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, 1995, statements of income for the three and
twelve month periods ended June 30, 1995, and notes to the
financial statements as Exhibit 1 attached hereto.
2. Credit hereby certifies that on June 30, 1995, it had
$748,150,000 face amount of commercial paper outstanding at a
weighted average cost of 6.06%. This amount consisted of
$386,150,000 issued and sold to Lehman Commercial Paper, Inc., as
dealer, and $362,000,000 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, 1995.
3. Credit hereby files as Exhibit 3 attached hereto the
earnings coverage for Credit's indebtedness for the period from
April 1, 1995 through June 30, 1995 and Credit's capital
structure at June 30, 1995. 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, 1995 through June 30, 1995 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.
5. With respect to Houston Lighting & Power Company (HLP),
Credit had month ending average net receivables of $340,593,000
outstanding during the twelve months ended June 30, 1995. During
the quarter ended June 30, 1995 the daily maximum borrowing
relating to the purchase of accounts receivable from HLP was
$392,706,000.
6. Credit hereby certifies it was in accordance with the
50% restriction on non-affiliated receivables during the quarter
ended June 30, 1995, as shown in Exhibit 4 attached hereto.
7. Credit hereby certifies that during the period April 1,
1995 through June 30, 1995, HLP receivables were acquired by
Credit and sold to The Bank of New York in order to maintain
compliance with the 50% restriction as follows: April
$4,500,000, May $4,800,000, and June $2,200,000. The figures set
forth in Exhibit 4 attached hereto shows the detail of the
receivables.
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, December 21, 1993, and December 16, 1994 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
and December 29, 1992, permitting said Application-Declaration to
become effective.
Page 2
SIGNATURE
As requested by order of the Securities and Exchange Commission
pursuant to the Public Utility Holding Company Act of 1935,
Central and South West Services, Inc. has duly caused this report
to be signed on the 14th day of August 1995.
By : /s/ Wendy G. Hargus
Wendy G. Hargus
Controller
CSW Credit, Inc.
1616 Woodall Rodgers Freeway
P.O. Box 660164
Dallas, Texas 75266-0164
Telephone (214) 777-1000
Page 3
EXHIBIT INDEX
-------------
Exhibit Transmission
Number Exhibit Method
------- ------- ------------
1 Balance sheet as of June 30, Electronic
1995, statements of income for the
three and twelve month periods
ended June 30, 1995, and
notes to the financial statements.
2 Commercial paper outstanding at Electronic
June 30, 1995.
3 Earnings coverage for the period Electronic
from April 1, 1995 through
June 30, 1995 and capital
structure at June 30, 1995.
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, 1995 through
June 30, 1995.
5 Discount calculation for affiliated Electronic
companies for the three months
ended June 30, 1995.
6 Analysis of the allowed returns on Electronic
common equity for affiliated
companies at June 30, 1995.
7 Factoring expense savings for Electronic
affiliated companies for the three
months ended June 30, 1995.
Page 4
EXHIBIT 1
---------
CSW CREDIT, INC.
BALANCE SHEET
JUNE 30, 1995
(thousands)
UNAUDITED
ASSETS
-------
Accounts receivable-affiliated $413,944
Accounts receivable-non-affiliated 414,477
Less: Allowance for doubtful accounts 3,916
--------
824,505
Cash and temporary cash investments 94
Other assets 6,758
--------
$831,357
========
LIABILITIES AND STOCKHOLDER'S EQUITY
------------------------------------
Short-term debt $748,150
Deferred credit 16,781
Other liabilities 10,661
Unearned revenues 3,070
Stockholder's equity
Common stock, no par; authorized
1,000 shares; issued and
outstanding 241 shares 1
Paid-in capital 52,694
--------
$831,357
========
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, 1995
(thousands)
UNAUDITED
Three Months Ended Twelve MonthsEnded
-------------------------- --------------------------
1995 1994 1995 1994
------------ ------------- ------------ -------------
REVENUES $16,594 $13,358 $66,959 $53,294
------ ------- ------- -------
OPERATING EXPENSES
Interest 9,382 6,500 37,977 24,313
Provision for
bad debts 3,041 2,370 10,239 9,561
Credit line fees 349 435 1,564 1,794
General and
administrative 1,344 1,597 6,604 7,135
------ ------- ------- -------
14,116 10,902 56,384 42,803
------ ------- ------- -------
INCOME BEFORE TAXES 2,478 2,456 10,575 10,491
------ ------- ------- -------
FEDERAL INCOME TAXES
Current 507 1,726 (1,990) 5,457
Deferred 360 (866) 5,062 (2,412)
------ ------- ------- -------
867 860 3,072 3,045
------ ------- ------- -------
NET INCOME $ 1,611 $ 1,596 $ 7,503 $ 7,446
====== ======= ======= =======
The accompanying notes to financial statements
are an integral part of these statements.
Page 6
CSW CREDIT, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1995
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, 1995. 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 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, 1995, was 5.6%. At
June 30, 1995, the Company had a revolving credit agreement
aggregating $900 million to back up its commercial paper program.
(4) Houston Lighting & Power Company (HLP)-
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 8
EXHIBIT 2
---------
CSW CREDIT, INC.
COMMERCIAL PAPER OUTSTANDING
LEHMAN COMMERCIAL PAPER, INC.
JUNE 30, 1995
(thousands)
MATURITY ISSUE PAR DISCOUNT
DATE DATE AMOUNT RATE
-------- -------- -------- --------
07/06/95 05/03/95 $ 20,000 6.0800%
07/07/95 06/06/95 18,900 5.9800
07/07/95 05/19/95 7,700 6.0500
07/12/95 06/05/95 10,000 5.9500
07/13/95 06/07/95 28,700 5.9900
07/13/95 05/24/95 7,500 6.0400
07/14/95 05/30/95 12,000 6.0300
07/14/95 05/25/95 8,750 6.0300
07/17/95 05/26/95 14,000 6.0400
07/20/95 06/02/95 33,000 5.9500
07/21/95 05/23/95 17,900 6.0500
07/25/95 06/08/95 2,600 6.0200
07/25/95 06/08/95 22,600 6.0200
07/28/95 06/09/95 17,900 6.0500
08/03/95 06/14/95 27,600 6.0000
08/04/95 06/13/95 9,400 6.0000
08/11/95 06/15/95 12,100 6.0000
08/11/95 06/26/95 17,000 6.0300
08/15/95 05/18/95 25,000 6.0300
08/16/95 06/12/95 24,000 6.0200
09/14/95 06/16/95 49,500 5.9600
--------
$386,150
========
Page 9
CSW CREDIT, INC.
COMMERCIAL PAPER OUTSTANDING
GOLDMAN SACHS & CO.
JUNE 30, 1995
(thousands)
MATURITY ISSUE PAR DISCOUNT
DATE DATE AMOUNT RATE
-------- -------- -------- --------
07/10/95 05/11/95 $19,800 6.0200%
07/10/95 06/30/95 3,100 6.2000
07/11/95 06/02/95 14,000 5.9700
07/14/95 05/17/95 28,700 6.0200
07/18/95 06/01/95 7,400 6.0000
07/18/95 06/01/95 3,000 6.0000
07/19/95 06/05/95 24,700 5.9500
07/24/95 05/05/95 42,500 6.0200
07/26/95 06/09/95 25,000 6.0100
07/27/95 06/14/95 20,000 6.0000
08/01/95 06/21/95 16,200 6.0000
08/10/95 06/28/95 32,700 6.0100
08/14/95 06/19/95 12,000 6.0100
08/17/95 06/15/95 21,000 6.0000
08/18/95 06/23/95 30,000 5.9500
08/21/95 06/12/95 10,000 6.0000
09/25/95 06/22/95 30,646 5.9000
09/25/95 06/22/95 14,354 5.9000
09/25/95 06/22/95 6,900 5.9000
--------
$362,000
========
TOTAL COMMERCIAL PAPER OUTSTANDING:
Lehman Commercial Paper, Inc. $386,150
Goldman Sachs & Co. 362,000
--------
$748,150
========
Page 10
EXHIBIT 3
---------
CSW CREDIT, INC.
EARNINGS COVERAGE
(thousands, except ratios)
1995
----------------------------------------
APRIL MAY JUNE
--------- ---------- ----------
Net Income $ 451 $ 534 $ 626
Income Taxes 243 287 337
Interest Expense 2,678 3,116 3,588
--------- ---------- ----------
$ 3,372 $ 3,937 $ 4,551
======== ======== ========
Interest Expense $ 2,678 $ 3,116 $ 3,588
Ratio of Earnings
to Fixed Charges 1.26 1.26 1.27
-------- ------- --------
CAPITAL STRUCTURE
JUNE 30, 1995
(thousands)
Short-term Debt $ 748,150 93%
Common Equity 52,695 7%
--------- -----
Total $ 800,845 100%
========= =====
Page 11
EXHIBIT 4
---------
CSW CREDIT, INC.
AVERAGE MONTH END ACCOUNTS RECEIVABLE
(thousands)
1995
---------------------------------------------
Twelve Months Twelve Months Twelve Months
Ended Ended Ended
April 30 May 31 June 30
-------------- ------------- --------------
Non-Affiliated-HL&P $ 346,539 $ 345,605 $ 342,793
Less: HLP receivables
sold to BONY 4,500 4,800 2,200
HLP net receivables 342,039 340,805 340,593
Non-Affiliated-Other 24,408 $ 24,976 $ 25,230
Total Non-Affiliated 366,447 365,781 365,823
Less: Affiliated 366,534 365,870 365,857
Excess Restriction $ (87) $ (89) $ (34)
BAD DEBT WRITE-OFFS
(thousands)
1995
----------------------------------------
APRIL MAY JUNE
--------- ---------- ----------
Non-Affiliated $ 393 $ 403 $ 308
Page 12
EXHIBIT 5
---------
CENTRAL POWER AND LIGHT COMPANY
DISCOUNT CALCULATION
THREE MONTHS ENDED JUNE 30, 1995
Retail Wholesale
-------- ---------
Weighted Cost of Capital (Annualized) 0.068557 0.068541
Average Days Outstanding 30.27 34.59
-------- --------
Weighted Cost of Capital (Average 0.005684 0.006516
Days Outstanding)
Collection Experience Factor 0.002713 0.000000
Agency Fee Rate 0.020000 0.020000
-------- --------
Total Discount Factor 0.028397 0.026516
======== ========
ASSUMPTIONS
-----------
INTEREST RATE 0.0611
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, 1995
Retail Wholesale
-------- ---------
Weighted Cost of Capital (Annualized) 0.066944 0.068541
Average Days Outstanding 35.47 179.08
-------- --------
Weighted Cost of Capital (Average 0.006512 0.033740
Days Outstanding)
Collection Experience Factor 0.002586 0.000000
Agency Fee Rate 0.020000 0.020000
-------- --------
Total Discount Factor 0.029098 0.053740
======== ========
ASSUMPTIONS
-----------
INTEREST RATE 0.0611
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, 1995
Arkansas Louisiana Texas Wholesale
-------- --------- ------- ---------
Weighted Cost of Capital (Annualized) 0.068557 0.069767 0.070734 0.068541
Average Days Outstanding 38.52 41.92 32.25 48.57
-------- -------- -------- --------
Weighted Cost of Capital (Average 0.007231 0.008014 0.006248 0.009135
Days Outstanding)
Collection Experience Factor 0.001228 0.001366 0.001022 0.000000
Agency Fee Rate 0.020000 0.020000 0.020000 0.020000
-------- -------- -------- --------
Total Discount Factor 0.028459 0.029380 0.027270 0.029135
======== ======== ======== ========
ASSUMPTIONS
-----------
INTEREST RATE 0.0611
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, 1995
Retail Wholesale
-------- ---------
Weighted Cost of Capital (Annualized) 0.067750 0.068541
Average Days Outstanding 38.20 25.32
-------- --------
Weighted Cost of Capital (Average 0.007090 0.004760
Days Outstanding)
Collection Experience Factor 0.002562 0.000000
Agency Fee Rate 0.020000 0.020000
-------- --------
Total Discount Factor 0.029651 0.024760
======== ========
ASSUMPTIONS
-----------
INTEREST RATE 0.0611
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, 1995
Weighted Cost of Capital (Annualized) 0.068541
Daily Rate 0.000188
Collection Experience Factor 0.000000
Agency Fee Rate 0.020000
--------
Total Discount Factor (A)
========
ASSUMPTIONS
-----------
INTEREST RATE 0.0611
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, 1995
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, 1995
(thousands)
20% Equity 5% Equity Savings
---------- --------- -------
CPL $ 2,453 $ 1,851 $ 602
PSO 1,379 1,089 290
SWEPCO 1,854 1,350 504
WTU 627 484 143
TRANSOK 1,500 1,132 368
-------- -------- -------
TOTAL $ 7,813 $ 5,906 $ 1,907
======== ======== =======
Page 19
