<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-346
Central Power and Light Company
(Exact name of registrant as specified in its charter)
Texas 74-0550600
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
539 North Carancahua Street, Corpus Christi, Texas 78401-2802
(Address of principal executive offices)
(Zip Code)
(512) 881-5300
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the
past 90 days.
Yes X No
Number of shares of Common Stock outstanding at April 30, 1994:
6,755,535
<PAGE>
<PAGE> 2
CENTRAL POWER AND LIGHT COMPANY
INDEX
Page
Number
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements. (unaudited)
Statements of Income for the Three Months
Ended March 31, 1994 and 1993 3
Balance Sheets as of March 31, 1994 and
December 31, 1993 4 - 5
Statements of Cash Flows for the Three
Months Ended March 31, 1994 and 1993 6
Notes to Financial Statements 7 - 10
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations. 11 - 13
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. 14
Item 2. Changes in Securities. Inapplicable
Item 3. Defaults upon Senior Securities. Inapplicable
Item 4. Submission of Matters to a Vote of
Security Holders. 14
Item 5. Other Information. Inapplicable
Item 6. Exhibits and Reports on Form 8-K. 14 - 15
Signature. 16
<PAGE>
<PAGE> 3
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
CENTRAL POWER AND LIGHT COMPANY
STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
March 31,
1994 1993
(Thousands)
ELECTRIC OPERATING REVENUES $263,229 $238,254
OPERATING EXPENSES AND TAXES
Fuel 78,024 68,534
Purchased power 15,799 8,180
Other operating 54,774 51,789
Maintenance 18,559 14,590
Depreciation and amortization 34,301 32,815
Taxes, other than Federal income 19,919 18,760
Federal income taxes 4,910 3,993
226,286 198,661
OPERATING INCOME 36,943 39,593
OTHER INCOME AND DEDUCTIONS
Mirror CWIP liability amortization 17,000 18,926
Other 1,038 522
18,038 19,448
INCOME BEFORE INTEREST CHARGES 54,981 59,041
INTEREST CHARGES
Interest on long-term debt 26,679 29,647
Interest on short-term debt and other 3,316 2,549
29,995 32,196
INCOME BEFORE CUMULATIVE EFFECT OF CHANGES
IN ACCOUNTING PRINCIPLES 24,986 26,845
Cumulative Effect of Changes in
Accounting Principles - 27,715
NET INCOME 24,986 54,560
Preferred stock dividends 3,458 3,580
NET INCOME FOR COMMON STOCK $ 21,528 $ 50,980
The accompanying notes to financial
statements are an integral part of these statements.
<PAGE>
<PAGE> 4
CENTRAL POWER AND LIGHT COMPANY
BALANCE SHEETS
(Unaudited)
March 31, December 31,
1994 1993
(Thousands)
ASSETS
ELECTRIC UTILITY PLANT
Production $3,062,327 $3,061,911
Transmission 355,533 351,584
Distribution 784,826 765,266
General 212,182 209,170
Construction work in progress 174,510 168,421
Nuclear fuel 160,334 160,326
4,749,712 4,716,678
Less - Accumulated depreciation
and amortization 1,293,647 1,263,372
3,456,065 3,453,306
CURRENT ASSETS
Cash and temporary cash investments 2,599 2,435
Special deposits 1,129 1,967
Accounts receivable 17,961 23,850
Materials and supplies, at average cost 63,737 64,359
Fuel inventory, at average cost 21,042 16,934
Deferred income taxes 593 4,831
Unrecovered fuel costs 63,515 52,959
Prepayments and other 2,079 2,255
172,655 169,590
DEFERRED CHARGES AND OTHER ASSETS
Deferred STP costs 489,588 489,773
Mirror CWIP asset 329,340 331,845
Income tax related regulatory assets 273,229 266,597
Other 73,202 70,634
1,165,359 1,158,849
$4,794,079 $4,781,745
The accompanying notes to financial
statements are an integral part of these statements.
<PAGE> 5
CENTRAL POWER AND LIGHT COMPANY
BALANCE SHEETS
(Unaudited)
March 31, December 31,
1994 1993
(Thousands)
CAPITALIZATION AND LIABILITIES
CAPITALIZATION
Common stock, $25 par value, authorized
12,000,000 shares; issued and
outstanding 6,755,535 shares $ 168,888 $ 168,888
Paid-in capital 405,000 405,000
Retained earnings 851,779 850,307
Total Common Stock Equity 1,425,667 1,424,195
Preferred stock
Not subject to mandatory redemption 250,351 250,351
Subject to mandatory redemption 18,551 22,021
Long-term debt 1,364,545 1,362,799
TOTAL CAPITALIZATION 3,059,114 3,059,366
CURRENT LIABILITIES
Long-term debt and preferred stock
due within twelve months 3,928 3,928
Advances from affiliates 224,898 171,165
Accounts payable 78,373 79,604
Accrued taxes 2,612 33,769
Accrued interest 21,497 24,683
Accrued restructuring charges 29,355 29,365
Other 28,557 28,020
389,220 370,534
DEFERRED CREDITS
Income taxes 1,071,964 1,057,453
Investment tax credits 162,875 164,322
Mirror CWIP liability and other 110,906 130,070
1,345,745 1,351,845
$4,794,079 $4,781,745
The accompanying notes to financial
statements are an integral part of these statements.
<PAGE> 6
CENTRAL POWER AND LIGHT COMPANY
STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
March 31,
1994 1993
(Thousands)
OPERATING ACTIVITIES
Net Income $ 24,986 $ 54,560
Non-cash Items Included in Net Income
Depreciation and amortization 37,414 35,673
Deferred income taxes and
investment tax credits 10,671 4,413
Mirror CWIP liability amortization (17,000) (18,926)
Cumulative effect of changes in
accounting principles - (27,715)
Changes in Assets and Liabilities
Accounts receivable 5,889 (2,338)
Fuel inventory (4,108) 7,337
Accrued taxes (31,157) (18,482)
Unrecovered fuel costs (10,556) (3,333)
Other (5,675) 12,730
10,464 43,919
INVESTING ACTIVITIES
Construction expenditures (36,472) (30,753)
Other (653) (268)
(37,125) (31,021)
FINANCING ACTIVITIES
Proceeds from issuance of long-term debt - 123,750
Reacquisition of long-term debt - (270,744)
Retirement of preferred stock (3,581) (6,578)
Special deposits for reacquisition of
long-term debt - 145,482
Change in short-term debt 53,733 32,420
Payment of dividends (23,326) (38,918)
26,826 (14,588)
NET CHANGE IN CASH AND CASH EQUIVALENTS 165 (1,690)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 2,435 3,666
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,600 $ 1,976
SUPPLEMENTARY INFORMATION
Interest paid less amounts capitalized $ 31,168 $ 24,711
Income taxes paid $ - $ -
The accompanying notes to financial
statements are an integral part of these statements.
<PAGE>
<PAGE> 7
CENTRAL POWER AND LIGHT COMPANY
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1994
(Unaudited)
(1) PRINCIPLES OF PREPARATION
The condensed financial statements included herein have been
prepared by Central Power and Light Company (Company or CPL) pursuant to
the rules and regulations of the Securities and Exchange Commission
(SEC). Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such
rules and regulations, although the Company believes that the
disclosures are adequate to make the information presented not
misleading. It is suggested that these condensed financial statements
be read in conjunction with the financial statements and notes thereto
included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1993.
The unaudited financial information furnished herewith reflects all
adjustments (consisting only of normal recurring adjustments, except for
the 1993 cumulative effect of changes in accounting principles as
discussed below) which are, in the opinion of management, necessary for
a fair statement of the results of operations for the interim periods.
Information for quarterly periods is affected by seasonal variations in
sales, rate changes and other factors.
Certain financial statement items for the prior year have been
restated to conform to the 1994 presentation. Pursuant to changes in
accounting principles made in December 1993, but effective January 1,
1993, the Company has restated 1993 first quarter information to reflect
the change in its method of accounting for unbilled revenues, for
electricity used by customers but not yet billed, and the adoption of
Statement of Financial Accounting Standards (SFAS) No. 112, Employers'
Accounting for Postemployment Benefits. The effect of restating the
quarter ended March 31, 1993, is as follows:
Electric
Operating Operating Net
Revenues Income Income
(thousands)
1993
March 31 $240,910 $41,346 $28,598
Adjustment (2,656) (1,753) 25,962
March 31 Restated $238,254 $39,593 $54,560
(2) SOUTH TEXAS PROJECT
Reference is made to the Company's Annual Report on Form 10-K for
the year ended December 31, 1993, for a discussion of regulatory and
other issues involving the South Texas Project nuclear electric
generating station (STP) that are in various stages of appeal.
STP Outage
The Company owns 25.2% of STP, a two unit nuclear power plant. In
February 1993, Units 1 and 2 of STP were shut down by Houston Lighting &
Power Company (HLP), the Project Manager, in an unscheduled outage
resulting from mechanical problems relating to two auxiliary feedwater
<PAGE>
<PAGE> 8
pumps. HLP determined that the units would not be restarted until the
equipment failures had been corrected and the Nuclear Regulatory
Commission (NRC) was briefed on the causes of these failures and the
corrective actions that were taken. The NRC formalized that commitment
in a confirmatory action letter, and sent an Augmented Inspection Team
to STP to review the matter. In March 1993, the NRC began a diagnostic
evaluation of STP. Conducted infrequently, diagnostic evaluations are
broad-based evaluations of overall plant operations and are intended to
review the strengths and weaknesses of the licensee's performance and to
identify the root cause of performance problems. During and subsequent
to the June 1993 completion of the evaluation, the NRC supplemented its
confirmatory action letter to identify additional issues to be resolved
and verified by the NRC before restart of STP. Such issues included the
need to reduce backlogs of engineering and maintenance work and to
simplify work processes which placed excessive burdens on operating and
other plant personnel. The report also identified the need to
strengthen management communications, oversight and teamwork as well as
the capability to identify and correct the root causes of problems.
The NRC announced in June 1993 that STP was placed on its "watch
list" of plants with "weaknesses that warrant increased NRC attention."
Plants on the watch list are subject to closer NRC oversight. STP will
remain on the NRC's watch list until both units have returned to service
and a period of good performance demonstrated.
During the outage, the necessary improvements have been made by HLP
to address the issues in the confirmatory action letter, as
supplemented. On February 15, 1994, the NRC agreed that the
confirmatory action letter issues had been resolved with respect to Unit
1, and that it supported HLP's recommendation that Unit 1 was ready to
restart. Unit 1 restarted in late February 1994 and operated at low
power for three days. The Project Manager then shut down Unit 1 due to
a problem with a steam generator feedwater valve and a steam generator
tube leak. The Project Manager has made the necessary repairs and
restarted Unit 1, which reached the 100 percent output level in early
April.
While many of the corrective actions taken are common to both
units, HLP must demonstrate to the NRC that these issues are also
resolved with respect to Unit 2 before it is restarted. Unit 2
reloading of nuclear fuel was completed in early April and the unit is
expected to resume service during the second quarter of 1994. The
outage has not affected the Company's ability to meet customer demands
because of existing capacity and the Company's ability to purchase
additional energy from affiliates and nonaffiliates.
During the outage, the Company's fuel and purchased power costs
have been, and are expected to continue to be, increased as the power
normally generated by STP must be replaced through sources with higher
costs. It is unclear how the Public Utility Commission of Texas (Texas
Commission) will address the reasonableness of higher costs associated
with the outage. At January 31, 1993, before the start of the STP
outage, the Company had an over-recovered fuel balance of $5.2 million,
exclusive of interest. At April 30, 1994, the Company's under-recovered
fuel balance was $66.8 million, exclusive of interest. This under-
recovery of fuel costs, while due primarily to the STP outage, was also
affected by changes in fuel prices and timing differences. The Company
cannot accurately estimate the amount of any future under- or over-
recoveries due to the unpredictable nature of the above factors.
Although there is the potential for disallowance of fuel-related costs,
such determination cannot be made until fuel costs are reconciled with
the Texas Commission. If a significant portion of fuel costs were
disallowed by the Texas Commission, the Company could experience a
<PAGE> 9
material adverse effect on its results of operations in the year of
disallowance. The Company is required to file a reconciliation of its
fuel costs by the last quarter of 1994 in accordance with a Texas
Commission order.
Management believes that the operating outage at STP will not have
a material effect on the Company's financial condition or on its results
of operations.
(3) RATE CASES
During December 1993 and January 1994, several cities (Cities) in
the Company's service territory, which together account for
approximately 40% of the Company's base revenues, exercised their rights
to require the Company to file rate cases to determine if its rates are
fair, just and reasonable. The Cities informed the Company that this
rate review was precipitated by the outage at STP, leading the Cities to
question whether STP should continue to be included in the Company's
rate base. Further, the Cities question whether the Company is earning
an excessive return on equity. The governing bodies of these Cities
have original jurisdiction over rates only within their incorporated
limits.
In February and March 1994, certain Cities passed resolutions
ordering the Company to reduce rates by amounts ranging from $73 million
to $137 million, if applied on a total company basis. The rate
reductions are based on removal of a portion of STP costs from base
rates. The orders only affect the rates of customers who take service
within these Cities' limits. The Company has appealed all of these
actions, and intends to timely appeal any others to the Texas
Commission, which has authority to stay their effectiveness.
Similar challenges to the Company's rates were filed with the Texas
Commission by the Office of Public Utility Counsel (OPUC), the Texas
Commission General Counsel, and affected customers (collectively,
Customer Cases). In its complaint, OPUC has alleged that the Company is
overearning by amounts ranging from $16 million to $214 million
annually, if applied on a total company basis, based on a range of
returns on common equity, removal of the investment in STP Unit 2 from
rate base and certain other matters. The Texas Commission has exclusive
original jurisdiction over the rates and services of the Company in the
areas outside municipal limits of cities who retain original
jurisdiction.
On March 25, 1994, a Texas Commission administrative law judge
consolidated the Company's appeals of the Cities' cases with the
Customer Cases filed at the Texas Commission and set a procedural
schedule calling for CPL to file its rate case by April 11, 1994.
The Company contends that both units of STP belong in rate base.
This contention is based on Unit 1 providing electrical output at a 100
percent level in early April and the expectation that Unit 2 will
restart in the second quarter of 1994. Additionally, the long-term
benefits nuclear generation provides to customers further supports their
inclusion in rate base. There are no Texas Commission precedents
addressing the removal of a nuclear plant from rate base. The Company's
base rates were last set in 1990. Based on inclusion of both units of
STP in rate base, the Company believes it is not collecting excessive
revenues, even when considering market rates of return on common equity
that are generally lower than they were in 1990 when base rates were
last set. If the Company ultimately is unsuccessful in maintaining
rates at their current level, the Company could experience a material
adverse effect on its results of operations or financial condition.
<PAGE> 10
On March 31, 1994, a scheduling and procedural settlement agreement
(Agreement), relating to the above matters, was filed with the Texas
Commission. The Agreement was executed by the Company and each of the
eight parties to the proceedings. The eight parties are: a group of
eleven Cities, the Texas Commission General Counsel, OPUC, Texas
Industrial Energy Consumers, the Lower Colorado River Authority,
Occidental Chemical Corporation, H. E. Butt Grocery Company and James O.
Bryant, a Company customer. On April 1, 1994, a Texas Commission
administrative law judge approved the Agreement. The Agreement allows
the Company more time to prepare a rate case defending its rates as
reasonable and its earnings as being within established regulatory
guidelines. The Agreement moved the filing deadline for the rate case
from April 11, 1994, to July 1, 1994, and the start of the hearings from
June 8, 1994, to October 31, 1994.
The parties also agreed that the Company's existing rates will
remain in effect until the Texas Commission's final order in the case.
The other parties thus agreed not to pursue lower interim rates in an
interim rate proceeding. As part of the Agreement, the Company agreed
that any reductions in rates, if any are implemented as a result of the
rate case, would be effective retroactive to June 15, 1994. The Company
also agreed not to seek a base rate increase in the proceeding. The
rate case will be based on a test year ending September 30, 1993.
The Company expects that a Texas Commission decision will occur
near the end of the first quarter of 1995.
In April 1994, the General Counsel and Staff of the Texas
Commission issued a Request for Proposal for an audit of the STP outage,
to evaluate the prudence of the management of STP, including the actions
of HLP and the STP management committee, of which CPL is a participant.
Such review will include the time from original commercial operation of
each unit until they are returned from the outage to full commercial
operation. The Company and HLP will pay the costs of the audit but will
have no control over the ultimate work product of the consultant. The
results of this audit are expected to be used by the General Counsel and
Staff in the Company's fuel reconciliation proceeding, which the Company
must file by the last quarter of 1994, and may also have implications
for the issues considered in the base rate case proceedings.
Management cannot predict the ultimate outcome of these rate
proceedings, although management believes that their ultimate resolution
will not have a material adverse effect on the Company's results of
operations or financial condition.
(4) DIVIDENDS
The Company's mortgage indenture, as amended and supplemented,
contains certain restrictions on the payment of common stock dividends.
At March 31, 1994, approximately $650 million of retained earnings were
available for payment of cash dividends to its parent company, Central
and South West Corporation (CSW).
<PAGE>
<PAGE> 11
CENTRAL POWER AND LIGHT COMPANY
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
Reference is made to Management's Discussion and Analysis of
Financial Condition and Results of Operations included in the Company's
1993 Annual Report on Form 10-K. Reference is also made to the
unaudited Financial Statements and related Notes to Financial Statements
included herein. The information included therein should be read in
conjunction with, and is essential in understanding, the following
discussion and analysis.
REGULATORY MATTERS
Reference is made to Notes 2 and 3 of the Notes to Financial
Statements for a discussion of the Company's regulatory matters.
CONSTRUCTION PROGRAM
Construction expenditures including allowance for funds used during
construction for the first three months of 1994 totaled $37.2 million as
compared to $31.1 million for the same period in 1993. The largest
portion of construction expenditures has been for the improvement and
expansion of transmission and distribution facilities. Construction of
a 345-kilovolt transmission line between the Company's Lon C. Hill and
Coleto Creek power stations represents approximately 25% of the 1994
construction expenditures. This new transmission line, which is about
85% complete, will provide much needed capability to move power from the
northeastern area of the Company's service territory to the southern
areas. Improvements and additions to these assets are required to
ensure reliable electric service, to meet the needs of new customers and
to satisfy changing requirements of existing customers.
FINANCING
The Company expects to obtain a majority of its 1994 capital
requirements from internal sources. The Company utilizes short-term
debt to meet fluctuations in working capital requirements due to the
seasonal nature of electric sales. If funds are needed, the financial
condition of the Company should allow the required permanent financing
to be obtained from capital markets. At March 31, 1994, the Company's
capitalization ratios were 46% common stock equity, 9% preferred stock
and 45% long-term debt.
In February 1994, the Company retired $3.5 million of 10.05% series
preferred stock, at par, pursuant to its sinking fund provisions. On
March 21, 1994, the Company filed a registration statement with the SEC
for the sale of preferred stock in an aggregate amount up to $75
million. The Company may offer preferred stock subject to market
conditions and other factors. The proceeds of any such offerings will
be used principally to redeem higher cost preferred stock. On May 10,
1994, the Company agreed to issue $100 million of 7.5% first mortgage
bonds due May 1, 1999. The funds from these bonds will be used to repay
a portion of the Company's short-term debt. The Company may offer
additional first mortgage bonds subject to market conditions and other
factors. The proceeds of any such offerings will be used principally to
redeem all or a portion of one or more series of the Company's
outstanding first mortgage bonds in order to lower the Company's
embedded cost of long-term debt.
<PAGE>
<PAGE> 12
RESULTS OF OPERATIONS
QUARTER ENDED MARCH 31, 1994 COMPARED TO THE QUARTER ENDED MARCH 31,
1993
Net Income For Common Stock. Net income for common stock decreased
57.8% during the first quarter of 1994 to $21.5 million from $51.0
million in the same quarter of 1993. The decline reflects the higher
restated level of 1993 net income for common stock due to the cumulative
effect of changes in accounting principles. These changes include a
change in the method of accounting for unbilled revenues, which had a
$29.9 million (net of taxes) effect on net income, and the offsetting
expense of $2.2 million (net of taxes) for the adoption of SFAS No. 112,
Employers' Accounting for Postemployment Benefits. Additionally, the
decline was due to increased STP operating and maintenance expenses,
increased administrative and general expenses, additional depreciation,
higher taxes other than Federal income taxes, and the decline in Mirror
CWIP liability amortization. Partially offsetting the effects of the
above items were increased base revenues, reduced interest expense
resulting from debt management activities, and lower preferred stock
dividends.
Electric Operating Revenues. Total operating revenues for the
first quarter of 1994 increased $25.0 million or 10.5% over the same
period last year. The increase reflects higher fuel-related revenues of
$17.6 million and greater base revenues of $7.4 million which includes
an approximate $1.0 million increase in unbilled revenue, for
electricity used by customers but not yet billed. Fuel-related revenues
were up because of the rise in per unit fuel and purchased power costs,
as discussed below. Total Kwh sales were up 9.0%, reflecting growth in
retail sales of 8.2% and a 24.8% increase in lower margin sales for
resale. A 6.0% increase in residential and a 4.2% increase in
commercial consumption is mainly due to continued customer growth and
weather that was less mild than the same period last year. Industrial
sales were up 12.8% on higher demand in the petrochemical and petroleum
industries with increased load requirements.
Fuel and Purchased Power. The 13.9% increase in fuel expense over
the same period in 1993 is attributable to a 26.8% increase in
consumption of gas associated with higher gas-fired plant generation and
the higher average unit cost of fuel. The average unit cost for the
first quarter of 1994 was $2.23 per million Btu, up $.31 per million Btu
for the same period last year. The rise in per unit fuel costs reflects
the higher unit cost of gas partially offset by lower unit cost for
coal. Purchased power increased $7.6 million for the first quarter of
1994 when compared to the same quarter of 1993. This was a result of
increased economy purchases.
Other Operating Expenses and Taxes. Other operating expenses
increased $3.0 million for the first quarter of 1994 when compared to
the same quarter of 1993. This was due primarily to an $1.8 million
increase in operation and administrative and general costs at STP,
higher administrative and general expenses not related to STP, and
greater distribution expenses.
Maintenance expense increased $4.0 million for the first quarter of
1994 when compared to the same quarter of 1993, due largely to a $3.4
million increase in maintenance activities at STP. The higher STP
related costs reflect the implementation and development of work process
improvements and reduction of maintenance backlogs associated with the
outage.
Depreciation and amortization increased $1.5 million due mainly to
the addition of transmission and distribution facilities. Taxes, other
than Federal income, increased $1.2 million primarily as a result of
increasing ad valorem taxes, partially offset by a state franchise tax
refund applicable to prior year taxes.
<PAGE>
<PAGE> 13
Mirror CWIP Liability Amortization. This amortization has
decreased from the same period in 1993 because CPL is amortizing its
Mirror CWIP liability, in declining amounts, over the years 1991 through
1995.
Interest Expense and Preferred Stock Dividends. Total interest
expense decreased $2.2 million or 6.8% due to the Company's refinancing
of higher cost long-term debt with lower cost debt, partially offset by
increases in short-term interest associated with higher levels of short-
term borrowings from the CSW System money pool. Preferred dividends
decreased due to lower dividend rates on auction preferred stocks and
due to the retirement of $3.5 million of the 10.05% Series preferred
stock in February 1994.
<PAGE>
<PAGE> 14
PART II - OTHER INFORMATION
For background and earlier developments relating to Part II
information, reference is made to the Company's 1993 Annual Report on
Form 10-K.
Item 1. Legal Proceedings.
Reference is made to Notes 2 and 3 of the Notes to Financial
Statements for a discussion of developments in certain of the
Company's legal matters.
In March 1994, the Company received an administrative
information request from the Environmental Protection Agency
seeking additional information about polychlorinated biphenyl
(PCB) compliance matters related to the September 1992 PCB
inspection of various Company facilities. This matter has not
resulted in any proceeding against the Company. Management
does not believe that the resolution of this matter will have
a material adverse effect on the Company's results of
operations or financial condition.
For background on this and other environmental matters, see
ITEM 1. BUSINESS - Environmental Matters and ITEM 7.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - Environmental in the Company's
Annual Report on Form 10-K for the year ended December 31,
1993.
Item 4. Submission of Matters to a Vote of Security Holders.
(a) The annual meeting of shareholders of the Company was
held on April 14, 1994.
(b) Directors elected at the annual meeting were:
E. R. Brooks Jim L. Peterson
Robert R. Carey H. Lee Richards
Ruben M. Garcia Melanie J. Richardson
Harry D. Mattison J. Gonzalo Sandoval
Robert A. McAllen B. W. Teague
Pete Morales, Jr. Gerald E. Vaughn
S. Loyd Neal, Jr.
Mr. David L. Hooper was elected to the Board and named
Vice President of the Company effective May 1, 1994,
replacing Mr. B. W. Teague. Mr. Teague resigned from the
Board in April, 1994 upon his retirement from the
Company.
(c) No other matters (other than procedural matters) were
voted upon at the annual meeting.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Computation of Ratio of Earnings to Fixed Charges
(Exhibit 1).
Computation of Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividends (Exhibit 2).
<PAGE>
<PAGE> 15
(b) Reports on Form 8-K
The Company filed a Form 8-K dated March 10, 1994
(Item 5, Other Events) relating to the STP outage
and reporting the status of rate cases.
The Company filed a Form 8-K dated April 7, 1994
(Item 5, Other Events) relating to the status of
rate cases.
The Company filed a Form 8-K dated May 6, 1994
(Item 5, Other Events) reporting the Company's
selected financial information in anticipation
of possible securities issuances.
<PAGE>
<PAGE> 16
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
CENTRAL POWER AND LIGHT COMPANY
Date May 13, 1994 By: DAVID P. SARTIN
David P. Sartin
Controller and Chief
Accounting Officer
<PAGE>
EXHIBIT 1
CENTRAL POWER AND LIGHT COMPANY
RATIO OF EARNINGS TO FIXED CHARGES
FOR THE TWELVE MONTHS ENDED MARCH 31, 1994
(Thousands Except Ratio)
(Unaudited)
Operating Income $187,429
Adjustments:
Federal income taxes (24,989)
Provision for deferred Federal income taxes 96,899
Deferred investment tax credits (5,806)
Other income and deductions 2,031
Allowance for borrowed and equity funds
used during construction 2,981
Mirror CWIP amortization 73,776
Earnings $332,321
Fixed Charges:
Interest on long-term debt 109,972
Interest on short-term debt and other 13,145
Fixed Charges $123,117
Ratio of Earnings to Fixed Charges 2.70
<PAGE>
EXHIBIT 2
CENTRAL POWER AND LIGHT COMPANY
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
FOR THE TWELVE MONTHS ENDED MARCH 31, 1994
(Thousands Except Ratio)
(Unaudited)
Operating Income $187,429
Adjustments:
Federal income taxes (24,989)
Provision for deferred Federal income taxes 96,899
Deferred investment tax credits (5,806)
Other income and deductions 2,031
Allowance for borrowed and equity funds
used during construction 2,981
Mirror CWIP amortization 73,776
Earnings $332,321
Fixed Charges:
Interest on long-term debt 109,972
Interest on short-term debt and other 13,145
Preferred stock dividend requirements 20,445
Fixed Charges and Preferred Requirements $143,562
Ratio of Earnings to Combined Fixed Charges
and Preferred Stock Dividends 2.31
