File No. 70-8887
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 2 TO
FORM U-1 APPLICATION-DECLARATION
UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
-----------------------------------------------
PUBLIC SERVICE COMPANY OF OKLAHOMA
212 East 6th Street
Tulsa, Oklahoma 74119-1212
(Names of company filing this statement and
address of principal executive office)
---------------------------------------------------
CENTRAL AND SOUTH WEST CORPORATION
(Name of top registered holding company parent)
---------------------------------------------------
William R. McKamey
General Manager
Public Service Company of Oklahoma
212 East 6th Street
Tulsa, Oklahoma 74119-1212
Wendy G. Hargus
Treasurer
Central and South West Corporation
1616 Woodall Rodgers Freeway
Dallas, Texas 75202
Joris M. Hogan, Esq.
Milbank, Tweed, Hadley & McCloy
1 Chase Manhattan Plaza
New York, New York 10005
(Name and addresses of agents for service)
<PAGE>
Public Service Company of Oklahoma ("PSO"), an Oklahoma
corporation and a wholly-owned electric utility subsidiary of Central and South
West Corporation ("CSW"), a Delaware corporation and a registered holding
company under the Public Utility Holding Company Act of 1935, as amended (the
"Act"), hereby files this Amendment No. 2 to the Form U-1 Application-
Declaration in this File No. 70-8887 (the "Application") for the purposes of
amending Items 1 and 6 in the following respects. In all other respects, the
Application as previously filed and amended will remain the same. Item 1.
Description of Proposed Transaction.
Item 1 is hereby amended to add the following information:
Financial Background of NSSI and Numanco Inc.
Set forth below is PSO's understanding of the financial situation of
NSSI and Numanco Inc. prior to their entry into proceedings for reorganization
in the Bankruptcy Court. Prior to filing for bankruptcy protection, NSSI had two
outstanding loans from two separate banks: a $7 million term loan secured by
fixed assets of NSSI and its subsidiaries, and a $20 million revolving credit
facility secured by their current assets, primarily receivables. The loans went
into technical default under certain covenants in the loan agreements by the end
of 1994. In order to attempt to avoid the consequences of such default, the
borrowing base and interest rate provisions of the loans were amended, the NSSI
board installed a new management team and outside consultants were retained to
assist with the company's financial restructuring.
<PAGE>
Although NSSI's financial restructuring was progressing, one of the
lenders, in September 1995, indicated it would no longer fund advancements under
the line of credit extended by it. Consequently, because all current assets were
pledged to the banks, NSSI had no access to working capital and was forced to
file for bankruptcy protection. No default in the timely payment of principal
and interest on the loans had ever occurred. Indeed, Numanco Inc. was profitable
for the two years prior to the filing for bankruptcy protection. Exhibit 13
hereto contains an income statement and balance sheet for Numanco Inc. for the
years 1993, 1994 and 1995.
Steps are being taken to provide for the financial soundness of the
Numanco Companies. Numanco LLC (and Numanco Inc. until Numanco LLC succeeds to
all of the business of Numanco Inc.) currently has a four year business plan
pursuant to which it will first seek to secure its existing customer base, then
expand services within its current areas of business and finally apply its
expertise in expanded areas of business. To achieve these goals, Numanco LLC is
divided into four divisions, each run by a vice president.
1. Health Physics and Decontamination Services. Staff
augmentation in the radiological and decontamination field
is Numanco LLC's core business and is expected to contribute
over 90% of the company's revenues over the next three
years. Market expansion will be focused primarily on
increasing market share within the utility industry, and
providing the same or similar services to Department of
2
<PAGE>
Energy ("DOE") and Department of Defense ("DOD") facilities. The
services provided range from project engineering and project scheduling
to the provision of lower levels of technical assistance. 2.
Maintenance. Maintenance is a broad service category that encompasses
over 150 job disciplines. The services provided range from turn-key
maintenance projects to staff augmentation of specialty employees such
as welders and machinists. Special emphasis will be placed on
developing this line of business because of the wide market potential
and the diversification it provides. Numanco LLC plans to expand its
markets through direct bids as well as cooperative arrangements with
other equipment and service providers. 3. Training. Worker training in
power plants, whether fossil or nuclear, focuses on Occupational Safety
and Health Act ("OSHA") requirements. Numanco LLC has developed
numerous training programs for its temporary employees. Employees are
required to participate in these programs prior to working at a plant
site. Several utilities have expressed an interest in Numanco's
providing this same training to their employees. The market for these
services is principally the electric utility industry with the
potential to expand into DOE and DOD facilities. 4. Quality Assurance
and Quality Control ("QA/QC"). In order to provide services to the
nuclear industry, Numanco LLC has had to develop extensive QA/QC
programs. These
3
<PAGE>
programs are audited by the Nuclear Regulatory Commission, Numanco's
customers and other industry groups. Developing and maintaining a QA/QC
program requires significant expertise and discipline. Several
utilities have expressed interest in Numanco's developing and
supporting their QA/QC efforts in both nuclear and fossil facilities.
Exhibit 14 hereto contains a summary of the types of
personnel available and marketed through Numanco LLC for each of
the above divisions.
In addition to its analysis of the financial background of Numanco Inc.
and the business plans of Numanco LLC, PSO has considered the following
financial aspects of the Numanco Companies in connection with its proposed
investments in them. The purchase price paid by Nuvest for the Numanco Stock was
based on contracts in hand at the time of the purchase, coupled with the belief
that operating costs could be decreased by moving the company to Tulsa, Oklahoma
and lowering fixed overhead costs, by appointing an experienced manager to
operate the company and by securing financing at more favorable rates. Payment
of the purchase price by Canton was subject to the satisfaction of three
principal conditions: (i) Numanco Inc. would be purchased free from all debts,
liabilities, liens or encumbrances, (ii) all backlog contracts (totaling
approximately $28,000,000) were in effect with no known contractual problems or
issues, and (iii) NSSI would not compete with Numanco Inc. A substantial due
diligence review of Numanco was performed focusing primarily on operations and
personnel issues. Exhibit 15 hereto contains a
4
<PAGE>
list of major items evaluated prior to the purchase of the
Numanco Stock.
As of July 30, 1996, the backlog contracts have increased to
approximately $42 million. Confidential Exhibit 16 hereto lists such backlog by
customer, Confidential Exhibit 17 hereto contains a table showing financial
projections, with certain assumptions, for Numanco through the end of 1997, and
Confidential Exhibit 18 hereto contains financial statements of Numanco Inc. and
Numanco LLC for the thirteen months ended August 31, 1996. Services to the CSW
System
Numanco LLC is currently providing staff augmentation and radiological
services to the South Texas Project ("STP") nuclear facility under a multi-year
contract providing for aggregate payments to Numanco of approximately $1.4
million. STP is partially owned by Central Power and Light Company, a CSW
subsidiary. Also, Numanco LLC is currently involved in preliminary discussions
with PSO regarding possible supplemental substation maintenance support. PSO is
in the process of drafting job descriptions that can be used by Numanco LLC to
develop pricing information. The cost of all services provided by Numanco LLC to
the CSW System will be determined by arms-length negotiation or, more likely,
through competitive bidding.
While Numanco's short term focus is to stabilize existing business, it
would also benefit from providing services to PSO and the CSW System. There are
several areas where Numanco and the CSW System may achieve synergies, including
shared training program development and management of retired employees of the
5
<PAGE>
CSW System who currently provide consulting services to PSO and
maintenance support during peak periods.
Item 6. Exhibits and Financial Statements
Item 6 is hereby amended to add and/or file the following exhibits:
Exhibit 4 -
Financial Statements of Public Service Company of
Oklahoma, as of September 30, 1996.
Exhibit 13 -
Numanco Inc. Income Statement and Balance Sheet for the
years ended 1993, 1994 and 1995
Exhibit 14 -
Types of personnel available through Numanco LLC.
Exhibit 15 -
List of major items evaluated prior to the purchase of the
Numanco Stock.
Confidential Exhibit 16 -
Backlog by Customer.
Confidential Exhibit 17 -
Financial Projections.
Confidential Exhibit 18 -
Financial statements of Numanco Inc. and Numanco LLC for
the thirteen months ended August 31, 1996.
6
<PAGE>
S I G N A T U R E
- - - - - - - - -
Pursuant to the requirements of the Public Utility Holding
Company Act of 1935, as amended, the undersigned company has duly caused this
document to be signed on its behalf by the undersigned thereunto duly
authorized.
Dated: December 3, 1996
PUBLIC SERVICE COMPANY
OF OKLAHOMA
By:/s/ William R. McKamey
William R. McKamey
General Manager
7
<PAGE>
INDEX OF EXHIBITS
EXHIBIT TRANSMISSION
NUMBER EXHIBITS METHOD
4 Financial Statements of Public Electronic
Service Company of Oklahoma, as of
September 30, 1996
13 Numanco Inc. Income Statement and Electronic
Balance Sheet for the years ended
1993, 1994 and 1995
14 Types of personnel available through Electronic
Numanco LLC.
15 List of major items evaluated prior Electronic
to the purchase of the Numanco Stock.
16 Backlog by Customer. Paper
(Confidential)
17 Financial Projections. Paper
(Confidential)
18 Financial statements of Numanco Inc. Paper
and Numanco LLC for the thirteen
months ended August 31, 1996.
(Confidential)
INDEX EXHIBIT 4
TO
FINANCIAL STATEMENTS Page
Number
CENTRAL AND SOUTH WEST CORPORATION AND SUBSIDIARY COMPANIES
Consolidated Balance Sheets - Per Books and Pro Forma
as of September 30, 1996 2 - 3
Consolidated Statement of Income for the Twelve Months Ended
September 30, 1996 4
Consolidated Statement of Retained Earnings for the Twelve Months
Ended September 30, 1996 5
Statements of Long-Term Debt Outstanding as of September 30, 1996 6 - 9
Statements of Preferred Stock Outstanding as of September 30, 1996 10
CENTRAL AND SOUTH WEST CORPORATION (CORPORATE)
Balance Sheets - Per Books and Pro Forma as of September 30, 1996 11
Statement of Income for the Twelve Months Ended September 30, 1996 12
PUBLIC SERVICE COMPANY OF OKLAHOMA
Balance Sheets - Per Books and Pro Forma as of September 30, 1996 13 - 14
Statement of Income for the Twelve Months Ended September 30, 1996 15
Statement of Retained Earnings for the Twelve Months Ended
September 30, 1996 16
PRO FORMA ADJUSTMENTS TO BALANCE SHEETS 17
STATEMENT OF CHANGES 18
CAPITALIZATION RATIOS - Per books and Pro forma 19
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 20
<PAGE>
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
PER BOOKS AND PRO FORMA
AS OF SEPTEMBER 30, 1996
UNAUDITED
(Millions)
Per Pro Forma Pro
Books Adjustments Forma
-------- ----------- --------
ASSETS
FIXED ASSETS
Electric utility plant
Production $5,833 $5,833
Transmission 1,521 1,521
Distribution 4,040 4,040
General 1,297 1,297
Construction work in progress 203 203
Nuclear fuel 175 175
Other Diversified 57 57
-------- -------- --------
13,126 13,126
Less - Accumulated depreciation 4,820 4,820
-------- -------- --------
8,306 8,306
-------- -------- --------
CURRENT ASSETS
Cash and temporary cash investments 422 3 425
Special Deposits 60 60
Accounts receivable 1,216 (4) 1,212
Materials and supplies, at average cost 179 179
Electric fuel inventory, substantially at
average cost 111 111
Prepayments and other 164 164
-------- -------- --------
2,152 (1) 2,151
-------- -------- --------
DEFERRED CHARGES AND OTHER ASSETS
Deferred plant costs 505 505
Mirror CWIP asset - net 302 302
Other non-utility investments 292 1 293
Income tax related regulatory assets, net 239 239
Goodwill 1,374 1,374
Other 422 422
-------- -------- --------
3,134 1 3,135
-------- -------- --------
$13,592 $0 $13,592
======== ======== ========
<PAGE>
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
PER BOOKS AND PRO FORMA
AS OF SEPTEMBER 30, 1996
UNAUDITED
(Millions)
Per Pro Forma Pro
Books Adjustments Forma
-------- ----------- --------
CAPITALIZATION AND LIABILITIES
CAPITALIZATION
Common Stock Equity -
Common stock, $3.50 par value,
authorized 350,000,000 shares;
issued and outstanding 210,800,000 shares $737 $737
Paid-in capital 999 999
Retained earnings 1,996 1,996
Foreign currency translation adjustment (3) (3)
-------- -------- --------
Total Common Stock Equity 3,729 3,729
Preferred stock
Not subject to mandatory redemption 293 293
Subject to mandatory redemption 32 32
Long-term debt 4,315 4,315
-------- -------- --------
Total Capitalization 8,369 8,369
-------- -------- --------
CURRENT LIABILITIES
Long-term debt/preferred stock
due within twelve months 65 65
Short-term debt 378 378
Short-term debt - CSW Credit 809 809
Loan Notes 97 97
Accounts payable 457 457
Accrued taxes 451 451
Accrued interest 74 74
Other 175 175
-------- -------- --------
2,506 2,506
-------- -------- --------
DEFERRED CREDITS
Accumulated deferred income taxes 2,229 2,229
Investment tax credits 295 295
Other 193 193
-------- -------- --------
2,717 2,717
-------- -------- --------
$13,592 $0 $13,592
======== ======== ========
<PAGE>
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF INCOME
FOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 1996
UNAUDITED
(Millions)
OPERATING REVENUES $4,806
--------
OPERATING EXPENSES AND TAXES
Fuel and purchased power 1,193
United Kingdom Cost of Sales 1,118
Other operating 719
Maintenance 154
Depreciation and amortization 454
Taxes, other than income 177
Income taxes 233
--------
4,048
--------
OPERATING INCOME 758
--------
OTHER INCOME AND DEDUCTIONS (45)
--------
(45)
INCOME BEFORE INTEREST CHARGES 713
--------
INTEREST CHARGES
Interest on long-term debt 300
Interest on short-term debt and other 99
--------
399
--------
INCOME FROM CONTINUING OPERATIONS 314
DISCONTINUED OPERATIONS
Income from discontinued operations, net of
tax 23
Gain on the sale of discontinued
operations, net tax 113
--------
136
--------
NET INCOME 450
Preferred stock dividends 18
--------
NET INCOME FOR COMMON STOCK $432
========
<PAGE>
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF RETAINED EARNINGS
FOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 1996
UNAUDITED
(Millions)
RETAINED EARNINGS AT SEPTEMBER 30, 1995 $1,914
Add: Net income for common stock 432
--------
2,346
Deduct: Common stock dividends 348
Adjustment to retained earnings 2
--------
RETAINED EARNINGS AT SEPTEMBER 30, 1996 $1,996
========
<PAGE>
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
STATEMENT OF LONG-TERM DEBT OUTSTANDING
AS OF SEPTEMBER 30, 1996
UNAUDITED
(Millions)
CENTRAL POWER AND LIGHT COMPANY
First mortgage bonds -
Series J, 6-5/8%, due January 1, 1998 $28
Series L, 7%, due February 1, 2001 36
Series T, 7-1/2%, due December 15, 2014 112
Series AA, 7-1/2%, due March 1, 2020 50
Series BB, 6%, due October 1, 1997 200
Series CC, 7-1/4%, due October 1, 2004 100
Series DD, 7-1/8%, due December 1, 1999 25
Series EE, 7-1/2%, due December 1, 2002 115
Series FF, 6-7/8%, due February 1, 2003 50
Series GG, 7-1/8%, due February 1, 2008 75
Series HH, 6%, due April 1, 2000 100
Series II, 7-1/2%, due April 1, 2023 100
Series JJ, 7-1/2%, due May 1, 1999 100
Series KK, 6-5/8%, due July 1, 2005 200
Installment sales agreements -
Pollution control bonds
Series 1984, 7-7/8%, due September 15, 2014 6
Series 1986, 7-7/8%, due December 1, 2016 60
Series 1993, 6%, due July 1, 2028 120
Series 1995, 6-1/10%, due July 1, 2028 101
Series 1995, variable, due November 1, 2015 41
Unamortized discount (6)
Unamortized costs of reacquired debt (91)
--------
$1,522
--------
<PAGE>
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
STATEMENT OF LONG-TERM DEBT OUTSTANDING (Continued)
AS OF SEPTEMBER 30, 1996
UNAUDITED
(Millions)
PUBLIC SERVICE COMPANY OF OKLAHOMA
First mortgage bonds -
Series K, 7-1/4%, due January 1, 1999 $25
Series L, 7-3/8%, due March 1, 2002 30
Series S, 7-1/4%, due July 1, 2003 65
Series T, 7-3/8%, due December 1, 2004 50
Series U, 6-1/4%, due April 1, 2003 35
Series V, 7-3/8%, due April 1, 2023 100
Series W, 6-1/2%, due June 1, 2005 50
Long-term note
Series A-1, 5.89%, due December 15, 2000 10
Series A-2, 5.91%, due March 1, 2001 6
Series A-3, 6.02%, due March 1, 2001 5
Series A-4, 6.02%, due March 1, 2001 9
Series A-5, 6.43%, due March 30, 2000 10
Installment sales agreements -
Pollution control bonds
Series A, 5.9%, due December 1, 2007 35
Series 1984 7-7/8, due September 15, 2014 12 *
Unamortized discount (4)
Unamortized costs of reacquired debt (18)
--------
* Rounded down from 12,660,000 $420
--------
<PAGE>
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
STATEMENT OF LONG-TERM DEBT OUTSTANDING (Continued)
AS OF SEPTEMBER 30, 1996
UNAUDITED
(Millions)
SOUTHWESTERN ELECTRIC POWER COMPANY
First mortgage bonds -
Series V, 7-3/4%, due June 1, 2004 $40
Series W, 6-1/8%, due September 1, 1999 40
Series X, 7%, due September 1, 2007 90
Series Y, 6-5/8%, due February 1, 2003 55
Series Z, 7-1/4%, due July 1, 2023 45
Series AA, 5-1/4%, due April 1, 2000 45
Series BB, 6-7/8%, due October 1, 2025 80
1976 Series A, 6.2%, due November 1, 2006 7
1976 Series B, 6.2%, due November 1, 2006 1
Installment sales agreements -
Pollution control bonds
1978 Series A, 6%, due January 1, 2008 14
Series 1986, 8.2%, due July 1, 2014 82
1991 Series A, 8.2%, due August 1, 2011 17
1991 Series B, 6.9%, due November 1, 2004 12
Series 1992, 7.6%, due January 1, 2019 54
Bank loan, variable rate, due June 15, 2000 50
Railcar lease obligations 11
Unamortized premium 1
Unamortized costs of reacquired debt (44)
Amount to be redeemed within one year (4)
--------
$596
--------
WEST TEXAS UTILITIES COMPANY
First mortgage bonds -
Series P, 7-3/4%, due July 1, 2007 25
Series Q, 6-7/8%, due October 1, 2002 35
Series R, 7%, due October 1, 2004 40
Series S, 6-1/8%, due February 1, 2004 40
Series T, 7-1/2%, due April 1, 2000 40
Series U, 6-3/8%, due October 1, 2005 80
Installment sales agreement -
Pollution control bonds
Series 1984, 7-7/8%, due September 15, 2014 44
Unamortized discount and premium (1)
Unamortized costs of reacquired debt (29)
--------
$274
--------
<PAGE>
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
STATEMENT OF LONG-TERM DEBT OUTSTANDING (Continued)
AS OF SEPTEMBER 30, 1996
UNAUDITED
(millions)
CSW U.K. GROUP
Long-term debt facility, floating rate, due 2001 $729
Eurobond, 8-1/2%, due October 3, 2005 156
Eurobond, 8-7/8%, due September 27, 2006 156
Notes, 6.95%, due August 1, 2001 * 202
Notes, 7.45%, due August 1, 2006 * 202
Unamortized discount and premium (2)
--------
$1,443
--------
* The $202 million amounts result from a U.S. dollar
to British pound cross currency swamp and the
subsequent translation of those pounds back into
U.S. dollars for U.S. reporting purposes.
CENTRAL AND SOUTH WEST SERVICES, INC.
Term loan facility, Variable rate, due
December 1, 2001 60
--------
$60
--------
TOTAL CONSOLIDATED $4,315
========
<PAGE>
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
STATEMENT OF PREFERRED STOCK OUTSTANDING
AS OF SEPTEMBER 30, 1996
UNAUDITED
(Millions)
NOT SUBJECT TO MANDATORY REDEMPTION
CENTRAL POWER AND LIGHT COMPANY
4.00% Series, 100,000 shares $10
4.20% Series, 75,000 shares 7
7.12% Series, 260,000 shares 26
8.72% Series, 500,000 shares 50
Auction Money Market, 750,000 shares 75
Auction Series A, 425,000 shares 43
Auction Series B, 425,000 shares 43
Issuance expense (3)
--------
$251
--------
PUBLIC SERVICE COMPANY OF OKLAHOMA
4.00% Series, 97,900 shares $10
4.24% Series, 100,000 shares 10
--------
$20
--------
SOUTHWESTERN ELECTRIC POWER COMPANY
5.00% Series, 75,000 shares $8
4.65% Series, 25,000 shares 2
4.28% Series, 60,000 shares 6
--------
$16
--------
WEST TEXAS UTILITIES COMPANY
4.40% Series, 60,000 shares 6
--------
Total Consolidated $293
========
SUBJECT TO MANDATORY REDEMPTION
SOUTHWESTERN ELECTRIC POWER COMPANY
6.95% Series, 352,000 shares $34
Amount to be redeemed within one year (2)
--------
Total Consolidated $32
========
<PAGE>
CENTRAL AND SOUTH WEST CORPORATION
BALANCE SHEETS
PER BOOKS AND PRO FORMA
AS OF SEPTEMBER 30, 1996
UNAUDITED
(Millions)
Per Pro Forma Pro
Books Adjustments Forma
-------- ----------- --------
ASSETS
FIXED ASSETS
Electric utility plant
General $4 $4
Less - Accumulated depreciation (1) (1)
-------- -------- --------
3 3
-------- -------- --------
INVESTMENTS IN COMMON STOCK
OF SUBSIDIARY COMPANIES (at equity) 3,914 3,914
-------- -------- --------
CURRENT ASSETS
Cash and temporary cash investments 5 5
Advances to affiliates 208 208
Accounts receivable - Affiliated 162 162
Prepayments and other 8 8
-------- -------- --------
383 383
-------- -------- --------
DEFERRED CHARGES AND OTHER ASSETS 58 58
-------- -------- --------
$4,358 $0 $4,358
======== ======== ========
CAPITALIZATION
Common Stock Equity -
Common stock, $3.50 par value;
authorized 350,000,000 shares;
issued and outstanding 210,800,000 shares $737 $737
Paid-in capital 999 999
Retained earnings 1,996 1,996
-------- -------- --------
Total Common Stock Equity 3,732 3,732
-------- -------- --------
Long-term debt 0 0
-------- -------- --------
Total Capitalization 3,732 3,732
-------- -------- --------
CURRENT LIABILITIES
Short-term debt 378 378
Accounts payable and other 214 214
-------- -------- --------
592 592
-------- -------- --------
DEFERRED CREDITS 34 34
-------- -------- --------
$4,358 $0 $4,358
======== ======== ========
<PAGE>
CENTRAL AND SOUTH WEST CORPORATION
STATEMENT OF INCOME
FOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 1996
UNAUDITED
(Millions)
INCOME
Equity in earnings of subsidiaries
Central Power and Light Company $152
Public Service Company of Oklahoma 35
Southwestern Electric Power Company 73
West Texas Utilities Company 17
SEEBOARD plc 62
Transok, Inc. 22
CSW Credit, Inc. 8
CSW Energy, Inc. (9)
CSW Leasing, Inc. 1
CSW International, Inc. (4)
CSW Communications, Inc. (3)
Enershop Inc. (1)
Central and South West Services, Inc. 0
Other Income 53
--------
$406
--------
EXPENSES AND TAXES
General and administrative expenses 32
Interest expense 59
Federal income taxes (4)
--------
87
--------
DISCONTINUED OPERATIONS
Gain on sale of discontinued operations, net of tax 113
--------
NET INCOME $432
========
<PAGE>
PUBLIC SERVICE COMPANY OF OKLAHOMA
BALANCE SHEETS
PER BOOKS AND PRO FORMA
AS OF SEPTEMBER 30, 1996
UNAUDITED
(Millions)
Per Pro Forma Pro
Books Adjustments Forma
-------- ----------- --------
ASSETS
FIXED ASSETS
Electric utility plant
Production $902 $902
Transmission 371 371
Distribution 761 761
General 186 186
Construction work in progress 46 46
-------- -------- --------
2,266 2,266
Less - Accumulated depreciation 973 973
-------- -------- --------
1,293 1,293
-------- -------- --------
CURRENT ASSETS
Cash and temporary cash investments 1 3 4
Accounts receivable 27 (4) 23
Materials and supplies, at average cost 36 36
Fuel inventory, at LIFO cost 15 15
Accumulated deferred income taxes 2 2
Prepayments 2 2
-------- -------- --------
83 (1) 82
-------- -------- --------
DEFERRED CHARGES AND OTHER ASSETS 58 1 59
-------- -------- --------
$1,434 $0 $1,434
======== ======== ========
<PAGE>
PUBLIC SERVICE COMPANY OF OKLAHOMA
BALANCE SHEETS
PER BOOKS AND PRO FORMA
AS OF SEPTEMBER 30, 1996
UNAUDITED
(Millions)
Per Pro Forma Pro
Books Adjustments Forma
-------- ----------- --------
CAPITALIZATION AND LIABILITIES
CAPITALIZATION
Common stock, $15 par value;
authorized 11,000,000 shares;
issued 10,482,000 shares;
outstanding 9,013,000 shares $157 $157
Paid-in capital 180 180
Retained earnings 147 147
-------- -------- --------
Total common stock equity 484 484
Preferred stock 20 20
Long-term debt 420 420
-------- -------- --------
Total capitalization 924 924
-------- -------- --------
CURRENT LIABILITIES
Long-term debt due within twelve months 0 0
Advances from affiliates 30 30
Payable to affiliates 20 20
Accounts payable 41 41
Payables to customers 14 14
Accrued taxes 44 44
Accrued interest 11 11
Other 9 9
-------- -------- --------
169 169
-------- -------- --------
DEFERRED CREDITS
Accumulated deferred income taxes 244 244
Investment tax credits 44 44
Income tax related regulatory
liabilities, net 46 46
Other 7 7
-------- -------- --------
341 341
-------- -------- --------
$1,434 $0 $1,434
======== ======== ========
<PAGE>
PUBLIC SERVICE COMPANY OF OKLAHOMA
STATEMENT OF INCOME
FOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 1996
UNAUDITED
(Millions)
ELECTRIC OPERATING REVENUE $728
--------
OPERATING EXPENSES AND TAXES
Fuel and purchased power 324
Other operating 118
Maintenance 38
Depreciation and amortization 76
Taxes, other than income 27
Income taxes 39
--------
622
--------
OPERATING INCOME 106
--------
OTHER INCOME AND DEDUCTIONS
Other (35)
--------
(35)
--------
INCOME BEFORE INTEREST CHARGES 71
--------
INTEREST CHARGES
Interest on long-term debt 30
Interest on short-term debt and other 5
--------
35
--------
NET INCOME 36
PREFERRED STOCK DIVIDENDS 1
--------
NET INCOME FOR COMMON STOCK $35
========
<PAGE>
PUBLIC SERVICE COMPANY OF OKLAHOMA
STATEMENT OF RETAINED EARNINGS
FOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 1996
UNAUDITED
(Millions)
RETAINED EARNINGS AT SEPTEMBER 30, 1995 $162
Add: Net income (loss) for common stock 35
--------
197
Deduct: Common stock dividends 50
--------
RETAINED EARNINGS AT SEPTEMBER 30, 1996 $147
========
<PAGE>
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
PRO FORMA ADJUSTMENTS TO BALANCE SHEETS
SEPTEMBER 30, 1996
UNAUDITED
(Millions)
DR CR
-------- --------
CENTRAL AND SOUTH WEST CORPORATION AND SUBSIDIARY COMPANIES
Cash and temporary cash investments 3
Accounts receivable 3
To record the partial repayment of the advance to Numanco
Other non-utility investments 1
Accounts receivable 1
To record the equity investment in Numanco
CENTRAL AND SOUTH WEST CORPORATION
No pro forma adjustments
PUBLIC SERVICE COMPANY OF OKLAHOMA
Cash and temporary cash investments 3
Accounts receivable 3
To record the partial repayment of the advance to Numanco
Deferred charges and other assets 1
Accounts receivable 1
To record the equity investment in Numanco
<PAGE>
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
STATEMENT OF CHANGES
There have been no significant changes in the financial statements of
Central and South West Corporation and subsidiary companies subsequent to
September 30, 1996, other than in the ordinary course of business. See CSW
Combined Quarterly Report on Form 10-Q for the quarter ended September 30,
1996.
<PAGE>
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
CAPITALIZATION RATIOS
PER BOOKS AND PRO FORMA
AS OF SEPTEMBER 30, 1996
Common
Stock Preferred Long-term
Equity Stock Debt
-------- -------- --------
Central and South West Corporation
and Subsidiary Companies
(Consolidated) Per books 44.6% 3.9% 51.6%
Central and South West Corporation
and Subsidiary Companies
(Consolidated) Pro forma 44.6% 3.9% 51.6%
Central and South West Corporation (Corporate)
Per books 100.0% 0.0% 0.0%
Central and South West Corporation (Corporate)
Pro forma 100.0% 0.0% 0.0%
Public Service Company of Oklahoma
Per books 52.4% 2.2% 45.5%
Public Service Company of Oklahoma
Pro forma 52.4% 2.2% 45.5%
<PAGE>
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The notes to consolidated financial statements included in Central and
South West Corporation's 1995 Annual Report on Form 10-K are hereby
incorporated by reference and made a part of this report.
Page
Reference
1995 Annual Report on Form 10-K pages 2-32 through 2-67
Exhibit 13
Consolidated Income Statement for NSS Numanco
1995 1994 1993
Revenues 34,675,503 40,111,194 49,215,607
Cost of Sales 30,148,551 35,898,763 42,224,122
Gross Profit 4,526,952 4,212,431 6,991,485
General & Administrative 2,919,560 3,159,888 4,154,047
Income from Operations 1,607,392 1,052,543 2,837,438
Other Income (Expense)
Dividend Income
Interest (Expense) (1,047) (1,958) (2,879)
Restructuring Expenses (3,171,099)
Other Income (Expenses)
Gain/Loss from Sale of Assets (5,390) (356) 141
Interest Income 700 6,677
Other Income (Expense) 4,512 32,332 (16,899)
Total Other Income (Expense) (1,225) 36,695 (3,190,736)
Income Before Taxes 1,606,167 1,089,238 (353,298)
Income Tax Expense
Net Income After Taxes 1,606,167 1,089,238 (353,298)
Allocated Interest Expense (287,000)
Net Income 1,319,167 1,089,238 (353,298)
Number of Share 2,169,190 2,184,217 2,167,220
Earnings Per Share 0.6081 0.4987 -0.163
Consolidated Balance Sheet for NSS Numanco
Assets
1995 1994 1993
Assets:
Current Assets
Cash (524,764) (541,299) 200
Accounts Receivable
Acc'ts. Rec. - Billed 5,844,107 4,316,653 7,028,340
Acc'ts. Rec. - Unbilled 8,687 258,432 1,908,927
Acc'ts. Rec. - Unbilled Retention 12,911 18,616
Acc'ts. Rec. - Other 562,232 601,514 3,395
Less Allowance for Bad Debts (131,140) (627,436)
Net Accounts Receivable 6,296,797 4,567,778 8,940,662
Advances to Employees 143,588 267,309
Recoverable Income Taxes
Inventory
Degerred Income Taxes
Other Prepaid Expenses 84,033 56,395 88,725
Other Current Assets
Cost and Earnings in Excess
Other Current Assets
Total Current Assets 5,856,066 4,226,462 9,296,896
Property, Plant, Equipment
Furniture and Office Equipment 1,137,794 1,206,920 1,112,038
Vehicles 24,120
Machinery and Equipment
Buildings and Improvements 206,878 232,420 232,727
Land
Other Property and Equipment
Total Property, Plant, and Equip. 1,344,672 1,439,341 1,368,885
Accumulated Depreciation (1,105,654) (1,079,978) (964,603)
Net Property, Plant, Equipment 239,018 359,363 404,282
Marketable Securities
Goodwill
Notes Receivable - L/T
Deferred Income Taxes
Other Assets
Total Assets 6,095,084 4,585,824 9,701,179
Consolidated Balance Sheet for NSS Numanco
Liabilities and Equity
1995 1994 1993
Liabilities and Equity
Current Liabilities
Notes Payable to Bank 319,151
Other Notes Payable 0 0 0
Current Part of L/T Debt 2,932 8,075 7,096
Accounts Payable 737,796 178,562 296,365
Employee Deductions 189,865 0
Accrued P/R and Benefits 946,661 2,521,774
Accrued Expense & Withholding 2,628,793 966,019 1,033,399
Deferred Income Taxes
Income Taxes Payable
Other Current Liabilities
Total Current Liabilities 3,369,521 2,289,182 4,177,785
Long-Term Liabilities
L/T Debt Less Current 0 2,932 11,007
Chemical Term Loan
Long Term Revolver
Dip
Total Liabilities 3,369,521 2,292,114 4,188,792
Intercompany Accounts
Due to Parent Company 3,732,153 4,605,525 9,357,861
Due to Subsidiary 1 (8,213,321) (8,101,894) (7,611,451)
Due to Subsidiary 2 265,105 167,619 (220,741)
Total Intercompany Debt (4,216,063) (3,328,749) 1,525,669
Stockholders Equity
Common Stock
Add. Paid in Capital
Retained Earnings, Beg. 5,622,459 4,533,222 4,340,016
Current Period Earnings 1,319,167 1,089,238 (353,298)
Treasury Stock
Total Stockholders Equity 6,941,626 5,622,459 3,986,718
Total Liability & Stkhld. Equity 6,095,084 4,585,824 9,701,179
Difference 0
HEALTH PHYSICS AND DECONTAMINATION SERVICES
NUMANCO, L.L.C. maintains a qualified group of Health Physics and
Decontamination Specialists and Technicians to fulfill and surpass the
expectations of our clients. Our technicians are trained and qualified in the
areas of Safety, ANSI/ANS and Site Requirements. These combined with numerous
other training programs, policies and procedures allow NUMANCO to provide
experienced, dedicated, qualified professionals, at reduced costs to our
clients.
Health Physics Support
ALARA Engineers; Health Physics/Radiological Engineers; Health Physics
Supervisors; ANSI 3.1 Health Physics Technicians; ANSI 18.1 Health
Physics Technicians; NRRPT Certified Technicians.
Decontamination Support
Sr./Jr. Decontamination Technicians; Cryogenisis; Hydrolaser.
Specialists
Kelly(C); Sharc(C); Robotic Devices; Cavity Decontamination.
MAINTENANCE DIVISION
NUMANCO's Maintenance Division specializes in providing project management and
professional technical support in the following disciplines: Mechanical
Maintenance; Diesel Generator Repair, Field Valve Repair, I&C and Electrical
Services; and Professional Services.
Mechanical Maintenance Support
Mechanical Maintenance Technicians; Valve Technicians; Diesel
Mechanics; Turbine Support; Certified Welders; Pipefitters/Millwrights;
Machinists; General Labor Support.
Diesel Generator Repair Services
NUMANCO maintains a staff of Certified Diesel Technicians trained
specifically in the overhaul and repair of PC2-14VB8 Colt Pielstick and
Fairbanks-Morse engines, and 251 EDG ALCO Diesel Generators.
Field Valve Repair and Refurbishment
NUMANCO can provide qualified personnel to support all facets of
repair and refurbishment of the following valves: Gate; Globe; Angle;
Check; Knife; Diaphragm; Butterfly; Plug; Ball; Relief And Safety
Relief (Steam, Air and Liquid).
In addition, NUMANCO can provide complete mechanical and electrical inspections
as well as actuator repair and refurbishment.
Instrument and Control Support
I&C Engineers; I&C Technicians; Metrology Lab Technicians; Security
System Technicians; Radiation Monitor Technicians.
Specialists
Pneumatic; Electronic; Westinghouse 7100 and 7300; Fire
Protection; PLC.
Electrical Maintenance Support
Electric Engineers; Electrical Maintenance Technicians; Motor
Operated Valve Technicians; Protective Relay Technicians.
Specialists
HV and LV Breaker Overhaul; MCC's; Transformers; HV Cable
Splicing; Motor Overhaul.
Engineers (All Levels)
Architectural; Civil; Construction; Development; Electrical; HVAC;
Facilities; Industrial; I&C; Maintenance; Manufacturing; Mechanical;
Piping; Project; Process; Reliability; Quality Assurance;
Quality Control; Software; Structural; Systems Analyst Specialist.
Designers, Draftsmen, Detailers
Architectural; CAD/CAM; Civil Piping; Electrical; E-M Packaging;
Electronic; HVAC; I&C; Machine; Mechanical; Pipe Support; Printed
Circuit; Structural; Tool.
Miscellaneous
Buyer; Cost Estimator; Engineering Aide; Expediter; Industrial
Hygienist; Planner/Scheduler; Procedure Writer; Proposal Writer; Safety
Specialist; Training Instructor.
Technicians
Documentation; Electrical; Industrial; I&C; Laboratory; Manufacturing;
Mechanical; Quality Assurance; Quality Control.
Publications
Technical Writers; Technical Editors; Technical Illustrators.
QA/QC DIVISION
NUMANCO offers a full range of Quality Services including Management, Quality
Engineering, Planning, Lead Auditors, and Quality Control personnel to support
Level III Inspection and Non-Destructive activities. All personnel will be
fluent in the applicable code or standard, including but not limited to:
American Society of Mechanical Engineers (ASME), American National Standards
Institute (ANSI), Military Standards (MIL-Standards), and American Welding
Society (AWS). In addition, all personnel will be thoroughly trained and
certified in the discipline required.
QA/QC SUPPORT
QA/QC Technicians/Inspectors
Mechanical, Electrical, I&C, & Civil, Level I VT-1 through VT-4, Level
I Mechanical, Electrical, I&C, & Civil, Level II
VT-1 through VT-4, Level II Mechanical, Electrical, I&C, & Civil, Level
III
VT-1 through VT-4, Level III
NDE SUPPORT
NDE Technicians
U.T. Technicians, Levels II and III
R.T. Technicians, Levels II and III
V.T. and P.T. Technicians, Levels II and III
M. T. Technicians, Levels II and III
TRAINING DIVISION
In addition to the preceding categories, NUMANCO offers the following
specialized instructional programs:
TRAINING SUPPORT
Basic Mechanical Fundamentals; Basic I&C Fundamentals; Pneumatic
Control Valve Repair; Unescorted Access; Leadership Training For
Supervisors; Basic Gas Turbines; Basic Heat Exchangers; Basic
Electrical Fundamentals; Basic Valve Repair; Safety and Relief Valve
Repair; Level I Radiation Worker Training; Basic Diesels; Steam
Turbines; Fire Watch.
NUMANCO also maintains working agreements with several major companies in order
to support subcontract opportunities that may exist as a result of our
customers' needs.
Subcontractors in the Following Areas:
Laundry; Teledosimetry; Specialty Decon; Specialty Coatings; Industrial
Hygienist.
Areas Of Review Prior To Close Of The NSS Numanco Purchase From NSSI
PSO began informally evaluating the temporary services business in mid 1995,
long before it had heard of NSS Numanco, Inc.. This evaluation included internal
discussions with employees that manage PSO's temporary staffing requirements, a
data search of available articles and reference material, and interviews with
people in the temporary services business.
Here are the principle parts of the "due diligence analysis PSO performed for
the Numanco investment: The terms and conditions of each of the "back log"
work contracts purchased. Financial review of each contract (mainly to
determine gross margin for each contract). Employment statistics by each
job site focusing on number of returnees, employee issues, lawsuits, etc.
Review of past performance evaluations from each of the sites included in
the contract base. Interviews with all of management and administrative
employees. Discussions with two site coordinators.
Employee performance review forms.
Current operating systems and procedures is the areas of: recruiting,
security, payroll, accounting, training, human resources. This review
included evaluating the computer systems, written guidelines, databases,
files and filing systems, management, etc.
Verification of assets.
In addition, significant time and effort was focused on how the
company would operate moving forward. This evaluation required looking at
existing leases, contracts and obligations. Because this company was purchased
out of chapter 11, the purchasing company had the right to keep or reject any of
the service leases being used by Numanco. The areas evaluated included:
Infrastructure leases such as building rent, copiers, computer systems,
faxes and furniture. Employee support and benefit packages including insurance,
car rental agreements, credit card agreements, bank rates, etc.
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