UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 2, 1997
Commission Registrant, State of Incorporation, I.R.S. Employer
File Number Address and Telephone Number Identification No.
1-1443 Central and South West Corporation 51-0007707
(A Delaware Corporation)
1616 Woodall Rodgers Freeway
Dallas, TX 75202-1234
(214) 777-1000
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FORWARD LOOKING INFORMATION
This report and other presentations made by CSW and its subsidiaries contain
forward looking statements within the meaning of Section 21E of the Exchange
Act. Although CSW and each of its subsidiaries believe that, in making any such
statements, its expectations are based on reasonable assumptions, any such
statements may be influenced by factors that could cause actual outcomes and
results to be materially different from those projected. Important factors that
could cause actual results to differ materially from those in the forward
looking statements include, but are not limited to: the impact of general
economic changes in the U.S. and in countries in which CSW either currently has
made or in the future may make investments; the impact of deregulation on the
U.S. electric utility business; increased competition and electric utility
industry restructuring in the U.S.; federal and state regulatory developments
and changes in law which may have a substantial adverse impact on the value of
CSW System assets; timing and adequacy of rate relief; adverse changes in
electric load and customer growth; climatic changes or unexpected changes in
weather patterns; changing fuel prices, generating plant and distribution
facility performance; decommissioning costs associated with nuclear generating
facilities; uncertainties in foreign operations and foreign laws affecting CSW's
investments in those countries; the effects of retail competition in the natural
gas and electricity distribution and supply businesses in the United Kingdom;
and the timing and success of efforts to develop domestic and international
power projects. In the non-utility area, the aforementioned factors would also
apply, and, in addition, would include: the ability to compete effectively in
new areas, including telecommunications, power marketing and brokering, and
other energy related services, as well as evolving federal and state regulatory
legislation and policies that may adversely affect those industries generally or
the CSW System's business in areas in which it operates.
ITEM 5. OTHER EVENTS
UNITED KINGDOM WINDFALL PROFITS TAX
As previously reported, in the general election held in the United Kingdom on
May 1, 1997, the Labour Party won control of the government with a considerable
majority. Prior to the general election, the Labour Party had announced that, if
elected, it would impose a windfall profits tax on certain industries in the
United Kingdom, including the privatized utilities, to fund a variety of social
improvement programs. On July 2, 1997, the one-time windfall profits tax was
introduced in the Labour Party's Budget by Chancellor Gordon Brown. It is likely
that legislation enacting the tax will be passed during the third quarter of
1997.
Central and South West Corporation (CSW) is currently analyzing the impact of
the tax on its SEEBOARD plc (SEEBOARD) subsidiary. Based upon its initial
analysis of the proposed tax, CSW estimates the impact to be a one-time charge
against earnings of approximately (pound)110 million or approximately $180
million when converted at the current prevailing exchange rates. The actual
amount of the tax when converted to dollars would depend upon the exchange rates
in effect at the time the tax is accrued. The timing of the actual charge
against CSW's earnings has not been determined at this time, but CSW anticipates
that the tax will be accrued in the period in which the tax is enacted. The
proposed tax is expected to be payable in two equal installments, with the first
due by December 1, 1997 and the second due by December 1, 1998. SEEBOARD expects
to finance its payments of the tax by incurring additional borrowings. There can
be no assurance that any windfall profits tax will be ultimately enacted or
that, if enacted, it will be the same or substantially similar to that proposed
by Chancellor Brown.
CSW completed its acquisition of SEEBOARD during April 1996 at a cost of
approximately $2.1 billion. For the twelve months ending December 31, 1996,
CSW's net income from its SEEBOARD investment totaled approximately $103 million
or approximately 24% of CSW's consolidated net income for common stock.
Imposition of the windfall profits tax, as currently proposed, would have a
material one-time adverse effect on CSW's 1997 results of operations. However,
CSW's management does not anticipate that the windfall profits tax, as proposed,
would have a material adverse effect on CSW's ongoing results of operations or
financial condition.
For background information regarding the windfall profits tax, please see CSW's
Form 10-K for the year ended December 31, 1996 and CSW's Form 10-Q for the
quarter ended March 31, 1997.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CENTRAL AND SOUTH WEST CORPORATION
Date: July 15, 1997
By: /s/ Lawrence B. Connors
Lawrence B. Connors
Controller
