File No. 70-9073
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 2 TO
FORM U-1 APPLICATION-DECLARATION
UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
------------------------------
CENTRAL POWER AND LIGHT COMPANY
539 North Carancahua Street
Corpus Christi, Texas 78401-2802
PUBLIC SERVICE COMPANY OF OKLAHOMA
212 East Sixth Street
Tulsa, Oklahoma 74119-1212
SOUTHWESTERN ELECTRIC POWER COMPANY
428 Travis Street
Shreveport, Louisiana 71156-0001
WEST TEXAS UTILITIES COMPANY
301 Cypress Street
Abilene, Texas 79601-5820
CENTRAL AND SOUTH WEST SERVICES, INC.
Williams Tower 2
2 West 2nd Street
Tulsa, Oklahoma 74103
(Names of companies filing this statement and addresses
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 10005-1413
(Names and addresses of agents for service)
<PAGE>
Central Power and Light Company, Public Service Company of
Oklahoma, Southwestern Electric Power Company and West Texas Utilities Company
(the "Operating Companies"), wholly owned public utility subsidiaries of Central
and South West Corporation ("CSW"), a registered holding company under the
Public Utility Holding Company Act of 1935, as amended (the "Act"), and Central
and South West Services, Inc., a wholly owned subsidiary of CSW that is
authorized to provide services to associate companies pursuant to Section 13(b)
of the Act and rules of the Securities and Exchange Commission (the
"Commission") promulgated thereunder (the "Service Company"), hereby submit for
filing this Amendment No. 2 to the Application on Form U-1 in File No. 70-9073
to amend and restate the Application in its entirety.
Item 1. Description of Proposed Transactions.
The Operating Companies, directly or through the Service
Company, propose to market to their customers a mortgage incentive program
provided by PHH Mortgage Services Corporation ("PHH Mortgage") and called the
Better Choices Home Mortgage Program (as the same may be renamed from time to
time, the "Better Choices Program").
The Better Choices Program is designed to promote efficiency
in the use of energy and environmental conservation. Under the Better Choices
Program, home buyers will be offered the opportunity to obtain mortgages with
enhanced benefits on homes that qualify either for a Good Cents Home
Certification or a Good Cents Environmental Home Certification. The Good Cents
Home Certification requires that the home to be purchased meet certain energy
efficiency standards (such as those relating to the quality of the insulation
installed, the energy efficiency of the heating, ventilating and air
conditioning equipment and other appliances installed and the presence of energy
management systems). The Good Cents Environmental Home Certification requires
that the home to be purchased meet not only energy efficiency requirements but
also have at least a minimum number of environmental conservation features from
a list of features (such as low-flow shower heads, recycling bins, composting
facilities and use of non-polluting materials).
The Good Cents Environmental Home Certification Standards have
been submitted to the Edison Electric Institute for certification that they meet
the standards of the E-Seal Program of the Edison Electric Institute, an
industry-wide program to promote energy efficiency and environmental
conservation. The Operating Companies will certify to PHH Mortgage that the
homes meet the standards for either a Good Cents Home Certification or a Good
Cents Environmental Home Certification and will list the features of the homes
that qualify them for such certification. Based on such certification, PHH
Mortgage will offer to customers of the Operating Companies various benefits
that may permit such customers to qualify for mortgages that are 15% to 20%
larger than conventional mortgages. The increased sizes of the mortgages are
made possible by a combination of features, such as granting mortgages for 100%
of the cost of qualifying energy efficiency and environmental conservation
features and calculating income available to service mortgages on the basis of
reduced utility bills. In addition, PHH Mortgage will offer to Operating Company
customers other inducements that will vary over time, such as reduced points,
closing costs and interest rates.
The services offered by PHH Mortgage are integrated with the
relocation services offered by PHH Real Estate Services Corporation ("PHH Real
Estate"), which maintains a network of residential realtors capable of assisting
Operating Company customers in selling their existing homes, buying new homes
and, together with PHH Mortgage, qualifying for new mortgages under the Better
Choices Program. In addition to receiving the benefits of the relocation
services, Operating Company customers would, where lawful, be paid portions of
the referral fees received by PHH Real Estate from the realtors upon closing.
The Operating Companies would not render any services to customers in respect of
the relocation services of PHH Real Estate and would not certify the homes of
relocating customers as qualifying for preferential mortgages if the customers
move out of the service territories of the Operating Companies. Nonetheless, the
Operating Companies believe that these ancillary services contribute to the
primary objectives of the Better Choices Program for the Operating Companies:
(i) the promotion of energy efficiency and environmental conservation on the
part of customers; and (ii) the promotion of general customer good will in an
era of anticipated competition in retail electric service by making available
financial services products that offer significant benefits to customers. In the
future the Operating Companies might market similar services if offered by other
providers ("Other Providers").
The Operating Companies (directly or through the Service
Company) would market the Better Choices Program through direct mail programs,
articles, promotional literature, advertisements, customer kits, and mail
inserts. The mail inserts portion of the marketing activity would utilize the
excess bill space in the billing envelopes sent by the Operating Companies to
their utility customers such that the total envelope weight with the added piece
would not result in any additional postage. The Operating Companies would be
compensated for their marketing services by payment to them, where lawful, of a
portion of the referral fee received by PHH Real Estate (or Other Providers)
from the realtor upon closing. The Operating Companies would also be compensated
for their marketing services by the payment to them, where lawful, of fees based
on mortgages closed by PHH Mortgage. The Operating Companies propose to offer
the Better Choices Program for the customer relations reasons stated above,
rather than primarily to make profits, and estimate that such compensation might
only cover their costs. Currently, it is estimated that the aggregate costs of
the Better Choices Program in 1998 and 1999 would be $50,000 and $100,000,
respectively, and that aggregate revenues in those years would be $40,000 and
$100,000, respectively.
The activities of the Operating Companies with respect to the
mortgage services described herein will be limited to marketing such mortgage
services and providing home certifications only. The Operating Companies will
not provide financing for such mortgages, nor will they be engaged in real
estate brokering, relocation services or other real estate related activities.
The Operating Companies' are participating in these programs solely for the
purposes of promoting and facilitating the use of energy efficiency and
environmental conservation features available in homes within each Operating
Company's service territory and developing customer loyalty in light of
anticipated competition.
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 exempt wholesale generator
("EWG") or a foreign utility company ("FUCO"), or other transactions by such
registered holding company or its subsidiaries other than with respect to EWGs
or FUCOs, the Commission 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 Rule 53(a), (b) and (c) are satisfied. As set forth below, all
applicable conditions set forth in Rule 53(a) are, and, assuming the
consummation of the transactions proposed herein, will be, satisfied and none of
the conditions set forth in Rule 53(b) exist or will exist as a result of the
transactions proposed herein.
Rule 54 under the Act is satisfied because Rules 53(a), (b)
and (c) are satisfied. As of March 31, 1997, CSW has invested approximately
$894.2 million in EWGs and FUCOs or approximately 46% of CSW's average
"consolidated retained earnings" of $1,939 million at the end of its four fiscal
quarters ended March 31, 1997, thus satisfying Rule 53(a)(1). CSW maintains in
conformity with United States generally accepted accounting principles and makes
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). And 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). None of the conditions
described in Rule 53(b) exist with respect to CSW or any of its subsidiaries,
thereby satisfying said Rule and making Rule 53(c) inapplicable.
Item 2. Fees, Commissions and Expenses.
The estimate of the approximate amount of fees and expenses
payable in connection with the proposed transactions is as follows:
Holding Company Act filing fee $ 2,000*
Counsel fees
Milbank, Tweed, Hadley & McCloy 10,000
Miscellaneous and incidental
expenses including travel,
telephone and postage 500
-------
TOTAL $12,500
- -------------------------
* Actual amount.
Item 3. Applicable Statutory Provisions.
Sections 9(a), 10 and 11(b) of the Act 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 Operating Companies and
the Service Company hereby request appropriate orders thereunder. Section 9(a)
of the Act makes unlawful the acquisition by a subsidiary of a registered
holding company of "any . . . interest in any business" without the prior
approval of the Commission under Section 10 of the Act. Under Section 10(c)(1),
the Commission may not approve the acquisition of any interest in any business
if the proposed acquisition is "detrimental to the carrying out of the
provisions of Section 11" of the Act. Under Section 11(b)(1), the Commission
must limit the operations of a public utility holding company and its
subsidiaries to a single integrated public utility system, and to such other
businesses as are reasonably incidental, or economically necessary or
appropriate, to the operations of such integrated public utility system. The
Commission may permit as reasonably incidental, or economically necessary or
appropriate, to the operations of an integrated public utility system the
retention of an interest in any business (other than the business of a public
utility company as such) which the Commission shall find necessary or
appropriate in the public interest or for the protection of investors or
consumers and not detrimental to the proper functioning of such system.
The Operating Companies believe that the marketing of the
Better Choices Program will provide substantial enhancement of efficiency of
energy use by residential customers and will promote customer good will, and
therefore satisfies the requirements of Sections 9(a)(1) and 10 in that it is
incidental, and economically necessary or appropriate to the Operating Companies
core business of generating, transmitting and distributing electric energy. The
Better Choices Program is also appropriate in the public interest, in that it
will promote environmental conservation by residential customers, and is not
detrimental to the proper functioning of the Operating Companies and the Service
Company.
The Better Choices Program satisfies the two-pronged
"functional relationship" test established by the United States Court of Appeals
for the District of Columbia Circuit in Michigan Consolidated Gas Co. v. SEC,
444 F.2d 913 (D.C. Cir. 1971), which traditionally has been used by the
Commission in applying Section 11(b)(1) of the Act. Under the "functional
relationship" test, an integrated public-utility system may retain an interest
in another business if (i) the additional business is "reasonably incidental or
economically necessary or appropriate" to the integrated system and (ii) the
retention of the additional business is in the public interest. Michigan
Consolidated at 916. The nature of the Better Choices Program and the objectives
of the Operating Companies in desiring to offer it to customers make it closely
related to the core business of the Operating Companies; therefore the marketing
of these programs to customers easily passes the "functional relationship" test.
Likewise, the Better Choices Program is fully consistent with Commission
precedent permitting subsidiaries of registered public utility companies to
promote energy management and efficiency in its customer base. New England
Electric System, Holding Co. Act Release No. 22719 (Nov. 19, 1982). In that
order, the Commission authorized New England Electric system to organize a
wholly-owned subsidiary to "perform a variety of conservation and load
management measures, including the installment of meters and controls on
equipment, the modification or replacement of inefficient equipment, an the
monitoring of energy consumption." The Better Choices Program would involve the
facilitation by the Operating Companies of third-party financing for upgraded
residential energy efficiency equipment and the certification by the Operating
Companies of the energy efficiency qualifications of the residences. Therefore,
the result of these activities would be similar to the objectives sought to be
realized by New England Electric System in the order cited above, although the
activities themselves would be somewhat different.
Item 4. Regulatory Approval.
No state regulatory authority and no federal regulatory
authority, other than the Commission under the Act, have jurisdiction over the
proposed transactions.
Item 5. Procedure.
It is requested that the Commission issue and publish not
later than July 18, 1997 the requisite notice under Rule 23 with respect to the
filing of this Application, such notice to specify a date not later than August
8, 1997 as the date after which an order granting and permitting this
Application to become effective may be entered by the Commission and the
Commission enter not later than August 9, 1997 an appropriate order granting and
permitting this Application to become effective.
No recommended decision by a hearing officer or other
responsible officer of the Commission is necessary or required in this matter.
The Division of Investment Management of the Commission may assist in the
preparation of the Commission'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 Commission 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 Operating Companies and the Service Company.
Exhibit 2 - Final or "Past Tense" opinion of Milbank, Tweed, Hadley &
McCloy, counsel to the Operating Companies and the Service
Company (to be filed with Certificate of Notification).
Exhibit 3 - Financial Statements as of September 30, 1997.
Exhibit 4 - Proposed notice of proceeding.
Item 7. Environmental Effects.
The proposed transactions do not involve major Federal action
having a significant effect on the human environment. No Federal agency has
prepared or is preparing an environmental impact statement with respect to the
proposed program.
<PAGE>
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 company has duly caused this
document to be signed on its behalf by the undersigned thereunto duly
authorized.
Dated: January 22, 1998.
CENTRAL POWER AND LIGHT COMPANY
By /s/ Wendy G. Hargus
Wendy G. Hargus
Treasurer
PUBLIC SERVICE COMPANY OF OKLAHOMA
By / s/ Wendy G. Hargus
Wendy G. Hargus
Treasurer
SOUTHWESTERN ELECTRIC POWER COMPANY
By /s/ Wendy G. Hargus
Wendy G. Hargus
Treasurer
WEST TEXAS UTILITIES COMPANY
By /s/ Wendy G. Hargus
Wendy G. Hargus
Treasurer
CENTRAL AND SOUTH WEST SERVICES, INC.
By /s/ Wendy G. Hargus
Wendy G. Hargus
Treasurer
<PAGE>
Exhibit Index
Exhibit Transmission
Number Exhibit Method
- ------ ------- -------------
1 Preliminary opinion of
Milbank, Tweed, Hadley &
McCloy, counsel to the
Operating Companies and Previously
the Service Company. filed
2 Final or "Past Tense"
opinion of Milbank, Tweed,
Hadley & McCloy, counsel
to the Operating Companies
and the Service Company
(to be filed with the
Certificate of
Notification). __
3 Financial Statements as
of September 30, 1997. Electronic
4 Proposed notice of Previously
proceeding. filed
INDEX EXHIBIT 3
TO
FINANCIAL STATEMENTS
CENTRAL AND SOUTH WEST CORPORATION AND SUBSIDIARY COMPANIES
Consolidated Balance Sheets - Per Books and Pro Forma
as of September 30, 1997
Consolidated Statement of Income for the Twelve Months Ended
September 30, 1997
Consolidated Statement of Retained Earnings for the Twelve Months Ended
September 30, 1997
CENTRAL AND SOUTH WEST CORPORATION (CORPORATE)
Balance Sheets - Per Books and Pro Forma as of September 30, 1997
Statement of Income for the Twelve Months Ended September 30, 1997
CENTRAL POWER AND LIGHT COMPANY
Balance Sheets - Per Books and Pro Forma as of September 30, 1997
Statement of Income for the Twelve Months Ended September 30, 1997
Statement of Retained Earnings for the Twelve Months Ended
September 30, 1997
PUBLIC SERVICE COMPANY OF OKLAHOMA
Balance Sheets - Per Books and Pro Forma as of September 30, 1997
Statement of Income for the Twelve Months Ended September 30, 1997
Statement of Retained Earnings for the Twelve Months Ended
September 30, 1997
SOUTHWESTERN ELECTRIC POWER COMPANY
Balance Sheets - Per Books and Pro Forma as of September 30, 1997
Statement of Income for the Twelve Months Ended September 30, 1997
Statement of Retained Earnings for the Twelve Months Ended
September 30, 1997
<PAGE>
INDEX
TO
FINANCIAL STATEMENTS
(CONTINUED)
WEST TEXAS UTILITIES COMPANY
Balance Sheets - Per Books and Pro Forma as of September 30, 1997
Statement of Income for the Twelve Months Ended September 30, 1997
Statement of Retained Earnings for the Twelve Months Ended
September 30, 1997
CENTRAL AND SOUTH WEST SERVICES, INC.
Balance Sheets - Per Books and Pro Forma as of September 30, 1997
Statement of Income for the Twelve Months Ended September 30, 1997
Statement of Retained Earnings for the Twelve Months Ended
September 30, 1997
PRO FORMA ADJUSTMENTS TO BALANCE SHEETS
STATEMENT OF CHANGES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
PER BOOKS AND PRO FORMA
AS OF SEPTEMBER 30, 1997
UNAUDITED
(Millions)
Per Pro Forma Pro
Books Adjustments Forma
--------------------------------
ASSETS
FIXED ASSETS
Electric utility plant
Production $5,825 $5,825
Transmission 1,561 1,561
Distribution 4,352 4,352
General 1,358 1,358
Construction work in progress 169 169
Nuclear fuel 195 195
Other Diversified 191 191
--------------------------------
13,651 13,651
Less - Accumulated depreciation 5,117 5,117
--------------------------------
8,534 8,534
--------------------------------
CURRENT ASSETS
Cash and temporary cash investments 390 390
Accounts receivable 1,208 1,208
Materials and supplies, at average cost 176 176
Electric fuel inventory 71 71
Under-recovered fuel costs 99 99
Prepayments and other 58 58
--------------------------------
2,002 2,002
--------------------------------
DEFERRED CHARGES AND OTHER ASSETS
Deferred plant costs 505 505
Mirror CWIP asset - net 289 289
Other non-utility investments 441 441
Income tax related regulatory assets, net 248 248
Goodwill 1,405 1,405
Other 379 379
--------------------------------
3,267 3,267
--------------------------------
$13,803 $0 $13,803
================================
<PAGE>
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
PER BOOKS AND PRO FORMA
AS OF SEPTEMBER 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 1,815 1,815
Foreign currency translation and other 33 33
--------------------------------
Total Common Stock Equity 3,630 3,630
--------------------------------
Preferred stock
Not subject to mandatory redemption 176 176
Subject to mandatory redemption 26 26
Subsidiary obligated, mandatorily redeemable,
trust preferred securities 323 323
Long-term debt 3,933 3,933
--------------------------------
Total Capitalization 8,088 8,088
--------------------------------
CURRENT LIABILITIES
Long-term debt/preferred stock
due within twelve months 204 204
Short-term debt 439 439
Short-term debt - CSW Credit 849 849
Loan Notes 65 65
Accounts payable 510 510
Accrued taxes 447 447
Accrued interest 129 129
Other 303 303
--------------------------------
2,946 2,946
--------------------------------
DEFERRED CREDITS
Accumulated deferred income taxes 2,235 2,235
Investment tax credits 282 282
Other 252 252
--------------------------------
2,769 2,769
--------------------------------
$13,803 $0 $13,803
================================
<PAGE>
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF INCOME
FOR THE TWELVE MONTHS SEPTEMBER 30, 1997
UNAUDITED
(Millions)
OPERATING REVENUES $5,174
-----------
OPERATING EXPENSES AND TAXES
U.S. Electric fuel and purchased power 1,237
United Kingdom Cost of Sales 1,298
Operating and maintenance 1,086
Depreciation and amortization 467
Taxes, other than income 183
Income taxes 151
-----------
4,422
-----------
OPERATING INCOME 752
-----------
OTHER INCOME AND DEDUCTIONS 34
-----------
INCOME BEFORE INTEREST CHARGES 786
-----------
INTEREST AND OTHER CHARGES
Interest on long-term debt 336
Distributions on trust preferred securities 11
Interest on short-term debt and other 77
-----------
424
-----------
INCOME FROM CONTINUING OPERATIONS 361
-----------
DISCONTINUED OPERATIONS
Gain on the sale of discontinued
operations, net of tax of $0.07 7
-----------
INCOME BEFORE EXTRAORDINARY ITEM 368
EXTRAORDINARY ITEM - UK Windfall Profits Tax (176)
-----------
NET INCOME 192
Less: preferred stock dividends 14
Gain on reacquired preferred stock 10
-----------
NET INCOME FOR COMMON STOCK $188
===========
<PAGE>
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF RETAINED EARNINGS
FOR THE TWELVE MONTHS SEPTEMBER 30, 1997
UNAUDITED
(Millions)
RETAINED EARNINGS AT SEPTEMBER 30, 1996 $1,996
Add: Net income for common stock 188
-----------
2,184
-----------
Deduct: Common stock dividends 369
Retained earnings adjustment 0
-----------
RETAINED EARNINGS AT SEPTEMBER 30, 1997 $1,815
===========
<PAGE>
CENTRAL AND SOUTH WEST CORPORATION
BALANCE SHEETS
PER BOOKS AND PRO FORMA
AS OF SEPTEMBER 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) 3,951 3,951
--------------------------------
CURRENT ASSETS
Cash and temporary cash investments 2 2
Accounts and interest receivable - Affiliated 128 128
Prepayments and other 4 4
--------------------------------
134 134
--------------------------------
DEFERRED CHARGES AND OTHER ASSETS 14 14
--------------------------------
$4,099 $0 $4,099
================================
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 1,815 1,815
Foreign currency translation and other 5 5
--------------------------------
Total Common Stock Equity 3,602 3,602
--------------------------------
Long-term debt 0 0
--------------------------------
Total Capitalization 3,602 3,602
--------------------------------
CURRENT LIABILITIES
Short-term debt 439 439
Accounts payable and other 60 60
--------------------------------
499 499
--------------------------------
DEFERRED CREDITS (2) (2)
--------------------------------
$4,099 $0 $4,099
================================
<PAGE>
CENTRAL AND SOUTH WEST CORPORATION
STATEMENT OF INCOME
FOR THE TWELVE MONTHS SEPTEMBER 30, 1997
UNAUDITED
(Millions)
INCOME
Equity in earnings of subsidiaries
Central Power and Light Company $122
Public Service Company of Oklahoma 55
Southwestern Electric Power Company 96
West Texas Utilities Company 24
SEEBOARD U.S.A. (58)
CSW Credit, Inc. 9
CSW Energy, Inc. 6
CSW Leasing, Inc. 1
CSW International, Inc. (4)
CSW Communications, Inc. (7)
Enershop Inc. (2)
Central and South West Services, Inc. 0
Other Income 21
----------
$263
----------
EXPENSES AND TAXES
General and administrative expenses 65
Depreciation and amortization expense 1
Interest expense 38
Taxes, other than income 2
Federal income taxes (24)
----------
82
----------
DISCONTINUED OPERATIONS
Gain on sale of discontinued operations, net of
tax of $0.07 7
----------
NET INCOME $188
==========
<PAGE>
CENTRAL POWER AND LIGHT COMPANY
BALANCE SHEETS
PER BOOKS AND PRO FORMA
AS OF SEPTEMBER 30, 1997
UNAUDITED
(Millions)
Per Pro Forma Pro
Books Adjustments Forma
--------------------------------
ASSETS
FIXED ASSETS
Electric utility plant
Production $3,109 $3,109
Transmission 513 513
Distribution 1,003 1,003
General 281 281
Construction work in progress 88 88
Nuclear fuel 195 195
--------------------------------
5,189 5,189
Less - Accumulated depreciation
and amortization 1,797 1,797
--------------------------------
3,392 3,392
--------------------------------
CURRENT ASSETS
Cash and temporary cash investments 106 106
Advances to affiliates 24 24
Accounts receivable 66 66
Under-recovered fuel costs 54 54
Materials and supplies, at average cost 71 71
Fuel inventory 14 14
Prepayments and other 4 4
--------------------------------
339 339
--------------------------------
DEFERRED CHARGES AND OTHER ASSETS
Deferred STP costs 485 485
Mirror CWIP asset 289 289
Income tax related regulatory assets, net 326 326
Other 104 104
--------------------------------
1,204 1,204
--------------------------------
$4,935 $0 $4,935
================================
<PAGE>
CENTRAL POWER AND LIGHT COMPANY
BALANCE SHEETS
PER BOOKS AND PRO FORMA
AS OF SEPTEMBER 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 872 872
--------------------------------
Total common stock equity 1,446 1,446
Preferred stock
Not subject to mandatory redemption 163 163
CPL obligated, mandatorily redeemable,
trust preferred securities 145 145
Long-term debt 1,329 1,329
--------------------------------
Total capitalization 3,083 3,083
--------------------------------
CURRENT LIABILITIES
Long-term debt due within twelve months 200 200
Payables to affiliates 9 9
Accounts payable 77 77
Accrued taxes 79 79
Accumulated deferred income taxes 17 17
Accrued interest 35 35
Refund due customers 106 106
Other 35 35
--------------------------------
558 558
--------------------------------
DEFERRED CREDITS
Accumulated deferred income taxes 1,135 1,135
Investment tax credits 144 144
Other 15 15
--------------------------------
1,294 1,294
--------------------------------
$4,935 $0 $4,935
================================
<PAGE>
CENTRAL POWER AND LIGHT COMPANY
STATEMENT OF INCOME
FOR THE TWELVE MONTHS SEPTEMBER 30, 1997
UNAUDITED
(Millions)
ELECTRIC OPERATING REVENUE $1,335
-----------
OPERATING EXPENSES AND TAXES
Fuel 376
Purchased power 51
Other operating 301
Maintenance 59
Depreciation and amortization 144
Taxes, other than income 73
Income taxes 79
-----------
1,083
-----------
OPERATING INCOME 252
-----------
OTHER INCOME AND DEDUCTIONS
Other 6
-----------
6
-----------
INCOME BEFORE INTEREST CHARGES 258
-----------
INTEREST AND OTHER CHARGES
Interest on long-term debt 108
Distributions on trust preferred securities 5
Interest on short-term debt and other 14
-----------
127
-----------
NET INCOME 131
Less: preferred stock dividends 11
Gain on reacquired preferred stock 2
-----------
NET INCOME FOR COMMON STOCK $122
===========
<PAGE>
CENTRAL POWER AND LIGHT COMPANY
STATEMENT OF RETAINED EARNINGS
FOR THE TWELVE MONTHS SEPTEMBER 30, 1997
UNAUDITED
(Millions)
RETAINED EARNINGS AT SEPTEMBER 30, 1996 $872
Add: Net income (loss) for common stock 122
-----------
994
Deduct: Common stock dividends 122
-----------
RETAINED EARNINGS AT SEPTEMBER 30, 1997 $872
===========
<PAGE>
PUBLIC SERVICE COMPANY OF OKLAHOMA
BALANCE SHEETS
PER BOOKS AND PRO FORMA
AS OF SEPTEMBER 30, 1997
UNAUDITED
(Millions)
Per Pro Forma Pro
Books Adjustments Forma
--------------------------------
ASSETS
FIXED ASSETS
Electric utility plant
Production $907 $907
Transmission 373 373
Distribution 811 811
General 206 206
Construction work in progress 32 32
--------------------------------
2,329 2,329
Less - Accumulated depreciation 1,031 1,031
--------------------------------
1,298 1,298
--------------------------------
CURRENT ASSETS
Cash and temporary cash investments 40 40
Advances to affiliates 8 8
Accounts receivable 27 27
Materials and supplies, at average cost 33 33
Fuel inventory 15 15
Prepayments and other 1 1
--------------------------------
124 124
--------------------------------
DEFERRED CHARGES AND OTHER ASSETS 72 72
--------------------------------
$1,494 $0 $1,494
================================
<PAGE>
PUBLIC SERVICE COMPANY OF OKLAHOMA
BALANCE SHEETS
PER BOOKS AND PRO FORMA
AS OF SEPTEMBER 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 163 163
--------------------------------
Total common stock equity 500 500
Preferred stock 5 5
PSO obligated, mandatorily redeemable,
trust preferred securities 73 73
Long-term debt 421 421
--------------------------------
Total capitalization 999 999
--------------------------------
CURRENT LIABILITIES
Payable to affiliates 12 12
Accounts payable 44 44
Payables to customers 16 16
Accrued taxes 39 39
Accrued interest 11 11
Refund due customers 29 29
Accumulated deferred income taxes 1 1
Other 8 8
--------------------------------
160 160
--------------------------------
DEFERRED CREDITS
Accumulated deferred income taxes 242 242
Investment tax credits 42 42
Income tax related regulatory
liabilities, net 43 43
Other 8 8
--------------------------------
335 335
--------------------------------
$1,494 $0 $1,494
================================
<PAGE>
PUBLIC SERVICE COMPANY OF OKLAHOMA
STATEMENT OF INCOME
FOR THE TWELVE MONTHS SEPTEMBER 30, 1997
UNAUDITED
(Millions)
ELECTRIC OPERATING REVENUE $700
-----------
OPERATING EXPENSES AND TAXES
Fuel 277
Purchased power 47
Other operating 119
Maintenance 35
Depreciation and amortization 80
Taxes, other than income 29
Income taxes 27
-----------
614
-----------
OPERATING INCOME 86
-----------
OTHER INCOME AND DEDUCTIONS 2
-----------
INCOME BEFORE INTEREST CHARGES 88
-----------
INTEREST AND OTHER CHARGES
Interest on long-term debt 30
Distributions on trust preferred securities 2
Interest on short-term debt and other 4
-----------
36
-----------
NET INCOME 52
Less: preferred stock dividends 1
Gain on reacquisition of preferred stock 4
-----------
NET INCOME FOR COMMON STOCK $55
===========
<PAGE>
PUBLIC SERVICE COMPANY OF OKLAHOMA
STATEMENT OF RETAINED EARNINGS
FOR THE TWELVE MONTHS SEPTEMBER 30, 1997
UNAUDITED
(Millions)
RETAINED EARNINGS AT SEPTEMBER 30, 1996 $148
Add: Net income (loss) for common stock 55
-----------
203
Deduct: Common stock dividends 40
-----------
RETAINED EARNINGS AT SEPTEMBER 30, 1997 $163
===========
<PAGE>
SOUTHWESTERN ELECTRIC POWER COMPANY
BALANCE SHEETS
PER BOOKS AND PRO FORMA
AS OF SEPTEMBER 30, 1997
UNAUDITED
(Millions)
Per Pro Forma Pro
Books Adjustments Forma
--------------------------------
ASSETS
FIXED ASSETS
Electric utility plant
Production $1,390 $1,390
Transmission 468 468
Distribution 859 859
General 310 310
Construction work in progress 35 35
--------------------------------
3,062 3,062
Less - Accumulated depreciation 1,209 1,209
--------------------------------
1,853 1,853
--------------------------------
CURRENT ASSETS
Cash and temporary cash investments 27 27
Accounts receivable 56 56
Materials and supplies, at average costs 25 25
Fuel inventory 29 29
Under-recovered fuel costs 19 19
Prepayments and other 16 16
--------------------------------
172 172
--------------------------------
DEFERRED CHARGES AND OTHER ASSETS 85 85
--------------------------------
$2,110 $0 $2,110
================================
<PAGE>
SOUTHWESTERN ELECTRIC POWER COMPANY
BALANCE SHEETS
PER BOOKS AND PRO FORMA
AS OF SEPTEMBER 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 349 349
--------------------------------
Total common stock equity 730 730
Preferred stock
Not subject to mandatory redemption 5 5
Subject to mandatory redemption 26 26
SWEPCO obligated, mandatorily redeemable,
trust preferred securities 106 106
Long-term debt 547 547
--------------------------------
Total capitalization 1,414 1,414
--------------------------------
CURRENT LIABILITIES
Long-term debt and preferred stock due
within twelve months 4 4
Accounts payable 58 58
Payable to affiliates 60 60
Customer deposits 12 12
Accrued taxes 42 42
Accumulated deferred income taxes 8 8
Accrued interest 12 12
Other 12 12
--------------------------------
208 208
--------------------------------
DEFERRED CREDITS
Accumulated deferred income taxes 393 393
Investment tax credits 68 68
Income tax related regulatory liabilities, net 18 18
Other 9 9
--------------------------------
488 488
--------------------------------
$2,110 $0 $2,110
================================
<PAGE>
SOUTHWESTERN ELECTRIC POWER COMPANY
STATEMENT OF INCOME
FOR THE TWELVE MONTHS SEPTEMBER 30, 1997
UNAUDITED
(Millions)
ELECTRIC OPERATING REVENUE $927
-----------
OPERATING EXPENSES AND TAXES
Fuel 382
Purchased power 24
Other Operating 143
Maintenance 44
Depreciation and amortization 95
Taxes, other than income 54
Income taxes 41
-----------
783
-----------
OPERATING INCOME 144
-----------
OTHER INCOME AND DEDUCTIONS 2
-----------
INCOME BEFORE INTEREST CHARGES 146
-----------
INTEREST AND OTHER CHARGES
Interest on long-term debt 41
Distributions on trust preferred securities 4
Interest on short-term debt and other 4
-----------
49
-----------
NET INCOME 97
Less: preferred stock dividends 3
Gain on reacquired preferred stock 2
-----------
NET INCOME FOR COMMON STOCK $96
===========
<PAGE>
SOUTHWESTERN ELECTRIC POWER COMPANY
STATEMENT OF RETAINED EARNINGS
FOR THE TWELVE MONTHS SEPTEMBER 30, 1997
UNAUDITED
(Millions)
RETAINED EARNINGS AT SEPTEMBER 30, 1996 $325
Add: Net income (loss) for common stock 96
-----------
421
Deduct: Common stock dividends 72
-----------
RETAINED EARNINGS AT SEPTEMBER 30, 1997 $349
===========
<PAGE>
WEST TEXAS UTILITIES COMPANY
BALANCE SHEETS
PER BOOKS AND PRO FORMA
AS OF SEPTEMBER 30, 1997
UNAUDITED
(Millions)
Per Pro Forma Pro
Books Adjustments Forma
--------------------------------
ASSETS
FIXED ASSETS
Electric utility plant
Production $418 $418
Transmission 208 208
Distribution 360 360
General 101 101
Construction work in progress 13 13
--------------------------------
1,100 1,100
Less - Accumulated depreciation 433 433
--------------------------------
667 667
--------------------------------
CURRENT ASSETS
Cash and temporary cash investments 1 1
Accounts receivable 31 31
Materials and supplies, at average cost 15 15
Fuel inventory 15 15
Under-recovered fuel costs 15 15
Prepayments and other 2 2
--------------------------------
79 79
--------------------------------
DEFERRED CHARGES AND OTHER ASSETS
Deferred Oklaunion costs 20 20
Regulatory assets 9 9
Other 41 41
--------------------------------
70 70
--------------------------------
$816 $0 $816
================================
<PAGE>
WEST TEXAS UTILITIES COMPANY
BALANCE SHEETS
PER BOOKS AND PRO FORMA
AS OF SEPTEMBER 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 132 132
--------------------------------
Total common stock equity 271 271
Preferred stock
Not subject to mandatory redemption 2 2
Long-term debt 278 278
--------------------------------
Total capitalization 551 551
--------------------------------
CURRENT LIABILITIES
Advances from affiliates 3 3
Payables to affiliates 12 12
Accounts payable 20 20
Accrued taxes 14 14
Accrued interest 9 9
Accumulated deferred income taxes 3 3
Other 3 3
--------------------------------
64 64
--------------------------------
DEFERRED CREDITS
Accumulated deferred income taxes 145 145
Investment tax credits 28 28
Investment tax related regulatory
liabilities, net 16 16
Other 12 12
--------------------------------
201 201
--------------------------------
$816 $0 $816
================================
<PAGE>
WEST TEXAS UTILITIES COMPANY
STATEMENT OF INCOME
FOR THE TWELVE MONTHS SEPTEMBER 30, 1997
UNAUDITED
(Millions)
ELECTRIC OPERATING REVENUE $390
-----------
OPERATING EXPENSES AND TAXES
Fuel 123
Purchased power 46
Other Operating 82
Maintenance 14
Depreciation and amortization 41
Taxes, other than income 24
Income taxes 13
-----------
343
-----------
OPERATING INCOME 47
-----------
OTHER INCOME AND DEDUCTIONS 1
-----------
INCOME BEFORE INTEREST CHARGES 48
-----------
INTEREST CHARGES
Interest on long-term debt 21
Interest on short-term debt and other 4
-----------
25
-----------
NET INCOME 23
Less: preferred stock dividends --
Gain on reacquisition of preferred stock 1
-----------
NET INCOME FOR COMMON STOCK $24
===========
<PAGE>
WEST TEXAS UTILITIES COMPANY
STATEMENT OF RETAINED EARNINGS
FOR THE TWELVE MONTHS SEPTEMBER 30, 1997
UNAUDITED
(Millions)
RETAINED EARNINGS AT SEPTEMBER 30, 1996 $126
Add: Net income (loss) for common stock 24
-----------
150
Deduct: Common stock dividends 18
-----------
RETAINED EARNINGS AT SEPTEMBER 30, 1997 $132
===========
<PAGE>
CENTRAL AND SOUTH WEST SERVICES, INC.
BALANCE SHEETS
PER BOOKS AND PRO FORMA
AS OF SEPTEMBER 30, 1997
UNAUDITED
(Millions)
Per Pro Forma Pro
Books Adjustments Forma
--------------------------------
ASSETS
General plant $117 $117
Less - Accumulated depreciation 32 32
--------------------------------
85 85
--------------------------------
CURRENT ASSETS
Cash and temporary investments 1 1
Accounts receivable affiliated 21 21
Accounts receivable non-affiliated 3 3
Prepayments and other 16 16
--------------------------------
41 41
--------------------------------
DEFERRED CHARGES AND OTHER ASSETS 4 4
--------------------------------
$130 $0 $130
================================
<PAGE>
CENTRAL AND SOUTH WEST SERVICES, INC.
BALANCE SHEETS
PER BOOKS AND PRO FORMA
AS OF SEPTEMBER 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 12 12
Advances from affiliates and other 35 35
--------------------------------
47 47
--------------------------------
DEFERRED CREDITS 23 23
--------------------------------
$130 $0 $130
================================
<PAGE>
CENTRAL AND SOUTH WEST SERVICES, INC.
STATEMENT OF INCOME
FOR THE TWELVE MONTHS SEPTEMBER 30, 1997
UNAUDITED
(Millions)
OPERATING REVENUE $0
-----------
OPERATING EXPENSES AND TAXES
Fuel Expense 3
Other Operating 186
Maintenance 4
Depreciation and amortization 9
Taxes, other than income taxes 8
Income taxes 1
-----------
211
-----------
OPERATING INCOME (211)
-----------
OTHER INCOME AND DEDUCTIONS 217
-----------
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 SEPTEMBER 30, 1997
UNAUDITED
(millions)
RETAINED EARNINGS AT SEPTEMBER 30, 1996 $0
Add: Net income (loss) for common stock 0
-----------
RETAINED EARNINGS AT SEPTEMBER 30, 1997 $0
===========
<PAGE>
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
PRO FORMA ADJUSTMENTS TO BALANCE SHEETS
SEPTEMBER 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
September 30, 1997, other than in the ordinary course of business. However, on
December 22, 1997 American Electric Power Company and Central and South West
Corporation announced a proposed merger of the two companies. For details on
the proposed merger see CSW's current report on Form 8-K dated December 22,
1997.
<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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0
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0
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</TABLE>
