UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM U-13-60
ANNUAL REPORT
FOR THE PERIOD
Beginning January 1, 1996 and Ending December 31, 1996
TO THE
U.S. SECURITIES AND EXCHANGE COMMISSION
OF
CENTRAL AND SOUTH WEST SERVICES, INC.
(Exact Name of Reporting Company)
A Subsidiary SERVICE COMPANY
("Mutual" or "Subsidiary")
Date of Incorporation January 8, 1969 If not Incorporated, Date of
Organization ___________________.
State or Sovereign Power under which Incorporated or Organized Texas
Location of Principal Executive Offices of Reporting Company Tulsa, Oklahoma
Name, title, and address of officer to whom correspondence concerning this
report should be addressed:
R. Russell Davis Controller P.O. Box 21928 Tulsa, Oklahoma 74121-1928
(Name) (Title) (Address)
Name of Principal Holding Company Whose Subsidiaries are served by
Reporting Company:
CENTRAL AND SOUTH WEST CORPORATION
<PAGE>
Page 1
INSTRUCTIONS FOR USE OF FORM U-13-60
1. Time of Filing. --Rule 94 provides that on or before the first day of May in
each calendar year, each mutual service company and each subsidiary service
company as to which the Commission shall have made a favorable finding pursuant
to Rule 88, and every service company whose application for approval or
declaration pursuant to Rule 88 is pending shall file with the Commission an
annual report on Form U-13-60 and in accordance with the Instructions for that
form.
2. Number of Copies. --Each annual report shall be filed in duplicate. The
company should prepare and retain at least one extra copy for itself in case
correspondence with reference to the report becomes necessary.
3. Period Covered by Report. --The first report filed by any company shall
cover the period from the date the Uniform System of Accounts was required to be
made effective as to that company under Rules 82 and 93 to the end of that
calendar year. Subsequent reports should cover a calendar year.
4. Report Format. --Reports shall be submitted on the forms prepared by the
Commission. If the space provided on any sheet of such form is inadequate,
additional sheets may be inserted of the same size as a sheet of the form or
folded to each size.
5. Money Amounts Displayed. --All money amounts required to be shown in
financial statements may be expressed in whole dollars, in thousands of dollars
or in hundred thousands of dollars, as appropriate and subject to provisions of
Regulation S-X (210.3-01(b)).
6. Deficits Displayed. --Deficits and other like entries shall be indicated by
the use of either brackets or a parenthesis with corresponding reference in
footnotes. (Regulation S-X,210.3-01(c))
7. Major Amendments or Corrections. --Any company desiring to amend or correct a
major omission or error in a report after it has been filed with the Commission
shall submit an amended report including only those pages, schedules, and
entries that are to be amended or corrected. A cover letter shall be submitted
requesting the Commission to incorporate the amended report changes and shall be
signed by a duly authorized officer of the company.
8. Definitions. --Definitions contained in Instruction 01-8 to the Uniform
System of Accounts for Mutual Service Companies and Subsidiary Service
Companies, Public Utility Holding Company Act of 1935, as amended February 2,
1979 shall be applicable to words or terms used specifically within this Form
U-13-60.
9. Organization Chart. --The service company shall submit with each annual
report a copy of its current organization chart.
10. Methods of Allocation. --The service company shall submit with each annual
report a listing of the currently effective methods of allocation being used by
the service company and on file with the Securities and Exchange Commission
pursuant to the Public Utility Holding Company Act of 1935.
11. Annual Statement of Compensation for Use of Capital Billed. --The service
company shall submit with each annual report a copy of the annual statement
supplied to each associate company in support of the amount of compensation for
use of capital billed during the calendar year.
<PAGE>
Page 2
LISTING OF SCHEDULES AND ANALYSIS OF ACCOUNTS
Schedule or Page
Description of Schedules and Accounts Account Number Number
Comparative Balance Sheet Schedule I 3-4
Service Company Property Schedule II 5
Accumulated Provision for Depreciation and Amortization
of Service Company Property Schedule III 6
Investments Schedule IV 7
Accounts Receivable from Associate Companies Schedule V 8
Fuel Stock Expenses Undistributed Schedule VI 9
Stores Expense Undistributed Schedule VII 9
Miscellaneous Current and Accrued Assets Schedule VIII 10
Miscellaneous Deferred Debits Schedule IX 10
Research, Development, or Demonstration Expenditures Schedule X 10
Proprietary Capital Schedule XI 11
Long-Term Debt Schedule XII 12
Current and Accrued Liabilities Schedule XIII 13
Notes to Financial Statements Schedule XIV 14
Comparative Income Statement Schedule XV 15
Analysis of Billing - Associate Companies Account 457 16
Analysis of Billing - Nonassociate Companies Account 458 17
Analysis of Charges for Service - Associate and
Nonassociate Companies Schedule XVI 18
Schedule of Expense by Department or Service Function Schedule XVII 19
Departmental Analysis of Salaries Account 920 20
<PAGE>
Page 2a
Outside Services Employed Account 923 21
Employee Pensions and Benefits Account 926 22
General Advertising Expenses Account 930.1 23
Miscellaneous General Expenses Account 930.2 24
Rents Account 931 24
Taxes Other Than Income Taxes Account 408 25
Donations Account 426.1 26
Other Deductions Account 426.5 27
Notes to Statement of Income Schedule XVIII 28
LISTING OF INSTRUCTIONAL FILING REQUIREMENTS
Organization Chart 29
Methods of Allocation 30
Annual Statement of Compensation for Use of Capital Billed 31
<PAGE>
Page 3
ANNUAL REPORT OF Central and South West Services, Inc.
SCHEDULE I - COMPARATIVE BALANCE SHEET
(thousands)
Give balance sheet of the Company as of December 31 of the current and prior
year.
ACCOUNT
ASSETS AND OTHER DEBITS AS OF DECEMBER 31
1996 1995
-------- ---------
SERVICE COMPANY PROPERTY
101 Service company property (Schedule II) $120,343 $114,492
107 Construction work in progress (Schedule II) -- 433
-------- ---------
Total Property 120,343 114,925
-------- ---------
108 Less accumulated provision for depreciation
and amortization of service company
property (Schedule III) 28,822 21,005
-------- ---------
Net Service Company Property 91,521 93,920
INVESTMENTS
123 Investments in associate companies
(Schedule IV) -- --
124 Other investments (Schedule IV) 4,148 2,720
-------- ---------
Total Investments 4,148 2,720
CURRENT AND ACCRUED ASSETS
131 Cash 1,270 7,238
134 Special deposits 323 323
135 Working funds 169 185
136 Temporary cash investments (Schedule IV) -- --
141 Notes receivable 3,006 3,311
143 Accounts receivable 3,513 7,952
144 Accumulated provision of uncollectable
accounts -- --
146 Accounts receivable from associate
companies (Schedule V) 34,582 28,928
152 Fuel stock expenses undistributed
(Schedule VI) -- --
154 Materials and supplies -- --
163 Stores expense undistributed (Schedule VII) -- --
165 Prepayments 14,157 9,309
174 Miscellaneous current and accrued assets
(Schedule VIII) -- --
-------- ---------
Total Current and Accrued Assets 57,020 57,246
DEFERRED DEBITS
181 Unamortized debt expense -- --
184 Clearing accounts 208 549
186 Miscellaneous deferred debits (Schedule IX) 134 (85)
188 Research, development, or demonstration
expenditures (Schedule X) -- --
190 Accumulated deferred income taxes 662 450
-------- ---------
Total Deferred Debits 1,004 914
======== =========
TOTAL ASSETS AND OTHER DEBITS $153,693 $154,800
======== =========
<PAGE>
Page 4
ANNUAL REPORT OF Central and South West Services, Inc.
SCHEDULE I - COMPARATIVE BALANCE SHEET
(thousands)
ACCOUNT
LIABILITIES AND PROPRIETARY CAPITAL AS OF DECEMBER 31
1996 1995
-------- ---------
PROPRIETARY CAPITAL
201 Common stock issued (Schedule XI) $100 $100
211 Miscellaneous paid-in-capital (Schedule XI) -- --
215 Appropriated retained earnings (Schedule XI) -- --
216 Unappropriated retained earnings (Schedule XI) -- --
-------- ---------
Total Proprietary Capital 100 100
LONG-TERM DEBT
223 Advances from associate companies (Schedule XII) -- --
224 Other long-term debt (Schedule XII) 60,000 59,936
225 Unamortized premium on long-term debt -- --
226 Unamortized discount on long-term debt-debit -- --
-------- ---------
Total Long-Term Debt 60,000 59,936
CURRENT AND ACCRUED LIABILITIES
231 Notes payable -- --
232 Accounts payable 24,304 21,892
233 Notes payable to associate companies
(Schedule XIII) 40,713 49,168
234 Accounts payable to associate companies
(Schedule XIII) 2,843 1,967
236 Tax accrued 412 (405)
237 Interest accrued -- --
238 Dividends declared -- --
241 Tax collections payable 774 1,880
242 Miscellaneous current and accrued liabilities
(Schedule XIII) 615 2,864
-------- ---------
Total Current and Accrued Liabilities 69,661 77,366
DEFERRED CREDITS
253 Other deferred credits 9,387 4,749
255 Accumulated deferred investment tax credits -- --
-------- ---------
Total Deferred Credits 9,387 4,749
282 ACCUMULATED DEFERRED INCOME TAXES 14,545 12,649
-------- ---------
-------- ---------
TOTAL LIABILITIES AND PROPRIETARY CAPITAL $153,693 $154,800
======== =========
<PAGE>
Page 5
ANNUAL REPORT OF Central and South West Services, Inc.
For the Year Ended December 31, 1996
SCHEDULE II - SERVICE COMPANY PROPERTY
(thousands)
<TABLE>
<CAPTION>
BALANCE AT RETIREMENTS BALANCE
BEGINNING OR OTHER (1) AT CLOSE
DESCRIPTION OF YEAR ADDITIONS SALES CHANGES OF YEAR
Service Company Property
Account
<S> <C> <C> <C> <C> <C> <C>
301 Organization $-- $-- $-- $-- $--
303 Miscellaneous Intangible Plant 2,485 171 -- (303) 2,353
304 Land and Land Rights 6,381 -- -- -- 6,381
305 Structures and Improvements 41,657 420 -- -- 42,077
306 Leasehold Improvements 3,522 2,451 -- 117 6,090
307 Equipment (2) 28,446 4,225 (2,863) -- 29,808
308 Office Furniture and Equipment 12,842 1,767 (109) (79) 14,421
309 Automobiles, Other Vehicles
and Related Garage Equipment 207 40 -- -- 247
310 Aircraft and Airport Equipment 18,882 -- -- -- 18,882
311 Other Service Company
Property (3) 70 14 -- -- 84
-------------------------------------------------
SUB-TOTAL $114,492 $9,088 $(2,972) $(265) $120,343
107 Construction Work in Progress (4) 433 (433) --
-------------------------------------------------
TOTAL $114,925 $9,088 $(3,405) $(265) $120,343
=================================================
(1) Provide an explanation of those changes considered material: None.
</TABLE>
<PAGE>
Page 5a
SCHEDULE II - CONTINUED
(thousands)
(2) Subaccounts are required for each class of equipment owned. The service
company shall provide a listing by subaccount of equipment additions during the
year and the balance at the close of the year:
BALANCE
AT CLOSE
SUBACCOUNT DESCRIPTION ADDITIONS OF YEAR
Account 307 - Equipment
Copy Machines $(252) $1,053
Data Processing Equipment 3,915 21,777
Microfilm/Microfiche -- 25
Communications Equipment 471 6,363
Other 91 590
--------------------------
TOTAL $4,225 $29,808
==========================
(3) Describe Other Service Company Property:
Refrigerators/Ice Makers $-- $10
Appliances -- 15
Industrial Hygine Equipment 11 11
Portable Loading Ramp -- 1
Power Wench -- 1
Portable Generator/Submersible Pump -- 1
10' Expandable Display -- 1
Soft Drink Vending Machines -- 4
Electric Trimmer -- 2
Projector 3 6
Aerial Work Platform -- 7
Power Punch Machine -- 3
Exercise Equipment -- 19
VCR/TV Combination -- 2
Desk Top Labeling System -- 1
===========================
$14 $84
===========================
(4) Describe Construction Work in Progress: None
<PAGE>
Page 6
ANNUAL REPORT OF Central and South West Services, Inc.
For the Year Ended December 31, 1996
SCHEDULE III
ACCUMULATED PROVISION FOR DEPRECIATION AND AMORTIZATION
OF SERVICE COMPANY PROPERTY
(thousands)
<TABLE>
<CAPTION>
BALANCE AT RETIREMENTS BALANCE
BEGINNING OR OTHER (1) AT CLOSE
DESCRIPTION OF YEAR ADDITIONS SALES CHANGES OF YEAR
Account
<S> <C> <C> <C> <C> <C> <C>
301 Organization $-- $-- $-- $-- $--
303 Miscellaneous Intangible Plant 724 359 1,083
304 Land and Land Rights -- --
305 Structures and Improvements 4,821 1,456 6,277
306 Leasehold Improvements 771 330 1,101
307 Equipment 11,151 4,757 (2,863) 13,045
308 Office Furniture and Equipment 3,691 1,382 (109) 1 4,965
309 Automobiles, Other Vehicles
and Related Garage Equipment 73 34 1 108
310 Aircraft and Airport Equipment (269) 685 -- 1,776 2,192
311 Other Service Company
Property 43 8 51
-------------------------------------------------
TOTALS $21,005 $9,011 $(2,972) $1,778 $28,822
=================================================
(1) Provide an explanation of those changes considered material: None.
</TABLE>
<PAGE>
Page 7
ANNUAL REPORT OF Central and South West Services, Inc.
For the Year Ended December 31, 1996
SCHEDULE IV - INVESTMENTS
(thousands)
INSTRUCTIONS: Complete the following schedule concerning investments.
Under Account 124 "Other Investments", state each investment separately, with
description, including the name of issuing company, number of shares or
principal amount, etc.
Under Account 136, "Temporary Cash Investments", list each investment
separately.
<TABLE>
<CAPTION>
BALANCE AT BALANCE AT
DESCRIPTION BEGINNING OF YEAR CLOSE OF YEAR
<S> <C> <C>
Account 123 - Investment in Associate Companies $-- $--
Account 124 - Other Investments
Purchase of Mortgages $1,406 $2,934
Preston Trail Golf Club Purchase of Membership 143 88
Lakewood Country Club Purchase of Membership 16 16
Northwood Club Purchase of Membership 124 124
River Bend Golf and Country Club Purchase of Membership 5 5
Brook Hollow Golf Club Purchase of Membership 80 80
Las Colinas Sports Club Purchase of Membership 15 15
Bent Tree Country Club Purchase of Membership 30 30
Texas Stadium Purchase of Texas Stadium Box Seats 788 722
Gleneagles Country Club Purchase of Membership 48 48
Oak Cliff Country Club Purchase of Membership 2 2
Barton Creek Club Purchase of Membership 30 30
El Paso Country Club Purchase of Membership 6 6
Fairfax Country Club Purchase of Membership 27 27
Sports Club at Four Seasons Purchase of Membership -- 21
--------------------------
TOTAL $2,720 $4,148
Account 136 - Temporary Cash Investments -- --
--------------------------
TOTAL $2,720 $4,148
==========================
</TABLE>
<PAGE>
Page 8
ANNUAL REPORT OF Central and South West Services, Inc.
For the Year Ended December 31, 1996
SCHEDULE V - ACCOUNTS RECEIVABLE FROM ASSOCIATE COMPANIES
(thousands)
INSTRUCTIONS: Complete the following schedule listing accounts receivable from
each associate company. Where the service company has provided accommodation or
convenience payments for associate companies, a separate listing of total
payments for each associate company by subaccount should be provided.
BALANCE AT BALANCE AT
DESCRIPTION BEGINNING OF YEAR CLOSE OF YEAR
Account 146 - Accounts Receivable from
Associate Companies
Central and South West Corporation $6,251 $5,435
Central Power and Light Company 7,708 8,573
Public Service Company of Oklahoma 4,235 6,334
Southwestern Electric Power Company 4,995 7,610
West Texas Utilities Company 3,009 4,454
Transok, Inc. 521 --
CSW Credit, Inc. 599 76
CSW Energy, Inc. 372 399
CSW International, Inc. 184 193
CSW Communications, Inc. 918 845
EnerShop Inc. 123 29
CSW Leasing, Inc. 13 23
Seeboard -- 611
------------------------------
TOTAL $28,928 $34,582
==============================
Analysis of Convenience or
Accommodation Payments TOTAL PAYMENTS
Central and South West Corporation $2,754
Central Power and Light Company 684
Public Service Company of Oklahoma 106
Southwestern Electric Power Company 850
West Texas Utilities Company 216
Transok, Inc. (5)
CSW Credit, Inc. (3)
CSW Energy, Inc. 719
CSW International, Inc. (116)
CSW Communications, Inc. (457)
CSW Leasing, Inc. (6)
Seeboard 4
--------
TOTAL PAYMENTS $4,746
========
The majority of convenience payments consists of taxes, corporate insurance,
relocation expenses, industry dues, and deferred compensation payments.
<PAGE>
Page 9
ANNUAL REPORT OF Central and South West Services, Inc.
For the Year Ended December 31, 1996
SCHEDULE VI - FUEL STOCK EXPENSES UNDISTRIBUTED
(thousands)
INSTRUCTIONS: Report the amount of labor and expenses incurred with respect to
fuel stock expenses during the year and indicate amount attributable to each
associate company. Under the section headed "Summary" listed below give an
overall report of the fuel functions performed by the service company.
DESCRIPTION LABOR EXPENSES TOTAL
Account 152 - Fuel Stock Expenses Undistributed $-- $-- $--
-------------------------------
TOTAL $-- $-- $--
===============================
Summary:
ANNUAL REPORT OF Central and South West Services, Inc.
For the Year Ended December 31, 1996
SCHEDULE VII - STORES EXPENSE UNDISTRIBUTED
(thousands)
INSTRUCTIONS: Report the amount of labor and expenses incurred with respect to
stores expense during the year and indicate amount attributable to each
associate company.
DESCRIPTION LABOR EXPENSES TOTAL
Account 163 - Stores Expense Undistributed $-- $-- $--
------------------------------
TOTAL $-- $-- $--
==============================
<PAGE>
Page 10
ANNUAL REPORT OF Central and South West Services, Inc.
For the Year Ended December 31, 1996
SCHEDULE VIII - MISCELLANEOUS CURRENT AND ACCRUED ASSETS
(thousands)
INSTRUCTIONS: Provide detail of items in this account. Items less than $10,000
may be grouped, showing the number of items in each group.
BALANCE AT BALANCE AT
DESCRIPTION BEGINNING OF YEAR CLOSE OF YEAR
Account 174 - Miscellaneous Current and
Accrued Assets $-- $--
------------------------------
TOTAL $-- $--
==============================
ANNUAL REPORT OF Central and South West Services, Inc.
For the Year Ended December 31, 1996
SCHEDULE IX - MISCELLANEOUS DEFERRED DEBITS
(thousands)
INSTRUCTIONS: Provide detail of items in this account. Items less than $10,000
may be grouped by class, showing the number of items in each class.
BALANCE AT BALANCE AT
DESCRIPTION BEGINNING OF YEAR CLOSE OF YEAR
Account 186 - Miscellaneous Deferred Debits
Deferred Travel Costs $(262) $--
Deferred Software Costs 20 --
Deferred Project Costs 157 134
------------------------------
TOTAL $(85) $134
==============================
ANNUAL REPORT OF Central and South West Services, Inc.
For the Year Ended December 31, 1996
SCHEDULE X - RESEARCH, DEVELOPMENT OR DEMONSTRATION EXPENDITURES
(thousands)
INSTRUCTIONS: Provide a description of each material research, development,
or demonstration project which incurred costs by the service corporation during
the year.
DESCRIPTION AMOUNT
Account 188 - Research, Development, or Demonstration
Expenditures $--
--------
TOTAL $--
========
<PAGE>
Page 11
<TABLE>
<CAPTION>
ANNUAL REPORT OF Central and South West Services, Inc.
For the Year Ended December 31, 1996
SCHEDULE XI - PROPRIETARY CAPITAL
(dollars in thousands except per share amounts)
NUMBER OF SHARES PAR OR STATED OUTSTANDING CLOSE OF PERIOD
ACCOUNT NUMBER CLASS OF STOCK AUTHORIZED VALUE PER SHARE NO. OF SHARES TOTAL AMOUNT
<S> <C> <C> <C> <C> <C>
Account 201 COMMON STOCK ISSUED 10,000 $10 10,000 $100
INSTRUCTIONS: Classify amounts in each account with brief explanation, disclosing the general nature of transactions which give
rise to the reported amounts.
</TABLE>
<TABLE>
DESCRIPTION AMOUNT
<S> <C>
Account 211 - Miscellaneous Paid-In Capital $--
Account 215 - Appropriate Retained Earnings --
--------
TOTAL $--
========
INSTRUCTIONS: Give particulars concerning net income or (loss) during the year, distinguishing between compensation for the use
of capital owned or net loss remaining from servicing nonassociates per the General Instructions of the Uniform System of Accounts.
For dividends paid during the year in cash or otherwise, provide rate percentage, amount of dividend, date declared and date paid.
</TABLE>
<TABLE>
<CAPTION>
BALANCE AT NET INCOME DIVIDENDS BALANCE AT
DESCRIPTION BEGINNING OF YEAR OR (LOSS) PAID CLOSE OF YEAR
<S> <C> <C> <C> <C>
Account 216 - Unappropriated Retained Earnings $-- $-- $-- $--
-------- ------- ------- -------
TOTAL $-- $-- $-- $--
======== ======= ======= =======
</TABLE>
<PAGE>
Page 12
<TABLE>
<CAPTION>
ANNUAL REPORT OF Central and South West Services, Inc.
For the Year Ended December 31, 1996
SCHEDULE XII - LONG-TERM DEBT
(thousands)
INSTRUCTIONS: Advances from associate companies should be reported separately for advances on notes and advances on open accounts.
Names of associate companies from which advances were received shall be shown under the class and series of obligation column. For
Account 224 - Other long-term debt provide the name of creditor company or organization, terms of the obligation, date of maturity,
interest rate, and the amount authorized and outstanding.
TERM OF OBLIGATION BALANCE AT BALANCE
CLASS $ SERIES DATE OF INTEREST AMOUNT BEGINNING DEDUCTIONS AT CLOSE
NAME OF CREDITOR OF OBLIGATION MATURITY RATE AUTHORIZED OF YEAR ADDITIONS (1) OF YEAR
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Account 223 - Advances 10,000
From Associate Companies: $-- $-- $-- $--
Account 224 - Other
Long-Term Debt:
Southwestern Life
Insurance Co. 30 Year Real Estate Note 2/1/2008 9% $5,840 (64) -- 64 --
First Interstate Bank
of Texas CSWS Term Loan Facility 12/1/2001 Variable 60,000 60,000 -- -- 60,000
---------------------------------------------------------
TOTAL $65,840 $59,936 $-- $64 $60,000
=========================================================
(1) Give an explanation of deductions:
Central and South West Services, Inc. retired the note on an office building in May, 1995. Payments of $64,000 were made in error
subsequent to the retirement of the note. The refund of those payments was received in 1996.
</TABLE>
<PAGE>
Page 13
ANNUAL REPORT OF Central and South West Services, Inc.
For the Year Ended December 31, 1996
SCHEDULE XIII - CURRENT AND ACCRUED LIABILITIES
(thousands)
INSTRUCTIONS: Provide balance of notes and accounts payable to each associate
company. Give description and amount of miscellaneous current and accrued
liabilities. Items less than $10,000 may be grouped, showing the number of items
in each group.
BALANCE AT BALANCE AT
DESCRIPTION BEGINNING OF YEAR CLOSE OF YEAR
Account 233 - Notes Payable to Associate
Companies
Central and South West Corporation $49,168 $40,713
-----------------------------
TOTAL $49,168 $40,713
=============================
Account 234 - Accounts Payable to Associate
Companies
Central and South West Corporation $1,967 $2,843
-----------------------------
TOTAL $1,967 $2,843
=============================
Account 242 - Miscellaneous Current and
Accrued Liabilities
CSW Employee Thrift Plan $172 $--
Fitness Plan 39 --
Payroll 2,550 610
Reimbursable Health & Dependent Care 143 --
Director's Deferred Compensation 5
Other (8) (40) --
-----------------------------
TOTAL $2,864 $615
=============================
<PAGE>
Page 14
ANNUAL REPORT OF Central and South West Services, Inc.
For the Year Ended December 31, 1996
SCHEDULE XIV - NOTES TO FINANCIAL STATEMENTS
(thousands)
INSTRUCTIONS: The space below is provided for important notes regarding the
financial statements or any account thereof. Furnish particulars as to any
significant contingent assets or liabilities existing at the end of the year.
Notes relating to financial statements shown elsewhere in this report may be
indicated here by reference.
1. Summary of Significant Accounting Policies
Effective January 1, 1996 Central and South West Services, Inc. (Company
or CSWS) adopted the Federal Energy Regulatory Commission Uniform System
of Accounts. Prior to 1996, the Company followed the Uniform System of
Accounts for Mutual Service Companies and Subsidiary Service Companies
prescribed by the Securities and Exchange Commission. The Company, as a
member of the Central and South West System (CSW System), performs at
cost various accounting, engineering, tax, legal, financial, electronic
data processing, centralized economic dispatching of electric power, and
other services for the CSW System companies.
Depreciation
For financial reporting purposes, provisions for depreciation of
property are computed by the Company using the straight-line method,
generally at individual rates applied to the various classes of
depreciable property. The annual composite rates averaged 7.68% and
7.33% for 1996 and 1995, respectively.
Federal Income Taxes
The Company, together with other members of the CSW System, files a
consolidated federal income tax return and participates in a tax sharing
agreement with the other members of the CSW System. The provision for
deferred federal income taxes resulted principally from the tax
deductions under accelerated methods of depreciation, as provided by
federal income tax laws, being greater than these expenses for book
purposes.
2. Benefit Plans
Defined Benefit Pension Plan
The Company, together with other members of the CSW System, maintains a
tax qualified, non-contributory defined benefit pension plan covering
substantially all employees. Benefits are based on employee's years of
service, age at retirement, and final average annual earnings with an
offset for the participant's primary Social Security benefit. The CSW
System's funding policy is based on actuarially determined
contributions, taking into account amounts deductible for income tax
purposes and minimum contributions required by the Employee Retirement
Income Security Act of 1974, as amended. Pension Plan assets consist
primarily of common stocks and short-term and intermediate-term fixed
income investments.
<PAGE>
Page 14a
Information about the pension plan, including: (1) pension plan net
periodic costs and contributions; (2) pension plan participation; and
(3) assumptions used in accounting for the pension plan follow.
1996 1995
(thousands)
-------------------------
Net Periodic Pension Cost
Service Cost $4,183 $3,442
Interest cost on projected benefit
obligation 12,653 10,886
Actual return on plan assets (20,292) (19,879)
Net amortization and deferral 5,074 7,425
-------------------------
$1,618 $1,874
=========================
Pension Plan Contributions $5,162 $4,948
Approximate Number of Participants in
the Plan
Active employees 1,059 997
Retirees 52 44
Terminated employees 123 108
Assumptions used in Accounting for the
Pension Plan
Discount rate 8.00% 8.00%
Salary scale 5.46% 5.46%
Return on plan assets 9.50% 9.50%
Health and Welfare Plans
The Company, with other members of the CSW System, have medical, dental,
group life insurance, dependent life insurance, and accidental death and
dismemberment plans for substantially all active CSW System employees.
The contributions, recorded on a pay-as-you-go basis, for the years
ended December 31, 1996 and 1995 were approximately $3,923,000 and
$3,411,000 respectively.
Postretirement Benefits Other Than Pensions
The components of net periodic postretirement benefit cost follow:
1996 1995
(thousands)
-------------------------
Net Periodic Postretirement Benefit Cost
Service Cost $983 $428
Interest cost on APBO 777 439
Actual return on plan assets (244) (231)
Amortization of transition obligation 195 195
Net deferred asset gain (loss) (49) 35
-------------------------
$1,662 $866
=========================
<PAGE>
Page 14b
A reconciliation of the funded status of the plan to the amounts
recognized on the consolidated balance sheets follow:
1996 1995
(thousands)
-------------------------
APBO
Retirees $2,665 $2,483
Other fully eligible participants 1,427 1,260
Other active participants 6,933 6,062
-------------------------
Total APBO 11,025 9,805
Less: Plan assets at fair value 5,182 3,453
-------------------------
APBO in excess of plan assets 5,843 6,352
Unrecognized transition obligation (3,105) (3,300)
Unrecognized gain or (loss) (2,658) (2,972)
-------------------------
Accrued Cost $80 $80
=========================
The assumption used in accounting for Post Retirement Benefit Costs for
both 1996 and 1995 follow:
Discount rate 8.00% 8.00%
Long term rate of return on plan assets 9.50% 9.50%
Tax rate on trusts 39.60% 39.60%
3. Financial Instruments
The following methods and assumptions were used to estimate the fair
value of each class of financial instruments for which it is practicable
to estimate fair value.
Cash and temporary cash investments.
The carrying amount approximates fair value because of the short
maturity of those instruments.
Notes payable to associate companies.
The carrying amount approximates fair value because of the short
maturity of those instruments.
Other long-term debt.
The fair value of the Company's long-term debt is estimated based on
quoted market prices for the same or similar issues.
<PAGE>
Page 14c
The estimated fair value of the Company's financial instruments are as
follows:
1996
(thousands)
Carrying Amount Fair Value
Cash and temporary cash investments $1,270 $1,270
Notes payable to associate companies 40,713 40,713
Other long-term debt 60,000 60,000
4. Short-Term Financing
The Company, together with other members of the CSW System, has
established a money pool to coordinate short-term borrowings and also
incurs borrowings outside the money pool through the issuance of
commercial paper. As of December 31, 1996, the CSW System had revolving
credit facilities totaling $1.2 billion to back up its commercial paper
program which, at December 31, 1996, had $364 million outstanding. The
maximum amount of such commercial paper outstanding during the year,
which had a weighted average interest rate for the year of 5.6%, was
$815 million during April 1996.
<PAGE>
Page 15
ANNUAL REPORT OF Central and South West Services, Inc.
SCHEDULE XV - COMPARATIVE INCOME STATEMENT
(thousands)
ACCOUNT DESCRIPTION CURRENT PRIOR
YEAR YEAR
------------ ----------
INCOME
457 Services rendered to associate companies $251,177 $209,989
458 Services rendered to nonassociate companies 1,025 24
421 Miscellaneous income or loss 3,549 7,437
---------- ----------
TOTAL INCOME 255,751 217,450
---------- ----------
EXPENSES
500-557 Power production 16,202 --
560-574 Transmission 10,474 --
580-598 Distribution 715 --
906-917 Customer service & Information 11,235 --
920 Salaries and wages 86,976 64,454
921 Office supplies and expenses 28,828 35,304
922 Administrative expense transferred - credit (30,909) (722)
923 Outside services employed 67,610 57,602
924 Property insurance 144 113
925 Injuries and damages 1,909 132
926 Employee pensions and benefits 9,935 9,232
928 Regulatory commission expense -- 881
930.1 General advertising expenses 3,733 5,025
930.2 Miscellaneous general expenses 5,744 3,117
931 Rents 13,161 14,530
932 Maintenance of structures and equipment 3,421 3,261
403-405 Depreciation and amortization expense 9,013 8,133
408 Taxes other than income taxes 7,113 6,036
409 Income taxes (714) (2,500)
410 Provision for deferred income taxes 1,756 4,239
411 Provision for deferred income taxes - credit (72) (658)
417 Administrative - Business Venture 5 --
426.1 Donations 619 785
426.5 Other deductions 2,759 1,517
427 Interest on long-term debt 3,657 4,036
430 Interest on debt to associate companies 2,330 2,859
431 Other interest expense 107 74
---------- ----------
TOTAL EXPENSE 255,751 217,450
---------- ----------
NET INCOME OR (LOSS) $-- $--
========== ==========
<PAGE>
Page 16
ANNUAL REPORT OF Central and South West Services, Inc.
For the Year Ended December 31, 1996
ANALYSIS OF BILLING
ASSOCIATE COMPANIES - ACCOUNT 457
(thousands)
DIRECT INDIRECT COMPENSATION TOTAL
COSTS COSTS FOR USE AMOUNT
NAME OF ASSOCIATE COMPANY CHARGED CHARGED OF CAPITAL BILLED
457 - 1 457 - 2 457 - 3
Central and South West Corporation $30,389 $10,678 $371 $41,438
Central Power and Light Company 49,445 20,909 628 70,982
Public Service Company of Oklahoma 26,958 15,298 422 42,678
Southwestern Electric Power Company 31,946 17,510 475 49,931
West Texas Utilities Company 13,297 8,104 273 21,674
Transok, Inc. 1,455 787 20 2,262
CSW Credit, Inc. 856 53 9 918
CSW Energy, Inc. 1,960 472 31 2,463
CSW International, Inc. 1,065 239 7 1,311
CSW Communications, Inc. 6,880 281 44 7,205
CSW Leasing, Inc. 30 2 -- 32
Enershop, Inc. 107 318 4 429
Seeboard 9,795 13 46 9,854
----------------------------------------
TOTAL $174,183 $74,664 $2,330 $251,177
========================================
<PAGE>
Page 17
<TABLE>
<CAPTION>
ANNUAL REPORT OF Central and South West Services, Inc.
For the Year Ended December 31, 1996
ANALYSIS OF BILLING
NON-ASSOCIATE COMPANIES - ACCOUNT 458
(thousands)
INSTRUCTION: Provide a brief description of the services rendered to each nonassociate company:
DIRECT INDIRECT COMPENSATION EXCESS TOTAL
COST COST FOR USE TOTAL OR AMOUNT
NAME OF NONASSOCIATE COMPANY CHARGED CHARGED OF CAPITAL COST DEFICIENCY BILLED
458 - 1 458 - 2 458 - 3 458 - 4
<S> <C> <C> <C> <C> <C> <C>
Engineering Services:
1. Tippett & Gee $1 $-- $-- $1 $3 $4
2. Burns & McDonnell 2 -- -- 2 -- 2
3. Timple Inland 2 -- -- 2 2 4
4. Transok 175 175 175
5. Electric Power Research Institute 302 1 303 303
6. Maritime Controls 9 9 6 15
7. Kekco 276 1 277 277
8. Powermax 8 8 8
9. Lone Star Steel 6 6 6
10. Georgia Pacific 199 199 199
11. Stroh's Brewery 7 7 7
12. Valspar 13 13 13
13. Republic Gypsum 12 12 12
--------------------------------------------------------------------------
TOTAL $1,012 $-- $2 $1,014 $11 $1,025
==========================================================================
</TABLE>
<PAGE>
Page 18
<TABLE>
<CAPTION>
ANNUAL REPORT OF Central and South West Services, Inc.
For the Year Ended December 31, 1996
SCHEDULE XVI - ANALYSIS OF CHARGES FOR SERVICE - ASSOCIATE AND NON-ASSOCIATE COMPANIES
(thousands)
Instruction: Total cost of service will equal for associate and non-associate companies the total amount billed under their separate
analysis of billing schedules.
ASSOCIATE COMPANY CHARGES NONASSOC. COMPANY CHARGES TOTAL CHARGES FOR SERVICE
DIRECT INDIRECT DIRECT INDIRECT DIRECT INDIRECT
ACCOUNT DESCRIPTION OF ITEMS COST COST TOTAL COST COST TOTAL COST COST TOTAL
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
500-559 Power Production $9,494 $6,705 $16,199 $3 $-- $3 $9,497 $6,705 $16,202
560-579 Transmission 4,814 5,660 10,474 -- -- 4,814 5,660 10,474
580-599 Distribution 214 501 715 -- -- 214 501 715
906-917 Customer Accounts,
Service, & Information 2,861 8,374 11,235 -- -- 2,861 8,374 11,235
920 Salaries and Wages 49,965 36,382 86,347 629 629 50,594 36,382 86,976
921 Office Supplies and Expenses 20,609 8,183 28,792 36 -- 36 20,645 8,183 28,828
922 Administrative Expense (577) (30,348) (30,925) 16 16 (561) (30,348) (30,909)
923 Outside Service Employed 60,882 6,476 67,358 252 -- 252 61,134 6,476 67,610
924 Property Insurance 144 -- 144 -- -- -- 144 -- 144
925 Injuries and Damages 1,870 39 1,909 -- -- -- 1,870 39 1,909
926 Employee Pensions and Benefits 980 8,951 9,931 4 -- 4 984 8,951 9,935
930.1 General Advertising Expense 3,569 163 3,732 1 -- 1 3,570 163 3,733
930.2 Miscellaneous General Expense 2,600 3,140 5,740 4 -- 4 2,604 3,140 5,744
931 Rents 9,827 3,279 13,106 55 -- 55 9,882 3,279 13,161
935 Maintenance of Structures
and Equipment 2,672 742 3,414 7 -- 7 2,679 742 3,421
403-405 Depreciation and Amortization
Expense 1,839 7,166 9,005 8 -- 8 1,847 7,166 9,013
408 Taxes Other than Income Taxes 1,779 5,332 7,111 2 2 1,781 5,332 7,113
409 Income Taxes (714) -- (714) -- -- -- (714) -- (714)
410 Provision for Deferred Income
Taxes 1,756 -- 1,756 -- -- 1,756 -- 1,756
411.5 Provision for Deferred Income
Taxes - Credit (72) -- (72) -- -- -- (72) -- (72)
417 Administrative - Business Venture -- 5 5 -- -- -- -- 5 5
426.1 Donations 533 86 619 -- -- -- 533 86 619
426.5 Other Deductions 2,521 238 2,759 -- -- -- 2,521 238 2,759
427 Interest On Long-Term Debt -- 3,657 3,657 -- -- -- 3,657 3,657
431 Other Interest Expense 99 -- 99 8 -- 8 107 -- 107
---------------------------------------------------------------------------------------
TOTAL EXPENSES 177,665 74,731 252,396 1,025 -- 1,025 178,690 74,731 253,421
---------------------------------------------------------------------------------------
Compensation for Use of Equity
Capital -- -- -- -- -- -- -- -- --
430 Interest On Debt To Associate
Companies 2,330 -- 2,330 -- -- -- 2,330 -- 2,330
---------------------------------------------------------------------------------------
TOTAL COST OF SERVICE $179,995 $74,731 $254,726 $1,025 $-- $1,025 $181,020 $74,731 $255,751
=======================================================================================
</TABLE>
<PAGE>
Page 19
<TABLE>
<CAPTION>
ANNUAL REPORT OF Central and South West Services, Inc.
For the Year Ended December 31, 1996
SCHEDULE XVII - SCHEDULE OF EXPENSE BY DEPARTMENT OR SERVICE FUNCTION
(thousands)
Instruction: Indicate each department or service function. (See Instruction 01-3 General Structure of Accounting System:
Uniform System of Accounts).
DEPARTMENT OR SERVICE FUNCTION
-------------------------------------------------------
TOTAL TECH
ACCOUNT DESCRIPTION OF ITEMS AMOUNT OVERHEAD EXEC SVCS ADMIN FOSSIL ENG LEGAL
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
500-559 Power Production $16,202 $3,091 $25 $4,612 $313 $1,925 $4,510 $--
560-579 Transmission 10,474 2,252 - 7,603 222 - 381 1
580-599 Distribution 715 212 - 349 12 - 142 -
906-917 Customer Service & Information 11,235 1,712 - 2,045 147 3 - 1
920 Salaries and Wages 86,976 20,370 4,806 2,026 19,339 167 3,131 4,135
921 Office Supplies and Expenses 28,828 2,874 585 290 3,990 51 1,278 2,058
922 Administrative Expense (30,909) (31,994) - - 1,085 - - -
923 Outside Service Employed 67,610 900 174 (73) 3,390 132 5,756 20,169
924 Property Insurance 144 - - - 144 - - -
925 Injuries and Damages 1,909 7 2 - 1,900 - - -
926 Employee Pensions and Benefits 9,935 75 20 1 8,795 4 27 20
930.1 General Advertising Expense 3,733 - - - 81 - 8 -
930.2 Miscellaneous General Expense 5,744 136 161 71 3,382 2 187 384
931 Rents 13,161 2,609 119 27 534 6 1,458 532
935 Maintenance of Structures and
Equipment 3,421 721 14 1 221 1 6 19
403-405 Depreciation and Amortization
Expense 9,013 7,095 - - 1,918 - - -
408 Taxes Other than Income Taxes 7,113 740 4 - 6,277 - - 4
409 Income Taxes (714) - - - (714) - - -
410 Provision for Deferred Income Taxes 1,756 - - - 1,756 - - -
411 Provision for Deferred Income
Taxes - Credit (72) - - - (72) - - -
417 Administrative - Business Venture 5 2 - - - - - -
426.1 Donations 619 - 19 2 103 - 20 31
426.5 Other Deductions 2,759 - 131 13 1,540 3 3 936
427 Interest On Long-Term Debt 3,657 3,657 - - - - - -
430 Interest On Debt To Associate
Companies 2,330 - - - 2,330 - - -
431 Other Interest Expense 107 - - - 68 - 39 -
--------------------------------------------------------------------------
$255,751 $14,459 $6,060 $16,967 $56,761 $2,294 $16,946 $28,290
==========================================================================
</TABLE>
<PAGE>
Page 19a
<TABLE>
<CAPTION>
ANNUAL REPORT OF Central and South West Services, Inc.
For the Year Ended December 31, 1996
SCHEDULE XVII - SCHEDULE OF EXPENSE BY DEPARTMENT OR SERVICE FUNCTION
(thousands)
Instruction: Indicate each department or service function. (See Instruction 01-3 General Structure of Accounting System:
Uniform System of Accounts).
DEPARTMENT OR SERVICE FUNCTION
-----------------------------------------------------------------------------
INFO
ACCOUNT DESCRIPTION OF ITEMS CORP SVCS MARKETING SERVICES NUCLEAR AUDITS SPI CORP DEV FUEL
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
500-559 Power production $-- $3 $-- $-- $-- $2 $6 $1,715
560-579 Transmission - 1 1 - - 1 12 -
580-599 Distribution - - - - - - - -
906-917 Customer Service & Information 5 7,318 1 - 2 - - 1
920 Salaries and Wages 11,563 842 13,732 184 1,552 1,732 2,213 1,184
921 Office Supplies and Expenses 3,625 1,568 7,978 34 334 523 3,182 458
922 Administrative Expense - - - - - - - -
923 Outside Service Employed 4,338 2,541 5,754 9 7 948 20,731 2,834
924 Property Insurance - - - - - - - -
925 Injuries and Damages - - - - - - - -
926 Employee Pensions and Benefits 451 2 17 - 144 238 95 46
930.1 General Advertising Expense 203 3,447 - - - - (8) 2
930.2 Miscellaneous General Expense 954 - 307 1 - 1 113 45
931 Rents 280 75 7,195 - 8 4 310 4
935 Maintenance of Structures and
Equipment 731 50 1,610 - 3 4 38 2
403 Depreciation and Amortization Expense - - - - - - - -
408 Taxes Other than Income Taxes (88) - - - 1 - 175 -
409 Income Taxes - - - - - - - -
410 Provision for Deferred Income Taxes - - - - - - - -
411 Provision for Deferred Income
Taxes - Credit - - - - - - - -
417 Administrative - Business Venture - 3 - - - - - -
426.1 Donations 419 - - - 3 - 22 -
426.5 Other Deductions 77 31 2 4 - - 16 3
427 Interest on Long-Term Debt - - - - - - - -
430 Interest On Debt To Associate
Companies - - - - - - - -
431 Other Interest Expense - - - - - - - -
---------------------------------------------------------------------------
TOTAL COST OF SERVICE $22,558 $15,881 $36,597 $232 $2,054 $3,453 $26,905 $6,294
===========================================================================
</TABLE>
<PAGE>
Page 20
ANNUAL REPORT OF Central and South West Services, Inc.
For the Year Ended December 31, 1996
DEPARTMENTAL ANALYSIS OF SALARIES - ACCOUNT 920
(thousands)
<TABLE>
<CAPTION>
DEPARTMENTAL SALARY EXPENSE
-----------------------------------------
NAME OF DEPARTMENT INCLUDED IN AMOUNTS BILLED TO NUMBER OF
-------------------------------
INDICATE EACH DEPARTMENT TOTAL PARENT OTHER NON PERSONNEL
OR SERVICE FUNCTION AMOUNT COMPANY ASSOCIATES ASSOCIATES END OF YEAR
<S> <C> <C> <C> <C> <C>
Executive $4,807 $4,197 $610 $-- 24
Technical Services 7,662 74 7,588 -- 150
Administration (1) 18,341 2,578 15,750 13 370
Fossil Generation 1,754 23 1,731 -- 22
Production Engineering 6,691 307 6,050 334 118
Legal (2) 4,128 298 3,830 -- 62
Corporate Services 11,566 1,594 9,972 -- 112
Marketing 4,787 73 4,714 -- 162
Information Services (3) 13,923 221 13,695 7 249
Nuclear Engineering 184 1 183 -- 1
Audits 1,557 9 1,548 -- 21
System Process Improvement 1,728 2 1,726 -- 23
Corporate Development 2,210 216 1,994 -- 21
Fuels 2,891 71 2,819 1 47
----------------------------------------------------
TOTAL $82,229 $9,664 $72,210 $355 1,382
====================================================
These amounts may include charges to accounts throughout the Income Statement
and Balance Sheet. Therefore, they can't be identified in total with any
particular line on Schedule XIV, but are distributed among various lines.
</TABLE>
<PAGE>
Page 21
ANNUAL REPORT OF Central and South West Services, Inc.
For the Year Ended December 31, 1996
OUTSIDE SERVICES EMPLOYED
(thousands)
INSTRUCTIONS: Provide a breakdown of outside services employed. If the aggregate
amounts paid to any one payee and included within one category is less than
$100,000, only the aggregate number and amount of all such payments included
within the subaccount need be shown. Provide a brief description of the service
rendered by each vendor listed.
FROM WHOM PURCHASED SERVICE PROVIDED AMOUNT
Engineering Services
EPRI Member Commitment Fees. $2,125
Other (11) 40
---------
$2,165
---------
Auditing Services
Arthur Andersen & Co. Auditing Services. $696
Other (3) 5
---------
$701
---------
Legal Services
Barlow & Hardtner, L.C. Legal Services. $343
Bracewell & Patterson Legal Services. 1,114
Broyles & Pratt Legal Services. 3,258
Byers, David E. Legal Services. 150
Christy & Viener Legal Services. 2,153
Clark, Thomas & Winters Legal Services. 162
Cravath, Swaine, & Moore Legal Services. 129
Document Services Legal Services. 408
Doerner, Saunders, Daniel
& Anderson Legal Services. 347
Gibbs & Burns LLP Legal Services. 241
Haynes and Boone LLP Legal Services. 506
Jones, Day, Reavis & Pogue Legal Services. 976
Locke, Purnell, Rain &
Harrell Legal Services. 248
McCall, Parhhurst &
Horton LLP Legal Services. 412
McDermott, Will & Emery Legal Services. 146
Milbank, Tweed, Hadley &
McCoy Legal Services. 3,595
Sheinfeld, Maley & Kay Legal Services. 442
Sidley & Austin Legal Services. 120
Slover & Loftus Legal Services. 883
Troutman Sanders Legal Services. 120
Vinson & Elkins LLP Legal Services. 3,361
Wagstaff, Alvis, Stubbeman,
Seamster & Longacre LLP Legal Services. 373
Other (87) Legal Services. 1,359
---------
$20,846
---------
Consulting Services
Analysts International
Corporation Consulting Services. $142
Architectural Energy
Corporation Consulting Services. 163
Arthur Andersen & Co. Consulting Services. 956
Assoc. Of Electric
Companies Of Texas Consulting Services. 370
Broyles & Pratt Consulting Services. 1,427
Continued
<PAGE>
Page 21a
ANNUAL REPORT OF Central and South West Services, Inc.
For the Year Ended December 31, 1996
OUTSIDE SERVICES EMPLOYED
(thousands)
FROM WHOM PURCHASED SERVICE PROVIDED AMOUNT
Consulting Services Continued
Burson-Marstell Consulting Services. $147
Cambridge Reports Research
Int'l Consulting Services. 121
Data Dynamics, Inc. Consulting Services. 307
Deloitte & Touche Consulting Services. 118
Delta Strategies Consulting Services. 195
Desola Group Inc. Consulting Services. 552
Duplex Products Consulting Services. 251
Electric Power Consulting Services. 403
Electrotek Concepts, Inc. Consulting Services. 381
Energy and Environmental
Economics, Inc. Consulting Services. 381
EPRI Consulting Services. 495
Financial Dynamics Consulting Services. 131
Financo Inc. Consulting Services. 342
Hewitt Associates Consulting Services. 319
Infosystems Corporation Consulting Services. 142
Intergraph Corporation Consulting Services. 129
James Martin & Company Consulting Services. 904
Jeter, John A. Consulting Services. 132
Love Envelopes, Inc. Consulting Services. 669
Main Factors, Inc. Consulting Services. 176
Management Applications
Consulting, Inc. Consulting Services. 237
Mayfield & Mayfield Consulting Services. 461
Minerva Technology Consulting Services. 189
Montare International Consulting Services. 132
Moody's Investors Service Consulting Services. 170
Morgan Stanley Consulting Services. 9,202
Newman Graphics Consulting Services. 109
Planergy, Inc. Consulting Services. 269
Read-Poland Associates Consulting Services. 153
Reed Consulting Group Consulting Services. 177
Robert Shaw Mfg. Consulting Services. 149
S & J Group Inc. Consulting Services. 110
Simon, Richard L Consulting Services. 104
Sodexho USA Consulting Services. 206
Software Solutions Consulting Services. 107
SPR Systems & Programming Consulting Services. 1,337
Stalter, AL Consulting Services. 219
Steinmeier William D. Consulting Services. 130
Sun Technical Services Consulting Services. 116
Team Consulting, Inc. Consulting Services. 146
Texas Tech. University Consulting Services. 128
Trammell Crow Company Consulting Services. 465
Tucker, Gerald W. Consulting Services. 319
UBS Limited Consulting Services. 4,844
Zond Systems Inc. Consulting Services. 160
Wilson Kullman Consulting Services. 217
Other (354) Consulting Services. 4,142
---------
$33,351
---------
Continued
<PAGE>
Page 21b
ANNUAL REPORT OF Central and South West Services, Inc.
For the Year Ended December 31, 1996
OUTSIDE SERVICES EMPLOYED
(thousands)
FROM WHOM PURCHASED SERVICE PROVIDED AMOUNT
Temporary Personnel
Accounting Principals Various Temporary Accounting Services $233
Imprimis Group, Inc. Various Temporary Office and Accounting
Services 731
Key Temporary Various Temporary Office and Accounting
Services 467
Manpower, Inc. Various Temporary Office and Accounting
Services 515
Pro Staff Various Temporary Office and Accounting
Services 184
Vinson and Associates Various Temporary Office and Accounting
Services 521
Other (84) 691
---------
$3,342
---------
Outside Services - Other
American Appraisal
Associates, Inc. Appraisal Services. $118
Arthur Andersen & Co. Tax & Financial Services 662
Assoc. of Electrical
Companies of Texas CAP/PSI Assessment/Member Dues. 392
Bowne of Dallas Printing & Proofing Services. 158
Cambridge Reports Research
Inc. Monthly Tracking Services. 200
Edison Electric Institute Workforce Planning & Consulting Services. 121
Electric Power Research
Institute Member Commitment Fees 6,650
ESCA Corporation Software Support Services. 2,114
Espey, Huston & Associates Preparation of Operating Permits. 313
Hefner & Associates Serp Administration. 112
Hewitt Associates Actuarial Services. 344
Kennedy Reporting Service
Inc. Reporting/Stenography Services. 145
Light Media Interactive Application Development Services. 200
Logical Resources, Inc. Technical Support Services. 148
Mail Box Statement Mailing Services. 109
Marshall Group, Inc. Consulting & Compensation Studies. 102
Michael Doyle & Associates Strategic Planning Services. 190
Morgan Stanley, Inc. Remarketing Services. 389
Power Costs, Inc. Software & Delivery Services. 218
Public Strategies, Inc. Consulting Services. 185
Project Group IDMS On Site Support Services 101
Real Estate Tax Services Property Tax Management Services 177
Red Simpson, Inc. Fiber Optic Installation Services 587
Small Change Original
Theater In-School Electrical Safety Tours 103
Southwestern Bell Maintenance Services. 114
Stonebridge Technologies On Site Computer Support Services 236
SWSI Programming Services 110
Xerox Copier Rental & Maintenance Services 320
Other (577) 3,328
---------
$17,946
---------
Total Outside Services $78,351
=========
These amounts summarize all outside services employed and may include charges to
accounts throughout the Income Statement and Balance Sheet. Therefore, they
can't be identified in total with any particular line on Schedule XIV, but
are distributed among various lines.
<PAGE>
Page 22
ANNUAL REPORT OF Central and South West Services, Inc.
For the Year Ended December 31, 1996
EMPLOYEE PENSIONS AND BENEFITS - ACCOUNT 926
(thousands)
INSTRUCTIONS: Provide a listing of each pension plan and benefit program
provided by the service company. Such listing should be limited to $25,000.
DESCRIPTION AMOUNT
Pension $1,611
Thrift Plan 1,752
Medical Plan 3,951
Benefit Plan Trustee Fee 20
Employee Assistance Program 47
Employee Awards and Events Program 168
Job Incentive Credits (1,470)
Accidental Death and Disability 44
Group Life 102
Employee Publications 91
System Employee Benefits 1,005
Retired Employee Benefits 2,084
Educational Assistance 433
Other 97
-------
TOTAL $9,935
-------
<PAGE>
Page 23
ANNUAL REPORT OF Central and South West Services, Inc.
For the Year Ended December 31, 1996
GENERAL ADVERTISING EXPENSE - ACCOUNT 930.1
(thousands)
INSTRUCTIONS: Provide a listing of the amount included in Account 930.1,
"General Advertising Expenses", classifying the items according to the nature of
the advertising and as defined in the account definition. If a particular class
includes an amount in excess of $3,000 applicable to a single payee, show
separately the name of the payee and the aggregate amount applicable thereto.
DESCRIPTION NAME OF PAYEE AMOUNT
Fees to Advertising Agency - BSA Advertising $81
Employment Related
Fees for Investor/Public
Relations Ad Vantage Corporation 8
Institutional Investor 48
National Association of
Investors Corp. 33
Read-Poland Associates 40
Research Magazine 16
Team Aztecas 15
Advertising in Newspapers,
Billboards, Periodicals,
Radio, TV, etc. J L Media, Inc. 1,295
Langdon Publishing 9
Moore Syndication 16
North Texas Public
Broadcasting, Inc. 40
Oklahoma Press Service, Inc. 495
Outdoor Placement of TX 328
Ruppman National Yellow Pages Svc. 91
Stokely Outdoor Sign 3
World Trade 4
Other (13) 13
Advertising Matter such as
Posters, Bulletins, Booklets
and Related Items Progressive Mktg, Inc. 367
Walsh Associates 21
Wingfield Smith 17
Other (5) 6
Fees for Marketing/General Ad Associates, Inc 9
Apex Corporation 8
Alsip Productions 11
Artworks, Inc. 8
Brothers & Company 655
Frederick, Sommers & Western 5
Hist & Fritz Creative Media 4
Ideas in Action 47
JC Creative Advertising 28
Key Temporary 4
Main Street Productions 5
Tracy's Graphics 3
-------
$3,733
-------
<PAGE>
Page 24
ANNUAL REPORT OF Central and South West Services, Inc.
For the Year Ended December 31, 1996
MISCELLANEOUS GENERAL EXPENSES - ACCOUNT 930.2
(thousands)
INSTRUCTIONS: Provide a listing of the amount included in Account 930.2,
"Miscellaneous General Expenses" classifying such expenses according to their
nature. Payments and expenses permitted by Section 321 (b)(2) of the Federal
Election Campaign Act, as amended by Public Law 94-283 in 1976 (2 U.S.C. 441
(b)(2)) shall be separately classified.
DESCRIPTION AMOUNT
Company Membership Fees and Dues $754
Company Relocation Expenses 3,070
Trustee, Registrar, and Transfer Agent Fees 361
Directors' Fees and Expenses 802
Research and Development Expense 112
Publish and Distribute Quarterly and Annual Reports 469
Contract Programming 109
Miscellaneous 72
-------
TOTAL $5,749
-------
ANNUAL REPORT OF Central and South West Services, Inc.
For the Year Ended December 31, 1996
RENTS - ACCOUNT 931
(thousands)
INSTRUCTIONS: Provide a listing of the amount included in Account 931, "Rents",
classifying such expenses by major groupings of property, as defined in the
account definition of the Uniform System of Accounts.
TYPE OF PROPERTY AMOUNT
Office Space Rent $3,284
Offsite Storage Space Rent 160
Computer Timesharing Rent 84
Computer Software Rent 6,347
Computer Equipment Rent 2,474
Automobile Rent 381
Other Rent 431
-------
TOTAL $13,161
-------
<PAGE>
Page 25
ANNUAL REPORT OF Central and South West Services, Inc.
For the Year Ended December 31, 1996
TAXES OTHER THAN INCOME TAXES - ACCOUNT 408
(thousands)
INSTRUCTIONS: Provide an analysis of Account 408 "Taxes Other Than Income
Taxes". Separate the analysis into two groups: (1) other than U.S. Government
taxes, and (2) U.S. Government taxes. Specify each of the various kinds of
taxes and show the amounts thereof. Provide a subtotal for each class of tax.
DESCRIPTION AMOUNT
Other Than U.S. Government Taxes:
State Unemployment Taxes $173
Property and Other Taxes 1,832
-------
SUBTOTAL 2,005
-------
U.S. Governmental Taxes:
Social Security Taxes 5,006
Federal Unemployment Taxes 102
-------
SUBTOTAL 5,108
-------
TOTAL $7,113
=======
<PAGE>
Page 26
ANNUAL REPORT OF Central and South West Services, Inc.
For the Year Ended December 31, 1996
DONATIONS - ACCOUNT 426.1
(thousands)
INSTRUCTIONS: Provide a listing of the amount included in Account 426.1,
"Donations", classifying such expenses by its purpose. The aggregate number and
amount of all items of less than $3,000 may be shown in lieu of details.
NAME OF RECIPIENT PURPOSE OF DONATION AMOUNT
Baylor Health Care System
Foundation Contribution to support the organization $25
Boys and Girls Clubs of
America Contribution to support the organization 5
Central Dallas Association Contribution to support community service 4
organizations
Child Care Group Contribution to support community service 6
organizations
Children's Medical Center Contribution to support the organization 3
Circle Ten Council - Boy
Scouts of America Contribution to support activities of the 35
organization
Contact 214 Corporate contribution 6
Cowboy Artists of America
Museum Contribution to support the organization 7
Foundation
Dallas Ambassadors Forum Contribution to support activities of the 30
organization
Dallas Museum of Art Contribution to support the organization 5
Dallas Opera Annual fund campaign contribution 10
Dallas Symphony
Association, Inc. Annual fund campaign contribution 15
Dallas Theater Center Contribution to support the organization 3
Denton County Autism Society Contribution to support the organization 5
Financial Executives
Research Foundation Annual fund campaign contribution 3
(continued)
<PAGE>
Page 26a
ANNUAL REPORT OF Central and South West Services, Inc.
For the Year Ended December 31, 1996
DONATIONS - ACCOUNT 426.1
(thousands)
NAME OF RECIPIENT PURPOSE OF DONATION AMOUNT
Friends of the Mansion, Inc. Contribution to support activities of the 5
organization
Greater Dallas Chamber of
Commerce Annual Membership contribution 6
GTE Byron Nelson Corporate sponsorship 21
Jenks US First Corporate sponsorship 5
Junior Achievement of
Dallas, Inc. Contribution to support the organization 5
Keep Texas Beautiful Corporate sponsorship 5
Leadership Texas Corporate sponsorship 10
Medisend Contribution to support activities of the 5
organization
National Alliance of
Business Annual Membership contribution 5
Nature Conservancy of Texas Corporate sponsorship 3
North Texas Public
Broadcasting, Inc. Contribution to support the organization 4
Progress & Freedom
Foundation Contribution to support activities of the 35
organization
Southwestern Bell Contribution to support educational
activities 5
Southwestern Medical Center Contribution to support educational
activities of the organization 25
Texas Book Festival Corporate sponsorship 3
Texas Business & Education
Coalition Contribution to support educational
activities of the organization 8
Texas Council on Economic
Education Contribution to support educational
activities of the organization 5
Texas Tech University
Capital Campaign Contribution for capital and endowment funds 20
(continued)
<PAGE>
Page 26b
ANNUAL REPORT OF Central and South West Services, Inc.
For the Year Ended December 31, 1996
DONATIONS - ACCOUNT 426.1
(thousands)
NAME OF RECIPIENT PURPOSE OF DONATION AMOUNT
Together for Tulsa Corporate sponsorship 5
Tulsa Area United Way Contribution to support community service 45
organization
Tulsa Opera Annual fund campaign contribution 5
United Way of Metropolitan
Dallas, Inc. Contribution to support community service 63
organization
Utilitree Carbon Company Contribution to support activities of 20
the organization
Utility Business Education Contribution to support educational
activities of the organization 5
YMCA of Metropolitan Dallas Contributions to the capital campaign and 15
to support the organization 25
YWCA of Metropolitan Dallas Contribution to support the organization 5
Other (164) 94
-------
TOTAL $619
=======
<PAGE>
Page 27
ANNUAL REPORT OF Central and South West Services, Inc.
For the Year Ended December 31, 1996
OTHER DEDUCTIONS - ACCOUNT 426.5
(thousands)
INSTRUCTIONS: Provide a listing of the amount included in Account 426.5, "Other
Deductions", classifying such expenses according to their nature.
DESCRIPTION NAME OF PAYEE AMOUNT
Expenditures for Certain Company employee and administrative $2,693
Civic, Political & Related costs for civic, political and
Activities related activities
Misc. Amortization Company expense 66
-------
TOTAL $2,759
=======
<PAGE>
Page 28
ANNUAL REPORT OF Central and South West Services, Inc.
For the Year Ended December 31, 1996
SCHEDULE XVIII - NOTES TO STATEMENT OF INCOME
(thousands)
INSTRUCTIONS: The space below is provided for important notes regarding the
statement of income or any account thereof. Furnish particulars as to any
significant increase in services rendered or expenses incurred during the year.
Notes relating to financial statements shown elsewhere in this report may be
indicated here by reference.
1. The Data Center provides centralized computer services for all CSW System
companies. The following information is provided pursuant to a Securities
and Exchange Commission data request letter dated May 6, 1983.
(a) Aggregate Billings by the Data Center
The operating costs for the Data Center for the year ended December 31,
1996, were $8,959,435. See paragraph (b) for explanation of the 1996
billing procedure.
(b) Breakdown of Data Center Billings by CRU
The actual 1996 costs for the operation of the Data Center were
$8,959,435. Costs of operation of the Data Center were charged back to
the system companies based on their usage of the computer resources.
CSWS allocates its costs for computer services rendered to CSW System
companies as follows:
Computer Resource Unit (CRU) Component Simplification
CSWS utilizes the CRU, a measurement of computer services rendered to
allocate direct costs to the CSW companies. The CRU was previously made
up of forty components. CSWS, on April 1, 1990, reduced the number of
components making up the CRU to only three components: (a) tape storage
in terms of tape-days, which is used to allocate all tape related costs,
(b) disk storage in terms of track-days which is used to allocate all
disk related costs, and (c) CPU seconds which is used to allocate all
other processor related usage costs. Use of only three components
simplifies the computer billing process, reduces administrative costs
and makes the charges to the users clearer and easier to understand.
Usage Cost Allocation
Computer usage costs are being allocated on the basis of two factors. A
"usage" portion is allocated based on the current number of CRU's used
reflecting incremental costs of utilizing the three CRU components. The
remaining "base" costs are being allocated to the companies based on the
previous three years of processor related CRU usage costs and reflect
fixed costs of operating the data center. Utilizing "past average usage"
as a basis for allocating a portion of the costs is appropriate because
a component of the cost of providing service is embedded and is more
equitably distributed based on past usage.
The following page outlines the billing to system companies separated
into the two components referenced above. It should be noted that one
dollar of usage cost equals one CRU.
<PAGE>
Page 28a
ANNUAL REPORT OF Central and South West Services, Inc.
For the Year Ended December 31, 1996
SCHEDULE XVIII - NOTES TO STATEMENT OF INCOME
(thousands)
Usage Base Total
Company CRU's Billing Billing Billing
CPL 616,593 $616,593 $523,644 $1,140,237
PSO 1,067,301 1,067,301 992,990 2,060,291
SWEPCO 939,710 939,710 757,784 1,697,494
WTU 426,917 426,917 234,912 661,829
TRANSOK 272,858 272,858 258,954 531,812
CSWS 1,957,250 1,957,250 906,929 2,864,179
CSW Energy 2,564 2,564 1,029 3,593
---------- ---------- ---------- ----------
TOTALS 5,283,193 $5,283,193 $3,676,242 $8,959,435
========== ========== ========== ==========
(c) Statement of Data Center Activities
The major activities of the Data Center during 1996 were production
environment of Integrated Data Management System (IDMS) and Customer
Information Control System (CICS) for all of the system companies.
The operating costs for 1996 included salaries, equipment expenses,
software services, disaster recovery, site rentals and general supplies.
<PAGE>
Page 29
CENTRAL AND SOUTH WEST SERVICES
ORGANIZATION CHART - DECEMBER 31, 1996
CHAIRMAN PRESIDENT & CHIEF EXEC OFFICER
-----------------------------------------------------------------
| | | | | |
SR VP GENERAL | SR VP CORPORATE SR VP CHIEF | SR VP EXTERNAL
COUNSEL | DEVELOPMENT FINANCIAL | AFFAIRS
| | | OFFICER | |
| | | | |
VP ASSOC GENERAL | VP HUMAN | VP REGULATORY
COUNSEL/CORP | RESOURCES | AFFAIRS
SECRETARY | |
| |
EXEC VP ELECTRIC EXEC VP ENERGY
OPERATIONS ENTERPRISES
| |
-------------|----------- |
| | | ---------------------
VP SPECIAL | PRESIDENT ENERGY | |
PROJECTS | SERVICES VP MERGERS & PRESIDENT POWER
| | ACQUISITIONS GENERATION
| | |
| VP MARKETING ---------------
| |
PRESIDENT ENERGY |--- VP ENGINEERING
DELIVERY |
| |--- VP FOSSIL GENERATION
------------------------ |
| | |--- VP FUELS
VP ELECTRIC VP OPERATION |
DELIVERY SERVICES |--- VP NUCLEAR PLANTS
<PAGE>
Page 30
ANNUAL REPORT OF Central and South West Services, Inc.
METHODS OF ALLOCATION
Central and South West Services, Inc. requested and the Securities and
Exchange Commission granted on December 30, 1982, October 23, 1985, and February
13, 1992, the following thirteen part cost allocation method.
1. Total Assets with 20% Allocated to CSW -- a basis of allocation with 20%
of costs allocated to CSW and the remaining 80% allocated among the
participating companies in the ratio of each company's total assets as a
percentage of the total assets of all participating companies.
2. Total Assets -- a basis of allocation which allocates costs among the
participating companies in the ratio of each company's total assets as a
percentage of the total assets of all participating companies.
3. Peak Load -- a basis of allocation which allocates costs among the
participating companies in the ratio of each company's peak load as a
percentage of the sum of the peak loads of all participating companies.
4. Average Number of Ultimate Customers -- a basis of allocation which
allocates costs among the participating companies in the ratio of each
company's average number of ultimate customers as a percentage of the sum
of the average number of ultimate customers of all participating
companies.
5. KWH Sales -- a basis of allocation which allocates costs among the
participating companies in the ratio of each company's kilowatt-hour
sales to ultimate customers of all participating companies.
6. Peak Load/Average Customers/KWH Sales -- a basis of allocation which
gives equal weighing to peak load, average number of ultimate customers
and kilowatt-hour sales to ultimate customers and allocates costs among
the participating companies in the ratio of each company's amounts to the
sum of each item of all participating companies.
7. Average Peak Load for Past Three Years -- a basis of allocation which
allocates costs among the participating companies in the ratio of the sum
of each company's peak load for the past three years as a percentage of
the sum of the last three years' peak loads for all of the participating
companies.
8. Computer Resource Units -- a basis of allocation which allocates costs
among the participating companies in the ratio of each company's computer
usage to the sum of the computer usage of all the participating
companies.
9. Number of Employees -- a basis of allocation which allocates costs among
the participating companies in the ratio of each company's number of
employees to the total number of all employees of all participating
companies.
10. Total Gross Utility Plant -- a basis of allocation which allocates costs
among the participating companies in the ratio of each company's gross
utility plant as a percentage of the total gross utility plant of all
participating companies.
11. Total Common Stock Equity with 20% Allocated to CSW -- a basis of
allocation with 20% of costs allocated to CSW and the remaining 80%
allocated among the participating companies in the ratio of each
company's common stock equity as a percentage of the total common stock
equity of all participating companies.
12. Number of Leases -- a basis of allocation which allocates costs among the
participating companies in the ratio of each company's participation in
leases held in mining projects.
13. Total CSWS Billing less Indirect Costs and Interest -- a basis of
allocation which allocates costs among the participating companies based
on the percentage of company direct work orders billed to each CSW System
company.
<PAGE>
Page 31
ANNUAL REPORT OF Central and South West Services, Inc.
ANNUAL STATEMENT OF COMPENSATION FOR USE OF CAPITAL BILLED
The following annual statement was supplied to each associate company in
support of the amount of compensation for use of capital billed during 1996:
In accordance with Instruction 01-12 of the Securities and Exchange
Commission's Uniform System of Accounts for Mutual Service Companies and
Subsidiary Service Companies, Central and South West Services, Inc. submits the
following information on the billing of interest on borrowed funds to associated
companies for the year 1996:
A. Amount of interest billed to associate companies is contained on
page 16, Analysis of Billing.
B. The basis for billing of interest to the associated companies is
based on the ratio of the total expenses charged to each
associated company, exclusive of interest, to the total Company
expenses exclusive of interest expense.
<PAGE>
Page 32
ANNUAL REPORT OF Central and South West Services, Inc.
SIGNATURE CLAUSE
Pursuant to the requirements of the Public Utility Holding Company Act of
1935 and the rules and regulations of the Securities and Exchange Commission
issued thereunder, the undersigned company has duly caused this report to be
signed on its behalf by the undersigned officer thereunto duly authorized.
Central and South West Services, Inc.
-------------------------------------
(Name of Reporting Company)
By: /s/ R. Russell Davis
-------------------------------------
(Signature of Signing Officer)
R. Russell Davis Controller
-------------------------------------
(Printed Name and Title of Signing Officer)
Date: April 29, 1997
--------------
<TABLE> <S> <C>
<ARTICLE> OPUR2
<CIK> 0000025944
<NAME> CENTRAL AND SOUTH WEST
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<BOOK-VALUE> PER-BOOK
<NET-SERVICE-COMPANY-PROPERTY> 91,521
<TOTAL-INVESTMENTS> 4,148
<TOTAL-CURRENT-ASSETS> 57,020
<TOTAL-DEFERRED-DEBITS> 1,004
<OTHER-ASSETS-AND-DEBITS> 0
<TOTAL-ASSETS-AND-DEBITS> 153,693
<TOTAL-PROPRIETARY-CAPITAL> 100
<TOTAL-LONG-TERM-DEBT> 60,000
<NOTES-PAYABLE> 0
<NOTES-PAYABLE-ASSOCIATE-COMP> 40,713
<OTHER-CURR-AND-ACCRUED-LIAB> 28,948
<TOTAL-DEFERRED-CREDITS> 9,387
<DEFERRED-INCOME-TAX> 14,545
<TOT-LIABIL-AND-PROPRIET-CAP> 153,693
<SERVICES-ASSOCIATE-COMPANIES> 251,177
<SERVICES-NON-ASSOCIATE-COMP> 1,025
<MISC-INCOME-OR-LOSS> 3,549
<TOTAL-INCOME> 255,751
<SALARIES-AND-WAGES> 86,976
<EMPLOYEE-PENSION-AND-BENEFIT> 9,935
<OTHER-EXPENSES> 158,840
<TOTAL-EXPENSES> 255,751
<NET-INCOME> 0
<TOTAL-EXPENSES-DIRECT-COST> 181,020
<TOTAL-EXPENSES-INDIRECT-COST> 74,731
<TOT-EXP-DIRECT-AND-INDIRECT> 255,751
<PERSONNEL-END-OF-YEAR> 1,382
</TABLE>
