Consolidated Diluted Earnings Per Share Allocated to Subsidiaries
Diluted EPS
-----------------
Three Months Ended
June 30,
-----------------
Subsidiary 2007 2006
---------- -------- --------
Cleco Power LLC $ 0.31 $ 0.33
Cleco Midstream Resources LLC (excludes gain on the
sale of CES claim) (0.15) 0.07
Corporate and Other(1) 0.09 0.04
-------- --------
Earnings excluding gain on the sale of CES claim $ 0.25 $ 0.44
Earnings from sale of CES claim, net 0.80 ---
-------- --------
Earnings applicable to common stock $ 1.05 $ 0.44
======== ========
-----------------------------------------
(1) Includes dividends on preferred stock
Consolidated Diluted Earnings Per Share Allocated to Subsidiaries
Diluted EPS
-----------------
Six Months Ended
June 30,
-----------------
Subsidiary 2007 2006
---------- -------- --------
Cleco Power LLC $ 0.52 $ 0.61
Cleco Midstream Resources LLC (excludes gain on the
sale of CES claim) (0.23) 0.01
Corporate and Other(1) 0.10 0.06
-------- --------
Earnings excluding gain on the sale of CES claim $ 0.39 $ 0.68
Earnings from sale of CES claim, net 0.81 ---
-------- --------
Earnings applicable to common stock $ 1.20 $ 0.68
======== ========
-----------------------------------------
(1) Includes dividends on preferred stock
Results for Second-Quarter 2007:
Major Reconciling Items for Second-Quarter EPS 2007 vs. 2006:
$0.44 2006 Second-Quarter Diluted EPS
(0.01) Lower Cleco Power nonfuel revenue
0.03 Lower Cleco Power nonfuel expenses
(0.04) Effect of increased number of outstanding shares
(0.22) Lower Cleco Midstream contribution (excluding gain
on sale of CES claim)
0.05 Higher corporate results
-----
$0.25
0.80 Net gain on sale of CES claim
-----
$1.05 2007 Second-Quarter Diluted EPS
=====
Cleco Power LLC
Cleco Power's 2007 second-quarter earnings were $0.02 per share lower than
in the second quarter of 2006.
In the quarter-to-quarter comparison with 2006, nonfuel revenue decreased
$0.01 per share.
-- The collection of a storm cost recovery surcharge increased second-
quarter results $0.02 per share. Collection of the surcharge began in May
2006 after the Louisiana Public Service Commission (LPSC) approved an
interim storm cost recovery plan.
-- Transmission services revenue decreased earnings $0.01 per share.
-- Lower kilowatt-hour sales resulted in a $0.03 per share decrease in
results. Kilowatt-hour sales for the second quarter 2007 were down 2
percent from the same period a year ago largely due to milder weather.
Cooling degree-days for the quarter were 3 percent above normal but 14
percent below second-quarter 2006 levels.
For the three months
(Million kWh) ended June 30
--------------------
2007 2006 Change
------ ------ ------
Electric Sales
Residential 777 820 (5)%
Commercial* 594 471 26 %
Industrial 758 725 5 %
Other retail* 34 147 (77)%
------ ------
Total retail 2,163 2,163 --
Sales for resale 117 114 3 %
Unbilled 182 224 (19)%
------ ------
Total retail and wholesale customer sales 2,462 2,501 (2)%
* Effective third quarter 2006, certain other retail customers were
reclassified to commercial customers.
-- Results of energy hedging, net, were up $0.01 per share. The increase
was the result of lower 2007 second quarter mark-to-market losses on energy
hedging positions tied to a fixed-price wholesale contract as compared to
the same period of 2006.
Nonfuel expenses were down $0.03 per share in quarter-to-quarter
comparisons with the same period of 2006.
-- Production maintenance expenses were $0.05 per share higher due to a
major planned outage at the Dolet Hills Power Station, partially offset by
$0.02 per share of lower benefits, salaries, and miscellaneous expenses.
-- Storm amortization costs of $0.05 per share related to the May 2006
LPSC interim storm cost recovery plan were recorded in the second quarter
of 2007 in depreciation and amortization. These costs compare to $0.04 per
share of storm amortization costs recorded as a maintenance expense in
second quarter of 2006 for a net increase of $0.01 per share in the quarter-
to-quarter comparison.
-- Interest expense, net, increased $0.04 per share primarily due to
higher accrual of interest on tax positions, interest expense on tax-exempt
solid-waste disposal bonds issued in November 2006, and lower interest
income from temporary investments, partially offset by lower interest
expense due to the retirement of medium-term notes at maturity.
-- AFUDC (allowance for funds used during construction), primarily
associated with the Rodemacher project, contributed an additional $0.09 per
share to results.
-- Income taxes were down $0.02 per share quarter over quarter. Of that,
about $0.06 per share was primarily related to the flow-through of
nontaxable AFUDC equity income, partially offset by the absence of a 2006
$0.03 per share favorable tax settlement and $0.01 per share of income tax-
true ups. Prior to January 1, 2007 interest accrued for uncertain tax
positions was recorded as a tax expense. Beginning January 1, 2007, Cleco
adopted FIN 48 and began to record interest accrued for uncertain tax
positions as interest expense instead of tax expense.
Other:
-- The issuance of 6.9 million shares of common stock in August 2006
resulted in a $0.04 per share dilution.
Cleco Midstream Resources LLC
Cleco Midstream's earnings were up $0.58 per share in the second quarter of
2007 compared to the second quarter of 2006. Excluding the $0.80 per share
gain on the sale of the CES claim, Cleco Midstream's earnings were down
$0.22 per share in the second quarter of 2007 compared to the second
quarter of 2006. Of the $0.22 per share decrease, $0.13 per share was due
to the absence of the partial drawdown of the Calpine letter of credit in
2006, and $0.01 per share was due to higher administrative costs.
Additionally, $0.05 per share was due to lower results at Acadia and $0.03
per share was due to lower results at Evangeline. Both were primarily
related to spring maintenance outages.
Other Corporate earnings increased $0.05 per share in the quarter-to-quarter comparison primarily due to higher interest income, lower preferred dividends after the conversion of shares of ESOP preferred stock into common stock, and lower taxes, partially offset by the absence of 2006 insurance proceeds from a failed transformer.
Results for Six Months ended June 30, 2007: Major Reconciling Items for Six Months ended June 30, EPS 2007 vs. 2006:
$0.68 Six Months ended June 30, 2006, Diluted EPS
0.10 Higher Cleco Power nonfuel revenue
(0.12) Higher Cleco Power nonfuel expenses
(0.07) Effect of increased number of outstanding shares
(0.24) Lower Cleco Midstream contribution (excluding gain
on sale of CES claim)
0.04 Higher corporate results
-----
$0.39
0.81 Net gain on sale of CES claim
-----
$1.20 Six Months ended June 30, 2007, Diluted EPS
=====
Cleco Power LLC
For the six months ended June 30, 2007, Cleco Power's earnings were $0.09
per share lower than in the same period of 2006.
Overall, nonfuel revenue increased $0.10 per share versus the first six
months of 2006.
-- The collection of a storm cost recovery surcharge contributed an
additional $0.10 per share to results compared to the same period of 2006.
Collection of the surcharge began in May 2006 after the LPSC approved an
interim storm cost recovery plan.
-- The absence of the 2006 reversal of previously accrued customer
refunds resulted in a $0.06 per share decrease in results.
-- Transmission services revenue decreased earnings $0.01 per share.
-- Kilowatt-hour sales increased $0.02 per share. Year-to-date 2007
kilowatt-hour sales were up 2 percent from the same period a year ago
largely due to colder weather in the first quarter of 2007. Heating degree-
days for the period surpassed 2006 levels by 37 percent while cooling
degree-days were 13 percent below 2006 levels.
For the six months
(Million kWh) ended June 30
--------------------
2007 2006 Change
------ ------ ------
Electric Sales
Residential 1,619 1,570 3 %
Commercial* 1,137 878 30 %
Industrial 1,468 1,417 4 %
Other retail* 67 279 (76)%
------ ------
Total retail 4,291 4,144 4 %
Sales for resale 219 232 (6)%
Unbilled 112 141 (21)%
------ ------
Total retail and wholesale customer sales 4,622 4,517 2 %
* Effective third quarter 2006, certain other retail customers were
reclassified to commercial customers.
-- Results of energy hedging, net, were up $0.05 per share. The increase
was the result of 2007 mark-to-market gains on energy hedging positions
tied to a fixed-price wholesale contract as compared to mark-to-market
losses in the same period of 2006.
Nonfuel expenses were up $0.12 per share compared to the same period of
2006.
-- Production maintenance expenses were $0.06 per share higher due a
major planned outage at the Dolet Hills Power Station, while transmission
and distribution expenses and professional fees increased $0.02 per share.
Higher benefits, salaries, and miscellaneous expenses increased $0.03 per
share.
-- Storm amortization costs of $0.10 per share from the May 2006 LPSC
interim storm cost recovery plan were recorded in first six months of 2007
in depreciation and amortization. These costs compare to $0.04 per share
of storm amortization costs recorded as a maintenance expense in the first
six months of 2006 for a net increase of $0.06 per share in the period-to-
period expense comparison. Additionally, the absence of the 2006 transfer
of storm costs to a regulatory asset resulted in an $0.08 per share
increase in expenses.
-- Depreciation from routine property, plant, and equipment was up $0.01
per share.
-- Interest expense, net, increased $0.09 per share primarily due to
higher accrual of interest on tax positions, interest expense on tax-exempt
solid waste disposal bonds issued in November 2006, and lower interest
income from temporary investments, partially offset by lower interest
expense due to the retirement of medium-term notes. Prior to January 1,
2007 interest accrued for uncertain tax positions was recorded as tax
expense. Beginning January 1, 2007, Cleco adopted FIN 48 and began to
record interest accrued for uncertain tax positions as interest expense
instead of tax expense.
-- AFUDC, primarily associated with the Rodemacher project, contributed
an additional $0.17 per share to results.
-- Income taxes were down $0.06 per share year over year. Of that, about
$0.08 per share was primarily related to the flow-through of nontaxable
AFUDC equity income, partially offset by the absence of a 2006 $0.02 per
share favorable tax settlement. Prior to January 1, 2007 interest accrued
for uncertain tax positions was recorded as tax expense. Beginning January
1, 2007, Cleco adopted FIN 48 and began to record interest accrued for
uncertain tax positions as interest expense instead of tax expense.
Other:
-- The issuance of 6.9 million shares of common stock in August 2006
resulted in a $0.07 per share dilution.
Cleco Midstream Resources LLC
Cleco Midstream's earnings were up $0.57 per share in the first six months
of 2007 compared to the same period of 2006. Excluding the $0.81 per share
gain on the sale of the CES claim, Cleco Midstream's earnings were down
$0.24 per share compared to the same period of 2006. Of the $0.24 per
share decrease, $0.15 per share was due to the absence of the drawdown of
the Calpine letter of credit in 2006, and $0.01 per share was due to higher
administrative costs. In addition, $0.05 per share was due to lower
results at Acadia and $0.03 per share was due to lower results at
Evangeline. Both were primarily related to spring outages.
Other
Corporate earnings increased $0.04 per share in the year-to-year comparison
primarily due to higher interest income, conversion of shares of ESOP
preferred stock to common stock, and lower taxes, partially offset by the
absence of 2006 insurance proceeds from a failed transformer.
Strategic Update
Cleco Midstream "The results of the Calpine bankruptcy process further validate Cleco Midstream's risk management strategies. Both the Perryville and Acadia projects faced weakened markets and bankrupt counterparties, but in both cases, the terms we negotiated into the tolling and partnership agreements enabled Cleco to extract its investment from the bankruptcy processes and realize the value we'd built," Madison said. "On the Evangeline project, we are working with Williams and Bear Stearns to complete the transfer of the project's tolling agreement to Bear Stearns. We expect the transfer to be complete later this year. The terms of the agreement will be unchanged, but we anticipate an improvement in Evangeline's senior secured debt rating due to the more favorable credit rating of Bear Stearns," Madison said. Cleco Power "We are into our 16th month of construction on our Rodemacher 3 project, and progress continues to go well, with capital expenditures, including AFUDC totaling $405 million since inception. Just as importantly, we recently celebrated one million work hours without a lost time accident," Madison said. Although intended primarily for petroleum coke, Rodemacher 3 utilizes CFB or circulating fluidized boiler technology which has the capability of using many types of fuels. "This additional flexibility is becoming more and more important given the current regulatory environment," Madison said. "While Congress has not yet imposed a national renewable energy mandate, we at Cleco are preparing for that eventuality. Most recently we have entered into a Cooperative Research and Development Agreement with the U.S. Army Corps of Engineers Engineer Research and Development Center to study the viability of geothermal power production in Louisiana. Other than biomass, geothermal power is the best renewable opportunity that we see in Louisiana. We see future renewable energy legislation as an opportunity to grow our business as well as help the environment." "Also looking to the future, during the second quarter we issued the informational draft of our long-term RFP for up to approximately 600 megawatts of intermediate and peaking capacity. We currently target selecting winning bids by third quarter of 2008," Madison continued. "Preparation for the securitization of storm costs is still continuing as planned. We expect to have the LPSC's financing order by the third quarter, with securitization completed by the end of the year. That securitization will include storm costs from 2005 as well as a $50 million dollar reserve for future storm damage." Guidance "We are maintaining guidance at $1.20 to $1.30 per share for the year, excluding the results of the Calpine bankruptcy process," Madison concluded. Earnings estimates assume normal weather, 2007 capital expenditures of about $440 million (including AFUDC) on the Rodemacher project, the continuation of our current rate plan at Cleco Power, continued performance by Evangeline's tolling counterparty, and certain assumptions about Acadia's plant operations and market conditions. Cleco management will discuss the company's second-quarter 2007 results during a conference call scheduled for 11 a.m. EDT (10 a.m. CDT) Thursday, August 2, 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 Second-Quarter 2007 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
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Thousands, except share and per share amounts)
(UNAUDITED)
FOR THE THREE MONTHS
ENDED JUNE 30,
------------------------
2007 2006
----------- -----------
Operating revenue
Electric operations $ 251,909 $ 241,286
Other operations 7,971 7,929
Affiliate revenue 1,621 1,737
----------- -----------
Operating revenue 261,501 250,952
----------- -----------
Operating expenses
Fuel used for electric generation 51,312 57,990
Power purchased for utility customers 115,592 97,696
Other operations 24,722 25,765
Maintenance 14,939 14,221
Depreciation 19,990 15,714
Taxes other than income taxes 9,867 10,150
----------- -----------
Total operating expenses 236,422 221,536
----------- -----------
Operating income 25,079 29,416
Interest income 2,589 1,943
Allowance for other funds used during
construction 7,032 1,372
Equity income from investees 71,282 15,233
Other income 582 148
Other expense (416) (414)
Interest charges
Interest charges, including amortization of
debt expenses, premium and discount, net of
capitalized interest 14,377 11,403
Allowance for borrowed funds used during
construction (2,388) (493)
----------- -----------
Total interest charges 11,989 10,910
----------- -----------
Income from continuing operations before income
taxes 94,159 36,788
Federal and state income tax expense 30,968 13,459
----------- -----------
Income from continuing operations 63,191 23,329
Discontinued operations
Loss from discontinued operations, net of tax - (103)
----------- -----------
Net income 63,191 23,226
Preferred dividends requirements, net of tax 12 427
----------- -----------
Net income applicable to common stock $ 63,179 $ 22,799
=========== ===========
Average shares of common stock outstanding
Basic 59,489,725 50,053,685
Diluted 59,798,877 52,297,838
Basic earnings per share
From continuing operations $ 1.06 $ 0.45
Net income applicable to common stock $ 1.06 $ 0.45
Diluted earnings per share
From continuing operations $ 1.05 $ 0.44
Net income applicable to common stock $ 1.05 $ 0.44
Cash dividends paid per share of common stock $ 0.225 $ 0.225
----------- -----------
CLECO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Thousands, except share and per share amounts)
(UNAUDITED)
FOR THE SIX MONTHS
ENDED JUNE 30,
------------------------
2007 2006
----------- -----------
Operating revenue
Electric operations $ 464,929 $ 452,275
Other operations 17,240 14,525
Affiliate revenue 3,082 3,188
----------- -----------
Gross operating revenue 485,251 469,988
Electric customer credits - 4,382
----------- -----------
Operating revenue, net 485,251 474,370
----------- -----------
Operating expenses
Fuel used for electric generation 106,808 106,353
Power purchased for utility customers 199,739 197,527
Other operations 51,038 43,854
Maintenance 25,181 20,153
Depreciation 40,088 31,358
Taxes other than income taxes 19,667 19,734
----------- -----------
Total operating expenses 442,521 418,979
----------- -----------
Operating income 42,730 55,391
Interest income 5,157 4,435
Allowance for other funds used during
construction 12,163 2,041
Equity income from investees 69,883 15,606
Other income 872 373
Other expense (1,882) (859)
Interest charges
Interest charges, including amortization of
debt expenses, premium and discount, net of
capitalized interest 28,034 22,579
Allowance for borrowed funds used during
construction (4,059) (719)
----------- -----------
Total interest charges 23,975 21,860
----------- -----------
Income from continuing operations before income
taxes 104,948 55,127
Federal and state income tax expense 33,111 19,573
----------- -----------
Income from continuing operations 71,837 35,554
Discontinued operations
Loss from discontinued operations, net of tax - (190)
----------- -----------
Net income 71,837 35,364
Preferred dividends requirements, net of tax 435 886
----------- -----------
Net income applicable to common stock $ 71,402 $ 34,478
=========== ===========
Average shares of common stock outstanding
Basic 58,585,451 49,956,429
Diluted 59,586,444 52,095,625
Basic earnings per share
From continuing operations $ 1.21 $ 0.68
Net income applicable to common stock $ 1.21 $ 0.68
Diluted earnings per share
From continuing operations $ 1.20 $ 0.68
Net income applicable to common stock $ 1.20 $ 0.68
Cash dividends paid per share of common stock $ 0.450 $ 0.450
----------- -----------
CLECO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Thousands)
(UNAUDITED)
At June 30, At Dec. 31,
2007 2006
----------- -----------
Assets
Current assets
Cash and cash equivalents $ 178,807 $ 192,471
Account receivable, net 105,530 79,048
Other current assets 223,466 265,789
----------- -----------
Total current assets 507,803 537,308
Property, plant and equipment, net 1,493,539 1,304,887
Equity investment in investees 311,127 307,136
Prepayments, deferred charges and other 325,018 311,773
----------- -----------
Total assets $ 2,637,487 $ 2,461,104
=========== ===========
Liabilities
Current liabilities
Long-term debt due within one year $ 125,000 $ 50,000
Accounts payable 157,539 151,653
Other current liabilities 179,181 183,047
----------- -----------
Total current liabilities 461,720 384,700
Deferred credits and other liabilities 579,204 560,842
Long-term debt, net 644,257 619,341
----------- -----------
Total liabilities 1,685,181 1,564,883
----------- -----------
Shareholders' equity
Preferred stock 1,029 20,092
Common shareholders’ equity 960,626 885,439
Accumulated other comprehensive loss (9,349) (9,310)
----------- -----------
Total shareholders' equity 952,306 896,221
----------- -----------
Total liabilities and shareholders’ equity $ 2,637,487 $ 2,461,104
=========== ===========
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, payment of $85 million from Cajun Gas Energy, L.L.C., 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,
construction and operational startup of Rodemacher Unit 3, extension of
Cleco Power's current rate plan, and the other risks and uncertainties more
fully described in the company's latest Annual Report on Form 10-K and
Quarterly Report on Form 10-Q. Actual results may differ materially from
those indicated in such forward-looking statements.
Contact Information: Investor Contacts: Cleco Corporation: 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) 484-7663