cleco fall 2010

November 16, 2010

CLECO CORPORATIONCNL/NYSE Continuing Coverage: Cleco Cleaning HouseInvestment Rating: Market OutperformPRICE: $ 30.38 S &P 500: 1,178.59 DJIA: 11,023.50 RUS S ELL 2000: 705.34

Wall Street's Farm Team

Completion of Rodemacher 3 allows Cleco to manage fuel costs. Regulated base rate increases will support future operations and investments. Selling its stake in Acadia 2 plant to Entergy will reduce Clecos exposure to wholesale risks. New Acadiana load pocket transmission project helps Cleco maintain and possibly expand its coverage. Expanded services in northern Louisiana will increase Clecos exposure to the Haynesville shale gas development. Pine Prairie natural gas storage, pipeline, and compressor station increases power demand. Our 12-month target price is $35.85.

* Excluding non-recurring items

Market CapitalizationEquity Market Cap (MM): Enterprise Value (MM): Shares Outstanding (MM): Estimated Float (MM): 6-Mo. Avg. Daily Volume:

Stock Data$ 1,845.59 52-Week Range: $ 3,153.02 12-Month Stock Performance: 60.75 Dividend Yield: 59.70 Book Value Per Share: 465,709 Beta: $24.62 - $31.71 24.39% 3.16% $ 21.57 0.68

Company Quick View:Location: Pineville, Louisiana Industry: Regulated and Unregulated Electric Utilities Description: Cleco is a holding company for Cleco Power, a regulated residential, commercial and industrial electricity provider; and Cleco Midstream, an unregulated wholesale energy provider with operations in Louisiana. Key Products & Services: Cleco focuses on electricity generation, distribution and transmission services. Company Web Site: www.cleco.com Analysts: Pramono Agungnugroho Brandon Iglesias Andrew McSween Richard Slocum Sofia Zarate Investment Research Manager: Joseph Costantinou

The BURKENROAD REPORTS are produced solely as a part of an educational program of Tulane University's A.B. Freeman School of Business. The reports are not investment advice and you should not and may not rely on them in making any investment decision. You should consult an investment professional and/or conduct your own primary research regarding any potential investment.

BURKENROAD REPORTS

Valuation EPS* P/E CFPS P/CFPS

2009 A $ 1.76 17.3x $ 2.90 10.5x

2010 E $ 1.98 15.4x $ 4.76 6.4x

2011 E $ 2.29 13.3x $ 4.86 6.2x

Cleco Corporation (CNL)

BURKENROAD REPORTS (www.burkenroad.org)

November 16, 2010

STOCK PRICE AND PERFORMANCE Figure 1: 5-year Stock Price Performance

INVESTMENT SUMMARY

Our Burkenroad analyst team gives Cleco a Market Outperform rating and projects the stock price will increase 18.01% from $30.38 as of November 16, 2010 to reach the forecasted 12-month target price of $35.85. Our weighted valuation methods assumed an average annual cash flow growth rate of 5.89%from 2010 to 2019. Valuation methods used were discounted cash flow, price-to-book-value, and price-to-earnings. Our projections considered Clecos continued push to minimize risk by maintaining a minimal footprint in the wholesale power markets. Cleco is a holding company for Cleco Power, a regulated residential, commercial and industrial electricity provider; and Cleco Midstream, an unregulated wholesale energy provider with operations in Louisiana. Our price forecasts are based on Clecos strategy of increasing revenues while minimizing risk by its exit of wholesale non-regulated power markets in Louisiana. The projections account for continued reliable Madison 3 unit operations, low environmental regulatory expenditures, an increased coverage area in northern Louisiana driven by the Haynesville shale gas play, the Pine Prairie gas storage and transfer operations, the Acadiana transmission project (which will be paid for by completing the sale of Acadiana 2 to Entergy), and smart meter installations. Cleco has the most advanced and diversified power generation portfolio in Louisiana and stands to minimize costs by arbitraging coal, lignite, and petroleum vs. natural gas prices with 43% of its portfolio. The one drawback in Clecos power portfolio is the lack of nuclear or hydroelectric power plants, which are the lowest cost base load and dispatch generators. We believe Cleco has a solid competitive advantage in Louisiana because of its efficient, environmentally clean, regulated, and diversified power generation fleet.

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PREVIOUS BURKENROAD RATINGS AND PRICES

Table 1: Previous Burkenroad Ratings and PricesDate 11/13/09 11/17/08 02/18/08 12/01/06 04/14/05 03/28/04 03/24/03 11/14/01 03/05/01 02/25/00 Rating Market Perform Market Outperform Market Outperform Market Outperform Market Perform Market Perform Market Perform Market Perform Market Perform Market Perform Price $28.33 $25.85 $33.66 $25.11 $19.94 $16.87 $10.41 $16.34 $17.86 $11.69

INVESTMENT THESIS

Cleco, as most utility companies, operates as a regulated monopoly. Therefore, to strengthen its business, Cleco needs to increase efficiency and grow its market area. The following examples illustrate what Cleco is doing to grow its business. The completion of Rodemacher 3 (now renamed Madison 3) represents Louisianas first reliable power plant that is petroleum fired and includes a biofuel operating envelope. The Madison 3 unit is able to use coal, lignite, petroleum, and biomass fuel types. Being able to use various fuel types gives Cleco the ability to manage fuel costs and potential environmental mandates. Madison 3s $1 billion rate base investment represents 24% of Clecos owned regulated power generation fleet when fed with pet coke. Clecos current negotiated rate base agreement with LPSC provides shareholders with an effective maximum return on equity of 11.7%, while maintaining 51% equity and 49% debt capital structure. Shareholders receive 100% of retail profits when ROE is less than 11.3%, 40% of retail profits for revenues that fall between 11.3% and 12.3% ROE, and 0% of retail profits that exceed 12.3% ROE. Cleco provides reliable low risk returns to the investor. Clecos strategic direction is to increase revenues while controlling risks. To achieve its strategic goals, Cleco will focus on regulated sales instead of selling wholesale. Clecos wholesale market risk exposure will be reduced by selling its 50% remaining ownership stake in Acadia Unit 2 for $150 million to Entergy in first quarter 2011. With the sale of Acadia Unit 2 to Entergy, Cleco can pay off $150 million of short-term debt, which was used to acquire Acadia Unit 1 for Cleco Power. The project is designed to maintain Clecos coverage area in its former Acadia Unit 2 wholesale market area. Peaking hours bottleneck the current transmission infrastructure, effectively removing rate payers from Clecos rate base, which results in net power purchases from Entergy. Thus, the new Acadiana load pocket project keeps the revenue flowing for Cleco vs. paying its competitor, Entergy, for power.3

Completion of Rodemacher 3 allows Cleco to manage fuel costs.

Regulated base rate increases will support future operations and investments.

Selling its stake in Acadia 2 plant to Entergy will reduce Clecos exposure to wholesale risks. New Acadiana load pocket transmission project helps Cleco maintain and possibly expand its coverage.



November 16, 2010

Expanded services in northern Louisiana will increase Clecos exposure to the Haynesville shale gas development. Pine Prairie natural gas storage, pipeline and compressor station increases power demand.

Spillover construction, pipeline, and distribution requirements driven by the Haynesville shale gas development are increasing power demand in Northern Louisiana. Additionally, an advanced drilling technique, commonly referred to as fracking, is also increasing demand further. New demand provides economic incentives for Cleco to run new distribution lines, effectively barricading off competitors. Thus, Cleco is securing a future market in northern Louisiana that is indirectly driven by the Haynesville shale gas development. Plains All American Pipeline L.P. is currently in negotiations with the Federal Energy Regulatory Commission (FERC) to approve an 80 Bcf capacity storage facility. New compressor stations that are driven by electric motors within the Pine Prairie storage and transmission project are expected to increase power demand. Pine Prairie Natural Gas Storage currently has three operating caverns with 24 Bcf of working gas capacity, and 18 Bcf incremental capacity is scheduled to be installed by 2012. The storage facility is located 50 miles northwest of Henry Hub, the delivery point for NYMEX natural gas. Our12-month target price estimate is $35.85 per share. We used three methods of valuation to calculate the price: the price to earnings (PE) method, the price to book value (P/BV) method, and the discounted cash flow (DCF) method.

VALUATION

Price to Earnings This valuation method compares the market value per share of Cleco to its Method earnings per share. To arrive at our target price, we multiplied the current P/E ratio of Clecos peers by our projected earnings per share for Cleco. The target price resulting from this method is $36.15 per share. Price to Book Value P/BV method is a valuation method that compares the market value per Method share of Cleco to its book value per share. Instead of using Clecos current P/BV ratio, we took its peers current P/BV ratio and multiplied that ratio by our projection of Clecos book value per share. This method produces the target price per share of $30.63 for Cleco. Discounted Cash The DCF method is used to estimate the attractiveness of an investment Flows Method opportunity. In this analysis, we used future cash flows projections of Cleco and discounted them using a weighted average cost of capital (WACC) to arrive at a present value. The present value of this calculation is $39.55, which is also the target price per share that we arrived at using the DCF method. Weighting After calculating target prices with these three methods, we applied weights to each target price and arrived at our weighted average target price. Because the DCF method shows a potential target price, we gave it a greater weight when calculating our target price. A potential target price for the DCF method exists because this method uses only Clecos internal4



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financial data, while other methods use multiples or ratios from Clecos peers. With these adjustments, we arrive at a weight of 40% for the DCF method, 30% for the P/BV method, and 30% for the P/E method. The weighted target price resulting from this weighting process is $35.85 per share. Table 2: Valuation Methods and Weighting Method Price Weight Weighted Price DCF $39.55 40% $15.82 P/BV $30.63 30% $9.19 P/E $36.15 30% $10.84 Target price 100% $35.85

INDUSTRY ANALYSIS

Cleco is a public electric utility company operating in two business segments, Cleco Power (retail) and Midstream (wholesale). Cleco generates, transmits, and distributes electricity within Louisiana. In 2009, net income for the utilities industry rose by 64.9% to $32.156 billion, from $19.505 billion, according to the Edison Electrical Institute (EEI). This increase is best explained by a $6.583 billion increase in asset sale gains and a $9.052 decline in asset write-downs. In 2009, most electric utilities (54%) reported a decline in net income, because of the impact of the economic downturn, the weakness in the power markets, and the unusual mild weather in most parts of the country. In 2009, operating revenues decreased by 11.6% to $365.931 billion on a yearly basis. Nevertheless, the decrease was offset by a 13.2% decline in total operating expenses to $302.784 billion, attributed to a 19% decline in power generation costs. Consequently, net income before taxes was up 46.0% to $48.531 billion. As of June 2010, U.S. electricity generation increased by 8% to 376,216 thousand MWh. The increase can be attributed to higher U.S. temperaturerelated energy demand and to an 8.2% annual increase in industrial production. From January through June 2010, retail electric power revenues reached $173.729 billion in the United States, a 2.3% increase from the same 2009 period. The fuel sources are distributed as follows: combustible fuels (61%), nuclear (22%), hydro (14%) and geothermal, wind, solar and other (3%). The value chain of the electricity industry comprises energy generation, electricity transmission, and electricity distribution. Customer groups are divided among residential (39% share by June 2010), commercial (36%), and industrial (25%).

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The major macroeconomic factors affecting the industry include GDP growth, industrial production, commercial activity, and employment. A higher economic output fuels demand, yet, an economic slowdown does not have a significant effect on total demand. For example, in 2008, the S&P Electric Utilities sub-index decreased by 28.1% compared with a 38.5% decline for the S&P 500. Total retail sales of electricity decreased by just 1% in 2008. The factor that affects electricity demand the most is weather and natural disasters such as hurricanes and tornados. Government The electricity utilities are monopolies. Because of the high capital Regulation investment requirements and the inability to set up two-different electrical wiring systems to connect the providers with the consumers, clients are forced to contract the services of their closest electricity provider. Because electricity utilities operate as monopolies, the government strongly regulates their returns and the rates they charge to consumers to avoid abuses to consumers. To promote efficiency, performance is assessed when determining base rates. The American Recovery and Reinvestment Act of 2009, a $787 billion economic stimulus package, aims to significantly accelerate the development of renewable energy projects through federal tax credits, loan guarantees, federal funding, and grants. The electricity industry can be highly vertically integrated, with businesses often performing generation, transmission, and distribution. This industry is highly regulated for numerous reasons, the most substantial being the inelasticity of demand in the market, and the requirement that customers must have access to power. At a national level, FERC regulates both the interstate transmission of electricity and the wholesale businesses. At a state level, the Louisiana Public Service Commission (LPSC) regulates utilities within the state of Louisiana. Cleco, for example, is regulated by the LPSC for its retail business, by the FERC for its wholesale division, and by the SEC for being a public company. The LPSC determines the components that can be included in base rates, the retail rates, and the returns that electricity utilities can achieve in Louisiana. Electric utilities are exposed to heavy fines if they do not meet the reliability requirements set by regulators. The challenge of electric utilities is to predict usage properly to have sufficient production capacity, and to have hedging procedures to prevent fines. Barriers to Entry The utilities market within Louisiana is highly regulated, which makes it extremely difficult for new companies to enter. Electricity companies in this state are essentially licensed monopolies, regulated by the Louisiana Public Service Commission (LPSC). Electricity companies are granted service agreements within the municipalities in which they operate. It would be difficult for any new competitor to enter these municipalities and create or lease the infrastructure needed to service customers. Furthermore, increasing federal, state, and local regulations make it difficult and expensive for non-established firms to compete in new markets. This6



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substantial barrier is an advantage for Cleco and other established companies because they will not have to worry about losing their customer base to new entrants. Bargaining Power Cleco and its competitors suppliers include fuel and electric providers that of Suppliers sell either raw material for power generation or additional power to meet surplus demand. Fuel suppliers in the utilities industry usually operate under long-term contracts, and there is relatively little supplier bargaining power during the life of a contract. Similarly, companies within the utilities industry often buy and sell power from each other to meet demand that cannot be generated in-house. Therefore, neither party has more or less power over the other. The volatile nature of the energy industry may result in major losses if a Company is forced to buy power on the open market when supply is tight. Bargaining Power Retail customers do not have any bargaining power because they are not of Buyers able to choose which utility company they will use. This guarantees demand for local electric utilities providers. The only state with an unregulated retail market is Texas, where consumers can choose their electricity provider. Commercial or industrial buyers have a greater degree of bargaining power because they can decide to generate their own power by investing in power generating facilities. Availability of Other available energy sources include natural gas, solar, wind, LPG, and Substitutes LNG. However, all clients need electricity to operate appliances or machinery. Therefore, a source substitute exists, but a product substitute does not exist. Customers have limited flexibility to switch to other energy sources like solar, but this alternative is extremely expensive. At the moment, Cleco offers a product with limited substitutes. Intensity of Rivalry Regulators determine base rates that electric utilities can charge to their clients. A competitive position is determined by generation capacity and number of customers. The key issue impacting profitability is the efficiency of the generation plant, which is affected by energy source type, technology, and general cost structure. The wholesale power market is less regulated by the government; hence, there is greater competition among the different utility companies. COMPANY DESCRIPTION Cleco (CNL/NYSE) is a holding company for Cleco Power, a regulated electricity provider, and Cleco Midstream, a wholesale energy provider. Headquartered in Pineville, Louisiana since 1934, Cleco served roughly 277,000 customers in 22 parishes as of 2009. Cleco currently has a total of 1,305 employees with the majority, 1,015 employees, working for Cleco Power. The Companys diversified power generation portfolio comprises coal, lignite, pet coke and natural gas. Figure 2 highlights Clecos service area across the state.

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Figure 2: Cleco Service Area

www.Cleco.com retrieved on 10/16/2010

History Clecos roots date back to 1906, when C.J. Pope began producing 25 kilowatts of power with a single steam driven generator in Bunkie, Louisiana. Years later, the power facility incorporated ice production into its services, and the Louisiana Ice and Utility Co. was born. In 1934, financier Floyd Woodcock reorganized that company into the Louisiana Ice and Electric Co., and shortly thereafter, he added the first power plant, Rea Station. As the value of ice and electricity changed throughout the mid 1900s, Louisiana Ice and Electric Co. updated its name to Central Louisiana Electricity Co. Inc. (Cleco). A merger with Gulf Public Service Co. in 1951 doubled the size of Cleco. Clecos growth led to the eventual admission of the corporation to the New York Stock Exchange in 1968. In 1998, Cleco implemented a public holding company structure, with Cleco Power and Cleco Midstream as the subsidiaries. In 2010, Cleco completed its Rodemacher 3 unit, the largest generation project in the Companys history, by adding its first solid fuel powered facility. This addition diversified Clecos power generation portfolio into petroleum coke and nearly eliminated its need to purchase power. In 2010, Cleco also acquired full ownership of a 580 megawatt unit from Acadia Power partners.8



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Clecos Customer Cleco has residential as well as commercial and industrial customers. In Base by Sales 2009, the number of residential customers was 237,126, generating an Percentage average of $1,429 per year per customer. Cleco serves 36,689 Commercial and 632 industrial customers. Revenue is distributed over these classes with 52% from residential, 31% from Commercial, and 16% from industrial customers. Figure 3: Cleco Customer Base by Sales PercentageIndustrial (16%) Other (1%) Residential (52%) Commerical (31%)

Figure by Author 10/16/10

In 2009 Cleco Power billed a total of 9,109 MWh to all of its customer classes. Each residential customer used approximately 15,337 KWh per year, up from 15,036 KWh in 2008, generating revenues of $1,429 per customer in 2009, down from $1,722 in 2008.With the addition of the Rodemacher 3 unit producing 600MW, Cleco Power can offer its customers a lower cost product. Business Segments Cleco Power LLC Cleco Power LLC is a regulated electric utility company that sells, generates, distributes and transmits electricity to the residential market. The rates charged are determined by local and federal commissions: the Louisiana Public Service Commission (LPSC) and the Federal Energy Regulatory Commission (FERC). Cleco operates five regulated steamelectric facilities, including the new Madison 3 unit and the Acadia acquisition, and one gas turbine. The net capacity of these generation units under Clecos ownership is 2,532 Mw. A full description of Clecos generating stations and output is listed in Table 3.

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Table 3: Generating Stations and OutputGenerating Station Acadia Power Station Dolet Hills Power Station Brame Energy Center Brame Energy Center Brame Energy Center Teche Power Station Teche Power Station Teche Power Station Total Generating Capability 1 2 3 1 2 3 Gen. Unit # 1 Initial Startup Year 2002 1986 1975 1982 2010 1953 1956 1971 Name Plate (Mw) 580 650 440 523 600 23 48 359 3,223 Cleco's % Ownership 100% 50% (325MW) 100% 30% (157MW) 100% 100% 100% 100% 2,532 Fuel Used For Generation(2) natural gas lignite/ natural gas natural gas/oil coal/ natural gas pet coke natural gas natural gas natural gas/oil

Cleco Midstream Resources LLC Cleco Midstream is the retail subsidiary of Cleco Corp. It operates wholesale generation and distribution as well as interconnection services for third party generation stations. Cleco Midstream operates two generation stations and acquired full ownership of its Acadia unit in Q1 2010. A full description of Midstreams generation stations and output is listed in Table 4. Table 4: Midstream Generation Stations and OutputGenerating Station Acadia Evangeline Total Generating Capability Gen. Unit # 2 6&7 Initial Startup Year 2002 1948/2000 Name Plate (Mw) 580 775 1,355 Midstream's % Ownership 50% 100% 1,065 Fuel Used For Generation (2) natural gas natural gas

Strategy Clecos strategic goals are to increase market share and efficiency in all aspects of its business. The Company is accomplishing its strategic goals through capital investments and acquisitions. The ultimate goal of Cleco is to achieve sustained lower operating costs and higher demand by diversifying fuel products, distributors, and customers. The Company has set five goals for the 2010 year: Continue to focus on safety Continue being a good steward for the environment and prepare to provide cost effective alternative energy solutions Keep its joint transmission project on budget and on schedule Look for new opportunities to grow Cleco power by adding new retail and wholesale customers Complete the sale of Unit 2 at Acadia Power station to Entergy Louisiana and continue working to maximize the value of the Evangeline asset.10



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Awards and Setting and accomplishing lofty strategic goals is one of the many reasons Recognition Cleco was nominated for or awarded several honors in the past year. These honors include: Finalist in the category of Construction Project of the Year in the annual Platts Global Energy Awards Edison Electric Institute Index Award for exceptional shareholder return in the small market capitalization category Cleco Power's Madison 3, formerly known as Rodemacher 3, was the recipient of Power magazine's 2010 Marmaduke Award, which is presented to power plants that made substantial upgrades, improved efficiency, improved environmental performance, or extended the life of the plant.

Competitors Cleco faces competition in all segments of its business from three main local competitors; Southern Company, Entergy, and CenterPoint Energy. There are also rural electric cooperatives and subsidized solar homes that diminish the potential market. Cleco operates under franchise agreements that define regions where Cleco has the right to provide electricity to customers. In the wholesale market there is a possibility that new competitors will enter the market; however, the cost of creating a plant is a relatively high barrier to entry. PEER ANALYSIS The criteria we used to define Clecos peer companies are proximity, geographical area of service, industry, integration to nearby power grids and pools (Eastern Interconnect and ERCOT companies, Southwest Power Pool companies, Southeastern Electric Reliability Council companies), and publicly traded utilities. One factor that was difficult to include in our peer analysis was the Companys exposure to hurricanes. Many utilities have service in southeastern states around Louisiana, but most of them are not publicly traded. For a multitude of reasons, no company will ever have the exact same exposure to hurricanes as another company. Consequently, we selected peers within the similar geographic locations to best factor in the risk that hurricanes pose. Figure 4 highlights the different grids and power pools. Thus, the numbers of peer utilities within SPP and SERC are limited to three. Therefore, the three companies identified as Clecos peers are CenterPoint Energy Inc. (CNP), Entergy Corporation (ETR), and Southern Company (SO).

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Figure 4: Power Grids & Power Pools

Source: solcomhouse.com retrieved on September 3, 2010

Table 5: Peer ComparisonCompany Southern Company Entergy CenterPoint Energy Inc. Cleco Tick SO ETR CNP CNL Mkt Cap 27.65 13.43 5.55 1.60 2009 P/E 14.42 11.76 13.69 15.80 P/BV 1.78 1.53 1.81 1.25 EV/ EBITDA 8.86 6.21 7.12 8.80 Debt/ Equity 1.24 1.31 3.16 1.09 Div. Yield 5.31% 4.30% 5.85% 3.50% ROE 13.96% 14.80% 15.63% 22.00%

Source: Bloomberg retrieved on September 11, 2010. All data are based on second quarter of 2010 reports except P/E. Market capitalizations are in billion dollars.

Although Table 5 shows that Cleco has the smallest market capitalization, the Company had the highest P/E ratio in 2009. We found no irregularities in this ratio, and it is relatively close to that of its peers. Based on the data on MSN Money (retrieved on September 17, 2010), the industry P/E ratio five-year high is 36.6, and the industry P/E ratio five-year low is 8.8. This ratio had shown an increase of 2.4% in 2009, which means that investors were willing to pay more per share per dollar of earnings than in the previous year. This increase indicates that the stock price of Cleco is either overvalued or has positive performance potential. As shown in Table 5, the 1.09% debt to equity ratio of Cleco is the lowest of its peers. Having the lowest D/E ratio implies that Clecos risk of bankruptcy is lower than that of its peers. Again, the D/E ratio is still within range of Clecos peer companies, with the exception of CenterPoint Energy. The EV/EBITDA ratio gives us information about a companys ability to create value per dollar of EBITDA. Clecos EV/EBITDA is within the range of its peers. The value of Cleco is 8.8 times its EBITDA (Table 5).12



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This multiple surpasses the multiples of two competitors, Entergy and CenterPoint Energy; however, the EV/EBITDA ratio declined from the 2009 value. This decline may indicate that the stock price of Cleco will go lower than the stock price in 2009. The lower the stock price is, the lower the P/E ratio is. Thus, the value creation of Cleco has decreased. A possible explanation may be that Cleco increased the dividend in 2010. The dividend yield of Cleco is the lowest relative to its peer companies. This yield describes the ability of a company to pay dividends relative to the stocks price. The size of the dividend depends on the size and strategy of a company. Cleco is the smallest company relative to its peers and the only undiversified company in the list. The return on equity (ROE) of Cleco exceeds the average ROE of its peer companies. This ratio shows a companys efficiency in revenue and expense management so that a company can give high earnings to its stockholders. It also indicates good debt management. Southern Southern Company is one of the largest electricity distributors in the Company Holding United States. It is headquartered in Atlanta, Georgia. Through its (SO/NYSE) subsidiaries, it provides electricity service to more than 4.4 million retail customers in Alabama (Alabama Power), Georgia (Georgia Power), Florida (Gulf Power), and Mississippi (Mississippi Power). It produces more than 42,900 MW of electricity using coal, nuclear, oil and gas, and hydro resources. Southern Company also owns all common stock of Southern Power. This subsidiary constructs, acquires, owns, and manages generation assets and sells electricity at market-based prices in the wholesale market. Through its other subsidiary, SouthernLINC Wireless, Southern Company provides digital wireless communication to the customers in the Southeast. This subsidiary also provides fiber optic solutions to telecommunications providers in the Southeast. The other subsidiaries are Southern Nuclear, SCS, Southern Renewable Energy, and other direct and indirect subsidiaries. Entergy Corp. Entergy Corp. is an integrated energy company with electricity production (ETR/NYSE) and retail electric distribution operations as its primary business. This company provides electricity service to more than 2.7 million customers in four states (Arkansas, Louisiana, Mississippi, and Texas) using its power plants to generate approximately 30,000 MW of electricity. As part of the utility segment, this company also provides natural gas to around 189,000 customers in Louisiana. The other business segment is non-utility nuclear. In this segment, this company owns and operates six nuclear plants in the northern United States and sells the electricity mainly to wholesale customers. This segment also provides services to other nuclear power plant owners. This company is based in New Orleans, Louisiana.

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CenterPoint CenterPoint Energy Inc. was founded in 1882. The Houston, Texas, based Energy Inc. company participates in many segments of the electrical markets. The first (CNP/NYSE) segment is electric transmission and distribution, which provides services to more than 2.1 million customers through its subsidiary, CenterPoint Energy Houston LLC. Its service covers approximately 5000-square miles in the Texas Gulf Coast, including Houston. The company, through its subsidiary, CenterPoint Energy Resources Corp., also owns and operates a natural gas distribution system. This business provides service to more than 3.2 million customers in six states. Another segment is Interstate Pipeline, which provides transportation services to shippers and end-users. Remaining segments are competitive natural gas sales and services, field services, and other operations. It is important to note that CenterPoint Energy is based within ERCOT, the electric power grid manager in Texas, and serves a deregulated, free market, which contrasts the regulationdriven utility business in Louisiana. MANAGEMENT PERFORMANCE AND BACKGROUND The board of directors and the executive officers of Cleco have sufficient experience in the energy and the financial sectors to properly manage the operations of Cleco. The board of directors comprises 12 individuals and is elected by Clecos shareholders.

Management Depth At least annually, the board evaluates the performance of the CEO. The board has a plan for succession if the CEO should have to leave his or her position. Under this plan, the CEO appoints another officer or officers who will assume the position if a need arises. The CEO will discuss with the board of directors an evaluation of executive officers, a continuing plan for management development measures, and a management succession plan. The CEO can recommend someone who will best replace him or her; however, the board will choose the CEO's replacement. Return on invested capital (ROIC) is used as a measure of management performance. The ROIC shows the relationship between returns generated and invested capital. Table 6 shows Clecos ROIC compared to the average ROIC of its peers. In 2008 and in 2009, Clecos ROICs of 6.08% and of 6.03%, respectively, are higher than its peers average of 5.33% and 4.83%, respectively. Clecos ROIC significantly improved in 2008 because Clecos net operating profits after taxes rose by 67% thanks to an increase of $21.639 million in revenues from sales for resale and unbilled revenues. Clecos operating revenues also increased in 2009, while the operating revenues of most of its peers decreased during these years. This increase allowed Cleco to achieve a higher ROIC than its peer group during 2008 and 2009.

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Table 6: ROIC ComparisonYear 2009 2008 2007 2006 Cleco ROIC 6.03% 6.08% 4.11% 4.11% Average Peer ROIC 4.83% 5.33% 5.26% 4.69%

Source: Bloomberg retrieved on September 10, 2010

Management Cleco has two stock-based plans: a long-term incentive compensation plan Incentives (LTICP) and an employee stock purchase plan (ESPP). The LTICP is targeted for certain officers, key employees, and directors of Cleco and its subsidiaries. A total of 2,250,000 shares of Cleco common stock may be granted through the 2010 LTICP (effective January 1, 2010).There were 117,695 non-vested share-based compensation arrangements granted under the LTICP (as of December 31, 2009).The ESPP plan benefits all other employees. A maximum of 784,000 shares of common stock may be purchased through the ESPP at a discount. There were 464,703 shares of common stock left to be purchased under the ESPP (as of December 31, 2009). Board of Directors By policy, a majority of the members of the board of directors are independent, non-management directors. The board created categorical standards to help determine the independence of its directors. No corporation employees, besides the CEO, can serve as a director. Michael H. Madison President and CEO of Cleco Corp and CEO of Cleco Power (62) Michael H. Madison has served as president and CEO of Cleco and CEO of Cleco Power since May 2005 and as president and COO of Cleco Power LLC from October 2003 to May 2005. He is a member of the executive committee. Mr. Madison was state president of the Louisiana-Arkansas region with American Electric Power from June 2000 to September 2003. During his career with American Electric Power (formerly the Central and South West System), he held positions that included president, director, vice president of operations and engineering, and vice president of corporate services. Mr. Madison serves as a member of the Alexandria/Pineville, Louisiana local advisory board for Capital One Bank. Mr. Madison has wide experience with the electric utility business. George W. President and Chief Operating Officer of Cleco Power LLC (55) Bausewine George W. Bausewine joined Cleco in 1986 and has served as president and COO of Cleco Power LLC since August 2010.Mr. Bausewine holds a BA in business administration from Rollins College in Winter Park, Florida, and an MBA from Southern Methodist University in Dallas, Texas.

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Darren J. Olagues Senior Vice President and Chief Financial Officer (40) Darren J. Olagues joined Cleco in 2007 and has served as senior vice president and CFO of Cleco and Cleco Power since May 2009. Mr. Olagues was Midstream's senior vice president from July 2007 to May 2009. Previously, Mr. Olagues worked for Exelon and Sithe Energies. SHAREHOLDER ANALYSIS Institutional investors and mutual funds own the large majority, 74%, of the shares outstanding. This is a decrease from 76% in 2009, while the number of institutional shareholders rose 12% to 197 from 176. The large coverage by institutions indicates that the stock is fairly well priced, which might reduce large price swings. Ninety-Nine percent of Clecos shares are free floating. Table 7: Institutional InvestorsHolder BlackRock Institutional Trust NFJ Investment Group T. Rowe Price Associates Artisan Partners Limited Jennison Associates LLC Shares Held 5,317,066 2,843,700 2,499,870 2,497,571 2,310,819 % Held 8.77% 4.69% 4.12% 4.12% 3.81%

Source: ThomsonOne retrieved on October 16, 2010

Cleco has a low P/E ratio of 13.82 and a low beta of 0.52 which indicates that Cleco is relatively resistant to market moves and is fairly priced. The dividend yield of 3.25% makes Cleco attractive to investors looking for a consistent growth company. In addition, Cleco has had strong growth through 2010, with a 26.9% EPS total return, and is on track to continue strong EPS growth. Insider Holdings Cleco Insiders hold 1% of shares outstanding. Since February 10, 2010, Cleco insiders have acquired a net of 25,000 shares, which could be interpreted as a sign that insiders are confident that Clecos stock price will increase. Table 8: Insider HoldingsMadison, Michael H. Walker, William H. Jr. Bausewine, George W. Garrett, Jasper Patrick Crowell, Richard B. Davis, R. Russell King, Elton R. Fontenot, William G. Marks, William L. Olagues, Darren J. 153,162 70,690 56,165 50,474 46,695 42,333 39,855 37,460 36,916 24,999 0.25% 0.12% 0.09% 0.08% 0.08% 0.07% 0.07% 0.06% 0.06% 0.04%

Source: ThomsonOne retrieved on October 16,2010 16



November 16, 2010

RISK ANALYSIS

To analyze risk, we must account for Clecos organizational structure. The Company owns many subsidiaries. One of its subsidiaries, Cleco Power, generates the majority of the Companys revenue. As a consequence, issues that affect the Companys subsidiaries will also affect Cleco as a parent company. However, the degree to which Cleco is affected depends on the Companys involvement and amount of interest or participation the Company has in a subsidiary. Investment risk has four elements and they interrelate with each other. The elements of investment risk in Cleco include operational risk, regulation risk, financial risk, and bankruptcy risk.

Operational Risk The most relevant factor is that Cleco Power operates under nonexclusive franchise rights, which are granted by local governments (municipalities, parishes, or counties) and enforced by state regulators. Rights last for a fixed term and vary from 10 years to 50 years. In the past, Cleco Power was successful in renewing rights; however, recently some municipalities have started asking for proposals from other utility companies to serve their territories. This action can reduce Cleco Powers service area, thereby, reducing the ability to generate income for Cleco. Weather Risk The utility business is a weather sensitive business; therefore, demand depends heavily on the weather. During the summer, the demand for electricity reaches its peak because of increased demand for air conditioning. Mild weather has an adverse effect on Cleco Power. Another threat related to weather is storms or hurricanes. This threat can cause outages and damage property that can potentially increase expenses and reduce income. Supplier Risk This operational risk may come from the suppliereither the suppliers of energy or the suppliers of fuel. Although Cleco Power owns 100% of many of its power plants, it cannot guarantee that there will be no outages. The power supply must be available anytime. Therefore, Cleco Power maintains ownership in numerous power plants, such as Acadia (50%), Dolet Hills (50%), and Rodemacher Unit 2 (30%). The Company also constructs new power plants, such as the Rodemacher Unit 3 (now Madison 3), or purchases units, such as a 33-MW gas turbine at Teche Power Station, Teche Unit 4. Purchased Power Risk Besides investing in the ownership of plants, Cleco management also divests plants, such as the Acadia Units. Management makes this decision after much consideration over the Companys dependence on purchased power to meet capacity requirements should the Company not be able to meet demand. Purchasing power disturbs the supply of power and reduces the ability to generate income. Cleco Power owns 50% ownership in17



November 16, 2010

Dolet Hills Mine to reduce the effects of volatility in the fuel market. The Company also purchased a 50% stake in Oxbow Mine. Both mines will secure the needs of lignite that generated 45.1% of power for Cleco in 2009. That said, other fuels (coal, natural gas, and petroleum coke) are still vulnerable to market risks such as price fluctuations, shortages, and transportation problems. Fuel Cost Risk Fuel choice affects the operation of Cleco Power in terms of environmental impact. Currently, it operates power plants using hydrocarbon fuel (lignite, coal, natural gas, and petroleum coke). Lignite, the fuel that provides the greatest electricity for Cleco Power, has a high carbon dioxide emission level, making it a high pollutant fuel. This environmental issue can negatively affect Cleco Power. Customer Risk Customers can also pose a risk to the Company. The global economic downturn that hit the United States affects the ability of Cleco Powers customers to meet their liability. Poor economic conditions can cause some commercial and industrial facilities to halt or close operations. Therefore, Cleco Power could increase its bad debt expense. Regulation Risk Like many companies in the utility industry, Cleco Corporation has to comply with many regulations. Regulatory factors include the following:

Changes in rate-setting policies Recovery of investments made under traditional regulation Recovery of storm restoration costs The frequency and timing of rate increases or decreases The results of periodic North American Energy Reliability Corporation audits and fuel audits The results of Integrated Resource Planning and Request for Proposal processes The formation of Independent Coordinator of Transmissions The compliance with the Electric Reliability Organization reliability standards for bulk power systems.

These regulations can affect Clecos accounting, capital/financial market, energy market, public service, and environment. Failure to comply with regulations can result in prosecutions, penalties, and discontinuance of business. Financial Risk Cleco is also subject to the risks inherent in any Companys financial condition. Table 9 provides a comparison of the financial conditions of Cleco, the industry, and the S&P500.

18



November 16, 2010

As indicated by the debt/equity ratio in the Table 9, Cleco is underleveraged relative to the industry and the S&P 500. The Company also has the ability to cover interest payments of debt to a greater extent than the industry, as shown by the interest coverage ratio of 6.5. Although Cleco is superior in capital structure and its ability to meet debt liability than the industry, it has liquidity problems. In case of liquidation, it will be difficult for the Company to meet its current liability with a current ratio of 0.9. In addition, Clecos quick ratio of 0.7 is lower than the industry, which indicates that the Company will also have difficulty in meeting short-term liabilities. Table 9: Comparison of Financial ConditionFinancial Condition Debt/Equity Ratio Current Ratio Quick Ratio Interest Coverage Cleco 1.09 0.9 0.7 6.5 Industry 1.29 1.3 1.1 4.0 S&P500 1.15 1.4 1.1 32.6

Source: moneycentral.msn.com retrieved on September 20, 2010

Credit Risk Financial risk also depends on Clecos credit rating. In November 2009, Moodys downgraded Cleco Powers credit rating. The credit rating downgrade can cause increasing fees and interest rates under its bank credit agreement. The downgrade can also require increasing collateral for derivatives. Interest Rate Risk The other financial risk comes from interest rates. The changes in interest rates have an effect on the issuance of new debt. Lower interest rates are beneficial when issuing new debt; however, low rates will negatively affect interest income from Clecos short-term investments. Altman Z-Score The Altman Z-score was created by Edward Altman in 1968 to predict the probability of a company going into default. It uses a combination of datasets from the income statement and balance sheet to predict a firms bankruptcy risk. Historically, the test is 72% accurate in predicting insolvency within two years from the day a firm goes bankrupt. The formula is derived from a regression with five components, measuring liquidity of capital, profitability, efficiency, stability, and sales turnover. A score below 1.8 puts a company in the distress zone. A higher Z-score, between 1.8 and 2.99 places a company in the grey zone, and above 2.99 a company is considered safe.

19



November 16, 2010

Clecos Altman Z-score is .89 for 2009 from a high of 1.15 in 2007. Although a .89 score places Cleco firmly in the distress zone, a low Zscore is typical of a regulated utility. The large number of assets and amount of debt, paired with profits capped at 12.7% skew the Z-score to misrepresent the probability of bankruptcy for Cleco. For 2009, Cleco is situated between the range of S&P utilities, from .69 (American Electric Power) to 1.37 (Exelon Corp). FINANCIAL PERFORMANCE AND PROJECTIONS Clecos future revenues were forecasted using projections of temperature, unemployment, population, GDP, fuel costs, and operation activities, including the increase in generation capabilities with the addition of the Madison 3 Unit and purchase of the Acadia Unit. The generation and fuel cost factors affect revenues, but they are passed on to consumers; therefore, they do not impact earnings. Furthermore, the generation capabilities will increase as the Madison 3 Unit becomes fully operational and the Acadia acquisition is finalized, and we project Cleco to be a net seller of electricity in the near future. The temperature projections included seasonality, number of heating and cooling days, solar cycles, and El Nio and La Nia cycles.

Weather and Although we have predicted a very mild winter in Louisiana for the 2010Climate Forecast 2011 period caused by La Nia currents, there is a general increase in both heating and cooling degree days for subsequent periods. Our population projections include the addition of service areas in the rural northwestern areas and a conservative estimate for population increase of roughly one percent. Investing Activities The investing activities include the acquisition of the remaining 50% of the Acadia 1 Unit, the Acadia Load Pocket transmission project, the finalization of the Madison 3 Generation Unit, general equipment and infrastructure upgrades, the sale of the Acadia 2 Unit and possibly a $73 million dollar electronic meter upgrade for Clecos clients. The Acadia 1 Unit will add to Clecos overall net surplus in generation capacity as well as allow Cleco to bid to municipalities outside of Clecos current territories. The Acadia Load Pocket is a joint transmission project designed to increase accessibility to the Lafayette Municipality, which is currently serviced by the less efficient Teche Base Unit. The Madison 3 Generation Unit will become a base unit as it becomes fully operational in Q1 2011. This Unit has the capability of burning bio-stock in anticipation of tighter carbon regulations. An AMI smart-meter upgrade, a $73 million dollar project, will increase service and reliability to Clecos Clients. However, Cleco is selected to receive a $20 million dollar grant from the DOE to offset these costs. With the inclusion of these projects we project an average of $143 million in CAPEX per year from 2010 to 2014.

20



November 16, 2010

Financial Structure Revenues Generated from the Acadia 2 unit have been used towards Cleco Corp.s debt. The Holding Company, Cleco Corp., will eliminate all debt with this transaction. Therefore, we project Cleco Powers target debt ratio to remain at 49%, and that Cleco will refinance all upcoming debt obligations. SITE VISIT REPORT The Cleco analyst team met at Tulanes Freeman School of Business at 7:30a.m. on October 8, 2010. Members present were Pramono Agungnugroho, Brandon Iglesias, Andrew McSween, Whit Slocum, and Sofa Zrate. At 8:00 a.m. we began the four-hour drive from New Orleans to Pineville, Louisiana, where Clecos corporate headquarters are located. President and CEO Michael H. Madison; VP investor relations and CAO, Russell Davis; president and COO, George W. Bausewine; and senior VP and CFO, Darren Olagues, met us in the seventh floor of the corporate offices of Cleco. Mr. Madison provided a brief overview of the history, the current situation, and the opportunities and strategies that Cleco is currently developing. Mr. Madison also mentioned the capabilities and resources that provide Cleco with a strategic advantage over its competitors in Louisiana. The meeting helped us get a better understanding of how Cleco Power and Cleco Midstream function within the state regulated and unregulated electric utility sectors. Management also commented on the following. Clecos current position and strategic direction are based on seizing opportunities while controlling risks. Cleco realizes increasing revenues by focusing on regulated sales over the wholesale market. Clecos good cash position allows it to identify, analyze and pursue investment opportunities and deploy its capital while providing its ratepayers with value-added returns that lower utility bills. According to management, upcoming environmental regulations do not pose a significant threat for Cleco; they are an opportunity because Clecos current assets and sharing agreements effectively distribute environmentally driven cap-x expenditures and associated risk. Most of Clecos generation assets already comply with these new environmental regulations. Given that the returns are regulated by the LPSC, Cleco is determined to increase its rate base and become more efficient to provide larger dividends to its shareholders. Cleco pursues a low-risk business model, where it looks for investments that provide the greatest returns for its clients and its shareholders.

21



November 16, 2010

SOURCES OF INFORMATION

To prepare this report we obtained information from conference calls with Russell Davis, CAO, Clecos annual and quarterly reports, an on-site executive management visit in Pineville, Louisiana, a meeting with a PhD and former chief economist, and customized reports on future projects and current rate base. Other sources of information included are Tulanes power trading course, Bloomberg, Louisiana Public Service Commission, Reuters, MSN Money, EIA, Google finance, DailyFinance.com, SeekingAlpha.com, CNN Money, Standard and Poors net advantage, sec.gov, Natural Gas Weekly, Business Wire, Southern Companys Web site, CenterPoints Web site, Entergys Web site, and Duke Energys Web site. While conducting research for Cleco, we discussed the Company with Tulane Energy Institute Staff and others within the utilities industry. We used analyst reports from various financial institutions to compare Clecos proprietary reports. Through our research, we found that despite its relatively small footprint in the utilities industry, Cleco is still earning the attention and respect of numerous industry associations, analysts, and experts for its exceptional innovation and performance.

INDEPENDENT OUTSIDE RESEARCH

22



November 16, 2010

WWBD?What Would Ben (Graham) Do?BEN GRAHAM ANALYSIS(slightly modified)

The Ben Graham analysis is used to find companies that make attractive investment opportunities. Based on eight criteria (or hurdles), the analysis seeks to find companies that are undervalued and growing. The first six hurdles focus on finding underpriced stocks, whereas, the remaining hurdles look for companies that have room to grow and are consistently growing. The Ben Graham analysis is one of several valuation techniques used in this report. A company is considered an attractive investment if over half of the criteria are satisfied; therefore, Cleco is considered an attractive investment. Cleco satisfies the first five hurdles of the Ben Graham analysis. An earnings to price yield double that of a 10-year treasury, a current P/E ratio less than half of the highest P/E ratio over the previous five years, a dividend yield over half that of a 10-year treasury, and a stock price less than 150% of book value make Cleco an undervalued stock. Cleco also carries a debt load less than its book value, which means that the company is financially sound. However, Clecos earnings have been inconsistent over the past five years; therefore, Cleco would not be considered a quality growth stock, according to the Ben Graham analysis. (See the following table for the complete Ben Graham analysis.)

23



November 16, 2010

CLECO CORPORATION (CNL) Ben Graham Analysis Hurdle # 1: An Earnings to Price Yield of 2X the Yield on 10 Year Treasury Earnings per share (ttm) $ 3.27 Price: $ 30.38 Earnings to Price Yield 10 Year Treasury (2X) Yes Hurdle # 2: A P/E Ratio Down to 1/2 of the Stocks Highest in 5 Yrs P/E ratio as of 2005 A P/E ratio as of 2006 A P/E ratio as of 2007 A P/E ratio as of 2008 A P/E ratio as of 2009 A Current P/E Ratio Yes 5.9 18.6 10.9 13.4 15.5 9.3 10.75% 5.60%

Hurdle # 3: A Dividend Yield of 1/2 the Yield on 10 Year Treasury Dividends per share (ttm) $ 0.95 Price: $ 30.38 Dividend Yield 3.14% 1/2 Yield on 10 Year Treasury 1.40% Yes Hurdle # 4: A Stock Price less than 1.5 BV Stock Price $ Book Value per share as of 150% of book Value per share as of 9/30/10 9/30/10 Yes Hurdle # 5: Total Debt less than Book Value Interest-bearing debt as of Book value as of 9/30/10 9/30/10 Yes $ 1,224,246 $ 1,311,634 $ $ 30.38 21.70 32.56

Hurdle # 6: Current Ratio of Two or More Current assets as of 9/30/10 $ Current liabilities as of 9/30/10 $ Current ratio as of 9/30/10 No

451,127 480,085 0.9

Hurdle # 7: Earnings Growth of 7% or Higher over past 5 years EPS for year ended 2009 A $ 1.76 EPS for year ended 2008 A $ 1.70 EPS for year ended 2007 A $ 2.54 EPS for year ended 2006 A $ 1.36 EPS for year ended 2005 A $ 3.53 No EPS for year ended EPS for year ended EPS for year ended EPS for year ended EPS for year ended Hurdle # 8: Stability in Growth of Earnings 2009 A $ 1.76 2008 A $ 1.70 2007 A $ 2.54 2006 A $ 1.36 2005 A $ 3.53 NoStock price data as of November 16, 2010

4% -33% 87% -61%

24

Cleco Corporation (CNL)CLECO CORPORATION (CNL)Quarterly and Annual Earnings


November 16, 2010

2010 E 2011 E For the period ended 2007 A 2008 A 2009 A 31-Mar A 30-Jun A 30-Sep A 31-Dec E 2010 E 31-Mar E 30-Jun E 30-Sep E 31-Dec E 2011 E Operating revenues Electric operations $ 988,193 $ 1,032,970 $ 808,646 $ 252,798 $ 261,101 $ 325,629 $ 252,682 $ 1,092,210 $ 250,897 $ 284,093 $ 308,412 $ 264,812 $ 1,108,215 Tolling operations 7,464 4,399 11,153 7,606 30,622 7,688 4,531 11,488 7,834 31,540 Other operations 35,285 36,768 33,651 10,876 10,245 13,305 11,117 45,543 11,202 10,552 13,704 11,450 46,909 Affiliate revenue 7,138 10,460 11,461 1,149 158 119 119 1,545 119 119 119 119 476 Gross operating revenue 1,030,616 1,080,198 853,758 272,287 275,903 350,206 271,524 1,169,920 269,907 299,295 333,723 284,215 1,187,140 Electric customer credits (6,314) (6,314) Total operating revenue 1,030,616 1,080,198 853,758 272,287 275,903 343,892 271,524 1,163,606 269,907 299,295 333,723 284,215 1,187,140 Operating expenses: Fuel used for electric generation 273,954 235,706 261,456 94,582 81,558 100,587 72,228 348,955 63,407 65,887 80,141 70,848 280,283 Power purchased for utility customers 385,247 471,261 216,906 48,219 24,508 51,678 40,101 164,506 47,345 53,609 58,198 49,971 209,122 Other operations 102,479 99,028 109,060 26,654 29,845 30,288 25,162 111,949 27,454 30,740 31,197 25,917 115,307 Maintenance 49,498 47,089 51,300 13,837 21,633 23,362 19,408 78,240 14,252 22,282 24,063 19,990 80,587 Depreciation 79,904 77,876 78,204 24,253 29,798 28,847 28,848 111,746 28,938 29,213 29,611 30,076 117,839 Taxes other than income taxes 41,975 34,471 29,947 8,802 8,565 9,123 10,318 36,808 10,256 11,373 12,681 10,800 45,111 Loss on sale of assets 15 (110) 76 39 (98) 20 (39) Total operating expenses 933,072 965,321 746,949 216,386 195,809 243,905 196,065 852,165 191,652 213,104 235,891 207,602 848,250 Operating income 97,544 114,877 106,809 55,901 80,094 99,987 75,459 311,441 78,255 86,191 97,832 76,613 338,890 Interest income 11,754 5,417 1,512 162 80 128 103 473 126 118 62 74 380 Allowance for other funds used during construction 32,955 64,953 73,269 9,805 359 887 394 11,445 434 474 471 458 1,837 Equity income from investees and gain on sale of equity investments 93,148 (5,542) (17,423) 37,847 (1,129) 2,494 39,212 62,905 210 317 426 63,858 Gain on toll settlement 148,402 148,402 Other income 29,531 1,263 5,581 1,079 266 2,755 2,755 6,855 2,755 2,755 2,755 2,755 11,020 Other expense (4,405) (7,970) (2,807) (925) (2,577) (1,416) (1,416) (6,334) (1,416) (1,416) (1,416) (1,416) (5,664) Income before interest charges 260,527 172,998 166,941 252,271 77,093 104,835 77,295 511,494 143,059 88,331 100,021 78,910 410,322 Interest charges, net of capitalized interest 51,111 72,042 77,228 26,007 24,663 25,404 25,723 101,797 25,017 24,725 24,528 24,331 98,601 Allowance for borrowed funds used during construction (13,145) (19,642) (26,173) (3,572) (145) (336) (159) (4,212) (175) (191) (190) (185) (742) Total interest charges 37,966 52,400 51,055 22,435 24,518 25,068 25,564 97,585 24,842 24,533 24,338 24,146 97,859 Income from continuing operations before incom e taxes 222,561 120,598 115,886 229,836 52,575 79,767 51,731 413,909 118,217 63,798 75,684 54,764 312,463 Federal and state income taxes 70,772 18,457 9,579 79,866 17,389 30,155 18,106 145,516 41,376 22,329 26,489 19,167 109,362 Net income (loss) 151,789 102,141 106,307 149,970 35,186 49,612 33,625 268,393 76,841 41,469 49,194 35,597 203,101 Preferred dividend requirements, net 458 46 46 12 12 12 10 46 12 12 12 10 46 Net income applicable to com mon stock $ 151,331 $ 102,095 $ 106,261 $ 149,958 $ 35,174 $ 49,600 $ 33,615 $ 268,347 $ 76,829 $ 41,457 $ 49,182 $ 35,587 $ 203,055 Average shares of common stock outstanding: Basic 58,976 59,990 60,188 60,326 60,432 60,432 60,455 60,411 60,465 60,475 60,485 60,495 60,480 Diluted 59,718 60,215 60,498 60,581 60,705 60,705 60,755 60,711 60,780 60,806 60,833 60,860 60,845 In thousands Basic earnings per share Net income applicable to com mon stock Non-recurring items Net income adjusted for non-recurring items Diluted earnings per share Net income applicable to com mon stock Non-recurring items Net income adjusted for non-recurring items Cash dividends paid per share

$ $ $ $ $

2.55 2.55 2.54 2.54 0.90

$ $ $ $ $

1.70 1.70 1.70 1.70 0.90

$ $ $ $ $

1.77 1.77 1.76 1.76 0.90

$ $ $ $ $ $ $

2.49 2.46 0.03 2.48 2.45 0.03 0.23

$ $ $ $ $

0.58 0.58 0.58 0.58 0.25

$ $ $ $ $

0.82 0.82 0.82 0.82 0.25

$ $ $ $ $

0.56 0.56 0.55 0.55 0.25

$ $ $ $ $ $ $

4.44 2.46 1.99 4.42 2.44 1.98 0.98

$ $ $ $ $ $ $

1.27 1.04 0.23 1.26 1.03 0.23 0.25

$ $ $ $ $

0.69 0.69 0.68 0.68 0.25

$ $ $ $ $

0.81 0.81 0.81 0.81 0.25

$ $ $ $ $

0.59 0.59 0.58 0.58 0.25

$ $ $ $ $ $ $

3.36 1.06 2.30 3.34 1.05 2.29 1.00

25



November 16, 2010

CLECO CORPORATION (CNL)Quarterly and Annual EarningsFor the period ended 2007 A 2008 A 2009 A 31-Mar A SELECTED COMMON-SIZE AMOUNTS (% of electric operations revenues less fuel and power cos ts unless Operating revenues Electric operations (% of total operating revenue) 95.88% 95.63% 94.72% Tolling operations (% of total operating revenue) 0.00% 0.00% 0.00% Other operations (% of total operating revenue) 3.42% 3.40% 3.94% Affiliate revenue (% of total operating revenue) 0.69% 0.97% 1.34% Fuel used for electric generation (% of electric operations) 27.72% 22.82% 32.33% Power purchas ed for utility customers (% of electric operations) 38.98% 45.62% 26.82% Other operations (% of revenues less power costs) 28.13% 27.30% 29.97% Maintenance 15.05% 14.44% 15.53% Depreciation 24.29% 23.89% 23.68% Taxes other than income taxes 12.76% 10.57% 9.07% Total operating expenses (% of total revenues ) 90.54% 89.37% 87.49% Operating income (% of total revenues) 9.46% 10.63% 12.51% YEAR TO YEAR CHANGE Operating revenues Electric operations Other operations Fuel used for electric generation Power purchas ed for utility customers Other operations Maintenance OTHER Electric operations Residential Commercial Industrial Other retail Storm surcharge Other Fuel cos t recovery Sales for res ales Unbilled Total revenues Sales of electricity (millions of kilowatt-hours ) - Cleco Residential Commercial Industrial Other Total kilowatt-hours 2010 E 30-Jun A 30-Sep A 31-Dec E 2010 E 31-Mar E 2011 E 30-Jun E 30-Sep E 31-Dec E 2011 E otherwise noted) 92.84% 2.74% 3.99% 0.42% 36.34% 19.07% 20.77% 12.58% 22.05% 8.00% 79.47% 20.53% 94.64% 1.59% 3.71% 0.06% 30.72% 9.39% 17.59% 13.95% 19.22% 5.52% 70.97% 29.03% 94.69% 3.24% 3.87% 0.03% 29.87% 15.87% 15.31% 13.48% 16.64% 5.26% 70.92% 29.08% 93.06% 2.80% 4.09% 0.04% 27.75% 15.87% 15.82% 13.83% 20.55% 7.35% 72.21% 27.79% 93.86% 2.63% 3.91% 0.13% 31.08% 15.06% 17.09% 13.52% 19.31% 6.36% 73.23% 26.77% 92.96% 2.85% 4.15% 0.04% 24.52% 18.87% 17.26% 10.17% 20.65% 7.32% 71.01% 28.99% 94.92% 1.51% 3.53% 0.04% 22.83% 18.87% 17.11% 13.54% 17.75% 6.91% 71.20% 28.80% 92.42% 3.44% 4.11% 0.04% 25.05% 18.87% 15.98% 14.15% 17.41% 7.46% 70.68% 29.32% 93.17% 2.76% 4.03% 0.04% 25.99% 18.87% 15.87% 13.88% 20.89% 7.50% 73.04% 26.96% 93.35% 2.66% 3.95% 0.04% 24.59% 18.87% 16.54% 13.02% 19.04% 7.29% 71.45% 28.55%

3.00% 16.71% 3.20% 2.81% 13.04% 23.49%

4.53% 4.20% -13.96% 22.33% -3.37% -4.87%

-21.72% -8.48% 10.92% -53.97% 10.13% 8.94%

24.61% 52.99% 7.11% 5.47% 6.83% 31.04%

33.45% 17.60% 62.06% -56.66% 15.05% 46.51%

42.23% 34.95% 34.86% -16.57% 13.58% 123.52%

39.47% 39.47% 49.72% -23.90% -20.12% 25.03%

35.07% 35.34% 33.47% -24.16% 2.65% 52.51%

-0.75% 3.00% -32.96% -1.81% 3.00% 3.00%

8.81% 3.00% -19.22% 118.74% 3.00% 3.00%

-5.29% 3.00% -20.33% 12.62% 3.00% 3.00%

4.80% 3.00% -1.91% 24.61% 3.00% 3.00%

1.47% 3.00% -19.68% 27.12% 3.00% 3.00%

$

157,521 93,644 56,534 21,693 24,170 634,631

$

154,001 94,226 55,560 5,589 21,105

$

157,672 95,453 50,957 5,715 19,661 453,555 23,371 2,262 808,646

$

$

988,193

680,850 19,685 1,954 $ 1,032,970

$

$

46,498 $ 29,563 14,160 1,757 4,195 (975) 137,850 8,783 10,967 252,798 $

62,012 $ 39,140 19,050 2,249 1,660 (1,704) 104,044 10,673 23,977 261,101 $

100,301 $ 48,193 22,563 2,721 1,350 (1,704) 149,045 14,745 (11,585) 325,629 $

270,037 $ 157,898 75,662 9,066 11,985 (4,383) 110,083 501,022 14,638 48,839 (1,274) 22,085 252,682 $ 1,092,210 $

61,226 41,002 19,889 2,339 4,780

$

60,329 40,804 17,612 2,427 4,739 107,429 7,808 9,749 250,897

$

63,021 42,869 20,179 2,463 4,807 115,911 10,733 24,111 284,093

$

92,886 48,578 21,830 2,666 5,134

$

62,076 43,849 20,621 2,480 4,840

$

278,312 176,099 80,242 10,037 19,521

$

$

134,189 14,601 (11,472) 308,412 $

117,194 474,723 15,062 48,203 (1,311) 21,077 264,812 $ 1,108,215

3,596 2,478 3,008 135 9,217

3,545 2,450 2,898 134 9,027

3,637 2,484 2,232 136 8,489

1,040 591 544 35 2,210

854 627 543 34 2,058

1,263 771 592 37 2,663

835 636 550 33 2,053

3,992 2,625 2,229 139 8,984

856 597 478 34 1,965

829 666 541 34 2,069

1,219 792 590 36 2,637

845 675 560 33 2,112

3,749 2,729 2,169 137 8,784

26

Cleco Corporation (CNL)CLECO CORPORATION (CNL)Quarterly and Annual Balance Sheets


November 16, 2010

2010 E 2011 E 31-Dec-07 A 31-Dec-08 A 31-Dec-09 A 31-Mar A 30-Jun A 30-Sep A 31-Dec E 31-Dec-10 E 31-Mar E 30-Jun E 30-Sep E 31-Dec E 31-Dec-11 E Cash and cash equivalents $ 129,013 $ 97,483 $ 145,193 $ 92,222 $ 52,155 $ 67,836 $ 84,611 $ 84,611 $ 76,378 $ 16,473 $ 28,977 $ 7,117 $ 7,117 Restricted cash 17,866 62,311 29,941 22,462 22,971 15,466 23,223 23,223 22,719 22,971 23,223 23,223 23,223 Customer accounts receivable, net 39,587 40,677 29,550 42,112 43,926 53,682 41,198 41,198 41,357 46,829 50,285 43,176 43,176 Accounts receivable - affiliate 9,367 3,428 12,129 580 830 2,046 839 839 821 830 839 839 839 Other accounts receivable 39,029 34,209 28,878 37,122 34,110 51,468 34,485 34,485 33,735 34,110 34,485 34,485 34,485 Tax receivables 13,663 15,449 Unbilled revenues 17,759 19,713 21,975 32,942 56,918 45,333 24,719 24,719 25,090 28,097 30,171 25,906 25,906 Fuel inventory, at average cos t 43,291 57,221 80,038 71,460 77,544 88,679 99,823 99,823 54,222 99,493 79,541 70,109 70,109 Materials and supplies, inventory, at average cos t 39,195 37,547 41,410 45,181 46,791 46,836 35,705 35,705 36,241 40,585 43,580 37,419 37,419 Margin deposits 2,966 Prepayments 3,661 3,751 3,571 2,897 3,986 3,867 3,164 3,164 3,232 3,245 3,207 3,165 3,165 Risk management asset 7,396 368 2,854 2,463 1,070 621 621 621 621 621 621 621 621 Accumulated deferred fuel 9,398 69,154 35,059 27,543 25,534 21,554 21,554 21,554 21,554 21,554 21,554 21,554 21,554 Accumulated deferred federal and state incom e taxes ,net 6,799 5,746 4,130 4,529 4,529 4,529 4,529 4,529 4,529 4,529 4,529 Cash surrender value of company owned life insurance 28,857 22,934 30,269 31,488 30,566 32,657 34,748 34,748 36,839 38,930 41,021 43,112 43,112 Regulatory ass ets - other 20,194 2,553 9,914 13,312 13,469 13,143 13,143 13,143 13,143 13,143 13,143 13,143 13,143 Other current assets 1,098 1,367 896 2,038 2,814 3,410 3,410 3,410 3,410 3,410 3,410 3,410 3,410 Total current as sets 408,677 466,379 493,925 429,568 416,814 451,127 425,772 425,772 373,890 374,820 378,585 331,808 331,808 Property, plant and equipment 1,926,848 2,015,269 2,144,491 3,744,514 3,760,963 3,779,244 3,763,912 3,763,912 3,802,946 3,835,748 3,906,860 3,957,344 3,957,344 Accumulated depreciation (917,043) (948,581) (999,204) (1,111,782) (1,132,984) (1,142,731) (1,149,089) (1,149,089) (1,155,629) (1,162,211) (1,168,996) (1,175,822) (1,175,822) Net property, plant and equipment 1,009,805 1,066,688 1,145,287 2,632,732 2,627,979 2,636,513 2,614,823 2,614,823 2,647,318 2,673,537 2,737,864 2,781,522 2,781,522 Construction work-in-progress 716,075 978,598 1,101,743 109,319 121,462 120,262 133,104 133,104 145,946 158,788 144,292 150,000 150,000 Total property, plant and equipm ent, net 1,725,880 2,045,286 2,247,030 2,742,051 2,749,441 2,756,775 2,747,927 2,747,927 2,793,264 2,832,326 2,882,156 2,931,522 2,931,522 Equity investment in investee 258,101 249,144 251,617 83,030 84,401 87,095 87,095 87,095 8,288 16,785 25,390 34,103 34,103 Prepayments 6,783 6,067 5,096 4,910 4,844 4,753 4,570 4,570 4,419 4,254 4,073 3,913 3,913 Restricted cash, les s current portion 95 40,671 26,510 25,720 25,958 25,874 26,243 26,243 25,673 25,958 26,243 26,243 26,243 Regulatory ass ets - deferred taxes 126,686 174,804 264,343 203,869 205,226 205,205 205,205 205,205 205,205 205,205 205,205 205,205 205,205 Regulatory ass ets - other 158,268 158,206 201,381 263,295 259,181 255,200 255,200 255,200 255,200 255,200 255,200 255,200 255,200 Net investment in direct financing lease 13,956 13,913 13,865 13,865 13,865 13,865 13,865 13,865 13,865 13,865 Intangible assets 167,826 157,098 154,219 151,027 148,187 144,995 144,995 141,803 138,611 135,419 132,227 132,227 Other deferred charges 26,245 32,821 47,847 17,611 16,306 15,459 14,154 14,154 14,154 14,154 14,154 14,154 14,154 Total as sets $ 2,710,735 $ 3,341,204 $ 3,694,847 $ 3,938,229 $ 3,927,111 $ 3,963,540 $ 3,925,027 $ 3,925,027 $ 3,835,760 $ 3,881,177 $ 3,940,290 $ 3,948,240 $ 3,948,240 Current liabilities Short-term debt Long-term debt due within one year Accounts payable Retainage payable Accounts payable - affiliate Customer deposits Provision for rate refund Taxes accrued Interest accrued Accumulated current deferred taxes, net Regulatory liabilities - other Risk management liability Deferred compensation Other current liabilities Total current liabilities Deferred credits: Deferred federal and state income taxes Deferred investment tax credits Pos tretirement benefit obligations Regulatory liabilities - other Restricted storm reserve Uncertain tax provis ion Other deferred credits Total deferred credits Long-term debt, net Total liabilities Stockholders ' equity: Preferred s tock not subject to mandatory redemption Common stock, $1 par value Premium on capital stock Retained earnings Treasury stock, at cost Other comprehensive income Total common shareholders' equity Total shareholders' equity Total liabilities and shareholders' equity $ 100,000 123,061 25 6,860 25,989 12,411 21,933 43,055 538 7,993 6,366 13,348 361,579 366,305 12,665 31,855 68,369 89,490 568,684 769,103 1,699,366 $ 63,546 117,337 12,734 8,229 27,155 $ 11,478 111,358 813 2,370 34,195 $ 150,000 11,869 61,183 754 35,446 39,037 20,670 84,393 15,663 7,521 13,279 439,815 492,337 9,632 143,533 77,621 25,648 111,888 129,883 990,542 1,253,695 2,684,052 $ 150,000 21,869 84,523 1,008 1 37,013 39,813 11,860 66,988 8,658 6,724 13,719 442,176 502,008 9,311 145,100 70,864 25,862 110,334 127,520 990,999 1,218,302 2,651,477 $ 150,000 36,440 105,507 1,558 6 38,019 6,316 35,849 19,967 53,781 11,560 7,546 13,536 480,085 521,979 8,990 146,927 44,044 25,779 107,244 129,052 984,015 1,187,806 2,651,906 $ 150,000 107,269 119,960 1,033 6 39,270 4,737 11,990 47,178 11,560 7,546 13,536 514,086 518,129 8,668 146,927 44,044 25,779 107,244 129,052 979,843 1,100,963 2,594,892 $ 150,000 107,269 119,960 1,033 6 39,270 4,737 11,990 47,178 11,560 7,546 13,536 514,086 518,129 8,668 146,927 44,044 25,779 107,244 129,052 979,843 1,100,963 2,594,892 $ 15,777 118,012 1,033 6 40,116 3,158 11,730 47,178 11,560 7,546 13,536 269,652 523,897 8,346 146,927 44,044 25,779 107,244 129,052 985,289 1,188,971 2,443,912 $ 31,554 133,372 1,033 6 41,103 1,579 11,860 47,178 11,560 7,546 13,536 300,326 528,551 8,024 146,927 44,044 25,779 107,244 129,052 989,621 1,169,711 2,459,658 $ 47,331 147,984 1,033 6 42,046 $ 63,108 127,356 1,033 6 42,885 $ 63,108 127,356 1,033 6 42,885

In thous ands

16,787 64,838 392 30,109 5,118 14,588 360,833 373,825 11,286 155,910 85,496 27,411 76,124 82,635 812,687 1,106,819 2,280,339

11,880 33,592 13,767 7,091 15,260 241,804 460,894 9,954 146,270 149,638 25,434 115,643 108,839 1,016,672 1,320,299 2,578,775

11,990 47,178 11,560 7,546 13,536 330,210 539,969 7,702 146,927 44,044 25,779 107,244 129,052 1,000,717 1,150,450 2,481,376

11,990 47,178 11,560 7,546 13,536 326,197 547,718 7,380 146,927 44,044 25,779 107,244 129,052 1,008,144 1,131,189 2,465,530 1,029 60,510 413,929 1,018,934 (238) (11,454) 1,481,681 1,482,710 3,948,240 $

11,990 47,178 11,560 7,546 13,536 326,197 547,718 7,380 146,927 44,044 25,779 107,244 129,052 1,008,144 1,131,189 2,465,530 1,029 60,510 413,929 1,018,934 (238) (11,454) 1,481,681 1,482,710 3,948,240

1,029 1,029 1,029 1,029 1,029 1,029 1,029 1,029 1,029 1,029 1,029 59,972 60,066 60,277 60,429 60,466 60,510 60,510 60,510 60,510 60,510 60,510 391,565 394,517 399,148 400,893 402,245 403,929 403,929 403,929 403,929 407,262 410,596 567,724 615,514 667,220 803,487 823,482 857,858 876,359 876,359 938,072 964,410 998,471 (530) (428) (311) (286) (263) (238) (238) (238) (238) (238) (238) (8,391) (9,833) (11,291) (11,375) (11,325) (11,454) (11,454) (11,454) (11,454) (11,454) (11,454) 1,010,340 1,059,836 1,115,043 1,253,148 1,274,605 1,310,605 1,329,106 1,329,106 1,390,819 1,420,490 1,457,885 1,011,369 1,060,865 1,116,072 1,254,177 1,275,634 1,311,634 1,330,135 1,330,135 1,391,848 1,421,519 1,458,914 $ 2,710,735 $ 3,341,204 $ 3,694,847 $ 3,938,229 $ 3,927,111 $ 3,963,540 $ 3,925,027 $ 3,925,027 $ 3,835,760 $ 3,881,177 $ 3,940,290 $

27

Cleco Corporation (CNL)CLECO CORPORATION (CNL)Quarterly and Annual Balance SheetsIn thousands 31-Dec-07 A Cash and cash equivalents $ 129,013 Restricted cash 17,866 Customer accounts receivable, net 39,587 Accounts receivable - affiliate 9,367 Other accounts receivable 39,029 Tax receivables Unbilled revenues 17,759 Fuel inventory, at average cost 43,291 Materials and supplies, inventory, at average cost 39,195 Margin deposits 2,966 Prepaym ents 3,661 Risk m anagem ent asset 7,396 Accum ulated deferred fuel 9,398 Accum ulated deferred federal and state incom e taxes,net 28,857 Cash surrender value of com pany owned life insurance Regulatory assets - other 20,194 Other current assets 1,098 Total current assets 408,677 Property, plant and equipm ent 1,926,848 Accum ulated depreciation (917,043) Net property, plant and equipment 1,009,805 Construction work-in-progress 716,075 Total property, plant and equipment, net 1,725,880 Equity investm ent in investee 258,101 Prepaym ents 6,783 Restricted cash, less current portion 95 Regulatory assets - deferred taxes 126,686 Regulatory assets - other 158,268 Net investm ent in direct financing lease Intangible assets Other deferred charges 26,245 Total assets $ 2,710,735 Current liabilities Short-term debt $ Long-term debt due within one year 100,000 Accounts payable 123,061 Retainage payable 25 Accounts payable - affiliate 6,860 Customer deposits 25,989 Provision for rate refund Taxes accrued 12,411 Interest accrued 21,933 Accum ulated current deferred taxes, net 43,055 Regulatory liabilities - other 538 Risk m anagem ent liability 7,993 Deferred com pensation 6,366 Other current liabilities 13,348 Total current liabilities 361,579 Deferred credits: Deferred federal and state income taxes 366,305 Deferred investment tax credits 12,665 Postretirement benefit obligations Regulatory liabilities - other 31,855 Restricted storm reserve Uncertain tax provision 68,369 Other deferred credits 89,490 Total deferred credits 568,684 Long-term debt, net 769,103 Total liabilities 1,699,366 Stockholders' equity: Preferred stock not subject to m andatory redemption 1,029 Com mon stock, $1 par value 59,972 Premium on capital stock 391,565 Retained earnings 567,724 Treasury stock, at cost (530) Other com prehensive incom e (8,391) Total comm on shareholders' equity 1,010,340 Total shareholders' equity 1,011,369 Total liabilities and shareholders' equity $ 2,710,735 31-Dec-08 A $ 97,483 62,311 40,677 3,428 34,209 13,663 19,713 57,221 37,547 3,751 368 69,154 22,934 2,553 1,367 466,379 2,015,269 (948,581) 1,066,688 978,598 2,045,286 249,144 6,067 40,671 174,804 158,206 167,826 32,821 $ 3,341,204 $ 63,546 117,337 12,734 8,229 27,155 31-Dec-09 A $ 145,193 29,941 29,550 12,129 28,878 15,449 21,975 80,038 41,410 3,571 2,854 35,059 6,799 30,269 9,914 896 493,925 2,144,491 (999,204) 1,145,287 1,101,743 2,247,030 251,617 5,096 26,510 264,343 201,381 157,098 47,847 $ 3,694,847 $ 11,478 111,358 813 2,370 34,195


November 16, 2010

$

31-Mar A 92,222 22,462 42,112 580 37,122 32,942 71,460 45,181

$

2010 E 30-Jun A 30-Sep A 52,155 $ 67,836 22,971 15,466 43,926 53,682 830 2,046 34,110 51,468 56,918 77,544 46,791 3,986 1,070 25,534 4,130 30,566 13,469 2,814 416,814 3,760,963 (1,132,984) 2,627,979 121,462 2,749,441 84,401 4,844 25,958 205,226 259,181 13,913 151,027 16,306 3,927,111 $ 150,000 21,869 84,523 1,008 1 37,013 39,813 11,860 66,988 8,658 6,724 13,719 442,176 502,008 9,311 145,100 70,864 25,862 110,334 127,520 990,999 1,218,302 2,651,477 $ 45,333 88,679 46,836

$

31-Dec E 84,611 23,223 41,198 839 34,485 24,719 99,823 35,705

31-Dec-10 E $ 84,611 23,223 41,198 839 34,485 24,719 99,823 35,705

$

31-Mar E 76,378 22,719 41,357 821 33,735 25,090 54,222 36,241

$

2011 E 30-Jun E 30-Sep E 16,473 $ 28,977 22,971 23,223 46,829 50,285 830 839 34,110 34,485 28,097 99,493 40,585 3,245 621 21,554 4,529 38,930 13,143 3,410 374,820 3,835,748 (1,162,211) 2,673,537 158,788 2,832,326 16,785 4,254 25,958 205,205 255,200 13,865 138,611 14,154 3,881,177 $ 31,554 133,372 1,033 6 41,103 1,579 11,860 47,178 11,560 7,546 13,536 300,326 528,551 8,024 146,927 44,044 25,779 107,244 129,052 989,621 1,169,711 2,459,658 $ 30,171 79,541 43,580

$

31-Dec E 7,117 23,223 43,176 839 34,485 25,906 70,109 37,419

31-Dec-11 E $ 7,117 23,223 43,176 839 34,485 25,906 70,109 37,419 3,165 621 21,554 4,529 43,112 13,143 3,410 331,808 3,957,344 (1,175,822) 2,781,522 150,000 2,931,522 34,103 3,913 26,243 205,205 255,200 13,865 132,227 14,154 3,948,240 63,108 127,356 1,033 6 42,885

2,897 2,463 27,543 5,746 31,488 13,312 2,038 429,568 3,744,514 (1,111,782) 2,632,732 109,319 2,742,051 83,030 4,910 25,720 203,869 263,295 13,956 154,219 17,611 $ 3,938,229 $ $ 150,000 11,869 61,183 754 35,446 39,037 20,670 84,393 15,663 7,521 13,279 439,815 492,337 9,632 143,533 77,621 25,648 111,888 129,883 990,542 1,253,695 2,684,052 $

3,867 621 21,554 4,529 32,657 13,143 3,410 451,127 3,779,244 (1,142,731) 2,636,513 120,262 2,756,775 87,095 4,753 25,874 205,205 255,200 13,865 148,187 15,459 3,963,540 $ 150,000 36,440 105,507 1,558 6 38,019 6,316 35,849 19,967 53,781 11,560 7,546 13,536 480,085 521,979 8,990 146,927 44,044 25,779 107,244 129,052 984,015 1,187,806 2,651,906 $

3,164 621 21,554 4,529 34,748 13,143 3,410 425,772 3,763,912 (1,149,089) 2,614,823 133,104 2,747,927 87,095 4,570 26,243 205,205 255,200 13,865 144,995 14,154 3,925,027 $ 150,000 107,269 119,960 1,033 6 39,270 4,737 11,990 47,178 11,560 7,546 13,536 514,086 518,129 8,668 146,927 44,044 25,779 107,244 129,052 979,843 1,100,963 2,594,892 $

3,164 621 21,554 4,529 34,748 13,143 3,410 425,772 3,763,912 (1,149,089) 2,614,823 133,104 2,747,927 87,095 4,570 26,243 205,205 255,200 13,865 144,995 14,154 3,925,027 $ 150,000 107,269 119,960 1,033 6 39,270 4,737 11,990 47,178 11,560 7,546 13,536 514,086 518,129 8,668 146,927 44,044 25,779 107,244 129,052 979,843 1,100,963 2,594,892 $

3,232 621 21,554 4,529 36,839 13,143 3,410 373,890 3,802,946 (1,155,629) 2,647,318 145,946 2,793,264 8,288 4,419 25,673 205,205 255,200 13,865 141,803 14,154 3,835,760 $ 15,777 118,012 1,033 6 40,116 3,158 11,730 47,178 11,560 7,546 13,536 269,652 523,897 8,346 146,927 44,044 25,779 107,244 129,052 985,289 1,188,971 2,443,912 $

3,207 621 21,554 4,529 41,021 13,143 3,410 378,585 3,906,860 (1,168,996) 2,737,864 144,292 2,882,156 25,390 4,073 26,243 205,205 255,200 13,865 135,419 14,154 3,940,290 $ 47,331 147,984 1,033 6 42,046 $

3,165 621 21,554 4,529 43,112 13,143 3,410 331,808 3,957,344 (1,175,822) 2,781,522 150,000 2,931,522 34,103 3,913 26,243 205,205 255,200 13,865 132,227 14,154 3,948,240 $ 63,108 127,356 1,033 6 42,885 $

16,787 64,838 392 30,109 5,118 14,588 360,833 373,825 11,286 155,910 85,496 27,411 76,124 82,635 812,687 1,106,819 2,280,339

11,880 33,592 13,767 7,091 15,260 241,804 460,894 9,954 146,270 149,638 25,434 115,643 108,839 1,016,672 1,320,299 2,578,775

11,990 47,178 11,560 7,546 13,536 330,210 539,969 7,702 146,927 44,044 25,779 107,244 129,052 1,000,717 1,150,450 2,481,376

11,990 47,178 11,560 7,546 13,536 326,197 547,718 7,380 146,927 44,044 25,779 107,244 129,052 1,008,144 1,131,189 2,465,530 1,029 60,510 413,929 1,018,934 (238) (11,454) 1,481,681 1,482,710 3,948,240 $

11,990 47,178 11,560 7,546 13,536 326,197 547,718 7,380 146,927 44,044 25,779 107,244 129,052 1,008,144 1,131,189 2,465,530 1,029 60,510 413,929 1,018,934 (238) (11,454) 1,481,681 1,482,710 3,948,240

1,029 1,029 1,029 1,029 1,029 1,029 1,029 1,029 1,029 1,029 60,066 60,277 60,429 60,466 60,510 60,510 60,510 60,510 60,510 60,510 403,929 407,262 410,596 394,517 399,148 400,893 402,245 403,929 403,929 403,929 615,514 667,220 803,487 823,482 857,858 876,359 876,359 938,072 964,410 998,471 (428) (311) (286) (263) (238) (238) (238) (238) (238) (238) (9,833) (11,291) (11,375) (11,325) (11,454) (11,454) (11,454) (11,454) (11,454) (11,454) 1,059,836 1,115,043 1,253,148 1,274,605 1,310,605 1,329,106 1,329,106 1,390,819 1,420,490 1,457,885 1,060,865 1,116,072 1,254,177 1,275,634 1,311,634 1,330,135 1,330,135 1,391,848 1,421,519 1,458,914 $ 3,341,204 $ 3,694,847 $ 3,938,229 $ 3,927,111 $ 3,963,540 $ 3,925,027 $ 3,925,027 $ 3,835,760 $ 3,881,177 $ 3,940,290 $

28

Cleco Corporation (CNL)CLECO CORPORATION (CNL)Quarterly and Annual Statements of Cash Flows


November 16, 2010

2010 E 2011 E For the period ended 2007 A 2008 A 2009 A 31-Mar A 30-Jun A 30-Sep A 31-Dec E 2010 E 31-Mar E 30-Jun E 30-Sep E 31-Dec E Cash flows from operating activities: Net income before preferred dividends $ 151,789 $ 102,141 $ 106,307 $ 149,970 $ 35,185 $ 49,613 $ 33,625 $ 268,393 $ 76,841 $ 41,469 $ 49,194 $ 35,597 $ Adjustments: Depreciation and amortization 82,131 120,652 121,436 37,622 44,484 43,988 41,102 167,196 42,225 42,919 44,504 39,256 Gain on sale of property, plant and equipment 15 (110) 76 Gain on forgiveness of debt (129,870) (129,870) Proceeds from sale of bankruptcy settlement claims 78,200 Provision for doubtful accounts 2,873 3,826 1,682 (335) 406 507 619 1,197 357 531 852 472 Income from equity investment (93,148) 5,542 17,423 (37,847) 1,129 (2,494) (39,212) (62,905) (210) (317) (426) Return on equity investment in investee 68,702 5,106 750 ESOP Expense 2,721 Unearned compensation 8,111 2,540 6,087 930 1,067 1,950 3,947 Allowance for other funds used during construction (32,955) (64,953) (73,269) (9,805) (360) (887) (19,303) (30,355) (9,805) (360) (12,170) (20,386) 1,395 Cash-surrender value of company/trust-owned life insurance (1,042) 5,334 (5,180) (866) (2,010) (1,481) Amortization of investment tax credits (1,435) (1,380) (1,332) (321) (321) (322) (322) (1,286) (322) (322) (322) (322) Deferred income taxes 6,180 5,154 (5,983) 16,361 7,705 15,947 (3,850) 36,163 5,768 4,654 11,418 7,749 Deferred fuel costs 11,024 6,444 7,223 19,864 (10,967) 5,097 13,994 Gain (loss) on economic hedges (1,066) 2,213 167 360 (392) (156) (188) Changes in assets and liabilities Accounts receivable, net (12,206) (5,557) 8,310 (17,889) (1,609) (29,831) 28,848 (20,481) 234 (6,378) (4,683) 6,637 Notes and accounts receivable, affiliate 15,198 14,242 (8,701) 9,109 (6,999) (1,216) 1,207 2,101 18 (9) (9) Unbilled revenues 623 (1,954) (2,262) (10,967) (23,977) 11,585 20,614 (2,745) (371) (3,007) (2,074) 4,265 Fuel, material and supplies inventories (3,363) (12,282) (26,680) 6,895 (7,693) (11,181) (13) (11,992) 45,065 (49,615) 16,957 15,593 Prepayments 1,111 1,050 1,575 1,552 (714) 209 886 1,933 83 152 220 201 Accounts payable 10,008 2,806 11,231 (58,264) 26,844 14,172 14,453 (2,795) (1,948) 15,360 14,612 (20,628) Notes and accounts payable, affiliate (11,598) (34,260) (22,796) (8,370) 6,001 5 (2,364) Customer deposits 5,447 5,961 12,906 2,888 3,496 3,106 1,251 10,741 846 987 943 839 Long-term receivable 27,976 27,976 Postretirement benefit obligations 4,899 (11,555) (2,737) 1,567 1,827 657 Regulatory assets and liabilities, net 18,101 43,790 32,922 (14,374) (24,059) (38,898) (15,666) (92,997) (10,095) (10,514) (11,701) (5,987) Other deferred accounts (20,356) (114,855) (46,051) 12,898 (3,211) 526 1,305 11,518 Retainage payable (12,384) 12,709 (11,921) (59) 254 550 (525) 220 Taxes accrued/receivable (27,906) 1,984 23,612 53,835 1,622 (3,860) (35,849) 15,748 Interest accrued 954 (4,439) (4,138) 9,431 (7,930) 8,105 (7,977) 1,629 (261) 130 130 Margin deposits 15,672 (16,482) Risk management assets and liabilities, net 4,406 (1,814) 6,684 1,470 6,340 Other, net 1,624 (595) (1,066) (2,343) (1,000) (98) (1,579) (5,020) (1,579) (1,579) (1,579) Net cash provided by operating activities 263,025 89,526 135,179 53,830 48,607 67,704 58,827 228,968 84,153 34,207 105,975 62,859 Cash flows from investing activities Additions to property, plant and equipment (510,192) (335,757) (250,286) (176,599) (35,520) (18,366) (20,000) (250,485) (74,275) (68,275) (79,442) (79,442) Allowance for other funds used during construction 32,955 64,953 73,269 9,805 360 887 19,303 30,355 9,805 360 12,170 20,386 Proceeds from sales of property, plant & equipment 601 1,894 751 254 221 475 Return on equity investment in investees 96 3,852 850 Cash transferred from restricted accounts, net 6,490 (85,021) 46,531 38,401 (747) 7,589 (8,127) 37,116 1,075 (538) (538) Cash from reconsolidation of VIEs 812 812 Equity Investment in Investee (8,427) (18,522) (45,539) (14,775) (11,275) (11,487) (37,537) 141,713 (8,288) (8,288) (8,288) Cash-surrender value of company/trust-owned life insurance (2,232) (1,664) (2,752) (354) (1,735) (80) (2,091) (4,260) (2,091) (2,091) (2,091) (2,091) Settlements received from insurance policies 941 Other Investment activities 599 63 (53) 7 17 Net cash provided by investing activities (480,709) (368,725) (177,176) (142,647) (48,716) (21,229) (10,914) (223,506) 76,227 (78,831) (78,188) (69,434) Cash flows from financing activities Conversion of options to common stock 9,458 Stock based compensation tax benefit 1,088 Stock issuance cost (93) Issuance of common stock under the ESOP 424 Deferred financing costs (2,593) (361) (1,953) (67) (35) (551) (653) Settlement of treasury stock rate lock 4,696 Change in short-term debt, net 150,000 150,000 (150,000) Retirement of long-term debt (50,318) (350,412) (114,846) (101,075) (25,035) (15,586) (15,586) (157,282) (3,067) (3,067) (3,067) (3,067) Repayment of capital leases (1,422) (390) (445) (428) (428) (1,691) (417) (417) (417) (417) Issuance of long-term debt 250,000 651,541 255,369 Other financing 983 2,130 985 691 913 2,589 3,333 3,333 3,333 Dividends paid on common and preferred stock (53,740) (54,082) (54,267) (13,607) (15,134) (15,142) (15,124) (59,007) (15,128) (15,131) (15,133) (15,134) Net cash provided by (used in) financing activities 154,226 247,669 89,707 35,846 (39,958) (30,794) (31,138) (66,044) (168,612) (15,281) (15,284) (15,284) Net increase in cash and cash equivalents (63,458) (31,530) 47,710 (52,971) (40,067) 15,681 16,775 (60,582) (8,232) (59,905) 12,504 (21,859) Cash and cash equivalents at beginning of period 192,471 129,013 97,483 145,193 92,222 52,155 67,836 145,193 84,611 76,378 16,473 28,977 Cash and cash equivalents at end of period 129,013 97,483 145,193 92,222 52,155 67,836 84,611 84,611 76,378 16,473 28,977 7,117 Operating cash flow per share excluding working capital changes Operating cash flow per share including working capital changes $ $ 4.74 4.40 $ $ 3.16 1.49 $ $ 2.90 2.23 $ $ 0.75 0.89 $ $ 1.31 0.80 $ $ 1.83 1.12 $ $ 0.85 0.97 $ $ 4.76 3.77 $ $ 0.86 1.38 $ $ 1.46 0.56 $ $ 1.53 1.74 $ $ 1.02 1.03 $ $

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