<PAGE>
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 December 31, 1993, statement of income for the three and
twelve month periods ended December 31, 1993, and notes to the
financial statements as Exhibit 1 attached hereto.
2. Credit hereby certifies that on December 31, 1993, it
had $641,100,000 face amount of commercial paper outstanding at a
weighted average cost of 3.38%. This amount consisted of
$320,300,000 issued and sold to Lehman Commercial Paper, Inc., as
dealer, and $320,800,000 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 December 31, 1993.
3. Credit hereby files as Exhibit 3 attached hereto the
earnings coverage for Credit's indebtedness for the period from
October 1, 1993 through December 31, 1993 and Credit's capital
structure at December 31, 1993. 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 October 1, 1993 through December 31, 1993 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>
5. With respect to Houston Lighting & Power Company (HLP),
Credit had month ending average receivables of $350,504,000
outstanding for the twelve months ended December 31, 1993.
During the quarter ended December 31, 1993 the daily maximum
borrowing relating to the purchase of accounts receivable from
HLP was $389,500,000.
6. Credit hereby certifies it was in accordance with the
50% restriction on non-affiliated receivables during the quarter
ended December 31, 1993, as shown in Exhibit 4 attached hereto.
7. Credit hereby certifies there were not any receivables
acquired during the quarter ended December 31, 1993 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, and
December 9, 1992 permitting said Application-Declaration to
become effective, and 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, December 29, 1992,
and December 21, 1993, permitting said Application-Declaration to
become effective.
DATED: February 14, 1994
CSW CREDIT, INC.
BY: CSW CREDIT, INC.
ROBERT M. SPRATLING
Robert M. Spratling
Controller
<PAGE>
EXHIBIT INDEX
-------------
Exhibit Transmission
Number Exhibit Method
- ------- ------- ------------
1 Balance sheet as of December 31, Electronic
1993, statements of income for the
three and twelve month periods
ended December 31, 1993, and
notes to the financial statements.
2 Commercial paper outstanding at Electronic
December 31, 1993.
3 Earnings coverage for the period Electronic
from October 1, 1993 through
December 31, 1993 and capital
structure at December 31, 1993.
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 October 1, 1993 through
December 31, 1993.
5 Discount calculation for affiliated Electronic
companies for the three months
ended December 31, 1993.
6 Analysis of the allowed returns on Electronic
common equity for affiliated
companies at December 31, 1993.
7 Factoring expense savings for Electronic
affiliated companies for the three
months ended December 31, 1993.
<PAGE>
EXHIBIT 1
---------
CSW CREDIT, INC.
BALANCE SHEET
DECEMBER 31, 1993
(thousands)
UNAUDITED
ASSETS
-------
Accounts receivable-affiliated $348,245
Accounts receivable-non-affiliated 339,495
Less: Allowance for doubtful accounts 9,887
--------
677,853
Cash and temporary cash investments 26,876
Other assets 9,699
--------
$714,428
========
LIABILITIES AND STOCKHOLDER'S EQUITY
------------------------------------
Short-term debt $641,100
Deferred credit 13,881
Accounts payable to CSW 5,783
Other liabilities 3,493
Unearned revenues 1,903
Stockholder's equity
Common stock, no par; authorized
1,000 shares; issued and
outstanding 214 shares 1
Paid-in capital 48,267
--------
$714,428
========
The accompanying notes to financial statements
are an integral part of these statements.
<PAGE>
CSW CREDIT, INC.
STATEMENTS OF INCOME
FOR THE PERIOD ENDED DECEMBER 31, 1993
(thousands)
UNAUDITED
Three Months Ended Twelve Months Ended
-------------------------- --------------------------
1993 1992 1993 1992
------------ ------------- ------------ -------------
REVENUES $12,592 $ 5,342 $56,488 $22,993
------ ------- ------- -------
OPERATING EXPENSES
Interest 5,704 2,775 22,210 12,106
Provision for
bad debts 2,016 1,533 15,206 7,127
Credit line fees 465 239 1,782 981
Business
Normalization 1,516 - 5,783 -
General and
administrative 419 147 1,359 557
------ ------- ------- -------
10,120 4,694 46,340 20,771
------ ------- ------- -------
INCOME BEFORE TAXES 2,472 648 10,148 2,222
------ ------- ------- -------
FEDERAL INCOME TAXES
Current 130 (109) 7,267 967
Deferred 190 502 (4,311) (39)
------ ------- ------- -------
320 393 2,956 928
------ ------- ------- -------
NET INCOME BEFORE
CUMULATIVE EFFECT
OF ACCOUNTING
CHANGE $ 2,152 $ 255 $ 7,192 $ 1,294
CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING
FOR SFAS 109 - - $ 164 -
NET INCOME $ 2,152 $ 255 $ 7,356 $ 1,294
====== ======= ======= =======
The accompanying notes to financial statements
are an integral part of these statements.
<PAGE>
CSW CREDIT, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1993
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 27.5% for the twelve
months ended December 31, 1993. The lower effective tax rate in
1993 is due primarily 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.
In 1992, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS) No. 109,
Accounting for Income Taxes effective January 1, 1993. The net
effect on the Company's earnings was a one time adjustment to
increase net income by $164 thousand for the cumulative effect of
adopting SFAS 109.
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.
<PAGE>
(2) REGULATION
The Company is subject to regulation by the 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.
(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 December 31, 1993, was 3.3%. At
December 1, 1993, the Company had a revolving credit agreement
aggregating $960 million.
(4) HOUSTON LIGHTING & POWER COMPANY (HLP)
The Company entered into an agreement with HLP to purchase
substantially all of HLP's utility receivables. The initial
purchase totaled $299 million, net of allowance for doubtful
accounts, and occurred January 12, 1993.
The Company is currently subject to a Securities and
Exchange Commission (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>
EXHIBIT 2
---------
CSW CREDIT, INC.
COMMERCIAL PAPER OUTSTANDING
LEHMAN COMMERCIAL PAPER, INC.
DECEMBER 31, 1993
(thousands)
MATURITY ISSUE PAR DISCOUNT
DATE DATE AMOUNT RATE
-------- -------- -------- --------
01/10/94 11/16/93 $ 10,000 3.4000%
01/12/94 11/16/93 4,000 3.4000
01/13/94 11/16/93 2,000 3.4000
01/13/94 11/30/93 15,000 3.4500
01/18/94 11/22/93 10,800 3.4400
01/20/94 11/29/93 17,700 3.4300
01/21/94 12/17/93 15,000 3.2800
02/02/94 12/03/93 17,600 3.4000
02/08/94 12/09/93 14,500 3.3500
02/10/94 12/10/93 48,200 3.3300
02/11/94 12/07/93 33,500 3.3800
02/14/94 12/13/93 10,000 3.3200
02/17/94 12/14/93 20,000 3.3200
02/18/94 12/13/93 37,000 3.3200
02/24/94 12/15/93 10,000 3.3000
02/24/94 12/22/93 25,000 3.3000
02/25/94 12/15/93 30,000 3.3000
--------
$320,300
========
<PAGE>
CSW CREDIT, INC.
COMMERCIAL PAPER OUTSTANDING
GOLDMAN SACHS & CO.
DECEMBER 31, 1993
(thousands)
MATURITY ISSUE PAR DISCOUNT
DATE DATE AMOUNT RATE
-------- -------- -------- --------
01/21/94 12/01/93 $31,800 3.4400%
01/28/94 12/02/93 25,200 3.4200
01/28/94 12/17/93 13,200 3.3000
02/02/94 11/30/93 12,700 3.4000
02/04/94 11/29/93 15,000 3.4000
02/04/94 11/29/93 3,000 3.4000
02/04/94 11/29/93 10,000 3.4000
02/04/94 11/30/93 7,300 3.4000
02/07/94 12/03/93 5,334 3.4300
02/07/94 12/13/93 25,600 3.3300
02/08/94 12/03/93 24,666 3.4200
02/11/94 12/06/93 8,900 3.4000
02/14/94 12/10/93 4,000 3.3000
02/14/94 12/10/93 4,000 3.3000
02/15/94 12/10/93 10,000 3.3000
02/15/94 12/14/93 11,600 3.3250
02/15/94 12/22/93 7,000 3.2750
02/17/94 12/10/93 20,000 3.3200
02/18/94 12/09/93 29,000 3.3500
02/22/94 12/15/93 19,400 3.3300
02/22/94 12/16/93 19,800 3.3200
02/25/94 12/15/93 13,300 3.3300
--------
$320,800
========
TOTAL COMMERCIAL PAPER OUTSTANDING:
Lehman Commercial Paper, Inc. $320,300
Goldman Sachs & Co. 320,800
--------
$641,100
========
<PAGE>
EXHIBIT 3
---------
CSW CREDIT, INC.
EARNINGS COVERAGE
(thousands, except ratios)
1993
--------------------------------------
OCTOBER NOVEMBER DECEMBER
------- -------- --------
Net Income $ 677 $ 392 $ 1,083
Income Taxes 364 295 (339)
Interest Expense 2,130 1,763 1,811
-------- -------- --------
$ 3,171 $ 2,450 $ 2,555
======== ======== ========
Interest Expense $ 2,130 $ 1,763 $ 1,811
Ratio of Earnings
to Fixed Charges 1.49 1.39 1.41
-------- ------- --------
CAPITAL STRUCTURE
DECEMBER 31, 1993
(thousands)
Short-term Debt $ 641,100 93%
Common Equity 48,268 7
--------- -----
Total $ 689,368 100%
========= =====
<PAGE>
EXHIBIT 4
---------
CSW CREDIT, INC.
AVERAGE MONTH END ACCOUNTS RECEIVABLE
(thousands)
1993
---------------------------------------------
Twelve Months Twelve Months Twelve Months
Ended Ended Ended
October 31 November 30 December 31
-------------- ------------- -------------
Non-Affiliated-Other $ 23,643 $ 23,418 $ 23,624
Non Affiliated-HL&P (1) 298,077 324,186 350,504
Total Non-Affiliated 321,720 347,604 374,128
Affiliated 371,139 374,628 379,825
Excess Restriction $ 49,419 $ 27,024 $ 5,697
(1) HL&P became a participant in January, 1993. Amount
represented is rolling twelve month average.
HL&P average based
on months participating $ 357,693 $ 353,657 $ 350,504
BAD DEBT WRITE-OFFS
(thousands)
1993
----------------------------------------
October November December
------- -------- --------
Non-Affiliated $ 792 $ 769 $ 1,071
<PAGE>
EXHIBIT 5
---------
CENTRAL POWER AND LIGHT COMPANY
DISCOUNT CALCULATION
THREE MONTHS ENDED DECEMBER 31, 1993
Retail Wholesale
-------- ---------
Weighted Cost of Capital (Annualized) 0.039797 0.040150
Average Days Outstanding 37.57 36.73
-------- --------
Weighted Cost of Capital (Average 0.004106 0.004030
Days Outstanding)
Collection Experience Factor 0.001289 0.000000
Agency Fee Rate 0.020000 0.020000
-------- --------
Total Discount Factor 0.025395 0.024030
======== ========
ASSUMPTIONS
- -----------
INTEREST RATE 0.0323
RETAIL ROCE 0.1300
WHOLESALE ROCE 0.1344
TAX RATE 0.3800
DEBT RATIO 0.9500
EQUITY RATIO 0.0500
<PAGE>
PUBLIC SERVICE COMPANY OF OKLAHOMA
DISCOUNT CALCULATION
THREE MONTHS ENDED DECEMBER 31, 1993
Retail Wholesale
-------- ---------
Weighted Cost of Capital (Annualized) 0.041021 0.040975
Average Days Outstanding 56.43 127.84
-------- --------
Weighted Cost of Capital (Average 0.006325 0.014275
Days Outstanding)
Collection Experience Factor 0.002222 0.000000
Agency Fee Rate 0.020000 0.020000
-------- --------
Total Discount Factor 0.028547 0.034275
======== ========
ASSUMPTIONS
- -----------
INTEREST RATE 0.0323
RETAIL ROCE 0.1350
WHOLESALE ROCE 0.1344
TAX RATE 0.3500
DEBT RATIO 0.9500
EQUITY RATIO 0.0500
<PAGE>
SOUTHWESTERN ELECTRIC POWER COMPANY
DISCOUNT CALCULATION
THREE MONTHS ENDED DECEMBER 31, 1993
Arkansas Louisiana Texas Wholesale
-------- --------- ------- ---------
Weighted Cost of Capital (Annualized) 0.040639 0.041787 0.043283 0.040975
Average Days Outstanding 33.40 37.93 28.11 55.62
-------- -------- -------- --------
Weighted Cost of Capital (Average 0.003718 0.004342 0.003333 0.006322
Days Outstanding)
Collection Experience Factor 0.000727 0.000865 0.000677 0.000000
Agency Fee Rate 0.020000 0.020000 0.020000 0.020000
-------- -------- -------- --------
Total Discount Factor 0.024445 0.025207 0.024010 0.026322
======== ======== ======== ========
ASSUMPTIONS
- -----------
INTEREST RATE 0.0323
ARKANSAS ROCE 0.1300
LOUISIANA ROCE 0.1450
TEXAS ROCE 0.1570
WHOLESALE ROCE 0.1344
TAX RATE 0.3566
DEBT RATIO 0.9500
EQUITY RATIO 0.0500
<PAGE>
WEST TEXAS UTILITIES COMPANY
DISCOUNT CALCULATION
THREE MONTHS ENDED DECEMBER 31, 1993
Retail Wholesale
-------- ---------
Weighted Cost of Capital (Annualized) 0.040315 0.041471
Average Days Outstanding 41.85 37.95
-------- --------
Weighted Cost of Capital (Average 0.004622 0.004311
Days Outstanding)
Collection Experience Factor 0.001541 0.000000
Agency Fee Rate 0.020000 0.020000
-------- --------
Total Discount Factor 0.026163 0.024311
======== ========
ASSUMPTIONS
- -----------
INTEREST RATE 0.0323
RETAIL ROCE 0.1200
WHOLESALE ROCE 0.1344
TAX RATE 0.3800
DEBT RATIO 0.9500
EQUITY RATIO 0.0500
<PAGE>
TRANSOK, INC.
DISCOUNT CALCULATION
THREE MONTHS ENDED DECEMBER 31, 1993
Weighted Cost of Capital (Annualized) 0.040975
Daily Rate 0.000112
Collection Experience Factor 0.000471
Agency Fee Rate 0.020000
--------
Total Discount Factor (A)
========
ASSUMPTIONS
- -----------
INTEREST RATE 0.0323
RETURN ALLOWED 0.1344
TAX RATE 0.3500
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>
EXHIBIT 6
---------
CSW CREDIT, INC.
ALLOWED RETURNS ON COMMON EQUITY
DECEMBER 31, 1993
ALLOWED
RETURN (1)
----------
CPL
- RETAIL 13.00%
- WHOLESALE 13.44%
PSO
- RETAIL 13.50%
- WHOLESALE 13.44%
SWEPCO
- ARKANSAS 13.00%
- LOUISIANA 14.50%
- TEXAS 15.70%
- WHOLESALE 13.44%
WTU
- RETAIL 12.00%
- WHOLESALE 13.44%
TRANSOK 13.44%
(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>
EXHIBIT 7
---------
CSW CREDIT,INC.
AFFILIATED COMPANIES
FACTORING EXPENSE SAVINGS
THREE MONTHS ENDED DECEMBER 31, 1993
(thousands)
20% Equity 5% Equity Savings
---------- --------- -------
CPL $ 2,088 $ 1,267 $ 821
PSO 1,460 891 569
SWEPCO 1,200 707 493
WTU 557 346 211
TRANSOK 1,237 757 480
-------- -------- -------
TOTAL $ 6,542 $ 3,968 $ 2,574
======== ======== =======
