UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d)
OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended DECEMBER 31, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d)
OF THE
SECURITIES EXCHANGE ACT OF 1934
[NO FEE REQUIRED]
For the transition period of to
Commission file number 1-15759
A. Full title of the plan and the address of the plan, if different from that of the issuer named below:
Cleco Corporation 401 (k) Savings and Investment Plan
B. Name of the issuer of the securities held pursuant to the plan and the address of its principal executive office:
CLECO CORPORATION
2030 Donahue Ferry Road, Pineville, Louisiana 71360-5226
Cleco Corporation 401(k)
Savings and Investment Plan
Financial
Statements and Supplemental Schedule
December
31, 2002 and
2001
Cleco
Corporation
401(k) Savings and Investment Plan
Contents
December 31,
2002 and 2001
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Page(s) |
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Report of Independent Auditors |
1 |
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Financial Statements |
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Statement of Net Assets Available for Benefits |
2 |
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Statement of Changes in Net Assets Available for Benefits |
3 |
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Notes to Financial Statements |
4 |
|
Supplemental Schedule |
|
|
Schedule of Assets (Held at End of Year) |
11 |
Note: Other schedules required by Section 2520.103-10 of the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act ("ERISA") of 1974 have been omitted because they are not applicable.
To
the Participants and Plan Administrator of the
Cleco Corporation 401(k) Savings and Investment Plan
In our opinion, the accompanying statement of net assets available for benefits
and the related statement of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of the Cleco Corporation 401 (k) Savings and Investment Plan (the "Plan") at
December 31, 2002 and 2001, and the changes in net assets available for benefits
for the year ended December 31, 2002 in conformity with accounting principles
generally accepted in the United States of America. These financial statements
are the responsibility of the Plan's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with auditing standards
generally accepted in the United States of America which require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for the
opinion expressed above.
Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental Schedule of Assets (Held at End of Year) as of December 31, 2002 is presented for the purpose of additional analysis and is not a required part of the basic financial statements but is supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental schedule is the responsibility of the Plan's management. The supplemental schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
/s/ PricewaterhouseCoopers LLP
New Orleans, Louisiana
June 23, 2003
1
Cleco
Corporation
401(k) Savings and Investment Plan
Statement of Net
Assets Available for Benefits
December 31,
2002 and 2001
Cleco
Corporation
401(k) Savings and Investment Plan
Statement of
Changes in Net Assets Available for Benefits
Year Ended December
31, 2002
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Nonparticipant Directed |
Participant |
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Allocated |
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Unallocated |
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Directed |
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Total |
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Income (losses) from investment activities |
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Interest and dividends |
$ 1,400,578 |
$ 689,837 |
$ 2,336,230 |
$ 4,426,645 |
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Net depreciation in fair value |
|||||||||||||
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of investments |
(12,259,779) |
(7,285,160) |
(19,872,460) |
(39,417,399) |
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Net loss |
(10,859,201) |
(6,595,323) |
(17,536,230) |
(34,990,754) |
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Contributions |
|||||||||||||
|
Employer |
- |
1,407,953 |
- |
1,407,953 |
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Employee |
- |
- |
6,286,005 |
6,286,005 |
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Allocation of 23,847 shares of company |
|||||||||||||
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convertible preferred stock |
2,174,454 |
(2,174,454) |
- |
- |
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Total contributions |
2,174,454 |
(766,501) |
6,286,005 |
7,693,958 |
|||||||||
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Total |
(8,684,747) |
(7,361,824) |
(11,250,225) |
(27,296,796) |
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Employee distributions and withdrawals |
1,584,798 |
- |
7,607,447 |
9,192,245 |
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Interest expense |
- |
770,267 |
- |
770,267 |
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Total deductions |
1,584,798 |
770,267 |
7,607,447 |
9,962,512 |
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Decrease in net assets |
|||||||||||||
|
available for benefits |
(10,269,545) |
(8,132,091) |
(18,857,672) |
(37,259,308) |
|||||||||
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Net assets available for benefits, |
35,718,459 |
9,404,406 | 97,695,737 |
142,818,602 |
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Net assets available for benefits, |
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|
end of year |
$ 25,448,914 |
$ 1,272,315 |
$ 78,838,065 |
$105,559,294 |
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Cleco
Corporation
401(k) Savings and Investment Plan
Notes to the
Financial Statements
December 31,
2002 and 2001
1. Summary of Significant Accounting Policies and Description of Plan
Plan Description
The Cleco Corporation 401(k) Savings and Investment Plan
("the Plan"), which was adopted January 1, 1985 and amended and restated as of
January 1, 1994, August 1, 1997 and January 1, 1999, is intended to provide
eligible employees of Cleco Corporation and its subsidiaries (the "Company" or
"Cleco") with long-term savings and investment opportunities. The Plan is a
defined contribution plan including a leveraged employee stock ownership plan
(the "ESOP"), and is designed to comply with Section 4975(e)(7) and the
regulations there under of the Internal Revenue Code of 1986, as amended (the
"Code") and is subject to the applicable provisions of the Employee Retirement
Income Security Act of 1974, as amended. The Plan enables employees to invest
up to 6% of their annual compensation, subject to Company matching
contributions, through payroll deductions. The ESOP provides a 66-2/3% match
of Cleco Corporation convertible Preferred Stock Series of 1991 ("the preferred
stock"). Non-matched participant contributions up to an additional 10% of
annual compensation can be made. Participation in the Plan is voluntary. Full-time
and part-time employees eighteen years or older are eligible to participate.
For a complete description of the Plan, refer to the Plan Document.
The Plan purchased the preferred stock using the proceeds of a bank borrowing subsequently purchased by Cleco (see Note 4) and holds stock in a trust established under the Plan. The borrowing is to be repaid over a period of seven years by fully deductible Company contributions to the trust fund. As the Plan makes each payment of principal, an appropriate percentage of preferred stock will be allocated to eligible employees' accounts in accordance with applicable regulations under the Code. Shares vest fully upon allocation.
The borrowing is collateralized by the unallocated shares of preferred stock. The Company has no rights against shares once they are allocated under the ESOP. Pursuant to the American Institute of Certified Public Accountants' Audit and Accounting Guide for Audits of Employee Benefit Plans, the financial statements of the Plan for the years 2002 and 2001 present separately the assets and liabilities and changes pertaining to:
a) the accounts of employees with vested rights in allocated preferred stock (allocated);
b) preferred stock not yet allocated to employees (unallocated); and
c) the accounts of employees with vested rights in investments other than preferred stock (other).
4
Cleco
Corporation
401(k) Savings and Investment Plan
Notes to the
Financial Statements
December 31,
2002 and 2001
Plan Administration
The administration of the Plan is the responsibility of an
administrative committee (the "Committee") comprised of employees of the
Company. The Committee is appointed by the Company's Board of Directors.
Administrative expenses incurred by the Plan are borne by the Company. The
responsibilities for the investment, reinvestment, control and disbursement of
the funds of the Plan rests with UMB Bank, N.A. ("Trustee") with J.P.Morgan/American Century Retirement Plan Services
("Agent") acting as the agent of the Trustee and recordkeeper to the Plan.
Contributions
Participant contributions are recorded in the period that the
Company makes payroll deductions from participants. Unless otherwise
restricted by law, participants may contribute on a pretax basis up to 16% of
annual compensation. For tax years beginning after December 31, 2001,
participants who were at least 50 years old by the end of the tax year may make
an additional "catch-up" contribution (above the 401(k) annual deferral limit)
in increments of $1,000 annually starting in 2002 until the $5,000 catch-up
limit is reached in 2006. The Company's matching contribution is not less than
66-2/3% of the employees' total pretax basic contribution, up to the first 6%
of the participant's annual compensation. Company contributions, paid
annually, are made in amounts necessary to satisfy debt service requirements,
after considering dividends received on the Cleco preferred stock. Certain
qualified rollovers are permitted. The Trustee, in accordance with the
participants' directives, invests the employee contributions in one or more of
twelve publicly traded mutual funds, in one self-directed account with access
to over 1,000 mutual funds, and in the Company's $1 par value common stock, on
a post-split basis as more fully described in Note 6.
Participants' Accounts
The agent maintains
accounts on behalf of each Plan participant. Each account is credited with (a)
the participant's pretax, after tax or rollover contribution, (b) the Company's
matching contribution of allocated shares and (c) the participant's share of
Plan earnings. Allocations are based on participant compensation or account
balances, as defined.
Vesting
Participants are fully vested in their accounts at all times.
Withdrawals and Loans
Funds in participants' accounts may be distributed upon death
or separation from service in either a lump-sum amount equal to the value of
their accounts or as a distribution in kind of shares held for their account in
the ESOP fund or common stock fund. A participant is entitled to receive a
whole number of common shares. The amounts of any fractional shares are
distributed in cash. Active employees may withdraw funds from their accounts
after age 59-1/2 or in the case of certain defined financial hardships.
5
Cleco
Corporation
401(k) Savings and Investment Plan
Notes to the
Financial Statements
December 31,
2002 and 2001
Loans are available to participants up to specified limits. The term of loans shall not exceed five years and the interest rate is calculated based on the prime rate published in the Wall Street Journal on the first day of the month before the loan is requested plus 2%. Interest rates on participant loans ranged from 6.25% to 11.5% in 2002.
Benefits payable for terminations and withdrawals are included in net assets available for benefits and are charged to net assets available for benefits when paid.
Diversification
Diversification
is offered to participants close to retirement so that they may have the
opportunity to move part of the value of their investment in preferred stock
into investments which are more diversified. Participants who are at least age
55 with at least 10 years of participation in the Plan may elect to diversify a
portion of their account. Diversification is offered to each eligible
participant over a six-year period. In each of the first five years, a
participant may diversify up to 25 percent of the number of shares allocated to
his or her account, less any shares previously diversified. In the sixth year,
the percentage changes to 50 percent. Participants who elect to diversify can
invest the proceeds from the sale of the preferred stock in the investment
options offered by the Plan.
Voting
Rights
Each
participant is entitled to exercise voting rights attributable to the preferred
stock shares allocated to his or her account and is notified by the Trustee
prior to the time that such rights are to be exercised. The Trustee is not
permitted to vote any allocated share for which instructions have not been
given by a participant. The Trustee is required, however, to vote any
unallocated shares on behalf of the collective best interest of plan
participants and beneficiaries.
Investment Valuation
Investments in securities and mutual funds traded on national
securities exchanges are valued based on the last reported sales price as of
the end of each fiscal year. The JP Morgan Money Market Fund is valued at cost
plus reinvested interest. Participant loans are valued at cost, which
approximates fair value. The Cleco preferred stock is valued based on the
greater of quoted market value of the equivalent shares of Cleco common stock
or par value of the Cleco convertible preferred stock. As of December 31, 2002 and 2001, the Cleco preferred stock was valued based on the quoted
market value of the equivalent shares of Cleco common stock.
Income Recognition
Transactions in the various funds are accounted for using the
transaction date. The Plan presents in the Statement of Changes in Net Assets
Available for Benefits, the net appreciation in the fair value of its
investments which consists of the realized gains or losses and the unrealized
appreciation on those investments.
6
Cleco
Corporation
401(k) Savings and Investment Plan
Notes to the
Financial Statements
December 31,
2002 and 2001
Priority Upon Termination of Plan
The Plan may be terminated at any time by the Company's Board
of Directors. Upon termination, all assets are to be distributed to Plan
participants or their beneficiaries. Participants would receive their
proportionate share of the assets as determined by individual account balances
on the date of termination.
Use of Estimates
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities of the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
Risk and Uncertainties
The Plan provides for various investment options in any
combination of stocks, fixed income securities, mutual funds, and other
investment securities. Investment securities are exposed to various risks,
such as interest rate, market, and credit risks. Due to the level of risk
associated with certain investment securities, it is at least reasonably
possible that changes in the value of investment securities will occur in the
near term and that such changes could materially affect participants' account
balances and the amounts reported in the statement of net assets available for
benefits.
7
Cleco
Corporation
401(k) Savings and Investment Plan
Notes to the
Financial Statements
December 31,
2002 and 2001
2. Investments
Information relative to
investments as of December 31, 2002 and 2001, respectively, is as follows:
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|
Description |
|
2002 |
|
2001 |
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Mutual Funds: |
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* |
American Century Income & Growth Fund |
$21,045,434 |
$27,771,157 |
|||||||||||||
|
JP Morgan Prime Money Market Fund |
3,815,629 |
4,090,015 |
||||||||||||||
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American Century GNMA Fund |
4,017,880 |
1,942,033 |
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* |
Dodge & Cox Balanced Fund |
12,040,175 |
12,854,205 |
|||||||||||||
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American Century Vista Fund |
2,808,481 |
3,591,138 |
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American Century International Growth Fund |
3,057,896 |
4,006,349 |
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American Century Strategic Allocation: |
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Conservative Fund |
448,866 |
416,383 |
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American Century Strategic Allocation: |
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Moderate Fund |
973,065 |
1,017,919 |
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American Century Strategic Allocation: |
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Aggressive Fund |
1,253,236 |
1,477,271 |
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* |
American Century Growth Fund |
6,903,217 |
9,128,339 |
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American Century Equity Income Fund |
1,409,883 |
1,152,562 |
||||||||||||||
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American Century Equity Index Fund |
2,404,756 |
3,162,042 |
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Schwab Personal Choice Retirement Account |
628,509 |
851,143 |
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Total mutual funds |
60,807,027 |
71,460,556 |
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|
* |
Cleco Corporation Common Stock |
14,354,973 |
22,498,701 |
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|
* |
Cleco Corporation Convertible Preferred Stock |
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Series of 1991** |
34,337,920 |
55,457,985 |
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Participant loans |
3,328,182 |
3,525,917 |
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$ 112,828,102 |
$ 152,943,159 |
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*Denotes investment exceeds 5% of the net assets available for benefits. |
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**Nonparticipant-directed investment |
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8
Cleco
Corporation
401(k) Savings and Investment Plan
Notes to the
Financial Statements
December 31,
2002 and 2001
The Plan's holding in the preferred stock which has not been allocated to participants were 74,162 and 98,009 shares as of December 31, 2002 and 2001, respectively, is as follows:
|
2002 |
|
2001 |
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|
|
|
|
||||||||
|
Cleco Corporation Convertible Preferred Stock |
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|
Series of 1991: |
||||||||||
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Cost |
$ 7,416,243 |
$ 12,844,376 |
||||||||
|
Market Value |
$ 9,967,478 |
$ 20,671,395 |
||||||||
Each share of the preferred stock is convertible into 9.6 shares of the Company's common stock on a post-split basis as more fully described in Note 6. The preferred stock is redeemable at the option of the Company beginning April 1, 1997, at the redemption price of $104.0625 per share and at lesser amounts thereafter. The dividend rate on the preferred stock was 8.125% in 2002.
The Plan's investments (including gains and losses on investments bought and sold, as well as held during the year) depreciated in value by $39,417,399 for the year ended December 31, 2002, as follows:
|
Company common stock |
$ (7,997,896) |
|
|
Company convertible preferred stock |
(19,544,939) |
|
|
Mutual funds |
(11,874,564) |
|
|
$(39,417,399) |
3. Related Party Transactions
Certain Plan investments are managed by the Agent. The Agent
is the recordkeeper as defined by the Plan. Participants may elect to invest
in the common stock of Cleco, the Sponsor of the Plan. In 2002, the Plan
purchased 341,131 shares of Cleco common stock with a market value of
$5,862,083 and sold 254,259 shares of Cleco common stock with a market value of
$4,250,360.
In 2002, the Plan allocated 23,847 shares of the preferred stock with a cost of $2,384,700 and a market value of $3,205,027 on account of the Company's matching contribution for 2002. At December 31, 2002 and 2001 the ESOP held 181,328 and 164,934 shares of the preferred stock with a market value of $24,370,442 and $34,786,590, respectively, which had been allocated to participants' accounts.
9
Cleco
Corporation
401(k) Savings and Investment Plan
Notes to the
Financial Statements
December 31,
2002 and 2001
4. Note Payable
On April 2, 1991, the Plan entered into a $30 million
borrowing agreement with the Bank of New York (the Bank) to finance the
purchase of 300,000 shares of a new issue of Cleco convertible preferred stock,
1991 series, $100 par value. In July 1992, Cleco purchased the outstanding
principal balance of the loan. The ESOP makes debt service payments to Cleco
from dividends received on Cleco convertible preferred stock and, if necessary,
from additional contributions by Cleco in amounts necessary to satisfy debt
service requirements. No debt service payments are required under the
borrowing agreement until the year 2008; however, as noted below the Plan has
made prepayments on the debt.
Effective in January 1993, Cleco fixed the rate of interest on the note payable at 7.4%. Principal payments began in January 1999 and are to continue until January 2009. In January 2003 and 2002, the Plan made principal prepayments of approximately $2,736,000 and $2,002,200, respectively. The unallocated preferred shares have been pledged as collateral for the loan. Pursuant to Employee Retirement Income Security Act of 1974 regulations, debt service payments must be made to unencumbered shares for allocation to participant accounts.
5. Tax Status
The Plan is qualified under Sections 401(a) and 401(k) of the
Internal Revenue Code and, accordingly, the associated trust is exempt from
Federal income taxes under provision of Section 501(a). The Internal Revenue
Service has determined and informed the Company by letter dated April 30, 2003, that the Plan and related trust are designed in accordance with applicable
sections of the Internal Revenue Code.
Participants' pretax contributions, the Company's contributions, rollover contributions as well as interest, dividends and profits earned by the Plan are not subject to Federal income taxes until these amounts are distributed.
6. Common Stock Split
On April 27, 2001, Cleco shareholders approved a charter amendment
to increase the amount of authorized common stock and to effect a two-for-one
stock split of the Company's common stock. The charter amendment became
effective at the close of business May 7, 2001, which was also the record date
for the stock split. Distribution of certificates representing the split
shares occurred on May 21, 2001. The common stock split had no effect on the
preferred stock other than the change in conversion factor. After the stock
split, each share of preferred stock is convertible into 9.6 shares of the
Company's common stock.
10
SUPPLEMENTAL SCHEDULE
Cleco Corporation
401(k) Savings and Investment Plan
Schedule of Assets (Held at End of Year)
December 31, 2002
EIN: 72-1445282
11
SIGNATURE
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
|
CLECO
CORPORATION |
|
|
Date: June 30, 2003 |
By: /s/ Dilek Samil |
| (Dilek Samil, Chairman of the Retirement Committee of Cleco Corporation, Plan Administrator) | |
EXHIBIT
INDEX
| Exhibit Number | Description |
| 23 | Consent of PricewaterhouseCoopers LLP |
99 |
Section 906 Certification of Dilek Samil |