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, 1995, statements of income for the three and
twelve month periods ended December 31, 1995, and notes to the
financial statements as Exhibit 1 attached hereto.
2. Credit hereby certifies that on December 31, 1995, it
had $646,300,000 face amount of commercial paper outstanding at a
weighted average cost of 5.83%. This amount consisted of
$272,200,000 issued and sold to Lehman Commercial Paper, Inc., as
dealer, and $374,100,000 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, 1995.
3. Credit hereby files as Exhibit 3 attached hereto the
earnings coverage for Credit's indebtedness for the period from
October 1, 1995 through December 31, 1995 and Credit's capital
structure at December 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 effective October 1, 1995 the allowed retail
returns on common equity for CPL and WTU changed from 13% and 12%
to 11.75% and 11.375%, respectively. PSO's, SWEPCO's, and
Transok's allowed return on common equity remained 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 $327,062,000
outstanding during the twelve months ended December 31, 1995.
During the quarter ended December 31, 1995 the daily maximum
borrowing relating to the purchase of accounts receivable from
HLP was $370,791,000.
6. Credit hereby certifies it was in accordance with the
50% restriction on non-affiliated receivables during the quarter
ended December 31, 1995, as shown in Exhibit 4 attached hereto.
7. Credit hereby certifies that any HLP receivables
acquired during the quarter were 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, 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 February 1996.
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 INDEX
-------------
Exhibit Transmission
Number Exhibit Method
- ------- ------- ------------
1 Balance sheet as of December 31, Electronic
1995, statements of income for the
three and twelve month periods
ended December 31, 1995, and
notes to the financial statements.
2 Commercial paper outstanding at Electronic
December 31, 1995.
3 Earnings coverage for the period Electronic
from October 1, 1995 through
December 31, 1995 and capital
structure at December 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 October 1, 1995 through
December 31, 1995.
5 Discount calculation for affiliated Electronic
companies for the three months
ended December 31, 1995.
6 Analysis of the allowed returns on Electronic
common equity for affiliated
companies at December 31, 1995.
7 Factoring expense savings for Electronic
affiliated companies for the three
months ended December 31, 1995.
Page 4
EXHIBIT 1
---------
CSW CREDIT, INC.
BALANCE SHEET
DECEMBER 31, 1995
(thousands)
UNAUDITED
ASSETS
-------
Accounts receivable-affiliated $341,701
Accounts receivable-non-affiliated 323,086
Less: Allowance for doubtful accounts 6,632
--------
658,155
Cash and temporary cash investments 41,777
Other assets 7,708
--------
$707,640
========
LIABILITIES AND STOCKHOLDER'S EQUITY
------------------------------------
Short-term debt $646,300
Deferred credit 13,415
Other liabilities 1,830
Unearned revenues 2,492
Stockholder's equity
Common stock, no par; authorized
1,000 shares; issued and
outstanding 234 shares 1
Paid-in capital 43,602
--------
$707,640
========
The accompanying notes to financial statements
are an integral part of these statements.
Page 5
CSW CREDIT, INC.
STATEMENTS OF INCOME
FOR THE PERIODS ENDED DECEMBER 31
(thousands)
UNAUDITED
Three Months Ended Twelve Months Ended
-------------------------- --------------------------
1995 1994 1995 1994
------------ ------------- ------------ -------------
REVENUES $17,031 $15,771 $70,550 $59,362
------ ------- ------- -------
OPERATING EXPENSES
Interest 9,802 9,006 40,100 31,201
Provision for
bad debts 3,080 2,174 12,129 9,347
Credit line fees 287 836 945 2,153
General and
administrative 990 1,769 5,377 6,940
------ ------- -------- ------
14,159 13,785 58,551 49,641
------ ------- -------- ------
INCOME BEFORE TAXES 2,872 1,986 11,999 9,721
------ ------- ------- -------
FEDERAL INCOME TAXES
Current 2,219 54 220 3,755
Deferred (1,485) 641 4,250 (987)
------ ------- ------- -------
734 695 4,470 2,768
------ ------- ------- -------
NET INCOME $ 2,138 $ 1,291 $ 7,529 $ 6,953
====== ======= ====== ========
The accompanying notes to financial statements
are an integral part of these statements.
Page 6
CSW CREDIT, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 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 37% for the twelve
months ended December 31, 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 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, 1995, was 6.0%. At
December 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 8
EXHIBIT 2
---------
CSW CREDIT, INC.
COMMERCIAL PAPER OUTSTANDING
LEHMAN COMMERCIAL PAPER, INC.
DECEMBER 31, 1995
(thousands)
MATURITY ISSUE PAR DISCOUNT WEIGHTED
DATE DATE AMOUNT RATE AVERAGE COST
-------- -------- --------- -------- ------------
01/19/96 11/06/95 $ 18,000 5.7800% 5.8495%
01/23/96 10/30/95 17,400 5.8000 5.8805
01/24/96 11/08/95 40,000 5.8100 5.8831
01/26/96 11/02/95 13,600 5.7800 5.8600
01/30/96 11/09/95 25,000 5.8000 5.8777
02/09/96 11/13/95 22,500 5.7500 5.8320
02/12/96 12/05/95 16,500 5.7500 5.8141
02/13/96 11/22/95 10,300 5.7200 5.7964
02/13/96 12/07/95 21,600 5.7500 5.8131
02/14/96 12/04/95 9,300 5.7500 5.8169
02/14/96 11/21/95 6,500 5.7200 5.7983
02/16/96 11/15/95 20,200 5.7200 5.8058
02/20/96 12/13/95 25,000 5.7300 5.7936
02/20/96 11/17/95 5,800 5.7200 5.8077
02/22/96 12/12/95 10,500 5.7200 5.7862
02/23/96 12/06/95 10,000 5.7200 5.7927
--------
$272,200
========
Page 9
CSW CREDIT, INC.
COMMERCIAL PAPER OUTSTANDING
GOLDMAN SACHS & CO.
DECEMBER 31, 1995
(thousands)
MATURITY ISSUE PAR DISCOUNT WEIGHTED
DATE DATE AMOUNT RATE AVERAGE COST
-------- -------- --------- -------- ------------
01/11/96 10/27/95 $ 12,900 5.8000% 5.8719%
01/12/96 10/26/95 15,500 5.7800 5.8533
01/17/96 11/03/95 17,104 5.8000 5.8709
01/18/96 11/08/95 1,907 5.8000 5.8671
01/18/96 11/08/95 15,693 5.8000 5.8671
01/18/96 11/07/95 8,200 5.8000 5.8681
01/22/96 11/10/95 18,000 5.7900 5.8588
01/22/96 11/14/95 6,900 5.8000 5.8652
01/22/96 11/16/95 1,600 5.7800 5.8429
01/25/96 11/03/95 1,596 5.7800 5.8581
01/25/96 11/03/95 4,000 5.7750 5.8529
01/25/96 11/09/95 18,400 5.7800 5.8524
01/29/96 11/17/95 1,000 5.7700 5.8383
01/29/96 11/13/95 4,000 5.7800 5.8524
02/05/96 12/06/95 12,500 5.7500 5.8066
02/06/96 11/27/95 2,000 5.7500 5.8160
02/06/96 11/27/95 20,200 5.7500 5.8160
02/07/96 11/15/95 15,000 5.7300 5.8076
02/08/96 11/17/95 27,700 5.7300 5.8067
02/09/96 11/13/95 31,000 5.7500 5.8320
02/15/96 11/16/95 13,700 5.7300 5.8142
02/20/96 12/13/95 15,000 5.7400 5.8039
02/21/96 12/13/95 1,700 5.7400 5.8048
02/21/96 12/08/95 14,300 5.7200 5.7890
02/22/96 12/13/95 11,800 5.7400 5.8057
02/22/96 12/11/95 8,200 5.7200 5.7871
02/27/96 12/14/95 48,700 5.7500 5.8197
02/28/96 12/15/95 25,500 5.7500 5.8197
--------
$374,100
========
TOTAL COMMERCIAL PAPER OUTSTANDING:
Lehman Commercial Paper, Inc. $272,200
Goldman Sachs & Co. 374,100
--------
$646,300
========
Page 10
EXHIBIT 3
---------
CSW CREDIT, INC.
EARNINGS COVERAGE
(thousands, except ratios)
1995
----------------------------------------
OCTOBER NOVEMBER DECEMBER
--------- ---------- ----------
Net Income $ 689 $ 651 $ 798
Income Taxes 371 (66) 429
Interest Expense 3,690 3,049 3,063
--------- ---------- ----------
$ 4,750 $ 3,633 $ 4,290
======== ======== ========
Interest Expense $ 3,690 $ 3,049 $ 3,063
Ratio of Earnings
to Fixed Charges 1.29 1.19 1.40
-------- ------- --------
CAPITAL STRUCTURE
DECEMBER 31, 1995
(thousands)
Short-term Debt $ 604,600 93%
Common Equity 43,603 7%
--------- -----
Total $ 648,203 100%
========= =====
Page 11
EXHIBIT 4
---------
CSW CREDIT, INC.
AVERAGE MONTH END ACCOUNTS RECEIVABLE
(thousands)
1995
---------------------------------------------
Twelve Months Twelve Months Twelve Months
Ended Ended Ended
October 31 November 30 December 31
-------------- ------------- --------------
Non-Affiliated-HL&P $ 329,632 $ 327,779 $ 327,062
HLP net receivables 329,632 327,779 327,062
Non-Affiliated-Other 26,666 27,167 27,675
Total Non-Affiliated 356,298 354,946 354,737
Less: Affiliated 361,545 361,668 363,931
Excess Restriction $ (5,247) $ (6,722) $ (9,194)
BAD DEBT WRITE-OFFS
(thousands)
1995
----------------------------------------
OCTOBER NOVEMBER DECEMBER
--------- ---------- ----------
Non-Affiliated $ 553 $ 719 $ 1,088
Page 12
EXHIBIT 5
---------
CENTRAL POWER AND LIGHT COMPANY
DISCOUNT CALCULATION
THREE MONTHS ENDED DECEMBER 31, 1995
Retail Wholesale
-------- ---------
Weighted Cost of Capital (Annualized) 0.064904 0.065874
Average Days Outstanding 36.93 52.79
-------- --------
Weighted Cost of Capital (Average 0.006575 0.009540
Days Outstanding)
Collection Experience Factor 0.002457 0.000000
Agency Fee Rate 0.020000 0.020000
-------- --------
Total Discount Factor 0.029031 0.029540
======== ========
ASSUMPTIONS
- -----------
INTEREST RATE 0.05830
RETAIL ROCE 0.11750
WHOLESALE ROCE 0.12980
TAX RATE 0.38000
DEBT RATIO 0.95000
EQUITY RATIO 0.05000
Page 13
PUBLIC SERVICE COMPANY OF OKLAHOMA
DISCOUNT CALCULATION
THREE MONTHS ENDED DECEMBER 31, 1995
Retail Wholesale
-------- ---------
Weighted Cost of Capital (Annualized) 0.064277 0.065874
Average Days Outstanding 46.93 95.61
-------- --------
Weighted Cost of Capital (Average 0.008261 0.017233
Days Outstanding)
Collection Experience Factor 0.002958 0.000000
Agency Fee Rate 0.020000 0.020000
-------- --------
Total Discount Factor 0.031218 0.037233
======== ========
ASSUMPTIONS
- -----------
INTEREST RATE 0.05830
RETAIL ROCE 0.11000
WHOLESALE ROCE 0.12980
TAX RATE 0.38000
DEBT RATIO 0.95000
EQUITY RATIO 0.05000
Page 14
SOUTHWESTERN ELECTRIC POWER COMPANY
DISCOUNT CALCULATION
THREE MONTHS ENDED DECEMBER 31, 1995
Arkansas Louisiana Texas Wholesale
-------- --------- ------- ---------
Weighted Cost of Capital (Annualized) 0.065890 0.067100 0.068067 0.065874
Average Days Outstanding 43.87 49.93 37.64 65.75
-------- -------- -------- --------
Weighted Cost of Capital (Average 0.007915 0.009188 0.007016 0.011861
Days Outstanding)
Collection Experience Factor 0.001566 0.001693 0.001254 0.000000
Agency Fee Rate 0.020000 0.020000 0.020000 0.020000
-------- -------- -------- --------
Total Discount Factor 0.029482 0.030881 0.028270 0.031861
======== ======== ======== ========
ASSUMPTIONS
- -----------
INTEREST RATE 0.05830
ARKANSAS ROCE 0.13000
LOUISIANA ROCE 0.14500
TEXAS ROCE 0.15700
WHOLESALE ROCE 0.12980
TAX RATE 0.38000
DEBT RATIO 0.95000
EQUITY RATIO 0.05000
Page 15
WEST TEXAS UTILITIES COMPANY
DISCOUNT CALCULATION
THREE MONTHS ENDED DECEMBER 31, 1995
Retail Wholesale
-------- ---------
Weighted Cost of Capital (Annualized) 0.064590 0.065874
Average Days Outstanding 58.41 29.18
-------- --------
Weighted Cost of Capital (Average 0.010340 0.005265
Days Outstanding)
Collection Experience Factor 0.002805 0.000000
Agency Fee Rate 0.020000 0.020000
-------- --------
Total Discount Factor 0.033145 0.025265
======== ========
ASSUMPTIONS
- -----------
INTEREST RATE 0.05830
RETAIL ROCE 0.11375
WHOLESALE ROCE 0.12980
TAX RATE 0.38000
DEBT RATIO 0.95000
EQUITY RATIO 0.05000
Page 16
TRANSOK, INC.
DISCOUNT CALCULATION
THREE MONTHS ENDED DECEMBER 31, 1995
Weighted Cost of Capital (Annualized) 0.065874
Daily Rate 0.000180
Collection Experience Factor 0.000000
Agency Fee Rate 0.020000
--------
Total Discount Factor (A)
========
ASSUMPTIONS
- -----------
INTEREST RATE 0.05830
RETURN ALLOWED 0.12980
TAX RATE 0.38000
DEBT RATIO 0.95000
EQUITY RATIO 0.05000
(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, 1995
ALLOWED
RETURN (1)
----------
CPL
- RETAIL 11.750%
- WHOLESALE 12.980%
PSO
- RETAIL 11.000%
- WHOLESALE 12.980%
SWEPCO
- ARKANSAS 13.000%
- LOUISIANA 14.500%
- TEXAS 15.700%
- WHOLESALE 12.980%
WTU
- RETAIL 11.375%
- WHOLESALE 12.980%
TRANSOK 12.980%
(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, 1995
(thousands)
20% Equity 5% Equity Savings
---------- --------- -------
CPL $ 2,353 $ 1,804 $ 549
PSO 1,721 1,340 381
SWEPCO 1,983 1,423 560
WTU 609 468 141
TRANSOK 1,754 1,304 450
-------- -------- -------
TOTAL $ 8,420 $ 6,339 $ 2,081
======== ======== =======
Page 19
