Schedule I Financial Statements of Cleco Corporation

12 Months Ended

Dec. 31, 2013

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Schedule I - Financial Statements of Cleco Corporation

CLECO CORPORATION (Parent Company Only) SCHEDULE I

Condensed Statements of Income
	FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	2013			2012			2011
Operating expenses
Administrative and general	$	2,501		$	1,154		$	1,184
Other operating expense	418			362			650
Total operating expenses	$	2,919		$	1,516		$	1,834
Operating loss	(2,919		)	(1,516		)	(1,834		)
Equity income from subsidiaries, net of tax	155,360			156,783			184,951
Interest, net	(2,380		)	(3,350		)	(2,874		)
Other income	3,392			2,068			4,647
Other expense	(38		)	(13		)	(2,230		)
Income before income taxes	153,415			153,972			182,660
Income tax benefit	(7,270		)	(9,676		)	(13,188		)
Net income	160,685			163,648			195,848
Preferred dividends requirements	—			—			26
Preferred stock redemption costs	—			—			112
Net income applicable to common stock	$	160,685		$	163,648		$	195,710
The accompanying notes are an integral part of the condensed financial statements.

CLECO CORPORATION (Parent Company Only)  SCHEDULE I

Condensed Statements of Comprehensive Income
	FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	2013		2012			2011
Net income	$	160,685	$	163,648		$	195,848
Other comprehensive loss, net of tax:
Postretirement benefits gain (loss) (net of tax expense of $3,137 in 2013 and tax benefit of $4,230 in 2012 and $344 in 2011)	5,016		(6,565		)	(508		)
Net gain (loss) on cash flow hedges (net of tax expense of $925 in 2013 and $1,460 in 2012, and tax benefit of $10,002 in 2011)	1,478		2,334			(15,993		)
Total other comprehensive income (loss), net of tax	6,494		(4,231		)	(16,501		)
Comprehensive income, net of tax	$	167,179	$	159,417		$	179,347
The accompanying notes are an integral part of the condensed financial statements.

CLECO CORPORATION (Parent Company Only) SCHEDULE I

Condensed Balance Sheets
	AT DEC. 31,
(THOUSANDS)	2013			2012
Assets
Current assets
Cash and cash equivalents	$	7,375		$	7,418
Accounts receivable - affiliate	9,549			9,455
Other accounts receivable	—			1
Taxes receivable, net	—			30,920
Accumulated deferred federal and state income taxes, net	7,330			—
Cash surrender value of life insurance policies	45,394			36,504
Total current assets	69,648			84,298
Equity investment in investees	1,553,543			1,497,788
Accumulated deferred federal and state income taxes, net	102,255			91,359
Other deferred charges	719			1,721
Total assets	$	1,726,165		$	1,675,166
Liabilities and shareholders’ equity
Liabilities
Current liabilities
Accounts payable	$	3,218		$	3,392
Accounts payable - affiliate	60,590			55,432
Taxes payable, net	17,161			—
Interest accrued	38			377
Accumulated deferred federal and state income taxes, net	—			2,926
Other current liabilities	11,081			9,986
Total current liabilities	92,088			72,113
Tax credit fund investment, net	41,840			78,840
Other deferred credits	1,040			—
Long-term debt	5,000			25,000
Total liabilities	139,968			175,953
Commitments and Contingencies (Note 5)
Shareholders’ equity
Common shareholders’ equity
Common stock, $1 par value, authorized 100,000,000 shares, issued 61,047,006 and 60,961,570 shares and outstanding 60,454,520 and 60,355,545 shares at December 31, 2013 and 2012, respectively	61,047			60,962
Premium on common stock	422,624			416,619
Retained earnings	1,149,003			1,075,074
Treasury stock, at cost, 592,486 and 606,025 shares at December 31, 2013 and 2012, respectively	(20,601		)	(21,072		)
Accumulated other comprehensive loss	(25,876		)	(32,370		)
Total shareholders’ equity	1,586,197			1,499,213
Total liabilities and shareholders’ equity	$	1,726,165		$	1,675,166
The accompanying notes are an integral part of the condensed financial statements.

CLECO CORPORATION (Parent Company Only)  SCHEDULE I

Condensed Statements of Cash Flows
	FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	2013			2012			2011
Operating activities
Net cash provided by operating activities	$	159,430		$	79,606		$	175,624
Investing activities
Contributions to tax credit fund	(51,011		)	(59,645		)	(43,921		)
Return of equity investment in tax credit fund	1,619			37,652			33,430
Return of equity investment in investees	—			—			89,654
Other investing	(3,705		)	(2,973		)	(1,232		)
Net cash (used in) provided by investing activities	(53,097		)	(24,966		)	77,931
Financing activities
Retirement of short-term debt	—			—			(150,000		)
Draws on credit facility	48,000			25,000			35,000
Payments on credit facility	(68,000		)	(10,000		)	(40,000		)
Repurchase of common stock	—			(8,007		)	(13,009		)
Dividends paid on common stock	(86,376		)	(78,844		)	(68,023		)
Other financing	—			1,987			(201		)
Net cash used in financing activities	(106,376		)	(69,864		)	(236,233		)
Net (decrease) increase in cash and cash equivalents	(43		)	(15,224		)	17,322
Cash and cash equivalents at beginning of period	7,418			22,642			5,320
Cash and cash equivalents at end of period	$	7,375		$	7,418		$	22,642
Supplementary cash flow information
Interest paid	$	217		$	95		$	1,752
Income taxes (refunded) paid, net	$	(46,928	)	$	59		$	31,180
Supplementary non-cash investing and financing activity
Issuance of common stock - ESPP	$	318		$	340		$	328
The accompanying notes are an integral part of the condensed financial statements.

Note 1 — Summary of Significant Accounting Policies

The condensed financial statements represent the financial information required by SEC Regulation S-X 5-04 for Cleco Corporation, which requires the inclusion of parent company only financial statements if the restricted net assets of consolidated subsidiaries exceed 25% of total consolidated net assets as of the last day of its most recent fiscal year. As of December 31, 2013, Cleco Corporation’s restricted net assets of consolidated subsidiaries were $843.8 million and exceeded 25% of its total consolidated net assets.

Cleco Corporation’s major, first-tier subsidiaries consist of Cleco Power and Midstream.

Cleco Power contains the LPSC-jurisdictional generation, transmission, and distribution electric utility operations serving Cleco’s traditional retail and wholesale customers. Midstream owns and operates a merchant power plant (Coughlin).

The accompanying financial statements have been prepared to present the results of operations, financial condition,and cash flows of Cleco Corporation on a stand-alone basis as a holding company. Investments in subsidiaries and other investees are stated at cost plus equity in undistributed earnings from the date of acquisition. These financial statements should be read in conjunction with Cleco’s consolidated financial statements.

Note 2 — Debt

At December 31, 2013 and 2012, Cleco Corporation had no short-term debt outstanding.

At December 31, 2013, Cleco Corporation’s long-term debt outstanding was $5.0 million, of which none was due within one year, compared to $25.0 million of long-term debt at December 31, 2012, of which none was due within one year. The long-term debt at December 31, 2013 and 2012, was the result of outstanding draws on Cleco Corporation’s credit facility.

In October 2013, Cleco Corporation entered into a new, amended and restated $250.0 million revolving credit facility. The credit facility is set to mature on October 16, 2018 and provides for working capital and other needs. In connection with the new credit facility, $1.0 million of unamortized debt expense related to Cleco Corporation’s previous credit facility was written off. At December 31, 2013, the all-in interest rate under the new facility was equal to LIBOR plus 1.275% or ABR, plus facility fees of 0.225%. Due to the credit ratings upgrade on January 30, 2014, the all-in interest rate under the new facility is equal to LIBOR plus 1.075% or ABR, plus facility fees of 0.175%. At December 31, 2013, Cleco Corporation had $5.0 million borrowings outstanding under its existing credit facility at an all-in interest rate of 1.445%, leaving an available borrowing capacity of $245.0 million. The $5.0 million borrowings outstanding at December 31, 2013 were repaid on January 31, 2014. At December 31, 2013, Cleco Corporation was in compliance with the covenants in its credit facility.

Note 3 — Cash Distributions and Equity Contributions

Some provisions in Cleco Power’s debt instruments restrict the amount of equity available for distribution to Cleco Corporation by Cleco Power under specified circumstances. The most restrictive covenant requires Cleco Power’s total indebtedness to be less than or equal to 65% of total capitalization. At December 31, 2013, approximately $666.3 million of member’s equity was unrestricted.

The following table summarizes the cash distributions Cleco Corporation received from affiliates during 2013, 2012, and 2011.

	AT DEC. 31,
(THOUSANDS)	2013		2012		2011
Cleco Power	$	105,000	$	58,000	$	130,000
Midstream	—		—		159,819
Diversified Lands	—		2,900		—
Perryville	700		1,500		700
Attala	400		1,300		700
Total	$	106,100	$	63,700	$	291,219

Cleco Corporation made no contributions to affiliates during 2013. The following table summarizes the contributions Cleco Corporation made to affiliates during 2012 and 2011.

	AT DEC. 31,
(THOUSANDS)		2012		2011
Midstream		$	16,191	$	35,500
Perryville		—		1,845
Cleco Innovations		—		3,000
Total		$	16,191	$	40,345

Note 4 — Income Taxes

Cleco Corporation (Parent Company Only) Condensed Statements of Income reflect income tax benefits of $7.3 million, $9.7 million, and $13.2 million for the years ended December 31, 2013, 2012, and 2011, respectively. In addition to these amounts, income tax expense of $86.8 million, $75.0 million, and $116.1 million is reflected in equity income of subsidiaries, net of tax for the years ended December 31, 2013, 2012, and 2011, respectively.

Note 5 — Commitments and Contingencies

For information regarding commitments and contingencies related to Cleco Corporation, see Part II, Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 14 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees — Off-Balance Sheet Commitments and Disclosures about Guarantees.”