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, 1995, statements of income for the three and
twelve month periods ended March 31, 1995, and notes to the
financial statements as Exhibit 1 attached hereto.
2. Credit hereby certifies that on March 31, 1995, it had
$527,100,000 face amount of commercial paper outstanding at a
weighted average cost of 6.21%. This amount consisted of
$278,800,000 issued and sold to Lehman Commercial Paper, Inc., as
dealer, and $248,300,000 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, 1995.
3. Credit hereby files as Exhibit 3 attached hereto the
earnings coverage for Credit's indebtedness for the period from
January 1, 1995 through March 31, 1995 and Credit's capital
structure at March 31, 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 January 1, 1995 through March 31, 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 receivables of $344,894,000
outstanding during the twelve months ended March 31, 1995.
During the quarter ended March 31, 1995 the daily maximum
borrowing relating to the purchase of accounts receivable from
HLP was $316,237,000.
6. Credit hereby certifies it was in accordance with the
50% restriction on non-affiliated receivables during the quarter
ended March 31, 1995, as shown in Exhibit 4 attached hereto.
7. Credit hereby certifies that during the period January
1, 1995 through March 31, 1995, $6,000,000 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.
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
EXHIBIT INDEX
-------------
Exhibit Transmission
Number Exhibit Method
- ------- ------- ------------
1 Balance sheet as of March 31, Electronic
1995, statements of income for the
three and twelve month periods
ended March 31, 1995, and
notes to the financial statements.
2 Commercial paper outstanding at Electronic
March 31, 1995.
3 Earnings coverage for the period Electronic
from January 1, 1995 through
March 31, 1995 and capital
structure at March 31, 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 January 1, 1995 through
March 31, 1995.
5 Discount calculation for affiliated Electronic
companies for the three months
ended March 31, 1995.
6 Analysis of the allowed returns on Electronic
common equity for affiliated
companies at March 31, 1995.
7 Factoring expense savings for Electronic
affiliated companies for the three
months ended March 31, 1995.
Page 3
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 15th day of May 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
EXHIBIT 1
---------
CSW CREDIT, INC.
BALANCE SHEET
MARCH 31, 1995
(thousands)
UNAUDITED
ASSETS
-------
Accounts receivable-affiliated $309,829
Accounts receivable-non-affiliated 273,121
Less: Allowance for doubtful accounts 4,557
--------
578,393
Cash and temporary cash investments 84
Other assets 5,021
--------
$583,498
========
LIABILITIES AND STOCKHOLDER'S EQUITY
------------------------------------
Short-term debt $527,100
Deferred credit 11,916
Other liabilities 8,867
Unearned revenues 1,877
Stockholder's equity
Common stock, no par; authorized
1,000 shares; issued and
outstanding 227 shares 1
Paid-in capital 33,737
--------
$583,498
========
The accompanying notes to financial statements
are an integral part of these statements.
Page 4
CSW CREDIT, INC.
STATEMENTS OF INCOME
FOR THE PERIOD ENDED MARCH 31, 1995
(thousands)
UNAUDITED
Three Months Ended Twelve Months Ended
-------------------------- --------------------------
1995 1994 1995 1994
------------ ------------- ------------ -------------
REVENUES $15,654 $11,294 $63,723 $52,097
------ ------- ------- -------
OPERATING EXPENSES
Interest 9,126 5,233 35,095 22,783
Provision for
bad debts 2,150 1,930 9,568 9,748
Credit line fees (40) 463 1,650 1,742
General and
administrative 1,303 1,385 6,858 8,194
------ ------- ------- -------
12,539 9,011 53,171 42,467
------ ------- ------- -------
INCOME BEFORE TAXES 3,115 2,283 10,552 9,630
------ ------- ------- -------
FEDERAL INCOME TAXES
Current (3,835) 691 (771) 4,815
Deferred 4,827 4 3,835 (2,087)
------ ------- ------- -------
992 695 3,064 2,728
------ ------- ------- -------
NET INCOME $ 2,123 $ 1,588 $ 7,488 $ 6,902
====== ======= ======= =======
The accompanying notes to financial statements
are an integral part of these statements.
Page 5
CSW CREDIT, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 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 March 31, 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 6
(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, 1995, was 5.1%. At
March 31, 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 7
EXHIBIT 2
---------
CSW CREDIT, INC.
COMMERCIAL PAPER OUTSTANDING
LEHMAN COMMERCIAL PAPER, INC.
MARCH 31, 1995
(thousands)
MATURITY ISSUE PAR DISCOUNT
DATE DATE AMOUNT RATE
-------- -------- -------- --------
04/04/95 02/06/95 $ 28,000 6.1000%
04/05/95 03/03/95 18,900 6.0600
04/10/95 02/14/95 10,000 6.1400
04/12/95 02/09/95 10,000 6.0800
04/13/95 02/15/95 23,500 6.1200
04/17/95 02/24/95 13,500 6.0500
04/17/95 02/15/95 5,000 6.1200
04/18/95 03/06/95 45,200 6.0900
04/19/95 03/10/95 32,000 6.1000
04/26/95 01/26/95 15,700 6.2200
04/26/95 01/27/95 1,794 6.2300
04/27/95 01/27/95 18,406 6.2300
05/01/95 03/16/95 8,400 6.0800
05/02/95 03/16/95 5,000 6.0800
05/03/95 02/08/95 17,900 6.1300
05/09/95 02/15/95 20,000 6.1500
06/12/95 03/16/95 5,500 6.1300
--------
$278,800
========
Page 8
CSW CREDIT, INC.
COMMERCIAL PAPER OUTSTANDING
GOLDMAN SACHS & CO.
MARCH 31, 1995
(thousands)
MATURITY ISSUE PAR DISCOUNT
DATE DATE AMOUNT RATE
-------- -------- -------- --------
04/04/95 03/31/95 $ 2,000 6.4000%
04/04/95 03/30/95 1,000 6.1300
04/04/95 01/11/95 20,400 6.1700
04/10/95 02/16/95 20,000 6.0800
04/11/95 01/10/95 40,000 6.2300
04/17/95 01/19/95 25,000 6.2000
04/20/95 03/13/95 16,300 6.0700
04/20/95 03/20/95 15,700 6.0500
04/26/95 01/27/95 25,000 6.2000
04/26/95 02/06/95 22,900 6.1300
05/03/95 02/07/95 5,000 6.1300
05/08/95 02/10/95 20,000 6.1300
05/10/95 02/13/95 35,000 6.1500
--------
$248,300
========
TOTAL COMMERCIAL PAPER OUTSTANDING:
Lehman Commercial Paper, Inc. $278,800
Goldman Sachs & Co. 248,300
--------
$527,100
========
Page 9
EXHIBIT 3
---------
CSW CREDIT, INC.
EARNINGS COVERAGE
(thousands, except ratios)
1995
--------------------------------------
JANUARY FEBRUARY MARCH
--------- ---------- ----------
Net Income $ 1,699 $ 31 $ 393
Income Taxes - 780 212
Interest Expense 3,210 2,902 3,014
--------- ---------- ----------
$ 4,909 $ 3,713 $ 3,619
======== ======== ========
Interest Expense $ 3,210 $ 2,902 $ 3,014
Ratio of Earnings
to Fixed Charges 1.53 1.28 1.20
-------- ------- --------
CAPITAL STRUCTURE
MARCH 31, 1995
(thousands)
Short-term Debt $ 527,100 94%
Common Equity 33,738 6%
--------- -----
Total $ 560,838 100%
========= =====
Page 10
EXHIBIT 4
---------
CSW CREDIT, INC.
AVERAGE MONTH END ACCOUNTS RECEIVABLE
(thousands)
1995
---------------------------------------------
Twelve Months Twelve Months Twelve Months
Ended Ended Ended
January 31 February 28 March 31
-------------- ------------- --------------
Non-Affiliated-Other $ 22,840 $ 23,571 $ 23,927
Non Affiliated-HL&P 350,728 346,797 344,894
Total Non-Affiliated 373,568 370,368 368,821
Less: Affiliated 373,626 370,402 368,880
Excess Restriction $ (58) $ (34) $ (59)
BAD DEBT WRITE-OFFS
(thousands)
1995
----------------------------------------
JANUARY FEBRUARY MARCH
--------- ---------- ----------
Non-Affiliated $ 1,006 $ 653 $ 564
Page 11
EXHIBIT 5
---------
CENTRAL POWER AND LIGHT COMPANY
DISCOUNT CALCULATION
THREE MONTHS ENDED MARCH 31, 1995
Retail Wholesale
-------- ---------
Weighted Cost of Capital (Annualized) 0.068967 0.068951
Average Days Outstanding 38.46 75.77
-------- --------
Weighted Cost of Capital (Average 0.007264 0.014352
Days Outstanding)
Collection Experience Factor 0.001472 0.000000
Agency Fee Rate 0.020000 0.020000
-------- --------
Total Discount Factor 0.028736 0.034352
======== ========
ASSUMPTIONS
- -----------
INTEREST RATE 0.0616
RETAIL ROCE 0.1300
WHOLESALE ROCE 0.1298
TAX RATE 0.3800
DEBT RATIO 0.9500
EQUITY RATIO 0.0500
Page 12
PUBLIC SERVICE COMPANY OF OKLAHOMA
DISCOUNT CALCULATION
THREE MONTHS ENDED MARCH 31, 1995
Retail Wholesale
-------- ---------
Weighted Cost of Capital (Annualized) 0.067354 0.068951
Average Days Outstanding 46.87 210.60
-------- --------
Weighted Cost of Capital (Average 0.008640 0.039815
Days Outstanding)
Collection Experience Factor 0.002543 0.000000
Agency Fee Rate 0.020000 0.020000
-------- --------
Total Discount Factor 0.031183 0.059815
======== ========
ASSUMPTIONS
- -----------
INTEREST RATE 0.0616
RETAIL ROCE 0.1100
WHOLESALE ROCE 0.1298
TAX RATE 0.3800
DEBT RATIO 0.9500
EQUITY RATIO 0.0500
Page 13
SOUTHWESTERN ELECTRIC POWER COMPANY
DISCOUNT CALCULATION
THREE MONTHS ENDED MARCH 31, 1995
Arkansas Louisiana Texas Wholesale
-------- --------- ------- ---------
Weighted Cost of Capital (Annualized) 0.068967 0.070177 0.071144 0.068951
Average Days Outstanding 38.00 41.78 31.88 43.58
-------- -------- -------- --------
Weighted Cost of Capital (Average
Days Outstanding) 0.007179 0.008032 0.006213 0.008229
Collection Experience Factor 0.001212 0.001225 0.000954 0.000000
Agency Fee Rate 0.020000 0.020000 0.020000 0.020000
-------- -------- -------- --------
Total Discount Factor 0.028391 0.029257 0.027167 0.028229
======== ======== ======== ========
ASSUMPTIONS
- -----------
INTEREST RATE 0.0616
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 14
WEST TEXAS UTILITIES COMPANY
DISCOUNT CALCULATION
THREE MONTHS ENDED MARCH 31, 1995
Retail Wholesale
-------- ---------
Weighted Cost of Capital (Annualized) 0.068160 0.068951
Average Days Outstanding 56.52 68.08
-------- --------
Weighted Cost of Capital (Average
Days Outstanding) 0.010526 0.012817
Collection Experience Factor 0.001907 0.000000
Agency Fee Rate 0.020000 0.020000
-------- --------
Total Discount Factor 0.032433 0.032817
======== ========
ASSUMPTIONS
- -----------
INTEREST RATE 0.0616
RETAIL ROCE 0.1200
WHOLESALE ROCE 0.1298
TAX RATE 0.3800
DEBT RATIO 0.9500
EQUITY RATIO 0.0500
Page 15
TRANSOK, INC.
DISCOUNT CALCULATION
THREE MONTHS ENDED MARCH 31, 1995
Weighted Cost of Capital (Annualized) 0.068951
Daily Rate 0.000189
Collection Experience Factor 0.000000
Agency Fee Rate 0.020000
--------
Total Discount Factor (A)
========
ASSUMPTIONS
- -----------
INTEREST RATE 0.0616
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 16
EXHIBIT 6
---------
CSW CREDIT, INC.
ALLOWED RETURNS ON COMMON EQUITY
MARCH 31, 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 17
EXHIBIT 7
---------
CSW CREDIT, INC.
AFFILIATED COMPANIES
FACTORING EXPENSE SAVINGS
THREE MONTHS ENDED MARCH 31, 1995
(thousands)
20% Equity 5% Equity Savings
---------- --------- -------
CPL $ 2,215 $ 1,674 $ 541
PSO 1,490 1,180 310
SWEPCO 1,686 1,230 456
WTU 651 502 149
TRANSOK 1,415 1,071 344
-------- -------- -------
TOTAL $ 7,457 $ 5,657 $ 1,800
======== ======== =======
Page 18
