Consolidated Diluted Earnings Per Share Allocated to Subsidiaries
Diluted EPS
-------------------------------
Three Months Ended Dec. 31
-------------------------------
Subsidiary 2006 2005
--------------- ---------------
Cleco Power LLC $ 0.22 $ 0.14
Cleco Midstream Resources
LLC (excluding
Perryville for 2005) (0.14) (0.11)
Corporate and Other(1) 0.11 --
------ ------
Earnings excluding
Perryville $ 0.19 $ 0.03
Earnings from 2005
Perryville reconsolidation -- --
------ ------
Earnings applicable to
common stock $ 0.19 $ 0.03
====== ======
Diluted EPS
-------------------------------
Twelve Months Ended Dec. 31
-------------------------------
Subsidiary 2006 2005
--------------- ---------------
Cleco Power LLC $ 1.21 $ 1.15
Cleco Midstream Resources
LLC (excluding
Perryville for 2005) (0.04) 0.28
Corporate and Other(1) 0.19 (0.01)
------ ------
Earnings excluding
Perryville $ 1.36 $ 1.42
Earnings from 2005
Perryville reconsolidation -- 2.11
------ ------
Earnings applicable to
common stock $ 1.36 $ 3.53
====== ======
(1)Includes dividends on preferred stock
Results for Fourth Quarter 2006:
Major Reconciling Items for Fourth-Quarter EPS 2006 vs. 2005:
$0.03 2005 Fourth-Quarter Diluted EPS
0.05 Higher Cleco Power nonfuel revenue
(0.01) Energy hedging, net
0.07 Lower Cleco Power nonfuel expenses
(0.03) Effect of increased number of outstanding shares
(0.03) Lower Cleco Midstream contribution
0.11 Higher corporate results
-----
$0.19 2006 Fourth-Quarter Diluted EPS
Cleco Power LLC
Cleco Power's 2006 fourth-quarter earnings were $0.08 per share higher than
in the fourth quarter of 2005.
Overall, nonfuel revenue increased $0.05 per share in the
quarter-to-quarter comparison with 2005.
-- The collection of a storm cost recovery surcharge contributed $0.06
per share to fourth quarter 2006 results. The collection began in May 2006
after the Louisiana Public Service Commission approved an interim storm
cost recovery plan.
-- Lower kilowatt-hour sales resulted in a $0.01 per share decrease.
Fourth quarter 2006 kilowatt-hour sales were down 1.8 percent from the same
period a year ago largely due to milder weather affecting residential,
other retail, and wholesale customers but was partially offset by stronger
kilowatt-hour sales to commercial and industrial customers, as well as a
wholesale contract that began in January 2006. Cooling degree-days were
approximately 4 percent above normal, but fell 22 percent below 2005 fourth
quarter levels. Heating degree-days for the quarter were about 5 percent
below normal and 9 percent below 2005 fourth quarter levels.
For the three months
(Million kWh) ended Dec. 31
-------------------------
2006 2005 Change
------- ------- ------
Electric Sales
Residential 792 820 (3.4)%
Commercial 580 455 27.5 %
Industrial 762 715 6.6 %
Other retail 32 156 (79.5)%
------- ------- ------
Total retail 2,166 2,146 0.9 %
Sales for resale 89 142 (37.3)%
Unbilled (46) (38) (21.1)%
------- ------- ------
Total retail and wholesale customer sales 2,209 2,250 (1.8)%
Results of energy hedging, net were down $0.01 per share compared to fourth
quarter 2005.
-- The $0.01 per share decrease was the result of 2006 mark-to-market
losses on energy hedging positions tied to a fixed-price wholesale contract
as compared to mark-to-market gains in the same period of 2005.
Nonfuel expenses were down $0.07 per share compared to the same quarter of
2005.
-- A $0.05 per share decrease was due to the reclassification of 2005
storm labor costs from the storm reserve to expense in 2005, and a $0.01
decrease came from the transfer of storm costs from expense to a regulatory
asset in 2006. Partially offsetting these items was a $0.02 per share
increase in salaries and benefits, and a $0.01 increase in production
expenses.
-- Storm amortization costs increased expenses by $0.04 per share, and
depreciation of routine property, plant and equipment additions increased
expenses by $0.01 per share.
-- Interest expense, net increased $0.02 per share primarily due to a
full quarter of interest expense on Senior Notes issued in November 2005.
-- Capacity payments were $0.01 per share lower primarily due to the
March termination of a 2006 power purchase agreement with Calpine Energy
Services, offset by a $0.01 per share increase in non-recoverable fuel and
purchased power for a fixed-price wholesale contract that began in January
2006.
-- AFUDC (allowance for funds used during construction) associated with
the Rodemacher project contributed $0.05 per share.
-- Income tax benefits mainly due to tax reserve adjustments related to
favorable settlements of federal and state income tax audits and appeals
and the permanent flow-thru of AFUDC equity contributed $0.05 per share.
Lower ad valorem taxes contributed $0.01 per share.
Other:
-- The issuance of 6.9 million shares of common stock in August 2006
resulted in a $0.03 per share dilution.
Cleco Midstream Resources LLC
Cleco Midstream's earnings were down $0.03 per share in the fourth quarter
of 2006 compared to the fourth quarter of 2005 primarily due to a $0.02
lower contribution from Acadia and a $0.01 per share lower contribution
from Evangeline.
Other
Corporate earnings increased $0.11 per share in the quarter-to-quarter
comparison. The increase was due to $0.07 per share in proceeds from
corporate-owned life insurance policies, $0.03 per share of higher interest
income and $0.02 per share of lower income taxes, partially offset by a
$0.01 per share increase in other expenses.
Results for 12 Months ended Dec. 31, 2006:
Major Reconciling Items for 12 Months ended Dec. 31 EPS 2006 vs. 2005:
$3.53 12 Months ended Dec. 31, 2005, Diluted EPS
(2.11) Less: Impact of Perryville transactions
-----
$1.42
0.34 Higher Cleco Power nonfuel revenue
(0.12) Energy hedging, net
(0.06) Higher Cleco Power nonfuel expenses
(0.03) Gain on 2005 sale of Cleco Power distribution assets
(0.07) Effect of increased number of outstanding shares
(0.32) Lower Cleco Midstream contribution
0.20 Higher corporate results
-----
$1.36 2006 Diluted EPS
Cleco Power For 2006, Cleco Power's earnings were $1.21 per share, up $0.06 per share from 2005 results. Overall, nonfuel revenue increased $0.34 per share compared to 2005 results.
-- Kilowatt-hour sales were $0.05 per share higher, primarily due to
higher retail kilowatt-hour sales and sales to a fixed-price wholesale
contract which began in January 2006, partially offset by lower municipal
sales. Cooling degree-days were down 5 percent in 2006 compared to 2005
but were 10 percent above normal. Heating degree-days were 6 percent down
compared to 2005 levels and 22 percent below normal. Retail kilowatt-hour
sales were higher in 2006, despite milder weather due to the outages in
2005 from hurricanes Katrina and Rita, as well as stronger sales to
commercial and industrial customers.
For the 12 months ended
(Million kWh) Dec. 31
--------------------------
2006 2005 Change
-------- -------- ------
Electric Sales
Residential 3,552 3,516 1.0 %
Commercial 2,109 1,838 14.7 %
Industrial 2,963 2,861 3.6 %
Other retail 412 610 (32.5)%
-------- -------- ------
Total retail 9,036 8,825 2.4 %
Sales for resale 480 552 (13.0)%
Unbilled 7 18 (61.1)%
-------- -------- ------
Total retail and wholesale customer sales 9,523 9,395 1.4 %
-- The collection of a storm cost recovery surcharge, which began in May
2006, increased revenue $0.19 per share.
-- Reversal of previous accruals for rate refund cycles 2002 through 2006
resulted in a $0.07 per share increase.
-- Higher customer service fees and other miscellaneous revenue increased
$0.03 per share compared to 2005.
Results of energy hedging, net were lower compared to 2005.
-- Mark-to-market losses on energy hedging positions tied to a fixed-
price wholesale contract compared to mark-to-market gains in 2005 resulted
in a $0.12 per share decline in earnings.
Nonfuel expenses were up $0.06 per share compared to 2005.
-- Lower capacity payments primarily due to the March termination of the
2006 power purchase agreement with Calpine contributed $0.03 per share,
offset by an $0.08 per share increase in non-recoverable fuel and purchased
power for a fixed-price wholesale contract that began in January 2006.
-- An $0.08 per share decrease was due to the transfer of storm costs
from expense to a regulatory asset in 2006, and a $0.05 per share decrease
was due to the reclassification of 2005 storm labor costs from the storm
reserve to expense in 2005. Partially offsetting these decreases were a
$0.04 per share increase in salaries and professional fees, and $0.02 per
share of higher miscellaneous expenses.
-- Amortization of deferred storm costs increased expense $0.15 per
share, and depreciation expense from routine property, plant and equipment
additions increased $0.03 per share.
-- Interest expense, net was up $0.06 per share primarily due to higher
debt levels outstanding on Senior Notes issued in November of 2005.
-- Higher AFUDC, primarily related to construction of Rodemacher Unit 3,
provided an increase in earnings of $0.09 per share.
-- Income tax benefits mainly due to tax reserve adjustments related to
favorable settlements of federal and state income tax audits and appeals
and the permanent flow-thru of AFUDC equity contributed $0.06 per share.
Lower ad valorem taxes contributed $0.01 per share compared to the same
period of 2005.
Other:
Cleco Power's earnings decreased $0.03 per share due to the absence of the
2005 sale of distribution assets.
Finally, Cleco Power's 2006 earnings were reduced $0.07 per share resulting
from an increase in the number of outstanding shares of common stock.
Cleco Midstream
Cleco Midstream recorded a loss of $0.04 per share for 2006. Excluding
2005 Perryville-related results of $2.11 per share, earnings were down
$0.32 per share compared to 2005.
Evangeline's results were down $0.13 per share from 2005. The primary
factors for the decrease were $0.05 per share due to higher turbine
maintenance costs associated with higher plant run times, $0.03 per share
related to prior year adjustments related to fixed asset accounting and
depreciation, $0.03 per share associated with tax true-ups, and $0.02 per
share of miscellaneous items.
Acadia recorded a loss of $0.12 per share for 2006 compared to earnings of
$0.10 recorded in 2005. The primary reasons for the loss were the
suspension of the Calpine tolling agreements and higher interest expense,
partially offset by revenue from merchant energy sales and $0.17 per share
from the drawdown on a $15 million letter of credit.
The Perryville and Attala transmission assets contributed an additional
$0.03 per share to 2006 results.
Other
Corporate and other posted a $0.20 per share higher contribution than in
2005. Contributing to this increase were $0.08 of higher interest income
from Acadia, $0.07 of lower interest expense primarily due to the repayment
of senior notes in 2005, $0.06 in proceeds from corporate-owned life
insurance policies, and a $0.01 decrease in income taxes, partially offset
by a $0.02 per share increase in other expenses.
2007 Outlook:
Strategic Update
"I am pleased to say that construction on our Rodemacher project remains on
schedule and on budget. Construction on our Rodemacher project will
accelerate this year with estimated 2007 capital expenditures on the
project totaling approximately $440 million, including approximately $25
million of AFUDC," Madison said.
"To address our anticipated short-term capacity needs for 2008, we recently
issued a one-year request for proposals (RFP) for up to 350 MW of
short-term baseload, intermediate, and peaking. Looking farther ahead, we
have started an internal assessment of our resource planning needs in
preparation for issuing a long-term RFP in mid-2007. Both Cleco Power
self-build proposals and market proposals will have an opportunity to bid
into the process. Our target is to select a short-list from the bids
received by mid-2008," Madison said.
Storm Cost Recovery
Madison continued, "We continue to move forward in finalizing the amount of
recoverable costs related to 2005 hurricanes Katrina and Rita. This month
we agreed on a settlement term sheet with the Louisiana Public Service
Commission (LPSC) staff whereby we will recover essentially all restoration
costs. We anticipate approval of the settlement by the LPSC during the
second quarter of 2007. We hope to securitize those costs, as well as $50
million dedicated to a restricted storm reserve for future storms, in late
2007."
Acadia Issues:
Madison stated, "We have actively pursued the resolution of issues
surrounding the Calpine bankruptcy and its effect on the Acadia project. We
are hopeful that we will be in a position very soon to announce how Cleco
will maintain the value we've built in the asset as well as capture the
value of the Calpine tolling agreements."
2007 Earnings Guidance:
"We are targeting consolidated 2007 earnings in the range of $1.20 to $1.30
per share," Madison said. "Our 2007 earnings estimate includes Cleco Power
results of $1.25 to $1.35 per share, a Midstream loss of $0.15 per share,
and corporate results of $0.10 per share.
"Cleco Power's earnings estimate assumes normal weather, 2007 capital
expenditures of about $440 million (including AFUDC) on the Rodemacher
project, and the continuation of our current rate plan. The 2007 target
includes approximately $0.50 per share of AFUDC equity income, an
approximate $0.40 per share increase from 2006. Offsetting that positive
effect are several items that will exert downward pressure on 2007
profitability: the absence of the 2006 benefits from settlement of the
2001-2003 rate stabilization plan filings, the absence of the 2006
reclassification of storm expense to a regulatory asset, increased expense
for Electric Reliability Organization compliance, increased transmission
expense due to the December 2006 expiration of a 1955 transmission
coordination agreement, expenses for a major planned outage at one of our
generation facilities, and dilution from the 2006 issuance of 6.9 million
shares of common stock.
"Midstream's earnings estimate assumes continued performance by
Evangeline's tolling counterparty and is based on assumptions about
Acadia's plant operations and market conditions. The 2007 target is lower
than 2006 results, since 2007 will not benefit from the $0.17 per share
drawdown on the Acadia letter of credit. The 2007 target does not include
any assumptions concerning restructuring of the Acadia partnership or
resolution of Acadia's claim in the Calpine bankruptcy. Any earnings
effects from resolution of these issues will be added to guidance once they
are known.
"Another factor to remember in comparing 2007 estimates to 2006 results was
the receipt of corporate-owned life insurance policies which contributed
$0.06 per share in 2006," Madison said.
"Earnings for 2007 through 2009 not only will be influenced by the
Rodemacher construction but will be affected by increasing costs of
providing service," Madison continued. "Despite rising costs, we have
committed to maintaining Cleco Power's base rates at current levels until
the new unit is complete. In 2008 we will begin a rate case not only to
determine how we will recover our investment in Rodemacher 3 but also to
re-set base rates based on current cost levels. So, although we will
strive for increased profitability over the next three years, our primary
focus is the ultimate optimization of customer costs as well as the
maximization of the company's earnings potential once the unit is
complete."
Cleco management will discuss the company's annual and fourth-quarter 2006
results during a conference call scheduled for 11 a.m. EST (10 a.m. CST)
Wednesday, February 28, 2007. The call will be broadcast live on the
Internet, and replays will be available for 12 months. Investors may
access the webcast through the company's Web site at www.cleco.com by
selecting "For Investors" and then "Cleco Corporation Fourth-Quarter 2006
Earnings Conference Call."
Cleco Corp. is a regional energy company headquartered in Pineville,
La. It operates a regulated electric utility company that serves 268,000
customers across Louisiana. Cleco also operates a wholesale energy
business with approximately 1,350 megawatts of generating capacity. For
more information about Cleco, visit www.cleco.com.
Financial tables follow:
CLECO CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Thousands, except share and per share amounts)
For the three months ended Dec. 31, 2006 2005
--------- ---------
Operating revenue
Electric operations $ 222,628 $ 259,887
Other operations 8,065 9,217
Affiliate revenue 1,199 1,391
--------- ---------
Gross operating revenue 231,892 270,495
Electric customer credits 310 (221)
--------- ---------
Operating revenue, net 232,202 270,274
Operating expenses
Fuel used for electric generation 78,470 80,776
Power purchased for utility customers 68,285 107,403
Other operations 22,600 22,977
Maintenance 11,078 13,670
Depreciation 19,865 15,271
Taxes other than income taxes 9,515 10,423
--------- ---------
Total operating expenses 209,813 250,520
--------- ---------
Operating income 22,389 19,754
Interest income 3,235 2,323
Allowance for other funds used during construction 3,548 245
Equity income from investees (6,351) (3,418)
Other income 6,483 1,121
Other expense (2,910) (1,285)
Interest charges
Interest charges, including amortization of debt
expenses, premium and discount, net
of capitalized interest 13,443 8,854
Allowance for borrowed funds used during
construction (1,311) (201)
--------- ---------
Total interest charges 12,132 8,653
--------- ---------
Income from continuing operations before income taxes 14,262 10,087
Federal and state income tax expense 3,126 7,839
--------- ---------
Income from continuing operations 11,136 2,248
Discontinued operations
Income (loss) from discontinued operations, net
of tax 75 (104)
--------- ---------
Total income (loss) from discontinued
operations 75 (104)
--------- ---------
Net income 11,211 2,144
Preferred dividends requirements, net 425 490
--------- ---------
Net income applicable to common stock $ 10,786 $ 1,654
========= =========
Average shares of common stock outstanding
Basic 57,202,384 49,615,708
Diluted 59,460,959 49,928,179
Basic earnings per share
From continuing operations $ 0.19 $ 0.03
Net income applicable to common stock $ 0.19 $ 0.03
Diluted earnings per share
From continuing operations $ 0.19 $ 0.03
Net income applicable to common stock $ 0.19 $ 0.03
Cash dividends paid per share of common stock $ 0.225 $ 0.225
CLECO CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Thousands, except share and per share amounts)
(UNAUDITED)
For the 12 months ended Dec. 31, 2006 2005
--------- ---------
Operating revenue
Electric operations $ 959,393 $ 874,557
Other operations 30,233 38,710
Affiliate revenue 6,356 7,879
--------- ---------
Gross operating revenue 995,982 921,146
Electric customer credits 4,693 (992)
--------- ---------
Operating revenue, net 1,000,675 920,154
Operating expenses
Fuel used for electric generation 265,450 197,915
Power purchased for utility customers 374,712 372,844
Other operations 90,661 91,951
Maintenance 40,082 46,517
Depreciation 74,975 60,330
Taxes other than income taxes 39,888 41,069
Gain on sales of assets (71) (2,206)
--------- ---------
Total operating expenses 885,697 808,420
--------- ---------
Operating income 114,978 111,734
Interest income 10,452 5,310
Allowance for other funds used during construction 7,779 2,349
Equity income from investees 24,452 218,441
Other income 7,412 4,567
Other expense (4,083) (2,937)
Interest charges
Interest charges, including amortization of debt
expenses, premium and discount, net of
capitalized interest 47,116 41,438
Allowance for borrowed funds used during
construction (2,845) (903)
--------- ---------
Total interest charges 44,271 40,535
--------- ---------
Income from continuing operations before income taxes 116,719 298,929
Federal and state income tax expense 42,049 115,951
--------- ---------
Income from continuing operations 74,670 182,978
Discontinued operations
Loss from discontinued operations, net of tax (79) (334)
--------- ---------
Total loss from discontinued operations (79) (334)
--------- ---------
Net income 74,591 182,644
Preferred dividends requirements, net 1,735 1,865
--------- ---------
Net income applicable to common stock $ 72,856 $ 180,779
========= =========
Average shares of common stock outstanding
Basic 52,751,021 49,486,790
Diluted 55,028,211 51,760,220
Basic earnings per share
From continuing operations $ 1.36 $ 3.54
Net income applicable to common stock $ 1.36 $ 3.54
Diluted earnings per share
From continuing operations $ 1.36 $ 3.53
Net income applicable to common stock $ 1.36 $ 3.53
Cash dividends paid per share of common stock $ 0.900 $ 0.900
CLECO CORPORATION
CONSOLIDATED BALANCE SHEETS
(Thousands)
At At
Dec.31, Dec. 31,
2006 2005
----------- -----------
Assets
Current Assets
Cash and cash equivalents $ 192,471 $ 219,153
Accounts receivable, net 79,048 89,750
Other current assets 265,789 125,565
----------- -----------
Total Current Assets 537,308 434,468
Property, plant and equipment, net 1,304,887 1,188,703
Equity investment in investees 307,136 317,762
Prepayments, deferred charges and other 311,773 208,555
----------- -----------
Total Assets $ 2,461,104 $ 2,149,488
----------- -----------
Liabilities
Current Liabilities
Long-term debt due within one year $ 50,000 $ 40,000
Accounts payable 151,653 147,899
Other current liabilities 186,858 106,205
----------- -----------
Total Current Liabilities 388,511 294,104
Deferred credits and other liabilities 557,031 539,478
Long-term debt, net 619,341 609,643
----------- -----------
Total Liabilities 1,564,883 1,443,225
----------- -----------
Shareholders’ Equity
Preferred stock 20,092 20,034
Common shareholders’ equity 885,439 690,359
Other comprehensive income (9,310) (4,130)
----------- -----------
Total Shareholders’ Equity 896,221 706,263
----------- -----------
Total Liabilities and Shareholders’ Equity $ 2,461,104 $ 2,149,488
----------- -----------
Please note: In addition to historical financial information, this news
release contains forward-looking statements about future results and
circumstances, including, without limitation, regarding the Rodemacher Unit
3 project and earnings guidance. There are many risks and uncertainties
with respect to such forward-looking statements, including the weather and
other natural phenomena, state and federal legislative and regulatory
initiatives, the timing and extent of changes in commodity prices and
interest rates, the operating performance of Cleco Power's and Cleco
Midstream's facilities, the financial condition of the company's tolling
agreement counterparties, the performance of the tolling agreements by such
counterparties, the resolution of claims arising from the Calpine
bankruptcy, construction and operational startup of the new unit at
Rodemacher Power Station, and other risks and uncertainties more fully
described in the company's latest Annual Report on Form 10-K. Actual
results may differ materially from those indicated in such forward-looking
statements.
Contact Information: Contacts: Investor Contacts: Cleco Corporation Keith Crump (318) 484-7719 Ryan Gunter (318) 484-7724 Rodney J. Hamilton (318) 484-7593 Analyst Inquiries: Dresner Companies: Kristine Walczak (312) 780-7205 Media Contact: Cleco Corporation: Michael Burns (318) 484-7673