File No. 70-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM U-1 APPLICATION-DECLARATION
UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
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CENTRAL AND SOUTH WEST CORPORATION PUBLIC SERVICE COMPANY OF OKLAHOMA
1616 Woodall Rodgers Freeway 212 East Sixth Street
Dallas, Texas 75202 Tulsa, Oklahoma 74119-1212
CENTRAL AND SOUTH WEST SERVICES, INC. SOUTHWESTERN ELECTRIC POWER COMPANY
1616 Woodall Rodgers Freeway 428 Travis Street
Dallas, Texas 75202 Shreveport, Louisiana 71156-0001
CENTRAL POWER AND LIGHT COMPANY WEST TEXAS UTILITIES COMPANY
539 North Carancahua Street 301 Cypress Street
Corpus Christi, Texas 78401-2802 Abilene, Texas 79601-5820
(Names of companies filing this statement and address
of principal executive offices)
-------------------------------------
CENTRAL AND SOUTH WEST CORPORATION
(Name of top registered holding company parent)
------------------------------------
Wendy G. Hargus, Treasurer
Central and South West Corporation
1616 Woodall Rodgers Freeway
Dallas, Texas 75202
Joris M. Hogan, Esq.
Milbank, Tweed, Hadley & McCloy
1 Chase Manhattan Plaza
New York, New York 10005
(Names and addresses of agents for service)
<PAGE>
Item 1. Description of Proposed Transaction.
Central and South West Corporation ("CSW"), a Delaware corporation and
a registered holding company under the Public Utility Holding Company Act of
1935, as amended (the "Act") and its subsidiary companies Central Power and
Light Company ("CPL"), Public Service Company of Oklahoma ("PSO"), to the extent
Rule 52 is not available, Southwestern Electric Power Company ("SWEPCO"), West
Texas Utilities Company ("WTU") and Central and South West Services, Inc.
("CSWS"), each referred to as a "Subsidiary" and collectively referred to as the
"Subsidiaries", are seeking authorization for the period beginning with the
effective date of an order issued in this proceeding through December 31, 2002
(the "Authorization Period") for the financing plan (the "Financing Plan")
described below. This application-declaration (the "Application") is an omnibus
type filing which seeks authority for CSW and the Subsidiaries (the
"Applicants") to issue the securities and engage in the financing transactions
pursuant to the authority requested herein in lieu of filing separate
applications for individual financing transactions. Overview of Requested
Authority
This Application seeks to consolidate in one filing a substantial
portion of the financing authorizations expected to be requested by the
Applicants over a five year period. The requested authority is similar in
concept to the authorization for shelf registration statements permitted under
Rule 415 promulgated under the Securities Act of 1933, as amended ("1933 Act").
The Application is for system-wide financing authority and therefore does not
set forth specific terms for the individual components of the Financing Plan.
Even though the terms of specific financings are not discussed in this
Application, the Applicants propose to continue to finance from time to time
based on capital budgets and estimates of other financing needs as they have in
the past. An underlying assumption of the Application is that as long as the
Applicants maintain a solid financial base, as demonstrated by ratings of a
nationally recognized statistical rating organization ("NRSRO"), they should be
allowed broad discretion with respect to financing activities. The Applicants
therefore propose to enter into financial transactions designed to maintain an
appropriate capital structure for investment grade long-term ratings as
established by an NRSRO. This flexibility would allow the Applicants to more
easily take advantage of favorable market conditions, making them more
competitive with companies that are not subject to the jurisdiction of the Act.
The authorization requested herein relates to issuances of common
stock, including common stock issued upon the exercise of convertible debt or
pursuant to rights, options, warrants or similar securities, preferred stock,
tax advantaged preferred securities, first mortgage bonds, pollution control
revenue bonds, debentures, notes (secured and unsecured), medium-term notes,
convertible debt, other forms of indebtedness and borrowings pursuant to credit
agreements ("Credit Agreements") with banks and other financial institutions, in
each case not subject to Rule 52. Each Applicant requests authority to issue and
sell these securities or enter into Credit Agreements without additional prior
Securities and Exchange Commission ("SEC") approval if the Applicant is within
the parameters discussed below under the heading "Parameters For Authorization."
The provisions of the securities, Credit Agreements and related instruments
would be determined at the time of the sale of securities or the execution of
Credit Agreements and, with respect to first mortgage bonds or preferred stock,
would not be limited by any of the SEC's "statements of policy" with respect
thereto. See HCAR Nos. 13105 and 13106, dated February 16, 1956, as amended in
HCAR Nos. 16369 and 16758, dated June 22, 1970, in which the SEC adopted
statements of policy with respect to first mortgage bonds and preferred stock
("Statements of Policy"). To the extent that the terms of any securities
proposed to be issued and sold pursuant to an authorization granted in this
proceeding may conflict with the Statements of Policy, request is hereby made
for authority to deviate from the Statements of Policy.
The proceeds from external financing transactions, including the
issuance and sale of securities and borrowings under Credit Agreements, by the
Applicants will be added to their respective treasuries and subsequently used
principally (i) to finance capital expenditures, (ii) to acquire, retire, or
redeem securities of which CSW or the Subsidiaries are the issuer, (iii) to
repay outstanding short-term borrowings, (iv) to provide working capital and/or
(v) for other general corporate purposes, without the need for prior SEC
approval, pursuant to Rule 42 or a successor rule.
This Application is consistent with the recommendation of the staff of
the Division of Investment Management that the SEC modernize its administration
of the Act, particularly with respect to financing authorizations, in order to
"reduce significantly the number of applications requiring SEC approval and to
provide more flexibility for registered holding companies and their
subsidiaries" (Division of Investment Management, The Regulation of
Public-Utility Holding Companies (June 1995) (the "1995 Report") at 50) by
issuing "orders covering blocks of securities to be sold at one time or from
time to time over a period of up to five years." (1995 Report at 54). The shelf
approach is designed to give the Applicants flexibility that will allow them to
respond quickly and efficiently to financing needs and to changes in market
conditions, which, in turn, should make them more competitive with utility and
energy companies that are not subject to the jurisdiction of the Act. At the
same time, the SEC will continue to have oversight over financings by the
Applicants through their regular disclosures under the 1933 Act and the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and through the
notification system established pursuant to this Application. Finally, this
Application is consistent with SEC precedent. See, e.g., Columbia Gas Systems,
Inc., et al., File 70-8925 (HCAR No. 26634; 12/23/96); Consolidated Natural Gas
Company, File 70-8667 (HCAR No. 26500; 3/28/96); Mississippi Power Company, File
70-8797 (HCAR No. 26491; 3/13/96); Gulf States Utilities Company, File 70-8721
(HCAR No. 26451; 1/16/96). Parameters of Authorization
The Applicants request authority to engage in financing transactions
for which the specific terms and conditions are not currently known, subject to
certain conditions concerning the financial condition of the Applicants. The
general conditions for financing without further prior approval are set forth
below.
CSW System Investment Grade Debt. With respect to financings at the
Subsidiary level only, the Subsidiaries seek authority to engage in financing
activities described herein as long as the long-term debt ratings of the
Subsidiary seeking to issue securities or enter into Credit Agreements are
investment grade as established by an NRSRO (as that term is used in Rule
15c3-1(c)(2)(vi)(F) under the 1934 Act). The Subsidiaries will at all times
during the Authorization Period strive to maintain a capital structure
sufficient to maintain investment grade long-term debt ratings.
Effective Cost of Money on Debt Securities and Borrowings under Credit
Agreements. The effective cost of money on debt securities issued pursuant to
this Application will not exceed the greater of (i) 300 basis points over
comparable term U.S. Treasury securities, or (ii) a gross spread over such
Treasury securities which is consistent with comparable investment grade
securities. The effective cost of money for borrowings under Credit Agreements
will not exceed the greater of (i) the prime rate plus 300 basis points, or (ii)
the rate of interest for comparable investment grade credits prevailing in the
market on the date of borrowing.
Effective Cost of Money on Other Approved Securities. The effective
cost of money on preferred stock and other fixed income oriented securities will
not exceed the greater of (i) 500 basis points over 30 year term U.S. Treasury
securities, or (ii) a gross spread over such Treasury securities which is
consistent with comparable investment grade securities.
Maturity of Debt. The maturity of debt securities will not exceed 100
years. Issuance Expenses. The underwriting fees, commissions, or other similar
expenses paid in connection with the issue, sale or distribution of a security
pursuant to the Application will not exceed 5% of the principal or total amount
of the financing.
Aggregate Dollar Limit. The aggregate amount of outstanding external
financing effected by the Applicants pursuant to the authorization requested
hereunder during the Authorization Period, other than the refunding of
outstanding securities which will not be limited, will not exceed $2 billion.
Description of Specific Types of Financing
I. External Financings
The Subsidiaries currently obtain, and seek authorization to obtain in
the future under the Financing Plan, funds externally through short-term debt
financing; long-term debt financing, such as first mortgage bonds, pollution
control revenue bonds, notes and debentures; sales of preferred stock, sales of
tax-advantaged preferred securities; and borrowings under Credit Agreements. The
only financing authority requested herein by CSW is to issue common stock. All
such debt and stock sales are at rates or prices and under conditions based
upon, or otherwise determined by, competitive capital markets.
The Applicants request authority to sell securities covered by this
Application in any of the following ways: (i) through underwriters or dealers;
(ii) directly to a limited number of purchasers or to a single purchaser, or
(iii) through agents or dealers. If underwriters are used in the sale of the
securities, such securities will be acquired by the underwriters for their own
account and may be resold from time to time in one or more transactions,
including negotiated transactions, at a fixed public offering price or at
varying prices determined at the time of sale. The securities may be offered to
the public either through underwriting syndicates (which may be represented by
managing underwriters) or directly by one or more underwriters acting alone. The
securities may be sold directly by CSW or a Subsidiary or through agents
designated from time to time. If dealers are used in the sale of any securities,
such securities will be sold to the dealers as principal. Any dealer may then
resell such securities to the public at varying prices to be determined by such
dealer at the time of resale.
If common stock is being sold by CSW in an underwritten offering, CSW
may grant the underwriters a "green shoe" option permitting the purchase from
CSW of additional equity securities (an additional 15% under present guidelines)
at the same price as the original equity securities then being offered, solely
for the purpose of covering over-allotments.
If debt securities are being sold, they may be sold pursuant to
"delayed delivery contracts" which permit the underwriters to locate buyers who
will agree to buy the debt at the same price but at a later date than the date
of the closing of the sale to the underwriters. Debt securities may also be sold
through the use of medium-term note and similar programs, including in
transactions covered by Rule 144A under the 1933 Act. Pollution control revenue
bonds may be sold either currently or in forward refundings where the price of
the securities is established currently for delivery at a future date.
A. Long-Term Financing Authority
CPL was authorized to issue and sell up to $475 million of pollution
control revenue bonds by SEC order in file No. 70-8597 (HCAR No. 35-26309;
6/15/95). CPL has since issued $160.635 million of pollution control revenue
bonds, thus leaving $314.365 million of such authorization available for future
use. CPL was authorized to issue and sell up to $95 million of pollution control
revenue bonds by SEC order in file No. 70-8677 (HCAR No. 35-26019; 10/13/95). To
date, CPL has since issued $40.89 million of pollution control revenue bonds,
thus leaving $54.11 million of such authorization available for future use. CPL
was authorized to issue and sell up to $100 million of preferred stock by SEC
order in file No. 70-8359 (HCAR No. 35-26019; 4/6/94). To date, CPL has not
issued any preferred stock under this order. WTU was authorized to issue and
sell up to $130 million of first mortgage bonds by SEC supplemental order in
file No. 70-8057 (HCAR No. 35-26340; 7/26/95). WTU has since issued $80 million
of first mortgage bonds, thus leaving $50 million of such authorization
available for future use. WTU was authorized to issue and sell up to $45 million
of first mortgage bonds by SEC order in file No. 70-8265 (HCAR No. 35-25928;
11/19/93). WTU has since issued $40 million of first mortgage bonds, thus
leaving $5 million of such authorization available for future use. SWEPCO was
authorized to issue and sell up to $131.7 million of pollution control revenue
bonds by SEC order in file No. 70-8847 (HCAR No. 35-26531; 6/12/96). SWEPCO has
since issued $81.7 million of pollution control revenue bonds, thus leaving $50
million of such authorization available for future use. WTU, PSO and CPL were
authorized to issue and sell up to $113.3 millon of pollution control revenue
bonds by SEC order in file No. 70-8869 (HCAR No. 35-26548). WTU, PSO and CPL
have since issued $63.3 million of pollution control revenue bonds, thus leaving
$50 million of such authorization available for future use. CPL, PSO, SWEPCO and
WTU were authorized to issue and sell up to $350 million, $100 million, $150
million and $80 million, respectively, of junior subordinated debentures and tax
advantaged preferred securities by SEC order in file No. 70-8979 (HCAR No.
35-26703; 4/10/97). CPL, PSO and SWEPCO have since issued $150 million, $75
million and $110 million of tax advantaged preferred securities, respectively,
thus leaving $200 million, $25 million, $40 million and $80 million of such
authorization available for CPL, PSO, SWEPCO and WTU, respectively. CSW was
authorized to issue and sell up to 11 million shares of common stock by SEC
order file No. 70-8357 (HCAR No. 35-26045; 5/2/94). To date, CSW has not issued
any common stock under this order.
The Applicants are proposing that the authorization to engage in
external financings requested herein supersede the prior authorizations
described above (the "Prior Authorizations"). The Applicants accordingly propose
to incorporate the Prior Authorizations into the financing authorization
requested in this Application. If this proposal is approved, the Applicants
would engage in long-term financing in the context of their needs and financial
market conditions at the time of issuance, subject to the terms and conditions
set forth herein and in any order in this file, and without reference to the
terms and restrictions set forth in the Prior Authorizations. Any long-term debt
or other security would have such designations, aggregate principal amount,
maturity, interest rate(s) or methods of determining the same, interest payment
terms redemption provisions, non-refunding provisions, sinking fund terms,
conversion or put terms and other terms and conditions as the Applicants may at
the time of issuance determine.
B. Stock Financing
CSW requests authorization hereunder to issue common stock, including
issuances of common stock upon the exercise of convertible debt or pursuant to
rights, options, warrants and similar securities. CSW also requests
authorization to purchase common stock from the Subsidiaries and to sell such
common stock back to the Subsidiaries. The Subsidiaries request authorization
hereunder to issue and sell preferred stock, including tax advantaged preferred
securities. The Subsidiaries also request authorization to issue common stock to
CSW and to repurchase their common stock from CSW.
C. Bank Borrowings
The Subsidiaries propose to make borrowings from banks or other lending
institutions from time to time through the end of the Authorization Period. Such
borrowings will be evidenced by promissory notes issued to the applicable
lender, to be dated as of the date of the first borrowing thereunder, with each
such borrowing maturing in not more than thirty years. Notes may or may not be
prepayable, in whole or in part, with or without a premium in the event of
prepayment. The amount of any premium or bank fees payable by a Subsidiary would
not exceed an amount consistent with credit agreements with similar terms and
provisions entered into by comparably rated borrowers.
D. Credit Enhancement
Applicants may obtain credit enhancement for the securities covered by
this Application, which could include insurance, a letter of credit or a
liquidity facility. The Applicants anticipate they may be required to provide
credit enhancement if they were to issue floating rate securities, whereas
credit enhancement would be a purely economic decision for fixed rate
securities. The Applicants anticipate that even though they would be required to
pay a premium or fee to obtain the credit enhancement, they would realize a net
benefit through a reduced interest rate on the new securities. Applicants will
obtain credit enhancement only if it is economically beneficial to do so.
If insurance is obtained, the Applicants may be required to enter into
an agreement with the insurer and an escrow agent pursuant to which the
Applicants would be obligated to make payments of certain amounts into an escrow
fund upon a failure to maintain certain financial ratios and on the occurrence
of certain other events. Amounts held in such an escrow fund would be payable to
the insurer as an indemnity for any amounts paid by the insurer with respect to
principal or interest on the new securities.
II. Financing Entities
The Subsidiaries seek authority to organize new corporations, trusts,
partnerships or other entities to be created for the purpose of facilitating
certain types of financings such as the issuance of tax advantaged preferred
securities. Request is also made for these financing entities to issue such
securities to third parties. Additionally, request is made for authorization
with respect to (i) the issuance of debentures or other evidences of
indebtedness by the Subsidiaries to a financing entity in return for the
proceeds of the financing and (ii) the acquisition by a Subsidiary of voting
interests or equity securities issued by the financing entity to establish the
Subsidiary's ownership of the financing entity (the equity portion of the entity
generally being created through a capital contribution or the purchase of equity
securities, such as shares of stock or partnership interests, involving an
amount usually ranging from 1 to 25 percent of the capitalization of the
financing entity). The Subsidiaries also request authorization to enter into
expense agreements with their respective financing entities, pursuant to which
they would agree to pay all expenses of such entity.
The Subsidiaries may also guarantee (i) payment of interest, dividends
or distributions on the securities issued by their subsidiary financing entities
if and to the extent such financing entities declare dividends or distributions
or pay interest out of funds legally available therefor; (ii) payments to the
holders of the securities issued by such entities of amounts due upon
liquidation of such entities or redemption of the securities of such entities;
and (iii) certain additional amounts that may be payable in respect of such
securities.
Tender Offers
In connection with any refinancing by CSW or a Subsidiary pursuant to
the authority requested hereunder, CSW and the Subsidiaries may determine to
acquire outstanding securities (the "Outstanding Securities") through tender
offers to the holders of such Outstanding Securities. Tender offers may be
conditioned upon receipt of a certain percentage of the Outstanding Securities.
The tender offer price would be based on a number of factors, including the
coupon rate of the Outstanding Securities, the date of expiration of the
refunding protection of the Outstanding Securities, the redemption price on such
expiration date and the then current market rates for similar securities, all of
which are relevant to the decision of an informed holder as to whether to hold
or sell Outstanding Securities. Holders of Outstanding Securities may be offered
a fixed price for their Outstanding Securities, or the tender offer may be a
"fixed spread" offer pursuant to which the Applicants will offer a price based
upon a fixed spread over comparable treasuries. Any tender offer will be
conducted in accordance with standard market practice, i.e., the length of time
the offer will be held open, the method of solicitation, etc., at the time of
the tender offer.
The Applicant would, in connection with any tender offer, retain one or
more investment banking firms experienced in such matters to act as tender agent
and dealer-manager. The dealer-manager will act as the Applicant's agent in
disseminating the tender offer and receiving responses thereto. As a
dealer-manager, the investment banking firm will not itself become obligated to
purchase or sell any of the Outstanding Securities. The dealer-manager's fee
will be determined following negotiation and investigation of fees in similar
transactions and will include reasonable out-of-pocket expenses and attorney's
fees. It is expected that the Applicant will be required, as is customary, to
indemnify the dealer-manager for certain liabilities. The Applicant may also
retain a depositary to hold the tendered Outstanding Securities pending the
purchase thereof and/or an information agent to assist in the tender offer.
Filing of Certificates of Notification
It is proposed that, with respect to the CSW System, the reporting
system of the 1933 Act and the 1934 Act be integrated with the reporting system
under the Act. This would eliminate duplication of filings with the SEC that
cover essentially the same subject matters, resulting in a reduction of expense
for both the SEC and the Applicants. To effect such integration, the disclosures
of transactions occurring pursuant to the authorization granted in this
proceeding would be incorporated by reference into this proceeding through Rule
24 certificates of notification. Such certificates of notification would be
filed within 60 days after the end of the calendar quarter in which the
transaction occurs.
The Rule 24 certificates will contain the following information:
(a) If sales of common stock by CSW are reported, the purchase price
per share and the market price per share at the date of the agreement of sale;
(b) If purchases by Subsidiaries of their securities from CSW are
reported, the purchase price and the basis on which it is determined;
(c) CSW balance sheets as of the end of the quarter, and separate
balance sheets as of the end of the quarter for each company, including CSW,
that has engaged in financing transactions during the quarter; and
(d) Future registration statements filed under the 1933 Act with
respect to securities that are the subject of the Application will be filed (or
incorporated by reference) as exhibits to the next certificate filed pursuant to
Rule 24. Rule 54
No proceeds from the financings for which authority is requested
hereunder will be used by CSW or any Subsidiary for the direct or indirect
acquisition of an interest in an exempt wholesale generator ("EWG"), as defined
in Section 32 of the Act, or a foreign utility company ("FUCO"), as defined in
Section 33 of the Act. Rule 54 promulgated under the Act states that in
determining whether to approve the issue or sale of a security by a registered
holding company for purposes other than the acquisition of an EWG or a FUCO, or
other transactions by such registered holding company or its subsidiaries other
than with respect to EWGs or FUCOs, the SEC shall not consider the effect of the
capitalization or earnings of any subsidiary which is an EWG or a FUCO upon the
registered holding company system if Rules 53(a), (b) and (c) are satisfied. As
set forth below, all applicable conditions set forth in Rule 53(a) are currently
satisfied and none of the conditions set forth in Rule 53(b) exist or will exist
as a result of the transactions proposed herein, thereby satisfying such
provision and making Rule 53(c) inapplicable.
CSW's "aggregate investment" (as defined under Rule 53(a) of the Act)
in EWGs and FUCOs as of September 11, 1997 was approximately $923 million, or
about 47% of $1,970 million, CSW's average consolidated retained earnings for
the four quarterly periods ended June 30, 1997. CSW thus satisfies Rule
53(a)(1). CSW will maintain and make available the books and records required by
Rule 53(a)(2). No more than 2% of the employees of CSW's operating subsidiaries
will, at any one time, directly or indirectly, render services to an EWG or FUCO
in which CSW directly or indirectly owns an interest, satisfying Rule 53(a)(3).
Lastly, CSW will submit a copy of Item 9 and Exhibits G and H of CSW's Form U5S
to each of the public service commissions having jurisdiction over the retail
rates of CSW's operating utility subsidiaries, satisfying Rule 53(a)(4).
CSW was authorized to invest up to 100% of its consolidated retained
earnings in EWGs and FUCOs by SEC order (the "100% Order") in file No. 70-8809
(HCAR No. 35-26653; 1/24/97). In connection with its consideration of CSW's
application for the 100% Order, the SEC reviewed CSW's procedures for evaluating
EWG or FUCO investments. Based on projected financial ratios and on procedures
and conditions established to limit the risks to CSW involved with investments
in EWGs and FUCOs, the SEC determined that permitting CSW to invest up to 100%
of its consolidated retained earnings in EWGs and FUCOs would not have a
substantial adverse impact upon the financial integrity of the CSW system, nor
would it have an adverse impact on any of the Subsidiaries or their customers,
or on the ability of State commissions to protect the Subsidiaries or their
customers. Since similar considerations are involved hereunder with respect to
Rule 54, Applicants should not be required to make subsequent Rule 54 filings
once CSW's aggregate investment in EWGs and FUCOs exceeds 50% of its
consolidated retained earnings. Items Subject to Further SEC Approval I. Stock
Financing
The Applicants propose that they be allowed to (i) increase their
authorized capital as deemed necessary and appropriate by CSW for proper
corporate purposes, (ii) amend their articles of incorporation and (iii) solicit
proxies through a proxy statement, filed under and meeting the standards of the
1934 Act, requesting shareholder approval of any amendment to their articles of
incorporation.
Proxy solicitation material relating to amendments to the articles of
incorporation will meet the requirements of Schedule 14A under the 1934 Act, and
will, to the extent required, be reviewed for compliance with such regulation by
the SEC before the proxy material is sent to shareholders. Such proxy
solicitation material will be incorporated by reference into this Application
when it is filed with the SEC under the 1934 Act, and request is made under Rule
62 of the Act to begin solicitation of proxies when such filing is made. The
Applicants request reservation of jurisdiction over the implementation of
amendments to the articles of incorporation pending the making of the 1934 Act
filings and completion of the record. The Applicants further request that any
supplemental order authorizing amendments to the articles of incorporation be
issued by the SEC without further public notice. II. Other Securities
In addition to the specific securities for which authorization is
sought herein, the Applicants also propose to issue other types of securities
that they deem appropriate during the period ending December 31, 2002. The
Applicants request that the SEC reserve jurisdiction over the issuance of
additional types of securities. The Applicants also undertake to file a
post-effective amendment in this proceeding which will describe the general
terms of each such security and will request a supplemental order of the SEC
authorizing the issuance thereof by an Applicant. The Applicants request that
each supplemental order be issued by the SEC without further public notice.
Summary of Requested Authority
The Applicants seek authority to engage in financing transactions
during the Authorization Period, subject to satisfaction of certain parameters,
without needing to file separate applications for each individual financing
transaction. Applicants seek to consolidate existing financing authority
equaling approximately $0.95 billion with the additional authority requested
hereunder equaling approximately $1.05 billion for a total of $2.0 billion of
financing authority during the Authorization Period. While the Applicants seek
authority to issue various types of securities described herein, CSW shall limit
its financing activity hereunder to the issuance of common stock. Item 2. Fees,
Commissions and Expenses
An estimate of the fees and expenses to be paid or incurred by the
Applicants in connection with the proposed transactions is set forth below:
Amount
Counsel fees:
Milbank, Tweed, Hadley & McCloy
New York, New York........................... $15,000
Miscellaneous and incidental expenses
including travel, telephone and
postage........................................ 2,000
Total $17,000
Item 3. Applicable Statutory Provisions
Sections 6(a), 7, 9(a), 10, 12(b) and 12(f) of the Act and Rules 43,
45 and 52 thereunder are or may be applicable to the proposed transactions. To
the extent any other sections of the Act may be applicable to the proposed
transactions, the Applicants hereby request appropriate orders thereunder.
Item 4. Regulatory Approval
The Arkansas Public Service Commission (the "APSC") and the Corporation
Commission of the State of Oklahoma (the "OCC") may have jurisdiction with
respect to certain of the proposed transactions. The proposed transactions are
not subject to the jurisdiction of any other state commission or of any federal
commission other than the SEC. If required, petition for approval of the
proposed transactions and the use of the proceeds therefrom will be made to the
APSC and the OCC. Item 5. Procedure
The Applicants request that the SEC issue and publish no later than
September 26, 1997, the requisite notice under Rule 23 with respect to the
filing of this Application-Declaration, such notice to specify a date not later
than October 20, 1997, as the date after which an order granting and permitting
this Application to become effective may be entered by the SEC and that the SEC
enter not later than October 21, 1997, an appropriate order granting and
permitting this Application to become effective.
The Applicants respectfully request that appropriate and timely action
be taken by the SEC in this matter.
No recommended decision by a hearing officer or other responsible
officer of the SEC is necessary or required in this matter. The Division of
Investment Management of the SEC may assist in the preparation of the SEC's
decision in this matter. There should be no thirty-day waiting period between
the issuance and the effective date of any order issued by the SEC in this
matter, and it is respectfully requested that any such order be made effective
immediately upon the entry thereof. Item 6. Exhibits and Financial Statements
Exhibit 1: Preliminary Opinion of Milbank, Tweed, Hadley &
McCloy, counsel to the Company (to be filed by
amendment).
Exhibit 2: Final or "Past Tense" opinion of Milbank, Tweed,
Hadley & McCloy, counsel to the Company (to be filed
with Certificate of Notification).
Exhibit 3: Proposed Notice of Proceeding.
Exhibit 4: Financial Statements of Central and South West
Corporation and its subsidiaries as of June 30, 1997.
Item 7. Information as to Environmental Effects
The proposed transactions do not involve major federal action having
significant effect on the human environment. To the best of the Applicant's
knowledge no federal agency has prepared or is preparing an environmental impact
statement with respect to the proposed transactions.
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S I G N A T U R E
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, as amended, the undersigned companies have duly caused this document to
be signed on their behalf by the undersigned thereunto duly authorized.
Dated: September 17, 1997
CENTRAL AND SOUTH WEST CENTRAL POWER AND LIGHT COMPANY
CORPORATION
By: /s/ WENDY G. HARGUS By: /s/ WENDY G. HARGUS
Wendy G. Hargus Wendy G. Hargus
Treasurer Treasurer
PUBLIC SERVICE COMPANY OF SOUTHWESTERN ELECTRIC POWER
OKLAHOMA COMPANY
By: /s/ WENDY G. HARGUS By: /s/ WENDY G. HARGUS
Wendy G. Hargus Wendy G. Hargus
Treasurer Treasurer
WEST TEXAS UTILITIES COMPANY CENTRAL AND SOUTH WEST
SERVICES, INC.
By: /s/ WENDY G. HARGUS By: /s/ WENDY G .HARGUS
Wendy G. Hargus Wendy G. Hargus
Treasurer Treasurer
<PAGE>
INDEX OF EXHIBITS
EXHIBIT TRANSMISSION
NUMBER EXHIBIT METHOD
Exhibit 1 Preliminary Opinion of Milbank, ----
Tweed, Hadley & McCloy, counsel
to the Company.
(to be filed by amendment)
Exhibit 2 Final or "Past Tense" opinion of ----
Milbank, Tweed, Hadley & McCloy,
counsel to the Company (to be filed
with Certificate of Notification).
Exhibit 3 Proposed Notice of Proceeding. Electronic
Exhibit 4 Financial Statements of Central Electronic
and South West Corporation and its
subsidiaries as of June 30, 1997.
EXHIBIT 3
SECURITIES AND EXCHANGE COMMISSION
(Release No. 35- )
Filings Under the Public Utility Holding Company Act of 1935 ("Act")
_________ __, 1997
Notice is hereby given that the following filings(s) has/have been made
with the Commission pursuant to provisions of the Act and rules promulgated
thereunder. All interested persons are referred to the application(s) and/or
declaration(s) for complete statements of the proposed transaction(s) summarized
below. The application(s) and/or declaration(s) and any amendment(s) thereto
is/are available for public inspection through the Commission's Office of Public
Reference.
Interested persons wishing to comment or request a hearing on the
application(s) and/or declaration(s) should submit their views in writing by
__________ __, 1997, to the Secretary, Securities and Exchange Commission,
Washington, D.C. 20549, and serve a copy on the relevant applicant(s) and/or
declarant(s) at the addresses specified below. Proof of service (by affidavit,
or, in case of any attorney at law, by certificate) should be filed with the
request. Any request for hearing shall identify specifically the issues of fact
or law that are disputed. A person who so requests will be notified of any
hearing, if ordered, and will receive a copy of any notice of order issued in
the matter. After said date, the application(s) and/or declaration(s), as filed
or as amended, may be granted and/or permitted to become effective.
<PAGE>
Central and South West Corporation (File No. 70-____)
Central and South West Corporation ("CSW"), a Delaware corporation and
a registered holding company under the Act and its subsidiary companies Central
Power and Light Company ("CPL"), Public Service Company of Oklahoma ("PSO"),
Southwestern Electric Power Company ("SWEPCO"), West Texas Utilities Company
("WTU") and Central and South West Services, Inc. ("CSWS"), each referred to as
a "Subsidiary" and collectively referred to as the "Subsidiaries", have filed an
application-declaration under Sections 6(a), 7, 9(a), 10, 12(b) and 12(f) of the
Act and Rules 43, 45 and 52 thereunder.
CSW and the Subsidiaries (the "Applicants") are seeking authorization
for the period beginning with the effective date of an order issued in this
proceeding through December 31, 2002 (the "Authorization Period") for the
financing plan (the "Financing Plan") described below. The
application-declaration (the "Application") is an omnibus type filing which
seeks authority for the Applicants to issue the securities and engage in the
financing transactions pursuant to the requested authority in lieu of filing
separate applications for individual financing transactions.
The Application seeks to consolidate in one filing a substantial
portion of the financing authorizations expected to be requested by the
Applicants over a five year period. The requested authority is similar in
concept to the authorization for shelf registration statements permitted under
Rule 415 promulgated under the Securities Act of 1933, as amended ("1933 Act").
The Application is for system-wide financing authority and therefore does not
set forth specific terms for the individual components of the Financing Plan.
Even though the terms of specific financings are not discussed in the
Application, the Applicants propose to continue to finance from time to time
based on capital budgets and estimates of other financing needs as they have in
the past. An underlying assumption of the Application is that as long as the
Applicants maintain a solid financial base, as demonstrated by ratings of a
nationally recognized statistical rating organization ("NRSRO"), they should be
allowed broad discretion with respect to financing activities. The Applicants
therefore propose to enter into financial transactions designed to maintain an
appropriate capital structure for investment grade long-term ratings as
established by an NRSRO. This flexibility would allow the Applicants to more
easily take advantage of favorable market conditions, making them more
competitive with companies that are not subject to the jurisdiction of the Act.
The authorization requested relates to issuances of common stock,
including common stock issued upon the exercise of convertible debt or pursuant
to rights, options, warrants or similar securities, preferred stock, tax
advantaged preferred securities, first mortgage bonds, pollution control revenue
bonds, debentures, notes (secured and unsecured), medium-term notes, convertible
debt, other forms of indebtedness and borrowings pursuant to credit agreements
("Credit Agreements") with banks and other financial institutions, in each case
not subject to Rule 52. Each Applicant requests authority to issue and sell
these securities or enter into Credit Agreements without additional prior
Commission approval if the Applicant is within the parameters discussed below
under the heading "Parameters For Authorization." The provisions of the
securities, Credit Agreements and related instruments would be determined at the
time of the sale of securities or the execution of Credit Agreements and, with
respect to first mortgage bonds or preferred stock, would not be limited by any
of the SEC's "statements of policy" with respect thereto. To the extent that the
terms of any securities proposed to be issued and sold pursuant to an
authorization granted in this proceeding may conflict with the statements of
policy, request is made for authority to deviate therefrom.
The proceeds from external financing transactions, including the
issuance and sale of securities and borrowings under Credit Agreements, by the
Applicants will be added to their respective treasuries and subsequently used
principally (i) to finance capital expenditures, (ii) to acquire, retire, or
redeem securities of which CSW or the Subsidiaries are the issuer, (iii) to
repay outstanding short-term borrowings, (iv) to provide working capital and/or
(v) for other general corporate purposes, without the need for prior SEC
approval, pursuant to Rule 42 or a successor rule.
Proceeds obtained from financings authorized hereunder will not be used
for the purpose of investing in either an exempt wholesale generator ("EWG") or
a foreign utility company ("FUCO") as defined in Sections 32 and 33 of the Act,
respectively.
The Applicants state that the Application is consistent with the
recommendation of the staff of the Division of Investment Management that the
SEC modernize its administration of the Act, particularly with respect to
financing authorizations, in order to "reduce significantly the number of
applications requiring SEC approval and to provide more flexibility for
registered holding companies and their subsidiaries" (Division of Investment
Management, The Regulation of Public-Utility Holding Companies (June 1995) (the
"1995 Report") at 50) by issuing "orders covering blocks of securities to be
sold at one time or from time to time over a period of up to five years." (1995
Report at 54). The shelf approach is designed to give the Applicants flexibility
that will allow them to respond quickly and efficiently to financing needs and
to changes in market conditions, which, in turn, should make them more
competitive with utility and energy companies that are not subject to the
jurisdiction of the Act. The Applicants further state that at the same time, the
Commission will continue to have oversight over financings by the Applicants
through their regular disclosures under the 1933 Act and the Securities Exchange
Act of 1934, as amended (the "1934 Act"), and through the notification system
established pursuant to the Application. Finally, the Applicants contend that
the Application is consistent with prior Commission precedent. Parameters of
Authorization
The Applicants request authority to engage in financing transactions
for which the specific terms and conditions are not currently known, subject to
certain conditions concerning the financial condition of the Applicants. The
general conditions for financing without further prior approval are set forth
below.
CSW System Investment Grade Debt. With respect to financings at the
Subsidiary level only, the Subsidiaries seek authority to engage in financing
activities described in the Application as long as the long-term debt ratings of
the Subsidiary seeking to issue securities or enter into Credit Agreements are
investment grade as established by an NRSRO (as that term is used in Rule
15c3-1(c)(2)(vi)(F) under the 1934 Act). The Subsidiaries will at all times
during the Authorization Period strive to maintain a capital structure
sufficient to maintain investment grade long-term debt ratings.
Effective Cost of Money on Debt Securities and Borrowings under Credit
Agreements. The effective cost of money on debt securities issued pursuant to
the Application will not exceed the greater of (i) 300 basis points over
comparable term U.S. Treasury securities, or (ii) a gross spread over such
Treasury securities which is consistent with comparable investment grade
securities. The effective cost of money for borrowings under Credit Agreements
will not exceed the greater of (i) the prime rate plus 300 basis points, or (ii)
the rate of interest for comparable investment grade credits prevailing in the
market on the date of borrowing.
Effective Cost of Money on Other Approved Securities. The effective
cost of money on preferred stock and other fixed income oriented securities will
not exceed the greater of (i) 500 basis points over 30 year term U.S. Treasury
securities, or (ii) a gross spread over such Treasury securities which is
consistent with comparable investment grade securities.
Maturity of Debt. The maturity of debt securities will not exceed 100
years. Issuance Expenses. The underwriting fees, commissions, or other similar
expenses paid in connection with the issue, sale or distribution of a security
pursuant to the Application will not exceed 5% of the principal or total amount
of the financing.
Aggregate Dollar Limit. The aggregate amount of outstanding external
financing effected by the Applicants pursuant to the authorization requested
hereunder during the Authorization Period, other than the refunding of
outstanding securities which will not be limited, will not exceed $2 billion.
For the Commission, by the Division of Investment Management, pursuant to
delegated authority.
Jonathan G. Katz
Secretary
INDEX EXHIBIT 4
TO
FINANCIAL STATEMENTS Page
Number
CENTRAL AND SOUTH WEST CORPORATION AND SUBSIDIARY COMPANIES
Consolidated Balance Sheets - Per Books and Pro Forma
as of June 30, 1997 3 - 4
Consolidated Statement of Income for the Twelve Months Ended
June 30, 1997 5
Consolidated Statement of Retained Earnings for the Twelve Months Ended
June 30, 1997 6
CENTRAL AND SOUTH WEST CORPORATION (CORPORATE)
Balance Sheets - Per Books and Pro Forma as of June 30, 1997 7
Statement of Income for the Twelve Months Ended June 30, 1997 8
CENTRAL POWER AND LIGHT COMPANY
Balance Sheets - Per Books and Pro Forma as of June 30, 1997 9 - 10
Statement of Income for the Twelve Months Ended June 30, 1997 11
Statement of Retained Earnings for the Twelve Months Ended
June 30, 1997 12
PUBLIC SERVICE COMPANY OF OKLAHOMA
Balance Sheets - Per Books and Pro Forma as of June 30, 1997 13 - 14
Statement of Income for the Twelve Months Ended June 30, 1997 15
Statement of Retained Earnings for the Twelve Months Ended
June 30, 1997 16
SOUTHWESTERN ELECTRIC POWER COMPANY
Balance Sheets - Per Books and Pro Forma as of June 30, 1997 17 - 18
Statement of Income for the Twelve Months Ended June 30, 1997 19
Statement of Retained Earnings for the Twelve Months Ended
June 30, 1997 20
<PAGE>
INDEX
TO
FINANCIAL STATEMENTS
Page
(CONTINUED) Number
WEST TEXAS UTILITIES COMPANY
Balance Sheets - Per Books and Pro Forma as of June 30, 1997 21 - 22
Statement of Income for the Twelve Months Ended June 30, 1997 23
Statement of Retained Earnings for the Twelve Months Ended
June 30, 1997 24
CENTRAL AND SOUTH WEST SERVICES, INC.
Balance Sheets - Per Books and Pro Forma as of June 30, 1997 25 - 26
Statement of Income for the Twelve Months Ended June 30, 1997 27
Statement of Retained Earnings for the Twelve Months Ended
June 30, 1997 28
PRO FORMA ADJUSTMENTS TO BALANCE SHEETS 29
STATEMENT OF CHANGES 30
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 31
<PAGE>
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
PER BOOKS AND PRO FORMA
AS OF JUNE 30, 1997
UNAUDITED
(Millions)
Per Pro Forma Pro
Books Adjustments Forma
--------------------------------
ASSETS
FIXED ASSETS
Electric utility plant
Production $5,800 $5,800
Transmission 1,553 1,553
Distribution 4,321 4,321
General 1,369 1,369
Construction work in progress 185 185
Nuclear fuel 193 193
Other Diversified 171 171
--------------------------------
13,592 13,592
Less - Accumulated depreciation 5,050 5,050
--------------------------------
8,542 8,542
--------------------------------
CURRENT ASSETS
Cash and temporary cash investments 268 268
Accounts receivable 1,004 1,004
Materials and supplies, at average cost 181 181
Electric fuel inventory 83 83
Under-recovered fuel costs 59 59
Prepayments and other 86 86
--------------------------------
1,681 1,681
--------------------------------
DEFERRED CHARGES AND OTHER ASSETS
Deferred plant costs 506 506
Mirror CWIP asset - net 292 292
Other non-utility investments 343 343
Income tax related regulatory assets, net 236 236
Goodwill 1,463 1,463
Other 360 360
--------------------------------
3,200 3,200
--------------------------------
$13,423 $0 $13,423
================================
<PAGE>
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
PER BOOKS AND PRO FORMA
AS OF JUNE 30, 1997
UNAUDITED
(Millions)
Per Pro Forma Pro
Books Adjustments Forma
--------------------------------
CAPITALIZATION AND LIABILITIES
CAPITALIZATION
Common Stock Equity -
Common stock, $3.50 par value,
authorized 350,000,000 shares;
issued and outstanding 212,200,000 shares $743 $743
Paid-in capital 1,039 1,039
Retained earnings 1,887 1,887
Foreign currency translation and other 38 38
--------------------------------
Total Common Stock Equity 3,707 3,707
--------------------------------
Preferred stock
Not subject to mandatory redemption 176 176
Subject to mandatory redemption 28 28
Subsidiary obligated, mandatorily redeemable,
trust preferred securities 324 324
Long-term debt 3,979 3,979
--------------------------------
Total Capitalization 8,214 8,214
--------------------------------
CURRENT LIABILITIES
Long-term debt/preferred stock
due within twelve months 204 204
Short-term debt 400 400
Short-term debt - CSW Credit 708 708
Loan Notes 67 67
Accounts payable 494 494
Accrued taxes 245 245
Accrued interest 102 102
Other 249 249
--------------------------------
2,469 2,469
--------------------------------
DEFERRED CREDITS
Accumulated deferred income taxes 2,244 2,244
Investment tax credits 284 284
Other 212 212
--------------------------------
2,740 2,740
--------------------------------
$13,423 $0 $13,423
================================
<PAGE>
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF INCOME
FOR THE TWELVE MONTHS JUNE 30, 1997
UNAUDITED
(Millions)
OPERATING REVENUES $5,135
-----------
OPERATING EXPENSES AND TAXES
U.S. Electric fuel and purchased power 1,215
United Kingdom Cost of Sales 1,295
Operating and maintenance 1,064
Depreciation and amortization 468
Taxes, other than income 183
Income taxes 178
-----------
4,403
-----------
OPERATING INCOME 732
-----------
OTHER INCOME AND DEDUCTIONS 34
-----------
INCOME BEFORE INTEREST CHARGES 766
-----------
INTEREST AND OTHER CHARGES
Interest on long-term debt 332
Distributions on trust preferred securities 4
Interest on short-term debt and other 75
-----------
411
-----------
INCOME FROM CONTINUING OPERATIONS 355
-----------
DISCONTINUED OPERATIONS
Gain on the sale of discontinued
operations, net of tax of $0.3 8
-----------
NET INCOME 363
Less: preferred stock dividends 16
Gain on reacquired preferred stock 10
-----------
NET INCOME FOR COMMON STOCK $357
===========
<PAGE>
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF RETAINED EARNINGS
FOR THE TWELVE MONTHS JUNE 30, 1997
UNAUDITED
(Millions)
RETAINED EARNINGS AT JUNE 30, 1996 $1,897
Add: Net income for common stock 357
-----------
2,254
-----------
Deduct: Common stock dividends 367
Retained earnings adjustment 0
-----------
RETAINED EARNINGS AT JUNE 30, 1997 $1,887
===========
<PAGE>
CENTRAL AND SOUTH WEST CORPORATION
BALANCE SHEETS
PER BOOKS AND PRO FORMA
AS OF JUNE 30, 1997
UNAUDITED
(Millions)
Per Pro Forma Pro
Books Adjustments Forma
--------------------------------
ASSETS
FIXED ASSETS
Electric utility plant
General $1 $1
Less - Accumulated depreciation (1) (1)
--------------------------------
NET PLANT 0 0
INVESTMENTS IN COMMON STOCK
OF SUBSIDIARY COMPANIES (at equity) 4,044 4,044
--------------------------------
CURRENT ASSETS
Cash and temporary cash investments 15 15
Accounts and interest receivable - Affiliated 106 106
Prepayments and other 4 4
--------------------------------
125 125
--------------------------------
DEFERRED CHARGES AND OTHER ASSETS 14 14
--------------------------------
$4,183 $0 $4,183
================================
CAPITALIZATION
Common Stock Equity -
Common stock, $3.50 par value;
authorized 350,000,000 shares;
issued and outstanding 212,200,000 shares $743 $743
Paid-in capital 1,039 1,039
Retained earnings 1,887 1,887
Foreign currency translation and other 3 3
--------------------------------
Total Common Stock Equity 3,672 3,672
--------------------------------
Long-term debt 0 0
--------------------------------
Total Capitalization 3,672 3,672
--------------------------------
CURRENT LIABILITIES
Short-term debt 400 400
Accounts payable and other 123 123
--------------------------------
523 523
--------------------------------
DEFERRED CREDITS (12) (12)
--------------------------------
$4,183 $0 $4,183
================================
<PAGE>
CENTRAL AND SOUTH WEST CORPORATION
STATEMENT OF INCOME
FOR THE TWELVE MONTHS JUNE 30, 1997
UNAUDITED
(Millions)
INCOME
Equity in earnings of subsidiaries
Central Power and Light Company $121
Public Service Company of Oklahoma 69
Southwestern Electric Power Company 86
West Texas Utilities Company 25
SEEBOARD U.S.A. 103
CSW Credit, Inc. 8
CSW Energy, Inc. 6
CSW Leasing, Inc. 1
CSW International, Inc. (1)
CSW Communications, Inc. (6)
Enershop Inc. (2)
Central and South West Services, Inc. 0
Other Income 20
----------
$430
----------
EXPENSES AND TAXES
General and administrative expenses 60
Depreciation and amortization expense 1
Interest expense 42
Taxes, other than income 2
Federal income taxes (24)
----------
81
----------
DISCONTINUED OPERATIONS
Gain on sale of discontinued operations,
net of tax of $0.3 8
----------
NET INCOME $357
==========
<PAGE>
CENTRAL POWER AND LIGHT COMPANY
BALANCE SHEETS
PER BOOKS AND PRO FORMA
AS OF JUNE 30, 1997
UNAUDITED
(Millions)
Per Pro Forma Pro
Books Adjustments Forma
--------------------------------
ASSETS
FIXED ASSETS
Electric utility plant
Production $3,110 $3,110
Transmission 509 509
Distribution 984 984
General 281 281
Construction work in progress 84 84
Nuclear fuel 193 193
--------------------------------
5,161 5,161
Less - Accumulated depreciation
and amortization 1,759 1,759
--------------------------------
3,402 3,402
--------------------------------
CURRENT ASSETS
Cash and temporary cash investments 26 26
Accounts receivable 146 146
Under-recovered fuel costs 31 31
Materials and supplies, at average cost 73 73
Fuel inventory 11 11
Prepayments and other 6 6
--------------------------------
293 293
--------------------------------
DEFERRED CHARGES AND OTHER ASSETS
Deferred STP costs 486 486
Mirror CWIP asset 292 292
Income tax related regulatory assets, net 329 329
Other 102 102
--------------------------------
1,209 1,209
--------------------------------
$4,904 $0 $4,904
================================
<PAGE>
CENTRAL POWER AND LIGHT COMPANY
BALANCE SHEETS
PER BOOKS AND PRO FORMA
AS OF JUNE 30, 1997
UNAUDITED
(Millions)
Per Pro Forma Pro
Books Adjustment Forma
--------------------------------
CAPITALIZATION AND LIABILITIES
CAPITALIZATION
Common stock, $25 par value;
authorized 12,000,000 shares;
issued and outstanding 6,755,535 shares $169 $169
Paid-in capital 405 405
Retained earnings 855 855
--------------------------------
Total common stock equity 1,429 1,429
Preferred stock
Not subject to mandatory redemption 163 163
CPL obligated, mandatorily redeemable,
trust preferred securities 145 145
Long-term debt 1,327 1,327
--------------------------------
Total capitalization 3,064 3,064
--------------------------------
CURRENT LIABILITIES
Long-term debt due within twelve months 200 200
Payables to affiliates 23 23
Accounts payable 83 83
Accrued taxes 67 67
Accumulated deferred income taxes 9 9
Accrued interest 31 31
Refund due customers 99 99
Other 32 32
--------------------------------
544 544
--------------------------------
DEFERRED CREDITS
Accumulated deferred income taxes 1,137 1,137
Investment tax credits 144 144
Other 15 15
--------------------------------
1,296 1,296
--------------------------------
$4,904 $0 $4,904
================================
<PAGE>
CENTRAL POWER AND LIGHT COMPANY
STATEMENT OF INCOME
FOR THE TWELVE MONTHS JUNE 30, 1997
UNAUDITED
(Millions)
ELECTRIC OPERATING REVENUE $1,301
-----------
OPERATING EXPENSES AND TAXES
Fuel 349
Purchased power 58
Other operating 287
Maintenance 53
Depreciation and amortization 149
Taxes, other than income 76
Income taxes 76
-----------
1,048
-----------
OPERATING INCOME 253
-----------
OTHER INCOME AND DEDUCTIONS
Other 3
-----------
3
-----------
INCOME BEFORE INTEREST CHARGES 256
-----------
INTEREST AND OTHER CHARGES
Interest on long-term debt 110
Distributions on trust preferred securities 2
Interest on short-term debt and other 14
-----------
126
-----------
NET INCOME 130
Less: preferred stock dividends 12
Gain on reacquired preferred stock 3
-----------
NET INCOME FOR COMMON STOCK $121
===========
<PAGE>
CENTRAL POWER AND LIGHT COMPANY
STATEMENT OF RETAINED EARNINGS
FOR THE TWELVE MONTHS JUNE 30, 1997
UNAUDITED
(Millions)
RETAINED EARNINGS AT JUNE 30, 1996 $858
Add: Net income (loss) for common stock 121
-----------
979
Deduct: Common stock dividends 124
-----------
RETAINED EARNINGS AT JUNE 30, 1997 $855
===========
<PAGE>
PUBLIC SERVICE COMPANY OF OKLAHOMA
BALANCE SHEETS
PER BOOKS AND PRO FORMA
AS OF JUNE 30, 1997
UNAUDITED
(Millions)
Per Pro Forma Pro
Books Adjustments Forma
--------------------------------
ASSETS
FIXED ASSETS
Electric utility plant
Production $903 $903
Transmission 372 372
Distribution 800 800
General 204 204
Construction work in progress 39 39
--------------------------------
2,318 2,318
Less - Accumulated depreciation 1,016 1,016
--------------------------------
1,302 1,302
--------------------------------
CURRENT ASSETS
Cash and temporary cash investments 5 5
Accounts receivable 32 32
Materials and supplies, at average cost 34 34
Fuel inventory 16 16
Accumulated deferred income taxes 6 6
Prepayments 5 5
--------------------------------
98 98
--------------------------------
DEFERRED CHARGES AND OTHER ASSETS 65 65
--------------------------------
$1,465 $0 $1,465
================================
<PAGE>
PUBLIC SERVICE COMPANY OF OKLAHOMA
BALANCE SHEETS
PER BOOKS AND PRO FORMA
AS OF JUNE 30, 1997
UNAUDITED
(Millions)
Per Pro Forma Pro
Books Adjustments Forma
--------------------------------
CAPITALIZATION AND LIABILITIES
CAPITALIZATION
Common stock, $15 par value;
authorized 11,000,000 shares;
issued 10,482,000 shares;
outstanding 9,013,000 shares $157 $157
Paid-in capital 180 180
Retained earnings 156 156
--------------------------------
Total common stock equity 493 493
Preferred stock 5 5
PSO obligated, mandatorily redeemable,
trust preferred securities 73 73
Long-term debt 421 421
--------------------------------
Total capitalization 992 992
--------------------------------
CURRENT LIABILITIES
Payable to affiliates 24 24
Accounts payable 43 43
Payables to customers 15 15
Accrued taxes 27 27
Accrued interest 9 9
Other 5 5
--------------------------------
123 123
--------------------------------
DEFERRED CREDITS
Accumulated deferred income taxes 254 254
Investment tax credits 42 42
Income tax related regulatory
liabilities, net 44 44
Other 10 10
--------------------------------
350 350
--------------------------------
$1,465 $0 $1,465
================================
<PAGE>
PUBLIC SERVICE COMPANY OF OKLAHOMA
STATEMENT OF INCOME
FOR THE TWELVE MONTHS JUNE 30, 1997
UNAUDITED
(Millions)
ELECTRIC OPERATING REVENUE $728
-----------
OPERATING EXPENSES AND TAXES
Fuel 281
Purchased power 47
Other operating 122
Maintenance 36
Depreciation and amortization 79
Taxes, other than income 28
Income taxes 35
-----------
628
-----------
OPERATING INCOME 100
-----------
OTHER INCOME AND DEDUCTIONS 1
-----------
INCOME BEFORE INTEREST CHARGES 101
-----------
INTEREST AND OTHER CHARGES
Interest on long-term debt 31
Distributions on trust preferred securities 1
Interest on short-term debt and other 3
-----------
35
-----------
NET INCOME 66
Less: preferred stock dividends 1
Gain on reacquisition of preferred stock 4
-----------
NET INCOME FOR COMMON STOCK $69
===========
<PAGE>
PUBLIC SERVICE COMPANY OF OKLAHOMA
STATEMENT OF RETAINED EARNINGS
FOR THE TWELVE MONTHS JUNE 30, 1997
UNAUDITED
(Millions)
RETAINED EARNINGS AT JUNE 30, 1996 $131
Add: Net income (loss) for common stock 69
-----------
200
Deduct: Common stock dividends 44
-----------
RETAINED EARNINGS AT JUNE 30, 1997 $156
===========
<PAGE>
SOUTHWESTERN ELECTRIC POWER COMPANY
BALANCE SHEETS
PER BOOKS AND PRO FORMA
AS OF JUNE 30, 1997
UNAUDITED
(Millions)
Per Pro Forma Pro
Books Adjustments Forma
--------------------------------
ASSETS
FIXED ASSETS
Electric utility plant
Production $1,370 $1,370
Transmission 467 467
Distribution 848 848
General 310 310
Construction work in progress 45 45
--------------------------------
3,040 3,040
Less - Accumulated depreciation 1,189 1,189
--------------------------------
1,851 1,851
--------------------------------
CURRENT ASSETS
Cash and temporary cash investments 5 5
Accounts receivable 62 62
Materials and supplies, at average costs 28 28
Fuel inventory 41 41
Under-recovered fuel costs 12 12
Prepayments and other 15 15
--------------------------------
163 163
--------------------------------
DEFERRED CHARGES AND OTHER ASSETS 75 75
--------------------------------
$2,089 $0 $2,089
================================
<PAGE>
SOUTHWESTERN ELECTRIC POWER COMPANY
BALANCE SHEETS
PER BOOKS AND PRO FORMA
AS OF JUNE 30, 1997
UNAUDITED
(Millions)
Per Pro Forma Pro
Books Adjustments Forma
--------------------------------
CAPITALIZATION AND LIABILITIES
CAPITALIZATION
Common stock, $18 par value;
authorized 7,600,000 shares;
issued and outstanding 7,536,640 shares $136 $136
Paid-in capital 245 245
Retained earnings 334 334
--------------------------------
Total common stock equity 715 715
Preferred stock
Not subject to mandatory redemption 5 5
Subject to mandatory redemption 28 28
SWEPCO obligated, mandatorily redeemable,
trust preferred securities 106 106
Long-term debt 548 548
--------------------------------
Total capitalization 1,402 1,402
--------------------------------
CURRENT LIABILITIES
Long-term debt and preferred stock due
within twelve months 4 4
Accounts payable 58 58
Payable to affiliates 62 62
Customer deposits 11 11
Accrued taxes 33 33
Accumulated deferred income taxes 5 5
Accrued interest 14 14
Other 12 12
--------------------------------
199 199
--------------------------------
DEFERRED CREDITS
Accumulated deferred income taxes 376 376
Investment tax credits 69 69
Income tax related regulatory liabilities, net 33 33
Other 10 10
--------------------------------
488 488
--------------------------------
$2,089 $0 $2,089
================================
<PAGE>
SOUTHWESTERN ELECTRIC POWER COMPANY
STATEMENT OF INCOME
FOR THE TWELVE MONTHS JUNE 30, 1997
UNAUDITED
(Millions)
ELECTRIC OPERATING REVENUE $914
-----------
OPERATING EXPENSES AND TAXES
Fuel 382
Purchased power 22
Other Operating 143
Maintenance 44
Depreciation and amortization 94
Taxes, other than income 53
Income taxes 40
-----------
778
-----------
OPERATING INCOME 136
-----------
OTHER INCOME AND DEDUCTIONS 1
-----------
INCOME BEFORE INTEREST CHARGES 137
-----------
INTEREST AND OTHER CHARGES
Interest on long-term debt 43
Distributions on trust preferred securities 1
Interest on short-term debt and other 6
-----------
50
-----------
NET INCOME 87
Less: preferred stock dividends 3
Gain on reacquired preferred stock 2
-----------
NET INCOME FOR COMMON STOCK $86
===========
<PAGE>
SOUTHWESTERN ELECTRIC POWER COMPANY
STATEMENT OF RETAINED EARNINGS
FOR THE TWELVE MONTHS JUNE 30, 1997
UNAUDITED
(Millions)
RETAINED EARNINGS AT JUNE 30, 1996 $310
Add: Net income (loss) for common stock 86
-----------
396
Deduct: Common stock dividends 62
-----------
RETAINED EARNINGS AT JUNE 30, 1997 $334
===========
<PAGE>
WEST TEXAS UTILITIES COMPANY
BALANCE SHEETS
PER BOOKS AND PRO FORMA
AS OF JUNE 30, 1997
UNAUDITED
(Millions)
Per Pro Forma Pro
Books Adjustments Forma
--------------------------------
ASSETS
FIXED ASSETS
Electric utility plant
Production $417 $417
Transmission 206 206
Distribution 355 355
General 101 101
Construction work in progress 16 16
--------------------------------
1,095 1,095
Less - Accumulated depreciation 426 426
--------------------------------
669 669
--------------------------------
CURRENT ASSETS
Cash and temporary cash investments 1 1
Accounts receivable 33 33
Materials and supplies, at average cost 16 16
Fuel inventory, at average cost 8 8
Coal inventory, at LIFO cost 7 7
Under-recovered fuel costs 14 14
Prepayments and other 1 1
--------------------------------
80 80
--------------------------------
DEFERRED CHARGES AND OTHER ASSETS
Deferred Oklaunion costs 21 21
Regulatory assets 10 10
Other 41 41
--------------------------------
72 72
--------------------------------
$821 $0 $821
================================
<PAGE>
WEST TEXAS UTILITIES COMPANY
BALANCE SHEETS
PER BOOKS AND PRO FORMA
AS OF JUNE 30, 1997
UNAUDITED
(Millions)
Per Pro Forma Pro
Books Adjustments Forma
--------------------------------
CAPITALIZATION AND LIABILITIES
CAPITALIZATION
Common stock, $25 par value;
authorized 7,800,000 shares;
issued and outstanding 5,488,560 shares $137 $137
Paid-in capital 2 2
Retained earnings 124 124
--------------------------------
Total common stock equity 263 263
Preferred stock
Not subject to mandatory redemption 3 3
Long-term debt 277 277
--------------------------------
Total capitalization 543 543
--------------------------------
CURRENT LIABILITIES
Advances from affiliates 26 26
Payables to affiliates 32 32
Accounts payable 8 8
Accrued taxes 9 9
Accrued interest 5 5
Accumulated deferred income taxes 2 2
Other 2 2
--------------------------------
84 84
--------------------------------
DEFERRED CREDITS
Accumulated deferred income taxes 145 145
Investment tax credits 29 29
Investment tax related regulatory
liabilities, net 16 16
Other 4 4
--------------------------------
194 194
--------------------------------
$821 $0 $821
================================
<PAGE>
WEST TEXAS UTILITIES COMPANY
STATEMENT OF INCOME
FOR THE TWELVE MONTHS JUNE 30, 1997
UNAUDITED
(Millions)
ELECTRIC OPERATING REVENUE $379
-----------
OPERATING EXPENSES AND TAXES
Fuel 124
Purchased power 38
Other Operating 76
Maintenance 14
Depreciation and amortization 41
Taxes, other than income 24
Income taxes 14
-----------
331
-----------
OPERATING INCOME 48
-----------
OTHER INCOME AND DEDUCTIONS 1
-----------
INCOME BEFORE INTEREST CHARGES 49
-----------
INTEREST CHARGES
Interest on long-term debt 21
Interest on short-term debt and other 4
-----------
25
-----------
NET INCOME 24
Less: preferred stock dividends --
Gain on reacquisition of preferred stock 1
-----------
NET INCOME FOR COMMON STOCK $25
===========
<PAGE>
WEST TEXAS UTILITIES COMPANY
STATEMENT OF RETAINED EARNINGS
FOR THE TWELVE MONTHS JUNE 30, 1997
UNAUDITED
(Millions)
RETAINED EARNINGS AT JUNE 30, 1996 $116
Add: Net income (loss) for common stock 25
-----------
141
Deduct: Common stock dividends 17
-----------
RETAINED EARNINGS AT JUNE 30, 1997 $124
===========
<PAGE>
CENTRAL AND SOUTH WEST SERVICES, INC.
BALANCE SHEETS
PER BOOKS AND PRO FORMA
AS OF JUNE 30, 1997
UNAUDITED
(Millions)
Per Pro Forma Pro
Books Adjustments Forma
--------------------------------
ASSETS
General plant $121 $121
Less - Accumulated depreciation 34 34
--------------------------------
87 87
--------------------------------
CURRENT ASSETS
Accounts receivable affiliated 21 21
Accounts receivable non-affiliated 4 4
Prepayments and other 16 16
--------------------------------
41 41
--------------------------------
DEFERRED CHARGES AND OTHER ASSETS 3 3
--------------------------------
$131 $0 $131
================================
<PAGE>
CENTRAL AND SOUTH WEST SERVICES, INC.
BALANCE SHEETS
PER BOOKS AND PRO FORMA
AS OF JUNE 30, 1997
UNAUDITED
(Millions)
Per Pro Forma Pro
Books Adjustments Forma
--------------------------------
CAPITALIZATION AND LIABILITIES
CAPITALIZATION
Long-term debt $60 $60
--------------------------------
Total capitalization 60 60
--------------------------------
CURRENT LIABILITIES
Accounts payable non-affiliated 11 11
Advances from affiliates and other 37 37
--------------------------------
48 48
--------------------------------
DEFERRED CREDITS 23 23
--------------------------------
$131 $0 $131
================================
<PAGE>
CENTRAL AND SOUTH WEST SERVICES, INC.
STATEMENT OF INCOME
FOR THE TWELVE MONTHS JUNE 30, 1997
UNAUDITED
(Millions)
OPERATING REVENUE $0
-----------
OPERATING EXPENSES AND TAXES
Fuel Expense 3
Other Operating 206
Maintenance 4
Depreciation and amortization 9
Taxes, other than income taxes 7
Income taxes 1
-----------
230
-----------
OPERATING INCOME (230)
-----------
OTHER INCOME AND DEDUCTIONS 236
-----------
INCOME BEFORE INTEREST CHARGES 6
-----------
INTEREST CHARGES 6
-----------
NET INCOME FOR COMMON STOCK $0
===========
<PAGE>
CENTRAL AND SOUTH WEST SERVICES, INC.
STATEMENT OF RETAINED EARNINGS
FOR THE TWELVE MONTHS JUNE 30, 1997
UNAUDITED
(millions)
RETAINED EARNINGS AT JUNE 30, 1996 $0
Add: Net income (loss) for common stock 0
-----------
RETAINED EARNINGS AT JUNE 30, 1997 $0
===========
<PAGE>
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
PRO FORMA ADJUSTMENTS TO BALANCE SHEETS
JUNE 30, 1997
UNAUDITED
(Millions)
DR CR
---------------------
CENTRAL AND SOUTH WEST CORPORATION AND SUBSIDIARY COMPANIES
None
CENTRAL AND SOUTH WEST CORPORATION (CORPORATE)
None
CENTRAL POWER AND LIGHT COMPANY
None
PUBLIC SERVICE COMPANY OF OKLAHOMA
None
SOUTHWESTERN ELECTRIC POWER COMPANY
None
WEST TEXAS UTILITIES COMPANY
None
CENTRAL AND SOUTH WEST SERVICES, INC.
None
<PAGE>
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
STATEMENT OF CHANGES
There have been no significant changes in the financial statements of
Central and South West Corporation and subsidiary companies subsequent to June
30, 1997, other than in the ordinary course of business.
<PAGE>
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The notes to consolidated financial statements included in Central and
South West Corporation's 1996 Combined Annual Report on Form 10-K are hereby
incorporated by reference and made a part of this report.
Page
Reference
1996 Combined Annual Report on Form 10-K pages 2-39 through 2-71
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