<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________________________________
:
In the Matter of :
:
CSW CREDIT, INC. : CERTIFICATE
:
CENTRAL AND SOUTH WEST CORPORATION : OF
:
File No. 70-7218 : NOTIFICATION
:
(Public Utility Holding Company Act of 1935) :
__________________________________________________:
1. CSW Credit, Inc. (Credit) hereby files a balance sheet as of March
31, 1994, statement of income for the three and twelve month periods ended March
31, 1994, and notes to the financial statements as Exhibit 1 attached hereto.
2. Credit hereby certifies that on March 31, 1994, it had $579,800,000
face amount of commercial paper outstanding at a weighted average cost of 3.62%.
This amount consisted of $295,500,000 issued and sold to Lehman Commercial
Paper, Inc., as dealer, and $284,300,000 issued and sold to Goldman Sachs & Co.,
as dealer, as shown in Exhibit 2 attached hereto. Credit hereby further
certifies that it had no other material borrowings outstanding on March 31,
1994.
3. Credit hereby files as Exhibit 3 attached hereto the earnings coverage
for Credit's indebtedness for the period from January 1, 1994 through March 31,
1994 and Credit's capital structure at March 31, 1994. Credit hereby files as
Exhibit 4 attached hereto the twelve month average as of the end of each month
of outstanding accounts receivable and bad debt write-offs related to non-
affiliated companies during said period.
4. With respect to affiliated companies, Credit hereby certifies that the
wholesale allowed returns on common equity for the period from January 1, 1994
through March 31, 1994 were unchanged in all regulatory jurisdictions from the
previous certificate of notification. Credit also hereby files the discount
calculation for affiliated companies, an analysis of the allowed returns on
common equity and the factoring expense savings for affiliated companies as
shown in Exhibits 5, 6 and 7, respectively, attached hereto.
<PAGE> 2
5. With respect to Houston Lighting & Power Company (HLP), Credit had
month ending average receivables of $295,000,000 outstanding for the three
months ended March 31, 1994 and $375,000,000 outstanding during the twelve
months ended March 31, 1994. During the quarter ended March 31, 1994 the daily
maximum borrowing relating to the purchase of accounts receivable from HLP was
$304,000,000.
6. Credit hereby certifies it was in accordance with the 50% restriction
on non-affiliated receivables during the quarter ended March 31, 1994, as shown
in Exhibit 4 attached hereto.
7. Credit hereby certifies there were not any receivables acquired during
the quarter ended March 31, 1994 that were not retained by Credit.
8. Said transactions have been carried out in accordance with the terms
and conditions of, and for the purpose represented in, the Form U-1 Application-
Declaration of Central and South West Corporation (CSW) and Credit, in File No.
70-7218, and in accordance with the terms and conditions of the Commission's
orders dated July 31, 1986, February 8, 1988, December 27, 1989, August 30,
1990, December 21, 1990, December 24, 1991, December 9, 1992 and December 21,
1993 permitting said Application-Declaration to become effective, and (b) the
Form U-1 Application-Declaration of CSW, Central Power and Light Company and
Credit, in File No. 70-8037, and in accordance with the terms and conditions of
the Commission's orders dated December 8, 1992 and December 29, 1992, permitting
said Application-Declaration to become effective.
DATED: May 13, 1994
CSW CREDIT, INC.
BY: CSW CREDIT, INC.
Robert M. Spratling
Controller
<PAGE> 3
EXHIBIT INDEX
-------------
Exhibit Transmission
Number Exhibit Method
- ------- ------- ------------
1 Balance sheet as of March 31, 1994, Electronic
statements of income for the
three and twelve month periods
ended March 31, 1994, and
notes to the financial statements.
2 Commercial paper outstanding at Electronic
March 31, 1994.
3 Earnings coverage for the period Electronic
from January 1, 1994 through
March 31, 1994 and capital
structure at March 31, 1994.
4 Twelve month average as of the Electronic
end of each month of outstanding
accounts receivable of affiliated
and non-affiliated companies and bad
debt write-offs related to non-
affiliated companies during the
period January 1, 1994 through
March 31, 1994.
5 Discount calculation for affiliated Electronic
companies for the three months
ended March 31, 1994.
6 Analysis of the allowed returns on Electronic
common equity for affiliated
companies at March 31, 1994.
7 Factoring expense savings for Electronic
affiliated companies for the three
months ended March 31, 1994.
<PAGE> 4
EXHIBIT 1
---------
CSW CREDIT, INC.
BALANCE SHEET
MARCH 31, 1994
(thousands)
UNAUDITED
ASSETS
Accounts receivable-affiliated $330,566
Accounts receivable-non-affiliated 289,437
Less: Allowance for doubtful accounts 8,700
--------
611,303
Cash and temporary cash investments 27,050
Other assets 8,431
--------
$646,784
========
LIABILITIES AND STOCKHOLDER'S EQUITY
Short-term debt $579,800
Deferred credit 12,515
Other liabilities 10,545
Unearned revenues 1,338
Stockholder's equity
Common stock, no par; authorized
1,000 shares; issued and
outstanding 207 shares 1
Paid-in capital 42,585
--------
$646,784
========
The accompanying notes to financial statements
are an integral part of these statements.
<PAGE> 5
CSW CREDIT, INC.
STATEMENTS OF INCOME
FOR THE PERIOD ENDED MARCH 31, 1994
(thousands)
UNAUDITED
Three Months Ended Twelve Months Ended
-------------------------- --------------------------
1994 1993 1994 1993
------------ ------------- ------------ -------------
REVENUES $11,294 $15,684 $52,097 $32,518
------ ------- ------- -------
OPERATING EXPENSES
Interest 5,233 4,659 22,783 13,620
Provision for
bad debts 1,930 7,388 9,748 12,366
Credit line fees 463 503 1,742 1,195
General and
administrative 1,385 332 8,194 787
------ ------- ------- -------
9,011 12,882 42,467 27,968
------ ------- ------- -------
INCOME BEFORE TAXES 2,283 2,802 9,630 4,550
------ ------- ------- -------
FEDERAL INCOME TAXES
Current 691 3,143 4,815 3,858
Deferred 4 (2,383) (2,087) (2,330)
------ ------- ------- -------
695 760 2,728 1,528
------ ------- ------- -------
NET INCOME $ 1,588 $ 2,042 $ 6,902 $ 3,022
====== ======= ======= =======
The accompanying notes to financial statements
are an integral part of these statements.
<PAGE> 6
CSW CREDIT, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1994
UNAUDITED
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CSW Credit, Inc. (Company) is a wholly owned subsidiary of Central and
South West Corporation (CSW), and purchases, without recourse, the accounts
receivable of CSW's operating subsidiary companies and non-affiliated companies.
The more significant accounting policies are summarized below:
Revenue Recognition-
Revenues are generally recorded for the difference between the face amount
of the receivables purchased and the purchase price.
Allowance for Doubtful Accounts-
The Company maintains an allowance for doubtful accounts at a level which
reflects the amount of receivables not reasonably expected to be collected. The
allowance is determined principally on the basis of collection experience.
Receivables are charged off when they are determined to be uncollectable.
Federal Income Taxes-
The Company, together with affiliated companies, files a consolidated
Federal income tax return. Federal income tax expense resulted in an effective
rate of 28.3% for the twelve months ended March 31, 1994. The lower effective
tax rate is primarily due to consolidated tax savings allocated to the Company.
Deferred income taxes resulted from the differences between tax deductions
for bad debts and those expensed for book purposes. The Internal Revenue Code
provides for tax deductions for bad debts when they are charged off.
Related Party Transactions-
The Company is managed by Central and South West Services, Inc. (CSWS), a
wholly owned subsidiary of CSW. CSWS provides administrative services to the
Company and is reimbursed for the cost of such services.
(2) REGULATION
The Company is subject to regulation by the Securities and Exchange
Commission (SEC) under the Public Utility Holding Company Act of 1935, as
amended. The SEC has approved the Company's method of calculating the discount
associated with the purchase of CSW subsidiary companies' accounts receivable.
<PAGE> 7
(3) SHORT-TERM FINANCING
The Company issues commercial paper that is secured by the assignment of
its receivables. The weighted average interest rate for the twelve months ended
March 31, 1994, was 3.3%. At March 31, 1994, the Company had a revolving credit
agreement aggregating $960 million to back up its commerical paper program.
(4) HOUSTON LIGHTING & POWER COMPANY
The Company is currently subject to a SEC restriction (50% Restriction)
such that the average amount of non-affiliated receivables is less than the
average amount of affiliated receivables outstanding as of the end of each
calendar month during the preceding 12 month period.
The Company has complied with the 50% Restriction since the purchase of HLP
receivables and has received SEC authority to sell a sufficient amount of HLP
receivables acquired by the Company from HLP to unrelated third parties so that
the Company remains in compliance with the 50% Restriction.
<PAGE> 8
EXHIBIT 2
---------
CSW CREDIT, INC.
COMMERCIAL PAPER OUTSTANDING
LEHMAN COMMERCIAL PAPER, INC.
MARCH 31, 1994
(thousands)
MATURITY ISSUE PAR DISCOUNT
DATE DATE AMOUNT RATE
-------- -------- -------- --------
04/04/94 02/17/94 $ 19,000 3.4800%
04/05/94 02/14/94 12,000 3.5300
04/06/94 03/09/94 10,000 3.6000
04/08/94 02/18/94 20,000 3.5000
04/11/94 02/25/94 15,000 3.5700
04/13/94 02/18/94 10,000 3.5000
04/15/94 02/25/94 20,000 3.6000
04/18/94 02/24/94 31,000 3.6000
04/18/94 03/14/94 35,000 3.6000
04/19/94 02/28/94 13,500 3.5800
04/19/94 03/11/94 5,000 3.6300
04/20/94 03/21/94 15,000 3.6750
04/21/94 03/21/94 15,000 3.6750
04/26/94 03/21/94 50,000 3.6750
05/10/94 03/10/94 25,000 3.7500
--------
$295,500
========
<PAGE> 9
CSW CREDIT, INC.
COMMERCIAL PAPER OUTSTANDING
GOLDMAN SACHS & CO.
MARCH 31, 1994
(thousands)
MATURITY ISSUE PAR DISCOUNT
DATE DATE AMOUNT RATE
-------- -------- -------- --------
04/04/94 03/03/94 $ 4,000 3.6200%
04/04/94 03/03/94 500 3.6200
04/04/94 03/03/94 2,500 3.6300
04/04/94 03/03/94 6,000 3.6300
04/05/94 02/14/94 12,500 3.4800
04/05/94 02/17/94 10,000 3.4800
04/06/94 03/09/94 14,000 3.6300
04/07/94 02/15/94 14,000 3.5200
04/08/94 02/17/94 20,000 3.4700
04/11/94 02/18/94 10,000 3.4800
04/12/94 02/18/94 23,000 3.4800
04/13/94 02/22/94 27,000 3.4700
04/18/94 02/25/94 10,000 3.5700
04/20/94 03/17/94 16,200 3.6000
04/20/94 03/17/94 11,300 3.6000
04/20/94 03/17/94 4,500 3.6000
04/21/94 03/18/94 14,500 3.6200
04/25/94 03/21/94 22,000 3.6500
05/02/94 03/10/94 9,200 3.7200
05/09/94 03/16/94 16,600 3.7300
05/11/94 03/16/94 1,000 3.7200
05/12/94 03/14/94 12,000 3.7500
05/12/94 03/15/94 4,460 3.7500
05/13/94 03/15/94 7,440 3.7500
05/16/94 03/24/94 11,600 3.7500
--------
$284,300
========
TOTAL COMMERCIAL PAPER OUTSTANDING:
Lehman Commercial Paper, Inc. $295,500
Goldman Sachs & Co. 284,300
--------
$579,800
========
<PAGE> 10
EXHIBIT 3
---------
CSW CREDIT, INC.
EARNINGS COVERAGE
(thousands, except ratios)
1994
--------------------------------------
JANUARY FEBRUARY MARCH
------- -------- --------
Net Income $ 730 $ 389 $ 469
Income Taxes 233 210 252
Interest Expense 1,816 1,613 1,794
-------- -------- --------
$ 2,779 $ 2,212 $ 2,515
======== ======== ========
Interest Expense $ 1,816 $ 1,613 $ 1,794
Ratio of Earnings
to Fixed Charges 1.53 1.37 1.40
-------- ------- --------
CAPITAL STRUCTURE
MARCH 31, 1994
(thousands)
Short-term Debt $579,800 93%
Common Equity 42,586 7%
Total $622,386 100%
<PAGE> 11
EXHIBIT 4
---------
CSW CREDIT, INC.
AVERAGE MONTH END ACCOUNTS RECEIVABLE
(thousands)
1994
---------------------------------------------
Twelve Months Twelve Months Twelve Months
Ended Ended Ended
January 31 February 28 March 31
-------------- ------------- -------------
Non-Affiliated-Other $ 23,558 $ 23,104 $ 22,932
Non Affiliated-HL&P (1) 350,288 351,872 353,334
Total Non-Affiliated $ 373,846 $ 374,976 $ 376,266
Affiliated 378,567 378,992 380,643
Excess Restriction $ 4,721 $ 4,016 $ 4,377
BAD DEBT WRITE-OFFS
(thousands)
1993
----------------------------------------
January February March
------- ------- ---------
Non-Affiliated $ 1,475 $ 924 $ 717
<PAGE> 12
EXHIBIT 5
---------
CENTRAL POWER AND LIGHT COMPANY
DISCOUNT CALCULATION
THREE MONTHS ENDED MARCH 31, 1994
Retail Wholesale
-------- ---------
Weighted Cost of Capital (Annualized) 0.042871 0.042855
Average Days Outstanding 38.44 47.83
-------- --------
Weighted Cost of Capital (Average 0.004513 0.005655
Days Outstanding)
Collection Experience Factor 0.001368 0.000000
Agency Fee Rate 0.020000 0.020000
-------- --------
Total Discount Factor 0.025881 0.025655
======== ========
ASSUMPTIONS
- -----------
INTEREST RATE 0.0341
RETAIL ROCE 0.1300
WHOLESALE ROCE 0.1298
TAX RATE 0.3800
DEBT RATIO 0.9500
EQUITY RATIO 0.0500
<PAGE> 13
PUBLIC SERVICE COMPANY OF OKLAHOMA
DISCOUNT CALCULATION
THREE MONTHS ENDED MARCH 31, 1994
Retail Wholesale
-------- ---------
Weighted Cost of Capital (Annualized) 0.041258 0.042855
Average Days Outstanding 45.00 44.89
-------- --------
Weighted Cost of Capital (Average 0.005080 0.005284
Days Outstanding)
Collection Experience Factor 0.002215 0.000000
Agency Fee Rate 0.020000 0.020000
-------- --------
Total Discount Factor 0.027295 0.025284
======== ========
ASSUMPTIONS
- -----------
INTEREST RATE 0.0341
RETAIL ROCE 0.1100
WHOLESALE ROCE 0.1298
TAX RATE 0.3800
DEBT RATIO 0.9500
EQUITY RATIO 0.0500
<PAGE> 14
SOUTHWESTERN ELECTRIC POWER COMPANY
DISCOUNT CALCULATION
THREE MONTHS ENDED MARCH 31, 1994
Arkansas Louisiana Texas Wholesale
-------- --------- ------- ---------
Weighted Cost of Capital (Annualized) 0.042871 0.044081 0.045048 0.042855
Average Days Outstanding 32.60 39.18 29.37 61.76
-------- -------- -------- --------
Weighted Cost of Capital (Average 0.003812 0.004707 0.003609 0.007178
Days Outstanding)
Collection Experience Factor 0.000816 0.000908 0.000733 0.000000
Agency Fee Rate 0.020000 0.020000 0.020000 0.020000
-------- -------- -------- --------
Total Discount Factor 0.024628 0.025615 0.024342 0.027178
======== ======== ======== ========
ASSUMPTIONS
- -----------
INTEREST RATE 0.0341
ARKANSAS ROCE 0.1300
LOUISIANA ROCE 0.1450
TEXAS ROCE 0.1570
WHOLESALE ROCE 0.1298
TAX RATE 0.3800
DEBT RATIO 0.9500
EQUITY RATIO 0.0500
<PAGE> 15
WEST TEXAS UTILITIES COMPANY
DISCOUNT CALCULATION
THREE MONTHS ENDED MARCH 31, 1994
Retail Wholesale
-------- ---------
Weighted Cost of Capital (Annualized) 0.042064 0.042855
Average Days Outstanding 40.81 39.72
-------- --------
Weighted Cost of Capital (Average 0.004699 0.004662
Days Outstanding)
Collection Experience Factor 0.001564 0.000000
Agency Fee Rate 0.020000 0.020000
-------- --------
Total Discount Factor 0.026263 0.024662
======== ========
ASSUMPTIONS
- -----------
INTEREST RATE 0.0341
RETAIL ROCE 0.1200
WHOLESALE ROCE 0.1298
TAX RATE 0.3800
DEBT RATIO 0.9500
EQUITY RATIO 0.0500
<PAGE> 16
TRANSOK, INC.
DISCOUNT CALCULATION
THREE MONTHS ENDED MARCH 31, 1994
Weighted Cost of Capital (Annualized) 0.042855
Daily Rate 0.000117
Collection Experience Factor 0.000428
Agency Fee Rate 0.020000
--------
Total Discount Factor (A)
========
ASSUMPTIONS
- -----------
INTEREST RATE 0.0341
RETURN ALLOWED 0.1298
TAX RATE 0.3800
DEBT RATIO 0.9500
EQUITY RATIO 0.0500
(A) Total discount factor varies for each customer and is
calculated using average days outstanding for that customer.
<PAGE> 17
EXHIBIT 6
---------
CSW CREDIT, INC.
ALLOWED RETURNS ON COMMON EQUITY
MARCH 31, 1994
ALLOWED
RETURN (1)
----------
CPL
- RETAIL 13.00%
- WHOLESALE 12.98%
PSO
- RETAIL 11.00%
- WHOLESALE 12.98%
SWEPCO
- ARKANSAS 13.00%
- LOUISIANA 14.50%
- TEXAS 15.70%
- WHOLESALE 12.98%
WTU
- RETAIL 12.00%
- WHOLESALE 12.98%
TRANSOK 12.98%
(1) Monthly adjustments are made to compensate for fluctuations in interest
rates and average days outstanding to ensure that actual returns on common
equity do not exceed those allowed on common equity.
<PAGE> 18
EXHIBIT 7
---------
CSW CREDIT,INC.
AFFILIATED COMPANIES
FACTORING EXPENSE SAVINGS
THREE MONTHS ENDED MARCH 31, 1994
(thousands)
20% Equity 5% Equity Savings
---------- --------- -------
CPL $ 1,710 $ 1,060 $ 650
PSO 1,223 802 421
SWEPCO 1,036 617 419
WTU 500 317 183
TRANSOK 1,373 851 522
-------- -------- -------
TOTAL $ 5,842 $ 3,647 $ 2,195
======== ======== =======
