SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________________________________
:
In the Matter of :
:
CSW CREDIT, INC. : CERTIFICATE
:
CENTRAL AND SOUTH WEST CORPORATION : OF
:
AMENDMENT :
:
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, 1994, statements of income for the three and
twelve month periods ended December 31, 1994, and notes to the
financial statements as Exhibit 1 attached hereto.
2. Credit hereby certifies that on December 31, 1994, it
had $653,479,000 face amount of commercial paper outstanding at a
weighted average cost of 6.06%. This amount consisted of
$342,290,000 issued and sold to Lehman Commercial Paper, Inc., as
dealer, and $311,189,000 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, 1994.
3. Credit hereby files as Exhibit 3 attached hereto the
earnings coverage for Credit's indebtedness for the period from
October 1, 1994 through December 31, 1994 and Credit's capital
structure at December 31, 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 October 1, 1994 through December 31, 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.
5. With respect to Houston Lighting & Power Company (HLP),
Credit had month ending average receivables of $355,512,000
outstanding during the twelve months ended December 31, 1994.
During the quarter ended December 31, 1994 the daily maximum
borrowing relating to the purchase of accounts receivable from
HLP was $436,250,000.
6. Credit hereby certifies it was in accordance with the
50% restriction on non-affiliated receivables during the quarter
ended December 31, 1994, as shown in Exhibit 4 attached hereto.
7. Credit hereby certifies that during the period October
1, 1994 through December 31, 1994, $3,900,000 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.
EXHIBIT INDEX
-------------
Exhibit Transmission
Number Exhibit Method
------- ------- ------------
1 Balance sheet as of December 31, Electronic
1994, statements of income for the
three and twelve month periods
ended December 31, 1994, and
notes to the financial statements.
2 Commercial paper outstanding at Electronic
December 31, 1994.
3 Earnings coverage for the period Electronic
from October 1, 1994 through
December 31, 1994 and capital
structure at December 31, 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 October 1, 1994 through
December 31, 1994.
5 Discount calculation for affiliated Electronic
companies for the three months
ended December 31, 1994.
6 Analysis of the allowed returns on Electronic
common equity for affiliated
companies at December 31, 1994.
7 Factoring expense savings for Electronic
affiliated companies for the three
months ended December 31, 1994.
<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 29th day of March 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> 4
EXHIBIT 1
---------
CSW CREDIT, INC.
BALANCE SHEET
DECEMBER 31, 1994
(thousands)
UNAUDITED
ASSETS
-------
Accounts receivable-affiliated $312,751
Accounts receivable-non-affiliated 326,090
Less: Allowance for doubtful accounts 6,401
--------
632,440
Cash and temporary cash investments 5
Other assets 11,111
--------
$643,556
========
LIABILITIES AND STOCKHOLDER'S EQUITY
------------------------------------
Short-term debt $572,979
Deferred credit 12,945
Other liabilities 11,443
Unearned revenues 3,122
Stockholder's equity
Common stock, no par; authorized
1,000 shares; issued and
outstanding 226 shares 1
Paid-in capital 43,066
--------
$643,556
========
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 DECEMBER 31, 1994
(thousands)
UNAUDITED
Three Months Ended Twelve Months Ended
-------------------------- --------------------------
1994 1993 1994 1993
------------ ------------- ------------ -------------
REVENUES $15,771 $12,592 $59,362 $56,488
------ ------- ------- -------
OPERATING EXPENSES
Interest 9,006 5,704 31,201 22,210
Provision for
bad debts 2,174 2,016 9,347 15,206
Credit line fees 836 465 2,153 1,782
General and
administrative 1,769 1,935 6,940 7,142
------ ------- ------- -------
13,785 10,120 49,641 46,340
------ ------- ------- -------
NCOME BEFORE TAXES 1,986 2,472 9,721 10,148
------ ------- ------- -------
FEDERAL INCOME TAXES
Current 54 130 3,755 7,267
Deferred 641 190 (987) (4,311)
------ ------- ------- -------
695 320 2,768 2,956
------ ------- ------- -------
NET INCOME BEFORE
CUMULATIVE EFFECT
OF ACCOUNTING
CHANGE - $ 2,152 - $ 7,192
CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING
FOR SFAS 109 - - - $ 164
NET INCOME $ 1,291 $ 2,152 $ 6,953 $ 7,356
====== ======= ======= =======
The accompanying notes to financial statements
are an integral part of these statements.
<PAGE> 6
CSW CREDIT, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 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 28% for the twelve
months ended December 31, 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 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 December 31, 1994, was 4.4%. At
December 31, 1994, 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.
DECEMBER 31, 1994
(thousands)
MATURITY ISSUE PAR DISCOUNT
DATE DATE AMOUNT RATE
-------- -------- -------- --------
01/03/95 11/04/94 $ 5,700 5.6000%
01/10/95 12/01/94 11,300 6.0100
01/17/95 11/15/94 20,000 5.7200
01/17/95 10/21/94 8,800 5.4800
01/18/95 11/21/94 11,500 5.8300
01/19/95 12/12/94 8,200 6.1000
01/19/95 12/12/94 3,000 6.1000
01/23/95 10/27/94 7,200 5.5300
01/25/95 10/26/94 27,500 5.5300
01/26/95 12/19/94 15,000 6.1400
01/26/95 10/28/94 4,000 5.5400
02/01/95 11/03/94 20,000 5.6100
02/02/95 11/08/94 25,000 5.7200
02/03/95 11/04/94 14,700 5.6600
02/03/95 12/05/94 4,890 6.1500
02/06/95 12/08/94 13,700 6.1600
02/06/95 12/02/94 13,900 6.1500
02/08/95 12/06/94 20,000 6.2000
02/09/95 12/05/94 10,000 6.1500
02/10/95 12/08/94 15,000 6.1600
02/13/95 12/13/94 20,000 6.2200
02/14/95 12/09/94 30,000 6.1700
02/15/95 12/12/94 25,900 6.1700
03/02/95 12/14/94 7,000 6.3200
--------
$342,290
========
<PAGE> 9
CSW CREDIT, INC.
COMMERCIAL PAPER OUTSTANDING
GOLDMAN SACHS & CO.
DECEMBER 31, 1994
(thousands)
MATURITY ISSUE PAR DISCOUNT
DATE DATE AMOUNT RATE
-------- -------- -------- --------
01/03/95 12/01/94 $23,500 6.0000%
01/09/95 12/01/94 6,500 5.9700
01/09/95 11/15/94 15,000 5.7500
01/09/95 11/15/94 20,000 5.7500
01/11/95 12/13/94 16,400 6.1200
01/19/95 12/12/94 10,000 6.0800
01/20/95 12/05/94 5,000 6.0500
01/24/95 12/12/94 1,000 6.0800
01/26/95 12/09/94 4,000 6.1000
01/27/95 12/09/94 25,000 6.1100
01/27/95 12/07/94 25,000 6.1000
01/31/95 12/15/94 15,000 6.1300
02/01/95 08/04/94 5,000 5.0500
02/01/95 12/16/94 23,000 6.1200
02/06/95 12/02/94 15,000 6.1000
02/07/95 12/15/94 5,300 6.1800
02/07/95 12/15/94 3,000 6.1800
02/07/95 12/16/94 12,000 6.1500
02/09/95 12/19/94 3,000 6.1250
02/10/95 12/06/94 20,000 6.1700
02/10/95 12/06/94 1,489 6.1700
02/13/95 12/05/94 25,000 6.1500
02/13/95 12/08/94 15,000 6.1500
02/16/95 12/19/94 15,000 6.1700
02/27/95 12/13/94 2,000 6.2000
--------
$311,189
========
TOTAL COMMERCIAL PAPER OUTSTANDING:
Lehman Commercial Paper, Inc. $342,290
Goldman Sachs & Co. 311,189
--------
$653,479
========
<PAGE> 10
EXHIBIT 3
---------
CSW CREDIT, INC.
EARNINGS COVERAGE
(thousands, except ratios)
1994
--------------------------------------
OCTOBER NOVEMBER DECEMBER
--------- ---------- ----------
Net Income $ 432 $ 748 $ 111
Income Taxes 233 403 59
Interest Expense 2,893 2,926 3,187
--------- ---------- ----------
$ 3,558 $ 4,077 $ 3,357
======== ======== ========
Interest Expense $ 2,893 $ 2,926 $ 3,187
Ratio of Earnings
to Fixed Charges 1.23 1.39 1.05
-------- ------- --------
CAPITAL STRUCTURE
DECEMBER 31, 1994
(thousands)
Short-term Debt $ 572,979 93%
Common Equity 43,067 7%
--------- -----
Total $ 616,046 100%
========= =====
<PAGE> 11
EXHIBIT 4
---------
CSW CREDIT, INC.
AVERAGE MONTH END ACCOUNTS RECEIVABLE
(thousands)
1994
---------------------------------------------
Twelve Months Twelve Months Twelve Months
Ended Ended Ended
October 31 November 30 December 31
-------------- ------------- --------------
Non-Affiliated-Other $ 23,184 $ 23,189 $ 23,015
Non Affiliated-HL&P 357,178 356,457 355,512
Total Non-Affiliated 380,362 379,646 378,527
Less: Affiliated 382,788 382,781 379,823
Excess Restriction $ (2,426) $ (3,135) $ (1,296)
BAD DEBT WRITE-OFFS
(thousands)
1994
----------------------------------------
OCTOBER NOVEMBER DECEMBER
--------- ---------- ----------
Non-Affiliated $ 781 $ 732 $ 998
<PAGE> 12
EXHIBIT 5
---------
CENTRAL POWER AND LIGHT COMPANY
DISCOUNT CALCULATION
THREE MONTHS ENDED DECEMBER 31, 1994
Retail Wholesale
-------- ---------
Weighted Cost of Capital (Annualized) 0.061527 0.061515
Average Days Outstanding 39.48 35.61
-------- --------
Weighted Cost of Capital (Average 0.006678 0.005969
Days Outstanding)
Collection Experience Factor 0.001642 0.000000
Agency Fee Rate 0.020000 0.020000
-------- --------
Total Discount Factor 0.028321 0.025969
======== ========
ASSUMPTIONS
-----------
INTEREST RATE 0.0537
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 DECEMBER 31, 1994
Retail Wholesale
-------- ---------
Weighted Cost of Capital (Annualized) 0.059772 0.061348
Average Days Outstanding 51.53 105.90
-------- --------
Weighted Cost of Capital (Average 0.008474 0.017766
Days Outstanding)
Collection Experience Factor 0.002349 0.000000
Agency Fee Rate 0.020000 0.020000
-------- --------
Total Discount Factor 0.030824 0.037766
======== ========
ASSUMPTIONS
-----------
INTEREST RATE 0.0537
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 DECEMBER 31, 1994
Arkansas Louisiana Texas Wholesale
-------- --------- ------- ---------
Weighted Cost of Capital (Annualized) 0.061530 0.062740 0.063707 0.061514
Average Days Outstanding 37.68 42.18 32.07 38.42
-------- -------- -------- --------
Weighted Cost of Capital (Average 0.006362 0.007290 0.005598 0.006492
Days Outstanding)
Collection Experience Factor 0.001200 0.001251 0.000924 0.000000
Agency Fee Rate 0.020000 0.020000 0.020000 0.020000
-------- -------- -------- --------
Total Discount Factor 0.027562 0.028541 0.026522 0.026492
======== ======== ======== ========
ASSUMPTIONS
-----------
INTEREST RATE 0.0537
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 DECEMBER 31, 1994
Retail Wholesale
-------- ---------
Weighted Cost of Capital (Annualized) 0.060724 0.061515
Average Days Outstanding 44.10 42.87
-------- ---------
Weighted Cost of Capital (Average 0.007357 0.007228
Days Outstanding)
Collection Experience Factor 0.001356 0.000000
Agency Fee Rate 0.020000 0.020000
-------- ---------
Total Discount Factor 0.028713 0.027228
======== =========
ASSUMPTIONS
-----------
INTEREST RATE 0.0537
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 DECEMBER 31, 1994
Weighted Cost of Capital (Annualized) 0.061514
Daily Rate 0.000169
Collection Experience Factor 0.000000
Agency Fee Rate 0.020000
--------
Total Discount Factor (A)
========
ASSUMPTIONS
-----------
INTEREST RATE 0.0537
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
DECEMBER 31, 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 DECEMBER 31, 1994
(thousands)
20% Equity 5% Equity Savings
---------- --------- -------
CPL $ 2,721 $ 1,967 $ 754
PSO 1,826 1,395 431
SWEPCO 1,556 1,084 472
WTU 685 505 180
TRANSOK 1,331 964 367
-------- -------- -------
TOTAL $ 8,119 $ 5,915 $ 2,204
======== ======== =======
