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 September 30, 1995, statements of income for the three and
twelve month periods ended September 30, 1995, and notes to the
financial statements as Exhibit 1 attached hereto.
2. Credit hereby certifies that on September 30, 1995, it
had $785,500,000 face amount of commercial paper outstanding at a
weighted average cost of 5.84%. This amount consisted of
$362,800,000 issued and sold to Lehman Commercial Paper, Inc., as
dealer, and $422,700,000 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 September 30, 1995.
3. Credit hereby files as Exhibit 3 attached hereto the
earnings coverage for Credit's indebtedness for the period from
July 1, 1995 through September 30, 1995 and Credit's capital
structure at September 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 July 1, 1995 through September 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.
<PAGE> 2
5. With respect to Houston Lighting & Power Company (HLP),
Credit had month ending average net receivables of $333,472,000
outstanding during the twelve months ended September 30, 1995.
During the quarter ended September 30, 1995 the daily maximum
borrowing relating to the purchase of accounts receivable from
HLP was $451,465,000.
6. Credit hereby certifies it was in accordance with the
50% restriction on non-affiliated receivables during the quarter
ended September 30, 1995, as shown in Exhibit 4 attached hereto.
7. Credit hereby certifies that during the period July 1,
1995 through September 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: July $6,900,000,
August $3,800,000, and September $0. 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> 3
EXHIBIT INDEX
-------------
Exhibit Transmission
Number Exhibit Method
- ------- ------- ------------
1 Balance sheet as of September 30, Electronic
1995, statements of income for the
three and twelve month periods
ended September 30, 1995, and
notes to the financial statements.
2 Commercial paper outstanding at Electronic
September 30, 1995.
3 Earnings coverage for the period Electronic
from July 1, 1995 through
September 30, 1995 and capital
structure at September 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 July 1, 1995 through
September 30, 1995.
5 Discount calculation for affiliated Electronic
companies for the three months
ended September 30, 1995.
6 Analysis of the allowed returns on Electronic
common equity for affiliated
companies at September 30, 1995.
7 Factoring expense savings for Electronic
affiliated companies for the three
months ended September 30, 1995.
<PAGE> 4
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 13th day of November 1995.
/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> 5
EXHIBIT 1
---------
CSW CREDIT, INC.
BALANCE SHEET
SEPTEMBER 30, 1995
(thousands)
UNAUDITED
ASSETS
-------
Accounts receivable-affiliated $468,122
Accounts receivable-non-affiliated 406,114
Less: Allowance for doubtful accounts 7,155
--------
867,081
Cash and temporary cash investments 151
Other assets 5,217
--------
$872,449
========
LIABILITIES AND STOCKHOLDER'S EQUITY
------------------------------------
Short-term debt $785,500
Deferred credit 17,690
Other liabilities 12,878
Unearned revenues 2,331
Stockholder's equity
Common stock, no par; authorized
1,000 shares; issued and
outstanding 248 shares 1
Paid-in capital 54,049
--------
$872,449
========
The accompanying notes to financial statements
are an integral part of these statements.
<PAGE> 6
CSW CREDIT, INC.
STATEMENTS OF INCOME
FOR THE PERIOD ENDED SEPTEMBER 30, 1995
(thousands)
UNAUDITED
Three Months Ended Twelve MonthsEnded
-------------------------- --------------------------
1995 1994 1995 1994
------------ ------------- ------------ -------------
REVENUES $21,270 $18,939 $69,290 $56,183
------ ------- ------- -------
OPERATING EXPENSES
Interest 11,790 10,462 39,304 27,898
Provision for
bad debts 3,858 2,874 11,222 9,190
Credit line fees 349 419 1,493 1,782
General and
administrative 1,739 2,189 6,156 7,106
------ ------- ------- -------
17,736 15,944 58,175 45,976
------ ------- ------- -------
INCOME BEFORE TAXES 3,534 2,995 11,115 10,207
------ ------- ------- -------
FEDERAL INCOME TAXES
Current 1,330 1,284 (1,944) 3,831
Deferred 547 (766) 6,376 (1,437)
------ ------- ------- -------
1,877 518 4,432 2,394
------ ------- ------- -------
NET INCOME $ 1,657 $ 2,477 $ 6,683 $ 7,813
====== ======= ======= =======
The accompanying notes to financial statements
are an integral part of these statements.
<PAGE> 7
CSW CREDIT, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 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 40% for the twelve
months ended September 30, 1995.
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> 8
(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 September 30, 1995, was 5.9%.
At September 30, 1995, the Company had a revolving credit
agreement aggregating $950 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> 9
EXHIBIT 2
---------
CSW CREDIT, INC.
COMMERCIAL PAPER OUTSTANDING
LEHMAN COMMERCIAL PAPER, INC.
SEPTEMBER 30, 1995
(thousands)
MATURITY ISSUE PAR DISCOUNT WEIGHTED
DATE DATE AMOUNT RATE AVERAGE COST
-------- -------- --------- -------- ------------
10/02/95 09/29/95 $ 10,000 6.6000% 6.6036%
10/05/95 08/14/95 3,500 5.8300 5.8795
10/05/95 08/11/95 35,700 5.7900 5.8417
10/06/95 08/10/95 13,600 5.7800 5.8334
10/11/95 08/14/95 2,000 5.8300 5.8853
10/17/95 08/29/95 4,100 5.8000 5.8462
10/20/95 08/18/95 20,000 5.8200 5.8799
10/24/95 09/15/95 32,000 5.7800 5.8164
10/25/95 09/18/95 6,000 5.7800 5.8145
10/30/95 09/01/95 20,000 5.7800 5.8353
11/02/95 09/11/95 30,200 5.7500 5.7982
11/06/95 09/13/95 27,000 5.7500 5.8000
11/08/95 09/14/95 50,000 5.7300 5.7806
11/08/95 09/14/95 10,000 5.7300 5.7806
11/09/95 08/16/95 45,500 5.8200 5.9011
11/15/95 09/08/95 14,600 5.7600 5.8234
11/21/95 09/22/95 29,400 5.7500 5.8056
11/22/95 09/29/95 9,200 5.8700 5.9221
--------
$362,800
========
<PAGE> 10
CSW CREDIT, INC.
COMMERCIAL PAPER OUTSTANDING
GOLDMAN SACHS & CO.
SEPTEMBER 30, 1995
(thousands)
MATURITY ISSUE PAR DISCOUNT WEIGHTED
DATE DATE AMOUNT RATE AVERAGE COST
-------- -------- --------- -------- ------------
10/04/95 08/23/95 $ 28,500 5.8000% 5.8395%
10/06/95 08/10/95 50,000 5.7800 5.8334
10/12/95 08/17/95 23,500 5.8200 5.8732
10/13/95 08/16/95 15,000 5.8000 5.8547
10/13/95 08/17/95 11,900 5.8200 5.8741
10/16/95 08/18/95 7,500 5.8000 5.8557
10/19/95 08/24/95 29,700 5.7700 5.8223
10/20/95 08/18/95 13,600 5.8000 5.8595
10/23/95 09/20/95 6,800 5.7800 5.8108
10/26/95 08/28/95 1,100 5.7800 5.8353
10/26/95 08/25/95 24,000 5.7700 5.8279
10/27/95 08/28/95 25,000 5.7800 5.8362
11/03/95 09/07/95 28,400 5.7700 5.8232
11/07/95 09/21/95 26,200 5.7500 5.7935
11/10/95 09/26/95 7,800 5.7700 5.8119
11/10/95 09/28/95 6,200 5.8000 5.8405
11/13/95 09/25/95 35,000 5.7500 5.7954
11/14/95 09/14/95 27,800 5.7500 5.8066
11/27/95 09/28/95 20,800 5.8000 5.8566
11/28/95 09/27/95 18,200 5.7800 5.8381
12/08/95 09/25/95 15,700 5.7300 5.7983
--------
$422,700
========
TOTAL COMMERCIAL PAPER OUTSTANDING:
Lehman Commercial Paper, Inc. $362,800
Goldman Sachs & Co. 422,700
--------
$785,500
========
<PAGE> 11
EXHIBIT 3
---------
CSW CREDIT, INC.
EARNINGS COVERAGE
(thousands, except ratios)
1995
----------------------------------------
JULY AUGUST SEPTEMBER
--------- ---------- ----------
Net Income $ 753 $ 832 $ 72
Income Taxes 406 448 1,024
Interest Expense 3,760 4,101 3,929
--------- ---------- ----------
$ 4,919 $ 5,381 $ 5,025
======== ======== ========
Interest Expense $ 3,760 $ 4,101 $ 3,929
Ratio of Earnings
to Fixed Charges 1.31 1.31 1.28
-------- ------- --------
CAPITAL STRUCTURE
SEPTEMBER 30, 1995
(thousands)
Short-term Debt $ 785,500 94%
Common Equity 54,050 6%
--------- -----
Total $ 839,550 100%
========= =====
<PAGE> 12
EXHIBIT 4
---------
CSW CREDIT, INC.
AVERAGE MONTH END ACCOUNTS RECEIVABLE
(thousands)
1995
---------------------------------------------
Twelve Months Twelve Months Twelve Months
Ended Ended Ended
July 31 August 31 September 30
-------------- ------------- --------------
Non-Affiliated-HL&P $ 341,025 $ 338,701 $ 333,472
Less: HLP receivables
sold to BONY 6,900 3,800 -
HLP net receivables 334,125 334,901 333,472
Non-Affiliated-Other 25,262 $ 25,677 $ 26,489
Total Non-Affiliated 359,387 360,578 359,961
Less: Affiliated 359,450 360,625 362,914
Excess Restriction $ (63) $ (47) $ (2,953)
BAD DEBT WRITE-OFFS
(thousands)
1995
----------------------------------------
JULY AUGUST SEPTEMBER
--------- ---------- ----------
Non-Affiliated $ 338 $ 311 $ 359
<PAGE> 13
EXHIBIT 5
---------
CENTRAL POWER AND LIGHT COMPANY
DISCOUNT CALCULATION
THREE MONTHS ENDED SEPTEMBER 30, 1995
Retail Wholesale
-------- ---------
Weighted Cost of Capital (Annualized) 0.066733 0.066717
Average Days Outstanding 26.99 37.49
-------- --------
Weighted Cost of Capital (Average 0.004937 0.006841
Days Outstanding)
Collection Experience Factor 0.003334 0.000000
Agency Fee Rate 0.020000 0.020000
-------- --------
Total Discount Factor 0.028271 0.026841
======== ========
ASSUMPTIONS
- -----------
INTEREST RATE 0.0592
RETAIL ROCE 0.1300
WHOLESALE ROCE 0.1298
TAX RATE 0.3800
DEBT RATIO 0.9500
EQUITY RATIO 0.0500
<PAGE> 14
PUBLIC SERVICE COMPANY OF OKLAHOMA
DISCOUNT CALCULATION
THREE MONTHS ENDED SEPTEMBER 30, 1995
Retail Wholesale
-------- ---------
Weighted Cost of Capital (Annualized) 0.065120 0.066717
Average Days Outstanding 33.18 100.98
-------- --------
Weighted Cost of Capital (Average 0.005912 0.018492
Days Outstanding)
Collection Experience Factor 0.002729 0.000000
Agency Fee Rate 0.020000 0.020000
-------- --------
Total Discount Factor 0.028641 0.038492
======== ========
ASSUMPTIONS
- -----------
INTEREST RATE 0.0592
RETAIL ROCE 0.1100
WHOLESALE ROCE 0.1298
TAX RATE 0.3800
DEBT RATIO 0.9500
EQUITY RATIO 0.0500
<PAGE> 15
SOUTHWESTERN ELECTRIC POWER COMPANY
DISCOUNT CALCULATION
THREE MONTHS ENDED SEPTEMBER 30, 1995
Arkansas Louisiana Texas Wholesale
-------- --------- ------- ---------
Weighted Cost of Capital (Annualized) 0.066733 0.067943 0.068910 0.066717
Average Days Outstanding 35.01 37.51 31.87 89.84
-------- -------- -------- --------
Weighted Cost of Capital (Average 0.006402 0.006982 0.006014 0.016372
Days Outstanding)
Collection Experience Factor 0.001386 0.001533 0.001149 0.000000
Agency Fee Rate 0.020000 0.020000 0.020000 0.020000
-------- -------- -------- --------
Total Discount Factor 0.027788 0.028515 0.027164 0.036372
======== ======== ======== ========
ASSUMPTIONS
- -----------
INTEREST RATE 0.0592
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> 16
WEST TEXAS UTILITIES COMPANY
DISCOUNT CALCULATION
THREE MONTHS ENDED SEPTEMBER 30, 1995
Retail Wholesale
-------- ---------
Weighted Cost of Capital (Annualized) 0.065926 0.066717
Average Days Outstanding 35.82 19.05
-------- --------
Weighted Cost of Capital (Average 0.006461 0.003473
Days Outstanding)
Collection Experience Factor 0.002748 0.000000
Agency Fee Rate 0.020000 0.020000
-------- --------
Total Discount Factor 0.029210 0.023473
======== ========
ASSUMPTIONS
- -----------
INTEREST RATE 0.0592
RETAIL ROCE 0.1200
WHOLESALE ROCE 0.1298
TAX RATE 0.3800
DEBT RATIO 0.9500
EQUITY RATIO 0.0500
<PAGE> 17
TRANSOK, INC.
DISCOUNT CALCULATION
THREE MONTHS ENDED SEPTEMBER 30, 1995
Weighted Cost of Capital (Annualized) 0.066717
Daily Rate 0.000183
Collection Experience Factor 0.000000
Agency Fee Rate 0.020000
--------
Total Discount Factor (A)
========
ASSUMPTIONS
- -----------
INTEREST RATE 0.0592
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> 18
EXHIBIT 6
---------
CSW CREDIT, INC.
ALLOWED RETURNS ON COMMON EQUITY
SEPTEMBER 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> 19
EXHIBIT 7
---------
CSW CREDIT, INC.
AFFILIATED COMPANIES
FACTORING EXPENSE SAVINGS
THREE MONTHS ENDED SEPTEMBER 30, 1995
(thousands)
20% Equity 5% Equity Savings
---------- --------- -------
CPL $ 2,704 $ 2,020 $ 684
PSO 2,123 1,661 462
SWEPCO 2,449 1,776 673
WTU 943 719 224
TRANSOK 1,592 1,190 402
-------- -------- -------
TOTAL $ 9,811 $ 7,366 $ 2,445
======== ======== =======
