<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 June 30, 1994, statements of income for the three and
twelve month periods ended June 30, 1994, and Notes to the
Financial Statements as Exhibit 1 attached hereto.
2. Credit hereby certifies that on June 30, 1994, it had
$775,601,000 face amount of commercial paper outstanding at a
weighted average cost of 4.40%. This amount consisted of
$387,800,000 issued and sold to Lehman Commercial Paper, Inc., as
dealer, and $387,801,000 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
June 30, 1994.
3. Credit hereby files as Exhibit 3 attached hereto the
earnings coverage for Credit's indebtedness for the period from
April 1, 1994 through June 30, 1994 and Credit's capital
structure at June 30, 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 allowed returns on common equity for the
period from April 1, 1994 through June 30, 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 $324,691,000
outstanding for the six months ended June 30, 1994 and
$358,501,000 outstanding during the twelve months ended June 30,
1994. During the quarter ended June 30, 1994 the daily maximum
borrowing relating to the purchase of accounts receivable from
HLP was $426,452,000.
6. Credit hereby certifies it was in accordance with the
50% restriction on non-affiliated receivables during the quarter
ended June 30, 1994, as shown in Exhibit 4 attached hereto.
7. Credit hereby certifies that during the period April 1,
1994 through June 30, 1994, $1,000,000 of HLP receivables were
acquired by Credit and sold to The Bank of New York in order to
maintain compliance with the 50% restriction. The figures set
forth in Exhibit 4 attached hereto include the effect of such
sales. Credit hereby files as Exhibit 8 attached hereto the
Receivables Purchase Agreement, dated as of June 30, 1994,
between CSW Credit Inc. and The Bank of New York.
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: August 11, 1994
CSW CREDIT, INC.
BY: WENDY G. HARGUS
Wendy G. Hargus
Controller
<PAGE> 3
EXHIBIT INDEX
-------------
Exhibit Transmission
Number Exhibit Method
- ------- ------- ------------
1 Balance sheet as of June 30, 1994, Electronic
statements of income for the
three and twelve month periods
ended June 30, 1994, and
notes to the financial statements.
2 Commercial paper outstanding at Electronic
June 30, 1994.
3 Earnings coverage for the period Electronic
from April 1, 1994 through
June 30, 1994 and capital
structure at June 30, 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 April 1, 1994 through
June 30, 1994.
5 Discount calculation for affiliated Electronic
companies for the three months
ended June 30, 1994.
6 Analysis of the allowed returns on Electronic
common equity for affiliated
companies at June 30, 1994.
7 Factoring expense savings for Electronic
affiliated companies for the three
months ended June 30, 1994.
8 Receivables Purchase Agreement, SE
dated as of June 30, 1994,
between CSW Credit Inc. and
The Bank of New York
(Confidential Treatment).
<PAGE> 4
EXHIBIT 1
---------
CSW CREDIT, INC.
BALANCE SHEET
June 30, 1994
(thousands)
UNAUDITED
ASSETS
Accounts receivable-affiliated $416,574
Accounts receivable-non-affiliated 453,311
Less: Allowance for doubtful accounts 9,576
--------
860,309
Cash and temporary cash investments 115
Other assets 10,850
--------
$871,274
========
LIABILITIES AND STOCKHOLDER'S EQUITY
Short-term debt $775,601
Deferred credit 17,477
Other liabilities 13,520
Unearned revenues 2,554
Stockholder's equity
Common stock, no par; authorized
1,000 shares; issued and
outstanding 228 shares 1
Paid-in capital 62,121
--------
$871,274
========
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 JUNE 30, 1994
(thousands)
UNAUDITED
Three Months Ended Twelve Months Ended
-------------------------- --------------------------
1994 1993 1994 1993
------------ ------------- ------------ -------------
REVENUES $13,358 $12,161 $53,294 $39,639
------- ------- ------- -------
OPERATING EXPENSES
Interest 6,500 4,971 24,313 15,729
Provision for
bad debts 2,370 2,556 9,561 13,488
Credit line fees 435 382 1,794 1,351
General and
administrative 1,597 2,656 7,135 3,274
------ ------- ------- -------
10,902 10,565 42,803 33,842
------ ------- ------- -------
INCOME BEFORE TAXES 2,456 1,596 10,491 5,797
------ ------- ------- -------
FEDERAL INCOME TAXES
Current 1,726 1,085 5,457 4,717
Deferred (866) (542) (2,412) (2,766)
------ ------- ------- -------
860 543 3,045 1,951
------ ------- ------- -------
NET INCOME $ 1,596 $ 1,053 $ 7,446 $ 3,846
====== ======= ======= =======
The accompanying notes to financial statements
are an integral part of these statements.
<PAGE> 6
CSW CREDIT, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 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 29% for the twelve
months ended June 30, 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 June 30, 1994, was 3.5%. At
June 30, 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.
June 30, 1994
(thousands)
MATURITY ISSUE PAR DISCOUNT
DATE DATE AMOUNT RATE
-------- -------- -------- --------
07/05/94 05/19/94 $ 22,400 4.4200%
07/06/94 05/23/94 20,000 4.4000
08/23/94 05/25/94 28,900 4.5300
07/12/94 06/06/94 43,600 4.3500
07/15/94 06/07/94 17,400 4.3400
07/07/94 06/08/94 25,000 4.3200
07/19/94 06/08/94 35,000 4.3200
07/14/94 06/10/94 15,000 4.2700
07/21/94 06/13/94 9,000 4.3300
07/20/94 06/14/94 10,000 4.3200
07/14/94 06/14/94 6,700 4.3200
08/09/94 06/15/94 23,000 4.4200
08/10/94 06/15/94 20,000 4.4200
07/21/94 06/16/94 7,900 4.3300
08/04/94 06/17/94 17,000 4.4200
08/09/94 06/22/94 25,000 4.4500
07/22/94 06/23/94 4,600 4.3500
07/25/94 06/24/94 16,800 4.3800
07/07/94 06/29/94 36,100 4.4000
07/29/94 06/29/94 900 4.4800
07/01/94 06/30/94 3,500 4.5500
--------
$387,800
========
<PAGE> 9
CSW CREDIT, INC.
COMMERCIAL PAPER OUTSTANDING
GOLDMAN SACHS & CO.
JUNE 30, 1994
(thousands)
MATURITY ISSUE PAR DISCOUNT
DATE DATE AMOUNT RATE
-------- -------- -------- --------
07/05/94 05/18/94 $ 4,800 4.4000%
07/15/94 05/18/94 2,000 4.4000
07/08/94 05/18/94 37,700 4.4300
07/11/94 05/23/94 14,400 4.4000
07/01/94 05/31/94 15,000 4.3800
07/01/94 05/31/94 4,000 4.3800
07/01/94 05/31/94 11,800 4.3800
07/06/94 06/03/94 13,100 4.3500
07/06/94 06/03/94 6,400 4.3500
07/13/94 06/07/94 17,400 4.3200
07/26/94 06/08/94 5,000 4.3500
07/26/94 06/08/94 15,000 4.3500
08/05/94 06/09/94 33,000 4.3800
07/27/94 06/10/94 10,800 4.3700
07/27/94 06/10/94 18,600 4.3700
07/27/94 06/10/94 1,000 4.3700
07/27/94 06/10/94 4,601 4.3700
08/01/94 06/13/94 30,000 4.3800
07/28/94 06/15/94 25,000 4.3400
08/02/94 06/15/94 17,500 4.3700
07/22/94 06/17/94 6,200 4.3200
07/22/94 06/17/94 5,000 4.3200
08/03/94 06/20/94 5,400 4.3500
08/09/94 06/22/94 25,000 4.4250
07/20/94 06/22/94 6,500 4.3700
07/11/94 06/23/94 15,000 4.3250
07/22/94 06/23/94 15,700 4.3500
07/15/94 06/29/94 8,800 4.4250
07/20/94 06/30/94 2,200 4.4500
07/20/94 06/30/94 10,900 4.4700
--------
$387,801
========
TOTAL COMMERCIAL PAPER OUTSTANDING:
Lehman Commercial Paper, Inc. $387,800
Goldman Sachs & Co. 387,801
--------
$775,601
========
<PAGE> 10
EXHIBIT 3
---------
CSW CREDIT, INC.
EARNINGS COVERAGE
(thousands, except ratios)
1994
--------------------------------------
APRIL MAY JUNE
------- -------- --------
Net Income $ 481 $ 581 $ 534
Income Taxes 259 313 287
Interest Expense 1,781 2,134 2,586
-------- -------- --------
$ 2,521 $ 3,028 $ 3,407
======== ======== ========
Interest Expense $ 1,781 $ 2,134 $ 2,586
-------- -------- --------
Ratio of Earnings
to Fixed Charges 1.42 1.42 1.32
-------- ------- --------
CAPITAL STRUCTURE
June 30, 1994
(thousands)
Short-Term Debt $775,601 93%
Common Equity 62,122 7%
-------- ----
Total $837,723 100%
======== ====
<PAGE> 11
EXHIBIT 4
---------
CSW CREDIT, INC.
AVERAGE MONTH END ACCOUNTS RECEIVABLE
(thousands)
1994
---------------------------------------------
Twelve Months Twelve Months Twelve Months
Ended Ended Ended
April 30 May 31 June 30
-------------- ------------- -------------
Non-Affiliated-Other $ 22,809 $ 22,677 $ 22,466
Non Affiliated-HL&P (1) 353,916 355,791 358,501
-------- ------- -------
Total Non-Affiliated $ 376,725 $ 378,468 $ 380,967
Affiliated 380,626 379,763 381,344
-------- -------- --------
Excess Restriction $ (3,901) $ (1,295) $ (377)
BAD DEBT WRITE-OFFS
(thousands)
1994
-----------------------------------------
April May June
--------- --------- ---------
Non-Affiliated $ 194 $ 339 $ 279
<PAGE> 12
EXHIBIT 5
---------
CENTRAL POWER AND LIGHT COMPANY
DISCOUNT CALCULATION
THREE MONTHS ENDED JUNE 30, 1994
Retail Wholesale
-------- ---------
Weighted Cost of Capital (Annualized) 0.048763 0.048747
Average Days Outstanding 32.57 35.40
-------- --------
Weighted Cost of Capital (Average 0.004355 0.004715
Days Outstanding)
Collection Experience Factor 0.001241 0.000000
Agency Fee Rate 0.020000 0.020000
-------- --------
Total Discount Factor 0.025596 0.024715
======== ========
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 JUNE 30, 1994
Retail Wholesale
-------- ---------
Weighted Cost of Capital (Annualized) 0.047150 0.048747
Average Days Outstanding 41.65 122.57
-------- --------
Weighted Cost of Capital (Average 0.005368 0.016449
Days Outstanding)
Collection Experience Factor 0.002247 0.000000
Agency Fee Rate 0.020000 0.020000
-------- --------
Total Discount Factor 0.027615 0.036449
======== ========
ASSUMPTIONS
- -----------
INTEREST RATE 0.0403
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 JUNE 30, 1994
Arkansas Louisiana Texas Wholesale
-------- --------- ------- ---------
Weighted Cost of Capital (Annualized) 0.048763 0.049973 0.050940 0.048747
Average Days Outstanding 30.20 32.29 26.67 104.66
-------- -------- -------- --------
Weighted Cost of Capital (Average 0.004043 0.004429 0.003734 0.013639
Days Outstanding)
Collection Experience Factor 0.001015 0.000997 0.000766 0.000000
Agency Fee Rate 0.020000 0.020000 0.020000 0.020000
-------- -------- -------- --------
Total Discount Factor 0.025058 0.025426 0.024499 0.033639
======== ======== ======== ========
ASSUMPTIONS
- -----------
INTEREST RATE 0.0403
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 JUNE 30, 1994
Retail Wholesale
-------- ---------
Weighted Cost of Capital (Annualized) 0.047956 0.048747
Average Days Outstanding 36.43 34.58
-------- --------
Weighted Cost of Capital (Average 0.004781 0.004622
Days Outstanding)
Collection Experience Factor 0.001540 0.000000
Agency Fee Rate 0.020000 0.020000
-------- --------
Total Discount Factor 0.026320 0.024622
======== ========
ASSUMPTIONS
- -----------
INTEREST RATE 4.0294
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 JUNE 30, 1994
Weighted Cost of Capital (Annualized) 0.044813
Daily Rate 0.000123
Collection Experience Factor 0.000312
Agency Fee Rate 0.020000
--------
Total Discount Factor (A)
========
ASSUMPTIONS
- -----------
INTEREST RATE 0.0403
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
JUNE 30, 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 JUNE 30, 1994
(thousands)
20% Equity 5% Equity Savings
---------- --------- -------
CPL $ 2,116 $ 1,395 $ 721
PSO 1,249 869 380
SWEPCO 1,309 829 480
WTU 566 382 184
TRANSOK 1,262 829 433
-------- -------- -------
TOTAL $ 6,502 $ 4,304 $ 2,198
======== ======== =======
