before
the first day of such Fixed Period in an amount substantially equal to the
Capital associated with such Fixed Period on such first day and for a period
equal to such Fixed Period.
"EURODOLLAR RATE RESERVE PERCENTAGE" of the Investor for any Fixed
Period in respect of which Yield is computed by reference to the Eurodollar Rate
means the reserve percentage applicable two Business Days before the first day
of such Fixed Period under regulations issued from time to time by the Board of
Governors of the Federal Reserve System (or any successor) (or if more than one
such percentage shall be applicable, the daily average of such percentages for
those days in such Fixed Period during which any such percentage shall be so
applicable) for determining the maximum reserve requirement (including, without
limitation, any emergency, supplemental or other marginal reserve requirement)
for the Investor with respect to liabilities or assets consisting of or
including Eurocurrency Liabilities (or with respect to any other category of
liabilities that includes deposits by reference to which the interest rate on
Eurocurrency Liabilities is determined) having a term equal to such Fixed
Period.
"EVENT OF TERMINATION" has the meaning specified in Exhibit V.
"FACILITY TERMINATION DATE" means the earliest of February 29, 2000,
the date
I-8
determined pursuant to Section 2.02, and the date the Purchase Limit reduces to
zero.
"FEE DETERMINATION DATE" means (i) for any Receivable Interest for
purposes of the computation of the Breakage Fee for such Receivable Interest
under Section 1.12, each day on which an amount of Capital of such Receivable
Interest is reduced and (ii) for any Receivable Interest for purposes of the
computation of the Breakage Fee under the definition of "Breakage Reserve"
contained in this Exhibit I, each time such calculation is made.
"FIXED PERIOD" means with respect to any Receivable Interest, a
period determined pursuant to Section 1.02 or Section 1.03, PROVIDED, however,
that:
(i) any Fixed Period in respect of which Yield is computed by reference
to the Assignee Rate shall be a period of from one to and including
14 days, or a period of 21, 30, 60, 90 or 180 days (or for any Fixed
Period in respect of which Yield is computed by reference to the
Eurodollar Rate a period of one to and including 29 days, or a
period of one, two or three months) as the Seller may select and the
Agent may approve on notice by the Seller received by the Agent
(including notice by telephone, confirmed in writing) not later than
11:00 A.M. (New York City time) on the day which occurs three
Business Days before the first day of such Fixed Period, each such
Fixed Period for any Receivable Interest to commence on the last day
of the immediately preceding Fixed Period for such Receivable
Interest (or, if there is no such Fixed Period, on the date of
purchase of such Receivable Interest), EXCEPT that if the Agent
shall not have received such notice, or the Agent and the Seller
shall not have so mutually agreed, before 11:00 A.M. (New York City
time) on such day, such Fixed Period shall be one day;
(ii) any such Fixed Period (other than of one day) which would otherwise
end on a day which is not a Business Day shall be extended to the
next succeeding Business Day (PROVIDED, HOWEVER, if Yield in respect
of such Fixed Period is computed by reference to the Eurodollar
Rate, and such Fixed Period would otherwise end on a day which is
not a Business Day, and there is no subsequent Business Day in the
same calendar month as such day, such Fixed Period shall end on the
next preceding Business Day);
(iii) in the case of Fixed Periods of one day, (A) if such Fixed Period is
the initial Fixed Period for a Receivable Interest, such Fixed
Period shall be the day of purchase of such Receivable Interest; (B)
any subsequently occurring Fixed Period which is one day shall, if
the immediately preceding Fixed Period is more than one day, be the
last day of such immediately preceding Fixed Period, and, if the
immediately preceding Fixed Period is one day, be the day next
following such immediately preceding Fixed Period; and (C) if such
Fixed Period occurs on a day immediately preceding a day which is
not a Business Day, such Fixed Period shall be extended to the next
succeeding Business Day; and
(iv) in the case of any Fixed Period for any Receivable Interest which
commences before the Termination Date for such Receivable Interest
and would otherwise end on a date occurring after such Termination
Date, such Fixed Period shall end on such
I-9
Termination Date and the duration of each Fixed Period which
commences on or after the Termination Date for such Receivable
Interest shall be of such duration as shall be selected by the
Agent.
"GOVERNMENT RECEIVABLE" means any Receivable whose Obligor is the
United States Government or any agency thereof.
"INVESTOR" means CAFCO and all other owners by assignment or
otherwise of a Receivable Interest and, to the extent of the undivided interests
so purchased, shall include any participants which are Eligible Assignees.
"INVESTOR RATE" for any Fixed Period for any Receivable Interest
means one of the following rates, as determined for such Fixed Period in
accordance with the terms and conditions of Section 1.02 or 1.03:
(i) the CP Rate for such Fixed Period, or
(ii) the MTN Fixed Rate for such Fixed Period, or
(iii) the MTN Floating Rate in effect from time to time for such
Fixed Period;
PROVIDED, HOWEVER, that if the Investor of a Receivable Interest shall not, at
any time and for any reason, fund its purchase or maintenance of such Receivable
Interest for such Fixed Period by its issuing Commercial Paper Notes or Medium
Term Notes, the "INVESTOR RATE" for such Fixed Period shall then be the Assignee
Rate for such Fixed Period or such other rate as the Agent and the Seller shall
agree to in writing; and PROVIDED, FURTHER, however, that if such Investor so
requests and the Seller consents thereto, the "INVESTOR RATE" for any Fixed
Period of one day shall be the Assignee Rate for such Fixed Period.
"INVESTOR REPORT" means a report, in substantially the form of Annex
A hereto, furnished by the Collection Agent to the Agent pursuant to the
Collection Agent Agreement.
"LIQUIDATION COLLECTION AGENT FEE" means, for any Receivable
Interest on any date, an amount equal to (i) the Capital of such Receivable
Interest on such date multiplied by (ii) the product of (a) the percentage per
annum at which the Collection Agent Fee is accruing on such date and (b) a
fraction having the Average Maturity (as in effect at such date) as its
numerator and 360 as its denominator.
"LIQUIDATION DAY" means, for any Receivable Interest, (i) each day
during a Settlement Period for such Receivable Interest on which the conditions
set forth in paragraph 2 of Exhibit II are not satisfied, PROVIDED such
conditions remain unsatisfied during such Settlement Period, and (ii) each day
which occurs on or after the Termination Date for such Receivable Interest.
"LIQUIDATION FEE" means, for each Receivable Interest for any Fixed
Period (computed without regard to clause (iv) of the definition of "Fixed
Period") during which any
I-10
Liquidation Day or Termination Date for such Receivable Interest occurs and for
which the Investor Rate shall be neither the MTN Fixed Rate nor the MTN Floating
Rate, the amount, if any, by which (i) the additional Yield (calculated without
taking into account any Liquidation Fee) which would have accrued on the
reductions of Capital of such Receivable Interest during such Fixed Period (as
so computed) if such reductions had remained as Capital, exceeds (ii) the
income, if any, received by the Investor or assignee of such Receivable Interest
from such Investor's or assignee's investing the proceeds of such reductions of
Capital.
"LIQUIDATION YIELD" means, for any Receivable Interest on any date,
an amount equal to the product of (i) the Capital of such Receivable Interest on
such date and (ii) the product of (a) the Assignee Rate for such Receivable
Interest for a 30-day Fixed Period deemed to commence on such date and (b) a
fraction having the Average Maturity (as in effect at such date) as its
numerator and 360 as its denominator.
"LOSS PERCENTAGE" means, for any Receivable Interest on any date,
the greater of (i) four times the highest Default Ratio as of the last day of
each of the three months ended immediately preceding such date, and (ii) 6%.
"LREC INDENTURE" means, collectively, the indentures dated as of
December 29, 1948, August 25, 1949, July 13, 1951 and July 11, 1958, and all
supplements thereto between the Louisiana Rural Electric Corporation and
Fidelity National Bank of Baton Rouge as Trustee securing mortgage notes by the
Louisiana Rural Electric Corporation to the United States of America, which
obligations under such indentures as supplemented have been assumed by the
Seller.
"MEDIUM TERM NOTE" means a promissory note having a term exceeding
270 days but not exceeding five years.
"MORTGAGE" means the Indenture of Mortgage dated as of July 1, 1950
by the Seller to National Bank of Commerce in New Orleans, as Trustee, as
amended and supplemented from time to time.
"MTN FIXED RATE" for any Fixed Period for any Receivable Interest
means the fixed interest rate per annum offered by the Investor of such
Receivable Interest in respect of Medium Term Notes issued or to be issued by
such Investor for a term (or a remaining term) equal to such Fixed Period and to
be used by such Investor to fund the purchase or maintenance of such Receivable
Interest, such fixed interest rate per annum to be notified by or on behalf of
such Investor to the Agent and the Collection Agent.
"MTN FLOATING RATE" for any Fixed Period for any Receivable Interest
means the floating interest rate per annum (determined by reference to an
interest rate formula) in effect from time to time offered by the Investor of
such Receivable Interest in respect of Medium Term Notes issued or to be issued
by such Investor for a term (or a remaining term) equal to such Fixed Period and
to be used by such Investor to fund the Purchase or maintenance of such
Receivable Interest, such floating interest rate per annum to be notified by or
on behalf of such Investor to the Agent and the Collection Agent.
I-11
"MTN INDENTURE" means the Indenture dated as of October 1, 1988
between the Seller and Bankers Trust Company, as trustee, as amended or
supplemented.
"NET RECEIVABLES POOL BALANCE" means at any time the Outstanding
Balance of Eligible Receivables then in the Receivables Pool reduced by the sum
of (i) the Outstanding Balance of such Eligible Receivables that have become
Defaulted Receivables and (ii) the aggregate amount by which the Outstanding
Balance of Eligible Receivables (other than Defaulted Receivables) of each
Obligor then in the Receivables Pool exceeds the product of (A) the
Concentration Limit for such Obligor multiplied by (B) the Outstanding Balance
of the Eligible Receivables then in the Receivables Pool.
"NOTICE OF PURCHASE AND/OR INVESTOR RATE" has the meaning
specified in Section 1.03.
"OBLIGOR" means a Person obligated to make payments pursuant to a
Contract.
"OUTSTANDING BALANCE" of any Receivable at any time means the then
outstanding principal balance thereof.
"PENSION PLAN" means an employee benefit plan (other than a
"multiemployer plan" as defined in Section 4001(a)(3) of ERISA) maintained for
employees of the Seller or any Affiliate of the Seller and covered by Title IV
of ERISA.
"PERSON" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture or other entity, or a government or any political subdivision or agency
thereof.
"POOL RECEIVABLE" means a Receivable in the Receivables Pool.
"POTENTIAL EVENT OF TERMINATION" means any event that would, with
the giving of notice or lapse of time or both, constitute an Event of
Termination.
"PROVISIONAL LIQUIDATION DAY" means each day that would be a
Liquidation Day but for the proviso in clause (i) of the definition of
"Liquidation Day."
"PURCHASE LIMIT" means $35,000,000, as such amount may be reduced
pursuant to Section 1.01. References to the unused portion of the Purchase Limit
shall mean, at any time, the Purchase Limit, as then reduced pursuant to Section
1.01(b) or pursuant to the next sentence, minus the sum of the then outstanding
Capital of Receivable Interests under the Agreement and the then outstanding
"Capital" of "Receivable Interests" under the Citibank Agreement. Furthermore,
on each day on which the Seller reduces the unused portion of (or terminates)
the "Commitment" under the Citibank Agreement, the Purchase Limit automatically
shall reduce by the same amount (or so terminate).
"RECEIVABLE" means the indebtedness of any Obligor under a Contract,
and includes the right to payment of any interest or finance charges and other
obligations of such Obligor with respect thereto.
I-12
"RECEIVABLE INTEREST" means, at any time, an undivided percentage
ownership interest in (i) all then outstanding Pool Receivables arising prior to
the time of the most recent computation or recomputation of such undivided
percentage interest pursuant to Section 1.04, (ii) all Related Security with
respect to such Pool Receivables, and (iii) all Collections with respect to, and
other proceeds of, such Pool Receivables. Such undivided percentage interest
shall be computed as
C + YR + CAFR + BR
------------------
NRPB
where:
C = the Capital of such Receivable Interest at the time of
computation
YR = the Yield Reserve of such Receivable Interest at the
time of computation
CAFR = the Collection Agent Fee Reserve of such Receivable
Interest at the time of computation
BR = the Breakage Reserve of such Receivable Interest at the
time of computation
NRPB = the Net Receivables Pool Balance at the time of
computation
Each Receivable Interest shall be determined from time to time pursuant to the
provisions of Section 1.04.
"RECEIVABLES POOL" means at any time the aggregation of each then
outstanding Receivable in respect of which the Obligor is a Designated Obligor
at such time or was a Designated Obligor on the date of the initial creation of
an interest in such Receivable under the Agreement.
"REINVESTMENT TERMINATION DATE" for any Receivable Interest means
that Business Day which the Seller or the Agent so designates by notice to the
other at least one Business Day in advance.
"RELATED SECURITY" means with respect to any Receivable:
I-13
(i) all security interests or liens and property subject
thereto from time to time purporting to secure payment of such Receivable,
whether pursuant to the Contract related to such Receivable or otherwise,
together with all financing statements signed by an Obligor describing any
collateral securing such Receivable; and
(ii) all guaranties, insurance and other agreements or
arrangements of whatever character from time to time supporting or securing
payment of such Receivable whether pursuant to the Contract related to such
Receivable or otherwise.
"SETTLEMENT PERIOD" for any Receivable Interest means each period
commencing on the first day of each Fixed Period for such Receivable Interest
and ending on the last day of such Fixed Period, and, on and after the
Termination Date for such Receivable Interest, such period (including, without
limitation, a period of one day) as shall be selected from time to time by the
Agent or, in the absence of any such selection, each period of thirty days from
the last day of the immediately preceding Settlement Period; PROVIDED, HOWEVER,
that until the Termination Date for such Receivable Interest, during any Fixed
Period for such Receivable Interest for which the Investor Rate shall be the MTN
Fixed Rate or the MTN Floating Rate, "SETTLEMENT PERIOD" for such Receivable
Interest means each period of six months (or a shorter period if the last day of
such Fixed Period shall earlier occur) during such Fixed Period, the initial
Settlement Period during such Fixed Period for such Receivable Interest
commencing on the first day of such Fixed Period and ending on the day which
occurs six months from such first day, and each subsequent Settlement Period
during such Fixed Period for such Receivable Interest commencing on the last day
of the immediately preceding Settlement Period for such Receivable Interest and
ending on the earlier of (i) the day which occurs six months from such last day
or (ii) the last day of such Fixed Period.
"SPECIAL ACCOUNT" means an account maintained by the Seller at a
Special Account Bank for the purpose of receiving Collections.
"SPECIAL ACCOUNT BANK" means any of the banks holding one or more
Special Accounts.
"SPECIAL RECEIVABLE" means any Receivable arising under a Contract
of the type described in clause (ii) of the definition of Contract relating to
reimbursement for operating and capital expenses.
"TARIFF" means each of the tariffs approved by the Louisiana Public
Service Commission or the Federal Energy Regulatory Commission pursuant to which
the Seller shall provide electricity to certain Obligors from time to time and
pursuant to which such Obligors shall be obligated to
pay for such electricity from time to time.
"TERMINATION DATE" for any Receivable Interest means the earlier of
(i) the Reinvestment Termination Date for such Receivable Interest and (ii) the
Facility Termination Date.
"UCC" means the Uniform Commercial Code as from time to time in
effect in the applicable jurisdiction.
I-14
"YIELD" means for each Receivable Interest for any Fixed Period:
IR x C x ED + LF + BF
--
BI
where:
IR = the Investor Rate for such Receivable Interest for such Fixed
Period (which rate shall be the Assignee Rate, if the Investor
of such Receivable Interest shall not, for any reason, fund its
purchase or maintenance of such Receivable Interest for such
Fixed Period by its issuing Commercial Paper Notes or Medium
Term Notes and the Seller and the Agent shall not have agreed
on another rate)
C = the Capital of such Receivable Interest during such Fixed
Period
BI = that number of days comprising a year which is the basis for
computing the Investor Rate for such Receivable Interest for
such Fixed Period
ED = the actual number of days elapsed during such Fixed Period
LF = the Liquidation Fee, if any, for such Receivable Interest for
such Fixed Period
BF = the Breakage Fee, if any, for such Receivable Interest for
such Fixed Period
PROVIDED, HOWEVER, that no provision of this Agreement shall require the payment
or permit the collection of Yield in excess of the maximum permitted by
applicable law; and PROVIDED, FURTHER, that Yield for any Receivable Interest
shall not be considered paid by any distribution to the extent that at any time
such distribution is rescinded or must otherwise be returned for any reason.
"YIELD RESERVE" for any Receivable Interest at any time means the
sum of (i) the Liquidation Yield at such time for such Receivable Interest, plus
(ii) the accrued and unpaid Yield (calculated for the purposes of this
definition of "Yield Reserve" by deleting the Breakage Fee component of the
formula set forth in the definition of "Yield") for such Receivable Interest.
- - - - - -
OTHER TERMS. All accounting terms not specifically defined
herein shall be construed in accordance with generally accepted accounting
principles.
I-15
EXHIBIT II
CONDITIONS OF PURCHASES
1. CONDITIONS PRECEDENT TO INITIAL PURCHASE. The initial purchase of
a Receivable Interest under the Original Agreement is subject to the conditions
precedent that the Agent shall have received on or before the date of such
purchase the following, each (unless otherwise indicated) dated such date, in
form and substance satisfactory to the Agent:
(a) Certified copies of the resolutions of the Board of Directors of
the Seller approving the Original Agreement and certified copies of all
documents evidencing other necessary corporate action and governmental
approvals, if any, with respect to the Original Agreement.
(b) A certificate of the Secretary or Assistant Secretary of the
Seller certifying the names and true signatures of the officers of the Seller
authorized to sign the Original Agreement and the other documents to be
delivered by the Seller thereunder.
(c) Acknowledgment copies or time stamped receipt copies of proper
financing statements, duly filed on or before the date of such initial purchase
under the UCC of all jurisdictions that the Agent may deem necessary or
desirable in order to perfect the ownership interests contemplated by the
Original Agreement.
(d) Acknowledgment copies or time stamped receipt copies of proper
releases, if any, duly filed on or before the date of such initial purchase,
necessary to release all assignments, security interests and other rights of any
Person (other than rights created pursuant to the LREC Indenture) in the
Receivables, Contracts or Related Security previously granted by the Seller.
(e) Completed requests for information, dated on or before the date
of such initial purchase, listing the financing statements referred to in
subsection (c) above and all other effective financing statements or assignments
filed in the same jurisdictions as such financing statements that name the
Seller as debtor or assignor, together with copies of such other financing
statements or assignments (none of which shall cover any Receivables, Contracts
or Related Security).
(f) Favorable opinions of Baker & Botts, special counsel for the
Seller, and William O. Bonin, Louisiana counsel for the Seller, substantially in
the forms of Annex B-1 and B-2 hereto and as to such other matters as the Agent
may reasonably request.
(g) The Collection Agent Agreement.
(h) A favorable opinion of Kaye, Scholer, Fierman, Hays & Handler,
counsel for the Agent, as the Agent may reasonably request.
(i) A favorable opinion of Kaye, Scholer, Fierman, Hays & Handler,
counsel for the Agent, addressed to CAFCO and the dealer for the commercial
paper of CAFCO, as to the correctness of the representation and warranty of the
Seller set forth in paragraph (l) of Exhibit
II-1
III, substantially in the form previously delivered to the Agent by such
counsel.
2. CONDITIONS PRECEDENT TO ALL PURCHASES AND REINVESTMENTS. Each
purchase (including the initial purchase) and each reinvestment shall be subject
to the further conditions precedent that (a) in the case of each purchase, the
Collection Agent shall have delivered to the Agent on or prior to such purchase
(except, in the case of the initial purchase, such delivery may occur within 15
days after such purchase), in form and substance satisfactory to the Agent, a
completed Investor Report dated within 30 days prior to the date of such
purchase together with (if requested by the Agent) a listing by Obligor of all
Pool Receivables and such additional information as may reasonably be requested
by the Agent, and (b) on the date of such purchase or reinvestment the following
statements shall be true (and acceptance of the proceeds of such purchase or
reinvestment shall be deemed a representation and warranty by the Seller that
such statements are then true):
(i) The representations and warranties contained in Exhibit III are
correct on and as of the date of such purchase or reinvestment as though made on
and as of such date,
(ii) No event has occurred and is continuing, or would result from
such purchase or reinvestment, that constitutes an Event of Termination or a
Potential Event of Termination,
(iii) On such date, all of the Seller's long-term public senior debt
securities are rated at least BBB- by Standard & Poor's Corporation and Baa3 by
Moody's Investors Service, Inc. or, if such debt securities are not publicly
rated on such date, the Agent has determined, in its sole discretion, that such
debt securities would receive such ratings if they were publicly rated, and
(iv) Giving effect to such purchase or reinvestment to be made on
such date, and for the purpose of this clause (iv) only, treating the Capital of
the Receivable Interests under the Agreement and the "Capital" of the
"Receivable Interests" under the Citibank Agreement as if the same were "Debt"
(as such term is defined in the MTN Indenture), the Seller will be in compliance
with Section 1009(b) of the MTN Indenture,
and (c) the Agent shall have received such other approvals, opinions or
documents as it may reasonably request.
3. CONDITIONS PRECEDENT TO AMENDMENT AND RESTATEMENT. The
effectiveness of the amendment and restatement of the Original Agreement is
subject to the condition precedent that the Agent shall have received on or
before the amendment and restatement date of the Agreement the following, each
(unless otherwise indicated) dated such date, in form and substance satisfactory
to the Agent:
(a) Certified copies of the resolutions of the Board of Directors of
the Seller approving the Agreement and the other documents to be delivered by
the Seller hereunder and the matters contemplated hereby, certified by the
Seller's Secretary or Assistance Secretary, and certified copies of all
documents evidencing other necessary corporate action and governmental
approvals, if any, with respect to the Agreement.
II-2
(b) A certificate of the Secretary or Assistant Secretary of the
Seller certifying the names and true signatures of the officers of the Seller
authorized to sign the Agreement and the other documents to be delivered by the
Seller hereunder (on which certificate the Agent and the Investor may
conclusively rely unless and until such time as the Agent shall receive from the
Seller a revised certificate from it meeting the requirements of this subsection
(b)).
(c) Favorable opinions of Baker & Botts, special counsel for the
Seller, and William O. Bonin, Louisiana counsel for the Seller, confirming their
respective opinions furnished pursuant to Section 1(f) of this Exhibit II (with
references therein to the Agreement to mean the amended and restated Agreement)
and as to such other matters as the Agent may reasonably request.
(d) By executing this Agreement, the Seller certifies as to the
matters set forth in Section 2(b) of this Exhibit II.
II-3
EXHIBIT III
REPRESENTATIONS AND WARRANTIES
The Seller represents and warrants as follows:
(a) The Seller is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Louisiana, and is duly
qualified to do business, and is in good standing, in every jurisdiction where
the nature of its business requires it to be so qualified.
(b) The execution, delivery and performance by the Seller of the
Agreement and the other documents to be delivered by it thereunder, including
the Seller's use of the proceeds of purchases and reinvestments, are within the
Seller's corporate powers, have been duly authorized by all necessary corporate
action, do not contravene (i) the Seller's charter or by-laws, (ii) any law,
rule or regulation applicable to the Seller, (iii) any contractual restriction
binding on or affecting the Seller or its property or (iv) any order, writ,
judgment, award, injunction or decree binding on or affecting the Seller or its
property, and do not result in the creation of any lien, security interest or
other charge or encumbrance upon or with respect to any of its properties (other
than in accordance with the Agreement). The Agreement has been duly executed and
delivered by the Seller.
(c) No authorization or approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body (including,
without limitation, the Federal Energy Regulatory Commission) is required for
the due execution, delivery and performance by the Seller of the Agreement or
any other document to be delivered thereunder, except for (i) an order of
approval from the Louisiana Public Service Commission, which approval has been
obtained and is in full force and effect, and (ii) the filing of a financing
statement in the State of Louisiana pursuant to the UCC.
(d) The Agreement constitutes the legal, valid and binding
obligation of the Seller enforceable against the Seller in accordance with its
terms.
(e) The balance sheets of the Seller and its subsidiaries as at
December 31, 1993, and the related statements of income, cash flows and changes
in common shareholders' equity of the Seller and its subsidiaries for the fiscal
year then ended, copies of which have been furnished to the Agent, fairly
present the financial condition of the Seller and its subsidiaries as at such
date and the results of the operations of the Seller and its subsidiaries for
the period ended on such date, all in accordance with generally accepted
accounting principles.
(f) Except as disclosed by the Seller in its most recent Annual
Report on Form 10-K or its most recent quarterly report on Form 10-Q filed with
the Securities and Exchange Commission pursuant to the Securities Exchange Act
of 1934, as amended, there is no pending or threatened action or proceeding
affecting the Seller or any of its subsidiaries before any court, governmental
agency or arbitrator (other than hearings, actions or other proceedings in
connection with rate matters or Tariffs) which may materially adversely affect
the financial condition or operations of the Seller or any of its subsidiaries
or the ability of the Seller to
III-1
perform its obligations under the Agreement, or which purports to affect the
legality, validity or enforceability of the Agreement.
(g) No proceeds of any purchase or reinvestment will be used to
acquire any equity security of a class which is registered pursuant to Section
12 of the Securities Exchange Act of 1934, as amended, except for purchases of
equity securities of the Seller for up to 270 days in each instance or until
permanent financing is obtained, whichever occurs earlier.
(h) The Seller is the legal and beneficial owner of the Pool
Receivables and Related Security free and clear of any Adverse Claim (other than
any claim created by the LREC Indenture and the interests of the owners of
Receivable Interests created pursuant to the Agreement and the Citibank
Agreement); upon each purchase or reinvestment, the Seller shall, and hereby
does, transfer to the Investor (and the Investor shall acquire), subject only to
any claim arising under the LREC Indenture, a valid and perfected priority
undivided percentage ownership interest to the extent of the pertinent
Receivable Interest in each Pool Receivable then existing or thereafter arising
and in the Related Security and Collections with respect thereto. Except for any
filing of the LREC Indenture in the mortgage records in Rapides Parish,
Louisiana, and in any other parish where such filing may be required, no
effective financing statement or other instrument similar in effect covering any
Contract or any Pool Receivable or the Related Security or Collections with
respect thereto is on file in any recording office, except those filed in favor
of the Agent relating to the Agreement.
(i) Each Investor Report (if prepared by the Seller or one of its
Affiliates, or to the extent that information contained therein is supplied by
the Seller or an Affiliate), information, exhibit, financial statement,
document, book, record or report furnished or to be furnished at any time by or
on behalf of the Seller to the Agent or the Investor in connection with the
Agreement is or will be accurate and complete in all material respects as of its
date or (except as otherwise disclosed to the Agent or the Investor, as the case
may be, at such time) as of the date so furnished.
(j) The principal place of business and chief executive office of
the Seller and the office where the Seller keeps its records concerning the Pool
Receivables are located at the address referred to in Section 4.02 (or, by
notice to the Agent in accordance with paragraph (b) of Exhibit IV, at such
other locations in jurisdictions where all actions reasonably requested by the
Agent to protect and perfect the interest in the Pool Receivables have been
taken and completed).
(k) The names and addresses of all the Special Account Banks,
together with the account numbers of the Special Accounts of the Seller at such
Special Account Banks, are specified in Schedule I hereto (or at such other
Special Account Banks and/or with such other Special Accounts as have been
notified to the Agent in accordance with the Agreement).
(l) The Pool Receivables are open accounts receivable, notes or
other obligations representing part or all of the sales price of merchandise,
insurance or services within the meaning of Section 3(c)(5) of the Investment
Company Act of 1940, as amended; the nature of the Pool Receivables is such that
their purchase with the proceeds of commercial paper notes issued by the Seller
would constitute a "current transaction" within the meaning of Section 3(a)(3)
of the Securities Act of 1933, as amended; the Pool Receivables are not being
and will not be used by
III-2
the Seller or any of its subsidiaries in determining the total "current
transactions" of the Seller and its subsidiaries in claiming an exemption from
registration under Section 3(a)(3) of the Securities Act of 1933, as amended,
for any securities issued by the Seller or any of its subsidiaries.
(m) The principal amount of the Debt outstanding under the LREC
Indenture does not exceed $300,000 and the interest rate payable by the Seller
on such Debt does not exceed 2% per annum.
III-3
EXHIBIT IV
COVENANTS
COVENANTS OF THE SELLER. Until the later of the Facility Termination
Date or the date on which no Capital of any Receivable Interest shall be
outstanding:
(a) COMPLIANCE WITH LAWS, ETC. The Seller will comply in all
material respects with all applicable laws, rules, regulations and orders and
preserve and maintain its corporate existence, rights, franchises,
qualifications, and privileges except to the extent that the failure so to
comply with such laws, rules and regulations or the failure so to preserve and
maintain such existence, rights, franchises, qualifications, and privileges
would not materially adversely affect the collectibility of the Receivables Pool
or the ability of the Seller to perform its obligations under the Agreement or
the Collection Agent Agreement.
(b) OFFICES, RECORDS AND BOOKS OF ACCOUNT. The Seller will keep its
principal place of business and chief executive office and the office where it
keeps its records concerning the Pool Receivables at the address of the Seller
referred to in Section 4.02 or, upon 30 days' prior written notice to the Agent,
at any other locations in a jurisdiction where all action required by paragraph
(j) of Exhibit III shall have been taken. The Seller also will maintain and
implement administrative and operating procedures (including, without
limitation, an ability to recreate records evidencing Pool Receivables and
related Contracts in the event of the destruction of the originals thereof), and
keep and maintain all documents, books, records and other information reasonably
necessary or advisable for the collection of all Pool Receivables (including,
without limitation, records adequate to permit the daily identification of each
Pool Receivable and all Collections of and adjustments to each existing Pool
Receivable).
(c) PERFORMANCE AND COMPLIANCE WITH CONTRACTS AND CREDIT AND
COLLECTION POLICY. The Seller will, at its expense, timely and fully perform and
comply with all material provisions, covenants and other promises required to be
observed by it under the Contracts related to the Pool Receivables, and timely
and fully comply in all material respects with its Credit and Collection Policy
in regard to each Pool Receivable and the related Contract.
(d) SALES, LIENS, ETC. Except for the arrangements described in the
LREC Indenture and in the third paragraph of Section VIII of the granting
clauses of the Mortgage, the Seller will not sell, assign (by operation of law
or otherwise) or otherwise dispose of, or create or suffer to exist any Adverse
Claim upon or with respect to, the Seller's undivided interest in any Pool
Receivable, Related Security, related Contract or Collections, or upon or with
respect to any account to which any Collections of any Pool Receivable are sent,
or assign any right to receive income in respect thereof.
(e) EXTENSION OR AMENDMENT OF RECEIVABLES. Except as provided in the
Collection Agent Agreement, the Seller will not extend, amend or otherwise
modify the terms of any Pool Receivable, or amend, modify or waive any term or
condition of any Contract related thereto in any manner that would, in either
case, materially adversely affect the collectibility of the Receivables Pool or
the ability of the Seller to perform its obligations under the Agreement or the
IV-1
Collection Agent Agreement.
(f) CHANGE IN BUSINESS OR CREDIT AND COLLECTION POLICY. The Seller
will not make any change in the character of its business or in the Credit and
Collection Policy that would, in either case, materially adversely affect the
collectibility of the Receivables Pool or the ability of the Seller to perform
its obligations under the Agreement or the Collection Agent Agreement.
(g) AUDITS. The Seller will, from time to time during regular
business hours as requested by the Agent, permit the Agent, or its agents or
representatives, (i) to examine and make copies of and abstracts from all books,
records and documents (including, without limitation, computer tapes and disks)
in the possession or under the control of the Seller relating to Pool
Receivables and the Related Security, including, without limitation, the related
Contracts, and (ii) to visit the offices and properties of the Seller for the
purpose of examining such materials described in clause (i) above, and to
discuss matters relating to Pool Receivables and the Related Security or the
Seller's performance hereunder or under the Contracts with any of the officers
or employees of the Seller having knowledge of such matters.
(h) CHANGE IN PAYMENT INSTRUCTIONS TO OBLIGORS. The Seller will not
add or terminate any bank as a Special Account Bank from those listed in
Schedule I to the Agreement, or make any change in its instructions to Obligors
regarding payments to be made to the Seller or payments to be made to any
Special Account Bank, unless the Agent shall have received notice of such
addition, termination or change.
(i) DEPOSITS TO SPECIAL ACCOUNTS AND DESIGNATED ACCOUNTS. Upon the
request of the Agent, the Seller will (i) at any time after the occurrence of an
Event of Termination or a Potential Event of Termination, instruct all Obligors
to cause all Collections of Pool Receivables to be deposited directly to a
Special Account, and (ii) at any time, deposit, or cause to be deposited, all
Collections in the Special Accounts to the Designated Account. The Seller will
not deposit or otherwise credit, or cause or permit to be so deposited or
credited, to the Designated Account (or, if instructed by the Agent, to the
Special Accounts) cash or cash proceeds other than Collections of Pool
Receivables.
(j) REPORTING REQUIREMENTS. The Seller will provide to the
Agent the following:
(i) as soon as available and in any event within 45 days after the
end of the first three quarters of each fiscal year of the Seller, balance
sheets of the Seller and its subsidiaries as of the end of such quarter and
statements of income and retained earnings of the Seller and its subsidiaries
for the period commencing at the end of the previous fiscal year and ending with
the end of such quarter, certified by the chief financial officer of the Seller;
(ii) as soon as available and in any event within 90 days after the
end of each fiscal year of the Seller, a copy of the annual report for such year
for the Seller and its subsidiaries, containing financial statements for such
year certified by Coopers & Lybrand or other independent public accountants
acceptable to the Agent;
(iii) as soon as possible and in any event within five days after
the occurrence of
IV-2
each Event of Termination or Potential Event of Termination, a statement of the
chief financial officer of the Seller setting forth details of such Event of
Termination or Potential Event of Termination and the action that the Seller has
taken and proposes to take with respect thereto;
(iv) promptly after the sending or filing thereof, copies of all
reports that the Seller sends to any of its securityholders, and copies of all
reports and registration statements that the Seller or any subsidiary files with
the Securities and Exchange Commission or any national securities exchange;
(v) promptly and in any event within 10 days after the filing or
receiving thereof, copies of each of the following: (A) any materials filed with
the Pension Benefit Guaranty Corporation in connection with the occurrence of
any "reportable event," as defined in Section 4043(b) of ERISA, as to which the
Pension Benefit Guaranty Corporation has not waived the notice requirement of
Section 4043(a) of ERISA, with respect to any Pension Plan, (B) any notice of
intent to terminate a Pension Plan in a distress termination under Section
4041(c) of ERISA filed by the Seller or any ERISA Affiliate, (C) any notice
received by the Seller, any ERISA Affiliate or any administrator of a Pension
Plan from the Pension Benefit Guaranty Corporation of the Pension Benefit
Guaranty Corporation's intention to terminate a Pension Plan or to appoint a
trustee to administer such plan, (D) each annual report filed with the Internal
Revenue Service on Treasury Form 5500 with respect to any Pension Plan, together
with any certified financial statements and actuarial valuations for such plan,
(E) any assessment of withdrawal liability under Section 4201 of ERISA received
from a multiemployer plan (as defined in Section 4001(a)(3) of ERISA) by the
Seller or any ERISA Affiliate, and (F) any application to the Secretary of the
Treasury for a waiver of the minimum funding standard under Section 412 of the
Internal Revenue Code of 1986, as amended, with respect to any Pension Plan, and
in each case other than clause (D) together with a statement of the chief
financial officer of the Seller setting forth details as to such event, notice
or condition and the action that the Seller has taken and proposes to take with
respect thereto;
(vi) at least ten Business Days prior to any change in the Seller's
name, a notice setting forth the new name and the effective date thereof;
(vii) such other information respecting the Receivables or the
condition or operations, financial or otherwise, of the Seller or any of its
subsidiaries as the Agent may from time to time reasonably request;
(viii) immediately upon the occurrence of (i) each "event of
default" (as defined in the Mortgage or the LREC Indenture) under the Mortgage
or the LREC Indenture, or (ii) each event which, with the giving of notice or
lapse of time or both, would constitute such an "event of default" and, in the
case of this clause (ii), either (A) such notice shall have been given or (B)
the Seller shall have notified the Trustee under the Mortgage or the LREC
Indenture that such event has occurred, notification to the Agent of the same in
writing; and
(ix) if the condition precedent contained in paragraph 2(b)(iv) of
Exhibit II shall
IV-3
not be satisfied at any time, immediate notification to the Agent of the same in
writing.
(k) LREC INDENTURE. The Seller will not amend or modify the LREC
Indenture so as to increase the principal amount of the Debt outstanding
thereunder or increase the interest rate payable thereunder, and the Seller will
not incur any other Debt which becomes secured by the LREC Indenture.
IV-4
EXHIBIT V
EVENTS OF TERMINATION
Each of the following shall be an "Event of Termination":
(a) The Collection Agent (if the Seller or any of its Affiliates)
(i) shall fail to perform or observe any term, covenant or agreement to be
performed or observed by it in its capacity as Collection Agent under the
Agreement or under the Collection Agent Agreement (other than as referred to in
clause (ii) of this paragraph (a)) and such failure shall remain unremedied for
three Business Days or (ii) shall fail to make when due any payment or deposit
to be made by it under the Agreement or the Collection Agent Agreement; or
(b) The Seller shall fail (i) to transfer to the Agent when
requested any rights, pursuant to the Agreement or the Collection Agent
Agreement, which the Seller then has as Collection Agent, or (ii) to make any
payment required under Section 1.05; or
(c) Any representation or warranty made or deemed made by the Seller
(or any of its officers) under or in connection with the Agreement or any
information or report delivered by the Seller pursuant to the Agreement shall
prove to have been incorrect or untrue in any material respect when made or
deemed made or delivered; or
(d) The Seller shall fail to perform or observe any other term,
covenant or agreement contained in the Agreement on its part to be performed or
observed and any such failure shall remain unremedied for 10 Business Days after
written notice thereof shall have been given to the Seller by the Agent; or
(e) The Seller or any of its subsidiaries shall fail to pay any
principal of or premium or interest on any of its Debt which is outstanding in a
principal amount of at least $1,000,000 in the aggregate when the same becomes
due and payable (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise), and such failure shall continue after the
applicable grace period, if any, specified in the agreement or instrument
relating to such Debt; or any other event shall occur or condition shall exist
under any agreement or instrument relating to any such Debt and shall continue
after the applicable grace period, if any, specified in such agreement or
instrument, if the effect of such event or condition is to accelerate, or to
permit the acceleration of, the maturity of such Debt; or any such Debt shall be
declared to be due and payable, or required to be prepaid (other than by a
regularly scheduled required prepayment), prior to the stated maturity thereof;
or
(f) Any purchase or any reinvestment pursuant to the Agreement shall
for any reason (other than pursuant to the terms hereof) cease to create, or any
Receivable Interest shall for any reason cease to be, subject only to the LREC
Indenture, a valid and perfected priority undivided percentage ownership
interest to the extent of the pertinent Receivable Interest in each applicable
Pool Receivable and the Related Security and Collections with respect thereto;
or
(g) The Seller shall generally not pay its debts as such debts
become due, or shall
V-1
admit in writing its inability to pay its debts generally, or shall make a
general assignment for the benefit of creditors; or any proceeding shall be
instituted by or against the Seller seeking to adjudicate it a bankrupt or
insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a receiver,
trustee, custodian or other similar official for it or for any substantial part
of its property and, in the case of any such proceeding instituted against it
(but not instituted by it), either such proceeding shall remain undismissed or
unstayed for a period of 30 days, or any of the actions sought in such
proceeding (including, without limitation, the entry of an order for relief
against, or the appointment of a receiver, trustee, custodian or other similar
official for, it or for any substantial part of its property) shall occur; or
the Seller shall take any corporate action to authorize any of the actions set
forth above in this paragraph (g); or
(h) As of the last day of any calendar month, either the Default
Ratio shall exceed 4% or the Delinquency Ratio shall exceed 7.5%; or
(i) The sum of the Receivable Interests plus the "Receivable
Interests" under the Citibank Agreement shall equal or exceed 100% for a period
of 5 consecutive days; or
(j) There shall have occurred any event which may materially
adversely affect the collectibility of the Receivables Pool or the ability of
the Seller to collect Pool Receivables or otherwise perform its obligations
under the Agreement or the Collection Agent Agreement; or
(k) There shall have occurred (i) an "event of default" (as defined
in the Mortgage or the LREC Indenture) under the Mortgage or the LREC Indenture,
or (ii) an event which with the giving of notice or lapse of time or both would
constitute such an "event of default" and, in the case of this clause (ii), such
notice shall have been given, or (iii) an event which with the giving of notice
or lapse of time or both would constitute such an "event of default" and, in the
case of this clause (iii), the Agent has determined, in its reasonable judgment,
that such event would materially adversely affect (A) the collectibility of the
Pool Receivables, (B) the ability of the Seller to collect Pool Receivables, (C)
the ability of the Seller to perform under the Agreement or (D) the perfection
or first priority, subject only to the LREC Indenture, of the undivided
percentage ownership interest of the Investor in any Pool Receivable.
V-2
EXHIBIT 10(n)(2)
[EXECUTION COPY]
U.S. $35,000,000
RECEIVABLES PURCHASE AGREEMENT
Dated as of April 9, 1990
as Amended and Restated as of March 1, 1995
Among
CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
AS SELLER
and
CITIBANK, N.A.
and
CITICORP NORTH AMERICA, INC.
INDIVIDUALLY AND AS AGENT
<PAGE>
TABLE OF CONTENTS
SECTION PAGE
Preliminary Statements.................................................... 1
ARTICLE I
AMOUNTS AND TERMS OF THE PURCHASES
Section 1.01 Commitment................................................ 1
Section 1.02 Making Purchases.......................................... 2
Sections 1.03
through 1.05 Incorporation by Reference................................ 3
Section 1.06 Fees...................................................... 3
Section 1.07
through 1.09 Incorporation by Reference................................ 3
Section 1.10 Eurodollar Increased Costs................................ 3
Section 1.11 Additional Yield on Receivable Interests Bearing
a Eurodollar Rate......................................... 3
Section 1.12 Increased Costs........................................... 4
ARTICLE II
REPRESENTATIONS AND WARRANTIES;
COVENANTS; EVENTS OF TERMINATION
Section 2.01 Representations and Warranties; Covenants................. 4
Section 2.02 Events of Termination..................................... 4
ARTICLE III
INDEMNIFICATION
Section 3.01 Indemnities by the Seller................................. 5
ARTICLE IV
MISCELLANEOUS
Section 4.01 Amendments, Etc........................................... 7
Section 4.02 Notices, Etc.............................................. 8
Section 4.03 Assignability; Termination................................ 9
Section 4.04 Costs, Expenses and Taxes.................................11
Section 4.05 Confidentiality...........................................12
Section 4.06 Governing Law; Execution in Counterparts..................12
Section 4.07 The Agent.................................................13
(i)
<PAGE>
LIST OF EXHIBITS AND ANNEXES
EXHIBIT I Definitions
EXHIBIT II Conditions of Purchases
EXHIBIT III Representations and Warranties
EXHIBIT IV Covenants
EXHIBIT V Events of Termination
ANNEX A [Intentionally Left Blank]
ANNEX B Forms of Opinions of Counsel for the Seller as to the initial
Purchase
ANNEX C Form of Assignment and Acceptance
(ii)
RECEIVABLES
PURCHASE AGREEMENT
Dated as of April 9, 1990
as Amended and Restated as of March 1, 1995
CENTRAL LOUISIANA ELECTRIC COMPANY, INC., a Louisiana corporation
(the "Seller"), CITIBANK, N.A. ("Citibank"), and CITICORP NORTH AMERICA, INC., a
Delaware corporation, individually ("CNA") and as agent (the "Agent") for itself
and the Banks (as defined in Exhibit I to this Agreement), agree as follows:
PRELIMINARY STATEMENTS. Certain terms that are capitalized and used
throughout this Agreement are defined in Exhibit I to this Agreement. References
in the Exhibits to "the Agreement" refer to this Agreement.
The Seller has Receivables in which it is prepared to sell
undivided fractional ownership interests (referred to herein as "Receivable
Interests"). Citibank and CNA are prepared to purchase such Receivable Interests
on the terms set forth herein.
The Seller, Corporate Asset Funding Company, Inc., CNA and the Agent
entered into a Receivables Purchase Agreement, dated as of April 9, 1990 (the
"Original Agreement").
The Seller, Citibank, CNA and the Agent desire to amend and restate the
Original Agreement.
Accordingly, the parties agree as follows:
ARTICLE I
AMOUNTS AND TERMS OF THE PURCHASES
SECTION 1.01. COMMITMENT. (a) On the terms and conditions
hereinafter set forth, the Banks shall, ratably in accordance with their
respective Bank Commitments, purchase Receivable Interests from the Seller from
time to time during the period from the date hereof to the Commitment
Termination Date. Under no circumstances shall the Banks be obligated to make
any such purchase if, after giving effect to such purchase, the aggregate
outstanding Capital of Receivable Interests, together with the aggregate
outstanding "Capital" of all "Receivable Interests" under the Investor
Agreement, would exceed the Commitment.
1
(b) The Seller may, upon at least five Business Days' notice to the
Agent, terminate in whole the Commitment or reduce in part the unused portion of
the Commitment; PROVIDED that each partial reduction shall be in the amount of
at least $1,000,000 or an integral multiple thereof; PROVIDED, FURTHER, that on
the effective date of any termination in whole of the Commitment occurring prior
to the first anniversary of the Original Agreement, the Seller shall pay to the
Agent the excess (if any) of (i) the sum of (x) all accrued and unpaid
Administration Fees and Program Fees plus (y) an amount equal to the lesser of
$75,000 or the sum of the Administration Fee and Program Fee that would have
accrued from such effective date to the first anniversary of the Original
Agreement pursuant to Section 1.05 thereof over (ii) any amounts actually paid
by the Seller on such effective date pursuant to the second proviso of Section
.01(b) of the Investor Agreement.
SECTION 1.02. MAKING PURCHASES. (a) Each purchase shall be made on
at least three Business Days' notice from the Seller to the Agent. Each such
notice shall specify (i) the amount requested to be paid to the Seller (such
amount, which shall not be less than $1,000,000, being referred to herein as the
"Capital" of the Receivable Interest then being purchased), (ii) the date of
such purchase (which shall be a Business Day) and (iii) the desired duration of
the initial Fixed Period for the Receivable Interest to be purchased. The Agent
shall notify the Seller whether the desired duration of the initial Fixed Period
for the Receivable Interest to be purchased is acceptable, and the Agent shall
promptly notify the Banks of the proposed purchase. Such notice of purchase
shall be sent by telecopier, telex or cable to all Banks concurrently and shall
specify the date of such purchase, each Bank's Percentage Interest multiplied by
the aggregate amount of Capital of the Receivable Interest being purchased, the
Fixed Period for such Receivable Interest and whether Yield for the Fixed Period
for such Receivable Interest is calculated based on the Eurodollar Rate (which
may be selected only if such notice is given at least two Business Days prior to
the purchase date) or the Alternate Base Rate.
(b) Prior to 2:00 P.M., New York City time, on the date of each
such purchase, the Banks ratably in accordance with their respective Bank
Commitments shall, upon satisfaction of the applicable conditions set forth in
Exhibit II, make available to the Agent the amount of their respective purchases
by deposit of the applicable amount in immediately available funds to the
Agent's Account, and, after receipt by the Agent of such funds, the Agent will
cause such funds to be made immediately available to the Seller in same day
funds, to the Seller's Account No. 00025494 at Citibank, N.A., in New York, New
York.
(c) Notwithstanding the foregoing, the total outstanding Capital of
Receivable Interests that any Bank shall be obligated to purchase under this
Section 1.02 shall not at any time exceed such Bank's Bank Commitment less (in
the case of any Bank other than Citibank) the aggregate "Capital" or "Percentage
Interests" purchased by such Bank under the APA. Each Bank's obligation shall be
several, such
2
that the failure of any Bank to make available to the Seller any funds in
connection with any purchase shall not relieve any other Bank of its obligation,
if any, hereunder to make funds available on the date of such purchase, but no
Bank shall be responsible for the failure of any other Bank to make funds
available in connection with any purchase.
(d) If CNA chooses to purchase Receivable Interests, it shall do so
by entering into an Assignment and Acceptance.
SECTIONS 1.03 through 1.05. INCORPORATION BY REFERENCE. Each of
Sections 1.03 through 1.05 of the Investor Agreement is hereby incorporated
herein by this reference, except that each reference therein to the "Investor"
shall be deemed to be a reference to the owner of the relevant Receivable
Interest.
SECTION 1.06. FEES. The Seller shall pay fees to the Agent pursuant
to letter agreements executed from time to time.
SECTIONS 1.07 through 1.09. INCORPORATION BY REFERENCE. Each of
Sections 1.07 through 1.09 of the Investor Agreement is hereby incorporated
herein by this reference, except that each reference therein to the "Investor"
shall be deemed to be a reference to the owner of the relevant Receivable
Interest.
SECTION 1.10. EURODOLLAR INCREASED COSTS. If, due to either (i) the
introduction of or any change (other than any change by way of imposition or
increase of reserve requirements referred to in Section 1.11) in or in the
interpretation of any law or regulation or (ii) the compliance with any
guideline or request from any central bank or other governmental authority
(whether or not having the force of law), there shall be any increase in the
cost to any Bank of agreeing to purchase or purchasing, or maintaining the
ownership of Receivable Interests in respect of which Yield is computed by
reference to the Eurodollar Rate, then, upon demand by such Bank (with a copy to
the Agent), the Seller shall immediately pay to the Agent, for the account of
such Bank (as a third-party beneficiary), from time to time as specified by such
Bank, additional amounts sufficient to compensate such Bank for such increased
costs. Such increased costs shall be determined by such Bank and notified to the
Seller through the Agent not more than 30 days after the Commitment Termination
Date. A certificate as to such amounts submitted to the Seller and the Agent by
such Bank shall be conclusive and binding for all purposes, absent manifest
error.
SECTION 1.11. ADDITIONAL YIELD ON RECEIVABLE INTERESTS BEARING A
EURODOLLAR RATE. The Seller shall pay to any Bank, so long as such Bank shall be
required under regulations of the Board of Governors of the Federal Reserve
System to maintain reserves with respect to liabilities or assets consisting of
or including Eurocurrency Liabilities, additional Yield on the unpaid Capital of
each Receivable Interest of such Bank during each Fixed Period in respect of
which Yield is computed
3
by reference to the Eurodollar Rate, for such Fixed Period, at a rate per annum
equal at all times during such Fixed Period to the remainder obtained by
subtracting (i) the Eurodollar Rate for such Fixed Period from (ii) the rate
obtained by dividing such Eurodollar Rate referred to in clause (i) above by
that percentage equal to 100% minus the Eurodollar Rate Reserve Percentage of
such Bank for such Fixed Period, payable on each date on which Yield is payable
on such Receivable Interest. Such additional Yield shall be determined by such
Bank and notified to the Seller through the Agent within 30 days after any Yield
payment is made with respect to which such additional Yield is requested. A
certificate as to such additional Yield submitted to the Seller and the Agent by
such Bank shall be conclusive and binding for all purposes, absent manifest
error.
SECTION 1.12. INCREASED COSTS. If any Bank, acting in good faith,
determines that compliance with any law or regulation or any guideline or
request from any central bank or other governmental authority (whether or not
having the force of law) affects or would affect the amount of the capital
required or expected to be maintained by such Bank and that the amount of such
capital is increased by or based upon the existence of any commitment to make
purchases of or otherwise to maintain the investment in Pool Receivables or
interests therein hereunder or under any commitments to the Investor related to
this Agreement or the Investor Agreement or to the funding thereof and other
commitments of the same type, then, upon demand by the Agent, the Seller shall
immediately pay to the Agent, for the account of such Bank (as a third-party
beneficiary), from time to time as specified by the Agent, additional amounts
sufficient to compensate such Bank in the light of such circumstances, to the
extent that such Bank reasonably determines such increase in capital to be
allocable to the existence of any of such commitments. A certificate as to such
amounts submitted to the Seller by such Bank shall be conclusive and binding for
all purposes, absent manifest error.
ARTICLE II
REPRESENTATIONS AND WARRANTIES; COVENANTS;
EVENTS OF TERMINATION
SECTION 2.01. REPRESENTATIONS AND WARRANTIES; COVENANTS. The Seller
hereby makes the representations and warranties, and hereby agrees to perform
and observe the covenants, set forth in Exhibits III and IV, respectively,
hereto.
SECTION 2.02. EVENTS OF TERMINATION. If any of the Events of
Termination set forth in Exhibit V hereto shall occur and be continuing, the
Agent may, by notice to the Seller, take either or both of the following
actions: (x) declare the Commitment to be terminated (in which case the
Commitment Termination Date shall be deemed to have occurred), and (y) without
limiting any right under the Collection Agent Agreement to replace the
Collection Agent, designate another Person to
4
succeed the Seller as the Collection Agent; PROVIDED that, automatically upon
the occurrence of any event (without any requirement for the passage of time or
the giving of notice) described in subsection (g) of Exhibit V, the Commitment
shall terminate, the Commitment Termination Date shall occur, the Seller (if it
is then serving as the Collection Agent) shall cease to be the Collection Agent,
and the Agent or its designee shall become the Collection Agent. Upon any such
declaration or designation or upon any such automatic termination, the Banks,
CNA and the Agent shall have, in addition to the rights and remedies which they
may have under this Agreement, all other rights and remedies provided after
default under all applicable law, which rights and remedies shall be cumulative.
ARTICLE III
INDEMNIFICATION
SECTION 3.01. INDEMNITIES BY THE SELLER. Without limiting any other
rights that each Bank, CNA or the Agent (each, an "Indemnified Party") may have
hereunder or under applicable law, the Seller hereby agrees to indemnify each
Indemnified Party from and against any and all claims, losses and liabilities
(including reasonable attorneys' fees) (all of the foregoing being collectively
referred to as "Indemnified Amounts") arising out of or resulting from this
Agreement or the use of proceeds of purchases or reinvestments or the ownership
of Receivable Interests or in respect of any Receivable or any Contract,
excluding, however, (a) Indemnified Amounts to the extent resulting from gross
negligence or willful misconduct on the part of such Indemnified Party; (b)
Indemnified Amounts to the extent arising out of, relating to, or resulting from
any act or omission on the part of such Indemnified Party or any Collection
Agent, other than the Seller, appointed by any Indemnified Party, (c) recourse
(except as otherwise specifically provided in this Agreement) for uncollectible
Receivables, (d) any income taxes incurred by such Indemnified Party arising out
of or as a result of this Agreement or the ownership of Receivable Interests or
in respect of any Receivable or any Contract, (e) Indemnified Amounts arising
from the failure of any Indemnified Party to comply with any applicable laws,
unless such failure arose out of the breach by the Seller of any representation,
warranty or covenant of this Agreement, and (f) Indemnified Amounts arising from
the sale of commercial paper and/or Medium Term Notes by any Indemnified Party
or the operations or administration of any Indemnified Party generally or which
would have existed or arisen even had such Indemnified Party not entered into
this Agreement, unless in each case such Indemnified Amounts arose out of the
breach by the Seller of any representation, warranty or covenant of this
Agreement; PROVIDED that in connection with any Indemnified Amounts covered by
this Agreement and one or more other agreements pursuant to which a Bank or CNA
has purchased receivables or interests therein from other Persons and arising
out of or resulting from the same act, omission or occurrence, the Seller's
liability under this Section shall not exceed its ratable portion thereof
determined in accordance with its usage and the usage of such other Persons
5
under their respective facilities; PROVIDED, FURTHER, that if such Indemnified
Amounts are attributable to one or more other Persons that have entered into
agreements with any Indemnified Party for the sale of interests in receivables
("Other Sellers") and not attributable to the Seller, such Other Sellers shall
be solely liable for such Indemnified Amounts; PROVIDED, FURTHER, HOWEVER, that
if such Indemnified Amounts are attributable to the Seller and not attributable
to any Other Seller, the Seller shall be solely liable for such Indemnified
Amounts. Without limiting or being limited by the foregoing, the Seller shall
pay on demand to each Indemnified Party any and all amounts necessary to
indemnify such Indemnified Party from and against any and all Indemnified
Amounts relating to or resulting from any of the following:
(i) the creation of an undivided percentage ownership interest in
any Receivable which is not at the date of the creation of such interest an
Eligible Receivable or which thereafter ceases to be an Eligible Receivable;
(ii) reliance on any representation or warranty or statement made
or deemed made by the Seller (or any of its officers) under or in connection
with this Agreement which shall have been incorrect in any material respect when
made;
(iii) the failure by the Seller to comply with any applicable law,
rule or regulation with respect to any Pool Receivable or the related Contract;
or the failure of any Pool Receivable or the related Contract to conform to any
such applicable law, rule or regulation;
(iv) the failure to vest in CNA, a Bank or any other Eligible
Assignee an undivided percentage ownership interest, to the extent of such
Receivable Interest, in the Receivables in, or purporting to be in, the
Receivables Pool and the Related Security and Collections in respect thereof,
free and clear of any Adverse Claim;
(v) the failure to have filed, or any delay in filing, financing
statements or other similar instruments or documents under the UCC of any
applicable jurisdiction or other applicable law, with respect to any Receivables
in, or purporting to be in, the Receivables Pool and the Related Security and
Collections in respect thereof, whether at the time of any purchase or
reinvestment or at any subsequent time;
(vi) any dispute, claim, offset or defense (other than discharge in
bankruptcy of the Obligor) of the Obligor to the payment of any Receivable in,
or purporting to be in, the Receivables Pool (including, without limitation, a
defense based on such Receivable or the related Contract not being a legal,
valid and binding obligation of such Obligor enforceable against it in
accordance with its terms), or any other claim resulting from the sale of
electricity or services related
6
to such Receivable or the furnishing or failure to furnish such electricity or
services;
(vii) any failure in any material respect of the Seller, as
Collection Agent or otherwise, to perform its duties or obligations in
accordance with the provisions hereof or of the Collection Agent Agreement or to
perform its duties or obligations under the Contracts;
(viii) any products liability claim arising out of or in
connection with electricity or services which are the subject of any
Contract;
(ix) the commingling of Collections of Pool Receivables at any
time with other funds;
(x) any investigation, litigation or proceeding, initiated by a
third party involving any act or omission on the part of the Seller which is
related to this Agreement or the use of proceeds of purchases or reinvestments
or the ownership of Receivable Interests or any Receivable, Related Security or
Contract;
(xi) any Adverse Claim affecting the Pool Receivables arising from
the Mortgage or the LREC Indenture or the filing or existence of assignments,
financing statements or similar instruments with respect to the Mortgage or the
LREC Indenture; or
(xii) any failure to obtain any acknowledgment, authorization or
approval under, or provide any notice required by, the Federal Assignment of
Claims Act of 1940, as amended, in respect of Government Receivables, or any
failure to obtain any acknowledgment, authorization or approval under, or
provide any notice required by, any similar law of the State of Louisiana or any
local or municipal government within such State, in respect of any Receivable
whose Obligor is the State of Louisiana, any governmental subdivision or agency
thereof or any locality or municipality therein.
ARTICLE IV
MISCELLANEOUS
SECTION 4.01. AMENDMENTS, ETC. No amendment or waiver of any
provision of this Agreement (including, without limitation, any provision of the
Investor Agreement which is incorporated herein by reference) or consent to any
departure by the Seller therefrom shall be effective unless in a writing signed
by the Agent, and then such amendment, waiver or consent shall be effective only
in the specific instance and
7
for the specific purpose for which given. Notwithstanding the foregoing, the
Agent agrees that it shall not:
(a) without the prior written consent of each Bank, (i) amend the
definitions of Eligible Receivable, Defaulted Receivable or Delinquent
Receivable contained in this Agreement or modify the then existing Concentration
Limit or any Special Concentration Limit, (ii) amend, modify or waive any
provision of this Agreement in any way which would (A) reduce the amount of
Capital or Yield that is payable on account of any Receivable Interest or delay
any scheduled date for payment thereof, (B) impair any rights expressly granted
to an assignee or participant under this Agreement, (C) reduce fees payable by
the Seller to the Agent or to Citibank which relate to payments to Banks or
delay the dates on which such fees are payable, or (D) modify any provisions
relating to recourse for uncollectible Receivables or reserves for Yield or the
Collection Agent Fee, or (iii) agree to a different Assignee Rate pursuant to
the final proviso in the definition of Assignee Rate; or
(b) without the prior written consent of the Majority Banks, (i)
amend the definitions of Default Ratio, Delinquency Ratio or Net Receivables
Pool Balance, (ii) amend the Events of Termination to increase the maximum
permitted Default Ratio or Delinquency Ratio or reduce the minimum required Net
Receivables Pool Balance to Capital ratio, (iii) (A) waive violations of the
Default Ratio or Delinquency Ratio for more than two consecutive months, or (B)
waive a violation of the Net Receivables Pool Balance to Capital ratio for more
than two consecutive months beyond any applicable grace period unless the Seller
has cured or has agreed to cure such violation within 30 days after notice from
the Agent, or (iv) amend this Agreement to increase the Commitment.
No failure on the part of the Banks, CNA or the Agent to exercise,
and no delay in exercising, any right hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right.
SECTION 4.02. NOTICES, ETC. All notices and other communications
hereunder shall, unless otherwise stated herein, be in writing (including
facsimile communication) and faxed or delivered, to each party hereto, at its
address set forth under its name on the signature pages hereof or at such other
address as shall be designated by such party in a written notice to the other
parties hereto, or, with respect to any other Bank, to the Agent, who will
forward such notice or communication to each such Bank at its address specified
in the Assignment and Acceptance pursuant to which it became a Bank or at such
other address as shall be designated by such Bank in a written notice to the
Agent. Notices and communications by facsimile shall be effective when sent, and
notices and communications sent by other means shall be effective when received.
8
SECTION 4.03. ASSIGNABILITY; TERMINATION. (a) Each Bank may assign
to any Eligible Assignee or to any other Bank all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Bank Commitment and any Receivable Interests or interests therein
owned by it); PROVIDED, HOWEVER, that
(i) Citibank may not assign any portion of its Bank Commitment to
the extent that it reduces such commitment below (A) 10% of the Commitment minus
(B) the Capital of the Receivable Interests purchased by CNA,
(ii) each such assignment shall be of a constant, and not a
varying, percentage of all rights and obligations under this Agreement,
(iii) the amount of the Bank Commitment and any Receivable
Interests of the Bank being assigned pursuant to each assignment shall in no
event be less than the lesser of $10,000,000 and all of the assigning Bank's
Bank Commitment,
(iv) the parties to each such assignment shall execute and deliver
to the Agent, for its acceptance and recording in the Register, an Assignment
and Acceptance, together with a processing and recordation fee of $2,500, and
(v) concurrently with such assignment, if such Bank is a Bank other
than Citibank, assign to such bank or other entity an equal percentage of its
rights and obligations under the APA.
Upon such execution, delivery, acceptance and recording, from and after
the effective date specified in each Assignment and Acceptance, (x) the assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, have the rights and obligations of a Bank hereunder and (y) the Bank
assignor thereunder shall, to the extent that rights and obligations hereunder
have been assigned by it pursuant to such Assignment and Acceptance, relinquish
its rights and be released from its obligations under this Agreement (and, in
the case of an Assignment and Acceptance covering all or the remaining portion
of an assigning Bank's rights and obligations under this Agreement, such Bank
shall cease to be a party hereto).
(b) By executing and delivering an Assignment and Acceptance, the
Bank assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows:
(i) other than as provided in such Assignment and Acceptance, such
assigning Bank makes no representation or warranty and assumes no
9
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement or
any other instrument or document furnished pursuant hereto;
(ii) such assigning Bank makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the Seller
or the performance or observance by the Seller of any of its obligations under
this Agreement or any other instrument or document furnished pursuant hereto;
(iii) such assignee confirms that it has received a copy of this
Agreement, together with copies of the financial statements referred to Exhibit
IV hereto and such other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into such Assignment and
Acceptance;
(iv) such assignee will, independently and without reliance upon
the Agent, such assigning Bank or any other Bank and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement;
(v) such assignee appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under this Agreement
as are delegated to the Agent by the terms hereof, together with such powers as
are reasonably incidental thereto; and
(vi) such assignee agrees that it will perform in accordance with
their terms all of the obligations which by the terms of this Agreement are
required to be performed by it as a Bank.
(c) The Agent shall maintain at its address referred to in Section
4.02 a copy of each Assignment and Acceptance delivered to and accepted by it
and a register for the recordation of the names and addresses of the Banks and
the Bank Commitment of, and aggregate outstanding Capital of Receivable
Interests or interests therein owned by, each Bank from time to time (the
"Register"). The entries in the Register shall be conclusive and binding for all
purposes, absent manifest error, and the Seller, the Agent and the Banks may
treat each person whose name is recorded in the Register as a Bank hereunder for
all purposes of this Agreement. The Register shall be available for inspection
by the Seller or any Bank at any reasonable time and from time to time upon
reasonable prior notice.
(d) Upon its receipt of an Assignment and Acceptance executed by an
assigning Bank and an Eligible Assignee, the Agent shall, if such Assignment and
Acceptance has been completed and is in substantially the form of Annex C
hereto,
10
(i) accept such Assignment and Acceptance, (ii) record the information contained
therein in the Register and (iii) give prompt notice thereof to the Seller.
(e) Each Bank may sell participations, to one or more banks or
other entities which are Eligible Assignees, in or to all or a portion of its
rights and obligations under this Agreement (including, without limitation, all
or a portion of its Bank Commitment and the Receivable Interests or interests
therein owned by it); PROVIDED, HOWEVER, that (i) such Bank's obligations under
this Agreement (including, without limitation, its Bank Commitment to the Seller
hereunder) shall remain unchanged, (ii) such Bank shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) the Seller, the Agent and the other Banks shall continue to deal solely
and directly with such Bank in connection with such Bank's rights and
obligations under this Agreement, and (iv) concurrently with such assignment, if
the selling Bank thereunder is other than Citibank, sell to such bank or other
entity an equal percentage of its rights and obligations under the APA.
(f) This Agreement and the rights and obligations of the Agent
herein shall be assignable by the Agent and its successors and assigns.
(g) The Seller may not assign its rights hereunder or any interest
herein without the prior written consent of the Agent.
(h) The provisions of Sections 1.09, 1.10, 1.11, 3.01, 4.04 and
4.05 shall survive any termination of this Agreement; PROVIDED, that each of the
indemnities under Section 3.01 which relate to claims against any Indemnified
Party shall not survive beyond the expiration of any statute of limitations
applicable to such claim (unless such claim is asserted against any Indemnified
Party prior to such expiration), and each of the other indemnities under Section
3.01 and each of the provisions of Section 4.04 shall not survive beyond the
second anniversary of the later of the Commitment Termination Date or the date
on which all Capital of all Receivable Interests purchased under this Agreement
is reduced to zero (except for claims for indemnification and demands for
payment asserted by any Indemnified Party prior to such second anniversary).
SECTION 4.04. COSTS, EXPENSES AND TAXES. (a) In addition to the
rights of indemnification granted under Section 3.01 hereof, the Seller agrees
to pay on demand all reasonable costs and expenses in connection with the
preparation, execution, delivery and administration (including periodic auditing
of Receivables) of this Agreement and the other documents and agreements to be
delivered hereunder, including, without limitation, the reasonable fees and
out-of-pocket expenses of counsel for the Agent and Citibank with respect
thereto and with respect to advising the Agent and Citibank as to their rights
and remedies under this Agreement, and all costs and expenses, if any (including
reasonable counsel fees and expenses) of the Banks,
11
CNA or the Agent in connection with the enforcement of this Agreement and the
other documents and agreements to be delivered hereunder.
(b) In addition, the Seller shall pay any and all stamp and other
taxes and fees payable in connection with the execution, delivery, filing and
recording of this Agreement or the other documents or agreements to be delivered
hereunder, and agrees to save each Indemnified Party harmless from and against
any liabilities with respect to or resulting from any delay on the part of the
Seller in paying or omission to pay such taxes and fees.
SECTION 4.05. CONFIDENTIALITY. (a) Unless otherwise required by
applicable law, the Seller agrees to maintain the confidentiality of this
Agreement (and all drafts thereof) in communications with third parties and
otherwise; PROVIDED that this Agreement may be disclosed (i) to third parties to
the extent such disclosure is made pursuant to a written agreement of
confidentiality in form and substance reasonably satisfactory to the Agent, (ii)
to the Seller's legal counsel and auditors, and (iii) to the extent required by
applicable law (including, without limitation, the Securities Exchange Act of
1934, as amended) or by any court, regulatory body or agency having jurisdiction
over the Seller; and PROVIDED, FURTHER, that the Seller shall have no obligation
of confidentiality in respect of any information which may be generally
available to the public or becomes available to the public through no fault of
the Seller, except that the Seller will not take any affirmative actions to
further disclose such information (except to the extent otherwise permitted by
this Section 4.05(a)).
(b) Citibank, CNA and the Agent each agrees to maintain the
confidentiality of all information with respect to the Seller furnished or
delivered to it pursuant to paragraph (g) of Exhibit IV; PROVIDED, that such
information may be disclosed (i) to such party's legal counsel and auditors,
(ii) to the extent required by applicable law or by any court, regulatory body
or agency having jurisdiction over such party, and (iii) to Banks and
prospective Banks if they agree to hold it confidential to the extent set forth
in this Section 4.05(b); and PROVIDED, FURTHER, that such party shall have no
obligation of confidentiality in respect of any information which may be
generally available to the public or become available to the public through no
fault of such party, except that such party will not take any affirmative
actions to further disclose such information (except to the extent otherwise
permitted by this Section 4.05(b)).
SECTION 4.06. GOVERNING LAW; EXECUTION IN COUNTERPARTS. (a) This
Agreement shall be governed by, and construed in accordance with, the law of the
State of New York, except to the extent that the validity or perfection of the
interests of any owner of a Receivable Interest in the Receivables, or remedies
hereunder, in respect thereof, are governed by the laws of a jurisdiction other
than the State of New York.
12
(b) This Agreement may be executed in any number of counterparts,
each of which when so executed shall be deemed to be an original and all of
which when taken together shall constitute one and the same agreement.
SECTION 4.07. THE AGENT. (a) Each of the Banks hereby appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement as are delegated to the Agent by the terms
hereof, together with such powers as are reasonably incidental thereto. As to
any matters not expressly provided for by this Agreement (including, without
limitation, enforcement of this Agreement), the Agent shall not be required to
exercise any discretion or take any action, but shall be required to act or to
refrain from acting (and shall be fully protected in so acting or refraining
from acting) upon the instructions of the Majority Banks, and such instructions
shall be binding upon all Banks; PROVIDED, HOWEVER, that the Agent shall not be
required to take any action which exposes the Agent to personal liability or
which is contrary to this Agreement or applicable law.
(b) Neither the Agent nor any of its directors, officers, agents or
employees shall be liable for any action taken or omitted to be taken by it or
them as Agent under or in connection with this Agreement (including, without
limitation, the Agent's servicing, administering or collecting Pool Receivables
as Collection Agent pursuant to the Collection Agent Agreement), except for its
or their own gross negligence or willful misconduct. Without limiting the
generality of the foregoing, the Agent: (i) may treat the Bank which funded any
purchase of a Receivable Interest as the owner of such Receivable Interest until
the Agent receives and accepts an Assignment and Acceptance entered into by such
Bank, as assignor, and an Eligible Assignee, as assignee, as provided in Section
4.03; (ii) may consult with legal counsel (including counsel for the Seller),
independent public accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts; (iii) makes
no warranty or representation to any Bank or CNA and shall not be responsible to
any of them for any statements, warranties or representations (whether written
or oral) made in or in connection with this Agreement; (iv) shall not have any
duty to ascertain or to inquire as to the performance or observance of any of
the terms, covenants or conditions of this Agreement on the part of the Seller
or to inspect the property (including the books and records) of the Seller; (v)
shall not be responsible to any Bank or CNA for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement or
any other instrument or document furnished pursuant hereto; and (vi) shall incur
no liability under or in respect of this Agreement by acting upon any notice
(including notice by telephone), consent, certificate or other instrument or
writing (which may be by telecopier, telegram, cable or telex) believed by it to
be genuine and signed or sent by the proper party or parties.
(c) With respect to any Receivable Interest or interest therein
owned by it, CNA shall have the same rights and powers under this Agreement as
any Bank and
13
may exercise the same as though it were not the Agent. CNA and its Affiliates
may generally engage in any kind of business with the Seller or any Obligor, any
of their respective Affiliates and any Person who may do business with or own
securities of the Seller or any Obligor or any of their respective Affiliates,
all as if CNA were not the Agent and without any duty to account therefor to the
Banks.
(d) The Banks agree to indemnify the Agent (to the extent not
reimbursed by the Seller), ratably according to the respective amounts of
Capital of the Receivable Interests (or interests therein) owned by each of them
(or if no Capital is then outstanding, the Banks shall indemnify the Agent
ratably according to the respective amounts of their Bank Commitments), from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against the
Agent in any way relating to or arising out of this Agreement or any action
taken or omitted by the Agent under this Agreement, PROVIDED that no Bank shall
be liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from the Agent's gross negligence or willful misconduct.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
By DAVID M. EPPLER
Title: Vice President-Finance
2030 Donahue Ferry Road
Pineville, Louisiana 71360
Attention: Michael P. Prudhomme
Facsimile No. 318-484-7697
14
CITIBANK, N.A.
By ARTHUR B. BOVINO, JR.
Attorney-in-Fact
450 Mamaroneck Avenue
Harrison, N.Y. 10528
Attention: Corporate Asset Funding
Facsimile No. 914-899-7015
CITICORP NORTH AMERICA, INC.,
individually and as Agent
By ARTHUR B. BOVINO, JR.
Vice President
450 Mamaroneck Avenue
Harrison, N.Y. 10528
Attention: Corporate Asset Funding
Facsimile No. 914-899-7015
15
EXHIBIT I
DEFINITIONS
As used in the Agreement (including its Exhibits), the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):
"AGENT'S ACCOUNT" means the special account (account number
4054-8804) of the Agent maintained at the office of Citibank, at 399 Park
Avenue, New York, New York.
"APA" means the "Asset Purchase Agreement" entered into by a Bank,
concurrent with the Assignment and Acceptance, that relates to the Investor
Agreement.
"ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance
agreement entered into by a Bank and an Eligible Assignee, and accepted by the
Agent, pursuant to which such Bank became a party to the Agreement, in
substantially the form of Annex C hereto.
"BANK COMMITMENT" of any Bank means, (a) with respect to Citibank,
$35,000,000, or such amount as reduced by any Assignment and Acceptance entered
into between Citibank and other Banks (but not reduced below (i) 10% of the
Commitment minus (ii) the Capital of Receivable Interests purchased by CNA), or
(b) with respect to a Bank that has entered into an Assignment and Acceptance,
the amount set forth therein as such Bank's Bank Commitment, or such amount as
reduced by any Assignment and Acceptance entered into between such Bank and an
Eligible Assignee, in each case as reduced (or terminated) pursuant to the next
sentence. Any reduction (or termination) of the Commitment pursuant to the terms
of the Agreement shall reduce ratably (or terminate) each Bank's Bank
Commitment.
"BANKS" means Citibank and each Eligible Assignee that shall become
a party to the Agreement pursuant to Section 4.03.
"CAPITAL" of any Receivable Interest means the original amount paid
to the Seller for such Receivable Interest at the time of its purchase by CNA or
a Bank, as the case may be, pursuant to the Agreement, or such amount divided or
combined in accordance with Section 1.07, in each case reduced from time to time
by Collections distributed on account of such Capital pursuant to Section 1.04;
PROVIDED that if such Capital shall have been reduced by any distribution and
thereafter all or a portion of such distribution is rescinded or must otherwise
be returned for any reason, such
I-1
Capital shall be increased by the amount of such rescinded or returned
distribution, as though it had not been made.
"COLLECTION AGENT" means at any time the Person then authorized
pursuant to the Collection Agent Agreement to administer and collect Pool
Receivables.
"COLLECTION AGENT AGREEMENT" means an agreement between the Seller
and the Agent (and, if the Seller does not act as Collection Agent, consented to
by the Collection Agent), in form and substance satisfactory to them, governing
the appointment and responsibilities of the Collection Agent as to
administration and collection of the Pool Receivables, and requiring the
Collection Agent to perform its obligations set forth in the Agreement.
"COMMITMENT" means $35,000,000, as such amount may be reduced
pursuant to Section 1.01. References to the unused portion of the Commitment
shall mean, at any time, the Commitment, as then reduced pursuant to Section
1.01(b) or pursuant to the next sentence, minus the sum of the then outstanding
Capital of Receivable Interests under the Agreement and the then outstanding
"Capital" of "Receivable Interests" under the Investor Agreement. Furthermore,
on each day on which the Seller reduces the unused portion of (or terminates)
the "Purchase Limit" under the Investor Agreement, the Commitment automatically
shall reduce by the same amount (or so terminate).
"COMMITMENT TERMINATION DATE" means the earliest of (a) February
28, 1996, (b) the Facility Termination Date under the Investor Agreement, (c)
the date determined pursuant to Section 2.02, and (d) the date the Commitment
reduces to zero.
"ELIGIBLE ASSIGNEE" means (i) CNA or any Affiliate of CNA, (ii) any
Bank already a party to this Agreement, (iii) Persons managed by CNA or any such
Affiliate, or (iv) a financial institution or other entity which is acceptable
to the Agent and approved by the Seller, which approval shall not be
unreasonably withheld.
"EVENT OF TERMINATION" has the meaning specified in Exhibit V.
"INVESTOR" means Corporate Asset Funding Company, Inc.
"INVESTOR AGREEMENT" means the Receivables Purchase Agreement,
dated as of the date hereof, among the Seller, the Investor and Citicorp North
America, Inc., as Agent, as the same may, from time to time, be amended,
modified or supplemented.
"LIQUIDATION FEE" means, for any Fixed Period during which a
Liquidation Day occurs, the amount, if any, by which (i) the additional Yield
(calculated without
I-2
taking into account any Liquidation Fee or any shortened duration of such Fixed
Period pursuant to clause (iv) of the definition thereof) which would have
accrued during such Fixed Period on the reductions of Capital of the Receivable
Interest relating to such Fixed Period had such reductions remained as Capital,
exceeds (ii) the income, if any, received by the owner of such Receivable
Interest from the investment of the proceeds of such reductions of Capital.
"MAJORITY BANKS" means at any time Banks holding Receivable
Interests having Capital equal to more than 50% of the aggregate outstanding
Capital of all Receivable Interests or, if no Capital is then outstanding, Banks
having more than 50% of the Commitment.
"PERCENTAGE INTEREST" of any Bank means, (a) with respect to
Citibank, 100%, or such amount as reduced by any Assignment and Acceptance
Agreement entered into between Citibank and other Banks (but not reduced below
(i) 10% minus (ii) CNA's Percentage Interest, or (b) with respect to a Bank that
has entered into an Assignment and Acceptance Agreement, the amount set forth
therein as such Bank's Percentage Interest.
"REINVESTMENT TERMINATION DATE" for any Receivable Interest means
that Business Day which the Seller so designates by notice to the Agent at least
one Business Day in advance.
"TERMINATION DATE" for any Receivable Interest means the earlier of
(i) the Reinvestment Termination Date for such Receivable Interest and (ii) the
Commitment Termination Date.
"YIELD" means for each Receivable Interest for any Fixed Period:
AR x C x ED + LF
---
360
where:
AR = the Assignee Rate for such Receivable Interest
for such Fixed Period
C = the Capital of such Receivable Interest during
such Fixed Period
ED = the actual number of days elapsed during such
Fixed Period
I-3
LF = the Liquidation Fee, if any, for such
Receivable Interest for such Fixed Period;
PROVIDED that no provision of the Agreement shall require the payment or permit
the collection of Yield in excess of the maximum permitted by applicable law;
and PROVIDED FURTHER that Yield for any Receivable Interest shall not be
considered paid by any distribution to the extent that at any time all or a
portion of such distribution is rescinded or must otherwise be returned for any
reason.
DEFINED TERMS INCORPORATED BY REFERENCE. Unless otherwise defined
in the Agreement and subject to the modifications herein set forth, capitalized
terms used in the Agreement or in any provisions of the Investor Agreement
incorporated in the Agreement by reference shall have the meanings given to them
in the Investor Agreement. Without limiting the foregoing, the defined terms
"Credit and Collection Policy" and "Investor Report" are hereby incorporated by
reference together with the related Schedule II and Annex A, respectively, of
the Investor Agreement. All references to the "Agent" and "Agreement" in
provisions of the Investor Agreement (including Exhibits and Schedules)
incorporated in the Agreement by reference shall, without further reference,
mean CNA as Agent under the Agreement and the Agreement, respectively.
Furthermore, all references in such incorporated provisions to "Collections",
"Contract", "Net Receivables Pool Balance", "Pool Receivable", "Receivable
Interest", "Receivables Pool" and "Related Security" shall mean the Collections,
a Contract, the Net Receivables Pool Balance, a Pool Receivable, a Receivable
Interest, the Receivables Pool and the Related Security under the Agreement,
respectively. To the extent any word or phrase is defined in the Agreement, any
such word or phrase appearing in provisions so incorporated by reference from
the Investor Agreement shall have the meaning given to it in the Agreement. The
incorporation by reference into the Agreement from the Investor Agreement is for
convenience only, and the Agreement and the Investor Agreement shall at all
times be, and be treated as, separate and distinct facilities. Incorporations by
reference in the Agreement from the Investor Agreement shall not be affected or
impaired by any subsequent expiration or termination of the Investor Agreement,
nor by any amendment thereof or waiver thereunder unless the Agent, as agent for
CNA and the Banks, shall have consented to such amendment or waiver in writing.
OTHER TERMS. All accounting terms not specifically defined
herein shall be construed in accordance with generally accepted accounting
principles.
I-4
EXHIBIT II
CONDITIONS OF PURCHASES
1. CONDITIONS PRECEDENT TO INITIAL PURCHASE. The initial purchase
of a Receivable Interest under the Agreement is subject to the conditions
precedent that the conditions precedent to the initial purchase under the
Investor Agreement shall have been satisfied on or prior to the date of such
purchase under the Agreement and that the Agent shall have received on or before
the date of such purchase under the Agreement the following, each in form and
substance satisfactory to the Agent:
(a) Certified copies of the resolutions of the Board of Directors
of the Seller approving the Original Agreement and certified copies of all
documents evidencing other necessary corporate action and governmental
approvals, if any, with respect to the Original Agreement.
(b) A certificate of the Secretary or Assistant Secretary of the
Seller certifying the names and true signatures of the officers of the Seller
authorized to sign the Original Agreement and the other documents to be
delivered by it thereunder.
(c) Acknowledgment copies or time stamped receipt copies of proper
financing statements, duly filed on or before the date of such initial purchase
under the UCC of all jurisdictions that the Agent may deem necessary or
desirable in order to perfect the ownership interests contemplated by the
Original Agreement.
(d) Acknowledgment copies or time stamped receipt copies of proper
releases, if any, duly filed on or before the date of such initial purchase,
necessary to release all assignments, security interests and other rights of any
Person (other than rights created pursuant to the LREC Indenture) in the
Receivables, Contracts or Related Security previously granted by the Seller.
(e) Completed requests for information dated on or before the date
of such initial purchase, listing the financing statements referred to in
subsection (c) above and all other effective financing statements or assignments
filed in the same jurisdictions as such financing statements that name the
Seller as debtor or assignor, together with copies of such other financing
statements or assignments (none of which shall cover any Receivables, Contracts
or Related Security).
(f) Favorable opinions of Baker & Botts, special counsel for the
Seller, and William O. Bonin, Louisiana counsel for the Seller, substantially in
the forms of Annex B-1 and B-2 hereto and as to such other matters as the Agent
may reasonably request.
II-1
(g) The Collection Agent Agreement.
(h) A favorable opinion of Kaye, Scholer, Fierman, Hays & Handler,
counsel for the Agent, as the Agent may reasonably request.
2. CONDITIONS PRECEDENT TO ALL PURCHASES AND REINVESTMENTS. Each
purchase (including the initial purchase) and each reinvestment shall be subject
to the further conditions precedent that (a) in the case of each purchase, the
Collection Agent shall have delivered to the Agent on or prior to such purchase
(except, in the case of the initial purchase, such delivery may occur within 15
days after such purchase), in form and substance satisfactory to the Agent, a
completed Investor Report dated within 30 days prior to the date of such
purchase together with (if requested by the Agent) a listing by Obligor of all
Pool Receivables and such additional information as may reasonably be requested
by the Agent, (b) on the date of such purchase or reinvestment the following
statements shall be true (and acceptance of the proceeds of such purchase or
reinvestment shall be deemed a representation and warranty by the Seller that
such statements are then true):
(i) The representations and warranties contained in Exhibit III are
correct on and as of the date of such purchase or reinvestment as though made on
and as of such date,
(ii) No event has occurred and is continuing, or would result from
such purchase or reinvestment, that constitutes an Event of Termination or a
Potential Event of Termination, and
(iii) Giving effect to such purchase or reinvestment to be made on
such date, and for the purpose of this clause (iii) only treating the Capital of
the Receivable Interests under the Agreement and the "Capital" of the
"Receivable Interests" under the Investor Agreement as if the same were "Debt"
(as such term is defined in the MTN Indenture), the Seller will be in compliance
with Section 1009(b) of the MTN Indenture,
and (c) the Agent shall have received such other approvals, opinions or
documents as it may reasonably request.
3. CONDITIONS PRECEDENT TO AMENDMENT AND RESTATEMENT. The
effectiveness of the amendment and restatement of the Original Agreement is
subject to the condition precedent that the Agent shall have received on or
before the amendment and restatement date of the Agreement the following, each
(unless otherwise indicated) dated such date, in form and substance satisfactory
to the Agent:
(a) Certified copies of the resolutions of the Board of Directors
of the Seller approving the Agreement and the other documents to be delivered by
the Seller
II-2
hereunder and the matters contemplated hereby, certified by the Seller's
Secretary or Assistant Secretary, and certified copies of all documents
evidencing other necessary corporate action and governmental approvals, if any,
with respect to the Agreement.
(b) A certificate of the Secretary or Assistant Secretary of the
Seller certifying the names and true signatures of the officers of the Seller
authorized to sign the Agreement and the other documents to be delivered by it
hereunder (on which certificate the Agent and the Banks may conclusively rely
unless and until such time as the Agent shall receive from the Seller a revised
certificate from it meeting the requirements of this subsection (b)).
(c) Favorable opinions of Baker & Botts, special counsel for the
Seller, and William O. Bonin, Louisiana counsel for the Seller, confirming their
respective opinions furnished pursuant to Section 1(f) of this Exhibit II (with
reference therein to the Agreement to mean the amended and restated Agreement)
and as to such other matters as the Agent may reasonably request.
(d) By executing this Agreement, the Seller certifies as to the
matters set forth in Section 2(b) of this Exhibit II.
II-3
EXHIBIT III
REPRESENTATIONS AND WARRANTIES
Exhibit III of the Investor Agreement is hereby incorporated herein
by reference, except that each reference therein to the Investor shall be deemed
to be a reference to the owner of the relevant Receivable Interest, and each
reference therein to the Agreement shall be deemed to be a reference to this
Agreement.
III-1
EXHIBIT IV
COVENANTS
Exhibit IV of the Investor Agreement is hereby incorporated herein
by reference, except that each reference therein to the "Facility Termination
Date" shall be deemed to be a reference to the "Commitment Termination Date."
IV-1
EXHIBIT V
EVENTS OF TERMINATION
Each of the "Events of Termination" set forth in Exhibit V of the
Investor Agreement is hereby incorporated herein by reference, except that (i)
the reference in subsection (i) thereof to the "Citibank Agreement" shall be
deemed to be a reference to the Investor Agreement and (ii) the following shall
constitute an additional Event of Termination:
(l) There shall occur any event that constitutes or that would,
with the giving of notice or lapse of time or both, constitute an "Event of
Termination" under the Investor Agreement; or the Investor Agreement shall cease
for any reason to be in full force and effect.
V-1
EXHIBIT 10(p)(3)
AMENDMENT NO. 1 TO REIMBURSEMENT AGREEMENTS
AMENDMENT NO. 1 TO REIMBURSEMENT AGREEMENTS (this "Amendment") dated as of
December 9, 1994 among Central Louisiana Electric Company, Inc. (the "Company"),
various financial institutions (the "Banks"), Swiss Bank Corporation, New York
Branch, as Issuer of the Letters of Credit ("Swiss Bank"), and Swiss Bank
Corporation, New York Branch, as Agent (the "Agent").
WITNESSETH:
WHEREAS, the Company, certain combinations of the Banks, Swiss Bank and the
Agent are parties to three separate Reimbursement Agreements, each dated as of
May 29, 1991 (collectively, the "Agreements"); and
WHEREAS, the parties hereto desire to amend the Agreements as herein
provided; and
WHEREAS, pursuant to Section 11.01 of each Agreement, each Agreement may be
amended by the written agreement of the Company, the Banks, Swiss Bank and the
Agent.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto hereby agree as follows:
1. DEFINED TERMS. Capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to such terms in the Agreements.
2. AMENDMENTS. (a) The first sentence of Section 2.03 of each of the
Agreements is hereby amended by deleting the words "one (1) year" and replacing
them with the words "the specific period of time set forth in such request".
(b) The third sentence of Section 2.03 of each of the Agreements is hereby
amended by (i) deleting, without replacement, the words "for one year" and (ii)
deleting the words "by one year" and replacing them with the words "through the
appropriate date".
(c) Section 2.04 of each of the Agreements is hereby amended by deleting the
percentage ".35%" and replacing it with the percentage ".315%".
-1-
(d) Section 2.05 of each of the Agreements is hereby amended by deleting the
percentage ".15%" and replacing it with the percentage ".11%".
(e) Clause (ii) of Section 11.02 of each of the Agreements is hereby amended
in its entirety to read as follows: " (ii) if to the Agent, to it at the offices
of Swiss Bank Corporation, San Francisco Branch, 101 California Street, Suite
1700, San Francisco, California 94111-5884, Attention: Ms. Marcia B. Burkey,
telecopy number (415) 989-7570;"
(f) Clause (iii) of Section 11.02 of each of the Agreements is hereby
amended by deleting the words "222 Broadway, New York, New York 10008" and
replacing them with the words "10 East 50th Street, New York, New York 10022".
3. NO DEFAULT. The Company hereby represents and warrants to the Banks,
Swiss Bank and the Agent that, both before and after giving effect to this
Amendment, no Default or Event of Default exists under any Agreement.
4. REPRESENTATIONS AND WARRANTIES. The Company hereby represents and
warrants to the Banks, Swiss Bank and the Agent that, both before and after
giving effect to this Amendment, the representations and warranties contained in
Sections 6.01, 6.02 (with respect to the Agreement only), 6.03 (with respect to
the Agreement only), 6.04 (with respect to the Agreement only), 6.05, 6.06,
6.07, 6.09 and 6.11 through 6.15, inclusive, of each Agreement are true and
correct.
5. COUNTERPARTS. This Amendment may be executed simultaneously in two or
more counterparts, each of which shall be deemed to be an original, and it shall
not be necessary in making proof of this Amendment to produce or account for
more than one such counterpart.
6. AGREEMENTS NOT OTHERWISE AMENDED. Terms and provisions of the Agreements
not amended hereby shall continue to remain in full force and effect. From and
after the date hereof, all references in the Agreements and each of the
Operative Documents to the Agreements shall be deemed references to the
Agreements as amended by this Amendment.
7. GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS
OF THE STATE OF NEW YORK.
-2-
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to
be executed and delivered on its behalf, all as of the date first above written.
CENTRAL LOUISIANA ELECTRIC
COMPANY, INC.
By: DAVID M. EPPLER
Title: Vice President-Finance
SWISS BANK CORPORATION, NEW
YORK BRANCH, individually, as
Agent and as Issuer of the
Letters of Credit
By: MARCIA BURKEY
Title: Director, Merchant Banking
By: JAMIE DILLON
Title: Director, Merchant Banking
THE FIRST NATIONAL BANK OF CHICAGO
By: MICHAEL J. JOHNSON
Title: Vice President
WACHOVIA BANK OF GEORGIA, N.A.
By: TERRY P. AKINS
Title: Senior Vice President
-3-
<PAGE>
EXHIBIT 11
CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
COMPUTATION OF NET INCOME PER COMMON SHARE
FOR THE YEARS ENDED DECEMBER 31,
(IN THOUSANDS, EXCEPT SHARE AND
PER SHARE AMOUNTS)
1994 1993 1992
---------- ---------- ----------
PRIMARY
Net income applicable to common stock . $43,017 $39,827 $43,010
========== ========== ==========
Weighted average number of shares of
common stock outstanding during the
year ................................ 22,394,891 22,350,475 22,279,852
Common stock under stock option
grants .............................. 19,940 38,060 63,292
---------- ---------- ----------
Average shares ..................... 22,414,831 22,388,535 22,343,144
========== ========== ==========
Primary net income per common share ... $1.92 $1.78 $1.93
========== ========== ==========
FULLY DILUTED
Net income applicable to common stock . $43,017 $39,827 $43,010
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 ......................... 1,486 1,497 1,521
Deduct additional cash contribution
required which is equal to dividends
on preferred stock less dividends
paid at the common dividend rate,
net of tax ......................... (213) (250) (289)
Add tax benefit associated with
dividends paid on (1) allocated
common shares in 1994 and (2)
allocated and unallocated shares
in 1993, assuming ESOP was a common
stock plan ......................... 114 78 741
---------- ---------- ----------
Adjusted income applicable to
common stock ........................ $44,404 $41,152 $44,983
========== ========== ==========
Weighted average number of shares
of common stock outstanding
during the year ..................... 22,394,891 22,350,475 22,279,852
Number of equivalent common shares
attributable to ESOP ................ 1,427,368 1,437,901 1,439,752
Common stock under stock option
grants .............................. 19,940 38,278 63,292
---------- ---------- ----------
Average shares ..................... 23,842,199 23,826,654 23,782,896
========== ========== ==========
Fully diluted net income per
common share ........................ $1.86 $1.73 $1.89
========== ========== ==========
<PAGE>
EXHIBIT 12
CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
COMPUTATION OF EARNINGS TO
FIXED CHARGES AND EARNINGS TO
COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
(IN THOUSANDS, EXCEPT RATIOS)
------------------------------------------------
1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Earnings from continuing
operations ....................... $ 45,043 $ 41,812 $ 45,239 $ 44,929 $ 42,544
Income taxes ...................... 19,901 19,565 18,595 18,918 18,648
-------- -------- -------- -------- --------
Earnings from continuing
operations before income taxes ... 64,944 61,377 63,834 63,847 61,192
-------- -------- -------- -------- --------
Fixed charges:
Interest, long-term debt ......... 23,194 22,089 26,142 28,192 26,190
Interest, other .................. 2,542 2,750 1,604 2,233 5,515
Amortization of debt expense and
premium, net .................. 1,223 1,402 1,282 1,118 983
Portion of rental expense
representative of interest
factor ........................ 707 485 547 527 595
-------- -------- -------- -------- --------
Total fixed charges ........ 27,666 26,726 29,575 32,070 33,283
-------- -------- -------- -------- --------
Earnings from continuing
operations before income
taxes and fixed charges .......... $ 92,610 $ 88,103 $ 93,409 $ 95,917 $ 94,475
======== ======== ======== ======== ========
Ratio of earnings to fixed
charges .......................... 3.35x 3.30x 3.16x 2.99x 2.84x
Fixed charges from above .......... $ 27,666 $ 26,726 $ 29,575 $ 32,070 $ 33,283
Preferred dividends ............... 2,966 3,008 3,440 3,008 1,267
-------- -------- -------- -------- --------
Total fixed charges and
preferred stock dividends ...... $ 30,632 $ 29,734 $ 33,015 $ 35,078 $ 34,550
======== ======== ======== ======== ========
Ratio of earnings to combined
fixed charges and preferred
stock dividends .................. 3.02x 2.96x 2.83x 2.73x 2.73x
</TABLE>
<PAGE>
EXHIBIT 13
MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Net income applicable to common stock for 1994 totaled $43.0 million, or $1.92
per share, an increase of $0.14 from 1993 earnings of $1.78 per share. Earnings
for 1992 were $1.93 per share. Net income for 1994 includes a $0.03 per share
after-tax restructuring charge for a customer service office consolidation plan
announced in October, while net income for 1993 includes a $0.31 per share
after-tax restructuring charge resulting from an organizational effectiveness
study. Results for 1994 were also affected by increases in sales, which were
more than offset by higher operating expenses compared to the previous year.
Earnings for 1993 benefited from lower interest charges and increased sales due
in part to favorable weather compared to 1992. Income for 1992 was affected by a
full year of service to the city of Opelousas and lower interest expenses,
offset by milder summer weather and higher operating expenses relative to the
previous year.
REVENUES AND SALES
Revenues and kilowatt-hour (kwh) sales were as follows:
REVENUES 1994 1993
--------------------------------------------------------------------------------
IN PERCENT In Percent
THOUSANDS CHANGE Thousands Change
--------------------------------------------------------------------------------
Base (nonfuel) $244,047 2.7% $237,526 3.0%
Fuel cost recovery 135,556 (6.5)% 144,907 19.7%
--------------------------------------------------------------------------------
Total revenues $379,603 (0.7)% $382,433 8.8%
================================================================================
SALES 1994 1993
--------------------------------------------------------------------------------
MILLION PERCENT Million Percent
KWH CHANGE kwh Change
--------------------------------------------------------------------------------
Regular customers
Residential 2,532 2.5% 2,470 5.0%
Commercial 1,180 6.4% 1,109 4.4%
Industrial 2,030 1.2% 2,005 1.7%
Other 487 5.2% 463 (2.9)%
Sales for resale 210 20.0% 175 19.9%
--------------------------------------------------------------------------------
Total sales to regular customers 6,439 3.5% 6,222 3.5%
Short-term sales to other utilities 174 (34.6)% 266 202.3%
--------------------------------------------------------------------------------
Total kilowatt-hour sales 6,613 1.9% 6,488 6.4%
================================================================================
The Company's base rates did not change in 1994, 1993 or 1992. Total operating
revenues were lower in 1994 compared to 1993 due primarily to a decrease in fuel
cost recovery revenues resulting from lower natural gas prices and lower sales
to other utilities. Net income is not affected by changes in the cost of fuel
and purchased power because these cost fluctuations are passed on to customers
through fuel adjustment clauses.
Total operating revenues were higher in 1993 compared to 1992 due primarily
to an increase in fuel cost recovery revenues associated with higher natural gas
prices.
Kilowatt-hour sales are influenced significantly by the weather. During 1994
winter temperatures were more favorable for sales compared to 1993, but summer
weather was less favorable than 1993. Both summer and winter temperatures in
1993 were more favorable for sales compared to 1992.
During the past five years, sales growth averaged 2.6% per year, and is
expected to range from 2% to 2.5% during the next five years. The levels of
future sales will depend upon weather conditions, customer conservation efforts,
the Company's retail marketing and business development programs, acquisitions
of other electric utilities and the overall economy of the service area. Sales
to industrial customers are also affected by the national economy and worldwide
demand for wood products, since the Company's two largest customers are
producers of such products. Issues facing the electric utility industry that
could affect sales include deregulation, retail wheeling, retention of large
industrial customers, municipal franchises, transmission access and demand side
management programs. As a result, the electric utility industry could become
more competitive.
In July 1994 the Company renewed a nonexclusive municipal franchise
affecting about 6,500 customers, or about 3% of the Company's customers. During
negotiations the city
-14-
administration had indicated that it might attempt to acquire ownership of the
Company's electric system within the city limits by condemnation or otherwise.
However, the new franchise was successfully negotiated without any attempts to
acquire the Company's local electric system or its customers.
Another nonexclusive municipal franchise affecting about 5,000 customers, or
about 2% of the Company's customers, expired at the end of 1994. The Company is
currently negotiating this franchise agreement and expects that it will be
renewed in early 1995.
During 1994 two existing industrial customers announced plans to build new
plants. Boise Cascade Corporation will build a $49 million engineered wood
products plant near the Company's Rodemacher Power Station and Martco
Partnership will build a $50 million plywood plant a little farther north. The
two plants, both scheduled for completion in 1996, will add a combined load of
about nine megawatts.
In 1993 the Company signed an agreement with the city of St. Martinville to
provide wholesale service beginning in 1995. Sales to the city will result in 13
megawatts of additional load through 2000. The Louisiana Energy and Power
Authority, the city of Lafayette and the American Public Power Association
intervened before the Federal Energy Regulatory Commission (FERC) asserting
unduly preferential, discriminatory and predatory pricing. The Company has
contested these assertions. The case was heard by an administrative law judge in
June 1994 and a decision is expected in 1995.
FUEL AND PURCHASED POWER
Changes in fuel and purchased power expenses reflect fluctuations in generation
mix, fuel costs, availability of economy power and deferral of expenses for
recovery from customers through fuel adjustment clauses in subsequent months.
The Company obtains natural gas, coal and lignite under long-term contracts
and purchases natural gas on the spot market when prices are advantageous. Power
is purchased from other utilities when the purchase price is less than the
Company's cost to generate or when needed to meet system requirements.
RESTRUCTURING EFFORTS
An organizational effectiveness study completed in 1993 identified opportunities
to improve Company operations and provide better service to customers. As a
result of the study, the Company's organizational structure was streamlined.
During 1994 the Company focused on continuous improvement by examining these
opportunities and recommending ways to improve business processes. One of these
recommendations resulted in an announcement during the fourth quarter of 1994 of
the Company's plans to consolidate 25 customer service offices into 10 regional
offices by June 1995. This consolidation plan will be implemented in conjunction
with the establishment of a 24-hour customer call center and a network of
authorized payment locations throughout the service area by mid-1995.
The customer service office consolidation plan resulted in a restructuring
charge to 1994 earnings of $1.2 million, or $0.7 million after-tax. This charge
consisted mainly of voluntary severance benefits and customer service office
lease costs.
In 1993 the reorganization resulted in a restructuring charge to earnings of
$10.9 million, or $7.0 million after-tax, which included $3.9 million for
special pension termination benefit costs, $2.0 million for net postretirement
plan curtailment costs and $5.0 million for voluntary severance, relocation and
other costs.
CO-OP DEVELOPMENTS
During 1994 the Company announced its interest in acquiring two electric
cooperatives. In February the Company approached the management of Teche
Electric Cooperative, Inc. (Teche) about the possibility of purchasing Teche.
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. Based on available data, the acquisition of Teche would result in
an increase in the Company's kilowatt-hour sales to regular customers of about
2.4%.
Teche management initially declined to discuss the offer with the Company.
Therefore, a team of Company employees personally canvassed Teche members for
their support. The Louisiana Public Service Commission (LPSC) intervened in
August and issued several orders seeking information from Teche regarding public
interest in the acquisition. The Company and Teche developed a memorandum of
understanding in November regarding a potential sale of Teche to the Company. In
February 1995 Teche and the Company executed a purchase and sale agreement for a
purchase price, including the Company's assumption or other discharge of Teche's
liabilities, of approximately $22.4 million.
-15-
Closing of the transaction is subject to a number of conditions, including the
approval by Teche members at their annual meeting on March 11, 1995, approval by
governmental authorities, including the LPSC and the Rural Utilities Service
(formerly the Rural Electrification Administration), successful resolution of
Teche's power supply contract with Cajun Electric Cooperative and certain other
conditions.
In December 1994 the Company announced its interest in purchasing
Washington-St. Tammany Electric Cooperative, Inc. (WST). WST serves
approximately 30,600 customers in an area adjacent to the Company's Northlake
Division in Washington, St. Tammany and Tangipahoa parishes, one of the fastest
growing areas in the state. The LPSC has ordered WST to submit to an operational
review and open its books to the Company and other interested buyers. The
potential purchase of WST would be subject to the same conditions that the Teche
acquisition is subject to.
NONFUEL OPERATING EXPENSES AND INCOME TAXES
The changes in nonfuel operating expenses for 1994 and 1993 were as follows:
INCREASE (DECREASE)
FROM PRIOR YEAR
(IN THOUSANDS, EXCEPT %)
1994 1993
--------------------------------------------------------------------------------
Other operation $ 5,868 11.6% $(1,232) (2.4)%
Maintenance $ (311) (1.2)% $(1,216) (4.6)%
Depreciation $ 2,715 7.3% $ 2,474 7.1%
Other taxes $ 1,888 7.0% $ 1,556 6.1%
Income taxes $ 336 1.7% $ 970 5.2%
================================================================================
In 1994 nonfuel operating expenses, excluding restructuring charges, increased
over 1993 by 6.6%. Other operation expenses increased due to increases in
retirement plan costs, computer software expenses, uncollectible accounts
expense, expenses associated with the FERC proceeding in connection with service
to St. Martinville and Company efforts related to the acquisition of Teche.
Depreciation expenses increased in 1994 due to the installation of a customer
information system and the completion of a large transmission line in 1993,
along with the Company's continuing construction program. Property taxes
increased because of routine additions to utility plant in service and higher
millages. Higher city franchise taxes resulted from increased sales and the
renegotiation of several small municipal franchise agreements.
In 1993 other operation expenses decreased due to the recognition of pension
plan income on an accrual basis and the amortization of prior regulatory credits
of $5.4 million related to the pension plan to be recognized over a five-year
period. This presentation was approved by the LPSC staff, subject to review by
the LPSC in future proceedings. Maintenance expenses declined in 1993, compared
to 1992, primarily due to delays in maintenance projects attributable to the
restructuring. Depreciation expenses reflected the amortization of the tax
effect on prior years' allowance for funds used during construction (AFUDC)
resulting from a new accounting standard implemented January 1, 1993, and the
completion of a large transmission project in 1993 along with other additions to
utility plant balances. Other taxes increased primarily due to additional
property taxes resulting from the expiration of a tax exemption on a generating
unit and normal additions to utility plant. Income taxes reflected the increase
in the federal tax rate in 1993.
In April 1994 agents of the Internal Revenue Service (IRS) commenced an
audit of the Company's tax returns for 1991 and 1992. The audit has been
completed and a Revenue Agent Report was issued to the Company 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 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 exist for interest and, if assessed, penalties.
A number of parishes have attempted in recent years to impose franchise fees
on retail revenues earned within the unincorporated areas served by the Company.
If the parishes are ultimately successful, taxes other than income taxes could
increase substantially in future years.
INTEREST AND OTHER INCOME AND INTEREST EXPENSE
The decline in interest income in 1994 was due to lower average balances of
temporary cash investments during the year. Interest income declined in 1993
because a note receivable and equity investments were redeemed by the issuers in
the latter part of 1992 and these funds were reinvested by the Company at lower
rates.
Other income increased in 1993 due to the establishment of an unregulated
investment subsidiary. Earnings from investments held by this subsidiary
declined in 1994 due to unfavorable market conditions.
-16-
In 1994 interest expense increased due to higher interest rates on
short-term and variable rate pollution control bond debt. This increase was
partially offset by lower average short-term debt balances and a full year's
effect of lower long-term debt costs due to refinancings in 1993. Interest
expense declined in 1993 compared to 1992 due to lower short-term interest rates
and because the Company refunded $34 million of long-term debt with lower cost
medium-term notes.
ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION
AFUDC represents the estimated cost of financing construction work-in-progress
and is not a current source of cash. A return on and recovery of AFUDC is
generally permitted by regulatory bodies in setting rates charged for utility
services. AFUDC for 1994 declined from 1993 primarily due to declining levels of
construction work-in-progress which are eligible for AFUDC, whereas average
construction balances in 1993 resulted in higher costs of financing such
construction. Beginning in 1993 AFUDC was recorded on a pre-tax basis as
required by a new accounting standard. In 1993 $1 million of the increase in
total AFUDC was due to the tax effect of the change to a pre-tax method. AFUDC
accounted for 3.3% of net income applicable to common stock in 1994, compared to
4.6% in 1993 and 4.5% in 1992.
EARNINGS PER SHARE
In 1994 potentially dilutive securities had a 3% dilutive affect on net income
per common share due to the assumed conversion of the Incentive Stock Option
Plan and the convertible preferred stock held by the Employee Stock Ownership
Plan (ESOP). As a result, both primary and fully diluted average shares of
common stock outstanding and earnings per share are presented in the
Consolidated Statements of Income.
FINANCIAL CONDITION
LIQUIDITY AND CAPITAL RESOURCES
Financing for construction requirements and operational needs is dependent
upon the cost and availability of external funds through capital markets and
from financial institutions. Access to funds is dependent upon factors such as
general economic conditions, regulation and the Company's credit rating.
Since 1990 the Company has participated in a program where up to $35 million
of 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 program is presently scheduled to continue through
April 1995, but the Company expects to extend the program until 2000.
The Company has an effective shelf registration statement and all regulatory
approvals necessary to issue up to $50 million of debt and $50 million of
preferred stock.
At December 31, 1994 and 1993, the Company had $29.0 million and $28.4
million, respectively, of short-term debt outstanding in the form of commercial
paper borrowings and bank loans. A $100 million revolving credit facility, which
provides support for the issuance of commercial paper, is presently scheduled to
continue through July 1997. Uncommitted lines of credit with banks totaling $23
million are available to meet short-term working capital needs. Additionally, at
December 31, 1994, an unregulated subsidiary of the Company had $17.7 million
of cash and marketable securities.
CASH GENERATION AND CASH REQUIREMENTS
During 1994 the Company generated $88.8 million of cash flows from operating
activities as shown in the Consolidated Statements of Cash Flows. Net cash
provided by operating activities results from net income, adjusted for noncash
charges to income, and changes in working capital. Net cash used in investing
activities is related to additions to utility plant and changes in utility and
nonutility investments. Net cash used in financing activities results
principally from the payment of dividends to shareholders and long-term
financing activities.
In recent years the construction program has consisted primarily of
enhancements to the transmission and distribution systems. Expenditures,
excluding AFUDC, totaled $53 million in 1994 and $48 million in 1993.
Construction expenditures, excluding AFUDC, for 1995 are estimated to be $57
million and for the five-year period ending 1999 are expected to total $284
million. Projected expenditures for the five-year period ending 1999 include a
distribution resource management system, enhancements to the information
technology infrastructure and, scheduled to begin in 1999, initial costs
associated with the refurbishment of a retired natural gas unit. Other
construction expenditures for capacity additions have been deferred until after
2000 due to adequate capacity reserves.
-17-
Scheduled maturities of debt and preferred stock will total about $15
million for 1995 and approximately $57 million for the five-year period ending
1999. If economical, certain issues of debt may be refinanced in 1995, and the
Company may require additional funds to purchase outstanding shares of the
Company's common stock. In 1991 the Company began a common stock repurchase
program, and as part of that program, up to $23.5 million of common stock may be
repurchased in the future.
Approximately 100% of total construction requirements were funded internally
in 1994 as compared to 90% in 1993 and 70% in 1992. Without the costs of
restructuring in 1993 and reconstruction costs required by Hurricane Andrew in
1992, construction requirements in both years would have been entirely funded
with internally generated funds. In 1995 and for the five-year period ending
1999, all construction requirements are expected to be funded internally. Other
capital requirements in 1994 were funded internally, and in 1993 were funded by
the issuance of debt.
RETAIL RATES
Retail rates, which are regulated by the LPSC, account for 95% of total
revenues. Fuel costs and monthly fuel adjustment billing factors are subject to
audit by the LPSC. The LPSC establishes base rates for the Company which reflect
nonfuel costs, including the cost of capital, and sales. In the past the Company
has sought increases in base rates to reflect the cost of service related to
plant facility additions and increases in operating costs. If the Company were
to request an increase in its rates and adequate rate relief was not granted on
a timely basis, the Company's ability to attract capital at reasonable costs to
finance its operations and capital improvements might be impaired.
The LPSC has elected to review the earnings of all electric, gas, water and
telecommunication utilities regulated by it to determine if the returns on
equity of these companies may be higher than returns that might be awarded in
the current economic environment. The Company is scheduled to be reviewed in
early 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 the results of its
operations.
INFLATION
The Company is a capital-intensive electric utility. As such, it is affected by
inflation since depreciation, which is based on the historical cost of assets,
will in all likelihood not fully reflect the cost of replacing assets. Although
the cost of fuel used for electric generation is a major component of total
costs, the Company is not exposed to the effects of inflation in fuel prices
since fuel costs are recovered from customers through fuel adjustment clauses.
ENVIRONMENTAL MATTERS
The Company is subject to federal, state and local laws and regulations
governing the protection of the environment. Violations may result in
substantial fines and penalties. The Company has obtained all material
environmental permits necessary for its operations and is in substantial
compliance with all applicable environmental laws and regulations. The Company
is preparing acid rain and operating permit applications under the 1990 National
Clean Air Act (Clean Air Act).
Implementation of Phase I of the Clean Air Act will not require the Company
to reduce sulfur emissions at its solid-fuel generating units, which either burn
low-sulfur coal or utilize pollution control equipment. Installation of
continuous emission monitoring equipment on its generating units has been
completed at a cost of approximately $2.7 million. Although Phase II of the
legislation, effective in 2000, involves more stringent limits on emissions, it
should not significantly affect the way the Company's generating units are
operated. However, some capital investment may be necessary in order to comply
with Phase II requirements.
In 1986 the Company was one of a number of companies named by the
Environmental Protection Agency as potentially responsible parties for the
cleanup of a site in Missouri previously operated by an authorized PCB
(polychlorinated biphenyl) processor. The Company is participating with other
parties in the cleanup of this site which is scheduled to be completed in 1995.
All anticipated costs have been funded.
NEW ACCOUNTING STANDARDS
On January 1, 1994, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 115, Accounting for Certain Investments in Debt and Equity
Securities. The adoption of this standard did not have a significant effect on
the Company's financial condition or the results of its operations.
-18-
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
(IN THOUSANDS,
EXCEPT SHARE AND PER SHARE AMOUNTS)
FOR THE YEARS ENDED DECEMBER 31 1994 1993 1992
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING REVENUES $379,603 $382,433 $351,613
------------------------------------------------------------------------------------------------------
Operating expenses
Fuel used for electric generation 120,546 119,197 113,944
Power purchased 17,376 28,088 9,647
Other operation 56,561 50,693 51,925
Restructuring charges 1,203 10,851
Maintenance 24,680 24,991 26,207
Depreciation 40,007 37,292 34,818
Taxes other than income taxes 28,899 27,011 25,455
Federal and state income taxes 19,901 19,565 18,595
------------------------------------------------------------------------------------------------------
Total operating expenses 309,173 317,688 280,591
------------------------------------------------------------------------------------------------------
OPERATING INCOME 70,430 64,745 71,022
Interest income 238 358 1,937
Allowance for other funds used during construction 1,716 2,556 1,412
Other income (expenses), net (967) (88) (642)
------------------------------------------------------------------------------------------------------
INCOME BEFORE INTEREST CHARGES 71,417 67,571 73,729
------------------------------------------------------------------------------------------------------
Interest charges
Interest on debt and other 25,736 24,839 27,746
Allowance for borrowed funds used during construction (585) (482) (538)
Amortization of debt discount, premium and expense, net 1,223 1,402 1,282
------------------------------------------------------------------------------------------------------
Total interest charges 26,374 25,759 28,490
------------------------------------------------------------------------------------------------------
NET INCOME 45,043 41,812 45,239
Preferred dividend requirements, net 2,026 1,985 2,229
------------------------------------------------------------------------------------------------------
NET INCOME APPLICABLE TO COMMON STOCK $43,017 $39,827 $43,010
======================================================================================================
AVERAGE SHARES OF COMMON STOCK OUTSTANDING
Primary 22,414,831 22,388,535 22,343,144
Fully diluted 23,842,199 23,826,654 23,782,896
======================================================================================================
EARNINGS PER SHARE
Primary $1.92 $1.78 $1.93
Fully diluted $1.86 $1.73 $1.89
======================================================================================================
CASH DIVIDENDS PAID PER SHARE OF COMMON STOCK $1.45 $1.41 $1.37
======================================================================================================
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART
OF THE CONSOLIDATED FINANCIAL STATEMENTS.
-20-
<PAGE>
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31 1994 1993
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Utility plant (Notes A and B)
Property, plant and equipment $ 1,276,266 $ 1,241,147
Accumulated depreciation (410,513) (379,753)
------------------------------------------------------------------------------------------------------------------------------------
Net property, plant and equipment 865,753 861,394
Construction work-in-progress 46,379 33,642
------------------------------------------------------------------------------------------------------------------------------------
Total utility plant, net 912,132 895,036
------------------------------------------------------------------------------------------------------------------------------------
Investments and other assets (Note D) 20,327 20,197
------------------------------------------------------------------------------------------------------------------------------------
Current assets
Cash and cash equivalents (Note A) 7,440 5,802
Accounts receivable, net (Note C)
Customer accounts receivable 2,165 3,981
Other accounts receivable 8,982 6,720
Unbilled revenues 573 1,506
Fuel inventory, at average cost 10,184 11,898
Materials and supplies inventory, at average cost 14,945 14,007
Prepayments and other current assets 2,374 2,218
------------------------------------------------------------------------------------------------------------------------------------
Total current assets 46,663 46,132
------------------------------------------------------------------------------------------------------------------------------------
Prepayments 7,861 7,640
------------------------------------------------------------------------------------------------------------------------------------
Deferred charges 151,831 154,556
------------------------------------------------------------------------------------------------------------------------------------
Accumulated deferred federal and state income taxes (Note J) 39,377 38,074
------------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 1,178,191 $ 1,161,635
====================================================================================================================================
CAPITALIZATION AND LIABILITIES
Common shareholders' equity
Common stock, $2 par value, authorized 50,000,000 shares, issued
22,720,074 and 22,708,874 shares at December 31, 1994 and 1993,
respectively (Note F) $ 45,440 $ 45,418
Premium on capital stock 113,070 112,829
Retained earnings 211,198 200,908
Treasury stock, at cost, 329,433 and 326,380 shares at
December 31, 1994 and 1993, respectively (6,681) (6,600)
------------------------------------------------------------------------------------------------------------------------------------
Total common shareholders' equity 363,027 352,555
Preferred stock (Note H)
Not subject to mandatory redemption 30,748 30,982
Subject to mandatory redemption 6,920 7,242
Deferred compensation related to preferred stock held by ESOP (24,404) (26,118)
Long-term debt, net (Note E) 336,589 351,087
------------------------------------------------------------------------------------------------------------------------------------
Total capitalization 712,880 715,748
------------------------------------------------------------------------------------------------------------------------------------
Current liabilities
Short-term debt (Note E) 28,977 28,373
Long-term debt due within one year (Note E) 14,676 790
Accounts payable 43,466 40,653
Customer deposits 19,513 18,638
Taxes accrued (Note J) 3,262 5,069
Interest accrued 8,298 8,329
Accumulated deferred fuel 6,114 5,315
Other current liabilities 2,618 2,355
------------------------------------------------------------------------------------------------------------------------------------
Total current liabilities 126,924 109,522
------------------------------------------------------------------------------------------------------------------------------------
Deferred credits
Accumulated deferred federal and state income taxes (Note J) 228,803 224,151
Accumulated deferred investment tax credits (Note J) 34,987 36,806
Other deferred credits 74,597 75,408
------------------------------------------------------------------------------------------------------------------------------------
Total deferred credits 338,387 336,365
------------------------------------------------------------------------------------------------------------------------------------
Commitments and contingencies (Notes C, E, F, I, J and K)
------------------------------------------------------------------------------------------------------------------------------------
TOTAL CAPITALIZATION AND LIABILITIES $ 1,178,191 $ 1,161,635
====================================================================================================================================
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART
OF THE CONSOLIDATED FINANCIAL STATEMENTS.
-21-
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER 31 1994 1993 1992
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 45,043 $ 41,812 $ 45,239
Noncash items included in net income
Depreciation and amortization 40,095 37,940 36,299
Allowance for funds used during construction (2,301) (3,038) (1,950)
Amortization of investment tax credits (1,819) (1,826) (1,830)
Deferred income taxes 2,445 1,327 10,826
Deferred fuel costs 799 1,869 (1,057)
Restructuring charges 1,152 7,135
(Gain)/loss on disposition of utility plant, net 25 (66)
Changes in working capital
Accounts receivable (446) (2,655) (6,832)
Unbilled revenues 933 (384) (753)
Inventories 776 (5,195) (410)
Accounts payable 2,076 (2,014) 4,250
Customer deposits 875 867 872
Taxes accrued (1,807) 2,372 (2,456)
Interest accrued (31) 1,044 (1,511)
Other, net 981 (3,075) (5,010)
------------------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 88,796 76,179 75,611
------------------------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Additions to utility plant (55,445) (51,507) (64,425)
Allowance for funds used during construction 2,301 3,038 1,950
Sale of utility plant 373 377 673
Proceeds from long-term note receivable 9,808
Purchase of investments (203,165) (292,178) (527,754)
Sale of investments 203,749 296,658 562,933
------------------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (52,187) (43,612) (16,815)
------------------------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Proceeds from issuance of
Common stock 208 1,160 795
Long-term debt 75,000 75,000
Retirement of long-term debt (650) (35,583) (106,139)
Purchase of ESOP note (29,350)
Repurchase of common stock (309)
Redemption of preferred stock (322) (150) (5,881)
Dividends paid on common and preferred stock, net (34,501) (33,493) (32,146)
Changes in short-term borrowings, net 603 (35,497) 38,805
------------------------------------------------------------------------------------------------------------------------------------
Net cash used in financing activities (34,971) (28,563) (58,916)
------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,638 4,004 (120)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 5,802 1,798 1,918
------------------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 7,440 $ 5,802 $ 1,798
====================================================================================================================================
Supplementary cash flow information
Interest paid (net of amount capitalized) $ 27,457 $ 24,116 $ 28,748
Income taxes paid $ 25,762 $ 17,326 $ 11,015
====================================================================================================================================
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART
OF THE CONSOLIDATED FINANCIAL STATEMENTS.
-22-
<PAGE>
CONSOLIDATED STATEMENTS OF CHANGES IN COMMON SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
COMMON STOCK PREMIUM TREASURY STOCK
FOR THE YEARS ENDED --------------------- ON CAPITAL RETAINED ----------------
DECEMBER 31, 1992, 1993 AND 1994 SHARES AMOUNT STOCK EARNINGS SHARES COST
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1992 22,570,412 $45,141 $111,224 $180,269 328,600 $6,645
--------------------------------------------------------------------------------------------------------------------------------
Redemptions of preferred stock (81)
Incentive stock options exercised 63,669 127 668
Issuance of treasury stock (266) (6)
Costs associated with stock split (116)
Dividend requirements, preferred stock, net (2,229)
Cash dividends paid, common stock, $1.37 per share (30,526)
Net income 45,239
-------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1992 22,634,081 45,268 111,811 192,637 328,334 6,639
-------------------------------------------------------------------------------------------------------------------------------
Redemptions of preferred stock 8
Incentive stock options exercised 74,793 150 1,010
Issuance of treasury stock (1,981) (40)
Incentive shares forfeited 27 1
Capital stock expense (48)
Dividend requirements, preferred stock, net (1,985)
Cash dividends paid, common stock, $1.41 per share (31,508)
Net income 41,812
------------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1993 22,708,874 45,418 112,829 200,908 326,380 6,600
------------------------------------------------------------------------------------------------------------------------------------
Redemptions of preferred stock 48
Incentive stock options exercised 11,200 22 186
Repurchase of common stock 14,300 309
Issuance of treasury stock 7 (11,247) (228)
Capital stock expense (12)
Dividend requirements, preferred stock, net (2,026)
Cash dividends paid, common stock, $1.45 per share (32,475)
Unrealized holding loss on available-for-sale
securities, net (240)
Net income 45,043
------------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1994 22,720,074 $45,440 $113,070 $211,198 329,433 $6,681
====================================================================================================================================
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART
OF THE CONSOLIDATED FINANCIAL STATEMENTS.
-23-
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRESENTATION AND REGULATION
The consolidated financial statements include the accounts of Central Louisiana
Electric Company, Inc. and its wholly owned subsidiaries (the Company). All
significant intercompany transactions are eliminated.
The Company maintains its accounts in accordance with the Uniform System of
Accounts prescribed for electric utilities by the Federal Energy Regulatory
Commission (FERC), as adopted by the Louisiana Public Service Commission (LPSC).
The Company provides electric service to a diversified base of residential,
commercial and industrial customers in 23 parishes of Louisiana. The Company's
retail rates for residential, commercial and industrial customers and other
retail sales are regulated by the LPSC, and its rates for transmission services
and wholesale power sales are regulated by the FERC.
UTILITY PLANT AND DEPRECIATION
Utility plant is stated at the original cost of construction, which includes
certain materials, labor, payroll taxes and benefits, administrative and general
costs, and the estimated cost of funds used during construction. The cost of
repairs and minor replacements is charged as incurred to the appropriate
operating expense and clearing accounts. The cost of improvements is
capitalized. Upon retirement or disposition, the recorded cost of depreciable
plant and the cost of removal, net of salvage value, are charged to accumulated
depreciation.
The provision for depreciation is computed using the straight-line method at
rates which will amortize the unrecovered cost of depreciable property over its
estimated useful life. Annual depreciation provisions expressed as a percentage
of average depreciable property were 3.17% for 1994, 3.11% for 1993 and 3.13%
for 1992.
CASH EQUIVALENTS
The Company considers highly liquid, marketable securities and other similar
instruments with original maturity dates of less than three months to be cash
equivalents.
INCOME TAXES
Deferred income taxes are provided at the current enacted income tax rate on all
temporary differences between tax and book bases of assets and liabilities. The
Company recognizes regulatory assets and liabilities for the tax effect of
temporary differences which, to the extent past ratemaking practices are
continued by regulators, will be realized over the accounting lives of the
related properties.
INVESTMENT TAX CREDITS
Investment tax credits which were deferred for financial statement purposes are
amortized to income over the estimated service lives of the properties which
gave rise to the credits.
DEBT EXPENSE, PREMIUM AND DISCOUNT
Expense, premium and discount applicable to debt securities are amortized to
income ratably over the lives of the related issues. Expense and call premium
related to refinanced debt are amortized over the remaining life of the original
issue.
REVENUES AND FUEL COSTS
Revenues from sales of electricity are recorded when billed to customers and, in
addition, are estimated and accrued for electricity delivered since the latest
billings. The cost of fuel is recovered from customers through fuel adjustment
clauses, based upon fuel costs incurred in prior months. These adjustments are
subject to audit and final determination by regulators.
ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION (AFUDC)
The capitalization of AFUDC is a utility accounting practice prescribed by the
FERC. AFUDC represents the estimated cost of financing construction work-
in-progress. AFUDC does not represent a current source of cash, but under
regulatory practices, a return on and recovery of AFUDC is permitted in setting
rates charged for utility services. The composite AFUDC rate, including
borrowed and other funds on a combined basis, for 1994 and 1993 was 15.1% on a
pre-tax basis (9.29% net-of-tax) and 9.35% net-of-tax for 1992.
NET INCOME PER COMMON SHARE
Net income per common share is computed using the weighted average number of
shares of common stock outstanding during the year. In 1994 potentially dilutive
securities had a 3% dilutive effect on net income per common share due to the
assumed conversion of the Incentive Stock Option Plan and the convertible
preferred stock held by the Employee Stock Ownership Plan (ESOP). As a result,
both primary and fully diluted average shares of common stock outstanding and
earnings per share are presented.
-24-
NOTE B -- JOINTLY OWNED GENERATING UNITS
Two electric generating units operated by the Company are jointly owned with
other utilities. The Company's proportionate share of operation and maintenance
expenses associated with these two units are reflected in the financial
statements.
(DOLLAR AMOUNTS IN THOUSANDS)
DOLET HILLS RODEMACHER
AT DECEMBER 31, 1994 UNIT #1 UNIT #2
--------------------------------------------------------------------------------
Percentage of ownership 50% 30%
Utility plant in service $270,878 $84,639
Accumulated depreciation $ 69,957 $31,685
Unit capability (thousand kilowatts) 650.0 523.0
Share of capability (thousand kilowatts) 325.0 156.9
================================================================================
NOTE C -- RECEIVABLES
The Company sells an ownership interest in certain types of accounts receivable
and accrued, unbilled revenues. A maximum of $35,000,000 of receivables may be
sold at any time, and new receivables are sold as previously sold receivables
are collected. Sales of the Company's receivables are scheduled to continue
through April 1995, but the Company expects to extend this program until 2000.
The Company is obligated to repurchase a limited amount of receivables if such
receivables were to become uncollectible. The Company maintains an allowance for
uncollectible accounts based on historical experience against which losses on
all receivables are charged.
(IN THOUSANDS)
FOR THE YEAR ENDED DECEMBER 31 1994 1993
--------------------------------------------------------------------------------
Receivables sold but not collected (at year end) $34,000 $35,000
Average amount of receivables sold $34,557 $34,366
Costs charged to operating expense $ 1,751 $ 1,311
Receivables subject to repurchase (at year end) $ 3,510 $ 3,374
Accumulated provision for uncollectible accounts
(at year end) $ 444 $ 537
================================================================================
NOTE D -- INVESTMENTS AND OTHER FINANCIAL INSTRUMENTS
On January 1, 1994, the Company implemented Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities." The Company has classified the various debt and equity securities
it owns as "available-for-sale" and carries these securities at fair value.
These funds are invested through an outside investment manager pending final
determination by the Company as to their ultimate utilization. Currently, the
Company does not intend to trade these securities actively or to hold these
investments to their final maturity. Securities may be sold in order to adjust
the amounts invested within the various types of securities, to limit the
potential loss exposure associated with a specific security or to obtain funds
needed for other investment opportunities. For the year ended December 31, 1994,
the net unrealized holding loss on the Company's available-for-sale securities
was immaterial.
(IN THOUSANDS)
ORIGINAL FAIR MARKET
AT DECEMBER 31, 1994 COST VALUE
--------------------------------------------------------------------------------
Equity securities $ 6,750 $ 6,466
U.S. Treasury/Government Agency 4,371 4,317
Corporate obligations 1,333 1,303
--------------------------------------------------------------------------------
Total marketable securities $12,454 $12,086
================================================================================
Proceeds from the sales of available-for-sale securities in 1994 were
$14,448,000. The gross realized gains from these sales were approximately
$1,295,000 and the gross realized losses were approximately $2,170,000 in 1994.
The contractual maturities of debt securities classified as available-
for-sale are as follows:
(IN THOUSANDS)
ORIGINAL FAIR MARKET
AT DECEMBER 31, 1994 COST VALUE
--------------------------------------------------------------------------------
Within 1 year $ 100 $ 99
1 through 5 years 1,883 1,836
5 through 10 years 3,637 3,605
After 10 years 84 80
--------------------------------------------------------------------------------
Total debt securities $5,704 $5,620
================================================================================
The amounts reflected in the financial statements at December 31, 1994 and
1993, for cash and cash equivalents, accounts receivable, accounts payable and
short-term debt approximate fair value because of their short-term nature. The
fair value of investments at December 31, 1994 and 1993, is estimated based on
quoted market prices for these or similar investments. The fair value of the
Company's long-term debt and non-convertible preferred stock is estimated based
upon the quoted market price for the same or similar issues or by a discounted
present value analysis of future cash
-25-
flows using current rates obtainable by the Company for debt and preferred
stock with similar maturities. The fair value of convertible preferred stock is
estimated assuming its conversion into common stock at the market price per
common share at December 31, 1994 and 1993, with proceeds from the sale of the
common stock used to repay the principal balance of the Company's loan to the
ESOP.
<TABLE>
<CAPTION>
(IN THOUSANDS)
1994 1993
------------------------------------------------------------------------------------------------------------------
CARRYING ESTIMATED Carrying Estimated
VALUE FAIR VALUE Value Fair Value
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investments $ 19,558 $ 19,558 $ 19,572 $ 19,657
Long-term debt $351,741 $345,810 $352,391 $379,127
Preferred stock not subject to mandatory redemption $ 6,344 $ 6,722 $ 4,864 $ 8,165
Preferred stock subject to mandatory redemption $ 6,920 $ 5,927 $ 7,242 $ 5,978
==================================================================================================================
</TABLE>
NOTE E -- DEBT
The Company has a $100,000,000 revolving credit facility with a group of banks
that provides for uncollateralized borrowings at prevailing market interest
rates or at interest rates established by competitive bids. Each year, subject
to the approval of the banks, the facility may be extended for a one-year
period. In 1994 the scheduled expiration date of the facility was extended for
one year to July 31, 1997. The Company pays a commitment fee (currently 0.1875%)
on the full amount of the facility, based upon the Company's lowest senior
secured debt or unsecured commercial paper rating. The Company is not required
to maintain compensating balances in connection with the revolving credit
facility. Since the revolving credit facility provides liquidity support for
the issuance of commercial paper, the aggregate amount of commercial paper notes
and borrowings under the revolving credit facility cannot exceed $100,000,000.
In addition to its revolving credit facility, the Company also has various
uncommitted borrowing arrangements with banks totaling $23,000,000. The banks
are not obligated to lend under these arrangements, and any borrowings are made
at negotiated interest rates and are uncollateralized. The Company pays no fees
on any of these arrangements, nor are compensating balances required. The
weighted average interest rate on short-term debt was 5.87% at December 31, 1994
and 3.34% at December 31, 1993.
(IN THOUSANDS)
1994 1993
--------------------------------------------------------------------
Commercial paper, net $ 28,977 $ 25,073
Bank loans 3,300
--------------------------------------------------------------------
Total short-term debt $ 28,977 $ 28,373
====================================================================
First mortgage bonds
Series L, 5%, due 1995 $ 14,000 $ 14,000
Series X, 912%, due 2005 60,000 60,000
Series Y, 958%, due 2021 50,000 50,000
Pollution control revenue bonds,
variable rate, due 2018 61,260 61,260
Medium-term notes
9.13%, due 1997 15,000 15,000
7.85%, due 2000 25,000 25,000
7.53%, due 2004 25,000 25,000
7.00%, due 2003 10,000 10,000
6.90%, due 1998 15,000 15,000
5.90%, due 1999 10,000 10,000
6.55%, due 2003 15,000 15,000
6.33%, due 2002 25,000 25,000
5.78%, due 2001 10,000 10,000
6.20%, due 2006 15,000 15,000
Mortgage notes, 2%, due 1995 171 346
Capitalized lease obligations,
5.0% - 6.875%, due 1995-2001 1,310 1,785
--------------------------------------------------------------------
Total long-term debt 351,741 352,391
Amount due within one year (14,676) (790)
Unamortized premium and discount, net (476) (514)
--------------------------------------------------------------------
Total long-term debt, net $ 336,589 $ 351,087
====================================================================
<TABLE>
<CAPTION>
(IN THOUSANDS)
1995 1996 1997 1998 1999 Thereafter Total
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Amounts payable under
long-term debt agreements $14,676 $535 $15,250 $15,005 $10,005 $296,270 $351,741
=================================================================================================
</TABLE>
-26-
NOTE F -- COMMON STOCK
In 1992 shareholders approved a two-for-one split of the Company's common stock.
The stock split reduced the par value of the common stock from $4.00 per share
to $2.00 per share and increased the number of authorized shares of common stock
from 25,000,000 shares to 50,000,000 shares.
In association with incentive compensation plans in effect during the
three-year period ended 1994, certain officers and key employees could be
awarded shares of restricted or unrestricted common stock or held options to
purchase shares of the Company's common stock at 100% of the fair market value
of the common stock at the dates the options were granted. The cost of the
restricted stock awards, as measured by the fair market value of the common
stock at the time of the grant, is recorded as compensation expense over the
periods during which the restrictions on the common stock lapse. The Company
makes no charge to expense with respect to the options. At December 31, 1994,
all options were exercisable, while the number of shares of restricted stock
previously awarded for which restrictions had not lapsed totaled 23,063 shares.
Changes in incentive shares for the three-year period ended 1994 were as
follows:
INCENTIVE SHARES
------------------------------------------------
OPTION PRICE UNEXERCISED AVAILABLE FOR
PER SHARE OPTION SHARES FUTURE GRANTS
--------------------------------------------------------------------------------
Balance, January 1, 1992 208,892 791,226
--------------------------------------------------------------------------------
Options exercised $ 7.00 (900)
$ 8.875 (25,668)
$ 14.75 (30,201)
$ 16.78 (6,900)
Restricted stock granted (6,994)
--------------------------------------------------------------------------------
Balance, December 31, 1992 145,223 784,232
--------------------------------------------------------------------------------
Options exercised $ 8.875 (6,118)
$ 14.75 (35,275)
$ 16.78 (33,400)
Restricted stock granted (10,320)
Restricted stock forfeited 27
Incentive stock awarded (2,624)
--------------------------------------------------------------------------------
Balance, December 31, 1993 70,430 771,315
--------------------------------------------------------------------------------
Options exercised $ 14.75 (6,500)
$ 16.78 (4,700)
Restricted stock granted (9,263)
Incentive stock awarded (2,274)
--------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1994 59,230 759,778
================================================================================
Various debt agreements of the Company contain covenants which restrict the
amount of retained earnings that may be distributed as dividends to common
shareholders. The most restrictive covenant requires that common shareholders'
equity be not less than 30% of total capitalization, including short-term debt.
At December 31, 1994, approximately $136 million of retained earnings was not
restricted.
NOTE G -- SUPPLEMENTARY PROFIT AND LOSS INFORMATION
(IN THOUSANDS)
1994 1993 1992
--------------------------------------------------------------------------------
Operating revenue derived from one customer $28,259 $29,731 $29,193
================================================================================
Other taxes included in income statement $28,899 $27,011 $25,455
Other taxes capitalized to plant 742 882 775
--------------------------------------------------------------------------------
Total other taxes $29,641 $27,893 $26,230
--------------------------------------------------------------------------------
Other taxes consist of:
State and municipal property $15,406 $14,174 $13,086
State and municipal franchise 10,424 9,443 9,066
Other 3,811 4,276 4,078
--------------------------------------------------------------------------------
Total other taxes $29,641 $27,893 $26,230
================================================================================
-27-
<PAGE>
NOTE H -- PREFERRED STOCK
Information about the components of preferred stock capitalization is as
follows:
<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
Balance Balance Balance BALANCE
January 1, December 31, December 31, DECEMBER 31,
1992 Change 1992 Change 1993 Change 1994
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
CUMULATIVE PREFERRED
STOCK, $100 par value
--------------------------------------------------------------------------------------------------------------
NOT SUBJECT TO MANDATORY
REDEMPTION
4.50% $ 1,029 $ 1,029 $ 1,029 $ 1,029
Convertible, Series of 1991,
variable rate 30,000 $ (6) 29,994 $ (41) 29,953 $(234) 29,719
--------------------------------------------------------------------------------------------------------------
$ 31,029 $ (6) $ 31,023 $ (41) $ 30,982 $(234) $ 30,748
--------------------------------------------------------------------------------------------------------------
SUBJECT TO MANDATORY
REDEMPTION
4.50%, Series of 1955 $ 560 $ (40) $ 520 $ (40) $ 480 $ (40) $ 440
4.65%, Series of 1964 3,640 (140) 3,500 3,500 (140) 3,360
4.75%, Series of 1965 3,510 (130) 3,380 (118) 3,262 (142) 3,120
7.50%, Series of 1973 5,490 (5,490)
--------------------------------------------------------------------------------------------------------------
$ 13,200 $(5,800) $ 7,400 $ (158) $7,242 (322) $ 6,920
==============================================================================================================
Deferred compensation related
to convertible preferred
stock held by the ESOP $(29,291) $ 985 $(28,306) $2,188 $(26,118) 1,714 $(24,404)
==============================================================================================================
CUMULATIVE PREFERRED
STOCK, $100 par value
--------------------------------------------------------------------------------------------------------------
Number of Shares
Authorized 1,478,400 (57,600) 1,420,800 (1,181) 1,419,619 (2,819) 1,416,800
Issued and Outstanding 442,288 (58,056) 384,232 (1,994) 382,238 (5,562) 376,676
==============================================================================================================
CUMULATIVE PREFERRED
STOCK, $25 par value
--------------------------------------------------------------------------------------------------------------
Number of Shares
Authorized 3,000,000 3,000,000 3,000,000 3,000,000
Issued and Outstanding
==============================================================================================================
</TABLE>
In 1991 the Company sold 300,000 shares of convertible preferred stock to
the ESOP. The dividend rate on the preferred stock was 8.125% in 1994, 1993 and
1992. Each share of preferred stock is convertible into 4.8 shares of common
stock. The amount of total capitalization reflected in the consolidated
financial statements has been reduced by an amount of deferred compensation
expense related to the shares of convertible preferred stock which have not yet
been allocated to ESOP participants. The amount shown in the consolidated
financial statements for preferred dividend requirements in 1994, 1993 and 1992
has been reduced by $771,000, $840,000 and $919,000, respectively, to reflect
the benefit of the income tax deduction for dividend requirements on unallocated
shares held by the ESOP.
Preferred stock, other than the convertible preferred stock held by the
ESOP, is redeemable at the Company's option, subject to 30 days' prior written
notice to holders. Preferred stock subject to mandatory redemption is redeemable
annually through sinking funds or purchase funds at prices of not more than $100
per share until all shares have been redeemed. The convertible preferred stock
is redeemable at any time upon the occurrence of certain events and, after April
1, 1996, is redeemable at the Company's option. If the Company were to elect to
redeem the convertible preferred shares, shareholders may elect to receive the
optional redemption price or convert the preferred shares into common stock. The
redemption provisions for the various series of preferred stock are shown in the
following table.
Optional Redemption Mandatory Redemption
------------------- -------------------------
Price per Number of Price per
Series Share Shares Annually Share
-------------------------------------------------------------------------------
4.50% $101
4.50%, Series of 1955 $102 400 $100
4.65%, Series of 1964 $102 1,400 $100
4.75%, Series of 1965 $100 1,300 $100
Convertible, Series of 1991
Through April 1, 1996 $105.6875 to $104.875
Thereafter $104.0625 to $100
===============================================================================
-28-
Upon involuntary liquidation preferred shareholders are entitled to receive
par value for shares held before any distribution is made to common
shareholders. Upon voluntary liquidation preferred shareholders are entitled to
receive the redemption price per share applicable at the time such liquidation
occurs plus any accrued dividends. In 1993 no shares of the 4.65%, Series of
1964 preferred stock were tendered by shareholders in response to the Company's
offers to purchase shares in satisfaction of the annual purchase fund redemption
requirement; the Company's offers to purchase shares of the 4.75%, Series of
1965 preferred stock were accepted only in part by shareholders.
NOTE I -- PENSION PLAN AND EMPLOYEE BENEFITS
Substantially all employees are covered by a noncontributory, defined benefit
pension plan. Benefits under the plan reflect an employee's years of service,
age at retirement and highest total average compensation for any consecutive
five calendar years during the last ten years of employment with the Company.
The Company's policy is to fund contributions to the employee pension plan based
upon actuarial computations utilizing the projected unit credit method, subject
to the Internal Revenue Service full funding limitation. Consistent with
regulatory accounting practices prior to 1993, the Company recognized a
regulatory adjustment to accrued pension costs so that pension expense was equal
to the amount funded. No contributions to the pension plan were required during
the three-year period ended 1994. Effective January 1, 1993, the Company began
accounting for its pension plan on an accrual basis for ratemaking purposes with
the approval of the LPSC staff. Additionally, the previously recorded regulatory
credit is being amortized to income over a five-year period, subject to review
by the LPSC in future proceedings. The components of pension expense and the
actuarial assumptions for the three-year period ended 1994 were as follows:
(IN THOUSANDS)
1994 1993 1992
-------------------------------------------------------------------------------
Service costs for benefits earned
during the period $ 2,648 $ 2,559 $ 2,422
Interest costs on projected
benefit obligation 6,269 5,674 5,206
Actual gain on assets (8,730) (8,164) (4,175)
Special termination benefits 3,903
Net amortization and deferral (1,037) (1,109) (4,490)
-------------------------------------------------------------------------------
Net pension benefit cost (850) 2,863 (1,037)
Regulatory adjustment 1,037
-------------------------------------------------------------------------------
Net pension cost expensed $ (850) $ 2,863 $ 0
===============================================================================
Actuarial assumptions
Weighted average discount rate 7.50% 7.00% 8.50%
Rate of increase in future
compensation 5.00% 5.00% 6.40%
Rate of return on plan assets 9.50% 9.50% 9.50%
===============================================================================
Employee pension plan assets are invested in publicly traded domestic common
stocks, U.S. government, federal agency and corporate obligations, an
international equity fund, commercial real estate funds and pooled temporary
investments.
The employee pension plan's funded status as determined by the actuary at
December 31, 1994 and 1993, is presented in the following table.
(IN THOUSANDS)
1994 1993
-------------------------------------------------------------------------------
Actuarial present value of benefit obligation
Vested benefits $ (71,740) $ (68,463)
Nonvested benefits (3,149) (3,038)
-------------------------------------------------------------------------------
Accumulated benefit obligation (74,889) (71,501)
Effect of projected future compensation
levels (14,438) (14,547)
-------------------------------------------------------------------------------
Projected benefit obligation for service
rendered to date (89,327) (86,048)
Plan assets at fair market value 101,432 105,105
-------------------------------------------------------------------------------
Plan assets in excess of projected benefit
obligation 12,105 19,057
Unamortized transition asset (11,896) (13,214)
Unrecognized net (gain)/loss 3,504 (2,980)
-------------------------------------------------------------------------------
Accrued pension asset $ 3,713 $ 2,863
===============================================================================
Substantially all employees are eligible to participate in a savings and
investment plan (401(k) Plan). The Company makes matching contributions to
401(k) Plan participants by allocating shares of convertible preferred stock
held by the ESOP. Compensation expense related to the 401(k) Plan is based upon
the value of shares of preferred stock allocated to ESOP participants, and the
amount of interest incurred by the ESOP, less dividends on unallocated shares
held by the ESOP.
-29-
The table below contains information about the 401(k) Plan and the ESOP for
the three-year period ended 1994.
(IN THOUSANDS)
1994 1993 1992
-------------------------------------------------------------------------------
401(k) Plan expense $1,537 $1,449 $ 870
-------------------------------------------------------------------------------
Dividend requirements to ESOP on
convertible preferred stock $2,415 $2,434 $2,436
-------------------------------------------------------------------------------
Interest incurred by ESOP on
its indebtedness $2,008 $2,079 $1,535
-------------------------------------------------------------------------------
Company contributions to ESOP $1,205 $1,270 $ 325
===============================================================================
The Company's retirees and their dependents are eligible to receive health,
dental and life insurance benefits. Prior to 1993 the Company recognized the
cost of postretirement benefits as claims were paid, which was approximately
$764,000 in 1992. In 1993 the Company began recognizing the expected cost of
these benefits during the periods in which the benefits are earned.
The components of net postretirement benefit cost for 1994 and 1993 were
as follows:
(IN THOUSANDS)
1994 1993
-------------------------------------------------------------------------------
Service costs for benefits earned $ 640 $ 507
Interest costs 1,025 1,010
Amortization of transition obligation 567 572
Plan curtailment cost 441
Recognition of prior service costs 1,512
-------------------------------------------------------------------------------
Net postretirement benefit cost $2,232 $4,042
===============================================================================
The financial status of the postretirement benefit plan at December 31, 1994
and 1993, as determined by the actuary is presented in the following table.
(IN THOUSANDS)
1994 1993
-------------------------------------------------------------------------------
Accumulated benefit obligation
Retirees $ 10,042 $ 10,600
Fully eligible participants 2,412 1,181
Other active participants 2,758 3,070
-------------------------------------------------------------------------------
Total accumulated benefit obligation 15,212 14,851
Unamortized transition obligation (9,240) (9,753)
Unrecognized loss (949) (1,697)
-------------------------------------------------------------------------------
Accrued unfunded postretirement benefit liability $ 5,023 $ 3,401
===============================================================================
Effective October 1, 1993, the Company revised certain actuarial assumptions
used in the computation of postretirement benefit expense, which resulted in an
unrecognized gain of $961,000. The unrecognized gain was subsequently eliminated
against the increase in postretirement benefit costs due to the curtailment
associated with the restructuring.
The assumed health care cost trend rate used to measure the expected cost of
benefits was 10% in 1994, declining to 5.5% by 2006 and remains at 5.5%
thereafter. If the health care cost trend rate assumptions were increased by 1%,
the accumulated benefit obligation would be $15,796,000 at December 31, 1994,
and the aggregate of the service and interest cost components of the net
periodic cost of health care benefits would be $1,752,000 annually. The weighted
average assumed discount rate used to measure the accumulated benefit obligation
was changed from 7% to 7.5% in 1994 and resulted in an unrecognized gain. The
weighted average assumed discount rate used to measure the accumulated benefit
obligation in 1993 was changed from 8.5% to 7% and resulted in an unrecognized
loss.
In 1994 the Company announced a plan to consolidate 25 customer service
offices into ten regional offices by June 1995. This plan resulted in a
restructuring charge to 1994 earnings of $1,203,000. This charge consisted
mainly of voluntary severance benefits and customer service office lease
commitment costs. In 1993 the Company's organizational structure was
streamlined. The resulting reduction in staff was achieved through enhanced
early retirement and voluntary severance programs. The restructuring charge,
which totaled $10,851,000, included $3,903,000 for special pension termination
benefit costs, $1,953,000 for net postretirement plan curtailment costs, and
$4,995,000 for voluntary severance, relocation and other costs.
-30-
NOTE J -- INCOME TAXES
Federal income tax expense for the three-year period ended 1994 is less than
the amount computed by applying the statutory federal rate to book income
before tax as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT %)
1994 1993 1992
------------------------------------------------------------------------------------------------------------------------------
AMOUNT % Amount % Amount %
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Book income before tax $ 64,944 100.0 $ 61,377 100.0 $ 63,834 100.0
------------------------------------------------------------------------------------------------------------------------------
Tax at statutory rate on book income before tax $ 22,730 35.0 $ 21,482 35.0 $ 21,704 34.0
Increase (decrease):
Tax effect of AFUDC (805) (1.2) (1,063) (1.7) (663) (1.0)
Amortization of investment tax credits (1,819) (2.8) (1,827) (2.9) (1,830) (2.9)
Tax effect of prior-year tax
benefits not deferred 537 0.8 444 0.7 297 0.5
Other, net (3,219) (5.0) (2,194) (3.6) (2,263) (3.6)
------------------------------------------------------------------------------------------------------------------------------
Total federal income tax expense 17,424 26.8 16,842 27.5 17,245 27.0
------------------------------------------------------------------------------------------------------------------------------
Current state income tax expense 2,477 3.8 2,723 4.4 1,350 2.1
------------------------------------------------------------------------------------------------------------------------------
Total federal and state income tax expense $ 19,901 30.6 $ 19,565 31.9 $ 18,595 29.1
==============================================================================================================================
</TABLE>
Information about current and deferred income tax expense is as follows:
(IN THOUSANDS)
1994 1993 1992
-------------------------------------------------------------------------------
Current federal income tax expense $ 16,798 $ 17,342 $ 8,249
Deferred federal income tax expense 2,445 1,327 10,826
Amortization of accumulated deferred
investment tax credits (1,819) (1,827) (1,830)
-------------------------------------------------------------------------------
Total federal income tax expense 17,424 16,842 17,245
-------------------------------------------------------------------------------
Current state income tax expense 2,477 2,723 1,350
-------------------------------------------------------------------------------
Total federal and state income tax
expense $ 19,901 $ 19,565 $ 18,595
===============================================================================
Deferred federal income tax expense
attributable to:
Depreciation $ 4,466 $ 5,022 $ 4,852
Storm damages (340) 414 4,801
Asset basis differences (352) (882) 380
Employee benefits (455) (2,074)
Fuel costs (244) (620) 407
Other (630) (533) 386
-------------------------------------------------------------------------------
Total deferred federal income tax
expense $ 2,445 $ 1,327 $ 10,826
===============================================================================
Cumulative net amounts of temporary
differences for which deferred federal
income taxes have not been provided $ 21,480
===============================================================================
The balance of accumulated deferred federal and state income tax assets and
liabilities at December 31, 1994 and 1993, was comprised of the tax effect of
the following:
(IN THOUSANDS)
1994 1993
ASSET LIABILITY Asset Liability
--------------------------------------------------------------------------------
Depreciation and property basis
differences $ 5,690 $122,210 $ 4,974 $117,087
Allowance for funds used during
construction 41,933 42,110
Investment tax credits 21,979 23,116
Other 11,708 64,660 9,984 64,954
--------------------------------------------------------------------------------
Accumulated deferred federal and state
income taxes $39,377 $228,803 $38,074 $224,151
================================================================================
In 1993 there was no material effect on the Company's results of operations
from the implementation of the new accounting standard for income taxes or the
increase in the federal corporate income tax rate. Regulatory assets recorded
for deferred taxes at December 31, 1994 and 1993, were $125,356,000 and
$126,174,000 respectively. Regulatory liabilities recorded for deferred taxes at
December 31, 1994 and 1993, were $51,712,000 and $52,968,000, respectively.
Regulatory assets and liabilities will be realized over the accounting lives of
the related properties to the extent past ratemaking practices are continued by
regulators. Prior to 1993 deferred federal and state taxes were not provided for
these temporary differences due to their treatment for ratemaking purposes.
-31-
NOTE K -- COMMITMENTS AND CONTINGENCIES
Construction expenditures for 1995 are estimated to be $57,000,000, excluding
AFUDC, and for the five-year period ending 1999 are expected to total
$284,000,000, excluding AFUDC. Scheduled maturities of debt and preferred
stock will total about $15,000,000 for 1995 and approximately $57,000,000 for
the five-year period ending 1999.
The Company has entered into various long-term contracts for the procurement
of lignite, coal and natural gas to fuel its generating stations. Most of these
contracts contain provisions for price changes, minimum purchase levels and
other financial commitments.
The Company has accrued for liabilities to third parties, environmental
claims, employee medical benefits, storm damages and deductibles under insurance
policies which it maintains on major properties, primarily generating stations
and transmission substations. Consistent with regulatory treatment, annual
charges to operating expense to provide a reserve for future storm damages are
based upon the average amount of noncapital, uninsured storm damages experienced
by the Company during the previous five years.
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 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 exist for interest and, if assessed, penalties.
In early 1995 the Company and Teche Electric Cooperative, Inc. (Teche)
executed a purchase and sale agreement regarding a 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. Closing of the transaction is subject to a number of conditions,
including the approval by Teche members at their annual meeting on March 11,
1995, approval by governmental authorities, including the LPSC and the Rural
Utilities Service (formerly the Rural Electrification Administration),
successful resolution of Teche's power supply contract with Cajun Electric
Cooperative and certain other conditions.
The LPSC has scheduled a review of the Company's earnings in early 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 the results of its
operations.
NOTE L -- MISCELLANEOUS FINANCIAL INFORMATION (Unaudited)
Quarterly information for 1994 and 1993 is shown below.
(IN THOUSANDS,
EXCEPT PER SHARE AMOUNTS)
1994
--------------------------------------------------------------------------------
1ST 2ND 3RD 4TH
QUARTER QUARTER QUARTER QUARTER
--------------------------------------------------------------------------------
Operating revenues $84,147 $100,940 $112,633 $81,883
Operating income $14,779 $19,276 $24,093 $12,282
Net income applicable to common
stock $8,081 $12,268 $17,100 $5,568
Primary net income per average
common share $ .36 $ .55 $ .76 $ .25
Fully diluted net income per
average common share $ .35 $ .53 $ .73 $ .25
Dividends paid per common share $ .355 $ .365 $ .365 $ .365
Market price per share
High $24-7/8 $25-5/8 $24-3/8 $23-5/8
Low $21-1/4 $22-1/4 $21-1/4 $20-7/8
================================================================================
1993
--------------------------------------------------------------------------------
1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter
--------------------------------------------------------------------------------
Operating revenues $75,448 $92,070 $126,110 $88,805
Operating income $12,761 $17,523 $20,252 $14,209
Net income applicable to common
stock $7,024 $11,545 $13,665 $ 7,594
Primary net income per average
common share $ .31 $ .52 $ .61 $ .34
Fully diluted net income per
average common share $ .31 $ .50 $ .59 $ .33
Dividends paid per common share $ .345 $ .355 $ .355 $ .355
Market price per share
High $25-3/8 $26-3/4 $27-1/8 $ 27
Low $23-1/2 $24-3/4 $25-1/4 $ 23
================================================================================
The Company's common stock is listed for trading on the New York and Pacific
stock exchanges under the ticker symbol "CNL." The Company's preferred stock is
not listed on any stock exchange. On December 31, 1994, the Company had 12,683
common and 211 preferred shareholders as determined from the records of the
transfer agent.
On January 27, 1995, the Company's Board of Directors declared a quarterly
dividend of 36-1/2 cents per share payable February 15, 1995, to common
shareholders of record February 6, 1995.
-32-
REPORT OF MANAGEMENT
To the Shareholders of
Central Louisiana Electric Company, Inc.
The management of Central Louisiana Electric Company, Inc. is responsible
for the preparation of the financial statements and accompanying disclosures.
Financial information throughout this annual report is consistent with the
financial statements. The financial statements have been prepared in conformity
with generally accepted accounting principles and include amounts based upon
currently available facts and the informed estimates and judgments of
management.
Management maintains a system of internal accounting controls which it
believes is adequate to provide reasonable assurance as to the integrity of the
accounting records and the protection of assets. The system of internal
accounting controls is supported by written policies and procedures, by a staff
of internal auditors who conduct comprehensive internal audits, by the selection
and training of qualified personnel and by an organizational structure that
provides for appropriate delegation of authority and segregation of
responsibilities.
The Audit Committee of the Board of Directors, comprised entirely of outside
directors, meets periodically with management, internal auditors and the
Company's independent accountants to discuss accounting, auditing and financial
reporting matters. To ensure their independence, both the internal auditors and
the independent accountants have unrestricted access to the Audit Committee.
DAVID M. EPPLER
Vice President - Finance
JOHN L. BALTES, JR.
Controller
January 27, 1995
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Central Louisiana Electric Company, Inc.
We have audited the accompanying consolidated balance sheets of Central
Louisiana Electric Company, Inc. as of December 31, 1994 and 1993, and the
related consolidated statements of income, cash flows and changes in common
shareholders' equity for each of the three years in the period ended December
31, 1994. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based upon our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Central Louisiana Electric Company, Inc. as of December 31, 1994 and 1993, and
the consolidated results of its operations and its cash flows for each of the
three years in the period ended December 31, 1994, in conformity with generally
accepted accounting principles.
As discussed in Notes I and J to the consolidated financial statements, in
1993 the Company changed its method of accounting for postretirement benefits
other than pensions and income taxes.
COOPERS & LYBRAND L.L.P.
New Orleans, Louisiana
January 27, 1995
-33-
EXHIBIT 23
COOPERS
& LYBRAND L.L.P. certified public accountants
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statements of
Central Louisiana Electric Company, Inc. on Form S-8 (Registration Nos. 2-79671,
33-10169, 33-38362 and 33-44663) and Form S-3 (Nos. 33-24895, 33-61068, and
33-62950) of our reports dated January 27, 1995, on our audits of the
consolidated financial statements and financial statement schedule of Central
Louisiana Electric Company, Inc. as of December 31, 1994 and 1993 and for each
of the three years in the period ended December 31, 1994, which reports are
included or incorporated by reference in this Annual Report on Form 10-K.
COOPERS & LYBRAND L.L.P.
New Orleans, Louisiana
March 30, 1995
EXHIBIT 24
CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
POWER OF ATTORNEY
WHEREAS, Central Louisiana Electric Company, Inc., a Louisiana corporation
(the "Company"), intends to file with the Securities and Exchange Commission
(the "Commission") under the Securities Exchange Act of 1934, as amended (the
"Act"), an Annual Report on Form 10-K (the "Form 10-K") for the Company's fiscal
year ended December 31, 1994, with any and all amendments thereto as may be
necessary or appropriate, together with any and all exhibits and other documents
having relation to the Form 10-K;
NOW, THEREFORE, the undersigned, in the capacity of a director or officer
or both a director and officer of the Company, as the case may be, does hereby
appoint Gregory L. Nesbitt and David M. Eppler, and each of them severally, his
true and lawful attorney(s)-in-fact and agent(s) with power to act without the
other, with full power of substitution and resubstitution, to execute in his
name, place and stead, in any and all capacities, the Form 10-K and any and all
amendments thereto and any and all instruments necessary or incidental in
connection therewith, to file the same with the Commission and to appear before
the Commission in connection with any matter relating thereto. Each of said
attorneys-in-fact and agents shall have full power and authority to do and
perform in the name and on behalf of the undersigned, in any and all capacities,
every act whatsoever necessary or desirable to be done in the premises, as fully
and to all intents and purposes as the undersigned might or could do in person,
the undersigned hereby ratifying, approving and confirming the acts that said
attorneys-in-fact and agents and each of them, or their or his substitutes or
substitute, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney as
of the 27th day of January, 1995.
SHERIAN G. CADORIA
<PAGE>
CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
POWER OF ATTORNEY
WHEREAS, Central Louisiana Electric Company, Inc., a Louisiana corporation
(the "Company"), intends to file with the Securities and Exchange Commission
(the "Commission") under the Securities Exchange Act of 1934, as amended (the
"Act"), an Annual Report on Form 10-K (the "Form 10-K") for the Company's fiscal
year ended December 31, 1994, with any and all amendments thereto as may be
necessary or appropriate, together with any and all exhibits and other documents
having relation to the Form 10-K;
NOW, THEREFORE, the undersigned, in the capacity of a director or officer
or both a director and officer of the Company, as the case may be, does hereby
appoint Gregory L. Nesbitt and David M. Eppler, and each of them severally, his
true and lawful attorney(s)-in-fact and agent(s) with power to act without the
other, with full power of substitution and resubstitution, to execute in his
name, place and stead, in any and all capacities, the Form 10-K and any and all
amendments thereto and any and all instruments necessary or incidental in
connection therewith, to file the same with the Commission and to appear before
the Commission in connection with any matter relating thereto. Each of said
attorneys-in-fact and agents shall have full power and authority to do and
perform in the name and on behalf of the undersigned, in any and all capacities,
every act whatsoever necessary or desirable to be done in the premises, as fully
and to all intents and purposes as the undersigned might or could do in person,
the undersigned hereby ratifying, approving and confirming the acts that said
attorneys-in-fact and agents and each of them, or their or his substitutes or
substitute, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney as
of the 27th day of January, 1995.
J. PATRICK GARRETT
<PAGE>
CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
POWER OF ATTORNEY
WHEREAS, Central Louisiana Electric Company, Inc., a Louisiana corporation
(the "Company"), intends to file with the Securities and Exchange Commission
(the "Commission") under the Securities Exchange Act of 1934, as amended (the
"Act"), an Annual Report on Form 10-K (the "Form 10-K") for the Company's fiscal
year ended December 31, 1994, with any and all amendments thereto as may be
necessary or appropriate, together with any and all exhibits and other documents
having relation to the Form 10-K;
NOW, THEREFORE, the undersigned, in the capacity of a director or officer
or both a director and officer of the Company, as the case may be, does hereby
appoint Gregory L. Nesbitt and David M. Eppler, and each of them severally, his
true and lawful attorney(s)-in-fact and agent(s) with power to act without the
other, with full power of substitution and resubstitution, to execute in his
name, place and stead, in any and all capacities, the Form 10-K and any and all
amendments thereto and any and all instruments necessary or incidental in
connection therewith, to file the same with the Commission and to appear before
the Commission in connection with any matter relating thereto. Each of said
attorneys-in-fact and agents shall have full power and authority to do and
perform in the name and on behalf of the undersigned, in any and all capacities,
every act whatsoever necessary or desirable to be done in the premises, as fully
and to all intents and purposes as the undersigned might or could do in person,
the undersigned hereby ratifying, approving and confirming the acts that said
attorneys-in-fact and agents and each of them, or their or his substitutes or
substitute, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney as
of the 27th day of January, 1995.
F. BEN JAMES, JR.
<PAGE>
CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
POWER OF ATTORNEY
WHEREAS, Central Louisiana Electric Company, Inc., a Louisiana corporation
(the "Company"), intends to file with the Securities and Exchange Commission
(the "Commission") under the Securities Exchange Act of 1934, as amended (the
"Act"), an Annual Report on Form 10-K (the "Form 10-K") for the Company's fiscal
year ended December 31, 1994, with any and all amendments thereto as may be
necessary or appropriate, together with any and all exhibits and other documents
having relation to the Form 10-K;
NOW, THEREFORE, the undersigned, in the capacity of a director or officer
or both a director and officer of the Company, as the case may be, does hereby
appoint Gregory L. Nesbitt and David M. Eppler, and each of them severally, his
true and lawful attorney(s)-in-fact and agent(s) with power to act without the
other, with full power of substitution and resubstitution, to execute in his
name, place and stead, in any and all capacities, the Form 10-K and any and all
amendments thereto and any and all instruments necessary or incidental in
connection therewith, to file the same with the Commission and to appear before
the Commission in connection with any matter relating thereto. Each of said
attorneys-in-fact and agents shall have full power and authority to do and
perform in the name and on behalf of the undersigned, in any and all capacities,
every act whatsoever necessary or desirable to be done in the premises, as fully
and to all intents and purposes as the undersigned might or could do in person,
the undersigned hereby ratifying, approving and confirming the acts that said
attorneys-in-fact and agents and each of them, or their or his substitutes or
substitute, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney as
of the 27th day of January, 1995.
HUGH J. KELLY
<PAGE>
CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
POWER OF ATTORNEY
WHEREAS, Central Louisiana Electric Company, Inc., a Louisiana corporation
(the "Company"), intends to file with the Securities and Exchange Commission
(the "Commission") under the Securities Exchange Act of 1934, as amended (the
"Act"), an Annual Report on Form 10-K (the "Form 10-K") for the Company's fiscal
year ended December 31, 1994, with any and all amendments thereto as may be
necessary or appropriate, together with any and all exhibits and other documents
having relation to the Form 10-K;
NOW, THEREFORE, the undersigned, in the capacity of a director or officer
or both a director and officer of the Company, as the case may be, does hereby
appoint Gregory L. Nesbitt and David M. Eppler, and each of them severally, his
true and lawful attorney(s)-in-fact and agent(s) with power to act without the
other, with full power of substitution and resubstitution, to execute in his
name, place and stead, in any and all capacities, the Form 10-K and any and all
amendments thereto and any and all instruments necessary or incidental in
connection therewith, to file the same with the Commission and to appear before
the Commission in connection with any matter relating thereto. Each of said
attorneys-in-fact and agents shall have full power and authority to do and
perform in the name and on behalf of the undersigned, in any and all capacities,
every act whatsoever necessary or desirable to be done in the premises, as fully
and to all intents and purposes as the undersigned might or could do in person,
the undersigned hereby ratifying, approving and confirming the acts that said
attorneys-in-fact and agents and each of them, or their or his substitutes or
substitute, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney as
of the 27th day of January, 1995.
WILLIAM A. LOCKWOOD
<PAGE>
CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
POWER OF ATTORNEY
WHEREAS, Central Louisiana Electric Company, Inc., a Louisiana corporation
(the "Company"), intends to file with the Securities and Exchange Commission
(the "Commission") under the Securities Exchange Act of 1934, as amended (the
"Act"), an Annual Report on Form 10-K (the "Form 10-K") for the Company's fiscal
year ended December 31, 1994, with any and all amendments thereto as may be
necessary or appropriate, together with any and all exhibits and other documents
having relation to the Form 10-K;
NOW, THEREFORE, the undersigned, in the capacity of a director or officer
or both a director and officer of the Company, as the case may be, does hereby
appoint Gregory L. Nesbitt and David M. Eppler, and each of them severally, his
true and lawful attorney(s)-in-fact and agent(s) with power to act without the
other, with full power of substitution and resubstitution, to execute in his
name, place and stead, in any and all capacities, the Form 10-K and any and all
amendments thereto and any and all instruments necessary or incidental in
connection therewith, to file the same with the Commission and to appear before
the Commission in connection with any matter relating thereto. Each of said
attorneys-in-fact and agents shall have full power and authority to do and
perform in the name and on behalf of the undersigned, in any and all capacities,
every act whatsoever necessary or desirable to be done in the premises, as fully
and to all intents and purposes as the undersigned might or could do in person,
the undersigned hereby ratifying, approving and confirming the acts that said
attorneys-in-fact and agents and each of them, or their or his substitutes or
substitute, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney as
of the 27th day of January, 1995.
A. DELOACH MARTIN, JR.
<PAGE>
CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
POWER OF ATTORNEY
WHEREAS, Central Louisiana Electric Company, Inc., a Louisiana corporation
(the "Company"), intends to file with the Securities and Exchange Commission
(the "Commission") under the Securities Exchange Act of 1934, as amended (the
"Act"), an Annual Report on Form 10-K (the "Form 10-K") for the Company's fiscal
year ended December 31, 1994, with any and all amendments thereto as may be
necessary or appropriate, together with any and all exhibits and other documents
having relation to the Form 10-K;
NOW, THEREFORE, the undersigned, in the capacity of a director or officer
or both a director and officer of the Company, as the case may be, does hereby
appoint Gregory L. Nesbitt and David M. Eppler, and each of them severally, his
true and lawful attorney(s)-in-fact and agent(s) with power to act without the
other, with full power of substitution and resubstitution, to execute in his
name, place and stead, in any and all capacities, the Form 10-K and any and all
amendments thereto and any and all instruments necessary or incidental in
connection therewith, to file the same with the Commission and to appear before
the Commission in connection with any matter relating thereto. Each of said
attorneys-in-fact and agents shall have full power and authority to do and
perform in the name and on behalf of the undersigned, in any and all capacities,
every act whatsoever necessary or desirable to be done in the premises, as fully
and to all intents and purposes as the undersigned might or could do in person,
the undersigned hereby ratifying, approving and confirming the acts that said
attorneys-in-fact and agents and each of them, or their or his substitutes or
substitute, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney as
of the 27th day of January, 1995.
ROBERT T. RATCLIFF
<PAGE>
CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
POWER OF ATTORNEY
WHEREAS, Central Louisiana Electric Company, Inc., a Louisiana corporation
(the "Company"), intends to file with the Securities and Exchange Commission
(the "Commission") under the Securities Exchange Act of 1934, as amended (the
"Act"), an Annual Report on Form 10-K (the "Form 10-K") for the Company's fiscal
year ended December 31, 1994, with any and all amendments thereto as may be
necessary or appropriate, together with any and all exhibits and other documents
having relation to the Form 10-K;
NOW, THEREFORE, the undersigned, in the capacity of a director or officer
or both a director and officer of the Company, as the case may be, does hereby
appoint Gregory L. Nesbitt and David M. Eppler, and each of them severally, his
true and lawful attorney(s)-in-fact and agent(s) with power to act without the
other, with full power of substitution and resubstitution, to execute in his
name, place and stead, in any and all capacities, the Form 10-K and any and all
amendments thereto and any and all instruments necessary or incidental in
connection therewith, to file the same with the Commission and to appear before
the Commission in connection with any matter relating thereto. Each of said
attorneys-in-fact and agents shall have full power and authority to do and
perform in the name and on behalf of the undersigned, in any and all capacities,
every act whatsoever necessary or desirable to be done in the premises, as fully
and to all intents and purposes as the undersigned might or could do in person,
the undersigned hereby ratifying, approving and confirming the acts that said
attorneys-in-fact and agents and each of them, or their or his substitutes or
substitute, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney as
of the 27th day of January, 1995.
EDWARD D. SIMMONS
<PAGE>
CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
POWER OF ATTORNEY
WHEREAS, Central Louisiana Electric Company, Inc., a Louisiana corporation
(the "Company"), intends to file with the Securities and Exchange Commission
(the "Commission") under the Securities Exchange Act of 1934, as amended (the
"Act"), an Annual Report on Form 10-K (the "Form 10-K") for the Company's fiscal
year ended December 31, 1994, with any and all amendments thereto as may be
necessary or appropriate, together with any and all exhibits and other documents
having relation to the Form 10-K;
NOW, THEREFORE, the undersigned, in the capacity of a director or officer
or both a director and officer of the Company, as the case may be, does hereby
appoint Gregory L. Nesbitt and David M. Eppler, and each of them severally, his
true and lawful attorney(s)-in-fact and agent(s) with power to act without the
other, with full power of substitution and resubstitution, to execute in his
name, place and stead, in any and all capacities, the Form 10-K and any and all
amendments thereto and any and all instruments necessary or incidental in
connection therewith, to file the same with the Commission and to appear before
the Commission in connection with any matter relating thereto. Each of said
attorneys-in-fact and agents shall have full power and authority to do and
perform in the name and on behalf of the undersigned, in any and all capacities,
every act whatsoever necessary or desirable to be done in the premises, as fully
and to all intents and purposes as the undersigned might or could do in person,
the undersigned hereby ratifying, approving and confirming the acts that said
attorneys-in-fact and agents and each of them, or their or his substitutes or
substitute, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney as
of the 27th day of January, 1995.
ERNEST L. WILLIAMSON
<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
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 912,132
<OTHER-PROPERTY-AND-INVEST> 20,327
<TOTAL-CURRENT-ASSETS> 46,663
<TOTAL-DEFERRED-CHARGES> 191,208
<OTHER-ASSETS> 7,861
<TOTAL-ASSETS> 1,178,191
<COMMON> 45,440
<CAPITAL-SURPLUS-PAID-IN> 106,389
<RETAINED-EARNINGS> 211,198
<TOTAL-COMMON-STOCKHOLDERS-EQ> 363,027
6,920
6,344
<LONG-TERM-DEBT-NET> 170,784
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 165,000
<COMMERCIAL-PAPER-OBLIGATIONS> 28,977
<LONG-TERM-DEBT-CURRENT-PORT> 14,171
0
<CAPITAL-LEASE-OBLIGATIONS> 805
<LEASES-CURRENT> 505
<OTHER-ITEMS-CAPITAL-AND-LIAB> 421,658
<TOT-CAPITALIZATION-AND-LIAB> 1,178,191
<GROSS-OPERATING-REVENUE> 379,603
<INCOME-TAX-EXPENSE> 19,901
<OTHER-OPERATING-EXPENSES> 289,272
<TOTAL-OPERATING-EXPENSES> 309,173
<OPERATING-INCOME-LOSS> 70,430
<OTHER-INCOME-NET> 987
<INCOME-BEFORE-INTEREST-EXPEN> 71,417
<TOTAL-INTEREST-EXPENSE> 26,374
<NET-INCOME> 45,043
2,026
<EARNINGS-AVAILABLE-FOR-COMM> 43,017
<COMMON-STOCK-DIVIDENDS> 32,475
<TOTAL-INTEREST-ON-BONDS> 14,157
<CASH-FLOW-OPERATIONS> 88,796
<EPS-PRIMARY> 1.92
<EPS-DILUTED> 1.86
</TABLE>
