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, 1996, statements of income for the three and
twelve month periods ended March 31, 1996, and notes to the
financial statements as Exhibit 1 attached hereto.
2. Credit hereby certifies that on March 31, 1996, it had
$588,200,000 face amount of commercial paper outstanding at a
weighted average cost of 5.36%. This amount consisted of
$281,200,000 issued and sold to Lehman Commercial Paper, Inc., as
dealer, and $307,000,000 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 March 31, 1996.
3. Credit hereby files as Exhibit 3 attached hereto the
earnings coverage for Credit's indebtedness for the period from
January 1, 1996 through March 31, 1996 and Credit's capital
structure at March 31, 1996. Credit hereby files as Exhibit 4
attached hereto the twelve month average of outstanding accounts
receivable and bad debt write-offs related to non-affiliated
companies during said period as of the end of each month.
4. With respect to affiliated companies, Credit hereby
certifies that effective January 1, 1996, the wholesale allowed
returns on common equity for CPL, PSO, SWEPCO, WTU and Transok
changed from 12.98% to 12.30%. The allowed retail returns on
common equity for SWEPCO's Arkansas jurisdiction was 13.0% for
January 1, 1996 through February 21, 1996 and 14.6% for February
22, 1996 through March 31, 1996 but remained unchanged from the
previous certificate of notification for SWEPCO's Texas and
Louisiana jurisdictions. CPL, PSO, WTU and Transok's allowed
return on common equity remained unchanged 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 $330,035,000
outstanding during the twelve months ended March 31, 1996.
During the quarter ended March 31, 1996 the daily maximum
borrowing relating to the purchase of accounts receivable from
HLP was $318,751,000.
6. Credit hereby certifies it was in accordance with the
50% restriction on non-affiliated receivables during the quarter
ended March 31, 1996, 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> 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 14th day of May 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
<PAGE> 4
EXHIBIT INDEX
-------------
Exhibit Transmission
Number Exhibit Method
- ------- ------- ------------
1 Balance sheet as of March 31, Electronic
1996, statements of income for the
three and twelve month periods
ended March 31, 1996, and
notes to the financial statements.
2 Commercial paper outstanding at Electronic
March 31, 1996.
3 Earnings coverage for the period Electronic
from January 1, 1996 through
March 31, 1996 and capital
structure at March 31, 1996.
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, 1996 through
March 31, 1996.
5 Discount calculation for affiliated Electronic
companies for the three months
ended March 31, 1996.
6 Analysis of the allowed returns on Electronic
common equity for affiliated
companies at March 31, 1996.
7 Factoring expense savings for Electronic
affiliated companies for the three
months ended March 31, 1996.
<PAGE> 5
EXHIBIT 1
---------
CSW CREDIT, INC.
BALANCE SHEET
MARCH 31, 1996
(thousands)
UNAUDITED
ASSETS
-------
Accounts receivable, net of allowance for
doubtful accounts of $3,931 $641,622
Cash and temporary cash investments 67
Deferred income taxes 3,691
Other assets 2,180
--------
$647,560
========
LIABILITIES AND STOCKHOLDER'S EQUITY
------------------------------------
Short-term debt $588,200
Deferred credit 13,028
Other liabilities 3,619
Unearned revenues 1,117
Stockholder's equity
Common stock, no par; authorized
1,000 shares; issued and
outstanding 232 shares 1
Paid-in capital 41,595
--------
$647,560
========
The accompanying notes to financial statements
are an integral part of these statements.
<PAGE> 6
CSW CREDIT, INC.
STATEMENTS OF INCOME
FOR THE PERIODS ENDED MARCH 31
(thousands)
UNAUDITED
Three Months Ended Twelve Months Ended
-------------------------- --------------------------
1996 1995 1996 1995
------------ ------------- ------------ -------------
REVENUES $15,027 $14,650 $66,325 $58,329
------ ------- ------- -------
OPERATING EXPENSES
Interest 9,038 9,126 40,012 35,095
Provision for
bad debts 2,752 2,150 12,731 9,568
Credit line fees 246 (40) 1,231 1,650
General and
administrative 219 299 695 1,464
------ ------- ------- -------
12,255 11,535 54,669 47,777
------ ------- ------- -------
INCOME BEFORE TAXES 2,772 3,115 11,656 10,552
------ ------- ------- -------
FEDERAL INCOME TAXES
Current 934 (3,835) 5,026 (771)
Deferred - 4,827 (577) 3,835
------ ------- ------- -------
934 992 4,449 3,064
------ ------- ------- -------
NET INCOME $ 1,838 $ 2,123 $ 7,207 $ 7,488
====== ======= ======= =======
The accompanying notes to financial statements
are an integral part of these statements.
<PAGE> 7
CSW CREDIT, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996
UNAUDITED
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CSW Credit, Inc. (Company) is a wholly owned subsidiary of
Central and South West Corporation (CSW), whose primary business
is to purchase, without recourse, the accounts receivable of
certain CSW subsidiary companies and non-affiliated companies.
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 written off when they are determined to be uncollectable.
FEDERAL INCOME TAXES
The Company, together with affiliated companies, files a
consolidated Federal income tax return and participates in a tax
sharing agreement with the other members of the CSW system.
Federal income tax expense resulted in an effective rate of 38%
for the twelve months ended March 31, 1996, and 29% for the
twelve months ended March 31, 1995. The difference in the
effective rates is primarily due to consolidated allocations and
true-ups of prior year income tax accruals.
Deferred income taxes for the three months and twelve months
ended March 31, 1996 vary from the three months and twelve months
ended March 31, 1995 primarily due to recognition differences of
book and income tax deductions.
STATEMENTS OF CASH FLOWS
Cash equivalents are considered to be highly liquid debt
instruments purchased with a maturity of three months or less.
Accordingly, the Company's temporary cash investments are
considered cash equivalents.
RELATED PARTY TRANSACTIONS
Central and South West Services, Inc., a wholly owned
subsidiary of CSW, provides administrative services to the
Company and is reimbursed for the cost of such services.
<PAGE> 8
USE OF ESTIMATES
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of financial statements and the reported
amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
(2) REGULATION
The Company is subject to regulation by the Securities and
Exchange Commission (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.
(3) SHORT-TERM FINANCING
The Company issues commercial paper that is secured by the
assignment of its receivables. The weighted average interest
rates for the twelve months ended March 31, 1996, was 5.85%. At
March 31, 1996, the Company had a revolving credit agreement
aggregating $900 million to back up its commercial paper program.
(4) HOUSTON LIGHTING & POWER COMPANY
The Company entered into an agreement with Houston Lighting
& Power Company (HLP) to purchase substantially all of HLP's
utility receivables.
The Company is currently subject to a SEC restriction (50%
Restriction) such that the average amount of non-affiliated
receivables is less that the average of the preceding twelve
calendar month-end balances of affiliated account receivables
outstanding. The Company received SEC authority to sell a
sufficient amount of HLP receivables acquired by the Company from
HLP to third parties such that the Company remains in compliance
with the 50% Restriction. The Company has been and is in
compliance with the 50% Restriction.
(5) FINANCIAL INSTRUMENTS
CASH, TEMPORARY CASH INVESTMENTS, AND SHORT-TERM DEBT
The fair value equals the carrying amount as stated on the
balance sheets because of the short maturity of those
instruments.
<PAGE> 9
EXHIBIT 2
---------
CSW CREDIT, INC.
COMMERCIAL PAPER OUTSTANDING
LEHMAN COMMERCIAL PAPER, INC.
MARCH 31, 1996
(thousands)
MATURITY ISSUE PAR DISCOUNT WEIGHTED
DATE DATE AMOUNT RATE AVERAGE COST
-------- -------- --------- -------- ------------
05/17/96 03/18/96 $ 20,000 5.3700% 5.4185%
05/10/96 03/20/96 20,000 5.3700 5.4112
05/02/96 03/12/96 7,100 5.3400 5.3807
05/03/96 03/13/96 23,500 5.3500 5.3909
05/13/96 03/26/96 10,600 5.4300 5.4696
05/08/96 03/27/96 5,000 5.4500 5.4849
05/09/96 03/21/96 22,000 5.4200 5.4603
04/29/96 03/25/96 12,400 5.4300 5.4588
04/08/96 02/16/96 23,300 5.2500 5.2901
04/09/96 02/20/96 33,200 5.2700 5.3081
04/03/96 01/12/96 25,000 5.4500 5.5185
04/02/96 02/14/96 20,000 5.2800 5.3174
04/23/96 03/08/96 13,900 5.3500 5.3868
04/22/96 03/11/96 12,200 5.3200 5.3532
04/19/96 02/22/96 10,000 5.2400 5.2838
04/17/96 02/23/96 23,000 5.2300 5.2714
--------
$281,200
========
<PAGE> 10
CSW CREDIT, INC.
COMMERCIAL PAPER OUTSTANDING
GOLDMAN SACHS & CO.
MARCH 31, 1996
(thousands)
MATURITY ISSUE PAR DISCOUNT WEIGHTED
DATE DATE AMOUNT RATE AVERAGE COST
-------- -------- --------- -------- ------------
05/15/96 03/18/96 $ 31,000 5.3500% 5.3965%
04/18/96 03/20/96 11,200 5.4000 5.4236
04/16/96 03/07/96 10,000 5.2700 5.3010
04/10/96 03/08/96 25,000 5.3200 5.3461
05/06/96 03/22/96 6,200 5.4000 5.4367
05/07/96 03/28/96 10,200 5.4500 5.4832
05/09/96 03/21/96 22,000 5.3900 5.4298
05/24/96 03/22/96 27,000 5.3800 5.4311
04/26/96 02/27/96 12,100 5.2200 5.2650
04/04/96 02/15/96 20,000 5.2300 5.2675
04/11/96 02/20/96 20,000 5.2200 5.2589
04/04/96 01/12/96 20,000 5.4200 5.4886
04/03/96 02/15/96 23,200 5.2300 5.2667
04/25/96 02/26/96 13,000 5.2000 5.2447
04/24/96 02/28/96 23,400 5.2200 5.2627
04/12/96 02/21/96 11,400 5.2500 5.2893
04/19/96 02/22/96 21,300 5.2200 5.2635
--------
$307,000
========
TOTAL COMMERCIAL PAPER OUTSTANDING:
Lehman Commercial Paper, Inc. $281,200
Goldman Sachs & Co. 307,000
--------
$588,200
========
<PAGE> 11
EXHIBIT 3
---------
CSW CREDIT, INC.
EARNINGS COVERAGE
(thousands, except ratios)
1996
----------------------------------------
JANUARY FEBRUARY MARCH
--------- ---------- ----------
Net Income $ 607 $ 1,212 $ 19
Income Taxes 308 634 (8)
Interest Expense 3,251 2,963 2,824
--------- ---------- ----------
$ 4,166 $ 4,809 $ 2,835
======== ======== ========
Interest Expense $ 3,251 $ 2,963 $ 2,824
Ratio of Earnings
to Fixed Charges 1.28 1.62 1.00
-------- ------- --------
CAPITAL STRUCTURE
MARCH 31, 1996
(thousands)
Short-term Debt $ 588,200 93%
Common Equity 41,596 7%
--------- -----
Total $ 629,796 100%
========= =====
<PAGE> 12
EXHIBIT 4
---------
CSW CREDIT, INC.
AVERAGE MONTH END ACCOUNTS RECEIVABLE
(thousands)
1996
---------------------------------------------
Twelve Months Twelve Months Twelve Months
Ended Ended Ended
January 31 February 29 March 31
-------------- ------------- --------------
Non-Affiliated-HL&P $ 328,782 $ 328,702 $ 330,035
HLP net receivables 328,782 328,702 330,035
Non-Affiliated-Other 27,677 27,107 27,261
Total Non-Affiliated 356,459 355,809 357,296
Less: Affiliated 367,135 374,446 377,789
Excess Restriction $ (10,676) $ (18,637) $ (20,493)
BAD DEBT WRITE-OFFS
(thousands)
1996
----------------------------------------
JANUARY FEBRUARY MARCH
--------- ---------- ----------
Non-Affiliated $ 981 $ 817 $ 550
<PAGE> 13
EXHIBIT 5
---------
CENTRAL POWER AND LIGHT COMPANY
DISCOUNT CALCULATION
THREE MONTHS ENDED MARCH 31, 1996
Retail Wholesale
-------- ---------
Weighted Cost of Capital (Annualized) 0.062339 0.062782
Average Days Outstanding 34.87 7.52
-------- --------
Weighted Cost of Capital (Average 0.005978 0.001297
Days Outstanding)
Collection Experience Factor 0.002204 0.000000
Agency Fee Rate 0.020000 0.020000
-------- --------
Total Discount Factor 0.028182 0.021297
======== ========
ASSUMPTIONS
- -----------
INTEREST RATE 0.05560
RETAIL ROCE 0.11750
WHOLESALE ROCE 0.12300
TAX RATE 0.38000
DEBT RATIO 0.95000
EQUITY RATIO 0.05000
<PAGE> 14
PUBLIC SERVICE COMPANY OF OKLAHOMA
DISCOUNT CALCULATION
THREE MONTHS ENDED MARCH 31, 1996
Retail Wholesale
-------- ---------
Weighted Cost of Capital (Annualized) 0.061734 0.062782
Average Days Outstanding 43.78 110.53
-------- --------
Weighted Cost of Capital (Average 0.007424 0.019179
Days Outstanding)
Collection Experience Factor 0.002519 0.000000
Agency Fee Rate 0.020000 0.020000
-------- --------
Total Discount Factor 0.029943 0.039179
======== ========
ASSUMPTIONS
- -----------
INTEREST RATE 0.05560
RETAIL ROCE 0.11000
WHOLESALE ROCE 0.12300
TAX RATE 0.38000
DEBT RATIO 0.95000
EQUITY RATIO 0.05000
<PAGE> 15
SOUTHWESTERN ELECTRIC POWER COMPANY
DISCOUNT CALCULATION
THREE MONTHS ENDED MARCH 31, 1996
Arkansas Louisiana Texas Wholesale
-------- --------- -------- ---------
Weighted Cost of Capital (Annualized) 0.063900 0.064557 0.065524 0.062782
Average Days Outstanding 43.19 48.14 38.43 96.88
-------- -------- -------- --------
Weighted Cost of Capital (Average 0.007574 0.008536 0.006906 0.016899
Days Outstanding)
Collection Experience Factor 0.002204 0.002275 0.001665 0.000000
Agency Fee Rate 0.020000 0.020000 0.020000 0.020000
-------- -------- -------- --------
Total Discount Factor 0.029778 0.030811 0.028571 0.036899
======== ======== ======== ========
ASSUMPTIONS
- -----------
INTEREST RATE 0.05560
ARKANSAS ROCE (1-1-96 to 2-21-96) 0.13000
ARKANSAS ROCE (2-22-96 to 3-31-96) 0.14600
LOUISIANA ROCE 0.14500
TEXAS ROCE 0.15700
WHOLESALE ROCE 0.12300
TAX RATE 0.38000
DEBT RATIO 0.95000
EQUITY RATIO 0.05000
<PAGE> 16
WEST TEXAS UTILITIES COMPANY
DISCOUNT CALCULATION
THREE MONTHS ENDED MARCH 31, 1996
Retail Wholesale
-------- ---------
Weighted Cost of Capital (Annualized) 0.062036 0.062782
Average Days Outstanding 42.14 26.66
-------- ---------
Weighted Cost of Capital (Average 0.007190 0.004581
Days Outstanding)
Collection Experience Factor 0.003344 0.000000
Agency Fee Rate 0.020000 0.020000
-------- ---------
Total Discount Factor 0.030535 0.024581
======== =========
ASSUMPTIONS
- -----------
INTEREST RATE 0.05560
RETAIL ROCE 0.11375
WHOLESALE ROCE 0.12300
TAX RATE 0.38000
DEBT RATIO 0.95000
EQUITY RATIO 0.05000
<PAGE> 17
TRANSOK, INC.
DISCOUNT CALCULATION
THREE MONTHS ENDED MARCH 31, 1996
Weighted Cost of Capital (Annualized) 0.062782
Daily Rate 0.000172
Collection Experience Factor 0.000000
Agency Fee Rate 0.020000
--------
Total Discount Factor (A)
========
ASSUMPTIONS
- -----------
INTEREST RATE 0.05560
RETURN ALLOWED 0.12300
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> 18
EXHIBIT 6
---------
CSW CREDIT, INC.
ALLOWED RETURNS ON COMMON EQUITY
MARCH 31, 1996
ALLOWED
RETURN (1)
----------
CPL
- RETAIL 11.750%
- WHOLESALE 12.300%
PSO
- RETAIL 11.000%
- WHOLESALE 12.300%
SWEPCO
- ARKANSAS (1-1-96 to 2-21-96) 13.000%
- ARKANSAS (2-22-96 to 3-31-96) 14.600%
- LOUISIANA 14.500%
- TEXAS 15.700%
- WHOLESALE 12.300%
WTU
- RETAIL 11.375%
- WHOLESALE 12.300%
TRANSOK 12.300%
(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 MARCH 31, 1996
(thousands)
20% Equity 5% Equity Savings
---------- --------- -------
CPL $ 1,894 $ 1,433 $ 461
PSO 1,455 1,119 336
SWEPCO 1,819 1,284 535
WTU 605 461 144
TRANSOK 2,419 1,804 615
-------- -------- -------
TOTAL $ 8,192 $ 6,101 $ 2,091
======== ======== =======
