Quarterly Report (10-q)

Date : 08/13/2019 @ 8:07PM
Source : Edgar (US Regulatory)
Stock : Cleco Corp. (CNL)
Quote : 55.36  0.0 (0.00%) @ 12:00AM
Cleco share price Chart

Quarterly Report (10-q)

 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q

x     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2019
Or
¨     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
Commission file number 1-15759
CLECO CORPORATE HOLDINGS LLC
(Exact name of registrant as specified in its charter)
Louisiana
(State or other jurisdiction of incorporation or organization)
72-1445282
(I.R.S. Employer Identification No.)
 
 
2030 Donahue Ferry Road, Pineville, Louisiana
(Address of principal executive offices)
71360-5226
(Zip Code)
 
 
Registrant’s telephone number, including area code: (318) 484-7400
 
Commission file number 1-05663
CLECO POWER LLC
(Exact name of registrant as specified in its charter)
Louisiana
(State or other jurisdiction of incorporation or organization)
72-0244480
(I.R.S. Employer Identification No.)
 
 
2030 Donahue Ferry Road, Pineville, Louisiana
(Address of principal executive offices)
71360-5226
(Zip Code)
 
 
Registrant’s telephone number, including area code: (318) 484-7400
 
Securities registered pursuant to Section 12(b) of the Act:
Cleco Corporate Holdings LLC: None
Cleco Power LLC: None
 
 
Indicate by check mark whether the Registrants: (1) have 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 Registrants were required to file such reports) and (2) have been subject to such filing requirements for the past 90 days. Yes ¨ No x
 
Indicate by check mark whether the Registrants have submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrants were required to submit such files). Yes x  No ¨
 
Indicate by check mark whether Cleco Corporate Holdings LLC is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.  (Check one): Large accelerated filer ¨      Accelerated filer ¨      Non-accelerated filer x      Smaller reporting company ¨      Emerging growth company ¨
If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
 
Indicate by check mark whether Cleco Power LLC is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.  (Check one): Large accelerated filer ¨      Accelerated filer ¨      Non-accelerated filer x      Smaller reporting company ¨      Emerging growth company ¨
If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
 
Indicate by check mark whether the Registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act)  Yes ¨     No x

Cleco Corporate Holdings LLC has no common stock outstanding. All of the outstanding equity of Cleco Corporate Holdings LLC is held by Cleco Group LLC, a wholly owned subsidiary of Cleco Partners L.P.

Cleco Power LLC, a wholly owned subsidiary of Cleco Corporate Holdings LLC, meets the conditions set forth in General Instructions H(1)(a) and (b) of Form 10-Q and is therefore filing this Form 10-Q with the reduced disclosure format.
 



CLECO
 
 
CLECO POWER
 
2019 2ND QUARTER FORM 10-Q

This Combined Quarterly Report on Form 10-Q (this “Quarterly Report on Form 10-Q”) is separately filed by Cleco Corporate Holdings LLC and Cleco Power LLC. Information in this filing relating to Cleco Power LLC is filed by Cleco Corporate Holdings LLC and separately by Cleco Power LLC on its own behalf. Cleco Power LLC makes no representation as to information relating to Cleco Corporate Holdings LLC (except as it may relate to Cleco Power LLC) or any other affiliate or subsidiary of Cleco Corporate Holdings LLC.
This Quarterly Report on Form 10-Q should be read in its entirety as it pertains to each respective Registrant. The Notes to the Unaudited Condensed Consolidated Financial Statements for the Registrants and certain other sections of this Quarterly Report on Form 10-Q are combined.


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CLECO
 
 
CLECO POWER
 
2019 2ND QUARTER FORM 10-Q

GLOSSARY OF TERMS
Abbreviations or acronyms used in this filing, including all items in Parts I and II, are defined below.
ABBREVIATION OR ACRONYM
DEFINITION
2016 Merger
Merger of Merger Sub with and into Cleco Corporation pursuant to the terms of the Merger Agreement which was completed on April 13, 2016
2016 Merger Commitments
Cleco Partners’, Cleco Group’s, Cleco Holdings’, and Cleco Power’s 77 commitments to the LPSC as defined in Docket No. U-33434 of which a performance report must be filed annually by October 31 for the 12 months ending June 30
401(k) Plan
Cleco Power 401(k) Savings and Investment Plan
ABR
Alternate Base Rate which is the greater of the prime rate, the federal funds effective rate plus 0.50%, or LIBOR plus 1.0%
Acadia
Acadia Power Partners, LLC, previously a wholly owned subsidiary of Midstream. Acadia Power Partners, LLC was dissolved effective August 29, 2014.
Acadia Unit 1
Cleco Power’s 580-MW, combined cycle power plant located at the Acadia Power Station in Eunice, Louisiana
Acadia Unit 2
Entergy Louisiana’s 580-MW, combined cycle power plant located at the Acadia Power Station in Eunice, Louisiana, which is operated by Cleco Power 
ADIT
Accumulated Deferred Income Tax
AFUDC
Allowance for Funds Used During Construction
Amended Lignite Mining Agreement
Amended and restated lignite mining agreement effective December 29, 2009
AMI
Advanced Metering Infrastructure
AOCI
Accumulated Other Comprehensive Income (Loss)
ARO
Asset Retirement Obligation
BCI
British Columbia Investment Management Corporation
CCR
Coal combustion by-products or residual
CEO
Chief Executive Officer
CFO
Chief Financial Officer
CIP
Critical Infrastructure Protection
Cleco
Cleco Holdings and its subsidiaries
Cleco Cajun
Cleco Cajun LLC (formerly Cleco Energy LLC, a wholly owned subsidiary of Cleco Holdings) and its subsidiaries
Cleco Cajun Transaction
The transaction between Cleco Cajun and NRG Energy in which Cleco Cajun acquired all the membership interest in South Central Generating, which closed on February 4, 2019, pursuant to the Purchase and Sale Agreement, which includes the Cottonwood Sale Leaseback.
Cleco Corporation
Pre-2016 Merger entity that was converted to a limited liability company and changed its name to Cleco Corporate Holdings LLC on April 13, 2016
Cleco Group
Cleco Group LLC, a wholly owned subsidiary of Cleco Partners
Cleco Holdings
Cleco Corporate Holdings LLC, a wholly owned subsidiary of Cleco Group
Cleco Katrina/Rita
Cleco Katrina/Rita Hurricane Recovery Funding LLC, a wholly owned subsidiary of Cleco Power
Cleco Partners
Cleco Partners L.P., a Delaware limited partnership that is owned by a consortium of investors, including funds or investment vehicles managed by MIRA, BCI, John Hancock Financial, and other infrastructure investors
Cleco Power
Cleco Power LLC and its subsidiaries, a wholly owned subsidiary of Cleco Holdings
Consent Decree
The Consent Decree, entered March 5, 2013, in Civil Action No. 09-100-JJB-DLD, US District Court for the Middle District of Louisiana, by and among the EPA, the LDEQ, and Louisiana Generating relating to Big Cajun II, Unit 1, New Roads, Louisiana
Cottonwood Energy
Cottonwood Energy Company LP, a wholly owned subsidiary of Cleco Cajun. Prior to the closing of the Cleco Cajun Transaction on February 4, 2019, Cottonwood Energy was an indirect subsidiary of South Central Generating.
Cottonwood Plant
Cleco Cajun’s 1,263-MW, natural-gas-fired generating station located in Deweyville, Texas
Cottonwood Sale Leaseback
A lease agreement executed and delivered between Cottonwood Energy and a special-purpose entity that is a subsidiary of NRG Energy pursuant to which NRG Energy will lease back the Cottonwood Plant and will operate it no later than May 2025.
Coughlin
Cleco Power’s 775-MW, combined-cycle power plant located in St. Landry, Louisiana
DHLC
Dolet Hills Lignite Company, LLC, a wholly owned subsidiary of SWEPCO
Diversified Lands
Diversified Lands LLC, a wholly owned subsidiary of Cleco Holdings
Dolet Hills
A facility consisting of Dolet Hills Power Station, the Dolet Hills mine, and the Oxbow mine
Dolet Hills Power Station
A 650-MW generating unit at Cleco Power’s plant site in Mansfield, Louisiana. Cleco Power has a 50% ownership interest in the capacity of Dolet Hills.
EAC
Environmental Adjustment Clause
EBITDA
Earnings before interest, taxes, depreciation, and amortization
Entergy Gulf States
Entergy Gulf States Louisiana, LLC
Entergy Louisiana
Entergy Louisiana, LLC
EPA
U.S. Environmental Protection Agency
ERO
Electric Reliability Organization
Evangeline
Cleco Evangeline LLC, a wholly owned subsidiary of Midstream
FAC
Fuel Adjustment Clause
FASB
Financial Accounting Standards Board

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CLECO
 
 
CLECO POWER
 
2019 2ND QUARTER FORM 10-Q

ABBREVIATION OR ACRONYM
DEFINITION
FERC
Federal Energy Regulatory Commission
Fitch
Fitch Ratings, a credit rating agency
FTR
Financial Transmission Right
FRP
Formula Rate Plan
GAAP
Generally Accepted Accounting Principles in the U.S.
kWh
Kilowatt-hour(s)
LDEQ
Louisiana Department of Environmental Quality
LIBOR
London Interbank Offered Rate
LMP
Locational Marginal Price
Louisiana Generating
Louisiana Generating, LLC, a wholly owned subsidiary of South Central Generating
LPSC
Louisiana Public Service Commission
LTSA
Long-Term Parts and Service Agreement between Cottonwood Energy and a third party, dated January 19, 2001, that Cleco Cajun assumed as a result of the Cleco Cajun Transaction to provide maintenance services related to the Cottonwood Plant
Madison Unit 3
A 641-MW generating unit at Cleco Power’s plant site in Boyce, Louisiana
Merger Agreement
Agreement and Plan of Merger, dated as of October 17, 2014, by and among Cleco Partners, Merger Sub, and Cleco Corporation relating to the 2016 Merger
Merger Sub
Cleco MergerSub Inc., previously an indirect wholly owned subsidiary of Cleco Partners that was merged with and into Cleco Corporation, with Cleco Corporation surviving the 2016 Merger, and Cleco Corporation converting to a limited liability company and changing its name to Cleco Holdings
Midstream
Cleco Midstream Resources LLC, a wholly owned subsidiary of Cleco Holdings
MIRA
Macquarie Infrastructure and Real Assets Inc.
MISO
Midcontinent Independent System Operator, Inc.
MMBtu
One million British thermal units
Moody’s
Moody’s Investors Service, a credit rating agency
MW
Megawatt(s)
MWh
Megawatt-hour(s)
NERC
North American Electric Reliability Corporation
NRG Energy
NRG Energy, Inc.
Other Benefits
Includes medical, dental, vision, and life insurance for Cleco’s retirees
Oxbow
Oxbow Lignite Company, LLC, 50% owned by Cleco Power and 50% owned by SWEPCO
Perryville
Perryville Energy Partners, L.L.C., a wholly owned subsidiary of Cleco Holdings
Purchase and Sale Agreement
Purchase and Sale Agreement, dated as of February 6, 2018, by and among NRG Energy, South Central Generating, and Cleco Cajun
Registrant(s)
Cleco Holdings and/or Cleco Power
ROE
Return on Equity
ROU
Right of Use
RTO
Regional Transmission Organization
S&P
Standard & Poor’s Ratings Services, a credit rating agency
SEC
U.S. Securities and Exchange Commission
SERP
Supplemental Executive Retirement Plan
South Central Generating
South Central Generating LLC, formerly NRG South Central Generating LLC
SSR
System Support Resource
START
Strategic Alignment and Real-Time Transformation
Support Group
Cleco Support Group LLC, a wholly owned subsidiary of Cleco Holdings
SWEPCO
Southwestern Electric Power Company, an electric utility subsidiary of American Electric Power Company, Inc.
TCJA
Federal tax legislation commonly referred to as the Tax Cuts and Jobs Act of 2017
Teche Unit 3
A 359-MW generating unit at Cleco Power’s plant site in Baldwin, Louisiana



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CLECO
 
 
CLECO POWER
 
2019 2ND QUARTER FORM 10-Q

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q includes “forward-looking statements” about future events, circumstances, and results. All statements other than statements of historical fact included in this Quarterly Report on Form 10-Q are forward-looking statements, including, without limitation, future capital expenditures; business strategies; goals, beliefs, plans and objectives; competitive strengths; market developments; development and operation of facilities; growth in sales volume; meeting capacity requirements; expansion of service to existing customers and service to new customers; future environmental regulations and remediation liabilities; electric customer credits; and the anticipated outcome of various regulatory and legal proceedings. Although the Registrants believe 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 that could cause the actual results to differ materially from the Registrants’ expectations. In addition to any assumptions and other factors referred to specifically in connection with these forward-looking statements, the following list identifies some of the factors that could cause the Registrants’ actual results to differ materially from those contemplated in any of the Registrants’ forward-looking statements:
 
the effects of the Cleco Cajun Transaction and the 2016 Merger on Cleco’s business relationships, operating results, and business generally,
regulatory factors, such as changes in rate-setting practices or policies; political actions of governmental regulatory bodies; adverse regulatory ratemaking actions; recovery of investments made under traditional regulation; recovery of storm restoration costs; the frequency, timing, and amount of rate increases or decreases; the impact that rate cases or requests for FRP extensions may have on operating decisions of Cleco Power; the results of periodic NERC, LPSC, and FERC audits; participation in MISO and the related operating challenges and uncertainties, including increased wholesale competition relative to additional suppliers; and compliance with the ERO reliability standards for bulk power systems by Cleco Power,
Cleco Power’s ability to recover fuel costs through the FAC,
the ability to successfully integrate the assets acquired in the Cleco Cajun Transaction into Cleco’s operations,
factors affecting utility operations, such as unusual weather conditions or other natural phenomena; catastrophic weather-related damage caused by hurricanes and other storms or severe drought conditions; unscheduled generation outages; unanticipated maintenance or repairs; unanticipated changes to fuel costs or fuel supply costs, shortages, solid fuel and natural gas transportation problems, or other developments; decreased customer load; environmental incidents and compliance costs; and power transmission system constraints,
reliance on third parties for determination of Cleco’s commitments and obligations to markets for generation
 
resources and reliance on third-party fuel transportation and transmission services,
global and domestic economic conditions, including the ability of customers to continue paying their utility bills, related growth and/or down-sizing of businesses in Cleco’s service area, monetary fluctuations, and inflation rates,
political uncertainty in the U.S., including the ongoing debates related to the U.S. federal government budget and debt ceiling, and volatility and disruption in global capital and credit markets,
the ability of the lignite reserves at Dolet Hills to provide sufficient fuel to the Dolet Hills Power Station for seasonal operations until at least 2036,
Cleco’s ability to maintain its right to sell wholesale power at market-based rates within its control area, 
Cleco’s dependence on energy from sources other than its facilities and future sources of such additional energy,
reliability of Cleco’s generating facilities,
the imposition of energy efficiency requirements or increased conservation efforts of customers,
the impact of current or future environmental laws and regulations, including those related to CCRs, greenhouse gases, and energy efficiency that could limit or terminate the operation of Cleco’s generating units, increase costs, or reduce customer demand for electricity,
the ability to recover costs of compliance with environmental laws and regulations, including those through Cleco Power’s EAC,
financial or regulatory accounting principles or policies imposed by FASB, the SEC, FERC, the LPSC, or similar entities with regulatory or accounting oversight, 
changing market conditions and a variety of other factors associated with physical energy, financial transactions, and energy service activities, including, but not limited to, price, basis, credit, liquidity, volatility, capacity, transmission, interest rates, and warranty risks,
changes in commodity prices and related factors, particularly related to natural gas,
legal, environmental, and regulatory delays and other obstacles associated with acquisitions, reorganizations, investments in joint ventures, or other capital projects,
costs and other effects of legal and administrative proceedings, settlements, investigations, claims, and other matters,
the availability and use of alternative sources of energy and technologies, such as wind, solar, battery storage, and distributed generation,
changes in federal, state, or local laws (including the TCJA and other tax laws), changes in tax rates, disallowances of tax positions, or changes in other regulatory policies that may result in a change to tax benefits or expenses,

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CLECO
 
 
CLECO POWER
 
2019 2ND QUARTER FORM 10-Q

the restriction on the ability of Cleco Power to make distributions to Cleco Holdings in certain instances, as a result of the 2016 Merger Commitments,
Cleco’s ability to remain in compliance with the commitments made to the LPSC in connection with the Cleco Cajun Transaction,
Cleco Holdings’ dependence on the earnings, dividends, or distributions from its subsidiaries to meet its debt obligations,
acts of terrorism, cyber attacks, data security breaches or other attempts to disrupt Cleco’s business or the business of third parties, or other man-made disasters,
the ability to successfully modify, implement, or transition Cleco’s legacy enterprise business applications into new systems,
credit ratings of Cleco Holdings and Cleco Power,
Cleco Holdings’ and Cleco Power’s ability to remain in compliance with their respective debt covenants,
the availability or cost of capital resulting from changes in global markets, Cleco’s business or financial condition, interest rates, or market perceptions of the electric utility industry and energy-related industries, and

 
workforce factors, including aging workforce, changes in management, and unavailability of skilled employees.

For more discussion of these factors and other factors that could cause actual results to differ materially from those contemplated in the Registrants’ forward-looking statements, see Part II, Item 1A, “Risk Factors” in this Quarterly Report on Form 10-Q.
All subsequent written and oral forward-looking statements attributable to the Registrants, or persons acting on their behalf, are expressly qualified in their entirety by the factors identified above.
Any forward-looking statement is considered only as of the date of this Quarterly Report on Form 10-Q and, except as required by law, the Registrants undertake no obligation to update any forward-looking statements, whether as a result of changes in actual results, changes in assumptions, or other factors affecting such statements.


6


CLECO
 
 
CLECO POWER
 
2019 2ND QUARTER FORM 10-Q

PART I — FINANCIAL INFORMATION
ITEM 1.  CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Cleco
These unaudited condensed consolidated financial statements should be read in conjunction with Cleco’s Consolidated Financial Statements and Notes included in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2018 . For more information on the basis of presentation, see “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 1 — Summary of Significant Accounting Policies — Basis of Presentation.”

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CLECO
 
 
CLECO POWER
 
2019 2ND QUARTER FORM 10-Q

CLECO
 
 
 
 
Condensed Consolidated Statements of Income (Unaudited)
 
 
 
 
FOR THE THREE MONTHS ENDED JUNE 30,
 
(THOUSANDS)
2019

 
2018

Operating revenue
 
 
 
Electric operations
$
365,466

 
$
294,213

Other operations
42,367

 
18,685

Gross operating revenue
407,833


312,898

Electric customer credits
(9,960
)
 
(13,637
)
Operating revenue, net
397,873

 
299,261

Operating expenses
 
 
 
Fuel used for electric generation
109,145

 
77,562

Power purchased for utility customers
68,637

 
50,154

Other operations and maintenance
64,970

 
49,580

Depreciation and amortization
51,535

 
41,807

Taxes other than income taxes
15,600

 
11,326

Merger transaction and commitment costs
796

 
5,123

Gain on sale of asset
(6
)
 

Total operating expenses
310,677

 
235,552

Operating income
87,196

 
63,709

Interest income
1,275

 
1,427

Allowance for equity funds used during construction
5,518

 
3,224

Other expense, net
(1,122
)
 
(2,947
)
Interest charges
 
 
 
Interest charges, net
37,898

 
32,957

Allowance for borrowed funds used during construction
(2,058
)
 
(1,048
)
Total interest charges
35,840

 
31,909

Income before income taxes
57,027

 
33,504

Federal and state income tax expense
12,281

 
7,665

Net income
$
44,746

 
$
25,839

The accompanying notes are an integral part of the condensed consolidated financial statements.
 
 
 

8


CLECO
 
 
CLECO POWER
 
2019 2ND QUARTER FORM 10-Q

CLECO
 
 
 
 
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
 
 
 
 
FOR THE THREE MONTHS ENDED JUNE 30,
 
(THOUSANDS)
2019

 
2018

Net income
44,746

 
$
25,839

Other comprehensive (loss) income, net of tax
 

 
 
Postretirement benefits (loss) gain (net of tax benefit of $52 in 2019 and tax expense of $87 in 2018)
(147
)
 
247

Total other comprehensive (loss) income, net of tax
(147
)
 
247

Comprehensive income, net of tax
$
44,599

 
$
26,086

The accompanying notes are an integral part of the condensed consolidated financial statements.
 
 
 

9


CLECO
 
 
CLECO POWER
 
2019 2ND QUARTER FORM 10-Q

CLECO
 
 
 
 
Condensed Consolidated Statements of Income (Unaudited)
 
FOR THE SIX MONTHS ENDED JUNE 30,
 
(THOUSANDS)
2019

 
2018

Operating revenue
 
 
 
Electric operations
$
678,416

 
$
556,424

Other operations
81,764

 
40,881

Gross operating revenue
760,180

 
597,305

Electric customer credits
(18,120
)
 
(21,284
)
Operating revenue, net
742,060

 
576,021

Operating expenses
 
 
 
Fuel used for electric generation
213,199

 
144,578

Power purchased for utility customers
128,736

 
103,313

Other operations and maintenance
125,705

 
104,718

Depreciation and amortization
101,391

 
84,314

Taxes other than income taxes
29,470

 
23,584

Merger transaction and commitment costs
5,786

 
7,070

Gain on sale of asset
(8
)
 

Total operating expenses
604,279

 
467,577

Operating income
137,781

 
108,444

Interest income
2,767

 
2,211

Allowance for equity funds used during construction
11,206

 
5,587

Other income (expe nse), net
1,655

 
(5,947
)
Interest charges
 
 
 
Interest charges, net
74,014

 
64,988

Allowance for borrowed funds used during construction
(4,175
)
 
(1,921
)
Total interest charges
69,839

 
63,067

Income before income taxes
83,570

 
47,228

Federal and state income tax expense
18,267

 
10,528

Net income
$
65,303

 
$
36,700

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.
 
 
 

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CLECO
 
 
CLECO POWER
 
2019 2ND QUARTER FORM 10-Q

CLECO
 
 
 
 
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
 
FOR THE SIX MONTHS ENDED JUNE 30,
 
(THOUSANDS)
2019

 
2018

Net income
$
65,303

 
$
36,700

Other comprehensive (loss) income, net of tax
 
 
 
Postretirement benefits (loss) gain (net of tax benefit of $100 in 2019 and tax expense of $102 in 2018)
(282
)
 
290

Total other comprehensive (loss) income, net of tax
(282
)
 
290

Comprehensive income, net of tax
$
65,021

 
$
36,990

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.
 
 
 

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CLECO
 
 
CLECO POWER
 
2019 2ND QUARTER FORM 10-Q

CLECO
 
Condensed Consolidated Balance Sheets (Unaudited)
(THOUSANDS)
AT JUNE 30, 2019

 
AT DEC. 31, 2018

Assets
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
116,077

 
$
110,175

Restricted cash and cash equivalents
10,692

 
11,241

Customer accounts receivable (less allowance for doubtful accounts of $1,144 in 2019 and $814 in 2018)
109,519

 
50,043

Other accounts receivable
33,087

 
27,196

Unbilled revenue
43,221

 
35,314

Fuel inventory, at average cost
102,555

 
82,836

Materials and supplies, at average cost
119,864

 
92,671

Energy risk management assets
17,080

 
23,355

Accumulated deferred fuel
38,619

 
20,112

Cash surrender value of company-/trust-owned life insurance policies
83,349

 
80,391

Prepayments
10,369

 
7,911

Regulatory assets
22,142

 
22,461

Other current assets
11,700

 
1,256

Total current assets
718,274

 
564,962

Property, plant, and equipment
 
 
 
Property, plant, and equipment
4,551,632

 
3,728,477

Accumulated depreciation
(369,549
)
 
(303,727
)
Net property, plant, and equipment
4,182,083

 
3,424,750

Construction work in progress
410,799

 
354,045

Total property, plant, and equipment, net
4,592,882

 
3,778,795

Equity investment in investee
18,172

 
18,172

Goodwill
1,490,797

 
1,490,797

Prepayments
20,285

 
2,251

Operating lease right of use assets
14,618

 

Restricted cash and cash equivalents
18,911

 
18,670

Note receivable
15,521

 
15,829

Regulatory assets
413,720

 
425,330

Intangible assets
161,639

 
84,307

Other deferred charges
40,192

 
37,701

Total assets
$
7,505,011

 
$
6,436,814

The accompanying notes are an integral part of the condensed consolidated financial statements.
 

 
 

 
 
 
 
(Continued on next page)
 
 
 

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CLECO
 
 
CLECO POWER
 
2019 2ND QUARTER FORM 10-Q

CLECO
 
Condensed Consolidated Balance Sheets (Unaudited)
(THOUSANDS)
AT JUNE 30, 2019

 
AT DEC. 31, 2018

Liabilities and member’s equity
 
 
 
Liabilities
 
 
 
Current liabilities
 
 
 
Long-term debt and finance leases due within one year
$
91,572

 
$
21,128

Accounts payable
175,447

 
156,589

Accounts payable - affiliate
3,174

 

Customer deposits
60,213

 
61,736

Provision for rate refund
54,611

 
35,842

Taxes payable, net
59,763

 
43,674

Interest accrued
16,333

 
15,828

Energy risk management liabilities
5,185

 
468

Regulatory liabilities - other
12,523

 
2,496

Deferred compensation
11,388

 
10,753

Other current liabilities
54,816

 
30,536

Total current liabilities
545,025

 
379,050

Long-term liabilities and deferred credits
 

 
 

Accumulated deferred federal and state income taxes, net
636,484

 
608,030

Postretirement benefit obligations
250,367

 
249,264

Regulatory liabilities - other

 
2,496

Regulatory liabilities - deferred taxes, net
149,461

 
155,537

Restricted storm reserve
15,909

 
15,485

Deferred lease revenue
54,464

 

Intangible liabilities
35,378

 

Asset retirement obligations
22,727

 
6,881

Operating lease liabilities
10,746

 

Other deferred credits
23,974

 
20,846

Total long-term liabilities and deferred credits
1,199,510

 
1,058,539

Long-term debt and finance leases, net
3,185,815

 
2,874,485

Total liabilities
4,930,350

 
4,312,074

Commitments and contingencies (Note 14)


 


Member’s equity
2,574,661

 
2,124,740

Total liabilities and member’s equity
$
7,505,011

 
$
6,436,814

The accompanying notes are an integral part of the condensed consolidated financial statements.
 

 
 


13


CLECO
 
 
CLECO POWER
 
2019 2ND QUARTER FORM 10-Q

CLECO
 
 
 
 
Condensed Consolidated Statements of Cash Flows (Unaudited)
 
 
 
 
FOR THE SIX MONTHS ENDED JUNE 30,
 
(THOUSANDS)
2019

 
2018

Operating activities
 
 
 
Net income
$
65,303

 
$
36,700

Adjustments to reconcile net income to net cash provided by operating activities
 
 
 
Depreciation and amortization
115,408

 
92,756

Unearned compensation expense
2,356

 
2,005

Allowance for equity funds used during construction
(11,206
)
 
(5,587
)
Deferred lease revenue
(3,835
)
 

Deferred income taxes
15,313

 
5,691

Deferred fuel costs
(3,531
)
 
(26,339
)
Cash surrender value of company-/trust-owned life insurance
(2,958
)
 
(248
)
Changes in assets and liabilities
 
 
 
Accounts receivable
(23,241
)
 
(8,309
)
Unbilled revenue
(7,907
)
 
(10,083
)
Fuel inventory and materials and supplies
560

 
6,500

Prepayments
(9,210
)
 
329

Accounts payable
8,343

 
306

Accounts payable - affiliate
3,174

 

Customer deposits
3,367

 
6,746

Provision for merger commitments
(1,444
)
 
(1,847
)
Postretirement benefit obligations
722

 
1,998

Regulatory assets and liabilities, net
8,904

 
7,917

Other deferred accounts
(2,591
)
 
1,612

Taxes accrued
16,028

 
22,621

Interest accrued
505

 
1,321

Risk management assets and liabilities, net
8,032

 

Other operating
4,168

 
1,719

Net cash provided by operating activities
186,260

 
135,808

Investing activities
 
 
 
Additions to property, plant, and equipment
(151,463
)
 
(135,702
)
Allowance for equity funds used during construction
11,206

 
5,587

Reimbursement for property loss
93

 
1,223

Issuance of note receivable

 
(16,800
)
Return of investment in company-owned life insurance
1,891

 

Return of equity investment in tax credit fund
1,625

 
2,775

Payment to acquire business, net of cash acquired
(814,969
)
 

Other investing
623

 
672

Net cash used in investing activities
(950,994
)
 
(142,245
)
Financing activities
 
 
 
Draws on credit facilities
108,000

 

Payments on credit facilities
(108,000
)
 

Issuances of long-term debt
400,000

 
50,000

Repayment of long-term debt
(10,382
)
 
(9,700
)
Payment of financing costs
(3,919
)
 

Contributions from member
384,900

 

Distributions to member

 
(39,900
)
Other financing
(271
)
 
(828
)
Net cash provided by (used in) financing activities
770,328


(428
)
Net increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents
5,594


(6,865
)
Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period
140,086

(1)  
152,202

Cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period
$
145,680

(2)  
$
145,337

The accompanying notes are an integral part of the condensed consolidated financial statements.
 
 
 
 
 
 
 
(Continued on next page)
 
 
 

14


CLECO
 
 
CLECO POWER
 
2019 2ND QUARTER FORM 10-Q

CLECO
 
 
 
 
Condensed Consolidated Statements of Cash Flows (Unaudited)
 
 
 
 
FOR THE SIX MONTHS ENDED JUNE 30,
 
(THOUSANDS)
2019

 
2018

Supplementary cash flow information
 
 
 
Interest paid, net of amount capitalized
$
67,639

 
$
60,528

Income taxes paid, net
$

 
$
272

Supplementary non-cash investing and financing activities
 
 
 
Accrued additions to property, plant, and equipment
$
39,527

 
$
40,011

Incurrence of finance lease obligation - barges
$

 
$
16,800

(1)  Includes cash and cash equivalents of $110,175, current restricted cash and cash equivalents of $11,241, and non-current restricted cash and cash equivalents of $18,670.
(2)  Includes cash and cash equivalents of $116,077, current restricted cash and cash equivalents of $10,692, and non-current restricted cash and cash equivalents of $18,911.

The accompanying notes are an integral part of the condensed consolidated financial statements.

15


CLECO
 
 
CLECO POWER
 
2019 2ND QUARTER FORM 10-Q

CLECO
 
Condensed Consolidated Statements of Changes in Member’s Equity (Unaudited)
(THOUSANDS)
MEMBERSHIP INTEREST

 
RETAINED EARNINGS

 
AOCI

 
TOTAL
MEMBER’S
EQUITY

Balances, Mar. 31, 2018
$
2,069,376

 
$
21,263

 
$
(2,878
)
 
$
2,087,761

Distributions to member

 
(20,400
)
 

 
(20,400
)
Net income

 
25,839

 

 
25,839

Other comprehensive income, net of tax

 

 
247

 
247

Balances, June 30, 2018
$
2,069,376

 
$
26,702

 
$
(2,631
)
 
$
2,093,447

 
 
 
 
 
 
 
 
Balances, Mar. 31, 2019
$
2,069,376

 
$
459,035

 
$
1,651

 
$
2,530,062

Net income

 
44,746

 

 
44,746

Other comprehensive loss, net of tax

 

 
(147
)
 
(147
)
Balances, June 30, 2019
$
2,069,376

 
$
503,781

 
$
1,504

 
$
2,574,661

 
 
 
 
 
 
 
 
Balances, Dec. 31, 2017
$
2,069,376

 
$
29,902

 
$
(2,921
)
 
$
2,096,357

Distributions to member

 
(39,900
)
 

 
(39,900
)
Net income

 
36,700

 

 
36,700

Other comprehensive income, net of tax

 

 
290

 
290

Balances, June 30, 2018
$
2,069,376

 
$
26,702


$
(2,631
)

$
2,093,447

 
 
 
 
 
 
 
 
Balances, Dec. 31, 2018
$
2,069,376

 
$
53,578

 
$
1,786

 
$
2,124,740

Contribution from member

 
384,900

 

 
384,900

Net income

 
65,303

 

 
65,303

Other comprehensive loss, net of tax

 

 
(282
)
 
(282
)
Balances, June 30, 2019
$
2,069,376

 
$
503,781

 
$
1,504

 
$
2,574,661

The accompanying notes are an integral part of the condensed consolidated financial statements.
 
 
 

 
 

 
 


16


CLECO
 
 
CLECO POWER
 
2019 2ND QUARTER FORM 10-Q

ITEM 1.   CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Cleco Power
These unaudited condensed consolidated financial statements should be read in conjunction with Cleco Power’s Consolidated Financial Statements and Notes included in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2018 . For more information on the basis of presentation, see “Notes to the Unaudited Condensed Consolidated Financial Statements — Note 1 — Summary of Significant Accounting Policies — Basis of Presentation.”


17


CLECO
 
 
CLECO POWER
 
2019 2ND QUARTER FORM 10-Q

CLECO POWER
 
 
 
 
 
 
 
Condensed Consolidated Statements of Income (Unaudited)
 
 
 
 
FOR THE THREE MONTHS ENDED JUNE 30,
 
(THOUSANDS)
2019

 
2018

Operating revenue
 
 
 
Electric operations
$
265,924

 
$
296,633

Other operations
15,404

 
18,685

Affiliate revenue
337

 
220

Gross operating revenue
281,665

 
315,538

Electric customer credits
(8,693
)
 
(13,637
)
Operating revenue, net
272,972

 
301,901

Operating expenses
 
 
 
Fuel used for electric generation
86,235

 
77,562

Power purchased for utility customers
18,486

 
50,154

Other operations and maintenance
42,914

 
50,950

Depreciation and amortization
39,330

 
39,720

Taxes other than income taxes
10,561

 
10,913

Total operating expenses
197,526

 
229,299

Operating income
75,446

 
72,602

Interest income
867

 
1,313

Allowance for equity funds used during construction
5,518

 
3,224

Other expense, net
(1,127
)
 
(2,302
)
Interest charges
 
 
 
Interest charges, net
19,428

 
19,155

Allowance for borrowed funds used during construction
(2,058
)
 
(1,048
)
Total interest charges
17,370

 
18,107

Income before income taxes
63,334

 
56,730

Federal and state income tax expense
13,978

 
13,710

Net income
$
49,356

 
$
43,020

The accompanying notes are an integral part of the condensed consolidated financial statements.
 
 
 


18


CLECO
 
 
CLECO POWER
 
2019 2ND QUARTER FORM 10-Q

CLECO POWER
 
 
 
 
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
 
FOR THE THREE MONTHS ENDED JUNE 30,
 
(THOUSANDS)
2019

 
2018

Net income
$
49,356

 
$
43,020

Other comprehensive income, net of tax
 

 
 

Postretirement benefits gain (net of tax expense of $45 in 2019 and $94 in 2018)
129

 
267

Amortization of interest rate derivatives to earnings (net of tax expense of $22 in 2019 and $22 in 2018)
64

 
64

Total other comprehensive income, net of tax
193

 
331

Comprehensive income, net of tax
$
49,549

 
$
43,351

The accompanying notes are an integral part of the condensed consolidated financial statements.
 
 
 


19


CLECO
 
 
CLECO POWER
 
2019 2ND QUARTER FORM 10-Q

CLECO POWER
 
 
 
 
 
 
 
Condensed Consolidated Statements of Income (Unaudited)
 
 
 
 
FOR THE SIX MONTHS ENDED JUNE 30,
 
(THOUSANDS)
2019

 
2018

Operating revenue
 
 
 
Electric operations
$
523,100

 
$
561,264

Other operations
34,833

 
40,880

Affiliate revenue
637

 
428

Gross operating revenue
558,570

 
602,572

Electric customer credits
(16,853
)
 
(21,284
)
Operating revenue, net
541,717

 
581,288

Operating expenses
 
 


Fuel used for electric generation
180,366

 
144,578

Power purchased for utility customers
48,140

 
103,313

Other operations and maintenance
90,614

 
107,332

Depreciation and amortization
81,707

 
80,109

Taxes other than income taxes
20,538

 
22,831

Total operating expenses
421,365

 
458,163

Operating income
120,352

 
123,125

Interest income
1,860

 
1,953

Allowance for equity funds used during construction
11,206

 
5,587

Other expense, net
(859
)
 
(4,171
)
Interest charges
 
 
 
Interest charges, net
38,690

 
37,684

Allowance for borrowed funds used during construction
(4,175
)
 
(1,921
)
Total interest charges
34,515

 
35,763

Income before income taxes
98,044

 
90,731

Federal and state income tax expense
21,976

 
21,707

Net income
$
76,068

 
$
69,024

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.
 
 
 

20


CLECO
 
 
CLECO POWER
 
2019 2ND QUARTER FORM 10-Q

CLECO POWER
 
 
 
 
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
 
FOR THE SIX MONTHS ENDED JUNE 30,
 
(THOUSANDS)
2019

 
2018

Net income
$
76,068

 
$
69,024

Other comprehensive income, net of tax
 
 
 
Postretirement benefits gain (net of tax expense of $101 in 2019 and $177 in 2018)
285

 
500

Amortization of interest rate derivatives to earnings (net of tax expense of $45 in 2019 and $45 in 2018)
128

 
128

Total other comprehensive income, net of tax
413

 
628

Comprehensive income, net of tax
$
76,481

 
$
69,652

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.
 
 
 

21


CLECO
 
 
CLECO POWER
 
2019 2ND QUARTER FORM 10-Q

CLECO POWER
 
 
 
 
Condensed Consolidated Balance Sheets (Unaudited)
 
 
 
(THOUSANDS)
AT JUNE 30, 2019

 
AT DEC. 31, 2018

Assets
 
 
 
Utility plant and equipment
 
 
 
Property, plant, and equipment
$
5,065,093

 
$
5,015,004

Accumulated depreciation
(1,843,622
)
 
(1,804,563
)
Net property, plant, and equipment
3,221,471

 
3,210,441

Construction work in progress
406,354

 
351,828

Total utility plant and equipment, net
3,627,825

 
3,562,269

Current assets
 
 
 
Cash and cash equivalents
26,017

 
31,987

Restricted cash and cash equivalents
10,692

 
11,241

Customer accounts receivable (less allowance for doubtful accounts of $1,144 in 2019 and $814 in 2018)
59,801

 
50,043

Accounts receivable - affiliate
2,023

 
3,318

Other accounts receivable
29,738

 
24,523

Unbilled revenue
43,221

 
35,314

Fuel inventory, at average cost
82,587

 
82,836

Materials and supplies, at average cost
94,233

 
92,671

Energy risk management assets
14,742

 
23,355

Accumulated deferred fuel
38,619

 
20,112

Cash surrender value of company-owned life insurance policies
17,496

 
20,497

Prepayments
5,010

 
6,143

Regulatory assets
11,112

 
13,603

Other current assets
602

 
1,162

Total current assets
435,893

 
416,805

Equity investment in investee
18,172

 
18,172

Prepayments
3,447

 
2,251

Operating lease right of use assets
14,352

 

Restricted cash and cash equivalents
18,175

 
18,649

Note receivable
15,521

 
15,829

Regulatory assets
258,545

 
261,569

Intangible assets
11,051

 
21,093

Other deferred charges
37,557

 
32,419

Total assets
$
4,440,538

 
$
4,349,056

The accompanying notes are an integral part of the condensed consolidated financial statements.
 
 
 
 
 
 
 
(Continued on next page)
 
 
 

22


CLECO
 
 
CLECO POWER
 
2019 2ND QUARTER FORM 10-Q

CLECO POWER
 
 
 
 
Condensed Consolidated Balance Sheets (Unaudited)
 
 
 
(THOUSANDS)
AT JUNE 30, 2019

 
AT DEC. 31, 2018

Liabilities and member’s equity
 
 
 
Member’s equity
$
1,671,014

 
$
1,594,533

Long-term debt and finance leases, net
1,377,224

 
1,387,774

Total capitalization
3,048,238

 
2,982,307

Current liabilities
 
 
 
Long-term debt and finance leases due within one year
21,577

 
21,128

Accounts payable
130,473

 
146,314

Accounts payable - affiliate
7,878

 
7,843

Customer deposits
60,213

 
61,736

Provision for rate refund
53,238

 
35,842

Taxes payable, net
34,724

 
48,177

Interest accrued
8,606

 
8,252

Energy risk management liabilities
832

 
468

Regulatory liabilities - other
12,523

 
2,496

Other current liabilities
27,924

 
22,263

Total current liabilities
357,988

 
354,519

Commitments and contingencies (Note 14)


 


Long-term liabilities and deferred credits
 
 
 
Accumulated deferred federal and state income taxes, net
646,026

 
630,765

Postretirement benefit obligations
184,343

 
182,721

Regulatory liabilities - other

 
2,496

Regulatory liabilities - deferred taxes, net
149,461

 
155,537

Restricted storm reserve
15,909

 
15,485

Asset retirement obligations
7,100

 
6,881

Operating lease liabilities
10,598

 

Other deferred credits
20,875

 
18,345

Total long-term liabilities and deferred credits
1,034,312

 
1,012,230

Total liabilities and member’s equity
$
4,440,538

 
$
4,349,056

The accompanying notes are an integral part of the condensed consolidated financial statements.
 
 
 

23


CLECO
 
 
CLECO POWER
 
2019 2ND QUARTER FORM 10-Q

CLECO POWER
 
Condensed Consolidated Statements of Cash Flows (Unaudited)
 
FOR THE SIX MONTHS ENDED JUNE 30,
 
(THOUSANDS)
2019

 
2018

Operating activities
 
 
 
Net income
$
76,068

 
$
69,024

Adjustments to reconcile net income to net cash provided by operating activities
 
 
 
Depreciation and amortization
84,503

 
83,199

Allowance for equity funds used during construction
(11,206
)
 
(5,587
)
Deferred income taxes
9,042

 
7,566

Deferred fuel costs
(3,531
)
 
(26,339
)
Cash surrender value of company-owned life insurance
3,002

 
(116
)
Changes in assets and liabilities
 
 
 
Accounts receivable
(20,932
)
 
(7,933
)
Accounts receivable - affiliate
2,125

 
1,639

Unbilled revenue
(7,907
)
 
(10,083
)
Fuel inventory and materials and supplies
(1,560
)
 
6,500

Accounts payable
12,974

 
5,465

Accounts payable - affiliate
(1,233
)
 
(1,740
)
Customer deposits
3,367

 
6,746

Provision for merger commitments
(1,444
)
 
(1,847
)
Postretirement benefit obligations
1,179

 
1,784

Regulatory assets and liabilities, net
7,911

 
6,923

Other deferred accounts
(1,836
)
 
1,949

Taxes accrued
(15,280
)
 
32,033

Interest accrued
354

 
1,407

Other operating
1,969

 
3,191

Net cash provided by operating activities
137,565

 
173,781

Investing activities
 
 
 
Additions to property, plant, and equipment
(147,696
)
 
(135,334
)
Allowance for equity funds used during construction
11,206

 
5,587

Reimbursement of property loss
93

 
1,223

Issuance of note receivable

 
(16,800
)
Return of investment in company-owned life insurance
1,891

 

Other investing
623

 
672

Net cash used in investing activities
(133,883
)
 
(144,652
)
Financing activities
 
 
 
Draws on credit facility
33,000

 

Payments on credit facility
(33,000
)
 

Issuances of long-term debt

 
50,000

Repayment of long-term debt
(10,382
)
 
(9,700
)
Distributions to parent

 
(71,000
)
Other financing
(293
)
 
(803
)
Net cash used in financing activities
(10,675
)
 
(31,503
)
Net decrease in cash, cash equivalents, restricted cash, and restricted cash equivalents
(6,993
)
 
(2,374
)
Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period
61,877

(1)  
102,957

Cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period
$
54,884

(2)  
$
100,583

 
 
 
 
Supplementary cash flow information
 
 
 
Interest paid, net of amount capitalized
$
33,958

 
$
33,940

Supplementary non-cash investing and financing activities
 
 
 
Accrued additions to property, plant, and equipment
$
38,971

 
$
39,974

Non-cash additions to property, plant, and equipment
$
51

 
$

Incurrence of finance lease obligation - barges
$

 
$
16,800

(1)  Includes cash and cash equivalents of $31,987, current restricted cash and cash equivalents of $11,241, and non-current restricted cash and cash equivalents of $18,649.
(2)  Includes cash and cash equivalents of $26,017, current restricted cash and cash equivalents of $10,692, and non-current restricted cash and cash equivalents of $18,175.

The accompanying notes are an integral part of the condensed consolidated financial statements.

24


CLECO
 
 
CLECO POWER
 
2019 2ND QUARTER FORM 10-Q

CLECO POWER
 
 
 
Condensed Consolidated Statements of Changes in Member’s Equity (Unaudited)
(THOUSANDS)
MEMBER’S EQUITY

 
AOCI

 
TOTAL
MEMBER’S
EQUITY

Balances, Mar. 31, 2018
$
1,562,366

 
$
(13,386
)
 
$
1,548,980

Distributions to parent
(43,000
)
 

 
(43,000
)
Net income
43,020

 

 
43,020

Other comprehensive income, net of tax

 
331

 
331

Balances, June 30, 2018
$
1,562,386

 
$
(13,055
)
 
$
1,549,331

 
Balances, Mar. 31, 2019
$
1,634,427

 
$
(12,962
)
 
$
1,621,465

Net income
49,356

 

 
49,356

Other comprehensive income, net of tax

 
193

 
193

Balances, June 30, 2019
$
1,683,783

 
$
(12,769
)
 
$
1,671,014

 
 
 
 
 
 
Balances, Dec. 31, 2017
$
1,564,362

 
$
(13,683
)
 
$
1,550,679

Distributions to parent
(71,000
)
 

 
(71,000
)
Net income
69,024

 

 
69,024

Other comprehensive income, net of tax

 
628

 
628

Balances, June 30, 2018
$
1,562,386

 
$
(13,055
)
 
$
1,549,331

 
Balances, Dec. 31, 2018
$
1,607,715

 
$
(13,182
)
 
$
1,594,533

Net income
76,068

 

 
76,068

Other comprehensive income, net of tax

 
413

 
413

Balances, June 30, 2019
$
1,683,783

 
$
(12,769
)
 
$
1,671,014

The accompanying notes are an integral part of the condensed consolidated financial statements.
 

 
 

 
 


25


CLECO
 
 
CLECO POWER
 
2019 2ND QUARTER FORM 10-Q

Index to Applicable Notes to the Unaudited Condensed Consolidated Financial Statements of Registrants
 
 
 
Note 1
Summary of Significant Accounting Policies
Cleco and Cleco Power
Note 2
Business Combination
Cleco
Note 3
Recent Authoritative Guidance
Cleco and Cleco Power
Note 4
Leases
Cleco and Cleco Power
Note 5
Revenue Recognition
Cleco and Cleco Power
Note 6
Regulatory Assets and Liabilities
Cleco and Cleco Power
Note 7
Fair Value Accounting
Cleco and Cleco Power
Note 8
Debt
Cleco and Cleco Power
Note 9
Pension Plan and Employee Benefits
Cleco and Cleco Power
Note 10
Income Taxes
Cleco and Cleco Power
Note 11
Disclosures about Segments
Cleco
Note 12
Regulation and Rates
Cleco and Cleco Power
Note 13
Variable Interest Entities
Cleco and Cleco Power
Note 14
Litigation, Other Commitments and Contingencies, and   Disclosures about Guarantees
Cleco and Cleco Power
Note 15
Affiliate Transactions
Cleco and Cleco Power
Note 16
Intangible Assets and Liabilities
Cleco and Cleco Power
Note 17
Accumulated Other Comprehensive Loss
Cleco and Cleco Power

Notes to the Unaudited Condensed Consolidated Financial Statements

Note 1 — Summary of Significant Accounting Policies

Principles of Consolidation
The accompanying condensed consolidated financial statements of Cleco include the accounts of Cleco Holdings and its majority-owned subsidiaries after elimination of intercompany accounts and transactions.
Cleco’s condensed consolidated financial statements include the financial results of Cleco Cajun from the closing of the Cleco Cajun Transaction on February 4, 2019, through June 30, 2019. For more information about the Cleco Cajun Transaction, see Note 2 — “Business Combination.”

Basis of Presentation
The condensed consolidated financial statements of Cleco and Cleco Power have been prepared in accordance with GAAP for interim financial information and with the instructions to the Form 10-Q and Regulation S-X. Accordingly, these condensed consolidated financial statements do not include all of the information and notes required by GAAP for annual financial statements. The year-end condensed consolidated balance sheet data was derived from audited financial statements. Because the interim condensed consolidated financial statements and the accompanying notes do not include all of the information and notes required by GAAP for annual financial statements, the condensed consolidated financial statements and other information included in this quarterly report should be read in conjunction with the consolidated financial statements and accompanying notes in the Registrants’ Combined Annual Report on Form 10-K for the fiscal year ended December 31, 2018.
These condensed consolidated financial statements, in the opinion of management, reflect all normal recurring adjustments that are necessary to fairly state the financial position and results of operations of Cleco and Cleco Power. Amounts reported in Cleco and Cleco Power’s interim financial statements are not necessarily indicative of amounts expected for the annual periods due to the effects of seasonal
 
temperature variations on energy consumption, regulatory rulings, the timing of maintenance on electric generating units, changes in mark-to-market valuations, changing commodity prices, discrete income tax items, and other factors.
In preparing financial statements that conform to GAAP, management must make estimates and assumptions that affect the reported amounts of assets and liabilities, the reported amounts of revenues and expenses, and the disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. For information on recent authoritative guidance and its effect on financial results, see Note 3 — “Recent Authoritative Guidance.”

Restricted Cash and Cash Equivalents
Various agreements to which Cleco is subject contain covenants that restrict its use of cash. As certain provisions under these agreements are met, cash is transferred out of related escrow accounts and becomes available for its intended purposes and/or general corporate purposes.
Cleco and Cleco Power’s restricted cash and cash equivalents consisted of the following:
Cleco
 
 
 
(THOUSANDS)
AT JUNE 30, 2019

 
AT DEC. 31, 2018

Current
 
 
 
Cleco Katrina/Rita’s storm recovery bonds
$
8,715


$
9,505

Cleco Power’s charitable contributions
1,200

 
1,200

Cleco Power’s rate credit escrow
777

 
536

Total current
10,692

 
11,241

Non-current
 
 
 
Diversified Lands’ mitigation escrow
21

 
21

Cleco Cajun’s defense fund
715

 

Cleco Power’s future storm restoration costs
15,879

 
15,391

Cleco Power’s charitable contributions
2,296

 
2,753

Cleco Power’s rate credit escrow

 
505

Total non-current
18,911

 
18,670

Total restricted cash and cash equivalents
$
29,603

 
$
29,911


26


CLECO
 
 
CLECO POWER
 
2019 2ND QUARTER FORM 10-Q

Cleco Power