Schedule I Financial Statements of Cleco Corporation

12 Months Ended

Dec. 31, 2017

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Condensed Financial Information of Parent Company Only Disclosure

CLECO HOLDINGS (Parent Company Only) SCHEDULE I

Condensed Statements of Income
	SUCCESSOR						PREDECESSOR
(THOUSANDS)	FOR THE YEAR ENDED DEC. 31, 2017			APR. 13, 2016 - DEC. 31, 2016			JAN. 1, 2016 - APR. 12, 2016			FOR THE YEAR ENDED DEC. 31, 2015
Operating expenses
Administrative and general	$	5,042		$	375		$	319		$	1,891
Merger transaction costs	287			23,211			34,912			4,591
Other operating expense	685			(382		)	624			490
Total operating expenses	6,014			23,204			35,855			6,972
Operating loss	(6,014		)	(23,204		)	(35,855		)	(6,972		)
Equity income from subsidiaries, net of tax	170,706			9,357			21,789			141,636
Interest, net	(53,684		)	(35,151		)	(286		)	(1,731		)
Other income	3,978			1,948			702			17
Other expense	—			—			—			(1,142		)
Income (loss) before income taxes	114,986			(47,050		)	(13,650		)	131,808
Federal and state income tax benefit	(23,094		)	(22,937		)	(9,690		)	(1,861		)
Net income (loss)	$	138,080		$	(24,113	)	$	(3,960	)	$	133,669
The accompanying notes are an integral part of the Condensed Financial Statements.

CLECO HOLDINGS (Parent Company Only)  SCHEDULE I

Condensed Statements of Comprehensive Income
	SUCCESSOR						PREDECESSOR
(THOUSANDS)	FOR THE YEAR ENDED DEC. 31, 2017			APR. 13, 2016 - DEC. 31, 2016			JAN. 1, 2016 - APR. 12, 2016			FOR THE YEAR ENDED DEC. 31, 2015
Net income (loss)	$	138,080		$	(24,113	)	$	(3,960	)	$	133,669
Other comprehensive (loss) income, net of tax
Postretirement benefits (loss) gain (net of tax benefit of $2,764 and tax expense of $938, $367, and $3,670, respectively)	(4,421		)	1,500			587			5,869
Amortization of interest rate derivatives to earnings (net of tax expense of $0, $0, $37, and $132, respectively)	—			—			60			211
Total other comprehensive (loss) income, net of tax	(4,421		)	1,500			647			6,080
Comprehensive income (loss), net of tax	$	133,659		$	(22,613	)	$	(3,313	)	$	139,749
The accompanying notes are an integral part of the Condensed Financial Statements.

CLECO HOLDINGS (Parent Company Only) SCHEDULE I

Condensed Balance Sheets
	AT DEC. 31,
(THOUSANDS)	2017			2016
Assets
Current assets
Cash and cash equivalents	$	48,732		$	1,377
Accounts receivable - affiliate	6,880			7,070
Other accounts receivable	209			395
Taxes receivable, net	15,172			—
Cash surrender value of trust-owned life insurance policies	62,839			57,207
Total current assets	133,832			66,049
Equity investment in subsidiaries	3,226,780			3,223,920
Tax credit fund investment, net	4,355			11,888
Accumulated deferred federal and state income taxes, net	105,575			140,577
Other deferred charges	1,037			1,351
Total assets	$	3,471,579		$	3,443,785
Liabilities and member's equity
Liabilities
Current liabilities
Accounts payable	$	4,354		$	3,424
Accounts payable - affiliate	5,621			14,521
Taxes payable, net	—			13,998
Interest accrued	7,621			7,642
Deferred compensation	12,132			11,654
Other current liabilities	272			270
Total current liabilities	30,000			51,509
Postretirement benefit obligations	4,404			4,280
Other deferred credits	—			1,100
Long-term debt, net	1,340,818			1,340,133
Total liabilities	1,375,222			1,397,022
Commitments and contingencies (Note 6)
Member's equity
Membership interest	2,069,376			2,069,376
Retained earnings (Accumulated deficit)	29,902			(24,113		)
Accumulated other comprehensive (loss) income	(2,921		)	1,500
Total member's equity	2,096,357			2,046,763
Total liabilities and member's equity	$	3,471,579		$	3,443,785
The accompanying notes are an integral part of the Condensed Financial Statements.

CLECO HOLDINGS (Parent Company Only)  SCHEDULE I

Condensed Statements of Cash Flows
	SUCCESSOR						PREDECESSOR
(THOUSANDS)	FOR THE YEAR ENDED DEC. 31, 2017			APR. 13, 2016 - DEC. 31, 2016			JAN. 1, 2016 - APR. 12, 2016			FOR THE YEAR ENDED DEC. 31, 2015
Operating activities
Net cash provided by operating activities	$	124,817		$	36,811		$	34,904		$	128,909
Investing activities
Contributions to tax credit fund	(630		)	—			—			(9,966		)
Return of equity investment in tax credit fund	7,502			901			476			2,128
Contribution to subsidiary	—			(50,000		)	—			—
Premiums paid on trust-owned life insurance	—			—			—			(3,607		)
Net cash provided by (used in) investing activities	6,872			(49,099		)	476			(11,445		)
Financing activities
Draws on credit facility	73,000			—			3,000			57,000
Payments on credit facility	(73,000		)	—			(10,000		)	(80,000		)
Issuance of long-term debt	—			1,350,000			—			—
Repayment of long-term debt	—			(1,350,000		)	—			—
Payment of financing costs	(269		)	(3,755		)	—			—
Dividends paid on common stock	—			(572		)	(24,579		)	(97,283		)
Contribution from member	—			100,720			—			—
Distributions to member	(84,065		)	(88,765		)	—			—
Other financing	—			—			—			(14		)
Net cash (used in) provided by financing activities	(84,334		)	7,628			(31,579		)	(120,297		)
Net increase (decrease) in cash and cash equivalents	47,355			(4,660		)	3,801			(2,833		)
Cash and cash equivalents at beginning of period	1,377			6,037			2,236			5,069
Cash and cash equivalents at end of period	$	48,732		$	1,377		$	6,037		$	2,236
Supplementary cash flow information
Interest paid, net of amount capitalized	$	52,026		$	26,264		$	126		$	130
Income taxes (refunded) paid, net	$	(6	)	$	4,263		$	1		$	1,464
Supplementary non-cash investing and financing activity
Non-cash distribution from subsidiary	$	13,000		$	—		$	—		$	33,661
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 Holdings, 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, 2017, Cleco Holdings’ restricted net assets of consolidated subsidiaries were $1.21 billion and exceeded 25% of its total consolidated net assets.

Cleco Holdings’ only major, first-tier subsidiary is Cleco Power. Cleco Power contains the LPSC-jurisdictional generation, transmission, and distribution electric utility operations serving Cleco’s traditional retail and wholesale customers.

The accompanying financial statements have been prepared to present the results of operations, financial condition, and cash flows of Cleco Holdings on a stand-alone basis as a holding company. Investments in subsidiaries and other investees are presented using the equity method. These financial statements should be read in conjunction with Cleco’s consolidated financial statements.

Note 2 — Business Combinations

On April 13, 2016, Cleco Holdings completed its merger with Merger Sub whereby Merger Sub merged with and into Cleco Corporation, with Cleco Corporation surviving the Merger, and Cleco Corporation converting to a limited liability company and changing its name to Cleco Holdings, as a direct, wholly owned subsidiary of Cleco Group and an indirect, wholly owned subsidiary of Cleco Partners. At the effective time of the Merger, each outstanding share of Cleco Corporation common stock, par value $1.00 per share (other than shares that were owned by Cleco Corporation, Cleco Partners, Merger Sub, or any other direct or indirect wholly owned subsidiary of Cleco Partners or Cleco Corporation), were cancelled and converted into the right to receive $55.37 per share in cash, without interest, with all dividends payable before the effective time of the Merger.

For more information regarding the Merger see Part II, Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 3 — Business Combinations.”

Note 3 — Debt

At December 31, 2017, and 2016, Cleco Holdings had no short-term debt outstanding.

At December 31, 2017, Cleco Holding’s long-term debt outstanding was $1.34 billion, of which none was due within one year.

In May 2016, Cleco Holdings completed the private sale of $535.0 million aggregate principal amount of its 3.743% senior notes due May 1, 2026, and $350.0 million aggregate principal amount of its 4.973% senior notes due May 1, 2046. On April 28, 2017, Cleco Holdings completed an exchange offer for all of its then outstanding 3.743% and 4.973% senior notes, which were not registered under the Securities Act of 1933, as amended, for an equal principal amount of newly issued 3.743% senior notes due May 1, 2026, and 4.973% senior notes due May 1, 2046, that were so registered. Cleco Holdings did not receive any proceeds from the exchange offer.

The principal amounts payable under long-term debt agreements for each year through 2022 and thereafter are as follows:

AMOUNTS PAYABLE UNDER LONG-TERM DEBT ARRANGEMENTS	(THOUSANDS)
For the year ending Dec. 31,
2018	$	—
2019	$	—
2020	$	—
2021	$	300,000
2022	$	—
Thereafter	$	1,050,000

Note 4 — Cash Distributions and Equity Contributions

Some provisions in Cleco Power’s debt instruments restrict the amount of equity available for distribution to Cleco Holdings by Cleco Power by requiring Cleco Power’s total indebtedness to be less than or equal to 65% of total capitalization. In addition, the Merger Commitments provide for limitations on the amount of distributions that may be paid from Cleco Power to Cleco Holdings, depending on Cleco Power’s common equity ratio and its corporate credit ratings.

The following table summarizes the cash distributions Cleco Holdings received from affiliates during 2017, 2016, and 2015:

	SUCCESSOR				PREDECESSOR
(THOUSANDS)	FOR THE YEAR ENDED DEC. 31, 2017		APR. 13, 2016 - DEC. 31, 2016		JAN. 1, 2016 - APR. 12, 2016		FOR THE YEAR ENDED DEC. 31, 2015
Cleco Power	$	135,000	$	85,000	$	25,000	$	135,000
Perryville	6,850		150		200		500
Attala	7,160		100		125		350
Total	$	149,010	$	85,250	$	25,325	$	135,850

During the successor year ended December 31, 2017, Cleco Holdings made no contributions to affiliates. During the successor period April 13, 2016, through December 31, 2016, Cleco Holdings made a contribution of $50.0 million to Cleco Power. During the predecessor period January 1, 2016, through April 12, 2016, and the predecessor year ended December 31, 2015, Cleco Holdings made no contributions to affiliates.

During the successor year ended December 31, 2017, Cleco Holdings received no equity contributions from Cleco Group and made $84.1 million of distribution payments to Cleco Group. During the successor period April 13, 2016, through December 31, 2016, Cleco Holdings received $100.7 million of equity contributions from Cleco Group and made $88.8 million of distribution payments to Cleco Group.

Note 5 — Income Taxes

Cleco Holdings’ (Parent Company Only) Condensed Statements of Income reflect income tax expense (benefit) for the following line items:

	SUCCESSOR						PREDECESSOR
(THOUSANDS)	FOR THE YEAR ENDED DEC. 31, 2017			APR. 13, 2016 - DEC. 31, 2016			JAN. 1, 2016 - APR. 12, 2016			FOR THE YEAR ENDED DEC. 31, 2015
Federal and state income tax benefit	$	(23,094	)	$	(22,937	)	$	(9,690	)	$	(1,861	)
Equity income from subsidiaries - Federal and state income tax expense	$	30,173		$	115		$	13,158		$	79,565

For information regarding the TCJA, see Part II, Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 10 — Income Taxes — 2017 Tax Reform.”

Note 6 — Commitments and Contingencies

For information regarding commitments and contingencies related to Cleco Holdings, see Part II, Item 8, “Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 15 — Litigation, Other Commitments and Contingencies, and Disclosures about Guarantees.”