<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[8] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998 Commission file number 1-5663
Or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
CLECO CORPORATION
(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 the 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 23, 1999, the aggregate value of the Registrant's voting stock
held by non-affiliates was $640,214,956. 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 February 23, 1999, there were 22,523,668 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, 1998 (1998 Annual Report to Shareholders), furnished to the
Securities and Exchange Commission pursuant to Rule 14a - 3(c) under the
Securities Exchange Act of 1934, are filed as Exhibit 13 to this report and
incorporated by reference into Part II herein. Portions of the Registrant's
definitive Proxy Statement and Prospectus dated March 25, 1999, for the Annual
Meeting of Shareholders to be held on April 23, 1999, are incorporated by
reference into Part III herein.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Disclosure Regarding Forward-Looking Statements............................ 1
PART I
Item 1. Business
General..................................................... 3
Electric Operations......................................... 3
Regulatory and Environmental Matters........................ 9
Other Events................................................ 16
Item 2. Properties....................................................... 16
Item 3. Legal Proceedings................................................ 17
Item 4. Submission of Matters to a Vote
of Security Holders......................................... 18
Executive Officers of the Registrant............................. 19
PART II
Item 5. Market for Registrant's Common Equity
and Related Stockholder Matters............................. 21
Item 6. Selected Financial Data.......................................... 21
Item 7. Management's Discussion and Analysis of
Results of Operations and Financial Condition.................... 22
Item 7A. Quantitative and Qualitative Disclosures
About Market Risk........................................... 22
Item 8. Financial Statements and
Supplementary Data.......................................... 22
Item 9. Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure........................................ 22
PART III
Item 10. Directors and Executive Officers
of the Registrant.......................................... 23
Item 11. Executive Compensation.......................................... 23
Item 12. Security Ownership of Certain Beneficial
Owners and Management...................................... 23
Item 13. Certain Relationships and Related
Transactions............................................... 23
PART IV
Item 14. Exhibits, Financial Statement
Schedule, and Reports on Form 8-K.......................... 24
</TABLE>
<PAGE>
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This Report includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. All statements other than
statements of historical fact included in this Report, including, without
limitation, the statements under "Business -- Electric Operations -- Sales,"
"Regulatory and Environmental Matters -- Industry Developments," "-- Regulatory
and Environmental Matters -- Environmental Quality," "Management's Discussion
and Analysis of Results of Operations and Financial Condition -- Industry
Developments," "-- Results of Operations," "-- Financial Condition -- Liquidity
and Capital Resources," "-- Financial Condition -- Regulatory Matters" and Note
N to the Consolidated Financial Statements, contain forward-looking statements.
Located elsewhere in this Report are forward-looking statements regarding sales
growth, capital expenditures, the settlement of the Company's earnings review
approved by the Louisiana Public Service Commission (LPSC) in October 1996, the
Company's shelf registration statement, the effect of certain recent Federal
Energy Regulatory Commission (FERC) regulations, future legislative and
regulatory changes affecting electric utilities, and other matters. Although the
Company believes that the expectations reflected in such forward-looking
statements are reasonable, such forward-looking statements are based on numerous
assumptions (some of which may prove to be incorrect) and are subject to risks
and uncertainties which could cause the actual results to differ materially from
the Company's expectations. Forward-looking statements have been and will be
made in written documents and oral presentations of the Company. Such statements
are based on management's beliefs as well as assumptions made by and information
currently available to management. When used in the Company's documents or oral
presentations, the words "anticipate," "estimate," "expect," "objective,"
"projection," "forecast," "goal" and similar expressions are intended to
identify forward-looking statements. In addition to any assumptions and other
factors referred to specifically in connection with such forward-looking
statements, factors that could cause the Company's actual results to differ
materially from those contemplated in any forward-looking statements include,
among others, the following:
Factors affecting utility operations such as unusual weather
conditions; catastrophic weather-related damage; unscheduled generation
outages; unusual maintenance or repairs; unanticipated changes to fuel
costs, gas supply costs, or availability constraints due to higher
demand, shortages, transportation problems or other developments;
environmental incidents; or electric transmission or gas pipeline
system constraints;
Increased competition in the electric environment, including effects of
industry restructuring, transmission system operation or
administration, retail wheeling or cogeneration;
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Regulatory factors such as unanticipated changes in rate-setting
policies or procedures; recovery of investments made under traditional
regulation; and the frequency and timing of rate increases;
Financial or regulatory accounting principles or policies imposed by
the Financial Accounting Standards Board, the Securities and Exchange
Commission (SEC), the FERC, the LPSC or similar entities with
regulatory or accounting oversight;
Economic conditions, including inflation rates and monetary
fluctuations;
Changing market conditions and a variety of other factors associated
with physical energy and financial trading activities, including, but
not limited to, price, basis, credit, liquidity, volatility, capacity,
transmission, interest rate and warranty risks;
Availability or cost of capital resulting from changes in the Company,
interest rates, and securities ratings or market perceptions of the
electric utility industry and energy related industries;
Employee work force factors, including changes in key executives;
Legal and regulatory delays and other obstacles associated with
mergers, acquisitions, capital projects, reorganizations or investments
in joint ventures;
Cost and other effects of legal and administrative proceedings,
settlements, investigations, claims and other matters; and
Changes in federal, state or local legislature requirements, such as
changes in tax laws or rates, regulating policies, or environmental
laws and regulations.
The Company undertakes no obligation to update or revise any
forward-looking statements, whether as a result of changes in actual results,
changes in assumptions or other factors affecting such statements.
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PART I
ITEM 1. BUSINESS
GENERAL
Cleco Corporation (the Company) was incorporated January 2, 1935 under the
laws of the State of Louisiana and is engaged principally in the generation,
transmission, distribution and sale of electric energy to approximately 242,000
customers in 63 communities and contiguous rural areas in a 14,000-square-mile
region in the State of Louisiana. At December 31, 1998, the Company employed
1,210 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 is 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 and state
regulation of the generation, transmission and sale of electricity. For a
discussion of various regulatory changes and competitive forces affecting the
Company and other electric utilities, see "Regulatory and Environmental Matters
- -- Industry Developments" below.
POWER GENERATION
The Company operates and either owns or has an ownership interest in four
steam electric generating stations and a gas turbine. The Company is the sole
owner of Coughlin Power Station (CPS), 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, 1998, the Company's aggregate electric
generating capacity was 1,693,000 kilowatts (excluding the Company's 20,000
kilowatts of firm purchases from the Sabine River Authority). The following
table sets forth certain information with respect to the Company's generating
facilities.
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<TABLE>
<CAPTION>
YEAR CAPACITY TYPE OF
OF AT FUEL
GENERATING INITIAL 12/31/98 USED FOR
GENERATING STATION UNIT # OPERATION (KILOWATTS) GENERATION (1)
------------------ ------ --------- ----------- --------------
<S> <C> <C> <C> <C>
Franklin Gas Turbine 1973 7,000 gas
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 1,693,000
=========
</TABLE>
(1) When 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.
FUEL AND PURCHASED POWER
Changes in fuel and purchased power expenses reflect fluctuations in
generation fuel mix, fuel costs, availability of economic purchased power and
deferral of expenses for recovery from customers through fuel adjustment clauses
in subsequent months.
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
------- ---- --- --------
COST COST COST COST AVERAGE
PER PERCENT PER PERCENT PER PERCENT PER PERCENT COST 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>
1998 15.85 32.0 14.88 16.7 25.38 51.3 - - 20.57
1997 14.85 36.7 17.06 19.1 29.85 44.2 - - 21.90
1996 15.45 38.1 16.67 21.3 30.06 39.8 26.09 0.8 21.61
1995 14.86 35.9 18.88 14.3 19.48 49.8 24.77 0.0 17.74
1994 15.09 36.5 19.53 16.0 22.28 47.4 21.00 0.1 19.22
</TABLE>
Power Purchases
The Company purchases electric energy from neighboring utilities when the
price of the energy purchased is less than the Company's cost of generating such
energy from its own facilities or when it needs power to supplement its own
electric generation if transmission capacity is available. Additionally, the
Company has a long-term contract under which it purchases a small percentage of
its total annual energy requirements from a hydroelectric generating plant.
In 1998, the amount of power purchased increased, compared to 1997, as a
result of the increased demand for electric energy and several unexpected
mechanical problems at the
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Company's generating facilities during the summer months. The following table
sets forth the amounts of power purchased by the Company on the wholesale
market for the years indicated.
<TABLE>
<CAPTION>
% OF TOTAL
MILLION ENERGY
KWH REQUIREMENTS
----------- ------------
<S> <C> <C>
1998 2,117 24%
1997 1,924 24%
1996 2,529 33%
1995 1,430 19%
1994 818 11%
</TABLE>
For information with respect to the Company's ability to currently pass through
changes in costs of fuel to its customers, see "Regulatory and Environmental
Matters -- Rates" below.
Natural Gas Supply
During 1998, the Company purchased a total of 38,431 billion British
thermal units (MMBtu) 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.
<TABLE>
<CAPTION>
AVERAGE
AMOUNT
1998 PURCHASED PERCENT
PURCHASES PER DAY OF TOTAL
NATURAL GAS SUPPLIER (MMMBTU) (MMMBTU) GAS USED
-------------------- --------- --------- ----------
<S> <C> <C> <C>
Noram 3,615 9.9 9.4%
Louisiana Intrastate Gas
Corporation (LIG) 3,148 8.6 8.2%
Columbia Energy Services 4,030 11.0 10.5%
Western Gas Resources 5,131 14.1 13.3%
Amoco 2,874 7.9 7.5%
Natural Gas Clearinghouse 1,631 4.5 4.2%
Cleco Energy (1) 5,031 13.8 13.1%
Southern Company Energy Marketing 2,380 6.5 6.2%
Other 10,591 29.0 27.6%
------ ---- -----
38,431 105.3 100.0%
====== ===== ======
</TABLE>
(1) The Company has an equity interest of 44.37% and a voting interest of 51%
in Cleco Energy.
A wholly-owned subsidiary of the Company, CLE Intrastate Pipeline Company,
Inc. (CLE Intrastate), owns a series of natural gas interconnections with
Trunkline Gas Company (Trunkline), a subsidiary of Duke Energy Corp.; Columbia
Gulf Transmission Co. (Columbia), a subsidiary of the Columbia Gas Systems,
Inc.; and ANR Pipeline Company (ANR), a Coastal Corporation subsidiary. The
pipeline interconnections have allowed the Company to access various additional
natural gas supply markets, which helps to maintain the competitiveness of the
Company's generating units.
Natural gas was plentiful and available without interruption throughout
1998. The Company currently meets, and expects to continue to meet, its natural
gas requirements with purchases on the spot market through daily, monthly and
seasonal contracts with various natural gas suppliers. However, future supplies
to the Company remain vulnerable to disruptions due to weather events
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and transportation disruptions. The potential for disruptions to the Company
has been decreased by the addition of the CLE Intrastate interconnections.
Nevertheless, large boiler fuel users of natural gas, including electric
utilities, generally have low priority among gas users in the event pipeline
suppliers are forced to curtail deliveries due to inadequate supplies. As a
result, supplies of natural gas may become unavailable from time to time, or
prices may increase rapidly in response to temporary supply disruptions. Such
events, though rare, 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 generation
resources, are adequate to meet its fuel needs during any temporary
interruption of natural gas supplies.
Coal and Lignite Supply
The majority of the coal for Rodemacher Unit 2 is purchased from mines in
Wyoming under a long-term contract expiring in 2007 with Jacobs Ranch Coal
Company (formerly owned by Kerr-McGee Coal Corporation). The contract has been
modified under price reopener procedures which were initiated in early 1997. The
pricing structure under the modified contract has been defined through mid 2002.
Provisions for pricing and terms can be renegotiated under a contract reopener
provision in early 2002. After purchasing a given annual quantity of base coal
(approximately 500,000 tons in 1998), the Company has the right to purchase coal
from third parties in the spot market through competitive bidding.
The coal for Rodemacher Unit 2 is transported under a long-term rail
transportation contract with the Union Pacific Railroad (Union Pacific). In
1997, Union Pacific began experiencing operating problems which resulted in
reduced volumes delivered to the unit. Union Pacific increased volumes being
delivered to Rodemacher Unit 2 in January and February of 1999, indicating that
Union Pacific is recovering. The Company's coal inventory at Rodemacher Unit 2
is currently above its desired minimum level. Based on Union Pacific's improved
performance and its anticipated delivery schedule of future coal shipments,
management does not expect that Rodemacher Unit 2 operations will need to be
curtailed due to insufficient fuel supply. The Company continuously monitors
this situation.
Substantially all of the lignite used to fuel Dolet Hills Unit 1 is
obtained under two long-term agreements. The Company and Southwestern Electric
Power Company (SWEPCO), each a 50% 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 expiring in 2011 with
the Dolet Hills Mining Venture (DHMV) for the mining and delivery of such
lignite reserves. These reserves are expected to provide a substantial portion
of the fuel requirements for the projected operating life of Dolet Hills Unit 1.
The Company's minimum annual purchase requirement is 1,187,500 tons. 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. Additional spot lignite may be obtained through competitive bidding. For
information regarding the Company's legal proceedings against the DHMV, see
"Legal Proceedings" in Part I of this Report.
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Additionally, the Company and SWEPCO have entered into a long-term
agreement expiring in 2011 with Red River Mining Co., a joint venture of the
North American Coal Corporation and Phillips Coal Company, which provides for
base contract purchases and spot purchases of lignite. The Company's minimum
annual purchase requirement is 275,000 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 determined through
competitive bidding.
The continuous supply of coal and lignite from the mining sources described
above may be subject to interruption due to adverse weather conditions or other
factors which may disrupt mining operations or transportation. At December 31,
1998, the Company's coal inventory at Rodemacher Unit 2 was approximately 69,801
tons (about a 34-day supply), and the Company's lignite inventory at Dolet Hills
Unit 1 was approximately 160,507 tons (about a 28-day supply).
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.
However, in accordance with the Company's current fuel oil inventory practices,
at December 31, 1998, the Company had between 5 to 10 days supply of fuel oil
stored at its generating stations. During 1998, no barrels of fuel oil were
burned.
SALES
The Company is a "public utility" engaged principally in the generation,
transmission, distribution and sale of electricity 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.
<TABLE>
<CAPTION>
SALES (MILLION KWH)
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Residential 3,230 2,838 2,723
Commercial 1,529 1,393 1,338
Industrial 2,518 2,467 2,369
Other retail 555 533 526
Sales for resale 402 311 291
--- --- ---
Total sales to regular customers 8,234 7,542 7,247
Short-term sales to other utilities 76 157 330
-- --- ---
Total kilowatt-hour sales 8,310 7,699 7,577
===== ===== =====
</TABLE>
The Company's 1998 system peak demand occurred in August and was 1,627,000
kilowatts. Sales and peak demand are affected and influenced by weather and are
generally highest during the summer air-conditioning and winter heating
seasons. For information concerning the financial effects of seasonal demand on
the Company's quarterly operating results, see Note O to
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the Consolidated Financial Statements on page 31 of the 1998 Annual Report to
Shareholders, which is filed as Exhibit 13 to this Report and incorporated
herein by reference.
The Company expects the peak demand on the system to grow at a compound
annual rate of approximately 2.1% over the next five years. The Company's
capacity reserve margin for 1998 was 5.0%. To meet the Company's capacity
reserve margin for 1999, the Company has purchased 120 megawatt (MW) of firm
capacity and transmission service for the summer months of June through
September and another 35 of non-firm capacity. The Company believes it can meet
its anticipated growth in customer demand by purchasing the needed capacity on
the wholesale market. Future capacity needs may be met by continuing to purchase
power on the wholesale market, adding capacity to existing power plants or
building new power plants. Currently, management is pursuing the construction of
a new power plant to be owned by an affiliated company. See Note M to the
Consolidated Financial Statements of the 1998 Annual Report to Shareholders,
which is filed as Exhibit 13 to this Report and incorporated herein by
reference.
No customer accounted for 10% or more of the Company's revenues in 1998.
Additional information regarding the Company's sales and revenues is set forth
in "Results of Operations" in "Management's Discussion and Analysis of Results
of Operations and Financial Condition" on pages 3 through 5 of the 1998 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, financing and
related matters, see "Financial Condition" in "Management's Discussion and
Analysis of Results of Operations and Financial Condition" on pages 7 through 11
of the 1998 Annual Report to Shareholders, which is filed as Exhibit 13 to this
Report and incorporated herein by reference.
SABINE TEXICAN PIPELINE ACQUISITION
On August 1, 1998, Cleco Energy, LLC (Energy), a joint venture between the
Company and Covenant Energy Corporation of Houston, purchased all of the capital
stock of Sabine Texican Pipeline Company (Sabine) of Lufkin, Texas . Sabine is
an energy company engaged in the exploration, production, gathering, marketing
and transmission of natural gas. Energy paid the sole shareholder of Sabine $2.5
million and gave him a 13% equity interest in Energy. Sabine has approximately
$24.3 million in assets, $7 million in current liabilities and $7.1 million in
long term debt. The acquisition added 415 miles of gathering and transmission
pipeline in Texas and Louisiana, serving wholesale customers, as well as oil and
gas producing properties in West Texas. After the acquisition of Sabine, the
Company has a 44.37% equity interest and a 51% voting interest in Energy. For
information regarding the Company's commitment to provide credit support to the
venture, see "Financial Condition -- Cash Generation and Cash Requirements" in
"Management's Discussion and Analysis of Results of Operations and
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Financial Condition" on page 8 of the 1998 Annual Report to Shareholders, which
is filed as Exhibit 13 to this Report and incorporated herein by reference.
REGULATORY AND ENVIRONMENTAL MATTERS
RATES
Retail electric operations of the Company are subject to the jurisdiction
of the LPSC with respect to rates, standards of service, accounting and other
matters. The Company is also subject to the jurisdiction of the FERC with
respect to certain aspects of its electric business, including rates for
wholesale service, interconnections with other utilities, and the transmission
of power. 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 generation, transmission and distribution
facilities.
The Company's electric rates include a fuel and purchased power cost
adjustment clause which enables the Company to adjust rates for monthly
fluctuations in the cost of fuel and short-term purchased power. Pretax income
from certain off-system sales to other utilities is passed on to customers
through a reduction in fuel cost adjustment billing factors. 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 can result in over- or
under-recovery for the period in which the adjustment is made. Any over- or
under-recovery is corrected by an adjustment in later periods. As of December
31, 1998, the net accumulated liability for over-recovery on sales subject to
the LPSC's jurisdiction was approximately $4.6 million.
The LPSC elected in 1993 to review the earnings of all electric, gas, water
and telecommunications utilities regulated by it to determine whether the
returns on equity of these companies may be higher than returns that might be
awarded in the current economic environment. In 1996, the LPSC approved a
settlement of the Company's earnings review, providing the Company's customers
with lower electricity rates phased in through two base rate reductions. The
first rate decrease, of $3 million annually, was effective November 1, 1996,
with a second decrease, of an additional $2 million annually, effective January
1, 1998. The terms of this settlement are effective for a five-year period. In
February 1999, the Company and the LPSC came to an agreement to extend the
period for an additional three years and transfer the assets of the CPS to an
affiliate of the Company. For information regarding the Company's agreement, see
Note M to the Consolidated Financial Statements on page 31 of the 1998 Annual
Report to Shareholders, which is filed as Exhibit 13 to this Report and
incorporated herein by reference
During the approximate eight-year period, which began November 1, 1996 and
extends to 2004, a rate stabilization plan was also placed in effect. This plan
allows the Company to retain all earnings equating to a regulatory return on
equity up to and including 12.25% on its regulated utility operations. Any
earnings which result in a return on equity over 12.25%, up to and including
13%, will be shared equally between the Company and its customers, which
effectively
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allows the Company the opportunity to realize a regulatory rate of return of up
to 12.625%. Any earnings above 13% will be refunded fully to customers.
During the eight-year period, the Company's regulatory return on equity
will be reviewed each year by the LPSC. If the Company's regulatory return on
equity in any given year requires a refund to customers, the refund will be made
in the form of billing credits during the months of July, August and September
following the evaluation period. The Company's 1998 revenues were reduced by a
$4.8 million provision for expected customer refunds under this plan.
During the eight-year period, the Company has the right to apply for a rate
increase if a significant event affecting its earnings would justify it, such as
regulatory or economic changes, major storm damage or other unforeseen
circumstances. During the period, the Company may also propose for LPSC
consideration any revenue-neutral rate design changes it determines to be
appropriate, such as revenue redistribution among customer classes. During the
period, the LPSC may amend or modify any of the settlement's terms should the
LPSC determine changes are warranted by the public interest.
FRANCHISES
The Company operates under nonexclusive franchise rights granted by
governmental units, such as municipalities and parishes (counties), and enforced
by state regulation. These franchises are for fixed terms, which vary from 10
years to 50 years. In the past, the Company has been substantially successful in
the timely renewal of franchises as each reaches the end of its term and
expires.
A number of parishes have attempted in recent years to impose franchise
fees on retail revenues earned within the unincorporated areas the Company
serves. If the parishes are ultimately successful, taxes other than income taxes
could increase substantially in future years.
INDUSTRY DEVELOPMENTS
Technological improvements in recent years have somewhat lessened the
historical barriers to entry in the electric utility industry and have set in
motion statutory and regulatory changes aimed at increased competition in this
industry. Federal and state legislation and new regulatory initiatives designed
to restructure electricity markets will likely produce even greater competition
at both wholesale and retail levels in the future. The LPSC is investigating
whether retail choice is in the best interest of Louisiana electric utility
customers. The Company and other existing and potential Louisiana electric
industry participants filed testimony in the LPSC's investigation of electric
industry restructuring during 1997 and 1998. During 1997, the Louisiana
legislature also considered, but did not enact, legislation regarding
restructuring of the electric utility industry within the State, but instead,
deferred consideration of the issues to the LPSC. The LPSC held a number of
hearings on different approaches to restructuring during 1998 and is expected
to reach a conclusion in 1999 on whether restructuring is in the public
interest. The Company expects the customer choice debate and related issues to
continue in legislative and regulatory bodies in 1999. At this time, management
cannot predict whether any legislation or regulation will be enacted or adopted
during 1999 and, if enacted or adopted, what form such legislation or
regulation would take.
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In general, Louisiana enjoys relatively low rates for electricity. Industry
restructuring presents the possibility that rates could move closer to the
national average, meaning possible higher prices for Louisiana's small
consumers. With this in mind, the Company has proposed a plan to the LPSC that
would protect the rates of small consumers and allow retail choice for larger
commercial and industrial customers no later than the year 2000. While
management believes too rapid a course to restructuring could result in higher
electricity prices for small consumers; it also believes that a clear plan by
the LPSC to restructure the electric industry in Louisiana, and especially to
afford retail choice to relatively large customers, will provide needed
additions to generation supplies in Louisiana. To protect small consumers
against higher prices, management does support for the most part, the cautious
approach to industry restructuring taken by the LPSC. The increasingly
competitive environment presents the opportunity to supply electricity to new
customers, as well as the risk of losing existing customers. Management believes
the Company is a reliable, low-cost provider of electricity and, as such, is
currently positioned to compete effectively in a restructured electric
marketplace.
WHOLESALE ELECTRIC COMPETITION
The Energy Policy Act, enacted by Congress in 1992, significantly changed
U.S. energy policy, including regulations 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
prohibits FERC-ordered retail wheeling (I.E., opening up electric utility
transmission 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
permitting the utility to recover from the FERC applicant all of the costs
incurred in connection with the transmission services, including any enlargement
of the transmission system and any 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 non-utilities to form "exempt wholesale
generators" without the 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.
On April 24, 1996, the FERC issued Order No. 888, a final rule requiring
open access transmission by all public utilities that own, operate or control
transmission lines. All of these utilities must now provide nondiscriminatory
open access transmission services that are comparable to transmission services
that the utilities provide themselves. The Company's open access transmission
tariff was approved by the FERC in a settlement with affected parties on
November 26, 1997. Utilities must take transmission service for their own
wholesale transactions under the terms and conditions of their open access
tariffs. In addition, Order No. 888, as amended, provides for the full recovery
from a utility's departing customers of wholesale stranded costs to the extent
such costs were prudently incurred to serve wholesale customers and would go
unrecovered if those customers use open access transmission service and move to
another electricity supplier. The Order, as amended, also allows customers under
existing
11
<PAGE>
wholesale sales contracts to seek FERC approval to modify their contracts on
a case-by-case basis.
The Company has three wholesale customers under firm sales agreements,
which represented 0.9% of its sales to regular customers for the twelve months
ended December 31, 1998. Management cannot predict what effects, if any, Order
No. 888, as amended, may have on wholesale prices in the Company's service area.
Wholesale energy markets, including the market for wholesale electric
power, have been competitive and are becoming even more so as the number of
participants in these markets increases as a result of enactment of the Energy
Policy Act and the regulatory activities of the FERC. The Company competes to
make sales of electric power at wholesale with other public utilities,
cogenerators, qualified facilities in other forms and power marketing companies.
Power marketers often do not own transmission or generation facilities, but
compete in the wholesale market by buying electricity from utilities and other
generators and reselling the electricity at market-based rates. Many such power
marketers now transact business in all regions of the country.
In recent years, the Company has been successful in competing to make
wholesale sales within its service territory, including sales to the city of
Alexandria and a full requirements sale to the city of St. Martinville. Sales
under the St. Martinville agreement, which is subject to the jurisdiction of the
FERC, began in May 1995 and represent an approximate 13 MW load. Sales to St.
Martinville provide additional base revenues, net of facility payments, of about
$4 million over the term of the agreement, which extends through December 2000.
This contract was challenged in 1993 by the previous supplier, Louisiana Energy
and Power Authority (LEPA), as well as the city of Lafayette and the American
Public Power Association, with assertions of preferential, discriminatory and
predatory pricing. An initial decision of the FERC's presiding administrative
law judge (ALJ) in February 1995 rejected LEPA's arguments. Under FERC
procedures, LEPA filed a brief requesting the FERC to revise the initial
decision. During 1998, the initial decision was upheld by the FERC. A subsequent
court decision also upheld the decision by the ALJ.
RETAIL ELECTRIC COMPETITION
Currently the LPSC does not provide exclusive service territories for
electric utilities under its jurisdiction. Instead, retail service is obtained
through the aforementioned long-term, nonexclusive franchises. The LPSC uses a
"300 foot rule" for determining the supplier for new customers. The application
of this law has led to competition with neighboring utilities for retail
customers at the borders of the Company's service areas. The Company also
competes in its service area with suppliers of alternative forms of energy, some
of which may be less costly than electricity for certain applications. The
Company could experience some competition for electric sales to industrial
customers in the form of cogeneration or from independent power producers.
However, the Company believes that its rates, and the quality and reliability of
its service, place it in a favorable competitive position in current retail
markets.
12
<PAGE>
In December 1997, the LPSC Staff made a recommendation to the LPSC that
restructuring of the retail electric market in Louisiana could be in the public
interest if solutions for key issues were determined and properly implemented.
This recommendation was based upon preliminary findings in the LPSC electric
restructuring investigation in Docket U-21453. The LPSC accepted the
recommendation and directed the Staff to further investigate the issues. The
LPSC held a series of six separate hearings in Docket U-21453 during 1998 to
receive input from interested parties, including the utilities that it
regulates, and to investigate alternative courses of action in electric
restructuring. The Company has participated actively in these proceedings by
offering alternative plans to implement electric restructuring and expects to
continue doing so. The State of Louisiana has not yet adopted any retail
electric competition or restructuring legislation. However, it is expected that
the LPSC will make a report to the legislature in 1999 and that retail electric
competition or restructuring legislation will be considered during the 1999
regular session of the Louisiana legislature.
LEGISLATIVE AND REGULATORY CHANGES AND MATTERS
Various federal and state legislative and regulatory bodies are considering
a number of issues in addition to those discussed above that will shape the
future of the electric utility industry. Such issues include deregulation of
retail electricity sales; the ability of electric utilities to recover stranded
costs; the repeal or modification of the Holding Company Act; the unbundling of
vertically integrated electric utility companies into separate business segments
or companies (I.E., generation, transmission, distribution and retail energy
service); the role of electric utilities, independent power producers and
competitive bidding in the construction and operation of new generating
capacity; and the pricing of transmission service on an electric utility's
transmission system. The Company is unable, at this time, to predict the outcome
of such issues or their effect on the Company's financial position, results of
operations or cash flows.
For information on certain regulatory matters and regulatory accounting
affecting the Company, see "Financial Condition -- Regulatory Matters" in
"Management's Discussion and Analysis of Results of Operations and Financial
Condition" on pages 10 and 11 of the 1998 Annual Report to Shareholders, which
is filed as Exhibit 13 to this Report and incorporated herein by reference.
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 1998, the
Company's capital expenditures related to environmental compliance were about
$1.0 million, due largely to the modification of a sludge landfill site at one
of the Company's generating stations. Expenditures related to environmental
compliance are estimated to total approximately $1.5 million in 1999.
13
<PAGE>
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 federal Environmental
Protection Agency (EPA). The AQD establishes standards of performance or
requires permits for certain generating units in Louisiana. All of the Company's
generating units are subject to these requirements.
The federal Clean Air Act Amendments of 1990 (the Act) established a
regulatory program to address the effects of acid rain and imposed restrictions
on sulfur dioxide (SO(2)) emissions from certain generating units. The Act
essentially requires that utilities, like the Company, must hold a regulatory
"allowance" for each ton of SO(2) emitted beginning in the year 2000. The EPA is
required to allocate a set number of allowances to each affected unit based on
its historic emissions. After the initial allocation, the Company requested an
adjustment to the allowance allocation for Rodemacher Unit 2 because of an
extended outage of 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. In October 1995, the EPA signed a settlement
agreement in which it agreed to give Rodemacher Unit 2 the additional allowances
requested. In December 1996, the EPA published proposed changes to the Acid Rain
Program that would grant Rodemacher Unit 2 the additional allowances. In June
1998, the proposed changes were made final.
The Act also requires the EPA to revise nitrogen oxides (NO(x)) emission
limits for existing coal-fired boilers. In November 1996, the EPA finalized
rules lowering the NO(x) emission rate for certain boilers, including Rodemacher
Unit 2 and Dolet Hills Unit 1. Under this rule, Rodemacher Unit 2 and Dolet
Hills Unit 1 would have to meet this new emission rate by January 1, 2000. The
rule also allows an option to "early elect," that is, achieve compliance with a
less restrictive NO(x) limit beginning January 1, 1997. The Company exercised
this option in December 1996. Early election protects the Company from any
further reductions in the NO(x) permitted emission rate until 2008.
Rodemacher Unit 2 and Dolet Hills Unit 1 were in compliance with the NO(x)
early election limits in 1997 and 1998 and are expected to continue to be in
compliance in 1999 without undergoing significant capital improvements.
Significant future reductions in NO(x) emission limits may require
modification of burners or other capital improvements at either or both of
the units.
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 Office of Water Resources of the LDEQ requires
facilities which discharge wastewater into Louisiana waters to
14
<PAGE>
be permitted under the Louisiana Pollution Discharge Elimination System
(LPDES). The Company has applied for and received LPDES permits for its four
generating stations.
In 1996, the LDEQ was granted authority to administer the federal NPDES
program in Louisiana. The NPDES permit is substantially similar to the LPDES
permit, and eventually LDEQ has stated its intention to merge the two into a
single LPDES permit. Until then, all data required by the NPDES permit and the
LPDES permit are reported to the LDEQ.
SOLID WASTE DISPOSAL
The Solid Waste Division (SWD) 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 SWD
for the on-site disposal of solid waste generated at its generating stations and
is in the process of repermitting its solid waste disposal facilities under
recently revised rules. The Company has received approval of an alternate liner
system for the Dolet Hills landfill facility that will satisfy the requirements
of the rules.
HAZARDOUS WASTE GENERATION
The Company produces certain wastes at its four generating stations and at
other locations that 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.
TOXICS RELEASE INVENTORY
The Toxics Release Inventory (TRI) is a part of the Emergency Planning and
Community Right to Know Act and is administered by the EPA. The TRI is an annual
reporting requirement for industrial facilities on about 650 substances they
release into air, water and land. The TRI ranks companies based on how much of a
particular substance they release on a state level and a parish (county) level.
On May 1, 1997, the EPA added seven new industry groups to the TRI, including
electric utility facilities. Before the 1997 additions, the Company was exempt
from the reporting requirements of the TRI. Now the Company must submit TRI
reports on its 1998 activities by July 1, 1999. Sometime after, the TRI will be
made public knowledge and the rankings will be published. The rankings do not
result in any federal or state penalties, but may result in adverse public
perceptions of the Company. Management is aware of the potential adverse effects
and is currently taking steps to mitigate the situation.
ELECTRIC AND MAGNETIC FIELDS
The possibility that exposure to electric and magnetic fields (EMFs)
emanating from electric power lines, household appliances and other electric
devices may result in adverse health effects or damage to the environment has
been a subject of current public attention. The Company funds research on
electric and magnetic fields through various organizations. The scientific
15
<PAGE>
research conducted to date concerning the effects of EMFs has not led to any
definitive results; however, such research is continuing. Lawsuits have arisen
in several states against electric utilities and others alleging that the
presence or use of electric power transmission and distribution lines has an
adverse effect on health and/or property values.
OTHER EVENTS
HOLDING COMPANY FORMATION
At the October 23, 1998 meeting of the Cleco Board of Directors, the
directors approved a proposal to reorganize the Company into a public utility
holding company structure. The proposed holding company structure would create a
parent company that would include several subsidiaries, one of which would
contain the Company's generation, transmission and distribution electric utility
operations neccessary to serve its traditional retail and wholesale customers.
Another subsidiary, Cleco Midstream Resources LLC, would operate the Company's
competitive electric generation, oil and natural gas production, energy and
generating fuel procurement and natural gas pipeline businesses. A third
subsidiary, Cleco Services LLC, would sell utility support services related to
distribution and retail service to municipal governments, rural electric
cooperatives and investor-owned electric companies.
Under the terms of the proposal, the newly organized holding company would
become the owner of all of the Company's outstanding common and preferred stock
and existing Company common and preferred shareholders would exchange their
Company stock for stock in the holding company. The proposal received LPSC
approval on December 18, 1998, and FERC approval on January 29, 1999. The
proposal is subject to approval by the Company's shareholders. Approval will be
requested from the Company's shareholders in connection with the 1999 Annual
Meeting of Shareholders. See the Company's 1999 Notice of Annual Meeting of
Shareholders and Proxy Statement, dated March 25, 1999, incorporated by
reference.
ITEM 2. PROPERTIES
All of the Company's electric generating stations and all other electric
operating properties are located in the State of Louisiana. The Company also has
an interest in gas gathering and transmission pipelines located in Texas and
Louisiana and oil and gas producing properties in Texas. 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, 1998, the Company either owned or had an ownership
interest in four steam electric generating stations and a gas turbine with a
combined electric generating capacity of 1,693,000 kilowatts. For additional
information regarding the Company's generating facilities, see "Electric
Operations -- Power Generation" in Item 1 of this Report.
ELECTRIC SUBSTATIONS
As of December 31, 1998, the Company owned 82 transmission substations and
303 distribution substations.
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<PAGE>
ELECTRIC LINES
As of December 31, 1998, the Company's transmission system consisted of
approximately 67 circuit miles of 500 kilovolt (kV) lines; 454 circuit miles of
230 kV lines; 648 circuit miles of 138 kV lines; and 21 circuit miles of 69 kV
lines. The Company's distribution system consisted of approximately 2,155
circuit miles of 34.5 kV lines and 11,956 circuit miles of other lines.
OIL AND GAS RELATED
As of December 31, 1998, the Company had an ownership interest in 415 miles
of gas gathering and transmission pipeline in Texas and Louisiana as well as oil
and gas producing properties in Texas. For additional information, see Note K to
the Consolidated Financial Statements of the 1998 Annual Report to Shareholders,
which is filed as Exhibit 13 to this Report and incorporated herein by
reference. Through a wholly-owned subsidiary, the Company also owns gas pipeline
laterals connecting its gas-fired generating plants to gas transmission
pipelines near the plants.
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 a lien securing obligations of the Company under an Indenture of Mortgage,
which does not impair the use of such properties in the operation of its
business.
ITEM 3. LEGAL PROCEEDINGS
The Company and SWEPCO, each a 50% owner of Dolet Hills Unit 1, jointly own
lignite reserves in the Dolet Hills area of northwestern Louisiana. In 1982, the
Company and SWEPCO entered into a Lignite Mining Agreement (LMA) with the Dolet
Hills Mining Venture (DHMV), a partnership for the mining and delivery of
lignite from a portion of these reserves (Dolet Hills Mine). The LMA expires in
2011. The price of lignite delivered pursuant to the LMA is a base price per
ton, subject to escalation based on certain inflation indices, plus specified
"pass-through" costs.
Currently, the Company is receiving annually a minimum delivery of
1,187,500 tons under the LMA. Since the late 1980s, additional spot lignite
deliveries have been obtained through
17
<PAGE>
competitive bidding from DHMV and another lignite supplier. In 1998, the
Company and SWEPCO received deliveries which approximated 28% of the annual
lignite consumption at the Dolet Hills Unit 1 from the other lignite supplier.
On April 15, 1997, the Company and SWEPCO filed suit against DHMV and its
partners in the United States District Court for the Western District of
Louisiana (Federal Court Suit) seeking to enforce various obligations of DHMV to
the Company and SWEPCO under the LMA, including provisions relating to the
quality of the delivered lignite, pricing, and mine reclamation practices. On
June 15, 1997, DHMV filed an answer denying the allegations in the Company's
suit and filed a counterclaim asserting various contract-related claims against
the Company and SWEPCO. The Company and SWEPCO have denied the allegations in
the counterclaims on the grounds the counterclaims have no merit.
The counterclaims filed by DHMV in the Federal Court Suit resulted in the
Company and SWEPCO filing a separate lawsuit against the parent companies of
DHMV, namely Jones Capital Corporation and Philipp Holzmann USA, Inc., on August
13, 1997, in the First Judicial District Court for Caddo Parish, Louisiana
(State Court Suit). The State Court Suit seeks to enforce a separate 1995
agreement by Jones Capital Corporation and Philipp Holzmann USA, Inc. related to
the LMA. Jones Capital Corporation and Philipp Holzmann USA, Inc. have asked the
state court to stay that proceeding until the Federal Court Suit is resolved.
At a November 5, 1998 scheduling conference, the Court set the Federal
Court Suit for trial beginning November 15, 1999. A discovery cut-off date of
August 15, 1999 has also been established.
On January 8, 1999, the Company and SWEPCO filed an amended complaint in
the Federal Court Suit seeking, among other things, a termination of the LMA
after trial based on DHMV's breach of the contract. It is expected that DHMV
will deny all such claims of breach.
The Company and SWEPCO will continue to aggressively prosecute the claims
against DHMV and defend against the counterclaims which DHMV has asserted. The
Company and SWEPCO continue to pay DHMV for lignite delivered pursuant to the
LMA. Normal day-to-day operations continue at the Dolet Hills Mine and Dolet
Hills Unit 1. Although the ultimate outcome of this litigation cannot be
predicted at this time, based on information currently available to the Company,
management does not believe that the counterclaims asserted by the DHMV in the
Federal Court Suit will have a significant adverse effect on the Company's
financial position or results of operations.
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 1998.
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<PAGE>
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, 1998,
are presented below. Executive officers are appointed annually to serve for the
ensuing year or until their successors have been appointed.
<TABLE>
<CAPTION>
POSITION AND FIVE-YEAR
NAME OF EXECUTIVE EMPLOYMENT HISTORY
- ----------------- ------------------
<S> <C>
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 60; 18 years of service)
David M. Eppler........... Executive Vice President and Chief Operating Officer since July
1997; Executive Vice President from January 1997 to July 1997; Vice
President-Power Supply and Energy Transmission from July 1995 to
January 1997; Vice President-Finance from October 1993 to July 1995;
Vice President and Treasurer from July 1987 to October 1993. (Age
48; 17 years of service)
Thomas J. Howlin.......... Senior Vice President-Financial Services and Chief Financial Officer
since July 25, 1997; Vice President-Finance and Chief Financial
Officer from July 14, 1997 to July 25, 1997. Vice President and
Chief Financial Officer of TransAmerican Natural Gas Corporation
from April 1995 to March 1997; Director of Financial Activity,
Business Development for Detroit Edison Company from January 1994 to
March 1995. (Age 50; 1 year of service)
Catherine C. Powell....... Senior Vice President-Employee and Corporate Services since July
1997; Vice President-Employee and Corporate Services from July 1995
to July 1997; Vice President-Human Resources from October 1993 to
July 1995; General Manager-Human Resources from August 1993 to
October 1993; Administrator-Compensation from May 1991 to August
1993. (Age 43; 7 years of service)
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<PAGE>
Darrell J. Dubroc......... Vice President-Generation Services since July 1997; General
Manager-Wholesale Merchant Operations from July 1996 to July 1997;
Manager-Regulatory Affairs and Business Development from March 1995
to July 1996; Manager-Contracts and Business Development from July
1994 to March 1995; Director-Contracts and Business Development from
October 1993 to July 1994. (Age 37; 13 years of service)
Jeffrey W. Hall........... Vice President-Retail Energy Services since July 1997; General
Manager-Customer Revenue from July 1996 to July 1997; Manager-Public
Affairs from October 1995 to July 1996; Regional Manager-Customer
Services from October 1993 to October 1995; Manager-Customer
Services, Opelousas from May 1991 to October 1993; Manager-Customer
Services, Mansfield from May 1983 to May 1991. (Age 47; 17 years of
service)
Mark H. Segura............ Vice President-Distribution Services since July 1997; General
Manager-Distribution Services from July 1996 to July 1997;
Manager-Stores and Transformer Management from October 1993 to July
1996; Supervisor-Distribution Engineering from June 1991 to October
1993. (Age 40; 14 years of service)
Robert A. Pulaski......... Controller since April 1998; Manager-Internal Audit from October
1993 to April 1998; Manager-Plant and Area Accounting from December
1985 to October 1993. (Age 41; 14 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 55; 29 years of service)
Carla D. Boothe........... Assistant Corporate Secretary since July 1998; Lead
Accountant-Payroll & Payables from November 1997 to July 1998;
Accountant-Payroll & Payables from November 1996 to November 1997;
Systems Accountant, U.S. Department of Agriculture from December
1992 to November 1996. (Age 34; 2 years of service)
</TABLE>
20
<PAGE>
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 Tape and dividends paid per share during each calendar quarter of 1998
and 1997.
<TABLE>
<CAPTION>
1998 1997
---- ----
HIGH LOW DIVIDEND HIGH LOW DIVIDEND
---- ---- --------- ---- ---- --------
<S> <C> <C> <C> <C> <C> <C>
First Quarter $34-9/16 $30-1/4 $0.395 $28 $26 $0.385
Second Quarter $34-3/4 $29 $0.405 $28-1/8 $24-3/4 $0.395
Third Quarter $33-7/8 $28-5/8 $0.405 $28-7/16 $25-13/16 $0.395
Fourth Quarter $36-1/8 $32-7/8 $0.405 $33-1/8 $25-9/16 $0.395
</TABLE>
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 35% of total capitalization, including short-term debt. At December 31,
1998 approximately $111,325,000 of retained earnings were not restricted. On
January 22, 1999 the Company's Board of Directors declared a quarterly dividend
of $0.405 per share, which dividend was paid on February 15, 1999 to common
shareholders of record on February 1, 1999.
As of February 23, 1999, there were 10,470 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 Tape was $28 5/8 per share.
ITEM 6. SELECTED FINANCIAL DATA
The information set forth in "Selected Financial Data" on page 1 of the
1998 Annual Report to Shareholders is incorporated herein by reference; such
information is filed as Exhibit 13 to this Report. This information should be
read in conjunction with the Consolidated Financial Statements and the related
Notes thereto set forth on pages 14 through 31 of the 1998 Annual Report to
Shareholders, which is filed as Exhibit 13 to this Report and incorporated
herein by reference.
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<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
The information set forth in "Management's Discussion and Analysis of
Results of Operations and Financial Condition" on pages 2 through 11 of the 1998
Annual Report to Shareholders is incorporated herein by reference; such
information is filed as Exhibit 13 to this Report.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK
For information concerning the quantitative and qualitative disclosures
about market risk see "Financial Risk Management" in "Management's Discussion
and Analysis of Results of Operations and Financial Condition" of the 1998
Annual Report to Shareholders, which is filed as Exhibit 13 to this Report and
incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information set forth on pages through of the 1998 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.
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<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information set forth (i) under "Proposal Number 2 -- Election of Three
Class II Directors" on pages 27 and 28 of, and (ii) under the caption "Section
16(a) Beneficial Ownership Reporting Compliance" on page 32 of the Company's
definitive Proxy Statement dated March 25, 1999, filed with the SEC pursuant to
Regulation 14A under the Securities Exchange Act of 1934 (1999 Proxy Statement),
is incorporated herein by reference. See also "Executive Officers of the
Registrant" on pages 19 and 20 of this Report.
ITEM 11. EXECUTIVE COMPENSATION
The information set forth (i) under the subcaption "Organization and
Compensation of the Board of Directors" under the caption "Proposal Number 2 --
Election of Three Class II Directors" on pages 29 and 30 of, and (ii) under the
caption "Executive Compensation" on pages 33 through 34 of the 1999 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 (i) under the caption "Security Ownership of
Directors and Management" on pages 31 and 32 of, and (ii) under the caption
"Security Ownership of Certain Beneficial Owners" on page 47 of the 1999 Proxy
Statement is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information set forth under the caption "Proposal Number 2 -- Election
of Three Class II Directors" on pages 27 and 28 of the 1999 Proxy Statement is
incorporated herein by reference.
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<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
<TABLE>
<CAPTION>
1998 ANNUAL
FORM 10-K REPORT TO
ANNUAL REPORT SHAREHOLDERS
------------- ------------
<S> <C> <C> <C>
14(a)(1) Consolidated Statements of Income for the years ended
December 31, 1998, 1997 and 1996 16
Consolidated Balance Sheets at December 31, 1998 and 1997 17
Consolidated Statements of Cash Flows for the years ended
December 31, 1998, 1997 and 1996 18
Consolidated Statements of Changes in Common Shareholders'
Equity for the years ended December 31, 1998, 1997 and
1996 19
Notes to Consolidated Financial Statements 20
Report of Independent Accountants 38
14(a)(2) Financial Statement Schedules
Report of Independent Accountants 38
Schedule II - Valuation and Qualifying Accounts 39
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.
14(a)(3) List of Exhibits
</TABLE>
The Exhibits designated by an asterisk are filed herewith. The Exhibits not so
designated have been previously filed with the SEC 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.
24
<PAGE>
<TABLE>
<CAPTION>
SEC FILE OR REGISTRATION
REGISTRATION STATEMENT EXHIBIT
EXHIBITS NUMBER OR REPORT NUMBER
-------- ------ --------- ------
<S> <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, 1998
3(b) Amended and Restated Bylaws of the 1-5663 10-Q(3/97) 3
Company, as amended to April 25, 1997
4(a)(1) Indenture of Mortgage dated as of July 1, 1-5663 10-K(1997) 4(a)(1)
1950, between the Company and First
National Bank of New Orleans, as Trustee
4(a)(2) First Supplemental Indenture dated as 1-5663 10-K(1997) 4(a)(2)
of October 1, 1951, to Exhibit 4(a)(1)
4(a)(3) Second Supplemental Indenture dated as 1-5563 10-K(1997) 4(a)(3)
of June 1, 1952, to Exhibit 4(a)(1)
4(a)(4) Third Supplemental Indenture dated as 1-5563 10-K(1997) 4(a)(4)
of January 1, 1954, to Exhibit 4(a)(1)
4(a)(5) Fourth Supplemental Indenture dated as 1-5563 10-K(1997) 4(a)(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
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(b) Indenture between the Company and Bankers 33-24896 S-3(10/11/88) 4(b)
Trust Company, as Trustee, dated as of
October 1, 1988
4(b)(1) Agreement Appointing Successor Trustee dated 333-02895 S-3(4/26/96) 4(a)(2)
as of April 1, 1996 by and among Central
Louisiana Electric Company, Inc., Bankers
Trust Company and The Bank of New York
4(c) 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
25
<PAGE>
<CAPTION>
SEC FILE OR REGISTRATION
REGISTRATION STATEMENT EXHIBIT
EXHIBITS NUMBER OR REPORT NUMBER
-------- ------ --------- ------
<S> <C> <C> <C>
4(c)(1) First Supplemental Trust Indenture (The 1-5663 10-K(1994) 4(e)(1)
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(c)
4(d) 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(e) 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 of
Commerce
4(e)(1) First Supplemental Trust Indenture (Parish 1-5663 10-K(1994) 4(g)(l)
of DeSoto, State of Louisiana
Adjustable Tender Pollution Control
Revenue Refunding Bonds, Series 1991A) dated
as of May 1, 1993, between the Parish of DeSoto,
State of Louisiana and First National Bank of
Commerce, relating to Exhibit 4(e)
4(f) 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(g) 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 the Parish of
DeSoto, State of Louisiana and First National
Bank of Commerce
4(g)(1) First Supplemental Trust Indenture (Parish 1-5663 10-K(1994) 4(i)(1)
of DeSoto, State of Louisiana Adjustable
Tender Pollution Control Revenue Refunding
Bonds, Series 1991B) dated as of May 1, 1993,
between the Parish of DeSoto, State of
Louisiana and First National Bank of Commerce,
relating to Exhibit 4(g)
26
<PAGE>
<CAPTION>
SEC FILE OR REGISTRATION
REGISTRATION STATEMENT EXHIBIT
EXHIBITS NUMBER OR REPORT NUMBER
-------- ------ --------- ------
<S> <C> <C> <C>
4(h) 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(i) $100,000,000 Credit Agreement 1-5663 10-Q(6/95) 4
dated as of June 15, 1995, among the
Company, certain Banks parties thereto,
and The Bank of New York, as Agent
4(j) $80,000,000 364 Day Credit 1-5663 10-Q(3/98 ) 4
Agreement dated August 28, 1998 between
Bank of New York and the Company
**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) Participation Agreement, Annual Incentive
Compensation 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) Form of Supplemental Executive Retirement 1-5663 10-K(1992) 10(o)(2)
Plan Participation Agreement between the
Company and the following officers:
Gregory L. Nesbitt, David M. Eppler,
Catherine C. Powell, Darrell J. Dubroc and
Thomas J. Howlin
**10(f) Form of Executive Severance Agreement between 1-5663 10-K(1995) 10(f)
the Company and the following officers:
Gregory L. Nesbitt, David M. Eppler,
Catherine C. Powell, Darrell J. Dubroc and
Thomas J. Howlin.
10(h)(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
27
<PAGE>
<CAPTION>
SEC FILE OR REGISTRATION
REGISTRATION STATEMENT EXHIBIT
EXHIBITS NUMBER OR REPORT NUMBER
-------- ------ --------- ------
<S> <C> <C> <C>
10(h)(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(h)(1)
10(h)(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(h)(1)
10(h)(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,
relating to Exhibit 10(h)(1)
10(i) Reimbursement Agreement (The Industrial 1-5663 10-K(1997) 10(i)
Development Board of the Parish of Rapides,
Inc. (Louisiana) Adjustable Tender Pollution
Control Revenue Refunding Bonds, Series
1991) dated as of October 15, 1997, among the
Company, various financial institutions, and
Westdeutsche Landesbank Gironzentiale,
New York Branch, as Agent
10(i)(1) Remarketing Agreement (The Industrial 1-5663 10-Q(9/94) 10(a)
Development 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(i)(2) Tender Agreement (The Industrial Development 1-5663 10-K(1991) 10(z)(2)
Board 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(i)(3) Amendment No. 1 to Reimbursement Agreements 1-5663 10-K(1994) 10(p)(3)
(The Industrial Development Board of the
Parish of Rapides, Inc. (Louisiana) Adjustable
Tender Pollution Control
28
<PAGE>
<CAPTION>
SEC FILE OR REGISTRATION
REGISTRATION STATEMENT EXHIBIT
EXHIBITS NUMBER OR REPORT NUMBER
-------- ------ --------- ------
<S> <C> <C> <C>
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(i), 10(j) and 10(k)
10(j) Reimbursement Agreement (Parish of DeSoto, 1-5663 10-K(1997) 10(j)
State of Louisiana Adjustable Tender Pollution
Control Revenue Refunding Bonds, Series
1991A) dated as of October 15, 1997, among the
Company, various financial institutions, and
Westdeutsche Landesbank Gironzentiale,
New York Branch, as Agent
10(j)(1) Remarketing Agreement (Parish of DeSoto, 1-5663 10-Q(9/94) 10(b)
State of Louisiana Adjustable Tender
Pollution Control Revenue Refunding Bonds,
Series 1991A) dated as of July 19, 1994,
between the Company and PaineWebber
Incorporated
10(j)(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(k) Reimbursement Agreement (Parish of DeSoto, 1-5663 10-K(1997) 10(k)
State of Louisiana Adjustable Tender
Pollution Control Revenue Refunding Bonds,
Series 1991B) dated as of October 15, 1997,
among the Company, various financial
institutions, and Westdeutsche Landesbank
Gironzentiale, New York Branch, as Agent
10(k)(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(k)(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,
29
<PAGE>
<CAPTION>
SEC FILE OR REGISTRATION
REGISTRATION STATEMENT EXHIBIT
EXHIBITS NUMBER OR REPORT NUMBER
-------- ------ --------- ------
<S> <C> <C> <C>
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(l) Selling Agency Agreement between the Company 333-02895 S-3(12/10/96) 1
and Salomon Brothers Inc, Merrill Lynch & Co.,
Smith Barney Inc. and First Chicago Capital
Markets, Inc. dated as of December 12, 1996
10(m) 401(k) Savings and Investment Plan ESOP 1-5663 10-K(1997) 10(m)
Trust Agreement dated as of August 1, 1997,
between UMB Bank, N.A. and the Company
10(m)(1) First Amendment to 401(k) Savings and Investment 1-5663 10-K(1997) 10(m)(1)
Plan ESOP Trust Agreement dated as of
October 1, 1997, between UMB Bank, N.A. 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
* 21 Subsidiaries of the Registrant
* 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, 1998
* 27 Financial Data Schedule UT
</TABLE>
14(b) Reports on Form 8-K
During the three-month period ended December 31, 1998, the Company filed no
Current Reports on Form 8-K.
30
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULE
To the Board of Directors of
Cleco Corporation
Our audits of the consolidated financial statements referred to in our report
dated January 27, 1999 appearing on page 38 of the 1998 Annual Report to
Shareholders of Cleco Corporation (which report and consolidated financial
statements are incorporated by reference in this Annual Report on Form 10-K)
also included an audit of the financial statement schedule listed in Item
14(a)(2) of this Form 10-K. In our opinion, this financial statement schedule
presents fairly, in all material respects, the information set forth therein
when read in conjunction with the related consolidated financial statements.
/s/ PricewaterhouseCoopers LLP
New Orleans, Louisiana
January 27, 1999
31
<PAGE>
CLECO CORPORATION
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Years ended December 31, 1998, 1997 and 1996
(In thousands)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E
ADDITIONS UNCOLLECTIBLE
BALANCE AT CHARGED TO ACCOUNTS BALANCE AT
BEGINNING COSTS AND WRITE-OFFS, END
ALLOWANCE FOR UNCOLLECTIBLE ACCOUNTS OF PERIOD EXPENSES LESS RECOVERIES OF PERIOD (1)
<S> <C> <C> <C> <C>
Year Ended December 31, 1998 $ 684 $1,069 $ 942 $ 812
Year Ended December 31, 1997 $ 681 $ 770 $ 767 $ 684
Year Ended December 31, 1996 $ 538 $ 887 $ 744 $ 681
</TABLE>
(1) Deducted in the balance sheet.
32
<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.
CLECO CORPORATION
(REGISTRANT)
/s/ Gregory L. Nesbitt
---------------------------------
(GREGORY L. NESBITT, CHAIRMAN
AND CHIEF EXECUTIVE OFFICER)
Date: March 17, 1999
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.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ Gregory L. Nesbitt Chairman, Chief Executive Officer and Director March 17, 1999
- ----------------------- (Principal Executive Officer)
(GREGORY L. NESBITT)
/s/ David M. Eppler President, Chief Operating Officer and Director March 17, 1999
- -----------------------
(DAVID M. EPPLER)
/s/Thomas J. Howlin Senior Vice President, Finance and Chief March 17, 1999
- ----------------------- Financial Officer (Principal Accounting Officer)
(THOMAS J. HOWLIN)
DIRECTORS*
SHERIAN G. CADORIA
RICHARD B. CROWELL
J. PATRICK GARRETT
F. BEN JAMES, JR.
A. DELOACH MARTIN, JR.
ROBERT T. RATCLIFF
EDWARD M. SIMMONS
WILLIAM H. WALKER, JR.
/s/ Thomas J. Howlin
- ---------------------------
*BY: THOMAS J. HOWLIN
(Thomas J. Howlin, as
Attorney-in-Fact) March 17, 1999
</TABLE>
33
<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.
CLECO CORPORATION
(REGISTRANT)
/s/ Gregory L. Nesbitt
---------------------------------
(GREGORY L. NESBITT, PRESIDENT
AND CHIEF EXECUTIVE OFFICER)
Date: March 17, 1999
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.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ Gregory L. Nesbitt President, Chief Executive Officer and Director March 17, 1999
- --------------------------------- (Principal Executive Officer)
(GREGORY L. NESBITT)
/s/ David M. Eppler President, Chief Operating Officer and Director March 17, 1999
- ---------------------------------
(DAVID M. EPPLER)
/s/Thomas J. Howlin Senior Vice President, Finance and Chief March 17, 1999
- --------------------------------- Financial Officer (Principal Accounting Officer)
(THOMAS J. HOWLIN)
DIRECTORS*
SHERIAN G. CADORIA
RICHARD B. CROWELL
J. PATRICK GARRETT
F. BEN JAMES, JR.
A. DELOACH MARTIN, JR.
ROBERT T. RATCLIFF
EDWARD M. SIMMONS
WILLIAM H. WALKER, JR.
/s/ THOMAS J. HOWLIN
- ---------------------------------
*BY: THOMAS J. HOWLIN
(Thomas J. Howlin, as
Attorney-in-fact) March 17, 1999
</TABLE>
34
<PAGE>
EXHIBIT 4(a)(7)
ELEVENTH SUPPLEMENTAL INDENTURE, dated as of April 1, 1969, between CENTRAL
LOUISIANA ELECTRIC COMPANY, INC., a corporation duly organized and existing
under and by virtue of the laws of the State of Louisiana (hereinafter
sometimes called the "Company"), party of the first part, and THE NATIONAL
BANK OF COMMERCE IN NEW ORLEANS, a national banking association duly
organized and existing under and by virtue of the laws of the United States
of America, as Trustee under the Indenture of Mortgage hereinafter mentioned
(hereinafter sometimes called the "Trustee"), party of the second part.
WHEREAS, the Company has heretofore executed and delivered its Indenture
of Mortgage (hereinafter called "Original Indenture") dated as of July 1,
1950, to the Trustee, to secure the Company's First Mortgage Bonds, limited
to $100,000,000 aggregate principal amount at any one time outstanding and
issuable in series, from time to time, in the manner and subject to the
conditions set forth in the Original Indenture, and by said Original
Indenture granted and conveyed unto the Trustee, upon the trusts, uses and
purposes specifically therein set forth, certain real estate, franchises and
other property therein described, including property acquired after the date
thereof except as :herein otherwise provided; and
WHEREAS, the Original Indenture provides for the issuance of bonds
thereunder in one or more series, the form of each series of bonds and of the
coupons to be attached to the coupon bonds to be substantially in the forms set
forth therein with such omissions, variations, and insertions as are authorized
or permitted by the Original Indenture and determined and specified by the Board
of Directors of the Company; and
WHEREAS, by the Original Indenture, the Company covenanted that it would
execute and deliver such further instruments and do such further acts as
might be necessary or proper to carry out more effectively the purposes of
the Original Indenture and to make subject to the lien thereof any property
thereafter acquired and intended to be subject to the lien thereof, and the
Company executed and delivered to the Trustee a First Supplemental Indenture
(hereinafter called the "First Supplemental Indenture") dated as of October
1, 1951, a Second Supplemental Indenture (hereinafter called the "Second
Supplemental Indenture") dated as of June 1, 1952, a Third Supplemental
Indenture (hereinafter called the "Third Supplemental Indenture") dated as of
January 1, 1954, a Fourth Supplemental Indenture (hereinafter called the
"Fourth Supplemental Indenture") dated as of November 1, 1954, a Fifth
Supplemental Indenture (hereinafter called the "Fifth Supplemental
Indenture") dated as of June 1, 1956, a Sixth Supplemental Indenture
(hereinafter called the "Sixth Supplemental Indenture") dated as of October
1, 1957, a Seventh Supplemental Indenture (hereinafter called the "Seventh
Supplemental Indenture") dated as of April 1, 1959, an Eighth Supplemental
Indenture (hereinafter called the "Eighth Supplemental Indenture") dated as
of March 1, 1960, a Ninth Supplemental Indenture (hereinafter called the
"Ninth Supplemental Indenture") dated as of October 1, 1962, and a Tenth
Supplemental Indenture (hereinafter called the "Tenth Supplemental
Indenture") dated as of September 1, 1965; and
1
<PAGE>
WHEREAS, the Company has heretofore issued, in accordance with the
provisions of the Original Indenture, as so supplemented, Bonds of a Series
entitled and designated First Mortgage Bonds, Series A, 3%, in the aggregate
principal amount of $5,500,000, of which $4,510,000 principal amount are
outstanding; Bonds of a Series entitled and designated First Mortgage Bonds,
Series B, 3 3/4%, in the aggregate principal amount of $4,844,000, of which
$4,021,000 principal amount are outstanding; Bonds of a Series entitled First
Mortgage Bonds, Series C, 3 3/4%, in the aggregate principal amount of $960,000,
of which $797,000 principal amount are outstanding; Bonds of a Series entitled
and designated First Mortgage Bonds, Series D, 3 3/4%, in the aggregate
principal amount of $4,000,000, of which $3,360,000 principal amount are
outstanding; Bonds of a Series entitled and designated First Mortgage Bonds,
Series E, 4 1/4%, in the aggregate principal amount of $3,000,000, none of which
are outstanding; Bonds of a Series entitled and designated First Mortgage Bonds,
Series F, 3 1/4%, in the aggregate principal amount of $3,000,000, of which
$2,580,000 principal amount are outstanding; Bonds of a Series entitled and
designated First Mortgage Bonds, Series G, 3 7/8%, in the aggregate principal
amount of $5,000,000, of which $4,400,000 principal amount are outstanding;
Bonds of a Series entitled and designated First Mortgage Bonds, Series H, 5
1/2%, in the aggregate principal amount of $7,000,000, of which $5,610,000
principal amount are outstanding; Bonds of a Series entitled and designated
First Mortgage Bonds, Series I, 5 1/8%, in the aggregate principal amount of
$5,000,000, of which $4,500,000 principal amount are outstanding; Bonds of a
Series entitled and designated First Mortgage Bonds, Series J, 5 1/2%, in the
aggregate principal amount of $7,000,000, of which $6,370,000 principal amount
are outstanding; Bonds of a Series entitled and designated First Mortgage Bonds,
Series K, 4.70%, in the aggregate principal amount of $6,000,000, of which
$6,000,000 principal amount are outstanding; and Bonds of a Series entitled and
designated First Mortgage Bonds, Series L, 4.75%, in the aggregate principal
amount of $14,000,000, of which $14,000,000 principal amount are outstanding;
and
WHEREAS, the Company, by appropriate resolutions adopted by its Board of
Directors pursuant to the terms of the Original Indenture, as supplemented by
the First Supplemental Indenture, the Second Supplemental Indenture, the
Third Supplemental Indenture, the Fourth Supplemental Indenture, the Fifth
Supplemental Indenture, the Sixth Supplemental Indenture, the Seventh
Supplemental Indenture, the Eighth Supplemental Indenture, the Ninth
Supplemental Indenture, the Tenth Supplemental Indenture, and the Eleventh
Supplemental Indenture (the Original Indenture as so supplemented being
hereafter referred to as the "Indenture"), has duly determined (A) to create
a thirteenth series of bonds under the Indenture to be designated as "First
Mortgaged Bonds, Series M, 7 1/2%" (herein sometimes called "bonds of Series
M"), (B) that such bonds shall be coupon bonds register able as to principal
and registered bonds without coupons, (C) that such coupon bonds shall be
exchangeable for registered bonds without coupons and registered bonds
without coupons shall be exchangeable for coupon bonds, and (d) that the
coupon bonds of Series M, the coupons appertaining thereto and the registered
bonds without coupons of said series, are to be substantially in the
following forms, respectively:
[FORM OF COUPON BOND OF SERIES M]
CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
First Mortgage Bond, Series M, 7 1/2%
Due, April 1, 1999
2
<PAGE>
No. $1000
CENTRAL LOUISIANA ELECTRIC COMPANY, INC., a corporation organized and
existing under the laws of the State of Louisiana (hereinafter called the
"Company", which term shall include any successor corporation as defined in the
Indenture hereinafter referred to), for value received, hereby promises to pay
to bearer, or, if this bond be registered as to principal, to the registered
holder hereof, on April 1, 1999, at the office or agency of the Company in the
City of New Orleans, Louisiana, One Thousand Dollars ($1000) in such coin or
currency of the United States of America as at the time of payment shall be
legal tender for public and private debts, and to pay interest thereon
semi-annually on October 1 and April 1 of each year at the rate of seven and
one-half per centum, (7 1/2%) per annum at such office or agency in like coin or
currency, from April 1, 1969, until this bond shall mature, according to its
terms or on prior redemption or by declaration or otherwise, and at the rate of
eight per centum (8%) per annum. on any overdue principal and premium (if any)
and (to the extent permitted by law) on any overdue installment of interest,
but, until the maturity hereof, only upon presentation and surrender of the
coupons for such interest installments as are evidenced thereby, hereto
appertaining, as they shall severally mature.
This bond is one of an authorized issue of bonds of the Company known as
its First Mortgage Bonds, limited to Five Hundred Million Dollars
($500,000,000) at any one time outstanding, issued and to be issued, in one
or more series, and equally and ratably secured (except insofar as a sinking
fund or other similar fund established in accordance with the provisions of
the Indenture may afford additional security for the bonds of any specific
series) by an indenture (hereinafter called the "Original Indenture") dated
as of July, 1, 1950, executed by the Company to THE NATIONAL BANK OF COMMERCE
OF NEW ORLEANS as Trustee (hereinafter called the "Trustee"), as supplemented
and amended by a First Supplemental Indenture dated as of October 1, 1951, a
Second Supplemental Indenture dated as of June 1, 1952, a Third Supplemental
Indenture dated as of January 1, 1954, a Fourth Supplemental Indenture dated
as of November 1, 1954, a Fifth Supplemental Indenture dated as of June 1,
1956, a Sixth Supplemental Indenture dated as of October 1, 1957, a Seventh
Supplemental Indenture dated as of April 1, 1939, an Eighth Supplemental
Indenture dated as of March 1, 1960, a Ninth Supplemental Indenture dated as
of October 1, 1962, a Tenth Supplemental Indenture dated as of September 1,
1965, and an Eleventh Supplemental Indenture dated as of April 1, 1969,
executed by the Company to the Trustee, to which Original Indenture, First
Supplemental Indenture, Second Supplemental Indenture, Third Supplemental
Indenture, Fourth Supplemental Indenture, Fifth Supplemental Indenture, Sixth
Supplemental Indenture, Seventh Supplemental Indenture, Eighth Supplemental
Indenture, Ninth Supplemental Indenture, Tenth Supplemental Indenture,
Eleventh Supplemental Indenture and all other indentures supplemental thereto
(said Original Indenture as so supplemented and amended being herein called
the "Indenture") reference is hereby made for a description of the property
mortgaged and pledged, the nature and extent of the security, the rights of
the holders of the bonds and of the Company in respect of such security, the
rights, duties and immunities of the Trustee, and the terms and conditions
upon which the bonds are, and are to be, secured. As provided in the
Indenture, the bonds may be issued in series for various principal sum , may
bear different dates and mature at different times, may bear interest at
different rates and may otherwise vary as in the Indenture provided or
permitted. This bond is one
3
<PAGE>
of the bonds described in the Indenture and designated therein as "First
Mortgage Bonds, Series M, 7 1/2%" hereinafter referred to as the "bonds of
Series M").
The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the holders of not less than 75% in aggregate principal
amount of all the bonds at the time outstanding, determined and evidenced as
in the Indenture provided, or in case the rights under the Indenture of the
holders of bonds of one or more, but less than all, of the series of bonds
outstanding shall be affected, then with the consent of the holders of not
less than 75% in aggregate principal amount of the bonds at the time
outstanding of the one or more series affected, determined and evidenced as
in the Indenture provided, to execute supplemental indentures adding any
provisions to or changing in any manner or eliminating any of the provisions
of the Indenture or modifying in any manner the rights of the holders of the
bonds and coupons; provided, however, that no such supplemental indenture
shall (i) extend the fixed maturity of any bonds, or reduce the rate or
extend the time of payment of interest thereon, or modify the terms of
payment of principal at maturity or by redemption, or otherwise modify the
terms of payment of any bond, without the consent of the holder of each bond
so affected, or (ii) reduce the percentage of bonds, the holders of which are
required to consent to any such supplemental indenture, without the consent
of the holders of all bonds then outstanding, or (iii) permit the creation of
any lien ranking prior to or equal with the lien of the Indenture on any of
the mortgaged and pledged property without the consent of the holders of all
bonds then outstanding, or (iv) deprive the holder of any outstanding bond of
the lien of the Indenture on any of the mortgaged and pledged property
without the consent of the holder of each bond so affected. Any such consent
by the holder of this bond (unless effectively revoked as provided in the
Indenture) shall be conclusive and binding upon such holder and upon all
future holders of this bond, irrespective of whether or not any notation of
such consent is made upon this bond. No reference herein to the Indenture and
no provision of this bond or of the Indenture shall alter or impair the
obligation of the Company, which is absolute and unconditional, to pay at the
stated or accelerated maturity herein and in the Indenture provided, the
principal of and interest and premium, if any, on this bond at the time and
place and at the rate and in the coin or currency herein prescribed.
The coupon bonds of Series M are issuable in the denomination of $1,000.
The registered bonds without coupons of Series M are issuable in
denominations of $1,000 and any multiple of $1,000. At the office or agency
to be maintained by the Company in said City of Now Orleans and in the
manner, subject to the limitations, and upon payment of the charges provided
in the Indenture, coupon bonds of such series, with all unmatured coupons and
any matured coupons in default thereto appertaining, may be exchanged for a
like aggregate principal amount of registered bonds without coupons of such
series, and registered bonds without coupons of such series may be exchanged
for a like aggregate principal amount of coupon bonds of such series bearing
all unmatured coupons and any matured coupons in default, or for a like
aggregate principal amount of registered bonds without coupons of such series
of other authorized denominations.
The bonds of Series M are entitled to the benefit of the Sinking Fund
provided for in Article II of the Eleventh Supplemental Indenture.
The bonds of Series M may be redeemed, either at the option of the Company
or pursuant to certain requirements of the Indenture, on any date prior to
maturity, as a whole or from time to
4
<PAGE>
time in part, upon publication at least once in each of four successive
calendar weeks, upon any business day of each such calendar week, of notice
of such redemption in a newspaper printed in the English language and
customarily published on each business day and of general circulation in the
Borough of Manhattan, The City of New York, New York, and like publication in
a similar newspaper of said City of New Orleans, the first publication in
each case to be not less than thirty (30) days and not more than sixty (60)
days before such redemption date (provided, however, that if all the bonds of
Series M at the time outstanding shall be registered bonds without coupons or
coupon bonds registered as to principal, such publication need not be made,
but, in lieu thereof, such notice may be given by mailing the same to each
registered holder of a bond so to be redeemed directed to his registered
address not less than thirty (30) days and not more than sixty (60) days
before the redemption date); all as provided in the Indenture; provided,
nevertheless, that no bonds of Series M (excepting those bonds of Series M
redeemed pursuant to clause (iii) of the paragraph immediately following) may
be redeemed at the option of the Company prior to April 1, 1974, directly or
indirectly as a part of, or in anticipation of, any refunding operation
involving the incurring of indebtedness which has an interest cost to the
Company, computed in accordance with generally accepted financial practice,
of less than 7.47% per annum.
If redeemed (i) by the application of moneys in the Sinking Fund for bonds
of Series M, provided for in Article H of the Eleventh Supplemental
Indenture, or moneys in the depreciation fund provided for in Section 5.07 of
the Indenture or (ii) by the application of moneys received by the Trustee in
connection with any release of property upon any acquisition thereof by any
municipal corporation or other governmental subdivision or governmental body
or public authority or (iii) by the application of any moneys (provided the
date fixed for such redemption under this clause (iii) occurs within sixty
(60) days of the Company's merger or consolidation, or of the Company's
conveyance or transfer of all or substantially all of the property mortgaged
and pledged under the Indenture, which merger, consolidation, conveyance or
transfer comes within the terms of and 's permitted by Section 13.01 of the
Original Indenture), the bonds or Series M are redeemable in such coin or
currency of the United States of America as at the time of payment shall be
legal tender for public and private debts, at the redemption price at the
time applicable, as set forth in Column A of the following schedule, and if
redeemed otherwise than by the application of such moneys, the bonds of
Series M are redeemable in like coin or currency, at the redemption price at
the time applicable, as set forth in Column B of the following schedule,
together with, in each case, interest accrued to the date fixed for
redemption:
<TABLE>
<CAPTION>
IF REDEEMED DURING REDEMPTION PRICE
TWELVE MONTH PERIOD (PERCENTAGE OF
ENDING MARCH 31, PRINCIPAL AMOUNT)
---------------- -----------------
<S> <C> <C>
1970 .................................... 101.50 109.00
1971 .................................... 101.50 108.69
1972 .................................... 101.50 108.38
1973 .................................... 101.50 108.07
1974 .................................... 101.50 107.76
1975 .................................... 101.48 107.45
1976 .................................... 101.46 107.14
1977 .................................... 101.44 106.83
1978 .................................... 101.41 106.52
5
<PAGE>
1979 .................................... 101.38 106.21
1980 .................................... 101.35 105.90
1981 .................................... 101.32 105.59
1982 .................................... 101.29 105.28
1983 .................................... 101.25 104.97
1984 .................................... 101.21 104.66
1985 .................................... 101.17 104.35
1986 .................................... 101.13 104.04
1987 .................................... 101.08 103.73
1988 .................................... 101.03 103.42
1989 .................................... 100.97 103.11
1990 .................................... 100.91 102.80
1991 .................................... 100.85 102.49
1992 .................................... 100.78 102.18
1993 .................................... 100.71 101.87
1994 .................................... 100.63 101.56
1995 .................................... 100.54 101.25
1996 .................................... 100.45 100.94
1997 .................................... 100.35 100.63
1998 .................................... 100.24 100.32
1999 .................................... 100.00 100.00
</TABLE>
If this bond is called for redemption and payment hereof is duly provided
for as specified in the Indenture, interest shall cease to accrue hereon from
and after the date fixed for redemption.
The Indenture provides that if the Company shall deposit with the Trustee
in trust for the purpose funds sufficient to pay the principal of all of the
bonds of any series, or such of the bonds of any series as have been or are
to be called for redemption, and premium, if any, thereon, and all interest
payable on such bonds to the date on which they become due and payable at
maturity or upon redemption or otherwise, and shall comply with the other
provisions of the Indenture in respect thereof, then from the date of such
deposit such bonds shall no longer be entitled to any lien or benefit under
the Indenture.
The principal hereof may be declared or may become due prior to the express
date of the maturity hereof on the conditions, in the manner and at the time
set forth in the Indenture, upon the occurrence of a completed default as in
the Indenture provided; subject, however, to the right, under certain
circumstances, of the holders of a majority in principal amount of the bonds
outstanding to annul such declaration.
This bond is negotiable and shall pass by delivery unless registered as to
principal at the office or agency of the Company in said City of New Orleans,
and such registration noted hereon, after which no valid transfer hereof can be
made, except at such office or agency, until after registered transfer to
bearer, but after such registered transfer to bearer this bond shall be again
transferable by delivery. Such registration, however, shall not affect the
negotiability of the coupons, which shall always remain payable to bearer, be
treated as negotiable and pass by delivery. The Company and the Trustee, any
paying agent and any bond registrar may deem and
6
<PAGE>
treat the bearer of this bond if it is not registered as to principal, or, if
this bond is registered as herein authorized, the person in whose name this
bond is registered, as the absolute owner hereof, and the bearer of any
coupon hereunto appertaining, as the absolute owner thereof, whether or not
this bond or such coupon shall be overdue, for the purpose of receiving
payment and for all other purposes and neither the Company nor the Trustee
nor any paying agent nor any bond registrar shall be affected by any notice
to the contrary.
No recourse shall be had for the payment of the principal of or interest
on this bond, or for any claim based hereon, or otherwise in respect hereof,
or based on or in respect of the Indenture, against any incorporator or any
past, present or future subscriber to the capital stock, stockholder, officer
or director, as such, of the Company or of any successor corporation, either
directly or through the Company or any successor corporation, under any rule
of law, statute or constitution or by the enforcement of any, assessment or
otherwise, all such liability of incorporators, subscribers, stockholders,
officers and directors, as such, being waived and released by the holder and
owner hereof by the acceptance of this bond and being likewise waived and
released by the terms of the Indenture.
Neither this bond nor the coupons hereto attached shall become valid or
obligatory for any purpose until THE NATIONAL BANK OF COMMERCE IN NEW ORLEANS,
the Trustee under the Indenture, or its successor thereunder, shall have signed
the certificate of authentication endorsed hereon.
IN WITNESS WHEREOF, CENTRAL LOUISIANA ELECTRIC COMPANY, INC. has caused
this bond to be signed in its name by its President or one of its
Vice-Presidents and its corporate seal, or a facsimile thereof, to be affixed
hereto, and attested by its Secretary or one of its Assistant Secretaries, and
interest coupons bearing the facsimile signature of its Treasurer to be attached
hereto, and this bond to be dated April 1, 1969.
CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
By
--------------------------------------
PRESIDENT.
Attest:
- --------------------------------------------
SECRETARY.
[FORM OF COUPON FOR BONDS OF SERIES M]
No. $
---------------- ------------------
On the first day ____________________ of 19_____, unless the bond
hereinafter mentioned shall have been called for previous redemption and payment
of the redemption price thereof shall have been duly provided for, CENTRAL
LOUISIANA ELECTRIC COMPANY, INC. will pay to bearer, upon surrender of this
coupon, at its office or agency in the City of New Orleans, Louisiana,
7
<PAGE>
Thirty Seven and 50/100 Dollars in such coin or currency of the United States
of America as at the time of payment shall be legal tender for public and
private debts, being six months' interest then due on its First Mortgage
Bond, Series M, 7 1/2%, No. __________.
-------------------------------
Treasurer.
8
<PAGE>
[FORM OF REGISTERED BOND OF SERIES M.]
CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
First Mortgage Bond, Series M, 7 1/2%
Due April 1, 1999
No. $
---------------- -----------------
CENTRAL LOUISIANA ELECTRIC COMPANY, INC., a corporation Organized and
existing under the laws of the State of Louisiana (hereinafter called the
"Company", which term shall include any successor corporation as defined in the
Indenture hereinafter referred to), for value received, hereby promises to pay
to ________________________, or registered assigns, on April 1, 1999, at
the office or agency of the Company in the City of New Orleans, Louisiana,
______________________ Dollars ($_________________) in such coin or
currency of the United States of America as at the time of payment shall be
legal tender for public and private debts, and to pay interest thereon
semi-annually on October 1 and April 1 of each year, at the rate of seven and
one-half per centum (7 1/2%) per annum at such office or agency, in like coin or
currency, from the interest payment date next preceding the date of this bond,
or if this bond be dated prior to October 1, 1969, then from April 1, 1969,
until this bond shall mature, according to its terms or on prior redemption or
by declaration or otherwise, and at the rate of eight per centum (8%) per annum.
on any overdue principal and premium (if any) and (to the extent permitted by
law) on any overdue installment of interest.
This bond is one of an authorized issue of bonds of the Company known as
its First Mortgage Bonds, limited to Five Hundred Million Dollars
($500,000,000) at any one time outstanding, issued and to be issued, in one
or more series, and equally and ratably secured (except insofar as a sinking
fund or other similar fund established in accordance with the provisions of
the Indenture may afford additional security for the bonds of any specific
series) by an indenture (hereinafter called the "Original Indenture") dated
as of July 1, 1950, executed by the Company to THE NATIONAL BANK OF COMMERCE
of NEW ORLEANS, as Trustee (hereinafter called the "Trustee"), as
supplemented and amended by a First Supplemental Indenture dated as of
October 1, 1951, a Second Supplemental Indenture dated as of June 1, 1952, a
Third Supplemental Indenture dated as of January 1, 1954, a Fourth
Supplemental Indenture dated as of November 1, 1954, a Fifth Supplemental
Indenture dated as of June 1, 1956, a Sixth Supplemental Indenture dated as
of October 1, 1957, a Seventh Supplemental Indenture dated as of April 1,
1959, an Eighth Supplemental Indenture dated as of March 1, 1960, a Ninth
Supplemental Indenture dated as of October 1, 1962, a Tenth Supplemental
Indenture dated as of September 1, 1965, and an Eleventh Supplemental
Indenture dated as of April 1, 1969, executed by the Company to the Trustee,
to which Original Indenture, First Supplemental Indenture, Second
Supplemental Indenture, Third Supplemental Indenture, Fourth Supplemental
Indenture, Fifth Supplemental Indenture, Sixth Supplemental Indenture,
Seventh Supplemental Indenture, Eighth Supplemental Indenture, Ninth
Supplemental Indenture, Tenth Supplemental Indenture, Eleventh Supplemental
Indenture, and all other indentures supplemental thereto (said Original
Indenture as so supplemented and amended being herein called the "Indenture")
reference is hereby made for a description of the property mortgaged and
pledged, the nature and extent of the security, the rights of the holders of
the bonds and of the Company in respect of such security, the rights, duties
and immunities of the Trustee, and the terms and conditions upon which the
bonds
9
<PAGE>
are, and are to be, secured. As provided in the Indenture, the bonds may be
issued in series for various principal sums, may bear different dates and
mature at different times, may bear interest at different rates and may other
wise vary as in the Indenture provided or permitted. This bond is one of the
bonds described in the Indenture and designated therein as "First Mortgage
Bonds, Series M, 7 1/2% (hereinafter referred to as the "bonds of Series M").
The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the holders of not less than 75% in aggregate principal
amount of all the bonds at the time outstanding, determined and evidenced as
in the Indenture provided, or in case the rights under the Indenture of the
holders of bonds of one or more, but less than all, of the series of bonds
outstanding shall be affected, then with the consent of the holders of not
less than 75% in aggregate principal amount of the bonds at the time
outstanding of the one or more series affected, determined and evidenced as
in the Indenture provided, to execute supplemental indentures adding any
provisions to or changing in any manner or eliminating any of the provisions
of the Indenture or modifying in any manner the rights of the holders of the
Bonds and coupons; provided, however, that no such supplemental indenture
shall (i) extend the fixed maturity of any bonds, or reduce the rate or
extend the time of payment of interest thereon, or modify the terms of
payment of principal at maturity or by redemption, or otherwise modify the
terms of payment of any bond, without the consent of the holder of each bond
so affected, or (d) reduce the percentage of bonds, the holders of which are
required to consent to any such supplemental indenture, without the consent
of the holders of all bonds then outstanding, or (iii) permit the creation of
any lien ranking prior to or equal with the lien of the Indenture on any of
the mortgaged and pledged property without the consent of the holders of all
bonds then outstanding, or (iv) deprive the holder of any outstanding bond of
the lien of the Indenture on any of the mortgaged and pledged property
without the consent of the holder of each bond so affected. Any such consent
by the holder of this bond (unless effectively revoked as provided in the
Indenture) shall be conclusive and binding upon such holder and upon all
future holders of this bond, irrespective of whether or not any notation of
such consent is made upon this bond. No reference herein to the Indenture and
no provision of this bond or of the Indenture shall alter or impair the
obligation of the Company, which is absolute and unconditional, to pay at the
stated or accelerated maturity herein and in the Indenture provided, the
principal of and interest and premium, if any, on this bond at the time and
place and at the rate and in the coin or currency herein prescribed.
The coupon bonds of Series M are issuable in the denomination of $1,000.
The registered bonds without coupons of Series M are issuable in
denominations of $1,000 and any multiple of $1,000. At the office or agency
to be maintained by the Company in said City of New Orleans and in the
manner, subject to the limitations, and upon payment of the charges provided
in the Indenture, coupon bonds of such series, with all unmatured coupons and
any matured coupons in default thereto appertaining, may be exchanged for a
like aggregate principal amount of registered bonds without coupons of such
series, and registered bonds without coupons of such series may be exchanged
for a like aggregate principal amount of coupon bonds of such series bearing
all unmatured coupons and any matured coupons in default, or for a like
aggregate principal amount of registered bonds without coupons of such series
of other authorized denominations.
The bonds of Series M are entitled to the benefit of the Sinking Fund
provided for in Article II of the Eleventh Supplemental Indenture.
10
<PAGE>
The bonds of Series M may be redeemed, either at the option of the Company
or pursuant to certain requirements of the Indenture, on any date prior to
maturity, as a whole or from time to time in part, upon publication at least
once in each of four successive calendar weeks, upon any business day of each
such calendar week, of notice of such redemption in a newspaper printed in
the English language and customarily published on each business day and of
general circulation in the Borough of Manhattan, The City of New York, New
York, and like publication in a similar newspaper of said City of New
Orleans, the first publication in each case to be not less than thirty (30)
days and not more than sixty (60) days before such redemption date (provided,
however, that if all the bonds of Series M at the time outstanding shall be
registered bonds without coupons or coupon bonds registered as to principal,
such publication need not be made, but, in lieu thereof, such notice may, be
given by mailing the same to each registered holder of a bond so to be
redeemed directed to his registered address not less than thirty (30) days
and not more than sixty (60) days before the redemption date); all as
provided in the Indenture; provided, nevertheless, that no bonds of Series M
(excepting those bonds of Series M redeemed pursuant to clause (iii) of the
paragraph immediately following) may be redeemed at the option of the Company
prior to April 1, 1974, directly or indirectly as a part of, or in
anticipation of, any refunding operation involving the incurring of
indebtedness which has an interest cost to the Company, computed in
accordance with generally accepted financial practice, of less than 7.47% per
annum.
If redeemed (i) by, the application of moneys in the Sinking Fund for
bonds of Series M, provided for in Article II of the Eleventh Supplemental
Indenture, or moneys in the depreciation fund provided for in Section 5.07 of
the Indenture or (ii) by the application of moneys received by the Trustee in
connection with any release of property upon any acquisition thereof by any
municipal corporation or other governmental subdivision or governmental body or
public authority or (iii) by the application of any moneys (provided the date
fixed for such redemption under this clause (iii) occurs within sixty (60) days
of the Company's merger or consolidation, or of the Company's conveyance or
transfer of all or substantially all of the property mortgaged and pledged under
the Indenture, which merger, consolidation, conveyance or transfer comes within
the terms of and is permitted by Section 13.01 of the Original Indenture), the
bonds of Series M are redeemable in such coin or currency, of the United States
of America as at the time of payment shall be legal tender for public and
private debts, at the redemption price at the time applicable, as set forth in
Column A of the following schedule, and if redeemed otherwise than by the
application of such moneys, the bonds of Series M are redeemable in like coin or
currency, at the redemption price at the time applicable, as set forth in Column
B of the following schedule, together with, in each case, interest accrued to
the date fixed for redemption:
(There will be inserted here in all registered bonds without
coupons of Series M, the same table of redemption prices and
corresponding dates as are specified for such redemption in the form of
coupon bond of Series M hereinabove set forth.)
If this bond is called for redemption and payment hereof is duly provided
for as specified in the Indenture, interest shall cease to accrue hereon from
and after the date fixed for redemption.
The Indenture provides that if the Company shall deposit with the Trustee
in trust for the purpose funds sufficient to pay the principal of all of the
bonds of any series, or such of the bonds
11
<PAGE>
of any series as have been or are to be called for redemption, and premium,
if any, thereon, and all interest payable on such bonds to the date on which
they become due and payable at maturity or upon redemption or otherwise, and
shall comply with the other provisions of the Indenture in respect thereof,
then from the date of such deposit such bonds shall no longer be entitled to
any lien or benefit under the Indenture.
The principal hereof may be declared or may become due prior to the express
date of the maturity hereof on the conditions, in the manner and at the time
set forth in the Indenture, upon the occurrence of a completed default as in
the Indenture provided; subject, however, to the right, under certain
circumstances, of the holders of a majority in principal amount of the bonds
outstanding to annul such declaration.
This bond is transferable as prescribed in the Indenture by the registered
holder hereof in person, or by his duly authorized attorney, at the office or
agency of the Company in said City of New Orleans, upon surrender and
cancellation of this bond, and upon payment, if the Company shall require it,
of the transfer charges prescribed in the Indenture, and thereupon, a new
registered bond or bonds with out coupons of authorized denominations of the
same series and for the same aggregate principal amount will be issued to the
transferee in exchange herefor as provided in the Indenture. The Company and
the Trustee, any paying agent and any bond registrar may deem and treat the
person in whose name this bond is registered as the absolute owner hereof,
whether or not this bond shall be overdue, for the purpose of receiving
payment and for all other purposes and neither the Company nor the Trustee
nor any paying agent nor any bond registrar shall be affected by any notice
to the contrary.
No recourse shall be had for the payment of the principal of or interest
on this bond, or for any claim based hereon, or otherwise in respect hereof,
or based on or in respect of the Indenture, against any incorporator or any
past, present or future subscriber to the capital stock, stockholder, officer
or director, as such, of the Company or of any successor corporation, either
directly or through the Company or any successor corporation, under any rule
of law, statute or constitution or by the enforcement of any assessment or
otherwise, all such liability of incorporators, subscribers, stockholders,
officers and directors, as such, being waived and released by the holder and
owner hereof by the acceptance of this bond and being likewise waived and
released by the terms of the Indenture.
This bond shall not become valid or obligatory for any purpose until THE
NATIONAL BANK OF COMMERCE IN NEW ORLEANS, the Trustee under the Indenture, or
its successor thereunder, shall have signed the certificate of authentication
endorsed hereon.
IN WITNESS WHEREOF, CENTRAL LOUISIANA ELECTRIC COMPANY, INC. has caused
this bond to be signed in its name by its President or one of its
Vice-Presidents and its corporate seal or a facsimile thereof, to be affixed
hereto and attested by its Secretary or one of its Assistant Secretaries, and
this bond to be dated _______________________.
By
-----------------------------------------------------
PRESIDENT.
12
<PAGE>
Attest:
- --------------------------------------------
SECRETARY.
: and
13
<PAGE>
WHEREAS, all acts and things prescribed by law and by the charter and
by-laws of the Company necessary to make the bonds of Series M, when executed by
the Company and authenticated by the Trustee, as in the Original Indenture
provided, valid, binding and legal obligations of the Company, entitled in all
respects to the security of the said Original Indenture and indentures
supplemental thereto, have been performed; and
WHEREAS, the Company since the date of the Original Indenture has
acquired additional property not heretofore specifically subjected to the lien
of the Original Indenture; and it is desired to add certain further covenants,
restrictions and conditions for the protection of the mortgaged and pledged
property and the holders of the bonds, as provided in this Eleventh Supplemental
Indenture, which the Board of Directors of the Company and the Trustee consider
to be for the protection of the holders of the bonds; and the Company desires to
issue bonds of Series M; and the Company therefore deems it advisable to enter
into this Eleventh Supplemental Indenture in the form and terms here of; and
WHEREAS, the execution and delivery of this Eleventh Supplemental
Indenture have been duly, authorized by the Board of Directors of the Company at
a meeting duly called and held according to law, and have been approved by the
written consents of the holders of in excess of 75% of the principal amount of
bonds outstanding under the Indenture at the date of execution hereof, and all
conditions and requirements necessary to make this Eleventh Supplemental
Indenture a valid, binding and legal instrument in accordance with its terms,
for the purposes herein expressed, and the execution and delivery hereof, in the
form and terms hereof, have been in all respects duly authorized;
Now, THEREFORE, THIS ELEVENTH SUPPLEMENTAL INDENTURE WITNESSETH: That
Central Louisiana Electric Company, Inc., by way of further assurance and in
consideration of the premises and of the acceptance by the Trustee of the trusts
hereby created and of one dollar to it duly paid by the Trustee at or before the
ensealing and delivery of these presents, the receipt whereof is hereby
acknowledged, and in order to further secure the payment of the principal of,
the premium, if any, and the interest on all bonds at any time issued and
outstanding under the Indenture, according to their tenor and effect, and the
performance and observance by the Company of all the covenants and conditions
herein and therein contained, and of said bonds, has executed and delivered this
Eleventh Supplemental Indenture, and has granted, bargained, sold, aliened,
remised, released, conveyed, assigned, transferred, mortgaged, hypothecated,
affected, pledged, set over and confirmed, and by these presents does grant,
bargain, sell, alien, remise, release, convey, assign, transfer, mortgage,
hypothecate, affect, pledge, set over and confirm, unto The National Bank of
Commerce in New Orleans, as Trustee, and to its successors in the trust, and to
its and their assigns forever, all the following described properties of the
Company, that is to say:
All properties, real, personal and mixed, tangible and intangible,
owned by the Company on the date of the execution hereof or which may be
hereafter acquired by it (except such property now owned or hereafter acquired
as is expressly excepted from the lien of the Indenture by the terms of the
Original Indenture, the First Supplemental Indenture, the Second Supplemental
Indenture, the Third Supplemental Indenture, the Fourth Supplemental Indenture,
the Fifth Supplemental Indenture, the Sixth Supplemental Indenture, the Seventh
Supplemental Indenture,
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the Eighth Supplemental Indenture, the Ninth Supplemental Indenture, the
Tenth Supplemental Indenture, or this Eleventh Supplemental Indenture).
The property covered by the lien of the Indenture shall include
particularly, among other property without prejudice to the general and
particular descriptions of property contained in the Original Indenture, in the
First Supplemental Indenture, in the Second Supplemental Indenture, in the Third
Supplemental Indenture, in the Fourth Supplemental Indenture, in the Fifth
Supplemental Indenture, in the Sixth Supplemental Indenture, in the Seventh
Supplemental Indenture, in the Eighth Supplemental Indenture, in the Ninth
Supplemental Indenture, in the Tenth Supplemental Indenture, and in this
Eleventh Supplemental Indenture, or to the generality of the language now or
hereafter contained in the Indenture, the following described property:
A. The following described real estate, together with all improvements
thereon situated in the State of Louisiana:
PARCEL 1: A certain piece, parcel or lot of ground with all rights,
ways and privileges appertaining thereto and all. improvements situated thereon
being located in the West Half of the Northeast Quarter (W 1/2 of NE 1/4 ),
Section 16, Township 3 South, Range 3 West, Allen Parish, Louisiana, and being
more particularly described according to Plat of Survey by R. A. Fenstermaker,
dated May, 1965, attached to and made a part of the Parcel 1 Deed, and being
more particularly described as follows, to-wit:
Begin at a point 836.4 feet West and 238.6 feet North of the Southeast
Corner of the Northwest Quarter of the Northeast Quarter of Section 16, Township
3 South, Range 3 West, said point being located on the East right-of-way line of
a state highway and marked "A" on the attached plat; thence run East 159.4 feet
to a Point B on the attached plat; thence South 100 feet to Point C; thence
North 89 degrees 56 minutes East 574.3 feet to Point D; thence North 18 degrees
21 minutes East 316.2 feet to Point E; thence South 89 degrees 56 minutes West
780.8 feet to Point F on the East right-of-way line of State Highway No. 1152;
thence South 14 degrees 41 minutes West 206.8 feet to Point A and the point of
beginning. Said property being North of and adjacent to that certain tract
described in the sale from Industrial Lumber Company, Inc. to Central Louisiana
Electric Company, Inc. by deed dated August 19, 1964, recorded August 24, 1964,
in Conveyance Book 141, Page 319, Entry No. 169,697, of the records of Allen
Parish, Louisiana, and points A, B, C, and D mentioned in this description being
the identical Points A, B, C, and D mentioned in the description of the deed
above referred to, the tract herein conveyed containing 4.90 acres.
Being the same property acquired by Central Louisiana Electric Company,
Inc. from Industrial Lumber Company, Inc. by deed dated July 6, 1965 (the
"Parcel 1 Deed"), before Gladys C. Tarver, Notary Public for the Parish of
Rapides, recorded in Conveyance Book 145, Page 129, Entry No. 175258, records of
Allen Parish, Louisiana.
There is located on Parcel 1, above described, a service center.
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PARCEL 2: Certain pieces, parcels or tracts of land with all rights,
ways and privileges attached thereto and all buildings and improvements thereon
situated, being Tract A, Tract B, Tract D and Tract E on plat of survey dated
June 25, 1965 by Daniel D. Sandefur, La. C.E.--3991, attached to and made a part
of the Parcel 2 Deed and being a part of the same property acquired by Charles
M. Waters, Jr. and Habeeb Monsur, Jr. from Robert J. Jones, et al, dated May 8,
1964, recorded May 8, 1964 in Conveyance Book 641, Page 518, Entry No. 497232 of
the records of Rapides Parish, Louisiana, and being more particularly described
as follows, to-wit:
TRACT A: A 7.490 acre tract fronting 539.4 feet on La. Hwy.
No. 1 in Section 9, Township 5 North, Range 2 West (T5N,
R2W), Rapides Parish, Louisiana, and being more particularly
described as follows: Begin at the rear or North corner
common to Lots 3 and 4 of Colonial Estates Subdivision, as
shown on plat thereof recorded in Plat Book 12, Page 208,
records of Rapides Parish, Louisiana, and run North 85
degrees 28 minutes West 109.9 feet; thence run North 0
degrees 10 minutes West 798.32 feet to the point of beginning
on the North line of La. Hwy. 1; thence run North 64 degrees
45 minutes West 218.17 feet along the North line of La. Hwy.
1 to the East line of a 40 foot Parish road; thence run North
1 degree 36 minutes East 521.7 feet along the East line of
said road to the South line of an intersecting 40 foot parish
road; thence run South 76 degrees 45 minutes East 633.53 feet
along the South line of said road; thence run South 13
degrees 17 minutes West 623.1 feet along the West line of a
1.0 acre lot and a 2.5 acre lot previously sold out of the
Jones Tract to the North line of La. Hwy. 1; thence run North
64 degrees 45 minutes West 321.23 feet to the point of
beginning.
TRACT B: A 5.410 acre tract in Sections 9 and 10, Township 5
North, Range 2 West (T5N, R2W), Rapides Parish, Louisiana and
being more particularly described as follows, to-wit: Begin
at the Northwest corner of Tract A, herein above described
and run South 76 degrees 45 minutes East 258.14 feet along
the South line of a 40 foot parish road to the point of
beginning; thence run North 24 degrees 13 minutes East 1011.2
feet; thence run North 1 degree 10 minutes East 135 feet to
the North line of Old La. Hwy. No. 20 (Old Boyce Road);
thence run North 85 degrees 04 minutes East 201.1 feet along
the North line of Old Boyce Road to the East line of the R.
J. Jones Tract; thence run South 1 degree 10 minutes West
197.15 feet along the East line of the R. J. Jones Tract;
thence run South 24 degrees 13 minutes West 1013.22 feet to
the North line of Tract A herein above described; thence run
North 76 degrees 45 minutes West along said North line of
Tract "A" 203.72 feet to the point of beginning. The 5.410
acres above described includes 0.275 acres in the Old Boyce
Road; 0.468 acres in the Texas & Pacific right-of-way; and
0.187 acres in the 40 foot Parish Road adjacent to Tract "A"
leaving a net tract of 4.480 acres unencumbered by
servitudes.
TRACT D: A 3.490 acre tract in Section 9, Township 5 North,
Range 2 West (T5N, R2W), Rapides Parish, Louisiana, being
adjacent to and North of Lots 3 and 4 of Colonial Estates
Subdivision, as shown in Plat Book 12, Page 208, records of
Rapides Parish, Louisiana, and more particularly described as
follows: Begin at the rear or
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North corner common to Lots 3 and 4 of Colonial Estates and
ran North 85 degrees 28 minutes West 109.9 feet along the
North line of Lot 3; thence run North 0 degrees 10 minutes
West 798.32 feet to the North right of way line of La.
Hwy. No. 1; thence run South 64 degrees 45 minutes East
221.43 feet along the North line of La. Hwy. No. 1; thence
run South 0 degrees 10 minutes East 725.64 feet to the rear
or North line of Lot 4 of Colonial Estates; thence run North
81 degrees 46 minutes West 91.41 feet along the rear line of
Lot 4 to the point of beginning. The above described 3.490
acre tract includes 0.508 acres in Louisiana Highway No. 1
leaving a net acreage of 2.982 acres unencumbered by
servitudes.
TRACT E: Lots 12, 20 and 31 of Colonial Estates according to
official plat thereof recorded in Plat Book 12, Pap 208 of
the records of Rapides Parish, Louisiana and a portion of
Lots 3 and 4 of Colonial Estates Subdivision, more
particularly described as follows: Begin at the comer on
Fredericksburg Road common to Lots 3 and 4 of Colonial
Estates and run North 84 degrees 12 minutes West 76.2 feet
along the South line of Lot 3; thence run North 0 degrees 10
minutes West 324.33 feet to the rear line of Lot 3; thence
run South 85 degrees 28 minutes East 109.9 feet along the
rear or North line of Lot 3 to the rear corner common to Lots
3 and 4; thence run South 81 degrees 46 minutes East 91.41
feet; thence run South 0 degrees 10 minutes East 322.87 feet
to the South line of Lot 4; thence run North 84 degrees 12
minutes West 124.9 feet along the South line of Lot 4 to the
point of beginning.
Being the same property acquired by Central Louisiana Electric Company,
Inc. from Charles M. Waters and Habeeb Monsur, Jr. by deed dated July 6, 1965
(the "Parcel 2 Deed"), before Nauman S. Scott, Notary Public for Parish of
Rapides, Louisiana, recorded in Conveyance Book 663, Page 365, Act No. 512331,
records of Rapides Parish, Louisiana.
There is located on Parcel 2, above described, an electric substation
and a 138 KV transmission line.
PARCEL 3: A certain vacant lot or parcel of land situated in the
central portion of irregular Section 61, T-4-S, R-3-E, of the La. Mer.,
Evangeline Parish, La., having a front of 100 feet on U. S. Highway 167 by a
depth of 100 feet between parallel lines, said property being taken from the
extreme southeast corner of a 63 arpent tract of land belonging to the vendor,
and being further described as bounded on the North and West by Mrs. Olga F.
Dupre, Vendor herein, on the East by Dillard Sylvester, and on the South by the
said U. S. Highway 167, all. as will be more fully shown by a Plat of Survey
dated July, 13, 1963, by Morgan Goudeau and Associates, which plat is duly
recorded in the Plat records of Evangeline Parish, Louisiana.
Being part of the same property acquired by the Vendor by act of Cash
Sale from Avit B. Fontenot dated October 12, 1956, which act is recorded at
Conveyance Book B-139, at Pages 268, et seq., records of Evangeline Parish,
Louisiana, and bearing Original Act No. 169861.
Being the same property acquired by Central Louisiana Electric Company,
Inc. from Olga B. Fontenot by deed dated July, 28, 1965, before Gladys C.
Tarver, Notary Public for the Parish of Rapides, records of Rapides Parish, and
before J. Burton Foret, Notary Public for the Parish of
17
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Evangeline, recorded in Conveyance Book B-180, Page 369, Act No. 236409,
records of Evangeline Parish, Louisiana.
There is located on Parcel 3, above described, an electric substation.
PARCEL 4: All that certain tract or portion of land, together with all
the buildings and improvements thereon, and all the rights, ways, privileges,
servitudes, appurtenances and advantages thereunto belonging or in anywise
appertaining, situated in Lot No. Four, Section 3, Township 9 South, Range 14
East, 9th Ward, St. Tammany Parish, Louisiana, and being more fully described as
follows, to-wit:
From the one-quarter section corner common to Section 34, T 8 S, R 14 E
and Section 3, T 9 S, R 14 E, go South 89 degrees 48 minutes West 93.7 feet to
the Northwest corner of Lot No. Four; thence go South 2096 feet to a point "A"
set on the line dividing Lot No. Three and Lot No. Four and the East right of
way line of the GM & O RR; thence go along said railroad being South 19 degrees
54 minutes East 641.6 feet to the point of beginning.
Thence go South 71 degrees 6 minutes East 433.8 feet to an iron pipe
set on the West right of way line of the Southern Railway System; thence go
along said right of way line being South 18 degrees 54 minutes West 619.9 feet
to the intersection of the East right of way line of the aforementioned GM & O
RR; thence go along said East right of way line in a three degree curve 480
feet, more or less, to the point of curve; thence North 19 degrees 54 minutes
West 263.6 feet to the point of beginning. Said parcel being designated as
parcel "B" on Plat of Survey No. 4162 by John H. Sollberger, C.E. dated August
3, 1962, and containing 2.950 acres.
Being the same property acquired by GWECO, Inc. and Gulf Welding
Equipment Company Profit Sharing Trust from Fritchie Bros. Inc., by act before
Gus A. Fritchie, St. Tammany Parish Notary Public, dated February 11, 1963, and
recorded in the conveyance records of St. Tammany Parish, Louisiana, in Book
338, Folio 509.
EXCEPT:
1. Right of way granted by Fritchie Bros. Inc. to Central Louisiana
Electric Company, Inc., by private act dated October 19, 1955, and
recorded in the conveyance records of St. Tammany Parish, Louisiana,
in Book 236, Folio 350.
2. Right of way granted by Fritchie Bros. Inc. to Central Louisiana
Electric Company, Inc. by private act dated June 16, 1961, and
recorded in the conveyance records of St. Tammany Parish, Louisiana,
in Book 311, Folio 329.
Being the same property acquired by Central Louisiana Electric Company,
Inc. from GWECO, Inc. and Gulf Welding Equipment Company Profit Sharing Trust by
Hibernia National Bank in New Orleans dated August 27, 1965, before Dalton J.
Barringer, Notary Public for the Parish of St. Tammany, recorded in Conveyance
Book 396, Page 468, Act. No. 226904, records of St. Tammany Parish, Louisiana.
18
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There is located on Parcel 4, above described, a service center.
PARCEL 5: All that certain lot or parcel of land located in the Parish
of Calcasieu, State of Louisiana, described as:
Lying within the West one-half of the Northeast Quarter of the
Southwest Quarter of Section Thirty-three (33), Township Seven (7) South, Range
Ten (10) West, and beginning at the Northeast corner of Section Thirty-three
(33), thence South One (1) degree forty-five (45) minutes West four thousand
nineteen (4019) feet, to the South boundary of an existing dirt road; thence
West along fence on the South side of road three thousand seven hundred
twenty-nine (3729) feet; thence North sixty (60) feet to the North boundary of
road for the point of beginning and the Southeast corner of the lot conveyed
hereby; thence North two hundred fifty (250) feet to the Northeast corner of
lot; thence West two hundred fifty (250) feet to the Northwest corner of lot;
thence South two hundred fifty (250) feet to the Southwest corner of lot; thence
East, along north boundary of road, two hundred fifty (250) feet to Southeast
corner of lot, and the point of beginning, containing 1.43 acres more or less.
Being the same property acquired by Central Louisiana Electric Company,
Inc. from Jack Donald Perkins, Bruce W. Perkins, and E. W. Perkins by deed dated
August 30, 1965, before Millard H. Roach, Notary Public for the Parish of
Rapides, recorded in Conveyance Book 934, Page 518, Act. No. 1,000,885, records
of Calcasieu Parish, Louisiana.
There is located on Parcel 5, above described, an electric substation.
PARCEL 6: All that certain tract or portion of land, together with an
the buildings and improvements thereon, and all the rights, ways, privileges,
servitudes, appurtenances and advantages thereunto belonging or in anywise
appertaining, situated in Section 36, Township 8 South, Range 14 East, St.
Tammany Parish, Louisiana, and more particularly described as follows, to-wit:
From the corner common to Sections 25, 26, 35 and 36 of the above
Township and Range, go South 1357.9 feet; thence East 3301.6 feet; thence South
25 feet to an iron pipe on the South side of Brown Switch Road and the point of
beginning. From the point of beginning go South 115 feet to an iron pipe; thence
East 100 feet to an iron pipe; thence North 115 feet to an iron pipe on the
South side of the Brown Switch Road; thence West along the South side of the
Brown Switch Road 100 feet to the point of beginning, containing 0.26 acres, all
as per survey of Ernest M. Furby, Civil Engineer, Registration No. 1147, dated
June 11, 1965, a print of which is annexed to and made part of the Parcel 6
Deed.
Being part of the same property acquired by Theodore J. Eddins from Sam
H. Lot, by act dated May 9, 1945, recorded COP 167, Folio 350, and from the
Succession of Mrs. Gladys Martin, wife of Theodore J. Eddins, No. 4169 of the
Docket of the 22nd Judicial District Court for the Parish of St. Tammany.
Further acquired by act of donation dated December 13, 1961, and
recorded COB D, Folio 212; by act dated June 26, 1926, recorded COB 94, Folio
294, and from the Succession of Gladys
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Martin, wife of Theodore J. Eddins, No. 4169 of the Docket of the 22nd Judicial
District Court for the Parish of St. Tammany, State of Louisiana.
Being the same property acquired by Central Louisiana Electric Company,
Inc. from Theodore J. Eddins, William T. Eddins, Jane Eddins Street, and Gladys
Eddins Salassi by deed dated August 16, 1965 (the "Parcel 6 Deed"), before
Dalton J. Barringer, Notary Public for the Parish of St. Tammany, recorded in
Conveyance Book 398, Page 376, Act No. 227,489, records of St. Tammany Parish,
Louisiana.
There is located on Parcel 6, above described, an electric substation.
PARCEL 7: A certain piece or parcel of ground, together with all the
buildings and improvements thereon, and all rights, ways, privileges, servitudes
and appurtenances thereunto belonging or in any wise appertaining, situated in
Square I of the Brugler Addition of the Town of Slidell, 9th Ward, St. Tammany
Parish, Louisiana, and more fully described as follows, to-wit:
Beginning at a point in the center of Harvey Front Street and being
the center of Florida Avenue, thence runs on a bearing of N 88DEG. 05' East
for 159.4 feet and being S 88DEG. 05' West 237.5 feet from center line of
Fourth Street and Florida Avenue; thence N. 1DEG. 55' West 54.1 feet to
Southwest corner of lot, and being the point of beginning; thence N. 88DEG.
05' East 32.4 feet to Southeast corner of lot; thence N 1DEG. 55' West 12
feet to Northeast corner of lot and being the south brick wall of the ice
plant; thence S 88DEG. 05' West 32.4 feet along the south side of brick wall
to Northwest corner of lot; thence S 1DEG. 55' East for 12 feet to Southwest
corner of lot and being the point of beginning.
All in accordance with survey by R. S. Woodruff and Associates, Inc.,
dated July 6, 1965, a copy of which is annexed to and made part of the Parcel 7
Act.
Being the same property acquired by Diamond Ice Service, Inc., from
Central Louisiana Electric Company, Inc., by private act dated March 10, 1959,
and recorded in the conveyance records of St. Tammany Parish, Louisiana, in Book
271, Folio 541.
Being the same property acquired by Central Louisiana Electric Company,
Inc. from Diamond Ice Service, Inc., by an act of exchange dated October 19,
1965 (the "Parcel 7 Act"), before Millard H. Roach, Notary Public for the Parish
of St. Tammany, recorded in COB 402, Folio 21, Entry No. 228455, records of St.
Tammany Parish, Louisiana.
There is located on Parcel 7, above described, an electric substation.
PARCEL 8: That certain lot or parcel of ground, situated south of
Coulee Des Grues, in Ward 4, Avoyelles Parish, Louisiana, in the Southeast
corner of Section 52, Township 2 North, Range 4 East, and being more
particularly described as follows, to-wit:
Beginning at the point where the east line of the Marksville Hessmer
Highway (State Highway No. 115) intersects with the north line of a gravelled
lane, proceed along said lane South 70DEG. 00' East a distance of 291 feet to
a point, thence proceed North 20DEG. 15' East a distance of
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265.0 feet to a point designated the point of beginning and the southeast
corner of the lot, thence proceed North 4DEG. 10' West a distance of 50 feet
to a point, being the northeast corner of the lot, thence proceed South
85DEG. 50' West a distance of 75.0 feet to a point, being the northwest
corner of the lot, thence proceed South 4DEG. 10' East a distance of 50 feet
to a point, being the southwest corner of the lot thence proceed North 85DEG.
50' East 75 feet back to the point of beginning, being the lot designated
"CLECO" on a Plat of Survey by Ralph L. Gagnard, Surveyor, dated September
4th, 1965, a copy of which is annexed to and made a part of the Parcel 8
Deed, and which plat also appears of record in Plat Book 11, Page 82, Records
of Avoyelles Parish, Louisiana; said lot being bounded on the North, South,
East and West by remaining lands of Frederick Andrews.
Being the same property acquired by Central Louisiana Electric Company,
Inc. from Frederick Andrews by deed dated November 26, 1965 (the "Parcel 8
Deed"), before Marc Dupuy, Jr., Notary Public for the Parish of Avoyelles,
recorded in Conveyance Book A-217, Page 528, Entry No. 211536, records of
Avoyelles Parish, Louisiana.
There is located on Parcel 8, above described, a metering station.
PARCEL 9: The North One Hundred (100) feet of Lot Six (6) of Block Two
(2) of the J. H. Jones Subdivision of the North 1010 feet of the West Half of
Northeast Quarter (W 1/2 of NE 1/4) of Section Eighteen (18), Township Seven (7)
South, Range Ten (10) West, La. Mer., as per plats recorded, and being a parcel
of land One Hundred (100) feet square, bounded on the North by Anise Street, and
being more fully described, according to a print of survey of said tract of land
prepared by Ernest M. Furby, Registered Professional Engineer, dated December 4,
1965, as follows:
A parcel of land in the J. H. Jones Subdivision, located in the North
1010 feet of the W 1/2 of the NE 1/4 of Section 18, Township 7 South, Range 10
West, Calcasieu Parish, Louisiana, further described as follows: Beginning at
the SW Corner of J. H. Jones Subdivision, found a 1/2 inch iron pipe: Thence
North 360 feet to NW Corner of Block 2, found a 1 inch iron pipe; thence East
700 feet to NW Comer of Lot and being the NW Corner of Lot 6 of Block 2, set a 1
inch iron rod; thence South 100 feet for corner, set a 1 inch iron pipe; thence
East 100 feet for corner, set a buggy axle; thence North 100 feet to the NE
Corner of said lot, set a 1 inch iron pipe; thence West 100 feet to NW, Corner
of Lot; said tract containing 0.23 acres, more or less.
Being the same property acquired by Central Louisiana Electric Company,
Inc. from Jesse Yellott by deed dated December 17, 1965, before Edward K.
Alexander, Notary Public for the Parish of Calcasieu, recorded in Conveyance
Book 944, Page 277, Entry No. 1011238, records of Calcasieu Parish, Louisiana.
There is located on Parcel 9, above described, an electric substation.
PARCEL 10: Certain pieces, parcels or lots of ground, together with all
buildings and improvements thereon located and all rights, ways, and privileges
thereunto appertaining, being Lots 37, 38, 65 and 66 of Bayou Grosse Park, a
subdivision in Rapides Parish, Louisiana, as per official plat thereof recorded
in Plat Book 12, Page 44, records of Rapides Parish, Louisiana.
21
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Being the same property acquired by Central Louisiana Electric Company,
Inc. from Champ Lumber and Development Corporation by deed dated December 31,
1965, before LeDoux R. Provosty, Jr., Notary Public for the Parish of Rapides,
recorded in Conveyance Book 673, Page 828, Act No. 519600, records of Rapides
Parish, Louisiana.
There is located on Parcel 10, above described, an electric
transmission line.
PARCEL 11: Certain pieces, parcels or lots of ground together with all
buildings and improvements located thereon, and all rights, ways and privileges
thereunto appertaining, being, lying and situated in Rapides Parish, Louisiana
and being more particularly described as follows, to-wit:
Lots 35, 36, 96, 97, 98, 99, 132, 133, 134, 135, 136 and 137 of Bayou
Grosse Park as per Plat of Survey thereof duly recorded in Plat Book 12, Page 44
of the records of Rapides Parish, Louisiana, which plat is made a part of the
Parcel 11 Deed by reference.
Being the same property acquired by Central Louisiana Electric Company,
Inc. from Clarence Earl Thornton by deed dated January 7, 1966 (the "Parcel 11
Deed"), before Richard B. Sadler, Jr., Notary Public for the Parish of Rapides,
recorded in Book 674, Page 374, Entry No. 519941, records of Rapides Parish,
Louisiana.
There is located on Parcel 11, above described, an electric
transmission line.
PARCEL 12: That certain piece, parcel or plot of ground consisting
of 2.83 acres, located in Ward 4 of Natchitoches Parish, Louisiana, which
said plot of ground lies in and forms a part of SW 1/4 of SE 1/4 of Section
18, Township 10 North, Range 6 West, and which said plot of ground is more
particularly described as follows, to-wit:
Begin at the southwest corner of the SE 1/4 of Section 18, Township
10 North, Range 6 West of Natchitoches Parish, Louisiana, and run thence East
a distance of 78 feet, or to the Eastern right of way of a blacktop parish
road, and run thence North 6 degrees 20 minutes East along the Eastern right
of way of said blacktop parish road a distance of 141 feet to the actual
point of beginning of the property being described, and from said point of
beginning, run North 6 degrees 20 minutes East a distance of 485 feet to a
one-half inch iron rod which will mark the northwest corner of the plot of
ground being described, run thence South 47 degrees 46 minutes East a
distance of 398.7 feet to a one-half inch iron rod which marks the northeast
corner of the plot of ground being described, and thence ran South 6 degrees
20 minutes West a distance of 267 feet to a one-half inch iron rod which
marks the Southeast corner of the plot of ground being described, and run
thence North 83 degrees 40 minutes West a distance of 323 feet to the point
of beginning. This plot of ground is fully shown on a plat of survey thereof
prepared by R. S. Woodruff & Associates, Inc., dated November 17, 1965, a
copy of which is annexed to and made a part of the Parcel 12 Deed.
Being the same property acquired by Central Louisiana Electric Company,
Inc. from Marie Azemia Ames by deed dated January 13, 1966 (the "Parcel 12
Deed"), before June C.
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Reynolds, Notary Public for the Parish of Natchitoches, recorded in Conveyance
Book 267, Page 416, Entry No. 122,690, records of Natchitoches Parish,
Louisiana.
There is located on Parcel 12, above described, an electric substation.
PARCEL 13: That certain tract or parcel of land containing 0.338
acres, more or less, situated in the Northwest Quarter of Section 10,
Township 10 South, Range 1 East, La. Meridian, Acadia Parish, Louisiana, and
being particularly described as commencing at the Northwest corner of Section
10, T-10-S, R-1-E, thence South 0DEG. 36' 40" East 155.9 feet to a point;
thence North 89DEG. 23' 20" East 55.1 feet to a point which point is the
Southwest corner of the tract; thence North 0DEG. 58' West 62.0 feet; thence
North 43DEG. 47' 30" East 100.7 feet; thence North 87DEG. 52' East 57.5 feet;
thence South 3DEG. 20' 20" East 130.0 feet; thence South 87DEG. 01' West
134.0 feet to the Southwest corner of the tract, as shown on the plat of
survey of the said tract prepared by Letz Engineers dated January 26, 1966, a
copy of which is attached to the Parcel 13 Deed.
The vendor herein reserves unto himself and excepts from this sale all
of the oil, gas and other minerals and rights thereto in, on, under, or that may
be produced from the property herein conveyed.
Being the same property acquired by Central Louisiana Electric Company,
Inc. from Jules Baronet, Jr., by, deed dated January 31, 1966 (the "Parcel 13
Deed"), before Noble M. Chambers, Jr., Notary Public for the Parish of Acadia,
recorded in Conveyance Book H-25, Page 622, Entry No. 358673, records of Acadia
Parish, Louisiana.
There is located on Parcel 13, above described, an electric substation.
PARCEL 14: A certain piece, parcel or tract of land, together with all
buildings and improvements, rights, ways and privileges thereto belonging or in
anywise appertaining, being, lying and situated in Grant Parish, Louisiana, more
particularly described as follows, to-wit:
Lots Three (3) and Four (4) of Block Three (3), Village of Bentley,
Section Eight (See. 8), Township Six North (T6N), Range One West (R1W), Grant
Parish, Louisiana.
The property herein above described was acquired by the Parcel 14
vendor with her own separate and paraphernal funds, as her own separate,
extra-dotal and parphernal property administered upon by her for the benefit of
her own separate estate.
Being the same property acquired by Central Louisiana Electric Company,
Inc. from Verna Mae Looper Bostwick (the "Parcel 14 vendor") by, deed dated
January 28, 1966, before Millard H. Roach, Notary Public for the Parish of
Rapides, recorded in Conveyance Book 150, Page 410, Entry No. 64247, records of
Grant Parish, Louisiana.
There is located on Parcel 14, above described, an electric substation.
PARCEL 15: That certain lot of ground with all buildings and
improvements thereon, together with all rights, ways, privileges and
appurtenances thereunto appertaining, situated in
23
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Section 13, T 14 S, R 9 E, Tenth Ward, St. Mary Parish, Louisiana, containing
and measuring one hundred forty-seven and four-tenths (147.4) feet front on the
Westerly side of an unimproved road by a depth between equal and parallel lines
of two hundred forty-nine (249) feet, bounded Northerly by right-of-way of
Southern Pacific Company, formerly known as Morgan's Louisiana & Texas Railroad
& Steamship Company, Southerly and Westerly by property formerly, belonging to
Mrs. Josephine R. Heinen, et al, now Central Louisiana Electric Company, Inc.,
and Easterly by said unimproved road.
Being the same property acquired by George Green, ancestor in title of
Charity Johnson Green, from the Orphan's Home Society of Louisiana by deed dated
February 21, 1881, filed for record March 4, 1881, in Conveyance Book U, Folio
88, Entry No. 14402, records of St. Mary Parish, Louisiana and by Charity
Johnson Green, in part, from Edward Green, et al by act dated April 14, 1919,
filed for record November 10, 1919, in Conveyance Book 3-S, Folio 286, Entry No.
46251; in part, from John Henry Green by deed dated and filed for record July 9,
1945 in Conveyance Book 6-P, Folio 201, Entry No. 72704; in part, by virtue of
the Judgment of Possession rendered in the Successions of George Green, et al
dated June 27, 1945, filed for record June 29, 1945 in Conveyance Book 6-Q,
Folio 313, Entry No. 78665; and, in part, from Albertha Green Dixon and Trever
Green by deed dated August 29, 1945, filed for record September 14, 1945, in
Conveyance Book 6-R, Folio 201, Entry No. 73080, all of the records of St. Mary
Parish, Louisiana.
Being the same property acquired by Central Louisiana Electric Company,
Inc. from Charity Johnson Green, by deed dated December 16, 1968, before Guyton
H. Watkins, Notary Public for the Parish of Iberia, recorded in Conveyance Book
15-N, Page 580, Entry No. 138944, records of Rapides Parish, Louisiana.
There is located on Parcel 15, above described, a generating station.
PARCEL 16: A certain tract or parcel of land, together with all
improvements thereon, situated presently in the City of Eunice, St. Landry
Parish, Louisiana; said tract of land being more particularly described as
beginning at a point which point is South 89DEG. 30' West, a distance of 343
feet, and North 1DEG. 25' West a distance of 627.84 feet from the Northwest
corner of the intersection of Eisenhower Street and U. S. Highway 190 (Laurel
Avenue) in the Town of Eunice, St. Landry Parish, Louisiana, thence from said
point of beginning running North 1DEG. 25' West, a distance of 116.16 feet;
thence running South 88DEG. 50' West, a distance of 116.16 feet; thence
running South 1DEG. 25' East, a distance of 116.16 feet; thence running North
89DEG. 30' East, a distance of 116.16 feet to point of beginning; said tract
of land being bounded, now or formerly, as follows, to-wit: On the North by
Joseph Fruge, on the South by the Parcel 16 Vendor, on the East by Ashy-Stagg
Addition and on the West bv Joe Manuel; which said property being the same
property which Mitchell N. Ashy acquired from Clifton Clause on January 6,
1966, by act executed before Isom J. Guillory, Jr., Notary Public.
Being the same property acquired by Central Louisiana Electric Company,
Inc. from Mitchell N. Ashy (the "Parcel 16 Vendor") by deed dated February 14,
1968, before Isom J. Guillory, Jr., Notary Public for the Parish of St. Landry,
recorded in Conveyance Book B-15, Page 32, Entry No. 516557, records of St.
Landry Parish, Louisiana.
24
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There is located on Parcel 16, above described, an elevated water tank.
PARCEL 17: A certain lot or parcel of ground, unimproved, together with
all rights, ways, privileges, servitudes and appurtenances thereunto belonging,
situated in the Fourth Ward of the Parish of Iberia, State of Louisiana,
containing and measuring 50 feet front on the north side of the public road
leading from Loreauville to Lake Dauterive, having a depth, between parallel
lines, of 100 feet, being bounded on the North by remainder of the property of
Maria Braquet Alleman, on the South by the public road leading from Loreauville
to Lake Dauterive, on the East by property of Antoine Braquet, or assigns
(formerly the property of Laurance Braquet), and on the West by a strip of land
belonging to Maria Braquet Alleman separating the property sold hereunder from
the right-of-way of the New Iberia & Northern Railroad Company (sometimes
referred to as the Missouri Pacific Railroad). The property sold and conveyed
hereunder is shown and depicted on a plat of survey made by G. K. Pratt Munson,
Civil Engineer, dated March 23, 1966, a copy whereof is attached to the Parcel
17 Deed and paraphed "No Varictur" for identification therewith.
Being a portion of the property acquired in full ownership by Marie
Braquet Alleman under a partition entered into among the heirs of Leon Braquet
and Octavie Richard Braquet, dated August 21, 1958, recorded in Conveyance Book
337, at Folio 227, under Entry No. 109671, and being carved out of a parcel of
land sometimes referred to as Lot 10-A of Map 4 of the partition among the heirs
of Bertrand Braquet, which partition is dated November 10, 1935, and is recorded
in Conveyance Book 125, Folio 544, under Entry No. 49053 of the records of
Iberia Parish, Louisiana.
Being the same property acquired by Central Louisiana Electric Company,
Inc. from Marie Braquet Alleman by deed dated April 12, 1968 (the "Parcel 17
Deed"), before Charles C. Jaubert, Notary Public for the Parish of Iberia,
recorded in Conveyance Book 491, Page 500, Entry No. 135884, records of Iberia
Parish, Louisiana.
There is located on Parcel 17, above described, an electric substation.
PARCEL 18: A certain piece, parcel or lot of ground and all rights,
ways and privileges thereunto appertaining, all buildings and improvements
thereon situated, being more particularly described as follows, to-wit:
Begin at a point where the East line of Section 15, Township 1 North,
Range 1 West, intersects the North right-of-way line of Louisiana State Highway
112; thence run North 28 degrees 35 minutes West along the East line of said
Section 15, 402.7 feet; thence run South 61 degrees 25 minutes West, 340 feet;
thence run South 28 degrees 35 minutes East, 300 feet to the North right-of-way
- -line of Louisiana State Highway 112; thence run Northeasterly along said North
right-of-way line 355 feet, more or less, to the point of beginning, said lot
containing 2.79 acres, more or less, and being located in the fractional
Northeast Quarter of Section 15, Township 1 North, Range 1 West, in the Parish
of Rapides, State of Louisiana.
25
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Being the same property acquired by Central Louisiana Electric Company,
Inc. from Roy O. Martin Lumber Co., Inc., by deed dated April 26, 1966, before
John F. Munsterman, Notary Public for the Parish of Rapides, recorded in
Conveyance Book 681, Page 308, Entry No. 524319, records of Rapides Parish,
Louisiana.
There is located on Parcel 18, above described, an electric substation.
PARCEL 19: A certain tract or parcel of land, being irregular in shape,
and comprising 0.07 Acres, more or less, located in Section Thirteen (13),
Township Three (3) South, Range One (1) West, Louisiana Meridian, Evangeline
Parish, Louisiana; said tract of land being further described as commencing at a
point which is the Southeast corner of the existing Central Louisiana Electric
Co., Inc. Lot, and from that point, running East a distance of thirty-two (32)
feet; thence North a distance of sixty eight point sixty-seven (68.67) feet;
thence West a distance of eighty-two (82) feet; thence South a distance of
eighteen point sixty-seven (18.67) feet to the Northwest corner of the existing
Central Louisiana Electric Co. Lot; thence East fifty (50) feet; thence running
South fifty (50) feet to point of beginning. All as will more fully appear by
reference to Plat of Survey dated May 13, 1966, made by Ernest M. Furby, Civil
Engineer, which plat is attached to and made part of the Parcel 19 Deed.
Being the same property acquired by vendor in the Parcel 19 Deed,
Lucian L. Chaffin, from Leonard Chaffin, et ux, by Mortgage Sale bearing
Original Act No. 176117, dated July 19, 1957, filed July 26, 1957, in Mortgage
Book No. 81 at Page 521 and Conveyance Book B-144 at Page 299, Evangeline Parish
Records.
Being the same property acquired by Central Louisiana Electric Company,
Inc. from Lucian L. Chaffin by deed dated May 19, 1966 (the "Parcel 19 Deed"),
before Jean W. Pucheu, Notary Public for the Parish of Evangeline, recorded in
Conveyance Book B-184, Page 373, Entry No. 243543, records of Evangeline Parish,
Louisiana.
There is located on Parcel 19, above described, an electric substation.
PARCEL 20: A certain tract or parcel of land together with an
rights, ways, means and privileges thereunto belonging or in anywise
appertaining, containing 5.12 acres, more or less, being more particularly
described as follows, to-wit: Beginning at the SE corner of Section 11,
Township 1 South, Range 3 East, Ward 9, Avoyelles Parish, Louisiana, being
the projected intersection of North-South and East-West fences; thence South
89DEG. 52' West 1621 feet; thence North 0DEG. 24' East 1447 feet, set a 1/2"
iron pipe for the Southeast corner of this tract, being point of beginning;
thence North 420.4 feet, set a 1/2" iron pipe on the Northeast corner of this
tract; thence South 89DEG. 30' West 670.7 feet to a 3/4" iron pipe on the
East right-of-way of Louisiana Highway No. 115; thence South 31DEG. 16' East
100.0 feet, set a stake; thence 30DEG. 10' East 100.0 feet, set a stake;
thence South 28DEG. 56' East 100.0 feet, set a stake; thence South 27DEG. 44'
East 96.5 feet, set a 1/2" iron pipe, the Northwest corner of existing CLECO
Lot; thence North 61DEG. 07' East 113.0 feet to a 3/4" iron pipe on the
Northeast corner of existing CLECO Lot; thence South 8DEG. 27' East 138.0
feet, set a 1/2" iron pipe on the Southeast corner of existing CLECO Lot;
thence North 88DEG. 00' East 355.9 feet to point of beginning of this tract.
26
<PAGE>
Being the same property acquired by Central Louisiana Electric Company,
Inc. from Mrs. Altie Firmin Dubroe and Emeric Dubroe by deed dated June 13,
1966, before John A. Boatner, Jr., Notary Public for the Parish of Avoyelles,
recorded in Conveyance Book A-220, Page 238, Entry No. 214590, records of
Avoyelles Parish, Louisiana.
There is located on Parcel 20 above described, an electric substation.
PARCEL 21: The North Twenty-six and Thirty-five One Hundreths (26.35)
feet, of Lots Eighteen (18), Nineteen (19) and Twenty (20) of Block Two (2) of
Acme Products Company Subdivision, or Addition, to the City of DeQuincy,
Calcasieu Parish, Louisiana, as per plat recorded in Plat Book 7, Page 192 and
193 of the Records of Calcasieu Parish, Louisiana.
Also, a strip of land adjoining said Lots Eighteen (18), Nineteen (19)
and Twenty (20) of Block Two (2), Acme Products Company Subdivision on the
North, measuring Twelve (12) feet in width, North South, by a length of One
Hundred Eighty (180) feet, East and West, the East end thereof being bounded by
Grand Avenue, and being a portion of the alley running through said Block Two
(2), abandoned, released and conveyed to the contiguous landowners by Ordinance
No. 600 of the City of DeQuincy, Louisiana.
Also, a strip of land measuring Six (6) feet North and South, by Sixty
(60) feet East and West, adjoining the South end of Lot Four (4) of BI ock Two
(2) of said Acme Products Company Subdivision, and adjoining that part of alley
abandoned by City oi DeQuincy, which adjoins Lot Seventeen (17), Block Two (2),
Acme Products Company, Subdivision, already owned by Central Louisiana Electric
Company, Inc.
Being the same property acquired by, Central Louisiana Electric
Company, Inc. by an act of exchange from DeQuincy General Hospital, Inc., by
deed dated May 21, 1968, before Edward K. Alexander, Notary Public for the
Parish of Calcasieu, recorded in Conveyance Book 1041, Page 37, Entry No.
1104389, records of Calcasieu Parish, Louisiana.
PARCEL 22: A certain tract or parcel of land, comprising 0.35 acres,
located in the North Half (N 1/2) of the North Half (N 1/2%) of Section Thirteen
(13), Township Three (3) South, Range One (1) West, Louisiana Meridian,
Evangeline Parish, Louisiana; said tract being further described as commencing
at a point which is the Southeast corner of the .07 acre tract purchased by
Central Louisiana Electric Company from Lucian L. Chaffin by, Sale dated May 19,
1966; thence from that point running East a distance of two hundred twenty-five
(225) feet: thence running North a distance of 68.67 feet; thence West a
distance of two hundred twenty-five (225) feet; thence South, along the Eastern
boundary of Central Louisiana Electric Company's .07 tract of land, a distance
of sixty-eight point sixty-seven (68.67) feet to point of beginning, and being
further described as that certain tract of land identified as Lot No. Three (3)
on Plat of Survey dated February 9, 1967, made by James Gilchrist, which plat is
attached to the Parcel 22 Deed.
Being part of the same property acquired by Lucian L. Chaffin from
Leonard Chaffin, et ux, by Mortgage Sale bearing Original Act No. 176117, dated
July 19, 1957, filed July 26, 1957, in Mortgage Book No. 81 at Page 521 and
Conveyance Book B-144 at Page 299, Evangeline Parish Records.
27
<PAGE>
Being the same property acquired by Central Louisiana Electric Company,
Inc. from Lucian L. Chafflin by deed dated March 16, 1967 (the "Parcel 22
Deed"), before Jean W. Pucheu, Notary Public for the Parish of Evangeline,
recorded in Conveyance Book B-187, Page 613, Entry No. 251207, records of
Evangeline Parish, Louisiana.
There is located on Parcel 22, above described, an electric substation.
PARCEL 23: A certain tract or parcel of ground, situated just East of
the City of Eunice, in St. Landry Parish, Louisiana, being identified as Lots
Nos. Eleven (11) and Twelve (12) of Block No. Sixteen (16) of the Harris
Subdivision Extension, Revised, all as will be shown by reference to a certain
Map of Survey made for Central Louisiana Electric Company, Inc., signed by
George G. Briggs, Civil Engineer, which said Plat is attached to and made part
of the Parcel 23 Deed; the WHOLE of said property having a front on Athabaska
Street of 104.7 feet, by a depth running South between parallel lines a distance
of 138.5 feet to Public Alley, and having a width along the said public alley of
104.S feet; and bounded North by, Athabaska Street, South by Public Alley, East
by St. Mary Street, and West by Lot 10 of said Block 16; and being a portion of
the property which Vendor acquired from Marie Fruge Ledav by Act of Sale dated
March 9, 1966, recorded in the Clerk's Records, St. Landry Parish, Louisiana, as
Original Act No. 517034, in Conveyance Book C-15, at Page 34.
Being the same property acquired by Central Louisiana Electric Company,
Inc. from Harris Realty, Inc. by deed dated March 30, 1967 (the "Parcel 23
Deed"), before Jacque B. Pucheu, Notary Public for the Parish of St. Landry,
recorded in Conveyance Book T No. 15, Page 491, Entry No. 525087, records of St.
Landry Parish, Louisiana.
There is located on Parcel 23, above described, an electric substation.
PARCEL 24: A certain tract or parcel of ground, situated in the Parish
of Beauregard, State of Louisiana, to-wit:
A part of the Southwest quarter of the Northeast Quarter (SW 1/4 of
NE 1/4) and a part of the Northwest Quarter of the IN ortheast Quarter (NW
1/4 of NE 1/4), of Section Four (4), Township Three (3) South, Range Nine (9)
West, Louisiana Meridian described as follows:
Beginning at a point 601.9 feet South 89 degrees 45 minutes West and
1262.5 feet south 15 degrees 0 minutes West from the Northeast comer of the
NW 1/4 of NE 1/4 of Section 4, Township 3 South, Range 9 West, thence North 85
degrees 42 minutes East 205.1 feet to the West Right-of-way line of Highway No.
104; thence South 26 degrees 40 minutes West along said Right-of-way line a
distance of 200 feet; thence South 77 degrees 40 minutes West 161.9 feet; thence
North 15 degrees 0 minutes East 200 feet to the point of beginning.
Subject to any street, road or highway rights-of-way which may be upon
or over the subject property.
28
<PAGE>
Being the same property acquired by Central Louisiana Electric
Company, Inc. from Lamar T. Schweitzer by deed dated May 17, 1967, before H. O.
Lestage, III, Notary Public for the Parish of Beauregard, recorded in
Conveyance Book 236, Page 16, Entry No. 187547, records of Beauregard Parish,
Louisiana.
There is located on Parcel 24, above described, a store yard.
PARCEL 25: That certain plot of ground, located in the Town of
Coushatta, Red River Parish, Louisiana, together with all improvements
thereon located and appurtenances thereunto appertaining, consisting of 3.27
acres as shown on a plat of survey made by W. L. Mangham, Jr., Registered
Surveyor dated May 6, 1967, a copy of which is annexed to and made a part of
the Parcel 25 Deed, which said plot of ground lies in and forms a part of
SE1/4 of NW1/4 in Section 19, Township 12 North, Range 9 West and which is
more particularly described as beginning at a one inch iron pipe set at the
Northwest Corner of a three acre plot of ground sold by the Parcel 25 vendor
to A. T. Gates by deed dated July 12, 1955, and recorded in Conveyance Book
96, Page 160, said point of beginning being 516 feet North and 25 feet West
of the Southwest Corner of SW1/4 of NE1/4 in Section 19, Township 12 North,
Range 9 West and from this point of beginning run thence North 0 degrees 39
minutes East a distance of 438.9 feet to a one inch iron pipe, run thence
North 88 degrees 39 minutes West a distance of 105.0 feet to a five inch iron
corner fence post in the East line of the Doxie Bailev three acre tract of
land, run thence South 0 degrees 44 minutes East along and with Doxie
Bailey's East line a distance of 144.0 feet to a five inch iron corner fence
post, run thence South 79 degrees 39 minutes West along and with Doxie
Bailey's South line a distance of 314.5 feet to a 3/4 inch iron pipe at a
fence corner in Fred McDowell's East line, run thence South 0 degrees 11
minutes West with the East line of Fred McDowell's property a distance of
313.0 feet to a 3/4 inch iron pipe set at the Northwest Corner of the A. T.
Gates three acre plot of ground, run thence North 80 degrees East with the
North line of the A. T. Gates three acre plot of ground a distance of 415.0
feet to the point of beginning.
The property herein sold was acquired in part from B. O. Jones by
deed dated May 9, 1939, and recorded in Conveyance Book 62, Page 141 as
corrected by Act dated January 20, 1949, and recorded in Conveyance Book 85,
Page 274 and in part by purchase from Belle C. Armistead by deed dated
November 17, 1943, and recorded in Conveyance Book 70, Page 73, records of
Red River Parish, Louisiana.
Being the same property acquired by Central Louisiana Electric
Company, Inc. from Willie Fulton Nails (the "Parcel 25 Vendor") by deed dated
June 12, 1967 (the "Parcel 25 Deed"), before Margie Worsham, Notary Public
for the Parish of Red River, Louisiana, recorded in Conveyance Book 122, Page
496, Entry No. 113141, records of Red River Parish, Louisiana.
There is located on Parcel 25, above described, a water well and
reservoir.
PARCEL 26: The following described property situated in the Parish
of St. Mary, State of Louisiana, adjudicated to the State in the name of
Jessie White for unpaid taxes of the year 1911, and acquired at Sheriff's
Sale No. 6223 at Franklin, Louisiana, on May 3, 1967, under the provisions of
Section 2189, Title 47, Louisiana Revised Statutes of 1950:
29
<PAGE>
Lot North Brown, East Borah, South Hackney, West Paddy.
Being the same property acquired by Thomas Allen Bonnet, by Patent
No. 19911, recorded in Book 14-U, Pap 359, Entry No. 133494, records of St.
Mary Parish, Louisiana.
Being the same property acquired by Central Louisiana Electric
Company, Inc. from Thoma Allen Bonnet by Recognitive Act dated June 21, 1967,
before Millard H. Roach, Notary Public for the Parish of Rapides, recorded in
Conveyance Book 14-V, Page 175, Entry No. 133730, records at St. Mary Parish,
Louisiana.
PARCEL 27: All that certain tract or portion of land, together with
all the buildings and improvements thereon, and all the rights, ways,
privileges, servitudes, appurtenances and advantages thereunto belonging or
in anywise appertaining, situated in Ozone Park Subdivision, in Section 22,
Township 7 South, Range 11 East, St. Tammany Parish, Louisiana, as shown on a
survey by Robert A. Berlin, dated July 12, 1967, and bearing Number 1903, a
copy of which is annexed to and made part of the Parcel 27 Deed, and more
particularly described as follows, to-wit:
Lots 29, 30, 31 and 32 of Block 10 of said Ozone Park Subdivision.
Said Lots are adjacent and contiguous and each front 35 feet on
Beech Street, by a depth of 150 feet between equal and parallel lines.
Block 10 is bounded by Mandeville Road, Maple Avenue, Pearl Street
and Beech Street.
The Parcel 27 Vendor acquired from the State of Louisiana at a
Sheriff's sale dated August 12, 1964, recorded in COB 367, Folio 517, and by
amended Process Verval dated October 7, 1964, recorded in COB 371, Folio 140,
and by Judgment confirming tax title in Suit No. 26,351, 22nd Judicial
District Court, Parish of St. Tammany, State of Louisiana, judgment dated
June 9, 1967, and recorded in COB 461, Folio 361.
Being the same property acquired by Central Louisiana Electric
Company, Inc. from Dalton J. Barringer (the "Parcel 27 Vendor") by deed dated
July 21, 1967 (the "Parcel 27 Deed"), before William J. Jones, Notary Public
for the Parish of St. Tammany, Louisiana. Recorded in Conveyance Book 467,
Page 198, Entry No. 246269, records of St. Tammany Parish, Louisiana.
There is located on Parcel 27, above described, an electric
substation.
PARCEL 28: That certain lot of. ground, with all rights, ways,
privileges and servitudes thereunto appertaining, situated in Section 13,
Township 14 South, Range 9 East, Tenth Ward, St. Mary Parish, Louisiana,
containing and measuring one hundred forty-seven and four-tenths (147.4) feet
front on the easterly side of a shell road by a depth between equal and
parallel lines of two hundred two (202) feet, bounded Northerly by right of
way of Southern Pacific Company, formerly known as Morgan's Louisiana & Texas
Railroad & Steamship Company, Southerly and Easterly by property formerly
belonging to Mrs. Josephine R. Heinen, et al, now Central
30
<PAGE>
Louisiana Electric Company, Inc., and Westerly by property formerly belonging
to Mrs. Josephine R. Heinen, et 4 now Central Louisiana Electric Company,
Inc. and/or said shelled road:
Being that property designated "Henry Brown" within the corners "D,
E, F, G, D" according to the plat of survey showing property of Mrs.
Josephine R. Heinen, et al prepared by T. F. Kramer, Civil Engineer and
Surveyor, dated June 26, 1951, a photocopy extract of which is attached to
and made a part of the Parcel 28 Deed.
Being the same property acquired by Henry Brown, ancestor of vendor,
from the Orphans Home Society of Louisiana by act dated and filed for record
February 18, 1882, in Conveyance Book U, Folio 504, Entry No. 14697, records
of St. Mary Parish, Louisiana.
Being the same property acquired by Central Louisiana Electric
Company, Inc. from Victoria Alberta Wooden Wilson by deed dated August 1,
1967, before George M. Hakim, Notary Public for Wayne County, Michigan,
recorded in Conveyance Book 14-W, Page 405, Entry No. 134122, records of St.
Mary Parish, Louisiana.
Being the same property acquired by Central Louisiana Electric
Company, Inc. from Alexander Terry by deed dated June 28, 1967, before
Millard H. Roach, Notary Public for the Parish of Rapides, recorded in
Conveyance Book 14-U, Page 269, Entry No. 133779, records of St. Mary Parish,
Louisiana.
Being the same property acquired by Central Louisiana Electric
Company, Inc. from Vivian Terry Dove by deed dated July 11, 1967, before John
C. Hoover, Notary Public, recorded in Conveyance Book 14-U, Page 605, Entry
No. 133964, records of St. Mary Parish, Louisiana.
Being the same property acquired by Central Louisiana Electric
Company, Inc. from Louis Thomas Brown by deed dated July 18, 1967 (the
"Parcel 28 Deed"), before Jacob D. Landry, Notary Public for the Parish of
New Iberia, recorded in Conveyance Book 14-U, Page 607, Entry No. 133965,
records of St. Mary Parish, Louisiana.
There is located on Parcel 28, above described, an electric
generating station.
PARCEL 29: A certain vacant tract or parcel of land, situated in
Irregular Section Forty-mine (49), Township Four (4) South, Range Two (2)
East, Evangeline Parish, Louisiana, measuring eighty-eight (88) feet on
Lincoln Street by a depth between parallel lines of one hundred fifty (150)
feet; and being further described as coninienchil at a point which is the
Southeast corner of property belonging to Purchaser herein (which property
was purchased from Lucy Vidrine Dardeau by Act of Cash Sale dated March 28,
1961, filed April .5, 1961 in Conveyance Book B-160 at page 146, et seq.,
Original Act No. 202631, Evangeline Parish Records); thence from that point
running in an easterly direction, along Lincoln Street, a distance of
eighty-eight (88) feet; thence from that point, running in a northerly
direction a distance of one hundred fifty (150) feet; thence from that point
running in a westerly direction a distance of eighty-eight (88) feet; thence
from that point running in a southerly direction a distance of one hundred
fifty (150) feet to point of beginning and bounded on the North and East by
Mrs. Lucy V. Dardeau; South by Lincoln Street; West by Central Louisiana
Electric Co., Inc., all as will more
31
<PAGE>
fully appear by reference to Plat of Survey made by Morgan Goudeau &
Associates, dated November 8, 1967, attached to and made part of the Parcel
29 Deed.
This land is subject to that certain right-of-way grant by the
Parcel 29 Vendors in favor of Evangeline Parish Police Jury for the purpose
of widening Lincoln Street, dated May 9, 1967, recorded as Original Act No.
252402, Conveyance Book B-188 at Page 409, Evangeline Parish Records.
Being the same property acquired by Central Louisiana Electric
Company, Inc. from Leonard Dardeau and Lucy Virdrine Dardeau (the "Parcel 29
Vendors") by deed dated December 29, 1967 (the "Parcel 29 Deed"), before Jean
W. Pucheu, Notary Public for the Parish of Evangeline, recorded in Conveyance
Book B-191, Page 44, Entry No. 258038, records of Evangeline Parish,
Louisiana.
PARCEL 30: A certain lot or parcel of land containing 4.965 acres,
situated approximately one mile south of the Town of Marksville in the Third
Ward of Avoyelles Parish, Louisiana, lying in and forming a portion of the
N/2 of Section 5, Township 1 North, Range 4 East, and being bounded on the
North and East by a Parish Public Road and a small lot presently owned by
Central Louisiana Electric Company, Inc., and on the South and West by
remaining land of the Parcel 30 vendor, Nolan Gagnard; the lot herein
conveyed is shown on a plat of survey made by R. S. Woodruff & Associates,
Inc., dated January 11, 1968, a copy of which is attached to and made a part
of the Parcel 30 Deed, and is further described, according to said survey, as
follows: From the southeast corner of Section 77, T1N, R4E, run N 57DEG. 40'
E 566.9 feet to a point in the south right of way line of a Parish road;
thence S 60DEG. 48' E 20.22 feet to corner and point hereinafter referred to
as the point of beginning; thence S 60DEG. 48' E 325.28 feet along the south
right of way line of Parish road to a point and corner (being the northwest
corner of existing CLECO lot); thence 50DEG. 11' W 53 feet to a point and
corner (being the southwest corner of existing CLECO lot); thence S 60DEG.
48' E 60 feet to a point on the west right of way line of a Parish road and
corner (being the southeast corner of existing CLECO lot); thence S 0DEG. 11'
W 416.99 feet along the west right of way line of Parish road to a point and
comer; thence N 60DEG. 48' W 674.44 feet to a point and corner; thence N
37DEG. 40' E 415.53 feet to the point of beginning. This is a portion of the
same property acquired by the Parcel 30 vendor, Nolan Gagnard, from the widow
and heirs of Shelby Gaspard by deed dated June 17, 1950, and recorded in
Conveyance Book A-144, Page 29, records of Avoyelles Parish, Louisiana.
Being the same property acquired by Central Louisiana Electric
Company Inc. from Nolan Gagnard by deed dated January 16, 1968 the Parcel 30
Deed, before Edwin L. Lafargue, Notary Public for the Parish of Avoyelles,
recorded in Conveyance Book A-227, Page 637, Entry No. 223158, records of
Avoyelles Parish, Louisiana.
There is located on Parcel 30, above described, an electric
substation.
PARCEL 31: A certain piece, parcel or tract of land, together with
all improvements located thereon and all rights, ways and privileges thereto
appertaining, being, lying and situated in Rapides Parish, Louisiana, and
being a part of Lot B of Lake Hills Subdivision, Unit No. 3,
32
<PAGE>
located in Section 2, Township 4 North, Range 1 East, and being more
particularly described as follows, to-wit:
Start at the Southeast corner of Lot 6 of Section 2 as per plat
recorded at Plat Book 12, Page 42, of the records of Rapides Parish; thence
go due West 550 feet to the point of beginning, from said point of beginning
thus established continue West and go a distance of 116.6 feet to a point;
thence turn North 17 degrees 04 minutes West and go 63.3 feet to a point;
thence turn North 74 degrees 32 minutes East and go 139.7 feet to a point;
thence turn due South and go 97.8 feet back to the point of beginning; all as
is more particularly shown on plat of survey by R. S. Woodruff & Associates,
Inc., dated February 10, 1968, a, copy of which is attached to the Parcel 31
Deed, said are herein described being enclosed within red lines on said plat
and contains 0.23 acres, more or less.
Being the same property acquired by Central Louisiana Electric
Company, Inc. from Richard E. Lee, Stanley Hromadka, Frank Hromadka and
Wesley Hromadka by deed dated March 8,1968 (the "Parcel 31 Deed"), before
Charles F. Wagner, Notary Public for the Parish of Rapides, recorded in
Conveyance Book 711, Page 882, Entry No. 547137, records of Rapides Parish,
Louisiana.
There is located on Parcel 31, above described, an electric
substation.
PARCEL 32: A certain lot or parcel of land lying in and forming a
portion of Section 4, Township 1 North, Range 6 East, Avoyelles Parish,
Louisiana, containing two-tenths (2/10ths) of an acre, more or less, and
described as follows :
Beginning at a point in the center of the public road between
Bordelonville and Hamburg on the property line common to the properties of
Jacob Paul Bordelon and Rudolph Bordelon, which point is the southeast corner
of the lot herein described, thence due West a distance of 102 feet along
said property line to a corner common to the properties of Jacob Paul
Bordelon, Rudolph Bordelon and Filmore Tassin, which point is the southwest
corner of the lot herein described, thence due North along the property, line
common to Jacob Paul Bordelon and Filmore Tassin a distance of 100 feet to
the point which is the northwest corner of the lot herein described, thence
due East 102.8 feet to a point in the center of the public road, which point
is the northeast corner of the lot herein described, thence South 0 degrees
28 minutes West a distance of 100 feet to the point of beginning; and bounded
now or formerly on the North by Jacob Paul Bordelon, East by the center line
of the public road, South by Rudolph Bordelon, and West by Filmore Tassin,
and more particularly identified on plat of survey by R. S. Woodruff &
Associates, Inc., dated April 15th, 1968, copy of which is attached to and
made a part of the Parcel 32 Deed; and being a portion of that certain tract
of land acquired by Jacob Paul Bordelon from the heirs of Edward Levi
Bordelon by deeds dated February 12th, May 14th, May 21st, September 11th,
and September 20th, 1957, recorded in Conveyance Book A-172 at Pages 215 and
217; Book A-173 at pages 79 and 81; and Book A-175 at Pages 49 and 51, all
Records of Avoyelles Parish, Louisiana.
Being the same property acquired by Central Louisiana Electric
Company, Inc. from Jacob Paul Bordelon by deed dated April 18, 1968 (the
"Parcel 32 Deed") before Marc Dupuy, Notary
33
<PAGE>
Public for the Parish of Avoyelles, recorded in Conveyance Book A-299, Page
35, Entry No. 244776, records of Avoyelles Parish, Louisiana.
There is located on Parcel 32, above described, an electric
substation.
PARCEL 33: All that certain tract or portion of land, together with
all the buildings and improvements thereon, and all the rights, ways,
privileges, servitudes, appurtenances and advantages thereunto belonging or
in anywise appertaining, situated in Section 44, Town ship 9 South, Range 14
East, 9th Ward, St. Tammany Parish, Louisiana, as shown on a survey by J. V.
Burkes, C.E., dated February 15, 1968, bearing No. 5312, a copy of which is
annexed to and made part of the Parcel 33 Deed, and more fully described as
follows, to-wit:
From the corner common to Sections 16, 15, 21 and 22 of said
Township 9 South, Range 14 East go South 66 degrees 1 minute West 321 feet;
thence South 26 degrees 37 minutes West 2100 feet to point "A"; thence go
South 63 degrees 23 minutes East 400 feet; thence go South 26 degrees 37
minutes West 50 feet to point "B", which is the point of beginning. From the
point of beginning go South 63 degrees 23 minutes East 100 feet; thence go
South 26 degrees 37 minutes West 100 feet; thence go North 63 degrees 23
minutes West 100 feet; thence go North 26 degrees 37 minutes East 100 feet
back to the point of beginning.
Being the same property acquired by the Salmen Company, a
partnership composed of Fred W. Salmen, Raymond F. Salmen, Ellarose Salmen
Sullivan and William H. Sullivan, Jr., who acquired from Fred W. Salmen, by
act dated December 7, 1962, recorded COB 339, Folio 491 of the records of St.
Tammany Parish, Louisiana.
Being the same property acquired by Central Louisiana Electric
Company, Inc. from the Salmen Company, by deed dated April 16, 1968 (the
"Parcel 33 Deed"), before Paul B. Deal, Notary Public for the Parish of
Orleans, recorded in Conveyance Book 493, Page 178, Entry No. 252645, records
of St. Tammany, Parish, Louisiana.
There is located on Parcel 33, above described, an electric
substation.
PARCEL 34: The following described property, situated in Acadia
Parish, Louisiana, to-wit:
TRACT 1: That certain tract or parcel of land containing 0.34 acres,
situated in Section Eight (8), Township Ten (10) South, Range One (1) East,
Louisiana Meridian, in Acadia Parish, Louisiana, and being more particularly
described as follows:
Commencing at a point in the center line of the Southern Pacific
Railroad right-of-way located 5,371.2 feet South 64DEG. 15' West from the
West Line of Western Avenue in the City of Crowley, Louisiana, and running
thence South 25DEG. 45' East a distance of 630.0 feet to the South boundary
line of a public road. Thence South 64DEG. 15' West along the South boundary
line of said road a distance of 666.7 feet to the point of beginning of this
description. Thence from said point of beginning, South 64DEG. 15' West along
the South boundary line of said road a distance of 150.0 feet to the
right-of-way line of the Roller Canal. Thence South 61DEG. 30' East along said
34
<PAGE>
right-of-way line a distance of 92.4 feet. Thence South 63DEG. 12' East along
said right-of-way line a distance of 80.6 feet. Thence South 69DEG. 26' East
along said right of-way line a distance of 68.1 feet. Thence North 25DEG. 45'
West a distance of 188.2 feet to the point of beginning, as per plat of
survey by Letz Engineers dated April 26, 1968, annexed to and made part of
the Parcel 34 Deed, SAVE AND EXCEPT: the oil, gas, sulphur and other minerals
in and under and that may be produced and saved from said property.
TRACT 2: A servitude for the construction, accommodation and
maintenance of a "guy installation" and appurtenances on vendor's property at
the point designated "proposed guy installation" on the plat annexed to and
made part of the Parcel 34 Deed.
Being the same property acquired by Central Louisiana Electric
Company, Inc. from Glenn Howard Roller by deed dated May 20, 1968 (the
"Parcel 34 De--111), before Lawrence G. Pugh, Jr., Notary Public for the
Parish of Acadia, recorded in Conveyance Book Y-26, Page 116, Entry No.
373689, records of Acadia Parish, Louisiana.
There is located on Parcel 34, above described, an electric
substation.
PARCEL 36: All of the East Half of the Northeast Quarter of Section
33, Township 4 North, Range 12 West, and all of the North Half of the
Northwest Quarter of Section 34, Township 4 North, Range 12 West, Sabine
Parish, Louisiana, save and except that portion conveyed to Sabine River
Authority -- State of Louisiana (as Toledo Bend Project Tract No. 617), by
deed dated October 2, 1964, as more particularly described by metes and
bounds as follows:
All bearings in this description are grid bearings based on the
Louisiana Lambert Coordinate System, North Zone, and coordinates, where
given, are also based on said system.
A tract of land being a part of the North 1/2 of the NW Quarter of
Section 34, and the East 1/2 of the NE Quarter of Section 33, T 4 N, R 12 W,
Sabine Parish, Louisiana, more particularly described by metes and bounds as
follows:
Begin at the NE corner of the NW Quarter of Section 34, T 4 N, R 12
W;
Thence S 89DEG. 47' 39" W along north line of Section 34 a distance
of 969.41 feet to a point on the taking line traverse of the shoreline survey
of the Toledo Bend Reservoir, said point having coordinates of X=1,
- -660,821.2 and Y=229,000.0;
Thence with the taking line traverse as follows:
<TABLE>
<CAPTION>
BEARING DISTANCE TO POINT
DEG. MIN. SEC. FEET
<S> <C> <C> <C> <C>
S 41 10 47 W 172.78 950
S 72 48 35 W 461.78 951
N 28 41 13 W 222.6 952
N 06 43 19 78.04 to a point on the north line of Section 34, T 4 N,
R 12 W;
</TABLE>
35
<PAGE>
Thence S 89DEG. 47' 39" W along north line of Section 34 a distance
of 509.93 feet to a point on the taking line traverse, said point being N
89DEG. 47' 39" East 488.04 feet from the NW corner of Section 34, T 4 N, R 12
W, said corner having coordinates of X=1,659,191.6 and Y=229,- 015.8;
Thence with the taking line traverse as follows:
<TABLE>
<CAPTION>
BEARING DISTANCE TO POINT
DEG. MIN. SEC. FEET
<S> <C> <C> <C> <C>
S 21 8 17 W 198.7 977
S 34 2 58 W 164 978
S 01 15 09 W 445.65 979
S 23 4 35 W 196.22 980
N 86 21 51 W 239.05 to a point on the east line of Section 33, T 4 N, R 12
W, said point being N 000 33' 55" E, 328.84 feet from the SE Corner of the NE
Quarter of the NE Quarter of Section 33, T 4 N, R 12 W, said point also having
coordinates of X = 1,659,180.6 and Y = 228,078.0;
</TABLE>
Thence continue with the taking line traverse as follows:
<TABLE>
<CAPTION>
BEARING DISTANCE TO POINT
DEG. MIN. SEC. FEET
<S> <C> <C> <C> <C>
N 86 21 51 W 268.73 981
N 36 57 18 W 164 978
N 66 21 45 W
N 24 6 12 W
N 04 19 28
N 74 27 50 W
S 20 0 13 W
S 12 8 5
S 36 42 9 445.65 979
S 67 27 35 W 196.22 980
N 72 33 51 W 239.05 to a point on the east line of Section 33, T 4 N, R 12
W, said point being N 000 33' 55" E, 328.84 feet from the SE Corner of the NE
Quarter of the NE Quarter of Section 33, T 4 N, R 12 W, said point also having
coordinates of X = 1,659,180.6 and Y = 228,078.0;
</TABLE>
Thence S 00DEG. 35' 34" W along wed line of said eighty 1233.37 feet
to the SW corner of said eighty;
Thence 8 89DEG. 02' 09" E along south line of said eighty 1300.04
feet to the BE corner of said eighty;
Thence N 00DEG.33' 55" E along east line of Section 33, a distance
of 1322.43 feet to the SW corner of North 1/2 of the NW Quarter of Section 34,
T 4 N, R 12 W;
36
<PAGE>
Thence S 89DEG. 15' 59" E along south line of said eighty 2655.64
feet to the BE corner of the eighty;
Thence N 00DEG. 39' 10" E along east Hue of the eighty 1326.89 feet
to the point of beginning, containing in the aggregate 115.91 acres.
Together with all of the surface right and interest of the Parcel 35
Grantor in and to the first described tract contained in that certain lease
from the Sabine River Authority, State of Louisiana, to the Parcel 35 Grantor
dated October 19, 1964; said first described tract being particularly
described as follows:
All that portion of tract No. 617 that lies Lakeward of the taking
line traverse of the shoreline survey of the Toledo Bend Reservoir and above
in elevation the 172.0 feet MSL contour containing 11.42 acres, more or less,
said tract No. 617 being a part of the North 1/2 of the NW1/4 of Section 34,
and the East 1/2 of the NE 1/4 of Section 33, Township 4 North, Range 12 West,
Sabine Parish, Louisiana.
Being the same property acquired by Central Louisiana Electric
Company, Inc. from the Southwestern Improvement Company (the "Parcel 35
Grantor") by deed dated June 6, 1968, before Augusta M. Twomey, Notary Public
in and for the County of Cook, State of Illinois, recorded in Conveyance Book
220, Page 182, Entry No. 201157, records of Sabine Parish, Louisiana.
PARCEL 36: That certain lot of ground, with all rights, ways,
privileges and servitudes thereunto appertaining, situated within the
corporate limits of the City of New Iberia, Iberia Parish, Louisiana,
containing and measuring ninety-eight (98) feet front on the Southerly side
of East Dale Street by a depth of ninety-six (96) feet, being bounded
Northerly by property of Ada D. Bernard, her heirs or assigns, Southerly by
said East Dale Street, Easterly by property of Paul Lawrence Crouchet, or
assigns, and Westerly by Property of Willie Bell, his heirs or assigns.
Being Lot 22 of Block 359 of the City of New Iberia, Louisiana.
Said lot is more particularly shown by reference to a plat of survey
prepared by G. K. Pratt Munson, C.ML, dated March, 1968, of record in
Miscellaneous Book 11, Folio 21, Entry No. 4036, records of Iberia Parish,
Louisiana.
Being the same property acquired by Allen Dorsey, Sr. and Eliza
Washington Dorsey, wife of Allen Dorsey, Sr., from William Dorsey, by deed
dated and filed for record December 9, 1878, in Conveyance Book 6, Folio 555,
Entry No. 2271, records of Iberia Parish, Louisiana.
Being the same property acquired by Central Louisiana Electric
Company, Inc. from Della Frere Ross by deed dated April 2, 1968, be fore
Richard A. Dennis, Notary Public for Cook County, Illinois, recorded in
Conveyance Book 524, Page 760, Entry No. 142637, records of Iberia Parish,
Louisiana.
37
<PAGE>
Being the same property acquired by Central Louisiana Electric
Company, fne. from Willie Richardson by deed dated April 2, 1968 before
Yvonne C. Hawley, Notary Public for the County of New York, New York,
recorded in Conveyance Book 524, Page 758, Entry No. 142636, records of
Iberia Parish, Louisiana.
Being the same property acquired by Central Louisiana Electric
Company, Inc. from Samuel J. Toussaint by deed dated April 18, 1968, before
Harold S. Jensen, Notary Public for the County of San Diego, California,
recorded in Conveyance Book 524, Page 762, Entry No. 142638, records of
Iberia Parish, Louisiana.
Being the same property acquired by Central Louisiana Electric
Company, Inc. from Fannie Druilhet Rozier by deed dated April 23, 1968,
before Harry Eaton Brooks, Jr., Notary Public for the County of Los Angeles,
California, recorded in Conveyance Book 524, Page 764, Entry No. 142639,
records of Iberia Parish, Louisiana.
Being the same property acquired by Central Louisiana Electric
Company, Inc. from Willie Press, Jr., and John Leroy Press by deed dated
April 30, 1968, before Louvanie Ollual, Notary Public for the County of
Harris, Texas, recorded in Conveyance Book 524, Page 766, Entry 142640,
records of Iberia Parish, Louisiana.
Being the same property acquired by Central Louisiana Electric
Company, Inc. from Ernest Frank Druilhet by deed dated May 20, 1968, before
Jake C. Drake, Notary Public for Imperial County, California, recorded in
Conveyance Book 526, Page 189, Entry No. 142881, recorded in Iberia Parish,
Louisiana.
Being the same property acquired by Central Louisiana Electric
Company, Inc. from Callie Frere Land, Beatrice Frere Williams, Isaiah Frere,
James Dorsey, Samuel Dorsey, Adam Dorsey, Gladys Ann Dorsey, Clarence Lewis
Dorsey, Odell Toussaint Jones, Clarence Toussaint Jones, Clara Toussaint,
Mary Louise Toussaint Moss, Celia T. Jones, Willie Toussaint, Edward J.
Toussaint, Wilhelmena Press Pearson, Elsie Press Peterson, Almeta Press
Johnson, Clara Press, Samuel Press, Edna Druilhet Hackett, Willie M.
Druilhet, by deed dated April 2, 1968, before Guyton H. Watkins, Notary
Public for the Parish of Iberia, recorded in Conveyance Book 524, Page 749,
Entry No. 142635, records of Iberia Parish, Louisiana.
There is located on Parcel 36, above described, an electric
substation.
PARCEL 37: That certain lot or parcel of ground known and described
as being Lot 19 of Block 1 of the J. E. Cutler Addition and Extension No. 1
to the J. E. Cutler Addition in Section 34, Township 9 South, Range 1 East,
in the City of Crowley, Acadia Parish, Louisiana, as per plat thereof on file
and of record in the office of the Clerk of Court in and for Acadia Parish,
Louisiana.
Being the same property acquired by Central Louisiana Electric
Company, Inc. from William C. Broadhurst and Warren Charles Rourk by deed
dated July 24, 1968, before Renola Clement, Notary Public for the Parish of
Acadia, recorded in Conveyance Book B-27, Page 31, Act No. 374796, records of
Acadia Parish, Louisiana.
38
<PAGE>
PARCEL 38: The following described property, situated in the Parish of
Vernon, State of Louisiana, to-wit:
Begin at the southeast corner of the Northwest Quarter (NW 1/4),
Section 27, Township 2 North, Range 9 West, Vernon Parish, Louisiana, and run
North 0 degrees 33 minutes West 190.8 feet; thence West 75 feet to the
Southeast corner of Lot 683 and the Southwest corner of Lot 684, Lee Hills
Subdivision of the Town of Leesville, Louisiana, as per plat of said
subdivision recorded in Book 137, Page 606 of the Conveyance Records of
Vernon Parish, Louisiana; thence Southwesterly 166 feet along the rear lot
line of Lots 683 and 682 of said Lee Hills Subdivision; thence South 82 feet
to the South line of said NW 1/4; thence South 89 degrees 45 minutes East
along South line of said NW 1/4, 200 feet to the point of beginning,
containing 0.713 of an acre, more or less, as per plat of survey dated July
16, 1968, made by S. M. Cothren, Registered Professional Engineer, annexed to
and made a part of the Parcel 38 Deed.
Being the same property acquired by Central Louisiana Electric Company,
Inc. from Leesville Improvement Corporation by deed dated August 8, 1968 (the
"Parcel 38 Deed"), before Jack L. Simms, Notary Public for the Parish of Vernon,
recorded in Conveyance Book 364, Page 322, Entry No. 279104, records of Vernon
Parish, Louisiana.
PARCEL 39: That certain lot of ground, unimproved, with all rights,
ways, privileges and servitudes thereunto appertaining, situated in the Ninth
Ward of Iberia Parish, Louisiana, containing and measuring one hundred (100)
feet front on the Southerly side of the Now Iberia-Jefferson Island Road
(sometimes known as the extension of Hopkins Street) by a depth between equal
and parallel lines of two hundred forty and three-tenths (240.3) feet, bounded
Northerly by said New Iberia-Jefferson Island Highway, known as Louisiana State
Highway 675 or the Extension of Hopkins Street, Southerly and Easterly by
property of Pauline Deslatte Robichaux, et al and Westerly by property of
Central Louisiana Electric Company, Inc.
Being located in Section 15 and, possibly, Section 16, T 12 S, R 6 E,
Southwestern Land District of Louisiana.
Being a portion of the property acquired by Louis Robert Robichaux,
husband of Pauline Deslatte Robichaux, from Kearney Robichaux by deed dated July
25, 1960, filed for record July 26, 1960 in Conveyance Book 376, Folio 42, Entry
No. 116462, records of Iberia Parish, Louisiana.
This being the same property acquired by Central Louisiana Electric
Company, Inc. from Elaine Robiehaux Riggs et al, and in part from Claude
Robichaux and Linda Robichaux Vincent, by deeds dated July 13, 1968, and August
3, 1968, before Guyton H. Watkins, Notary Public for the Parish of Iberia. The
deed for Elaine Robichaux Riggs was recorded in Conveyance Book 529, Page 279,
Entry No. 143523, and the deed for Claude Robichaux and Linda Robichaux Vincent
was recorded in Conveyance Book 530, Page 8, Entry No. 143696, records of Iberia
Parish, Louisiana.
There is located on Parcel 39, above described, an electric substation.
39
<PAGE>
PARCEL 40: A certain lot or parcel of land containing 0.23 acres, more
or less, situated in the Fifth (5th) Ward, St. Landry Parish, Louisiana, and
being more specifically designated and described as follows:
Beginning at the NE corner property, being a fence corner common to
the North property line and a gravel road West fence line, running South
20DEG. 00' West a distance of 150 feet to the Northeast corner of the
property herein conveyed, which is the beginning point of the said property,
wherein there is set a 3/4" iron pipe, thence North 70DEG. 00' West 100 feet
to Northeast corner of lot herein described, thence South 20DEG. 00' West 100
feet to Southwest corner of property herein conveyed, thence South 70DEG. 20'
East 100 feet to the Southeast comer of property herein conveyed, and thence
North 20DEG. 00' East 100 feet along the West edge of a gravel road to said
Northeast corner of lot, which is the point of beginning, all as described on
Plat prepared by R. S. Woodruff & Associates, Inc., Consulting Engineers,
dated March 8, 1968, which lot herein conveyed is designated as CLECO lot
0.23 AC.
Being the same property acquired by Central Louisiana Electric
Company, Inc. from Mrs. Linda Ann Dumser Graves by deed dated April 1, 1968,
before Michael H. Bagot, Notary Public for the Parish of Orleans, recorded in
Conveyance Book Q-16, Page 311, Entry No. 532942, records of St. Landry,
Parish, Louisiana.
PARCEL 41: A certain piece, parcel or lot of ground, together with
all rights, ways and privileges appertaining thereto, and all buildings and
improvements situated thereon, located and situated on the left descending
bank of Bayou Boeuf in Cheneyville in the Northwest Quarter (NW1/4) of
Section 33, Township 1 North, Range 2 East, Rapides Parish, Louisiana, and
being more particularly described as follows, to-wit:
Begin at the intersection of the West property line of the tract
belonging now or formerly to L. B. Marshall and the North right-of-way line
of a black-top road (being the Southwest corner of the tract be longing now
or formerly to L. B. Marshall) and proceed South 1DEG. East, 105 feet to a
point; thence proceed North 79DEG. 45' West, 879 feet to a half-inch iron rod
and the point of beginning; thence South 10DEG. 15' West, 75 feet to a
half-inch iron rod; thence North 79DEG. 45' West, 100 feet to a half-inch
iron rod; thence North 10DEG. 15' East, 75 feet to a half-inch iron rod;
thence South 79DEG. 45' East 100 feet to a half-inch iron rod and the point
of beginning, said lot containing 0.17 acres more or less, all as is more
fully, shown by plat of survey of Ernest M. Furby, C.E., dated June 14, 1968.
Being the same property acquired by Central Louisiana Electric Company,
Inc. by an act of exchange from Weil Company, Inc. by deed dated August 9,
1968, before Donald Garret, Notary Public for the Parish of Rapides, and
Gladys C. Tarver, Notary Public for the Parish of Rapides, recorded in
Conveyance Book 722, Page 337, Entry No. 553892, records of Rapides Parish,
Louisiana.
There is located on Parcel 41, above described, an electric
substation.
40
<PAGE>
B. The following described franchises, grants, immunities, privileges, and
rights of the Company granted by the governing authorities of the cities, towns,
villages and parishes in the State of Louisiana enumerated in the schedule below
and all renewals, extensions, and modifications of said franchises, grants,
immunities, privileges and rights in any of them:
1. Those certain franchises granted by the governing bodies of the
following named cities, towns and villages in the State of Louisiana, to-wit:
(a) Electric franchise granted by the Town of Basile to Central
Louisiana Electric Company, Inc. by ordinance adopted October 2,
1967. for a term of 25 years.
(b) Electric franchise granted by the Town of Cheneyville to Central
Louisiana Electric Company, Inc. by ordinance adopted April 2, 1968,
for a term of 25 years.
(c) Water franchise granted by the Town of Cheneyville to Central
Louisiana Electric Company, Inc. by ordinance adopted April 2, 1968,
for a term of 25 years.
(d) Electric franchise granted by the Town of Colfax to Central Louisiana
Electric Company, Inc. by, ordinance adopted March 8, 1966, for a
term of 25 years.
(e) Electric franchise granted by the Village of Converse to Central
Louisiana Electric Company, Inc. by ordinance adopted March 4, 1968,
for a term of 25 years.
(f) Gas franchise granted by the Village of Converse to Central Louisiana
Electric Company, Inc. by ordinance adopted March 4, 1968, for a term
of 25 years.
(g) Gas franchise granted by the Village of Edgefield to Central
Louisiana Electric Company, Inc. by ordinance adopted October 4,
1966, for a term of 25 years.
(h) Electric franchise granted by the City of Eunice to Central Louisiana
Electric Company, Inc. by ordinance adopted March 14, 1967, for a
term of 25 years.
(i) Water franchise granted by the City of Eunice to Central Louisiana
Electric Company, Inc. by ordinance adopted March 14, 1967, for a
term of 25 years.
(j) Electric franchise granted by the Town of Glenmora to Central
Louisiana Electric Company, Inc. by ordinance adopted July 14, 1964,
for a term of 25 years.
(k) Electric franchise granted by the Village of Grand Cane to Central
Louisiana Electric Company, Inc. by ordinance adopted February, 21,
1968, for a term of 25 years.
(l) Electric franchise granted by the Town of Madisonville to Central
Louisiana Electric Company, Inc. by ordinance adopted September 7,
1965, for a term of 25 years.
41
<PAGE>
(m) Gas franchise granted by the Town of Many to Central Louisiana
Electric Company, Inc. by ordinance adopted September 14, 1965, for a
term of 25 years.
(n) Electric franchise granted by the Town of Merryville to Central
Louisiana Electric Company, Inc. by ordinance adopted September 19,
1966, for a term of 25 years.
(o) Electric franchise granted by the Village of Noble to Central
Louisiana Electric Company, Inc. by ordinance adopted October 2,
1967, for a term of 25 years.
(p) Electric franchise granted by the City of Pineville to Central
Louisiana Electric Company, Inc. by ordinance adopted February 7,
1967, for a term of 25 years.
(q) Gas franchise granted by the City of Pineville to Central Louisiana
Electric Company, Inc. by ordinance adopted February 7, 1967, for a
term of 25 years.
(r) Electric franchise granted by the Town of Pleasant Hill to Central
Louisiana Electric Company, Inc. by ordinance adopted November 10,
1965, for a term of 25 years.
(s) Gas franchise granted by the Town of Pleasant Hill to Central
Louisiana Electric Company, Inc. by ordinance adopted November 10,
1965, for a term of 25 years.
(t) Electric franchise granted by the Town of Zwolle to Central Louisiana
Electric Company, Inc. by ordinance adopted November 4, 1965, for a
term of 25 years.
(u) Gas franchise granted by the Town of Zwolle to Central Louisiana
Electric Company, Inc. by ordinance adopted November 4, 1965, for a
term of 25 years.
(v) Electric franchise granted by the Village of McNary to Central
Louisiana Electric Company, Inc. by ordinance adopted September 3,
1968, for a term of 25 years.
(w) Gas franchise granted by the Town of Franklin to Central Louisiana
Electric Company, Inc. by ordinance adopted May 1, 1968, for a term
of 25 years for a section of town (restricted to Pecan Acres
Subdivision).
2. Those certain franchises granted by the governing bodies of the
following named parties in the State of Louisiana, to-wit:
(a) Electric, Gas and Water franchises granted by the Parish of Avoyelles
to Central Louisiana Electric Company, Inc. by, ordinance adopted
September 13, 1967, for a term of 25 years.
(b) Gas franchise granted by the Parish of DeSoto to Central Louisiana
Electric Company, Inc. by ordinance adopted August 9, 1967, for a
term of 50 years.
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(c) Electric, Gas and Water franchises granted by the Parish of Rapides
to Central Louisiana Electric Company, Inc. by ordinance adopted
August 9, 1967, for a term of 25 years.
(d) Electric franchise granted by the Parish of St. Landry to Central
Louisiana Electric Company, Inc. by ordinance adopted October 2,
1967, for a term of 25 years.
(e) Gas franchise granted by the Parish of St. Landry to Central
Louisiana Electric Company, Inc. by ordinance adopted October 2,
1967, for a term of 25 years.
(f) Electric franchise granted by the Parish of Beauregard to Central
Louisiana Electric Company, Inc. by ordinance adopted October 8,
1968, for a term of 25 years.
(g) Electric and Gas franchises granted by the Parish of Evangeline to
Central Louisiana Electric Company, Inc. by ordinance adopted
November 8, 1965, for a term of 25 years.
(h) Water franchise granted by the Parish of Evangeline to Central
Louisiana Electric Company, Inc. by ordinance adopted July 10, 1967,
for a term of 25 years.
(i) Electric franchise granted by the Parish of Vernon to Central
Louisiana Electric Company, Inc. by ordinance adopted October 14,
1968, for a term of 25 years.
(j) Electric franchise granted by the Parish of Washington to Central
Louisiana Electric Company, Inc. by ordinance adopted July 13, 1965,
for a term of 25 years.
(k) Electric franchise granted by the Parish of Winn to Central Louisiana
Electric Company, Inc. by ordinance adopted April 12, 1966, for a
term of 50 years.
C. The following described electric transmission lines:
1. A 138KV transmission fine commencing at the Plaisance 138KV
Substation, and extending a distance of 6.5 miles to the Opelousas Generating
Plant in St. Landry Parish.
2. A 138KV transmission line commencing at a point near Florien on the
Toledo Bend-Many 138KV line, and extending Westward a distance of 1.5 miles, in
Sabine Parish.
3. A 138KV transmission line commencing at the Plaisance 13SKV
Substation in St. Landry Parish, and extending a distance of 9.5 miles to a
point near Port Barre in St. Landry Parish.
4. A 138KV transmission line commencing at the Pineville 138KV
Substation in Rapides Parish, and extending a distance of .8 miles to the
Alexandria Generating Station in Rapides Parish.
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5. A 138KV transmission line commencing at the 138KV Substation in
Iberia Parish, and extending a distance of 2.75 miles to the Gulf States
Utilities Moril Substation in Iberia Parish.
6. A 138KV transmission line commencing at the Coughlin Station 138KV
Substation in Evangeline Parish, and extending a distance of 15.8 miles to Bay
Hill in Avoyelles Parish.
7. A 138KV transmission line commencing at the Pineville 139KV
Substation in Rapides Parish, and extending a distance of 15.0 miles to the
Rapides 230KV Substation in Rapides Parish.
8. A 138KV transmission line commencing at the Coushatta 138KV
Substation in Red River Parish, and extending a distance of 29.0 miles to the
Clarence 138KV Substation in Natchitoches Parish
9. A 138KV transmission line commencing at a point near Bayou Sale in
St. Mary Parish, and extending a distance of 4.5 miles to a point near North
Bend in St. Mary Parish.
10. A 138KV transmission line commencing at the Teche Station 138KV
Substation in St. Mary Parish, and extending a distance of 14.0 miles to the
United Carbon Plant in St. Mary Parish.
11. A 230KV transmission line commencing at the Coughlin Station 138KV
Substation in Evangeline Parish, and extending a distance of 44.5 miles to the
Rapides Station Substation in Rapides Parish.
12. A 138KV transmission line commencing at the Clarence 138KV
Substation in Natchitoches Parish, and extending a distance of 7.1 miles to the
Natchitoches City Generating Station in Natchitoches Parish.
13. A 138KV transmission line commencing at Bay Hill in Avoyelles
Parish, and extending a distance of 9.0 miles to the Marksville 138KV Substation
in Avoyelles Parish.
14. A 138KV transmission line commencing at the Ramos 138KT Substation
in St. Mary Parish, and extending a distance of .8 miles to the Morgan City
Generating Station in St. Mary Parish.
15. A 500KV transmission line commencing at the East boundary of
Richard Bulk Substation in Acadia Parish, and extending a distance of 3.0 miles
in an Eastward direction.
II.
All real estate or interest therein, now owned or which may be hereafter
acquired by the Company for use or which may be used by it in connection with
its business as an electric, gas and water company, together with all of the
right, title, and interest of the Company, now owned
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or hereafter acquired in and to any and all works, plants, buildings,
structures, erections, and constructions now or here after placed upon any of
the real estate mentioned, described or referred to as being subject to the
lien of the Indenture, with the fixtures, tenements, hereditaments, and
appurtenances thereunto appertaining or belonging.
III.
The following Described Property, Wherever Situate:
FIRST: The electric generating plants and electric transmission and/or
distribution systems now or hereafter owned by the Company, and any electric
generating plants and electric transmission and/or distribution systems
hereafter constructed or acquired by the Company, and any additions to or
extensions of any such existing or future electric generating plants and/or
electric transmission and/or distribution systems, together with all engines,
dynamos, motors, generators, boilers, turbines, pole lines, poles, wires,
cross-arms, insulators, transformers, meters, buildings, erections, structures,
stations, substations, power houses, power producing and power transmitting
equipment, water, water rights, water wheels, headworks, race-ways, hydraulic
works, hydro-electric plants, cables, conduits, instruments, apparatus,
appliances, machinery, facilities, fixtures and all other property used or
provided for use in the construction, repair, maintenance and/or operation
thereof, both that now owned and that which may be hereafter acquired by the
Company, and together also with all the rights, privileges, franchises,
easements, licenses, ordinances, rights of way, liberties, immunities and
permits of the Company, howsoever conferred or acquired, and whether now owned
or hereafter to be acquired, with respect to the construction, maintenance,
repair and/or operation of said electric generating plants and electric
transmission and/or distribution systems, and each of them, and any additions
thereto and extensions thereof.
SECOND: The gas gathering and/or transmission and/or distribution systems
now owned by the Company, and any gas gathering and/or gas transmission
and/or distribution systems hereafter constructed or acquired by the Company,
and any additions to or extensions of any such existing or future plants and
systems, together with the buildings, erections, structures, generating and
purifying apparatus, holders, engines, boilers, benches, retorts, tanks,
pipelines, connections, service pipes, meters, conduits, instruments,
appliances, apparatus, facilities, machinery, fixtures and all other property
used or provided for use in the construction, maintenance, repair and/or
operation thereof, both that now owned and that which may be here after
acquired by the Company, and together also with all rights, privileges,
rights of way, franchises, licenses, easements, grants, liberties,
immunities, permits and ordinances of the Company, howsoever conferred or
acquired, and whether now owned or hereafter to be acquired, with respect to
the construction, maintenance, repair, and/or operation of said gas gathering
and/or transmission and/or distribution systems, and each of them, and any
additions thereto and extensions thereof.
THIRD: The waterworks plants and water distribution systems now owned by
the Company, and any waterworks plants and/or water works distribution
systems hereafter constructed or acquired by the Company together with the
buildings, structures, erections, pumps, pumping machinery, reservoirs,
filters, filter-galleries, chlorinating equipment, tanks, wells, water
rights, water supply, water main, hydrants, pipelines, service pipes, meters,
standpipes, engines,
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boilers, apparatus, appliances, facilities, machinery, equipment, fixtures
and all other property used or provided for use in the construction,
maintenance, repair and/or operation thereof, both that now owned and that
which may be hereafter acquired by the Company, and together also with all of
the rights, privileges, rights of way, franchises, licenses, easements,
permits, liberties, immunities, grants and ordinances of the Company,
howsoever conferred or acquired, and whether now owned or hereafter to be
acquired, with respect to the construction, maintenance, repair and operation
of said plants and systems and each of them, and any additions thereto and
extensions thereof.
To HAVE AND TO HOLD all such properties, real, personal and mixed,
granted, bargained, sold, aliened, remised, released, conveyed, assigned,
transferred, mortgaged, hypothecated, affected, pledged, set over or confirmed
by the Company as aforesaid, or intended so to be, unto the Trustee and its
successors in the trust hereby created and its and their assigns forever;
SUBJECT, HOWEVER, to existing leases, to easements and other rights of
way for pole lines and other similar encumbrances and restrictions which the
Company hereby certifies, in its judgment, do not impair the use of said
property by the Company in its business, to liens securing indebtedness which
has neither been assumed by the Company nor upon which it customarily pays
interest charges, existing solely upon real property, or rights in and relating
thereto, which real property or rights have been or may be acquired for
right-of-way purposes, to liens of taxes and assessments for the current year
and taxes and assessments not yet due, to alleys, streets and highways that may
run across or encroach upon said lands, and to undetermined liens and charges,
if any, incidental to construction, except such as may result from any
delinquent obligation of the Company f or the payment of money on account of
such construction, and, with respect to any property which the Company may
hereafter acquire, to all terms, conditions, agreements, covenants, exceptions
and reservations expressed or provided in such deeds and other instruments,
respectively, under and by virtue of which the Company shall hereafter acquire
the same and to any and all liens existing thereon at the time of such
acquisition within the restrictions contained in the Indenture; and subject also
to other liens and encumbrances of the character defined in the Indenture as
"permitted liens" insofar as the same may attach to any of the property embraced
herein:
SAVING AND EXCEPTING, however, from the properties mortgaged and pledged by
the Indenture (whether now owned by the Company or hereafter acquired by it)
all bills, notes and accounts receivable, cash on hand and in banks,
contracts, merchandise and appliances kept for purposes of sale, and all
bonds, obligations, evidences of indebtedness, shares of stock and other
securities, and certificates or evidences of interest therein -- other than
any of the foregoing which may be hereafter specifically transferred or
assigned to or pledged or deposited with the Trustee under the Indenture or
required by the provisions of the Indenture so to be -- and all office
furniture and equipment, motor vehicles, tools, testing equipment and
consumable materials and supplies; provided, however, that, if upon the
happening of an event of default as in the Indenture defined, the Trustee or
any receiver appointed under the Indenture shall enter upon and take
possession of the mortgaged property, the Trustee or such receiver may, to
the extent permitted by law, at the same time likewise take possession of any
and all of the property described in this paragraph then on hand and use and
administer the same to the extent as if such
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property were part of the mortgaged property, unless and until such event of
default shall be remedied or waived and possession of the mortgaged property
restored to the Company, its successors or assigns.
Also SAVING AND EXCEPTING, however, from the property hereby mortgaged
and pledged:
(a) All parcels of land now owned or hereafter acquired by the Company
and not used by it or useful in connection with its business as an electric, gas
or water company or as an electric, gas or water utility.
(b) All machinery, equipment, fixtures, supplies and materials now used
or hereafter acquired for use in connection with the ice business of the
Company.
(c) All motor vehicles now used or hereafter acquired for use in
connection with the ice business of the Company, together with an tires, spare
parts, materials and supplies appertaining thereto.
(d) All machinery, equipment, fixtures, supplies and materials, now
owned or hereafter acquired, not used by or useful to the Company in its
business as an electric, gas or water company or as an electric, gas or water
utility, not located on any parcel of real estate now owned or hereafter
acquired, referred to as being subject to the lien of the Indenture.
(e) All additions, improvements, betterments, extensions and
replacements now or hereafter made to or acquired for or in connection with the
property set forth in paragraphs (a), (b), (c) and (d) above.
IN TRUST NEVERTHELESS, upon the terms and trusts herein and in the
Original Indenture, the First Supplemental Indenture, the Second Supplemental
Indenture, the Third Supplemental Indenture, the Fourth Supplemental Indenture,
the Fifth Supplemental Indenture, the Sixth Supplemental Indenture, the Seventh
Supplemental Indenture, the Eighth Supplemental Indenture, the Ninth
Supplemental Indenture and the Tenth Supplemental Indenture set forth;
PROVIDED, HOWEVER, and these presents are upon the condition that if the
Company, its successors or assigns, shall pay or cause to be paid the
principal of and interest on all said bonds, together with the premium, if
any, payable on such of said bonds as may have been called for redemption
prior to maturity, or shall provide, as permitted by the Indenture, for the
payment thereof by depositing with the Trustee the entire amount due or to
become due thereon for principal, interest and premium, if any, and if the
Company shall also pay or cause to be paid all other sums payable under the
Indenture by it, then the Indenture and the estate and rights thereby granted
shall cease, determine and be void, otherwise to be and remain in full force
and effect.
IT IS HEREBY FURTHER COVENANTED, DECLARED AND AGREED by and between the
Company and the Trustee, for the benefit of those who shall hold said bonds and
coupons or any of them, as follows:
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ARTICLE I.
DESCRIPTION OF BONDS OF SERIES M.
SECTION 1.1. The thirteenth series of bonds to be issued under the
Indenture and secured thereby is hereby created, which shall be designated, and
distinguished from the bonds of all other series, by the title "First Mortgage
Bonds, Series M, 7 1/2%," elsewhere herein referred to as the "bonds of Series
M".
Except as otherwise provided in Section 2.08 of the Indenture with respect
to destroyed, lost or stolen bonds, the aggregate principal amount of the
bonds of Series M which may be outstanding at any one time shall be
$12,000,000.
The bonds of Series M shall be dated, and shall bear interest from April 1,
1969, except as provided in Section 2.03 of the Indenture with respect to
registered bonds without coupons, and shall be due April 1, 1999, and shall
bear interest at the rate of seven and one-half per centum (7 1/2%) per
annum, payable semi-annually on the first day of October and the first day of
April in each year, until they shall mature, according to their terms or on
prior redemption or by declaration or otherwise, and at the rate of eight per
centum (8%) per annum on any overdue principal and premium (if any) and (to
the extent permitted by law) on any overdue installment of interest. The
principal of and the premium (if any) and the interest on the bonds of Series
M shall be payable at the office or agency of the Company in the City of New
Orleans, Louisiana, in such coin or currency of the United States of America
as, at the time of payment, shall be legal tender for public and private
debts.
Subject to the further provisions of this Article I, the bonds of Series M
shall be redeemable, either at the option of the Company or pursuant to any
provision of the Indenture requiring such redemption, either as a whole or in
part from time to time, at any time prior to maturity, upon notice as
provided in Section 8.02 of the Indenture, published in a newspaper printed
in the English language and customarily published on each business day and of
general circulation in the Borough of Manhattan, The City of New York, New
York, and like publication in a similar newspaper of the City of New Orleans,
at least once in each of four (4) successive calendar weeks upon any business
day of each such calendar week, the first publication to be not less than
thirty (30) days and not more than sixty (60) days before such redemption
date (or upon mailing of such notice of redemption as provided in the first
paragraph of Section 8.02 of the Indenture in the event such paragraph shall
be applicable). If redeemed (i) by the application of moneys in the Sinking
Fund for bonds of Series M provided for in Article II of this Eleventh
Supplemental Indenture or moneys in the depreciation fund provided for in
Section 5.07 of the Indenture, or (ii) by the application of moneys received
by the Trustee in connection with any release of property upon any
acquisition thereof by any municipal corporation or other government
subdivision or governmental body or public authority, or (iii) by the
application of any moneys (provided the date fixed for such redemption under
this clause (iii) occurs within sixty (60) days of the Company's merger or
consolidation, or of the Company's conveyance or transfer of all or
substantially all the property mortgaged and pledged under the Indenture,
which merger, consolidation, conveyance or transfer comes within the terms of
and is permitted by Section 13.01 of the Indenture), the bonds of Series M
are redeemable at the redemption price at
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the time applicable specified in Column A of the schedule contained in the
form of coupon bond of Series M set forth in the recitals hereof, together
with interest accrued to the date fixed for redemption. If redeemed otherwise
than by the application of such moneys, the bonds of Series M are redeemable
at the redemption price at the time applicable specified in Column B of said
schedule, together with interest accrued to the date fixed for redemption. No
bonds of Series M (excepting those bonds of Series M redeemed pursuant to
clause (iii) of the second sentence of this paragraph) may be redeemed at the
option of the Company prior to April 1, 1974, directly or indirectly as a
part of, or in anticipation of, any refunding operation involving the
incurring of indebtedness which has an interest cost to the Company, computed
in accordance with generally accepted financial practice, of less than 7.47%
per annum. As used herein, the term "indebtedness" shall mean any obligation
created or assumed by the Company for the repayment of money borrowed.
Coupon bonds of Series M shall be issuable in the denomination of $1,000
and shall be registerable as to principal. Registered bonds without coupons
of Series M shall be issuable in denominations of $1,000 and any multiple of
$1,000. Bonds of Series M shall be interchangeable at the option of the
holders thereof, in like aggregate principal amounts, coupon bonds for
registered bonds without coupons, registered bonds without coupons for coupon
bonds and the several denominations of registered bonds without coupons. Any
such interchange of registered bonds without coupons of Series M originally
issued by the Company pursuant to this Article I and Section 2.03 of the
Indenture (or registered bonds without coupons delivered on any partial
redemption of any such originally issued registered bonds without coupons)
for either coupon bonds or coupon bonds and registered bonds without coupons
requested by the original registered holder thereof shall be at the expense
of the Company (such expense to include the cost of delivery including the
cost of insurance against loss or theft) anything in the Original Indenture
to the contrary notwithstanding.
ARTICLE II.
SINKING FUND FOR BONDS OF SERIES M.
SECTION 2.1. The Company covenants and agrees that it will on or before
the first day of April, 1970, and annually thereafter on or before the first day
of April in each year to and including the first day of April, 1998, as long as
any of the bonds of Series M issued hereunder shall be outstanding, pay to the
Trustee as and for a sinking fund for the bonds of Series M an amount in cash
equal to one percentum. (1%) of the greatest principal amount of bonds of Series
M at any, one time outstanding under the Indenture; provided, however, that the
amount of cash payable to the Trustee on any such date pursuant to the
provisions of this Section shall be reduced by an amount equal to the sum of the
following credits:
(a) The aggregate principal amount of bonds of Series M which
the Company shall deliver to the Trustee for that purpose (provided,
however, that no bonds of Series M shall be delivered to the Trustee
which have not been sold in a bona fide transaction and reacquired by
the Company); and
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(b) An amount equal to sixty per centum (60%) of the amount of
bondable value of property additions which the Company shall elect to
make the basis of a credit against such payment.
In the event the Company shall elect to take credit against any such
payment pursuant to the provisions of the foregoing paragraph (b) of this
Section, the Company shall deliver to the Trustee an officers' certificate of
bondable value of property additions meeting the requirements of subsection (B)
of Section 1.06 of the Original Indenture, accompanied by the instruments
required by subsection (C) of Section 1.06 thereof.
Cash paid to the Trustee pursuant to the provisions of this Section
shall be applied by it as follows:
(a) Upon the written notice by the Company to the Trustee
given on or before February 15 in any year, beginning with the year
1970, specifying the amount of cash which the Company, will pay to the
Trustee on the next succeeding April 1 pursuant to this Section and
requesting that it be used for the redemption of bonds, the Trustee
shall, to the extent practicable, apply the cash received by it on the
next succeeding April 1, together with any other cash held by it on
such February 15 under the provisions of this Section, to the
redemption on such April 1 of bonds of Series M, in the manner and
subject to the conditions provided in such bonds, in Article VIII of
the Indenture and in Section 2.4 of this Eleventh Supplemental
Indenture; and for such purpose the Trustee may publish notice of
redemption in the name of the Company or in its own name as Trustee.
(b) If the Company shall not have given the notice referred to
in the foregoing subdivision (a), the cash received by the Trustee on
any April 1 pursuant to the provisions of this Section shall, upon
request of the Company and to the extent practicable, be applied
promptly by the Trustee to the purchase of bonds of Series M in
accordance with the provisions of Section 8.06 of the Indenture.
(c) If the Trustee on June 20 of any year shall hold cash
under the provisions of this Section amounting to $15,000 or more (or
any amount less than $15,000, if the Company so elects), the Trustee
shall apply all cash, to the extent practicable, then held under the
provisions of this Section to the redemption on the next succeeding
August 1 of bonds of Series M, in the manner and subject to the
conditions provided in such bonds, in Article VIII of the Indenture and
in Section 2.4 of this Eleventh Supplemental Indenture; and for such
purpose the Trustee may publish notice of redemption in the name of the
Company or in its own name as Trustee.
SECTION 2.2. The Company further covenants to pay to the Trustee, on
demand, the compensation of the Trustee in administering the sinking fund as
provided in this Article II, together with the Trustee's expenses, including
cost of advertisement of redemption notice and any other advertisements and
other lawful charges, if any, and any accrued interest and premium paid or
payable with respect to any such bonds of Series M purchased or redeemed as
provided
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for in Section 2.1, it being intended that the aforesaid compensation,
expenses, charges, accrued interest and premium shall not be charged against
sinking fund money.
SECTION 2.3. All bonds of Series M delivered to the Trustee for the
purpose of taking a credit pursuant to the provisions of Section 2.1, or
purchased or redeemed pursuant to the provisions of Section 2.1, shall be
forthwith canceled by the Trustee, and such bonds shall not be reissued.
SECTION 2.4. Notwithstanding any other provision of the Indenture, if
less than all of the bonds of Series M outstanding are to be called for
redemption, whether for the sinking fund for bonds of Series M or otherwise, the
Trustee shall select out of such bonds of Series M the particular coupon bonds
and/or registered bonds without coupons and/or portiou's ($1,000 or any multiple
thereof) of registered bonds without coupons so to be redeemed, in the following
manner:
(a) The Trustee shall first allocate the total principal
amount of such bonds of Series M to be redeemed between
(i) coupon bonds of Series M not
registered as to principal at the time outstanding, and
(ii) coupon bonds of Series M registered as to
principal and registered bonds of Series M without coupons at
the time outstanding,
in proportion (to the nearest multiples of $1,000) to the respective
aggregate principal amounts thereof at the time outstanding.
(b) The Trustee shall then select, by lot according to such
method as the Trustee in its discretion shall consider proper, in the
principal amount determined as provided in paragraph (a) above, the
particular coupon bonds of Series M not registered as to principal to
be redeemed.
(c) At the same time the Trustee shall select, in the
principal amount determined as provided in paragraph (a) above, the
coupon bonds of Series M registered as to principal and the registered
bonds of Series M without coupons (or portions thereof) to be redeemed
by allocating such principal amount so determined among the various
registered owners of bonds of Series M in proportion to the respective
aggregate principal amounts of bonds of Series M registered in their
respective names, provided that
(i) the Trustee may in its discretion allocate an
additional or lesser amount not exceeding $1,000 to any one or
more of such registered owners to the end that the principal
amount of bonds of Series M registered in the name of each
such registered owner to be redeemed shall, be $1,000 or a
multiple thereof;
(ii) in malting such allocation, if the aggregate
principal amount of bonds of Series M registered in the name
of any registered owner of bonds of
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Series M shall be $1,000, the Trustee shall not be required
to allocate any portion of such principal amount to such
registered owner;
(iii) the particular bonds and portions of particular
bonds of Series M registered in the name of any registered
owner to be redeemed shall be selected by the Trustee
according to such method (which need not be by lot) as it in
its discretion shall consider proper, avoiding, where proper
and practicable to do so, the selection of portions of
particular bonds of Series M, rather than the entire bonds of
Series M, for redemption; and
(iv) if any registered owner of more than one bond of
Series M shad state in writing to the Trustee that it holds
such bonds as nominee for more than one beneficial owner and
shall have so requested by written notice to the Trustee, the
respective bonds of Series M registered in the name of such
owner shall be treated, for purposes of this Section 2.4, as
owned by separate registered owners.
In any selection of bonds of Series M by lot under this Section 2.4
which involves registered bonds of Series M, each registered bond with out
coupons shall be represented by a separate number for each $1,000 of its
principal amount.
The Trustee forthwith upon any selection of bonds of Series M for
redemption as aforesaid shall give written notice to the Company describing the
bonds of Series M (including any portion of registered bond of Series M without
coupons) selected for redemption as afore said.
ARTICLE III.
ADDITIONAL COVENANTS OF THE COMPANY.
SECTION 3.1. The Company covenants that, so long as any bonds of Series
M an outstanding, it will not at any time declare or pay any dividend on its
Common Stock or make any distribution to its Common Stockholders (other than
dividends or distributions payable solely in its Common Stock) or purchase or
otherwise acquire for value any of its Common Stock, except out of (1) earned
surplus of the Company accumulated after December 31, 1949, plus (2) $530,000 of
earned surplus accumulated prior to January 1, 1950 (such aggregate amount being
hereinafter called "unrestricted earned surplus"), nor unless after the payment
of such dividend or the making of such- distribution, purchase or acquisition
the sum of (a) the provision for property retirements or depreciation made by
the Company out of income or earned surplus, during the period from July 1,
1950, to the end of the calendar year next preceding the date of payment of such
dividend or the making of such distribution, purchase or acquisition and (b) the
unrestricted earned surplus, if any, of the Company shall be not less than the
aggregate of the minimum provision for property retirements or depreciation
determined as provided in Section 1.05 of the Indenture, for the period from
July 1, 1950, to the end of the calendar year next preceding the date of payment
of such dividend or the making of such distribution, purchase or acquisition.
For the purposes of this Section, the earned surplus of the Company accumulated
after December 31, 1949, shall be determined in accordance with sound accounting
practice, and, so long as and to the extent that there shall remain any earned
surplus of the Company accumulated prior to January
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1, 1950, other than unrestricted earned surplus, such amount shall be available
for all surplus charges other than such dividends or the making of such
distribution, purchase or acquisition.
SECTION 3.2. The Company covenants that so long as any bonds are
outstanding under the Original Indenture no Indenture or Indentares supplemental
to the Original Indenture will be entered into by the Company unless such
Supplemental Indenture shall contain provisions which are in compliance with the
Trust Indenture Act of 1939 as then in effect; provided, however, that this
provision shall not be effective and binding upon the Company if all of the
bonds then outstanding and then to be issued under the Original Indenture as
supplemented and amended by all other supplemental indentures and by such
supplemental indenture then to be entered into, shall either be exempt
securities as defined in the Trust Indenture Act of 1939 as then in effect, or
are to be issued in a transaction exempt from the provisions of said Act.
SECTION 3.3. The Company covenants that, so long as any bonds of Series
M are outstanding, it will not convey or transfer any property which is subject
to the lien of the Indenture to any affiliate of the Company except in
accordance with the provisions of Article XIII of the Indenture or except such
property as shall thereupon be released from the lien of the Indenture under the
provisions of Article IX thereof.
SECTION 3.4. The Company covenants that, so long as any bonds of Series
M are outstanding, it will not at any time purchase or cause to be purchased any
bond of any series outstanding under the Indenture at a price (including accrued
interest, bat not including brokerage charges) which is in excess of the current
optional redemption price of such bond specified in the table of redemption
prices contained therein at the date of purchase if such bond is redeemable
before maturity or one hundred five per cent (105%) of the principal amount of
such bond if it is not so redeemable, plus, in either case, accrued interest.
ARTICLE IV.
AMENDMENT OF ORIGINAL INDENTURE.
SECTION 4.1. The first sentence of Section 4.01 of the Original
Indenture, which now reads:
"The aggregate principal amount of bonds which may be secured
by this Indenture shall be such aggregate principal amount as may now
or hereafter from time to time be authenticated and delivered under the
provisions hereof, but not exceeding $100,000,000 aggregate principal
amount."
is hereby amended to read as follows:
"The aggregate principal amount of bonds which may be secured
by this Indenture shall be such aggregate principal amount as may now
or hereafter from time to time be authenticated and delivered under the
provisions hereof, but not exceeding $500,000,000 aggregate principal
amount."
53
<PAGE>
SECTION 4.2. Subsection (5) of Section 4.06 of the Original
Indenture is hereby amended by changing "$100,000,000" to "$500,000,000".
ARTICLE V.
STAMPING AND REVISION OF BONDS OF
SERIES A, B, C, D, F, G, H, I, J, K, AND L.
SECTION 5.1. All bonds of Series A, B, C, D, F, G, H, 1, J, K and L
hereafter issued shall (unless revised as hereinafter provided) be stamped or
typewritten prior to their issuance with a notation as follows:
"The Indenture dated as of July 1, 1950 referred to in this
bond has been amended by an Eleventh Supplemental Indenture dated as of
April 1, 1969, executed and delivered with the consent of the holders
of 75% of the bonds at the time outstanding under the Indenture,
providing for the amendment of the Indenture so that the aggregate
principal amount of bonds which may be secured by the Indenture shall
be such aggregate principal amount as may from time to time be
authenticated and delivered under the provisions thereof, but not
exceeding $500,000,000 aggregate principal amount. A copy of the
Eleventh Supplemental Indenture is on file with The National Bank of
Commerce in New Orleans, Trustee under the Indenture, to which
reference is hereby made.
THE NATIONAL BANK OF COMMERCE
IN NEW ORLEANS, TRUSTEE."
SECTION 5.2. Any bonds of Series A, B, C, D, F, G, H, I, J, K and L at
any time hereafter issued shall, if the Company so elects or if the holder of
such bond so requests in writing, be in such revised form as may be approved by
the Trustee so as to refer to the amendment of the Original Indenture hereby
effected.
ARTICLE VI.
MISCELLANEOUS.
SECTION 6.1. The Company is lawfully seized and possessed of all the
real estate, fritinebi es and other property described or referred to in the
Indenture as presently mortgaged and pledged thereunder, subject to the
exceptions stated therein and except property which has been released from the
lien of the Indenture in accordance with its terms, and upon the initial issue
of bonds of Series M thereunder such real estate, franchises and other property
will be free and clear of any lien prior to or on a parity with the lien of the
Indenture except as set forth in the granting clauses of the Indenture and
except permitted liens as therein defined, and the Company has good right and
lawful authority to mortgage and pledge the same as provided in and by the
Indenture.
SECTION 6.2. As supplemented and amended by this Eleventh Supplemental
Indenture, the Original Indenture, the First Supplemental Indenture, the Second
Supplemental Indenture, the Third Supplemental Indenture, the Fourth
Supplemental Indenture, the Fifth Supplemental
54
<PAGE>
Indenture, the Sixth Supplemental Indenture, the Seventh Supplemental Indenture,
the Eighth Supplemental Indenture, the Ninth Supplemental Indenture and the
Tenth Supplemental Indenture are in all respects ratified and confirmed and said
Original Indenture, First Supplemental Indenture, Second Supplemental Indenture,
Third Supplemental Indenture, Fourth Supplemental Indenture, Fifth Supplemental
Indenture, Sixth Supplemental Indenture, Seventh Supplemental Indenture, Eighth
Supplemental Indenture, Ninth Supplemental Indenture, Tenth Supplemental
Indenture and this Eleventh Supplemental Indenture shall be read, taken and
construed as one and the same instrument.
SECTION 6.3. The Company may enter into an agreement with any holder of
a registered bond of Series M without coupons providing for payment to such
holder of the principal of and the premium, if any, and interest on such bond or
any part thereof at a place other than the place specified in such bond as the
place for such payment, and for the making of notation, if any, of any such
payment on such bond by such holder or by an agent of the Company or of the
Trustee.
The Trustee is authorized to approve any such agreement, and shall not
be liable or responsible to any such holder or to the Company or to any other
holder for any act or omission to act on the part of the Company, any such
holder or any such agent in connection with any such agreement.
SECTION 6.4. The Trustee assumes no duties, responsibilities or
liabilities by reason of this Eleventh Supplemental Indenture, other than as set
forth in the Original Indenture, the First Supplemental Indenture, the Second
Supplemental Indenture, the Third Supplemental Indenture, the Fourth
Supplemental Indenture, the Fifth Supplemental Indenture, the Sixth Supplemental
Indenture, the Seventh Supplemental Indenture, the Eighth Supplemental
Indenture, the Ninth Supplemental Indenture, and the Tenth Supplemental
Indenture; and this Eleventh Supplemental Indenture is executed and accepted by
the Trustee subject to all the terms and conditions of its acceptance of the
trust under the Original Indenture, the First Supplemental Indenture, the Second
Supplemental Indenture, the Third Supplemental Indenture, the Fourth
Supplemental Indenture, the Fifth Supplemental Indenture, the Sixth Supplemental
Indenture, the Seventh Supplemental Indenture, the Eighth Supplemental
Indenture, the Ninth Supplemental Indenture and the Tenth Supplemental
InOenture, as fully as if said terms and conditions were herein set forth at
length.
SECTION 6.5. This Eleventh Supplemental Indenture shall be
simultaneously executed in several counterparts and all such counter parts
executed and delivered, each as an original, shall constitute but one and the
same instrument.
SECTION 6.6. This Eleventh Supplemental Indenture has been dated as of
April 1, 1969, solely for convenience. The date of actual execution hereof by
each of the parties hereto is the date shown by the acknowledgment of execution
hereof by its officers.
IN WITNESS WHEREOF, CENTRAL LOUISIANA ELECTRIC COMPANT, INC. has caused
this instrument to be signed in its corporate name by one of its Vice-Presidents
and sealed with its corporate seal attested by one of its Assistant Secretaries,
and The National Bank of Commerce in New Orleans to evidence its acceptance of
the trust hereby created has caused this instrument to
55
<PAGE>
be signed in its corporate name by its Executive Vice-President and sealed by
its corporate seal attested by one of its Assistant Cashiers, all as of the day
and year first above written.
CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
[SEAL]
By......................................
Attest: By S. O. BRAME
S. 0. Brame, Vice President
............................................
C. MIZELLE
ASSISTANT SECRETARY
Signed, sealed, acknowledged and delivered by
CENTRAL LOUISIANA ELECTRIC COMPANY, INC., in the presence of:
EARL G. EAGAN
JOHN E. MORGAN
56
<PAGE>
THE NATIONAL BANK OF COMMERCE IN NEW ORLEANS
[SEAL]
By..........................................
Attest: By F. C. DOYLE
Executive Vice-President
............................................
MILTON F. FOGARTY
ASSISTANT CASHIER
Signed, sealed, acknowledged and delivered
by THE NATIONAL BANK OF COMMERCE IN NEW ORLEANS in
the presence of:
EARL G. EAGAN
JOHN E. MORGAN
57
<PAGE>
STATE OF LOUISIANA
PARISH OF ORLEANS
BE IT KNOWN, THAT on this 16th day of April, 1969, before me the
undersigned, a Notary Public in and for said Parish and State, duly qualified
and commissioned as such, personally appeared S. O. BRAME, Vice President and C.
MIZELLE, Assistant Secretary of Central Louisiana Electric Company, Inc., the
grantor in the foregoing instrument, to me personally known and known to me to
be such officers, respectively, of such Company, and personally known to me to
be the identical persons whose names are subscribed and affixed to the foregoing
instrument as such officers, respectively, and who subscribed the name of the
Company thereto, and in my presence and in the presence of the undersigned
witnesses, of lawful age and domicile, severally acknowledge that the same is
their respective, free and voluntary act and deed as such officers and the free
and voluntary act and deed of said Company for the uses and purposes therein
expressed; and the said persons being each by me duly and severally sworn as
individuals did depose and say that they are such officers, respectively, of
said Company; that they know the seal of said Company; that the seal affixed to
the foregoing instrument was and is such corporate seal; that said seal was so
affixed and said instrument was so signed on behalf of said Company by the order
and authority of the Board of Directors of said Company; and that they signed
their names thereto as such officers, Respectively, of said Company by like
authority.
IN TESTIMONY WHEREOF, the said Appearers have hereunto signed their
names on the day and date first hereinabove written, in the presence of EARL G.
EAGAN and JOHN E. MORGAN, witnesses of lawful age and domicile, and of me, said
Notary Public.
Witnesses:
S. O. BRAME
Vice President
EARL G. EAGAN
C. MIZELLE
Assistant Secretary
JOHN E. MORGAN
MICHAEL K. TARVER
Notary Public
[SEAL]
58
<PAGE>
STATE OF LOUISIANA
PARISH OF ORLEANS
BF, IT KNOWN, THAT on this 16th day of April, 1969, before me the
undersigned, a Notary Public in and for said Parish and State, duly qualified
and commissioned as such, personally appeared F. C. DOYLE, Executive
Vice-President, and MILTON F. FOGARTY, an Assistant Cashier of The National Bank
of Commerce in New Orleans, a national banking association, duly organized and
existing under the laws of the United States of America, Trustee under the
foregoing instrument, to me personally known and known to me to be such
officers, respectively, of said Bank, and personally known to me to be the
identical persons whose names are subscribed and affixed to the foregoing
instrument as such officers, respectively, and who subscribed the name of the
said Bank thereto, and in my presence and in the presence of the under signed
witnesses, of lawful age and domicile, severally acknowledged that the same is
their respective, free and voluntary act and deed as such officers and the free
and voluntary act and deed of said Bank for the uses and purposes therein
expressed; and the said persons being each by me duly and severally sworn as
individuals did depose and say that they are such officers, respectively, of
said Bank; that they know the seal of said Bank, that the seal affixed to the
foregoing instrument was and is such corporate seal; that said seal was so
affixed and said instrument -..as so signed on behalf of said Bank by the order
and authority of the Board of Directors of said Bank; and that they signed their
names thereto as such officers, respectively, of said Bank by like authority.
ITS TESTIMONY WHEREOF, the said Appearers have hereunto signed their
names on the day and date first hereinabove written, in the presence of EARL G.
EAGAN and JOHN E. MORGAN, witnesses of lawful age and domicile, and of me, said
Notary Public.
Witnesses:
F. C. DOYLE
Executive Vice President
EARL G. EAGAN
MILTON F. FOGARTY
Assistant Cashier
JOHN E. MORGAN
MICHAEL K. TARVER
Notary Public
[SEAL]
59
<PAGE>
EXHIBIT 11
CLECO CORPORATION
COMPUTATION OF NET INCOME PER COMMON SHARE
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
(In thousands, except share and per share amounts)
--------------------------------------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
BASIC
Net income applicable to common stock $51,664 $50,402 $50,061
----------------- ----------------- -----------------
----------------- ----------------- -----------------
Weighted average number of shares of common
stock outstanding during the year 22,480,163 22,459,770 22,442,683
----------------- ----------------- -----------------
----------------- ----------------- -----------------
Basic net income per common share $2.30 $2.24 $2.23
----------------- ----------------- -----------------
----------------- ----------------- -----------------
DILUTED
Net income applicable to common stock $51,664 $50,402 $50.061
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 1,435 1,456 1,462
Deduct additional cash contribution required which is
equal to dividends on preferred stock less dividends
paid at the common dividend rate, net of tax (70) (107) (140)
Add tax benefit associated with dividends paid on
allocated common shares 342 297 227
----------------- ----------------- -----------------
Adjusted income applicable to common stock $53,371 $52,048 $51,610
----------------- ----------------- -----------------
----------------- ----------------- -----------------
Weighted average number of shares of common
stock understanding during the year 22,480,163 22,459,770 22,442,683
Number of equivalent common shares attributable
to ESOP 1,380,614 1,397,532 1,405,205
Common stock under stock option grants 6,681 6,729 10,079
----------------- ----------------- -----------------
Average shares 23,867,458 23,864,031 23,857,967
----------------- ----------------- -----------------
----------------- ----------------- -----------------
Diluted net income per common share $2.24 $2.18 $2.16
----------------- ----------------- -----------------
----------------- ----------------- -----------------
</TABLE>
<PAGE>
EXHIBIT 12
CLECO CORPORATION
COMPUTATION OF EARNINGS TO
FIXED CHARGES AND EARNINGS TO
COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Earnings from continuing operations $ 53,801 $ 52,519 $ 52,135 $ 48,703 $ 45,043
Income taxes 26,666 27,729 26,154 25,229 19,901
------------ ------------ ------------ ------------ ------------
Earnings from continuing operations
before income taxes $ 80,467 $ 80,248 $ 78,289 $ 73,932 $ 64,944
------------ ------------ ------------ ------------ ------------
Fixed charges:
Interest, long-term debt $ 23,350 $ 23,676 $ 25,134 $ 24,516 $ 23,194
Interest, other 3,666 3,873 2,359 3,482 2,542
Amortization of debt expense and
premium, net 1,248 1,206 1,107 1,234 1,223
Portion of rental expense
representative of interest factor 486 487 445 457 707
------------ ------------ ------------ ------------ ------------
Total fixed charges $ 28,750 $ 29,242 $ 29,045 $ 29,689 $ 27,666
------------ ------------ ------------ ------------ ------------
Earnings from continuing operations
before income taxes and fixed charges $ 109,217 $ 109,490 $ 107,334 $ 103,621 $ 92,610
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
Ratio of earnings to fixed charges 3.80x 3.74x 3.70x 3.49x 3.35x
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
Fixed charges from above $ 28,750 $ 29,242 $ 29,045 $ 29,689 $ 27,666
Preferred dividends 2,814 2,884 2,909 2,960 2,966
------------ ------------ ------------ ------------ ------------
Total fixed charges and preferred
stock dividends $ 31,564 $ 32,126 $ 31,954 $ 32,649 $ 30,632
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
Ratio of earnings to combined fixed
charges and preferred stock dividends 3.46x 3.41x 3.36x 3.17x 3.02x
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
</TABLE>
<PAGE>
EXHIBIT 13
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------------------------------------
1998 1997 1996 (1,2) 1995 (1,2) 1994 (1,2)
---- ---- ---- ---- ----
(In thousands, except per share amounts, ratios
and operating statistics)
<S> <C> <C> <C> <C> <C>
FINANCIAL DATA
Statements of Income Data
Operating revenues.................. $ 515,175 $ 456,245 $ 437,121 $ 396,227 $ 381,482
Net income.......................... 53,801 52,519 52,135 48,703 45,043
Net income applicable to common
stock............................. 51,664 50,402 50,061 46,651 43,017
Basic earnings per common share..... 2.30 2.24 2.23 2.08 1.92
Diluted earnings per common share... 2.24 2.18 2.16 2.02 1.86
Cash dividends paid per common share 1.61 1.57 1.53 1.49 1.45
Ratio of earnings to fixed charges..... 3.80x 3.74x 3.70x 3.49x 3.35x
Ratio of earnings to combined fixed
charges and preferred stock dividends 3.46x 3.41x 3.36x 3.17x 3.02x
Balance Sheet Data (at end of period)
Total assets......................... $1,429,000 $ 1,361,044 $1,321,771 $1,226,034 $1,178,191
Long-term obligations and redeemable
preferred stock.................... $ 348,722 $ 372,017 $ 347,231 $ 367,432 $ 343,509
OPERATING STATISTICS
Electric sales -- regular system
customers (million KWH)
Residential.......................... 3,230 2,838 2,723 2,763 2,532
Commercial........................... 1,529 1,393 1,338 1,265 1,180
Industrial........................... 2,518 2,467 2,369 2,227 2,030
Other retail......................... 555 533 526 502 487
Sales for resale..................... 402 311 291 360 210
---------- ---------- --------- --------- ---------
Total sales to regular customers..... 8,234 7,542 7,247 7,117 6,439
Short-term energy sales to other
utilities............................ 76 157 330 68 174
---------- ---------- --------- --------- ---------
Total electric sales................. 8,310 7,699 7,577 7,185 6,613
========== ========== ========= ========= =========
System peak (thousand kilowatts)....... 1,627 1,560 1,500 1,473 1,310
Electric customers..................... 242,457 238,061 224,703 220,923 217,568
</TABLE>
(1) Certain amounts for the period 1994-1996 have been reclassified to conform
with the presentation shown in the current year's financial statements.
These classifications had no effect on net income applicable to common
stock or common shareholders' equity.
(2) Earnings per average common share for the period 1994-1996 have been
restated to reflect adoption of Statements of Financial Accounting
Standards (SFAS) No. 128, "Earnings per Share."
1
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
INDUSTRY DEVELOPMENTS/CUSTOMER CHOICE
Forces driving increased competition in the electric utility
industry involve complex economic, legislative and regulatory factors. These
factors have resulted in the introduction of federal and state legislation
and other regulatory initiatives that are likely to produce even greater
competition at both the wholesale and retail levels in the future. The
Louisiana Public Service Commission (LPSC) is investigating whether retail
choice is in the best interest of Louisiana electric utility customers. The
Company and a number of parties, including the other Louisiana electric
utilities, certain power marketing companies and various associations
representing industry and consumers, participated in electric industry
restructuring testimony before the LPSC during 1997 and 1998. Also during
1997, the Louisiana legislature deferred any action regarding restructuring
of the electric utility industry within the State. We expect the debate
relating to customer choice and other related issues to continue in
legislative and regulatory bodies in 1999. At this time, we cannot predict
whether any legislation or regulation will be enacted or adopted during 1999
and, if enacted or adopted, what form such legislation or regulation would
take.
In general, Louisiana enjoys relatively low rates for electricity.
Industry restructuring presents the possibility that rates could move closer
to the national average, meaning possible higher prices for Louisiana's small
consumers. With this in mind, we prepared a plan that would stabilize the
rates of small consumers and allow retail choice no later than the year 2000,
primarily for larger commercial and industrial class customers. In the
meantime, we recognize the need to resolve issues to create a level playing
field for all energy suppliers. The increasingly competitive environment
presents the opportunity to supply electricity to new customers, as well as
the risk of losing existing customers. We believe the Company is a reliable,
low-cost provider of electricity and as such, is currently positioned to
compete effectively in a restructured electric marketplace.
RESULTS OF OPERATIONS
EARNINGS
Our 1998 earnings (net income applicable to common stock) totaled
$51.7 million, or $2.30 per share, an increase of $1.3 million, or $0.06 per
share compared to 1997. Earnings increased because we sold more
kilowatt-hours to our regular customers, adding an additional $17.5 million
in base revenues and because of efforts by our power marketing operations.
Earnings were adversely affected by expected increases in such nonfuel
operating expenses as depreciation and ad valorem taxes, as well as a $2
million annual base rate reduction ordered by the LPSC, and a $4.8 million
reserve for customer rate refunds.
Our 1997 earnings increased $0.3 million, or $0.01 per share
compared to 1996. The growth in earnings were primarily due to increased
sales of electricity to our customers compared to 1996. Earnings were
adversely affected by a $3 million annual rate reduction ordered by the LPSC.
Earnings in 1996 increased $3.4 million, or $0.15 per share compared to 1995.
Results for 1996 were affected by increased sales of electricity to
commercial and industrial customers, offset by an increase in nonfuel
operating expenses.
Earnings for past years are not necessarily indicative of future
earnings and results. Future earnings will be affected by weather conditions,
our business development programs, the overall economy of the Company's
service area, legislative and other regulatory changes and increased
competition.
REVENUES
Retail rates for residential, commercial and industrial customers
and other retail sales (about 90% of revenues) are regulated by the LPSC.
Rates for transmission and wholesale power sales are regulated by the Federal
Energy Regulatory Commission (FERC). Retail rates consist of a base rate and
a fuel rate. Base rates are designed to allow us to recover the cost of
providing service and a return (profit) on utility assets. Fuel rates
fluctuate, allowing us to recover, with no profit, the majority of changing
costs of purchased power and fuel used to generate
2
<PAGE>
electricity. The following chart shows the amounts and changes in base
revenues and fuel cost recovery revenues for 1998, 1997 and 1996.
<TABLE>
<CAPTION>
1998 1997 1996
--------------------- -------------------- --------------------
IN PERCENT In Percent In Percent
THOUSANDS CHANGE Thousands Change Thousands Change
--------- ------ --------- ------- --------- -------
<S> <C> <C> <C> <C> <C> <C>
Base (nonfuel)............................ $324,788 16.7% $278,412 3.9% $268,006 1.9%
Fuel cost recovery........................ 190,387 7.1% 177,833 5.2% 169,115 26.9%
-------- ----- -------- ----- -------- -----
Total revenues.................. $515,175 12.9% $456,245 4.4% $437,121 10.3%
======== ===== ======== ===== ======== =====
</TABLE>
Base revenues were reduced $3 million annually beginning November 1,
1996, and were reduced by an additional $2 million annually beginning January
1, 1998, by the settlement of an earnings review conducted by the LPSC. Base
revenues in 1998 were reduced further by a $4.8 million provision for
customer rate refunds based on the same LPSC settlement. For more information
on the results of the LPSC earnings review, see "Financial Condition - Retail
Rates" below. About half of the $58.9 million, or 12.9% increase in 1998
operating revenues, was due to an increase in base revenues from a 9.2%
growth in kilowatt-hour sales to regular customers.
Fuel cost recovery revenues collected in 1998 increased $12.6
million due to the increased demand for power and the lack of available
low-cost power on the wholesale market combined with the lack of available
transmission capacity to transport energy to our electric system. The lack of
available purchased power increased the need for additional generation by our
natural gas units at a higher cost. Net income is not materially affected by
changes in the cost of fuel and purchased power because most of these cost
fluctuations are currently passed on to customers through fuel cost
adjustments clauses. For information on changes in the fuel adjustment
clause, see "Financial Condition -- Retail Rates" below.
Total operating revenues for 1997 were 4.4% higher compared to 1996.
This increase was primarily due to an increase in base revenues from a 4.1%
growth in kilowatt-hour sales to regular customers and a corresponding
increase in fuel cost recovery revenues.
SALES
Weather influences the demand for electricity, especially among
residential customers. A hot summer or a cold winter will increase
residential customer demand for electricity. Cooler summers and warmer
winters will reduce customer demand. Demand for electricity by commercial and
industrial customers is primarily dependent upon the strength of the economy
in the service territory and the nation, and is less affected by weather.
Sales to industrial customers are also affected by the worldwide demand for
wood products, since our two largest customers are producers of such
products. The following chart compares the kilowatt-hour sales by customer
class for 1998, 1997 and 1996.
<TABLE>
<CAPTION>
1998 1997 1996
---------------------- ---------------------- ----------------------
MILLION PERCENT Million Percent Million Percent
kwh CHANGE kwh Change kwh Change
--- ------ --- ------ --- ------
<S> <C> <C> <C> <C> <C> <C>
Regular customers
Residential........................ 3,230 13.8% 2,838 4.2% 2,723 (1.4)%
Commercial......................... 1,529 9.8% 1,393 4.1% 1,338 5.8%
Industrial......................... 2,518 2.1% 2,467 4.1% 2,369 6.4%
Other retail....................... 555 4.1% 533 1.3% 526 4.8%
Sales for resale................... 402 29.3% 311 6.9% 291 (19.2)%
------- ------ ------- ------ ------- -------
Total sales to regular customers..... 8,234 9.2% 7,542 4.1% 7,247 1.8%
Short-term sales to other utilities.. 76 (51.6)% 157 (52.4)% 330 385.3%
------- ------ ------- ------ ------- -------
Total electric sales............. 8,310 7.9% 7,699 1.6% 7,577 5.5%
======= ====== ======= ====== ======= =======
</TABLE>
3
<PAGE>
The increase in sales to residential customers during 1998 resulted
primarily from warmer than normal spring and summer seasons in 1998. Sales to
residential customers were also boosted by the addition of 7,700 mostly
residential customers on September 30, 1997 through the acquisition of the
business of Teche Electric Cooperative, Inc. (Teche). Sales to commercial and
industrial customers grew from 1997 as a result of customer growth and
increased economic growth in the region we serve.
During 1997, consumption by commercial and industrial customers was
higher than in 1996 due to customer growth and increased consumption by our
largest industrial customer. In addition, the fall weather in 1997 was warmer
than the fall weather in 1996, resulting in a 4.2% increase in residential
sales.
During the last five years, electric sales growth to regular
customers averaged 5.8% and, based on current information, is expected to
range from 3% to 4% per year during the next five years. The levels of future
sales will depend upon weather conditions, customer conservation efforts, our
retail marketing and business development programs, and the overall economy
of the service area. Issues facing the electric utility industry that could
affect sales include deregulation, retail wheeling, legislative and
regulatory changes, retention of large industrial customers, franchises and
access to transmission systems.
In February 1995, we agreed to purchase the assets of Teche for a
price, including the assumption or other discharge of Teche's liabilities, of
about $22.4 million. The members of Teche overwhelmingly approved the sale at
their annual meeting in March 1995. One of the conditions necessary to the
closing of the Teche acquisition was an interim power purchase agreement with
Cajun Electric Power Cooperative, Inc. (Cajun), Teche's former wholesale
power supplier. Cajun has been involved in bankruptcy proceedings since 1995.
An interim agreement, acceptable to Cajun's bankruptcy trustee and the Rural
Utilities Service, was reached in September 1997. We consummated the purchase
on September 30, 1997.
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 following table shows the amount and changes in fuel
and purchased power expenses for 1998, 1997 and 1996.
<TABLE>
<CAPTION>
1998 1997 1996
------------------------ ----------------------- -----------------------
IN PERCENT In Percent In Percent
THOUSANDS CHANGE Thousands Change Thousands Change
--------- ------ --------- ------ --------- ------
<S> <C> <C> <C> <C> <C> <C>
Fuel used for electric generation.... $142,737 12.9% $136,009 17.6% $115,642 6.8%
Power purchased...................... 53,011 18.9% 44,590 (19.8)% 55,609 103.2%
-------- ----- -------- ------- -------- ------
Total fuel expenses........ $195,748 11.1% $180,599 5.4% $171,251 26.2%
======== ===== ======== ======= ======== ======
</TABLE>
Fuel and purchased power costs increased $14.1 million in 1998. Fuel
costs used for electric generation increased over 1997 primarily as a result
of the lack of available low-cost power on the wholesale market combined with
the lack of available transmission capacity to transport energy to our
electric system and increased kwh sales overall. Consequently, 1998 purchased
power costs and generation fuel costs increased compared to 1997.
Fuel and purchased power costs increased $9.3 million in 1997. Fuel
costs used for electric generation increased over 1996 primarily as a result
of the lack of available low-cost power on the wholesale market and the lack
of available transmission capacity to transport energy to our electric
system, which increased the need for additional generation output by our
4
<PAGE>
natural gas units at a higher fuel cost. This caused an increase in
generating fuel costs and a decrease in 1997 purchased power costs compared
to 1996.
Coal and lignite are obtained under long-term contracts. Natural gas
is purchased under short-term contracts on the spot market when prices are
advantageous. Power is purchased from other utilities when the purchase price
is less than our cost of generation and when transmission capacity is
available to transport the energy to our system. During 1998, 24% of our
energy requirements were met with purchased power, the same as in 1997.
The Company is constrained as to the amount of purchased power it
can bring into its system. Because of the location of the system, the Company
must rely on one main supplier of electric transmission to bring purchased
power into the Company's system. In future years, the Company may not have
enough electric power to meet native load demand. Management plans to address
the issue by repowering Coughlin Power Station (CPS) through a wholly-owned
affiliate. See Notes to the Consolidated Financial Statements, Note M,
"Repowering Project" for a further explanation of the repowering of CPS.
We and the joint-owner of one of our electric generating units
jointly filed suit in 1997 against a joint venture and its partners who mine
lignite for the generating unit. The joint venture has filed counterclaims.
The counterclaims caused us and the joint-owner to file another suit against
the joint venture's parent company. Management believes the counterclaims, if
successful, would not have a significant adverse effect on our financial
position or results of operations. Normal day-to-day operations continue at
the mining facility and the jointly-owned electric generating unit.
One of the Company's wholly-owned subsidiaries owns and operates
natural gas pipelines at three of our power stations where natural gas is
used as a primary fuel. These pipelines increase our access to natural gas
markets and lower-cost gas supplies. The Company has a base supply contract
for approximately one-third of our natural gas requirements. These natural
gas supply arrangements and access to the gas markets afforded by the
pipelines are helping to maintain the competitiveness of our generating units.
The coal for one of our jointly-owned electric generating units is
transported under a long-term transportation contract with a railroad. The
railroad was experiencing operating problems, which began in 1997 and
resulted in reduced volumes delivered to the unit. Throughout 1998, the
delivery problems persisted and the coal inventory fluctuated at or below the
Company's desired minimum level. In January and February of 1999, the
deliveries of coal have increased, indicating some recovery from the
railroad's operating problems. Coal inventory at the unit currently is above
its desired minimum level. Based on the railroad's anticipated delivery
schedule of future coal shipments, management does not expect that production
at the unit will need to be curtailed due to insufficient fuel supply.
NONFUEL OPERATING EXPENSES AND INCOME TAXES
Changes in nonfuel operating expenses (excluding restructuring
charges) for 1998, 1997 and 1996 were as follows:
<TABLE>
<CAPTION>
1998 1997 1996
-------------------------- ------------------------- -------------------------
IN PERCENT In Percent In Percent
THOUSANDS CHANGE Thousands Change Thousands Change
--------- ------ --------- ------ --------- ------
<S> <C> <C> <C> <C> <C> <C>
Other operation.............. $33,770 52.3% $ (152) (0.2)% $ (2,994) (4.4)%
Maintenance.................. 6,999 30.0% (203) (0.9)% 873 3.9%
Depreciation................. 2,479 5.4% 2,449 5.6% 2,277 5.5%
Other taxes.................. 1,998 6.0% 3,827 12.9% 532 1.8%
Income taxes................. (1,063) (3.8)% 1,575 6.0% 925 3.7%
------- ------ -------- ------ --------- ------
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Total.............. $44,183 22.7% $ 7,496 4.0% $ 1,613 0.9%
======= ====== ======== ====== ========= ======
</TABLE>
Total 1998 nonfuel operating expenses, excluding 1997 restructuring
charges, increased 22.7% over 1997. For more information concerning a $1.9
million restructuring charge incurred in 1997, see "Restructuring Charge",
below. The increase in other operation expense was mainly due to power
purchased by the power trading operation for resale on the wholesale market.
Maintenance expense increased due to several unanticipated generating unit
repairs due to mechanical problems and increased right-of-way reclearing
relating to transmission and distribution. Depreciation expense increased
primarily due to a full year of depreciation on property additions associated
with the acquisition of Teche's assets and planned additions to generation,
transmission and distribution facilities.
Total 1997 nonfuel operating expenses, excluding restructuring
charges, increased 4.0% over 1996. For more information concerning the $1.9
million restructuring charge incurred in 1997, see "Restructuring Charge"
below. Depreciation expense increased primarily due to a full year of
depreciation on property additions associated with the Energy Control Center,
and planned additions to generation, transmission and distribution
facilities. Taxes other than income taxes increased primarily due to the
expiration, in 1997, of ten-year property tax exemption on the Dolet Hills
Power Station. Taxes other than income taxes increased primarily due to our
share of the increased property taxes on this generating station.
A number of parishes (counties) have attempted in recent years to
impose franchise fees on retail revenues earned within the unincorporated
areas we serve. If the parishes are ultimately successful, taxes other than
income taxes could increase substantially in future years.
RESTRUCTURING CHARGE
During 1997, we reorganized our electric production staff. The
primary objective of this reorganization was to create a centralized power
production maintenance workforce. Other initiatives included improving power
production operations and providing better service to customers. As a result,
approximately 30 employee positions were eliminated resulting in a charge to
earnings of $1,891,000 ($1,248,000 on an after-tax basis), consisting mainly
of voluntary severance programs offered to eligible employees.
OTHER INCOME AND INTEREST EXPENSE
"Other income (expenses), net" decreased $1.6 million in 1998
compared to 1997, mainly due to start up costs relating to several
nonregulated subsidiaries, primarily Cleco Evangeline LLC, which is in the
process of repowering an existing generating station. In 1997, "other income
(expenses), net" increased $0.9 million as a result of increased earnings
from nonregulated activities. Interest expense for 1998 decreased $1.2
million, as compared to 1997. This decrease was due to lower interest rates
during 1998 as compared to 1997.
Interest expense for 1997 increased $0.6 million, as compared to
1996. This increase was due to higher average outstanding balances of
commercial paper and medium-term notes during 1997 at interest rates similar
to 1996, which was partially offset by a decrease in interest on first
mortgage bonds because of the redemption in 1996 of $50 million Series Y
first mortgage bonds.
ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION (AFUDC)
AFUDC represents the estimated cost of financing LPSC and FERC rate
regulated construction work-in-progress and is not a current source of cash.
A return on and recovery of AFUDC is permitted by regulatory bodies in
setting rates charged for utility services. AFUDC for 1998 increased as a
result of higher LPSC and FERC rate regulated construction expenditures.
AFUDC for 1997 decreased as a result of lower average LPSC and FERC
construction work-in-progress balances compared to 1996. AFUDC accounted for
2.2% of earnings in 1998, compared to 0.9% in 1997 and 1.5% in 1996.
6
<PAGE>
EARNINGS PER SHARE
Earnings per average common share has been computed using the
weighted average number of shares of common stock outstanding during the
year. Earnings per average common share are reported for the years 1998 and
1997 and restated for 1996 to reflect adoption of SFAS No. 128, "Earnings per
Share."
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, regulatory authorizations and
policies, and the Company's credit rating.
From 1990 through 1996, we participated in a program where up to $35
million of our receivables were sold on an ongoing basis. The amount of
receivables that could have been sold any time depended upon seasonal
fluctuations in the amount of eligible receivables. In December 1996, sales
of accounts receivable were reduced to zero and the program was terminated in
early 1997. To replace this short-term liquidity program, our committed bank
borrowing capacity was increased by $25 million in 1997.
The Company has an effective shelf registration statement and all
regulatory approvals necessary to issue up to $140 million of medium-term
notes.
At December 31, 1998 and 1997, there was $68.2 million and $34.2
million, respectively, of short-term debt outstanding in the form of
commercial paper borrowings. Short-term debt increased as a result of
increased commercial paper borrowings for interim expenditures related to a
project to repower a generating station. The higher level of commercial paper
outstanding relating to the generation station repowering is temporary,
pending finalization of permanent financing for the repowering project.
Currently, we have a $100 million revolving credit facility, which is
scheduled to continue to June 2000 and an $80 million facility which expires
in August 1999. The $80 million facility may be extended for another year
prior to its scheduled expiration date, provided approvals are received from
participating banks. Both credit facilities support the issuance of
commercial paper. Uncommitted lines of credit with banks totaling $15 million
are available to meet short-term working capital needs. Additionally, at
December 31, 1998, one of our nonregulated consolidated subsidiaries held
$13.2 million of cash and marketable securities, which are committed to
supporting activities of affiliates.
CASH GENERATION AND CASH REQUIREMENTS
Cash Flows
- ----------
During 1998, cash flows from our operating activities generated
$113.4 million as shown in the Consolidated Statements of Cash Flows. Net
cash provided by operating activities resulted 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 property, plant, and
equipment, including the repowering of one of the Company's older power
stations, CPS, by a wholly-owned affiliate, and changes in utility and
nonutility investments. Net cash used in financing activities resulted
principally from the payment of dividends to shareholders and the changes in
short-term and long-term financing activities.
Construction Overview
- ---------------------
The Company has divided its construction into two categories: LPSC
jurisdictional and LPSC non-jurisdictional. LPSC jurisdictional construction
consists of assets that may be added to the Company's rate base and the cost,
if considered prudent by the LPSC, may be passed on to jurisdictional
customers. Those assets earn a rate of return restricted by the LPSC and are
subject to the rate agreement described under "Retail Rates".
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<PAGE>
Such construction consists of additions to the distribution system,
improvements to the transmission system and improvements at the generation
stations other than CPS. LPSC non-jurisdictional construction consists of
assets whose rate of return is largely determined by the market, not the
LPSC. Examples of this type of construction are the repowering of CPS and
additions to gas pipeline transmission systems.
LPSC Jusidictional Construction
- -------------------------------
In recent years, the LPSC jurisdictional construction program has
consisted primarily of enhancements to the transmission system, distribution
system, and improvements at the generating stations. In 1997, we acquired the
assets of Teche for $22.4 million. LPSC non-jusidictional construction
expenditures, excluding AFUDC, totaled $53.9 million in 1998 and $52.9
million in 1997, excluding the Teche assets.
LPSC Jusidictional construction expenditures, excluding AFUDC, for
1999 are estimated to be $58.8 million and for the five-year period ending
2003 are expected to total $252.5 million. About one-half of the planned
construction in the five-year period will support line extensions and
substation upgrades to accommodate new business and load growth. Some
investment will be made to rehabilitate older transmission, distribution and
generation assets. We will also continue to invest in technology to allow us
to operate more efficiently.
In 1998, 99.8% of LPSC jurisdictional construction requirements were
funded internally, as compared to 100% in 1997 and 96% in 1996. In 1999,
99.9% of construction requirements are expected to be funded internally. For
the five-year period ending 2003, 99.8% of the construction requirements are
expected to be funded internally.
LPSC Non-Jurisdictional Construction
- ------------------------------------
In the past few years, LPSC non-jurisdictional construction has
consisted of a series of natural gas interconnections between several gas
transmission pipelines and our generation stations that use natural gas. In
1998, the Company started the repowering project at CPS. Additions to
property, plant and equipment for 1998 as shown on the Consolidated
Statements of Cash Flows include $37.1 million cash outlay for the repowering
of CPS. See Notes to the Consolidated Financial Statements, Note M,
"Repowering Project" for a further explanation of the repowering of CPS. LPSC
non-jurisdictional construction expenditures totaled $40.1 during 1998 and
$1.2 in 1997.
LPSC non-jurisdictional construction expenditures for 1999 are
estimated to total $123.8 million and for the five year period ending 2003
are expected to total $319.0 million. Most of the planned construction in the
five year period will go toward the repowering of CPS. The rest of the
expected construction budget is slated for possible joint ventures as well as
possible natural gas pipeline construction and acquisition.
In 1998, 14.3% of LPSC non-jurisdictional construction requirements
were funded internally, as compared to 100% in 1997 and 100% in 1996. In
1999, all construction requirements are expected to be funded externally. For
the five year period ending 2003, 7.42% of the construction requirements are
expected to be funded internally.
Other Cash Requirements
- -----------------------
Scheduled maturities of debt and preferred stock, including $20
million of medium-term notes which are due in 2008, but putable in November
1999, will total about $33.3 million for 1999 and approximately $135.5
million for the five-year period ending 2003. In 1991, we began a common
stock repurchase program, and as part of that program, up to $23 million of
common stock may be repurchased in the future. No shares of common stock were
repurchased in 1998 or 1997.
The Company has committed to provide credit support up to $10
million for working capital and electricity or natural gas commodity
positions for Cleco Energy LLC. Additionally, commitments for asset
development projects will be made as they occur up to $5 million per year for
years 1998 through 2002. Amounts not advanced
8
<PAGE>
in any year are added to the amount available for the remaining years. $2.5
million was advanced in 1998 for the acquisition of Sabine Texican Pipeline
Company, Inc. See the Notes to the Consolidated Financial Statements, Note K,
"Sabine Texican Pipeline Acquisition."
RETAIL RATES
Retail rates regulated by the LPSC account for 90% of 1998 revenues.
Fuel costs and monthly fuel adjustment billing factors are subject to audit
by the LPSC. In the past, we have sought increases in base rates to reflect
the cost of service related to plant facility additions and increases in
operating costs. If we were to request an increase in our rates and adequate
rate relief were not granted on a timely basis, our ability to attract
capital at reasonable costs to finance our operations and capital
improvements might be impaired.
The LPSC elected in 1993 to review the earnings of all electric,
gas, water and telecommunications utilities regulated by it to determine
whether the returns on equity of these companies may be higher than returns
that might be awarded in the current economic environment. In 1996, the LPSC
approved a settlement of our earnings review, providing our customers with
lower electricity rates. The first base rate decrease, of $3 million
annually, was effective November 1, 1996, with a second decrease, of an
additional $2 million annually, effective January 1, 1998. The terms of this
settlement were to be effective for a five-year period. In February 1999, the
period was extended three more years until 2004 under an agreement to
transfer the existing assets of CPS from the Company's LPSC regulated rate
base into Cleco Evangeline LLC which will then repower the generating plant.
See Notes to the Consolidated Financial Statements, Note M, "Repowering
Project".
During the eight-year period, which began November 1, 1996, a rate
stabilization plan is in place. This plan allows the Company to retain all
earnings equating to a regulatory return on equity up to and including 12.25%
on its regulated utility operations. Any earnings which result in a return on
equity over 12.25%, up to and including 13%, will be shared equally between
ourselves and our customers, which effectively allows us the opportunity to
realize a regulatory rate of return of up to 12.625%. Any earnings above this
level will be refunded fully to customers.
During the eight-year period 1997-2004, our revenues and return on
equity will be reviewed each year by the LPSC. If the Company is found to be
achieving a regulatory return on equity in any given year which requires a
refund to customers, the refund will be made in the form of billing credits
during the months of July, August and September following the evaluation
period. Based on the terms of the settlement with the LPSC, the Company has
decreased 1998 revenues by $4.8 million for a provision for the rate refunds.
During the eight-year rate stabilization period, we will have the
right to apply for a rate increase if a significant event affecting our
earnings would justify it, such as regulatory or economic changes, major
storm damage or other unforeseen circumstances. During the period, we will
also be able to propose for LPSC consideration any revenue-neutral rate
design changes we determine appropriate, such as revenue redistribution among
customer classes that may be warranted. During the period, the LPSC may amend
or modify any of the settlement's terms should the LPSC determine changes are
warranted by the public interest.
In November 1997, the LPSC issued an order in a generic docket which
promulgated new standards for the monthly Fuel Cost Adjustment (FCA) rate
filings of electric companies under its jurisdiction. The order adopted new
rules and procedures for the monthly FCA computation and changes in reporting
of fuel and purchased power costs to be implemented after final LPSC
approval. Although the order narrows the types of costs that can be included
in the FCA, the changes are expected to have no effect upon our financial
position or results of operations, as costs no longer allowable in the FCA
will be allowable as an increase in base rates under the provisions of the
order.
INFLATION AND FUEL COSTS
We are a capital-intensive electric utility. As such, we are
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
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<PAGE>
cost of fuel used for electric generation is a major component of total
costs, we are not currently materially exposed to the effects of market
fluctuations in fuel prices since most fuel costs are currently recovered
from customers through fuel adjustment clauses.
YEAR 2000 READINESS DISCLOSURE
The year 2000 (Y2K) problem occurs because many systems, both
hardware and software, were designed to accept only two digits instead of
four digits for the year in a date field. Having two digits instead of four
digits may cause the system to read "00" as 1900 instead of 2000. This may
cause calculations that are date sensitive to arrive at an incorrect or
impossible solution. This may affect items such as delivery dates, interest
calculations, pension benefit calculations, and a variety of other
date-dependent calculations.
The Company is aware of the issues surrounding Y2K and the problems
that may occur and has put into action a plan to address these issues. The
Company is aware that the Y2K problem may affect both internal information
technology (IT) and non-IT systems. IT systems consist of software programs
such as the operating system, spreadsheets, accounting and other programs.
Non-IT systems refer to embedded technology such as micro controllers found
in computers and other hardware systems. The Company has divided the IT and
non-IT systems into two categories; mission critical and non-mission
critical. Mission critical systems are those that would affect the health and
safety of the public by causing a disruption in supplying electricity.
Non-mission critical systems are those that would not cause a disruption in
supplying electricity, but may still have a material, negative impact on the
liquidity and financial condition of the Company. The following tables show
the initiatives, the completion percentage of the various stages and an
estimated completion date for the mission critical systems:
<TABLE>
<CAPTION>
MISSION CRITICAL SYSTEMS
ESTIMATED
PLANNING- DATE OF
INITIATIVES ASSESSMENT CORRECTION TESTING IMPLEMENT COMPLETION
- ----------- ---------- ---------- ------- --------- ----------
<S> <C> <C> <C> <C> <C>
Distribution 100% 100% 100% 100% N/A
Generation 100% 82% 82% 82% June 1999
IT Services* 100% 91% 52% 34% Sept. 1999
Transmission 100% 100% 100% 20% June 1999
</TABLE>
*IT Services includes business applications and telecommunications.
The description of the stages are:
<TABLE>
<S> <C>
Planning Assessment: Develop a project plan, compile a complete list of affected systems, and prepare a
detailed technical plan.
Correction: Make the required changes identified in Planning-Assessment.
Testing: Test all changes made in the Correction stage to insure that systems will meet the
compliance criteria and the systems will be accepted by user management.
Implementation: Integrate the changed systems into a production environment and begin use. Monitor
subsequent changes to other systems to ensure overall system integrity.
</TABLE>
Management considers the Company's non-mission critical systems to be Y2K
compliant.
Internal systems are not the only ones that may have a material
effect on the Company. Institutions external to the Company, such as vendors
and customers, may also impact the Company's operations if their systems are
not Y2K compliant. Vendors could impact the Company by their inability to
deliver goods and services required by the Company to operate. Customers
could impact the Company by their inability to operate, reducing the sale of
power, or their inability to pay the Company for the power consumed. The
Company has decided to
10
<PAGE>
address this issue by identifying major vendors and customers and sending
surveys to discover their level of Y2K compliance. Major vendors are defined
as those that provide critical goods or services to the Company, or those
that provide critical components to the Company (such as fuel suppliers and
financial institutions). Major customers are identified as those customers
that are at the greatest risk of being impacted by the Y2K problem and are
large consumers of power (mainly industrial and commercial customers). To
date, the surveys to the major vendors have been sent out and the requested
responses have been received. Efforts will continue in soliciting responses
from others, with any required contingency plans being completed by the end
of the third quarter. The surveys to major customers are in the process of
being reviewed and their state of readiness is being monitored. The projected
completion date of system surveys of external parties is expected to be
December 1999.
The Company's cost to address its Y2K problem is currently estimated
at $1.4 million, with approximately $0.9 million expended so far. The
remaining $0.5 million is expected to be spent before July, 1999. The
expenses associated with Y2K are being funded through cash flows from
operations. Only a nominal amount of the Y2K budget is being expended on
hardware. Most of the budget is being expended in software. The Company's
overall IT operating budget for the year ended December 31, 1998 is
approximately $13.4 million, however, the bulk of the Y2K expenses were
budgeted and expended by the various departments that were affected by Y2K
issues.
At this point in time, management has not engaged any firm, nor does
it plan to engage any firm, to perform an independent verification and
validation of the Company's Y2K readiness. However, the Company's independent
auditing firm has been engaged to review the readiness process being
followed. Their review was completed in February and a summary of their
findings relative to the process is expected soon, but the firm will not
issue an opinion on Y2K readiness.
The Company has been reporting to the LPSC on a quarterly basis
starting in 1998. Also, monthly reports are sent to the Southwest Power Pool
(SPP), which summarizes their member's reports and forwards them to the North
American Electric Reliability Council (NERC). The U.S. Department of Energy
receives its reporting from the NERC. The Company is in full compliance with
the NERC reporting requirements, is planning to participate in the two
planned NERC system tests, and is conforming with the NERC contingency
planning requirements for the electrical system.
The risks of not addressing the Y2K problem include the failure to
bill customers, collect payments, pay invoices, operate generation
facilities, operate substations, and order and receive critical materials.
Each of these risks, should they materialize, could have a material, negative
impact on the operations, liquidity and financial condition of the Company.
It is the opinion of management that the action plan outlined above will
adequately address the Y2K risks facing the Company and reduce them to
manageable levels so that Y2K issues will not materially impact the Company.
A worst case scenario would be the entire SPP grid collapsing due to
the lack of available power. Management believes the Company is capable of
disconnecting from the SPP grid and restarting our power generation stations.
However, other regional grids may also collapse, which in turn could cause a
disruption in the supply of fuel or critical parts. During a possible
disruption, the Company would have to rely on its inventory of fuel and
critical parts. The Company keeps approximately 30-day supply of coal at the
two coal-fired plants, which are considered the Company's base load plants.
If deliveries of fuel were interrupted for more than 30 days or if certain
critical parts should fail, the Company's ability to generate power would be
severely curtailed.
The Company has contingency plans for mission critical systems
against normal operating hazards such as major storms or fires. These plans
were designed to minimize the impact to customers by providing alternatives
and solutions to possible adverse conditions. These plans are required by
several oversight agencies, such as the LPSC and the NERC. The existing
contingency plans were reviewed and evaluated by the Company's staff to find
out if they adequately addressed possible failures due to Y2K noncompliance.
Plan amendments have been proposed but not yet finalized. The amendments are
expected to be finalized before December, 1999.
At present, the Company does not have a contingency plan in place to
specifically cover the non-mission critical Y2K issues. However, management
is continually monitoring the progress of each initiative. In the third
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<PAGE>
quarter of 1999, management will evaluate the reasonableness of the projected
completion dates and at that time determine if a contingency plan is
required. As of the date of this filing, management reasonably expects the
completion of the initiatives in a timely manner; thus, a contingency plan is
not believed to be required.
ENVIRONMENTAL MATTERS
We are subject to federal, state and local laws and regulations
governing the protection of the environment. Violations of these laws and
regulations may result in substantial fines and penalties. We have obtained
all material environmental permits necessary for our operations and believe
we are in substantial compliance with these permits, as well as all
applicable environmental laws and regulations. We anticipate that existing
environmental rules will not affect operations significantly, but some
capital improvements may have to be made in response to new environmental
programs expected in the next few years.
Implementation of Phase I of the Clean Air Act will not require us
to reduce sulfur emissions at our solid-fuel generating units, which either
burn low-sulfur coal or utilize pollution control equipment. Installation of
continuous emission monitoring equipment on generating units was completed in
1996 at a cost of approximately $3 million. Although Phase II of the
legislation, effective in 2000, involves more stringent limits on emissions,
these requirements should not significantly affect the operation of our
generating units. However, some capital investment may be necessary in order
to comply with Phase II requirements. Capital expenditures for environmental
matters were $1.0 million in 1998 and are estimated to be $1.5 million for
1999.
REGULATORY MATTERS
In 1996, the FERC issued rules requiring open access to utilities'
transmission systems. The open access provisions require FERC-regulated
electric utilities to offer third parties access to transmission under
comparable terms and conditions as the utilities' use of their own systems.
Providing unbundled transmission services to firm-requirements customers may
have significant financial consequences to the utility industry. Providing
open access for non-firm sales may have significant effects on utility
operations. Currently, we have three wholesale full-requirements customers
representing about 0.9% of our total kilowatt-hour sales to regular customers.
Federal and state regulators and legislators are studying potential
effects of deregulating the vertically integrated utility systems and
providing retail customers a choice of supplier. At this time, it is not
possible to predict when, if, or to what extent, retail customers will be
able to choose their electric service suppliers. The regulatory requirement
to serve customers and industry standards for reliability of electric supply
have resulted in the construction of facilities sufficient, when combined
with power purchased off-system and transmitted to the Company, to meet peak
load conditions with a margin for reserve. With customer choice, costs
associated with utility assets specifically dedicated to, or used by,
departing customers, such as the Company's generating plants and power
purchase contracts, would have to be paid by the departing customers
(stranded costs), absorbed by remaining and new customers or written off by
the Company.
The Company has recorded regulatory assets and liabilities,
primarily for the effects of income taxes, as a result of past rate actions
of our regulators, pursuant to SFAS No. 71, "Accounting for the Effects of
Certain Types of Regulation" (SFAS 71). The effects of potential deregulation
of the industry or possible future changes in the method of rate regulation
of the Company could require the Company to discontinue the application of
SFAS 71, pursuant to SFAS No. 101, "Regulated Enterprises -- Accounting for
the Discontinuation of Application of FASB Statement No. 71" (SFAS 101). At
December 31, 1998, the Company had recorded $14.2 million of regulatory
assets, net of regulatory liabilities, because of the regulatory requirement
to flow through the tax benefits of accelerated deductions to current
customers and an implied regulatory compact that future customers would pay
for additional taxes when the Company paid additional taxes. These
differences occur over the lives of relatively long-lived assets, up to 30
years or more. Under the current regulatory and competitive environment, the
Company believes that these regulatory assets are fully recoverable. However,
if in the future, as a result of regulatory changes or increased competition,
the Company's ability to recover these regulatory assets would not be
probable, then to the extent that these regulatory assets were determined not
to be recoverable, the Company would be required to write off or write down
these assets.
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<PAGE>
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed Of" (SFAS 121), establishes
accounting standards for determining if long-lived assets are impaired, and
when and how losses, if any, should be recognized. The Company believes that
the net cash flows that will result from the operation of its assets are
sufficient to cover the carrying value of the assets.
The Emerging Issues Task Force (EITF) assists the Financial
Accounting Standards Board (FASB) in identifying emerging issues affecting
financial reporting. In 1997, the EITF reached a consensus in Issue No. 97-4:
"Deregulation of the Pricing of Electricity -- Issues Related to the
Application of SFAS No. 71 and No 101." EITF 97-4 specified that SFAS No. 71
should be discontinued at a date no later than when the details of a
transition plan toward the deregulation of electric rates for all or a
portion of the entity subject to such plan are known. However, other factors
could cause the discontinuation of SFAS No. 71 before that date.
Additionally, EITF 97-4 establishes that regulatory assets to be recovered
through cash flows derived from another portion of the entity which continues
to apply SFAS No. 71 should not be written off, but rather, should continue
to be considered regulatory assets of the separable portion which will
continue to apply SFAS No. 71.
FINANCIAL RISK MANAGEMENT
The market risk inherent in the Company's market risk sensitive
instruments and positions is the potential change arising from increases or
decreases in the short, medium and long term interest rates and the commodity
price of electricity traded on the Into Entergy exchange. Generally, the
Company's market risk sensitive instruments and positions are characterized
as "other than trading". The Company's exposure to market risk, as discussed
below, represents an estimate of possible changes in the fair value or future
earnings that would occur assuming possible future movements in the interest
rates and the commodity price of electricity. Management's views on market
risk are not necessarily indicative of actual results, nor do they represent
the maximum possible gains or losses. The views do represent, within the
parameters disclosed, what Management estimates may happen.
Interest
- --------
The Company has entered into various fixed and variable rate debt
obligations. See the Notes to the Consolidated Financial Statements, Note D,
"Debt" for details.
As of December 31, 1998, the carrying value of the Company's
long-term, fixed-rate debt was approximately $312 million, with a fair market
value of approximately $336 million. Fair value was determined using quoted
market prices. Each 0.05% change in the average interest rates applicable to
such debt would result in a change of approximately $8 million in the fair
values of these instruments. If these instruments are held to maturity, no
change in fair value will be realized.
As of December 31, 1998, the carrying value of the Company's
long-term, variable-rate debt was approximately $61.3, which approximates the
fair market value. Each 0.5% change in the average interest rates applicable
to such debt would result in a change of approximately $0.3 million in the
Company's pre-tax earnings.
As of December 31, 1998, the carrying value of the Company's
short-term, variable-rate debt was approximately $68.4 million, which
approximates the fair market value. Each 0.5% change in the average interest
rates applicable to such debt would result in a change of approximately $0.3
million in the Company's pre-tax earnings.
The Company monitors its mix of fixed and variable rate debt
obligations in light of changing market conditions and from time to time may
alter that mix by, for example, refinancing balances outstanding under its
variable rate commercial paper program with fixed rate debt.
As of December 31, 1998, CLE Resources, Inc. (Resources), a
wholly-owned subsidiary of the Company, held $13.2 million in cash
equivalents in a money market account. Each 0.5% change in average interest
rates
13
<PAGE>
applicable to such investments could result in a change of approximately $0.1
million in the Company's pre-tax earnings.
Market Risk
- -----------
The Company uses derivative instruments to manage the commodity
price risk associated with its power marketing operations (PMO) and its joint
venture which markets natural gas.
The Company's PMO enters into sales and purchases of electricity for
delivery up to twelve months into the future. Because the market prices for
electricity can be volatile, the PMO is exposed to risks arising from
differences between the fixed prices in its commitments and fluctuating
market prices. To mitigate its exposure, the PMO enters into electricity
futures, swaps, option contracts and electricity forward agreements.
The Company's joint venture, Cleco Energy LLC (Energy), enters into
sales and purchases of natural gas for delivery up to five years into the
future. Because the market prices for natural gas can be volatile, Energy is
exposed to risks arising from differences between the fixed prices in its
commitments and fluctuating market prices. To mitigate its exposure, Energy
enters into natural gas futures, swaps, option contracts and natural gas
forward agreements.
Both trading operations utilize a value-at-risk model to assess the
market risk of its derivative financial instruments. Value-at-risk represents
the potential loss for an instrument from adverse changes in market factors
for a specified period of time and confidence level. The value-at-risk was
estimated using historical simulation calculated on a daily basis over a one
week period with a 99.7% confidence level and a holding period of one week.
Based on these assumptions, the total value-at-risk as of December 31, 1998,
was not material to the Company.
NEW ACCOUNTING STANDARDS
Periodically, the Financial Accounting Standards Board (FASB) issues
Statements of Financial Accounting Standards (SFAS). These standards reflect
accounting, reporting, and disclosure requirements the Company should follow
in the accumulation of financial data and in the presentation of financial
statements. The FASB, a nongovernmental organization, is the primary source
of generally accepted accounting principles within the United States.
In June 1998, the FASB issued SFAS No. 133, "Accounting for
Derivatives Instruments and Hedging Activities", effective for fiscal years
beginning after June 15, 1999. This Statement establishes accounting and
reporting for derivative instruments, including certain derivative
instruments embedded in other contracts and for hedging activities. The
effect of adopting this Statement has not been determined.
In October 1998, the FASB issued SFAS No. 134, "Accounting for
Mortgage-Backed Securities Retained after the Securitization of Mortgage
Loans Held for Sale by a Mortgage Banking Enterprise", effective for fiscal
years beginning after December 15, 1998. This Statement is an amendment of
FASB Statement No. 65 and required classifying certain securities as trading.
Adoption of this Statement is not expected to affect our financial position
or results of operations.
14
<PAGE>
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report to Shareholders includes "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All
statements other than statements of historical fact included in this Report,
including, without limitation, the statements under "Management's Discussion and
Analysis of Results of Operations and Financial Condition -- Industry
Developments/Customer Choice," "-- Results of Operations," "-- Financial
Condition -- Liquidity and Capital Resources," "-- Financial Condition --
Regulatory Matters" and Note N to the Consolidated Financial Statements contain
forward-looking statements. Located elsewhere in this Report are forward-looking
statements regarding sales growth, capital expenditures, the settlement of our
earnings review approved by the LPSC in October 1996, our shelf registration
statement, the effect of certain recent FERC regulations, future legislative and
regulatory changes affecting electric utilities, and other matters. Although we
believe the expectations reflected in such forward-looking statements are
reasonable, such forward-looking statements are based on numerous assumptions
(some of which may prove to be incorrect) and are subject to risks and
uncertainties which could cause the actual results to differ materially from our
expectations. Forward-looking statements have been and will be made in written
documents and oral presentations by management. Such statements are based on
management's beliefs as well as assumptions made by and information currently
available to management. When used in our documents or oral presentations, the
words "anticipate," "estimate," "expect," "objective," "projection," "forecast,"
"goal" and similar expressions are intended to identify forward-looking
statements. In addition to any assumptions and other factors referred to
specifically in connection with such forward-looking statements, factors that
could cause our actual results to differ materially from those contemplated in
any forward-looking statements include, among others, the following:
Factors affecting utility operations such as unusual weather
conditions; catastrophic weather-related damage; unscheduled generation
outages; unusual maintenance or repairs; unanticipated changes to fuel
costs, gas supply costs, or availability constraints due to higher demand,
shortages, transportation problems or other developments; environmental
incidents; or electric transmission or gas pipeline system constraints;
Increased competition in the electric environment, including effects
of: industry restructuring, transmission system operation or
administration, retail wheeling or cogeneration;
Regulatory factors such as unanticipated changes in rate-setting
policies or procedures; recovery of investments made under traditional
regulation; and the frequency and timing of rate increases;
Financial or regulatory accounting principles or policies imposed by
the FASB, the Securities and Exchange Commission, FERC, LPSC, or similar
entities with regulatory or accounting oversight;
Economic conditions, including inflation rates and monetary
fluctuations;
Changing market conditions and a variety of other factors associated
with physical energy and financial trading activities, including, but not
limited to, price, basis, credit, liquidity, volatility, capacity,
transmission, interest rate and warranty risks;
Availability or cost of capital resulting from changes in the Company,
interest rates, and securities ratings or market perceptions of the
electric utility industry and energy-related industries;
Employee workforce factors, including changes in key executives;
Legal and regulatory delays and other obstacles associated with
mergers, acquisitions, reorganizations or investments in joint ventures;
Cost and other effects of legal and administrative proceedings,
settlements, investigations, claims and other matters; and
Changes in federal, state or local legislature requirements, such as
changes in tax laws or rates or environmental law and regulations.
The Company undertakes no obligation to update or revise any
forward-looking statements, whether as a result of changes in actual
results, changes in assumptions or other factors affecting such statements.
15
<PAGE>
CLECO CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
For the Years Ended December 31,
----------------------------------------
1998 1997 1996
---- ---- ----
(In thousands,
except share and per share amounts)
<S> <C> <C> <C>
OPERATING REVENUES............................................. $ 515,175 $ 456,245 $ 437,121
Operating expenses
Fuel used for electric generation............................ 142,737 136,009 115,642
Power purchased.............................................. 53,011 44,590 55,609
Other operation.............................................. 98,388 64,618 64,770
Restructuring charges........................................ 1,891
Maintenance.................................................. 30,285 23,286 23,489
Depreciation................................................. 48,369 45,890 43,441
Taxes other than income taxes................................ 35,420 33,422 29,595
Federal and state income taxes............................... 26,666 27,729 26,154
----------- ----------- -----------
Total operating expenses............................. 434,876 377,435 358,700
----------- ----------- -----------
OPERATING INCOME............................................... 80,299 78,810 78,421
Interest income................................................ 372 427 256
Allowance for other funds used during construction............. 812 620 1,134
Other income (expenses), net................................... (322) 1,248 333
----------- ----------- -----------
INCOME BEFORE INTEREST CHARGES................................. 81,161 81,105 80,144
----------- ----------- -----------
Interest charges
Interest on debt and other................................... 27,016 27,549 27,492
Allowance for borrowed funds used during construction........ (904) (169) (590)
Amortization of debt discount, premium and expense, net...... 1,248 1,206 1,107
----------- ----------- -----------
Total interest charges............................... 27,360 28,586 28,009
----------- ----------- -----------
NET INCOME..................................................... 53,801 52,519 52,135
Preferred dividend requirements, net........................... 2,137 2,117 2,074
----------- ----------- -----------
NET INCOME APPLICABLE TO COMMON STOCK.......................... $ 51,664 $ 50,402 $ 50,061
=========== =========== ===========
AVERAGE SHARES OF COMMON STOCK OUTSTANDING
Basic......................................................... 22,480,163 22,459,770 22,442,683
=========== =========== ===========
Diluted....................................................... 23,867,458 23,864,031 23,857,967
=========== =========== ===========
EARNINGS PER AVERAGE SHARE
Basic......................................................... $2.30 $2.24 $2.23
=========== ========== ===========
Diluted....................................................... $2.24 $2.18 $2.16
=========== ========== ===========
CASH DIVIDENDS PAID PER SHARE OF COMMON STOCK.................. $1.61 $1.57 $1.53
=========== ========== ===========
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
16
<PAGE>
CLECO CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
At December 31,
1998 1997
-------------- ---------------
(In thousands)
<S> <C> <C>
ASSETS
Utility plant and other property, plant and equipment
Property, plant and equipment............................................. $1,565,028 $1,506,949
Accumulated depreciation.................................................. (551,705) (518,664)
---------- ----------
Net property, plant and equipment......................................... 1,013,323 988,285
Construction work-in-progress............................................. 76,475 37,277
---------- ----------
Total utility plant, net............................................ 1,089,798 1,025,562
---------- ----------
Investments and other assets................................................ 3,500 3,479
---------- ----------
Current assets
Cash and cash equivalents................................................. 19,457 18,015
Accounts receivable, net
Customer accounts receivable (less allowance for doubtful accounts of
$812 in 1998 and $684 in 1997).......................................... 27,436 28,822
Other accounts receivable............................................. 22,218 18,601
Notes receivable.......................................................... 930 930
Unbilled revenues......................................................... 9,712 11,090
Fuel inventory, at average cost........................................... 9,725 8,648
Material and supplies inventory, at average cost.......................... 12,674 14,413
Other current assets...................................................... 1,738 1,894
---------- ----------
Total current assets...................................................... 103,890 102,413
---------- ----------
Prepayments................................................................. 8,293 8,331
---------- ----------
Regulatory assets-- deferred taxes.......................................... 95,199 115,285
---------- ----------
Other deferred charges...................................................... 30,975 29,418
---------- ----------
Accumulated deferred federal and state income taxes......................... 97,345 76,556
---------- ----------
TOTAL ASSETS........................................................ $1,429,000 $1,361,044
========== ==========
CAPITALIZATION AND LIABILITIES
Common shareholders' equity
Common stock, $2 par value, authorized 50,000,000 shares, issued
22,767,754 and 22,762,754 shares at December 31,1998 and 1997, respectively $ 45,535 $ 45,525
Premium on capital stock.................................................. 113,871 113,763
Retained earnings......................................................... 271,019 255,549
Treasury stock, at cost, 281,930 and 299,842 shares at December 31, 1998
and 1997, respectively.................................................. (5,734) (6,086)
---------- ----------
Total common shareholders' equity................................... 424,691 408,751
---------- ----------
Preferred stock
Not subject to mandatory redemption....................................... 29,718 30,102
Subject to mandatory redemption........................................... 5,680 6,120
Deferred compensation related to preferred stock held by ESOP.............. (16,923) (18,766)
Long-term debt, net ........................................................ 343,042 365,897
---------- ----------
Total capitalization................................................ 786,208 792,104
---------- ----------
Current liabilities
Short-term debt .......................................................... 68,416 34,219
Long-term debt due within one year ....................................... 33,330 15,000
Accounts payable.......................................................... 61,786 53,365
Customer deposits......................................................... 20,120 20,172
Taxes accrued ............................................................ 11,942 12,211
Interest accrued.......................................................... 7,340 7,681
Accumulated deferred fuel................................................. 4,613 2,965
Other current liabilities................................................. 3,868 5,102
---------- ----------
Total current liabilities........................................... 211,415 150,715
---------- ----------
Deferred credits
Accumulated deferred federal and state income taxes ...................... 286,619 296,123
Accumulated deferred investment tax credits .............................. 27,784 29,574
Regulatory liabilities-- deferred taxes .................................. 81,074 62,468
Other deferred credits.................................................... 35,900 30,060
---------- ----------
Total deferred credits.............................................. 431,377 418,225
---------- ----------
TOTAL CAPITALIZATION AND LIABILITIES................................ $1,429,000 $1,361,044
========== ==========
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
17
<PAGE>
CLECO CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Years Ended December 31,
--------------------------------
1998 1997 1996
-------- ------- -------
(In thousands)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income.............................................................. $ 53,801 $ 52,519 $ 52,135
Adjustments to reconcile net income to net cash provided
by operating activities
Depreciation and amortization....................................... 50,852 47,719 44,548
Allowance for funds used during construction........................ (1,716) (789) (1,724)
Amortization of investment tax credits.............................. (1,790) (1,790) (1,809)
Deferred income taxes............................................... 8,703 2,908 3,818
Deferred fuel costs................................................. 1,648 797 (1,483)
Restructuring charge................................................ 1,285
Gain (loss) on disposition of land sales, net....................... (224) (20)
Changes in assets and liabilities
Accounts receivable, net.......................................... (2,231) (4,441) (26,837)
Unbilled revenues................................................. 1,378 103 (8,095)
Fuel, material and supplies inventories........................... 662 3,334 (1,877)
Accounts payable.................................................. 4,421 2,058 (1,065)
Customer deposits................................................. (52) 411 36
Taxes accrued..................................................... (269) 6,405 3,303
Interest accrued.................................................. (341) 160 (1,388)
Other, net.......................................................... (1,682) 7,321 1,251
-------- -------- --------
Net cash provided by operating activities......................... 113,384 117,776 60,793
-------- -------- --------
INVESTING ACTIVITIES
Additions to property, plant and equipment.............................. (94,030) (77,525) (64,425)
Allowance for funds used during construction............................ 1,716 789 1,724
Sale of utility plant................................................... 408 417 482
Purchase of investments................................................. (480) (222) (420)
Sale of investments..................................................... 1 807
-------- -------- --------
Net cash used in investing activities............................. (92,386) (76,540) (61,832)
-------- -------- --------
FINANCING ACTIVITIES
Issuance of common stock................................................ 100 66 288
Repurchase of common stock.............................................. (16) (16)
Redemption of preferred stock........................................... (522) (252) (238)
Issuance of long-term debt.............................................. 40,000 45,000
Retirement of long-term debt............................................ (30,000) (15,000) (50,000)
Increase (decrease) in short-term debt, net............................. 49,197 (30,942) 42,099
Dividends paid on common and preferred stock, net....................... (38,331) (37,384) (36,408)
-------- -------- --------
Net cash provided by (used in) financing activities............... (19,556) (43,528) 725
-------- -------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS...................... 1,442 (2,292) (314)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR............................ 18,015 20,307 20,621
-------- -------- --------
CASH AND CASH EQUIVALENTS AT END OF YEAR.................................. $ 19,457 $ 18,015 $ 20,307
======== ======== ========
Supplementary cash flow information
Interest paid (net of amount capitalized)............................... $ 28,118 $ 28,770 $ 29,881
======== ======== ========
Income taxes paid....................................................... $ 20,140 $ 23,752 $ 20,351
======== ======== ========
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
18
<PAGE>
CLECO CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN
COMMON SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
For the Years Ended December 31, 1996, 1997 and 1998
----------------------------------------------------------------------------
Premium on
Common Stock Capital Retained Treasury Stock
Shares Amount Stock Earnings Shares Cost
---------- ------ ----- -------- ------ ----
(In thousands, except share and per share amounts)
<S> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1996.......... 22,745,014 $45,490 $113,444 $224,688 318,446 $6,459
Redemption of preferred stock..... 31
Incentive stock options exercised. 15,050 30 220
Issuance of treasury stock........ 7 (11,484) (233)
Incentive shares forfeited........ 615 16
Dividend requirements, preferred
stock, net..................... (2,073)
Cash dividends paid, common stock,
$1.53 per share................. (34,336)
Net income........................ 52,135
---------- ------- -------- -------- ------- ------
BALANCE, DECEMBER 31, 1996........ 22,760,154 45,520 113,702 240,414 307,577 6,242
---------- ------- -------- -------- ------- ------
Redemptions of preferred stock.... 18
Incentive stock options exercised. 2,600 5 38
Issuance of treasury stock........ 5 (8,528) (172)
Incentive shares forfeited........ 793 16
Dividend requirements, preferred
stock, net..................... (2,118)
Cash dividends paid, common stock,
$1.57 per share................ (35,266)
Net income........................ 52,519
---------- ------- -------- -------- ------- ------
BALANCE, DECEMBER 31, 1997 22,762,754 $45,525 $113,763 $255,549 299,842 6,086
---------- ------- -------- -------- ------- ------
Redemptions of preferred stock 10
Incentive stock options exercised 5,000 10 74 (19,755)
Issuance of treasury stock 24 (401)
Incentive shares forfeited 1,987 54
Director's restricted stock award (144) (5)
Dividend requirements, preferred
stock, net (2,137)
Cash dividends paid, common stock,
$1.61 per share (36,194)
Net income 53,801
---------- ------- -------- -------- ------- ------
BALANCE, DECEMBER 31, 1998 22,767,754 $45,535 $113,871 $271,019 281,930 $5,734
========== ======= ======== ======== ======= ======
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
19
<PAGE>
CLECO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRESENTATION AND REGULATION
Cleco Corporation (the Company) provides electric service to a
diversified base of residential, commercial and industrial customers in 23
parishes (counties) of Louisiana. 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'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.
The consolidated financial statements include the accounts of the
Company and all subsidiaries which the Company owns directly, or indirectly,
through a majority interest. Intercompany balances are eliminated in
consolidation.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
RECLASSIFICATION
Certain reclassifications have been made to the 1996 consolidated
financial statements to conform to the presentation used in the 1998 and 1997
consolidated financial statements. These reclassifications had no effect on net
income applicable to common stock or total common shareholders' equity.
UTILITY PLANT, OTHER PROPERTY, PLANT AND EQUIPMENT 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. Other property, plant and equipment is stated the same as utility
plant except there is no estimated cost of funds used during construction, but
instead has interest capitalized during the construction period.
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 3.32% for 1998, 3.27% for 1997
and 3.21% for 1996.
CASH EQUIVALENTS
The Company considers highly liquid, marketable securities and other
similar instruments with original maturity dates of three months or less at the
time of purchase 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 basis of assets and
liabilities. The Company recognizes regulatory assets and liabilities for the
20
<PAGE>
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 life 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 recognized based upon the amount
of energy delivered. The cost of fuel and purchased power is currently 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 and the LPSC. 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 1998 was 13.49%
on a pretax basis (8.30% net of tax), 13.97% on a pre-tax basis (8.59% net of
tax), for 1997, and 13.33% on a pre-tax basis (8.20% net of tax) for 1996.
DERIVATIVES
From time to time the Company or its subsidiaries may limit or expand
their exposures to interest rate risk or electricity or generator boiler-fuel
market price risk by using hedging transactions. In each case the transactions
reflect underlying indebtedness or commodity requirements. No hedging
transactions are entered into for speculative purposes. The Company did not
engage in any interest rate hedges in 1998 and had no significant amounts of
natural gas futures transactions outstanding at December 31, 1998 and 1997.
RECENT ACCOUNTING STANDARDS
Statements of Financial Accounting Standards (SFAS) No. 133,
"Accounting for Derivatives Instruments and Hedging Activities", is required to
be implemented during the Company's fiscal year December 31, 2000. SFAS No. 134,
"Accounting for Mortgage-Backed Securities Retained after the Securitization of
Mortgage Loans Held for Sale by a Mortgage Banking Enterprise", are required to
be implemented during the Company's fiscal year ending December 31, 1999.
EARNINGS PER AVERAGE COMMON SHARE
Earnings per average common share (EPS) is computed using the weighted
average number of shares of common stock outstanding during the year. EPS is
reported for the years 1998, 1997 and restated for 1996 to reflect the Company's
adoption of SFAS No. 128, "Earnings per Share." The following table is a
reconciliation of the components in the calculation of basic and diluted
earnings per share.
21
<PAGE>
<TABLE>
For the year ended December 31,
(In thousands, except per share amounts)
1998 1997 1996
------------------------------------ ----------------------------------- -----------------------------------
INCOME SHARES PER-SHARE Income Shares Per-share Income Shares Per-share
(NUMERATOR) (DENOMINATOR) AMOUNT (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
----------- ------------- ------ ----------- ------------- ------ ----------- ------------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net income $53,801 $52,519 $52,135
Less: preferred
dividend
requirements, net (2,137) (2,117) (2,074)
------- ------- -------
BASIC EPS
Income available
for common
shareholders $51,664 22,480 $2.30 $50,402 22,460 $2.24 $50,061 22,443 $2.23
===== ===== =====
EFFECT OF DILUTIVE
SECURITIES
Stock option 7 7 10
grants
Convertible ESOP
preferred stock 1,707 1,380 1,646 1,397 1,549 1,405
----- ----- ------- ------ ------- -----
DILUTED EPS
Income available
to common
shareholders +
assumed
conversions $53,371 23,867 $2.24 $52,048 23,864 $2.18 $51,610 23,858 $2.16
======= ====== ===== ======= ====== ===== ======= ====== =====
</TABLE>
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 is reflected in the
financial statements.
<TABLE>
<CAPTION>
At December 31, 1998
-------------------------------
Rodemacher Dolet Hills
Unit #2 Unit #1
---------- -----------
(Dollar amounts in thousands)
<S> <C> <C>
Percentage of ownership ................ 30% 50%
Utility plant in service ............... $85,301 $273,420
Accumulated depreciation ............... $41,798 $103,895
Unit capability (thousand kilowatts) ... 523.0 650.0
Share of capability (thousand kilowatts) 156.9 325.0
</TABLE>
NOTE C -- FAIR VALUE OF FINANCIAL INSTRUMENTs
The amounts reflected in the financial statements at December 31, 1998
and 1997 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, 1998 and 1997 is estimated based
on quoted market prices for these or similar investments. The fair value of the
Company's long-term debt and nonconvertible 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 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, 1998 and 1997, with
proceeds from the sale of the common stock used to repay the principal balance
of the Company's loan to the Employee Stock Ownership Plan (ESOP).
22
<PAGE>
<TABLE>
<CAPTION>
At December 31,
-------------------------------------------
1998 1997
-------------------- ---------------------
CARRYING ESTIMATED Carrying Estimated
VALUE FAIR VALUE Value Fair Value
-------- ---------- -------- ----------
(In thousands)
<S> <C> <C> <C> <C>
Investments ......................... $ 1,287 $ 1,287 $ 807 $ 807
Long-term debt ...................... $376,698 $400,738 $381,260 $395,183
Preferred stock
Not subject to mandatory redemption $ 12,795 $ 28,567 $ 11,336 $ 24,248
Subject to mandatory redemption ... $ 5,680 $ 5,143 $ 6,120 $ 5,058
</TABLE>
NOTE D -- DEBT
The Company has revolving credit facilities totaling $180 million. A
$100 million facility, which is scheduled to continue to June 15, 2000, and an
$80 million facility, which is scheduled to expire on August 28, 1999, provide
for uncollaterialized borrowings at prevailing interest rates. Both facilities
provide for borrowings at interest rates established by competitive bid.
Commitment fees are based upon the Company's lowest secured debt ratings and are
currently 0.10% on the $100 million facility and 0.085% on the $80 million
facility. Compensating balances are not maintained in connection with either
revolving credit facility. In addition various uncommitted borrowing
arrangements with banks total $15 million. The banks are not obligated to lend
under these uncommitted arrangements, and any borrowings are made at negotiated
interest rates and are uncollaterialized. No fees are paid on any of the
uncommitted arrangements, nor are compensating balances required. The weighted
average interest rate on short-term debt was 5.26% at December 31, 1998 and
5.97% at December 31, 1997.
Total indebtedness for the two year periods ended December 31, 1998
were as follows:
<TABLE>
<CAPTION>
At December 31
----------------------
1998 1997
-------- --------
(In thousands)
<S> <C> <C>
Commercial paper, net $ 68,226 $ 34,219
Bank Loans 190
-------- --------
Total short-term debt $ 68,416 $ 34,219
======== ========
First mortgage bonds
Series X, 9 1/2%, due 2005 $ 60,000 $ 60,000
Pollution control revenue bonds, variable rate, due 2018 61,260 61,260
Bank Loans 10,438
Medium-term notes
7.85%, due 2000 25,000 25,000
7.55%, due 2004, callable at 100%, 2002 15,000 15,000
7.50%, due 2004, callable at 100%, 2002 10,000 10,000
7.00%, due 2003 10,000 10,000
6.90%, due 1998 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
6.42%, due 2001 15,000 15,000
6.95%, due 2006 10,000 10,000
6.53%, due 2007 10,000 10,000
6.32%, due 2006 15,000 15,000
6.28%, due 2008, putable at 100%, 1999 20,000 20,000
7.50%, due 2007 15,000 15,000
7.00%, due 2007 25,000 25,000
-------- --------
Total long-term debt $376,698 $381,260
Amount due within one year (33,330) (15,000)
Unamortized premium and discount, net (326) (363)
-------- --------
Total long-term debt, net. $343,042 $365,897
======== ========
</TABLE>
<TABLE>
<CAPTION>
1999 2000 2001 2002 2003 THEREAFTER
------- ------- ------- ------- ------- ----------
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
Amounts payable under long-term debt
agreements............................ $33,330 $25,748 $25,693 $25,748 $25,000 $241,179
======= ======= ======= ======= ======= ========
</TABLE>
23
<PAGE>
The first mortgage bonds are the only debt that is secured specifically
with the LPSC jurisdictional property, plant and equipment of the Company. In
the various parishes that contain such property, a lien is filed with the clerk
of court. Before the Company can sell any of this property, it must get a
release signed by the mortgage holder.
NOTE E -- COMMON STOCK
In association with incentive compensation plans in effect during the
three-year period ended December 31, 1998, certain officers and key employees
were awarded shares of restricted common stock. The cost of the restricted stock
awards, as measured by the market value of the common stock at the time of the
grant, is recorded as compensation expense during the periods in which the
restrictions lapse. Had the Company accounted for the value of these awards
after 1995 using an estimate of their "fair value," including the effects of
historical volatility of the market price, rather than their "intrinsic value,"
additional compensation expense of $55,369, $57,512 and $104,272 would have been
recorded for the years 1998, 1997, and 1996 respectively.
The Company makes no charge to expense with respect to the granting of
options. At December 31, 1998, all options were exercisable. The number of
shares of restricted stock previously granted for which restrictions had not
lapsed totaled 85,450 shares.
Changes in incentive shares for the three-year period ended
December 31, 1998, were as follows:
<TABLE>
<CAPTION>
Incentive Share
-------------------------------------------------
Option Price Unexercised Available for
per Share Option Shares Future Grants
------------- ------------- -------------
<S> <C> <C> <C>
Balance, January 1, 1996................................ 34,200 746,245
------- -------
Options exercised....................................... $14.75 (1,250)
$16.78 (13,800)
Options lapsed.......................................... $14.75 (750)
Restricted stock granted................................ (12,751)
Restricted stock forfeited.............................. 615
Incentive stock awarded................................. (2,258)
------- -------
Balance, December 31, 1996.............................. 18,400 731,851
------- -------
Options exercised....................................... $16.78 (2,600)
Restricted stock granted................................ (20,904)
Restricted stock forfeited.............................. 793
Incentive stock awarded................................. (3,701)
------- -------
Balance, December 31, 1997.............................. 15,800 708,039
------- ------- -------
Options exercised....................................... $16.78 (5,000)
Options granted (directors)............................. $31.875 12,503 (12,503)
Restricted stock granted................................ (21,362)
Restricted stock forfeited.............................. 2,543
------- -------
BALANCE, DECEMBER 31, 1998.............................. 23,303 676,717
======= =======
</TABLE>
24
<PAGE>
The assumptions used to calculate the additional compensation expense
are as follows:
<TABLE>
<S> <C>
Expected term: 5.0 years
Volatility: 12.29%
Expected dividend yield: 5.05%
Risk free interest rate: 5.79%
Weighted average fair value: $3.1280 (Black-Scholes value)
</TABLE>
Had the compensation cost for the Company's stock-based compensation
plans been determined consistent with SFAS 123, the Company's net income and net
income per common share for Fiscal 1998 would approximate the pro forma amounts
below:
<TABLE>
<CAPTION>
(In thousands, except per share amounts)
December 31, 1998
As Pro
Reported Forma
-------- -----
<S> <C> <C>
SFAS 123 Charge $ 0 $ 525
Net income 51,664 51,139
Net income per Common Share (basic) $ 2.30 $ 2.28
</TABLE>
The effects of applying SFAS 123 in this pro forma disclosure are not
indicative of future amounts. SFAS 123 does not apply to awards prior to 1995,
and the Company anticipates making awards in the future under its stock-based
compensation plans.
The following table summarizes information about employee and director
stock options outstanding at December 31, 1998:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
-------------------------------------------------- ---------------------------------
Weighted Weighted Weighted
Average Average Average
Range of Number Exercise Remaining Number Exercise
Exercise Price Outstanding Price Contr. Life Exercisable Price
- -------------- ---------------- ------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
$31.88 12,503 $31.88 9.325 0 -
</TABLE>
Various debt agreements 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 35% of total capitalization, including short-term debt. At December
31, 1998, approximately $111.3 million of retained earnings was not restricted.
NOTE F -- SUPPLEMENTARY PROFIT AND LOSS INFORMATION
<TABLE>
<CAPTION>
For the years ended December 31,
------------------------------------
1998 1997 1996
---- ---- ----
(In thousands)
<S> <C> <C> <C>
Operating revenue derived from one customer................... $35,612 $36,260 $33,359
======= ======= =======
25
<PAGE>
Other taxes included in the consolidated income statements.... $35,420 $33,422 $29,595
Other taxes capitalized to plant.............................. 1,351 1,325 1,049
------- ------- -------
Total other taxes............................................. $36,771 $34,747 $30,644
======= ======= =======
Other taxes consist of:
Parish and municipal property............................... $21,215 $21,436 $16,302
State and municipal franchise............................... 10,984 10,204 10,434
Other....................................................... 4,572 3,107 3,908
------- ------- -------
Total other taxes............................................. $36,771 $34,747 $30,644
======= ======= =======
</TABLE>
NOTE G -- PREFERRED STOCK
In connection with the establishment of the ESOP, the Company sold
300,000 shares of 8.125% convertible preferred stock to the ESOP. 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 1998, 1997 and 1996 has been reduced by
$521,000, $587,000 and $658,000, respectively, to reflect the benefit of the
income tax deduction for dividend requirements on unallocated shares held by the
ESOP.
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.
Information about the components of preferred stock capitalization is
as follows:
<TABLE>
<CAPTION>
Balance Balance Balance BALANCE
Jan. 1, Dec. 31, Dec. 31, DEC. 31,
1996 Change 1996 Change 1997 Change 1998
---- ------ ---- ------ ---- ------ ----
(In thousands, except share amounts)
<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............... 29,490 $ (239) 29,251 $ (178) 29,073 $ (384) 28,689
--------- ------ --------- ------ --------- ------ ---------
$ 30,519 $ (239) $30,280 $ (178) $ 30,102 $ (384) $ 29,718
========= ====== ========= ====== ========= ====== =========
SUBJECT TO MANDATORY
REDEMPTION
4.50%, Series of 1955......... $ 400 $ (40) $ 360 $ (40) $ 320 $ (40) $ 280
4.65%, Series of 1964......... 3,220 (140) 3,080 (140) 2,940 $ (140) 2,800
4.75%, Series of 1965 2,990 (58) 2,932 (72) 2,860 $ (260) 2,600
--------- ------ --------- ------- --------- ------ ---------
$ 6,610 $ (238) $ 6,372 $ (252) $ 6,120 $ (440) $ 5,680
========= ======= ========= ======= ========= ====== =========
Deferred compensation related to
convertible preferred stock held
by the ESOP................... $ (22,595) $ 1,844 $ (20,751) $ 1,985 $ (18,766) $1,843 $ (16,923)
========= ======= ========= ======= ========= ====== =========
CUMULATIVE PREFERRED STOCK,
$100 par value
Number of Shares
Authorized.................. 1,414,100 (1,975) 1,412,125 (2,125) 1,410,000 (4,000) 1,406,000
Issued and Outstanding...... 371,287 (4,768) 366,519 (4,301) 362,218 (8,240) 353,978
========= ======= ========= ======= ========= ====== =========
CUMULATIVE PREFERRED STOCK,
$25 par value
Number of Shares Authorized
(None outstanding).......... 3,000,000 3,000,000 3,000,000 3,000,000
========= ========= ========= =========
</TABLE>
26
<PAGE>
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 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.
<TABLE>
<CAPTION>
Optional Redemption Mandatory Redemption
------------------------- ---------------------------------
Price Number of Price
per Share Shares Annually per Share
--------- --------------- ---------
<S> <C> <C> <C>
SERIES
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 March 31, 1999.................. $102.4375
Thereafter.............................. $101.625 to $100
</TABLE>
* THE COMPANY IS REQUIRED TO OFFER HOLDERS OF THE SERIES OF 1964 THE OPPORTUNITY
TO REDEEM 1,400 SHARES EACH YEAR AND HOLDERS OF THE SERIES OF 1965 THE
OPPORTUNITY TO REDEEM 1,300 SHARES EACH YEAR. ONLY SHARES ACTUALLY TENDERED,
IF ANY, ARE REQUIRED TO BE REDEEMED.
NOTE H -- 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's full funding limitation. No
contributions to the pension plan were required during the three-year period
ended December 31, 1998.
The Company's retirees and their dependents are eligible to receive
health, dental and life insurance benefits (other benefits). The Company
recognizes the expected cost of these benefits during the periods in which the
benefits are earned.
The employee pension plan's and other benefits' obligation, plan assets
and funded status as determined by the actuary at December 31, 1998 and 1997 are
presented in the following table.
27
<PAGE>
<TABLE>
<CAPTION>
(In thousands)
PENSION BENEFITS OTHER BENEFITS
------------------------------- ---------------------------------
1998 1997 1998 1997
-------------- -------------- -------------- -----------------
<S> <C> <C> <C> <C>
Change in benefit obligation
Benefit obligation at beginning of year....... $123,082 $ 97,724 $ 15,379 $ 13,341
Service cost.................................. 3,734 2,984 671 601
Interest cost................................. 8,326 7,288 1,062 1,034
Plan participants contributions............... 311
Amendments.................................... 10,504
Actuarial loss................................ 4,591 10,991 176 1,246
Expenses paid................................. (1,100) (1,111)
Benefits paid................................. (5,912) (5,298) (997) (843)
---------- ---------- ---------- ----------
Benefit obligation at end of year............. 132,721 123,082 16,602 15,379
---------- ---------- ---------- ----------
Change in plan assets
Fair value of plan assets at beginning of year 163,574 138,672
Actual return on plan assets.................. 25,136 31,311
Expense paid.................................. (1,100) (1,111)
Benefits paid................................. (5,912) (5,298)
---------- ----------
Fair value of plan assets at end of year...... 181,698 163,574
---------- ----------
Funded status..................................... 48,977 40,492 (16,602) (15,379)
Unrecognized net actuarial (gain)............. (48,421) (40,815) (1,434) (1,676)
Unrecognized transition obligation/(asset).... (6,625) (7,943) 7,186 7,700
Prior service cost............................ 13,745 14,714
---------- ---------- ---------- ----------
Prepaid / (accrued) benefit cost.............. $ 7,676 $ 6,448 $(10,850) $ (9,355)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
Employee pension plan assets are invested in the Company's common
stock, other 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.
Effective January 1, 1998, the Company changed the method of
calculating fair market value of assets to reflect the difference between
actual and projected appreciation for the current year ratably over five
years. This change has been reflected in the table above.
Effective January 1, 1998, the Company increased the crediting rates
for each year of service but limited the maximum number of years of service
credited to 35. This change has been reflected in the table above.
The components of net periodic pension and other benefits
cost/(income) for 1998, 1997 and 1996 are as follows, along with assumptions
used:
<TABLE>
<CAPTION>
(In thousands)
PENSION BENEFITS OTHER BENEFITS
----------------------------------- ----------------------------------
1998 1997 1996 1998 1997 1996
---------- ---------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Components of periodic benefit
costs
Service cost............... $ 3,734 $ 2,984 $ 3,010 $ 671 $ 601 $ 596
Interest cost ............. 8,326 7,288 6,768 1,062 1,034 934
Expected return on plan assets (12,797) (10,290) (9,572)
Amortization of transition
</TABLE>
28
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
obligation/(asset)...... (1,318) (1,317) (1,317) 513 513 513
Prior period service cost
amortization............ 969 347 280
Net (gain)/loss........... (142) (66) (82)
---------- ---------- ---------- ---------- ---------- ---------
Net periodic benefit
cost/(income)........... $(1,228) $ (988) $ (831) $2,180 $2,066 2,043
---------- ---------- ---------- ---------- ---------- ---------
---------- ---------- ---------- ---------- ---------- ---------
</TABLE>
<TABLE>
<CAPTION>
PENSION BENEFITS OTHER BENEFITS
----------------------------------- ----------------------------------
1998 1997 1996 1998 1997 1996
---------- ---------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Weighted-average assumptions as
of December 31
Discount rate..................... 6.75% 7.00% 7.50% 6.75% 7.00% 7.50%
Expected return on plan assets.... 9.50% 9.50% 9.50% N/A N/A N/A
Rate of compensation increase..... 5.00% 5.00% 5.00% N/A N/A N/A
</TABLE>
The assumed health care cost trend rate used to measure the expected
cost of benefits was 9.5% in 1997 and 1998, declining to 5.5% by 2008 and
remaining at 5.5% thereafter. The initial health care cost trend rate was
reduced from 10% in 1996 to 9.5% in 1997 and resulted in an unrecognized
gain. Assumed health care cost trend rates have a significant effect on the
amount reported for the health care plans. A one-percentage point change in
assumed health care cost trends rates would have the following effects on
other benefits:
<TABLE>
<CAPTION>
(In thousands)
1-PERCENT POINT
---------------------------
INCREASE DECREASE
------------ ------------
<S> <C> <C>
Effect on total of service and interest cost components.......... $125 $(126)
Effect on postretirement benefit obligation...................... $935 $(981)
</TABLE>
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. At December 31, 1998 and 1997, the
ESOP had allocated to employees 124,984 and 109,668 shares, respectively.
The table below contains information about the 401(k) Plan and the
ESOP:
<TABLE>
For the years ended December 31,
--------------------------------------
1998 1997 1996
---- ---- ----
(In thousands)
<S> <C> <C> <C>
401(k) Plan expense.................................................... $1,107 $1,453 $1,490
------ ------ ------
Dividend requirements to ESOP on convertible preferred stock........... $2,341 $2,367 $2,378
------ ------ ------
Interest incurred by ESOP on its indebtedness.......................... $1,683 $1,604 $1,746
------ ------ ------
Company contributions to ESOP.......................................... $1,075 $1,235 $1,239
------ ------ ------
</TABLE>
29
<PAGE>
NOTE I -- INCOME TAX EXPENSE
Federal income tax expense is less than the amount computed by
applying the statutory federal rate to book income before tax as follows:
<TABLE>
<CAPTION>
For the years ended December 31,
-----------------------------------------------------------------
1998 1997 1996
---- ---- ----
AMOUNT % Amount % Amount %
------ - ------ - ------ -
(In thousands, except for %)
<S> <C> <C> <C> <C> <C> <C>
Book income before tax................... $80,467 100.0 $80,248 100.0 $78,289 100.0
Tax at statutory rate on book income before
tax...................................... 28,163 35.0 $28,087 35.0 $27,401 35.0
Increase (decrease):
Tax effect of AFUDC.................... (601) (0.8) (276) (0.3) (185) (0.2)
Amortization of investment tax credits. (1,790) (2.2) (1,790) (2.2) (1,809) (2.3)
Tax effect of prior-year tax benefits not
deferred............................. 2,175 2.7 978 1.2 921 1.1
Other, net............................. (3,452) (4.3) (2,645) (3.3) (3,296) (4.2)
-------- ------ -------- ------ -------- ------
Total federal income tax expense......... 24,495 30.4 24,354 30.4 23,032 29.4
-------- ------ -------- ------ -------- ------
Current state income tax expense......... 2,171 2.7 3,375 4.2 3,122 4.0
-------- ------ -------- ------ -------- ------
Total federal and state income tax expense $26,666 33.1 $27,729 34.6 $26,154 33.4
-------- ------ -------- ------ -------- ------
-------- ------ -------- ------ -------- ------
</TABLE>
Information about current and deferred income tax expense is as follows:
<TABLE>
<CAPTION>
1998 1997 1996
----- ---- ----
(In thousands)
<S> <C> <C> <C>
Current federal income tax expense.................... $17,582 $23,236 $21,023
Deferred federal income tax expense................... 8,703 2,908 3,818
Amortization of accumulated deferred investment tax credits (1,790) (1,790) (1,809)
-------- -------- --------
Total federal income tax expense...................... 24,495 24,354 23,032
Current state income tax expense...................... 2,171 3,375 3,122
-------- -------- --------
Total federal and state income tax expense............ $26,666 $27,729 $26,154
-------- -------- --------
-------- -------- --------
Deferred federal income tax expense attributable to:
Depreciation........................................ 11,748 $ 2,733 $4,834
Storm damages....................................... 492 (332) 70
Asset basis differences............................. (571) (1,707) 425
Employee benefits................................... (419) 321 (504)
Fuel costs.......................................... (612) 790 (481)
Reacquired debt..................................... (249) 1,037 (238)
Other............................................... (1,686) 66 (288)
-------- -------- --------
Total deferred federal income tax expense........... $ 8,703 $ 2,908 $3,818
-------- -------- --------
-------- -------- --------
</TABLE>
The balance of accumulated deferred federal and state income tax
assets and liabilities at December 31, 1998 and 1997 was comprised of the tax
effect of the following:
<TABLE>
<CAPTION>
1998 1997
--------- ----
ASSET LIABILITY Asset Liability
----- --------- ----- ----------
(In thousands)
<S> <C> <C> <C> <C>
Depreciation and property basis differences................... $ 6,584 $143,975 $ 6,978 $132,491
Allowance for funds used during construction.................. 39,270 40,608
Investment tax credits........................................ 17,378 18,498
FASB 109 adjustments.......................................... 62,235 92,513 42,614 112,562
Postretirement benefits other than pension.................... 3,700 3,266
Other......................................................... 7,448 10,861 5,200 10,462
-------- -------- -------- --------
Accumulated deferred federal and state income taxes........... $97,345 $286,619 $76,556 $296,123
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
Regulatory assets recorded for deferred taxes at December 31, 1998 and
1997 were $95.2 million and $115.3 million, respectively. Regulatory liabilities
recorded for deferred taxes at December 31, 1998 and 1997 were $81.0 million and
$62.5 million, 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.
30
<PAGE>
NOTE J -- DISCLOSURES ABOUT SEGMENTS
The Company has determined that its reportable segment is based on
the Company's method of internal reporting, which disaggregates its business
units by regulatory jusidiction. The Company's reportable segment is LPSC
Jusidictional Utility. This segment contains the revenues, expense and assets
over which the LPSC may have material effect based upon state statues. The
effects include rate-making powers, determination of depreciable lives,
determination of pass through cost of fuel through the fuel cost adjustment
clauses, and determination of prudent capital expenditures.
The financial results of the Company's segment is presented on an
accrual basis. Significant differences among the accounting policies of the
segments as compared to the Company's consolidated financial statements
principally involve the classification of revenue and expense between
operating and other. Management evaluates the performance of its segments and
allocates resources to them based on segment profit/(loss) before income
taxes and preferred stock dividends. Material intersegment transactions occur
on a regular basis.
31
<PAGE>
The table below presents information about the reported operating
results and net assets of the Company's reportable segments.
For the Year Ended December 31, 1998
-------------------------------------
(In thousands)
<TABLE>
<CAPTION> LPSC
JUSIDICTIONAL ALL
UTILITY OTHER TOTAL
------- ------ -----
<S> <C> <C> <C>
Operating revenues from external customers.............................. $ 515,175 $11,197 $ 526,372
Operating intersegment revenues......................................... 0 $ 4,982 $ 4,982
Interest expense........................................................ $ 27,360 $ 792 $ 28,152
Depreciation expense.................................................... $ 48,369 $ 910 $ 49,279
Segment profit (loss)................................................... $ 79,383 $ 610 $ 79,993
Segment assets.......................................................... $ 1,383,648 $98,248 $ 1,481,896
Reconciliation between segment amount and consolidated amounts
OPERATING REVENUES
Total operating revenues for all segments.............................. $531,354
Reclassification and elimination of other income/expense................ (16,179)
------------
Total consolidated operating revenues............................... $515,175
============
PROFIT OR LOSS
Total profit or loss on reportable segments............................. $ 79,383
Other profit or loss.................................................... 610
Intersegment profit included in other income............................ 474
Unallocated items
Income taxes........................................................ (26,666)
Preferred dividend requirements, net................................ (2,137)
------------
Net income to common................................................ $ 51,664
============
ASSETS
Total assets for reportable segments.................................... $1,383,648
Other assets............................................................ 98,248
Assets eliminated in consolidation...................................... (52,896)
------------
Total consolidated assets........................................... $1,429,000
============
<CAPTION>
SEGMENT CONSOLIDATION
OTHER SIGNIFICANT ITEMS TOTALS ADJUSTMENTS TOTALS
------ ----------- ------
<S> <C> <C> <C>
Depreciation expense.................................................... $49,279 $(910) $48,369
Interest expense........................................................ $28,152 $(792) $27,360
</TABLE>
The reconciling item of assets eliminated in consolidation
consists of certain receivables due to associated companies that
are eliminated for the purpose of consolidated reporting. All
other adjustments are immaterial.
32
<PAGE>
For the Year Ended December 31, 1997
------------------------------------
(In thousands)
<TABLE>
<CAPTION>
LPSC
JUSIDICTIONAL ALL
UTILITY OTHER TOTAL
------- ----- -----
<S> <C> <C> <C>
Operating revenues from external customers.............................. $ 456,245 $ 924 $ 457,169
Operating intersegment revenues......................................... $ 0 $ 2,092 $ 2,092
Interest expense........................................................ $ 28,586 $ 440 $ 29,026
Depreciation expense.................................................... $ 45,890 $ 624 $ 46,514
Segment profit (loss)................................................... $ 78,938 $ 1,287 $ 80,225
Segment assets.......................................................... $ 1,338,135 $ 28,511 $ 1,366,646
Reconciliation between segment amount and consolidated amounts
OPERATING REVENUES
Total operating revenues for all segments............................... $459,261
Reclassification and elimination of other income/expense................ (3,016)
------------
Total consolidated operating revenues............................... $456,245
============
PROFIT OR LOSS
Total profit or loss on reportable segments............................. $ 78,938
Other profit or loss.................................................... 1,287
Intersegment profit included in other income............................ 23
Unallocated items
Income taxes........................................................ (27,729)
Preferred dividend requirements, net................................ (2,117)
------------
Net income to common................................................ $ 50,402
============
ASSETS
Total assets for reportable segments.................................... $1,338,135
Other assets............................................................ 28,511
Assets eliminated in consolidation...................................... (5,602)
------------
Total consolidated assets........................................... $1,361,044
============
<CAPTION>
SEGMENT CONSOLIDATION
OTHER SIGNIFICANT ITEMS TOTALS ADJUSTMENTS TOTALS
------ ----------- ------
<S> <C> <C> <C>
Depreciation expense.................................................... $46,514 $(624) $45,890
Interest expense........................................................ $29,026 $(440) $28,586
</TABLE>
The reconciling item of assets eliminated in consolidation
consists of certain receivables due to associated companies that
are eliminated for the purpose of consolidated reporting. All
other adjustments are immaterial.
33
<PAGE>
For the Year Ended December 31, 1996
------------------------------------
(In thousands)
<TABLE>
<CAPTION>
LPSC
JUSIDICTIONAL ALL
UTILITY OTHER TOTAL
------- ----- ------
<S> <C> <C> <C>
Operating revenues from external customers.............................. $ 437,121 $ 992 $ 438,113
Operating intersegment revenues......................................... $ 0 $ 19 $ 19
Interest expense........................................................ $ 28,009 $ 11 $ 28,020
Depreciation expense.................................................... $ 43,441 $ 0 $ 43,441
Segment profit (loss)................................................... $ 77,402 $ 887 $ 8,289
Segment assets.......................................................... $ 1,297,033 $ 25,415 $ 1,322,448
Reconciliation between segment amount and consolidated amounts
OPERATING REVENUES
Total operating revenues for all segments............................... $438,132
Reclassification and elimination of other income/expense................ (1,011)
------------
Total consolidated operating revenues............................... $437,121
============
PROFIT OR LOSS
Total profit or loss on reportable segments............................. $ 77,402
Other profit or loss.................................................... 887
Intersegment profit included in other income............................ 0
Unallocated items
Income taxes........................................................ (26,154)
Preferred dividend requirements, net................................ (2,074)
------------
Net income to common................................................ $ 50,061
============
ASSETS
Total assets for reportable segments.................................... $1,297,033
Other assets............................................................ 25,415
Assets eliminated in consolidation...................................... (677)
------------
Total consolidated assets........................................... $1,321,771
============
<CAPTION>
SEGMENT CONSOLIDATION
OTHER SIGNIFICANT ITEMS TOTALS ADJUSTMENTS TOTALS
------ ----------- ------
<S> <C> <C> <C>
Depreciation expense.................................................... $43,441 $ 0 $43,441
Interest expense........................................................ $28,020 $(11) $28,009
</TABLE>
The reconciling item of assets eliminated in consolidation
consists of certain receivables due to associated companies that
are eliminated for the purpose of consolidated reporting. All
other adjustments are immaterial.
34
<PAGE>
NOTE K -- SABINE TEXICAN PIPELINE ACQUISITION
On August 1, 1998, Cleco Energy, LLC (Energy) a joint venture
between the Company and Covenant Energy Corporation of Houston, purchased all
of the capital stock of Sabine Texican Pipeline Company (Sabine) of Lufkin,
Texas . Sabine is an energy company engaged in the exploration, production,
gathering, marketing and transmission of natural gas. Energy paid the sole
shareholder of Sabine $2.5 million and gave him a 13% equity interest in
Energy. Sabine has approximately $24.3 million in assets, $7 million in
current liabilities and $7.1 million in long-term debt. The acquisition added
415 miles of gathering and transmission pipeline in Texas and Louisiana,
serving wholesale customers as well as oil and gas producing properties in
West Texas. After the acquisition of Sabine, the Company has a 44.37% equity
interest and a 51% voting interest in Energy. The acquisition was recorded
under the purchase method as required under Accounting Principals Board
Opinion No. 16 (APB 16), "Business Combinations". The disclosures set forth
in APB 16 are immaterial and are not presented.
NOTE L -- ACCRUAL OF ESTIMATED CUSTOMER CREDITS
The Company's results for the year ended December 31, 1998, reflect
an accrual of estimated customer credits which may be required under the
terms of an earnings review settlement reached with the LPSC in 1996. The
accrual for estimated customer credits was $4.8 million. The settlement set
the Company's rates for a period of five years, and also provided for annual
base rate tariff reductions of $3 million in 1997 and an additional $2
million in 1998. The period was extended to eight years, to 2004, as a part
of an agreement with the LPSC to transfer assets at Coughlin Power Station
(CPS) to an affiliate, Cleco Evangeline LLC (Cleco Evangeline). The transfer
is a part of the repowering of CPS, described in Note M, below. As part of
the settlement, the Company is allowed to retain all regulated earnings up to
a 12.25% return on equity and to share equally with customers as credits on
their bills all regulated earnings between a 12.25% and 13% return on equity.
This gives the Company an effective regulated equity return allowance on the
LPSC jurisdictional operations of up to 12.625%. All such earnings above 13%
return on equity are credited to customers. The amount of credits due
customers, if any, is determined by the LPSC annually based on the Company's
12 month results ending as of September 30 of each year. The amount of the
credit has not yet been determined by the LPSC. Under the settlement, such
credits are to be made on customers' bills the following summer.
NOTE M -- REPOWERING PROJECT
In July 1998, the Company's Board of Directors approved the
construction of a 750-megawatt repowering project (Project) to be implemented
at the site of its existing CPS. The Project will use three new natural
gas-fueled combustion turbine generators and three related heat recovery
system generators to repower two existing units at CPS.
It is anticipated that the Project's generation capacity and energy
will be available to the Company at competitive market rates and also to the
regional wholesale market at competitive market rates. The degree to which
the output of CPS will be sold and delivered to the Company and to
unaffiliated purchasers, as well as the terms and conditions of such sales,
remains to be determined in now ongoing commercial negotiations and in
related regulatory proceedings before the LPSC and FERC.
One of the Company's subsidiaries, Cleco Evangeline, will own and
operate the Project. The total cost of the Project is expected to be $250
million and is scheduled to be completed by June 1, 2000. As of December 31,
1998, the Company has spent approximately $37.1 million on the Project, which
is currently being funded through the Company's commercial paper program.
Permanent financing for the Project has not yet been determined and is
expected to be finalized during 1999. Implementation of the Project is
subject to approval by the LPSC and FERC. In February 1999, the LPSC did
approve the transfer of the existing CPS assets out of LPSC regulated rate
base into Cleco Evangeline. The actual transfer is expected to occur in the
fourth quarter of 1999. In return for the approval of the asset transfer, the
Company agreed to extend the terms of its 1996 rate settlement with the LPSC
for an additional three years, to the year 2004. The agreement also requires
the Company to hold harmless its ratepayers from negative impacts resulting
from the removal of the generating assets from the rate base. In return,
35
<PAGE>
the Company is authorized to transfer the assets at their net book value of
approximately $10 million. Approvals from the LPSC and FERC are expected to
be obtained in 1999.
NOTE N -- COMMITMENTS AND CONTINGENCIES
Construction expenditures for 1999 are estimated to be $182.6
million, excluding AFUDC, and for the five-year period ending 2003 are
expected to total $571.5 million, excluding AFUDC. Scheduled maturities of
debt and preferred stock, including $20 million of medium-term notes which
are due in 2008, but putable in November 1999, will total approximately $33.3
million for 1999 and approximately $135.5 million for the five-year period
ending 2003.
The Company has entered into various long-term contracts for the
procurement of coal and lignite to fuel certain of our generating stations.
These contracts contain provisions for price changes, minimum purchase levels
and other financial commitments. The Company purchases, as an additional fuel
source for generation, natural gas under short-term contracts on the spot
market.
The Company and another utility filed suit against a joint venture
and its partners who mine lignite for one of the Company's jointly-owned
electric generating units. The joint venture has filed counterclaims. The
counterclaims resulted in the filing of another suit by the Company and the
other utility against the joint venture's parent company. Management believes
the counterclaims, if successful, would not have a significant adverse effect
on the Company's financial position or results of operations. Normal
day-to-day operations continue at the mining facility and the Company's
electric generating unit.
The coal for one of the Company's jointly-owned electric generating
units is transported under a long-term transportation contract with a
railroad. The railroad is overcoming operating problems, which began in 1997
and resulted in reduced volumes delivered to the unit. Coal inventory at the
unit is currently above the Company's desired minimum level. Based on the
railroad's anticipated delivery schedule of future coal shipments, management
anticipates the inventory to remain at or above desired levels.
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.
The Company has committed to provide credit support up to $10
million for working capital and electricity or natural gas commodity
positions for Energy. Additionally, commitments for asset development
projects will be made as they occur up to $5 million per year for years 1998
through 2002. Amounts not advanced in any year are added to the amount
available for the remaining years. $2.5 million was advanced in 1998 for the
acquisition of Sabine . See the Notes to the Consolidated Financial
Statements, Note K, "Sabine Texican Pipeline Acquisition".
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed Of" (SFAS 121), establishes
accounting standards for determining if long-lived assets are impaired, and
when and how losses, if any, should be recognized. The Company believes that
the net cash flows that will result from the operation of its assets are
sufficient to cover the carrying value of the assets.
The Company has recorded regulatory assets and liabilities,
primarily for the effects of income taxes, as a result of past rate actions
of our regulators, pursuant to SFAS No. 71, "Accounting for the Effects of
Certain Types of Regulation" (SFAS 71). The effects of potential deregulation
of the industry or possible future changes in the method of rate regulation
of the Company could require the Company to discontinue the application of
SFAS 71 in the future, pursuant to SFAS No. 101, "Regulated Enterprises --
Accounting for the Discontinuation of Application of FASB Statement No. 71"
(SFAS 101). At December 31, 1998, the Company recorded $14.2 million of
regulatory assets, net of regulatory liabilities, because of the regulatory
requirement to flow through the tax benefits of
36
<PAGE>
accelerated deductions to current customers and an implied regulatory compact
that future customers would pay when the Company paid the additional taxes.
These differences occur over the lives of relatively long-lived assets, up to
30 years or more. Under the current regulatory and competitive environment,
we believe that these regulatory assets are fully recoverable. However, if in
the future, as a result of regulatory changes or increased competition, our
ability to recover these regulatory assets would not be probable, then to the
extent that such regulatory assets were determined not to be recoverable, we
would be required to write off or write down such assets.
NOTE O -- MISCELLANEOUS FINANCIAL INFORMATION (UNAUDITED)
Quarterly information for 1998 and 1997 is shown in the following
table.
<TABLE>
<CAPTION>
1998
----------------------------------------------
1ST 2ND 3RD 4TH
QUARTER QUARTER QUARTER QUARTER
------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Operating revenues........................................... $97,210 $128,298 $172,553 $117,114
Operating income............................................. $13,833 $20,946 $28,902 $16,618
Net income applicable to common stock........................ $6,468 $14,491 $22,320 $8,385
Basic net income per average common share.................... $0.29 $0.64 $0.99 $0.38
Diluted net income per average common share.................. $0.29 $0.63 $0.95 $0.37
Dividends paid per common share.............................. $0.395 $0.405 $0.405 $0.405
Market price per share
High....................................................... $34 9/16 $34 3/4 $33 7/8 $36 1/8
Low........................................................ $30 1/4 $29 $28 5/8 $32 7/8
<CAPTION>
1997
----------------------------------------------------
1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter
------- ------- ------- -------
(In thousands, except per share amounts)
<S> <C> <C> <C> <C>
Operating revenues........................................... $97,668 $105,324 $138,099 $115,154
Operating income............................................. $14,798 $18,459 $28,624 $16,929
Net income applicable to common stock........................ $7,002 $10,744 $22,360 $10,296
Basic net income per average common share.................... $0.31 $0.48 $1.00 $0.45
Diluted net income per average common share.................. $0.31 $0.47 $0.95 $0.45
Dividends paid per common share.............................. $0.385 $0.395 $0.395 $0.395
Market price per share
High....................................................... $28 $28 1/8 $28 7/16 $33 1/8
Low........................................................ $26 $24 3/4 $25 13/16 $25 9/16
</TABLE>
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, 1998,
the Company had 10,476 common and 168 preferred shareholders, as determined
from the records of the transfer agent.
On January 22, 1999, the Company's Board of Directors declared a
quarterly dividend of 40.5 cents per share payable February 15, 1999, to
common shareholders of record on February 1, 1999. Preferred dividends were
also declared, payable March 1, 1999, to preferred shareholders of record on
February 15, 1999.
37
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and
Shareholders of Cleco Corporation
In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of income and common shareholder's equity
and of cash flows present fairly, in all material respects, the
financial position of Cleco Corporation ("the Company") and its
subsidiaries at December 31, 1998 and 1997, and the results of their
operations and their cash flows for each of the three years in the period
ended December 31, 1998, in conformity with generally accepted
accounting principles. These financial statements are the responsibility
of the Company's management; our responsibility is to express an opinion on
these financial statements based on our audits. We conducted our audits of
these statements in accordance with generally accepted auditing
standards which 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,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion
expressed above.
/s/ PricewaterhouseCoopers LLP
New Orleans, Louisiana
January 27, 1999
38
<PAGE>
GLOSSARY
ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION (AFUDC)
An amount recorded by the Company to represent the costs of those funds used to
finance the Company's construction projects.
DEFERRED TAXES
Amounts representing adjustments to current income taxes which will increase or
decrease income taxes to be paid in future periods. These result from timing
differences between generally accepted accounting principles or regulatory
guidelines and income tax regulations.
DEREGULATION
The removal of regulatory restrictions on the electric utility industry, thus
allowing electric utilities to compete for electric customers at current market
prices.
DERIVATIVE
A complex financial instrument whose value is based on an underlying benchmark,
such as a commodity, a security, an index or an interest rate.
FEDERAL ENERGY REGULATORY COMMISSION (FERC)
A federal regulatory body composed of five appointed members. This body sets and
monitors the Company's rates for wholesale sales of electricity,
interconnections with other utilities, and transmission service, as well as
regulates the Company's short-term borrowing.
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP)
Rules and guidelines for recording and summarizing transactions, and for the
preparation of financial statements. These rules and guidelines are set by
various accounting authoritative bodies.
KILOWATT-HOUR (KWH)
A measure of electric consumption or generation equivalent to the use of
1,000 watts of power over a period of one hour.
LOUISIANA PUBLIC SERVICE COMMISSION (LPSC)
A state regulatory body composed of five elected members. This body sets and
monitors the Company's rates for retail electric service, the installation of
new generating capacity, and the Company's issuance of stock securities and
long-term debt.
MEGAWATT (MW)
A measure of electric consumption or generation equivalent to the use of
1,000,000 watts of power.
OPEN TRANSMISSION ACCESS
As a FERC-regulated electric utility, the Company must open its transmission
system to third parties under the same terms and conditions as the Company's use
of its own transmission system.
REGULATORY ASSET
An item of value, created by a regulatory agency, recoverable from the Company's
customers at some point in the future.
REGULATORY LIABILITY
An obligation of the Company, created by a regulatory agency, payable to the
Company's customers at some point in the future.
RETAIL CUSTOMER
An end-user of electricity.
STRANDED COSTS
In an environment where customers may choose their electric supplier, fixed
costs are those associated with utility assets specifically dedicated to, or
used by, departing customers who choose a new electric supplier. If the fixed
costs are not recoverable from the departing customers, then the Company will
have to write off these costs or charge the remaining customers of the Company.
39
<PAGE>
WHOLESALE CUSTOMER
Another investor owned electric utility, municipality, cooperative, power broker
or marketer or the like that purchases electricity from the Company for resale.
40
<PAGE>
BOARD OF DIRECTORS/OFFICERS
BOARD OF DIRECTORS*
SHERIAN G. CADORIA
Brigadier General, U.S. Army
(Retired); President, Cadoria
Speaker and Consultancy
Service, Pineville,
Louisiana. Member of the
Compensation Committee.
AGE 58; ELECTED 1993.
RICHARD B. CROWELL
Partner, Crowell & Owens,
Attorneys at Law, Alexandria,
Louisiana. Member of the
Audit Committee
AGE 60; ELECTED 1997.
DAVID M. EPPLER
Executive Vice President and
Chief Operating Officer,
Cleco Corporation.
AGE 48; ELECTED 1998.
J. PATRICK GARRETT
President and Chief Executive
Officer, Windsor Food
Company, Ltd, Houston, Texas.
Member of the Compensation
Committee.
AGE 55; ELECTED 1981.
F. BEN JAMES, JR.
President, James Investments,
Inc. (real estate development
and international marketing),
Ruston, Louisiana. Chairman
of the Audit Committee and
member of the Executive
Committee.
AGE 62; ELECTED 1986.
A. DELOACH MARTIN, JR.
Chairman, Central Engineering
& Supply Company (wholesale
distributor of industrial
supplies), Dallas, Texas.
Chairman of the Executive
Committee and member of the
Audit Committee.
AGE 69; ELECTED 1978.
GREGORY L. NESBITT
President and Chief Executive
Officer, Cleco Corporation,
Pineville, Louisiana. Member
of the Executive Committee.
AGE 60; ELECTED 1988.
ROBERT T. RATCLIFF
Chairman, President and Chief
Executive Officer, Ratcliff
Construction Company, Inc.,
Alexandria, Louisiana. Member
of the Audit Committee.
AGE 56; ELECTED 1993.
EDWARD M. SIMMONS
Chairman and Chief Executive
Officer, McIlhenney Company
(Tabasco Brand Products),
Avery Island, Louisiana.
Chairman of the Compensation
Committee and member of the
Executive Committee.
AGE 70; ELECTED 1992.
WILLIAM H. WALKER, JR.
President, Howard, Weil,
Labouisse, Friedrichs Inc.
(investment banking firm),
New Orleans, Louisiana.
Member of the Executive
Committee and Compensation
Committee.
AGE 53; ELECTED 1996.
OFFICERS*
GREGORY L. NESBITT
President and Chief Executive
Officer.
AGE 60; JOINED CLECO IN 1980.
DAVID M. EPPLER
Executive Vice President and
Chief Operating Officer.
AGE 48; JOINED CLECO IN 1981.
THOMAS J. HOWLIN
Senior Vice President,
Finance and Chief Financial
Officer.
AGE 50; JOINED CLECO IN 1997.
CATHERINE C. POWELL
Senior Vice President,
Employee and Corporate
Services.
AGE 43; JOINED CLECO IN 1991.
DARRELL J. DUBROC
Vice President, Generation
Services.
AGE 37; JOINED CLECO IN 1985.
JEFFREY W. HALL
Vice President, Retail Energy
Services.
AGE 47; JOINED CLECO IN 1981.
MARK H. SEGURA
Vice President, Distribution
Services.
AGE 40; JOINED CLECO IN 1984.
ROBERT A. PULASKI
Controller.
AGE 41; JOINED CLECO IN 1981.
MICHAEL P. PRUDHOMME
Secretary-Treasurer.
AGE 55; JOINED CLECO IN 1967.
CARLA D. BOOTHE
Assistant Corporate Secretary.
AGE 34; JOINED CLECO IN 1996.
* Ages as of December 31, 1998
<PAGE>
EXHIBIT 21
CLECO CORPORATION
SUBSIDIARIES OF THE REGISTRANT
<TABLE>
<CAPTION>
State of Incorporation
Subsidiaries of Registrant(1) or Organization
----------------------------- ---------------
<S> <C>
CLE Intrastate Pipeline Company, Inc. Louisiana
CLE Resources, Inc. Delaware
Cleco Columbian LLC Louisiana
Cleco Construction Company, Inc.(2) Louisiana
Cleco Energy LLC Texas
Cleco Evangeline LLC Louisiana
Cleco Generation Services LLC Louisiana
Cleco Holding Corporation Louisiana
Cleco Midstream Resources LLC Louisiana
Cleco Services LLC Louisiana
Cleco Support Group LLC Louisiana
Cleco Trading & Marketing LLC Louisiana
DeSoto Pipeline Company, Inc. Louisiana
DeSoto Services, Inc. Texas
Four Square Gas Company, Inc. Louisiana
Four Square Production, L.L.C. Texas
Hudson Capital Partners, L.L.C. Texas
Hudson SVD, L.L.C. Texas
Panola Exploration, Inc. Texas
Providence Partners, L.L.C. Texas
Sabine Texican Pipeline Company Texas
STP Marketing, Inc. Texas
The Kentucky Four Limited Partnership Texas
</TABLE>
(1) None of the subsidiaries is doing business under an assumed name.
(2) Dissolved, March 1999.
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statements
of Cleco Corporation on Form S-8 (Registration Nos. 2-79671, 33-10169,
33-38362 and 33-44663) and Form S-3 (Nos. 33-24895, 33-62950 and 333-02895)
of our reports dated January 27, 1999, on our audits of the consolidated
financial statements and financial statement schedule of Cleco Corporation as
of December 31, 1998 and 1997, and for the years ended December 31, 1998,
1997 and 1996, which reports are included or incorporated by reference in
this Annual Report on Form 10-K.
/s/ PricewaterhouseCoopers LLP
New Orleans, Louisiana
March 11, 1999
<PAGE>
EXHIBIT 24
CLECO CORPORATION
POWER OF ATTORNEY
WHEREAS, Cleco Corporation, 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, 1998, 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 Michael P. Prudhomme, 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 22 day of January, 1999.
/s/ Sherian G. Cadoria
----------------------------------
Sherian G. Cadoria
<PAGE>
CLECO CORPORATION
POWER OF ATTORNEY
WHEREAS, Cleco Corporation, 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, 1998, 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 Michael P. Prudhomme, 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 22 day of January, 1999.
/s/ Richard B. Crowell
----------------------------------
Richard B. Crowell
<PAGE>
CLECO CORPORATION
POWER OF ATTORNEY
WHEREAS, Cleco Corporation, 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, 1998, 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 Michael P. Prudhomme, 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 22 day of January, 1999.
/s/ J. Patrick Garrett
----------------------------------
J. Patrick Garrett
<PAGE>
CLECO CORPORATION
POWER OF ATTORNEY
WHEREAS, Cleco Corporation, 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, 1998, 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 Michael P. Prudhomme, 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 22 day of January, 1999.
/s/ F. Ben James, Jr.
----------------------------------
F. Ben James, Jr.
<PAGE>
CLECO CORPORATION
POWER OF ATTORNEY
WHEREAS, Cleco Corporation, 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, 1998, 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 Michael P. Prudhomme, 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 22 day of January, 1999.
/s/ A. DeLoach Martin, Jr.
----------------------------------
A. DeLoach Martin, Jr.
<PAGE>
CLECO CORPORATION
POWER OF ATTORNEY
WHEREAS, Cleco Corporation, 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, 1998, 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 Michael P. Prudhomme, 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 22 day of January, 1999.
/s/ Robert T. Ratcliff
----------------------------------
Robert T. Ratcliff
<PAGE>
CLECO CORPORATION
POWER OF ATTORNEY
WHEREAS, Cleco Corporation, 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, 1998, 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 Michael P. Prudhomme, 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 22 day of January, 1999.
/s/ Edward M. Simmons
----------------------------------
Edward M. Simmons
<PAGE>
CLECO CORPORATION
POWER OF ATTORNEY
WHEREAS, Cleco Corporation, 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, 1998, 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 Michael P. Prudhomme, 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 22 day of January, 1999.
/s/ William H. Walker, Jr.
----------------------------------
William H. Walker, Jr.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,089,798
<OTHER-PROPERTY-AND-INVEST> 3,500
<TOTAL-CURRENT-ASSETS> 103,890
<TOTAL-DEFERRED-CHARGES> 223,519
<OTHER-ASSETS> 8,293
<TOTAL-ASSETS> 1,429,000
<COMMON> 45,535
<CAPITAL-SURPLUS-PAID-IN> 108,137
<RETAINED-EARNINGS> 271,019
<TOTAL-COMMON-STOCKHOLDERS-EQ> 424,691
5,680
12,795
<LONG-TERM-DEBT-NET> 128,042
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 215,000
<COMMERCIAL-PAPER-OBLIGATIONS> 68,416
<LONG-TERM-DEBT-CURRENT-PORT> 33,330
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 541,046
<TOT-CAPITALIZATION-AND-LIAB> 1,429,000
<GROSS-OPERATING-REVENUE> 515,175
<INCOME-TAX-EXPENSE> 26,666
<OTHER-OPERATING-EXPENSES> 408,210
<TOTAL-OPERATING-EXPENSES> 434,876
<OPERATING-INCOME-LOSS> 80,299
<OTHER-INCOME-NET> 862
<INCOME-BEFORE-INTEREST-EXPEN> 81,161
<TOTAL-INTEREST-EXPENSE> 27,360
<NET-INCOME> 53,801
2,137
<EARNINGS-AVAILABLE-FOR-COMM> 51,664
<COMMON-STOCK-DIVIDENDS> 36,194
<TOTAL-INTEREST-ON-BONDS> 8,992
<CASH-FLOW-OPERATIONS> 113,384
<EPS-PRIMARY> 2.30
<EPS-DILUTED> 2.24
</TABLE>
